National Industrial Conference Board Prize Essays, 1919-1920 THE CLOSED UNION SHOP VERSUS THE OPEN SHOP: THEIR SOCIAL AND ECONOMIC VALUE COMPARED By Ernest F. Lloyd A SECOND PRIZE ESSAY SPECIAL REPORT NUMBER 11 July, 1920 331.88 v^% nrc 2^ e 8f' - *': ♦• M ■» V National Industrial Conference Board 15 BEACON STREET, BOSTON. MASS. BRANCH OFFICE 724 SOUTHERN BUILDING, WASHINGTON, D. C. THE National Industrial Conference Board is a co-operative body composed of representatives of national and state in- dustrial 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 ma- chinery 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 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 Railway Car Manufacturers' Association The Silk Association of America United Typothet^ 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 THE CLOSED UNION SHOP VERSUS THE OPEN SHOP: THEIR SOCIAL AND ECONOMIC VALUE COMPARED BY ERNEST F. LLOYD Special Report Number ii July, 1920 Copyright 1920 National Industrial Conference Board 15 Beacon Street Boston, Mass. rru Lb Foreword TN February, 1919, the National Industrial Conference Board, in an effort to stimulate sound and constructive thinking on labor problems, oifered 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 v^^as 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 O 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. vD oo 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 Yale & Towne Manufacturing Co., New York City. A second prize was awarded to Ernest F. Lloyd, of Ann Arbor, Michigan, for his essay on "The Closed Union Shop versus the Open Shop: Their Social and Economic Value Compared." 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. The Closed Union Shop versus the Open Shop: Their Social and Economic Value Compared Introductory The economic relationship of employee and employer has probably existed in every civilized society. Whether the employee has been slave, serf, or freeman, we may well believe his relation to his employer has ever been charged with possibilities of conflict. The closed union shop and the open shop present contemporary phases of this age-old relation. They are important in that they represent social movements which give expression to great theories of society. They are equally of value because they contain certain explanations of human nature. And they are of especial present interest because their par- ticular forms have arisen under the industrial organiza- tion of society, and because the character and method of the conflicts they have engendered point to a revolu- tionary change in the conditions that have so long con- trolled the workers' status. I shall endeavor to discuss the subject under topical heads dealing with definitions of the closed union shop and the open shop, with the bases upon which they respectively rest, with their organizations and working effects, and with their social and economic values. Finally, I shall examine their validities as movements in the drama of our social development. In using such general divisions, I recognize their frequently close relationship and even interpenetration. They must not, therefore, be assumed as positive demarcations. It should also be said that the treatment of the Subject has been deliberately confined to principles. The closed and open shops, in the extreme forms in which I picture them, rarely if ever appear in actual practice. Neverthe- less the tendency toward the extremes is held to be inherent. Therefore it is believed that it will conduce to clarity if the extremes are assumed while remembering 1 that the actual situation is always in total a compromise. Yet, even so, as will no doubt be recognized, aspects of the extremes do crop up in real life. Unless, then, we are prepared to set up a naked abstraction of principles, there will be constantly present to obscure our analysis what may be termed the clothing of everyday working practice. The method is but the ordinary one in all scientific inquiry. This preliminary caution to the reader is given so much emphasis because both the employer and the employee know full well that rarely if ever are their ultimate de- mands attained. Always, in every arrangement, there is a measure of compromise. Even in the rare instances where one side or the other appears to impose its full will on the other, there is no permanence in the relations, or the very demands or conditions have been perhaps un- consciously modified by the situation. Expediency is ever present and at work as a practical force, though it may in no degree abridge the opposing principles. The general text of the inquiry, therefore, frequently assumes, or but briefly refers to, much that would otherwise have to be gone into at length. For these reasons I hope the reader will pardon the omission of current facts and data and remember, whether a believer in the closed or the open shop, that the treat- ment is impersonal throughout. The Closed Union Shop The closed union shop arises out of the labor movement. I take it as proper, therefore, first to define a labor union as the term has been commonly accepted. Such a labor union is a non-legal organization of occupational in- dustrial workers associated for united action under chosen leaders. Membership in the union is accorded by vote. The union is affiliated with other similar organizations to form state and national bodies. Usually the members individually find their own employment. Hence, a union is a voluntary and selective society of trade workers, the members of which may be employed in their trade by a number of employers, but the practical control of whose actions, by reason of their group affiliations, does not reside wholly within themselves. Equally, the control of the actions of any single group of such workers, employed by any one employer, does not reside within such group. A 2 1^ labor union, then, is a selective organization of trade workers whose relations to their employer or to their employment is subject to extra or ultra-group control. By reason of the non-legal quality of the union organiza- tion, I shall hereafter term this extra-legal control. The most notable body of this type of labor organization in the United States is the American Federation of Labor. This organization represents the dominant type in private industry. The railroad services have evolved different forms, due to the particular features of the services engaged in, though the distinctions are rather in structure than in any diiferences of principles. The "closed union shop" is one in which the union principle is extended to compass a monopoly. It is a shop in which all the workers in a given trade occupation must be members in good standing of a union of that trade, to which condition the shop assents and agrees. It will be seen, then, that the closed union shop rests upon the principle of compulsion. The complement of com- pulsion is exclusion. That is to say, in such a shop a worker refusing or refused membership in the union of his trade must by that fact be refused employment or be discharged by an employer. A power to thus exclude is in industry a power to unreasonably restrain trade. Hence it is conceded to be contrary to public policy and agreements to effect it are legally non-enforceable. It is, then, the illegal feature of agreement in monopoly which "closes" a union shop. This definition, however, may be made somewhat more complete by reference to some of the modifications of the formally closed shop. The circumstance that all the workers in a unionized trade in a shop are in point of fact members of the union does not of itself "close" the shop. Nor is it closed if the employer engage only union workers, through fear of trouble if he should act otherwise. He is still constructively free to engage whom he pleases and to reject for such reason as he pleases. Yet a threat to strike or a notice by the union of intention to cease work by its members or a condition known to involve trouble, if a non-union worker be employed, and the employer's tacit acceptance of such practical exclusion, might be looked upon as a de facto agreement and thereby as constituting a closed shop. But, in general, a closed shop is one in which the agreement to close is formal. 