CHAPTER XXVII

THE INDUSTRIAL PROBLEM

192. =What It Means.=--The industrial problem as a whole is a problem of adjusting the relations of employer and employee to each other and to the rapidly changing age in the midst of which industry exists. It is a problem that cannot be solved in a moment, for it has grown out of previous conditions and relationships. It must be considered in its causes, its alignments, the difficulties of each party, the efforts at solution, and the principles and theories that are being worked out for the settlement of the problem.

193. =Conflict Between Industrial Groups.=--The industrial problem is not entirely an economic problem, but it is such primarily. The function of employer and employee is to produce material goods that have value for exchange. Both enter into the economic relation for what they can get out of it in material gain. Selfish desire tends to overcome any consideration of each other's needs or of their mutual interests. There is a continual conflict between the wage-earner who wants to make a living and the employer who wants to make money, and neither stops long to consider the welfare of society as a whole when any specific issue arises. The conflict between individuals has developed into a cla.s.s problem in which the organized forces of labor confront the organized forces of capital, with little disposition on either side to surrender an advantage once gained or to put an end to the conflict by a frank recognition of each other's rights.

It is not strange that this conflict has continued to vex society.

Conflict is one of the characteristics of imperfectly adjusted groups.

It seems to be a necessary preliminary to co-operation, as war is. It will continue until human beings are educated to see that the interests of all are paramount to the interests of any group, and that in the long run any group will gain more of real value for itself by taking account of the interests of a rival. Railroad history in recent years has made it very plain that neither railway employees nor the public have gained as much by hectoring the railroad corporations as either would have gained by considering the interests of the railroad as well as its own.

Industrial conflict is due in great part to the unwillingness of the employer to deal fairly by his employee. There have been worthy exceptions, of course, but capitalists in the main have not felt a responsibility to consider the interests of the workers. It has been a constant temptation to take advantage of the power of wealth for the exploitation of the wage-earning cla.s.s. Unfortunately, the modern industrial period began with economic control in the hands of the employer, for with the transfer of industry to the factory the laborer was powerless to make terms with the employer. Unfortunately, also, the disposition of society was to let alone the relations of master and dependent in accordance with the _laisser-faire_ theory of the economists of that period. Government was slow to legislate in favor of the helpless employee, and the abuses of the time were many. The process of adjustment has been a difficult one, and experiment has been necessary to show what was really helpful and practicable.

194. =More than an Industrial Problem.=--In the process of experiment it has become clear that the industrial problem is more than an economic problem; secondarily, it is the problem of making a living that will contribute to the enrichment of life. It is not merely the adjustment of the wage scale to the profits of the capitalist by cla.s.s conflict or peaceful bargaining, nor is it the problem of unemployment or official labor. The primary task may be to secure a better adjustment of the economic interests of employer and employee through an improvement of the wage system, but in the larger sense the industrial problem is a social and moral one. Sociologists reckon among the social forces a distinction between elemental desires and broader interests. Wages are able to satisfy the elemental desires of hunger and s.e.x feeling by making it possible for a man to marry and bring up a family and get enough to eat; but there are larger questions of freedom, justice, comity, personal and social development that are involved in the labor problem. If wages are so small, or hours so long, or factory conditions so bad that health is affected, proper education made impossible, and recreation and religion prevented, the individual and society suffer much more than with reference to the elemental desires. The industrial problem is, therefore, a complex problem, and not one that can be easily or quickly solved. Although it is necessary to remember all as parts of one problem of industry, it is a convenience to remember that it is:

(1) An economic problem, involving wages, hours, and conditions of labor.

(2) A social problem, involving the mental and physical health and the social welfare of both the individual worker, the family, and the community.

(3) An ethical problem, involving fairness, justice, comity, and freedom to the employer, the employee, and the public.

(4) A complex problem, involving many specific problems, chief of which are the labor of women and children, immigrant labor, prison labor, organization of labor, insurance, unemployment, industrial education, the conduct of labor warfare, and the interest of the public in the industrial problem.

