Although making no specific proposals for the disposition of labor's interests, L. A. Jenny, in his proposal for a 6-system regional consolidation made the following general comments:

To be successful consideration must not only be given to the economic, but also the social problems involved. If we are to abandon certain positions because of the obsolescence of the plant, then we must also take care of the consequent obsolescence of manpower. If it is economically desirable to abandon certain lines, then the carriers can give such labor protection as labor needs. This should be mandatory.25

Briefly, the early years of the depression found railway labor unions appealing to Congress for protection against displacement. An attempt was also made at that time to deal with the problem through union-management negotiation. The 1932 negotiation which resulted in the temporary general wage-cut also provided that a unionmanagement committee be established to study the problem of the disposition of labor's interests in consolidations; but no agreement proved possible at that time.26 As the depression deepened and as the financial condition of the Nation's railroads grew steadily worse, the attention of railroad management and of Congress turned more and more toward the possibility of improving the situation through coordination of railroad facilities but with increasing appreciation of consequent unemployment.

REGULATION AND UNION-MANAGEMENT NEGOTIATION

The development of protection of employees from undue suffering through the curtailment of railroad facilities or services has been traced to this point in chronological order. It is now feasible to divide the remainder of the historical development. The administrative and judicial actions having to considerable degree their own particular logic and problems, will be dealt with later; in the present section, the inseparably related legislative and negotiative phases will receive attention.

The Emergency Railroad Transportation Act of 1933.-This act marked the first congressional recognition of the principle of employee protection in the United States. Without the efforts of railway labor the protective provisions would hardly have been included, but the current unemployment situation was the motivating influence in Congress' acceptance of the principle of explicit legislative protection for employees. This body considered it inconsistent to adopt a policy which would throw many railroad employees out of work at a time when unprecedented sums were being appropriated to alleviate general unemployment. Since the Government itself was sponsoring this program of rationalization of railroad operations, Congress believed that the protection of displaced labor was a legislative responsibility. This conviction, no doubt, was strengthened by the British precedent of 1921.27

25 L. A. Jenny, A Possible Solution of Our Railroad Consolidation Problem, November 1938, p. 11. L. C. Fritch in his Synopsis of the Fritch Plan of Coordination of Class 1 Railroads of the United States (Oct. 1940, p. 1.), refers to the protection grant by the Transportation Act of 1940 having made "provision for that formidable and obstructive feature of taking care of the employees displaced in the event of consolidation" and thus cleared the way for carrier action.

26 Brown et al., Railway Labor Survey, p. 108.

27 According to the Coordinator, the main protective provision in the act was "in a general way modeled on action taken in Great Britain in 1921." Fourth Report of the Federal Coordinator of Transportation on Transportation Legislation, H. Doc. 394, 74th Cong., 2d sess. (1936), p. 51. However, the British act in addition to stating that no employee should be placed in a worse employment position as a result of a measure undertaken under its authority, also provided the alternative of dismissal compensation; and in that respect, therefore, as will be seen later, the Washington agreement more nearly resembled the British act than did the Emergency Railroad Transportation Act of 1933.

The combination of influences resulted in an act the main protective provisions of which were stronger even than those suggested by labor spokesmen.28 Whereas the union spokesmen at the hearings had asked that displaced employees receive comparable substitute employment, pension, or dismissal compensation, section 7 (b) of the act provided that no individual in the employ of the carriers in May 1933 should be dismissed or reduced in pay as a result of an undertaking pursuant to the act. Furthermore, it provided that no carrier might reduce the number of its employees below the level of May 1933 by any coordination under the act, except through the process of normal attrition; and even then not to exceed 5 percent per annum.29

The act also provided for regional labor committees to be set up by the unions and consulted by the Coordinator and the regional coordinating committees before any action affecting the interests of the workers would be taken. In addition, the act incorporated the comparatively well-established principle of compensation for employees who were forced to move as a result of economy measures.30

Railroad management regarded section 7 (b) as a bar to the accomplishment of the desired economies. At the hearings on the extension of the Coordinator section of the act for another year J. J. Pelley, president of the Association of American Railroads, testified that the labor provision prevented managements from making further economies through the joint use of facilities and, in fact, had completely nullified the act's purposes.31 Since the labor provisions applied only to economy efforts undertaken under the machinery set up by the act, the carriers tried to accomplish economies through "waste committees" independent of the Coordinator and the official regional coordinating committees. In order to bring these economy measures under the jurisdiction of the act the Coordinator sent out a statement which required that all projects then under consideration by the independent bodies be referred to the official regional committees for investigation and report.32 Consequently, the carriers, evidently feeling that their prospects of attaining any savings had been largely

