Part 3

Indeed, because of the kaleidoscopic changes which the factors entering into the production of wealth are always undergoing, it is unlikely that any final solution of the problem of the fair distribution of wealth will ever be reached. But the effort to devise a continually more perfect medium of approach toward an ever fairer distribution must be no less energetic and unceasing.

For many years my father and his advisers had been increasingly impressed with the importance of these and other economic problems, and with a view to making a contribution toward their solution, had had under consideration the development of an institution for social and economic research.

While this general subject was being studied, the industrial disturbances in Colorado became acute. Their many distressing features gave me the deepest concern. I frankly confess that I felt there was something fundamentally wrong in a condition of affairs which made possible the loss of human lives, engendered hatred and bitterness, and brought suffering and privation upon hundreds of human beings. I determined, therefore, that in so far as it lay within my power I would seek some means of avoiding the possibility of similar conflicts arising elsewhere or in the same industry in the future. It was in this way that I came to recommend to my colleagues in the Rockefeller Foundation the instituting of a series of studies into the fundamental problems arising out of industrial relations. Many others were exploring the same field, but it was felt that these were problems affecting human welfare so vitally than an institution such as the Rockefeller Foundation, whose purpose, as stated in its charter, is “to promote the well-being of mankind throughout the world,” could not neglect either its duty or its opportunity.

This resulted in securing the services of Mr. W. L. Mackenzie King, formerly Minister of Labor in Canada, to conduct an investigation “with a special view,” to quote the language of an official letter, “to the discovery of some mutual relationship between Labor and Capital which would afford to Labor the protection it needs against oppression and exploitation, while at the same time promoting its efficiency as an instrument of economic production.”

In no sense was this inquiry to be local or restricted; the problem was recognized to be a world-problem, and in the study of it the experience of the several countries of the world was to be drawn upon. The purpose was neither to apportion blame in existing or past misunderstandings, nor to justify any particular point of view; but solely to be constructively helpful, the final and only test of success to be the degree to which the practical suggestions growing out of the investigation actually improved the relations between Labor and Capital.

V

With reference to the situation which had unfortunately developed in Colorado, it became evident to those responsible for the management of one of the large coal companies there--the Colorado Fuel and Iron Company, in which my father and I are interested--that matters could not be allowed to remain as they were. Any situation, no matter what its cause, out of which so much bitterness could grow, clearly required amelioration.

It has always been the desire and purpose of the management of the Colorado Fuel and Iron Company that its employees should be treated liberally and fairly.

However, it became clear that there was need of some more efficient method whereby the petty frictions of daily work might be dealt with promptly and justly, and of some machinery which, without imposing financial burdens upon the workers, would protect the rights, and encourage the expression of the wants and aspirations of the men--not merely of those men who were members of some organization, but of every man on the company’s payroll.

The problem was how to promote the well-being of each employee; more than that, how to foster at the same time the interest of both the stockholders and the employees through bringing them to realize the fact of their real partnership.

Long before the Colorado strike ended, I sought advice with respect to possible methods of preventing and adjusting such a situation as that which had arisen; and in December, 1914, as soon as the strike was terminated and normal conditions were restored, the officers of the Colorado Fuel and Iron Company undertook the practical development of plans which had been under consideration.

The men in each mining camp were invited to choose, by secret ballot, representatives to meet with the executive officers of the company to discuss matters of mutual concern and consider means of more effective coöperation in maintaining fair and friendly relations.

That was the beginning, merely the germ, of a plan which has now been developed into a comprehensive “Industrial Constitution.” The scheme embodies practical operating experience, the advice and study of experts, and an earnest effort to provide a workable method of friendly consideration, by all concerned, of the daily problems which arise in the mutual relations between employer and employees.

The plan was submitted to a referendum of the employees in all the company’s coal and iron mines, and adopted by an overwhelming vote. Before this general vote was taken, it had been considered and unanimously approved by a meeting of the employees’ elected representatives. At that meeting I outlined the plan, which is described below, as well as the theory underlying it, which theory is in brief as follows:

Every corporation is composed of four parties: the stockholders, who supply the money with which to build the plant, pay the wages, and operate the business; the directors, whose duty it is to select executive officers carefully and wisely, plan the larger and more important policies, and generally see to it that the company is prudently administered; the officers, who conduct the current operations; and the employees, who contribute their skill and their work.

