Chapter 8

THE "GREENBACK" PERIOD, 1862-1879

The few national trade unions which were formed at the close of the fifties did not constitute by themselves a labor movement. It needed the industrial prosperity caused by the price inflation of the Civil War time to bring forth again a mass movement of labor.

We shall say little of labor's attitude towards the question of war and peace before the War had started. Like many other citizens of the North and the Border States the handful of organized workers favored a compromise. They held a labor convention in Philadelphia, in which a great labor leader of the sixties, William H. Sylvis, President of the International Molders' Union, took a prominent part and pronounced in favor of the compromise solution advanced by Congressman Crittenden of Kentucky. But no sooner had Fort Sumter been fired upon by the secessionists than labor rallied to the support of the Federal Union. Entire local unions enlisted at the call of President Lincoln, and Sylvis himself assisted in recruiting a company composed of molders.

The first effect of the War was a paralysis of business and an increase of unemployment. The existing labor organizations nearly all went to the wall. The period of industrial stagnation, however, lasted only until the middle of 1862.

The legal tender acts of 1862 and 1863 authorized the issue of paper currency of "greenbacks" to the amount of $1,050,000,000, and immediately prices began to soar. For the next sixteen years, namely until 1879, when the government resumed the redemption of greenbacks in gold, prices of commodities and labor expressed in terms of paper money showed varying degrees of inflation; hence the term "greenback" period. During the War the advance in prices was due in part to the extraordinary demand by the government for the supply of the army and, of course, to speculation.

In July 1863, retail prices were 43 percent above those of 1860 and wages only 12 percent above; in July 1864, retail prices rose to 70 percent and wages to 30 percent above 1860; and in July 1865, prices rose to 76 percent and wages only to 50 percent above the level of 1860. The unequal pace of the price movement drove labor to organize along trade-union lines.

The order observed in the thirties was again followed out. First came a flock of local trade unions; these soon combined in city centrals--or as they came to be called, trades' assemblies--paralleling the trades' union of the thirties; and lastly, came an attempt to federate the several trades' assemblies into an International Industrial Assembly of North America. Local trade unions were organized literally in every trade beginning in the second half of 1862. The first trades' assembly was formed in Rochester, New York, in March 1863; and before long there was one in every town of importance. The International Industrial Assembly was attempted in 1864, but failed to live up to the expectations: The time had passed for a national federation of city centrals. As in the thirties the spread of unionism over the breadth of the land called out as a counterpart a widespread movement of employers' associations. The latter differed, however, from their predecessors in the thirties in that they made little use of the courts in their fight against the unions.

The growth of the national trade unions was a true index of the condition of business. Four were organized in 1864 as compared to two organized in 1863, none in 1862, and one in 1861. During 1865, which marked the height of the intense business activity, six more national unions were organized. In 1866 industry entered upon a period of depression, which reached its lowest depth in 1867 and continued until 1869. Accordingly, not a single national union was organized in 1866 and only one in 1867. In 1868 two new national labor unions were organized. In 1869 two more unions were formed--a total of seven for the four depressed years, compared with ten in the preceding two prosperous years. In the summer of 1870 business became good and remained good for approximately three years. Nine new national unions appeared in these three years. These same years are marked also by a growth of the unions previously organized. For instance, the machinists and blacksmiths, with only 1500 members in 1870, had 18,000 in 1873. Other unions showed similar gains.

An estimate of the total trade union membership at any one time (in view of the total lack of reliable statistics) would be extremely hazardous. The New York _Herald_ estimated it in August 1869, to be about 170,000. A labor leader claimed at the same time that the total was as high as 600,000. Probably 300,000 would be a conservative estimate for the time immediately preceding the panic of 1873.

Although the strength of labor was really the strength of the national trade unions, especially during the depression of the later sixties, far greater attention was attracted outside as well as inside the labor movement by the National Labor Union, a loosely built federation of national trade unions, city trades' assemblies, local trade unions, and reform organizations of various descriptions, from philosophical anarchists to socialists and woman suffragists. The National Labor Union did not excel in practical activity, but it formed an accurate mirror of the aspirations and ideals of the American mechanics of the time of the Civil War and after. During its six years' existence it ran the gamut of all important issues which agitated the labor movement of the time.

