THE COMING INDUSTRIAL DEMOCRACY

VICTOR S. YARROS

Chicago School of Civics and Philanthropy

In a paper entitled "Representation and Leadership in Democracy," in the November (1917) issue of this Journal, the present writer incidentally touched upon the momentous question of industrial democracy versus industrial autocracy or industrial oligarchy. The only point made in that connection was this, that certain questions that are often treated as purely political-such, for example, as the question of making representative government truly and fully representative, or of giving the masses of toilers the weight and influence in government to which their numbers and importance entitle them-are really at bottom social and economic questions, since a degraded, morally corrupt, and ignorant class cannot be expected to value integrity, intelligence, and fidelity in elected representatives of the people, or to know how to utilize democratic election machinery to their actual and ultimate benefit. In other words, the point was that economic and social injustice sooner or later reduces political democracy to a hollow mockery and empty form, and that in order to eradicate such notorious evils as corrupt control of legislation, class legislation, insidious bribery, spoils politics, and waste of public assets, we must gradually remove certain kinds of economic injustice.

That paper brought the writer a spirited letter of admonition and comment from an alert, keen, and thoughtful employer of labor who is not an apologist for the present social economic order, but who yet fears that vague talk about industrial democracy may cause more harm than good. The letter is doubtless typical and symptomatic; many employers who would energetically protest against any reflection on their liberalism and progressivism undoubtedly share the sentiments so candidly expressed therein. So do many influential editors. We have permission to reproduce

the letter in its entirety, while the opportunity of considering and meeting the points it raises is most welcome.

The letter is as follows:

With interest I have read your article on "Representation and Leadership in Democracies" and think that you have stated a number of pertinent truths well.

I am a manufacturer and take exception to your statements regarding the democratization of industry, not that this is not desirable, but I believe you and your friends, who for years have been talking about these matters, are on a very dangerous subject that will complicate matters very seriously in the future.

As I wrote Mr. Lyman Abbott years ago, if you want to democratize labor, why do you not start right in your own family, making the cook, treasurer, and the butler, secretary, and submit all questions of matters pertaining to the household to this council. If you first make a success of this, no doubt the industries will follow.

Success in business is at all times dependent on "eternal vigilance." You have to buy and sell at the right time and produce your material of the right grade and at the right price. It takes practically a genius in these lines to be a successful leader and without that a business goes to smash.

While from the theoretical point, it undoubtedly would be lovely to have a set of artisans that are clever, industrious, honest, and capable of giving counsel, and submit the whole matter to them-of course under able leadership from above-yet under present conditions, the results would not be any better than those achieved from the low-grade wards, unless you could pick out an especially efficient, sober, and industrious class of workmen, much above the average. This, of course, is impossible to do as a general rule, as you must employ the average run of laborers offered.

Talking about business over-charging and so on, is, of course, not altogether nonsense, but the business cannot exist on a margin of 5 per cent profit. Now, just before the war, we built a new plant that was intended to work up rock imported from Germany. This plant was hardly in good working order before the importations were stopped-fifteen or twenty thousand dollars thrown into the gutter. Next we had to buy mines down in Georgia and start producing material there. We were very fortunate in getting a good deposit, but now the ore is pinching and from all indications, we will have to move all of our machinery, etc., to Tennessee and there build railroads, etc., to handle this proposition. As far as I can see, we will have to make an investment of about seventy-five thousand dollars, and we will never know the quantity or quality of this ore, until we are through working it. These are just minor things that just come up, and come up every day.

Supposing we had a system of democratized industry with minimum wages, minimum hours, and maximum leisure, and we at the same time had to

compete, not alone in the home market with other manufacturers, but with the foreign market for of course, we have to have free trade, fraternity, and equality the world around—and the Germans with their abundance of natural raw material in our line and expert chemists and low wages, are very formidable competitors, and what about the Japs coming in and the Chinese with a daily wage of ten cents? I think the difficulties before us will be enough as it is without getting us into a fix that democratized industry would unquestionably lead us to.

This is a beautiful thought, but if this dream shall be realized, we must stop the emigration of all but the highest grade of people and few of them. We must improve our home stock, doing away with the large increase that under present conditions is produced by our low-grade people.

Now, all of these advices, I admit are pretty hard to follow, but believe me, they must be considered before you can introduce "democratized industry." While it may be a very good catch word on the platforms for Progressive leaders, Socialists, and anarchists-I do not use these words to designate low-grade people, but the theorists and individuals who really hope to improve the conditions of humanity-all of these things are goals that we may try to reach in some distant future, but they are not within the practical reach of society today. Kindly excuse my writing on this subject to you, but the fact is that these matters are of very great importance and it is of very great importance, too, that our leaders treat them seriously; and it is in the hopes of gaining a new convert for the sane treatment of social improvement with special reference to democratized industries, that I am writing you.

