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Labor Adjustments

( Originally Published 1918 )

Importance of labor. In the preceding chapters we have seen the importance of capital to the development of our industries. We have seen, indeed, that capital is indispensable to the growth of civilization itself. But there is another factor in the development of both industry and civilization which is fully as important and probably much older than capital, namely, labor. Without labor the resources of a country are of no present use. Perhaps in some of the Pacific islands at the time of their discovery there was such exuberance of the products of nature that the natives lived in a sort of paradise without much work, but it is perfectly plain that the highest civilization has never originated in such favored spots. It is not only a necessity that man should labor but the fact that he is obliged to do so is good for him and for the progress of mankind. In general, the highest civilization is to be found where men have been most industrious, and the most civilized races are those in which the habits of industry have become the most firmly fixed.

Need of labor in a new country. We have seen that land is of no avail without men, that is, without the application of human effort, and that this effort is more successful if the men are of high quality, both of body and of intelligence. In any new country the quantity of labor necessary to overcome the difficult pioneering conditions, so as to work on up to easier and more modern systems, is very great. In the American colonies, as always on the frontier, there was much work to be done at the same time that labor was scarce. There was so much land, and it was so cheap, that the tendency was for newcomers to take up new land rather than to work for wages. In the North the farms were small, and the owner and his family did the bulk of the work, hiring what little help they could. Farmers cooperated with one another in such enterprises as house-raising or barn-raising, where a number of laborers were needed. This cooperative plan has been natural and inevitable under similar conditions up to the present day. If the reader will recall what has been said in Chapter IV about the conditions in a temperate colony, what is here said will take its proper place in the perspective. He will also see how in the South, where large plantations and a staple crop were the order of the day, more crude labor was needed than was called for farther North.

The colonial labor force. But in all the colonies, especially when other industries were added to agriculture, the crying need was for labor, and various schemes were devised for obtaining workers from Europe. Because of the much land and the few men, and the consequent fact that the immigrant naturally became a landowner rather than a wage-earner, the first servants were largely "redemptioners " or slaves. Of the latter we need to say no more, for we have considered the case of the slave in Chap-ter III. The redemptioners, or indentured servants, were in reality in temporary servitude, for, not having any funds, they contracted debts for their transportation and were sold to work out these debts after they arrived. But even they, when their terms of service were over, tended to become independent proprietors.

Immigrant labor. If the colonies felt the lack of labor while agriculture was as yet almost their only industrial interest, they felt it still more painfully when manufacturing began to take a start. A number of writers in the earlier days asserted that the scarcity of labor had checked the introduction of manufactures, and the factory system with them, into America. Before the immigrants came in large numbers manufactures could flourish only where the work could be performed by women and children or where men could sell their time in dull seasons. This is the way in which the textile and the boot and shoe industries, for example, were built up ; the textile industry was the first to be organized on a modern scale in this country, and it was built up principally by the labor of women.

Preference for agriculture. There was still another reason for the backwardness of manufacturing development. The attraction of the independent life of a landowner was always drawing even the skilled newcomer away from his old occupation into agriculture, and the sentiment of the community so favored the more independent pursuit that both habit and social prejudice conspired to depreciate manufacture. It came to be associated with poverty, especially since the use of pauper labor in British factories had fixed a lasting stigma upon such employment. And in the South, as well, labor in general came to be thought of as a servile occupation a fact which strengthened the natural tendency of the colonists to seek independent employment. This is one of the main reasons why it was harder in this country to divert men from farming to industrial pursuits than it has been elsewhere.

Development of the factory. But this situation was greatly modified by the influx of immigrants, for that made possible the organization of labor in a considerable number of industries and favored the adoption of the factory system in many other branches than the textile. Even before the Civil War the part played by immigration in American industry was very great, for while the number of immigrants was small their contributions were the more needed. At times there was great industrial unrest in England and on the Continent, which drove many skilled workers to America, where they expected eventually to become proprietors of factories of their own. Many of them realized their hopes and became pioneers in great industries which developed later, introducing into this country the arts which they had learned in Europe. It is said that the infant industries of Pittsburgh were conducted largely by Scotch and English workmen, and our textile factories in New England were kept going by skilled operators from England and Ireland. The British immigrants in particular were very largely skilled workmen and were exactly what we needed in the beginnings of our industry.