The National Labor Union came together in its first convention in 1866. The most pressing problem of the day was unemployment due to the return of the demobilized soldiers and the shutting down of war industries. The convention centered on the demand to reduce the working day to eight hours. But eight hours had by that time come to signify more than a means to increase employment. The eight-hour movement drew its inspiration from an economic theory advanced by a self-taught Boston machinist, Ira Steward. And so naturally did this theory flow from the usual premises in the thinking of the American workman that once formulated by Steward it may be said to have become an official theory of the labor movement.

Steward's doctrine is well expressed by a couplet which was very popular with the eight-hour speakers of that period: "Whether you work by the piece or work by the day, decreasing the hours increases the pay." Steward believed that the amount of wages is determined by no other factor than the worker's standard of living. He held that wages cannot fall below the standard of living not because, as the classical economists said, it would cause late marriages and a reduction in the supply of labor, but solely because the wage earner will refuse to work for less than enough to maintain his standard of living. Steward possessed such abundant faith in this purely psychological check on the employer that he made it the cornerstone of his theory of social progress. Raise the worker's standard of living, he said, and the employer will be immediately forced to raise wages; no more can wages fall below the level of the worker's standard of living than New England can be ruled against her will. The lever for raising the standard of living was the eight-hour day. Increase the worker's leisure and you will increase his wants; increase his wants and you will immediately raise his wages. Although he occasionally tried to soften his doctrine by the argument that a shorter work-day not only does not decrease but may actually increase output, his was a distinctly revolutionary doctrine; he aimed at the total abolition of profits through their absorption into wages. But the instrument was nothing more radical than a progressive universal shortening the hours.

So much for the general policy. To bring it to pass two alternatives were possible: trade unionism or legislation. Steward chose the latter as the more hopeful and speedy one. Steward knew that appeals to the humanity of the employers had largely failed; efforts to secure the reform by cooperation had failed; the early trade unions had failed; and there seemed to be no recourse left now but to accomplish the reduction of hours by legislative enactment.

In 1866 Steward organized the Grand Eight-Hour League of Massachusetts as a special propagandist organization of the eight-hour philosophy. The League was a secret organization with pass words and obligations, intended as the central organization of a chain of subordinate leagues in the State, afterwards to be created. Of a total of about eighty local leagues in existence from 1865 to 1877, about twenty were in Massachusetts, eight elsewhere in New England, at least twenty-five in Michigan, four or five in Pennsylvania, about seven in Illinois, as many in Wisconsin, and smaller numbers in Missouri, Iowa, Indiana, and California. Michigan, Illinois, Iowa, and Pennsylvania had each a Grand Eight-Hour League. Practically all of these organizations disappeared soon after the panic of 1873.

The National Labor Union centered on the passage of an eight-hour law for employes of the Federal government. It was believed, perhaps not without some justice, that the effect of such law would eventually lead to the introduction of the same standard in private employment--not indeed through the operation of the law of supply and demand, for it was realized that this would be practically negligible, but rather through its contagious effect on the minds of employes and even employers. It will be recalled that, at the time of the ten-hour agitation of the thirties, the Federal government had lagged about five years behind private employers in granting the demanded concession. That in the sixties the workingmen chose government employment as the entering wedge shows a measure of political self-confidence which the preceding generation of workingmen lacked.

The first bill in Congress was introduced by Senator Gratz Brown of Missouri in March 1866. In the summer a delegation from the National Labor Union was received by President Andrew Johnson. The President pointed to his past record favorable to the workingmen but refrained from any definite promises. Finally, an eight-hour bill for government employes was passed by the House in March 1867, and by the Senate in June 1868. On June 29, 1868, President Johnson signed it and it went into effect immediately.

The result of the eight-hour law was not all that the friends of the bill hoped. The various officials in charge of government work put their own interpretations upon it and there resulted much diversity in its observance, and consequently great dissatisfaction. There seemed to be no clear understanding as to the intent of Congress in enacting the law. Some held that the reduction in working hours must of necessity bring with it a corresponding reduction in wages. The officials' view of the situation was given by Secretary Gideon Wells. He pointed out that Congress, by reducing the hours of labor in government work, had forced upon the department of the Navy the employment of a larger number of men in order to accomplish the necessary work; and that at the same time Congress had reduced the appropriation for that department. This had rendered unavoidable a twenty percent reduction in wages paid employes in the Navy Yard. Such a state of uncertainty continued four years longer. At last on May 13, 1872, President Grant prohibited by proclamation any wage reductions in the execution of the law. On May 18, 1872, Congress passed a law for the restitution of back pay.

