Modern Economic Problems Part 26

-- 14. #Organized labor's opposition to compulsory arbitration.# Organized labor in America has attained to a highly influential position. On the whole it const.i.tutes an "aristocracy of labor,"

consisting largely of skilled workers that obtain a wage exceeding that of unskilled workers to a degree not seen anywhere else in the world. In this they have been favored by a combination of conditions which it is not possible to describe briefly; suffice it here to say that organization is itself not the whole explanation, but only a small part of it. That organized labor, officially, is strongly opposed to compulsory arbitration in America, is thus perhaps sufficiently to be understood on the principle of "Let well enough alone." When in August, 1916, a strike on the entire railroad system was threatened by the four railroad brotherhoods, and some action was proposed in the form of the Canadian act, the trade-union officials issued a statement containing these words: "Since the abolition of slavery no more effectual means has been devised for insuring the bondage of the workingman than the pa.s.sage of compulsory investigation acts of the character of the Canadian Industrial Disputes Act." Within less than a week the brotherhoods called off the strike after Congress had pa.s.sed an act giving the men immediately the eight-hour day--a substantial part of what they had asked--and providing for investigation, by a commission, of the effects of the rule. This is compulsory upon the railroads but it is not compulsory upon the men to accept these terms.

-- 15. #The public and labor legislation.# It has come to be recognized that in every serious labor dispute, especially in such as develop into strikes, those concerned are not merely the two parties, employers and employees, but a third party, the public, consisting of every one else whose interests are not directly or indirectly bound up with one of the other two parties. The line of demarcation is not easy to draw exactly. An individual may be divided in sympathy, inclining to the one party perhaps because of some personal friendships or cla.s.s loyalty or to the other party because of material investments, while in the main having interests distinct from either. But wherever the public is drawn in as a party, it includes far more persons and embraces far larger interests than does either of the other two parties or than do both of them together. The public becomes a party primarily because it consists of the purchasers and consumers of the products, who are deprived of the usual supply of goods, more or less essential to their welfare or even to their existence. With the increasing division of labor and complexity of industrial organization more and more kinds of business have, in a greater and greater degree, become "affected with a public interest." The public becomes an unwilling party, therefore, in every serious labor controversy.

In order that any kind of labor legislation shall be enacted, it is necessary (so far as we have a government by public opinion) for a majority of the public to be convinced that the conditions are such as call for governmental interference. It becomes so convinced in two broadly distinguishable cla.s.ses of cases: one, when the ma.s.ses of unorganized workers are too weak to secure for themselves conditions of work and wages consistent with health and morality; and the other, when strong bodies of organized workers, in their attempts to win their ends in an industrial dispute, exceed their private rights and invade the public welfare.

-- 16. #The public and compulsory arbitration#. Where the railways are owned and operated by the state (as is now the case pretty generally except in America and Great Britain) the question of the "right to strike" arises from time to time, in critical forms. The logic of the situation compels even those officials that are of the labor party or are most favorable to labor, to maintain an uninterrupted service on the public railways. The experiences of that nature in France and in Australasia have been notable. Nowhere in the United States has the principle of compulsory arbitration been adopted, but at the time of the great anthracite strike, in 1902, public sentiment grew strong in favor of it. As a result of the intolerable conditions in the mines of Colorado was pa.s.sed the compulsory investigation act of 1915 in that state. In 1916 the threat of a general railroad strike brought from many quarters strong expressions of condemnation in principle, of the strike as a method of settlement of wage disputes on the railroads.

And in the end the organized laborers themselves accepted, apparently with much satisfaction, a law involving the legal fixation of wages and the principle of compulsion as applied to the employers.

[Footnote 1: By the Secretary of the American Federation of Labor.]

[Footnote 2: See Vol. I, pp. 458-467.]

[Footnote 3: For example, increase less than 25 per cent per hour in changing from a 10 hour to an 8 hour day.]

[Footnote 4: See above, ch. 6, sec. 12.]

[Footnote 5: See especially, sec. 8.]

[Footnote 6: At this writing the case, Bunting vs. the State of Oregon, is still undecided.]

[Footnote 7: Published as "The case for the shorter working day," by the National Consumers' League, see especially pp. 621-892.]

[Footnote 8: See Vol. I, pp. 135 and 197.]

