Frank Albert Fetter.

Modern Economic Problems Economics Volume II online

. (page 27 of 40)
Online LibraryFrank Albert FetterModern Economic Problems Economics Volume II → online text (page 27 of 40)
Font size
QR-code for this ebook

physically, mentally, and morally weak, vocational guidance, and
more effective measures of industrial education. Alongside of the
abnormally low paid occupations or elsewhere in the industrial
organization are other occupations in which with, or often
even without, special training, the sweated workers could get,
competitively, more than the minimum wage, if they could, or would,
qualify for the work.

§ 11. #Mediation and voluntary arbitration#. The labor controversies
in which the public has the largest interest as a third party[10]
are those which result or may result in strikes. The public interest
becomes acute when a strike results in interference with the
individual freedom of other workers and of nonparticipants, when it
causes a blocking of the highways and disturbance of the peace, and
when it prevents the regular production and transportation of the
commodities which the public consumes. The public, therefore, has
steadily become more interested in all methods and agencies designed
to conserve better relations between employers and wageworkers, and to
diminish or, if possible, to do away with strikes when individual and
collective bargaining between the two parties fail.

_Mediation_, or conciliation, is the effort of a third party to get
the two parties to a trade dispute to come together to agree peaceably
upon a settlement. Mediation may be voluntarily undertaken in a
particular case by any citizen or by a public official, usually the
executive (mayor, governor, or President); or it may be by a regular
public state or national commission charged with this duty (as in some
17 states).

_Arbitration_ is the decision, by a disinterested person (or
commission) to whom it is submitted, of the exact terms, after a
provisional settlement of a dispute. It is voluntary when the parties
agree in advance to accept the verdict, and compulsory when they are
compelled by law to submit to arbitration and abide by the verdict.

Some provision either of voluntary private or of public agencies
to mediate between the parties in labor disputes and to facilitate
voluntary arbitration has been made of late in most communities of the
civilized world, including 32 of our states, and the nation as a
whole particularly in respect to disputes between railroads and train
operatives engaged in interstate commerce.[11] No one objects to
them, and they accomplish much good, but fail oftenest in the greater
emergencies because of the unwillingness of one or the other party
to submit the case, or because of lack of any power to enforce the

§ 12. #Compulsory arbitration#. The serious question in the subject of
arbitration concerns the introduction of the principle of coercion by
government, in compulsory arbitration. This, in principle, is pretty
radically different from voluntary arbitration, for as it denies to
the parties the right to settle their dispute by private agreement,
it becomes in effect the legal regulation of rates of wages and
conditions of work. In principle this was involved in the legal
regulation of wages in England from the fourteenth to the nineteenth
centuries. The plan is closely approached in the industrial courts
that are now provided in a number of European countries for a cheap
and expeditious settlement of small disputes regarding trade matters,
arising in the relations between employer and employees. The new
modern development began when New Zealand passed a compulsory
arbitration act in 1894, followed to some extent since by all the
other Australian states, largely through the action of the Labor
party. Through the operation of its act New Zealand came to be called
the "land without strikes," tho the description was inaccurate,
especially after 1907. The Canadian Industrial Disputes Act of 1907 is
an example that has had influence upon public opinion everywhere, and
has been followed to some extent in recent legislation in New Zealand,
America, and elsewhere. It involves the compulsory principle in a
limited degree, making it unlawful in public utilities and mines to
change the terms of employment without thirty days' notice, or to
strike or lock-out until after investigation and hearing before a
board to be nominated for the purpose. The Colorado Act of 1915 goes
even beyond the Canadian act in its scope. The plan seems destined to
have wider applications and a larger development in the not distant
future. Let us note the general attitude of the various interests

