Judge Gary's Opportunity

I

JUDGE E. H. GARY, Chairman of the Board of Directors of the United States Steel Corporation, is one of the most conspicuous figures of our time. The position that he occupies, coupled with the record of his administration for nearly a generation, proves him to be a man of rare administrative power and constructive business imagination, and of much knowledge of men; yet he may very well have forgotten an incident in the affairs of the Steel Corporation that took place ten years ago, although it now appears that it was not without significance.

The incident was this. In the year 1910 a very small stockholder, like the knight-errant of the Age of Chivalry, set his lance in rest and charged the Corporation single-handed, on the issue of the twelve-hour day and the sevenday week. A painstaking examination of the records appeared to him to warrant the conclusion that, in an industry notable for the exhausting character of the labor, one half of the laborers worked twelve hours a day, and one third of them seven days in the week — a system which most other industries, even of a far less exhausting type, had abandoned, because it was beyond the power of the average man. This anomalous situation, involving a group which, with wives and children, probably comprised more than 500,000 persons, stirred his Puritan soul so deeply, that, without any support, he attacked the forces of the Steel Trust where they lay entrenched behind their powerful fortifications in the heart of Wall Street. That the situation should have stirred him, and that he should have made the attack, is perhaps not extraordinary; but what is extraordinary is that the object of his attack proved to be vulnerable, and that he met with notable success.

As a result of his efforts, the stockholders of the Corporation, at their meeting on April 17, 1911, appointed a committee of most distinguished gentlemen, who, in April, 1921, brought in a report of monumental importance, finding in substance that the practices complained of did exist; that they were inhuman and anti-social in character; and that they ought to be abolished. While framed in the most cautious terms (as was natural and proper for men in such commanding positions), the report met the attack squarely, admitted the soundness of the complaint, and in effect surrendered the fortress.

The victory appeared so complete that great changes might properly have been looked for in the immediate future. They did not come, for it appears from recent investigations that the twelve-hour day is as prevalent in the works of the Steel Corporation as it was ten years ago. By some critics of the company this is regarded as evidence of hypocrisy and bad faith on the part of Judge Gary and his associates— as part of a deliberate plan to grind down the workmen, destroy their organizations, and wring the last dollar of profit from the business. But no such conclusion is necessary or, I think, warranted by the facts.

Let us consider for a moment what the situation was when that report was made, and what it has been since. The report above referred to was made in the summer of 1912, in a period of hesitation and business uncertainty, which lasted through 1913, and was followed in 1914 by the war, which produced, first, a severe depression, followed by such a wild demand for steel and iron as the world has never known — a condition that continued unabated until the end of 1920. These were hardly the conditions under which changes of such a fundamental character should have been undertaken or would have met with success, and it is fortunate for the cause of progress and reform that they were not attempted. If, in 1912, the officials of the United States Steel Corporation had entered upon such a course, they would probably have been forced to abandon it by the exigencies of war, with its huge demand for production and coincident shortage of labor.

In the years that have elapsed, however, the situation has not remained unchanged. Recent investigations and reports¹ have disclosed the fact that the eight-hour day and the six-day week have now become the rule in most of Europe; and of Great Britain it is reported that neither the companies nor the men would consider going back to the old basis.² The change appears to have been made possible by the willingness of both sides to make concessions — the companies anticipating some increase in costs and the men accepting some reduction of wages, although the evidence now available indicates that neither party really suffered, as the increased efficiency of the ‘short turn’ resulted in larger production, so that the labor-cost per ton did not rise.

In the United States, also, some of the smaller steel companies have successfully adopted the short turn; while in other continuous-process industries, like paper and chemicals, the three-tour system, or eight-hour shift, has become the rule. In this respect, the paper business affords a most important objectlesson, as the change was made, in many cases, with great apprehension on the part of the companies, and calamity was freely predicted. But experience proves that the industry has benefited, as the men are more contented and labor-costs per ton have been reduced.

All men love gossip, — the interchange of loose ideas, approximating the truth but unhampered by the requirements of close reasoning, — and men rarely indulge in the painful process of close thinking, which is, however, essential to the formation of clear-cut ideas. There are ten men who will talk breezily about the conditions of life in the steel industry and ‘continuous-process operations’ to every one who has any clear conception of the subject; but such a conception is essential to an adequate understanding of the problems that confront the Steel Corporation.

