Labor and capital; a discussion of the relations of employer and employed

Front matter

class _itiLi*rz

Book_^filJ' J l_

COPYRIGHT DEPOSIT

Contents

PAGE

INTRODUCTION by rev. john p. peters,

d.d. ix

Appendix

a. Letter of Charles Francis Adams on Arbitration .....

b. Article of John Mitchell on Recognition of Trade-Unions ....

c. Extracts from address of Samuel Gom pers on Arbitration

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433 440

448 459

Introduction

THE extraordinary development of manufacturing industries in recent years and the increasing tendency toward the consolidation of those industries in vast combinations and corporations, together with the almost commensurate growth of labor organizations, has rendered labor disturbances a national danger. In the industrial sphere we have reached, or are fast reaching, a period of concentration and high organization similar to that attained in the political world. Wars were once almost the avocation of nations. Europe was never free from wars, conducted often on frivolous pretexts between some of its numerous kingdoms and principalities, but sometimes embroiling large areas. This was the normal condition of society. Gradually, with the development of industries and the increase of wealth, new conditions arose. Great nations took the place of small. War assumed constantly more formidable proportions and entailed ever greater sacrifices. The science of arms developed. More deadly weapons were invented. Armaments were increased. Finally the military organization of whole nations took the place of temporary levies. And this very perfection ofmilitary and national organization began to put a stop to war. It had become xiv Introduction

too costly, too destructive. Not that hostility between nation and nation has come to an end. They stand one over against the other, armed to the teeth, and the world trembles with apprehension of the outbreak of a war more terrible than any known heretofore. But just because war has become so terrible each hesitates to break the peace for fear of the disastrous consequences to itself which may ensue; and the disinterested nations, when war is threatened, hasten to put pressure upon the parties to the dispute to bring about a reconciliation, for, after all, they are themselves far from disinterested, since in the event of war they too will suffer by the loss of markets in which to buy or sell, and it may well be that they also will become embroiled.

A somewhat similar condition we have almost reached in the industrial world. Employers* and employed stand over against one another in great organizations, a conflict between which may mean national disaster, as we have learned from the experience of England in the strike of the engineering trades in 1897, which cost her her industrial supremacy. Thorough organization of both sides in great masses renders war between employers and employed less common, but if it does come it is vastly more disastrous. And there are two sides, well trained, well organized, which can be mobilized almost at a moment's notice. Who can tell what spark may inflame passion and kindle a conflict more costly than any hitherto known? The attitude of employers and employed toward one another has become a matter of supreme national importance.

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How can we render conflict impossible? How can we bring employers and employed together in relations of permanent and stable peace and co-operation?

Genesis of the Book. — It was the threat of a great national disaster which might develop out of the conflict between the United States Steel Corporation and the Amalgamated Association of Iron, Steel, and Tin Workers in the summer of 1901 which was the initial cause of this book. In the heat of that conflict, as the result of some preliminary correspondence the Bishop of New York addressed the following letter to Mr. Hearst.:

Hawk Island, Lake Placid, N. Y., Aug. 20, 1901. W. R. Hearst, Editor the N. Y. American and Journal :

My Dear Sir: — It would take a volume to answer the long list of questions which the present labor situation has brought forth, and when they were answered what would they be but truisms in the labor controversy, e. g., " That employers should make concessions, that violence should be avoided, that arbitration should be employed, ' ' etc.?

I confess the gravest question seems to me to be, "How can working men and employers be helped to a better understanding of their mutual interests, and, indeed, even before that, of the fact that their interests are mutual ? ' '

There is something infinitely pathetic in the effort of Mr. Shaffer and his confreres to " play politics " in outwitting the corporations.

It is all so futile and mischievous, and instead of encouraging it and lending itself as it is constantly doing to inflame class hatreds, would it not be worth while for xvi Introduction

the press to try and educate the ignorant to some intelligent understanding of social problems ?

