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up by Mr. Bobbins, the most prominent of their representatives : ' This
Interstate movement, with its rules and its peculiar organisation, is
different from anything that exists in this or any other country. It is a
movement that is full of pitfalls. It is one where a very small minority
can block the entire proceedings of the majority and prevent a settlement.



io8 THE ADJUSTMENT OF WAGES



Wliat is coming to be known as the ' regulation ' of
an industry may, however, be aimed at from more than
one direction. Uniformity of labour-cost will remove
one of the chief causes of differences in selling price ;
on. the other hand, uniformity of prices will diminish
the temptation to cut down the labour bill. A main
cause for the general strike of the miners in 1897 was
the almost complete absence of combination among the
bituminous owners, and the repeated failure of selling
agreements. But there are indications that this state
of things is passing away. The present anti-trust law
puts formidable obstacles in the way of pooling or other
similar combinations of producers, so long as each re-
tains his legal independence ; for that very reason, as the
economic forces pushing men towards common action
do not cease their pressure, the law has the unintended
effect of encouraging complete amalgamation, — which
of course no statute can prevent. And so in Pennsyl-

. . . That rule was adopted for protection on both sides. It was adopted
as a mutual protection. To increase the possibilities of disagreement
and failure is against the interests of the movement. It is against the
interests of the movement for the miners as well as for the operators.
The movement has been successful now since it was started last in
Chicago. We have come together now in these four cities and have
made agreements, and I tell you to let well enough alone. There is no
reason why the states of Iowa and Michigan should be selected out.
You can just as well select out other states. Kentucky and Alabama are
just as competitive and more competitive than the states of Michigan and
Iowa.' The advocates of the inclusion of Iowa had maintained that that
state and Michigan were more closely connected with the states
represented than the others named : ' If you form other conferences, if
you form a conference south of the Ohio river, another one west of the
Mississippi, have three conferences as was suggested last year in
Indianapolis, then I say that Iowa and Michigan belong to this conference
nevertheless. We compete with Missouri coal just a little, we compete
with Kansas coal just a little ; but we compete with Illinois and Ohio
and the block coal of Indiana in all of our markets ' {ihid. 49). All this is
denied by the operators {ihid. 46). It should not be impossible to obtain
a trustworthy report on the facts of the case which would be authoritative
with both parties.



AMERICAN JOINT AGREEMENTS 109



vania in 1899 an amalgamation was effected of all the
140 bituminous properties accessible to railways, in the
Pittsburg coal district.^ This is the Pittsburg Coal Com-
pany, with 32 million dollars in 7 per cent, cumulative
preferred stock, and a like amount of common stock,
the greater part of which was thrown in as a bonus
to subscribers in the hope that it might earn some-
thing some day. Side by side with this was created
the Monongahela River Coal Company, with a nominal
capital of 30 million dollars (one-third bonds, one-third
preferred stock, one-third common), dealing with all
the coal of the state sent down the Ohio and Mississippi.
These two great companies began with a mutual under-
standing, and they are now under one control. To-
gether they form the largest single coal business in the
world, with a considerable railroad mileage not only
in Pennsylvania, but also at the western end of Lake
Superior. To the great lakes it sends some six mil-
lion tons annually, and it owns docks at various lake
ports. Such a combination evidently makes it much
more feasible to maintain a steady price, and therefore
a steady wage rate, in Pennsylvania. Of course it
strengthens the coal-owning interest in its negotiation
with the miners. But the New York banker who
financed this amalgamation declared before the Indus-
trial Commission that he ' found that the leaders of
labour organisations were fully alive to the advantages
of dealing with one concern, rather than with a hundred
and forty. So far as the company was concerned,
instead of being indisposed to deal with the representa-
tives of organised labour, they were ' doing it all the
time and preferred to do it.' The arrangement with
the United Mine Workers was entirely satisfactory, and

^ Not including the coking coal.