The interest of these four parties is a common interest, although perhaps not an equal one; and if the result of their combined work is to be most successful, each must do its share. An effort on the part of any one to advance its own interest without regard to the rights of the others, means, eventually, loss to all.

The problem which confronts every company is so to interrelate its different elements that the best interests of all will be conserved.

VI

The industrial machinery which has been adopted by the Colorado Fuel and Iron Company and its employees is embodied in two written documents, which have been printed and placed in the hands of each employee. One of these documents is a trade agreement signed by the representatives of the men and the officers of the company, setting forth the conditions and terms under which the men agree to work until January 1, 1918, and thereafter, subject to revision upon ninety days’ notice by either side.

This agreement guarantees to the men that for more than two years, no matter what reductions in wages others may make, there shall be no reduction of wages by this company; furthermore, that in the event of an increase in wages in any competitive field, this company will make a proportional increase.

The agreement provides for an eight-hour day for all employees working underground and in coke ovens; it insures the semi-monthly payment of wages; it fixes charges for such dwellings, light, and water, as are provided by the company; it stipulates that the rates to be charged for powder and coal used by the men shall be substantially their cost to the company.

To encourage employees to cultivate flower and vegetable gardens, the company agrees to fence free of cost each house-lot owned by it. The company also engages to provide suitable bath houses and club houses for the use of employees at the several mining camps.

The other document is an “Industrial Constitution,” setting forth the relations of the company and its men. The Constitution stipulates, among other things, that “there shall be a strict observance by management and men of the Federal and State laws respecting mining and labor,” and that “the scale of wages and the rules in regard to working conditions shall be posted in a conspicuous place at or near every mine.”

Every employee is protected against discharge without notice, except for such offenses as are posted at each mine. For all other misconduct the delinquent is entitled to receive warning in writing that a second offense will cause discharge, and a copy of this written notice must be forwarded to the office of the president of the company at the same time it is sent to the employee.

The constitution specifically states that “there shall be no discrimination by the company or any of its employees on account of membership or non-membership in any society, fraternity, or union.” The employees are guaranteed the right to hold meetings on company property, to purchase where they choose, and to employ check-weighmen, who, on behalf of the men, shall see to it that each gets proper credit for his work.

Besides setting forth these fundamental rights of the men, the Industrial Constitution seeks to establish a recognized means for bringing the management and the men into closer contact for two general purposes:

First, to promote increased efficiency and production, to improve working conditions and to further the friendly and cordial relations between the company’s officers and employees; and,

Second, to facilitate the adjustment of disputes and the redress of grievances.

In carrying out this plan, the wage-earners at each camp are to be represented by two or more of their own number chosen by secret ballot, at meetings especially called for the purpose, which none but wage-earners in the employ of the company shall be allowed to attend. The men thus chosen are to be recognized by the company as authorized to represent the employees for one year, or until their successors are elected, with respect to terms of employment, working and living conditions, adjustment of differences, and such other matters as may come up.

A meeting of all the men’s representatives and the general officers of the company will be held once a year to consider questions of general importance.

The Industrial Constitution provides that the territory in which the company operates shall be divided into a number of districts based on the geographical distribution of the mines. To facilitate full and frequent consultation between representatives of the men and the management in regard to all matters of mutual interest and concern, the representatives from each district are to meet at least three times a year--oftener if need be--with the president of the company, or his representative, and such other officers as the president may designate.

The district conferences will each appoint from their number certain joint committees on industrial relations, and it is expected that these committees will give prompt and continuous attention to the many questions which affect the daily life and happiness of the men as well as the prosperity of the company. Each of these committees will be composed of six members, three designated by the employees’ representatives and three by the president of the company.

A joint committee on industrial coöperation and conciliation will consider matters pertaining to the prevention and settlement of industrial disputes, terms and conditions of employment, maintenance of order and discipline in the several camps, policy of the company stores, and so forth. Joint committees on safety and accidents, on sanitation, health and housing, on recreation and education, will likewise deal with the great variety of topics included within these general designations.

