[66] The _Outlook_, June, 1911.

[67] Sidney Webb, the _Contemporary Review_ (1908) and "Basis and Policy of Socialism," pp. 83, 84.

[68] The _Survey_ (New York), 1910, pp. 81-82, 466, 731-732.

[69] H. G. Wells, "First and Last Things," p. 133.

[70] Edmond Kelly, "Twentieth-Century Socialism," p. 314.

[71] _Vorwaerts_ (Milwaukee), Feb. 3, 1898.

CHAPTER V

COMPULSORY ARBITRATION

So far I have spoken only of the constructive side of the new capitalism's labor program, its purpose to produce healthy and industrially efficient laborers so as to increase profits. "State Socialism" gives the workingman as a citizen certain carefully measured political rights, and legislates actively in his behalf as a profit-producing employee at work, but its policy is reversed the moment it deals with him and his organizations _as owners and sellers of labor_.

Towards the individual workers, who are completely powerless either politically or economically until they are organized, the new capitalism is, on the whole, both benevolent and actually beneficent. But it does not propose that organized labor shall obtain a power either in industry or in government in any way comparable to that of organized capital.

"Successful State Socialism," as Victor S. Clark says in writing of the Australian experiments, "depends largely upon perfecting public control over the individual."[72] But compulsory arbitration of labor disputes which reaches the wage earners' organizations, is far more important to "State Socialism" than any other form of control over individual. A considerable measure of individual liberty may be allowed without endangering this new social polity, and it is even intended systematically to encourage the more able among the workers by some form of individual or piece wages--or at least a high degree of cla.s.sification of the workers--and by a scheme of promotion that will utilize the most able in superior positions, and incidentally remove them out of the way as possible leaders of discontent.

Nor is it intended to use any compulsion on labor organizations beyond that which is essential to prevent them from securing a power in society in any way comparable to that of property and capital. For this purpose compulsory arbitration is the direct and perfect tool. It can be limited in its application to those industries where the unions really occupy a position of strategic importance like railroads and coal mines, and it can be used to attach to the government those employees that are unable to help themselves. I have mentioned those weaker groups of employees who would be unable to improve their condition very materially except by government aid, and, even when so raised to a somewhat higher level, have no power to harm capitalism. Compulsory arbitration or some similar device must therefore replace such crudely restrictive and oppressive measures as have hitherto been applied to the unions.

In the United States all "dangerous" strikes are at present throttled by court injunctions forbidding the strikers to take any effective action, and boycotts are held to be forbidden by the Sherman law originally directed against the "trusts." Recently the Supreme Court decided that the officers of the American Federation of Labor were not to be imprisoned for violation of the latter statute. But the decision was purely on technical grounds, and the court upheld unanimously the application of the law to the unions. There is little question that the attorney for the manufacturers, Daniel Davenport, was right when he thus summed up the court's opinion:--

"It held that the boycott is illegal; that the victim of the boycott has the right to go into court of equity for protection by injunction; that such court has the right to enjoin any and every act done in enforcing the boycott, including the sending out of boycott notices, circulars, etc., that the alleged const.i.tutional right of free speech and free press affords the boycotter no immunity for such publication; that for a violation of the injunction the party violating it is liable to be punished both civilly and criminally."

Against this law and the use of injunctions in labor disputes the Federation of Labor has introduced a bill through Congressman W. B.

Wilson, which aims to free the unions from these legal obstacles by enacting that no right to continue the relation of employer to employee or to carry on business shall be construed as property or a property right; and that no agreement between two or more persons concerning conditions of employment or its termination shall const.i.tute a conspiracy or an offense against the law unless it would be unlawful if done by a single individual, and that, therefore, such an act is not subject to injunctions. While neither of the great parties has definitely promised to support this particular measure, one party has made a vague promise to restrict injunctions, and the leaders of the progressive wings of both are quite definite about it. Nearly half of the House of Representatives voted for the repeal of the Sherman law as applied against union boycotts. Senator La Follette has demanded the abolition of this species of injunction, and Governor Woodrow Wilson has accused our federal courts of "elaborating a theory of conspiracy destined to bring 'the sympathetic strike' and what is termed 'the secondary boycott' under legal condemnation."

Such reforms are not as radical as might appear to Americans, for the boycott is legal in Germany, while the crime of "conspiracy" was repealed in Great Britain in 1875, and the rights of strikers were further protected in that country by the repeal of the Taff Vale decision against picketing a few years ago, and yet unions are in no very strong position there. And weak as they are, the talk of compulsory arbitration is growing, and it seems only question of time until some modification of it is adopted. And, though the abuse of injunctions and the other forms of anti-union laws and decisions now prevailing will probably be done away with in this country, there is little doubt that here also employers will use some great coal or railroad strike as a pretext for enacting a compulsory arbitration law.[73]

Similarly, as governments continue to take on new industrial functions, great importance is attached to the right of government employees, now denied, to organize and to join unions. Senator La Follette and other progressives also champion this right against President Taft, and will doubtless win their fight, but, as I shall show later a right to organize does not mean a right to strike--and there seems no probability that any government will fail to answer the effort to strike on any very large scale either by punishment for conspiracy against the State or by excluding the strikers permanently from government employment.

