Adjustment of Differences.

As an executive department devoted to the just interests of wage earners, the Department of Labor has been guided in all its activities. by recognition of the historical fact declared in its first annual report,18 that its establishment was demanded by the logic of industrial progress.

Organization begetting further organization, the relation of employer and wage earner has come to be no longer personal or individual. It is usually a relationship between groups of employers on one side (such as corporation stockholders) and groups of workmen on the other. Employers act collectively through their own chosen agents-corporation managers, factory or mine superintendents or foremen, labor brokers, or the like—who, in hiring laborers, represent collective or federated business interests.

This method of employment, generally necessary for success in modern industry, gives to employers great contractual advantages over wage earners. Unless wage earners also act together they are manifestly at such a practical disadvantage as seriously to menace their industrial interests and their social welfare. Yet employers who themselves act collectively are often averse to dealing collectively with wageworkers. It is over this point that labor disputes frequently spring up and become bitter. That was the question on which a majority of the employer group, although a small minority of the whole, overruled the labor group and the public group at the President's Industrial Conference of 1919, thereby preventing that unanimity of the three groups which the rules of the conference imposed as a condition of agreement.19

In most instances in which employers accord to workmen practical recognition of the right of collective bargaining which they themselves exercise, fair relations are maintained. But in any circumstances, however honest, differences may arise. Then it is that the Department of Labor, through public agents experienced in controversies of like character, can probably find, as it often has found, common grounds for agreement which the disputants, in their eagerness for advantage or in the heat of controversy, have overlooked. From growing experience and accumulated knowledge and skill the Department of Labor has learned how, even in the more difficult cases, to appeal with pacifying and prosperity-promoting effect to the good citizenship and the sane self-interest of both parties. Though no common grounds for compromise be discovered, the Department may stimulate, as it often has stimulated, a conciliatory spirit on each side sufficient to bring the two sides, each none the less convinced, perhaps,

18 Department Reports of 1913, pp. 68-69. 19 Department Reports of 1919, pp. 18-26.

of the righteousness of its own cause, to a manly agreement to submit their unreconciled differences to fair arbitration and to mutual and uncoerced acceptance of awards.

In any of three ways, the welfare of wage earners can be fostered while the prosperity of employers and the peace and good order of society at large are conserved. First of these in order of preference are adjustments by collective bargaining. Next comes mediation. Arbitration is the third and final resort short of industrial warfare. Throughout nearly eight years of responsible experience with labor disputes, this Department has demonstrated that, wide apart as differences may be at the start, they can be settled to the profit of all interests whenever both sides are fairly disposed. Those demonstrations have been made under greater embarrassments than the Department need be hampered with as conciliatory dispositions grow among conflicting industrial groups and Congress awakens to the importance of promoting industrial peace. Cordially supported by Congress, this Department should be able to make industrial mediation (which spells industrial peace) universally popular with both the employing and the wage-earning interests of the country. Thus far, organized wageworking interests have as a rule accepted it, whereas organized employing interests have as a rule opposed it.

Collective Bargaining.

Difficulties of adjustment are of course greatly increased if either. party refuses to bargain collectively. In this connection it is not uncommon for organized employers to overlook a controlling principle. They urge the enforcement, against labor organizations, of collective bargains by law. But collective bargains are not of a kind that can be so enforced fairly.

A moment's consideration will make the reason plain. If in collective bargaining the representatives of the wageworkers agreed to supply certain workmen on certain terms, and the representatives of the employers concerned, agreed to give steady employment to those or that number of workmen on such terms, the contract might fairly be subject to legal enforcement. For then it would impose an obligation upon both sides.

But there is no such mutuality in collective bargains between employers and labor organizations. The employer does not and can not agree to give steady employment to all the wage earners concerned, nor to any specified number. He only agrees to certain terms if he does employ, and to the extent that he employs. Fully to appreciate the point one need but imagine a sales bargain between. a dealer and a manufacturer for the supply by the latter and pur

chase by the former of certain goods at certain prices. This would be a fairly enforceable contract, because each party could be held to account for a breach. But if the dealer engaged to pay a certain price only if and for what he might actually buy in the future at his own discretion there would be no mutuality of obligation. To enforce performance by the manufacturer, since he could not enforce correlative performance by the dealer, would then be unfair. A like principle of fairness applies to collective bargaining between employers and wage earners.

Employers do not agree to employ a certain number of laborers for a certain period at certain wages. All they agree to do, and all that collective bargaining requires of them, is to pay certain wages for certain work to the wageworkers whom they at their own discretion actually employ. Consequently the wageworkers who are included in such a bargain could have no legal claim, either as groups or as individuals, except as they were actually employed by the other party to the bargain and at his discretion. Were he to quit employing, he would quit paying wages without breaking any legal obligation under his contract. But if they were to quit working, they would not only lose their wages but they would be legally guilty of a breach of their contract. There would be no fairness in making such contracts enforceable at law.

