Preview

INTERNATIONAL LABOUR OFFICE

STUDIES AND REPORTS
Series A (Industrial Relations) No. 38
•

STUDIES
ON

INDUSTRIAL RELATIONS
III
The Canadian National Railways. — The Pequot Mills, Salem,
Mass., U.S.A. — A Paris Department Store. — The Norwegian
Nitrogen Company. — Industrial Relations in the Grand Duchy
of Luxemburg.

GENEVA
1935
Published in the United Kingdom
For the INTERNATIONAL LABOUR OFFICE (LEAGUE OF NATIONS)

By P. £». KING & SON, Ltd.
Orchard House, 14 Great Smith Street, Westminster, London, S.W. 1

PRINTED BY ALBERT KUNDIG

GENEVA

CONTENTS
Page
INTRODUCTION

THE CANADIAN NATIONAL RAILWAYS
General Characteristics of the Railways
The Organisation and Administration of Industrial Relations
Accident Prevention
Health
Conclusion

. . .

1
2
33
35
40

THE PEQUOT MILLS OF THE NAUMKEAG STEAM
COTTON COMPANY, SALEM, MASS., U.S.A.
The History, Scope and Nature of the Mills
The History of Industrial Relations
Waste Elimination and Joint Research
Regular Collaboration between Management and Workers
Conditions of Work
Employment and Training
Safety, Health and Welfare
Influence of Labour Legislation
Conclusion
A PARIS DEPARTMENT STORE (LA SAMARITAINE)
How a Department Store Works
The Staff
Co-Partnership and Profit-Sharing
Social Insurance
Welfare
Conclusion

43
46
53
57
58
60
62
65
66
71
78
84
93
98
109

THE NORWEGIAN NITROGEN COMPANY
Introduction
Conditions of Labour
Housing Policy
Social Hygiene and Welfare
Workers' Spare Time
Conclusions

Ill
114
118
124
127
129

INDUSTRIAL RELATIONS IN THE GRAND DUCHY
OF LUXEMBURG
General Introduction
The Arbed-Terres Rouges Amalgamation
Legislation governing Industrial Relations
Employers' Social Institutions
Conclusions

131
135
142
168
182

INTRODUCTION

This volume contains a further series of studies on industrial
relations, supplementing those published under the same title in
1930 and 19321.
The origin and purpose of these monographs were fully explained
in the introductions to the first two volumes, to which the reader
may be referred. It will be well to repeat here, however, that no
attempt has been made to compare one country, one industry or
one undertaking with another. The object has been merely to
give as faithful a picture as possible of the relations existing between
management and staff within the particular undertaking. It should
again be emphasised that these undertakings have been selected
as illustrations, not as patterns ; it is left to the reader to draw such
lessons from them as he may wish.
The studies were previously restricted to European countries,
but their scope has been extended beyond those limits in this
third volume, where two of the five articles deal with undertakings
in North America—one in Canada and the other in the United
States. It was thought desirable to devote another monograph to
one of the Scandinavian countries, as there are few parts of the
world where conditions are more favourable for the development
of industrial relations. In the present series of studies, a commercial establishment has for the first time been included, the one
selected being one of the large department stores in Paris. In the
case of the Arbed undertakings (United Steel Works of Burbach,
Eich and Dudelange, in Luxemburg) the method adopted differs
somewhat from that of the other studies. This is one of the rare
cases in which a single undertaking is responsible for a large proportion of the industrial activity of the country in which it is situated ;
i INTERNATIONAL LABOUR OFFICE: Studies on Industrial Relations: I. The

Siemens Works, The Lens Mining Company, The London Traffic Combine,
The State Mines oí the Saar Basin and The Bata Boot and Shoe Factory—
Studies and Reports, Series A (Industrial Relations), No. 33, Geneva, 1930.
II. The Zeiss Works, The F.I.A.T. Establishments, The Philips Works and
The Sandvik Steel Works—Studies and Reports, Series A, No. 35, Geneva, 1932.

Vili

INTRODUCTION

the question has therefore been treated from the national standpoint,
and the study covers industrial relations in the Grand Duchy of
Luxemburg x.
The Office wishes to express its gratitude to the firms which
allowed its representatives to make the necessary investigations
on the spot and to the members of their staffs who kindly assisted
them in their task. The Office also wishes to place on record
once again its debt of gratitude to Industrial Relations Counselors,
Inc., New York, whose financial assistance has helped it to carry
through the present series of studies.

i Those who visited the various undertakings on behalf of the Office were
follows : Naumkeag Company and Canadian National
Railways:

Mr. G. A. JOHNSTON; Arbed Works and Samaritaine Stores: Mr. P. H E N R Y ;

Norwegian Nitrogen Company: Mr. E. ERICHSEN.

The Canadian National Railways
GENERAL CHARACTERISTICS OF THE RAILWAYS

The Canadian National Railway system operates a network of
lines extending throughout Canada from Halifax in the east to
Vancouver and Prince Rupert in the west and to Athabasca and
Churchill in the north. In the south, its lines penetrate into the
United States, in particular the New England States, Michigan,
Illinois, Indiana and Minnesota. The total mileage of railroad in
operation in 1933 was 23,750.
The system is the result of the co-ordination in 1918-1923 of
four distinct transportation groups. First, a unified management
was set up in 1918 for the Canadian Government Railways and the
Canadian Northern Railway Company, and then to these were
added the Grand Trunk Pacific Railway in October 1920, and the
Grand Trunk Railway Company in January 1923.
Like the railways of other countries, the Canadian National
Railway system has suffered severely as a result of the economic
depression. In 1929 the Canadian National Railways' gross
revenues showed a decline of $13,053,649 from 1928; in 1930 the
decline from the previous year amounted to $48,264,281; 1931
saw a decline of $50,462,939 from 1930; in 1932 the decline was
$39,401,568 as compared with 1931, and in 1933 $12,583,852
as compared with 1932. The total receipts in 1933 were
$148,519,742.43 as compared with $312,286,031 in 1928, a decrease
of $163,766,289 or 52.44 per cent.
To meet the situation, economies have been effected through
the elimination of unprofitable services, the reduction and reorganisation of the supervisory staff, closing of stations and office
buildings, laying off a large number of employees, and by such
other measures as could be made effective without bearing too
heavily upon the communities served. At the end of 1933 the
staff was approximately 36.59 per cent, below the 1929 level. The
total payroll, on the other hand, was 45.9 per cent, below the 1929
figure.

INDUSTRIAL RELATIONS

The average number of employees and amount of wages and
salaries they received, from 1929 to 1933 inclusive, was as follows :
Year

Average
number of
employees

Remuneration

1929
1930
1931
1932
1933

111,383
101,046
91,416
76,616
70,625

177,037,682
159,980,994
139,784,630
106,911,608
95,632,076

The elimination of a great many unprofitable passenger services
has been brought about by a severe curtailment of passenger train
miles. The reduction in passenger train miles from 1929 was
9,557,496. Some idea of the extent of these reductions may be
gained by realising that they are equivalent to wiping out practically.
one-third of the passenger train service operated in 1929.
It is clear from the figures quoted that the undertaking has been
passing through a very difficult period, and it is therefore all the
more interesting to examine, in the light of these circumstances,
the working of industrial relations in the system.

THE ORGANISATION AND ADMINISTRATION
OF INDUSTRIAL RELATIONS

It is clear that no single form of industrial relations would be
adequate to cover such a wide range of functions and occupations
as the operations of the system cover ; and in fact, as we shall see,
there is considerable variety in the practice of industrial relations
in the Company. But this variety is always subject to the guiding
principle of the labour policy of the Company, which is to ensure the
active and willing collaboration of its staff in all grades and
occupations.
Throughout the whole staff of the Company there is a spirit of
singleness of purpose and unity of aim which dominates every aspect
of its operations. Until the appointment of three trustees under
the 1933 legislation, one of the Directors of the Company was the
President of the Trades and Labour Congress of Canada. Many
of the general officers of the Company have been promoted from
the lower grades. The management keeps in close touch with the
railway unions, and throughout the various departments provisions
for regular contact and negotiation are, as we shall see in detail,
carefully made and applied.

THE CANADIAN NATIONAL RAILWAYS

The Canadian National Railways is a member of the Railway
Association of Canada, which comprises all the steam railways of
Canada.
The employees are in the main members of the various railway
trade unions. The railwaymen's unions in Canada are, with one
exception, " international " unions, t h a t is to say they organise
railwaymen both in the United States and Canada. So far as
internal organisation is concerned, one of the vice-presidents of
the union is generally appointed to look after Canadian affairs.
These international unions are the following:
Brotherhood of Locomotive Engineers.
Brotherhood of Locomotive Firemen and Enginemen.
Order of Railway Conductors.
Brotherhood of Railroad Trainmen.
Order of Railroad Telegraphers.
United Brotherhood of Maintenance of Way Employees.
Brotherhood of Railroad Signalmen of America.
In addition to these international organisations, there is a purely
Canadian body which has no international affiliations. This is the
Canadian Brotherhood of Railroad Employees, which covers clerks,
freight handlers, and station, stores and shop labourers.
Finally, the shop craftsmen are federated in the Canadian
National Railway System Federation No. 11, which covers machinists, boilermakers, blacksmiths, carmen, sheet-metal workers,
electricians, pipe fitters and moulders.
For purposes of negotiation with the Railway Association of
Canada, the shop crafts have constituted the Railway Employees'
Department, Division No. 4, American Federation of Labour.
Collective

Agreements

Wages and conditions of labour on the Canadian National, as
on all Canadian railways, are in general regulated by national
collective agreements concluded between the railways and the
respective railwaymen's organisations.
Separate agreements are concluded for the various categories
of staff, and these are, by mutual agreement, revised from time
to time. All agreements are subject to revision or cancellation on
thirty days' notice, except t h a t for the maintenance of way and
signal department employees which provides for a sixty days,
notice. As an example, it may be mentioned t h a t for the locomotive
and car departments, the appropriate collective agreement is Wage
Agreement No. 6, governing rates of pay and rules of service,

INDUSTRIAL RELATIONS

consolidated and issued on 15 July 1927 and amended 16 April
1929. Since t h a t date this agreement has remained unchanged,
except for percentage reductions of wages.
The Settlement

Grievances

When an employee feels he has been unjustly treated or t h a t he
has a grievance in connection with wages or working conditions,
he may take the matter up either directly or through his local
chairman up to and including the superintendent of the division;
if the matter cannot be adjusted with the superintendent, the local
chairman may turn over the case to his general chairman, who, if
he considers there is merit in the employee's contention, will appeal
the case to the general superintendent, and, if necessary, to the
general manager. When it is impossible for the general manager
and the general chairman to agree, then, if it is a case of interpretation of the schedule, the general manager will refer the matter
to the Chief of Wage Bureau, Montreal, for an interpretation before
definitely declining to adjust the dispute. If the general manager's
contention is upheld, the general manager and the general chairman
write up the case—first agreeing on and writing " a joint statement
of facts "—after which the employees will set out their contentions,
and the railway officer does the same. The dispute is then referred
to the Board or Committee provided for in the agreement between
the railway and the respective organisation.
In the case of the following organisations, the case would be
referred to the Canadian Railway Board of Adjustment No. 1.
—created in August 1918 for the purpose of adjusting grievances:
Brotherhood of Locomotive Engineers.
Brotherhood of Locomotive Firemen and Enginemen.
Order of Railway Conductors.
Brotherhood of Railroad Trainmen.
Order of Railroad Telegraphers.
United Brotherhood of Maintenance of Way Employees.
This Board is composed of twelve members, six being representatives of labour organisations—generally vice-presidents—
and six railway officers, a chairman and vice-chairman being
elected from among the twelve members, such position alternating
every six months between a railway officer and an officer of the
labour organisations.
It deals with all disputes between the
respective railway managements and the employees, members
of these trade unions, concerning the interpretation or application

THE CANADIAN NATIONAL RAILWAYS

of wage schedules or agreements which have not been settled by
direct negotiations. Disputes arising out of the negotiation of new
agreements as to wages and working conditions are not dealt with.
Under the terms of the agreement, decisions of the Board are
binding. In the event of a majority vote of the members of the
Board not being obtained, provision is made for the appointment
of a referee.
Disputes between the railways and other employees not
represented on this Board may, by joint submission, be referred to
Board of Adjustment No. 1 provided the parties to the dispute agree
that the decision of the Board shall be accepted by each party as
final and binding.
A similar tribunal, the Canadian National Railways Employees'
Board of Adjustment No. 2, was organised in 1925 by agreement
between the Canadian National Railways and members of the
Canadian Brotherhood of Railway Employees, for the purpose of
disposing of grievances or disputes which may arise respecting the
application, non-application or interpretation of agreements as
to wages or working conditions. The Board is composed of eight
members, four of whom are selected by the railway management and
four by the employees concerned. A majority vote of the full
Board is necessary for a decision which is binding upon the parties.
Here, also, if no decision is reached provision is made for the
appointment of an arbitrator.
These boards have done excellent work, and have been very
useful in maintaining a harmonious relationship between employees
and the railways.
In the case of shop crafts' employees the arrangement in effect for
handling disputes is that the joint write up of the general manager
and general chairman is sent to the Railway Association; the
secretary of the Association notifies the Sub-Committee on Wages
and Working Conditions, and also advises the president and secretary of Division No. 4, and a meeting is arranged through a board
consisting of ten members—five being labour organisation
representatives and five being railway representatives.
In either case, whether the matter is referred to the Canadian
Railway Board of Adjustment No. 1, or to the Railway Association
of Canada's Sub-Committee, the parties to the dispute are advised
of the date the dispute will be heard. Both parties appear before the
Board of which they are a party, and, in addition to the written
statements, submit oral arguments in support of their respective
contentions. The Board asks of each party such questions as, in its

INDUSTRIAL RELATIONS

opinion, will help to clarify the point at issue, after which the parties
to the dispute retire and the Board considers the case and arrives
at a decision, which is made unanimous once adopted.
On the whole, the results obtained through this procedure have
been very satisfactory.
Boards of Conciliation
If agreement cannot be reached as a result of direct negotiation
between the railway companies and the employees, a Board of
Conciliation may be set up under the Industrial Disputes Investigation Act. This Board is an ad hoc body consisting of three members, one appointed on the recommendation of the workpeople
involved in the dispute, one on the recommendation of the employers, and a chairman appointed on the recommendation of the
other two members. The Minister of Labour makes any
appointments necessitated by failure to recommend.
The functions of the Board are first of all conciliation. If
conciliation fails the Board's findings are published. These findings
set forth the facts and circumstances of the dispute, including the
causes, and the Board's recommendations for the settlement of the
dispute, these latter dealing with each item and stating in plain
terms " what, in the Board's opinion, ought or ought not to be
done by the respective parties concerned ". The parties to a dispute
may agree to be bound by the recommendation of the Board " in the
same manner as parties are bound upon an award made pursuant
to a reference to arbitration on the order of a court of record ". The
recommendation thereupon becomes enforceable on the application
of either party.
The most characteristic feature of the Industrial Disputes
Investigation Act consists of the provisions enforcing a waiting
period before a strike or lock-out is lawful in industries of public
interest. Section 56 of the Act lays down that " it shall be unlawful
for any employer to declare or cause a lock-out, or for any employee
to go on strike on account of any dispute prior to or during the
reference of such dispute to a Board of Conciliation and Investigation ", while section 57 adds that " employers and employees
shall give at least thirty days' notice of an intended or desired
change affecting conditions of employment with respect to wages
or hours; and in the event of such intended or desired change
resulting in dispute, it shall be unlawful for the employer to make
effective a proposed change in wages or hours, or for the employees

THE CANADIAN NATIONAL RAILWAYS

t o go on strike until the dispute has been finally dealt with by a
Board ". In both cases the penalty for infringement is a fine, for
employers of not less t h a n $100 nor more than $1,000 for each day
or part of a day t h a t any illegal lock-out or change exists, for
employees of not less than $10 nor more than $50 for each day or
part of a day t h a t such employee is on strike.
Precautions are taken that these provisions shall not be used for
purely obstructionist purposes. It is laid down that a Board, if its
creation is approved, must be established within fifteen days of
application. It is further provided that if, in the opinion of a Board,
either party uses the section relating to the advance notification
of changes in wages or hours, or any other provision of the Act,
for the purpose of " unjustly maintaining a given condition of
affairs through delay ", such party shall be guilty of offence and
liable to the same penalties as are provided in the case of an illegal
strike or lock-out.
In 1931, the Canadian National Railways, together with the
Canadian Pacific Railway, applied for the establishment of a Board
of Conciliation under this Act in connection with a proposed wage
reduction for running trades and telegraphers. The Board made a
majority award on 30 November 1931 in favour of'a 10 per cent.
reduction in wages for these categories of employees.
The Joint Co-operative Plan
As the most distinctive feature of industrial relations on the
Canadian National Railway is the so-called " Joint Co-operative
Plan ", it will be necessary to describe in some detail not only its
constitution but also its origin and development.
When the Grand Trunk Railway Company had been included as
part of the Canadian National Railway system, it was employing
a bonus plan of remunerating its shop workers at all its major repair
points both in Canada and the United States. Opinion developed
on the Canadian National Railway system, especially among
officials, in favour of inaugurating the bonus method of payment on
other sections of the Company's lines, a proposal which at once gave
rise to vigorous controversy. Though many formerly in the employment of the Grand Trunk Railway Company were satisfied
with the operation of the bonus plan, it soon became evident to
officers of the shop craft organisations that hostility would be
shown to its wider extension by a large proportion of workers on the
system as a whole. In view of this fact, Mr. J. A. McClelland, a

INDUSTRIAL RELATIONS

vice-president in Canada of the International Association of
Machinists, considered a move to establish some form of co-operation
between management and men on the Canadian National Railway
system which might stop, or at least discourage, the spread of the
bonus method of payment. He communicated with Mr. William
H. Johnston, President of the International Association of Machinists, seeking to learn more of the objectives of co-operation
as it was being advocated by him. He also sketched for Sir Henry
W. Thornton, then President of the Company, what he thought
it might mean if applied in the mechanical department of the
Canadian National Railway Company.
Sir Henry Thornton
foresaw the advantages which the introduction of co-operation
might have in establishing improved industrial relations on the
great railway that had recently come under his supervision.
Early in the summer of 1923 he wrote to Mr. William H. Johnston
stating that he would be glad to discuss the co-operative movement
with him if he would make a trip to Montreal. President Johnston
could not go at that time, and for six months the matter was in
abeyance. In December Mr. McClelland again talked with Sir Henry
Thornton about co-operation and received his assurance that he
was willing to give it a trial on the lines of the Canadian National
Railway Company.
On 11 January 1924, a meeting of general managers, mechanical
superintendents, and other officers of the Canadian National
Railway System was held in Montreal, at which Mr. William
H. Johnston and Captain Beyer were present. The meeting was
inclined toward an acceptance of a plan of co-operation, but before
its conclusion agreed that no steps could be taken to introduce
it on the railway until the approval of each of the shop crafts
involved had been secured. With this in mind the Railway Employees' Department of the American Federation of Labour
arranged to have the claims of co-operation presented before the
fifth annual convention of Division No. 4 when it assembled at
Montreal on 24 March. Mr. B. M. Jewell, president of the department, Mr. William H. Johnston and Captain Beyer attended the
convention, and early in its proceedings delivered addresses dealing
with the co-operative movement from almost every angle. A special
committee of fifteen members was then appointed to study the
issues which the adoption of a plan of co-operation would present
to the shop crafts in Canada. In a report submitted on March 28,
this committee advised that Division No. 4 go on record as endorsing the principle of co-operation, but that each system federation

THE CANADIAN NATIONAL BAILWAYS

adhering to it should decide, from the standpoint of labour, whether
it was ready to have a plan put into effect on the lines under
its jurisdiction. The policy might be followed of first agreeing with
management upon one particular shop where the plan would be
given a fair test. No action, however, should be taken before the
membership at t h a t point had signified its approval. The report
was finally adopted on a roll-call ballot of the convention by
85 votes to 29.
Endorsement of co-operation by Division No. 4 had cleared the
way for its acceptance, so far as labour was concerned, on any
Canadian railway, but only on the Canadian National Railway
system was management willing to go along with the movement.
Conversations between officers of the Canadian National Railway
Company and its System Federation No. 11 continued throughout
the remainder of the year. In the interval Captain Beyer made
a personal survey of the leading repair points on the system in
Canada and prepared a report which he submitted to the Company
for consideration on August 23. Finally, the shop at Moncton, New
Brunswick, a point on the former Canadian Government Railways,
was selected as an appropriate spot to launch the movement.
Industrial relations had always been harmonious at Moncton, but
nevertheless production was at a relatively low ebb. After a
sanctioning vote of the local crafts had been taken, the first joint
co-operative meeting on the Canadian National Railway system
was held at Moncton in January 1925. The plan was next extended
to the locomotive repair shop at Stratford, Ontario, and thereafter
by degrees to other of its major shops in Canada. The sentiment
of the men at the different points was generally discovered through
what to Canadian railroaders is known as " caboose talk " (gossip
in the guard's van), the tenor of which would indicate when a
favourable vote might be secured and the plan successfully inaugurated.
As early as August 1925 the co-operative movement was carried
to the western region of the Canadian National Railway system,
but only at first to its Fort Rouge and Transcona shops at or near
Winnipeg, Manitoba. In consequence of the spread of One Big
Union doctrines in western Canada after the war, leading to the
famous general strike at Winnipeg in 1919, the shop crafts affiliated
with the American Federation of Labour in t h a t area had been
reduced to skeleton proportions. ' ' One Big Union ' ' advocates showed
their dislike for co-operation, when its introduction was discussed,
by calling it " the Canadian National slave pact ". However, as

INDUSTRIAL RELATIONS

the management of the railroad entered into co-operative relations
only with representatives of the international craft unions, a
change was gradually effected in the labour situation at its Winnipeg
shops. All the craft unions began to experience a marked accession
of strength after the inception of co-operation. In January 1927
management and men agreed upon a constitution for the joint
co-operative plan, which according to orders issued in April of
the same year was to be extended, if locally acceptable, to all
engine-houses and smaller car repair points in eastern Canada
where approximately fifty or more men were employed. Following
a visit paid by Captain Beyer to Battle Creek, Michigan, in 1926,
the plan was introduced at that station and then transmitted by
stages to other points on the Grand Trunk Western Lines and to
the strip of mileage belonging to the Canadian National Railway
Company in New England. In 1926 and 1927 provision was made
for the selection of a regional committee in each of the railways'
three regions located mainly in Canada, and for the formation of
a joint system committee \
In 1930 the principles of the joint co-operative plan were extended
to the Maintenance of Way and Structures Department of the
system. When this extension was first contemplated, it was
anticipated that there might be some difficulty in securing the full
co-operation of forces so widely scattered, but under the wise
planning of the Brotherhood's consulting engineer and the wholehearted support of the Railway Executives expected difficulties
melted away or were overcome. In order that the plan could be
successfully launched it was decided to make a survey of the
field and a representative of the Brotherhood and the Railway
was selected for this work. As a result of this survey, covering
22,000 miles of roadway from coast to coast, it was decided that
the plan was practicable and desirable and a report was submitted
outlining the organisation and plan for putting the movement into
operation.
From first to last the co-operative plan received the strongest
support from Sir Henry Thornton. It could not, of course, have
been introduced on the railway without his consent. And, once
introduced, he continued personally to follow its development, or
rather to stimulate its development, with the greatest interest and
the most active sympathy. His attitude to the plan at its inception
1

L. A. WOOD : Union-Management Co-operation on the Railroads, p. 96. New
Haven, 1931.

THE CANADIAN NATIONAL RAILWAYS

was clearly stated by him at the Convention of the C.N.R. System
Federation in 1928.
" I am satisfied ", he said, " that if both parties to the plan do their
part it can be made a success, so that the employees and the people
of Canada will profit by the effort. It opens up a large field, and if
this plan proves a success in the shops where it is being tried out, then
there is no reason why it could not be extended to all branches of the
railway. I am hopeful that we will continue our activities in this
direction, as we all have, including all the people of Canada, a stake
in the property. I desire to thank the officers for their loyalty to the
plan, and I can say that in the last three years there has been, first, a
spirit of confidence in one another built up, second, pride amongst our men
in the Canadian National Railways, third, constantly improved service.
I have faith in co-operation, and can assure you that it is our job to
give full measure in our service, and on this we can be assured rests the
foundations of our success. We stand committed to the principle of
co-operation."
Sir Henry Thornton continued his personal interest in the working
of the co-operative plan until his retirement in 1932, and since then
Mr. S. J. Hungerford has continued to support it. Mr. Hungerford
was appointed President by the Trustees on 31 January 1934. In
spite of the economic depression both the management and the
men retain their confidence in the plan.
Co-operation in the Railway

Workshops

The joint co-operative plan was first introduced, as we have
seen, in the railway workshops. The constitution of the plan,
adopted in 1927, lays down that Joint Co-operative Committees
shall be appointed at each large motive power and car repair shop,
and also at locomotive roundhouses and car repair points, including
repair tracks, where approximately fifty or more men are employed.
Before giving a detailed description of the functioning of the
plan, it will be useful to explain briefly the nature of the work
undertaken in the workshops and repair points.
From the operating standpoint, railroads in Canada keep the
train car and motive power sections of the mechanical department
carefully apart. The two sections, however, may lie contiguous
to one another on a single strip of railroad property where certain
plant facilities may be used in common. If both are combined
for administrative purposes, it is usual railroad practice to allow
precedence to the motive power section. The labour force of each
section is always considered as a separate entity, and should
workers of one be employed by the other, it becomes a matter

INDUSTRIAL RELATIONS

of entry in the bookkeeping records. Maintenance of train car
equipment of the railroads involves a recognition of three classes
of repairs: running or inspection, light and heavy. Running or
inspection repairs are mostly performed when trains are halted
according to timetable, thereby avoiding car detention. But in
the case of light and heavy repairs cars are cut from the trains,
and held out of service. Maintenance operations on cars cut from
trains lasting from approximately one to twenty man-hours are
ordinarily classified as light repairs. Rip or repair tracks, varying
in number with the comparative importance of the station, are
placed at the disposal of these cars, and a force of experienced
carmen and helpers begin to repair them. Employment here is
on the straight eight-hour basis. Occasionally all or a portion
of the day shift of a yard gang, if near at hand and unoccupied, may
be requisitioned for work on the rip tracks.
Under a light repair schedule, time is permitted among other
things for the jacking up of cars, the removal of trucks, and, if
necessary, the mounting of new wheels; for the straightening of
parts of steel structure by means of the blowtorch ; and for important
repairs to be made to air brakes and other safety appliances.
Heavy repairs to train cars are rated as consuming more than
twenty man-hours of applied labour. Although some heavy
repairs are done on rip tracks, the major proportion are completed
within shops or on nearby shop tracks, equipped with facilities for
the purpose.
Locomotives are repaired at power terminals, known as enginehouses or roundhouses, where they are taken after they have
finished a trip or day's work, or they are repaired at special shops
of one description or another. When a locomotive is brought in
from a run, its condition is reported by the engineer in charge who
has noted any faults in performance, and it is then placed on a
pit for regular inspection. All minor defects that may be remedied
quickly are attended to before the locomotive is despatched on
its next run. Should something more serious be disclosed in its
condition, it may be detained for repairs beyond the scheduled hour
for departure.
As a general rule the facilities provided at locomotive and car
repair shops in Canada do not differ very materially from those
in the shops operated by the railways in Great Britain, except in
so far as is necessary for the handling of the much larger and heavier
locomotives and cars. Main locomotive shops equipped for heavy
repairs to and rebuilding of locomotives on the Canadian National

THE CANADIAN NATIONAL RAILWAYS

are located at Moncton, Quebec, Montreal, Stratford and Winnipeg.
Car shops are located at Moncton, Quebec, Montreal, Toronto,
London and Winnipeg. On the Grand Trunk Western the locomotive shop is located at Battle Creek and the car shop at Port
Huron. Both the locomotive and car shops for the Central Vermont
Railway and New England lines are located at St. Albans. The
total staffs of the main shops as at January 1933 amounted to 7,594.
In addition there are 224 roundhouses and 198 car repair points
reaching from the Atlantic to the Pacific and from Portland to
Chicago, the total staffs of which amount to 11,172 making a total
of 18,766 employees in the department.
Constitution of the Joint Committee
There are three grades of joint committees, the shops committees,
the regional committees and the system committees.
The Constitution lays down, in the case of shops committees,
that at major shops the committees shall consist of one representative from each shop craft, appointed by the respective crafts,
the members of this committee to act for a period of one year
from the date of their appointment. At the larger roundhouses
and car repair points the committee shall consist of three representatives of the employees. At smaller points the committee shall
consist of two representatives of the employees. Should the craft
representative be removed from the locality or service, the craft
affected shall appoint a representative from its membership to
fulfil the term of office. The Railway Company shall also appoint
an equal number of representatives from the local superintendent's
staff, including one representative from the Stores Department.
The local shop superintendent or head of the department shall act
as chairman at all meetings. In case of emergency it shall be the
privilege of the committee to call on any employee to attend a
meeting when necessary.
A regional committee shall be appointed consisting of the
executive officers of each shop craft. An equal number of representatives shall be appointed by the General Manager on the respective
regions to represent the Company. The Chairman to be appointed
by General Manager.
A system committee shall consist of officers appointed by the
vice-president of operation of the Railway Company, and the following representatives of the employees: Chairman of Division No. 4;
Chairman of Canadian National System Federation No. 11 ; Secretary

INDUSTRIAL RELATIONS

of Canadian National System Federation No. 11, and the federation
representative from any region or craft not directly represented.
This committee to have the privilege of calling in any executive
officer of the company or any representative of the men mutually
desired.
The joint committee at each major locomotive and car repair
shop shall meet twice each month, on the first and third Tuesdays.
The joint committee at all roundhouses and car repair points shall
meet once each month, on the first Tuesday. The regional committee shall meet, at the call of the chairman, once each year. It shall
be the privilege of the chairman of the regional committee or system
committee to call an additional meeting at any time. It is left
within the jurisdiction of the regional committee to reduce the
meetings of all major shops from two meetings per month to one,
if such action is felt desirable.
The scope of the work of the joint committees is clearly laid
down in their Constitution:
" The committee shall confine their recommendations to such subjects
as apply to the advancement of the industry under the jurisdiction of
the chairman, or to the welfare of the employees under his jurisdiction
and to the betterment of the railway's service to the public."
And it is further explicitly specified that no subject which would
affect wage agreements already in operation is to be considered
by the committees. The committees confine their recommendations
to the advancement of the industry, the welfare of the workers,
and the betterment of the railway's service to the public. The
committees do not deal with grievances which arise about working
conditions established by agreement between the trade unions and
management. The committees are therefore not concerned with
the thorny problems of distribution, or other matters of conflict.
They deal solely with questions of constructive co-operation, in
which the interests of management and workers are largely similar.
The regular association on terms of equality of representatives of
the management and the workers in constructive co-operation can,
however, hardly fail to provide a better basis for understanding
and agreements between the management and the trade unions
during bargaining over wages and other questions of distribution.
Operation of the Joint

Committees

Careful minutes are kept of the proceedings at all committee
meetings, and elaborate statistics are prepared on the results of

THE CANADIAN NATIONAL RAILWAYS

the discussions. The following table gives a summary of the suggestions offered at all co-operative committee meetings on the
system from 1928 to 1933. It will be noted that the great majority
of the suggestions were offered by employees.
SUMMARY OF SUGGESTIONS OFFERED AT CO-OPERATIVE

COMMITTEE MEETINGS, 1928-1933
Pending at
31 December 1932

Number
dropped

Brought up by

Total
suggestions

Number
accepted

1928
1929
1930
1931
1932
1933

2,431
2,430
2,240
2,919
1,747
1,374

2,018
2,070
1,776
2,414
1,393
1,046

413
356
456
473
178
145

4
8
32
176
183

393
436
503
681
397
334

2,038
1,994
1,737
2,238
1,350
1,040

Total
Percentage

13,141

10,717
81.5

2,021
15.3

403
3.1

2,744
20.9

10,397
79.1

Year

Management

Employees

The data given below show the kind of work undertaken by
the committees. They indicate that the subjects discussed are
largely concerned with improvements in the efficiency of work.
CLASSIFICATION OF SUGGESTIONS OFFERED BY CO-OPERATIVE
COMMITTEES
1928

P r o s p . business cards, sales of
money orders, etc.
Measuring production system
Operation of co-operative plan
A p p r e n t i c e instruction
Passes, half-fare orders, etc.
Co-operation in production, improved work, p u n c t u a l i t y ,
etc.
Increase in staff, promotions
Safety and first-aid
F i r e prevention
S t a n d a r d i s i n g forces
Condition of shops and grounds,
h e a t i n g , sanitation, repairs
O u t p u t records
Development new devices, manufacture equipment
for
shop
P u r c h a s e new shop e q u i p m e n t

1929

1930

1931

1932

1933

5
—
14
2
4

2
3
14
4
2

16
1
19
3
9

44
3
11
1
8

31
1
11
4
4

12
2
3
—
—

14
8
74
—
—

15
26
60
—
2

12
16
124
51
1

7
7
800
286
3

3
3
535
179
—

1
4
379
155
1

323
5

289
4

420
6

472
15

296
8

258
1

273
298

285
320

183
220

105
131

64
52

46
46

INDUSTRIAL RELATIONS

CLASSIFICATION OF SUGGESTIONS OFFERED BY CO-OPERATIVE

COMMITTEES
1928

Care of tools and machineryRepairs to machinery
Defective materials, purchase
materials
Manufacturing material instead of purchasing
Economy, reclaiming material
Storage and handling materials
Standardising materials
Shop methods and practices
Alteration to standard designs
for locos, and cars
Maintenance locos, and cars
Lunch rooms, lockers, etc.
Miscellaneous
Total

(continued)
1929

1930

1931

1932

1933

45
437

41
434

30
238

49
157

22
83

28
106

128

28
77
172
6
292

24
65
160
13
381

36
63
143
4
320

59
114
53

46
79
44
44

79
96
43
48

29
93
83
1
336
63
92
34
35

31
46
43
3
177
41
43
16
23

2,431

2,430

2,240

2,919

1,747

15
45
22
9
139
10
53
6
10
1,374

The constructive work of the committees may be illustrated by
examples taken from the minutes of various meetings. A number
of the decisions deal with improvements in working conditions,
including safety measures, which contribute both to the convenience
and comfort of the workers and to an increase in their output.
Thus, improvements in lighting the workshop and the avoidance
of excessive heat in summer or cold in winter form the subject of
various decisions. Provision of adequate ventilation to prevent
nuisance from fumes, the supply of goggles to workers grinding
tools, and the erection of screens to protect the eyesight of
workers employed near electric welding apparatus are among other
recommendations made for improving workshop conditions. A
number of subjects concern greater convenience in the location
of machinery, material and tools so as to eliminate unnecessary
walking for the men or movements of the parts of engines under
repair.
Many of the recommendations on organisation, methods of work,
and economy are highly technical. Mention may be made here
of one or two of the less technical decisions. Thus the employees'
representatives on one of the committees suggested an improvement
in the method of building up worn pistons by bronze welding.
Another suggestion made by an employee was that the deck
planking used between the tank and frame on some of the older

THE CANADIAN NATIONAL RAILWAYS

tenders be spaced at wider intervals, resulting in an economy of
timber. It was estimated that the saving would amount to over
$750.00 per annum. One of the employees' representatiyes noticed
that many engines brought for repair had nuts which were badly
damaged, apparently by being loosened or tightened by chisels
instead of proper tools when the engine was away from the shop.
In consequence many of these nuts, which cost from $3.50 to $4.00
each, had to be scrapped. This meant considerable loss to the
Company. The committee before which the question was brought
decided to bring the matter to the attention of those concerned.
This resulted in a great improvement.
Examples of this kind taken from the records of the committee
meetings could be given by the hundred to show the value of the
co-operative plan in leading to improved output and reduced costs
by better organisation of work and elimination of waste of time
and materials. The plan gives the workers an active interest in
the organisation of their work and enables them to share with the
management in considering the best methods of performing the
tasks on which they are jointly engaged. Some of the men's
suggestions would no doubt be made by individual workmen to
foremen in factories and workshops which have not established
a plan of organised co-operation. But the Canadian National
Railways Co-operative Plan provides a systematic channel for
co-operation and ensures that each suggestion shall be given adequate
consideration. The individual worker takes his suggestions readily
to his union representative on the co-operation committee, or it
may be first brought forward and given preliminary consideration at a
meeting of the trade union branch. Often problems of workshop
organisation and technique form the subjects of lively discussions
at the trade union meetings. The workers' representatives therefore have the benefit of the experience and advice of all the members.
It might be argued that most of the men's suggestions could have
been made by the foremen. This neglects the fact that the individual workmen in performing their tasks are more intimately
associated with their work, and improved methods may occur to
them which might easily escape the notice of foremen. The plan,
therefore, usefully supplements the foremen's work.
The plan also gives the management an opportunity to submit
for consideration changes in organisation and methods of work
which it proposes to make. The workers are thus able to participate
in a preliminary discussion of the proposals and to share in determining the best methods of introducing and applying the new
2

INDUSTRIAL RELATIONS

measures. This has the value of avoiding the resistance to sudden
changes in long-established practices or arrangements which might
be encountered if the workers had not been given an opportunity
to express their views or to co-operate in the introduction of the
changes. The workers thus have the satisfaction not only of using
their experience for constructive purposes, but also of working
under a system in which autocracy has largely given place to
co-operation. Both men and management are convinced of the
value of the plan.
The workers naturally desire to share in the material as well
as in the psychological consequences of co-operation. Among
material benefits are improved workshop conditions and higher
earnings. The financial value of the Co-operative Plan to t h e
Canadian National Railways system is difficult to measure in
dollars and cents. However, as a consequence of the benefit»
received, the Company was able to introduce in 1928 the system
of one week's holiday with pay each year for all workers with two or
more years' service, i.e. for a total of approximately 16,000 menA further benefit both from the point of view of the Company
and of the men is to be found in the stabilisation of employment.
Stabilisation of employment in railroad service, especially in the
maintenance branches, was considered one of the most important
steps in the programme of the co-operative plan. There is perhaps
no greater single factor militating against a wholesome interest
on the part of industrial workers in matters of basic concern
to management than the fear of working themselves out of a job.
If practical steps can be taken to allay this fear and to assure every
employee t h a t everything possible is being done to keep him
employed, then the greatest menace to co-operation between workers
and management will be removed, and the Company, as well as
the employees, will share in the benefits of stabilised employment.
In fact, the company's benefit from this source will be twofold.
In the first place, steady employment means steadier production,
and secondly, it will bring about more efficient plant utilisation.
Nothing affects the overall performance of any organisation of
railroadmen, whether they be employed in the office or in t h e
running or maintenance service, so much as repeated increasesand decreases in staff. Also workers in an environment of unstable
employment cannot help but t r y to make the job last as long as
possible ; not only do they do this instinctively, but they worry
about what they will do for a living when the job comeg to an end.
Consequently, the morale of the organisation is at a low level.

THE CANADIAN NATIONAL RAILWAYS

Steady employment brings about a more wholesome atmosphere,
which, though perhaps intangible, is as potent a factor in good
service, high-grade workmanship, and efficient shop operation as
any other factor.
Co-operation on the Permanent Way
It was in 1930, as we have seen, that the principles of the Joint
Co-operative Plan were extended to the Maintenance of Way and
Structures Department of the system. There are over 20,000
workmen employed in this Department, and the extension to them
of the committee system presented special difficulties owing to the
fact that they are scattered in small groups over the length and
breadth of the system.
The Constitution of the Joint Committees
Joint committees were established similar to those in the workshops, and it was provided that there should be one System General
Committee, four Regional Committees, ten District Committees
and forty Divisional Committees.
In addition to the regular members of the committee the higher
railway officers, superintendents, general superintendents, and
general managers as well as executive officers of the Brotherhood
of Railway Maintenance of Way Employees frequently attended
these meetings as observers. In order to expedite consideration
of matters with a regional or system application, a small system
and regional executive committee was formed to meet when
required upon the call of the Chairman.
It was considered advisable, in initiating the Divisional Committees, to start with one of the most important divisions on each
Region and after these committees were working smoothly to
extend the movement to all Divisions. This was done and worked
out to the general advantage, as observers from the districts and
regions attended and they became familiar with the proceedings
in advance of the general expansion over all divisions.
It was obvious that representatives of the employees who are
regularly employed should have some means of contact with the
men in the territory they represent. An effective method of
allowing the committee member who is an employee two days'
leave of absence with pay and transportation in advance of the
regular time of meeting so that he could get in touch and confer
with the maintenance gangs was devised.

INDUSTRIAL RELATIONS

No formal method of procedure for the various committees was
laid down, as it was intended t h a t any project t h a t would contribute
to the mutual welfare and helpfulness could be discussed. Criticisms and fault-finding were to have no place in the discussions.
Grievances, wages and working conditions were to be dealt with,
as they always had been in keeping with the regular wage agreements
between the Railway and the Brotherhood of Railway Maintenance
of Way Employees.
It was understood that there would be no limit to the range of
subjects which might be offered for consideration so long as they
aimed at mutual helpfulness. A partial list of subjects which might
be considered was offered as follows :
(1) Proper tools and equipment; (2) care and distribution of tools;
(3) delivery and care of materials; (4) improving methods of performing
work; (5) improving standard facilities; (6) maintenance of way rules;
(7) new business for the Railway; (8) building up of working forces;
(9) improving working conditions; (10) living and housing conditions;
(11) education and training of employees; (12) accident prevention.
Operation of the Committees
The Co-operative Movement on the Permanent Way has been
working since June 1930 over the entire system and in the view of
the Railway has been an unqualified success.
The following tables give a summary of the suggestions offered at
all co-operative meetings on the system from 1930 to 1933:
CLASSIFICATION

SUGGESTIONS

OFFERED

CO-OPERATIVE

COMMITTEES
1930

Improving working conditions
Improving housing conditions
Care and distribution of material
Improvement and care of motor, hand and
push cars
Methods of performing work
Accident prevention
Maintenance of way rules
New business for the railroad
Building up working forces
Education and training of employees
Greater regularity of employment
Betterments to appliances and work equipment
Miscellaneous
Total

1931

1932

1933

1,263
906
414

681
666
290

454
381
205

295
249
129

286
394
106
35
39
65
30
91

246
409
137
26
30
26
31
56

205
215
135
24
15
16
16
18

237
151

286
107

173
67

165
152
71
8
6
16
9
4
117
34

2,991 1,924

1,255

4,017

THE CANADIAN NATIONAL RAILWAYS

SUMMARY OF SUGGESTIONS OFFERED AT CO-OPERATIVE COMMITTEE

MEETINGS, 1930-1933

Year

Total
Number Number
sugges- accepted
dropped
tions i

1930
1931
1932
1933

4,017
3,869
2,909
2,138

2,071
1,928
1,393
1,074

1,068
956
635
554

Number
deferred

Number
pending

428
360
124

878
557
523
386

Brought up by
Manage- Employees
ment
418
735
590
373

3,599
2,256
1,334
882

i Including those carried over from previous year as " pending " or " deferred ".