They will doubtless be offered, as in France, instead of the right to strike, the right to submit their grievances as a body, if they wish it, to some government board (see Part III, Chapter VI).

The Australasian labor leaders were the first and are still the chief advocates of compulsory arbitration among the unionists, and if they find it used against them they have n.o.body but themselves to blame. That Labor is disappointed in the result in those countries is shown by the fact that of late years, both in Australia and New Zealand, the most important strikes have been settled outside of the compulsory arbitration acts, and Mr. Clark states that he is unaware of any important exception.

But that the workers in Australia still hope to use this legislation for their purposes is shown by the referendum of 1911, by which they sought to nationalize the State laws on the subject. At the time of the railroad strike in Victoria, Australia, in 1903, a law was pa.s.sed which imposed a penalty of "twelve months' imprisonment or a fine of one hundred pounds" for engaging in a strike on government railways, and made a man liable to arrest without warrant or bail "for advising a strike orally or by publication, or for attending any meetings of more than six persons for the purpose of encouraging strikers." Even then the limit had not been reached. In 1909 the Parliament of New South Wales pa.s.sed an act especially directed against strikes in any industry which produced "the necessary commodities of life [these being defined as coal, gas, water, and food] the privation of which may tend to endanger human life or cause serious bodily injury," and the penalty of twelve months' imprisonment of the Victorian law was extended to all this vast group of industries also. The law of New South Wales was most stringent, providing that any one taking part in a strike meeting under these circ.u.mstances is also liable to twelve months' imprisonment, and that the police may break into the headquarters of any union and seize any doc.u.ments "which they reasonably suspect to relate to any walk-out or strike." Under this law the well-known labor leader, Peter Bowling, was sentenced to one year of imprisonment.

The unions violently denounced this enactment, but chiefly as they had denounced previous legislation, on the ground that it permitted _unorganized_ workmen to apply for relief under the law. That is to say, while the employers were using the law to make striking a crime, they were extending such benefits as it produced to the nonunion workers who can often be used as tools for their purposes. But the astounding hold that "State Socialism" has on the Australian ma.s.ses, especially on the working people, is shown by the steadfast belief that this measure can be amended so as to operate to their interest. Bowling and his unions made a serious agitation for the general strike against the coercive measure just mentioned, but it was only by a tie vote that the New South Wales Labour Congress even favored protest in the form of cancelling the agreement which the unions had made under the Industrial Disputes Acts, while in the next elections New South Wales returned a majority of labor representatives opposing Bowling's policy of radical protest. That is, the majority of the working people still express confidence in the possibilities of compulsory arbitration, and even want to extend it.

Professor Le Rossignol of the United States and Mr. William D. Stewart of New Zealand have undertaken a careful and elaborate investigation of compulsory arbitration in New Zealand.[74] A reference to a few of their quotations from original doc.u.ments will show the nature and possibilities of this coercive measure as it has developed in the country of its origin. The original law in New Zealand was introduced by the Honorable William Pember Reeves, the Minister of Labor, in 1894, and was supported by the labor leaders. Mr. Reeves says: "What the act was primarily pa.s.sed to do was to put an end to the larger and more dangerous cla.s.s of strikes and lockouts. The second object of the act's framer was to set up tribunals to regulate the conditions of labor."

"Mr. Reeves' chief idea," say our authors, "was to prevent strikes, and a great deal more was said in Parliament about industrial peace than about the improvement in the conditions of labor which the act was to bring about. But there can be little doubt that the unionists, without whose help the act could not have been pa.s.sed, thought more of the latter than of the former result, and looked upon the act as an important part of the new legislation for the benefit of the working cla.s.s." Here is the contrast that we must always keep in mind. _The purpose of the unionists is to see if they cannot obtain improvements in their conditions; the purpose of the employers and also of "the public"

is to prevent strikes._ One of the most able students of the situation, Mr. MacGregor, has shown that since the pa.s.sing of the law the latter purpose has been thoroughly accomplished, since it has been used not only as was originally intended, to settle labor disputes which become so serious as to threaten to "arrest the processes of industry," but that it has practically built up a "system of governmental regulation of wages and conditions of labor in general." That is to say, the law has accomplished rather the purposes of the employers than those of the employees.

