Wage Wrangle

In Chicago last week, three men--one little, two big--sat down with grim-faced representatives of 137 Class I railroads and 19 railroad unions. The three were the National Mediation Board, and their problem, in their own words, was the "biggest" the board has ever faced: to arbitrate the three-month-old deadlock between railroad managements' demand for and railroad workers' refusal of a 15% wage cut.

When U. S. railroads returned to private hands after the War, the Transportation Act of 1920 created a U. S. Railroad Labor Board of nine. Woodrow Wilson's sensible appointees were soon succeeded by the patronage appointees of Warren Harding. A strike of 400,000 railroad shopmen in 1922 thoroughly exposed the board's incompetence and in 1926 the Railway Labor Act replaced it with a five-man U. S. Board of Mediation. This failed to succeed because the law provided no penalties for evasion of the board's decisions and because Calvin Coolidge's appointees were generally inefficient. In 1934, against the bitter lobbying of the Association of American Railroads, the New Deal shoved through a Railway Labor Act Amendment with teeth in it, set up a three-man National Mediation Board. Chairman since then has been little, alert, Estonian-born Dr. William Morris Leiserson, onetime professor of economics at Antioch College and a lifelong expert on arbitration. His present fellow members are both 200-pounders: George Cook, who began his career as a railroad timekeeper and has worked for every railroad mediation body since 1920, and Otto Sternoff Beyer, who assisted Joseph Eastman when he was Transportation Coordinator. The National Mediation Board's record has been good--out of 407 cases in fiscal 1936-37, 259 were successfully settled; last year Dr. Leiserson arbitrated the dispute which got the railway unions a 7 1/2% wage rise.

The present dispute promises to be more difficult because both sides are obstinately entrenched, management insisting that the roads cannot continue in business without reducing wage costs, labor relying on the Administration's oft-reiterated stand that cutting wages is against the best interests of the U. S. Messrs. Leiserson, Beyer and Cook last week hoped to settle the wrangle, but most observers guessed that the case would progress to the final stage provided by the Railway Labor Act--either appointment of an emergency investigating board by the President or arbitration by a group jointly appointed by the opposing sides.

Last week the U. S. Government also did the following for and to U. S. Business:

P: Tightened rules for proxies. On the theory that security holders are entitled to know all essential information when a proxy is requested, SEC revised its 1935 rules to make proxies include such facts as full identity of the soliciting persons, nature of the matters to be voted on, expenses of the solicitation, powers and rights of dissenting groups. Most important, the new rules, which go into effect October 1, provide space for negative as well as positive choice on the part of the security holder.

P: Agreed to investigate peach-canning in California.

P: Continued its drive to expand U. S. exports to South America. Having just negotiated a $5,000,000 credit to Haiti (TIME, Aug. 8), President Warren Lee Pierson of the Export-Import Bank embarked on a flying junket to South America in search of further lending opportunities. Said he: "I will visit every major trading nation, starting with Venezuela, then Brazil, Uruguay and Argentina, followed by west coast countries."

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