THE SPIRIT OF THE CORPORATION
To one interested in social and industrial questions a tour over the
vast properties and plants of the United States Steel Corporation can
hardly fail to be of great educational value. It has been the writer’s
good fortune to be able to make such a tour on more than one occasion.
He had expected to be, and was, impressed by the various processes
whereby iron ore is converted into steel ingots and then into rails,
tubes, structural shapes, plates, bars, wire, nails, tin plate, and
other products; by the monster machines used for loading and unloading
ore; the blowing furnaces, pools of molten metal; the great rolls
through which the red-hot steel is passed on its way to becoming a
finished article of commerce; the mining of coal from the bowels of the
earth, and the thousand and one other sights of what is probably the
most spectacular of all industries.
But the more lasting impression was made not by the mechanical
apparatus but by the human factor, the manner in which the vast human
machinery that makes the Corporation was handled; the organization that
made it possible for an army of more than a quarter of a million men to
work in complete harmony and to a single end. In a word, the spirit of
the Corporation.
As one becomes more and more familiar with the great company’s
activities at first hand, more and more does it become plain that
the entire organization is permeated with this spirit. From Judge
Gary, its chairman and chief executive, and James A. Farrell, its
president, who directs the manufacturing and commercial operations,
down through the heads of the various constituent companies, and so
through the subordinate officials, through those whom we may call the
non-commissioned officers of the steel army, the foremen and mine
captains, and finally among the men, both skilled workers and common
laborers, there is evidence nearly everywhere of a universal sentiment
of loyalty, of personal interest in the fortunes of the big company and
of the will, on the part of each man, to give the best in him for the
general result.
The above statement was originally penned six or seven years ago,
after the writer’s first tour of the Corporation’s plants. Since that
time the world has seen a general upheaval of labor. The Corporation
itself has had to fight a great strike, and it would therefore be
natural to suppose that the spirit of the Corporation had been
adversely influenced during these trying years, but a recent visit to
the Corporation’s plants did not bear out such a presumption. Rather,
it left the impression that in spite of general labor unrest and
notwithstanding the efforts of labor leaders to destroy it, the spirit
of loyalty and coöperation is still strong in the great mass of the
workers.
What is the reason for this spirit? How had it been possible to leaven
with it so great a mass of men of different nationalities and varying
degrees of intelligence? An excellent answer to these questions was
furnished by one of the men, not one of the executives or operating
heads, but one of the rank and file. He said:
“In the Steel Corporation the man who gives gets. Question those who
are in the higher positions, who are drawing big salaries, and you will
find that they all worked their own way from the bottom. Several of the
men holding important jobs, now my bosses, I knew when they held little
ones, and in every case I was satisfied that the advancement they got
they fully deserved. I don’t believe that there is a single official
of the Corporation, or of any of its subsidiary companies, who got his
job through pull. Hard work is the only key to success with us, and it
is a sure one. In brief, I feel bound to give this Corporation a square
deal because I know that it will give me a square deal.”
A square deal--that is the secret of the Corporation’s spirit. The
desire for justice, for fair and full recognition of fair and full
service, is deep grounded in every man, and the management of United
States Steel, by giving each worker the assurance that he will get just
what is his due, has secured for itself the entire coöperation of most
of its employees and has, as a result, an organization that probably
could not be equalled elsewhere in the industrial world.
The Steel Corporation is a true democracy. No position in it, however
high or responsible, is beyond the reach of any employee who proves
his ability to handle the job. Farrell, now president, started as a
laborer in a wire mill. The late Thomas Lynch, for many years head of
the Frick Coke Co., handled a pick in the coal mines of that concern.
Charles M. Schwab and William Ellis Corey, two former presidents of
the Corporation, both started from the very bottom, as did Alvah C.
Dinkey, one-time head of the Carnegie company, and a number of others.
Even Gary, although he did not become connected with the steel industry
until in middle life and after he had made a marked success in the
legal field, was not the son of a wealthy man, and won his way to
fortune by hard work combined with unusual business ability. There is
no open sesame to honor and advancement in the big company, nor for
that matter in the steel trade as a whole; the keys to success are
ability plus energy.
“Nor could it be otherwise,” said one of the men who had himself
climbed the ladder; “in steel making harmonious team work is essential
to good results, and the natural leader rises to the top by the general
recognition of his fellows.”
Efficiency, that supreme factor in large output and big profits, has
become a fetish in industry in recent years. In its final analysis,
“The Spirit of the United States Steel Corporation” is efficiency, not
applied merely to the mechanical processes of manufacturing, but to the
human element behind these processes; the efficiency that abides in a
healthy, well-housed, and contented workman.
The Corporation has always taken a keen interest in matters affecting
conditions of labor. It has lent its influence, its money, and the time
of its officials to better these conditions, to provide more attractive
homes and more sanitary and healthful conditions for its men, better
educational facilities for their children, and wholesome amusement for
all. For itself, the big company expects the benefit from the resultant
increased efficiency and loyalty. For the worker, the most important
gain is added self-respect.
