i933 H33 [•^KR^BB^HHBi H 33 CORNELL UNIVERSITY LIBRARY HD4933 W ""'"'"•>' '■'*'""' ^''°i'iniiiii«ii?iiififi^fiS..!.'3lS''*6re in the determ olin 3 1924 032 450 748 ■4WPS=P»#I£r ifrr? DUE im^^ ^m^ tm t^. PRINTED INU.S.A. Cornell University Library The original of tliis book is in tlie Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924032450748 National Industrial Conference Board lO EAST 39TH STREET, NEW YORK BRANCH OFFICE SOUTHERN BUILDING, WASHINGTON, D. C. THE National Industrial Conference Board is a co-operative body composed of representatives of national and s]^te industrial associations and closely allied engineering societies of a national character, and is organized to provide a clearing house of information, a forum for constructive discussion, and machinery for co-operative action on matters that vitally affect the industrial development of the nation. Frederick P. Fish Chairman Magnus W. Alexander Managing Director MEMBERSHIP American Cotton Manufacturers' Association American Electric Railway Association American Hardware Manufacturers' Association American Malleable Castings Association American Paper and Pulp Association Electrical Manufacturers' Club Institute of Makers of Explosives Manufacturing Chemists' Association of the U.S. National Association of Cotton Manufacturers National Association of Finishers of Cotton Fabrics National Association of Manufacturers National Association of Wool Manufacturers National Automobile Chamber of Commerce National Boot and Shoe Manufacturers' Association National Electric Light Association National Erectors' Association National Founders' Association National Implement and Vehicle Association National Industrial Council National Metal Trades Association Rubber Association of America, Inc. The American Pig Iron Association The Railway Car Manufacturers' Association The Silk Association of America United Typothetje of America ASSOCIATE MEMBERSHIP Associated Industries of Massachusetts Associated Industries of New York State, Inc. Illinois Manufacturers' Association Manufacturers' Association of Connecticut, Inc. National Industrial Conference Board Prize Essays, 1919-1920 SHOULD THE STATE INTERFERE IN THE DETERMINATION OF WAGE RATES? BY HARLEIGH H. HARTMAN, M. A., LL. M., D. C. L. Special Report Number 12 August, 1920 Copyright 19S0 National Industrial Conference Board No. 10 East 39TH Street New York HP Foreword TN February, 1919, the National Industrial Conference Board, in an eiFort to stimulate sound and constructive thinking on labor problems, offered a series of prizes for the best monographs on any one of eight subjects, as follows: 1. A practicable plan for representation of workers in determining conditions of work and for prevention of industrial disputes. 2. The major causes of unemployment and how to minimize them. 3. How can efficiency of workers be so increased as to make high wage rates economically practicable? 4. Should the state interfere in the determination of wage rates ? 5. Should rates of wages be definitely based on the cost of living? 6. How can present systems of wage payments be so per- fected and supplemented as to be most conducive to individual efficiency and to the contentment of workers? 7. The closed union shop versus the open shop: their social and economic value compared. 8. Should trade unions and employers' associations be made legally responsible? The contest was open without restriction to all persons except members of the staff of the National Industrial Conference Board, or those identified with it. In all, 553 essays had been submitted when the contest closed. The widespread interest in the contest is further indicated by the fact that of the 48 states in the United States all but four were represented by contestants. Nineteen essays were submitted from outside the United States; fifteen came from Canada, two from England, one from Haiti, and one from the Virgin Islands. The Committee of Award selected by the Conference Board was composed of Frederick P. Fish, of Fish, Richardson & Neave, and Chairman of the National Industrial Conference Board, Boston, Mass., Jacob Gould Schurman, President of Cornell University, Ithaca, N. Y., Henry R. Towne, Chairman of Yale & Towne Manufactur- ing Co., New York City. A second prize was awarded to Harleigh H. Hartman, M.A., LL.M., D.C.L., Attorney-Examiner of the Inter- state Commerce Commission at Washington, D.C., for his essay on the subject: "Should the State Interfere In the Determination of Wage Rates.?" The publication rights of this prize essay are vested in this Board, and the Board publishes it because of its merit. It is a contribution on an important question, worthy of careful consideration. In publishing this report, however, the Board assumes no responsibility or sponsorship for the views expressed or for the conclusions reached, nor does it undertake to criticize or commend the arguments contained in the essay. All such responsibility rests with the author. CONTENTS PAGE Introduction 1 CHAPTER I The Development of the Wage Question SECTION I. Introductory Statement 5 II. The Demand for Government Intervention .... 9 III. The Development of the Wage Problem 10 IV. The Laissez-Faire Policy 10 V. Private Property Rights 11 VI. Personal Rights and Freedom 12 VII. The Results of the Laissez-Faire Policy 14 VIII. The Conflict between Property and Personal Rights 15 IX. The Reaction 17 X. Summary 17 CHAPTER II The Economic Features of the Wage Problem I. The Issues Presented 19 II. The Productive Process 19 III. The Growth of Capitalistic Production 21 IV. The Economic Basis of the Wage Question .... 23 V. The Economic Theory of Wages 24 VI. Labor's Theory of Wages 27 VII. The Employer's Theory of Wages 31 VIII. The True Interests of the Parties to Industry . 32 IX. Summary 35 CHAPTER III The Basis and Aims of Government Intervention I. The Nature of Private Rights 37 II. Limitations on Private R.ights 38 III. The Public Interest in Private , Rights 40 IV. The State and Private Rights 41 V. The Make-up of Rights 43 VI. The Nature of the Limitations 43 VII. The Public Interest in Utility Wages 46 VIII. The Aims of Government Inter,vention 49 IX. Summary 52 vii CHAPTER IV The Minimum Wage section page I. The Need for a Minimum Wage 54 II. The Theory of the Minimum Wage 55 III. What Constitutes an Able-bodied Worker.? .... 56 IV. What is a Fair Day's Work.? 58 V. What Constitutes a Living Wage.? 59 VI. The Economic Effects of the Minimum Wage ... 61 VII. The Benefits of a Legal Minimum Wage 64 "VIII. The Place of the Minimum Wage in the Wage Control Program "' IX. The Constitutionality of the Minimum Wage . . 69 X. Summary °" CHAPTER V Mediation, Conciliation, and Investigation I. The Sphere of State Intervention 83 11. The Theory of Mediation 86 III. The Theory of Conciliation 88 IV. The Theory of Investigation 88 V. The Form of Medlative Agencies 91 VI. Summary 95 CHAPTER VI Arbitration and the Industrial Court I. The Need for Arbitration 96 II. The Aims of Arbitration 99 III. The General Principles of Arbitration 102 IV. The Living Wage as a Basis for Arbitration . . . 106 V. Unemployment Risk, Reward for Service, etc. . . 108 'VI. Increased Living Costs 110 VII. Increased Productive Efficiency 113 VIII. Standardization of Wages 118 IX. Plant and System Standardization 121 X. District Standardization 121 XL National Standardization 125 XII. The Saving Clause 125 XIII. The Form of the Wage Tribunal 126 XIV. The Method of Enforcing the Award 131 XV. Summary 132 CHAPTER VII I. Conclusions 135 APPENDIX I. Proposed Bill for an Industrial Commission . . . 141 Should the State Interfere in the Determination of Wage Rates? INTRODUCTION The abnormally acute wage problem of today is the result of the irrational application to industrial questions of concepts transferred from the field of social science.' The whole production and distribution machinery of the country has been thrown out of plumb by the injection of an overestimated human element without regard for the workings of those economic and legal forces which control the intricate industrial organization. The wage problem itself is not new. It has developed with the growth of capital and become irrepressible under the complexities of the factory system and corporate organization. It is the result of the operation of specific economic forces which yield to strict analysis. But serious analytical study of the operation of those forces in all their aspects has seldom been attempted. Their operation in the complex sphere of the present productive system has been given little more than superficial attention. The wage system produced by the operation of these forces in modern corporate industry has been subjected to all forms of adverse criticism but has received very little con- structive consideration. An attempt has been made to avoid detailed analysis of the system and study of the forces and their operation by transferring the wage problem bodily from the realm of economics to that of social science. Philanthropic social workers moved by humanitarian motives have joined forces with less public spirited agitators who have coined the phrase "democracy in industry" into personal gain. The result has been a radical change In the labor conflict which must defeat the purposes of all parties concerned unless the policies adopted are altered in the immediate future. ' The text of this book was completed in June, 1919, and remains unchanged except for annotations in reference to the Kansas Industrial Court Act and the report of the Second Industrial Conference Board. 1 Demands have been made upon industry which it is physically incapable of meeting. Wage scales have been insisted upon which exceed the productive capacity ot labor and which, if enforced, would so materially hmit production as to ruin industry. The fundamental legal concepts upon which society rests have been attacked and the existence of government itself threatened. The com- promise point has been passed and the country stands unprepared face to face with the necessity of a definite practical decision of the wage problem. Government intervention has been suggested as the expedient solution of the situation, and it is with the issues thus raised that this thesis is concerned. The problem is not a wholly new one. There has been extensive experimentation with voluntary state interven- tion in the railway field in the United States. The Erdman Act of 1898, after remaining inactive^ upon the statute books for eight years, was successfully invoked to settle a dispute between two brotherhoods, by the Southern Pacific Railroad Company. From this time on the act was frequently used with surprising success. There were sixty-one interventions in all, of which forty resulted in satisfactory settlements, thirty-six being reached by government mediation. Practically all of the remaining twenty-one cases were voluntarily settled by the parties after mediation had been requested. Only one strike occurred after mediation had been accepted.^ Only four cases were submitted to arbitration without prior media- tion and only eight cases in which mediation was at- tempted had to be settled by arbitration. The Erdman Act was replaced in 1913 by the Newlands Law to avoid a decision by a single neutral arbitrator. The provisions of the law, however, were not satisfactory to either the men or the railroads, and while over sixty cases were settled under the act, there was an apparent discontent with its terms.^ 1 This strike, involving two thousand switchmen on the thirteen roads entering St. Paul and Minneapolis, occurred in November, 1909, and was lost by the workmen. ' There was a fourteenrday strike on the Sunset lines of the Southern Pacific in November, 1913, and an eighteen-hour strike on the Delaware & Hudson in January, 1914, in both of which the brotherhoods refused mediation. The strike of 55,000 engineers and firemen on the western roads in the summer of 1914 was averted, after the roads had declined mediation, only by the inter- vention of the President of the United States; and the complete deadlock settled by the Adamson Act was reached in 1916. 2 The present problem is to formulate a system of govern- ment intervention which will eliminate the unsatisfactory- provisions of the Newlands Law and the defects of the Erdman Act, which will give greater scope to the state than either law did, and which will extend not to the railroads alone, but to all industry. In addition, a wage scale must be established which will work with substantial justice to both employees and employers and be adapted to the system of intervention suggested. The disastrous compromise decisions of wage arbitration boards must be replaced by scientific wage-fixing. The study must be an essentially theoretical one. The economic rules and legal theories involved are capable of definite statement, but the specific remedies proposed are new and untried under conditions approximating those in the United States. A twofold division of the subject is thus suggested, i.e., the theory of wage control, and the application of the theory to the proposed regulation. This division has been adopted by the author. The first chapters of the thesis : (1) point out the recent radical change in the wage problem and state the issues now presented; (2) analyze the wage system to determine the economic rules involved and the extent to which they are susceptible to practical modification by legislative action; (3) consider the interests and claims of the parties to secure a basis and guide for intervention; and (4) study the political and legal machinery to determine the practicability of legislative interference in the economic field. The later chapters of the thesis apply the rules gleaned by this general analysis of the wage problem to specific phases of government control in an effort to determine the expedient regulatory program. The minimum wage has been considered as a basis for state intervention, and mediation and conciliation, supplemented by voluntary arbitration, as the backbone of the organization. Com- pulsory arbitration has been advocated for public utilities. The thesis has attempted to consider the economic and legal aspects of the problem with the social phases as a secondary issue. The author does not seek to belittle the social features of the wage question, nor to deny them the consideration to which they are entitled. But those issues have of late received a preponderance of attention. No 3 phase of the need for a greater human element in industry has been neglected. This work, therefore, seeks to test not only the desirability but also the practicability of the issues raised by the attempted humanization of industry. CHAPTER I THE DEVELOPMENT OF THE WAGE QUESTION I. Introductory Statement Every industrial community during the years immedi- ately preceding the European War witnessed a slowly but constantly gathering storm of industrial unrest. New forces were widening the breach between employer and employee. Many conservative people were being con- verted to the belief that existing methods of apportioning income from industry between capital and labor were unjust and no longer tolerable. A majority of those dealing with these problems were not conservative, and in their hands they acquired a decided socialistic aspect. Propaganda, conceived and developed under foreign tyranny and caste oppression, had made the labor problem a primary phase of the strife between "those who have and those who have not." It was fast developing in labor leaders an anarchistic spirit previously unknown in America. The great body of union workmen, under pre- text of bettering their economic and social status, were being drawn blindly into a political conflict on a side opposed to their own interest. Every branch of industry had been torn by bitter dis- sension and costly conflict. The public had played the role of innocent bystander with disastrous results. The I.W.W.^ theories of industrial anarchy had been widely disseminated. Conservative trade unionism had been swayed by radical leader^ who had disregarded trade agreements, sought to annihilate resisting employers, coerce government, override law, and intimidate the courts. By the time the war broke out, unionism, under the dictatorship of these leaders, had approached the borders of syndicalism; I.W.W. delegates had become the chief strike organizers; sabotage^ had been introduced 1 Industrial Workers of the World. ^ Sabotage is a word difficult to define because its meaning varies with the change in circumstances under which it is used, and because it has been em- ployed with a difi^erent meaning by almost everyone who has used it. Invariably, however, it refers to some system of making trouble for the employer without seeming to do so. Invariably sabotage is wantonly destructive, and has for its 5 into the struggle; and the violence previously directed almost exclusively against "scabs" had been turned toward capitalists. Industrial friction was fast being turned into class war.^ aim decreased output and increased cost of production. Eugene Debs, writing in an I.W.W. paper in 1911, said: "The checker in freight houses, to my knowledge, often puts a package in the wrong car to avenge a fancied wrong. This is sabotage. I have seen in mining camps soap put in the blacksmiths tub to prevent a good temper being secured on steel." Work poorly done to drive away business and create public sentiment adverse to the employer, intended injury to machinery camouflaged to appear accidental, resulting in increased costs and delayed production, adulteration, or ruinous modification of the product, are all common forms of sabotage. 1 Threats of open warfare have been abundant. The most quoted are the words of Mr. Garretson, President of one of the Railroad Brotherhoods, spoken before the New York Economic Club, December 11, 1916. He said : " Industrial war is precisely of the same character as actual war. No battle has been fought in establishing the rights of mankind, either real or fancied, where the hospital hasn't been filled afterwards, and the corpses left upon the field. And it is just so in industrial war. If you complain that four hundred thousand men held up the Government, what will eight millions of them do, if they can, to hold up the Government.' " This is the utterance of a labor union leader, not an I.W.W., sociaHst, nor an anarchist speaker. The Seattle Labor Party recently issued a statement that "The stern, iron march of labor is on. Where it will end no one knows. ... If necessary, the workers will take control of the basic industries and operate them themselves." (Pamphlet, 1918.) Mr. A. Henderson, a leader of the British Labour Party, referring to a threat- ened strike of the members of the Amalgamated Society of Engineers on Feb- ruary 1, 1918, said: "The temper of the workmen is dangerous; the unyielding attitude of the Government is bringing the country to the verge of industrial revolution, and unless a more just and reasonable attitude is adopted, I am seriously apprehensive that an irreparable break between an important section of industrial labor and the Government will result." The statement is par- ticularly noteworthy in that the state, not capital, is threatened. The same author writing in his "Aims of Labour" (1918), p. 59, says: "Never before have we had such vast numbers of the population skilled in the use of arms, disciplined, inured to danger, accustomed to act together under orders. When the war ends this country and every other will be flooded with hardy veterans of the great campaigns. Among them will be thousands of men who have exercised authority over their fellows in actual warfare, and who will be capable of assuming leadership again if insurrectionary movements come into existence. We may be warned by a perception of these facts that if barricades are indeed likely to be erected in our streets they will be manned by men who have learned how to fight and not by ill-disciplined mobs unversed in the use of modern weapons, likely to be easily overcome by trained troops. Revolution, if revolu- tion is indeed to be forced upon democracy, will be veritable civil war." The reconstruction program of the British Labour Party which has been widely accepted by American workmen, is replete with similar utterances, thus: "The Individualist system of capitalist production, based on the private owner- ship and competitive administration of land and capital, with its reckless 'profiteering' and wage slavery; with Its glorification of the unhampered struggle for the means of life and its hypocritical pretense of the 'survival of the fittest'; with the monstrous inequity of circumstances which it produces and the degradation and brutallzation, both moral and spiritual, resulting therefrom, may, we hope. Indeed have received a death blow. With It must go the political system and ideas in which it naturally found expression." See Monthly Review (U. S. Bureau of Labor Statistics), VI, No. 4, p. 64 (1918). The social and political changes sweeping the country had increa^sed the gulf between the parties in industry. An epoch of intense and bitter conflict'- resulted in the appointment in 1912 of a Federal Commission on In- dustrial Relations which reported in 1915, recommending sweeping changes to democratize industry.^ The abnormal conditions following 1914 forced the labor problem into the background until the armistice was signed. There was no opportunity for fundamental readjustments. The relationship between capitalists and labor was modified, but the sole aim of the changes was to expedite war measures. The unusual conditions neces- sitated limitation of personal liberty, variation of labor agreements, an influx of new workers, and many similar changes. Wages were increased to meet the abnormal advance in the cost of living. William E. Trautman, in a pamphlet called "Industrial Union Methods," published about 1912 by the Socialist News Co. of Pittsburgh, Pa., said: "A portion of the workers, in ever-increasing numbers, recognize the fact that the working class and the employing class have nothing in common, and that the struggle must go on until all the toilers come together and take and hold that which they produce by their labor. The workers begin to see that they must not only prepare themselves to hold their own against the aggressions of their oppressors, but also destroy the fortifications behind which the enemy has entrenched himself in his possessions of land, mills, mines, and factories. What is of benefit to the employers must, self-evidently, be detrimental to the employees." William D. Haywood, in the preamble to "The General Strike" (1912), states the basis of I.W.W. activity thus: "The working class and the employing class have nothing in common. There can be no peace so long as hunger and want are found among millions of the working-people and the few who make up the employing class have all the good things of life. " Between these two classes a struggle must go on until the workers of the world organize as a class, take possession of the earth and the machinery of production, and abolish the wage system. ... "Instead of the conservative motto, 'A fair day's wages for a fair day's work,' we must inscribe on our banners the revolutionary watchword, 'Abolition of the wage system.' "It is the historic mission of the working class to do away with capitalism." 1 Chief among these disturbances were the Ludlow and shirtwaist makers' strikes in 1909; the paper workers', Bethlehem, Westmoreland, cloak makers'. New York expressmen's. Great Lakes seamen's, Columbus street car strikes, and the San Diego disturbance in 1910; the Grand Rapids furniture and Paterson silk workers' strikes in 1911; the Indianapolis street car, Michigan copper, Delaware & Hudson R.R., Atlanta cotton workers, Pittsburgh Westinghouse strikes and the Hartford Valley trouble in 1912. The loss of life in these conflicts was high. The loss' of property and econornic waste was practically immeasurable. The Lawrence strike alone resulted in two deaths, cost the operators and strikers over a million dollars, cost the city $75,000 for extra police and the state $180,000 for militia service. The New York garment workers' strike cost not less than $36,000,000. The average annual strike loss has been estimated at various sums. Probably $250,000 approximates the actual figure. 2 Final Report of Committee on Industrial Relations, 1915. The draft created a labor shortage and enabled many workers to secure wage increases far out of proportion to price advances. Work-hours were shortened for the basic workday, but there was much overtime. Union rnember- ship gained rapidly. The government intervened between capitalists and labor in many unprecedented ways, and the status of labor was materially altered. The method of re-establishing normal conditions raises a new and more intense wage issue. Lack of assurance that pre-war conditions will be re-established where gains cannot be retained, and that labor will secure fair play in the reconstruction process have produced widespread unrest. Labor organizations have assumed an aggressive position. The rabid pre-war strife is reopening with new vigor. The demands of labor are becoming more revolutionary. Its leaders have unre- servedly refused to accept wage reduction regardless of any return to pre-war living costs. ^ This phase of the question' cannot be overemphasized. Two classes of labor have been developed. An ever- increasing number of radicals dispute even the produc- tivity of capital and deny absolutely the right of capital- ists to any share in the income from industry. A great number of workers and most of the higher officials of the older unions have remained more conservative. They do not desire to make fundamental economic changes or alter the institution of private property. Their demands, however, have materially altered. They are no longer content with a living wage and present standards. They dispute the equity of the present division of income, alleging that capitalists divert a part of labor's earnings which should be used to raise the workmen's standard of living. Wholly "new rights and advantages" are claimed. The views of this branch of labor have become more radical. They are, moreover, submerged to a large extent by the incendiary theories of the more active revolutionary agitators. The attitude of all labor judged from its col- 'Gompers, Samuel: "Labor Standards after the War." Annals of the American Academy of Political and Social Science. Philadelphia. Vol. LXXXI (1919), pp. 182, 186. Patten, Simon N.: "Making National Debts National Blessings." Annals of the American Academy of Political and Social Science. Philadelphia. Vol. LXXXII (1919), pp. 39, 46. Wooley, C. M.: "Labor Aspect of Reconstruction." Annals of the American Academy of Politi- cal and Social Science. Philadelphia. Vol. LXXXII (1919), pp. 91 95 In The Public, Vol. XXI, 1918, p. 1424, article on "Wages and Prices." lective activity and representative public utterances has undergone a most threatening change. The large following radical leaders have gained among laborers, the acute interest that social workers have taken in industrial readjustment, and the changed demands of labor, indicate undeniable defects in the existing indus- trial organization. Employers have recognized this and taken steps to locate and remove the friction. Govern- ment commissions have been appointed to investigate the changed industrial situation. Economic and industrial organizations are intently studying it to find a con- servative and equitable compromise. Industrial problems have become the most serious questions of the day, and the wage problem is the most pressing issue they present. II. The Demand for Government Intervention The result of this agitation and the threatening change in its character has been a growing demand for state intervention. The extended sphere of government activity developed by the exercise of war powers, the recent abnormal importance of wage disputes on account of threatened interruptions in war industries, and the increased political aspect of industrial disturbances, have given an impetus to a previously existing movement toward state action to protect public economic interests. There has developed a strong demand for government control of wage disputes. It is with the issues raised by this demand that we are primarily interested. The wage question, however, is complex. The elements involved are economic, social, and political, as well as legal in their nature. The state may set aside, augment, or curtail economic forces, but cannot disregard them. The industrial sphere in which wage problems arise is controlled by economic forces. Legislative interference without regard for the principles controlling those forces, or without ample justification and definite aim, would produce friction, economic waste, and dissatisfaction. Similarly, law may disregard social betterment, but in so far as it does, it fails to promote the public welfare and must prove temporary. It is necessary, therefore, before considering specific features of government intervention to study the broader 9 aspects of the wage question and sketch a background with the legal issues in their proper perspective. Abnet survey of the development of the industrial conflict is prerequisite to an understanding of the present problem, which has been slowly moulded by the expedience of changing economic conditions. III. The Development of the Wage Problem The causes of the general unrest are not apparent at first glance. The dissatisfaction antedates the war con- ditions and therefore cannot be attributed solely to them. Neither is it the result of wage stagnation. Actual money wages doubled during the half century preceding the extensive development of trade unions. The price of commodities was lowered and the workday shortened from sixteen to ten hours. Since the coming of the union there has been an indisputable improvement in wages and working conditions, though the purchasing power of money has decreased. The laborer's standard of living in the United States has been raised, and is higher than that of workers in other countries. The basic cause of discontent must be sought elsewhere. IV. The Laissez-Faire Policy At the time economic, social, political, and legal thought took shape in the United States, industry flourished under absolute freedom from external restraint. The prevailing economic and legal doctrine was the Utopian eulogy of human nature promulgated by Adam Smith, ^ forced upon the world by Bentham, and branded ''^laissez-faire" by the French economists. Individualism was supreme. Every person was permitted to follow the promptings of self- interest. Private interests were dominant. Such sub- ordinate interests as the public asserted were believed to be amply protected by competition and the common-law restrictions on monopoly. Freedom of contract and competition were considered panaceas for all industrial ills. 1 Smith, Adam: "An Inquiry into the Nature and Causes of the Wealth of Nations," edited by Edwin Cannan. London, 1904. (Methuen & Co.) Book IV, Ch. II. (Published originally in 1776.) See also: Goodwin: "An Enquiry Concerning Political Justice and its Influence on General Virtue and Happiness" (1793),pp.514,561ff. Bentham, Jeremiah: "Works." (1838-43), Vol. V,p.234. Mill, John Stuart: "Principles of Political Economy." Book V, Ch. XI (1848). Farrer, T. H.: "The State in its Relation to Trade" (1883), Ch. XV. 10 V. Private Property Rights Two groups of private rights developed under the laissez-faire policy, i.e., property rights and personal rights.^ Early American economic conditions emphasized the former. The country was large and undeveloped. The total available supply of capital was small. The need for capital was unlimited. Land and labor were abundant, but agriculture awaited markets and transport facilities, and industry was handicapped by lack of funds. The new and overburdened governments could not in- crease already high taxes to supply the innumerable necessary local improvements. The expanse of country which rendered transportation and communication facili- ties necessary made them difficult to secure. The only funds available were private. The interests of both labor and the general public could be promoted only by the temporary subordination of their interests to those of the capitalists. Every effort was made to encourage invest- ments in enterprises which would develop the land. The risk involved in the development was excessive on account of the very nature of the undertaking, not because investors voluntarily speculated to increase profits. It had to be assumed wholly by the capitalist. The return offered had to be large enough to cover the risk. Industry was highly speculative and speculative profits were gladly offered. Bonuses, state aid, and the almost insatiable demand, coupled with an abundance of land, raw material, and labor, produced enormous but unquestionably equita- ble returns to supplement the speculative profits. Unculti- vated fields were transformed into densely populated, flourishing metropolises, and the venturesome persons who risked early hardships and accepted an immediate low return for future profits claimed the "unearned incre- ment." Capital multiplied rapidly. Property rights were developed without limitation. Judicial and legislative organizations were shaped to protect capital and reduce the risks, and private property assumed a legal status and an economic importance it had never before possessed. The land was rapidly developed under the incentive of 1 The individualism of the laissez-faire theory carried to its logical conclusion would have wiped out property rights. These two types of rights are inherently antagonistic. Property rights depend upon the limitation of personal rights. Expediency prevented this unreasonable application of the doctrine and the "natural order" of Smith and Goodwin included the existing fundamental social and political institutions, and private property with them. 11 land grants, state aid, speculative returns, and protective tariffs. Industry was placed upon a safe basis. The risk element in the return was materially reduced, but the rate of return remained unchanged. Many of the inducements offered early investors were of a perpetual nature and their benefits continued to pile up wealth for the recipient long after the need for encouraging the business had ceased. Many of the liberties granted investors were based upon waiver and non-enforcement of public rights rather than direct grants, and an effort was made to revivify the state's latent power. Investors resisted every effort to force an adjustment, and private property maintained its exaggerated fictitious economic and legal status. VI. Personal Rights and Freedom The laissez-faire individualism which promoted property rights and entrenched capital, created equally dispropor- tionate concepts of personal rights.^ The declaration that all men are born free, equal, and possessed of unimpeach- able rights to enjoy life and liberty, to pursue happiness, and to speak freely, was endowed with a nieaning the law had never attached to it.^ The right to quit work was transformed into a right to strike. The right to liberty became a right to freedom from all legal restraint. The right to pursue happiness was transfigured and became an alleged right to picket and employ "direct action." The right of free speech became a right to boycott, lobby, and intirnidate. The right of equality became a right (in the opinion of many labor leaders and of those disposed to follow them blindly) to equal bargaining power and equal wealth. Personal rights came to be considered liberties without corollary duties. The laissez-faire "nonaction" and emphasized in- dividualism created fictitious personal rights dependent upon waiver and non-enforcement of legal duties. Social 1 The tem "personal rights" as here used must not be confused with "rights m personam." The words are used in an untechnical sense to designate all private rights other than those relative to property. Those rights herein denominated personal are technically "rights in rem." *The common law and constitutional personal rights carried no idea of equality and m effect extended the freedom they bestowed little further than to property and contract rights. Slavery existed. Wages were regulated down- ward and labor s movements restrained by poor laws. Political rights were unequal, and constitutional amendments were necessary to abolish involuntary servitude, eliminate discriminations based on race and color, and to guarantee due process and equal protection of the laws. The legal sanction of inequality and restricted liberty was clear. -i / 12 propaganda, drafted without regard for economic and legal rules by workers trained in neither of these subjects, with the sole aim oi emphasizing the human element in industry, forced inexpedient and in many cases im- practicable changes and heightened the unrest.^ A con- current attempt to apply rules of political democracy to industry without consideration of economic forces has had the same effect. The continued inexcusable refusal of our schools to teach even the rudimentary principles of true personal liberty has made possible wide diffusion of this fiction by the efforts of those who have used it for personal gain.^ It cannot be expected that laboring people will as a body impartially study the complicated problems of distribu- tion to determine why a few men are permitted to flaunt wealth in the face of poverty. The laborer's conception of wages and personal rights, as a result of public neglect, is a predigested one, prepared by union leaders or social agitators, and promulgated by socialistic propaganda or pamphlets and papers supporting the activities of labor leaders. Under this tutelage, the ideas of personal rights have been more distorted than the laissez-faire concept of property rights.' ' Important as the present social betterment movements are, it may be seriously questioned whether the ill-advised phraseology of social workers has not done almost as much harm as their constructive suggestions have done good, for it has created a misconception of fundamental human rights and concealed the limitations inherent in all rights. The use of the word "class" and similar terms has been an inexcusable irritant where non-irritants were most needed. A single recent example of such exaggeration should be sufficient to show the harm it is capable of causing. "We have been so imbued with the individualistic philosophy that we have permitted the lower stratum of laborers to degenerate into virtual serfs, rather than interfere with the individual's liberty to sell his labor in the market of his own choice and on his own terms. Society has been criminally negligent in refusing to prevent earlier this economic exploitation of these helpless classes." Swenson: "Public Regulation of the Rate of Wages" (1917). Similar quotations may be taken from almost any page of the Final Report of the Committee on Industrial Relations. (See Note 12.) ^The Federal Government has recently issued texts called "Lessons in Community and National Life," ostensibly to correct this defect. It is doubtful, however, whether the books can meet the situation. They have been written to emphasize the human element and personal rights. They do not show the limitations necessarily placed upon all rights in organized society. They separate rights from their corresponding duties. They demand social better- ment but fail to point out clearly the self-restraint by which alone it can be obtained. They emphasize the rights of one part of society, not of society as a whole. For these reasons they supply the future laborer with material supple- mental to rather than in rebuttal of the agitator's arguments. ' A very large part of our disastrous industrial disturbances must be credited directly to unscrupulous leaders who have victimized labor and fostered mis- representation. A single instance suffices to show the cause of their activity. 13 VII. The Results of the Laissez-Faire Policy Several changes vitally affecting the wage question took place during the laissez-faire regime. The unprecedented need for capital and the increased size of the individual undertaking necessitated the development of new fornis of industrial organization. The corporation resulted. Management was separated from capital and the responsi- bility of capitalists limited. The extensive accumulation of capital and freedom of the laissez-faire policy developed the new organization with unparalleled rapidity. The speculative character of the undertakings gave the de- velopment an unexpected turn. Financing and business practices which were not above reproach became common. Discriminations and rebates were granted and accepted. Passes were demanded and issued. Price wars were fought and the public rushed to take advantage of the lowered costs. Reformers seized the campaign material offered and branded the corporation a great soulless octopus with tentacles fast tightening about the public. The economic advantages of the corporate organization, however, were undeniable and its acceptance has become universal. The ill-will generated during the "big-stick" epoch has lived on and played an important part in the conflict between capitalists and labor. The change in the form of industrial organization and the contemporaneous growth of the factory system com- pletely altered the relations between employer and em- ployee. A wide gulf was created where there had been intimate contact. The capitalist ceased to be an employer. His place was filled by an entrepreneur who soon came to be looked upon as a buffer between capital and labor. The capitalist once out of direct contact with the worker knew less of his condition and manifested less concern for his welfare and more for the capitalist's gain. Bitterness akin to class feeling was developed where there had been friendliness and understanding. The division of work under the factory system wrought a change in labor which emphasized the distance between In the Lawrence strike, some $62,564 was collected by the workmen. Only $46,188 was deposited and that was placed to the credit of the I.W.W., not the strike committee. The sum of $16,376 was unaccounted for and $10300 was transferred from the Lawrence bank to New York City and there distributed. The private gain of the leaders and promoters caused the strike' to be unneces- sarily prolonged. McPherson, J. B.: "The Lawrence Strike of 1912," p. 43. \\.\ii.Z.) 14 employer and employee. The "all-round" mechanic was specialized into a machine tender. Apprenticeship became unnecessary and its educational and social values were lost. A small group of skilled laborers was developed, but the great body of employees were forced into un- skilled work. The growing gulf between capitalists and laborers created _a_ group spirit. The contest for personal rights and individualism continued, but group activity has more and more replaced individual action. Combinations of capital have been partially met by organization of labor. Under government encouragement unionism has spread rapidly since 1916. Both corporations and unions have accepted and acted upon principles which individuals would not have considered. A limited liability has been created in both groups and responsibility has been shifted by both to a few persons paid to bear it. Group spirit has become firmly established and group conflict developed. The massing of enormous fortunes through speculative returns, by increased land values, large scale production and, unfortunately, in a number of instances by methods which have come to be considered questionable, has emphasized the uneven division of wealth and augmented the unrest and dissatisfaction. ^ VIII. The Conflict between Property and Personal Rights The supremacy of individualism was by no means a guarantee of personal freedom or individual equality. The absolute lack of government control gave an opportunity ^ The report of the Federal Committee on Industrial Relations places a great emphasis on this cause of labor unrest. It states the situation thus: "Massed in millions, at the other end of the social scale, are fortunes of a size never before dreamed of, whose very owners do not know the extent, nor, without the aid of an intelligent clerk, even the sources of their incomes. Incapable of being spent in any legitimate manner, these fortunes are burdens which can only be squan- dered, hoarded, put into so-called benefactions which for the most part con- stitute a menace to the state, or put back into the industrial machine to pile up ever-increasing mountains of gold" (p. 26). "The families of these industrial princes are already well established and are knit together not only by com- mercial alliances, but by a network of intermarriages which assures harmonious action whenever their common interest is threatened" (p. 31). See also King, W. I.: "The Wealth and Income of the People of the United States." New York (Macmillan), 1917. The report phrases its recommendation thus: "Effective action by Congress is required — to check the growth of an hereditary aristocracy, which is foreign to every conception of American government and menacing to the welfare of the people and the existence of the nation as a democracy" (p. 32). One can scarcely read such a state document and still deny the revolutionary char- acter of the industrial struggle. 15 for the oppression of the weak by the strong. The in- direct responsibility introduced by corporate organization multiplied the opportunities. It was inevitable that the exaggerated ideas of property rights on one hand and personal rights on the other should cause friction.' Property owners sought to enhance^ their possessions by curtailing their neighbors' personal rights. The champions of personal rights strove to expand their freedom by diminishing property rights and lowering the prohibitive and restrictive legal wall which had been erected around them. The conflict became bitter. It was impossible that both types of rights survive undiminished. The exalted position of capital gave property owners a decided advantage over mere possessors of personal rights. Property rights were accordingly extended in a manner which would have been impossible under any system of regulation. Capital was supreme, and many capitalists, with reckless disregard for the future, made the most of its supremacy. The individualism of the period seemed to become one of land owners and capitalists. Personal rights became so surrounded by limitations, in comparison with the unrestricted ideas of labor leaders, that they seemed to survive only when they operated to enhance and protect property rights. It was forgotten that all rights were open on equal terms to all, and that the legal protection of property rights safeguarded the worker's home as fully as the capitalist's mansion. Prop- erty rights became confused with property. The rights of labor seemed reduced to freedom from involuntary direct servitude and liberty to contract for the sale of services on the most advantageous terms available. Both of these rights were skillfully portrayed as existing at the suffer- ance of the holders of property rights, the first being sanctioned because it assured an abundant supply of efficient labor which alone could give value to property; the second, because it afforded capitalists an opportunity to strengthen their grip on the industrial situation by masquerading as the patrons of labor while they dictated the terms of the service contract. 'The conflict between capitalists and labor is based wholly on misunder- standing. The interests of the parties to industry are identical. The rights each party erijoys are identical and are open to, and protected for, both parties alike. The limitations upon property and personal rights have the same aim. The two are interdependent. Neither can successfully limit the other for its own ends without thereby ultimately defeating those ends. 16 IX. The Reaction The present tendency toward radical socialism, the industrial anarchy of the I.W.W. and Bolshevism are a reaction against the exalted concept of property rights. They are traceable directly to the accumulation and con- centration of gigantic wealth. As the reactionary move- ment has grown, labor has become as unheeding of prop- erty rights as capitalists were inconsiderate of personal rights. The same arrogant spirit has developed. Intoxi- cated by the realization of the dependency of capital upon labor, and failing to realize that the dependency is mutual, union leaders have indulged in excesses cruder, but neither more absurd than the gross display of wealth and the power of capital, nor more illegal than the acts of some capitalists. Both capitalists and laborers as groups have been guilty of serious mistakes. Both have acted upon a misconception and ambiguous interpretation of the term " rights." Both have taken advantage of the laissez-faire failure to assert the public interest and exercise the state's latent power of control over the individual and his property to advance their own selfish interests. Both have been blinded by passion, or have been wholly ignorant of the axiomatic fact that the self-interest of each is dependent upon justice to the other and upon promotion of the general welfare.. The public has been an unorganized victim of two strongly organized groups, each wholly unconcerned about the rights of any but the members of its own organization. The conflict between the parties has assumed a character and acquired proportions that threaten to disrupt ,the whole economic system, that constitute a menace to the public welfare and a powerful latent source of harm. Public utility service and the supply of life's necessities have been treated as pawns in the strife. The hand of the state has been called and the response is the demand for extended governmental intervention in industry and inter- ference in wage disputes. The issue with which we are concerned is the expediency of such intervention. X. Summary The wage problem is the product of misunderstanding, selfishness, and force. Its growth has been made possible 17 by the failure of governmental forces to protect the public welfare, the resulting development of exaggerated con- cepts of private rights, and the precipitous injection of group activity into an economic and legal system based upon extreme individualism. Consideration of the development of the problem raises two fundamental issues: (1) The "rights of labor as human beings," and (2) the basis of distributing the in- come from industry. The demand for state intervention creates a third issue, i.e., the public interest in industry. The contestants have shaped their arguments to present a single issue, the conflict between property and personal rights. The public has intervened on the ground that any question of rights involves the element of public welfare. The issue presented by the intervention is not the pro- tection of property from the onslaughts of labor. It is only incidentally the guardianship of labor to check alleged oppression by capitalists. The true victim of the labor conflict is the public. Capital must receive a fair return for its use. Labor must secure a just income from the product it helps to produce. A lasting settlement of the problem can be made on no other basis. But consideration of the public welfare, upon the maintenance of which the interests of both labor and capitalists depend, is para- mount to that of the private interests of either. A point has been reached where peace can no longer be maintained by casting a bit of the public interest to the aggressor, by temporary compromises, or by the forced concession to one group of some unimportant asset of the other belligerent. The whole problem must be analyzed, the interests of all parties considered, and their rights protected by a>n adjustment which will prove just and equitable to all. The following chapter states the economic features of the problem, determines the interests and claims of the several parties to industry, and considers the present system of dividing income. 