The expectations of the workingmen that the Federal law would blaze the way for the eight-hour system in private employment failed to materialize. The depression during the seventies took up all the impetus in that direction which the law may have generated. Even as far as government work is concerned forty years had to elapse before its application could be rounded out by extending it to contract work done for the government by private employers.

We have dealt at length with this subject because it marked an important landmark. It demonstrated to the wage earners that, provided they concentrated on a modest object and kept up a steady pressure, their prospects for success were not entirely hopeless, hard as the road may seem to travel. The other and far more ambitious object of the workingman of the sixties, that of enacting general eight-hour laws in the several States, at first appeared to be within easy reach--so yielding political parties and State legislatures seemed to be to the demands of the organized workmen. Yet before long these successes proved to be entirely illusory.

The year 1867 was the banner year for such State legislation. Eight-hour laws were passed in Illinois, Wisconsin, Connecticut, Missouri, and New York. California passed such a law in 1868. In Pennsylvania, Michigan, Maryland, and Minnesota bills were introduced but were defeated. Two common features characterized these laws, whether enacted or merely proposed to the legislatures. There were none which did not permit of longer hours than those named in the law, provided they were so specified in the contract. A contract requiring ten or more hours a day was perfectly legal. The eight-hour day was the legal day only "when the contract was silent on the subject or where there is no express contract to the contrary," as stated in the Wisconsin law. But the greatest weakness was a lack of a provision for enforcement. New York's experience is typical and characteristic. When the workingmen appealed to Governor Fenton to enforce the law, he replied that the act had received his official signature and he felt that it "would be an unwarrantable assumption" on his part to take any step requiring its enforcement. "Every law," he said, "was obligatory by its own nature, and could derive no additional force from any further act of his."

In Massachusetts, however, the workingmen succeeded after hard and protracted labor in obtaining an enforceable ten-hour law for women--the first effective law of its kind passed in any American State. This law, which was passed in 1874, provides that "no minor under the age of eighteen years, and no woman over that age" shall be employed more than ten hours in one day or sixty hours in any one week in any manufacturing establishment in the State. The penalty for each violation was fixed at fifty dollars.

The repeated disappointments with politics and legislation led in the early seventies to a revival of faith in trade unionism. Even in the early sixties we find not a few unions, national and local, limiting their hours by agreement with employers. The national unions, however, for the most part left the matter to the local unions for settlement as their strength or local conditions might dictate. In some cases the local unions were advised to accept a reduction of wages in order to secure the system, showing faith in Steward's theory that such reduction could not be permanent.

The movement to establish the eight-hour day through trade unionism reached its climax in the summer of 1872, when business prosperity was at its height. This year witnessed in New York City a general eight-hour strike. However, it succeeded in only a few trades, and even there the gain was only temporary, since it was lost during the years of depression which followed the financial panic of 1873.

To come back to the National Labor Union. At the second convention in 1867 the enthusiasm was transferred from eight-hour laws to the bizarre social reform philosophy known as "greenbackism."

"Greenbackism" was, in substance, a plan to give the man without capital an equal opportunity in business with his rich competitor. It meant taking away from bankers and middlemen their control over credit and thereby furnishing credit and capital through the aid of the government to the producers of physical products. On its face greenbackism was a program of currency reform and derived its name from the so-called "greenback," the paper money issued during the Civil War. But it was more than currency reform--it was industrial democracy.