In another point of the most fundamental importance the law has become something radically different from what the labor leaders who first favored it hoped it would be. The act of 1894 was ent.i.tled: "An act to encourage the formation of industrial unions and a.s.sociations and to facilitate the settlement of industrial disputes by conciliation and arbitration." By the amendment of 1898 the words, "to encourage the formation of industrial unions and a.s.sociations," were left out. Thus the law ceased to be directly helpful to the very unions which had done so much to bring it about and are the only means employees possess to make the law serve them instead of becoming a new weapon for employers.

An early decision of the Arbitration Court in 1896 had declared that preference should be given to the unionists. "Since the employer was the judge of the qualifications of his employees, the unionists did not gain much by this decision," say Le Rossignol and Stewart. "In later awards it was usually specified that preference was granted only when the union was not a closed guild, but practically open to every person of good character who desired to join." These later decisions brought it about that the so-called preference of unionists became no preference at all.

"The Arbitration Court, except in a few minor cases, has refused to grant unconditional preference and the unionists, realizing that preference to an open union is no preference at all, now look to Parliament for redress and demand statutory unconditional preference to unionists."

In 1905 strikes and lockouts were made statutory offenses, and a single judge was given the power practically to force the individual worker to labor. After ten years of trial the law had become almost unrecognizable from the workingman's standpoint, and from this moment on the resistance to it has grown steadily. In a decision rendered in 1906, the Chief Justice said: "The right of a workman to make a contract is exceedingly limited. The right of free contract is taken away from the worker, and he has been placed in a condition of servitude or status, and the employee must conform to that condition." Not only do judges have this power, but they have the option of applying or not applying it as they see fit, for the amendment of 1908 "expressly permits the court to refuse to make an award if for any reason it considers it desirable to do so." With a law, then, that in no way aids the unions, as such--however beneficial it may be at times to the individual workingman--and which leaves an arbitrary power in the hands of the judge elected by an agricultural majority, what has been the _concrete_ result? Especially, what principles have been applied by the judges?

Of course the first principle has been that all the working people should get what is called a "minimum" or a "living" wage, but our authors show that merely to keep their heads above the sea of pauperism was not at all the goal of the workers of New Zealand. No doubt they were already getting such a wage in that relatively new and prosperous country, yet this was all the new law did or could offer, besides keeping existing wage scales up to the rising cost of living. Anything more would have required, not compulsory arbitration, but a series of revolutionary changes in the whole economic and political structure.

"Another stumbling block in the way of advance in wages is the inefficient or marginal or no-profit employer, who, hanging on the ragged edge of ruin, opposes the raising of wages on the ground that the slightest concession would plunge him into bankruptcy. His protests have their effect on the Arbitration Court, which tries to do justice to all the parties and fears to make any change for fear of hurting somebody.

But the organized workers, caring nothing for the interests of any particular employer, demand improved conditions of labor, though the inefficient employer be eliminated and all production be carried on by a few capable employers doing business on a large scale and able to pay the highest wages."

Here is the essential flaw in compulsory arbitration in compet.i.tive industries (its limitations under monopolies will be mentioned later).

The courts cannot apply a different standard to different employers. On the other hand, they cannot fix a wage which any employer cannot afford to pay or which will drive him out of business. That is to say, the standard tends to be fixed by what the poorest employer can pay, the employer who, from the standpoint either of capital or of labor or of efficient industry, really deserves to be driven from business. An exception is made only against such employers as cannot even afford to pay a _living_ wage--these alone are eliminated.

Le Rossignol and Stewart show that in view of these considerations the court has repeatedly stated that "profit sharing could not be taken as a basis of awards, on the ground that it would involve the necessity of fixing differential rates of wages, which would lead to confusion, would be unfair to many employers, and unsatisfactory to the workers themselves."

With such a principle guiding the court, and it is probably a necessity under commercial compet.i.tion, it is no wonder that some of the representatives of the unions have claimed that annual real wages have actually fallen. "It is not easy," say our authors, "to show that compulsory arbitration has greatly benefited the workers of the Colony.

Sweating has been abolished, but it is a question whether it would not have disappeared in the years of prosperity without the help of the Arbitration Court. Strikes have been largely prevented, but it is possible that the workers might have gained as much or more by dealing directly with their employers than by the mediation of the court. As to wages, it is generally admitted that they have not increased more than the cost of living. A careful investigation by Mr. von Dalezman, the Registrar-General, shows that, while the average wages increased from 1895 to 1907 in the ratio of 84.8 to 104.9, the cost of food increased in the ratio of 84.3 to 103.3. No calculation was attempted for clothing or rent." If we take it into account that rents have risen very rapidly and are especially complained of by the working people, we can see that real wages, measured by their purchasing power, probably fell in the first twelve years of compulsory arbitration, notwithstanding that it was on the whole a period of prosperity in the Colony. For ten years, as a consequence, the complaints of the workers against the decisions have been growing, "not because the wages were reduced, but because they were not increased and because other demands were not granted."

