The Economic Necessity of Trade-Unionism

IN discussing the economic necessity of trade-unionism I shall be obliged to take issue with the criticisms, deductions, and proposals contained in the article under the caption ‘Monopoly of Labor,’ contributed to the October number of the Atlantic Monthly by Professor J. Laurence Laughlin. It is not my purpose to indulge in abstruse theories; on the contrary, I shall undertake to demonstrate by the results of experience, and by concrete example, the legality, the wisdom, and the morality of trade-unionism and tradeunion policy.

Those who declare themselves to be in favor of trade-unionism in the abstract but opposed to it in the concrete, are not unlike the western farmer who announced that he was unreservedly in favor of the construction of railroads but unalterably opposed to the running of trains. Trade-unions were formed for a definite purpose; they have well-defined policies and methods of procedure; they are great, democratic institutions administered by practical men who are earnestly and successfully striving for the amelioration of the conditions of the poor.

In its fundamental principle, tradeunionism is a recognition of the fact that under modern industrial conditions the individual unorganized workman cannot bargain advantageously with the employer for the sale of his labor. Since the workingman has little or no money in reserve and must sell his labor immediately; since, moreover, he has no knowledge of the market and no skill in bargaining; since, finally, he has only his own labor to sell while the employer engages hundreds or even thousands of men and can easily do without the services of any one of them, the workingman, if bargaining on his own account and for himself alone, is at an enormous disadvantage. Tradeunionism recognizes the fact that under such conditions the workman becomes more and more helpless, because the labor which he sells, unlike other commodities, is a thing which is of his very life and soul and being.

In the individual contract between a powerful employer and a single workman the laborer secures the worst of the bargain. He is progressively debased because of wages insufficient to buy nourishing food, because of hours of labor too long to permit of sufficient rest, because of conditions of work destructive of moral, mental, and physical health; and, finally, because of danger from accident and disease, which kill off the workingman or prematurely age him. The individual bargain or individual contract between employers and workmen means that the condition of the economically weakest man in the industry is often that which the average man must accept. Therefore, there can be no permanent prosperity to the wage-earners, no real, lasting progress, no consecutive improvement in conditions until the principle is firmly and fully established that in industrial life, especially in enterprises on a large scale, the settlement of wages, hours of labor, and all essential conditions of work, shall be made between employers and workingmen collectively, and not between employers and workingmen individually. It will thus be seen that the philosophy of trade-unionism is the very antithesis of Professor Laughlin’s scheme of individual bargaining or unrestricted competition among wage-earners.

The policy of collective bargaining as advocated by the unions recognizes and teaches the interdependence of labor and capital. It is the bridge that spans the gulf which modern industrialism has created between the workman and the employer. It is only necessary to attend a joint conference between the representatives of any of the great trade-unions and the representatives of employers or employers’ associations, when wage-agreements are under discussion, to be convinced that there are no more antagonisms engendered, and no more ill feeling displayed, than there are between any other groups of men meeting in conference for the purpose of buying and disposing of a commodity which one must have and the other must sell.

The organized workingman, as a rule, is not hostile to the employer of labor; he does not entertain any feelings of hatred against the man who has honorably acquired wealth. The workingman understands full well that his wages must come from the earnings of industry, therefore he is interested in the successful conduct of industry. In common with many other good citizens he may fear that there is some danger to society, and to the institutions of our country, in the possession of enormous wealth by a few men, and he regards as immoral the acquirement of wealth through the payment of less than living wages and the imposition of unjust conditions of employment.

It is true that in their wage-conferences the employers and the organized workmen are not always able to agree, and that strikes or lockouts occur. It is equally true that strikes and lockouts occur in trades and industries in which the workers are not organized. Indeed, many of the most bitterly contested strikes of which we have any record have been inaugurated and conducted by non-union men. Fresh in the memories of all are the reports of the scenes attending strikes of nonunionists at McKees Rocks and Bethlehem, Pennsylvania, at Paterson, New Jersey, and at Lawrence, Massachusetts. If one desires to learn the truth in regard to the causes which make for class hatreds, let him mingle with the non-union workmen employed in some of our great industries. These workmen, denied by their employers the right of organization, compelled to work long hours for low wages, frequently hate their employers with an intensity which results in scenes of turmoil and disorder when strikes take place.