195. =Characteristics of Factory Life.=--Group life in the factory is not very different in characteristics from group life everywhere. It is an active life, the hand and brain of the worker keeping pace with the speedy machine, all together shaping the product that goes to exchange and storage. It is a social life, many individuals working in one room, and all the operatives contributing jointly to the making of the product. It is under control. Captains of industry and their lieutenants give direction to a group that has been thoroughly and efficiently organized. Without control and organization industry could not be successfully carried on, but it is open to question whether industrial control should not be more democratic, shared in by representatives of the workers and of the public as well as by the representatives of corporate capital or a single owner. It is a life of change. It does not seem so to the operative who turns out the same kind of a machine product day after day, sometimes by the million daily, but the personnel of the workers changes, and even the machines from time to time give way to others of an improved type. It is a life that has its peculiar weaknesses. The relations of employer and employee are not cordial; the health and comfort of the worker are often disregarded; the hours of labor are too long or the wages too small; the whole working staff is driven at too high speed; the whole process is on a mechanical rather than a human basis, and the material product is of more concern than the human producer. These weaknesses are due to the concentration of control in the hands of employers. The industrial problem is, therefore, largely a problem of control.

196. =Democratizing Industry.=--When the modern industrial system began in the eighteenth century the democratic principle played a small part in social relations. Parental authority in the family, the master's authority in the school, hierarchical authority in the church, official authority in the local community, and monarchical authority in the nation, were almost universal. It is not strange that the authority of the capitalist in his business was unquestioned. Only government had the right to interfere in the interest of the lower cla.s.ses, and government had little care for that interest. The democratic principle has been gaining ground in family and school, state and church; it has found grudging recognition in industry. This is because the clash of economic interests is keenest in the factory.

But even there the grip of privilege has loosened, and the possibility of democratizing industry as government has been democratized is being widely discussed. There is difference of opinion as to how this should be done. The socialist believes that control can be transferred to the people in no other way than by collective ownership. Others progressively inclined accept the principle of government regulation and believe that in that way the people, through their political representatives, can control the owners and managers. Others think that the best results can be obtained by giving a place on the governing board of an industry to working men alongside the representatives of capital and permitting them to work out their problems on a mutual basis. Each of these methods has been tried, but without demonstrating conclusively the superiority of any one.

Whatever method may come into widest vogue, there must be a recognition of the principle of democratic interest and democratic control. No one cla.s.s in society can dictate permanently to the people as a whole. Industry is the concern of all, and all must have a share in managing it for the benefit of all.

197. =Legislation.=--The history of industrial reform is first of all a story of legislative interference with arbitrary management. When Great Britain early in the nineteenth century overstepped the bounds of the let-alone policy and began to legislate for the protection of the employee, it was but a resumption of a paternal policy that had been general in Europe before. But formerly government had interfered in behalf of the employing cla.s.s, now it was for the people who were under the control of the exploiting capitalist. The abuses of child labor were the first to receive attention, and Parliament reduced the hours of child apprentices to twelve a day. Once begun, restriction was extended. Beginning in 1833, under the leadership of Lord Shaftesbury, the working man's friend, the labor of children under thirteen was reduced to forty-eight hours a week, and children under nine were forbidden to work at all. The work of young people under eighteen was limited to sixty-nine hours a week, and then to ten hours a day; women were included in the last provision. These early laws were applicable to factories for weaving goods only, but they were extended later to all kinds of manufacturing and mining. These laws were not always strictly enforced, but to get them through Parliament at all was an achievement. Later legislation extended the ten-hour law to men; then the time was reduced to nine hours, and in many trades to eight.

In the United States the need of legislation was far less urgent.