§ 13. #Organized labor's attitude toward labor legislation#. Labor
organizations hitherto have been in their legal nature almost entirely
private and voluntary. They are seldom incorporated and are rarely
even recognized in any way by legislatures and by courts, which deal
merely with the members as individuals.[12] Their private character,
combined with their limited membership as compared with the total
population, leaves them without the power to accomplish legally by
themselves the results which they desire in their own interest. Hence
they are tempted at times to usurp public authority over the field of
private rights in industry.[13] In other cases, when they have come
to the end of their unaided powers, they invoke the aid of the law to
accomplish their objects. But the appeal of organized labor to the law
is special and qualified, being confined to cases where the actions
of others are controlled to the advantage of the union, such as
regulating the work of women and children, controlling the acts of
employers in respect to construction of factories, and limiting the
length of trains. This does not imply a peculiarly selfish attitude
on the part of organized labor. Action together in any social group
always develops in men their loyalty and spirit of coöperation without
always making them more considerate to those outside of their group.
Indeed, often men acting through their chosen officials, private or
public, are more selfish collectively than they are individually.
The leaders of any group of men, whether of wage workers, merchants,
manufacturers, or political constituents, find it necessary to
show that the interest of their supporters rather than a broader
"sentimentality" is uppermost in their thought. And further, the
jealousy of any limitation of their power is as powerful a motive in
one group of men as in another. All are made of the same human clay.
But the stronger and more successful a labor organization is, the
more vigorously do its leaders resist any legislation that limits the
functions and field of action of the labor leaders, or that settles
labor troubles in a way that makes the voluntary labor organization
less necessary to the individual worker. Of course self-help, as a
spirit and as a policy, is a virtue, if it does not sacrifice the
rights of others. But if the facts above suggested are borne in mind
they will help to explain the otherwise often puzzling attitudes of
organized labor toward different measures of social legislation.

§ 14. #Organized labor's opposition to compulsory arbitration.#
Organized labor in America has attained to a highly influential
position. On the whole it constitutes an "aristocracy of labor,"
consisting largely of skilled workers that obtain a wage exceeding
that of unskilled workers to a degree not seen anywhere else in the
world. In this they have been favored by a combination of conditions
which it is not possible to describe briefly; suffice it here to say
that organization is itself not the whole explanation, but only
a small part of it. That organized labor, officially, is strongly
opposed to compulsory arbitration in America, is thus perhaps
sufficiently to be understood on the principle of "Let well enough
alone." When in August, 1916, a strike on the entire railroad system
was threatened by the four railroad brotherhoods, and some action was
proposed in the form of the Canadian act, the trade-union officials
issued a statement containing these words: "Since the abolition of
slavery no more effectual means has been devised for insuring the
bondage of the workingman than the passage of compulsory investigation
acts of the character of the Canadian Industrial Disputes Act." Within
less than a week the brotherhoods called off the strike after Congress
had passed an act giving the men immediately the eight-hour
day - a substantial part of what they had asked - and providing for
investigation, by a commission, of the effects of the rule. This is
compulsory upon the railroads but it is not compulsory upon the men to
accept these terms.

§ 15. #The public and labor legislation.# It has come to be recognized
that in every serious labor dispute, especially in such as develop
into strikes, those concerned are not merely the two parties,
employers and employees, but a third party, the public, consisting of
every one else whose interests are not directly or indirectly bound up
with one of the other two parties. The line of demarcation is not easy
to draw exactly. An individual may be divided in sympathy, inclining
to the one party perhaps because of some personal friendships or class
loyalty or to the other party because of material investments, while
in the main having interests distinct from either. But wherever
the public is drawn in as a party, it includes far more persons
and embraces far larger interests than does either of the other two
parties or than do both of them together. The public becomes a party
primarily because it consists of the purchasers and consumers of the
products, who are deprived of the usual supply of goods, more or
less essential to their welfare or even to their existence. With the
increasing division of labor and complexity of industrial organization
more and more kinds of business have, in a greater and greater degree,
become "affected with a public interest." The public becomes an
unwilling party, therefore, in every serious labor controversy.

