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The banker's understanding of human nature in this instance proved sound. He had not misjudged his man. As the profitable advertising grew the newspaper's crusading tendencies diminished.
But some bankers do not hesitate to use other methods. It was apparent in the summer of 1930 that a few leading bankers were in active opposition to the White House conference program of November, 1929, which provided that there should be neither reductions in wages nor demands for higher wages during the depression. These bankers were insisting that wages must be deflated as å means of restoring prosperity.
In the early winter of 1930 Mr. Albert H. Wiggin, chairman of the board of directors of the Chase National Bank, made a public declaration in which he insisted that wages must be reduced. His statement was supported by a similar one from Mr. Rome C. Stephenson, president of the American Bankers Association. Many prominent business men were in active opposition to such a policy, pointing out that their business depended upon the capacity of the people to buy, and that if this buying power was reduced through lowered wages the industrial situation would become worse instead of better. A goodly portion of the public press was giving loyal support to the White House conference program.
One of the Nation's best known publishing houses which issues a number of weekly, biweekly and monthly publications devoted to business, ardently championed the White House program in all of its publications.
In the early months of 1931, Mr. Albert H. Wiggin, chairman of the board of directors of the Chase National Bank, sent for a representative of this publishing house. In a most brusk manner, he desired to know why the publishing house was continuing its support of the no-reduction-in-wage policy, in view of the fact that some of the Nation's leading bankers had made it evident that wages must be reduced as a means of restoring prosperity.
Without any diplomatic beating around the bush, Mr. Wiggin informed the publishing company's representative that their business success depended upon the advertising they secured from business concerns, and added that if they thought it would help their business to advocate a policy, contrary to the one which the bankers were endeavoring to put into effect, it was for the
to go ahead and discover the results,
Very shortly after this interview, there was a meeting of the board of directors of the publishing house in question, and from that day its publications ceased to carry editorials or articles supporting the White House program.
The banker at times may prefer to confine himself to the purely banking business rather than assume responsibility for the business policies of those to whom he loans money, but, as in the case of Ginsberg, the cloak and suit man, the banker in his efforts to protect his loans, becomes enmeshed with the business policies of those who have borrowed.
One of the largest department stores in the eastern part of the country believed it advisable to borrow heavily from its bank. The bank, to protect its loan, insisted upon having a certain control over the department store's expenditures, with this result: After the loan had been made, the store's advertising manager found that before contracting for newspaper display advertisements, it was necessary to secure the banker's consent.
The fact that the banker was endeavoring to protect his loan, did not alter the fact that he was very definitely interfering with the department store's advertising policy. By the wildest stretch of imagination it could not be expected that a banker would have any such knowledge of necessary newspaper advertising as the heads of the department store and their advertising manager.
But the banker's policy prevailed.
Those whose memory is not too short, will recall that Mr. James A. Farrell, president of the United States Steel Corporation, gave vigorous expression to his conviction that to reduce wages was economically a most unsound policy, that it would injure business as well as the wage earners, and also create dangerous social and political problems. It was a courageous as well as a vigorous and intelligent discussion of the subject. But shortly afterwards Mr. Farrell was no longer the corporation's president, and the United States Steel Corporation reduced wages.
If the house of Morgan, which finances the United States Steel Corporation, and Mr. J. Pierpont Morgan, who sits upon its board of directors, were of the same opinion as the chairman of the board of directors of the Chase National Bank, it is not difficult to visualize the conference which followed between Mr. Farrell and Mr. Morgan, and the reversal of Mr. Farrell's wage policy.
When a number of bankers, led by Mr. A. H. Wiggin and Mr. Rome C. Stephenson, in the early winter of 1930 held that wages must be reduced, it probably seemed to them that there was but one industrial program which would protect their interests, and also restore our vanished prosperity. The first step must be to provide that there should be less money in the pay euvelopes.
Whatever soundness there was in their economies, the fact is that to-day our leading bankers are not accepted as exceptionally wise and well informed in the field of economics and business. A proof of their incapacity, and what some charge them with-stupidity--was their policy toward wages during the so-called prosperous years ending in 1929. During this period, while the total volume of manufactured goods was enormously increased, the total amount of wages paid by these manufacturing industries was shrinking.
The fact that a tremendous increase in the value of manufactured products, accompanied by a reduction in pay rolls, was disastrous to the market in which manufacturers must sell, did not seem to impress the bankers.
The result was an economically fatal policy toward wages. The importance of the worker as a producer was emphasized. The vital part in business which the worker plays as a consumer was neglected and ignored.
If the leading bankers had been opposed to a reduction in wages by the railroads, the question would never have arisen. If these bankers, on the other hand, were interested in forcing a reduction, the majority of the railroad companies were unable to withstand the pressure.
The large banker, in the entrenched position he occupies, has, in a most practical and material way, taken part in the development of industrial policy, and the relationship between employers and those working for them. Had tbe great bankers been opposed to the wage-slashing theory as a means of restoring business conditions, the reductions would not have been made, for the bankers controlled the purse strings which determine the credit which would be extended to employers.