3 Actually, it is always one in which a non-union worker cannot secure employment. "Recognition" is not infrequently confounded with "closed shop," but is of much less inclusiveness. Really recognition of the union occurs whenever for any reason an employer or any group of employers meet represen- tatives of a union. In practice, however, the term serves to express any agreement with a union as such. It is thus susceptible to many shades of meaning and degrees of interpretation. But the union is actually recognized, in point of fact, when the extra-legal authority of its control in any way determines the conduct of the employer. The shop is "closed" only when this recognition extends to and includes an agreement by the employer to employ only members of the recognized union in the prosecution of the unionized trade. The Open Shop An open shop is one in which the employer makes no distinction between union and non-union workmen, and in which he makes no exclusive agreements with the union. The most advanced type of open shop refuses to make any formal or written agreements of any sort with the union. It contents itself with simply putting into effect the acceptable result of a negotiation. The test of the worker rests on his performance of his duty, his desira- bility otherwise, and his amicable relations with his fel- lows. The employer is free to discharge him for any or no given reason and he is equally free to quit. An open shop may then happen to have in its employ all union workers, or no union workers, or both union and non- union workers. It is not, therefore, precisely the reverse of the closed union shop. The true open shop deals with its employees as indi- viduals, refraining from actual or tacit interference with their personal affairs and regarding their affiliation with or non-relation to the union as a personal affair. The open shop does not, therefore, preclude the making of arrangements with its workers as a group. Nor does it preclude conference with union representatives, nor the putting into effect of the results of such conferences. But it does distinctly maintain the right to employ any person regardless of his personal affiliations, and that any understanding or agreement shall apply equally to all its 4 workers affected. And commonly it will not permit union propaganda in working hours; nor, perhaps naturally, is it favorable to it at any time. And it always asserts the right of the owner to conduct the shop as he may see fit. We may, perhaps, sum up the open shop by saying that in it the worker deals with the employer as one free individual with another, or as a free autonomous group of workers with a free employer. "^ 4'^>rp a As in the case of the closed shop, the definition might not be complete with only the affirmations. The open shop is not a non-union shop, in that it not only does not refuse employment to union workers but also employs them freely. Neither does it refuse to recognize the union, for the very quality of its openness constitutes such recogni- tion in fact. Yet, in the absence of the potential effects of unionization a shop would not be "open" in the under- stood sense. It may, therefore, as has been said, be a shop employing in fact all union workers, or no union workers, or both union and non-union. It may deal with union officials, or with committees of its union employees, or with mixed committees, or it may refuse to deal with any committees, to listen to any alleged grievances, or to make any adjustments. Again, it may refuse to do any of these things individually, but may do any or all through its representatives in an association of employers, or, through such association, may refuse to do any or all of them. But whatever may be the detail of its practice, it never abridges the principle that the employer and the worker have the right to deal with each other as free individuals acting each of his own free will, and that the shop is the private property of the owner. So it concedes to the worker the full right to organize, and asserts its own freedom of action in respect thereto and in respect to its conduct of the enterprise. The Basis of the Closed Union Shop The closed union shop has a very wide and old founda- tion. No single theory underlies it. Its motivation pro- ceeds from the varying economic and social impulses of human nature as affected by differences of environment. In the economic sense, as before intimated, it is distinctly monopolistic. If a group can cause the exclusion of others, or can restrict them or its own members in the exercise of their trade functions, it thereby makes it pos- ><^ sible to Increase its own demands and to compel a higher remuneration for the services of its members/^ It can create, in other words, an artificial scarcity. In this pecuniary respect the closed union shop is analogous to trade and professional agreements among all classes. There is little economic difference between a closed union group of workers, a pool among manufacturers, an association of jobbers, or a professional society which promotes certification and establishes fees. Each acts, in the economic sense, from a motive of greater profit, or of greater security of revenue, for its members. Such associations are of course seldom exclusively economic, but in this sense the analogy is very close. The eff"ects of this restriction I shall advert to later. ^^ In a social sense, the closed union shop embodies the /y^ universal spirit of caste. Theoretically, the organized J workers of a trade are socially superior to the unorganized, regarding themselves in the same light as members of a church congregation regard those who are non-members. Theoretically, again, union membership implies trade skill, acquired formerly through the education of appren- ticeship. In modern industry this phase has been greatly weakened, but none the less the tradition survives. The class idea is present in a consciousness of the solidifying power residing in organization. The idea that advantages accrue to the individual through class action presents the corollary that all members of the class should contribute to the effort. In a sense this is the spirit underlying national conscription, — the spirit of the tribe or nation. In the historic sense the closed union shop is a reaction against the control of the means of production by the em- ployer. It is not, as often thought, a reaction against capitalism. It is therefore not socialistic, for it accepts the economic order of the private ownership and direction of property. But it is an attempt to encroach upon the profits and control of industry through the power to bargain with the owners of industrial capital. The different degrees of importance accorded to these motives by various groups are as many as the leaders and the groups that apply them. The Basis of the Open Shop Underlying the attitude and true functioning of the open shop, there is constantly present the idea of responsible 6 Individual action, springing untrammeled from each side. It is the idea of the free contractual relation, the making of agreement by the meeting of free minds, acting without other compulsion than a consideration of their respective best personal interests. The true open shop accords every employee entire liberty of action in all his affairs. It refuses to discriminate against him by reason of any religious, political, social, or economic beliefs or affiliations. It asks only that he shall observe his con- tracts or other agreements and it holds him free to accept or reject any terms or conditions of his employment or any rate of wages or method of compensation. By in- ference it resists any outside pressure on him in any of these matters. That is to say, it refuses to allow itself to be influenced in its dealings with each of its employees by any influences save those which proceed from the em- ployee himself. The open shop perfectly expresses the theory of individual freedom — the right of every person to life, liberty, and the pursuit of happiness. It rests, therefore, upon the political ideal of English institutions as expressed in their historical development and the teachings of our classical political