II. Industrial Conciliation and Arbitration

INDUSTRIAL CONCILIATION AND ARBITRATION

ByHonorable Marcus A. HannaUnited States Senator from Ohio

ByHonorable Marcus A. Hanna

United States Senator from Ohio

When I received the kind invitation of this society to come to this meeting, I confess I did not know what I was coming to. I like to talk upon practical things, and there is no subject to-day that is nearer my heart than is this question of the relation between capital and labor.

The subject assigned to me was “Arbitration,” which I consider only introductory in entering upon the discussion of a subject as broad as the one under consideration this evening. The matter of arbitration might be considered under two heads. Arbitration in business circles, by business men, whom we may call employers or capitalists, if you please, is one phase of it, but arbitration to settle differences between employers and employees is an advanced stage of it. It is a progressive form of arbitration.

To have success in conciliation, or arbitration, there must be thorough and effective organization on both sides. The large aggregations of capital, feared at first by labor, may prove to be labor’s best friend, in that, control of a trade being thus centralized, there is opportunity to establish friendly relations which shall make uniform conditions throughout the country, or large sections thereof, and reduce the basis of competition to the quality of the product rather than to the concessions forced from labor.

The growth of sentiment for arbitration and conciliation has been reflected in the legislation of the various states. While foreign countries made the earlier attempts by legislation to promote the formation of local boards of arbitration, some of the states of the Union were first to establish permanent central bodies with authority to mediate in labor disputes and to arbitrate matters referred to them. Sixteen states have established such central boards, beginning with Massachusetts and New York in 1866 and following, in succeeding years, with California, Colorado, Idaho, Illinois, Louisiana, Montana, Minnesota, Ohio. Utah, Wisconsin, New Jersey, Michigan, Connecticut and Indiana. Thesecentral boards usually consist of three members, an employer, an employee and a neutral.

Massachusetts, New York, Ohio, Indiana, Illinois and Wisconsin seem to be the only states within which tangible results have been accomplished, doubtless due to the highly developed industries prevailing and the frequency of labor disputes therein. In this as in all other matters of enforcement of public laws, successful results depend upon the strong impelling influence of an enlightened public sentiment.

The United States Government has established a method for arbitration and mediation in strikes and lock-outs upon interstate transportation lines, by virtue of its constitutional authority over interstate commerce. The act of 1888 provided for a voluntary board, but had no provision for enforcement of awards, and seems to have fallen into disuse. In 1898 a new act was passed under the terms of which either party to a dispute upon any interstate transportation line might request the intervention of the chairman of the Interstate Commerce Commission, and the United States Commissioner of Labor. These officers have no specific authority to intervene on their own motion, but apparently have the right to attempt conciliation even in the absence of an application from either party. There has been no case of arbitration under the act, so its effect in application is yet to be demonstrated.

The compulsory law of New Zealand has found no favor in this country. The hearings before the recent Industrial Commission show that the representatives of both employers and workingmen gave testimony against compulsory arbitration. The employers object because, they claim, it would be one-sided owing to the lack of responsibility on the part of the workingmen, while the workingmen object because, they claim, it would be manipulated to suit the employers, and, if enforcement carried imprisonment, it would provide for a species of slavery intolerable in a free country. Many state boards, however, while not advocating as a whole compulsory arbitration, urge further legislation which shall prevent public inconvenience and loss resulting from strikes and lock-outs involving public service corporations and means of transit.

This condensed summary of the general features of the question brings us logically to a consideration of the method or methods best suited to our time and country. Since the great majority interested on both sides, employer and employed, reject any systemof arbitration which includes compulsion in its composition, experiments must be along the line of mutual concession and tactful persuasion. Such results may be hoped for, and, perhaps, confidently expected in the system of mediation and conciliation promulgated by the Industrial Department of the National Civic Federation.

That brings me up to date. I do not propose to treat this question from an academic standpoint, but to give an expression of my own experience, having been a large employer of labor for more than thirty years, and having studied that question from the standpoint of mutual interest. My attention was strongly directed to this subject as far back as 1874, at the end of one of the most severe and destructive strikes that ever occurred in Northern Ohio, in the coal mines, long and protracted, bitter and destructive. When it was over both sides had suffered, and it occurred to me that there ought to be some other way to settle these differences, and as a result of that we organized in Northern Ohio an organization of employers, the mine owners, and the men organized what was known then as the National Bituminous Coal Miners’ Association, the first of that character ever organized in the United States. Their constitution and by-laws provided that no strikes should occur until every other effort in the right should fail, and the employers covenanted that they would give hearings and consideration to any committees sent to them by the union.

As a result, during the life of the organization on the part of the men, there never was a serious strike. All differences, which with small beginnings very often lead to disastrous strikes, were settled by the employer and employee coming together with a proper spirit, with a determination to do right. Upon that hypothesis I have been working ever since, and from that day to this I have never had a serious strike.

The Civic Federation is the outgrowth of the evolution to which your chairman has referred. This country has grown greatly. Our industries have multiplied, and the opportunities for labor equally with it. Great undertakings are claiming the attention of the people, and this question of labor and capital has approached a crisis. This Civic Federation has adopted a constitution and by-laws covering simply the methods of procedure, and has also adopted a principle, and that principle is the Golden Rule.

Now, Mr. Chairman, the great productive capacity of this country has forced upon us the aggregation of capital and the creationof great material wealth seeking opportunity for investment. This rapidly increasing wealth must find investment, and to make the investment in industrials secure we must have industrial peace.

The Civic Federation is beginning to lay the foundation for such results, with the hope that it will appeal to the whole country and to all classes of the people. We are simply placing before the American people the opportunity to unite with us in the accomplishment of this purpose, as necessary to our social conditions as to our industrial conditions. Of course, it is not an easy task; the conditions in the United States differ from those in any other country in the world. This great cosmopolitan people, coming to our shores by thousands every year from every country and from every clime, this coming together of all classes and all kinds of people from the four quarters of the globe, produces a condition of things not found in any other country. It is not an easy matter to assimilate such a large number of foreign immigrants; they do not understand our language, they are not abreast with the education of a self-governing people; they do not understand our institutions. Therefore, it must necessarily be a work of education, and the Civic Federation is merely a nucleus to begin this educational work.