Trade-unions strive for peace based upon industrial righteousness. A strike, nevertheless, is of itself neither illegal nor immoral. On the contrary, a strike may be and often is a manifestation of a wholesome, yea, even a divine, discontent. Said Abraham Lincoln, in a speech delivered at Hartford, Connecticut, in 1860, ‘Thank God, we have a system of labor where there can be a strike. Whatever the pressure, there is a point where the workingman may stop.’

Our courts have declared repeatedly that workingmen have a legal right to organize in trade-unions, that they have a legal right to strike for higher wages, for shorter hours, for better conditions of life and labor, indeed, for any reason that seems sufficient to them. It has been held by the courts that union workingmen have a legal right to refuse to work with nonunion men. There has been no decision in any suit instituted under the Sherman Anti-Trust law which would justify the opinion that an organization of workingmen, even if it embrace every man employed at the trade, is an unlawful monopoly. It is true that the United States Supreme Court has decided, in the Danbury Hatters’ case, that labor-unions are not exempt from the provisions of this law. It is also true that, in a suit for damages instituted under the provisions of the Sherman Anti-Trust law, judgment was rendered against certain members of the Hatters’ Union by a court in Connecticut. This case, however, is still in the courts, and even should the United States Supreme Court sustain the decision of the trial court, that action would not, by any process of reasoning, justify the contention that a labor-union is a combination or conspiracy in restraint of trade. The issue involved in this particular case is not the right of men to organize in tradeunions or to strike for higher wages. The allegation of the plaintiff, one Loewe, a hat manufacturer, was that through the instrumentality of a secondary boycott, he had suffered large losses, and the claim was that he was entitled to damages.

It is not the purpose of this article to criticize the conclusions of the Supreme Court, nevertheless there exists in the minds of many an opinion that the Sherman Anti-Trust law was never intended to apply to organizations of labor or to other associations having no capital stock, not dealing in the products of labor, and not organized for profit. Moreover, there is much substantial evidence to justify the opinion that members of Congress in voting for the passage of the Sherman AntiTrust law did so with the understanding that labor organizations formed for the purpose of improving the conditions of employment were exempt from its provisions and its penalties.

When this statute was under consideration in Congress, in 1890, it contained a section declaring that the organizations of working people instituted for the purpose of regulating wages, hours of labor, and conditions of employment should not come under the operation of the proposed law. This section was afterwards eliminated by a committee of Congress, and when the bill was reported back and was again being considered by the Senate, Senators Hoar, George, Blair, Sherman, and others gave assurances to the representatives of labor that it was not necessary specifically to except labor organizations, as they were not intended to come under the provisions of the law and were not included in them. In view of these assurances, it is not difficult to understand that many were surprised and disappointed when, twenty years later, the Supreme Court decided that laborunions might be sued under the provisions of the Sherman Anti-Trust law. If it eventually should be held that labor-unions, as such, are monopolies in restraint of trade and thus subject to dissolution by order of the court, no greater disaster to the orderly, rational, and constructive development and progress of the wage-earning masses will have occurred.

It is not contended by trade-unionists that they should be immune from prosecution for the commission of unlawful acts. They recognize, of course, that they stand before the law with exactly the same responsibilities that attach to all citizens. What they contend is that the voluntary associations of labor, formed for the sole purpose of protecting the wage-earning toilers, shall not be legally designated as monopolies in restraint of trade, and thus be made liable to the penalty of dissolution. That the possibility of such an interpretation of the law has presented itself to the organized wage-earners, there can be no doubt.

That statesmen of the highest standing, in harmony with and responding to the humanitarian sentiment prevailing among men and women in every walk of life, recognize the necessity of differentiating between combinations organized to control the necessities of life and organizations formed for the purpose of defending and promoting the interests of the wage-earners, is evidenced by the fact that, in the closing days of the Sixty-second Congress, a Democratic House of Representatives and a Republican Senate inserted in the Sundry Civil Appropriation bill a proviso that no part of the money appropriated by a certain section of that bill should be expended by the government in prosecuting any organization or individual for entering into a combination or agreement having in view the increasing of wages, shortening of hours, or bettering the conditions of labor, or for any act not in itself unlawful done in furtherance thereof. True, this appropriation bill was vetoed by President Taft, but it was again enacted by an overwhelming majority in both houses of the present Congress, and it has been signed by President Wilson.