Excellent quality of the early immigrants. The impetus given to American manufacture by such advantages enjoyed during its earlier stages is difficult to overestimate. Power spinning and weaving, the use of coal and coke for smelting iron, the use of puddling furnaces and rolling mills, were advantages that accrued from deriving skilled laborers from a land where the industries were more highly specialized and more advanced in every way. England had been forced by the scantiness of woodland to the use of coal, and because of large markets and the easy transportation that had been developed she had been enabled to stride for-ward to wholesale production. The use of chemicals for dyeing, as well as other applications of science to industry, were the natural contributions of old communities possessing ancient institutions of learning, ample capital for experimentation, and a market for luxuries. Some of these inventions were so dependent upon conditions not then existing in America that when one of our manufacturers chanced upon one of them it might not come into practical use until it had been re-introduced from abroad.

Skilled labor. The fact that when our industries were in their formative stages the ranks of our laboring classes were being recruited from countries industrially far in advance of us, and recruited also from a high-grade class of laborers possessing a good knowledge of machines, was a considerable factor in our earlier and later successes. The truth of this can be seen if one tries to imagine the result, had the bulk of these immigrants come, at that time, from the same regions from which the bulk of them now come. This will recall, again, our repeated contention that America was very fortunate in the quality of the human element which she was able at the outset to draw from Europe.

The need of unskilled labor. Between 1860 and 1880 immigration was proceeding at a rapid rate and our industries were fast expanding. Over five million immigrants arrived in this country during this period, but their presence was so much needed that they were successfully absorbed. The building of railroads and the development of the metallic industries called for ever larger supplies of both skilled and unskilled labor. The West was settled very largely by our native stock, whose relinquished places would not have been taken except for the multitude of newcomers who filled the gap in the labor supply and thus prevented a check on growing manufactures. Skilled labor is always in demand, but the improvements in our industries, and especially in automatic machinery, made it possible for us to use unskilled labor in our factories with considerable satisfaction. Up to 1880 nine tenths of our immigrants were from Germany, Ireland, Great Britain, Canada, and the three Scandinavian states, and were vigorous, thrifty, quick to learn, and easily molded into the American type. Yet they were, in their day, mostly unskilled, and so took a lower position in the industrial organization, while the natives rose to the higher ones. Those who wish to limit immigration should not let slip from their minds the fact that there was an immensity of hard and rough work, much of which demanded little more than willing hands, but whose performance was indispensable to our industrial and social development ; and that if the immigrants had not been on hand to do this work, either it would not have been done at all or much else that was done would have had to be omitted.

Rise of the immigrant. It is a fact, as we have seen in a former chapter, that in later years this country has been the refuge of those who have had very few chances at home, and also of many whose manner of life does not fit into ours very well ; but if the whole course of immigration into this country is considered, it is seen that, although every new set of immigrants was slipped in, as it were, at the bottom of the social pile, yet under the system of freedom and opportunity characteristic of this country it has always been possible for the industrious and enterprising to work themselves up among the older and higher layers. This has been the Land of Promise for many decades to hordes of the miserable and oppressed ; and there is no doubt but that the opportunities accorded have been happily taken advantage of by thousands. And at the same time this country has profited by the labor supply afforded it at a time when that supply, even though of low quality, was much in demand. This is certainly true, whatever doubts one may now have about the continuance of our free-and-easy methods in the matter of immigration.

Colonial wages. The conditions of labor in colonial times, even when such labor was free, seem to us, in the light of present-day conditions, quite bad ; and this is true of the early part of the last century. An unskilled workman would earn some-thing like fifty cents a day, and the working hours were from sunrise to sunset. With the opening of the West the condition of the unskilled laborer somewhat improved and he received a dollar a day. It must be realized that these sums represented at that time a much higher purchasing power than they had later. There was not so much to complain of as one would judge at first sight ; and then, of course, labor was so far from organized that any complaints that did arise were local and isolated.

