[93] A Protestant interdenominational organization of influence, which investigated the strike and issued a report.

[94] The union had not been formally "recognized" at any time.

[95] Coppage _v._ Kansas, 236 U.S. (1915).

[96] Hitchman Coal and c.o.ke Co. _v._ Mitch.e.l.l et al, 245 U.S. 229 (1917).

[97] Duplex Printing Press Co. _v._ Deering, 41 Sup. Ct. 172 (1921).

[98] Montana allows the "unfair list" and California allows all boycotts.

[99] American Steel Foundries of Granite City, Illinois, _v._ Tri-City Central Trades' Council, 42 Sup. Ct. 72 (1921).

[100] Truax et al. _v._ Corrigan, 42 Sup. Ct. 124 (1921).

PART III

CONCLUSIONS AND INFERENCES

CHAPTER 12

AN ECONOMIC INTERPRETATION

To interpret the labor movement means to offer a theory of the struggle between labor and capital in our present society. According to Karl Marx, the founder of modern socialism, the efficient cause in all the cla.s.s struggles of history has been technical progress. Progress in the mode of making a living or the growth of "productive forces," says Marx, causes the coming up of new cla.s.ses and stimulates in each and all cla.s.ses a desire to use their power for a maximum cla.s.s advantage.

Referring to the struggle between the cla.s.s of wage earners and the cla.s.s of employers, Marx brings out that modern machine technique has concentrated the social means of production under the ownership of the capitalist, who thus became absolute master. The laborer indeed remains a free man to dispose of his labor as he wishes, but, having lost possession of the means of production, which he had as a master-workman during the preceding handicraft stage of industry, his freedom is only an illusion and his bargaining power is no greater than if he were a slave.

But capitalism, Marx goes on to say, while it debases the worker, at the same time produces the conditions of his ultimate elevation. Capitalism with its starvation wages and misery makes the workers conscious of their common interests as an exploited cla.s.s, concentrates them in a limited number of industrial districts, and forces them to organize for a struggle against the exploiters. The struggle is for the complete displacement of the capitalists both in government and industry by the revolutionary labor cla.s.s. Moreover, capitalism itself renders effective although unintended aid to its enemies by developing the following three tendencies: First, we have the tendency towards the concentration of capital and wealth in the hands of a few of the largest capitalists, which reduces the number of the natural supporters of capitalism.

Second, we observe a tendency towards a steady depression of wages and a growing misery of the wage-earning cla.s.s, which keeps revolutionary ardor alive. And lastly, the inevitable and frequent economic crises under capitalism disorganize it and hasten it on towards destruction.

The last and gravest capitalistic industrial crisis will coincide with the social revolution which will bring capitalism to an end. The wage-earning cla.s.s must under no condition permit itself to be diverted from its revolutionary program into futile attempts to "patch-up"

capitalism. The labor struggle must be for the abolition of capitalism.

American wage earners have steadily disappointed several generations of Marxians by their refusal to accept the Marxian theory of social development and the Marxian revolutionary goal. In fact, in their thinking, most American wage earners do not start with any general theory of industrial society, but approach the subject as bargainers, desiring to strike the best wage bargain possible. They also have a conception of what the bargain ought to yield them by way of real income, measured in terms of their customary standard of living, in terms of security for the future, and in terms of freedom in the shop or "self-determination." What impresses them is not so much the fact that the employer owns the employment opportunities but that he possesses a high degree of bargaining advantage over them. Viewing the situation as bargainers, they are forced to give their best attention to the menaces they encounter as bargainers, namely, to the compet.i.tive menaces; for on these the employer's own advantage as a bargainer rests. Their impulse is therefore not to suppress the employer, but to suppress those compet.i.tive menaces, be they convict labor, foreign labor, "green" or untrained workers working on machines, and so forth. To do so they feel they must organize into a union and engage in a "cla.s.s struggle" against the employer.

It is the employer's purpose to bring in ever lower and lower levels in compet.i.tion among laborers and depress wages; it is the purpose of the union to eliminate those lower levels and to make them stay eliminated.

That brings the union men face to face with the whole matter of industrial control. They have no a.s.surance that the employer will not get the best of them in bargaining unless they themselves possess enough control over the shop and the trade to check him. Hence they will strive for the "recognition" of the union by the employer or the a.s.sociated employers as an acknowledged part of the government of the shop and the trade. It is essential to note that in struggling for recognition, labor is struggling not for something absolute, as would be a struggle for a complete dispossession of the employer, but for the sort of an end that admits of relative differences and gradations. Industrial control may be divided in varying proportions,[101] reflecting at any one time the relative ratio of bargaining power of the contesting sides. It is labor's aim to continue increasing its bargaining power and with it its share of industrial control, just as it is the employer's aim to maintain a _status quo_ or better. Although this presupposes a continuous struggle, it is not a revolutionary but an "opportunist"

struggle.

