A History of Trade Unionism in the United States

by Selig Perlman

It is the employer's purpose to bring in ever lower and lower levels in competition among laborers and depress wages; it is the purpose of the union to eliminate those lower levels and to make them stay eliminated. That brings the union men face to face with the whole matter of industrial control. They have no assurance that the employer will not get the best of them in bargaining unless they themselves possess enough control over the shop and the trade to check him. Hence they will strive for the "recognition" of the union by the employer or the associated employers as an acknowledged part of the government of the shop and the trade. It is essential to note that in struggling for recognition, labor is struggling not for something absolute, as would be a struggle for a complete dispossession of the employer, but for the sort of an end that admits of relative differences and gradations. Industrial control may be divided in varying proportions,[101] reflecting at any one time the relative ratio of bargaining power of the contesting sides. It is labor's aim to continue increasing its bargaining power and with it its share of industrial control, just as it is the employer's aim to maintain a status quo or better. Although this presupposes a continuous struggle, it is not a revolutionary but an "opportunist" struggle.

Once we accept the view that a broadly conceived aim to control competitive menaces is the key to the conduct of organized labor in America, light is thrown on the causes of the American industrial class struggles. In place of looking for these causes, with the Marxians, in the domain of technique and production, we shall look for them on the market, where all developments which affect labor as a bargainer and competitor, of which technical change is one, are sooner or later bound to register themselves. It will then become possible to account for the long stretch of industrial class struggle in America prior to the factory system, while industry continued on the basis of the handicraft method of production. Also we shall be able to render to ourselves a clearer account of the changes, with time, in the intensity of the struggle, which, were we to follow the Marxian theory, would appear hopelessly irregular.

We shall take for an illustration the shoe industry.[102] The ease with which shoes can be transported long distances, due to the relatively high money value contained in small bulk, rendered the shoe industry more sensitive to changes in marketing than other industries. Indeed we may say that the shoe industry epitomized the general economic evolution of the country.[103]

We observe no industrial class struggle during Colonial times when the market remained purely local and the work was custom-order work. The journeyman found his standard of life protected along with the master's own through the latter's ability to strike a favorable bargain with the consumer. This was done by laying stress upon the quality of the work. It was mainly for this reason that during the custom-order stage of industry the journeymen seldom if ever raised a protest because the regulation of the craft, be it through a guild or through an informal organization, lay wholly in the hands of the masters. Moreover, the typical journeyman expected in a few years to set up with an apprentice or two in business for himself—so there was a reasonable harmony of interests.

A change came when improvements in transportation, the highway and later the canal, had widened the area of competition among masters. As a first step, the master began to produce commodities in advance of the demand, laying up a stock of goods for the retail trade. The result was that his bargaining capacity over the consumer was lessened and so prices eventually had to be reduced, and with them also wages. The next step was even more serious. Having succeeded in his retail business, the master began to covet a still larger market,—the wholesale market. However, the competition in this wider market was much keener than it had been in the custom-order or even in the retail market. It was inevitable that both prices and wages should suffer in the process. The master, of course, could recoup himself by lowering the quality of the product, but when he did that he lost a telling argument in bargaining with the consumer or the retail merchant. Another result of this new way of conducting the business was that an increased amount of capital was now required for continuous operation, both in raw material and in credits extended to distant buyers.

