THE 
 
 THE LIBRARY 
 
 OF 
 THE UNIVERSITY 
 
 OF CALIFORNIA 
 RIVERSIDE
 
 THE rv-i j"0a 
 POLITICS OF INDUSTRY 
 
 A foot-note to the Social Unrest 
 
 BY 
 
 GLENN FRANK 
 
 >ij 
 
 Associate Editor of the Century Magazine 
 Co-author of "Stakes of the War" 
 
 NEW YORK 
 
 THE CENTURY CO. 
 
 1919
 
 HC 
 
 Copyright, 19 19, by 
 THE CENTUET Co. 
 
 Published, June, 1919
 
 TO 
 THE TWO MEN TO WHOM I AM MOST PROFOUNDLY INDEBTED 
 
 GORDON FRANK 
 
 AND 
 
 AMBROSE HENRY FLOOD SMITH
 
 FOREWORD 
 
 There is clear necessity that, in this day of 
 unrest and revaluation, the leaders of Ameri- 
 can business and industry face fresh problems 
 with fresh minds. The real center of social 
 authority has so far shifted from politics to in- 
 dustry that the tone and temper of our na- 
 tional life are more nearly determined by the 
 way the business and industry of the country 
 are conducted than by the way the government 
 is conducted. The statesmanship or stupidity 
 of business men is of more social significance 
 than the statesmanship or stupidity of politi- 
 cians. 
 
 The recognition of this fact brought an in- 
 teresting task into my hands. During the past 
 year it has been my assignment and my pleas- 
 ure to try to interpret the mind and attitude of 
 the more forward-looking business and indus- 
 trial leaders of this country in relation to the 
 social and industrial unrest and the pervasive 
 spirit of change that marks our time. I have
 
 FOREWORD 
 
 concerned myself, not with the rank and file, 
 but with those anonymous liberals of the busi- 
 ness world the men who may perchance be the 
 pioneers of a new order of business and indus- 
 try. I have tried to catch their spirit rather 
 than quote their words. This volume is the re- 
 sult. 
 
 The five papers appearing in this volume 
 have before appeared in THE CENTURY. 
 Here they are slightly revised, and the titles, 
 in all but one instance, changed. I am deeply 
 indebted to the business and labor leaders who 
 have permitted me to counsel with them in the 
 preparation of this foot-note to the discontent 
 of our time the un-named collaborators in the 
 writing of these papers. 
 
 GLENN FRANK. 
 
 NEW YORK, June, 1919.
 
 CONTENTS 
 
 FIRST PAPER rAOE 
 
 A NATION OF IMPEOVISEES 3 
 
 A warring nation unprepared for war A peaceful 
 nation unprepared for peace The spell of the 
 immediate Learning to anticipate and to dis- 
 count crises Immediate problems of transition 
 economics Long time problems of policy Unity 
 of opinion in war-time Diversity of opinion in 
 peace-time If we had a Peace Book. 
 
 SECOND PAPER 
 THE BACKGROUND OP RECONSTRUCTION i, . . 17 
 
 A social doomsday The myth of a fixed world 
 The contagion of change Latest aspirations find 
 voice and vitality Devising new policies for a 
 new world The man of affairs turns social sci- 
 entist A time of transition A century of prog- 
 ress in a decade Burbanks of business Revolu- 
 tion balances the ledger Retained attorneys for 
 dead men's policies Knowing enough about all 
 things to keep one's own work in right perspec- 
 tive The social waste of our scrap-heap for lead- 
 ers A nation that knows where it is going. 
 
 THIRD PAPER 
 ANONYMOUS LIBERALISM 42 
 
 The statesman's General Staff The new spirit in 
 business Professions vs. Trade The intellectual 
 challenge of modern business The social function
 
 CONTENTS 
 
 PAGE 
 
 of the business man Henry Ford's peace ship 
 vs. Henry Ford's farm tractor Efficient produc- 
 tion Just distribution Wise consumption 
 Trade ethics Business leadership and the social 
 unrest The menace of the firing-squad mind 
 Twenty business men and a Magna Charta for 
 American industry. 
 
 FOURTH PAPER 
 THE POLITICS OP INDUSTRY ........ 93 
 
 Making war with phrases vs. Making war with 
 principles A phrase that will haunt the coun- 
 sels of business and industry The Balance of 
 Power system breaks down in both international 
 and industrial relations Competition and drift 
 vs. cooperation and control The futility of half- 
 measures The origin of the modern labor prob- ' 
 lem A glance at handicraft days Lost assets 
 of modern industry Fighting for a lost control 
 Inadequate expedients Collective bargaining 
 Strikes Lockouts Conciliation Arbitra- 
 tion Investigation Social legislation Welfare 
 work Profit-Sharing Scientific Management 
 What the ultimate labor issue is Competitive 
 bargaining vs. Cooperative government England 
 moves toward industrial self-government The 
 Whitley Report analyzed Making industry a 
 training school for political citizenship. 
 
 FIFTH PAPER 
 BUSINESS STATESMANSHIP 151 
 
 Decentralizing statesmanship Political policemen 
 vs. Business statesmen Conservatives and radi- 
 cals join forces against political bureaucracy 
 The current sets against the bureaucratic state 
 and the Socialistic state for same reason The
 
 CONTENTS 
 
 PAGE 
 
 center of social authority shifts from politics to 
 industry Making the invisible government vis- 
 ible and socially responsible A state that cannot 
 meet an emergency without abdicating Repre- 
 sentative government lags behind the facts of 
 modern life American government not designed 
 for quick response to public will Business meets 
 demands of awakened labor with statesmanship 
 instead of blind antagonism Business democracy 
 vs. business autocracy A forecast A store tries 
 self-government. 
 
 APPENDIX 195 
 
 (1) THE WHITLET REPORT ...... 195 
 
 (2) LETTER FROM THE MINISTER OF LABOUR . 207 
 
 An explanation of the British Government's view 
 of its proposals.
 
 THE POLITICS OF INDUSTRY
 
 THE POLITICS OF INDUSTRY 
 
 A NATION OF IMPEOVISEBS 
 
 A warring nation unprepared for war A peaceful nation un- 
 prepared for peace The spell of the immediate Learning 
 to anticipate and to discount crises Immediate problems 
 of transition economics Long time problems of policy 
 Unity of opinion in war-time Diversity of opinion in 
 peace-time If we had a Peace Book. 
 
 WE have come near to missing an appoint- 
 ment with destiny through our palter- 
 ing indecision respecting the issues of readjust- 
 ment left in the wake of the war. We learned 
 in a costly school what it means to become a 
 warring nation unprepared for war; we are 
 now in the equally embarrassing position of 
 a peaceful nation unprepared for peace. No 
 small share of the responsibility for our plight 
 is traceable to the cowardly conception of mo- 
 rale that dictated the subject and determined the 
 direction of our public thought during the war. 
 We manifested an intolerant impatience with
 
 4 THE POLITICS OF INDUSTRY 
 
 any proposal that did not relate, or purport to 
 relate, to the effective prosecution of the war. 
 We deliberately chose to be a nation of single- 
 track minds. In a manner we shall be heartily 
 ashamed of some day, we subjected American 
 opinion to propagandist organizations manned, 
 too frequently, by hysterical professors who had 
 taken a leave of absence both from their uni- 
 versities and from their scholarly judgment. 
 There was, of course, a show of reason in our 
 procedure. When the foundation of one's 
 house is being undermined is, of course, no 
 time for the complacent discussion of interior 
 decorations. For all their importance in nor- 
 mal times, there were many rights and causes 
 which had to adjourn their claim upon the na- 
 
 
 
 tion's attention until the urgent business of 
 war was concluded. The scattered energies of 
 the nation had to be knit and kept knit into a 
 forceful unity. 
 
 With this necessity in mind we attempted, by 
 ruthless concentration, to rule out the wasting 
 even of thought on non-essentials. But a con- 
 centration that found no time for a systematic 
 study in advance of the social, economic, and 
 political problems that we abruptly faced when 
 the war ended is now seen to have been a vi-
 
 A NATION OF IMPROVISERS 5 
 
 sionless and dangerous policy. There is such 
 a thing as the treason of misguided emphasis. 
 
 As a people we have never quite acquired the 
 habit of preparing well in advance for even the 
 most predictable demands of the future. We 
 are in many ways a nation of improvisers. 
 Our social and political thinking is too often 
 done under the spell of the immediate. We 
 wait until a crisis is upon us, and then hastily 
 provide some expedient which we permit to 
 crystallize into a tradition that becomes an ob- 
 stacle to consistent progress. But our democ- 
 racy must in self-defense learn to anticipate 
 and to discount crises. Our social and polit- 
 ical policies must not be created over night in 
 the heat and hurry of a critical situation. 
 They must be got ready before the crisis devel- 
 ops. The wastefulness of the trial and error 
 process must be minimized by a public mind 
 that can think of two things at once, especially 
 when those two things are as vitally inter-de- 
 pendent as a day and the day after. 
 
 Nowhere has this principle applied with 
 greater force than to the necessity for our hav- 
 ing given sustained attention to after-the-war 
 problems even while we were most immersed in 
 during-the-war problems. The problems of
 
 6 THE POLITICS OF INDUSTRY 
 
 war and the problems of peace were not joined 
 cleanly like flag-stones or bits in a mosaic; 
 there was an overlapping, a blending. They 
 should, therefore, have been dealt with abreast, 
 not tandem. 
 
 When peace was declared, the United States 
 was confronted with many serious domestic 
 problems; immediate problems of transition 
 economics that called for measurably quick ac- 
 tion, and long time problems of policy, the ad- 
 equate treatment of which promises to involve a 
 reexamination of the foundations of our politi- 
 cal and industrial polity. A categorical listing, 
 under these two headings, of a few of our na- 
 tional problems will serve to visualize the chal- 
 lenge to our national ingenuity involved in the 
 transition of American life from a war footing 
 to a peace footing. 
 
 Among the problems of transition economics 
 that became immediately pressing with the end- 
 ing of the war may be listed : 
 
 1. The demobilization of our Army, involv- 
 ing the concurrent demobilization of our mu- 
 nitions workers and all others who were en- 
 gaged in war work. As part of this demobil- 
 ization process we must deal with the problem 
 of unemployment which may attend demobil-
 
 A NATION OF IMPKOVISERS 7 
 
 ization unless sound policy and adequate or- 
 ganization are brought to the question ; here ap- 
 pears the necessity for a net-work of carefully 
 conceived and executed surveys that will show 
 the vocational adaptabilities of the returning 
 soldiers and the man-power needs of Ameri- 
 can industries and farms; this demobilization 
 raises afresh the problem of a reorganization 
 of many American industries along lines that 
 will better meet the problem of seasonal em- 
 ployment which contributes so much toward un- 
 employment at certain times. 
 
 2. The larger implications of shifting Amer- 
 ican industrial organization from a war footing 
 to a peace footing, involving as that does the 
 determination of the new uses to which war 
 plants shall be put ; the charting of the field of 
 commodity demands that were adjourned dur- 
 ing the war but which now may serve to absorb 
 the output of the increased productive machin- 
 ery and power brought about by the war; and 
 the necessary readjustment of machinery and 
 personnel to the new output. Here are like- 
 wise involved the intricate problems of prices 
 and wages which will so largely determine the 
 satisfaction or discontent under which the pro- 
 cess of transition will be carried on.
 
 8 THE POLITICS OF INDUSTRY 
 
 3. The reeducation of crippled and semi-dis- 
 abled soldiers and the fitting of them back into 
 the industrial life of the nation. 
 
 4. The prompt, if not final, determination of 
 the basis upon which we purpose to conduct the 
 transportation and communication systems of 
 the country. 
 
 5. The possible uses of reclaimed lands for 
 soldier and further civilian settlement. 
 
 6. The handling of raw materials, involving 
 as that does a study of our duties and interests 
 in the matter of supplying the European de- 
 mand for raw materials, a study of the raw ma- 
 terials we shall need from foreign sources and 
 the understandings that are to be reckoned 
 with in getting them, a study of the disposition 
 of the raw materials left in the hands of the 
 Government at the termination of the war, and 
 the underlying problem of the regulation of the 
 movement of raw materials. 
 
 7. The transfer from war exports to their 
 substitute peace exports. 
 
 8. The organization of American production 
 to meet the demands growing out of the physi- 
 cal reconstruction of the devastated regions of 
 Europe and the related demands of industrial 
 reconstruction.
 
 A NATION OF IMPROVISERS 9 
 
 9. The determination of American policies 
 that will meet the centralized purchasing meth- 
 ods and organizations being instituted in Eur- 
 ope. 
 
 10. The sound adjustment of American tariff 
 policy to actual conditions in such a manner as 
 will protect the legitimate interests of both pro- 
 ducer and consumer and at the same time not 
 run counter to our international responsibility 
 for helpfulness in the physical reconstruction 
 of Europe and the fairest of fair play in the 
 next few years while the nations of Europe are 
 commercially getting on their feet after the dis- 
 rupting experience of the war which was ours 
 no less than theirs; a tariff policy that will 
 neither play a role of super-sentiment nor lie 
 open to the charge of purposing to capitalize 
 advantages accrued from the waging of an un- 
 selfish war. 
 
 11. The administration of our augmented 
 gold supply in a manner that will best reestab- 
 lish international credit and stability, and a 
 score of equally vital problems. 
 
 This is a large enough number of the imme- 
 diate transition problems to throw into con- 
 trast with some of the long time problems of 
 policy which the war-altered world has forced
 
 10 THE POLITICS OF INDUSTRY 
 
 upon us. Of these latter it is sufficient to men- 
 tion the following: 
 
 1. A national labor policy. We need frankly 
 to face the necessity for finding and formulat- 
 ing the policy that will most nearly insure con- 
 tinuing harmony between employers and em- 
 ployees. The whole question of our national 
 progress and happiness is bound up in that. 
 Dare we hope for an ultimate solution from the 
 processes of conciliation as exemplified in the 
 work of our National War Labor Board, from 
 the give and take of collective bargaining and 
 a balance of power see-saw between capital and 
 labor, or does the way out lie along the road 
 toward some sort of industrial self-govern- 
 ment! 
 
 2. A trust policy. We need to determine 
 once for all whether the best future for Amer- 
 ican national life demands centralization or de- 
 centralization. If the conclusion gives the ver- 
 dict to centralization, then we must consider 
 how the fruits of centralization may be guaran- 
 teed for the common good instead of private in- 
 terests in an unsocially limited sense. 
 
 3. A foreign trade policy. We need to con- 
 sider the sort of foreign trade policy that will 
 best consolidate the gains in moral leadership
 
 A NATION OF IMPROVISERS 11 
 
 which we have made during the war in interna- 
 tional affairs. But we need to apply with a 
 new intensity the most scientific methods to the 
 study of our past foreign trade methods with 
 the view to putting them upon a basis of 
 greater efficiency for the keen contests which 
 lie ahead. I do not think American foreign 
 trade should be turned into an agency of exhor- 
 tation in behalf of American ideals to the ex- 
 clusion of a straightforward and aggressive 
 contest for our share of the commerce of the 
 world, such an adventure would be taken ad- 
 vantage of as much as it would be appreciated, 
 but it does need to be remembered that the 
 exporter, in a peculiar sense, holds the honor 
 and ideals of his nation in his hands. And all 
 in all our foreign trade should clarify and not 
 contradict the international ethics for which 
 our statesmanship has so consistently stood 
 throughout the war and in the considerations 
 of peace. 
 
 4. A research policy. We need to organize 
 the research abilities of the nation in a manner 
 that will put a foundation of fact under our po- 
 litical and industrial calculations to a degree 
 that we have not heretofore reached. 
 
 5. A national educational policy. We need
 
 12 THE POLITICS OF INDUSTRY 
 
 to throw a concentrated national attention upon 
 the adjustment of our educational system to 
 the new demands of this new day. We need to 
 insure to the average child the opportunities of 
 vocational education, not a vocational educa- 
 tion that trains in technic alone and mechanizes 
 the mind of the child, but a vocational educa- 
 tion that awakens the creative impulse. We 
 need to rid our educational system of the ele- 
 ments of standardization and quantity produc- 
 tion that have blighted it to such a marked ex- 
 tent in the past. We need to reconsider the 
 curricula of our colleges and universities to the 
 end that the college graduate may be better 
 oriented to his world and may face his prob- 
 lems not merely with the possession of a num- 
 ber of unrelated blocks of information, but with 
 that spacious mindedness which comes from a 
 truly liberal education. 
 
 6. An Americanization policy. The need 
 here is for something more than social settle- 
 ment classes in English. We must somehow in- 
 fuse the immigrant with the American spirit and 
 awaken in him a fundamental respect for Amer- 
 ican institutions. Of course we may have to 
 change some of our institutions before succeed- 
 ing 'fully in that venture, but the fact remains
 
 A NATION OF IMPEOVISERS 13 
 
 that we have failed in this respect in the past. 
 Some of the most disturbing characters in the 
 red revolutions of Europe are men and women 
 who lived in our midst before the war and went 
 back to Europe with a sneer on their faces say- 
 ing, "Are we going to organize a Republic af- 
 ter our revolution T No. The United States is 
 a Republic. " Whether these men were right 
 or wrong in their sneer is beside the mark I 
 am aiming at here, which is to state the chal- 
 lenge which the presence of a large foreign 
 born element in our midst makes to us for a 
 genuine Americanization policy. 
 
 7. The underlying problem of striking a just 
 balance of judgment and legislation between 
 necessary emergency measures and fundamen- 
 tal solutions, so that in the end we may be the 
 beneficiaries of a boldly conceived and states- 
 manlike reconstruction instead of a temporiz- 
 ing patchwork of palliatives. 
 
 What we did not fully reckon with in advance 
 is the fact that political leadership is in a less 
 favored position for dealing with these prob- 
 lems of reconstruction than it enjoyed in dealing 
 with the problems of war. During the war the 
 necessity for presenting a solid front to the en- 
 emy drove diversity of opinion to cover and
 
 gave constituted authority a measurably clear 
 field for action, except for sporadic flurries of 
 criticism. In war time the issues were subject 
 to relative simplification. There were not the 
 usual complications of party and class inter- 
 ests. Particularist claims were postponed in 
 deference to the supreme issue of the emer- 
 gency. Speaking in the large, there was in war 
 time one clear road to an agreed-upon goal. 
 
 But all that changed over night when peace 
 came. Pent-up differences of opinion were 
 released. The embargo on partizanship was 
 lifted. The forces of reaction remobilized. 
 Eadicalism resumed its rights of criticism. 
 Guided by the instincts of self-defense and self- 
 expression, the various classes and points of 
 view that comprise our national life gravitated 
 toward common centers in support of common 
 interests and ideas. There is not the unity of 
 opinion about the goal of national effort that 
 obtained during the war. There is even less 
 unity of opinion about the roads leading to any 
 goal. Issues are so numerous and complicated 
 that political leadership finds it difficult to mold 
 public opinion by occasional speeches as in war 
 time. And above all, the difficulties and dan- 
 gers are at our very door; there are no Allies
 
 A NATION OF IMPROVISERS 15 
 
 to hold the line while we are getting ready to 
 act. 
 
 The problem of physical reconstruction is 
 not an extensive and pressing problem with us, 
 as with France and Germany, for instance ; but 
 we face a difficult and important time, never- 
 theless. And what is most important of all, 
 the end of the war has given us the chance to 
 do many unprecedented things that will set us 
 forward for a generation in political and social 
 organization if we act while the flush of the 
 creative moment is on, while the spirit of read- 
 justment is still in the air, and before the old so- 
 cial inertia and our everyday spirit take posses- 
 sion of us once more. The public mind is to-day 
 highly sensitive to suggestion, because the is- 
 sues of politics and industry to-day are recog- 
 nized as touching vitally the personal future 
 and fortune of every American. We must 
 somehow contrive to overcome the handicap of 
 unpreparedness for peace if we are not to be 
 captured by catch words, ruled by snap judg- 
 ment, and rifled by special interests. 
 
 A fatal trust in our facility for improvising 
 brought us to the end of the war without any 
 adequate advance preparation having been 
 made, either by the government or by voluntary
 
 16 THE POLITICS OF INDUSTRY 
 
 groups, for the readjustment period. We have 
 no American " peace book'' affording a sound 
 fact basis upon which our political, business, la- 
 bor and educational leadership can operate. If 
 we had such a " peace book" it would go far to- 
 ward preventing a capture of the public mind by 
 the special pleader and the demagogue. It 
 would give a sweep and grasp to the legislative 
 thought of the country beyond anything that 
 can be hoped with each legislator himself at- 
 tempting to visualize the entire problem. It 
 would be invaluable in helping every business 
 man, labor leader, and educator to orient his 
 problem and policy to the whole situation. It 
 would induce among us the habit of thinking 
 nationally; and that we must do if we are to 
 meet in an adequate manner the new demands 
 of the new world that this war, with all of its 
 tragedy, has created.
 
 n 
 
 THE BACKGROUND OF RECONSTRUCTION 
 
 A social doomsday The myth of a fixed world The conta- 
 gion of change Latent aspirations find voice and vitality 
 Devising new policies for a new world The man of affairs 
 turns social scientist A time of transition A century of 
 progress in a decade Burbanks of business Revolution 
 balances the ledger Retained attorneys for dead men's 
 policies Knowing enough about all things to keep one's 
 own work in right perspective The social waste of our 
 scrap-heap for leaders A nation that knows where it is 
 going. 
 
 WE are a cautious people, skeptical of 
 easy generalizations, but it is now rec- 
 ognized on all hands that the war has shaken 
 down about our ears an old order of things. 
 The sociologist has been talking about some 
 such doomsday for the last decade, but his pre- 
 dictions have not been taken seriously as the 
 basis for practical policies by men of affairs. 
 Now, however, we are in actual grapple with a 
 thousand and one newly released forces which 
 we must either master or be mastered by in the 
 determination of a new order of things. It is 
 not the analyses of the class-room, but the ac- 
 
 17
 
 18 THE POLITICS OF INDUSTRY 
 
 tualities of the market-place, that have set 
 everyone talking about a changing order. 
 
 There is a disposition in many quarters, how- 
 ever, to minimize the importance of American 
 reconstruction a disposition to say that it is 
 well enough for Great Britain to set up the 
 elaborate machinery of a ministry of recon- 
 struction because Great Britain has been on 
 the edge of the battle-field for four and a quar- 
 ter years and the whole texture of her life has 
 been disarranged; but that the brief valor of 
 America's war-making, while it involved exten- 
 sive administrative readjustments, did not 
 place such a strain upon the social conceptions 
 and industrial relations of American life as to 
 require of us the fundamental reexamination of 
 things in general which Great Britain seems to 
 have been feeling her way toward. There is a 
 disposition to feel that we shall need to read- 
 just the business of American life, simply as an 
 administrative shift from war to peace, but 
 that there is no new reason for reexamining the 
 bases of American policy in business, industry, 
 education, and other fields. And there is some 
 show of reason in that disposition if recon- 
 struction is regarded as simply the rearrange- 
 ment of things that war has disturbed, as one
 
 EECONSTEUCTION 19 
 
 might tidy up a room which a group of rowdies 
 had occupied and littered up. But the fact is 
 that the war is only one of many factors that 
 have made this a transition day in history. 
 The war did not of itself make this a time of 
 transition; the war merely dramatized and 
 gave added urgency to processes of readjust- 
 ment and revaluation that were already under 
 way and of which we as a people were but in- 
 differently aware. Before the war we were 
 more of a sheltered people than we like to ad- 
 mit, creatures of an isolation that had been quite 
 as much a matter of mind as of geography. 
 The very bigness of our country had worked 
 against vivid concentrations of our social and 
 industrial problems that might have made us 
 more keenly aware of the forces of change that 
 were getting hold of the world. If we were not 
 unacquainted with the ferment that was work- 
 ing throughout Europe, we were at least living 
 in the quieter suburbs of its disturbing effects. 
 
 Before the war a long period of peace had 
 lulled us into a false sense of security. Ex- 
 cept when we forced ourselves to analysis, most 
 of us determined our policies and ordered our 
 actions upon the assumption that the habits of 
 men and nations were relatively fixed or at
 
 20 THE POLITICS OF INDUSTRY 
 
 least predictable. Despite the social and in- 
 dustrial discontent, the political ferment, and 
 the ceaseless readjustments of science which 
 marked the past generation, we went about our 
 affairs with a certain uncritical confidence that 
 the institutions, policies, and forces of the 
 world were labeled and catalogued with fair 
 clearness, and that the direction of progress 
 had been so charted that we could lie down at 
 night and in the morning know just about how 
 far and in what direction the world had moved 
 while we slept. Then suddenly there burst 
 upon the world this war, with its consequent 
 results of revolution and revaluation. In the 
 four and a quarter years of its course so many 
 accredited theories of government and indus- 
 try have been scrapped, so many readjustments 
 effected, and so many new forces released, that 
 now when we lie down at night we have no as- 
 surance of the kind of world to which we shall 
 awaken in the morning. Under the pressures 
 of war it seems that civilization has left its 
 comfortable home of well-ordered habits, 
 broken through its crust of custom, and in the 
 spirit of adventure and experiment taken to the 
 open road. The whole world is yeasty. The 
 latent and brooding aspirations of a century
 
 RECONSTRUCTION 21 
 
 have found voice and vitality. The spirit of 
 change which has entered the counsels of the 
 world, in its several degrees of intensity from 
 moderate reform to Bolshevism, is not a local- 
 ized phenomenon which the rest of the world 
 can watch in a detached way, as it might a lab- 
 oratory experiment, postponing judgment and 
 action until the experiment offers proof of its 
 soundness or its danger; this spirit of change 
 is a contagion which eludes constituted author- 
 ity and crosses frontiers at will. It is no trick 
 of rhetoric to call this a "time of transition." 
 The phrase runs through bank bulletins and busi- 
 ness men's interviews about as frequently as 
 through the literature of theory, and no one 
 will indict bank bulletins for fervid imaginings. 
 This spirit of interrogation and change which 
 marks our time will for the next few years at 
 least constitute the very atmosphere which 
 every policy of government, business, industry, 
 education, and religion must breathe. It is of 
 primary importance, therefore, that every man 
 who carries responsibilities of administration 
 in any department of American life gain a 
 working knowledge of the new forces, new 
 ideas, and new alignments which are to give 
 the next few years their character and deter-
 
 22 THE POLITICS OF INDUSTRY 
 
 mine the success or failure of every individual 
 or corporate plan. It has long been a truism 
 of foreign trade that the business man must 
 study his market, not merely market quota- 
 tions but the character and customs of the peo- 
 ple to whom he would sell, their likes and dis- 
 likes, their whims ; that his salesman must ad- 
 just his manners and methods to the etiquette 
 of the foreign purchasers; that to be exotic 
 either in his goods, their package, or their pres- 
 entation is bad business. The threadbare bur- 
 lesque of the failure to study one's market is 
 the exporter who would try to sell furs in the 
 tropics and fans in the arctic zone. To-day 
 that principle carries a wider application. 
 Our problem is more than one of adjusting our 
 goods to a new market ; our problem is that of 
 adjusting all of our fundamental policies to a 
 new world. 
 
 The most practical thing, therefore, that the 
 man of affairs can do at this time is to turn so- 
 cial scientist in dead earnest until he has surely 
 seen, understood, valuated, and found a basis 
 for reckoning with the complicated and far- 
 reaching implications of this new era that has 
 been germinating for a generation and which 
 the war has called suddenly to life. As a prac-
 
 RECONSTRUCTION 23 
 
 tical service to practical men, therefore, I want 
 to make several more or less unrelated observa- 
 tions upon times of transition in general and 
 this one in particular. I do this even at the risk 
 of appearing abstract and discursive, for in my 
 judgment the larger implications of the spirit 
 of change, of experiment, of reconstruction 
 which is stirring throughout the world are of 
 as immediately practical concern to the busi- 
 ness man as the figures on his latest cost-sheet, 
 of as urgent interest to the servant of govern- 
 ment as the latest election forecast, of as much 
 moment to the educator as current endowment 
 prospects. In fact, it is the action of the elu- 
 sive human, social, and, shall I say, spiritual 
 forces loosed by the war that may more nearly 
 determine the success or failure of a given po- 
 litical, social, or industrial policy than effi- 
 ciency or blundering in the mechanics of admin- 
 istration. 
 
 I shall ask the reader to go along with me 
 as leisurely as he may and not grow impatient 
 for " practical" deductions concerning the next 
 problem that awaits his decision at the office. 
 It would be a reversal of intelligent planning to 
 discuss specific policies before analyzing the 
 situation the policies must meet.
 
 24 THE POLITICS OF INDUSTRY 
 
 Here, then, let us set down some of the things 
 that mark an epoch of readjustment, like the 
 sixteenth-century Reformation, for instance, 
 but more particularly our own time. 
 
