A Policy Is Born

On the White House lawn, blanketed by the heaviest Washington snowfall in years, Harry Truman frolicked without topcoat, gleefully tossing snowballs. Then, back in his office, he tossed a snowball with a rock in it at General Motors and U.S. industry in general.

In a conference room at the Labor Department, the heads of General Motors and the striking United Automobile Workers sat facing each other across a horseshoe-shaped table, presided over by Fact Finder Lloyd K. Garrison and his two assistants, North Carolina's Judge Walter P. Stacy, Kansas' Milton Eisenhower (brother of General Ike). Few facts were being found. The union's Walter Reuther insisted on a 30% raise unless "shown the arithmetic" to prove that such a raise would force higher auto prices. The company refused to lay the figures on the table before "the hungry eyes of its competitors."

Into the room hurtled the President's missile, wrapped in a mimeographed statement.

Relevant Recommendation. Said President Truman:

"In appointing a fact-finding board in an industrial dispute where one of the questions at issue is wages, it is essential to a fulfillment of its duty that the board have the authority, whenever it deems it necessary, to examine the books of the employer . . . [in order] to determine the ability of the employer to pay. . . .

"This does not mean that the Government or its fact-finding board is going to endeavor to fix a rate of return for the employer. It does mean, however, that . . . the question of earnings is relevant.

"The detailed information obtained from the books of an employer should not be made public. . . . But the fact-finding board should unquestionably have the right . . . to make public all findings based on such information that it deems relevant to the controversy. . . .

"In view of the public interest involved, it would be highly unfortunate if any party to a dispute should refuse to cooperate with a fact-finding board."

The President was recommending a little less than Walter Reuther wanted--since the company's books, if not made public, would not be seen by the union either. But he was recommending a great deal more than the company wanted.

Fact or Guesswork? By examining General Motors' books, the fact-finding panel could obtain detailed information on 1) the company's recent costs and profits on war contracts, and 2) costs and profits in making automobiles four years ago.

Armed with these facts, the board could estimate probable General Motors earnings under new costs (including wages), new selling prices and new market conditions. This is the "arithmetic" of the company's ability to pay--but it is more a matter of expert guesswork than of fact-finding. Any mistake in the panel's business forecasting, if used to determine wages, could prove costly to the company, or even to the union.

The President did not say that wages should be based entirely on ability to pay--this was just one of the "relevant facts." But certainly he had given his official blessing to an argument which might have far-reaching effects on both industry and labor.

The doctrine of ability to pay (or even its relevancy) might strengthen the union's demand for higher wages from General Motors. But Ford, if it can show lower unit profits, might use the same doctrine to make a case that Ford employes should receive less than General Motors workers.

The doctrine might be used by unions to justify demands which would cut down the extra profits of efficient companies, might in turn be used by incompetent managements to justify substandard wages. It might be used in boom times to justify extravagant wage demands and in depression to justify extravagant demands for wage cuts.

Here & Now. Whatever the President's pronouncement meant for the future, it had very definite results on the present. It undercut General Motors' contention that profits had nothing to do with the current wage negotiations. It was a sharp threat to the oil industry, where another fact-finding panel is at work.

The fact-finding boards, though still without authority to subpoena company books, now had orders to make and publish their own estimates of the employers' ability to pay, and to use these estimates in recommending wage increases. Whether the companies opened their books or not, the estimates would be made.

Hastily, General Motors decided to reopen negotiations with the union. The oil companies quickly announced that they would also resume talks. The fact-finding panels took a recess to see what would come of the bargaining.

The President also:

Accepted an invitation to introduce Winston Churchill when the ex-Prime Minister speaks at Westminster College in Fulton, Mo. March 5. Churchill will be vacationing in the U.S. at that time (see PEOPLE)

Killed, by pocket veto, legislation that would have handed the U.S. Employment Service offices to the states and territories, explained that it would "immeasurably retard our re-employment program."

Sent congratulations to Generalissimo Stalin on his 66th birthday.

Presented the Congressional Medal of Honor to six war heroes in the White House.

Accepted an oil portrait of his mother from the Order of DeMolay.

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