The Pandemic Depression
The Global Economy Will Never Be the Same
It was inevitable that the sharp labor conflicts characteristic of our day here in the United States should evoke a discussion of laws "to do something about it." What that something is, or should be, is not agreed upon among the advocates of state action. Their proposals vary from a Fascist demand for the prohibition of strikes to the adoption of an industrial code like that now under controversy in Michigan. Here and there one hears a revival of proposals for compulsory arbitration—this despite the failure of such a plan in Kansas. Demands for the incorporation of unions are frequent. Before we rush into any plan for rigorous state control of unions or of strikes we would do well to look at European experience.
An inquiry into what has been attempted in Europe must be prefaced by a word of warning. The background of industrial warfare is the same in all industrialized nations, but there are differences in national attitudes, in forms of government, and in conditions of organization both among workers and employers, which make it quite impossible to say that such-and-such a plan has worked well in Great Britain, France, or the Scandinavian countries, and therefore would work equally well in the United States. No successful American legislation can be purely imitative. Unfortunately we have problems of racketeering virtually unknown in the European democracies; we also have a problem of internal democracy within unions sharper than exists abroad. But even taking account of qualifications like these we unquestionably will find it advantageous to inquire what the European experience has been, and specifically what has been the result of state intervention to secure industrial peace.
We must exclude from this inquiry the Fascist countries and Soviet Russia. The Fascist countries have momentarily obtained comparative industrial peace at the price of outlawing the free association of workers in their own unions and forbidding strikes. The uneasy industrial peace which has resulted is not a lasting peace of happiness or of freedom. In the U.S.S.R. trade unions are encouraged, and their rôle is definitely fixed by the government. A strike such as that against General Motors in America would be unthinkable. If it began, it would be ruthlessly put down. Partisans of the Russian dictatorship may argue that Russia is under a workers' government and that this fact makes strikes unnecessary. I shall not examine that argument here, but only point out that whether the Russian type of control of workers' associations is good, bad, or partly good and partly bad, it can have little significance for the United States under our present political arrangements.
The significant countries for us are the surviving European democracies, or what we call democracies by way of contrast with the totalitarian states. I came away from a recent brief visit to the Scandinavian countries with much admiration for them. But they are not Utopias of peace and contentment. They are familiar with strikes and lockouts, though these cause no such violence as is customary in the United States. The reason, in part, is that the very strength of the labor organization makes large-scale strikebreaking impossible. In all three Scandinavian countries there is a high standard of union responsibility as well as useful machinery of conciliation and voluntary arbitration. From 1916 to 1923 the Norwegian Government had power to impose compulsory arbitration in cases of grave national importance. However, in 1923 both the representatives of the workers and of the Conservative Government then in office united to defeat the renewal of the law. But much as there is to praise in Denmark, Sweden and Norway, their small size, their peculiar history, and their homogeneity, make the situation in them very different from ours or even from England's. It is to Great Britain, mother of the industrial revolution, that our inquiry must principally be directed.
The present British policy in labor relations has a long history behind it. As we might expect from our knowledge of British temperament, it was not born of philosophical consideration but of practical experience. In general, the British have granted nothing to the unions by law which they were not afraid that the unions might have been strong enough to take anyhow. But the British Government, even when in Conservative hands, has had a way of foreseeing necessity a little in advance, and of yielding enough in time to avoid explosion.
The most recent strike of consequence in England tied up the London bus service all through the month of May. No attempt was made to run the busses with strike-breakers. The public was badly inconvenienced. But it, or considerable sections of it, professed to find satisfaction in the fact that the absence of busses from London streets simplified the Coronation arrangements! In the end the strike was settled less by the persuasive powers of any mediators, governmental or otherwise, than by the insistence of that powerful trade union leader (bureaucrat, if you don't like him), Mr. Ernest Bevin, president of the Transport Workers Union, to which the busmen belong. In effect, what Mr. Bevin did was to make the men accept the recommendations of the Tribunal of Inquiry, to which, under British law, the Government had referred the dispute for investigation. Those terms gave the men nothing more than the promise of an investigation, and possible readjustment of working schedules. It was, however, an official recognition of the importance of those schedules to the health of the workers.
I had happened to meet some leaders of the busmen two weeks before the strike, and was interested then to learn that it was precisely Mr. Bevin whom they feared more than anyone else. Their complaints to me—and later their formal statement of grievances—were concerned almost solely with the effect upon their health of bad schedules and long hours. These complaints were impressive. In times gone by the subject had been dear to Mr. Bevin's heart. But before the government tribunal he presented it inadequately. The men think that he let them down by consenting to a strike which he was unwilling to make effective by allowing it to extend to the trams and subway. Mr. Bevin's insistence in the end upon virtual capitulation has been ascribed to his belief that there were strong Communist influences at work in the strike and in the union, and to his hope that these would be cast out from it by defeat.
