INTERNATIONAL LABOUR OFFICE

STUDIES AND REPORTS
Series A (Industrial Relations) No. 27

INDUSTRIAL RELATIONS
IN

THE UNITED STATES
By
H. B. BUTLER, C.B.
Deputy-Director of the International Labour Office

GENEVA
1927

+

PREFACE
The object of this study is to give a concise and, it is hoped,
an impartial view of the relations between employers and employed in the United States. It does not pretend to be exhaustive, as it would be impossible to treat so large a subject
fully in all its aspects within the compass of a small volume.
Its aim is rather to convey a bird's eye view of the problem of
industrial relations as it presents itself under American conditions and to furnish some indications to readers who desire to
make a more intensive study of it.
The short bibliography printed in Appendix I and the footnotes indicate the principal documentary sources which have
been used, but much as he is indebted to them, the writer owes
even more to the many persons, firms and organisations, both
in the United States and Canada, who placed themselves freely
at his disposal and were unstinting in affording information
during a visit to North America in the autumn of 1926. It is
impossible to obtain any adequate conception of American
industry without having seen it and without having discussed
it with those who are in a position to speak with knowledge
about it. It is always difficult for a foreigner to acquire a
correct view about the conditions in another country. It is,
however, easier to obtain collective and authoritative opinions
about industry in America than in Europe, owing to the habit
of collective discussion of economic and industrial problems,
and the frequent meeting of groups for that purpose, which are
customary among American industrialists. Indeed, one of the
most "striking features of American industrial life is the freedom
with which big employers and the managers of big establishments compare notes, exchange experiences, and profit by each
other's knowledge and mistakes. Their frankness in discussing
their own methods and their willingness to accept criticism of
them are certainly factors in their success. Incidentally, these
characteristics greatly facilitate the task of the enquiring stranger,

_ 4 —
and I have a large debt of gratitude to acknowledge to innumerable employers, responsible managers of big establishments,
engineers and labour leaders who did not grudge valuable time
in explaining their problems and their manner of solving them
and who did not resent cross-examination, even when its purpose
was openly critical.
In the first place, I owe a special debt to Mr. A. H. YOUNG
and Mr. G. BOWERS, of the Industrial Relations Counsellors,
Inc.,

to Dr.

A. FLEXNER and

Mr.

RAYMOND B. FOSDICK,

oi

the Rockefeller Foundation, and to Mr. SPENCER MILLER, jun.,
of the American Federation of Labor, through whose good
offices I was able to get into touch with a very wide variety
of employers' and workers' representatives and to see a number
of establishments in the railway, chemical, iron and steel,
engineering, clothing, motor-car, and meat-packing industries.
In the second place, the National Industrial Conference Board
through Mr. MAGNUS ALEXANDER, and the United States Chamber
of Commerce, through Mr. ALVIN DODD, gave me extensive
opportunities of studying their organisations and discussing
employers' problems, while among a large number of individual
employers who were generous in their help I am specially
indebted to Mr. HENRY S. DENNISON, Mr. STANLEY KING,
Mr. SAM A. LEWISOHN, and

Mr. JOSEPH SCHAFFNER.

On

the

labour side, the • American Federation of Labor through
Mr. WILLIAM GREEN and Miss THORNE, the Illinois Federation
of Labor through Mr. VICTOR OLANDER, the Amalagamated
Clothing Workers through Mr. SIDNEY HILLMAN and Dr. L E O
WOLMAN, and many other union officials gave me every assistance and guidance. I also received much help from the Department of Labor through the kindness of Mr. Secretary DAVIS,
from the Women's Bureau through Miss MARY ANDERSON,
from the Children's Bureau through Miss GRACE ABBOTT, from
the American Association for Labor Legislation through Mr. J. B.
ANDREWS, from the Canadian National Railway through
Mr. JOHN ROBERTS and Mr. THOMAS on the management side
and through the officials of the Montreal Branch of the Railway
Shopmen's Union, from the Russell Sage Foundation through
Miss MARY VAN KLEECK, from the Federal Council of the Churches
of Christ in America, from the Taylor Society through Mr. MORRIS L. COOKE, from the League of Nations Non-Partisan Association through Mr. CHARLES C. BAUER, and from many other

— 5 —
organisations. There were many others who were lavish in
their hospitality and counsel, and if owing to their number
I offer my thanks to them collectively rather than individually,
I hope they will not regard this procedure as indicating any
want of appreciation on my part.
Of course, none of the persons or organisations mentioned
can be held in any way responsible for the accuracy of the
statements made in this study, or for the opinions expressed
in it.
Finally, I should like to express my thanks to Mr. W. J.
ELLISON of the International Labour Office, and to Mr. L.
MAGNUSSON, Director of its Washington Branch Office, for the
constant help which they have given me both in my enquiry
in the United States and in the preparation of this volume.
H. B. BUTLER.

June 1927.

CONTENTS

Pages
CHAPTER

I: The General Background

9

Geographical and Constitutional Features
The Mixture of Races
American Individualism
CHAPTER

I I : Economic Conditions

9
13
17
22

American Prosperity
Wage-rates and Earnings
Real Wages and Standard of Living
Labour Supply and Productive Efficiency
The Doctrine of High Wages

22
25
29
33
37

CHAPTER I I I : The American Trade Unions

40

Their Structure
Their Aims and Policy
Insurance and Banking Activities
Their Present Strength
Opposition to Trade Unionism
The Policy of Co-operation

40
45
48
52
54
56

CHAPTER

IV: Employers' Organisations and Policies

The "Open S h o p " Doctrine
Its Enforcement
Legislative, Legal, and Research Activities
The New Labour Policy
CHAPTER

V: "Personnel Management"

The Labour Turnover
The Study of Working Conditions
Insurance and Other Benefits
Stockholding by Employees
CHAPTER

59
61
64
67
70
74

*

VI: Employee Representation

The Meaning of "Employee Representation"
Criticism of Employee Representation

74
77
79
81
84
86
89

— 8 —
Pages

VII: Co-operation between Employers and Trade Unions

CHAPTER

Collective Bargaining
Building and Printing Trades
The Clothing Trades
In the Railway Shops . .
VIII: Conclusion

CHAPTER

I:
II:
III:
IV:

APPENDIX

„
„

93
93
94
96
101
106

Short Bibliography . . . . . . . . . , ; . . . . . 113
Hours and Wages . . . .'''. . . . .".' . . . . 117
Employee Representation Plans . . . . . . . . 120
Selected Employee Stock-Ownership and ProfitSharing Plans
.132

CHAPTER I
THE GENERAL BACKGROUND

Any attempt to describe the relations between employer
and employed in the United States must necessarily be prefaced by an attempt of even greater magnitude and difficulty
to describe the general setting of American industry. To
approach the study of industrial relations with preconceived
notions based upon European experience is to run the risk
of total misunderstanding at the outset. American conditions
are not comparable with those which prevail in any European
country, or indeed in any country outside the United States
with the partial exception of Canada. The vast extent of its
territory, the mixed character of its population, the psychological and social atmosphere peculiar to a "new country"
are factors which find no parallel elsewhere, but which exercise
a marked influence upon relations in industry. In order to
obtain the right perspective a few elementary notes on the
background of the American picture may assist those who
are unfamiliar with it.
GEOGRAPHICAL AND CONSTITUTIONAL FEATURES

In the first place, the United States is not a country but a
continent. Without adducing statistics as to its square mileage, its length or its breadth, it may suffice to mention that one
alone of its 48 component States, Texas, is greater in area than
Germany, that California is three-quarters of the size of France,
that Wyoming and Oregon are each larger than Great Britain,
and that New York State is three times as big as Switzerland.
The difference in climate between Maine and Florida is greater
than that between Scotland and Sicily. The distance between
New York and Chicago is greater than that between Paris and
Breslau, while the journey from Chicago to San Francisco
equals that from Athens to the Arctic Circle. These simple
facts alone create a problem of industrial organisation such as
confronts no European community. To establish an employers'

— 10 —
association or a trade union of national scope in such circumstances is a gigantic task. To maintain contact, discipline, and
consultation presents enormous difficulties and entails great
expenditure, despite the perfection of the railway system and
the telephone. National agreements and national uniformity
are impossible as we understand them in Europe. Conditions
vary so widely from one part of the country to another that
much looser organisation and much wider local independence
are inevitable.
Over such a huge expanse of territory decentralisation is
a necessary feature not only of industrial but also of political
government. Since the day when the thirteen States first
formed the American Union in 1776 down to the present time,
a watchful jealousy of any encroachment by the Federal Legislature on the autonomy of the States has persisted. Moreover,
even if this traditional antipathy to centralisation did not
exist, the impracticability of applying a single code of domestic
law to so large and so variegated an area would have almost
inevitably limited the jurisdiction of the Federal Government.
The result is that labour legislation falls almost exclusively
within the sphere of the States, and only in regard to railways
and maritime matters does Congress possess any effective
power of regulation. An attempt was recently made to confer
authority upon it to deal with child labour under the age of 18.
In order to do so, it was necessary to amend the Constitution
of the United States, as two Acts of Congress for the purpose
had been declared unconstitutional by the Supreme Court.
The amendment became the subject of violent political controversy and has so far been rejected by most of the States, on
the ground that labour legislation is within their prerogative
and the proposal to transfer any part of it to Congress would
constitute an infringement of the fundamental rights bequeathed
to them by the Act of Union.
There is, then, not one Labour Code in the United States
but forty-eight Labour Codes, framed on no common or uniform
plan. In northern States, such as New York, Massachusetts,
or Wisconsin, or again in western States such as California
and Oregon, there are advanced schemes for workmen's compensation, the labour of women is carefully supervised, and
the law is enforced by adequate machinery. In the south, on
the other hand, there are States where women work all through
the night, where no compensation is provided for accidents,

and where factory inspection is largely ineffective. The workman who passes from one State to another finds himself under
a new dispensation, which may afford him protection which
he never previously enjoyed or which may deprive him of rights
to which he was accustomed. A few examples may be.given
to illustrate the diversity of legislation which prevails. Many
American States have minimum wage laws, but they vary
widely in their scope and underlying principles. While in Arizona and Utah flat rates for female labour are set by statute,
in most other States the fixing of rates is entrusted to special
commissions variously constituted but generally providing for
representation of employers and employees. While in most
cases fines are inflicted for non-compliance, in Massachusetts
the only penalty is the publication of the offender's name in
the newspapers 1 . The same absence of uniformity may be
found in regard to child labour. The employment of children
under 16 in factories is forbidden in six States and under 15
in seven. Some limit their hours of work to 48, others to 44
per week. But "the law of North Carolina still permits an
eleven-hour day, while several other States, north and south,
allow ten hours, and because of lack of law enforcement in some
of these States the hours are reported to be still longer " 2.
A further important factor is the power of Courts to annul
legislation on the ground of unconstitutionality 3 . In virtue
of the Fourteenth Amendment to the Constitution every
American possesses a double citizenship — that of the United
States and of the State in which he is resident. It is for the
Federal Courts to decide whether the Acts of the State are
consonant with the rights and liberties guaranteed to him by
the Federal Constitution, and if they are curtailed or infringed,
to declare such acts null and void. Almost every social reform
has thus to run the gauntlet of the Judiciary. Almost every
limitation imposed by the State legislatures on the employer's
freedom has been contested. Thus in 1924 the United States
Supreme Court declared illegal the minimum wage law for women
of the District of Columbia, although it had previously pronounced in favour of a similar law in Oregon, and like decisions
had been rendered by seven State Supreme Courts. Again, the
1
See J. R. COMMONS and J. B. ANDREWS: Principles of Labour
Legislation, pp. 205 et seq.
2
Ibid., p. 245.
* See W. G. RICE: "The Constitutionality of Labour Legislation in
the United States ", International Labour Review, Nov.-Dec. 1926.

iL/- 1
**^ ^ ^ j
V H. ^
t^T . ^ |
"* 7 « ^

— 12 —
New York State Court of. Appeals declared a law forbidding
night work for women unconstitutional in 1907, but reversed
its decision six years later 1. Similar cases might be quoted
over the whole range of social legislation. Its history in the
United States is one of extreme complexity, depending as it
does on the fluctuating decisions of forty-eight legislative bodies
and innumerable tribunals.
Enough has been said, however, without multiplying further
instances, to suggest yet another considerable complication in
the life of a national employers' association or trade union,
which is bound to follow and keep pace with the law-making
activities of all the States and the pronouncements of the judicial
authorities all over the country, any one of which may erect
or demolish a principle of far-reaching importance. It is commonly said that American trade unions do not take part in
politics. Although there is no Labour Party in the United
States, this is very far from the truth. The British trade unions
perforce followed political developments closely long before
the first Labour Member was elected to the House of Commons,
and their central executive bore until very recently the title
of "Parliamentary Committee of the Trade Union Congress ",
because it was formed expressly to keep in touch with parlia*
mentary proceedings, to promote legislation in the interests of
its members and to ensure that attention was drawn to any
act of the executive inimical to them. The American Federation
of Labor does precisely the same thing, but its task is enormously more complicated, because, in addition to the President
and Congress, it has to deal with the Legislatures and Governors
of 48 States. Without constant political activity and vigilance
it would not have achieved its present power of collective bargaining and would risk the loss of many rights which are now
assured to it by the law. Employers' organisations such as the
National Manufacturers' Association and the United States
Chamber of Commerce are not less active or vigilant. Further
reference will be made to these matters in later chapters. They
are only mentioned here as another illustration of the effects
of the size and heterogeneity of the United States, which
impose upon industrial organisations unprecedented problems
of internal structure and immense obligations in the legislative,
judicial, and political spheres.
1

See J . R. COMMONS and

J . B. A N D R E W S , op. cit.,

p.

292.

-

13 —

T H E MIXTURE OF RACES

A further factor which has a profound influence on the
industrial situation is the mixture of races which compose the
United States. Although English is the common language of
the whole country, there are millions of its inhabitants who
only possess the most rudimentary acquaintance with it. The
Federal Census of 1920 showed that there were 13,712,754
whites of foreign birth resident at that time, of whom only
2,171,694 were English-speaking, while there were no less than
36,398,958 persons one or both of whose parents were of foreign
origin, and of these only 9,729,365 were of British or Irish
stock 1. These immigrants coming from all parts of the earth,
speaking almost every known tongue, with widely-varying
habits and standards of life, constitute one of the great social
problems of the United States. As American industry and
American agriculture expanded, the flow of immigration steadily
increased. From 1860 onwards its volume swelled from decade
to decade, until during the eight years 1907-1914 more than
eight million persons entered the United States. These newcomers supplied the greater part of the common labour on the
farms, in the factories and the forests, on the roads and the
railways. Thanks to popular education and other "Americanising " agencies the process of assimilation was extraordinarily
rapid. The children of immigrants, many of them sprung from
races which have conspicuously failed to assimilate during
centuries in Europe, frequently became indistinguishable from
each other or from the native American. But as each generation
became merged in the national life, it was followed by a fresh
flood of strangers, most of them accustomed to a mode of
living far below that of the American-born workman, glad to
accept wages which he would regard as inadequate to sustain himself and his family, often ignorant of the first principles of industrial association, and almost beyond the reach of organisation
owing to their inability to comprehend the speech of the organiser. Strike meetings at which the orator has required ten or
fifteen interpreters are commonplaces in American industrial
history. Ignorance of the language, often combined with
illiteracy, places the immigrant at the mercy of an unscrupulous
employer, and these same drawbacks make the creation of any
effective plan for representation of the workpeople in the plant
1

Statistical Abstract of the United States, 1925, pp. 32-33.

— 14 —
extremely complicated and at times largely illusory. In these
circumstances it is surprising not how little has been done in
the way of organisation, but how much. Yet. when all is said,
the mixture of race is bound to retard social advancement,
which must depend on the pursuit of common ideals and of
a progressive standard of life. Its consequences are reflected
in the marked difference between the wages of skilled and
unskilled labour, which represents not merely inequality in
productive power but in a large degree racial distinctions, not
because any actual discrimination is made between one race
and another, but because those which are accustomed to a lower
standard of life and are largely incapable of organisation naturally tend to accept a lower rate of remuneration for their
services. These facts serve to explain the attitude of the American Federation of Labor towards immigration, which is often
misconceived in other countries. The first cares of any national
trade union movement are to build up solid organisation among
all ranks of labour and to improve the standard of living. As
long as immigration was unchecked, both these aims were
constantly thwarted. With the doors almost closed, education
is expected gradually to destroy the obstacles which language
and illiteracy have hitherto raised in the path of organisation,
and so to produce in time a homogeneous working population
seeking the same objectives and the same standard of well-being.
But the immigrant is not the only social problem springing
from diversity of race and habits. A hardly smaller problem
is presented by two large groups indigenous to the United States
— the negro and the "poor white ". The Federal Census Bureau
estimated that in 1923 the negroes numbered over 11,000,000,
or about 10 per cent, of the total population. They are no
longer confined to agriculture or to the southern States. One
of the results of the great demand for labour caused by the rapid
growth of industry in the last decade coupled with the restriction of immigration has been to draw the negro to the industrial
centres in the north, where he can earn far higher wages than
he was offered in the south. The census returns show that
hundreds of thousands migrated to the northern States, particularly Illinois, Michigan, Ohio, and Pennsylvania, between
1910 and 1920, and the northward flow has probably continued
since. A substantial proportion of the unskilled labour in cities
like Chicago and Detroit is now supplied by negroes, who work
side by side with white men, and sometimes with white women,

— l o in the factories. Hitherto experience seems to have shown that
they have little aptitude for co-operative enterprise or organisation even among themselves, while the difficulties of securing
collaboration between white and coloured races on equal terms
have hardly begun to be explored but are likely to be formidable.
Moreover, as yet the negro is on a lower plane of culture than
the white races in the United States, whether of American or
foreign origin. While only 2.0 per cent of the native born whites
and 13.1 per cent, of the foreign born were found to be illiterate
in 1920, the percentage of illiteracy in the negro population
was as high as 22.9 1 . To attempt any detailed description or
analysis of the negro problem would be out of place here, but
no picture of the background of American industry could pretend to be complete which did not include it among the shadows.
There is, however, another problem, not perhaps so urgent
or so difficult but hardly less peculiar — that of the "poor
white ". For centuries thousands of descendants of the earliest
British settlers have lived an isolated, barren life among the
southern mountains. They are perhaps the purest Anglo-Saxon
stock to be found anywhere and have preserved much of the
speech and customs of England of the seventeenth century.
But they are mostly poor and ignorant. In seven of the southern
States 2 there were in 1920 603,476 persons over 10 years who
could not read or write but who were native-born whites. They
mostly belong to this mountain community. But with the
development of industry in the south, the mountaineers
are now coming down in tens of thousands to the mines or to
the mills, where they dwell in villages built and owned by the
mineowners or millowners. Whole families are employed in
the mills at wages which represent wealth and comfort far
beyond anything they have known, though far below the wages
paid for the same kind of work in New England. Thus
competition has been set up between the mills of the north, f ••
where conditions are good and regulated by the State, and the ^
mills of the south, where labour is cheap and conditions are . i^/u/3-7'J
mainly determined by the employer, who exercises a patriarchal
sway over his employees. One writer thus describes these
industrial communities 3 :
1
2

Statistical Abstract, 1925, p. 28.
Virginia, North Carolina, Georgia, Kentucky, Tennessee, Alabama,
and3 Louisiana (Statistical Abstract, 1925, p. 27).
F. TANNENBAUM: Darker Phases of the South, pp. 58-59. This
book gives a graphic picture of the southern textile industry and its
white workpeople.

— 16 —
• 4
The mill-village is a curious institution. It is built behind the mill
,^t*^
and is an adjunct to it. It has no life of its o w n . . . It is private property.
?
. j . The State may not enter in without a warrant. The school-teacher is
'JU" ' X paid by the mill man. So is the church. The grocery-store, the
U*
moving-picture, the drug-store, the doctor, everything is in the hands
\<y ' o j
of the mill m a n . . . Everything is owned and bought by him. Even the
ff^ •'
policemen are paid by him. The people have no political life. They do
not vote. They are not interested in politics.

In many cases the employer is no doubt honestly doing his
best to raise the status of his employees. His rule is often
benevolent, but it is practically absolute. This peculiar situation has its importance not merely as a survival in modern
times of a paternalistic relationship which is rapidly disappearing elsewhere, but as presenting an economic problem of
an unusual kind. One of the objects aimed at by the International Labour Organisation is to create international minimum
standards which will prevent unfair competition, based on
subnormal labour conditions, between one country and another.
In the United States competition of this kind appears to exist
in the textile industry between one part of the same country
and another 1. The effects are already clearly seen. During
the last few years New England, which was the original home
of the industry, has been steadily losing ground to the southern
mills. In 1921, there were in the New England States 185,000
textile workers, representing 45 per cent, of those engaged
in the industry, as against 164,000, representing 43 per cent.,
in the southern States. In the short space of four years this
position has been reversed. In 1925, there were 229,000 textile
workers, representing 51 per cent, of the industry, in the southern States, while the New England total had fallen to 164,000,
representing only 36 per cent. 2 No doubt this migration is
partly accounted for by the fact that the southern factories
are newer and more up to date, but the difference in wages
and conditions of labour is at least as important a factor. It
^~: r*V
has even been suggested in New England that, in order to meet
t/2rtl*7 southern competition, the standard of protection for women
-^
í,t"'~ a n d children now established by law should be lowered. Moreover, there is no reason why similar competition should not
be set up in other industries. The supply of labour is by no
means exhausted in the southern States. It is almost innocent
1

Another illustration of the same tendency may be found in the
eight-hour law passed in Oregon in 1923, which is made conditional on
similar legislation being adopted by the adjoining States (COMMONS
and

2

ANDREWS, op. cit., p. 278).
DEPARTMENT OF COMMERCE:

Census of Manufacture, 1925.

— 17 —
of trade union organisation and is content with a small wage,
because it has always been accustomed to a hard and bare
living. There are, indeed, already signs of considerable industrial
development in the south, which possesses large quantities of
coal and other natural resources 1. How industrial relations
are likely to develop there is speculative, but the existence
of large masses of people, both white and coloured, who are
much below the general cultural level of the country is a
circumstance which is clearly having industrial consequences
and cannot be left out of any general survey of American
industry.
AMERICAN INDIVIDUALISM

It has often been remarked, both by Americans themselves
and by foreign observers, that the American workman adopts
a different attitude towards his employer and towards his
associates from that of the workmen of other countries. That
there is some truth in this assertion can hardly be denied. In
a later chapter some account will be given of the theoretical
basis of the American labour movement, which is certainly
different from that of European movements, though perhaps it
is more a question of method than of ultimate aim. This difference may be traced partly to the circumstances which have
already been touched upon — the size of the country and the
heterogeneity of its people — but perhaps still more to the
mentality of the individual American workman. The atmosphere of a "new country", in which possibilities are- still
enormous, class divisions as yet barely perceptible and the
process of social crystallisation only beginning, naturally breeds
a different outlook in the worker to that which prevails in
countries which have reached the limit of their expansion and
where the social hierarchy has been solidified for generations.
No doubt frequent instances could be found in most countries
of men who have gone from the bottom to the top of the industrial ladder, but in America they are far more numerous than
elsewhere. Many workmen still feel that they may in their turn
become a Ford or a Swift or a Rockefeller, if they can save some
money and a little luck comes their way. Moreover, industry
is swelling so fast that even without any special good fortune
1
In the 12 States comprising the south Atlantic and east-southcentral groups with the District of Columbia, there were 1,726,075
persons engaged in manufacture and 238,635 in mining in 1920 (Statistical Abstract, 1925, pp. 56-57).

— 18 —
the ordinary worker may hope for promotion far more reasonably
than can the worker in a country where the rate of economic
growth is less meteoric. As a consequence not only has he a
stronger belief in his own capacity to rise in the social scale, but
the obstacles to his doing so are less formidable. The number of
employers and high officials who have come up from the ranks is
undoubtedly very considerable. One can hardly fail to find them
in any big business. This is a fact which has an obvious bearing
on industrial relations, though it is easy to exaggerate its effects.
It is not always the employer who started Ufe as a labourer
who has the greatest sympathy with his own labourers' claim
to better wages and conditions. Because they were good enough
for him in his young days, he is sometimes apt to suppose that
they ought to be indefinitely satisfactory. But on the whole
knowledge breeds understanding and therefore tends to ease
the relationship between employer and employee. Again, the
worker's knowledge that avenues of advancement are open to
him, besides being a stimulus to the more ambitious, has prevented the growth of a "class-conscious " attitude towards
society at large. As the report of the German trade union
delegates puts it: " T h e more developed self-consciousness
springing from his own individuality which exists in the
American workman is certainly one of the reasons which stand
in the way of class-consciousness of the European t y p e . . .
The new world does not indeed offer ' unlimited possibilities '
to every penniless adventurer, but the number of successful
fortune-hunters is yet large enough to keep the idea alive that
any good workman may, if luck is only kind to him, attain
by his own efforts a higher, or possibly even the highest, rung
of the social ladder. " x
The knowledge and belief that he can soar above his present
social status, or that at least his children may do so, also
influences the American worker's attitude towards his fellows.
He does not feel so keenly that he and they are all in the same
boat, destined to sink or swim together. He thinks that without
their aid he may better his position by his own exertions. He
may not wish to limit his ambitions too closely to those of a
class which he may hope to quit for higher things. As a result
he has less " class feeling ", less sense of solidarity, and a greater
reliance on his own powers to improve his own standard of
Amerikareise deutscher Gewerkschaftsführer, p. 206.

— 19 —
living, whether his associates improve theirs or not. A writer
very familiar with the American labour movement has pointed
out that this constant progress of the individual has prevented the
seeding of radicalism in the United States, in periods when the
general prosperity of the various strata in the labour hierarchy
was stationary or declining. The immigrant usually earned
for his unskilled labour more than he had ever earned at home.
As he acquired skill, he could readily pass into a higher rank,
and he felt sure that his sons would go higher still. Their
places were always taken below by a fresh relay of immigrants.
The restriction of immigration has contributedto produce a general
uplifting of the standards of all classes of labour, but it may at the
same time check the ascent of the individual from one stratum
to another. Mr. Walling considers that in the future "the individual wage-earning employee will be able to advance himself,
as a rule, only by the advance of his employment — a method
of advance facilitated, however, by this same restriction of
immigration. This means of course a wholly new outlook
and new mentality for American labour." 1 This forecast is
naturally speculative. Whether the damming of immigration
is sufficiently complete, or will be maintained sufficiently long,
to produce so far-reaching a change is impossible to predict.
In any event it is not likely to come about rapidly. But in
so far as American society tends in the direction of stratification
and stabilisation, the prospects and probably with it the outlook
of the wage earner are likely to be modified.
pjj
The same individualist ambition has another effect upon
the habits of the American worker which reacts on his relations
with his employer. He does not as a rule expect or desire to
remain indefinitely in the same employment. A natural
impulse often drives him to seek a change if he can see an
opportunity of bettering himself. This restlessness is a national
characteristic common to all classes. The American is constitutionally more inclined to "take a chance " than the European.
He welcomes new experiences, partly from sheer love of novelty
and adventure, partly from the constant hope that he may
strike a lucky vein which will lead on to fortune. He attaches
less importance to security than to the possibility of "getting
on ". He often goes down instead of up, but he has a fund of
optimism which encourages him in the belief that he will rise
1
W. E. WALLING: American Labor and American Democracy, I,
p. 224.

— 20 —
again. This is a contributory cause of the labour turnover,
which is one of the problems of the American employer and
which, as will be seen later, has had a distinct influence upon
his attitude towards labour. Of course this mobility is much
more marked in good times, when labour is at a premium, than
in bad times, when employment is scarce. It would be idle
to suppose that the fear of unemployment is not very real in
the minds of most American workmen or that it is not the
mainspring of trade union policy in the United States, as in
other countries. But, after making every allowance, it still
remains true that migration from one establishment to another,
or even from one industry to another, is a much more frequent
phenomenon in America than in Europe. Moreover, it has its
reflex in the practice of the American employer. Though
there were many exceptions, generally he acted on the principle
of "hire and fire ". Until recently he usually felt little compunction in dismissing the individual workman for the least
shortcoming or in turning off any number of men as soon as
a momentary slackening of business seemed to render it expedient. This tendency sprang not so much from a natural
hardness of heart as from the individualistic tradition governing
American industry, according to which each man from the
highest to the lowest had to fend for himself and the weakest
must go to the wall.
Another aspect of the same mentality may be found in the
attitude of the American towards change of all kinds. He is
seldom content with what he is doing or what he has got. He is
ready at any moment to throw over old methods if he can
find better, just as he will pull down a comparatively new
building in order to construct one twice as big. Though in
some respects as conservative as anybody, he is not as a rule
wedded to custom or tradition in matters of organisation.
Novelty as such is rather attractive than repugnant to him.
This frame of mind partially accounts for his readiness to try
experiments in the field of industrial relations. These experiments are not modelled on any one pattern, but bear a strongly
individualist stamp, for individualism is the keynote of American
industry as it is of American life.
It would be easy to illustrate this theme by innumerable
examples and it will be necessary to recur to it; but enough
has been said to indicate one conclusion, which must be borne
constantly in mind in any study of American conditions.

— 21 —
No generalisation can safely be made about them. The country
is too big, too heterogeneous, too individualistic, to enable
its industrial relations to be summed up in any convenient
formula. There are no rules to which numerous exceptions
could not be found, whether as regards wages or hours or any
other factor in industry. In the course of this study an attempt
will be made to deduce a certain number of prevailing tendencies
and principles from a mass of shifting, variegated and sometimes
contradictory data; but every general statement is liable to
be falsified by a hundred instances to the contrary. Above
all, it is difficult to draw any comparison between the
United States and any other part of the world, because no
precise comparison is possible. There are certainly lessons to
be derived from particular phases of American industrial experience, but anyone who seeks to draw them or to apply them
will do well to remember that it has its setting in a geographical, ethnical, and psychological background which is
unique and incapable of being reproduced anywhere else.

CHAPTER II
ECONOMIC CONDITIONS

In the previous chapter some account was attempted of the
general factors derived from the geographical, social, and racial
structure of the United States which have a traceable influence
upon industrial relations. The economic conditions under which
they exist have an even greater share in their determination.
Much attention has been devoted to the prevailing American
prosperity. It has been claimed that the high level of wages
now obtaining has gone far to eliminate the causes of discord
between employer and employed, that it has united them in a
common effort to increase production and with it their common
well-being. It has also been asserted that the high-wages
movement has bred a contentment in the working population,
which has checked the spread of trade unionism by obviating
its necessity. That there is some substance in all these claims
is almost certainly true. Industrial strife is generally likely
to diminish as the standard of comfort of the workpeople rises
above the mere subsistence level and guarantees them not only
a reasonable measure of financial security, but even the enjoyment of some degree of luxury. In order to estimate, however,
how far the wage earners of America have attained this state,
it is necessary to examine the facts of prosperity rather more
closely.
AMERICAN PROSPERITY

That America has been remarkably and unprecedentedly
prosperous in the last ten years is hardly open to question.
It is attested by all the criteria usually applied to measure
national wealth. In every department of production enormous
strides have been made, which have brought the United States
to an equality with the whole of Europe in many products and
actually beyond it in some. The following table will illustrate
the change that has come about in the balance of economic
power between the old world and the new in the past decade:

— 23 —
TABLE I.

