Part 1

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THE PERSONAL RELATION IN INDUSTRY

by

JOHN D. ROCKEFELLER, JR.

Boni and Liveright Publishers New York

Copyright, 1923, by Boni and Liveright, Inc.

Printed in the United States of America

First printing, December, 1923 Second printing, January, 1924

PUBLISHER’S NOTE

The following material by Mr. John D. Rockefeller, Jr., consists, with one exception, of addresses delivered by him on various occasions and amidst the demands of many varied interests. These addresses are left practically as they were delivered, and no effort has been made to change their form. Slight repetitions of certain points may be noted in these addresses, a condition which is expected in arguments or subjects of the character of those contained in this book.

The publishers, in obtaining Mr. Rockefeller’s permission to publish these addresses, believed that by presenting his views in this form there would be made a substantial contribution to the ever-important subject of industrial relationships.

CONTENTS

CHAPTER PAGE I. COÖPERATION IN INDUSTRY 9

II. LABOR AND CAPITAL--PARTNERS 38

III. THE PERSONAL RELATIONS IN INDUSTRY 63

IV. REPRESENTATION IN INDUSTRY 83

V. TO THE EMPLOYEES 90

VI. TO THE PEOPLE OF COLORADO 107

APPENDIX

I. REPRESENTATION OF EMPLOYEES 123

II. DISTRICT CONFERENCES, JOINT COMMITTEES AND JOINT MEETINGS 129

III. THE PREVENTION AND ADJUSTMENT OF INDUSTRIAL DISPUTES 136

IV. SOCIAL AND INDUSTRIAL BETTERMENT 145

THE PERSONAL RELATION IN INDUSTRY

I

COÖPERATION IN INDUSTRY

I

To-day the world is passing through a period of reconstruction.

As we address ourselves to the grave problems which confront us, problems both national and international, we may look for success in their solution just in so far as we continue to be animated by the spirit of coöperation and brotherhood. The hope in the future lies in the perpetuation of this spirit, and unless increasingly it is made the foundation of the political, social, and industrial life of the world, there will not be permanent peace and good will among men, either nationally or internationally.

In no one of these spheres of human relations is the spirit of coöperation more essential than in industry, since industry touches almost every department of life. Moreover, there is no problem pressing more urgently upon the attention of the world to-day than the industrial problem, none more important, none more difficult of solution. There are pessimists who say that there is no solution short of revolution and the overturn of the existing social order.

Surely the nations which have shown themselves capable of such lofty sacrifice, which have given themselves so freely, gladly, unreservedly, during these past years of struggle, will bring to bear in the solution of this great problem powers of head and heart, not less wise and unselfish than those exhibited in dealing with the problems of the war; surely a way out of the impenetrable maze will be found.

Almost countless are the suggested solutions of the industrial problem, which have been brought forth since industry first began to be a problem. Most of these are impracticable; some are unjust; some are selfish and therefore unworthy; some have merit and should be carefully studied. None can be looked to as a panacea.

There are those who believe that legislation is the cure-all for every political, social, and industrial ill. Much can be done by legislation to prevent injustice and encourage right tendencies, but legislation of itself will never solve the industrial problem. Its solution can be brought about only by the introduction of a new spirit into the relationship between the parties to industry--the spirit of coöperation and brotherhood.

It is this theme, _coöperation in industry_, that I desire to develop.

We must ask ourselves at the outset certain fundamental questions:

First, what is the purpose of industry? Shall we cling to the conception of industry as an institution, primarily of private interest, which enables certain individuals to accumulate wealth, too often irrespective of the well-being, the health, and the happiness of those engaged in its production? Or shall we adopt the modern viewpoint and regard industry as being a form of social service, quite as much as a revenue-producing process?

Is it not true that any industry, to be permanently successful, must insure to labor adequately remunerative employment under proper working and living conditions, to capital a fair return upon the money invested, and to the community a useful service?

The soundest industrial policy is that which has constantly in mind the welfare of the employees as well as the making of profits, and which, when human considerations demand it, subordinates profits to welfare. Industrial relations are essentially human relations. It is therefore the duty of everyone entrusted with industrial leadership to do all in his power to improve the conditions under which men work and live. The day has passed when the conception of industry as chiefly a revenue-producing process can be maintained. To cling to such a conception is only to arouse antagonisms and to court trouble. In the light of the present every thoughtful man must concede that the purpose of industry is quite as much the advancement of social well-being as the production of wealth. It remains none the less true, however, that to be successful, industry must not only serve the community and the workers adequately, but must also realize a just return on capital invested.