Employers could not be so masterful in the treatment of their employees or so parsimonious in their distribution of wages, because the laborer always had the option of leaving the factory for the farm, and land was cheap. Women and children were not exploited in the mines as in England, pauper labor was not so available, and such trades as chimney-sweeping were unknown. Then, too, by the time there was much need for legislation, the spirit of justice was becoming wide-spread and legislatures responded more quickly to the appeal for protective legislation. It was soon seen that the industrial problem was not simply how much an employee should receive for a given piece of work or time, but how factory labor affected working people of different s.e.x or age, and how these effects reacted upon society. Those who pressed legislation believed that the earnings of a child were not worth while when the child lost all opportunity for education and healthful physical exercise, and that woman's labor was not profitable if it deprived her of physical health and nervous energy, and weakened by so much the stamina of the next generation. The thought of social welfare seconded the thought of individual welfare and b.u.t.tressed the claims of a particular cla.s.s to economic consideration in such questions as proper wages. Ma.s.sachusetts was the first American State to introduce labor legislation in 1836; in 1869 the same State organized the first labor bureau, to be followed by a National bureau in 1884, four years later converted into a government department.

Among the favorite topics of legislation have been the limitation of woman and child labor, the regulation of wage payments, damages and similar concerns, protection from dangerous machinery and adequate factory inspection, and the appointment of boards of arbitration. The doctrine of the liability of employers in case of accident to persons in their employ has been increasingly accepted since Great Britain adopted an employers' liability act in 1880, and since 1897 compulsory insurance of employees has spread from the continent of Europe to England and the United States.

198. =The Organization of Labor.=--These measures of protection and relief have been due in part to the disinterested activity of philanthropists, and in part to the efforts of organized labor, backed up by public opinion; occasionally capitalists have voluntarily improved conditions or increased wages. The greatest agitation and pressure has come from the labor-unions. Unlike the mediaeval guilds, these unions exist for the purpose of opposing the employer, and are formed in recognition of the principle that a group can obtain guarantees that an individual is helpless to secure. Like-mindedness holds the group together, and consciousness of common interests and mutual duties leads to sacrifice of individual benefit for the sake of the group. The moral effect of this sense and practice of mutual responsibility has been a distinct social gain, and warrants the hope that a time may come when this consciousness of mutual interests may extend until it includes the employing cla.s.s as in the old-time guild.

The modern labor-union is a product of the nineteenth century. Until 1850 there was much experimenting, and a revolutionary sentiment was prevalent both in America and abroad. The first union movement united all cla.s.ses of wage-earners in a nation-wide reform, and aimed at social gains, such as education as well as economic gains. It hoped much from political activity, spoke often of social ideals, and did not disdain to co-operate with any good agency, even a friendly employer. Cla.s.s feeling was less keen than later. But it became apparent that the lines of organization were too loose, that specific economic reforms must be secured rather than a whole social programme, and that little could probably be expected from political activity.

Labor began to organize on a basis of trades, cla.s.s feeling grew stronger, and trials of strength with employers showed the value of collective bargaining and fixed agreements. Out of the period grew the American Federation of Labor. More recently has come the industrial union, which includes all ranks of labor, like the early labor-union, and is especially beneficial to the unskilled. It is much more radical in its methods of operation, and is represented by such notorious organizations as the United Mine Workers and the International Workers of the World.

199. =Strikes.=--The principle of organization of the trade-union is democratic. The unit of organization is the local group of workers which is represented on the national governing bodies; in matters of important legislation, a referendum is allowed. Necessarily, executive power is strongly centralized, for the labor-union is a militant organization, but much is left to the local union. Though peaceful methods are employed when possible, warlike operations are frequent.

The favorite weapon is the strike, or refusal to work, and this is often so disastrous to the employer that it results in the speedy granting of the laborers' demands. It requires good judgment on the part of the representatives of labor when to strike and how to conduct the campaign to a successful conclusion, but statistics compiled by the National Labor Bureau between 1881 and 1905 indicate that a majority of strikes ordered by authority of the organization were at least partially successful.

The successful issue of strikes has demonstrated their value as weapons of warfare, and they have been accepted by society as allowable, but they tend to violence, and produce feelings of hatred and distrust, and would not be countenanced except as measures of coercion to secure needed reforms. The financial loss due to the cessation of labor foots up to a large total, but in comparison with the total amount of wages and profits it is small, and often the periods of manufacturing activity are so redistributed through the year that there is really no net loss. Yet a strike cannot be looked upon in any other way than as a misfortune. Like war, it breaks up peaceful if not friendly relations, and tends to destroy the solidarity of society. It tends to strengthen cla.s.s feeling, which, like caste, is a handicap to the progress of mankind. Though it may benefit the working man, it is harmful to the general public, which suffers from the interruption of industry and sometimes of transportation, and whose business is disturbed by the blow to confidence.