As further evidence of the justice of labor’s claim that trade-unions should not be regarded as monopolies in restraint of trade, the Democratic platforms of 1908 and 1912 declared: —

‘The expanding organization of industry makes it essential that there should be no abridgment of the right of wage-earners and producers to organize for the protection of wages and the improvement of labor conditions, to the end that such labor organizations and their members should not be regarded as illegal combinations in restraint of trade.’

In the platform of the National Progressive Party (1912) we find these words: —

’We favor the organization of the workers, men and women, as a means of protecting their interests and of promoting their progress.’

It will thus be seen that two of the great political organizations have recognized the importance and the necessity of differentiating between organizations of labor formed for the purpose of improving the conditions of the toilers, and combinations of capital formed for the purpose of making profit. The Democratic and Progressive parties combined polled 10,486,600 votes; the Republican Party, which made no favorable declaration on this subject, polled 3,484,980 votes. In other words, 75 per cent of the voters registered their approval of labor’s position — that labor unions should not be legally proscribed as monopolies or combinations in restraint of trade. Any failure on the part of the present Federal administration and Congress specifically to except labor-unions from the provisions and penalties of the Sherman Anti-Trust law will be a repudiation of a solemn pledge contained in these platform declarations.

But it is suggested by Professor Laughlin that, ‘Any law which would except labor-unions from the provisions of the act would be unconstitutional, and could not stand.’ This statement belongs in the category of things that are important if true. It is based upon the assumption that an anti-trust law which excepted labor organizations from its provisions would be class legislation. However, the history of legislation does not sustain this contention. Congress and the State legislatures frequently have enacted special legislation. There is, of course, a difference between class legislation and special legislation. If a law were to provide that some labor-unions should be excluded from its operation and others included in it, that would probably be class legislation and therefore unconstitutional. If, however, a law should provide that all labor-unions or other associations organized not for profit, and not dealing in the products of labor, should be exempt from its operation, there would be no doubt of its constitutionality.

As a case in point, it will be remembered that the Payne Tariff bill of 1909, which imposed a tax on corporations, contained the following provision: —

‘Provided, however, that nothing in this section contained shall apply to labor, agricultural, or horticultural organizations, or to fraternal beneficiary societies, orders, or associations operating under the lodge system, and providing for the payment of life, sick, accident, and other benefits to the members of such societies, orders, or associations, and dependents of such members, nor to domestic building and loan associations, organized and operated exclusively for the mutual benefit of their members, no part of the net income of which inures to the benefit of any private stockholder or individual.’

When, in the case of Flint vs. Stone, Tracy & Co., the question of the constitutionality of this law was carried to the Supreme Court on the issue of the validity of the provision excluding labor and other organizations from the corporation tax, the court upheld the constitutionality of the measure.

If further argument were necessary to sustain the opinion of those who hold that there are no constitutional difficulties in the way of legislation excepting labor organizations and associations of farmers from the provisions of the Sherman Anti-Trust law, attention could be called to the fact that the Underwood Tariff act with its income-tax provisions, enacted by the present Congress, contains exceptions in exactly the same language and referring to the same organizations as the corporation-tax act of 1909.

On the ground that it relates to the subject of taxation and therefore has little bearing upon the question at issue, namely the exemption of voluntary associations of labor from the provisions of the Anti-Trust law, it may be suggested that the precedent set by this Federal legislation is not conclusive. However, there are many state laws and court decisions which support the contention that laws need not, in order to be constitutional, apply alike to all citizens or to all associations of citizens. In the case of Holden vs. Hardy the Supreme Court of the United States sustained a law enacted by the legislature of Utah prohibiting the employment of miners for more than eight hours in anyone day. This statute applied exclusively to men working in the mines, no other workmen being included in its provisions. The Supreme Court of the United States upheld the law enacted in Oregon prohibiting the employment of women for more than ten hours in any one day. This statute does not apply to all women-workers. The highest court of the State of Massachusetts and the highest courts in several other states have sustained laws providing compensation for workmen who are injured in the course of their employment, even when these laws exclude specifically from their provisions agricultural laborers and domestic servants.