From the earliest days of the business, the steel industry has been operated largely on a twelve-hour turn. A blast furnace is necessarily operated continuously, day and night. The coke and limestone are charged in at the top of the stack, and every four or six hours the molten metal is drawn off at the bottom. Once blown in, a furnace will be in unbroken blast for periods of months or perhaps years; twenty-four hours a day, seven days in a week, 365 days in a year. Should the fires die down for only a few hours, great loss will result. Such continuous operation, which is essential for the blast furnace, has, for reasons of economy, been extended to most of the other basic processes of the industry. The white-hot pig-iron, flowing in a beautiful river from the base of the blast furnace, is saturated with carbon and other impurities, which it is the business of steel-making to remove; and in these days this is largely done by the open-hearth process. An openhearth furnace is a large, though frail, affair, in which the metal is raised to very high temperatures by gas-flames deflected from the roof. Theoretically, it could be worked by day and allowed to rest at night; but it would be necessary to keep the furnace at high temperature during the resting hours, and the practice would be very wasteful. So, except in dull times, open-hearth furnaces are invariably operated twenty-four hours a day, and, commonly, seven days a week. Many types of rolling-mills, by which the larger part of the country’s steel production is worked into commercial shapes, are also, as a rule, continuously operated; and while such continuous operation is not essential, it is in the interest of convenience and economy.

The result of this is that practically all departments of a steel mill are operated continuously, and probably fifty or sixty per cent of the employees are on the twelve-hour turn, which has been the standard of the steel industry for many years— not because men or managements have considered twelve hours as the best working day, but because it was a natural and convenient arrangement for twenty-four-hour operation. On the other hand, much has been done in recent years to make the long turn more tolerable; and the mental picture that so many men have, of the steel-worker stripped to the waist, and pouring with sweat while working over masses of molten metal, represents what is to-day a very exceptional condition. Most of the rolling-mills are mechanically manipulated; blast furnaces and open-hearth furnaces are, for the most part, charged by machinery; cranes lift the heavy weights, and water-cooled doors and electric fans relieve the heat; while safety precautions have greatly reduced, although not wholly eliminated, the hazard.

Thus the twelve-hour day is not now (if it ever has been) a day of continuous work. Much of the time the men are simply standing by while the furnaces, or the huge machinery, discharge their functions; and unless something goes wrong, hours may pass with little for them to do. Where work is hot or intensive, there are usually interruptions in the progress of the work, more or less regular in their recurrence, and spare men are provided, so that, as a matter of fact, during the twelve-hour turn the actual hours of labor rarely exceed eight.

Nevertheless, while important progress has been made in the direction of mitigating the strain, there has for years been a growing feeling in the steel industry that the twelve-hour shift is too long. Originally a humanitarian conception, it is now coming to be felt that the long day is undesirable from a technical and financial point of view. It is the experience of nearly all steelmakers that the night shift—twelve hours or more— is less efficient than the day shift. Part of this lessened efficiency is due to the unavoidable difficulties of artificial light, but part also to the length of the shift; to the feeling that, having worked all day one week, a man cannot be expected to work all night the next; and to the cold fact, admitted by everyone, that on the night shift the men, even the bosses, sleep as much as from one to three or four hours. In some cases the twelve-hour turn has been modified by turning it into a ten-hour turn during the day in one week and a fourteen-hour turn at night the next; but it does not take much imagination to picture the way a considerable part of the fourteen-hour night turn is spent. Laxness of discipline is sure to creep in, spreading from the night shift to the day shift, and thus undermining the efficiency of the whole organization. Moreover, men who are corralled in the shop half their lives make up for it by staying at home when they should be at work, or by drifting from one steel plant to another. The rapid turnover of labor in the industry indicates the low morale that the long hours foster. Your valuable employee is the man who is alert and interested in his work, who has pride in himself, in his family, and in his home; but the appearance of any typical steel town bears witness to the fact that the great majority of the workingmen are not of this type.

The fact of the matter is that industrial experience indicates that, as a general rule, men will produce more in the long run working forty-eight to fiftyfour hours a week, than they will in seventy-two to eighty-four; and to-day, if the long turn is to be defended, it must be upon the ground that the work required is of an unusually light or intermittent character. That the continuous processes of the steel industry fall into this class, no one familiar with the business will maintain; in fact, the steel men themselves like to talk of it as a ’he-man’s job,’ meaning, of course, that the labor is of an unusually taxing character. We are warranted, therefore, in our curiosity to know why, among so many other continuous-process industries, the continuous processes of the steel industry in the United States are still operated, as a rule, on a twelvehour basis, which others have for the most part abandoned, and which, even in the steel industry, has been abandoned in most of Europe.³ Doubtless there was a time when it was generally believed that this was the best and most profitable way to operate a continuous process; but the experience of mankind has now made this position untenable. The paper, chemical, and other continuous-process trades, in which the eighthour day has been adopted, continue to thrive; and where it has been tried in the steel industry it has certainly not been proved a failure. Where energy and alertness are essential, the short turn seems to be the best; and it is, therefore, not impertinent of us to ask how the hesitation of the great exponents of the steel industry in this country to adopt the eight-hour day can be justified, and what is the prospect, if any, that the time is at hand when a change is imminent.