THE ADJUSTMENT OF WAGES



there was not the shghtest friction. The labourer, he
went on to say, has as much right to combine as
they had to combine these properties, and a right to
be represented by the organisation. A manager who
wouldn't listen to such representatives ' ought to seek
other employment.' ' If I owned the property, he
would;' ^

A close combination among all the bituminous opera-
tors for the purpose of controlling prices is probably
not for the present a matter of practical politics, though
to this I shall recur. But something like this, in close
confederacy with an equally complete combination of
the miners, is the ultimate ideal of the leaders of the
United Mine Workers. They do not like to be called
' a trust,' but what they do believe, as they expressed
it before the Industrial Commission, is that ' the best
interests of the coal trade would be served ' by ' a
general union ' or ' association ' of both miners and
operators, ' treating mutually and voluntarily together,
and holding selling prices up to reasonable rates' "^

1 Bep. Ind. Com. xiii. 101-102. Cf. xix. 230. For a list of ten other
large consolidations in 1899-1902 among soft coal operators, see Mineral
Resources of the United States, 1901 (U.S. Geological Survey), 280.

* Bep. Ind. Com. xii. 63. Something may be added here as to the con-
siderations which are urged in the American Interstate Conventions with
regard to the causes which ought to influence wages. Unfortunately it
is not possible to institute a comparison with discussions in England
because the final negotiation in America takes place in a Sub-scale-
committee, whose proceedings are not reported. In the Convention and
in the Scale Committee most stress is laid upon prices. But the leader of
the operators, Mr. Bobbins, of the Pittsburg Coal Company, has also
done what in Great Britain it has usually been left for the miners to do —
called attention to the matter of volume of trade : ' It is not a question of
price that governs alone ; it is a question of volume of business ; that is
as necessary as price.' — BeiJ. Fourth Convention, 55. The operators
also have urged that an alleged increase in the cost of mining should be
taken into account {ibid. 157). On their side the miners have pointed to
an alleged increase in the cost of living as justifying a rise in wages
{ihid. &d), and have disclaimed any intention to rely upon their 'great



AMERICAN JOINT AGREEMENTS



strength ' (iJep. Fifth Convention, 52). As to what the prices are or have
been, neither party has been inchned to accept the figures produced by the
others. The miners have quoted ' the journals published in the interests
of the operators ' {'Rep. Fourth Convention, 70) ; the ' Government coal
reports ' {Bep. Fifth Convention, 42), and especially the Eeports of the
IlUnois Bureau of Statistics {ihid. 63). As to the latter one operator
declared that ' the operators do not give the state statistician the figures as
to cost of production or selling price. It is none of the state statistician's
business, and we won't give him the information.' Accordingly ' the
Coal Reports of Illinois are all buncombe and rot ' {ihid. 78). Mr.
Eobbins, on behalf of the operators, offered in 1902 to substantiate his
facts by a reference to his books {ihid. 74). The x\merican ' scale ' (which
is simply a rate and not a sHding scale) fixes wages for a year ; and Mr.
Eobbins went on to propose that the realised prices of one year should
determine the wages of the next : ' To show our good faith in the matter
we made the proposition that a scale should be established based upon
what our books would show as to the relative difference in the selUng
prices of coal in the year 1901 and the year 1900, and if the records
would show that there was an increased price, a relative increase in the
price of mining would be paid ; and if it shows a decreased selling price
a relative decrease in the price of mining would be paid ' {ihid. 122).
"Whether this has led to anything like the British system of accountants'
' ascertainments,' I do not know.

[Additional Note to Lecture V. — It appears that while the great
strike in the anthracite region (described in the nest Lecture) was
proceeding in Eastern Pennsylvania, a severe strike was also being
engaged in, for several months, in West Virginia, in consequence of the
refusal of the operators to ' sign a scale ' laid before them by the U.M.W.
of A. The strike was only very partially successful ; but the miners
were granted an increase of 10 per cent, in wages in certain districts ;
and, in one important district, that of Kanawha, where some 7,000
men were employed, an agreement was finally reached with the operators,
recognising the right of the men to combine. This the U.M.W. regard
ab ' estabUshing for the first time the nucleus of an organisation in West
Virginia.' An account of these transactions, from their point of view, is
given in the Minutes of the Fourteenth Annual Convention (1903), 38,
52-54.]