Next we must ask ourselves, who are the parties to industry: The parties to industry are four in number: capital, management, labor, and the community.

I am, of course, well aware of the social theories and experiments that seek to merge capital and labor, either through ownership of capital by the state or by the workers themselves. But the difficulties that confront the realization of these plans are vast and the objection to many of them fundamental.

Under our present system, capital is represented by the stockholders, and is usually regarded as embracing management. Management is, however, an entirely separate and distinct party to industry; its function is essentially administrative. It comprises the executive officers who bring to industry technical skill and managerial experience. Labor consists of the employees. Labor, like capital, is an investor in industry, but labor’s contribution, unlike that of capital, is not detachable from the one who makes it, since it is in the nature of physical effort and is a part of the worker’s strength and life. Here the list usually ends.

The fourth party, namely, the community, whose interest is vital and in the last analysis controlling, is too often ignored. The community’s right to representation in the control of industry and in the shaping of industrial policies is similar to that of the other parties. Were it not for the community’s contribution, in maintaining law and order, in providing agencies of transportation and communication, in furnishing systems of money and credit and in rendering other services, all involving continuous outlays, the operation of capital, management, and labor would be enormously hampered, if not rendered wellnigh impossible. The community, furthermore, is the consumer of the product of industry, and the money which it pays for the product reimburses capital for its advances and ultimately provides the wages, salaries, and profits that are distributed among the other parties.

Finally we must inquire: what are the relations between the parties to industry? It is frequently maintained that the parties to industry must necessarily be hostile and antagonistic; that each must arm itself to wrest from the others its share of the product of their common toil. This is unthinkable; it is not true; the parties to industry are in reality not enemies, but partners; they have a common interest; no one can get on without the others. Labor must look to capital to supply the tools, machinery, and working capital, without which it cannot make its vital contribution to industry; and capital is equally powerless to turn a wheel in industry without labor. Management is essential to supply the directing force, while without the community as the consumer, the services of the other three parties would have no outlet. Just what the relative importance of the contribution made to the success of industry by the several factors is, and what their relative rewards should be, are debatable questions.

But, however views may differ on these questions, it is clear that the common interest cannot be advanced by the effort of any one party to dominate the others, arbitrarily to dictate the terms on which alone it will coöperate, or to threaten to withdraw if any attempt is made to thwart the enforcement of its will. Success is dependent upon the coöperation of all four. Partnership, not enmity, is the watchword.

II

If coöperation between the parties to industry is sound business and good social economics, why then is antagonism so often found in its stead? The answer is revealed in a survey of the development of industry. In the early days of industry, as we know, the functions of capital and management were not infrequently combined in the one individual, who was the employer. He in turn was in constant touch with his employees. Together they formed a vital part of the community. Personal relations were frequent and mutual confidence existed. When differences arose they were quickly adjusted. As industry developed, aggregations of capital larger than a single individual could provide were required. In answer to this demand, the corporation with its many stockholders was evolved. Countless workers took the place of the handful of employees of earlier days. Plants under a single management scattered all over the country superseded the single plant in a given community. Obviously, this development rendered impossible the personal relations which had existed in industry, and lessened the spirit of common interest and understanding. Thus the door was opened to suspicion and distrust; enmity crept in; antagonisms developed. Capital not infrequently used its power to enforce long hours and low wages; labor likewise retaliated with such strength as it had, and gradually the parties to industry came to view each other as enemies instead of as friends and to think of their interests as antagonistic rather than common.

Where men are strangers and have no contact, misunderstanding is apt to arise. On the other hand, where men meet frequently about a table, rub elbows, exchange views, and discuss matters of common interest, almost invariably it happens that the vast majority of their differences quickly disappear and friendly relations are established.

Several years ago I was one of a number of men who were asked two questions by a Commission appointed by the President of the United States to deal with certain labor difficulties.

The first was: “What do you regard as the underlying cause of industrial unrest?” The second: “What remedy do you suggest?”