PERCENTAGE OF WORLD PRODUCTION

Product groups

Year

Metals

1913
1925
1913
1925
1913
1925
1913
1925
1913
1925
1913
1925

General index (excluding foodstuffs)

1913
1925

Cereals
Cereals and other foodstuffs . .
Textiles
Wood pulp
Fuels

1

x

Europe
(excluding
U.S. S.R.)

North America
(i.e. U.S. and
Canada)

32.7
31.0
34
32
10
14
52
43
44
35.0
47.6
39.0
34.1
28.1

33.1
37.0
19.7
20.1
30.2
31.4
47.0
52.9
45.0
50.8
42.5
50.8
35.9
38.7

Taken from Memorandum on Production and Trade, by the ECONOMIC AND FINANCIAL

SECTION OP THE LEAGUE OF NATIONS, 1926 (Table VI).

W h a t is most impressive, however, is not so much the
growth in America's o u t p u t of raw materials or semi-manufactured articles, b u t t h e tremendous expansion of its manufacturing industry, as m a y be succinctly seen from t h e subjoined
Table.
TABLE I I .

PRODUCTION OF 1 6 GENERAL GROUPS OF AMERICAN
INDUSTRIES
Wage earners
(average
number)

Census year

1914
1919
1921
1923
1

.
.
.
.

.
.
.
.

.
.
.
.

7,023,685
9,041,311
6,946,570
8,778,156

Wages

x

Value
oí products

Expressed in thousands of dollars

4,067,718
10,461,787
8,202,324
11,009,298

24,216,515
62,193,427
43,653,283
60,555,998

Primary
horse-power

22,290,899
29,327,669
33,082,923

Taken irom Table 726, United States Statistical Abstract, 1925 p. 748

These figures t h r o w into relief several i m p o r t a n t facts, which
will be seen t o have some bearing upon our enquiry. In t h e
first place, t h e value of t h e manufactured products of t h e
United States has increased by 149 per cent., while wages h a v e

— 24 —

risen in an even greater proportion (175 per cent.) \ Such a substantial development in the space of ten years clearly denotes
very rapid industrial expansion, but it becomes much more
significant when it is seen to be out of all proportion to the
growth of the industrial population. A comparison of the
average number of wage-earners in these sixteen industrial
groups in 1914 and 1923 shows an increase of only about
1,750,000, or 25 per cent. In other words, the average value
produced annually by each worker has risen from $3,447.84
to $6,892.93, while the average annual wage has augmented
from $579.14 to $1,253.93 per head. These are very striking
facts which demonstrate both the increase in individual output
and a corresponding increase of prosperity among the working
population. The truth of the latter proposition may be further
realised by examining the export figures, which indicate that
only an insignificant proportion of this increased production
is consumed abroad. It is true that the United States has now
surpassed Great Britain and stands first among the countries
of the world in the export of manufactured articles 2, but its
great foreign trade still only represents less than 8 per cent, of
its total production. To give a few examples for particular
industries, it may be mentioned that of the 2,173,097 motorcars produced in the first six months of 1926 only 143,507, or
about 6.5 per cent., went abroad 3. It was estimated that in
1925 there were approximately 24,589,000 motor vehicles in
the world, of which 20,051,000 were in the United States 4 —
about one for every six persons. Similarly, out of 154,155,000
pairs of boots and shoes manufactured in the first half of 1926,
only 2.2 per cent, were exported 5 . Other figures could be given
to illustrate the enormous consuming power of the American
population; but without further elaborating the case, it is
beyond dispute that higher wages have meant higher purchasing
power, which in turn has stimulated the further growth of
1
It has of course t o b e remembered t h a t t h e increase in values
and wages is partly accounted for b y t h e decline in t h e value of t h e
dollar, but even when full allowance is made for this factor, the increase
still remains very impressive.
2
In 1923 t h e United States held 16.88 per cent, of t h e world's
manufactured exports as against 14.03 per cent, by t h e United Kingdom. In 1913 t h e proportions were: United Kingdom 13.02, United
States 12.47 (Survey of Overseas Markets, p . 667).
3

U N I T E D STATES D E P A R T M E N T O F COMMERCE:

Survey

Business, Sept. 1926, p . 3 1 .
4
United States Statistical Abstract, 1925, p . 368.
5
Survey of Current Business, Sept. 1926, p . 34.

of

Current

— 25 —

demand to maintain and enlarge the production of American
industry. Wealth has been diffused downwards, with the result
that in a country as large and as populous as the United States,
divided by no commercial barriers, the market for many articles
has undergone a very great extension. This tendency has been
accentuated by the fact of prohibition, which by suppressing the
consumption of alcohol, except for those who can afford to
purchase smuggled liquor — a comparatively small proportion
of the population — has diverted considerable sums of money
to other industries. As a general conclusion it may be stated
that the standard of living of all classes, including large sections
of the working class, has undoubtedly risen substantially during
the last few years; but it does not follow that this prosperity
has been evenly distributed, either over all grades of labour
or over all districts. In order to appreciate the situation in its
true proportions, a more detailed examination of American wage
standards and real earnings is necessary.

WAGE-RATES AND EARNINGS

In all countries there is a sharp distinction to be found
between the wages of the skilled and the unskilled worker, but
the distinction is perhaps sharper in the United States than
elsewhere for a number of reasons. Its working force is generally
lacking in the traditional skill which exists in older industrial
countries. Although many skilled craftsmen have emigrated
across the Atlantic and although others have been trained in
America, their number is not sufficient to meet the demand for
their services. The greater part of the labour available is
entirely unskilled, and the high rates of remuneration which can
now be earned in occupations which require little preliminary
training make it difficult to induce lads to undergo a long
apprenticeship. The natural consequence is that the skilled man
possesses a disproportionate value based on scarcity, and commands a correspondingly high price. In the second place, as
will be seen in a later chapter, the skilled man alone possesses
any effective trade union organisation in most industries. As a
rule the ordinary labourer has no organisation to support his
demands for higher wages, and he has usually been drawn from
the immigrant or negro sections of the community, which are
accustomed to a lower standard of comfort.

— 26 —
An examination of the wages of the skilled man seems to
suggest that they are highest in those trades where a high degree
of organisation exists, notably the building and printing trades,
and that they are accompanied by shorter hours of work, though
in all trades there has been a marked reduction of hours since
the war 1 . It also appears that in these trades the differences
between wages and conditions in the north and the south are
much less marked than in other industries. In Appendix II,
Table B, which is based upon a full recapitulation of union
scales of wages and hours operative last year in the building
and printing crafts in 40 cities, published by the United States
Department of Labor a , six cities have been selected as
roughly typifying the scales prevalent in different parts of
the country. The 44-hour week is general in the building
trade and in most sections of the printing trade. The 40-hour
week has already been introduced for painters in New York,
Newark (New Jersey), Portland, Scranton, and Seattle, and
for plasterers in New York, Boston, Buffalo, Philadelphia,
Pittsburgh, and a few other centres. As regards wages, it should
be remembered that the figures given in this table are rates, not
earnings. In point of fact, owing to keen competition for
building labour in a boom period, much higher wages are not
infrequently paid and earnings of $100 a week or more are not
unknown. The post-war period has witnessed a great deal
of constructional activity, which has enabled the trade unions
to obtain important concessions; but wages were always relatively high in this industry, as is shown by the fact that in spite
of the high rates quoted the index figure has not risen more than
in the other industries 3. At the same time it should be borne
in mind that it is largely a seasonal trade. Unemployment,
against which there is no provision, is, owing to the climate,
inevitable during the winter months in the northern cities,
except for those who can find work by moving south or west,
and the average builder probably does not get more than 200
days' work in the year.
In building and printing, which are old-organised crafts,
1
2

See Appendix II, Table A.
U N I T E D STATES D E P A R T M E N T OF L A B O R :

Union

Scale of

Wages

and 8 Hours of Labor, 15 May 1926.
The index figures for 1925 based on 1913 ( = 100) are for bricklayers 213, carpenters 213, plasterers 220, granite cutters 217. Compare these with bakers 293, teamsters 254, moulders 236, electro typers
(finishers a n d moulders) 250 (Statistical Abstract, 1925, p p . 332-333).

— 27 —
high wages and short hours might be expected, but the same
conditions can also be found in other industries. In the men's
clothing trade, which fifteen years ago was very scantly organised
but now possesses a very strong trade union in the principal
centres, hours are 44 per week, and the average full-time weekly
earnings in 1926 were $41.50 for all occupations \ while in some
shops in Chicago cutters and other highly-skilled workers
frequently earn $60 and more. These earnings are not constant,
however, throughout the year, as ten weeks' seasonal unemployment or more are usual in this industry. Again, blowers
in blast-furnaces average $52.77 for a 58-hour week, first
melters' helpers $64.70 for 55 hours in open-hearth furnaces,
and rollers $90.44 for 53 hours in bar mills 2. In the textile
trades, on the other hand, which have been passing through a bad
period, much lower wages prevail. The average weekly earnings
of skilled male cotton operatives in the north do not exceed
$23.34 for a week averaging about 47 hours, while in the south
they are only $17.89 for on average week of about 50 hours*.
Similarly, in hardware, silk, hosiery and wool, skilled men have
been averaging less than $30 a week, partly owing to short-time
or intermittent employment 4 . In bituminous coal-mining there
is a wide variation in earnings dependent upon fluctuations of
employment, district and degree of organisation, and ranging
in 1924 from about $33 a week for hewers and loaders in Illinois
to $14.35 in Tennessee. It was estimated by a survey undertaken by the Department of Labor 5 that in the 599 mines
covered by their investigation the possible average yearly
earnings did not exceed $1,300, or an average of less than $25
a week. In anthracite mining the National Industrial Conference Board calculated that in 1924 the actual earnings per
shift were $9.11, which, at an average of five shifts a week,
would make a weekly income of $45.50 6 , but this figure is
probably not maintained throughout the year. Finally, on the
railroads the train and engine staffs, who are highly organised,
averaged in 1925 $46.44 a week and skilled labour in the shops
1
2
3

Monthly Labor Review, Nov. 1926, p . 103.
Ibid., Sept. 1926, p p . 77 et seq.
N A T I O N A L INDUSTRIAL C O N F E R E N C E B O A R D :

Wages in the

States, p p . 118-121.
4
Ibid., p p . 116-127.
5
" H o u r s a n d Earnings in Bituminous-Coal M i n i n g " ,
Labor Review, Feb. 1926, p p . 77 e t seq.
6

United

Monthly

NATIONAL INDUSTRIAL CONFERENCE B O A R D : op. cit., p p . 69 et seq.

— 28 —
$34.27 1 . Generally speaking, it will be evident that on the
whole the remuneration of skilled labour is high, though not
uniformly so, with a tendency to be better maintained in
occupations where trade unionism prevails, though these trades
are for the most part trades which, like printing and railways,
are not so susceptible to market conditions, or which, like
building, have been under exceptional pressure.
A glance at the wages of the unskilled worker shows a different
state of affairs, as-may be judged from Appendix II, Table C,
compiled from the figures published by the National Industrial
Conference Board, 2 an important employers' organisation which
derives its information from returns of actual wages made by a
substantial number of the most representative firms in each
trade.
Further light is thrown on the remuneration of the unskilled
by a table of hourly wage rates published by the Bureau of
Labor Statistics 3. The average entrance rates for common
/«^ p* labourers in thirteen industries, including automobiles, iron
**»and
steel, foundry, meat-packing and lumber, range from 40.1
£•
to
a"? ' Of:
^ cents an hour (or from $18.20 to $23.04 per week of
f ú ^ h9 ^ hours) in the northern and western States. In the south they
^
run from 27.6 to 32.8 cents, while in the south Atlantic States
the lowest figure is 15 cents an hour (or $8.25 for a week of 55
hours).
A similar result may be found in regard to women's wages.
Their average weekly earnings in the cotton industry of the
north are $15.55 a week 4 , or little more than the minimum wage
of $14.40 fixed by the Massachusetts Wage Board for women
in the jewellery trade 5 . In other industries women's remuneration runs from $13 to $20 a week 6 , but in the men's clothing
trade, where the women are mostly unionised, their average
earnings for all occupations are as high as $24.28 7 . In the
1

NATIONAL

INDUSTRIAL

C O N F E R E N C E B O A R D , op. cit.,

p p . 56-57.

See also infra, p . 3 1 , note 1.
2
Ibid.. p p . 58, 100-150.
3
Monthly Labor Review, Sept. 1926, p . 74.
4

5

NATIONAL INDUSTRIAL C O N F E R E N C E BOARD, op. cit., p p . 118-120.

Monthly Labor Review, Nov. 1926, p . 47. Other Massachusetts
Orders, however, fix minima under $14 (see Monthly Labor Review,
Feb.u 1927, p . 25).
In New York State the average women's wage in factories is $15.68
p e r week

INDUSTRIAL COMMISSIONER FOR N E W Y O R K S T A T E :

Industrial

Bulletin, Dec. 1926, p . 85), while in Illinois il is $17.81 (ILLINOIS DEPARTMENT OF LABOR: Labor Bulletin, J u l y 1926, p . 14).
' Monthly Labor Review, Nov. 1926, p . 103.

-

29 —

south the average in cotton mills is $13.55 \ while the Tennessee
Department of Labor gives the wage of the female cotton
operatives in that State as $11.96 per week 2. In South Carolina
the average for all industries was $9.50 in 1921 and more than
88 per cent, of the women employed worked more than 54 hours
a week 3 .
The general upshot of these figures is to demonstrate the
truth of President Coolidge's statement in his Message to the
last Congress that "skilled labour is well compensated. But
there are unfortunately a multitude of workers who have not
yet come to share in the general prosperity of the nation. " For
reasons which have already been suggested, the division between
the skilled and unskilled is more clearly marked in the United
States than in most other countries. That the wages of the
former are high and that those of the latter are on a much lower
level is fairly evident, as is the wide variation in rates of pay in
different industries and different regions. To appraise the true
value of these wages, however, it is necessary to translate them
into purchasing power by bringing them into relation with the
cost of living.
REAL WAGES AND STANDARD OF LIVING

The citation of money rates and money earnings in the foregoing section gives little indication of their real worth, which can
only be judged by finding what standard of comfort they connote.
To establish any valid comparison between the standards of one
country and another is an extremely difficult matter, but some
idea of the value of American wages can best be obtained by
reference to American standards.
In the first place, a fairly certain answer can be obtained to
the question how far " real " wages have increased, that is to say,
how far wages have risen more rapidly than the cost of living.
In a matter of this kind Mr. Ethelbert Stewart, United States
Commissioner of Labor Statistics, may be taken as a safe
guide 4 . He shows that since 1913 the purchasing power of
1

2
3

N A T I O N A L INDUSTRIAL C O N F E R E N C E B O A R D , op.

cit.,

pp.

118-120.

Monthly Labor Review, Sept. 1926, p . 116.
DEPARTMENT OF L A B O R : Women in South Carolina
Industries,
pp. 4 24 and 33.
" A r e Average Wage-Rates Keeping Pace with the Increased Cost
of Living ? " , Monthly Labor Review, J a n . 1926, p p . 16 and seq.

— 30 —
union wages has risen by 37.1 per cent, as will be seen from the
following table:
Year

1913
1925

%

»f CV/-

Index number
of unibn rates
per hour

100
237.9

Index number
ol cost of
living

100
173.5

Relative purchasing power of
wages as measured
in living cost

100
137.1

Taking three largely unorganised industries — boot and
shoe, wool, and cotton — where the base rates were much lower
than in the unionised trades 1, he finds that actual earnings
showed an increase of purchasing power of 25.4, 76.3, and 47.0
per cent, respectively. Although wages in these trades were
rather abnormally low before the war, these figures nevertheless clearly indicate a considerable improvement in the
standard of living, an inference which may be generally confirmed from other sources. While there are some industries
in which the rise of wages has not done much more than keep
pace with the rise in the cost of living, such as lumber mills
and sheet mills, there are others, such as men's clothing and
woollen, which have increased their real wages by as much as
70 per cent. On the whole, it would probably be not very wide
of the mark to assume that wages were on the average worth
about 30 per cent, more in 1925 than they were before the war.
A second question which suggests itself is how far real wages
thus improved provide a high or a reasonable standard of
comfort.
Various estimates have been made of what
is a reasonable standard, but there seems to be a general
measure of agreement that an annual income of $1,500 to
$1,800 is necessary in the cities and larger towns for a married
man with three children to enable him to house, clothe, and feed
them decently and allow a modest margin for recreation, while
an income of $1,100 to $1,400 represents the "minimum of
subsistence level " 2, consisting of necessary food and clothing
and three rooms, sometimes four. To reach these annual
incomes, average weekly earnings of from $28-36 would be
1
The average hourly rate for trade unionists in 1913 was 45.9 cents,
as compared with 14.8 cents in cotton mills, 17.7 in woollen mills, and
24 in
boot factories.
2
See Wages and the Family, by Professor Paul H. DOUGLAS. In
Chapter I he gives the various estimates on which the above figures
are based. An informing discussion of the subject may also be found
in The Causes of Industrial Unrest, by J. A. FITCH, Chapter IV.

— 31

-

required in the first case and from $21-27 in the second. On
this basis, the wage figures given above indicate that, if he
obtains steady employment throughout fifty-two weeks, the
skilled man can be sure of a very fair standard of living, and in
the higher-paid branches can attain to a considerable degree of
comfort and sufficient means to enable him to make adequate
provision against sickness, old age, and unemployment 1 .
Moreover, in families where there is more than one wage earner,
— and they are numerous owing to the extensive employment
of women — the family income will usually be such as to provide
a fairly high standard of life. Further evidence to this effect
may be seen in the growth of savings deposits, which have
nearly tripled since 1913, and in the large investments by
employees in industrial stock. The British Mission, whose
report possesses considerable authority as presenting the unanimous conclusions of three experienced Government officials,
two well-known employers, and two prominent trade union
leaders, concluded that " with this increase in real wages there
has been a steady improvement in the standard of living, particularly of the skilled workers, whose standard of living is higher
than the standard in Great Britain. Such a workman expects
to have his house fitted with central heating, and a household
is in many cases not considered complete without an automobile,
a wireless set, an electric washer and other electric domestic
equipment".
On the other hand, it should not be overlooked that there is a
good deal of irregular employment even in some of the highlypaid trades, such as mining, clothing, building and automobiles,
owing to their seasonal character, or again in the meat-packing
industry owing to the unequal arrivals of live stock for slaughtering. Moreover, the American worker has no State or municipal
protection against unemployment 2 . If he is out of work, he
1
This general conclusion may be illustrated from the "Average
Annual Earnings of Railway Employees on Class I Railroads " (Monthly
Labor Review, Feb. 1927, pp. 62-64). From this it will be seen that the
skilled worker engaged on the maintenance of way or equipment earns
from $1,300 to $1,900 a year, while the train and engine staffs average
$2,376 annually — the highest-paid class, the passenger locomotive
drivers, receiving as much as $3,209 per annum. On the other hand,
labourers of all grades receive less than $1,000 annually, the largest
class — namely, those engaged on the maintenance of track — averaging
only $879.
2
The British Mission give some valuable particulars on unemployment in Appendix 9 to their report, which shows that it is far more
prevalent in the United States, even in good times, than is sometimes
supposed.

— 32 —

has to live on his own savings or on charity. Similarly, he has
no provision against sickness or old age, except in so far as it
is furnished by his employer or by his own participation in a
trade union or benefit scheme. These are contingencies which
naturally weigh heavily on his mind and on his budget, and of
which account must be taken in estimating the value of his
real wages. In the case of the unskilled labourer with a family
whose wage ranges from $20-25 a week, it appears that he will
usually be living about on the "minimum of subsistence level",
and is likely to fall below it if sickness or enforced idleness
overtake him, unless some other member of his family is
contributing to its maintenance. Moreover, as Appendix II,
Table C shows, there are large classes of workers whose
remuneration definitely falls short of the subsistence limit.
It would therefore be rash to suppose that such a general
level of contentment prevails in the United States that strikes
and lockouts may be discounted in the future. At present
they are in most industries infrequent, though by no means
unknown, as is illustrated by the recent strike in the textile
mills at Passaic (New Jersey), a struggle of remarkable bitterness
and obstinacy, and the conflict in the Illinois coalfield. There
is also possibly a certain apathy about trade unionism, which is
reflected in the decline in the membership of the American
Federation of Labor and which may be partly due to the
maintenance of the wage level and the general steadiness of
employment. On the other hand, there is little evidence to
suggest that the trade unions will be permanently satisfied with
their present rates of remuneration. While, as will be seen
later, they have offered their co-operation in improving production in certain cases, they claim their full share of the
resulting profit.
The wage policy of the American Federation of Labor was
expressed in a resolution adopted in 1925 at their annual convention ât Atlantic City, which was couched in the following
terms :
Social inequality, industrial instability and injustice must increase,
unless the -workers' real wages, the purchasing power of their wages,
coupled with a continual reduction in the number of hours making
up the working day, are progressed in proportion to man's increasing
power of production.

In other words, the Federation seeks a progressive, not a
stationary standard of life and is not content only to measure

-

33 —

it against the cost of living. In the event of an attempt to reduce
the present standard on account of bad trade conditions, the
organised workers would probably offer the same resistance as
they did to the wage-cuts during the depression of 1921-1922,
which caused widespread industrial strife throughout the
United States. On the other side is the problem of the unskilled
worker, who, as he becomes more Americanised and as the
standard of culture rises among the foreign-born and negro
population, may no longer be content with an inferior economic
status. If immigration continues to be held back by artificial
restrictions, his value will increase because he will not be
subject to the competition of low-paid labour from Europe
available in such quantities as to check any upward movement
of the wage scale. Here again lies a source of possible difficulties for the future which cannot be altogether dismissed as
imaginary. Much probably depends on the adequacy of the
labour supply, and as it is an essential factor in the economic
as in the social background of present-day America, it requires
some notice in order to complete the picture.
LABOUR SUPPLY AND PRODUCTIVE EFFICIENCY

Attention has already been drawn to the phenomenon that
production has increased in America out of all proportion to the
growth of the manufacturing population. It is this circumstance which has enabled higher wages to be paid, because greater
individual output has rendered them economically possible.
It may well be asked how this result has been achieved. It has
sometimes been ascribed to the harder work of the American
workman, but though any precise comparison on this point is
impossible, there is not much reason to suppose that this explanation is adequate. Both the British Mission and the German Trade Union Delegation discount the supposition of the
higher individual efficiency of the American workman under
equal conditions. At most it can only be a very partial explanation, for no amount of physical effort would account for the
great upward movement in American production. The more
general, and no doubt the more correct, explanation is the
introduction of mass production methods rendered possible by
the greatly extended application of machinery.
The present era of industrial expansion dates from the war
period, when the demands of the belligerents gave a tremendous
3

— 34 —
stimulus to American production. Wealth poured into the
country from Europe, creating fresh demand for all kinds of
articles among the home population. With immense natural
resources and a vast internal market of growing purchasing
power at his door, the American manufacturer saw possibilities
of extending his business in every direction. But the source
from which he had formerly drawn most of his additional labour
as he needed it was dried up. The war had cut off the stream
of immigration which had been steadily rising during the previous half-century. He was therefore thrown back on his own
resources, and in order to achieve the necessary output, resorted
to machine-power as a substitute for man-power. Moreover,
the shortage of skilled craftsmen induced him to subdivide
operations so that they could be performed by men possessed
of little or no technical training. After the war the situation
did not alter. The natural restrictions placed upon immigration
were maintained artificially by the application of the Quota
Law, prompted partly by racial and partly by economic considerations. The effectiveness of these restrictions may be
judged by the fact that during the ten years 1915-1924 less than
4,000,000 persons gained access to the country. Seeing how
readily double that number was absorbed in the eight preceding
years, it may be inferred that this reduced inflow was quite
insufficient to meet the potential demand for labour at a time
when the nation was far richer and industry expanding more
rapidly than during the pre-war period. It was stated before a
Congressional Committee in 1920 that there was a shortage of
5,000,000 workers, and though this is no doubt an exaggeration,
it was generally considered at that time that there was a serious
deficit.
The limitation of the labour supply had two important
consequences which have profoundly influenced industrial
relations. By giving labour something of a scarcity value it
tended to raise wages, and by setting up strong competition
between one factory and another it greatly increased the labour
turnover. The consideration of this second effect may for the
moment be postponed, but the reaction of reduced immigration
on wages needs some further comment.
As has already been noted, the American Federation of Labor
had always advocated the restriction of immigration on the
ground that the influx of hundreds of thousands of workers every
year, who were mostly habituated to a lower standard of life, who

-

35 —

kept wages down and who could be used as strike-breakers,
made improvement in the condition of the American worker very
slow. It is significant that in spite of considerable industrial
prosperity real wages actually declined between the years 1900
and 1910, the period of highest immigration \ On the other
side there was at various times a great deal of opposition to
restriction from employers' quarters, including the National
Association of Manufacturers, the Bethlehem Steel Company
and others. It was even alleged that shortage of immigrant
labour had been actually responsible for the rise of wages. This
opposition has now diminished in intensity, as the counterbalancing advantages of high wages have been realised, but its
existence supports the conclusion that immigration and wages
are closely connected. It would go beyond the mark to assert
that the diminution of immigration has been the only cause of
the rise in real wages, but that it would have been much less
considerable had there been no restriction seems altogether
probable.
The precise influence of reduced immigration cannot,
however, be disentangled from the other contemporaneous
influences which made for higher wages and cannot therefore
be statistically measured, but it seems evident that a shortened
labour supply turned the minds of American employers to the
problem of reducing costs by every possible method in order to
enable them to pay the high wages which labour could command.
The most obvious method was the substitution of machines for
men, particularly for skilled men, of which there was a great
scarcity. Mechanisation has proceeded with extraordinary
rapidity in the United States, so that far greater production
can be achieved by fewer operatives with a smaller proportion
of skilled men. Without so large and prosperous a body of
consumers mechanical production on so large a scale would not
have been possible, but it has been achieved, with the result
that the output per head has risen substantially in most industries. The Department of Labor has recently conducted **
an enquiry on this point in ten industries, which shows JM-*
that within the last ten years the production of the individual
workman has increased in the following proportions as compared
with the pre-war period, taking 1914 as 100 a :
1
2

See J. A. FITCH : The Causes of Industrial Unrest, pp. 32 et seq.
Monthly Labor Review, Jan. 1927, p. 37.

— 36 —
Iron and steel
Automobiles
Boots and shoes
Paper and pulp
Cement
Leather

159
272
106
134
161
126

Flour milling
Cane sugar refining . . . .
Slaughtering and meat packing
Petroleum refining . . . .

140
128
127
183

These facts alone go far to explain how the payment of
higher wages has been made possible, but there are other contributing causes, which have facilitated it and which may also be
traced to some extent to the primary need of effecting every
possible economy in order that the high rates payable to labour
might be made remunerative. Mass production demands
standardisation, and great progress has been made in reducing
the number of types and sizes of a great variety of articles under
the guidance of the Division of Simplified Practice, created by
Mr. Hoover for the purpose as part of the Department of Commerce. He has likewise inspired a national campaign against
waste in industry, to which bodies like the Taylor Society, the
numerous engineers who specialise in scientific organisation,
and even experts specially appointed by the trade unions have
made notable contributions. Lastly, the fact that American
industry is tending to fall more and more under the control of
large combinations has made for better and more economical
management, though this is a circumstance which is, of course,
quite independent of the labour supply. Out of 8,778,156 wage
earners employed in manufacture in 1923, 2,122,827, or nearly
25 per cent., were in large establishments with more than
1,000 workers, but these establishments only represented less
than 1 per cent, of the total number. The conduct of business
on this scale has tended to produce more efficient management.
In the judgment of the British Mission 1 : " they have caused
cheaper production and lower selling prices, and this has
resulted in widened markets, greater employment, and higher
wages. Large amalgamations of similar industries are no more
difficult to control than small units, and the advantages are
that overhead charges are lessened, selling expenses are reduced,
and individual factories can be specialised on the production of
fewer varieties of articles, again causing cheaper production".
Applied during a period of industrial expansion favoured by
abundant credit, all these methods have had the effect of enabling
high wages to be carried and increased in spite of a concurrent
Report, p. 5.

— 37 —

reduction of the hours of labour. The attempt to lower wages
during the depression of 1921-1922 met with very partial success,
particularly in the organised trades where union rates only fell
slightly below the high level of 1920, and with the improvement
of business they resumed their upward movement, although
the cost of living remained almost stationary 1. The success
with which costs were kept down, however, seemed to show
that sales could be maintained, and even largely extended, in
spite of high wage rates, a fact which has led the American
employer to revise his views on the remuneration of labour and
its relation to production.
T H E DOCTRINE OF HIGH

WAGES

American employers now generally express the view that
high wages are advantageous as being an incentive to production,
as engendering a better feeling among their workpeople, and as
creating a purchasing power among them which serves to promote
and to maintain prosperity. These results have certainly flowed
on the whole from the payment of good wages, but to suppose
that the average American employer deliberately adopted a
high wage policy because he foresaw these consequences, would
be to credit him with a foresight to which he would hardly
pretend. It is true that Mr. Henry Ford suddenly established a
minimum wage of $5 for an eight-hour day as far back as January
1914. In doing so he made a radical departure from the prevailing wage scales, which caused considerable perturbation and
protest among his competitors. He did it, as he explains,
because he believed it was good business and he found it was
"one of the finest cost-cutting moves we ever made " 2 . But
his action was exceptional and was not generally imitated. The
recent rise in wages may, then, be attributed to the economic
causes just enumerated rather than to any deliberate policy,
but high wages have been found to carry with them compensations which were not generally suspected. There is no doubt
that their effect in stimulating both production and consumption
has been more fully realised by employers than ever before. The
fact that many thousands of workers have a margin above the
bare necessities of life means an increased demand for all kinds
of articles, in other words, a steadier market and a stimulus to
1
z

Monthly Labor Review, Jan. 1926, p. 17.
Henry FORD: My Life and Work, p. 147.

— 38 —
further production. On these grounds, the principle is now
widely accepted among American employers that it is good
policy to avoid reducing wages if possible, that piece rates for
the same job should not be lowered, and that economies should
be looked for in every other direction before touching wages.
Mr. Ford 1 has said that " every depression is a challenge to every
manufacturer to put more brains into his business — to overcome
by management what other people try to overcome by wage
reduction. To tamper with wages before all else is changed is to
avoid the real issue. And if the real issue is tackled first, no
reduction of wages may be necessary. " This doctrine seems
to have made considerable progress in the United States during
recent years. How far it will continue to be applied when hard
times recur remains to be seen, but in any case it represents a
change of emphasis, which may have a considerable bearing
on industrial relations. However much high wages may have
been an economic necessity, it is none the less important for the
future relations between employer and employee if the former
believes that high wages are beneficial not only to the workman
but to himself and to industry in general, and is therefore
anxious to maintain them even in the face of difficulties. Good
pay has been found to promote good work and good feeling in
America, as indeed in other countries, but if it becomes a generally accepted axiom in American industry, the prospects of
industrial warfare will be notably diminished.
It will be realised from the foregoing considerations that
American industrial relations must be viewed against an economic background which is at present favourable for their
peaceful evolution. It falls outside the scope of this study to
speculate how far these conditions are likely to be prolonged or
even permanent, what are the possibilities and limitations of
mass-production methods upon which they largely depend, or
to what extent their application in other countries is practicable
or desirable. All that we are here concerned with is to note that
the level of remuneration, and consequently the standard of
comfort of large sections of the American working class, have
been substantially improved during the last decade. This fact
combined with steady employment in most industries has tended
to facilitate the relations between employer and employed,
while apart from its effects on wages the competition for labour
1

H e n r y F O R D , op. cit.,

p . 136.