The next phase in the evolution of the market rendered the separation of the journeymen into a class by themselves even sharper as well as more permanent. The market had grown to such dimensions that only a specialist in marketing and credit could succeed in business, namely, the "merchant-capitalist." The latter now interposed himself permanently between "producer" and consumer and by his control of the market assumed a commanding position. The merchant-capitalist ran his business upon the principle of a large turn-over and a small profit per unit of product, which, of course, made his income highly speculative. He was accordingly interested primarily in low production and labor costs. To depress the wage levels he tapped new and cheaper sources of labor supply, in prison labor, low wage country-town labor, woman and child labor; and set them up as competitive menaces to the workers in the trade. The merchant-capitalist system forced still another disadvantage upon the wage earner by splitting up crafts into separate operations and tapping lower levels of skill. In the merchant-capitalist period we find the "team work" and "task" system. The "team" was composed of several workers: a highly skilled journeyman was in charge, but the other members possessed varying degrees of skill down to the practically unskilled "finisher." The team was generally paid a lump wage, which was divided by an understanding among the members. With all that the merchant-capitalist took no appreciable part in the productive process. His equipment consisted of a warehouse where the raw material was cut up and given out to be worked up by small contractors, to be worked up in small shops with a few journeymen and apprentices, or else by the journeyman at his home,—all being paid by the piece. This was the notorious "sweatshop system."

The contractor or sweatshop boss was a mere labor broker deriving his income from the margin between the piece rate he received from the merchant-capitalist and the rate he paid in wages. As any workman could easily become a contractor with the aid of small savings out of wages, or with the aid of money advanced by the merchant-capitalist, the competition between contractors was of necessity of the cut-throat kind. The industrial class struggle was now a three-cornered one, the contractor aligning himself here with the journeymen, whom he was forced to exploit, there with the merchant-capitalist, but more often with the latter. Also, owing to the precariousness of the position of both contractor and journeyman, the class struggle now reached a new pitch of intensity hitherto unheard of. It is important to note, however, that as yet the tools of production had not undergone any appreciable change, remaining hand tools as before, and also that the journeyman still owned them. So that the beginning of class struggles had nothing to do with machine technique and a capitalist ownership of the tools of production. The capitalist, however, had placed himself across the outlets to the market and dominated by using all the available competitive menaces to both contractor and wage earner. Hence the bitter class struggle.

The thirties witnessed the beginning of the merchant-capitalist system in the cities of the East. But the situation grew most serious during the forties and fifties. That was a period of the greatest disorganization of industry. The big underlying cause was the rapid extension of markets outrunning the technical development of industry. The large market, opened first by canals and then by railroads, stimulated the keenest sort of competition among the merchant-capitalists. But the industrial equipment at their disposal had made no considerable progress. Except in the textile industry, machinery had not yet been invented or sufficiently perfected to make its application profitable. Consequently industrial society was in the position of an antiquated public utility in a community which persistently forces ever lower and lower rates. It could continue to render service only by cutting down the returns to the factors of production,—by lowering profits, and especially by pressing down wages.

In the sixties the market became a national one as the effect of the consolidation into trunk lines of the numerous and disconnected railway lines built during the forties and fifties. Coincident with the nationalized market for goods, production began to change from a handicraft to a machine basis. The former sweatshop boss having accumulated some capital, or with the aid of credit, now became a small "manufacturer," owning a small plant and employing from ten to fifty workmen. Machinery increased the productivity of labor and gave a considerable margin of profits, which enabled him to begin laying a foundation for his future independence of the middleman. As yet he was, however, far from independent.

The wider areas over which manufactured products were now to be distributed, called more than ever before for the services of the specialist in marketing, namely, the wholesale-jobber. As the market extended, he sent out his traveling men, established business connections, and advertised the articles which bore his trade mark. His control of the market opened up credit with the banks, while the manufacturer, who with the exception of his patents possessed only physical capital and no market opportunities, found it difficult to obtain credit. Moreover, the rapid introduction of machinery tied up all of the manufacturers' available capital and forced him to turn his products into money as rapidly as possible, with the inevitable result that the merchant was given an enormous bargaining advantage over him. Had the extension of the market and the introduction of machinery proceeded at a less rapid pace, the manufacturer probably would have been able to obtain greater control over the market opportunities, and the larger credit which this would have given him, combined with the accumulation of his own capital, might have been sufficient to meet his needs. However, as the situation really developed, the merchant obtained a superior bargaining power and, by playing off the competing manufacturers one against another, produced a cut-throat competition, low prices, low profits, and consequently a steady and insistent pressure upon wages. This represents the situation in the seventies and eighties.