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orderly progress in solving specific problems, for the protection of all public interests, including those of consumers, workers, and investors, and the elimination of all special privilege and antisocial conditions as rapidly as they can be identified and unmasked, for the improvement of quality, the stabilizing and lowering of prices, the stabilizing of markets, the protection of life and of the standard of life of the workers and their families.
The United Mine Workers might very naturally feel that such a voluntary committee is superfluous. I would rejoice if the miners' union could and would undertake this task and make any new organization superfluous. It is a very great organization. It has had, and has, able leadership, loyal membership, and notable achievement to its credit. The commission says in its report that the potent agency for the last thirty years in the increase of wages, the decrease of hours, and the improvement of working conditions has been the United Mine Workers of America.
In various non-union fields the coal companies have organized their employees for consultation and for cooperation in certain matters, but such organizations do not, of course, give the miners equality of bargaining power, solidarity of action with comrades in other coal mines, or such security, independence, and self-respect as are associated with membership in a strong union.
In my opinion neither the coal industry nor the public gains from the division of the soft-coal industry into union and non-union fields. The non-union operators have an illegitimate and antisocial advantage. The union mines are operating under the Jacksonville Agreement of 1924, which has now less than a year to run. This agreement fixes a relatively high day-rate for men paid by the day: $7.50 a day as the minimum for underground work. That is much higher than is paid day men, or "company men," as they are generally called, in nonunion mines. Under the operation of the Jacksonville Agreement, the union mines, with their higher labor costs, have lost ground to their non-union competitors, where they have not, by some evasion or subterfuge, slipped out from an honorable performance of their contract and become non-union themselves.
Large non-union producers, especially in West Virginia, have the great initial advantage of superior grades of coal. Now they have the additional advantage of lower labor costs and, especially, the quick practical advantage of being able to reduce the wage scale suddenly, more or less arbitrarily, as often as they like, subject of course to the limitation of the labor supply. They have the handicap, on the other hand, of having to send their product on a long and expensive journey to the industrial markets, but this has been offset to some extent by differential freight rates in their favor.
As a result of rapid and large-scale shifting of production from union to nonunion fields, there are today idle or part-time operations and idle miners in the great central competitive fields of Illinois, Indiana, Ohio, and western Pennsylvania, while coal in large quantities flows past them from below the Ohio River
and from across the Allegheny Mountains to their former markets in Chicago, eastward to Buffalo, and westward to the Twin Cities and the Dakotas.
Freight rates are among the social aspects of the coal industry. The coal commission recommended that the Interstate Commerce Commission should undertake, on its own initiative, a thoroughgoing revision, starting with a clearly formulated principle, such as we cannot be said to have at present; but it is the other social aspect, the union versus non-union controversy, which is splitting the soft-coal industry wide open, engendering daily new bitterness, and all over the perfectly childish question as to whether the miners shall bargain collectively with their employers in regard to hours and wages and working conditions or whether each miner shall be individually at the mercy of whatever rates and regulations the mine may post. I hold the right of collective bargaining to be elementary, including the right of the miners to be represented by a union, with national or international membership. The entire anthracite industry is unionized, and there is no doubt that it is better so. The entire British coal industry is unionized, and no doubt it is better so. Suspensions occur, but when an agreement is reached, it equalizes labor costs and both operators and miners know what they can count on. The railroads of the United States are unionized in brotherhoods, and there is no doubt that this is to the advantage of the engineers, firemen, conductors, and other railroad men, to the advantage of the railroad management, and to the advantage of the public.