A symposiujn of clever men discussing the question of wages, common ownership of plants, land — anything to make the people "thiiik" is what is wanted.

If you would print chapter by chapter such a book as Mallock's Labor and the Popular Welfare 1 and then get such men as Mr. Crosby or Mr. Gompers or some others to undertake to discuss it, then a newspaper would be doing real good.

The communication from Mr. Charles Francis Adams 2 to which you call my attention is admirable — so far as it goes — and his suggestion that there should be somewhere a commission or court of appeal in the realm of our social economy where differences between employers and working men should go, and that by common consent, born of a sound public opinion — which, if I understand it, is in substance the burden of Mr. Adams' communication — is altogether excellent.

Unfortunately the difficulty lies further back. You must, first of all, provide somehow "a sound public opinion."

If, on one hand, we have large indifference, commercial greed, impatience of any other considerations than those involved in the doctrine of demand and supply, and if, on the other, you have the resentment provoked by real or fancied wrongs, imperfect apprehension of fundamental economic truths, exaggerated estimates of the value of particular specifics for the cure of existing conditions, or blind and unreasoning devotion to a particular leader, you have hardly the elements for

1 " Or better yet, Mr. Henry Wood's Political Economy and Humanism." — Extract from later letter.

2 Printed in the appendix.

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making " sound public opinion." And yet, if you are to avail yourself of them, you have them at hand.

The press, which you must pardon me for saying in all frankness, has not always, in seeking to befriend labor, really been eager to serve its best interests, must here make the inexorably necessary beginning by refraining from exaggeration and discouraging heated speech. To inflame passion, to pervert facts, to withhold qualifying considerations which sometimes alter the whole aspect of a particular question, these are methods for the poorer and least creditable type of a jury lawyer perhaps, but they are not those of a great public teacher and enlightener, such as a newspaper of the first class should be.

I do not need to be told at this point that the sensational policy is usually most effective for selling a newspaper, but I think it would be worth while for the press, even from a purely commercial point of view, to consider whether a policy which inflames the popular judgment, but does not enlighten it, may not involve in its consequences destructive forces which do not discriminate as to where they strike, and which, in pulling down, like Samson, the structure of which they are a part, perish with their enemies in its ruins. Surely there is some better way than that, and surely it is worth while for the press to try and find it out.

If you can secure, therefore, as already mentioned, the aid of competent minds representing the different points of view on the labor question in its largest aspect, and if they are willing to discuss it without prejudice and without invective, two results at least may be obtained — a large group of facts, now little recognized, will be brought into view, and all reasonable men, of whatever calling or theory, will be constrained to own, first, that xviii Introduction

there is no single short-cut, patent-applied-for remedy for a situation so complex; and second, that along lines of mutual consideration and concession that solution is not to be dismissed as impossible.

To lead men to " think " and " know," not to shout or to shriek or to strike, that is the best service you can render. For then, when the time comes that they must both shout and strike, they may hope to do so to some purpose.

Sincerely yours,

Henry C. Potter.

Mr. Hearst decided to adopt very literally Bishop Potter's suggestion, and to make the experiment of a symposium in the great daily paperscontrolled by him, The American and Journal, of N. Y. , Hearst's Chicago American, and The Examiner, of San Francisco, on the subject How can Labor and Capital be Reconciled ? At Bishop Potter's suggestion I was asked to organize and conduct this symposium. It began with the publication of Bishop Potter's letter, August 25, 1901, and continued, with some interruptions, occasioned by the assassination and death of our President, until November 3d, covering more than fifty large newspaper pages. College professors, national and State officials, ecclesiastics, lawyers, philanthropists and reformers, men of affairs and labor leaders, responded readily to my requests for contributions, and so ably that from all sides came a demand for these papers in a more permanent form than the columns of a daily paper. Hence this volume.