 A time of revaluation which bridges two or- 
 ders of things always makes possible a speed- 
 ing up of evolution, an opportunity which, as 
 history regrettably records, has not always 
 been taken advantage of. This is not in vio- 
 lation, but in fulfilment, of natural law, for bi- 
 ology reckons with the possibility of quick 
 growth as well as slow growth ; biology is based 
 upon the twin laws which have been called the 
 law of gradualism and the law of the sudden 
 leap. American society is just now at a point 
 where the law of the sudden leap may come into 
 valuable play unless it is deliberately defeated 
 by reactionary interference. The stage is set 
 for the accomplishment of an amount of prog- 
 ress within the next ten years in the direction 
 of greater efficiency in work and finer justice 
 in relations which in normal times might take 
 a century. In fact, this is the central sig- 
 nificance of the reconstruction period as far as 
 the United States is concerned. On any other 
 basis the word " reconstruction" is something 
 of a misnomer when applied to the American
 
 RECONSTRUCTION 25 
 
 situation. We rightly used the word "recon- 
 struction" to describe the period following our 
 Civil War : we were restoring former rights to 
 seceded States and relating them to privileges 
 of the Union. The word is being rightly used 
 in most of the belligerent countries of Europe 
 where devastated regions demand physical re- 
 construction, and where the debris of over- 
 thrown governments must be removed and new 
 governments set up. But in this country the 
 war, for all its upsetting of traditions and 
 quick enforcement of reorganization in busi- 
 ness and industry, did not tear our national 
 life to pieces to an extent that produced a re- 
 construction problem that cannot be taken care 
 of as a part of the day's work. I am not here 
 taking back what I say elsewhere about the na- 
 tional importance of constructive foresight; I 
 am not reverting to the unconscious assumption 
 that has played such a large role in American 
 affairs in the past that we are the favored 
 wards of Good Luck. I have in mind just what 
 Mr. Wilson had in mind unless I misinterpret 
 him when, just before sailing for Europe, he 
 said: "It will not be easy to direct the return 
 to a peace footing any better than it will direct 
 itself. The American business man is of quick
 
 26 THE POLITICS OF INDUSTRY 
 
 initiative." Certain of the liberal journals 
 took Mr. Wilson to task for this assertion, 
 and in a measure implied that he had for 
 the time fallen short of the creative leader- 
 ship in reconstruction which his previous pro- 
 nouncements gave us the right to expect from 
 him. I do not think so. I think Mr. Wil- 
 son had in mind the fact that reconstruction, 
 in the strictly accurate sense of the word, is not 
 the major problem for America as it is for 
 France, to take only one example. He knew 
 that it would be bad tactics to tie up the whole 
 program of liberal advance with the conception 
 of reconstruction, for practical men already 
 feel that the wholesale application of the word 
 to the American situation is a forced use of the 
 word and smacks of the theorist-reformer. 
 Then, too, a word like "reconstruction" is a 
 standing invitation to every man with a pan- 
 acea concealed on his person. Under its lure 
 all Utopian-minded persons are resurrecting 
 and refurbishing all their dead dreams and 
 throwing them on the study-table of statesman- 
 ship and business. Mr. Wilson knew that be- 
 fore long the word "reconstruction" would be 
 associated in the minds of responsible men with 
 all sorts of impossible proposals, and that the
 
 EECONSTKUCTION 27 
 
 merging of the whole program of solid advance 
 with the temporary process of shifting the 
 country from a war-footing to a peace-footing 
 would return to plague him later. It has been 
 an important part of his political technique to 
 keep proposed programs free from stereotyped 
 labels, which always tend to crystallize opposi- 
 tion and to set opinion before all of the facts 
 have been examined. 
 
 It may seem that I have wandered a bit from 
 the proposition with which I began, namely, 
 that the central importance of this time of tran- 
 sition is that it gives us the chance to speed up 
 evolution and accomplish in the next few years 
 what in normal times might take us a century. 
 But I stepped aside to comment upon Mr. Wil- 
 son's statement, by way of illustrating the im- 
 portance of distinguishing between the things 
 that must be done 'and the things that may be 
 done in the fluid times through which we are just 
 passing, the importance of restricting the word 
 "reconstruction" to the more or less mechani- 
 cal processes of readjustment that must be 
 done, and leaving the wide field of things that 
 may be done free from the handicap of a word 
 that is already getting hackneyed and losing its 
 power to stimulate creative imagination in the
 
 28 THE POLITICS OF INDUSTRY 
 
 men who stand at the centers of real authority 
 and power. For from the point of view of 
 strategy there is more likelihood of our using 
 to the full the present opportunity for a great 
 advance in the better organization of our com- 
 mon life if we do not make everything revolve 
 about the strictly technical process of recon- 
 struction which may incite prejudice and antag- 
 onisms more than it inspires to political and in- 
 dustrial creativeness. It will be one of the 
 great wastes of history if we permit the pres- 
 ent flexibility of things to stiffen before we 
 wrest from the situation some distinct measure 
 of progress or if we slow down the rate of prog- 
 ress by assembling unnecessary antagonisms 
 around a catchword. It may seem that I have 
 here played with words simply, have set up a 
 distinction without a difference; but the dis- 
 tinction is real. There is a problem of transi- 
 tion economics which men had in mind when 
 the word " reconstruction'* came first into 
 vogue ; but as the war went on, people began to 
 feel the need for larger and more permanent 
 policies determined in the spirit the war had 
 revealed. The larger meaning of the present 
 transition-time lies not so much in the new 
 problems that the war has created as in the old
 
 RECONSTRUCTION 29 
 
 problems which the war has intensified and re- 
 ferred anew to society for fresh consideration. 
 A transition period in history always drama- 
 tizes the necessity for the conscious control and 
 direction of civilization; it exposes the tragic 
 social cost of drift. And to-day the whole pos- 
 ture of affairs, in business, in industry, in gov- 
 ernment, and in education, puts it squarely to 
 the leadership and citizenry of American de- 
 mocracy to choose whether the development of 
 American life in the next few critical years 
 shall be the outcome of a planless drift, touched 
 here and there by the hastily drawn policy of 
 some improviser, or the result of intelligent 
 foresight expressed through social invention, 
 business statesmanship, and political creative- 
 ness. Now, any man who thinks in terms of 
 modern science believes that even the drift of 
 the world is toward the good, that the curve 
 of human evolution is an ascending curve; but 
 such a man knows also that by mixing human 
 intelligence with the operation of natural laws 
 and social forces better results may be arrived 
 at in a shorter time than if evolution is left 
 to shift for itself. The secret of Luther Bur- 
 bank's unusual public service, for instance, is 
 not that with a magician's wand he has sum-
 
 30 THE POLITICS OF INDUSTRY 
 
 moned from the thin air new creations of veg- 
 etables and flowers ; but that he has taken nat- 
 ural laws and natural forces that were already 
 at work, and by mixing human intelligence with 
 them has produced in a short while a Shasta 
 Daisy, a bigger, better, and finer daisy than 
 nature would have produced in a century if left 
 to herself. In the readjustment period we are 
 entering we shall need the services of a great 
 many Luther Burbanks of business, of indus- 
 try, of politics, of education, men who by the 
 grace of analysis can see where contemporary 
 forces and current ideas are steering the coun- 
 try, and by adding conscious plan to uncon- 
 scious drift play the general to these political, 
 social, and economic tendencies, and get for us 
 the maximum of constructive result with the 
 minimum waste of time and effort. 
 
 But a few social Burbanks will not insure 
 stable progress in our readjustment period. 
 Unless the average American acquires a 
 broadly intelligent understanding of the newer 
 aspects of our political, social, and industrial 
 problems which the war has shoved into the 
 foreground, it may turn out that even though 
 we have enough brilliant leadership in this 
 country, we shall fall far short of easily real-
 
 RECONSTRUCTION 31 
 
 izable progress, because the masses of our cit- 
 izens lack that intelligent appreciation of the 
 situation and the policies proposed to insure 
 effective response to the leadership. For 
 clearly our reconstruction period cannot pro- 
 duce the best results if it is left to the brilliant 
 performance of a few conspicuous leaders; it 
 must be a nation-wide popular collaboration. 
 
 Times of transition are also characterized by 
 the fact that they present for instant and lump 
 payment the debt that the injustice, ignorance, 
 blindness, and inefficiency of the whole preced- 
 ing era have been accumulating a debt that 
 in normal times would be paid piecemeal. 
 This is of fundamental importance to remem- 
 ber in determining one's attitude toward the 
 apparent excess of waste and destruction that 
 frequently marks a process of revolution or re- 
 adjustment. Too frequently one dead man in 
 a street brawl or a million dollars lost in the 
 reordering of a system alone determine a man's 
 opposition to a revolution or a reform. I am 
 not building a case for Bolshevism's experi- 
 ment in proletarian autocracy; I am saying 
 only that the costs and penalties of revolutions 
 and readjustments are sometimes distressingly 
 large not because the change is wrong, but be-
 
 32 THE POLITICS OF INDUSTRY 
 
 cause the concentrated debts of the passing or- 
 der are being paid off. When revolutions take 
 place on the instalment plan, as they are al- 
 ways doing, we don't worry about their incon- 
 venience or their price; but when evolution 
 lets bills pile up and calls us to account, we de- 
 mur. The basic question to ask in such in- 
 stances is, Will the payment of the lump sum 
 bring a compensating degree of progress! If 
 so, the costs of change may represent invest- 
 ment rather than loss. 
 
 Times of readjustment like this always tempt 
 the current generation to draw up a program 
 for human destiny and take immediate steps to 
 carry it out. Men who are most creative for 
 their own generation too frequently contradict 
 themselves by trying to crystallize their no- 
 tions for the next generation. Much of the 
 popular criticism of great foundations has cen- 
 tered about the fact that they may easily be- 
 come retained attorneys for dead men's poli- 
 cies. We cannot, of course, get on upon any 
 such basis. We must not limit the freedom 
 or, I should say, hamper the freedom of the 
 next generation to experiment with life. We 
 must not will our children a rigid world that 
 nothing but war or revolution will alter; we
 
 EECONSTEUCTION 33 
 
 have had enough experience with that kind of 
 world. The greatest inheritance we can hand 
 down to the next generation is not an improved 
 world, but a world in which improvement is 
 daily possible. Every scheme of government 
 or industry that may be proposed during our 
 readjustment period should be carefully scru- 
 tinized in the light of this essential requirement 
 of consistent progress. 
 
 Some one has said that in every time of fun- 
 damental readjustment the partitions of life 
 are torn out and the specialists confounded. 
 Just that is happening to-day, and one of the 
 big results that will come from it will be the 
 widening of the range of the average man's in- 
 terests. By strange paradox, \\ihen specialized 
 knowledge will be at a premium, no man with 
 large directive responsibilities will dare be too 
 purely a specialist. The war has emphasized 
 to the American mind the relatedness of things. 
 It is clearer than ever that the business man 
 of the future must be more than a business man 
 in the conventional sense of the word : he must 
 be something of a sociologist, or his bungling 
 with labor may undo him ; he must have at least 
 a bowing acquaintance with science, or he may 
 fall a victim to the rule-of-thumb and be bested
 
 34 THE POLITICS OF INDUSTRY 
 
 in the race with the European who is effecting 
 a closer and closer alliance between science and 
 industry; he must know something of interna- 
 tional politics, or he may find his far-flung 
 scheme of investment or credit go on the rocks 
 because some intangible aspiration of the na- 
 tives of an African colony was left out of his 
 reckoning. The educator must be more than 
 a teacher of accumulated knowledge: he must 
 be keenly alive to the character and demands 
 of his time ; for to-day the street cuts squarely 
 across the campus, the class-room opens into 
 the market-place, and the slum is next door to 
 the seminar. The world is the educator's mar- 
 ket, his graduates are his goods; he must ad- 
 just his goods to his market. The university 
 is an anachronism that puts its graduates into 
 the modern world with the information and out- 
 look of the medieval world. The doctor must 
 clearly be more than a doctor; he must know 
 his city as few men know it, for he will be in- 
 creasingly adjudged as failing in his function 
 unless his practice is an integral part of a con- 
 tinuous collaboration with the sanitarian, the 
 architect, the parent, the teacher, and the mu- 
 nicipal government. Self-interest alone will 
 prompt the man of this generation to become
 
 RECONSTRUCTION 35 
 
 more of a student of the whole range of public 
 affairs in order that he may fit his own work 
 more smoothly into the total social process, and 
 the work that is not thus fitted will carry a han- 
 dicap even in the matter of material success. 
 
 One of the serious, but avoidable, wastes of 
 a period of transition to a new order is that in- 
 volved in the transfer of leadership into new 
 hands. What I mean concretely is this: the 
 men who are to-day in the positions of author- 
 ity throughout our society, the men whose 
 hands are on the levers of power in business, in 
 industry, in education, in the church, are the 
 logical candidates for the leadership of the new 
 world into which we are moving. Whether 
 they represent in their points of view the newer 
 aspirations and determinations of our time is 
 another question, but they are the men best 
 trained in the mechanics of leadership; they 
 know the machinery of American life as the 
 rest of us do not. Other things being equal, 
 their whole life has been a training for the re- 
 sponsibilities of this day. Their fruits of ex- 
 perience society can ill afford to lose. But this 
 is certain: if these present leaders of Ameri-i 
 can life either fail or refuse to recognize the le- 
 gitimate new demands of this time of revalua-
 
 36 THE POLITICS OF INDUSTRY 
 
 tion, if they conceive their task to be the de- 
 fense of the past rather than the guidance of 
 the future, if they spend their energies in the 
 thankless task of heckling progress, the leader- 
 ship of American life will inevitably pass into 
 green hands the hands of men who more faith- 
 fully voice the will of the American people, al- 
 though they lack adequate training for leader- 
 ship. This is not conjecture. Whenever, in 
 those creative moments in history when the ac- 
 customed calm and conservatism of the popu- 
 lar mind has been broken up, society has had 
 to choose between trained blind men and un- 
 trained men of vision, society has chosen the 
 untrained men of vision. And the instinct of 
 society has been right. The leader whose vi- 
 sion is right and whose purpose is sincere will 
 acquire the training in time, while the trained 
 man who persists in clinging to the passing or- 
 der is a dead weight. But there is no final rea- 
 son why the trained leadership of one period 
 of development should not become the fittest 
 servant of the next period. Hardly a day 
 passes now without some glimmerings of hope 
 in that direction. Of course a certain propor- 
 tion of the surprising liberalism expressed 
 .from hitherto ultra-conservative quarters is in-
 
 RECONSTEUCTION 37 
 
 spired by the Bismarckian policy of defeating 
 reform by annexing it, but in a swiftly moving 
 time like this even that is a subtly educative 
 process, which will leave its mark upon the 
 mind that goes through it. What a heartening 
 thing it would be to see some capitalist forget 
 himself into immortality by conceiving and pro- 
 posing the most just and workable solution for 
 the labor problem! And some business man 
 who approaches the restless aspirations of the 
 next few years in a spirit of inquiry, of sympa- 
 thy and of disinterested public service instead 
 of automatic antagonism may do just that 
 thing. Back in our muck-raking period many 
 fine-spirited men broke under the exposure, be- 
 came prematurely old men under the grilling, 
 and passed out of public life shamed and dis- 
 appointed men. A hardened reporter, not 
 given to sentiment, in telling me of one of these 
 men said that he died of a broken heart. Now, 
 few of these men were personally bad men; 
 many were good men, who were carrying the 
 business and political ethics of a dead day over 
 into a day of new and different standards. 
 They had stuck too closely to their political and 
 business jobs and had failed to keep sensitive 
 to the growing ideals of their time. Society in
 
 38 THE POLITICS OF INDUSTRY 
 
 its development moved past them without their 
 knowing it, and that fact left society no choice 
 but to scrap their leadership. I have taken the 
 time to pick up this bit of history because our 
 leaders face a similar situation to-day. The 
 key-word of political and business criticism in 
 the years immediately ahead will not be "cor- 
 ruption," as it was in the muck-raking period. 
 But the man who fails to adjust himself to the 
 spirit and standards of this time will be as 
 ruthlessly scrapped as were the leaders of that 
 period. 
 
 Finally, a time of transition makes impera- 
 tive the possession of a unified national policy 
 that will knit the scattered energies and diver- 
 gent purposes of a people into effective unity 
 of action. Without such national purpose or 
 policy, the varied internal antagonisms of a na- 
 tion cancel and neutralize one another and 
 bring the society to a state of rest. And it is 
 at just that point that a society can be caught 
 in the sweep of invisible world currents and 
 carried into situations neither of its choosing 
 nor its expectation. I am here trying to state 
 from memory and apply to our present prob- 
 lem the thesis which L. P. Jacks developed in 
 his illuminating essay on "A Drifting Civiliza-
 
 EECONSTRUCTION 39 
 
 tion." American society does not want to be- 
 come the inert plaything of invisible currents, 
 whether they be currents of Bolshevism or im- 
 perialism. The achievement of a few definite, 
 large, inspiring, and unified national purposes 
 is the best or, more accurately, the only insur- 
 ance against such loss of the control of our fu- 
 ture. A nation without such integrating pur- 
 pose or purposes is always easy prey for the 
 demagogue or the strong man who knows what 
 he wants. Of course, the difficulty we face in 
 the United States is that ours is such a 
 sprawled-out country that concentrated atten- 
 tion is but rarely paid to anything that states- 
 manship says. We listen by sections, and us- 
 ually by the time the necessary unity of opinion 
 has been secured the ripe hour for action has 
 passed, so that we lose half the value of the act. 
 Maybe some advertising genius will arise who 
 can teach us how to get at the mind of this 
 whole people with political and industrial poli- 
 cies at least as effectively as it is got at with the 
 name of a chewing-gum or an automobile. He 
 would deserve well of the country were he to ap- 
 pear for service during the next few important 
 years. 
 Here, then, are seven things which charac-
 
 40 THE POLITICS OF INDUSTRY 
 
 terize times of readjustment and revaluation 
 like the one through which we are now passing 
 and shall be passing for several years to come : 
 (1) The possibility of speeding up evolution 
 and accomplishing in a few years what in nor- 
 mal times might take a century; (2) a dra- 
 matization of the necessity for the conscious 
 control and direction of civilization and an 
 exposure of the high social cost of drift; 
 (3) the burdensome necessity for paying off 
 the accumulated debts of the old order that 
 is passing; (4) a temptation to the living to 
 draw up a dogmatic program for the next gen- 
 eration; (5) a tearing down of the partitions 
 that normally separate the various interests 
 and classes of society; (6) a waste of skill and 
 experience in the transfer of leadership into 
 new hands ; and (7) an emphasis upon the need 
 for a unified national policy. The implications 
 of these seven aspects of this time of readjust- 
 ment will touch intimately every problem and 
 interest of the financial district, of the factory, 
 of the university, of the church, of every insti- 
 tution of American life. No calculation will be 
 complete that leaves them out of account. 
 
 I am under no delusion that in this paper I 
 have sketched an adequate picture of this time
 
 EECONSTEUCTION 41 
 
 of transition. I have not attempted to do the 
 impossible to make a complete catalogue of 
 the forces and factors that must be reckoned 
 with in determining American policies. I have 
 conceived this paper as more in the nature of 
 a foot-note to the discontent and mobility of 
 our time. If it gives the reader the sense of 
 movement, of flexibility, of questioning that 
 gives this time its character, if it dramatizes 
 the equal danger latent in ultra-conservatism 
 and ultra-radicalism, if it indicates the wisdom 
 of making the forces of change and the forces 
 of conservatism complementary instead of com- 
 petitive purely, the paper will more than serve 
 its purpose. 
 
 It is not too much to say that everything de- 
 pends upon the attitude which the present lead- 
 ers of American life take toward the new forces 
 that are now moving across the face of the 
 world, not to leave untouched the last corner of 
 our own country. Until it becomes clear what 
 that attitude is to be, it is difficult to say which 
 is the more important undertaking the edu- 
 cation of the leaders of the social revolution 
 or the education of the captains of industry.
 
 Ill 
 
 ANONYMOUS LIBERALISM 
 
 The statesman's General Staff The new spirit in business 
 Professions vs. Trade The intellectual challenge of modern 
 business The social function of the business man Henry 
 Ford's peace ship vs. Henry Ford's farm tractor Efficient 
 production Just distribution Wise consumption Trade 
 ethics Business leadership and the social unrest The 
 menace of the firing-squad mind Twenty business men and 
 a Magna Charta for American industry. 
 
 THE war meant for American business 
 quick and fundamental readjustments in 
 those processes of production, distribution, and 
 consumption upon which civil and military 
 strength rest. To an unprecedented degree, 
 private interests were adjourned, and the pro- 
 cesses of business reassessed in terms of public 
 service. For the time our factories and stores 
 were looked upon less as distinct businesses, 
 conducted for private ends, and more as coor- 
 dinate parts of a national machinery for pro- 
 duction and distribution. The spirit of com- 
 mon enterprise which the urgency of war 
 evoked made possible many forward-looking 
 
 42
 
 ANONYMOUS LIBERALISM 43 
 
 things that in normal circumstances would have 
 required a decade of agitation and split the na- 
 tion into camps of competitive opinion. 
 
 This necessity for common action has not 
 ceased with the ending of the war. The re- 
 quirements of progress, no less than the re- 
 quirements of war, demand a mobilization of 
 the spirit of unity, cooperation, and concentra- 
 tion. Without unity, cooperation, and concen- 
 tration as a basis of action, the policies of the 
 immediate future, at least, will be the outcome 
 of log-rolling compromise, a patchwork of re- 
 luctant concessions from conflicting interests. 
 Quite clearly we shall not obtain this unity, co- 
 operation and concentration by the methods of 
 governmental control that obtained during the 
 war, for the general tendency will be from con- 
 trol to freedom the farther we get from the sit- 
 uation of emergency. This brings to the fore, 
 as a question of national interest, the spirit and 
 purpose which we may expect the leaders of 
 American business and industry to bring to 
 the issues of readjustment and development 
 within the next few years. The outlook for 
 fundamental progress cannot be predicated 
 upon the breadth or narrowness of political 
 leadership alone; the breadth or narrowness
 
 44 THE POLITICS OF INDUSTRY 
 
 of leadership in business and industry is an 
 equally important factor in any such reckoning. 
 A few determined political leaders with vision 
 and strategy, supported by the degree of lib- 
 eralism that exists in the national mind, will 
 doubtless be able to swing the nation with them 
 in the effecting of the clearly essential read- 
 justments in our domestic policies ; but we shall 
 not, as a people, take full advantage of the pe- 
 culiar possibilities of progress that inhere in 
 a period of readjustment unless all of the pro- 
 cesses of our common life, particularly those of 
 business and industry, are guided by broadly 
 conceived reconstructive policies, unless every 
 man who holds a position of leadership in our 
 social, industrial, and business life plays a 
 courageous and creative part. The statesman, 
 the prophet, the publicist, the leader with a syn- 
 thetic mind who sees the varied factors and 
 forces of our national life in their just relations, 
 will be invaluable in the years just ahead; but 
 such leadership will not achieve the largest 
 possible results without intimate collaboration 
 with constructive leadership in the fields of 
 production, distribution, and consumption. 
 The statesman will be hampered in his leader- 
 ship unless the manufacturer, the merchant, the
 
 ANONYMOUS LIBERALISM 45 
 
 banker, and the labor leader constitute for him 
 a sort of general staff, with the members of 
 which he can establish a community of inter- 
 est and an agreement on policy. 
 
 For these reasons it becomes necessary to be- 
 gin a study of the probable contribution of busi- 
 ness to the period of readjustment we are 
 passing through with an assessment of the mo- 
 tive forces that promise to determine and di- 
 rect the American business mind. With such 
 an assessment made, one may think with a 
 greater sense of sureness upon specific prob- 
 lems of business and industry. This paper, 
 therefore, deals with standards of value, points 
 of view, and motives that may be found in busi- 
 ness circles, partly with standards and mo- 
 tives that are established and apparent, but 
 also with standards and motives that are in pro- 
 cess of formulation standards and motives 
 that have been stimulated by the circumstances 
 and demands of the war. 
 
 American business men aspire to contribute 
 to the processes of readjustment and revalua- 
 tion more than mere shrewdness. American 
 business men are not sentimentalists. They 
 have not turned radical. But on every hand 
 there is evidence in business circles of a tern-
 
 46 THE POLITICS OF INDUSTRY 
 
 pered idealism impatient to translate itself into 
 the concrete, an increasingly high sense of the 
 function business may perform in these days 
 that challenge, as few days have challenged, 
 whatever of the creative there may be in a man. 
 During the war men everywhere breathed the 
 ampler air of service to causes larger than 
 themselves or their interests alone, and what- 
 ever their early post-war reactions may be, 
 these men will not long breathe easily in the 
 stuffy atmosphere of narrow policies and purely 
 self-seeking methods. I am under no illusion 
 that the war has remade human nature. I am 
 not under the spell of analogy to the extent of 
 thinking that the spirit of dedication to, and 
 sacrifice for, large common causes will be car- 
 ried over undiminished into the period of peace. 
 We are doubtless in for a good round measure 
 of reaction. Men will want to shake off arbi- 
 trary restrictions that war imposed. There 
 will be on all hands pleas for a renaissance of 
 individualism ; but I am sanguine enough to be- 
 lieve that this will be temporary temporary 
 not because the war has worked any miracle 
 of transformation in the mind of the race, but 
 because the whole temper of the times will cry
 
 ANONYMOUS LIBERALISM 47 
 
 out against it; temporary because even before 
 the war an enlarging sense of its social func- 
 tion was getting hold of the business mind. 
 
 For several years now, years during which 
 we have been consolidating the social gains 
 from our muck-raking period, there has been 
 going on in the American business mind a move- 
 ment almost mystical in its essential quality 
 and yet of the profoundest practicality. This 
 movement, which I want to discuss in detail a 
 bit later, the facile criticism of the radical mind 
 has frequently discounted and dismissed with 
 a sort of can-any-good-come-out-of-Nazareth 
 air. But these subtle alterations of mind and 
 attitude, however unsatisfying to the type of 
 mind that would rather play with a perfect the- 
 ory than improve an imperfect world, consti- 
 tute one of the important sets of operating in- 
 fluences with which we shall find ourselves deal- 
 ing in the fresh ordering of our immediate fu- 
 ture in this country. It is a commonplace that 
 every such time of democratic advance as 
 we are now passing through means the release 
 and accentuation of certain fundamental hu- 
 man qualities. I am here listing as a product 
 of the current purpose to humanize more fully
 
 48 THE POLITICS OF INDUSTRY 
 
 business, industry, education, and politics what 
 for want of better phrasing I may call the new 
 spirit in business. 
 
 I can perhaps describe this new spirit no bet- 
 ter than by saying that American business has 
 been gradually evolving from a trade into a 
 profession. In our minds at least there has 
 existed a definitive difference between a trade 
 and a profession. Until recently we went about 
 a classification of occupations somewhat as 
 follows : drawing a line down the center of the 
 page, we wrote the word " professions" at the 
 top of the right-hand column and listed there- 
 under such undertakings as the law, medicine, 
 teaching, the ministry, journalism all of the 
 so-called professions; at the top of the left- 
 hand column we wrote the words " business" 
 and "labor" as blanket designations of all re- 
 maining undertakings of which the controlling 
 motive seemed to be the money that could be 
 made out of them. Between business and la- 
 bor on the one hand and the professions on 
 the other a great gulf was fixed a gulf as sun- 
 dering as the gulf that separated Dives and La- 
 zarus. 
 
 This gulf was the product of a certain uncrit-
 
 ANONYMOUS LIBERALISM 49 
 
 ical assumption that men enter the professions 
 not primarily because of the money that can be 
 made out of them, but because, in addition to 
 a competence and some measure of surplus, 
 professions give men automatic and accredited 
 rank as public servants ministering to the 
 higher needs of the society of which they are 
 members. Business and labor, however, have 
 not commonly come within the radius of that 
 assumption. For years we have held in the 
 back of our minds a conception of business and 
 industry as an unregenerate section of our so- 
 cial order in which the law of tooth and nail 
 applied of necessity. Whenever some one re- 
 ferred to a business man as being a public ser- 
 vant or benefactor, the picture that came invol- 
 untarily to mind was that of a man who in his 
 early and poor youth had plunged into busi- 
 ness, where by dint of exacting effort and ruth- 
 less concentration upon purely material ends 
 he had accumulated a lot of money, and, when 
 getting old and a trifle weary of the grind, had 
 turned himself into a sort of glorified Santa 
 Glaus to society, giving his money away to all 
 sorts of "good" causes. For years no one 
 worried greatly about the sources of such bene- 
 factions, it seeming to be the assumption that
 
 50 THE POLITICS OF INDUSTEY 
 
 the fact that a man did good with his money 
 after he got it disinfected the methods of ac- 
 quisition, if the methods needed disinfection. 
 
 All that is changing, is indeed changed, and 
 not because any superconscienee has evolved a 
 theory of tainted money, but because also, and 
 perhaps mainly, business men have come to be- 
 lieve that a business man's most important op- 
 portunity to serve society comes not after he 
 has made his money, in giving it away, but ra- 
 ther while he is making his money, in the way 
 he makes it. Statesmanship in business has 
 come to be adjudged worthier of a real man's 
 mettle than philanthropy outside business. 
 A business man's public service is seen to con- 
 sist not so much in a number of benevolent 
 chores taken on after office hours as in the way 
 the business of the world is carried on during 
 office hours. In other words, business is tak- 
 ing on the character of a profession. It has al- 
 ways been true that the social significance of 
 business equals if not exceeds the social signifi- 
 cance of any of the accredited professions sim- 
 ply because business occupies more of the hours 
 of the average man 's day and touches life daily 
 at more points than all other social processes 
 combined.
 
 ANONYMOUS LIBERALISM 51 
 
 John Buskin caught this significance years 
 ago when he wrote, in his essay on "The Roots 
 of Honour," this statement, which has been 
 quoted threadbare, but which is still valid and 
 still merits attention. Ruskin said, with refer- 
 ence to the merchant, a term that he uses to re- 
 fer to all who engage in any form of industrial 
 pursuit : 
 
 The fact is that people never have had clearly ex- 
 plained to them the true functions of a merchant with 
 respect to other people. . . . Five great intellectual 
 professions, relating to daily necessities of life, have 
 hitherto existed three exist necessarily, in every 
 civilized nation: 
 
 The Soldier's profession is to defend it. 
 
 The Pastor's, to teach it. 
 
 The Physician's, to keep it in health. 
 
 The Lawyer's, to enforce justice in it. 
 
 The Merchant's, to provide for it. 
 And the duty of all these men is, on due occasion, to 
 die for it. On due occasion, namely: 
 
 The Soldier, rather than leave his post in battle. 
 
 The Physician, rather than leave his post in plague. 
 
 The Pastor, rather than teach falsehood. 
 
 The Lawyer, rather than countenance injustice. 
 
 The Merchant What is his "due occasion" of 
 
 death? 
 
 It is the main question for the merchant, as for all of 
 us. For, truly, the man who does not know when to 
 die, does not know how to live.
 
 52 THE POLITICS OF INDUSTRY 
 
 In even more pointed fashion, the profes- 
 sional implications of business have been stated 
 by the late Professor William Smart of Glas- 
 gow, who was an employer of men as well as a 
 teacher of economics. In his very stimulating 
 volume, called "Second Thoughts of an Econo- 
 mist, " he said: 
 
 Personally I count it [the employer's function] 
 the noblest profession of all, though, as a rule, it is 
 taken up from anything but the noblest motives ; and 
 what I ask is just this and no more that the tradi- 
 tions of the professions be transferred to it the 
 noblesse oblige of living for their work and, if neces- 
 sary, dying for it. If an employer has any faith in 
 the well worn analogy of an "army of industry" he 
 must believe in the necessity of Captains of Industry, 
 who think first of their country and their men, and 
 only second of their pay. . . . He must take the sins 
 of his order upon himself and win back the confi- 
 dence that meanwhile has disappeared. His task to- 
 day, in fact, is very much that of a philosopher-king 
 who comes to his throne after many years of misrule 
 by his predecessors. He has no right to his honor- 
 able position but that he governs divinely. 
 
