Which Labor Policy?

Political Democracy, But Industrial Autocracy in U.S., Says Noted Steel Magnate

WILLIAM B. DICKSON January 15 1921

Which Labor Policy?

Political Democracy, But Industrial Autocracy in U.S., Says Noted Steel Magnate

WILLIAM B. DICKSON January 15 1921

THE United States, to-day, faces a momentous problem, for which both labor and capital must find a solution, says William B. Dickson, vice-president of the Midvale Steel and Ordnance Co., in a recent issue of Printers’ Ink. The choice lies, says this writer, between industrial democracy on one hand, and chaos or serfdom on the other. The world unrest is not, perhaps, as acute in the U.S. as in Europe, but the writer most emphatically declares that while the United States may have political democracy it certainly is far from the desired goal of industrial democracy. The article was originally given a few weeks ago in an address before the American Society of Mechanical Engineers. It reads, in part, as follows:—

“Most men will agree that our present social order is showing signs of instability. This is particularly true abroad, but we in America are not lacking in signs which point to a disturbed state of mind, especially on the part of workingmen. The authority of old standards and convention is being questioned, sometimes in such a manner as to take one’s breath away. For instance, in the proposed Plumb bill for handling the railroads.

“The term ‘Mechanical’ in the title of your society would seem, on first thought, to be essentially materialistic—‘of the earth, earthy’—and, therefore, furthest removed from ethical problems. In the last two or three generations, however, mechanical developments have played such a large part in shaping our social order that they have become an important factor in ethical problems.

“The question has been raised by thoughtful men whether or not the applied sciences, progress in which is peculiarly the boast of our age, have really advanced the human race in the path of evolution. I believe that they have; but, nevertheless, there are grave dangers attendant on modern conditions of work and living which must be recognized and counteracted, if American ideals are to be preserved as energizing factors in our civilization.

“The danger to which I refer is the high degree of specialization in modern industry. The division of labor, which is such a marked characteristic of modern industry, has added a new complexity to the relation of employer and employee, and has brought with it new problems, which vitally affect the community life.

“I tried to draw a parallel between the village blacksmith and shoemaker, whom I knew as a boy in a country village in Western Pennsylvania, and their modern successors, who operate the automatic machines in our factories.

My point was that the old conditions furnished what I felt to be an essential factor in a normal life—i.e., joy in work through the exercise of the creative instinct. 

It is difficult for me to associate this feeling with a highly specialized task, where the workman performs a simple operation over and over perhaps for years.

"I feel that the opportunity for the expression of the creative instinct in our modern factory is very limited. I am also convinced that the natural, inevitable effect on the individual of the deadly monotony of highly specialized factory work is to stunt him mentally, morally and physically, unless it is counteracted by some other vital force.

"It is unthinkable that there should be any backward step in our industrial process. No sane man would propose to solve this problem by reverting to the old conditions. Our shoes, clothing and all other products essential to our present civilization will have to be made by specialized automatic machinery.

"But if I am justified in my premises, there is a human problem which must be faced, and in my opinion it is a problem in the solving of which lies the question of the survival of our democratic ideals.

"It has been said that free government is more important than good government I believe this to be a profound truth, and applying it to the form of government and admitting the manifest advantages of a concentrated governing class in securing a highly efficient social order, I would say that if there must be a choice, it is better to be free and inefficient than to secure efficiency by having men become mere cogs in a complex social machine operated by a so-called superior class.

"Efficiency in all lines of human endeavor is greatly to be desired, yet I fear that we are at present in danger of making a fetish of efficiency to such an extent as to endanger human freedom.

“It is a deadly menace in a people clothed with political power, but stunted in body and soul by their environment. As I said, I have not been able to find satisfactory, practicable answer to this problem, and I leave it with you.

“The principal theme, however, to which I wish to direct your attention is a broader one, and in the working out of the social problem which I present, I am hopeful that an answer will be found also for the problem of the specialized task.

“My theme is this: What is the supreme issue confronting mankind to-day? In my opinion, simply the same issue which runs back through all history, namely—aristocracy vs. democracy.

“We Americans are so accustomed to think of democracy as the normal system of human government, the very flower of civilization, that the man in our midst who would seriously question this apparently self-evident truth would be looked upon as abnormal, to say the least.

“We achieved, or we fondly hoped we had achieved, political democracy when Cornwallis surrendered at Yorktown. As a matter of fact, democracy is not an achievement; it is an opportunity for further struggle upward.

"We must now set our minds to the task of applying democratic principles to industrial relations.

“I believe there is a grave menace to our American ideas in the highly centralized, autocratic control which is becoming a marked tendency in our great industries.

"The feudal system was based on the ownership of land and its appurtenances— such as highways, mines, streams, fisheries, etc., by the barons, and it was effective in securing autocratic control of the workers, because the vast majority were tillers of the soil, or workers in other industries controlled through land ownership.

“The tendency of our modern industrial system is toward autocratic control of the workers through ownership of what our socialistic friends term “the tools of production,” which include not only the natural resources, but also the furnaces, mills, factories and transportation systems.

“Instead of indulging in glittering generalities, let me cite two instances of what has happened under the existing system of corporate control.

“Some years ago, a gentleman at the head of one of our great corporations decided that prices must be maintained in the face of diminishing demand. In order to accomplish his purpose, he restricted production by shutting down a number of large plants located in different communities, each of which had been built up largely as an adjunct of the plant.