economy. The Organization and Effects of the Closed Union Shop We have seen that labor unions consist of trade workers employed usually by more than one employer, and that in consequence of this fact the union theory involves sub- mission by the employees of any one employer to the control of a power whose source in greater part resides outside their own group. We have seen, then, inferen- tially, that an employer cannot deal with his own group but must deal with union leaders who only in part repre- sent the group. This fact constitutes an irresponsible leadership, that is to say, a leadership that is not de- pendent upon the group for which it acts and which it binds by its acts. Hence, neither the employer nor his employees are able to hold the union official responsible for his acts. This fact constitutes the extra-legal quality previously referred to. And it constitutes perhaps the most serious criticism of the union organization. It may be also regarded as axiomatic that all groups are led by minorities. This is particularly true of groups whose action is taken in meetings and by debate. In general, leaders of such groups are persons possessed of 7 personal assurance, ready speech, and aggressive dis- position. Such persons, in the main, incline to exaggera- tion. Groups among all classes of people present these characteristics, but they are especially marked in labor union organization. Moreover, the less educated a group, the more immediate must be the results of its decisions in order that the action may be understood and valued. Hence, the ordinary workman, not being well informed on economic principles, inclines to "direct action," and decides his course by viva voce vote. This method is, therefore, well established in union practice and em- phasizes the minority control. The combined result from these various factors is, in practice, a radical and aggres- sive union leadership. It is not necessary to assume that such leadership is corrupt, nor is it fair to do so. Corrupt leadership does beyond doubt exist, yet it should not be forgotten that there is little to choose between the sale and the purchase of principle. It is further a fact in human psychology that irrespon- sible power tends always to become arbitrary in its exercise. In labor leadership this irresponsibility is both moral and financial — moral in the sense that there is a wide latitude for meretricious acts which society cannot prevent or punish, and financial in that the official act does not carry a personal financial risk, even granting that personal means ordinarily exist. Hence, we observe that in the closed union shop the policy also of the shop itself is substantially determined by a third party — one who may be morally and financially irresponsible and who does not derive his support from the operations of the shop. The tendency of irresponsible power is always to establish and rely upon programs, that is, upon the minutiae of rules and regulations. The reason for this is obvious. Programs affect the individual in a specific manner. He is of small weight in any group. To control the individuals of a group, and thereby the group itself by means of specific enactments, is much simpler than to control the group as a whole through general principles. Thus it is possible to discipline a particular individual or group for the technical violation of a specific regulation, where it would not be possible to do so under the general terms of a principle. In this manner an organization can be held together and its action unified. This unity of action, or solidarity, of the closed union shop is essential to its successful functioning. These rules, moreover, are not arrived at with any regard to the interests, proper or otherwise, of the em- ployer, nor with reference to the particular relations or conditions of any given employer and his own group of employees. Their particular function is to control the worker in the conceived interest of the union. The penalties for infractions are severe fines or expulsion. The power universally recognized as residing in monopoly and the condition of irresponsibility which we have seen pertains in labor organizations, combine to cause a constant effort by union leaders to "close" the shops under their influence. The extent to which this effort is successful is the extent to which the union is "recognized, " and measures the degree to which an extra-legal or irresponsible power is introduced into the management of the shop. We are not here concerned with the desira- bility or undesirability of any practice or conduct which may be sought or agreed upon, but only with the fact of its irresponsible source. The organization of the individual union, or "local," as thus described, is but the beginning of a natural sequence that has been indicated. The locals of various trades tend to form more or less closely knit local bodies or councils. These in turn tend to organize into district or state bodies, and these again to join into a national body. In the American Federation of Labor type the authority of the successive organizations is not supreme, but their influence is exceedingly powerful. Possessing advisory functions and endowed with powers of expulsion, the officers of the larger groupings possess all the extra- legal qualifications of the officers of the locals with the additional advantages of prestige and distance. Hence, the irresponsibility of the union organization does not stop with the representatives of the local union of the trade to which the immediate workers belong. Each such step in removal thus tends to reduce the responsibility, lessen the possibility of enforcement of agreements, and increase the opportunities for the exer- cise of arbitrary authority and power. Yet, again, such removals introduce laxness of discipline, mutual jealousies among leaders of complementary groups, involving juris- dictional conflicts and a vast confusion, ill will, and opportunity for factional contests, all affecting morale, production, and continuity of operation. In the railway types of unions the different character of the employments, the more direct control by the national officers, and the larger public effects of their actions, subject them to greater public scrutiny and correspondingly modifies their functioning. Yet, this very concentration of power carries with it the possible evil of greater public conse- sequences, as the history of the Adamson Law shows. We may now more particularly examine the effects of the closed union shop. We shall find it reacting against the employer, the worker, and the public. As against the employer, it practically limits his per- sonal selection of employees to a choice of union workers. These may or may not be in his opinion suitable for the work in hand, or they may be otherwise undesirable. Equally, the disciplinary power of the employer is cur- tailed or abrogated and his methods of compensation regulated. These limitations may so increase the cost of production and the hazards of operation that the em- ployer may be subjected to unsustainable financial loss. He must therefore consciously assume unknown risks and as well protect himself, in so far as that may be possible, by so-called "strike" clauses in his contracts, the effects of which on the employer himself are to Intro- duce into his business affairs an element of speculation and to reduce his feeling of responsibility for the prompt performance of his agreements. These elements react through the community at large as an insecurity in con- tractual relations. In short, there is promoted in business a general lowering of tone in respect to the moral obliga- tions of engagements. The irresponsible, detached, and removed character of union control inevitably and under practically all cir- cumstances excites a feeling of antagonism and resent- ment. If the source of control were immediate, that is, if It were lodged In the group of workers with whom the employer deals, so that it might be possible to show the consequences of an action to Its members, to reason with them, or even to share with them a loss which It had been predicted would ensue, the employer might feel that the loss would have at least an educational