Project Canterbury

Christianity and Industrial Relations: An Address Delivered at the Fifty-Second General Convention, Cincinnati, Ohio, October, 1937.

By Benjamin Seebohm Rowntree.

New York: Department of Christian Social Service of the National Council, 1937.

I THINK we shall all agree that whatever be the motives which induce any given individual to engage in industry, its basic purpose must be the service of the community, for without industry and commerce the community would starve in a few days. It was because men could only exist if they worked that they engaged in industry. A little effort on their part enabled them to subsist. Greater effort enabled them to live in greater comfort. So we may say that the true purpose of industry is to provide the goods and services necessary to enable the community to live healthily and comfortably, at any rate, so far as material factors are concerned.

Two influences are tending to induce men to forget this: first, the growth of markets renders industry much less personal than it used to be, and, secondly, the growth in the size of industrial units renders personal contact between employers and employed increasingly difficult.

In the old days, most industrialists came into personal contact with those they served. This is no longer true of productive industry save in a few instances. For the most part, the producer and consumer of goods never meet. Very often the producers do not know in what continent or hemisphere their goods will be consumed. Admittedly, many retail distributors come into direct contact with those they serve, but even there trade is increasingly done by large distributors and the principals do not see their customers. In the case of small shopkeepers, the spirit of service to the consumer often exists and in many cases prevails.

While the extension of markets has been rendering industry less personal, so the ever increasing size of industrial units has placed upon directors heavy financial responsibilities, for they are often handling millions of dollars belonging to other people. It is not, therefore, unnatural that the service aspect of industry tends to be forgotten, and the financial aspect to assume undue importance. At the same time, the growth of large scale industry has rendered the relation of employer and employed less personal, so that today millions of workers in this country are never seen by those who are responsible for their employment. Indifference to their well-being is, therefore, not unnatural. Which of us is as deeply moved by hearing that an earthquake ten thousand miles away has killed a thousand people, as we should be if told of a disaster in our own locality which led to the death of ten?

These are some of the reasons why, today, the organization of industry and the division of the wealth produced are so largely determined,’ not on a basis of justice, but according to the economic strength of the different interested parties. You cannot imagine the Founder of our religion recommending His followers to establish their industrial system on the basis of “every man for himself and the devil take the hindmost!”

In this contention among the different parties engaged in industry, the workers have, on the whole, come off second best. For a long time they accepted the condition in which they found themselves without active protest, partly through fatalism, but largely because their economic position was so weak in relation to that of the employers that they could not make any [3/4] effective protest. In consequence of this, employers, and the class to which they belonged, became so used to the prevailing condition of things, that they took them for granted and expected them to last forever. To quote words which I heard used in another connection, they became, in fact, “a kindly, cosy, comfortable, conservative, complacent community.”

But in expecting them to last forever, they are profoundly mistaken. Gradually, there has been growing up, in every industrial country, a spirit of discontent among the workers, and it is spreading with ever increasing momentum. You can observe it throughout the world. I have seen it in its early stages in India and Japan. You can see it in France, where the growing discontent of the workers is becoming a grave danger to the State. The war in Spain and the Russian Revolution arose from the same cause.

The labor unrest in this country and in Britain arises from a belief held with ever increasing conviction, that the human and economic relations in the field of industry are not based on justice. No civilization, indeed, no part of a nation’s life, which is not based on justice will endure. Sooner or later, when men feel themselves unjustly dealt with, they will fight—they are fighting now. What are we going to do about it?

First, what are we going to do about the Trade Unions? A great deal depends on our attitude to them. In England, until a comparatively short time ago we sought to keep them at arm’s length, and if forced to deal with them we did so in a grudging and antagonistic spirit, with the result that the Union leaders found themselves compelled to fight the employers ruthlessly. Gradually, however, the relationship has changed. Today an employer who refuses to recognize the right of an outside Union to negotiate matters affecting his workers would be regarded as a curious relic of the past; rather like a pterodactyl or ichthyosaurus!

And in consequence of this changed attitude there is an ever growing spirit of co-operation between the Unions and the employers, to the great benefit of industry.