This bankers' influence over employment policies constitutes one of the most serious problems which faces business men and wage earners. It is but a few years ago that terms of employment and conditions of labor were determined by the individual employer's attitude and effectiveness of such organization as the employees had developed.
As business, and particularly the manufacturing industries, experienced the changed condition created through the forming of huge corporations, wage negotiations became more difficult, for the general manager or the president's conclusions had to be placed before the board of directors before an agreement could be entered into with employees.
From what had transpired in the last 10 or 15 years, it has become growingly evident that the opinion of the general manager and the board of directors was nct the final authority, but that the banker must give his assent before wage rates are changed or the hours of labor shortened.
One of the reasons why collective bargaining has not made greater progress in our industries is the opposition of the bankers to an industrial condition enabling labor to have a voice which, in any manner, would interfere with the bankers' industrial program.
The serious problems affecting wage earners which developed with the beginning of the century, have not been solved. Unfortunately, some of them have been intensified because of the newer methods of production being applied in industry, and the human dislocations of employment and standards of living which followed.
The depression has created new problems, grave problems, which affect the very foundation of the structure of civilization upon which our American institutions have been erected.
No single group in the industrial, commercial, and financial world, are qualified to determine the conditions under which other groups must function and live. The relationship between the groups should be determined by joint action, rather than by an arbitrary effort by one group to force its will upon the others.
The American method had been to deal with major problems through legislation, or through conferences between those affected. The American tradeunion movement has placed its faith in the methods of negotiation and conciliation. It has favored joint agreements between employers and labor. It has endeavored to prevail upon the captains of industry and finance to meet with labor at the conference table, so that the representatives of the groups more familiar than any one else with their problems, could jointly endeavor to work out a basis of relationship and of understanding which would operate to the benefit of all, and the welfare of the Nation as a whole.
The dominant position which the bankers have occupied for some time, places them in a position where such conferences would be more general if they so desired. It is easily within their power, because of the control they exercise over credit, to prevail upon the captains of industry and commerce to meet with the representatives of labor, for the purpose of jointly considering those questions which must either be decided by law, by conference, or by the independent action of groups to whom conditions have become unbearable.
The presence of bankers as directors in many thousands of manufacturing corporations, would make the conference table instead of the legislative chambers, the place where problems which must be adjusted or become worse, would be considered.
Upon the bankers, more than any other group, rests the responsibility for many of the intolerable industrial and economic conditions which are shaking our national structure to the very center. Some of these industrial conditions as they affect wage earners, are so unjustified and so intolerable that they create social and poltical situations much more dangerous to our American civilization than all of the propaganda carried on by communists and others whose aim is to overthrow American institutions and supplant human liberty and freedom of action by dictatorship, and all that this involves.
If it is asked why we do not suggest a remedy, the answer is that education must precede action, and our present purpose is to present a few facts which may prompt others to carry on further studies of a situation which is creating some of our most serious national and international problems.
The CHAIRMAN. If there are no further questions, let us thank Mr. Frey for his interesting statement and hear the next witness.
STATEMENT OF PHILIP MURRAY, VICE PRESIDENT OF THE
UNITED MINE WORKERS OF AMERICA
The CHAIRMAN. The next witness to be heard this morning is Mr. Philip Murray, vice president of the United Mine Workers of America.
Mr. MURRAY. The Connery bill provides for the limitation of working hours to 30 a week in the case of business undertakings producing commodities for interstate trade.
The idea of a 30-hour week for American industry no doubt appears to many persons as something exceedingly novel, perhaps almost revolutionary. This is so solely because such persons are carrying over into the changed world which now confronts us, the beliefs and conceptions of an earlier, more primitive epoch, and are blind to the industrial forces which have been at work during recent years, particularly during the past decade.
The mine workers, to their bitter sorrow, became aware of these new forces many years ago, sooner than the workers in most other industries. Therefore, to them the idea of a 30-hour week is nothing new. The mine workers indeed may take credit for being the first responsible group in the United States to propose the 30-hour week as an immediate necessity for the coal industry and as probably an ultimate necessity for all industry.
Almost 15 years ago President Frank J. Hayes, of the United Mine Workers, made the declaration which, in the light of recent developments, may be regarded as of historic significance, that, “ the work day of the miners should be reduced from eight hours to six hours; five days a week.”
In an address to the policy committee of the United Mine Workers on March 18, 1919, President Hayes said:
I recommend the establishment of a 6-hour workday, five days a week, as a remedial proposition to solve the peculiar situation existing in the mining industry to-day. I have long entertained the idea of a shorter workday, believing that it was the only sure means of promoting a condition in which all the mine workers of America could share in the markets of the Nation. I need not say that thousands of our people are idle to-day; that a very large number of the coal miners of the country are working only half time; that if the necessary requirements of the market were apportioned among all the mines of the country, a workday of six hours, five days a week, would more than supply the existing demands. We are engaged in a hazardous occupation, shut out from the light of day, working among poisonous fumes and gases that too often shorten the lives of our people. If there is any calling in our industrial life that is entitled to a short workday as an economic measure as well as a measure to protect the health and life of the worker, then it is the calling in which we are engaged.