In order that any kind of labor legislation shall be enacted, it is
necessary (so far as we have a government by public opinion) for a
majority of the public to be convinced that the conditions are such
as call for governmental interference. It becomes so convinced in
two broadly distinguishable classes of cases: one, when the masses of
unorganized workers are too weak to secure for themselves conditions
of work and wages consistent with health and morality; and the other,
when strong bodies of organized workers, in their attempts to win
their ends in an industrial dispute, exceed their private rights and
invade the public welfare.

§ 16. #The public and compulsory arbitration#. Where the railways are
owned and operated by the state (as is now the case pretty generally
except in America and Great Britain) the question of the "right to
strike" arises from time to time, in critical forms. The logic of the
situation compels even those officials that are of the labor party or
are most favorable to labor, to maintain an uninterrupted service on
the public railways. The experiences of that nature in France and in
Australasia have been notable. Nowhere in the United States has the
principle of compulsory arbitration been adopted, but at the time of
the great anthracite strike, in 1902, public sentiment grew strong in
favor of it. As a result of the intolerable conditions in the mines of
Colorado was passed the compulsory investigation act of 1915 in that
state. In 1916 the threat of a general railroad strike brought from
many quarters strong expressions of condemnation in principle, of the
strike as a method of settlement of wage disputes on the railroads.
And in the end the organized laborers themselves accepted, apparently
with much satisfaction, a law involving the legal fixation of wages
and the principle of compulsion as applied to the employers.

[Footnote 1: By the Secretary of the American Federation of Labor.]

[Footnote 2: See Vol. I, pp. 458-467.]

[Footnote 3: For example, increase less than 25 per cent per hour in
changing from a 10 hour to an 8 hour day.]

[Footnote 4: See above, ch. 6, sec. 12.]

[Footnote 5: See especially, sec. 8.]

[Footnote 6: At this writing the case, Bunting vs. the State of
Oregon, is still undecided.]

[Footnote 7: Published as "The case for the shorter working day," by
the National Consumers' League, see especially pp. 621-892.]

[Footnote 8: See Vol. I, pp. 135 and 197.]

[Footnote 9: Much public regulation of wages occurred in Europe until
near the end of the eighteenth century. In England this was done
mainly by the justices of the peace and, in the main was directed
toward limiting the demands of the wage-workers.]

[Footnote 10: See below, sec. 15.]

[Footnote 11: By the act of 1888, the Erdman act of 1898, superseded
by the Newlands act of 1913, and supplemented by measures for
mediation by the Department of Labor.]

[Footnote 12: The few exceptions to this statement are mostly recent;
such as the recognition of the unions in New Zealand in 1894 as
parties in the plan of compulsory arbitration, and in Great Britain
in 1909 as agencies through which unemployment insurance may be

[Footnote 13: As appeared in ch. 20.]



§ 1. Evils of early factory conditions. § 2. Improvement of factory
conditions. § 3. Limitation of the wage contract. § 4. Usury laws. § 5.
Public inspection of standards and of foods. § 6. Charity, and control of
vice. § 7. City growth and the housing problem. § 8. Good housing
legislation. § 9. General grounds of this social legislation. § 10.
Training in the trades. § 11. Prevalence of unemployment. § 12. Evils of
unemployment. § 13. Definition of unemployment. § 14. Individual
maladjustments causing unemployment. § 15. Maladjustment of wages
causing unemployment. § 16. Individual maladjustment in finding jobs,
§ 17. Public employment offices. § 18. Fluctuations of industry causing
unemployment. § 19. Remedies for seasonal fluctuations. § 20. Reducing
cyclical unemployment and its effects.

