rate. As the highly skilled are the minority, the ma-
jority must either work longer hours, or else suffer
in decreased earnings.

It is sometimes found, upon the introduction of
piece rates, that the production is very much greater
than was the case when time wages were paid. Hence
the actual amounts received by the workmen become
much greater than formerly. Whenever this is the
case, it almost invariably occurs that there is a cut
in the rates. The cut tends to bring wages back to
the amount earned under the time-rate system. This
is partly the reason why many trade unions object to
the introduction of piece payments. They claim that
all that happens is an increase in the amount of work
done, without a corresponding increase in the pay.



THE REMUNERATION OF LABOR 367

On the other hand, it sometimes occurs that the men
protest against the introduction of time rates. Here
it is claimed that by speeding-up machinery, the work-
man produces more work, but reaps no benefit from
his increased production.

It is claimed on the whole for piece rates that they
tend to increase production. Against them it is
argued that the workman is liable to undue pressure
in order to earn the wage which he regards as necessary.
The time wage is blamed for keeping production
at a minimum, while those who favor it often say
that it prevents the average man from being imposed
upon.

The truth is that it is impossible to say that either
is bad or good in itself. The case of each individual
occupation must be settled by itself.

3. The Bonus Systems Many attempts have been
made to combine the two systems so as to get the best
out of each and to eliminate the evils of both. One
system is to pay all men, no matter how much their
production, a standard rate. By an investigation
into the average time taken in the past for a particular
job, however, a standard time for a piece of work is
set. Any workman who passes that standard receives
an extra payment in the form of a bonus for his increased
production. In this way, both time and piece rates
are combined. There is an infinite variety of bonus
systems, however, and that indicated here is merely
one of the simplest. It is worth while, however, to
outline one of the schemes which has been criticized
very severely and also highly praised. In this system,
instead of merely averaging from past experience to



368 AN INTRODUCTION TO ECONOMICS

find the time in which a job ought to be done, a careful
scientific investigation is carried out to see which is
the best way to do it. The best arrangement of the
machinery is first considered. Then a skilled work-
man is set to perform the task, every movement he
makes being noted, and the time taken recorded. By
a study of his actual movements all waste motions are
seen. These are eliminated and the workman again
set to perform the task. When it is seen that every
motion is essential, and there is no waste, the final
time is recorded.

As it is obvious that the time taken by a skilled
workman under these conditions is hardly the same as
the time taken by the average man, a deduction is
made from the amount of production required in the
standard time, say twenty per cent, or even, in some
cases, fifty per cent. The time thus arrived at is
the standard for this job. Then each workman is
taught the method of production arrived at by this
investigation. He is paid on a time basis as a mini-
mum, but he receives a bonus when he reaches the
standard time, and another bonus when he passes it.

There is no doubt as to the success of this system
from the point of view of production. There have
been most wonderful increases made by its means.
The effect upon the workman, however, is not so
satisfactory. There is good reason to believe that
the increased work is not obtained without a certain
increase in the effort. The workman becomes rather
a wonderful machine than a human being. If the
hours of labor are appreciably shortened so as to offset
the greater intensity of effort, no harm may be done,



THE REMUNERATION OF LABOR 369

but if the system is adopted without change in the
hours worked, there can be little doubt that a great
deal of harm is done.

4. Profit Sharing The final method of payment
is to supplement the wages by allowing the workers
a share in the profits. This method, however, will
require more discussion than we can give space to in
the present chapter. It will be dealt with later on
and is here only mentioned in order to complete the
account of methods of wage payment.



CHAPTER XXVII

THE ORGANIZATION OF LABOR

The Origin of Labor Organizations There is a
common but erroneous belief that trade unions have
their origin in the old trade gilds or craft gilds. This
is not the case. The craft gild was an organization
quite distinct in its aim from the trade union. It was
designed to include every one in the industry, whether
craft-master, journeyman, or apprentice; it regarded
the craft as a unity. The trade union, on the other
hand, is an organization definitely based upon the belief
that the journeymen, the common workers, cannot
protect themselves against the employers unless they
act as a body. The origin of modern labor organiza-
tion lies in the realization of an antagonism between
the laborer and the capitalist. Although we can
trace the beginnings of trade unionism to periods much
earlier than the end of the eighteenth century, it was
the conditions resultant from the chaos of the industrial
revolution which brought about the great combina-
tions that have grown to be of such importance at
the present day.

