It is clearly indicated, therefore, what labor leaders, under the Sherman Act, can do. They have the right to organize, to combine—that is, to form unions; they have the right to refuse to work for wages or terms of employment unsatisfactory to themselves—that is, to strike. Under the Sherman Act, indeed, mere organizations of laboring men are regarded as no more outlawed than ordinary social clubs or college fraternities.
How the Chicago Strike of 1894 Restrained Trade
On the other hand, labor leaders know what, under the Sherman Act, they can not do. They cannot enter into combinations that restrain trade. This vital point has been settled in several important proceedings—those involving the Chicago disturbances in 1894, and, more recently the decision just handed down in the matter of the Danbury Hatters. These cases so clearly show the bearing of the Sherman Act upon illegal labor practices, that they may profitably be reviewed here.
In 1894 the employees of the Pullman Palace Car Company of Chicago struck for higher wages. These employees were not railway men; they were workmen engaged in the manufacture of railway cars. In spite of this, about four thousand had been admitted to membership in the American Railway Union, an organization of railroad operatives, which, under the vigorous management of Eugene V. Debs, had acquired a membership of 250,000, and a correspondingly great power in the field of railroad labor. In order to help the Pullman workmen in their struggle with the Pullman Company, the American Railway Union declared what was in effect a boycott upon all railroads using Pullman cars. Nearly all the larger American railroads had entered into contracts with the Pullman Company, by which parlor and sleeping cars were to be used on their trains. Debs now demanded that these railroads should break their contracts, and thereby, of course, become responsible for heavy damages to the Pullman Company. In other words, he demanded that all American railroads cease patronizing the Pullman Company because of its "unfair" attitude toward union labor; that is, he started a boycott against the Pullman Company. When the railroad companies refused to meet his demand, he ordered out all American Railway Union men employed on these lines. He even declared war upon several of the Vanderbilt roads, which had no Pullman sleepers, operating instead the Wagner cars. In effect, in order that several thousand workmen in Chicago might profitably settle their private grievances with their employers, Debs proposed, practically to end railroad communication in the larger part of the United States.
"The gigantic character of the conspiracy," said William H. Taft in a well-known decision resulting from these proceedings, "staggers the imagination. The railroads have become as necessary to the life and health and comfort of the people of this country as are the arteries to the human body." The larger part of our food supply, for example, is furnished by means of the railway; the interruption of railroad transportation for any considerable period would, among other calamities, bring famine upon large sections of the country. In Chicago, in Cincinnati, and in other large cities, Debs despatched his lieutenants with orders to tie up all railroads using Pullman cars. He gave particular instructions to interfere with freight trains, since freight was the main source of railroad revenue. In many places riots followed; in Chicago, strikers began wrecking trains, blowing up bridges, burning freight yards, tearing up tracks—indeed, nearly all the twenty-three railroads centering in that city ceased operations. The fundamental principles of the constitution, guaranteeing the safety of life and property, had apparently given way to lawlessness and anarchy. In the opinion of Grover Cleveland, then President of the United States, these proceedings constituted a "conspiracy in restraint of trade" among the States, and as such were prohibited by the Sherman Act. That the purpose and effect of Debs' proceedings was to restrain trade is sufficiently clear; indeed, no more complete restraint than the cessation of railroad communication could be imagined. Trade in this case was not only restrained; it was entirely stopped. That the means by which this was to be accomplished had all the essential elements of the inter-State boycott has also been shown. In several cities, acting under the President's instructions, United States district attorneys obtained injunctions on the ground that the strike leaders were violating the Sherman Act, and also interfering with the carriage of United States mails. In Chicago Eugene V. Debs was enjoined, and, when he disobeyed the injunction, was arrested and afterward sentenced to six months' imprisonment. In Cincinnati his associate, Frank W. Phelan, was likewise enjoined and likewise imprisoned for contempt. It was his act as judge in sending Phelan to prison for violating the Sherman Law that first made William H. Taft a national figure. The circuit courts[J] decided, in several cases, that the combination formed by Debs against nearly all the trunk lines was a boycott, "a conspiracy in restraint of trade," and punished the leaders, under the Sherman Act. William H. Taft declared that "the combination is in the teeth of the act of July 2, 1890."