"Greenbackism" was the American counterpart of the contemporary radicalism of Europe. Its program had much in common with that of Lassalle in Germany who would have the state lend its credit to cooperative associations of workingmen in the confident expectation that with such backing they would drive private capitalism out of existence by the competitive route. But greenbackism differed from the scheme of Lassalle in that it would utilize the government's enormous Civil War debt, instead of its taxing power, as a means of furnishing capital to labor. This was to be done by reducing the rate of interest on the government bonds to three percent and by making them convertible into legal tender currency and convertible back into bonds, at the will of the holder of either. In other words, the greenback currency, instead of being, as it was at the time, an irredeemable promise to pay in specie, would be redeemable in government bonds. On the other hand, if a government bondholder could secure slightly more than three percent by lending to a private borrower, he would return his bonds to the government, take out the corresponding amount in greenbacks and lend it to the producer on his private note or mortgage. This would involve, of course, the possible inflation of legal tender currency to the amount of outstanding bonds. But inflation was immaterial, since all prices would be affected alike and meanwhile the farmers, the workingmen, and their cooperative establishments would be able to secure capital at slightly more than three percent instead of the nine or twelve percent which they were compelled to pay at the bank. Thereby they would be placed on a competitive level with the middleman, and the wage earner would be assisted to escape the wage system into self-employment.

Such was the curious doctrine which captured the leaders of the organized wage earners in 1867. The way had indeed been prepared for it in 1866, when the wage earners espoused producers' cooperation as the only solution. But, in the following year, 1867, they concluded that no system of combination or cooperation could secure to labor its natural rights as long as the credit system enabled non-producers to accumulate wealth faster than labor was able to add to the national wealth. Cooperation would follow "as a natural consequence," if producers could secure through legislation credit at a low rate of interest. The government was to extend to the producer "free capital" in addition to free land which he received with the Homestead Act.

The producers' cooperation, which offered the occasion for the espousal of greenbackism, was itself preceded by a movement for consumers' cooperation. Following the upward sweep of prices, workmen had begun toward the end of 1862 to make definite preparations for distributive cooperation. They endeavored to cut off the profits of the middleman by establishing cooperative grocery stores, meat markets, and coal yards. The first substantial effort of this kind to attract wide attention was the formation in December 1862, of the Union Cooperative Association of Philadelphia, which opened a store. The prime mover and the financial secretary of this organization was Thomas Phillips, a shoemaker who came from England in 1852, fired with the principles of the Rochdale pioneers, that is, cash sales, dividends on purchases rather than on stock, and "one man, one vote." By 1866 the movement had extended until practically every important industrial town between Boston and San Francisco had some form of distributive cooperation. This was the high tide of the movement. Unfortunately, the condition of the country was unfavorable to these enterprises and they were destined to early collapse. The year 1865 witnessed disastrous business failures. The country was in an uncertain condition and at the end of the sixties the entire movement had died out.

From 1866 to 1869 experiments in productive cooperation were made by practically all leading trades including the bakers, coach makers, collar makers, coal miners, shipwrights, machinists and blacksmiths, foundry workers, nailers, ship carpenters, and calkers, glass blowers, hatters, boiler makers, plumbers, iron rollers, tailors, printers, needle women, and molders. A large proportion of these attempts grew out of unsuccessful strikes. The most important undertakings were among the workers in iron, undoubtedly due in large measure to the indefatigable efforts of William H. Sylvis, the founder of the Iron Molders' International Union.

At the close of 1869 members of the Iron Molders' International Union owned and operated many cooperative foundries chiefly in New York and Pennsylvania. The first of the foundries established at Troy in the early summer of 1866 was followed quickly by one in Albany and then during the next eighteen months by ten more--one each in Rochester, Chicago, Quincy, Louisville, Somerset, Pittsburgh, and two each in Troy and Cleveland. The original foundry at Troy was an immediate financial success and was hailed with joy by those who believed that under the name of cooperationists the baffled trade unionists might yet conquer. The New York _Sun_ congratulated the iron molders of Troy and declared that Sylvis had checkmated the association of stove manufacturers and, by the establishment of this cooperative foundry, had made the greatest contribution of the year to the labor cause.

But the results of the Troy experiment, typical of the others, show how far from a successful solution of the labor problem is productive cooperation. Although this "Troy Cooperative Iron Founders' Association" was planned with great deliberation and launched at a time when the regular stove manufacturers were embarrassed by strikes, and although it was regularly incorporated with a provision that each member was entitled to but one vote whether he held one share at $100, or the maximum privilege of fifty in the total of two thousand shares, it failed as did the others in furnishing permanent relief to the workers as a class. At the end of the third year of this enterprise, the _American Workman_ published a sympathetic account of its progress unconsciously disclosing its fatal weakness, namely, the inevitable tendency of cooperators to adopt the capitalistic view. The writer of this account quotes from these cooperators to show that "the fewer the stockholders in the company the greater its success."