112 THE ADJUSTMENT OF WAGES



LECTUEE VI

THE ANTHRACITE PROBLEM

I PROPOSE, in this lecture, to concentrate your at-
tention upon the anthracite or hard coal industry —
the coal-mining of Eastern Pennsylvania ; and this not
only because of the recent strike. That strike, indeed,
has been one of the most significant in the history of
industry. It is, I think, only the third occasion in
modern times that an almost complete cessation has
taken place (outside Eussia or India) in the supply of a
necessary of life for several millions of people. The
only parallels that occur to one are the potato famine
in 1845 and the cotton famine in Lancashire during
the American Civil War. The recent coal famine in
America was likewise the result of war — of civil indus-
trial war — and of civil industrial war in the country
itself that suffered. It is the first time that ' organised
labour ' has actually succeeded in enforcing an embargo
on a necessary article of consumption long enough to
secure its purposes.

And, as a consequence of this, it is the first time
the chief Executive Magistrate of the United States has
intervened and compelled the parties to the dispute
to refer their contention to a tribunal appointed by
himself. It was an important step when, in 1894, the
President of the United States appointed a Commission
to report on the great Chicago railroad strike. But by
that time the strike was practically over, and the report



THE ANTHRACITE PROBLEM 113

of the Commission had no share in determining the issue :
but now both parties have been compelled to resume
work while the case is being heard by a Commission
whose judgment they will be compelled by public opinion
to obey. Just what the nature of the pressure may have
been which President Eoosevelt brought to bear upon
Mr. Morgan, and through him upon the coal operators,
we shall have to wait a few years before we learn.
Nor, indeed, does it much matter ; there are more than
one means of coercion in the hands of the executive
government of a great state. And it does not matter
what the motives were which influenced the President.
I have equally intelligent American friends who beheve,
some of them, that it was sheer humanity which im-
pelled him to intervene, and, some of them, that it was
a deplorable regard for the electoral interests of his
political party. In either case, the step has been taken
and the precedent has been created. If it has an effect
only as great as its nearest parallel — the intervention
of the English Government in the midland coal strike
of 1892 — and opens a new period in the relations
between mining labour and mining capital, in the same
way as the creation of the Board for the Federated
Districts has done in Enoland, it will have left its mark
on history.

I ask your attention, however, to the subject, for
other reasons : because it sets before us, not the labour
problem only, but a whole series of typical problems
of modern industrial life in general and of American
industry in particular ; and, above all, because it
illustrates the necessary approximation in our time of
the two problems of the combination of labour and the
combination of capital.

You will remember that the anthracite of the

I



114 THE ADJUSTMENT OF WAGES



United States is practically all found in Eastern Penn-
sylvania, separated by some two hundred miles of
mountainous country from the Pittsburg soft coal in
Western Pennsylvania. In appears in a number of
narrow bands or strips of land : the northernmost (or
Wyoming) field being 50 miles long, and in its widest
part 5 J miles across ; the southernmost (or Schuylkill)
55 miles long, and in its widest part 4 miles across, but
much of it very narrow.^ The eastern middle (or
Lehigh) field and the western middle are smaller, in
proportions which the eye may easily gauge on the ac-
companying map. The total coal area is 483 sq. miles.
The number of persons employed in 1900 was 143,831.^
This is not far short of the total number employed in
the ' competitive bituminous fields ' under ' the joint
agreement,' although the tonnage raised, some 47 mil-
lions, is very much less — little more than half.^ The
number of men is somewhat smaller than in our Great
Northern or South Wales fields. This will give some
impression of the magnitude of the problem.

Let us begin by observing that in the anthracite
coal fields an element makes its appearance as of
primary importance which is hardly present at all as a
determining factor in the bituminous fields ; and that
is the element of transportation, or, as we call it in
England, transport. Coal mining is not only dependent
on the railway companies for the carriage of the coal :
the railroads themselves now own by far the greater
part of the coal-bearing land in the district. The
accompanying map indicates the ownership of anthra-
cite coal lands in 1896 ; the absolutely black patches

^ Eoberts, The Anthracite Coal Industry, 5. See Map IV. opposite
p. 126.

- Bulletin 43 of the Department of Labor, 1194.
^ Cf. McLeod in Rep. Ind. Co7n. ix. 567.



