message transmission via the radio beam technique will effect enormous savings in the cost of handling telegraph messages from point to point of origin and destination. The company will simultaneously continue and accelerate its program to substitute automatic switching transmission for the present system which is largely manual operation. This modernization plan goes through the entire system, not only in the internal, unseen operations of the company, but also in the public office and between public offices and the central operating rooms. Facsimile machines will be employed in lieu of manual pick-up, delivery, and transmission. The technique has so developed that the company is contemplating the use of mobile facsimile units. All of this will result in reduced unit and total costs and therefore in improving the company's ability to pay decent wages. The same modernization plan will lay the basis for a vastly broader scope and improved quality of service for the public, so that the telegraph company can enjoy a larger share of the total communications business. This will have the effect of increasing revenues. Thus ability to pay is improved by this mechanization program both through reducing costs and increasing revenues.

I am not speaking here about theoretical perspectives. The Western Union Co. has already launched this program, and estimates vary only as to when it will be fully completed. As the program progresses, however, the results which I have mentioned will continually take place, and the company's ability to pay will be progressively better each year, beginning as of now.

We firmly believe that the Western Union Co. should develop into a responsible public utility with decent labor standards. In the event that obsolescent, nineteenth-century thinking on the part of this company prevails over twentieth century, modern methods, we believe that the American people, who need and want a rapid-communications system, will no longer tolerate incompetent management and continued requests for congressional hand-outs at the taxpayers' expense, such as their demand for full rate for Government messages; their program seeking repeal of the Post Roads Act; the telegraph merger; special dispensations from minimum-wage provisions for messengers, and so forth. If the company continues to operate on this basis, the American people, the regulatory agencies, and certainly Congress will begin to question the wisdom of continuing to operate that public utility under that management.

In other sections of the industry, radio, point-to-point radio, cable, broadcastthere is no question of the company's ability to pay the wage rates set forth in this legislation.

We therefore can conclude by saying that employees in the communications industry are a highly skilled group of people, whose record of devotion to the public service is outstanding; who have in many cases performed acts of heroism in staying at their posts under conditions of fire, flood, and other disaster; that these people, employed by utilities that have in the main monopoly power in this country, should certainly receive a living wage and are entitled to the American standard of living.

For these reasons we say this legislation is a very important, a most important, step forward in the national policy of our country. We heartily endorse it.

EXCERPT FROM BRIEF OF AMERICAN COMMUNICATIONS ASSOCIATION, CIO, TO NATIONAL WAR LABOR BOARD

If ability to pay is considered to be relevant, we think it elementary justice that the Company should be required to prove and not merely assert its inability to pay the award. The company made not the slightest effort to prove inability to pay. It has repeatedly made that assertion, but it has never even attempted to produce any evidence in support thereof. The evidence, if it exists, is in the possession of the company, and the company is under an obligation to present it. We are not, in this memorandum, going to attempt to prove that the company has the ability to pay the wage award directed here. We think that such an ability can be proven, but we can hardly do it in the course of a written memorandum without a hearing, without an opportunity to examine and crossexamine witnesses, without an opportunity to make a thorough study of the Company's books, and without much knowledge as to the company's proposed mechanization program.

A few facts are conceded by the company and ought to be called to the Board's attention in the first place.

Prior to 1943, Western Union had a strong financial position. In 1938, the Federal Communications Commission, in denying an application for an increase in certain telegraph rates, said:

"The evidence shows that Western Union has a reasonably sound financial structure, a reasonable ratio of current assets to current liabilities, and a remarkable earning record over a long period of years. While the trend of reve nues as compared with the previous year started to decline after the first quarter of 1937, it has not been shown that this downward trend may be expected to continue or that its business is on a permanently lower basis."

The judgment of the Commission was borne out by the fact that the temporary downward trend in 1938 was, in fact, reversed sharply in 1939, and since that time, operating revenues have steadily increased. Income, before taxes, bas climbed from $1,380,000 in 1939 to $13,567,000 in 1944, and net income, after taxes, has increased, since 1939, by over 500 percent. Dividends have been paid on outstandng stock for many, many years, with the exception of four of the depression years. Even in 1932, when the company showed a net loss, it managed to squeeze out a dollar a share for dividends and, in recent years, it has been paying dividends regularly.