A similar instance is furnished by the Cooperative Foundry Company of Rochester. This venture has also been a financial success, though a partial failure as a cooperative enterprise. When it was established in 1867 all employes were stockholders and profits were divided as follows: Twelve percent on capital and the balance in proportion to the earnings of the men. But the capitalist was stronger than the cooperative brother. Dividends on capital were advanced in a few years to seventeen and one-half percent, then to twenty-five, and finally the distribution of any part of the profits in proportion to wages was discontinued. Money was made every year and dividends paid, which in 1884 amounted to forty percent on the capital. At that time about one-fifth of the employes were stockholders. Also in this case cooperation did not prevent the usual conflict between employer and employe, as is shown in a strike of three and a half months' duration. It is interesting to notice that one of the strikers, a member of the Molders' Union, owned stock to the amount of $7000.

The machinists, too, throughout this period took an active interest in cooperation. Their convention which met in October, 1865, appointed a committee to report on a plan of action to establish a cooperative shop under the auspices of the International Union. The plan failed of adoption, but of machinists' shops on the joint-stock plan there were a good many. Two other trades noted for their enthusiasm for cooperation at this time were the shoemakers and the coopers. The former, organized in the Order of St. Crispin, then the largest trade union in the country, advocated cooperation even when their success in strikes was at its height. "The present demand of the Crispin is steady employment and fair wages, but his future is self-employment" was one of their mottoes. During the seventies they repeatedly attempted to carry this motto into effect. The seventies also saw the beginning of the most successful single venture in productive cooperation ever undertaken in this country, namely, the eight cooperative cooperage shops in Minneapolis, which were established at varying intervals from 1874 to 1886. The coopers took care to enforce true cooperation by providing for equal holding of stock and for a division of ordinary profits and losses in proportion to wages. The cooper shops prospered, but already ten years later four out of the eight existing in 1886 had passed into private hands.

In 1866 when the eight-hour demand was as yet uppermost, the National Labor Union resolved for an independent labor party. The espousal of greenbackism in 1867 only reenforced that resolution. The leaders realized only too well that neither the Republican nor Democratic party would voluntarily make an issue of a scheme purporting to assist the wage earner to become an independent producer. Accordingly, the history of the National Labor Union became largely the history of labor's first attempt to play a lone political hand on a national scale.

Each annual session of the National Labor Union faithfully reaffirmed the decision to "cut loose" from the old parties. But such a vast undertaking demanded time. It was not until 1872 that the National Labor Union met as a political convention to nominate a national ticket. From the first the stars were inauspicious. Charges were made that political aspirants sought to control the convention in order to influence nominations by the Republican and Democratic parties. A "greenback" platform was adopted as a matter of course and the new party was christened the National Labor and Reform Party. On the first formal ballot for nomination for President, Judge David Davis of Illinois, a personal friend of Abraham Lincoln, received 88 votes, Wendell Phillips, the abolitionist, 52, and the remainder scattered. On the third ballot Davis was nominated. Governor J. Parker of New Jersey was nominated for Vice-President. At first Judge Davis accepted the nomination, but resigned after the Democrats had nominated Horace Greeley. The loss of the candidate spelled the death of the party. The National Labor Union itself had been only an empty shell since 1870, when the national trade unions, disaffected with the turn towards politics, withdrew. Now, its pet project a failure, it, too, broke up.

In 1873, on the eve of the financial panic, the national trade unions attempted to reconstruct a national labor federation on a purely trade-union basis in the form of a National Industrial Congress. But the economic disaster of the panic nipped it in the bud just as it cut off the life of the overwhelming majority of the existing labor organizations. Another attempt to get together on a national basis was made in the National Labor Congress at Pittsburgh in 1876. But those who responded were not interested in trade unionism and, mirroring the prevailing labor sentiment during the long years of depressions, had only politics on their mind, greenback or socialist. As neither greenbacker nor socialist would meet the other half-way, the attempt naturally came to naught.

Greenbackism was popular with the working people during the depressed seventies because it now meant to them primarily currency inflation and a rise of prices and, consequently, industrial prosperity--not the phantastic scheme of the National Labor Union. Yet in the Presidential election of 1876 the Greenback party candidate, Peter Cooper, the well known manufacturer and philanthropist, drew only a poor 100,000, which came practically from the rural districts only. It was not until the great strikes of 1877 had brought in their train a political labor upheaval that the greenback movement assumed a formidable form.

