The attempt has already been made to show that the organization of trade unions and trusts was not due to accident, but was the necessary and inevitable consequence of the freedom of contract, freedom of industry, and freedom of trade inaugurated by the French Revolution. These three so-called freedoms are a sentimental way of describing the competitive system, and as a matter offact, not only make real freedom impossible, but pave the way for despotism—the despotism of the market in the first place and the despotism of the trade union and trust, to which the despotism of the market inevitably leads.
The illusion contained in the words "freedom of contract" is well demonstrated in the history of the trade union, for if the employee is to be free to make such contracts as he chooses, he is not only free as regards the contracts he chooses to make with his employer, but also as regards the contracts he chooses to make with his fellow employee. And amongst the contracts that he is free to make with his fellow employee is the contract not to work for his employer except under certain agreed conditions. In other words, the trade union is simply an expression of freedom of contract between employee and employee. But to what does this freedom of contract between employee and employee lead? It leads to a suppression of the freedom of contract, for it is an agreement not to work with the employee except under conditions imposed by the trade union. Freedom of contract, therefore, so far as the employee is concerned, under the competitive system compels employees to abandon freedom of contract.
This may seem paradoxical until we understand the real significance of it. Man stands between two alternatives—the unlimited freedom and insecurity of savagery and the limited freedom and security of civilization. This has been developed in the chapter on Property and Liberty and receives interesting confirmation in the history of trade unions, which has been too often and too well told to make it necessary to repeat it here. Suffice it to point out that all historians of the trade union movement record the fact that at the very time when employers were shouting for freedom ofcontract they passed laws denying freedom of contract to workingmen.[83]But the very effort of the employers to prevent employees from combining with one another reduced wages to so low a level and brought about so wicked an exploitation of women and children and such unsanitary conditions of the whole working population, that a parliament of employers was as a matter of national defence compelled to restore to workingmen the right to agree to abandon freedom of contract.
It may appear to the unsophisticated that for a workingman to endeavor to escape from the tyranny of the employer by subjecting himself to the tyranny of the trade union is but a jump from the frying-pan into the fire. But such a conclusion would display woeful ignorance as to the whole trend of human development; that is to say, from involuntary subjection to a power over which we have no control, to voluntary subjection to a power over which we have control. This is the history of the development of all popular government. Reactionaries are disposed to dwell on what they call the tyranny of the majority and compare it unfavorably with the beneficent despotism of a Henri IV. They, however, ignore the very material fact that an absolute monarchy represents an involuntary servitude over which the subject has no control; whereas the tyranny of a majority represents a voluntary subjection to authority over which we have control. It may be and undoubtedly is true that control over government even under popular forms of government is small and ineffectual; but I hope to make it clear in the chapter on the Political Aspect of Socialism[84]that the ineffectualness of our control over government is dueto the competitive system and that under a coöperative system our control over government would be effectual; and that it is only under a coöperative commonwealth that the ideal democracy can be realized.
The development of trade unionism throws also a great light on the fact of human solidarity. Socialists are often accused of being theoretical and the bourgeois is disposed to regard human solidarity as a theory. But in the growth of trade unionism it will be observed that solidarity presents itself as a rock upon which the competitive system must ultimately be wrecked. The capitalist class expressed its wish in the law of 1799, which was a law of oppression; but the inconvenient fact that women cannot be worked like beasts of burden under ground without arousing the sympathies even of the capitalist class; that little children cannot be made to suffer and to starve without reaching the hearts of the whole nation, and that cholera bred in unsanitary dwellings will find its way to the doors of the rich, forced this same capitalist class to abrogate the law of 1799; to abandon the policy of oppression in consideration of its own best interests.
So combinations amongst employees have grown in strength in spite of all the power of capital—political and industrial. This progress was inevitable. Given freedom of contract, or in other words, the competitive system; given some intelligence on the part of some of the proletariat; and some compassion in the hearts of some employers, and trade unions had to develop and grow in strength.
But now that they have developed and grown in strength—now that they can be said to have reached what seems to be maturity, let us consider how much good they have done. Let us discuss the unsolved and what Ibelieve to be the insoluble problems that result from trade unionism.