Once we accept the view that a broadly conceived aim to control compet.i.tive menaces is the key to the conduct of organized labor in America, light is thrown on the causes of the American industrial cla.s.s struggles. In place of looking for these causes, with the Marxians, in the domain of technique and production, we shall look for them on the market, where all developments which affect labor as a bargainer and compet.i.tor, of which technical change is one, are sooner or later bound to register themselves. It will then become possible to account for the long stretch of industrial cla.s.s struggle in America prior to the factory system, while industry continued on the basis of the handicraft method of production. Also we shall be able to render to ourselves a clearer account of the changes, with time, in the intensity of the struggle, which, were we to follow the Marxian theory, would appear hopelessly irregular.

We shall take for an ill.u.s.tration the shoe industry.[102] The ease with which shoes can be transported long distances, due to the relatively high money value contained in small bulk, rendered the shoe industry more sensitive to changes in marketing than other industries. Indeed we may say that the shoe industry epitomized the general economic evolution of the country.[103]

We observe no industrial cla.s.s struggle during Colonial times when the market remained purely local and the work was custom-order work. The journeyman found his standard of life protected along with the master's own through the latter's ability to strike a favorable bargain with the consumer. This was done by laying stress upon the quality of the work.

It was mainly for this reason that during the custom-order stage of industry the journeymen seldom if ever raised a protest because the regulation of the craft, be it through a guild or through an informal organization, lay wholly in the hands of the masters. Moreover, the typical journeyman expected in a few years to set up with an apprentice or two in business for himself--so there was a reasonable harmony of interests.

A change came when improvements in transportation, the highway and later the ca.n.a.l, had widened the area of compet.i.tion among masters. As a first step, the master began to produce commodities in advance of the demand, laying up a stock of goods for the retail trade. The result was that his bargaining capacity over the consumer was lessened and so prices eventually had to be reduced, and with them also wages. The next step was even more serious. Having succeeded in his retail business, the master began to covet a still larger market,--the wholesale market.

However, the compet.i.tion in this wider market was much keener than it had been in the custom-order or even in the retail market. It was inevitable that both prices and wages should suffer in the process. The master, of course, could recoup himself by lowering the quality of the product, but when he did that he lost a telling argument in bargaining with the consumer or the retail merchant. Another result of this new way of conducting the business was that an increased amount of capital was now required for continuous operation, both in raw material and in credits extended to distant buyers.

The next phase in the evolution of the market rendered the separation of the journeymen into a cla.s.s by themselves even sharper as well as more permanent. The market had grown to such dimensions that only a specialist in marketing and credit could succeed in business, namely, the "merchant-capitalist." The latter now interposed himself permanently between "producer" and consumer and by his control of the market a.s.sumed a commanding position. The merchant-capitalist ran his business upon the principle of a large turn-over and a small profit per unit of product, which, of course, made his income highly speculative. He was accordingly interested primarily in low production and labor costs. To depress the wage levels he tapped new and cheaper sources of labor supply, in prison labor, low wage country-town labor, woman and child labor; and set them up as compet.i.tive menaces to the workers in the trade. The merchant-capitalist system forced still another disadvantage upon the wage earner by splitting up crafts into separate operations and tapping lower levels of skill. In the merchant-capitalist period we find the "team work" and "task" system. The "team" was composed of several workers: a highly skilled journeyman was in charge, but the other members possessed varying degrees of skill down to the practically unskilled "finisher." The team was generally paid a lump wage, which was divided by an understanding among the members. With all that the merchant-capitalist took no appreciable part in the productive process.

His equipment consisted of a warehouse where the raw material was cut up and given out to be worked up by small contractors, to be worked up in small shops with a few journeymen and apprentices, or else by the journeyman at his home,--all being paid by the piece. This was the notorious "sweatshop system."

The contractor or sweatshop boss was a mere labor broker deriving his income from the margin between the piece rate he received from the merchant-capitalist and the rate he paid in wages. As any workman could easily become a contractor with the aid of small savings out of wages, or with the aid of money advanced by the merchant-capitalist, the compet.i.tion between contractors was of necessity of the cut-throat kind.

