impressed with the importance of these and other economic problems, and
with a view to making a contribution toward their solution, had had
under consideration the development of an institution for social and
economic research.
While this general subject was being studied, the industrial
disturbances in Colorado became acute. Their many distressing features
gave me the deepest concern. I frankly confess that I felt there was
something fundamentally wrong in a condition of affairs which made
possible the loss of human lives, engendered hatred and bitterness,
and brought suffering and privation upon hundreds of human beings.
I determined, therefore, that in so far as it lay within my power I
would seek some means of avoiding the possibility of similar conflicts
arising elsewhere or in the same industry in the future. It was in
this way that I came to recommend to my colleagues in the Rockefeller
Foundation the instituting of a series of studies into the fundamental
problems arising out of industrial relations. Many others were
exploring the same field, but it was felt that these were problems
affecting human welfare so vitally than an institution such as the
Rockefeller Foundation, whose purpose, as stated in its charter, is
“to promote the well-being of mankind throughout the world,” could not
neglect either its duty or its opportunity.
This resulted in securing the services of Mr. W. L. Mackenzie King,
formerly Minister of Labor in Canada, to conduct an investigation “with
a special view,” to quote the language of an official letter, “to the
discovery of some mutual relationship between Labor and Capital which
would afford to Labor the protection it needs against oppression and
exploitation, while at the same time promoting its efficiency as an
instrument of economic production.”
In no sense was this inquiry to be local or restricted; the problem
was recognized to be a world-problem, and in the study of it the
experience of the several countries of the world was to be drawn
upon. The purpose was neither to apportion blame in existing or past
misunderstandings, nor to justify any particular point of view; but
solely to be constructively helpful, the final and only test of success
to be the degree to which the practical suggestions growing out of the
investigation actually improved the relations between Labor and Capital.
V
With reference to the situation which had unfortunately developed in
Colorado, it became evident to those responsible for the management
of one of the large coal companies there--the Colorado Fuel and Iron
Company, in which my father and I are interested--that matters could
not be allowed to remain as they were. Any situation, no matter what
its cause, out of which so much bitterness could grow, clearly
required amelioration.
It has always been the desire and purpose of the management of the
Colorado Fuel and Iron Company that its employees should be treated
liberally and fairly.
However, it became clear that there was need of some more efficient
method whereby the petty frictions of daily work might be dealt with
promptly and justly, and of some machinery which, without imposing
financial burdens upon the workers, would protect the rights, and
encourage the expression of the wants and aspirations of the men--not
merely of those men who were members of some organization, but of every
man on the company’s payroll.
The problem was how to promote the well-being of each employee; more
than that, how to foster at the same time the interest of both the
stockholders and the employees through bringing them to realize the
fact of their real partnership.
Long before the Colorado strike ended, I sought advice with respect to
possible methods of preventing and adjusting such a situation as that
which had arisen; and in December, 1914, as soon as the strike was
terminated and normal conditions were restored, the officers of the
Colorado Fuel and Iron Company undertook the practical development of
plans which had been under consideration.
The men in each mining camp were invited to choose, by secret ballot,
representatives to meet with the executive officers of the company to
discuss matters of mutual concern and consider means of more effective
coöperation in maintaining fair and friendly relations.
That was the beginning, merely the germ, of a plan which has now been
developed into a comprehensive “Industrial Constitution.” The scheme
embodies practical operating experience, the advice and study of
experts, and an earnest effort to provide a workable method of friendly
consideration, by all concerned, of the daily problems which arise in
the mutual relations between employer and employees.
The plan was submitted to a referendum of the employees in all
the company’s coal and iron mines, and adopted by an overwhelming
vote. Before this general vote was taken, it had been considered
and unanimously approved by a meeting of the employees’ elected
representatives. At that meeting I outlined the plan, which is
described below, as well as the theory underlying it, which theory is
in brief as follows:
Every corporation is composed of four parties: the stockholders,
who supply the money with which to build the plant, pay the wages,
and operate the business; the directors, whose duty it is to select
executive officers carefully and wisely, plan the larger and
more important policies, and generally see to it that the company
is prudently administered; the officers, who conduct the current
operations; and the employees, who contribute their skill and their
work.
The interest of these four parties is a common interest, although
perhaps not an equal one; and if the result of their combined work is
to be most successful, each must do its share. An effort on the part of
any one to advance its own interest without regard to the rights of the
others, means, eventually, loss to all.
The problem which confronts every company is so to interrelate its
different elements that the best interests of all will be conserved.