The labor movement. But during the third decade of the last century there arose what might be called a real labor movement. It did not start because of bad conditions in our factories, for outside of the textile industry, which employed mostly women and children, factories of any size were few. What movement there was grew up as a protest against a system, developed by merchants and capitalists, which, it was thought, was reducing mechanics of various degrees of skill to a common level of wage-dependency. This movement, as well as a number of others before the middle of the century, had only a brief career. A trade-union movement was developed about 1853 which showed more strength and in which attention was directed toward bettering conditions in the trades ; and, after the Civil War had shown that industries were to be run by free labor, most labor movements were in the direction of improving the conditions of the free laborers.

Labor organization and legislation. All through this book we have noticed that the middle of the nineteenth century and the Civil War have formed a point of departure for industrial development of a higher order in many fields. The growth of population and its tendency to concentrate in cities, together with the marked development of manufacturing industries, evoked new labor conditions of a more modern order. The size of the industrial plant increased and the workman was no longer personally known to his employer. But when people who have business relations are thus separated, they naturally fall out of harmony with one another and into a mood of suspicion and opposition. Conflicts arose between labor and capital ; then labor was more firmly organized and began to bring about the large mass of labor legislation that had to do with hours of labor, employment of women and children, and other such desirable reforms which cannot in all cases be expected from employers. The bulk of such legislation has been passed since 1880, but Massachusetts had led the way as early as 1866 by passing an eight-hour law for children under fourteen. Most of the early labor legislation was in favor of women and children. Improvements in labor conditions have been brought about largely by the creation of organizations so that laborers could act as a unit in looking after their interests.

The labor union. Prior to the Civil War there were very few labor unions in this country, but many were formed between 1860 and 187o in connection with the most important trades. The strike was the weapon used by the labor unions to secure their ends ; but it was not until the late seventies that strikes became significant enough to attract public attention ; it was in 1877 that a widespread railroad strike gave the American people their first realization of the problems which the great growth of industry and the creation of much wealth were bringing upon the country. Whether or not we credit it to the labor organizations, it is a fact that labor conditions have greatly improved during the last few decades ; working hours have been shortened, wages have risen, and the general condition of the bulk of industrial workers is much more satisfactory than it was before the Civil War. Outside of the body of industrial workers such progress has not been shown ; and this is particularly true of the agricultural laborers, who could not very readily organize and whose wages and hours of work have remained until very recently much as they were a half-century ago.

Capital and labor. It is not our intention in this place to enter into the pros and cons of the many disputes between capital and labor. We shall describe several movements which have resulted in better relations between the two, as examples of what may be won by intelligent study of the conditions. But it should be recognized by every intelligent American citizen that capital and labor cannot be independent of one another but must always be interdependent. Industries cannot exist without the laborers or without the capital, nor can the laborers exist without the industries and the capital behind them. The interests of the two parties should be the same, and it is to be hoped that some form of adjustment will be arrived at so that industrial peace will come out of what has so often been industrial war. The capitalist can-not accept dictation from the laborer, nor can the laborer consent to allow the capitalist to dictate conditions of employment. Discussion and cooperation between the two is better than is dictation on the part of either. Increasing responsibility on the part of the capitalist or the organization which he represents, on the one hand, and the laborer or his trade union, on the other, is essential to the carrying out of whatever agreement may be made between the parties.

Employers' liability. In recent years we have turned our attention to the safeguarding of the life and limb of the laborer. Under the common law the employer has long been required to afford his employees safe labor conditions. He was not, however, responsible for injuries caused to workmen which were " incident to the business," nor was he liable for the negligence of a fellow servant. Consequently an employer, if he so desired, was until recently able to shift practically all responsibility for industrial accidents upon others than himself. But many states have , now modified this common-law doctrine so as to make the employer assume liability in many more cases of accident than formerly. In 1914 we had practically no workmen's compensation laws in any of the states, whereas, at the present day, there are few states without such laws.