[Footnote 9: Much public regulation of wages occurred in Europe until near the end of the eighteenth century. In England this was done mainly by the justices of the peace and, in the main was directed toward limiting the demands of the wage-workers.]

[Footnote 10: See below, sec. 15.]

[Footnote 11: By the act of 1888, the Erdman act of 1898, superseded by the Newlands act of 1913, and supplemented by measures for mediation by the Department of Labor.]

[Footnote 12: The few exceptions to this statement are mostly recent; such as the recognition of the unions in New Zealand in 1894 as parties in the plan of compulsory arbitration, and in Great Britain in 1909 as agencies through which unemployment insurance may be administered.]

[Footnote 13: As appeared in ch. 20.]

CHAPTER 22

OTHER PROTECTIVE LABOR AND SOCIAL LEGISLATION

-- 1. Evils of early factory conditions. -- 2. Improvement of factory conditions. -- 3. Limitation of the wage contract. -- 4. Usury laws. -- 5.

Public inspection of standards and of foods. -- 6. Charity, and control of vice. -- 7. City growth and the housing problem. -- 8. Good housing legislation. -- 9. General grounds of this social legislation. -- 10.

Training in the trades. -- 11. Prevalence of unemployment. -- 12. Evils of unemployment. -- 13. Definition of unemployment. -- 14. Individual maladjustments causing unemployment. -- 15. Maladjustment of wages causing unemployment. -- 16. Individual maladjustment in finding jobs, -- 17. Public employment offices. -- 18. Fluctuations of industry causing unemployment. -- 19. Remedies for seasonal fluctuations. -- 20. Reducing cyclical unemployment and its effects.

-- 1. #Evils of early factory conditions#. The time is but brief in the life of nations since the main manufacturing processes, now mostly conducted in great factories, were carried on in or near the homes of the workers. This change has been reflected in the meaning of "manufactures," which first meant literally goods made by hand but now conveys the thought of goods made by machinery. The craftsmen worked alone in their own homes or with the help of their wives and children.

If the master craftsmen had other helpers these were usually lodged and fed in the homes, and were taught by the side of the masters' own families. The old English law of master and servant was the labor law of that time as, to some extent, it still is to-day in Great Britain and America. The living and working conditions of the wage-workers were in general the same as those of the master himself and of his own family; and this was the best possible guarantee that the conditions would be kept up to the best standards of that time. The same change in industrial relations that led to the rise of the organized labor movement[1] revealed new and often horrible neglect and evil in and about the factories. They had been erected with no thought of sanitation, safety, and decency for the workers.

-- 2. #Improvement of factory conditions#. Legislation to remedy these evils began in England a century ago, and the English code of factory laws, regulating the construction and operation of factories and providing for their inspection, has become voluminous. It has been copied, and in some respects improved, by all of the great industrial nations. This is true in America of the manufacturing states, tho the agricultural states have still very few such regulations. As a result of these measures, accompanying and stimulating an enlightenment of the employers' self-interest, there has been a very remarkable improvement in such matters in recent years. In many American factories erected in the last quarter-century the conditions as to lighting, heating, ventilation, stairways, fire-escapes, protection of the workers against accidents, and lavatory and sanitary arrangements, are better than the best conditions ever existing in domestic manufactures. A somewhat corresponding improvement has taken place on railroads, in mercantile establishments and, perhaps less, in mining.

Factory legislation often has been opposed by employers because of the expense it causes; but if the regulations apply to all factories, the expense becomes a part of the cost of production and is shifted, like the other expenses of production, to the general body of consumers, of which the employers form only a small part. Much of the recent progress in some establishments has, however, gone much beyond the requirements of any existing laws. Many employers recognize that it is costly and unprofitable to themselves to allow their workmen to be in surroundings that reduce their vitality and efficiency, such as do the conditions mentioned at the close of the preceding section.

-- 3. #Limitation of the wage contract#. In general the law does not attempt to interfere with the making, by individuals, of such contracts as they choose to make. Its main function is to interpret and enforce the contracts that are made. But there has been an increasing group of exceptions to this general statement. It was forbidden even by the English common law for wage-workers under some conditions to sign away their right to claim damages in case of accident, and many recent statutes have added more specific limitations in this respect.[2] Legislatures and courts have been particularly watchful of the interests of children, who are usually deemed incapable of entering into contracts binding them to their injury. Sailors, likewise, have been somewhat exceptionally treated, because, journeying far from home, they are under the often despotic control of their employers. The English courts may even change the contract if the sailors have been coerced by their masters.