Before entering into this subject, let me say that if I do not discuss here the merits of trade unionism it is not because I am not aware of them; but rather because in this work on Socialism, which I desire to make as concise as possible, it is not the merits of trade unionism which it is important to emphasize, but their demerits. Although the intelligence, order, and self-restraint displayed in the trade union movement must be to the eternal credit of the workingman, nevertheless all his efforts, however intelligent, however orderly, however sacrificing, have failed to solve the problem of the conflict between labor and capital. It is obviously wiser for the workingman to seek salvation where it is to be found than by clinging exclusively to trade unionism to abandon salvation altogether. Trade unionism, I cannot emphasize it too much—was and is still a necessary step in the development and education of the workingman; but it is only a step, and nothing demonstrates the inadequacy of trade unionism better than the conditions of unemployment that have existed during the last two years not only in the United States of America, but almost throughout the entire civilized world. It must not be supposed, however, that because trade unions are believed to have created new evils almost as intolerable as those they were organized to suppress, that trade unions are to be looked upon with disfavor. On the contrary, the whole argument of this book proceeds upon the self-evident fact that trade unions have performed a necessary function and are bound to perform a necessary function in the community until the trade union realizes its ideal, but that a realization of this ideal is impossible under the competitive system. In other words, the attempt will bemade not only to demonstrate that trade unions have, under the competitive system, failed and must continue to fail to accomplish the work they set out to do, but that under the coöperative system they can and will attain their ideal—they can and will perform exactly what they started out to do. However much, therefore, our argument may demonstrate the failure of trade unions under existing conditions, it only leads to the triumph of trade unions under coöperative conditions. What the trade union has failed to do under competition, it can and will accomplish under a coöperative commonwealth.
The argument of this book, therefore, is not to abandon trade unions, but, on the contrary, to appeal to the unorganized employee to join the trade union in order to strengthen it industrially; and on the other hand to appeal to all employees, organized or unorganized, to combine politically for the purpose of securing by franchise what they never can accomplish by the strike.
The moral then to be drawn from the following pages is not that trade unions have come to an end of their usefulness, but that whereas their task in the past has been to check exploitation, their rôle in the future will be to put an end to it altogether.
John Mitchell in his book "Organized Labor" has very properly stated that "the ideal of Trade Unionism is to combine in one organizationallthe men employed, or capable of being employed, at a given trade, and to demand and secure for each andallof them a definite minimum standard of wages, hours and conditions ofwork;"[85]and the principle of Trade Unionism is also well described as "theabsolute and complete prohibitionof contracts between employers and individual men."[86]In other words, the object of the Trade Union is to put an end to competition between employees in order to substitute what is called "collective bargaining," which, if complete, would put the employer at the mercy of the employee, for individual bargaining, which on the contrary puts the employee at the mercy of the employer.
The above is stated in other words in the Report of the Industrial Commission:[87]
"The union is conceived as a means of bettering the condition of its members by united action. If this action is to be thoroughly effective, it must be taken by or on behalf ofall the members of the craft. It is by the establishment of anabsolute monopoly of labor powerand to ameliorate the conditions under which it is sold and used."
Now the inherent and necessary defect of trade unionism under the competitive system is to be found in the words I have italicized in the above extract. If the trade union could be a "real monopoly of labor," it could dictate terms to the employer; but it must not be forgotten that, with the employer, it would remain subject to the conditions created by the market. The very fact, however, that all relations between labor and capital are determined by the conditions of the market makes it impossible and will always make it impossible for the trade union to attain its ideal; that is to say, to constitute an absolute monopoly of labor power, to bind in one organizationallthe men employed, to secure the absolute and complete prohibition of contracts betweenemployers and individual men, to demand and secure for each andallof them a definite minimum standard of labor, wages, and conditions of work. This is the crux of the whole question.
It has taken over a century of organization on the part of the employer and employee, of conflict between the two, of bankruptcy for the employer and of misery for the employee, to demonstrate that the ideal of trade unionism has not been and can never, so long as the competitive system persists, be attained. The trade unionist will answer that even though it be impossible to attain the ideal, trade unions have accomplished much and can accomplish more for the wage-earning class. To this it may be fairly answered that whatever trade unions have in fact accomplished has been accomplished only at a ruinous price—that the price they must continue to pay for this accomplishment will continue to be ruinous and insufferable until either by the revolt of the discontented as predicted by Karl Marx, or by the awakening conscience of the whole community, as has already to a limited degree taken place, the betterment aimed at by the trade unionist will be attained and maintained without the payment of the awful toll now exacted by the competitive system.
