INDUSTRIAL WRONGS
WE have been discussing the treatment of recognized crime. But beyond
the boundaries of conduct universally labeled as criminal, there is
a whole realm of anti-social action to which the public conscience
is only beginning to be sensitive, although it is often far more harmful
to the general welfare than that for which men are imprisoned.
Especially is this true of the wrongs connected with modern industry.
As Professor Ross puts it, [Footnote: Sin and Society, p. 97.] "the
master iniquities of our time are connected with money-making"; and
so our "moral pace-setters," who are, for the most part, confining
their attacks to the time-worn and familiar sins, "do not get into
the big fight at all." The root of the trouble is that great power
over the lives and happiness of others has been acquired by a small
class of irresponsible men, many of whom fail to recognize their
privileged position as a public trust and care only for enriching
themselves. As we noted in chapter in, the complexification of our
industrial life is making possible a whole new range of what must be
branded as crimes; endless opportunities have been opened up of
money-making at the cost of others' suffering. Often that suffering,
or loss, is so remote from the path of the greedy business man that
he does not see himself, and others fail to see him, as the predatory
money-grabber that he is. The many who have been ruined by unscrupulous
competitors are often embittered, the repressed capitalism; but the
public as a whole has not been aroused to rebuke this "newer
unrighteousness." We must proceed to note its commonest contemporary
forms. In our present organization of industry, what are the duties
of businessmen:
I. To the public?
(1) The first duty of businessmen is to supply honest goods, in honest
measure. Underweight, undermeasure, double- bottomed berry-boxes,
bottles so shaped as to appear to contain more than their actual
contents, are obviously cheating. Misbranding of goods is now
regulated, so far as interstate trade goes, by the Federal Pure Food
and Drugs Act; and most States have similar legislation.
Misrepresentation in advertisement should be severely punished; the
selling of cold storage for fresh products, of part-cotton for all-wool
clothing, of less for more expensive woods, and the thousand other
ways of panning inferior goods upon an inexpert public for high-grade
articles. At present there is little recourse but to carry distrust
into all purchasing, learn to be canny, and to recognize differences
in quality in all articles needed. But the average man cannot become
an expert purchaser; he buys furniture which breaks down prematurely;
he pays a high price for clothing which proves to have no wearing
quality; he buys patent medicines which promise to cure his physical
ills, and is lucky if they do not leave him worse in health than before.
Jerry- building, and the doing of fake jobs by contractors, especially
for municipalities, is one of the scandals of our times. [Footnote:
See Encyclopedia Britannica, article, "Adulteration." E. Kelly Twentieth
Century Socialism, book ii, chap. i. For a notorious case of tampering
with weights, see Outlook, vol. 92, p. 25; vol. 93, p. 811. For cases
of adulteration, Good Housekeeping Magazine, vol. 54, p. 593. F. W.
Taussig, Principles of Economics, chap. 45.]
(2) Another duty, less generally recognized by even the more honorable
businessmen, is to sell their goods at fair prices. The strangulation
of competition by mutual agreements or the formation of trusts, aided
often by an iniquitously high tariff, has put many a business for a
time on a par with those natural monopolies which, if unregulated,
can always exact exorbitant prices for what the public needs. Rich
profits have been made by the tucking of a few cents on to the price
of gas, or coal, or steel, or oil, or telephone service. Enormous
fortunes have been made, at the public expense, by the practical
cornering of staple commodities. These hold-up prices should be clearly
recognized for what they are-a form of modern piracy. No business man
or corporation is entitled in justice to more than a moderate reward
for the mental and physical labor expended; the excessive incomes of
monopoly are largely at the expense of the public, who, by one means
or other, are being compelled to pay more than a fair price for the
article. [Footnote: For cases, see C. R. Van Hise, Concentration and
Control, pp. 109,145, 149.]