When I make the appeal to all persons and all classes in the United States to join with us, I believe that in their hands ultimately rests the future of that question. We may have arbitration and we may have meetings of our conciliatory committees, but unless we have the sympathy of the people, who in the end are the final arbiters on this question, we cannot hope to succeed.

The Civic Federation is only two years old, and the Industrial Bureau of the Civic Federation has been scarcely organized, but seven strikes have already been settled in three months. It has prevented the occurrence of two strikes which would have brought from the labor ranks more than two hundred and fifty thousand people, and that has been accomplished, my friends, by simply finding out to start with what the differences were, and who were right and who wrong. When men get together with the determination to treat each side of the question fairly, and when the public feels that the men connected with this enterprise are thoroughly acquainted with details, men of prominence in the country, well known and well understood, and are men giving their time for the love of the work and the good they may accomplish, the public realizes that it means something.

In adjusting the relations of labor and capital, appeal must be made to the sympathies of the people. Opportunities like this to-night must be embraced to inform intelligent audiences of the character of the work to be done and to give them an opportunity to contribute their mite and influence to help the cause along. I know no city in the United States where we can look for more aid and comfort than in this great industrial centre of Philadelphia. Indeed, it was because of this that I was induced to come here to-night and discuss this question of capital and labor before people who in every day of their lives can put into execution and effect the principles for which we are contending.

My experience has taught me, my friends, that the employer because of his position has the most to do, and it must be expected that the employers, at least in the beginning of this educational work, should go more than half way. They provide work, and are responsible for the conduct of business, and upon them rests the responsibility of seeing that the men receive their share of its benefits. We must rise to a higher level, where we can have a broader view of this question, where we can tear ourselves away from the prejudices which have heretofore stood between capital and labor.

I believe in organized labor, and I have for thirty years. I believe in it because it is a demonstrated fact that where the concerns and interests of labor are entrusted to able and honest leadership, it is much easier for those who represent the employers to come into close contact with the laborer, and, by dealing with fewer persons, to accomplish results quicker and better.

The trusts have come to stay. Organized labor and organized capital are but forward steps in the great industrial evolution that is taking place. We would just as soon think of going back to primitive methods of manufacturing as we would primitive methods of doing business, and it is our duty, those of us who represent the employers, from this time on to make up our minds that this question is one that must be heard.

You are well aware that there has been a tendency in this country, from the very nature of things, to what is called socialism. Everything that is American is primarily opposed to socialism. We talk about it and regret that these conditions exist, regret that there are extremists who are teaching the semi-ignorant classes labor theories, that proceed upon the principle that liberty islicense. This is a condition which must be met. It is the duty of every American citizen to assume his responsibilities in this educational work, and to assist any organization which can correct these theories and these ideas. There is no question concerning our body politic to-day that should command deeper or more serious thought. There is nothing in the organization of society in this country that can afford to permit the growth of socialistic ideas. They are un-American and unnatural to us as a people.

In the beginning of this work I received great encouragement from an address which Samuel Gompers made in Cooper Union Institute, in New York, about a year and a half ago, when he took the broad ground that in the interests of labor there was no room for the socialist or the anarchist, no room for men who undertook to disturb the principles of our society and government. When such words came from a man leading the largest labor organization in the world, a man of advanced thought and of honest intent, I knew that now is the time to strike, now is the time to proclaim to the American people that in the consideration of this question, which sooner or later must be forced upon us, we must consider what is for the best interests of society as well as for our material development.

If I can impress these principles upon the people of this country, either by word or action; if I can hold the attention of the American people away from all selfish and political interests long enough to have them study and investigate this great question, I shall feel that of all the efforts I have ever made to serve my country and society in any way, that has been the best.

THE LIMITATIONS OF CONCILIATION AND ARBITRATION

BySamuel GompersPresident American Federation of Labor

BySamuel Gompers

President American Federation of Labor

The subject under consideration involves the difference between the isolated bargain made by workmen acting as individuals and the joint or collective bargain made by an aggregation of workers. The individual bargain made by a workman with his employer is practically based upon the condition of the poorest situated among the applicants for the position, and the conditions of employment, accepted or imposed, are fixed by the immediate and dire necessities of the poorest conditioned worker who makes application for the job. The collective bargain is made upon the basis of about the average economic condition or situation of those who desire to fill the position.

The individual bargain is made at the entrance to the factory, the shop, the mill, or the mine; the collective bargain is made usually in the office of the employer.

When the period covered by the collective bargain has expired and the conditions under which labor has been carried on for a specific period become unsatisfactory to either or both, a conference is held and a new agreement endeavored to be reached under which industry and commerce may be continued. When there is failure to agree, a strike occurs.

The effort at best in the joint bargaining or in the strike is the effort to secure the best possible conditions for the wage-earners. Much as we deplore strikes and endeavor to avoid them, they are the highest civilized expression of discontent of the workers in any part of the world. China has no strikes. The people of India have no strikes, but in the highest developed and most highly civilized countries strikes do occur. In China, when discontentarises, we see it manifested in revolution against constituted authority, the venting of prejudice against the foreigner; the stiletto, the bludgeon, war brutality are the manifestations of the discontent of the poor and of the workers of those countries.

I am not here to defend strikes, nor to find an excuse for them, but that we may more clearly understand the subject to which we are giving attention, it may not be amiss to at least set ourselves right concerning strikes. Our forefathers, when establishing our government, wisely reserved to the popular branch of our federal government the right to control revenue and expenditure, a right which had been struggled for and secured by the House of Commons of Great Britain. The strike of labor is in another form the holding of the purse-strings of the nation, to protest against injustice and wrong being meted out to the laborers. It is the determination of the workers that in the last analysis, if there be no other means by which their rights may be accorded and their wrongs righted, they may say with Lincoln, “Thank God, we live in a country where the people may strike!” Nevertheless a strike ought to be avoided by every means within the power of every man, capitalist, laborer, or the neutral citizen, and he who would not give his best efforts and thought to prevent a strike is scarcely doing justice to his fellow-men, nor is he loyal to the institutions under which we live. But I re-assert that there are some things which are worse than strikes, and among them I include a degraded, a debased, or a demoralized manhood.

Labor insists upon and will never surrender the right to free locomotion, the right to move at will, the right to go from Philadelphia to Camden or California, or vice versa, at will. To achieve that right it has cost centuries of struggles and sacrifices and burdens. Laborers, moreover, will insist upon the right freely to change their employment, a right which they have secured through centuries of travail and sacrifices. That right three-fourths of the nation was up in arms a little more than forty years ago to achieve for the black man, and the white laborers of America will not surrender that prerogative. Laborers are aiming at freedom through organization and intelligence.