§ 1. #Evils of early factory conditions#. The time is but brief in
the life of nations since the main manufacturing processes, now mostly
conducted in great factories, were carried on in or near the homes
of the workers. This change has been reflected in the meaning of
"manufactures," which first meant literally goods made by hand but now
conveys the thought of goods made by machinery. The craftsmen worked
alone in their own homes or with the help of their wives and children.
If the master craftsmen had other helpers these were usually lodged
and fed in the homes, and were taught by the side of the masters' own
families. The old English law of master and servant was the labor law
of that time as, to some extent, it still is to-day in Great Britain
and America. The living and working conditions of the wage-workers
were in general the same as those of the master himself and of his own
family; and this was the best possible guarantee that the conditions
would be kept up to the best standards of that time. The same change
in industrial relations that led to the rise of the organized labor
movement[1] revealed new and often horrible neglect and evil in
and about the factories. They had been erected with no thought of
sanitation, safety, and decency for the workers.

§ 2. #Improvement of factory conditions#. Legislation to remedy these
evils began in England a century ago, and the English code of factory
laws, regulating the construction and operation of factories and
providing for their inspection, has become voluminous. It has been
copied, and in some respects improved, by all of the great industrial
nations. This is true in America of the manufacturing states, tho the
agricultural states have still very few such regulations. As a result
of these measures, accompanying and stimulating an enlightenment
of the employers' self-interest, there has been a very remarkable
improvement in such matters in recent years. In many American
factories erected in the last quarter-century the conditions as to
lighting, heating, ventilation, stairways, fire-escapes, protection of
the workers against accidents, and lavatory and sanitary arrangements,
are better than the best conditions ever existing in domestic
manufactures. A somewhat corresponding improvement has taken place on
railroads, in mercantile establishments and, perhaps less, in mining.

Factory legislation often has been opposed by employers because of the
expense it causes; but if the regulations apply to all factories, the
expense becomes a part of the cost of production and is shifted, like
the other expenses of production, to the general body of consumers,
of which the employers form only a small part. Much of the recent
progress in some establishments has, however, gone much beyond the
requirements of any existing laws. Many employers recognize that it is
costly and unprofitable to themselves to allow their workmen to be in
surroundings that reduce their vitality and efficiency, such as do the
conditions mentioned at the close of the preceding section.

§ 3. #Limitation of the wage contract#. In general the law does
not attempt to interfere with the making, by individuals, of such
contracts as they choose to make. Its main function is to interpret
and enforce the contracts that are made. But there has been an
increasing group of exceptions to this general statement. It was
forbidden even by the English common law for wage-workers under
some conditions to sign away their right to claim damages in case
of accident, and many recent statutes have added more specific
limitations in this respect.[2] Legislatures and courts have been
particularly watchful of the interests of children, who are usually
deemed incapable of entering into contracts binding them to their
injury. Sailors, likewise, have been somewhat exceptionally treated,
because, journeying far from home, they are under the often despotic
control of their employers. The English courts may even change the
contract if the sailors have been coerced by their masters.

Laws regulate the form, time, and methods of payment in manufactures
and mining. Companies sometimes keep stores and pay the workers in
mines and factories in goods instead of money. Such a store in the
hands of a philanthropic employer might easily be made, without
expense to himself, a great boon to his workmen, giving them the
benefits of consumers' coöperation. But the usual result is told
by the fact that such stores are often known as "truck stores" and
"pluck-me stores," and heartily disliked by the wage-workers. They
are most often found where some one large corporation dominates in
the community, as in a mining district, and the workers are in a very
dependent condition. If the higher prices demanded practically lower
real wages, it would seem that the worker had an immediate remedy in
his power to demand higher money-wages. Recognizing that this is for
the most part an illusion - for it is just in such places that the
conditions for free competition are least present - the law in many
states prohibits these stores. It regulates also the measuring of
work, fixing the size of screens and of cars used in coal-mining.
The law is especially favorable to the hand-laborer in regard to the
collection of his wages, requiring monthly or fortnightly or sometimes
weekly payments. Mechanics' liens give to workmen in the building
trades the first claim upon the products of their labor.