It is difficult to pick out from the many benefits and
improvements that have resulted from the co-operative meetings
one that stands out above the others, but it would seem that the
best and most fundamental achievement as the result of these
" Round Table Conferences " is the birth of a better understanding
and more kindly feeling between the railway officers and employees.
Barriers have been removed, petty grievances have been forgotten
and a consistent co-operative inclination manifested which has been
the means of putting into effect many suggestions for mutual welfare.
In analysing the suggestions that have been brought forward by
the employees through the committeemen at the various meetings,
the most numerous and frequent were in regard to improving working conditions so that a better job could be done for the, Railway.
Standard tools have been changed, remodelled and improved;
practices and policies affecting the daily work were inaugurated
with mutual benefit. So many suggestions were obviously an
improvement that they were immediately adopted, while others
were placed under investigation by experts, which resulted in
changes and an increased efficiency in service.
The second most frequently discussed suggestion was in regard to
housing conditions. It is only natural that the thoughts of the
worker should turn to the living and housing conditions of himself
and- his family. It is obvious that the employees or their families
who are suffering or uncomfortable in their homes, boarding cars,
bunk and toolhouses cannot give the best service during their
working hours. This feature was recognised by the Railway
as an obligation, and concerted and systematic efforts are being
made towards removing petty annoyances induced by discomfort
in living and recreation quarters.
The third in importance of the suggestions relates to the

INDUSTRIAL RELATIONS

distribution and care of materials. These discussions took a very
practical form, so that considerable improvement has been made
in requisitioning, recording and storing materials. Lessons in
avoiding waste are being introduced with object lessons in unit
costs of some of the smaller materials with the result that the
interest in conserving materials is stimulated.
Climate and snowfall have so much effect upon the ordinary
maintenance activities in Canada that it is most difficult to find
ways or work by which the usual working season can be extended
for the regular employees. It is obvious, therefore, owing to the
short season in which maintenance work may be satisfactorily
performed, that there will be large numbers of regular summer men
who will be furloughed in the winter months. How best to take care
of the men who are employed only during the summer months has
been one of the most important subjects taken up by the
Co-operative Committees. Investigations as to economy and
practicability of using a regular number of trackmen all the year
instead of the usual variation in summer and winter forces have
shown that this is feasible in some divisions and will be tried.
Bridge and building maintenance has been rearranged so as to
prolong the working season by deferring such work as can be
satisfactorily performed in the winter months, and on some divisions
the " B & B " work has been rearranged so that the same number
of men are now employed all the year round.
Taking care of the unemployed during the periods of regular
seasonal reductions of the maintenance forces has been actively
taken up by the Committees. One of the results has been that the
employing officers have earnestly accepted this matter as a part
of their responsibilities, and in consequence a regular and systematic
method of recording and classifying applications for further
employment has been put into effect on each division. An identification card is furnished to each furloughed employee, and an application form is filled out by those desiring work and filed in each
superintendent's office. Contractors doing work for the Railway
are requested to give preference to the railwaymen out of work,
also the Governments, cities and municipalities are canvassed for
jobs. This plan has had a most beneficial result in providing
work for those looking for it.
The growth of modern transportation, increase in wheel loading
and higher speed of trains has brought about the need for greater
refinement in track maintenance. In consequence the education
and training of the track forces to a higher standard has been

THE CANADIAN NATIONAL RAILWAYS

undertaken. A small committee was selected and the services of an
expert engineer obtained to make a survey of the field, investigate
methods in use on other railways and devise a practical plan to
meet the requirements. In addition, a tentative plan for the training
of trackmen has been initiated with considerable success. One
sectionman is carefully selected from each roadmaster's territory
on the Division and placed with selected foremen in turn one month
with each, then for six weeks or a month successively with yard
gangs and extra gangs. At the end of the season he undergoes an
examination and is rated for promotion whenever a vacancy is open.
This plan is providing qualified men for the position of foreman.
Monthly educational letters on matters pertaining to daily work
of the Maintenance of Way forces are issued. .
HOURS AND WAGES

The eight-hour day is in operation on the Canadian National
Railways. During the depression, hours of work have been reduced,
wherever practicable, in preference to dismissing staff. It was
considered that wherever such a course was compatible with the
maintenance of efficiency, as large a number of men as possible
should be retained in employment, with reduction of hours and
reduction of wages. The depression, however, has been so severe
that large numbers of men have had to be laid off. The following
table gives details with regard to the reduction of the personnel
and the reduction of the payroll from 1931 to 1933.
PERSONNEL AND PAYROLL IN 1 9 3 1 , 1932 AND
1932

1931
Number
Officers and staff
assistants
Clerical and general
employees
Maintenance of way
and structures employees
Maintenance
of
equipment
employees
Transportation employees
Train and engine
employees
Telegraph employees
E x p r e s s employees
Less : Charged
other accounts
Operating labour

1933

Amount

Number

1933

Amount

Number

Amount
8

S
854

4,892,246

744

3,908,985

629

3,201,603

14,571

22,188,337

12,530

18.092,786

11,440

16,545,905

21,621

24,992,559

17.733

1 9 , ; ' ° «48

17,055

18,240,586

25,758

35,422,263

20,607

24,170,561

18,616

21,682,327

11,079

17,080,824

9,686

13,667,610

8,829

12,040,797

9,970
2,964
2,382

20,655,535
3,318,159
3,491,324

9,369
2,466
2,221

17,905,978
2,931,462
3,083,418

76,616

99,692,883

70,625

89,631,238

11,623
3,290
2,620

27,059,781
4,021,724
4,126,896

91,416

126,950,842

7,218,725

12,833,788

6,000,839

INDUSTRIAL RELATIONS

Some of the most important measures taken in respect of hours
and wages in 1931 and 1932 were as follows:
As a measure of economy, main repair shops were closed for one
week during the months of July and August 1931, and from
1 September a reduction of 10 per cent, was made in working
hours, reducing the hours to an average of thirty-six instead of
forty per week. During the year a time reduction plan of onehalf day per week without pay was, by mutual agreement, applied
to the following forces: clerks and certain other classes covered
by schedule; non-schedule clerical forces (including all monthly
rated employees earning less than $4,000 per annum) ; maintenance
of way and bridge and building forces: telegraph department
employees; signal department employees. From 1 August, following a resolution of the Board of Directors, a reduction of 10 per cent.
was made in salaries of all officers and employees earning $4,000 or
over per annum. From 1 December, a 10 per cent, reduction in the
remuneration of the running trades and telegraphers was made.
This 10 per cent, deduction for the running trades and railway
telegraphers was continued throughout 1932. During the year
negotiations were carried on with various labour organisations
leading to agreements for a reduction of 10 per cent, in the basic
rate of wages on Canadian lines. On 1 May 1932, the reduced
time plan of half-day per week applicable to clerical forces, maintenance of way employees and other miscellaneous employees was
cancelled, and the rates of pay of these employees made subject
to a reduction of 10 per cent. On the United States lines of the
Canadian National as on all railroads in the United States the Chicago
agreement was put into effect on 1 February 1932. This agreement
called for a reduction of 10 per cent, in the wages of all railway
employees. In 1932, a survey was made of all salaried positions
paying $2,700 or more per year. A reduced salary scale was put
into force, the percentage reduction being heavier in the higher
paid positions. In addition, the reduced salaries were further
made subject to a 5 per cent, deduction.
PENSIONS AND PROVIDENT FUND

Owing to the fact that the C.N.R. is the resultant of the grouping
of previously independent railway companies, it has in operation
three separate pensions schemes, as well as a provident fund,
but two of the pensions schemes are now closed to further entrants.
The C.N.R. is proud of the fact that it holds two records in the

THE CANADIAN NATIONAL RAILWAYS

matter of pensions and provident funds, for one of the schemes
(the Grand Trunk Superannuation, established in 1874) was the
first railway pensions scheme to be formed in America, and another
(the Grand Trunk Railway Insurance and Provident Society
established in 1885) was the first railway employees' insurance
society in America.
Canadian National Railways

Pension Act

The Canadian National Railways Pension Act of 1929 set up a
system of non-contributory pensions. The Pension Committee
consists of nine members, seven of whom are officers of the Company,
and two members from the ranks of officers of the recognised labour
organisations on the Canadian National Railways. It is intended
t h a t all employees shall be retired on reaching the age of 65 years.
This may be varied by Pension Committee on recommendation of
Heads of Departments in certain cases. No pension is to be at
a lower rate than §25.00 per month. No person whose age upon
entry to the service exceeds fifty years is eligible for pension.
Pensions are calculated at the rate of one per cent, for each year of
service on the highest average rate of the employee's wages or pay
during any ten consecutive years of his service, the calculation to be
made on the gross amount from time to time credited to the employee
on the payrolls of the Company without deduction of any kind.
Pensions may be granted on retirement in the following cases:
(a) To an employee retiring at the age of sixty-five or over, with
fifteen or more years' service to his credit.
(b) To an employee of sixty and under sixty-five years with twenty
or more years' service retired by reason of permanent physical
or mental disability on certificate of Company's Chief Medical
Officer that employee is unfitted to follow his usual or other
suitable employment in the Company's service.
(c) To an employee who after ten or more years' service becomes
incapable of continuing by reason of injuries received while
actually at work in the Company's employ, but only for so long
as his incapacity continues.
(d) To an employee of fifty years and upwards with fifteen or more
years' service who is discharged otherwise than for misconduct.
Subject to approval of the Directors the Pension Committee
may grant a pension to an employee on account of special circumstances of his particular case where on retirement he may not be
eligible under provisions specifically stated above.
These rules and regulations supersede and take the place of the
present Grand Trunk Pension Rules and Regulations and all other

INDUSTRIAL RELATIONS

pensions or existing pension rules excepting those pertaining to
the Grand Trunk Railway of Canada Superannuation and Provident
Fund Association.
Intercolonial and P.E.I. Railway
Provident Fund Act

Employees'

This Act of 1907, amended in 1913, set up a system of contributory
pensions. The Board consists of five persons, three being Chief
Officers of the Railway " appointed from time to time by the
Honourable the Minister of Railways, and one of whom, the General
Manager, shall always when present act as Chairman, the remaining
two being elected triennially by employees contributing to the
Fund ". The Fund is administered by the Minister through the
Board in accordance with the Act and with the Rules and Regulations of the Board.
The Fund is created by means of contributions by every employee
of one and a half per cent, of his regular monthly salary or wages.
This percentage is deducted each month from payrolls. The
Government contributes to the Fund, out of the gross earnings
of the Railway, an amount at least equal to total monthly contributions by employees, but not exceeding one hundred thousand
dollars in any one year, in such sum or sums as the Governor in
Council from time to time determines to be necessary for maintenance of the Fund. The Fund is vested in the Government, which
allows interest thereon at 3 per cent, per annum, which interest
is added to and forms part of the Fund. No person over 35 if
inexperienced or over forty-five if experienced in railway work
is permitted to become a member of the Fund.
The retiring rules are as follows:
(a) Those who have attained the age of seventy after being fifteen
years in service.
(b) Those who after fifteen years in service become physically or
mentally incapacitated from following their usual occupations in
the service.
(c) Those who have attained the age of sixty after being fifteen years
in service, and request to be retired '.
1
This regulation as quoted from the Act was modified in 1907, permitting
only those certified as physically or mentally unfit to retire upon request
at the age of sixty. A further modification in 1925 permits those who have
attained the age of sixty and who have had forty years' service to retire
voluntarily, this superseding a previous modification made in 1913 permitting
retirement after reaching sixty years of age and after thirty-five years of service.

THE CANADIAN NATIONAL RAILWAYS

(d) Those who are permanently disabled as a result of injuries received
whilst on duty and actually at work in the service.
(e) Those who prior to the coming into force of this Act entered
the service at such advanced age as to cause them to reach the
age of seventy before being fifteen years in the service ; provided
that on attaining the age of seventy they have been at least
ten years in the service.
The allowance paid under the Act is a monthly allowance of one
and a half per cent, of the average monthly pay received by an
employee for the eight years immediately preceding his retirement
for each year of his service and is paid monthly upon retirement
for the remainder of his life. No monthly allowance may be less
than $30.00 or more than two-thirds of the said average monthly
pay. No refund of contributions made by members is permissible
to (a) those, except as provided in the Act, who voluntarily retire
from the service, and (b) those discharged from the service for wilful
default, misconduct, negligence in performance of duties, drunkenness, fraud or dishonesty, and are not reinstated. Any employee
discharged on or after 1 April 1907 for or on account of having
been engaged in partisan work in connection with a Dominion or
Provincial election, the Board with approval of the Minister may
pay out of the Fund the whole of such employee's contribution,
but without interest. Employees discharged for any cause other
than mentioned in (b) above, after having contributed for three
or more years, may be paid out of the Fund their total contribution
but without interest.
By Order in Council P.C.1447, dated 7 August, 1929, this Fund
was closed to all new entrants, and employees not already contributors to the Fund are placed in the same category as Canadian
National Railway employees under the Canadian National Railways
Pension Act.
Grand Trunk Railway of Canada Superannuation and Provident
Fund Association
This Association was established under provisions of " The
Grand Trunk Consolidated Debenture Stock Act, 1874 ". The
Committee of Management consists of five officers of the Canadian
National Railway Company and six persons members of the Fund
resident at headquarters in Montreal, to be elected by the members.
Moneys in Fund not required for immediate application are to be
invested in such of the following ways as the Committee of Management direct: (1) Dominion Government securities; (2) Provincial

INDUSTRIAL RELATIONS

or Municipal Bonds or stock; (3) Grand Trunk Mortgage bonds or
debenture stock; (4) Grand Trunk Western Railway bonds;
(5) Mortgages on real estate in the Dominion of Canada.
Contributors include: salaried officers, clerks, passenger or
freight agents, telegraph operators, roadmasters, inspectors in any
department or foremen in mechanical department who were in the
service on 1 October 1874, and whose age at that date was 37 years
or under.
Contributions by employees to be a sum equal to 2y2 per cent.
upon actual salary to be deducted pro rata in advance from time
to time as salaries are or may become payable. At the end of each
half-year the Company contributes, out of revenues, a sum equal
to the sum which has been contributed by employees during the
same period, and such further sum as the Committee of
Management, subject to approval in writing of the Chairman for
the time being of the Board of Directors of the Canadian National
Railway Company, from time to time agree upon, not exceeding
one-half of such specified contribution.
Member after attaining the age of fifty-five years may retire and*
is entitled to an annual allowance for life equal to one-sixtieth
for each year of membership of the highest average annual salary
received by him for any ten consecutive years of membership,
not however to exceed in all forty-sixtieths of such annual salary.
No annual superannuation allowance is to exceed the sum of
$10,000 (this was made effective 6 November 1929). The original
maximum was $7,500.
If any member dies prior to superannuation, his contributions to
the Fund will be paid to his lawful heirs. If a superannuated member
dies prior to having received by way of allowance a sum equal to the
amount of his contributions during membership, the difference
between such contributions and allowance received shall be paid
to his heirs. Any contributing member, in consequence of his
services being dispensed with from any cause other than misconduct,
fraud or dishonesty, shall receive back all of his own contributions.
Members resigning also receive like treatment. Persons dismissed
for fraud, misconduct or dishonesty forfeit all contributions and are
deprived of any benefit in the Fund at the discretion of the
Committee, with the approval of the Board.
This Fund was closed to new applicants on 31 December 1907.

THE CANADIAN NATIONAL RAILWAYS

Grand Trunk

Railway

Insurance

and Provident

Society

This Society was established in 1885. It was originally
compulsory, but is now voluntary. At a cost of $1.00 for medical
examination and approximately 3 % cents per day, the Society
offers to employees within former Grand Trunk Railway lines
territory in Canada a life insurance policy of $250, payment of all
operation, hospital (public ward rates) and medical costs incurred in
connection with any sickness or accident, allowance of 50 cents
per day after the third day, for duration of disability, up to fifty-two
weeks, and life insurance coverage up to $2,000 at proportionately
higher rates.
The C.N.R. contributes to the Society an annual sum of $12,500
and pays 5 per cent, interest on its Funds.
Statistics
The following statistics with regard to the operation of the
various pensions schemes are published by the Company:
" Under the provisions of the Canadian National Railways' Pension
Act there were retired during the year 1933 495 employees. The number
deceased in 1933, who were in receipt of pension, totalled 246. Total
number receiving pension under this Act was 3,250 at the end of 1933.
" Under the provisions of the Grand Trunk Railway of Canada Superannuation and Provident Fund Association, 8 members of the staff
were retired during the year 1933. The number of members deceased
during the year was 2. The number in receipt of superannuation under
this Fund was 150 at the close of the year.
" Under the Intercolonial and Prince Edward Island Railway
Employee's Provident Fund Act there were retired during the year
216 members of the staff. The number deceased during the year who
were receiving superannuation under this Act totalled 91. The number
in receipt of superannuation from this fund totalled 1,661 at 31 December 1933."
The cost of pensions in 1933 was $3,105,264.
EDUCATION AND APPRENTICESHIP

Apprentice

Training

In 1927, the Canadian National Railway Executive Board
appointed a sub-committee to enquire into problems affecting the
education of its workers and to present a report on the subject. The
sub-committee felt bound to carry its report, in so far as it bore

INDUSTRIAL RELATIONS

upon the mechanical department, before the joint system
co-operative committee of the railroad when it assembled at
Montreal in 1928. The system committee voted approval of the
findings embodied in the report, commenting especially upon the
value of its proposal that an educational officer be appointed with
jurisdiction over the instruction of apprentices on all the Company's
lines.
While it advised a continuance of the apprentice training plan
already operative in the mechanical department of the Canadian
National Railway system, the sub-committee stressed the importance of having uniform methods of instruction at all repair points.
The educational officer whose appointment it recommended should,
it believed, be responsible for the character of the textbooks
authorised and for their revision, whenever desirable. He should
also have charge of the preparation of examination papers to be
submitted periodically to apprentices in training, and should
supervise the marking and correction of them. The report asserted
that care should be observed in working out the details of the.plan
in order that classroom instruction might be made to synchronise
effectively with practical shop training. It would be well, however,
if the policy of standardising the apprentice training plan on the
railway should be undertaken gradually, lest the programme of
apprentices already indentured should be disrupted, and textbooks
and classroom equipment needlessly scrapped that were still
serviceable.
With the object of safeguarding the interests of apprentices
enrolled at lesser repair points where classroom instruction is
impossible, it has been the practice on the Canadian National
Railway system to transfer them to larger points where they are
given technical training for a period of two years. For example,
at the Stratford, Ontario, locomotive repair shop, a certain
percentage of the apprentices come from nearby stations on the line.
The Stratford shop is of the " home guard " type, in which 80 per
cent, of the workers are property owners. The railroad shop trades
are in high repute among the young men of the city, and as a result
the shop superintendent generally has a waiting list of 100 or more
applicants. At intervals, from eight to ten of these are subjected to
tests, on the basis of which two or three are accepted for indenture.
As a consequence of the economic depression, resulting in the
laying off of staff, a situation developed according to which apprentices who had completed their training in the Railway's shops could
not be taken into the service of the Railway. This was satisfactory

THE CANADIAN NATIONAL RAILWAYS

neither to the Company which was spending money training apprentices for other people's service, nor to the apprentices themselves,
most of whom desired to enter the service of the Railway. The matter
was therefore discussed at the System Go-operative Meeting in
January 1932 and it was agreed to refer it to a sub-committee on
apprentice training. A survey was also made as to the number of
mechanics and apprentices employed on the different Regions
before and after the reduction in staff in April 1932. At a meeting
of the sub-committee, composed of two officers of the Railway and
two officers of the railwaymen's organisations, the report of the
survey was submitted, which showed the number of mechanics
and apprentices and the ratio of apprentices in each trade, also the
number of apprentices that could be employed on a ratio of one
apprentice to ten mechanics. After some discussion it was the
unanimous opinion that in starting new apprentices this ratio
of one to ten would be a fair basis on which to work, and it was
agreed to recommend to the Company that new apprentices be
started. It was also agreed and recommended that in trades
where the ratio was below one to ten, the ratio be brought up
gradually, and that when new apprentices were taken into the
service, the Co-operative Committee, at the point where apprentices
were to be employed, should be informed. The recommendations
were forwarded to the Chief of Motive Power and Car Equipment,
along with a general plan outlining the number of apprentices that
could be employed in each Region. These plans in turn were
forwarded to the General Managers for their recommendation.
The plan was finally approved by the Acting President,
Mr. S. J. Hungerford, and authority was given to put it into effect
on 1 September 1932. From this date until 31 December 1932,
fifty-six new apprentices were taken into the service.
In carrying out the plan of starting new apprentices, applications
from sons of employees are to be given special consideration, and
sons of employees at stations apart from main shops where apprentices are trained will be given special consideration on a fair
proportional basis.
In accordance with the original agreement of the Committee
on apprentice training, that apprentices be trained at main shops,
arrangements have been made to train apprentices at some twenty
points.
In centralising apprentice training at these points it is considered
that apprentices will get a more thorough training and at a less
cost. At small points where apprentices have been trained, it

INDUSTRIAL RELATIONS

was not possible to give an apprentice a proper training owing
to the limited number of machines and variety of work.
Plans are now made five years ahead with regard to the number
of fresh apprentices who will be taken on. It is necessary to plan
a long time ahead in order to make sure that only those apprentices
are trained who can be taken into the employment of the Company.
Education on the Permanent Way
In 1932 an interesting decision was taken in connection with
the vocational education of the maintenance of way staff. It was
decided that mimeographed " educational letters " should be prepared at headquarters and distributed to each foreman. These
letters deal with questions of everyday practical concern to the
permanent way staff. Those issued in 1932 and 1933 have included
the following subjects: general information in regard to proportioning and mixing of concrete ; best method of eliminating heaving
of track ; general information in connection with heating systems ;
the proper care, handling and seasoning of untreated ties; fire
prevention; method of killing weeds.
An educational survey made in July 1931 revealed that eightytwo foremen in the Track Department, mostly men over forty,
were unable to read or write either English or French. These
men were encouraged to improve their education, with the result
that about half of them made fair to good progress.
The education of the illiterate amongst the employees has been
receiving the attention and consideration of the Executive Council
for some time. A revision of the regulations has now been made
to provide that no new appointments to permanent positions in
the Maintenance of Way Department will be made unless the
applicant has an elementary knowledge of reading, writing and
simple arithmetic.
Valuable work is also done in the vocational training of future
foremen.
The " C.N.R. Magazine "
In the field of education, special reference must be made to the
Canadian National Railways Magazine. This is a well-illustrated
and admirably produced monthly magazine, issued for circulation
among the employees of the company and the general public.
The magazine contains, in addition to articles and stories of general
interest, special articles and news of special interest to the employees

THE CANADIAN NATIONAL RAILWAYS

of the company. For example, a recent issue contains an address
by Mr. S. J. Hungerford, now President of the Company (then
Acting President) on the subject of the Railway's unique position
in the field of transportation. Realising that they have a definite
place that no other form of transportation can fill, the railroads,
Mr. Hungerford points out, are " concentrating their efforts upon
doing their own job ". Articles of special concern to employees
in recent months take up such matters as the locomotive and the
air brake and treat of them in accurate but readable style; give
reports of technical developments on other railways; explain the
work of departments within the Canadian National system ; remind
the readers of early railroading problems. A good deal of interest
was occasioned by a special series of articles on British railways
by Mr. C. E. R. Sherrington, Secretary of the British Railway
Research Service, in which some comparisons were made with
Canadian methods. " News Notes " from various points on the
system deal with appointments, promotions and retirais, social
functions of the staff, and athletics and other recreational activities.
In the case of such a far-flung railway, a magazine of this kind
clearly performs a very important function in encouraging collaboration and esprit de corps.
ACCIDENT PREVENTION

Active collaboration takes places between the management and
the personnel with a view to the prevention of accidents. Committees on which the workers are represented deal with questions
of safety and rehabilitation; and accident prevention also forms
an important part of the work of the Committees set up under the
Joint Co-operative Plan, which have now in fact assumed the
duties of the previously existing Safety First Committees and
Fire Prevention Committees.
The ultimate responsibility for accident prevention is in the
hands of the C.N.R. Safety Council. This body, under the
chairmanship of the President, consists of the general managers or other leading officers of the various departments of
the Railway, viz. operating, legal, traffic, purchases and stores,
hotels, express, telegraphs, medical and publicity. It also includes
three representatives of the general chairmen's organisation, which
is the organisation of chairmen of the railwaymen's unions. The
Safety Council has created certain special Committees to deal with
3

INDUSTRIAL RELATIONS

particular problems in the field of accident prevention, for example,
protective goggles. It has also provided for the establishment
in the various departments of the Railway of permanent safety
Committees consisting of representatives of the management and
of the staff, with a view to preventing accidents and maintaining
the highest possible standard of safety in all departments of the
Railway.
Early in the year 1931 the Safety Council decided to abolish
the existing Safety First Committees at all main shops, roundhouses and car repair points where Co-operative Committees were
functioning, and to assign the work of the prevention of accidents
to the Co-operative Committees. Arrangements are made that in
each of these Co-operative Committees four times a year a thirty
minutes' talk is given on some aspect of accident prevention.
Every effort is made to interest, not only local superintendents
and foremen, but also each railwayman, in the details of accident
prevention. While the management has endeavoured to make
machinery and physical conditions as accident-proof as possible,
emphasis is laid on the value of the suggestions of employees
offering for their supervisory officers' consideration ideas towards
the elimination of apparently unsafe conditions and recommendations covering the installation of additional safeguards to ensure
greater safety.
With a view to obtaining suggestions from employees a suggestion
scheme was inaugurated and forms are available for all employees
on which they indicate an apparently unsafe condition or practice
and make suggestions for its correction. Suggestion boxes are
available at convenient points, and employees' suggestions may
be anonymous or signed. Superintendents or heads of departments in their turn make a monthly report to headquarters of
unsafe conditions and practices reported and corrected.
The administration of accident prevention is in the medical
department, and, under the general direction of the Chief Medical
Officer, in the hands of the Director of Accident Prevention. The
function of the Director of Accident Prevention is, under the jurisdiction of the Chief Medical Officer, to furnish expert technical
advice to the Safety Council on all matters pertaining to safe
practices, safety standards and the formulation of policies governing
the conduct and administration of accident prevention throughout
the system. Under the Director of Accident Prevention regional
safety inspectors are appointed to investigate accidents and
periodically inspect the Company's property, reporting all unsafe

THE CANADIAN NATIONAL RAILWAYS

practices and conditions to the chairman of the appropriate local
Safety Committee and to the Director of Accident Prevention.
The medical statistician is, under the jurisdiction of the Director
of Accident Prevention, responsible for the operation of the
statistical plan necessary in the administration of accident prevention, and for furnishing the Safety Council and local Safety Committees with reports indicating the frequency, severity and causes
of accidents throughout the system.
A special bulletin is issued known as the C.N.R. Accident
Prevention Bulletin, which contains articles by leading officers of
the Company and also by representatives of the labour unions
on various aspects of accidents prevention, includes statistical tables
with regard to the severity and frequency of accident in the various
regions, districts or divisions of the Railway and contains practical
advice with a view to the avoidance of accidents. The first number
of the Bulletin, for example, contained an article by Mr. Hungerford,
and by vice-presidents, general managers, superintendents and other
officials.
HEALTH

Special attention is paid by the Canadian National Railways
to the health of the employees. Under the supervision of the
Chief Medical Officer, arrangements are made for preliminary and
periodical examination of employees, for treatment at the various
treatment centres and in emergency hospitals located throughout
the system, and for thorough instruction in first aid.
Medical Examination
All new employees, for whatever department intended, are
required to pass a medical examination before being employed. All
employees on reaching the age of sixty-five must pass a medical
examination for extension of employment. Further, certain
categories of employees are required to pass periodical medical
examination. Thus, all drivers, firemen, conductors and brakesmen
are medically examined every three years till the age of fifty,
every two years from fifty till sixty-five, and every year thereafter.
All employees who handle food or attend to bedding, cooks and
waiters in hotels and restaurant cars and sleeping-car porters, are
examined every three months. Such regular medical examination
is imposed in the interests not only of the employees themselves
but also of the travelling public.

INDUSTRIAL RELATIONS

The Treatment Centres
The Treatment Centre in Montreal was opened in June 1928
by Sir Henry Thornton. In declaring the Treatment Centre open,
Sir Henry stated : " This is a new step in the progress of the Canadian
National Railways which has for its object the assistance of those
loyal men and women, officers and employees of the system, who
have given such wonderful support and co-operation in the operation
of the National Railways."
In connection with the treatment centres small emergency
hospitals were opened at the Point St. Charles Shops, Turcot
Roundhouse, the offices in the Belgo Building, on St. Catherine
Street West, and the Canadian National Telegraphs, all under the
care of fully trained nurses, with a doctor visiting each one daily
for consultations, treatments and instructions.
The treatment centre includes a number of rooms similar to
those in the outdoor department of a large modern hospital.
On one side is located a women's examining room, containing a
bed, table, chairs, examining light, weighing machine, bloodpressure apparatus, wash basin, and various other necessary
appliances. Next to it is a modern dispensary, fully equipped with
all modern requirements, and presided over by an experienced
dispenser who fills several hundred prescriptions a month; and
in addition to this work the dispenser keeps the other emergency
hospitals supplied with stock mixtures, lotions, and medical supplies,
makes daily analyses, etc.
Then comes the X-ray room, in charge of a trained nurse. This
room is equipped for taking radiographs and fluoroscopic work.
Most of the radiographic work is for fractures and teeth, although
X-rays of the body cavities, heart, lungs, etc., if required, are
also taken.
Next to the X-ray room is the operating and surgical dressing
room, which, naturally, is the largest room in the service, containing,
besides the modern operating table, an instrument case fully
equipped, a large basin with hot and cold running water controlled
by foot pressure, a sitz bath, solution basins, a dressing table
completely equipped, a special examination and treatment chair
with upright light for eye, ear, nose and throat work, screens, and
a dressing and splint cupboard. Off this room is a small private
wash room. All of the surgical work of the treatment centre
is done in this room-minor operations, either with general or local

THE CANADIAN NATIONAL RAILWAYS

anaesthesia, ordinary surgical dressings, applications of plaster
casts, and the ordinary everyday work of a surgical outdoor
department.
Across the main office and opposite the operating room is a
special consulting room used for the treatment of nose and throat
cases, as well as for special examinations for vision, colour sense
and hearing. A specialist in diseases of ear, nose and throat attends
one afternoon a week for examination of cases requiring his attention.
Similar arrangements have been made in regard to consultant
specialists in diseases of the eye, in general surgery and in internal
medicine. In cases where such specialists' services are given, no
charge is made to the patients for them. The consulting room
is equipped with specialists' examining chairs, instrument tables,
lights, and other necessary apparatus used in these cases. The
room can be darkened as necessity demands in examining patients
in regard to vision and colour sense.
Next to this room is a men's examining room, equipped similarly
to the one previously described; and, finally, the doctors' office,
containing everything necessary for their work.
Between the doctors' room and the rest room is the entrance
direct from McGill Street, through which are admitted the ambulance cases and most of the walking cases. Beneath the rest room
and the waiting room are store rooms for medical and surgical
supplies.
In addition to the staff mentioned in the foregoing, which
render service in the administration of the clinic, there is a doctor
in attendance from 9 a.m. to 1 p.m., and from 2 to 5.30 p.m., two
doctors each are on duty for half the ¿¿y, ;.~d - third doctor is
on full time duty who devotes his time to the work of the four
emergency hospitals and such other special work as is from time
to time assigned to him. There is also a trained nurse on duty
all day, who assists the doctors in turn, looks after instruments,
dressings, prepares patients, and is continually occupied just as
is a nurse of an outdoor department of a hospital. The staff is
completed by a record clerk and translator, and a stenographer.
There is also a trained first-aid attendant on duty, from 5.30 in
the evening to 8.30 in the morning, to render emergency first-aid
services in all cases of accident occurring at night.
Each case coming to the treatment centre is given one of four
cards; for physical examination, for employment or insurance,
(a) male and (b) female, for illness or for accidental injury to an
employee. Each card is filled in with the name and address and

INDUSTRIAL RELATIONS

other necessary particulars about the patient, and in the case of
illness, or accident, the history, results of examination, including
X-rays, diagnosis, and treatment are all recorded and subsequent
treatments and results noted. The card is then filed for future
record, or for statistical purposes.
After these cards are filled in, the patient remains in the waiting
room until called for his examination by the doctor on duty. He
is assigned to the surgical dressing room, to the X-ray department,
to the physio-therapy room, or to have a prescription filled, as may
be required.
If the condition necessitates indoor hospital treatment, arrangements are made therefor, and, if necessary, the patient is sent
in the company's ambulance to the hospital, or to his home, as
the doctor decides. If the case presents unusual difficulties, but
does not necessarily require indoor hospital treatment, a consultant
in surgery and another in medicine are at the disposal of the doctor
on duty and the patient is sent to one of them after the necessary
arrangements are made, with full particulars of his complaint and
the doctor's original examination. If the case requires an eye or
a nose and throat specialist, arrangements are made to cover each
individual case.
In enlarging the medical service, the Chief Medical Officer saw
the necessity of establishing a laboratory, which, in addition to
dealing with matters usually undertaken in laboratories associated
with hospitals and directly connected with the health of the employees, also renders as pecial service to those who use the trains,
steamships, hotels, restaurants and summer resorts each year,
by examining and testing water supplies, milk and other food
supplies.
The medical treatment centre, as described, is only part of the
activities of the Medical Department, which by degrees, as the
staff and equipment may be secured, is continually branching out,
so that eventually the whole system will be taken care of from
a medical point of view, and the employees at the main centres
on the system, between Halifax and Vancouver, will be in a
position to receive the same attention as those located at Montreal.
Up to the present time, centres have been established at Toronto
and Winnipeg, in addition to the main centre at Montreal.
It is intended to establish similar treatment centres at other
important points on the railways.

THE CANADIAN NATIONAL RAILWAYS

First Aid
First aid receives particular attention on the Canadian National
Railways. The work commenced on the individual lines of the
Canadian Northern and Grand Trunk in 1909. In March of that year
the first first-aid class was organised on the Grand Trunk Railway,
at the Point St. Charles Shops, Montreal, and it had twelve members. Canadian National First-Aiders number thousands to-day
and they are found in every part of the system, in every department
of the railway, studying, passing their St. John Ambulance
Association examinations, practising, and whenever called upon
to meet an emergency they are ready.
The administration of first aid is, under the general jurisdiction
of the Chief Medical Officer, in the hands of the Director of first aid.
Under the Director come the regional organisers, one for each of the
four regions in which the railway is organised. The regional organiser is responsible for conducting classes in first aid in his region,
giving each class a course of sixteen lectures of one hour each.
Regional organisers used to have instructors to assist them, but at
present the only instructor in service is a French-speaking instructor
in the Central Region. A film on artificial respiration is used in
instruction, and two films on fractures are under consideration.
Each qualified certificated First-Aider is supplied with a copy of
the 38th Edition of the St. John Ambulance Association Handbook,
either in French or in English. First-aid kit is placed in all passenger
cars, dining cars, sleeping cars and observation cars on the system.
It is ultimately intended to supply with first-aid kit all guards'
vans and locomotives.
In 1930 the first first-aid instruction and emergency hospital car
was put into service. Half of each car, a length of 30 feet and
floored with linoleum, composes the lecture room. At one end is a
platform with blackboard, regular first-aid charts and moving
picture screen for the demonstration of first-aid methods. It has
space for fifty pupils and the seats are collapsible, so that the floor
may quickly be cleared for stretcher drill.
A unique feature of the car is the miniature hospital. It is
complete with an operating table, a bed which folds down from the
wall, a chair for minor operations, instrument table and steriliser,
and a host of other appliances. It is fitted with a special storage
battery to ensure the best of lighting at any time, anywhere.
Should an accident occur for instance at some isolated plant on a
northern stretch of line, a doctor and nurse could be put aboard

INDUSTRIAL RELATIONS

the car and rushed to the scene. The convenience of taking a
hospital to a patient unable to stand a train journey over a long
mileage can be easily appreciated. For minor injuries, the car is
equipped with a variety of appliances necessary to the first-aid craft.
Should a case of contagious disease break out in some settlement or
camp, ill-equipped to cope with an epidemic, the sick person could
be moved to the car and isolated there, and the settlement relieved
of any threat to its welfare.
It was intended that each car, in charge of a competent instructor,
should be sent to divisional points, to remain until such time as all
available employees had received a full course, after which the
cars would proceed to points that had not previously had the
benefit of first-aid instruction. In this way, the Medical Department
would reach, for the first time, enginemen and trainmen, agents and
section workers, isolated from medical care and the ordinary
channels of first-aid instruction.
These cars have rendered excellent service, both in instruction in
first aid and as emergency hospitals. At present, however, owing
to the necessity for economy, they are not in regular use, but are
held in readiness for any emergency that might require their service.
Rehabilitation
When employees suffer accidents or have an illness which results
in some physical condition rendering it impossible to continue
to employ them on the jobs they previously had, every effort is used
to find for them other suitable employment in their own
departments. If this should prove impossible, endeavours are made
to find for them employment in some work in which their physical
infirmity will not constitute a serious drawback. To facilitate such
rehabilitation, a Rehabilitation Committee has been set up, including representatives of the railwaymen's organisations. This
Committee has done useful work in the rehabilitation of disabled
employees.
CONCLUSION

In the development of industrial relations on the Canadian
National Railways it has been necessary, as the preceding pages
must have made clear, to cope with two very great difficulties.
One of these difficulties resided in the diversity of conditions and
of traditions in the various companies which were combined to form

THE CANADIAN NATIONAL RAILWAYS

the Canadian National Railway system. Methods of management
differed, methods of payment differed, conditions of employment
differed, provision for old age and sickness differed—and this list
of differences could be almost indefinitely extended. Out of this
diversity it was necessary to create unity of aim and community of
purpose; it was necessary to achieve a real team-spirit on the part
both of management and of men.
The second great difficulty in the way of the development of
industrial relations was to be found in the far-flung character
of the system. Its total mileage is very great, and this mileage is
spread over an immense area, with long distances between focal
points. This results in a necessary scattering of personnel, which,
in its turn, gives rise to special problems of control and co-ordination.
Under these special circumstances, the institution and
development of a unified system of industrial relations is a tribute
both to the management of the Company and to the railway unions.
Without mutual confidence between the principal officers of the
Company and the leaders of the railway brotherhoods it would have
been impossible to inaugurate the special features of the Joint
Co-operative Plan. And it would have been impossible for this plan
not only to develop during years of prosperity but also to weather
years of adversity without the day-to-day loyal co-operation of all
grades of the personnel.

The Pequot Mills of the Naumkeag Steam
Cotton Company, Salem, Mass., U.S.A.
THE HISTORY, SCOPE AND NATURE OF THE MILLS

The mills of the Naumkeag Steam Cotton Company are situated
at Salem, Massachusetts, U.S.A. An interesting feature of the
company's annals is that in its inception and at critical stages in
its history it has been essentially influenced by international conditions. To a complex of international circumstances was due its
original establishment in 1839.
At the beginning of the nineteenth century Salem was a prosperous shipping town. But the embargoes and blockades of the
Napoleonic wars dealt a blow to the shipping of Salem from which
it never recovered. During the embargoes hundreds of ocean-going
ships lay rotting alongside the wharves of the historic town, with
their seamen scattered wherever employment could be found.
Many old and famous concerns went out of business, or transferred
their affairs to the rapidly growing town of Boston, or the already
outstanding city of New York. The shipowners, shipmasters and
merchants of Salem began to look about for other investments.
Their attention was naturally drawn to the new and successful
industry of cotton spinning and weaving, as carried on along the
Merrimac and Charles Rivers in Massachusetts and in the Blackstone
Valley in Rhode Island. The result of their investigation was the
establishment, in 1839, of the Naumkeag Steam Cotton Company
on the harbour front.
Naumkeag has never had an undue respect for tradition, and
both its location and its source of power constituted, when it
was founded, a break with convention. At that time, cotton mills
were always situated on the banks of water-courses, for two reasons.
In the first place, the water-wheel supplied the necessary power
for the mill, and in the second, the river valley produced the humid
atmospheric conditions essential to the successful manipulation of
cotton fibre. The founders of the Naumkeag Company believed,

INDUSTRIAL RELATIONS

however, that coal would generate power more cheaply and efficiently than the water-wheel, and that the necessary humidity
would be obtained from proximity to the sea. Their calculations
proved correct, and the Company continued to operate successfully
until 1914, when the entire plant was completely destroyed by fire.
Again the fortunes of Naumkeag were bound up with world
events. The plant was entirely rebuilt on the same historic site 1,
and by the end of 1915 the new Naumkeag was in full operation.
Rebuilt at pre-war scales of costs, it was ready, with completely
new construction and machinery, but with mature experience, to
take advantage of the immense boom in the cotton textile trade
produced by the World War.
The Naumkeag mills, as they stand to-day, are of improved
reinforced concrete construction, special attention having been
paid to the details of light, ventilation, sanitation and everything
contributing to the well-being of the operatives. The weaving
shed, covering 9 acres, is claimed to be the largest of its kind in
the world. The machinery is of the latest design, largely automactic and electrically driven. Although none of this equipment
dates from earlier than 1915, the management has already made
large replacements, and consistently throws out old machinery as
fast as more efficient or more economical machines are tested and
proved.
The main product of the Naumkeag Company's mills is plain
sheetings and pillow-cases, known under the trade name of Pequot.
The Naumkeag Company has, in fact, always specialised in plain
sheetings. Even in the first year of its operation it was awarded
a medal, at the Annual Exhibition of the Massachusetts Charitable
Mechanics' Association, for the excellence of its products. As early
as 1860 the mills began to pay special attention to the weaving
of wide sheeting. Many years ago they initiated the custom of
supplying housewives with bed linen made up ready to use, and a
large proportion of their output is marketed in this form.
The capital of the Naumkeag Steam Cotton Company amounts
to $6,000,000. During the years of prosperity large reserves were
built up, which amounted on 30 November 1930 to over $3,600,000.
In the succeeding year, however, a net loss of some $50,000 was
registered, and dividends, although not earned, were continued
throughout the year, with the result that the surplus was reduced
' Just opposite the water-front is the famous Derby Wharf where East
India merchantmen used to unload, and a few hundred yards away is Nathaniel
Hawthorne's " House of the Seven Gables ".

THE PEQUOT MILLS, SALEM, MASS., U.S.A.

on 30 November 1930 to below $3,200,000. The quarterly rate
of dividend of $2.00 per share was reduced to $1.00 per share,
beginning with the October 1931 quarter.
Production and sales have been well maintained since 1928,
although in that year a heavy fall occurred from the peak year
of 1927. The actual figures are as follows:
PRODUCTION AND SALES, 1 9 2 7 - 1 9 3 3
Sales

Production
Year

1927
1928
1929
1930
1931
1932
1933

lb.

yds.

