THE REAL CONFLICT by David Maclean Parry

Pacific Press Publishing Company · Oakland, Cal. · Dec 16, 1903

FromSigns of the Times, Vol. 29, No. 50.

THE REAL CONFLICT.

By David Maclean Parry

(By David Maclean Parry, President of the National Association of Manufacturers.) The question which has been asked as to what are the fundamental differences between labor and capital appears to imply that there is some great conflict on between those who own capital and those who labor for a livelihood. But this is not a correct statement of the controversy. To my mind, the labor issue is merely a question whether individual and property rights are to be obliterated at the behest of labor organizations.

Organized labor demands that fundamental laws be suspended in its behalf; the employers demand that those laws be respected and enforced. This is the one great and irreconcilable difference between the forces of so-called capital and labor.

In insisting that personal liberty and ownership of property be recognized as secondary considerations to its own will and mandates, organized labor, I contend, has arrayed itself against the most sacred interests of mankind in general, and has made the labor issue not so much a conflict between labor and capital as a conflict between labor and labor. Will the owner of capital permit inroads to be made upon his capital?—He will not. He will take his money out of business; and will place it in a safe place, and live upon it in peace and comfort. Organized labor may devise any plan it pleases by which to force capital to relinquish its holdings, and it will fail in its designs. If the advanced wage scales enforced by the unions can not be charged up to the consumer, or, in other words, to the rest of the labor world, then the industries controlled by these unions will languish or die. When prices for a manufactured product advance, or when the output of the product diminishes by reason of retrenchment of industry, who are the sufferers?—The people who want to buy the product for the satisfaction of their necessities and desires and the men who want employment in order to secure a livelihood, these are the ones who suffer. It is labor that pays the penalty for the folly of trades unionism, and not capital.

When Adam ate of the Tree of Knowledge, the Garden of Eden disappeared. This story in Genesis is one of the most wonderful of all stories. When man was gifted with knowledge, that is, with a brain, he learned that he was not like the beast of the field that went up and down the earth devouring what came in his path. He found that he must live by the sweat of his brow. He may reasonably be supposed that it was in order to compel him to use and develop his intelligence, the one faculty that distinguishes him from the rest of creation, that the decree was made that he should obtain his living through work. As any function becomes atrophied from disuse, man would have no intellect if he were not required to use it.

I do not want to contend that organized labor believes exactly in the re-establishment of the Garden of Eden, when labor shall no longer be necessary, but I do contend that it has some vague notions of the kind. It places faith in the theory that wages are not dependent so much upon what labor produces as upon other considerations, and one of these considerations is its ability by mere dictum to say what wages shall be. It appears to have the idea that, if the railroads and other industries were only owned by the people, mankind would have to work only three or four hours a day, and every one would receive all that his heart desires. What a beautiful elysium dream it weaves for the delusion of honest labor! But this dream of the Garden of Eden revived would, I fear, turn out to be a counterpart to that condition in which the Indians lived before Columbus came to America. We find that the aborigines of this continent were socialistic in their government; that what one man planted was the common property of the tribe, or practically so, and that the idea of personal ownership never became deeply rooted.

Individual Liberty and Personal Ownership.

Since all men should work for a living, each man is justly responsible for his own livelihood. He therefore must have freedom of action to work out his own destiny. This is what is known as individual liberty. Again, since it would be unjust to allow others to live off the fruits of his toil, for that would enable some men to live without working, he must be guaranteed undisputed possession of that which he produces. This is personal ownership. Personal ownership gives rise to thrift, self-denial, and strenuous effort. It causes the accumulation of stored-up labor, capital. Capital makes possible the harnessing of the forces of nature, to make them subservient to the will of man, that they may assist in production. Without bringing these forces to his assistance, man would have to delve in the soil for a bare living. But every piece of machinery multiplies his productive capacity, and thus enables him to raise himself to some extent above the mire of poverty and drudgery. Therefore capital is a friend of labor. It is the emancipator of labor. Since it is only by increasing the fund of productive capital that mankind can lift itself up to higher planes of existence, it follows that it is a false political economy which does not encourage the accumulation of capital.

But personal ownership is necessary for the accumulation of capital. Men are not going to put their savings into a machine unless they can increase their savings by so doing. Neither are men going to save at all unless there is some reward for their action. Personal ownership protects capital. It prevents it from being dissipated, and it keeps a watchful eye upon it, to see that it is well managed, so that it may grow in volume, instead of being wasted. Socialism would not supply that jealous guardianship and competent control of capital which is assured by individual ownership.

Who Gets the Benefits from Capital?