The policy committee approved this recommendation and 6-hour day, and 30-hour week was formally adopted as part of the official program of the organization, in the following pronouncement:
Recognizing that unemployment is a constant threat and menace to the security, happiness, and prosperity of the miners of the m ners of the United States, which unemployment is created by the overdevelopment of the mining industry, we concur in the recommendation of President Hayes and declare for a 6-hour workday, five days per week, and recommend that the full power and influence of the United Mine Workers of America be used to attain that end.
At the time this pronouncement by the mine workers was made, as might have been expected, it was denounced by some persons as impracticable and ridiculed by others as indicating that the mine workers were seeking to obtain a living without really working. Comparatively few seemed to understand that what the mine workers were desperately striving for was not less work, but more work and regular work, and that the proposal was probably as much in the interest of the operators as of the employees. The situation in the soft-coal mining industry, and the real object of the mine workers was emplained by President John L. Lewis on April 3, 1922, in the course of a hearing before the House Committee on Labor as follows:
What the mine workers need, what they ardently desire, and what they demand, is not less work, but more work, and, above everything, steadier work. During the past year their earnings have been so pitiful that without help from the grocer, baker, and butcher in the shape of extended credits many of them would have starved. The number of days in 1921 when they were afforded an opportunity to work was probably only 169 or less on the average, while in certain districts it was less than 100. The number of days the mines of the country were open overaged only 215 per year throughout the past 30 years. At 8 hours per day, the average opportunity to work is only eight times 215 or 1,720 hours per year. During 1921 the opportunity to work probably averaged less than 1,352 hours. On the other hand, if the hours per day are reduced to 6, and a full year of 308 days is offered, the Jearly hours will be 1,824.
The great point is that the mine workers desire and must have steady work, We think that the institution of the 6-hour day would result in steady work.
Now, the reasons why the mine workers' union was led to propose the 30-hour week some 15 years ago, was not because they had any prophetic knowledge of the great crisis which was shortly to come upon the country, nor because they could foresee the devastation which was soon to be wrought by the phenomenal increase in mechanization and improved technique in practically all phases of Amer
ican industrial life. It was simply that the mine workers were familiar with their own industry. They had seen the machine in that industry constantly pushing out hand labor. They had seen the output per man in the bituminous mines increase from 212 tons in 1890 to 4 tons in 1920, and they could easily foresee the further increase to some 51/3 tons per man in 1931.
They had seen more and more capital being invested in new and unneeded mines, until the production capacity of the bituminouscoal industry was far in excess of the demand. And they had seen the evil results of all these things—namely a cutthroat competition which led to lowering prices in many cases below the cost of production, and, thus, to the continuing effort to beat down the wage and living standard of the employees, while the overdevelopment of mine capacity led to a most critical condition of unemployment and irregular employment.
The bituminous-mine workers, in other words, were present at the birth of practically all the economic problems now confronting the country. There was nothing fundamentally different in the problems of that industry 15 years ago from those now faced by other industries. It so happened, however, that the coal industry was the first of the major industries to suffer from the forces of mechanization and overcapitalization which by now have spread to practically all industries.
Consider, for instance, the matter of employment in the bituminouscoal mines during the period 1922 to 1929. This is a period which is now generally looked back upon as being one of immense prosperity, as almost a “golden age. During this period of eight years the average number of days of employment in the bituminous-coal industry never exceeded 219 8-hour days per year, fell as low as 142 days, and averaged for the period only 189 8-hour days. Consider for a moment what this means to the man who works for a living. There are 308 work days in a year. When a man is employed an average of only 189 days, it means that he is unemployed 119 days, or 20 full weeks of 6 days each, or approximately 5 months. During all of those 20 weeks he is wholly without income. It requires no extraordinary imagination to picture and understand what this means to the worker. Suppose any one of us, whether minor, merchant, lawyer, or Member of Congress were forced to remain idle and wholly without income 20 weeks, or approximately 5 months, in each and every year. I believe you will agree with me that it would be disastrous for all of us, inasmuch as we must live, maintain our families, and meet our expenses 52 weeks or 365 days in the year. In other words, during this period, the average number of hours of work offered the workers was only 29 hours per week, and in 1929, the peak of so-called prosperity, was less than 34 hours per week. The anthracite industry was not much better off, the average working days in 1929 being only 225, which means a work week of not quite 35 hours.
In view of this situation, it is not surprising that the mine workers, years ago, were urging a 30-hour week for their industry. It offered then, as it offers now, one of the most important measures possible for the amelioration of conditions in the coal industry. It will not cure all the ills of the industry, but it is an essential first step in