In 1943, Western Union filed an application with the Federal Communications Commission for leave to merge with Postal Telegraph. Extensive hearings were held before the Commission on that application and many days of testimony were taken bearing on the financial condition of the company. In order to approve the proposed merger, the Commission was required by law to make a finding that the merged carrier would be in sound financial condition. The Commission did so find. We will not here repeat the extended discussion by the Commission of the company's financial situation. It pointed out that for the ten years ending December 31, 1942, a period of nation-wide economic depression, the company had reported a total net income, after taxes, of almost $42,500,000. During the same period, Western Union increased its plant and equipment by almost $14,000,000, reduced its long-term debt by almost $27,500,000, and paid dividends of almost $10,000,000. The Commission found, in accordance with the claims made by Western Union witnesses at the hearing, that the acquisition of Postal's business would result in great savings to the company and in substantially increased profits. It was the company's contention at the hearing that merger would result in additional net income to the merged company of almost $8,000,000 before taxes.

The annual report submitted to the stockholders by the present management of Western Union was far from pessimistic about the future of the company. It was pointed out that, during the year 1944, the first full year after merger, current total assets were increased by $750,000, and current liabilities were reduced by over $10,000,000. A surplus was shown on the balance sheet as of December 31, 1944, in the sum of $62,765,000. Management entered into an extended discussion of plant improvements which were contemplated as soon as the war war over and anticipated greater savings and higher profits in the years to come. Expert financial opinion outside the company has a similarly high opinion of the company's financial position. A recent prospectus issued by Ira Haupt & Co., a leading member of the New York Stock Exchange, points out that after the war, total earnings of $12 a share are likely. Even assuming a substantial fall-off in business after the war, it was estimated that merger would enable Western Union to achieve savings in its own expenses equivalent to $1.30 a share and to earn on business brought in by Postal, about $2 a share. It was pointed out that the competitive position of Western Union was steadily improving, that between 1932 and 1944, some $42,000,000 worth of debt had been paid off, and that prospective refunding operations for its current debt would result in substantial saving. It was pointed out that the physical plant was in good condition and that the mechanization program under consideration would mean potential expansion and increase, both in business and in earnings. Postwar earning possibilities were rated very high.

We might add, in passing, that the panel report in case 388, likewise, considered the company's contention of lack of ability to pay, and found, again, that the company was in good financial condition. It might also be noted that, despite the the company's fears as to its inability to pay the increases ordered in case 388, in fact it paid not only those increases, and the increases ordered in case 909 (the A. F. of L. case) and also in the so-called wage parity case, and-as the company admits in one of the briefs submitted at the hearing-it even made a slight profit.

So we find that this company is not in bad financial condition-that, on the contrary, it today stands in good financial condition, has a good credit position,

has paid dividends regularly, has paid much of its outstanding indebtedness and, therefore, is clearly in a position to pay substantial wage increases.

The company's entire case on inability to pay rests on the assertion that net income, before taxes, in 1944 would have been wiped out had the present wage award been effective at that time. This, again, is an assertion. There is no evidence at all in the record as to how much the present wage award would amount to and, therefore, no way of telling whether the company's assertion, even if we take it as the basis for determination of this question, is accurate. More basic to the entire question, however, is the fact that Western Union past earnings are absolutely no guide to its future earnings. This company has just announced a major program of postwar mechanization which will, within the next 10 years, completely change its method of operations. Virtually all of the present physical plant of the company will be scrapped and a new plant created which, according to company estimates, will result in faster, more accurate and much more economical service. It is impossible to compare the cost of the wage award with past earnings and come up with anything having the slightest relevance to future earnings, expenses, and income.

As we stated above, the company has completely failed to submit any estimate as to the cost of the proposed wage award. Having had considerable experience with company estimates in the past, we would be loath to accept at face value any estimate made by the company, but at the present we do not even have figures which we can challenge. There is, likewise, nothing in the record as to the savings which would inevitably flow from a wage award which would increase wages and thus provide a more stable labor force and increased productivity of workers. No information appears in the record as to the mechanization program, which was given wide publicity by the press during the very course of the hearings, and no suggestion as to the savings which the company anticipates from such extensive mechanization. In the absence of information on these and many other items, obviously this Board is in no position to find that the company is unable to pay. In the absence of such proof, the Board must deny the company's contention.

