Oscar S. Straus

Trade unions and federated unions—Formation of the National Civic Federation—Notable industrial disputes are settled—Andrew Carnegie dines with fighting labor leaders—Marcus Hanna, general of industry—My chairmanship of the Board of Railway Labor Arbitration—Our findings and recommendations—My chairmanship of the New York Public Service Commission—Military necessities impinge upon industrial relations—The President's Industrial Conference of 1919-20.

When our industries were small, a strong human tie bound together employer and worker. Following the expansion which began after the Civil War, our industries resolved themselves into vast organizations and corporations, and the relations between employer and worker became more and more impersonal. The workers first organized into trade unions, which presently expanded into federated unions similar to those which a generation before had begun to be formed in Great Britain.

The rapid growth of our industries and the impersonal relations between employer and employed made it apparent that social justice required that reciprocal rights be recognized in order to bring about a better understanding of a relationship which had already become increasingly strained and often embittered, resulting in serious strikes and lock-outs. One of the first organizations to meet this need was formed in Chicago in 1894, following the Pullman strike. It was called the Civic Federation of Chicago and was under the leadership of a number of prominent men of that city, directed by Ralph M. Easley.

Six years later the scope of this organization was enlarged, and in the name of the National Civic Federation a conference was called in Chicago, in December, 1900, and the debate centered round the proposition that in American industries voluntary conciliation was preferable to compulsory arbitration. At that conference a committee was selected whose duty it was to collect information at home and abroad regarding measures of arbitration, and to advise with employers and workmen in this country whenever and wherever possible.

In the following December, 1901, the National Civic Federation held a conference in New York in the rooms of the New York Board of Trade and Transportation. I was then president of that Board and was asked to preside at the conference. After adjourning the sessions, we organized the industrial department of the Federation, with a committee of twelve men representing the public, twelve men representing employers, and twelve men representing wage-earners. These three groups were headed, respectively, by Grover Cleveland, Marcus A. Hanna, and Samuel Gompers. All of their colleagues were men of national distinction and were recognized leaders in their fields. From this larger committee of thirty-six, an executive committee of five was selected, whose members were as follows: Marcus A. Hanna, chairman; Samuel Gompers, first vice-president; I, second vice-president; Charles A. Moore, treasurer; and Ralph M. Easley, secretary.

The scope and plan of the industrial department was to promote industrial peace in whatever way might seem best. We planned for a large meeting in May, when two public sessions were to be held, one at Cooper Union and one in the rooms of the New York Chamber of Commerce. We issued a statement of our plan and scope and inaugurated a broad educational campaign.

Meanwhile our department proved itself most practical. It actively helped settle several disputes, notably the Albany street-car strike, the disagreement between the National Metal Trades Association and the International Association of Machinists, and the United States steel strike. And it was instrumental in averting the threatened anthracite coal strike.

The identical ideal that I held up in my opening address at the meeting in January, 1901, I should hold up to-day: namely, that industrial peace, to be permanent, cannot rest upon force, but must rest upon justice, and in essential industries especially, upon a high sense of responsibility to the public by both employer and employed. In no other country are conditions, by nature and by principles of government, better adapted to the equitable adjustment of the reciprocal rights, duties, and privileges of labor and capital than in our own, because we are a democratic people with no fixed class distinctions to separate us. The laborer of to-day may be the capitalist of to-morrow, and vice versa. Capital and labor are interdependent, not opponents; and it is on the basis of that dependency that adjustments in the relationship between them must be made. This ideal is, happily, more widely recognized to-day than it was when the National Civic Federation was organized.

I gave considerable attention to the work of the Federation for a number of years. As the offices were in New York and the president and first vice-president were both resident in other cities, the direction of the organization between conferences largely fell upon me as second vice-president, with the important assistance of the secretary, Mr. Easley.

The Federation afforded a neutral forum where, under the chairmanship of one of its officers, the disputants could discuss their grievances and arrive at an understanding. Many times the growing bitterness between them was checked and a strike or lock-out averted. The fact was often borne in upon me how many of these industrial disputes grew out of misunderstandings which were cleared away when men assembled around a table and frankly discussed their differences.

To further the work and interests of the Federation I brought together in social relationship, at several dinners at my home, the representatives of all three groups; namely, the public, the wage-earner, and the employer. One day Andrew Carnegie expressed the desire to meet the labor leaders who had instigated the strike in the Carnegie works which resulted in the Homestead riots. Accordingly I arranged a dinner, to which I invited a number of the men of the labor wing of the Federation, as well as some others of the committee, together with Messrs. Wighe and Schaeffer, of Pittsburgh, officers of the Amalgamated Union, who had led the Homestead strike.