— 39 —
brought about by the restriction of the supply at a time of rapid
industrial expansion has given unusual acuity to the problem
of the labour turnover. On the other hand, the great masses
of unskilled workers are still far from having attained the same
degree of prosperity which is enjoyed by the higher grades. This.
in itself is a problem which may present considerable difficulties,
as the assimilation of the immigrant and the aspirations of the
negro engender the desire for a more uniform standard of life
throughout the whole industrial population. It has finally to
be kept in view that the existing conditions have only prevailed
for a short period, and that it would accordingly be premature
to paint any picture of industrial relations upon the assumption
that they are destined to continue indefinitely. With this
word of caution an attempt may be made to analyse the attitude
and policies of the organised employers and workers.

^ .
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;

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CHAPTER III
T H E

W&,

?Myn

AMERICAN TRADE UNIONS
•

y
The history of American trade unionism is one of struggle
and vicissitude. Its problems are not different from those which
have confronted trade unions in other countries. The right of
workers to associate and to act collectively in defence of their
interests, the recognition of their unions as representing them
in negotiation with employers, the effort to promote a higher
standard of living and to improve the status of the worker in
industry, these are the main objects for which American trade
unionists have been striving since industry took root in the
United States. To trace the evolution of their organisation
from the first local associations of handicraftsmen in the early
years of the nineteenth century up to the formation of the
American Federation of Labor in 1881, from which modern
trade union history may be said to date, falls altogether outside
the purview of this study 1 . It is a story of success and failure,
progress and retrogression, hope and disillusionment, but in
spite of many fluctuations of fortune trade unionism on the
whole grew steadily, until in 1914 the Federation counted
over two million members, nearly four times as many as in 1900.
For the purpose of understanding industrial relations it is,
however, necessary to estimate the present strength of the
movement in relation to the whole body of American wage
earners, the nature of its organisation, its sources of strength
and weakness vis-à-vis the employers, and the present trend
of its industrial policy.
THEIR STRUCTURE

a

The great majority of the trade unions in the United States
are grouped in the American Federation of Labor, which was
1
Readers interested in t h e origins of American trade unionism will
find its history fully set forth in t h e History of Labor in the United States,
b y Professor J. R. COMMONS and his associates. Useful shorter accounts
have been written by Dr. Leo Wolman and Miss Mary Beard (see
Appendix I).
2
The principal authorities used for this section are : U N I T E D STATES
DEPARTMENT OF LABOR, Handbook of American Trade Unions, 1926,
and the Reports of the Executive Council of the American Federation of
Labor, 1920-1926.

— 4]

-

originally formed by the skilled crafts in order to preserve
their trade autonomy, seemingly menaced at that time by the
Knights of Labor, an organisation in which the unskilled held
the numerical preponderance and threatened to override their
interests. As at present constituted the Federation consists
of 107 self-governing national and international trade unions,
which form its main body. In addition, however, it comprises
380 local trade and Federal unions, which receive a charter
from the Federation and are governed directly by it, while
any local body of workers of sufficient importance not possessing
a national union may become directly affiliated. By the recruitment and recognition of these secondary bodies the foundations are often laid for the eventual formation of a national
organisation and they also enable negro workers, who are
debarred from membership of some national and international
unions, to be incorporated. In 1926 there were 29,417 local
unions representing a heterogeneous collection of occupations
scattered widely over the country and affiliated to national
or international unions. This variety of organisation is sufficiently indicative of the immense difficulty of building a national
trade union edifice in so large an area as the United States, a
difficulty to which attention was called in the first chapter. In
order to preserve some measure of common policy and action
among the different trades there exists in each of the 48 States
a State Federation of Labor, composed of all the local unions
and City Central Bodies affiliated to the American Federation
of Labor in the State. Its functions are to watch over the
activities of the State Legislature and generally to promote trade
union interests in the State. In the larger industrial centres
there are bodies known as "Central Labor Unions " or "City
Centrals ", composed of the local unions, which take an active
part in directing local trade union politics. In 1926 they
numbered 833.
For the most part each union is autonomous and completely
free to manage its own affairs without any reference to other
unions engaged in the same industry, except in cases where
joint boards or district councils exist. The Federation is only
called in to settle jurisdictional or other disputes between them.
An important step was taken in 1908, however, towards coordinating the sixteen organisations in the building trade by
creating a Building Trades Department within the Federation

— 42 —

with an executive council and an annual conference of its own.
The Department deals with demarcation disputes between its
component unions, and nominates the workers' representatives
on the National Board of Jurisdictional Awards in the Building
Industry. Although the Department has not effected amalgamation among the building unions, it has the appearance of a step
towards their federation. In the same year Departments were
also set up for the metal trades and the railway employees on
similar lines, but there does not seem to have been any attempt
since the war to extend these efforts at industrial co-ordination.
Generally speaking, the American Federation of Labor has
retained its original character of a league of craft organisations,
but a few of the affiliated unions are organised on industrial
lines, notably, the United Mine Workers, which includes all
"workers in and around coal mines ", and the Ladies' Garment
Workers' Union, which covers the whole "women's and children's garment making trade ". In other industries unskilled
or semi-skilled workers are not excluded, but are organised
separately from the skilled men in their trade. Proportionately
to their numbers, however, few of them are included in the
Federation, and the same is true of women, who have not
occupied a prominent place in it. Difficulties have more than
once arisen in cases where the extensive introduction of machinery has tended to obliterate craft lines. For example, the
International Union of Carriage and Wagon Workers was expelled from the Federation in 1918, because, in attempting to
organise the automobile industry on industrial lines, it had
encroached upon the territory of many craft unions which had
members in the industry 1. The left-wing critics of the American
Federation of Labor complain that its adherence to the old
craft structure has rendered it impotent to organise the lower
grades of labour, without which its unions cannot bargain
effectively with the employers, because they only represent
a small proportion of their employees and cannot speak for all
employed in the industry 2 . The German Trade Union Delegation
also expressed the view that the neglect of the unskilled worker
constituted a danger to the future of trade unionism:
1
See Handbook of American Trade Unions, pp. 43-44. The union
is now known as the " United Automobile, Air-craft and Vehicle Workers
of America
". Its present membership is 3,000.
2
Criticism on these lines may be found in three recent pamphlets,
The Bankruptcy of the American Labor Movement, Organize the Unorganized, and Amalgamation, published by the Trade Union Educational
League.

— 43 —
An impartial observer (they say) cannot fail to note that the
American trade union movement has persistently clung to methods
which have been eminently successful in the past, and indeed still are
so in the sphere in which they are applied, but which are not adequate
to cover the new and increasingly important fields which economic
progress is opening up. In saying this we are merely repeating what
prominent American trade union leaders have been proclaiming for
years. The trade unions have concentrated intensively on recruiting
skilled workers, and the organisation of unskilled workers has been
neglected. For a considerable time the organised skilled workers thought
that this was no disadvantage to them, for they felt that their better
craftsmanship kept them safe from the unsatisfactory conditions of
work to which the unskilled and unorganised workers were subject.
Technical progress, however, is constantly tending — and the process is much more rapid in America than here —• to deprive craftsmanship and the worker's individual trade experience of their value. The
machine is breaking through the ranks of the skilled workers, and hordes
of the unskilled are pouring in through the breach. The use of machinery
and the division of labour are breaking down the exclusiveness of the
small restricted unions, and the latter are ceasing to be unaffected by
the position of other workers. Not only is machinery, with the unskilled
worker in its train, intruding into undertakings which were once the
province of the skilled worker, but whole industries are growing up
which from the outset are independent of manual dexterity and craftsmanship, and which can turn any workman off the street into a fullyqualified worker in a few hours. There can be no doubt that the problem
of the unorganised worker is ceasing to be his own exclusive concern,
and is beginning to hit the organised worker very hard indeed. The fact
that the most up-to-date large-scale undertakings are in most cases
"non-union shops " strikes at the very
root of the trade union movement. And this danger is increasing 1 .
Whether these criticisms be justified or not, the American
Federation of Labor at present comprises a very small proportion of the unskilled labour of the country and has little hold
on some of the most important industries, such as iron and steel,
automobile, and electrical equipment. It largely represents
the American-born worker, and contains a comparatively small
percentage of the immigrant and negra sections of the popula- ^
tion, except among the mine workers and garment workers, fjVTo ascribe this entirely to its constitution would certainly be
unjust, as there have been other and formidable obstacles to
the organisation of the unskilled; but whatever be the causes,
the Federation, in the judgment of the historians of the American
labour movement, "remains, with the striking exceptions of
the miners' and garment workers' organisations, mainly the
organisation of the upper and medium strata among the native
and Americanised wage-earners " 2.
Outside the fold of the American Federation of Labor there
are about a million workers organised in independent unions,
1

Amerikareise deutscher Gewerkschaftsführer, pp. 237-238.

2

COMMONS, op. cit., Vol. II, p. 524.

— 44 —

of which two groups require special mention — the Railway
Brotherhoods and the Amalgamated Clothing Workers. The
former, comprising the locomotive engineers, trainmen, firemen
and conductors, have a membership of 435,000 and represent
all the highest skilled men employed on the railroads. They
are very highly organised, possess considerable funds, and
founded several of the first labour banks. Even railways such
as the Pennsylvania, which operate on a non-union basis, are
obliged to deal with the Brotherhoods in all matters which
concern the grades which they represent. Although not affiliated
to the American Federation of Labor, they pursue a similar
policy, co-operate with it in many matters, and are in general
sympathy with its aims and methods.
The Amalgamated Clothing Workers of America is an organisation of a different type. Founded on industrial lines, it
embraces the great majority of workers of all classes, both male
and female, in the men's clothing trade. Its membership is
largely Jewish and largely foreign, as is illustrated by the fact
that its official organs are issued in English, Yiddish, Italian,
Czech, Polish, Lithuanian, and Russian. Since it was first
formed twelve years ago by a group seceding from the American
Federation of Labor, it has made remarkable progress and now
counts 150,000 adherents. It is generally regarded as more
"radical " in tendency than the American Federation of Labor.
During its early years it was frequently engaged in strikes, but
it has consistently followed a constructive policy of co-operation
with employers who have been prepared to accord it wholehearted recognition, though in doing so it has had to contend
with a certain amount of Communist opposition within its ranks.
The conversion of the men's clothing industry from a "sweatshop " to a factory industry has been largely due to its efforts. It
can also claim that the 44-hour week is now generally recognised,
while the wage level, which before the war was low with an
index of 100, is now among the highest with an index of 296 x
and average weekly earnings for all occupations of §41.50 2.
This union furnishes an interesting example of the possibility
of organising all grades, even in a trade where the great bulk
of the employees are of foreign origin, speaking many different
languages.
1
2

Statistical Abstract, 1925, p. 327.
Monthly Labor Review, Nov. 1926, p. 103.

-

45 —

THEIR AIMS AND POLICY

The American Federation of Labor owes much of its general
orientation as well as of its organic development to its first
president, Mr. Samuel Gompers, a man of unusual power and
personality, who shaped its destinies for forty years. Throughout
his life, he was inflexibly opposed to any Socialistic doctrine
or to any attempt to achieve the ends of trade union effort by
means of a political party pursuing a labour policy. He regarded
trade unions as purely economic organisations seeking purely
economic objectives, and though he later found that without
playing an active part in politics these objectives could not
be secured, his policy was to use the electoral influence of organised labour to fortify or improve its position through the existing parties in the State rather than by founding a new party
of its own. His politics were therefore "non-partisan", 1 and
his aim was not to overthrow the existing industrial order but
step by step to win for the workers a recognised place in it.
This does not mean, however, that he regarded the establishment of collective bargaining as the ultimate goal of trade
unionism. He definitely looked forward to a time when through
co-operation with management the workers would acquire an
acknowledged responsibility for the conduct of industry. The
State seemed to him ill-adapted to exercise control in industrial
affairs and he combated the idea of state regulation of private
enterprise, save within narrow limits. This attitude may be
the better understood when the wide extent of the United States
and the division of governmental functions between the Federal
and State authorities are remembered, which render any centralised operation or control of industry exceedingly difficult
and repugnant to American sentiment. Mr. Gompers's faith
was pinned essentially on trade union action "which, in addition
to its defensive service, is free to develop constructive functions
as soon as it is accepted by the management and its spokesmen
admitted to conferences considering various problems in which
their work is concerned. . . . The next step is organisation of
the shop, thus creating a trade council in which all the factors
in the industry have representation, and then organisation of
the whole industry along the same lines. This is a natural
development which we now see in the making. Ultimately,
1
The only exception to this principle was the support given to
Senator Lafollette's candidature for the presidency in the election of
1924.

— 46 —
perhaps, those things which concern all industry may be determined by a national economic body, truly representative, competent to make decisions and secure compliance, or political
regulation must develop a new technique and more competent
personnel V His final goal, therefore, seems to have been a
joint control of industry, proceeding by stages from collective
bargaining through the workshop to the industry and possibly
culminating in a sort of functional parliament.
At the same time he never concealed the fact that these
objects necessarily involved a conflict with " c a p i t a l " . The
preamble to the constitution of the American Federation of
Labor begins with the statement that " a struggle is going on in
all the nations of the civilised world between the oppressors
and the oppressed, a struggle between the capitalist and the
labourer, which grows in intensity from year to year ". The
same idea was advanced by Mr. Gompers in his evidence before
the United States Commission on Industrial Relations in 1914 2
when he said: "Because employers as a class are interested in
maintaining or increasing their share of the general product
and because workers are determined to demand a greater and
ever greater share of this same general product, the economic
interests between these two are not harmonious. . . . There
are times when, for temporary purposes, interests are reconcilable; but they are temporary only. " The American Federation
of Labor claims that the worker has not a fair share in the
fruits of production and that in so far as this claim is resisted,
conflict is inevitable. It conceives of industry as being conducted
for service rather than for profit, but it does not deny that both
capital and management are entitled to the due reward of their
services. It is on these principles that it bases its demand for
the démocratisation of industry through the co-operation of
all its factors, which was embodied in the declaration adopted
by the Portland Convention in 1923. The spirit of that declaration is contained in the following passages 3 :
"What we have observed is that the period ending with the beginning of the world war found political democracy in its fullest state of
development, while the close of that period of overwhelming upheaval
marked the opening of the period of intelligent demand and living need
1
2

Samuel GOMPERS: Seventy Years of Life and Labor, Vol. II, p. 25.
Quoted in American Labor and American Democracy, by W. E.
WALLING, Part II, p. 62. This book contains an interesting discussion
of the3 aims and political activities of the American Federation of Labor.
Report of the Executive Committee of the American Federation of
Labor to the 43rd Annual Convention, pp. 18-19.

— 47 —
for industrial democracy
Henceforth trade unionism has a larger
message and a larger function in society. Henceforth the movement for
the organisation of the workers into trade unions has a deeper meaning
than the mere organisation of groups for the advancement of group
interests, however vital that function may yet remain. Henceforth the
organisation of the workers into trade unions must mean the conscious
organisation of one of the most vital functional elements for enlightened
participation in a democracy of industry whose purpose must be the
extension of freedom, the enfranchisement of the producer as such, the
rescue of industry from chaos, profiteering and purely individual whim,
including individual incapacity, and the rescue of industry also from the
domination of incompetent political bodies
It is not the mission
of industrial groups to clash and struggle against each other. Such
struggles are the signs and signals of dawning comprehension, the birth
pangs of an industr al order attempting through painful experience to
find itself and to discover its proper functioning. The true rôle of industrial
groups, however, is to come together, to legislate in peace, to find the
way forward in collaboration, to give of their best for the satisfaction
of human needs. There must come to industry the orderly functioning
that we have been able to develop in our political life. We must find
the way to the development of an industrial franchise comparable to
our political franchise.

It will be seen, then, that the American trade union aims
at a new ordering of industrial society, in which the workers'
organisations will have a recognised part and function. Though
it is prepared to co-operate with the other elements of production
it is only on the basis of such recognition. Though it is fundamentally opposed to any revolutionary change in the present
social scheme, it looks to an evolution which will introduce a
new regime in industry, and until that goal is reached, regards
antagonism between capital and labour as wasteful but
inevitable.
But Mr. Gompers usually eschewed distant aims and devoted
most of his remarkable energies to securing the largest measure
of improvement in the wages, conditions, and status of the
worker that was obtainable at each given moment. The spirit
of Gompers animated the greater part of the American trade
unions. Their policy has been primarily a "business " policy
pursued on constitutional lines. It is true that reference may
be found to the "class-struggle " in the statutes of the blacksmiths, and that those of the plumbers declare that "labour
is capital and the only capital capable of reproducing itself ",
but such general statements are rare. The objects usually
announced in the rules of the trade unions are the betterment
of wages and standard of living, the promotion of the skill, the
efficiency and general welfare of their members, the maintenance
of the standing of their craft, the discouragement of piece-work,
and the like. On the whole they have been largely successful

— 48 —

in attaining these objects, but only at the cost of unremitting
struggle. Collective bargaining has been widely established in
the unionised industries, and with it has generally gone the
attempt to enforce the union label and the "closed shop ".
This latter doctrine was largely adopted as a defensive measure
against the introduction of immigrant labour content to accept
wages below the union scale. It has been pushed to considerable
lengths in certain trades where agreements debarring the employer from employing non-unionists are not uncommon, while
in some cases the "check-off ", or the deduction of union dues
from wages by the employer, has been instituted. Both strikes
and boycotts have been extensively resorted to, many of them
ruthlessly conducted by both sides and occasionally leading
to bloodshed.
The attitude of the American Federation of Labor towards
Communism, to which it has always presented the most unqualified hostility, is of considerable significance and importance.
It has consistently opposed any move towards the recognition
of the Soviet Government or for dealings with Russia in any
shape or form, and quite recently has organised a vigorous
campaign in New York in order to stamp out Communist influence in the clothing trades. This attitude is in harmony with
the generally constitutional character of the Federation, though
it is so definite as to suggest that the spread of Communist
doctrines is felt to be a real danger to the orthodox trade union
movement.
INSURANCE AND BANKING ACTIVITIES

American trade unions have displayed considerable activity
( ve/ ' in providing for the protection of their members and their
* n A
dependents in the event of sickness, unemployment, old age,
i'• h* • «and death. Some of them, indeed, particularly the Railway
A
u^/Brotherhoods, were in their origin primarily mutual benefit
.-**'
societies, ensuring their members against industrial risks which
Jj"? at that time the ordinary insurance companies declined to
r * ^ ^ cover. It was for this reason that the Brotherhoods did not
\$/y* jj> adopt a militant policy and did not affiliate to the American
1
JLV***7V9 Federation of Labor . This beneficiary function has in America
sajtf' / ^ a s elsewhere been one of the most powerful cohesive forces in
*„ v . V^T/trade unionism, and it is the more important in view of the
1

COMMONS, op. cit.,

Vol.

II,

p.

310.

— 49 —

M*

general absence of social insurance provided by the State.
. ' *
It is true that systems of workman's compensation have now il*» , " ¿:
been established in all but five of the 48 States, but there is no tU-- rf
State provision against sickness, invalidity, or unemployment.
*"*
As regards old age, eight States only — Kentucky, Maryland,
Colorado, Montana, Nevada, Wisconsin, Pennsylvania, and
Arizona — have passed old-age pension laws. Those of the two
latter have been annulled as unconstitutional, and that of Nevada
is practically inoperative through want of funds *. Efforts are
now being made to establish statutory pensions in other States,
but there appears to be little possibility of any system applicable
to the whole country being adopted owing to the difficulties
which the Federal system of government places in the way
of national legislation on social questions. These difficulties
are well illustrated by the Report on Old-Age Pensions presented
to the American Federation of Labor in 1922 2 , which concludes
that under present circumstances an old-age pension law would
probably be declared unconstitutional by the Courts as an
infringement of State rights. The only direct method of providing national pensions which the report could suggest was the
curious device of using the power of Congress "to raise and
support armies", in order to establish an "Old-Age Home
Guard " of the United States Army, which would enable men
and women over 65 to draw an annual pension from the War
Department in return for nominal defence services. The committee concluded that "this plan seems to be the most feasible
one yet presented or devised ", and reproduced a Bill which
had been introduced in Congress in 1909 for the purpose of
giving effect to it.
In addition to the absence of State provision against social
risks, the great development of life-insurance schemes, pensions . ¡M.1L.
for long service and sick benefit funds instituted by employers ^
'^p .
has no doubt stimulated trade union activity in the insurance ^T~ o ^
field. A report presented to the American Federation of Labor
in 1925 3 shows that out of the 107 national and international tpi» ''
^
unions 81 offered death benefits, 39 sick benefits, and 28 dis- t^ ,.[ifZ fvj
ability benefits. Seven made provision against old age and five
against unemployment. The most interesting, because the most ¿£* AM-- /**
1

G. W. P E R K I N S and Matthew W O L L : Trade Union
Benefits,
pp. 32-33.
2
Report of Executive Committee, 1922, p p . 125 et seq.
3
G. W . P E R K I N S and Matthew W O L L : Trade Union Benefits.

F¿

to j» '

— 50 —
unusual, of these benefits are those established by the Cloth
Hat and Cap Makers and the Ladies' Garment Workers' Unions
against unemployment. In these two trades a joint scheme
of industrial insurance has been set up in collaboration with
the employers, and a similar plan has been brought into operation by the Amalgamated Clothing Workers in Chicago.
In the hat trade the whole cost is borne by the Manufacturers'
Association and the fund is administered by a joint council,
while in the ladies' garment trade in New York and Baltimore
1 per cent, is deducted from the workers' wages and 2 per
cent, from the employers' pay rolls. Similarly in the men's
clothing trade at Chicago each side pays P/2 per cent., and the
fund is administered by the union. In all these plans, however,
employment is only guaranteed for a specified number of weeks
annually and benefits are not paid until after a certain number
of weeks of unemployment. Nevertheless, these are interesting
experiments in co-operation between employers and workers
to combat unemployment, and have set a precedent which seems
likely to be imitated in other trades.
The American Federation of Labor has, moreover, recently
launched a big scheme of life insurance in establishing the Union
Labor Life Insurance Company. This step is justified on two
grounds 1. In the first place, it is stated that insurance companies demand far more than the premium necessary to cover
the risk and that they have excluded trade unions from participation in group insurance, except on payment of an extra
$2 per thousand. In the second place, it is pointed out that
the life-insurance schemes set up by employers are intended
to benefit them " b y reducing the labour turnover and tying
the employee to his employment ". The new company has
been formed therefore with the object of offering life policies
to trade unionists at a lower cost and independently of their
employment in any particular plant or industry.
A more remarkable venture, to which a good deal of attention has been attracted, is the institution of labour banks.
One of the first labour banks was founded in Cleveland in 1920
by the Brotherhood of Locomotive Engineers under the inspiration of their.president, Mr. Warren S. Stone. It was his belief
that " t h e saving power of the American working-men is so great
that, if they would save and carefully invest their savings, in
1
See Union Insurance, published by the American Federation of
Labor, 1925.

— 51 —
ten years they could be one of the dominating financial powers
of the world ". The object of the bank was to provide expert
advice on investment and to advance loans to members of the
union, in addition to carrying on ordinary banking business.
At the present time the Brotherhood owns twelve banks with
an aggregate capital of $4,150,000, holds deposits exceeding
40 million dollars, and controls ten investment corporations with
a capital of 261U million dollars 1. The example of the Locomotive Engineers has been followed by other unions, for the
most part connected with the railway service, including, however, the Amalgamated Clothing Workers, who own banks both
at New York and Chicago. The total resources of all the labour
banks now exceed 120 million dollars. For the most part they
conduct ordinary banking business on orthodox lines, though
they make special efforts to meet the needs of their members.
Thus they all make small loans to them at a low rate of interest
and give advice on money matters. The Amalgamated Bank
is financing a co-operative housing project for the construction
of 250 apartments, and has set up a remittance service to enable
its clients to send money abroad without loss on exchange.
The dividends of most labour banks are limited to 10percent.,
their motive being service rather than profit 2 .
It is too early to say what is likely to be the ultimate effect
of these activities. They have given rise to a good deal of speculation and comment, some of it of a rather extravagant kind.
Some people think that they denote "an economic revolution "
or a capitalistic tendency on the part of labour. There does not
seem much evidence to support so far-reaching a conclusion,
any more than in the case of the great co-operative enterprises
in Europe. "For trade unions to organise their own insurance
undertakings does not represent the entrance of labour into commercial undertakings, but the application of scientific principles
to benefit undertakings which are now for the most part not
managed in the most efficient manner. . . . Labor is now
taking steps to secure cheap but adequate insurance protection
by ways other than through the beneficence of employers."
There seems to be little ground for quarrelling with this summary of its insurance policy given by the Executive Council
1
F . P . STOCKBRIDGE: " T h e New Capital ", in the Saturday Evening
Post, 1926.
2
Sidney H I L L M A N : "The Labor Banking Movement in the United
States, " 1925.

— 52 —
of the American Federation of Labor *. It is much more cautious
as regards labour banks, pointing out the danger to the whole
movement involved in their failure 2. The services which they
perform are less clearly trade union services as they have
hitherto been conceived. Mr. Sidney Hillman 3, the president
of the Amalgamated Clothing Workers, regards them from a
wider standpoint as proof of the new desire on the part of labour
in the United States "to assert itself and to use its economic
power to advantage ", at the same time accepting responsibility
in the management of industry. They not only give trade
unionism a financial power which it never previously possessed,
but also an insight into managerial problems and difficulties,
which should be a valuable education if it is to seek to shoulder
larger responsibilities. This is perhaps the most interesting
aspect of labour banking, and so far from its being a volte face,
it seems to be in general harmony with the constructive policy
already outlined. Whatever its success or failure, it is an experiment which deserves most careful study, but one which
has not yet gone far enough to permit any judgment as to its
final results.
THEIR PRESENT STRENGTH

In 1926 there were, according to the official return of the
Department of Labor, 4,443,523 trade unionists in the United
States, of whom 3,383,997 were in the American Federation
of Labor 4 . This may safely be taken as a maximum figure, fo¡;
seeing that the report of the Executive Committee to last « £"„,
year's Convention computed its paying membership at 2,803,966. '
It is not possible to give the exact statistics of the industrial
population at the present time, but in 1920, when the last
Census was taken, it was reckoned that there were 12,818,524
persons engaged in manufacturing and mechanical industries,
1,090,223 in the extraction of minerals and 3,063,582 in transportation 5 — a total of nearly 17 millions, of whom about
16 millions were wage earners. This last figure has no doubt
increased during the last six years, so that it would be within
the mark to suppose that less than 25 per cent, of the industrial
wage earners are organised in trade unions. As has already
1
2
3
4
5

Report, 1925, p. 21.
Ibid., p. 22.
Op. cit., passim.
Handbook of American Trade Unions, p. 3.
Statistical Abstract, 1925, pp. 47 et seq.

-

53

-

been pointed out, the greater part of this 25 per cent, are skilled
men, while the unskilled are devoid of organisation in most
industries. Turning to individual industries, it appears that
the building, printing and clothing trades have attained a high
degree of organisation. The miners, though greatly reduced
in strength since 1920, still claim 500,000 members, or about
half the mining population. Out of 790,000 skilled and semiskilled operatives in the textile industries, only about 60,000
are organised, half of them being affiliated to the American
Federation of Labor. Out of a total railway personnel of about
1,200,000, approximately 740,000 are organised — 435,000 in the
four great Brotherhoods, 200,000 in the American Federation
of Labor, and 105,000 in independent unions. On the other
hand, in iron and steel, automobiles and electrical equipment,
the percentage of trade unionists is small. Some of the craft
unions, such as the machinists, moulders and blacksmiths are
fairly strong, but the great mass of semi-skilled and unskilled
workers in the metal trades, reckoned at nearly V/i millions
by the 1920 Census, are practically without organisation.
There is one further point which cannot be overlooked
because it is often cited in the discussion of industrial relations,
namely, the decline in membership of the American Federation
of Labor since 1920. In that year it reached its zenith with
a total of 4,078,740, but in 1926 it had declined by,L275,000
members. The greater part of this drop was accounTea for in
1921-1922, during which years nearly 900,000 members left
the unions. Since that time there has not been any marked
decrease, but on the other hand there has been no sign of a recovery. Various explanations have been given of this phenomenon. It is said that the numbers were swollen during the war,
as was the case in other countries, and were bound to dwindle
in normal times; that the wage cuts of 1921 made it difficult
for many to continue their subscriptions; that the succeeding
prosperity left the skilled men so well off that they did not feel
the need for union backing. There is no doubt some element
of truth in all these explanations. Again, the opponents of
the Federation ascribe its failure to renew its advance in membership to the unsuitability of its structure and demand reorganisation on industrial lines. This, too, may be a partial
cause, but that it is not the whole cause may be seen from the
fact that the United Mine Workers, an industrial union, has
suffered as severely as any. There are two other causes, which

/¡¿fóff
^ y

— 54 —
have certainly played an important part and which are closely
bound up with the whole question of industrial relations —
the institution of employee representation and benefit plans
by employers and the sustained effort which they have made in
certain industries, particularly the metal trades and the mines,
to drive unionism out. These subjects will call for further
consideration in later chapters, but they form so important
an element in the history of trade unionism in the last few
years that its general policy cannot be understood without
reference to them. Nevertheless, whatever may be the causes
of the present arrest of trade union expansion, there are, in
spite of the falling off in membership immediately after the war,
probably twice as many trade unionists to-day in America as
there were in 1914. At present at any rate there is no clear
evidence for the supposition that unionism is on the wane or
unlikely to play so preponderant a part in the future as in the
past. There is no doubt, however, that its development has
been checked in the last few years owing to various causes,
of which the intensive campaign of opposition waged against
them by the employers in certain industries is not the least
important.
OPPOSITION TO TRADE UNIONISM

The efforts of the trade unions to secure recognition and to
establish the right of collective bargaining led to constant
conflict with the employers and their organisations, who undertook concerted action on a large scale to combat the spread of
unionism. A campaign for the establishment of the "open
shop ", or the right to employ non-unionists and to have no
dealings with the union, was initiated before the war and is
still being pursued, though perhaps with abated vigour. Methods
such as the lockout and the introduction of strike breakers,
armed guards and detectives in the works were employed,
while in addition recourse has been frequently had to the injunction. This last weapon has perhaps produced greater
resentment than any other. In the last twenty years the American Federation of Labor has expended a great deal of money
in fighting cases in the Courts and a great deal of political
activity in trying to obtain legislation from Congress and State
Legislatures to protect trade unions from judicial interference
in the conduct of disputes. In 1914 the Clayton Act was passed
at their instigation to limit the power of the Federal Courts

—

00

—

to grant injunctions. This measure was hailed as "Labour's
Magna Charta ", but subsequent decisions have very largely
nullified its intended effects. It is impossible to go at length
into the mass of legal decisions, often contradictory, which
have been given by the various courts, Federal and State, and
from which alone a definition of the rights of trade unions may
be doubtfully deduced. Some further examples of the use made
of the legal weapon will be cited in the next chapter, but two
points clearly emerge at this stage.
In the first place, the restraint placed by the Courts on trade
union action has considerably limited their power and contributed substantially to the employers' offensive against trade
unionism. Quite apart from the direct effect of injunctions
and judgments in declaring illegal the enforcement of strikes
and boycotts, the posting of pickets and even peaceable attempts
to induce men to join the union, the very uncertainty of the law
has naturally bred hesitancy and confusion in the minds of
trade unionists. The extent of this confusion may be estimated
from the following summary of the present situation :
It is evident that organised labour is limited in the use of its economic weapons. It may strike, but not for the purposes disapproved
of by the Courts. It may picket in most of the States, but it must be
neither intimidating nor coercive, and it must satisfy the Courts on this
point, even those which speak of 'verbal acts " and "moral coercion"1.
In some States all picketing is illegal. It may withdraw its own patronage
from its own employer, and it may ask others to do so, but it may not
similarly withdraw patronage — and ask others to do likewise — 2from
third parties who refuse to join the boycott against the employer .