 Since Euskin and Smart said these things, 
 progress has in a measure at least answered 
 their pleas. The traditions of the professions 
 are at least in process of transfer to business.
 
 ANONYMOUS LIBERALISM 53 
 
 In saying this, I am neither falling victim to a 
 merely pretty sentiment nor confusing fact 
 with desire. Of course one runs the constant 
 risk of failure to distinguish between a private 
 wish and a public movement, as George Ber- 
 nard Shaw has suggested; but I am trying in 
 this paper to keep well within the radius of the 
 findings of experience. I am basing my asser- 
 tions regarding the professional tendencies in 
 business upon things I have seen and heard in 
 banks and stores and factories, fully aware, 
 however, that I am reporting a situation that 
 exists among the creative few rather than 
 among the routine many of business men. But 
 these creative-minded business men who envi- 
 sion their business in its social relations are on 
 the increase; they are the pioneers of a new 
 business order. They are among the most pre- 
 cious possessions of a democracy of liberal in- 
 tentions, for the tempered liberalism of one man 
 whose hands are on levers of power may ac- 
 complish more essential progress than the more 
 vocal and more clearly labeled liberalism of 
 academic circles. In other words, there is an 
 anonymous liberalism that frequently does the 
 thing for which professional liberalism has set 
 the stage. This is no cheap fling at the theo-
 
 54 THE POLITICS OF INDUSTRY 
 
 rist, who is, after all, the most practical man 
 alive, the man who blazes the trails that re- 
 sponsible executives later travel. This is sim- 
 ply a reminder that the cautious liberalism of 
 the forward-looking business man and the more 
 daring liberalism of theory are complementary 
 rather than competitive. 
 
 But, to get to more detailed statement re- 
 specting the professional tendencies in busi- 
 ness, most of the discussions of this matter sug- 
 gest the peculiar characteristics of a profes- 
 sion, as contrasted with other occupations, as 
 being these : 
 
 First, a professional career requires a pre- 
 liminary attainment of knowledge, and in some 
 measure of learning, as distinguished from the 
 mere skill that comes from administrative ex- 
 perience. 
 
 Second, a professional career implies a sense 
 of public function looking toward the accom- 
 plishment of certain social objectives as the 
 final justification of any claim to public respect 
 and support. 
 
 Third, a professional career involves adher- 
 ence to a code of professional ethics. 
 
 These three things constitute the popular, 
 though perhaps highly theoretical, conception
 
 ANONYMOUS LIBERALISM 55 
 
 of the recognized professions, such as the law, 
 medicine, teaching, the ministry, journalism, 
 and the like. Here and there throughout the 
 United States I have seen these three charac- 
 teristics of a profession happily illustrated in 
 highly successful businesses worthily adminis- 
 tered. I want now to suggest how these pro- 
 fessional standards may become, are indeed be- 
 coming, characteristic of American business 
 in its finer forms of expression. In doing this 
 I shall do little more than report what I have 
 heard outstanding leaders in American busi- 
 ness and industry say in those self-revealing 
 moments when men are off guard and express- 
 ing their real selves. Some one will say, of 
 course, that it is not the club-corner conversa- 
 tions of captains of industry in an expansive 
 after-dinner mood that give us an insight into 
 the amount of anonymous liberalism that we 
 may even tentatively reckon upon coming into 
 play during our readjustment period ; that the 
 only dependable basis for such reckoning is the 
 actual policies that have been and are under 
 way in business and industry. Such sayings 
 seem to me to spring from the most short- 
 sighted of social analysis. A vast amount of 
 reasonable progress has been checked by just
 
 56 THE POLITICS OP INDUSTRY 
 
 such blindness and cynicism toward the hesi- 
 tant beginnings of new points of view in quar- 
 ters where they are least expected. The pres- 
 ent expansion in the business man's conception 
 of the larger social implications of business is 
 one of those quiet works of the mind that have 
 always preceded and must always precede the 
 silent revolutions that lay most of the mile- 
 stones of genuine progress. In an article on 
 "Reconstruction" in "The Round Table" for 
 September, 1916, Alfred E. Zimmern put this 
 fact clearly when he said: 
 
 "We have always realized that outward changes are 
 of no avail unless men's minds have been prepared 
 beforehand to profit by them. We know that new 
 social classes cannot be created in a moment to un- 
 dertake the new tasks which may be ready for them. 
 ... It is the quiet work of the mind that makes revo- 
 lutions possible. Without a change of outlook all 
 external change is meaningless. But if the inner 
 change has taken place, everything is possible, even the 
 moving of mountains. And it is this silent Inner 
 change which is preparing the way for the new world 
 after the war. 
 
 Variations of judgment as to its essential 
 character and significance aside, the fact re- 
 mains that a changing point of view in so stra- 
 tegic a class as that of business men is a real
 
 ANONYMOUS LIBERALISM 57 
 
 factor to be reckoned with in any attempt 
 to assess the probabilities of future policy or 
 progress. And, as a basis for forecasting the 
 probable character of future business policies 
 in this country, there is more significance in the 
 discovery of the tender shoots of a finer point 
 of view scattered about in a thousand and one 
 places of power than to know of a few factories 
 and stores in which the newer ideals of busi- 
 ness have been worked out in fair fullness. It 
 is always heartening to find brilliant exceptions, 
 but doubly heartening to find the contagion of 
 these brilliant exceptions beginning to spread. 
 It would be easy to write a series of valuable 
 papers descriptive of particular factories and 
 stores in which business men with professional 
 ideals have demonstrated with dramatic defi- 
 niteness the practical relation between profes- 
 sional business and permanent profit, and I 
 hope to do that at some future time ; but in this 
 particular paper I am more concerned to em- 
 phasize the fact that the ideals of such ex- 
 ceptional businesses are gaining a foothold 
 throughout American business, even in many 
 quarters where the tangible evidence is not yet 
 apparent. 
 Let me try, then, to interpret as accurately
 
 as I may the opinions of certain business and 
 industrial leaders of America with whom I 
 have discussed the way busine'ss and industry 
 should and may assume the three characteristics 
 that were noted a few paragraphs back as dis- 
 tinguishing a profession. 
 
 First, it is evident that modern business, no 
 less than the time-honored professions, requires 
 a preliminary attainment of knowledge, and in 
 some measure of learning, as distinguished 
 from the mere skill that comes from experience. 
 Mr. Justice Brandeis, in an address at Brown 
 University in 1912, stated clearly the basis of 
 such an assertion as this when he said: 
 
 The field of knowledge requisite to the more suc- 
 cessful conduct of business has been greatly widened 
 by the application to industry not only of chemical, 
 mechanical, and electrical science, but also the new 
 science of management; by the increasing difficulties 
 involved in adjusting the relations of labor to capital ; 
 by the necessary intertwining of social with industrial 
 problems; by the ever extending scope of state and 
 federal regulation of business. Indeed, mere size and 
 territorial expansion have compelled the business man 
 to enter upon new and broader fields of knowledge in 
 order to match his achievements with his opportuni- 
 ties. This new development is tending to make busi- 
 ness an applied science.
 
 ANONYMOUS LIBERALISM 59 
 
 It is a far cry from the simple shops, small- 
 scale production, and intimate personal-appren- 
 ticeship relation between men and masters to 
 the present great stores and factories which in- 
 volve in their administration intelligent coop- 
 eration with the laboratories of science, a con- 
 tinuous study of the temper and fundamental 
 aspirations of vast armies of working-men 
 whose content is an asset and whose restless- 
 ness is a liability, a knowledge of the changing 
 forces that from time to time determine new 
 adjustments of the relation of business to gov- 
 ernment, an insight into the currents of inter- 
 national politics that react upon business poli- 
 cies and profit, an understanding of local cus- 
 toms and native psychology in foreign markets, 
 and the thousand and one things that go into 
 the making of the environment in which the pol- 
 icy and practice of a given business must op- 
 erate. Few, if any, of the recognized profes- 
 sions make as sweeping challenge to the intel- 
 lectual ability and acquirements of a man as 
 does modern business. In this respect at least 
 business claims fellowship with the professions. 
 
 Second, it is clear that a business career, if it 
 is spaciously conceived and made permanently 
 successful under present-day conditions and
 
 60 THE POLITICS OF INDUSTRY 
 
 ideals, must imply a sense of public function in 
 the business man that holds him to the accom- 
 plishment of certain social objectives as the 
 final justification of any claim to public respect 
 and support. The all too prevalent apostasy 
 from ideals aside, it is true that members of all 
 the recognized professions are obligated to re- 
 gard their function as a public service rather 
 than as a private venture alone. Walter Lipp- 
 mann, in -a brilliant essay in his ' ' Drift and Mas- 
 tery," put very pointedly the instinctive reac- 
 tion of the public against non-business classes 
 who show a blindness to their social responsi- 
 bility, in a paragraph that reads : 
 
 The business man may feel that the scientist con- 
 tent with a modest salary is an improvident ass. But 
 he also feels some sense of inferiority in the scientist 's 
 presence. For at the bottom there is a difference of 
 quality in their lives in the scientist's a dignity 
 which the scramble for profit can never assume. The 
 professions may be shot through with rigidity, in- 
 trigue, and hypocrisy : they have, nevertheless, a com- 
 munity of interest, a sense of craftsmanship, and a 
 more permanent place in the larger reaches of the im- 
 agination. It is a very pervasive and subtle differ- 
 ence, but sensitive business men are aware of it. ... 
 So the public regards a professor on the make as a 
 charlatan, a doctor on the make as a quack, ... a
 
 ANONYMOUS LIBERALISM 61 
 
 politician on the make as a grafter, a writer on the 
 make as a hack, a preacher on the make as a hypocrite. 
 
 I have quoted Mr. Lippmann in this connec- 
 tion both because he states the social responsi- 
 bility of the professions succinctly and because 
 his statement gives a good background for the 
 special emphasis I desire to place upon the fact 
 that this gap between the ideals of the profes- 
 sions and the ideals of business is rapidly nar- 
 rowing. Every day the conviction among busi- 
 ness men is becoming more definite that the 
 real tone and temper of American life is per- 
 haps determined more fully by the way the 
 work of the nation is done and by the way the 
 business of the nation is conducted than by any 
 other single set of factors. As I have said be- 
 fore, business and industry largely determine 
 the quality of our common life simply because 
 the primary processes of production, distribu- 
 tion, and consumption touch life at more points 
 and oftener than all other social processes com- 
 bined. Certainly a perversion of business and 
 industry can nullify the purpose and influence 
 of the teacher, the writer, the physician, the 
 minister, the artist, and even the statesman. 
 It is the growing recognition of this fact that is 
 prompting a larger and larger number of busi-
 
 62 THE POLITICS OF INDUSTKY 
 
 ness men to feel that business is more than 
 simply an instrument with which the business 
 man can gain the personal financial freedom to 
 devote an increasing part of his time to disin- 
 terested public service, that business is in itself 
 a field of public service that makes a challeng- 
 ing levy upon whatever the business man may 
 have of statesmanship and public spirit. To 
 put this matter concretely, the relative futility 
 of the average business man's "public service" 
 in outside activities as compared with the op- 
 portunities for really significant statesmanship 
 inside his business finds apt illustration in a 
 comparative consideration of Henry Ford's 
 peace ship and Henry Ford's farm tractor. 
 The former awakened the world's humor, the 
 latter the world's gratitude. This is not a flip- 
 pant criticism of Mr. Ford's peace ship. I 
 should rather have in my record an earnest, 
 although futile, attempt to have done something 
 toward the relief of the tragic circumstances of 
 the war than the calloused indifference which 
 many men carried through a time when civiliza- 
 tion was at the cross-roads, and no one could 
 tell which direction it might take. This is sim- 
 ply a statement of fact, that by an act of inven- 
 tion and business promotion, Mr. Ford, in pro-
 
 ANONYMOUS LIBERALISM 63 
 
 ducing and selling his farm tractor, is laying the 
 foundation for a revolution upon the farms of 
 the world, the implications of which are endless, 
 not alone making possible an increased produc- 
 tivity, with all that means in the forestalling 
 of food shortage and the consequent removal of 
 one of the fertile sources of revolutionary dis- 
 content, but also making possible an increase in 
 the margin of leisure for the farmer and his 
 family, which is essential if our farms are to 
 develop men as well as acres. 
 
 Mr. Ford, happily, is a man who visualizes 
 in advance the full round of social implications 
 involved in his business policies and acts, and 
 for that reason he is able to find in business 
 the same professional satisfaction that Alexis 
 Carrel must have found in his work on the su- 
 turing of blood-vessels and the transplantation 
 of human organs for which he received the 
 Nobel Prize in 1912. But the social and eco- 
 nomic influence of the farm tractor would exist 
 although Mr. Ford were blind to its larger 
 meaning. For that reason this reference to 
 the farm tractor illustrates with peculiar di- 
 rectness the way in which business men may, 
 without taking to the pulpit or turning re- 
 former, affect through the actual processes of
 
 64 THE POLITICS OF INDUSTRY 
 
 their business the social, intellectual, moral, 
 and esthetic quality of our common life. 
 
 And I have found throughout the business 
 life of America men in whose minds something 
 approaching a definite philosophy of the social 
 function of business is taking form. Forward- 
 looking business men see that business, in addi- 
 tion to the making of profit and, indeed, in or- 
 der to make profit permanently under the con- 
 ditions that are obtaining, should contribute 
 toward the realization of three large ends in 
 American life; namely, (1) greater efficiency 
 in the production of wealth, (2) greater justice 
 in the distribution of wealth, and (3) greater 
 wisdom in the consumption of wealth. These 
 are social objectives which business men will 
 feel increasingly obligated to work toward as 
 the final justification of their claim to the es- 
 teem and support of the nation. It is worth 
 while to glance at these three objectives in pass- 
 ing: 
 
 In the first place it is clear that a democracy 
 cannot endure unless the average man in it is 
 an efficient producer of wealth. A democracy 
 rests upon uncertain foundations as long as one 
 element of the population plays the parasite on 
 the productive power of the other element of
 
 ANONYMOUS LIBERALISM 65 
 
 the population. A time is doubtless coining 
 when we shall withhold our respect from the 
 man who so far forgets essential justice that 
 he claims the right to the possession of wealth 
 upon any other ground than that he has pro- 
 duced it. Those who are in possession of 
 wealth upon any other basis are doubtless hold- 
 ing it upon grounds which their children's chil- 
 dren at least will regard not only as unjust, but 
 as fundamentally immoral. For, however dis- 
 turbing to our complacency it may be, the fact 
 remains that vast and hitherto inarticulate 
 masses in every country are now thinking and 
 saying that the only justification for the owner- 
 ship of wealth is the production of wealth. 
 This of course does not mean, except to the rev- 
 olutionary confiscator, that one has no right to 
 the private ownership of a dollar's worth of 
 property except that he has produced in return 
 for it a tangible something that can be sold on 
 the market for a hundred cents. I once heard 
 an extremist deliver an address on "American 
 Parasites" in which he suggested a list of the 
 classes in America that he regarded as non-pro- 
 ducers. In this list he included clergymen, con- 
 cerning whom he said, "We are through with 
 the preacher until he can justify himself from
 
 66 THE POLITICS OF INDUSTRY 
 
 an economic standpoint. " He was saying in ef- 
 fect, "Let 's deify the man who raises the 
 wheat of the country, but let 's damn the man 
 who raises the moral standards of the coun- 
 try." It is quite evident, however, that the 
 man who raises the moral standards of a com- 
 munity is as truly a producer of wealth as the 
 man who raises the wheat of a community ; that 
 the artist who adds a touch of beauty to a 
 world all too sordid to the many, or the thinker 
 who flings one creative thought against the sky 
 of the future is as truly a producer of wealth as 
 the puddler in a steel plant. It is nevertheless 
 a healthy sign that men everywhere are feeling 
 more and more that one has no right to the pos- 
 session of wealth unless in return for that 
 wealth he has helped make his city, his state, 
 and his nation either a materially richer, a 
 more just, a more intelligent, a more beautiful, 
 a more moral, or a more healthful place in 
 which he, his fellows, and future generations 
 can live. 
 
 In the second place, it is clear that although 
 every man in America were an efficient pro- 
 ducer of wealth, the development and stability 
 of a genuine democracy would remain an uncer- 
 tain quantity if the wealth of the country were
 
 ANONYMOUS LIBERALISM 67 
 
 not distributed justly. No society can reckon 
 upon stability if one extreme of its population 
 consistently gets more than it earns and the 
 other extreme earns more than it gets. We are 
 in a time when contagious revolution is in the 
 air. Glaring injustice in the distribution of a 
 nation's wealth produces just so much inflam- 
 mable material to feed the fires of revolt. 
 Even the most conservative of business men 
 are reckoning with the fact that progress 
 toward greater justice in the distribution of 
 wealth, far from being a radical measure, is an 
 essential element of that sanely conservative 
 program which all true liberals are counting 
 upon to insure for America healthy progress in 
 the next few years when reckless revolution 
 will plead its case at every street corner. But 
 aside from this self-preservation motive, there 
 is more in the cause of just distribution to chal- 
 lenge the finer impulses of a business man than 
 there is in many of the conventional causes to 
 which he gives his time and money. It cer- 
 tainly offers a bigger challenge than does char- 
 ity. It is small challenge to a man's genius to 
 respond with a check to the appeal of need. 
 But the thing that makes charity unsatisfac- 
 tory as an exclusive expression of a business
 
 man's public spirit is that it is a "time-and- 
 again" service; it is a job that can never be 
 finished. If one had all the wealth of all the 
 multi-millionaires of the United States, one 
 could doubtless make comfortable, if not happy, 
 all the poor of the United States ; but if in ad- 
 dition to such benefaction one did not make cer- 
 tain fundamental readjustments in the social 
 and economic structure and processes of Amer- 
 ican life, one would have to do the job all over 
 again when the present poor died and their 
 children came on the stage. Leonardo da Vinci 
 would probably have painted "The Last Sup- 
 per" with little enthusiasm had he known that 
 with the last stroke of his brush the picture 
 would fade from the canvas. Yet that is what 
 happens in the case of the business man who 
 is indifferent to the problem of the just distri- 
 bution of wealth and centers all of his out-of- 
 office interest upon charity. The just distribu- 
 tion of wealth is a "once-for-all" service. In 
 almost exact proportion to the nearness of our 
 approach to perfect justice in the distribution 
 of wealth will the number of our disturbing 
 social and industrial problems be diminished. 
 Injustice in the distribution of wealth, either 
 real or fancied, becomes a breeding-ground for
 
 ANONYMOUS LIBERALISM 69 
 
 political, social, and industrial difficulties. Re- 
 move the cause, and the effect will disappear. 
 Of course there are in every society a certain 
 number of congenital revolutionaries with 
 whom revolt is a major sport; they would or- 
 ganize a Red Left in Utopia. But the average 
 American is at heart conservative and is im- 
 mune to revolutionary appeal unless actual 
 conditions give some measure of validity to the 
 revolutionary appeal. The conservative busi- 
 ness man (I use the word " conservative" in 
 its finer sense, not as equivalent to "reaction- 
 ary") sees that constructive effort toward 
 greater justice in the distribution of wealth is a 
 challenge to real public service in that it will 
 mean essential progress for society and at the 
 same time cut the ground from under the revo- 
 lutionist. And, after all, the poor of America 
 not the shiftless poor, but the involuntary 
 poor do not want charity. Given justice, 
 they will manage to get along very nicely with- 
 out charity. And certainly the aim of our de- 
 mocracy should be to make charity an unneces- 
 sary virtue. This whole argument I have 
 found being threshed out among our business 
 men of insight. 
 In the third place, it is clear that even though
 
 70 THE POLITICS OF INDUSTRY 
 
 every man in America were an efficient pro- 
 ducer of wealth, and American wealth were dis- 
 tributed with mathematical justice, if there is 
 such a thing, still democracy would in time 
 tumble like a house of cards if the wealth of the 
 country were not consumed wisely. That fact 
 is leading many business men to emphasize the 
 responsibility of business in the education of 
 the appetites of the nation. Advertising is one 
 of the evident instruments which business must 
 use in such education. The social significance 
 of advertising will receive increasing attention 
 from the business men who aspire to make 
 their businesses minister to the public welfare 
 as well as to private profit. Advertising serves 
 a higher function than the mere increase of 
 sales ; it lifts the tone of a society by increasing 
 the sanity of consumption. Charles Frederick 
 Higham, a London advertising man who has a 
 large and constructive conception of his profes- 
 sion, in his engaging volume on ' ' Scientific Dis- 
 tribution," says: 
 
 One thing is absolutely certain, and that is that 
 the general public do not appreciate in the least the 
 value which advertising has for them. They seem to 
 consider it an entertaining extravagance on the part 
 of business men. They remain childishly unaware
 
 ANONYMOUS LIBERALISM 71 
 
 of the influence it has upon their own choice and taste 
 and welfare. Such criticism as they put forward is 
 summed up in the phrase, "Who pays for all this!" 
 And the answer implied is, "We the public do." 
 But broadly speaking, modern scientific advertising 
 . . . produces such a growth in the volume of business 
 that it saves in the cost of production in the end, and 
 so increases the profit by decreasing the selling cost. 
 It is unscientific advertising if it does not produce 
 these results. 
 
 The influence of advertising upon taste is in the 
 right direction. . . . This is what happens. A shoe 
 manufacturer wishes to increase his market. He 
 therefore decides to advertise. But before he em- 
 barks upon that expense he makes sure that he is mak- 
 ing a shoe of a superior kind. It must be cut from 
 good lasts, be a shoe that keeps its shape, wears well, 
 looks smart, and has about it an air of distinction. All 
 these points he puts forth boldly in his advertisements, 
 thus throwing out impressions of what a really good 
 shoe ought to be impressions that stick in the pub- 
 lic's mind. . . . With the result that many people be- 
 come dissatisfied with the cheap, unwieldy shoes they 
 usually buy. So much so that they agree to pay the 
 higher price; and thus ihey learn the secret of true 
 economy which is always to buy the best that one 
 can. . . . Despite all the weakness and vulgarity of 
 trade to-day its labor problems, its bad organiza- 
 tion, the ugliness and feebleness of its craftsmanship 
 I honestly believe it will work out its own salvation ; 
 and that advertisement is the great tool with which
 
 72 THE POLITICS OF INDUSTRY 
 
 this will be done. . . . The influence of advertising 
 upon the public welfare lies in its power to raise the 
 standard of living all round. . . . Advertising has 
 helped to standardise goods; to socialise manners; to 
 individualise taste. It has beautified dress, democra- 
 tised luxury. It fosters a healthy dissatisfaction with 
 anything less than the best. 
 
 Of course concern with sane consumption is 
 abortive unless linked with concern for just dis- 
 tribution. The hopeful thing is the increasing 
 number of business men who feel that the adver- 
 tising which business does, if it is not to be par- 
 asitic, must make for increased sanity as well 
 as increased size of consumption demands. 
 
 It is needless to say that it is the exceptional 
 business man who has formulated anything like 
 the definite conception of the public function of 
 business that I have here reported as having 
 found among certain American business men. 
 The real significance lies not alone in the fact 
 that a growing group of influential business 
 men hold these views, but also in the fact that 
 public opinion and mass pressure are turning 
 these principles into the form of demands upon 
 business. And the basis of hope is that the in- 
 stinct of self-preservation among the many in 
 business will join with the vision of the few in
 
 ANONYMOUS LIBERALISM 73 
 
 bringing these things about. At any rate, here 
 are currents of thought making for profes- 
 sional standards in business. 
 
 Third, business is likewise coming to demand 
 adherence to a code of professional ethics. 
 And in this respect business promises to out- 
 distance the professions, in which professional 
 ethics too frequently means only professional 
 etiquette. American business in certain quar- 
 ters is evolving standards of professional 
 ethics in the sense that business men are at- 
 tempting to think out fundamental morality in 
 terms of business activities; trying to analyze 
 just how it is possible for business men, 
 through the complicated interdependence of 
 modern business, to lie, to steal, to despoil vir- 
 tue, and to hold slaves by indirect, long-dis- 
 tance, and impersonal methods; trying to set 
 up standards that will rule these essential im- 
 moralities out of American business. 
 
 Thanks to the literature of exposure that was 
 in vogue a few years ago, it became clear that 
 business men might, while adhering to the 
 strictest standards of private morality, commit 
 all of the sins of the decalogue by indirect and 
 impersonal methods. In fact, interdependence 
 came so swiftly upon the heeds of individual-
 
 74 THE POLITICS OF INDUSTRY 
 
 ism in this country that "good" men found 
 themselves doing a number of "bad" things in 
 business and industry before they fully realized 
 the implications of their acts. Some cynic, 
 with more cleverness than insight, once re- 
 marked that Mr. Roosevelt discovered the ten 
 commandments and gave out the fact as news. 
 But the truth is that the ten commandments 
 need to be rediscovered for each generation. 
 Quite clearly the decalogue needed reinterpre- 
 tation to a generation in which men might 
 slowly poison a nation with adulterated food- 
 stuffs, a method less dramatic, but no less rep- 
 rehensible, than the quicker methods used by 
 medieval monarchs with disloyal courtiers; to 
 a generation in which men might steal through 
 monopoly control, a more refined, but no less 
 effective, method than Robin Hood employed. 
 There is a long list of now trite comparisons 
 between the impersonal sins of a society of 
 grand-scale industry and the more direct and 
 easily recognized sins of the simpler and more 
 individualistic society that preceded it. These 
 comparisons are no longer the exclusive prop- 
 erty of the muck-raker. They are part of the 
 common thought of modern business men who 
 know that their morality is more than a ques-
 
 ANONYMOUS LIBERALISM 75 
 
 tion of personal habits, that it must rest upon 
 a carefully thought-out application of the fun- 
 damental principles of morality to the compli- 
 cated processes of modern business. It is the 
 moral duty of a nation to keep its economic and 
 ethical development neck and neck. Otherwise 
 there is constantly a " twilight zone" in which 
 men who adhere to the accepted standards of 
 ethics will commit socially immoral acts be- 
 cause the moral implications of such acts or 
 methods have not been thought out and stan- 
 dards raised against them. This is ground so 
 familiar that it needs only a gesture calling at- 
 tention to it as a field in which business is 
 evolving professional ethics. 
 
 It is loyalty to such large aims as these that 
 will make business truly professional in the 
 sense that business will consciously promote 
 the social virtues of efficiency, justice, and san- 
 ity while dealing with the material processes 
 of production, distribution, and consumption. 
 These professional ideals in business, it should 
 be said once more, have been here sketched not 
 as the finished picture of accomplished fact, but 
 as the assessment of emerging motive forces 
 which, if sedulously cultivated by the business 
 and industrial leaders of America, will exert
 
 76 THE POLITICS OF INDUSTRY 
 
 determining influence upon the quality and rate 
 of progress in the period of readjustment we 
 are passing through. And there is more than 
 nai've optimism upon which to base the hope 
 that these ideals will gain vital currency in the 
 years just ahead. Forces of self-interest will 
 supplement the innate idealism of the Ameri- 
 can mind in making these ideals more fully op- 
 erative. These forces of self-interest have 
 been suggested throughout this paper, but it is 
 worth while to deal more specifically with them 
 at this point. 
 
 Business men find themselves under the ne- 
 cessity of deciding what their attitude is to be 
 toward the restless discontent which is to-day 
 manifest throughout the world. If really in- 
 telligent self-interest determines that attitude, 
 we may expect the formulation of policies wor- 
 thy of truly professional business. This dis- 
 content is not a passing temper provoked by the 
 stage tricks of a small group of professional 
 malcontents ; it is one of those tidal movements 
 of social aspiration that now and then sweep 
 over nations, with the nations too frequently 
 only half aware of what is happening. Vis- 
 count Morley, referring to such movements, 
 said, "Wise statesmen are those who foresee
 
 ANONYMOUS LIBERALISM 77 
 
 what time is thus bringing, and try to shape in- 
 stitutions and to mould men's thought and pur- 
 pose in accordance with the change that is si- 
 lently surrounding them." This is pertinent 
 counsel for business men as well as for states- 
 men in these times, because nothing less than 
 this statesmanlike attitude toward the current 
 forces of unrest and change can protect busi- 
 ness; certainly nothing less can afford guar- 
 anty of healthy progress. Business statesman- 
 ship is the one effective instrument that can 
 bring constructive economic results out of a 
 radical hour; simple opposition cannot. John 
 Stuart Mill once said, ' ' The future of mankind 
 will be greatly imperiled if great questions are 
 left to be fought out between ignorant change 
 and ignorant opposition to change." This 
 statement might well be printed on the desk cal- 
 endar of every American business man, for it 
 suggests the key not only to business states- 
 manship, but to business success as well in 
 these days of discontent and revaluation. Au- 
 tocratic indifference to the aspirations that are 
 moving the masses of a nation has spelled bank- 
 ruptcy of authority for governments through- 
 out history; autocratic attempts to suppress 
 such aspirations have spelled revolution
 
 78 THE POLITICS OF INDUSTRY 
 
 throughout history. These lessons of political 
 leadership are not lost upon far-sighted busi- 
 ness leadership. On every hand I find business 
 men saying frankly that it lies pretty largely 
 with the leaders of business and industry 
 whether change shall be disruptive or con- 
 structive. 
 