Questions Asked and Answered.— As Bishop

Introduction xix

Potter had said in his letter: "I confess the gravest question seems to me to be, ' How can working men and employers be helped to a better understanding of their mutual interests, and, indeed, even before that, of the fact that their interests are mutual? ' I addressed to each contributor, first of all, the general question: "Are the interests of employer and employed mutual, and, if so, how can this mutuality of interest be made effective? " In accordance, also, with Bishop Potter's suggestion, Mallock's Labor and the Popular Welfare was printed in the symposium chapter by chapter (in substance), with a view to eliciting discussion. It certainly accomplished its purpose so far as drawing correspondence from all parts of the country was concerned ; but does not appear to have affected in any way the regular disputants. Further, one or more special questions were addressed to each contributor. Consequently the articles in this book have, as a rule, two parts, one which deals with the general questions of the reconciliation of labor and capital, as in the title of the symposium, and the mutual interests of employer and employed ; and one which deals with certain specific questions. Those questions, as originally propounded, were as follows:

1. Are so-called trusts or giant incorporations beneficial to employed as well as to employers? How?

2. Are labor unions beneficial to employers as well as to employed? (Suggestions how they might be made beneficial or more beneficial.)

3. Is it necessary or desirable that labor unions xx Introduction

be incorporated to make them legally and financially responsible for contracts and agreements?

4. Could labor unions, if incorporated, rely upon fair treatment from the courts? (How about methods of legal procedure; " government by injunction," legal delays which put the capitalist at such an advantage as to amount to denial of justice to the laborer, etc. ?)

5. Is compulsory arbitration, enforced by law, desirable, and, if so, under what conditions?

6. How can voluntary arbitration in case of labor disputes be made effective?

7. Does the laborer receive his fair share of the joint product of labor and capital (in view, for example, of the immense increase of earning power through use of machinery)? How are the relative shares of capital and labor to be apportioned?

8. To what extent can, in your judgment, the apparently conflicting interests of capital and labor be unified through profit sharing?

9. Results of experience in so-called model industries.

id. Socialist standpoint. Single tax.

11. Is our present tariff (in general) beneficial to (a) the manufacturer, public carrier, and in general the employer (does it foster trusts? — is this good or bad?); (b) the workman, the employed (does it increase his effective wage?)?

12. Is permanent work with comfortable living wage possible for all in this country? How may work and workers be brought together?

13. What rights, if any, moral or legal, has the

Introduction xxi

workman in the plant of the work (comparable, for instance, to tenants' rights in land under British legislation in Ireland)?

Of these questions, number 1 1, dealing with the tariff, was afterwards withdrawn, because, although it seemed to me eminently pertinent to the general topic, nevertheless there was danger that its discussion would savor too strongly of politics more narrowly so-called. It had, however, already been answered briefly by Messrs. Warner and Crosby, and is traversed also in the articles of Messrs. Peters, Fieldhouse, and Hall; but as it is only briefly alluded to by these writers, and not discussed at any length, no division has been allotted to it in this book. Similarly, question 7, as to the relative shares of capital and labor, has been dropped, because, although of great importance, no one seemed ready to attempt anything like a definite answer or even discussion of it in that form. It is referred to in the papers of Messrs. Stokes, White, Warner, and Crosby, and is treated indirectly by many others. Indeed it may be said that the belief that the laborer does not receive his fair share in the division of profits, as it lies at the base of trade unionism, affects all the papers of the labor men, and not a few also of those who are not labor men, in this volume. It seemed to be the general opinion that the condition of the laborer was improving, although probably not in proportion to the increase in wealth. Some stated definitely that the laborer does not receive his proportionate share of the joint production of labor and capital.

xxii Introduction

The second part of the question may be said to be answered from various points of view in the papers on trades unions, arbitration, profit and stock sharing, co-operation, model industries, socialism, and single tax. The question as a whole, therefore, has no special division allotted to it in the arrangement of the book.