Now the question resolves itself down as to who gets the benefits from capital. Organized labor declares that capital does. It points to a Rockefeller, who owns millions of dollars in bonds and stocks, as proof of its assertion. But it does not stop to analyze its assertion. The wealth of the captain of industry consists of his title of control in railroads and corporations. Neither he nor any one else can consume these railroads or corporations. All that a Rockefeller

can do is to direct their management so that they will serve the ends for which they exist in the best possible manner. By giving the highest intelligence to the management of capital, the captains of industry are in truth performing a service for mankind, the value of which is incalculable. It is not the ownership of the pieces of paper called stocks and bonds that is of the first importance to men in general, but rather the ownership of the products of industry which go to satisfy the necessities and comforts of life. To whom do these products go?—They go to all, to the rich and poor, to the men who toil and to the men who hire. It is true that the rich get more than the poor, but there is, after all, but little difference between the amount of food and clothing that different men consume, and a limit is quickly reached to the amount of furniture a man can place in his home. The amount of wealth actually consumed by the rich is but little greater than that consumed by the poor, and it is one of the wise provisions of nature that this must necessarily be the case.

An examination of the facts shows that, instead of getting only fifteen or twenty per cent of production, as some labor leaders assert, labor gets nearly the entire bulk of production. The capitalist who gets three per cent on large investments nowadays deems himself fortunate. The employer who, for the use of his capital and the expenditure of his energy and brains or otherwise his labor, secures ten per cent per annum, is considered fortunate. What does not go to capital must go to labor. Therefore it is plain that labor reaps nearly all the benefits from the utilization of capital. Even the small percentage that goes to capital is in the main reinvested, so that it serves to still further increase the productive capacity of labor. The latter secures not only nearly all the income derived from labor and capital combined, but it also participates in the income from the share that capital receives and saves.

Now it ought to be a plain proposition to any one that it is impossible to distribute more than is produced. It is also easily demonstrable that all consumable wealth that is produced is distributed practically as fast as made. Again, there is another fact that must impress those who think about it, and that is the very small percentage of idle men when industrial conditions are normal. Practically the whole nation is straining all its energies the year around, and the resulting products of its labor are constantly being divided up and consumed. Nobody is hoarding the wheat or the clothing or the furniture. Those who happen to have any quantity of these commodities are constantly trying to dispose of them, and if they have more on hand than they think they can readily sell, down go the prices until the number of purchasers is sufficiently enlarged to take away the surplus. Would socialism or government by organized labor succeed in turning out more product than is now turned out? And, unless more is produced, would it be possible to give each man a larger amount of consumable wealth than he now gets?

Unionism Tends to Impoverish Labor.

There is one only way by which wages can be increased, and that is by increasing the amount of capital engaged in production. All the resolutions of unions or artificial wage scales foisted upon employers can not add one iota to the amount of wealth to be distributed. When a union succeeds in getting a special wage scale, it is merely diverting to its own members a share of the aggregate production that rightfully belongs to other classes of labor. It is not hurting capital, except that it checks the use of existing capital and curtails the rate of its accumulation, and the injury it causes in this way is felt more by labor in general than it is by the owner of the capital. An unnatural wage scale increases the cost of production, and the prices of the product are raised. Because of the increased prices, some people find it impossible to buy and use articles which previously they were able to have, while others who pay the enhanced prices find their power to purchase other articles they have been in the habit of buying considerably curtailed. There is consequently a reduced consumption, and this in turn means less men employed in the industry. It is thus those who can stand it the least who suffer the most by the bolstered-up wage scales.

Unionism thus tends to impoverish rather than to enrich labor. It does this because it lessens production. It not only lessens production directly through increasing the cost of production, but it also does it indirectly through limiting the amount of work to be known as a day's labor. In every union that I ever heard of, "soldiering" is taught as a fine art. Only the other day a great firm failed because it was impossible to get the men to do a fair day's work. They dawdled and went to sleep with their hammers in their hands. When remonstrated with, they said that their union protected them. The unions say to their men, "The less you do, the greater the number of other men that can get jobs." In the case I refer to, there ought to be a great demand for labor, if this theory is correct, for the men did a little before the failure, and now they are doing nothing at all. If the "go-easy" rule of unionism is valid, all labor should quit work entirely, and then every one ought to be rich.

That wages or the amount of production going to labor is dependent upon the aggregate production is shown by comparing this country with Russia and China, countries where there is comparatively little production per capita, and where also wages are only a few cents a day. The people in those countries toil and suffer more than they do in this, but, with all their efforts, they find it difficult to maintain an existence. In China also they have trades unionism, or what amounts to the same. Every vocation is thoroughly organized, and has been for centuries. Even the beggars have their guilds. But there is little capital engaged in production in either country, while in the United States, machinery is everywhere. This country turns out a great product per capita, and consequently there is a fair share to distribute to every one.

What Has Increased Wages.