It is probable that both employers and employees, during a century's struggle, have failed to take proper account of the extent to which both were hampered by the exigencies of the market. The blindness of both to this fact was perhaps due to the expansion of trade both in England and America during most of the century; this expansion being due to the development of the country in the United States and, in England, to the conquests of new markets and colonies. So long as expansion continued, trade unionists could insist uponincreasing wages out of increasing prices, and the success which attended trade unions in raising wages during a large part of the century, brought about a false idea that there was no limit to the extent to which trade unions could by organization increase their share in the profits of industry. Unfortunately, the era of expansion could not last forever, and it was not until the lockout of the engineers in 1898-1899 that the British trade unionists began to discover how narrow were the limits within which they could improve conditions.
Until 1897 the employees had on an average the best of it. In 1893 no less than 63 per cent of strikes were decided in favor of the employees. In 1896 again the proportion of working people involved in disputes settled in their favor was greater than in any of the previous years since 1892 with the exception of 1893; and it may be interesting to note that during this year there was a lower percentage of unemployed than during any year since 1890.[88]It is not surprising, therefore, that trade unionists were convinced that there was no limit to the extent to which they might increase their share in the profits of industry. In 1897, however, the condition of the steel industry in England became such that the employers could no longer comply with the exactions of the trade unionists. In 1895 American manufacturers for the first time attempted to export their steel to other lands,[89]and their exports grew to $121,913,548 in 1900 and to $183,982,182 in 1908.[90]
In the presence of American as well as Germancompetition, the pressure of the market was such that the employers felt they must either break the power of the union or go out of business. They therefore locked out the engineers in July, 1897, and the lockout lasted until January, 1898, when the union was obliged to abandon all its contentions. This lockout is the turning point in the history of trade unionism in England. Up to that time, the idea that workingmen could be induced to abandon the parties to which they belong in order to organize a party of their own was never seriously taken into consideration at their conventions, and resolutions in favor of Socialism were overwhelmingly voted down. But as soon as the power of the engineers—the strongest union in England—was broken in 1897 we find trade union conventions entertaining the idea of political organization and resolutions in favor of Socialism receiving careful consideration.
The history of trade unionism in America has not as yet resulted in any such definite climax as this; but what foreign competition has compelled English employers to do a combination of employers in the Steel Trust has done for the steel workers in America. In other words, the trade union has to face one of two alternatives: either foreign competition is bound ultimately to compel the employer to destroy the union; or in the absence of foreign competition owing to a high protective tariff, a combination of employers will do for their own benefit what competition compelled British employers to do as a condition of survival.
If we turn from the history to the nature of trade unions it will be seen that what has happened must have happened. As has been stated, all agree that the ideal of trade unionism is to unite all the workers in one trade so as to substitute collective bargaining forindividual bargaining. Unfortunately by the very nature of things such a combination is impossible. It is impossible to read any work on trade unions, whether it emanates from the government, or from employers, or from employees, without being struck by the fact that trade unions seek to be comprehensive, to include all the members in the trade on the one hand, while on the other hand there is a perpetual pressure upon them to be exclusive. For example, we find locals charging heavy initiation fees of a character to keep out members, for instance the longshoremen, the garment workers, glass workers; and it may be "stated as a general rule that when a union does succeed in establishing a monopoly against employers it is exceedingly likely to go on, if it feels strong enough, to establish a monopoly against the employees."[91]
It is perfectly true that this tendency is frowned upon by the trade unionists at large; but the reason for this is that every union which tries to be exclusive cultivates a crop of non-unionists who constitute a menace to the union.
A better illustration of the quandary in which unionists find themselves between the importance of being comprehensive in the one hand and the importance of being exclusive on the other, is found in their attitude towards boy labor.