Prevention of friction is an underlying purpose of the plan. The aim is to anticipate and remove in advance all sources of possible irritation. With this in view a special officer, known as the President’s Industrial Representative, is added to the personnel of the staff as a further link between the president of the corporation and every workman in his employ. This officer’s duty is to respond promptly to requests from employees’ representatives for his presence at any of the camps, to visit all of them as often as possible, to familiarize himself with conditions, and generally to look after the well-being of the workers.

It is a fundamental feature of the plan, as stated in the document itself, that “every employee shall have the right of ultimate appeal to the president of the company concerning any condition or treatment to which he may be subjected and which he may deem unfair.” For the adjustment of all disputes, therefore, the plan provides carefully balanced machinery.

If any miner has a grievance, he may himself, or preferably through one of the elected representatives in his camp, seek satisfaction from the foreman or mine superintendent. If those officials do not adjust the matter, appeal may be had to the president’s industrial representative. Failing there, the employee may appeal to the division superintendent, assistant manager, or general manager, or the president of the company, in consecutive order.

Yet another alternative is that, after having made the initial complaint to the foreman or mine superintendent, the workman may appeal directly to the joint committee on industrial coöperation and conciliation in his district, which, itself failing to agree, may select one or three umpires whose decision shall be binding upon both parties to the dispute.

If all these methods of mediation fail the employee may appeal to the Colorado State Industrial Commission, which is empowered by law to investigate industrial disputes and publish its findings.

So as adequately to protect the independence and freedom of the men’s representatives, the Constitution provides that in case any one of them should be discharged or disciplined, or should allege discrimination, he may resort to the various methods of appeal open to the other employees, or he may appeal directly to the Colorado State Industrial Commission, with whose findings in any such case the company agrees to comply.

The company is to pay all expenses incident to the administration of the plan, and to reimburse the miners’ representatives for loss of time from their work in the mines.

VII

Such in outline is this Industrial Constitution. Some have spoken of it as establishing a Republic of Labor. Certain it is that the plan gives every employee opportunity to voice his complaints and aspirations, and it neglects no occasion to bring the men and the managers together to talk over their common interests.

Much unrest among employees is due to the nursing of real or fancied grievances arising out of the daily relations between the workmen and the petty boss. Such grievances should receive attention at once, and this plan provides that they shall.

Just as in the case of bodily wounds, so with industrial wounds, it is of prime importance to establish a method of prompt disinfection, lest the germs of distrust and hatred have opportunity to multiply.

This plan is not hostile to labor organizations; there is nothing in it, either expressed or implied, which can rightly be so construed; neither membership in a union nor independence of a union will bring a man either preference or reproach, so far as the attitude of the company is concerned.

The fact is that the Colorado Fuel and Iron Company Constitution does not restrict in any way the right of the employees to regulate their own lives, nor does it abridge their right to join any organization they please. At the same time it does insure the men fair treatment and an opportunity to make their voice heard in determining the conditions under which they shall work and live.

The plan does not deny to the representatives the right to act in concert; it does not deny to the men the right to employ counselors or advisers to assist them in formulating their views as to any situation. Indeed, the door is left wide open for the natural exercise of any right or privilege to which the men are entitled.

There is nothing in the plan to prevent the men holding open or secret meetings as often as they like, either in the separate camps, the districts, or as representing the whole industry. Such meetings are not specifically provided for because all those who are connected with the corporation are considered to be partners in the enterprise, and their interests common interests.

The plan provides a channel through which not only may the men confer with the management, but through which also the officers may lay their purposes, problems, and difficulties before the employees.

It provides a medium of adjustment, as between employer and employees, of the problems which constantly arise in the conduct of business, while in regard to the relations of both it recognizes that the voice of public opinion is entitled to be heard.

The acts of bodies of men in their relations with other men should always be illuminated by publicity, for when the people see clearly what the facts are, they will, in the long run, encourage what is good and condemn what is selfish.

Some may think that the form which the organization of labor takes must necessarily be originated and developed by Labor. If, however, a workable method of coöperation between managers and men is actually developed, which is satisfactory to both, is its authorship of consequence, provided only its provisions are adequate and just and it proves to be an effective instrument through which real democracy may have free play?

The Colorado Plan has been devised for the employees of the Colorado Fuel and Iron Company, and without reference to the employees, or organizations of employees, in other companies. Some people will maintain that the men’s interests cannot be adequately protected or their rights at all times enforced without the support of their fellows in similar industries.