In labor circles in Britain the original controversy, and the real grievances of the men against the Transport Authority, a quasi-public body, have been almost forgotten in the bitterness of the internal union struggle. Nevertheless, on the official score card another victory has probably been written down for the government Tribunal of Inquiry, and for the coöperation of "responsible unionism." At all events, the strike was marked by none of the violence which would have occurred during a similar strike in New York City. Whether British patience and restraint would have been as effective if the strike had extended to trams and subways is a matter on which the reader's guess is as good as mine.
Let me recall two turning points in the British attempt to obtain industrial peace. In 1800 Parliament passed the Combination Law. It made explicit and emphatic the prohibition of combination among workers which from the time of Edward III had been a corollary to the general policy of state regulation of trade and industry. One hundred and six years later the high water mark in reversal of this policy was reached in the Trade Disputes Act of 1906. The act was an answer to the celebrated decision in the Taff Vale case which held unions liable for damages arising out of trade disputes—a decision which was the occasion, if not the cause, of the formation of the British Labor Party. The Liberal Party was then in office. In alarm it adopted the Trade Disputes Act of 1906 prohibiting the courts from entertaining any actions against Trade Unions, their members or officials, in respect to any tortious acts alleged to have been committed on their behalf. This was a decision of great practical importance to labor unions, because if they should be held responsible for damages for every alleged act committed by any individual to the hurt of the employers during a strike, they would soon be ruined financially.
How often we hear men with patriotic enthusiasm justify every war in which their country has ever engaged, and all its accompanying violence, yet unqualifiedly condemn working men for violence in labor disputes. As a matter of fact, it is extraordinary how little violence has attended the rise of the labor movement, especially when one remembers how much nearer to him and his dear ones are the worker's demands concerning wages and hours than are most of the political demands which have provoked wars. The British unions in particular have achieved their present status with an amazing minimum of violence. But not without struggle and suffering. It took a full quarter century, from 1800 to 1825, to win the passage of Peel's Act which legally permitted for the first time the right of combination among workers for the purpose of regulating their own wages and hours of labor. It was not until 1859 that picketing was legalized. Full legal recognition of unions with protection for their funds was given in the Act of 1871. So slow has been the change in law, even in England, to meet the stern realities of the industrial age!
The generation following the adoption of the Trade Disputes Act of 1906 has seen a tendency on the part of the state to depart from the older rôle of self-proclaimed "umpire" in economic and industrial disputes. During this period social insurance has come into a high state of development in Great Britain; there has been a fairly successful elaboration of the machinery of mediation, conciliation and inquiry; and, during the Great War, compulsory arbitration received a thoroughgoing trial.
We are concerned with the latter two developments, pausing only to recall how much social security legislation has done in England to diminish bitterness in the economic conflict. Historically, compulsory arbitration is older in England than conciliation and voluntary arbitration. In the year 1800, the same year in which the Combination Law was enacted, the first Arbitration Law was passed. It applied, however, only to the cotton industry. Dr. Ducksoo Chang, to whose excellent study "British Methods of Industrial Peace" every student is deeply indebted, thus summarizes that early Act:
The act applied to England only, but covered all cases of disputes arising between employers and workmen engaged in the cotton trade, including wage disputes over both future and existing rates. Each party to the dispute was free to demand arbitration and appoint an arbitrator. The arbitrators so appointed were authorized to summon and examine witnesses and to decide the case finally. Should they fail within three days to agree upon an award, they were required to refer the case for final settlement to one of the Justices of the Peace of the locality. Any party refusing to submit either to arbitration or to observe the findings was to be liable either to the payment of ten pounds in damages or three months' imprisonment.
For a number of years the law worked well enough to warrant its extension to other parts of the United Kingdom. Its success was mostly in interpreting existing contracts. Since the workers were unorganized, and combination was prohibited, they were usually at the mercy of the employers. Arbitration was not on even terms. The law was significant because it did away with the old practice of direct regulation of wages by state authorities—a practice already virtually dead with the coming of the machine age. In 1824 the Arbitration Act was extended to all disputes between employers and workmen engaged in any trade, except disputes concerning future wage rates.