19,888,984
13,017,464
12,908,725
12,692,542
12,248,393
11,382,328
10,221,100

32,328,371
20,945,905
20,836,475
20,086,821
19,601,887
18,240,630
16,363,318

30,766,299
20,397,142
21,058,163
20,335,881
19,460,503
18,466,223
16,744,588

10,583,100
7,273,535
7,887,608
7,162,267
5,895,004
4,184,758
3,811,826

The undertaking is governed by a Board of seven Directors, the
President of which is Mr. Henry P. Benson, and the Managing
Director, with the title of Agent, Mr. J. Foster-Smith. The Agent
is responsible to the Directors for the management of the mill,
and has under his orders three superintendents, each responsible for
one of the three main divisions : spinning, weaving and maintenance.
Under the superintendents are overseers, each responsible for one
of the ten operating departments of the mill.
During its long history Naumkeag has naturally drawn its
workers from many sources. When it began operation, it started
with a nucleus of trained spinners from England and Scotland,
but the majority of the workers were native born and residents
of Salem. It will be remembered that the mills started work when
the other industries of the town were suffering from depression,
and a reserve of workers who had been thrown out of employment
in their previous occupations was therefore available. In addition,
as has always been the case in other countries at the beginning
of the development of the cotton textile industry, many girls came
in from the country to work in the mills. After a few years,
however, waves of immigrants began to flood the country. The
Naumkeag mills were well situated to absorb this immigrant labour,
and the native American workers gradually left the mills, attracted

INDUSTRIAL RELATIONS

to other occupations. In the sixties, the workers were chiefly Irish,
but after a few years they too passed into other industries.
The present workers consist largely of the descendants of two
other immigrant streams, the French Canadians, who began to
come to Salem in the seventies, and the Poles, who arrived in the
two subsequent decades. In the last forty years, therefore, the
working population of the mill has been remarkably stable. Many
of the workers own their own homes in Salem, and their horizon
is largely limited by the life of the mill and their immediate surroundings. The number of workers in April 1933 was about 1,293.
575 males and 718 females.

THE HISTORY OF INDUSTRIAL RELATIONS

In the very early years industry relations in Naumkeag were
marked by paternalistic and even theocratic conceptions. The
corporation controlled rigidly not only conditions in the mill but
also conditions outside. The mill bell rang a curfew at nine o'clock
every evening, as an intimation that everybody must then be off
the streets. And on Sunday all mill employees were obliged to
attend church.
Soon, however, the attempt to control the conditions of life of
the workers outside the mill was abandoned. It became obviously
impossible to do so when the employees were no longer recruited
largely or exclusively from Puritan New England homes, but were
of different nationalities, different religious beliefs, and different
manners and customs.
Control of conditions within the mill, on the other hand, continued
to be paternalistic right up to the war years. This control would
appear to have been on the whole benevolent and free from a
dictatorial spirit. In any case no serious collective divergence of
opinion between management and workers occurred until 1918,
eighty years after the establishment of the company.
The last year of the war and the first of the peace were periods
of industrial strife in all countries, and Naumkeag did not escape.
In June 1918 a strike occurred in the Naumkeag spinning and
carding department, employing 300 workers. A local Union was
organised and chartered in the United Textile Workers of America,
affiliated to the American Federation of Labour, and machinery
for dealing with the management was established. Agreement was
reached at the end of five days to return to work and submit the

THE PEQUOT MILLS, SALEM, MASS., U.S.A.

entire controversy to arbitration under the auspices of the Massachusetts State Board of Arbitration.
In the autumn of 1919, 75 per cent, of all workers were members
of the Union, and demanded its recognition with collective bargaining in its fullest sense plus a general increase in wages. After
a seven weeks' strike, a conference was called, and the management
and Union officials agreed upon: (1) recognition of the Union;
(2) a minimum wage for women; (3) collective bargaining;
(4) withdrawal of the demand for a wage increase; (5) a system
of collecting union dues within the mill ; and (6) the establishment
of a shop committee and foreman conferences to adjust grievances.
In neither of these disputes was there any resort to violence or
to measures of which either side might subsequently feel ashamed.
The Agent of the Company closed the plant on both occasions,
and did not resort to injunctions, " yellow-dog " contracts, or other
methods of strike-breaking. The strikers on their part adopted a
responsible attitude, and sought through conference and not through
violence to make their point of view effective.
With the resumption of work began a closer co-operation between
employer and employee, and a united effort for quantity and quality
production. Added to this was a sincere effort on both sides to
eliminate, or at least alleviate, the causes of friction, misunderstanding and resentment. Next followed an agreement to accept
seniority rule as a means of still further improving morale. It is
believed on both sides that honest effort in quality and quantity
production is rendering faithful service, and is entitled to reward
in the form of promotion as well as in security of job.
A further extension of the co-operative spirit came about when
the management and the Union, through their legally qualified
officers, signed in 1927 an agreement, the main object of which is
the removal, as far as possible, of all causes of misunderstanding
and friction, and the promotion to the greatest possible degree of
mutual helpfulness between the two organisations.
The agreement recognised the desirability of trade unions;
pledged the co-operation of employees in effecting such economies
in manufacturing as may be brought about by the introduction
of improved machinery ; provided for a proper and orderly holding
of conferences in the event of differences which may arise in the
natural course of the operations of the mill and bleachery; and
further provided for regular meetings between the management
and the representatives of the Union.
In view of the importance of this agreement in the history of

INDUSTRIAL RELATIONS

industrial relations in the undertaking, it is necessary to quote it
in extenso :
AGREEMENT by and between the United Textile Workers of America,
through its legally qualified' officers, party of the first part, and the
Naumkeag Steam Cotton Company, of Salem, Massachusetts, through
its legally qualified officers, party of the second part, with the object
of removing, as far as possible, all causes for misunderstanding and
friction and of promoting to the greatest possible degree the mutual
helpfulness of the two organisations.
First: The party of the second part agrees to a cordial and full
membership recognition of the bona-fide trade unions of its employees,
known as party of the first part, as their proper agents in matters
affecting their welfare, and further agrees that these trade unions are
acceptable. It recognises them as desirable, not only in regard to the
welfare and protection of their members, but also desirable to the
management, inasmuch as the co-operation of their members is essential
to the continued and successful operation of the Mills.
Second: The party of the first part agrees to promote in every
legitimate way the distribution and sale of " Pequot " sheets and pillow
cases, and other products of the party of the second part, and pledges
its support in a constructive and responsible way to the end that
quantity and quality production may be maintained, and further pledges
its co-operation in effecting such economies in manufacturing as may be
brought about by the introduction of improved machinery.
Third : The party of the first part, realising that continuity of operation
is essential to the successful operation of the Mills, agrees that in the
event of differences which may arise in respect to details of operation,
compensation, hours of labour, working conditions, or any other matter
of controversy between the management and the employees, a period
of not less than sixty days shall be allowed for the proper and orderly
holding of conferences between the management and the executive or
other committee of the Union, and further agrees that no action tending
to disrupt production shall be taken before the expiration of the said
period.
In the event of the unauthorised cessation of work by an employee
or group of employees the said party of the first part agrees to use
every effort at its command to assist in maintaining continuous
operation.
Fourth: The party of the second part, appreciating the advantage
of a spirit of co-operation and loyalty inspiring the personnel of its
employees, and desiring to further cement the feeling of friendly and
sympathetic understanding, agrees to use every effort to maintain good
working conditions, fair wages and continuity of employment.
Fifth: Representatives of the party of the first part shall meet with
the representatives of the party of the second part at regular intervals,
preferably once a month, or as often as necessity may require, for the
discussion of any questions that may arise and for the further extension
of a spirit of loyalty, helpfulness and co-operation.
Sixth: This co-operative agreement is binding upon both parties in
spirit as well as in letter, and shall be changed only by mutual agreement,
after notification in writing, served by either party upon the other at
least sixty days before such change is to become effective.

THE PEQUOT MILLS, SALEM, MASS., U.S.A.

Seventh: This agreement shall be operative for the period of one
year from date of acceptance, and either party may withdraw from
this agreement on sixty days' notice.
This agreement continued in operation, unchanged, until 1933.
With this joint machinery in force, monthly conferences started
to discuss competition in manufacture, sales and markets, quality
and quantity production, régularisation and continuity of employment, technical changes and economies to be effected through new
and improved machinery.
In 1928 the management considered that it was essential to
reduce costs of production. This was a period of intense competition in the cotton textile industry, when the New England
companies were threatened with extinction as a result of the rapid
development of the mills of the Southern States, operating close
to the sources of supply of the raw material, with the most modern
automatic machinery and with cheap labour.
The management of the Naumkeag therefore brought to the
attention of the Executive Committee of the Union the fact that
the Naumkeag, owing to the lower costs of its competitors, was
put to most serious disadvantage in ma-'.eting its product, and
that its costs of production must be brought to a figure comparable
with mills making an identical line of goods. To this end the
management, believing an undertaking can prosper and give employment to its workers only to the degree to which it is economically in balance with industry as a whole, presented a new
schedule of labour and wages. This schedule provided for a rearrangement of work in every department, and inevitably involved
the elimination of a considerable number of operatives. Dn the
other hand it provided that no wages would be reduced. In other
words, this reapportioning of jobs in each case carried with it an
increase in pay, and stressed the further belief of the management
that no employee doing a fair day's work should have any addition
made to his task without some commensurate improvement in
working conditions. The schedule was worked out by the supervising executives from their intimate knowledge of the jobs, and
not by factual tests.
Several conferences were held between the management and the
Union, but it was difficult to reach agreement. The Union recognised the necessity of a reduction in costs, but was reluctant to
accept without further examination the programme of the management. The Union then took an interesting and unusual step. It
consulted Mr. Morris L. Cooke, management engineer of Phila4

INDUSTRIAL RELATIONS

delphia. It then presented to the management a counter-proposal.
It agreed that cost reduction was desirable to safeguard its employer,
and thus its own status. It agreed that proposals of the nature
suggested by the management would accomplish the result. But
it pointed out that they should not be adopted wholesale, because
of the effect on employment. Furthermore, detailed study of
each suggestion was desirable. Why not employ an engineer, to
be selected by Mr. Cooke, who could make analytical research into
each process, recommend standards of performance in accordance
with experimentally ascertained facts, and discover new possibilities
of waste elimination ?
The management agreed to this proposal,. and Mr. Francis
Goodell was employed by the Union and with the consent of the
mill management made a fortnight's survey of the whole situation
of industrial relations in the mill.
As a result of this survey, the Union submitted to the management, in January 1930, a series of proposals relating to the new
schedule suggested by the management, and providing for the
employment by the Company of a trained technician, and for the
appointment of a committee representing the management and the
Union to act with him in the making of tests on a factual basis.
The object of these was the elimination of waste—both of labour
and of materials—and an ultimate reduction in cost. The proposal
further provided for master planning on the part of the management,
for the budgeting of sales and for the forecasting, as far as is
humanly possible, of continuous operation.
In detail, the Union proposed that each question under discussion
should*be settled separately and upon the basis of analytical research.
It was believed that this analytical approach would not only settle
the points at issue, but would supply elemental facts leading to
other forms of economy, aid in the selection or rejection of new
equipment, and, above all, give practice to both parties to the
agreement in discussing upon a factual basis matters at issue.
This research work would be headed by a technician employed
by the Company. The Union was prepared to accept someone
recommended by Mr. Morris L. Cooke as having the requisite
viewpoint.
It was also proposed that the existing machinery for discussion
should be supplemented by a Committee on Waste Elimination.
This Committee would act, or appoint individuals to act, to give
assistance to the above-mentioned technician, and have the power
to review the facts leading up to decisions relating to manufacture

THE PEQUOT MILLS, SALEM, MASS., U.S.A.

recommended by the technician. The Committee confined itself
to such constructive proposals, under provisions somewhat as
follows :
The parties to this contract (or agreement), recognising their common
stake in eliminating waste, and realising that wasteful practices generally
result, not from intention but from lack of common understanding of
such practices and their injurious effect upon both earnings and wages:
Hereby agree to set up a joint research committee composed of three
(four or five) representatives of the management and three (four or five)
representatives of the Union, whose duty it shall be to ascertain the facts
and to devise methods of co-operation for the elimination of waste and
the improvement of working conditions as related to quality and quantity
of production. This research committee shall in no case entertain complaints or grievances, but shall concern itself exclusively with constructive
suggestions for the promotion of the common interest of the parties
signatory to this agreement in eliminating waste.
The Committee should be furnished, in the view of the Union,
not only with relevant figures obtained by research but also with
information concerning the major cost and quality problems arising
from competition which confront the management. Although the
employees might at times realise t h a t t h e costs must be upon a
sound basis, they did not have any way of knowing the effect of
their output upon the costs. There was a psychological need for
concrete and immediate facts of this nature if habits of economy
and pride in achievement were to be further developed.
This procedure, first of research and second of joint factual
consideration, would furnish the machinery for sufficiently frequent
and constructive discussions.
Master planning. — The Union realised t h a t the elimination
of waste in its several forms was partly dependent upon other
considerations than the provision of adequate machinery for
constructive discussion. They could not indefinitely continue to
endorse a programme which would reduce the labour requirements
per unit without reasonable assurance t h a t the sales problem was
being met in the same forward-looking and resourceful spirit. They
were concerned about distribution at a time of unprecedented
change in this field. They could co-operate fully upon the basis
that, humanly speaking, future sales were under control, and t h a t
plans were made ahead for preventing sudden drops in production
due to failure to forecast sales, and to co-ordinate the forecasts
with the labour requirements in terms of t h e immediately succeeding
years.
If the necessary sales planning to give assurance to the employees

INDUSTRIAL RELATIONS

did not already exist, this lack should be the major concern in
order that the place of " Pequot " in the market might not be
injured by the many powerful changing elements in the field of
distribution—the increasing chain-store development, the general
dissatisfaction with and review of present sales methods, the
introduction of new basic fabrics and the intensive study of product
design.
Unemployment reserve. — It was considered by the Union that
if sales planning were adequately carried out, it should become
possible for the management to develop plans running at least a
year or two in advance, to provide for an unchanged or an increasing
staff coupled with a decreasing cost. The Union felt that steps
should be taken to work out a financially sound unemployment
reserve fund. They did not insist that this fund be started
immediately, but believed that with a competent sales planning
function, which is integrated with the other administrative functions
of financing, buying, manufacturing and planning labour requirements, such a fund would not be a drain upon the Company.
On the contrary, it would give two vitally important benefits:
first, it would provide a valuable stimulus to continuing and farsighted sales administration, and second, it would liberate an
unprecedented degree of co-operation.
In addition, such a fund should not mean a heavy outlay. With
a highly effective control of the distribution problem, the amount
expended might be relatively small. And the financing could be
made conservative by limiting the amount of liability to the amount
of the reserve.
To sum up, the Union believed that the Company could supply
conditions which would cut waste in line with their proposals by
supplying the machinery for constructive discussion, by getting and
giving out the facts relative to the cost requirements, and supplying
in some way the confidence that lower costs would not only work
to the ultimate benefit of all concerned but that readjustments
within the Company, or from the Company to other companies,
would be made in conformity with the practical needs of the
employees.
The management agreed to these proposals, and, on the nomination of Mr. Morris L. Cooke, Mr. Francis Goode'll was retained
by the Company to undertake, in co-operation with management
and workers, the necessary technical study.

THE PEQUOT MILLS, SALEM, MASS., U.S.A.

WASTE ELIMINATION AND JOINT RESEARCH

The co-operation of management and workers was ensured, in
the first place, through two pieces of joint machinery: the Waste
Elimination Committee, sometimes called the Research Committee
and the Research Staff. The Research Staff were all on the Waste
Elimination Committee, but, unlike the others, they gave full time
to research work. The Committee was called together occasionally
for advice and review of findings and as an additional medium
for getting information from and to the body of employees.
The Waste Elimination Committee was composed of nine members. Its Chairman was the Technician. The Technician was paid
by the Company, but the choice had to be approved by both
parties to the agreement. The management members were appointed
—the acting Superintendent, the Plant Engineer, an overseer, and
an official who was at one time night superintendent. The Union
members were the presidents of the two Locals—the United Textile
Workers No. 33 and the Loom Fixers' Union No. 30—and two
other members, one of whom was changed in accordance with the
operation under discussion.
There were two ways in which the activities of the Waste
Elimination Committee were spread among the rank and file. The
best was the informal method whereby the Committee members
were regularly and most of the time available for questions by the
rank and file. The other was by means of posted notices telling
about the meetings. The Chairman prepared minutes of the
meetings; the Company had them mimeographed, and then they
were posted on the bulletin boards. Other copies were given to
the interested parties for record.
The Research Staff consisted of the Technician, assisted by
two of the Union members of the Waste Elimination Committee,
and a similar number of Management members, all of whom
were paid by the Company.
The work done by the Committee and Staff consisted principally
in an analysis of various jobs with a view to ascertaining the
practical possibilities of increasing the number of machines to be
tended by each operative.
The problem of increasing the number of looms per operative
has recently become an issue not only in the East and South of
the United States, but also in the countries of Europe. It has
become an issue mainly because of the installation of more perfect

INDUSTRIAL RELATIONS

looms, the organisation of better maintenance, and the institution
of better operation control.
The number of looms per weaver was formerly limited by
the frequency of stops and breakdowns which necessitated the
weaver's attention. But with better maintenance of the machinery
and operation control, the number of stops is reduced, and more
looms per weaver are possible. How many he can tend depends
not, as before, upon the emergency work he has to do, but on
the incidental work. Some of this may be delegated to others.
Some requires the skilled hand of the weaver. To make new
adjustments of work which really aid efficiency instead of injuring
it requires careful study.
If the given looms have a large number of unexpected stops
per hour, naturally the weaver has to be on hand to provide for
these emergency breakdowns. If he has to be on hand ready
for an emergency, then he might as well do the incidental work
around the loom while he is waiting, because this incidental
work can be set aside when the emergency comes. Incidental
work consists of cleaning the looms, taking out the finished cuts
of cloth, " burling " the battery end of the cloth and oiling.
These things do not have to be done on the instant. Therefore
the weaver has until recently cleaned his looms and performed
most of the incidental work. In recent years, however, the art
of maintenance has taken a great step forward. It has been
learned that there is an emphatic economy in prevention of
these breakdowns, in periodic inspections and renewals. As a
result the " end breakage " is much lower. Now that the end
breakage is low, the unexpected stops are almost negligible, and
the weaver need no longer be assigned looms on the basis of
serious trouble. He can, therefore, handle more looms. How
many more depends upon whether he is still to do the incidental
work around the loom. Some of this incidental work really requires
help as skilled as the weaver himself. But some of it, such as
cleaning, can be done by a less trained and experienced worker,
and at a lower wage cost. The. cleaner can become expert—intensively trained in that single operation and equipped with tools well
adapted to that one special job—and the other advantages of
division of labour can be enjoyed.
A great many companies have tried to make extensions, i.e.
to increase the number of looms per weaver, without improving
and controlling the end breakage. They have usually failed to
maintain their new standards. Others have made extensions

THE PEQUOT MILLS, SALEM, MASS., U.S.A.

without specialisation by virtue of their improved maintenance.
The joint research work undertaken in this field of job analysis
in the Naumkeag Company was organised as follows.
After an operation had been decided upon for study, Union
delegates and the Overseer in the room concerned jointly selected
a number of so-called " average " operators for study. In addition
to the joint selection of operators to be studied the tentative
standard practices which were to obtain while making the tests
were reduced to writing. More often than not these standard
practices had to be changed as the studies threw light on the
fact involved. For example, the interval which should elapse
between examinations of the cloth on the looms is a matter of
quality and cannot be set without the approval of those in touch
with sales problems. But the similar interval in the spinning
room is a simple matter of economy which can be determined
without difficulty by a couple of tests. When the tentative standard
practices had been put in writing, the Union representatives
went over them with operators in touch with the operations.
There was not infrequently some valuable complaint or suggestion
in regard to this standard practice.
When the standard practice was ready for adoption, the Union
member went to the operator, or operators, to be studied and
told him the purpose of the study, and explained the value of Union
protection in the study and the importance to him and his colleagues
of telling the Research Staff of the difficulties which the operator was
likely to be "up against". In this way, the co-operation of the employee was usually obtained in a shorter time, especially when that
operator became convinced that a thorough study was to be made.
There were two sorts of studies. There were the formal tests
of the machines in the exact way that they are to be manned and
operated in accordance with the Company objectives. These were
called " critical " tests. On some other tests more empirical methods
were used, learning what standard practices are economical,
and sometimes showing the operative that some job is less than a
fair standard for a day's work. These tests, " critical " or empirical,
were made where those who were concerned could see them. Such
tests often carry more conviction in regard to the practicability
of a given arrangement than would any assemblage of figures.
After a job was analysed in this way, the next step was the review
by the Waste Elimination Committee. It was established that
this was not a voting matter. The Technician presented the

INDUSTRIAL RELATIONS

figures and each side had an opportunity to criticise the details.
Was any factor forgotten ? What precautions had been taken
against unforeseen delays ? Up to what end breakage would the
figures be usable ? The job of the Committee members in this
review was merely to present any objection. But the Technician
decided as to the weight of these objections. Responsibility was
thus kept single, and one of the main difficulties of the Committee was swept away. Also the onus of any unpopular move
could not seriously be charged to any management or Union
delegate. If the delegates had presented their views clearly and
forcibly, they had done their part. After the job standard had
been made and reviewed, the payment, whatever its form, was
left to negotiations between the Company and the Union, just
as in the years previous to this joint research.
The joint research undertaken by Mr. Goodell in this spirit and
with the co-operation of management and workers continued until
a new system of standard practice was evolved.
By 1933, however, the joint research programme, which for
several years had proved an outstanding success, appeared to have
exhausted its usefulness. The reasons for its discontinuance are
not less instructive than the movement which led to its inauguration.
The main reasons for the abandonment of the scheme are stated
to be the following:
(1) Joint Research as it functioned at Pequot began to assume
managerial and administrative duties by formulating
standards of operations which rightly should have been
decisions of the operating executives. This began to divorce
the Staff from the aspects of pure safeguarding upon which
the original set-up was founded.
(2) As the programme proceeded, the Union was left with the
major job of persuading the workers to accept the findings
of the Joint Research Committee. This became the responsibility of the Union members of the staff, plus one or two
of the executive board who were familiar with the operations
in general—a total of not over three or four individuals at
the most.
(3) Contacts between Union officials and workers became
stagnant, as questions involving fewer operatives became
the usual trend. In such matters, the Union agent assumed

THE PEQUOT MILLS, SALEM, MASS., U.S.A.

greater responsibility for decisions, without the usual consultation with the executive board, delegates and worker-body.
(4) In May 1933, the worker-body, deciding that they could
no longer rely upon their Union officials to protect them
against what they thought were unreasonable requirements
of the management, called a strike against the orders of their
national officers, and formed an independent union of their
own. The reasons that led to this act were, in addition
to the above, the necessity for further reduction in the cost
of manufacturing, causing the management to reduce wages,
and to call for revision of some of the existing job-standards,
and the decision of the management that workers whose
employment would terminate because of such revisions were
to be confined to married women who had husbands capable
of supporting their families.
This strike was settled two months later largely because of the
requirements of the National Industrial Recovery Act, and the
signing early in July of the Cotton Textile Code. The latter had
provisions regarding further stretch-outs, and other features which
gave the workers substantially what they desired with respect to
the main issues at stake.
Although these events resulted in the abandonment of the joint
research programme, the day-to-day practice of industrial relations
continues to operate between the management of the firm on the
one hand, and on the other the new independent union and the
Loom Fixers' Local which is still affiliated with the United Textile
Workers of America.
REGULAR COLLABORATION BETWEEN MANAGEMENT AND WORKERS

In every department there is a delegate of the Union, and if
any worker employed in that department has a grievance, he goes
in the first place to the Union delegate, if the Union delegate
considers that the grievance is a real one, he will consult the
overseer on the matter, and in the great majority of cases the
question is settled in the department. If, however, it is impossible
to arrange matters amicably in the department, the grievance may
be brought to the attention of the Agent at the monthly meeting
which he has with the representatives of the Union. At this
monthly meeting, at which 24 Union representatives are present,
the Agent gives an account of the development of general business

INDUSTRIAL RELATIONS

conditions in the course of the last month, together with particulars
of the influence of these conditions on production and sales at
Naumkeag. He also explains the progress made in any particular
question of Union-Management co-operation which may be in
evidence at the time. Finally, opportunity is given for the chairman
of the Union to raise any question relating to industrial relations
and to mention any grievance that may have been brought to the
attention of the Union representatives, and which they have been
unable to settle directly in the various departments.
This monthly meeting, which brings representatives of the
workers into direct touch with the managing director, enables
them to feel that they are au courant with the progress of the firm,
and are directly co-operating in that progress. They, on their
part, after the meeting, are able to pass on to the Union members
the information which they have received directly from the managing
director. They are also in a position to give to Union members
explanations with regard to particular aspects of Union-Management
co-operation. In April 1932 the particular question at issue was
the elimination of oil in spinning. In the spinning departments,
on the bulletin boards were to be seen recommendations with regard
to the elimination of oil, typed on paper with the Union letterhead.
In this and other ways, regular collaboration between management
and workers takes place and serves to maintain a spirit of good
industrial relations.
CONDITIONS OF WORK

Hours of Work
The main features of conditions of work in the undertaking can
be very briefly described. Under normal conditions of production
a 48-hour week was worked, the daily distribution of hours being
7.15 to 12 and 1 to 5; on Saturdays 7.15 to 11.30. In 1931-1932
short time was worked, thus: from 1 June 1931 to 1 March
1932 a four-day week was worked, namely, 7.15 to 12 and 1 to 5 from
Monday to Thursday, giving 35 hours a week. On 1 March 1932,
however, owing to increasing demand, a five-day week was put
into operation, namely, 7.15 to 12 and 1 to 5 from Monday to Friday
inclusive, giving 43 3 / 4 hours per week, and sometimes, if extra
production were required, work would continue on Saturday,
making the full 48-hour week. After the establishment of the
Cotton Textile Code, hours of Labour were limited to 40 per week.

THE PEQUOT MILLS, SALEM, MASS., U.S.A.

Rest Pauses
In each department and on each job, periods of actual work
are carefully scheduled so as to provide for adequate rest pauses.
In the case of spinning, on an average about 25 per cent, of the
total active working period is rest, which includes waiting and
watching. In weaving, about 33 per cent, of the total active
working period is rest, including waiting and watching. The actual
amount of rest allowed depends to some extent on the nature of
the job. If the operations required by the particular job involve
stooping or other awkward postures, then more rest is allowed for.
In other jobs, less rest is normally provided for, because rest periods
automatically occur during the operation. For example, in thecloth room, two girls sit at a machine examining cloth unrolled
from a machine, with a view to detecting and repairing small
defects. If one girl stops the machine to mend a defect on her
side of the roll, the other girl on the opposite side automatically rests.
In the case of cleaners in the spinning room, the following timetable of rest pauses was applied in 1932: work begins 7.15; rest
9.34 to 10.10; rest 11.45 to 12 (12 to 1, lunch hour); rest 3.07 to
3.30; rest 4.53 to 5. At 5 o'clock work stops. This provides for
a total of rest periods during the course of working hours of 81 minutes. In the case of other operations, an actual schedule of rest
periods is not laid down and the operative gets his rest as and when
he can, reasonable provision being made for this purpose.
In the case of a weaver operating twenty looms on 90-inch
Pequot, the following table summarises the average time taken
per hour for each of the operations required of him:
Item of operation
Patrolling backs
Patrolling fronts
Piecing up ends
Pickouts
All else (call fixer, cloth
boy, mark cut, get pay,
smashes, etc.)

Per loom
per hour
3 times
3 times
1.05
0.0165

Minutes
per operation
0.214
0.123
0.900
8.600

Total: Work
Watching and waiting

Minutes
per hour
12.83
7.83
18.93
2.85
3.01
45.00
15.00

It will be seen that out of each hour 45 minutes is occupied
in actual active work and 15 minutes is left free for watching
and waiting, personal and fatigue. It should be noted, however,
that watching and waiting time is not necessarily pure rest. A

INDUSTRIAL RELATIONS

weaver during watching and waiting time sits down and does not
actually perform any operation on any of his looms, but if a loom
stops the man must go and attend to it. It will also be noted
that, as one of the mysteries in weaving not yet completely solved
is the wide fluctuation that may take place from hour to hour in
end breakage, the amount of time which the weaver may spend
on piecing up ends varies appreciably for short periods. The
figures given in the table quoted above are based on careful
observation and experience over a long period and under widely
different atmospheric conditions.
Wages
The average wage for operatives employed by the undertakingin April 1932, calculated on a 48-hour basis, was $22.00. Wages
of loom fixers were $34.00, weavers $33.00, and the minimum wage
paid in the establishment was $14.00.
In consequence of the continued depression in the textile industry,
it was necessary to put into effect in 1932 and 1933 two reductions
of wages, each of approximately 10 per cent. The result was that
in May 1933 the average weekly wage was $18, wages of loom
fixers averaged $27.50, weavers $26.75, and the minimum wage
paid in the establishment was $12.00.
After the coming into operation of the Cotton Textile Code, and
with the basis of job assignments somewhat changed, the average
wage based on a 40-hour week was $20.50. Loom fixers averaged
$26.60, and weavers $23.00. The.minimum wage in the North
was fixed by the Code at $13.00.

EMPLOYMENT AND TRAINING

Employment
New hands are hired directly by the overseers in charge of the
various departments. The overseer is responsible for the quantity
and quality of production in his department, and it is considered
right, therefore, that he should have the opportunity of choosing
his own personnel. In actual practice, if the overseer finds at
7.15 in the morning, when work commences, that any of his staff
are not in their place, he goes to the " spare floor " where those
in search of employment are waiting. He selects by personal

THE PEQUOT MILLS, SALEM, MASS., U.S.A.

interview the most suitable person or persons, and they are immediately set to work. The system of " call girls " is not applied
at the Naumkeag mills. " Call girls " are girls who are not regularly
employed, but remain at home ready to come at a moment's notice
to take the place of absentees.
There is no central employment bureau in the Naumkeag mills,
and no central employment system. It is not considered that it
would be justifiable to set up central machinery for employment,
for two or three reasons. In the first place, the rate of labour
turnover is extremely low, so that the number of new hands taken
on in normal times is very small. Further, employment is greatly
sought after in the Naumkeag mills, and the overseers have large
numbers of candidates to choose from, many of whom will be relations or friends of trusted employees. As each overseer is responsible for doing his own hiring, so he is also responsible for discharging. As, however, a careful selection is made before hands
are taken on, the number of dismissals is in normal times not great.
When it is necessary to lay off employees owing to reduced production or as a consequence of rationalisation, one of the main
principles applied in selecting employees for dismissal is that of
seniority. In every department a list of the operatives employed
is posted on a bulletin board in accordance with the date of first
engagement. Employees are proud of their seniority rating, and
if it becomes essential to reduce staff, the most junior are, other
things being equal, those who are obliged to go.
While, however, each overseer is allowed liberty, in accordance
with the general principles of employment laid down by the firm,
in respect of hiring and firing, he is limited in respect of employment
by his quota. Each department is allowed a certain quota of
employees which must not be exceeded. The Agent personally
supervises the monthly recapitulation of the actual payroll of the
department in comparison with the quota allowed for that department. All staff records are kept in the central office, to which each
department submits a weekly record of movements in the staff
employed in that department, indicating, in the case of separations,
the reason for the separation, for example, " retired on pension ",
" left to marry ", and so forth.
Training
Ordinary operatives normally get their training in the department
in which they are hired. They are put first of all on unskilled

INDUSTRIAL RELATIONS

work, in which they have opportunities of learning more skilled
work, and gradually they are promoted. In the weaving department,
for instance, a new hand normally begins as a sweeper. As a
sweeper she gradually acquires a working knowledge of the next
higher job, namely, that of the cleaner. The cleaner gradually
learns the work of the battery hand, and the battery hand in
turn that of the weaver. Whether promotion is slow or rapid
from one job to another naturally depends on a variety of circumstances, the occurrence of vacancies, and the intelligence,
adaptability and skill of the employee. In the case of technicians,
provision is made by the mill for its technicians to take courses in
Textile Technology from time to time at the Massachusetts Institute
of Technology, Boston, the undertaking paying their salaries and
expenses throughout the course. Permission is also freely granted
to technicians to attend meetings of technical bodies, in some cases
leave with pay and travelling expenses being accorded.

SAFETY, HEALTH AND WELFARE

Accident Prevention
Much attention is paid to the prevention of accidents. In
addition to the measures for industrial safety required by
legislation, every endeavour is made to provide additional
mechanical safeguards, and to educate the employees, with the
co-operation of the Union, in the prevention of accidents. In each
department there is a special bulletin board on which records
are prominently displayed of the accidents occurring in that
department, together with the accidents taking place in the
whole mill. The causes of the accidents in each department are
given on a typewritten sheet affixed to the board. Posters containing publicity and educational matter relating to accident prevention are also displayed. A representative of the insurance company
visits the mill once a week and meets the members of the workers'
accident committee, which consists of one worker from each
department. He discusses with them any additional measures,
either of a material or psychological order, that could be taken
with a view to accident prevention. The representative of the insurance company also meets the foremen, and has access to the
superintendents and to the Agent.

THE PEQUOT MILLS, SALEM, MASS., U.S.A.

Health Provisions
Industrial nurses are employed who attend immediately to
all accidents. It is impressed upon employees that even the
slightest accident should be reported, and attended to without
delay. The nurses also give attention in cases of sudden sickness
or malaise on the part of workers, and give them advice on general
matters of health. Serious accidents are immediately reported
to the works doctor and are treated by him. The works doctor
and the industrial nurses are also responsible for the general
hygienic provisions of the mill, which are maintained in a_ high
state of efficiency.
In the case of employees in the bleachery, where good eyesight
is indispensable, the eyes of every employee are periodically
examined at the expense of the undertaking by an oculist, and
glasses are supplied to them free in accordance with the oculist's
prescription.
Workmen's Compensation and Pensions
Workmen's compensation is provided for in the mills in
accordance with the Workmen's Compensation Law of the State
of Massachusetts.
Although there is no regular pensions scheme in operation,
the Agent has discretionary power to provide pensions for operatives of advanced years with long service in the firm who become
incapable of work. Operatives have no right to a pension, but in
cases of long service the Agent, in his discretion, grants retiring
allowances. The pension given depends on a variety of conditions,
such as age, wage, long service and personal circumstances. In the
month preceding the writer's visit to the mill, three operatives
were placed on pension, on allowances varying from $5.00 to
$15.00 per week.
Welfare
With regard to welfare, the general policy of the undertaking
is to pay its employees the highest wage possible, and not to
spend money on accessory and marginal welfare institutions
(" the welfare of the workers is placed in their pay envelopes ").
It is not considered necessary by the undertaking to make special
provision for the employees after their hours of work in the mill.
Salem is not a large town, its population numbering less than

INDUSTRIAL RELATIONS

50,000, and it abounds with religious and charitable associations
making provision for recreation and for the health of its
inhabitants. The Young Men's and Young Women's Christian
Associations and the corresponding Catholic and Hebrew associations provide educational and recreational facilities. Playing
fields are within easy reach, and in the summer the sea branches
afford opportunities for healthful and invigorating recreation.
From the point of view of health, there are excellent hospitals
in the town, and various national and religious organisations
maintain orders, fraternities and sororities which take care of
the sick.
As a large proportion of the workers return to their homes
for the midday meal, no need has arisen for the provision of a
cafeteria or restaurant. For the convenience of those who remain
in the mill at the lunch hour, however, a lunch room is provided,
with an attendant who will heat food which the employees bring
with them from their homes. Employees may eat their lunch in the
lunch room, in their departments, or in the open air. After having
eaten their midday meal, employees often join in ball games in the
grounds of the mill.
No general stock ownership scheme is in operation in the mill,
but all employees—executives, overseers, office employees and
operatives—are permitted to purchase shares in the company
by a system of deferred payment. It is considered, however,
that owing to the wide market fluctuations in the price of general
textile securities, they are not suitable investments for the general
body of employees to acquire in this manner.
Finally, reference may be made to the Américanisation School
conducted in the factory in the winter months. The factory
supplies the room for the School, and the State furnishes the
teachers. The School meets two hours per week and its main
aim is the teaching of English to employees whose knowledge
of this language is rudimentary. In March a little graduation
ceremony takes place, with an entertainment provided by the
Company. A knowledge of English is useful both to the employees
and to the Company: to the Company because it prevents misunderstanding of orders given by the overseer, and to the employees
because it supplies them with one of the conditions necessary for
naturalisation. As a matter of fact, in the case of new employees,
only those who understand English are now engaged.

THE PEQUOT MILLS, SALEM, MASS., U.S.A.

INFLUENCE OF LABOUR LEGISLATION

Little reference has so far been made to the effect of labour
legislation on industrial relations within the mill. That effect
is, however, far-reaching, for basic conditions are largely determined by the system of labour legislation of the State of
Massachusetts. It is necessary here only to. mention the more
important provisions of the various laws.
Work is prohibited on legal holidays, except such work as
is absolutely necessary, and it is also prohibited to make up time
lost by reason of a legal holiday by working more hours on any
one day than the law permits. Work on Sunday is prohibited
unless the worker is allowed during the six days next ensuing
twenty-four consecutive hours without labour. Before operating on
Sunday, every employer, with certain specified exceptions, must
post in a conspicuous place on the premises a schedule containing
a list of his employees who are required or allowed to work on
Sundays, and designating the day of rest for each.
Conditions of work of women and children are particularly
carefully regulated. Their hours of work are normally limited to
8 in the day and 48 in the week, with provision for additional
hours on the first five days of the week in order to provide for
the Saturday half-holiday. No woman over twenty-one may be
employed in any capacity before 6 a.m. or after 10 p.m., or in the
manufacture of textile goods after 6 p.m. This provision, it will be
noted, prevents the application of a two-shift system in the textile
industry in Massachusetts. Similar provisions, varying according
to age, apply to boys under eighteen and girls under twenty-one.
No child under fourteen is allowed to be employed in any industrial
occupation. Employment of minors under sixteen is prohibited
in the case of certain specified occupations and employment of
minors under eighteen is prohibited in a further series of dangerous
or heavy occupations. Women may not be employed in industrial
undertakings within two weeks before or four weeks after childbirth.
Women and children, subject to certain specified exceptions, must
be allowed their meal times at the same hour. No woman or child
may be employed for more than six hours at a time in a factory or
workshop without an interval of at least forty-five minutes for
a meal. Provisions are also contained in the law with regard
to the employment of children in street trading and other similar
occupations, the lifting and moving of weights, and so forth.
5

INDUSTRIAL RELATIONS

Further, laws provide for the establishment of minimum wages
for women and minors and the establishment of the necessary
wage boards.
The laws further contain detailed provisions as to health and
safety in factories and mills. These are particularly comprehensive in the case of textile factories, where detailed regulations
are made with regard to the use of standardised wet and dry
bulb thermometers for the purpose of recording and regulating
the humidity of the atmosphere and the temperature. Detailed
regulations are also made with regard to the installation of safety
devices for machinery and for the lighting, ventilation and cleanliness of the premises. Further, sections of the general laws contain
regulations with regard to the weekly payment of wages and
precise specifications concerning the payment of wages in cotton
textile factories. It is provided, for example, that no employer
shall impose a fine on any employee engaged in weaving for imperfections arising during the process of weaving. In every textile
factory, in every room where any employees work by the job,
specifications are to be posted of the character of each work to be
done by the employees and the rate of payment.
Workmen's compensation, as already indicated, is also provided
for by law.
The law provides for action to be taken by the board of
conciliation and arbitration in the case of industrial disputes.
This very brief enumeration of some of the provisions of the
system of labour legislation of the State of Massachusetts will
give some indication of the extent of the control exercised by
the law over conditions of employment.
In certain respects these legislative measures have been
superseded by the provisions of the Cotton Textile Code, which
lays down, inter alia, that hours of work may not exceed 40 per week,
and that no minor under sixteen may be employed.

CONCLUSION

The working of industrial relations in the Naumkeag mill»
combines, it will be seen, several features of interest. A thoroughgoing system of Union-Management co-operation was developed
in an undertaking with a long tradition of labour management on
autocratic and even paternalistic lines. All that is good in that
tradition was transmuted into the maintenance of cordial personal

THE PEQUOT MILLS, SALEM, MASS., U.S.A.

relations between management and workers within the framework
of collective agreements and labour legislation. While some features
of the system proved unequal to the strain of an exceptionally
difficult period, the value of the results achieved remains very great.
The unions co-operate with the management not only in the
regulation of labour conditions, but also in the development among
workers of diverse national origins of a spirit of esprit de corps and
loyalty both to the Unions and to the mills.
The management, on its part, takes the workers into its
confidence, realising that better work will be done if causes of
suspicion and ill-will are removed before they have time to breed
trouble. By associating the workers in technical research, the
management was able to apply the principles of scientific method
throughout the whole plant, and thus assure the continued operation
of the mills in the face of intense competition and throughout
a period of profound economic depression.
0

A Paris Department Store
(La Samaritaine)
In order to emphasise that these studies of industrial relations
are intended to cover the relations between employer and workers
not only in industry but in commercial establishments as well, it
has been decided to devote one of the present series to a big
department store. The undertaking chosen is the " Samaritaine
Stores " (Grands Magasins de la Samaritaine) in Paris, which,
besides being one of the largest enterprises of its kind in the world,
also has certain features of special interest in the form of profitsharing and labour co-partnership schemes.
Like all department stores, the establishment under consideration here is essentially a distributive organisation. Vertical
concentration is not popular in this type of undertaking; although
superficially logical, it would be unsatisfactory if applied on a
general scale. In the Samaritaine Stores it is found only in the
men's ready-made clothing department, in which connection it
will be examined in due course. The present study is confined to
the Paris area, the undertaking having no other branches either
in the provinces, in the French colonies or abroad.
The Stores are situated in the centre of Paris near the river
.Seine on the right bank, with an annex on the grands boulevards
between the Opéra and the Place de la Madeleine. The men's
ready-made clothing workrooms and their warehouses are higher
up the river. The general warehouses and delivery and despatch
services for goods ordered to be sent by personal shoppers or
ordered out of the catalogues are housed in a large building on the
outer boulevards to the south-east of Paris. This threefold division
of the various services was necessitated by the impossibility of
finding suitable premises near the Store itself. Its inconveniences
have been mitigated by a direct and regular system of communications and by making the several sections of the undertaking more
or less autonomous.
Including the Store itself, the packing and forwarding services,
the workrooms and the warehouses, the Samaritaine covers a

INDUSTRIAL RELATIONS

total ground area of 48,000 square metres and a total working area
of 270,000 square metres. It employs a staff of between 8,000
and 9,000 according to the season and has an annual turnover
of 1,500,000,000 francs involving cash transactions amounting to
over 5,000,000,000 francs.
I t is unnecessary to give a detailed description of the sales
departments of the store, since the assortment of goods displayed
is more or less the same in all establishments of this kind. Like
most other similar undertakings, the firm takes all possible precautions against fire, having a special staff of firemen and special
equipment including a system of fire alarms and automatic extinguishers. Provision is also made for emergency lighting, in the
event of the municipal power supplies being interrupted, by power
engines in the basement of the main building, which also supply
the power for the lifts and moving staircases.
The workrooms in which men's clothing is made are in a separate
building and employ 500 persons, mostly women. They turn out
only a quarter of all the garments sold by the store, the rest being
obtained from manufacturers 1 . Nearby there is a warehouse for
storing the manufactured stocks of clothes, which also serves to
house the reserve stocks of women's underlinen and shoes.
The despatch, delivery and general reserves services employ
between 2,500 and 3,000 permanent employees and a number of
temporary helpers varying with the season. The general reserves
are a replica of the Store itself; they contain stocks of all the
goods advertised in the firm's catalogues with a view to preventing
the overcrowding of the actual sales departments and enabling
mail orders to be dealt with as quickly as possible 2 . These services
also receive and distribute incoming correspondence, again with a
view to speeding up operations.
To complete this general description of the undertaking about
to be examined some account must be given of its credit sales
branch, La Semeuse de Paris. This company, which is under the
direct supervision of the under-manager of the parent firm, is
intended to facilitate the purchasing of goods by allowing payment
by gradual instalments. The scope of its operations has been
1

In the main store building itself there are also women's ready-made clothing
workrooms, and fur-working, cabinet-making, upholstery and bedding workrooms. These employ a comparatively small number of workers for purposes
of 2alterations and special orders.
Except in the case of the ready-made clothing departments, which as
already stated have their own warehouse.

