8. The plan involves no penalties other than those imposed by public opinion. It does not impose compulsory arbitration. It does not deny the right to strike. It does not submit to arbitration the policy of the "closed" or "open" shop.

The plan is national in scope and operation, yet it is decentralized. It is different from anything in operation elsewhere. It is based upon American experience and is designed to meet American conditions. It employs no legal authority except the right of inquiry. Its basic idea is stimulation to settlement of differences by the parties in conflict, and the enlistment of public opinion toward enforcing that method of settlement.

II. PREVENTION OF DISPUTES.

JOINT ORGANIZATION THROUGH EMPLOYEE REPRESENTATION.

Prevention of disputes is worth more than cure. The conference feels that a new basis of industrial peace may be found in the further development of the democratic organization of the relations of employers and employees, now widely in progress throughout the

country.

Modern industry, as conducted in large plants, has caused a loss of personal contact between employers and employees. It has also caused, through high specialization and repetitive mechanical processes, a loss of creative interest. But it makes possible a greater production of the material things which contribute to the common resources of the people. Upon these resources an advancing civilization, with a higher common standard of living, must depend.

Direct personal contact in the old manner can not be restored. It is necessary, therefore, to find the best possible substitute through democratic representation. Employees need an established channel of expression and an opportunity for responsible consultation on matters which affect them in their relations with their employers and their work. There must be diffused among them a better knowledge of the industry as a whole and of their own relation to its success. Fmployee representation will not only enable them better to advance their own interests, but will make them more definitely conscious of their own contribution and their own responsibilities.

Employee representation has been discussed under different names and forms, such as shop committees, shop councils, works councils, representative government in industry, and others. But representation is a definite principle rather than a form. The conference, therefore, prefers the generic term "employee representation." In using this term the conference has in mind the successful application of the principle to various activities outside, as well as within, the purely industrial field.

From both employers and employees the conference has received thoughtful and helpful suggestions as to the possibilities, under proper conditions, of employee representation. These suggestions clearly proceed from a genuine desire that this movement may spread in accordance with sound principles and be kept from perversions which would threaten its lasting usefulness by making it an agency of attack rather than a means to peace.

Employee representation organizes the relations of employer and employee so that they regularly come together to deal with their common interests. It is operating successfully under union agreements in organized shops. It is operating in nonunion shops, and it is operating in shops where union and nonunion men work side by side. In plants working under union agreement it adds to collective bargaining an agency of cooperation within the plant. It is itself an agency of collective bargaining and cooperation where union agreements do not obtain.

It is idle wholly to deny the existence of conflicting interests between employers and employees. But there are wide areas of activity in which their interests coincide. It is the part of statesmanship to organize identity of interest where it exists in order to reduce the area of conflict. The representative principle is needed to make effective the employee's interest in production, as well as in wages and working conditions. It is likewise needed to make more effective the employer's interest in the human element of industry.

The idea of employee representation has aroused opposition from two sources. On the one hand, in plants too large for direct personal contact, employers who still adhere to the theory that labor is a commodity, hold off from any form of cooperation with employees. This view is steadily disappearing and will, it is hoped, wholly disappear. On the other hand, a number of trade-union leaders regard shop representation as a subtle weapon directed against the union. This thought is apparently based on the fear that it may be used by some employers to undermine the unions. Conceived in that spirit no plan can be a lasting agency of industrial

peace.

But occasional misuse of employee representation and the consequent hesitancy of organized labor to indorse it officially are based on a misconception of the possible and desirable relations between the union and the shop committee. This relation is a complementary and not a mutually exclusive one. In many plants the trade-union and the shop committee are both functioning harmoniously. In some establishments the men are unionized, and the shop committees are composed of union men. In others some men belong to the tradeunion while all belong to the shop organization.

The union has had its greatest success in dealing with basic working conditions and with the general level of wages in organized and partially organized industries and crafts. It has also indirectly exerted an influence on standards in unorganized trades. There is no reason to suppose that in the future this influence will not continue. Local problems, however, fall naturally within the province of shop committees. No organization covering the whole trade and unfamiliar with special local conditions and the questions that come up from day to day, is by itself in a position to deal with these questions adequately, or to enlist the cooperation of employer and employee in methods to improve production and to reduce strain. Except for trades in which the union itself has operated under a system of employee representation, as it does in shipbuilding and in the manufacture of clothing and in other trades, these internal factors are likely either to be neglected or to be dealt with in a way which does not make for satisfactory cooperation.

The existence of employee representation in plants operating under union agreement does not necessarily reduce the scope of the union representative's work. But matters are more likely to come to him as questions of the application of an agreement rather than as mere grievances. In other words, he has greater opportunity for service in negotiation of an essentially conciliatory nature. The fortunate results of such development have been evident in industries in which employee representation and trade-unions have for some time been functioning harmoniously.

Employee representation must not be considered solely as a device for settling grievances. It can find success only if it also embodies cooperation in the problem of production. Whatever subjects the representatives come to feel as having a relation to their work, and their effectiveness as members of the plant, may come within the field of committee consideration. It is a thing to be undertaken, if at all, in a thoroughgoing way. Representatives must be selected by the employees with absolute freedom. In order to prevent suspicion on any side, selection should be by secret ballot. There must be equal freedom of expression thereafter. All employees must feel absolutely convinced that the management will not discriminate against them in any way because of any activities in connection with shop committees. Meetings should be held frequently and regularly, not merely when specific disputes are threatened. Both sides must be prepared to study the problems presented and must give them patient, serious, and open-minded consideration. There should be made available those facilities and facts essential to the formation of soundly based conclusions.

