Enemies of Production

VOLUME 178 NUMBER 5

NOVEMBER, 1946

89th YEAR OF CONTINUOUS PUBLICATION

by ROBERT R. YOUNG

WHEN late in June the Editor of this magazine wrote requesting my views on labor, and stating: “It is my belief that you would bring to the discussion of labor relations a clear-headedness, a sanity, and a candor which would be tonic for Atlantic readers,” my first impulse was to decline, despite the impelling subtlety of the approach.

My railroad labor problems are handled in cooperation with many other railroads, with whom I already had quarrels enough; besides, there flashed to me out of youthful memory a painful scene in General Motors when I quoted an outside author in opposition to my superior, and was curtly rebuked: “Those who know anything about a subjec are too— — busy to write about it!”

Before I could offer these reasons as an excuse to the Editor, fate called me to France and England, where conditions shocked me into reflection. During the long voyage home on the Queen Mary by way of Halifax — despite the distractions of thirteen hundred war brides and five hundred babies — I wrote what follows. This capitulation does not mean, however, that I disagree with that boss of long ago from whom I learned so much.

All of us productively engaged are laborers, for I see less difference between a board chairman and a foreman than I do between a track worker and a piccolo player. It is only a hop, skip, and jump from organizing foremen to approaching vice-presidents.

The only worth-while wage of any of us is the joy of work and the preservation of some of its fruits for ourselves and those upon whom we would bestow them. This real wage, beyond the dream of avarice, is within the grasp of man anywhere in the world today except for the non-producers of the State.

Management has proved, given time, stability, and the coöperation of Labor, that it can go on increasing wages and shortening hours without raising prices. Incentive enterprise has seen to that. Freight rates are lower today than they were thirteen years ago when the track laborer was paid $3.60 for nine hours’ work; today he is paid $6.84 for eight hours. The contrasting burden of taxation, then and now, is equally striking.

In the light of this achievement, how much wiser Capital would have been to have accepted unionization and thus have averted the Wagner Act. Capital might also have been wiser to create its own railway retirement act, its own social security act, its own housing authority. It is paying the bill — why not have earned the gratitude?

Mr. Green, of Labor, has recently called the roll of Congressional failures, including medical care, long-range housing, and employment insurance. Capital might profitably confer sympathetically with Labor on ways of accomplishing these objectives directly so that self-reliance is maintained, local conditions are observed, and individual preferences are considered.

Copyright 1946, by The Atlantic Monthly Company, Boston 16, Mass. All rights reserved.

Capital is beginning to recognize that the welfare of the employee and his respect for his employer have not only a dollar-and-cents value, but an important insurance value as well — for the system. Procter & Gamble and a handful of other companies enjoying high regularity of demand have already guaranteed an “annual wage.” Heavier industries are considering it.

Although Labor has a shorter history of excesses than Capital, it too should re-examine itself. Work rules that reduce initiative or productivity, or increase costs, come out of Labor as certainly as taxes. They deprive man of the supreme wage, pride of craftsmanship. No worker can remain truly contented who is not constructively busy.

My first promotion came at nineteen because my output was highest on the duPont “powder line.” The railroads cannot do as much for their men because Washington bureaus interpret restrictive clauses in our labor contracts to mean that any employee of greater length of service who can stand up is sufficiently fit to fill any vacancy. Where are our future Chryslers to come from if they are not to be allowed to come up through the ranks? From the Post Office?

Reams of work rules in this country are as destructive of happiness as this Scottish one that comes to mind: “The number of bricks laid per day must not exceed 350 in Edinburgh or 830 in Aberdeen ” In the face of such monstrosities, squatting veterans over there are no more surprising than market panics here.

Quarrels between labor leaders which break out in jurisdictional strikes should not be recognized as strikes but for what they are, intolerable breaches of the public peace. Restrainers of trade and levelers of individual opportunity and reward should no more be tolerated in Labor than they are in Capital. The freedom of the individual to work and to rise as well as to strike must be respected. Capital has been weak and lax in submitting to these crimes against production when public opinion could have been rallied so easily in its support. A minimum wage, without even a minimum of effort, is communization in its most destructive form.