18 CHAPTER II THE ECONOMIC FEATURES OF THE WAGE PROBLEM I. The Issues Presented The existing wage system is an economic one developed without legislative interference during the laissez-faire regime. The wage conflict is a fight to substitute for that system a wage shaped by social and political rather than economic forces. It is an effort to capitalize the human element in the services and emphasize it above the economic factors. Four fundamental economic issues are presented. They are: (1) Is capital a true productive agent, or does labor create all wealth .? (2) If both produce, which is the more important instrumentality in the production process .? (3) On what basis should the income from production be divided between the two.'' (4) On what theory should the burdens and privileges of management be allocated.? The present chapter considers these issues to determine an equitable formula for distribution preparatory to consideration of the expediency of state interference to enforce such a division. II. The Productive Process Probably no statement has been more commonly re- ferred to in economic writing or more universally accepted by workers than the assertion that "labor produces all wealth." It has always been the cyclone center of feeling between capitalists and laborers. It has been the foun- dation for every radical labor movement and the basis of the most bitter "class" feeling.^ If substantiated it would undermine the whole existing economic system. But it cannot be proved without the use of the logical fallacy of the ambiguous middle term. ' In the hands of Karl Marx this theory produced socialism. Manipulated by- Henry George it created the single-tax movement. Distorted by William D. Haywood, it organized the Industrial Workers of the World. And it has been this doctrine, if any belief other than that in unrestrained passion and self- interest, which has given rise to the Bolshevism of Lenine and Trotzky. 19 Production is the application of labor to natural goods to increase their utility or decrease the cost of their prepa- ration for ultimate use. Capital, as distinct from natural goods, is the surplus utility produced by the application ot labor to such goods. It is an aid to labor and therefore a productive agency.' It decreases the amount of labor necessary to convert raw material into a finished product. It decreases the cost of preparing natural goods for con- sumption. It is productive in the same sense as labor, for its use not only refunds its cost but leaves a surplus. Capital goods are substitutes for labor. They replace handwork by machine work. The complex processes of modern production have forced capital to play a further part in industry. Labor 'The threadbare Robinson Crusoe illustration best explains capital's place in the productive process. Crusoe's economic system began with man and natural goods. He applied labor to nature and planted corn. By hard work he was able to plant 3,000 grains a day. That was the absolute maximum productivity of labor. Life could not be maintained by planting less than 4,000 grains, so Crusoe spent a day constructing a crude plow. He was able with the aid of this instrument to plant 6,500 seeds. Machine work was sub- stituted for handwork. The capitalistic plow increased production more than twofold. There can be no other way of accounting for the 3,500 seed actually planted in addition to the number labor alone could plant. The cost of the plow was a day's work. Each day the plow increased the productivity of labor by a greater amount than that. Had the tool been destroyed, the productivity of labor would have fallen at once to 3,000 seeds a day. The value of the plow, therefore, was clearly not a day's labor. The theory that capital adds nothing to the product beyond the value it cost to produce the capital, cannot be sus- tained. The first day's work paid for the plow and 500 seeds were planted in addition, which according to this theory cannot be attributed to the plow nor to labor, whose maximum limit was 3,000 seeds. Each additional day's use of the plow added 3,500 more seeds to the alleged spontaneous planting. Marx's argument is thus reduced to an absurdity. Crusoe realized the advantages of capital, produced many labor-saving tools, and became an "active capitalist." One day six other men were cast upon the island without tools. They knew that with implements each might plant 6,500 seed and without only 3,O0O. They realized that it would require a day's labor to make a plow, so each offered Crusoe a half-day's work for the use of his tools and each grew for himself 5,000 plants where otherwise only 3,000 would have grown. Crusoe by the lease of his implements secured the planting of 9,000 seeds or 2,500 more than he himself could plant and became a "loan capitalist." He took nothing unjustly from the newcomers. He merely claimed a return for the machine work done by the plow. The six newcomers, being able to live by planting 4,000 seed, saved the planting of 1,000 each or reduced their planting and diverted their laljor to other purposes or lived with less effort. Those who saved purchased implements from Crusoe. His surplus was accumulating fast. He constructed a warehouse and stored his grain. A damp year came. Crops were poor. The newcomers planted diligently, working overtime, but they could not grow enough to live on. Under- nourished and overworked, two became ill. They were forced to buy from Crusoe's warehouse. They had nothing but their services with which to pay. They sold them, ceased to be " active capitalists " and became laborers. Crusoe advanced them funds to live on and took in payment the produce of their labor. The advance was a wage and the wage system was established on the island. 20 is a production, not a consumption commodity. It pos- sesses a future rather than a present good. It can secure no return before the ultimate commodity it helps to pro- duce is sold. It is forced to draw upon the surplus from past labor, which is capital, for a means of support till the return from present labor is available. This process in modern industry takes the form of advance payments to labor by capitalists.^ The capitalist discounts the laborer's claims to income. In effect he takes an assign- ment collectible when the product is sold and pays the laborer less than its face value. The risk element of wages attributable to the particular industry and not covered by workmen's compensation laws is thus trans- ferred to the capitalist. The discount includes an allow- ance for this risk as well as interest for the use of the capital. Where the productive process is prolonged and the immediate product of labor is itself a production rather than a consumption good, the time element in the discount is increased. The risk assumed in the advance is aug- mented and the portion of labor's claim which is trans- ferred to capital by the assignment to secure a present return is proportionately greater. Capital is a true productive agency, and any wage theory based upon the fallacious assumption that only labor creates wealth must prove untenable. III. The Growth of Capitalistic Production The second economic issue raised by the wage dispute is that involving the relative importance of capital and labor in industry. Before the factory system was estab- lished labor held the balance of power in the industrial field, but since that time the importance of the capitalistic factors in production has increased continuously. This has been inevitable because capital is surplus and its use creates surplus. The maintenance and depreciation of a machine doing the work of a dozen laborers are neg- ligible compared to the living expenses of the workers, and the surplus produced by the capitalistic machine is there- fore many times that produced by handwork. Each suc- cessive invention has augmented the productive power of capital. Machine work has speeded production, reduced risk, lessened rent, and in a hundred other ways increased 1 This doctrine of the Austrian Sciiool is here advanced to explain the part capital plays in the productive process. It is not offered as a wage theory. 21 surplus production in algebraic progression. Each com- bination of capital and division of labor has increased the proportion of the total consumptive goods produced by capital above that produced by labor. The introduction of large scale production, the development of storage facilities, and the widening of markets have operated to render the surplus created by labor small in comparison with that created by capitalistic goods. The economic advantages of capitalistic production have resulted in the substitution of machine work for human labor wherever possible. The amount of capital necessary to produce on the most advantageous terms and the length of the production process have constantly in- creased. Industry and exchange have become so complex that labor can find employment only where capitalists have been willing to advance funds for great plants, mul- titudinous huge machines, and almost limitless pay-rolls on the chance that the venture would prove profitable. The economic order has been reversed and labor in actual practice has become dependent upon capital. The enormous fortunes, built by the concentration of capital in a few hands, have overemphasized the great- ness of the portion of net income which the capitalist receives and the smallness of the portion allotted to labor. The complexities of the capitalistic system of industry have rendered the causes of this difference in distribution difficult to understand and made it easy for agitators to convince labor that the wage system is unjust and oppres- sive. The great fortunes have been accepted as irrefutable evidence that labor has not been receiving its due share of the return from industry.^ Labor's attention has been skillfully diverted from actual wage increases, and dis- 1 The concentration of wealth in a few hands as a result of the operation of forces wholly outside the field of industry seems to have been overlooked. The accumulation of wealth by large-scale gambling between capitalists, however deplorable, has amassed boundless fortunes without taking one cent from the just allotment to labor. The appreciation of land values has centralized wealth by a process which no contortion of facts can attribute to inequitable wage adjustnients. The constitutional protection of patent rights has transferred the mechanic bodily from the labor to the capitalist side of industry, but the wealth thus created can be traced to no flaw in the wage system. Economies of man- agement, large scale production, scientific operation, the legitimate assumption of enormous risks for speculative gain, and the discount of the future have all helped to coiicentrate wealth but have taken nothing from labor's just reward. Their operation, however, has been difficult to understand. They have never been advertised by incorporation in a political party platform. No social worker has extolled their virtues, and no agitator has flooded the land with cheap tracts pointmg out their expediency. They have, therefore, received little consideration in wage controversies. 22 satisfaction produced, though both money wages and real wages have increased steadily and the worker's standard of living has been raised to an unprecedentedly high level fully equaling the increased productivity of the worker. IV. The Economic Basis of the Wage Question Labor unrest is in part the result of this constantly growing supremacy of capital over labor as a productive agency, the accompanying reversal of the economic posi- tions of capital and labor and the dissatisfaction caused by the alleged injustice of the existing system of apportioning net income. It is based upon the theory that capital is productive only as an aid to labor and therefore is de- pendent upon labor. Its aim is to manipulate distri- bution so as to restore to labor its balance of power in industry without altering production. The re-establishing of such a balance is impossible so far as production is concerned. Capital must go on producing more than labor, or society and labor itself will suffer an irreparable loss. Production has been multiplied many- fold by capitalistic labor. The standard of living has been raised, and population has increased far beyond the ability of handwork to supply its needs. Any attempt to return to past methods, any decrease in machine work, would so reduce production that even a return to the former low standard of living could not prevent poverty and starvation. The present generation could not be fed and clothed, and it would be wholly impossible to provide for the natural increase in population. Labor's contentions, however, are not confined to analysis of production. It is suggested by the more con- servative labor leaders that the necessity of capitalistic production does not in itself close the door to all equalizing distributive processes. The division of income need not be based upon the relative productivity of _the_ agents engaged. Income may be divided between capitalists and labor on a system which allocates part of the surplus created by capital goods to labor because capital is pro- ductive only with the help of labor. The wage agitation thus assumes the form of a revolt against the relative productivity basis of distribution developed by economic forces during the laissez-faire period. 23 V. Thf Economic Theory of Wages ■ The wage system against which the present agitation is directed is based upon the fact that, irrespective of what term is used to describe them, the services for which wages are paid are commodities.^ They may be bought and sold and they command a price, and are subject to the essential economic rules determining prices, unless economic forces are altered by law. Labor, however, differs from other commodities in many respects. The human element materially affects the economic forces and brings social and political elements into the problem.^ Though labor, in seeking a market, is subject to the same economic forces as other commodities, those forces are not active in the same degree in the case of wages as in the case of prices. Many attempts have been made to analyze the economic rules determining wages. The first important theory de- veloped was the "minimum wage" or "cost of production" explanation,^ suggested by Adam Smith, added to by Malthus, and formulated by Ricardo. The doctrine was fallacious in considering labor a simple reproducible commodity, and that price, in the absence of external regulation, is determined wholly by the cost of production. It was gradually altered, and was finally developed by John Stuart Mill into the "wage-fund ' Section 6 of the Clayton Law (1914) provides that "the labor of a human being is not a commodity or article of commerce"; but with all due respect to the drafters of that act the writer suggests that changing the name does not alter the thing. Unless the law forcibly diverts the economic forces fixing prices, unless some method of withdrawing services from the market and preventing their purchase and sale is found, the services of labor will remain a " commodity" and "an article of commerce" though they be called an attribute of Diety itself. ^ Seligman, Prof. E. R. A., in his "Principles of Economics" (Longmans, GreeH & Co., N. Y.), 4th Ed. (l909), lists four peculiarities which differentiate labor from other commodities : (1) Commodities are produced for certain eiids; human beings are ends in themselves. (2) A commodity once in existence continues to give its services unbidden; a laborer may work or not, as he lists. The commodity takes no holiday and does not strike. (3) Labor is perishable, while many commodities are durable. (4) Finally labor is inseparable from the laborer, while the commodity may be separated from its owner. 'See Ricardo's "Principles of Political Economy and Taxation," Chap. V (1817). Market value, according to this theory, depends upon supply and de- mand, but the normal value of all reproducible commodities is fixed by the cost of reproduction. The cost of reproducing labor is stated as the expense of perpetuating a supply of laborers. The rate of wages, therefore, tends to approximate the minimum wage which will sustain life. 24 theory,"! which, while it varied the earlier explanation, retained its fundamental errors and therefore proved unsatisfactory. The theory was attacked by Longe and Thornton and finally was replaced by Walker's' theory that wages are a residual share of the product of industry. That theory in turn gave place to the present generally accepted marginal productivity doctrine. The modern theory of wages^ rests upon the premises that the value of any commodity is dependent upon the service it renders, and the price of production goods is determined by the value of the consumption goods they help produce. Labor demands a wage because the ser- vices rendered are used to produce commodities of value. The maximum wage is limited by the worth of the ultimate consumption goods produced.'' The actual wage under normal conditions, however, never equals the maximum. The laws of supply and demand and the rules of marginal increments are as effective in the case of labor as in that of any other commodity.^ The normal rate of wages 1 See John Stuart Mill's "Elements of Political Economy," pp. 25-28 (1848), and Taussig's "Wages and Capital" (1896). This theory assumed that wages are paid from capital, that the amount of capital available for wage payments is predetermined, and that the wage increases or decreases in direct proportion to the number of laborers. The conclusion reached is that the only effective method of regulating wages is through control of population. The theory, though it exercised more influence over economic thought than the earlier doctrine, was based on erroneous premises and the conclusion reached was proved untenable in the actual working of economic forces. 'Walker, F. A.: "The Wages Question" (1904). ' Prof. J. B. Clark states the theory as follows: "The law of wages would stand thus: (1) By a common mercantile rule, all men of a given degree of ability must take what marginal men of that same ability get. This principle fixes the market rate of wages. (2) Marginal men get what they produce. This principle governs wages more remotely, by fixing a natural standard for them. ... As real as gravitation is the force that draws the actual pay of men toward a standard that is set by the final productivity law. This law is universal and permanent; everywhere it will outlive the local and changeful influences that modify its operation. We are to get what we produce — such is the domi- nant rule of life; and what we are able to produce by means of labor is deter- mined by what a final unit of mere labor can add to the product that can be created without its aid. Final productivity governs rates." * If the total value of the ultimate good produced is not sufficient to provide food and clothing for the workers, they must secure employment elsewhere or make up the difference by charity and the low wage cannot be blamed on any inequality in the distribution of income. ' With a given piece of land or fixed amount of capital each increase in the amount of labor will materially increase the value produced. Beyond the point of maximum utilization, however, the increase is controlled by the law of diminishing returns. Each additional laborer adds to the value but not in direct proportion to the number employed. Each new worker adds less value until a point is reached when it becomes unprofitable to use more labor. Further land 25 under competitive conditions therefore tends to approxi- mate tlie value which the marginal worker produces. And in the absence of monopoly or regulatory interference the wage of the marginal worker approaches the mmimum wage figure. The cost of production of a permanent adequate supply of competent labor operates as an ulti- mate minimum limitation, though the actual wage m a particular industry may be lower than that figure on account of the great number of physically and mentally defective workers, the cut-throat competition between unorganized laborers, the abundance of immigrants whose standard of living is low, and the great number of partly supported women workers. The wage scale is complicated by the diversity of work and unequal productive powers of the individual workers. The wages of each class are determined primarily by the marginal productivity of the workers in that class. In the absence of regulation each laborer ultimately secures for himself a wage which includes an excess based upon the value of any efficiency he possesses above the marginal efficiency of his class. The capable worker can secure a higher wage than his less efficient fellow laborer,^ unless his freedom to contract for the sale of his services has been limited by trade union or other uneconomic restric- tions. Capital does not derive all of the benefit from the increased production resulting from the use of capitalistic goods. Any force which increases the value of labor or of the product it produces will increase the value of the marginal unit and raise wages. A high return to capital assures abundant facilities and increases the productivity of labor. Each advance in the arts, each improvement in or capital will be acquired instead of more labor. The last laborer who can be economically utilized is the marginal producer. The employer will pay such laborer no more than he adds to the product, because he would lose money if he did. He will pay his other employees more than that sum only when they individually produce more than the marginal amount produced by their fellow workers whose work can be substituted for theirs. The difference between the total value of the product and the total wage goes first to rent or interest, then to management, and the residual to profit. ^The corollary of this rule has been universally underestimated in discussions relative to wage rates. The employment of mentally subnormal workers and of inefficient youths in low-grade work has been responsible for many low wages. Any distributive system^ which attempts to guarantee a living wage to all laborers must make specific provision for these workers who do not produce a return sufficient to support life, and who make up that great body of inefficient, irresponsible, shifting laborers who have been largely responsible for the ultra- radical views labor has recently countenanced. 26 machinery, each mechanical factor which makes the in- dividual laborer produce more, increases wages, the widely accepted belief to the contrary notwithstanding. Within reasonable limits a higher standard of living, further education, better health, and more extensive training enable labor to produce more and thereby raise wages. Similarly, when there is an abundant supply of land and capital an increase in the labor supply raises the wage rate, but under average industrial conditions the Mal- thusian proposition^ is impregnable, and a limitation of the number of workers is a condition precedent to the maintenance of high wages. VI. Labor's Theory of Wages The economic forces just considered ultimately deter- mine the wage system unless their operation is interfered with by legislative enactment or modified by monopoly or the collective bargaining power of labor unions. They state the existing theory of wages, but not necessarily the ideal or the expedient theory. The fundamental economic forces which have shaped the present system cannot be altered, but they may be directed by law. They form an undeniable limitation upon legislative action, but, because of their flexibility, constitute no Insurmountable obstruc- tion in the path of changes essential to social betterment or the promotion of the public welfare. Legislative action cannot eliminate them. It cannot successfully go contrary to their operation, but it may so shape their course as to be aided, not hindered, by their force. Their effect, there- fore, is to impose upon each contemplated change the burden of proving the possibility, practicability, and expediency of the alteration. The wage theory which these forces have formulated is very different from that advanced by labor. The workers seek to overthrow the present wage system for the follow- ing four reasons. They contend: 1. That it does not consider the human element in labor. 2. That it does not return to labor all that labor produces. 3. That it affords too many opportunities for capitalists to take advantage of labor. 4. And that it does not give labor any voice in management. iMalthus, Thomas R.: "Essay on the Principle of Population as it Affects the Future Improvement of Society" (1798). 27 Labor's first premise is perhaps the most popular today. It is a "catchy" slogan and carries the popular appeal to philanthropy. Its exact meaning has never been stated, and no criterion has been suggested for measunng the economic value of the human element.' An attenapt to distill an explanation of the term from the multitudmous uses that have been made of it gives the followmg proposi- tion: The services rendered by labor must not be considered a commodity when to do so would permit the laws of supply and demand to force wages below the cost of living on a reasonable standard, but they must remain a commodity whenever collective bargaining power, or unusual ability, will enable the worker to secure a return above such cost. The inconsistency of the proposition stated thus is apparent, but labor seeks to justify it on the theory that every worker who does a full day's work Is entitled "of right" to a living wage for it. It is argued that if such a wage cannot be paid the industry has no legitimate excuse for existence, and economic forces enabling it to continue its operation should be checked by laws compelling the capital and land employed in such undertakings to seek interest and rent from more productive fields.^ Labor insists that capital should not be employed in industries where profit must be derived from low wages rather than from the advantages of capitalistic production. The employees realize that they are essential to indus- try, that business could no more succeed without their services than without the facilities provided by capital, and that the earning of interest would be even more im- possible without labor than the earning of wages without capital. For these reasons the workers claim a part ownership of the products they help create.' Labor 'Numerous personal letters written by the author to of&cials of labor organiza- tions failed to secure a single response stating labor's interpretation of this clause. 'The practicability and expediency of these contentions will be considered in later chapters. They are referred to here merely to state the wage problem. »Mr. Seth Low in an article on "The National Civic Federation and Industrial Peace," Vol. XLIV, Annals of the American Academy of Political and Social Science, Philadelphia, p. 11 (1912), stated the problem thus: "There has grown up very widely among employees the feeling that the men who put labor into a railroad system or into any other vast industrial plant, help to create that system just as truly as the men who put their money into it; and out of this belief has grown, and is growing, a constantly strengthening conviction that those who work for such an enterfrise acquire a property right in it just as real as 28 claims no strictly proprietary interest in the facilities fur- nished by capital, but it does contend that its interest in the product ^and its "investment" of human effort and "human life" in the business create a partnership relation which entitles the workers to a voice in the management of the business sufficient to protect their rights. ^ Labor demands representation proportionate to its interest in the undertaking. It is no longer willing to submit wholly to the dictation of persons whose interests are in a measure antagonistic to labor's. The wage problem involves the division of management as well as of profits. This feature of the problem cannot be too strongly emphasized. The idea has secured a firm place in the public mind, has been favorably considered by several governmental in- vestigating bodies, and, to a large extent, has been the cause of the changes taking place in the character of the labor struggle. The new demand for participation by labor in the management, while it is not strictly a part of the wage question, is inseparable from that problem. The British Industrial Commission in investigating English labor conditions found itself constrained to recommend that the present industrial system "should be modified in such a way as to identify the worker more closely with the control of the industry in which he is engaged." The Commission explained its recommendation thus: the property right of those who embark capital in it. The problem of modern in- dustry, so far as it relates to the relation of the employer and the employee, seems to me to be to discover the just and equitable and practical way of reconciling these two claims of property right in modern industry." See also Pratt, "A New Industrial Democracy," Vol. XLIV., Ann. Am. Acad., p. 34 (1912). 'The following quotation from the Illinois Federation of Labor's News Letter of February 22, 1919, states labor's claim as clearly as any authentic utterance that has come to the writer's attention: "On the strength of the actual value of the investment the worker makes as compared with the actual value of the investment the employer makes, the workers feel that they are entitled to not only equal consideration with the employer in determining on what basis they will make that investment, but because of the fact that they invest the most important element in the operation of any industry (labor) and because they cannot separate their labor (which is a combination of mental and physical service) from their lives, thus making it so that whenever they invest their labor they are investing their lives as well; they are also investing the most valuable element that enters into the operation of any industry; and because the average working man and woman in our country is more intelligently conscious of that today than they ever were before in all history, with the present legal opportunities for the educated who have large material resources to draw from, in any fight, to take advantage of the weak, uninformed, and helpless, who are unorganized, and who have no material resources, they know that the only way a worker can protect himself at all is through organization." 29 'We have repeatedly referred to the spirit of antagonism that has sprung up; ... we feel that what is wanted is a new spirit, — a more human spirit, one in which economic and business considerations will be influenced and corrected, and, it is hoped, will be eventually controlled by human and ethical considerations. To bring this about it must be • realized that the main cause of unrest lies deeper than any material consideration, that the -problem is fundamentally a human and not an economic problem. . . . "A new spirit of partnership is therefore essential. The precise mechanism of that partnership, especially its details, can be left to be investigated and developed at a later stage, under the influence of the new spirit. It must he a growth from within, not something imposed from without. . . ■ The management sentiment is not confined to England. The President's Mediation Commission in investigating American labor problems in the United States found that: "While not expressed in so many words, the dominant feeling of protest was that the [copper] industry was con- ducted upon an autocratic basis. The workers did not have representation in determining those conditions of their em- ployment which vitally affected their lives as well as the company's output. . . . "The men sought the power to secure industrial justice in matters of vital concern to them. . . . "The crux of the conflict was the insistence of the men that the right and the power to obtain just treatment were in themselves basic conditions of employment and that they should not be compelled to depend for such just treatment on the benevolence or uncontrolled will of the employers.'"' 1 Report of the British Industrial Commission for the West Midlands Area, U. S. Bureau of Labor Statistics, Bulletin No. 237, p. 169. Arthur Henderson, in his "Aims of Labour" (1917), p. 24, states the British problem thus: "In the reorganization of industry after the war, the Labour Party will claim for the workers an increasing share in the management and control of the factories and workshops. What the workers want is freedom, a definite elevation of their status, the abolition of the system of wage slavery which destroyed their in- dependence and made freedom in any real sense impossible. . . ." (See also Appendix II, p. 99.) * Report of the President's Mediation Commission, January 9, 1918, pp. 6,7. See also Opinion of Justice Clark of the National War Labor Board. In re Wheeling Mold and Foundry Co. VII Monthly Labor Rev. (U. S. Bureau of Labor Statistics) No. 5, p. 1183 (1919). Small, Albion W., in "Between Eras from Capitalism to Democracy" (1913), p. 379, states the most important step in the transition from capitalism to democracy as: "First . . . that the theories and policies of business shall frankly recognize the literal fact of the operative partnership of workers, and shall honestly accept the moral consequences of corresponding right to partner- ship in control. This reality of partnership is filling the minds of workers, and 30 This indefinitely _ defined claim for "democracy in industry" and division of management, during the past two years, has been so carefully associated by labor leaders with the determination of the wage rate that no wage systern will prove wholly satisfactory to a large part of the organized workers which does not at least appear to conform to the demand. VII. The Employer's Theory of Wages The employer contests the right of labor to a proprietary interest in the products of industry. He considers the services he purchases as commodities to be bargained for the same as other material and supplies. The price he must pay, he insists, is dependent upon the productivity of the services and upon supply and demand alone. He does not belittle the human element in the labor problem but considers it an issue wholly outside of the wage question. He denies absolutely any right on the part of labor to a voice in the management of the undertaking other than the right to seek reasonable working conditions.^ He has assumed the entire risk of the undertaking. He is not willing to entrust the management, on which that risk to a large extent depends, to persons who have assumed no part of the risk and whose return he has guaranteed. He is willing to pay labor the price demanded by the cheapest competent workers he can hire and operate successfully. Beyond that he will make no voluntary concessions. Labor and the employer are therefore at a deadlock so far as wage theories are concerned. it will not rest till it refashions their democracy. The fact that every business is an organization of men who are necessary to one another on the operative side, foreordains sooner or later a regime of partnership in information, partner- ship in influence, partnership in deciding policies, partnership in adjusting principles of distribution; an active partnership of every worker in giving spiritual meaning to the work; not merely dumb and menial partnership in physical operation." See Saunders: "The Outlook for America's Industrial Future." Vol. LXXXII, Ann. Am. Acad., p. 334 (1919); Schwab, Charles M.: "Capital and Labor," Vol. LXXXI, Ann. Am. Acad., p. 160 (1919); Kendall: "Post-War Standards for Industrial Relations," Vol. LXXXI, Ann. Am. Acad., p. 164 (1919); Rockefeller, John D., Jr.: "Representation in Industry," Vol. LXXXI, Ann. Am. Acad., p. 167 (1919). ' This is, of course, but the statement of the general attitude of the employer group. It does not take into consideration the rapidly spreading movement on the part of many individual business concerns to check excessive labor turnover by inducing labor to secure a financial interest in the business through stock ownership, division of profits, etc., nor, the less extensive movement to give labor (irrespective of any financial interest) a voice in certain problems of management by means of workers' councils or boards. 31 VIII. The True Interests of the Parties to Industry The discussion thus far has considered only the capital- ist and the laborer, but modern industry invokes the aid not of those two parties alone, but also of the landowner, the entrepreneur, and the public. The income from in- dustry cannot be apportioned upon an equitable basis, and no successful wage system can be devised without considering the actual interests of each of these five parties. The landowner supplies to industry a productive factor whose use varies with the nature of the undertaking. It may furnish raw material, water, fuel, power, fertile soil, or advantageous location. As a landowner he gives the use — not the title — to his property, and for the service it renders he collects a rent fixed by the value the use of the land adds to the product it helps create. So long as society is organized upon the basis of private ownership, rent must form a charge against the income from industry; and the amount of the charge, because of the varying worth of different tracts of land, must be determined by the unhampered economic law of the marginal produc- tivity of the particular grade of land. The capitalist's interest is a strictly proprietary one. He contributes the physical property and working capital employed in the business. He seeks to employ his capital so as to secure the highest possible return from it. To induce him to invest he must be assured that the transac- tion will be reasonably safe and his capital kept intact. He must be guaranteed funds for taxes, insurance, and depreciation. In addition he must be promised a return sufficient to give him interest for the use of his funds and an additional sum to cover the risk he assumes in investing in the particular business, for the return of his principal is wholly dependent upon the success or failure of the venture. His financial claim against income may be stated thus: Capitalist's interest = (taxes + insurance) + depreciation + interest + risk fund. Every element of that claim must be promptly met to provide funds for maintenance and expansion and to keep the original capital permanently in the transaction. The employee brings services to the business. He has no proprietary interest, though he has begun to believe 32 that he has a sort of ownership in the product. He seeks to use his physical and mental strength and training so as to keep them, like the capitalist's funds, intact, and to secure the highest possible wage for their use. To induce him to labor willingly he must be assured that his health and training will remain unimpaired. Working and living conditions must be reasonably safe. He must be guaran- teed a wage that will enable him to maintain life and health, meet taxes, pay insurance, etc., and in addition he must be promised a further sum by way of return for his services. These two divisions of wages correspond to the depreciation fund and interest allowances of the capitalist. The risk element in labor (except a part of that from unemployment) attributable to the particular busi- ness is not embodied in the wage under present conditions, but is assumed by the capitalist under workman's com- pensation acts and as part of his general risk.^ Wages are com.paratively certain, not conditional like profits. Specu- lative gains are impossible for the wage-earner because he does not assume the risks of the venture. The employee's financial interest in the industry, therefore, may be stated thus: Labor's interest = living expenses + unemployment risk -|- insurance -|- pay for skill -|- reward for services. Both elements must be deducted from the gross income of the business and must be promptly met. As the general risk element is not provided for in the return to labor, wages constitute a claim prior to that of the capitalist or the entrepreneur, who are paid for the chances they take. The entrepreneur brings business training, financial standing, and services to the industry. He discovers the opportunity, analyzes the situation to make the most of the opening, interests capital and organizes the business. He is the manager and assumes the burdens of operation. As entrepreneur, his claim to income is determined by the amount that the efficiency of his management^ and his bargaining ability add to the product, consideration being given to his share in the risks of the venture. The equation representing his interest is : Entrepreneur's interest = reward for management + profits from superior bargaining ability + risk. 'The usual philanthropic demand for a reapportionment of income either gives little consideration to the risk element or uses the term "risk" ambigu- ously without regard to its connection with the particular industry. 33 The entrepreneur's interest is the most uncertain of all. He guarantees the landowner his rent and the laborer his wage. Interest on borrowed capital constitutes a prior claim against income, and his return is dependent upon the continuous earning of dividends upon the original in- vestment. His is a residual share in income, and because of the many contingencies upon which its payment rests, speculative profits are necessary to attract managerial ability sufficient to keep land, capital, and labor profitably employed. Landov/ner, capitalist, and entrepreneur may be one and the same person or group of persons, but three services are rendered and three distinct charges against income must be met. The public's interest in industry is wholly dissimilar to the claims of the other parties. It involves no allotment from income, although the public may exercise its authority to limit the allotment made to its co-workers. The income from industry after operating expenses and the cost of material are paid, therefore, must be divided between the four participating parties according to a formula which may be stated thus: Income = (living expenses + unemployment risk due to the particular industry + insurance + pay for skill + reward for services) + (rent + insurance + depreciation + interest + capitalist's risk) + (reward for efficient manage ment + entrepreneur's risk + profit). Any wage system which will prove satisfactory and supply a firm basis for industry must be premised upon this equation. Economic forces alone would compel its adoption if such forces always worked unhampered; but they do not. Combinations of interests, monopoly, legal interference, and superior bargaining power give first one then another party to the transaction power to compel distribution of income on a basis which neglects some factor of the equation, and industrial conflict results; production ceases, property is destroyed, the public peace is disturbed, and the rights of parties not involved in the struggle are violated. The pure economic wage system operating under laissez-faire freedom has failed to hold distribution to the terms of this fundamental equation. The public interest has suffered and the public has de- manded the adoption of some means of directing economic 34 forces m conformity with this basic principle of distri- butive justice. Governmental interference in the deter- mination of the rate of wages is the solution that has been suggested. IX. Summary The primary issue presented by the present wage dis- pute is the productivity of capital. Labor generally has insisted that capital is not a true productive agency and that it has no legitimate part in industry. Strict analysis, however, shows that labor's contention to this effect can- not be substantiated. Both capital and labor are pro- ductive agencies because the use of either adds to the creation of economic goods. But capital is creative only because it increases the productivity of labor. Capital alone could accomplish nothing, and labor operating with- out capital could not secure a living wage for the existing workers and would be utterly incapable of providing for the natural increase in population. The two factors are interdependent. Each is indebted to the other and their ultimate interests are identical. Labor's second contention is that, conceding the pro- ductivity of capital, labor is the more important because capital is creative only as an aid to labor. Here again the argument is incapable of proof. Since the introduction of the factory system, industry has assumed a capitalistic character. The portion of created wealth directly assign- able to capitalistic production has grown steadily and machine work has tended to replace human work whenever possible. The transition, however, has advanced the pro- ductivity of labor and thereby increased wages and raised the worker's standard of living. The total wealth of both the capitalist and the laborer has increased, but because the maintenance costs and operating expenses of machine production have been far less than the corresponding charges in case of human effort, the return to the capitalist has grown in greater ratio than that to the laborer. Wealth has been concentrated and the capitalistic group has been forced by the ever-lengthening period of the productive process to finance the laboring group by advancing wages before the completion of the product worked upon. In practice, if not in theory, the economic factors have been reversed and labor has become de- pendent upon capital. 35 Labor's third suggestion is that the present wage system is inequitable and does not give the workman adequate return for the services he renders. This charge goes to the very base of the wage question and necessitates a com- plete analysis of the economic forces determining the wage rate. Briefly stated the economic law of wages is that, so long as labor's services are offered for sale they are a commodity controlled by the laws of supply and demand and the wage is fixed by the marginal productivity of the particular class of labor to which the worker belongs. Labor denies the assertion that its services are a com- modity, but offers no suggestion for avoiding the effects of those economic forces which come into play whenever anything of value is offered for sale. They disregard the laws of marginal productivity and rest their case upon the play upon words which seeks to differentiate labor from other commodities because the worker's services are inseparable from his body. They have attempted by law to inject humanitarian and social factors into the purely economic system without first ascertaining the com- patibility. They have wholly disregarded the necessary relationship between wages and the productivity of labor in their attempts to raise wages, reduce hours, and curtail output. There has been developed as a corollary of this undue emphasis of the human element in labor, an ever-growing deniand for "democracy in industry." Labor insists that it is entitled as a right to a share in management as well as in profits. Capital replies that as long as labor assumes none of the risks incidental to the particular undertaking it can have no place in management. The capitalist and laborer disagree on the most funda- mental economic issues involved. Though their interests rightly conceived are ultimately the same, their theories are at such a variance that there is no common ground upon which they can meet. Compromise can do no more than postpone the final conflict and prolong the struggle. There is, therefore, no hope of bringing the parties together without resorting to external influence. Force must be exerted sufficient to impose a common, economically sound and equitable wage theory upon both. The government must intervene in wage disputes to establish, not a fixed and definite wage, but a definite wage theory. The follow- ing chapter states the basis and aims of that intervention. 36 CHAPTER III THE BASIS AND AIMS OF GOVERNMENT INTERVENTION I. The Nature of Private Rights The suggestion of government intervention in the wage controversy has raised the charge of undue interference with the property rights of the employer and the personal rights of the laborer. The question is thus transformed from a problem in economics into one in political science, and the primary issue becomes the state's power to infringe upon or disregard private interests. It is neces- sary, therefore, before proceeding further with the con- sideration of the economic features of wages, to consider the true nature of the rights involved and ascertain the basis of government interference. A right is an interest protected by general recognition making respect for it a duty and disregard for it a wrong/ The form of the recognition and duty determine the character of the right which may be "natural" and moral or legal. A right is a social concept.