(3) Finally, all business must be looked upon as a form of public
service, and the convenience of customers scrupulously consulted. Where
there is competition this tends to regulate itself; but our public-
service monopolies have too often followed the "public- be-damned"
policy. The long-suffering community puts up with inadequate and
crowded streetcars, inconvenient train service, a bungled and high-
handed telephone system. Railway managements have sometimes been
criminally indifferent to public safety, finding it less expensive
to lose occasional damage suits than to install safety appliances.
Efficiency in serving the public has likewise been sacrificed to
dividends; and courtesy, where it is not recognized to have a cash
value, tends to disappear. Such indictments point to the widespread
existence of the idea that men and corporations are in business for
themselves only, and not as fulfilling a public need.[Footnote: For
concrete illustrations, see Outlook, vol. 91, p. 861; vol. 95, p. 515.
World's Work, vol. 23, p. 579.]
II. TO INVENTORS?
It has not been generally enough recognized that business men owe it
to investors to do their best to see to it that they get fair returns
on their money invested -and only fair returns. There are a number
of ways in which, on the one hand, the investing public is "skinned,"
and, on the other hand, stock in a business, largely owned by the
management itself, has been rewarded with undeserved dividends at the
expense of the public.
(1) There are, in the first place, the get-rich-quick swindles, the
out-and-out impostures, which have deceived the credulous into
investments that never could pay. Bonanza mines, impractical
inventions, town lots laid out on the prairie, orange groves that
existed only on paper-such bogus hopes have enticed many an honest
man and woman, who could ill afford to lose, into turning over their
small earnings to the brazen exploiters.[Footnote: For cases, see World's
Work, vol. 21, p. 14112.]
(2) But such arrant deception is not the commonest form of wrong. A
more usual practice, and more dangerous- because it deceives even the
intelligent-is to overcapitalize an honest business, to issue "watered"
stock-that is, stock in excess of the actual value of plant, patents,
and other assets. These stocks are issued merely to sell. If the
business is very successful, its profits may pay a fair return on all
this capital; if not, low dividends or none can be paid until the
business slowly catches up with its overcapitalization. In all
investment-as our industrial organization at present goes-there is
risk; but to create a needless risk and deceive the public into taking
it is plain dishonesty. The extra money thus sucked from the public
goes sometimes to pay excessive salaries to the officials of the
company, sometimes to pay excessive prices for patents or plants
purchased; there are many subtle ways, known to "high finance," of
misappropriating stockholders' money and diverting it to the pockets
of the promoters. Many great fortunes have been made in this way; such
exploitation is so new to society that it has not yet awakened to its
essentially criminal nature. Even if the business is able to pay good
dividends on watered stock, the crime of overcapitalization is not
lessened, though the harm done is now not to the investor but to the
public. Stocks should represent only the actual value of the property,
so that dividends may be only a fair return for capital really invested
in the business. Where there is sharp competition, the possibility
of overcharging the public to make returns on watered stock is cut
out, and the loss falls upon the investor. But in the case of monopolies,
such as railways, or of combinations which practically stifle
competition, the public may be charged enough to "pay a fair dividend
to investors," although the money upon which dividends are being made
went not into improving the service, but into fattening the promoters'
purses. [Footnote: On stock watering, see Dewey and Tufts, Ethics,
pp. 561-64. Outlook, vol. 85, p. 562. Political Science Quarterly,
vol. 26, p. 88. International Journal of Ethics, vol. 18, p. 151. C.
R. Van Hise, Concentration and Control, pp. 115, 142, etc.]
(3) A third method of "fleecing" investors lies in skillful
manipulation of the stock market. In ways which are known to the
initiated, it is often possible artificially to raise or lower the
market value of stocks. Unwary investors are lured in; timid investors
are frightened out; through all ticker fluctuations the brokers win
their commissions; the skilled financiers and organizers of
combinations rake in unearned sums that are sometimes immense,
while the losses fall mostly to the lot of the are honestly seeking to put
their savings into solid investments. The ethics of the stock market has
not yet been clearly decided, and the subject is too big to discuss here.
It is mentioned only to point out one more form of social sinning, as yet
inadequately punished or rebuked, whereby men of capital and brains
have been able to pocket money for which they have given no return
to society. [Footnote: For cases, see C. Norman Fay, Big Business and
Government. Outlook, vol. 91, pp. 591, 636.]