The strikes of 1877, which on account of the wide area affected, the degree of violence displayed, and the amount of life and property lost, impressed contemporaries as being nothing short of social revolution, were precipitated by a general ten percent reduction in wages on the three trunk lines running West, the Pennsylvania, the Baltimore & Ohio, and the New York Central, in June and July 1877. This reduction came on top of an earlier ten percent reduction after the panic. The railway men were practically unorganized so that the steadying influence of previous organization was totally lacking in the critical situation of unrest which the newly announced wage reduction created. One must take also into account that in the four terrible years which elapsed since the panic, America had developed a new type of a man--the tramp--who naturally gravitated towards places where trouble was expected.

The first outbreak occurred at Martinsburg, West Virginia, on July 17, the day after the ten percent reduction had gone into effect. The strike spread like wildfire over the adjacent sections of the Baltimore & Ohio road, the strikers assuming absolute control at many points. The militia was either unwilling or powerless to cope with the violence. In Baltimore, where in the interest of public safety all the freight trains had stopped running, two companies of militia were beleaguered by a mob to prevent their being dispatched to Cumberland, where the strikers were in control. Order was restored only when Federal troops arrived.

But these occurrences fade into insignificance when compared with the destructive effects of the strike on the Pennsylvania in and around Pittsburgh. The situation there was aggravated by a hatred of the Pennsylvania railway corporation shared by nearly all residents on the ground of an alleged rate discrimination against the city. The Pittsburgh militia fraternized with the strikers, and when 600 troops which arrived from Philadelphia attempted to restore order and killed about twenty rioters, they were besieged in a roundhouse by a furious mob. In the battle the railway yards were set on fire. Damages amounting to about $5,000,000 were caused. The besieged militia men finally gained egress and retreated fighting rear-guard actions. At last order was restored by patrols of citizens. The strike spread also to the Erie railway and caused disturbances in several places, but not nearly of the same serious nature as on the Baltimore & Ohio and the Pennsylvania. The other places to which the strike spread were Toledo, Louisville, Chicago, St. Louis, and San Francisco.

The strikes failed in every case but their moral effect was enormous. The general public still retained a fresh memory of the Commune of Paris of 1871 and feared for the foundations of the established order. The wage earners, on the other hand, felt that the strikers had not been fairly dealt with. It was on this intense labor discontent that the greenback agitation fed and grew.

Whereas in 1876 the greenback labor vote was negligible, notwithstanding the exhortations by many of the former trade union leaders who turned greenback agitators, now, following the great strikes, greenbackism became primarily a labor movement. Local Greenback-Labor parties were being organized everywhere and a national Greenback-Labor party was not far behind in forming. The continued industrial depression was a decisive factor, the winter of 1877-1878 marking perhaps the point of its greatest intensity. Naturally the greenback movement was growing apace. One of the notable successes in the spring of 1878 was the election of Terence V. Powderly, later Grand Master Workman of the Knights of Labor, as mayor of Scranton, Pennsylvania.

The Congressional election in the autumn of 1878 marked the zenith of the movement. The aggregate greenback vote cast in the election exceeded a million, and fourteen Representatives were sent to Congress. In New England the movement was strong enough to poll almost a third of the total vote in Maine, over 8 percent of the total vote in both Connecticut and New Hampshire, and from 4 to 6 percent, in the other States. In Maine the greenbackers elected 32 members of the upper house and 151 members of the lower house and one Congressman, Thompson Murch of Rochland, who was secretary of the National Granite Cutters' Union. However, the bulk of the vote in that State was obviously agricultural. In Massachusetts, the situation was dominated by General Benjamin F. Butler, lifelong Republican politician, who had succeeded in getting the Democratic nomination for governor and was endorsed by the Greenback convention. He received a large vote but was defeated for office.

But just as the Greenback-Labor movement was assuming promising proportions a change for the better in the industrial situation cut under the very roots of its existence. In addition, one month after the election of 1878, its principal issue disappeared. January 1, 1879, was the date fixed by the act for resumption of redemption of greenbacks in gold and on December 17, 1878, the premium on gold disappeared. From that day on, the greenback became a dead issue.