28 The amendments proposed by the Railway Labor Executives' Association included the following (1) That the stated purpose of the act be extended to include not only the stabilization of employment but the improvement of labor relations and employee morale, and provision for "more adequate and economical machinery" for settling labor disputes; and (2) that the Coordinator be directed to see that the carriers adopt "appropriate measures to stabilize employment and to maintain security of employment and particularly to provide against the removal of employees from the service of a carrier because of actions taken to carry out the purposes of this act, without making adequate provision either for comparable substitute employment or other means of self-support or providing either an adequate pension for senior employees so displaced from service or an adequate dismissal wage for junior employees so dismissed from service." According to Mr. Richberg, the employees regarded the whole policy of coordination as "fundamentally unsound," and offered amendments in the hope that "in explaining the need for such amendments, it may be possible not only to demonstrate the weaknesses of the bill as drafted, but * * * to demonstrate the fundamental unsoundness of this method of attacking the railroad problem." Hearings before the Committee on Interstate Commerce, on S. 1580, 73d Cong., 1st sess. (1933), pp. 77-78.

29 Section 7 (b) of the Emergency Railroad Transportation Act (48 Stat. 211, 1933) read as follows: "The number of employees in the service of a carrier shall not be reduced by reason of any action taken pursuant to the authority of this title below the number as shown by the pay rolls after the effective date of this act by reason of death, normal retirements, or resignation, but not more in any year than 5 percent of said number in service during May 1933; nor shall any employee in such service be deprived of employment such as he had during said month of May or be in a worse position with respect to his compensation for such employment, by reason of any action taken pursuant to the authority conferred by this title." 30 The carriers were to "make just compensation for * * property losses and expenses imposed upon employees by reason of transfers of work from one locality to another in carrying out the purposes of this title."

31 Hearings before the Committee on Interstate and Foreign Commerce, on H. J. Res. 319 and S. J. Res. 112, 74th Cong., 1st sess. (1935), pp. 19-27. Carl Gray, then president of the Union Pacific Railroad, speaking in 1933 of the proposal to amend the bill's purposes to include the stabilization of employment, made the following remarks: "Now I think that this amendment * * merely produces an absolute impossibility. You have got to face frankly just exactly what this means. You cannot take off trains, you cannot consolidate yards, and also stabilize employment." Hearings on S. 1580, p. 141.

32 "The result was a general disposition on the part of the railroads to regard sec. 7 (b) as a bar to any effective action and to lapse into inactivity, so far as the purposes of the act were concerned. The Coordinator found it necessary to take the initiative to an extent which had not been anticipated, and under a broad interpretation of his duties." Fourth Report of the Federal Coordinator, p. 35.

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eliminated, for the most part ceased their efforts to economize through coordination.

As time went on the number of employees whose status was guaranteed by the act decreased steadily as labor attrition reduced the proportion of workers who were on the pay rolls during May 1933. Soon railway labor came to regard the protection afforded by section 7 (b) as only a stopgap.33 Thus, although the employee organizations supported a continuance of the Coordinator section (not the office) of the act, they sought further and more complete protection by statute and negotiation.

The immediate forerunners of the Washington job protection agreement.-Throughout the period when the Emergency Transportation Act was in force, there continued strenuous activity to improve further labor's employment protection. Two bills were introduced in Congress which embodied detailed protective provisions for employees affected by economy measures, and the representatives of railway labor secured protection through negotiation in three important instances. The latter type or source of protection will be considered first.

The consolidation carried out by the Union Pacific in 1935 involved the centralization at Omaha of five variously located general accounting offices.34 The union-management agreement provided that the new jobs available at the central office were to be obtainable on a seniority basis. Those employees who were laid off were given 1 year's pay and the right to be recalled in seniority order as vacancies occurred. Employees who were transferred to Omaha were reimbursed for expenses and losses and guaranteed against pay cuts and decline in working conditions for 1 year.35

One of the bills introduced in Congress was sponsored by the Federal Coordinator, who had been temporarily won over to the idea of permanent specific statutory protection. The other, known as the Wheeler-Crosser bill, was drawn up by the railway labor organizations. Both of these bills were designed to apply to economy