Modern conditions have made apprenticeship practically obsolete, and yet many national organizations endeavor to maintain the practice with a view to preventing too great a supply of skilled workers in the trade. The limit generally fixed by national organizations is 1 to 10, though some, such as pressmen, trunk and bag workers, flint glass workers, allow 1 to 4. Lithographersallow 1 to 5.[92]"It is obvious," says the Report of the Industrial Commission, "that the chief motive which influences the unions in the shaping of their apprenticeship rules is the desire to maintain their wages, by diminishing competition within the trades."[93]
It is true that many unions in controlling apprenticeship are animated by a much higher purpose; that is to say, to provide that when a boy undertakes to learn a trade he shall have a chance to learn it.
John Mitchell in his book[94]claims that the restriction of admission of apprentices in the United States is negligibly small, and yet deplores the fact that "the great mass of youths to-day receive little or no training in their particular trade as a result of the breakdown of the apprenticeship system." In his opinion the solution to the problem is not to be found in apprenticeship, but in industrial schools; yet he deplores the hostility of graduates of trade schools to trade unions, without apparently recognizing that this hostility is due to the hostility first evinced by unions to trade schools. But let us turn from conflicting opinions and look the facts in the face.
When a unionist approaches the age of forty years, he is confronted by the fact that he cannot rival in speed and efficiency the work of a young graduate of an industrial school. He looks forward to the time when his place will be taken by the graduate of the industrial school. He is very naturally therefore hostile to the industrial school and the graduate of the industrial school is for the same reason hostile to him. And here we come to the real difficulty: When a trade union fails to includeallthe members in the trade, it doesnotsucceed in eliminating competition between workingmen. On the contrary, it begins by creating two hostile classes of workingmen: Those within the union and those without—classes which bitterly hate one another because they are both fighting for the same job. But they do more than this: They create competition within the trade union because by insisting upon high wages and short hours they are making it impossible for the employer to utilize the service of any but the most efficient. John Mitchell himself points this out. In resisting the charge that trade unions tend to level down, he says: "If there is a levelling at all in the trade union world, it is a levelling up and not a levelling down. The only levelling which the trade union does isthe elimination of men who are below a certain fixed standard of efficiency."[95]He further expresses it in another passage:[96]"Trade unionism tends to improve workmen not only directly, through an increase in wages and a reduction in hours, but it attains the same end in an indirect manner. The general policy of trade unionism, as has been explained before, is the establishment of a minimum wage, safeguarding, as a rule, the right of the employer to discharge for proved inefficiency. The result of this is the gradual creation of a dead line of a standard of efficiency, to which all who work must attain. Where there is a minimum wage of four dollars a day, the workman can no longer choose to do only three dollars' worth of work and be paid accordingly, but he must earn four dollars,or else cease from work, at least in that particular trade, locality, or establishment. The consciousness that he may be employed for a varying wage permits many a man to give way to his natural idleness and carelessness, whereas the maintenance of a rigid standardcauses a rapid and steady improvement. The minimum wage acts upon the workman, as the school examination upon the child. If a child falls, by however small a margin, below the standard set by the school, he fails of promotion, and the stimulus which is strong in the case of a school child is infinitely more intense in that of a worker with a family dependent upon him. The principle of the survival of the fittest through union regulations works out slowly and unevenly; nevertheless its general effect is towards a steady and continuous progress of workingmen to a permanently higher standard of efficiency."[97]
There is one point upon which the author is silent—yet it is the point which enormously interests the workingman at large: this is that while trade unionism guarantees high wages and short hours to the efficient, it throws out of the trade altogether those workingman who do not attain a high standard of efficiency or who, having attained it, fall back from it owing to overwork, sickness, or old age.
There is, therefore, a perpetual struggle going on in the trade unions, not only between members and non-members, but even amongst the members of the union itself, in view of the fact that diminished efficiency must eventually lead to the weeding out of the inefficient. In periods of industrial depression such as we have just passed through it is obvious that the most inefficient are the first to be dismissed, and being the most inefficient, they are the ones least able to find employment in other industries.
Under the title of Unemployment, the extent of this evil has been pointed out; it must not be lost sight of; it reaches a population of a million at the best of times and of five millions at such times as these.
But the problem raised by the importance ofcomprehensiveness to prevent "scabbing" on the one hand and of exclusiveness to maintain wages on the other, is not confined to such details as initiation fees and apprenticeship. It covers the whole question of the employment of boys, women, old men, and half-supported persons, and includes the "sweating" system.