III. TO COMPETITORS?
(1) The most conspicuous form of wrongdoing, perhaps, to be charged
to modern business is the attempt to get monopoly by foul means. The
story of too many of our great trusts is a story of competitors ruined
by ruthless and unscrupulous methods. The competitor may be hurt by
the circulation of falsehoods concerning his business, his right to
patents, or the worth of his goods. He may be denied outlet to markets
by control of the railway upon which he must depend. If the capital
of the concern that is seeking monopoly permits, the price of the article
manufactured may be lowered until rivals with less financial backing
are forced out of business-after which the price can be raised and
losses recouped. With skill and foresight worthy of a better cause,
some of the great industrial leaders of our day have eliminated one
rival after another and attained that unification of a business which
has, indeed, its great economic advantages, but is not to be won at
such a bitter cost. [Footnote: See, for example, I. Tarbell, History
of the Standard Oil Company.]
(2) Even where monopoly is not sought, there are many unfair methods
of competition-unfair to competitors and to the public that both should
serve. One method, much discussed in recent years, is that of railway
rebates. By this is meant favoritism in freight rates between shippers
and between localities. One manufacturer, who is in a position to ship
his goods by either of two railways, perhaps by a water route, is given
a low rate to get his freight; another manufacturer of similar goods,
not so favorably situated, is made to pay a higher rate. Rates from
seaboard or river cities, where water competition exists, have often
been considerably lower than rates from inland towns on the same line,
with a very much shorter haul. In such ways the railway squeezes those
whom it can squeeze and is content with a bare profit where it can
do no better. Where the railway is controlled by the same interests
that control some industrial combination, the favoritism may go even
farther, and the railway's profits be sacrificed entirely for the
cheaper marketing of that particular trust's article. Against all such
inequalities in the treatment of shippers the public conscience has
lately protested; the railways are recognized as a public instrument
of transportation, which should be open to use by all upon equal terms,
at a price which will repay the cost of carriage plus a fair profit.
[Footnote: On railway rebates, see H. R. Seager, Introduction to
Economics, chap. XXIV, secs 260-63. F. W. Taussig, Principles of
Economics, chap. 60, secs. 7, 8. Outlook, vol. 81, p. 803; vol. 85,
p. 161.] IV. TO EMPLOYEES?
(1) The first duty of employers is to give to all employees a fair
wage. If the business does not pay enough to allow this, it has no
right to exist; if the owners are pocketing large salaries, or giving
dividends to stockholders, this money should be used first for a proper
payment of the workers. So many laborers are at the mercy of the
employing class, because of their ignorance, their lack of capital
and necessity of work at any wage, and often their unfamiliarity with
the language and customs of the country, that it has become possible
in many cases to treat them like animals and give them less than enough
to sustain life in decency, not to say in comfort. Such a case as that
of our benevolent Mr. Carnegie, who million dollars in one year's
earnings of his steel trust, while many hundreds of his employees were
getting but a miserable pittance and living in vile surroundings, is
exceptionally glaring; but in lesser degree the same injustice is being
wrought in many industries. Wages have, indeed, been raised gradually,
here and there; but not usually by the free will of employers. The
callousness of some of the privileged classes toward the underpayment
of the lower classes is almost on a par with the attitude of the
nobility before the French Revolution.[Footnote: See, for example,
Outlook, vol. 101, p. 345.] Fortunately, the public is coming to see
not only the wrong done to the helpless poor, but the cost to the
community in breeding underfed, ill- housed, criminally tempted
classes, and the danger that lies ahead if these classes realize their
power before amelioration is effected from above. As a recent writer
has put it, Addition Division=Revolution. [Footnote: S. Hearing,
Wages in the United States; Social Adjustment, chap. IV. Ryan,
A Living Wage.]