Collective bargains are in the nature of "gentlemen's agreements," in contradistinction to legally enforceable contracts. They are made in good faith by both parties, under the circumstances of the time and upon an implied understanding that these circumstances will not change to the serious detriment of either side. They are not to be broken lightly; but when industrial circumstances alter, so that their enforcement would place either side in an unexpected plight whereby the other would unexpectedly profit, they should not be enforceable beyond the point at which the side thus prejudiced is willing, acting in good faith, to have them enforced. Were they legally enforceable the employing side would be free, in a contingency prejudicial to that side, to ignore its contract with impunity by restricting or stopping output as unprofitable; yet if the contingency were prejudicial to the wage earners, they could not quit work with-. out subjecting themselves to penalties of the law for a breach.

To permit collective bargains to be legally enforceable, would be to discourage the making of them; to leave their fulfillment to the good sense and good faith of each side, would encourage their making and thereby promote industrial peace.20

20 See report of Industrial Conference called by the President, Part IV, subd. 2, in the appendix.

WAR-TIME ACTIVITIES.

Upon the severance of diplomatic relations between our Government and that of Germany, February 3, 1917, this Department began to adapt itself to war service. Modern warfare is no longer a mere military undertaking. Although battle courage and military skill are as necessary as ever to achieve military victories, wars are fought not only between armed men but also between the factories, the workshops, and the mines of contending nations. Consequently, warfare efficiency is dependent as well upon man power in industry as upon man power on the battle field. It follows that a central labor administration and a consistent labor policy were of the utmost importance to this country in its recent conflict. If at the beginning of the war the Department of Labor had not existed, Congress would have been obliged to create such a Department.

Departmental work had been so adapted to the new currents of industrial activities at the time when war was formally declared, April 6, 1917, as to enable the Department to assist other branches of the Government, and contractors under them, with efficiency and effect. Some of its war activities were distributed among its bureaus; others were pursued in the Office of the Secretary. They continued unabated and with increasing expansion and efficiency until after the armistice.21

The President's Mediation Commission.

Not long after the United States entered the war the President found it necessary to appoint for war purposes an industrial mediation commission, from the investigations of which there evolved a large extension of the Department of Labor's functions and numerous additions to the number of its subdivisions for their administration. This commission was known as the President's Mediation Commission. Appointed in the summer of 1917, it reported in January, 1918. The necessity for its appointment arose out of labor controversies in the Southwest and Northwest which had seriously checked the output of such war materials as copper, lumber, and oil. Since those controversies were apparently due to general causes, the commission was authorized to investigate, in its discretion, and to make such specific adjustments as might be required. The President designated the Secretary of Labor as chairman of this commission. After several months of constant investigation in the copper districts of Arizona, the oil fields of California, the Northwest timber districts, and other sections where industry had been disturbed by

1 Department Reports, 1917, pp. 9-51, 67-82, 88-94; 1918, pp. 11-148, 169–174. 182-188, 191-194, 199–200, 201-219; 1919, pp. 11-209, 235-236, 255, 275, 276-285.

labor unrest, including Chicago, where a strike in the meat-packing establishments was threatened, the commission transmitted to the President a report which summed up its work in a concise description of the causes of labor difficulties in the United States.22 This report concluded with the following recommendations:

The causes of unrest suggest their own means of correction:

1. The elimination to the utmost practical extent of all profiteering during the period of the war is a prerequisite to the best morale in industry.

2. Modern large-scale industry has effectually destroyed the personal relation between employer and employee-the knowledge and cooperation that come from personal contact. It is therefore no longer possible to conduct industry by dealing with employees as individuals. Some form of collective relationship between management and men is indispensable. The recognition of this principle by the Government should form an accepted part of the labor policy of the Nation.

3. Law, in business as elsewhere, depends for its vitality upon steady enforcement. Instead of waiting for adjustment after grievances come to the surface there is needed the establishment of continuous administrative machinery for the orderly disposition of industrial issues and the avoidance of an atmosphere of contention and the waste of disturbances.

4. The eight-hour day is an established policy of the country; experience has proved justification of the principle also in war times. Provision must of course be made for longer hours in case of emergencies. Labor will readily meet this requirement if its misuse is guarded against by appropriate overtime pay

ments.

5. Unified direction of the labor administration of the United States for the period of the war should be established. At present there is an unrelated number of separate committees, boards, agencies, and departments having fragmentary and conflicting jurisdiction over the labor problems raised by the war. A single-headed administration is needed, with full power to determine and establish the necessary administrative structure.

6. When assured of sound labor conditions and effective means for the just redress of grievances that may arise, labor in its turn should surrender all practices which tend to restrict maximum efficiency.

7. Uncorrected evils are the greatest provocative to extremist propaganda, and their correction in itself would be the best counter-propaganda. But there is need for more affirmative education. There has been too little publicity of an educative sort in regard to labor's relation to the war. The purposes of the Government and the methods by which it is pursuing them should be brought home to the fuller understanding of labor. Labor has most at stake in this war, and it will eagerly devote its all if only it be treated with confidence and understanding, subject to neither indulgence nor neglect, but dealt with as a part of the citizenship of the State.

The Advisory Council.

Partly as a result of the investigations and conclusions of the President's Mediation Commission and partly in consequence of proposals from other sources, the Secretary of Labor early in 1918 organized an Advisory Council composed of men and women repre