It lies beyond the scope of the present article to do more than point out that this act was not a success, and that compulsory arbitration soon became in practice a dead letter. Standardization of industrial conditions greatly reduced the number of individual disputes which had been settled under the cotton arbitration law, and the growth of labor unions made it increasingly necessary to get their assent to working conditions. In 1867, and again in 1872, more elaborate laws were adopted dealing with conciliation, but prescribing some measure of compulsory arbitration. These laws concerned the adjustment of disputes under existing contracts rather than the adjustment of future wages. Increasingly that all-important matter was left to collective bargaining between employers and the growing trades unions. By 1896 Parliament got around to making a legal end of the creaking and useless machinery of compulsory arbitration in favor of conciliation. For this it drew up an elastic and comprehensive plan which it committed, so far as the government interests were concerned, to the Board of Trade. Compulsory arbitration in Britain was dead until it was resurrected under the stress of the Great War.
If ever there was a case for compulsion it was provided by the grim logic of war. Industry was necessarily mobilized for war purposes. In a great many industries factory workers were at least as important for the military machine as any soldiers; indeed, many of them were exempt from conscription for this very reason. They were better paid than soldiers, but on the other hand they had a direct responsibility for feeding themselves and their children which the soldiers lacked, and there was a continual tendency for prices to increase faster than industrial wages.
To compulsory arbitration the British war government added the "leaving certificate" as a method of controlling the workers. No employer was allowed to engage a worker without such a certificate. This scheme encouraged so much petty tyranny, engendered so much friction, and required so much red tape, that it perished in a storm of strikes, chiefly among skilled men in the engineering trades, before the end of 1917. An attempt to reintroduce it, or something like it, in the summer of 1918 in the munitions trade also resulted not in peace but in a fresh outbreak of strikes. To meet these and other strikes, compulsory arbitration was quite inadequate. It had, however, a fair degree of success in dealing with more or less routine disputes. It was quicker than the slow processes of conciliation. The government had wisely provided a variety of arbitration tribunals or arbitrators with some choice of reference for the interested parties. In general, the most satisfactory work was done by a permanent arbitration tribunal on a representative basis of workers and employers.
Nevertheless, even under war conditions compulsory arbitration was exceedingly unpopular; and the Whitely Committee, appointed as early as October 1916, reported that "the experience of compulsory arbitration during the war period has shown that it is not a successful method of avoiding disputes, and in normal times it would undoubtedly prove even less successful." Compulsory arbitration was therefore abandoned as early as November 21, 1918, except temporarily, as Dr. Chang tells us, "for the purpose of determining cases arising from or in respect to the minimum rates, that might be changed by an agreement between employers and workers concerned with the approval of the Minister of Labor or by an award of the interim Board of Arbitration." Even this limited use of compulsory arbitration was not very successful and played a small rôle in labor adjustments.
Certainly the weight of experience in Great Britain, pioneer in industrial revolution, is against compulsory arbitration and there is nothing at all in our American life to give us greater hope of it here. It is, of course, a form of state interference in the process of collective bargaining. Arbitration tribunals have no such basis of generally recognized law or justice as have the courts in deciding civil and criminal cases. They are not dealing with some norm which by common consent, even of the parties in conflict, is right or wrong. They are dealing with conflicting rights and interests by standards which are largely subjective or born of a desire to compromise. The state which gives them authority is not itself accepted by either of the parties in conflict as necessarily a fountain of justice above suspicion. Compulsory arbitration, in short, is an instrument more appropriate to the totalitarian state than to the democratic capitalist state.
Inquiry and conciliation are, however, different matters, and the British governmental machinery for making them effective may justly claim a very considerable degree of success. As Dr. Chang points out, following an elaborate statistical analysis of disputes and the manner of their settlement, "the primary value of the negotiation machinery . . . lies more in the prevention than the cure of industrial disputes." The machinery in question includes not merely various arrangements under which the government may act as investigator and mediator with power to make public its recommendations for settlement, but also joint committees set up by representatives of employers and workers under collective agreements.
Shortly after the war much was hoped in England from Joint Industrial Councils. The Whitely Committee saw in them a means of establishing self-government in industry. Actually they have achieved no such important purpose, although in a few industries they have performed a moderately useful function. Many detailed reasons can be given for their lack of success, but they boil down to two general reasons: one, the fundamental difference in interest regarding the wage question between the employers and workers; and two, the dependence of all industries upon the general economic situation which, of course, Joint Councils cannot control. Precisely in proportion as the workers believe that the answer to their troubles lies in the socialization of such basic industries as coal or the railroads, they are unable to accept for more than limited uses any type of joint council which recognizes the validity of private ownership and the profit system.