The Industrial Department of the National Civic Federation is erroneously thought by some to be an arbitration committee, whereas the first purpose is to endeavor to bring about a conference between employers and employees before any acute stateof feeling shall occur relative to their diverse interests. If a rupture occurs, the committee endeavors to bring about a conference so that arbitration may be resorted to if both parties to the controversy shall so request.

As a rule, men do not care to refer matters in which they are particularly and financially interested to what are usually termed disinterested parties. They prefer to meet with those whose interests may be opposite to theirs, and, each conceding something in a conciliatory spirit, endeavor to come to an adjustment and agreement.

Unorganized workmen have a notion that they are absolutely impotent, that the employers are omnipotent, almighty. This is typified in the thought or expression, “What can labor do against capital?” Likewise the employers of unorganized workmen usually regard themselves as “monarchs of all they survey,” and brook no interference. If any workman has the temerity to question the justice or sense of fairness of the employer or the wages paid, he is dismissed and a strike frequently results.

No strikes are conducted more bitterly than strikes of previously unorganized workmen. As soon as such men become desperate enough to strike, they are transformed; they no longer believe the employer all-powerful, but attribute to themselves that function and faculty; the touching of shoulders brings a newfound power to their minds, of which they never dreamed before, and they look upon their employers against whom they went on strike as absolutely at their mercy.

The employers, in these cases, usually regard the matter of request to be heard upon the question of wages, hours or other conditions of employment, as dictation by their workmen; but whether the strike is won or lost, if the workmen but maintain their organization, the initial step has been taken for a joint bargain and a conciliatory policy in the future. Both parties have learned a severe but a profitable lesson, that neither party is impotent, and neither all-powerful. The organized labor movement in our day is an assertion of the principle that there is no hope that the workers can protect their interests or promote their welfare unless they organize; unless they advocate conciliation to adjust whatever controversies may arise between themselves and their employers and declare for arbitration with their employers upon any disputed points upon which they cannot agree. There are some who advocatecompulsory arbitration. I concur with Senator Hanna, who does not believe in compulsory arbitration. Indeed, voluntary arbitration cannot be successfully carried out unless both parties are equally strong and powerful or nearly so. This is true between nations as well as between individuals. Russia never arbitrated the question of the nationality of Poland. England did not arbitrate the question with Afghanistan, but simply bombarded her. England in her dispute with Venezuela proposed to bombard her, and only when the United States said, “Hold on, this is of very serious consequence to us,” did England consent to arbitrate. There has never yet been in the history of the world successful arbitration between those who were powerful and those who were absolutely at their mercy. There has never yet been arbitration between the man who lay prone upon his back and the man who had a heel upon his throat and a sabre at his breast. Arbitration is possible, but only when capital and labor are well organized. Labor is beginning to organize, and when labor shall be better organized than it is to-day we shall have fewer disputes than we have now.

Of the agreements made between employers and employed, two-thirds, if not more, of the violations, of the failures to abide by the awards of arbitrators, are on the part of the employers. But if it were not so, if the awards were broken by either one or the other side or by both sides in equal proportion, it would be better, it would make for human progress and economic advantage, to have an award violated than to have the award forced by government upon either one side or the other. The employer if he chose could close his business, and that would mean his enforced idleness. On the other hand, if the state entered and forced workmen to accept an award and to work under conditions which were onerous to him or to them, you can imagine the result. Men work with a will when they work of their own volition, then they work to the greatest advantage of all. On the other hand, if men were compelled to work by order of the state, with the representatives of the state entering with whip in hand or a commitment to the jail, it would create a nation of sullen, unwilling and resentful workers; a condition that we do not wish to encourage; a condition which would be most hurtful to our industrial and commercial greatness and success. It is strange how some men desire law to govern all other men in all their actions and doings in life. The organized labor movementendeavors to give opportunities to the workers so that their habits and customs shall change by reason of new and better conditions.

We have our combinations of capital, our organizations and federations of labor. These are now working on parallel lines and have evolved the National Civic Federation. Through the efforts of men noted for their ability, for their straightforwardness, noted for the interest they take in public affairs, an effort is being made to bring about the greatest possible success industrially and commercially for our country with the least possible friction.

One of the greatest causes of the disturbance of industry, the severance of friendly relations between employer and employees, is the fact that the employers assume to themselves the absolute right to dictate and direct the terms under which workers shall toil, the wages, hours and other conditions of employment, without permitting the voice of the workmen to be raised in their own behalf. The workers insist upon the right of being heard; not heard alone at mass-meeting, but heard by counsel, heard by their committees, heard through their business agent, or heard, if you please, through the much-abused walking delegate. They insist upon the right to be heard by counsel; the Constitution of our country declares that the people of our country may be heard through counsel. It is a saying in law, and I repeat it, though not a lawyer, that he who is his own lawyer has a fool for a client. The organized workmen have long realized this truism and have preferred to be heard by counsel, and we say that the political and civil right guaranteed to us by the constitutions of our country and our states ought to be extended; the principle of it ought to be extended to protect and advance our industrial rights.

One of the representatives of the Illinois Board of Arbitration recently said to me that there were so many cases of employers who refused to recognize the committees of the organizations of their employees that the Board was in doubt whether it ought to name each individual employer or simply group such employers together and give their number in round figures. No man in this world is absolutely right and no man absolutely wrong. If this be so, men ought, as organized labor has for half a century demanded, and as the National Civic Federation has emphasized, to meet in conference and be helpful in allowing common-sense and fair dealing and justice and equity and the needs of the people to determine what shall be the conditions under which industry and commerceshall continue to advance until we shall be in truth producers for the whole world.

The movement for which we stand tends to foster education, not only among the workmen, but among the educated; for of all those possessing crass ignorance and prejudice regarding industrial matters, the educated man who takes his cue regarding the labor question from those who are always opposed to the labor movement and who never takes the trouble to find out the laborer’s side of the labor question, is in the most deplorable condition.