200. =Peaceful Methods of Settlement.=--Strikes are so unsettling to industry that all parties find it better to use diplomacy when possible, or to submit a dispute to arbitration rather than to resort to violence. It is in industrial concerns very much as it is in international politics, and methods used in one circle suggest methods in the other. Formerly war was a universal practice, and of frequent occurrence, and duelling was common in the settlement of private quarrels; now the duel is virtually obsolete, and war is invoked only as a last resort. Difficulties are smoothed out through the diplomatic representatives that every nation keeps at the national capitals, and when they cannot settle an issue the matter is referred to an umpire satisfactory to both sides. Similarly in industrial disputes the tendency is away from the strike; when an issue arises representatives of both sides get together and try to find a way out. There is no good reason why an employer should refuse to recognize an organization or receive its representatives to conference, especially if the employer is a corporation which must work through representatives. Collective bargaining is in harmony with the spirit of the times and fair for all. Conference demands frankness on the part of all concerned. It leads more quickly to understanding and harmony if each party knows the situation that confronts the other. If the parties immediately concerned cannot reach an agreement, a third party may mediate and try to conciliate opposition. If that fails, the next natural step is voluntarily to refer the matter in dispute to arbitration, or by legal regulation to compel the disputants to submit to arbitration.

201. =Boards of Conciliation.=--The history of peaceful attempts to settle industrial disputes in the United States helps to explain the methods now frequently employed. In 1888, following a series of disastrous labor conflicts, Congress provided by legislation for the appointment of a board of three commissioners, which should make thorough investigation of particular disputes and publish its findings. The cla.s.s of disputes was limited to interstate commerce concerns and the commissioners did not const.i.tute a permanent board, but the legislative act marked the beginning of an attempt at conciliation. Ten years later the Erdman Act established a permanent board of conciliation to deal with similar cases when asked to do so by one of the parties, and in case of failure to propose arbitration; it provided, also, for a board of arbitration. Meantime the States pa.s.sed various acts for the pacification of industrial disputes; the most popular have been the appointment of permanent boards of conciliation and arbitration, which have power to mediate, investigate, and recommend a settlement. These have been supplemented by State and national commissions, with a variety of functions and powers, including investigation and regulation. The experience of government boards has not been long enough to prove whether they are likely to be of permanent value, but the results are encouraging to those who believe that through conciliation and arbitration the industrial problem can best be solved.

202. =Public Welfare.=--There can be no reasonable complaint of the interference of the government. The government, whether of State or nation, represents the people, and the people have a large stake in every industrial dispute. Society is so interdependent that thousands are affected seriously by every derangement of industry. This is especially true of the stoppage of railways, mines, or large manufacturing establishments, when food and fuel cannot be obtained, and the delicate mechanism of business is upset. At best the public is seriously inconvenienced. It is therefore proper that the public should organize on its part to minimize the derangement of its interests. In 1901 a National Civic Federation was formed by those who were interested in industrial peace, and who were large-minded enough to see that it could not be obtained permanently unless recognition should be given to all three of the interested parties--the employers, the employees, and the public. Many small employers of labor are bitterly opposed to any others than themselves having anything to say about the methods of conducting industry, but the men of large experience are satisfied that the day of independence has pa.s.sed. This organization includes on its committees representatives of all parties, and has helped in the settlement of a number of controversies.

203. =Voluntary Efforts of Employers.=--It is a hopeful sign that employers themselves are voluntarily seeking the betterment of their employees. It is a growing custom for corporations to provide for the comfort, health, and recreation of men and women in their employ.