George G. Crawford, president of the Tennessee Coal, Iron & Railroad
Co., says on this point: “Summed up, the end of all social betterment
work is the inculcation of self-respect. The worker possessing this
attribute is worth more to himself, to his employer, and to society
generally, than the man lacking it. Without self-respect, he remains a
common drudge, his value at best stationary, but more likely receding.
With it comes ambition and energy, and it is only the short-sighted
employer who does not set high store on these qualities and encourage
their growth. The lowest kind of labor is always to be had, but the men
with ambition and the will to make good that ambition, the men of real
value to themselves, are not so easy to find--and they are many times
more necessary!”
Mr. Crawford pointed out that many young men who might be marked out
for advancement in the steel industry, where their energy and ability
would be quickly recognized and rewarded, prefer to go into offices
or stores as clerks, although the field of advancement there is much
smaller because natural conditions in a steel mill or coal mine, unless
mitigated by the efforts of the employer, were such as to injure their
self-respect. By surrounding living conditions in the industry with
those things that make for clean, decent manhood such men would be
attracted and the employing corporation would thereby open to itself
new fields for recruiting to its organization the highest type of men.
The work done by the Corporation in making conditions at its plants
more safe and sanitary, in endeavoring to improve home conditions among
its workers, in providing better educational facilities for their
children, and so on, will be detailed in another chapter. Any official
of the Corporation or of such concerns as have worked along similar
lines will tell you that the installation of these helps to better
living is plain, practical business. That the gain in efficiency pays
many times over the outlay involved. They studiously deny altruistic
motives. But the observer who has an opportunity to become familiar
with their activities can hardly help arriving at the conclusion
that the men who engage in this work for the improvement of working
conditions usually become engrossed in it for its own sake. That the
human side of the work, deny it as they will, eventually and inevitably
comes to occupy the chief place in their minds.
[Illustration: “Drawing” Bee-hive Coke Ovens]
Under the Corporation’s stock subscription plan many thousands of
employees have become stockholders of the great company. It has been
suggested by those who see nothing but menace to the workers in every
action of a big corporate enterprise, by those to whom the very word
“corporation” is anathema, that this plan had for its real object the
subjugation of the worker by inducing him to invest part of his wages
in the securities of the employing company and then demanding from
him unswerving obedience; enslaving him by holding over his head the
fear of the loss of his investment. It has been claimed that the plan
was a master stroke to give the Corporation the whip hand in the event
of a strike. It is, of course, impossible to argue motives, but the
plain facts are that the plan has not worked out this way.
[Illustration: “Pushing” Coke in By-Product Oven]
[Illustration: The Other Side--Coke Falling into Car
Two Views of Modern By-Product Oven]
Far from instilling the spirit of fear into the men, it is noticeable
that stockholding employees regard themselves, and rightly, as owners
in the vast enterprise of which they are a part, that they feel a
genuine interest in its welfare and work wholeheartedly to further
its interests. They take a pride in the Corporation that is very
real and apparent and it is not strange that this should be so. If
the Corporation designs to make its workers subservient it is ipso
facto defeating another great end it is unquestionably striving
for--efficiency. Because self-respect and servility are implacable
enemies and cannot exist together.
The offering of stock to employees on attractive terms is merely
another efficiency measure. Each employee who is a part owner in the
business works for more than his wage. “His heart is in his work and
the heart giveth grace to every task.” Moreover, the plan encourages
thrift, and every employer knows that a thrifty worker is more reliable
than his spendthrift brother, less prone to the inefficiency induced
by financial worries. Finally, the having of a stake in industry and
through it, in the country’s prosperity, makes a man a better citizen
and increases his independence and self-respect.
If the subject of self-respect appears to be harped on to some extent,
it is because it is of paramount importance, its influence affecting
not only the worker and his employer, but the whole community. If the
writer were asked to sum up in a few words what the Steel Corporation
has done for industry, these words would be: It has exerted an enormous
influence in helping the worker, the common laborer, to become a
self-respecting citizen.
The tangible gain to the Corporation has been enormous. The intangible
gain, although it cannot be measured, has almost certainly been many
times as great. The management of the big company realized that the
workers’ rights to a decent life were fully as important as the rights
of capital, and that more, both in mental satisfaction and in profit,
was to be gained from a recognition of these rights than from their
denial. Perhaps, too, it saw that sooner or later the day would dawn
when the worker with his hands would demand fair treatment, and it had
the foresight and the courage to hasten the dawn of that day.
In the matter of wages the Corporation’s course has been in entire
harmony with its general policy toward the worker. Since its
organization in 1901 it has many times, and always voluntarily,
increased wage rates, and in doing so it has set a lead which other
steel companies have found themselves forced to follow. Only once has
it ever reduced wages and then but a small amount and only after the
dividend on the common stock had been eliminated. The wages were soon
restored and frequently thereafter advanced. Its principle has been
that capital and labor both have important rights in the financial
results of industry, but that labor is perhaps more directly concerned
and should therefore be the last to suffer in times of stress.
