The Practice of Price-Fixing.—Meanwhile some new abuses on the part of various large industrial corporations had arisen. Many manufacturers began the habit of dictating to retail merchants the prices at which goods should be sold. If a merchant refused to maintain these prices and sold goods at lower figures, the manufacturer would thereupon decline to supply him with any more merchandise. This was an effective way of bringing a merchant to terms, particularly in the case of patented articles which are made by only one firm and which cannot be obtained from anyone else. |The Clayton Act.| Here, again, the of the Clayton Act intervened by forbidding price discriminations wherever the effect of such action tends to lessen competition or to create a monopoly. The Clayton Act also prohibited manufacturers and wholesalers from dictating to retail merchants the sort of goods they may sell. The makers of a particular brand of flour, for example, are not permitted to say to the merchant: “You must sell our brand only, otherwise we will not sell to you.”
The Federal Trade Commission.—The foregoing statutes, the Sherman and Clayton Acts, are examples of our attempt to regulate industry by law. The trouble with regulation by law, however, is its stiffness. Laws are hard and fast while the scope and methods of modern business are continually and rapidly changing. A law which is sufficient to meet one problem today proves quite inadequate to cope with another problem tomorrow. The strictest legal provisions, moreover, can usually be circumvented or evaded by some new device. Accordingly, the national government has reached the conclusion that it is better to have the laws lay down the general principles of industrial regulation, leaving the details to be applied by an administrative board or commission. In conformity with this idea Congress in 1914 authorized the establishment of a Federal Trade Commission, the duty of which is to investigate all complaints regarding unfair methods of competition in interstate commerce (except in the case of banks and railroads) and to order that such unfair methods, if found to be in existence, shall be discontinued.[[176]] Decisions of the Federal Trade Commission are reached after a hearing at which both sides may be represented. The commission is also given power to compile and publish information concerning the organization, management, and policy of any industrial corporation engaged in interstate trade. Since 1914 it has rendered signal service in protecting the business men of the country, and the general public as well, against economic injustice.
The Control of Industrial Corporations by the States.—What has been said in the preceding pages relates only to corporations which are engaged in interstate business. This includes most of the largest industrial concerns. Smaller corporations which keep their operations within the bounds of a single state, are not subject to the provisions of the Sherman or Clayton Acts, neither do they come within the jurisdiction of the Federal Trade Commission. This does not mean, however, that the smaller industrial corporations are exempt from regulation altogether. Most of the states have their own anti-trust laws and their own legal regulations to prevent the growth of local monopolies. These rules differ from state to state; in some they are much more strict than in others. State regulation is beset with serious difficulties everywhere because in all the states industries are to some extent carried on by corporations which have obtained their charters from some other state and thus cannot be fully controlled except by the national government.
The Greatest Problem of Modern Industry.—The most difficult industrial problems of today, however, are not connected with the question of government control. So far as the protection of the public against combinations and monopolies is concerned the government is bound to be, in the long run, successful in its efforts although even the strictest laws can work no miracle over night. Far more perplexing is the problem of determining the proper relations between industrial employers on the one hand and industrial workmen on the other. Although labor is a great and essential factor in industry it has hitherto had practically no direct voice in determining the conditions under which industry shall be carried on.
Taking American industry as a whole, labor has had no share in ownership or management. |The human relation in industry.| The relation of the worker to industry has been strictly that of a hired employee who does his job, takes his pay, and calls the account square. But of late years it has been becoming apparent that this relation does not satisfy the workman altogether and that he does not regard wages alone as a sufficient recompense for his share in industrial production. His leaders are asking, in some cases, for a share in the profits, for a voice in determining the conditions of labor and, ultimately, for some share in the management.
The representation of the workers.
Industrial Democracy.—In some large industrial concerns representation has already been given to the workers. They are permitted and encouraged to select a committee from among themselves whose function it is to take up with the management, in an official way, all questions of wages, hours of labor, discipline, and conditions of work. In case of disagreement between the committee and the management impartial arbiters are called in. Thus the employees are given a fair share in the settlement of all matters affecting their work and welfare.
The success of such schemes will depend, of course, upon the degree of fairness which both sides display in conference. Just as the success of political democracy depends upon the exercise of tolerance on the part of those to whom power is given, so in any form of industrial democracy the abuse of power, whether by employers or workmen, will surely spell failure. It is essential to the well-being of the nation that the workers in industry shall receive their rightful share from the earnings of industry, that they shall have just conditions of employment and be treated like men. But it is also essential that the management of industry shall not be subjected to unreasonable demands and that a system of production which the world has spent a century in building up shall not be broken down until something well tried and tested by experience can be put in its place.
Profit Sharing as a Step toward Industrial Harmony.—One of the ways suggested for ensuring to the workman his full share in the earnings of industry is known as profit sharing. The usual provision is that after the current rates of interest, wages, and salaries are paid the surplus earnings shall be divided between the employers and the workers on some fair basis determined in advance. But the amount which goes to the workers is not necessarily paid in cash. Either in part or in whole it may be given to them in the form of shares in the business and on these shares they receive thereafter the regular rate of earnings.
It was hoped that an arrangement of this sort would bring the employer and his workers more closely together. Profit sharing, indeed, was at one time proclaimed to be a solution of the whole labor problem. But on the whole it has not fulfilled expectations. For this there are several reasons. |Why profit sharing has not made great headway.| Some workers did their best, others scamped their work; but all shared alike. The employers did not find that labor responded with increased efficiency when a share of profits was given. The workers, on their part, found that profits sometimes declined greatly in spite of their hardest efforts. Bad judgment on the part of the management would offset hard work on the part of the men. Not having access to the books and figures the workers often suspected that their rightful share of the profits was being withheld from them. The trade unions, moreover, looked askance at the whole proposal and insisted, among other things, that no one who was not a member of the union should be a profit-sharer. So the movement has slackened, although it still has some strong advocates and seems to be losing none of the ground that it has gained.