Carnegie knew these leaders well, and they knew him. He called them by their Christian names and they called him "Andy." They said that night that they and their colleagues in the union had always believed that that strike and riot would never have taken place had "Andy" been present. As a matter of fact, Carnegie's relations with his men had always been very friendly. He was unjustly accused of the responsibility for the Homestead riots, which might not have occurred had he, instead of Mr. Frick, been in charge of the employers' side. Mr. Carnegie at the time was in Scotland.

Only a short while before this Carnegie dinner, Marcus Hanna had died, and our executive committee offered to Mr. Carnegie the presidency of the Federation, to succeed Mr. Hanna. Mr. Carnegie was gratified and very much touched, especially by the implied confidence on the part of the twelve labor men of the Federation; but on account of his advanced years he felt that he could not give the position the attention it deserved. He was, however, glad to become a member of the executive committee, and as such revealed himself in a most favorable light. Beneath his Scotch nimbleness of mind there was a broad, tolerant, and lovable heart. He met the laboring men, not as their superior, but as one having a genuine brotherly interest in their welfare. It became very evident to us all why he was so highly regarded by his workmen, and why he had so much influence with them: they trusted to his fairness and had a real affection for him personally. In his Autobiography he makes feeling reference to his connection with the Federation.

Marcus Hanna, who was known to the country chiefly through his political activities, was looked upon as the leader of a group of rich men who had won political power by commercializing our political system; and was regarded by many as an evil influence. But in connection with the great industrial interests that he had built up in Ohio and elsewhere—coal mines, iron works, shipping, street railways—little was known of him. He had shown great capacity as an industrial general in the management of his men, winning their good-will by fair and equitable treatment; and it is said he never had a strike in the industries he administered. He was highly regarded by the labor leaders, who had confidence in his fairness to the wage-earners. He did not oppose, as did so many of the employers of his time, the organization of labor unions. On the contrary, he believed that such organizations were necessary adequately to protect the rights of the workers.

As chairman of the executive committee of the Civic Federation, Hanna displayed this better side of his character and his great ability as an organizer and a leader. Here he was not the cunning politician, but the genial head of an industry who recognized the just demands of the wage-earners and was always generous with them in regard to compensation and labor conditions.

The work we did and the experiences we encountered as officers of the Federation, each group coming into close contact with the others and adjusting with them industrial differences, had a decided educational value for us all. For myself, the study I gave during these years to the relations between capital and labor, and my active part in the conciliation and arbitration of labor disputes, provided me with an intensely practical background and preparation for the secretaryship of the Department of Commerce and Labor, which later fell to my lot. It was this experience and my personal acquaintance with the representatives of capital and labor all over the country that induced me, as head of that Department, to organize the Council of Commerce and to plan the Council of Labor, to both of which I shall refer more specifically later.

The Board of Railway Labor Arbitration of 1912 was perhaps the most important labor arbitration body brought into existence up to that time. Its decisions affected the whole Eastern district: that is, that section of our country lying east of Chicago and East St. Louis, and north of the Ohio River to Parkersburg, West Virginia, and of the Potomac River to its mouth. Fifty-two railroad lines and over thirty-one thousand engineers were involved. The latter negotiated through the Brotherhood of Locomotive Engineers.

The representatives of the Brotherhood and the members of the Conference Committee of Managers of the railroads held several conferences in March, 1912, at which the Brotherhood made certain requests. The conferences ended with the refusal of the roads to grant these requests or any part of them, whereupon ninety-three per cent of the members voted for a strike. Charles P. Neill, United States Commissioner of Labor, and Judge Martin A. Knapp, of the United States Commerce Court, tendered their friendly offices under the Erdman Act, but were unable to mediate, and the contending parties would not agree to arbitrate under the provisions of the Erdman Act. It was then decided to submit the dispute to a board of arbitration composed of seven members, one to be chosen by each side, and those two to agree on the other five within fifteen days of their own appointment.