^ It implies' the existence of persons against whom it avails, and involves exclusive control which can exist only under the protection of an organized state. It requires the sanction of society to enforce the corollary obligation and defend the owner's interest from the encroachments of more powerful neigh- bors. The right would cease to exist without the pro- tection thus afforded, for men's diverse conflicting im- pulses, instincts, desires, and interests, if unrestricted, would produce chaos. Ownership would be reduced to possession and might would replace right. 1 See Salmond, J. W.: "Jurisprudence" (3d Ed.) p. 184; Stevens and Haynes, London, 1910; Holland: "Jurisprudence," 12th Ed. (1916); Ihering: "Law as a Means to an End," p. 49, fE. (translated 1911). 2 "All that is right or wrong, just or unjust, is so by reason of its effect upon the interests of mankind, that is to say, upon the various elements of human well-being, such as life, liberty, health, reputation, and the uses of material objects. If any act is right or just, it is so because and in so far as it promotes some form of human interest. If any act is wrong or unjust, it is because the interests of men are prejudicially affected by it." Salmond, J. W.: "Jurispru- dence" (3d Ed.), p. 185 (1910). 37 The concerted action necessary to create a right can be secured only by subordination of private interests ^ ^he common good. Individual interests must be pooled to make them enforceable, and it is the purpose of govern- ment to regulate the pool to secure the greatest good for the greatest possible number. Expediency dictates what rights shall be made legal and to what extent they shall be enforceable. The sole aim in creating and enforcmg legal rights is the promotion of the common good. Legal rights exist only at the sufferance of the state; and natural and moral rights, though they may exist without the sanction of the state, have little significance other than that arising from the probability of their future transfor- mation into legal rights.^ II. Limitations on Private Rights Individuals are permitted to acquire rights protected by the state, because such permission promotes the public welfare. The private interests thus acquired are neces- sarily held in subordination by the state police power, in order that the exclusive freedom created shall in reality promote the common good. An absolute private right is an impossibility in organized society.^ The social interest on which the whole structure rests limits the individual in the exercise of his rights. All private rights are acquired and held conditionally under the limitation of the common-law maxim "Sic utere tuo ut alienum non Icedas." The individual must 'Jeremy Bentham, in his "Theory of Legislation" (1802), p. 82, stated a denial of the existence of natural rights, which was accepted by Mill and has retained many adherents up to the present time. Thus Ritchie in his work on "Natural Rights," 2d Ed. (1903), p. 80, says: "Natural rights, when alleged by the would-be reformer, mean those rights which in his opinion would be recognized by the public opinion of such a society as he admires and would either be supported or at least would not be interfered with by its laws, if it had any laws; they are the rights which he thinks ought to be recognized, i.e., they are the rights sanctioned by his ideal society, whatever that may be." See also p. 103; Pattee: "Essential Nature of Law" (1909), p. 162; Gettell: "Problems in Political Evolution" (1914), pp. 214,260; Willoughby, W. W.: "Nature of the State" (1896), p. 103. •"Strictly speaking there are no such (absolute) rights in society; not only the right to liberty and the pursuit to happiness, but even the right to life in society is necessarily subject to the will of the aggregate, as authoritatively expressed in the state or government. This is indispensable to the existence of society. . . . Absolute individual rights are a social impossibility." Gunton: "Principles of Social Economics" (1891), p. 296. See also Salmond J W r "Jurisprudence," 3d Ed. (1910), p. 217; Ritchie: "Natural Rights," '2d Ed (1903), p. 122; Sidgwick: "Elements of Pohtics" (1897), Ch. IV , etc. 38 not use his rights in a manner injurious to the rights of others, nor in a way which impairs the public rights.^ This is equally true of property rights,* contract 1 Korkunov: "The Theory of Law" (translated 1909), pp. 208, 211; Holland: "Jurisprudence," 12th Ed. (1916), p. 81; Hastie's Kant's "Philosophy of Law" (1796), p. 46; Pattee: "Essential Nature of Law" (1909), p. 163; Garee: "Science of Law," Sec. 2, 18; Pollock: "A First Book of Jurisprudence," 3d Ed. (1911), pp. 186, 175; Del Vecchio: "Formal Bases of Law" (translated 1916), Ch. IV, Sec. 129; Merke: "Elemente der allegemeine Rechtslehre," Ch. II, Sec. 21; Roguim: "La Regie de Droit," p. 76. " Political or civil liberty is the liberty from legal obligation, which is left or granted by a sovereign government to any of its own subjects; and since the power of the government is incapable of legal limitation, the government is legally freed to abridge their political liberty, at its own pleasure or discretion." Austin: "Province of Jurisprudence Determined" (1832), p. 287. "The dogma of equality makes an equation between individuals only, not between an individual and the community. No society has ever admitted that it could not sacrifice individual welfare to its own existence. If conscripts are necessary for its army it seizes them, and marches them, with bayonets in their rear, to death. It runs highways and railroads through old family places in spite of the owner's protest, paying in this instance the market value, to be sure, because no civilized government sacrifices the citizens more than it can help, but still sacrificing his will and his welfare to that of the rest." Holmes: "The Common Law," p. 42. Though the United States Federal Government is one of delegated powers only, it has been held that those liberties safeguarded by the Bill of Rights are subject to the same limitations in this country as in England. The Supreme Court said: "The law is perfectly well settled that the first ten amendments to the Constitution, commonly known as the Bill of Rights, were not intended to lay down any novel principles of government, but simply to embody certain guaran- ties and immunities which we had inherited from our English ancestors, and which had from time immemorial been subject to certain well-recognized exceptions arising from the necessities of the case. In incorporating these principles into the fundamental law there was no intention of disregarding the exceptions, which continued to be recognized as if they had been formally expressed." Robertson v. Baldwin, 165 U. S. 275, 17 Sup. Ct. 326, 41 L. Ed. 715. See also Davis vs. Season, 133 U. S. 333, 10 Sup. Ct. 299; Ex Parte Jackson, 96 U. S. 727, 24 L. Ed. 877; Ex Parte Rapier, 143 U. S., 110, 12 Sup. Ct. 374, etc.; Freund, "The Police Power" (1904), p. 12; Warvelle, "Real Prop- erty," 3d Ed. (1909), p. 2. 2 The rulings on limitation of Individual rights have been particularly clear in the case of property rights. "It is a fundamental principle of the con- stitutional system of the United States that rights of property, like all other social and conventional rights, are subject to such reasonable restraints and regulations established by law as the legislature under the governing and con- trolling power vested in it by the Constitution may think necessary and ex- pedient." 6 Ruling Case Law, 194. "All property is acquired and held under the tacit condition that it shall not be so used as to injure the equal rights of others, or to destroy or greatly impair the public rights and interests of the com- munity; under the maxim of the common law, " Sic utere tuo ut alienum non Icedas." Commonwealth vs. Tewksbury, 11 Metcalf (Mass.), 55. "The rule that the owner has the right to do as he pleases with or upon his own property is subject to many limitations and restrictions, one of which is that he must have due regard for the rights of others." People's Gas Co. ». Tyner 131 Ind. 277. See also Pullen ». Commissioners, 66 N. C. 361; Thorpe ». RutiaAd & Burlington R.R. Co., 27 Vt. 139; The Slaughterhouse Cases, 16 Wall, 36, 21 L. Ed. 394; Dutton v. Strong, 17 U. S. 29; Crowley ». Christensen, 137 U. S. 86, 34 L. Ed. 620, 11 Sup. Ct. 13; Parker v. Otis, 130 Cal. 322, Aff. 187 U. S. 606, 23 Sup. Ct. 168; California Reduction Co. v. Sanitary Reduction Works, 199 U. S. 306, 26 Sup. Ct. 100, etc. 39 rights,! the right to labor,^ and other purely personal rights. The so-called absolute rights are but privileges relative to and limited by the common good. III. The Public Interest in Private Rights Every private right is shaped by conflicting forces. Two interests are involved, the private and the public or social interest; and because the one limits the other the two are antagonistic. The elements which render the social interest essential to the existence of the private right necessitate the domination of the social element in the conflicts which result.' The public interest must be pro- 1 " There is no absolute freedom to do as one wills or to contract as one chooses. The guaranty of liberty does not withdraw from legislative supervision that wide department of activity which consists of the making of contracts, or deny to government the power to provide restrictive safeguards. Liberty implies the absence of arbitrary restraint, not immunity from reasonable regulations and prohibitions imposed in the interests of the community." Chicago, Burlington & Quincy R.R. Co. v. McGuire, 219 U. S. 567, 31 Sup. Ct. 259, 55 L. Ed. 328. "It is settled that neither the 'contract' clause nor the 'due process' clause has the effect of overriding the power of the state to establish all regulations that are reasonably necessary to secure the health, safety, good order, comfort, or general welfare of the community; that this power can neither be abdicated nor bargained away, and is inalienable even by express grant; and that all contract and property rights are held subject to its fair exercise." Atlantic Coast Line R.R. Co. v. Goldsboro, 232 U. S. 548, 34 Sup. Ct. 364, 58 L. Ed. 721. "Contracts must be understood as made in reference to the possible exercise of the rightful authority of the government, and no obligation of a contract can extend to the defeat of legitimate government authority." Legal Tender Cases, 12 Wall, 457, 20 L. Ed. 287; Louisville & Nashville R.R. Co. v. Mottley, 219 U. S. 467, 31 Sup. Ct. 265, 55 L. Ed. 297, 34 L.R.A. (N. S.) 671. See also, Manigault b. Springs, 199 U. S. 473, 26 Sup. Ct. 127; Hudson County Water Co. v. McCarter, 209 U. S. 349, 28 Sup. Ct. 529; Rail & River Coal Co. V. Ohio Industrial Comm. 236 U. S. 338, 59 L. Ed. 607; Union Dry Goods Co. v. Georgia PubUc Service Corporation (U. S.) 63 L. Ed. 116, etc. ^ The right to labor has been spoken of as an absolute right of which no one can be deprived even by the legislature. But this statement is not strictly accurate. Although the provisions of American constitutions protecting liberty and property have been judicially extended so as to protect the occupations of mdividuals, the right to pursue any occupation is subject to the right of the government to impose such restrictions as the public interests may require. The same is true of the right to dispose of one's labor." 16 Ruling Case Law, 414, etc. ' "There must be some kind of social recognition of the rights to possess and use It [property] and some kind of public defense of the right. The sole legiti- mate purpose of such laws is to conserve and economize scarce goods and see that they go to the persons who ought to have them rather than merely to the strongest." 11 Cyc. of American Government 79. See also Ritchie: "Natural Rights," 2d Ed.^ (1903), Ch. XIII. "The emphasis is now to be put upon the rights of the community in private property and to private property, rather than on those of the individual owner. ■ ■ •- ^". other words, the new movement is an attempt to establish by authority the individuahsm — conditions of welfare — which individual action itself has tailed to achieve. The whole movem.ent imports a lessening of the importance of private property and a strengthening of the importance of men; an emphasis 40 tected or the excuse for government sanction of the private interest will be destroyed. The tendency, therefore, is toward an ever greater public element in all private rights, particularly in property rights. Each new conflict ulti- mately results in additional gain for the social interest. The tendency toward government intervention in labor disputes and in the determination of wage rates is such a conflict. _ The basis of regulation is found in this theory of private rights. Government control is not an infringement upon private rights; it is but the exercise of a necessary sov- ereign power to protect the private rights themselves and to promote the public interest in those rights. Such protection, though it limits the private interest, is essential to the very existence of the rights. IV. The State and Private Rights The primary function of the state is to establish justice and secure to society and the individuals who compose it the fullest possible enjoyment of their rights. ^ This is as true of government in its relation to industry as in any of its several other capacities. The exercise of this function of the state is accompUshed by (1) the legal recognition of private rights, (2) the provision of tri- bunals wherein contests involving those rights may be decided without resort to trials of strength, and (3) the of public weal as against private gain; a demand for more equality in economic conditions, and greater social responsibility for wealth." Kinley: American Economic Review, Suppl. March, 1914; Emerick: "The Courts and Property," Popular Science Monthly, December, 1913, June, 1914; Warren: "A Bulwark of the State Police Power," Columbia Law Review, December, 1913; Brown: "The Underlying Principles of Modern Legislation," p. 236; Maitland: "The Service of the State," p. 36. The day has passed when the conception of industry as chiefly a revenue- producing process can be maintained. To cling to such a conception is only to arouse antagonisms and to court trouble. In the light of the present, every thought- ful man must concede that the purpose of industry is quite as much the advance- ment of social well-being as the accumulation of wealth. Rockefeller, J. D., Jr.: "Representation in Industry" (1918), p. 6. ^ "In every well-organized government — with reference to the security both of public rights and private rights — it is indispensable that there should be a judicial department to ascertain and decide rights, to punish crimes, to ad- minister justice, and to protect the innocent from injury and usurpation." Rawle: "The Constitution," Ch. XXI. "The realization of the law is no longer the affair of the individual, but solely that of the State; and it is only through the mediation of the State that the individual can obtain his rights — his rights even in the face of others' opposition. . . . This realization of the law through the State avoids all those imperfec- tions which self-help involves." Kohler: "Philosophy of Law" (translated 1911), p. 243, if. 41 substitution of the sanction of government for personal force to compel recognition of such rights. The civilization of any community may be accurately measured by the degree of development of these three steps in the judicial system and by the extent of the jurisdiction within which they are applied. Iii most branches of law all of these steps are fully developed m the United States. In the field of wage disputes not one is complete. Many of the rights of the parties to the wage controversy have been definitely fixed, but their extent and interpretation constantly vary and the recognition of economic rights has been far less complete than that of other rights. There have been, moreover, no satisfactory tribunals provided wherein contests involving those rights may be decided without resort to trials of strength, and therefore the substitution of governmental for personal force to compel recognition of such rights has been im- possible. Our judicial system in its application to in- dustry is in a primitive state. In that field, and in that field only, force replaces law and justice, and the parties to the controversy are left to settle their differences by violence. The strike, the boycott, and similar methods of self- preservation and redress of injuries by means of force and violence are necessary safeguards of private rights under our present makeshift system. They cannot be abolished until the state provides some other method of protecting individual rights and enforcing their corollary obligations. In the absence of a recognized means of securing equitable treatment and just enforcement of private rights, mob violence, sabotage, feuds, lynchings, and deportations in- evitably will be resorted to to ward off injustice and to avenge wrong. The public peace and security require the presence in this field, as fully as elsewhere, of a force more powerful than either contestant, which can compel respect for rights and maintain order. The clause Ubi jus ihi remedium states a fundamental principle of American law, i.e., that a remedy must be provided for the violation of every right.^ This principle has been applied to every field of municipal law except that affecting wage disputes. ^"The very essence of civil liberty consists in the right of every individual to claim the protection of the laws whenever he receives an injury. One of the first duties of government is to afford that protection." Marbury v. Madison 1 Cranch (U. S.) 163. See also Ashby v. White, Ld. Raymond 938, 1 Smith, Leading Cases 342, 1 Eng. Ruling Cases 521. Blackstone: "Commentaries " Book 1, p. 141, ff. 42 The present demand for government intervention is a movement to secure its extension to cover such con- troversies. It is not, however, only the interests of employers and employees which require the substitution of judicial determination of wage disputes for strike violence. The public interest is directly involved. The people as a whole have a right to demand that the state policing power be extended and the capitalist and laborer both be required to submit their grievances to a regular tribunal whose decision will be binding and backed by the full sanction of the state. Public rights, and the private rights of persons not involved in the wage conflicts demand the institution of peaceful, prompt, competent, and impartial methods of deciding such controversies. V. The Make-up of Rights Each of the fundamental private rights involved in the wage question is a conglomerate body composed of many subsidiary rights. Ownership includes the right of pos- session, the more or less restricted rights of use, of disposal by sale, gift, loan, or rental, and, within certain limits, the right of consumption or destruction. Combined, these unit rights constitute the bundle called property rights. The right to liberty embraces, in addition to freedom from unjust imprisonment and involuntary servitude, the right to "make the most of" one's life and a multitude of minor rights. The unit rights in each of these bundles are slowly but constantly changing with social and economic changes and their legal recognition. What rights are embraced in any bundle at any particular time depend upon social arrangements sanctioned by the state with a view to pro- moting the public good. VI. The Nature of the Limitations The opportunity to abuse private rights varies in form and degree with each set of conditions under which these rights are exercised. The need for protection of the public welfare varies in a correspondingly direct ratio. The state in seeking to protect the public interest must impose differ- ent forms of regulation upon different exercises of private rights. The bundles of rights constituting private prop- erty and personal liberty become more or less encumbered 43 as their use changes. They acquire or lose unit rights as the use promotes or endangers the public welfare. The right of contract, the right to engage in the pursuit of happiness, to gain a living, or the rights of property used in connection with slaughterhouses, pesthouses, or in the manufacture of explosives, are subjected to stringent restrictions to promote the public health. Their extent is materially reduced. The same rights used for saloon, gambling, or questionable lodging-house purposes would be subjected to other limitations imposed with a view to the defense and promotion of the public morals. These rights used in strictly private business, or to secure do- mestic happiness, would meet but little government mter- ference. Devoted to a public use and employed in the conduct of a public service business, the rights are sub- jected to regulation drafted primarily to promote the economic welfare of the public. The industrial field is subjected to a threefold classifica- tion for the purposes of regulation to prevent abuse of private rights and of resulting injury to the public.^ Strictly private undertakings (the manufacture or sale of commodities not of vital importance in the industrial organization, under competitive and fair conditions) are subject only to regulation formed to promote the public health and morals. Monopolistic industries are subjected to additional regulation formed to re-establish the economic forces destroyed by the elimination of competition. Public utilities are regulated to promote the public health and morals, to counteract the evils of monopoly, and in addition thereto for the purpose of promoting the general public economic good. The varying purpose of regulation naturally varies the form of control so that not only the extent but the nature of the interference Is different. For this reason the wage problem, from the viewpoint of government control, presents a different question in each of these three fields. The public interest m industry. In so far as It affects the wage question, varies in the same manner. The state has little concern with wages paid in strictly private competitive business other than to see that production is not interrupted or waste caused by needless conflicts between employers and employees; and to see that the ir.cS?5i"S ''■J^°^^^"^' ^^"'^= C'ty Stockyards et at., 183 U. S. 101, 46 L. Ed. lUo, jiJ, bup. Ct. oU. 44 wage scale is not reduced so low that It creates a body of workers broken in health and spirit who, unable to earn a living by their labor, must become a charge upon the public. In the case of monopolistic private business the only additional public interest is to see that the power of monopoly is not used to oppress the worker. The state, in the case of private industry, whether it be competitive or monopolistic, is interested in the wage scale primarily from the viewpoint of production, not distribution. It is interested in the continuous and effi- cient operation of the business and vitally concerned with preventing the economic waste resulting from industrial warfare. It is indirectly interested in the equity of the wage system because an unjust rate of wages must in- evitably produce friction, interrupt production, and cause inefficiency and waste. This same public interest exists in the case of privately owned public utilities, but the state necessarily asserts several additional claims against such industries. The absolute dependency of the community at large upon the utility service forces- the government to guarantee ade- quate and continuous service. Interruptions are undesir- able in private business; they are unbearable in the public service.^ i"To stop transportation for an hour must of necessity paralyze industry for the same hour; to stop transportation for a week would not only stop industry for a week, but would throw out of employment millions of men who are de- pendent upon industry for their daily wage. To stop transportation for a month in the United States would not only destroy industry and deprive labor of employment, but would produce a scarcity of the necessities of life that would cause actual suffering to the hundred millions of people in continental United States. Therefore it would be idle to contend for a moment that either the labor or the capital employed in inland transportation has an interest in the matter of the stoppage for any cause of the movement of railroad trains that is at all comparable with the interest of the whole people of the United States." Underwood: "Why I Believe the Interstate Commerce Commission Should Have Power to Fix Wages and Hours of Labor on Interstate Carriers," Vol. LXIX Ann. Am. Acad., p. 232 (1917). "If a railway strike was declared and it was successful, the babies would begin to suffer for milk in a day; the perishable foods would be scanty in a week; and before a month had gone by the people would be in want for the very necessities of life. " If the operation of the trains ceased for any considerable time the greater number of the manufactories would be obliged to discontinue, both because they could not secure supplies and could not sell their products. The financial losses would be incalculable, to be reckoned at the lowest unit, in hundreds of millions of dollars. Hundreds of thousands of laborers would be out of employment, and they would not have the money to purchase food even if it were obtainable." Van Hise, Charles: "The Railroad Hours of Labor Law," Vol. LXIX Ann. Am. Acad., p. 259 (1917). 45 VII. The Public Interest in Utility Wages The public service corporations which furnish transpor- tation and communication facilities are the physical basis upon which all modern political, social, and economic organizations rest. They underlie every governmental, industrial, and social institution. If the services which they render were cut off it would be impossible to build or maintain a prosperous community or extensive industrial organization. Any serious interruption in utility service, particularly in transportation service, would paralyze in- dustry and menace health. The existence of the public utility in a permanent, adequate, well-organized form, therefore, is scarcely less important to government today than sovereignty itself. The utilities are the military, political, and economic tools of the government. Public service companies supplying limited neces- sities such as water, light, and heat are as essential to the health, safety, and general welfare of the community, under the present form of industrial and social organization, as communication or transportation facilities. Unimportant sections of the land might be able to do without either service, but it would be impossible for a modern city to continue its existence wholly dependent upon individual water supplies, lighted by candles or oil lamps and heated by stoves or ranges. The urban life, made possible by the development of the transportation system, has developed new forms of limited necessities and utilities, and em- phasized their public character. The service the utility renders is a public one, because it is so essential to the general economic welfare and the public health and safety that the state in order to secure its own complete development, must supply the service they render or a substitute for it. The governmental function, i.e., the guarantee of adequate continuous, non- discriminatory service at a price low enough to assure its universal use has never been delegated and as a strict "Clear also is it that an obligation rests upon a carrier to carry on its business, and that conditions of cost or other obstacles afford no excuse and exempt from no responsibility which arises from a failure to do so, and also that government possesses the full regulatory power to compel performance of such duty." Wilson V. New, 243 U. S. 327, 350, 37 Sup. Ct. 298, 61 L. Ed. 755; Atlantic Coast Line R.R. Co. v. North Carolina Corp. Comm., 206 U. S. 1, 51 L Ed. 933, 27 Sup. Ct. 585, 11 Ann. Cas. 398; Missouri Pac. R.R. Co. v. Kansas 216 U. S. 262, 54 L. Ed. 472, 30 Sup. Ct. 330, etc. 46 legal proposition cannot be delegated,^ although the exercise of the function or operation of the business has been generally left to private individuals. The rendering of a public utility service, whether it be by a private individual or the state itself, is the exercise of a governmental function.^ The construction and ^ Goezler v. Georgetown, 6 Wheat. 593; E. Hartford ». Hartford Bridge Co. 10 How. 51; Boyd v. Alabama, 94 U. S. 645, 24 L. Ed. 302. "The right to regulate the charges of railroads for transportation is one of the powers of the state, inherent in every sovereignty, to be exercised by the legislature from time to time at its pleasure, and hence one legislature cannot, by a charter granted to a railroad company, though for valuable consideration, confer on such railroad company a right to charge rates for transportation which shall be beyond the control of subsequent legislatures." Laurel Fork & S. H. R.R. Co. v. West Virginia Trans. Co., 25 W. Va., 324. "The legislature cannot, by any contract, divest itself of the power to provide for these objects (preservation of good order and the public morals). They belong emphatically to that class of objects which demand the application of the maxim, salus populi suprema lex; and they are to be attained and provided for by such appropriate means as the legislative discretion may devise. That discretion can no more be bargained away than the power itself." Boston Beer Co. v. Massachusetts, 97 U. S. 25, 33, 24 L. Ed. 989. See also, Stone v. Mississippi, 101 U. S. 814, 25 L. Ed. 1079; Butchers' Union Slaughterhouse Co. v. Crescent City Live Stock Landing Co., Ill U. S. 746, 28 L. Ed. 385, 4 Sup. Ct. 652; New York & N. E. R.R. Co. v. Bristol, 151 U. S. 556, 38 L. Ed. 269, 14 Sup. Ct. 437; St. Louis & S. F. R.R. Co. v. Mathews, 165 U. S. 1, 17 Sup. Ct. 243; New Orleans Gas Light Co. v. Drainage Comm., 197 U. S. 831, 49 L. Ed. 831, 25 Sup. Ct. 471; Northern Pacific R.R. Co. n. Duluth, 208 U. S. 583, 28 Sup. Ct. 341; American Union Tel. Co. v. Western Union Tel. Co., 67 Ala. 26; Birmingham Mineral R.R. Co. v. Parsons, 100 Ala. 662; Danville v. Danville Water Co., 178 111. 299, and 180 111. 235; Rogers Park Water Co. v. Fergus, 178 111. 571; Freeport Water Co. v. Freeport, 186 111. 179; Venner o. Chicago City R.R. Co., 246 111. 170; Public Service Comm. of Montana v. City of Helena, 52 Mont. 527, etc. 2 "yi railroad once constructed is instanter, and by meie force of the grant and law, embodied in the governmental agencies of the state and dedicated to the public use, all and singular its cars, engines, right of way, and property of every description, real, personal, and mixed, are but a trust fund for the political power. The corpora- tion created by sovereign power expressly for this sole purpose and no other, is, in the most strict technical and unqualified sense, but its trustee. This is the primary and sole motive for its creation. The incidental interest and profit of individuals are accidents both in theory and in practice." Talcott b. Town of Pine Grove, 1 Flipp (U. S.) 120. "A railroad corporation is created for public purposes, and performs a function of the state." Culver v. St. Joseph & Grand Island Ry. Co. (Mo.) P. U. R. 1917- B, 542, 554. "It has never been considered a matter of any importance that the road was built by the agency of a private corporation; no matter who is the agent, the function performed is that of the state. Though the ownership is private, the use is public. ... So turnpikes, bridges, ferries, and canals, although inade by individuals under public grants, or by companies, are regarded as puhlici Juris. The right to exact tolls or charge freight is granted for a service to the public " They [highways] have always been governmental affairs and it has ever been recognized as one of the most important duties of the state to provide and care for them." Olcott V. Supervisors, 16 Wall, 678, 695, 83 U. S. 678. "The creation of all highways is a public duty. Railroads are highways. The state may build them. // an individual does the work he is protanto doing the work of the state." Budd v. New York, 143 U. S. 549, 36 L. Ed. 247, 12 Sup. 47 maintenance of transportation agencies and_ the pro- vision of adequate water and lighting systems is a public duty. The power of the state to conduct the service is unquestioned. When the state waives its right to serve and an individual assumes the duty, he volunteers to do the work of the state. The public service corporation performs a governmental function and no private interest can be permitted to interfere with its operation. The state cannot allow a controversy between employers and employees to interrupt the service. The legal status of the wage problem in its relation to the public service is no longer wholly a matter of speculation. The United States Supreme Court has passed upon the question and decided that in the case of interstate commerce the public interest is superior to the private interests of the contestants. In the case of Wilson v. New, the Court^ said : "When one enters into interstate commerce, one enters into a service in which the public has an interest, and subjects one's self to its behests. And this is no limitation of liberty; it is the consequence of liberty exercised, the obligation of his undertaking, and contains no more than any contract contains. . . . "What purpose would be subserved by all the regulations established to secure the enjoyment by the public of an effi- cient and reasonable service if there was no power in Govern- ment to prevent all service from being destroyed.'' Further yet, what benefit would flow to society by recognizing the right, because of the public, to regulate the relation of em- ployer and employee and of the employees among them- selves and to give to the latter peculiar and special rights safeguarding their persons, protecting them in case of accident, and giving efficient remedies for that purpose, if there was no power to remedy a situation created by a dispute between employers and employees as to rate of wages, which, if not remedied, would leave the public helpless, the whole people ruined, and all the homes of the land submitted to a danger of the most serious character? And finally, to what derision would it not reduce the proposition that Government Ct. 468. "A railroad corporation is an artificial person, created by positive law, and invested with franchises involving specific powers and privileges, con- Jerring some of the attributes oj sovereignty, to be exercised primarily for the benefits and advantages of the public." Bradley v. Ohio River, etc., R.R. Co., 78 Fed. 387. See also Munn v. Illinois, 94 U. S. 113, 24 L. Ed. 77; Railroad Coram. V. P. & O. C. R.R. Co., 63 Me. 269; Banker ». L. I. R.R. Co., 89 Hun (N. Y.) 202; Beekman v. Saratoga, etc., R.R. Co., 3 Paige 45; Bloodgood v. Mohawk & Hudson R.R. Co., 18 Wendell 1; Warcester v. Railroad Co., 4 Metcalf 564, etc. 1 243 U. S. 327, 350, 37 Sup. Ct. 298, 61 L Ed. 755. Known as the Adamson Case. 48 had power to enforce the duty of operation, if that power did not extend to doing that which was essential to prevent operation from being completely stopped ? "Considering comprehensively the situation of the em- ployer and the employee in the light of the obligations arising from the public interest and of the work in which they are engaged, and the degree of regulation which may be lawfully exerted by Congress as to that business, it must follow that the exercise of the lawful governmental right is controlling." While the decision goes no further than to recognize the power of government intervention when the parties have failed to agree, the recognition of the supremacy of the public interest and the necessity for continuous service is unqualified. Wage disputes, therefore, cannot be permitted to in- terrupt public utility service, first because the economic interests of the public and the public health demand con- tinuous operation, and second, because the utility performs a governmental service and private interests cannot be allowed to block necessary governmental activities. The public has, in addition to its interest in service, a direct financial interest in the utility business. The vital importance of the service necessitates maintenance of a rate low enough to assure universal use of the facilities. Public service rates are therefore regulated and the com- pany's profits limited to a reasonable return upon the actual reasonable investment in property used and useful in rendering the public service. The constitutional limitation requiring due process, however, has been held by the Federal Supreme Court to prevent reducing rates so low as, in effect, to take the company's property without just compensation. Where rates have been fixed at a reasonable figure, therefore, each increase in wages means a proportional raise in the charge for service. The additional operating expense is not borne by the company but is transferred in toto to the consumers. They are thus more vitally affected by increases in the wage schedule than the capitalists themselves. VIII. The Aims of Government Intervention The two general objects of government intervention in the wage controversy are the maintenance of the public peace and the prevention of unnecessary interruptions in production. The specific aims of state wage regulation 49 are many. To assure the fulfillment of the general pur- poses of control the state must guarantee the fullest pro- tection of private rights commensurate with the general welfare of society. It must "democratize" justice^ by, providing equal non-discriminatory legal aid_ for all, on conditions which make it as nearly as possible equally available to all, and equally efficient in the case of all. The wage agreement must be elevated to the sphere of a contract in practice as well as in theory. It must be made in some measure enforceable against the employee as well as the employer. The present universal absence of responsibility on the part of workers could not be fitted to any form of government control. An agreement ' The general opinion in the ranks of labor that the present legal system is discriminatory and unjust is directly responsible for many of the radical ten- dencies of today. It stands in the way of a permanent settlement of the wage question, and' forms a serious obstacle in the path of government intervention. It is not a wholly unfounded belief and the state must aim to correct the defect upon which it rests. This phase of the wage problem is emphatically brought out in the Final Re- port of the United States Industrial Commission, pp. 38-39. The Commission said, in part: "No testimony presented to the Commission has left a deeper impression than the evidence that there exists among the workers an almost universal conviction that they, both as individuals and as a class, are denied justice in the enactment, adjudication, and administration of law, that the very instruments of democracy are often used to oppress them and to place obstacles in the way of their movement toward economic, industrial, and political freedom and justice. Many witnesses, speaking for millions of workers as well as for themselves, have asserted with the greatest earnestness that the mass of workers are convinced that laws necessary for their protection against the most grievous wrongs cannot be passed except after long and exhausting struggles; that such beneficent measures as become laws are largely nullified by the unwarranted decisions of the courts; that the laws which stand upon the statute books are not equally enforced, and that the whole machinery of government has fre- quently been placed at the disposal of the employers for the oppression of the workers; that the Constitution itself has been ignored in the interests of the employers; and that constitutional guaranties erected primarily for the protec- tion of the workers have been denied to them and used as a cloak for the misdeeds of corporations." Prof. H. R. Seager, of Columbia University, has said: "I don't see how any fair-minded person can question but what our judges have shown a decided bias in favor of the employers. I would not be inclined to ascribe this so much to a class bias, although I think this is a factor, as to the antecedent training of judges." Ex-President William H. Taft said: "We must make it so that the poor man will have as nearly as possible an equal opportunity in litigating as the rich man; and under present conditions, ashamed as we may be of it, this is not the fact." "Our law tends to place private property rights above personal and social rights. It places private property very close to the center of its social phi- losophy and therefore tends everywhere to emphasize private property rights at the expense of all other rights of the individuals, and to overlook the rights of society." Hoxie, R. F.: "Trade Unionism in the United States" (1917') n 217 See also pp. 238, 216. 50 binding upon only one party cannot be made the basis of a permanent plan to secure industrial peace. The state must provide a tribunal wherein questions involving the extent or interpretation of the rights of the parties to the wage dispute may be quickly decided by a disinterested and properly trained judiciary. ^ And it must hold in reserve a force available to compel com- pliance with the obligations arising from such decisions. No wage system, even though it be imposed by law, can prove successful if it violates fundamental economic laws or fails to consider the workings of existing economic forces. The state, therefore, must aim to shape its inter- vention so as to work in unison with, not counter to, economic forces. Similarly, no legal rate of wages can prove satisfactory if it violates individual rights without ample justification, or favors one type of private rights at the expense of another type. The state, therefore, must mould its inter- ference so as to recognize and enforce such private interests as really promote the common good, but the rights and interests of the public are the supreme concern in govern- ment intervention. As long as industry is private and the labor agreement is regarded as a contract the state has no regulatory interest in the terms of that covenant other than that which it has in the provisions of any other private con- tract. It must regulate the subject matter to promote the public health and morals. It should guard against fraud and the more vicious forms of undue influence, and pro- vide more or less adequate facilities for interpreting and enforcing the provisions of the agreement. It should not, however, attempt to dictate the essential terms of the contract. The state is more interested in the manner of fixing the terms and of enforcing the agreement than in the terms themselves, primarily because the means adopted by the parties in interest have in many instances been unsocial and detrimental to the public good, and because the in- 1 "Delays in the settlement of disputes, especially when such delays as usually happen are accompanied by the ultimate granting of the original de- mand, are dangerous, . . . some simple machinery should be set up to deal locally and promptly with matters at issue between the employers and men as they arise." Report of British Industrial Commission for West Midlands Area. U. S. Bureau of Labor Statistics, No. 237, p. 185. 51 strumentalities afforded by the state for the enforcement of such contracts have been inferior to those provided for the carrying out of other agreements. The state's interest in the wage strife is identical with its interest in any other private conflict. The government stands in the position of guardian of the public peace, and, in the case of public utilities, of guarantor of continuous service. IX. Summary To summarize: the basis of government intervention in wage disputes is found in the theory of private rights. Government regulation is but the exercise of a necessary sovereign power to protect the public interests. Such protection, although it limits the individual rights affected, is essential to their existence; for, in the absence of the restraining force of the government, might would replace right. The wage conflict is a struggle between two sets of private rights. It is an attempt to eliminate one set and substitute force for right. The adversaries have lost sight of the true nature of private rights and claim inconsistent absolute interests. Neither party considers either the rights of the other party or those of the public. Govern- ment intervention is suggested in this field, just as else- where, to avoid a resort to force and to prevent the substitution of might for right. The general aims of state intervention in the wage field are exactly the same as elsewhere. First, the government proposes to establish peace and public order, by com- pelling individuals to settle their private differences by resort to established courts rather than to force and violence. _ It proposes to treat the right of contract just the samein the sphere of wages as it does in other fields, i.e., require its interpretation by impartial third parties and enforce the obligations that the decisions of such parties create. Second, the state aims to establish justice by creating a legal tribunal where a speedy, equitable, unbiased settle- ment of wage difficulties may be secured on terms which render such justice equally available to all and equally efficacious in the case of all. To assure such justice the state seeks to readjust the system of distributing the 62 income from industry, in so far as may be necessary, and to establish a practical and equitable wage schedule. Third, the government seeks to protect the public interest in case of public utility service by assuring ade- quate, continuous service at rates which make the facilities available to all; and to prevent the waste in other indus- tries which results from needless interruptions. The purpose of this thesis thus far has been to show the changing character of the wage problem and the resulting need for intervention; to consider the relative positions of the parties to industry, ascertain their claims and their interests; to determine the economic forces shaping wages and consider the possibility of successful legal interference with such forces; and to ascertain the basis and aims of such interference. The following chapter considers one form of government wage control and applies to it the tests thus far developed. 53 CHAPTER IV THE MINIMUM WAGE I. The Need for a Minimum Wage The most universally advocated form 6f governmental interference in the determination of wage rates is the legal minimum wage. The demand for such intervention is due to the indisputable fact that a very large per cent of the working population, during the normal period preceding the war, received a wage insufficient to provide the bare necessities of life for the persons dependent upon it. The United States Industrial Commission appointed to in- vestigate those normal working conditions reported in 1915 that: " It is evident both from the investigation of this Commis- sion and from the reports of all recent governmental bodies that a large part of our industrial population are, as a result of the combination of low wages and unemployment, living in a condition of actual poverty. How large this population is cannot be exactly determined, but it is certain that at least one-third and possibly one-half of the families of wage-earners employed in manufacturing and mining earn in the course of the year less than enough to support them in anything like a comfortable and decent condition." ' The report of the New York Factory Investigating Commission made during the same year embodied similar findings.^ The Commission concludes its report with a recommendation of a legal minimum wage for women and minors and the statement that: "After careful deliberation and study of the results of its investigation and the testimony taken, the Commission has come to the conclusion that the State is justified in protecting the underpaid women workers and minors in the interest of the state and society. It finds that there are thousands of 1 Manly, Basil M.: "Final Report of U. S. Commission on Industrial Re- lations" (1915). ^ New York Factory Investigating Commission. Fourth Report (1915), p. 49. See also Lauck, W. J., and Sydenstricker, Edgar: "Labor Conditions' in American Industries" (1917). Report of Massachusetts Commission on Mini- mum Wage Boards, January (1912) ; Brandeis : " Constitution and the Minimum Wage," No. 33, Survey, p. 490 (1915); Ryan: "The Living Wage" XCVI Catholic World, -p. 577 {\%\2). ^' 54 women and minors employed in the industries throughout the State of New York who are receiving too low a wage adequately to maintain them in health and decent comfort. The Commission believes this injuriously affects the lives and health of these underpaid workers, and that it is opposed to the best interests and welfare of the people of the state." It would be useless to attempt to minimize the evils that have resulted from these low wages. They have been the cause of most of our labor unrest. They explain, to a large extent, the constantly increasing bitterness in the wage conflict and the change in the character of the struggle. The "cheap worker" is a human being, though he may not be an efficient instrument of production. He either has not had enough economic productivity to capitalize at a living wage, or has lacked sufficient bar- gaining ability to capitalize it at its true value, so he has sought to trade upon his human attributes. The demand for a legal minimum wage is the result. II. The Theory of the Minimum Wage ^ The minimum wage doctrine rests upon three assump- tions : (1) that the determining element in the wage ques- tion is the law of supply and demand; (2) that, in fact, under normal conditions, the supply of workers is so far in excess of the demand for their services that the un- scrupulous employer has it within his power to force wages below the cost of living and still secure a working force sufficient to operate his plant; and (3) that there is a large body of workmen employed today who produce an amount sufficient to pay a living wage, but who receive less than that sum because the need for employment is so great that others are willing to work for less. Such a wage scale aims to overcome the undesirable effects of the discrepancy between supply and demand by placing a minimum limit upon the price at which the laborer may sell his services. It aims to eliminate the most radical element from the ranks of labor by doing away with the actual want and poverty behind that type of unrest. The economic purpose of this artificial limitation upon the supply factor in the wage problem is to give to the laborer that part of profits which arises from the superior bargain- ing power of the employer. The minimum wage theory itself, if confined within proper limits, is beyond criticism, except from a strict 55 laissez-faire viewpoint. Few persons now question the desirability of assuring a living wage to every able-bodied worker who does a fair day's work every day.