were not allowed to have any personal association or contact with
their officers, we learn that in the World War a spirit of comradeship
was developed by the officers with their men off duty, which personal
relationship was building up rather than weakening the morale of the
armies.
What is true as to the relationships which I have mentioned is equally
true in industrial relations, and personal contact is as vital and as
necessary there as in any other department of life.
Let us trace briefly the history of the development of industry, that
we may see where this personal relationship is present, where absent,
and what is the effect of its presence or absence.
Industry in its earliest forms was as simple as it is complex to-day.
The man who provided the capital was frequently the director,
president, general manager and superintendent of the enterprise, and
in some instances actually worked with his employees. These latter
were few in number. They were usually born and brought up in the same
community with their employer, his companion in school days, his
friends and neighbors, often calling him as he did them by their first
names.
There was daily contact between employer and employee, and naturally if
any questions or causes for complaint arose on either side, they were
taken up at the next chance meeting and adjusted.
Next came the partnership, a development necessary because more capital
was required than a single individual cared to or was able to provide.
Two or more partners were thus associated together, but otherwise the
situation was not materially different from that just described, except
that more employees were required.
With the invention of the steam engine and its application to
railroads, which quickly began to make their way over the face of the
earth; with the development of the steamboat, replacing to so large
an extent the old sailing vessels and making possible the regular and
frequent transportation of the products of the soil and of industry
from one part of the world to another; with the perfecting of the
telegraph, cable and telephone, there came the need for larger
aggregations of capital in order to carry on the ever expanding
industries that were required to keep pace with this growth.
This led to the development of the corporation, the capital for which
was supplied in larger or smaller amounts by few or many individuals,
thus making possible almost indefinite financial expansion. And this
form of business has continued to grow, as commerce and industry have
become not only national but international and world wide in their
extent, until we have to-day the United States Steel Corporation, with
its 120,000 stockholders and its 260,000 employees.
It stands to reason that corporations of such magnitude have
necessarily become highly specialized.
The responsibility of an individual stockholder in a corporation is
of course in proportion to his interest, but the function of the
stockholders in general consists in casting their votes each year for
the election of directors to represent their interests.
The directors in turn are charged with the general responsibility of
developing the policies of the corporation, some of which are matured
by the officers, of selecting its officers and of seeing to it that the
corporation is properly managed.
The officers as the executives of the company carry out the company’s
policies and are charged with the actual operation of the company and
the employment of labor.
As we contrast this gigantic organization with the simple form of
industrial organization first described, it is at once apparent that in
the very nature of the case the man who supplies the money seldom if
ever comes in contact with the man who supplies the labor.
Here we note a marked and serious change. While deplorable, this
situation is practically inevitable. Frequently the industry in which a
stockholder has invested his capital is located in a far distant city.
Not only this, but often investments are made in corporations which
conduct business in other countries almost at the ends of the earth.
As a result of this lack of contact between Labor and Capital, the
personal relationship has disappeared, and gradually a great gulf
has grown up between the two, which is ever widening, so these two
great forces have come too often to think that their interests are
antagonistic, and have worked against each other, each alone seeking
to promote its own selfish ends. This has resulted in the strike, the
lockout and the various incidents of industrial warfare so regrettably
common in this day and apparently on the increase.
Reports of the United States Bureau of Labor Statistics show that for
the first eleven months of 1916 there were 3,134 strikes and lockouts
in the industries of this country, as against only 1,147 for the
corresponding period of 1915.
These industrial conflicts have in some instances come to be little
short of civil war; vast sums of money have been lost by both sides,
untold hardship and misery have followed in their wake.
The New York City street railroad strike of last summer (1916) is
estimated to have cost the companies some four millions of dollars,
not to mention the loss in wages borne by the employees or the losses
sustained by the public.
Last summer[3] four hundred thousand railroad men, constituting
the four brotherhoods, voted in favor of a strike on 225 American
railroads. If the average pay of these men had been only $2.50 a
day, which is considerably lower than the fact, such a strike would
have meant a daily loss in wages of a million dollars, not taking
into account the far greater loss to business and the inevitable
inconvenience and distress which would have been brought, directly or
indirectly, to the doors of the entire population.
I have not had access to data showing the cost to this country of
strikes and lockouts. However, the following quotation from a recent
address made by Mr. Frank A. Vanderlip, President of the National City
Bank of New York, throws light on the subject. Mr. Vanderlip said:
The cost of the recent garment workers’ strike in New York City
has been estimated to be in the neighborhood of fifty million
dollars.