The theory of laissez faire which, in the early part
of the nineteenth century, held full sway, emphasized
the value of individual liberty. The conception of
individual liberty, however, did not take into account
the fact that mere permission to do a thing is not the
370



THE ORGANIZATION OF LABOR 371

same as granting power to do it. Theoretically, under
the laws which were so well thought of by the early
individualists, any man had the right to engage in any
industry he pleased, conduct that industry as he
pleased, pay his workmen what he pleased, and so forth.
At the same time any one also had the right to change
his employment when he wished, to bargain for higher
wages, to refuse to work for less than a certain sum, and
to go where he pleased in search of work. In practice,
however, this liberty was illusory. The owner of
capital was in the better position almost invariably.
What was the use of the workman exercising his right
to change his employment, when the change could not
result in an improvement ? In case he refused to work
for less than a certain wage, he was powerless to en-
force the payment of that wage.

The much praised freedom of competition of laborer
with laborer tended inevitably toward the forcing of
the wages of the laborer and the conditions of his
labor to the lowest level.

We have not the space in the present discussion to
give any account of the evils which unrestricted com-
petition of laborer with laborer and manufacturer
with manufacturer led to. As an illustration, however,
it may be mentioned that in the early years of the
nineteenth century in England medical testimony was
called and gravely discussed to prove whether it was
unhealthy for a child of eight or ten to work for four-
teen hours a day.

The fact was that laborers could not hope to im-
prove their condition by individual bargaining, rely-
ing upon the generosity of their employers to see that



372 AN INTRODUCTION TO ECONOMICS

they received sufficient to keep them and their families
from starvation. There were two alternatives. Either
the laborers were to become mere serfs, cared for by
their masters in the same way that cattle and horses
are cared for, or else they must combine and add to
their bargaining strength by union.

The early attempts at union were most bitterly
fought. Every weapon that could be suggested was
used against the unions. A parliament elected on a
restricted franchise, corrupt, and biased against all
industrial agitations, fearful of outbreaks or revolu-
tions, passed law after law prohibiting this, that, and
the other group of workmen from combining to secure
increases in wages.

Not content with passing individual laws at the
solicitation of manufacturers in certain industries,
these laws were codified into a solid group affecting
all workmen, no matter what trade they carried on.
The common law was invoked to render workmen
liable to be sentenced for conspiracies in restraint of
trade.

Out of this chaos of trade which tacitly permitted
employers to combine, but persecuted labor combina-
tions, was born the struggle to obtain legal recogni-
tion of the right .to organize.

The Right to Organize It is worth our while to
consider the importance of this right on the part of
labor to organize itself. We have already seen that
the tendency of all our modern industrial development
is toward the elimination of competition. This is so
in the case of labor, as in most other cases. The
individual laborer who comes to an employer asking



THE ORGANIZATION OF LABOR 373

for a job is, as a general rule, in a poor situation to
bargain for his wages. He must take what is offered.
It is only when he is backed by an organization that
he can insist on a minimum wage and definite standards
of treatment.

The right to organize implies the right to do collec-
tively what is permitted to be done by the individual.
Any individual may, if he wishes, refuse to work for
any other individual. If John Jones does not like to
work for Tom Smith, he does not need to, and it does
not make any difference if Tom Smith happens to be
Thomas Smith and Company, Inc. This individual
right was acknowledged in the laissez faire period.
But what was right in the individual became wrong
in the association. The association is powerless,
however, unless it is granted the right to make use of
its collective importance. It makes very little dif-
ference to Thomas Smith and Company, if John Jones
resigns. But it makes a very great difference if
John Jones is accompanied by all of his fellow work-
men. In other words, when it comes to a trial of
strength, the association has a power which is not
possessed by the individual. The right to strike,
therefore, is essential to the organization of workmen,
unless there are other and more satisfactory methods
of gaining improvements in wages and conditions of
labor.

This involves, of course, the right of the employers
to organize as well. But no one has ever questioned
this right ; it has been taken for granted. The point
we wish to emphasize is this; if it is assumed that
conditions of industry are to be governed by the



374 AN INTRODUCTION TO ECONOMICS

bargain made between the employers and the work-
men, it is only fair that the parties should be in nearly
equal positions in settling the bargain. To give either
party an invariably preponderant power is bound to
result in oppression of the other.

We are now in a position to define the meaning of
trade union. We shall find, however, on further ex-
amination that the varieties of trade unions make it
necessary to give subdivisions which must be further
defined. As a general statement, we may say a trade
union is an organization of workmen which has for
its primary object the obtaining of increases in wages
and the improvement of conditions of labor.

The Methods of Organization Experiments with-
out number have been made in the organization of
trade unions. Hardly any scheme which has been
suggested for the conduct and improvement of demo-
cratic government has not been tried. It is difficult
to say that any particular trade union is typical.
There are, however, two distinct and broad types which
are worthy of consideration in the present brief dis-
cussion.

