For labor the combination of cut-throat competition among employers with the new machine technique brought serious consequences. In this era of machinery the forces of technical evolution decisively joined hands with the older forces of marketing evolution to depress the conditions of the wage bargain. It is needless to dilate upon the effects of machine technique on labor conditions—they have become a commonplace of political economy. The shoemakers were first among the organized trades to feel the effects. In the later sixties they organized what was then the largest trade union in the world, the Order of the Knights of St. Crispin,[104] to ward off the menace of "green hands" set to work on machines. With the machinists and the metal trades in general, the invasion of unskilled and little skilled competitors began a decade later. But the main and general invasion came in the eighties, the proper era from which to date machine production in America. It was during the eighties that we witness an attempted fusion into one organization, the Order of the Knights of Labor, of the machine-menaced mechanics and the hordes of the unskilled.[105]

With the nineties a change comes at last. The manufacturer finally wins his independence. Either he reaches out directly to the ultimate consumer by means of chains of stores or other devices, or else, he makes use of his control over patents and trade marks and thus succeeds in reducing the wholesale-jobber to a position which more nearly resembles that of an agent working on a commission basis than that of the quondam industrial ruler. The immediate outcome is, of course, a considerable increase in the manufacturer's margin of profit. The industrial class struggle begins to abate in intensity. The employer, now comparatively free of anxiety that he may be forced to operate at a loss, is able to diminish pressure on wages. But more than this: the greater certainty about the future, now that he is a free agent, enables him to enter into time agreements with a trade union. At first he is generally disinclined to forego any share of his newly acquired freedom by tying himself up with a union. But if the union is strong and can offer battle, then he accepts the situation and "recognizes" it. Thus the class struggle instead of becoming sharper and sharper with the advance of capitalism and leading, as Marx predicted, to a social revolution, in reality, grows less and less revolutionary and leads to a compromise or succession of compromises,—namely, collective trade agreements.

But the manufacturer's emancipation from the middleman need not always lead to trade agreements. In the shoe industry this process did not do away with competition. In other industries such an emancipation was identical with the coming in of the "trust," or a combination of competing manufacturers into a monopoly. As soon as the "trust" becomes practically the sole employer of labor in an industry, the relations between labor and capital are thrown almost invariably back into the state of affairs which characterized the merchant-capitalist system at its worst, but with one important difference. Whereas under the merchant-capitalist system the employer was obliged to press down on wages and fight unionism to death owing to cut-throat competition, the "trust," its strength supreme in both commodity and labor market, can do so and usually does so of free choice.

The character of the labor struggle has been influenced by cyclical changes in industry as much as by the permanent changes in the organization of industry and market. In fact, whereas reaction to the latter has generally been slow and noticeable only over long periods of time, with a turn in the business cycle, the labor movement reacted surely and instantaneously.

We observed over the greater part of the history of American labor an alternation of two planes of thought and action, an upper and a lower. On the upper plane, labor thought was concerned with ultimate goals, self-employment or cooperation, and problems arising therefrom, while action took the form of politics. On the lower plane, labor abandoned the ultimate for the proximate, centering on betterments within the limits of the wage system and on trade-union activity. Labor history in the past century was largely a story of labor's shifting from one plane to another, and then again to the first. It was also seen that what determined the plane of thought and action at any one time was the state of business measured by movements of wholesale and retail prices and employment and unemployment. When prices rose and margins of employers' profits were on the increase, the demand for labor increased and accordingly also labor's strength as a bargainer; at the same time, labor was compelled to organize to meet a rising cost of living. At such times trade unionism monopolized the arena, won strikes, increased membership, and forced "cure-alls" and politics into the background. When, however, prices fell and margins of profit contracted, labor's bargaining strength waned, strikes were lost, trade unions faced the danger of extinction, and "cure-alls" and politics received their day in court. Labor would turn to government and politics only as a last resort, when it had lost confidence in its ability to hold its own in industry. This phenomenon, noticeable also in other countries, came out with particular clearness in America.

For, as a rule, down to the World War, prices both wholesale and retail, fluctuated in America more violently than in England or the Continent. And twice, once in the thirties and again in the sixties, an irredeemable paper currency moved up the water mark of prices to tremendous heights followed by reactions of corresponding depth. From the war of 1812, the actual beginning of an industrial America, to the end of the century, the country went through several such complete industrial and business cycles. We therefore conveniently divide labor and trade union history into periods on the basis of the industrial cycle. It was only in the nineties, as we saw, that the response of the labor movement to price fluctuations ceased to mean a complete or nearly complete abandonment of trade unionism during depressions. A continuous and stable trade union movement consequently dates only from the nineties.

The cooperative movement which was, as we saw, far less continuous than trade unionism, has also shown the effects of the business cycle. The career of distributive cooperation in America has always been intimately related to the movements of retail prices and wages. If, in the advance of wages and prices during the ascending portion of the industrial cycle, the cost of living happened to outdistance wages by a wide margin, the wage earners sought a remedy in distributive cooperation. They acted likewise during the descending portion of the industrial cycle, when retail prices happened to fall much less slowly than wages.

Producers' cooperation in the United States has generally been a "hard times" remedy. When industrial prosperity has passed its high crest and strikes have begun to fail, producers' cooperation has often been used as a retaliatory measure to bring the employer to terms by menacing to underbid him in the market. Also, when in the further downward course of industry the point has been reached where cuts in wages and unemployment have become quite common, producers' cooperation has sometimes come in as an attempt to enable the wage earner to obtain both employment and high earnings bolstered through cooperative profits.

FOOTNOTES:

[101] The struggle for control, as carried on by trade unions, centers on such matters as methods of wage determination, the employer's right of discharge, hiring and lay-off, division of work, methods of enforcing shop discipline, introduction of machinery and division of labor, transfers of employes, promotions, the union or non-union shop, and similar subjects.