The last anthracite coal strike in the short course of five
months caused a loss of one hundred and twenty million dollars to
employers and employees in the community.
I have seen the statement that in a single year the losses that
could be attributed to labor disturbances in this country total
more than a billion dollars.
These are extraordinary figures, and though some of them are doubtless
merely estimates, they serve to show what enormous proportions the
industrial problem has assumed and how serious and vital a question it
has become.
May I add that almost beyond belief as these figures are, they do not
include those terrible mental and moral losses growing out of struggle
and conflict, nor do they take account of the depleted bank balances
of the workers, and the hunger, suffering and distress which extend
into the homes and which touch the lives not only of those immediately
concerned, but of tens of thousands of innocent women and children.
What I have said leads me to advance two ideas, both of which I
believe to be profoundly true, but which have received far too limited
consideration.
The first is that Labor and Capital are naturally partners, not
enemies.
The second, that the personal relation in industry, entered into
in the right spirit, gives the greatest promise of bridging the
yawning chasm which has opened up between employer and employee.
The mistaken point of view in regard to the relation between Labor and
Capital exists on the part of both Labor and Capital, as well as among
the interested and disinterested public.
Too often Capital regards Labor merely as a commodity to be bought and
sold, while Labor not infrequently regards Capital as money personified
in the soulless corporation.
It might seem that technically speaking both of these definitions could
be justified, but they are far from being comprehensive and adequate.
For both Labor and Capital are men--men with muscle and men with money.
Both are human beings and the industrial problem is a great human
problem.
This is one of the first things we need to recognize, and it is
just because human nature is involved in this problem that it is so
intricate and difficult to solve.
The popular impression that from the very nature of the case Labor and
Capital are two great contending forces arrayed against each other,
each striving to gain the upper hand through force, each feeling that
it must arm itself in order to secure from the other its rights and its
just dues, is even more unfortunate than it is untrue.
I cannot believe that Labor and Capital are necessarily enemies. I
cannot believe that the success of one must depend upon the failure or
lack of success of the other. Far from being enemies, these two factors
must necessarily be partners.
Surely, their interests are common interests, the permanent well being
of neither can be secured unless the other also is considered, nor can
either attain the fullest possibilities of development which lie before
both unless they go hand in hand.
Only when the industrial problem is approached from the point of view
of a firm belief in this doctrine is there any hope of bringing about
closer, more healthful and mutually advantageous relations between
these two forces.
If, therefore, my first statement is true, namely that Labor and
Capital are partners, then certain things must follow. They must have
contact. This standing aloof one from the other must end.
Respect grows in the heart of each for the other, confidence is
developed, and they come to realize that they are working with a common
interest for a common result.
But this attitude, this relationship, is the personal relation in
industry. Nothing else will take its place, nothing else will bridge
the chasm of distrust and hatred.
It is the recognition of the brotherhood of man, of the principle of
trying to put yourself in the other man’s place, of endeavoring to see
things from his point of view. The old saying that honesty is the best
policy is often scoffed at and pronounced unpractical, but there never
was a truer saying. Honesty _is_ the best policy.
You may be able to deceive a man once or twice, or, if he is
exceptionally gullible, half a dozen times, but you cannot deceive him
indefinitely. You may be able to deceive a number of people sometimes,
but you cannot deceive all of the people with whom you have business
dealings all of the time. You may be able to make a contract which
gives you an unfair advantage of the other man, but the chances are
that you cannot do it twice.
From a purely cold-blooded business point of view, honesty _is_ the
best policy. Likewise do I say that to treat the other man as you would
have him treat you is an equally fundamental business principle.
This does not mean that you should surrender your rights or neglect
to avail of your opportunities. It simply means that in the game of
business, the same rules of sportsmanship should prevail as in a
boxing bout, in a match of golf, or a football game.
Play fair and observe the rules. Let the contest be clean, gentlemanly,
sportsmanlike, a contest always having regard for the rights of the
other man.
Assuming, then, that the personal relation is a vital factor in
successful industrial life, but recognizing the impossibility in this
day of big business of reproducing it as it existed between employer
and employee in the early days of industrial development, how can a
like result be brought about, how can personal contact be established?