From a human or social point of view, the eight-hour shift in the continuous processes of the steel industry is clearly to be desired; and if, as is alleged, over forty per cent of the steel workers are now working 72 hours a week, this is a national problem of prime importance. The great decrease of the world’s capital, which has already resulted in lowering the standard of living of 400,000,000 human beings, can be made up only by increased production. The social unrest now so widespread, which is preventing this, can bo eliminated only by a new and better understanding between employer and employee, produced by the intelligent study of working conditions and their readjustment to modern standards. The long turn in the steel industry is one of the most critical points at issue.

The two principal reasons commonly advanced for retaining the long turn are, that the steel companies cannot afford to pay for the third shift, and that, even if they could, the change would require more men than the labor market can provide, so that reduced production would necessarily result. As a corollary to the first objection, it is maintained that the men do not want it, because, being paid mostly by the hour or by the ton, fewer hours mean lower pay.

These are considerations which have doubtless been entitled to great weight in the past, but which present conditions have profoundly modified. During the last ten years a mass of evidence has accumulated in many continuousprocess industries, the steel business among them, which tends to prove that the higher efficiency on an eight-hour instead of a twelve-hour shift counterbalances the reduction in hours, so that unit-costs do not rise. It appears, moreover, to have been the experience of Great Britain, when the change from twelve to eight hours was being made, that while the men were not unanimous, a large majority of them willingly agreed to meet the employers halfway and accept a reduction of wages for the sake of the shorter day.

Considering, however, the great size of the steel industry in this country and its highly competitive character, it is perhaps no wonder that the men who administer the affairs of the Steel Corporation should have moved with great caution in the past and should be disposed to continue to do so. But there is no denying the fact that times have changed since 1912, and are now far more propitious for this reform than they were. That the cautious, and relatively unprogressive, manufacturer of Great Britain has taken the plunge, so to speak, while the industrial leaders here ‘shiver on the brink’ is a fact that requires an explanation. Perhaps this may supply it: both stood shivering on the brink; one was suddenly pushed in from behind, and, like the timid swimmer, now proclaims loudly, ‘The water’s fine.’ The other more firmly planted on his feet, or with a less powerful agent behind him, contrives to stand his ground. In other words, the labor-unions and the war forced the hand of the British steel manufacturers, while in this country these forces were not sufficiently powerful. In England, the steel industry is completely unionized. In this country, it is not. The attacks of the unions on the stronghold of the indust ry, where Judge Gary and the Steel Corporation lie entrenched, have been long, bloody, and unsuccessful. The Corporation has consistently maintained the principle of the ‘open shop’; has always refused to allow the American Federation of Labor to dictate its terms, and has been, perhaps, the greatest bulwark in the country against the onward sweep of the labor-union movement.

II

It is neither within my province nor within my power to discuss at length the economic and social aspects of labor-unionism, but some reference to it, as related to the Steel Corporation, is necessary, in order to explain the position that it has taken in regard to the eight-hour day.

Without exaggeration it can be said that the great majority of those who think earnestly about social and political problems have come to regard the organization of labor into unions as a useful and permanent development, necessary to promote collective bargaining, and desirable in many other ways, to forward the welfare of the worker. But it needs now to be pointed out that many of these organizations are essentially ‘combinations in restraint of trade’; that, as a general rule, their activities have aimed at, and have achieved, restriction of output; that they are, in fact , monopolies, which have secured some of those results for which monopolies have been properly condemned and which are definitely harmful to our civilization. The mortality among monopolies in the past, from the time of Queen Elizabeth to the present day, has been remarkably high, exactly because they have aimed to increase prices and restrict output. This is what the labor-unions, in many instances, have successfully striven to achieve; and one is tempted to suggest that the high mortality that has been observable among monopolies in the past may claim this form of organization, too, and that labor-unions may prove to be merely a passing form in our social evolution. Certainly, if there are other ways in which collective bargaining and the education of the worker can be accomplished equally well, they must be given a trial.

This issue with organized labor, the issue of the closed shop against the open shop, is perhaps the most fundamental and important social and economic problem of our times; and it is noteworthy that the United States Steel Corporation, itself accused of being a monopoly, should be the great champion of freedom against the Labor Trust. Organized during the great era of trust organizations, this Corporation has survived the downfall of its contemporaries because it was not in fact a monopoly; because it did not seek to raise prices and reduce production; and for these reasons it has been one of the most constructive forces in the industrial life of the country during the last fifteen years. This is the organization which stands for another form of collective bargaining — bargaining with groups of its own employees instead of with the American Federation of Labor, — and it has been of the greatest importance, not only to this industry, but to all others, that this issue should be fought out. The Steel Corporation may be wrong, but it is certainly not reactionary. In this instance, it is, if anything, radical. It has increased production and kept prices down, while the Labor Trust has restricted production and raised prices.