We believe that the following questions must be answered before any determination can be made by the Board as to inability to pay:

1. What is the cost of the wage award directed by the regional board?
2. What will be the effect of a higher wage scale on turn-over?

NOTE-Turn-over currently is very high running at about 42 percent a year, exclusive of messengers. About 80 percent of the quits occur among the junior and lower-paid employees. Preliminary surveys by the union indicate that at least 60 percent of the quits are the result of low wages. The increase ordered by the board would probably cut the quit rate at least by 45 or 50 percent. 3. What will be the effect of higher wages and, hence, a lower quit rate on the company expenditure for training?

NOTE-The company spends $2,700,000 annually for the training of new employees. With a lower quit rate, this figure can be materially cut. At least $1,500,000 can be saved by the company from this source if wages are increased. 4. What will be the effect of a lower quit rate on premium overtime pay? NOTE.-At the present time about 29.5 percent of the company's pay roll, both locally and Nation-wide, is expended for premium pay under the Fair Labor Standards Act. In New York, this amounts to about $3,600,000 annually and, for the rest of the Nation, to about $22,750,000. Of course, all of this could not be eliminated even were there no force shortage, since about half of it is guaranteed under existing labor contracts, and a certain percentage of overtime is probably inevitable in the telegraph industry. There is no doubt, however, that with the decrease in force shortage which would result from higher wages, savings between $5,000,000 and $7,500,000 could be made annually in the premium overtime bill of the company.

5. What would be the effect of higher wages and, hence, a more stable force, on absenteeism, and what is the present cost of such absenteeism?

NOTE.-Many employees currently are working between 60 and 70 hours a week regularly. This company is no exception to the general rule that a high rate of absenteeism inevitably follows upon such a working schedule. A more stable force would cut down absenteeism and result in a substantial saving to the company. We are not in possession of any facts which would justify even a guess as to the savings in this direction.

6. What other savings in operations would result from a more stable labor force?

NOTE. Some of these savings may be imponderable but are nonetheless real. For example, a more stable working force would result in greater speed of service and, hence, more satisfactory service, and thus would enable the company to maintain its position in the face of competition from other forms of communications. Other items of savings could undoubtedly be estimated, had we sufficient information on hand. For example, many of the older employees could be pensioned at substantial savings to the company if it were not confronted with a serious force shortage. Premium pay on holidays could likewise be cut down.

7. What are the prospective profits for the year 1945?

NOTE.-The company has introduced evidence that its profits, before taxes, in 1944 amount to about $13,500,000. However, monthly statements issued since that time show a very substantial increase over that figure. For the first 6 months of 1945, the company showed substantially greater profits than for the corresponding period in 1944. There is no evidence at all in the record on this point, but it is clear that the figure of $13,500,000, used by the company, is not an accurate one.

8. What are present plans for the refunding of the company's 1951 maturity 5-percent bonds?

NOTE.-The company recently had an offer for the refunding of those bonds, which total $25,000,000, at 4 percent instead of 5 percent, thus realizing a saving of $250,000 a year in capital costs. In addition the company has another outstanding bond issue of 1960 5-percent bonds amounting to $35,000,000 and an additional $20,000,000 of mortgage bonds carrying 4% percent interest which mature on May 1, 1950. We understand that plans are afoot to refund the $35,000,000 bond issue. We know nothing about plans with respect to the $20,000,000 issue. If all of these could be refunded at 4 percent, additional savings of about $700,000 a year in capital costs could be realized.

9. What will be the total cost of the company's projected mechanization program?

NOTE. Our understand is that the total cost of this program will be $63,000,000 spread out over a period of the next 10 years. However, there is nothing in the record about it.

10. What is the nature of this mechanization program?

NOTE. There is nothing in the record about this either. However, it is our understanding that there are three primary elements to this program:

(a) The substitution of high-frequency radio beams for the transmission of intercity messages, in place of the present outside wire plant.

(b) The substitution of automatic reperforator transmission in place of the present manual system of relays.

(c) The substitution of Telefax transmission for intracity communication in place of the present teleprinter transmission.

11. What will be the saving to the Company as a result of the substitution of high-frequency radio transmission in place of present wire telegraphie transmis

sion?