Granting that it is impossible for the stockholders of a great
corporation, because of their number, because of their geographic
relations, to come into frequent or even semi-occasional contact with
their partners, the employees of a company; and that the situation
is much the same with the directors--at least it is possible, and
must be made increasingly so, for the leading representatives of the
stockholders and directors, namely the officers of a corporation, to
have such contact with the employees, special officers being appointed
for that purpose alone if necessary. Because of the vast numbers of
employees in many a company, even this is difficult and altogether too
infrequent to-day.
As the officers of our great corporations come to see more and more
that the problem of understanding their employees and being understood
by them is a vital problem, one of the most important with which the
management is confronted, they will be convinced not only of the wisdom
of devoting far more time to such contact, but of the desirability and
the advantage to themselves, and to the employees as well as to the
company, of such closer relation and intimate conference in regard to
matters of common interest and concern.
If we look into our own experience, we find that the misunderstandings
which we have had with other men have been largely the result of lack
of contact. We have not seen eye to eye.
Men cannot sit around a table together for a few hours or several days
perhaps and talk about matters of common interest, with points of
view however diverse, with whatever of misunderstanding and distrust,
without coming to see that after all there is much of good in the worst
of us and not so much of bad in most of us as the rest of us have
sometimes assumed.
But someone says, “We grant the desirability of the personal relation
in industry. Theoretically we accept your suggestion as to how this
theory can be put into practice in the industrial life of to-day, but
practically, will it work?”
I can best answer this question by saying that such a program has been
put into operation in a certain coal company in Colorado, in which my
father and I are interested and of which I am a director.
If you will pardon a personal reference, may I say that when I visited
Colorado some eighteen months ago, I had the opportunity of talking
personally with hundreds, if not thousands, of the employees of that
company. These men and many of the people of Colorado had formed their
opinion of anyone bearing the name of Rockefeller from what they had
read and heard. Because of certain industrial disturbances which had
developed in the State, bitterness and hatred had existed to a high
degree.
As I went from camp to camp I talked with the representatives of the
men individually and privately, I went into the men’s homes, talked
with their wives and children, visited their schools, their places of
amusement, their bathhouses, and had just such friendly relations with
them as any man going among them would have had.
Frequently I found points of difference between the men and the
officers, but in no single instance were the men as I met them other
than friendly, frank and perfectly willing to discuss with me, as I was
glad to discuss with them, any matters they chose to bring up.
It often occurred that there was justice in the points which they
raised and their requests were acted upon favorably by the officers.
Also frequently situations were presented in which it was impossible
for the company to meet the views of the employees. But never was a
subject dismissed until, if unable myself to make the situation clear,
the highest officials of the company were called in to explain to the
employee with the utmost fulness and detail the reasons why the thing
suggested was impossible.
No matter presented was left without having been settled in accordance
with the request of the employee, or, in the event of that being
impossible, without his having been fully convinced that the position
of the company was just and right and in the common interest.
This personal contact with the employees of the company led to the
establishment of mutual confidence and trust and to the acceptance on
their part of the premise that they and we were partners.
The men generally came to see that the man about whom they had heard
was very different from the man whom they had met in their homes and
at their work. While they distrusted the former, they believed in the
latter. Before I left Colorado, a plan of industrial representation,
providing for close personal contact between the duly elected
representatives of the men and officers of the company, was worked out
and adopted by a large majority vote of the employees.
This plan in substance aims to provide a means whereby the employees
of the company should appoint from their own number as their
representatives men who are working side by side with them, to meet
as often as may be with the officers of the corporation, sometimes in
general assembly, where open discussions are participated in and any
matters of mutual interest suggested and discussed; more frequently in
committees composed of an equal number of employees and officers, which
committees deal with every phase of the men’s lives--their working and
living conditions, their homes, their recreation, their religion and
the education and well-being of their children.
In brief, the plan embodies an effort to reproduce in so far as is
possible the earlier contact between owner and employee.
I do not venture to make any prediction as to the ultimate success of
the plan. Two interesting side lights, however, may be mentioned.
The first is that whereas the plan itself and an agreement covering
working and living conditions was adopted by the coal miners employed
by this company some fifteen months ago--since that time the same plan
and agreement, adapted to the particular requirements of the steel
workers, and also of the iron miners employed by the company, has been
adopted by both.
The second, while the company has reopened a number of mines formerly
idle and is now working quite to the limit of its capacity in the
production of coal, it has all the labor at its various mines which
it requires, and that too without having made any special effort to
attract labor to its recently reopened mining camps.