The second conclusion suggested is that the belief has been
engendered among trade unionists that the Courts are not
impartial, and with it considerable bitterness of feeling. They
maintain that the Courts have been less severe in restricting
the employers' action against them by means of the lockout,
the black list, and the use of strike breakers. It is impossible
for a stranger to judge how far such charges may be justified,
but the language used by so moderate a body as the Executive
Committee of the American Federation of Labor indicates
clearly enough the strength and depth of labour feeling on the
subject. For instance, their report for 1922 3 speaks of the
"class-biased decisions of our courts " and states that "in the
1
e.g. The Supreme Court of Massachusetts held that picketing
by two men constituted "moral intimidation ". Vegelahan V. Gunter,
167 Mass. 92 (1896).
2
John A. FITCH: "The Causes of Industrial Unrest", p. 312.
3
P. 23.

— 56 —

great industrial struggle of the past years, as in former years,
employers have found our courts ever willing and anxious to
throw the forces of the State on the side of capital and against
that of labour"
" Our courts have become so bold that they
hesitate no longer in declaring openly that the judiciary of our
land represents not the people but a class interest." The Committee accordingly recommends that " t h e public conscience
be aroused to the great and grave menace which confronts the
perpetuity of the constitutional rights and liberties of all our
people and as originally conceived by the founders of our
Republic ". Or again in their 1924 report 1 , they say "the special
form of class legislation by judicial decree is assuming an enormous proportion and the wage earners are compelled to suffer
under a set of class laws which apply to no other group within
our Government. It is inconceivable that this form of government by injunction can long prevail without serious reckoning."
It would be easy to quote other similar passages, but enough
has been said to suggest that the use of legal restraints is one
of the most powerful influences making for discord and bitterness in industrial relations. It has been used unsparingly in the
struggle for and against trade union recognition in the last few
years, even to the extent of prohibiting the furnishing of money
and food to miners and their families evicted by the companies
while on strike in West Virginia, who were living in tents near
the mine premises 2 . This injunction was set aside by the
Court of Appeals, but it may be cited as an extreme instance
of the powers exercised by the Courts in industrial disputes,
which constitute a very important factor in the present relations between employers and trade unions.
T H E POLICY OF CO-OPERATION

It would, however, be misleading to suppose that their
relations are so antagonistic as might be inferred from the
preceding paragraphs. It is one of the most interesting and
perhaps not least characteristic features of American industrial
life that, whereas a struggle of considerable intensity is being
waged in some industries around the question of trade union
recognition, in others where recognition has been accorded,
1

P . 82.
Rtport of the Executive Committee of American Federation of Labor,
1922, pp. 26-27. See also F I T C H , op. cit., p p . 327-328.
2

— 57

-

the unions are working harmoniously with the employers for
promoting production and avoiding conflict. Their present
attitude is clearly defined by Mr. William Green, the successor
of Mr. Gompers as president of the American Federation of
Labor 1 :
"Labour does not want to waste its energies and its resources by
engaging in industrial conflicts. . . . I am confident that we can minimise
industrial controversy through a proper regard and recognition of the
rights of both employers and employees. The right of the employer
to manage his industry, to control it, and to receive a fair profit upon
his investment should be maintained and recognised. The right of the
employees to organise, to bargain collectively, to be represented in
conference with employers, through their chosen representatives, is a
right which should be readily accorded and completely recognised
Supplementing the recognition of these simple rights must come
understanding, co-operation and the manifestation of a mutuality of
interest in the management and conduct of industry.

In another passage 2 he declares that:
Labour is interested in the successful management of industry
because it reasons that with the introduction of economy processes, in
the development of efficiency and increased production, the cost of manufacturing and production can be reduced without lowering the standard
of the workers or reducing wages.

These statements indicate the position at present taken up
by the American Federation of Labor and are in accordance
with the general principles already referred to upon which its
policy is founded. If recognition is secured, the trade unions
are prepared to collaborate in increasing production because
their recent experience has convinced them that "standards
of life can improve only as production for use and consumption
increases " 3, always provided, however, that the worker has
his full share of increased productivity. As will be shown later,
this constructive policy is already bearing fruit in several
industries and has been followed with success not only in some
of those which are under the aegis of the Federation, but also
by the Amalgamated Clothing Workers. It may be said, therefore, that American trade unionism is practising two very
different methods. On the one hand, it is still engaged in a keen
struggle to establish the right of organisation and collective
bargaining. But where this right has been admitted, it is disposed to co-operate with employers in improving production
1

Unions Reduce Industrial Waste, pp. 11-12.
Ibid., p. 6.
Declaration of American Federation of Labor and the Railway
Brotherhoods, 1919 : quoted WALLING, op. cit., II, p. 75.
2
3

— 58 —
through joint bodies, which give the workers a voice in determining their conditions and some share in the responsibilities
of industry. It is still premature to predict which of these two
tendencies will ultimately prevail. The tendency to conflict
has not yet been generally replaced by the tendency to collaboration, nor must it be forgotten that the problem may assume
quite a new aspect, should the great mass of semi-skilled and
unskilled workers acquire effective organisation. This seems
to be the unknown quantity in the American situation, and as
long as it remains unknown and outside the pale of organised
industrial relations, to attempt any general judgment about
them would be exceedingly hazardous. No doubt the wage rates
set by collective bargaining with the unions have to a considerable degree been taken as a guide in determining the standard
of remuneration of the semi-skilled and unskilled; but as the
latter tend to invade skilled occupations more and more, the
influence of the unions may run the risk of being correspondingly
diminished for the reasons pointed out by the German trade
union delegates 1. The present may, therefore, be regarded as
a transitional period in the development of American trade
unionism, in which a number of divergent possibilities may be
observed, rendering confident forecast impossible.
1

See p. 43..

CHAPTER IV
EMPLOYERS' ORGANISATIONS AND POLICIES

If it is true that the majority of American workers are not
organised, the same is not less true of the American employers.
Although trade associations are numerous, many of them
pay little or no attention to labour questions, and the want
of effective union organisation in many industries makes
collective action or negotiation superfluous. In addition, the
restrictions imposed on employers by the Sherman AntiTrust Act have tended to hinder their combination ; but a
stronger influence militating against organisation is the individualist attitude of the American employer himself. He usually
prefers to manage his own business in his own way, and believes
that he has the right to do so without any interference from
the State, the trade union, or his brother employers. There
is a good deal of aversion to any kind of limitation of his
personal initiative such as is necessary for the pursuit of any
collective policy. It is not therefore surprising to find that in
many trades employers are totally unorganised; that in others,
of which coal-mining is the most conspicuous example, they
have no representative body to negotiate wages and other
labour questions, although the men are highly organised and
collective bargaining obtains over large sections of the coalfields; and that there is no national association, which has any
certain claim to put forward the views of American employers
as a whole on matters affecting industrial relations. Of the two
largest national bodies, the United States Chamber of Commerce,
being a federation of chambers of commerce and not of employers' associations, is not wholly composed of industrialists
and is not primarily concerned with labour affairs. The other,
the National Association of Manufacturers, though large and
influential, is based upon individual membership. In connection
with it, however, there is a focal body of employer's organisations known as the National Industrial Council, comprising
some 300 national, state and local associations of employers.

— 60 In 1920 the National Association claimed 5700 members
ii JL'fi
employing six million persons 1. Since then it has declined
^iK jt»-- in numbers 2, so that at the present time its members probably
jT^ ^jJL^ employ about the same number of workers as are organised
HT. <\ «. ,in trade unions, leaving the employers of the remaining three^' I »^»^icniarters of the industrial population outside its ranks.
**"^
Although the two great national organisations may be
taken as largely representing the views of the unorganised
majority, any general statement as to the views and policies
of American employers can hardly be made. Among them
will be found men of every shade of opinion on labour
problems. While there are many who see no relation between
themselves and their workers but the cash relation, there
are many others who practise an austere or a benevolent
paternalism towards them. While there are many who believe
in trade unionism, there are more who detest and fear it. While
there are many who hold that their right to conduct their
establishments as it pleases them is open to no possible question,
there are some who share their profits and some of the responsibilities of management with their workpeople. All the intermediate types which lie between these various extremes may
be plentifully discovered with every possible variety and
peculiarity, so that there is no such thing as a composite picture
of the American employer. All that one can attempt is to pick
out a certain number of current policies and practices with a
view to showing how complete is their absence of uniformity
and how wide their divergence.
In the first place, a distinction may be drawn between the
employers who recognise the unions and those who do not. The
former are for the most part organised for purposes of collective
bargaining into bodies such as the Building Construction Employers' Association, the Newspaper Publishers' Association,
the Stove-Founders' National Defence Association, and so on.
Although they do not comprise all the employers in their
respective industries, their agreements generally set the conditions for the whole of their trades. The most striking exception is the coal industry, where even for the anthracite mines,
1
C. E . BONNETT : Employers' Associations in the United Slates, p . 291.
This work forms the most important source of information about
employers' organisations. Written with s y m p a t h y for t h e employer's
standpoint, it is very carefully and fully documented and is based on
very extensive research.
2

NATIONAL ASSOCIATION OF MANUFACTURERS : Secretary's

1926, p . 76.

Report,

-

61 —

which are highly unionised, there is no regular organisation of
the mineowners, either national or district, for the purpose of
conducting relations with the union 1 . Some particulars of
the arrangements for settling disputes and promoting co-operation in the organised trades will be given in a later chapter.
What is important to remark at this stage is that they only
cover about one-fourth of American industry, and that the main
body of American employers are either actively or passively
hostile to trade unionism. Until the close of the war, their
opposition principally took the form of fighting unionism with
every weapon at their disposal. In the last few years, however,
there has been a marked tendency to seek the good will of labour
by offering good wages and conditions, by giving insurance and
other benefits, and in some cases by setting up a regular system
of consultation between workers and management in the plant.
These two policies are concurrent at the present time. To some
extent they are complementary, in so far as the bid for collaboration with the employees is actuated by the desire to keep
the union out, which is often the case. But in so far as it represents a new approach to the labour problem, it is increasingly
in contradiction with the old combative idea and is already
beginning to modify, if not to supplant it. In order to appreciate
the significance of this change, some account must be given
of the battle which has waged for twenty-five years round the
question of the "open shop ".
T H E " OPEN SHOP " DOCTRINE

As the trade unions grew in power, they claimed with increasing success to enforce the doctrine of the "closed shop ",
that is to say, the obligation imposed upon the employer by
agreement to employ none but union men. Always faced
with the danger that their members would be supplanted by
non-unionists willing to work for lower wages, most of the
unions exerted pressure on the employer to exclude the latter
by contract from his shop 2. For instance, section 3 of the
Joint Arbitration Plan between the Building Trades Employers'
Association and the Unions of the Building Trades of New
York, 1903-1905, reads as follows:
1
2

Report of the United States Coal Commission, Part I, p. 100.
Some unions, such as the Railway Brotherhoods and the Amalgamated Clothing Workers, do not insist on the "closed shop ", but rely
exclusively on their own organisers.

— 62 —
The employers parties t o this Arbitration Plan agree to employ
members of the trade unions only, directly or indirectly, through
subcontractors or otherwise, on the work and within the territory as
described in section 1 of this Plan.

This demand produced a strong reaction among American
employers which took shape in the early years of this century
and has been a fertile cause of strikes and lockouts. Most of
the fighting employers' associations made it their principal
object to combat and defeat the "closed shop ", and some of
them renounced their relations with the unions largely on this
ground 1. It is noticeable that even a body like the National
Metal Trades Association, which pursued an uncompromisingly
militant policy, while supporting its members with all its forces in
strikes arising on the issue of unionism, warned them that " i t does
not extend its protection against ordinary wage strikes " 2.
The "closed shop " is not the only issue between employers
and trade unions. The former have also charged the latter
with limitation of production, with graft and blackmail s ,
with calling boycotts and sympathetic strikes, which injure
the business of men who are powerless to remedy the grievances
which give rise to them. Instances can be found by which
these charges can be justified, but the evidence seems to show
that it was above all the insistence on the "closed shop " which
lent particular vehemence to American employers' antagonism
to unionism.
On their side the employers promulgated a rival doctrine,
that of the "open shop " ; but whereas there was no ambiguity
about the "closed shop", the "open shop" has been subject
to some variety of interpretation. In practice, it often meant
the refusal to employ unionists at all, but in theory at any rate
it was more usually construed as refusal to recognise the union
or to discriminate between unionists and non-unionists in the
matter of employment. A typical declaration on this point
is contained in the principles adopted in 1903 by the National
Manufacturers' Association, which has the maintenance of
the "open s h o p " as one of its chief objectives 4 :
1

e.g. the National Founders' and National Erectors' Associations

( B O N N E T T , op. cit.,
2
B O N N E T T , op.
3

pp.
cit.,

71 and
139).
p . 115.

These practices are of course not countenanced by the national
trade union leaders. As an instance may be cited the charges of bribery
brought recently by the International Bortherhood of Electrical Workers
against 17 officials of their local union at New York (New York Times,
21 and 22 Dec. 1926).
4

B O N N E T T , op. cit., p p . 296-297.

— 63 —
3. No person should be refused employment or in any way discriminated against on account of membership or non-membership in any labour
organisation, and there should be no discriminating against or interference with any employee who is not a member of a labour organisation
by members of such organisation.
9. Employees have the right to contract for their services in a
collective capacity, but any contract that contains a stipulation that
employment should be denied to men not parties to the contract is an
invasion of the constitutional rights of the American workman, is against
public policy, and is in violation of the conspiracy laws. This association
declares its unalterable antagonism to the closed shop and insists that
the doors of no industry be closed against American workmen because
of their membership or non-membership in any labour organisation.

This definition contains a number of statements which bring
out the main points in the controversy of legal and social
concepts which rages round the "open shop " . The first principle, that of non-discrimination, is generally accepted by
employers as representing their creed, but it has been by no
means universally applied. Contracts are not unknown, particularly in the mines, by which the employee binds himself not to
join or encourage tha union 1. In fact, the League for Industrial
Rights, an employers' organisation for legal offence and defence,
which has fought a large number of important cases against
the unions, recommends such contracts as a powerful instrument for preserving the "open s h o p " , particularly in view
'Tt*)\*
of a famous decision by the Supreme Court that where they *"* £^J£«
have been signed, any attempt to induce the signatory to join ¿Jb*^'"
the union becomes ipso facto illegal 2 . As the League puts it 3 : r
^J^

Every step taken by a union or any outsider to accomplish the unJ7
lawful purpose of inducing a breach of contract is unlawful, although
\2t~J*
under other circumstances the same step might be innocent and proper. X** * j 4. * V
Threats of strikes, persuasion of employees, peaceful picketing, a n d o v
ji
payment of strike benefits, though frequently held lawful, become illegal " . t $\
if they are steps to induce the employee to quit work or an employer fri**" \^
to operate a closed shop in violation of agreement. By the execution i ** U^*
of these suggested agreements, therefore, the employer broadens hisi^*i X*A
rights and remedies, narrows the rights of the outside agitator, and lays ^ **^*^
the foundation for injunction and damages against labour troubles which
\ , \T'
the law might otherwise sanction.
U <i
As a general rule, however, the " open shop " does not exclude
unionists, but even where this wider interpretation of the
principle has been accepted, employers have not infrequently
adopted energetic measures to prevent organisation taking
place among their workpeople. In any case, it precludes
1
Such contracts are popularly (or unpopularly) known as "yellowdog contracts ". For an example see Report of the United Slates Coal
Commission, Part III, p. 1389.
2
Hitchman Coal and Coke Co. v. Mitchell, 245 U.S. 229.
3

BONNETT, op. cit., p. 464.

— 64 —

any dealings whatever with the union, and consequently does not
admit collective bargaining, as usually understood.
In the face of this fundamental feature of the "open shop "
it may seem inconsistent to proclaim that "employees have
the right to contract for their services in a collective capacity ".
It was on this point that President "Wilson's first Industrial
Conference broke down in 1919, because the employers' group,
while admitting "collective dealing", refused to deal with
organisations, while others are indisposed to deal with anybody
except the individual workman. On all these points there is
a good deal of confusion and uncertainty. Both employers and
workers base their claims upon " natural rights " enshrined in
the American Constitution —on one side the rights of property
and of individual liberty, on the other the right to associate
for common purposes. Each denounces the attitude of the
other as "un-American ", and the frequent appeal to the Courts
has invested the whole question of industrial relations in a juridical
atmosphere. Although there are some signs that both sides
are inclined to reconsider their attitudes, the doctrine of the
"open shop " still prevails to-day among the majority of
American employers, and the attempt to enforce it constitutes
a large part of the history of several of their leading organisations.
Its Enforcement
As has already been mentioned, trade unionism is weak in
the great metal industries. That this is due in a large measure
to the active and organised opposition of the employers can
hardly be questioned. The combative methods adopted were
not confined to these industries, but may be found also in the
coal trade, on some of the railways, and in other fields. The
practice of the National Founders' Association may fairly be
taken, however, as typifying the methods of employers who
resorted to "direct action" against the unions. This body
was originally formed for the purpose of negotiating collective
agreements, but in 1904 the New York agreement with the
Iron Moulders' Union broke down on various points, including
the "closed shop ". The association decided not to renew it,
but to follow a belligerent anti-union policy. It accordingly
adopted the principle of the "open shop", admitting of no
compromise on this question, though in other matters of dispute

— 65 —
between employers and their employees arbitration was recommended 1 . In order to carry through this programme a severe
struggle was anticipated and an anti-strike organisation was
created by the association for the benefit of its members. In
the first place, it provided strike-breakers up to 70 per cent.
of the average number employed in the plant through its own
labour bureaux established in different parts of the country.
To protect the strike-breakers from violence it undertook to
secure police assistance or to furnish armed guards paid from
its own funds. By these measures a large number of strikes
was fought, and when a shop had been "cleaned " of unionists,
the employer was under a written obligation to maintain a
non-union shop for twelve months 2. Other expedients of a
preventive character were also employed. Propaganda was
energetically conducted among the men by the association's
organ, the Open Shop Review, and other means. Safety and
sanitation were impressed both on employers and workmen.
Unskilled men and boys were taught moulding in order to
increase the available supply of skilled men. Finally, the
association had its own "intelligence corps " :
This corps enables the association officers to know at all times the
conditions in the shops of members. Through it, the most cautious
agitator and trouble-maker may be quickly detected and removed from
the shop ; and thus strikes may be prevented. An "intelligence man "
may report an impending strike to the officers of the association a long
time before the proprietor can or d«es... As these "intelligence men "
are to be found in the ranks of the moulders' union, and are in "good
standing " there, practically every move of the union3 or proposed scheme
is reported shortly to the leaders of the association .

The president of the association testified to the efficiency
of this secret service by saying: " I regard this as one of the
very best investments the association makes. Without it I
would hardly know how to direct the work of the association.
It seems to be an indispensable requisite to good results*.
These methods were not peculiar to the foundry trade.
They were likewise practised by the National Metal Trades'
Association, a powerful organisation comprising more than
1,000 firms, which claims to have won every strike since it
was formed. It, too, maintained its own secret service, supplied
1
2
3
4

See BONNETT, op. cit., pp. 68-73.
Ibid., p. 75.
Ibid., p. 79.
Annual Convention, National Founders' Association, 1912. Quoted

BONNETT, op. cit., p. 80.

CI

C^

/L~L.

— 66 —
strike-breakers and guards, at the same time urging its members
to give good wages and conditions as a preventive of labour
trouble. For employers who did not possess their own espionage
system, detective agencies which specialised in "industrial enquiries " offered their services in most large centres, and no
particular secret was made of the utilisation of informers.
One of the vice-presidents of the Pennsylvania Railroad stated
before the United States Commission of Industrial Relations
in 1915: " W e have a very efficient police organisation, and
we know in advance everything that is going on just exactly
as the organisations themselves know what is going on with us.
We have emissaries in our ranks just as the organisations have
emissaries in their ranks. " x
This Commission found that " practically all of the (employers') associations maintain a secret service department" 2 ,
while the United States Coal Commission found in 1921 that
"the use of the spy system is widespread " 3 . It is unnecessary
to pursue this topic further 4 . The use of espionage is said
now to be on the decline, but available evidence seems to show
that it is still commonly practised. Its effect upon the relations between employers and workers can scarcely have been
beneficial.
The employment of strike-breakers protected by armed
guards frequently became a source of disorder and violence,
particularly in the mines. The Coal Commission gave a
number of examples, including an account of the "Herrin
massacre " of 21 June 1922, when some 25 strike-breakers and
others were shot by an enraged mob of miners and their sympathisers 5 . Similar deeds of violence not infrequently resulted
from the eviction of strikers from company-owned houses or
from mass marches of miners in order to force the unionisation
of non-union mines. As the Commission says 6 : " Since the
members may carry anything from rotten tomatoes to guns
and since feeling is high, it is likely to lead to shooting
affrays and violence, started sometimes by one side, some1

UNITED

STATES COMMISSION ON INDUSTRIAL R E L A T I O N S :

Final

Report and Testimony, Vol. X I , p . 10130.
2
Ibid., Vol. I, p . 118.
3

U N I T E D STATES COAL COMMISSION: Labor Relations

in

Bituminous

Mining, P a r t I I I , p . 1331.
4
Further particulars m a y be found in The Labor Spy b y Sydney
H O W A R D , and in F I T C H , op. cit., p p . 171-185.
5
6

Report of the United States Coal Commission,
Ibid., P a r t I I I , p . 1332.

P a r t I, p p . 165-168.

— 67 —
times by the other. This is especially likely to be the case
in these mountain communities (in the south) where the
citizens are accustomed to the use of the rifle since childhood
and habitually regard it as a means of settling disputes. "
It would be a mistake to suppose that armed force was
advocated by the responsible officials on either side, for "much
of this violence had nothing to do with the coal industry, but
had to do with the nature and racial characteristics of the
people " of West Virginia and Kentucky, in which it most
frequently occurred 1 . Nevertheless, violent incidents arising
out of provocation offered by one side or the other have not
been uncommon in mining disputes, nor were they wholly unknown in other industries, as is shown by the strikes at the
Bethlehem Steel Works in 1910 or the Standard Oil Company's
works at Bayonne (New Jersey) in 1916 2 , or again by the
dynamite campaign carried out by the Structural Iron Workers'
Union, for which the Macnamaras were convicted at Los Angeles
in 1911.
It is difficult to refer to troubles of this kind without
running the risk of giving the impression that violence and
bitterness have been the general characteristics of industrial
relations. This is certainly not the case, and once again a
caution must be entered against general conclusions being
drawn from particular events or particular industries in the
United States. At the same time, no account of American
conditions would be complete which omitted all mention of
the acts of violence which have, even in the recent past, sometimes marked the struggle for and against unionism and have
at times given it unexampled intensity.
LEGISLATIVE, LEGAL, AND RESEARCH ACTIVITIES

The activity of the American Federation of Labor and of the
trade unions in pressing their causes upon the Legislatures and
in defending their members before the Courts has been referred
to in a previous chapter. The big employers' associations
have devoted a good deal of their money and energy to the
same purposes. The National Association of Manufacturers
has a well-organised system by which pressure can be exercised
1
5

Report of the United Stales Coal Commission, Part I, p. 168.
FITCH, op. cit., pp. 231-233.

— 68 —
through its members all over the country on their political
representatives both in the State and the Federal Legislatures.
It keeps track of all legislation of the States and in the National
Legislature of interest to manufacturers. It informs them fully as to
their terms and meaning. It represents them in opposition to such
legislation as they oppose, and in the promotion of such legislation as they
express a formal interest in *.

. ft" By these means labour legislation has often been effectively
tA*****contested, as well as the attempts of the American Federation
IL*:
of Labor to secure an alteration of the law relating to injuncions. Its attitude on the immigration question has been
r ^\,
somewhat variable, but at present is not opposed to the existing
v*¡ rv restrictions, though desiring greater" administrative flexibility" 2 .
JL.V" ^
Similar political activities are carried on by the National Metal
**
Trades Association and other employers' bodies, as well as a
great deal of publicity in favour of the "open shop" and
other aims.
These associations also pay a great deal of attention to the
legal aspect of the flght against unionism, to which reference
has already been made, but the most powerful and successful
body in this sphere is the League for Industrial Rights, founded
in 1902 and known as the "American Anti-Boycott Association " until it took its present more comprehensive title. Its
first notable success was in the well-known Danbury Hatters'
Case, where after legal proceedings lasting twelve years the
League obtained a judgment from the United States Supreme
Court, condemning the use of the boycott in wide limits and
awarding damages of $252,300 against the union and its members,
which the League proceeded to collect during the following
five years with unrelenting pertinacity 3. Since that time it
has fought a number of other cases, some of which have had a
far-reaching effect in limiting the action of trade unions and
exposing them to legal penalties in matters such as picketing,
union responsibility, the strike, and the boycott. The legal
weapon has been one of the most effective arms wielded by the
employers in their fight against unionism, and has done much
to check its progress. In forging this weapon the League for
Industrial Rights has played an important part. It goes
1

See BONNETT, op. cit., p.

312.

* See Thirty-First Annual Convention (1926), pp. 92-94.
3
Walter Gordon MERRITT: History of the League for Industrial
Rights, i p . 22-31. For other particulars see BONNETT, op. cit., Chapter
XII.

— 69 —
so far as to claim that its efforts "have gone to weave the
structure of jurisprudence on this subject and have made a
deep impress on the skyline of our industrial horizon " 1.
One of the most distinctive features of the corporate life
of employers in the United States is the habit of exchanging
information and conducting joint research. It is their practice
to furnish particulars to their associations and to the United
States Chamber of Commerce as to costs, prices, production,
and other matters relating to their business far more freely
than is the habit in other countries. It is even quite usual to
pool such information with competitors on the principle that
each individual has more to gain than to lose on the exchange.
Cases may be found in which production costs are circulated
among a group of firms in the same industry and a sort of
sporting rivalry established between their managements and
workpeople. The same method is now being applied in respect
of labour conditions, welfare, and industrial relations. Men
responsible for labour management frequently meet together,
compare notes, and carry out experiments on agreed lines in
order to increase their common knowledge. Managers sometimes even visit each other's factories and write detailed criticisms of the defects they have found, which are discussed at
their next meeting. This practice undoubtedly stimulates
thought and progress, and tends to propagate successful and
advanced methods of handling the labour problem.
The most outstanding example of employers' co-operation
in the field of research is the National Industrial Conference
Board, which was founded in 1916. Among its objects are
the following 2 :
To make impartial investigations in the field of industrial economics,
and to co-operate to this end with individuals, institutions, associations
and agencies of Government ; to aid in securing, on the basis of established
economic facts underlying and affecting industrial conditions, joint
deliberation of manufacturers and associations of manufacturers in the
United States ; to promote good understanding and friendly relations
between employees and employers for the benefit of both, and between
those engaged in industry and the public for the general good of the
community.

The Board is a federation of twenty-seven employers'
associations, each of which elects two members and makes a
financial contribution. It has a research staff of about eighty
1
2

MERRITT, op. cit., p. 125.
NATIONAL INDUSTRIAL CONFERENCE BOARD: Purposes and

Laws, 1925.

By-

— 70 —
persons, under the direction of Mr. Magnus W. Alexander,
including a number of highly-trained economists, and has issued
a large number of industrial and economic reports. Much of
its material is supplied by its constituents, who are sufficiently
numerous and representative to lend considerable authority to
the deductions drawn from the information which they furnish.
Monthly returns on wages, hours, and cost of living are regularly
furnished by 1,760 firms chosen as typical in various industries.
Before publication, however, every report is submitted to each
member of the Board for comment and criticism. Subtantial
modifications are not infrequently made in the drafts presented by the research staff, and no doubt matter which might
expose employers to criticism is sometimes omitted. The
Board itself assumes collective responsibility for every publication. Its aim is to give facts, not to frame or advocate
policy, and it furnishes information not only to its- own
members, but to outside economists and organisations. It has
been suggested that some of the reports are definitely twisted
in order to suit the employer's standpoint 1 , but the Board
energetically repudiates any such imputation on the scientific
character of its work. In any case, many of its studies are of
undoubted value and have acquired considerable authority as
sources of information on industrial conditions in the United
States.
T H E N E W LABOUR POLICY

As has been already indicated, there is now a fairly widespread
tendency among employers to adopt a new attitude towards
labour. It may perhaps be said roughly to date from 1920, when
the second Industrial Conference convened by President Wilson
presented a report outlining a fresh approach to the whole
problem. That report, though little regarded at the time,
is an important landmark in the history of American industrial
relations. Although works councils and shop committees had
existed even before the war in certain establishments, they
had been instituted simply on the initiative of the individual
employer, not as part of any general policy for improving the
relations between capital and labour. The Philadelphia Rapid
Transit scheme, for instance, had been founded by Mr. T. E.
Mitten in 1911, as the best means of rehabilitating a business
which was in a parlous condition, while two years later the
1

See BONNETT, op. cit., p. 483, note.