A PARIS DEPARTMENT STORE

wide from the beginning, and its activities extend to all wholesale
and retail firms, which may open a current account with it upon
application and after due enquiry. Its chief customer is nevertheless
the Samaritaine Stores. Precautions are taken against dishonest
or reckless borrowers ; a thorough enquiry is made into the circumstances of every customer before he is allowed to open an account,
and strict conditions are laid down for every loan. These include
cash down for one-third of the amount, a maximum period of six
to twelve months for repayment, and the obligation to settle the
previous account before opening a new one. Lastly, the range of
goods which may be acquired by credit vouchers is strictly limited,
luxury articles and goods for immediate consumption being
excluded.
How

A DEPARTMENT STORE WORKS

No big department store could carry on its business successfully
if it were organised on centralised lines: the concentration in the
same hands of such varied activities, dealing with such a number
of different goods, would inevitably paralyse all initiative and lead to
the ruin of the undertaking. H enee every big store as it has developed
has been obliged to allow a large measure of freedom to its principal
services, especially those responsible for sales, i.e. the departments.
At the same time this freedom does not imply an absence of supervision. In the Store which is under consideration here, there are
twenty-eight administrators, each in charge of several departments
or central services. They in turn are responsible to the two managers
of the limited partnership company of the Grands Magasins de la
Samaritaine. Managers and administrators have frequent contact
with each other; they meet in conference once a week and some
of the administrators also make daily reports to the head manager,
who is responsible for the general conduct of the establishment.
Side by side with this organisation, there are the shopwalkers,
who have their own grading and are responsible solely to the
general management.
The Departments
The Samaritaine Stores has ninety departments, each of which
is in charge of a head and one or several assistant heads (300 in all).
Each of these departments is organised like a separate shop. The
work of the heads of departments has been described by Mr. Gabriel

INDUSTRIAL RELATIONS

Cognacq, in an account which gives some idea of how all similar
establishments operate 1 :
" Each department is in itself a large commercial establishment, since
its turnover always reaches a very respectable number of millions of
francs, fluctuating between 20 and 30 millions in certain departments.
The head of the department and the administrator who supervises
several department are really shopkeepers with full freedom of action
within their appointed field ; they buy what they wish and where they
wish within the limits of the credits allotted them by the management,
which in return for the partnership to which it admits them requires
only that they shall produce a turnover and a profit fixed at each yearly
stocktaking. They may obtain larger credits during the course of the
year on showing that their turnover to date has exceeded the management's estimates 2.
" But whereas the ordinary retailer is obliged to deal with a thousand
details of his business, which cost him a great deal of time and worry,
the heads of departments and administrators are absolved from the
trouble of all the contingent operations of buying and selling, which are
done for them by the general services of the store. The central accounts
department settles their bills, the advertising service inserts the notices
they transmit to it in newspapers and catalogues; the local delivery
service and the provincial despatch service (which also forwards to the
colonies and abroad) are responsible for delivering to their destination
the goods they have sold, and the information service informs them at
any time of the quality and price of similar lines of goods sold by their
competitors. They are thus free to devote all their attention and all
their activity to the work of buying and selling, and they are in constant
contact with the customers whose whims and requirements they can
test at any time.
" The goods in stock must be sold very quickly and therefore at a
very small profit. If they are selling badly, they must be cleared at
once at reduced prices, at any sacrifice, since the essence of the trade
is to renew the stock as many times a year as possible with the same
amount of capital, so that this capital may be continually working and
producing. It is better to incur a 20 per cent, loss at once on an
unpopular line of goods than to let them lie on the shelves where they
lose their freshness and more and more of their selling value, a principle
which accounts for the frequent clearance sales held by big stores. The
head of the department will try to balance the loss by making a larger
profit on a more popular line. This, however, is not always easy because
of the keen competition of other stores, and if he makes too many
mistakes in the same year either his turnover or his profits will fall, and
he will have to make room for a colleague who may be more skilful.
For him this is the equivalent of bankruptcy in the case of a small
retailer.
" The typical features of the selling policy of big stores are, as you
know, free admittance, freedom to circulate within the store, prices
marked in plain figures, and the possibility of exchanging or returning
purchases. The customer, who may be either timid or undecided,
i A talk on department stores published in L'Echo des Roches in 1933
by2 Mr. Gabriel COGNACQ, head manager of the Samaritaine Stores.
The practice of entrusting all buying and selling operations to the heads
of departments is not general ; in some department stores the buying is done
by a central body.

A PARIS DEPARTMENT STORE

wants to see what there is without being pestered to buy; to make up his
mind or to obtain information without feeling obliged to buy anything
at all, and to yield to temptation without any anxiety, knowing that
he need not keep the object he has bought if he changes his mind on
reaching home. The big stores display their goods in such carefully
arranged order, in spite of their apparent lack of method, that the desire
to buy is born of icself and the purchase is made almost automatically.
All the shop assistant has to do is often merely to make out the bill.
Thus sales are effected very quickly; the assistant earns a good living
and the store is able to apply its selling policy more and more easily, i.e.
to sell the article as nearly as possible at the price charged by the factory
with the smallest possible addition for overhead expenses, and making a
very small profit or even none at all if it should seem advisable for
purposes of advertisement. This practice has given rise to the classic
joke that the big stores lose on each separate article they sell but make
it up on the lot.
" As a matter of fact, this paradox could actually be made to come
true, and I will tell you how. The secret is that the store has actually
already made a profit on the article before it is displayed for sale at allit has made a profit on its cash reserves. What exactly is this profit ?
It is nothing but the rent on the money advanced to the department for
the purchase of its stock, the equivalent of the interest charged by banks
on the credit they allow to retailers ; but in the department stores it is
the managers who act as bankers to the shops represented by their
departments. You will see now why the first profits of the department
store are made not on sales themselves but on the turnover of capital.
The quicker the goods can be sold, the quicker is this turnover and therefore the larger the profits of the store. This explains the fact that a
department store can often sell at a loss; it wins on all hands since if it
takes a commission of 3 or 4 per cent, every time it advances the money
to stock a department and if it lends the same capital to this department
several times a year, this capital in itself will have earned a very considerable income by the end of the year.
"This profit on cash reserves also serves another purpose: it forces
the buyers to buy carefully, since they know that they must show the
management a gross profit fixed in advance, and that the management
bases this profit on the purchase price plus the interest on its capital.
" It must also be remembered that the store will often have made its
profit on cash reserves and its profit on sales even before it has paid the
manufacturer for the goods concerned, since much of its stock is sold
almost before it has reached the counter, whereas it need not be paid
for until a month or ninety days after delivery. Hence it sometimes
makes yet a third profit in the form of discount for early payment; for
whatever the terms of payment agreed upon between the buyer and the
manufacturer, the store is always in a position to pay as soon as it takes
delivery of the goods, provided that it keeps plenty of cash in hand.
It may even, although this is less frequent, pay advances on account of
goods in course of manufacture. All these bills are, of course, discounted
at a rate proportionate to the period which still has to run before the
normal date of payment."
The Central Services
It would be unnecessary to give a detailed account of all t h e
central services in a big department store, but there are some

INDUSTRIAL RELATIONS

which are of particular interest for the purposes of this study and
may therefore be described in somewhat greater detail. These are
the delivery and despatch services, backed by the general reserves
and housed, in the case of the Samaritaine Stores, in a large building
some distance from the shop itself.
The process of despatching orders differs according as to whether
the goods are selected personally at the store by the customer
or ordered by post. Goods bought in the store, if not taken away
by the customer, are sent to the delivery and despatch services 1 .
If the goods are to be paid for on delivery a bill is attached, and
payment must be secured by the delivery man before leaving the
parcels. The articles may, however, be returned or exchanged by
the purchaser subject to certain conditions which are the same in
all the big stores.
The system is slightly complicated when the customer is given
a collective bill enabling him to make purchases in different departments without having to pay at each cash desk. All the articles
with the same account number are sent down shoots to the basement
of the main building, where they land on a revolving tray and are
removed as they go past by the employee in charge of the series
to which the number belongs, and placed on a rack. When the
customer has completed his purchases he has to hand in the
collective bill to a central cash desk, and this is also sent to the
basement. As all the purchases are entered on the bill it is an
easy matter to collect and check them, and all that then remains
to be done is to add the invoice if payment has not already been
made at the central cash desk.
In the Samaritaine Stores however, the majority of purchases
are selected from the catalogues, some of the orders coming from
the other side of the world. Most of the mail comes in at about
8 a.m.; the personal letters are first sorted and put aside, and the
rest are then opened by machine. A second sorting then takes
place by sections, that is, by groups of departments served by the
same railway system, by colonies or by foreign countries, according
to the postmark. Envelopes which are stamped illegibly or by a
travelling post office are placed on one side, opened last and
classified in the appropriate section according to the address
inside the letter.
1
In the case of heavy goods the articles selected are taken directly from
the central reserves to save transport expenses, those displayed in the shop
serving merely as samples.

A PARIS DEPARTMENT STORE

A clerk for each section collects the letters within his area,
stamps them with a reference number and makes them up into
packets of twenty. These are then handed over to the readers,
who have to decide and note the category in which each is to be
filed, i.e. order with remittance, firm order, reLurn of goods, complaint, etc. When this has been done the letters are collected
again, sorted into categories and filed. The orders with remittances
are sent to the accounts department with the forms for payment
enclosed, and the sum with which the purchaser is credited is
entered on the file. These letters are then treated in the same
way as firm orders except that they are given priority.
All the mail orders are copied on slips corresponding to the
departments concerned, each section having a different-coloured
slip to facilitate the classification of the articles when supplied.
This is done by home workers. The letters are distributed on the
day of their arrival and must be returned in the course of the
following day with the corresponding slips. In connection with
this process of classifying the separate orders on slips, the address
lists for advertising purposes are also brought up to date.
These slips are then classified by departments and transmitted
to the appropriate department for the articles ordered to be
supplied \ When the order specified on the slip has been supplied
and checked, the article is placed on a conveyer passing through
all the departments and carried on to a revolving tray. Round
this tray a number of assistants sort the goods into sections by
the colour of the slip and send them down shoots to the sections
in the lower storeys. There they are sent to the sorting department, where, by means of a subsidiary system of numbering, the
articles sent from the various departments to make up the order
are quickly assembled. The articles are then put with the file
containing the original letter, but are not taken out until the
order has been completed or completed except for given articles
which the file states cannot be supplied immediately. Next to the
sorting department is the department which has to see that the
goods sent by the various departments correspond to those ordered.
At this stage the goods are roughly parcelled up and sent on by
conveyer to the " receivers ". The latter are responsible for seeing
that the numbers on the slips tally exactly with those on the files
and that the replies of the departments concerning the articles
1
Actually they are handed to the reserves department corresponding to
the appropriate department in the Stores themselves.

INDUSTHIAL RELATIONS

they cannot supply or cannot supply exactly as ordered are clearly
noted outside the files, so that they cannot be missed by the
employee responsible for sorting the files after the order has been
despatched and informing the purchaser accordingly. The parcel
is then sent to the " debiting department " where a clerk types
out the invoice, taking account of any payments made in advance,
the label, and, if necessary, the form for reimbursement. These
documents are placed in the file1, which is then attached to the
parcel and sent with it to the checking service, which verifies the
address and debiting and reimbursement operations. The package
is then sent to the packing department. The final stage in its
long journey is through the parcels post service, which fills in the
post office or railway forms and conveys the parcels to the post
office or to the appropriate railway station. The files containing
the orders which have been supplied in full are then destroyed,
only the copies of the documents for the accounts department and
the receipts for the parcels despatched being kept, and providing
a record of the order and its execution.
As regards goods delivered directly to the customer's house, no
distinction is made between orders sent by post and those given
by personal shoppers. They are classified by delivery districts,
some of which are a considerable distance from Paris. The delivery
by post or rail of goods bought at the Stores by the customer does
not call for any special comment.
Superintendence
Superintendence is an important factor in the conduct of a
department store. It is exercised on behalf of the management
by shopwalkers who ensure constant supervision of the departments
and services, their duties extending as far as the temporary redistribution of staff among the different departments should one
of those under their supervision be overstaffed 2.
The duties of the shopwalkers are laid down by the rules of the
establishment. They have to make a daily written report to the
General Superintendent, describing the events of the day and
adding their personal comments. They are responsible for setting
an example of correct behaviour and speech, maintaining discipline
1
As regards " heavy " packages a distinction has again to be made ; as
each article is despatched separately, they are dealt with by means of a set
of slips which do not pass through the whole series of operations just described.
- There are 180 shopwalkers in the Samaritaine Stores under the control.
of four divisional superintendents and one General Superintendent.

A PARIS DEPARTMENT STORE

among the staff and intervening if they hear noisy or heated
discussion. They have to report to the management any complaints
from customers and any shortcomings on the part of the staff,
even down to listlessness and slowness in carrying out their
duties.
The discipline in all department stores is strict. No talking is
allowed between men and women employees except on matters
connected with their work, a rule which is common to all undertakings employing a large staff and which the shopwalkers are
required to enforce with particular strictness. It is also the duty
of the shopwalkers to keep a close watch over the customers
themselves. In this they are assisted by women superintendents
who mingle with the saleswomen and are less conspicuous than
the shopwalkers in their frock coats and white ties.
A few words must also be said on one or two other points to
complete this explanation of how a big department store works.
On grounds of expediency it has been found necessary in certain
cases to limit the autonomy of the departments and services. In
the case of the men's ready-made clothing department, for instance
—the only example of vertical concentration from production to
distribution in this firm—the workrooms and sales departments
are controlled by one and the same management. The reserves
of these departments in their special warehouse are grouped by
storeys or sections of storeys corresponding to each department.
The heads and assistant heads of departments (the latter being
known as " seconds ") withdraw their stock from the reserves,
giving a receipt for it to the storekeeper.
A similar measure of rationalisation is applied in respect of the
general reserves. These are important enough to warrant the
permanent detachment of an assistant from the department to
take charge of its reserves, responsible for supplying articles
ordered out of the catalogue and reporting to his chief at the end
of the day. The administrator in charge of the delivery and despatch
services does not intervene unless cases of delay or neglect are
brought to his notice, when he forwards his remarks to the administrator responsible for the department concerned. This system
enables orders to be supplied with the maximum of speed and
accuracy.

INDUSTRIAL RELATIONS

THE STAFF

Under this head consideration will be given successively to the
engagement of workers, working conditions and pay, and dismissals, laying stress only on those features peculiar to department
stores in the Paris area and to the Samaritaine Stores in particular.
Engagement of Workers
With a staff varying according to the seasons between 3,000
and 5,000 permanent and temporary employees for the sales
departments alone, 800 odd men 1 , nearly 400 cashiers (men and
women), 200 book-keepers and as many typists, and between
800 and 1,500 employees in the delivery and despatch services, it
is obvious that recruiting methods must be strictly defined. This
is all the more necessary in that the superior posts, up to the very
highest grades, are habitually filled by promotion from within.
The general rule adopted by the big department stores in the
Paris area is to admit to their staff as salesmen and saleswomen
(by far the largest section of the staff) only persons with good
references who have had at least a year's experience in a similar
but smaller undertaking. As an exception, and strictly within the
limits of the posts available, apprentices between sixteen and
twenty years of age are also accepted, the girls as junior shop
assistants and the men in the despatch department. In these
subordinate posts they learn the ways of the house, and if found
suitable are promoted to salesmen and saleswomen as soon as a
vacancy occurs.
Candidates for posts are required to apply personally at a
specified time. They must first fill in a form stating their full name,
age, birthplace, nationality, religion, education, present address,
family situation, previous employment, apprenticeship served,
reasons for giving up previous jobs, knowledge of languages,
diplomas or certificates gained, and lastly, stating whether they
are prepared on entering the firm's employment to furnish an
extract from their police record. The candidate is then interviewed
by the head of the staff branch, all further questions asked and
information given being recorded together with the personal
impressions of the person conducting the interview. After this,
unsuitable candidates are weeded out and a strict investigation is
» See p. 80 for composition of this category.

A PARIS DEPARTMENT STORE

made on the basis of the particulars supplied by those whose
names have been retained. As regards applicants who began their
career in the provinces, the management communicates by correspondence with their former employers, and the mayors and police
authorities of their place of residence. In this way personal files
containing the fullest possible details are constituted and a second
selection is made. The applicants ultimately chosen are summoned
whenever a vacancy suitable to their age and qualifications becomes
available 1 .
Working Conditions
The working day of the staff of the Samaritaine Stores begins
at 8.45 a.m. and the employees leave the building at 6.45 p.m.,
the heads of departments and their assistants leaving last, after
seeing that all their subordinates have gone. A break of sixty-five
minutes is allowed in the middle of the day, when the firm provides
a free meal, compulsory for most of the staff, in its restaurants,
one of which is in the main building and the other in the general
warehouse. The meal is served in three shifts from 10.30 a.m.
to 1.30 p.m. All department stores in the Paris area are closed
on Monday morning.
The rules governing annual holidays are as follows: both salaried
and wage-earning employees may if they so desire take fifteen
days' leave during the holiday period, which normally extends from
1 May to 31 August of each year. They receive no pay during
their leave, but holiday allowances are paid with the salary or
wages for the month or last week of August to all members of the
staff entitled to them, that is, to all permanent employees or
workers with a full year's service (from 1 August to 31 July of
the following year) during which they have not been absent
without permission for more than thirty-one days (the two months'
leave granted to women in case of childbirth being considered as
authorised leave).
The heads of departments and services and their assistants
receive the interest due to them on turnover during their fifteen
days' leave, but their fixed remuneration is suspended. Workers
of both sexes in the workrooms for men's and women's clothing,
furriers, cabinet makers, furniture makers, upholsterers, bedding
and mattress makers, firemen, packers and lingerie makers paid
1

Francis AMBRIÈRE: La Vie secrète des grands magasins.

INDUSTRIAL RELATIONS

by the week receive a holiday allowance equal to one week's
earnings.
Employees or manual workers paid by the month receive a
lump sum varying with their job, sex and age according to the
following scale. The first category comprises odd men (inside men,
delivery men, workers in the supplies service and electricians,
night watchmen, cooks and waiters in the staff restaurants, women
in the sanitary and cleaning services, and those responsible for
collecting waste paper). All the rest of the staff belongs to the
second category.
SCALE OF HOLIDAY ALLOWANCES FOR WORKERS AND EMPLOYEES
PAID BY THE MONTH
First category

Second category

Age at end of vear
(31 July)

Years
U n d e r 17
17 to 21
21 to 23
23 t o 30
Over 30

Men

Women

Alen

Women

Fr.

120
150
200
220
280

120
140
160
180
220

120
150
200
240
300

120
150
17.5
200
250

Wages and Salaries
It is a matter of fairly common knowledge that the salesmen
and saleswomen in big department stores are paid on the basis of
a commission on their sales after deducting those cancelled or not
confirmed because the goods in question were returned or the order
cancelled before delivery. The old fixed rates of remuneration
established for the occupation before the devaluation of the
currency have been maintained ever since; they vary between
25 and 100 francs a month in the Samaritaine Stores. This shows
that the practice of paying remuneration as a commission on sales,
which is known as guelte, is so widely accepted that the payment
of a fixed monthly sum no longer has anything but a nominal
value as a survival from the past.
Average figures for the earnings of the staff of the Samaritaine
Stores according to age and occupation are given in the table on
pages 82 and 83. It may be noted that as regards sales the turnover

A PARIS DEPARTMENT STORE

varies very considerably from one department to another. A few
years ago salesmen and saleswomen earned an annual income of
between 12,000 and 20,000 francs according to the department
and to their individual efficiency. The average has fallen slightly
since the onset of the depression.
Wherever possible payment is at piece rates rather than at time
rates, not only in the case of workers in the clothing workrooms
but for the staff of the delivery and despatch services, the typists
and the clerks responsible for checking the manifold book-keeping
operations.
The higher-grade staff—heads and assistant heads of departments
and administrators—also receive a fixed salary and a percentage
on turnover, the latter forming by far the larger part of their
remuneration. In the case of administrators, this percentage is
calculated on the turnover of the whole firm and not on that of
the departments actually under their charge, this arrangement
being intended to strengthen the community of interests between
the members of the higher-grade staff. In accordance with the
principle of the autonomy of the individual departments, however,
the heads and assistant heads are paid on the basis of the net
sales of their respective departments.,
The free midday meal provided by the firm costs it an average
of 1,800 to 2,000 francs per year for every employee. This meal
is compulsory, and the management considers that the money is
well spent, the outlay being balanced by a better output on the
part of the staff. Members of the staff are also allowed a discount
of 15 per cent, on all their purchases at the stores, but they may
only do their shopping between 8.45 and 9.30 a.m. in order not
to interfere with the ordinary customers.
The profit-sharing scheme established under the company's
articles is dealt with in a separate section, but it may be noted
here that with very few exceptions these arrangements increase
the earnings of practically all members of the staff x. The family
allowances which also go to increase the income of heads of families
are discussed at length in the section devoted to welfare schemes.

The annual wages bill for 1933 was 150 million francs and the amount
of profits distributed about 27 million francs.
6

AVERAGE EARNINGS OF STAFF OF THE SAMARITAINE STORES BY
(EXCLUDING PROFIT-SHARING BONUSES AND FAMILY A

Men

Occupational category

Salesmen, saleswomen
Sales: Provinces
„
Paris suburbs .
Junior shop assistants
Ticketers (women)
Lingerie makers
Shopwalkers
Superintendents
Checking: Paris sales
n
,,
))
„
Provincial sales
Complaints: Paris customers
Book-keepers
?)

Cash desk clerks
Book-keepers: Paris deliveries
Supervising cashiers
Telephonists
Receipt of goods
Odd men (inside)
Delivery men (inside)
,,
,, (inside)
,,
„
(outside)
„
„
(outside)
Supplies men

Method
of
payment

Commission
Task
»J

Under 21 years

Over 21 years

U n d e r 21 y

N u m b e r Average N u m b e r Average N u m b e r Ave
emannual
emannual
eman
ployed
wage
ployed
wage
ployed
w

1,995
293
29

12,600
15,000
19,900

91
2
4

155

15,600

—

6
—
—
—

6,600
8,000
—
—
7,400
—
—
—

24 11,000
15 11,100
13 15,000
18 12,700
29 14,300
13 18,400
156 13,500
77 13,800

15
38
1
7
—
3
—
3

7
8
12
7
—
8
—
8

—
—
12
—
—
—
—
1

—
—
8,100
—
—
—
—
8,200

—
—
40 13.200
590 10.300
29 10,600
78 12,600
65 10,000
184 11,700
64
9,900

—
—
—
—
—
—
—
—

—
—

75
19
—

9,500
7,300
—

.—

—

14
3
—

9
8
8

Time
J)
) J

))
J)
Í3

Task
ti

Time
)}

Task
Time
,,
,,
»i

;)

Task
Time
Task
Time

—

•

Liftmen
Electricians
Employees in provincial sales
service (male)
Employees in provincial sales
service (male)
Waste-paper collectors
Commissionaires
Sanitary service
Nursery
Staff restaurant:
Cooks
Kitchen boys
Butchers
Cellarmen
Waiters
Night Watchmen
Firemen
Workers in men's clothing
workroom :
Apprentices
Juniors
Cutters
Liners
Piecers; pressers
Machine women and maphinf»
pnttpi*«!
L/1I-111\J \>L1 v L O I G

Hand workers
Superintendents ; office staff
Workers in women's clothing
workrooms
Workers in fur workrooms
Cabinet makers
Upholsterers
)»

Bedding makers
J)

))

) î

—
—

45
26

10,800
10,100

—
—

—

™

11,100

—

Task
Time

—

111

13,600

1,500

—
—
—
—
—
—

—
—
—
.—
—
—

24
19
10
8
150
8
54

13,100
11,700
11,840
12,500
7,700
11,600
11,000

.—
—
—
—
—
—

—
—
—
—
—

_
—

12
14

Time

) i

))
ii
) 3
Î >

))
))

) Î

Task

))

Time
Task

—

8 15,000
4 14,500
6 17,500

3
5

—
—

Time
5)

))
Task
Time
Task

—
—
—
—
• - —

—
—
—
~
—

17
18
4
19
14
26

17,000
14,400
14,400
16,500
14,400
16,800

—
—
—
—

•

—

INDUSTRIAL RELATIONS

Dismissals
Any employee who has a complaint to make about his superiors
—heads of departments or services and their assistants—may a t
any time claim a hearing from the responsible administrator.
Usually a transfer to another department or service is applied for.
In the rare cases where the administrator cannot settle the incident
the matter is referred to the management. This is the system in
force in the Samaritaine Stores, and is customary throughout
the trade.
In the event of dismissal the administrator's intervention is
compulsory. When a complaint about an employee is lodged by
the head of a department or service,' the offender is sent for by
t h e administrator, questioned and usually warned that he will be
dismissed in the event of any further complaints. In some cases
t h e administrator does not dismiss the employee concerned until
a third complaint is received from his responsible chief.

CO-PARTNERSHIP AND PROFIT-SHARING

By deed of 16 July 1914, Mr. Ernest Cognacq and his wife,
Mrs. Marie Louise Cognacq-Jay, transformed the various undertakings in their ownership into a limited partnership share company.
The articles of association of this company, which are summarised
below, defined its object as t h a t of ensuring that " the staff, which
contributes now or in future to the prosperity of the Samaritaine
Stores shall henceforth receive, after serving for a specified length
of time in the undertaking, an important share in the company's
profits ". This share in profits was intended by the founders of
the company to improve the position of the staff, and was in no
way to affect the conditions of remuneration in force at the time
or in the future; and, lastly, the articles were stated to be drafted
with a view to enabling the staff to acquire a large part of the
firm's share capital.
The life of the company was fixed at ninety-nine years from the
date of its actual constitution (1 August 1914), subject to dissolution or prolongation under specified conditions. Its registered
capital amounted to 36 million 1 francs divided into 1,000-franc
1
In view of the devaluation of the French currency, the firm would have
heen justified in increasing its capital to five times this amount. So far,
however, this step has not proved necessary, nor is it contemplated for the
future.

A PARIS DEPARTMENT STORE

shares. Of this amount 34,500 shares were assigned to Mr. and
Mrs. Cognacq on account of the capital contributed by them, so
t h a t only 1,500 shares remained to be taken up by the staff or
by persons unconnected with the firm. Each of these shares
carried with it the right to an equal share in profits and in the
firm's registered assets.
Acquisition

of Shares

Since 1916, when the Cognacq-Jay Foundation was formed x ,
the position has been t h a t the Foundation holds half the company's
shares, while the other half is available for the staff, with the
exception of a certain number, fixed by the articles at 200 each,
which must be held by the managers and deposited as a guarantee
in the firm's treasury and are non-transferable so long as they
continue to occupy their posts. Thus, even in the very doubtful
contingency of the staff of all grades combining together and
having acquired all the shares to which they are theoretically
entitled, the majority would still be in the hands of the managers
and, in fact, of the head manager alone, since he represents the
capital held by the Foundation at the company's general meeting.
The founders of the company also guarded against the possibility
of the formation within the staff of a caste of shareholders with
hereditary rights. Failing such precautions the number of shares
available for new members of the staff might soon have been
reduced to negligible proportions, while the shares reserved for
the staff would have passed within a comparatively short space
of time into the hands of persons otherwise unconnected with the
undertaking. Hence a number of safeguards were provided, some
in the articles of association themselves and some in special
company's rules.
Articles 10 to 14 of the articles of association 2 define the nature
of the shares and the conditions for their acquisition or transfer
as follows:
Article 10
The shares must be registered in the holder's name. They may not
on any account be converted into bearer bonds. They are represented
by share certificates detached from a counterfoil register and bearing
1
Since the death of Mr. Ernest Cognacq in 1928—his wife having died in
1925—the two managers of the company are Mr. Gabriel Cognacq, nephew.
of 2the founders and head manager, and Mr. Georges Renand, under-manager.
These articles were amended on several occasions, in particular on 10
November 1919 and 15 November 1923. Only the provisions at present in
force are considered here.

INDUSTRIAL RELATIONS

the manager's signature. These certificates are stamped with the
firm's impress, bear a serial number and have stated upon them the
quantity and numbers of the shares they represent. Interest and
dividends are legally payable to the bearer of the share certificate.
A shareholder who loses his certificate may be issued with a duplicate
by the company, but not until six months have elapsed since the loss
was notified to the management. Pending the issue of the new certificate,
payment of interest and dividends is suspended.
The right to unclaimed interest or dividends lapses five years from
the date on which they fell due.
Article 11
The rights and liabilities attached to a share are transferred with it
to the new owner.
Ownership of a share implies full acceptance of the terms of association
and of the decisions of the general meeting.
The liability of each shareholder is limited to the amount of capital
represented by his share. In conformity with section 33 of the Commercial Code, no financial claim beyond this amount may be made on
shareholders.
Article 12
Shares may be transferred by a statement of transfer signed by the
transferor and the transferee and entered in the firm's books with the
signature of the manager or, where there are several managers, of one
of thei- number. The company may require the signature and capacity
of the parties to be attested by a notary. No transfer of shares, even
when effected by public sale or by a sale ordered by the court, to persons
unconnected with the company is valid unless approved by the management. The latter must make known its decision within a month of the
date on which application for the transfer was made.
The management may refuse approval of the transfer without giving
reasons, but must announce the name of the purchaser and the purchase
price of the share within the time limit of a month specified above.
Shares may not be acquired by persons unconnected with the undertaking unless no application has been received from a member of the
staff or of the management, who enjoy a right of priority as specified
below.
Should the proposed transferee not be approved by the management,
the share must be acquired by the new purchaser appointed by it at a
fixed price calculated by capitalising the amount of the dividend for the
previous year (after deducting taxation) on the basis of a rate equal to
the current rate of interest charged on advances by the Bank of France,
increased by two per cent.
A right of priority for the purchase of shares is given to the members
of the staff and to the managers in the proportion of half each, either
group being entitled to exercise the right of which the other has not
availed itself. Priority is reserved for members of the staff where single
shares are for sale and if all the managers between them already hold
9,000 shares.
If the staff fails to exercise this right of priority in full or in part it
passes to the managers. In every case the staff must be notified of the
number of shares available.
Should the management fail to appoint a purchaser within the month,

A PARIS DEPARTMENT STORE

the transfer applied for must be regularly concluded in the manner
described above.
In the event of the death of a shareholder, and whoever his heirs or
representatives may be, the management has the full right to acquire or
assign to a purchaser of its choice the shares owned by the deceased at a
price fixed as provided in the present article and subject to the procedure
described above.
The right of purchase is exercised by the management by notifying
the said heirs and representatives through the medium of an extrajudicial deed. This deed automatically transfers the ownership of the
shares to the managers or such persons as they may appoint.
Article 13
The shares may not be divided by the company and must be transferred in the name of a single proprietor. If a share is owned jointly
by several persons these must appoint one of their number to represent
them.
Article 14
The heirs, representatives and creditors of a shareholder may not
under any pretext have the property or securities of the company
placed under official seal, apply for the company's dissolution or partition, or interfere in aiiy way in its management. They must rely for
the exercise of their rights on the balance-sheets and on the decisions
of the general meeting.
To sum up, therefore, the company's shares may not be freely
donated or bequeathed by will or sold directly. The managers
have a priority claim as to the purchase of half the shares available,
provided that they may not between them hold more than a
quarter of all the company's shares, the other half being reserved
for the active staff. No transfer of shares is valid without the
approval of the management, which need not give reasons for
withholding such approval. Lastly, company rules have been
drawn up, subject to amendment by decision of the general meeting,
laying down the following principles for the acquisition of shares
b y the staff : men and women manual workers, junior shop assistants,
odd men and ordinary employees may hold not more than five
shares, assistant heads of departments and equivalent grades,
heads of small services and equivalent grades not more than
twelve shares, heads of departments and heads of assimilated
services not more than twenty shares, and administrators not more
than fifty shares.
These rules make it impossible for any member of the lowergrade staff to obtain a seat on the supervisory board prescribed
b y law x , since Article 30 of the company's articles of association
i Section 5 of the Act of 24 July 1867.

INDUSTRIAL RELATIONS

provides that only persons holding not less than twenty shares are
eligible for membership of the supervisory board, a condition which
cannot be fulfilled by any of the staff except heads of departments,
heads of assimilated services and administrators. On the other
hand, all shareholders may be represented at the annual general
meeting, provided that they combine to form groups holding
between them the requisite 100 shares entitling them to representation, one person acting as delegate for the rest. In practice this
right of representation was exercised at the early meetings, but has
since fallen into abeyance. On the other hand, every shareholder,
whatever the number of his shares, is entitled to attend extraordinary general meetings. These may be convened by the supervisory board only for one of the following reasons: increase or
reduction of the firm's registered capital, and prolongation or dissolution of the company, the latter being possible only if the management and supervisory board confirm the loss of nine-tenths of the
whole registered capital. It is therefore highly probable that there
will be no occasion to call an extraordinary general meeting before
the expiry of the ninety-nine years originally fixed for the life of
the company.
It is thus clear that although the founders of the company
wished to enable all the members of the staff to acquire a share
of the capital of the undertaking, they had no intention of allowing
them to participate in its management 1 .
At the end of 1933 the number of persons holding shares in the
Samaritaine Stores Company was as follows:
2,745 employees
4 members of Supervisory Board
2 managers
Cognacq-Jay Foundation
Total: 2,752 shareholders

holding 14,591 shares
„
90
,,
,,
3,319
,,
,,
18,000
„
,,

36,000

Of the 2,745 employee shareholders, 1,759 were on the active staff
and 986 had left the firm owing to resignation, dismissal or superannuation.

1
This marks the essential difference between the articles of association
of the Samaritaine Stores and those of the joint stock companies formed on
the principle of labour co-partnership under the Act of 26 April 1917. The
latter provide for the compulsory representation of the staff at general meetings
by elected representatives, and one or more seats on the board are reserved
for staff delegates.

A PARIS DEPARTMENT STORE

The shares held by the staff were distributed as follows:
553 employees holding 1 share each
379
,
„
2 shares
289
3
„
275
4
„
456
5
.,
282
6
.,
77
7
..
62
8
„
35
9
„
32
10
.,
27
11
..
101
12
,,
21
13
.,
4
14
.,
26
15
.,
2
16
.,
4
17
,.
4
18
..
76
20
„
21
.,
1
7
23
„
4
40
,,
25
50
..
53
.,
3
2,745 employees holding in all

553 shares
758
867
1,100
2,180
1,692
539
496
315
320
297
= 1 212
273
56
390
32
68
72
1,520
21
161
160
1,250
159
14,591 shares

The rates for the purchase or transfer of shares as fixed under the
company's articles were: from 1 January to 6 February 1933
(based on trading results for 1931-1932), 3,640 francs, and from
7 February to 31 December 1933 (based on trading results for 19321933), 3,620 francs.
Profit Sharing
The share of the staff in the profits of the undertaking is regulated
under Articles 48 to 53 of the company's articles. The total proportion of profits to be distributed among the staff is fixed invariably, the general meeting having been deprived in advance of the
right to amend the provisions and articles relating to the objects
of the company, its management, and the distribution of profits.
The provisions concerning profit sharing are as follows :
(1) An appropriation of one-quarter of the net profits shown on
the balance-sheet is made for reserves. This appropriation may
cease when the total amount of the reserves has reached 60,000,000
francs if the management considers that the existing circumstances
do not require a higher figure, but must be resumed as soon as the
reserves fall below 60,000,000 francs.
(2) A further appropriation is made of the amount necessary to
pay interest at 5 per cent, on the nominal value of the shares.

INDUSTRIAL RELATIONS

Should the profits for any trading year be insufficient to provide
this interest, the balance may be made up from reserves.
(3) Any profits remaining after these appropriations are
distributed as follows:
15 per cent, to the managers in the proportion of 8 per cent.
to the first and 7 per cent, to the second if there are two,
and 6 per cent, to the first and 4% per cent, to each of
the others if there are three;
20 per cent, distributed as a dividend on the capital;
65 per cent, entrusted to the management for distribution
among the staff in accordance with the company rules
appended to the articles of association, which may not be
amended either by the present managers or by their
successors *.
Before considering these company rules, it may be noted that
in accordance with the principles which inspired the provisions
relating to the supervisory board the articles specify that this
65 per cent, share in profits shall not confer on the beneficiaries
any right of interference in or supervision over the affairs of the
company or the fixing and distribution of dividends. The beneficiaries must submit to the decisions of the general meeting and
management as regards the determination of the share to be
assigned to them out of annual profits. It is also provided that the
distribution of profits shall not give the beneficiaries any rights
in respect of the registered capital of the company either during
its life or after its dissolution.
Generally speaking, all the members of the staff of the Samaritaine
Stores who have had three years' continuous service with the
firm at the end of the trading year and are over twenty-five years
of age are entitled to a share in annual profits 2 .
Nevertheless, the management has the right to withhold at its
discretion all or part of the profit-sharing bonus from any member
of the staff, without giving reasons for its action, while only those
employees who have been present throughout the year are entitled
to participate in the scheme. The money made available by the
1
These rules were amended by Deeds of 11 February 1918, 22 May 1919,
2 December 1920, 7 November 1923, and 19 October 1925. The provisions
described
above are those in force at present.
2
The conditions originally required seven years' service and twenty-seven
years of age ; subsequently reduced to five years' service and twenty-five years
age .

A PARIS DEPARTMENT STORE

withholding or reduction of these bonuses goes to increase the
bonuses paid to other members of the staff.
The bonuses are distributed on the following basis:
(a) one unit each to manual workers, male and female, junior
shop assistants and odd men;
(b) two units each to ordinary employees (salesmen, saleswomen, etc.);
(c) three units each to assistant heads of departments and
equivalent grades;
(d) four units each to heads of small services and equivalent
grades ;
(e) five units each to heads of departments and equivalent
grades ;
(/) eight units each to administrators;
(g) a number of units equal to one-sixth of the total as specified
above placed at the disposal of the management.
The amount of profits available for distribution divided by the
sum total of all these units gives the value of each individual unit,
the management being entitled in all cases to alter the number of
units due to employees of any category. As regards the units
placed at the disposal of the management, these are distributed at
its discretion as end-of-year bonuses to members of the staff who
are not yet entitled to a profit-sharing bonus.
Members of t>j staff who leave the firm for whatever reason
and at whatever time of the year thereby forfeit any claim to a
share in the current year's profits. Further, in the case of a direct
breach of contract the profit-sharing bonus due to the employee
is not taken into consideration in calculating the indemnity due
from the party responsible for the breach of contract, a fact which
must be expressly stated in the agreement signed between the
management and the individual employee on engagement.
Each unit of profit-sharing bonuses is personal and non-transferable, but the units are not paid up in full. As will be seen below,
a fraction of each is appropriated and paid into an account with
the National Old-Age Pension Fund 1.
The amount of these yearly payments, made in the individual
employees' own names, varies with the value of the bonus unit
» The retiring age for members of the Samaritaine staff is fifty years for women
andfifty-fivefor men. In exceptional cases heads of departments and services
and administrators may retain their posts up to a later age.

INDUSTRIAL RELATIONS

and is fixed year by year by the management. Employees may
nevertheless be permitted, on making application in writing, to
have these annual amounts paid into a special deposit account
opened with the firm itself. The sums in this account are compulsorily repayable only on the departure of the employee, the application forms specifying the conditions under which the account
bears interest.
THE FOLLOWING TABLE SHOWS THE DISTRIBUTION OF PROFIT-SHARING
BONUSES AMONG THE STAFF OF THE SAMARITAINE STORES FOR THE

TRADING YEAR 1932-1933

Category of persons
participating

2
3
4
5
8

unit
Odd
men,
manual
workers and equivalent grades
units
Salaried employees
units
Assistant heads of dep a r t m e n t s or services
units
H e a d s of small d e p a r t m e n t s or services
units
H e a d s of d e p a r t m e n t s
or services
units
Administrators

U n i t s placed a t t h e disposal of t h e managem e n t for distribution
as end-of-year bonuses
Total

Number Number
of units
allocated participating
to staff

Total
number
of permanent
staff

Persons
Percen- excluded
from partage of ticipation
total
owing
staff
to long
partici- absence
pating
from
work

Persons excluded
from participation
but granted a
substitute bonus
representing :
The whole Half the
profitprofitsharing sharing
bonus
bonus

1,903

2,842

6,400

3,200

5,512

107

1,194

398

401

100

545

109

110

224

100

5,660

8,915

1
1

l,726i
12,080

168

1
1

1
The 1,726 units placed at the management's disposal were divided among 2,602 employees who
were under 25 years of age or had completed less than 3 full years' service at 31 July 1933 in amounts
varying according to length of service between 500 and 3,800 francs.

A PARIS DEPARTMENT STORE

During the past five years the following amounts have been
distributed as dividends to shareholders and profit-sharing bonuses :
Year

Shareholders'
dividend
Fr.

Total amount of
profits distributed
Pr.

Value
per unit
Fr.

1928-1929
1929-1930
1930-1931
1931-1932
1932-1933

263.78
286.50
277.99
281.62
279.58

25,012,858.95
27,671,076.65
26,675,807.35
27,099,640.25
26,861,871.65

2,778
2,955
2,603
2,439
2,303

Thus a good salesman who earned the average remuneration of
12,600 francs in 1933 received an additional sum of 4,600 francs
representing the value of his two-unit share of profits, and a further
1,650 francs in dividends and interest if he owned the five shares
which he was entitled to acquire.