I stated that in my judgment the chief cause of industrial unrest is that capital does not strive to look at questions at issue from labor’s point of view, and labor does not seek to get capital’s angle of vision. My answer to the second question was that when employers put themselves in the employee’s place and the employees put themselves in the employer’s place, the remedy for industrial unrest will have been found. In other words, when the principle adopted by both parties in interest is: “Do as you would be done by,” there will be no industrial unrest, no industrial problem.

It is to be regretted that there are capitalists who regard labor as their legitimate prey, from whom they are justified in getting all they can for as little as may be. It is equally to be deplored that on the part of labor there is often a feeling that it is justified in wresting everything possible from capital. Where such attitudes have been assumed, a gulf has been opened between capital and labor which has continually widened. Thus the two forces have come to work against each other, each seeking solely to promote its own selfish ends. As a consequence have come all too frequently the strike, the lockout, and other incidents of industrial warfare.

A man, who recently devoted some months to studying the industrial problem and who came into contact with thousands in various industries throughout the United States, has said that it was obvious to him from the outset that the working men were seeking for something, which at first he thought to be higher wages. As his touch with them extended, he came to the conclusion, however, that not higher wages, but recognition as men, was what they really sought. What joy can there be in life, what interest can a man take in his work, what enthusiasm can he be expected to develop on behalf of his employer, when he is regarded as a number on a pay-roll, a cog in a wheel, a mere “hand”? Who would not earnestly seek to gain recognition of his manhood and the right to be heard and treated as a human being, not as a machine?

Then, too, as industry has become increasingly specialized, the workman of to-day, instead of following the product through from start to finish and being stimulated by the feeling that he is the sole creator of a useful article, as was more or less the case in early days, now devotes his energies for the most part to countless repetitions of a single act or process, which is but one of perhaps a hundred operations necessary to transform the raw material into the finished product. Thus the worker loses sight of the significance of the part he plays in industry and feels himself to be merely one of many cogs in a wheel. All the more, therefore, is it necessary that he should have contact with men engaged in other processes and fulfilling other functions in industry, that he may still realize he is a part, and a necessary, though it may be an inconspicuous, part of a great enterprise. In modern warfare, those who man the large guns find the range, not by training the gun on the object which they are seeking to reach, but in obedience to a mechanical formula which is worked out for them. Stationed behind a hill or mound, they seldom see the object at which their deadly fire is directed. One can readily imagine the sense of detachment and ineffectiveness which must come over these men. But when the airplane, circling overhead, gets into communication with the gunner beneath and describes the thing to be accomplished and the effectiveness of the shot, a new meaning comes into his life. In a second he has become a part of the great struggle. He knows that his efforts are counting, that he is helping to bring success to his comrades. There comes to him a new enthusiasm and interest in his work. The sense of isolation and detachment from the accomplishments of industry, which too often comes to the workers of to-day, can be overcome only by contact with the other contributing parties. In this way only can common purpose be kept alive, individual interests safeguarded, and the general welfare promoted.

While obviously under present conditions those who invest their capital in an industry, often numbered by the thousand, cannot have personal acquaintance with the thousands and tens of thousands of those who invest their labor, contact between those two parties in interest can and must be established, if not directly, then through their respective representatives. The resumption of such personal relations through frequent conferences and current meetings, held for the consideration of matters of common interest, such as terms of employment and working and living conditions, is essential in order to restore a spirit of mutual confidence, good will, and coöperation. Personal relations can be revived under modern conditions only through the adequate representation of the employees. Representation is a principle which is fundamentally just and vital to the successful conduct of industry. It means, broadly speaking, democracy through coöperation, as contrasted with autocracy.

It is not for me or anyone else to undertake to determine for industry at large what specific form representation shall take. Once having adopted the principle, it is obviously wise that the method to be employed should be left, in each specific instance, to be determined by the parties interested. If there is to be peace and good-will between the several parties in industry, it will surely not be brought about by the enforcement upon unwilling groups of a method which in their judgment is not adapted to their peculiar needs. In this, as in all else, persuasion is an essential element in bringing about conviction.

With the developments in industry what they are to-day, there is sure to come a progressive evolution from the autocratic single control, whether by capital, management, labor, or the community, to some form of democratic coöperative control participated in by all four. The whole movement is evolutionary. That which is fundamental is the idea of coöperation, and that idea must find expression in those forms which will serve it best, with conditions, forces and times what they are.

