If the boatowners also established prices, then they could bargain effectively with the boatowners for the prices which determine their wages. But the boatowners do not establish prices, and our problem is not that fishermen are refused recognition as employees of the boatowners, but the fact that their wages are set by the canners in large measure is a fact which the law ignores, and by ignoring it, it deprives them of the opportunity to bargain for their wages. It is this evil that we want cured.

Senator BARTLETT. Upon what basis are they paid?

Mr. MARGOLIS. They are paid upon the basis of a share of the catch. I might say, Senator, that this is not any recent development. I don't know how far it goes back, but it probably goes back to the early orgins of the fishing industry, and there are very, very good economic reasons for it which I would like to discuss in a moment.

But they receive, in effect, a share of the price which the boatowner receives. If the boatowner receives nothing for the fish, they receive nothing.

Let me give you an example. There may be a contract between the boatowner and the union that the crewmembers will receive 50 percent of the catch to be divided among a 12-man crew. This means that each crewmember, subject to certain deductions which are provided for in the contract, which deductions, by the way, include the items of expense in running the boat, subject to those deductions, each crewmember will receive one-twelfth of 50 percent of the amount which the boatowner receives. So that unless the amount which the boatowners receive is determined as part of the contract, then the wage is not determined.

I was talking to John Budrovich, who was the president of local 33, during the lunch hour, and he said, "I have just $400 knocked off my wages." He went out fishing on a boat. The price was $290 per ton. When he came back the price was cut after two successive cuts to $250. Now, the union had no voice in that cut. Mr. Budrovich had no voice in that cut. It was just handed to them, and they were told, "This is it."

If the union under the existing law were to go to the canner and say, "You have cut our wages and you can't do this to us, we want to bargain with you to prevent you from cutting our wages," they would be violating the law. This is not right and ought to be corrected.

Senator BARTLETT. Let me ask you about that. You say, "violating the law." What law?

Mr. MARGOLIS. The antitrust laws. The theory is that the fishermen are then fixing prices. The fishermen are not interested in fixing prices; they are interested in fixing their wages, which they have a right to fix. The mere fact that this industry has chosen, and perhaps necessarily so, as a method of compensating the fisherman the share method, and a method where wages depend upon prices, should not deprive the fisherman of the right to bargain for their wages. You know, I think the fishermen would be the happiest people in the world if the boatowner were to say, "From now on we will pay you $3 an hour for every hour that you are on the boat, $4.50 for overtime, whether we catch any fish or we don't."

I am not trying to set wage rates, but I am just giving that as an example. But because of the nature of the industry this is probably not practical. It is probably not possible for an individual boatowner to say, "If we go out for a 100 days and come back with no fish, I am still going to pay you for that 100 days, three and a half months, a salary of $1,500."

Senator BARTLETT. Has it been judicially determined that fishermen would be violating the antitrust law if they sought to arrive at fish prices?

Mr. MARGOLIS. Oh, yes.

Senator BARTLETT. Would you give us the citation?

Mr. MARGOLIS. Yes, I will. May I do that in the course of discussing the history of this?

Senator BARTLETT. No hurry at all.

Mr. MARGOLIS. I will do that in the course of discussing it.

In any event, let me make this point clear: It is because of this economic relationship, Senator, that the collective bargaining history in the fishing industry has developed as it has. It is no accident that when collective bargaining began in this area it was three-way collective bargaining. This did not come about as a result of a conspiracy; it did not come about because the fisherman wanted to raise the prices that the consumer was going to pay for fish; it came about because this was the only way that the fisherman could determine their wages, could bargain concerning their wages. What happened was, that before there was organization in this area, before 1933-and I am talking not about organization in this area, before 1933-and I am talking not about organization elsewhere, but organization in the southern California area-before 1933 it was the practice simply for the canners to announce a uniform price to be paid by all canners in the Los Angeles Harbor area, and all the crews on the boats would be paid a share of that price. There was no bargaining at all.