 If a stupid conservatism should attempt to 
 revert to " big-stick" methods in dealing with 
 labor difficulties, one would need either courage 
 or blindness to contemplate the future with an 
 easy mind. Calling in the police, mobilizing 
 the militia, employing detectives, arresting la- 
 bor leaders, blocking discussion, and forcing 
 passions underground are not only undemo- 
 cratic methods; they are unintelligent meth- 
 ods ; they are played out. The business execu- 
 tive who uses them may think he is protecting 
 his interests, but his firing-squad type of mind 
 does not see far ; in using such methods, or even 
 in taking an undefined attitude of emotional de- 
 nunciation toward a labor difficulty, he is play- 
 ing directly into the hands of the revolutionary. 
 Constructive conservatism, on the other hand, 
 by refusing to employ these methods, forces the 
 radical leader to attempt to present a satisfac-
 
 ANONYMOUS LIBERALISM 79 
 
 tory program to his followers ; for an average 
 group of Americans of whatever class can be 
 held together only by one of two methods, com- 
 mon action against a common antagonist who 
 flaunts his antagonism in their faces or com- 
 mon action in behalf of a program that captures 
 their imagination and appeals to their sense of 
 justice. The increasing recognition of this fact 
 promises to help materially toward lifting the 
 whole question of labor unrest out of the atmos- 
 phere of a test of strength alone. Business 
 men realize with a definiteness that is relatively 
 recent that capital loses even when it wins in 
 a fight with labor, simply because business can- 
 not be permanently successful and perma- 
 nently profitable unless its relations with labor 
 are cordial, especially with the numerical 
 strength of labor becoming politically articu- 
 late, and its relations with labor cannot be 
 consistently cordial as long as labor unrest is 
 dealt with upon the basis of a tournament ra- 
 ther than a parliament. A system of relations 
 between employers and employees that usually 
 breaks down when the issue is of fundamental 
 importance and forces both parties to threaten 
 and fight their way toward a decision is clearly
 
 80 THE POLITICS OF INDUSTEY 
 
 inadequate for the sort of times we are coming 
 into ; it is a costly system, as all expedients are 
 costly ; it generates and leaves behind too many 
 sullen antagonisms that may be played upon by 
 destructive radicalism. Alfred E. Zimmern, 
 in an article from which I have quoted earlier 
 in this paper, says : 
 
 Collective bargaining is clearly an advance on the 
 old unequal system of individual wage-contracts. 
 But collective bargaining between large-scale organ- 
 izations of employers and workmen involves a piling 
 up of armaments on both sides not unlike that of 
 the rival European groups before the war. At its 
 best it preserves the peace by establishing a precarious 
 balance of power; at its worst it precipitates a dis- 
 astrous conflict ; and, in either case, whether it works 
 well or ill for the moment, it is non-moral and in- 
 human, for it has no basis in a sense of common serv- 
 ice or public duty. Hence it creates a feeling of 
 divided interest and permanent estrangement which 
 has been all too visible to the rest of the community 
 during the recurring industrial crises of the last ten 
 years. In this vicious situation a great national re- 
 sponsibility rests upon the leaders of both groups of 
 combatants. 
 
 The costly inadequacy of the present system 
 of employer-employee relations, coupled with 
 the fact that there exists to-day throughout the
 
 ANONYMOUS LIBERALISM 81 
 
 world of labor a heightened determination to 
 secure a larger share in the profits and a larger 
 voice in the management of industry, means 
 that business men, purely as a matter of good 
 business, must take the initiative in a sincere 
 collaboration with labor in effecting a saner or- 
 ganization of industrial relations. It is inter- 
 esting to note that this is just what is happen- 
 ing in England, for instance, where responsible 
 business men are contributing leadership to 
 the movement for forms of industrial self-gov- 
 ernment, which, administered in the newer 
 spirit, should not only satisfy the basic aspira- 
 tions of labor, but also put business and indus- 
 try upon a more dependable and profitable 
 basis than ever before. The implications of in- 
 dustrial self-government both to employers and 
 employees, as they are worked out in the liter- 
 ature and discussed by the leaders of that move- 
 ment, I shall take up in detail later in this vol- 
 ume. All I am concerned in doing at this point 
 is to suggest that self-interest is making for con- 
 structive conservatism and making against stu- 
 pid conservatism, which knows no mood but de- 
 nunciation, no instrument but the policeman's 
 club or an injunction. And this means the 
 greater development among business men of
 
 82 THE POLITICS OF INDUSTRY 
 
 that genuinely professional spirit which is one 
 of the best guaranties of orderly progress dur- 
 ing our readjustment period. 
 
 All this may appear to be only a dissertation 
 upon the strategy of concession, by which the 
 leaders in business and industry may keep 
 things running smoothly for a time by granting 
 just enough in a given situation to keep labor 
 quiet and satisfy a progressive public opinion, 
 and repeating the manoeuver whenever indus- 
 trial relations become strained. And such tac- 
 tics will doubtless be used in certain quarters. 
 Certain short-sighted leaders of business and 
 industry will attempt to dilute discontent with 
 half-measures. But the more far-sighted lead- 
 ers see that as a false and costly procedure. 
 The trouble with it is that there is no end to it. 
 The appetite of labor, no less than the appe- 
 tite of capital, grows by what it feeds on under 
 a system of periodic strikes and periodic con- 
 cessions. The preservation and promotion of 
 sound business demands, therefore, that busi- 
 ness men take into full account the freshly 
 awakened and increased aspirations of la- 
 bor which until some better method is es- 
 tablished will attempt realization through de- 
 mands that hold the latent threat of a strike;
 
 ANONYMOUS LIBERALISM 83 
 
 and having taken these aspirations into ac- 
 count, and realizing that the situation cannot 
 be met adequately either by benevolence or 
 piece-meal concession on the part of employers 
 or by usurpation on the part of employees, 
 boldly face the problem of some new and better 
 organization of the human side of industry. 
 
 It is fortunate that affairs have, in our day, 
 assumed a posture that closes every other ave- 
 nue of orderly progress. Unintelligent resis- 
 tance to-day spells revolution; creative leader- 
 ship spells progress. 
 
 This discussion has been purposely directed 
 toward motive forces rather than specific poli- 
 cies, because the logic of events is leading 
 toward more broadly conceived policies, but 
 whether the logic of events will produce its per- 
 fect work depends upon the attitude which lead- 
 ership takes. 
 
 To summarize, then, the simple thesis of this 
 paper which I should hesitate to discuss at such 
 length except that its current implications 
 strike so closely at the heart of the total prob- 
 lem of American content and progress that re- 
 iteration may be pardoned in an earnest search 
 for emphasis : 
 
 American business and industry rendered
 
 84 THE POLITICS OF INDUSTRY 
 
 history making service during the war, because 
 in response to emergency demands and govern- 
 mental edicts and under the inspiration of a 
 challenging cause business and industry were 
 dedicated to the accomplishment of a great so- 
 cial objective, and business men brought to 
 their work the same professional spirit that the 
 doctor and sanitarian carry into a fever- 
 stricken region that is to be reclaimed for civ- 
 ilized life. Both the insuring of orderly prog- 
 ress and the working out of a permanently 
 successful business order, under the conditions 
 the war has produced and left behind, require 
 the continuance and development of that pro- 
 fessional spirit in business. In normal times 
 we cannot count upon a hot-house growth of 
 the professional spirit in business, fostered by 
 governmental requirements, but must depend 
 upon the natural development of such spirit in 
 our business and industrial leaders. That 
 makes a study of the motive forces behind the 
 business thinking of the country fundamentally 
 important. 
 
 Before the war, the professional spirit in 
 business was on the increase. Business was 
 more and more demanding a breadth of knowl- 
 edge and an intellectual preparation which
 
 ANONYMOUS LIBERALISM 85 
 
 equalled if not exceeded the demands made by 
 any of the time-honored professions. 
 
 Business men were more thoroughly visualiz- 
 ing their business in its social relations; they 
 were becoming more concerned that, in addi- 
 tion to making profits, their business should 
 make some ultimate contribution toward in- 
 creasing the efficiency of the production, the 
 justice of the distribution, and the sanity of the 
 consumption of American wealth. 
 
 Business men were erecting standards of 
 business ethics as the result of seeing that the 
 complicated interdependence of modern life 
 makes it possible for business men to commit 
 all of the old sins by new methods that are indi- 
 rect and impersonal. 
 
 Wherever these professional ideals have 
 been brought into full and intelligent play in 
 American business institutions, it has been 
 proved that they are not simply idealistic but 
 costly ventures that business men may afford 
 to undertake, in a mood of benevolent pater- 
 nalism, after a business has succeeded and 
 piled up a surplus; rather that they are the 
 corner-stones of permanently successful busi- 
 ness. 
 
 Now that the war is over, business and indus-
 
 86 THE POLITICS OF INDUSTRY 
 
 try face the problem of a mass restlessness 
 which in some quarters has a definite program, 
 in other quarters simply a medley of undefined 
 but active aspirations. Because the masses 
 throughout the world have during the war be- 
 come more keenly conscious of their political 
 power, should they organize and use it, the in- 
 adequacy of mere make-shift concessions is ap- 
 parent, and business leadership is challenged 
 to make a fresh and constructive approach to 
 the problem of industrial relations. 
 
 The primary inspiration of such a fresh and 
 constructive approach to the problem of indus- 
 trial relations may come from either of two 
 groups the men at the top, or the salaried 
 men who do the actual job of administration 
 in factories, mines, and stores. There is a 
 fairly general disposition to make the man at 
 the top the scape-goat for all of the injustice 
 and conservatism that may mark a given indus- 
 try. I have no desire to lift emphasis from the 
 responsibility that the man at the top, by virtue 
 of his position, must carry ; but sound analysis 
 demands recognition of the fact that frequently 
 the salaried manager, who is administering the 
 affairs of a local unit of an industry, is just as 
 jealous of his perquisites of power and author-
 
 ANONYMOUS LIBERALISM 87 
 
 ity and just as averse to any broadening of the 
 base of control as the man at the top. In fact 
 it will usually be found, in an industry where 
 the administration of the human factor is unen- 
 lightened, that a hierarchy of resistance to any 
 really forward-looking and creative policy re- 
 specting the human side of industry runs all 
 the way from the directors' room to the office 
 of the local boss. It is far easier and more 
 dramatic, in a study of the relation of business 
 leadership to social unrest, to point an accus- 
 ing finger at a conspicuous director or financier 
 and say, "Thou art the man!" But the appli- 
 cation and administration of business liberal- 
 ism is a more complicated matter than the mere 
 preachment of business liberalism. It must 
 take into account all the men and all the fac- 
 tors in the entire organization of industry and 
 reckon in advance with the strength of opposi- 
 tion and support that may be expected or se- 
 cured. The key groups, however, in the deter- 
 mination and application of any large policy in 
 industry, as now organized, are the men at the 
 top and the salaried managers who stand in 
 daily contact with the work and the workers of 
 the industry. 
 A better organization of industrial relations
 
 88 THE POLITICS OF INDUSTRY 
 
 may, therefore, come from the action of either 
 of these groups. The successful administra- 
 tion of a new order demands, of course, a collab- 
 oration of these two groups. A new note in 
 the human side of industry may be struck, and 
 struck quickly, if the men at the top assume 
 the full educational responsibilities of their 
 position and deliberately inspire the salaried 
 managers of industry to as consistent concern 
 in the human side of industry as they already 
 evince in the technical side. On the other 
 hand, it may be that the new order will come 
 more slowly as a result of pressure upon the 
 men at the top by the younger salaried men 
 who manage, men who have carried into their 
 work the education and the ideals of the mod- 
 ern engineer who is not so unscientific as to 
 leave out of his reckoning the human factor in 
 any enterprise. 
 
 This much should be said, in passing, as an 
 explanation, if not a defense, of the salaried 
 man's slowness in experimenting with the hu- 
 man problem of industry : in the main, the sal- 
 aried men of industry have not been made to 
 feel that the men at the top were as deeply in- 
 terested in the human as in the financial prob- 
 lem of industry. Therefore, it is for the men
 
 ANONYMOUS LIBERALISM 89 
 
 at the top, at this time when sound business 
 judgment prompts it, to create in the minds of 
 the salaried managers of American industry 
 the impression that a discovery on their part 
 of a better way of handling the human prob- 
 lem of industry will receive as hearty welcome 
 and as careful consideration in the directors' 
 room as will a new method of extracting ore, 
 let us say. The men at the top are now chal- 
 lenged by the present situation to create among 
 their men the atmosphere for sane experiment 
 with the problem of industrial relations upon 
 exactly the same base of reasoning that 
 prompts them to set scientists at work in their 
 laboratories. 
 
 I think I could name twenty leaders of Amer- 
 ican business and industry who at this moment 
 hold it within their power to determine the 
 course of industrial relations in this country 
 for the next twenty-five years at least. What 
 I mean concretely is this: There are twenty 
 outstanding leaders of American business and 
 industry who have always been classed as con- 
 servative men concerned primarily with the 
 financial problem of industry; if these twenty 
 men should pool their brain-power in a study 
 of the labor problem with the same sustained
 
 90 THE POLITICS OF INDUSTKY 
 
 thought they have given to financial problems, 
 if they should counsel with students of labor 
 as they have counselled with students of chem- 
 ical, electrical, and other problems that touch 
 their business interests, and if they should take 
 the initiative in making a sincere and exhaus- 
 tive study of the whole area lying between the 
 extreme forms of private capitalism and the ex- 
 treme forms of State Socialism in order to find 
 out whether or not there is a middle ground 
 of industrial self-government on which both la- 
 bor and capital can stand in a co-operation that 
 will minister to the legitimate aims of both, I 
 have no hesitancy in saying that they these 
 twenty business and industrial leaders could 
 with dramatic suddenness invent a new order 
 of industry. I am not being carried away 
 with rhetoric. I have seen enough instances of 
 industrial self-government at work to know 
 that the tested principles of free, responsible, 
 and representative government can be adapted 
 to business and industry in a manner that will 
 go far toward eliminating the waste of labor 
 conflicts, uncovering hitherto unused reserves 
 of enterprise and ingenuity in the working 
 force, largely freeing the time of executives 
 from the administration of discipline which to-
 
 ANONYMOUS LIBERALISM 91 
 
 day drains away valuable executive energy that 
 should be employed in the larger creative tasks 
 of policy and expansion, and actually making 
 business and industry more profitable. The 
 twenty or more men whom I have in mind today 
 have it in their power to create history as truly 
 as did the men who formulated the Declaration 
 of Independence or the men who drafted the 
 Constitution of the United States. In fact the 
 requirement of the industrial situation today is 
 very much the same as the requirement of the 
 governmental situation then. The labor prob- 
 lem today is not a problem of working-man 
 psychology, as the attitude and policy of many 
 men would seem to indicate they think. The la- 
 bor problem is a constitutional problem. The 
 constitutional problem that our political fathers 
 faced, our business men face today in business 
 and industry under the name of the problem 
 of management or control. Until that problem 
 is solved by genuine business statesmanship, 
 the labor problem will doubtless continue as a 
 balance of power game of see-saw, and in the 
 midst of every labor conflict we shall hear the 
 familiar jibes that labor's only interest is in 
 shorter hours and higher wages and that capi- 
 tal's only interest is in longer hours and lower
 
 92 THE POLITICS OF INDUSTRY 
 
 wages, jibes that fly wide of the mark simply 
 because no one faces boldly the real challenge 
 of the labor problem. The American public is 
 waiting for a business statesmanship that will 
 attack the government problem in industry. 
 
 One does not wish to believe less than this: 
 American business men of vision, face to face 
 with the emergency demands of an era of 
 change, will be an important party to the task 
 of creating in this country a constructive liber- 
 alism that will restrain reckless radicalism by 
 formulating and putting into effect a program 
 bounded only by the frontiers of economic wis- 
 dom and practical justice.
 
 IV 
 
 THE POLITICS OF INDUSTRY 
 
 Making war with phrases vs. Making war with principles A 
 phrase that will haunt the counsels of business and indus- 
 try The Balance of Power system breaks down in both 
 international and industrial relations Competition and 
 drift vs. cooperation and control The futility of half- 
 measures The origin of the modern labor problem A 
 glance at handicraft days Lost assets of modern industry 
 Fighting for a lost control Inadequate expedients Col- 
 lective bargaining Strikes Lockouts Conciliation Arbi- 
 tration Investigation Social legislation Welfare work 
 Profit-sharing Scientific Management What the ultimate 
 labor issue is Competitive bargaining vs. Cooperative gov- 
 ernment England moves toward industrial self-government 
 The Whitley Report analyzed Making industry a train- 
 ing school for political citizenship. 
 
 THE war has left the world with its face 
 toward the dawn, impatient to crowd the 
 progress of a century into a decade. The popu- 
 lar assumption, sedulously fostered by those 
 with the greatest stake in the status quo, that 
 social changes must of necessity be effected 
 slowly if they are to be effected safely has been 
 shattered. During the war, men on the battle- 
 field and in the workshop have seen how quickly 
 the industrial standards and processes of an 
 
 93
 
 94 THE POLITICS OF INDUSTRY 
 
 entire nation can be transformed when once the 
 national will has come under the sway of a 
 dominant and unifying motive. And men who 
 have watched a new Industrial Revolution take 
 place before their eyes within a few swift 
 months are likely to be critical of any theory 
 or leadership that attempts to set an unneces- 
 sarily slow schedule for progress in peace time. 
 If new ideas outstrip our capacity to apply 
 them, we shall find ourselves the victims of a 
 mischievous medley of undigested idealisms; 
 but, unless leadership abdicates in the face of 
 its supreme opportunity, these new determina- 
 tions of our time may be made the driving force 
 of a period of unprecedented progress toward 
 a finer organization of our common interests 
 and actions. 
 
 The motivating stakes of the war were clearly 
 certain basic principles, upon the vindication 
 of which the integrity of civilization itself 
 hinged the principle of right as the basis of 
 human association, the applicability of the 
 moral law to public affairs, and the guaranty 
 of the weak against the lawless aggression of 
 the strong. Regardless of the frequency with 
 which the ghost of Machiavelli may have walked 
 through the corridors of certain foreign offices,
 
 THE POLITICS OF INDUSTRY 95 
 
 these were the principles that alike inspired 
 our armies of industry and arms; these were 
 the principles that set the tone of civilian 
 morale; these were the principles upon which 
 statesmen appealed to their countries. These 
 principles ran through state papers and in- 
 formal diplomatic conversations with the in- 
 sistent recurrence of a motif, giving to the 
 whole texture of international thought during 
 the war the qualities of sustained and consistent 
 purpose. A world debate ran parallel with the 
 world war. The period of greatest distraction 
 proved to be the period of greatest concentra- 
 tion upon fundamental ideas. The studied 
 frivolities of dinner table conversations gave 
 way to serious discussions of the conflict of 
 ideas that was going on above the battle of 
 arms. Abstract principles of political and 
 social philosophy were turned into battle cries 
 a thing crowd psychologists could have 
 proved impossible before the war. The Amer- 
 ican people, in particular, were drawn into the 
 war by an ideal rather than driven into it by 
 an insult. And that fact will have an import- 
 ant bearing upon after-the-war thought and 
 action in this country. For to awaken the war 
 spirit of a nation with a catch-phrase that
 
 96 THE POLITICS OF INDUSTRY 
 
 vividly expresses popular resentment to some 
 dramatic insult is one thing; to awaken the 
 war spirit of a nation with the lure of some 
 fundamental principle is another thing. The 
 catch-phrase, carried through the battle as a 
 stimulator of morale, is forgotten in the first 
 flush of victory ; the fundamental principle has 
 a more sustained vitality, reacting upon popu- 
 lar thought long after the battle and insistently 
 demanding ultimate application. A phrase 
 like "Remember the Maine" does not neces- 
 sarily produce any after- war effects; but a 
 phrase like "the world must be made safe for 
 democracy" has in it a yeastiness that begins 
 its real fermentation after the nation has had 
 time to catch its breath from the exertions of 
 war. That phrase will haunt the counsels of 
 politics and industry for many years to come. 
 As Americans begin to assess the results of 
 their Great Adventure in the war and to think 
 out the implications of the principles they 
 helped to vindicate, a plain parallel between 
 international and industrial relations will be 
 recognized. Men who have had this world de- 
 bate on right as the basis of human association, 
 the moral law in public affairs, and the safe- 
 guarding of the weak against the strong, tossed
 
 back and forth over their heads as they fought 
 in the trenches will quite naturally ask whether 
 these principles, after being adjudged the 
 guiding principles of international relations, 
 should not assume similar primacy in indus- 
 trial relations. When this sense of parallel 
 really grips the popular mind, industrial states- 
 manship will find itself genuinely challenged. 
 The brevity of our part in the war may have 
 spared us many of the depressions and robbed 
 us of many of the disciplines of war, but the 
 examination and discussion of the principles 
 for which the war was fought went to greater 
 lengths in the United States, before the war's 
 challenge was accepted, than in any of the 
 belligerent countries. When, therefore, Amer- 
 icans begin to apply to industry the political 
 principles for which they fought, the scope and 
 insistence of the demand for application may 
 be greater here than in Europe, although our 
 industrial unrest may be less dramatic and 
 emotional. 
 
 As a flash of lightning illuminates a land- 
 scape, the war revealed the existing systems 
 of international and industrial relations for 
 what they are, throwing into clear relief their 
 essential inadequacies. Before the war, many
 
 98 THE POLITICS OF INDUSTRY 
 
 leaders both in the camp of capital and the camp 
 of labor, from whom we had the right to ex- 
 pect constructive leadership, gave the problem 
 of industrial relations but fractional consider- 
 ation. They busied themselves now with this 
 problem of wages and then with that problem 
 of hours, but did not subject to critical ex- 
 amination the system of industrial relations it- 
 self. But the war has altered the attitude and 
 widened the scope of industrial thought both in 
 business and labor circles. And just as many 
 statesmen have frankly acknowledged the 
 breakdown of the old system of a balance of 
 power and conflict of controls, and asserted the 
 necessity for a fresh ordering of international 
 relations based upon the greatest practicable 
 degree of cooperation, so the best brains of 
 business and labor frankly acknowledge that the 
 old system of a balance of power and conflict 
 of controls between capital and labor will no 
 more meet the future demands of peace time 
 than it met the demands of war time, and that 
 the time has come for both capital and labor 
 to bring high conception and courageous ex- 
 ecution to the creation of a new order of in- 
 dustrial relations that will materially reduce, 
 if not remove, the social and economic waste of
 
 THE POLITICS OF INDUSTRY 99 
 
 the present system of competing suspicions 
 under which labor brandishes the strike weapon 
 and capital anticipates or parries the blow with 
 the lock-out or the injunction, while the public 
 plays the role of the harassed neutral. 
 
 This new attitude, which outstanding leaders 
 of both capital and labor are taking toward the 
 problem of industrial relations, is marked by 
 certain gratifying features. The fundamental 
 reorganization of the present system of indus- 
 trial relations is looked upon as an essentially 
 conservative measure ; not as a radical experi- 
 ment proposed by doctrinaires detached from 
 profit and loss responsibility, not as the organ- 
 ized demand of class cupidity, but as one of 
 those normal changes in method to meet 
 changed conditions which intelligent adminis- 
 tration always effects. The parallel between 
 international and industrial relations holds 
 good in this particular. A new international 
 order based upon a cooperation of power rather 
 than a conflict of power is the only way that 
 lies open, to those interested in sanely ordered 
 progress, to control and administer the com- 
 plicated interdependence of the modern world; 
 it is in that sense a conservative proposal rather 
 than the radical adventure in political knight-
 
 100 THE POLITICS OF INDUSTRY 
 
 errantry that certain statesmen, who persist in 
 looking wistfully over their shoulders at George 
 "Washington, contend. In international rela- 
 tions the choice is between clear alternatives 
 competition and drift or cooperation and con- 
 trol. In industrial relations leadership is con- 
 fined to a choice between the same alternatives. 
 Political statesmanship must choose between in- 
 ternational association and international anar- 
 chy. Industrial statesmanship must choose be- 
 tween a fundamental reorganization of indus- 
 trial relations upon a more democratic basis and 
 an intensified class struggle, with revolution as 
 a probability to be reckoned with. The former 
 means for society economy and conservative 
 progress, the latter means costly radical ex- 
 cess. 
 
 Another gratifying feature of this new atti- 
 tude is that its adherents are not wasting their 
 energy and further complicating the situation 
 by abusing either organized capital or organ- 
 ized labor; they are concerned with the using 
 of both in the structure and processes of the 
 new order. Capitalists have, in certain in- 
 stances, abused the power of the lock-out and 
 the injunction, granted. Labor leaders have, 
 in certain instances, abused the power of the
 
 THE POLITICS OF INDUSTRY. 101. 
 
 strike, granted. But it is beside the mark to 
 try to correct such abuses by bitter arraignment 
 either of the anti-social capitalists or the anti- 
 social labor leaders in question; both are the 
 inevitable and logical product of an anti-social 
 system of industrial relations. And the aver- 
 age American who criticises them would act 
 exactly the same were he in their position, with 
 their responsibility to their fellows, and their 
 limited choice of instruments of influence un- 
 der the prevailing system. 
 
 The most important thing in the whole in- 
 tellectual approach to this problem of industrial 
 relations and social unrest, on the part of the 
 leaders of business and labor, is to see that 
 what is at issue is the fundamental reorganiza- 
 tion of a system, not the haphazard patching 
 up of an old system. Whether it meets our 
 wishes or not, the time for half-measures is 
 past. Half-measures may delay, they cannot 
 prevent the social revolution toward which the 
 present " armed camp" system of industrial re- 
 lations is inevitably working. The advocate 
 of the half-measure is a but slightly less effec- 
 tive ally of the revolutionary than is the blind 
 reactionary. This holds true even in the case 
 of those willing to go far in the matter of re-
 
 102 THE POLITICS OF INDUSTRY 
 
 pairs. There are on all hands men who say: 
 "This is a time of unrest. The workers are 
 everywhere becoming articulate, demanding 
 their place in the sun. If our businesses are to 
 succeed we must adjust our methods to this 
 fact, just as we change the weight of our cloth- 
 ing when we go into a milder or more severe 
 climate. "We may be obliged to make some 
 rather costly concessions, but it is inevitable 
 and we might as well be sportsmanlike about 
 it." Such an attitude is a good long step be- 
 yond the attitude of the blind reactionary, but 
 its fault is that it is determined upon the basis 
 of concession instead of frank and courageous 
 reconstruction. Such an attitude ignores the 
 plain fact that it will not be enough simply to 
 bow gracefully to such industrial readjustments 
 of policy and administration as the war has 
 proved to be of greater economic efficiency, to 
 institute by careful economy of concession such 
 reforms as may prove essential to a smooth 
 return to normal industry, to patch up the 
 patently weak spots which the war has revealed 
 in economic organization, to speed up the ma- 
 chinery of production, and to effect something 
 of a new deal in the distribution of the increased 
 output so that all classes will share to some de-
 
 THE POLITICS OF INDUSTRY 103 
 
 gree. Concession, even when going as far as 
 all this, will fail to meet the situation, for cer- 
 tain entirely clear reasons. 
 
 For one thing, such a policy of concession 
 overlooks or affects to ignore the fact that the 
 central significance of the current unrest, with 
 its resultant programs of aspiration, lies not 
 so much in the extent as in the character of the 
 unrest. The one thing that a patch-work of 
 palliatives and concessions does not touch is 
 the one thing that lies at the heart of the mod- 
 ern labor problem and gives to the modern la- 
 bor movement its sustained and vibrant pur- 
 pose, and that is the status of the worker in 
 industry. This question of status has been a 
 question of increasing moment ever since the 
 introduction of machine power in production 
 and the rise of the factory system. Before 
 that time, industry was a relatively simple af- 
 fair in the matter of its mechanics and in the 
 matter of its human relations as well. The 
 man who was master of a handicraft produced 
 his wares in his own home, where he associated 
 with himself a few apprentices and journey- 
 men. He and his workmen dined at the same 
 family table. There was little, if any, social 
 cleavage between the two master and work-
 
 104 THE POLITICS OF INDUSTRY 
 
 men. The workman married the master's 
 daughter, and pursued his labor as a scholar 
 pursues a study, looking upon his labor as a 
 process of education that would in time make 
 him a master and secure for him the civic 
 privileges of a freeman. The master owned 
 his simple tools. He was master of his own 
 profits. His customers were his neighbors 
 a fact that made good work a matter of per- 
 sonal pride and responsibility. The simple 
 regulations of his guild and of his city safe- 
 guarded his trade. The men of this era of 
 simple processes and intimate relations lived 
 simply. Even the limited luxuries of the mod- 
 ern poor were unknown to many of the masters 
 of that day. But the simple system had cer- 
 tain compensating advantages which have been 
 lost and which it is the function of industrial 
 statesmanship to restore in modern industry. 
 These advantages, while clearly evident, merit 
 a brief summarization which it will be valuable 
 to throw into contrast with certain features of 
 the present system of industrial relations, for 
 out of that contrast will arise a clear definition 
 of the ultimate labor issue. In the simpler 
 days of industry, before division of labor came 
 with its far-reaching possibilities of blessing
 
 THE POLITICS OF INDUSTRY 105 
 
 and blight, the workman was able to keep his 
 spirit fresh and his eye alight with a creative 
 and personal interest in the article he was pro- 
 ducing, he was able to go his way with little of 
 the fear of insecurity or the deadening sense 
 of dependence, and he was lured by hope the 
 ladder that led from apprenticeship to master- 
 ship was not a discouragingly long ladder. 
 
 Then the machine entered, and the simple pro- 
 cesses and intimate relations of the handicraft 
 and small-scale production order of industry 
 began rapidly to disappear. The race of mas- 
 ters of small shops from that time was a pass- 
 ing race. They could not buy the expensive 
 machines as they had bought their simple tools, 
 as they had bought their hand spindles and 
 hand looms, for instance. Production forsook 
 the home for the factory. The concentration 
 of production in factories involved the concen- 
 tration of workmen about the factory, impetus 
 to the forces making for the crowded city. At 
 first workmen showed spirited resistance to the 
 introduction of machine power in production, 
 which in the period of transition threw masses 
 of workmen out of employment ; factories were 
 mobbed and machinery was wrecked. But the 
 men who owned the machines had a telling way
 
 106 THE POLITICS OF INDUSTRY 
 
 with legislators. England placed the death 
 penalty on the wrecking of machinery. The old 
 masters began by breaking the machinery ; they 
 ended with having their own spirit broken. 
 Men who had been masters of tools became ser- 
 vants of machines, and for the first time the 
 world of industry was cut in two, capital and 
 labor, and from the agonies of the displace- 
 ment a legacy of class hatred hung over the 
 new order. Machine production made for the 
 steady disintegration of the three outstanding 
 advantages of the hand-production system as 
 mentioned above. It became increasingly diffi- 
 cult for the workman to maintain a creative 
 and personal interest in the article being pro- 
 duced, when the only part he played in its pro- 
 duction was the tending of a machine that with 
 every click monotonously turned out one small 
 part of the article, the workman in question 
 never seeing even that small part fit itself into 
 the finished whole. With every year industry 
 became more and more specialized so that pride 
 of craftsmanship found itself subtly disin- 
 tegrated under the growth of a system of pro- 
 duction which sentenced the average workman 
 to devote the major part of his energy to count- 
 less repetitions of a single act or process, but
 
 THE POLITICS OF INDUSTRY 107 
 
 one of a hundred operations used in turning 
 the raw material into the marketable article. 
 With complete loss of the ownership of the in- 
 struments of production and of raw materials, 
 the old sense of security gave way to the fear 
 of insecurity both as to wages and to tenure of 
 employment, and the upstanding independence 
 of the handicraft days became dulled by a nar- 
 cotic sense of dependence. For in the early 
 stages of machine production the machines pro- 
 duced goods so rapidly that periodically a 
 glutted market automatically stopped produc- 
 tion until consumption could catch up ; and that 
 meant a work famine with the fear it threw into 
 the hearts of the employed. It hardly needs 
 saying that the new order of machine produc- 
 tion dimmed the hope that formerly lured the 
 worker at least the particular hope he form- 
 erly entertained of ultimately becoming a mas- 
 ter in his own right, for clearly the elect few 
 alone would aspire to the accumulation of 
 wealth sufficient to own a factory. 
 