The higher the wages exacted by trade unions the more employers are compelled to have recourse to cheap labor of women and children, and this labor is all the cheaper because the unionist himself contributes to the supply; for the unionist supports his wife and children, and the very fact of the support he gives them permits them to accept a lower rate of wages than if they were not supported. To understand the operation of this principle it must be borne in mind that rates of wages are determined, not by the wishes of the employee or even by the greed of the employer; they are determined by the market price. Unionists are not the only persons who object to the labor of women and boys. There is indeed no divergency of opinion as to the unwisdom of working boys before their education is complete or their bodies matured; or the unwisdom of employing women, destined by Nature to perform other more important functions. No better witness to the control exercised by the market on this important subject can be found than a member of the English Ministry, the Right Honorable H.O. Arnold-Forster, who says:
"The great cotton industry of Lancashire, the wool and worsted industry of Yorkshire, and many other industries in a less degree are at the present time dependent upon child labor. It is interesting to observe that as lately as the autumn of 1907 a deputation waited upon the responsible minister to urge upon him the desirability of raising the age of half-timers from twelve to thirteen.The desirability of the change was not denied,but it was not considered possible to give effect to it.
"Those who have any acquaintance with the cotton trade are well aware that that great industry, employing as it does no less than half a million persons, is conducted upon themost minute margins of profit and loss. The rate book of the cotton trade, in which wages of every kind of work are calculated out to the tenth of a penny, is a miracle of painstaking and intelligent computation. These fine calculations are absolutely necessary. Both employers and employed know perfectly well that the trade is, so to speak,balanced on a knife edge, and that any sudden increase of cost, whatever may be its cause, is likely to upset the balance, and turn the hardly won profit out of which operators as well as employers obtain their living, into a loss. Thefierce competition of the world, especially of those countries in which child labor and long hours are prevalent, has to be met, and the persons principally concerned are only too well aware of the fact."[98]
Nothing then is better established than that every employer is forced by the pressure of competition to keep wages down, and that any employer who either under the compulsion of a trade union or out of generosity of heart attempts to raise wages one cent above the price permitted by the market, must expiate his mistake in the bankruptcy court.
There is only one way in which this competition can be met—the way imagined by Karl Marx: a comprehensive organization of trade unions, not only within one nation, but amongst all nations; in other words, the famous—and at one time loudly proclaimed as the infamous—International. The fact that the internationalplan of organization imagined by Karl Marx failed, is little argument against it. But the fact that trade unions do not succeed in securing all the members of a trade in any nation—that indeed in the United States organized labor includes at most 2,000,000 members, whereas the working population is over 20,000,000, ought to be a convincing argument that a comprehensive organization of workers all over the world is still less possible.
One word must be said in this connection about the sweating system and its relation to trade unions. It is a current statement that sweating is confined in America to a few industries, such as tobacco and garment making. This, however, is a great mistake. Sweating may be defined as the reduction of wages to starvation or even below starvation level. It is true that sweating in this country is in large part due to an ignorant, unorganized, and poverty-stricken class of immigrants. But sweating is also to be found in a much higher order of employees. I refer to the sweating of certain factories and department stores where the rate of wages is determined, not by the cost of living, but by the price which half-supported women are willing to take for their week's work.
In many factories and in practically all the department stores the wages are below the sum necessary for a working woman to live; and they are made so at least in part by the fact that the daughters of well-to-do workingmen, being supported at home, are able and willing to give their time for a sum less than sufficient to support life. In some cases this work is rendered in a laudable desire to contribute to the common expense of the home. In many cases it must be attributed to vanity and the attractiveness of this kind of work.
We find, therefore, the workingman put in this singular position: Through his trade union he secures a high rateof wages; with this high rate of wages he seeks to establish a decent home; the desire of a decent home permeates the entire family; the daughters want to contribute thereto and, because they are partially supported themselves by the high wages received by the father, they accept a rate of wages so low that their less fortunate sisters are doomed to starve.
So on every side the trade unionist is hoist by his own petard. The high wage he is in a position to exact is perpetually menaced by the competition of the women and children of his own family whom his own high wages put in a position to compete with him. These high wages throw out of employment all save those of the highest efficiency, and by permitting the half-supported members of his family to work for low wages, reduce others who are not half supported below the level of starvation.