This may be true where Labor and Capital do not generally recognize that their interests are one. But when men and managers grasp that vital point, as I believe this plan will help them to do, and are really awake to the fact that when either takes an unfair advantage of the other the ultimate interests of both are bound to suffer, they will have an incentive to fair dealing of the most compelling kind.

It is clear that a plan of this kind must not overlook the interests of the stockholders, for no plan which disregards their rights can be permanently successful. The interests of Capital can no more be neglected than those of Labor.

At the same time I feel that a prime consideration in the carrying on of industry should be the well-being of the men and women engaged in it, and that 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 the necessity arises, subordinates profits to welfare.

In order to live, the wage-earner must sell his labor from day to day. Unless he can do this, the earnings of that day’s labor are gone forever.

Capital can defer its returns temporarily in the expectation of future profits, but Labor cannot. If, therefore, fair wages and reasonable living conditions cannot otherwise be provided, dividends must be deferred or the industry abandoned.

On the other hand, a business, to be successful, must not only provide for Labor remunerative employment under proper working conditions, but it must also render useful service to the community and earn a fair return on the money invested.

The adoption of any policy toward Labor, however favorable it may seem, which results in the bankruptcy of the corporation and the discontinuance of its work, is as injurious to Labor which is thrown out of employment, as it is to the public, which loses the services of the enterprise, and to the stockholders whose capital is impaired.

This plan is not a panacea; it is necessarily far from perfect, and yet I believe it to be a step in the right direction. Carefully as it has been worked out, experience will undoubtedly develop ways of improving it.

While the plan provides elaborate machinery which of itself ought to make impossible many abuses and introduce much that is constructively helpful, too strong emphasis cannot be put upon the fact that its success or failure will be largely determined by the spirit in which it is carried out.

The problem of the equitable division of the fruits of industry will be always with us. The nature of the problem changes and will continue to change with the development of transportation, of invention, and the organization of commerce.

The ultimate test of the rightness of any particular method of division must be the extent to which it stimulates initiative, encourages the further production of wealth, and promotes the spiritual development of men.

The Colorado Plan is of possible value in that State, and may prove useful elsewhere, because it seeks to serve continually as a means of adjusting the daily difficulties incident to the industrial relationship. It brings men and managers together, it facilitates the study of their common problems, and it should promote an understanding of their mutual interests.

Assuming, as we must, the fundamental fairness of men’s purposes, we have here possibly a medium through which the always changing conditions of industry may be from time to time more closely adapted to the needs, the desires, and the aspirations of men.

FOOTNOTE:

[1] NOTE.--This article, “Labor and Capital--Partners,” originally appeared in the _Atlantic Monthly_, January, 1916.

III

THE PERSONAL RELATION IN INDUSTRY[2]

Heretofore the Chief Executives of important industrial corporations have been selected largely because of their capacity as organizers or financiers.

The time is rapidly coming, however, when the important qualification for such positions will be a man’s ability to deal successfully and amicably with labor. Yet how to do this is a subject which, I fancy, is never taught or referred to in the classroom.

Like knowledge of the problems of sex, than which no department of life is more sacred, vital or deserving of full and ennobling instruction, an understanding of this subject is left to be acquired by experience, often costly or bitter, or through chance information, gleaned too frequently from ignorant and unreliable sources.

Just as the first of these two themes is coming to be taught sympathetically and helpfully in our schools and colleges, so I believe the second, the personal relation in industry, will eventually be regarded as an important part of those college courses which aim to fit men for business life.

After all, is it not the personal relations with one’s fellows which, when rightly entered into, bring joy and inspiration into our lives and lead to success, and which, on the other hand, if disregarded or wrongly interpreted, bring equally sorrow and discouragement and lead to failure?

Think what the ideal personal relation between a father and son may mean to both. Some of us have known such contact. Our lives have been fuller and richer as a result, freer from sin and sorrow. Others of us know from bitter experience what the absence of this relationship has involved.

How helpful to a student is such a friendly association with some professor who commands his confidence, respect and regard, and who is interested in his college work, not for itself alone, but quite as much because of its bearing on his future life’s usefulness.

What would college life be without the personal relationships which are formed during its happy days and often continued close and intimate through life?