RESULTS ACCOMPLISHED BY THE INDUSTRIAL DEPARTMENT, NATIONAL CIVIC FEDERATION

ByHonorable Oscar S. Straus

The contest between capital and labor is as old as the human race, and very likely will continue as long as there is employer and workman. Early in the history of our country, that rugged reformer, who stood for much of the liberty we enjoy to-day, Roger Williams, said: “What are all the wars and contentions about, except for larger bowls and dishes of porridge?” That is putting the question in a very graphic form. This struggle for the dishes of porridge is still going on, and unfortunately very often through clash and strikes the dish gets broken and neither side gets any of the porridge. We want to save the porridge; we want the dishes to be so large that labor will get its full share, we know that capital will take care of itself. In these industrial contests there are other interests at stake than labor and capital—the general public, greater in numbers than either of these. The Civic Federation believed that if it organized a machinery which contained within itself the representatives of both the laborers and the employers, and associated with these two the representatives of the general public, it would have the true basis for the solution of the labor question. You have heard from capital and labor. I am here as the representative of the general public.

The Industrial Department of the National Civic Federation is composed of twelve men representing the employers, twelve men representing labor, and twelve men representing the general public. At the head of these three groups of the Civic Federation stand Grover Cleveland, Senator Hanna, and Samuel Gompers. This is the only semi-public office ex-President Cleveland has accepted since he retired from the office of President of the United States. The purpose and the objects of the National Civic Federation appealed to his heart. His acceptance and co-operation have been to us a tower of strength and an inspiration for our difficult task.

The Civic Federation feels there is a possibility of inaugurating a great work, of promoting a better feeling and better relationsbetween the employers and the workmen, and thereby removing some of the chief obstacles militating against industrial peace. We have been criticised; peacemakers always are. I want to answer one or two criticisms that have been made in reference to our organization. One of the misconceptions is that the Civic Federation is a board of arbitration. Its purpose is to mediate, to conciliate, and only in very exceptional cases, when requested by both sides, to arbitrate between capital and labor. It has been said that the existence of such a body would stimulate laborers to threaten to strike or to strike or to make demands which otherwise they would not make, with the hope that the subject might be brought before this body, and that they might thereby gain concessions which otherwise they could not hope to secure. It might as well be said that preventives and curatives stimulate disease. It has also been stated that we promote the organization of labor, and that organized labor stimulates strikes. The Civic Federation’s platform or statement of objects distinctly provided that its province would embraceunorganizedas well as organized labor. The scope of the Federation is embodied in the By-Laws:

“The scope and province of this Department shall be to do what may seem best to promote industrial peace and prosperity; to be helpful in establishing rightful relations between employers and workers; by its good offices to endeavor to obviate and prevent strikes and lock-outs, to aid in renewing industrial relations where a rupture has occurred.

“That at all times representatives of employers and workers, organized or unorganized, should confer for the adjustment of differences or disputes before an acute stage is reached, and thus avoid or minimize the number of strikes or lock-outs.

“That mutual agreements as to conditions under which labor shall be performed should be encouraged, and that when agreements are made, the terms thereof should be faithfully adhered to, both in letter and spirit, by both parties.

“This Department, either as a whole or a sub-committee by it appointed, shall, when requested by both parties to a dispute, act as a forum to adjust and decide upon questions at issue between workers and their employers, provided, in its opinion, the subject is one of sufficient importance.

“This Department will not consider abstract industrial problems.

“This Department assumes no powers of arbitration unless such powers be conferred by both parties to a dispute.”

The Civic Federation recognizes conditions and aims to improve them in the interest of the public welfare. Railroad accidents do not argue for the stage-coach, but that the railroad should be better constructed so that accidents may be more and more eliminated. Education upon this great question of labor and capital is not entirely confined to the labor side. We have found in our short experience that education is needed upon the other side as well, and if the Civic Federation succeeds in bringing out a more conciliatory spirit on both sides and thereby contributes to a better understanding of such principles as have been laid down to-night by Senator Hanna and Mr. Gompers, it will be doing a very great public service.

It will perhaps surprise some of you, I confess, that before I became more familiar with this subject, I was agreeably surprised, to hear, in the conferences recently held in the rooms of the National Civic Federation, one of the most important officers of organized labor, state, that he wished it to be understood, that organized labor does not approve of sympathetic strikes, and that organized labor has come to the conclusion that restrictions of output should not be permitted, as all such efforts were uneconomical.

The chances for industrial peace in this country are greater than they are in any other country. The fact that this conflict and antagonism have existed and now exist in the countries of Europe, is no reason why the same conditions should obtain in the United States, and the reason is very evident. In the first place, we are not divided in this country into permanently distinct classes. There is no fixed gap between the laboring and capitalistic classes. The most successful capitalists in this country to-day are men who have themselves risen from the ranks of labor, men who have been the architects of their own fortune. The large fortunes of to-day are to a great extent held by the men who achieved them, and for that reason there is a natural and closer contact between capitalists and laborers in this country than in any other. In America, as a rule, the great fortunes are not as yet in the hands of the second, third and fourth generations and are never likely to be to any considerable extent.

I will refer but briefly to the work the Industrial Departmentof the National Civic Federation has performed since its organization in December last: The first contest that came up before it was the threatened clothing cutters’ strike. This strike affected forty thousand hands in the clothing trade. It was announced in October before the organization of this committee, and was to go into effect on the first of January. On our committee we had the chief representatives both of the clothing cutters and of the manufacturers. A meeting was called of a section of the committee of the Civic Federation, and when the two chiefs of the rival interests came together, the trouble was satisfactorily adjusted in the course of ten minutes. The next matter that claimed our help was the Dayton Cash Register strike. It began nine months ago, or more, and consequently before our committee was formed. We were asked to mediate by the Cash Register people, and we are gratified to state that that great trouble after we had been called in was very speedily adjusted.

The third matter was the Union Iron Workers’ strike in San Francisco. It began nine months ago, six months before our committee was organized. Our committee was called in and the adjustment was largely, if not entirely, due to our mediation.

A number of other questions have come before us; one was that of the paper manufacturers; a general strike had been decided upon and we brought the workmen and paper manufacturers together and they had a conference, and as a result postponed the question of their differences for further consideration.

Then there was the Boston’ Freight Handlers’ trouble. The Civic Federation came into that upon the invitation of the Mayor of Boston and the Massachusetts Board of Arbitration; and without arrogating to ourselves too much credit, I think both of those bodies concede that we were of material help in adjusting those difficulties.