SOCIAL INSURANCE

Since the coming into force of the Social Insurance Act of
30 April 1930, the special insurance scheme of the Samaritaine
Stores has been adapted to conform to the statutory provisions
of the law.
Accident Insurance
All the employees of the Samarita'ine Stores, whether covered
by the national social insurance scheme or not, are protected
against occupational risks in conformity with the current provisions
of the law.
The non-industrial accident risks of employees insured under
the national scheme are covered under the same conditions as their
sickness risks by the funds to which they belong, provided that they
fulfil the statutory conditions as to contributions entitling them to
benefits.
Employees who are not covered by the national scheme are not
entitled to compensation of any kind for non-industrial accidents.
If the accident is due to a third party the victim may obtain
compensation from that party or from his insurance company,
and if to personal carelessness or chance the victim bears his own
medical and pharmaceutical expenses and loss of pay during his
absence from work. Most of the employees who are not covered
by the national scheme, however, belong to a mutual benefit society
(this having been compulsory for the whole staff before the Social

INDUSTRIAL RELATIONS

Insurance Act came into force), which bears part of the expenses
arising out of non-occupational accidents.
The Solidarity Fund of the Samaritaine Stores 1, financed by
appropriations from profits, may in particularly deserving cases
assist victims of accidents who are not entitled to compensation.
Sickness Insurance
Until the coming into force of the Social Insurance Act, employees
and workers of both sexes who were absent from work through
sickness received half their wages for the first month and a quarter
for the three following months. As the Act of 30 April 1930
covers commercial establishments and goes beyond these provisions, the latter now apply only to employees who are not covered
by the Act.
Old-Age Insurance
The Samaritaine Stores provides old-age pensions for all its
permanent employees whether insured under the national scheme
or not, by means of deductions made in accordance with its rules
from profit-sharing or end-of-year bonuses.
These sums are paid every year as follows:
(a) until the employee reaches forty years of age, into the
individual pension account opened in the name of each
employee with the National Old-Age Pension Fund; the
capital is reserved on behalf of the insured person's heirs, but
permission may be obtained to alienate it and the pension
may be claimed at fifty years of age by women and fifty-five
years by men ;
(b) When the employee reaches the age of forty years and the
sum standing to his reserved capital account with the
National Old-Age Pension Fund is enough to provide a
pension of at least 3,000 francs, payment may at his own
request be made into a deferred deposit account entered
in the company's books, and yielding interest which may be
drawn yearly or left to swell the capital (present rate of
interest, 5 per cent, less 12 per cent, income tax), and which
must be repaid to the person concerned when he leaves
the firm 2.
1
2

This Fund is described in the section dealing with welfare schemes.
At 31 December 1933 accounts of this type had been opened for
744 employees with total deposits amounting to 13,802,216.90 francs. The

A PARIS DEPARTMENT STORE

In the case of employees covered by the national social insurance
scheme, the fraction of the worker's contribution assigned annually
by the accumulation fund to cover the risk of old age may, at their
own request, be deducted from their profit-sharing or end-of-year
bonus. This fraction is paid in cash at the same time as the bonus
and their social insurance contribution is reduced by an equivalent
amount.
Employees who leave the firm before reaching the age limit are
entitled, on reaching the age (fifty or fifty-five years) at which it
becomes repayable, to the pension formed by their account with
the National Old-Age Pension Fund, to the income they can obtain
from the investment of the capital representing their deferred
deposit account, and also, if they are insured under the national
scheme, on reaching the age of sixty years to the pension formed by
the employers' and workers' social insurance contributions paid
since 1 July 1930. Employees who retire from the firm on reaching
the age limit receive the same benefits as the others. Those who
have completed more than fifteen years' service with the company
receive an addition to their pensions and income provided by the
firm, varying in amount year by year and bringing the total pension of each pensioner up to 300 francs for every year's service,
whatever the post occupied at the date of retirement. These
supplementary pensions are paid out of a special reserve fund
constituted by appropriations from annual profits on the basis
of mortality tables. The pensions are paid by instalments, quarterly in arrears, on the first of February, May, August and November
each year.
Up to 1922 the supplementary pensions were constituted by
payments on the alienated capital system into the National OldAge Pension Fund on account of the individual employees. The
gradual raising of the rates of these supplements however, resulting
in a considerable increase in the charges on the firm, led to the
suspension of direct payments into the National Old-Age Pension
Fund and the substitution of an annual assessment system.
The supplements payable to members of the national scheme
between the date of their leaving the firm and that on which they
become eligible for their social insurance pension, i.e. on reaching
employees may also deposit in these accounts, to be repaid immediately
on demand, all their available funds up to a limit of 30,000 francs, interest
being paid at 6 per cent. At the same date 3,783 employees were availing
themselves of this facility, their total deposits amounting to 37,760,205.20
francs.

INDUSTRIAL RELATIONS

sixty years of age, are reckoned as if no social insurance payments
had been made. As soon as these pensioners reach the age of
sixty years, however, their annual supplement is reduced by the
half of the pension corresponding to the payments made to social
insurance during the employee's service with the company. No
account is taken of supplements granted by social insurance funds
to the pensions of mothers or fathers who are family breadwinners
and have supported at least three children up to the age of sixteen
years, or of the supplements granted to ex-servicemen belonging
to an ex-servicemen's friendly society. When the provision for the
minimum State pension guaranteed after five contribution years
comes into force, account will be taken of half the supplement
granted in proportion to the number of contributions paid during
the employee's service with the company.
Invalidity
The articles of association of the Samaritaine Stores make no
special provision for safeguarding those of their employees who are
not covered by the national social insurance scheme against
invalidity. Disablement due to industrial accident and covered
by the Act of 1898 gives rise to compensation from the firm's
accident insurance company. Other disabled persons may, if
their material circumstances so require, apply for assistance to the
Solidarity Fund of the Samaritaine, while the firm also makes
every effort to provide employment for the wife or husband of the
disabled person and for the children if they are old enough to work.
Widows and Orphans
The widows and orphans of employees insured under the national
scheme enjoy the reversion of the capital assigned to the old-age
risk under the reserved capital system ; and if the deceased fulfilled
the conditions laid down by the Social Insurance Act they also
receive the lump sum payable on death and orphans' pensions.
The widows of all employees, whether insured under the national
scheme or not, receive the following benefits on the death of the
husband and father of the family:
(a) the reversion of the reserve capital paid into the individual
account of the deceased with the National Old-Age Pension
Fund;
(b) the reversion of the capital paid into the deferred deposit
account of the deceased;

A PARIS DEPARTMENT STORE

(c) the profit-sharing bonus that would have been due to the
deceased for the current year, provided that he actually
worked for at least six months of the year in which death
occurred ;
(d) family allowances granted by the firm or by the CognacqJay Foundation until the child or children reach the age
of fifteen years.
Widows who are left in difficult circumstances may be granted
assistance by the Solidarity Fund, and wherever possible the firm
provides employment for the widow and for the orphans if they
are old enough to work. It may be noted, however, that in many
cases the widows themselves are already employed in the Samaritaine Stores and are thus entitled to their own pension.
Maternity Benefits
Women employees of the Samaritaine Stores who are not insured
under the national scheme are entitled on confinement after at
least one year's service with the firm to a maternity leave indemnity
for two months, paid as a lump sum on the following scale according
to their age and position in the firm.

U n d e r 17 years
17-21 years
21-23 years
Over 23 years

Employees in posts carrying the right
to a profit-sharing bonus at the rate of:
Two units or more
One unit
Fr.
Fr.
600.00
600.00
750.00
750.00
883.35
800.00
1,000.00
900.00

Women insured under the national scheme receive the statutory
maternity allowances at the rate of half their wages for the six
weeks before and six weeks following confinement, provided that
they are actually absent from work, and the repayment of their
confinement expenses according to the scale applied by their
primary sickness fund.
In the infrequent event that the indemnities received by women
insured under the national scheme in the form of the allowance
of half their wages and repayment of their confinement expenses
are together less than the maternity leave indemnity paid in the
form of a lump sum by the firm to its other women employees,
the difference is made up by the firm itself.
As will shortly be seen, women employees of the Samaritaine
Stores, whether insured under the national scheme or not, are
7

INDUSTRIAL RELATIONS

entitled after a full year's service to a baby's bonus of 1,000 francs
(formerly called a layette bonus), and may also enter the CognacqJay Maternity Home administered by the Foundation, where they
have a preferential right of admittance but are required to pay
the ordinary fees.
WELFARE

Like most large-scale industrial and commercial undertakings,
the Paris department stores possess highly developed welfare
schemes. This policy is to the advantage of the firms themselves,
since they have a special interest in retaining the services of a
stable staff on whom a large share of the responsibility for the
efficient conduct of the undertaking rests, even in the lower grades.
The secret of the profits of big department stores lies, as explained
above, on large and quick sales, and the success of the undertaking
therefore hangs very largely on the intelligence and skill of its
salesmen and saleswomen, and to a lesser degree on its delivery
staff. The widespread sense of a community of interests prevailing
among the staff has given rise to a marked " family " spirit in the
undertaking. " Never forget, " said Mr. and Mrs. Cognacq, in
acknowledging assurances of the devotion of their staff in 1919,
" that all of you are really working each for all and all for each.
So in your own interests work keenly, and do not put up with
chatterboxes and idlers. We want no drones to eat the honey of
the hive."
This idea of a community of interests is closely linked with the
principle of authority already referred to in several connections.
New members are not accepted into the " family " unless they
have already proved their worth in similar employment elsewhere
and are thoroughly dependable from a moral standpoint. As a
general rule they are not admitted to the enjoyment of their full
rights until after a probationary period of some length. Thus in
undertakings like that under consideration here in which a profitsharing scheme is in operation, profit-sharing bonuses are not
granted until certain conditions as to age and length of service
are fulfilled. Moreover, the service must be continuous, and the
management reserves a discretionary right to decide whether the
bonus shall be granted in certain cases without having to give
reasons for its decision. These conditions apply to a fraction of
the staff's earnings which is by no means negligible, amounting,
as has already been seen, to a quarter of the total or even more.

A PARIS DEPARTMENT STORE

Welfare schemes are another factor which operate in a similar
direction. While it would be wrong to deny their humanitarian
character, the fact remains that they, too, forge solid links in the
chain which binds the staff to the undertaking. These links become
more and more difficult to break as he advances in his career for
the employee who eats the chief meal of the day in the shop
restaurant, makes his purchases in the shop, uses the firm's playing
fields, attends its lectures and classes, avails himself of the services
of its maternity home, nursery and babies' home for his family,
and resorts to its hospitals and convalescent homes in case of
sickness. Without his being fully conscious of the fact, his whole
life centres round the firm which employs him and which gradually
becomes the focus of all his preoccupations. In the words of
Mr. Frances Ambrière, he gets into the habit of " thinking shop ",
and in this fact probably resides one of the greatest elements of
the strength of the big department stores and one of the major
reasons for their success.
To return to the undertaking which is the immediate subject of
this study, the following pages will deal first with those welfare
schemes which operate actually at the place of work or in close
connection with it, and secondly, with the whole of the institutions
financed by the Cognacq-Jay Foundation 1. The distinguishing
features of the latter are that their benefits are not confined to
the Samaritaine staff, and that all their services must be paid for,
although the fees charged often cover only a fraction of the expense
actually incurred by the beneficiary.
Indemnities and Allowances
These take the form of wedding bonuses, babies' bonuses, relief
granted by the Solidarity Fund, and family allowances.
The flat rate for the wedding bonus granted to all women
employees of the Samaritaine with at least one year's service on
the date of their marriage was 1,000 francs throughout 1933, the
total amount paid under this head during the year being 198,000
francs.
The flat rate for the babies' bonus, formerly known as a layette
bonus and granted on the birth of each child to every woman who
has been employed for at least one year at the Samaritaine Stores,
i The Foundation bears the two names of Cognacq and Jay, the latter being
the maiden name of Mrs. Ernest Cognacq.

100

INDUSTRIAL RELATIONS

was also 1,000 francs throughout 1933. The total amount paid
during the year was 132,000 francs.
As already stated, the firm has also set up a Solidarity Fund
financed entirely by annual appropriations from yearly profits.
The assistance granted to members of the staff implies no obligation on their part. During 1933 assistance was given in 623 cases,
representing a total of 267,778.75 francs, or an average of 430 francs
in each case.
Where good reason can be shown, the firm also fairly frequently
grants advances varying between 500 and 3,000 francs on the
profit-sharing bonuses for the current year, which are payable
about 15 November each year. These advances can be recovered
without difficulty when paying out the bonuses.
Lastly, there is a family allowance scheme. Allowances are paid
until the child reaches the age of fifteen years and are not suspended in the event of the death or superannuation of the father
or mother.
On 31 December 1933 the number of families in receipt of family
allowances was as follows: 2,617 families with one or two children
receiving allowances from the Samaritaine Stores alone; 218 families with more than two children receiving allowances from the
Samaritaine Stores and from the Cognacq-Jay Foundation; 62 families with more than two children receiving allowances from the
Cognacq-Jay Foundation alone, making a total of 2,897 families.
At the same date, the number of children on account of whom family
allowances were being paid was as follows: first children, 2,642;
second children, 875 ; third children, 259 ; fourth children, 85 ; fifth
children, 29; sixth children, 16; seventh children, 7; eighth children, 3; ninth children, 2: making 3,918 children in all.
The total amount paid out in family allowances to the Samaritaine staff in 1933 was 3,379,275 francs for first and second
children, and 668,350 francs for all others, making a grand total
of 4,047,625.
The Act of 11 March 1932 introducing compulsory family
allowances for all wage earners is not yet applicable to the Samaritaine Stores, the Decree applying the Act to the fancy goods
trade not yet having been published. The differences between
the allowances now paid jointly by the Samaritaine and the
Foundation and the statutory rates which will be payable after
the Act comes into force are shown in the following table:

101

A PARIS DEPARTMENT STORE
Annual allowance
Number
of children
in family

1
2
3
4
5
6
7
8
9

Paid by Samaritaine
and CognacqJay Foundation

Statutory rates
payable by an
equalisation fund

Annual
difference

Fr.

900
2,100
3,600
5,400
7,500
9,900
12,600
15,600
18,900

360
840
1,440
2,400
3,360
4,320
5,280
6,240
7,200

540
1,260
2,160
3,000
4,140
5,580
7,320
9,360
11,700

Miscellaneous Welfare Schemes
The firm has installed an infirmary and babies' room on the
seventh floor of the main building and served by a special lift.
Consultations are given by a medical practitioner, assisted by the
head nurse and a laboratory assistant, from 10 to 12 each morning,
and are attended by the new employees who must undergo a medical
examination before being definitely engaged, and employees who
are unwell or have been injured *.
Next to the infirmary dressing room, the doctor's consulting
room and the waiting room, is the day-nursery containing thirty
cots where nursing mothers (saleswomen or other shop employees)
may leave their babies while at work. The babies may be brought
every day up to the age of fifteen months and the'mothers are allowed
to spend three half-hour periods with them every day at 10.30 a.m.,
1.30 p.m. and 4.30 p.m. 2. There are five nurses who look after
the cots, baths and bottles, and superintend the open-air terrace
where the babies are left whenever the weather is warm enough.
In addition to the welfare institutions set up by the Cognacq-Jay
Foundation, which are shortly to be discussed, certain other social
services are also available to the staff. Beds for the children of
members of the staff are reserved in two preventive institutions,
L'Enfant au Grand Air at Royan and the Louise de Bettignies
Home at St. Martin de Ré. The Bligny Sanatorium and that
i Fernand LAUD ET: La Samaritaine.
These provisions are more favourable than those laid down by the Act
of 5 August 1917, which provides that the mother shall be allowed one hour
daily during working hours to nurse her child until it is twelve months old.
2

102

INDUSTRIAL RELATIONS

founded by the Villepinte Institution also reserve twenty-five and
three beds respectively for the Samaritaine staff, while in Paris
itself seven founders' beds at the St. Joseph Hospital for surgical
and general cases and three at the Bon Secours Hospital for surgical
cases are also available.
Facilities for games and sports are provided for the staff of the
Samaritaine Stores as for that of other big Paris stores. There
is a gymnasium for physical culture and gymnastics on the top
storey and on the flat roof of the clothing reserves warehouse on
the Quai des Célestins, and the firm also possesses a training ground
and playing fields at Eaubonne (Seine-et-Oise). There is a staff
sports club which has a membership of 1,500 at present, under the
leadership of one man and one woman physical training instructor.
The playing field is, of course, used only on holidays, but the
gymnasium is attended from 7 to 8 a.m. and from 8 to 9 p.m.,
different days being fixed for men and women respectively.
Lastly, to close the list of the recreational facilities provided
for the Samaritaine staff, it may be mentioned that there is a
dramatic and musical society with its own studio in Paris and a
membership some 600 strong.
The Cognacq-Jay Foundation
The Cognacq-Jay Foundation, approved as a public utility
institution by a Decree of 2 December 1916, was the subject of
another Presidential Decree shortly after. In order to provide
the Foundation with personal estate and regular funds, Mr. and
Mrs. Cognacq made over to it by deed of gift on 27 December 1916
various movable assets, some house property in Paris and the neighbouring municipalities of Rueil and Levallois-Perret, and various
securities including shares to a value of 18,000,000 francs, or half
its total capital in the Samaritaine Stores Company. The Presidential Decree of 20 February 1917 authorised the chairman of the
Foundation to accept this gift, valued for purposes of registration
at a total of 39,898,107 francs \
The articles of the statutes concerning the aims and procedure
of the Foundation are given below:
Article 1
The Cognacq-Jay Foundation is set up by Mr. and Mrs. Ernest Cognacq
with the following objects:
1

Albert

TBOMBERT:

La participation aux bénéfices, Appendix VI.

A PARIS DEPARTMENT STORE

103

1. To provide for the foundation of a home, hospital or maternity
home which shall be called the Cognacq-Jay Home, Hospital or Maternity
Home.
2. To provide for the continuation, maintenance and, if necessary,
development of the following existing welfare institutions:
(a) the home for the aged set up at Rueil by Mr. and Mrs.
Ernest Cognacq for retired commercial employees, residence in
which is free for retired employees of the Samaritaine Stores;
(b) the Samaritaine Babies Home, also at Rueil, which brings up
twenty-five children free of charge up to the age of three years;
(c) the group of cheap dwellings at Levallois-Perret, consisting of
seven blocks situated in the rue Danton, rue Ernest Cognacq and
rue Baudin, intended to provide cheap and healthy dwellings for
large families.
3. To participate within the limits of its available funds in such
welfare schemes for the relief of war victims, already in existence or to
be launched in future, as may be designated by the Board, e.g. orphanages
for war orphans, assistance to disabled and invalided ex-servicemen,
vocational retraining, assistance to the blind, relief to large families,
the building up of broken homes.
4. Lastly, to create, develop or maintain, subject to the funds
available and irrespective of any political or denominational considerations, all institutions or organisations for social welfare.
The headquarters of the Foundation shall be in Paris.
Article 2
During the lifetime of the founders and until the death of the surviving
founder, the Foundation shall be represented and administered by a
Board of Management consisting of ten members.
The first Board of Management shall consist of Mr. and Mrs. Ernest
Cognacq, founders, Mr. Gabriel Cognacq, and other members appointed
by the founders.
The members of the Board shall cease to serve only on death or
resignation. In the event of a vacancy arising out of either of these
causes, it shall be filled by a person appointed by the founders or
surviving founder.
Article 3
After the death of both founders, the Board of Management of the
Cognacq-Jay Foundation shall be composed of not less than twelve
and not more than fifteen members who shall include persons chosen
from the following bodies (as far as possible one from each) : the Institute,
the Council of State, the Magistrature or the Bar, the Tax Inspection
Department, and the head manager of the Samaritaine Stores.
Should Mr. and Mrs. Ernest Cognacq die without appointing the new
members to serve on the Board after their death, the members serving
at the time shall themselves appoint others to bring their number up to
twelve or fifteen.
The members appointed after the death of the founders shall also
hold office until death or resignation, except in the case of the Manager
of the Samaritaine Stores, who on giving up his post with the company
shall be replaced by his successor.

104

INDUSTRIAL RELATIONS

Nevertheless, Mr. Gabriel Cognacq, who shall represent the management of the Samaritaine Stores as head manager after the death of the
founders, shall continue to serve on the Board of the Foundation even
after he has ceased to be manager of the Samaritaine Stores.
Article 4
The chairmanship of the Board shall be held ex officio by Mr. Ernest
Cognacq and after his death by Mrs. Ernest Cognacq, and after the death
of both founders by Mr. Gabriel Cognacq.
Subsequent chairmen shall be chosen by the Board from among its
members.
The Board shall complete its Executive Committee by appointing from
among its members a vice-chairman, treasurer and secretary, subject
during the lifetime of the founders to their approval.
With the exception of the founders and of Mr. Gabriel Cognacq, who
shall retain their chairmanship for life, the chairmen, vice-chairmen,
treasurers and secretaries of the Foundation shall be elected for a term
of three years but shall be re-eligible.
After the death of Mr. Gabriel Cognacq the head manager of the
Samaritaine Stores shall be an ex officio member of the Board so long as
he continues to hold his post.
Article 5
The Board shall meet as often as is required for the conduct of the
Foundation's affairs, at least once every three months, and as convened
at any time by the chairman or at the request of three of its members.
Decisions shall be taken by a majority vote of the members present
and shall not be valid unless a majority of the members in office are
present. In the event of a tie, the chairman, or in his absence the vicechairman, shall have the casting vote.
Minutes shall be taken of the meetings.
Thè minutes shall be signed by the chairman or in his absence by
the vice-chairman and secretary.
Article 6
The duties of the members of the Board of Management shall be
honorary.
The institutions maintained by the Foundation are described
below in geographical order, beginning with those in Paris.
The maternity home specified in Article 1 of the rules of the
Foundation as one of its primary objectives has been set up in
Paris. It contains ninety-five beds and deals with 2,000 confinements annually, the normal stay in the home being a fortnight.
One of the special features of this institution, which also characterises several other institutions run by the Foundation, is t h a t it is
reserved for the wives of employees in department stores and provision stores and of insurance and bank employees, preference in

A PARIS DEPARTMENT STORE

105

admitting patients being given to the Samaritaine staff. The fees
payable for a fortnight in the home, including confinement expenses
and attendance, are 390 francs for a single room and 360 francs for
a double room. The staff consists of four doctors, five midwives,
nineteen nuns and sixty other assistants.
The Foundation has a considerable achievement to its credit
in the sphere of working-class housing. One group of its cheap
dwellings was built in Paris itself in 1931. They comprise 300 dwellings at rents varying according to the storey and position between
1,400 and 3,500 francs a year. The flats are in four parallel blocks
separated by broad courtyards and are intended for young couples.
They consist of two rooms and a kitchen, with a cellar and small
shed for each tenant. The other group of houses is at LevalloisPerret in the immediate vicinity of Paris. These are also of recent
construction having been completed in 1930, and are reserved for
large families. They comprise 314 dwellings of two or three rooms
and a kitchen, hall and the usual offices. There is a large square
planted with trees which serves as a playground for the children,
who number between 700 and 800 at present, and as in the Paris
flats each tenant also has the use of a cellar and small shed. Rents
vary between 725 francs and 2,250 francs a year with an optional
quarterly subscription of 40 francs for the use of the central lavatories, which contain baths and showers. Employees of the
Samaritaine Stores are given preference in allotting flats in both
these groups of dwellings.
Several important institutions supported by the Foundation,
comprising a Babies' Home, a Convalescent Home, and a Home
for the Aged, have been set up near Paris at Rueil, in grounds
adjoining the Chateau de Malmaison.
The Babies' Home receives about thirty babies who must be
the children of women employees of the Samaritaine Stores or of
widowers employed at the Stores or whose deceased wives were
employed there as manual workers or salaried employees. The
babies must be medically examined before admittance and must
have been weaned at least a fortnight before. They are maintained free of charge, but their parents do not receive the family
allowance which would otherwise be payable (75 francs a month
for the first child, 100 francs for the second, 125 francs for the third,
etc.). From the age of three to six years the children are placed
in a special nursery, which also has thirty beds ; this is in the same

106

INDUSTRIAL RELATIONS

building, but independent of the Babies' Home, and makes a uniform
charge of 90 francs a month for each child.
The children of widowers whose wives were employees or
workers at the Samaritaine Stores, but who are not employed there
themselves, are maintained free of charge in the Babies' Home, but
are charged for at the normal rate in the nursery home. Cases
of this sort are, however, exceptional and can only arise when
the mother dies after the child has been admitted to the Babies'
Home or nursery, since as a rule they accept only the children
of women workers or employees actually employed at the Samaritaine at the time.
The Convalescent Home is also reserved for the staff of the
Samaritaine Stores. It accepts only girls and young women, who
may spend their holidays there provided that room is available.
There is accommodation for twenty-two boarders, each of whom
may stay as a general rule for a maximum of three weeks at a
daily charge of 8 francs.
The Home for the Aged is open to all former employees in the
fancy goods trade and allied occupations and industries, although
a prior right of admission is always reserved for the staff of the
Samaritaine Stores. Applicants for admission must be over sixty
years of age and have spent their working life in Paris or in the
department of the Seine. The Home can accommodate 115 persons
and makes an annual charge of 1,800 francs for a single room and
1,200 francs in all other cases. Married couples pay a joint fee
of 2,400 francs, for which they receive a larger room. All the
inmates are entitled to use the park, reception rooms and library
in common.
Two other establishments endowed by the Foundation are
situated outside Paris at Argenteuil and near Champagne-sur-Seine.
The Apprenticeship School at Argenteuil was set up with a view
to training girls as lingerie-makers, embroiderers, dressmakers or
makers of ready-made clothes. In addition to serving their apprenticeship in these trades, the girls at the Argenteuil School also attend
classes in cutting, designing and housewifery, and receive French,
English and arithmetic lessons. The School takes 120 girls, who
must either be orphans or without responsible guardianship from
the age of thirteen to eighteen years. A monthly boarding fee
of 80 francs, plus personal expenses, is payable by the girl's family
or by the appropriate welfare organisation. After an apprenticeship
lasting about eighteen months according to their individual aptitude

A PARIS DEPARTMENT STORE

107

and industry, they are provided with paid work, the proceeds of
which enable them to pay their fees, which are maintained at the
same rate, and later to provide for their own personal needs.
Any surplus is paid into a savings bank account opened in each
girl's name and is drawn by her on leaving the school.
Hours of work in the apprenticeship workrooms are seven in
the day, meals, classes and recreation occupying the rest of the
pupil's time. Saturday afternoon is a half-holiday and is used
by the girls to do their personal jobs. After completing the various
apprenticeship courses, i.e. when they are about eighteen years
of age, the girls either return to their families, where the latter
are able to receive them, are placed in employment if they so desire,
or are given employment as saleswomen or manual workers in the
Samaritaine Stores. Those who are too delicate to live in Paris
are found employment as dressmakers or lingerie-makers in the
provinces. It may be noted that day girls are also admitted to the
same classes.
The Argenteuil institution is not only an orphanage, another
part of the building being installed as a boarding house containing
fifty rooms for girls who work at the Samaritaine Store but who
have no homes in Paris. The price charged for board and lodging
is 125 francs monthly for juniors and 250 francs for saleswomen.
One of the most interesting and useful of the Foundation's
institutions is the Horticultural School of Pressoirs-du-Roy,
approved as a public utility institution and situated near Champagne-sur-Seine in.the department of Seine-et-Marne on an estate
presented by Mr. and Mrs. Edmond Fabre-Luce*. This is an
apprenticeship school intended to provide a thorough training for
boys wishing to enter agriculture as gardeners, flower-growers,
market gardeners, nursery gardeners, or gardening overseers.
The School takes seventy-five pupils, chosen for preference from
among children belonging to large families who have a taste for
agricultural work and whose state of health is such as to make
an outdoor training advisable. Pupils are admitted between
thirteen and fifteen years of age, or at twelve years of age if they
already have their elementary school certificate. The ordinary
school year begins on 1 October, the apprenticeship usually lasting
three years during which an annual fee of 2,400 francs is payable.
Although this is not specifically provided under the rules, the
1

Cf.

L A U D E T , op.

cit.

108

INDUSTRIAL RELATIONS

Foundation gives preference to children or orphans of employees
of the Samaritaine Stores for admission to the apprenticeship
schools.
Outside the Paris area there is another group of welfare institutions at Monnetier-Mornex in Haute-Savoie, in the immediate
vicinity of Geneva. This village is situated at a height of 800 metres
on the slopes of the Salève, is a suitable place for a mountain rest
cure, and the Foundation owns a villa there to which, as in the
case of the Rueil home, it admits girls between fifteen and twentyfive years of age employed in commercial establishments, banks
or insurance companies. Here again priority is given to employees
of the Samaritaine Stores. The villa is not merely a holiday
hostel, and only accepts girls with a medical certificate, but it
does not admit anyone suffering from contagious diseases or, as
a rule, girls requiring special care. It is open throughout the
year and has accommodation for about 100 girls, a daily charge
of 15 francs (reduced to 8 francs for employees of the Samaritaine
Stores) being made for board and lodging.
The Cognacq-Jay Foundation has also taken a lively interest
from the beginning in holiday camps. Through the medium of
the Petits Savoyards et Parisiens de la Montagne, an organisation
to which Mrs. Cognacq, as a native of Haute-Savoie, was particularly
attached, it sends 300 children every year to stay with approved
farmers' families in the country for fifty-five days, all their travelling
and maintenance expenses being paid. Two-thirds of these
children are chosen by the municipalities of the twenty districts
of Paris and the rest by the chairman of the organisation in agreement with the Foundation. An equal number of children are also
sent year by year to spend their holidays in the department of
Charente-Inférieure and in the Island of Ré, the original home
of Mr. Ernest Cognacq.
Lastly, mention must be made of the fifty bursaries awarded
at the St. Nicolas School in Paris, at which elementary education
and vocational training are provided. These bursaries, worth
1,300 francs each, are reserved for the sons of employees of the
Samaritaine Stores.
The Cognacq-Jay Endowment for large families, amounting
to 2,250,000 francs a year, and the Endowment for young French
married couples, which has an annual income of 2,000,000 francs,
are administered by the French Academy, but it would be outside

A PARIS DEPARTMENT STORE

109

the scope of this study to describe them in detail here. The same
is true of the Cognacq-Jay Museum which adjoins the grands boulevards branch of the Samaritaine Stores and has been bequeathed
to the City of Paris.
CONCLUSION

In the course of this study attention has been drawn to the principal characteristics of industrial relations in department stores.
It has been shown in examining the working of a department store
how large a share of responsibility for the conduct and success
of these undertakings rests with the staff, even in the lower grades,
and how in order to organise the activities of the various departments and services without impeding them, the stores have had
to weld their staff into a uniform community while allowing a wide
measure of independence to the separate parts. In the particular
firm taken as an example, attention has been drawn to the part
played by the profit-sharing scheme and the steps taken to enable
the staff to acquire shares in the undertaking, and also to the
steady improvements made in an already highly developed series
of welfare schemes.
This striving for uniformity, however, almost inevitably leads
to a certain tendency to exclusiveness, on the part of the management and of the staff as well. The latter, feeling themselves
part of a powerful organisation and living constantly in its atmosphere, come to devote not only their labours but their thoughts
to the undertaking. This is the salient feature which emerges from
the present study, and which gives its characteristic stamp to
undertakings such as that which has been described.

The Norwegian Nilrogen Company
INTRODUCTION

Between the years 1905 and 1929 what may be claimed to be
the largest hydro-electric power stations in Europe, and perhaps
in the whole world, were built in a deserted district in the middle of
the mountain range of the Telemark Province in southern Norway.
These works now have a generating capacity of 470,000 HP. Why
these immense works were constructed in such an isolated region
and what use is made of the enormous amount of power generated
needs some explanation however, and this is given below.
At the beginning of the present century two Norwegians—
Professor Birkeland and Mr. Sam Eyde, engineer—first succeeded
in perfecting a process for extracting nitrogen from the air and
for fixing it in the form of nitrate fertiliser. The first stage of
the process consisted in burning air with an electric arc in a special
furnace built by the inventors. For this, large quantities of electricity were required. As Norway possessed enormous quantities
of water power but no coal, it was decided to build the works
required for the operation of the Birkeland-Eyde process in one
of the largest river and lake districts of Norway in the valleys of
Vestfjord and the Tinn in the Province of Telemark.
Thus it was that the building of the first works set up by the
Norwegian Nitrogen Company (Norsk Hydro-Elektrisk Kvaelstofaktieselskab) to exploit the Birkeland-Eyde invention was begun
in 1905 at Notodden, a small township situated a little below a
large waterfall called the Svaelgfos, where even then a number of
small industrial undertakings were established. Dams were constructed below this waterfall and in their immediate vicinity three
power stations with a capacity of 80,000 HP. were erected. The
production of nitrate fertiliser by the new process turned out to
be a lucrative affair and the need for synthetic saltpetre rapidly
increasing, the directors of the Company conceived a plan which
at that time seemed both vast and daring. This was to acquire
the right to use the Rjukan, the largest and most beautiful waterfall

112

INDUSTRIAL RELATIONS

in Norway, to harness this enormous quantity of water and to
convert it into the electric power required for the manufacture of
nitrate fertilisers.
Now this scheme entailed much organisation and work. In the
first place, the waterfall had to be captured and power stations
built in the immediate neighbourhood. Then factories for the
manufacture of saltpetre had to be built nearby, for at that time
(1907) electric current could not be conveyed long distances with
the same facility as nowadays. But the valley through which the
waters of the Rjukan flowed and which were to become the site
of the various works was practically uninhabited, so besides
building roads, railways and other means of locomotion for the
transport of its manufactured goods, the Company was also obliged
to erect the dwellings and premises necessary for a large staff of
workers and technicians and, in short, to create everything required
for a modern industrial community. The manner in which the
Company carried out this part of its work is the main object of
this study.
The undertaking rapidly proved to be a great success both from
a technical and a financial standpoint and paid increasing dividends.
Rjukan thus became an important industrial centre. In 1907 the
population of the parish of Dal, where the works and workers'
quarters were built, consisted of some 200 persons, but by 1908
it had increased to 700 and by 1914-1915 totalled 7,800 persons.
The world war having considerably enhanced the marketing possibilities of the Company, the population increased to 8,900 by the
end of 1917 while in 1920 it totalled 9,400 persons, the highest
figure reached.
The chemical industry is, however, subject to constant evolution,
and despite improvements made in the Birkeland-Eyde process
the Company began to feel more and more the effects of competition due to new methods invented and applied elsewhere which
ensured a more rational use of electricity. In 1926 the Company,
which was then managed by its present General Director, Mr. Axel
Aubert, decided to discard the Birkeland-Eyde process for the
Haber-Bosch system which had met with considerable success in
Germany in the works of the LG. Farbenindustrie. This change
in the technical process was to lead to a complete transformation
of the whole concern. From a technical and financial standpoint
it might perhaps have been wiser to abandon the nitrate works
at Rjukan and to build a new plant near the sea, while linking
up the new works with the sources of electricity produced in the

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113

mountains. But the Company was loth to forsake the communities
which it had brought into existence, one of which—the town of
Rjukan—had over 8,000 inhabitants. It therefore chose a less
drastic solution which consisted in adapting the existing plant to
the requirements o'f the new process and constructing new works
in the seaside commune of Eidanger near the town of Porsgrund.
As a result of this building and reconstruction work, which was
begun in 1926 and completed in 1929, the Norwegian Nitrogen
Company now consists of the following establishments:
(1) Rjukan, with three hydraulic power stations with a generating capacity of 390,000 HP. and a steam plant generating
20,000 HP. One half of the electric power generated is
used for the manufacture of synthetic ammonia, nitrogen
being extracted from the air and hydrogen from water by
electrolysis, while the other half is used for manufacturing
by means of the old electric arc process. Fifty per cent.
of the ammonia produced is transformed on the spot into
calcium nitrate, the rest being sent in liquid form to the
new Eidanger Works where the process is completed.
(2) The Notodden factories which use the electricity generated
(80,000 HP.) by the Svaelgfos and Lienfos works, and
which nowadays limit their operations to the production of
ammonia for despatch to the Eidanger works.
(3) The Eidanger nitrate works which transform the ammonia
received from Rjukan into nitrate acid and subsequently
into calcium nitrate and other chemical products. The
electric power required for these operations is supplied by
a steam plant. The Eidanger works also include factories
for the manufacture of soda and sulphate of ammonia.
In addition, the Company is at present building a powerful
hydro-electric works at Tyin (in the Sognefjord Massive) which
will have a generating capacity of 125,000 HP.
It may also be noted that the Company owns and runs at Menstad
near Porsgrund a port fitted up with the most modern equipment
and that it has built and operates a railway and a ferry boat
service between Rjukan and Tinnoset. It also owns a factory
manufacturing bituminous products.
The old and new works of the Norwegian Nitrogen Company
can turn out 600,000 to 700,000 tons of fertiliser a year composed
mainly of calcium nitrate. The initial capital of the Company

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was 7,500,000 Kr. 1 To-day it amounts to 104,300,000 Kr. to
which must be added two debenture issues amounting respectively
to 50 million Krone and 20 million dollars (by 30 July 1933
these debentures had been reduced respectively to 23,400,000 Kr.
and $17,180,000 approximately). The Company is the most
important industrial concern in Norway and its products are
exported to all parts of the globe.
CONDITIONS OF LAROUR

Recruiting
Recruiting and training of a body of workers capable of
performing the manual operations entailed in the manufacture
of chemicals on a large scale gave the Company much food for
thought.
Up to the end of the last century Norway had not become
industrialised to any considerable extent. The large majority
of the population earned a living from agriculture, fishing and
shipping. From the beginning of the twentieth century, however,
industrial interests developed in Norway with a rapidity hitherto
unknown. But as the country had no trained industrial reserves,
the new concerns had to recruit their workers from a population
which was largely devoid of any experience in industrial work.
The Norwegian Nitrogen Company, which from its earliest days may
be said to have been a large-scale undertaking, was likewise compelled to recruit and train labour possessing very little knowledge of
industrial conditions. This state of affairs naturally engendered
a number of difficulties. The young peasants, fishermen and hunters, accustomed to an existence which, although rough and precarious, was not wanting in freedom, were attracted to industrial
work by the prospects of regular and, to them, relatively high wages.
But once in the factories they felt themselves out of place, while the
discipline and restraint associated with the regular working of an
industrial enterprise worried them and led to disillusionment
and discontent. The social institution set up by the management,
and to which detailed reference will be made later, therefore
answered a real need. The Company was able to surmount
its initial difficulties in this connection and nowadays has at its
1
The par value of the Norwegian Krone is equal to 1.38 gold francs.
Since 1931 it has depreciated to about the same extent as the £ sterling.

THE NORWEGIAN NITROGEN COMPANY

115

disposal a permanent supply of labour, well trained and
capable of carrying on the work of an undertaking equipped with
the latest technical installations.
In 1933, the aggregate staff employed in the various undertakings
of the Company numbered 3,206. Of these, 836 have contracts of
employment based on three months' notice. The remaining 2,370
are workers, but 305 of them are paid by the month and not by the
hour.
Practically all the workers in the employment of the Company are
trade unionists, the majority belonging to the Norwegian Chemical
Workers' Union which is affiliated to the Norwegian Trade
Union Federation. It may be noted that the Norwegian
Trade Union Federation left the International Federation of Trade
Unions some years ago without, however, affiliating to the
Red Trade Union International. Nevertheless, the Norwegian
workers' unions follow a policy of co-operation with the employers
inasmuch as they negotiate and conclude with them collective
agreements for the regulation of wages and other conditions of
labour.
Collective Agreements
Since the end of the last century collective agreements have
become general in Norwegian industry. Like the bulk of the organised Norwegian employers—at least since the establishment in
1900 of the Norwegian Employers' Federation—the Norwegian
Nitrogen Company showed its willingness from the outset to establish
wages and conditions of labour by means of collective agreements.
Thus it is that practically all manual work performed on the
premises of the Company is nowadays regulated on a collective basis.
The Company is affiliated to the Norwegian Employers' Federation. But in view of its importance it is affiliated directly to the
Federation and not through the Chemical Manufacturers' Association. Collective agreements are concluded and signed on the one
side by the Employers' Federation and the Company, and on the
other by the Norwegian Trade Union Federation and the Norwegian
Chemical Workers' Union. Negotiations relating to the amendment
or interpretation of existing collective agreements are in general
carried out by the Employers' Federation, one of whose higher
officials is specially acquainted with the business of the Company.
Collective agreements deal in particular with wage rates, hours
of work, holidays with pay, special rates for overtime, Sunday
work, and particularly obnoxious work, etc. They also make

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INDUSTRIAL RELATIONS

provision for workers' representation and the settlement of disputes
arising in connection with the application of agreements and the
performance of work.
It may here be noted that the agreement concluded between
the Company and its workers does not require the employer to
engage only trade unionists. Up till 1919, the collective agreements
expressly stipulated that the Company was free to engage and employ any worker, whether a trade unionist or not. Later, this clause
was deleted from the agreements, but it is tacitly recognised and is,
moreover, admitted by the Labour Court.
Wages
Workers' wages are fixed in detailed fashion by the collective
agreements. Wages are fixed at hourly rates or at pieces rates.
The annual wage of an unskilled worker employed the whole year on
continuous work amounts, as a rule, to about 3,000 Kr., while a
worker on piece rates easily earns as much as 4,100 Kr. It may be
added for purposes of comparison that the initial salary of a firstclass civil servant amounts to 3,600 Kr. while that of an assistantchief of service is 4,950 Kr.
Hours of Work
Since 1919, Norwegian legislation limits working hours in
industry to forty-eight in the week and to a maximum of eight and
a half a day. As the establishments of the Norwegian Nitrogen
Company come under the scope of this legislation, the collective
regulation of working hours referred to above is restricted to the
arrangement of working hours within the limits laid down by law.
The collective agreement in force states in this respect that,
failing other arrangements made by joint agreement, the working
hours for work which is not performed in shifts are from 7 a.m.
to 11.30 a.m. and from 1 p.m. to 5 p.m. on the first five days of the
week, and from 7 to 9.30 a.m. and from 10 a.m. to 1 p.m. on
Saturdays. Workers not employed in shifts thus have Saturday
afternoon off, although employed forty-eight hours a week.
As the Company is engaged on continuous processes, a
considerable number of its workers work an eight-hour shift once
every twenty-four hours on six days a week. Being mainly engaged
in supervising the plant, no provision is made for such workers to
have a break for meals which may, however, be taken provided no
interruption of work is entailed. Shifts working on Sunday and on

THE NORWEGIAN NITROGEN COMPANY

117

specified holidays are paid one and a half times their normal rate
of wages.
The agreement empowers the Company to require their staff
to work overtime within the limits prescribed by law. At the same
time, it is laid down that the use of overtime must be restricted
as far as possible, and in particular that no individual worker may
be compelled to work an excessive amount of overtime. Furthermore, a worker is entitled to refuse to work overtime for certain
definite reasons such as attendance at a trade union meeting, etc.
Overtime rates are laid down in detail in the collective agreement.
The rate of extra pay for overtime varies from 25 to 100 per cent.
of the usual wage.
Salaried employees in the office of the Company work from
9 a.m. to 4.10 p.m. or seven hours ten minutes a day at one single
spell. During this period they may eat such food as they bring
with them.
Annual Holidays
Every worker is entitled to an annual holiday of twelve
consecutive working days. Workers employed under a system
of rotation and working on certain specified holidays are entitled
to one or two days' extra leave according to circumstances. Holidays
must be taken between 1 May and 30 September, the exact date
being fixed by the head of the undertaking, who is required to
notify the worker at least a fortnight in advance.
Once a year the worker is entitled to a holiday bonus, which is
usually calculated by multiplying 4.2 per cent, of his hourly wage
by the number of hours actually worked by him in the service of the
Company during the previous year, provided he has completed at
least four weeks' work 1. When a worker is dismissed or voluntarily
leaves the service ot the Company after giving due notice, he receives
a voucher for the part of the holiday bonus to which he is entitled
under the rules of the establishment. Detailed regulations have been
adopted to ensure that the amount shown on the voucher is used
for the purpose intended.
Workers' Representations
Through the collective agreement, the management of the Company recognises delegates appointed by the workers as " the
i For the purpose of holidays, the year begins on 1 May and ends on
30 April.