Of course, employers who conduct their enterprises solely with the object of making the greatest possible profits for shareholders, regardless of the welfare of the workers, will find that the Trade Unions will oppose them with all their power. And this is as it should be, for believe me, there will be no lasting peace in industry until it is based on justice, and employers who refuse so to conduct their own concerns need to be man-handled, for they are a peril to the community.

If time permitted, I could give instance after instance from personal experience of the co-operative spirit shown by the Trade Unions. If I had a dispute with labor, I would far rather settle it with a Trade Union official than with our own workers direct. They are used to negotiating, and if upon examination, they find that I have made out my case, they are not afraid to admit it. Often the workers, because they have had no experience in conducting negotiations, find it difficult to reason logically, and even when they are convinced that their case could not stand examination, they are fearful of having to go back to their workmates having failed to achieve their object.

I can well realize that there may be a difficult time for many American employers through having to recognize the Trade Unions, but quite apart [4/5] from recent legislation, sooner or later they would have had to do it, and as the Unions find that they are no longer repelled by employers, they will gradually show the same helpful and co-operative spirit as they show to good employers in Britain. The Unions will find that in the long run it pays them better to entrust their negotiations to tactful diplomats rather than to blundering bullies.

Today in Britain our most serious difficulty arises from unofficial strikes, i.e., strikes not called by the Union, and to which the Union is opposed. The omnibus strike in London during the Coronation was of such a character, and those who led it have been expelled from the Transport Union. The Unions do all in their power to prevent such strikes, which are usually engineered by hot-headed and irresponsible agitators.

There is another matter relating to Trade Unions to which I should like to refer. I have been struck with the great interest shown here in the tactics to be employed in dealing with Trade Unions; in such questions as to whether or no they should be incorporated, or what laws should be enacted to deal with picketing. I do not, of course, deny that it is desirable to decide these questions wisely, but they are of secondary importance. A wise employer will not trouble too much about them. He will rather ask: “Now, what’s all the trouble about?” And when he seriously inquires into this, he will find that the workers have quite a lot of legitimate grievances, and the whole community suffers from the industrial unrest to which they give rise. Surely it is wiser to attack these grievances than to spend time and effort in perfecting what are, after all, the methods and tactics of warfare.

In 1650 during the civil war in England, George Fox was offered a captaincy in the Parliamentary army, but he refused. “I told them,” he said, “I knew from whence all wars arose, even from the lust, according to James’s doctrine; and that I lived in the virtue of that life and power that took away the occasion of all wars.”

Not only is it supremely important from the standpoint of the stability of the Government of the country to remedy any injustices from which the different parties engaged in industry may be suffering; it is our Christian duty to do so. And here let me say, that there is a difference between the duty of the Christian Churches as such, and that of their individual members. It is the duty of the Church to lay down the principles which should govern the conduct of industry and commerce, and to urge their members to act in accordance with them. They go beyond their province if they attempt to define the precise way in which those principles shall be applied. I have seen terribly serious consequences follow from a Church, as such, attempting to do this. But to apply Christian principles is an essential duty of every individual Christian engaged in industry in whatsoever capacity.

Some of these are engaged as principals, some as executives, and others as rank and file workers. Obviously, the heaviest responsibility for establishing the reign of justice in the industrial field rests with directors and other principals; and since it is they who must take the lead, I shall confine myself to the responsibilities which Christian principles impose on business leaders but do not let it be forgotten that if justice in the field of industry is to prevail, the co-operation of executives and rank and file workers is essential. [5/6] All parties in industry have duties to perform, as well as rights to defend, and if any fail to perform their duties, they render more difficult the performance of their duties by the others.

What is the duty of employers who desire to conduct business on Christian principles, or to put it another way, so to conduct their businesses as to serve the highest ends of the community?

I would suggest that industry should be increasingly regarded, not primarily as a means of promoting the material welfare of groups or individuals, but as a great national service, endeavoring to realize three ideals. These are:

1. Industry should create goods or provide services of such kinds, and in such measure, as may be beneficial to the community.

2. In the process of wealth production, industry should pay the greatest possible regard to the general welfare of the community, and pursue no policy detrimental to it.