There is, first, the craft union. In this case the work-
men are associated with one another by similarity of
work. The carpenters form a group of their own,
each knowing exactly what difficulties occur in the
carpenter's work, the conditions which should be im-
proved, and so forth. The bricklayers form another
union, which is concerned purely with the work of
bricklayers. It is in this sort of union, which is con-
fined to the members of a particular craft, that the
similarity is seen between the trade union and the



THE ORGANIZATION OF LABOR 375

craft gild. The difference is obvious, however. The
trade union is definitely an organization of employees,
as distinguished from employers; the craft gild in-
cluded both. As the association grows in size, the
trade union tends to affiliate with similar organiza-
tions in different places. But it is important to re-
member that it affiliates with organizations in the
same trade. The machinists union of one city affili-
ates with the machinists union in another. There is
no suggestion of an association of painters and black-
smiths. The trade lines are kept distinct.

National Association As it comes to be realized that
national associations are of great value, in other words,
as the organization becomes nation-wide in its scope,
the dependence of one trade upon another is more
strongly realized. At the time of writing, for instance,
a strike of a certain number of boiler makers and
machinists, the actual number of strikers numbering
perhaps two or three thousand, has caused the idleness
of over thirty thousand workmen. In order to pro-
duce common action, some central organization asso-
ciated with all grades is required, so that all industrial
workers shall not be at the mercy of a small group,
and at the same time the small group in what is deemed
a right cause shall have the support of the whole.
This association is formed on the principle of a federa-
tion. Each trade union is autonomous as far as its
peculiar affairs are concerned. But each is compelled
in matters affecting all to submit to the orders of the
central council.

The national organization becomes a federation of self-
governing unions, each with its own national council.



376 AN INTRODUCTION TO ECONOMICS

The tendency is all the time toward centralization.
Perhaps the best analogy is that of the government of
the United States itself. Here we have a series of
forty-eight states each with its own central organiza-
tion, in the form of legislative assemblies with their
officials and executive staffs. All purely local matters,
that is, all matters that have to do with those within
the state alone, are settled according to the will of the
central organization. But all matters that have to do
with inter-state affairs are settled by an organization
controlling the action of the states the Federal
Government.

The difference between the government of the
states and of the country on the one hand, and the
government of the trade unions on the other, is largely
due to the restriction of the number of individuals
within the country and within the trade unions.
The trade unions that have this federal organization
include among their members only the workers in the
organized crafts.

The American Federation of Labor, which is the
great central organization of labor in this country, is,
however, not entirely representative of labor through-
out the country. It represents rather a class of labor
the skilled trades. It has very little to do with the
great mass of unskilled laborers. There is, it is true,
a tendency at present to widen its scope to include
laborers without a trade, but even in so doing, it
desires to allot these laborers to the trades toward
which they incline.

Essentially, the American Federation of Labor be-
lieves in trade unions rather than in a trades union.



THE ORGANIZATION OF LABOR 377

The distinction is of great importance, for it emphasizes
the tendency which is becoming stronger every day,
to change toward an organization of labor which ignores
the difference in trades. Industrial unionism, as it is
called, believes in the fundamental solidarity of labor.
All workmen, according to its creed, have the same
difficulties to contend with, and only by combining as
a whole can they achieve the solution of their diffi-
culties. In the industrial union, or as it was known in
English labor history, the trades union, the unit is a
geographical one, rather than a craft unit. The large
geographical units are split into smaller geographical
units until we arrive at last at the fundamental unit,
the shop.

There are distinct advantages claimed for this basis
of organization. In the first place, the men who are
at work in a single shop or plant know best the condi-
tions which affect themselves. They know that the
strike of one particular trade in the shop may bring
about the idleness of all the workers in that shop.
Hence it appears that an organization which includes
all the workers will have a better chance to arrive
at a proper decision worthy of the action of all com-
bined, than when one group, for a reason affecting only
that group, drags all into the struggle.

Again, when all the workers are united into a single
union, there is better chance for a truly united action,
and therefore a successful action, than when the
trades are separately organized, with the unskilled
workers unorganized. There will be no possibility of
jealousy in regard to the trade divisions. With craft
unions there is always a tendency for the division be-



378 AN INTRODUCTION TO ECONOMICS

tween crafts to become vague and indistinct. In the
engineering trades, for example, there are pattern-
makers, whose work bears a strong similarity to that of
carpenters. Yet the unions are separate. In some
cases, these differences which seem so slight lead to
awkward complications, each union claiming that the
other is encroaching upon work which rightly belongs
to the claimant.

The industrial union, it is also claimed, leads to a
feeling of community of interest which is of great value
in the struggle between labor and capital.

The chief exponent of the industrial union in
America is the association known as the Industrial
Workers of the World, or, more briefly, the I. W. W.
While the I. W. W. represents the " industrial " attitude,
as distinguished from the " craft " idea, however, it
has political and social aims which are extraneous to
the present discussion.