When the unions perceived that the principles for which they have been contending were not granted, and that their material conditions were not being improved, it was suggested that the judge of the Arbitration Court should be elected by the people, in the hope that the unions might control the election, "but this would be at variance with all British traditions and could not be brought about," say our authors. No doubt British tradition has had something to do with the matter, but the impracticability of this remedy is much more due to the fact that the employees confront an agricultural and middle cla.s.s majority.

At first it was the employers who were displeased, but now they are becoming converted. The employers, say Le Rossignol and Stewart, "have come to realize that they might have lost more by strikes than they have ever lost by arbitration; and, since the workers have been dissatisfied, the employers are more disposed to stand by the act, or to maintain a neutral att.i.tude, waiting to see what the workingmen will do."

It would seem, then, that the real gain from the law has been through the abolition of strike losses, and since these had previously been borne by employers and employees alike, this saving has been pretty equally divided between the two cla.s.ses, neither making any relative gain over the other. But at the bottom this is a blow to the unions, for the purpose of every union policy is not merely to leave things where they were before, but to increase the workers' relative share. Any policy that brings _mutual_ gain requires no organized struggle of any kind. It is the workers who are the plaintiffs, and the employers the defendants. When things are left _in statu quo_ it is a moral and actual defeat for the employees.

This is why, in the last two or three years, the whole labor movement in New Zealand has arisen against the law. In 1908 the coal miners' union refused to pay a fine levied against it, alleging that it had no funds.

"In this position the union was generally condemned by public opinion, but supported by a number of unions by resolutions of sympathy and gifts of money. Finally, the Arbitration Court decided to proceed against the men individually for their share of the fine. The whole of the fine, together with the costs of collection, amounting to over 147 pounds, was recovered by means of attachment orders under the Wages Attachment Act of 1895. According to a recent decision of the Court of Appeals, the men could have been imprisoned, if they had refused to pay, for a maximum term of one year, but it was not necessary to do this, and public opinion was not in favor of imprisonment for the offense."

This and other strikes in 1907 and 1908 "caused a widespread opinion among _employers_ and the general public that the act should be amended chiefly for the sake of preventing strikes. The laborers, as a cla.s.s, were not enthusiastic about the matter, since the proposed amendments were designed to compel them to obey the law rather than to bring them any additional benefit." After having been debated for a year, a new law was pa.s.sed, and went into effect January 1, 1909. This new law, though still compulsory, repeals some of the features of the previous legislation which were most obnoxious to the unions. Even this act, however, they found entirely unsatisfactory, and "during the year ending March 31, 1909, sixteen workers' unions, and a like number of employers'

unions, had their registration cancelled for neglect, while two other unions formally cancelled their registration." This meant practically that these unions have withdrawn from the field of the act and expressed their disapproval of compulsory arbitration, even in its recently modified form. Not only have the unions been withdrawing, but, freed from its bondage, they began at once to win their most important strikes, indicating what its effect had been. Even the employees of the State have been striking, and successfully.

"The workers' position is embarra.s.sing. The original act was pa.s.sed for their benefit as well as to prevent strikes, but when it could no longer be used as a machine for raising wages, they were the first to rebel against it." There can be no doubt that our authors are correct, and that the working people are beginning to feel they have been trapped. In both New Zealand and Australia they have given their approval to an act which in actual practice may become more dangerous than any weapon that has ever been forged against them. The only possible way they could gain any advantage from it would be if they were able to elect the judge of the Arbitration Court, but, to obtain a political majority for this purpose, they would have to develop a broad social program which would appeal to at least a part of the agriculturists as well as to the working people, but here we turn to the considerations to be brought out in the next chapter.

Mr. Charles Edward Russell, as the result of two visits to Australasia, has very ably summed up the Socialist view of compulsory arbitration in _The Coming Nation_, of which he is joint editor. Mr. Russell says:--

"The thing is a failure, greatly to the surprise of many capable observers, and yet just such a result might have been expected from the beginning, and for two perfectly obvious reasons, both of which, strange to say, were universally overlooked.

"In the first place, the court was nominally composed of three persons, and really of one. That one was the judge appointed by the government.

"The representative of the employers voted every time for the employers; the representative of the unions voted every time for the unions; the judge alone decided, and might as well have const.i.tuted the whole court.

"At first the judge decided most of the cases in favor of the policy of increasing wages. Fine, again. Many wage scales ascended.

"But the judge, as a rule, did not like his job. He desired to get to the Supreme Court as rapidly as possible; to the Supreme Court where the honors were. A succession of judges went by. At last came one that agreed with the employers that wages were too high for the welfare of the country. This had long been a complaint of the manufacturers in particular, who were fond of pointing out how high wages discouraged the opening of new factories, and consequently the development of the country. This judge, being of the same opinion, apparently, began to decide the cases the other way.

"Then, of a sudden the second fatal defect in the system opened up.