Under the present laws, the government uses the Ministry of Labor as the chief office of conciliation. It has set up an Industrial Court as the principal tribunal for voluntary arbitration, but the parties may, if they prefer, use single arbitrators or ad hoc courts. The government also has a machinery of inquiry. The resulting recommendations may (as in the busmen's strike), with the aid of public opinion, become the basis of settlement.
Vital in all this is the extent to which British employers, especially in the basic industries, have come to accept the principle of collective bargaining. Great Britain has no Wagner Law or its equivalent, but not for many years has it had a Tom Girdler. British industry has not maintained its own private armies and arsenals of the sort characteristic of American industry for many years. A fairly general recognition of the principle of collective bargaining has certainly not bankrupted British industry. It has not by any means prevented strikes; but it has kept them from taking on the aspect of little civil wars.
Whether these relatively peaceful conditions will continue is another matter. There is much unrest in England, Scotland and Wales, and some dissatisfaction with the conservative union leadership. There are thirteen and a half million insured persons in British industry; there were eight and a half million trade unionists affiliated with the Trade Union Congress in 1920. Today there are only about three and a half million thus affiliated. Union strength is concentrated in mining, textiles, ship building and railways. Geographically it is concentrated in the north but, as my friends in labor circles pointed out to me in England last April, the new industrial development, thanks partly to the diffusion of electric power, is taking place in the south of England, where unionism has always been relatively weak. Harold Laski in a recent article entitled "Wanted: a British C.I.O." (The Nation, July 3, 1937) gives no less than ten reasons for the decline in union strength. The most important of them spring from the insistence of the British unions on the old craft emphasis. What Mr. Laski writes was, I found, the general conviction of Left-Wing trade unionists and members of the Labor Party.
Any such upsurge of organization as took place in France a few months ago, and is taking place in the United States as I write, would quite likely conflict with the Trade Disputes Act of 1927, one of the consequences of the extensive and dramatic but short-lived General Strike of 1926. Among other things this law forbids sympathetic strikes—a prohibition born of the fact that the general strike was called in sympathy with the coal miners. The unions and the British Labor Party denounce this law at every convention and in every election campaign, but the leaders have shown no great ardor or energy in attempting to change it, not even when a Labor Government was in office. If, last May, the men on the subways and tram lines in London had gone out in support of their fellow-unionists the busmen, the government might have held that strike in conflict with the Act of 1927. Such a ruling was not certain. Everything would have depended on the interpretation of the clause which confines a legal strike to those within the same trade or industry. If the coal miners or textile workers had struck in sympathy with the busmen, it would have been clearly illegal; but are the subway workers, who had their own separate agreement, to be regarded as within the same trade or industry as the busmen? It was a point which Mr. Bevin preferred to avoid, pinning his hopes, as we have seen, on whatever redress of grievances might come out of further investigation.
Sympathetic strikes or political strikes are not the only ones that are illegal in Great Britain. British law imposes many restrictions on strikes, some of them without an equivalent in our American laws. Dean Dinwoodey, editor of the United States Law Week, summarizes them in the New York Times of July 25, 1937, as follows: "The British law places restrictions upon membership of civil service in labor organization; restricts striking by employees of certain classes of public utilities; makes illegal any strike if it has any object other than the furtherance of a trade dispute within the trade or industry in which the strikers are engaged and is designed to coerce the Government. It limits the scope of picketing, and makes it a criminal offense for a person to break his contract of employment where he knows, or should know, that such action will probably endanger human life or cause serious bodily injury or serious damage." The law also specifically forbids attempts to intimidate satisfied workers into joining a strike. Penalties are provided against both individuals and unions which may violate the provisions of the law.
The employing classes in Great Britain seem content with the law as it stands. There is no echo there of the American demand for incorporation. However, employers' associations and most unions are alike registered with the government and make yearly financial reports of revenues and expenditures. In this connection the subcommittee on labor unions of the City Club of New York points out in a recent study: "The filing of these reports seems to be a mere formality, and the published reports of the Registrar show only reports by national unions of a very general nature." A later section of the discussion adds the following observations: "The labor union is not hostile to incorporation; it is hostile only to the implication and possible consequences of a compulsory requirement. In several European countries, such as England, France, and Belgium, statutes confer upon labor unions rights to which they would otherwise not be entitled, provided they undergo what may be roughly compared to incorporation." Of this the British registration is an example. There is no provision in British law compelling unions to live up to their agreements, but the unions have a long record for keeping them. There has been little or no occasion even to ask for legislation to protect the workers themselves from racketeering in their own unions. Racketeering seems to be an American problem born of American conditions and not of trade union theory or practice.