As to the bituminous coal industry, the curious idea has somehow gained currency that when there is a wage controversy the country is saved by the existence of non-union mines which continue to operate. This fact, of course, weakens the miners in such a struggle. It is apt to prolong the struggle. It is apt to lead to violence, to bloodshed, to armed intervention. It lowers the plane of the controversy. Since there are operators who are outside the Agreement, bound by no such obligations as are written into wage contracts, free to snatch orders and contracts from buyers at the time when their competitors, the union operators, are embarrassed by having to consider the demands of their workers, the general level tends naturally to sink to whatever level of hours and wages these free-lance operators may be able to set. The process is analogous to what occurs in other fields. Professor Farnam has recently reminded us of the analogy of Gresham's law: that bad money will always drive out good money when both are legal tender. You keep the more valuable coin and pay your debts with the chipped or worn or less valuable coin. Just so in industry the exploiting employer, the manufacturer of shoddy or adulterated or sweated goods, if he is allowed to operate, will either drive out his more honorable competitors or drag their practices down to his own level. In a historic paper before one of the earliest sessions of the American Economic Association, Professor Henry Carter Adams demonstrated that regulatory laws do not destroy competition, but merely fix the level below which competition shall not take place.
Now the non-union coal competition in Alabama, Colorado, West Virginia,
and other states is on too low a level. That is what I mean by illegitimate. The United Mine Workers deserve the moral support of the nation-bear in mind I am not predicting that they will get it-in demanding that the plane of competition be raised by the extension of union contracts, the introduction of union conditions throughout the entire industry. The miners of the United States are entitled, in my opinion, to the same sort of moral support and encouragement from the federal and from the state governments in this paramount issue as the miners and the trade-unions of England are receiving from the Baldwin government.
A MINORITY REPORT ON THE BITUMINOUS
Warren S. Blauvelt, Terre Haute, Indiana
It is, of course, impossible in a brief discussion to deal exhaustively with the present social aspects of the coal industry. In view of the thousands of pages of documentary evidence collected by the coal commission, the recommendations of the commission, and the books which have recently been published dealing with the question it may be a little presumptuous for a mere coal operator to take up your time in giving his views. What I have to say is the result of several years' study of the various problems of the bituminous coal industry, combined with the experience obtained as chief executive for about a year of a small mining company in a non-union field, and four years' experience in a similar capacity in the union field. In no sense am I expressing the opinions of coal operators generally. Both mind and temperament place me inevitably in the minority. I never could understand why the other eleven jurors were so utterly unable to weigh evidence and arrive at the obviously correct verdict. But in one case, on a trial jury more than thirty years ago, the other eleven jurors finally expressed their surprise that their opinions when first they entered the juryroom were so completely mistaken, and the verdict finally rendered was entirely in accord with the evidence and the law. For thirty-three years I have been hoping that this experience might be repeated in some case of real importance, but never since that date have I found the other eleven jurors amenable to reason. The bituminous coal industry of this country is overdeveloped; we have mines developed, equipped after a fashion, and nearly fully manned, with a total productive capacity, if operated 300 days each year, 50 to 80 per cent in excess of the country's requirements. This overdevelopment causes enormous wastes of man-power, of capital investment, and of the natural resource, and, as in all other cases of needless waste, society as a whole must suffer and the bill has to be paid, though part of the payment may be deferred to future generations, even as a considerable part of the waste involved in the Great War will be paid for by our great-grandchildren.
But notwithstanding these wastes, the bituminous coal industry probably
compares fairly well with all other basic industries of the country. Stuart Chase, in that extremely stimulating, interesting, but grossly misleading book, "The Tragedy of Waste," gives the overdevelopment of important industries as follows: automobile manufacturing (after 1926), 10 per cent excess capacity; steel industry, 70 per cent; copper smelters, 100 per cent; copper wire, copper and brass rolling mills, 300 per cent; zinc industry, 100 per cent; sulphur, 100 per cent; lumber, 215 per cent; shoes, 80 per cent; printing, 50 per cent to 150 per cent; linseed oil, 200 per cent; sugar, 100 per cent; clothing, 31 to 86 per cent.
From this comparison it is natural for coal operators to ask, "Why pick on us?" As a coal operator I am rather glad that the coal industry is "picked on," for within the industry the comparison should not be made with other industries, but with an attainable standard in our own industry; and criticism stimulates improvement. The coal industry, however, like all of these other industries which are overdeveloped and which run irregularly, is the victim of a politicoeconomic environment which has been established without any regard whatever to natural economic laws.