In the United States, the coöperation in war service of labor, capital, management, and Government afforded a striking and most gratifying illustration of this tendency.

After all, the basic principles governing the relations between the parties to industry are as applicable in the successful conduct of industry to-day as in earlier times. The question which now confronts us is how to reëstablish personal relations and coöperation in spite of changed conditions. The answer is not doubtful or questionable, but absolutely clear and unmistakable: it is, through adequate representation of the four parties in the councils of industry.

III

Various methods of representation in industry have been developed, conspicuous among which are those of labor unions and employers’ associations. As regards the organization of labor, it is just as proper and advantageous for labor to associate itself into organized groups for the advancement of its legitimate interests as for capital to combine for the same object.

Such associations of labor manifest themselves in collective bargaining, in an effort to secure better working and living conditions, in providing machinery whereby grievances may easily and without prejudice to the individual be taken up with the management. Sometimes they provide benefit features, sometimes they seek to increase wages, but whatever their specific purpose, so long as it is to promote the well-being of the employees, having always due regard for the just interests of the employer and the public, leaving every worker free to associate himself with such groups or to work independently, as he may choose, they are to be encouraged.

But organization is not without its dangers. Organized capital sometimes conducts itself in an unworthy manner, contrary to law and in disregard of the interest of both labor and the public. Such organizations cannot be too strongly condemned or too vigorously dealt with. Although they are the exception, such publicity is generally given to their unsocial acts that all organizations of capital, however rightly managed or broadly beneficent, are thereby brought under suspicion.

Likewise it sometimes happens that organizations of labor are conducted without just regard for the rights of the employer or of the public; methods and practices are adopted which, because unworthy or unlawful, are deserving of public censure. Such organizations of labor bring discredit and suspicion upon other organizations which are legitimate and useful, just as is the case with improper organizations of capital, and they should be similarly dealt with. We ought not, however, to allow the occasional failure in the working of the principle of the organization of labor to prejudice us against the principle itself, for the principle is fundamentally sound.

In the further development of the organization of labor and of large business, the public interest as well as the interest of labor and of capital will be furthest advanced by whatever stimulates every man to do the best work of which he is capable and to render useful service, by a fuller recognition of the common interests of employers and employed, and by an earnest effort to dispel distrust and hatred and to promote good-will.

Labor unions have secured for labor in general many advantages in hours, wages, and standards of working conditions. A large proportion of the workers of the world, however, are outside of these organizations, and unless somehow represented are not in a position to bargain collectively. Therefore, representation of labor to be adequate must be more comprehensive and all inclusive than anything thus far attained.

Representation on the employers’ side has been developed through the establishment of trade associations, the purpose of which is to discuss matters of common interest and to act, in so far as is legally permissible and to the common advantage, along lines that are generally similar. But here also representation is inadequate. Many employers do not belong to employers’ associations.

In the United States during the war, the representation of both labor and capital in common councils was brought about through the War Labor Board, composed equally of men from the ranks of labor and capital, together with representatives of the public. When differences arose in industries where there was no machinery to deal with such matters, the War Labor Board stepped in and made its findings and recommendations. In this way, relatively continuous operation was made possible and the resort to the strike and lockout was less frequent.

In England there have been made during the past years various important Government investigations and reports, looking toward a more complete program of representation and coöperation on the part of labor and capital. One is the well-known Whitley Report, which owes its distinction to a single outstanding feature, namely, that it applies to the whole of industry, the principle of representative government.

The Whitley Plan seeks to unite the organizations of labor and capital by a bond of common interest in a common venture; it changes at a single stroke the attitude of these powerful aggregations of class interest from one of militancy to one of social service; it establishes a new relation in industry.

“Problems old and new,” says the report, “will find their solution in a frank partnership of knowledge, experience, and good-will.”

Another investigation and report was made by a Commission on Industrial Unrest, appointed by the Prime Minister. This Commission made, among others, the following interesting recommendations:--

(1) that the principle of the Whitley Report as regards industrial councils be adopted;

(2) that each trade should have a constitution;

(3) that labor should take part in the affairs of industry as partners rather than as employees in the narrow sense of the term;

(4) that closer contact should be set up between employers and employed.

A third report was prepared by the Ministry of Labor. This report deals with the constitution and operation of works committees in a number of industries. It is a valuable treatise on the objects, functions, and methods of procedure of joint committees.