A few words regarding French procedure may now be in order.
Until 1936 the French workers, like their brethren in America, were less well organized than those in Great Britain. The Socialist and Communist Parties in France were strong, but they were not organized, as in Great Britain, primarily by the labor unions as such. From 1892 on there had been some rudimentary machinery of conciliation and arbitration administered on behalf of the state, principally by local judges. The year 1936 saw an amazing change. Politically it saw the triumph of the Popular Front in which the workers were the most important factor. When the Blum Cabinet took office it found itself confronted with widespread sit-down strikes and with a labor union organization in which newly enlisted rank-and-file members were taking things into their own hands. The Government allayed this unrest by a series of social laws setting up the forty-hour week, holidays with pay, collective bargaining, etc. M. Blum supplemented these general laws by personal intervention with the growing C.G.T. (Confédération Générale du Travail) and with the employers' association, the C.G.P.F. (Confédération Générale du Patronat Français). His government did not use force, though it finally indicated that its self-restraint might not last forever. It received the help of the Socialist and Communist leaders and of the C.G.T. in ending the strikes and bringing about comparative industrial peace.
In its first months the Blum Government was too hard pressed with immediate emergencies to try to pass a general law of conciliation and arbitration. However, through a paragraph inserted in the Monetary Law it gained temporary power to set up such machinery by decrees of the Council of State. Finally, toward the end of 1936, it introduced a bill which after a sharp fight it managed to drive through a reluctant Senate—but only after the Chamber had conceded a number of changes, including one eliminating agriculture from the scope of the bill. The law requires every collective dispute in industry and commerce to be submitted to conciliation and arbitration before a strike or lockout is declared. Each side chooses an arbitrator; if necessary a third person, as umpire, is chosen from among the "active or retired members of the principal services of the state." There is no sanction to enforce the decision of the arbitrators except public opinion. Since the state imposes no penalties for refusal to accept the decision, "compulsory arbitration" in France means something much less than the words suggest to us in English-speaking countries. It is more nearly analagous to the compulsion under which certain industrial disputes in both England and America must, by law or custom or both, be referred to a tribunal of inquiry or a commission of mediation—as, for example, disputes involving railway labor in America.
The law was approved rather more heartily by the spokesmen of the C.G.T. (which in the space of about a year had grown from one and a half to five million members) than by the leaders of the C.G.P.F. The Blum Government's own defense of the law ends on a rather modest note of hope that it will work well enough to lead to the elaboration of a better law on a broader and more durable base. Certainly it has not laid any sure bases of industrial peace in France. The economic issues go too deep to be settled piecemeal by conciliation or arbitration in particular industrial disputes. But the law has nevertheless been a factor in the relative success of the Popular Front Government in maintaining, during the last six months, an uneasy and precarious industrial peace.
It has been the primary purpose of this article to record certain facts concerning British and French experience in efforts to maintain industrial peace. The reader can draw his own moral. Indeed, he will draw his own moral without too much regard for the deductions of the author! Yet I may be permitted to sum up my own conclusions briefly as follows:
The long experience of Great Britain, and the shorter experience of the Scandinavian countries and France, show that there is no panacea for industrial unrest in our capitalist society. However, recognition of the right of the workers to organize their own unions, and to bargain collectively through them, has not only diminished the number of conflicts but the bitterness of those that nevertheless occur. Democracy within the unions and their own recognition of their social responsibility are primarily achievements of the workers themselves. Legislation has played only a minor part. The state has been able to accomplish something in the rôle of peacemaker through setting up a machinery of inquiry, conciliation, and voluntary arbitration. Experiments in compulsory arbitration where the verdicts of tribunals have been enforced by law have not been successful; in Great Britain, indeed, such attempts tended, even under wartime conditions, to increase the resentment of the workers. The more recent efforts of the British Government to declare certain types of strikes illegal have not yet been subjected to the test of such an upsurge of labor organization and struggle for better conditions as has taken place in France and the United States. We have, therefore, no adequate evidence whether the limitations imposed by the British Trade Disputes Act of 1927 will in times of emergency keep the peace or tend to do the very thing which it was designed to prevent, that is, convert a great strike into a struggle against the government. Certainly it is at least in order to advise Americans who are tempted to copy or go beyond the British limitations on the right to strike to take this possibility into account before rushing into a series of prohibitions designed to maintain industrial peace by the police power of the state.