The Shop Steward Movement The final matter
which must be dealt with under the consideration of
the organization of labor is the rise of a new and very
important union officer, the shop steward. The shop
steward movement represents the tendency to break
away from the craft union and to develop the industrial
union. Even in the craft unions it has often been felt
that the central control exercised by the national
organization of the craft, has been too far separated
from the conditions in any particular plant. Some one
closely connected with the actual daily work in the
plant, familiar with everything that is going on, it
was thought, should represent the workers within that
plant. An individual has been appointed, not rep-






THE ORGANIZATION OF LABOR 379

resenting any particular union in the plant, but rather
representing all unions. His duty is to watch for
attempts at increasing the hardship of the laborers,
whatever their occupation, and to represent the united
employees in disputes within the plant.

With the advent of the shop steward, it becomes
evident that there is a tendency to break away from
the central control. This tendency is seen with in-
creasing frequency in the labor disputes that occur at
the time of writing. Local unions refuse to abide by
the decision of their national organization, claiming,
often, that the national officials are out of touch with
the actual conditions in the locality. As to the outlook
for future development we shall say nothing here, but
consider this matter under another head later on.

Aims of Labor Organizations Labor organization
is only a means toward an end, not an end in itself.
The question now arises, what are the aims which the
organized laborers seek to attain? They may be
summed up in a very few words the betterment
of the laboring classes. It will be well, however, to
divide these aims into four groups.

1. Collective Bargaining The original cause which
drove laborers to organize was the fact that the in-
dividual was powerless to bargain for good conditions
of labor. As an individual he was unimportant, so long
as there was an abundance of labor. In order to obtain
good conditions of labor, the effect of an abundance of
labor in the market must be removed. The only way
to do this was to increase the size of the bargaining unit.
It meant nothing to an employer if one workman asked
for an increase in wages or a reduction in the hours of



380 AN INTRODUCTION TO ECONOMICS

work; he could always get another to do the work
at the old rate. But it was a very different matter
when a large body demanded a change. It was not
so easy to replace, at a moment's notice, half of his
workmen. Hence if the bargaining for improved con-
ditions was done by a large group, instead of by the
individual members of that group, the chances of success
on the part of the laborers were materially improved.
One of the fundamental aims of all organized labor,
therefore, has always been that bargains for the change
of conditions of labor should be made collectively.
An increase in wages or a reduction in hours should
affect all of the workers and not one individual. It is
true that this meant, possibly, a reduction in wages
for a particularly strong or particularly skilled laborer,
and an increase for a comparatively inefficient work-
man, but on the whole it meant that a decent wage
would be secured by all. The trade unions have al-
ways claimed that the rate set for payment of wages
by individual bargaining has tended to be decided by
what the poorest would take, rather than what each
earned, so that payment on the basis of average work
meant an improvement to all.

2. Standard Wage We have already seen in a
previous chapter that the greatest cause of poverty is
low wages. After the principle of collective bargaining
has been secured by the labor unions, the next step,
and by far the most important, is the securing of better
wages. No matter on what philosophy the demand
be based, and many reasons are given for every effort
at gaining greater remuneration, the fundamental
fact is that each workman believes that his lot would be



THE ORGANIZATION OF LABOR 381

improved by an increase in his wages. Wages represent
to him the satisfaction of his desires. When his desires
outstrip the possibility of satisfying them, he demands
higher wages. This appears to be a state of affairs
which can never be improved. As the wages advance
so do the desires. This is not necessarily an evil. If
we remember the problem with which we set out, we
must recognize that the advance of civilization depends
largely upon the increase in the desires of mankind,
coupled with the means of satisfying those desires.

The labor unions believe that a greater share of the
results of industry should belong to the workers
using the word in its limited meaning. Hence their
demand that wages be increased seems perfectly
reasonable. Of course labor has recognized the differ-
ence between money wages and real wages. In all
modern efforts at increase of wages, a strong point is
made of the increase in the cost of living. Constant
studies are made of the variation in the purchasing
power of money. Before the war it was estimated by
the United States Bureau of Labor that $800 was neces-
sary to support a working-class family for a year. The
latest estimate is somewhat over $1700. If, therefore,
wages have doubled, the workman has not gained, but
lost slightly. Yet the unions have had to make bitter
fights to keep wages rising to meet the cost of living.

The basis of the union philosophy is that the workman
should not be considered as a commodity, but as a man
and as a citizen. Hence his welfare is as important
as that of any member of the community.

3. Conditions of Labor Arising out of that philos-
ophy, the unions have demanded that the conditions



382 AN INTRODUCTION TO ECONOMICS

under which a workman has to perform his daily
task should be congenial. Good sanitary workshops,
safety against dangerous machinery, and so forth, are
all of importance. Hence the unions have striven, by
collective bargaining, and by a certain amount of
pressure upon legislatures, to secure improvement in