Workmen's compensation. The compensation of workmen who meet with accidents is vitally connected with very grave social issues, especially with that of poverty. As the factory system has grown to larger and larger dimensions the world has experienced a tremendous industrial expansion, and along with this there has grown up notorious disregard for human life. In a single year in the United States a half million or more of laborers are killed outright or injured ; and many of those who are injured are disabled for life, while others are incapacitated for varying periods. And then there are the families which are dependent upon the killed or injured workmen and which, because of the loss of income and the extra expenditures involved, often fall into a truly pitiable condition. It is plain that industrial accidents should be reduced to the lowest possible number and that proper compensation or indemnification should be provided. All such human misery should be reduced to its lowest limits. But this is a knotty problem, for justice must be done at the same time to both the employer and the employed.

Industrial accidents. We have seen that until a few decades ago the whole burden of industrial accidents, excepting those for which the employer could be shown to be solely to blame, had been borne by the workman. The idea which prevailed was that the workman in taking the job would figure on the peril to life and limb, and that as a consequence of his steering clear of dangerous occupations there would be a scarcity of laborers in them and the wages would be so high as to justify the venture. But this theory, like so many others that neglect the plain facts of life and of human nature, did not work out. Laborers have only the most general idea of the danger of occupations, and they do not expect to suffer by them. There are usually plenty of candidates for positions as switchmen on railroads, although the occupation is a hazardous one and is not highly paid. What the laborer out of work generally has to do is to take the job which he can get ; he is seldom well enough off to. wait until he can pick and choose. Thus the plan for making the individual laborer work out his own salvation in taking a job and standing the risk does not succeed.

Evasion of compensation. On the other hand, the plan of employers' liability as it existed under the common law did not prove satisfactory. An employer could evade liability by establishing any one of three defenses : (1) contributory negligence, (2) assumption of risk, and (3) the fellow-servant rule. The first of these means that an injury is caused by the negligence of the injured man ; the assumption of risk means that if there is an injury caused by a danger inherent in the occupation, the employee is as well able to protect himself as the employer to protect him ; and `the third defense rests on the contention that if an injury is caused by the negligence of a fellow workman, the employer is not liable. According to the common law the establishment of any one of these defenses nullifies the liability of the employer ; but, as can easily be seen, no one of the three would be very difficult for a sharp lawyer to establish.

Workmen's compensation laws. When it was found that this common-law system of employers' liability was full of defects, and that only a small proportion of the injured received compensation, the remedy was sought in the adoption, by the various states, of workmen's compensation laws. The general theory back of these laws is that industry should assume the burden of loss of life or the burden of accident, just as industry bears the expense of new machinery or of repairing old machinery. The machine helps to make the product ; so does the workman. If a machine is broken it must be repaired or replaced ; and similarly if a workman is injured or killed there must be a reparation and compensation. And there is also behind these compensation laws the general principle that compensation shall be forthcoming with-out regard to the question as to whose fault it was that the accident took place. This enables every person injured in the course of duty to obtain compensation in proportion to the degree of disability incurred.

Insurance. This puts a considerable risk upon the employer, and he generally takes recourse, as in the case of other risks, to insurance. The upshot of the laws is, then, that employers must incur an additional steady expenditure in order that the workman may be protected ; it is, of course, possible for the employer to pass this item on to the consumer in the form of a higher price for the product, so that the public pays. But it is a service to society to protect and compensate its members against the risks of life, and society has seemed well content to shoulder the burden. In any case, there is now no uncertainty as to the basis of liability, nor yet concerning the amount of the indemnity, for there are definite schedules covering this matter ; and it is now reasonably certain that the injured will be able to collect promptly, whereas under the older system there might be protracted bickerings and legal procedure leading to a barren result in the end. It looks very much as if we had worked out a system much better adapted to comfortable living than was the one which preceded it.