I shall not insist on other problems which still divide the members of trade unions, such as what is called "right of trade," or "the conflict between industrial and craft organization," both of which occasion loss of employment and division in the ranks of labor, because these are not insoluble. It is true that they have not yet been solved, but there is nothing in their very nature that makes a solution impossible. I do, however, insist upon the problems above referred to, because they are not only unsolved, but by their very nature can never be solved. No trade union can ever includeallthe men of the trade, becauseallcannot earn the high standard of wages set by the union; because the trade never can give employment to all the men in the trade—at the best of times there are over 3 per cent unemployed; because by insisting on a high rate for unionists, they compel the employer to have recourse to the cheaper labor of women and boys; because the very sense of family responsibilitywhich makes a unionist support his wife and children is exploited by the employer to secure the services of these last at half wages; because the existence of a half-supported population creates and maintains sweated trades; because the employers, were they Angels of Mercy, cannot, thanks to the pressure of the market, raise wages or dispense with the cheap labor of women and boys without either incurring bankruptcy or shutting down; because either contingency would deprive the unionist of work and therefore of wages; because both employer and employee are perpetually being chased round a vicious circle by the devil of competition which, by keeping down prices and wages, keeps both in danger of ruin and unemployment.
The conclusion to which we are driven seems to be that the competitive system has the same effect upon trade unions as upon the rest of the industrial field—it sacrifices the many to the few. During these last two years wages have not been appreciably reduced. The most efficient have continued to receive the same wages as before. But the price paid for this advantage has been the reduction of between five and twenty millions of people to the verge of starvation, a large part of whom must by the very necessity of things be driven to vagrancy and through vagrancy to crime.[99]
What Socialism proposes is to maintain the principle of competition to the extent necessary to assure most comfort to the most efficient without exposing the rest to so awful an alternative as unemployment. And I think it will be seen that the education of the workingman through the organization, the order, the democracy of trade unions will play no small part in making Socialismpossible, and that it is probably through the organization of trade unions that a true democracy will eventually be attained.
Two pictures of trusts have already been borrowed in this book,[100]one by Mr. Rockefeller, showing the economies they make, and the other by Mr. Havemeyer, showing the dangers that attend them. Trade unions start out to include all the men in the industry; this is their ideal; and it has been shown how far short of it they fall. It is generally supposed that trusts likewise seek to include all employers in the industry, but this is a great mistake. Not only does the law forbid this, but it would be a mistaken policy. A trust that included all the industry would invite newcomers for blackmailing purposes if for no other. The last and best policy of the promoter is to include only the most prosperous and to leave around the trust a fringe of independents too weak to affect prices but just strong enough to live as a warning to others. A good collection of independent factories on the verge of bankruptcy is the finest bulwark a trust can have, for they discourage the starting of any more.
How the trusts make prices and keep independents in their wake is well illustrated by the following extract:[101]"The custom has regularly been for some years for the Standard Oil Company to announce from day to day the price which it would pay for crude petroleum and the price at which it would sell refined petroleum. This price is generally accepted as the market price, and competitors follow."
"Likewise, the American Sugar Refining Company first posts the prices for the day, and is then followed by its competitors, who post theirs. Generally they take the prices fixed by the American Sugar Refining Company; but at times, if they have a little surplus stock on hand, or if it is difficult for them to secure a customer, they will cut the price perhaps one-sixteenth of a cent per pound. One or two of the chief competitors seem to be forced to put their prices quite frequently at one-sixteenth of a cent below that of the American Sugar Refining Company. In spite of its control over the output it is said by Mr. Post that the American Sugar Refining Company has not, in his judgment, unduly restricted the output. It is probable, he thinks, that had that company not been formed the competitive system would have ruined many established refineries, so that as many would have been closed as is now the case, and the output would have been fully as small, probably even less. Practically all of the witnesses, both members of the combination and their opponents, concede that while there is a certain arbitrariness in fixing the prices it has been exercised in most cases only within comparatively narrow limits, and then, mainly to meet competition or stifle it."
