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motions and demotions was deleted from the clause and made the subject of a special clause establishing a unionmanagement committee to pass upon promotion matters.

While these negotiations were in progress, the Board's Trial Examiner conducted hearings on the Union's complaint. The Examiner held that respondent had a right to bargain for inclusion of a management functions clause in a contract. However, upon review of the entire negotiations, including respondent's unilateral action in changing working conditions during the bargaining, the Examiner found that from and after November 30, 1948, respondent had refused to bargain in a good faith effort to reach agreement. The Examiner recommended that respondent be ordered in general terms to bargain collectively with the Union.

The Board agreed with the Trial Examiner that respondent had not bargained in a good faith effort to reach an agreement with the Union. But the Board rejected the Examiner's views on an employer's right to bargain for a management functions clause and held that respondent's action in bargaining for inclusion of any such clause "constituted, quite [apart from] Respondent's demonstrated bad faith, per se violations of Section 8 (a)(5) and (1)." Accordingly, the Board not only ordered respondent in general terms to bargain collectively with the Union (par. 2 (a)), but also included in its order a paragraph designed to prohibit bargaining for any management functions clause covering a condition of employment. (Par. 1 (a)).5 89 N. L. R. B. 185.

5 The Board ordered that respondent:

"1. Cease and desist from:

"(a) Refusing to bargain collectively with Office Employees International Union, A. F. L., Local No. 27, as the exclusive representative of all of its employees at its Galveston, Texas, office, excluding guards, secretaries to department heads and executives, agents, building and maintenance employees, professional employees, department

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Opinion of the Court.

On respondent's petition for review and the Board's cross-petition for enforcement, the Court of Appeals for the Fifth Circuit agreed with the Trial Examiner's view that the Act does not preclude an employer from bargaining for inclusion of any management functions clause in a labor agreement. The Court of Appeals further found that the evidence does not support the view that respondent failed to bargain collectively in good faith by reason of its bargaining for a management functions clause. As a result, enforcement of the portion of the Board's order directed to the management functions clause (par. 1 (a)) was denied. Other portions of the Board's order (pars. 1 (b) and 2 (a)) were enforced because respondent's unilateral action in changing working conditions during bargaining does support a finding that respondent had not bargained collectively in good faith as required by the Act. 187 F. 2d 307. We granted certiorari on petition of the Board for review of the denial of enforcement as to paragraph 1 (a) of the Board's order. 342 U. S. 809.

First. The National Labor Relations Act is designed to promote industrial peace by encouraging the making of voluntary agreements governing relations between unions

heads, and all other supervisors as defined in the Act, by insisting as a condition of agreement, that the said Union agree to a provision whereby the Respondent reserves to itself the right to take unilateral action with respect to rates of pay, wages, hours of employment, and other terms and conditions of employment;

[Paragraph (b) proscribes other conduct not pertinent to the issues before this Court.]

"2. Take the following affirmative action which the Board finds will effectuate the policies of the Act:

"(a) Upon request, bargain collectively with Office Employees International Union, A. F. L., Local No. 27, as the exclusive representative of all its employees in the appropriate unit described above with respect to rates of pay, wages, hours of employment, and other conditions of employment;

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6

and employers. The Act does not compel any agreement whatsoever between employees and employers." Nor does the Act regulate the substantive terms governing wages, hours and working conditions which are incorporated in an agreement. The theory of the Act is that the making of voluntary labor agreements is encouraged by protecting employees' rights to organize for collective bargaining and by imposing on labor and management the mutual obligation to bargain collectively.

Enforcement of the obligation to bargain collectively is crucial to the statutory scheme. And, as has long been recognized, performance of the duty to bargain requires more than a willingness to enter upon a sterile discussion of union-management differences. Before the enactment of the National Labor Relations Act, it was held that the duty of an employer to bargain collectively required the employer "to negotiate in good faith with his employees' representatives; to match their proposals, if unacceptable, with counter-proposals; and to make every reasonable effort to reach an agreement." The duty to bargain.

661 Stat. 136 ("Findings and Policies"); Consolidated Edison Co. v. Labor Board, 305 U. S. 197, 236 (1938).

Labor Board v. Jones & Laughlin Steel Corp., 301 U. S. 1, 45 (1937).