Standing for the open shop, Judge Gary has seen his British companions forcibly ‘kicked off the float’ by the labor-unions; and it has doubtless seemed more important to him to vindicate the principle of the open shop than to hasten the advent of the eighthour day. But the time has now arrived when Judge Gary’s position has been adequately vindicated.

There is another aspect of the situation, to which attention should be called. Many years ago, Mr. H. G. Wells, himself a Social Reformer, ‘hit the nail on the thumb’ when he wrote that the members of the group to which he belonged were like men owning patents, or secret processes—things of great value, which would accomplish great results, but the details of which they were unwilling to disclose. Each had his panacea,but was weak on the practical details. Such men think in pictures, not in processes, and are prone, therefore, to overlook the difficulty of putting into practice the reforms that they see must come. ‘We must cross the seas.’ ‘How do you get over?’ ‘Oh, just cross.’ So with the proposed changes in the working conditions of the steel industry—the reformers overlook the practical difficulties which the immense size of the business alone interposes. It is one thing for a small steel-maker to adopt the short turn, but quite another for the Steel Corporation. To ask a commanding general to re-form an army of 250,000 men, after it has been brought into action and is under fire of the enemy, would be midsummer madness, while to reform a cavalry brigade under such conditions might be entirely possible.

And so it is with the Steel Corporation. Granting that the changes must come, time must be allowed to make them, and the right time must be chosen. The day of battle is not the time. The action must be fought out on the lines laid down, and reorganization or re-formation must wait for a lull, at least. The conditions in the steel industry for the last eight years have been those of battle. To-day, however, there is a pause. The strategic moment has arrived.

The advantages of this time are manifest. In a period of slackening demand and surplus of labor, reduced production and shortage of labor are not to be feared. As wage-reductions are being made on every hand, the workers will be more amenable to reason and more willing to meet the employer half-way than at any time in many years. As the political and social unrest produced by the war has drawn public attention very urgently to the social aspects of the problem of the long turn, a move of such a momentous character by the Steel Corporation would serve, as nothing else could, to emphasize the beneficial effects of this great balance-wheel in the steel industry, and the wisdom of the course it has pursued.

Judge Gary has doubtless been influenced to postpone action heretofore by the paramount importance of emphasizing the position of his company in opposition to some of the demands of organized labor; but it would seem that this purpose has now been achieved and need no longer hold him back.

Of course, in a matter of such magnitude, Judge Gary might hesitate to act alone. He can hardly afford to risk such a great increase of pay-roll while any doubt remains as to whether or not unit-costs will increase, unless his competitors adopt the same policy. But in this matter, as someone must lead and the others follow, our experience in the past would seem to indicate Judge Gary as the natural leader. Long before the outbreak of the war, the Steel Corporation was the recognized leader of the industry in America; and the last seven years have stamped this fact upon the public mind — particularly the course of events since the Armistice. Always the leader in wage-advances, the Corporation has recently maintained prices far below those demanded by the so-called ‘independent’ operators, with the result that to-day, when buying power is reduced, the Steel Corporation is operating at eighty-per-cent capacity, while the business of its competitors has dropped to thirty per cent or less. At a time when public attention is directed, as never before, to the social evils resulting from seasonal and periodic unemployment, this fact alone serves to indicate the Steel Corporation as the logical, if not the only possible, leader in any important change; and the psychological moment seems now to have arrived. Conditions and events conspire to point to the road, and to the leader; the course, — no longer uncharted, in view of the experience in Great Britain and in this country during the recent past, — the slackening demand for production, and the necessity for a lower level of prices, combined with a surplus of labor-supply, point to this time as the time of all others in the history of industry, when a monumental advance can be made.

The chance may never again be offered to the Steel Corporation to demonstrate its power to serve the nation by boldly taking this important step. The pressure of public opinion, as well as self-interest, will force its competitors into line, or pulverize them with the recoil. Judge Gary is in a position where he must seize the flying opportunity that fortune offers to him, or run the risk of being crowned with the humiliation of walking in the triumphal procession of some independent manufacturers more alert to the conditions of our time and more skilled to take advantage of them. In matters of broad general policy in the past the Steel Corporation has been both shrewd and wise; and as these lines are being written, Judge Gary has given out a statement that warrants the hope that, before they are printed, he will have taken this epoch-making step.

The Puritan knight-errant who, like Don Quixote, charged the windmill ten years ago, has ridden off the stage and into eternity. Again the stage is set for another performance. May his successor prove worthy of the audience, of the occasion, and of the part.