Trusts, therefore, do in one sense succeed where trade unions fail; that is to say, they do succeed in getting all to join them that they want; whereas the trade unions do not, the essential difference between the two being that the trust is essentially monopolistic whereas the trade union is essentially democratic. The one wants to benefit a few at the expense of the many; the other wants to benefit all at the expense of none. As the competitive system favors the policy of the trust and disfavors that of the union, the trust succeeds where the union fails.
No one would accuse the organizers of a union of seeking to benefit a few at the expense of the many, and yet this under the competitive system is not only what happens but what must happen. On the other hand, no one imagines that the organizers of a trust have any other intention: they deliberately set out to eliminate competitors for their own benefit and they have succeeded in their task to an altogether unexpected degree.
It has been claimed, however, for the trusts that whatever may be the private benefit of their stockholders, they do perform a great public service.
Among the public services they were supposed to render it was claimed that they would pay good wages and furnish steady employment.[102]Even the labor unions themselves were of this opinion. Their leaders testified that they did not fear industrial combination and that if combinations were able by virtue of their savings to increase the profits of industry, workingmen would be able by pressure to "maintain or increase their wages quite as readily as before the combinations were made."[103]Another contention made for trusts was that they would lower prices. With the view of maintaining this contention, the trust magnates themselves testified to the enormous economies effected by combination, for the purpose of persuading us that the consumers would profit by these economies. Mr. Havemeyer was honest enough, however, to admit that he would be guided in fixing the price only by business considerations. But it was believed at that time that business considerations would be sufficient to keep prices down and the experience of the Whisky Trust was cited to prove that it was impossible to maintain prices above a reasonable margin of profit.
The Whisky Trust was organized in 1887 and after having lowered prices for the purpose of eliminating competitors, it brought the prices up to as high a level as had ever been reached before. The result of this was that at the end of 1888 prices fell, owing to a reorganization of the trust and to a subsequent raising of prices by the trust in 1891, only to be followed by a corresponding fall in 1892. And so prices went on reaching a very high level at the close of 1892, only to fall back to a low level in 1893; and again to a high level in 1894, only to go down so low in 1895 as to put the trust into the hands of a receiver. By this time the Whisky Trust had learned its lesson; it learned that if it endeavored to put the price of whisky up to an undue height, new distilleries were started to profit by these high prices, and the only way of avoiding bankruptcy was to maintain the price just high enough to return profits to the trust, but not high enough to encourage outside competition.
Undoubtedly the opinion generally prevailed at the end of the last century that increase in price by the trust was not to be feared. But at that time trusts had not yet acquired the art of handling independent competitors. To-day the art has been acquired. Owing to the enormous capital they control and the enormous extent of territory they cover, they are in a position so to reduce prices in any one spot where competition becomes dangerous as to crush out the competitor in that place. They adopted this method recklessly at first, crushing out all competitors and then raising the price unduly. Now they have learned to maintain a group of competitors about them and to keep these competitors alive, keeping prices high so long as competition is not dangerous and depressing them just enough to crush out competition when it becomes dangerous.
The movement of prices since the end of last century is sufficient to demonstrate that trusts, far from reducing prices, are advancing them.
It must in all fairness to trusts be admitted that the enormous increase in the annual output of gold tends to increase prices, and it is extremely difficult to state just how much of the advance in price since the end of last century is due to the increased output of gold, and how much is due to deliberate advance on the part of the trusts. We have, however, a guide in the relation between increase of wages and increase of prices. If the advance in prices were due entirely to increased output of gold, wages ought to increase in the same proportion. But they do not.
Of the opinion expressed at the end of the last century that trusts would improve the condition of workingmen, there is very little left to-day.
From almost every point of view, trusts have since 1900 disappointed expectations. It was claimed and with every show of reason that trusts would, by their control of the market, be able to adjust supply to demand and thus avoid the gluts that produce unemployment,[104]and that although the economies they practised might result in the shutting down of some factories and the discharge of employees, in the end the workingmen would gain because their employment would be steady and because trade unions would have only one employer to bargain with instead of many.[105]
How far has experience justified these anticipations?