Rest-rooms, reading-rooms, baths, and gymnasiums are provided; athletic clubs are organized; lunches are furnished at cost; continuation schools are arranged. Some manufacturing establishments employ a welfare manager or secretary whose business it shall be to devise ways of improving working conditions. When these helps and helpers are supplied as philanthropy, they are not likely to be appreciated, for working people do not want to be patronized; if maintained on a co-operative basis, they are more acceptable. But the employer is beginning to see that it is good business to keep the workers contented and healthy. It adds to their efficiency, and in these days when scientific management is putting so much emphasis on efficiency, any measures that add to industrial welfare are not to be overlooked.

204. =Profit-Sharing.=--Another method of conferring benefit upon the employee is profit-sharing. By means of cash payment or stock bonuses, he is induced to work better and to be more careful of tools and machinery, while his expectation of a share in the success of the business stimulates his interest and his energy and keeps him better natured. The objections to the plan are that it is paternalistic, for the business is under the control of the employer and the amount of profits depends on his honesty, good management, and philanthropic disposition. There are instances where it has worked admirably, and from the point of view of the employer it is often worth while, because it tends to weaken unionism; but it cannot be regarded as a cure for industrial ills, because it is a remedy of uncertain value, and at best is not based on the principle of industrial democracy.

205. =Principles for the Solution of the Industrial Problem.=--Three principles contend for supremacy in all discussions and efforts to solve the industrial problem. The first is the doctrine of _employer's control_. This is the old principle that governed industrial relations until governmental legislation and trade-union activity compelled a recognition of the worker's rights. By that principle the capitalist and the laborer are free to work together or to fight each other, to make what arrangements they can about wages, hours, and health conditions, to share in profits if the employer is kindly disposed, but always with labor in a position of subordination and without recognized rights, as in the old political despotisms, which were sometimes benevolent but more often ruthless. Only the selfish, stubborn capitalist expects to see such a system permanently restored.

The second principle is the doctrine of _collective control_. This theory is a natural reaction from the other, but goes to an opposite extreme. It is the theory of the syndicalist, who prefers to smash machinery before he takes control, and of the socialist, who contents himself with declaring the right of the worker to all productive property, and agitates peacefully for the abolition of the wage system in favor of a working man's commonwealth. The socialist blames the wage system for all the evils of the present industrial order, regards the trade-unions as useful industrial agencies of reform, but urges a resort to the ballot as a necessary means of getting control of industry. There would come first the socialization of natural resources and transportation systems, then of public utilities and large industries, and by degrees the socialization of all industry would become complete. Then on a democratic basis the workers would choose their industrial officers, arrange their hours, wages, and conditions of labor, and provide for the needs of every individual without exploitation, overexertion, or lack of opportunity to work.

Serious objections are made to this programme for productive enterprise on the ground of the difficulty of effecting the transfer of the means of production and exchange, and of executive management without the incentive of abundant pecuniary returns for efficient superintendency; even more because of the natural selfishness of human beings who seek personal preferment, and the natural inertia of those who know that they will be taken care of whether they exert themselves or not. More serious still are the difficulties that lie in the way of a satisfactory distribution of the rewards of labor, for there is sure to be serious difference of opinion over the proper share of each person who contributes to the work of production, and no method of initiative, referendum, and recall would avail to smooth out the difficulties that would be sure to arise.

206. =Co-operation.=--The third principle is _co-operation_. The principle of co-operation is as important to society as the principle of division of labor. By means of co-operative activity in the home the family is able to maintain itself as a useful group. By means of co-operation in thinly settled communities local prosperity is possible without any individual possessing large resources. But in industry where compet.i.tion rules and the aim of the employer is the exploitation of the worker, general comfort is sacrificed for the enrichment of the few and wealth flaunts itself in the midst of misery. There will always be a problem in the industrial relations of human beings until there is a recognition of this fundamental principle of co-operation. The application of the principle to the complicated system of modern industrialism is not easy, and attempts at co-operative production by working men with small and incapable management have not been successful, but it is becoming clear that as a principle of industrial relation between cla.s.ses it is to obtain increasing recognition. If it is proper to admit the claims of the employer, the employee, and the public to an interest in every labor issue, then it is proper to look for the co-operation of them all in the regulation of industry. The usual experiments in co-operative industry have been the voluntary organization of production, exchange, or distribution by a group of middle or working cla.s.s people to save the large expense of superintendents or middlemen. Co-operation in production has usually failed; in America co-operative banks and building a.s.sociations, creameries, and fruit-growing a.s.sociations have had considerable success, and in Europe co-operative stores and bakeries have had a large vogue in England and Belgium, and co-operative agriculture in Denmark. But industry on a large scale requires large capital, efficient management, capable, interested workmanship, and elimination of waste in material and human life. To this end it needs the good-will of all parties and the a.s.sistance of government. Unemployment, for instance, may be taken care of by giving every worker a good industrial education and doing away with inefficiency, and then establishing a wide-spread system of labor exchanges to adjust the ma.s.s of labor to specific requirements.