^ it is universally conceded that such a wage should form the basis upon which any legal wage system is based. But the proposition thus stated is so Indefinite and ambiguous that its general acceptance signifies little. At least four points of dispute are Involved, any one of which if in- equitably construed, Is capable of defeating the purpose of the proposition. They are: (1) What constitutes an able- bodied worker.? (2) What is a fair day's work.? (3) How many workdays constitute a week.? (4) And, What is a living wage .? III. What Constitutes an Ahle-Bodied Worker? The wage scale, Irrespective of the theory upon which it is based, can secure the laborer no greater return for his services than those services produce. The statement that the law of supply and demand prevents this principle from coming into play In actual practice does not controvert the principle itself. It cannot be disproved and it is as true of a legal minimum wage as of any other wage. The legal fixing of a wage rate creates no sum in addition to that produced by the worker, from which the new wage can be paid. If the employee does not produce a living wage he cannot be paid one. No employer can long con- • "There is a practical agreement nowadays among students of social condi- tions that no employee should receive compensation below an amount sufficient to secure a normal standard of living. The opinion is current that since the result of the wage contract is dependent upon the relative strength of the two parties, and since the employees are usually the weaker, employers should be limited in the exercise of their superior power by a provision that every wage must fulfill the requirements of a living wage. . . . Undoubtedly a living wage is a necessity; the real issue is whether it is possible to determine the essentials constituting a normal standard of living, and whether the amount of money required to purchase these essentials can .be calculated within reasonably exact limits." Stockett, "The Arbitral Determination of Railway Wages" (1918), p. 67. "The welfare of the state demands that the useful labor of every able-bodied workman should as a minimum be compensated by sufficient income to support in comfort himself, a wife, and at least three minor children, and in addition to provide for sickness, old age, and disability." Final Report of United States Industrial Commission, p. 92 (1915). The railways have raised no serious objection in any of the several arbitration proceedings in which they have been involved, to the employee's demands for a living wage. There has been considerable difference of opinion concerning the amount necessary to support a laborer and his family according to a recognized standard of living, but the principle that the worker should receive a wage adequate to satisfy subsistence wants, and in additiori provide certain con- veniences and luxuries, is generally accepted by railway officials. See Nickel Plate Arbitration Proceedings, p. 388 (1914), ff. 56 tinue to pay a worker more than he brings to the business. ^ A wage system shaped by economic forces alone is little troubled by this principle, because the wage is automati- cally fitted to the ability of the employee by the workings of competition. But when a rigid minimum is established by law and the wage is based, not upon the productive ability of the worker, but upon his human needs, the question of his productive power becomes all-important. It will be contended by but few even of the most enthusiastic humanitarian advocates of the legal minimum wage that all workers now employed produce a return sufficient to guarantee them a living wage.^ It would be absurd to argue that the worker is competent irrespective of his physical condition. It is equally foolhardy to close the public eye to the great proportion of physically de- fective workers now actively engaged in industry. When the United States Government examined 2,500,000 men for the national army in 1917, thirty-three per cent of that number were found physically unfit for service.^ Somewhat over half of the nation's workers are diseased or physically or mentally defective to an extent which materially affects their work. A recent publication of the National Industrial Conference Board,* after considering the percentage of workers suffering from industrial diseases, says: "When physical defects as well as disease are included the proportions run very much higher. For instance, of 800 bakers examined in New York for the army and navy, 57% had ' This axiom is in no way dependent upon acceptance or rejection of the wage- fund theory and is equally independent of the point of view from which the question is approached. The rule holds true whether the return on investment or the wage be considered the residual share. ' This contention, however, was made and with the appearance of good faith by the Massachusetts Commission on Minimum Wage Boards in its Report of January, 1912, wherein it said: "The mechanical or labor-saving device used in industry cannot be worth less than the cost of its manufacture and mainte- nance. The normal human workers cannot earn less than a like cost." The first fallacy of this argument is the false major premise which fails to consider the effect of the law of supply and demand. The second fallacy is the ambiguous middle term, for the argument without qualification, compares goods made solely to aid industry with human beings created without regard to their place in the industrial field. The third fallacy is the unwarranted conclusion. _ A "normal human worker" may employ himself strenuously for a week producing an article for which he can find no market. In such case he has clearly earned less than a living wage. ' U. S. Provost Marshal General's Report to Secretary of War (1917), p. 44. * "Sickness Insurance or Sickness Prevention.?" National Industrial Con- ference Board. Research Report No. 6, May, 1918, p. 8. 57 some disease or defect; of a similar number of tailors, the percentage was nearly 63; of 203 printers and 1,600 food handlers, it was only a little below 70%. Of a group of 2,08b male garment workers practically 100% were affected by some disease or physical disability. Not all of these workers are incapable of earning a living wage, but many are. They cannot do a full day s labor every day of the week; they cannot produce a normal amount during the days they do labor; they require such extensive supervision that their services are not fully productive; or they cannot be entrusted with a task which produces a living wage return. Such workers will necessarily be excluded from employment if the law requires the operator to pay them the same minimum wage that he pays his able-bodied workmen. If the employee does not produce a product of a value sufficient to pay the fixed minimum, the employer has no alternative but to dismiss the worker and if necessary reduce production or even discontinue operation. An able-bodied workman, then, is one who is capable of producing during each workday a product of sufficient value to enable the employer to pay him the legal mini- mum wage. All such workers are entitled to receive a living wage provided they work reasonably well during the necessary number of hours and days each week. IV. What is a Fair Day^s Work? The question of what constitutes a fair day's work, like the issue just considered, turns upon the productive ability of the laborer and the value of the product created.^ However much we may feel inclined to favor the uniform eight-hour day for social or humanitarian reasons, it can- not be coupled with a legal minimum wage without con- sideration of the economic effect of such a union. If a minimum wage is imposed upon the industry by law, the 'The report continues, p. 9: "To say that the existence of any such great amount of ill health and physical disability among the nation's industrial workers is a serious matter is merely to state a truism. Even though these dis- abilities may not, at least in their earlier stages, cause extended absence from work, the tax thus imposed on efficiency must be a heavy one. Obviously, maximum efficiency cannot be obtained from a force of workers one fourth of whom are suffering from such disabilities as defective vision, nasal disorders, and deformities, or whose health is being steadily sapped by tuberculosis, alcoholism, or venereal disease." ^ Any consideration of the hours-of-labor problem may seem dictum here, but it is so inseparably interwoven with the minimum wage question that the wage issue cannot be intelligently considered without reference to the other. 58 workday cannot be reduced below the number of hours in which an able-bodied laborer working in that industry can earn such a wage. If the workday is fixed by agree- ment, trade custom, or law at less than that number of hours, the day will have to be lengthened or the wage decreased if production is continued. The present tendency is to favor an eight-hour day for economic as well as social reasons. If such a workday is universally established, any legal minimum wage will have to be based upon the value of the product the able- bodied worker in the particular industry can produce in eight hours' time, even if the worker's standard of living is forced to the sphere of the bare living wage. The effect of limiting the number of working hours in the week is exactly the same as that of limiting the work- day. V. What Constitutes a Living Wage? The most disputed question in relation to the minimum wage is what constitutes a living wage. The two terms "minimum wage" and "living wage" are not analogous. The term "living wage," as ordinarily used, means a sum sufhcient to secure the bare necessities of life at the cur- rent prices — to provide food, shelter, clothing, heat, and light.^ The minimum wage may be fixed at the same figure as the living wage, or it may be based upon a "nor- mal standard of living," which is somewhat higher than the mere costof subsistence, and includes provision for med- ical attendance, recreation, and savings. It is generally admitted that the latter figure should ordinarily determine the absolute minimum wage, and, as was pointed out in Chapter II, labor must secure that figure to induce it to enter the employment willingly. There is a virtual unanimity of opinion as to what con- stitutes a minimum wage for men based upon the normal standard of living.^ It includes an allowance for sufficient iStockett in his "Arbitral Determination of Railway Wages " (1918), Ch. II, drew a somewhat technical distinction between a wage based upon "the minimum of subsistence" and a living wage, including within the latter, funds for recreation, medical attention, etc. He also distinguished similarly between the "normal standard of living" and the "standard of living." ^Devine, E. T.: "Principles of Relief" (1904), pp. 29-36; More, L. B.: "Wage-Earners' Budgets "(1907), pp. 269-270; Chapin, R. C: "Standard of Living Among Workingmen's Families in New York" (1909), pp. 75-198; Stockett, J. N.: "The Arbitral Determination of Railway Wages" (1918), pp. 67-70; Western Engineers' & Firemen's Arbitration Proceedings, p. 7774. 59 food, of the quality the workingman usually purchases, to maintain a family of two adults and three dependent chil- dren in health and efficiency; sanitary living quarters tor such a family, warm clothing of a reasonable quality, the heat and light necessary not only for health but for com- fort, a reserve for medical attendance, insurance, old age, and periods of unemployment, and a small additional sum for recreation. The estimates of the sum necessary to meet the require- ments of such a wage have varied. R. C. Chapin calcu- lated that it would require an annual wage of $900 to provide such a living in New York.^ F. H._ Streightoft placed the average figure for the principal cities of the country at $850.' Louise Boland More estimated that the cost would be $800 to $900 in New York,^ and Dr. E.T. Devine, Secretary of the Charity Organization of New York, put the figure at an absolute minimum of $600.* Prof. Scott Nearing, of the University of Pennsylvania, placed the living wage at $750,^ and the Minnesota Labor Bureau has accepted the same figure.^ The Massachusetts Bureau of Statistics estimated the cost of living at $724, and Mr. John Mitchell, then President of the United Mine Workers of America, at $600. These estimates, of course, were based upon pre-war conditions and must be ma- terially increased to fit the present abnormal prices.'' Mr. R. Meeker, U. S. Commissioner of Labor Statistics, placed the figure for Washington, D. C, at $1,200 in 1916 and SI, 800 in 1918. A conservative estimate of the present absolute minimum would place the figure at $1,200.« The absolute minimum wage, however, cannot be applied to all industry. Working conditions, the demands upon the laborer, the selling price of the product, and the productivity of labor vary in the different occupations. The greater training, responsibility, and risk required in '" Standard of Living Among Workingmen's Families in New York" (1909), pp. 245-250. 2 "Standard of Living" (1911), p. 162. '"Wage-Earners' Budgets" (1907), pp. 269-270. " "Principles of Relief" (1904), p. 35. 'Nearing, "Wages in the United States" (1908-1910). ° Twelfth Biennial Report of the Minnesota Labor Bureau. ' "Wartime Changes in the Cost of Living," National Industrial Conference Board. Research Report No. 14 (February, 1919). ' The return to normal prices will soon materially reduce this amount. 60 certain undertakings entitle the workers who bear these additional burdens to a wage in excess of that based upon the normal standard of living. Economic forces have gained such a wage for them and developed a well-defined standard of living for each trade, distinct even from that of workers of a similar grade in other like occupations. The employees have come to consider a wage based upon such specific standards as their natural right, and the arbitral decisions involving the question have almost universally adopted the same view.^ VI. The Economic Effects of the Minimum Wage ^ It has been generally affirmed by advocates of the legal minimum wage that the only important economic effect of such a regulation would be an increase in the standard of living of the workmen directly affected.^ This, how- 1 Re Southern Railway Arbitration Proceedings, pp. 10-23 (1914) ; Re Nickel Plate Arbitration, Report of Board, p. 723 (1914); Re Eastern Railroads and Brotherhood of Locomotive Engineers Arbitration, Report of Board, p. 47; Western Engineers' & Firemen's Arbitration Proceedings, p. 7774 (1915); Wheeling & Lake Erie Arbitration Proceedings, pp. 135-141 (1914). See also Canadian Pacific Ry. Co. v. Maintenance of Way Employees, Cana- dian Dept. of Labor Ann. Report, 1911, Appendix, pp. 221-247; Canadian Northern Ry. Co. v. Maintenance of Way Employees, ibid., Appendix, pp. 248-254; Grand Trunk Pacific Ry. Co. w. Maintenance of Way Employees, ibid., Appendix, pp. 255-274; Canadian Pacific Ry. Co. v. Freight Handlers. ^ This view is characteristically expressed in the Massachusetts Commission on Minimum Wage Boards, Report of January, 1912, which says: "There is a common and widespread erroneous view that such legislation is an attempt to provide by government that low paid workers shall receive more than they earn; that it runs counter to an economic law which by some mysterious but certain process correlates earnings and wages. There is no such law. . . ." This is very similar to the lawyer's assurance to the man in the cell that he cannot be jailed. The minimum wage has been enforced in the brush industry of Massachusetts, and that very economic law, branded nonexistent, not only appeared but operated to such an extent that an investigation conducted by the National Association of Manufacturers in co-operation with the United States Commission on Industrial Relations showed (1) that a great per cent of the workers affected by the law were unable to earn a living wage and therefore were forced out of employment by the law, (2) that of the number thus expelled sixty-seven per cent were unable to secure any employment during the six months intervening the effective date of the act and the time of the investiga- tion, (3) that ten per cent were employed part of that time at a wage slightly better than their former but less than the minimum wage, (4) that sixteen per cent were employed at less than their former wage, and (5) that the remaining seven per cent remained at home. One brush-making concern testified under oath that it was "unable to retain in our employ over seventy-five women and minor workers, whom we considered were not competent to earn for us the wage decreed by the Minimum Wage Commission." See Report of the Indus- trial Betterment Committee of the National Association of Manufacturers, published in the Report of the Association, 20th Annual Convention, 1915. The inevitable working of this same rule has been illustrated by the piling up of an enormous deficit by the Railroad Administration under a policy of paying a compromise wage fixed without regard to the earning capacity of the employees. 61 ever, is but a Utopian belief born of hope rather than true expectation or sound reasoning. It leaves one side of the question out of consideration. Ostrich-like, it buries its head to avoid consideration of the unsought results of the proposed change. Three types of employers would be vitally affected by the adoption of a minimum wage. They are the marginal producers in all trades, the operators whose businesses are dependent upon an available supply of cheap labor because of the low value of the products, and the em- ployers who have taken advantage of the existing labor surplus to reap a profit from low wages. The marginal producers would be forced out of business by their more efficient competitors, because they have barely been able to continue operation with their existing production costs and the increase in wages would raise such costs. Part of their trade and labor would be absorbed by the surviving competitors, but there would be a very material unavoidable decrease in production and many of the workers would be thrown out of em- ployment. The operators whose employees do not earn a living wage because of the low value of the goods created would be compelled to cease production and their employees would be deprived of their positions.^ The abundance of labor on which the appeal for the minimum wage is predicated, and which originally forced these workmen into this low-wage industry, would prevent them from securing employment in more profitable fields. All of the workers from such undertakings would be added to the ranks of the unemployed. The employers who have conducted a profitable busi- ness based upon low wages rather than efficiency would have to curtail production until they were able to make such adjustments as proved possible. Their employees, however, would eventually retain their positions at the increased wage, payment being made from funds which now are paid to the capitalist as profits. This forced exodus of laborers from industry would not be confined to the three chief employers of low-wage 1 This discussion is predicated upon normal conditions when an abundant labor supply makes a legal minimum wage necessary. In times of labor shortage like the present the argument, in so far as it refers to able-bodied workmen is inapplicable. ' 62 workers. Higher wages would raise the prices of all products which they affected, sales would be reduced, ■production curtailed, and the number of laborers needed would be lessened. It is idle to argue that the increase in production to meet the greater purchasing power pro- vided by the higher wage would offset the decrease. It is only on the assumption that the great majority of the low-paid workers would secure the increase that such an argument can be based, and that assumption may safely be said to almost controvert what would necessarily actually occur. Many workers would be thrown out of employment entirely and lose their whole purchasing power. The laborers directly affected by the minimum wage who retained their work would secure but a minor increase in wages, so that the total buying ability would be materially decreased. It has been suggested that many of the workers would secure employment elsewhere, but the minimum wage is based upon the existence of an excessive supply of labor. It is therefore difficult to conceive how all of these new recruits to the ranks of the unemployed could force their way back into industry at an increased wage. A few might be able to secure employment with the efficiently managed undertakings which would survive, but the number thus fortunate would be small, because the very efficiency of the plant indicates that it has closely approxi- mated the point of highest productivity in the sale of diminishing returns, and because high wages would tend to increase costs and raise prices, thus limiting output. Many of the workmen eventually would be able to secure employment from reinvested capital, but the number thus provided for would be small until the capital forced from the "cheap labor industries" found its way into the more economic undertakings overlooked, waived, or non- existent at the time of the original investment. Many competent workmen temporarily would be left without employment, and inefficient laborers would be left per- manently without work. The net result of the change in normal times would be a material reduction in the numbers employed in industry and a great increase in unemployment. The question presented by these three types of low- wage industry has been universally avoided by the advocates of the minimum wage, since the Webbs' pub- 63 lication, by branding such industries as parasitic. The business which secures its profits from low wages when the worker produces an amount sufficient to pay a livmg wage is truly parasitic, but the application of that term to those industries in which the worker produces less than such a wage, because of the low value of the product, is in- excusable libel. Such operators pay their labor all_ that it produces. They take nothing from other industries, but serve as a dumping ground for the inefficient worker whom the state has failed to provide for otherwise. The expediency of continuing the economic and social services they render may be questioned, but the fact that they perform such services cannot be. VII. The Benefits of a Legal Minimum Wage A material reduction in production and increase in the already too large body of unemployed workers would inevitably result from the establishment of the minimum wage, and must be faced. This does not necessarily mean that such a regulatory system should not be adopted. The existence of a great body of underpaid workmen has been a constant strain upon industry and an ever-present latent source of trouble. Business has been compelled to bear a burden that rightly belonged to the state. The "parasitic" workshop has been made the scapegoat of blundering politics which failed to provide for those un- fortunates whose labor could not secure them a fair living. The situation is analogous to that of the weakened cor- poration which submits to a friendly reorganization to weed out the weaknesses in the structure and prevent bankruptcy. Industry must be submitted to a similar renovation to stave off the threatened upheaval and place business upon a safe basis. It may be asked, What benefits would flow from the reorganization of industry by way of minimum wage legislation, if such control has the apparently disastrous effects pointed out.? The answer is as clear as the un- desirable effects are certain. First, the minimum wage would eliminate all profit which arises from oppression of the workman. It would give to labor all that labor in justice can demand. It would free industry from the charge of being parasitic and remove the cause of many labor disturbances and practically all of the radical ten- dencies that now threaten disastrous upheavals. It would 64 eventually relieve the congestion of the industrial centers, provide workers for the rural districts, relieve the do- mestic servant problem, and generally adjust the labor supply to the demands for labor. It would exclude from mdustry that great body of inexperienced temporary women workers who are partly supported from sources other than their wages, and who, therefore, demoralize the entire wage system. And it would remedy the present evil of excessive labor turnover. It would restrict competition between both employers and enaployees. It would thus take the undesirable economic advantage from the employee whose greatest asset is his willingness to work at a low wage, and give an equal chance to the man of training and efficiency. It would take the similarly undesirable advantage from the employer whose chief ability is his power to drive a close bargain with labor, and give an opportunity to the operator who depends upon efficiency of management for his profits. It would reduce the amount of work left to unskilled laborers and introduce machinery and effi- ciency into fields from which they have been excluded by low wages. It is an indisputable fact that a great many workers now employed produce a living wage which they never receive. The surplus of unskilled and female labor enables many employers to take an unfair advantage of their employees. There is no other way of explaining the oft-quoted wages paid women workers in the candy trade, lace-making, paper-box, bindery, and needlework industries, or the low wages paid many unskilled and unorganized male laborers. These particular wages are not fixed by the productivity of the marginal producer, because the laws of supply and demand coupled with some element such as low profits, special skill, or secret processes prevent the working of competition which ordinarily gives the laborer all that he produces. A minimum wage which did not go beyond the productivity point applied to such industries would merely secure justice for the employees. It would take from the operator nothing to which he has a right, for the public interest and the laborer's interest in such profits are and should be paramount to any claim the operator has. The problem is somewhat more difficult in the case of the non-parasitic industries, which, while they pay the 65 laborer all he produces, do not give him a living wage. In considering such cases we leave the realm of strict econo- mics and enter the field of sociology and political science. We cannot force the employer to pay a living wage, because he is unable to do so. The issue, therefore, is, shall we permit him to pay less and let the employee earn what he can, or shall we meet the situation squarely, force such uneconomic industries to cease production, and pro- vide for the new recruits to the ranks of the unemployed by other means ? The latter seems to be the more desirable step. The vice, violence, destruction, and crime directly at- tributable to starvation wages present a serious problem. The sickness, illiteracy, low morals, and inefficiency which result from low pay are scarcely less deplorable. The dis- turbances due to strikes and social unrest create a third argument for a firm stand for the minimum wage, even at the expense of the uneconomic industry. ^ The elimination of the starvation wage would temporarily impose a heavy additional burden upon the state, for such a wage cannot justly be adopted until the government has made adequate provision for the support of the unemployed workers from such industries. This item, however, is rightly a charge against the state rather than against industry.^ There is, moreover, a very strong probability that in the long run the social gain would more than repay the added cost. The only economic argument of sufficient weight to offset these social and political advantages is one that even the most conservative economists will hesitate to advance, i.e., that industry crippled by the loss in productive power resulting from the imposition of a minimum wage would be incapable of producing a sufficient amount to supply the needs of society. ^ If such uneconomic Industries must be resorted to as emergency employ- ment to provide work for many laborers of limited productive ability, in order to lessen the expense of their keep, the industry should be conducted by the state. This would eliminate the necessity of reducing the paltry wage earned to provide a return upon private capital invested in the undertaking, a rent to private land owners, or a profit to private managers. ^(There is not the slightest ground to dispute the right of every individual to a reasonable Hving if he or she performs his obligation to the best of his or her ability, but that right is one against society and the state in which he claims citizenship. The employee has a right to demand a living wage from his em- ployer only when he earns one. If he has fully performed his tasks as capably as he could he is entitled to a living regardless of what he produces, but his right in so far as it exceeds the point of production is one against society as a whole and cannot be enforced against the employer. 66 VIII. The Place of the Minimum Wage in the Wage Control Program The living wage is an economic possibility and is politically and socially desirable. This, however, does not prove the expediency of any type of minimum wage which may be suggested. The establishment of a legal wage is not a panacea for all industrial ills. It is but one plank in a general state regulatory platform and there- fore cannot be considered independently or apart from the remainder of the program. The legal minimum wage cannot be successfully en- forced without auxiliary provision for three classes of persons who would be thrown out of employment in large numbers if such a wage schedule were established. Those classes include the youthful apprentices, the disabled workers, and the persons grown old in industry.^ Education, as distinct from experience, is a purely state function. It has never had a place in industry save by governmental waiver and neglect. The state must assume its duty and provide for the training of the apprentice by development of its fast growing system of vocational education. His practical experience must be provided for by modification of the minimum wage to permit be- ginners to work at a wage based upon their low productive power rather than their physical needs. Those needs must be specifically provided for by an allowance in the parent's wage. The cost of providing relief for the sick, the disabled, the unemployed, and the worn-out laborers constitutes a charge to be allocated between the industry, the in- dividual, and the state. It must be met by means of workmen's ' compensation acts, compulsory insurance legislation, and perhaps old age and mothers' pension laws. The numerous safety appliance acts, factory inspection laws, health measures, and similar preventive steps, the state employment bureaus, and those more recent regula- tions seeking to compel efficient management, form a class of auxiliary provisions but a degree further removed from the wage problem. litis impossible, within the limits of this thesis to do more than suggest the regulatory program which must supplement legal interference in the wage question. But these non-wage features of the program are perhaps more im- portant at the present time than those features with which we are directly- concerned. 67 Such ultimate relief is essential and would eventually readjust the industrial system, but it provides no adequate immediate relief for those persons whose sole means ot support would be extinguished by the minimum wage provision. Two general provisions are prerequisite to such wage reform. First, the minimum wage must be intro- duced in such a way as to disrupt industry as little as possible and yet sacrifice the principle of such a wage no more than is necessary. The first minimum wage estab- lished, therefore, should approximate the cost of livmg, and provision should be made for employment of appren- tices and beginners at a lower wage with an automatic increase based upon length of employment. The wage for men must be based upon family life and the wage for women upon the needs of the individual worker, except in those industries where women compete directly with men. In such trades the wage should be the same for men and women to prevent single women from depriving heads of families of their means of support. Second, the state must supply immediate emergency employment for all physically and mentally capable workers, and support for all other laborers deprived of jobs by the proposed legislation. The relief work must be drafted so as to afford the beneficiaries a return at least equivalent to that taken from them, and so limited as not to attract laborers from industry who might earn the legal minimum wage. The system must be elastic enough to tide over periods of financial depression and supply additional workers during abnormally prosperous epochs. It should, moreover, be so shaped that it would serve as a great training school for these unfortunates, thus enabling them ultimately to gain that efficiency which would carry them back into the reorganized industrial system at the increased wage. The minimum wage itself has two distinct functions to perform. First, it must serve as an absolute minimum fixed by some form of "wage-board" for each industry in which the pay of any group of employees has fallen below the cost of living. Second, it must serve as a basis for the determination of other wages in conciliation and arbitration proceedings. The function of the minimum wage is radically different in these two cases. The living wage is established as a principle of fundamental economic and social justice. 68 The minimum wage based upon a specific rather than a normal standard of living is a criterion whereby the justice of wage claims may be determined. Economic forces play a much greater part in deciding the expediency of such a minimum wage, for the strong social and political argu- ments for a living wage lose much of their force when applied to a wage based upon a higher standard. In the former case the public interest is directly involved; in the latter case it comes into play indirectly. The state is involved in such disputes as arbitrator and protector of the public peace rather than as a party to the contro- versy.^ This difference in purpose materially affects the appli- cation of the theory. In the case of the living wage the ability of the company to pay is an immaterial question.^ In the case of the minimum wage based upon a standard above the cost of living the company's ability to pay be- comes a prime issue.^ Thus in the "Big Four Arbitra- tion," after affirming the living wage theory, the Board said: "The period of depression from which business is just emerging and the consequent physical and financial condition of the railroads have, however, been taken into consideration, and on this account larger concessions have been refused." The general practice of arbitration boards has been to strictly enforce the living wage, but to recognize the employer's inability to pay when the wage demanded exceeded that figure but did not exceed the cost of living based upon the particular standard involved. Such a policy is expedient, for obvious practical reasons, at least until the minimum wage has been firmly established and industry readjusted to fit it. IX. The Constitutionality of the Minimum Wage The adoption of a legal minimum wage is clearly within the sphere of governmental functions, though its con- 1 The state is of course directly interested in the wage when the industry- involved is quasi-public. ^New York, Chicago & St. Louis Ry. v. Telegraphers; Wheeling & Lake Erie R.R. v. Telegraphers; Wabash Ry. v. Telegraphers; Pittsburgh Terminal Ry. V. Telegraphers; and West Side Belt Ry. v. Telegraphers. See Nickel Plate Arbitration, Report of Board, p. 723 (1914). 5 Grand Trunk Pacific Ry. Co. v. Maintenance of Way Employees, Canadian Labour Gazette, March, 1914, p. 1056; Canadian Pacific Ry. Co. v. Maintenance of Way Employees, Canadian Labour Gazette, February, 1914, p. 904; Big Four Arbitration, Records U. S. Board of Mediation and Conciliation, File No. 26; Chicago, Burlington & Quincy Arbitration Proceedings, p. 9577. 69 stitutionality has been questioned. The purpose of the state is to promote the social welfare by securing the greatest good to the greatest possible number of those in- dividuals who are subject to its jurisdiction. Furtherance of the public welfare is the primary concern of state activity, and three groups of governmental powers are recognized as adapted to this purpose.^ The first group of state powers comprises those normal functions necessary to maintain national existence, estab- lish justice, and secure internal peace, order, and security. The second class includes all powers naturally adapted to promote the economic welfare of the state, to protect against fraud, oppression, and unfair business methods, and to regulate production and distribution. The exer- cise of such powers is not absolutely essential to sover- eignty, but is essential to a complete fulfillment of the purposes of government. The third group of powers in- cludes those desirable but relatively non-essential activi- ties which promote civilization and deal with moral, intellectual, and political activities. It requires no resort to imagination to conceive of government regulation of wages as within the first group of these powers, and it is upon this assumption that the Federal Supreme Court seems to have upheld the Adamson Act, fixing wages for certain railway employees engaged in interstate commerce.^ The question, whether a minimum wage in the general industrial field could be brought within this group of powers, is immaterial, for such regulation is clearly within the scope of those state powers which make up the second group, and is far more vitally connected with the public welfare than those powers usually considered well within the third class. The fact that minimum wage legislation is a legitimate government activity, however, does not establish its constitutionality under the American system of delegated powers. Such proof makes a prima facie case, but that case has been violently attacked on the ground that wage regulation violates constitutionally protected rights of iFreund, Ernst: "The Police Power" (1904), p. 7; Garner, J. W ■ "Intro- duction to Political Science" (1910), p. 316; Cook, W. W.: "What is the Police Power?" Columbia Law Review, May, 1907. 2 Wilson V. New, 243 U. S. 332, 37 Sup. Ct. 298, 61 L. Ed., 755. 70 both employers and employees "without due process of law."i The principal interest involved is the employee's free- dom and his right to contract for the sale of his services on such terms as he sees fit. The theory of unrestricted natural rights solidified into an unchanging written con- stitution interpreted only by reference to precedent, has been advanced to support this interest; and that concept has done more to befog labor problems than any one other thing. Coupled with the laissez-faire doctrine, it effec- tively clipped the wings of state control for half a century. But the reaction against the laissez-faire policy brought with it a revolt from the unchanging legal right concept and restated the purpose of regulation. Regulation limits private rights because it is necessarily antagonistic to the individual interests regulated. It destroys private rights and private property by limiting the bundle of unit rights which constitute liberty and property. It destroys individual freedom by limiting the use of property and restraining the exercise of personal rights. It destroys profits. It limits the right of contract. But this is true of all regulation, and regulation is es- sential to the very existence of the rights regulated. Whenever the individual interest and the public interest conflict to such an extent that regulation becomes necessary, the individual interest is destroyed in whole or in part as expediency dictates.^ A legal right is not an unchanging concept. The makeup of a specific private right at any time, as was pointed out in Chapter III, depends solely upon what unit rights the state believes it expedient in the promotion of the public welfare to grant to the individual. This is as true in the case of personal liberty and the right of contract as in that of any other private interest. The right of contract has always been considered subject 1 The constitution of the State of Louisiana specifically prohibits government regulation of wages in private employments. 2 "A police regulation, obviously intended as such, and not operating un- reasonably beyond the occasions of its enactment, is not rendered invalid by the fact that it may affect incidentally the exercise of some right guaranteed by the constitution; as, for example, it is said that the exercise of the police power is not subject to restraint by constitutional provisions designed for the general protec- tion of rights of individual life, liberty, and property." 6 Ruling Case Law 195, Sec. 193, and cases there collected. 71 to numerous limitations, ^ and every agreement carries the implied condition that it is subject to the reasonable exercise of the state police power.^ The courts, for ex- ample, have repeatedly affirmed the legislative po^er to protect certain classes against themselves, although the laws passed under such power necessarily interfere with the freedom of contract. And such legislation, even when it acted as a limitation upon the labor contract, has been held valid in every case where the theory of the law was directly in issue.^ A great number of such acts, however, have been declared invalid on account of arbitrary discrimination between industries. A strictly private business in no way involving the public health or well-being, if lawful and not abnormally dangerous, cannot be subjected to special regulation impairing the freedom of contract even though such control would directly promote the public welfare. This, however, does not mean that general legislation applicable alike to all industries would be void if applied to such private undertakings. Such laws have always been sustained. The only limitations upon general regulation of private business is the necessity of proving the reasonableness of the control. The state may not arbitrarily abridge individual freedom or the right to contract, but it may restrict and limit those rights in a reasonable manner for legitimate purposes. ' See Chapter II, Note 3, p. 24. "The liability of contract guaranteed by the constitution is freedom from arbitrary restraint — not immunity from reasonable regulation to safeguard the public interest." Miller ». Wilson, 236 U. S. 373, 35 Sup. Ct. 342, 59 L. Ed. 628, L.R.A. 1915-F 829. "Granting then that there is a liberty of contract which cannot be violated even under the sanction of direct legislative enactment, but assuming, as accord- ing to settled law we may assume, that such liberty of contract is subject to such legislation as the state may reasonably prescribe for the common good and well-being of society, what are the conditions under which the judiciary may declare such regulations to be in excess of the legislative authority and void? Upon this point there is no room for dispute; for the rule is universal that a legislative enactment, federal or state, is never to be disregarded or held invalid unless it be, beyond question, plainly palpably in excess of legislative power." Patterson v. Kentucky, 97 U. S. 501. See also 6 Ruling Case Law 199 and cases cited. ^ "The principle is that a person cannot, by entering into a contract, impair the power which the state must have for the protection of peace, safety, health, and morals." Freund, Ernst: "The Police Power" (1904), p. 584. Manigault V. Springs, 199 U. S. 473, 26 Sup. Ct. 127, 50 L. Ed. 274; Chicago, Burlington & Quincy R.R. v. Nebraska, 170 U. S. 57, 18 Sup. Ct. 513, 42 L. Ed. 948; Buffalo E. Side St. R.R. V. Buffalo St. R.R., HI N. Y. 132, 19 N. E. 63, 2 L. R.A. 384, etc. ' Hancock ». Yaden, 121 Ind. 366; State v. Peel Splint Coal Co., 36 W Va 802; Patterson v. The Bark Eudora, 190 U. S. 169, 23 Sup. Ct. 821. See also Avent-Beattyville Coal Co. v. Commonwealth, 96 Ky. 218. 72 The employer's rights are in no manner infringed by the minimum wage. It does not compel him to do any act, but merely restrains him from acting in a manner declared detrimental to the public welfare. It does not require him to hire any laborer or pay any person a wage, but it restrains him from paying less than a living wage if he does elect to hire a workman. He may have economic ability to employ workmen at a lower wage, but he has no legal or natural right to do so. He cannot establish any alleged right to conduct his business in a manner declared injurious to the public welfare, or any asserted right to conduct a business which cannot be carried on in any other manner. The judicial effort to draw the employer's rights into the question was but an attempt to fit the early decisions to the theory of vested rights. Since the courts have enlarged the scope of judicial limitation upon legislation, this subterfuge has been unnecessary and has been dropped. The history of the judicial doctrine of the freedom of labor contracts throws considerable light upon the present status of the law. The principle was first stated in two decisions rendered in 1886. The Illinois Supreme Court in the case of Millett v. The People,^ in passing upon the constitutionality of a statute regulating the weighing of coal to determine the pay of miners, said: "What is there in the condition or situation of the laborer in the mine to disqualify him from contracting in regard to the price of his labor, or in regard to the mode of ascertaining the price? And v/hy should the owner of the mine, or the agent in control of the mine, not be allowed to contract in respect to matters as to which all other property owners and agents may contract.? Undoubtedly, if these sections fall within the police power, they may be maintained on that ground; but it is quite obvious that they do not. Their re- quirements have no tendency to insure the personal safety of the miner, or to protect his property, or the property of others. They do not have reference to the comfort, the safety, or the welfare of society." The Pennsylvania Supreme Court took a similar stand in Godcharles v. Wigeman^ where, in passing upon the constitutionality of a statute involving wage payments by "store orders," it said: 1 117 111. 294, 302. See also Ramsey v. People, 142 111. 380; Harding v. People, 160 111. 459; and Vogel ». Pekoe, 157 111. 339. In the last-named case the freedom of contract theory was definitely accepted. 2 131 Pa. St. 43. 73 "More than this, it is an insulting attempt to put the laborer under a legislative tutelage which is not only degrading to his manhood, but subversive of his rights as a citizen of the United States. He may sell his labor for what he thinks best whether money or goods, just as his employer may sell his iron or coal, and any and every law that proposes to prevent him from so doing is an infringement of his constitutional privileges and consequently vicious and void." The doctrine thus originated has had a stormy life, buiFeted back and forth between jurisdictions and within the separate jurisdictions. Thus the Utah Supreme Court in 1896 sustained an eight-hour day for miners and laborers in smelting works ^ and the decision was affirmed in 1898 by the Federal Supreme Court, ^ but the same legislation was held unconstitutional in the neighboring state of Colorado in the very next year.^ The United States Supreme Court has affirmed acts regulating wage payments* which many of the state courts have declared unconstitutional." And the Illinois Supreme Court declared an act limiting the hours of employment for women in certain industries invalid in Ritchie V. The People,'' but held a similar statute valid in People v. Elerding.^ The indecision and irrecon- cilability of the courts led the Oregon Supreme Court, after reviewing the decisions, to justly comment, that: "The decisions of the courts have been based upon first impressions and may be liable to fluctuations from one extreme to the other before the extent of the power of legisla- tion on these questions is finally settled." ' The recognition of the labor contract theory which placed the potential personal rights of the employee upon the same legal basis as the vested property rights of the employers, was an innovation in constitutional law. The courts had no precedent to follow. Public 1 State V. Holden, 14 Utah 71. 2 Holden t-. Hardy, 169 U. S. 366, 42 L. Ed. 780, 18 Sup. Ct. 383. 3 Re Morgan, 26 Colo. 415. < Knoxville Iron Co. v. Harbison, 183 U. S. 13, 22 Sup. Ct 1 46 L Ed McLean v. Arkansas, 211 U. S. 539, 53 L. Ed. 315, 29 Sup. Ct. 529! * State V. Missouri Tie & Timber Co., 181 Mo. 536; Re Preston, 63 Ohio St. 428; State v. Haun, 61 Kan. 146; Jordan v. State, 51 Tex. Cr 531 etc ' 155 in. 98. ' 254 111, 579. oi'-^i^q'I.'' "• ?;?^" " '''•' ^® °'- ^^^' ^■'^■^- 1917-C 914, Ann. Cas. 1916-A 74 opinion Itself was not definitely formulated and furnished them no criterion, so discrepancies were to be expected. There has been, in fact, no uniformity in the holdings or in the theory upon which the courts have proceeded. They have followed the dictates of expediency and the paths of least resistance. _ The decisions are in practical accord in accepting the right to labor as a constitutionally protected interest ^ and they unanimously hold that such rights are subject to any reasonable regulation necessary to promote the public welfare.2 The question thus, in reality, becomes one of fact as to what constitutes reasonableness or necessity, and on this issue there is no agreement. The courts have fixed no definite standard to which they will conform in deciding such questions. In the early nineties, when the "labor cases" first arose, the courts were swayed by the laissez-faire theory.