effect and that possibly with more effort on his part a repetition might be avoided. But in dealing with closed shop union con- 10 trol he has neither opportunity nor prospect. He may even know that, so far as the members of his own group are concerned, they agree with him in large measure, yet that their union solidarity, or considerations of personal or family security or comfort, cause them to subordinate their economic interests. The employer is aware, also, that the irresponsibility reacts through him to his customers and thereby against the public interest at large. On this ccore he objects to political subservience to union demands. This not in- frequently has the effect of placing the employing interests in opposition to measures which on their merits would be favored. As a consequence, progressive measures in factory administration largely find expression in various forms of so-called "welfare" work, thus insuring control by the group concerned. Further, the employer has serious cause for objection to the many restrictions and exasperating annoyances in- separably connected with union control. As we have seen, this control can be more effectively exercised through specific programs than through general principles. With the avowed principles of unionism, few intelligent em- ployers find fault. With the programs, or regulations, nominally based on these principles, the most subservient of employers can only be in constant conflict. The closed shop regulations respecting employment, discharge, sus- pension, and reinstatement; the union rules relating to actions in violation of the employer's shop rules; to limi- tations of output; to necessary overtime; to minute trade restrictions and jurisdictional disputes; to piece and premium work and to payment for increased pro- duction; and to authority of union officials in the shop, or over the workers, all have a serious disturbing influence on the morale of any force subjected to their influence or authority. Lastly, perhaps, the closed union shop promotes a sAy spirit of unfair competition among employers. An em- /\ ployer who voluntarily agrees to the "closing" of his shop cannot but know that he is agreeing to an illegal practice but one to which no money penalty ordinarily attaches. Such agreements are not undertaken unless for an unfair advantage against competitors, of a character which partakes of many of the qualities of conspiracy. The "Union Label" affords scope for much analysis. In 11 any event, the agreement is looked upon as a surrender of principle for which there can be no redress and with which there can be no compromise. As against the worker, the effects of the closed shop are to supplant his personal judgment and freedom of action with a conformity to the union program, and in large measure to induce a subservience to the personnel of the leadership. On some natures these considerations sit lightly, but the worker of independent spirit chafes under the many restraints. As previously said, unionism has a social, economic, and historical basis. No clear-cut line of demarcation exists between these bases. There still survives, however, the Lump of Labor theory, the idea that there is but a certain quantity of work to be performed, therefore a too fast performance of it will result in unemployment. The fast worker is there- fore a menace to his group. The social aspect of this doctrine is that the higher pay accruing to the fast worker is unsocial in two forms — first, a personal selfishness, and, second, a harm to the less expert members of the group. Hence unionism frowns upon all measures calculated to reward the fast worker in proportion to his work. The closed union in a shop can enforce these objections. The incentive to personal excellence is thereby largely removed and a dead level of uniformity established which neces- sarily tends to be within the capacity of the poorer workers. A further and important result of this theory as it works out in practice is to place the worker in antagonism to his employment as such. That is to say, to engender a dis- regard for the economic necessity of giving a full equiva- lent in work for the wages he receives. Workmen who are inclined to do as little as possible for their wages may more easily shirk under the closed shop by reason of the degree of protection afforded by the system of union control. This is one of the actual efi'ects of the union motto, "A fair day's pay for a fair day's work." In a measure, the same reasoning opposes the introduc tion of labor-saving machinery. To the extent to which it is able to make good its objections to both fast work and automatic machinery, the closed union shop stands in the way of lessening the labor required for human subsistence or restricts the commodities which society may enjoy, through, in efi"ect, expending an unneces- 12 sary time on their production. The wide introduction of automatic machinery has, however, rendered active opposition futile and it has practically ceased, at least as an open question. Historically the resistance has always existed. I have previously said that if a group can exclude or restrict others from the exercise of any of their functions it may thereby create an artificial scarcity to its own advantage. In so far, however, as a labor union fails to control the entire labor market within its field, it has the economic effect of a wage advantage against unor- ganized labor through the fact that it first affects and raises the costs of production to, the weaker or "marginal " producer, whopasses on his increased cost to the consumer. Only when the union approaches total control in an in- dustry may it infringe upon the profits of the employer. In view of this economic principle the closed union shop is in this particular antagonistic to the larger interests of labor as a whole. As against the public at large it may be said that any policy which restricts the freedom of the individual through the exercise of an irresponsible power, or which in any way tends to supplant the self-responsibility of the individual in his group, is contrary to the well-being of society. This is additional to the element of monopoly, which I have perhaps sufficiently discussed. Society has long recognized that a power to control the individual is a power to control the State. Equally, though in a more easily acquired measure, the power to control the indi- vidual worker is a power to control an industry. In the close interdependence of industries under our industrial civilization, a power to control an industry is a power to stop its operation and therefore a power to interfere with, if not actually to control, all other industries. Perhaps no more remarkable exhibition of this power has ever been given than in the railroad troubles of 1916. That the public does not widely recognize the signi- ficance of this power is beside the point. Its inability to grasp the fundamentals involved arises from the confusion and frequently the conflict between principles and pro- grams on the one hand and the fact of irresponsible con- trol on the other. The public is aware of the principles of unionism as expounded by its national leaders. These, in large measure rightfully, it willingly accepts. The 13 programs, or detailed regulations, by which the control is carried out are unknown to it. There are, of course, in total, the multitudinous methods by which the unions exert pressure to attain their ends. Nor would it be possible for any one not in actual contact with the work- ings of these programs and their effect on the individuals concerned to gauge accurately their consequences or even to grasp their details. Neither is it possible for the ordinary person, unless he is a student of social problems, to be familiar with the character, extent, and limitations of the relations between the local, the district, and the national control in labor unionism. The quality of the control, enabling assump- tion of responsibility when this is advantageous and of escape from it when harmful, is a factor the value of which in any particular issue is not to be easily understood or weighed. The closed union in a shop is able by the fact of closure to bring all these elements positively