Question 13, as to the legal or moral rights of the workman in the plant of the work, may occasion some surprise. A belief in such moral right, at least, underlies the positions of the socialist and, to some extent, the single-taxer, and has led to various practical experiments in profit and stock sharing, co-operation, and the like. A similar idea influences more or less consciously the general attitude of not a few reformers and of a large part of the laboring men. An article by one of the latter class, John Mitchell, President of the United Mine Workers of America, in The Independent of August 15, 1901 (printed for reference in the appendix), came so near to formulating this position of the moral right of the workman in the plant, from the laborer's point of view, that I was led to propound the question directly for discussion. In the arrangement of the book I have included it under the division treating of the legal aspect of trusts and labor unions.

Composition and Arrangement.— Of the papers used in the original symposium two, contributed by Cardinal Gibbons and President Hadley, are not reproduced here. While authorized for use in the symposium by the writers, and pertinent to

Introduction xxiii

the discussion, both had already appeared in book form. A contribution by myself, in the nature of a sermon, has also been omitted. The other articles contained in the symposium, with the exception of four, the authors of which were practically inaccessible, were afterwards returned to the writers for revision and correction with a view to permanent publication. In a few cases the original articles have been entirely rewritten. In most cases the changes from the original form are relatively slight. Only one of the articles in this book, that of Mr. Dill, was not published in the original symposium, having arrived too late for use. This article, constituting the body of an address delivered before the Merchants' Club in Chicago, has been revised by the author for the present publication. The brief article by Cardinal Gibbons on arbitration appeared originally in The Independent. Mr. Peters' article on "The Benefits of Trusts" was first published as a letter in the New York Times, but has been enlarged and somewhat changed by the writer. The articles on arbitration by Messrs. Fieldhouse, Lusk, E. E. Clark, Mitchell, Stahl, Douglas, Hogan, Fox, Keefe, Reed, Going, Hoyt, and Sargent were prepared originally for the Arbitration Conference of the National Civic Federation, held in Chicago in December, 1900. These papers were about to be published in the shape of a report of the Conference at the time when the symposium was organized. As they covered two of my questions, I solicited their use for the purpose of the symposium, from Mr. Ralph M. Easley, Secretary of xxiv Introduction

the National Civic Federation. With the consent of their authors my request was granted, with the view of giving that discussion on arbitration the widest possible circulation. Afterwards the papers were again revised by the authors (with the exception of one paper, the author of which could not be reached) for publication in this volume. The division on arbitration may, therefore, be regarded as in a sense a substitute for the omitted report of the Conference on Arbitration of the National Civic Federation. I desire to make this special announcement of the provenance of these articles as some small recognition of the peculiar courtesy shown me both by their authors and also by the Secretary of the Federation.

In arranging this material for permanent publication I have retained the questions originally asked, as necessary to a proper understanding of the point of view of the writer, but re-arranged them under general groups. Not a few of the articles deal with two or more of these questions. As it is of course impracticable to reprint them under each several division, or to divide them into sections according to the topics treated, they have been printed under that division to which they seem primarily to belong and referred to under the other divisions the themes of which they discuss. For convenience of reference mention is made at the close of each division in the table of contents of other articles dealing with the same topic; and still further to facilitate reference, a brief synopsis of the contents of all articles except those in the general division

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has been prefixed to their respective divisions of the book.

Summing Up. — It is not to be expected, of course, that any such discussion will settle everything, or that conclusive answers can be given to most of the questions asked, but the general agreement, amounting to unanimity on certain points, and the trend of opinion on others are so interesting, and, as it seems to me, so important, that I shall venture to endeavor briefly to sum up some points of the discussion. In the first place it should be noted that the contributors to this volume represent not only economists and reformers, but to an even larger extent employers and employed, and the utterances especially of the latter may be regarded as an authoritative expression of the opinions of the working men comprised in what is commonly known as " organized labor," i. e., the mass of the more intelligent working men of the country. There is not quite the same sort of organization, nor the same consensus of opinion among the employers; but the views here presented are probably a fair expression of the opinion of the more thoughtful and broad-minded employers of labor.

