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Disputes may be referred to the High Court by state courts, or the President of the High Court may on his own initiative summon the disputants for a compulsory hearing. The emphasis in the law is upon conciliation, with arbitration held in the background as an ultimate means of settlement. Most disputes are settled without resort to the arbitration machinery. Relatively few cases come before the High Court, although these are likely to be the most serious and aggravated cases. Perhaps the chief single principle insisted upon by these agencies is the minimum wage. The lowest grades of labor are guaranteed a minimum living wage, and the higher grades of labor are guaranteed a differential above the minimum.

Whether or not similar legislation would be effective in the United States is a difficult question to settle. There are many differences between Australia and the United States. In Australia, the industrial population is small relative to the agricultural, whereas in the United States the industrial population exceeds the agricultural. Where industrial labor dominates the whole population, the element of compulsion is likely to be difficult to administer. Again, Australia definitely recognizes and encourages labor unions, whereas in the United States, the majority of wage earners are outside of unions, and employers are doing their best to keep them outside. The Australian principle in the United States would necessitate the almost universal unionization of labor. These are strong reasons for doubting the efficacy of the Australian principle in the United States.

However, one agricultural state, Kansas, has experimented with compulsory arbitration. The experiment was conducted in the face of fierce hostility on the part of the unions. Before there could be a full opportunity to test the consequences of the experiment, the law was declared unconstitutional. The Supreme Court of the United States declared in 1925 that, "Such a system infringes the liberty of contract and rights of property guaranteed by the due process of law clause of the Fourteenth Amendment." This decision does not necessarily mean that the Court would declare unconstitutional a law of compulsory arbitration applying to railroads, but it does indicate the probable unconstitutionality of such a law. The Kansas experiment holds out no hope of further application of the principle of compulsion in the United States.

A distinction must be drawn between compulsory arbitration and compulsory investigation of disputes. In the former, the award is compulsory. In the latter, hearings and investigations alone are compulsory. The theory is that public opinion will be so strongly behind the report of the board of investigation that labor will be influenced to abide by the report. But there is no legal compulsion to abide by it.

The Canadian system is one of compulsory investigation. According to an Act of 1907, it is illegal to declare a strike or lockout in mines or other public utilities until an official investigation has been conducted. Fines are imposed for strikes or lockouts called prior to such investigation. In practice, the compulsory features of the law have been

minimized. The law has served chiefly to develop agencies of conciliation in industry. Strikes have not been entirely eliminated. Some illegal strikes have occurred in defiance of the law. But on the whole, the law appears to have reduced strikes and to have strengthened the cause of industrial peace.

The nearest approach to an application of the Canadian principle in the United States is the work of the Railway Labor Board, established in 1920. In the original draft of the bill establishing this Board, compulsory arbitration was provided for, but the opposition of labor unions was so intense that compulsory investigation was substituted. The railroads and their workers may by mutual agreement set up Boards of Labor Adjustment to settle all disputes regarding grievances, rules or working conditions. These Voluntary Adjustment Boards are supplemented by a Railroad Labor Board of nine members, composed of three representatives of the employers, the employees, and the public, respectively. The powers of this national board authorize it to investigate any disputes which are not being adequately handled by the voluntarily formed Adjustment Boards. The Railroad Labor Board has exclusive jurisdiction in final settlement of wage questions. The Board relies upon public opinion for the enforcement of its decisions. The compulsory feature is the power of the Board to compel men and management to submit the facts bearing on cases before the Board. Whether employers or employees desire the Board to act or not, the Board nevertheless is under obligation to make an award and give the terms of the award wide enough publicity to create an informed public opinion on the case. A crucial test of the Board occurred in connection with the railroad shopmen's strike of 1922. The pressure of public opinion finally resulted in the calling off of the strike, but the intimidation of labor by the weapon of publicity was bitterly resented. Since that time, the unions have sought to secure the repeal of the law. They are unqualifiedly opposed to the idea of using public opinion as a weapon for the crushing of a strike. A further reason for their opposition is found in the rejection by the Board of the principle of a minimum living wage. During the strike, President Harding recommended that the functions of the Board be transferred to the Interstate Commerce Commission, that its decisions be made binding, and that strikes be definitely prohibited on the railroads. These recommendations were not, however, adopted by Congress. The Board is the target of bitter attacks, and the extent of its future influence is uncertain.

In general, the success of compulsion as a means of settling labor disputes depends upon the stage of development reached by industry. At a stage where unions have to fight for recognition, when the open and closed shop controversy rages, when labor is bitterly hostile to compulsion, it is very doubtful whether compulsion can be carried far. Conciliation and voluntary arbitration are invaluable, but compulsion either on Australian or Canadian lines is of doubtful efficacy. Compulsion is purely relative to a given stage of labor and industrial develop

ment. The stage of industrial development in the United States at the present time offers an almost insurmountable obstacle to extremes of compulsion. However much there may be to offer in defense of compulsion in abstract logic, the determining factors in its use are the prevailing attitudes and conditions in a given country at a given time.

It is not irrelevant to mention here that one of the most potent means of securing industrial peace is stabilizing the value of the dollar. The violent fluctuations in the price level between 1913 and 1923 were the real causes of most of the industrial unrest of that decade. Laborers went on strike to exact wage increases when prices were rising and went on strike to resist wage cuts when prices were falling. Recurrent inflation and deflation entail a heavy burden of friction, misunderstanding, and industrial warfare. Arbitration would never be necessary in the majority of cases if the dance of the price level did not furnish the basis for strife and battle.