into being and in such varying ways and degrees as may be most effective. The Orgariization and Effects of the Open Shop In its essential theory we have seen that the open shop is based on the accepted legal principle of equality of persons and their right of free contractual relations. In a sense, therefore, it may be said that the open shop does not require an organization, or that Its organization is provided for It by law and custom. That is to say, unless some modifying action be taken by the employer, his shop is, ipso facto, an open shop. From a working standpoint, however, this is not true. The moment that unionization appears among his em- ployees, the employer can no longer maintain an attitude of indifference to it. The essence of labor unionism, as we have seen, is the exercise of pressure upon the em- ployer by irresponsible power. Elsewhere I have dis- cussed the consequences of this interposed or extra-legal power. If this power becomes superior to himself, the employer must obey its mandate. To the extent to which it attains authority, It must curtail his freedom of action. Presumptively its strength will always tend to increase. The employer is therefore confronted with one of two alternatives. Either he must declare his shop non-union, 14 thereby himself adopting a policy of exclusion of the same character as that to which he objects; or he must oppose the union power in his shop by a force of the same nature. Preferably he adopts the latter course and brings such a force into being through the medium of an employers* association. Employers' associations are variously organized. They differ from labor unions in that they are practically all local bodies. They differ further in that they are officered by their own working members whose actions bind them- selves as well as their associates, and they differ still further, and importantly, in that their individual members are financially responsible. In all such associations there naturally reside the possibilities of good and evil. The reactionary as well as the orderly and constructively pro- gressive spirit is always present. But the quality of responsibility, the fact of greater consequence in the community, and usually of a higher regard for action within legal limits, tend to restrain the reactionary element and to prevent the pursuit of illegal methods. We conclude, therefore, that where an overwhelming preponderance of power exists on the part of the workers, unionism will always take the form of the closed shop. Per contra, where the like conditions prevail on the side of the employer, there will be a probability of only the non-union shop, particularly if the question be raised. Where, however, there is a fairly balanced power, there will come into existence the open shop in its more or less complete expression. This is what I mean in saying that the open shop is itself a recognition of the union and appears only in the presence of unionization. I have previously said that the open shop is in accord with our traditional political and economic theory. Presumably, this should be its complete justification. To question, then, the social validity of the open shop is to question the validity of these theories. If we are to do this, we are bound first to examine their structure, to ascertain whether or not there is coincidence between the traditional theory and the modern fact. We are, as well, bound to make such an inquiry with a great deal of care. The mark of a free man is the right of contract. But such freedom must rest upon the presumption of a relative equality in the effects of the contract upon the parties to it. Society has long recognized the element of duress and 15 its bearing upon the validity of contracts. Has, then, the modern development of society inevitably Introduced duress into the Industrial relations of the employer and the worker under the open shop? The answer involves an Inquiry Into the character or quality of the modern em- ployer as related to the worker. Such an employer may be an individual, firm, or corporation. In their economic aspect all are persons of equal legal standing. Yet are they. In point of fact, of equal contractual standing.^ We must examine this at some length. If one natural person desires the service of another, there Is, In the absence of monopoly or duress, a pre- sumptive equality between them. The service sought, being personal. Is one which either party might perform. If, then, a crossroads blacksmith, finding himself with more work than he can do, seeks an assistant, the minds of the two men can play freely as to the terms and condi- tions of the service. The blacksmith Is aware, let us say, that he can double his profits by doubling his output and that the possibility of his doing this resides in the proposed assistance. The assistant Is equally aware of this fact and both are aware that the newcomer might set up his own forge. There Is a relative equality, or perhaps more correctly, a quality of equal relativity, existing be- tween the two men bargaining for terms. Free competi- tion exists and, we may aver. Is justified. But let us suppose that the blacksmith's shop In time outgrows his resources and he takes in a partner, and that presently they find It necessary to Incorporate their business. Let us presume that the corporation prospers and comes to employ twenty thousand men and operates as an open shop. Is the worker applying for or accepting employment by that corporation In the same relative position as the blacksmith's assistant.^ Legally, no doubt, yes; for the corporation, before the law, is neither more nor less an economic individual than the blacksmith whom It succeeded. But Is the relativity of the worker to the employer now the same.^ Obviously it Is not, for whereas the worker in his own person previously represented the entire additional output, under the changed conditions he represents, so to say, but one twenty-thousandth of it. His economic relativity has long been negligible. The corporation, when It has passed beyond the state of a personal business, must establish rules of employment. 16 The freedom of the applicant is confined wholly to accepting or rejecting that which the corporation offers. To say that this constitutes freedom of contract may be stating a legal truth, but one which, in point of fact, must be a practical fiction. Nor is it possible to conceive that the conditions of employment under the modern corpora- tion could possibly provide the freedom of traditional conception. It would be as though a government bar- gained with every private soldier over the terms of his enlistment. The industrial development of society has of itself established a new condition in industrial relations between the employer and the worker. It has established what we may term a condition of industrial duress, — a condition in which the offered terms are the only terms tO' the individual worker. By the middle of the nineteenth century, under the influence of laissez-faire and unlimited competition, this economic disparity, or compelling weight, had so pressed upon the worker as to call for remedial legislation. But no such legislation can anticipate; it must of necessity always lag behind the actual situation. It is true that under the open shop the worker is free to reject the terms offered or to quit if for any reason displeased with the terms of his employment. But does that constitute a freedom in contract in conformity with the theory of the open shop? We have seen that the effect on the business of the employer is the fraction or quantity of his business which the production of the worker represents. This resolves itself into a problem of substitution, which of late has been formulated as the cost of labor turnover. The effect on the worker, per contra, is his total subsistence during the period of substitution. If a refusal of terms by the worker suspended the employer's Income to the same relative extent as a refusal to comply with the employer's terms suspends the worker's Income, there would exist in fact that equality in contractual relations contemplated in the theory. The absence of that equality in fact invalidates the practice of the theory. The open shop under modern industrial conditions denies and must deny the worker, acting singly, a freedom to which his citizen- ship theoretically entitles him. It may be said that this fact Is set off in practice by the widened opportunities for modern employment, but while this holds a certain truth we shall see that it is not a complete answer. 