Since 1901 the average wage rate of the steel worker has been increased
approximately 237 per cent. and this increase has been due almost
entirely to the Corporation’s stand on this question. Any one who
doubts this has but to ask the competitors of the big company to be
convinced. In 1911, when steel prices were at an unprofitable level
and business was slack, the heads of more than one independent company
expressed the opinion that a reduction in wages, what they called
the liquidation of labor, was necessary, even imperative, but that
they were restrained from attempting this liquidation while the Steel
Corporation continued to pay its men the old rate. They said in effect:
“The United States Steel Corporation boosted wages to the present high
level. Let it take the lead in lowering them.” But the Corporation
refused. Instead, with the first signs of an improvement in business,
it gave wages another boost. Again in 1914, in the face of the worst
period of depression in years, and with world industry demoralized
as a result of the outbreak of the European war, and in spite of the
fact that the Corporation had been compelled to forego the payment
of the dividend on its junior stock and was not fully earning its
preferred dividend, its management refused to let the worker suffer.
So strong was the sentiment throughout the trade at this time in favor
of the liquidation of labor that a wage cut was looked on as not only
justified, but inevitable, and it is generally understood that even in
the Corporation it was only the insistence of Judge Gary that prevented
its occurrence.
At the present writing, world industry is going through a process of
deflation from the high prices induced by the war. In some instances
the effect is already visible on labor. Cotton mill workers in some
parts of New England have themselves suggested a decrease in pay to
keep the wheels of industry running. In the steel trade costs are
admittedly high and wages constitute the chief factor in costs. But if
one may conclude from Judge Gary’s public utterances in recent months
the thought of reducing wages at present is far from the mind of the
Corporation’s management. A liquidation of labor may occur later, but
if it does, it is a reasonable assumption that, so far as the Steel
Corporation is concerned, it will not take place until living costs
have been at least sufficiently deflated to make the new real wage of
the worker as distinct from his money wage, at least as high as it is
to-day.
Average wages paid by the Steel Corporation to its employees during the
past eighteen years have been as follows:
1902 $716.88
1903 720.08
1904 677.18
1905 710.78
1906 729.86
1907 765.18
1908 729.44
1909 775.77
1910 800.95
1911 819.85
1912 856.70
1913 909.50
1914 905.36
1915 925.06
1916 1,042.41
1917 1,295.87
1918 1,684.58
1919 1,902.13
1920 (partly estimated) 2,169.00
Although the average wage in 1914 was some four dollars less than
in 1913, the average day wage to the worker, exclusive of the
administrative and selling cost, was $2.88, compared with $2.85 the
previous year. This is significant as indicating the policy of the
Corporation to equalize as much as possible the amounts paid to
different classes of workers. In instituting advances, it has always
been the lowest classes of labor that have benefited most. The workers
themselves have testified to satisfaction with this policy and their
recognition of its essential justice.
The Steel Corporation has been subjected to occasional attacks because
of its attitude toward labor unions. It neither encourages nor approves
unionism. It does not contract with unions as such. It stands for the
open shop. As it is plain that this biggest of all employers has not
sought to crush the worker, that it has, in fact, done much to make his
lot better and brighter, the question may fairly be asked why it is
opposed to dealing with organized labor.
The reason is not far to seek. Unionism is opposed to efficiency, it
destroys the _esprit de corps_ that is so important in getting the
best results from a large body of men. It prevents promotion according
to merit. In its very essence it is antagonistic to the employer; it
sets labor and capital into two distinct and constantly armed camps;
it would make war between capital and labor. And the management of
the Corporation believes that the only workable solution of the
whole industrial problem is to bring labor and capital into friendly
coöperation, to give labor a part in the earnings of industry, making
the interests common.
This cannot be accomplished in a hurry. A movement of so vast a
magnitude must necessarily take time. But had the Corporation’s
employees been organized it is doubtful if the betterment of conditions
of its workers, and consequently of the steel workers of the country,
would have progressed as rapidly as it has.
The labor union, if used to help the oppressed worker, is
unquestionably a beneficial factor in industry. Used as it too
often is, to promote the selfish interests of its leaders, and to
impinge upon the rights of the public at large, it is just as surely
a great evil. The logical result of union labor as preached by its
principal exponents is to cripple initiative, and to oppress the
worker who prefers to stand on his own feet. And, in America at
least, the majority of the workers are of this independent type. And
in maintaining its policy of the open shop the Corporation has been
fighting the battles of this class of workers.
The writer has tried to show that loyalty and coöperation permeate the
United States Steel Corporation. That it is the result of the endeavor
on the part of the big company to give to the men who make up its
organization absolute justice, the square deal; its effort to make the
worker, even the poorest, an independent, self-respecting citizen, and
to give to every man in its mines, mills, offices, etc., an opportunity
to share in the profit derived partly from his efforts. All this to
promote efficiency, the “spirit of the Corporation,” to increase the
value of the worker to himself, to his employer, and to the community.
He believes that the facts justify the statement made in an earlier
chapter that the organization of the United States Steel Corporation
was the greatest step that has ever been made toward the highest form
of socialism.