Laws regulate the form, time, and methods of payment in manufactures and mining. Companies sometimes keep stores and pay the workers in mines and factories in goods instead of money. Such a store in the hands of a philanthropic employer might easily be made, without expense to himself, a great boon to his workmen, giving them the benefits of consumers' cooperation. But the usual result is told by the fact that such stores are often known as "truck stores" and "pluck-me stores," and heartily disliked by the wage-workers. They are most often found where some one large corporation dominates in the community, as in a mining district, and the workers are in a very dependent condition. If the higher prices demanded practically lower real wages, it would seem that the worker had an immediate remedy in his power to demand higher money-wages. Recognizing that this is for the most part an illusion--for it is just in such places that the conditions for free compet.i.tion are least present--the law in many states prohibits these stores. It regulates also the measuring of work, fixing the size of screens and of cars used in coal-mining.

The law is especially favorable to the hand-laborer in regard to the collection of his wages, requiring monthly or fortnightly or sometimes weekly payments. Mechanics' liens give to workmen in the building trades the first claim upon the products of their labor.

-- 4. #Usury laws#. The limitation by law of the rate of interest that may be charged affects many persons outside the ranks of wage-workers.

Usury laws are found almost universally in civilized lands. By usury was formerly meant any payment for the loan of goods or money; now it means only excessive payments. In former times moralists and lawmakers were opposed to all usury or interest. The reason for this att.i.tude is not hard to find.[3] Most loans were made in times of distress. The sources of loanable capital and the chances of profitable investment were few. But for the last four centuries there has been on the question of usury a gradual change of opinion, beginning in the commercial centers and progressing most rapidly in the countries with the most developed industry. A moderate rate of interest is now everywhere permitted; but in all but a few communities the rate that can be collected is limited by law, and penalties more or less severe are imposed upon the usurious lender.

Usury laws are practically evaded in a number of ways within the letter of the law.[4] Many persons maintain that they do more harm than good even to the borrower, whom they are designed to protect. In a developed credit economy, where a regular money-market exists, they are superfluous, to say the least, as most loans are made below the legal rate. Such laws, however, have a partial justification. In a small loan market they to some extent protect the weak borrower at the moment of distress from the rapacity of the would-be usurer. There has been great need to check the rapacity of the "loan-shark" in the cities. Usury laws are fruits of the social conscience, a recognition of the duty to protect the weaker citizen in the period of his direst need. Their utility is diminishing; and at best they are only negative in their action, preventing the needy borrower from borrowing when his need is acute. In many European countries a more positive remedy has been found in the provision of public p.a.w.n-shops. In America a very little has yet been done in this way, and that mostly by private philanthropy.[5]

-- 5. #Public inspection of standards and of foods#. The determination and testing of standards of weights and measures has long been a function of government. English laws of the Middle Ages forbade false measures and the sale of defective goods, and provided for the inspection of markets in the cities. Usually, the self-interest of the purchaser is the best means of ensuring the quality of goods; but personal inspection by each buyer frequently is difficult and time-consuming, requiring special and unusual knowledge of the products and special costly testing apparatus. The states and the nation undertake, in some cases, therefore, to set minimum standards of quality, and to enforce them by governmental inspection. Government coinage had its origin in this need.

This policy is applied, however, mainly to commodities affecting health; its application to art products, except to protect the morality of the community, would be difficult or unwise. Recent legislation in many lands and in all of the American states has developed greatly the policy of insuring the purity or the safety of many articles consumed in the home; notable is the Federal Pure Food and Drug Act of 1906. The federal law levying a tax on oleomargarine, however, was designed as protective legislation in the interest of the farmer. Public regulation and inspection sometimes raises the price, but the cost is small compared with the convenience and the benefits resulting to the citizen.

-- 6. #Charity, and control of vice#. The public relief of the defective cla.s.ses, insane, feeble-minded, and paupers, is a part of the social protective policy. The public interest undoubtedly is served by having these suffering cla.s.ses systematically relieved, but the extent and nature of the provision are questions ever in debate.