(2) Another phase of modern industrial injustice is the overlong hours
of work still required in many industries. The race for cheapness of
product has blinded manufacturers and the public to the cost in terms
of human happiness. An eight-hour day is quite long enough to produce
all that is necessary, with the aid of modern machinery; every man
should be given a margin of leisure for education, recreation, and
social life. And every man should be given the benefit of that one
day's rest out of seven which is so precious a legacy to us from the
Jewish religion.[Footnote: A joint legislative committee in
Massachusetts in 1907 estimated that 222,000 persons in that State
were working seven days in the week. Similar, or worse, conditions
exist throughout the country.] Those industries that require continuous
use of machinery should employ three complete shifts of workmen; and
those that must be run every day in the week should have enough extra
helpers man. This humanizing of hours cannot be done by individual
action, where competition is sharp; but by legislation that bears equally
upon all, a generous standard-the eight-hour day and six-day week -can
be maintained, with hardship to none and a great increase in the health
and happiness of the masses. Especially jealous should the law be for
the welfare of women workers. In cotton mills in the South women work
ten and twelve hours a day; in canneries in the North they work, during
the short season, fifteen and eighteen hours a day, eighty or even
ninety hours a week. Particularly should women be protected during
the weeks before and after childbirth; as it is, women workers are
often ruined in health for life, the rate of infant mortality is
shockingly high, and the children that survive are usually subnormal.
Girls through overwork are weakened too seriously to bear strong
children- which, in any case, they have had no time or opportunity
to learn how to nurture and rear. No doubt women should work, as well
as men; if not in the home, then outside the home. But the contemporary
economic pressure that bears so hard on so many girls and women must
be eased not only for their sakes but for that of coming generations.
[Footnote: Dorothy Richardson, The Long Day. S. Nearing, Social
Adjustment, chap. X. J. Rae, Eight Hours for Work.]
(3) The most piteous form of industrial slavery is that of young
children, who should be in school or out of doors, developing their
minds and bodies into some measure of readiness for adult work and
responsibility, instead of prematurely losing the joy of life and
stunting their mental and physical growth. In 1910 some two million
children under sixteen were earning their living in this country. Even
many thousands of children of twelve years or less are set to work
in our factories and canneries. These children get almost no development
and wholesome recreation; in great numbers they die early, and if they
live it is commonly to fall into some form of vice or crime, and to
breed an inferior race. Nothing is more inhumane or more mad than for
the community to permit cheapness of goods at such a price. Indeed,
child labor means, in the end, economic waste; the ultimate loss in
efficiency on the part of these undeveloped, uneducated children, far
more than overbalances the temporary industrial gain. The situation
has been incredibly shocking; the employers who seek such an advantage
over their humaner rivals, and the legislators who have winked at their
inhumanity, deserve no mild reprobation. But legislation alone is not
adequate to meet the situation; the underlying cause is the
insufficient payment of adult workers, which practically necessitates
supplementation by what the children can add to the family income.
This is one illustration of the way in which all our social problems
are tangled together so that it is impossible fully to solve any one
without solving the others. When every adult receives wages enough
to support a normal family-and when he is content to restrict his family
to normal size; when the public schools are made efficient enough to
show their evident worth to parents and to attract the children
themselves, and a strict truant system takes care that the law is
really obeyed; when the sick and defective and aged among the poor
are cared for at public expense as a matter of course, there will be
no need for children to work to help support the family; and we must
endeavor, by the arousal of public opinion and by nationwide
legislation, to keep children out of the factories, the shops, and
the mines, till they are full-grown and educated. [Footnote: S. Nearing,
The Solution of the Child-Labor Problem. J. Spargo, The Bitter Cry
of the Children. E. N. Clopper, Child Labor in City Streets. Reports
of Annual Meetings of the National Child Labor Committee. (Free
literature. 105 East Twenty-second Street, New York City.)]