Another factor of great importance was the large increase in the volume of the currency. In 1881 the currency, which had averaged about $725,000,000 for the years 1876-1878, reached over $1,111,000,000. Under these conditions, all that remained available to the platform-makers and propagandists of the party was their opposition to the so-called "monopolistic" national banks with their control over currency and to the refunding of the bonded debt of the government.

The disappearance of the financial issue snapped the threads which had held together the farmer and the wage-worker. So long as depression continued, the issue was financial and the two had, as they thought, a common enemy--the banker. The financial issue once settled, or at least suspended, the object of the attack by labor became the employer, and that of the attack by the farmer--the railway corporation and the warehouse man. Prosperity had mitigated the grievances of both classes, but while the farmer still had a great deal to expect from politics in the form of state regulation of railway rates, the wage earners' struggle now turned entirely economic and not political.

In California, as in the Eastern industrial States, the railway strikes of 1877 precipitated a political movement. California had retained gold as currency throughout the entire period of paper money, and the labor movement at no time had accepted the greenback platform. The political issue after 1877 was racial, not financial, and the weapon was not merely the ballot, but also "direct action"--violence. The anti-Chinese agitation in California, culminating as it did in the Exclusion Law passed by Congress in 1882, was doubtless the most important single factor in the history of American labor, for without it the entire country might have been overrun by Mongolian labor and the labor movement might have become a conflict of races instead of one of classes.[10]

The seventies witnessed another of those recurring attempts of consumers' cooperation already noticed in the forties and sixties. This time the movement was organized by the "Sovereigns of Industry," a secret order, founded at Worcester, Massachusetts, in 1874 by one William H. Earle. The spirit of the Order was entirely peaceful and unobtrusive as expressed in the first paragraph of the Declaration of Purposes which reads as follows:

"The Order of the Sovereigns of Industry is an association of the industrial or laboring classes, without regard to race, sex, color, nationality, or occupation; not founded for the purpose of waging any war of aggression upon any other class, or for fostering any antagonism of labor against capital, or of arraying the poor against the rich; but for mutual assistance in self-improvement and self-protection."

The scheme of organization called for a local council including members from the town or district, a state council, comprising representatives from the local councils and a National Council in which the States were represented. The president of the National Council was the founder of the Order, William H. Earle.

Success accompanied the efforts of the promoters of the Sovereigns of Industry for a few years. The total membership in 1875-1876 was 40,000, of whom seventy-five percent were in New England and forty-three percent in Massachusetts. Though the Order extended into other States and even reached the territories, its chief strength always remained in New England and the Middle States. During the last period of its existence a national organ was published at Washington, but the Order does not appear to have gained a foothold in any of the more Southern sections of the country.

In 1875, 101 local councils reported as having some method of supplying members with goods, 46 of whom operated stores. The largest store belonged to the council at Springfield, Massachusetts, which in 1875 built the "Sovereign Block" at a cost of $35,500. In his address at the fourth annual session in Washington, President Earle stated that the store in Springfield led all the others with sales amounting to $119,000 for the preceding year. About one-half of the councils failed to report, but at the Congress of 1876 President Earle estimated the annual trade at $3,000,000.

Much enthusiasm accompanied the progress of the movement. The hall in "Sovereign Block" at Springfield was dedicated amid such jubilation as marks an event thought to be the forerunner of a new era. There is indeed a certain pathos in the high hopes expressed in the Address of Dedication by President Earle, for, though the Order continued to thrive until 1878, shortly after a decline began, and dissolution was its fate in 1880.

The failure of the Sovereigns marked the latest attempt on a large scale[11] to inoculate the American workingmen with the sort of cooperative spirit which proved so successful in England.[12]

This failure of distributive cooperation to gain the strong and lasting foothold in this country that it has abroad has been accounted for in various ways by different writers. Great emphasis has been laid upon the lack of capital, the lack of suitable legislation on the subject of cooperation, the mutual isolation of the educated and wage-earning classes, the lack of business ability among wage earners, and the altogether too frequent venality and corruption among cooperators.