33 As an illustration of labor's attitude, consider the following resolution passed by the Brotherhood of Railroad Trainmen: "In view of the fact that the Emergency Transportation Act expires on June 16, 1935. and such act in section 7 (b) provides a small safeguard, we recommend that the action of the Chief Executiyes' Association in seeking an extension of title No. I of that act be concurred in by the Brotherhood and we further recommend that paragraph 4 of section 5 of the Interstate Commerce Act be amended, so as to provide that employees displaced by mergers, consolidations, or unification of railroad properties or facilities, in whole or in part, be approved [sic] by the Interstate Commerce Commission." Proceedings of the first quadrennial convention, Brotherhood of Railroad Trainmen (1935), p. 257. 34 This consolidation was first proposed by the Union Pacific in 1932. At the first set of hearings a representative of the Clerical Employees' Association of the Oregon Short Lines protested. He based his case largely on the generally low level of employment prevailing at that time. The decision of the Commission contained no protective conditions, but because approval of the Commission was contingent upon the Union Pacific's including in the consolidation several short lines which it did not propose to include, no action was taken at that ime. In the supplementary application of 1935 the Brotherhood of Railway and Steamship Clerks intervened. About a month later the intervening petition was withdrawn because the carrier and the employees had reached an agreement. Union Pacific Railroad Company Unification, 207 I. C. C. 543 (1935).

35 Hearings on S. 4174, pp. 45-47. Provision for reemployment or dismissal compensation for displaced employees was also made by the Baltimore & Ohio R. R. in 1934. See Baltimore and Ohio Railroad Company Operation, 202 I. C. C. 773 (1935). And in 1935 an agreement was reached between the Railroad Labor Executives' Association and two New England roads which provided that employees forced to move because of a merger of certain accounting work on the two roads should be reimbursed for moving expenses (hearings on S. 4174, p. 54). This arrangement, however, differed from the other two in that instead of protecting dismissed employees through dismissal compensation, it embodied the principle set forth in the Emergency Act-that is, reductions in force should be taken care of wholly by normal attrition.

measures undertaken by one carrier as well as by two or more.36 The two bills also provided for administration by the governmental agencies which pass on such measures. The agent named in the Wheeler-Rayburn or Coordinator's bill was the proposed permanent coordinator of transportation; the Wheeler-Crosser bill, on the other hand, named the Interstate Commerce Commission. Both bills required the carrier to submit a detailed statement of the number and occupational distribution of employees to be affected and, like the emergency act, provided for consultation with employee representatives before any such measure could be undertaken.

The Coordinator's bill, in spite of these similarities, was considerably less favorable to the employees than was the Wheeler-Crosser bill. The former was characterized by principles accepted in more advanced dismissal compensation plans, modified to make it "smoothly articulated with the Railroad Retirement Act," 37 and including, as has been indicated, certain principles carried over from the Emergency Act. Its basic formula for dismissal compensation was one-half month's pay for each year of service, with a differential for age. This differential was justified on the ground that the loss to a displaced employee varies directly with his age as well as with his earnings and length of service. It was pointed out that these features occur in the more advanced plans for dismissal compensation in other industries.38 The requirement of a minimum employment status for eligibility for compensation (in this case 2 years) is also a common feature of industrial plans. It will be recalled that the British act has a minimum status requirement of 5 years. The provision for the transfer of seniority of employees of constituent carriers to the consolidated company had as a precedent the legislation enacted in Canada in 1933. The preferential treatment to be accorded lower-paid employees through the use of graduated percentages and a dismissal compensation minimum is, as the Coordinator's report pointed out, "a wellrecognized principle in social insurance." 39

The "articulation" with the Railroad Retirement Act was accomplished by making certain definitions and general principles of the bill agree with those of this particular act: (1) Earnings in excess of $300 a month were to be disregarded in calculating dismissal compensation; (2) dismissal compensation for employees aged 60 or over was to be sufficient to buy a temporary annuity equal to the pension

38 As defined in the Wheeler-Rayburn or Coordinator's bill, "The term 'coordination' means action by or affecting two or more carriers for the purpose of promoting economy or efficiency or increasing traffic or revenues or improving service; or action by any one carrier for any such purpose involving unification, consolidation, or merging of existing separate facilities which are operated by such carrier independently of one another in separate localities, and the transfer of work, operations, or services of one such facility to another; or the abandonment of any existing facilities, operations, or services or such carrier or carriers resulting from any such action." The text of this bill is given in full as appendix IX of the Report of the Federal Coordinator, 1934, p. 225. It was introduced into the Senate as S. 1630 and into the House as H. R. 5378, 74th Cong., 1st sess. (1935).

The Wheeler-Crosser bill, S. 4174, 74th Cong., 2d sess. (1936), applied to "any action taken or arrangement made by a carrier, either consolidating its facilities independently or with those of one or more other carriers, or entering into any arrangements for pooling or consolidating traffic operations, or any action which may either reduce existing competition between carriers or between carriers and other forms of transportation service, or may reduce the facilities of a carrier for performing public service, or reduce the amount of public service previously being performed by the carrier."