8 Terminal Assn. v. Trainmen, 318 U. S. 1, 6 (1943):

"The Railway Labor Act, like the National Labor Relations Act, does not undertake governmental regulation of wages, hours, or working conditions. Instead it seeks to provide a means by which agreement may be reached with respect to them. The national interest expressed by those Acts is not primarily in the working conditions as such. So far as the Act itself is concerned these conditions may be as bad as the employees will tolerate or be made as good as they can bargain for. The Act does not fix and does not authorize anyone to fix generally applicable standards for working conditions. . . .”

Houde Engineering Corp., 1 N. L. R. B. (old) 35 (1934), decided by the National Labor Relations Board organized under 48 Stat. 1183 (1934).

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Opinion of the Court.

collectively, implicit in the Wagner Act as introduced in Congress, was made express by the insertion of the fifth employer unfair labor practice accompanied by an explanation of the purpose and meaning of the phrase "bargain collectively in a good faith effort to reach an agreement." 10 This understanding of the duty to bargain collectively has been accepted and applied throughout the administration of the Wagner Act by the National Labor Relations Board and the Courts of Appeal."

10 Before the addition of Section 8 (5), now Section 8 (a) (5), to the bill, Senator Wagner described the bill as imposing the duty to bargain in good faith, citing the Houde Engineering case, note 9, supra. Hearings before the Senate Committee on Education and Labor on S. 1958, 74th Cong., 1st Sess. 43 (1935). Section 8 (5) was inserted at the suggestion of the Chairman of the Board that decided Houde. Id., at 79, 136-137. The insertion of Section 8 (5) was described by the Senate Committee as follows:

"The committee wishes to dispel any possible false impression that this bill is designed to compel the making of agreements or to permit governmental supervision of their terms. It must be stressed that the duty to bargain collectively does not carry with it the duty to reach an agreement, because the essence of collective bargaining is that either party shall be free to decide whether proposals made to it are satisfactory.

"But, after deliberation, the committee has concluded that this fifth unfair labor practice should be inserted in the bill. It seems clear that a guarantee of the right of employees to bargain collectively through representatives of their own choosing is a mere delusion if it is not accompanied by the correlative duty on the part of the other party to recognize such representatives as they have been designated (whether as individuals or labor organizations) and to negotiate with them in a bona fide effort to arrive at a collective bargaining agreement. . . ." S. Rep. No. 573, 74th Cong., 1st Sess. 12 (1935).

See H. J. Heinz Co. v. Labor Board, 311 U. S. 514 (1941).

The Board applied the good faith test of bargaining from the outset. 1 N. L. R. B. Ann. Rep. 85-87 (1936). Cases in the Courts of Appeal approving and applying the good faith test of bargaining are collected in 29 U. S. C. A. § 158, note 265.

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In 1947, the fear was expressed in Congress that the Board "has gone very far, in the guise of determining whether or not employers had bargained in good faith, in setting itself up as the judge of what concessions an employer must make and of the proposals and counterproposals that he may or may not make." 12 Accordingly, the Hartley Bill, passed by the House, eliminated the good faith test and expressly provided that the duty to bargain collectively did not require submission of counterproposals.13 As amended in the Senate and passed as the Taft-Hartley Act, the good faith test of bargaining was retained and written into Section 8 (d) of the National Labor Relations Act. That Section contains the express provision that the obligation to bargain collectively does not compel either party to agree to a proposal or require the making of a concession."

Thus it is now apparent from the statute itself that the Act does not encourage a party to engage in fruitless marathon discussions at the expense of frank statement and support of his position. And it is equally clear that the Board may not, either directly or indirectly, compel concessions or otherwise sit in judgment upon the substantive terms of collective bargaining agreements.

Second. The Board offers in support of the portion of its order before this Court a theory quite apart from the

12 H. R. Rep. No. 245, 80th Cong., 1st Sess. 19 (1947). 13 H. R. 3020, 80th Cong., 1st Sess., § 2 (11) (1947).

14 Note 3, supra. The term "concession" was used in place of "counterproposal" at the suggestion of the Chairman of the Board that the statutory definition of collective bargaining should conform to the meaning of good faith bargaining as understood at the passage of the Wagner Act. S. Rep. No. 105, 80th Cong., 1st Sess. 24 (1947); Hearings before House Committee on Education and Labor on Amendment to the National Labor Relations Act, 80th Cong., 1st Sess. 31743175 (1947). See H. R. Rep. No. 510, 80th Cong., 1st Sess. 34 (1947).