Trusts. — Even two short years ago there was an almost universal popular outcry against so-called trusts, which made itself felt in a great deal of attempted and some actual hostile legislation. Part of this outcry came or was believed to come from laboring men. There is very little of that feeling shown in the articles in this book, and what little there is comes exclusively or almost exclusively xxvi Introduction

from the socializing or socialistic writers, although by no means from all of these, since some of them welcome trusts as a stepping-stone to State control. There is still, however, the fear of monopoly through trusts, and this seems to some of the best thinkers a grave danger. Other more immediate dangers are the interference of trusts in politics and fraudulent or fictitious capitalization, issue of stock, and so forth, which render urgent a supervision and control of trusts similar to that employed in regard to banks and insurance companies, and in some States railroads. The giant incorporation may be and is beneficial to the community at large in reducing prices, and to its own laborers in raising wages, provided it does not succeed in destroying competition, is honestly and efficiently managed, and is the creature, not the master of government. Labor Unions. — On the benefits of labor unions to their own members both in raising wages and also as an educative force there has never been any serious difference of opinion ; but it has often been contended that labor unions are the natural enemies of employers, and even that they are a source of injury to the community at large. Nothing has been published which shows more conclusively the change of opinion which has taken place in this regard than the articles in this volume. There is absolute unanimity with regard to the value of labor unions to the employers and the community at large, as well as to their own members. Employers assert, in the most emphatic way, the importance to the employer of strong labor

Introduction xxvii

unions with which to deal, and economists feel that a blow to trade unionism would be a blow to business. But it is pointed out that there are faults and dangers in trade unionism, the danger of attempted monopoly on one side, and of disregard of law and disregard of agreements and financial irresponsibility on the other. Disregard of law has resulted in violence in connection with strikes, which has in its turn led to that use by the courts of injunctions which has given rise to the phrase "government by injunction." This system of legal procedure is unequivocally condemned by lawyers and economists, as well as by labor men, as unnecessary, demoralizing, and inherently illegal. It is shown that the ordinary processes of law, adequately and honestly administered, are sufficient to meet the needs of the situation both as regards strike violence and also, probably, as regards responsibility for fulfilment of agreements, without resort to such arbitrary methods. Such methods aggravate that distrust of the courts, the existence of which among laboring men Is made clear in these articles. This distrust of the courts makes itself felt, among other things, in the objections of labor unions to incorporation, and in their opposition to anything approaching compulsory arbitration, that is agreement to submit disputes to arbitrators whose decisions can be enforced.

Arbitration.— It is the matter of arbitration to which the greatest amount of space has been allotted, because of its peculiarly practical character, as an immediate means o[ settling labor disputes, and bringing employed and employers together. The xxviii Introduction

arguments here presented for compulsory arbitration, that is, for some legal mode of making and enforcing a settlement between employers and employed in case of labor troubles, are very strong, and do not seem to us to be fully met by the other side. It is, however, clear from this discussion that whatever the future may have in store, the times are not now ripe for the adoption of such methods in any form (except possibly in Massachusetts, which seems to be generally more advanced in its treatment of industrial problems than the rest of the country). One cause of this distrust of governmental arbitration is the belief that the State or national courts of arbitration would be in politics. This belief is in general the result of experience with our present State boards of mediation, conciliation, and arbitration. Let the angel Gabriel be appointed chairman or member of a State board of conciliation or arbitration because he is a Republican or a Democrat and the usefulness of that board is minimized if not utterly destroyed. Added to this distrust of official boards resulting from the belief in their political character, is the further unfortunate belief among working men, resulting in part from the practice of the so-called "government by injunction," that all official courts and boards are liable to be controlled or manipulated in the interests of "capital" against "labor." But it should be noted that in point of fact employers seem to be almost as much opposed to enforced arbitration and official boards as are their employees. Both sides, however, clearly recognize the need