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INDUSTRIAL RELATIONS

mouthpiece and the representatives of the organised workers ".
These delegates are elected from among " workers whose occupational competence is generally admitted " and who, whenever
possible, must have worked for at least two years in the Company.
The names of the delegates appointed must be notified to the
Company not later than one week after their election.
The workers' delegates are required by the collective agreement
to co-ordinate in every possible way with their union and their
employer to maintain harmonious relations within the works.
All claims and complaints must be sent by them to the head of the
undertaking or, in his absence, to his representative.
Workers' delegates are not entitled to any special privileges as
regards their work in the service of the Company. The Company
agrees, however, not to sanction the dismissal of a workers' delegate
except for reasons connected with the work itself.
The functions of workers' delegate are often combined with those
of the chairman of the local section of the national trade union x,
or with those of the chairman of the workers' " shop club " whose
delegate is required to protect the interests of the members of the
club. At Rjukan, where the most important establishment of the
Company is situated, a special organisation called the " Rjukan
Labour Association " includes all the organised workers in the town.
This body appoints three delegates who are empowered to discuss
with the management all questions of interest to the general body
of workers or certain sections of the workers.
There are no workers' councils in the establishments of the Company. The Act of 23 July 1920 makes provision for the appointment of such councils in undertakings employing more than fifty
workers when a demand for them is made by more than one-fourth
of the staff, but in practice no effect has been given to the Act.

HOUSING

POLICY

As stated in the introduction, the Company's premises had to
be built in uninhabited or sparsely populated districts, and the
management was therefore faced right at the outset by a number
of problems of which the housing of the workers was by far the
most serious and most urgent. The methods adopted to solve this
* The Norwegian Chemical Workers' Trade Union, affiliated to the Norwegian Trade Union Federation.

THE NORWKGIAN NITROGEN COMPANY

119

problem varied with the natural and demographical conditions
in the industrial centres set up by the Company at Notodden,
Rjukan and Heroen. At Notodden, where a small industrial
population was already established when the first works of the
Company were put up, and at Heroen, which is situated near
the town of Porsgrund, the steps taken by the Company consisted
mainly in encouraging the workers to build their own homes. At
Rjukan, which lay in an almost uninhabited valley, the Company
was itself obliged to build quarters for its workers. The housing
policy adopted by the Company to meet the requirements in
both cases is described below.
Low-Rental Dwellings
At Rjukan the Company has built a sufficient number of dwellings
to house all its married workers and salaried employees including
the management staff. The number of these houses is at present
1,300. The capital invested amounts to 22 million Kr., including
the cost of building roads and other work of general utility.
The main idea of the policy followed by the Company at Rjukan
has been to lodge one family, or as small a number as possible of
families, in each house. The Company considers that a worker
who spends eight hours a day in a factory ought to be given a
chance of forgetting all about his work during his leisure time,
a thing which is difficult to do if he is continually in contact with his
fellow-workers. The organisation of work in the factory by alternating shifts makes it particularly desirable, moreover, to provide a
separate house for each family, so that a workman's sleep need not
be disturbed by a fellow-worker returning from or going to his
work. For this reason, the workers' quarters at Rjukan include a
large number of houses reserved for one family, while the majority
of the other houses have been built to hold two, three or four
families. In order to prevent the spread of possible outbreaks of
fire more easily, the rows of houses, which are built of wood in
accordance with the custom of the country, are separated by groups
of brick houses. In order to achieve this aim, most of these houses
are fairly large and therefore contain a considerable number of
dwellings. When, as is usually the case, a house is inhabited by
only one family or a small number of families, each family has its
own garden attached to the house. The dwellings built by the
Company vary in size from small one-room and kitchen flats
to large villas intended for the managing staff. The Company

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INDUSTKIAL RELATIONS

considers that a three-room and kitchen dwelling is the type of
accommodation best suited to the present requirements of an
average working-class family. It is therefore endeavouring to transform the greatest possible number of small flats into dwellings of this
size. In 1932 alone, forty three-room and kitchen dwellings were
built by transforming small flats. Most of the dwellings have
a bathroom, generally situated in the basement.
The annual rent is calculated at the rate of 5.30 Kr. per square
metre of floor space, which means that a three-room and kitchen
dwelling costs from 28 to 37 Kr. a month. As the average earnings
of a worker in the employment of the Company amount to 250300 Kr., and even to 400 Kr. a month, such a rent would not seem
to weigh heavily on the worker's budget.
The appearance of the workers' quarter at Rjukan is most
agreeable. The taste of the inhabitants, which perhaps owes
something to friendly rivalry, leads them to devote particular
care to their gardens. In order to break the monotony of rows
of similar houses, and with a view to giving each of them a personal
touch, the Company has had them painted in varied and lively
colours. So far as can be judged, the pride shown by the workers
in the external appearance of their houses extends also to internal
arrangements. Most of the families have a piano, and generally
speaking their homes have the appearance of belonging to
middle-class families rather than to wage earners.
Shortly after beginning building operations at Rjukan, the
Company erected large premises intended to house about a hundred
unmarried workers. This building contained a canteen, public
rooms, vapour baths, etc. But as the persons living in these premises
married one after another and went to live in their own homes, the
initial object of the building disappeared. The Company therefore
let the premises at a nominal rent to the community as a home for
elderly persons.
It is to be noted that the Company supplies the inhabitants
of the workers' quarter with electricity at the very low charge of
0.01 Kr. a kilowatt-hour, and thus enables them to heat their
houses and do their cooking by electricity in very favourable
conditions.
The management of the Company lets these dwellings in
accordance with applications received, and in doing so makes
due allowance for the number of children in the family of the
applicant. Only applications from married workers are taken
into consideration.

THE NORWEGIAN NITROGEN COMPANY

121

Notodden, it will be remembered, was inhabited by a small
industrial community before the Company built its first works
there, and this fact made it less urgent for the Company to build
workers' quarters. The Company decided, however, to undertake
building operations on a large scale in comparison with the size of the
staff employed, and altogether 125 houses containing 229 dwellings
were erected. The main idea of this scheme was to provide cheap
dwellings, for rents were particularly high at Notodden. Following
the policy adopted at Rjukan, the Company concentrated on
building houses to hold one or two families at most. Only 35 of
the 229 dwellings built by the Company are in houses containing
more than two families. Finally, the Company built about twenty
houses for single families at the port of Menstad near Porsgrund,
these dwellings being intended for the higher-placed employees of
the works.
Altogether, 25,000,000 Kr. were invested by the Company in
houses built for the staff at Rjukan, Notodden and Heroen.
Acquisition of Houses by the Workers
At Rjukan, simultaneously with the construction of low-rental
houses, the Company did its best to encourage workers to acquire
their own home. With this end in view it built a number of houses
for single families which it offered at cost price to members of
the staff. Standing as guarantor, it arranged first mortgage loans
for them, accepting second mortgages, repayable in twenty-five
years, for the rest of the price. The Company adopted this policy
rather than that of leaving the workers to build for themselves,
because at that time it was engaged in large-scale building operations and could therefore put up houses under very favourable
conditions. But the idea of owning a house did not make much
progress at Rjukan. The principal reason for this seems to be
that when a worker imposes sacrifices for himself in order to
acquire a house, he generally desires to provide a home for his
old age, and the outlandish position of Rjukan does not make
this town a very desirable place for retired persons. The Company
which, in acting thus, was actuated solely by a desire to help
their staff, therefore decided to buy back the houses of those
desiring to sell, but nevertheless a good number of the houses
still remain the property of their purchasers.
At Notodden, on the other hand, the steps taken by the Company
to help workers to become the owners of their own house were

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INDUSTRIAL RELATIONS

crowned with success. Notodden is, in fact, a small town on the
edge of a lake where the view is not obstructed as at Rjukan by
a high mountain range and where communications with the rest
of the country are good. The workers therefore contemplate with
pleasure the idea of fixing themselves there definitely by using
their savings to acquire a home.
In 1909 the Company bought land which it divided into fortyfive plots, on each of which a house was built. These houses were
sold at cost price to workers desiring to become houseowners.
Each house consists of two dwellings, one of which is occupied
by the owner, the other by a worker from the factory. The houses
were sold on the same terms as those arranged at Rjukan.
During the early years of the world war the workers showed a
desire to build their own houses and here again their wishes were
met by the Company. Each worker desiring to build with the help
of the Company was required to purchase the necessary land and
carry out certain initial operations (navvying work and the laying
of foundations). This was insisted on so that the worker concerned
would feel that he was really doing something himself towards
the acquisition of his house. Once these conditions were fulfilled,
the Company granted a loan to cover the cost of building operations. The rate of interest on such loans was originally fixed at
4 per cent., but was subsequently increased in proportion to the
discount rate, but in no case did it exceed 5 per cent.
A total of 150 workers' houses was built at Notodden with the
financial help of the Company. The mortgages signed by the owners
contain no clause foreclosing the loan in the case of a worker
leaving the Company or disposing of his house. But in both cases
the interest was increased by y2 per cent, more than the discount
rate of the National Bank.
At Heroen also, the Company made a great effort to encourage
its staff to become house-owners. It purchased several sites in
the neighbourhood of the works with a view to re-selling them
at a reasonable price to workers desiring to build on their own
account. Loans were granted up to 80 per cent, of the value of
the buildings. These loans, which bear interest fixed at 5 per cent.,
were repayable in twenty years. When building operations are
completed, the loans may be converted into loans from the State
Building Mortgage Fund which makes a charge of 6% per cent, for
interest and amortisation combined. The average cost of these
buildings is 8,000 Kr. for a house for one family and 11,000 Kr.
for houses for two families.

THE NORWEGIAN NITROGEN COMPANY

123

With the help of the Company, 120 workers' houses have been
erected in the neighbourhood of the Heroen works, the capital
invested in the form of loans amounting to 900,000 Kr.
Altogether, the loans granted by the Company for the construction of workers' dwellings amount to 1,300,000 Kr. The annual
amounts payable on these sums are recovered mainly through the
" Interessekontor ", an office set up to administer the financial
affairs of the staff. The organisation and working of this office
are described below.
The " Interessekontor "
The " Interessekontor " has the double character of a savings
bank and a staff income administration office. Set up solely in the
interests of the Company's workers and salaried employees, it has
its own special charter. Membership is open to all members of the
staff. According to its rules its object is to help its members
to meet their financial obligations (payment of taxes, interest and
charges on loans, etc.), by distributing such payments over a long
period by a system of deductions from wages or salaries. Among
other things, it provides its members with opportunities for
investment, while it also acts as a savings bank, and in exceptional cases aids members who get into financial difficulties.
Practically the whole of the staff of the Company belong to
the " Interessekontor ". It is owing to this organisation that such
a large number of workers have been able to become owners of
their own house. It also permits the workers and salaried employees
to buy objects which, generally speaking, would otherwise be
beyond their means, and to contract life insurance under very
favourable conditions.
The Company bears the entire cost of the staff required to manage
the " Interessekontor ". All employees of the organisation are
required to observe the greatest discretion even with regard to the
management of the Company itself. The latter is also responsible
for the management and investment of funds entrusted to the
" Interessekontor ". The amount of these funds varies, but on
several occasions has reached as much as 2,000,000 Kr. The prudence with which this organisation is managed is shown by the
fact that during its eighteen years of existence the total losses
incurred barely amount to 2,000 Kr.

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INDUSTRIAL RELATIONS

SOCIAL HYGIENE AND WELFARE

Industrial Safety and Hygiene
Norway possesses comparatively recent and up-to-date legislation
for the protection of labour, the provisions relating to industrial
safety and hygiene being consolidated by the Act of 18 September
1915. Under this legislation the competent departments of the
Factory Inspectorate and the management of the Company
co-operate in order to ensure that the plant offers the requisite
safety and hygiene. It is true that certain processes used in
the manufacture of nitrate fertilisers are not exactly agreeable or
healthy, but a visit to the works gives the impression that the
Company has done all that is humanly possible to safeguard the life
and limb of its workers. For example, the hydrogen manufacturing
departments are provided with balconies where the workers may
rest and breathe pure air when their work allows. Highly sensitive
apparatus automatically works a signalling system when for some
unusual reason the hydrogen manufactured absorbs sufficient
oxygen to make an explosion possible. The pipes containing the
various gases given off during the manufacturing processes are
painted in different colours (red for hydrogen, light blue for oxygen,
green for nitrogen) and this enables the workers to remember the
contents of any given pipe line. Whenever conditions permit, wash
basins with running hot and cold water are placed at the disposal
of the workers. At Rjukan, moreover, the Company pays for
the upkeep of a trained fire brigade with highly perfected fireextinguishing equipment, which is placed at the disposal of the
community at a nominal charge. At Heroen, too, a fire brigade
has been trained and equipped at the cost of the Company.
A noteworthy point is the great care which the Company has
taken to make their works and the immediate neighbourhood a
pleasant spectacle to the eye. At Rjukan the high-power stations
have been fitted up both inside and outside with taste and even
luxury which would do honour to any town hall. Flower beds
and clumps of bushes planted here and there break the monotony
of the typical appearance of an industrial concern.
Old-Age and Invalidity Insurance
In Norway a certain number of communes have instituted
non-contributory old-age pensions, but there is no old-age insurance

THE NORWEGIAN NITROGEN COMPANY

125

scheme for the whole of the population or the wage earners, nor
any general system of non-contributory old-age pensions. In
such circumstances, the measures taken by the Norwegian Nitrogen
Company on behalf of its retired employees and workers are of
undoubted importance and meet a real need.
For salaried employees there has been set up a compulsory
pension fund to which members contribute 2 per cent, of salaries
not exceeding 14,400 Kr. a year. The Company meets all
expenditure not covered by the ordinary revenue of the fund.
After twenty-five years' service, members are entitled to a pension
equal to 50 per cent, of their earnings below 14,400 Kr., provided
they have reached the retiring age, which is fixed at sixty-six years
for men and at sixty years for women. In addition, the fund also
makes provision for pensions for widows and children of deceased
members. The pension fund is combined with an invalidity fund.
During the financial year 1931-1932, the revenue of the pension
fund amounted to about 937,000 Kr., of which members' contributions represented 453,000 Kr. and interest on accumulated
capital 484,000 Kr. The assets of the fund totalled 9,700,000 Kr.,
while those of the invalidity fund amounted to about 640,000 Kr.
These insurance funds are administered by a managing committee
appointed by the Company, which has the assistance of a
representative nominated by the members.
For workers, the Company has set up a special fund which is
financed solely by the Company and of which the main object is to
provide workers with old-age pensions. Unlike the salaried employees' pension fund, the members of which pay contributions,
the benefits granted by the workers' old-age pension fund have no
contractual character.
Its operations are governed by rules
approved by the management of the Company.
Only the Company's permanent workers are entitled to benefits,
but the term " permanent " is applied in a rather wide sense.
In order to be entitled to an old-age pension, a worker must as a
rule have worked for the Company for the ten years previous to the
retiring age, which is fixed at sixty years. The amount of the old-age
pension generally amounts to 600 Kr. for workers who have
completed ten years' service, plus 40 Kr. for each additional year's
service, with a maximum of 800 Kr. In addition, cost-of-living
bonuses are granted which may bring the maximum pension up
to 920 Kr.
Besides old-age pensions, the fund may grant to the widows
of permanent workers a pension of 30 Kr. a month plus 10 Kr.

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INDUSTRIAL RELATIONS

a month for each child under sixteen years of age provided the
total supplementary pension does not exceed 60 Kr. a month.
Cost-of-living bonuses may be added to these pensions. Finally,
the fund may grant up to a maximum of 60 Kr. a month to workers
in cases of prolonged illness.
The capital of the fund was formed by a succession of grants from
the Company, which also gave large subsidies in years when business
was particularly remunerative. The assets of the fund at present
amount to about 7,000,000 Kr. The supervision of the general
management of the fund is carried out by a committee composed
of four representatives of the management and three workers
appointed by their fellow-workmen. This committee meets once a
year to study questions connected with the working of the fund.
The general operation of the fund is ensured by the administrative
services of the Company.
Sickness Insurance, etc.
Norway has a compulsory sickness insurance system which
applies to all workers whose annual remuneration does not exceed
a certain amount, which is at present fixed at 4,500 Kr. The funds
of this insurance system are derived from contributions paid by the
insured persons and their employers and from grants from public
funds. The insurance system provides insured persons with daily
cash benefit, medical attendance, treatment in curative establishments, etc. This being so, the Company did not consider it
necessary to set up a general sickness insurance scheme for its staff,
but even in this field it has taken a number of measures.
For example, the Company has built on its own initiative
and with its own money a hospital at Rjukan which can generally
receive sixty patients. This hospital is open to the whole population
of the district, but it is naturally intended in the first place for
workers and salaried employees of the Company, who, in case of
sickness, are treated there under the best conditions. The total
cost of building and fitting up the establishment amounted to over
1,000,000 Kr. The hospital is run on the Company's money. For
members of the sickness fund the cost of maintenance and treatment
amounting to 6.50 Kr. a day is met by the sickness fund (that is to
say, by the body of workers whose annual remuneration is less
than 4,500 Kr.). Although the Company has waived its right to
interest on the capital invested, each financial period ends with a
deficit, which is also met by the Company. The hospital is managed

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127

by a chief medical officer who has an assistant doctor, a probationary
doctor and twelve nurses under his orders. The hospital is equipped
with medical and surgical appliances which meet the latest technical
and scientific requirements. It includes a general surgery and an
isolation ward for contagious diseases. Each year between 700 and
800 patients receive treatment in the hospital.
In addition to the above measures the Company grants yearly
subsidies varying from 7,000 to 12,000 Kr. to the Rjukan Health
Association, a private organisation in which the officials of the
Company play an important part. This Association has set up and
runs a nursery and other institutions for children. With the help
of the Company the Health Association has been able to establish
a holiday camp in the mountains which each year takes seventy
children from the town free of charge.
It may also be noted that the Company runs a sickness fund
open to all members of the staff of the Rjukan works whose remuneration exceeds the limit laid down for compulsory sickness
insurance. Charging only a modest contribution (8 Kr. a month
for fathers of families and 5 Kr. for unmarried persons), this fund
is able to supply its members and their families with all medical
requirements, including treatment in hospital and, where necessary,
in a convalescent home. It is managed by a committee composed
of a representative of the management and the Company and two
persons representing the members. Finally, it may be mentioned
that all workers in the employment of the Company may receive
relief from the workers' pension fund in case of prolonged illness.

WORKERS' SPARE TIME

It was at Rjukan that the Company made its greatest effort to
help the workers to make the best of their spare time. In view
of the love of sport common among Norwegian youth, and the
particularly favourable position of the town, the Company devoted
its energy in the first place to developing various forms of sport.
In the town itself, it built a large stadium, which it handed
over to the Rjukan Sports Club, formed mainly of the Company's
workers and salaried employees and their children. This stadium,
which includes football and athletic grounds, required a considerable
amount of navvying and other work. During the winter season,
it may be converted into an ice rink. It is provided with stands
for the public, dressing-rooms, shower-baths, etc. The plans were

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INDUSTRIAL RELATIONS

made in conjunction with the committee of the Sports Club, to
which the stadium was handed over, on condition that it was
to be open to all members of the Federation of Norwegian Sports
Associations, an organisation of a non-political character.
The Company also built at its own expense five tennis courts,
which it has put at the disposal of the Rjukan Tennis Club, subject
to the same condition as that imposed in connection with the
stadium. As is known, ski-ing is a national sport of Norway,
and the mountains surrounding Rjukan offer unique facilities for
the practice of this sport. The Company has contributed in a large
measure towards the construction of a sports hut in the mountains
above Rjukan, about 12 km. from the town. This hut, which is
the property of the Sports Club, includes several large commonrooms with fireplaces and accommodation for from twenty to
thirty persons.
The Company owns vast tracts of land on the high plateaux
where the streams which supply electric power have their sources.
Scattered over this district are some two hundred shepherds' huts.
The Company has had these converted into sports huts, which it
rents at the modest price of 20 Kr. a year to its workers and
employees who wish to have a shelter in the mountains when
they go on shooting and fishing expeditions. It may also be noted
that all members of the staff of the Company are entitled to fish
and shoot on the Company's land. The Company also paid a
large share of the cost of building a ski-jumping track near the
large chalet of the Sports Club. Part of this track is in reinforced
concrete. Two ski-jumping tracks have also been built by the
Company in the town itself.
But of all the social measures taken by the Company, that
which strikes the imagination the most is the large overhead cable
railway which carries workers from the depths of the valley in
which Rjukan lies into the heart of the surrounding mountains.
While the climate of Rjukan is healthy, the town itself gets practically no sunlight during five months a year, and this is why the
Company, in times when financial conditions were good, built a
cable railway by which it is possible in a few minutes to reach
an altitude where the sun exercises its beneficent influence on the
body and mind. Starting from the town, which is 394 metres
above sea level, this railway rises in four minutes to an altitude
of 900 metres, where immense tracts of land offer superb facilities
for sport, both in summer and winter. Its construction cost about
600,000 Kr. After deducting the cost of interest and amortisation,

THE NORWEGIAN NITROGEN COMPANY

129

which the Company refrains from claiming, the annual deficit on
the working of the railway is 20,000 Kr. a year, and this, too, is
met by the Company. The price of the tickets is so low (0.25 Kr.
for adults and 0.10 Kr. for children) that even the most humble
worker can use the railway to his heart's content.
The Company has also granted a loan of 135,000 Kr. without
interest to a holiday camp built by the Rjukan workers on the
edge of a lake at about 35 km. from the town. This camp includes
a number of bungalows, each fitted up to house one or two families.
The Company pays the cost of a band consisting of twenty amateur
musicians, who undertake to organise a number of open-air concerts
in the town every year. Three bandstands have been built for
this purpose. It also grants an annual subsidy to the Rjukan
Musical Association, which has its own choir and orchestra. Finally,
the People's Club, which was built by the Rjukan Labour Association, was granted a loan of 100,000 Kr. without interest. These
premises, which cost about 600,000 Kr., include meeting rooms,
with a stage for theatrical performances, rooms for the local labour
press, a restaurant and a cinema.

CONCLUSIONS

The study of industrial relations in the establishments of the
Norwegian Nitrogen Company brings out a number of important
points. In the first place, it shows how, with the help of appropriate social institutions, conceived often on most generous lines,
a body of regular workers, trained to meet the technical requirements of modern industry, has been formed in a short space of
time from a population practically devoid of any previous
industrial training. In the second place, it provides an example
of the co-existence in the same establishments of important
social institutions due to the employers' initiative, organised
trade unionism with advanced ideas, and a highly developed
system of collective agreements.
The social policy followed by the Norwegian Nitrogen Company
has necessarily been influenced to some extent by the special
conditions obtaining in the country and in the district in which
the Company's establishments are situated. As soon as his work
is over, the worker in the employment of the Company can lead
an existence which differs but little from that of his superiors of
Ararious grades. Like the overseer, the engineer or the director,
9

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INDUSTRIAL RELATIONS

he possesses a garden in most cases. Nor does he need to worry
overmuch about his old age. With the help of his employer,
he is able to purchase numerous articles usually beyond the
reach of a worker. In a few minutes, and at a minimum cost,
he can reach wide table-lands where, according to the season, he
can ski, hunt or fish in the same conditions as his chiefs.
There would seem to be no doubt that the comprehensive social
policy so successfully followed by the Norwegian Nitrogen Company
is, when taken in conjunction with the system of collective bargaining practised in its establishments, one of the main reasons
for the harmonious relations which have been established between
the management and the staff.

Industrial Relations in the Grand Duchy
of Luxemburg
GENERAL

INTRODUCTION

The Grand Duchy of Luxemburg has an area of 2,587 square
kilometres and a population of 300,000. I t lies in the north-west
of Europe, and is bounded on the east by Germany—from which
it is separated by the Moselle, the Sûre and the Our—on the
south by France, and on other sides by Belgium, to which it is
linked by an economic union. It consists of three separate belts,
running east and west.
Towards the north, the Oesling plateau rises to a height of
1,500 feet, and resembles the neighbouring Belgian province of the
Ardennes, with its rugged climate and barren soil. The population
is sparse and. grouped in villages such as Wiltz (well known for
its tanneries), Vianden and Clervaux 1 . The Herrenberg region
lies next to and at the foot of the Oesling plateau. It consists
of plainland interspersed with smiling valleys, and is, in short, a
land of tillage and orchards. In this region is a number of agglomerations, including Diekirch, a town of 3,800 inhabitants and a
centre of administrative, judicial and intellectual importance, and,
some miles to the south-west, Ettelbrück, with 4,600 inhabitants,
the agricultural and commercial centre of the region.
Gutland, or the " good land ", is the third belt. It is subdivided
into the Luxemburg plateau district, the Moselle or wine-growing
district, and, to the extreme south of the country, the iron ore
district, the natural wealth of which has helped to make Luxemburg
one of the most important steel-producing countries in the world.
It would seem essential here to say a few words about the Luxemburg plateau district, although it is not this part of the
i For this part of the article, frequent use has been made of the information
collected by the Fifteenth University Social Week (of Belgium), and printed
in the Revue de l'Institut de Sociologie, Oct.-Dec. 1933, which is published by
the Free University of Brussels.

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Grand Duchy which is of the greatest concern to the present
study. But this district, with the town of Luxemburg (55,000
inhabitants) in its centre and Echternach, an excursion centre,
lying farther to the east, possesses large forests, which have
contributed towards the wealth of the country to the same extent
as the tanbark oak forests of the Oesling plateau. It was indeed
directly due to the abundance of wood and the ready supply of
charcoal that the first ironfoundries were established at Eich,
Fischbach and Septfontaines to smelt alluvial mineral ores.
The steel-manufacturing district, economically by far the most
important in the Duchy, is also the most densely populated.
Esch-a/Alzette has 30,000 inhabitants, while Differdange and
Dudelange have respectively 18,000 and 15,000. In this district
farming, to which the soil lends itself admirably, has had to give
way before mines, blast furnaces, steel works and rolling mills.
The economic revolution which, towards the end of the nineteenth century, resulted from the exploitation of the iron ore
mines of Luxemburg, was bound to lead to important demographic
changes. About that time, a stream of alien workers, increasing
in volume with each successive year, began to flow into the Grand
Duchy which previously, owing to racial tendencies, had always
been an emigration country. This movement reached its peak in
1907, when the steel and mining industries employed 6,124 Luxemburgers as against 10,254 aliens, including 6,129 Italians. Since
the war, the proportion of Luxemburgers has never fallen below
60 per cent, and since the beginning of the world economic depression in 1929 it has shown a constant upward tendency. The fall
in the number of alien workers amounted to as much as 55 per cent.
for Italians and to nearly 70 per cent, for Slavs. These movements
of the population did not, however, extend to the rural classes.
The great stability displayed by this section of the population is
mainly due to the widespread influence of small farming, in which
90,000 persons find employment on 16,000 farmsteads.
It is this wide development of small and medium-size holdings
that explains the Luxemburgers' attachment to the land, just as
it was formerly one of the main causes of the emigration movement.
Strongly attached to the soil, the Luxemburg peasant is not
greatly attracted by the factory, and, as seen above, he is prepared
to leave the higher wages of the factory to alien workers. Even
when he accepts work in a factory, he will not leave his village,
preferring to cover long distances daily to get to his place of work.
The twofold result of this is that he lives more cheaply than the

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133

average factory worker, and is much more adaptable when overtaken by unemployment 1 . It may here be noted that the supervisory staff in industry, like the higher grades in officialdom, are
recruited mainly from the peasant classes, from which they inherit
the vigour and continuity of ideas which characterise them.
Although throughout this report stress is laid on the importance
of industrial production, it would be an error to suppose that
that constitutes the only resource of Luxemburg. In 1928, for
example, agricultural production amounted to 400,000,000 Luxemburg francs 2, as compared with 1,800 million francs representing
the net value of the output of the steel industry. Since then, the
relative importance of agriculture has shown a tendency to rise,
as agricultural production has remained relatively stable, while
industry has felt the effects of the worldwide industrial depression.
The agricultural output of Luxemburg suffices to cover the main
home requirements, and there is even a surplus for exportation,
which in 1932 amounted to 70 million francs.
The industry of the Grand Duchy is dominated by the metalworking and mining branch, but certain other sections are worthy
of note. Attention has already been called to the Oesling tanneries.
To these may be added other wood-working industries: sawmilling, parquetry making, etc., while the building yards in the
Duchy use Luxemburg sandstone. But it is not generally known
that the Luxemburg nail trade exports to England and other
countries, and that the Luxemburg hosiery, leather, footwear and
glove industries supply the German markets.
Turning to the study of the iron and steel trade itself, one may
note first of all that it is one of the oldest industries in Luxemburg.
Even so far back as the beginning of the nineteenth century, it
came up against international competition, and was saved only by
the adherence of the Grand Duchy to the Zollverein in 1842. But
other trials awaited the industry. In the first place, the market
value of charcoal—a great source of wealth to central Luxemburg—
was practically destroyed by the advent of coke, while the use by
the English steel trade of the Bessemer process, impracticable as
it was in the Lorraine-Luxemburg basin, had disastrous effects for
1
At the end of April 1934, which is as far as this study goes, the number of
workers in receipt of assistance from unemployment and emergency funds was
453, including 38 aliens. Unemployment is therefore practically non-existent
in 2Luxemburg, if regard be had to the economic capacity of the country.
The Luxemburg franc has the same value as the Belgian franc: one-seventh
of the gold franc.

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INDUSTRIAL RELATIONS

the steel trade. Impending ruin was, however, averted in 1879 by
Thomas and Gilchrist, the English inventors of the process of slag
grinding by the basic converter. From this moment, continual
headway was made by the industry, which reached its peak in 1929
with an output of 2,900,000 tons of pig iron and 2,700,000 tons
of steel.
Luxemburg, as is well known, has concluded an economic union
with Belgium. Before the conclusion of this agreement, the Grand
Duchy had, for the greater part of a century, been a member of the
Zollverein. Although Luxemburg exercised no direct influence on
customs legislation, this period was very favourable to her, and
especially for her metal industry. Possessing mineral ores, and
obtaining coal supplies from the Ruhr and the Saar basins,
Luxemburg formed a part of the Rhenish-Westphalian industrial
movement. When it denounced the Zollverein on 1 January 1919,
Luxemburg declared itself in favour of an economic union with
France, where her steel industry would have obtained conditions
very similar to those it had previously enjoyed. In the end,
however, an economic union with Belgium, with the consequent
changes, was concluded. By the agreement of 25 July 1921 the two
countries agreed to recognise each other's currency as legal
tender.
In concluding this general introduction, a few words on the social
legislation of Luxemburg will not be out of place. It will be necessary
from time to time to refer back to this legislation in studying the
effects of its application to the various aspects of industrial relations. It may be said t h a t at the present time the social legislation
of Luxemburg may be held up as an example. In many cases, the
Grand Duchy has acted as a pioneer; in others, its legislation has
been modelled on the most liberal laws of neighbouring countries.
Ever since 6 December 1876, the minimum age for admission to
industrial employment has been fixed at twelve years, while in
1890-1891 it was limited to sixteen or eighteen years for certain
classes of mining and quarrying work. The prohibition of night
work for persons under sixteen years of age also dates back to the
year of 1876. Moreover, Luxemburg was one of the first countries
to ratify (on 3 August 1907), the international Convention adopted
at Berne in 1906 to prohibit the night work of women. Thereafter,
a series of intermediary measures led up to the ratification, on
5 March 1928, of the twenty-five Draft Conventions adopted up
to that time by the International Labour Conference, an act which
brought Luxemburg at one bound to the top of the list of countries

IN THE GRAND DUCHY OF LUXEMBURG

135

in respect of the number of International Labour Conventions
ratified by them \
T H E A R B E D - T E R R E S ROUGES AMALGAMATION

The importance of this amalgamation in the economic system of
Luxemburg is so great t h a t it merits a special study. There are
very few examples, if any, of an amalgamation of private interests
absorbing such a large part of the industrial life of the country
in which it is situated. I t is for this very reason t h a t the ArbedTerres Rouges have been selected to provide examples of industrial
relations for the present report. Before proceeding any further,
however, it would seem fitting to give a general description of the
establishments themselves.
Of the forty-six blast furnaces in Luxemburg, twenty-five belong
to the Arbed-Terres Rouges establishments 2 . The proportion remains
the same when the number of blast furnaces in operation in April
1934 is taken as a basis of comparison, the Arbed-Terres Rouges
owning thirteen of the twenty-one furnaces then in operation. If
their Saar and Rhenish works be included, the Arbed group produces
almost as much pig iron and steel as the whole of the metal works
in the Grand Duchy 3. Further and even more complete figures
may be obtained by a study of Luxemburg employment statistics.
According to the last census, taken on 31 December 1930, t h e total
population of Luxemburg was 299,782, including an occupied population of 120,850. On 1 January 1934 the total number of
workers employed in industry in the Grand Duchy was 27,557,
including 17,485 in the metal-working and mining industry 4. At
the same date the staff employed in Luxemburg by the ArbedTerres Rouges Amalgamation numbered 11,407, or nearly one-half
of the total number of persons employed in the industries of the
Grand Duchy, and about two-thirds of the total number of workers
employed in the metal-working and mining industry.
i At the beginning of 1934, Luxemburg, with twenty-seven ratifications,
was overshadowed only by Spain and Uruguay, both of which countries had
thirty
ratifications to their credit.
8
The word " Arbed " is formed by the initials of the " Aciéries réunies de
Burbach-Eich-Dudelange
".
3
In 1933 the output of pig iron and steel—almost entirely intended for
export—for the whole of the Grand Duchy was respectively 1,887,540 tons and
1,844,840 tons. During the same year the Arbed establishments produced
1,604,160
tons of pig iron and 1,646,940 tons of steel.
4
These figures are quoted from L'Echo de l'industrie, a weekly periodical
published by the Federation of Luxemburg Manufacturers.

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INDUSTRIAL RELATIONS

The vast combine known by the name of Arbed-Terres Rouges
is essentially the creation of two families, one Belgian and the
other belonging to Luxemburg—a fact which might well be taken as
a symbol of the present economic union between the two countries.
In 1847, a private company was formed by members of the Metz
family under the style of " Auguste Metz et C ie " at Eich, a small
locality some miles to the north of the town of Luxemburg. The
company built four blast furnaces for transforming alluvial mineral
ores, which used charcoal produced in the forests of the Grand
Duchy. After the construction of the first railway line in Luxemburg, coke soon made the use of charcoal a thing of the past. The
Metz Company immediately decided to transform its plant and
equipment, and in 1865 proceeded to do so in the neighbouring
district of Dommeldange, after having increased its capital by
converting the original concern into a limited company known as
the " Forges d'Eich ". This company built four coke blast furnaces
at Dommeldange, although it may be noted in passing t h a t the
first coke blast furnace was erected at Eich in 1857 by the Metz
Company. As far back as 1854, the directors of the company had
begun to buy up mining land in the south of Luxemburg and in
Lorraine, with the result t h a t by 1903 the mining property of the
Eich Ironworks covered an area of 1,750 hectares.
Meanwhile, Mr. Victor Tesch, a former Minister of Justice in
Belgium, and sometime Governor of the " Société Générale de
Belgique ", had founded, in 1856, a Belgian company in the Saar
called the " Société en participation des Forges de Sarrebrück ". This
step was a reply to the protectionist measures with which Prussia
had surrounded its growing metal industry, and which had closed the
German markets for Belgian iron and steel products. After building
the Burbach works and acquiring large mining interests, this company was converted, in 1862, into a limited company named the
" Société des mines du Luxembourg et forges de Sarrebrück ".
In 1871, the Burbach Company concluded an agreement with
the Eich Company for the building and joint working of four blast
furnaces at Esch-a/Alzette, in the iron ore district of Southern
Luxemburg. In 1879, the Eich Company took out the first patent
rights to use the Thomas steel process, which enabled it to transform
the phosphorous pig iron of Luxemburg into steel in very advantageous conditions, and allowed the Grand Duchy to compete in
the steel market against other countries using the Bessemer process,
which could not be adapted to Luxemburg pig iron.
In order to be able to use the Thomas process, Mr. Victor Tesch,

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137

acting in conjunction with the Eich Ironworks, founded the
company " Société anonyme des hauts fourneaux et forges de
Dudelange ", at about a dozen kilometres to the east of Escha/Alzette. This company laid down six blast furnaces, a Thomas
steel works, rolling mills, etc., and by 1911 had already acquired
about a thousand hectares of mining deposits. In addition to these
joint holdings, there was that held by the " Société des mines du
Luxembourg et forges de Sarrebrück " in its own name, and which
covered an area of 4,000 hectares situated partly in Luxemburg
and France and in German Lorraine. In closing this description
of the undertakings prior to their amalgamation, it may be noted
that the Eich Company, while acquiring considerable interests in
the southern part of Luxemburg, did not abandon the scene of its
original activities, and in 1908 built at Dommeldange the first
electric steel works in Luxemburg.
In 1911, these various undertakings, already connected by intermarriage between the Metz and Tesch families, decided to amalgamate. This fusion merely gave a sort of official recognition to an
existing state of affairs, the successive stages of which have just
been outlined. At the time of its foundation, the new company,
with its five works capable of an annual output of approximately
1,200,000 tons of pig iron and 900,000 tons of steel, its own mining
possessions of an area of about 6,750 hectares, and its coal-mining
concession of 2,626 hectares, ranked among the largest metallurgical
undertakings in Europe. Its trade name—" Aciéries réunies de
Burbach-Eich-Dudelange "—did not really show the real size of
the concern, which, in addition to those mentioned, included the
works of Dommeldange and Esch-a/Alzette.
After their amalgamation, the growth of the undertakings was
very rapid. In 1912, the Arbed group acquired the Hostenbach
works in the Saar. At the same time the vertical organisation
of the group was continued. In 1913 an amalgamation with the
" Eschweiler Bergwerksverein ", near Aix-la-Chapelle, led to the
Arbed group taking over the management of that concern, thus
ensuring a source of supply for its blast-furnace coke requirements.
During the same year, new blast furnaces, a steel works and rolling
mills were laid down at Esch-a/Alzette. A further phase in the
vertical organisation was completed in 1917, when the Arbed
establishments bought out the share capital of the company " Stein
und Thonindustriegesellschaft Brohlthal " at Burgbrohl, near
Coblence, a transaction which provided it with the necessary
supplies of fire-clay products.

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INDUSTRIAL RELATIONS

Immediately after the war, the Arbed establishments continued
the plan of horizontal development begun in 1911, and took part,
together with Messrs. Schneider and Company (Greusot works),
in the constitution of the " Société métallurgique des Terres
Rouges ". This company was formed in 1919, with a capital of
100,000,000 francs, for the purchase of the metal working undertakings owned by the Gelsenkirchen Company in the Grand Duchy
and Rhineland. The Arbed group also helped to constitute the
" Société minière des Terres Rouges ", to which the property of
the Gelsenkirchen Company was ceded when Lorraine again became
a French province. In 1920 the Arbed and Terres Rouges combines
acquired large interests in the company of " Feiten & Guilleaume
Carlswerk " of Cologne-Miilheim, which manufactures electric and
steel cables, while it also proceeded to enlarge its coal-mining
concessions by taking up a large part of the capital of the " Société
anonyme des charbonnages Helchteren et Zolder " in the Belgian
Limburg. In the same year, the Arbed and Terres Rouges groups
set up the " Comptoir métallurgique Luxembourgeois ", known by
the name of " Columeta ", to which they entrusted the sales
monopoly for all their products. In 1921, the two groups acquired
considerable interests in the " Sociedad Anonima Talleres Metalúrgicos San Martin " in Buenos Aires, the output of which represents
at least 60 per cent, of the total metal-working industry of the
Argentine Republic. During the same year, the Arbed concern,
acting in conjunction with Belgian, French and Luxemburg groups,
formed the " Companhia Siderurgica Belgo-Mineira ", the largest
metallurgical company in Brazil.
The vertical organisation was continued in 1922 by the acquisition
of shares (the Company's holding now amounts to 95 per cent, of
the capital stock) in the company " Clouteries et Trefíleme des
Flandres " at Guitbrugge (Belgium), which takes up the greater
part of the wire-rods manufactured at Esch-a/Alzette. A further
step towards the complete amalgamation of the various interests
was completed in 1926, when the Arbed and the Terres Rouges
groups were combined. By an exchange of shares (four Terres
Rouges for one Arbed share), the Arbed group became the owner
of about 99 per cent, of Terres Rouges capital stock. In the same
year the Dudelange plant was enlarged by the addition of a sheetiron works and a cold rolling mill. Finally, in 1926, the Arbed
group took over as much as 93 per cent, of the capital stock of the
" Eschweiler Bergwerksverein ".
In this rapid sketch of the growth of the Arbed group, no reference

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139

has been made to a number of companies in Belgium, France and
Luxemburg in which somewhat less important holdings were
acquired. These companies include the " Société métallurgique
d'Aubrives et Villerupt ", at some kilometres from Esch-a/Alzette,
but on French soil; the Errouville Company and the Bellevue Mines,
also in France; the " Société de Transports et d'Affrètements " at
Antwerp ; the " Société anonyme des Anciens établissements Paul
Wurth " and the " Société des ciments luxembourgeois " in
Luxemburg.
A description of the undertakings situated outside the Grand
Duchy would go beyond the limits of the present study. Even
keeping to these limits, the list is quite long enough, and it is therefore preferable to keep to essential details. Two groups are geographically distinct, namely the Eich-Dommeldange group, situated
to the north of the town of Luxemburg, and the Esch and Dudelange
group, lying to the south of the town, and to which the works of
the " Société minière des Terres Rouges " at Audun-le-Tiche, on
French soil, are attached.
The old works at Eich include a foundry producing pig-iron
castings for general engineering purposes, an engineering workshop,
a pottery factory, and a radiator works, while, at Dommeldange,
there are three blast furnaces with a potential daily output of
300 tons of pig-iron, a Siemens-Martin steel plant and an electrical
melting plant with potential monthly outputs of 4,000 and 1,100
tons respectively, a rolling mill containing two trains of rolls,
a steel foundry, an iron foundry, a bronze foundry, a heat treatment shop, etc.
The undertakings of Esch-a/Alzette form by themselves a group
of considerable importance. Including the works of Audun-leTiche, situated on neighbouring French territory and belonging
to the " Société minière des Terres Rouges ", this group includes
eighteen blast furnaces, steel works and rolling mills capable of
producing 160,000 tons of pig-iron and 140,000 tons of steel a
month in most economical conditions. Moreover, the four
works at Esch and Audun-le-Tiche have been linked up as the
result of very considerable efforts by a private railway and a system
of blast furnace gas mains and electric cables.
One of the three works at Esch belongs entirely to the Arbed
group, the two others—Esch-Terres Rouges and Belval—to the
" Société métallurgique des Terres Rouges ". The first comprises
three blast furnaces of a total potential daily output of 1,000 tons
of pig-iron, a Thomas steel works with five 30-ton converters, a

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INDUSTRIAL RELATIONS

rolling mill with one blooming train and five finishing mills, etc.
The Esch-Terres Rouges works, which are specially equipped for
the production of pig-iron, possess five blast furnaces with a total
potential output of 1,750 tons a day. The iron produced by these
works is conveyed in a molten state to both the Belval steelworks and
the Arbed-Esch steel works to which reference has just been made 1 .
Belval is one of the most modern and well-equipped steel works
in Europe. Built originally with a view to large extensions, it
covers an area of 200 hectares and includes six blast furnaces with
a total potential daily output of 1,800 tons of pig-iron, a Thomas
steel works with six 30-ton converters, an 8-mill rolling plant, etc.
The Dudelange works, which are linked up to the Esch group
only by electric cables, are equipped with three blast furnaces
with a total daily output capacity of 1,500 tons, a Thomas steel
works with four 25-ton converters, a 6-mill rolling plant, a cold
rolling mill, two sheet-iron works (average and thin), a foundry, etc.
This description would hardly be complete without a few remarks
on the iron mines worked by the Arbed-Terres Rouges amalgamation. In this case also only mines actually in the Grand Duchy
will be considered, although it is to be noted that the total superficial area of the iron mines owned by the Arbed-Terres Rouges
group and supplying their Luxemburg works and the foundry at
Audun-le-Tiche in France, is 10,453 hectares. In the territory of
the Grand Duchy, the Arbed works own over 840 hectares and hold
another 387 hectares of mining concessions, while the Terres Rouges
group has 179 hectares of mining concessions. As the works are
situated close to the mines, the cost of conveying ore is reduced to
a minimum. In many cases, the concessions lie across the FrancoLuxemburg frontier, while they are often separated one from
another by the concessions of another important metal-working
company of Luxemburg: the "Société des Hauts Fourneaux et
Aciéries de Differdange-Saint-Ingbert-Rumelange ", known by
the initials H.A.D.I.R., a company founded with French and
Belgian capital. It is interesting to note how the force of circumstances leads to collaboration between neighbouring concerns, and
even between interests on opposite sides of a political frontier.
For example, the ten blast furnaces at Differdange, which belong
to the H.A.D.LR., are linked up to the Ottange mines on French
soil by a funicular railway which crosses the political frontier at three
1
The same operation is carried out between the Audun-le-Tiche works on
French soil and the Belval and Esch steel works.