Industry is such a big and important matter that nothing less than the co-operation of the whole of society can solve its problems.

This co-operation, to be effective, requires a genuine partnership, in which the body of stockholders and the body of working men plan together, work together, and share together, with the a.s.sistance of government commissions and boards that continually adjust and, if necessary, regulate the processes of production and distribution on a basis of equity, to be determined by a consensus of expert opinion. In such a system there is no radical derangement of existing industry, no destruction of initiative, no expulsion of expert management or confiscation of property. Individual and corporate ownership continue, the wage system is not abolished, efficient administration is still to be obtained, but the body of control is not a board of directors responsible only to the stockholders of the corporation, and managing affairs primarily for their own gain, but it consists of representatives of those who contribute money, superintendence, and labor, together with or regulated by a group of government experts, all of whom are honestly seeking the good of all parties and enjoying their full confidence. Toward such an outcome of present strife many interested social reformers are working, and it is to be hoped that its advantages will soon appear so great that neither extreme alternative principle will have to be tried out thoroughly before there will be a general acceptance of the co-operative idea. It may seem utopian to those who are familiar with the selfishness and antagonism that have marked the history of the last hundred years, but it is already being tried out here and there, and it is the only principle that accords with the experiences and results of social evolution in other groups. It is the highest law that the struggle for individual power fails before the struggle for the good of the group, and a contest for the success of the few must give way to co-operation for the good of all.

READING REFERENCES

ELLWOOD: _Sociology in Its Psychological Aspects_, pages 188-194.

ADAMS AND SUMNER: _Labor Problems_, pages 175-286, 379-432, 461-500.

_Bulletins of the United States Department of Labor._

CARLTON: _History and Problems of Organized Labor_, pages 228-261.

GLADDEN: _The Labor Question_, pages 77-113.

HENDERSON: _Social Elements_, pages 167-206.

CROSS: _Essentials of Socialism_, pages 11, 12, 106-111.

WYCKOFF: _The Workers._

CHAPTER XXVIII

EXCHANGE AND TRANSPORTATION

207. =Mercantile Exchange.=--Important as is the manufacturing industry in the life of the city, it is only a part of the economic activity that is continually going on in its streets and buildings.

The mercantile houses that carry on wholesale and retail trade, the towering office-buildings, and the railway and steamship terminals contain numerous groups of workers all engaged in the social task of supplying human wants, while streets and railways are avenues of traffic. The manufacture of goods is but a part of the process; distribution is as important as production. All these sources of supply are connected with banks and trust companies that furnish money and credit for business of every kind. The economic activities of a city form an intricate network in which the people are involved.

Hardly second in importance to manufacturing is mercantile exchange.

The manufacturer, after he has paid his workers, owns the goods that have been produced, but to get his living he must sell them. To do this he establishes relations with the merchant. Their relations are carried on through agents, some of whom travel from place to place taking orders, others establish office headquarters in the larger centres of trade. Once the merchant has opened his store or shop and purchased his goods he seeks to establish trade relations with as many individual customers as he can attract. Mercantile business is carried on in two kinds of stores, those which supply one kind of goods in wholesale or retail quant.i.ties, like groceries or dry goods, and those which maintain numerous departments for different kinds of manufactured goods. Large department stores have become a special feature of mercantile exchange in cities of considerable size, but they do not destroy the smaller merchants, though compet.i.tion is often difficult.