The roads chose Daniel Willard, president of the Baltimore and Ohio Railroad, and the Brotherhood chose P. H. Morrissey, former grand master of the Brotherhood of Railroad Trainmen. At the end of fifteen days, these two had not succeeded in agreeing upon the other five members of the board, though they had agreed upon a list from which the five might be chosen. A committee consisting of Mr. Neill, Judge Knapp, and Chief Justice White, of the Supreme Court of the United States, then chose five names from that list, and the final personnel of the board was as follows: Dr. Charles R. Van Hise, of Madison, Wisconsin; Frederick N. Judson, of St. Louis; Dr. Albert Shaw, Otto M. Eidlitz, and myself, of New York, in addition to Mr. Morrissey and Mr. Willard.

On July 12th the board met and organized, electing me as chairman. The decisions of the board were to be binding for one year and thereafter could be terminated by either side upon a thirty days' notice. For two weeks we held hearings, morning and afternoon, at the Oriental Hotel, Manhattan Beach, New York. When the hearings were over, the board adjourned until early September, when the work of making the awards was begun. Because of my nomination for Governor by the Progressive Party at the time, I found it advisable to relinquish the chairmanship of the board to Dr. Van Hise, although I continued my membership and active interest to the end.

The hearings were reported and consisted of 1250 pages of testimony. The questions that confronted the board were not alone whether or not the wages in a given case should be raised, but, if it was found that the rate was inadequate, by what margin should it be increased? It was fairly difficult to arrive at principles of standardization applicable to so many roads, and to fix a basis of differentiation for the many and complicated branches of employment. The whole subject, however, had our most careful and painstaking consideration. We took up the whole intricate problem of the running of railroads, with relation to the several kinds of work performed by the engineers, in passenger service, freight service, in switching, and in yard work, bearing in mind always that railways were public utilities and that the necessities and comfort of the whole people depended upon their functioning; and that therefore the necessity for uninterrupted service far transcended the interests of either the roads on the one side or the employees on the other.

Our decisions as finally printed made a book of one hundred and twenty-three pages. One of our chief recommendations was that National and State wage commissions be created which should function in relation to labor engaged in public utilities as the public service commissions functioned toward capital. I quote from the report:

Especially for the public utilities is it important that labor should have a just wage, and if the existing wages are not adequate, they should be increased. If a just increase in wages places the public utilities in a position that does not enable them to secure a fair return upon capital invested and maintain a proper reserve, they should be allowed to increase their rates until they are in that position.

Another point upon which we laid stress was the limitation of the right to strike:

While it is clear from the public point of view that a concerted strike of railway employees for a great region would be as intolerable as a strike of the postal clerks; on the other hand, the position of the employees is a very natural one. They feel under existing conditions that the power to strike is their only weapon of defense against employers and the only means by which they can enforce a betterment of their conditions of service. They realize, too, that the principle of concerted action, for all the railroads in a great section of the country, gives them a most effective weapon, and they are naturally loath to relinquish or impair it.

While this is the situation under the present conditions, and the railway employees feel that they cannot surrender their right to strike, the necessity would no longer exist for the exercise of this power, if there were a wage commission which would secure them just wages.

Finally, it is the belief of the Board that in the last analysis the only solution—unless we are to rely solely upon the restraining power of public opinion—is to qualify the principle of free contract in the railroad service. A strike in the army or navy is mutiny and universally punished as such. The same principle is applied to seamen because of the public necessity involved. A strike among postal clerks, as among the teachers of our public schools, would be unthinkable. In all these cases, the employment, to borrow a legal phrase, is affected with a public use; and this of necessity qualifies the right of free concerted action which exists in private employments.

However, if the principle be accepted that there are certain classes of service thus affected with a public interest and men who enter them are not free concertedly to quit the service, then these men must be guarded in the matter of wages and conditions by public protection; and this it is believed can best be done through an interstate wage commission.

The report was signed by six members of the board, Mr. Willard adding an explanatory statement. Mr. Morrissey wrote a dissenting opinion. For a number of years the findings of this board, with slight alterations, continued to be effective in adjusting wages for the different kinds of service among the engineers, and in governing conditions and number of working hours of the employees.

The President's Industrial Conference of 1919-20, of which I was a member, was of value chiefly in that it correlated the best ideas in practice throughout the country with regard to the prevention and relief of industrial unrest and the betterment in general of the relationship between employer and employee, and that it published suggestions based on these ideas, of which the main points were the following:

1. The parties to the dispute may voluntarily submit their differences for settlement to a board, known as a Regional Adjustment Conference. This board consists of four representatives selected by the parties, and four others in their industry chosen by them and familiar with their problems. The board is presided over by a trained government official, the regional chairman, who acts as a conciliator. If a unanimous agreement is reached, it results in a collective bargain having the same effect as if reached by joint organization in the shop.