Far from diminishing unemployment, the reign of the trusts has resulted in the most intense and widespread depression that we have any record of.[106]Far from benefiting the unions, trusts have crushed unions out of existence. Far from raising wages and shortening hours, the employees of the Steel Trust in Pittsburg are to-day working twelve hours at $1.80 a day, and once a fortnight twenty-four hours in a single shift; whereas miners in the same district because their union has not yet been crushed by the Coal Trust, are working only eight hours at $2.36 a day.[107]And the Miners' Union has been saved from the trust only by what is still regarded by many as the improper personal intervention of President Roosevelt Oct. 31, 1902.
The conditions of labor under trust rule cannot be better described than in the Survey, an investigation published not by Socialists, nor even by persons inclined towards Socialism, but by believers in and upholders of the competitive system:[108]
"With this number, Charities and The Commons completes its presentation of the findings of the Pittsburg Survey, as to conditions of life and labor of the wage-earners of the American Steel district. The gist of the situation, as we find it, is as follows:
"I. An altogether incredible amount of overwork by everybody, reaching its extreme in the twelve-hourshift for seven days in the week in the steel mills and the railway switchyards.
"II. Low wages for the great majority of the laborers employed by the mills, not lower than other large cities, but low compared with the prices—so low as to be inadequate to the maintenance of a normal American standard of living; wages adjusted to the single man in the lodging-house, not to the responsible head of a family.
"III. Still lower wages for women, who receive for example in one of the metal trades in which the proportion of women is great enough to be menacing, one-half as much as unorganized men in the same shops and one-third as much as the men in the union.
"IV. An absentee capitalism, with bad effects strikingly analogous to those of absentee landlordism, of which Pittsburg furnishes noteworthy examples.
"V. A continuous inflow of immigrants with low standards, attracted by a wage which is high by the standards of Southeastern Europe, and which yields a net pecuniary advantage because of abnormally low expenditures for food and shelter; and inadequate provision for the contingencies of sickness, accident, and death.
"VI. The destruction of family life, not in any imaginary or mystical sense, but by the demands of the day's work and by the very demonstrable and material method of typhoid fever and industrial accidents; both preventable, but costing in single years in Pittsburg considerably more than a thousand lives, and irretrievably shattering nearly as many homes.
"VII. Archaic social institutions such as the aldermanic court, the ward school district, the family garbage disposal, and the unregenerate charitable institution, still surviving after the conditions to which they were adapted have disappeared.
"VIII. The contrast—which does not become blurred by familiarity with detail, but on the contrary becomes more vivid as the outlines are filled in—the contrast between the prosperity on the one hand of the most prosperous of all the communities of our western civilization, with its vast natural resources, the generous fostering of government, the human energy, the technical development, the gigantic tonnage of the mines and mills, the enormous capital of which the bank balances afford an indication; and, on the other hand, the neglect of life, of health, of physical vigor, even of the industrial efficiency of the individual. Certainly no community before in America or Europe has ever had such a surplus, and never before has a great community applied what it had so meagerly to the rational purposes of human life. Not by gifts of libraries, galleries, technical schools, and parks, but by the cessation of toil one day in seven, and sixteen hours in the twenty-four, by the increase of wages, by the sparing of lives, by the prevention of accidents, and by raising the standards of domestic life, should the surplus come back to the people of the community in which it is created."
It would be unfair, however, to the trusts not to recognize that in spite of the shameful conditions they create for the majority they do benefit a minority to no small degree. The highly skilled are highly paid; they are fairly safe from unemployment; they are also furnished an opportunity of purchasing stock, of which this minority avails itself. The effect of the trust system on the workingman is very much like that of the trade union; both benefit the highly skilled and highly efficient, but at the expense of all the rest.
Now those who believe in the competitive system regard this as proper; and that the highly skilled andhighly efficient should fare better than the lazy and vicious is equally a part of the Socialist creed. All that the Socialist asks is that the punishment for falling short of the highest skill and the highest efficiency benot so severeas that described by the Pittsburg Survey; and this not only in the interest of the victim, but in that of the community of which he forms an essential part. It is because Socialism proposes a plan for giving to the efficient what their efficiency earns without committing the inefficient to a life of degradation, that it is entitled to the consideration of practical business men.
The degradation of the majority is not the only evil that results from the trusts. The rich are accustomed to look upon this evil as necessary and, therefore, one that they cannot hope to do more than mitigate by philanthropy. They seem unconscious of the goal to which this evil is inevitably driving them; and it is to this goal that I want above all to direct their attention.