CHAPTER XXVI

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.]

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