There is evidence already that Labor is seeing some of these things, for the Brotherhood of Paper Makers, one of the worst offenders in seniority abuses, now courageously acknowledges: “Some men who came into the industry just do not fit and cannot go beyond a certain point.” Labor must also clean house at the top. There can be no true representation of labor by political adventurers or racketeers.

In scurrying to the State with their grievances, Labor and Capital are as naive as Little Red Riding Hood. The wolf is waiting to gobble them both up. Out of a scramble for legislation or political favor one may gain temporarily at the expense of the other, but in the end the board or the court will make the kind of finding that suits the State. Well-selected appointees are ambitious, and higher appointments stem from chores well attended to. The vote seeker who yields quickest to Labor is the officeholder most likely to harm it.

Now, when Labor fears legislation, is the time for the alliance with Capital. The era of antagonisms should be past. Karl Marx would be one of the first to recognize it. For every dime that Capital or Labor stands to gain at the expense of the other, it stands to lose dollars by the ever expanding area of errors by the State. The buyer-seller relationship between Capital and Labor should be as sympathetic as that between doctor and patient.

As popular government advances, and virtually every government in the world today so describes itself, it encroaches upon the freedom of Paul in order to curry the favor of Peter. Eventually all become Pauls. Destroyers of freedom feel insecure. Naturally, they persuade themselves that their continuance in office is for the good of the people. Naturally, they turn for security to the powers traditionally yielded by the people to the State only in time of emergency. By this time their seizure of power has brought them close to the temptation of war or the threat of war. This is the lesson of history.

In war, to an army of non-producers there is added a multitude engaged in destruction. New seeds of discontent are sown and new emergencies must be declared. Such is the vicious circle.

The attempt of the people to create popular States in Germany and Russia following the First World War, and the subsequent fate of Labor, is history well known in America. Few yet appreciate the extent of the deterioration in France and England following this war. I quote from Alsop in the Paris Tribune:

Replacement of capitalists by communists as heads of great industrial enterprises is the most dramatic . . . fact of the French scene.

Again, from the Whitehall Letter, pointing to the discontent of the British middle classes under peacetime extension of rationing: —

A revolutionary party of the Left must climb into power on the shoulders of the middle class, but thereafter must “liquidate” that class at the earliest possible moment. In Germany liquidation meant economic annihilation, in Russia, death. Presently we shall see what it means in Britain.

That Labor, as well as the middle class, is suffering under the impact of nationalization is attested by the employment in the coal pits of youths down to fourteen years of age, at high accident cost, in a futile attempt to check the decline in output. Not only has a psychological deterrent to productivity been created by the substitution of the State for the private employer, but the continuance of taxation that reaches confiscatory levels as the worker’s pay check increases has encouraged absenteeism.

Lords and laborers alike are growing shabbier. Theirs will be a new low in cheerless winters, without heat, milk, cream, butter, sugar, coffee, eggs, meat, fruit, or vegetables. Laying hens are killed for lack of even garbage. Adulteration descends to bread. The black market languishes because there is nothing to sell. I saw more automobiles in Halifax than in all of France and England.

The threat to all of us today is the State. Marx knew that the chief victim of war was Labor. That was why he placed the blame for war on Capital — as Russia does today. But Russia knows that Marx is hopelessly out of date, for the State consumes in a year of war the profit of a generation — that is why peace with Russia should be regarded as inevitable. For both of us to expect war is virtually to ensure it.

The excesses of the State can be stopped, just as the excesses of Capital have been stopped and the excesses of Labor will be stopped. But it will require a militant public opinion, a revival of integrity.

2

LEGISLATION is never constructive per se. It is always a choice between evils. If Capital had better policed itself it would not have been hamstrung by numerous restrictive Acts that have placed powers of arbitrary administration vastly exceeding legislative intentions in the hands of incompetents. If Labor behaves in time, it will escape a like fate. Only government has largely escaped legislation, prosecution, and impeachment.

The most effective and least harmful control is that of an informed public opinion. Capital and Labor can thus be adequately controlled. But the State dupes public opinion by withholding or distorting information — and its need for deceit rises as confidence falls. Those who inform democracy the least are the ones who must profess it the most.

A virile public opinion proved that Capital can be controlled when the Chesapeake and Ohio’s provocative challenge was picked up by editors from coast to coast: “A hog can cross the country without changing trains, but YOU can’t.”

