In 1926 Congress passed the Railway Labor Act creating the National Mediation Board. In this act were provisions insuring freedom of choice to the workers in selecting representatives for the purpose of collective bargaining. The new Act was tested in the courts the next year when a railway labour organization ap plied for an injunction against a carrier which was attempting to defeat these provisions by interfering in the selection of repre sentatives and counteracting union activity with the formation of a company union. This time the reception of the courts was more hospitable. The injunction was granted and the Supreme Court affirmed the decree in a decision which virtually overruled the Adair case. This case, Brotherhood of Railway Mail Clerks v. Texas and New Orleans Railway, by extending the scope of permissible legislation in this field paved the way for the inclusion of similar provisions in the National Industrial Recovery Act. In Section 7(a) of this measure it was directed that every code should contain provisions guaranteeing to employees the right to bargain collectively through representatives of their own choosing and to be free from the interference of employers in their self organizations.
In the early history of the Recovery Act an agency known as the National Labor Board, made up for the most part of promi nent industrialists and officials of the American Federation of Labor, was created to deal with labour disputes arising under the codes. Such disputes were numerous for union labour had taken advantage of the protection promised by Section 7(a) to organize workers in industries which hitherto had been largely open shop. Moreover the technique of framing the codes tended to stimulate the desire for organization. The labour provisions were drafted after hearings at which employer and employee representatives appeared—thus making it to the advantage of both parties to foster organization.
The employer's associations which had largely acquiesced in wage, hour and child labour provisions of the codes, were opposed in general, however, to craft, or industrial unions organizing their employees under the aegis of Section 7(a). As a result the Board which had no power over either the code members or the code administrators made little headway in resolving the ensuing welter of industrial disputes. Congress replaced it in 1934 with an agency created in connection with the Department of Labor con sisting of three impartial members and known as the National Labor Relations Board. The Board had final administrative juris diction over disputes under Section 7(a) and power to order and conduct elections of employee representatives. Its decisions were
not subject to review by any other agency in the executive branch of government.
Upon the principles contained in Section 7(a) the new Board created a body of law to define rights and duties arising from the employer-employee relationship. It was held that employers could not discharge or discriminate against employees because of union activity, but the employer was obligated to bargain col lectively with the representatives of his employees and to reach a collective agreement. Company unions were not per se illegal. But it was interference for an employer to impose a company union or to sponsor and finance such an association. Employees were not compelled to organize. They were not constrained to join any particular form of organization. The choice was for them to make. To give content to the right of organization the Board affirmed the principle that representatives elected by the majority of a bargaining unit, were the exclusive bargaining agency of all the employees in that unit.
Various organizations of employers attacked this line of de cision as imposing a closed-shop on American industry and inter fering with the constitutional rights of American employers. Many of them refused to comply with the orders of the Board, or even to respond to a citation. Since the Board lacked power to issue subpoenas, except in connection with ordering of an employee election, the Board was unable to send complete records of its cases to the courts. This meant that an employer defying the Board could obtain a trial de novo if prosecuted in the courts.
In order to strengthen the powers of the Board and to prevent review of its decisions in the courts, except upon questions of law, the Senate passed a bill, the National Labor Relations Act of 1935 which gave the Board power to issue subpoenas, to make orders for the reinstatement of the discharged workers and to hold elections. The Circuit Courts of Appeal were given the power of review but this was restricted to the record. The princi ples enunciated by the old Board were embodied in the sub stantive provisions of the bill. The majority rule was stated. The bill defined as unfair labour practices, the financing and domina tion of company unions, the refusal to bargain collectively, and anti-union discrimination. Before the House acted on this bill, the suspension of the codes following the Schechter case deprived the Board of all jurisdiction over the litigation then pending. The bill was amended so as to limit the jurisdiction of the new Board to disputes affecting Interstate Commerce. In this form the bill was finally enacted into law.