Conclusion. The relations between employers and employees are a matter of evolution and growth. They cannot be confined in any form of economic straitjacket. Deliberate effort to improve and control industrial relations is necessary if progress is to be insured. The conquest of a new status of power is one of the primary objectives set up by labor. This demand for status involves policies of representation in industry, of collective bargaining, of constitutional government applied to the workshop.

BIBLIOGRAPHY

ANDREWS, J. B., and COMMONS, J. R., Principles of Labor Legislation.
BERRIDGE, W. A., Cycles of Unemployment in the United States.

BEVERIDGE, W. H., Unemployment.

BOETTIGER, L. A., Employee Welfare Work.

Budish, J. M., and SOULE, G., The New Unionism.

COMMISSION OF INQUIRY, INTERCHURCH WORLD MOVEMENT, Report on the Steel Strike of 1921.

COMMONS, J. R., Industrial Goodwill.

DOUGLAS, P. H., and others, The Worker in Modern Economic Society, Parts 4-7. ELDRIDGE, S., Political Action.

FEIS, H. J., The Settlement of Wage Disputes.

FRANKFURTER, F., The Case for the Shorter Work Day.

HARRISON, S. M., Public Employment Offices.

HENRY, A., Women and the Labor Movement.

HOXIE, R. F., Trade Unionism in the United States.

LESCOHIER, D. D., The Labor Market.

LOWE, B. E., The International Protection of Labor.

MITCHELL, W. C., and others, Business Cycles and Unemployment.

MOTE, C., Industrial Arbitration.

NATIONAL INDUSTRIAL CONFERENCE BOARD, Reports No. 10, 23, 38, Industrial

Arbitration.

PIGOU, A. C., and others, Is Unemployment Inevitable?

ROWNTREE, B. S., The Human Factor in Business.

WATKINS, G. S., Introduction to Study of Labor Problems.

WEBB, SIDNEY and BEATRICE, Industrial Democracy.

History of Trade Unionism.

WOLMAN, LEO, The Growth of American Trade Unionism.

CHAPTER XXIII

INEQUALITIES OF OWNERSHIP AND INCOME

Diffusion of Ownership.-The increase in number of stockholders in various kinds of business from 1918 to 1925 is indicated in the following table: 1

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Of the increase of 2,514,394 stockholders, 338,760 were employees, 864,754 were customers, 1,310,880 were the general public. For all industry, stockholders increased from 4,400,000 in 1900 to about 14,400,000 in 1922.2 In addition to the increase of stockholders, there has been an increase of bondholders which may total more than 2,000,000. One fact seems certain, namely, that a remarkable expansion of stockholding has taken place during the last decade.

However, these figures do not tell us the value of the stock held by the scattered mass of new stockholders. There has occurred a marked increase in numbers of stockholders, but this increase does not reveal the extent to which inequalities of ownership have been moderated. Although statistics are lacking on this point, there is no reason to believe that the mass of petty stockholders own more than a very small fraction of the total corporate property. (Ownership still concentrates in the hands of the few. Five million small stockholders may not own as much stock as five hundred wealthy stockholders. Whether ownership has

p. 33.

1 R. S. Binkerd, Proceedings of the Academy of Political Science, April, 1925, 2 H. T. Warshaw, Quarterly Journal of Economics, Volume 39, pp. 13-39.

actually been diffused is a question which cannot be answered from data of the foregoing type. Certain agencies of publicity use such data to create the impression that decentralization of ownership has taken place, but obviously the kind of data needed would be statistics showing what proportion of the total capital of a corporation is owned by, say, the 5 per cent of largest stockholders.3

The greatest increase in number of stockholders has appeared in the industries classed as public utilities. This fact is not the result of accident but of deliberate policy. Undoubtedly the utilities have felt the necessity of checking the encroachments of public regulation. One check attempted has been by way of making the public the stockholders of the concerns. By giving a stake in the company to employees, customers, and the general public, the utilities can hope to make the public their ally. They can hope to get the public on their side when public service commissions begin to enforce too restrictive rules and regulations. Another motive has been to appease labor. "Every laborer a capitalist” is a slogan frequently heard. The laborer stockholder is assumed to be immune to union agitation, to strike propaganda, to radicalism. He has an ownership stake in the concern, and wants his property safe from labor unrest.

Although these motives of controlling public opinion and labor unrest have been important, we must not overlook a broad element of constructive gain for the stockholding public. As a means of stimulating thrift, encouraging saving, and accumulating capital, democratic ownership is of great benefit to the public. There is a distinct social gain from diffused ownership. From the standpoint of private business, however, this social gain is often an incidental by-product. The main intent is to influence public opinion and labor attitudes, but if the incidental consequence is also sound and good, that is so much added advantage.

In two important fields, the tendency in recent years has been toward decreasing popular ownership. These fields are farms and homes. Herbert Hoover states that "for twenty years the national ratio of owned homes has fallen slowly and slightly, but steadily.”’♦ In 1880, farms operated by owners or part owners were about 75 per cent of the total, but in 1920 there were only about 62 per cent of the total. In these two fields, diffusion of ownership, although of the greatest social importance, is not being attained.

Savings accounts are a good index of popular accumulation. The increase in such accounts from 1918 to 1925 was as follows: 5

3 In 1922, the American Telephone and Telegraph Company offered a new subscription of stock, of which three-fourths was taken up by one-third of the subscribers, ibid., p. 65. After fourteen years of employee ownership, The United States Steel Corporation in 1922 had 94,415 employee subscriptions of stock, amounting to a total of $7,930,860. This total was equal to only about 6 of 1 per cent of the total capitalization of the company. See E. E. Lincoln, Applied Business Finance, p. 279, and R. S. Brookings, Industrial Ownership, p. 92.

4 Proceedings of the Academy of Political Science, April, 1925, p. 49. 5 Ibid., p. 37.

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