Group life insurance. A new phase of insurance, designed for the benefit of the employees of a concern, is what is known as group life insurance. A number of companies have recently adopted this as a Christmas gift or bonus to their employees. This form of insurance is designed to increase the efficiency and stimulate the loyalty of the workers, so as to strengthen mutual good will and make the business relations between employer and employee closer and more permanent. The amount of insurance has for its basis generally a year's wages or salary, with about $3000 as the limit; or each employee is given $500 or $1000 worth of insurance which is to be increased, up to a certain point, by $100 annually for each additional year of service. Group life insurance is ordinarily carried, for the concern in question, by one or more insurance companies ; but in some cases it is assumed by the employing corporations themselves, just as some large shipping concerns insure their own vessels rather than have them insured by companies.

A case of insurance. In illustration of this device we might mention the case of the Union Pacific Railroad, which, on January I, 1917, had 35,000 to 40,000 of its employees insured with-out any cost to themselves, the company carrying the premium. They were also insured in a large casualty company against loss by accident and sickness. The total insurance amounted to about $30,000,000, and the annual premium charges to about $750,000.

How " having a heart" pays. It is entirely likely that projects of this sort really pay in the end. It is impossible to ignore the fact that human beings have emotions, and that their efficiency varies with their state of mind. If a laborer is always worried about the future, and thinks that his employer has no interest in his welfare, he cannot work with the zest or the success which he might attain if he had more peace of mind. There are types of laborers upon whose stupidity or bad disposition no amount of consideration will make any impression. If they are given an inch they will take an ell. Such persons do not deserve consideration. But the ordinary normal human being is the one for whose benefit these schemes are devised, and the preliminary returns seem to prove that real results are obtained.

The labor question. The question of labor, like that of capital, is one upon which many volumes have been written. It is out of the question to make any complete survey of the various plans to promote its efficiency which have been tried. But the above paragraphs describe some of the most important conditions and devices for securing adjustment that are connected with this subject, and exhibit the historic trend of events which has accompanied the development of our industries since colonial times.

Retrospect. And now, in the course of this book, we have set before the reader a series of fundamental facts out of the history of American industries and trade. The first essentials were the land and the people, and we briefly described the productive areas, with their natural resources, and then the human element and its social development. The rest of the book has been a presentation of the various efforts put forth by man to utilize the land and its products, and the results attained by such efforts. Thus have been developed the agricultural industries, the animal industries, the mineral, manufacturing, and transportation industries. And, finally, we have considered the various methods adopted or proposed whereby each and all of our industries have been or may be raised to a higher grade.

Industrial life is only one part of social life. We have under-taken to make a survey of a certain section of the nation's life ; that is, of its industrial and commercial development. But it must not be forgotten that this section of the national life cannot be separated from other sections except for purposes of study, for if we wish to see our industrial life in operation, we can never see it thus by itself. There are other sets of national institutions

such as the domestic, the political, and the religious which exist side by side with the industrial institutions, and which deeply influence them and are deeply influenced by them. In fact, these several sets of institutions do not really exist side by side,, but completely interpenetrate one into another, so that they have- no independent life of their own, but form one living body and one life, which is the life of the nation.

The need of understanding our national life as a whole. A true industrial education is, therefore, not complete unless its recipient has arrived at some conception of the relationship between the national industrial life and other aspects of the national life. This means that that man has the best industrial education who has not limited himself strictly to the study of industry, but who has also read and reflected upon the other aspects of national life and their relations one with another. It is necessary for the purpose of study to take up one section of our national life at a time, and so we have a history of American politics, for example, as well as a history of American industries and commerce. In the present book we have confined ourselves to the latter topic, but we cannot conclude our work without warning the reader once again that industrial life is but part of the national life and cannot be thoroughly understood without a comprehension of that life as a whole. When one has derived a conception of our American industrial and commercial organization from some such series of facts and conclusions as the one we have here presented, he must realize that his conception is still incomplete until it is expanded to take in a vision of the industrial organization in its mutual relations with the rest of the national structure.

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