IN THE GRAND DUCHY OF LUXEMBURG

141

different places and the concessions of the Arbed-Terres Rouges at
a number of points.
The ore, of variable colour but mainly of a brownish red hue,
which gives the name of Terres Rouges to the company so frequently mentioned in this study, is composed of a series of small
oolitic grains embedded in calcareous or silicious strata, the upper
layers being calcareous, the lower silicious. In these two strata
numerous fossils are found, a fact which explains the high percentage of phosphorus in the ore.
The electric power for working the iron mines and works is
obtained from the calorific energy of the blast furnace gas transformed by a central power house. It is used for haulage, for ventilation where the natural ventilation of the mines is insufficient, and
for pumping in deep mines. The ore is won by means of shattering
explosives of powder, nitrate of soda or liquid oxygen, the latter
being manufactured in the mine itself. Boring is carried out by
pneumatic hammer-drills.
The ore-bearing strata being regular and almost horizontal can
be worked by the pillar-and-stall system. First of all, roads are
cut at a very gentle slope. On one or both sides of these
roads, diagonal roads are then driven from which, at intervals
depending on the firmness of the roof, the stalls are opened out for
a certain distance. When this distance is attained, the workers
retreat from the stall, taking down the pillars of ore left standing
between the different stalls. This operation is called " depillaring "
and results in an immediate fall of the roof.
A few words must now be said concerning the central management of the Arbed-Terres Rouges Amalgamation. The general
and managerial services are housed in central offices situated in
the town of Luxemburg, a special wing being reserved for the
" Comptoir métallurgique luxembourgeois " (" Columeta "). Besides
the usual offices, the headquarters of the amalgamation contain
meeting rooms for the staff, to which further reference is made
in another part of the study.
The Chairman of the Administrative Board of the Arbed group
is Mr. Gaston Barbanson, grandson of the late Mr. Victor Tesch,
founder of the Burbach Works, while Mr. Eugène Schneider, the
well-known French manufacturer, is Chairman of the Terres Rouges
group. The General Director for both Arbed and Terres Rouges
establishments is Mr. Aloyse Meyer 1, who, like his principal assis1

Mr. Aloyse Meyer is also Chairman of the International Steel Trust.

142

INDUSTRIAL RELATIONS

tants, is a native of Luxemburg. Three Assistant General Directors
are responsible respectively for the management of the ArbedTerres Rouges Amalgamation, the management of the " Columeta "
and the management and supervision of the interests acquired by
the two companies to which detailed references have already
been made. Some of the central services have a Manager at their
head, this being so in the case of " Columeta " 1 . Finally, the
undertakings on Luxemburg soil are divided into six divisions,
each with its own manager and corresponding to the main production units mentioned above: Dommeldange-Eich, Dudelange,
Esch-Arbed, Esch-Terres Rouges, Belval, Arbed mining concessions.
Social questions—those of more direct interest to this study—are
dealt with by one of the directors at headquarters and, in each
division, by the manager of the division.
LEGISLATION GOVERNING INDUSTRIAL RELATIONS

In the part of the above introduction dealing with the economic
and social position of Luxemburg, it was stated that the social
legislation of that country has always been most advanced and
progressive. This is confirmed in the field of industrial relations,
as will become evident in the following pages. Permanent relations
have been established at every stage of industrial organisation.
The legislation relating to " workers' committees ", which will
be discussed in detail later, is in no way exhaustive. It is supplemented on the one hand by the existence of trade chambers and,
on the other, by the works regulations of the undertakings themselves.
The Engagement of Alien Labour
Before proceeding to study a typical example of works regulations, it is perhaps desirable to say a few words on the engagement
of labour. So far as national labour is concerned, there is nothing
special to be noted, but this is far from being the case as regards
alien labour, which still forms about 20 per cent, of the personnel
of industrial establishments in Luxemburg and 25 per cent, of
that employed in metal-working and mining concerns. For such
labour a special permit must be obtained from the General Direci The marketing organisation " Columeta " has branches and agencies in
sixty-seven towns abroad, situated in thirty-eight countries infivecontinents.

IN THE GRAND DUCHY OF LUXEMBURG

143

torate of Labour and Social Welfare 1 , otherwise the alien is not
authorised to enter the Grand Duchy.
Applications for engagement permits must be made by the
employer in writing to the General Directorate of Labour and
Social Welfare, and must be accompanied by a certificate from the
official employment exchange, declaring t h a t the current registers
of persons seeking employment do not contain the name of any
worker of Luxemburg nationality who could fill the vacancy, and
also t h a t the employer has submitted the following identity papers
for the inspection of the employment exchange : the passport 2 of
the person applying for work; certificates from former employers
showing that the applicant has the necessary qualifications for the
employment which he is soliciting; an extract from the police
register respecting the person concerned, not more than a year old ;
and a certificate of character issued by the communal authority
or the commissioner of police for the district or districts in which
the applicant has resided during the preceding twelve months 3 .
Further, in order to avoid deportation on medical grounds and
the expenditure resulting for the Luxemburg Government from
deportation, the Order stipulates t h a t the application for a permit
must be accompanied by a medical certificate issued as the result
of a compulsory medical examination carried out under the supervision of a Luxemburg consul abroad, or in default of such consul,
a Belgian consul. This certificate must state t h a t the medical
practitioner issuing the certificate has previously vaccinated the
worker concerned and noted the result; t h a t the worker is not
subject to epilepsy or any contagious disease and in particular
pulmonary tuberculosis or venereal disease at a contagious stage;
that he is not addicted to drugs; and that, in general, he is not
suffering from any other physical or mental infirmity rendering
him unfit for the occupation which he proposes to follow, or liable
to necessitate long hospital treatment. The medical certificate,
which must be drawn up in a specified form, must not have been
i Grand Ducal Order of 30 November 1929. In accordance with the provisions of the Labour Treaty concluded between Belgium and Luxemburg
on 20 October 1926, such authorisation is not required for persons of Belgian
nationality.
2
Only an identity card is required for nationals of Belgium, France and
the Netherlands. For a certain number of other countries a Luxemburg
consular
visa is not required.
3
Admission to the Grand Duchy is refused to aliens in possession of the
necessary papers if the extract from the police register or the certificate of
character shows that the person or persons concerned are deemed to be dangerous or possible disturbers of public peace and order. Incases of doubt,
the question is decided by the Chief Officer of Public Safety.

i44

INDUSTRIAL RELATIONS

issued more than a fortnight before the date of entry of the worker
to the Grand Duchy. Further, in order to avoid any future dispute,
the worker must sign a statement on the actual health certificate
t h a t he is free from the diseases and infirmities mentioned in the
certificate. By his signature he is deemed to admit at the same
time t h a t he has been warned t h a t any inaccuracy in his statement
renders him liable either to be refused admission into the territory
of the Grand Duchy or to be expelled from it by the competent
police authorities even after a prolonged sojourn, with no further
legal formality than the mere notification of the case by means
of a report addressed to the Attorney-General's Department.
It is to be noted that the engagement permit is of an essentially
revocable character. It must be accompanied by a certificate
to the effect t h a t the alien worker concerned has been admitted to
employment in the Grand Duchy. The employer transmits this
certificate, together with the other identity papers (passport,
extract from police register, certificate of character, and health
certificate) to the alien applying for work, who must submit them
t o the supervisory officials (customs officers and general police
officers) in order to pass the frontier. The employer subsequently
notifies the authorities of the alien worker's arrival, and takes
charge of the alien's identity papers, which are then placed in the
worker's personal file and serve as documentary evidence when
the engagement register, the keeping of which is compulsory, is
officially checked. Finally, in order to ensure the strictest possible
«ompliance with these prescriptions, it is forbidden for keepers of
hotels, inns or lodging houses, and persons who let houses or flats,
to give lodging for more than twenty-four hours to any alien
worker who fails to show that his declaration of arrival has been
made within that time. All such persons must, moreover, keep
-a special register, which must showr, in addition to the usual
information, the date on which alien lodgers have given them
proof t h a t their declaration of arrival has been made.
In addition to the elaborate system of precautions adopted by
the Luxemburg authorities for the admission of alien workers to
t h e Grand Duchy, a further safeguard exists in the medical examination in the factory itself of all alien workers not medically
examined before entering the territory of the Grand Duchy.
Works regulations usually require the immediate termination of
the contract of employment, if the worker, on his engagement,
has produced false papers, has given false information or has
•concealed the existence of another contract under which he is

IN THE GRAND DUCHY OF LUXEMBURG

145

bound. Sometimes, however, deceptions practised on the medical
authorities are difficult to detect. This is so when a worker already
in possession of an entry permit, and who is suffering from a
contagious disease, arranges for a friend to take his place at
the medical examination 1 . The works engagement office can
frustrate such attempts at fraud only by arranging for the medical
examination to be made in a neighbouring room, or by having the
applicant accompanied on his way to the doctor, or by requiring
the doctor to check the applicant's identity from identity papers
bearing the applicant's photograph.
Works Regulations
As a typical example of works regulations in Luxemburg, one may select the "Works Regulations of the Luxemburg
Divisions " of the Arbed 2 establishments and their special service
regulations for salaried employees, while noting that similar
regulations are in force in the Terres Rouges works. The opportunity
will also be taken to make a rapid survey of the Luxemburg legislation relating to conditions of labour.
Although the regulations of the Arbed group are not a mere
reproduction of the statutory provisions in force in Luxemburg,
they nevertheless embody the essential features of that legislation.
They, therefore, may be said to constitute the contract of employment between the Company and its staff in all cases where conditions
of employment are not laid down by special agreement, but they
give way to any special departmental regulations with which
the worker or salaried employee has undertaken to comply.
The main provisions of the works regulations may now be studied.
Clause 4 states that the worker, by the very fact of his engagement 3,
undertakes to obey the instructions of his superiors, to perform
with zeal and care the work entrusted to him, to study the interests
of the Company to the best of his ability, and to refrain from any
activity which might adversely affect the work and good order
of the establishment or cause prejudice to the Company in any
1

This may even have been done at the time of the examination in the
applicant's country of residence.
2
It will be remembered that the Arbed-Terres Rouges undertakings on
Luxemburg territory are divided into six divisions: Dommeldange (Arbed),
Dudelange (Arbed), Esch-Arbed, Arbed mining, Esch-Terres Rouges, and
Belval (Terres Rouges).
3
Children under fourteen years of age and girls under sixteen years are not
employed. These provisions go beyond the International Labour Convention
on the subject, which was ratified by Luxemburg in 1928.
10

146

INDUSTRIAL RELATIONS

way. Each worker is signed on for a definite job. If he proves
to be incapable of such work, he may be immediately dismissed
or employed on other work, possibly at a lower rate of pay. He
may even be employed on other work when no fault can be imputed
to him, b u t in this case without any reduction of the agreed wages.
This stipulation is waived when there is a partial or entire stoppage
of work in the establishment. But in the event of unemployment
in one of its divisions, the Company undertakes to distribute
the available work uniformly throughout the whole division,
in so far as this is possible. When any exceptional stoppage of
work is to be foreseen, the workers are informed with the least
possible delay.
Hours of work are regulated by the eight-hour day legislation x
in force and according to the exigencies of the service. The time
for beginning and knocking off work is posted up in each branch.
If provision is made for a rest period, the beginning and end of
such period are arranged to suit the convenience of the branch,
and then brought to the notice of those concerned. When, in a
branch engaged on continuous processes, the weekly change-over
is being carried out, the workers are obliged to work for twice as
long as the length of the normal spell. In order t o facilitate supervision, workers are required to make use of the roads indicated to
them for journeys to and from the works. When they are unable
to go to work on account of sickness or other sufficient reason,
they must notify their respective.foremen before work commences
or, when this cannot be done, as soon as possible, and at any rate
within twenty-four hours. A worker who has been ill must return
to work immediately after his recovery and report his return to
his foreman.
As in all large industrial concerns, very strict rules are applied
during working hours and a certain number of restrictions are
applied. For example, it is against the rules to bring in, or to
cause to be brought in, or to consume, alcoholic beverages in any
department of the Company; to bring strangers into the premises
without permission; and to bring in or cause to be brought in
i Order of 14 December 1918 and the ratification in 1928 of the international
Convention concerning hours of work in industry. In this connection it may
be noted that night work by women and children is forbidden by an Act which
is based on the provisions of the respective international Conventions. A
similar measure has been adopted to regulate the employment of women,
before and after childbirth. With regard to weekly rest, the Act of 21 August
1913 was sufficiently comprehensive to allow Luxemburg to ratify the corresponding international Convention without introducing any fresh legislation.

IN THE GRAND DUCHY OF LUXEMBURG

147

and to distribute newspapers or printed matter of any kind among
the staff of the Company.
With regard to safety, the works regulations stipulate in general
terms that all work given to the workers must be carried out with
care and in accordance with the instructions of superiors and the
safety requirements. If an accident occurs to a worker, he is required,
whenever possible, to notify his superior and to give the necessary
explanations before leaving the establishment. If he injures one
of his fellow-workmen in a scuffle, he must be prepared to pay 1
the benefits which the sickness fund would otherwise have paid for
loss of working capacity caused by injury. Workers are recommended, in their own interests, to keep the workshops, premises and
services in a state of perfect cleanliness.
The chapter dealing with attendance, work and discipline
concludes with a list of the workers' various superiors. These
are, starting from the bottom, the ganger, the overseer, the foreman
or overman, the chief foreman or chief overseer, and then the
assistant engineer, the departmental manager, the chief of service,
and, finally, the manager. During working hours, the workers
are required to show respect to their superiors and obey them implicitly. They are also required to obey the orders of doormen,
watchmen and supervisors.
The Company is entitled to terminate the contract of employment
without notice or delay if the worker, at the time of his engagement,
has produced false papers, given false information, or concealed
the existence of another contract by which he was then bound.
Clause 50 of the regulations makes provision for other cases of
immediate dismissal. For example, the worker may be immediately
dismissed if he is guilty of an offence punishable under the Penal
Code or if he lives a disorderly life; if he is late for work or leaves
it too early without good reason or permission, or if he refuses to
carry out the duties imposed on him by the works' regulations;
if he is absent without leave for more than three consecutive days;
if he endangers the safety of the service, his fellow-workmen, or
other persons ; if he is guilty of assault or threats against his superiors, his fellow-workmen, or members of their families ; if he intentionally causes prejudice to the Company or his fellow-workmen,
or incites his fellow-workmen to do so ; if he commits, either individually or collectively, a serious breach of the laws in force, or
» Cf. Article 78 of the Law of 17 December 1925 concerning the social
insurance code.

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INDUSTRIAL RELATIONS

incites his companions to do so; if he is unable to continue his
work or is affected by a " foul " disease; if he betrays trade secrets;
and, in general, if he fails to fulfil his obligations with regard to the
good order and discipline of the establishment and the fulfilment of
the contract. The Company reserves the right to claim compensation when necessary. On the other hand, it forfeits its right of
instant dismissal if it is has been aware for more than a week
of the fact justifying dismissal.
Without prejudice to the application of Clause 50, contraventions
of the provisions of the works regulations may entail deductions
from wages. These fines may not exceed, in any one month,
one-tenth of the total wage for that month, and are deducted
from the wages due for the last period of pay. Deductions from
wages may be replaced by temporary dismissal not exceeding
three working days. The names of persons fined, with particulars
as to the motive and the amount of the fine, are posted up in the
works by the chief of the service, whenever the latter deems this
to be advisable. The termination of a contract of employment does
not remove the obligation to pay fines. All fines, with the exception
of those imposed as a result of damage caused to the Company,
are paid into the sickness fund of the division.
No details of the provisions relating to the payment of wages
need here be given, as these have no special characteristics. But
it would seem advisable to mention that holidays are fixed by
the Act of 6 December 1926, as completed by Ministerial Instructions issued on 21 May 1927, 31 March 1933, and 17 February 1934.
After one year of uninterrupted service with the Company, the
worker is entitled to an annual holiday with pay of four days 1 .
After five years, annual paid leave amounts to five days; after
ten years to seven days; and after twenty years' service to twelve
days a year. It is to be noted in this connection that, prior to the
introduction of the Act, the Arbed establishments had already
instituted holidays for workers employed in their establishments,
on a slightly lower scale. Holidays are granted only to workers
who have worked at least 280 days during the previous year,
this number being reduced to 270 in the case of miners. In this
period are included days of absence due to sickness or accident,
absence previously authorised by the employer, and periods of nonauthorised absence due to unavoidable circumstances or causes independent of the will of the wage earner, which have prevented him
1

Seven days for wage earners and apprentices under eighteen years of age

IN THE GRAND DUCHY OF LUXEMBURG

149

from obtaining prior authorisation. The worker who himself
terminates his contract, and who has not been re-engaged during
the three months following the determination of the contract,
and workers who are dismissed for serious reasons entitling the
employer to dismiss them without notice, lose their right to holidays.
It is not without interest to note the details of the procedure
for the termination of contracts of employment. Save in the case
of a special agreement, and with the exception of the cases laid
down in Clause 50, the two parties can terminate a contract only
by giving a fortnight's notice. Notice of termination may be given
to the workers only by the chief of service or by a delegate authorised
to do so, and known to the workers as such. The immediate dismissal of a worker may be notified only by the management or
by the chief of service. Notice of dismissal may be given only
on certain days laid down in advance for the different divisions.
If one of these days falls on a Sunday or a holiday, the notice
expires only on the following working day. If a worker leaves
the Company of his own free will and without notice, a deduction
equal to one-tenth of the wages due to him is made at the moment
of paying his wages, by way.of compensation. The worker who
leaves the Company receives a certificate giving details of the
nature and length of his services. When a contract of employment
is terminated with or without notice, the worker loses, even if
he is re-engaged later, all his rights to the privileges which the
Company confers for a certain period of uninterrupted service.
The short chapter dealing with complaints is of particular
interest from the standpoint of industrial relations. Clause 45
states that complaints by the workers must be submitted in the
first place to the respective foremen. If the worker does not
receive satisfaction, he may apply to his superiors in order of rank.
The manager of the division decides in the final instance. Finally,
Clause 46 deals with the institution of workers' committees, of
which full details are given elsewhere. For the moment, it is sufficient to point out that the main workers' committee must be
consulted before any amendment can be made in the works
regulations.
Salaried employees are engaged by a written individual contract
of which the " service regulations ", the same for all employees,
form an integral part. The " service regulations " do not differ
to any great extent from the " works regulations ". Their main
features are outlined below.
Clause 1 gives a list of the employees' superiors : chief of service

150

INDUSTRIAL RELATIONS

or branch, management of the respective divisions, general director.
On entering the Company, the employee signs a contract which
regulates reciprocal rights and obligations in so far as these are
not laid down in the service regulations. The contract must not
contain any provision contrary to the said regulations or to the
laws of the country. If a difference arises between an employee
and a subordinate, the latter may appeal to the general management,
after notifying his immediate chiefs. The committee of salaried
employees may be called upon to intervene with a view to the
settlement of the dispute.
The same declaration of loyalty to the undertakings is found:
" Employees are required conscientiously to respect the interests
of the society by complying with the regulations, the stipulations
of their contract and the instructions of their chief. " Employees
are required to devote the whole of their occupational activity
to the service of the Company. They must provide their chiefs
with any explanations required concerning the service. It is
forbidden for them to communicate to persons outside the Company
specifications, diagrams, models, statistics, or other documents
of any nature belonging to the Company x. They are required to
observe the greatest discretion as regards the internal working
of the services.
Salaried employees are forbidden to engage or take an active
part in any other business. It is forbidden for them to order the
workshops of the Company to make anything for them without
the previous consent of the manager of the division concerned.
They may not employ the Company's workmen for their own
requirements, but outside working hours this restriction applies
only in the case of workers belonging to their own service. Salaried
employees may not place orders for the Company without the
necessary authorisation. No employee may apply, either directly
or indirectly, for patent rights for Luxemburg or any foreign
country in the range of industry covered by the Company; should
such patent rights be granted, they remain the property of the
Company. It is understood, however, that an employee who makes
an invention of appreciable value to the Company will be suitably
compensated, such compensation being limited to 50 per cent, at
the most of the profit resulting from the patent. Inventions which
» The Act of 5 July 1929 concerning unfair competition makes provision for
fines and terms of imprisonment for the divulging of business or manufacturing
secrets by salaried employees, workers or apprentices.

IN THE GRAND DUCHY OF LUXEMBURG

151

are of no direct or indirect interest to the Company, and which are
not the outcome of work performed in the works with the assistance
of the staff of the Company, are excluded from the foregoing
prohibition.
Salaried employees are required to keep strictly to the hours of
service \ The date of their annual holiday is fixed by the manager
of the division, on the application of the chief of service 2 . Hobdays
must be arranged so as to avoid any inconvenience to the service
and, if possible, no two employees of the same service should be
on holiday at the same time. Whenever practicable, the fellowworkers of the employee on holiday must perform his duties during
his absence.
According to their gravity, breaches of the Regulations committed by employees may entail a reprimand, suppression of their
annual increment or bonus, temporary suspension or immediate
dismissal. The final decision in all such matters lies with the general
manager. The only power given to the Administrative Board in
this connection is to decide as to the amount of compensation, if
any, to be paid to the dismissed employee.
The service regulations for salaried employees may be amended
at any time b y the Administrative Board of the Company, after
consultation with the salaried employees' committee.
Workers'

Committees

The legislation which instituted workers' committees constitutes
the basis of the relations between employers and wage earners in
Luxemburg.
Workers' committees were formally instituted by the Grand Ducal
Order of 8 May 1925, b u t steps in this direction had already been
taken some years earlier. The first step was made by the Order
1
The eight-hour day legislation applies also to salaried employees, as does
the legislation governing the weekly rest, the minimum age for admission to
employment and the employment of women before and after childbirth. The
main provisions relating to salaried employees are embodied in the Act of
312 October 1919, concerning the hire of services of private employees.
The Act of 31 October 1919 lays down the length of the annual holiday
period for employees as follows: at least ten days' holiday with pay after three
years' and not more than five years' uninterrupted service with the same employer; at least twenty days' holiday afterfiveyears' uninterrupted service. The
Arbed, Terres Rouges and Columeta Companies have adopted more generous
provisions. Their employees are entitled to an eight-day annual holiday
with pay after one year of uninterrupted service, ten days' holiday after three
years' service, twenty days after five years, and twenty-eight days after
twenty-five or more years' service.

152

INDUSTRIAL RELATIONS

issued on 26 April 1919, and subsequently amended on 26 July
1920. The intention was to set up works councils similar to those
in force in Germany at that time. The Order of 26 July 1920 was
never made operative, and was replaced on 8 October 1920 by
new provisions, to which very little effect was given 1 , but which
served as a model for the Order of 8 May 1925, a detailed analysis
of which is given below.
The Arbed group, to which reference must once again be
made, issued on 1 September 1921, although not obliged to do
so, works instructions intended to comply with the spirit of the
Order of 8 October 1920, but differing from it in certain material
respects. In the first place, shop delegates were recognised, but
not a works council composed of such delegates. The age of the
electors was fixed at twenty-one years instead of eighteen years
as in the Order, and that of workers eligible for election as delegates
at twenty-five years instead of twenty-one. Electors were required
to have had one year's uninterrupted employment in the works
of the Company instead of one month as required by the Order,
while five years' uninterrupted employment, with at least one
year in the department concerned, was the criterion of eligibility
for election, as compared with the six months stipulated in the
Order of 8 October.
The duties of delegates did not differ to any great extent. The
text of the Order was couched in very general terms. The works
council was required to foster a good understanding between
employers and workers, and to make suggestions to that end in
so far as such suggestions were in conformity with the law. It was,
however, definitely laid down that the works council was to concern
itself with all questions relating to the material and moral welfare
of workers, with special reference to requests and proposals relating
to the contract of employment, works safety and welfare institutions,
to problems connected with wages and other conditions of work.
On this point the Arbed instructions stated that the duty of the
workers' delegates was to bring to the notice of the management
or its representatives any demands which might be made in connection with questions of hygiene, safety, work or wages by the
workers who elected them. The fundamental difference lay in the
methods employed by the delegates, which in turn was due to the
fact that the management of the Arbed works did not recognise a
i The application was suspended by the Order of 11 March 1921, as a result
of certain labour movements of a revolutionary tendency in February of that
year.

IN THE GRAND DUCHY OF LUXEMBURG

153

council of delegates, but only delegates acting independently.
While, in accordance with the Government text, delegates were to
meet during working hours in premises specially allotted to them
within the works, and were entitled to wages for working time lost,
and even to a travelling allowance when necessary, the Arbed
delegates were not allowed (Clause 8) to hold their meetings within
the works. Unless with special permission, delegates were not even
entitled to carry out their duties during working hours. But all
that is a thing of the past.
The Grand Ducal Order of 8 May 1925 relating to " the institution
of workers' committees in industrial establishments " did actually
come into force, and is still applied. Section 1 defines the work
of the committees, which is to further co-operation between
employers and workers by means of the settlement, in accordance
with the law, of matters which concern both parties. It is specially
stated that the work of the committees and their negotiations with
the employers' representatives must be concerned with questions
of the moral and material wellbeing of the workers, and in particular
that they shall deal with wishes and suggestions as to the contract
of employment, social insurance and welfare arrangements in the
establishment, wages questions and other conditions of employment. This is more or less the same definition as was given to the
duties of the works councils in the Order of 8 October 1920.
The Order is compulsory only for undertakings employing at
least twenty workers 1. If an industrial undertaking consists of
several separate establishments, each establishment must elect its
own main committee. In this case a central committee may be
set up for the whole undertaking, composed of representatives of
these main committees. Further, if an establishment consists of
various branches, the workers in each branch may appoint a
branch committee, provided that at least fifty workers are employed
in the branch as a rule. This is the system in force, for example,
in the Arbed-Terres Rouges establishments.
The size of the main committees is fixed as follows. For a staff
of 20-50 workers, 1 member; 51-80 workers, 2 members; 81-100
workers, 3 members; 101-150 workers, 4 members; 151-200 workers,
5 members.
If the number of persons employed exceeds 200, the committee
is increased by one member for each additional hundred workers,
provided that the total number of members does not in any case
1

Apprentices and young persons are not included in this figure.

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exceed fifteen. Provision is made for the election of an equal
number of substitute members. Branch committees consist of one
actual and one substitute member for every fifty workers, provided
that the total number of members does not exceed five. The central
committee, which is the senior body to the main committees
concerned in undertakings consisting of several establishments
under a single general director, is composed of two or three delegates
from each main committee and an equal number of substitute
members appointed by each committee.
The conditions laid down for electors and candidates for election
resemble to some extent those of the Order of October 1920 and
to some extent those of the works instructions issued by the Arbed
Company in 1921. All workers, without distinction of sex or nationality, who have attained the age of eighteen, are in possession
of their civil rights, and have worked continuously in the establishment for at least six months, are entitled to vote. Aliens must,
in addition, have been employed continuously in the establishment
for the twelve months immediately preceding the election. Any
men and women workers may be elected as members of the committees if they have attained the age of twenty-five, are in
possession of their civil rights, have worked continuously in the
establishment for at least a year, and have been employed for at
least three consecutive years in the same industry. Leading hands
acting as foremen are not eligible to the committee. Aliens must,
in addition, have been resident in the Grand Duchy for at least
five years, or must have worked in an establishment there for the
last five years. Further, the number of alien members may not
exceed one-third of the total number of members. In case of the
establishment of a new business or the reopening of a business
after a temporary cessation, the period of employment laid down
for electors and candidates for election is not required.
The term of office of the delegates is fixed at four years for all
committees. New committees must be chosen every four years,
retiring members being eligible for re-election 1. Further, the term
of office of a member or substitute member of a committee expires
on his death, on his leaving the establishment, on his voluntary
resignation, on his promotion to a managerial post, and in case
of his loss of eligibility. The substitute member takes the place
of the original member forthwith in the cases enumerated above,
1
This rule was introduced by the Order of 2 June 1933. The Order of
8 May 1925 had fixed the term of offices of delegates at two years, and in consequence committees were renewed every two years.

IN THE GRAND DUCHY OF LUXEMBURG

155

and temporarily in the event of absence for good and sufficient
reason. The committee elects from among its own number, by a
simple majority on a ballot, a chairman and a secretary. In case
of an equality of votes, the older candidate is deemed to be elected.
The members of the committees and their substitutes exercise
their functions in an honorary capacity. Nevertheless, attendance
at meetings called during working hours may not entail any loss
of wages. The employer must provide the committee with a
suitable place of meeting, as well as with the necessary office
accomodation.
The main committees may meet once a month during working
hours, provided that the management is given twenty-four hours'
notice. In case of need, the chairmen of the main committees may
convene the branch committees for a meeting during working
hours, provided that the management is given twenty-four hours'
notice, and that the number of such meetings in a year does not
exceed six. In all other cases the meetings must be held outside
working hours. The convening of the committees is usually carried
out by the chairmen. A meeting of the committee must be called on
a requisition by one-third of the members of the committee. The
employers' representative (the manager of a division, for example)
is also entitled to convene the committees. If attendance at such
meetings necessitates expenditure on travelling, such expenditure
is refunded to the members of the committee by the employer.
The meetings of the committees are not open to the public.
Nevertheless, the employers' representatives may be invited to be
present at the meeting of a committee, but are not entitled to vote.
They are always entitled to attend meetings convened by themselves.
The Government may send to the meeting an official who is entitled
to address the meeting. The proposals and wishes of the committees are communicated to the management in writing 1. When
negotiations have been conducted with the management, a statement of the results achieved (the text of which must be approved
by the committee) must be posted up by the management in
the establishments concerned for the information of the workers.
Another provision which recalls the Order of 8 October 1920
is that which states that in establishments employing more than a
hundred workers, the main committee, with the consent of the
employer, may arrange consulting hours at the committee room
i Always to the manager concerned. This, in Arbed establishments, is
the chief of service in the case of branch committees, the manager of the
division for main committees, and the general director for the central committee.

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on a given day of the week, during which the workers, outside their
working hours, may lay their wishes and complaints before a
member delegated by the committee for this purpose.
The later sections of the Order of 8 May 1925 deal with the main
duties devolving on the workers' committees. The first matter
dealt with is the question of disputes between workers and their
foremen. It is pointed out that such disputes may not be brought
before the committee until after they have passed through the
stages provided for in the works regulations 1. If a worker is
dismissed without notice, the reasons for his dismissal must be
reported to the competent committee. If alterations are introduced
into the establishment, necessitating the dismissal of a considerable
number of workers employed, the committee must be given due
notice beforehand.
There are a number of special guarantees to avoid the arbitrary
dismissal of a member of a workers' committee. Committee
members may not be dismissed on account of any action arising
out of the exercise of their functions as committee members, unless
such action constitutes a serious breach of the rules of employment
or the laws in force. If an objection is raised to the dismissal of a
committee member, the Government, on the application of the main
committee, supported by sufficient reasons, may order the appointment of a committee to enquire into the case. This committee of
enquiry is composed of a representative of the employer, a representative of the workers, and a magistrate as chairman.
The committee has another important duty, to which reference
has already been made, arising out of its compulsory consultation
on the drafting or the amendment of the works or shop
regulations. The main committee must similarly be heard on questions concerned with wage settlements of a permanent and general
character, the drawing up of collective labour agreements 2, the
fixing of annual leave, and apprenticeship. Any alterations in the
conditions as to wages, in so far as they concern individual groups
of workers, must be brought to the knowledge of the main
committee.
1
Cf. remarks made above in the analysis of the works regulations of the
Arbed establishments.
2
In Luxemburg there is no legislation governing collective labour agreements. A Bill relating to collective agreements with compulsory arbitration
was introduced in the Chamber of Deputies on 24 April 1917, but has remained
in suspense. Nevertheless, the principle of the collective labour agreement
was included in section 8 of the Act of 6 December 1926, concerning holidays
for workers.

IN THE GRAND DUCHY OF LUXEMBURG

157

It is also laid down that the committees are required to co-operate
in the reduction of risks of accident and sickness and to assist the
industrial inspectors and any other competent authorities concerned
by putting forward proposals. They are also required to lay before
the employer the wishes of their constituents as to the voluntary
welfare institutions of the undertaking.
It is to be noted that, without prejudice to the application of
section 23, which fixes the fines for actual or attempted contraventions of the Order, all disputes must be settled according to
circumstances by the Factory Inspector or the Mining Engineer.
An appeal against these decisions may be made to the competent
General Director, whose decision is final1.
A few remarks must now be made on the procedure for the election
of workers' committees 2. Section 8 of the Order of 8 May 1925
stated that the election was to be by ballot, and that an absolute
majority of votes was required. These provisions were amended
by the Grand Ducal Order of 17 May 1929, and replaced by the
following text " Workers' committees shall be elected by ballot.
The method of election shall be that of voting on lists of candidates
in accordance with the system of proportional representation ".
The regulations for electoral procedure given in an appendix to the
Grand Ducal Order of 8 May 1925 were, as a result of the amendment made in the methods of balloting, made the subject of a new
Ministerial Order dated 17 May 1929. The main features of the
new Order are summarised below.
The elections are organised and managed by the head of the
undertaking in person, or by a representative appointed by him
for the purpose. The head of the undertaking 3 must cause to be
drawn up a register of the workers eligible to vote and a register
of the workers eligible for election. These registers must be
available for inspection by the persons concerned at least a fortnight before the election. A notice must be issued on the day
on which the registers of electors are open for inspection, to inform
the workers that any objection to the registers must be lodged
within three days. This notice must at the same time specify the
date of the poll, the number of members and substitutes to be
1
2

The General Director of Social Welfare and Labour, etc.
The last elections took place in January 1934. The Grand Ducal Order
of 2 June 1933, increasing from two to four years the term of office of delegates,
ordered new elections to be carried out and that the new committees should be
in office by 1 February 1934.
3
In each case the phrase " or his representative " is to be understood.
It will not be repeated in the following pages.

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elected, and the days and hours for receiving nominations of
candidates. The head of the undertaking must pronounce, after
hearing the parties concerned, on any objections to the electoral
registers which may have been lodged. He must communicate
his decision to the objectors within a week of the opening of the
registers for inspection.
The nomination of candidates for office as members or substitutes
is made by means of lists, which nftist reach the head of the undertaking at latest by 6 p.m. on the fourth day before the polling day.
After this time-limit, no further nominations of candidates will be
received. Any isolated nomination is deemed to constitute a list
in itself. Each list of candidates must be presented by five electors ;
it must further be accompanied by a declaration signed by the
candidates and stating that they are willing to stand for election.
The list must give in alphabetical order the names in full and the
occupations of the candidates, and the names of the electors
nominating them. No individual may have his name on more
than one list either as a candidate or as nominator, and a list may
not contain a number of candidates greater than that of the members
and substitutes to be elected. Each list must bear a descriptive
title ; if different lists bear the same title, the delegates are invited
to make the necessary distinguishing marks, and in default of this
the lists are marked by the head of the undertaking with a serial
letter ; this must be done before the expiry of the time-limit assigned
for the nomination of candidates.
The head of the undertaking must register the lists in the order
in which they have been presented. It is his duty to refuse to
register any list which fails to comply with the above-mentioned
requirements. If identical declarations are made respecting
candidates whose names are on the lists, the first in date shall be
valid. If they bear the same date, none is valid. If the number
of candidates does not exceed that of the members and
substitutes to be elected, or if the number of candidates
nominated is less than that of the members and substitutes to be
elected, these candidates are declared elected without further
formalities, provided that only one list of candidates has been
presented and that this list expressly names on the one hand the
members and on the other the substitutes, in the order in which
they are to replace the members. The head of the undertaking
keeps a record of the proceedings.
If no valid list of candidates has been sent in within the
prescribed time-limit, the head of the undertaking makes this

IN THE GRAND DUCHY OF LUXEMBURG

159

known to the electors, and grants them a supplementary time-limit
of three days. If, on the expiry of this supplementary time-limit,
no valid list of candidates has been presented, the head of the
undertaking draws up a report to this effect and sends it, with the
relevant documents, to the General Director of the Government
department concerned. The members and the substitutes are
then appointed, ex ofßcio, from among the eligible workers of both
sexes.
The valid lists of candidates are posted up during the three days
immediately preceding the poll. The posters must show, on a
single sheet and in large letters, the names in full and occupations
of the candidates on all the valid lists which have been registered.
The order in which the candidates have been nominated in each
list is maintained, and the lists are placed in an order fixed by lots
cast by the head of the undertaking, in the presence of two electors
as witnesses.
Parts III and IV of the Ministerial Order deal with voting papers,
the election committee, and the counting of the votes. The
arrangements made are similar to those generally in use, and call
for no comment. It may be useful, on the other hand, to give
some information concerning the allocation of seats.
Once the number of voters, the number of spoilt voting papers
and the number of valid papers have been ascertained by the
election committee 1, a return is made showing the number of list
votes obtained by each list of candidates, and the number of
individual votes obtained by each candidate. In order to decide
the allocation of seats, the total number of valid votes secured by
the various lists is divided by the number of members to be elected,
increased by one. The number next above the quotient so obtained
is called the electoral quota. To each list there is assigned a number
of members' seats, and as many substitutes' seats, equal to the
number of times the quota is obtained in the number of votes
secured by the list. If the number of members and substitutes so
elected is less than the number of members and substitutes to be
elected, the number of votes received by each list is divided by
the number of members' seats which it has already secured,
increased by one. The member's seat and the corresponding substitute's seat are assigned to the list which obtains the highest
quotient. The same process is repeated if there are still any seats
» The head of the undertaking acts as returning officer, and is assisted in
his duties by two workers' delegates appointed by the electors present.

160

INDUSTRIAL

RELATIONS

to be distributed. In case of equality of quotients, the available
member's seat and substitute's seat are assigned to the list which
has secured the greatest number of votes.
Members' seats and those of substitutes, as the case may be, are
assigned in each list to those candidates who have obtained the
greatest number of votes. Substitutes' seats are assigned to those
candidates who come next to the titular members in the number
of votes. In case of equality of votes the oldest candidate is declared
elected. If a list secures more seats than the number of candidates
on it, the number of seats remaining vacant is distributed among
the other lists. For this purpose a fresh proportionate distribution
is carried out.
A report is drawn up immediately on the election proceedings
and the results of the election. This report is signed by the returning
officer and the two assessors. The names of the members and substitutes elected are posted up in the establishment for three days.
If an elected candidate refuses to take office, the candidate who has
the next lower number of votes is deemed to be elected in his
place. Refusal must take place within six days after the publication
of the result of the election. The validity of the election may be
contested within the eight days immediately following the poll.
Objections must be lodged either with the Factory Inspectorate or
with the Mines Department, as the case may be. If the competent
authority decides that the election is void, a new election must be
held within a month of the date of this decision. The election
records must be kept by the committee until the expiration of
its term of office. All the election expenses are borne by the head
of the undertaking.
It will be remembered that among other things the workers'
committees are required " to co-operate in the reduction of risks
of accident and sickness and to assist the factory inspectors and
any other authorities concerned, by putting forward suitable
proposals ". This provision, which is embodied in the Order of
S May 1925, implied the adoption of further provisions concerning
the institution of workers' safety inspectors, and provisions to
this effect were subsequently introduced by the Grand Ducal Order
of 31 December 1929.
Every main committee 1 must appoint one of its members to
hold the post of workers' safety inspector. Every fortnight the
1

Or branch committee, if the undertaking includes services employing more
than fifty workers as a rule.

IN THE GRAND DUCHY OF LUXEMBURG

161

safety inspector, together with the head of the establishment or
his representative, is required to make a tour of inspection of the
establishment or branches for which the committee has been
appointed. During the tour of inspection the safety inspector must
concern himself exclusively with questions relative to the safety of
the workers. At the end of the tour of inspection the safety
inspector must enter the results of his observations in a special
register, which must always be kept at the office of the establishment, where the committee, the head of the establishment or his
representative, and the officials of the Factory Inspectorate or
Mines Department may have access to it.
In urgent cases, when the observations may demand immediate
action on the part of the Factory Inspectorate or Mines Department,
the safety inspector may apply directly to these authorities, provided t h a t at the same time he gives notice of this to the head of
the undertaking or his representative and the committee. The
officials of the Factory Inspectorate and Mines Department are
entitled to require the safety inspector to accompany them on
their official inspection rounds; they may likewise require him to
attend accident enquiries. The safety inspector may not suffer any
loss of wages on account of his absence from work due to tours of
inspection or help given to officials of the Factory Inspectorate
or Mines Department.
All disputes which may arise out of the administration of
the provisions of the Order of 31 December 1929 are settled by the
Factory Inspectorate or Mines Department, according to the case.
The parties concerned are entitled to appeal against the decisions
of the Factory Inspectorate or Mines Department to the General
Director of Labour and Social Welfare, whose decision is final.
This appeal must be lodged within a week of the notification of
the decision of the Factory Inspectorate or Mines Department.
The corresponding legislative measures applicable to salaried
employees may now be considered 1. These measures are embodied
in sections 24 and 25 of the Act of 31 October 1919 " respecting the
legal regulation of the contract of service of private employees ", to
which reference has already been made.
The head of an undertaking in which at least fifteen salaried
employees are regularly engaged must appoint a salaried employees'
1
The legislative provisions concerning staff representation also include the
Grand Ducal Order of 26 May 1930 concerning the staff employed by Luxemburg railway companies.

