Evening star., 1955-05-22
The implications

If the trend toward purchase of
common stocks continues, what are
the implications?
Most union officials agree with
CIO General Counsel Arthur Gold
berg, who says there are no implica-
tions to discuss. Stock ownership
will not change unions point of
view. And unions will not use their
stock as an economic weapon in
securing contracts.
The officials reason this way:
Their financial power will be scat
tered in a myriad independent
unions, so no one union will ever
own enough stock to make a diff
ference. g
Opportunities to use stock as lev
erage are few-proxy fights. for in
stances. don't occur very often.
Unions don't want to take part in
management decisions. Professional
businessmen can do better job and
are there to be blamed If anything
goes wrong.
Not all union officials agree. Mel
son Cruikshank, the AFL's director
of social insurance activities, be-
lieves that if large sums Of money
do pile up in uncontrolled funds
and are used to buy common stocks,
the temptation to use stock to Bet
ter labor's bargaining position will
be great. Union officers are going
to develop schizophrenia if nothing
else," he said.
homogeneous Worries
Management spokesmen seem sure
the unions will use their funds to
pressure employers-just as unions
now use the economic pressure of
the strike.
A proxy fight, for instance, would
give wealthy union a chance to
offer to vote stock for the side
which would sign the best contract.
Or q union could buy enough stock
to demand and get minority seat
on q board Of directors, and thus
take part in management decisions
regarding labor. Or unions could
join in syndicates to buy into COM
panies that are particularly hard
bargaining nuts to crack.
Management also worries about a
union buying control of company
and then distributing all the profits
in the form of wages, by-passing
stock dividends.
Many of these worries seem far
fetched, but difficult situations do
appear to be possible.
At a Senate Labor subcommittee
panel discussion Of pension and
welfare fund money, some dangers
in common stock purchases were
pointed out. Welfare fund money
could be invested in the company
having the fund. The union could
be faced with an emergency. The
stock would have to be liquidated;
the company would suffer from a
sudden sale. possibly heightening
the emergency.
Or supposing the fund directors
decided to sell the stock just to find
better investment. Other investors
would then assume that the stock
was not a good investment and
would sell, too.
DiIemmos for Unions
There are other interesting posi-
5ilities one union official tossed out.
Supposing union owned stock in
a plant and then struck the plant.
The value of the stock would 60
down, undermining the unions own
financial position.
Or perhaps some union owns New
England textile stock. A move of the
company to the South could mean
bigger dividends, but would result
in lost jobs for other union mem
bers.
Again--a teakettle-maker's union
might own a chunk of a widget fac
tory. If the widget-maker's union
went on strike, the first union could
lind itself on management's side in
opposition to brother union.
Schizophrenia is right!
That's why most union leaders
swear they will stick to Government
bonds. But as the money piles up.
as unions gain more control over
the money and as initiation con-
tinues to make Government bonds
look like only part Of the answer to
the investment problem. the temta-
ton to buy common stocks may over
come that resolution.