17 % Yet, in spite of this actual state of facts the advocates of the open shop are able to point to a certain qualitative difference which undoubtedly exists between it and the closed union shop. It is current knowledge that, other things being equal, the open shop can and frequently does pay a higher wage rate than competing closed shops. The alleged reasons for this fact are many, but we may content ourselves with examining those which appear to be basic. Relatively speaking, the industrial establishments operated in the spirit of the open shop are few. The open shop employer must waive the exercise of much of the potential power which of necessity resides in him before the spirit of the open shop can be made practically effective. But when it has been brought into play, it holds a strong appeal for the type of workman who is naturally restive under the very real and imminent yoke of the union regulations. Especially it appeals to the fast worker who is apt to be of independent or individualistic temper. These characters naturally drift to the open shop. This, however, would not alone be the whole truth. The real open shop is commonly of moderate size. In present day terms, it is apt to be a small organization. It will be one in which the managers are themselves heavily interested stockholders. As a consequence, the personal factor has still some opportunity. Some one near the top will be in close touch with the details of the costs of pro- duction. In one way and another wages and other con- siderations can be adjusted to individual output and shop conditions adapted to the personalities of workers, and with these a degree of personal acquaintance and contact must exist between management and man. The manage- ment of small or moderate size is thus able to avoid the dead uniformity that inevitably accompanies the im- personal relations of large scale operation. The Social and Economic Values of the Closed and the Open Shop Our examination thus far has tended to expose the ■evils of the closed shop in a political democracy. It endeavors to enforce monopoly; it tends to develop a caste spirit or a class consciousness; it would deprive the individual of full personal responsibility for his own acts; 18 it makes him lean upon the system rather than upon his own excellence, for his remuneration and advance; It makes him callous to the legitimate demands of the economic order under which he lives. In short, It would' seem demonstrably opposed to the highest public welfare. It embodies the germs of chaos If not of anarchy. This is beyond doubt a severe indictment, but as we have seen, the open shop. In Its extreme form, presents what may only at best be termed a benevolent autocracy. Let us consider first Its Influence on the employee. The insistence on the right of individual relations between employer and employee must of necessity place the worker In an Impotent position. The conception of justice obtaining between them must be that of the employer. The quality of fact In this circumstance and its import is not lessened by any exercise of reasonableness or high-mindedness upon the part of the officials of the employing corporation. A decision in any matter becomes effective only as the worker accepts it. Its rejection by him means to him a change In employment and hence In his working environment and associates. In the course of time these naturally become Important elements in his life. He may therefore submit to conditions very offensive in many ways rather than make a total change, which, he may feel, will in the main occasion little difference. This can only tend to a feeling of Irresponsibility on the worker's part, an aloofness, a lack of Interest In the successful doing of the work by which he makes his livelihood. The dis- satisfaction may be none the less real because It can find no effective outlet or expression. He Is apt to regard with a good deal of Indifference, if not of suspicion, any under- takings In the nature of welfare work Instituted by the employer. His response to them Is apt to be negative — they will be regarded by him as devices for avoiding the granting of Increased wages, or as in some manner primarily for the employer's own security or profit. This feeling, too, has within Itself the germs of chaos and anarchy. The effect on the employer is not less harmful. It has been well said that all men of brains seek to dominate others to the limit of their powers. The qualification is perhaps superfluous; the quality of dominance exists in all men. The unrestrained employer cannot be expected to do otherwise than apply this doctrine. He acts in 19 accordance with his human nature in believing his own way to be the best. The influence which the individual employee can exert can at most be no more than an appeal to the employer's sense of fairness. It cannot carry the dignity of equality. Moreover, the trend of modern business is in the direction and nature of trustee- ship. The corporation manager is ordinarily more a trustee than a personal owner of the business he conducts. This quality of trusteeship is steadily expanding and carries with it a corresponding dependence upon assistants. This entire group, under our present principle of industrial organization, technically represent only the stockholders. Some declarations of open shop principles are explicit — "Foremen shall be the agents of the employer." The rewards of these officers come from services to the stock- holder rather than to the worker. Under such form of organization it becomes practically impossible to avoid petty annoyances, tyrannies, and even injustices, wholly foreign to the desire of the responsible management or even of the stockholders themselves, but for which the open shop worker in his individual capacity can gain neither hearing nor redress. The statement must be taken qualitatively. Yet it nevertheless remains a fact that the nature of modern business organization involves delegated authority, — a dependence upon subordinates — and that as these subordinations descend in rank, the impersonal nature of their relations to the worker decreases and the human nature in the relation increases. A good or a bad foreman is of the essence of peace or trouble. The Value of the Closed and the Open Shop in the Social Development Thus far I have endeavored to hold the two phases of employment separate and to examine each in turn. I come now to that point where the issues join — where that which may be said of either will apply to the other and the distinctions disappear. Differences become merely those of expression and degree — the opposite faces of the same medal. It may be said of few human movements that their values are all to be entered on only one side of the social account. The progress of civilization is a progress in cooperation. Superlatively is this true of an industrial, civilization, whereby I mean a civilization in which the 20 production of commodities is carried on by minutely sub- divided and coordinated effort. Save as men are willing to cooperate, to submit their personal freedom of action to the necessities of the social body and to act as groups rather than as persons, industrial cooperation cannot be. The closed and the open shop are both peculiar to our accepted views of property and commerce. Under these views all. the group in authority represent the stock- holder, and commercial business is organized for the pur- pose of making profit from its conduct. In the accepted sense, whatever is done in business is done for profit, certain or expected. I am not here inquiring into the rightfulness of the system or its practice, nor implying that it should be organized in any other manner, but am only endeavoring to ascertain the reasonable implications from the facts as they exist. It is the world-wide condition of industrialism in which the most charitable, philan- thropic, and humane