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of some method of adjusting their differences other than strikes and lockouts. The generally approved plan is trade conferences and agreements, and trade boards of conciliation and arbitration. Here some would stop, believing that matters which could not be settled by these means could not and should not be settled by reference to outsiders as arbitrators or umpires. The general opinion of both sides seems to be in favor, however, of going a step further, and referring matters which cannot be settled by trade conferences or trade boards of conciliation and arbitration to outside umpires or arbitrators. Sometimes the State boards are utilized for this purpose, but unfortunately, as already noted, they do not in general seem to command the necessary respect and confidence of both employers and employed.

Church Arbitrators. — This has led to various endeavors to meet the needs of the situation by creating a permanent board of voluntary mediators and arbitrators, who shall keep in touch with industrial conditions and offer and afford to both sides an impartial tribunal, with public opinion behind it, through which to settle their differences.

A few years since the "Church Association for the Advancement of the Interests of Labor " organized such a board or committee in New York City, unsectarian in its character, and representing in its membership employers, employed, and the general benevolently and intelligently interested community. This committee, which included in its membership Bishop Potter and Mayor Low, won considerable confidence, more especially among the xxx Introduction

working men, who seem on the whole to have been more ready to seek arbitration, and adjusted a number of industrial differences, including several strikes. As an outcome of the activity of this Association, commonly called CAIL, the General Convention of the Protestant Episcopal Church, held at San Francisco in October and November, 1901, was led to consider the duty of the Church to labor for industrial peace, and adopted the following resolutions, which are peculiarly significant because they seem to indicate the beginning of an awakening of the consciences of religious men to their obligation to utilize their religious mechanisms in some way in the practical work of reconciling industrial differences and hostilities:

Whereas, the Church of Jesus Christ has been commissioned by her Lord to be the friend and counsellor of all sorts and conditions of men, rich and poor alike, without respect of persons ;

And whereas, it is a part of her divine mission to be a mediator and peacemaker between those who are at strife one with another;

And whereas, the relations of Labor and Capital, which ought to be harmonious, are from time to time very seriously disturbed, to the prejudice of peace and good will among the people of the land, and often to the suffering of thousands of women and children, as well as to the sowing of bitterness and strife between brethren ;

And whereas, the Christian Church would be untrue to her Master — the Carpenter of Nazareth — if she were not the friend of the laboring man, and did not hold his

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welfare as dear to her heart as that of his employer; therefore,

Resolved, the House of Bishops concurring, that a Joint Commission of both Houses, to consist of three bishops, three presbyters, and three laymen, be appointed (the bishops in such manner as the House of Bishops shall determine, and the other members by the President of this House) as a standing commission upon the relations of Capital and Labor, and employers and work people, whose duty it shall be: first, to study carefully the aims and purposes of the labor organizations of our country; second, in particular to investigate the causes of industrial disturbances as these may arise; and third, to hold themselves in readiness to act as arbitrators should their services be desired, between the men and their employers, with a view to bring about mutual conciliation and harmony in the spirit of the Prince of Peace;

Resolved, That the said Commission shall make report of its proceedings to the General Convention;

Resolved, That it is desirable that the above-named Commission should be continued by re-appointment every three years.

The following were appointed members of this Commission : Bishop Potter of New York, Bishop Lawrence of Massachusetts, Bishop Anderson of Chicago, Rev. Dr. McKim of Washington, Rev. Dean Hodges of Massachusetts, Rev. Dean Williams of Ohio, Hon. Seth Low and Jacob Riis of New York, and Mr. Samuel Mather of Ohio. At the first meeting of this Commission, held in New York, Jan. 14, 1902, Dean Hodges, of Cambridge, Mass., was made Secretary.