The industrial cla.s.s struggle was now a three-cornered one, the contractor aligning himself here with the journeymen, whom he was forced to exploit, there with the merchant-capitalist, but more often with the latter. Also, owing to the precariousness of the position of both contractor and journeyman, the cla.s.s struggle now reached a new pitch of intensity hitherto unheard of. It is important to note, however, that as yet the tools of production had not undergone any appreciable change, remaining hand tools as before, and also that the journeyman still owned them. So that the beginning of cla.s.s struggles had nothing to do with machine technique and a capitalist ownership of the tools of production.

The capitalist, however, had placed himself across the outlets to the market and dominated by using all the available compet.i.tive menaces to both contractor and wage earner. Hence the bitter cla.s.s struggle.

The thirties witnessed the beginning of the merchant-capitalist system in the cities of the East. But the situation grew most serious during the forties and fifties. That was a period of the greatest disorganization of industry. The big underlying cause was the rapid extension of markets outrunning the technical development of industry.

The large market, opened first by ca.n.a.ls and then by railroads, stimulated the keenest sort of compet.i.tion among the merchant-capitalists. But the industrial equipment at their disposal had made no considerable progress. Except in the textile industry, machinery had not yet been invented or sufficiently perfected to make its application profitable. Consequently industrial society was in the position of an antiquated public utility in a community which persistently forces ever lower and lower rates. It could continue to render service only by cutting down the returns to the factors of production,--by lowering profits, and especially by pressing down wages.

In the sixties the market became a national one as the effect of the consolidation into trunk lines of the numerous and disconnected railway lines built during the forties and fifties. Coincident with the nationalized market for goods, production began to change from a handicraft to a machine basis. The former sweatshop boss having acc.u.mulated some capital, or with the aid of credit, now became a small "manufacturer," owning a small plant and employing from ten to fifty workmen. Machinery increased the productivity of labor and gave a considerable margin of profits, which enabled him to begin laying a foundation for his future independence of the middleman. As yet he was, however, far from independent.

The wider areas over which manufactured products were now to be distributed, called more than ever before for the services of the specialist in marketing, namely, the wholesale-jobber. As the market extended, he sent out his traveling men, established business connections, and advertised the articles which bore his trade mark. His control of the market opened up credit with the banks, while the manufacturer, who with the exception of his patents possessed only physical capital and no market opportunities, found it difficult to obtain credit. Moreover, the rapid introduction of machinery tied up all of the manufacturers' available capital and forced him to turn his products into money as rapidly as possible, with the inevitable result that the merchant was given an enormous bargaining advantage over him.

Had the extension of the market and the introduction of machinery proceeded at a less rapid pace, the manufacturer probably would have been able to obtain greater control over the market opportunities, and the larger credit which this would have given him, combined with the acc.u.mulation of his own capital, might have been sufficient to meet his needs. However, as the situation really developed, the merchant obtained a superior bargaining power and, by playing off the competing manufacturers one against another, produced a cut-throat compet.i.tion, low prices, low profits, and consequently a steady and insistent pressure upon wages. This represents the situation in the seventies and eighties.

For labor the combination of cut-throat compet.i.tion among employers with the new machine technique brought serious consequences. In this era of machinery the forces of technical evolution decisively joined hands with the older forces of marketing evolution to depress the conditions of the wage bargain. It is needless to dilate upon the effects of machine technique on labor conditions--they have become a commonplace of political economy. The shoemakers were first among the organized trades to feel the effects. In the later sixties they organized what was then the largest trade union in the world, the Order of the Knights of St.

Crispin,[104] to ward off the menace of "green hands" set to work on machines. With the machinists and the metal trades in general, the invasion of unskilled and little skilled compet.i.tors began a decade later. But the main and general invasion came in the eighties, the proper era from which to date machine production in America. It was during the eighties that we witness an attempted fusion into one organization, the Order of the Knights of Labor, of the machine-menaced mechanics and the hordes of the unskilled.[105]

With the nineties a change comes at last. The manufacturer finally wins his independence. Either he reaches out directly to the ultimate consumer by means of chains of stores or other devices, or else, he makes use of his control over patents and trade marks and thus succeeds in reducing the wholesale-jobber to a position which more nearly resembles that of an agent working on a commission basis than that of the _quondam_ industrial ruler. The immediate outcome is, of course, a considerable increase in the manufacturer's margin of profit. The industrial cla.s.s struggle begins to abate in intensity. The employer, now comparatively free of anxiety that he may be forced to operate at a loss, is able to diminish pressure on wages. But more than this: the greater certainty about the future, now that he is a free agent, enables him to enter into time agreements with a trade union. At first he is generally disinclined to forego any share of his newly acquired freedom by tying himself up with a union. But if the union is strong and can offer battle, then he accepts the situation and "recognizes" it. Thus the cla.s.s struggle instead of becoming sharper and sharper with the advance of capitalism and leading, as Marx predicted, to a social revolution, in reality, grows less and less revolutionary and leads to a compromise or succession of compromises,--namely, collective trade agreements.