Through service at Chicago and St. Louis followed immediately. Yet as late as last November, an important official of the Pennsylvania Railroad testified under oath before a Federal court in the Pullman case: “. . . it is extremely difficult to predict whether such service can be made to pay and whether there is a sufficient volume of traffic to justify the operation of through trains.”

The through Pullmans, as anyone could have predicted, have actually proved to be the highest earners in railroad service. The witness failed to disclose that his road had entered into an agreement away back in 1894 with the New York Central to combine with it against all other railroads to protect their joint passenger business. I am reminded of that famous remark attributed to J. P. Morgan: “A man always has two reasons for the things he does — a good one and the real one.”

Again, it was public opinion, led by the Chesapeake and Ohio, that put an end to the competitionless racket, maintained through an elaborate system of interrelated and subservient boards, under which Mr. Morgan’s firm for three generations had occupied both the buying and the selling side of virtually every bond deal in America. Without branch offices, salesmen, or engineers, the only equipment a telephone — yet every partner owned a yacht!

Me are again turning to public opinion in an attempt to persuade the State. A petition for a freight rate increase has now been pending before the Interstate Commerce Commission since away back in 1941. The National Transportation Policy as laid down by the representatives of the people in their legislative instructions to this Commission is*

“. . to foster sound economic conditions in transportation ... to the end of developing, coördinating and preserving a national transportation system . . . adequate to meet the needs of the commerce of the United States, of the Postal Service and of the national defense.”

Since 1933 five wage increases have been granted, aggregating 90 per cent. Fuel prices are up 117 per cent and other supplies 86 per cent. Yet freight rates today are lower then they were then; and the average rate of return on investment is only 2.75 per cent, an amount pitifully inadequate to attract new capital. In the meantime other utilities serving the public have been allowed to earn two to three times as much. Could there be a clearer case for the railroads’ long-pending and modest request for relief than these simple facts, or a clearer case of contempt for the explicit wishes of the people?

Yet hearings, at great expense to the railroads and the taxpayers, have been going on ad infinitum. To cap the climax of chicanery and folly, the railroads were forced this September, by the stalling tactics of the Commission, publicly to predict calamity and bankruptcy by 1947. Naturally, a market panic followed and railroad credit weakened. In direct consequence the railroads, as well as allied industries, may be forced to “lay off,” and to “abandon” long-delayed plans for improvements which are essential. A private facility, yet one as vital as the Army, well able to pay its own way, is being maneuvered into public charge and public expense by public servants paid to foster, not destroy.

If this example is typical, is there any wonder that the market predicts depression and unemployment in a time of shortages?

This very Commission has approved the sale of railroad bonds as “in the public interest” which, by distorting its reorganization function, it arbitrarily wiped out almost immediately: more than two billions of dollars of securities, held by a multitude of producers, declared valueless because of “ Dust Bowl ” earnings. Could the purpose of present “stalling” at a time of record-breaking traffic be to prove themselves right away back in the thirties when they implied that the railroads were “a cooked goose” — as obsolete as the Erie Canal? Why should any public agency have the power to make its own insane predictions of calamity come true? The President of the Chesapeake and Ohio would not remain in office long if he did not believe in its future. Why should the Securities and Exchange Commission’s jurisdiction over fraud in securities reach Wall Street but not Pennsylvania Avenue?

3

PUBLIC opinion must rebel against deceit and dishonesty if democracy is to survive. A man cannot cast his ballot on a false premise any more than he can invest on a false prospectus. Fake in government — through the radio or other means of communication — is more worthy of penal servitude than the sale of fraudulent stock. The latter is only aimed at our dollar, the former at our freedom — even our life. Instead of rejecting this type of master politician there has been a shameful tendency to emulate him.

If my annual reports and public utterances were replete with broken pledges and false statements, the Truth in Securities Act would have got me if the common law had not. Corporate leaders who thus take their stockholders to crisis and bankruptcy are immortalized only in the police records. When public opinion and the opposition party also sink to the level of a corrupt government, then in truth Labor needs a Truth in Politics Act. Policed as effectively as the Securities Act, such an Act would give us good, government.

Before our eyes and heads are clear in the morning some sensationalist, for hire to the highestpaying physic manufacturer, flushed with hot dope from Washington, is directing the public’s venom against some foreign or domestic personality, who, he says, imperils the nation, when in fact nothing imperils us more than such needling. Forever beating our breasts about someone else’s devils, unmindful of our own, may stimulate the circulation, but it does not create the atmosphere in which peace in labor or foreign relations grows.