-71 -

°

Colorado Fuel and Iron Company's plan was established as
a consequence of a disastrous strike, in which many lives were
lost. During the war the War Labor Board had encouraged
the formation of shop committees as part of their policy for
the prevention of strikes and the stimulation of production, but
without any intention of providing aii alternative to trade
unionism. Indeed, the Board's first declared principle was
that "the right of workers to organise in trade unions and to
bargain collectively through chosen representatives is recognised
and affirmed. This right shall not be denied, abridged, or
interfered with by the employers in any manner whatsoever 1 ."
The considerable increase in trade union membership during
the war-years was fostered by the policy of the Board, but in
1919 there was a strong reaction against unionism on the part
of many employers, producing a great deal of industrial disturbance and culminating in the declaration against recognition
by the employers' group at the first Industrial Conference.
The latter had, indeed, admitted representation of employees
in the works for purposes of joint discussion, but it was felt
that industrial peace could not be ensured on a basis which
organised labour refused to consider, and a second Conference,
at which neither employers or trade unions were represented
as such, was accordingly convened.
The second Industrial Conference definitely propounded a
new philosophy aspiring to restore contact and community of
interest between employer and employee by giving the latter
a voice in settling the conditions under which he earned his
livelihood. The kernel of the Conference's recommendations
is contained in the following sentences of its report 2 :
The guiding thought of the Conference has been that the right relationship between employer and employee can be best promoted by the
deliberate organisation of that relationship. That organisation should
begin within the plant itself. Its object should be to organise unity of
interest and thus to diminish the area of conflict, and supply by organised
co-operation between employers and employees the advantages of that
human relationship that existed between them when industries were
smaller. Such organisation should provide for the joint action of
managers and employees in dealing with their common interests. It
should emphasise the responsibility of managers to know men at least
as intimately as they know materials, and the right and duty of employees
to have a knowledge of the industry, its processes and its policies.
Employees need to understand their relation to the joint endeavour so
that they may once more have a creative interest in their work.
1
2

W. J. LAUCK: Political and Industrial Democracy, p.
UNITED STATES DEPARTMENT OF LABOR: Annual

p. 235.

13.
Report, 1920,

— 72 —
These proposals differ fundamentally from those of the
British "Whitley Committee in that they do not advocate joint
machinery on an industrial basis, but owing to the want of
organisation on both sides in most American industries such
machinery would not have been generally applicable. At the same
time, the Conference did not put forward organisation within
the plant in opposition to organisation on a craft or on an industrial basis. They conceived it rather as completing and
supplementing arrangements for collective bargaining where
they existed....
Employee representation (they state) organises the relations of
employer and employee so that they regularly come together to deal
with their common interests. It is operating successfully under union
agreements in organised shops. It is operating in non-union shops,
and it is operating in shops where union and non-union men work side
by side. In plants working under union agreement it adds to collective
bargaining an agency of co-operation within the plant. It is itself an
agency of collective bargaining and co-operation where union agreements do not obtain 1.

The conception of joint consultation within the plant was
accepted by Mr. Gompers, who considered that there could
be no objection to the closest co-operative relations in the
shop so long as they did not separate the workers in that shop
from their fellow-workers in the industry 2 . But he rejected
the findings of the Conference as tending to set up machinery
in non-union shops which would be prejudicial to the development of trade unionism, and it is to this fear that the unceasing
opposition of the American Federation of Labor to employee
representation must be ascribed. That their apprehension
was not ungrounded was shown by the action of many employers
who introduced representation schemes with the undisguised
object of checkmating the unions, and their advocacy by bodies
which had taken an active part in the "open shop " fight did
not increase their attractions in the eyes of trade unionists.
At the same time, the recommendations of the second Industrial
Conference were not acted upon by employers simply because
they seemed to furnish a new weapon against the unions. Many
of them had become convinced, on various grounds, which will be
more fully explained in the succeeding chapters, that a new
attitude towards labour was necessary in the interests of good
business, if for no other reason. Moreover, every works council,.
however limited its scope and functions, inevitably implies
1

Ibid., p. 238.

2

WALLING, op. cit.,

Il, p . 34.

— 73 —
that the employer has surrendered some measure, however
small, of the absolute power which he previously exercised to
determine the conditions in his own establishment. It would,
therefore, be misleading to assume that the creation of such
councils means nothing at all or that they have no appreciable
effect on the relations between employers and workers, whatever the motive which led to their formation. At the least
they denote recognition of the principle that the voluntary
co-operation of the workpeople is a desirable factor in industry
and that it cannot be obtained except by discussing their
working conditions with them collectively.
This represents a clear departure from the standpoint that the employer
fixed the conditions of employment as he thought best, leaving
the individual worker free to accept them or not, as his economic
interests or necessities might dictate. However much, therefore, employee representation may have been adopted as a breakwater against unionism, it nevertheless denotes a new policy in
industrial relations.
With the employers as with the trade unions in the United
States there are, then, two concurrent policies at the present
time. On the one hand, the old fight against unionism and in
favour of the "open shop " is still being vigorously prosecuted
in many quarters. There are still many employers, especially
in the south and in new industrial centres like Detroit, who
reject any sort of collective dealing with their workpeople and
who maintain their own unqualified right to decide every question
relating to their employment without any consultation or
advice. On the other hand, there is a new movement in the
direction of enlisting the co-operation of the workers by means
of joint bodies within the works. It is founded on the belief
that the "human element " is a vital factor in industry requiring
as much consideration and study as organisation, equipment,
or selling methods. "While it is sometimes adopted as a means
of forestalling trade unionism, in other cases it is being carried
forward in agreement and collaboration with the unions. It
owes its origin to a number of different but converging circumstances, which will be referred to in the next chapter, but
from whatever point of view it may be regarded, it constitutes
one of the most interesting and important features of modern
American industry.

CHAPTER V
"PERSONNEL MANAGEMENT"

The new labour policy, of which the establishment of works
councils and other representative schemes is but one phase,
did not spring from any theory that the basis of industrial
relations required to be changed. It grew rather from the intensive re-examination of all the problems of management which
war and post-war conditions in America have imposed upon
employers. Its foundation was not philanthropy but business.
From the study of factory organisation, machinery and salesmanship it was a natural and inevitable transition to the study
of the human factor, not only in relation to each particular
job, but more widely as an essential part of the apparatus of
production. The researches of the Taylor school had early
pointed in this direction, and the peculiar conditions which
have obtained in the United States during and since the war have
led to the elaboration of a new science known as "personnel
management". A considerable literature has grown up around
it, and a number of important organisations have been formed
for its furtherance, chief among them the Personnel Research
Federation and the American Management Association.
T H E LABOUR TURNOVER

The origin of this movement can only be understood in
the light of the economic circumstances of the past few years.
In the first place, the shortage of labour both during the war
and since its termination combined with the migratory habits
of the American worker made it frequently difficult for managers
to ensure a regular working-force capable of keeping their
machinery running smoothly and uninterruptedly. The problem of the labour turnover forced itself upon them in an acute
form, and obliged them to turn their attention to devising means
for retaining their workpeople in the permanent service of the
establishment. The old hand-to-mouth employment policy,

— 75 —
which paid little heed of the individual so long as a sufficient
number of arms and hands were available, was no longer adequate to meet the situation. The constant replacement of
men by newcomers often requiring training before they became
capable of full output slowed down the efficiency of the plant
and came to be recognised as wasteful and uneconomic. Works
in which the annual turnover was from 100 to 200 per cent.
were common, and in some cases it was as high as 300 per cent. ;
in other words, on an average every job was done by three
different men in the space of twelve months. Employment
being plentiful, men threw up their jobs readily if they were
dissatisfied with the nature of their work, with their treatment
by the management, or with the amenities of the locality.
Having no attachment to the factory, and often none to the
district, they would change their employment for the sake of
changing and leave the management to find a substitute at short
notice. On their side the employers often discharged men
with equal light-heartedness, and as a rule paid little attention
to the consequences for their employees 1. The extent of the
turnover may be judged from a statement made in the Report
on Employment Relations to the last annual meeting of the
National Association of Manufacturers 2 to the effect that
"the average annual turnover rate (voluntary ' q u i t s ' only)
in manufacturing plants employing 300,000 wage earners was
161 per cent, in March 1920, 97 per cent, in February 1923,
and only 41 per cent, in August 1926— The importance of
such reduction can be realised when we know that one large
company employing over 40,000 workers reports that the
cost of hiring and training each new employee is over $81".
The desire to cut down the turnover was one of the strongest
incentives towards adopting more scientific methods of personnel
management, and thus reducing the causes of dissatisfaction,
which led men to give up their jobs and move elsewhere. There
were, however, other motives which tended in the same direction. The wastefulness of industrial strife was in itself an
inducement to managers to seek closer and happier relations
with their men, while the promotion of contentment by
according benefits and privileges, which would create a per1
For full treatment of this question see Sumner H. SLICHTER: The
Turnover of Factory Labor, and Paul F. BRISSENDEN and Emil FRANKEL:
The Mobility of Industrial Labor.
8
Thirty-First Annual Convention: Proceedings, p. 138.

— 76 —

manent link with the factory and might also deprive them of
any inclination to join the union was also an object which was
kept in view. It was chiefly in the big corporations that the
new methods were put into operation, and here they were
assured of a fuller and fairer trial owing to the very size of
these great combinations of capital. Most of them were so
large that the function of management had become completely
separated from the function of ownership. With establishments often widely scattered over the country, the manager
had to bear a responsibility which gave him a new outlook
and a new independence. He was to blame if output was
slack, whether it might be due to a strike, insufficient labour,
want of skill, or want of effort. Consequently, he claimed,
and was allowed, a good deal of latitude in the policy he pursued,
provided that the results were good. Most of the large corporations, such as the Standard Oil Company and the International Harvester, now employ a labour manager to supervise
the industrial relations throughout the whole of their plants.
He is responsible for the avoidance of trouble and for bringing
about general contentment among tens of thousands of men
in many different places. He has an important department
under his orders, and it is his business to consider the effect
on the firm's relations with its employees of every phase of
their policy, just as it is the business of the financial director
to consider the financial consequences. He necessarily learns
to look at things more from the men's standpoint, and as he
is a salaried official and has therefore no personal interest in
profits, his view is more detached than that of the employer
who is his own labour manager can possibly be. The growth
of a professional class of this kind has greatly contributed to
the study of industrial relations. There is a constant interchange of information and collation of experience both through
the medium of the societies formed for the purpose and through
informal meetings among labour managers themselves. They
have brought a new approach to the labour problem and have
been largely responsible for the adoption of the various schemes
which have been inaugurated, more especially by the large enterprises, for creating a closer and more understanding relationship with their employees.
These methods may be roughly divided into three categories, all of which fall under the general term of "personnel
management " :

— 77

-

(1) The scientific determination of working conditions.
(2) The establishment of benefits such as life insurance,
pensions, sickness funds, and stockholding plans, of
which the cost is borne wholly or partly by the employer.
(3) The establishment of works committees or other representation schemes for ensuring contact between men and
management.
Although these various methods are applied in different
degrees in different establishments, they all form part of the
same policy and may be properly considered together.
THE

STUDY OF WORKING CONDITIONS

The study of working conditions naturally forms part of
the cares of every management, but it is now being undertaken
in the United States from a scientific standpoint in order to
evolve a series of general principles more or less applicable
throughout industry. It begins with the establishment of
an employment department for selecting workers, fitting them
to their jobs, watching their progress and analysing the causes
of their resignation or discharge. In many undertakings no
dismissal may take place without the agreement of the employment manager and in some there is an appeal to the works
council. The second important function of the labour manager
is to secure the fixing of such hours, rest periods, holidays, and
other shop conditions as will ensure the maximum output and
will avoid its being prejudiced by unnecessary fatigue. This
implies a great deal of investigation of a psychological and
physiological character and is linked up with welfare questions,
recreation facilities, medical care and assistance, accident prevention, and so forth. Such activities are less important in
cases where hours and other general conditions are regulated
by collective agreement, but in non-union plants their effect
is far reaching. To them may be partly attributed the decrease
in hours which has taken place recently in many of the unorganised industries. Messrs. Tead and Metcalf, whose book
on "personnel management " contains a comprehensive survey
of its principles, practice and results, state * that " On the
1

Ordway T E A D and H. C. METCALF: Personnel Administration,

p. 77.

— 78 —
whole the evidence tends to show that under present conditions
in most industries an eight-hour day results in a high, if not
the highest, productivity. A moderate amount of leisure is
thus obtained; the plant is in operation during the daylight
hours nearly the year through; the weekly output has been
shown in well-managed plants not only not to decrease, but
actually to increase, in a reduction from nine to eight hours ".
The same authors show that the practice of giving paid holidays has also gained a good deal of ground in recent years,
as has the policy of allowing short rest periods during working
hours !. Similarly much has been done to relieve monotony
by studying the individual aptitudes of workers in order to
adapt them to the kind of work for which they are constitutionally best fitted, on the principle that " interest and monotony
are not so much characteristics of work as of a relationship
between a worker and a job. In each individual case the
two must fit: the worker must find the job that satisfies
him 2 ".
Lastly, attentionis given notonly to the training and adaptation
of the operative, but also to that of the foremen and the managerial
staff. Without a proper comprehension on their part of the
effect on output of ensuring the right conditions to the worker,
no great progress can be made, and it has often been found that
their want of education in the new methods has been an obstacle
to the better organisation of production. " Scientific management ", in the wider sense of the term which it now usually
carries in America, has certainly done much to improve conditions and with them industrial relations. It is not to be
confused with what is generally called "Taylorism". Taylor
originally approached the problem of production from a purely
engineering standpoint, but the pursuit of the line of enquiry
which he initiated soon passed beyond the realm of mechanical
and manual processes and led to the investigation of all the
elements of production and distribution. The number of
factories in which the pure Taylor system is now applied is
small, but the number in which scientific methods are used is
large. What is important in the whole American treatment
of* the subject is the thoroughness with which every phase of
the machinery of production is tested with a view to improving
1
Ibid., pp. 83-92.
dustrial Workers.
2
Ibid., p . 201.

See also Charles M. M I L L S : Vacations for In-

— 79 —
it. In the last resort, the greater part of the improvements
effected resolve themselves into the application of common
sense and close regard for detail, rather than in the introduction
of any abstruse scientific principles or the tyrannical use of
the stop-watch. This new science is generally recognised as
being still in its infancy, but it is the subject of so much thought
and study that it is bound to make considerable progress.
INSURANCE AND OTHER BENEFITS

Perhaps the most striking phase of " personnel management"
and the fight to reduce the labour turnover is the extent and
rapidity with which the practice of covering the risks of their
employees has spread among the larger employers. As has
already been pointed out, the American workman is without any
protection against sickness, invalidity, or unemployment, while
effective provision against old age is only made by five States
in the Union 1. Although most of the trade unions pay death
benefits and some also give assistance in the case of sickness
and disability 2, they have hitherto only covered a small portion
of these risks, and have little standing in the non-union shops,
where most of the employers' schemes have been introduced.
There is no doubt, therefore, that these schemes have substantially improved the material position of the worker where
they have been inaugurated, and they have probably had the
effect of attaching the workers more closely to the establishments which provide them. Moreover, the policy of offering
better conditions of employment than are provided for under
collective agreements has also probably been an influence
operating against the growth of unionism.
The commonest form of benefit is life insurance, either
provided directly by the employer or more usually effected by
means of group insurance through an ordinary insurance company. In some cases the policy is paid for entirely by the
employer, but more generally by joint contributions. At the fS 1 ^ ' f1***"
present time more than three million workers are protected by,
Ì'
group-insurance policies, while the dependants of many morétti»» y»* ,***
are entitled to death benefits under mutual benefit or employers' vW
schemes. These policies usually include provision against ¿"J/* "•* *f' "
total disability as well as against death. As a rule they are
1
2

See p. 49.
See pp. 49-50.

— 80 —
renewable annually and have no surrender value, so that they
often lapse if the employee quits the service of the company.
Similarly, sickness funds have been started by employers in a
large number of establishments. They are generally voluntary
and on a mutual basis, with some financial assistance from the
firm in the form either of proportionate contributions, lumpsum payments, or guarantee of benefits. Their administration
is, as a rule, in the hands of the members themselves. Resignation or discharge usually terminates membership, though some
funds make arrangements for its continuance under certain
conditions. The report of the National Industrial Conference
Board l indicates that while the protection afforded against
sickness and accident is generally welcomed, there is not much
enthusiasm among the workers, though many employers consider that relations have been improved and the turnover
reduced.
Little has so far been done to provide insurance against unemployment. A few firms, such as the Dennison Manufacturing
Company and the Deering Milliken Company, have created
unemployment funds, while some others guarantee a certain
number of weeks' work at full pay in the year. There are
also the schemes operated jointly by employers and trade
unions, to which reference is made elsewhere a . But these
measures cover but a small fraction of American industry.
The provision of old-age pensions by big firms has, however,
assumed considerable proportions. In 1925 the National
Industrial Conference Board reported that there were 268
formal plans in existence including more than 2,800,000 workers.
Many of these schemes may no doubt be open to criticism, as
the Board point out 3 , on the ground that they may be arbitrarily and unfairly administered, or again that they are not
actuarially sound and may involve t h e employer in claims
which he may be unable to meet, especially in a period of business depression. From the employer's standpoint they may
be considered advantageous because they not only enable
men no longer efficient to be discharged without the same sense
of hardship, but also check unionism and reduce the turnover.
"To the extent that a pension scheme will enable the employer
1

NATIONAL

INDUSTRIAL

Mutual Benefit Associations
2
See p p . 50 and 99.
3

NATIONAL

CONFERENCE

BOARD:

Experience

with

in the United States, p p . 138-146. 1923.

INDUSTRIAL C O N F E R E N C E BOARD-

in the United States, p p . 4 and 12.

Industrial

Pensions

— 81 —
to attach his working force permanently to himself, it renders
him independent of the uncertainties of the labour market
on the one hand, and of union domination on the other." 1
The further objection is made that, as many plans make the
grant of a pension dependent upon the good behaviour of the
recipient, they may be used to limit his freedom of action, particularly in the direction of trade union activity a . To meet
these objections some employers have adopted the system of
purchasing annuities, Which gives the worker an inalienable
contractual right, prevents any disciplinary use being made of
his pension, and ensures it even in the event of his employer's
bankruptcy or withdrawal from business 3 . Of course, pensions
provided on a company basis can never cover more than a
portion of the industrial community, as small employers cannot
afford them, and there must always be a large number of workers
who, voluntarily or unvoluntarily, move from factory to
factory. But when every allowance is made for the various
shortcomings and drawbacks mentioned above, the provision
of pensions must have ameliorated the lot of many thousands
of workers who were previously without any protection against
industrial risks, and have on the whole contributed to the
creation of better feeling between them and their employers
STOCKHOLDING BY EMPLOYEES

i-fpf

%\>-JLS

'

~?1T^

Another method of interesting employees in the concerns A / ' ^ I ' j
with which they are employed is through the distribution or
sale of stock. The extent to which this practice has been adopted
— again, mainly by the large corporations — and the very
large amounts of industrial stock now held by workers have
naturally drawn a good deal of attention to the subject. It
is calculated that in 1926 their holdings amounted to more
than 700 million dollars. Some writers have claimed that a
new era of joint enterprise is opening, in which the worker is
coming to share the profits, risks, and responsibilities of the
capitalist. This would seem to be a rather premature conclusion,
and it is necessary to distinguish between the different methods
of stock distribution and their respective significance. In
1
2

Ibid., p . 63.
See T E A D and METCALF, op. cit., p p . 359-363.

Also F I T C H , op.

cit.,

p p . 155-157.
3
See Mary CONYNGTON: " I n d u s t r i a l Pensions for Old Age and
Disability " , Monthly Labor Review, J a n . 1926.
6

— 82 —
some cases the shares are simply given by way of gratuity,
but in most instances they are offered to employees at a rate
somewhat below the market value for purchase by instalment,
sometimes with some assistance from the company. In other
cases a regular system of profit sharing has been instituted.
Some illustrations of these various methods are given in
Appendix IV.
The large quantity of stock taken up by employees is certainly an indication of the present widespread prosperity in
the United States, which permits so many workers to invest
money after meeting the ordinary needs of life. But investigation has shown that the percentage of stock held by workers.
is still small. The Federal Trade Commission recently reported.
that "employee stockholders comprised 7.5 per cent, of the
common stockholders and 35 per cent, of the preferred stock-,
holders, but employee holdings represented only 15 per cent.
of the common stock and less than 2 per cent, of the preferred." \
In the majority of cases the stock acquired by employees has
carried no voting rights, though the holders are of course exposed.
to all the market risks which go with industrial investment.
In only very few instances, of which the Philadelphia Rapid
Transit Company is probably the most striking example, has
the purchase of stock led to effective participation in manage-,.
ment 2 . Other points which should be noted are that the
amount of stock which any individual may acquire is usually.
limited and that conditions as to length of service or non-,
membership of a union are sometimes attached. Moreover,
it has been found in frequent instances that employees have
been unable to retain their holding, but have been obliged to.
sell it to meet financial difficulties, so that their interest in the
success of the undertaking is liable to be precarious. On the
other side it is pointed out that stock ownership is open to
the objection that workers are induced to invest their savings
in a single company and that industrial securities are seldom
" gilt edged " and may be highly speculative. If a large business
fails and carries with it a large part of its employees' savings,
the soundness of the principle is likely to be called in question,
and particularly its value in promoting good relations. That
1

F E D E R A L T R A D E COMMISSION: Summary

of the National

Wealths

and Income, 25 May 1926.
2
For a useful discussion of t h e question see LAUCK, op. cit., p p . 105-,
112 and 353-374. Out of 103 plans of which he gives particulars, only
8 afford the possibility of obtaining representation on t h e directing board.'

— 83 —
the experiment now in progress in the United States is of great
interest cannot be doubted, but its success varies very much
according to the way in which it is applied in individual concerns
and it has not yet been tested in a period of depression.
The results so far achieved do not seem to warrant the conclusion that it has effected any far-reaching modification of
the relations between capital and labour, though the fact
that workers have become investors on a small scale probably
has a distinct psychological effect on their attitude towards
their own firm. It may even influence their attitude towards
capital in general, but this seems more questionable.
The foregoing rapid sketch of some phases of personnel
management will have suggested some of its principal features.
In the first place, it is based on purely business considerations.
Its aims are not humanitarian, but better production and lower
costs, which cannot be achieved with a shifting and discontented
labour force. It seeks, therefore, to bring about greater stability and better feeling by eliminating grievances and offering
substantial advantages to men who remain with the firm and
give good service. Incidentally, it has the subsidiary but
prominent objective in view of checking union activities.
Secondly, it should be observed that to apply it in all its forms
costs a great deal of money, and that it is accordingly for the
most part confined to large and wealthy corporations. Moreover,
the insurance benefits can hardly be compared in respect either
of their scope or their security with those offered by schemes
covering whole industries or a whole industrial population and
guaranteed by the State. Thirdly, whatever maybe the motives
for the introduction of personnel management and whatever
the drawbacks to which it is subject, it no doubt marks a
great advance on previous practice and has done a good deal
to improve industrial relations. Nevertheless, none of the
measures so far mentioned appear to contain the seeds of any
startling change in the industrial situation, though they may
have modified it in a favourable sense. The institution of
employee representation has been hailed as a much more
radical departure, and indeed appears to have much greater
possibilities. Though forming part of the general movement
in favour of enlightened management, it accordingly requires
separate and more detailed examination.

r

*"•'

CHAPTER VI
EMPLOYEE REPRESENTATION

When the second Industrial Conference reported in favour
of the establishment of works councils in 1920, it was careful to
point out that they were applicable not less in union than in
non-union establishments. In point of fact, such councils
under various forms and titles may be found in establishments
of both kinds, and in all alike they constitute a method of
bringing the management into direct and systematic contact
with representatives of the workers for the discussion of questions of mutual interest. In practice, however, a distinction
has come to be drawn between schemes inaugurated in agreement with the unions and plans worked on a non-union basis.
The former are generally spoken of as "union-management
co-operation " and are strongly advocated by the American
Federation of Labor, while the latter are known as "employee
representation" or "company union plans", and are roundly
condemned by them. The reasons for this distinction will
appear in the course of their examination, and this chapter
will be confined to the consideration of the non-union plans,
both because they are more numerous and because they imply
a less comprehensive system of association between employers
and workpeople than those based on union organisation.
The motives which led to the institution of representative
bodies in the works are complex. As in the case of other phases
of personnel management, it is hardly disputable that they
have not infrequently been adopted as an alternative to unionism. Many of them were first brought into being at the time
of the "open shop " movement immediately following the war,..
often as a direct sequel to strikes which led to the defeat of
the unions and to the loss of their hold over the shops in which
joint bodies were subsequently set up. To this circumstance may
be largely attributed the disrepute into which they have fallen in
the eyes of organised labour. At the same time it would be
unjust and inaccurate to assume that the anti-union motive was

— 85 —
the only or the universal motive for their establishment. Many
employers were genuinely anxious to bring about better relations with their employees, because they saw that they were
in the long run indispensable to smooth working and the
maintenance of production. Investigation had proved that
many grievances, which led to bad work, frequent resignations
or to strikes, might have been easily remedied, had any regular
channel existed through which they could be brought to the
notice of the management and some agreed adjustment arrived
at. It was also realised that ignorance of the elementary facts
of the business with which they were associated resulted in
the workpeople ignoring the difficulties which beset it, and
frequently in their supposing that circumstances were far more
favourable for an improvement in their working conditions
than was actually the case. Finally, it has to be remembered
that in many shops the unions had only a small following
and could only speak for the skilled men, who formed the
minority of the employees. Instances may often be found
in which unionists participate in the work of shop committees,
although there is no system of collective bargaining in the industry. While, therefore, there are cases in which employee
representation has been introduced from ulterior motives, it
would be a mistake to condemn the whole movement as insignificant and valueless on that account, as some critics are
inclined to do.
As has already been said, the admission of the right of
employees to confer with the management through elected
representatives must almost always imply some voluntary
limitation of the latter's prerogatives and freedom of action.
It may therefore be regarded as a notable departure from the
customs which previously regulated factory management,
particularly in non-union establishments, and it is not surprising
that it is to be found only in a comparatively small number of
plants. According to the survey carried out by the National
Industrial Conference Board, there were 814 representation
plans in existence in 1924 covering about 1,177,000 workers 1.
Since that date there has been a slight increase, bringing in
another 230,000 workers, but even so it will be seen that not
more than 10 per cent, of American industry is under the new
regime. On the other hand, it is particularly the large corpora1

NATIONAL INDUSTRIAL CONFERENCE BOARD:

Councils in the United States, p. 5.

The Growth of Works

— 86 —
tions which have adopted it, such as the International Harvester
Company, the Standard Oil Company, the General Electric
Company, the Bethlehem Steel Corporation, Swift and Company, the Goodyear Tyre and Rubber Company, and so on. The
size and representative character of the firms which have inaugurated works councils therefore give them greater significance
than the actual number of workpeople whom they represent.
T H E MEANING OF "EMPLOYEE REPRESENTATION "

The term "employee representation" in its usual sense
denotes the association of employer and employed by means of
some representative body elected only by the workmen employed
in a particular shop. A number of typical plans are printed
in Appendix III, but it is impossible to give any general account
of them, because each has its special characteristics and is
framed to meet the individual circumstances of the establishment in which it exists. In this respect they are in conformity
with the spirit of individualism which is so prevalent in American
industry. They present a very great variety, ranging from
schemes which deal with little more than welfare arrangements
to something like joint operation of the undertaking. Moreover,
any judgment of them is bound to be provisional and tentative.
Very few of them have been in existence for more than seven
years, hardly a long enough time to permit of their full possibilities being tested or even of their actual machinery being
brought to perfection. Bearing these reservations in mind,
there are, however, certain general features which may be
discerned in them, and certain general standards by which
they may be judged.
The most important point is the scope and powers of the
joint bodies set up, whatever their precise constitution. In
almost every case they deal with grievances, safety, welfare,
and kindred subjects, but even the negotiation of grievances
through a regular procedure is in itself a considerable step.
The usual practice is that the employee representative in the
department tries in the first place to come to an understanding with the foreman, but if this fails he carries the matter
through the further stages provided, until it reaches the works
council. In many schemes, such as those of the Standard Oil,
the Harvester, the General Electric, and the Pennsylvania
Railroad, questions of dismissal are included, and a regular

— 87 —
system of appeal is provided, culminating as in the case of the
last-named with arbitration, if there is no final agreement.
These are not purely illusory powers. There is plenty of evidence that they are effectively exercised by the men's representatives in many establishments with the result that minor
troubles are speedily settled, often before they reach the council,
and that discharges, which otherwise might be a cause of
friction and bad feeling, are after full enquiry either accepted
as just or cancelled as unjust. It might be supposed that
discussion of questions of this kind would be subversive of
discipline. It was, indeed, the general experience of most
firms that there was a good deal of opposition from the foremen
in the early stages, because they felt their powers circumscribed and their authority menaced. Education and experience
have gone far to overcome this difficulty, because it has been
found that the resulting sense of justice has more than outweighed any disadvantages. The testimony of Mr. Cyrus
JMcCormick, jun., vice-president of the International Harvester
Company, is interesting on this point:
Do not let anyone argue (he says x) that employee representation is
subversive of shop discipline. I have seen times when the council
proved to the factory management that a man had been unfairly dismissed and, because it was the fair thing to do, secured his reinstatement.
I have seen times when an employee representative was dismissed for
cause, and, because of the justice of the discipline, his colleagues in the
council approved. In none of these cases was shop discipline injured,
•but rather in every such case it was helped. Workmen do not know how
or want to run a shop — but they are eminently able to know whether
or not the superintendent knows how. When they respect him, the
council becomes a help ; when they fear or scorn him, the absence of a
council will only make his failure less apparent, not less real.

The general testimony of employers and managers who have
tested the working of employee representation is that it has
greatly reduced the number of grievances and has at the same
time conduced to the peaceable and agreed settlement of those
that arise. As committees acquire confidence and experience,
the general tendency is for matters of dispute to fall into the
background and to be replaced on the agenda by questions of
more constructive interest.
As regards wages, the powers of works councils are usually
more limited. Sometimes wages are altogether excluded from
their purview, while in the majority of cases where discussion
1

1925.

Address before the American Management Association, 30 Nov.

— 88 —
is permitted, the final decision is absolutely reserved to the
board of directors. Still, most plans allow of negotiation,
enabling the employees to put forward their claims and requiring
the management to advance their reasons for not accepting
them where they are rejected. À few plans, such as those
of the Philadelphia Rapid Transit Company and the Dennison
Manufacturing Company, aim at the maintenance of real
wages by adjustments following the cost of living. Generally
speaking, however, it is evident that negotiation on the basis
of a single establishment cannot be conducted with full knowledge of the conditions prevailing throughout the industry, and
that in the absence of such knowledge the employees must
be at a disadvantage in presenting their case. Attempts have
been made to meet this difficulty in some instances by the
works council undertaking a joint enquiry as to rates paid by
rival firms, while in others there has been a demand for a
conference of all the councils in the various establishments of
a large corporation in order to obtain uniform rates which
shall be applicable throughout. Requests of this kind have
up to now been generally refused, but in a few big concerns
such conferences have taken place x . They indicate an interesting and natural development of the works council movement in
the direction of broadening the basis of wage negotiation.
The mere existence of joint consultation in the works has
inevitably led to the communication of a good deal of information by managements on the state of business. Some firms
make a practice of laying their balance sheets before their
works council and explaining it in detail through their financial
officers. Others, without going so far, afford regular information
as to their trade conditions and bring full statements to the
discussion of wage problems. In the Harvester Company, for
instance, two successive wage cuts were agreed to during the
depression of 1921 after a thorough explanation of the position,.
and other companies have had similar experiences. Again,
quite apart from questions of wages, managements often try
with considerable success to educate their employees through
their representatives as to the importance of the work of each
department in the general scheme of production, and so to
give the individual workman some conception of the value of
1
For example, the representatives of the three New Jersey refineries
of the Standard Oil Company meet together with the directors once a
year (see Appendix III, p. 122).