Respectfully yours,

S. H. KREBS

P.S.-It may interest you to know that I, myself, thirty-five years ago was a Scandinavian emigrant, landing on these shores without means and without any pull whatever, managing to rise, I suppose, to what you might call the top of the heap. I am president and principal stockholder of the Krebs Pigment & Chemical Co.

Before attempting to answer this stimulating communication, it is perhaps not impertinent to point out that some employers of labor, captains of industry, capitalists, or men of big affairswhatever we may call them-have latterly spoken or written in a very different tone. Mr. Charles M. Schwab, the head of the greatest steel plant in the world, created an international sensation by telling a school alumni audience that a new social order is coming; that "this social order may mean great hardship to those who control property, but perhaps in the end it will work for the good of us all." "The man who labors with his hands, who does not possess property," continued Mr. Schwab, "is the one who is going

to dominate the affairs of this world." And he concluded with the more reassuring reflection that the transformation of the social and economic order "will be so gradual that we will hardly realize that it has occurred."

Now, Mr. Schwab is neither a sentimentalist nor an academic, doctrinaire radical. He does not wish to give away his wealth, he frankly says, nor to surrender his economic power. He merely perceives that certain changes are inevitable, and, indeed, already taking place, and he feels that it is his duty, or the part of sagacity and common sense, at any rate, not angrily and passionately to oppose, but to meet, instruct, and discuss matters with those who are more radical, or less fortunate, or less rational than himself.

But is Mr. Schwab a good prophet? Is he able to see things as they are? Well, the familiar tendencies and developments of our day would seem to answer these questions beyond peradventure. Mr. Schwab speaks of Socialism, of Russian Bolshevism-which is merely intransigeant and international socialism temporarily in the saddle of Syndicalism, of the growing influence of labor unions and other radical forces. He has heard of the Non-Partisan League. He knows what the Labor party has achieved in England, in Australia, in New Zealand, in the United States even, where it is not as yet acting independently in national or state politics, but only applying pressure to the great historic parties and forcing them to make concessions in various directions and just beginning to make itself felt in municipal politics.

Can any sober-minded, studious observer assert that all these signs and portents signify little, and that the practical, hard-headed man of affairs, the "realist" in business or government, may calmly ignore them or treat them as of no consequence? Can any thoughtful person who is at all conversant with political and industrial history, or with the doctrine and facts of evolution, assert that the existing social order is immutable and attack-proof?

Hardly. Of course, the shallow, the ignorant, the intellectually indolent and the narrowly selfish, who think only of the present, may be left out of consideration. Profitable argument is possible only with the earnest, the open-minded, the intelligent, conservatives, and beneficiaries of the present régime.

Among these, no doubt, there are many who think that the present order is sound and just in the main, and that only certain so-called progressive-conservative reforms are either desirable or possible. Does Mr. Krebs belong to this category? Is he of the opinion that no radical reforms, such as are implied in or suggested by the vague phrase "industrial democracy," are necessary or practicable? Is he one of those who think that better elementary and vocational training, industrial insurance, a shorter work-day, and like measures will solve the social problem and do away with the dangers that beset us? Does he think that benevolence and condescension on the part of employers, will satisfy labor? Does he think that strikes, friction, bitterness, class feeling, and the terrific economic waste that attends these phenomena, can be abolished by a few palliatives? How does he propose, if he condemns truly but constructively radical reforms, to combat the destructive, extreme notions that are making headway everywhere? Would he rely on force, on bayonets, martial law, and the machinery of coercion and repression generally? Does he hold that might can permanently suppress right?

We must assume that he believes nothing of the sort, and that the real question with him is, What is right?

Our answer is, righteousness and justice in industry and economic relation generally now mean and enjoin, and will gradually bring about, "industrial democracy." Our answer is, there is no use in preaching, crying, or thundering industrial peace where there is no peace.

And why is there no peace? Because labor feels that it is still largely at the mercy of capital; that it must agitate, threaten, strike, and even riot to obtain the most moderate concessions; that it does not obtain its just share of the total product and never will obtain it under industrial autocracy; that the interests of the employers and the employed, instead of being regarded as identical, are in fact diametrically opposed; that it is no more reasonable to expect economic justice to be handed down from above than it was to expect political justice to be so handed down by an upper class. The masses are now politically enfranchised and have a voice in deciding national and international affairs. They are