Still more debated is temperance legislation, both as to licensing and as to prohibiting the liquor traffic. Nowhere is the manufacture and sale of intoxicating liquor treated quite like the traffic in most other goods, because it is recognized that the public interest is affected in a different way. While it is beyond question that society should protect itself and its innocent members against the drunkard, it is more doubtful whether it owes to the man, for his sake, protection against his own blunders. Not even the G.o.ds can save the stupid. Temperance legislation is strongest in its social aspect. The opponent of it usually champions the individualist view; its partizans uphold, in varying degrees, the social view.

Similar questions arise regarding lotteries, gambling, betting, and horse-racing. When a man backs a worthless horse against the field, money probably is transferred from the stupider to the shrewder party.

The philosopher may say that the sooner a prodigal and his money are parted the better; but the broken gambler remains a burden and a threat to honest society. Gambling, lotteries, and speculation cause embezzlement, crime, unhappy homes, and wrecked lives.[6] Here are to be found with difficulty the true boundaries between ethics and expediency. A busybody despotism may protect the fool, but it thereby helps to perpetuate and multiply his folly; yet if the fool is left alone, he too often is a plague to the wise and the virtuous.

-- 7. #City growth and the housing problem#. In 1790, of our population only 3 per cent lived in cities of over eight thousand inhabitants; in 1900 the percentage was 33. Then the largest city (Philadelphia) numbered 50,000; in 1910 the largest city (New York) numbered 5,500,000; that is, 110 times as large 120 years later. The total number of persons living in cities of 8000 had increased in more than double that ratio. The rapid growth of cities brought with it many evils. Considered in their more material aspects, nearly all of these are summed up in the expression "the housing problem."

As population grows denser in cities, land rises in value, yards and gardens narrow and then disappear, light, sun, and air are shut out, and cleanliness, decency, and home life become more difficult and, for many, impossible. The residents gradually group themselves in districts corresponding to their economic incomes, and the poorer parts of the population become tenement dwellers in the neighborhood of factories or become segregated in "slum" districts of unsanitary and dilapidated houses.

-- 8. #Good housing legislation.# Two policies are open under these conditions. The one, always followed for a time, is to leave individual self-interest unguided to solve the problem. If the tenant agrees to rent a disease-breeding house, he is the first to suffer.

The interests of investors, it is said, will supply as good a house as each tenant can pay for. The other policy now adopted is to set a minimum standard of sanitation and comfort, in respect to plans, lighting, materials, and proportion of lots to be covered, to which standard all builders and owners must attain. Complying with the legal requirements, they are left free to collect whatever rent they can get. As one bad building may bring down the rent of all on the street, such legislation may sometimes be in the interest of the body of landowners as against the selfish desires of some individuals. Mainly, however, the regulation is in the interest of the tenants and of society as a whole, and against that of the landlords. The rents from slum property are threatened, hence the strong opposition always manifested against tenement-house legislation by some landlords, architects, and contractors, who fight it as an interference with their interests and as a confiscation of their property. It is not unlikely that this policy has the effect of making rents too high for some poorer tenants and driving them into the country. But this result is not so undesirable. Moreover, the control and inspection of housing conditions has in a few states been made statewide to reach even "the country slums" which lately have been recognized to exist. Enlightened sentiment to-day favors efforts to destroy the breeding-places of disease, misery, and crime, no matter where they may be.

Property owners are in many communities no longer left free to determine height of buildings, appearance, or even the uses for which houses may be erected in any district. American cities have still much to learn in this regard from the example of many European cities which have developed the art of city planning with wonderful results in beauty of landscape and of architecture, in practical economy for business, and in the health and welfare of the ma.s.s of the people.

-- 9. #General grounds of this social legislation#. Why are not such matters as we have been discussing safely left to individuals? It is for the interest of every one that his back yard should not be a place of noisome smells and disagreeable sights. But men are at times strangely obstinate, selfish, and neglectful, and through one man's fault a whole community may suffer. The refusal of one man to put a sewer in front of his house may block the improvement of a whole street. The heedlessness of one family may bring an epidemic upon an entire city. There must be a plan, and by law the will of the majority must be imposed upon the unsocial few. Where voluntary cooperation fails, compulsory cooperation often is necessary. Thus health laws, tax laws, and improvement laws regulate many of the acts of citizens, limit the use of property, and compel men to better social courses against their own wishes and judgments.