— 89 —
his own contribution, however small, to the finished product.
In a few cases something like joint management has been
established, as in the Philadelphia Rapid Transit Company, the
Columbia Conserve Company, and the Dennison Manufacturing
Company, either through the collective acquisition of voting
stock by the workpeople or by their nominating representatives
on the board of directors 1 . These are, however, quite exceptional plans, which do not number more than twenty in
the whole United States. Among them those of the Columbia
Conserve Company and of the Philadelphia Rapid Transit
Company, though differing widely in many respects, are perhaps
the most noteworthy, as the employees are in process of acquiring complete financial control, the latter being particularly
remarkable both on account of the size of the enterprise, which
employs more than 10,000 men, and of the amount of the stock
which they already hold — more than one-third of 30 million
dollars of capital, giving them two directors out of eight on
the board of management Without laying too much stress
on such extreme instances, the general experience has been
that the communication of information to works councils and
the sharing with them of some of the anxieties of management
has led to a better understanding of the problems of industry
by the workers, just as contact with the latter has made their
difficulties and desires better realised by the management.
CRITICISM OF EMPLOYEE REPRESENTATION

Some of the limitations of company-union plans have already
been suggested. There are others on which varying emphasis
is laid by trade union critics and by American writers who
have studied them as a new form of social development. Most
of their delects are ascribed to the narrow foundation on which
they are built. For instance, although their constitutions
almost always require the men's representatives to be elected
by secret ballot, it is pointed out that the choice of candidates
may be influenced by the employer either directly, or indirectly
through the knowledge that a man who does not stand well with
the management is not likely to be effective as a representative.
Again, the fact that the representatives have no outside organisation to support them places them in a position of inevitable
dependence on the management, which deprives them of real
1

For particulars of such plans, see Appendix III.

— 90 —
freedom of speech and action in pressing the men's claims.
Or again, having no general training in industrial economics
or negotiation such as an experienced trade union official
possesses, they are likely to be unduly impressed by the
arguments put from the employers' side, which they have no
means of checking by comparison with other establishments.
There is no doubt considerable truth in all these criticisms
in a degree which varies widely between one firm and another.
However openly and honestly a works council is conducted,
it cannot have the same independence of outlook as a trade
union in collective bargaining, unless it rests on an organisation
larger than that of the works. This fact, added to the circumstance that all the plans now in existence were set up on the
employers' initiative, has furnished the basis of the objections
advanced against them by the trade unions. The latter insist
that there can be no freedom in a company union of which
membership is obligatory as a condition of employment, and
^ that even when operated under the most beneficent conditions
Jvi they "cannot supply the initiative and thought necessary to
creative production and co-operation, which come only through
voluntary agencies " 1.
There is, however, another feature of employee representation which deserves notice. However imperfect and open
to objection it may be., it has the effect of bringing together all
grades in the works and of giving a hearing to skilled and unskilled
alike. In numerous works councils, white and coloured, men and
women, participate on an equal footing. In many cases their
common or their competing interests have been thrown open for
mutual examination and discussion for the first time. Moreover,
for the unskilled who were never previously organised the works
council gives an opportunity of collective approach to the
management such as they had not hitherto enjoyed. It is
an initiation in. collective bargaining, which may have considerable developments. Some writers even suggest that it may
be the forerunner of trade union organisation on an industrial
basis.
It is, however, too early to speculate on the possible growth
and tendencies of employee representation. The whole movement is very recent and has not yet passed through the test
of bad times, except as regards some of the schemes which
1

Executive Committee Report to American Federation of Labor, 1926,
p. 25.

— 91 —
were established before the depression of 1921. As yet the
majority have thrived in a period of prosperity, in which wages
have been rising, and there are only a few instances in which
company unions have declared a strike. The real trial of
their value and stability will come when they have to handle
acute problems of wage reduction and lack of employment
owing to the decline of trade. Again, they are for the most
part confined to large establishments, though a good many
examples could be adduced of successful works councils in
small factories. This may be partly ascribed to the wider outlook and larger means which the big corporations possess, but
perhaps not less to the need of personal leadership and the
necessity of devoting much time and study to ensure their
smooth and successful working. In any representative institution personality is bound to play a very important rôle.
The essence of a works council lies in the human contact which
it establishes, and in every'human relationship it is the individual qualities of men which finally determine its nature and
results. Much therefore depends on the leaders on either
side, and it will often be found that the success of works councils
hinges very largely on the influence of one or two men of outstanding character and capacity. It is in this respect that
the managerial class, which has grown up in the great American
enterprises, has produced a very marked effect. It consists
mainly of men possessing the outlook and characteristics needed
for the sympathetic understanding of the men under their
control. Either personally or through subordinates selected
specially for the job, they make the works council one of their
principal preoccupations — an indispensable factor to success.
No piece of representative machinery can be made to work,
unless those interested in it are prepared to make considerable
sacrifices of time and thought to that end. Where failures
have been recorded, they have been more often than not due
to want of sufficient interest on the workers' side or to want of
consideration and determination to overcome obstacles on
that of the employer. It is perhaps for this reason more than
any other that employee representation has not spread more
rapidly and is still mainly to be found only in large establishments.
Whatever the motives which inspired its introduction, there
is no doubt that it has had a real influence in improving
industrial relations. Schemes which were set up primarily as a

— 92 —
countermove to trade unionism have been developed because they
proved of value in themselves. Others have not been worked
in good faith and^have discredited the whole movement in the
eyes of the workers. But whatever their defects and limitations,
whether they constitute a new and permanent form of collective
relationship or, as many good judges think, only a transitional
stage, the general verdict upon the experiment coincides with
that of the British Mission, who conclude that "there can be
no question as to the soundness of the principle underlying the
joint schemes, which is to provide for closer contact between
the management and the employees and for open and frank
disclosure of facts and figures on both sides " 1. In so far as
these objects are really achieved, they are likely to bring about
better understanding, whether in organised or unorganised
industries, and it is for that reason that employee representation
is an experiment which has more than an American interest.
i Report, p. 30.

CHAPTER VII
CO-OPERATION HETWEEN EMPLOYERS AND
TRADE UNIONS

,
'nïr„
^k*

While a new attitude towards labour is discernible among
employers, which is partly responsible for the development of
" personnel management " and employee representation, it is
equally true that the unions on their side are disposed to adopt
a co-operative, standpoint in their dealings with employers,
once the fundamental postulate of recognition is granted.
The general reasoning on which this policy is based has already
been explained. It now remains to give some examples of its
application and of the results which have been achieved.
COLLECTIVE B A R G A I N I N G

All official relations between employers and the trade unions
are founded upon collective bargaining. Wages and other
working conditions are fixed by agreement in the trades where
organisation exists, and the standards thus set frequently tend
to be adopted by the bulk of the employers in these trades,
whether they are actually parties to the agreement or not.
It may be said, therefore, that the practical scope of collective
bargaining in the United States is substantially greater than
the number of organised employers or workers would appear
to indicate. Its general characteristics do not, however, differ
from those which may be found in all industrial communities
and do not require any special description. In the event of
disputes arising, the State, and in some cases the Federal
Government, not infrequently intervenes in order to offer
conciliation or arbitration, On the railways special machinery
of an elaborate character was set up in 1926 by statute, which
forbids any change in working conditions without due notice, so
that, if a dispute is threatened, sufficient time is provided for
full enquiry before hostilities can commence. More frequently,

s

JW

¿} «\
^

— 94 —
however, organised industries prefer to make their own arbitration arrangements, of which examples may be found in
the printing, building, and other industries. Machinery of this
kind has done much to prevent or limit industrial conflict, but
it is necessarily of a negative character and presents fewer
features of peculiar interest than the more constructive attempts
at co-operation between employers and trade unions.

BUILDING AND PRINTING TRADES

Interesting experiments of this kind are being carried out
both in the building and printing trades. In the former a
body of a rather novel character has been formed at New
York, known as the New York Building Congress. It is not
a joint organisation of employers and workers only, but is
composed of members drawn from the whole building community
— investors, architects, contractors, trade unionists, and furnishers of raw material — the underlying idea being mutual
education and the utilisation of all the experience available to
improve the trade from a business, labour, and artistic standpoint. The. congress encourages apprenticeship and craftsmanship, promotes safety, studies the trend of construction
business, advocates winter building as a remedy for seasonal
unemployment, and generally aims at better co-operation
among all branches. Of its 1,572 members 105 represent
labour, though all membership is individual and not representative. The congress is not a deliberative but an educational
body, which seeks its ends by the spread of information rather
than by regulation. Its whole basis is voluntary and it is still
in an experimental stage, but it is not without significance as
an essay at creating a corporate spirit in an industry by rather
novel methods.
The printing trade has succeeded in setting up co-operative
machinery of a more comprehensive and formal character in
the shape of International Joint Conference Council, which
covers the commercial and periodical branches of the industry.
It is composed of the Printers' League of America on the one
side and the four principal trade unions on the other. Its object
is " t o promote the spirit of co-operation and to deal with the
problems of the industry in a way to insure the protection of
the interests of all concerned ". The council "shall be thoroughly

— 95 —
informed as tö conditions and interests of all parties in the
industry and in a position to suggest for ratification regulations
which shall eventually become the law of the industry ". Its
primary concern is with policy rather than with wages and
disputes, although it was designed to act as a final court of
appeal when the ordinary procedure has failed to produce a
settlement. Any legislation affecting the trade falls under its
consideration, it aims at standardising shop practices, and pays
a great deal of attention to encouraging and improving the training of apprentices. In addition, it seeks to promote co-operation.
in introducing better machinery and organisation and in.
carrying out new industrial ideas by giving full consideration
of the employees' point of view and by utilising their practical
experience. The phraseology of the constitution of the council
is largely drawn from the British Whitley report, and its general
features resemble those of the Joint Industrial Councils which
have been established in Great Britain. Like the latter, it has
passed through difficult times. It has not reached all its
objectives, nor has it revolutionised industrial relations. It
has, however, brought the two sides into permanent association
and collaboration within the field prescribed for it, which is
an important first step.
Another joint effort of some importance in the same industry
is the School for Printing Pressmen of New York City, which is
maintained and managed jointly by the Employing Printers'
Association and the Printing Pressmen's Union, with the assistance of the municipal Board of Education. Finally, as a
further illustration of the growth of co-operation among printers,
mention should be made of the steps taken by the unions to improve production and workmanship by employing their own
expert advisers. The Printing Pressmen's Union has nowestablished an Emergency and Production Department manned
by men of high technical ability, who give information and
advice to all engaged in the industry. They are frequently
consulted by newspaper publishers on questions affecting machinery, processes and workshop arrangement *. This new and
interesting departure m trade unionism has also been followed
in the railway and clothing shops, and constitutes a practical
example of the collaboration in production, which now forms,
part of its constructive policy.
See American Federationist, Feb. 1926.

— 96 —
T H E CLOTHING TRADES

One of the most interesting chapters in American trade
!
•**
union history is the rise of the Amalgamated Clothing Workers
• i '*
of America and the revolution in the methods and relationships
*"
jL*' n t h e m e n ' s clothing trade which has been brought about by
[ f ^ f t h e m in the last fifteen years. The union itself only came
<t,y into existence in 1914, when large sections of the Chicago and
Tf*«''
New York members broke away from the United Garment
Workers and the American Federation of Labor, because
they were dissatisfied with their leadership and organisation.
But the foundations of a new system of joint government in
the industry had already been laid in Chicago three years
previously by Mr. Sidney Hillman and some of his colleagues,
who subsequently became the leaders of the secession movement and the founders of the new organisation on industrial
lines, which they held to be indispensable to success 1 . After
a prolonged and bitter strike in 1910, an agreement was
signed with the large firm of Hart, Schaffner and Marx, now
employing about 8,000 operatives, which provided regular
machinery for dealing with all questions of dispute, whether
arising from wages, dismissals, working conditions, or other
causes. Since that date the original agreement has been
greatly extended and modified, but there has never been any
stoppage of work for any reason, although the Chicago clothing
trade was the scene of continuous disturbance during the years
1911-1919 as the result of the union's efforts to draw the whole
of the shops into its organisation. Since 1919 the system first
established by Hart, Schaffner and Marx has been put into
operation by all the principal clothing manufacturers in Chicago,
and has spread to many shops in New York, Cincinnati, and
other cities, with the result that relations have on the whole
been remarkably good in localities which had formerly been the
scenes of frequent strife. Some of the effects on the wages and
conditions of the workers have already been indicated 2 ; but
the relations now prevailing between the union and the employers do not stop short at collective bargaining. They imply
a large measure of association in the individual shops and in
the general development of the industry.
?.£
1

The union has published a Documentary History of the Amalgamated
Clothing Workers of America, 1914-1926, and Clothing Workers of
Chicago, 1910-1922, which give a full account of its origin and activities.
* See supra, p. 27.

— 97 —
The essence of the Hart, Schaffner and Marx agreement
lies in the creation of two bodies to settle all possible matters
of dispute, and the acceptance of their decisions by both parties.
The first consists of a "trade board " of five persons, two nominated by each side with an outside chairman appointed by agreement. To this body are referred all questions regarding the
terms of employment as settled between the firm and the union.
Moreover, each side appoints a deputy for each branch of the
trade, whose duty is to prevent any stoppage of work, whether
ordered by representatives of the management or undertaken
by the employees, and to secure the proper observance of the
Board's decisions. The great majority of minor differences
and grievances are settled by these officers without report
to the Board, and the neutral chairman exercises a good
deal of influence by way of advice and conciliation in addition to his presidential functions. The Board has, however,
gradually built up an elaborate code of workshop jurisprudence, which now covers most of the cases likely to occur,
and guides the deputies in handling them. In the event of
the Trade Board's decision not being accepted, an appeal
lies to a Board of Arbitration, consisting of one member
chosen by each side and an outside chairman jointly nominated
by them. To this body only questions of great difficulty are
referred. During the period April 1912 to June 1914, when
the whole machinery was new and many questions came up
for adjustment, 1,178 cases or 84.1 per cent, were successfully settled by the deputies, 206 or 14.7 per cent, by the Trade
Board and only 17 or 1.2 per cent, by the Board of Arbitration 1 .
As confidence has grown, the number of cases referred to the
Trade Board has declined, and in 1926 it only had to handle
81 cases.
The new system has naturally passed through some periods
of stress when matters of acute controversy had to be faced,
particularly when the agreement came up for renewal. It has
owed much to the influence of the impartial chairmen, who
have been men of high character and recognised impartiality.
But all the crises, have been successfully weathered and no
arbitral decision has been rejected, though acceptance has
sometimes needed considerable courage on the part of the
employers or of the union leaders. The firm has steadily
increased its business and maintained its profits in spite of
1

Clothing Workers of Chicago, p. 58,
7

— 98 —
constant improvement in wages and reduction of hours. On
the other side, the union has won the right of preference for
union workers and has set up regular employment exchanges
in order to be able to select suitable workers to fill vacancies,
as it recognises the employers' right to employ non-unionists,
should suitable unionists not be available. Moreover, the whole
nature of the scheme requires the assumption by the union
of a considerable measure of responsibility for the discipline
and organisation of the shops. Having obtained an effective
guarantee against dismissal without full hearing by a body on
which it has equal representation with the management, it
requires its members to maintain a high standard of workmanship and conduct, and promotes all measures making for efficiency which do not run counter to the terms of the agreement.
As the official historian of the union puts it, "the workers as
an organised body respect the rights of management to conduct
the industry in accordance with its own insight, policies and
methods . . . To the extent that the purposes of management aim at the orderly and efficient operation of the industry,
the union endorses them and agrees to co-operate with the
management in making possible the irrealisation " 1 . The union
has frequently brought the experience of its members to bear
in order to improve methods, lower costs and increase business,
because by these means it has been enabled to strengthen
its position and to defeat the competition of non-union shops.
In some instances it has assisted in carrying out extensive
shop reorganisation, which entailed the replacement of skilled
operatives by machines worked by lower-paid men or women»
and in at least one such case the displaced men received a sub^
stantial sum to compensate them for temporary unemployment..
The money was jointly provided by the employer and the union..
When the large firm of A. Nash and Company, of Cincinnati,,
became unionised on the initiative of the employer himself,.
the union carried out an extensive technical survey of one of
his subsidiary factories, pointed out various sources of inefficiency and co-operated with the management in introducing;
remedies "with the result that all the workers in the shops.
received substantial increases in wages, while the labour cost
was reduced " 2 .
1
2

Ibid., p . 197.
Documentary History of the Amalgamated
America, 1914-1926, p. 18.

Clothing

Workers

of;

— 99 —
Finally, a joint scheme for meeting seasonal unemployment
has been instituted by the Chicago employers and the union,
and a similar scheme is to be launched in New York. An unemployment fund has been created by weekly contributions by
the employers of l 1 ^ per cent, of their pay-rolls and by the
workpeople of P/2 per cent, of their wages. The fund is administered by a joint board of trustees under a neutral chairman,
to whom each firm renders a weekly statement of earnings and
hours worked. Payments are made through the union's employment exchanges, and are at present limited to 40 per cent, of the
worker's wages for not more than two and a half weeks annually.
As the trade is highly seasonal, only a small portion of the
normal unemployment is as yet covered, but the scheme
oners an interesting example of industrial insurance carried
out on joint lines. Altogether the relations established in the
men's clothing industry are based on a remarkable degree of
co-operation between the employers and the trade union.
They are the more noteworthy on account of the bad feeling
and want of organisation which prevailed in the trade until
very recent times, and on account of the great number of nationalities from which the workpeople are drawn. They have,
moreover, survived periods of severe trade depression, and
give promise of possessing sufficient stability to ensure their
continuance.
In the ladies' garment industry a somewhat similar plan
has been in operation at Cleveland since 1919, with the result
that there has been no stoppage of work since that date, although
previously there had been numerous strikes and continual
unrest. In order "to provide a means whereby the parties
may co-operate to preserve peace in the industry and to further
their mutual interests in the common interest ", the Cleveland
Garment Manufacturers' Association and the International
Ladies' Garment "Workers' Union, which is affiliated to the
American Federation of Labor, agreed to set up a permanent
board of referees consisting of three persons independent of
the trade to settle all matters in dispute, to establish wage
scales, and to secure the observance of the terms of the agreement 1 . Shop grievances are dealt with by the individual
employer and the union's representative in the first instance,
1
See The Cleveland Garment Plan and Guaranteed Employment in
the Cleveland Garment Industry, by F. C. BUTLER, manager of the Cleveland Garment Manufacturers' Association.

— 100 —
and, failing agreement, are referred to the officials of the manufacturers' association and the union. If they in turn cannot
agree, an appeal is made to the board of referees, whose decision
is accepted as final. In the matter of wages, the effect of the
board's action has been striking and far reaching. In its early
years it twice ruled for an increase, but since 1921 it has twice
decreed a reduction. Moreover, under its auspices a totally
new system of wage calculation has been established. The
union was opposed to piece-work, on which the employers
insisted. It was finally agreed to have a survey made of the
industry by independent experts appointed jointly by the two
sides with a view to establishing production standards for
each class of work. This meant the setting of a weekly minimum wage for each worker, with the possibility of increasing
his earnings in accordance with a schedule based on agreed
time-studies. In order to supervise the working of the system
a joint board of control was created under the chairmanship
of an independent expert, whose ruling is final in case of dispute,
subject to an appeal to the board of referees. Each party
now employs its own expert for the calculation of the basic
standards, and the general result of the system has been not
only to eliminate friction over wage rates but to improve considerably the general efficiency of the industry.
The board of referees took a further important step in recommending the establishment of an unemployment insurance
fund as a corollary to the reduction of wages, the first scheme
of its kind in the United States. Each employer gives a surety
bond to the board in an amount equal to 10 per cent, of his
weekly pay-roll and guarantees 41 weeks' employment to his
workpeople, a period substantially in excess of the normal
annual working period before the scheme was established.
Any worker not provided with work during more than eleven
weeks is entitled to draw half his weekly minimum wage from
the fund, whether he is actually employed elsewhere or not.
The principal object aimed at was to reduce seasonal unemployment by giving the employer a strong inducement to organise
his work in such a way as to maintain a more even flow.
Although previously not more than 36 or 37 weeks' employment
had been given, in the second year of the scheme's operation
only two shops used the whole of their unemployment funds,
eleven did not draw upon them at all, and the remainder only to
the extent of 24 per cent. Of course, there are drawbacks to the

— 101 —
scheme, which in the absence of any general insurance against
unemployment imposes upon the employers a burden which is
not borne by their competitors in other cities and may induce
them to poach upon the preserves of other trades, in order to
keep their employees busy during the slack season. But like
the plan followed in the men's clothing trade at Chicago, the
Cleveland scheme is a noteworthy experiment in industrial
insurance. The fact that such experiments have been initiated
by these two large industrial groups indicates that stability
of employment is regarded as one of the first conditions of
good industrial relations in trades which are liable to violent
fluctuation. The schemes themselves are somewhat fragmentary in character, both as regards the protection they afford
and the number of workers covered in proportion to the whole
of the clothing trades. It is rather their spirit and their
method which are important than the actual success which
they have so far achieved in solving the unemployment
problem.
IN THE RAILWAY SHOPS

The form of association between employers and employees
which has been established in the carriage and locomotive
shops of several important railway systems diners in several
respects from the foregoing illustrations of the same tendency.
It is usually known as "union-management co-operation ". This
system was first introduced in 1923 in the Glenwood shops of
the Baltimore and Ohio Railway at Pittsburg by agreement
between the company and the Railway Employees' Department
of the American Federation of Labor. During the previous
years there had been a great deal of trouble coupled with
violent fluctuations in employment in this as in other shops.
The suggestion came from. the unions that a co-operative
committee should be set up, which should not deal with wages,
grievances, or any of the other matters already negotiated by
the regular trade union machinery, but which should undertake
the constructive tasks of improving production and stabilising
employment. The preliminary conditions which they laid down
were full recognition of the unions and a fair division of the
increased profits resulting from co-operation.
The Glenwood experiment, though undertaken in a locality
where circumstances were not favourable, proved a distinct
success and was extended to the other shops of the Baltimore

— 102 —
and Ohio system. Its advantages both to men and management were such that it was in turn adopted by five other railways, including the Canadian National Railway, one of the
largest in the world.
As in other schemes of association between management and
employees, one of the outstanding features has been the determination of the companies to surmount obstacles and attain
success in spite of the initial difficulties which were bound to
«
be encountered. On the Canadian National Railway, for
^ *\J
instance, Sir Henry Tflft rritrm -il"-s president, created a special
u- """(L^V department under two responsible officers to supervise the
ìr^er &V- committees' work and to report any hitches in their operation.
^v Y\vJ&*K% in the case of the Raltimore and Ohio and other railways,
„: ' i& these officers met with a good deal of open or concealed oppone'
sition from foremen and superintendents, which might well
have proved fatal if the higher officials of the company had
not made it plain that they would accept no excuses for failure.
As they acquired experience of the practical working of the
committees, men who had originally objected to them as limiting
their authority became entirely converted to their usefulness
and even enthusiastic in their support; but this result would
not have been achieved, had not the management attached
great weight to the movement and had it not selected men
possessing the necessary personal qualities to initiate it. On
the trade union side similar measures were taken. Mr. B. M.
Jewell, the head of the railway department of the American
Federation of Labor, and Mr. Otto S. Beyer, a practical engineer,
were appointed to supervise the creation and working of the
committees on their behalf. They had to do a great deal of
explanation and to overcome a certain amount of Communist
opposition before they obtained the full adhesion of the shopmen
to the scheme. But for their work it could hardly have reached
its present development and might have failed to bear fruit
altogether. On both sides the personal element has played a
considerable part, as it must in all plans for the association
of employers and employed on a representative basis.
The actual work of the joint committees is concerned exclusively with shop questions. They consist, therefore, of a certain
number of representatives appointed by the unions from the
various departments and an equal number of foremen and
other officials, with the superintendent or his assistant in the
chair. They usually meet twice a month, and their agenda

— 103 —
relates to such matters as improvement of tools and equipment,
economical use of material, the co-ordination and organisation
of work in the shops, the improvement of the quality and quantity of work, the stabilisation of employment by spreading
work evenly through the year, securing new business for the
railway and the conditions of the shops in respect of lighting,
ventilation, safety, and so on. Questions of more than local
importance or on which there is disagreement are dealt with
at quarterly meetings, known as "joint system co-operative
conferences ", between the head of the railway's rolling stock
department with his assistants and the heads of the federation
of trade unions for the railway, while questions of great importance can always be reserved for treatment by the president and
the international trade union officials. There is thus a complete
chain of responsibility on both sides, and an appeal to higher
authority which gives the members of committee the opportunity of seeking advice from men of wider experience on any
matter of difficulty. On the workers' side, as on the company's,
much thought and discussion precedes the submission of a
proposal to the joint committee, and all suggestions are usually
debated in a lodge meeting before being adopted for inclusion
in the agenda. Anyone attending the meetings of these committees cannot fail to be struck by the keenness and businesslike spirit, by the manifest good feeling between officials and
workers' representatives, and by the general desire to better
the work and the conditions under which it is performed. The
actual amount of business transacted may be judged from the
fact that in a period of 15 months 11,478 proposals were brought
before the committees of the Baltimore and Ohio Railroad, of
which nearly 80 per cent, were adopted and put into effect,
while only 8 per cent, were dropped altogether as impracticable.
On the Canadian National Railway the proportions are almost
identical. Of 2,201 subjects discussed 76 per cent, were brought
up by the men and 24 per cent, by the management, while
1,769 or over 80 per cent, have been put into operation.
The judgment of both managements and unions on the
experiment has hitherto been unreservedly favourable. On the
one side very great economies have been effected, which are said
to have contributed substantially to improving the finances both
of the Baltimore and Ohio and of the Canadian National. On the
other, employment has been stabilised and in some cases increases
of wages have resulted. Mr. Daniel Willard, the president of the

— 104 —
Baltimore and Ohio Railroad Company, stated x two years ago
that the experiment had "more than justified itself from many
different angles. . . . As time goes on and as we develop and
cement still further the understanding and relationship which
has already grown up between the management and the men,
I feel certain that the friendly and sympathetic efforts of both
parties will discover and suggest new methods and new practices
that will not only make for economy, and thereby enable the
railroad to pay good wages and at the same time maintain
satisfactory working conditions, but will also contribute towards
giving to the public the lower rates for transportation service
which they desire." Similarly, Sir Henry Thornton spoke in
warm terms of the plan before the trade union federation of
the Canadian National system 2, as having built up a spirit of
mutual confidence and produced better service, which had
increased the net earnings of the railway. The other companies
which have tried the scheme appear to be equally satisfied, and
it has now become a definite part of their policy.
The benefits accruing to the men are thus summed up by
Mr. 0. S. Beyer, who has perhaps more detailed knowledge
of the actual working of the committees than any other man,
as he frequently attends their meetings on all the systems
where they are operating as an expert adviser on behalf of the
unions:
First, our unions become a constructive necessary part of the industry.
Committeemen and representatives no longer are simply tolerated. They
fulfil a distinct responsibility in the management and control of the
railroad industry. Second, we strengthen our organisations so that our
bargaining power is increased. Under a programme of genuine cooperation membership in our unions will become indispensable to the
welfare of the men and their industry. Third, by collective co-operation
as proposed, we increase the service of our organisations to ourselves and
industry and learn by getting the facts on the ground just what contributions we make, and thereby acquire that knowledge and strength which
enables us to prove more effectively than ever in the past just what
we
are entitled to by way of better wages and working conditions 3.

In addition, he points out that wages and conditions have
been improved on the Baltirnore and Ohio more than on the
neighbouring systems, that greater continuity of employment
has been achieved, and that the committeemen have acquired
1
AMERICAN FEDERATION OF LABOB: Union Management Co-operation,2 1925, p. 8.
Second Convention of the Canadian, National Railway System
Federation, p. 27.
3
Address delivered before the Fifth Convention. 1924.

— 1Ü5 —
a new and valuable position which has raised the whole status
of the unions.

All the various experiments which have been described in
this chapter have their place in the development of industrial
relations. They represent different methods of approach to
a problem, to which there is probably no single or cut-and-dried
solution, but each of them contains an idea which may provide
a valuable contribution. They also show that the collaboration
of employers and workers through some representative system
is quite as feasible under union as under non-union conditions.
It is too early to say what will be their ultimate development
or whether they will fulfil their early promise. They may
wither and die, or they may grow and flourish. History suggests, however, that on the whole human institutions which
contain the germ of a new and fertile idea which embodies the
vague aspirations of large masses of men usually take root and
survive in some form of other, once they have been planted.
On this ground it may be surmised that the movement towards
closer association between management and men in the United
States is destined to continue and to produce abiding results
in American industry.