THE ANTHRACITE PROBLEM 115



representing the properties, in that year, of what are
known as the 'independent operators.' In that year
the independent output was estimated at some 34
per cent, of the whole ; by 1901 it has fallen to
29 per cent. ; Mt is now probably a good deal less."^
There could scarcely be a better example of the way
in which absolutely free competition works towards
its own destruction. Two out of the eight railways
concerned were, indeed, engaged in mining from the
time they reached the district ; but most of them, on
the contrary, only entered into the mining business to
secure their freight tonnage from competition. Thus,
the largest owner of coal-land at the present time is the
Philadelphia and Reading Railway (known for short
as the 'Reading'). This railway down to 1871 did not
own a yard of coal -land. It had enjoyed up to that
time, however, a practical monopoly of the traffic from
the southern anthracite field ; but in that year two
much greater railroads, the Pennsylvania on the west
and the Lehigh Valley on the east, began to enter its
territory and compete with it for the carriage of coal.^
The Reading company believed, and doubtless with
reason, that it must, at almost anj^ cost, ' assure the
permanence of its tonnage ; ' and for this purpose it
began to buy up coal-land right and left. Other railway
companies have done the same for the same reason.
They are no longer allowed by law to operate their coal
mines directly ; they all make use of subsidiary com-
panies (corporations) for the purpose, sometimes bearing
a similar name — thus the Philadelphia and Reading Rail-



' iJej?' I-nd. Com. ix. ooo.

2 Roberts (August 1901), 66, makes it 20-99 per cent.
^ The situation will be at once apparent on examination of the accom-
panying Map III. opposite p. 124.

1 2



n6 THE ADJUSTMENT OE WAGES



road Co. works through the Philadelphia and Eeading
Coal Co. ; sometimes bearing a quite different name
— thus the Pennsylvania Railroad works through the
Scranton Coal Co. But, having become coal operators
mainly in self-defence against other railroads, they
are exceedingly formidable competitors for the inde-
pendent operators. The independent operators are
dependent upon them for the carriage of their coal ;
and they can charge what rates they please for the
service. As to whether the rates have often been
excessive in themselves there is a good deal of contro-
versy. They are, undoubtedly, much higher than those
which the same companies charge for carrying soft
coal ; but for various reasons the hauling and unload-
ing of soft coal are really less expensive.^ Certainly
there has frequently been a widespread and intense
feeling among the independent coalowners that they
were being penalised by the rates charged. It was no
reply that the railroads charged themselves {i.e. the
subsidiary mining companies practically identical with
themselves) the same rates as they charged every one
else. For to them it was but transferring the money
from one pocket to another. And the feeling among
the independent operators has been such that they
have again and again tried to get railroads of their
own. One or two of the biggest coal companies have
constructed little lines from their own mines to some
one or more of the great competing roads. ^ But the
proposal which has frequently been mooted in one or
other district to construct, in the interest of the small
operators, a new railroad all the way to tide water has
invariably broken down. The railroads, threatened by

^ He'^. Ind. Com. ix., Digest xxvii. ; Bulletin 43 0/ Dep. Labour, 1163.
* E.g. Coxe Bros. & Co., a road of 40 miles, Eej). Ind. Com. ix. 590.



THE ANTHRACITE PROBLEM 117



a new rival, invariably offer good terms to a sufficient
number of those independent mine owners who have
pledged tonnage to the new line to induce them to part
with their property, and so once more to exorcise the
danger even at a heav}^ cost.^

It must not, indeed, be supposed that the pre-
dominance of the railroads has been due simply to their
powers as carriers. It has been caused quite as much
l^y their greater command of capital. Mining, as first
carried on in these parts, required very little capital.
The operators worked at the outcrops ; they took what
they could get easily and cheaply ; and then many of
them left the workings, uncharted and uncared for, to
be a source of danger to future generations. As
deeper shafts have become necessary and more capital
has been called for — both to meet the greater cost of
successful mining and the greater financial risk in-
volved in seeking the coal''^ — the larger capitalists
(mainly the railways) have been able to buy up the
small holdings, and have justified their presence by
developing resources which would otherwise have
remained unutilised.^ Not that railways have been
alone in taking advantage of the situation : there have
grown up two or three other great coal-mining com-
panies which have owned but little railroad : ^ and
there is everywhere a tendency towards the absorption
of the smaller in the larger concerns.