Quite apart, however, from constitutional and legal considerations, it must be obvious to all thoughtful men and women, especially those who are familiar with the struggles of the wage-earning masses for more humane conditions of employment, for better living opportunities, that it would be ethically wrong to consider labor and the products of labor as though they were one and the same thing. It must be clear that associations formed for the sole purpose of protecting and promoting the welfare of the men and women and children who labor should not be placed by the law in the same category with monopolies or combinations organized for profit, and be condemned as unlawful conspiracies in restraint of t rade.

‘ Organizations of labor, ' says Samuel Gompers, president of the American Federation of Labor, ‘have their origin in human need, they seek human welfare and betterment, they have to do with human labor-power. Capitalistic monopolies have their origin in desire for great profit, they seek economic control and the elimination of competitive rivals, they deal in material things — the products of labor, wealth. Between wealth and labor there is a vital and fundamental difference, an understanding of which is essential to those upon whom falls the responsibility of dealing with matters influencing the freedom of men. Wealth consists in material things which are external, useful, and appropriable. Wealth is that which a man has — not what he is. To classify skill, knowledge, labor-power as wealth is an error that has crept into the thinking of some economists and political scientists. It is an error conducive to grave injury to the working people. These attainments or attributes are not possessions of the individual, they are the individual and cannot be separated from personality. Cultivation of powers and ability increases and enriches the resourcefulness and efficiency of the individual; but these things are subjective and immaterial and are not in themselves wealth. The individual may be able and powerful, and therefore fortunate, but it does not necessarily follow therefrom that he is wealthy. The wealth which he may produce is separate and distinct from himself. It follows then that to apply to voluntary associations of working people (commonly called labor organizations), which are concerned with individuals and their powers, the same regulations that are applied to organizations manipulating the products of labor, would lead to mischievous results and perversion of justice.’

Perhaps the most serious charge brought against the voluntary associations of labor by Professor Laughlin is that higher wages are responsible largely for the high prices which consumers are now required to pay for what they buy. He says, ‘There is no question whatever in my mind that the rise of prices of almost all articles of general consumption during the last decade or two has been due, as much as to any one thing else, to the rise in money wages paid for the same, or even less, labor effort.’ This is a strange and unusual contradiction of what is almost uniformly asserted by leading economists, nearly all of whom hold that the worldwide movement of increased prices is due primarily and principally to the increase in the quantity of money which has followed the extraordinary production of gold during the past sixteen years. No doubt the increase in the cost of food-products in the United States is additionally accounted for by the fact that the growth of city population, both in the aggregate and in proportion, has been much greater than the growth of agricultural population. It is not denied that increased wages may and often do add to the cost of production, but that the worldwide movement, of increased prices and higher cost of living is chargeable in any considerable degree to higher wages and ‘less labor effort’ is unthinkable and unbelievable.

It is a matter of common knowledge that prices of practically all articles generally used have risen in every country in the world. They have risen in countries in which there are no organizations of labor; they have risen in countries in which there are no organizations of labor having sufficient numbers or strength to influence wages or increase the cost of production. Prices have risen in every part of the United States and have affected commodities in the production of which union labor is not engaged and in which wages have not been advanced. As a matter of fact, the articles of general consumption which are shown by the reports of the United States government to have increased in price to the greatest extent — such as flour, meats, potatoes, butter, eggs — are all commodities in the production of which union labor has little or no part, and therefore the organizations of labor can have no direct influence upon the wages of workers employed in the production or distribution (except in respect to railway transportation, which I shall touch upon later) of such articles.

For illustration, let us consider meats. From the time the animal is born, through all the processes, until it is delivered, ready for use, at the kitchen door, not a hand touches it or influences its cost that is controlled by an organized workman. Again, follow a sack of flour from the wheatfields of the northwest to the rolling-pin of the housewife — no organized workman ‘levies tribute’ upon it as it proceeds from the farmer to the consumer. And so it is with practically all food-products; from the very beginning, as they find their devious ways from the farm through the factory to the merchant and to the home of the consumer, no organization of labor affects their cost or controls the price at which they shall be sold.