Employee representation offers no royal road to industrial peace. No employer should suppose that merely by installing some system of shop representation he can be assured, without continued effort, of harmony and increased production. Doubtless there will be failures where the plan is adopted as a fad or a panacea. It is only a means whereby sincerity of purpose, frank dealing, and the establishment of common interests, may bring mutual advantage.

The development and maintenance of right relations between employer and employee require more than mere organization. Intelligent and wise administration is needed of all those problems of production that directly touch the employee. Conditions affecting human beings in industry were, during the last generation, largely in charge of men whose special training had been devoted to the mechanical side of production. Much study was given to the machinery and processes upon which men worked. But the factors that contribute to the broader human development and satisfaction of the employee and that lead to increased productivity were too nearly neglected. The elimination of human friction is, even from the point of view of increased production, at least no less important than the elimination of waste in materials or in mechanical power.

Establishments in which the ultimate management is of necessity widely removed from the employees require provision for specialized study of industrial relations. But the right concept of human relations in industry, which should be the primary impulse of management, is of full value only when it permeates the entire administrative force. Far-sighted executives testify to the advantage gained from

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careful and painstaking efforts to encourage and educate their foremen in the proper attitude toward employees.

A large proportion of men trained in our engineering and technical schools now pass into executive positions. It is, therefore, desirable that these schools should provide courses of instruction in which the psychological and industrial background for human relations work shall be developed. But no amount of education outside the plant will remove the need for the systematic training of the force within. Some industries have extended the principles of employee representation beyond the individual plant. The voluntary joint councils which have thus been set up in the clothing industry, in the printing trade, and elsewhere are fruitful experiments in industrial organization.

The conference has had the benefit of testimony from both employers and employees who have had experience of the results of employee representation. An enthusiasm has been shown which comes from a sincere feeling of substantial progress in the development of human relations.

III. PLAN FOR ADJUSTMENT OF DISPUTES.

GENERAL DESCRIPTION.

1. PROCEDURE WHEN BOTH SIDES VOLUNTARILY SUBMIT DISPUTES FOR

ADJUSTMENT.

The United States shall be divided into a specified number of industrial regions, in each of which there shall be a chairman.

Whenever a dispute arises in a region which can not be settled by existing machinery the regional chairman may request each side to submit the dispute to a regional adjustment conference, to be composed of two representatives from each side, parties to the dispute, and two representatives to be selected by each side from the panels herein provided for. The regional chairman shall preside but not vote at the conference.

If the conference reaches a unanimous agreement, it shall be regarded as a collective bargain between the parties to the dispute and shall have the force and effect of a trade agreement. If the conference does not reach an agreement and the disagreement relates to wages, hours, or working conditions, it shall make a finding of the material facts and state the reasons why it was unable to reach an agreement. The regional chairman shall report such finding and statement to the National Industrial Board herein provided for, which shall determine the matters so submitted as arbitrator. If the National Industrial Board shall reach a unanimous agreement, it shall report its determination back to the regional adjustment conference, which shall in accordance therewith state the agreement between the parties to the dispute the same as if the conference had reached a unanimous conclusion. If the National Industrial Board shall fail to reach a unanimous conclusion, it shall make majority and minority reports and transmit them to the regional chairman, who shall immediately publish such reports, or such adequate abstracts thereof, as may be necessary to inform the public of the material facts and the reasons why the board was unable to reach an agreement.

If the conference does not reach an agreement and its disagreement relates to matters other than wages, hours, or working conditions, it shall make and publish its report, or majority and minority reports, stating the material facts and the reasons why it was unable to reach an agreement.

If the parties to the dispute so desire, they may select an umpire to act as arbitrator in place of the National Industrial Board, and in such case the determination of the umpire shall be transmitted to the regional adjustment conference with the same force and effect as a determination by the National Industrial Board.

The appointment of representatives to the regional conference constitutes a voluntary agreement (a) that there shall be no cessation of production during the processes of adjustment, (b) to accept as an effective collective bargain the unanimous agreement of the regional adjustment conference, (c) to accept as an effective collective bargain (in case of failure of the regional adjustment conference) the decision of a mutually chosen umpire, (d) to accept as an effective collective bargain (in case of failure of the regional adjustment conference or upon failure of the parties to agree upon an umpire) the unanimous decision of the National Industrial Board upon wages, hours, and working conditions.

2. PROCEDURE WHEN THERE IS NO VOLUNTARY SUBMISSION.

If both parties to the dispute refuse to submit it to a regional adjustment conference through the failure to appoint representatives within the time allowed, the chairman shall organize forthwith a regional board of inquiry, consisting of two employers from the top of the employers' panel for the industry concerned, and two employees from the top of the employees' panel for the craft or crafts concerned. The four so chosen with the chairman shall constitute the board of inquiry.

If either side shall have selected representatives, and thereby agreed to submit to the process of adjustment of the dispute, such representatives may select two names from their panel in the same manner as for a regional adjustment conference. Such representatives of the party to the dispute may sit on the board of inquiry and take full part as members thereof. The six thus selected, with the chairman, shall thereafter constitute the board of inquiry.

The board of inquiry shall proceed forthwith to investigate the dispute and make and publish its report, and, if not in agreement, its majority and minority reports, in order that the public may know the facts material to the dispute and the points of difference between the parties to it.

DETAILS OF THE PLAN.

1. NATIONAL AND REGIONAL BOARDS.

There shall be established a National Industrial Board, regional adjustment conferences, and boards of inquiry.

2. NATIONAL INDUSTRIAL BOARD.

The National Industrial Board shall have its headquarters in Washington, and shall be composed of nine members appointed by