CHAPTER VIII
CONCLUSION

The problem of industrial relations does not command any
universal solution. It presents itself in different forms, which
vary with economic circumstances, social tradition, and national
psychology. The conditions under which it has developed in
America diverge widely from those which obtain in European
countries. Indeed, a good deal of prejudice has been created
in European minds against American methods, sometimes owing
to their misrepresentation, sometimes owing to their being
advocated as applicable without modification to European
conditions. Only after studying them objectively in relation
to the peculiar circumstances of American industry, which have
fashioned them, does it become profitable to consider how far
they can be usefully adapted to the different environment which
exists in older countries.
At the same time, the magnitude and prosperity of American
industry are so great that the elements which have contributed
to its success cannot be a matter of indifference to any other
industrial community. Some of those elements are no doubt
derived from the special advantages which the United States
enjoys in its great home market, its immense natural resources,
its abundance of capital and in its population, which is still far
short of the country's capacity. But there are other elements
which are not American peculiarities and which are capable of
being reproduced in other surroundings. Even in the sphere
of industrial relations, which, as has just been said, must be
largely shaped in a national mould, some general principles
of more or less universal validity may perhaps be found, provided
that they are applied with due discrimination.
In the United States relations between employers and employed have passed through a period of conflict which finds its
counterpart in the history of most industrial countries. At the
present time a transitional stage seems to have been reached, in
which the creed of combat is being challenged by a new doctrine

— 107 —
of co-operation, which has found considerable support both among
employers and workers. The fact that the American tradition
is less disciplined and uniform than that of older countries
allows of experiments being tried with more freedom and more
disregard for the past than is usually possible elsewhere. But
it does not follow that their results can have no interest for
outsiders on that account. In spite of all differences in national
or continental mentality, human nature everywhere has fundamental characteristics in common which generally outweigh
them. The study of industrial relations is nothing but the
study of human nature in the setting of modern industry, and
that setting is largely similar everywhere. It is a subject to
which comparatively little attention has been devoted, despite
its great and growing importance to the general welfare of society
in the present industrial age. The attempt which is now being
made in America to raise it to the dignity of a science comparable
to the study of politics or economics is in itself both significant
and important. It may therefore be worth while to draw
attention to some of the more salient points which seem to be of
general interest.
First among them must certainly be placed the prevalence
of discussion, the exchange of information, the widespread
public concern with industrial relations. They are felt to be a
matter of national importance upon which the well-being and
progress of the whole community largely depend. The American
literature on the subject during the last ten years probably
exceeds that of the rest of the world put together. This public
debate has stimulated and educated both employers and trade
unions to re-examine their past policies and practices, and to
justify them not merely to themselves but to the country at
large. There is in most countries a tradition in favour of
reticence, if not of secrecy, about industrial affairs. The American method seems to show that, in spite of the exaggerations
and over-statements which it at times provokes, publicity is on
the whole a healthy and quickening influence.
Secondly, the voluntary assumption by employers of heavy
social charges is remarkable, whatever its motive. It suggests
that, in the absence of social insurance provided by the State,
the protection of the worker against industrial risks is felt to
be a necessary preliminary to good industrial relations. In 1925
there were 135 railway companies giving pensions to their
employees on retirement at a cost of $18,500,000, more than

— 108 —
double the figure of 1920. If the total cost ot the charges which
are being voluntarily carried by employers could be calculated,
it would be found to amount to an enoimous sum. On the
other hand, the durability and soundness of these schemes
are not proved beyond doubt. They do not offer the same
measure of security to the workers that is afforded by State
insurance, and there can be no certainty that they can, or will
be, continued in a period of depression. Some companies have
already abandoned their schemes, while others might easily be
forced to do so, either because they are not secured on a sound
actuarial basis or because the burden involved may become
too heavy when trade slackens. Moreover, the smaller establishments, which after all represent a very large proportion of
American industry, cannot as a rule afford bo cover their
employees. The voluntary insurance system therefore, though
valuable and important in its effects upon industrial relations,
cannot be regarded as furnishing a complete or certain solution
of the problem of giving the worker protection against industrial
risks. Once established, moreover, it cannot be dropped or be
allowed to fail without seriously prejudicing the good feeling
between employer and employed which it was designed to
promote.
The third point which may be singled out is the attempt to
restore contact and co-operation between employers and
employees. That this is a principle of cardinal value is scarcely
open to dispute, but its application is exceedingly difficult
under modern conditions. To revive the personal relationship
which may have existed in a more primitive stage of industrial
society is impossible in an era when the employees of a single
enterprise may be numbered not in tens but in tens of thousands.
The only method is through some form of representation. The
essence of all democratic systems is that the election of representatives shall be free and unfettered. Moreover, no new
method which ignores the past is likely to be permanently
acceptable. The future government of industry can only be
evolved out of its existing institutions, just as political democracy was in the first instance developed by the infusion of a
new spirit into old organs of government and by their gradual
transformation to new uses and the exercise of new powers. It
is on these grounds that the stability of works councils functioning independently of the existing machinery of collective
bargaining is perhaps open to question in America. If workers

— 109 —
still feel the need of association, not merely with their colleagues
in the factory, but with the whole of their fellow-workers in the
industry; or, in other words, if they still feel the need of trade
unionism, it cannot be affirmed with any certainty that a system
which ignores trade unionism, and in some cases is deliberately
intended to eradicate it, will ultimately command their confidence and assent.
On the other hand, the incorporation of representative
bodies in the works within the general system of collective
bargaining is not likely to encounter any serious opposition
from the workers based on the sentiment that the traditions in
which many of them have been bred are being undermined.
The experiments in co-operation with trade unions which are
now taking place in the United States are therefore of peculiar
interest, not so much on account of the machinery which is
being devised in order to effect it, as on account of the new
attitude which is implied on the part both of employers and
trade union leaders. Where such experiments have been
initiated, both have openly or tacitly renounced the idea that
their interests are in necessary and permanent conflict in favour
of the notion that they are largely identical. The present
leaders of the American Federation of Labor have definitely
accepted the doctrine that greater production is as much in the
interest of the worker as of the employer, provided that the former
has an effective voice in determining its conditions and in the
allocation of its proceeds. On their side large numbers of the
employers have accepted the view that it is to their own advantage to afford as good wages and conditions as the industry
will bear, seeing that only on this basis can unstinted collaboration with their workpeople, be founded, without which
the maximum of efficiency is unattainable. Moreover, those
who practise co-operation with the unions have recognised that
the latter are capable of playing an important and constructive
part in the machinery of production.
Each side is no doubt being considerably impressed by the
evidence of a modified attitude in the other party. Employers
are much more inclined than in the past to revise their opinion
of trade unionism, while for their part the unions are disposed
to answer an appeal for co-operation based on the recognition
of their partnership in production. It is significant, for example,
that Mr. J. D. Rockefeller, jun., whose enterprises have
hitherto been conducted on the "open-shop" principle and have

— 110 —
been the scene of much conflict with unionism in the past,
recently held out the olive branch. After stating * that "both
employers and employees are beginning to realise that in the
application of the principle of representation in industry a way
of getting together again is offered ", he asked what form of
industrial representation would ultimately prevail, and continued: "More probably the instrumentality of that larger good
will be a composite of many plans now being utilised and developed. If the labour movement, with its important contribution
of collective bargaining, with its history of achievement and all
of its traditions that are worthiest of perpetuation, will do its
share in outlawing industrial warfare, substituting partnership
therefore: if those in its ranks who have long recognised the
fallacy and harmfulness of the doctrine that the less work a
man does in a day, the more days' work he will have, are all
able to convince their associates that to secure the largest
possible production is the best way to advance their own
interests and to maintain their self-respect: if more men of broad
vision and high purpose respond to the opportunity for constructive leadership which labour unionism offers, it may be that the
trade union movement will enjoy the glory and honour of
ushering in industrial peace ".
In reply to this pronouncement the American Federation
of Labor reaffirmed its co-operative policy in unequivocal
terms as follows : " Partnership, as Mr. Rockefeller very truly
says, must be the basis of constructive relations between
employers and employed. The essence of partnership is mutuality of confidence, responsibilities and duties. Either member
of the partnership may be handicapped in what he may do by
the shortcomings of the other. So the trade union movement is
prevented from rendering maximum service when employers
do not enter into agreements with union representatives so
that there may be clearly defined rights and conditions of
employment which beget confidence, safeguarded by an agency
controlled solely by the workers. Upon such a foundation may
be developed the technique and agencies of co-operation.
Employers reserve the right to decide management policies,
and so long as they refuse to negotiate with unions, unions
are forced to militant tactics. So long as management refuses
workers a right to a voice in deciding conditions of work through
1
Speech at Cleveland, Ohio, 7 April 1927. (Industrial and Labour
Information, Vol. XXII, No. 11, p. 433.)

— Ill —
their own representatives, workers are forced to protect themselves against .unfair impositions as best they can and the
spirit of retaliation is fostered.
The ' worthiest traditions '
of trade unionism fmd expression only when employers
contribute to the development of conditions which make them
possible.' The American Federation of Labor has declared that
the materials of increased productivity are essential to sustained
increases in standards of living and that the union holds itself
ready to do its part in working out better methods and plans
for production. Where employers are ready to make cooperation possible, trade unionists are ready to do their p a r t . " 1
Even more striking, perhaps, is the hope of the future outlined by Mr. Owen D. Young, Chairman of the General Electric
Company, one of the largest corporations in the United States,
in an address given at the opening of the new buildings of the
Harvard Business School, from which the following passages
may be quoted : "Here in America we have raised the standard of
political equality. Shall we be able to add to that full equality
in economic opportunity? No man is wholly free until he is
both politically and economically free. Perhaps some day we
may be able to organise human beings engaged in a particular
undertaking so that they will truly be the employer buying capital
as a commodity in the market at the lowest price. I hope the
day may come when these great business organisations will truly
belong to the men who are giving their lives and their efforts
to them, I care not in what capacity. Then they will use
capital truly as a tool, and they will all be interested in working
it to the highest economic advantage. Then men will be free
in co-operative undertakings and subject only to the same
limitations and chances as men in individual business. Then
we shall have no hired men. That objective may be a long way
off, but it is worthy to engage the research and efforts of the
Harvard School of Business." 2
Such utterances must not be taken as representing the
general opinion of American industrialists, but as indicating
the spirit which is being promoted by the experiments in
collaboration between capital and labour. As has been frequently emphasised throughout this study, the enterprises
in which such experiments are being tried are as yet com1
2

American Federationist, May 1927, pp. 529-530.
New York Times, 5 June 1927; reprinted in Industrial and Labour
Information, Vol. XXII, No. 13, p. 511.

— 112 —
paratively small in number. They represent the advance
guard of American industry, of which the main body still
proceeds on more familiar lines. But it is to the pioneers
that one naturally looks to see the Une which the army may
ultimately follow. If the American pioneers can confirm and
extend their success in bringing about real partnership between
employers and workers, their example will ultimately spread
to the whole mass, with the result that the United States will
have secured a further guarantee of supreme importance for
the maintenance of its material prosperity and for the progress
of its social welfare. Any such consummation is not likely to be
achieved in any very near future. Indeed, its achievement at
all is still entirely uncertain. But when every allowance is
made for doubts and difficulties, the promise is sufficiently
substantial to make it wise to follow its destiny. It may be
that the present experiments in the direction of a better industrial order will prove to be barren. If so, they are bound to
be succeeded by others which will take account of the reasons
for their failure, for the problem which they are seeking to solve
is one that cannot be shelved or shirked, if industrial civilisation
is to be preserved and developed.

nJJJr

l

r

APPENDIX I
SHORT BIBLIOGRAPHY

1. —

GENERAL

UNITED STATES DEPARTMENT OF COMMERCE, BUREAU OF FOREIGN AND
DOMESTIC COMMERCE.
Statistical Abstract of the United

States, 1925.

Washington, Govt. Printing Office, 1926.
Fourteenth Census of the United
States taken in the Year 1920. Vol. VIII, "Manufactures,
1919." Washington, Govt. Printing Office, 1923.
Amerikareise deutscher Gewerkschaftsführer. Verlagsgesellschaft des
Allgemeinen Deutschen Gewerkschaftsbundes G.m.b.H. Berlin
S.14, 1926.
J . R. COMMONS and J. B. ANDREWS. Principles of Labor Legislation. New York and London, Harper & Bros., 1927.
Edward A. FILENE. The Way Out. London, Geo. Routledge & Sons,
Ltd., 1925.
Henry FORD. My Life and Work. New York, Doubleday Page &
Co., 1922.
'
Julius HIRSCH. Das amerikanische Wirtschaftswunder. Berlin, S.
Fischer Verlag A.-G., 1926.
Report of the Delegation appointed to Study Industrial Conditions in
Canada and the United States of America. London, H. M.
Stationery Office, 1927.
André SIEGFRIED. America Comes of Age. (Translated from the
French by H. H. HEMMING and Doris HEMMING.) London,
Jonathan Cape, 1927.
BUREAU OF THE CENSUS.

2. — WAGES AND ECONOMIC CONDITIONS
UNITED STATES DEPARTMENT OF LABOR, BUREAU OF LABOR STATIS-

TICS. Monthly Labor Review, 1920-1927. Washington, Govt.
Printing Office.
——
Union Scale of Wages and Hours of Labor, 15 May 1926,
No. 431. Washington, Govt. Printing Office, 1927.
WOMEN'S BUREAU. Women in South Carolina Industries —
A Study of Hours, Wages and Working Conditions. Washington, Govt. Printing Office, 1923. [Similar studies of
Women's Conditions in Alabama, Georgia, Kansas, Maryland,
Mississippi, and Virginia.]
UNITED STATES DEPARTMENT OF COMMERCE. Survey of Current
Business. Washington, Govt. Printing Office, 1926.
Paul H. DOUGLAS. Wages and the Family. Chicago, 111., University
of Chicago Press, 1925.
s

^

— 114 —
John A.

FITCH. The Causes of Industrial Unrest. New York and
London, Harper & Bros., 1924.
NATIONAL INDUSTRIAL CONFERENCE BOARD. Wages in the United
States. New York, N.I.C.B., 1926.
Isaac A. HOURWICH. Immigration and Labor. B. W. Huebsch, Inc.,
1922.
Sumner H. SLIGHTER. The Turnover of Factory Labour. New York
and London, D. Appleton & Co., 1919.
Matthew WOLL. Wage Negotiations and Practices. American Federation of Labor, 1925.
3. — TRADE UNIONS
UNITED

STATES DEPARTMENT OF LABOR, BUREAU OF LABOR STATISTICS. Handbook of American Trade Unions. No. 420.

Washington, Govt. Printing Office, 1926.
Annual Reports and Proceedings,
1920-1926. Washington, D.C.
Mary BEARD . A Short History of the American Labor Movement. New
York, Geo. H. Doran Company, 1924.
AMERICAN FEDERATION OF LABOR.

CHICAGO JOINT BOARD , AMALGAMATED CLOTHING WORKERS OF AMERICA.

The Clothing Workers of Chicago, 1910-1922. Chicago, 1922.
and Associates. History of Labor in the United
States. 2 vols. New York, McMillan Co., 1918.
Documentary History of the Amalgamated Clothing Workers of America,
1914-1926. Report of the General Executive Board and
Proceedings of the Seventh Biennial Convention (Montreal,
Canada, 1926).
Samuel GOMPERS. Seventy Years of Life and Labor. 2 Vols. New
York, E. P. Dutton & Co., 1925.
D. L. HOOPINGARNER. Labor Relations in Industry. Chicago and
New York, A. W. Shaw Co., 1925.
R. F. H O X I E . Trade Unionism in the United States. New York and
London, D. Appleton & Co., 1920.
W. E. WALLING. American Labor and American Democracy. New
York and London, Harper & Bros., 1926.
Leo WOLMAN. The Growth of American Trade Unions, 1880-1923.
New York, National Bureau of Economic Research, Inc., 1924.
Pamphlets
AMERICAN FEDERATION "OF LABOR. Industrial Unionism. Washington, D.C, 1912.
Summary of Reports of Labor Banks. Washington, D.C.
Union Insurance. Washington, D.C, 1925.
W. Z. FOSTER. The Bankruptcy of the American Labor Movement.
Chicago, 111., Trade Union Educational League, 1923.
Organise the Unorganised. Chicago, 111., Trade Union Educational League, 1926.
The Railroaders' Next Step—Amalgamation.
Chicago, 111.,
Trade Union Educational League, 1921.
J. R.

COMMONS,

— 115 —
Jay Fox. Amalgamation. Chicago, 111., Trade Union Educational
League, 1922.
William GREEN. Modem Trade Unionism. Washington, D.C., American Federation of Labor, 1925.
The Superiority of Trade Unions over Company Unions. Washington, D.C., American Federation of Labor, 1926.
Unions Reduce IndustrialWaste. Washington, D.C., American
Federation of Labor, 1925.
Sidney HILLMAN. The Labor Banking Movement in the United States.
An Address before the Academy of Political Science, New York.
New York, Academy of Political Science, 1925.
4. — EMPLOYERS' ORGANISATIONS

Clarence E. BONNETT. Employers' Associations in the United States.
A Study of Typical Associations. New York, McMillan Co.,
1922.
Walter Gordon MERRITT. History of the League of Industrial Rights.
New York, League for Industrial Rights, 1925.
NATIONAL

ASSOCIATION

OF MANUFACTURERS.

Proceedings

of the

Annual Conventions, 1920-1926.
Trade Associations,
Their Economic Significance and Legal Status. New York,
National Industrial Conference Board, Inc., 1925.

NATIONAL INDUSTRIAI. CONFERENCE BOARD, INC.

5. — INDUSTRIAL RELATIONS

Report of the United States Coal Commission. • Washington, Govt.
Printing Office, 1923.
Report of the United States Commission on Industrial Relations.
Washington, Govt. Printing Office, 1916.
Reports of Industrial Conferences, 1919 and 1920. Annual Report of the
Secretary of Labor. Washington, Govt. Printing Office, 1920.
John R. COMMONS, and Associates. Industrial Government. McMillan
Co., 1921.
R. F . FOERSTER and E. H. DIETEL. Labor Stock Ownership in the
United States. Princeton, 1926.
Gordon JAMES, Henry S. DENNISON, Edwin F . GAY, Henry P. K E N DALL, Arthur W. BURRITT. Profit Sharing and Stock Ownership
for Employees. New York and London, Harper & Bros., 1926.
W. Jett LAUCK. Political and Industrial Democracy, 1776-1926.
New York and London, Funk & Wagnalls Co., 1926.
and Claude S. WATTS. The Industrial Code. New York and
London, Funk & Wagnalls Co., 1922.
Sam A. LEWISOHN. The New Leadership in Industry. New York,
E. P . Dutton & Co., 1926.
Charles M. MILLS. Vacations for Industrial Workers. New York, The
Ronald Press Company, 1927.
James MYERS. Representative Government in Industry. New York,
Doran, 1924.

— 116 —
INDUSTRIAL CONFERENCE BOARD. Practical Experience
with Profit Sharing in Industrial Establishments.
Research
Report No. 29. New York, 1920.
Experience with Mutual Benefit Associations in the United
States. Research Report No. 65. New York, 1923.
Experience with Works Councils in the United States. Research
Report No. 50. New York, Century Co., 1922.
The Growth of Works Councils in the United States. Special
Report No. 32. New York, 1925.
Industrial Pensions in the United States. New York, 1925.
PENNSYLVANIA OLD-AGE PENSION COMMISSION. The Problem of
Old-Age Pensions in Industry. Harrisburg, Pa., 1926.
Ben M. SCLEKMAN. Sharing Management with the Workers. New York,
Russell Sage Foundation, 1924.
and Mary Van KLEECK. Employees' Representation in Coal
Mines. New York, Russell Sage Foundation, 1924.
Ordway TEAD and Henry C. METCALF. Personnel Administration —
Its Principles and Practices. New York, McGraw-Hill Book
Co. 1926.
NATIONAL

COMMITTEE ON ELIMINATION OF WASTE IN INDUSTRY OF THE
FEDERATED AMERICAN ENGINEERING SOCIETIES. Waste in

Industry.

New York, McGraw-Hill Book Co., Inc., 1921.
Pamphlets

AMERICAN FEDERATION OF LABOR.
Union Management Co-operation:
B. M. JEWELL, " Recent Extension of Collective Bargaining" ;
O. S . B E Y E R , jun., "Railroad Union-Management Co-opera-

tion". Washington, D.C., 1925.
F. C. BUTLER. The Cleveland Garment Plan. Cleveland, 0., Cleveland
Garment Manufacturers' Association, 1923.
•
Guaranteed Employment in the Cleveland Garment Industry.
Cleveland, 0., Cleveland Garment Manufacturers'Association.

APPENDIX II
HOURS AND WAGES

TABLE

A

AVERAGE F U L L - T I M E HOURS P E R W E E K I N CERTAIN INDUSTRIES 1

Textile Industries

«

Cotton Goods
Year

1913
1924

(female)

Spinners,
frame
(male)

Spinners,
frame
(female)

Speeder
tenders
(male)

Speeder
tenders
(female)

General
index >

56.7
51.8

56.9
53.2

57.8
53.1

59.8
54.3

56.5
51.2

100
92

Weavers

Weavers

(male)

57.6
52.8

Men's
Cutters,
cloth
(male)

1913
1924

49.0
44.2

Clothing

Pressers, Operators, Operators,
coat
coat
coat
(malet
(male)
(female)

Hand
sewers,
coat
(female)

Basters,
coat
(male)

52.5
44.1

52.1
44.1

52.5
44.4

52.3
44.2

52.1
43.6

General
index *

100
85

Woollen Goods
Weavers

1913
1924

Weavers

(male)

( female)

56.3
48.8

56.0
48.9

Spinners, Spinners,
frame
mule
(male)
(female)

56.5
48.9

55.5
48.9

(female)

Labourers,
dyehouse
(male)

55.6
49.2

55.6
49.2

Burlers

General
index '

100
88

Hosiery and Underwear

(male)

(female)

(female)

Knitters,
footers
and
toppers
(female)

1913
1924

55.8
51.9

54.7
49.8

55.1
50.5

56.0
50.8

Year

Cutters,
hand
(male)

Treers

Vampers

(male)

(female)

54.5
48.4

55.3
48.8

54.7
49.4

Boarders

Inspectors
Finishers and
folders

Loopers

Seamers

(female)

(female)

56.0
50.8

54.5
50.3

100
92

General
'ndex *

Boot and Shoe Industry

1913
1924
1

Bed
machine
operators
(male)

Top
stitchers
(female)

Lining
makers
(female)

General
index *

55.2
49.1

54.6
49.3

54.6
49.3

100
89

UNITED STATES DEPARTMENT OF COMMERCE: Statistical Abstract of the United States,

1925, pp. 327-329.
* Includes occupations shown together with other occupations in the industry.

— 118 —
A (cont.)

TABLE

Iron and Steel Industry
Blast Furnaces
Year

1913
1924

Stockers

Larrymen

Blowers

Keepers

Keepers'
helpers

Labourers

78.0
60.5

82.3
57.7

82.2
58.3

82.0
57.1

82.2
58.6

72.5
62.4

Stockers

Charging
machine
operators

Melters'
helpers,
first

Steel
pourers

77.8
58.2

78.0
56.3

77.1
55.5

77.0
56.5

General
index '

100
75

Open-Hearth Furnaces

r

1913
1924

Ladle
cranemen Labourers

77.2
55.2

76.2
59.0

Hotbed
men

Labourers

60.3
53.8

62.5
57.5

General
index *

100
74

Bar Mills

1913
1924

Stockers

Rollers

60.2
56.0

59.3
53.9

Roughers Finishers

59.8
54.7

59.6
54.0

General
index '

100
89

Tin-Plate Mills
Rollers

Roughcrs

Doublers

Heaters,
levelhanded

Tinners

Assorters
(female)

1913
1924

42.7
42.7

42.7
42.7

42.7
42.7

42.7
42.7

43.6
43.4

53.7
43.6

Year

Bessemer
converters

General
index '

100
94

General Indexes for other Branches — Iron and Steel

100
75

1913
1924

Puddling
mills

Blooming
mills

100
96

100
78

Plate
mills

Standardrail mills

100
82

Sheet
Mills

100

100
100

1

Slaughtering and Meat Packing Industry (All Departments)
Year

All males

All females

52.2

52.8

1923

I N D E X NUMBERS OF UNION HOURS OF LABOUR 3
Year

1913
1925«

. . . .

Full-time hours per week

100
93

1

Includes occupations shown together with other occupations in the industry.
* No data available.
«
* UNITED STATES DEPARTMENT OF COMMERCE, op. cit.,

p. 331.

* These figures do not include the metal-working and millwork trades. They cover the
building, printing, baking, road transport, granite and stone cutting and laundry trades,
in most of which hours were generally shorter before the war than in the unorganised trades

— 119 —
TABLE B.

—

UNION

SCALES

OF WAGES

BIRMINGHAM

CHARLESTON
(S. C.)

(Alabama)

Bricklayers
Carpenters . .
Granite cutters
Painters . . .
Plasterers . .
Newspaper
compositors (day)
Electrotypers
(finishers)

Full
Rale Hours weekly
per
per earnhour week ings

Full
Rate Hours weekly
per earnper
hour week ings

Cents

Cents

5

HOURS

CHICAGO
Full
Rate Hours weekly
per
per earnhour week ings
Cents

150.0 44 66.00 100.0 48 48.00
95.0 44 41.80 70.0 48 33.60
100.0 44 44.00
100.0 44 44.00 55.0 44 24.20
125.0 44 55.00 100.0 44 44.00

150.0
137.5
125.0
150.0
150.0

í

44
44
44
44
44

66.00
60.50
55.00
66.00
66.00

9 2 . 5 42 3 8 . 8 5 83.3 48 40.00 129.0 45 58.05
102.3 44 45.01
KANSAS CITY
Full
Rate Hours weekly
per
per earnhour week
ings
Cents

Bricklayers
Carpenters . .
Granite cutters
Painters . . .
Plasterers . .
Newspaper
compositors (day)
Electrotypers
(finishers)

AND

1

IN CERTAIN I N D U S T R I E S

150.0
112.5
106.3
125.0
150.0

140.9 44 62.00
N E W YORK

S A N FRANCISCO

Full
Rate Hours weekly
per earnper
hour week ings

Full
Rate Hours weekly
per
per earnhour week ings

Cents

44
44
44
44
44

66.00
49.50
46.77
55.00
66.00

175.0
150.0
137.5
150.0
175.0

44
44
44
40
40

77.00
66.00
60.50
66.00
70.00

Cents
137.5
112.5
118.8
100.0
150.0

44
44
44
44
44

60.50
49.50
51.
44.
66.00

102.1 48 49.00 133.3 45 59.98 115.6 45- 52.02
104.5 44 45.98 140.9 44 62.00 125.0 44 55.00

• U N I T E D STATES DEPARTMENT OF LABOR: Union Scale of Wages and Hours of Labor,
15 May 1926.
TABLE

C.

—
OF

AVERAGE

Iron a n d steel
Agricultural machinery . .
Automobile
Electrical a p p a r a t u s . . . .
Machines a n d machine tools
Hardware
Cotton manufacture (north)
,.
,.
(south)
Hosiery
Silk
Wool
Railways
1

WEEKLY

EARNINGS

U N S K I L L E D MALE LABOUR,

1926

AND

HOURS

X

Hours
(all wage
earners)

Weekly
earnings

55.3
50.6
50.4
44.1
50.5
48.9
46.
49.7
44.5
46.2
44.6
47.7

28.01
24.46
27.63
23.06
24.23
22.33
19.33
13.00
17.47
25.92
20.29
17.75

NATIONAL INDUSTRIAL CONFERENCE BOARD: Wooes in the Uniled Stales, pp. 58,100-150.

A P P E N D I X III
EMPLOYEE REPRESENTATION

PLANS

A. — T H E INTERNATIONAL HARVESTER COMPANY *

Institution and adoption of plan: March 1919: "This plan shall
become effective at any works upon adoption by a majority vote of the
employees of such works voting thereon at a special election held for
that purpose. "
Nature of plan : A works council composed of representatives of
employees and management with equal voice and vote.
Selection of representatives : Each works divided into voting divisions
to secure fair representation of different departments and crafts. One
employee representative per 200 to 300 employees, with minimum of
5 employee representatives on council. Employee representatives.
must be U.S.A. citizens, over 21, and continuously employed by works,
for a t least one year : foremen, assistant foremen, and other salaried
employees not eligible, and without vote in election of representatives.
Nomination and election by secret ballot (of all employees, men and
women, except foremen) in works under supervision of works auditor.
Representatives appointed by management not to exceed employee
representatives in number.
Organisation of council: Director of department of industrial
relations or his appointee acts as chairman, without vote. Secretary
appointed by the superintendent of the works. Meetings held
monthly. Provision for special meetings. The company provides
accommodation for meetings, gives regular pay to members for absence
from work on council business, and pays expenses of reports.
Scope of council, and character of consultation : "The works council
may consider and make recommendations on all questions relating to
working conditions, protection of health, safety, wages, hours of labour,
recreation, education, and other similar matters of mutual interest to.
the employees and the management. " It receives from the management ' regular reports in regard to accident prevention, sanitation,
restaurants, medical service, employment, educational programmes,^
and recreational activities, including information as to the cost,
efficiency, and results obtained." The council is only concerned with.
the shaping of policy, their execution being left to the management.
The manner of execution may be referred to the council for advice..
Voting is secret; the majority of the votes of either employee or
management representatives is regarded as their unit vote. When agreement is reached, the recommendation is referred to the superintendent
for execution. The superintendent may in matters of importance
refer the question immediately to the president of the International
1

See INTERNATIONAL HARVESTER COMPANY A N D SUBSIDIARY COMPANIES :

Harvester.

Industrial Council, 10 March 1919 (United States Works). Reprinted September 1926.

— 121 —
Harvester Company, who either orders its execution or shall within ten
days (after hearing such further evidence as he may require) either:
(a) propose a settlement; or
(b) refer the matter to a General Council ; or
(c) submit it to arbitration.
Reference is made to the general council when the matter is one
that affects other works. Employee representatives from the works
affected (1 per 1,000 employees; but not less than 2 per works) meet
-with an equal number of representatives selected by the president.
Travelling expenses and hotel bills of employee and management
representatives are paid by the company. If no agreement is reached,
the matter is referred to arbitration.
"Whenever the president and a majority of the employee representatives in the general council, or the works council, as the case may
be, have mutually agreed to submit a matter to arbitration, they shall
proceed to select an impartial and disinterested arbitrator. " In case
of disagreement in the choice of arbitrator, each side selects one.
Where these disagree they select a third. A majority decision of
the three is final.
General: "There shall be no discrimination under this plan against
any employee because of race, sex, political or religious affiliation or
membership in any labour or other organisation."
Decisions affecting wages are subject to revision whenever changed
conditions justify, but not offener than at six month's intervals.
"This plan may be terminated, at any works, after six months'
notice, by a majority vote of the employees of that works, or by action
of the board of directors of the company. "
Special features: Employee stock ownership and investment plan;
occupational rating plan; benefit plan; pensions regulations.
Appréciation: Mr. Cyrus McCormick, jun., vice-president in charge
of manufacturing, International Harvester Company; "Some five years
a g o . . . I told the story of the early efforts of the International Harvester
Company to put into practice its theories of industrial relations... Had
I been permitted to look ahead into the period of depression and readjustment of 1921,1 am sure I could never have dared to hope it would
live through. Yet it has. I said then that it was no panacea for all
industrial ills, and that statement I now repeat; but this much I know:
we are happier with it than without it; we have accomplished and are
accomplishing progress, and we are still learning. " (Address before
the American Management Association, Kansas City, Missouri,
30 November 1925.)
B. — T H E STANDARD OIL COMPANY ( N E W JERSEY) X

Institution and adoption of plan: Adopted on 1 April 1918 in
Bayonne, Bay way, and Eagle works. Later extended with slight
modifications to cover other refineries and subsidiary companies.
"The main purpose of the plan, which has been in effect since 1918,
is to provide a means of contact between the management and every
employee and regular opportunities for collective action by representatives of the employees and of the management on all matters
1
Industrial Representation in the Refineries of the Standard Oil Company (New Jersey).
Edition of 1U25.