 Here, then, are certain valuable industrial 
 assets that were lost, let us hope temporarily, 
 in the transfer of industry from the small- 
 scale production of handicraft days to the 
 grand-scale production of the power-machine:
 
 108 THE POLITICS OF INDUSTRY 
 
 personal creative interest in the product and a 
 concern for maximum output, that sense of 
 security and freedom from involuntary de- 
 pendence without which the mind cannot be free 
 for its best work, and justifiable hope of the 
 continuous possibility of advance. It is im- 
 portant to remember that these effects have 
 been produced not by the deliberate bad inten- 
 tions of individuals with a corner on power, but 
 that these effects are inevitable by-products of 
 the transfer from an industry of hand produc- 
 tion and personal relations between masters 
 and apprentices to an industry of power-ma- 
 chine production and impersonal relations be- 
 tween employers and employees. I use the 
 word inevitable in this connection without pur- 
 posing to suggest that modern industry in itself 
 implies of necessity the destruction of the crea- 
 tive spirit of the craftsman, and the dimming of 
 the sense of security, independence, and hope; 
 the thing that made the destruction of these 
 inevitable in modern industry was the fact that 
 when industry was transferred from the per- 
 sonal small-scale basis to the impersonal large- 
 scale basis, the administrative brains of indus- 
 try centered exclusively upon the mechanical 
 problem of the transfer and ignored the human
 
 THE POLITICS OF INDUSTRY 109 
 
 problem involved. That was left to shift for 
 itself. And the instincts of self-defense and 
 self-interest, rather than conscious statesman- 
 like administration, have dictated and devised 
 the policies and instruments that both capital 
 and labor, with certain heartening exceptions, 
 today employ in dealing with the issues of in- 
 dustrial relations. 
 
 Stripped of details and many concurrent is- 
 sues, I think this affords a fairly adequate 
 background for consideration of the modern 
 labor problem. At least it gives us a picture 
 of the conditions that have called into being 
 the policies and instruments that both capital 
 and labor now use to maintain and advance 
 their respective interests and rights. 
 
 Now, one thing lies coiled at the heart of 
 everything I have pointed out, and that is that 
 in the transfer from hand production or small- 
 scale industry to machine production or large- 
 scale industry the worker lost control of the 
 instruments of production, lost control of the 
 raw materials for production, lost control of 
 the conditions under which production is car- 
 ried on, lost control of the profits arising from 
 production. And the history of the labor 
 movement, from the time James Watt, in 1769,
 
 110 THE POLITICS OF INDUSTRY 
 
 harnessed the expansive power of steam to hu- 
 man use and made possible machine production 
 down to the present, has been the story of la- 
 bor 's struggle to regain the fruits if not the 
 fact of that lost control. To the cynical and 
 the superficial the labor movement is a purely 
 selfish struggle between a group called labor, 
 trying to keep wages up, and a group called 
 capital, trying to keep wages down; but it is 
 essentially a competition for control, with a rich 
 variety of meanings attached to that word. 
 Specific demands and specific strikes for 
 shorter hours and higher wages, aside from 
 their immediate purpose, are part of this larger 
 movement for a restoration of control, even in 
 those instances where the leaders of such 
 strikes are blind to the relation their immediate 
 action bears to the larger movement. 
 
 Before the entry of machine production and 
 the factory system the workmen exerted a 
 positive control over industrial processes and 
 industrial relations. Modern industry made 
 and still makes that impossible. Workmen 
 turned, therefore, instinctively to the attempted 
 exercise of a negative control over industry, at 
 least control over wages and conditions of 
 work. Organized labor, collective bargaining,
 
 THE POLITICS OF INDUSTRY 111 
 
 and the strike are methods and instruments 
 that have been evolved out of this attempt at 
 negative control. Capital has, of course, coun- 
 tered with similar methods and instruments 
 designed to meet in detail the procedure of la- 
 bor. And thus the stage is set for the present 
 relations of capital and labor, with the excep- 
 tion of certain happy variations which need not 
 detain our analysis at this point. 
 
 The present system of regulating the rela- 
 tions between the parties to industry in the at- 
 mosphere of continuous class contest, latent 
 or in action, from the public's point of view 
 falls far short of the desirable. From the point 
 of view of the intelligent self-interest of both 
 capital and labor it is a costly and inadequate 
 method of progress. It is important to remem- 
 ber, however, that this system was never de- 
 liberately planned as a desirable method of 
 progress either by capitalists or labor leaders ; 
 it is the product of an instinctive evolution un- 
 der the spur of self-defense and immediate self- 
 interest. Nobody chose strikes and lock-outs 
 as statesmanlike and desirable instruments for 
 the effecting of social advance. They have 
 been employed because, in the absence of indus- 
 trial statesmanship, no other methods lay
 
 112 THE POLITICS OF INDUSTRY 
 
 readily at hand with which workmen might ex- 
 ercise some measure of control over the condi- 
 tions and reward of their work, and with which 
 capital might resist such attempted control in 
 toto or provide against its running the full 
 gamut to usurpation or expropriation. But the 
 weakness of the whole round of partial policies 
 and opportunist methods used by both capital 
 and labor at present lies in the fact that they 
 do not drive directly at the sustaining cause of 
 the conflict between capital and labor. It will 
 clear the air of irrelevancies to review briefly 
 the more important of the policies and instru- 
 ments now used in the administration of indus- 
 trial relations and to attempt to assess their 
 value as an ultimate solution or a fundamental 
 contribution toward an ultimate solution of the 
 labor problem. 
 
 Collective bargaining, as we have seen, is one 
 of the logical products of the attempt of labor 
 to exert a negative control over industry in 
 place of the positive control it formerly ex- 
 ercised a gesture of self-defense upon the part 
 of a class from whom former weapons of pro- 
 tection had been taken. It is idle to rail at the 
 use of collective bargaining in the absence of a 
 pr e^uallv effective method, but if we
 
 THE POLITICS OF INDUSTRY 113 
 
 are to arrive at a better method we must 
 visualize the essential fault of collective bar- 
 gaining as anything approaching a solution of 
 the problem of industrial relations. I can do 
 no better at this point than to quote Alfred E. 
 Zimmern on collective bargaining. In an Ox- 
 ford publication entitled " Progress and His- 
 tory" he says: 
 
 It is the defect of the wage system, as Adam Smith 
 makes clear to us, that it lays stress on just those 
 points in the industrial process where the interests 
 of employers and workpeople run contrary to one an- 
 other, whilst obscuring those far more important as- 
 pects in which they are partners and fellow-workers in 
 the service of the community. This defect cannot be 
 overcome by strengthening one party to the contract 
 at the expense of the other, by crushing trade unions 
 or dissolving employers' combinations, or even T)y 
 establishing the principle of collective bargaining. 
 It can only be overcome by the recognition on both 
 sides that industry is in essence not a matter of con- 
 tract and bargaining at all, but of mutual interde- 
 pendence and community service; and by the growth 
 of a new ideal of status, a new sense of professional 
 pride and corporate duty and self-respect among all 
 who are engaged in the same function. 
 
 And in one of Mr. Zimmern 's "Bound Table " 
 articles he further states regarding collective
 
 114 THE POLITICS OF INDUSTRY 
 
 bargaining this, which I have in part quoted in 
 an earlier paper in this volume : 
 
 Trade Unions and Employers' Associations are 
 necessary parts of the organization of a modern state, 
 and collective bargaining is clearly an advance on the 
 old unequal system of individual wage-contracts. 
 But collective bargaining between large-scale organ- 
 isations of employers and workmen involves a piling 
 up of armaments on both sides not unlike that of the 
 rival European groups before the war. At its best it 
 preserves the peace by establishing a precarious bal- 
 ance of power ; at its worst it precipitates a disastrous 
 conflict ; and, in either case, whether it works well or 
 ill for the moment, it is non-moral and inhuman, for 
 it has no basis in a sense of common service or pub- 
 lic duty. Hence it creates a feeling of divided in- 
 terest and permanent estrangement which has been all 
 too visible to the rest of the community during the 
 recurring industrial crises of the last ten years. 
 
 It is quite clear that collective bargaining, 
 however necessary it may be in the absence 
 of a better method, cannot be considered as 
 more than a half-way house on the road to an 
 ultimate solution of the problem of industrial 
 relations. 
 
 Respecting strikes little need be said beyond 
 a statement of the fact that the strike is frankly 
 recognized by labor as an emergency instru-
 
 THE POLITICS OF INDUSTRY 115 
 
 ment to be brought into use when other avail- 
 able means of influence and control fail. I am 
 not concerned here with the complex of opinions 
 regarding the use and abuse of the strike; I 
 am concerned only with the fact that not even 
 the users of the strike regard it as a solution. 
 
 Respecting the lock-out and the injunction, 
 which are counter measures that capital has 
 used in meeting or anticipating the strike, the 
 same may be said as has just been said regard- 
 ing strikes. No capitalist thinks of lock-outs 
 or injunctions as elements of a solution; they 
 are frankly war measures. 
 
 Conciliation likewise falls short of a solu- 
 tion. Conciliation serves an invaluable func- 
 tion in adjusting differences that have their 
 rools in misunderstanding of policy or motive. 
 The record of conciliation in the United States, 
 Great Britain, Canada, New Zealand, and Aus- 
 tralia is the record of a highly valuable method 
 for the reduction of the wastes of open breaks 
 between the parties to industry. But concilia- 
 tion as a matter of fact does not deal with root 
 causes; its paramount aim is industrial peace, 
 and its paramount temptation is to regard in- 
 dustrial peace as an end in itself. Too fre- 
 quently it becomes industrial pacifism, with a
 
 116 THE POLITICS OF INDUSTRY 
 
 leaning toward peace at any price. Peace at 
 any price, when an issue of right and wrong 
 is at stake between nations, has had its day in 
 court and the popular verdict has gone against 
 it. Is it less reprehensible in a clean-cut issue 
 in industrial relations? The peace which con- 
 ciliation too frequently has in mind is the im- 
 mediate peace of the community rather than a 
 lasting peace between capital and labor. In- 
 dustrial peace and international peace alike are 
 not ends in themselves; they are means to an 
 end the end of freedom and self-respect. It 
 is a common-place that international justice 
 does not necessarily flow from international 
 peace, but contrariwise. Just so social justice 
 is not a by-product of industrial peace, but the 
 other way around. Conciliation is a valuable 
 instrument that will always be necessary, re- 
 gardless of the system of industrial relations, 
 but it is not a solution. 
 
 Arbitration differs from conciliation in the 
 fact that a third party is present with the power 
 to balance claims and evidence and pass bind- 
 ing judgment thereon. The practical weak- 
 ness of arbitration, in making a fundamental 
 contribution to the solution of vexed industrial 
 relations, lies in the difficulty the arbitrator
 
 THE POLITICS OF INDUSTRY 117 
 
 has in acting upon more than an opportunist 
 basis of judgment. In fact the average arbitra- 
 tor jockeys the parties in dispute toward the 
 settlement most likely to be accepted, and that 
 makes it very difficult for the arbitrator to ar- 
 rive at a decision upon the basis of abstract 
 justice. He must perforce balance the strength 
 of the opposing parties and reach a decision 
 that stands a good chance of acceptance. Fre- 
 quently the arbitral award is accepted because 
 the strength of one of the parties can afford to 
 accept it, and the weakness of the other one 
 of the parties must accept it. In such cases 
 sullenness follows assent and real industrial 
 peace is not advanced; simply one crisis is 
 bridged over. Just because arbitration has 
 such difficulty in arriving at a decision upon the 
 basis of justice, there is always the possibility 
 that the weaker party will feel justified in 
 flouting the decision when the posture of affairs 
 shifts and the chance for a more advantageous 
 settlement seems to offer itself. We have not 
 been without examples in this country when 
 one of the parties to industry has agreed to 
 arbitration and award and then flouted the de- 
 cision of the duly constituted tribunal. As a 
 matter of ethics that is indefensible. It is use-
 
 118 THE POLITICS OF INDUSTRY 
 
 less to hope for ordered progress, if we cannot 
 reckon upon the sanctity of contract and agree- 
 ment. But getting into a fever about isolated 
 cases of broken agreements is of slight use. 
 Profanity and righteous indignation cannot 
 take the place of intelligent administration of 
 a difficult situation. The scientist searching 
 for a cure for tuberculosis does not damn the 
 bacillus under his microscope; he studies it, 
 learns its actions and effects, and attempts to 
 devise a remedy or preventive against it. Just 
 so it is essential that we recognize the limita- 
 tions of arbitration, voluntary or compulsory, 
 and deal with the causes which, rightly or 
 wrongly, prompt organized groups to scout the 
 method or flout the award, when really funda- 
 mental issues are at stake. 
 
 Investigation that shall insure a putting of 
 the full facts before the public in a labor dis- 
 pute, so that public opinion may not be swayed 
 either by demagogic appeal or false sympathy, 
 is a salutary method always. There is room 
 for a wider and more systematic use of this 
 agency. As W. L. Mackenzie King in his "In- 
 dustry and Humanity" points out: 
 
 Investigation is useful as a method, and imperative 
 where a situation is intricate, or the numbers of per-
 
 THE POLITICS OF INDUSTRY 119 
 
 sons directly or indirectly affected are considerable. 
 Investigation is a letting in of light. It does not at- 
 tempt to award punishments or to affix blame ; it aims 
 simply at disclosing facts. Its efficacy lies in what 
 it presupposes of the power of Truth to remedy evil 
 of itself. Its use is a high tribute to human nature, 
 for it assumes that collective opinion will approve the 
 right, and condemn the wrong. Willingness to in- 
 vestigate is prima facie evidence of a consciousness of 
 right. In the absence of good and sufficient reasons, 
 refusal to permit investigation is equally prima facie 
 evidence of weakness or wrong. So powerful is In- 
 vestigation as a means of inducing right behavior, 
 that authority to employ this method at any or all 
 times is of itself protection against injustice. The 
 statutory right to investigate disputes, which some 
 public boards enjoy, has been found sufficient to in- 
 fluence parties to industrial differences to settle their 
 controversies both voluntarily and speedily. 
 
 Within an industry, the right of investigation is 
 usually exercised in the form of an appeal from a 
 subordinate to a higher authority. All such rights of 
 appeal are guarantees against arbitrary conduct and 
 unfair dealing. The higher the right of appeal may 
 be carried, the greater the safeguard. To make this 
 right effective, it should at some point lie wholly be- 
 yond influence by any of the parties in interest. 
 
 But investigation is, of course, only an anti- 
 septic. The publicity of the results of inves- 
 tigation can discourage, drive to cover, or pre-
 
 120 THE POLITICS OF INDUSTRY 
 
 vent manifest injustice and unfairness of deal- 
 ing that public opinion plainly would not toler- 
 ate ; but investigation is negative and lacks the 
 character of positive administration which is 
 essential in any adequate dealing with indus- 
 trial relations. Conciliation, arbitration, and 
 investigation are indispensable instruments of 
 any industrial system, but they may not be 
 looked upon as offering adequate machinery for 
 the total regulation of industrial relations. 
 They deal with disputes after they have arisen ; 
 but industrial peace and progress require 
 policies and machinery that will deal construc- 
 tively with the conditions out of which disputes 
 arise. 
 
 Social legislation designed to create a sense 
 of security against unemployment, accident, 
 sickness, old age, and kindred fears of labor 
 realizes its immediate aim, the increased sense 
 of security, but does not seem materially to les- 
 sen the vitality of the labor movement, a fact 
 that might suggest that security and material 
 safeguards are not the sum and substance of 
 labor's aspiration. Any attempted solution or 
 partial solution of the labor problem that pro- 
 ceeds upon the assumption that security is the
 
 goal that comprehends the whole round of labor 
 aims is assured of failure Mr. Zimmern, from 
 whose illuminating studies of the problems of 
 industry I am quoting at length in this paper, 
 touches this matter in a pointed analogy drawn 
 between the security of paternal legislation and 
 the security of feudalism. He says : 
 
 It is constantly being said, both by employers and 
 by politicians, and even by writers in sympathy with 
 working-class aspirations, that all that the workman 
 needs in his life is security. Give him work under 
 decent conditions, runs the argument, with reasonable 
 security of tenure and adequate guarantees against 
 sickness, disablement, and unemployment, and all will 
 be well. This theory of what constitutes industrial 
 welfare is, of course, when one thinks it out, some 
 six centuries out of date. It embodies the ideal of 
 the old feudal system, but without the personal tie 
 between master and man which humanised the feudal 
 relationship. Feudalism . . . was a system of con- 
 tract between the lord and the laborer by which the 
 lord and master ran the risks, set on foot the enter- 
 prises (chiefly military), and enjoyed the spoils, in- 
 cidental to mediaeval life, while the laborer stuck to 
 his work and received security and protection in ex- 
 change. Feudalism broke down because it involved 
 too irksome a dependence, because it was found to be 
 incompatible with the personal independence which is 
 the birthright of a modern man. So it is idle to ex-
 
 122 THE POLITICS OF INDUSTRY 
 
 pect that the ideal of security will carry us very far 
 by itself towards the perfect industrial common- 
 wealth. 
 
 Welfare work instituted and carried on by 
 employers does not bring us any nearer a solu- 
 tion of the tangled riddle of industrial rela- 
 tions. Percy Stickney Grant in his "Fair Play 
 for the Workers," which is an attempt to 
 state the workers' point of view regarding the 
 problems centering in industrial relations, in- 
 terprets the workman's attitude toward the 
 welfare work of employers as follows : 
 
 The newspaper-reading public and conservative 
 business men, when confronted by the labor problem, 
 are often confused by the behavior of working-men 
 toward employers famous for their kindness. Dur- 
 ing the Pullman strike it was hard for the public to 
 understand how the employees of the company could 
 be so hostile and could commit acts of violence. Had 
 not Mr. Pullman given them an ideal town to live in, 
 all at his own expense ? 
 
 . . . The working-man's great complaint today is 
 his helplessness, and it is perfectly clear that what- 
 ever increases this sense of helplessness will really in- 
 crease his outcry. Working-men don't like to have 
 things done for them. The more that is done for them, 
 the more they feel in the power of the person who is 
 responsible even for their benefits. . . . Paradoxically 
 enough, . . . some of the most serious explosions of
 
 THE POLITICS OF INDUSTRY 123 
 
 indignation have taken place amid the fairest environ- 
 ment that can surround the conditions of toil. . . . 
 Working-men say that if corporations can afford 
 these extras, these adornments and additions to the 
 comfort of their people, then they can afford to give 
 better wages. Of the two methods of distributing a 
 surplus, the working-man prefers the latter. He 
 would rather take his chances in an ordinary factory 
 with higher pay and use the addition to his income as 
 he pleases. 
 
 In other words, the working-man realizes, or, at 
 any rate, asserts, that he himself is paying for the 
 improved tenements, for the parks, for the libraries, 
 for the comforts and conveniences of the superior fac- 
 tories, for kindergartens, for lessons in cooking, for 
 lectures, for flower-gardens, for flower-boxes outside 
 the windows, for baths, etc. While he is meeting the 
 cost of these advantages, he finds the world at large 
 praising his employer as a notable philanthropist, and 
 in his heart he regards this as a sham. At all events 
 he would rather be his own philanthropist. 
 
 I have quoted this, not in order to pass per- 
 sonal judgment upon the justice or injustice of 
 the working-man's point of view in this matter, 
 but to indicate that welfare work offers no key 
 to the riddle. 
 
 Nor does profit-sharing as usually adminis- 
 tered offer in itself a solution to industrial un- 
 rest or furnish a final basis for cordial indus-
 
 124 THE POLITICS OF INDUSTRY 
 
 trial relations. Profit-sharing, when its full 
 implications are worked out, may come nearer 
 to a solution than any of the matters I have 
 mentioned, but I have here in mind profit- 
 sharing as normally conducted. Here again 
 let me summon one who, from wide experience 
 in la*bor matters, can speak with sureness and 
 authority. W. L. Mackenzie King, in his vol- 
 ume referred to earlier in this paper, says : 
 
 As the term "profit-sharing" is generally used, it 
 means the distribution among wage-earners of part 
 of the net profits of an undertaking. Where the rate 
 of return at which labor is rewarded in the first in- 
 stance is the standard rate, so that the share which 
 labor receives from the net profits is in no sense a 
 restoration, in whole or in part, of the wages it should 
 have received before net profits were estimated, the ob- 
 jection of labor to this method of rewarding effort 
 is in large measure removed. Often, however, in esti- 
 mating net profits, capital and management are 
 tempted to regard the remuneration of labor as an item 
 in the cost of production to be kept as low as possible. 
 It is hard for labor to believe that this is not what is 
 generally done, and to understand why, if extra pay- 
 ments are available in the form of dividends out of net 
 earnings, they should not be as readily available in 
 the form of higher wages at the outset. . . . 
 
 . . . there is yet another ground on which organized 
 labor fears profit-sharing. Trade-union effort to
 
 THE POLITICS OF INDUSTRY 125 
 
 raise the status of labor seeks reinforcement from a 
 growing belief among workers in the solidarity of 
 labor. Whatever tends to weaken or destroy the class 
 interest is apt to be viewed with misgivings as likely 
 to lessen the possible power of organization as a whole. 
 ... It is not surprising, therefore, to find that, where 
 the result of profit-sharing is genuinely such as to im- 
 prove the status, and not merely the temporary earn- 
 ings, of working-men, labor's opposition to profit-shar- 
 ing has not only been silenced, but profit-sharing has 
 found some of its strongest advocates in the ranks of 
 trade unionists. 
 
 It will be sufficient to mention one other 
 policy which, despite the ambitious claims 
 made in its behalf by its partizans, fails to 
 afford a basis for the administration of indus- 
 try mutually satisfactory to capital and labor, 
 and that is scientific management. That the 
 labor-saving devices of scientific management 
 represent new and valuable assets to produc- 
 tion may not be questioned. It is the reaction 
 of scientific management upon the worker that 
 presents a problem which the advocates of 
 scientific management must solve before the 
 principle can gain a fundamental foothold in 
 industry with the full assent of labor. It tends 
 to mechanize the worker. It centralizes re- 
 sponsibility for initiative in the scientific man-
 
 126 THE POLITICS OF INDUSTRY 
 
 ager, and allots to the worker a charted action 
 which he must carry out with economy of mo- 
 tion. It makes the worker a better tool, but 
 a poorer craftsman. It pushes the specializa- 
 tion of modern industry, which has already 
 created a problem of cramped initiative, still 
 further. It makes for greater centralization 
 of management. It is met with open hostility 
 by labor. Labor fears that the rate of wage 
 increase under scientific management will not 
 be in just proportion to the gains of capital; 
 but most of all fears a weakened status as the 
 result of a system that fully worked out will 
 have a diminishing dependence upon exper- 
 ienced workers. Certain scientific managers 
 assert that they are confident they could place 
 their factory upon a paying basis within three 
 months in the event they lost their entire work- 
 ing force except the staff of managers and the 
 minimum number necessary to maintain the 
 organization and were obliged to begin again 
 with green hands. It is quite clear that scien- 
 tific management, if it is not to be a disruptive 
 factor in the labor situation, must be installed 
 with the consent and cooperation of labor. La- 
 bor will never consent to the extreme forms of 
 scientific management that turn a man into a
 
 machine. Far from being a solution of the 
 central problem of the control of industry, the 
 very proposal of scientific management makes 
 acute the issue of labor's desire for a greater 
 share in the control of the processes and profits 
 of industry. 
 
 At the end of this survey of some of the out- 
 standing policies, methods, and instruments 
 used or proposed for the administration of in- 
 dustry collective bargaining, strikes, lock- 
 outs, injunctions, conciliation, arbitration, in- 
 vestigation, social legislation, welfare work, 
 profit-sharing, and scientific management the 
 thing that stands clear is that no one, or all of 
 these combined will succeed in shifting the ad- 
 ministration of industrial relations from the 
 present balance of power basis. These cannot 
 be considered as solutions; they fail to touch 
 the ultimate labor issue the status of the 
 worker in industry, and his relation to the con- 
 trol of industry. Unless the question of the 
 workers' relation to the control of industry is 
 cleared up by constructive thought and action 
 in which capital shares, there is a very definite 
 possibility that the labor movement will be cap- 
 tured by the extreme wing of labor thought 
 which desires the overthrow of the present sys-
 
 128 THE POLITICS OF INDUSTRY 
 
 tern of privately owned industry and the pass- 
 ing of control fully into the hands of the work- 
 ers. 
 
 The adherents to the present order of pri- 
 vately owned industries are, therefore, chal- 
 lenged to join in a fresh, unprejudiced, and 
 thorough attempt to find whether there can be 
 devised methods of association between capital 
 and labor that will satisfy the legitimate aspira- 
 tions that lie at the heart of the present world- 
 wide unrest, guarantee orderly progress, and 
 keep industry a going concern. Now, I have 
 not built the arguments of this paper to this 
 point in order to launch a personal theory, but 
 to report what some of the best minds of both 
 capital and labor are thinking and saying re- 
 garding the way out. 
 
 We have seen that the fundamental weakness 
 of past attempts to bring industrial relations 
 to a state of harmony and efficiency has been 
 that industrial relations have been looked upon 
 as a problem of bargaining between competing 
 groups instead of a problem of government by 
 collaborating groups. Industrial relations in 
 handicraft days presented a problem of adjust- 
 ment between individuals. Industrial relations 
 under modern grand-scale production present a
 
 THE POLITICS OF INDUSTRY 129 
 
 problem of adjustment between groups highly 
 organized. The former was a problem of bar- 
 gaining ; the latter is a problem of government. 
 To the present, however, we have persisted in 
 an attempt to handle the new problem with the 
 old technique. It was useless to hope for any 
 constructive treatment of the problem of indus- 
 trial relations until the leaders of business, of 
 industry, and of labor visualized the modern 
 labor problem for what it is a problem of per- 
 manent government rather than periodic bar- 
 gaining. Today there is on all hands through- 
 out business circles a clear recognition that only 
 by a frank facing and constructive treatment 
 of the problem of government in industry can 
 industrial peace be secured. I want now to 
 present the conception of the labor problem 
 that is assuming a gratifying distinctness in 
 the minds of responsible leaders of business, 
 industry, and labor; and to follow the state- 
 ment of this conception with a statement of the 
 machinery and organization which is being pro- 
 posed for the handling of industrial relations 
 upon the basis of definitely organized govern- 
 ment in industry. 
 
 I find myself again turning to Mr. Zimmern 
 for the clearest available statement of the new
 
 130 THE POLITICS OF INDUSTRY 
 
 conception of the labor problem as it is taking 
 definite form in the minds of the leaders of 
 British industry particularly. His statement 
 may be taken as accurately interpretive of a 
 growing body of British opinion. In a chapter 
 on "The Control of Industry," in his volume 
 on "Nationality and Government," he says: 
 
 Industry and politics are two very closely related 
 functions. The object of politics or government is 
 to carry on the public business of the community; to 
 pass the laws and make the administrative arrange- 
 ments which are needed in the interests of the com- 
 munity as a whole. The object of trade and industry 
 is very similar. It is to serve the needs of the com- 
 munity; to provide the goods and services which are 
 necessary to its existence and well-being. It is, there- 
 fore, not at all surprising that the same standard 
 should tend to be adopted in both, and that that stand- 
 ard should conform to the general view of life in 
 vogue in the country. . . . 
 
 But industry and politics do not resemble one an- 
 other only in their objects. They resemble one an- 
 other also in their methods. Both have certain work 
 to get done for the community, and in both cases the 
 question arises how that work shall be organized. 
 Both industry and politics are faced by what in 
 politics is called the constitutional problem and in 
 industry the problem of management. ... In politics, 
 so far as this and most Western countries are con- 
 cerned, this problem has been decided in favor of
 
 THE POLITICS OF INDUSTRY 131 
 
 democracy. ... In industry, however, the problem of 
 management is still unsolved, or rather it has hitherto 
 been decided in a direction adverse to democracy. 
 . . . The problem of management, what I would call 
 the constitutional problem in industry, the question 
 as to how the industrial process shall be controlled, is 
 already, and is likely to continue, the burning issue in 
 industrial policy. 
 
 Industrial democracy . . . does not mean handing 
 over the control of matters requiring expert knowl- 
 edge to a mass of people who are not equipped with 
 that knowledge. Under any system of management 
 there must be division of labor; there must be those 
 who know all about one subject and are best fitted to 
 deal with it. Democracy can be just as successful as 
 any other form of government in employing experts. 
 Nor does democratic control, in the present stage at 
 any rate, involve a demand for control over what 
 may be called the commercial side of management 
 the buying of the raw material, the selling of the fin- 
 ished article, and all the exercise of trained judgment 
 and experience that are brought to bear by business 
 men on these questions ... at present at any rate 
 the workers' demand for democratic control is not a 
 demand for a voice in the business, but for control 
 over the conditions under which their own daily work 
 is done. It is a demand for control over one side, 
 but that the most important side because it is the 
 human side, of the industrial process. 
 
 Elsewhere he summarizes his thesis by say- 
 ing that between the extreme forms of state
 
 132 THE POLITICS OF INDUSTRY 
 
 socialism and the extreme forms of private 
 capitalism there exists an intermediate region 
 of industrial self-government. 
 
 All this might be readily dismissed or lis- 
 tened to with a tolerant courtesy were it simply 
 a publicist's notion; but in England this con- 
 ception of the labor problem has given rise to 
 a definite program that is supported by many 
 of the most responsible and conservative lead- 
 ers of business and industry, and that the gov- 
 ernment has adopted as an official policy and 
 made a measure of practical politics. An il- 
 luminating and abundant literature has grown 
 up in this field, an interpretive digest of which 
 would afford effective stimulation to American 
 thought upon the problem of industrial rela- 
 tions. Instead of attempting that, however, I 
 desire to treat here of the one official documen- 
 tary formulation of the proposal for industrial 
 government which has served to crystallize 
 English opinion and afford a basis for practical 
 action the Whitley Report. 
 