(4) A less appalling, but still sufficiently serious; aspect of
industrial unrighteousness is the dirty, crowded, ugly, unsanitary,
and sometimes indecent conditions under which many workers in our
prosperous age have to carry on their work. Lack of proper lighting,
space, and ventilation, unnecessary noises, and general untidiness,
undermine the health and morals of laborers; while insufficient fire-
protection causes intermittently one tragedy after another. Much has
been done in many quarters to improve such conditions; not a few up-to-
date factories are models of cleanliness and sanitation, spacious,
reasonably quiet, and altogether pleasant places in which to spend
the working day. They point the way which all must in time follow.
In addition, the provision of reading-rooms, baths, rest- and recreation-
rooms, lunch-rooms, athletic fields, and the like, give augury of that
happy future when work shall be divorced from ugliness and free from
unnecessary physical strain.[Footnote: Sir T. Oliver, Diseases of
Occupation. W. H. Tolman, Social Engineering, chaps. III, X, XI.
World's Work, vol. 15, p. 9534; vol. 23, p. 294. Outlook, vol. 97,
p. 817; vol. 100, p. 353.]
(5) Finally, the callousness to injuries incurred by employees must
be sharply checked. Well over a hundred thousand men, women, and children
are killed or injured every year in the various industries of this
country. Our proportion of accidents is far greater than in Europe;
the great majority are preventable by the adoption of known safeguards.
What stands in the way is, partly, ignorance and heedlessness on the
part of employers, and, still more, the initial cost of installing
safety appliances. It is often cheaper to lose an occasional damage
suit than to forestall accidents. In coal mines alone we have let
thirty thousand men be killed and seventy-five thousand be more or
less seriously maimed, in a decade; proportionately about twice as
many as in European mines-which are far from ideally safeguarded. There
are two ways to check this waste and crippling of human life; one is
to keep our legislation up to date, and require the installation of
every effective safety device, no matter if the cost to the public
has to be increased. The other is to make accidents so expensive to
employers that they will have a greater interest in taking measures
to prevent them.
Certainly all deaths or injuries in any industry where proper
precautions have been neglected must be a criminal matter for the
employer. [Footnote: Outlook, vol. 92, p. 171; vol. 93, p. 196; vol.
99, p. 202. World's Work, vol. 22, p. 13602; vol. 23, p. 713.] We must
do entirely away with the system whereby accidents to workingmen bear
so heavily upon their families. Though it is true that they are
commonly due, in some measure, to the carelessness of the worker, his
punishment, in the loss of life or limb, is great enough; and if he
dies or is incapacitated from supporting wife and children, the burden
should fall upon the community, which is able to bear it. It should
not be necessary to bring a damage suit against the employer; that
method is slow, dubious, and expensive; the corporation, with its expert
lawyers, has too great an advantage over the helpless and sorrow-struck
poor. In some form, automatic compensation for injuries is destined
to become universal; the cost will fall upon the industry, where it
belongs, bad feeling between employer and employee will cease, the
courts will be freed from a good deal of work, and relief will follow
injury with promptness and certainty. [Footnote: H. R. Seager, Social
Insurance. Outlook, vol. 85, p. 508; vol. 92, p. 319; vol. 98, p. 49.
S. Nearing, Social Adjustment, chap. XII.] What general remedies for
industrial wrongs are feasible?
(1) The first step toward an amelioration of our crude and unjust
industrial code is to awaken the public conscience to protest against
the evils we have enumerated. Publicity, pitiless publicity, alone
can lead to redress. These large- scale, impersonal sins must not be
so nonchalantly tolerated; instead of applauding and envying the shrewd
financier who rakes in unearned profits by clever manipulation, by
unscrupulous use of inside information, and disregard of the welfare
of workers, competitors, and public, we must brand him as a selfish
scoundrel, turn him out of the church, ostracize him in society. Such
a man must not be looked upon as a successful businessman any more
than a pirate is a successful trader; success must clearly imply
obedience to the rules of the game. Taking all that one can grab without
punishment is a reversion to barbarism; the unscrupulous magnate is
morally no better than a pickpocket. And these men are, in general,
responsive to public opinion; it has effected rapid improvement in
some points in the past few years. Just so soon as the community
conscience is aroused to the point of a general condemnation of
industrial robbery, it will cease to flaunt itself so boldly, and lurk
only underground with the other furtive sins.