Our national advertisers had better take a closer look at their copy writers. Some of our “doers” should take unto themselves those problems heretofore left to glib voices. Caruso could not have found time to sing, such would have been the demand for him in affairs of state.

If it is work stoppages or price rises that bedevil us, the State must fix it by saddling us with a new bureau, new forms to fill out, and a couple of hundred thousand more non-producers; if it is incidents abroad that annoy us, some Rosinante must dash out to save us; but the productivity of labor and the impact of prices are no more controllable by Congress than world peace is attainable by Yankee bluster.

You cannot devote your energies to destruction, or to exports unbalanced by imports, and enjoy the prices and pleasures of production, even with the help of Mr. Bowles, et al. Scarcities make for restless labor and uneasy housewives whether under a Nero or a New Dealer — scars that cannot be erased by bureaus or commissars, as countries less fortunate than ourselves have long since found out. Witness, where living costs have multiplied ten times since 1939: —

Paris, August 29th. —The French Cabinet is submitting a bill to the Assembly providing that the

death penalty be imposed for black marketeers.

After death fails, what?

A discussion of labor, wages, and prices outside the orbit of foreign policy is as futile as planning a career for one’s son or a husband for one’s daughter. If we are to continue in recent patterns our sons and daughters might more charitably be allowed to remain unborn, our labor diverted to tiddlywinks.

Most of the evils, economic and political, of the twenties and thirties, abroad and at home, came as a direct result of that first great conflict; and ripples from this last one are going to keep on radiating for quite some time. We shall be lucky indeed not to pay some more frightful consequences. Washington may point to the devils: Wilhelm, Borah, Coolidge, Insull, Hitler, or Wallace, but it is only to divert attention from itself.

The banking crisis of the thirties, the miasma out of which came the New Deal, was not unrelated to the Polish, German, Italian, and Peruvian bonds we took for our fast dwindling oil, copper, and steel. Now we do not even bother to take the bonds. Under the World Fixers we have kicked away ten times the profit on our foreign trade since Columbus — and look at the world.

Already the price of everything we buy is padded with colossal tax burdens, dishonest if for no other reason than that they are concealed. High wages and reduced availability of useful goods consequent upon new armament races may blow the price roof off, then the choice will be between uncontrolled inflation with freedom, and price control with forced labor and rationing. The choice should be easy. It is far better to have high prices with their stimulus to production, and freedom, than low prices and no freedom. But if we are to follow European patterns, and we have been following them closely since we projected ourselves there, this will not be the choice.

Those moving toward Statism, and there are plenty in both parties, will get new holds here as they are getting them there. Our weakness for simplification will destroy us. As prices go up, price control will extend; as price control extends, production will fall off; as production declines, rationing will be renewed; as rationing extends, demands for production will increase. Again the solution will be simple: private enterprise having failed to produce, the State will take over. Money will have lost its value just as certainly as by inflation, for all it will buy will be coupons and only those who behave will be so supplied. Bureaucracy will mushroom still further; production will still further decline. During the period of transition, some whipping boy will be made Public Enemy Number One by our superficialists, but he will no more be the specific cause of our new troubles than Labor was of our old ones.

America can come to one bit of beef a week, one egg a month, one shirt a year in peacetime as certainly as Old England; and when it does, there will come no loans to us from overseas. Mr. Churchill denied coming into power to liquidate His Majesty’s Empire, but history may record that he did. Any ruling class, be it Labor or Capital, that persistently lacks the ingenuity to avoid modern war must inevitably be submerged.

If advancing Statism “for the good of Humanity” continues to come to us, — and only intelligence, integrity, and determination can stop it, — no one will lose more than Labor, just as in war and inflation no one pays more than Labor. Yet, there are labor leaders demanding price control, just as there are labor leaders in the forefront of every war party.

There could never have been a first or a second world war without the participation of America, nor can there be a third. It is the wars we avoid, not the ones we win, that make us strong.

This is the first of a series by Mr. Young which will appear in the Atlantic this autumn. His next paper will be on the future of the American railroads. His third, “Looking Russia in the Eye,” will appear at the turn of the year. — THE EDITOR