The first collective bargaining agreement in San Pedro was assigned in November of 1933, and it had the following parties to a single agreement: The California Sardine Products Institute, Inc., a canners association, and their individual members, three boatowners associations and one fishermen's union at that time-it later broke up into three unions, but at that time there was only one fishermen's union. So that you had as parties to the same collective bargaining agreement the boatowners, the canners and the unions, and nobody thought it was an odd thing because everybody recognized the fact that each of the parties to this agreement had a basic interest in the determination. of the price which would be paid and the price upon which the fisherman's wages would be based.

Now, what happens? This kind of negotiations continued, and by the way, in sardines the three-way negotiations used to take place initially on a coast wide basis, and then there would be local negotiations. Contracts would be signed with all three parties to the contract, and this was a period during which the industry was growing and was flourishing. The consumer wasn't being hurt. The consumer was doing better in those days than he is doing now. The industry was flourishing and the fisherman had a voice in collective bargaining.

Some time, I believe, in about 1946 there was a case came up-and this has been fully reported, covered in the earlier reports-the Hinton case-I don't remember whether it was Portland or Seattle-but it was somewhere up north. It was primarily a case which was concerned with the question of the closed shop, where a union was seeking a closed shop.

But in the course of handing down that decision the Supreme Court of the United States, I believe in 1949, held not only that the closed shop was illegal but indicated that the fisherman had no right to bargain with respect to the matter of prices even though prices did determine their wages.

Now, I must say that there was an unfortunate aspect of that case, and that was that it was tried without any real economic data being presented to the court, without the kind of an argument that we are making here about the economic reality of the situation, really being presented to the court.

Then what happened was this

Senator BARTLETT. What year was that?

Mr. MARGOLIS. I think the Hinton decision came down about 1948. May I say this, this matter is excellently covered-the reason I didn't get the details of this is because it is excellently covered, and the dates and everything are in there, in an article which appears in the hearings on Senate bill 3093, the predecssor to this bill, by Roger L. Randall. It begins on page 5 of those hearings, and I might say that I, from personal experience, know that the facts in here are accurate, and it is an excellent exposition of the collective bargaining history up until 1950. It leaves out one or two things which I will

cover.

Mr. SCHELLENBERGER. That was in 1942.

Mr. MARGOLIS. But that was when it was instituted, isn't that right? Mr. SCHELLENBERGER. That was the decision of the Supreme Court, that was in 1942.

Mr. MARGOLIS. Yes, 315 U.S. 143. It is in a footnote here on page 6.

In 1946, and here I want to cover things that are not in that article, in 1946 there was a case started here in Southern California, United States v. Local 36. I was counsel for local 36 and was one of the attorneys who participated in that case and participated in the proceedings which led to the demise of that union.

That union was a union of small boatowners. As I remember it, the boats by and large had somewhere between one and three crewmembers. They delivered a substantial portion of their fish to the fish dealers, but they also delivered fish to the canners.

Local 36 at that time engaged in collective bargaining with the fish dealers and established prices at which the boats would sell their fish to the fish dealers. As far as the cannery prices were concerned, those were established by collective bargaining between local 33 and two other locals then in existence and the canners.

The charge was that this was an illegal conspiracy to establish prices. In that case there was a thorough presentation made of the economic considerations, but on appeal-and in Local 36 v. United States at 177 Fed. 2d 320, decided on September 28, 1959-I guess that is where I got the 1949 date-decided on September 28, 1949, the

Court of Appeals for the Ninth Circuit affirmed, relying primarily on the Hinton case; in other words, the Hinton case which had gone up to the Supreme Court and in which the economic material was not really presented, constituted the basis for the decision in local 36, in which there was a presentation of the economic material. That is the case in which Mr. Eden worked and did a brilliant job in preparing the economic material, but it did no good in the end result.

The result of this decision was to destroy the union. That unionI don't know whether it lasted as long as 1960-but certainly not after that. The individual fishermen have become absolutely helpless in their dealings with the fresh market wholesalers, The consumer has gained nothing by the result of this decision, because if you go out to buy fresh fish on the consumer market you will find that you are paying more than you did at that time, considerably more, but the fisherman is absolutely helpless.