The anthracite coal controversy has been before us. You know that the springtime always produces a great many labor troubles. They are called the spring crop of strikes. I do not know whether we can uproot all the seed; in fact, I know we cannot. I think there has been rather less of it thus far this spring than usual. Still the entire spring has not gone by, and we cannot yet tell what may happen. At any rate, we have brought together the leading coal operators and the leading representatives of the coal miners; brought them face to face, and that is a thing that hadnot been done before. They discussed their various grievances, and the whole matter has been adjourned for a month in order that each side may consider and deliberate.[1]

There are other important matters before us. We are happy to say up to the present time, which we think is rather remarkable, we have as yet had no failure to report.[2]I am proud to say this because I am afraid in another year, should you have Senator Hanna and Mr. Gompers before you, they may not be able to bear witness to so good a report. I will say, however, that at the conference in December, where there were present the representatives of two million organized laborers and of the leading employers of the country, we were impressed with the desire of these men to endeavor to find a common ground upon which they might arrive at a better understanding. The representatives of labor in their treatment of the subject were highminded and liberal in their views; I think I am voicing the sentiments of everyone of my colleagues in the Civic Federation when I say that such men as Gompers, Mitchell, Sargent and Duncan have given every evidence of being conservative, patriotic and considerate of the public welfare.

In conclusion, permit me to say that the powers of the Civic Federation are entirely voluntary, and that its effective force is public opinion. We can advise, endeavor to conciliate, remove misunderstandings, and invite both sides of the controversy to come together and confer. We cannot compel, except by the force of reason and public opinion. We may invite to arbitration; we may upon request of both sides arbitrate. Arbitration is a powerful weapon, and experience has shown that the side in the wrong is the first to object, upon the ground, “There is nothing to arbitrate.” That answer is itself a confession of wrong. It was Penn’s famous maxim, “We must concede the liberties we demand.” If both sides to this controversy will bear that maxim in mind, much trouble can be avoided. That maxim implies that organization on the one side justifies, if it does not compel, organization on the other side; and each side must concede the rights which it claims for itself, and any contest waged upon principles which conflict with such concessions the public will not justify.The refusal to recognize conditions does not change those conditions, and often embitters the relations that exist between the respective sides. The mission of the Civic Federation is one of peace, and like all peacemakers will doubtless, as time runs on, come in for abuse and misinterpretation of its purposes. We are prepared for this reward, and so long as we remain true to our mission, and that we will so remain our membership is a guarantee, no amount of abuse will cause us to flinch from the duty that is before us.

CO-OPERATION OF LABOR AND CAPITAL

ByW. H. PfahlerNational Association of Iron Founders

ByW. H. Pfahler

National Association of Iron Founders

There is no subject of greater general importance before the world to-day, none more simple in its character, and yet none so handicapped by fanaticism, as that of the relation of employer and employee.

Remove the curtain between the two real parties to the controversy, which is often held by men of selfish purpose on both sides, and you behold two simple factors, the wage-payer and the wage-earner, each dependent upon the other and both serving the same master, the great consuming public, of which they are also equal and very important parts.

The wage-payer, being directly in contact with the purchasing consumer, claims that he must have a result in production equal in every way to the wages paid, while the wage-earner contends that he must have a wage equivalent to his contribution in time, energy and skill, to the article produced.

Every visible article of use, for food, clothing or shelter, of necessity, luxury or culture, represents three component parts, and the production of each such article depends upon the proper combining of these parts, which are: 1st. Raw material. 2d. Capital. 3d. Labor.

Raw material, supplied by nature, is controlled only by the law of supply and demand, except when by legislation the natural law is for a time superseded, and it then becomes a matter of political action, in which the entire community, except the few who are directly interested in profit, join to abolish the corrupt legislation and restore the natural condition. Raw material is, therefore, the basis of cost in determining the price of every product to the public.

Labor, whether skilled or unskilled, engaged in the reduction of the raw material to the finished product, is also dependent upon the law of supply and demand to fix its value or wage; and any effort to change this value brings the wage-earner in direct conflict with the consumer, through his representative, the employer, whose duty it is to know, and who usually does know, what proportion of the entire cost of any article can be distributed in wage so as toretain the value of the article at a price not in excess of the ability of the consumer to purchase, and yet within limits which will prevent a more favored nation or district from furnishing the same article in competition, and thereby cause idleness for the wage-earner and loss to the employer.

Capital represents plant, machinery, transportation, interest, and all the factors known as unproductive, and yet absolutely essential for the combination of material and labor. Capital is usually, though not always, the owner of material and the direct employer of labor, and therefore must stand for the silent partner in the combination. What is so frequently called a war between capital and labor is simply an effort on the part of the wage-earner and wage-payer to determine what part of the product of labor, as distinct from material, is represented in the price to the public, and after deducting the proper charge for plant, etc., how the balance, which is profit, shall be divided between the employer and the employee,—or wage-payer and wage-earner.

The growth of prosperity in this country has always been in ratio to increased production, and until a recent period such increased production has been the direct result of the co-operation of the wage-earner and the wage-payer. In the beginning of our commercial history it was only necessary for one man to exchange the product of his own industry for that of other men to obtain the necessities of life, and then the results of labor were not measured by a unit of value or wage, but by the amount of energy expended in production.

When the rapid growth of the country required greater productiveness, and the enlargement of territory made necessary a change in the distribution of the products of labor, the factory system was introduced, whereby capital, or unproductive labor, was joined with productive labor to accomplish greater results than had heretofore been attained by individual labor.

This brought with it the employment of a number of wage-earners under the direction of one or more employers, or wage-payers, and made it necessary to determine the relation of one to the other, or rather the share each should have in the division of profits.

All conflicts which have ever arisen between men upon any subject, whether social, political or religious, have been based, not upon difference in conditions really existing, but upon differenceof opinion as to the relation which existed between the parties to the conflict; and strife, to a greater or less extent, has been brought into use to determine such position.

An excess of power on one side or the other succeeded in establishing for a time the opinion of the victor, but never removed the cause of dispute; and so the organization of wage-earners into associations or unions enabled them to establish from time to time, by power which they never hesitated to exercise, such wages and conditions as in their opinion were fair to them, but not always in accord with the condition of supply and demand.

From their struggle arose the continual change of wages in ratio to the power of either party, the employer lowering wages when by reason of limited demand he could limit production, and the employee raising wages when his services were in sufficient demand to enable him to do so.