Probably the lack of adequate leadership has played as important a part as any. It is peculiar to America that the wage earner of exceptional ability can easily find a way for escaping into the class of independent producers or even employers of labor. The American trade union movement has suffered much less from this difficulty. The trade unions are fighting organizations; they demand the sort of leader who is of a combative spirit, who possesses the organizing ability and the "personal magnetism" to keep his men in line; and for this kind of ability the business world offers no particular demand. On the other hand, the qualifications which go to make a successful manager of a cooperative store, namely, steadiness, conservatism of judgment, attention to detail and business punctuality always will be in great demand in the business world. Hence, when no barrier is interposed in the form of preempted opportunities or class bias, the exceptional workingman who possesses these qualifications will likely desert his class and set up in business for himself. In England, fortunately for the cooperative movement, such an escape is very difficult.

The failure of consumers' cooperation in America was helped also by two other peculiarly American conditions. European economists, when speaking of the working class, assume generally that it is fixed in residence and contrast it with capital, which they say is fluid as between city and city and even between country and country. American labor, however, native as well as immigrant, is probably more mobile than capital; for, tradition and habit which keep the great majority of European wage earners in the place where their fathers and forefathers had lived before them are generally absent in this country, except perhaps in parts of New England and the South. It is therefore natural that the cooperative spirit, which after all is but an enlarged and more generalized form of the old spirit of neighborliness and mutual trust, should have failed to develop to its full strength in America.

Another condition fatal to the development of the cooperative spirit is the racial heterogeneity of the American wage-earning class, which separates it into mutually isolated groups even as the social classes of England and Scotland are separated by class spirit. As a result, we find a want of mutual trust which depends so much on "consciousness of kind." This is further aggravated by competition and a continuous displacement in industry of nationalities of a high standard of living by those of a lower one. This conflict of nationalities, which lies also at the root of the closed shop policy of many of the American trade unions, is probably the most effective carrier that there is to a widespread growth of the cooperative spirit among American wage earners. This is further hindered by other national characteristics which more or less pervade all classes of society, namely, the traditional individualism--the heritage of puritanism and the pioneer days, and the emphasis upon earning capacity with a corresponding aversion to thrift.

FOOTNOTES:

[10] The National Labor Union came out against Chinese immigration in 1869, when the issue was brought home to the Eastern wage earners following the importation by a shoe manufacturer in North Adams, Massachusetts, of Chinese strike breakers.

[11] There were many cooperative stores in the eighties and a concerted effort to duplicate the venture of the Sovereigns was attempted as late as 1919 under the pressure of the soaring cost of living.

[12] Where Consumers' Cooperation has worked under most favorable conditions as in England, its achievements have been all that its most ardent champions could have desired. Such is the picture presented by Mr. and Mrs. Sidney Webb in the following glowing terms:

"The organization of industry by Associations of Consumers offers, as far as it goes, a genuine alternative to capitalist ownership, because it supersedes the capitalist power, whether individual or joint-stock, alike in the control of the instruments of production by which the community lives, and in the absorption of the profits, which otherwise support a capitalist class. The ownership and control are vested in, and the profits are distributed among, the whole community of consumers, irrespective of their industrial wealth. Through the device of dividend on purchases the Cooperative Movement maintains an open democracy, through the control of this democracy of consumers it has directly or indirectly kept down prices, and protected the wage-earning class from exploitation by the Credit System and from the extortions of monopolist traders and speculators. By this same device on purchases, and the automatic accumulation of part of the profit in the capital of each society and in that of the Wholesales, it has demonstratedly added to the personal wealth of the manual working class, and has, alike in Great Britain, and in other countries, afforded both a valuable financial reserve to the wage earners against all emergencies and an instrument for their elevation from the penury to which competition is always depressing them. By making possible the upgrowth of great business enterprises in working class hands, the Cooperative Movement has, without divorcing them from their fellows, given to thousands of the manual workers both administrative experience and a well-grounded confidence; and has thus enabled them to take a fuller part in political and social life than would otherwise have been probable."--_New Statesman_, May 30, 1916. "Special Supplement on the Cooperative Movement."

Indeed the success of the consumer's cooperative movement in European countries has been marvellous, even measured by bare figures. In all Europe in 1914, there were about 9,000,000 cooperators of whom one-third lived in Great Britain and not less than two and a half millions in Germany. In England and Scotland alone, the 1400 stores and two Wholesale Cooperative Societies controlled in 1914 about 420 million dollars of retail distributive trade and employed nearly 50,000 operatives in processes of production in their own workshops and factories.