 A committee of expert students of industrial 
 relations, under the chairmanship of the Right 
 Honorable J. H. Whitley, M. P., Chairman of 
 Committees of the House of Commons, was ap- 
 pointed in 1917. The terms of reference to the
 
 THE POLITICS OF INDUSTRY 133 
 
 Committee on Relations between Employers 
 and Employed, as the Whitley committee was 
 called, were: 
 
 1. To make and consider suggestions for 
 securing a permanent improvement in the rela- 
 tions between employers and workmen. 
 
 2. To recommend means for securing that 
 industrial conditions affecting the relations be- 
 tween employers and workmen shall be sys- 
 tematically reviewed by those concerned, with 
 a view to improving conditions in the future. 
 
 With all promptness consistent with thor- 
 oughness the committee prosecuted its investi- 
 gations and formulated its suggestions which 
 appear in the First (interim) Report on Joint 
 Standing Industrial Councils, under date of 
 March 8, 1917, together with three later reports 
 representing supplementary and more detailed 
 considerations. The report gives plain evi- 
 dence of certain general considerations that 
 dictated the specific suggestions it makes. It 
 will be of value to indicate these general con- 
 siderations. 
 
 The report is based upon the assumption 
 that the most workable solution of the prob- 
 lems arising out of industrial relations is likely 
 to come from the voluntary cooperative action
 
 134 THE POLITICS OF INDUSTRY 
 
 of employers and employees rather than from 
 the arbitrary imposition of government regula- 
 tions; that the system of industrial relations 
 springing from such a voluntary collaboration, 
 as the faithful expression of joint thought and 
 agreement, will be more likely to prove per- 
 manent and effective than an even better sys- 
 tem shoved down over recalcitrant groups by 
 executive order. This is clearly expressed in 
 a letter, under date of October 20, 1917, that 
 the Minister of Labor addressed to Employers' 
 Associations and Trade Unions. In answer- 
 ing certain questions raised in communications 
 to the Ministry of Labor, he said: 
 
 Fears have been expressed that the proposal to set 
 up Industrial Councils indicates an intention to in- 
 troduce an element of State interference which has 
 hitherto not existed in industry. This is not the case. 
 The formation and constitution of the Councils must 
 be principally the work of the industries themselves 
 . . . the success of the scheme must depend upon a 
 general agreement among the various organizations 
 within a given industry and a clearly expressed de- 
 mand for the creation of a Council. 
 
 This matter of self-solution of the problems 
 of industrial relations by the two active parties 
 to industry as contrasted with state regulation
 
 THE POLITICS OF INDUSTRY 135 
 
 is emphasised in the report itself. Since that 
 issue may become acute in the United States, 
 it is worth-while to reproduce the reference 
 the report makes. The report states: 
 
 It has been suggested that means must be devised 
 to safeguard the interests of the community against 
 possible action of an anti-social character on the part 
 of the Councils. We have, however, here assumed 
 that the Councils, in their work of promoting the in- 
 terests of their own industries, will have regard for 
 the national interest. If they fulfil their functions, 
 they will be the best builders of national prosperity. 
 The State never parts with its inherent over-riding 
 power, but such power may be least needed when 
 least obtruded. 
 
 The report is further based upon the assump- 
 tion that a satisfactory system of industrial re- 
 lations can be more easily created and more 
 effectively administered if there is complete 
 and coherent organization of both employers 
 and employees in all industries. On this point 
 the report reads : 
 
 An essential condition of securing a permanent im- 
 provement in the relations between employers and em- 
 ployed is that there should be adequate organization 
 on the part of both employers and workpeople. The 
 proposals outlined for joint cooperation throughout 
 the several industries depend for their ultimate sue-
 
 136 THE POLITICS OF INDUSTRY 
 
 cess upon there being such organization on both sides ; 
 and such organization is necessary also to provide 
 means whereby the arrangements and agreements 
 made for the industry may be effectively carried out. 
 
 It is interesting to see big business men in 
 England arguing for the complete organization 
 of labor, in view of the pronounced attitude of 
 many American business men in this matter. 
 
 A further assumption underlying the report 
 is that there is imperative need for machinery 
 that will bring employers and employees to- 
 gether for continuous consultation upon mat- 
 ters of mutual concern other than matters in 
 dispute; that there is a serious gap in an in- 
 dustrial organization that provides for con- 
 ference only when one of the parties has a 
 grievance. On this point the report states: 
 
 The schemes recommended in this report are in- 
 tended not merely for the treatment of industrial 
 problems when they have become acute, but also, and 
 more especially, to prevent their becoming acute. 
 We believe that regular meetings to discuss indus- 
 trial questions, apart from and prior to any differ- 
 ences with regard to them that may have begun to 
 cause friction, will materially reduce the number of 
 occasions on which, in the view of either employers 
 or employed, it is necessary to contemplate recourse 
 to a stoppage of work.
 
 THE POLITICS OF INDUSTRY 137 
 
 The general idea that permeates the whole 
 report is that industrial peace and efficiency de- 
 mand candid and constructive treatment of 
 the fundamental aspiration of labor, which 
 promises to be voiced with increasing vitality, 
 for a greater influence and control over those 
 parts and processes of industry that most 
 vitally touch the workmen's interests. It is re- 
 freshing to see the framers of this report go 
 past the inadequate expedients referred to 
 earlier in this paper and drive directly at the 
 heart of the labor problem, although extremists 
 contend that they betray but a Platonic inter- 
 est in the full implications of the workman's 
 interest in actual joint control. But the fram- 
 ers frankly state their convictions on this point 
 in a manner that indicates a healthy apprecia- 
 tion that the questions of status and control un- 
 derlie the more material issues of wages and 
 hours. On this point the report reads : 
 
 We have thought it well to refrain from making 
 suggestions or offering opinions with regard to such 
 matters as profit-sharing, co-partnership, or particular 
 systems of wages, etc. . . . We are convinced . . . 
 that a permanent improvement in the relations be- 
 tween employers and employed must be founded upon 
 something other than a cash basis. What is wanted
 
 138 THE POLITICS OF INDUSTRY 
 
 is that the work-people should have a greater oppor- 
 tunity of participating in the discussion about and 
 adjustment of those parts of industry by which they 
 are most affected. 
 
 The Whitley report, then, is based upon 
 these four general considerations: (1) the self- 
 administration of industry rather than govern- 
 mental regulations; (2) the complete and co- 
 herent organization of both employers and em- 
 ployed in all industries; (3) continuous con- 
 sultation instead of intermittent parleys, with 
 the view to removing the causes as well as ad- 
 justing the issues of disputes ; (4) the securing 
 to the workmen a larger voice in the control 
 of those parts of industry by which they are 
 most affected. 
 
 The machinery proposed by the Whitley re- 
 port is designed to meet, in its requirements and 
 working, the four general considerations just 
 summarized. The report suggests as desir- 
 able three units of organization, as follows : 
 
 (1) National Industrial Councils; 
 
 (2) District Industrial Councils ; 
 
 (3) Local Works Industrial Councils. 
 
 This triple organization of national, district, 
 and work-shop bodies is designed for applica- 
 tion to each industry separately. The scheme
 
 THE POLITICS OF INDUSTRY 139 
 
 looks upon a factory as an industrial commun- 
 ity requiring government, just as a municipal- 
 ity requires the forms and functions of a gov- 
 ernment. Unless the analogy is pushed too far, 
 it may be said that the plan divides industrial 
 government roughly along the lines that in the 
 United States divide municipal, state, and fed- 
 eral government. Each of these bodies is com- 
 posed of a joint membership of employers and 
 employed, is to meet regularly, and is to as- 
 sume constructive as well as conciliatory func- 
 tions. The report sedulously avoids the ap- 
 pearance of any attempt to impose a finished 
 system upon all industries ; it makes no attempt 
 at a rigid standardization of forms, leaving the 
 widest latitude of choice in the matter of the 
 specific forms a given industry shall see fit to 
 adopt. 
 
 The report at all points avoids the appear- 
 ance of a comprehensive analysis or complete 
 recommendation ; it purposely keeps its recom- 
 mendations suggestive merely. This appears 
 in its recommendations regarding the possible 
 jurisdiction of these joint Councils. A discus- 
 sion in great detail of the questions that might 
 come under the jurisdiction of work-shop com- 
 mittees may be found in the published results
 
 140 THE POLITICS OP INDUSTRY 
 
 of enquiries arranged by the section of eco- 
 nomic science and statistics of the British As- 
 sociation during 1916 and 1917. The results 
 of these enquiries appear in a volume entitled 
 "Industry and Finance. " I do not purpose, 
 however, to go into detailed discussion at this 
 point on the jurisdiction of these councils. 
 That may better be reserved for a later paper, 
 after there has been time to watch the councils 
 in operation over a period of time long enough 
 to warrant generalizations that may afford 
 some guidance to American thought in this 
 field. But it will be valuable to reproduce at 
 this point the suggestions of the Whitley report 
 which states : 
 
 Among the questions with which it is suggested that 
 the National Councils should deal or allocate to Dis- 
 trict Councils or "Works Committees the following may 
 be selected for special mention : 
 
 1. The better utilization of the practical knowledge 
 and experience of the workpeople. 
 
 2. Means for securing to the workpeople a greater 
 share in and responsibility for the determination and 
 observation of the conditions under which their work 
 is carried on. 
 
 3. The settlement of the general principles govern- 
 ing the conditions of employment, including the 
 methods of fixing, paying, and readjusting wages,
 
 THE POLITICS OF INDUSTRY 141 
 
 having regard to the need for securing to the work- 
 people a share in the increased prosperity of the in- 
 dustry. 
 
 4. The establishment of regular methods of nego- 
 tiating for issues arising between employers and 
 workpeople, with a view both to the prevention of 
 differences, and to their better adjustment when they 
 appear. 
 
 5. Means of ensuring to the workpeople the great- 
 est possible security of earnings and employment, 
 without undue restriction upon change of occupation 
 or employer. 
 
 6. Methods of fixing and adjusting earnings, piece- 
 work prices, etc., and of dealing with the many diffi- 
 culties which arise with regard to the method and 
 amount of payment apart from the fixing of general 
 standard rates, which are already covered by para- 
 graph three. 
 
 7. Technical education and training. 
 
 8. Industrial research and the full utilization of its 
 results. 
 
 9. The provision of facilities for the full considera- 
 tion and utilization of inventions and improvement 
 designed by workpeople, and for the adequate safe- 
 guarding of the rights of the designers of such im- 
 provements. 
 
 10. Improvements of processes, machinery, and or- 
 ganization and appropriate questions relating to man- 
 agement and the examination of industrial experi- 
 ments, with special reference to cooperation in carry- 
 ing new ideas into effect and full consideration of
 
 142 THE POLITICS OF INDUSTRY 
 
 the workpeople's point of view in relation to them. 
 11. Proposed legislation affecting the industry. 
 
 I have taken the trouble and space to present 
 this analysis of the Whitley report which 
 stands at the center of British policy with re- 
 gard to the labor problem and social unrest, be- 
 cause even as important a document as this re- 
 port is slow in getting to our reading public. 
 But this plan will doubtless come up for ex- 
 tended consideration in the United States as we 
 get more fully into our reconstruction difficul- 
 ties, and I have, therefore, thought it important 
 to present its general character and some of its 
 implications in this paper. 
 
 We should keep ourselves free, as the authors 
 of the report have kept themselves free, from 
 the delusion that this proposal is a panacea 
 guaranteed to cure all industrial ills. It is 
 frankly conceived as a practically possible step 
 that will take us a little farther along the road 
 of reasonable progress. It is stoutly opposed 
 by those who give no quarter to the present sys- 
 ter of privately owned industry, who desire 
 complete ownership and operation by the work- 
 ers. G. D. H. Cole, the belligerent young apos- 
 tle of the Guild movement, states this attitude 
 very pointedly:
 
 THE POLITICS OF INDUSTRY 143 
 
 The Whitley report . . . only regularizes and 
 formalizes a process which has long been going on 
 in most of our principal industries, and one which 
 would have continued whether there had been a Whit- 
 ley report or not. In fact, the control of industry 
 cannot be altered merely by the setting up of a few 
 Joint Committees. The control of industry rests upon 
 the economic power of those who control it ; and only 
 a shifting of the balance of economic power will alter 
 this control. 
 
 The plan is also opposed by those who fear 
 that regular conferences in which the employ- 
 ees would talk face to face with the employers 
 or managers would tend to conservatize the em- 
 ployees and take the fighting edge off the labor 
 movement. Such men conceive industry as a 
 play of opposed rather than common interests. 
 A pointed expression of this point of view is 
 found in this statement made by Gilbert K. 
 Chesterton : 
 
 My immediate advice to labor would be to stick 
 to its strict rights of combining and striking; and 
 certainly not to sell them for any plausible and partial 
 "participation" in management. I distrust the lat- 
 ter because it is in line with the whole oligarchic 
 strategy by which democracy has been defeated in 
 detail. The triumph of capitalism has practically 
 consisted in granting popular control in such small 
 quantities that the control could be controlled. It
 
 144 THE POLITICS OF INDUSTRY 
 
 is also founded on the fact that a man who can be 
 trusted as speaking for the employees often cannot 
 be trusted for long when speaking with the employers. 
 He can carry a message, especially a defiance; but if 
 he prolongs a parley, it may degenerate into a parlia- 
 ment. The parley of partners would be lifelong ; and 
 I fear the labor partner would be a very junior part- 
 ner. 
 
 As I have stated earlier in this paper, the 
 suggestions of the Whitley report are not the 
 last word in industrial relations. The value of 
 the plan lies in the fact that its acceptance will 
 establish certain fundamental principles with- 
 out which there is no hope of escaping from the 
 balance of power system of industrial relations. 
 The fundamental principles which the plan es- 
 tatflishes may be summarized as follows : 
 
 1. The plan is based upon a sound conception 
 of what the ultimate labor issue is the issue 
 of representative government in industry. 
 
 2. The plan establishes the principle of con- 
 ference between equals. 
 
 3. The plan establishes the principle of equal 
 representation of equally strong and well or- 
 ganized forces. 
 
 4. The plan establishes open diplomacy in 
 business as a counter-measure to the suspicions
 
 THE POLITICS OF INDUSTRY 145 
 
 and lack of confidence that mar the present re- 
 lations between labor and capital. 
 
 5. The plan establishes the principle of leg- 
 islation by industry for industry. 
 
 6. The plan marks the beginnings of consti- 
 tutionalism in industry. 
 
 There are two equally grave dangers in- 
 volved in the consideration of this question of 
 government in industry. It will be dangerous 
 to assume that labor is incapable of assuming 
 joint responsibility in the larger matters of in- 
 dustrial policy and management. With labor 
 articulate, as it is today, that will prove simply 
 a " sitting on the lid" policy which will presage 
 an explosion. It will be equally dangerous to 
 ignore the fact that men need training in the 
 use of power, and push the organization of in- 
 dustrial government beyond present trained ca- 
 pacity in the ranks and leadership of labor. 
 
 The report of the Whitley committee has met 
 with serious consideration at the hands of all 
 sorts and conditions of men and interests be- 
 cause there is a growing conviction that while 
 in the past society has constantly been re- 
 minded of its duty to keep a condition of law 
 and order in social relations in order that busi- 
 ness and industry might develop unhampered,
 
 146 THE POLITICS OF INDUSTRY 
 
 the time has now come for the community to 
 turn to industry with its own demand reversed 
 and insist that industry establish within its 
 boundaries such law and order as will permit 
 society to develop unhampered. 
 
 An effective carrying out of the ideal of gov- 
 ernment in industry will react favorably upon 
 the quality of political action in the community. 
 Critics constantly take flings at the political 
 incapacity of the average citizen. The criti- 
 cism has a basis in fact that will remain valid 
 as long as the political action of the average 
 voter is restricted to balloting on isolated elec- 
 tion days. But a constrtutionalizing -of indus- 
 try will mean a turning of our factories into 
 training schools that will develop political ca- 
 pacity in the workman. It will not only reduce 
 friction in industrial relations but will make 
 the average workman a better citizen and a 
 more intelligent voter. 
 
 We should remember that the proposal of 
 joint control in industry is nothing new. It is 
 attempted every day. Under the present sys- 
 tem of effecting a control of industrial relations 
 by governmental regulation, both of the active 
 parties to industry attempt to control the pro- 
 cesses of legislation. Capital attempts subtly
 
 THE POLITICS OF INDUSTRY 147 
 
 to influence legislation, while labor now and then 
 attempts boldly to intimidate legislators. 
 
 The advocates of the Whitley report have 
 wisely pointed out that the representation of 
 labor in the councils of industry is imperative 
 not because management is unimportant, but 
 because the importance of management is so 
 critical that it is essential that it have behind 
 it the confidence and cooperation of all who are 
 affected by it. The goodwill of a factory's la- 
 bor force is certainly as vital as the goodwill 
 of its market. The manager of the future will 
 see the need of the sympathetic support of the 
 working force, and realize that his effectiveness, 
 no less than the effectiveness of a premier and 
 his cabinet, demands the ability to secure a 
 vote of confidence when a critical situation 
 arises. 
 
 Any plan that might be proposed for a more 
 representative government in industry will be 
 distrusted by certain employers who will feel 
 that it grants too much power to the workers, 
 and distrusted also by certain workers, bent 
 upon Bolshevising industry, who will feel that 
 it grants too little power to the workers. But 
 I have reported in this paper a plan that has 
 been formulated and supported by careful
 
 148 THE POLITICS OF INDUSTRY 
 
 minded men who have attempted to study dis- 
 content with the same dispassionate spirit in 
 which the scientist studies disease. It is prob- 
 ably true to say that even this plan, with all of 
 its limitations, would not have been formulated 
 at this time save for the existence of a wide- 
 spread and settled determination in the ranks 
 of workmen the world over to attain a greater 
 voice in industry. The movement toward rep- 
 resentative government exists in industry just 
 as it has existed and exists in politics. The 
 question that concerns men who want consistent 
 and orderly progress instead of revolution is 
 whether the King Johns of business and indus- 
 try will collaborate with labor or take an atti- 
 tude that will drive labor to wrest from them 
 by revolutionary methods the Magna Charta 
 of a new order in industry. 
 
 We have come upon a time when blind pre- 
 judice and the closed mind are suicidal. I have 
 before me as I write an editorial which pur- 
 ports to analyze the current unrest and point 
 out the crux of the labor problem in the United 
 States. It is a perfect expression of that so- 
 cial blindness which furnishes dramatic issues 
 to revolutionists. The editorial, in part, says :
 
 THE POLITICS OF INDUSTRY 149 
 
 Our country would be contented and happy if it 
 were not for the work of parasites, theorists, and 
 weaklings, mental and moral, who promote unrest, 
 discontent, and agitation for their own ends and pur- 
 poses. Our industrial questions are not serious ex- 
 cept in the fact that a few ambitious self-seekers and 
 malcontents make an issue of them, distort them, lie 
 about them, and promote discontent by misstatements 
 and promises impossible of performance. . . . Our 
 troubles arise from a toleration of pests. . . . 
 
 Now, no student of the situation will deny 
 the existence of the professional malcontents 
 described. But to see in the agitator the sole 
 cause of a problem and movement that girdles 
 the planet is plain bankruptcy of intelligence. 
 
 It is refreshing to throw into contrast with 
 that sort of statement the statement of a fine 
 conservative mind like that of Lord Milner's. 
 No one will accuse Milner of intellectual reck- 
 lessness, but he has sensed the temper of his 
 time in this statement: 
 
 It may be said using the word in no party sense 
 that we are all Radicals today, all prepared to en- 
 tertain, and to judge dispassionately on their merits, 
 proposals which only a few years ago would have 
 seemed wildly revolutionary ... we all recognize 
 now that there must be a fresh effort of economic and 
 social organization.
 
 150 THE POLITICS OF INDUSTRY 
 
 Progress will be orderly to just the degree 
 that responsible leadership brings to the pres- 
 ent situation clear perception and a mediating 
 ministry of guidance into such new policies and 
 new organization as the altered conditions 
 clearly warrant and require.
 
 BUSINESS STATESMANSHIP 
 
 Decentralizing statesmanship Political policemen vs. Busi- 
 ness statesmen Conservatives and radicals join forces 
 against political bureaucracy The current sets against the 
 bureaucratic state and the Socialistic state for same reason 
 The center of social authority shifts from politics to 
 industry Making the invisible government visible and 
 socially responsible A state that cannot meet an emer- 
 gency without abdicating Representative government lags 
 behind the facts of modern life American government not 
 designed for quick response to public will Business meets 
 demands of awakened labor with statesmanship instead of 
 blind antagonism Business democracy vs. business au- 
 tocracy A forecast A store tries self-government. 
 
 THE other day, in glancing over a series of 
 papers I had written on certain post-war 
 tendencies, I discovered myself using, with a 
 frequency I had not before realized, the word 
 "statesmanship" in all sorts of connections 
 business statesmanship, industrial statesman- 
 ship, educational statesmanship, medical states- 
 manship, and so on. There is, of course, noth- 
 ing new in these varied adaptations of the term. 
 They are sprinkled rather freely through the 
 liberal literature of the last ten years. But 
 
 151
 
 152 THE POLITICS OF INDUSTRY 
 
 seeing such a variety of these adaptations of 
 statesmanship within the small compass of one 
 series of papers, and realizing that they were 
 there not from any unified design but from the 
 separate consideration of the several fields of 
 which the series treats, led me to question 
 whether I was simply falling victim to a cur- 
 rent catch-word and indulging in the easy re- 
 tailing of a young platitude. But on second 
 thought I realized that I had been reckoning, 
 more or less unconsciously, with an actual ten- 
 dency of our time toward a widening and redis- 
 tribution of the functions and responsibilities 
 of statesmanship. 
 
 Now, if it is true that many of the functions 
 and responsibilities commonly credited to po- 
 litical statesmanship are devolving, or clearly 
 should devolve, upon the leadership of business, 
 industry, agriculture, education, medicine and 
 other such functional fields of interest, the ad- 
 ministration of which touch with a most inti- 
 mate concern the daily lives of all of us, then 
 that fact involves on the one hand a redefini- 
 tion of political statesmanship, and on the other 
 hand plunges the leaders of business, industry, 
 agriculture, education, medicine and other occu- 
 pational fields into new and untried adventures
 
 BUSINESS STATESMANSHIP 153 
 
 which will attach to the position of all such 
 leaders far-reaching new possibilities of per- 
 sonal interest and social significance. 
 
 All this lies so closely at the heart of those 
 processes of readjustment and revaluation into 
 which we have been driven by the war and 
 drawn by the requirements of progress, that I 
 have seen fit to conclude this series of papers 
 by making certain observations upon this revo- 
 lutionary, but in its final effects soundly con- 
 servative, social development which is making 
 for a decentralization of many of the current 
 functions and responsibilities of statesman- 
 ship to the end that ultimately every process 
 of our common life shall be administered by 
 those who know most about it, rather than by 
 politicians fitted neither on the basis of their se- 
 lection nor by their fundamental training and 
 outlook for such responsibilities. 
 
 There is, unless I am far afield in judgment, 
 a definite new recognition of modern facts and 
 a massing of tendencies making for a narrow- 
 ing and intensifying of the field and operation 
 of statesmanship at Washington and our sev- 
 eral state capitols and a correlative awakening 
 and widening of statesmanship in New York, 
 Pittsburgh, Chicago, Kansas City, San Fran-
 
 154 THE POLITICS OF INDUSTRY 
 
 cisco, and the other significant centers of Amer- 
 ican life. There is an increasing skepticism of 
 the soundness of a policy under which political 
 statesmanship stands on the outer edge of busi- 
 ness, industry, agriculture, education, and 
 other social functions playing the role of police- 
 man and guardian to the administration of 
 these interests. And there is a turning, in a 
 spirit of critical inquiry and hope, toward a 
 policy under which business statesmanship will 
 stand at the center of business, industrial 
 statesmanship at the center of industry, educa- 
 tional statesmanship at the center of education 
 as the administration itself rather than an out- 
 side and superimposed force ruling and regu- 
 lating the administration. 
 
 It is not strange that this fresh considera- 
 tion of a policy of decentralization should ap- 
 pear coincident with the present unprecedented 
 concentration of economic and industrial func- 
 tions in the hands of government. It took the 
 excessive war-induced centralization of eco- 
 nomic and industrial functions in the hands of 
 government to dramatize the essential fallacy 
 of trying to substitute the politician for the en- 
 gineer and executive, using the terms engineer 
 and executive rather broadly to suggest the
 
 BUSINESS STATESMANSHIP 155 
 
 men functionally fit for the job in hand. The 
 experiences of great centralization in govern- 
 mental agencies during the war, both here and 
 in Europe, have convinced a growing number 
 that handing everything over to the state, as 
 now organized, to be run by the state simply 
 does not and will not work; that it throws the 
 vital processes of a nation's life, particularly 
 those of business and industry, with a danger- 
 ous certainty into the hands of an officialdom 
 that stands too far removed from the actual 
 processes to know them with that intimacy of 
 touch which alone can insure sanity and effi- 
 ciency in policy and action. 
 
 That too great political interference with the 
 vital processes of a nation through the action 
 of an ill-trained and amateur bureaucracy is 
 fatal to an effective and harmonious common 
 life is little questioned. And by one of those 
 strange paradoxes of history both ultra-con- 
 servative and highly liberal forces are joined 
 in blasting at the foundations of such a policy 
 from entirely different motives, it must be 
 granted. On the one hand, certain selfish in- 
 terests upon which the government has been 
 obliged to impose conscience and a social sense, 
 and a large number of business men who have
 
 156 THE POLITICS OF INDUSTRY 
 
 a personal sense of social responsibility and 
 cannot be adjudged profiteers either of peace 
 or war but who are honestly convinced that busi- 
 ness and industry cannot reach its maximum 
 success in development save by the old auto- 
 cratic methods of control all these are openly 
 warring against the political rule of business 
 and industry. On the other hand, there is a 
 party of constructive liberalism, equally op- 
 posed to the political rule of business and in- 
 dustry, made up of forward-looking business 
 men and certain creative thinkers in the fields 
 of political and economic theory, as well as cer- 
 tain elements in labor leadership. The first 
 group desires to relax the political grip upon 
 business and industry so that they may go back 
 to the old order of business. The second group 
 desires a decreasing political interference with 
 economic processes so that we may go forward 
 to a new and better business order. Both 
 groups are acting upon one of the most sound 
 and fruitful ideas of modern times that busi- 
 ness must be governed from the inside, not 
 from the outside. And that fact holds true of 
 every department of American life, for every 
 department of American life should be admin- 
 istered by those who touch and handle the stuff
 
 BUSINESS STATESMANSHIP 157 
 
 of that department as part of their day's work 
 government by those who know. 
 
 That a large part of political interference 
 with economic and industrial processes has 
 been justified in the past by the fact that gov- 
 ernment has had to step in here and there in 
 order to introduce a needed element of social 
 control in given situations will be little denied. 
 But the point is that we are now coming to see 
 that society is not confined to a choice between 
 a rampant unsocial individualism on the one 
 hand and an inefficient amateur bureaucracy on 
 the other. We are coming to see that business 
 and industry can be organized upon bases that 
 will give adequate protection, voice, and oppor- 
 tunity to all classes involved the employer, 
 the employee, and the consuming public and 
 increase both the efficiency and profits of the 
 undertakings. And it is toward such policies 
 of self-governing business and industry that 
 the best minds of both capital and labor are 
 turning in their reaction against an encroaching 
 governmental ownership, control, and regula- 
 tion which, run to its ultimate application, con- 
 sists really in the devising of policies and laws 
 that shall mean such motherly oversight that 
 business and industry will be relieved of the
 
 158 THE POLITICS OF INDUSTRY 
 
 necessity of having either statesmanship or 
 conscience. The state is right in its insistence 
 that business and industry have a social re- 
 sponsibility; but social responsibility, to say 
 nothing of that high efficiency without which a 
 sense of social responsibility is only a pious 
 and abortive emotion, will never be enforced 
 by the political policeman; it must be evolved 
 by the business and industrial statesman. 
 
 It is just such problems of finding and ac- 
 knowledging the socially right and sound cen- 
 ters of authority and administration that have 
 turned the liberal intelligence of our time 
 toward a consideration of that decentralization 
 of statesmanship which I purpose now to dis- 
 cuss in greater detail. It should be said in 
 passing that the same set of facts and consid- 
 erations that is bringing about a reaction 
 against the too great centralization of economic 
 and industrial functions in the hands of the 
 state, as we knew it, is also convincing a larger 
 and larger number of its former adherents that 
 a socialistic state would likewise drift toward 
 the rocks of bureaucratic unreality. In the 
 light of the high specialization and complex in- 
 terdependence of our modern industrialized so- 
 ciety, we simply do not dare to put all of our
 
 BUSINESS STATESMANSHIP 159 
 
 eggs in one basket, whether the basket is car- 
 ried by a bureaucratic politician or an auto- 
 cratic business executive. It certainly is too 
 great a risk to make the efficiency, justice, and 
 social responsibility of our complex and inter- 
 related business and industrial world depend 
 upon the policies of ever-changing cabinets and 
 congresses, still less upon presidents and 
 premiers. Benevolent and enlightened pater- 
 nalism is a comfortable and convenient system 
 when and while it works, but our waiting-list of 
 supermen is not long enough to justify our 
 trusting to such a system. The consistent and 
 continuous safety and efficiency of our democ- 
 racy demand a constant broadening of the base 
 of policy, and the bringing of policy more and 
 more fully into the hands of the men whose au- 
 thority is intrinsic by virtue of their being the 
 creative conductors of those real enterprises 
 that constitute our common life, the leaving of 
 fundamental policies less and less to fluctuating 
 political groups brought together by antiquated 
 election methods, by a counting of noses that 
 too frequently fails to result in anything ap- 
 proaching an effective expression of the will of 
 society. 
 I am not here making a personal plea. I am
 
 160 THE POLITICS OF INDUSTRY 
 
 reporting and trying to set in orderly relation 
 certain elements of a plea for a more realistic 
 politics, based upon government by those who 
 know and do, as I have found scattered frag- 
 ments of that plea upon the lips of business 
 men, labor leaders, lawyers, and educators 
 within the last few months. I am building the 
 underlying arguments of this paper upon defi- 
 nite interviews, printed statements, and va- 
 grant scraps of conversation with such men. 
 That would be a superficial method were I try- 
 ing to present a comprehensive discussion of 
 some political or economic theory. But, in do- 
 ing this, I am simply holding to the purpose 
 which I set for these papers in the beginning 
 the interpretive reporting of the most signifi- 
 cant drifts of opinion among the men and 
 women upon whom the actual responsibilities 
 of business, industry, education, the church, 
 and certain of the professions rest. The pur- 
 pose of these papers is not so much to discuss 
 the most forward-looking theories of business, 
 industry, education, and so on, as these are ad- 
 vanced by students and publicists, as to give a 
 sort of moving picture of the minds of the men 
 and women who are doing the work in these 
 fields. In the measure that these papers sue-
 
 BUSINESS STATESMANSHIP 161 
 
 ceed in reaching their purpose we shall be able 
 to see to what extent the theories of the best 
 students of these matters are influencing the 
 men of action, and better still discover what 
 new and creative ideas are being evolved out of 
 actual experience to serve as the raw materials 
 for new and better conceptions of the function 
 and organization of these several fields of inter- 
 est. 
 