2. If the Regional Conference fails to agree unanimously, the matter, with certain restrictions, goes, under the agreement of submission, to the National Industrial Board, unless the parties prefer the decision of an umpire selected by them.

3. The voluntary submission to a Regional Adjustment Conference carries with it an agreement by both parties that there shall be no interference with production pending the processes of adjustment.

4. If the parties, or either of them, refuse voluntarily to submit the dispute to the processes of the plan of adjustment, a Regional Board of Inquiry is formed by the regional chairman, of two employers and two employees from the industry, and not parties to the dispute. This Board has the right, under proper safeguards, to subpoena witnesses and records, and the duty to publish its findings as a guide to public opinion.

5. The National Industrial Board in Washington has general oversight of the working of the plan.

6. The plan is applicable also to public utilities, but in such cases, the government agency, having power to regulate the service, has two representatives in the Adjustment Conference. Provision is made for prompt report of its findings to the rate regulating body. The Conference makes no recommendation of a plan to cover steam railroads and other carriers, for which legislation has recently been enacted by Congress. (Esch-Cummins Bill.)

7. The plan provides machinery for prompt and fair adjustment of wages and working conditions of government employees. It is especially necessary for this class of employees, who should not be permitted to strike.

8. The plan involves no penalties other than those imposed by public opinion. It does not impose compulsory arbitration. It does not deny the right to strike. It does not submit to arbitration the policy of the "closed" or "open" shop.

9. The plan is national in scope and operation, yet it is decentralized. It is different from anything in operation elsewhere. It is based upon American experience and is designed to meet American conditions. It employs no legal authority except the right of inquiry. Its basic idea is stimulation to settlement of differences by the parties in conflict, and the enlistment of public opinion toward enforcing that method of settlement.

Unfortunately nothing came of the painstaking work of this conference beyond the publishing of its final report of March 6, 1920.

The chairmanship of the New York Public Service Commission did not at all appeal to me when first Governor Whitman offered it to me. The commission as it then existed had unfortunately lost public confidence to a large extent, and I felt that it was not the kind of service for which I was especially qualified. However, it was pointed out to me that there was constant danger of strikes on the part of the thousands of workmen engaged in the construction of subway and elevated extensions, and an added appeal was made to me in view of the considerable experience I had had in adjusting labor difficulties. And so, after declining, I was finally prevailed upon by the Governor and the late George W. Perkins, in December, 1915, to accept this arduous duty.

As soon as it became known that I had accepted the chairmanship, the Governor received a communication from William Henry Hodge, the distinguished engineer, announcing his willingness to serve on the commission, although before my selection he had refused such appointment. The other members of the commission were: Charles E. Hervey, William Hayward, and Traverse H. Whitney. Messrs. Hayward and Hodge left the commission, when we entered the war, to join the army. Mr. Hayward was commissioned Colonel, having organized the 15th New York, afterward the 369th United States Infantry, a regiment of colored men who performed gallant service in France. Mr. Hodge was commissioned Major and was promoted to Lieutenant-Colonel, and gave his splendid talents to the services of his country in building roads to the battle fronts of France. Due to his strenuous labors over there, this gifted engineer and exemplary patriot died shortly after the armistice.

The commission had charge of the building of the subways and elevated lines then in process, as well as the regulation of traffic and all public utilities. As the war progressed, it became clearer that our country would inevitably be drawn in, and therefore increasingly important that nothing should prevent the functioning of our public utilities. And accordingly it was not long before my services as adjuster and arbitrator of labor difficulties were needed. The cost of living was rapidly rising, and there was great unrest among laborers; and the demand for skilled and unskilled labor grew day by day. When our country entered the war, it was highly important for the moral effect upon our own people, as well as to avoid giving encouragement to our enemies, that the transportation system of our greatest metropolis should operate without interruption. During the following year and a half I was able to adjust a dozen or more important labor disputes and to prevent a number of strikes. The situation was complicated by the fact that the laborers were not employees of the commission, but of the several contractors to whom contracts had been awarded under conditions of fierce competition, so that every increase in wages materially affected their profits and in the end caused many of them to suffer considerable loss. I had to appeal to the patriotism of both sides, and it is a pleasure to be able to state that in every instance the response was most gratifying.