^ The judicial benches were filled by men trained in the classical school of economics. Sociology played but a 1 "It is true that in Worthington v. Waring, 157 Mass. 421, 32 N.E. 744, this Court refused to enjoin defendants from making use of a blacklist, stating that the rights alleged to be violated were personal and not property rights. ... In the light of more recent decisions of the Court recognizing that the right to labor and to its protection from unlawful interference, is a constitutional as well as a common law right, there appears to be no sound reason why it should not be adequately protected under our present broad equity powers." Cornellier v. Haverhill Shoe Mfg. Assn. et al., 221 Mass. 554, 109 N. E. 643; State v. Stewart 59 Vt. 273, 9 Atl. 559; Slaughterhouse Cases, 16 Wall, 36, 127, 21 L. Ed 394- Adair v. United States, 208 U. S. 161, 28 Sup. Ct. 277, 52 L. Ed. 436, 12 Ann! Cas. 764; Coppage o. Kansas, 236 U. S. 1, 35 Sup. Ct. 240, 59 L. Ed. 341, L.R.A. 1915-C 960; Bogni et al. v. Perotti et al., 224 Mass. 152, 112 N. E. 853. •^ Stettler v. O'Hara, 243 U. S. 629, 37 Sup. Ct. 475, 61 L. Ed. 937; Wilson v. New, 243 U. S. 327, 37 Sup. Ct. 298, 61 L. Ed. 755; Miller ». Wilson, 236 U. S. 373, 35 Sup. Ct. 342, 59 L. Ed. 628, L.R.A. 1915-F 829; Muller v. Oregon, 208 U. S. 412, 28 Sup. Ct. 324, 52 L. Ed. 551, 13 Ann. Cas. 957; Riley v. Massa- chusetts, 232 U. S. 671, 34 Sup. Ct. 469, 58 L. Ed. 788; Hawley v. Waller, 232 U. S. 718, 34 Sup. Ct. 479, 58 L. Ed. 813; Bosley et al.v. McLaughlin rt al., 236 U. S. 385, 35 Sup. Ct. 345, 59 L. Ed. 632; Earnshaw v. Newman et al. (D. Col.) 43 Wash. L. Rep. 198; Commonwealth v. J. T. Connor Co. (Mass.) 110 N. E. 301; Hotchkiss v. District of Columbia, 41 Wash. L. Rep. 706; People o. Charles Schweinder Press, 214 N. Y. 395, 108 N. E. 639, Ann. Cas. 1916-D 1059; State v. Bunting (Or.) 139 Pac. 731; Sturges & Burn Mfg. Co. ». Beau- champ, 231 U. S. 320, 34 Sup. Ct. 60, 58 L. Ed. 245, L.R.A. 1915-C 1196; Bunting V. Oregon, 243 U. S. 426, 37 Sup. Ct. 435, 61 L. Ed. 830; McLean v. Arkansas, 211 U. S. 539, 29 Sup. Ct. 206, 53 L. Ed. 315, etc. ' "As such, the law is archaic and antiquated in viewpoint and method. It accepts a social theory conceived more than a century ago and now almost universally rejected. It therefore tends to assume that social ideas, conditions, and relations that existed more than a century ago exist now. It tends to base its judgments of right, rights, and relationships on the conditions and relations that existed more than a century ago. Its method of procedure is that of pre- cedent." Hoxie, R. F.: "Trade Unionism in the United States" (1917), p. 216. See also p. 238. 75 minor part in public affairs. Individualism and P"vate property rights were supreme, and the courtslooked with little favor upon government interference in industry. Gradually, however, the judicial conservatism was pene- trated and the social element was forced into the law. Public opinion changed, and the courts were constrained to modify their holdings accordingly. Legislation fixing the terms and conditions of employment was uphe d. Hours of labor were declared subject to statutory regula- tion, and the labor contract subject to legal limitation Laws controlling the manner of paying wages were held valid, and the constitutionality of the minimum wage itself as applied to women and minors was affirmed. The only basis upon which these varying decisions concerning the exercise of the police power in labor cases can be reconciled is expediency. The courts have attempted to promote the public welfare and have moulded their decisions to fit the prevalent public opinion. The test has been the reasonableness of the laws, and the social element in rights has received a constantly growing attention. Economic and social conditions have changed greatly and the legislative needs have altered with them. The question of constitutionality has in reality ceased to be one of law and become one of fact.^ The issue is the expediency of the regulation contemplated, and the decision changes with the varying need for control. Thus i"There is no essential difference, so far as constitutional status is concerned, between the legal regulation of the hours of labor and the legal regulation of wages. The constitulionality of both alike is solely a matter of producing sufficient evidence showing the necessity and appropriateness of the proposed legislation. . . . Our constitutional system is susceptible of adaptation to any social condition. The constitutionality of plans for the legal regulation of wages depends, then, upon the necessities of the case to which they are to be applied, and the ap- propriateness of the particular plans presented." Holcombe: "The Legal Minimum Wage in the United States." American Economic Review, March, 1912. "Our views on social relations and public control may undergo considerable changes. A certain standard of living may come to seem as important as the preservation of health; industrial employment may become affected with a public interest, and regulation may supersede contract as contract has super- seded statutes. "If such changes come it will require no constitutional amendment to give them relief. . . . Not one of the principles of limitation has been formulated in so explicit a manner that its abandonment would require more than the familiar process of distinguishing precedents. All thatis vague, shifting, or contradictory in the present doctrines will facilitate their modification or abandonment, if necessary, so that there will be no difficulty in accommodating the substantive content of constitutional rights to altered social or economic conceptions." Freund, Ernst: "Constitutional Limitations and Labor Legislation," Proceed- ings of the American Association of Labor Legislation. December 28-30, 1909. Freund, Ernst: "Standards of American Legislation," p. 127. 76 the constitutionality of the minimum wage for women and minors, which was hotly contested but a few years ago, has ceased to be a debatable question. State laws providing for the establishing of such wages have been upheld by the Federal Supreme Court and the courts of last resort of several states.' The Supreme Court of Oregon has sustained such a law against charges of undue interference both with the employer's rights^ and with those of the employee, saying in the latter case: "Having determined in the preceding case that the police power of the state legitimately extended to the right to pre- vent the employment of women and children for unreasonably long hours or at unreasonably small wages, and that the state had the right to use the machinery of a commission to deter- mine, to the extent stated in the opinion, the length of time and at what wage such persons might be employed, it would seem to follow as a natural corollary that the right to labor for such hours and at such wages as would reasonab'y seem to be detrimental to the health or welfare of the community is not a privilege or immunity of any citizen."^ There is considerable question, however, whether a point has been reached in the growth of judicial theory where the reasoning of these cases would be extended to include a minimum wage, for men. The courts have handed down several dicta which indicate a doubt as to the expediency of such legislation, if not an unwilling- ness to uphold it.* Thus the Minnesota Supreme Court in the Williams case said:^ 1 Stettler v. O'Hara, 243 U. S. 629, 37 Sup. Ct. 475, 61 L. Ed. 937; Stettler v. O'Hara et fl/.,69 Or. 519, 141 Pac. 158, L.R.A. 1917-C 944; Williams ». Evans et al., 139 Minn. 321, 165 N. W. 495; State v. Crowe, 130 Ark. 272, 197 S. W. 4. See also Malette v. Spokane, 77 Wash. 205, 137 Pac. 496, Ann. Cas. 1915-D 225, 51 L.R.A. (N. S.) 686; Atkin v. Kansas, 191 U. S. 207, 24 Sup. Ct. 12i, 48 L. Ed. 148; Norris v. Lawton (Okla.) 148 Pac. 123; State v. Midwest Const. Co. (Kan.), 162 Pac. 1175; Byars v. State, 2 Okla. Cr. 481, 102 Pac. 804; Clark v. State, 142 N. Y. 101, 36 N. E. 817, etc. 2 Simpson V. O'Hara et al., 70 Or. 261, 141 Pac. 158. 3 Stettler v. O'Hara et al., 69 Or. 519, L.R.A. 1917-C 944, Ann. Cas. 1916-A 217, 139 Pac. 743. * Williams a. Evans et al., 139 Minn. 32, 165 N. W. 495. See also Muller v. Oregon, 208 U. S. 412, 28 Sup. Ct. 324, 52 L. Ed. 551, 13 Ann. Cas. 957, wherein Justice 'Brewer said: "That woman's physical structure and the performance of maternal functions place her at a disadvantage in the struggle for subsistence is obvious. ... As minors, though not to the same extent, she has been looked upon in courts as needing especial care that her rights may be preserved. . . . Differentiated by these matters from the other sex, she is property placed m a class by herself, and legislation designed for her protection may be sustained, ^ even where like regulation is not necessary for men and could not be sustained.' 'Williams v. Evans et al., 139 Minn. 321, 165 N. W. 495. 77 "It is not necessary that we should hold that statutes of this kind applicable to men would be valid. We think it clear, there is such an inequality or difference between men and women in the matter of ability to secure a just wage and m the consequences of an inadequate wage that the legislature may by law compensate for the difference." What the attitude of the courts would be today is but a matter of speculation. The question is one of fact, not law, and their decision depends upon the ability of the public to convince the judges that the protection of the minimum wage is necessary in the case of male labor. This can best be done by analysis of the decisions sus- taining such laws for women workers. The constitutionality of the minimum wage cannot be predicated on any benefit to the individuals affected. It rests solely upon the promotion of the public welfare. It cannot be based upon any strict difference between the sexes, because minors have been included within its operation. "Woman's physical structure and the per- formance of maternal functions place her at a disadvantage in the struggle for subsistence," and that disadvantage has been made the basis for the immediate action in her behalf. The sex element has been drawn into the decisions to show the immediate need of providing for the women, not to indicate any basic difference between men and women so far as the theory of the law is concerned. Such legislation can only be justified by the social necessity of protecting the family. The woman is the mother and the trainer of children. She is the ridgepole of the family structure. Her health is of vital importance to the family and indirectly to the public.'- But arguments based upon her status in the family group are equally applicable to men. The male has been the head of the family and principal breadwinner since the dawn of civilization. Woman's place in the provider class is due solely to the existence of economic conditions which prevent the male from earning an amount sufficient to provide for the support of the family without the wife's help. Women and children of the families of able-bodied male workers have no legitimate place in industry. They are found there only because of the insufficient wage earned by the father. The minimum wage is applied to 'This argument is in point in case of legislation limiting the hours of work or regulating working conditions, but has little direct bearing in the case of wage laws. 78 women and children to relieve this deplorable situation which the laches of the state and the greed of the economic world has superimposed upon society. It has been the expedient remedy because it was the possible one, not because it was the most practical one. True reform legis- lation would be aimed at the father's wage. It is a super- ficial and temporary compromise to attempt to solve the problem by way of a minimum wage applied to women alone. Such legislation is desirable, but it should be a supplement to the minimum wage for male workers. It is a fallacious argument which attempts to show any economic disability of women, not directly attribu- table to men's insufficient wage, which is not equally effec- tive In the case of the unskilled and unorganized male workers who make up the vast majority of our great army of labor. The unskilled woman worker differs from the unskilled male in only one way. There is no greater surplus of women than of men, but women and minors are willing to work for less because their pay is ordinarily supplemental to that of some male worker and adds to the family purchasing power in greater ratio than the adult male's wage does. This difference Is the economic basis for the differentiation between men and women. Standing alone the minimum wage for women is far from an efficient remedy for this situation. The supposi- tion is that the family has not been able to secure a living from the father's wage and the women and children have been forced into industry. The minimum wage legislation excludes many of these workers by increasing the wage above their productive ability, and thus reduces the family's earning ability. It leaves the father with a wage based upon the assumption that his pay will be supplemented by that of his family, and, at the same time, prevents the remainder of the family from earning such supplemental pay. It prevents women from offering their services for sale at a price fixed by the fact that the wage supplements that of a male worker, but It does not in any way change the circumstances which forced these women into industry at such low wages. The infringement of the right of contract is no greater in the case of men than In that of women. The police power extends to both. The proof of the constitutionality is but the proof of the necessity of the legislation. 79 The recent trend of decisions, the extension of the limitation on hours of work to men, the upholding of the Adamson Act regulating men's wages, the gerieral widen- ing of the sphere of government intervention in industry, and the constantly growing judicial recognition of the public interest in private rights seem to indicate that a minimum wage applicable to all unskilled male workers would be sustained by the court. The earlier dicta repre- sent the groping of the judges for the fundamental principles rather than their mature judgment upon the question. X. Summary The primary cause of the present radical labor unrest is the poverty resulting from low wages. The great body of irresponsible agitators in the ranks of labor are the product of the less than a living wage policy in industry and the freedom of contract at any cost doctrine in government and legislation. These dissatisfied laborers who are without social ties to hold them in restraint, and who justly feel that they have been maltreated by society, constitute the most dangerous element in the problem. They are the authors of the unreasonable economic demands which disrupt industry with con- stantly increasing frequency, and of the irrational political policies which threaten social order and government itself. The first aim in government intervention should be "direct action" to eliminate this group. The situation calls for a sweeping change. The forces which created this type of workman must be counteracted. Any compromise legislation which leaves those forces active must prove of limited and temporary benefit, for such radicals will spring up from the ranks as long as the causes of unrest remain. The only sound remedy for industrial anarchy is to eliminate wages which are lower than the bare cost of living by establishing a legal minimum wage for those industries in which the presence of a large number of unorganized, unskilled women or minor workers makes such action necessary. Such regulation, however, constitutes a serious innova- tion and cannot be enacted precipitously. It requires corollary action by the state to provide for those un- fortunates who are unable to earn a living wage, and emergency employment for those laborers who must 80 necessarily be thrown out of work temporarily by the reorganization. It requires careful analysis of the whole situation to prevent unnecessary interruptions and im- practical interference. This reform, after the necessary readjustment has been accomplished, must prove of infinite benefit to industry. It will relieve business of the unjust obligation now im- posed upon it of supporting a great body of incapacitated workmen, who because they cannot earn a living wage and are not restrained from reproduction, go on perpetu- ating the great burden upon both industry and the state. It will require the employer to pay a higher wage, but in return it will give him better service and eliminate the loss from repeated interruptions and constant dis- satisfaction. It will decrease the number of business institutions by forcing the present marginal producer out of operation, and by compelling all uneconomic in- dustries to cease production, but the increased efficiency will eventually raise the total amount of truly economic goods produced. The really wasteful production now possible on account of the available cheap labor will be eliminated. Industry will be placed upon an efficient basis. This seemingly Utopian change, however, cannot be accomplished by a single sweep of the legislative hand. The delicate machinery of complex modern industry cannot be successfully altered by such methods. The first minimum wage will have to be one far below the desideratum, and be increased gradually as supplemental state action and economic readjustment make such action feasible. The whole wage system, moreover, will have to be reorganized to conform to the new order. The present balance between skill, _ training, ability, education, and mere manual labor which has been fixed by economic forces cannot be discarded to create a favored class who are guaranteed a wage without regard to their productive ability. A rigid minimum wage is an impossibility. A separate wage based upon the productive power as well as the needs of the workman must be fixed for each industry. The wage for men, women, minors, and apprentices must be fixed mde- pendently. The minimum wage is but a single step in a wide regulatory program, and because its effects are far- 81 reaching, it cannot be taken without regard for the rest of that program. It constitutes the total direct govern- ment interference in wage disputes, but it must be sup- plemented by a system of indirect control to make regulation effective. The following chapters consider the several suggested forms of indirect intervention and attempt to judge their expediency by the criterion estab- lished in the preceding chapters. 82 CHAPTER V MEDIATION, CONCILIATION, AND INVESTIGATION I. The Sphere of State Intervention State intervention in industry has spread with astound- ing rapidity during the past decade. The movement, though but a revivification of a latent state power, in effect is new. The theories are radically different from the laissez-faire policy of former years, and the opportunities for harm are correspondingly great. There is imminent danger that the impetuous clamor for democracy in industry and humanization of business may bring ill- advised or excessive interference which will work serious harm and vitally handicap government control. The fundamental principle of state regulation should be: Intervene whenever expedient, but only to the extent necessary to secure the maximum good.^ Every act in the reorganization of industrial affairs to meet the new situation which can be left to the active parties in business should be entrusted to them. Every change which can be made without distorting existing economic forces should be moulded to operate with their aid. Industry should be regulated but not interrupted. The primary step in indirect intervention, consequently, must be a very flexible one capable of using every medium of voluntary mediation and conciliation to the fullest extent. It may seem out of place to consider non-govern- mental intervention agencies in this thesis, but the work of such bodies, in many cases, is so closely connected with that of the state organizations that the two cannot be considered separately. ' The danger from excessive intervention has been realized even in those states which have been most universally accused of this fault. Mr. Justice Higgins, President of the Arbitration Court of Australia, has repeatedly warned against such overzealous action. He has said: "My principle is to interfere as little as possible with employers in the administration of their business, to interfere only so far as to protect human lives from the undue pressure which profit-making often involves, and to rectify, in the interests of industrial peace, matters of grave injustice" (IV Commonwealth Arbitration Reports 73); and " I conceive it my duty to leave every employer free to carry on his own business on his own system, that he may make the greatest profit within his reach, so long as he does not perpetrate industrial trouble or endanger industrial peace." IV C.A.R. 18. 83 American industry cannot long avoid resort to some form of voluntary intra-industry organization of jomt boards of mediation and conciliation similar to those proposed for England by the Whitley Report.^ Such bodies are highly desirable and, as a supplement to govern- ment intervention, should be promoted, aided, and fostered by the state. They, more than any one other instrumentality, are capable of introducing democracy into industry. They afford the workman a voice in rnan- agement without infringing upon the employer's^ right of control. They recognize the human element in the workman as fully as is practical. And in addition they conform to local conditions more closely, and afford greater flexibility, than any state agency could. The intervention program, therefore, should include co- operation with such voluntary local boards, and the state organization should be formed on that basis. • The English system as outlined in the reports of the Whitley Commission and that of the Ministry of Labour briefly states that the Government should propose to the employers' and employees' associations the formation of joint standing industrial councils in the several industries, composed of represen- tatives of employers and employed selected with regard to the various sections of the industry and classes of labor. The appointment of chairmen should be left to the council, who may decide that there should be (1) a chairman for each side of the council; (2) a chairman and vice-chairman selected from the council members (one from each side); (3) a chairman chosen by the council from persons outside the industry; or (4) a chairman nominated in such manner as the council may determine, or by the government. The council should hold frequent regular meetings to consider appropriate matters affecting the industries, and to establish close cooperation between employers and employed. In well-organized industries organizations should be established to supple- ment the central bodies. District councils representative of the trade-unions and employers' associations should be created or developed from existing machinery for negotiation in the various trades. And works committees repre- sentative of the management and workers should be instituted in each plant to co-operate with the district and national machinery. What is needed is a triple instrumentality, organized on a common principle, in the workshops, the districts, and nationally. As it Is of the highest importance that the scheme should secure the support of the trade-unions and employers' associations its designs should be a matter for agreement between these organizations. In industries having no adequate organizations of employers or employed, trade boards should be created, con- sisting of representatives of the employers and employed and appointed mem- bers, and these boards should possess functions similar to those of the works organizations. The district and works bodies and trade boards should hold regular meetings to secure co-operation by granting to workpeople a greater share in the con- sideration of matters affecting their industry, and by keeping employers and workmen in constant touch. The respective functions of the several committees, boards, and councils should be moulded to accord with the varying conditions of different industries, and care should be taken to limit their respective functions to avoid overlapping and resulting friction. Where conditions of employment are determined by 84 Past experience has shown that much can be accom- plished by means of judicious state mediation,^ especially when supplemented by compulsory investigation. Such intervention should form the primary feature of any pro- gram of indirect regulation. national agreements, the district councils or works committees should not be allowed to contract out of conditions so laid down, nor, where conditions are determined by local agreements, should such power be allowed to works committees. The national councils should deal with the following questions or allocate them to district councils or works committees: (1) Better utilization of the workmen's practical knowledge and experience; (2) Means for securing for workmen a greater share in determining the conditions under which they work; (3) Settlement of the general principles of employment, including the methods of fixing, paying, and readjusting wages, to secure the workmen a share in the increased prosperity of the industry; (4) Establishment of regular methods of negotiation for issues arising between parties and sections in industry to prevent differences, and to secure better and speedier adjustment when they appear; (5) Means of insuring the greatest possible security of earnings and employment, without undue restriction upon the worker's change of occupation or employer; (6) Methods of fixing and adjusting earnings, piecework prices, etc., and of dealing with difiiculties relative to the method and amount of pay- ment, apart from the general standard rates; (7) Technical education and training, lectures, joint conferences, etc.; (8) Industrial research and the collection of statistics; (9) Facilities for considering and utilizing inventions and improvements designed by workmen, and for safeguarding the designer's rights; (10) Improvements of processes, machinery, organization, and manage- ment, examination of industrial experiments with full consideration of the workpeople's point of view, and comparative study of industry in this and other countries; (11) Proposed legislation; (12) Health conditions; (13) Publicity; (14) Consideration of matters referred by the Government. The Government should offer to be represented in an advisory capacity at preliminary meetings or at meetings of councils for those semi-organized indus- tries if the parties so desire; and should undertake to supply such information on industrial subjects as may be available and likely to prove of value. It has been suggested that means should be devised to safeguard the public interest against anti-social action by the councils. But the reports assume that the councils will have regard for the national interest and that while the state never parts with its inherent overriding power, such power may be least needed when least obtruded. The reports point out that it may be desirable later for the state to give the sanction of law to agreements made by the councils, but that the initiative in this direction should come from the councils themselves. 1 Of the 61 disputes brought before the Federal Board under the Erdman Act during the fourteen years of its operation, 28 were settled by mediation, 8 by mediation and arbitration, and only 4 by arbitration alone. Of the 71 controversies brought before the Board under the Newlands Law of July 15, 1913, 52 were settled by mediation, 6 were partly settled by media- tion, 3 were settled by the parties themselves, and 8 were settled by arbitration. The' Board's efforts to secure a settlement by mediation failed in only one case. Report of U. S. Board of Mediation and Conciliation, December 8, 1918. No strike has ever occurred where the services of the Board have been invoked or where a case has actually been taken up, and in only three instances since the present mediation law was enacted have train movements been even temporarily suspended, with but slight inconvenience to the public and in- finitesimal damage to property." Chambers/'Achievements of Federal Media- tion " Vol. VII, Proceedings Academy of Political Science, 1 (January, 1917). Of 212 disputes brought before the Canadian Board of Mediation and Arbi- tration, 167 were reported on by boards or settled through their mediation, 85 II. The Theory of Mediation The most prolific cause of industrial disturbances_ is misunderstanding between the parties. A great majority of the threatened strikes and lockouts may be prevented if the parties can be brought to a full understanding of each other's position before an actual break occurs. The purpose of mediation is to make such an understanding possible.! Its chief merit is the fact that it affords the parties an opportunity to make their claims clear without weakening their positions in any way. Many times one party to the controversy feels that it is entitled to certain relief, but is willirig to accept less rather than suffer the losses which invariably accompany the interruption of business by a strike or lockout. Even if actual hostilities have occurred, such a party may be willing to accept less than its original demand, but may fear that it will appear weaker if it makes known its lower and the others were terminated before the boards were organized or while the disputes were still under investigation. Mr. Justice Higgins of the Commonwealth Arbitration Court of Australia said: "In connection with my arbitration court, in particular, much of my best work has been done in quiet conference behind the court, procuring agreements without arbitration. "Our most feasible means of progress is along the line of mediation rather than arbitration. When a difficulty gets to the status where it must be arbi- trated it is frequently too late to do anything effective. If it can be got at in its early stages, a solution is much more likely to be brought about." P. S. Collier, Secretary, Oneonta Chamber of Commerce. "These conciliation councils in New Zealand are the most successful agencies for the regulation of industrial relations and the prevention of strikes with which I am acquainted. The parties to the dispute gather around a table and discuss in a thoroughly informal manner the claims made by the applicants. Any person having an interest in the matter has a right to be heard in person or by means of a representative, but attorneys may not appear and no effort is made to follow legal methods of procedure. The commissioner who presides has no vote but he has the authority to continue the negotiations until he has reason to believe that no agreement is possible. He is constantly on the lookout for weak points in the argument, and when a deadlock occurs he is likely to ask the representatives of one of the parties to retire from the room while he talks matters over with those who remain. At such times he does not hesitate to inform them of the weakness of their position, as he sees it, and he urges them to make concessions rather than to have the case go to the arbitration court." Hammond, M. B.: "Compulsory Arbitration in Australia and New Zealand." VII, Proceedings Academy of Political Science, 19 (January, 1917). 1 Sir George Asquith, while Chairman of the Industrial Council of the United Kingdom (1912), said of the Canadian Industrial Disputes Act: "The pith of the act lies in permitting the parties and the public to obtain full know- ledge of the real causes of the dispute, and in causing suggestions to be made as_ impartially as possible on the basis of such knowledge for dealing with the existing difficulties, whether a strike or lockout has commenced or not. This action on behalf of the public allows an element of calm judgment to be intro- duced into the dispute which, at the time, the parties themselves may be unable to exercise." offer. In such disputes added obstacles are introduced by the bitterness which always follows the breaking off of relations and grows as the hardships increase with the prolongation of the disturbance. The strike or lockout makes frank negotiations between the parties practically impossible. The situation is especially complicated where either party feels aggrieved by the trend of previous discussions, or believes that the other party has acted without sufficient discussion. Similarly, an employer is often unwilling to negotiate with a newly organized union, but would willingly concede all other demands made by the men, while they, on the other hand, are willing to accept such concessions without actual recognition of the union. The mediator is in a position to render a valuable service in all such cases. He may be able to bring the parties together in a conference and prevent further irritation. Often the parties will enter a conference with a neutral when they would refuse to negotiate further with each other. They seem to feel that they can take part in such a meeting without sacrificing any element of strength in their position or without the ap- pearance of weakening in their fight. And a trained mediator can usually bring out the true minimum demands and the rights of the parties at such conference, thus securing the information necessary to manipulate an equitable and acceptable settlement of the difficulty. When such open conferences prove impossible the mediator may be able to secure the same results by acting as a confidential intermediary between the parties.^ He may be able to secure conditional offers from the con- testants and act in that fiduciary capacity even after an unsuccessful conference. This feature of the mediator's work is especially valuable in the case of newly formed unions, of unorganized workers, and of local controversies. In such disputes the confidential mediator is often able to work out an agreement between the parties which otherwise could not have been secured. iCroxton, r. C, Chief Mediator of Ohio, referring to the value of this feature of the mediator's service, said: "Joint conferences, except in cases where the employees have, been organized for a number of years and are accus- tomed to dealing with their employers through committees, are often productive of bitterness and for that reason are seldom held by the mediators. . . . Media- tion under this plan (confidential intermediaries) does not disclose to either side either the weali points or the strong points in the position of the opposing side." 3 Bulletin Industrial Commission of Ohio, No. 4. 87 III. The Theory of Conciliation The mediator's services, however, are not necessarily limited to bringing the parties together and securing an agreement upon the basis of voluntary concessions. _ A neutral, sometimes, is able to secure concessions which would never have been made in the most frank and open discussion between the parties themselves. The mediator sees the situation from a wholly different _ viewpoint, and is able to point out the equity in the claims of both parties. He is trained to know the economic situation, its possibilities and limitations, and the problems of the specific industry. He knows the employer's return and ability to pay, and the productive power and needs of the employee. He is thus in a position to suggest remedies that would not occur to the parties themselves. He is often able to make recommendations upon which a satis- factory settlement may be based without the concession of a single point considered vital to the controversy by either party. But the mediator's most constructive work is not along the lines of compromises thus far suggested. One of the most undesirable features of the present situation is the prevalence of compromise. Mediation, conciliation, and arbitration have seldom gone beyond a suggestion of mutual concessions. The settlements secured have been temporary and the real cause of dispute has been left as a canker to break out again on the least provocation. The mediator's training and experience, under a proper system of state intervention, would enable him to suggest constructive action, going to the root of the trouble. Mediation is a most desirable prerequisite to formal investigation or arbitration because it is much more flexible than either and can more readily be adapted to the circumstances of the particular dispute. Each party to the proceedings is thoroughly familiar not only with the technical trade conditions but with the local aspects of the trouble, and the limiting effect of precedent is absent. IV. The Theory of Investigation But mediation cannot succeed in all cases. Where the employer is a member of a strong association, or is in control of the situation; where the employees are strongly entrenched and backed by a well-organized union; or where either party is prejudiced or aggrieved httle can be accomplished by mediation. Such cases, rnoreover, afford small opportunity for successful arbitra- tion, and would seldom yield to such proceedings unless they were compulsory and the awards were strictly en- forced. There is, however, a form of intervention short of compulsory arbitration which can accomplish con- siderable even in these spheres.^ The state authorities may conduct a thorough investigation and compel equity by means of publicity. There has been considerable objection to such inter- vention, however, and for that reason most of the minor disturbances, which have not been settled by mediation, have been allowed to go to a trial of strength without formal investigation. It has been contended that it would be bad policy for a system which depends much upon maintaining the good will of the parties interested to hold up one side to public disapproval, particularly after the issue had been virtually decided. It has been argued that proof that one or both parties were blame- worthy would accomplish little when the parties could not be brought to a settlement by mediation and con- 1 Rogers, W. C, Chief Mediator of New York, said before the Federal Commission on Industrial Relations: "I think it would be very wise, indeed, if we could have more public investigation of serious labor disputes than we have had in the past. I think it really ought to become an expected thing that where a serious strike occurs, so that the interests of the public at large are affected, it ought to be the expected thing that the state would intervene and ascertain by formal public inquiry just what the trouble is about, so that the people at large, on whose support and sympathy success or failure of every strike depends, may know from an authoritative source just what the trouble is about and just what prevents the parties from getting together. II Commission on Industrial Relations Report, 1932 (Sen. Doc. Vol. 20, 64th Congress, 1st Session). _ A Canadian official active in securing the Dominion Compulsory Investiga- tion Act said: "In the dispute in Alberta referred to in the report (i.e., the one leading to the adoption of the Act), we spent nearly a week trying to get the parties together. We spent nearly another week finding out from each what they were prepared to do. Meanwhile, settlers and others were freezing in their homes. We had no powers other than that of a voluntary conciliator to fall back upon. Had we had legislation providing powers of compulsory investigation, we could have effected in two days what took nearly two weeks. It was this experience, and similar experiences, in other strikes which made us seek to get from Parliament powers of compulsory investigation, which meant to labor, power at the expense of the state, and with the machinery of the state back of it to choose its own investigator, to summon witnesses, to compel the production of documents, to take evidence under oath, and to give to the public the fullest possible kind of a view of its case, including any injustices under which it might be suffering. This is the really important compulsory investigation feature of the Act, not the penalties which it laid to strikes and lockouts." "The Canadian Industrial Disputes Investigation Act," National Industrial Conference Board, Research Report No. 5 (April, 1918). ciliation. Such criticism is the result of the compromise spirit that has marked all past intervention proceedings, and has been less pronounced the past few years. The demand for a settlement going to the cause of the dis- turbance has discredited the argument, and investigation leading to constructive suggestion without publicity or a fixing of blame has been generally used in several jurisdictions. Such intervention is particularly advan- tageous where the issue involved is largely one of fact. The investigations thus conducted border upon arbitra- tion, are in fact an informal arbitration proceeding,^ but they have the great advantage of being possible while a strike or lockout is in progress, and the added advantages of greater flexibility and informality. Such investigations are particularly desirable where the public interest is directly involved or where excessive ■disturbance is threatened. They afford a much stronger guarantee of industrial peace than mere mediation does. They possess a threat power which is often effective without being exercised, and which is almost always effective when actually applied. They constitute a powerful force working toward the promotion of the public welfare and the protection of neutral rights. The resort to such investigations carries with it one of the principal advantages of compulsory arbitration. It protects the employer, who pays fair wages and fur- nishes good working conditions, from his less scrupulous competitors who seek to undersell him and recoup at their employees' expense. Practically all of the employers in any locality who are engaged in the same general busi- ness are competitors and are in a position to grant the same general terms of employment. Mediation, backed by compulsory investigation, would put their competition upon a legitimate basis. The tendency would be to es- tablish uniform terms and conditions of employment, to enforce the highest standards permitted by the trade, and to hold all employers to those standards. State investigation followed in the case of failure to secure a settlement by publicity of the results of the inquiry possesses other elements of advantage. It gives a true knowledge of the real causes of the dispute and permits^ of impartial and enlightened suggestions for reniedying the defects disclosed. It discovers remedies which the parties themselves may have been unable to 90 advance. It changes the issue from a question of com- promise to a search for a true cure for the real malady. It introduces the public interest into the controversy, and transforms the situation from one of might to one of right. V. The Form of Mediative Agencies The mediation feature of the regulatory program should include a permanent mediative organization, connected with, and under the general supervision of, the industrial commission.^ The general policies of the mediation department should be controlled by the superior office but the strictly departmental activities should be conducted absolutely independent of any outside inter- ference. The personnel of the department should consist of a chief mediator, and such regular and special assistants as the local needs require. The chief mediator should be appointed by the industrial commission, and the assistants should be selected by the chief mediator subject to the commission's approval. The chief mediator should be an official, trained in economics and law and experienced in industrial matters. He must be a non-interested party, unbiased, and im- partially trained. He should be familiar with the general principles of mediation, the aims of regulation, the systems of voluntary mediation in the several trades, and the joint agreements throughout industry. He can- not be drawn from the ranks either of the operators or employees, for such an official could not prove satis- factory to both parties. And above all else, he must not be a politician or a political appointee. The mediator's entire time should be devoted to his work, and his activities should be wholly distinct from those of the other government wage officials. Ordinarily only one mediator should act in each case on account of the fiduciary character of the services performed, the need for coherent and unified action and continuity of policy, and the necessity for direct and undivided re- sponsibility. He should not be required to pass judgment upon the questions he seeks to discuss with the parties. The mediator should champion no side in the controversy; 1 The detailed plan of organization suggested by the author is incorporated in this thesis as an appendix. 91 he should express no opinion on the merits of the con- tentions, though he may make recommendations; and he should not vote on any issue in the proceedings. He is an intermediary rather than a judge. He may suggest but must not dictate. The mediator should be authorized to act upon invita- tion of either party, or, at his discretion, to offer his services whenever an industrial disturbance arises which threatens to result in a strike or lockout either before the actual break occurs or at any time during hostilities. Some method of supplying the mediator with immediate or advance information of strikes should be provided,^ so that the efforts of the mediator will not be delayed until the actual severance of friendly relations has made successful intervention difficult if not impossible. News- paper reports cannot be relied upon for such information, for they often fail to attract attention until the disturbance has reached a dangerous magnitude. The chief mediator should be required, upon receipt of notice of a threatened industrial disturbance, to investigate the nature of the dispute, the number of persons involved, and the danger of injury to neutral rights; and, if such action seems advisable, to offer his services as mediator. In case the mediator's offer is declined, he should be empowered to report such fact to the industrial com- mission, with a statement of the conditions and a recom- mendation relative to further action. And where media- tion has been undertaken but has proved unsuccessful, the officers should be at liberty to make a similar report. When the prominence of the disturbance and the public interest involved warrant a resort to further mediation before compulsory investigation is resorted to, a special board of mediation and investigation should be appointed on application of the chief mediator. Such board should be composed of a representative selected by each party and a special chairman appointed by the state. The records of the prior mediation should be transmitted to the new board, which should have full authority to proceed independently. In case of the failure of either party to appoint a representative or to co-operate, resort should be made to compulsory investigation. 'The mayor of each city has been required to make immediate report of threatened industrial disturbances by some laws. It would seem to be a better plan to require the employer to report any disturbance immediately. 92 _ The mediator, because of his connection with the situation, is the most proper official to determine the ex- pediency of any supplemental investigation or of inter- vention, and his report should constitute a prima facie case for such action. The authority thus conferred would give the mediator a much stronger position and increase the probability of successful mediation.^ The parties to an industrial dispute always prefer to settle their own problems rather than to have a third party intervene and give publicity to the affair by submitting it to the tribunal of public opinion. Mediation will always prove more fruitful if the parties know that their failure to agree will result in such publicity. Wide latitude should be given all mediators in the manner of the conduct of their work and the means of bringing the parties together to secure an agreement. No definite rules can be laid down for their guidance, but the general principles applied must be such as tend to further the aims of state intervention and co-operate with the other factors in the regulatory program. When an investigation proves necessary it should be conducted by an experienced official other than the mediator. That official's position as intermediary pre- cludes him from passing formal judgment upon the issues without creating a very detrimental feeling which would accumulate and eventually materially weaken his position. Moreover, the possibility that the mediator might later assume the character of investigator would preclude him from securing the confidential information essential to successful mediation. A permanent agency of investi- gation, therefore, should be created which would be available both for any specific investigation and for general wage inquiries. Such an organization would prove of immense value if required to conduct a con- tinuous study of industrial conditions and carry on an educational campaign to eliminate industrial disturbances. The power given the investigation agency should be broad. It should have the authority to summon witnesses and compel the production of books and papers, to take testimony under oath, to personally inspect the plant and working conditions, and to question the employees. 1 See testimony of Mr. J. M. Lynch, Commissioner of Labor of New York, Vol. II of the Report of the Commission on Industrial Relations, p. 1949 (Sen. Doc. Vol. 20, 64th Congress, 1st Session). 