You saw an exhibit which Mr. Eden prepared as to what has happened to the small boat fleet in this community, and remember that this has happened to the small boat fleet in this community at a time when there was a tremendous rate of growth of population in the Southern California area.

I don't have the figures on that, but from 1949 to the present time I thing the rate of increase has been something like 250,000 a year. We have about one-half of the fresh boat fleet that we had in 1949. I say it is directly the result of this decision, because without any security, without knowing what they are going to get, only the most desperate man is going to continue in this kind of an industry.

Senator BARTLETT. Well, Mr. Margolis, what effect, if any, then, did the 1954 Federal Trade Commission decision

Mr. MARGOLIS. I am going to come to that.

Senator BARTLETT. All right. Then let me rephrase my question. Collective bargaining had ceased before the Federal Trade Commission

Mr. MARGOLIS. May I

Senator BARTLETT. You approach it in your own way. Mr. MARGOLIS. I probably was not clear. Local 36 was a union consisting of boatowners and their employees or partners. See, these were small boats. Local 33 does not include boatowners. Local 33, which is the union which represents the fishermen on the boats that fish exclusively, by and large, for the canners, the bigger boats, represents only employees. So that the Local 36 case, while it pointed the way to what was going to happen to local 33, did not conclusively determine that local 33 could not collectively bargain.

As a matter of fact, local 33 continued to collectively bargain until shortly after this decision was rendered. But in 1950 the U.S.

District Court for the Southern District of California, Central Division, in criminal case No. 2137, indicted local 33 and its officers for violation of the antitrust laws, based upon their bargaining with the canners and the setting of prices pursuant to such bargaining. Senator BARTLETT. What year?

Mr. MARGOLIS. That was in 1950.

Now, that is the point at which bargaining with the canners was stopped.

Local 36 had just gone through a terribly long-drawn-out and expensive fight. It had been helped by local 33. It looked at that point as though it couldn't win this case. It didn't have the financial sources with which to fight it, and therefore the officers entered a plea of nolo contendere, which, as you know, Senator, means “We don't admit guilt but we don't oppose the indictment. We are not going to contend it."

This was accepted, along with an agreement which was entered into by the union at that time to discontinue the practice of bargaining between the unions and the canners.

But the whole story still isn't told because there is another step. At that time the union said, "We will do the best we can." And there was sort of a musical chairs operation going on for a few years. after that. The union would go to the boatowners and say, "We want to negotiate with you on price." That was perfectly proper. And then they would say, "We want so much."

The boatowners would run over to the canners and they would say, "This is what the union wants, and this is what we want to get."

But there wasn't really any bargaining between the boatowners and the canners for the simple reason that the real bargaining power lay in the unions, and the unions were not confronting the canners. The boatowners' associations were largely errand boys. They were playing no really independent role. The role of the union was greatly diminished because of the fact that it had to act through an intermediary not of its own choosing, but it had to act in effect through an intermediary over which the canners had the greatest economic power imaginable.

But, in any event, there was some form of bargaining. There would be an agreement for price between the boatowners' association and the canners, and that same price would then be incorporated into the agreements between the union and the boatowners' association, or the individual boatowners, so that you still had uniform prices, and all of the canners paid the same price; all wages were based upon the same price. The only change that had happened had been that the collective bargaining process had been interrupted and had been to a considerable expense made fictional and weakened, and that is still not the end.

Even this weak collective bargaining was destroyed by what happened in August of 1956. There was an earlier Federal Trade Commission proceeding up north, Senator. But the Federal Trade Commission proceeding which affected us here, at least which affected the unions here, was filed in August of 1956, and it was docket No. 6623 in the matter of California Fish Canners Association, Inc., and it named all of the canners' associations, all of the canners, all of the boatowners' associations, and all of the unions, and it charged a gigantic conspiracy to fix price.

What is it that the boatowners were doing that was wrong or the boatowners' associations, according to the Federal Trade Commission? They said to the boatowners' association, "A cooperative has the right to sell the fish of its members, but it doesn't have the right to bargain for the price at which its members will sell their fish to the canneries."