VI
The industrial machinery which has been adopted by the Colorado
Fuel and Iron Company and its employees is embodied in two written
documents, which have been printed and placed in the hands of each
employee. One of these documents is a trade agreement signed by the
representatives of the men and the officers of the company, setting
forth the conditions and terms under which the men agree to work until
January 1, 1918, and thereafter, subject to revision upon ninety days’
notice by either side.
This agreement guarantees to the men that for more than two years, no
matter what reductions in wages others may make, there shall be no
reduction of wages by this company; furthermore, that in the event of
an increase in wages in any competitive field, this company will make a
proportional increase.
The agreement provides for an eight-hour day for all employees working
underground and in coke ovens; it insures the semi-monthly payment of
wages; it fixes charges for such dwellings, light, and water, as are
provided by the company; it stipulates that the rates to be charged for
powder and coal used by the men shall be substantially their cost to
the company.
To encourage employees to cultivate flower and vegetable gardens, the
company agrees to fence free of cost each house-lot owned by it. The
company also engages to provide suitable bath houses and club houses
for the use of employees at the several mining camps.
The other document is an “Industrial Constitution,” setting forth the
relations of the company and its men. The Constitution stipulates,
among other things, that “there shall be a strict observance by
management and men of the Federal and State laws respecting mining
and labor,” and that “the scale of wages and the rules in regard to
working conditions shall be posted in a conspicuous place at or near
every mine.”
Every employee is protected against discharge without notice, except
for such offenses as are posted at each mine. For all other misconduct
the delinquent is entitled to receive warning in writing that a second
offense will cause discharge, and a copy of this written notice must
be forwarded to the office of the president of the company at the same
time it is sent to the employee.
The constitution specifically states that “there shall be no
discrimination by the company or any of its employees on account of
membership or non-membership in any society, fraternity, or union.”
The employees are guaranteed the right to hold meetings on company
property, to purchase where they choose, and to employ check-weighmen,
who, on behalf of the men, shall see to it that each gets proper credit
for his work.
Besides setting forth these fundamental rights of the men, the
Industrial Constitution seeks to establish a recognized means for
bringing the management and the men into closer contact for two general
purposes:
First, to promote increased efficiency and production, to improve
working conditions and to further the friendly and cordial relations
between the company’s officers and employees; and,
Second, to facilitate the adjustment of disputes and the redress of
grievances.
In carrying out this plan, the wage-earners at each camp are to be
represented by two or more of their own number chosen by secret
ballot, at meetings especially called for the purpose, which none but
wage-earners in the employ of the company shall be allowed to attend.
The men thus chosen are to be recognized by the company as authorized
to represent the employees for one year, or until their successors
are elected, with respect to terms of employment, working and living
conditions, adjustment of differences, and such other matters as may
come up.
A meeting of all the men’s representatives and the general officers of
the company will be held once a year to consider questions of general
importance.
The Industrial Constitution provides that the territory in which the
company operates shall be divided into a number of districts based
on the geographical distribution of the mines. To facilitate full
and frequent consultation between representatives of the men and the
management in regard to all matters of mutual interest and concern, the
representatives from each district are to meet at least three times a
year--oftener if need be--with the president of the company, or his
representative, and such other officers as the president may designate.
The district conferences will each appoint from their number certain
joint committees on industrial relations, and it is expected that
these committees will give prompt and continuous attention to the
many questions which affect the daily life and happiness of the men
as well as the prosperity of the company. Each of these committees
will be composed of six members, three designated by the employees’
representatives and three by the president of the company.
A joint committee on industrial coöperation and conciliation will
consider matters pertaining to the prevention and settlement of
industrial disputes, terms and conditions of employment, maintenance
of order and discipline in the several camps, policy of the company
stores, and so forth. Joint committees on safety and accidents, on
sanitation, health and housing, on recreation and education, will
likewise deal with the great variety of topics included within these
general designations.
Prevention of friction is an underlying purpose of the plan. The aim is
to anticipate and remove in advance all sources of possible irritation.
With this in view a special officer, known as the President’s
Industrial Representative, is added to the personnel of the staff as
a further link between the president of the corporation and every
workman in his employ. This officer’s duty is to respond promptly to
requests from employees’ representatives for his presence at any of
the camps, to visit all of them as often as possible, to familiarize
himself with conditions, and generally to look after the well-being of
the workers.
It is a fundamental feature of the plan, as stated in the document
itself, that “every employee shall have the right of ultimate appeal
to the president of the company concerning any condition or treatment
to which he may be subjected and which he may deem unfair.” For the
adjustment of all disputes, therefore, the plan provides carefully
balanced machinery.