A. How much would be saved by canceling contracts between Western Union and the railroad companies?

NOTE. At the present time the Western Union outside wire plant is the subject of a series of contracts between Western Union and numerous railroad companies, along whose rights-of-way the pole lines of the company run. It is the opinion of many experts in the field that these contracts have been the source whereby the railroad companies have been milking Western Union for decades. Western Union is almost completely controlled by railroad interests currently. B. What is the present scrap value of the outside plant of Western Union? C. What would be the saving in maintenance costs by the elimination of both material and labor presently expended in keeping up the outside plant of the company?

NOTE. It is somewhat difficult for us to estimate this. We do know that there are several thousand employees whose sole duties consist in maintaining the outside plant, and that most of these employees would be eliminated as a result of the mechanization program of the company. We also know that the outside plant of the company is very old, is in comparatively bad shape, and that the cost of maintenance is quite high. We would estimate that, very conservatively speaking, the savings that will result from the substitution of wireless for wire transmission of telegraph messages would amount to an average of at least $200,000 a year for the next 10 years.

12. What will be the saving to the company as a result of the substitution of automatic reperforator relay for present manual relay?

NOTE.-Reperforator relays have been put into use in several large cities, including St. Louis, Washington, Atlanta, and Richmond, and some statistics must be available as to the savings effected in those cities. It is our understanding that the present cost of the terminal handling of messages is about 4.8 cents a message and that the installation of automatic reperforators will cut that cost down to about 1.8 cents a message. Estimates have been made that the savings effected by the installation of automatic reperforator systems throughout the country will amount to an average of $7,750,000 annually for the next 10 years.

13. What will be the saving to the company as a result of the substitution of Telefax for teleprinter transmission of intracity traffic?

NOTE. Telefax is already in use in New York to a limited extent and in many other places. We cannot estimate exactly the full amount of savings which will result from its projected extension. We think that an average annual saving of $1,250,000 for the next 10 years is conservative.

14. How is the mechanization program of the company to be financed? NOTE. There is nothing in the record on this, although there has been some discussion in the public and trade press. We might point out in this connection that the credit of the company is excellent and the company recently had an offer from Wall Street banking houses to underwrite a proposed bond issue to refund the existing 1951 maturity 5-percent bonds amounting to $25,000,000. Banking interests agreed to underwrite the new issue at 4 percent. There is every indication that much larger sums could be raised without the slightest difficulty for mechanization or for any other legitimate purpose.

15. How soon will the benefits of mechanization be realized by the company? NOTE. The company intends to start its mechanization program immediately. Undoubtedly, the benefits will be greater at the end of 10 years than they will at the beginning of mechanization, although substantial benefits will undoubtedly be realized in the first year of the mechanization program. The installation of reperforator equipment in a few cities has already resulted in substantial savings.

16. How much is available to the company for wage increases?

NOTE. Obviously, no definitive answer can be made to this question. We have estimated the savings from mechanization to approximate $9,300,000 over the next 10-year period, and we have been unable to estimate some of the items of saving which will undoubtedly be realized by the company. On savings from sources other than mechanization, we have estimated between $7,200,000 and $9,700,000, exclusive of many items concerning which we do not have sufficient information. In addition to these items, the current profit return of the company is about $14,000,000 a year. On this basis, a minimum of between $30,000,000 and $33,000,000 a year should be available to the company. This will not only provide for the wage increase ordered by the board, but a handsome dividend return as well.

EXHIBIT 48

STATEMENT OF THE AMERICAN FEDERATION OF HOSIERY WORKERS AFFILIATED WITH THE CIO THROUGH THE TEXTILE WORKERS UNION OF AMERICA ON THE EARNINGS AND WAGES OF WORKERS IN THS HOSIERY INDUSTRY

The American Federal of Hosiery Workers represents workers in both sections of the hosiery industry, the full-fashioned and the seamless. In the former, stockings are made shaped to fit milady's legs. Seamless hosiery plants produce infant's, children's, and men's hose as well as anklets and full-length seamless stockings for women. It is in these mills that serious substandard wages are found.

A small percentage of the full-fashioned hosiery workers find their pay less than 65 cents an hour at present. A number of full-fashioned mills, particularly in North Carolina, have recently instituted a 65-cent minimum for their employees. No matter how small the number, however, the workers who receive less than that figure suffer the same hardship brought about by a low standard of living.

The seamless hosiery industry has suffered from the results of serious internal competition for a great many years. This competition since the boom years