All such laws as these are protective legislation, in that they depart from the rule of free trade taken in its broadest sense. It does not follow, however, that all these laws stand or fall together. The justification of such measures is limited and relative, and therefore of varying strength. All protective measures are alike in that the free choice of one citizen is forbidden by law in the supposed interest of some other citizen who is to be "protected." While the purpose of the tariff is economic and political, in a large majority of social laws the moral purpose is fundamental. It is the demand of humanity that compet.i.tion be placed upon a higher plane. Most social legislation is to protect the weak from being forced into contracts, or from living in conditions injurious to their welfare and happiness.

The justification for these limitations upon the right of private property, upon the free choice of the individual, upon "free compet.i.tion," must be found in the social result secured. The best test of social protective laws is their contribution to a higher independence and to a freer compet.i.tion on a higher, more worthy, and more humane plane.

-- 10. #Training in the trades#. Free elementary and secondary education has become the all but unquestioned public policy in the American commonwealths. The main motive for it has been the belief that education in books is a necessity for good citizenship in a republic. At the same time it has been thought that the training of the school would help the child to earn a living. This appears to have been true so long and so far as it was combined with, or supplemented by, industrial training on the farm, in the home, and through apprenticeship in the manual trades, as once was so prevalent. But industrial conditions have changed. Most of the old-time education of the schools has now little relation to the industrial life of the great majority of the children, for few enter clerical or professional callings. Germany was the first nation to recognize the new educational need (in fact, never as urgent there as here) and to provide for systematic and efficient training in all the industrial arts. Since the beginning of the century the American public has been awaking to the needs of the situation. We appear to be on the eve of a great development in industrial training that will equip youth for more efficient life in business and in the home, either in rural or in urban conditions.

-- 11. #Prevalence of unemployment.# Many other forms of social legislation on behalf of the common man might well deserve, did time and s.p.a.ce permit, a larger measure of the economic student's attention. However, excepting the subjects treated in the next two chapters, the one remaining that is most important at this time is the problem of unemployment.

In every country and at all times where the wage system prevails, some wage-workers, now more and now less, are "out of work" and unable to get it. The proportion that they const.i.tute of all workers cannot, with the aid of any existing statistics, be exactly told, nor can exact comparisons be made between different countries. Of the magnitude, importance, and difficulty of this "problem of the unemployed" there is, however, no question. It is greatest, speaking generally, in manufacturing industries, tho, among the various kinds, great differences in this respect appear. In 1900 the United States census reported that of all persons in gainful occupations 2.5 per cent had been unemployed more than half the year, 8.8 per cent from three to six months, and 11 per cent one to three months, a total of 22.3 per cent more than one month.[7] In 1911 in a large group (nearly all) of the manufacturing industries, the minimum number of wage-earners employed (in January) was 13 per cent below the maximum (in November). In some the difference was much greater (e.g., 24 per cent in the iron industry, 63 per cent in the brick and tile industry). Statistics of unemployment among trade-unions in New York and Ma.s.sachusetts indicate that the annual average of unemployment is between 12 and 15 per cent. In some years upwards of 10 per cent of all the working time of the wage-earning population is lost by unemployment.

-- 12. #Evils of unemployment.# A considerable part of the total in an ordinary year may be set aside as "normal" in the sense that it is allowed for in the wage-workers' plans;[8] and a part of it may even be desirable. Yet there remains an inconceivable sum of suffering in the lives of the workers, and an enormous economic waste of productive energy not only for them but for the whole community.

The irregularity, and occasionally the excessive duration, of these periods of unemployment too often makes unemployment not a beneficent vacation (comparable to shorter hours), but a period of tragic anxiety, demoralizing and unfitting for return to work. Irregular work is generally recognized to be a greater cause of poverty and of actual pauperism than is a low wage regularly received.

-- 13. #Definition of unemployment.# Unemployment is the state of a wage-worker for the time out of a job. But this definition needs to be further explained and limited if it is to be useful in the discussion of unemployment as an evil calling for social remedy. There must be set aside the cases where the lack of a job is due to one rest day in seven and to legal holidays, a total of nearly 65 days in most American states; to the worker's being on strike; to temporary sickness; finally, and more difficult to distinguish, that due to continued disability, physical, mental, or moral, to do the work up to an acceptable standard and to retain a job in the occupation chosen by the applicant. The first cannot be called a problem, and the others const.i.tute the problems of strikes, of industrial sickness, and of the unemployables, respectively.