operators are caught up or enmeshed equally with the most avaricious and heartless. The commercial enterprise that does not make a profit for the stockholders forfeits its right to public confidence. Now, the industrial enterprise purchases materials in the open market. These are themselves the result of human effort in many ways, one of which is what we particularize as labor. Equally, it purchases such labor for the further fabrication of the materials purchased. Both the labor and the materials must be obtained at such prices that the product can be sold in competition on the open market. The inevitable result is in effect to constitute labor a commodity and, as we have seen, for the laborer, acting alone, to sell his commodity under duress. The highest type of management can do no more than mitigate the workings of the system. If we would frame an Indictment, it must be against industrialism Itself, having rightly a very great care not recklessly to advocate changes of a character that would be only to jump from the frying pan Into the fire. But we are not here concerned with such an inquiry. The total result, however, is to foster, in the group which represents property, a con- sciousness of class and of class superiority and even of class antagonism, perhaps as disruptive of social solidarity as its corresponding and cruder form, unionism. Unionism, however, of which the closed union shop is the extreme expression, gradually taught the workers the 21 needed discipline for cooperation. Had the movement failed to abridge the prevailing laissez-faire, it would have served no purpose. Anything which did abridge that doctrine became, ipso facto, anathema, and encountered opposition. This opposition, or resistance, was practically individual on the part of the employing interests until the end of the nineteenth century. But by that time, when- ever the issues were joined, the preponderance of power had passed to the workers. The employers, as individuals, by about the year 1900 were no longer able successfully to cope with the strengthening of affiliated workers. As a consequence employers' associations came into being and developed rapidly. These performed precisely the same disciplinary functions for the employing interests that the unions were providing for the workers. The individualist employer met his competitor and found that he learned as much as he taught — received as much as he gave away. In a manner of speaking, the employers also became unionized. In each case the pressure from without produced a solidarity within. The unification of the opposing in- terests also increased the magnitude of the contest which again, as it were, led to a search for improved "weapons." Prominent among these was public opinion. This could be influenced favorably only by a presentation of facts and principles. I need not, perhaps, enlarge on the details. Analogous movements are familiar to all students of political phi- losophy. The principle which underlies them presents three phases, aspects, or periods, viz., (1) indifference, (2) conflict, (3) unity. In the appearance of the principle in industrial labor relations the first stage may fairly be said to have ob- tained in the early period ending with the middle of the nineteenth century. In this early period neither employer nor employee was conscious of any rights residing in the other. It was considered that the good of all was best conserved through allowing every one to pursue his own economic ends, unaided and unfettered. Unions were sporadic and weak and employers' associations had not been thought of. But with unionism came a consciousness and definition of differences which produced conflict, in which the slowly affiliating unions strove for advantage over the tra- 22 ditionally individualistic employers. This form of the conflict reached its height with the end of the nineteenth century. The appearance of employers' associations and a definition of the open shop produced a pause or equali- zation in which the conflict only maintained itself. This continued through the first decade of the present century, but is perhaps now entering upon its closing phases. The evidences of this are twofold, proceeding respectively from the two sides to the conflict. On the side of labor there has been an apparently arrested or at least restricted development of that aspect of unionism which insists upon the closed shop. Coin- cidently a certain note of conservatism appears in the utterances and attitude of the national leaders. There has also been a growth of socialism, so called, within the ranks of traditional unionism, and there has been as well a marked increase in the importance of labor movements outside of the established order, with especially a radical character in the newer activities. The significance of these various phenomena may not be overlooked. They indicate in the first place a tacit, or more probably an unconscious, acknowledgment of the inadequacy of the earlier methods. Naturally this shows long before the methods themselves actually cease. Of even greater interest Is the seeming fact that both the growing conservatism and the newer radicalism proceed from the same cause, the conservatism being the union recognition of an increasing public sense of the essential dignity of human labor, while the radicalism expresses its feeling of Inherent power. Both, then, are evidences of solidarity, which must presently recognize that labor's own highest good is inextricably bound up with the good of society. The socialistic groups within the older orders are, so to say, the halfway houses between the extremes, while the fact that these groups are socialistic Is evidence that the established system of Industrial control is not satisfying to the mass of now self-conscious workers. Their socialism. In short, is a protest rather than a pro- gram. All these circumstances point to a sharp change in the methods which American labor has pursued for the last forty years. On the side of capital, there are the growths evolving out of the "welfare" movement, itself at first undoubt- edly in large measure a tactical move, but probably also a. 23 pioneer of the coming phase. The many attempts now- being made, in the main tentatively and experimentally, but all looking to closer cooperation between employers and workers, in practically all cases of significance, involve the placing of responsibility upon the group concerned. The efforts to establish labor councils and other rap- prochements between the employers on the one hand as a group of owners and the employees on the other as a group of workers, each wholly autonomous, is a return to the earlier alignment, but a return in which autonomous groups take the place of free individuals. In the nature of things such groups cannot be so individualistic as persons. As the interests are widened the restrictions must become less sharp. Thus there is a growth of mutual respect and harmony. In parentheses it may be observed that we must be exceedingly careful in all this rightly to evaluate collateral conditions, such as the revolutionary character of the social and economic changes brought about by the de- velopment of machinery and machine processes. The difficulties in arriving at these valuations lie primarily In determining wherein they are causes of change and wherein merely accelerations or retardants. In the main most of them are mere Incidents in the struggle, as, for example, that the growth of the automatic tool has tended to shift the labor side of the conflict from the form of the A. F. of L.^ to the form of the I. W. W.^ That is to say, the A. F. of L. embodies the doctrine of laissez-faire, embodied in the group. In other words, that type of unionism accepts the tenets of capitalism and wishes no Interference with its struggle to wrest Its own advantage from capital and to wrest Its advantage in its own way. The right to strike, the non-interference of Government, the objection to incorporation, the monopoly of the closed shop, the organization by trades, the boycott, the sympathetic strike, and the advisory character of the higher control, all partake of the philosophical anarchy of laissez-faire. On the other hand, economic socialism appeared as a reaction against capitalism at a time when the worker was not organized sufficiently to prevail by his own strength. This latter doctrine has continued and grown In Its primary purpose. It is also slowly permeating the ranks of tra- ,dItIonal unionism while itself undergoing extensive ^American Federation of Labor. '^ Industrial Workers of the World. 