37 Report of the Federal Coordinator of Transportation, 1934, p. 95.

38 The same, p. 99.

39 The same, p. 94.

to which they would become entitled under the Retirement Act;40 (3) employees eligible for retirement under the act were to be compulsorily retired before any younger employee was dismissed; (4) employees between 55 and 60 years of age who were not eligible for retirement could elect to receive their compensation in the form of a temporary annuity.41

Two features of the Coordinator's bill deserve attention. One was the section devised to preclude the carrier's attempting to escape or delay through extended or intermittent furloughs the payment of dismissal compensation.2 The other was a provision for separating the effects of labor-saving improvements from those of traffic fluctuations; employees who were later displaced to be considered as having been displaced by the economy measure, except by reductions occurring through normal attrition.43

The Wheeler-Crosser bill, on the other hand, was drawn up by labor representatives largely for use as a bargaining weapon in the negotiations which finally resulted in the signing of the Washington agreement. At the beginning of these negotiations, there was little common ground between the representatives of labor and those of management. Although the latter "agreed to the principle of compensation," "they disagreed with the labor representatives as to the type of economy to be covered and the extent of protection to be granted. Two factors were to a large degree responsible for the final attainment of a satisfactory compromise. One of these was President Roosevelt's opinion, expressed in letters to Mr. Pelley of the Association of American Railroads and Mr. Phillips of the Railway Labor Executives' Association, favoring settlement through negotiation. The other was the Wheeler-Crosser bill's potency as a bar

40 "The amount of dismissal compensation to which an employee shall be entitled who has not attained age 60 at the time of his displacement shall be determined by multiplying the number of years in the 'service period' of the employee, not to exceed 30, by the sum of the following: 75 percent of the first $50 of the employee's average monthly earnings; 56.25 percent of the next $100 of such average monthly earnings; and 37.5 percent of the next $150 of such average monthly earnings. The product shall be the dismissal compensation for employees separated from the service prior to attaining age 36. For each completed year of age in excess of 35, up to and as calculated above plus 1.5 percent of such amount for each completed year of age in excess of 35." The same, p. 227. This compensation was to be paid in bimonthly installments equal to one-quarter of average monthly earnings. The minimum dismissal compensation was $100 or 1 month's earnings, whichever was larger.

41 The plan proposed to the Coordinator by William B. Poland in January 1934, in connection with his study of the Prince plan, had also provided that older employees should be pensioned off and that other displaced employees should receive compensation based on their average earnings. A pension of $60 a month was suggested for all employees 55 years of age or over; those under 55 were to receive allowances equal to half their average pay in some suitable base period until comparable employment was found for them or for a maximum period of 4 years. Regulation of Railroads, p. 128.

42 "Another factor in railroad employment, bearing upon displacements because of labor-saving improvements, is the practice of furloughing employees for varying periods. Shops may either be shut down for a time or some of their employees may be laid off subject to recall when required. In the train and engine service, employees are occasionally removed from the lists for varying periods owing to decline in traffic, to be recalled to service dependent upon traffic revival. In the event of the inauguration of a labor-saving plan, this process of making temporary adjustments in forces would be aggravated unless some method were devised to segregate those employees who should be considered permanently displaced from those who are to be returned to service within a reasonable period. This can be done by providing that any employee of an occupational group or class affected by the plan (up to the total number who may be displaced), shall be considered permanently displaced, if, after having been laid off for a specific period, he is not restored to service. The plan proposed provides a test period of 8 weeks. That is, if after 8 weeks, any furloughed employee within the number and classification eligible for dismissal compensation, is not recalled to service and enabled to work the minimum number of hours per week or run the equivalent thereof in miles for the succeeding 8 weeks, he shall be considered as permanently dismissed and entitled to receive compensation.

"But, even with such a test period, temptation might easily develop to furlough the employees to be dismissed, for the length of the test period before finally separating them from the service. In order to forestall this tendency, therefore, and to precipitate prompt action, it becomes necessary to provide a penalty in the event of furlough prior to separation. This may be accomplished by granting to any employee who eventually finds himself dismissed at the end of a furlough, a benefit, in addition to his regular dismissal payment, of half his previous average earnings per week for every week he was furloughed prior to final dismissal. An arrangement such as this will discourage temporary furloughs as a device for circumventing, as long as possible, the permanent separation from the service of employees who must inevitably be separated." Report of the Federal Coordinator of Transportation, 1934, pp. 85-86.

43 The same, p. 87.

44 Hawkins, Dismissal Compensation, p. 164.