 I am aware that in this paper I am, at one 
 point and another, approaching a field of po- 
 litical theory which has been ably developed by 
 such writers as Benoist, Duguit, Figgis, Bar- 
 ker, Laski and others who, either as part of an 
 attempt at a complete philosophy of the state 
 or in discussions of particular problems of in- 
 dustry and politics, have concerned themselves 
 with the unreality of a representative system 
 of government under which the only basis of 
 representation is that of artificially drawn geo- 
 graphical units, and with the possibilities of 
 governmental reforms that would determine 
 representation upon the basis of interests and 
 occupations as well. Such students have 
 blazed and are blazing a path toward a new 
 and more realistic politics. But I am not con- 
 cerned primarily with the interpretation of any
 
 162 THE POLITICS OF INDUSTRY 
 
 theory of the state in the direction of which the 
 subject matter of this paper may look. In fact, 
 I am not approaching the problem from the 
 angle of political science at all, but from the 
 angle of business and industry, in an attempt 
 to forecast, upon the basis of present and go- 
 ing facts, what developments are likely to oc- 
 cur in the relation of government to business 
 and industry and in the internal reordering of 
 the administration of business and industry. 
 We may find that the political pluralist starting 
 from the ground of theory and the business man 
 starting from the ground of practical necessity, 
 as he faces the present-day labor unrest and po- 
 litical bureaucracy, will meet in agreement. 
 
 I think I have suggested with sufficient clear- 
 ness that in many quarters, both conservative 
 and radical, a definite conviction is forming 
 that we should move from a policy of govern- 
 ment of industry by the state toward a policy 
 of government of industry by industry. I have 
 suggested also that the principle involved in 
 this conviction has a much wider legitimate ap- 
 plication than simply its application to indus- 
 try. It is clear that among the adherents to 
 such a conviction will be found some business 
 men and captains of industry who support the
 
 BUSINESS STATESMANSHIP 163 
 
 contention for individualistic, selfish, and reac- 
 tionary reasons, men who chafe at any and ev- 
 ery restraint the state may impose upon busi- 
 ness. But it just happens that this movement 
 toward a more realistic, more just, more demo- 
 cratic, and more efficient organization of both 
 industry and politics serves their selfish pur- 
 pose in the negative and purposely destructive 
 phase of its criticism. But forward-looking 
 business men, labor leaders, and the whole in- 
 tellectual leadership of this movement toward 
 self-governing business and industry and a de- 
 creasing political interference with industrial 
 processes may accept the help of these reac- 
 tionaries in the criticism and defeat of the 
 forces making for the political rule of business 
 and industry, and then courteously part com- 
 pany with them when the hour strikes to deter- 
 mine the new alternative policy, when they en- 
 ter the positive constructive phase of the move- 
 ment. 
 
 Disregarding, then, for the moment, the rea- 
 sons that lead the ultra-reactionaries to oppose 
 the entrance of the state into business and in- 
 dustrial activities, what are the basic consider- 
 ations that are drawing so many men of action 
 and thinkers of diverse interests and points of
 
 164 THE POLITICS OF INDUSTRY 
 
 view together in support of a policy of decen- 
 tralizing statesmanship, of self-determination 
 and -self -government for business and industry? 
 I do not refer to the conventional battle of ar- 
 guments regarding the relative efficiency or in- 
 efficiency of governmental or private ownership. 
 I am thinking of the deeper considerations that 
 are less likely to be colored by personal and 
 selfish interests, and more likely to spring from 
 disinterested analysis. These considerations 
 fall roughly into two classes: first, those con- 
 siderations arising from a growing feeling that 
 our political institutions have not been pro- 
 gressively adapted to changing conditions in 
 a manner to make them effective instruments 
 to express and serve modern industrialized so- 
 ciety as they were to express and serve the rel- 
 atively simple social and economic organiza- 
 tion of our country at its beginning when any 
 average citizen of intelligence and honorable 
 purpose might really represent competently 
 the interests of his congressional district or 
 state; and, second, those considerations forced 
 upon business and industrial leaders by the 
 character and extent of the present labor un- 
 rest which is daily making it more evident that 
 compromise and concession are about played
 
 BUSINESS STATESMANSHIP 165 
 
 out and that some new approach to the prob- 
 lem of the government and control of industry 
 must be made. Let us look at some of the con- 
 siderations. 
 
 For one thing, many are saying that the real 
 center of authority in the modern world has 
 shifted from politics to business anyway, and 
 that the rational thing to do is to recognize the 
 fact and set to work at the organization of busi- 
 ness and industry upon a basis that will make 
 them socially responsible and give full and ef- 
 fective recognition to all classes involved cap- 
 ital, labor, and the community ; that if business 
 and industry have become the dominant factors 
 in modern society, constituting a sort of invis- 
 ible government, the wisest thing to do is to 
 make that invisible government visible and so- 
 cially responsible, to organize these economic 
 forces into a mainstay instead of a menace to 
 the common rights and interests of society. 
 As I have already suggested, this point of view, 
 arising from different motives, is found among 
 both conservatives and radicals. This matter 
 was aptly stated in a recent issue of "The Na- 
 tion" which said: 
 
 The framers of our Federal Constitution could not 
 foresee the development of modern industrialized so-
 
 166 THE POLITICS OF INDUSTRY 
 
 ciety. They could not foresee the shifting of the actual 
 seat of government from executive chambers and leg- 
 islative halls to banks, stock exchanges, schools, and 
 newspaper offices. . . . The real rule of the modern 
 world the power which makes or breaks a nation, 
 which directs the creative energies of a culture, which 
 determines the development and destiny of a people 
 is vested in forms economic rather than political. 
 These constitute the invisible government which lies 
 behind the visible government of the old political 
 forms. . . . The old political forms remain funda- 
 mentally unchanged. 
 
 Over against these new economic forms, exercising 
 the real governmental functions of modern society, 
 has grown in the industrial field a system of organized 
 check and protest, the invisible opposition, as it were. 
 This is the political significance of the organization of 
 the workers everywhere during the rapid rise of in- 
 dustrialism; they recognized the necessity of an eco- 
 nomic opposition, the inadequacy of the old political 
 forms to furnish a proper check upon the new gov- 
 ernmental functions; and the action was a healthy 
 sign of men's political sagacity. For the past fifty 
 years these lines have been deepening. If the old 
 political forms could have been made flexible enough 
 to encompass the new economic order, to ride the 
 tidal wave of industrialism, all would have been well ; 
 the channels of political activities would have run 
 smoothly, the workers would have been satisfied with 
 adequate voice and representation in the new indus- 
 trial functions of government, the community instead 
 of a special class would have profited, and the great
 
 BUSINESS STATESMANSHIP 167 
 
 economic war would not have descended upon our 
 civilization. But those in control were too selfish or 
 too blind to render the political machinery flexible, to 
 make the invisible government the visible and respon- 
 sible government . . . and thus they . . . brought 
 about a fatal division between our political activities 
 and the life processes of our society. 
 
 The line of thought here is clearly logical. 
 If business and industry become in effect the 
 real government of society, and if political 
 forms are not adapted to reckon with this fact 
 and are therefore ineffective instruments either 
 for expression or protection alike on the part 
 of capital and labor, it is inevitable that both 
 capital and labor will ultimately resent polit- 
 ical control and turn their energies either 
 toward a reform of government along lines 
 that will merge the actual economic rule with 
 political forms or toward the development of 
 some sort of business and industrial self-gov- 
 ernment. The latter seems more likely to 
 occur than the former in the United States. 
 
 Another consideration that is weakening the 
 faith of many in political control of business 
 and industry is the fact that we do not pretend 
 to meet the heavy demands of a great emer- 
 gency, like the war, with our normal govern-
 
 168 THE POLITICS OF INDUSTRY 
 
 ment polity and its relation to business, indus- 
 try, agriculture, education. We hurriedly con- 
 struct an emergency machine, and the moment 
 the emergency, the war, is over, everyone is im- 
 patient to shake off the temporary restraints. 
 Now, everyone realizes that a great emergency 
 like the war through which we have just passed 
 will always involve certain emergency organ- 
 ization, certain alterations in the normal ad- 
 ministration of the state, but not a complete 
 alteration of the basis of life and government. 
 And there is a growing conviction in many of 
 our best conservative minds that there is some- 
 thing inherently unsound in a political organ- 
 ization, in its relation to the social and eco- 
 nomic forces of the nation, that cannot meet 
 emergencies without a fundamental reorgani- 
 zation of itself. Modern wars are more than 
 fights between troops. Modern wars are strug- 
 gles between the whole round of the creative 
 powers of production and organization of rival 
 nations and alliances. A nation's army is 
 only the clenched fist of its factories and 
 farms. We have just been through a costly 
 demonstration of that fact. We have seen that 
 the quiet processes of production can be as bel- 
 ligerent as the actions of a submarine; that a
 
 BUSINESS STATESMANSHIP 169 
 
 Kansas wheat field is as much a war factor as 
 a munitions plant; that the potato growers 
 of Maine are as essential to our armies as the 
 powder manufacturers of Delaware. Farm, 
 factory, and firing line constitute the essential 
 trilogy of war power. A breakdown of any one 
 spells defeat. Fighting power is essentially a 
 by-product of industrial power. Therefore, 
 aside from the drilling of troops, the determi- 
 nation of strategy, and certain emergency or- 
 ganization that will always be necessary in war 
 time, the governmental and industrial organi- 
 zation that will give the greatest social har- 
 mony and the highest production in peace time 
 is the best possible organization for war. The 
 way we were obliged to scurry about in search 
 of effective policies and organization to meet 
 the demands of war has given rise to a whole 
 new critique of our governmental organization 
 in its relation to business and industry and the 
 other vital processes of our national life. 
 
 Then, too, there is an increasing recognition 
 of the fact that there is an inevitable tendency 
 toward unreality in a system that elects its rep- 
 resentatives solely upon the basis of arbitrarily 
 and artificially drawn geographical districts 
 that have a less and less distinct unity of in-
 
 tcrest as society becomes more specialized and 
 industrialized. This does not spring from the- 
 ory, although there is a growing literature on 
 this matter. It springs from a facing of cer- 
 tain clear facts of modern life which H. G. 
 Wells has stated with as much clearness as any 
 other writer. In an essay of his which appears 
 in his " Social Forces in England and America,*' 
 he says : 
 
 The ties that bind men to place are being severed ; 
 we are in the beginning of a new phase in human ex- 
 perience. . . . For endless ages man led the hunting 
 life, migrating after his food, camping, homeless. 
 . . . Then began agriculture, and for the sake of 
 securer food man tethered himself to a place. The 
 history of man's progress from savagery to civiliza- 
 tion is essentially a story of settling down. It began 
 in caves and shelters ; it culminates in a wide spectacle 
 of farms and peasant villages, and little towns among 
 the farms. . . . The enormous majority of human be- 
 ings stayed at home at last; from the cradle to the 
 grave they lived, married, died in the same district, 
 usually in the same village ; and to that condition, law, 
 custom, habits, morals have adapted themselves. . . . 
 Now . . . this astonishing development of cheap, 
 abundant, swift locomotion which we have seen in the 
 last seventy years . . . dissolves almost all the reason 
 and necessity why men should go on living perma-
 
 BUSINESS STATESMANSHIP 171 
 
 nently in any one place or rigidly disciplined to one 
 set of conditions . . . this revolution in human loco- 
 motion that brings nearly all the globe within a few 
 days of any man is the most striking aspect of the 
 unfettering again of the old restless, wandering, ad- 
 venturous tendencies in man's composition. 
 
 We are off the chain of locality for good and all. 
 . . . People have hardly begun to speculate about the 
 consequences of the return of humanity from a closely 
 tethered to a migratory existence. . . . Obviously 
 these great forces of transport are already straining 
 against the limits of existing political areas. 
 
 Mr. Wells is here dealing only with the po- 
 litical implications of rapid transportation, 
 but the implications he outlines later in this es- 
 say rest not only upon the fact that in modern 
 times a man can move himself about from place 
 to place and from job to job, but also upon tbe 
 fact that in modern times the business and in- 
 dustrial interests of almost every man, whether 
 he is capitalist or workman, overrun political 
 boundaries within states and cross the fron- 
 tiers of the state itself. In other words the area 
 of the average man's interests and the area of 
 his congressional district or state, from which 
 his political representative is elected, as in the 
 United States, do not at all correspond. Keep-
 
 172 THE POLITICS OF INDUSTRY 
 
 ing this fact, as well as the fact of rapid trans- 
 portation, in mind, it is worth while to quote 
 further from Mr. Wells' statement: 
 
 In every locality . . . countless people are found 
 delocalized, uninterested in the affairs of that par- 
 ticular locality. ... In America political life, espe- 
 cially State life as distinguished from national po- 
 litical life, is degraded because of the natural and in- 
 evitable apathy of a large portion of the population 
 whose interests go beyond the State. 
 
 Politicians and statesmen, being the last people in 
 the world to notice what is going on in it, are making 
 no attempt whatever to readapt this hugely growing 
 floating population of delocalized people to the public 
 service. . . . Local administration falls almost en- 
 tirely and the decision of Imperial (or national) af- 
 fairs tends more and more to fall into the hands of 
 that dwindling and unadventurous moiety which sits 
 tight in one place from the cradle to the grave. No 
 one has yet invented any method for the political ex- 
 pression and collective direction of a migratory popu- 
 lation. . . . Here, then, is a curious prospect, the pros- 
 pect of ... a floating population going about the 
 world, uprooted, delocalized, and even, it may be, de- 
 nationalized, with wide interests and wide views, de- 
 veloping, no doubt, customs and habits of its own, a 
 morality of its own, a philosophy of its own, and yet, 
 from the point of view of current politics and legisla- 
 tion, unorganized and ineffective. . . . The history of 
 the immediate future will, I am convinced, be very
 
 BUSINESS STATESMANSHIP 173 
 
 largely the history of the conflict of the needs of this 
 new population with the institutions, the boundaries, 
 the laws, prejudices, and deep-rooted traditions estab- 
 lished during the home-keeping, localized era of man- 
 kind's career. 
 
 It is clear, at any rate, that the real struggles 
 that cut to the heart of our modern society are 
 more and more struggles between interests 
 rather than struggles between parties. The 
 cleavage between interests, actual or believed, 
 has an air of reality and permanence, while 
 the cleavage between political parties is a shift- 
 ing line determined from election to election 
 upon a basis of opportunism. The recognition 
 that present political forms are ill adapted to 
 deal with such social and economic facts as 
 have just been pointed out is contributing 
 greatly toward the reaction against the polit- 
 ical rule of business and industrial policy and 
 administration. 
 
 But even though it were feasible to get a gen- 
 uine representation of vital interests by a sys- 
 tem under which the basis of representation is 
 the geographical area, the fact remains that our 
 political institutions are not designed for quick 
 and effective response to the will of their con- 
 stituencies. In this respect the British govern-
 
 174 THE POLITICS OF INDUSTRY 
 
 ment is much more fully responsive to and con- 
 trolled by the current public mind than our own 
 government. The members of our legislative 
 bodies are elected part at one time and part at 
 another. And for that reason we can never 
 say that a particular congress is the creation 
 of the public mind at that given time. Our 
 President's responsibility to our popular house 
 in no wise corresponds to the responsibility of 
 the English Premier. Our President creates 
 a cabinet that is not responsible to the popular 
 house nor in any specific and controllable sense 
 to the public will. The line of cause and effect 
 running from the individual citizen's vote to 
 the ultimate policy of government is frequently 
 obscure and difficult to trace. And all this con- 
 tributes to the feeling of unreality that an in- 
 creasing number feel in connection with much 
 of current political processes. It is clear that 
 this, too, adds to the reaction against too great 
 political control of business and industry. If 
 we are to trust the vital life processes of our 
 national life in the hands of government, we 
 want it to represent a highly realistic politics. 
 These are some of the fundamental consider- 
 ations that enter into the opinion that govern- 
 mental ownership, regulation, and control of
 
 BUSINESS STATESMANSHIP 175 
 
 business and industry by the present state, on 
 the one hand, and the creation of a socialistic 
 state on the other both lead to the same funda- 
 mentally bad end the management of the 
 larger aspects at least of our productive and dis- 
 tributive processes by a bureaucratic class ra- 
 ther than by the men who know and do, the men 
 who handle the stuff of business and industry 
 as their regular job. All these considerations 
 are based upon the inadequacy of current pol- 
 itics to meet the responsibilities of a highly in- 
 dustrialized society. 
 
 There is another set of considerations, as I 
 have already suggested, growing out of the 
 clear necessities forced upon business and in- 
 dustry by the present aspirations and demands 
 of labor. These I have taken up so fully in the 
 two papers preceding this, that I need do little 
 more at this point than to refer to them. This 
 set of considerations has to do with what is be- 
 coming a very definite movement toward an or- 
 ganization of business and industry upon the 
 basis of self-government that shall be a govern- 
 ment truly representative of the employer, the 
 workman, and the community. And quite nat- 
 urally business and industry that is engaged 
 in the fundamental task of reordering itself
 
 176 THE POLITICS OF INDUSTRY 
 
 upon a basis truly representative of all classes 
 and interests concerned will not want to be 
 hampered in this constructive task by politi- 
 cians who lack that sureness of touch and judg- 
 ment that comes alone from practical contact 
 with business and industry. Let us see how 
 these considerations have arisen. 
 
 Prophecy is a game as elusive as it is tempt- 
 ing in such times of grand-scale readjustment 
 and revolution as we are now passing through, 
 such as we shall be passing through for a long 
 stretch of months and years. Much of current 
 forecasting will go to the scrap heap of snap 
 judgments. There are too many unknown fac- 
 tors, too many new factors being interjected 
 day by day, to make prophecy a wholly sci- 
 entific calculation. But some things have 
 reached the stage of essential certainty ; among 
 them this : labor will demand, and successfully 
 demand, an increasing share in both the profits 
 and management of business and industry. 
 What changes in the fundamental organization 
 of business and industry will that demand make 
 necessary? Will the increased participation 
 of labor in the control of business and indus- 
 try make for greater or less efficiency? Will 
 it raise or reduce the total profits? Will the
 
 BUSINESS STATESMANSHIP 177 
 
 wise employer oppose the demand, or will he 
 join with his employees in working out a new 
 organization of the productive and distributive 
 machinery of the nation along lines that will 
 mean an increase in both the equity and effi- 
 ciency of business? Does this mean a class 
 war, or is there a feasible cooperation of the 
 classes? These are the questions, cutting to 
 the heart of modern society as they do, that 
 employers the world over are asking them- 
 selves. The clearer the answers lie in the 
 minds of both employers and employees, the 
 sooner will the job of readjustment find an ef- 
 fective basis of procedure. And every day an 
 increasing number of employers are reaching 
 an understanding of the inevitable answer to 
 these questions. 
 
 Among forward-looking business men, the 
 conception is obtaining that the problem of la- 
 bor and capital is not a question of a test of 
 strength between two opposing forces; that 
 both are "workers'* engaged in a fundamental 
 public service; that the problem of industrial 
 relations will never be solved by benevolence 
 on the part of employers or by usurpation on 
 the part of employees ; that the problem will be 
 solved when the best and most scientific way of
 
 178 THE POLITICS OF INDUSTRY 
 
 doing business and conducting industry is 
 found ; and that the best way of doing business 
 will be found to be the most just and harmo- 
 nious way of doing business. It is -becoming 
 clear to the leaders of 'business and industry 
 that side by side with this war, waged in de- 
 fense of political democracy, there has been go- 
 ing on a slightly less dramatic but equally fun- 
 damental marshalling of forces for the exten- 
 sion and protection of economic democracy, 
 without which political democracy is a doubt- 
 ful guaranty of justice or permanent progress. 
 Men are seeing that there is no permanently 
 valid reason why the economic problem, which 
 so completely underlies our other problems, 
 must pass into the hands of any one class for 
 solution, whether that class be employers or 
 employees, provided genuine economic democ- 
 racy is achieved. 
 
 And the idea of industrial and business de- 
 mocracy is no longer the scare-phrase it once 
 was to the responsible business and industrial 
 leaders. Only the other day one of the big 
 business men of this country, the head of the 
 largest business of its kind in the world, said 
 to me, "Speaking purely from the business 
 point of view, I am convinced that a real demo-
 
 BUSINESS STATESMANSHIP 179 
 
 cratization of business that shall organize la- 
 bor and capital into a real partnership in both 
 profits and management will prove as great an 
 advance in business efficiency and profit as in 
 social and economic justice. In other words, 
 I am convinced that genuine democracy in busi- 
 ness not only is right, but that it pays. Fig- 
 ured in terms of profit and loss, I believe that 
 every argument against autocracy and class 
 control in government is now coming to apply 
 with equal force to autocracy and class control 
 in business and industry." I interrupted him 
 to tell him of a less liberal, and clearly less in- 
 telligent, business man who a few days before 
 had scoffed at the idea of democratizing busi- 
 ness and said that modern business could not 
 be run by New England town-meeting meth- 
 ods. He went on to say, ' ' Of course there never 
 was a time when one man or a few men with 
 expert equipment and specialized experience 
 could not do certain things better than a mass 
 meeting could do them ; but looked at from the 
 long view, democracy with all of its mistakes 
 arrives at right ends more times than does au- 
 tocracy. Autocracy can, by its possible quick- 
 ness of action, undoubtedly achieve greater re- 
 sults in a particular instance and in a shorter
 
 180 THE POLITICS OF INDUSTRY 
 
 time than democracy can. But the unbusiness- 
 like thing about autocracy is that too frequently 
 it will achieve immense immediate improve- 
 ment at the price of stifling progress thereaf- 
 ter. The businesslike thing about democracy 
 is that its progress, although in some instances 
 less rapid, is more sustained." 
 
 To the degree that American business men 
 act upon such principles will the dangers of 
 Bolshevism in this country diminish. Taking 
 all these contentions into consideration it is 
 clear that there are more factors involved in the 
 reaction against an increasing governmental 
 ownership, regulation, and control of business 
 and industry than the mere selfish desire of a 
 visionless group of business men who want to 
 go their socially irresponsible way. And it is 
 clear that the reaction against too great cen- 
 tralization of business and industrial functions 
 in the hands of the government is simply one 
 expression of a fundamental protest against 
 the unreality of present day politics, the nega- 
 tively critical side of a plea for greater realism 
 in politics. Granted the truth of this conclu- 
 sion, what are the probable lines of develop- 
 ment in politics on the one hand and industry
 
 BUSINESS STATESMANSHIP 181 
 
 on the other that will come from this protest and 
 plea? 
 
 I do not look for any fundamental constitu- 
 tional changes in this country looking toward 
 a reform of the basis of representation. I 
 think it is very unlikely that we shall get any- 
 thing in the nature of occupational represen- 
 tation supplementary to our representation by 
 geographical areas. We have a marked reluc- 
 tance to experiment with our political struc- 
 ture. What seems more likely is a large-scale 
 experiment in the organization of business and 
 industry upon a more representative and dem- 
 ocratic basis. We are already seeing indica- 
 tions of this in the proposal of The Interna- 
 tional Harvester Company to institute shop 
 committees throughout that industry. As our 
 unrest becomes more acute, we shall doubtless 
 see wider and wider application of the Whitley 
 scheme of joint industrial councils in our in- 
 dustries. That, of course, is not the last word 
 in industrial democracy, but it is a start. And 
 the further development of all such ventures 
 looking toward a more democratic organization 
 of the relations of industry will not only serve 
 as a preventive against Bolshevistic tendencies,
 
 182 THE POLITICS OF INDUSTRY 
 
 but will make material headway toward an an- 
 swer of the plea for a more realistic politics. 
 
 Such developments will contribute toward 
 the vitalizing of our political processes in this 
 way : as the various fields of interest in our na- 
 tional life, business and industry particularly, 
 are shifted to a broader base of control and or- 
 ganized along the lines of truly representative 
 government that takes adequate account of the 
 legitimate interests of employer, employee, and 
 the consuming public, the necessity, both ap- 
 parent and real, for political interference with 
 business and industrial processes will grow less 
 and less. In the end such development of the 
 forms and functions of self-government in busi- 
 ness, industry, and the other functional fields 
 will mean that we shall have a series of coop- 
 erating sovereignties in these fields, with the 
 political government acting as their correlator. 
 We shall arrive at a situation such as I sug- 
 gested in the opening paragraphs of this paper. 
 We shall see business statesmanship standing 
 at the center of and administering business, in- 
 dustrial statesmanship at the center of indus- 
 try, educational statesmanship at the center of 
 education, with political statesmanship acting 
 as the impresario of these several statesman-
 
 BUSINESS STATESMANSHIP 183 
 
 ships in their relations. All this will mean an 
 approach toward the ideal of government by 
 those who know and do, by those who know 
 most about the department of national life that 
 they are administering. It will tend in many 
 ways, if not in the direct way that would best 
 please the theorists, to make the invisible gov- 
 ernment visible and socially responsible. The 
 political and industrial developments of the 
 next ten years in this country probably will not 
 move along as clearly drawn lines as I have 
 just suggested, but I think I have suggested the 
 general trend. 
 
 It would materially help the situation if some- 
 one would make a survey of all attempts that 
 have been made in this country toward a more 
 democratic organization of business and in- 
 dustry. Such a survey would help to lift this 
 entire discussion out of the realm of pure the- 
 ory and, to some degree at least, afford a basis 
 of proved experiments upon which our business 
 and industrial leaders might found conclusions 
 regarding the wisest procedure. During the 
 past three years it has been my fortune to work 
 in close relation with Mr. Edward A. Filene, 
 President of William Filene 's Sons Company, 
 the largest store of its particular kind in the
 
 184 THE POLITICS OF INDUSTRY 
 
 world. This effective and profitable business 
 has been developed at the same time that an at- 
 tempt has been made to organize the store upon 
 a basis of the employees ' sharing alike in profits 
 and management. To me the most significant 
 thing about this store is that its managers have 
 not looked upon the more democratic organiza- 
 tion of business as an idealistic but costly con- 
 cession to be granted after a business has suc- 
 ceeded and piled up a large surplus; rather 
 have they regarded democracy of organization 
 as one of the corner-stones of permanently suc- 
 cessful business. In that fact lies the justifi- 
 cation for the mention of this store in this con- 
 nection. We shall never lack for examples of 
 benevolence and paternalism in business; but 
 the way out does not lie in that direction. 
 Some time ago I asked Mr. Edward A. Filene 
 to outline for me those features in the organiza- 
 tion of the Filene store that he considered rep- 
 resentative of principles that will be helpful in 
 the inevitable readjustments of business and 
 industrial organization in this after-the-war 
 period, and to tell me how they have worked. 
 I want now to summarize the results of that in- 
 terview. 
 In the early days of that business, the man-
 
 BUSINESS STATESMANSHIP 185 
 
 agers found that they were spending much time 
 and energy in the adjustment of differences be- 
 tween employees and executives which would 
 produce larger returns to the business if spent 
 on the more creative work of clarifying and 
 making more effective the fundamental policy 
 and administration of the business. The man- 
 agers felt that every hour that they were obliged 
 to give to the adjustment of differences or to the 
 administration of discipline represented a di- 
 rect loss to the business, if those matters could 
 be adequately attended to in any other way. 
 They reckoned that the energy of the manage- 
 ment could be more profitably employed in the 
 creative rather than the negative features of 
 administration, so they determined to hand 
 over, so far as practically possible, the matters 
 of discipline and the adjustment of differences 
 to the employees themselves. A Board of Ar- 
 bitration was created in 1901, if I rightly re- 
 member the date. This B'oard is composed 
 entirely of employees. It consists of twelve 
 members elected, one from each section of the 
 store, and a chairman appointed from the 
 council of the Filene Cooperative Association, 
 which I shall discuss later, by the president 
 of that body. This Arbitration Board has jur-
 
 186 THE POLITICS OF INDUSTRY 
 
 isdiction over all cases of difference between 
 employees and the management; cases relating 
 to the justice of rules affecting employees, such 
 cases as dismissals, changes in position or 
 wage, transfers, location in the store, sales 
 shortages, lost packages, breakage, and the like. 
 In all cases except dismissal or increase of pay, 
 where a two-thirds vote of the entire board is 
 necessary, the majority vote of the entire board 
 decides the case. The action of the board is 
 final in all cases arising within its jurisdiction, 
 unless it sees fit to reconsider a case upon re- 
 quest. To date the board has passed upon 
 about one thousand cases, I think, and about 
 one-half of these have -been decided in favor of 
 the employees and one-half in favor of the firm. 
 At the time the board was founded, there was 
 marked fear in many quarters that the disci- 
 pline of the store would be undermined. Many 
 business men said that it was impossible to sub- 
 mit every question to arbitration by a board of 
 employees and get -safe -and conservative judg- 
 ments. But experience has proved this fear 
 to have been unfounded. The result has been 
 highly satisfactory as regards discipline, and 
 the time of the management has been freed for 
 the larger directive work of the store. A dis-
 
 BUSINESS STATESMANSHIP 187 
 
 tinguished jurist, who made an analysis of the 
 records of this arbitration board, has said that 
 the type of justice meted out by this board com- 
 pares favorably with the justice meted out in 
 any of our courts. The board is so organized 
 that its twelve members are counsellors to the 
 respective store sections from which they have 
 been elected. These counsellors advise em- 
 ployees in their sections on questions arising 
 in the conduct of their work, distribute infor- 
 mation regarding the Arbitration Board and 
 its processes, and instruct employees in the de- 
 tails of presenting their cases before the board. 
 
 The principle of the right of the employees to 
 participation in the conduct of the business is 
 further recognized in the arrangement under 
 which today four of the eleven members of the 
 directorate are representatives of the employ- 
 ees who exercise the right of direct nomination. 
 And the store is experimenting its way toward 
 some workable method of profit-sharing. 
 