The numerous physicians who are prescribing remedies, whether volunteers, government officials, politicians, labor leaders, journalists, or social reformers, are all offering prescriptions intended to ameliorate conditions, but which are doomed to ultimate failure because they disregard the ultimate causes of the disease and the natural law of human conduct that men always strive to satisfy their desires by the method which appears to them least repugnant. In handling the coal problem up to the present time, reformers, politicians, and the American public are running true to form. They show a marvelously credulous confidence in the efficacy of statutes backed up by the police power of government.
The one unmistakably proper function of government is to establish justice, which in economics might be interpreted as equality of opportunity. This is the one function of government which has been disregarded to such an extent that in the great mass of legislation affecting industry the general effect has been to establish inequality of opportunity, to penalize thrift, industry, and enterprise, to curtail the efficient performance of the service functions generally, and to multiply the hazards of productive enterprises. On the other hand, economic legislation generally has tended to increase the rewards of antisocial activities and to safeguard parasitic incomes—that is, incomes obtained from society without rendering to society equivalent service, either in labor of brain or brawn, or in what is equally important, the assumption of risk by capital in industry, in commerce, or in the other service functions upon which our present civilization depends.
We are constantly attempting to use the political means of solving our economic and social problems; we neglect the economic means. In social relations we constantly act like the crazy inventor who could achieve success with his invention only by the alteration or abrogation of the law of gravity, V2=2GH.
The use of the economic rather than the political method in solving a prob
lem may be illustrated by an actual occurrence during the war. In the fall and early winter of 1917, owing to inadequate transportation facilities, the movement of coke from producing centers to industries engaged in war work was insufficient to meet the demand. There were between seven and eight thousand foundries and minor industries 'engaged in war work which required coke. There were also possibly some 350 blast furnaces whose operation depended upon their supply of coke. The foundries needed only about 10 per cent of the total product, while the blast furnaces required possibly 85 per cent. But the foundry supply was the more immediately important. The political method was to use the police power of government to compel the movement of the required coke to foundries, but the problem of getting coke of the particular quality required to each of the seven or eight thousand industries when and as needed was as far beyond the immediate police power to accomplish as the measurement of the wave-length of ultra-violet rays is beyond the power of the sweet girl graduate of the grammar school. The Fuel Administration employed the economic means; it permitted a slightly higher profit per ton on foundry coke moved to foundries than on blast furnace coke or coke moved to blast furnaces, with the natural result that foundries got coke of the quality required, when and as needed, without any compulsion and at far less cost than the expense of policing the movement of all coke, which would have been disastrous to the production schedule of the war industries.
The ills of the bituminous coal industry could and would be remedied in a comparatively few years if the economic method rather than the political method were employed, but any such consummation is utterly unattainable in a society so avid as ours to purchase quack remedies and so unwilling to act in harmony with natural laws. But notwithstanding the comparative hopelessness of the situation, it may be a matter of academic interest to consider the possibilities.
Desire is the sole force leading men to action. The law of this force, as previously stated, is that men attempt to satisfy desire by the method which appears least repugnant. If we wish to increase efficiency and economy in the performance of the service functions of the coal industry, namely, the production, the transportation, and the distribution of coal, and wish to abate those activities connected with the coal industry which promote waste, we should alter the economic environment of the industry in such ways as would reduce the hazards connected with the performance of the service functions, and would tend to increase the rewards for their efficient performance, but would tend to increase the risks and reduce the rewards which may now be obtained by the efficient performance of antisocial activities which promote waste and increase cost, thus producing socially evil consequences of unmeasured magnitude.
In approaching the problem from this angle it is highly important that we should cease to think in terms of persons, whether natural or artificial, and should think only in terms of functions, keeping clearly in mind the difference between the service functions in the industry and its antisocial or parasitic func