If any miner has a grievance, he may himself, or preferably through one
of the elected representatives in his camp, seek satisfaction from the
foreman or mine superintendent. If those officials do not adjust the
matter, appeal may be had to the president’s industrial representative.
Failing there, the employee may appeal to the division superintendent,
assistant manager, or general manager, or the president of the company,
in consecutive order.
Yet another alternative is that, after having made the initial
complaint to the foreman or mine superintendent, the workman may
appeal directly to the joint committee on industrial coöperation and
conciliation in his district, which, itself failing to agree, may
select one or three umpires whose decision shall be binding upon both
parties to the dispute.
If all these methods of mediation fail the employee may appeal to the
Colorado State Industrial Commission, which is empowered by law to
investigate industrial disputes and publish its findings.
So as adequately to protect the independence and freedom of the men’s
representatives, the Constitution provides that in case any one of them
should be discharged or disciplined, or should allege discrimination,
he may resort to the various methods of appeal open to the other
employees, or he may appeal directly to the Colorado State Industrial
Commission, with whose findings in any such case the company agrees to
comply.
The company is to pay all expenses incident to the administration of
the plan, and to reimburse the miners’ representatives for loss of time
from their work in the mines.
VII
Such in outline is this Industrial Constitution. Some have spoken of it
as establishing a Republic of Labor. Certain it is that the plan gives
every employee opportunity to voice his complaints and aspirations, and
it neglects no occasion to bring the men and the managers together to
talk over their common interests.
Much unrest among employees is due to the nursing of real or fancied
grievances arising out of the daily relations between the workmen and
the petty boss. Such grievances should receive attention at once, and
this plan provides that they shall.
Just as in the case of bodily wounds, so with industrial wounds, it is
of prime importance to establish a method of prompt disinfection, lest
the germs of distrust and hatred have opportunity to multiply.
This plan is not hostile to labor organizations; there is nothing in
it, either expressed or implied, which can rightly be so construed;
neither membership in a union nor independence of a union will bring
a man either preference or reproach, so far as the attitude of the
company is concerned.
The fact is that the Colorado Fuel and Iron Company Constitution does
not restrict in any way the right of the employees to regulate their
own lives, nor does it abridge their right to join any organization
they please. At the same time it does insure the men fair treatment and
an opportunity to make their voice heard in determining the conditions
under which they shall work and live.
The plan does not deny to the representatives the right to act in
concert; it does not deny to the men the right to employ counselors
or advisers to assist them in formulating their views as to any
situation. Indeed, the door is left wide open for the natural exercise
of any right or privilege to which the men are entitled.
There is nothing in the plan to prevent the men holding open or secret
meetings as often as they like, either in the separate camps, the
districts, or as representing the whole industry. Such meetings are not
specifically provided for because all those who are connected with the
corporation are considered to be partners in the enterprise, and their
interests common interests.
The plan provides a channel through which not only may the men confer
with the management, but through which also the officers may lay their
purposes, problems, and difficulties before the employees.
It provides a medium of adjustment, as between employer and employees,
of the problems which constantly arise in the conduct of business,
while in regard to the relations of both it recognizes that the voice
of public opinion is entitled to be heard.
The acts of bodies of men in their relations with other men should
always be illuminated by publicity, for when the people see clearly
what the facts are, they will, in the long run, encourage what is good
and condemn what is selfish.
Some may think that the form which the organization of labor takes
must necessarily be originated and developed by Labor. If, however, a
workable method of coöperation between managers and men is actually
developed, which is satisfactory to both, is its authorship of
consequence, provided only its provisions are adequate and just and it
proves to be an effective instrument through which real democracy may
have free play?
The Colorado Plan has been devised for the employees of the Colorado
Fuel and Iron Company, and without reference to the employees, or
organizations of employees, in other companies. Some people will
maintain that the men’s interests cannot be adequately protected or
their rights at all times enforced without the support of their fellows
in similar industries.
This may be true where Labor and Capital do not generally recognize
that their interests are one. But when men and managers grasp that
vital point, as I believe this plan will help them to do, and are
really awake to the fact that when either takes an unfair advantage of
the other the ultimate interests of both are bound to suffer, they will
have an incentive to fair dealing of the most compelling kind.
It is clear that a plan of this kind must not overlook the interests
of the stockholders, for no plan which disregards their rights can
be permanently successful. The interests of Capital can no more be
neglected than those of Labor.