The union was able in many cases,—I may say in all cases,—to enforce its demands because of the combined power it could exercise against the individual employer, and, as is usual in such cases, soon began to exercise a power which was unnatural and unwarranted. The result of this was the necessity of forming an organized opposition to their force by creating an opposing force in the organization of the employer class, and this brings me to the history of two organizations of this character with which I have been closely identified during the past fifteen years, and which have been successful in establishing a new basis of relation between the employer and employee.

Fifteen years ago the industry in which I am engaged was in perpetual conflict, involving three or four strikes or lock-outs every year, causing great loss in time and money to employer and employee. Unable longer to endure the strain, an association was formed of about fifty of the leading firms engaged in the business, for the sole purpose of defending the members against the unjust demands of their employees. It was decided to create a large fund for the purpose of carrying on a warfare against the union to which our men belonged. Within a year from the organization a strike occurred which resulted in every member of the Defence Association closing his shop, and the consequent defeat of the union. A second strike occurred in which, after many weeks of severe struggle, the union was again defeated by the united action of the Defence Association. In the third year of its existence, the Defence Associationwas invited by the officers of the union to appoint a committee to meet a similar committee from their organization for the purpose of discussing some plan by which strikes and lock-outs could be avoided. Frequent meetings were held; many attempts at forming a plan were abandoned, until finally it was agreed that all questions of difference between any employer, member of our association, and his employee, member of the union, should be referred to a committee of three from each association for arbitration and that, pending such action, no strike or lock-out should occur. As a result of this agreement, during the past ten years no strike has occurred in this industry, and every point of difference has been amicably adjusted by conference. Each year a general conference is held, at which the wages are fixed for the ensuing year, and such other changes as may be of mutual advantage are adopted.

It is true that at first the members of local unions, led by some wild agitator, would make a demand upon their employer, and, failing to enforce the demand, would quit work; but the national officers of the union would require them to return to work at once and await the usual and proper means of adjustment.

The Arbitration Board is composed of an even number of men because then an agreement when reached becomes unanimous, and a failure to agree (although no such failure has ever occurred) will not result in the enforcing of the opinion of either side by the decision of a third party. We prefer rather to adjourn from time to time, under the agreement to have no strike or lock-out, and let time and reason aid in finding some common ground upon which we can agree. These agreements made from time to time have been signed for the members of the union by their officers, and it gives me the highest pleasure, as a tribute to human nature, and in reply to those who deny the responsibility on the part of workingmen to a contract, to say that in the history of our organization no agreement has ever been violated in any manner.

The success of this organization led to the formation of a larger and more powerful one, known as the National Founders’ Association, of which I had the honor to be the first president. It required a long time to convince many of the larger employers of men that the formation of such an association was not dangerous, because in the negotiations it would be a virtual recognition of the union; but we at last succeeded in organizing with about fifty members.

Within six months the president of the union in which most of our men are employed addressed a letter to our body requesting a conference to devise a plan for conducting negotiations on lines similar to those of the Stove Defence Association. This conference resulted in what has ever since been known as the New York Agreement, which is as follows:

Whereas, The past experience of the members of the National Founders’ Association and the Iron Molders’ Union of North America justifies them in the opinion that any arrangement entered into that will conduce to greater harmony of their relations as employers and employees will be to their mutual advantage; therefore,

Resolved, That this Committee of Conference indorse the principle of arbitration in the settlement of trade disputes, and recommend the same for adoption by the members of the National Founders’ Association and the Iron Molders’ Union of North America on the following lines:

That, in the event of a dispute arising between members of the respective organizations, a reasonable effort shall be made by the parties directly at interest to effect a satisfactory adjustment of the difficulty, failing to do which either party shall have the right to ask its reference to a Committee of Arbitration, which shall consist of the presidents of the National Founders’ Association and the Iron Molders’ Union of North America or their representatives, and two other representatives from each association appointed by the respective presidents.

The finding of this Committee of Arbitration, by a majority vote, shall be considered final so far as the future action of the respective organizations is concerned.

Pending adjudication by this Committee of Arbitration there shall be no cessation of work at the instance of either party to the dispute.

The Committee of Arbitration shall meet within two weeks after reference of the dispute to them.

This agreement to go into effect Monday, March 4, 1901.

Occurring at a time when we were passing from extreme depression to a revival of business activity, when there was an enormous demand for good workmen, when wages were moving upward and when strikes were of almost daily occurrence in every industry, this agreement was observed in letter and in spirit, and, as a result, both employer and employee enjoyed industrial peace and prosperity.

Because of a failure to agree on certain demands made by the union, which would have resulted in reduction of production, a strike was commenced in the city of Cleveland by the union about two years ago, which lasted over seven months and cost upwards ofa million dollars, but at the end resulted in a conference lasting some days, in which both parties to the conference agreed to prevent a recurrence of warfare and united in an agreement which marked greater progress in the labor situation than had ever been reached before.

The resolution was as follows:

Whereas, The N. F. A. and the I. M. U. of N. A., through their duly accredited representatives, at a joint conference held in Detroit, Mich., June, 1900, each formulated a declaration of principles to which they still adhere and which they have been unable to harmonize after careful consideration; and

Whereas, The consensus of enlightened opinion points to conciliatory methods and the principles of arbitration as the most desirable and equitable policy to be pursued when disputes arise between any employer and his employees; and as this is a policy to which both the N. F. A. and the I. M. U. of N. A. most heartily subscribe, they entered into an agreement, the one with the other, since known as the New York Agreement, by virtue of which their representatives have been enabled to meet and harmoniously discuss important matters affecting their mutual interests, and to endeavor to settle them in accord with the more enlightened and equitable policy referred to; and,

Whereas, These efforts have discovered the fact that wide differences of opinion, upon certain vital and essential principles, exist between the members of the N. F. A. and the I. M. U. of N. A., which their representatives have hitherto failed to harmonize by the method provided in the New York Agreement, thus seriously endangering the high purposes to which they stand committed, and in one instance leading to a serious conflict between the members of the two associations in an important section of the joint jurisdiction; be it therefore

Resolved, That it is the earnest opinion of this Joint Conference Committee, composed of representatives of the N. F. A. and the I. M. U. of N. A., that agreement upon the essential points of difference can only be secured by the slow evolutionary processes begotten of friendly intercourse and the more intelligent understanding of mutual interests, which time and the influences of education alone can bring. And be it further

Resolved, That we hereby reaffirm our adherence to the New York Agreement, whose beneficent provisions we will continue to invoke, until by joint agreement we are enabled to reach a more defined code of conciliation and arbitration.