93 The inquiry should be an impartial one during which each side to the dispute should be permitted to advance such evidence as it deems essential and proceed in an informal manner to protect its interests. The results of the investigation should be made known to the parties to the controversy before they are made public, and an effort should be made to secure a settlement based on the recommendations made by the investigators. In case of failure to secure an agreement between the contestants, the widest publicity should be given the investigators' findings. The expense of the investigation should be borne by the state. The jurisdictional problem involved in wage control presents the usual difficulties arising from federal organi- zation. Both state and national regulatory bodies are necessary. The federal organization would ordinarily be powerless to interfere in intrastate disputes, and state officials would be unable to cope with interstate disagree- ments. The Ohio Board found itself thus handicapped in the Newark railroad machinists' strike and reported that: "The men at the Newark shop made no complaint as to wages, working conditions or other matters. They went out in obedience to the order of the union as they did at all other shops and were powerless to settle the matter. The strike involved twelve (12) shops and about nine hundred (900) men in Pennsylvania, Indiana, and West Virginia and six (6) shops and two hundred (200) men in Ohio. The strike was interstate in character, and we were officially informed could only be settled by the general officers of the company and the national officers of the machinists' organization." A similar jurisdictional question is raised by those disputes which, because of standardization and the extent of territory covered, are interstate in character, though they involve no strictly interstate commerce facilities. Usually such disturbances fall well within the federal jurisdiction, for they directly or indirectly affect com- merce between the states; but many disputes of this character have arisen which are not so clearly within that sphere. In such cases, as well as in strictly intrastate conflicts, the state authorities should be authorized, at their discretion, to seek the assistance of the federal organization. 94 The same general principles of organization should be followed for both state and national bodies, but the federal system would require more co-ordination with existing bodies. VI. Summary The first step in indirect wage control should be medi- ation or conciliation, followed, if necessary, by investi- gation and publicity. Such regulation saves the benefits of collective bargaining and at the same time exerts the restraining influence of government intervention to prevent the stronger party from taking undue advantage of the weaker in the bargain. It gives the parties an opportunity to settle their dispute without outside inter- ference. It affords them all the information and experi- ence of wage experts without the constraint of direct control. It permits the parties to shape the wage agreement to the local needs and the requirements of the particular industry. Mediation, conciliation, and investigation have a threat power that is usually effective, but they are no guarantee against strike or lockout, and they afford no absolute assurance of a final peaceful settlement after hostilities have started. Many wage disputes require a more direct exercise of the government's restraining forces. In those industries where continuity of service is essential, absolute restraint is necessary. It is desirable, therefore, to supplement these forms of indirect control by a system of arbitration elective in the case of all private industry and compulsory in that of public service companies. The following chapter considers such a system, its organization, jurisdiction, and the principles it should enforce. 95 CHAPTER VI ARBITRATION AND THE INDUSTRIAL COURT I. The Need for Arbitration The minimum wage can eliminate a large part of the present labor unrest and do much . to counteract the recent radical tendencies in the labor struggle. It forms the basis for equitable wage discussions. _ It satisfies the humanitarian demands upon industry in so far as eco- nomics can safely yield to sociology. Collective bargaining supplemented by voluntary intra-industry mediatlve agencies can afford the parties to industry an opportunity to reach a settlement of their differences without ex- ternal interference. Properly developed, these non-govern- mental forces can introduce into industry the democratic element demanded by labor. They give the workman a voice in the conduct of the business without infringing upon management. Supplemented by mediation they protect the public by making interruptions to industry and disturbances of the public peace less frequent. Mediation can supply the bridge between these non- governmental forces and state regulation. It gives flexibility to the whole system, and affords the parties an opportunity to secure the benefits of regulation without suffering the inconveniences of actual inter- vention. Compulsory investigation can add the power of public opinion as a deterrent from a resort to force and an incentive to a settlement by agreement. But the system thus far considered leaves the final decision concerning a resort to force exactly where it is today, except in the case of the minimum v/age. It is a strictly voluntary arrangement and cannot have the effectiveness of actual intervention. Any system of wage settlement dependent upon vol- untary agreements between the parties, even though it has the constructive aid of a government mediator's suggestions, is almost certain to reach a compromise arrangement which does not dispose of the controversy permanently. Even compulsory investigation does little more than force a compromise. Self-interest, when un- 96 restrained, is too strong to permit the dominant party to concede all that equity demands and invariably leads to a deadlock when the forces are evenly balanced. The mediator is seldom able to overcome this self- interest of the parties sufficiently to play a really con- structive part. He is, moreover, an intermediary, not a judge. He does not pass upon the issues presented. It is his purpose to make peace, not to secure justice. He seeks to bring the parties together and secure such harmonious action as he can. He attempts to secure an agreement embodying the concessions each side is willing to make. The settlement mediation seeks does not go to the merits of the case. Its primary aim is a quick adjustment to keep industry in operation and avoid the wastes of conflict. It seeks a compromise to secure immediate peace and postpones final consideration of the problem. It does not consider the causes of industrial unrest; it does not remove the disturbing element or lessen the friction. It has decreased the number of strikes and maintained continuous production, but it is by no means the panacea it has been proclaimed. It has done little to really settle the labor problem or the wage dispute, and, irrespective of strike statistics, dissatisfaction and unrest have increased and the conflict has assumed a much more radical and dangerous character. A system which goes no further than the voluntary agreement goes but half way. It provides no final settlement other than a resort to force. It establishes no general principles. It gives no unity or stability to the wage system. And when used as final steps in the wage dispute, such systems are superficial makeshifts which avoid the issue and are sufFerable only because past laches has made them expedient.^ Arbitration takes up the wage question where mediation and other measures for securing voluntary settlements leave it. Arbitration proceeds further and seeks a final permanent settlemerit and a judgment of the problems involved. It attempts to weigh the arguments presented and pass upon the merits of the issues raised. It is a judicial proceeding. It attempts to apply definite and accepted legal and economic principles to the issues, just as a court of law does. It analyzes the causes of the iThis statement refers solely to the use of such instrumentaUties as a final move in the wage dispute. Voluntary action to settle wage questions must always be the basic feature of any successful wage control program. 97 disturbances and seeks to remedy the situation by re- moving the friction. It is not confined to the narrow- partisan viewpoint of the contestants themselves, but involves a decision by a third party. It involves con- sideration of the public interest and the rights of neutrals. It provides a substitute for force as the final move in wage determination. It is useless to attempt to cloud the issue. The funda- mental question in a consideration of government inter- vention is: shall the state limit the use of force in the trial of strength which forms the final step in every vol- untary system of wage control ? Shall wage disputes be elevated to the sphere of judicial adjustment as all other private controversies have been ? Shall the state intervene to protect the property and rights of neutrals, and main- tain the public peace when the parties themselves refuse to effect a peaceful settlement? In the case of strictly private industry the government is under no obligation to prevent a strike or lockout,^ but it does owe a duty to the contestants and to the public to provide a means of peaceful, permanent, prompt, and satisfactory settlement of disturbances. In the case of public utilities the govern- ment's duty extends further. It must guarantee continu- ous service. For this reason it must not only provide a tribunal where public service wage disputes may be peacefully settled, it must compel the parties to such disputes to abandon force and resort to that tribunal. It must give the awards of that body the binding force of law backed by the full sanction of the government. It must establish an equitable system of wages and put public service upon a sound basis. The expense of every wage increase in the public utility field is immediately transferred to the people as a whole so that the public has a direct and vital interest in the discussion. The service rendered is a public one, is in effect the exercise of 1 The right to strike and peacefully picket, subject to certain limitations to protect the rights of others, has been recognized in a long line of decisions. See Tri-City C. T. C. ei al. v. American Steel Foundries, 238 Fed. 728; Alaska Steamship Co. v. Longshoremen's Assn. of P. S. et al., 236 Fed. 964; Munisean V. Osborne, 210 Mass. 250, 96 N. E. 1036; Minnesota Stove Co. ». Cavanaugh (Minn.) 155 N. W. 638; Hardie-Tyne Mfg. Co. v. Cruse et al. (Ala.) 66 So. 657; Cohn & Roth Elec. Co. v. B. M. & P. Local Union (Conn.), 101 Atl. 659; Gutl Engraving Co. o. Doerr, 214 Fed. Ill; My Maryland Lodge v. Adt, 100 Md. 238; Shaughnessey et al. v. Jordan et al. (Ind.) Ill N. E. 622; Karger Furniture Co. V. Amalgamated, etc., Union, 165 Ind. 421, 75 N. E. 877; Empire Theater Co. V. Clope et al. (Mont.), 163 Pac. 107; Gray v. Building Trades Council 91 Minn. 171, 97 N. W. 520; Sleffes v. Motion Picture M. O. Union et al. (Minn ) 161 N. W. 524; Bossert et al. v. Dhuy et al. (N. Y.), 117 N. E. 682 a government function; and the state, therefore, becomes a party to the wage dispute. Two forms of final intervention are expedient. The state must provide an elective system of government wage determination for strictly private industry, and a conapulsory system for public and quasi-public under- takings. II. The Aims of Arbitration A widespread belief has grown that the wage problem cannot be solved and does not yield to definite analysis.^ Arbitration boards throughout the country seem to have accepted this view and to have acted upon it. They appear to have sought little more than mediation and to have been content with any compromise which would stave off the final settlement. This attitude is illustrated by the report in the Eastern Railroads and Brotherhood of Locomotive Engineers arbitration pro- ceedings,^ wherein the Board said: "Possibly there should be some theoretical relationship for a given branch of industry between the amount of the income that should go to labor and the amount that should go to capital; and if this question were decided, a scale of wages might be devised for the different classes of employees which would determine the amount rightly absorbed by ' Thus Dr. F. H. Dixon in an address before the American Economic Associa- tion, in 1914, said: "As a matterof fact thesituatlon is hopeless, and will remain so, as long as we delude ourselves into thinking that we can under present economic conditions find a basis for wages in any theory of ultimate reasonable- ness. It may be that we are not merely chasing a will-o'-the-wisp when we are hunting for a reasonable wage, but we are at any rate seeking the unattainable. 27 Proceedings Am. Econ. Assn. 264. See also Address of M. A. Knapp of U S. Board of Mediation and Concilia- tion before the National Association of Railway Commissioners, 45 Railway Age Gazette, 1193; Proceedings 20th Ann. Convention Natl. Assn. Ry. Com- missioners, p. 39. "There is no yardstick or fixed measure to determine the right or wrong of a scale of wages or hours of service. What is fair compensation for the laborer is not a question to be determined by appeal to statutes of judicial precedents. Nor is there any abstract principle of justice or ethics by which such a question can be correctly decided. 2 Report of Board, p. 47 (1912) . See also Southern Railway Arbitration (1914) Proceedings, pp. 10-23. See also Report of the Voluntary Arbitration Board for the Eastern Railways (1912) wherein it was said: "There Is no attempt on the part of the mediators to make a judicial decision wholly on the basis of equity and justice. The primary purpose Is to bring the parties together and avert a strike." The same absence of any consistent or scientific principle in wage fixing and the same resort to compromise is found in Australia. See "Arbitration and Wage Fixing in Australia," National Industrial Conference Board, Research Report No. 10, pp. 7, 8 (1918). labor. . . . Thus far, however, political economy is unable to furnish such a principle as that suggested. There is no generally accepted theory of the division between capital and labor. . . . "What, then, is the basis upon which a judgment may be passed as to whether the existing wage scale of the engineers in the Eastern District is fair and reasonable? It seems to the Board that the only practicable basis is to compare the rates and earnings of the engineers in the Eastern District with those of engineers in the Western and Southern Districts and with those of other classes of railway employees." No satisfactory theory of wage regulation has been formulated and no consistent method of adjustment applied. No standard has been accepted either by the arbitration boards or the industrial world. Arbitration has seldom gone beyond the compromise point in the past, and when an attempt has been made to proceed further, the basis has been mere comparison of the con- tested wages with those paid in similar industries in other localities, or with the wages paid for similar work in the same industry. Even the basic living wage has been gauged by this comparative method. Such a standard leads nowhere. Like the compromise it seeks merely to pacify the workman, not to determine or remove the causes of discontent. Such decisions have no legi- timate place in arbitration procedure. They are based upon no adequate investigation of the relative merits of the parties' claims. They involve no inquiry into issues presented. They do not attempt to remove the cause of the dispute and cannot prevent further dis- turbances arising from those same causes. They settle nothing definitely or permanently. They merely postpone the settlement. They add to rather than diminish the hostility between the contestants. The evil effects of such slipshod methods cannot be overstated. They are responsible, in a large measure, for the present pre- judice against arbitration,^ and for the inability of state intervention to secure final disposition of many disputes. Such decisions prevent voluntary resort to arbitration proceedings, and widen the breach between operators ^Stockett: "The Arbitral Determination of Railway Wages" (1917), Intro- duction; Prof. Adam Shortt: Address in Labour Gazette (Canada) June, 1907, p. 1410; Clark, Victor S.: "Canadian Industrial Disputes Investigation Act of 1907," U. S. Bureau of Labor Bulletin, No. 86, p. 3; Eastern Firemen's Arbitration (1913), Supplementary Report of the International President. See also Carlton, F.T. : "The Advantages and Defects of Compulsory Arbitration," Vol. XLIX Ann. Am. Acad. 150, 152 (1917). 100 and workmen. And when arbitration is resorted to, compromise decisions produce excessive demands which effectively defeat an equitable settlement before it is undertaken. They encourage frequent disputes, for if a compromise usually results each conflict represents a gain for the aggressor. Laborers enter the arbitration proceedings with claims far in excess of the demands they really intend to fight for and are willing to accept. The workers, knowing that their demands will be cut, naturally file excessive claims. The rank and file of laborers are misled by these excessive demands and are disappointed by the concessions made. The operators, realizing that they will be compelled to grant some increase, avoid arbitration and fight every demand, just or unjust, to keep the grants within reason. Neither side bothers to present evidence upon which a permanent equitable decision can be based, for a com- promise verdict needs no proof. The wage schedule built up by repeated compromises bears little relation to the needs of the industry or the merits of the case. It is not founded upon the workman's need, his productive capacity, or the employer's ability to pay. It introduces speculation and uncertainty into the business and prevents an efficient handling of operat- ing expenses. Intervention producing such settlements is artificial, meddlesome, and most undesirable. The primary need, in any system of arbitration or final determination of wage controversies, is the elimination of these makeshift compromise decisions and the deter- mination of definite aims and policies. Blind groping, sentimental leaping, fruitless comparisons, and conserva- tive compromise must be abandoned. The work of the Commission must be both analytical and remedial. Its aim must be constructive, and it must deal with causes and conditions as well as effects. It must attempt to discover the real causes of the complaint, and, if it be founded upon injustice, to see that equity is done; or if it be founded upon misconception and misunderstanding, on the part of either or both parties, to see that the misunderstanding is cleared away. The award must be just and equitable. The only wage settlement that can prove successful, the only agreement that can prevent industrial disturbances, is one that pro- vides conditions under which strikes and lockouts are 101 unnecessary. The decision must establish working con- ditions and wages which leave the employees no induce- ment to strike because such action could not better their condition. It must, on the other hand (and the obliga- tion here is equally great), keep wages within the limits of economic practicability. The employer must be per- mitted to earn a return which will leave him no incentive to close his plant or lock out his employees. These pro- positions are not inconsistent. Strikes and lockouts are costly to both capitalists and laborers. Industrial unrest and dissatisfaction are equally disastrous to both. Too low a wage means loss to the employer on account of inefficient, grumbling workmen. Too high a wage means loss to the employee through unemployment and idle plants. Either means friction, prejudice, and latent if not open strife. The industrial judge must approach the issues from a strictly neutral angle. He can champion neither the capitalist nor the laborer, nor slight the interests of either. He must promote the public interest even at the expense of private claims, but he cannot unreasonably infringe upon the private rights back of those claims. All this, however, merely means that he acts in the usual judicial capacity. Briefly stated, the aim of arbitration is to substitute justice for force. HI. The General Principles of Arbitration Probably the following language of the Ohio Industrial Commission is the nearest approach to a statement of the principles of arbitration which has been attempted thus far: "Exact industrial justice would not take into consideration the demands of the employees or the proposals of employers, but would be determined after a full investigation and inquiry into the cost of production, cost of maintaining a satisfactory standard of living, distribution of profits, and all other such matters." This general proposition, however, is too indefinite and incomplete to be of real value, and was not intended as a specific rule. The construction of a body of wage-fixing criterions, therefore, must start from the very foundation. The interests of the parties, as stated in Chapter II, and there reduced to workable formulae, must be reasserted for the 102 major premises. The minor premises may be drawn from the facts presented in the particular controversy and the award arrived at by way of conclusion. Thus in a public utility wage controversy^- the workmen allege an unreasonably low wage. The operators reply that they cannot pay more without increasing rates for service. Assuming that the company's^ wages have been fixed by a regulatory commission the employees have not only the burden of proof but that of proceeding. They must show that the wages paid do not provide a reason- able allowance to cover all of the elements of the work- man's interest, i.e.: Labor's interest = living expenses + unemployment risk + insurance + pay for skill + reward for services. They must then prove that the service can be made to bear a charge which, after meeting the increased operating expense caused by the proposed raise in wages, will enable the operator to pay a reasonable return upon the "fair value" of his property. They must show further, unless the present laws are altered, that such a charge will not defeat the legitimate purpose of rate control by making the service too expensive for universal use.^ It is a funda- mental principle of regulation that the public utility ser- vice is so important to the community that it must be rendered at a reasonable charge, and, if possible, one which will make it available to all. The worth of the service to the community therefore operates as a maximum limit upon public service rate-making.^ It may be argued ' It is necessary to keep constantly in mind the fact that industry is divided into two groups for regulatory purposes, private and quasi-public. The latter is the more important in a consideration of state intervention, and therefore is discussed first. ^ If more than one plant is involved the practical solution would seem to be the determination of a working average by analysis of several representative plants. The selection of these test plants would be regulated largely by the theory of standardization used. If the utility's rates have been accepted but not declared reasonable, the usual rate-making procedure must be resorted to. ' The fair rate is predicated upon reasonable operating expenses so there is no way to secure a fund for wages other than in increase in rates. * San Diego Land & Town Co. v. National City, 174 U. S. 739, 19 Sup. Ct. 804, 43 L. Ed. 1154; Brunswick & T. W. Dist. ». Maine Water Co. 99 Me. 371; State ex rel. R.R. Comm. v. Seaboard Air Line Ry. Co., 48 Fla. 129; Interstate Commerce Comm. v. Cleveland, Cincinnati, Chicago & St. Louis R.R. Co., 11 I. C. C. 382; Planters' Compress Co. v. Mc, K. &T. R.R. Co., 11 1. C. C. 606; Memphis Cotton Oil Co. v. Illinois Central R.R. Co., 17 I. C. C. 318; In re Advance on Coal to Lake Ports, 22 I. C. C. 604; National Hay Assn. v. Michigan C RR Co 191. C. C. 34; Coke Products Assn. of Connellsville ». Baltimore & Ohio R.R. Co., 27 I. C. C. 125; Ardmore Water Case, 111. P. U. C. No. 4670, etc. 103 that this is a figure impossible of determination, but recent developments in public utility regulation indicate otherwise. The elevated railways of Chicago, for example, operated at a greater loss with a six than with a five cent fare, though there was no material increase in operating expenses. The city of Boston was forced to secure a por- tion of its local transportation cost by general taxes, because the service was worth less than the cost of ren- dering it at the abnormal operating figure imposed by war conditions. And it is a well-known fact that under ordinary conditions any increase in utility rates means a material decrease in consumption. Wages could not be raised if the increase would force the rate for service so high that the resulting decrease in consumption would compel operation at a loss. A wage fairly based upon the formulae stated, however, would not increase operating expenses beyond the worth of the service limitation (unless the entire industrial system were altered) except under the most abnormal conditions. When such conditions are met, or if reor- ganization of industry should make them permanent, we are brought face to face in the public service field, with a political, social, and economic necessity for supplying ser- vice at less than cost. The only solution is to alter the law so as to care for the difference by general taxation, and resort to either government ownership or a bonus system. A private company cannot be compelled to continue operation at an actual loss. Such a situation means that the workman is employed in an industry wherein he produces less than the sum an able-bodied laborer is entitled to earn. If the government wishes to keep him in such employment it must make up the difference. It in effect guarantees the capitalist his return, his depreciation, etc. It protects him from every- thing but his own poor judgment in making an investment which cannot produce a return, and even then it permits him to withdraw and seek a more remunerative field. The state can do no less for the laborer. The showing that must be made to justify a wage increase outside the public utility field is practically the same as within that sphere, but the problem is much more difficult. There is no recognized standard of rate reason- ableness, consequently there is no ability to say that the operators can or cannot grant an increase without re- 104 ducing their return below a fair point. There is no way, at present, of being certain that existing charges or prices are reasonable or that operating expenses are as low as they ought to be. The inquiry starts with unknown quantities in the case of private industry where there were known figures in the utility field. It is possible to make valuations, determine reasonable operating expenses, and estimate the possible prices at which commodities could be sold in a few plants or in- dustries; but it would be impracticable, if not impossible, to undertake to do so for any extended field. Moreover, the private industry enjoys no freedom from competition, no franchise privileges, no right of eminent domain, in short, none of the advantages which offset the govern- ment's right to limit return in the case of public utilities. Private industry is speculative, and the operators are entitled to a speculative return. No fixed sum can be said to be a just or reasonable reward for their contribution to industry. Arbitration in private industry, therefore, cannot, under existing conditions, proceed with anything like the degree of certainty it can in the public service arena. Moreover, prices are not determined in the same way in the two types of industry. Monopoly affects prices in the absence of regulation, for, within well-defined limits, it may prove more advantageous to sell a few goods at a high price than many at a low rate. Prices outside the utility field are based upon what the public will pay, except where keen competition has reduced that figure, and even then they seldom closely approximate the actual cost of reproduction. There is no universal ability to shift the increase in wages to the public. The company may or may not be able to market its product at a higher price. The necessity for low charges that limits public service rate-making does not extend to private industry, and the test of the reasonableness of prices is not the same. Again, in unregulated business the only check upon "cost of production" or operating expenses is competi- tion, and the secrecy of modern privately conducted_ in- dustry, the general lack of cost data, etc., render this a most ineffective control. There is, therefore, little or no assurance that operation is being conducted upon the 105 most efficient basis or that wages cannot be increased by reducing costs. These difficulties though they diminish the effectiveness of arbitration, in the field of private industry, do not make it undesirable. They are not insurmountable and are constantly diminishing as business is placed upon a more scientific basis. During the past few years industrial conditions have changed materially and a vast amount of wage control data, particularly in reference to production costs, has become available. "Cumulative labor cost data and market facts have been secured; and the spread of cost keeping and cost accounting, the increased con- sideration given to general accounting methods, and the universal tendency in legitimate industry to reduce water and place capitalization on a truer basis all operate to diminish the difficulties. IV. The Living Wage as a Basis for Arbitration The several items of the wage formula itself warrant detailed consideration. Much confusion has been in- jected into wage discussions by careless and indiscriminate usage of the terms "living wage" and "minimum wage." The living wage which constitutes the first factor of the wage equation differs in several respects from the mini- mum wage defined in Chapter IV. The minimum wage includes all the elements of the wage formula. The living wage deals with only the first element. It includes an allowance for sufficient food, of a quality the workingman usually purchases, to maintain a family of two adults and three dependent children in health and efficiency;^ sanitary living quarters for such a family;^ warm clothing ' Unless the average worker's family is buying and consuming about 3,000 calories of food energy per day per adult, and a proportional amount for each minor, it is not getting enough nourishment. Standard budgets giving reason- able recognition to personal likes and dislikes actually exercised by workers can be formulated and a workable figure deducted from them. They must, however, be based upon existing conditions. They "cannot be successfully worked out by a group of domestic scientists, dietitians, social workers, and physicians sitting around a conference table." ^ "The housing experts can now lay down reasonably approximate standard requirements for housing for the typical family of husband, wife, and three chil- dren under fourteen years. The barest minimum of decency and health calls for a dwelling for such a family of not less than four rooms. A kitchen-dining room, a living room, which can be used for a sleeping room by one of the children, and two large, well ventilated and lighted bedrooms, seem to me an irreducible minimum for decent, healthful living for this typical family." Meeker, T. Royal: "Relation of Cost of Living to The Public Health," Monthly Labor Review Qanuary, 1919), p. 5. The amount of floor space necessary for such quarters and the rental therefor are easily determined. 106 of a reasonable quality ;i and the heat and light necessary for health.^ The wage allowance necessary to cover these Items may be calculated with a much greater degree of accuracy than is generally supposed, and a number of such calculations have already been made.^ The living wage, in fact, is a relatively definite figure, and its use as the basis of state wage control gives a unity to the gov- ernment wage system which the wage schedule deter- mined solely by bargaining power has always lacked. The confusion between the living wage and the mini- mum wage has been increased' by the fact that many arbitration boards have based their awards upon a wage fixed by the recognized standard of living for the type of workmen involved.^ This is a proper basis for an award when the employees have been sufficiently organized to secure an adequate standard, but it is confusing because it combines more than one factor of the workman's interest formula without indicating that such a combination has been made. The sum calculated as sufficient to enable the worker to live according to the standard recognized for his trade is not strictly an estimate of the cost of living. The greater training, responsibility, and risk required of some workers are the basis for their higher wages and correspondingly better living conditions. The standard of living basis, however, is not without advantages. It is a recognized basis of wage regulation. It has the approval of the employees, and it results in substantial justice in most cases. It, however, involves the calculation of a separate cost of living for every type of labor, based upon the grade of food, clothing, shelter, ^ The clothing allowance may be calculated by the number and kind of items needed by each member of the family per year, and the application of unit prices of those items. ^ Prof. W. F. Ogburn has very accurately calculated the fuel requirements of this typical family in Washington, D.C. Similar calculations may be made for other localities where climatic conditions are different. ^ See government estimates on cost of living in shipyard districts, VII Monthly Labor Review, No. 2, p. 132; No. 3, p. 115; No. 4, p. Ill (1919). Similar estimates were made for the Chicago Stock Yards District in the pro- ceedings before Judge Alschuler. Specific estimates of a more general nature are given in Chapter IV, pp. 59-61 infra. * Re Southern Railway Arbitration Proceedings, pp. 10-23 (1914). Re Nickel Plate Arbitration, Report of Board, p. 723 (1914); Re Eastern Rail- roads and Brotherhood of Locomotive Engineers Arbitration, Report of Board (1912), p. 47; Re Western Engineers and Firemen's Arbitration Proceedings, p. 7774 (1915); Re Wheeling & Lake Erie Arbitration Proceedings, pp. 135-141 (1914), ff. 107 amusements, etc., common to the particular type; and places a heavy task upon the arbitrators. It, moreover, introduces the element of personal likes and dislikes into the computation and lessens the accuracy with which the wage base can be computed. Furthermore, such an allow- ance can only be premised upon existing standards form- ulated by bargaining power alone, and therefore would represent little gain over present methods of wage deter- mination. When the wage computation is made upon the standard of living basis the formula becomes Workman's interest = (cost of living according to recog- nized standard) + insurance + reward for services. All Other items are included in the increased living costs. V. Unemployment Risk, Reward for Service, etc. The allowance for insurance in the wage formula cor- responds to the depreciation allowance in the case of capital. The unemployment risk and reward for service correspond to the rate of return in public utility rate- making; and the pay for skill is the equivalent of the "reward for efficient management" in rate-making. The determination of the sums necessary to provide for these items of the formula is the result of estimates by experts based upon the most reliable information available, and tempered hj experience and actual trial. The pro- cedure is no more speculative than that of valuation, of rate-making, of price-fixing, and at present of wage-fixing itself. The investors of millions in the insurance business have no more accurate information to rely upon. Men loan their funds upon estimated security and guess at the risk they take. Practically every business transaction is based directly upon some such estimates. These calculations approximate the truth more closely than mere chance, and a wage based upon such figures would come nearer doing equity than one predicated solely upon bargaining ability. A wage fixed by a per- manent board upon the basis of the formula suggested would not be proof against faults and dissatisfaction, but no system involving a judicial decision is. Our legal sys- tem itself is far from perfect, and our courts are not above 108 criticism. One party to almost every suit at law or equity feels aggrieved with the decision or verdict, but very few rational persons today would advocate abandon- ing the judicial system and returning to the mediaeval trial by resort to force. The principles involved in every factor of the formula are capable of definite statement. The estimated allow- ance for medical services, for example, may be based upon the same data that health insurance companies throughout the country use in calculating their risk. Several of the state insurance commissions have already gathered con- siderable information of this nature, and though no definite statistics or tables have been prepared for use by wage boards, their preparation would be but a matter of routine if a permanent organization were created. Such data, of course, would be merely an estimate, probably based upon the number of days each member of every family within certain test areas was sick during the test year, but it would be sufficiently accurate for the purpose. The allowance for insurance should be ample to protect the worker's family against sickness, invalidism, death, and accidental injury not within the provisions of the workman's compensation act. The ideal method of meeting the problem would be by means of a system of mutual communal insurance, but such a plan has not been definitely formulated and cannot be expected under present conditions for several years. Neither industry nor the public is prepared for such insurance. The ex- pedient substitute would seem to be an allowance in the wage sufficient to enable the head of the family to carry a $1,000 standard life insurance policy and a small amount of protection against sickness and accident. The allowance to protect the family against unemploy- ment might admirably be covered by insurance, but no means of meeting it in this manner exists today. It must be cared for, therefore, by a slight increase in the wage allowance itself. The sum necessary for this purpose niay be computed for each industry from actual figures of time off during a normal period. The allowance for skill, training, and efficiency is the balance wheel of the wage formula. It gives the arbi- trators an opportunity to adjust wages so that those em- ployees who have not been able to advance wages by way 109 of collective bargaining, but, nevertheless, contribute training and ability, may receive a return proportionate thereto instead of one based upon their existing inequi- table standard. It places all training and ability upon an equal basis, and assures a fair relationship between the wages of skilled and unskilled labor. The allowance need not be estimated from existing wages, though they are competent evidence. It may be calculated from the cost of training in actual expenditure and loss of time, allow- ance being made for the additional risks and responsibility on the same basis that efficiency is rewarded in public utility rate-making. The reward for service element of the formula includes protection against old age and provision _for_ the meager amusements that can be included. This is the most speculative item in the wage and the most that can be hoped for is a rough estimate based upon a general average of the amusement expenditures of workmen's families for dances, .excursions, moving pictures, etc., and an arbitrary allowance for savings. VI. Increased Living Costs The cost of living element of the wage formula, though capable of definite determination at any given time, is not a constant figure. There has been a continuous advance in the prices of necessities and of those com- modities which constitute the chief articles of consumption by workmen and their families. The prices of such goods have increased steadily since 1907, and had advanced from ten to twenty per cent before the abnormal war increase began. ^ Wages had increased before the generous allow- ances of the War Labor Board were given, but not in corresponding ratio. The result was that by 1914 real wages had declined to a serious extent in spite of the advance in money wages. The purchasing power of the workman's pay had dwindled so much that his standard- of living was threatened.^ Realizing the danger, the iDevine, E. T.: "The Principles of Relief" (1904), p. 36; More: "Wage- earners' Budgets" (1907), p. 32; Bulletin of U. S. Bureau of Labor Statistics, No. 156, p. 924, ff. ^Dr. I.M. Rubinow, in an article in the American Economic Review of De- cember, 1914, p. 813, estimated the decrease in the buying power of wages at from ten to fifteen per cent. This figure, however, seems high and exceeds that accepted by the government. 110 workers have advanced repeated claims for wage Increases sufficient to counteract their increased costs. ^ The argument proceeds upon the "vested interest" theory of the Webbs, which considers that no change in conditions can justify a decrease in real wages, for the workman's standard of living once increased may never be reduced. Confined strictly within the limits of the established standard of living the argument may be used, but it cannot be extended to include every increase in wages due to changing economic conditions. The abnor- mal war wages made possible only by the great shortage of labor coupled with the necessity for continuous and in- creased production are not within the legitimate scope of the rule. Similarly any temporary increase based upon rising prices, etc., must be sacrificed on a return to normal conditions. The value of the service rendered, not the needs of the workman, must regulate the amount of the wage. The productivity of the worker, not his standard of living, must be the final determinant of wage rates, and it is only when the living standard falls within the productivity limitation that the Webbs' rule may be accepted. When a prolonged decrease in the market price of a commodity makes the laborer's effort actually worth less, or when a return to normal conditions after a prolonged period of abnormal wages leave the employer unable to pay the higher wage, the standard of living must suffer. The working of the "vested interest" rule as applied to wages themselves is dependent wholly upon the manner in which existing wages were fixed. It cannot be used successfully to advance or to keep wages above the earning power of the workers. It is very desirable, from the viewpoint of all parties concerned, that the workman's present standard of living be maintained. The political, social, and economic welfare of the community is best promoted by maintenance of a 1 Besinning in Canada with the case of the Canadian Northern Ry. Co v. Engineers, in 1908, and the Canadian Northern Ry. Co. o. Maintenance of Way Employees, in 1909, the plea spread to the United States and was advanced in the Chicago Switchmen's Arbitration, the Denver & Rio Grande Arbitration, the Western Firemen's and Engineers' Arbitration, the Missouri Pacific Arbitra- tion, and the Big Four Arbitration, in 1910; the Eastern Conductors and Trainmen's Arbitration, the Southern Railway Arbitration, and the Chicago & Western Indiana Belt Ry. Co. Arbitration, in 1913; the Wheeling & Lake Erie Arbitration and the Nickel Plate Arbitration, in 1914; the Western Engi- neers' and Firemen's Arbitration, in 1915, etc., including a number of arbitration proceedings outside of the public service field, down to date. Ill high standard of living for all citizens.^ The employer benefits by the increased productive power of his labor and the decreased dissatisfaction, unrest, and labor turn- over. And the benefits to the employees themselves are apparent. When laborers are receiving a normal wage based upon the recognized elements of the wage formula, and the cost of living increases, the workmen are ordinarily entitled to an advance in wages, but not necessarily in direct ratio to the increased costs. Wages and prices should advance or decrease simultaneously. The normal risks of industry are assumed by the capitalist and his return includes an allowance for such risks. The laborer's wage formula includes no such item. All normal increases in expenses, therefore, should be counteracted by wage increases. But abnormal increases need not necessarily be com- pletely offset in this manner. There is, for example, no reason why the laborer should be authorized to shift his war burden completely. The capitalist has his return reduced, the general public bears its part of the increased costs, and the return element of the wage formula supplies a means for adjusting wages so that laborers may bear their part without suffering any greater hardship than is imposed upon other members of society. In such cases the cost of living element of the formula should be in- creased to cover the added expense, but the reward for service element should be reduced. Any other method of treating the wage situation discriminates in favor of labor. Within certain limits, too, the ability of the industry to meet the wage increase must be considered. This is especially true in the case of public service where the ability to increase rates is limited by the worth of the service ^nd the amount the traffic will bear. The work- man's claims are of first importance, but it would be a mockery of justice to award an increase that would force manyplants to close and deprive the employees of all pay at a time when they really needed more, not less. Any wage award predicated upon an increase in living i''The lessening of national productiveness, the danger of industrial dis- turbances, and the physical and moral deterioration sure to follow from a reduction m the standard of living, will affect every class of society and therefore the importance of at least maintaining the standard at its present level can hardly be overestimated." Stockett: "The Arbitral Determination of Railway Wages" (1918), p. 96. ' 112 expenses should be a temporary one made for a limited period, subject to revocation, extension, or permanent adoption at the close of the period. It is only by such periodic readjustment that such a wage can be made equitable. Allowance must also be made in the wage for the differ- ence in the effect of the increased costs upon the wages of each type of workmen. No general per cent allowance can be applied to all wages, for the cost of living Item forms a different percentage of each wage. An apprentice's wage, for example, may be made up almost wholly of living cost, while that item occupies a much smaller place in the skilled mechanic's pay. Any increase in living costs, therefore, should be offset by a graduated increase in wages, making a large increase to the poorly paid workers and a smaller increase for the highly skilled men. A decline in living expenses presents the exact opposite of the price increase. The money wages of workmen may be decreased during a period of prolonged decrease in prices, in the same ratio that they are increased to meet rising costs, without lowering the real wage or the work- men's standard of living. Laborers have always strongly opposed any decrease in money wages, but their position is based upon misunderstanding of, or a refusal to con- sider, the difference between real and money wages, and is untenable. It has been argued that this opposition should influence the wage tribunal to decrease wages in a smaller ratio than the decline in prices,^ and that such action would correspond closely to the normal relation of wages and prices evident in former periods of declining prices. Such an argument considers the workman's interest only. It is inequitable and does not conform to any consistent theory of regulation. If the normal ratio of wages to prices is a controlling element, it should affect increases as well as decreases and wages would lag in both cases. If it is not controlling, it cannot justify an in- direct wage increase by operating only when it operates to the benefit of the workman. VII. Increased Productive Efficiency The use of the wage formula and the principle of wage increases to meet increased expenses places wages upon a firm basis and guarantees their maintenance. It assures 1 Stockett: "The Arbitral Determination of Wages" (1918), pp. 115-117. 113 the workman of a reasonable standard of living, but pro- vides no means of bettering the laborer's position, or increasing his share in the return from industry. The workman's standard of living would not reniain stationary irrespective of wage increases, for the develop- ment of other factors affecting the workman's condition would gradually raise the standard. Improvements m housing requirements, sanitation and drainage restric- tions, and safety appliances, medical and similar regula- tions, improvements in education, the establishment of industrial schools, the construction of playgrounds, parks, and bathing beaches, the development of public utility service, and the many similar changes, would continueto better the laborer's general living conditions irrespective of the money wage he received. And the higher health and educational standards would make the laborer more efficient and tend to increase wages. The workmen as a body, however, will not be satisfied with any wage system which fails to give them_ an ad- vantage from the constantly increasing productive effi- ciency. The wage formula places the workman's pay upon an equitable basis, comparable to that of the capitalist's return in regulated industries, but it provides no adjustment machinery to keep it upon such a basis. The workmen claim a right to share in the growing wealth resulting from capitalistic production.^ They are convinced that the constant improvement of equip- ment and advancement of the industrial arts is resulting in an ever-increasing production of wealth. They argue that, if productive ability is the basis of wages, any in- creased efficiency in the means of production which increases the productivity of labor ought to result in a corresponding increase in wages. Each new invention, each substitution of machine for handwork, each im- provement upon existing machinery should bring an increased wage to the worker. The increased hauling capacity of a locomotive and carrying capacity of a car, the greater efficiency in the lathe and drill press, the im- '■ " If we are to have a proper measure of economic well-being and advance- ment, ... it is evident that the principle of productive efficiency must be recognized in fixing wage payments, and the financial or corporate control of the transportation industry must be so regulated and adjusted to democratic institutions that a proper measure of participation in revenue gains may be made possible to railroad employees." W. S. Stone, in the Western Engineers' and Firemen's Arbitration (1915) Proceedings, p. 7747. 