At the same time I feel that a prime consideration in the carrying
on of industry should be the well-being of the men and women engaged
in it, and that the soundest industrial policy is that which has
constantly in mind the welfare of the employees as well as the making
of profits, and which, when the necessity arises, subordinates profits
to welfare.
In order to live, the wage-earner must sell his labor from day to
day. Unless he can do this, the earnings of that day’s labor are gone
forever.
Capital can defer its returns temporarily in the expectation of future
profits, but Labor cannot. If, therefore, fair wages and reasonable
living conditions cannot otherwise be provided, dividends must be
deferred or the industry abandoned.
On the other hand, a business, to be successful, must not only provide
for Labor remunerative employment under proper working conditions, but
it must also render useful service to the community and earn a fair
return on the money invested.
The adoption of any policy toward Labor, however favorable it may
seem, which results in the bankruptcy of the corporation and the
discontinuance of its work, is as injurious to Labor which is thrown
out of employment, as it is to the public, which loses the services of
the enterprise, and to the stockholders whose capital is impaired.
This plan is not a panacea; it is necessarily far from perfect, and yet
I believe it to be a step in the right direction. Carefully as it has
been worked out, experience will undoubtedly develop ways of improving
it.
While the plan provides elaborate machinery which of itself ought to
make impossible many abuses and introduce much that is constructively
helpful, too strong emphasis cannot be put upon the fact that its
success or failure will be largely determined by the spirit in which it
is carried out.
The problem of the equitable division of the fruits of industry will be
always with us. The nature of the problem changes and will continue to
change with the development of transportation, of invention, and the
organization of commerce.
The ultimate test of the rightness of any particular method of division
must be the extent to which it stimulates initiative, encourages the
further production of wealth, and promotes the spiritual development of
men.
The Colorado Plan is of possible value in that State, and may prove
useful elsewhere, because it seeks to serve continually as a means
of adjusting the daily difficulties incident to the industrial
relationship. It brings men and managers together, it facilitates the
study of their common problems, and it should promote an understanding
of their mutual interests.
Assuming, as we must, the fundamental fairness of men’s purposes,
we have here possibly a medium through which the always changing
conditions of industry may be from time to time more closely adapted to
the needs, the desires, and the aspirations of men.
FOOTNOTE:
[1] NOTE.--This article, “Labor and Capital--Partners,” originally
appeared in the _Atlantic Monthly_, January, 1916.
III
THE PERSONAL RELATION IN INDUSTRY[2]
Heretofore the Chief Executives of important industrial corporations
have been selected largely because of their capacity as organizers or
financiers.
The time is rapidly coming, however, when the important qualification
for such positions will be a man’s ability to deal successfully and
amicably with labor. Yet how to do this is a subject which, I fancy, is
never taught or referred to in the classroom.
Like knowledge of the problems of sex, than which no department of life
is more sacred, vital or deserving of full and ennobling instruction,
an understanding of this subject is left to be acquired by experience,
often costly or bitter, or through chance information, gleaned too
frequently from ignorant and unreliable sources.
Just as the first of these two themes is coming to be taught
sympathetically and helpfully in our schools and colleges, so I believe
the second, the personal relation in industry, will eventually be
regarded as an important part of those college courses which aim to fit
men for business life.
After all, is it not the personal relations with one’s fellows which,
when rightly entered into, bring joy and inspiration into our lives
and lead to success, and which, on the other hand, if disregarded or
wrongly interpreted, bring equally sorrow and discouragement and lead
to failure?
Think what the ideal personal relation between a father and son may
mean to both. Some of us have known such contact. Our lives have been
fuller and richer as a result, freer from sin and sorrow. Others of us
know from bitter experience what the absence of this relationship has
involved.
How helpful to a student is such a friendly association with some
professor who commands his confidence, respect and regard, and who is
interested in his college work, not for itself alone, but quite as much
because of its bearing on his future life’s usefulness.
What would college life be without the personal relationships which are
formed during its happy days and often continued close and intimate
through life?
Can you imagine a successful football team composed of strangers,
having no points of contact, no sympathy with each other, no common
cause inspiring them to strive for victory? Team play, the support of
one player by another, would be well nigh impossible.
Even in the army, where formerly the man who had become the most
perfect machine was regarded as the best soldier, it is coming to be
accepted that in addition to being obedient and subject to discipline,
the man who thinks, who is capable of acting on his judgment when
occasion arises, who is bound to his fellow soldiers and his officers
by personal friendliness, admiration and respect, is a far more
efficient soldier.