— 122 —
of mutual interest. In proposing this plan the directors of the
company believed that a system which would create an opportunity
for the honest expression and fair consideration of the views of all, and
which would send men to their work with the consciousness that so
long as the industry flourished their interests were safeguarded, must
in the long run bring results in efficiency, co-operation, harmony
and mutual profit, and promote justice to employees, officials, and
stockholders. Experience since the adoption of the plan has fully
confirmed this belief."
Nature of plan : Joint conference of equal numbers of employee and
company representatives.
Selection of representatives: Refineries divided into districts and
divisions by joint conferences. One representative for from 50 to
150 employees according to size of plant; no division to have less than
two representatives. "All employees except those indentified with
the management, such as general officers, superintendents, department
heads, timekeepers, foremen, and subforemen, are entitled to vote and
are eligible for election." Election by secret ballot under supervision
of representative selected by employees, and time keeper appointed
by management. Elected for one year.
Organisation of Joint Conference: (a) The works joint conference
consists of all employees' representatives of plant and equal number
of management representatives. Meets at regular intervals. In
large works an executive council, consisting of a smaller number of
employees' representatives selected by and from employee plant
representatives and an equal number of company representatives,
meets regularly in intervals between sessions of works joint conference.
(b) -The division joint conference consists of the employees' and
management representatives of division. Meets as required.
Special meetings of any group may be called by general superintendent. Joint committees may also be set up by chairman of works
conference to handle specific subjects. In addition all representatives
of the three New Jersey refineries hold annual joint meeting attended
by the directors and other company officers.
The personnel department is responsible for the general administration of the representation plan.
Works joint conferences have two secretaries, one appointed by
employees' representatives and the other by management. They keep
records, and jointly prepare minutes for submission to board of directors. Records of all decisions by division conference are made by
the personnel officer, and forwarded to management after approval by
employees' representatives.
Scope of conferences, and character of consultation: A division
conference " is usually concerned with a specific problem affecting only
a particular group ". It deals with wage questions subject to approval
of board of directors. Provision is made for appeal to it for adjustment
of grievances.
The works joint conference "meets at regular intervals to discuss
the general problems of the plant ".
General: The company states that its labour policy "is based upon
certain well-established principles which have been developed on the
fundamental proposition of a square deal for all concerned: the
employees, the management, the stockholders, and the public ".

— 123 —
"The outstanding features of this programme as at present
established at the refineries are as follows:
(1) No discrimination by the company or its employees against
any employee on account of membership or non-membership
in any church, society, fraternity, or union.
(2) Collective dealing as to all matters of mutual interest, made
effective through the industrial representation plan.
(3) Paying at least the prevailing scale of wages for similar work in
the community.
(4) The eight-hour day or its equivalent.
.(5) One day's rest in seven, preferably on Sunday, or the equivalent
of such period.
(6) Sanitary and healthful working conditions.
(7) Just treatment assured each employee, with opportunity for
submission of all grievances for adjustment through the industrial representation plan.
(8) Continuous effort to eliminate accidents through effective
safeguards and active co-operation of employees and committees, under expert supervision.
(9) Payment of disability benefits in case of accidents incurred
while a t work.
(10) Health supervision by a competent medical staff.
(11) Payment of sickness benefits after one year's service.
(12) Opportunity for special training to qualify employee for better
work, with standard system of keeping record of service
performed.
(13) Promotion according to ability demonstrated and length of
service.
(14) One week's annual vacation with pay after one year's service,
extended to two weeks after ten years' service."
Special features: Stock acquisition plan (with financial assistance
of company); pensions scheme (at age of 65, with 20 or more years'
service); life insurance (after one year's service, varying from $500 to
$2,000); sick benefit (at company's cost, after one year and 13 consecutive weeks' service).
C. —

SWIFT AND COMPANY 1

Institution and adoption of plan: Instituted 1921, and now in force
in eighteen plants in U.S.A. and Canada.
Nature of plan: An assembly composed of equal numbers, according
to size of plant, of employee and management representatives working
through three committees, with minimum of six employee representatives on Assembly.
Committee No. 1: Assembly procedure and elections;
„
No. 2: Interpretations and adjustment of disputed
plant rulings;
„
No. 3 : Changes in working conditions.
Every representative has a seat on one or other of the committees.
1

See SWIFT A N D COMPANY: Employees'

Representation

Plan. 1924.

— 124 —
Selection of representatives : Plants divided into voting divisions,
to secure fair representation of different departments and interests.
Any employee on pay-roll who does not represent management in any
position of trust, such as foreman, watchman, police and fire departments, etc., may vote. Representatives must also have been in
company employ for one year, be American citizens or have first
papers, and of legal age.
Elections by secret ballot, conducted by temporary joint committee
of three employees and three executives of the plant, nominated by
president of company, with timekeeper and one employee as judges.
Representatives elected for one year.
Organisation of assembly: Assembly selects two persons in employ
of company, but not members of the assembly and without voting
power in it, as chairman and secretary. Majority of employee with
majority of employer representatives constitute a quorum. Chairman
responsible for ensuring that voting power of the two is equal.
Assembly fixes regular times for meetings. Provision for special
meetings. Company provides suitable meeting places and gives
regular pay to employees for time spent on assembly meetings.
Company also pays expenses of assembly reports.
Scope of assembly, and character of consultation : "The Assembly is
not vested with executive or administrative authority, but may review
and discuss all cases and matters referred to it by its committees or
initiated by the employees' or management representatives concerning
the mutual interests of employees and management, and the assembly
and its committees may call for any desired information or evidence. '
"The assembly may include in such matters all cases, references or
appeals relating to wages, hours, safety, buildings, plant equipment,
sanitation, restaurants, dressing-rooms, and any other matters of
interest to the employees. "
Any decision by a two-thirds vote of the assembly is binding on
employer and employee, unless board of directors of company or
employees' representatives request assembly to reopen the matter
within 14 days. If after reconsideration by assembly no collective
agreement is reached, " t h e management and the employees are at
liberty to take such action outside of the plan as they may think
desirable ".
When matters of general interest are under discussion, the president
of company may at his discretion convoke, at expense of company, two
employee and two employer representatives from each plant involved,
to constitute a temporary general assembly for consideration of the
matter.
General : ' ' Neither the company nor the employees shall discriminate
against any representative on account of any position taken in the
exercise of his own convictions while discharging his duties as such
representative. "
" N o favour or prejudice may be shown either by the company or
by the employees towards any employee in the matter of voting òr in
any other matter by reason of the employees' race, religious creed,
political belief, membership or non-membership in any labour union
or other organisation."
"There shall be on the part of the company and on the part of the
employees strict observance of the Federal and State Laws respecting
labour."

— 125 —
The plan " shall continue in force so long as it is desired by employer
and employee".
Special features: One general wage decrease (November 1921)
and one general wage increase (April 1923) have been voted by assembly
and put into effect.
In November 1922 a special committee of six employee and six
manager representatives was appointed to examine conditions and
cost of living in other industries.
Vacations with pay for all employees after three years' continuous
service.
Employees' stock investment plan; employees' stock savings plan;
employees' benefit association (group life insurance plan); pension
fund.
D. — T H E " M I T T E N " (PHILADELPHIA R A P I D TRANSIT) P L A N 1

Institution and adoption of plan: Introduced in 1911 and modified
at intervals until 1926, when the present plan was adopted.
Nature of plan : Company divided into five departments, which
are in turn subdivided into 65 branches. Branch, departmental, and
general committees are appointed.
(a) Branch committees are composed of 2 employer and 2 employee
representatives.
(b) Departmental committees are composed of all employer and
employee branch representatives in the department.
(c) General Committees are composed of 2 employer and 2 employee
representatives from each departmental committee.
Selection of representatives: Any employee in branch with six
months' service entitled to vote provided he holds no official position
in the company. Candidates must be regularly employed, have
served a t least two years and in no way represent employer. Voting
by secret ballot under supervision of election committee of three
members. Candidates receiving the two highest polls are elected for
one year and called No. 1 and No. 2 branch committeemen respectively, No. 2 committeeman representing the minority.
Employer representatives are appointed by management from.
among supervisory force.
Organisation of Committees: Each group of employers' and employees' representatives select their own chairman and vice-chairman.
A secretary, appointed and paid by management, acts as impartial
chairman without vote. Discussions are public as between groups,
but each group may vote independently in private caucus, the majority
opinion being considered unit vote of group.
(a) Branch committees meet when and where occasion demands.
Meetings of all workers in branch may be held every three
months to hear report of committeemen.
(Ô) Departmental committees meet alternate months, or on
special request.
(c) General committees held every month, or on special request.
1

See R A P I D T R A N S I T

Consideration

COMPANY,

and Co-operative

Benefits.

PHILADELPHIA:

1926.

The

Mitten

Plan

for

Collective

— 126 —
Employee representatives compensated by co-operative association
for time spent on committees ; employer representatives paid as usual
by company.
Scope of Committees, and character of consultation : (a) Branch
committees "consider and, so far as possible, settle all questions arising
out of employee-employer relations in that branch".
(6) Departmental committees deal with "all matters affecting the
department as a whole, all discussions arising between or affecting
more than one local branch, and all questions which cannot be settled
by the local branch committees themselves".
(c) General committees may "discuss and consider all matters
affecting the system as a whole, all discussions arising between or
affecting more than one department, and all questions which cannot
be settled by the departmental committees themselves".
They are also " t o devise ways and means for furthering the efforts
of the various departmental committees for the greatest possible good;
to promote harmony and good fellowship among all employees of the
company and between employer and employees; to formulate plans for
submission to the several departmental committees; and to render
every assistance within their power toward advancement of the
interests of employees and the betterment of the service".
The decision of general committees on any matter involving wages,
working conditions and discipline is fimi.
Matters which cannot be settled by the general committees are
referred to an arbitration board, consisting of one arbitrator selected by
general committee of employees, one arbitrator selected by general
committee of employers, and one neutral arbitrator selected by the
other two. (In case of disagreement, the chairman of the public
service commission of Pennsylvania, or his nominee.) Their majority
decision is binding. Expenses shared equally by co-operative
association and management.
General: "The distinctive feature of this plan as compared to
others, and the one to which its greatest success is attributed, is that
men and management must agree, otherwise arbitration follows."
No discrimination against members who do not join the co-operative
association or trade unionists.
Wages established at fixed rates by general committees; subsequent
variations dependent on cost of living, as determined by special bureau
working under direction of general committees.
In event of a "two-thirds majority of the men becoming members
of trade union, company will deal on trade union basis".
Special features : Co-operative association, with privileges including
life insurance, sick benefits, pensions, saving fund, helping hand fund;
employee stock ownership, patron stock ownership and sale of securities
by employees; " t h e Mitten Men and Management Bank and Trust
Company".
E. —

T H E COLORADO FUEL AND IRON COMPANY 1

Institution and adoption of plan : Plan originally outlined by Hon.
W. L. Mackenzie King and John D. Rockefeller, jun., as result of a
1
See Joint Representation of Employees and Management and Procedure in Industrial
Relations, adopted by Employees and Management of the Colorado Fuel and Iron Company
at the Mines, October 1915, and at the Steel Works and Quarries, May 1916, as Consolidated

— 127 —
serious strike, and adopted ; n coal mines in 1915. Adopted at steel
works in 1916. Two plans consolidated and adopted by joint conference of employer and employee representatives in December 1921.
Nature of plan: Joint conferences for seven districts, working
through permanent joint committees on:
(a) co-operation, conciliation and wages;
(¿>) safety and accidents;
(c) sanitation, health and housing;
(of) recreation and education.
Selection of representatives : (a) Six districts, divided into divisions
and subdivisions for voting purposes. One employee representative
per 150 employees, or major fraction thereof, provided that each
division has at least two, and each subdivision one, representatives.
All employees with at least three months' service entitled to vote,
except foremen, officials with authority to employ or discharge, and
salaried employees.' Representatives must be U.S.A. citizens, 21 years
old, and in the company's employ at least one year.
Representatives elected by secret ballot, and hold office for one
year.
Management representatives designated by the president, with
voting power not exceeding that of employee representatives.
(b) Joint committees of six members each (three from each side),
except in the Minnequa district, where the numbers are doubled.
Organisation of Conferences : (a) Joint conferences held in January,
May, and September at call of president. Presided over by president,
or his appointee. Conference appoints its own secretary. January
meetings responsible for electing members of joint committees.
(b) The joint committees are regarded as permanent committees
available at any time for consultation. Elect their own chairman and
secretary, and hold meetings at least quarterly.
Scope of conference and committees, and character of consultation :
Joint conferences, " to discuss freely matters of mutual interest
and concern, embracing a consideration of suggestions to promote
increased efficiency and production, to improve living and working
conditions, to enforce discipline, avoid friction, and to strengthen
friendly and cordial relations between management and employees."
(i) Joint committees on co-operation, conciliation, and wages, for
" t h e prevention and settlement of disputes, terms and conditions of
employment (including wages, hours and other working conditions),
maintenance of order and discipline, company stores, and other
similar matters ".
(ii) Joint committees on safety and accidents, for" the safeguarding
of machinery and dangerous working places, the prevention of accidents,
the investigation of fatal accidents, the use of explosives, fire protection,
first aid, and other similar matters".
(iii) Joint committees on sanitation, health and housing, for
" health, hospitals, physicians, nurses, occupational diseases, sanitation,
water supply, sewage system, garbage disposal, street cleaning, wash
bg a Joint Committee of Emplogees and Management, 20 December 1921. The Consolidated
Form Adopted bg the Annual Meetings of Employees' and Management's
Representatives
at Pueblo on 29-30 December 1921 (Colorado F u e l a n d Iron C o m p a n y ) .
A full account of this P l a n is t o be found in Employees' Representation in Coal Mines
b y SELEKMAN a n d V A N K L E E C K . published by t h e Russell Sage F o u n d a t i o n . New York,
1924.

— 128 —
and locker rooms, houses, rents, gardens, fencing, and other similar
matters " .
(iv) Joint committees on recreation and education, for "social
centres, club house,, playgrounds, entertainments, moving pictures,
athletics, competitions, field days, schools, libraries, classes for those
who speak only foreign languages, technical and vocational education,
manual training, churches and Sunday schools, and other similar
matters ".
Provision is made for committees to visit coal mines with local
employees' representative.
Annual joint meetings of employees and management, including
members of the committees, held in December. Reports of work of
all committees made to this meeting, and all points of general interest,
requiring collective action, discussed.
Provision also made for arbitration in cases where joint committees
fail to reach agreement. Such arbitration may be effected by appointment of an umpire, or by reference to the industrial commission of
Colorado.
General: "There shall be no discrimination by the management or
by any of the employees on account of membership or non-membership
in any society, fraternity, or union".
Special clauses govern the right of appeal of the employee against
unfair treatment, etc., through various channels up to joint committee
on conciliation and wages.
A special officer, " t h e president's industrial representative", is
appointed to attend meetings, keep in touch with employers' representatives, and " a t least once every three months to confer with the
employees or their representatives and the management respecting
working and living conditions, the observance of Federal and State
laws, the carrying out of the company regulations, and to report the
result of such conferences to the president
" T h e promotion of harmony and good will between the company
and its employees, and the furtherance of the well-being of employees
and their families and the communities in which they reside being
essential to the successful operation of the company's industries in an
enlightened and profitable manner, the expenses necessarily incidental
to the carrying out of the social and industrial betterment policies
herein described, and the joint representation and joint conferences
herein set forth, including the payment of expenses of employees'
representatives when attending joint conferences and annual joint
meetings and their reimbursement for the working time necessarily
lost in so doing, shall be borne by the company. But nothing herein
shall preclude employees of the company from making, in lieu of payment by the company or in addition to it, such payment to their
representatives in consideration of services rendered on their behalf
as they themselves may voluntarily desire and agree to make."
Special features : Advisory board on social and industrial betterment
with industrial relations executive as president, and composed of
officers selected by president.
"Coal miners have the right to employ checkweighmen, and the
management shall grant the said checkweighmen every reasonable
facility to enable them to render a correct account of all coal weighed."

— 129 —
F. — THE DENNISON MANUFACTURING COMPANY1

Institution and adoption of plan :- Plan formulated by employees
at their own instigation with assistance of management; adopted
and put into practice in 1920.
Nature of plan : A general works committee, and a central committee, composed only of employee representatives.
Conference committees with equal representation of employees
and management.
Selection of representatives : Departmental and Divisional representatives apportioned according to districts on general basis of 50 employees per voting unit. Representatives must be regular employees,
21 years old, with one year's service, U.S.A. citizens or hold first
citizenship papers, and able to pass literacy test. Persons in managerial positions, foremen, supervisors, instructors, etc., are excluded.
Right to vote limited to employees over 18, with three months' continuous service, and in non-managerial, etc., class.
Representatives elected annually on Australian ballot system.
Absence for two consecutive meetings without justifiable excuse involves
resignation.
Organisation of committees: (a) The general works committee is
composed of all departmental representatives, and meets twice a
month. Elects its own chairman, vice-chairman and secretary for one
year. No member of the central committee can be an officer of the
general works committee.
(ft) The central committee is composed of divisional representatives. Elects its own officers and has no regular meetings.
(c) Conference committees are composed of two to six members,
one-half designated by management and one-half by general works
committee.
Scope of committees, and character of consultation : (a) " The general
works committee shall discuss freely all factory problems, conditions,
and regulations, and shall recommend to the management any policies
which it believes will bring about better and closer relations between
the management and employees or improve the efficiency or general
welfare of the employees or the company. "
(6) "The central committee shall take action to promote matters
brought up by the general works committee and to facilitate the settlement of grievances and similar matters. The action of the central
committee, except in regard to grievances, shall not be final unless
authorised or ratified by the general works committee. "
The general works and central committees can create and delegate
their powers to sub-committees.
(c) " In order to bring about the co-operative consideration and
constructive development by the works committee and the management of the recommendations or suggestions of either body ", standing
conference committees deal with (1) procedure ; (2) publicity ; (3) hours,
wages and promotions; (4) buildings and facilities; (5) housing;
(6) unemployment ; (7) health and safety ; (8) lunch room ; (9) classification; (10) resignations; (11) suggestions; (12) co-operative buying.
1

"Denntson Employees' Co-operative Plan," Constitution and By-Laws, 1926.
9

— 130 —
Recommendations submitted by management or works committee
go in the first instance to committee on procedure, who either refer
question to a standing conference committee, set up a similar special
conference committee to examine it. or submit it direct to the management or works committee as the case requires.
Divisional committees, composed of all the representatives within
given sections of the plant, can make suggestions and "constructive criticism ", and investigate general grievances within the division.
Personal grievances can be brought to the works manager through
the central committee.
General: " N o employee shall be discriminated against in the
operation of the employees' co-operative plan because of race, sex,
political or religious affiliations, or membership in any labour or other
organisation".
" N o departmental or divisional representative shall be interfered
with by the management in the legitimate performance of the duties
of his office, nor shall he be discriminated against by the management
on account of any action taken by him in good faith in his representative capacity " .
" T h e employees' co-operative plan shall not interfere with existing
or future agreements between trade organisations and the company,
nor abridge the right of any trade organisation to deal separately
with the company".
Employees pay no fees to co-operative association.
Special features : Unemployment relief covering 3000 employees
($150 000 fund provided by management); housing ($100,000 fund);
managerial industrial partnership stock; employees' industrial partnership certificates.
G. — T H E DUTCHESS BLEACHERY, I N C . 1

Institution

and adoption of plan:

August 1918.

Nature of plan : Three boards :
(a) Board of operatives ; composed entirely of representatives
of employees.
(£>) Board of management ; equally representative of employees
and stockholders.
(c) Board of directors; representatives of employees, community, and stockholders.
Selection of representatives : (a) Board of operatives : One employee
representative for each of ten departments. Representatives must be
U.S.A. citizens or have first papers, 21 years old, able to read or write
English, and on pay-roll for one year prior to election. Foremen and
other executives may vote or act as representatives.
Members of board elected annually by secret ballot of all employees
on pay-roll for at least 12 consecutive months.
\b) Board of management: Twelve members, six of whom are
selected by the board of operators from among their own members.
Remaining six represent management and stockholders. In case of
1
See Handbook of the Partnership Plan, Dutchess Bleachery, Inc., Wappingers Falls,
Neu> York. Published November 1920.— See also Ben M. SELEKMAN: Sharing Management
with the Workers. Published by the Russell Sage Foundation, New York, 1924.

— 131 —
disagreement, board appoints a thirteenth member. Decision by
majority vote.
(c) Board of directors. Five members elected annually ; e.g.
three company officials — usually the president of the company, the
sales manager (with offices in New York), and the manager of the
bleachery — an employers' representative nominated by board of
operatives, and a representative of the community (Wappingers Falls)
nominated by local Chamber of Commerce.
Organisation of boards: (a) Board of operatives: President and
vice-president elected at beginning of year by board. Executive
secretary is full-time official, nominated by board of management
subject to confirmation by board of operatives. Constitution of board
can be amended by two-thirds vote, subject to approval by two-thirds
of board of management.
Meetings held monthly, open to all employees, who receive $ 1
for each meeting attended.
(£>) Board of management: Meets monthly, or on request of any
two members.
(c) Board of directors.
Scope of boards, and character of consultation : (a) Board of operatives: The board of operatives is intended to represent interests of
the workers. It is authorised to bring individual grievances before
the local management, manage the houses owned by company, and
initiate and "manage any educational or recreational w o r k . . . which
does not conflict with the powers of the board of management ".
An explanatory circular published in 1918 stated that " t h e board will
in time become a sort of clearing house of valuable suggestions, and
its responsibilities will undoubtedly grow with its experience".
Three standing sub-committees deal with housing, recreation and
education, and working conditions.
(b) Board of management. Established on direct request of board
of operatives for more than the merely advisory power that the board
then enjoyed in regard to matters of mill management, wages, working
conditions, etc. It determines wages and working conditions, and is
authorised to settle and adjust such matters of mill management as
may arise.
General: Mass meetings are called periodically when manager of
bleachery explains financial situation and future possibilities of
company. Audited monthly statements at disposal of board of operatives, and open to all. Minutes of all board meetings interchanged.
" T h e board of directors authorises the statement that our partnership plan is in no way opposed to organised labour."
Special features: Profit-sharing, stock purchasing and house purchasing; savings plan; vacations with pay; committee on safety; sick
benefits; suggestion boxes.
" A fairly large proportion of them (i.e. the employees) are
Italians who understand little English and form, at. least temporarily,
a group hard to impress with new ideas".

A P P E N D I X IV
Selected Employee Stock-Ownership and Profit-Sharing Plans 1

T H E COLUMBIA CONSERVE COMPANY,

INDIANAPOLIS

The Company employs approximately 100 persons on its permanent
staff, and 200 more on a temporary footing for six weeks during the
canning season. Practically all the permanent staff are on a salary
basis ; the temporary staff are on a wage-earning basis ; all are entitled
to a vote in the Council, which directs all company policy, including
production and distribution, hours, salaries and wages, promotions, etc.
Profits are distributed as follows:
(i) 10 per cent, (cumulative) to common stockholders.
(ii) 10 per cent, (non-cumulative) to salaried employees.
(iii) Of the remainder, 10 per cent, is allocated to the Pension
Fund and 90 per cent, to the purchase of common stock,
to be held by the Council in a trust fund. Stock held by
absentee owners has been entirely bought up in this way,
and the only common stock now held under (i) is the property of the original owners (Mr. Wm. Hapgood and his two
brothers) or — to a very small extent — of company employees.
The employees are thus collectively obtaining complete ownership
of the common stock of the Company, while the Board of Directors
is already composed exclusively of salaried workers of the Company.
T H E DENNISON MANUFACTURING COMPANY

The Company was entirely reorganised in 1911, so as to remove
all control from outside absentee investors and to place it with the
managerial employees. To achieve this all common stock was bought
in and replaced by sufficient first preferred stock to cover the market
value of the old stock. There are now four classes of stock: first
preferred, second preferred, managerial industrial partnership, and
employee industrial partnership.
(1) First preferred stock pays a fixed cumulative dividend of
8 per cent, per annum, and is transferable but non-voting.
(2) Second preferred stock, which is exchangeable for partnership
stock on leaving company or a t death, pays a fixed cumulative dividend
of 7 per cent, per annum, and is negotiable but non-voting.
1
The plans, of which particulars are given in this Appendix, have been selected as
possessing features of special interest, not because they are typical of stock-ownership
plans in general. The notes upon them are largely derived from Mr. J E T T LAUCK'S Political and Industrial Democracy and Profit-Sharing
and Stock-Ownership for Employees by

Messrs. GORTON J A M E S , H E N R Y S. D E N N I S O N , E D W I N F. G A Y . H E N B Y P. K E N D A L L and

ARTHUR W. BURRITT, to whom the author is much indebted.

— 133 —
(3) Managerial industrial partnership stock can be held only by
the chief managerial employees of five years' service. These employees
now number about 400. They elect thè Board of Directors (at present
six), who are all full-time employees of the firm. If over a period
of years they fail to produce preferred dividends to the full amount,
control reverts to the first preferred stockholders. Dividends are
decided by Board of Directors. Shares are non-transferable.
(4) Employee industrial partnership stock (introduced in 1919)
is held by employees of all ranks over 19, with three years' service,
who are not in managerial group. Shares are non-voting and nontransferable.
After payment of the fixed obligatory dividends on first and
second preferred stock, of a dividend as decided by Board of Directors
on managerial industrial partnership stock, and of all other company
charges, the remaining profits are divided between the managerial
and industrial partners, two-thirds going to the former and one-third
to the latter. This division of profits is effected by distributing nontransferable stock, which is allocated in the managerial group according to salary and in the employee group according to length of service.
This stock pays a variable dividend based on the state of company's
business, and the fact that it is non-negotiable is intended to encourage
hard work with a view to high dividends.
As the managerial industrial partnership stock alone carries voting
power, the managerial industrial partners control the company,
and the Directors constitute, as it were, their executive committee.
The employee industrial partners, however, have a voice in the internal
management of the company through the works committee.
FORD MOTOR COMPANY

The Company issues certificates of $100, and multiples of $100,
in the names of employees. These investment certificates are nonnegotiable and non-assignable, and invalid when held by anyone
other than a Ford employee, except under special circumstances in
case of an employee's death. The certificates are guaranteed to return
6 per cent, per annum, paid half-yearly, but additional payments
are made in the discretion of the board of directors, and have amounted
in different years to from 8 to 16 per cent. The total investments
of employees in these certificates have attained as much as $20,000,000.
Certificates may be purchased by any regular employee over
21 years old. Instalments, in no case to exceed one-third of the weekly
wage, are collected on pay-day, or during the two days following.
Until 1924 certificates could only be held up to an amount equivalent
to one year's wages. This condition has now been withdrawn.
Interest at 3 per cent, per annum is given on all payments less than
the full amount of a certificate. The Company reserves the right
to require 30 days' notice of demands for payment in case of withdrawal
but this right has not been enforced. In case of death, the Board
of Directors may permit certificates to stand for the benefit of
deceased's dependents.
Note. Mr. Ford also states that the high wages paid by his Company are part of a plan "to distribute profits, but instead of waiting
until the profits had been earned, to approximate them in advance
and to add them, under certain conditions, to the wages of those

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— 134 —
persons who had been in the employ of the company for six months
or more . . . A man was first to be paid his just wages—which were
then on an average of about 15 per cent, above the usual market
wage. He was then eligible to a certain profit. His wages plus his
profit were calculated to give a minimum daily income of five (now
six) dollars ". (My Life and Work, by HENRY FORD, 1922, p. 127).
BANK OF ITALY (CALIFORNIA)

1. Employees are entitled to set aside each six months a sum equal
to 10 per cent, of their salary for the first full year's service, and thereafter an additional 1 per cent, per annum up to a total of 30 per cent.
These are called "savings deductions ".
2. The Bank reserves 40 per cent, of its net profits for distribution
among employees. This is distributed in the form of
(i) Extra compensation. From 5 to 10 per cent, of salary, according to length of service, is payable annually, as bonus.
(ii) Dependency credits. An amount equal to 15 per cent, of
"savings deductions" plus 15 per cent, of "extra compensation "
is allotted for each dependent child, up to a maximum of three
dependent children.
(iii) Pensions. Pensions up to a maximum of $5,000 are granted
employees over 65 years old.
(iv) Life Insurance. $500 to $1000 according to length of service.
(v) Special Compensation. When the above charges have been
met, the remainder (which is normally larger than all the other
amounts combined) is divided among employees proportionally
to their "savings deductions ".
The amounts standing to the credit of employees under (i), (ii)
and (v) are combined for the purchase of Bank of Italy stock and
credited to employees in the form of trust certificates. Trust
certificates are non-voting, but mature after twenty years. Dividends
are distributed in cash.
Employees are thus gradually acquiring control of the company
by the purchase of common stock. Their profits at the beginning
of 1926 equalled one-fifth of their annual earnings.
INTERNATIONAL HARVESTER COMPANY

In 1924 the International Harvester Company instituted a plan
(to replace their previous plan inaugurated in 1920) under which
employees can subscribe under an instalment system towards the
purchase of investment certificates of $100 par value. Payments
are deducted monthly from wages. These certificates are convertible
into 7 per cent. Cumulative Preferred Stock of the Company each
time the price of a share has been accumulated. The price of all
Preferred Stock issued prior to 1 November 1924 is $100; the price
of subsequent issues is determined by the directors, but is in any
event not less than $100.
An employee can subscribe for a $100 certificate or any multiple
thereof up to the amount of his annual wages, but may not hold
more than $3,000. Payment must be completed by January 1930.

— 135 —
A bonus of 1 per cent, of wages of previous year, plus 5 per cent.
interest on the total amount standing to each employee's credit, is
payable annually by the Company, who also grant a bonus of $2 per
share per year for five successive years as an inducement to employees
to retain their stock.
An employee may use his credit for the purchase of a house,
or for the purchase at market price of other securities formally
approved by the treasurer of the Company, who is responsible for
the working of the plan.
"Company now has 22,500 subscriptions in force for $15,000,000
in stock. Percentage of employee subscribers to total working forces
is 58 per cent. In the factories alone about 60 per cent, of employees
are stock subscribers, the average holding being about $600. Employees
now own about 10 per cent, of preferred stock outstanding." (W. J.
LAUCK, Political and Industrial Demoracy, 1926, p. 159.)
T H E A. NASH COMPANY, INC.

The Company was organised in June 1916 by Mr. A. Nash, with
a total capital of $60,000, of which Mr. Nash held $59,000.
Wages are paid weekly on results. Dividends on stock are limited.
After payment of these charges, all surplus profits are divided —
50 per cent, going to the workers, and 50 per cent, being reinvested
in the Company. As a result, the capital of the Company has increased
to $3,000,000, the majority of which is held by the employees. This
increase in stock is derived entirely from the exceedingly rapid increase
in the earnings of the Company, which have passed from $500,000 to
approximately $10,000,000 a year within the last six years.
T H E PHILADELPHIA R A P I D TRANSIT COMPANY

In addition to a basic wage, varying in accordance with cost of
living, each employee is entitled to a share in proportion to his wages
of a "supplementary co-operative wage ", which totals one half of
the remuneration allotted to management. (This latter amount
equals 4 per cent, of gross revenue after deduction of regular stock
dividends and other fixed charges.)
The employees' share of the management fee is invested collectively
in Company common stock. Employee stock ownership thus increases
annually. The employees already hold the largest amount of common
stock; namely, over ten million dollars, which is more than one third
of total shares issued. As a consequence they have two regularly
elected representatives on the Board of Directors.
A new and interesting experiment is the sale of recent issues of
preferred stock by employees to passengers on cars or to applicants
at car junctions. $13,000,000 of 7 per cent, preferred stock was sold
in this way in 1925, arrangements being made where required for its
purchase by one-dollar weekly instalments, up to a limit of 20 shares.

! •