114 proved means of manufacture, should all be reflected in the laborer's wage. The argument, confined strictly within its proper limits, seems sound, though it often has been disputed. But each improvement in machinery, every change resulting in greater efficiency, represents an additional capital expenditure requiring an increased return upon invest- ment. It involves compensation to the investor and the holder of the patent rights. Ordinarily it involves a loss through obsolescence and the junking of the dis- carded equipment. It means an increased return by way of reward for efficient management. And very often it results in a price or rate reduction. Increased sales may be due to the natural growth of the community, to extensive advertising campaigns, to the development of good-will by a change in management, or to any one or more of a multitude of similar reasons in no way dependent upon greater productivity of labor. Neither the increase in gross receipts, nor the growth in production or sales, therefore, indicates the increase that can be made in wages. The only figure which even approximately in- dicates labor's share in the increased return is the net profit, adjusted to allow for the ordinary increase in business and for market fluctuations. The workman's claim is sound from the economic point of view. While there can be no question but that when an improvement in equipment results in greater gain the entire increase is due to the machine work rather than to labor, this does not mean that the entire profit must go to the capitalist. Any argument leading to such a conclusion rests upon an ambiguous use of the term "productivity." If, for example, a laborer could produce one hundred bolts by hand in the same length of time that he could turn out one thousand with the aid of a machine, the owner of the machine could afford to pay a higher wage and take the employee from the operator who produced only by hand. If a third em- ployer should provide an improved apparatus which would enable the workman to make fifteen hundred bolts, that operator could well afford to pay a wage which would attract labor from the second employer. The only economic force which prevents the complete operation of this principle is the superabundance _ of boltmakers which keeps the wage down. The machine 115 owners, if they had to, could and would pay the increased wages. The true productive power of the laborer is in- creased with each improvement in the equipment, and the capitalist must credit a part of the gain made possi- ble by the machine to labor because the operation of the machine is wholly dependent upon labor. The question of what portion of the gain from the in- creased productivity belongs to the capitalist and what to labor is an unanswered one. The division of the in- creased profits has been made in the past solely on the basis of bargaining power. The only specific limitation has been the fact that the capitalist must be allowed a sufficient portion to pay him interest, depreciation, risk, and return. He must be given an incentive to produce and install the improvement. In addition to the interests of the capitalists and of labor, the public has a claim to a share In such increased profits by way of reduced prices. The portion to be al- lotted to each party is a matter of expediency, except for the above limitation in the capitalist's behalf. It depends upon the speculativeness of the venture, the capital required, the additional burden upon labor, the importance of the change to the public, the character of the business, etc. No rule of thumb can be established for the apportionment. The most that can be expected is a rational guess made with the aim of securing sub- stantial justice to all.' And it is natural that the capitalist who assumes all the risks of the venture should object to such experiments at his expense. The claims of the other parties, however, are valid though indefinite, and the increase in efficiency has aided in the massing of fortunes of such gigantic proportions that both the public and the employees have become so insistent that their claims can no longer be neglected. Compromise awards which seek to maintain industrial peace without establishing a just and definite basis of dividing the return have proved futile. Distrust and dissatisfaction have resulted which cannot be overcome without a careful reorganization of the wage system. Some redivision of 1 The proposal of the employees in the Eastern Firemen's Arbitration (1913), to measure their proportion of the increase in profits by ascertaining the ratio of their total compensation to the total transportation expenses during the year 1902 and comparing it with the same figures for the vear 1912 was wholly un- acceptable. See Stockett: "The Arbitral Determination of Railway Wages" (1918), pp. 147-148, for a partial but effective rebuttal of this argument. 116 profits accruing from increased efficiency must be at- tempted whether a wage based upon the formula is paid or not. As a corollary to the claim to a share in the return from increased efficiency, the workers claim an allowance for the additional risk and responsibility in handling the more complicated equipment.^ Their demands in this respect are supplemental to, rather than in addition to, their claim to a share in the profits on the ground of increased returns. It states the proposed basis for the division of the employees' share of the increase. All workmen directly or indirectly engaged in the operation of the improved equipment are entitled to an increase in wages, but those employees directly in control, who bear the increased burden and responsibility, are entitled to a relatively larger share in the gains than the other laborers whose work, hazard, and responsibility have not been increased. Each grade of labor is entitled to participate in the increased gain in direct proportion to its specific contribution to the increase. The principal defect in the theory of increased risk, as in the case of the corollary demand, is the difficulty of application. There is practically no means of ascertaining the amount of the increased income which should go to labor, or the proportion which each grade of labor should receive. There is no way of ascertaining whether the hazards of the workman have as a whole been increased or decreased by the improvements. And it is almost impossible to tell what part of the gain in profits has been the result of the increased productivity of labor and what part is due to other causes. The increased risk argument for wage _ increases, however, is capable of application irrespective of the proof of increased efficiency gains. Any additional risk or responsibility, not offset by safety appliances, etc., entitles the workman to an increase in the risk elernent of his wage, irrespective of whether it is ac- companied by a gain or a loss. Often an award may be made upon this basis when the evidence relative to m- creased efficiency would be too tangled to justify a change in wages. 1 Eastern Firemen's Arbitration (1913), Supplemental Report of International President, Employees' Brief, p. 1237; Eastern Conductors and Trainmen s ArbTtration (1913), Employees' Final Brief, p 6; Western Engineers and Fire- men's Arbitration (1915), Proceedings, p. 7730, etc. 117 VIII. Standardization of Wages The wage formula fixes an equitable wage; the principle of increased efficiency adjusts it to changing conditions. A further rule of procedure is necessary to give unity and coherence to the wage schedule, and the principle of standardization has been developed for this purpose. Experience has demonstrated that one of the most im- portant features of any extensive system of government wage-making must be uniform compensation for similar service throughout a given area. This principle itself is generally accepted, but there is a wide difference of views as to the area to be standardized and the scope and terms of the standardization. The need for uniformity is particularly great in the public service field, where government intervention must be most extensive, and especially in the railway field, where standardization already forms the basis of both collective bargaining and arbitration proceedings.^ In- dividual bargaining and multiplicity of wages and wage scales are inconsistent with both modern corporate organization and state wage regulation. Collective bargaining and the reference of wage con- flicts to temporary arbitration boards have forced the adoption of standardization. The constantly expanding area of dispute in wage controversies has made a uniform wage scale of some form an absolute necessity. The resort to temporary wage tribunals without permanent records or adequate investigating facilities, and the demand for immediate settlement, emphasize this phase of collective bargaining. A present day wage controversy may involve hundreds of thousands of workers and affect the greater part of the country's industry. The issues involved are technical. The award must be made in a few weeks' time. The machinery of arbitration is imperfect. The absence of a permanent organization of experts trained for the work, backed by precedents and armed with the necessary data in workable form, handicaps the board and makes scientific determination of the issues impossible. It is not practical, with the limited time and facilities, even to consider separately each road ' See McCabe : "Standard Rate in American Trade Unions," 30 Johns Hopkins University Studies in Historical and Political Science, 120 (1912); Cunningham: "Standardizing the Wages of Railroad Trainmen," Quarterly Journal of Economics (November, 1910), p. 139; Stockett: "The Arbitral Determination of Railway Wages" (1918), Chap. H. 118 involved. Differences in earning power and in physical conditions are necessarily submerged. The work and ability of individual workmen drop from view. Details are lost sight of and minute calculations are impossible. Averages rnust be used throughout. Neither the time nor the facilities will permit of exact wage-making. The standard wage is the only alternative. The creation of a permanent wage tribunal with com- missioners or judges trained for their work, with competent assistants constantly employed collecting and arranging statistics, _ making industrial surveys of the country, investigating living costs and conditions, etc., would simplify the situation very much. Settlement of the minor controversies would become almost routine work and interpretation of awards would give less trouble. But the great divisional wage disputes would continue to present questions of such magnitude that standardization could not be avoided. The method of handling wage controversies may be greatly improved, the classifications involved may be placed upon a more scientific basis, but standardization must be incorporated in any system of state wage control. The principal conflict has related, not to the theory of standardization itself, but to the classification upon which the standard rate should be based. The fact that uniformity in wage schedules is not dependent upon the acceptance or rejection of any particular classification, seems to have been overlooked. Writers and arbitration boards have treated the question of standardization as one with the classification argument. Such a union is most confusing. Wage uniformity is essential to any successful state intervention, but the present classifica- tion of wages is not. The railway wage system of the past, which in its general features is widely advocated by the road manage- ments today, consisted of a multitude of rates. It was based upon the character of the run, the skill required, the size of locomotives, the nature of the territory, the density of traffic, main line or branch line service, the number of tracks, the number of curves and crossings, etc. The classification was too minute and there was no uniformity of application, but the system was founded upon the theory of the productivity of the labor and would have yielded as readily to standardization as any other 119 classification. The workmen, however, objected to the arrangement because it fixed the wage according to the nature of the work instead of the training of the workman. The employees insisted that every workman of the same grade be paid the same amount for similar service irrespective of the locality in which the service was rendered, the traffic conditions or the physical aspects of the territory. They demanded the same pay for main line and branch line service, for single track and double track, for runs involving curves and grades and for those over straight and level track. The classification advocated by the employees has been based solely upon the kind of service performed. Locomotive engineers' wages, for example, depend in a schedule so formed upon whether the employee is engaged in passenger service, through freight, local freight, switching, or belt line service, and these divisions are themselves subdivided to indicate the types of local freight service, etc. The classifications of both parties seem to be well founded. The density of traffic, the physical conditions of the territory, the grade of the track, and similar factors, all directly affect the productive power of the worker and are a proper basis for wage-fixing. The character of the service, however, also affects productivity and should be considered. The ideal system would seem to be one incorporating the desirable features of both standards. Such a system, perhaps, would prove more technical and detailed than is desirable, but there is no reason why it should prove unworkable. Multiplicity of wage rates is undesirable, but wage simplicity also may be carried to a dangerous extreme. The organization of a permanent and competent body of wage experts would make possible the formulation of a scientific classification embodying both criterions without unnecessary multiplicity. And such a classification would place standardization upon a scientific basis. In addition to these classifications it has been found necessary, in order to give reasonable consideration to the efficiency and responsibility of the workmen, to establish a graduated standard, based upon the hauling power of the locomotive estimated by cylinder dimensions or weight on drive wheels, the length of the train, etc. The second standardization conflict relates to the area to be covered by the uniform wage rate. Considered 120 from, this viewpoint, standardization is of three types: plant or system standardization, district standardization, and national standardization. IX. Plant and System Standardization Plant and system standardization have met with little opposition. The area included is so small that living conditions are the same throughout, and the question of the company's ability to pay affects all wages alike. There have been objections to the classification adopted, but even these have been comparatively mild, for the dissimilarity of operating conditions plays a much less important part when only one system is involved than when divisional standardization is in question. The railway arbitration awards under the federal acts have uniformly accepted the general principles of system standardization, probably because this seemed the easiest way to formulate a workable wage schedule. The arbitration boards, however, have never definitely accepted the employee's system of classification, and have even refused to commit themselves to a policy of disregarding the physical conditions of the roadbed, the density of traffic, etc. The graduated schedule has been generally adopted. The gain to the employees under these awards has been considerable and the possibilities opened so great that they have not been satisfied with such holdings. The growing strength of their organizations has_ raade collective bargaining on a larger scale than the division advantageous, so they have advocated district standard- ization. The wide variance in wage scales and the diversified union conditions have made it desirable to secure uniformity of wages within certain specified areas, irrespective of corporate management or control. X. District Standardization Beginning in 1902 with a successful demand by the Western Conductors' and Trainmen's Unions, district standardization spread rapidly by way of voluntary agreements, and collective bargaining was placed upon a district basis. The principal argument for district standardization has been that diversity of wage in the several plants or 121 upon the different roads within a district breeds discontent and dissatisfaction, and that standardization removes this friction, makes petty disputes less frequent, and does away with local disturbances. It has been argued further that the ability of the workman should be_ the controlling element, and that all employees of a given grade should receive the same wage within the same district irrespective of the work performed. The diversity of working conditions and the difference in profits is not questioned, but the laborers argue that the effect of these features upon the wage question cannot be deter- mined with a sufficient degree of accuracy to warrant considering them. They contend further that if these elements were considered the wage schedule would prove unwieldy and unsuited to modern conditions. Such a schedule, it is argued, would be undesirable too, because the physical conditions of each plant or road are constantly shifting and the wage rate would have to be readjusted with unpractical frequency. All similar business concerns in a district should be required to pay the same wage, it is argued, just as they pay the same price for oil or cars or coal. The fact that a railroad is poorly laid out, or that an industrial plant is unsuccessfully managed, or is not prosperous for any other reason, should not be accepted as a justification for lower wages. The objection to district standardization is its failure to consider the diversity of conditions. The employers contend that wages must be governed by the amount of labor performed, the skill and efficiency required, the responsibility and risk involved, the rapidity of promotion, cost of living, etc., and that these several elements depend largely upon the physical conditions under which the work is performed. District standardization, it is ob- jected, is arbitrary and does not fit conditions. It is further objected that wages, in order to prevent an unreasonable burden upon the less prosperous con- cerns, must bear some relation to the earning capacity of the companies. Excessive wages decrease the borrow- ing power of such employers and lead directly to financial difficulties. The late Professor Stockett said:^ ' Stockett: "The Arbitral Determination of Railway Wages" (1918), p. 45. 122 ''There is no reason why an employee should forego his claim to like pay for similar service merely because the rail- road on which, he works is operated at a loss." On the contrary, there are several very good reasons why the employee on such a railroad should receive less. First, he does not produce as much as his fellow laborer on the more advantageously located road, irrespective of whether he works as hard or harder and irrespective of whether he does the same type of work with the same skill or greater skill.i He therefore has no real claim to as much as the worker on the more prosperous line, and he foregoes_ no valid claim when he accepts less. He _ cannot consistently proclaim productivity the true basis of wages m the case of an allowance for increased efficiency and in the same proceeding reverse his claim where it operates against him and contend that the productivity of labor is an immaterial element. No conception of economics can give a man a claim to more than he produces, and no theory of public policy or right can extend an alleged claim in that manner. Law may prevent the employment of a worker at less than a fixed wage, but it cannot compel his employment at that wage. And no law can be justified which fixes such an arbitrary wage standard above the minimum figure already dis- cussed. Second, no undertaking can operate at a loss long, and it is better for the workman to have a wage which pays him more than it costs him to live and pays him fairly for what he produces, than for him to be forced to face unemployment. Third, it is far better for the public who pay all railway wage increases to have the service, as long as living wages are paid, than to have the road forced out of operation by standardization. An arbitra- tion award which would standardize wages at the expense of necessary service would work a real hardship upon the public and the workmen alike. It would add confusion and dissatisfaction to the labor problem rather than remove friction. If district standardization must mean disregarding true earning power, the standard wage cannot be fixed at a 1 See pp. 39-42, 102 infra. Two artists of equal ability working the same length of time may produce pictures one of which sells for $100 and the other for $10,000; yet even if working for a wage these men could not be paid the same amount until the public could be induced to buy their pictures at the same prices. 123 sum greater than that which can be paid by the poorest efficiently managed road which should be continued in operation. Public policy demands that the public service shall not be hampered by unjust inroads upon capital which would prevent future investments for maintenance and extensions. Standardization carried to such an extreme by imperfect classification concerns itself only with the interests of one of the parties to industry, and in effect makes a labor organization of the arbitration tribunal. It is just as essential to industry that capitalists receive a fair return upon the reasonable investments as that labor receive a just wage. And the public interest exceeds that of either the capitalist or the laborer. The standardization principle, in effect, is an extension of the minimum wage theory to embrace the standard of living argument. It seeks to create or establish a definite standard for each grade of workman and give the wage necessary to support such a standard the force of a legal minimum. The argument seems sound so far as a mini- mum wage is concerned. Beyond that point it loses its force completely unless the classification makes allowance for the employer's ability to pay, for it fails to consider the productivity of the laborer. Unless so limited it is un- economic, unsound legally, and when followed to a logical conclusion, unsound as a social measure to better the condition of labor. A wage which disregards the pro- ductive power of the worker cannot be justified except by proof that the business is of such an unproductive and uneconomic nature that it should not operate, and such proof is impossible in the case of practically every public service company. To place district standardization upon a really sound basis it would be necessary to classify business according to net earnings in the same way that the Interstate Commerce Commission has grouped rail- ways by gross earnings. Such regulation would permit the adoption of a standard wage for each class without material injustice, but it would, of course, meet with strong opposition from organized labor. The arbitration boards have not been willing to accept district standardization unconditionally and have not been consistent in their treatment of it. It was rejected by the Eastern Engineers' Board in 1912, but was accepted with modifications in the Clark-Morrlsey Award in the 124 New York Central Arbitration. It was accepted as a minimum wage criterion in the Eastern Engineers' and Conductors' and Trainmen's Awards and in the Western Engineers' and Firemen's Awards. The inability of the companies to pay has not been generally considered a defense against standard wages, though it was accepted as such on the Southern Railway Maintenance of Way Employees' Arbitration. One further adjustment is necessary to place district standardization upon a safe basis. The cost of living may vary considerably within a territory as large as a railway district, and any wage which fails to consider this varia- tion, while it may give a standard money wage, will result in a material variance in real wages. Unless some means is provided in the wage classification to counteract this difference in living costs the economic purpose of stan- dardization will be defeated. Subject to compliance with these conditions precedent the adoption of district standardization by arbitration tribunals seems desirable. XI. National Standardization National standardization has been advocated by railway employees in the East because the West enjoys a slight advantage in wages. The railway trainmen contend that railway service is practically the same irrespective of locality, with the possible exception of the mountainous territory of the West, that equipment has been so standardized that the classification of workmen by motive power specifications meets the situation com- pletely, and that the cost of living and living conditions are practically the same throughout the country. No arbitration board has accepted the principle of national standardization, though it was favorably con- sidered in the Eastern Engineers', Firemen's, and Con- ductors' and Trainmen's Arbitrations. XII. The Saving Clause The principle of standardization has been burdened by the workmen with a rider provision wholly inconsistent in theory and in operation, known as the "saving clause." When the employees have sought to raise wages by appli- cation of the standardization 'principle they have seldom 125 considered it expedient to attempt to fix the standard at the maximum existing wage. They have not been willing, however, in increasing the low wages to decrease the pay of those workmen already receiving a wage above the pro- posed standard rate. The saving clause is the device used to assure the retention of the higher wage in the revised schedule. The saving clause covenant is incorporated in the agree- ment to arbitrate as a matter of course and rests rather upon precedent than reason or logic. Employees consider the standard rate as a sort of minimurn wage and hold that the increase in the minimum is no justificatioii for a decrease in any wage above it. They insist that skill and efficiency should rule above the minimum but play no part therein. The employers logically contend that if standardization is proper all workmen of a given grade should be paid alike. There is no arbitrary point where skill, efficiency, and productivity begin to operate, and if there were such a point, its location would not be dependent solely upon the benefits to be derived therefrom by the workmen. Such a clause has no purpose other than to insure the employee against loss, and it therefore encourages wage aggression, leads to excessive claims, and increases rather than diminishes friction. It cannot be justified in prin- ciple or practice. It assumes without warrant that existing wages were based upon the same theory that the arbitration will apply. It limits the arbitration by removing part of the wage scale from his jurisdiction, blocks complete justice, and handicaps arbitrators who are really seeking to do equity. Good faith on the part of the employees would open the whole wage question to settlement on a uniform basis, making allowance for skill and training, and leaving the door open to the employer to adjust individual wages in cases of exceptional ability. XIII. The Form of the Wage Tribunal The questions relative to the form of the proposed arbitration board or court have aroused almost as much discussion as those dealing with the necessity for such a body and the basis for its awards. The expediency of a permanent board has been argued, and the advisability of uniting wage and rate control in the case of public utilities considered. 126 Much of this discussion has resulted from the failure to recognize the necessity for treating the labor control problem as a unified whole. Wage regulation is but a part of the labor control program and arbitration but one step in wage control. The industrial court, therefore, cannot be considered as a distinct body separate and apart from the other regulatory agencies. The control of the entire wage machinery of each jurisdiction, irrespective of its form, must be centralized in the hands of an administrative body of from three to five persons. The responsibility for the general policies of the department must rest upon them, and they must be given authority to develop a unified wage program. The details of the organization of such an industrial commission must depend largely upon local needs, A specimen bill creating such a body is set forth in detail in the appendix, with explanatory notes relative to the alterations necessary to fit the bill for the several jurisdictions.^ The form and scope of action of the mediation and investigation sections of the commission's staff have been considered in detail. The nature and powers of the commission itself and of its arbitration section remain for analysis. The primary need is for a permanent commission which will collect reliable data on wages, living costs over a period of years, hours of work, past and present money and real wages, rates, rents and prices, dividends, returns, and consumption and productivity tables; place the material in a form which will make it available for im- mediate use when necessary; prepare skill and risk tables, etc. There is no opportunity for a thorough investigation after a wage disagreement has started. Unless the necessary data has already been collected and placed in form its use by the arbitrators is practically precluded. There is neither time to consider nor oppor- tunity to know the facts, and a compromise award is the only move possible. There has been some objection to a permanent arbitra- 1 The aim in offering such a bill has been to forestall the charge of impractica- bility and indefiniteness which is invariably lodged against a study of this nature. It is the author's contention that such a bill could be legally enacted without constitutional amendment in any jurisdiction in the United btates except Louisiana. 127 tion board,^ but the detrimental features ordinarily suggested are far outweighed by the advantages offered. The criticisms universally have been predicated upon the compromise conception of the tribunal's functions, and are not applicable to an organization which goes to the merits of the issue presented and considers conditions as well as effects. Any real judgment of the problems presented in a wage dispute requires resort to fixed principles, the use of previously collected data, and uniformity in holdings. If prejudice can only be avoided by maintaining uncertainty as to the principles the ar- bitrators will apply, prejudice becomes a desirable element, for certainty of procedure and the application of fixed and recognized principles are as necessary in matters before the industrial court as in any other judicial pro- ceeding. An uncertain method of making awards renders resort to arbitration a mere matter of chance. The parties might hope for equal justice from a stipulation to decide their controversy by the fall of a coin. A definite standard for the determination of wage rates is essential to successful state intervention. The wage theory once developed can be departed from only to adjust it to changing economic conditions, or to meet some abnormal situation which makes its application temporarily inexpedient. To this extent precedent is absolutely necessary in wage awards. The strong opposition to precedent^ in wage con- troversies is difficult to understand. It can rest only upon a misunderstanding of the term. The application of uniform principles of wage determination means progress, not retrogression. It is an aid rather than an obstacle to social betterment measures. It places wage disputes upon a higher plane and removes the necessity for resort to force to secure equity. It does not mean acceptance of existing conditions or perpetuation of existing status. Precedent refers to rules and principles, not to conditions. 1 "The rulings of a permanent board are apt to become fixed and one or more of the parties or the general public is apt, in consequence, to become prejudiced in its attitude toward a Board. . . . After two or three decisions precedents become pretty well fixed, and prejudice, in consequence, is created at the very- outset. In the case of individual boards, their ideas are not known in advance, not, indeed, until the findings are made." King: "Industrial Peace." Address delivered May, 1914. ^Carlton, F. T.: "The Advantages and Defects of Compulsory Arbitration," Vol. XLIX, Ann. Am. Acad. 154 (1917); King: "Industrial Peace." See pre- ceding note. 128 It deals with the law, not the facts. Precedent is retro- gressive only when the criterion adopted makes no pro- vision for progress, and the acceptance of the increased productive efficiency standard precludes the application of such a charge of conservation to the proposed wage standard. The suggestion of combining the wage and rate tribunals in the case of public service companies is open to the objection already considered. It fails to give due import- ance to the need of a unified system of wage regulation. It would develop needless friction between governmental agencies, and would tend to subordinate wage control to rate regulation. The rate-making body has available much of the information and data necessary for scientific wage-fixing, but it lacks much, and the use of that which exists must differ greatly in rate and in wage cases. The training of the public utility commissioner is not nec- essarily such as fits him for wage regulation, and it is extremely questionable whether the acquisition of such training would leave the commissioner a desirable rate arbitrator. It would seem more advisable, therefore, to confer wage-fixing and rate-making authority upon separate bodies. The two functions, however, cannot be entirely separated. The wage-fixing tribunal should be given power to secure the presentation of such material data as the rate-making body possesses, and should be required to make that body a party to every wage case afi^ecting a public service company. The public utilities commission might appear then as a defender of the public interest in utility rates, and the rights of all parties would be safe- guarded without the union of antagonistic powers in the hands of one body. It seems desirable to create a permanent wage arbitra- tion body distinct from the rate-making commission, but such a distinct wage organization need not necessarily be an additional labor control agency. The functions of the industrial commission and arbitration board, under ordinary conditions, can be advantageously com- bined. It might prove desirable, in organizing a federal wage body, to segregate the two functions and create a district industrial court, but such an organization would 129 prove too complicated and expensive^ for adoption by the individual states. The suggested bill provides for the creation of a com- mittee of three members, one an employer of labor, one identified with industrial workers, and one a lawyer who is familiar with conditions of employment. The union of commission and arbitration board makes such qualifi- cations expedient. Where a separate arbitration board or court is created it should be composed wholly of persons who do not represent either employers or employees. When representation is granted the balance of power must be left to a neutral. The term of office of the commissioners is fixed at six years to release the board from political influence and to assure the familiarity of the members with the work. The details of organization and the formulation of rules of practice, etc., are left to the commission to gain flexibility and adaptability. The proposed bill provides a tribunal to which the parties to any industrial dispute may resort for final determination of the controversy. It makes such a settlement mandatory in the case of public service com- panies. The elective feature in the case of private industry is retained because of the lack of data as to actual in- vestments, costs, return, etc., and the absence of any standard as to what constitutes a reasonable return upon the fair value of such properties. The public interest is not involved in the same degree in such cases, and continuous service is not so vital as in the public service disputes. The state, moreover, cannot guarantee the same absolute equity either to the employer or employee that it can in the case of utilities. Companies supplying limited necessities, such as milk, ice, and food, are not subjected to compulsory arbitration, because it cannot at present be effectively extended to them. As the importance of the public interest in such industries becomes more generally recognized, they should be de- clared utilities and subjected to regulation which will make effective arbitration possible. ' The annual expenses of such a commission would not exceed the cost of a single militia campaign in case of a strike. The additional financial burden upon the public, leaving out of consideration the loss in wages, the loss to the employer, and the indirect loss to the public, would be infinitesimal on account of the direct saving the system makes possible. 130 The commission, as an arbitration board or industrial court IS required to conduct an open public hearing at the place of dispute, after five days notice in writing to the employers and any rate regulatory body having juris- diction over the charges of any business affected by the award. At such hearing the parties are permitted to present such evidence as they desire to bring before the commission, and cross-examine adverse witnesses and the commission's investigators. The procedure should be of the informal character now universally adopted by public service commissions and other administrative bodies. The formal rules of evidence should be relaxed as far as possible without filling the record with irrelevant and undesirable testimony. Appeal from the Industrial Commission's award to the Circuit Court and thence directly to the Supreme Court is provided to assure a prompt, final, and satis- factory award. XIV. The Method of Enforcing the Award The enforcement of the commission's awards presents a serious problem. The impossibility of directly com- pelling workmen to perform their contracts, and the im- practicability of imposing large fines upon a multitude of workers complicate the question. The penalties pro- visions of the Canadian and Australian acts have been severely criticised as impractical and undesirable.^ They have aroused a storm of protest from organized labor which has been quieted only by the failure to enforce the provisions. But the penalties have not been without ' "All drastic penalties which the law has provided against strikers in these states, such as imprisonment of the strike leaders and heavy fines on individual strikers, have failed of their purpose. Whenever they have been imposed they have failed to meet the approval of the public at large, and the laws which provided these penalties have been repealed." Hammond: "Compulsory Arbi- tration in Australia and New Zealand." VII Proceedings Acad. Pol. Science, 28. See also, "The Canadian Industrial Disputes Investigation Act," National In- dustrial Conference Board, Research Report No. 5, p. 21; Ashland: "Canadian Legislation Concerning Industrial Disputes," XLIX Ann. Am. Acad., 166 (1913). "The only value they [penalties] have is that they make the union reluctant to fly in the face of public opinion. It doesn't make them afraid to violate the law, because they know that it cannot be enforced. But the same thing could be gained if you simply provided the machinery for investigation. Those unions which respect public opinion would not strilce in the face of this established machinery." Prof. Adam Shortt, chairman of eleven arbitration boards in Canada. 131 beneficial effect.^ They have tended to develop a respect for law and have placed the balance of public opinion upon the side of law enforcement. The proposed bill attempts to reach a compromise pro- vision which will allay some of the opposition to the compulsory provisions, eliminate the impractical and unen- forceable sections, and yet retain the restraining power of the legal penalty. The heavier penalties provided by the act are imposed upon the employer. No penalty is levied against the individual workman for leaving his employ- ment, but a fine is imposed upon any person who instigates or attempts to bring about a strike or lockout in violation of the provisions of the act. Any employer who violates or procures the violation or assists in the violation of any arbitration award or minimum wage order made by the Industrial Commission is subjected to a fine of from $500 to $1,000 for each offense, and each day of violation constitutes a separate offense. And any wage agreement made in violation of the commission's order is declared void, but the award may be altered by voluntary agreement of the parties. The commission's orders are thus given the force of law without closing the door to collective bargaining. The plan of enforcement goes beyond the ordinary pro- cedure in contracts for personal service, but it violates no personal rights. It cannot be said to be an experiment, for it is founded upon deductions from years of experience in other jurisdictions. It is the most practical solution of the problem open at the present time, and it is certainly a great improvement over the present chaos of strike, lock- out, violence, and brute force which form the only sanction back of the wage scale in the United States today. XV. Summary The outline of wage regulatory procedure which has been presented will doubtless seem too brief for practical use, but the scope of the study is limited. The inquiry is '"But even though violations are seldom prosecuted, neither strikers nor employers dare to defy the law of the land in disputes prominently before the public and affecting the prosperity and comfort of a large body of citizens. By doing so they would put a powerful weapon in the hands of their opponents, and they would fatally prejudice their cause in the high court of public opinion." Clark, V. S.: "The Canadian Industrial Disputes Act," Vol. VII, Proceedings Acad. Pol. Science, 16. 132 concerned primarily with the expediency of state inter- yentioni^ The methods of control are indicated to show its practicability and, in so far as possible, to forestall the customary opposition to any legislative innovation. The formulation of specific rules cannot be attempted. The most that can be accomplished in such a study is the suggestion of the general principles that should be applied. The details of the regulatory program must be left for determination by the proposed Industrial Commission of each jurisdiction. The principle of the minimum wage based upon the cost of living must form the keystone of any regulatory system. But such control goes only part way. It must be supplemented by mediation, conciliation, and investiga- tion. Such agencies provide state aid for voluntary settle- ment of wage disputes, but they do not prevent industrial disturbances and they do not settle the issues which stir up industrial unrest. They are concerned with effects, not causes, and the settlements they bring are necessarily temporary, for the cause of dispute remains. Their object is to minimize the amount of state wage-making, and, in so far as practicable, keep the control of industry in the hands of the participating parties. Arbitration is necessary to secure a final settlement of wage controversies and to remove the causes of friction between employers and employees. Compulsory arbitra- tion is necessary in the public service field to guarantee continuous service at reasonable rates. It is desirable in other industries but is at present impracticable because of the absence of uniform accounts, rate control, valuation, regulation of securities, and a recognized standard as to what constitutes a fair return upon the actual investnient. The information necessary to make compulsory arbitra- tion feasible does not exist outside the utility field. Voluntary arbitration is advantageous in the case of private industry, but it cannot proceed with the same scientific exactness that may be obtained in the determina- tion of public service wages. The general principles of wage-making in arbitration proceedings may be formulated with as much accuracy as the other rules which regulate the industrial world. With the aid of permanent and competent industrial commis- sions, government wage-fixing may be placed upon as 133 scientific a basis as rate-making. The rules necessary for such control have been considered. A practical plan for putting those rules into force has been suggested. All that is necessary to relieve the labor problem is the crea- tion of a public opinion which will compel the adoption of some such system of removing wage disputes from the field of force to that of justice. 134 CHAPTER VII CONCLUSIONS The consideration of state intervention necessarily has been somewhat incoherent on account of the obligation to show both the benefits to be derived from, and the practicability of, the proposed action. It seems desirable, therefore, in concluding to direct attention briefly to the fundamental points considered. The labor situation today is acute. The nation faces threatened strikes to release Eugene Debs, set aside the Federal Supreme Court decision in the Mooney case, and compel disregard for the prohibition amendment to the nation's Constitution. The radical aspect of organized labor is apparent. The spread of syndicalism is even more threatening. The Chicago Federal Building disaster and the two more recent widespread bomb outrages indicate one phase of the American Bolshevik movement. The attempted Seattle general strike illustrates a second phase. The growing employment of I. W. W. leaders in strikes ordered by organized labor publicly proclaims an all too close union between the two bodies. This radicalism, without doubt, is a part of the general political, social, and economic disturbance which is sweep- ing over the entire world, but that does not explain the movement. Such unrest, even in the throes of a world war, could not gain momentum sufficient to wipe out every vestige of civilization, of order, and of human self-respect, as it has in Russia, without a far deeper cause than the general spirit of dissatisfaction. Such revolt, in the actual presence of the horror and failure of anarchy, could not sweep from the degraded land across the face of the whole earth and throughout the most democratic nations if the cause were solely the despotic oppression in the one land of darkness. We are face to face with a great social revolution. Its causes are economic, and the restraining forces in America, which must prevent the disastrous results that have terrorized and destroyed Russia, must be economic. 