(2) We cannot rely wholly upon the force of public opinion, however;
the law must be ready to check those who are insensitive to moral
restraints. One by one, the paths of evildoing must be blocked.
Especially must the law learn how to punish corporations, which have
been the greatest offenders. At present the stockholders throw
responsibility upon the directors, the directors upon their managers,
and they upon the subordinates who have personally carried through
the evil practices. But to punish these subordinates is ineffective,
because they have, in general, little money wherewith to pay fines,
and will be ready to run the risk of imprisonment for the sake of
pleasing their superiors and earning promotion. If they are imprisoned,
others can readily be found to step into their places and higher up.
It is these superiors who must be held responsible for acts done by
their subordinates. If they realize the risk of punishment falling
upon their own heads, they will see to it that illegal practices are
discontinued. It will probably be necessary to hold directors responsible
for the conduct of their managers, and stockholders for the character
of their directors. It will then become the business of owners and
directors to watch out for lawbreaking and to put men in control who
will keep to fair dealing. This will put an end to the easy assumption
of the directorship of several corporations at once by men whose names
are wanted; directorship will be made to imply actual attention to
the affairs of the business. And the stockholders will take pains to
elect such directors as will not incur fines for the corporation that
will lessen their dividends. [Footnote: For comment on this matter,
see Outlook, vol. 88, p. 862.]
(3) Through these two means, public opinion and the law, we must work
toward the ultimate solution, the establishment of codes of honor in
the professions and industries. Canons of professional ethics have
been adopted by lawyers and doctors; any member of these professions
who is guilty of breaking these canons suffers loss of prestige and,
almost inevitably, financial loss. So must it be in every industry;
each must be organized and must formulate for itself its code; so that
pressure from within will supplement pressure from without. There is
plenty of capacity for loyalty, self-denial, and discipline in men,
even in captains of industry; it needs only to be aroused, crystallized,
directed. "We may prevent certain specific practices by statutes which
make them misdemeanors; but in so doing we have simply cut off one
way of reaching an end. Men will get the same result by another route.
obtaining money or office in certain specified ways. We must so shape
their ambitions that they do not wish to obtain money or office by
means that injure the community. We must get them to consider public
selfishness as dishonorable a thing as we now consider private
selfishness". If a man today crowds himself out of a theater, leaving
behind him a trail of bruised women and children, the very newsboy
in the street will hiss him when he gets to the door. Such a man will
be despised by the public, and in his heart he will despise himself,
for taking advantage of his strength to crush others. But if a man
gets money or office by analogous processes, the world is inclined
to admire the result and forgive the means; and the man, instead of
despising himself for his selfishness, applauds himself for his
success.[Footnote: A. T. Hadley, Standards of Public Morality,
p. 8.] Certainly, unless in these peaceful ways we can transform our
present system of grab-as-grab-can into a fair and rational industrial
order, changes will come by violence and revolution. There are volcanic
passions slumbering beneath the prosperity of our trade and
manufacture; there is but a brief respite before society wherein to
evolve a measure of social justice. The lower classes are awakening
to their power; unless society and government grant them their fair
share of the fruits of industry, they will take them through the wreck
of society and government. There is no moral problem more pressing
than the finding of peaceful remedies for industrial wrongs.
E. A. Ross, Sin and Society. H. R. Seager, Introduction to Economics,
chap. XXII. C. R. Van Hise, Concentration and Control, chap. II. A.
T. Hadley, Standards of Public Morality. H. C. Potter, The Citizen
in his Relation to the Industrial Situation. W. Gladden, The New
Idolatry. R. C. Brooks, Corruption in American Politics and Life. H.
Jeffs, Concerning Conscience, chaps. XXII, XXIII. C. R. Henderson,
The Social Spirit in America, chaps. VII, IX. J. S. Brooks, The Social
Unrest. Jane Addams, Democracy and Social Ethics, chap. V. Buskin,
Unto this Last. International Journal of Ethics, vol. 23, p. 455. [For
specific references, see footnotes.]