162

INDUSTRIAL RELATIONS

committee comprising three members and two substitute members,
to be chosen by ballot and by a majority of votes. If the number
of employees exceeds fifty, the committee must be increased by
one member and one substitute member for each further 100 employees. Every separate works belonging to the same undertaking
is required to have such a committee. The regular members and
substitutes must be renewed every three years, retiring members
being eligible for re-election. The members of the committee
appoint a chairman from among their own number; their duties
are purely honorary. The employer is responsible for furnishing
a room for meetings, and for the expenses of office work, heating
and lighting.
The committee of salaried employees must meet at least once
every three months. In addition, the chairman may convene it
at other times either on his official initiative or at the request
of the employer or of two members. The agenda and the rules of
procedure for meetings are drawn up by the committee.
The duties of the committee are to give an opinion on amendments to be made in the service regulations of the undertaking,
to settle disputes between the employer and employees by way of
conciliation, to transmit the wishes of the employer and of the
employees, to protect the interests of the employees, and to take
a part in the management of welfare schemes established by the
employer for the improvement of the situation of employees or
their famines.
It may be opportune here to make a few general remarks on the
principles implied by the regulations discussed above. In the first
place, too much stress cannot be laid on the fact that there is a
close connection between the works regulations of each undertaking
and the activity of the respective workers' committee 1. The works
regulations are among the papers which the worker receives when
he is engaged, and by the mere fact of his demanding to enter the
establishment he undertakes to comply with all the provisions of
the regulations, which, in fact, become his working rules. In this
respect the works regulations of undertakings in Luxemburg are
in no way exceptional. But the institution of workers' committees
modifies this unilateral system, inasmuch as the respective committees are required to discuss the terms of the regulations when
1
The same remarks apply to salaried employees' committees. This observation need not be repeated.

IN THE GRAND DUCHY OF LUXEMBURG

163

they are being drawn up and, as has been emphasised on several
occasions, must be consulted whenever the management proposes
to introduce amendments to the regulations. It is true that the
management is not legally obliged to take account of the opinion
given by the committee, but in practice no provision is ever
included in the works regulations when it is opposed by the
respective workers' or salaried employees' committee.
It has also been seen that the workers' committees must be
notified of the reasons for a worker's dismissal without notice,
and must be informed beforehand in the event of mass dismissals.
Here again, it is not merely a question of pure formality. The duties
entailed by these prerogatives, and those resulting from their
right to settle disputes arising between the worker and his superior
once the usual procedure provided for in the works regulations
has failed, are considered by the workers' committees to be among
the most important tasks which they are called upon to perform.
The drafting of work regulations and the application of their most
important provisions are thus an integral part of the duties of the
workers' committees.
There is also, as has been seen, another field in which the workers'
committees are called upon to play an important part, namely,
the establishment of wage rates of a permanent and general character. Here also the consultation of the workers' committee or
the salaried employees' committee as the case may be is compulsory.
Finally, as already stated, the Act of 6 December 1926 has made
provision for the possible conclusion of collective labour agreements,
and a Bill regulating the form of these agreements is still before
the Luxemburg Parliament.
Trade Chambers
In spite of the obvious interest of these institutions, it will
be impossible here to give them all the attention they deserve,
and only those aspects of them which have some connection with
industrial relations will be discussed.
The main facts concerning the trade association movement
in Luxemburg are as follows. Industrial employers are grouped in
the Federation of Luxemburg Manufacturers, which was founded
in 1918 and now includes all manufacturers in the Grand Duchy.
The middle classes are represented by the Federation of Commercial
Associations and the Federation of Craftsmen's Associations.
Agriculturists belong to either the Federation of Agricultural

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INDUSTRIAL RELATIONS

Associations or the Federation of Wine-Growers' Associations.
Workers who desire to take part in the trade union movement
may do so through the " Commission Syndicale " or free trade
unions, of Socialist tendency, which at present have an aggregate
membership of 12,000 persons after reaching their peak in 1920
with a membership of 27,000, a figure which represented practically
the total number of persons employed at t h a t time in the industry
and commerce of the Grand Duchy. Workers are also free to join
the Federation of Christian Trade Unions 1. Salaried employees
are organised in the Federation of Unions of Salaried Employees,
which has a membership of 2,500.
There is no obstacle to trade association in Luxemburg. Freedom
of association is guaranteed for all classes by the Constitution of
17 October 1868, which states t h a t "The people of Luxemburg
have the right of association. This right is not subject to any
preliminary authorisation. " The right of assembly is guaranteed
in the same terms, but is subject to the provisions of the Communal
Law of 24 February 1843. This law recognises the right of the
people of Luxemburg to assemble without the necessity of prior
authorisation, provided that they do so peacefully, without arms
and in accordance with the existing laws. This provision does
not apply to assemblies in the open air, political, religious or
other, as such assemblies remain entirely subject to the laws and
police regulations. Moreover, section 310 of the Penal Code punishes
with fines and imprisonment or either of these two penalties " any
person who, with the object of forcing an increase or decrease of
wages or of interfering with the free working of industry or labour,
shall commit acts of violence, utter any threats or abuse,
pronounce fines, prohibitions, or any proscriptions- whatever,
whether against the workers or against the employers ". The
same section of the Penal Code declares picketing and acts of
destruction to be punishable offences. Acts of destruction against
steam engines, however, come under section 523 of the Code 2.
The Act of 4 April 1924 set up five elective trade chambers
1
The Federation of Christian Trade Unions of Luxemburg had a membership of 2,238 on 1 January 1932, according to the report of the General Secretary to the Fifth Congress (Antwerp, 22-24 June 1932) of the International
Confederation
of Christian Trade Unions.
2
Section 310, the strict application of which would prevent the free exercise
of the right of association, has been the object during the last fifteen years of a
number of proposals for amendment or repeal. It seems, however, to have
fallen practically into disuse, as no instances can be quoted of convictions
under this section in recent years.

IN THE GRAND DUCHY OF LUXEMBURG

165

which correspond to the large occupational categories already
mentioned 1 .
The Chamber of Agriculture corresponds to the Federation of
Agricultural Associations and to the Federation of Wine-Growers'
Associations; the Chamber of Commerce to the Federation of
Luxemburg Manufacturers and to the Federation of Commercial
Associations; the Chamber of Handicrafts to the Federation of
Craftsmen's Associations; the Chamber of Salaried Employees to
the Federation of Unions of Salaried Employees, while the Chamber
of Labour corresponds to the free trade unions and to the Federation of Christian Trade Unions.
In the composition of each of these chambers, the legislator has
made due allowance for the demographic and economic importance
of the various elements which they represent 2. Thus in the Chamber
of Agriculture, five of the nineteen members represent the winegrowing industry. In the Chamber of Commerce, which comprises
twenty-one members, three seats are provided for the wholesale
trade, four for the retail trade, four for metal and mining establishments regularly employing over 200 wage earners, six for small
and medium-size industry, one for banking, one for insurance
companies, and two for the hotel industry. The Chamber of
Salaried Employees, which includes twenty members, allocates
six seats to employees in large and medium-scale industry,
eight to railway employees, two to employees in small-scale
industry, one to employees in banks and insurance companies,
and three to employees in commerce, agriculture or forestry and
to other branches of trade not specially mentioned. The Chamber
of Labour, composed of eighteen members, allocates twelve seats
to workers in large and medium-scale industry, and six seats to
small-scale industry and commerce. In the Chamber of Handicrafts, which comprises twelve members, the seats are distributed
among the various trades.
The duties of the various chambers are more or less identical,
and cover the interests of the trades they represent. The chambers
are corporate bodies, and are required to create and, if necessary,
to subsidise establishments, institutions, organisations or services
1

The Act of 4 April 1924 was amended by the Act of 3 June 1926, but the
amendments relate only to the contributions which the chambers are allowed
to 2charge in order to meet their expenses.
The Ministerial Order of 12 November 1932 has slightly altered the rules
governing the allocation of seats in several of the chambers. The new
distribution- is given here.

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INDUSTRIAL RELATIONS

the main purpose of which is to improve the lot of those concerned
(agriculturists, commercial workers, wage earners, etc.), and to
promote their activities, to give opinions, make complaints,
demand enquiries and produce statistical information. They are
entitled to propose legislative measures, and their proposals must
be examined by the Government and laid before the Chamber of
Deputies if they relate to matters within the competence of the
latter. Moreover, the opinion of the trade chambers must be
procured on all Acts and Ministerial Orders and Grand Ducal
Decrees relating mainly to their occupational interests.
A few of the prerogatives of the Chamber of Labour are given
below by way of example. The Chamber is required to protect
and defend the interests of the workers. It is required, in particular, to supervise the observance of labour legislation (Acts
relating to social insurance, night work, employment of women and
children, hours of work, regulations respecting sanitary conditions
in workshops, dwellings, etc.). It supervises and checks the execution of individual and collective contracts of employment. Its
opinion must be asked on all Bills affecting the working classes
before the final vote of the Chamber of Deputies is taken. It
transmits to the Chamber of Deputies its observations on the use
made of the votes granted in the previous year to promote the
interests of the working classes, and gives its opinion on the grants
to be applied for in respect of the following year. It makes
proposals concerning the supervision of the industrial training of
the workers.
The members of the trade chambers are elected by ballot by
an electoral body corresponding to each group represented (agriculturists, commercial workers, craftsmen, etc.). The majority
system is adopted for the Chambers of Agriculture, Commerce and
Handicrafts, and the system of lists of candidates on the basis of
proportional representation for the Chamber of Salaried Employees
and the Chamber of Labour, so as to safeguard the rights of trade
union minorities. 1 The result is t h a t the respective occupational
associations exercise a predominant influence in the composition
and the working of the chambers.
A provision of the greatest interest from the standpoint of
1
The entry of a person's name on the electoral register is deemed to be
evidence of his qualification as a voter. The electoral register is drawn up in
alphabetical order by the Mayor and aldermen separately for each chamber and
for each group; it is not liable to alteration, except for deletions and entries
which may be made on the occasion of the revision carried out every four years.

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167

industrial relations is t h a t embodied in section 44, the text of
which is given below in extenso:
" Whenever two or more trade chambers have to deal with matters
of common interest, they may hold a joint meeting to discuss such matters
with a view to joint decision. In such cases each chamber shall delegate
two or more of its members to attend the said meeting. The total
number of such representatives shall not exceed the number of members
of whichever of the chambers concerned has the largest membership.
" Whenever circumstances so require, the Government may convene
representatives of two or more chambers for the joint discussion of
questions which affect various occupations. The expenses shall be
defrayed by the individual chambers."
This provision of the Act concerning trade chambers is not,
however, very often applied. Indeed, for some years back it has
tended to overlap with the prerogatives of the Economic Council,
about which a few remarks must be made before closing this
chapter.
The Economic Council of Luxemburg, set up by the Grand
Ducal Order of 3 December 1931, acts in an advisory capacity.
It is required, at the request of the Government or on its own
initiative, to make a general study of questions of interest to the
economic system of the Grand Duchy. In addition, in its capacity
of supreme advisory organ, it must collaborate with a view to
co-ordination with the existing organisations, and in particular
with the trade chambers. The Economic Council has a maximum
membership of fifteen regular members and a number of advisory
members. These members are appointed for two years by Ministerial Order. The Government may also entrust the study of special
questions to experts, who take part in an advisory capacity in the
deliberations of the Economic Council. The Government elects
the chairman from among the regular members of the Economic
Council. It also appoints a secretary, an assistant secretary, and
where necessary one or two officials responsible for carrying on the
business of the Council. The Council is convened by its chairman
or by the Government. It may take a decision only if at least half
of its regular members are present. The duties of the members of
the Economic Council are honorary. Nevertheless, a refund is
made for expenses incurred by members who are required to
undertake a journey in order to be present at meetings or carry out
a mission for the Council.
Members appointed in an advisory capacity include the Chairmen
of the Federation of Luxemburg Manufacturers, the Chamber of
Labour, the Chamber of Commerce, the Chamber of Agriculture,

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INDUSTRIAL RELATIONS

the Chamber of Salaried Employees and t h e Chamber of Handicrafts. The State Commissioner attached to the International
Bank of Luxemburg, a member of the Supreme Council of
the Belgo-Luxemburg Economic Union, the Vice-Chairman of the
Chamber of Agriculture, the Director of t h e Federation of Agricultural Associations and a member of the Chamber of Commerce
may also sit on the Council in an advisory capacity.
As the majority of the members of the Council are representatives of the trade chambers, they are mainly called upon to protect
the interests of the various trades and to contribute in this way
towards the amalgamation of their common interests for the good
of the community at large 1. This dovetailing of the work of the
two important advisory institutions explains to some extent why
the provision of the Act of 4 April 1924 concerning joint discussions
by several trade chambers has fallen into desuetude.

EMPLOYERS' SOCIAL INSTITUTIONS

Under this term are to be included not only the " voluntary
welfare institutions " mentioned in section 18 of the Act concerning
workers' committees, but also all other institutions set up by
private undertakings or subsidised by them with the twofold intention of improving the workers' wellbeing and increasing their
output. Whatever the motive behind the creation of establishments of this kind, the fact remains t h a t their existence creates and
strengthens in the worker's mind a feeling of security for the
present and for the future, while in the employer it awakens and
increases a feeling of responsibility towards his staff. Finally,
such institutions are bound to bring home to the employer and
worker alike some idea of the interdependence of the different
factors of production. For these reasons they offer a useful
contribution to industrial relations.
A detailed description of the social institutions set up on the
employers' initiative in Luxemburg would go beyond the bounds of
the present study, which will therefore be limited to the most
important undertakings, namely, the Arbed-Terres Rouges
establishments. The description given below deals in succession
with institutions providing for vocational training and guidance,
i The close contact between the Economic Council and the trade chambers
is further shown by the fact that the Economic Council transmits the minutes
of its meetings to the trade chambers for purposes of information.

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169

those concerned with the safety of the workers, social insurance
institutions, and those set up to improve the general wellbeing of
thè workers.
Vocational Training and Guidance
The Arbed-Terres Rouges group, including as it does both metalworking and mining establishments, has taken steps to organise
vocational instruction in both branches either on their own initiative or by subsidising State institutions.
To begin with, the metallurgical branch is catered for by a
vocational school established at Dudelange. Instruction is
given at the works and is spread over a period of two years. It
is compulsory for all apprentices 1 during hours of work. Hours
spent in the classroom are paid for at the same rate as hours of
manual labour 2. At Esch-a/Alzette, the most important of the
centres of the Luxemburg divisions of the Arbed-Terres Rouges
group, the vocational school is a State school. The length of
the course is three years. The Arbed-Terres Rouges group pays
two-sixths of the cost.
The Emile Metz Institute, which is situated at Dommeldange,
provides other technical educational facilities for the Arbed-Terres
Rouges establishments in the Grand Duchy. Not only in Luxemburg is it considered to be a model institution, but this opinion
is shared by experts in vocational training and guidance in a
number of countries. The Institute was founded in 1913 by
Mrs. Emile Metz-Tesch, but, as a result of the war, was completed
only on 12 August 1922. It houses a vocational school, an apprenticeship workshop and a psycho-physiological laboratory. The
ground floor of the central building contains a gymnasium, a
library and reading room, the offices of the tutorial staff and a
testing and experimental laboratory. On the first floor there are
the Director's office, a reception room, classrooms and a large
room which is used as a lecture hall. The premises on the second
floor include a drawing class, a technological museum and the
archives. In the basement are wash basins, bathrooms, vapour
baths and a swimming pool.
The length of the course is three years. Two days a week are
devoted to theoretical work. During the first year a start is made
1
2

Apprenticeship is regulated by the Act of 5 January 1929.
Admission to vocational schools is subject to the production of a certificate
showing that the applicant has completed two years' study in a higher primary
school.

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in the study of languages and history, elementary mathematics,
chemistry and physics, which form the basis of all technical
education. Free-hand drawing is also taught. It is only in the
latter half of the second year of the course that special studies
are begun, these including mechanics and the elements of machinery, chemical technology, mechanical technology, iron metallurgy
and industrial hygiene. In addition, special courses are given
during the third year on industrial electricity for electricians,
iron machining for fitters, turners and locksmiths; foundry and
pattern work for moulders and modellers. These special courses
are run in connection with the practical classes. It is to be
noted that swimming is compulsory twice a week, while gymnastic
instruction according to the Hébert and Link methods is given
every day.
The programme of practical training which is spread over three
years covers the following branches: fitters, turners and planers,
electricians, blacksmiths, modellers and moulders. During the
first half-year apprentice fitters learn to use files 1. They are
required, in the first place, to make a rectangular prism in metal
and, subsequently, square and hexagonal prisms. When made,
these prisms are given to the pupils who convert them into screws
for adjustment bolts. The programme for the second six months
includes the transformation of a cylindrical piece of metal into a
square prism, by means of a burin. From this moment productive
work begins and apprentices make the tools which they will use
later, the forging operations being done by blacksmiths' apprentices, lathing work by turners' apprentices. During the third and
fourth half-years the series of operations is continued while, in
addition, apprentice fitters are taught forging by passing six to
eight weeks in the blacksmith's shop, welding by a series of
practical lessons, and are given some idea of turning, planing and
milling operations on simple machines. They are then allowed to
execute small jobs and repairs. Finally, during the fifth and sixth
half-years each apprentice spends a more or less prolonged period
of probation in the building and repair shops and completes his
apprenticeship in the apprenticeship workshops. He is required
to note down all jobs performed in a book which is regularly
examined by the chief of the apprenticeship workshops.
It seems unnecessary to give such full details for other classes of
1
Dr. J. Amar's dynamographic file helps the instructors to discover and
correct certain faults common to the beginner.

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apprentices, but a few remarks on the psycho-physiological laboratory seem to be indicated here. One of the outstanding features
of vocational guidance, as it is conceived in the Metz Institute, is
t h a t it should not be a single intervention but rather a continuous
process covering the whole period of apprenticeship 1. As a
limited number of trades is aimed at, bearing many points in
common, it is possible to practise a system of progressive guidance
for apprentices while directing them towards specialised trades
suitable to their aptitudes and capacities.
Before entering the Institute, apprentices have to pass an examination and only those showing the requisite aptitudes, capacities and
knowledge are admitted. Candidates are examined from four
standpoints: physical, medical, theoretical and psycho-technical.
Nothing need be said here with reference to the first two points.
The theoretical examination is limited to the verification of general
knowledge corresponding to the primary school certificate which,
moreover, must be produced. The psycho-technical part of the
examination is summary and bears mainly on powers of concentration, how the candidate sees bodies in space, his sharpness of
view, manual skill and receptivity.
The methods of vocational guidance employed being, as already
stated, progressive, tests are continued throughout the duration
of apprenticehip, but are particularly numerous during the first
three months 2. Two important physical tests complete the information obtained from the entrance examination: the fatigue
cycle test and the physical endurance test. These are followed
b y a test of the senses and in particular of the psycho-motive
aptitudes and, finally, by a test of receptivity towards instruction
and adaptability to work. The psycho-physiological laboratory
has adopted the following tests : the perforation by hand of strips
of paper, the drawing of compound figures by means of an instrument which, among other things, allows a study to be made of the
co-ordination of the movements of the two hands and, finally,
typewriting and the assembly of separate parts. Groups of eight
1
Quoted from the terms used by Mr. Robert, teacher at the Metz Institute,
during a lecture given by him on 15 May 1930 to the Paris Conservatory of
Arts
and Crafts.
3
According to section 5 of the Act of 5 January 1929, " the contract of
apprenticeship may be cancelled by either of the parties within the first four
weeks of the apprenticeship in cases where a longer probationary period has
not been fixed by contract. Nevertheless, this probationary period shall
not exceed three months and shall be included within the apprenticeship
period."

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to ten apprentices take part in the tests, which bear mainly on
work in which the use of the eyes and the hands is preponderant.
Operations already performed are as a rule not given in tests, the
same remark applying to all kinds of work which requires a certain
amount of strength and might, therefore, unduly handicap apprentices whose physique is not of the best.
The psychological examination includes collective tests of the
apprentice's memory, power of combination, technical comprehension and comprehension of space, which complete the data
collected about him during the theoretical part of his studies. As
to the study of the character and moral worth of the apprentice,
personal contact between the pupil and teacher and between the
apprentice and the shop instructor provides an initial source of
information. The knowledge thus obtained is supplemented by
the systematic observation of each apprentice both at work and at
play. In this respect the gymnastic and swimming classes offer
valuable opportunities. The apprentice's memory for movements
and the skill with which he performs them, his courage, energy,
daring, stamina and perseverance can thus be observed and the
results conveyed to the head of the psycho-technical laboratory.
During the three years' study course the pupils receive a fixed
wage, of which 10 per cent, is paid into a special fund. All deductions plus 5 per cent, interest are paid to the pupil at the end of
his apprenticeship, provided his conduct and attention to his
studies have not given rise to serious complaints.
In the mining branch there are no private vocational instruction
and guidance institutions comparable with the Metz Institute.
There is, however, a State school of mines at Esch-a/Alzette ;
the length of the study course is two years. Candidates for the
post of overman or chief overseer are given theoretical instruction
in the operation of mines. Classes are held during working hours
but any loss of wages entailed is not refunded. Preparatory schools
exist at Esch, Rumelange and Tétange where the study course is
spread over two years. Classes are held after working hours. The
cost of the school of mines and the preparatory schools is shared
by the authorities of the district in which the schools are situated,
the mine managements and the State.
In concluding these notes on vocational training and guidance
institutions, it may be pointed out that the Arbed group grants
subsidies to the higher primary school at Dudelange, and thus allows
the miners' children to study free of charge. In addition, a special
fund has been formed to provide highly gifted children of workers

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173

and employees in the service of the Arbed group with funds to
enable them to study at secondary and higher educational establishments. The amount of such subsidies varies with the merit of
the pupil and the degree of his studies. Finally, with the help of the
Mrs. Emile Metz-Tesch Foundation, scholarships have been
instituted for young persons of outstanding intelligence. These
scholarships allow a certain number of pupils selected from among
the workers' and employees' children to complete a course of
secondary and higher studies.
Prevention of Accidents
The central management of the Arbed-Terres Rouges amalgamation includes a service dealing with accident prevention and industrial medicine. This service, which is under the orders of the
director of administrative and social questions, is required to make
suggestions to the general management as to the best way to
comply with the legal requirements relating to accident prevention
and industrial medicine 1 .
Industrial diseases being extremely rare in Luxemburg both in
the metal and iron mining industries, the service is mainly concerned
with accident prevention. In this connection psycho-technical,
psychological and practical methods are employed. Reference
has already been made to the psycho-technical work carried on by
the Metz Institute. All t h a t need be added is that from the
standpoint of accident prevention the aptitude of the individual
for his work must be considered as an important element of safety.
The psychological methods employed are similar to those in use
in other establishments of the same kind. Publicity by posters is
carried out in all divisions of the Arbed-Terres Rouges amalgamation. These posters are intended to ensure the collaboration of the
individual worker by giving him a knowledge of prudence, the
precautions to be taken during work and the treatment of injuries.
In addition, notices and railings arranged in zigzag fashion draw
attention to passage ways, means of access and dangerous
machinery.
1

These include the Act of 28 August 1924 concerning the safety and health
of persons employed in industrial and commercial undertakings or in work in
construction, adaptation, repairs or excavation; the Grand Ducal Order of
the same date respecting provisions for the health and safety of persons
employed in industrial and commercial undertakings; the Grand Ducal Order
of 26 April 1930 respecting the operation of underground and open mines
and quarries.

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Periodical lectures are arranged at which attendance is compulsory. They are given in each service at fixed dates and during
working hours. Reference to them has already been made in the
part of the study dealing with workers' committees. The subjects
of these lectures are drawn from the " Accident Prevention Rules ",
a copy of which is given to each worker when he is engaged. Any
serious accidents which occur are discussed and stress is laid on the
means of avoiding them in the future. The organisation of accident
prevention is further strengthened by periodical inspection by
private organisations specialising in the supervision of plants from
the accident prevention standpoint. In addition to all these
measures, there is of course the preventive work carried on by the
workers' safety inspectors.
Although it is really a social welfare institution, attention must
also be called to the first-aid service which works in conjunction
with the accident prevention service. In all large metal works in
the Grand Duchy each service has a first-aid squad composed of
workers skilled in first-aid work. Numerous first-aid posts, sick
rooms provided with complete outfits, and motor ambulances for
conveying injured persons to hospital are placed systematically
throughout the works.
Social Insurance

Institutions

Before proceeding to study the social insurance institutions set up
or subsidised by the Arbed-Terres Rouges group 1, a few remarks
must be made regarding the social insurance laws of Luxemburg.
Compulsory insurance against industrial accidents (and certain
occupational diseases) was introduced by the Act of 5 April 1902,
which was subsequently amended by the Acts of 23 December 1904,
12 May 1905, 21 April 1908, 20 December 1909, 17 December 1925
and 6 September 1933 2 . Insurance covers all wage-earners
in industry, the handicrafts, and agricultural and forestry
undertakings, with the exception of salaried employees in
such undertakings and foremen and technical employees whose
annual remuneration exceeds 10,000 francs. The cost of
insurance is borne by the employers, but the State pays half the
administrative expenses.
1
In reading the following pages it should be borne in mind that the steps
taken by the Arbed and Terres Rouges establishments on behalf of their staff
extend to the " Comptoir de vente ' Columeta ' ", even when this is not
definitely stated.
2
The Act of 17 December 1925 introduced the Social Insurance Code.

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175

Compulsory sickness insurance is governed by the Acts of
31 July 1901, and 17 and 31 December 1925. It applies to all
wage-earners, workers and salaried employees alike, provided,
in the case of salaried employees, t h a t their annual remuneration
does not exceed 10,000 francs. Persons not liable to compulsory
insurance may contract voluntary insurance, provided t h a t their
total annual income does not exceed 12,000 francs. The resources
are derived from contributions, one-third of which are paid by the
employers and two-thirds by the insured. Contributions are fixed
as a percentage of wages and may not exceed 6.75 per cent, of the
normal wage.
Old-age, invalidity and survivors' insurance was introduced by
the Act of 6 May 1911, which was subsequently amended by the
Act of 2 June 1914, the Social Insurance Code of 17 December 1925
and, finally, by the Act of 20 November 1929 concerning the
re-assessment of old-age and invalidity pensions. Insurance is
compulsory for all wage earners over sixteen years of age. The
resources are derived from contributions payable by the insured
persons and the employers and from State and communal subsidies.
The contributions payable by the insured person and the employer
amount to 4 per cent, of the wage, one-half of which is borne by
the employer, the other half by the insured person. The Act of
29 January 1931 set up a special pension insurance fund for salaried
employees, contributions being fixed at 5 per cent, of the total
annual remuneration for both employers and insured persons. l
The Arbed-Terres Rouges undertakings have gone beyond the
statutory obligations. In case of fatal accidents, the Act of
6 September 1933 makes provision for the payment, in addition
to a pension, of funeral benefit equal to one-fifteenth of the nominal
wage, with a minimum of 600 francs and a maximum of 800 francs.
In the Arbed-Terres Rouges works a supplementary allowance of
500 francs is granted for each member of the family for whose
maintenance the deceased person—whether married or single—was
responsible. These sums are obtained from the income of a fund
set up for this purpose by Mrs. A. Mayrisch of St. Hubert and
1
No details will be given here concerning social assistance given by the
State: unemployment relief; assistance of elderly, infirm and blind persons;
medical aid for persons in necessitous circumstances, etc. The employers
and wage earners do not bear any share in the cost of such measures. It is
to be noted that theoretically a quarter of the cost of unemployment relief
is supposed to be met by the employers and a quarter by the wage earners,
but in practice the State and the municipal authorities provide the necessary
funds.

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INDUSTRIAL RELATIONS

Miss Andrée Mayrisch in memory of Mr. Emile Mayrisch, who was
Chairman of the management of the Arbed-Terres Rouges companies prior to Mr. Aloyse Meyer.
As has previously been stated, accident insurance and sickness
insurance do not cover salaried employees whose annual remuneration exceeds 10,000 francs. In order to remedy this, the management of the Arbed-Terres Rouges group insures against industrial
and non-industrial accidents (with private companies and free of
charge to the insured persons) all its employees as well as those
of the sales organisation " Columeta ". Like the metallurgical
company of Ougrée-Marihaye at Rodange, it has also set up a special
accident and sickness fund for salaried employees of the ArbedTerres Rouges-" Columeta " groups. This fund began operations
on 1 January 1923. It works on the same lines as the mutual-aid
societies sanctioned by the Act of 11 July 1891 and admits all
salaried employees of the three undertakings as paying members.
It may admit employees of concerns connected with the societies.
It may also admit, but on a non-paying basis, members of the
families of paying members recognised as such by the general
assembly of the fund. The cost is borne equally by the employers
and the insured. The companies also undertake the actual
management of the fund, meet the administrative expenses and
supply it with the necessary office materials.
Insured persons are free to choose their doctor and curative
establishment, while no restrictions are imposed in connection with
articles prescribed by a doctor. No arrangements are made
for lump sum payments or special prices and members of the fund
are treated in the same way as private patients. They are required
to pay the cost of their treatment on presentation of a detailed and
receipted bill, doctors' fees being paid immediately and the receipted
bills sent to the fund by the person concerned for reimbursement.
The extent of the insured person's share (10 to 50 per cent.) is
fixed in proportion to the opportunities which various types of
treatment afford for abuses. The fund reduces receipted bills to
the level of the official scale published by the Government and
repays to its members its share of the expenses incurred.
It is to be noted, in connection with accidents and sickness, that
the Arbed-Terres Rouges group has taken the necessary steps to
provide the best possible treatment for its staff in hospitals and
curative establishments. The Dudelange hospital, which belongs
to the Arbed group, receives sick and injured staff from the Dudelange works. It also admits their wives and children and, if

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accommodation permits, other members of the community.
The hospital has two operating theatres, a modern hydro-therapeutic
institution, a mechano-therapeutic room, two radiology and radiotherapeutic rooms, a maternity ward, isolation wards for tuberculosis and epidemic diseases, open balconies for fresh-air treatment,
and a disinfection service. Thanks to the generosity of the Norbert
Metz Foundation, the Dommeldange works has twenty beds at
its disposal in the local hospital, and in the case of epidemics the
whole premises are put at the disposal of the Arbed group.
At Esch-a/Alzette, the companies are allowed to use the town
hospital. This hospital, which is reputed to be a model institution,
was opened on 15 March 1930 at a cost of sixteen and a half
million francs. It belongs to a society formed by the town of Esch
and the Arbed and Terres Rouges concerns, and receives only
paying patients; but the two concerns have priority rights as
regards the admission of their staff. It contains 225 beds, of which
twenty are reserved for tubercular cases and twenty for infectious
diseases such as scarlet fever, typhus and diphtheria, the forty
special beds being situated in two separate isolation wards K
Patients are free to choose their doctor. The nursing and managing services are staffed by trained sisters of mercy. Many years
were spent in completing the planning, building and endowment of
the institution, which is staffed and managed according to the
latest scientific requirements. 2 The results achieved have exceeded
all expectations from the standpoint of treatment and administration, and the hospital covers its expenses solely from the revenue
derived from patients' fees 3 .
As regards invalidity and old-age insurance, the Arbed-Terres
Rouges group has set up a pension fund for workers, widows and
orphans which supplements the invalidity, old-age and survivors'
pensions paid by the invalidity and old-age insurance scheme.
These supplements may amount to as much as 1,800 francs a year
after fifteen years' service, and may be increased up to 3,600 francs
i The morbidity and sickness incidence was particularly high in the Luxemburg iron and steel trades during the influx of alien workers. It has shown a
tendency to diminish since the labour turn-over has decreased as a result of the
depression.
2
It is interesting to note that the hospital staff works on the basis of an
eight-hour
day.
3
A description of the other hospital and curative establishments in Luxemburg which, though neither belonging to nor subsidised by the undertakings
under consideration, may be used by their staff, would go beyond the bounds
of the present study. It is regretted in particular that space precludes any
detailed account of the Vianden sanatorium which was only recently opened,
and which is equipped according to the most modern requirements.
12

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INDUSTRIAL RELATIONS

a year after forty-five years' service. When a worker completes
fifty years' uninterrupted service, he becomes entitled to a supplement which brings his monthly pension up to the average monthly
wage earned by him during his last three months' service. Supplements for widows may amount to as much 1,080 francs a year after
fifteen years' service and are increased up to 2,160 francs after
forty-five years' service. If the husband has served the company
for fifty years without interruption, the pension payable to the
widow is equal to 60 per cent, of that received by the husband.
The supplement for orphans under eighteen years of age may
amount to 300 francs a year.
In addition, retired workmen receive an annual allowance
composed of a basic amount and a fixed increment for each child
under eighteen years of age. The hospital which the Arbed group
formerly owned at Esch-a/Alzette and which was replaced by the
Esch town hospital mentioned above, has been converted into a
home, in which are housed elderly workers in receipt of a pension
from the Arbed and Terres Rouges companies.
The two companies also set up a pension fund for their salaried
employees, which was conceived on very liberal lines. Employees
paid a contribution equal to 5 per cent, of their salary towards the
upkeep of the fund, 11 per cent, being paid by the company. But
when the Act of 29 January 1931 authorised the State to set up a
salaried employees' pension fund, the pension fund for salaried
employees constituted by the Arbed and Terres Rouges companies
ceased to operate, but all rights acquired at the moment of the
introduction of the Act have been safeguarded. x
After fifty years of uninterrupted service, salaried employees are
entitled, in the same way as workers, to an annual pension equal
to their last fixed salary with a maximum of 50,000 francs, the
companies paying the necessary supplementary sums. In such
cases, the widow receives 60 per cent, of the income derived by her
husband at the moment of his death from pension sources (pension
from the fund and supplements from the company). Finally,
the Arbed and Terres Rouges companies also make a yearly allowance
to salaried employees formerly in their service, the amount of this
allowance varying according to circumstances.
i For employees who, on account of health reasons cannot be admitted to
the pension fund, the Arbed and Terres Rouges companies open individual
savings accounts bearing 5 per cent, interest, into which the insured person
pays 5 per cent, of his wages, while 11 per cent, is paid by the company.

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Under the heading of social welfare must also be included the
maternity allowances which the companies grant at confinement
to the wives of the workers and salaried employees. This allowance
amounts to 250 francs and, in the case of workers, is granted on
condition that they have been employed at least six months by
the company. It may be added that in the Arbed's Dudelange
hospital, five rooms with seven beds are reserved for the confinement
of the wives of workers and salaried employees. They are entitled
to special rates for their maintenance. 1
This section of the present study may be concluded with a
short description of the institutions set up for the protection of
childhood, as these play an important part in the social work
carried on by the Arbed and Terres Rouges establishments. The
two companies have spent large sums for the prevention and
treatment of tuberculosis among the children of their staff. They
have acquired twenty beds in the seaside home at Clemskerke on
the Belgian coast, which can accommodate eighty children annually for a period of three months. Children between five and
thirteen years of age suffering from scrofula, rickets, anaemia or
general debility are admitted, provided they are not contagious
cases. The entire cost entailed is borne by the companies. The
same applies to the children's home at Rédange, where the company
maintains five beds, and at Bettendorf, Grevenmacher, Itzig,
Limpertsberg, and Rumelange. In all these homes, children of one
to two months are admitted either because they must be separated
from their family on account of contagious tuberculosis or because
they are orphans. Children are allowed to remain in the homes
until they reach three or four years of age.
Special reference must be made to the children's home at
Kreutzberg, near Dudelange. Founded in 1920 by the two
companies, this home is situated on the Kreutzberg Hill at an
altitude of 280 metres and about a mile from the town of Dudelange.
The establishment includes a preventive hospital with beds for
fifty-eight children. Further, a sanatorium with fifteen beds has
been set up for children suffering from open tuberculosis. The
establishment is built in the middle of a park of two and a half
hectares, on a picturesque site. It is surrounded by wide plains,
fields and forests; the pure air, dry soil and abundant supply of
1
Attention must also be called to the Poeckeshof nurseries at Esch-a/Alzette.
This institution was founded in 1897 by the Red Cross Society and the ArbedTerres Rouges Amalgamation. The two companies fitted up the premises
required by the nurseries at a cost of 54,000 francs.

180

INDUSTRIAL RELATIONS

excellent water together constitute very favourable conditions for
patients treated in the establishment.
The preventive hospital is established in a large mansion house
which in other days was the residence of Mr. E. Mayrisch, former
chairman of the management of the Arbed Company. Isolated
from the rest of the establishment, well ventilated and provided
with the requisite comforts, it lends itself admirably to the work of
social hygiene to which it is dedicated. Educational courses are
given on the lines of the official syllabus of the State schools and in
accordance with timetables which make all due allowances for
medical requirements: regular rest, physical training, hydrotherapy, helio-aërotherapy. The preventive hospital can accommodate from fifty to sixty boys and girls from the earliest infancy up
to the age of thirteen.
The sanatorium has accommodation for about fifteen patients
and receives children up to the age of fourteen. It is situated far
enough from the main building to avoid any risk of contagion,
and all the necessary measures to this end are taken with regard to
the staff and patients. No charge is made either in the sanatorium
or preventive hospital, and patients are allowed to remain in these
establishments for a period varying from three months to two
years.
In summer, school classes are held in the open air. This is a
method practised to an increasing extent by the Arbed and Terres
Rouges companies to improve the health of the children of their
staff. With this end in view, the companies grant subsidies to open
air schools in the forests of Dudelange and Esch-a/Alzette. The
Dudelange forest school has accommodation for forty-two children.
The initial cost of the establishment was met by the Arbed,
which also bears the cost of its working expenses,while the town pays
the wages of the schoolmistress in charge. The school situated
near Esch-a/Alzette in the Holzenberg forest has accommodation
for eighty children. Its original cost was paid in equal parts by
the Arbed and Terres Rouges The companies also send annually
a group of thirty to forty children either to the children's
thermal camps at Mondorf-Etat in the south-east of Luxemburg,
which are organised by the State, or to holiday camps organised by
private initiative.

IN THE GRAND DUCHY OF LUXEMBURG

181

Workers' Welfare Schemes
The first institution to be considered under this heading is that
of family allowances. In order to help their staff who have family
responsibilities, the companies pay a monthly allowance equal to
70 francs for each of the first three children and 85 francs for
every child after the third. These allowances are paid until the
children reach eighteen years of age in the case of workers and
until the twentieth birthday in the case of salaried employees.
In addition, married salaried employees and workers are allowed
an indemnity — 1.10 franc a day for the workers and 50 francs a
month for the salaried employees.
Attention must also be called to the bonuses paid to staff for
length of service. At the end of the year, salaried employees
receive a bonus based on their salary but which varies with the
profits made during the year, while workers, when profits permit,
receive a bonus composed of a fixed amount equal to the dividend
on one of the company's shares, plus a supplement of 10 per cent.
for each year of service.
On completing a period of twenty years' uninterrupted service,
each worker receives an annual bonus of 150 francs which is paid
into a savings account bearing 5 per cent, interest. At the end of a
similar period of service, salaried employees are granted a special
holiday of one week. Both workers and salaried employees also
receive a souvenir from the company to which they belong.
Another important addition to wages takes the form of cheap
dwellings and building allowances. The Arbed and Terres Rouges
companies provide their workers with cheap dwellings, priority
being given length of service and category of employment.
More than 1,500 such dwellings, including 1,032 houses, are occupied by their workers, who pay a rent which barely exceeds onequarter of the amount they would normally have to pay.
The two companies have provided their salaried employees with
345 free houses, including 364 dwellings. Together with the
" Columeta " company they have formed a housing society with
a view to the acquisition of land in Verlorenkost, in the suburbs
of Luxemburg. Houses will be built on this land and rented to
their employees. This society, which was latterly taken over by the
Arbed, also sells building sites at very favourable prices to the
staff of its three foundation members.

182

INDUSTRIAL RELATIONS

Workers and salaried employees desiring to build their own homes
are granted loans and provided with building materials at reduced
prices. Formerly the companies granted building bonuses, but
these were abolished on 1 January 1932, as were loans made to
workers. As a result of these arrangements, 271 salaried employees
and 815 workers had become house-owners by May 1933.
The two companies^ have also taken steps to enable their staff
to purchase foodstuffs on very favourable terms by providing a part
of the initial and working capital of a joint purchasing society.
In addition, they provide at very low rates the coal required by
their married workers and salaried employees, and the companies'
pensioners.
A domestic science school, established by the companies at
Esch-a/Alzette, gives practical instruction in household matters
to the wives and daughters of the companies' workers and salaried
employees.x
Salaried employees have their own separate premises called
" casinos " where they may hold meetings, have meals at reduced
prices and spend their leisure time. Games and libraries are
provided in the " casinos ", which have been established in Luxemburg, Dommeldange, Dudelange and Esch-a/Alzette. The Luxemburg " casino " is established in the headquarters of the central
management of the Arbed, Terres Rouges and " Columeta "
companies. It includes a dining room and reception rooms for the
directors, and a dining hall, library and reading rooms for salaried
employees. A hall with seating accommodation for 400 persons
is used for lectures, theatrical and cinema performances, and
concerts. A terrace commanding a wide view, recreation rooms and
a gymnasium complete these premises.

CONCLUSIONS

This study has been largely devoted to a description of the various
aspects of the Arbed-Terres Rouges Amalgamation. It was
thought impossible to limit the study to an outline of the essential
features of Luxemburg legislation concerning industrial relations,
which would pass over in silence the steps taken by private ini1

A woman social assistant is attached to each of the Luxemburg and French
Divisions of the Arbed-Terres Rouges .Amalgamation.

IN THE GRAND DUCHY OF LUXEMBURG

183

tiative to complete these provisions and to facilitate their application. On the other hand, a complete description of the latter
would have required more space than was available. Concrete
examples had therefore to be sought, and these have been taken
from a group of undertakings which is economically the most
important in the Grand Duchy. These undertakings have therefore been described in some detail. From whatever angle they be
considered, they are a striking example of horizontal and vertical
organisation, unique in Luxemburg and extending far beyond its
frontiers. From this standpoint alone they are obviously worthy
of study.
What conclusions are to be drawn from this study ? While no
attempt has been made to estimate the importance of Luxemburg
legislation dealing with industrial relations, it is a striking fact
that since 1921 industrial peace has reigned in that country.
Should this peace at any time be imperilled, a network of
machinery exists to deal with the workers' and employers' claims
and to keep them within reasonable bounds, and this despite the
fact that so far the Statehas taken no steps to set up conciliation
and arbitration boards.