 Throughout the store organization an at- 
 tempt has been made to work out and apply 
 what I may call the " confidential'* principle. 
 Let me illustrate what I mean. After the es- 
 tablishment of an employees' hospital or clinic 
 in connection with the store, the managers
 
 188 THE POLITICS OF INDUSTRY 
 
 found that many employees were reluctant to 
 take advantage of it because of the fear that 
 the bringing of their physical defects or disor- 
 ders to the attention of the management might 
 result in discrimination or dismissal. With 
 that highly practical and scientific procedure 
 which has marked the development of this 
 store, the managers gave to the employees the 
 power to dismiss any nurse or doctor who 
 should violate their confidence. This arrange- 
 ment has produced marked results. An aver- 
 age of about two hundred employees take ad- 
 vantage of the clinic every day, either for treat- 
 ment or advice. This has materially reduced 
 the charge on the business involved in absences 
 due to sickness. 
 
 All of these factors the control of the Ar- 
 bitration Board by the employees, the sharing 
 of profits by employees, the participation in the 
 management by employees, and the payment of 
 relatively high wages have proved a marked 
 business advantage instead of a drain upon the 
 profits of the business. They have made for 
 the spirit of team work and have meant the de- 
 velopment of a higher and higher type of em- 
 ployee. 
 
 All of these features find expression in and
 
 BUSINESS STATESMANSHIP 189 
 
 through the Filene Cooperative Association, 
 an organization to which every regular em- 
 ployee of the store belongs, and enjoys a voting 
 privilege in, by virtue of employment in the 
 store. In this organization no dues are im- 
 posed, but each feature of its work is planned 
 to be self-supporting. Where such is not the 
 case, it simply means that they have not yet 
 worked out completely the technique of this pol- 
 icy which they steadfastly hold as their goal. 
 Participation in this work is 'optional. It is the 
 central organ of government in -this store com- 
 munity of .some three thousand business citizens. 
 It conducts the social and so-called " welfare" 
 work of the store, without the dictation but with 
 the cooperation of the management. Aside 
 from its representation on the directorate of 
 the store, it has, in certain matters, a direct 
 voice in the management. For example, if two- 
 thirds of the members of the Filene Coopera- 
 tive Association vote in mass meeting to ini- 
 tiate, change, or amend any rule affecting the 
 discipline or working conditions of the store, 
 the vote becomes immediately operative. Or, 
 if five-sixths of the members of the governing 
 body of the Filene Cooperative Association 
 vote in favor of any such rule, it goes into effect
 
 190 THE POLITICS OF INDUSTEY 
 
 at the end of a week, unless during the week it 
 is vetoed by the general manager, president, or 
 board of managers of the corporation, or a ma- 
 jority vote of the Filene Cooperative Associa- 
 tion membership. But even when vetoed by 
 the management, a mass meeting of the em- 
 ployees may be held and a two-thirds vote of 
 the entire association at such meeting passes 
 the rule over the veto. 
 
 I need not here go into the numerous mat- 
 ters of insurance, education, recreation, and 
 other features which the Filene Cooperative 
 Association controls. Such features are to be 
 found in many businesses and industries irre- 
 spective of the degree of democracy that enters 
 into their fundamental organization. The dis- 
 tinctive feature of such matters in the Filene 
 store is that they are under the control and di- 
 rection of the employees, not the employers. 
 
 I may have gone astray on a minor detail or 
 two in this analysis of the Filene organization, 
 but I think I have given an essentially accurate 
 description of its constitution and functioning. 
 I have followed the workings of this business 
 with a growing enthusiasm for its underlying 
 idea, but I have always known that the sugges- 
 tion of anything like a general application* of
 
 BUSINESS STATESMANSHIP 191 
 
 these principles to American business and in- 
 dustry would be met in certain quarters by the 
 contention that these principles have succeeded 
 in the case of this particular business primarily 
 because of the spirit, attitude and technique of 
 the management, that they would not succeed 
 in any widespread application to our entire 
 business and industrial life. I put this ques- 
 tion to Mr. Filene one day, and he replied, 
 "These things work because they are funda- 
 mentally sound, and because they are funda- 
 mentally sound they will work in any business 
 where they are courageously put to the test. 
 These experiments, I know, may seem danger- 
 ous to the employer who has not tried them. 
 At first we had fears that the granting of such 
 powers to employees might not always work 
 toward the common good of all concerned, but 
 our employees have never misused their powers, 
 never, to my knowledge, have they acted upon 
 the basis of a purely class interest." 
 
 It seems to me that all this should be highly 
 suggestive to the leaders of American business 
 and industry in the face of the fundamental la- 
 bor unrest that is moving across the world. 
 These experiments would seem to suggest that 
 when the powers granted to employees are real
 
 192 THE POLITICS OF INDUSTRY 
 
 powers, where the responsibility enjoyed by la- 
 bor is real responsibility in the determination 
 of wages, hours, conditions of work, and the 
 settlement of disputes, the net result is not rad- 
 ical, but sanely conservative. This does not 
 mean that such a system is a capitalistic scheme 
 to dull the edge of labor's demands by granting 
 an authority which the employer is fairly safe 
 in assuming will be little used. It means sim- 
 ply this: so long as employers organize busi- 
 ness and industry upon the theory that labor 
 is a purchasable commodity we may expect a 
 discontent upon the part of employees express- 
 ing itself largely in negative criticism and 
 protest, but where the employees are made a 
 working part of the management with a real 
 voice, then what would otherwise be trouble- 
 some protest growing out of discontent becomes 
 constructive effort to determine upon and cre- 
 ate satisfactory conditions. Participation in 
 management, if it be real, does not diminish the 
 rightful demands of labor, but it does convert 
 a large part of labor's legitimate protest into 
 an instrument of constructive endeavor. 
 
 I have attached this analysis of a particular 
 business to the arguments of the main body of
 
 BUSINESS STATESMANSHIP 193 
 
 this paper as an exhibit of a laboratory exper- 
 iment in the principle of self-governing busi- 
 ness and industry suggested throughout this 
 discussion.
 
 APPENDIX 
 THE WHITLEY REPORT 
 
 To the Right Honourable D. LLOYD GEORGE, M.P., 
 
 Prime Minister. 
 SIR, 
 
 WE have the honour to submit the following 
 Interim Report on Joint Standing Industrial Councils. 
 
 2. The terms of reference to the Sub-Committee 
 are: 
 
 "(1) To make and consider suggestions for 
 securing a permanent improvement in the relations 
 between employers and workmen. 
 
 "(2) To recommend means for securing that 
 industrial conditions affecting the relations between 
 employers and workmen shall be systematically 
 reviewed by those concerned, with a view to im- 
 proving conditions in the future." 
 
 3. After a general consideration of our duties in 
 relation to the matters referred to us, we decided first 
 to address ourselves to the problem of establishing 
 permanently improved relations between employers 
 and employed in the main industries of the country, 
 in which there exist representative organisations on 
 both sides. The present report accordingly deals 
 more especially with these trades. We are proceeding 
 with the consideration of the problems connected with 
 the industries which are less well organised. 
 
 195
 
 196 THE POLITICS OF INDUSTRY 
 
 4. We appreciate that under the pressure of the 
 war both employers and workpeople and their or- 
 ganisations are very much pre-occupied, but, not- 
 withstanding, we believe it to be of the highest 
 importance that our proposals should be put before 
 those concerned without delay, so that employers and 
 employed may meet in the near future and discuss 
 the problems before them. 
 
 5. The circumstances of the present time are 
 admitted on all sides to offer a great opportunity for 
 securing a permanent improvement in the relations 
 between employers and employed, while failure to 
 utilise the opportunity may involve the nation in 
 grave industrial difficulties at the end of the war. 
 
 It is generally allowed that the war almost enforced 
 some reconstruction of industry, and in considering 
 the subjects referred to us we have kept in view the 
 need for securing in the development of reconstruc- 
 tion the largest possible measure of co-operation be- 
 tween employers and employed. 
 
 In the interests of the community it is vital that 
 after the war the co-operation of all classes, estab- 
 lished during the war, should continue, and more 
 especially with regard to the relations between em- 
 ployers and employed. For securing improvement 
 in the latter, it is essential that any proposals put 
 forward should offer to workpeople the means of 
 attaining improved conditions of employment and a 
 higher standard of comfort generally, and involve 
 the enlistment of their active and continuous co- 
 operation in the promotion of industry.
 
 APPENDIX 197 
 
 To this end, the establishment for each industry 
 of an organisation, representative of employers and 
 workpeople, to have as its object the regular consid- 
 eration of matters affecting the progress and well- 
 being of the trade from the point of view of all those 
 engaged in it, so far as this is consistent with the 
 general interest of the community, appears to us 
 necessary. 
 
 6. Many complicated problems have arisen during 
 the war which have a bearing both on employers and 
 workpeople, and may affect the relations between 
 them. It is clear that industrial conditions will need 
 careful handling if grave difficulties and strained 
 relations are to be avoided after the war has ended. 
 The precise nature of the problems to be faced natu- 
 rally varies from industry to industry, and even from 
 branch to branch within the same industry. Their 
 treatment consequently will need an intimate knowl- 
 edge of the facts and circumstances of each trade, 
 and such knowledge is to be found only among those 
 directly connected with the trade. 
 
 7. "With a view to providing means for carrying out 
 the policy outlined above, we recommend that His 
 Majesty's Government should propose without delay to 
 the various associations of employers and employed 
 the formation of Joint Standing Industrial Councils 
 in the several industries, where they do not already 
 exist, composed of representatives of employers and 
 employed, regard being paid to the various sections of 
 the industry and the various classes of labour engaged. 
 
 8. The appointment of a Chairman or Chairmen
 
 198 THE POLITICS OF INDUSTRY 
 
 should, we think, be left to the Council who may 
 decide that these should be 
 
 (1) A Chairman for each side of the Council; 
 
 (2) A Chairman and Vice-Chairman selected 
 from the members of the Council (one from each 
 side of the Council) ; 
 
 (3) A Chairman chosen by the Council from 
 independent persons outside the industry; or 
 
 (4) A Chairman nominated by such person or 
 authority as the Council may determine or, failing 
 agreement, by the Government. 
 
 9. The Council should meet at regular and frequent 
 intervals. 
 
 10. The objects to which the consideration of the 
 Councils should be directed should be appropriate 
 matters affecting the several industries and particu- 
 larly the establishment of a closer co-operation be- 
 tween employers and employed. Questions connected 
 with demobilisation will call for early attention. 
 
 11. One of the chief factors in the problem, as it at 
 first presents itself, consists of the guarantees given 
 by the Government, with Parliamentary sanction, and 
 the various undertakings entered into by employers, 
 to restore the Trade Union rules and customs 
 suspended during the war. While this does not mean 
 that all the lessons learnt during the war should be 
 ignored, it does mean that the definite co-operation 
 and acquiescence by both employers and employed 
 must be a condition of any setting aside of these 
 guarantees or undertakings, and that, if new arrange- 
 ments are to be reached, in themselves more satis-
 
 APPENDIX 199 
 
 factory to all parties but not in strict accordance 
 with the guarantees, they must be the joint work of 
 employers and employed. 
 
 12. The matters to be considered by the Councils 
 must inevitably differ widely from industry to in- 
 dustry, as different circumstances and conditions call 
 for different treatment, but we are of opinion that 
 the suggestions set forth below ought to be taken into 
 account, subject to such modification in each case as 
 may serve to adapt them to the needs of the various 
 industries. 
 
 13. In the well-organised industries, one of the 
 first questions to be considered should be the estab- 
 lishment of local and works organisations to supple- 
 ment and make more effective the work of the central 
 bodies. It is not enough to secure co-operation at 
 the centre between the national organisations; it is 
 equally necessary to enlist the activity and support 
 of employers and employed in the districts and in 
 individual establishments. The National Industrial 
 Council should not be regarded as complete in itself; 
 what is needed is a triple organisation in the work- 
 shops, the districts, and nationally. Moreover, it is 
 essential that the organisation at each of these three 
 stages should proceed on a common principle, and 
 that the greatest measure of common action between 
 them should be secured. 
 
 14. With this end in view, we are of opinion that 
 the following proposals should be laid before the 
 National Industrial Councils: 
 
 (a) That District Councils, representative of the
 
 200 THE POLITICS OF INDUSTRY 
 
 Trade Unions and of the Employers' Association 
 in the industry, should be created, or developed 
 out of the existing machinery for negotiation in the 
 various trades. 
 
 (Z>) That Works Committees, representative of 
 the management and of the workers employed, 
 should be instituted in particular works to act 
 in close co-operation with the district and national 
 machinery. 
 
 As it is of the highest importance that the scheme 
 making provision for these Committees should be such 
 as to secure the support of the Trade Unions and 
 Employers' Associations concerned, its design should 
 be a matter for agreement between these organisations. 
 Just as regular meetings and continuity of co-opera- 
 tion are essential in the case of the National Indus- 
 trial Councils, so they seem to be necessary in the 
 case of the district and works organisations. The 
 object is to secure co-operation by granting to work- 
 people a greater share in the consideration of matters 
 affecting their industry, and this can only be achieved 
 by keeping employers and workpeople in constant 
 touch. 
 
 15. The respective functions of Works Committees, 
 District Councils, and National Councils will no doubt 
 require to be determined separately in accordance 
 with the varying conditions of different industries. 
 Care will need to be taken in each case to delimit 
 accurately their respective functions, in order to 
 avoid overlapping and resulting friction. For in- 
 stance, where conditions of employment are deter-
 
 APPENDIX 201 
 
 mined by national agreements, the District Councils 
 or Works Committees should not be allowed to con- 
 tract out of conditions so laid down, nor, where con- 
 ditions are determined by local agreements, should 
 such power be allowed to Works Committees. 
 
 16. Among the questions with which it is suggested 
 that the National Councils should deal or allocate to 
 District Councils or Works Committees the following 
 may be selected for special mention : 
 
 (i) The better utilisation of the practical knowl- 
 edge and experience of the workpeople. 
 
 (ii) Means for securing to the workpeople a 
 greater share in and responsibility for the deter- 
 mination and observance of the conditions under 
 which their work is carried on. 
 
 (iii) The settlement of the general principles 
 governing the conditions of employment, including 
 the methods of fixing, paying, and readjusting 
 wages, having regard to the need for securing to 
 the workpeople a share in the increased prosperity 
 of the industry. 
 
 (iv) The establishment of regular methods of 
 negotiation for issues arising between employers 
 and workpeople, with a view both to the prevention 
 of dfferences, and to their better adjustment when 
 they appear. 
 
 (v) Means of ensuring to the workpeople the 
 greatest possible security of earnings and employ- 
 ment, without undue restriction upon change of 
 occupation or employer. 
 
 (vi) Methods of fixing and adjusting earnings,
 
 202 THE POLITICS OP INDUSTRY 
 
 piecework prices, &c., and of dealing with the 
 many difficulties which arise with regard to the 
 method and amount of payment apart from the 
 fixing of general standard rates, which are already 
 covered by paragraph (iii). 
 
 (vii) Technical education and training, 
 (viii) Industrial research and the full utilisation 
 of its results. 
 
 (ix) The provision of facilities for the full con- 
 sideration and utilisation of inventions and im- 
 provement designed by workpeople, and for the 
 adequate safeguarding of the rights of the designers 
 of such improvements. 
 
 (x) Improvements of processes, machinery and 
 organisation and appropriate questions relating to 
 management and the examination of industrial 
 experiments, with special reference to co-operation 
 in carrying new ideas into effect and full con- 
 sideration of the workpeople's point of view in 
 relation to them. 
 
 (xi) Proposed legislation affecting the industry. 
 17. The methods by which the functions of the pro- 
 posed Councils should be correlated to those of joint 
 bodies in the different districts, and in the various 
 works within the districts, must necessarily vary 
 according to the trade. It may, therefore, be the 
 best policy to leave it to the trades themselves to 
 formulate schemes suitable to their special circum- 
 stances, it being understood that it is essential to 
 secure in each industry the fullest measure of co- 
 operation between employers and employed, both
 
 APPENDIX 203 
 
 generally, through the National Councils, and specif- 
 ically, through district Committees and workshop 
 Committees. 
 
 18. It would seem advisable that the Government 
 should put the proposals relating to National Indus- 
 trial Councils before the employers' and workpeople's 
 associations and request them to adopt such measures 
 as are needful for their establishment where they do 
 not already exist. Suitable steps should also be taken, 
 at the proper time, to put the matter before the gen- 
 eral public. 
 
 19. In forwarding the proposals to the parties con- 
 cerned, we think the Government should offer to be 
 represented in an advisory capacity at the preliminary 
 meetings of a Council, if the parties so desire. We 
 are also of opinion that the Government should 
 undertake to supply to the various Councils such 
 information on industrial subjects as may be available 
 and likely to prove of value. 
 
 20. It has been suggested that means must be de- 
 vised to safeguard the interests of the community 
 against possible action of an anti-social character on 
 the part of the Councils. We have, however, here 
 assumed that the Councils, in their work of promoting 
 the interests of their own industries, will have regard 
 for the National interest. If they fulfil their func- 
 tions they will be the best builders of national pros- 
 perity. The State never parts with its inherent 
 over-riding power, but such power may be least needed 
 when least obtruded.
 
 204 THE POLITICS OF INDUSTRY 
 
 21. It appears to us that it may be desirable at 
 some later stage for the State to give the sanction 
 of law to agreements made by the Councils, but the 
 initiative in this direction should come from the 
 Councils themselves. 
 
 22. The plans sketched in the foregoing paragraphs 
 are applicable in the form in which they are given 
 only to industries in which there are responsible 
 associations of employers and workpeople which can 
 claim to be fairly representative. The case of the less 
 well-organised trades or sections of a trade necessarily 
 needs further consideration. We hope to be in a posi- 
 tion shortly to put forward recommendations that 
 will prepare the way for the active utilisation in 
 these trades of the same practical co-operation as is 
 foreshadowed in the proposals made above for the 
 more highly-organised trades. 
 
 23. It may be desirable to state here our considered 
 opinion that an essential condition of securing a per- 
 manent improvement in the relations between em- 
 ployers and employed is that there should be adequate 
 organisation on the part of both employers and work- 
 people. The proposals outlined for joint co-operation 
 throughout the several industries depend for their 
 ultimate success upon there being such organisation 
 on both sides; and such organisation is necessary 
 also to provide means whereby the arrangements and 
 agreements made for the industry may be effectively 
 carried out. 
 
 24. We have thought it well to refrain from making
 
 APPENDIX 205 
 
 suggestions or offering opinions with regard to such 
 matters as profit-sharing, co-partnership, or particu- 
 lar systems of wages, &c. It would be impracticable 
 for us to make any useful general recommendations 
 on such matters, having regard to the varying condi- 
 tions in different trades. We are convinced, more- 
 over, that a permanent improvement in the relations 
 between employers and employed must be founded 
 upon something other than a cash basis. What is 
 wanted is that the workpeople should have a greater 
 opportunity of participating in the discussion about 
 and adjustment of those parts of industry by which 
 they are most affected. 
 
 25. The schemes recommended in this Report are 
 intended not merely for the treatment of industrial 
 problems when they have become acute, but also, and 
 more especially, to prevent their becoming acute. 
 We believe that regular meetings to discuss industrial 
 questions, apart from and prior to any differences 
 with regard to them that may have begun to cause 
 friction, will materially reduce the number of occa- 
 sions on which, in the view of either employers or 
 employed, it is necessary to contemplate recourse to 
 a stoppage of work. 
 
 26. We venture to hope that representative men in 
 each industry, with pride in their calling and care 
 for its place as a contributor to the national well- 
 being, will come together in the manner here sug- 
 gested, and apply themselves to promoting industrial 
 harmony and efficiency and removing the obstacles 
 that have hitherto stood in the way.
 
 206 THE POLITICS OF INDUSTRY 
 
 "We have the honour to be, Sir, 
 
 Your obedient Servants, 
 
 3T. H. WHITLEY, Chairman 
 
 F. S. BUTTON 
 GEO. J. CARTER 
 S. J. CHAPMAN 
 
 G. H. CLAUGHTON 
 J. R. CLTNES 
 
 J. A. HOBSON 
 
 A. SUSAN LAWRENCE 
 
 J. J. MALLON 
 
 THOS. R. RATCLIPPE-ELLIS 
 
 ROBT. SMILLIE 
 
 ALLAN M. SMITH 
 
 MONA WILSON 
 
 H. J. WILSON 
 ARTHUR GREENWOOD 
 Secretaries 
 8th March, 1917.
 
 APPENDIX 207 
 
 LETTER ADDRESSED BY THE MINISTER OF 
 LABOUR TO THE LEADING EMPLOYERS' 
 ASSOCIATIONS AND TRADE UNIONS. 
 
 MINISTRY OP LABOUR, 
 MONTAGU HOUSE, 
 
 WHITEHALL, S.W. 1. 
 
 20th October, 1917. 
 SIR, 
 
 IN July last a circular letter was addressed by 
 the Ministry of Labour to all the principal Employers' 
 Associations and Trade Unions asking for their views 
 on the proposals made in the Report of the Whitley 
 Committee on Joint Standing Industrial Councils, a 
 further copy of which is enclosed. As a result of the 
 replies which have been received from a large number 
 of Employers' organisations and Trade Unions gen- 
 erally favouring the adoption of those proposals, the 
 War Cabinet have decided to adopt the Report as part 
 of the policy which they hope to see carried into effect 
 in the field of industrial reconstruction. 
 
 In order that the precise effect of this decision may 
 not be misunderstood, I desire to draw attention to 
 one or two points which have been raised in the com- 
 munications made to the Ministry on the subject, and 
 on which some misapprehension appears to exist in 
 some quarters. 
 
 In the first place, fears have been expressed that the 
 proposal to set up Industrial Councils indicates an 
 intention to introduce an element of State interference 
 which has hitherto not existed in Industry. This is
 
 208 THE POLITICS OF INDUSTRY 
 
 not the case. The formation and constitution of the 
 Councils must be principally the work of the indus- 
 tries themselves. Although, for reasons which will be 
 explained later, the Government are very anxious that 
 such Councils should be established in all the well- 
 organised industries with as little delay as possible, 
 they fully realise that the success of the scheme must 
 depend upon a general agreement among the various 
 organisations within a given industry and a clearly 
 icxpressed demand for the creation of a Council. 
 Moreover, when formed, the Councils would be inde- 
 pendent bodies electing their own officers and free 
 to determine their own functions and procedure with 
 reference to the peculiar needs of each trade. In fact, 
 they would be autonomous bodies, and they would, in 
 effect, make possible a larger degree of self-govern- 
 ment in industry than exists to-day. 
 
 Secondly, the Report has been interpreted as mean- 
 ing that the general constitution which it suggests 
 should be applied without modification to each in- 
 dustry. This is entirely contrary to the view of the 
 Government on the matter. To anyone with a knowl- 
 edge of the diverse kinds of machinery already in 
 operation, and the varying geographical and indus- 
 trial conditions which affect different industries it will 
 be obvious that no rigid scheme can be applied to 
 all of them. Each industry must therefore adapt 
 the proposals made in the Report as may seem most 
 suitable to its own needs. In some industries, for 
 instance, it may be considered by both employers and 
 employed that a system of Works Committees is un-
 
 APPENDIX 209 
 
 necessary owing to the perfection of the arrangements 
 already in operation for dealing with the difficulties 
 arising in particular works between the management 
 and the trade union officials. In others Works Com- 
 mittees have done very valuable work where they 
 have been introduced and their extension on agreed 
 lines deserves every encouragement. Again, in in- 
 dustries which are largely based on district organisa- 
 tions it will probably be found desirable to assign 
 more important functions to the District Councils 
 than would be the case in trades which are more 
 completely centralised in national bodies. All these 
 questions will have to be threshed out by the industries 
 themselves and settled in harmony with their particu- 
 lar needs. 
 
 Thirdly, it should be made clear that representation 
 on the Industrial Councils is intended to be on the 
 basis of existing organisations among employers and 
 workmen concerned in each industry, although it will, 
 of course, be open to the Councils, when formed, to 
 grant representation to any new bodies which may 
 come into existence and which may be entitled to 
 representation. The authority, and consequently the 
 usefulness of the Councils will depend entirely on 
 the extent to which they represent the different in- 
 terests and enjoy the whole-hearted support of the 
 existing organisations, and it is therefore desirable 
 that representation should be determined on as broad 
 a basis as possible. 
 
 Lastly, it has been suggested that the scheme is 
 intended to promote compulsory arbitration. This is
 
 210 THE POLITICS OF INDUSTRY 
 
 certainly not the case. Whatever agreements may be 
 made for dealing with disputes must be left to the 
 industry itself to frame, and their efficacy must de- 
 pend upon the voluntary co-operation of the organisa- 
 tions concerned in carrying them out. 
 
 I should now like to explain some of the reasons 
 which have made the Government anxious to see In- 
 dustrial Councils established as soon as possible in 
 the organised trades. The experience of the war has 
 shown the need for frequent consultation between the 
 Government and the chosen representatives of both 
 employers -and workmen on vital questions concerning 
 those industries which have been most affected by war 
 conditions. In some instances different Government 
 Departments have approached different organisations 
 in the same industry, and in many cases the absence 
 of joint representative bodies which can speak for 
 their industries as a whole and voice the joint opinion 
 of employers and workmen, has been found to render 
 negotiations much more difficult than they would 
 otherwise have been. The case of the cotton trade, 
 where the industry is being regulated during a very 
 difficult time by a Joint Board of Control, indicates 
 how greatly the task of the State can be alleviated by 
 a self-governing body capable of taking charge of the 
 interests of the whole industry. The problems of the 
 period of transition and reconstruction will not be less 
 difficult than those which the war has created, and the 
 Government accordingly feel that the task of re- 
 building the social and economic fabric on a broader 
 and surer foundation will be rendered much easier if
 
 APPENDIX 211 
 
 in the organised trades there exist representative 
 bodies to which the various questions of difficulty can 
 be referred for consideration and advice as they arise. 
 There are a number of such questions on which the 
 Government will need the united and considered 
 opinion of each large industry, such as the demobilisa- 
 tion of the Forces, the re-settlement of munition 
 workers in civil industries, apprenticeship (especially 
 where interrupted by war service), the training and 
 employment of disabled soldiers, and the control of 
 raw materials ; and the more it is able to avail itself 
 of such an opinion the more satisfactory and stable- 
 the solution of these questions is likely to be. 
 
 Furthermore, it will be necessary in the national 
 interest to ensure a settlement of the more permanent 
 questions which have caused differences between 
 employers and employed in the past, on such a basis 
 as to prevent the occurrence of disputes and of serious 
 stoppages in the difficult period during which the 
 problems just referred to will have to be solved. It 
 is felt that this object can only be secured by the 
 existence of permanent bodies on the lines suggested 
 by the Whitley Report, which will be capable not 
 merely of dealing with disputes when they arise, but 
 of settling the big questions at issue so far as possible 
 on such a basis as to prevent serious conflicts arising 
 at all. 
 
 The above statement of the functions of the Coun- 
 cils is not intended to be exhaustive, but only to 
 indicate some -of the more immediate questions which 
 they will be called upon to deal with when set up.
 
 212 THE POLITICS OF INDUSTRY 
 
 Their general objects are described in the words of 
 the Report as being "to offer to workpeople the means 
 of attaining improved conditions of employment and 
 a higher standard of comfort generally, and involve 
 the enlistment of their active and continuous co- 
 operation in the promotion of industry." Some fur- 
 ther specific questions, which the Councils might con- 
 sider, were indicated by the Committee in paragraph 
 16 of the Report, and it will be for the Councils 
 themselves to determine what matters they shall deal 
 with. Further, such Councils would obviously be the 
 suitable bodies to make representations to the Govern- 
 ment as to legislation, which they think would be of 
 advantage to their industry. 
 
 In order, therefore, that the Councils may be able 
 to fulfil the duties which they will be asked to under- 
 take, and that they may have the requisite status for 
 doing so, the Government desire it to be understood 
 that the Councils will be recognised as the official 
 standing Consultative Committees to the Government 
 on all future questions affecting the industries which 
 they represent, and that they will be the normal 
 channel through which the opinion and experience of 
 an industry will be sought on all questions with which 
 the industry is concerned. It will be seen, therefore, 
 that it is intended that Industrial Councils should 
 play a definite and permanent part in the economic 
 life of the country, and the Government feels that 
 it can rely on both employers and workmen to co- 
 operate in order to make that part a worthy one. 
 
 I hope, therefore, that you will take this letter as
 
 APPENDIX 213 
 
 a formal request to your organisation on the part of 
 the Government to consider the question of carrying 
 out the recommendations of the Report so far as they 
 are applicable to your industry. The Ministry of 
 Labour will be willing to give every assistance in its 
 power in the establishment of Industrial Councils, 
 and will be glad to receive suggestions as to the way 
 in which it can be given most effectively. In particu- 
 lar, it will be ready to assist in the convening of 
 representative conferences to discuss the establishment 
 of Councils, to provide secretarial assistance and to 
 be represented, if desired, in a consultative capacity 
 at the preliminary meetings. The Ministry will be 
 glad to be kept informed of any progress made in 
 the direction of forming Councils. Although the 
 scheme is only intended, and indeed can only be 
 applied, in trades which are well organised on both 
 sides, I would point out that it rests with those trades 
 which do not at present possess a sufficient organisa- 
 tion to bring it about if they desire to apply it to 
 themselves. 
 
 In conclusion, I would again emphasise the pressing 
 need for the representative organisations of employers 
 and workpeople to come together in the organised 
 trades and to prepare themselves for the problems of 
 reconstruction by forming Councils competent to deal 
 with them. The Government trust that they will 
 approach these problems not as two opposing forces 
 each bent on getting as much and giving as little as 
 can be contrived, but as forces having a common 
 interest in working together for the welfare of their
 
 214 THE POLITICS OF INDUSTRY 
 
 industry, not merely for the sake of those concerned 
 in it, but also for the sake of the nation which depends 
 so largely on its industries for its well-being. If the 
 spirit which has enabled all classes to overcome by 
 willing co-operation the innumerable dangers and diffi- 
 culties which have beset us during the war is applied 
 to the problems of Reconstruction, I am convinced 
 that they can be solved in a way which will lay the 
 foundation of the future prosperity of the country 
 and of those engaged in its great industries. 
 I am, Sir, 
 
 Your obedient servant, 
 
 GEO. H. ROBERTS.
 
 Date Due 
 
 0C 6 1968 
 
 DEC1
 
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 The politics of industry.