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Just after the National Recovery Act was passed, industrialists rushed to form Company Unions in order to get out of its labor clause, Section 7a. At that time, Administrator Johnson warned them that these unions would eventually get out of hand, and become a "Frankenstein that would eventually override them."

According to a report of Louis Stark in Sunday's New York Times, the prophecy is now fulfilling itself. In the steel and rubber industries, there is already a movement to join company union in the same industry into a large, independent organization. Where this has already happened, there have already been demands for higher wages and shorter hours. The idea seems to be spreading rapidly in all industries where heretofore the company-dominated employee representation plan has been in force.

There is no doubt, despite higher-wage purchasing-power theories of Recovery, that a general increase in wage-rates at this time would only accentuate unemployment. In some industries, there is more possibility that such increases would goad the management into more efficient methods of production, but it is unlikely that where the depression has failed to do this, higher wages could. In other industries or firms where large profits still exist, laborers may be able to take a larger cut from gross income. But a general increase in wage-rates, to repeat, like a rise in the price of anything else, merely means less demand for it, which in this case means more unemployment.

Labor Unions, naturally and logically, as long as capitalists take large, monopoly profits to the detriment of the whole of society, can never be induced to sacrifice their monopoly advantages for the benefit of the whole of society. There is no reason that they should. So the hope of the future lies in compensating for these anti-social tendencies in capitalist-economic life, with great sweeps of prosperity and production which will make them insignificant and unimportant.

If the boom investment and production is not strong enough overwhelmingly to counter-act these inevitable rigidities, then Labor Unions will conquer in their unconscious attempts to make unemployment as large as possible, and Capitalists will gain a splendid victory in contracting production as much as is monopolistically profitable and possible.

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