The National Founders’ Association now numbers nearly 500 members, having a combined capital of over $400,000,000, and employing nearly 30,000 molders and more than 100,000 workingmen in other departments, and is daily adding to the numberbecause the manufacturer has seen that it is the best—in fact, the only—method of dealing with organized labor.

On the other hand, the labor organization, recognizing the strength and fair dealing of the employers’ association, is from time to time so modifying its plans and methods as to make it possible to work in harmony with the employer, and together secure results for both that have heretofore been impossible.

This brief history enables me to declare not only as a conviction, but as an axiom, that there is a common ground upon which the wage-payer and the wage-earner can safely unite to form a community of interest in the great industrial problem, and that negotiation for the adjustment of their several interests can be conducted without strife, to the mutual advantage of both.

The history of all associations of manufacturers formed for the purpose of establishing and maintaining just and fair business relations between their employees and themselves, proves beyond doubt that better results can be obtained in this way than in any other.

Following the conference resolution adopted at Cleveland, the first agreement entered into as a result of the conference involves so many points of imaginary difference between employer and employee, and shows the possibility of arranging even the smallest difference by conference, that it is worthy of, careful study by both the employer and employee.

This agreement was made in the city of Philadelphia, March 4, 1901, is still in force, and I believe has never been violated by either party to the contract.

Agreement between the National Founders’ Association (on behalf of its Philadelphia members), and the Iron Molders’ Union of North America (on behalf of its Philadelphia members):

Article 1. In view of the fact that there has been an agreement entered into at the recent conference in Cleveland, Ohio, between representatives of both associations, on the question of equitable wage rates for molders, and in view of the mutual understanding that there is to be a further conference on the subject within a reasonable time—as may be agreed upon by the presidents of the respective associations—for the purpose of further perfecting the details regarding the regulation of wages of molders;

It is agreed that the temporary agreement, entered into July 16, 1900, shall be null and void, and that the agreement herein contained shall supersede the above-mentioned temporary agreement.

Art. 2. The iron molders, members of the Philadelphia Union of the Iron Molders’ Union of North America, agree to withdraw their demands that the foundrymen of Philadelphia should operate their foundries under the rules and regulations of the union.

Art. 3. In accordance with the national agreement, entered into at the recent conference in Cleveland, on the regulation of molders’ wages, the foundrymen of Philadelphia who are members of the National Founders’ Association, and the molders of Philadelphia who are members of the Iron Molders’ Union of North America, agree to the following wage scale:

The standard minimum wage rate for bench and floor molders who have learned the general trade of molding shall be twenty-seven and one-half (27½) cents per hour, or sixteen dollars and fifty cents ($16.50) per week of sixty hours, it being understood that when a molder has completed his work before regular shop-closing time such time shall not be deducted in computing the week of sixty (60) hours.

Art. 4. The standard minimum wage rate shall be subject to the followingDIFFERENTIALS:

1. The young man who has completed his apprenticeship, and who, by reason of his mechanical inferiority or lack of experience, or both, in either branch of the trade of molding, shall be unfitted to receive the full wage rate provided for above, shall be free to make such arrangements as to wage with his employer for a period mutually satisfactory as may be agreeable to himself and employer.

2. The molder who, by reason of his physical incapacity or physical infirmity, cannot earn the standard minimum wage rate, is to be free to make such arrangements as to wages as may be mutually satisfactory to the employer and himself.

3. There being in some foundries a grade of work calling for less skill than is required by the ordinary molder, this grade of work being limited in quantity, it is agreed that nothing in this agreement shall be construed as prohibiting the foundrymen from employing a molder to make such work and paying for same at a rate that may be mutually agreed upon between the molder and the foundryman. It is understood that a molder who is working for and receiving a rate of wages of twenty-seven and one-half (27½) cents per hour or over, is not to be asked or expected to make the grade of work referred to above for any less wage rate than he is regularly entitled to under this agreement. This does not give the molder the right to refuse to make the work if it is offered to him at his regular wage rate.

Art. 5. It is agreed that nothing in the foregoing shall be construed as prohibiting piece or premium work, and when it is desired on the part of the foundryman that his work shall be done under the piece work or premium system, it is agreed that the wages of the molder shall be based so that he may earn a wage not less than if working by the day. This is understood as applying to molders who are competent to do an equal amount of work and of equal quality to the average molder in the foundry in which he is employed.

Where the foundryman and molder cannot agree on the piece price for a certain piece of work, the foundryman is to have the work done by the dayfor a period of a day or more, according to the nature of the work, in order to establish a fair and equitable wage rate on the work in question.

It is further agreed that nothing in this agreement shall be construed as preventing a molder from agreeing with his employer on a piece price as soon as he is given a pattern.

Art. 6. Time and half-time shall be paid for all overtime, excepting in cases of accident or causes beyond control consuming not more than thirty (30) minutes; and double time for Sundays and legal holidays—to wit: Fourth of July, Labor Day, Thanksgiving Day and Christmas. It being further understood that when foundries do not make a practice of running beyond bell or whistle time and are occasionally late, the “give and take” system shall apply in all such cases, it being further understood that both sides should show a spirit of fairness in adjusting matters of this kind.

Art. 7. Arbitrary limitations of output on the part of molders, or arbitrary demands for an excessive amount of output by the molders on the part of the foundryman, being contrary to the spirit of equity which should govern the relationship of employer and employee, all attempts in that direction by either party, the molder or foundryman, are to be viewed with disfavor and will not receive the support of either of the respective associations parties to this agreement.

It being further agreed that the wage rates specified herein are to be paid for a fair and honest day’s work on the part of the molder, and that in case of a molder feeling that a wrong has been done him by his employer and that his treatment has been at variance with the terms of this agreement, he shall first endeavor to have the same corrected by a personal interview with his employer, and, failing in this, then he shall report same to the proper channel of his local union for its investigation. If there is any objectionable action on the part of the molder which is in conflict with this agreement or the spirit thereof, then the employer is to endeavor to point out to the molder where he is wrong, and, failing in this, he may discharge the man for breach of discipline, or else retain him in his service and submit the case to the National Founders’ Association for investigation.