But the manufacturer's emanc.i.p.ation from the middleman need not always lead to trade agreements. In the shoe industry this process did not do away with compet.i.tion. In other industries such an emanc.i.p.ation was identical with the coming in of the "trust," or a combination of competing manufacturers into a monopoly. As soon as the "trust" becomes practically the sole employer of labor in an industry, the relations between labor and capital are thrown almost invariably back into the state of affairs which characterized the merchant-capitalist system at its worst, but with one important difference. Whereas under the merchant-capitalist system the employer was _obliged_ to press down on wages and fight unionism to death owing to cut-throat compet.i.tion, the "trust," its strength supreme in both commodity and labor market, can do so and usually does so _of free choice_.

The character of the labor struggle has been influenced by cyclical changes in industry as much as by the permanent changes in the organization of industry and market. In fact, whereas reaction to the latter has generally been slow and noticeable only over long periods of time, with a turn in the business cycle, the labor movement reacted surely and instantaneously.

We observed over the greater part of the history of American labor an alternation of two planes of thought and action, an upper and a lower.

On the upper plane, labor thought was concerned with ultimate goals, self-employment or cooperation, and problems arising therefrom, while action took the form of politics. On the lower plane, labor abandoned the ultimate for the proximate, centering on betterments within the limits of the wage system and on trade-union activity. Labor history in the past century was largely a story of labor's shifting from one plane to another, and then again to the first. It was also seen that what determined the plane of thought and action at any one time was the state of business measured by movements of wholesale and retail prices and employment and unemployment. When prices rose and margins of employers'

profits were on the increase, the demand for labor increased and accordingly also labor's strength as a bargainer; at the same time, labor was compelled to organize to meet a rising cost of living. At such times trade unionism monopolized the arena, won strikes, increased membership, and forced "cure-alls" and politics into the background.

When, however, prices fell and margins of profit contracted, labor's bargaining strength waned, strikes were lost, trade unions faced the danger of extinction, and "cure-alls" and politics received their day in court. Labor would turn to government and politics only as a last resort, when it had lost confidence in its ability to hold its own in industry. This phenomenon, noticeable also in other countries, came out with particular clearness in America.

For, as a rule, down to the World War, prices both wholesale and retail, fluctuated in America more violently than in England or the Continent.

And twice, once in the thirties and again in the sixties, an irredeemable paper currency moved up the water mark of prices to tremendous heights followed by reactions of corresponding depth. From the war of 1812, the actual beginning of an industrial America, to the end of the century, the country went through several such complete industrial and business cycles. We therefore conveniently divide labor and trade union history into periods on the basis of the industrial cycle. It was only in the nineties, as we saw, that the response of the labor movement to price fluctuations ceased to mean a complete or nearly complete abandonment of trade unionism during depressions. A continuous and stable trade union movement consequently dates only from the nineties.

The cooperative movement which was, as we saw, far less continuous than trade unionism, has also shown the effects of the business cycle. The career of distributive cooperation in America has always been intimately related to the movements of retail prices and wages. If, in the advance of wages and prices during the ascending portion of the industrial cycle, the cost of living happened to outdistance wages by a wide margin, the wage earners sought a remedy in distributive cooperation.

They acted likewise during the descending portion of the industrial cycle, when retail prices happened to fall much less slowly than wages.

Producers' cooperation in the United States has generally been a "hard times" remedy. When industrial prosperity has pa.s.sed its high crest and strikes have begun to fail, producers' cooperation has often been used as a retaliatory measure to bring the employer to terms by menacing to underbid him in the market. Also, when in the further downward course of industry the point has been reached where cuts in wages and unemployment have become quite common, producers' cooperation has sometimes come in as an attempt to enable the wage earner to obtain both employment and high earnings bolstered through cooperative profits.

FOOTNOTES:

[101] The struggle for control, as carried on by trade unions, centers on such matters as methods of wage determination, the employer's right of discharge, hiring and lay-off, division of work, methods of enforcing shop discipline, introduction of machinery and division of labor, transfers of employes, promotions, the union or non-union shop, and similar subjects.

[102] The first trade societies were organized by shoemakers. (See above, 4-7.)

[103] See Chapter on "American Shoemakers," in _Labor and Administration_, by John R. Commons (Macmillan, 1913).