But even if it were true that the higher wages secured for labor through the instrumentality of the trade-unions is responsible for the increase in the cost of living, that fact would not justify their condemnation, nor would it sustain the claim that from an economic standpoint the increased wages secured during the past two decades have not benefited the recipients of these increased wages because there has been a corresponding increase in the cost of living. If workingmen are not benefited by increased wages because there is a corresponding increase in the cost of living, then it must follow as a matter of course that workingmen would suffer no injury, that there would be no lowering of their standard of living, if wages were reduced. The fallacy of this reasoning is that it fails to take into account the fact that to increase wages does not always increase the cost of production, since, among other reasons, the workingman becomes more efficient when he is better paid, better fed, better clothed, and better housed.

In many industries, prices have little to do with wages, but are arbitrarily fixed at a monopoly figure and remain the same whether wages are high or low. For illustration, steel rails are quoted at the same price per ton now as when the employees of the steel companies received ten per cent less wages; newspapers and magazines are cheaper now than they were when employees in the printing trades received much lower wages than they do to-day. In the matter of the number of persons employed, railroading is the greatest industry in the United States. Practically all men engaged in the transportation service, and a majority of those engaged in the shops of railroads, are members of trade-unions. The wages of all railway employees have advanced substantially and repeatedly during the past twenty years, yet during this period the charge to shippers for hauling freight has been reduced 17.5 per cent per ton per mile. Passenger rates are 6.3 per cent less now than they were twenty years ago. Therefore, while the cost of transportation is a vitally important element in fixing the value of every commodity purchased or used by the people, yet this cost has not been increased — on the contrary it has been reduced — notwithstanding the fact that during the past twenty years the average wages of railway employees have advanced 28.77 per cent.

Moreover, even if we agree that higher wages have increased the cost of production, the fact still remains that the increase in the cost of the articles produced is never in proportion to the rise of wages. The cost of many of the materials, ground-rent, the interest on capital, taxes, royalties, the cost of supervision, are not necessarily affected by an increase in wages to the workmen. Again, if the employer receives, as he often does, exorbitant profits, it would not necessarily increase the cost to the consumer if a part of those exorbitant profits were paid in wages to the workmen. Furthermore, workingmen do not consume all the articles they produce, and an increase in the wages of men making grand pianos, or of weavers of fine carpets, or of fifty-seven other varieties of articles used exclusively by the rich or the well-to-do, does not in any way affect the purchasing power of the money in the ordinary workingman’s envelope.

In his attempt to demonstrate that an advance in money wages is of no value to the workman and to prove that increased wages paid to labor are responsible for the increase in the cost of products, Professor Laughlin says, ‘In the expense of producing raw materials such as coal, ore, wool, and the like, into whose processes labor enters more largely than machinery, the general rise of wages raises out of all proportion the prices of materials from which finished goods are made.’ An analysis of this statement will prove interesting and illuminating. In the raising of wool and in the production of ore, except copper and gold, union labor is not employed. There is no union of workingmen engaged in the production of wool, and very few union men are employed in the manufacture of woolen goods; the organization of metalliferous miners is confined largely to the production of copper and gold, therefore wool and ore may be eliminated from consideration. In the production of coal, however, union men are engaged. In fact, in the mines of practically every important coal-producing state, with the exception of West Virginia, Alabama, and Colorado, union labor is employed almost exclusively. This has not always been so. Prior to 1897 unrestricted competition of labor — that is, non-unionism — prevailed in the coal-producing industry. In 1896, when there was little or no organization among the coalminers, the average market price of bituminous coal loaded on the railway cars at the mines was 83 cents per ton; the average price paid to miners for producing a ton of screened coal was 45 cents. Sixteen years later, — that is, in 1912, — at a time when the miners had become strongly organized, the average market price of bituminous coal loaded on the railway cars at the mines was $1.15 per ton; the average price paid to miners for producing a tone of screened coal was $1.00. The significance of these figures is that while wages paid to miners for mining a ton of coal during the period from 1896 to 1912 have advanced 122 per cent, the price received by the mine-owners has advanced only 38.5 per cent. Therefore, it cannot be true that even in an industry in which wages are the principal element of cost in production, an advance in wages ‘raises out of all proportion the prices of materials from which finished goods are made.’ Notwithstanding the splendid work and the great achievements of the organized wage-earners in protecting those in our social and industrial life who are least able to protect themselves, efforts are constantly being made to discredit and destroy the trade-unions. Open foes and professing friends alike have sought their undoing, the former by siege or assault, the latter by insidious attempts to divert them from the course they have pursued so successfully. And yet every year the unions grow in strength, in numbers, and in influence; they grow in the affections of the wage-earners; they grow in the respect of fair-minded employers; they grow in the esteem of right-thinking men and women everywhere.