135 There is no real mystery concerning labor agitation in the United States. Its causes are apparent. The dernands have been specifically stated. The ability or inability to meet them may be ascertained with reasonable certainty. The expediency of meeting the demands, within the limits of possibility, is not open to doubt. Briefly stated, the workmen's demands are for: (1) A living wage, (2) A reasonable, graduated standard of living based upon skill, risk, and responsibility; (3) An equitable division of income between employees and employers; (4) A voice in those features of management which vitally affect labor; or democracy in industry; and (5) Provision for wage increases to meet increased return from greater efficiency in equipment, and to keep the division of income equitable. There is no ambiguity about this program. It is economic. It must be treated as such. It cannot be met by the sweeping generalities of the enthusiastic social worker. Social betterment theories are incapable of in- creasing the economic possibilities of complying with labor's demands. What is necessary is not a passionate proclamation of humanitarian principles, but a statement of industry's ability or inability to meet labor's demands, couched in terms as certain and unambiguous as the demands themselves. A sort of " get-together " feast is the prime need. Capitalists must concede that laborers have a right to be heard and their demands fairly judged. The employees must acknowledge that capitalists have interests at stake as vital as their own and as worthy of recognition. Both workmen and capitalists must admit that they are not the sole parties to the wage question. The public has an interest in industry superior to that of either the laborers or the capitalists, because the private interests of both of these parties are directly dependent upon the public interest. No progress towards a settlement can be made as long as either the capitalist or the worker claims unlimited or absolute rights of any sort. The rights of property and contract are subject to regulation in the public interest. The claim to wages is limited by the claim to profits. The 136 claim to profits by that to wages. The freedom to strike is restricted by the employer's freedom to operate his plant without restraint. All activity in organized society is regulated by a system of checks and balances aimed to give as much freedom as possible to all and to replace force and might by justice and right. Each right has a cor- responding obligation and a limitation. Other persons miust respect the right, and the right itself must be exer- cised in such a way that it does not infringe upon the rights of others. It is a function of government to declare what rights shall exist, to what extent they shall be recognized, and to enforce their corresponding obligations and their limita- tions. The state has instituted legislative, judicial, and administrative machinery for the exercise of this function, and has extended its use to include almost every field of human activity. The individual is no longer permitted to avenge what he considers injury to himself or to his rights. He must rely upon the state for a decision as to whether he has been wronged, for reparation and for protection. The individual is prohibited from the use of force and protected from its use by others. The field of industrial disturbances alone remains with- out the sphere of operation of this state machinery. There force forms the final criterion of right, because the state has failed to provide any other means for settling disputes. The appeal for state intervention in the determination of wage rates is but a suggestion that the legislative, judicial, and administrative machinery of the state be extended to this field in the same degree that it is exercised in practi- cally every other arena. State intervention is expedient because it prevents actual pecuniary loss to the employer, employee, and the public; because it prevents social loss; because it places industrial disputes upon a basis of substantial justice rather than force. It infringes upon no private rights, because all such interests are subject to the legitimate exercise of the state's police power. It discriminates against no one, but prevents undue advantage to the party in power at the expense of the other party and of the public. But, can state intervention meet the employee's de- mands? Can it allay the industrial unrest and quiet the 137 radical tendencies? The answer involves the detailed description of a practical system of state control. The state can and should compel the reorganization of industry upon the basis of a living wage. Social and industrial peace can no longer be maintained on any other basis. The time has passed when a large body of men are willing to work for less than a living wage arid when the public is willing to perpetuate a system which compels them to do so. The minimum wage, therefore, must be the first step in any state wage control program. Labor's second demand would seem capable of being met with equal ease. Economic forces alone would compel the establishment of a wage schedule rewarding increased skill, efficiency, responsibility, and risk not cared for by compensation acts or other provisions; and allowances to meet such items would naturally form the basis of any government wage schedule. This, however, is not all that labor asks. It demands the perpetuation of existing standards. The ability of the state successfully to superimpose such a schedule upon industry depends solely upon the ability of the worker to earn his present real wage during normal times. He cannot be paid more than he earns. If his standard has been increased above his earning power by the lavish allowances of the War Labor Board, as seems the case in certain public utility fields, the standard will have to be lowered. It is a physical impossibility to com- pel the payment of a wage in excess of the workman's earning power. The wage is directly dependent upon what the public can be induced to pay for the service and what the community can permit the utility to collect for the service. The normal standard of living can and should be maintained. The abnormal one should be established where it can be with fairness to the employer and to the public. Labor's third demand must be met in state intervention by the use of a wage formula which apportions the income from industry between the participating parties according to their respective interests measured by a uniform criterion. Such a formula has been stated in the text and its general use indicated. The fourth demand made by labor is more difficult to meet by way of state control. Management is ordinarily 138 without the scope of regulation. It is a strictly internal affair. The problems it presents can best be met by voluntary agreement. The system of local joint boards now under experimental study in this country and in England, supplemented by state mediation, seems to approximate a satisfactory settlement. They go as far as intervention can on this point, and they put no obstacle in the path of progress by way of collective bargaining. Labor's fifth demand in part is automatically met by a wage based upon the formula suggested. The increased risk, skill, and responsibility resulting from developments in equipment are an undeniable basis for wage increase and such elements are specifically covered by the formula. Any additional allowance due to the increased efficiency of the workman can and should be met in a state wage award, upon clear proof of such increase. The five demands of the employees may be met as stated, but the question arises. Will intervention which meets them prove equitable to the employer.'' The answer depends upon the construction placed upon the term equitable. There is no question but that many marginal industries would be forced to shut down and many operators who have based their undertakings upon the availability of cheap labor forced to reorganize or abandon them. But it has always been a maxim of the courts that "he who seeks equity must do equity," and that one must come into equity "with clean, hands"; and it is extremely questionable whether an employer who pays less than a living wage does equity or one who undersells by reason of starvation wages comes with clean hands. The Massachusetts Minimum Wage Board and many other organizations and writers have reached the con- clusion that such employers do not do equity and therefore merit no consideration, or if they pay all that the laborer produces are undesirable from the public welfare view- point, though not culpable. Confining the discussion strictly to the living wage field this view seems a correct one. The state should act, not criticise. It should exer- cise its police power to regulate all uneconomic business without discrimination, for such industry is anti-social as well as uneconomic. Capital should be diverted into the more legitimate fields. It is absurd to argue that such a step is impossible for lack of openings for investment. The country's transpor- 139 tation system for years has been clamoring for additional funds to finance extensions and improvements. The public service companies throughout the land are seeking additional capital on reasonable terms, and those indi- viduals of a speculative turn who still refuse to invest in such securities may find solace in the development of the West's yet untold wealth. There is opportunity to employ the nation's whole wealth at reasonable terms in economic undertakings where the workmen can secure a living wage. Speculative profits may be somewhat limited, but the natural growth of the land will eventually eliminate them anyway. Our young country is growing older and we must accept the change. The form of intervention deemed expedient by the author has been suggested in the text and incorporated in a specimen bill which follows as an appendix. 140 APPENDIX A BILL For an Act in relation to the regulation of conditions of employment.! Section 1. Be it enacted by the People of the State of Illinois, represented in the General Assembly: There is hereby established the Industrial Commission. Sec. 2. The Industrial Commission^ shall consist of three persons, who shall be appointed by the Governor by and with the advice and consent of the Senate. Of the persons to be appointed one shall be an employer of labor, one shall be identified with industrial workers, and one shall be a lawyer who is familiar with the condi- tions of employment in industry. The members of the Industrial Commission shall elect one of their number to act as chairman. ' This bill presents in the form of a legislative measure the recommendations made in the preceding study of government regulation of wages. It has been drafted, to give definiteness, as if it were to be introduced In the Illinois General Assembly. However, as a matter of fact, local conditions in Illinois (par- ticularly the Civil Administrative Code), and probably in every other state, would require that the bill be slightly modified to secure harmony with existing legislation. The author gratefully acknowledges his indebtedness to Maurice T. Van Hecke, of the Illinois Legislative Reference Bureau, for aid in drafting this bill. ^ Three comprehensive plans for governmental intervention in wage disputes have been advanced since this thesis was submitted. They are the Kansas plan, the Federal Railroad Adjustment Board plan, and the Industrial Com- mission plan. The Kansas plan, though the most similar to that here proposed, differs from it materially. The instrumentality there suggested is an Industrial Court with judicial formalities and evidentiary rules, having "full power, authority, and jurisdiction to supervise, direct, and control the operation of the industries, employments, public utilities, and common carriers on all matters herein specified." All limited necessities industries are incorporated in the public service field and the state is given the drastic power of taking over and operating the industries whenever such action becomes necessary to enforce the orders of the court. The law adds a valuable provision, omitted from the above proposed bill, prohibiting discrimination on account of the appearance of employees before the court. The Industrial Conference plan reported March 6, 1920, provides, pp. 7-8: "The system of settlement consists of a plan, nation wide in scope, with a National Industrial Board, local Regional Conferences and Boards of Inquiry "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 141 Sec. 3. Of the first members of the Industrial Com- mission, one shall be appointed for a term of two years, one for a term of four years, and one for a term of six years, and until their respective successors are appointed and qualified. Each of these terms shall begin upon the taking effect of this Act. Thereafter, upon the expiration of each of these terms, the members of the Industrial Commission shall be appointed for terms of six years each and until their respective successors are appointed and qualified. Before entering upon the duties of his office, each member of the Industrial Commission shall take the constitutional oath of office, and shall give a 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 in- dustry, 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. Either of the parties at conflict may join the Board of Inquiry on giving an undertaking that, so far as its side is con- cerned, it will agree to submit its contention to a Regional Adjustment Con- ference, and if both join, a Regional Adjustment Conference is automatically created. "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 represen- tatives in the Adjustment Conference. Provision is made for prompt report of its findings to the rate regulating body. (No recommendation is made relative to steam railroads on account of the recent act.) "7. The plan provides machinery for prompt and fair adjustment of wages and working conditions of government employees. ... "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." The Federal Railroad Act referred to creates a Railroad Labor Board of nine members, three from the ranks of labor, three from the carriers, and three to represent the public, and provides for local Labor Adjustment Boards to be organized upon application of the parties, upon a written petition of one hun- dred unorganized employees or upon request of the Labor Board. These local boards have general control over labor matters. The central body acts on appeal, where local boards have not been organized, or when they fail to act. The law provides that wage-fixing orders must be reasonable and must con- sider existing wage scales in similar industries, the hazards of the employment, the cost of living, the training and skill required, the responsibility of the employee, the regularity of the work, and the general equities of the situation U2 bond in the sum of $10,000 with such security as shall be approved by the Governor, conditioned for the faithful performance of his duties under the provisions of this Act. Sec. 4. Vacancies in the membership of the Industrial Commission shall be filled for the unexpired portion of the particular term in accordance with the provisions of Sections 2 and 3 of this Act. In case a vacancy occurs during the recess of the Senate, the Governor may make . a temporary appointment for the duration of that recess. Sec. 5. The members of the Industrial Commission shall each receive a salary of five thousand dollars per annum. The members of the Industrial Commission and the employees thereof shall be reimbursed for their actual and necessary expenses incurred in the performance of duties under the provisions of this Act. Sec. 6. Subject to the provisions of any civil service law which is now or which hereafter may be in force in this State, the Industrial Commission shall appoint a secretary, a chief mediator, and such other assistants, technical and clerical, as may be necessary, and shall prescribe their duties, compensation, and terms of employ- ment. Sec. 7. The Industrial Commission shall establish, equip, and maintain a principal office in the Capitol, at Springfield, and such branch offices as may be necessary. Sec. 8. Whenever a dispute arises between an em- ployer of labor and his or its employees, as to either wages, hours of labor, or any other condition of employment, the employer, within forty-eight hours after the dispute arises, shall in writing report that fact, the conditions and circumstances surrounding the dispute, and the identity of the disputing employees and of their representa- tives, to the Industrial Commission. In addition, either the employer or twenty-five per centum of the employees affected by the dispute, or both, may, in writing, petition the Industrial Commission to offer the services of its mediators to the employer and to the disputing employees. Sec 9. Upon receipt of such notice the Industrial Commission shall offer the services of its mediators to the employer and to the disputing employees. If this offer is not accepted within ten days by either the employer or by twenty-five per centum of the disputing employees, 143 the Industrial Commission may, in its discretion, cause an investigation to be made as to the nature of the dispute and the conditions and circumstances surrounding it, but the Industrial Commission shall be withoutpower to proceed further in the matter of that particular dispute. A copy of the report of any such investigation to the Industrial Commission shall, upon request, be furnished to the employer and to the representatives of the employees. Sec. 10. If this offer is accepted by either the employer or by twenty-five per centum of the disputing employees, and if the attempt to mediate fails, the Industrial Com- mission may, in its discretion, and upon recommendation of the Chief Mediator, cause an investigation to be made of the nature of the dispute and of the conditions and circumstances surrounding it, but the Industrial Commission shall be without power to proceed further in the matter of that particular dispute. A copy of the report of any such investigation to the Industrial Com- mission shall, upon request, be furnished to the employer and to the representatives of the disputing employees. Sec. 11. Upon the petition of both the employer and the majority of the employees affected by the dispute, the Industrial Commission shall arbitrate the dispute and make an arbitration award as to either wages, hours of labor, or any other condition of employment. However, no arbitration award shall be made unless the Industrial Commission, either as a whole or through any one or any combination of its members, shall, at the place of the dispute, have afforded both the employer and the disputing employees an open public hearing, of which the employer and the representatives of the disputing employees shall have been given five days notice in writing. Sec. 12. Upon such a hearing, any member of the Industrial Commission may administer oaths and may procure, by the subpoena of the Industrial Commission, the attendance and testimony of witnesses and the production of relevant books and papers. Any judge of a circuit court, either in term time or in vacation, upon application of any member of the Industrial Com- mission, may, by order duly entered, require the attend- ance and testimony of witnesses and the production of relevant books and papers before the Industrial Com- mission in any hearing relating to the enforcement of 144 the provisions of this Act. Upon refusal or neglect to obey the order of the judge, the judge may compel, by proceedings for contempt of court, obedience of his order. Sec. IS. The arbitration award of the Industrial Comniission and a finding of facts as to the nature of the dispute and the conditions and circumstances sur- rounding it shall be reduced to writing, and a copy thereof shall be furnished to the employer and to the disputing employees. This award shall be binding upon both the employer and the employees until changed by voluntary agreement of the employer and the employees or by the Industrial Commission. Sec. 14. If, at any time prior to the making of the arbitration award, the dispute shall be settled, the em- ployer shall immediately, in writing, notify the Industrial Commission thereof and of the terms of the settlement. After such a settlement the Industrial Commission shall be without power to proceed further in the matter of that particular dispute. Sec. 15. Whenever a dispute such as any one of those described in Section 8 of this Act arises between an employer and his or its employees in any business defined as a "public utility" in an act entitled: "An Act to provide for the regulation of public utilities," approved June 30, 1913, in force January 1, 1914, as amended, the Industrial Commission shall, through its mediators, attempt to mediate the dispute. If this attempt fails, the Industrial Commission shall arbitrate the dispute and make an arbitration award as to either wages, hours of labor, or any other condition of employ- ment. No arbitration award shall be made, however, unless the Industrial Commission shall have afforded the employers and employees affected an open, public hearing conducted in accordance with the provisions of Sections 11 and 12 of this Act, of which the employers and the representatives of the employees shall have been given five days notice in writing. In addition, like notice shall be given to the Illinois Public Utilities Commission, and, in cases of hearings likely to affect businesses under the jurisdiction of the Interstate Com- merce Commission of the United States, to that Com- mission. Upon request, either of these Commissions, or both, shall be made a party to the hearing. It shall 145 be unlawful for any of the employees to strike priorto the making of the arbitration award, unless no arbitration award is made within thirty days after the receipt of the report of the dispute by the Industrial Commission. No petition for mediation or offer to mediate, or accept- ance thereof, or petition for arbitration, shall be a condi- tion precedent to the power of the Industrial Commission to arbitrate that dispute. The arbitration award shall be binding upon both the employer and the employees until changed by voluntary agreement of the_ employer and the employees or by the Industrial Commission. Sec. 16. The Industrial Commission may, in its dis- cretion, fix a reasonable minimum living wage for the persons employed in any industry in this State. ^ No such wage shall be fixed, however, unless the Industrial Commission shall have offered the employers and em- ployees to be affected an open, public hearing, conducted in accordance with the provisions of Sections 11 and 12 of this Act, of which the employers and the representatives of the employees shall have been given thirty days notice, in writing. In addition, in cases of hearings likely to affect businesses under the jurisdiction of the Illinois Public Utilities Commission, like notice of the hearing shall be given to that Commission, and, in cases of hear- ings likely to affect businesses under the jurisdiction of the Interstate Commerce Commission of the United States, to that Commission. Upon request, either of these Commissions or both, as the case may be, shall be made a party to the hearing. Separate minimum living wages shall be fixed for men, women, apprentices, and minors, but in an industry wherein women employees compete directly with men employees, the minimum living wage for women shall be the same as that for men. Whenever a minimum living wage is fixed for apprentices, the Indus- trial Commission shall fix the term of apprenticeship. The order of the Industrial Commission fixing a minimum living wage, and a finding of the facts involved therein, shall be reduced to writing, and a copy thereof shall be furnished, upon request, to the employers and to the representatives of the employees affected. This order shall be binding upon both the employers and employees ' Provision should be made for emergency orders in case of stringent labor shortage permitting the temporary employment of persons incapable of earning a living wage, at less than that figure, in direct competition with able-bodied workers receiving a living wage. 146 m the particular industry throughout the state, until changed by voluntary agreement of any of the employers and employees or by the Industrial Commission. How- ever, any such agreement for a wage less than the mini- nium living wage fixed by the Industrial Commission shall be void. Sec. 17. Within twenty days after the making of any arbitration award or minimum wage order, any employer affected thereby or the representatives of a majority of the employees affected thereby may appeal to the circuit court of any county wherein an employer affected by the award is located for a review of the reasonableness or lawfulness of the award or order. In the case of an appeal from a minimum wage order, however, this appeal shall be made to the Circuit Court of Sangamon County. Appeals from any orders or judgments of the Circuit Court may be taken by either party thereto, within sixty days after the making thereof, direct to the Supreme Court. All proceedings in the Circuit and Supreme Court shall be governed by the rules applicable to cases in chancery, except that no formal pleadings shall be required. Sec. 18. Any employer who neglects or refuses to make any report to the Industrial Commission required by the provisions of Sections 8 and 14 of this Act shall be guilty of a misdemeanor, and, upon conviction, shall be punished by a fine of $100.00. Any person who, under oath, wilfully makes any false statement during the course of any hearing held under the provisions of this Act, shall be guilty of perjury, and, upon conviction, shall be punished accordingly. Any person who instigates or attempts to bring about a strike or lockout in violation of the provisions of Section 15 of this Act shall be guilty of a misdemeanor, and upon conviction shall be punished by a fine of not less than $100.00 nor more than $500.00. Any employer who violates, or procures the violation of, or assists in the violation of any arbitration award or minimum wage order made pursuant to the provisions of this Act, shall be guilty of a misdemeanor, and upon conviction shall be punished by a fine of not less than $500.00 nor more than $1,000.00 for each offense, and each day of violation shall constitute a separate offense. 147 Sec. 19. The Industrial Commission may adopt reason- able rules and regulations, may conduct investigations, inspections, and examinations, and may undertake and publish the results of research studies relating to the en- forcement of the provisions of this Act. Sec. 20. No fee or charge shall be collected by or on behalf of the Industrial Commission for any act done, service rendered, or thing furnished under the provisions of this Act. Sec. 21. Annually on or before the first day of De- cember, the Industrial Commission shall make a report to the Governor, irrespective of its activities in the enforce- ment of the provisions of this Act. This report shall be accompanied by a copy of the text of every arbitration award and minimum wage order made by the Industrial Commission during the preceding year. This report and these texts shall, at the same time, be published by the Industrial Commission for public distribution. Sec. 22. Every report of a dispute, petition for media- tion, offer of mediation, acceptance of offer of mediation, investigation report, notice of settlement, notice of hear- ing, record of hearing, arbitration award, finding of facts, minimum wage order, and rule and regulation received or made by the Industrial Commission, shall be open to public inspection at all reasonable times at the principal office of the Industrial Commission. 148 SELECTED BIBLIOGRAPHY I. 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G. — ^ Introduction to the Study of Organized Labor in America (1916). Hobson, J. A. — Democracy after the War (1918). Holcombe, A. N. — Effect of the Legal Minimum Wage for Women, Mass. Minimum Wage Comm. (1917). Hunter, R. — Violence and the Labor Movement (1914). Janes, G. M. — Control of Strikes in American Trade Unions (1916). Kansas Industrial Welfare Commission Report (1917). Kelly, F. — Present Status of Minimum Wage Legislation (1916). King, W. L. M. — Industry and Humanity (1918). Mote, C. H. — Industrial Arbitration (1916). Mussey, H. R. — Labor Disputes and Public Service Corporations (1917). Neill, C. P. — Mediation and Arbitration of Railway Labor Disputes in the United States. U. S. Bureau of Labor Bulletin No. 98 (1912). O'Grady, J. — A Legal Minimum Wage (1915). Oregon Industrial Welfare Commission — Living Wage by Legislation (1916). Prevention of Railroad Strikes — Report of Comm. on Public Utilities and Law of the Merchants' Association of New York (1916). Rankin, M. T. — Arbitration and Conciliation in Australia (1916). Ryan, J. A. — Distributive Justice (1916). Snowden, P. — The Living Wage (1913). Sparkes, M. — Self-Government in Industry (1918). Suffern, A. E. — Conciliation and Arbitration in the Coal Industry of America Swenson, R. L. — Public Regulation of the Rate of Wages (1917). _ Verrill, C. H.— Minimum Wage Legislation in the United States and Foreign Countries. U. S. Bureau of Labor Bulletin (1915). Webb, Sidney, and Webb, Beatrice — Industrial Democracy (1902). II. ARTICLES IN PERIODICALS. Abbott, E. — Progress of the Minimum Wage in England. 23 J. Pol. Econ. 268 (1915). ,. ^ ^ . , ,r. , Ballantine, H. W. — Evolution of Legal Remedies as a Substitute for Violence and Strikes. 69 Ann. Am. Acad. 140 (1917). 149 Boyle, J. — Legal Minimum Wage. 49 Forum 576 (1913). Brandeis, L. D. — Constitution and the Minimum Wage. 33 Survey 490 (1915). Brewster, J. H. — A Comparison of Some Methods of Conciliation and Arbitra- tion of Industrial Disputes. 13 Mich. Law Rev. 185 (1915). Browne, L. A. — Bolshevism in America. 59 Forum 703 (1918). Bruere, R. W. — Can We Eliminate Labor Unrest? 81 Ann. Am. Acad. 95 (1919). Carlton, F. C. — Advantages and Defects of Compulsory Arbitration. 69 Ann. Am. Acad. 150 (1917). Labor and Capital after the War. 21 Public 363 (1918). Clark, J. B. — On What Principles Should a Court of Arbitration Proceed in Determining the Rate of Wages? (Discussed by several leading economists) 8 Am. Econ. Assn. Pub. (3d Ser.) 23 (1907). Minimum Wage, 112 Atlantic Monthly, 289 (September, 1913). Compton, W. — Wage Theories in Industrial Arbitration. 6 Am. Econ. Rev. 324 (1916). ■ Democracy in Bethlehem. 16 New Republic 36 (1918). Dixon, F. H. — Public Regulation of Railway Wages, 5 Am. Econ. Rev. (Sup.) 245 (1915). Evans, E. G. — Case for Minimum Wage Boards. 31 Survey 497 (1914). Feely, J. J. — Right to Strike, its Limitations. 191 N. Am. Rev. 644 (1910). Fisher, I. — Humanizing Industry. 82 Ann. Am. Acad. 83 (1919). Fitch, J. A. — Making the Bargain. 39 Survey 316 (1917). Ford, L. — Growing Menace of I. W. W. 61 Forum 62 (1919). Garfield, H. A. — The Industrial and Commercial Outlook. 82 Ann. Am. Acad. 342 (1919). Ghent, W. J. — How the Minimum Wage Works. 89 Ind. 219 (1917). Gompers, S. — Compulsory Service Unconstitutional. 24 Am. Federationist 21 (1917). Labor Standards After the War. 81 Ann. Am. Acad. 182 (1919). Lessons for Compulsory Arbitrationists. 21 Am. Federationist 316 (1914). Headier, F. K. — Minimum Wage in Washington. 37 Survey 517 (1917). Higgins, H. B. — A New Province for Law and Order. 29 Harvard L. Rev. 13 (1915). Hobson, J. A. — State and the Minimum Wage in England. 33 Survey 503 (1915). Holcombe, A. N. — Effects of the Legal Minimum Wage for Women. 69 Ann. Am. Acad. 34 (1917). Hughes, C. E. — Shall Force or Reason Rule? 88 Ind. 62 (1916). James, G. M. — Trend of Voluntary Conciliation and Arbitration in Labor Disputes. 69 Ann Am. Acad. 173 (1917). Johnson, A. S. — Beclouding the Minimum Wage. 7 New Republic 296 (1917). Johnson, E. R. — Legislation Concerning the Railroad Service. 69 Ann. Am. Acad. 247. (1917). Jones, F. D. — The Trade Association as a Factor in Reconstruction. 82 Ann. Am. Acad. 159 (1919). Keir, M. — Post-War Causes of Labor Unrest. 81 Ann. Am. Acad. 101 (1919). Kendall, H. P. — Post-War Standards for Industrial Relations. 81 Ann. Am. Acad. 163 (1919). Kranskopf, J. — Necessity of Industrial Arbitration. 36 Ann. Am. Acad. 311 (1910). Le Rossignol, J. E. — Some Phases of the Minimum Wage Question. 7 Am. Econ. Rev. (Sup.) 251 (1917). Low, S. — Government Mediation in Railroad Labor Disputes. 41 Elec. Ry. Journal 212 (1913). Lusk, H. H. — Industrial War. 48 Forum 533 (1912). Macy, V. E. — Seven Points for a Reconstruction Labor Policy. 81 Ann. Am. Acad. 80 (1919). Manly, B. M. — Labor's Share of the Social Product. 69 Ann. Am. Acad. 128 (1917). 150 ^^"■"J'gH- — Minimum Wage Board and the Union. 4 Unpopular Rev. 397 Parkinson — Constitutional Aspects of Compulsory Arbitration. 7 Proceed. Col. Acad, of Pol. Science 44 (1917). P'8°"' ^- C- — Principle of The Minimum Wage, 73 Nineteenth Century 644 Powell, T- R- — Garment Trade and the Minimum Wage Cases. 133 Outlook DO (1916). Oregon Minimum Wage Cases, 32 Pol. Science Quarterly 296 (1917). Ripley, W. Z. — To Prevent Industrial War. 7 New Republic 12 (1916). Ritchie, A. C. — Sanity in Reconstruction Legislation. 82 Ann. Am. Acad. S2o (1919). Russel, F. A. — Industrial Arbitration in New So. Wales. 25 Econ. Tournal. 329 (1915). Schwab, C. M. — Capital and Labor. 81 Ann. Am. Acad. 156 (1919). Seager, H. R. — Theory of the Minimum Wage. 3 Am. Labor Legislatioa Rev. 81 (1913). Simon, E. D. — .Labor from the Employers' Point of View. 113 Contemn. 551 (1918). Stone, N. I. — Is the Minimum Wage a Menace to Industry.? 33 Survey 512 (1915). Stone, W. A. — Compulsory Arbitration. 54 Ind. Management 2219 (1918). Sumner, H. L. — A Court for the Garment Trades. 4 New Republic, 176 (1915). Taussig, F. W. — Minimum Wage for Women. 30 Q. J. Econ. 411 (1916). Taylor, A. W. — Operation of the Minimum Wage Law in Washington. 5 Am. Econ. Rev. 398 (1915). Underwood, O. W. — Why I Believe the Interstate Commerce Commission Should Have Power to Fix Wages and Hours of Labor on Interstate Carriers. 69 Ann. Am. Acad. 229 (1917). Walsh, J. P. — War Labor Board and the Living Wage. 41 Survey 301 (1918). Weiss, G. — Labor and the Railroads. 56 Forum 370 (1916). Weyl, W. E. — Substitute for the Protocol. 3 New Republic, 142 (1915). Where Do the People Come In? 88 Ind. 139 (1916). Whitle, E. E. — The Doctrine that Labor Is a Commodity. 69 Ann. Am. Acad. 133 (1917). Wilcox, D. F. — Shall the Interstate Commerce Commission and the State Public Utilities Commissions Fix Wages on the Railroads and on Local Public Utilities? 69 Ann. Am. Acad. 237 (1917). WoUey, C. M. — The Labor Aspect of Reconstruction. 82 Ann. Am. Acad. 91 (1919). Young, J. T. — Government Arbitration and Mediation. 69 Ann. Am. Acad. 268 (1917). TABLE OF CASES CITED A PAGE Adair V. United States, 208 U. S. 161, 28 Sup. Ct. 277, 52 L. Ed. 436, 12 Ann. Cas. 764 75 Adt; My Maryland Lodge p., 100 Md. 238 98 Advance on Coal to Lake Ports, i?f 22 L C. C. 604 103 Alabama; Boyd v., 94 U. S. 645, 24 L. Ed. 302 47 Alaska Steamship Co. v. Longshoremen's Assn. of P. S., 236 Fed. 964 . . 98 Amalgamated, etc.. Union; Karger Furniture Co. v., 165 Ind. 421, 75 N.E. 877 98 American Steel Foundries; Tri-City C. T. C. H al. v., 238 Fed. 728 . . 98 American Union Tel. Co. v. Western Union Tel. Co., 67 Ala. 26 . . . 47 Ardmore Water Case, 111. P. U. C. No. 4670 103 Arkansas; McLean v., 211 U. S. 539, 53 L. Ed. 315, 29 Sup. Ct. 206 . 74, 75 Ashby V. White, Ld. Raymond 938, 1 Smith Leading Cases 342, 1 Eng. Ruling Cases 521 42 Atkin V. Kansas, 191 U. S. 207, 24 Sup. Ct. 124, 48 L. Ed. 148 ... . 77 Atlantic Coast Line R.R. Co. v. Goldsboro, 232 U. S. 548, 34 Sup. Ct. 364, 58 L. Ed. 721 40 Atlantic Coast Line R.R. Co. v. North Carolina Corp. Comm., 206 U. S. 1, 51 L. Ed. 933, 27 Sup. Ct. 585, 11 Ann. Cas. 398 46 Avent-Beattyville Coal Co. v. Commonwealth, 96 Ky. 218 72 B B. M. & P. Local Union; Cohn & Roth Elec. Co. v. (Conn.) 101 Atl. 659 98 Baldwin; Robertson v., 165 U. S. 275, 17 Sup. Ct. 326, 41 L. Ed. 715 . 39 Baltimore & O. R.R. Co.; Coke Products Assn. of Connellsvllle v., 27 I. C. C. 125 103 Banker v. L. L R.R. Co., 89 Hun (N. Y.) 202 48 Beason; Davis v., 133 U. S. 333, 10 Sup. Ct. 299 39 Beauchamp; Sturges & Burn Mfg. Co. v., 231 U. S. 320, 34 Sup. Ct. 60, 58 L. Ed. 245, L. R. A. 1915-C 1196 75 Beekman o. Saratoga, etc., R.R. Co., 3 Paige 45 48 Big Four Arbitration 69,111 Birmingham Mineral R.R. Co. v. Parsons, 100 Ala. 662 47 Bloodgood V. Mohawk & Hudson R.R. Co., 18 Wendell 1 48 ' Bogni et al. v. Perotti et. al, 224 Mass. 152, 112 N. E. 853 75 Bosley et al. v. McLaughlin et al, 236 U. S. 385, 35 Sup. Ct. 345, 59 L. Ed. 632 75 Bossert et al. v. Dhuy et al. (N. Y.), 117 N. E. 582 98 Boston Beer Co. v. Mass., 97 U. S. 25, 24 L. Ed. 989 47 Boyd V. Alabama, 94 U. S. 645, 24 L. Ed. 302 47 Bradley v. Ohio R., etc., R.R. Co., 78 Fed. 387 48 Bristol; New York & N. E. R.R. Co. v., 151 U. S. 556, 38 L. Ed. 269, 14 Sup. Ct. 437 47 Brotherhood of Locomotive Engineers and Eastern Railroads Arbitration, 1912 61 Brunswick & T. W. Dist. v. Maine Water Co., 99 Me. 371 ... . 103 Budd V. New York, 143 U. S. 549, 36 L. Ed. 247, 12 Sup. Ct. 468 . . 47 Buffalo East Side St. R.R. Co. v. Buffalo St. R. R. Co., Ill N. Y. 132, 19 N. E. 63, 2 L. R. A. 384 . 72 Building Trades Council; Gray v., 91 Minn. 171, 97 N. W. 5^3 . . . . 98 Bunting; State ». (Or.) 139 Pac. 731 75 Bunting v. Oregon, 243 U. S. 426, 37 Sup. Ct. 435, 61 L. Ed. 830 .. . 75 Butchers' Union Slaughterhouse Co. v. Crescent City Live Stock Land- ing Co., Ill U. S. 746, 28 L. Ed. 385, 4 Sup. Ct. 652 .. . 47 Byars ». State, 2 Okla. Cr. 481, 102 Pac. 804 77 152 C PAGE CaUfornia Reduction Co. v. Sanitary Reduction Works, 199 U. S. 306 26 Sup. Ct. 100 ' 39 Canadian Northern Ry. Co. v. Engineers' Arbitration ...... Ill Canadian Northern Ry. Co. v. Maintenance of Way Employees Ar- bitration gj^ yyy Canadian Pacific Ry. Co. t>. Freight Handlers Arbitration ....... ' 61 Canadian Pacific Ry. Co. v. Maintenance of Way Employees Arbitra- tion 61 69 Cayanaugh; Minnesota Stove Co. v. (Minn.) 155 N. W. 638 . . , . ' 98 Chicago and Western Indiana Belt Ry. Arbitration Ill Chicago, Burlington & Quincy R.R. Arbitration 69 Chicago, Burlington & Quincy R.R. Co. o. McGuire, 219 U. S. 567 si Sup. Ct. 259, 55 L. Ed. 328 40 Chicago, Burlington & Quincy R.R. Co. ». Nebraska, 170 U. S. 57, 18 Sup. Ct. 513, 42 L. Ed. 948 72 Chicago City R.R. Co., Venner v., 246 111. 170 47 Chicago Switchmen's Arbitration Ill Christensen; Crowley v., 137 U. S. 86, 34 L. Ed. 620, 11 Sup. Ct. 13 '. 39 City of Helena; Public Service Comm. of Montana v., 52 Mont. 527 . 47 Clark t). State, 142 N. Y. 101, 36 N. E. 817 77 Cleveland, Cincinnati, Chicago & St. Louis R.R. Co.; Interstate Com- merce Comm. f., 11 I. C. C. 382 103 Clope et al; Empire Theater Co. v. (Mont.) 163 Pac. 107 98 Cohn & Roth Elec. Co. v. B. M. & P. Local Union (Conn.) 101 Atl. 659 98 Coke Products Assn. of Connellsville v. Baltimore & O. R.R. Co., 27 I. C. C. 125 103 Commissioners; PuUen v., 66 N. C. 361 39 Commonwealth; Avent-Beattyville Coal Co. v., 96 Ky. 218 72 Commonwealth v. J. T. Connor Co. (Mass.) 110 N. E. 301 39, 75 Commonwealth v. Tewksbury, 11 Metcalf (Mass.) 55 39 Connellsville, Coke Products Assn. of, v. Baltimore & O. R.R. Co., 27 I. C. C. 125 103 Connor, J. T. Co., Commonwealth ti. (Mass.) 110 N. E. 301 75 Coppage V. Kansas, 236 U. S. 1, 35 Sup. Ct. 240, 59 L. Ed. 341, L. R. A. 1915-C960 75 Cornellier v. Haverhill Shoe Mfg. Assn. et al, 221 Mass. 554, 109 N. E. 643 75 Cotting V. Goddard, Kansas City Stockyards et al., 183 U. S. 101, 46 L. Ed. 105, 22 Sup. Ct. 30 44 Crescent City Live Stock Landing Co.; Butchers' Union Slaughterhouse Co. v.. Ill U. S. 746, 28 L. Ed. 385, 4 Sup. Ct. 652 47 Crowe; State p., 130 Ark. 272, 197 S. W. 4 '..... 77 Crowley v. Christensen, 137 U. S. 86, 34 L. Ed. 620, 11 Sup. Ct. 13 . 39 Cruse, et al; Hardie-Tyne Mfg. Co. v. (Ala.) 66 So. 657 98 Culver V. St. Joseph & Grand Island Ry. Co. (Mo.) P. U. R. 1917-B 542,554 47 D Danville v. Danville Water Co., 178 111. 299 47 Davis V. Beason, 133 U. S. 333, 10 Sup. Ct. 299 39 Denver & Rio Grand Arbitration Ill Dhuy et al; Bossert et al v. (N. Y.) 117 N. E. 582 98 District of Columbia; Hotchkiss o., 41 Wash. L. Rep. 706 75 Doerr- Gutl Engraving Co. v., 214 Fed. Ill 98 Drainage Comm ; New Orleans Gas Light Co. .., 197 U. S. 831, 49 L, Ed. ^^ Dukthl' Nofth'era Paf^ R.R. Co. v., '208 u'. S. 583, 28'Sup: Ct.'sil ' '. 47 Dutton V. Strong, 17 U. S. 29 39 153 E PAGE Earnshaw v. Newman et al. (D. C.) 43 Wash. L. Rep. 198 75 East Hartford v. Hartford Bridge Co., 10 How. 51 47 Eastern Conductors' and Trainmen's Arbitration 111. 117 Eastern Firemen's Arbitration (1913) , • 100, 117 Eastern Railroads and Brotherhood of Locomotive Engineers Arbitra- tion (1912) 61, 107 Elerding; People »., 254 111. 579 74 Empire Theatre Co. v. Clope et al. (Mont.) 163 Pac. 107 98 Eudora, The; Patterson v., 190 U. S. 169, 23 Sup. Ct. 821 72 Evans; Williams v., 139 Minn. 321, 165 N. W. 495 77 Ex Parte Jackson, 96 U. S. 727, 24 L. Ed. 877 39 Ex Parte Rapier, 143 U. S. 110, 12 Sup. Ct. 374 39 F Fergus; Rogers Park Water Co. v., 178 111. 571 47 Freeport Water Co. v. Freeport, 186 111. 179 47 Freight Handlers; Canadian Pacific Ry. Co. v.. Arbitration 61 G Georgetown; Goezler »., 6 Wheat. 593 47 Georgia P. S. Corp.; Union Dry Goods Co. v. (U. S.) 63 L. Ed. 116 . 43 Godcharles 0. Wigeman, 131 Pa. St. 43 70 Goddard et al; Cotting v., 183 U. S. 101, 46 L. Ed. 105, 22 Sup. Ct. 30 44 Goezler v. Georgetown, 6 Wheat. 593 . ' 47 Goldsboro; Atlantic Coast Line R.R. Co. »., 232 U.S. 548, 34 Sup. Ct. 364, 58 L. Ed. 721 40 Grand Trunk Pacific Ry. Co. v. Maintenance of Way Employees Arbitration ' 61, 69 Gray ». Building Trades Council, 91 Minn. 171, 97 N. W. 520 ... . 98 Gutl Engraving Co. v. Doerr, 214 Fed. Ill 98 H Hancock v. Yaden, 121 Ind. 366 72 Harbison; Knoxville Iron Co. v., 183 U. S. 13, 22 Sup. Ct. 1, 46 L. Ed. . . 74 Hardie-Tyne Mfg. Co. v. Cruse et al. (Ala.) 66 So. 657 98 Harding v. People, 160 111. 459 73 Hardy; Holden v., 169 U. S. 366, 42 L. Ed. 780, 18 Sup. Ct. 383 .. . 74 Hartford Bridge Co.; E. Hartford v., 10 How. 51 47 Haun; State v., 61 Kan. 146 74 Haverhill Shoe Mfg. Assn.; Cornellier v., 221 Mass. 554, 109 N. E. 643 , 75 Hawley ». Waller, 232 U.S. 718, 34 Sup. Ct. 479, 58 L.Ed. 813 75 Helena, City of; Public Service Comm. of Montana v., 52 Mont. 527 47 Holden ». Hardy, 169 U. S. 366, 42 L. Ed. 780, 18 Sup. Ct. 383 ... 74 Holden; State v., 14 Utah 71 74 Hotchkiss V. District of Columbia, 41 Wash. L. Rep. 706 75 Hudson County Water Co. v. McCarter, 209 U. S. 349, 28 Sup. Ct. 529 . . 40 I Illinois Cent. R.R. Co.; Memphis Cotton Oil Co. »., 17 I. C. C. 318 103 Illinois; Munn z;., 94 U. S. 113, 24 L. Ed. 77 48 Interstate Commerce Comm. v. Cleveland, Cincinnati, Chicago & St Louis R.R. Co., 11 I. C. C. 382 103 J Jackson, Ex Parte, 96 U. S. 727, 24 L. Ed. 877 39 Jordan v. State, 51 Tex. Cr. 5, 31, etc 74 Jordan et al; Shaughnessey et al. v. (Ind.) Ill N. E. 622 ..... 98 154 K PAGE Kansas; Atkin v., 191 U. S. 207, 24 Sup. Ct. 124, 48 L. Ed. 148 77 Kansas; Coppage v., 236 U. S. 1, 35 Sup. Ct. 240, 59 L. Ed. 341, L. R. A. 1915-C 960 75 Kansas; Missouri Pac. R.R. Co. p., 216 U. S. 262, 54 L. Ed. 472 30 Sup. Ct. 330 46 Kansas City Stock Yards et a/.; Cotting v.. 183 U. S. 101, 46 L. Ed. 105 22 Sup. Ct. 30 44 Karger Furniture Co. v. Amalgamated, etc., Union, i65 Ind. 421, 75 n! E. 877 98 Kentucky; Patterson »., 97 U. S. 501 72 Knoxville Iron Co. v. Harbison, 183 U. S. 13, 22 Sup. Ct. 1, 46 L. Ed. 74 L Laurel Fork & S. H. R.R. Co. v. W. Virginia Trans. Co., 25 W. Va. 324 47 Lawton; Norris v. (Okla.) 148 Pac. 123 77 Legal Tender Cases, 12 Wall 457, 20 L. Ed. 287 40 L. I. R.R. Co.; Banker v., 89 Hun (N. Y.) 202 48 Longshoremen'sAssn. of P. S.; Alaska Steamship Co. »., 236 Fed. 964 . 98 Louisville & Nashville R.R. Co. v. Mottley, 219 U. S. 467, 31 Sup. Ct. 265, 55 L. Ed. 297, 34 L. R. A. (N. S.) 671 40 M McCarter; Hudson County Water Co. v., 209 U. S. 349, 28 Sup. Ct. 529 . 40 McGuire; Chicago, Burlington & Quincy R.R. Co. v., 219 U. S. 567, 31 Sup. Ct. 259, 55 L. Ed. 328 40 McLaughlin; Bosley et al. v., 236 U. S. 385. 35 Sup. Ct. 345, 59 L. Ed. 632 75 McLean v. Arkansas, 211 U. S. 539, 53 L. Ed. 315, 29 Sup. Ct. 206 . . 74, 75 Madison; Marbury »., 1 Cranch (U. S.) 163 42 Maine Water Co.; Brunswick &T. W. Dist. »., 99 Me. 371 103 Maintenance of Way Employees; Canadian Pacific Ry. Co. v 61 Maintenance of Way Employees; Canadian Northern Ry. Co. ». . . 61, 111 Maintenance of Way Employees; Grand Trunk Pacific Ry. Co. ». . . 61,69 Malette v. Spokane, 77 Wash. 205, 137 Pac. 496, Ann. Cas. 1915-D 225, 51 L. R. A. (N. S.) 686 77 Manigault v. Springs, 199 U. S. 473, 26 Sup. Ct. 127, 50 L. Ed. 274 . . 40, 72 Marbury v. Madison, 1 Cranch (U. S.) 163 42 Massachusetts; Boston Beer Co. »., 97 U. S. 25, 24 L. Ed. 989 ... 47 Massachusetts; Riley »., 232 U. S. 671, 34 Sup. Ct. 469, 58 L. Ed. 788 . 75 Mathews; St. Louis & S. F. R.R. Co. v., 165 U. S. 1, 17 Sup. Ct. 243 . 47 Memphis Cotton Oil Co. v. Illinois Cent. R.R. Co., 17 I. C. C. 318 . . 103 Michigan Central Ry. Co.; National Hay Assn. »., 19 I. C. C. 34 . . 103 Midwest Const. Co.; State ». (Kans.) 162 Pac. 1175 77 Miller V. Wilson, 236 U. S. 373, 35 Sup. Ct. 342, 59 L. Ed. 628, L. R. A. 1915-F 829 72, 75 MiUett V. People, 117 111. 294 73 Minnesota Stove Co. v. Cavanaugh (Minn.) 155 N. W. 638 98 Mississippi; Stone v., 101 U. S. 814, 25 L. Ed. 1079 47 Missouri, K. & T. R.R. Co.; Planters' Compress Co. v., 11 I. C. C. 606 . 103 Missouri Pacific Arbitration • • • • • • ■ Hi- Missouri Pac. R.R. Co. !>. Kansas, 216 U. S. 262, 54 L. Ed. 472, 30 Sup. Q^ 33Q 46 Missouri Tie & Timber Co.; State »., 181 Mo. 536 74 Mohawk & Hudson R.R. Co.; Bloodgood v., 18 Wendell 1 . . . . . 48 Montana, Public Service Comm. of, p. City of Helena, 52 Mont. 527 . 47 Motil^n 'Picture M.'o'Vnbn 'et 'al'.; Sleffes '..' (Minn.)' 161 n'. W.'524' 98 Mottley; Louisville & Nashville R.R. Co. v., 219 U. S. 467, 31 Sup. Ct. 265 55 L. Ed. 297, 34 L. R. A. (N. S.) 671 ■ 40 Muller V. Oregon, 208 U. S. 412, 28 Sup. Ct. 324, 52 L. Ed. 551, 13 Ann. Cas. 957 '^'" 155 PAGE Munn V. Illinois, 94 U. S. 113, 24 L. Ed. 77 48 Munisean v. Osborne, 210 Mass. 250, 96 N. E. 1036 98 My Maryland Lodge w. Adt., 100 Md. 238 98 N National City; San Diego Land & Town Co. v., 174 U. S. 739, 19 Sup. Ct. 804, 43 L. Ed. 1154 103 National Hay Assn. v. Michigan C. R.R. Co., 19 I. C. C. 34 103 Nebraska; Chicago, B. & Q. R.R. Co. v., 170 U. S. 57, 18 Sup. Ct. 613, 42L. Ed. 948 72 New; Wilson v., 243 U. S. 327, 332, 350, 37 Sup. Ct. 298, 61 L. Ed. 755 46,48,70,75 Newman; Earnshaw v. (D. Col.) 43 Wash. L. Rep. 198 75 New Orleans Gas Light Co. v. Drainage Comm., 197 U. S. 831, 49 L. Ed. 831, 25 Sup. Ct. 471 47 New York; Budd v., 143 U. S. 549, 36 L. Ed. 247, 12 Sup. Ct. 468 . . 47 New York&N. E. R.R. Co. v. Bristol, 151 U. S. 556, 38 L. Ed. 269, 14 Sup. Ct. 437 47 New York, Chicago & St. L. Ry. o. Telegraphers Arbitration 69 Nickel Plate Arbitration 56,61,69,107,111 Norris v. Lawton (Okla.) 148 Pac. 123 77 North CaroHna Corp. Comm.; Atl. Coast Line R.R. Co. v., 206 U. S. 1, 51 L. Ed. 933, 27 Sup. Ct. 585, 11 Ann. Cas. 398 48 Northern Pacific R.R. Co. v. Duluth, 208 U. S. 583, 28 Sup. Ct. 341 . 47 O O'Hara; Stettler t>., 69 Or.519, L. R.A. 1917-C 944, Ann. Cas. 1916-A217, 139 Pac. 743, 141 Pac. 158 74 O'Hara; Simpson v., 70 Ore. 261, 141 Pac. 158 77 O'Hara; Stettler v., 243 U. S. 629, 37 Sup. Ct. 475, 61 L. Ed. 937 . . 75, 77 Ohio Industrial Commission; Rail & River Coal Co. v., 236 U. S. 338, 59 L. Ed. 607 40 Ohio R., etc., R.R. Co.; Bradley »., 78 Fed. 387 48 Olcott 0. Supervisors, 16 Wall, 678, 695, 83 U. S. 678 47 Oregon; Bunting v., 243 U. S. 426, 37 Sup. Ct. 435, 61 L. Ed. 830 . . 75 Oregon; MuUer v., 208 U. S. 412, 28 Sup. Ct. 324, 52 L. Ed. 551, 13 Ann. Cas. 957 75 Osborne; Munisean v., 210 Mass. 250, 96 N. E. 1036 98 Otis; Parker v., 130 Cal. 322; Affd., 187 U. S. 606, 23 Sup. Ct. 168 . 39 P P. & O. C. R.R. Co.; Railroad Comm. v., 63 Me. 269 48 Parker v. Otis, 130 Cal. 322; Affd., 187 U. S. 606, 23 Sup. Ct. 168. . . 39 Parsons; Birmingham Mineral R.R. Co. c, 100 Ala. 662 47 Patterson v. Kentucky, 97 U. S. 501 72 Patterson v. The Eudora, 190 U. S. 169, 23 Sup. Ct. 821 72 Peel Splint Coal Co.; State o., 36 W. Va. 802 72 Pekoe; Vogel v., 157 111. 339 73 People V. Charles Schweinder Press, 214 N. Y. 395, 108 N. E. 639, Ann. Cas. 1916-D 1059 75 People; Elerding v., 254 111. 579 74 People; Harding v., 160 111. 459 73 People; Millett v., 117 111. 294 73 People; Ramsey v., 142 111. 380 73 People; Ritchie v., 155 111. 98 74 People's Gas Co. v., Tyner, 131 Ind. 277 39 Perotti f( a/.; Bogni fi a/, p., 224 Mass. 152, 112 N. E. 853 75 156 PAGE Pirnt"J^^'™'""'r^^^-'';J'='^S^^P^^^^ Arbitration ... 69 planters Compress Co. v. Missouri, K. & T. R.R Co 11 I C C fior, ' in^ Preston, In re, 63 Ohio St. 428 ^"^^ ■ 7? PubUc Service Comm. of Montana v. City of Helena,' 52 Mont. 527 ' ' 47 Pullen V. Commissioners, 66 N. C. 361 ' ' og R Rai & River Coal Co. ». Ohio Ind. Comm., 236 U. S. 338, 59 L. Ed 607 40 RairoadCo.; Warcester »., 4 Metcalf 564 . li Railroad Comm. v. P. & O. C. R.R. Co., 63 Me. 269 Railroad Co.; Warcester v., 4 Metcalf 564 Railroad Comm. v. P. & O. C. R.R. Co., 63 Me. 2W as Ramsey v. People, 142 111. 380 73 Rapier, Ex Parte, 143 U. S. 110, 12 Sup. Ct'. 374 39 Riley ». Massachusetts, 232 U. S. 671, 34 Sup. Ct. 469, 58 L. Ed. 788 ' 75 Ritchie V. People, 155 111. 98 . . '74 Robertson v. Baldwin, 165 U. S. 275, 17 Sup. Ct! 326, 41 'l 'Ed '715 ' ' ?g Rogers Park Water Co. v. Fergus, 178 111. 571 ' 47 Rutland & Burlington R.R. Co.; Thorpe 8>., 27 Vt. 139. '. '. '. ' '. ', 39 S St. Josephs Grand Island Ry. Co.; Culvers. (Mo.) P. U R lf>17-B 642 47 St. Louis & S. F. R.R. Co. V. Mathews, 165 U. S. 1, 17 Sup. Ct. 243 ' 47 San Diego Land & Town Co. 0. National City, 174 U. S. 739 19 Sun Ct 804, 43 L. Ed. 1154 [ ^ ' 103 Sanitary Reduction Works; Cal Reduction Co. v., 199 U. S. 306, 26 Sup. Ct. 100 39 Saratoga, etc., R.R. Co.; Beekman v., 3 Paige 45 ..... . 48 Schweinder Press; People v., 214 N. Y. 395, 108 N. E. 639, Ann. Cas. 1916-D 1059 75 Seaboard Air Line Ry. Co.; State «»■<■/. R.R. Comm. »., 48 Fla. 129 . 103 Shaughnessey et al. v. Jordan et al. (Ind.) Ill N. E. 622 . . 98 Simpson ». O'Hara, 70 Or. 261, 141 Pac. 158 . 77 Slaughterhouse Cases, 16 Wall, 36, 127, 21 L. Ed. 394 39, 75 Sleffes V. Motion Picture M. O. Union et al. (Minn.) 161 N. W. 524 . 98 Southern Railway Arbitration (1914) 6] 107 111 Spokane; Malette v., 77 Wash. 205, 137 Pac. 496, 51 L. R. A. (N. S.) 686; Ann. Cas. 1915-D 225 77 Springs, Manigault v., 199 U. S. 473, 26 Sup. Ct. 127, 50 L. Ed. 274 . 40, 72 Stone V. Mississippi, 101 U. S. 814, 25 L. Ed. 1079 47 State V. Bunting (Or.) 139 Pac. 731 75 V. Crowe, 130 Ark. 272, 197 S. W. 4 77 V. Haun, 61 Kans. 146 74 V. Holden, 14 Utah 71 74 V. Midwest Const. Co. (Kans.) 162 Pac. 1175 77 V. Missouri Tie & Timber Co., 181 Mo. 536 74 V. Peel Splint Coal Co., 36 W. Va. 802 72 0. Stewart, 59 Vt. 273, 9 Atl. 559. 75 State; Byars v., 2 Okla. Cr. 481, 102 Pac. 804 77 State; Clark v., 142 N. Y. 101, 36 N. E. 817 77 State; Jordan v., 51 Tex. Cr. 531 74 State ex rel. R.R. Comm. ». Seaboard Air Line Ry. Co., 48 Fla. 129 . . 103 Stettler v. O'Hara, 69 Ore. 519, L. R. A. 1917-C 944, Ann. Cas. 1916-A 217, 139 Pac, 743, 141 Pac. 158 74, 77 Stettler v. O'Hara, 243 U. S. 629, 37 Sup. Ct. 475, 61 L. Ed. 937 .. . 75, 77 Stewart; State »., 59 Vt. 273, 9 Atl. 559 75 Strong; Dutton 0., 17 U. S. 29 39 Sturges & Burn Mfa. Co. v. Beauchamp, 231 U. S. 320, 34 Sup. Ct. 60, 58 L. Ed. 245, 1. R. A. 1915-C 1196 75 Supervisors; Olcott v., 16 Wall, 678, 695, 83 U. S. 678 47 157 ■J" PAGE Talcott V. Town of Pine Grove, 1 Flipp (U. S.) 120 47 Telegraphers; New York, Chicago & St. L. Ry. v °^ Telegraphers; Pittsburgh Terminal Ry. o ^ Telegraphers; Wabash Ry. v °^ Telegraphers; West Side Belt Ry. v ^^ Telegraphers; Wheeling & Lake Erie R.R. » °° Tewksbury; Commonwealth v., 11 Metcalf (Mass.) 55 39 Thorpe v. Rutland & Burlington R.R. Co., 27 Vt. 139 39 Town of Pine Grove; Talcott v., 1 Flipp. (U. S.) 120 47 Tri-City C. T. C. et al. v. Am. Steel Foundries, 238 Fed. 728 98 Tyner; People's Gas Co. v., 131 Ind. 277 39 U Union Dry Goods Co. v. Ga. P. S. Corp. (U. S.) 63 L. Ed. 116 ... . 40 United States; Adair v., 208 U. S. 161, 28 Sup. Ct. 277, 52 L. Ed. 436, 12 Ann. Cas. 764 75 V Venner v. Chicago City R.R. Co., 246 111. 170 47 Vogel V. Pekoe, 157 111. 339 73 W Wabash Ry. v. Telegraphers Arbitration 69 Waller; Hawley v., 232 U. S. 718, 34 Sup. Ct. 479, 58 L. Ed. 813 .. . 75 Warcester v. Railroad Co., 4 Metcalf 564 48 Waring; Worthington v., 157 Mass. 421, 32 N. E. 744 75 Western Engineers' and Firemen's Arbitration ... 59, 61, 107, 111, 114, 117 Western Union Tel. Co.; American Union Tel. Co. »., 67 Ala. 26 ... 47 West Side Belt Ry. v. Telegraphers Arbitration 69 West Virginia; Laurel Fork & S. H. R.R. Co. v., 25 W. Va. 324 ... 47 Wheeling & Lake Erie Arbitration 61, 69, 107, 111 Wheeling & Lake Erie Ry. v. Telegraphers Arbitration 69 White; Ashby v., Ld. Raymond 938, 1 Smith Leading Cases 342, 1 Eng. Ruling Cases 521 42 Wigeman; Godcharles »., 131 Pa. St. 43 73 Williams V. Evans et al, 139 Minn. 321, 165 N. W. 495 77 Wilson V. New, 243 U. S. 327, 332, 350, 37 Sup. Ct. 298, 61 L. Ed. 755 46, 48, 70, 75 Wilson: Miller »., 236 U. S. 373, 35 Sup. Ct. 342, 59 L. Ed. 628, L. R. A. 19i5-F829 72 Worthington v. Waring, 157 Mass. 421, 32 N. E. 744 75 Y Yaden, Hancock v., 121 Ind. 366 72 158 Publications of the National Industrial Conference Board RESEARCH REPORTS Research Report No. 1. Workmen's Compensation Acts in the United States — The Legal Phase. 60 pages. April, 1917. Revised, August, 1919. $1.00. Research Report No. Z. 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