§ 4. #Usury laws#. The limitation by law of the rate of interest that
may be charged affects many persons outside the ranks of wage-workers.
Usury laws are found almost universally in civilized lands. By usury
was formerly meant any payment for the loan of goods or money; now it
means only excessive payments. In former times moralists and lawmakers
were opposed to all usury or interest. The reason for this attitude
is not hard to find.[3] Most loans were made in times of distress. The
sources of loanable capital and the chances of profitable investment
were few. But for the last four centuries there has been on the
question of usury a gradual change of opinion, beginning in the
commercial centers and progressing most rapidly in the countries
with the most developed industry. A moderate rate of interest is now
everywhere permitted; but in all but a few communities the rate that
can be collected is limited by law, and penalties more or less severe
are imposed upon the usurious lender.

Usury laws are practically evaded in a number of ways within the
letter of the law.[4] Many persons maintain that they do more harm
than good even to the borrower, whom they are designed to protect. In
a developed credit economy, where a regular money-market exists, they
are superfluous, to say the least, as most loans are made below the
legal rate. Such laws, however, have a partial justification. In a
small loan market they to some extent protect the weak borrower at the
moment of distress from the rapacity of the would-be usurer. There
has been great need to check the rapacity of the "loan-shark" in the
cities. Usury laws are fruits of the social conscience, a recognition
of the duty to protect the weaker citizen in the period of his
direst need. Their utility is diminishing; and at best they are only
negative in their action, preventing the needy borrower from borrowing
when his need is acute. In many European countries a more positive
remedy has been found in the provision of public pawn-shops. In
America a very little has yet been done in this way, and that mostly
by private philanthropy.[5]

§ 5. #Public inspection of standards and of foods#. The determination
and testing of standards of weights and measures has long been a
function of government. English laws of the Middle Ages forbade
false measures and the sale of defective goods, and provided for the
inspection of markets in the cities. Usually, the self-interest of
the purchaser is the best means of ensuring the quality of goods;
but personal inspection by each buyer frequently is difficult and
time-consuming, requiring special and unusual knowledge of the
products and special costly testing apparatus. The states and the
nation undertake, in some cases, therefore, to set minimum standards
of quality, and to enforce them by governmental inspection. Government
coinage had its origin in this need.

This policy is applied, however, mainly to commodities affecting
health; its application to art products, except to protect the
morality of the community, would be difficult or unwise. Recent
legislation in many lands and in all of the American states has
developed greatly the policy of insuring the purity or the safety of
many articles consumed in the home; notable is the Federal Pure Food
and Drug Act of 1906. The federal law levying a tax on oleomargarine,
however, was designed as protective legislation in the interest of the
farmer. Public regulation and inspection sometimes raises the price,
but the cost is small compared with the convenience and the benefits
resulting to the citizen.

§ 6. #Charity, and control of vice#. The public relief of the
defective classes, insane, feeble-minded, and paupers, is a part
of the social protective policy. The public interest undoubtedly is
served by having these suffering classes systematically relieved, but
the extent and nature of the provision are questions ever in debate.
Still more debated is temperance legislation, both as to licensing and
as to prohibiting the liquor traffic. Nowhere is the manufacture and
sale of intoxicating liquor treated quite like the traffic in most
other goods, because it is recognized that the public interest is
affected in a different way. While it is beyond question that society
should protect itself and its innocent members against the drunkard,
it is more doubtful whether it owes to the man, for his sake,
protection against his own blunders. Not even the gods can save the
stupid. Temperance legislation is strongest in its social aspect. The
opponent of it usually champions the individualist view; its partizans
uphold, in varying degrees, the social view.

Similar questions arise regarding lotteries, gambling, betting, and
horse-racing. When a man backs a worthless horse against the field,
money probably is transferred from the stupider to the shrewder party.
The philosopher may say that the sooner a prodigal and his money
are parted the better; but the broken gambler remains a burden and a
threat to honest society. Gambling, lotteries, and speculation cause
embezzlement, crime, unhappy homes, and wrecked lives.[6] Here are

Online LibraryFrank Albert FetterModern Economic Problems Economics Volume II → online text (page 27 of 40)