Moreover, the material benefits which have come to the miners as a result of trade-union effort are not all represented by the increased wages received for mining a ton of coal. In the year 1896 the average production of the bituminous coal-miners of the United States was 2.91 tons per man per working day; in the year 1912 the average production of the bituminous coalminers of the United States was 3.68 tons per man per working day. In 1896 ten hours was the length of the workday, whereas in 1912 the eighthour day prevailed. It will thus be seen that the income of the bituminous coalminers has increased much more than is represented by the advance in the schedule of rates for mining coal.

But what is more important, these increased wages and shorter hours of labor have wrought a tremendous change in the intellectual and moral as well as in the physical lives of the mineworkers. They are no longer, as they once were, a poverty-stricken, hopeless, despairing people. They are men; men whose outlook upon life is that of hope, of cheer, of intelligent, constructive discontent. And the experience of the miners is typical of that of all workmen. Low wages, long hours, evil conditions of employment—the inevitable results of unrestricted competition of labor — mean the degradation of the workers, the abandonment of hope, a deadening of the finer senses, the survival of the strongest, the destruction of the laboring classes.

Unrestricted competition of labor — that is, non-unionism — finds its natural and inevitable sequence in the sweat-shop and the slum; it finds its logical expression at Lawrence, at Paterson, at McKees Rocks, at Bethlehem, and in the mining fields of West Virginia. Unrestricted competition of labor is portrayed by Millet, and depicted by Markham in ‘The Man with the Hoe.’

The suggestion, heard in more than one quarter, that trade-unionism is in conflict with the law and the state, or that trade-unionists wage war on society, has no foundation in fact. Tradeunionism stands for the constructive development of society, it seeks the more equitable distribution of wealth in order that all our people may develop to the extent of their highest and best possibilities. In contradiction to the dire apprehensions sometimes expressed by critics and opponents of trade-unionism, listen to the words of the great English statesman, William E. Gladstone: ‘Trade-unions are the bulwarks of modern democracies’; to those of Wendell Phillips: ‘I rejoice at every effort workingmen make to organize. I hail the labor movement, it is my only hope for democracy. Organize and stand together; let the nation hear a united demand from the laboring voice! ’ Again, hear Thorold Rogers, during his life Professor of Political Economy at the University of Oxford: ‘I look to the tradeunions as the principal means for benefiting the working classes’; and Mr. Taft, when President of the United States: ‘Time was when everybody who employed labor was opposed to the labor-union; when it was regarded as a menace. That time, I am glad to say, has largely passed away, and the man to-day who objects to the organization of labor should be relegated to the last century.’

The critics of trade-union policy have suggested that the employer ‘introduce into his shops carefully worked-out plans for helping the operatives to rise in life, to better conditions by welfare work, to encourage savings and thrift, to introduce the stimulus of profitsharing.’ I have no desire or disposition to detract from the value of welfare work; on the contrary, I wish to commend every employer who undertakes at his own expense to improve and make more pleasant and wholesome the conditions under which his employees work. Welfare work, however, is not a substitute for wages. If the employer desires to supplement the wages agreed to between himself and the union, such action is not inimical to trade-unionism and may be of great value to all concerned; but the workingmen will not be lured by any device from their allegiance to trade-unionism, they will not accept welfare work or profit-sharing in lieu of just wages and the right to organize; they will not and should not depend upon Lords Bountiful and Ladies Charitable; they prefer to depend upon themselves and their trade-unions as the means through which to work out their economic salvation.