The Danbury Hatters Attempt to "Restrain Trade"
This boycott involved violence as an incident; the Supreme Court, however, has recently taken still more advanced ground, and decided that a peaceable boycott also violates the Sherman Act. In the last fifteen years a terrific warfare has raged between the American Federation of Labor and nearly all American manufacturers of hats. The American Federation has a membership variously estimated at from 1,500,000 to 2,000,000, including workmen in practically every State and Territory. It is, as its name implies, a central association organized for the purpose of bringing into one effective machine all the local labor organizations scattered throughout the country. It is an association of associations, and, as indicating its national scope, has its headquarters in Washington. It keeps constantly in touch with its membership through its monthly publication, the American Federationist, as well as through the many journals of the unions with which it is affiliated. It regularly employs nearly one thousand agents who continually push the interests of its members in the larger part of the United States and Canada. Mr. Samuel Gompers constantly uses this organization for the prosecution of inter-State boycotts. In his petition to intervene in the Danbury Hatters case, Mr. Gompers stated, over his own signature, that "the constitution of said American Federation of Labor makes special provision for the prosecution of boycotts, so-called, when instituted by a constituent or affiliated organization." In a public speech on May 1, 1908, Mr. Gompers declared that the Supreme Court might "as well dissolve and destroy the organization of labor as to enforce these decisions"—that is, the decisions against boycotts. Obviously, the Federation of Labor has an advantageous organization for work of this kind. A local union, with membership extending not beyond the limits of a town or State, could make little headway against a manufacturer against whose goods it had declared a boycott, inasmuch as his trade usually extends over a large area. The American Federation of Labor, however, by embracing the local unions' cause can make the boycott effective in practically every part of the country. In the last twelve years, Mr. Gompers' organization has declared four hundred and eight boycotts.
In particular, it has prosecuted with considerable success boycotts against the manufacturers of fur hats. About ten years ago, Mr. Gompers, working with the United Hatters of North America, inaugurated an elaborate program to compel all such manufacturers to unionize their shops. By using their well-known methods, they have brought to terms seventy out of the eighty-two manufacturers in this country. The firm of D. L. Loewe & Co. of Danbury, Connecticut, however, had persistently refused to comply with these demands. Mr. Loewe was not a large manufacturer; he had, however, built up a prosperous business, and, though he had never shown any hostility to union labor, had insisted on maintaining an open shop. In 1901 the United Hatters' Union practically ordered him to discharge his non-union men and unionize his factory. Mr. Loewe again refused to do this, and a strike immediately followed. Mr. Loewe, however, promptly engaged new non-union men, and soon his factory was running as busily and as profitably as before.
Mr. Gompers then brought the whole machinery of his organization to bear upon this recalcitrant hatter. On July 25, 1902, the Federation of Labor and the United Hatters declared a boycott against his products. They denounced this concern in their several publications as "unfair," and notified nearly all the wholesale and retail hat dealers throughout the United States that they must not handle the Loewe goods, under pain of being boycotted themselves. It is said that their agents kept espionage, in Danbury, over all freight consignments from the Loewe factory, and thus obtained a fairly complete list of their customers; committees of labor men in many cities waited upon these customers, and, in several instances, persuaded them to drop the Loewe hats. Some firms who refused to obey this dictation were themselves boycotted; and, in San Francisco, Philadelphia, Baltimore, and Richmond, the boycott was pursued with particular virulence. The Federation went so far as to grant a special dispensation to its members to purchase hats made by other non-union labor, rather than patronize the Loewe brand. Mr. Loewe, though he suffered enormous loss as a result of these proceedings, pluckily kept up the fight. Under the Sherman Law, an aggrieved citizen is authorized to bring private suit against persons engaged in a conspiracy to restrain his trade, and, if he successfully maintains his case, may recover three-fold damages. Mr. Loewe quietly went to work and had made an inventory of all property-holders actively engaged in boycotting his goods. He then brought suits for $340,000 damages against a large number of labor men, filing in the District Court 240 separate attachments. The Supreme Court of the United States made short work of this case. Chief Justice Fuller, who wrote the decision, declared that "the combination described in the declaration is a combination 'in restraint of trade or commerce among the several States' in the sense in which these words are used in the act, and the action can be maintained accordingly." An interesting feature of the case is that the decision of the Supreme Court was unanimous. In nearly all the other proceedings involving the Sherman Law—the Trans-Missouri case, the Northern Securities—the government has won by a bare majority; every member of the Supreme bench, however, at once concluded that Mr. Gompers' activities against the firm of D. L. Loewe & Co. restrained inter-State trade, and thus violated the Sherman Law.
Thus, in eighteen years, the Sherman Act has proved an effective weapon against the two forms of trust and conspiracy with which the public is most familiar—combinations of capitalists to restrain inter-State trade and arbitrarily fix prices, and combinations of labor unions organized for the prosecution of inter-State boycotts. It strikes impartially the Northern Securities Company and the American Federation of Labor; it does not discriminate between the activities of Mr. J. Pierpont Morgan and of Mr. Samuel Gompers. At the last session of Congress, the two forces which it opposes bent all their energies to destroy this law; in all probability they will renew and redouble their efforts this winter.