“Some of these plants we’re kept closed for about a year, and the result was disaster to the communities. The merchants were driven out of business, real estate values were depreciated, and the workers were thrown on their own resources and had to break up their homes and seek employment elsewhere. None of these persons had any voice in the New York office, and which resulted in social paralysis in all of these communities.

“This last summer the president of one of the largest textile companies suddenly announced that his mills would close for an indefinite period, and they were closed in the same arbitrary, autocratic manner as above described.

“Consider for a moment the despotic power which our modern system of industry gives a few men over the lives and fortunes of hundreds of thousands of their fellow-citizens. By reason of this condition, we have the unstable situation of a government founded on the suffrages of men who, for all practical purposes, are industrial bond men.

“If we should read in the paper some morning that a Turkish Pasha had exercised his authority in such a way as to deprive a city of its means of subsistence, we would raise our eyes in holy horror and bless our good fortune in living in a more enlightened land.

“What is the answer? Only one; namely, industrial democracy.

“What do I mean by industrial democracy? It is exceedingly important that there be no confusion as to this definition. Mr. Carnegie was once asked: ‘Which is the most important factor in your business— capital, management or labor?’ He replied: ‘Which is the most important leg on a three-legged stool?’

“This answer epitomizes my theme and also what I believe will be the creed of the twentieth century.

“In an efficient partnership, such as Mr. Carnegie’s answer implies, while each partner may have equal rights, the duties and responsibilities are usually separated so that each exercises his principal function within his own limited sphere. But where grave questions are to be considered, which virtually affect the organization, as a whole, there is general consultation.

“So, in the new ideal of industrialism, each factor, i.e., capital, management and labor, will continue to have its own separate natural function as heretofore, but no arbitrary, autocratic decisions affecting the general welfare will be made, either by the directors, the officials or by the workmen.

“Some of you may ask: ‘Did Mr. Carnegie follow this ideal in practice?’ My answer is ‘No.’ He did give a larger measure of recognition to management than most of his fellow manufacturers, but in his attitude toward labor he was merely a sign post, pointing the right way but never taking it.

“The Carnegie labor policy was highly autocratic, as is that of its successor, the United States Steel Corporation; a benevolent autocracy, if you please, in many splendid ways, although it still maintains that relic of barbarism—the twelve-hour day, as well as some fairly large remnants of the seven-day week. But, however large you write the word “benevolent,” you must always write after it the word “autocracy.”

“The steel corporation has become such an important factor in our national life that it is a fair object for criticism.

“The corporation deservedly stands high in the estimation of the American people because of the material advantages enjoyed by its employees, but its managers have as yet failed to appreciate the spirit of the times. To paraphrase St. Paul:

“ ‘Though they pay the highest wages, give pensions and furnish every modern convenience and safeguard to their workmen, and have no democracy, it profiteth them nothing.’

"In a completely natural society, every man by reason of close and continuous contact with land and other natural resources would be an independent, self-sustaining unit. When a man has left this natural condition, whether voluntarily or otherwise, and. has become the servant of another man, or other men, he has given up a natural right and his employer has assumed an equivalent obligation. The fact that neither the employer nor the employee has been conscious of this exchange, and that both may have acted upon purely selfish motives, does not alter the elemental fact, which, in the great national aggregate, constitutes the great unanswered problem of modern times—the elemental fact that is at the base of all social unrest. 

 “In the two instances which I cited, where communities were paralyzed by the arbitrary closing of plants, the American way to handle such a situation would be to have a conference of the representatives of the three factors, i.e., capital, management and labor, which after considering all the facts, would determine whether to shut down, operate part time, reduce wages and salaries or adopt any other course which would give the fullest recognition to the human factors involved.

“I believe that the greatest task to which American employers must address themselves is the devising of practical ways in which labor can be given the full recognition to which, as an equal partner, it is entitled. I make this statement with absolute confidence in the fair-mindedness of the American workingman when he is fully informed, and is entirely free to act. If I did not have this confidence, I would despair of the future of our free institutions.

In an address delivered by me in 1915, I said: ‘The individual workman, dependent on his own strength and resources, cannot hope to bargain on equal terms with the corporation. If he cannot do so, he is no longer a free man, but a serf, and the serf has no place in the future of America.”

“I believe, therefore, that one of the first steps necessary to inspire the workman with confidence is the sincerity of the employer’s recognition of the proper status of labor, in the adoption of a fair system of collective bargaining.

“I also believe that in the near future the workmen must become partners through some system of profit-sharing. No scheme could be adopted which would be applicable to all business, as each particular company would have to adapt the general idea to its own peculiar conditions.

“American industry has come to the parting of the ways; on the right, is the road that leads direct to industrial democracy. This road has some heavy grades, and a higher degree of skill will be required to drive on it, but it will bring us out into Peace Valley.

“On the left is a road also deviating from the old road by which we have come, but it is cunningly camouflaged so as to seem to be the natural continuation of the main highway. It leads directly to industrial feudalism; to that social condition predicted by Hilaire Belloc in his book, ‘The Servile State,’ in which the workers voluntarily sacrifice freedom in return for comfortable maintenance and safety.

“From this second road, there is also a bypath which is now being trodden by Russia, and toward which not only our British brethren, but a considerable number of American workmen are being tempted to stray.

“These things seem to me to be entirely practicable:

“First. Place our industries on a more democratic basis giving recognition to management and labor, as equal partners with capital.

“Second. Teach democracy in our schools and colleges as thoroughly as we teach arithmetic, so that it will permeate every phase of human life, politically and industrially.”