In the last century wages have quadrupled in the United States, and the hours of labor have decreased from fourteen to sixteen down to about ten. Did unionism do this?—No; for unionism has been strong as a force only in the last few years. It is the increased use of capital which has brought it about, and, as capital multiplies in the future, so wages will continue to advance and the hours of labor to gradually lessen. Unionism can not accelerate, it can only check, the process.

As capital continues to be invested, it must compete against itself. It matters not how many own it or do not own it. Take the case of an industrial monopoly. If the profits in the monopoly are larger than can be secured in other avenues of investment, then the surplus income from the monopoly will naturally be reinvested in its plant, and, as its output is increased, prices must be lowered, in order to broaden the market. Thus the margin of profit is diminished, and it will continue to be diminished until it is about on a par with the general average of profits in other lines of investment. While I say this, I do not mean to argue in behalf of monopolies, for I do not believe that one industry should be allowed to develop at the expense of other industries, any more than I believe that the men of a labor union should be allowed to profit at the expense of other labor. Still, in the case of the industrial monopoly, it is evident that it must in the long run succumb to the working of the law of supply and demand. Free competitive conditions should be maintained, however, throughout the industrial field, to the end that the owners of capital and the owners of labor should all receive their just dues. Under free conditions, the law is that, as capital accumulates, the margin of profit diminishes and the rate of real wages advances. This is true, because the more capital invested, the greater the demand for labor, and therefore the higher the wages; and also, as the output increases, the lower the prices must be to dispose of the product, thus diminishing the margin of profit and increasing the purchasing power of the wages paid.

The Corner-stones of Progress.

As I stated in the beginning, the Constitution and the laws of this country guaranteeing individual freedom and property rights are the corner-stones of progress, the essential principles upon the observance of which depends the accumulation of capital and its utilization to the fullest extent possible, upon which also depends the incentive to effort which makes men develop their powers and strive to do their best, in whatever sphere of life they may find themselves. Inasmuch as organized labor seeks to override these fundamental ideas of our government, it is inimical to the interests of the entire country. It is retrogressive in its effects. It is seeking to array class against class without just cause. It appeals to the cupidity and ignorance of men, inflaming their minds with the belief that wages do not depend upon service rendered, but upon their power to stand together and hold up the employer. They do not see that in their attempts to hold up the employer they are in reality holding up their fellow-laborers. Trades unionism, instead of benefiting labor, works to its detriment, and, if it is allowed to continue with its present policies, it will bring ruin and disaster to the nation. The only real beneficiaries of organized labor are the men who lead it and grow fat from the salaries and emoluments of their positions, and who secure notoriety or cheap political power through their alleged leadership. The country could well spare these trouble-makers, who, when they are not taking the proceeds of blackmail, or ordering their deluded followers into costly idleness, are browbeating the employer to the verge of quitting business. Affairs went along very well before they sprang into existence, and they would continue to move smoothly enough without their assistance, or, rather, interference. It is only in good times that the labor agitator finds a special opportunity for the exercise of his peculiar talents. When the employer is loaded down with contracts, and his men are happy in having steady employment and good wages, then is the golden chance for the agitator. He says to the men: "You have the boss just where he can't help himself. Make him divy up. We are entitled to a piece of the money. Labor creates all. The boss must fill his contracts, and he can't discharge you." A mighty good recipe for bankruptcy—do you not think so? Hundreds of employers have been forced to the wall because of just such tactics as these.

The Remedy.

It is also asked, "What is necessary in order to bring about a permanent settlement and peace between the two great forces?" I can only reiterate that the one remedy needed is the strict enforcement of primal rights under the Constitution of this country. It is folly to talk about making a settlement with a force that stands for lawlessness. There is no room for compromise on the question of allowing a man to dispose of his labor as he sees fit, or on the question of an employer being allowed to employ whom he sees fit. The "closed-shop" principle of organized labor is un-American, disastrous industrially, and in utter contravention of the laws and institutions of the country. Demands of unions for wages, based upon their ability to prevent other men from working in their places, ought not to be made the subject of compromises any more than they should be granted through coercion. There is no valid dispute between labor and capital that can not now be settled in existing courts.

Employers do not desire to be at war with their men. They do not desire to grind down wages. They can not grind down wages if they did desire to do so. They are not responsible for there being but small profit in employing some classes of labor. They go into business because they find they can make a reasonable profit by employing labor at the wage fixed by supply and demand. By going into business, they tend to increase the demand for labor, and thereby to some extent to advance wages. But they can not pay more than the normal wage scale, for, if they did, they would soon have to quit business. In brief, business must be conducted on business principles.

Wages can not be regulated either by charitable considerations or by the imaginations of men as to what they should receive. "Come, let us reason and be men." D. M. PARRY.