In order that there may be no misunderstanding as to the wages a molder is to receive under the above agreement, it is understood that a molder must agree with the employer on the rate of wages that he is to receive at the time he is engaged; it being further agreed that neither the molder nor the foundryman is to deviate from the terms of this agreement as to wages or deportment.

Art. 8. In conformity with the agreement adopted at the recent conference in the city of Cleveland, the National Founders’ Association and the Iron Molders’ Union of North America deprecate strikes and lock-outs, and desire to discourage such drastic measures among the members of their respective associations.

It is therefore agreed that all unfair or unjust shop practices on the part of molders or foundrymen are to be viewed with disfavor by the Iron Molders’ Union of North America and the National Founders’ Association, and any attempt on the part of either party to this agreement to force any unfair or unjust practice upon the other is to be the subject of rigid investigationby the officers of the respective associations; and if upon careful investigation such charges are sustained against the party complained of, then said party is to be subject to discipline—according to the by-laws of the respective associations.

And it is further agreed that all disputes which cannot be settled amicably between the employer and molder shall be submitted to arbitration under the “New York Agreement.”

Art. 9. When the words “employer” or “foundryman” are used, it is understood that their foremen or representatives may carry out the provisions of this agreement and act for them.

Art. 10. It is further agreed that nothing in the foregoing shall be construed as applying to operators of molding machines who have not learned the general trade of molding, and the right of a foundryman to introduce or operate molding machines in his factory shall not be questioned.

Art. 11. This agreement shall continue in force to July 16, 1901, and thereafter to June 3, 1902, and to continue from year to year, from June 3, 1902, unless notice be given on May 1 of any year by either party to this agreement signifying their desire to change or modify the conditions of this agreement.

And it is further agreed that should any agreement be reached by a conference of representatives of the National Founders’ Association and the Iron Molders’ Union of North America upon the question of wage rates for molders, and in conflict with the terms of this agreement, that a conference of the parties hereto shall be called immediately to conform the terms of this agreement to those of the national agreement; otherwise this agreement is to continue in force as above provided.

In England, several years ago, the great strike of engineers involving 75,000 men, and extending over a period of six months, was finally settled by conference between the representatives of the associated employers and representatives of the several unions, and resulted in an agreement which established harmonious relations between both parties, and has ever since prevented strikes or lock-outs.

In Belgium, in 1899, a lock-out, probably the greatest which has ever occurred, involving almost every industry, shutting out more than 50,000 men, and extending over a period of seven months, was only settled after the employers discovered to their own great advantage that matters can be arranged more satisfactorily when the representatives of organized capital confer with the representatives of organized labor. The result of their conference was the removal of all obnoxious demands and the adjustment of wages and conditions of labor upon an equitable basis, embodied in an agreement now in force and held equally binding on employer andemployee, the result of which was, in England as in the examples cited in this country, the elimination of strikes and lock-outs.

A review in detail of the results accomplished by the methods of conference and conciliation, in these cases referred to, would require more space than can be used in this paper—but warrant the following conclusions:

First.—That labor organizations are the natural result of a great movement in the business world which is replacing costly competition with profitable co-operation, and are formed primarily for the protection of their members, upon the theory that collective bargaining for the sale of their labor is more profitable than individual contract.

Second.—The accomplishment of their object requires labor organizations to secure the membership of the largest number of persons employed in any kindred trade, and (because voluntary advancement of wages rarely or never occurs) to demand a change in wages and betterment in conditions whenever it appears that the need for their labor is in excess of the supply, and therefore warrants such demand. Labor organizations are necessary also to resist collectively any movement on the part of the employer which would result in injury to the workingman.

Third.—Whenever labor organizations by reason of false leaders have made unfair demands or established conditions which were unfair to the employer, it has been because of the use of collective force against the individual employer, and this has been defeated whenever the employers have organized similar associations for their own defence.

Fourth.—That strikes for advance in wages and improvement of condition—occurring, as they do, during a period of prosperity—usually succeed, while strikes for recognition of the union, usurpation of the rights of the employer or against the reduction of wages almost invariably fail in their purpose.

Assuming that the employer is governed by honesty of purpose in dealing with labor, and that the employee is equally honest in his desire to give worth for wages, the organization of both parties must slowly but surely remove force as the means of securing results, and cause a resort to reason and conciliation as the best means to accomplish the greatest value for both.

There are two great obstacles which prevent the substitution of these means of settling the labor question at present, and which must be first removed before better conditions can be realized.

On the part of the employer there is the refusal (usually sentimental) to recognize the union, and the determination to destroy it. He forgets that his effort to destroy the union presupposes his recognition of it, else he would be fighting a nightmare, while the recognition in fact would enable him to learn its scope, purposes, and plans, and by co-operation secure a valuable ally instead of an unreasonable enemy.

In the use of the word union, I desire always to be understood to refer to such organizations of workingmen as are conducted along reasonable lines and are led by representatives worthy of the best element composing the membership, who formulate their demands in harmony with known business conditions and control their movements within the lines of law and order, because when they assume any other condition they are simply mobs, and deserve only the condemnation of every worthy citizen.

The obstacle on the part of labor is the effort to establish the idea that recognition of the union implies more than the agreement to make collective bargains between employer and employee at such times as a change in business conditions demands or permits, or to insist that it conveys the right to enforce rules and methods in the conduct of the business without the consent or co-operation of the employer.

To remove these obstacles and establish a condition of harmony and mutual prosperity, the employer must not forget that wage-earners have formed powerful associations for the purpose of advancing and protecting their interests, and have delegated their individual power to, and placed their confidence in, the officers of their unions.

That these officers are in many cases far above the average of their craftsmen, and their highest ambition is to better the condition of their fellow-workmen.

That the aggressive methods of labor unions are very frequently caused by the determination of the employer to destroy them, without giving them a chance to be heard in their own defence.

That in the conduct of business involving large investment for plant, and the employment of a large number of men, able management is required to secure the best results from machinery and power, but good government is necessary to secure the highest efficiency of men, and the best government is that which is founded on the consent of the governed.

That responsibility for the performance of such an agreement as should exist between employer and employee cannot be measured by legal or financial standard, but can be safely based on individual integrity, and in this I have found that a very large majority of the workingmen in this country hold an agreement which is made for them by the officers of their union as binding them in every sense of the word.

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