24 modification. So we find a socialistic minority in the ranks of the A. F. of L. and a radical socialistic group organized separately as the I. W. W. But it would be a serious mistake to confuse the issues by assuming that socialism Is an essential element of the labor movement, and this even despite the fact that It was born out of the misery of the workers and is prominent in their councils. The real labor Issues are not economic socialism. In a fundamental sense they are political. The older unionism is dimly conscious of this, while the I. W. W. is as yet only an evidence of mere solidarity — a protest, but not suffi- ciently informed to be In any way constructive. To return from our parentheses, I think we may there- fore properly look upon the granting of consultative and administrative powers to workers through the large measure of shop control that Is being growlngly placed upon them, as the acquisition and use of a new and very effective weapon by the employer, which will tend to equalize the contest and will call upon labor unionism to devise some exclusive weapon of Its own If it would counteract the advantage accruing to capital through the use of this new strategy. Meantime, labor itself also gains, and industry becomes more "human." If unionism cannot devise some weapon in the form of measures tending to benefit itself exclusively, then the vigor of the contest will diminish and the issues for which It has contended will surrender their prominence. But in any event we may hardly expect that unionism will be able to arrest quickly the momentum of the autonomous movement. The worker has become conscious of his Importance in society, and of this cognition has been born a desire for a wider and more Immediately personal de- termination of his life. The multiplying efforts of em- ployers to placate him serve the twofold end of increasing the worker's desire for extension in this participation, and of moulding both himself and the employer to a broader conception of the true purposes of industry. The logical outcome of sharing control is a sharing of reward, and the plans for accomplishing this purpose that have sprung into being within a year are more than can be quickly enum- erated. All these measures work for autonomy. All tend to make the worker push aside the extra-legal control of unionism. All equally tend to make the employer deal with his group rather than with his Individual workers^ And all together act to solidify Industrial enterprises Into 25 self-determinative units embracing owners, officials, and handworkers. This would be an extension of the prin- ciples of democracy to industry. That this condition is actually in process at the present time seems to me to be indicated both in this country and in the British Empire. Our particular national genius and form of political institutions may conceivably give a different aspect to our development, but, on the whole, and in the end, the unity at which we shall arrive is apt to embody the same essential principles. Summary Summing up, then, we may say that the closed union shop and the open shop are the action and reaction of a struggle for a greater unity of life under an industrial form of civilization. Both, therefore, are temporary and opposite phases of the same thing and must be judged as steps in the process of welding society into a more homo- geneous relationship of its individuals. Neither can, therefore, be accepted as a factor of final utility or validity. It would appear that the greater unity which the result promises will be a distinct social gain, and it would seem to be a reasonable inference that the broadening of the basis of responsibility for efficiencies in production should have a tendency to increase the actual efficiency. This may be supposed on the theory that the increase of responsibility will carry with it an increasing share in the gains and losses of enterprise and the bringing in, there- fore, of a direct personal incentive to the workers which is lacking under the present traditional relations of capital and labor. We may possibly look forward as a result of the conflict to the joining in fact, if not in name, of these two terms. Thus we should arrive at unity. Finally, we may venture to say, as a result of our analysis, that the closed union shop and the open shop concretely represent opposite sides of a disunity peculiar to an industrial organization of an individualistic society. If either side to this struggle should gain and retain mastery, our civilization could not ripen to its fruition and would perish in the conflict, leaving history uninformed as to the possible values residing in industrialism. We may hope, therefore, that neither side may prevail, that no class or group may attain an impregnable preponder- ance, but that the conflict may continue to develop a 26 constant approach to unity. The relative values under this point of view become equal and the varying phases are to be viewed as steps in a world process which neither side can express as a conclusion. ■-'^ Certain it is that industrialism as we have seen it slowly evolving since the downfall of feudalism, first in the domestic and now in the factory system, has at no time presented to us the picture of a perfect civilization. Yet, equally true it is that the conditions of life have been steadily ameliorating. Equally true it is that the possi- bilities of a larger, wider life are steadily expanding. We may not deny this even though these greater possibilities of good carry with them, as they always have, the poten- tialities of greater evil. Man may compass no good that is not pregnant with curse. The war gave a terrific impetus to the movement that was slowly gathering head- way before its advent. It crystallized suddenly, into a vital solidarity, that entire element of the population which we have heretofore loosely called labor. At once, that labor became instinct with the dynamic power of a consciousness of its own dignity and worth. Vague and as yet inarticulate as to means, it has none the less set its face to the vision of an end. That end is a larger place in life, a definite voice in the shaping of its own destiny — in short, a demand for self-expression, for wider avenues of knowledge, for a greater equality of opportunity. The differentiations of its expressions heretofore have been sunk in this larger unity. It is far too early rightly to appraise the intellectual forces released by the war. It is no proper cause for sur- prise that these loosed forces should be largely unreason- ing, unreasonable — aye, even brutal in their expression. That they will overwhelm or even seriously cripple our Anglo-Saxon social discipline is not to be believed. Even now we are rallying from the shock of their outrush. But a vision of the course they are to take when they steady down for their great forward march toward the further goal of a better industrialism is stirring the hearts and occupying the thoughts of men in every walk of life. As never before, men are seeking and men are willing to concede the widening and the wider opening of the doors of opportunity^'VWe may well believe that in the prepara- tion for this newer life the closed union shop and the open shop have, all unconsciously, played their valuable and significant parts. 27 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. 2. Analysis of British Wartime Reports on Hours of Work AS Related to Output and Fatigue. 58 pages. November, 1917. Sl.OO. Research Report No. S. Strikes in American Industry in Wartime. 20 pages. March, 1918. 50 cents. Research Report No. 4- Hours of Work as Related to Output and Health of Workers — Cotton Manufacturing. 64 pages. March, 1918. $1.00. Research Report No. 6. The Canadian Industrial Disputes Investigation Act. 28 pages. 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