But there is a further reason why the personal relation in industry
is of such vital importance, and that is in order that the attitude
and purpose of the owners and directors of a company may be rightly
understood by and interpreted to their partners, the employees, and
vice versa; also that all grievances may be taken up and adjusted as
they arise.
How true it is that when some petty representative of a great
corporation makes a sharp trade with a customer, the customer at once
says, “Obviously, the president of this corporation is a dishonest and
unscrupulous man. It must be that he has directed his agents to pursue
these sharp and crooked practices.”
However high-minded the owners or directors of a company may be, it is
of the utmost difficulty to guard against such practices on the part
of an occasional representative. But it is obviously just as unfair on
such grounds to maintain that the owners and managers are unjust and
crooked in their business methods, as it would be to say that the whole
tree was bad simply because one apple on it had spots or imperfections.
The employee in any corporation must form his opinion of the owners and
directors of the corporation from the petty officer or foreman with
whom he has personal contact. Too often these men, not infrequently
promoted from the ranks, become overbearing and arrogant in their
treatment of those under them.
This very naturally is as irritating and unjust to the employee as it
is distressing to the company, and it is at this point in ninety-nine
cases out of a hundred where grievances arise.
The Colorado Industrial Plan to which I have referred has been so
drawn as to guard against the exercise of arrogance or oppression, by
providing various channels through which the employee with a grievance
can at once secure a sympathetic and friendly hearing, carrying his
difficulty to the president’s ear, if necessary.
The foreman who knows that any arbitrary or unjust action on his part
may be reviewed by his superior officers is very much more careful in
his treatment of his men, always wanting to avoid having his decisions
reversed.
If a slight scratch made on the finger with a rusty nail is
immediately cleansed with an antiseptic wash, it heals at once. On
the other hand, if the poison which has been introduced is allowed to
remain, soon inflammation sets in, the disorder spreads, and serious
menace to life may result.
And so it is with the petty grievance. If it is dealt with
sympathetically and justly, immediately it is made known, peace,
harmony and good-will are readily maintained. On the other hand, if
indifference is shown and lack of sympathy, the grievance is nursed and
from it grows the industrial disorders which later become so acute and
difficult to heal.
An ounce of prevention is worth much more than a pound of cure. In no
place is this saying truer than in dealing with human nature.
If I were to sum up in a few words what I have been endeavoring to say
to you in regard to the personal relation in industry, I should say,
apply the Golden Rule.
Every human being responds more quickly to love and sympathy than to
the exercise of authority and the display of distrust.
If in the days to come, as you have to do with labor, you will put
yourself in the other man’s place and govern your actions by what you
would wish done to you, were you the employee instead of the employer,
the problem of the establishment of the personal relation in industry
will be largely solved, strife and discord as between labor and capital
will give place to coöperation and harmony, the interests of both will
be greatly furthered, the public will be better served, and through the
establishment of industrial peace, a great stride will have been taken
toward the establishment of peace among nations.
FOOTNOTES:
[2] An address delivered at Cornell University on the occasion of
Founder’s Day, January 11, 1917.
[3] 1916.
IV
REPRESENTATION IN INDUSTRY[4]
I speak as a member of the Public Group. I hold no executive position
in any business corporation, and am not here representing any business
interest.
I have come in response to the request of the President to accept
appointment as one of the representatives of the general public in
this Conference and am considering the questions which come before the
Conference from that standpoint.
The resolution before the Conference is predicated upon the principle
of representation in industry, which includes the right to organize and
the right to bargain collectively. In supporting this resolution I beg
leave to present the following statement which, for the sake of brevity
and clearness, I have reduced to writing.
The experience through which our country passed in the months of
war, exhibiting as it did the willingness of all Americans without
distinction of race, creed or class to sacrifice personal ends for
a great ideal and to work together in a spirit of brotherhood and
coöperation, has been a revelation to our own people, and a cause for
congratulations to us all. Now that the stimulus of the war is over,
the question which confronts our nation is how can these high levels of
unselfish devotion to the common good be maintained and extended to the
civic life of the nation in times of peace.
We have been called together to consider the industrial problem. Only
as each of us discharges his duties as a member of this Conference in
the same high spirit of patriotism, of unselfish allegiance to right
and justice, of devotion to the principles of democracy and brotherhood
with which we approached the problems of the war, can we hope for
success in the solution of the industrial problem which is no less
vital to the life of the nation. Surely the men and women will stand
together as unselfishly in solving this great industrial problem as
they did in dealing with the problems of the war if only right is made
clear and the way to a solution pointed out.