The combination of mining with railroading has
one minor consequence which is worth noting. It
makes it very difficult, if not impossible, to disentangle

^ i?ep. Ind,. Com. ix., Digest xxvi.
"^ McLeod, in Eep. hid. Com. ix. 570.

^ De Rousiers, Les Industries Monopolisces aux Etats-Unis (1898),
100-103. Roberts, 19.

■* E.g. Coxa & Co. and the Pennsylvania Coal Company.



n8 THE ADJUSTMENT OF WAGES

the accounts of the two businesses. And when the
miners employed by the raiboads refuse to beUeve
what the officials tell them of the small or non-existent
profits of the mining business, and declare their con-
viction that the railroads are making large profits as
carriers of coal, they are simply echoing what the
independent operators are always saying. There may
be an answer to this : it may be true, as the president
of the Beading Company avers, that neither the carry-
ing nor the mining branch has paid any profits for
years on a perfectly genuine and unwatered stock.'
Still, some of the roads have undoubtedly at times
obtained large profits on their carrying business ; '^
and anyway the situation is such that no very con-
vincinij; financial statement seems available."^

This, then, is the first point : practically all the coal
is carried, and more than three-quarters of it is mined,
by eight great railway companies. Hitherto the de-
mand from the West and South has been comparatively
small — perhaps one-fifth of the whole. All the rest is
consumed in the eastern states, from Pennsylvania north-
ward ; and a very large part of it is carried to ' tide-water,'
as it is called, at New York and Philadelphia, to be
thence distributed.'* The carrying roads have con-
sequently been driven for many years past into the
fiercest competition, a competition which has exhibited
on an increasingly large scale all the phenomena which
we have now learnt to expect. The ine\dtable result has

^ Bulletin 43 of Lab. Dep. 1160; Bep. Ind. Com. ix. 566.

^ Roberts, Anthracite Industry, 75 ; Virtue, in Quarterly Journal of
Economics, x. 321 (April 1896).

■' See the evidence before the Industrial Commission (Beport, ix. 474)
of Mr. Greene, the well-known authoritj"^ on ' Corporation Finance.'
Of. the observations in Final Report of Ind. Com. xix. 448.

* Eep. Ind. Com. ix. 562.



THE ANTHRACITE PROBLEM ,19



been the repeated attempt, during the last thirty years,
to moderate the competition by some measure of com-
bination. Several plans have been resorted to: an
agreed schedule of tide-water prices — i.e. prices at com-
petitive points ; a definite division or allotment of tide-
water tonnage ; an allotment of permissible output ; a
curtaihnent of total output by general stoppages. But
until recently each has broken down after about a year's
trial. Desperation drove the roads into one compact
after another, but the memories of business men are
surprisingly short : and after a few months of compara-
tive prosperity, the members of the combination simply
broke away from their agreements. They could not
control their selhng airents — all anxious to do as laro-e a
trade as they could possibly get hold of ; and each dis-
trusted the other, and beheved the other was playing
fiist and loose with the agreement. These plain men of
common-sense have expended an amount of casuistry
on self-excuse that would have done credit to a pro-
fessional director of consciences.^ And it must be
confessed that, even if all the participants in the
compact had been firm, it would have been exceed-
ingly difficult to maintain it so long as the independent
operators were left free outside — including some quite
large concerns ; and wliile one great railway company,
the Pennsylvania Eailroad (^which owned, it is true,
little coal-land, but carried about one-ninth of the
output -), steadily refused to enter into any agreement.
To all these causes must be added in the late eighties
the popular outcry against monopohes, and the various

' The whole history of the matter is cleailj set forth by
Mr. Virtue in the Quarterly Journal of Economics for April 189G
(X. 296 seq.).

- In 1900, Rc^. Ind. Com. six. 444.



I20 THE ADJUSTMENT OF WAGES

legislative measures prohibiting combination in re-
straint of trade.

Of all the railroad companies it seems to be
generally agreed that it was only the Reading which
was never guilty of breach of faith. The Eeading is
nothing but a local Eastern Pennsylvanian line, with-
out any of the through traffic of some of its rivals ;
it is dependent almost entirely upon its carriage of
anthracite, and therefore impelled to get control of as



Online LibraryW. J. (William James) AshleyThe adjustment of wages; a study in the coal and iron industries of Great Britain and America → online text (page 10 of 31)