3. Industry should distribute the wealth produced in such a manner as will best serve the highest ends of the community.

If we accept these as the ideals we should seek to realize, the next step is to decide whether they are capable of realization under a system of industry which allows private profit and competition.

It will help us to do so if, instead of discussing the matter on abstract philosophical grounds, we seek to answer four questions. Is it possible under the existing industrial system,

1. to give good service to the consumer?

2. to provide conditions for the workers of all grades comparing not unfavorably with those they might reasonably expect to enjoy under any other industrial system?

3. and, having done these things, to make business pay?

4. and lastly, can the hardships caused by competition between business units be so regulated that they do not outweigh its advantages to the communal well-being?

On the replies to these questions, the future character of our industrial system may depend.

I have no doubt as to the ability of industry to give good service to the consumer. Competition, whatever may be urged against it, sees to that, and in spite of the waste incidental to the present system, I believe its; advantages outweigh its disadvantages so far as the consumer is concerned.

Before discussing the conditions we should seek for the workers, among whom I include everyone of whatever rank engaged for a wage or salary, I want to consider our attitude to capital. Some of you own your businesses. They belong to you, and you have no shareholders. Most of us, however, are in companies largely financed by borrowed capital, publicly subscribed. Our first duty to the shareholders is to keep their capital intact. As regards the question of the return upon it, I believe we should hire it as cheaply as possible. Obviously, however, the return upon it must be high enough to [6/7] induce people to lend their money. Under whatever system we work, under a capitalistic or socialistic or communistic system, we may force people to provide capital by taxing them, but they will not lend their money voluntarily without sufficient inducement. I suggest this would be the payment of interest at a rate equal to that paid on gilt-edged securities, plus an insurance for any risk run. If the risk is high, the rate of insurance will be high. If the business fails, they lose their money; if it succeeds, they receive high dividends. But after the above payments, capital has no further claim, and any further profits are surplus, and, therefore, available for other objects. So much for capital. Now what of the workers?

The first duty of the employer is to see that the business is efficiently and energetically managed. It does not matter whether or not there is anybody to boss him. If he is trying to serve the interests of the community, that should be drive enough, without anyone to stand over him with a whip or a stop-watch. He must aim at the maximum efficiency. There must be no nepotism. If the son of some highly placed administrative official gets a post, it must be because he is the best man to fill it, not because he is his father’s son. An employer who deliberately assigns some coveted post to an inferior man, because he is a relative, is betraying his trust to the community.

Secondly, we must see that the industry provides a decent living for those engaged in it. That indeed is one strong reason for efficient management, for this is likely to result in the cake to be shared being a bigger one. It is cowardly to say to men: “I am sorry I cannot pay higher wages, but my profits are too smallj” unless we have strained every nerve to increase the profits. We must not let low-paid workers suffer for our mental laziness. We ought to do our utmost to pay our lowest grade of workers a living “wage, which I should define as a wage which would enable a man to marry, to bring up a family of ordinary size in a state of physical efficiency, to live in a decent house, and to have a moderate margin for contingencies and recreation. That at least is what every normal man in this country should be able to demand, and could receive, if industry were properly organized. If it cannot be properly organized under the present “system,” then whether we like it or not, another system will take its place.

This is not a question of the standard wage or the market price of labor, but of labor’s actual needs, and capital should take no surplus profits until such a wage is paid. Remember that high wages are essential to industrial prosperity. It is useless to manufacture goods for people without purchasing power!

My conviction is that none of the higher paid executives, including directors, should receive more than their bare market price until this minimum living wage is paid to all the workers. Of course, many salaries will be higher than the wages of the rank and file; and unless we pay good executives their market price, they will leave. But a reasonable living wage for the lowest paid worker is of more vital importance than bounties to the well paid. If there are further profits after labor and capital have been remunerated as above, they should be distributed among the workers, the executives and the shareholders. I do not rule out the shareholders, because I think that their inclusion is one of the factors enabling us to hire our capital on economical terms.

[8] Thirdly, the workers must be given a greater measure of economic security. Notwithstanding the steps taken by your Federal and State Governments, and by the Government in Britain, most workers whether wage or salary earners, live in fear of unemployment, of sickness, and of an old age, against which there is inadequate provision. On the last two I have no time to dwell, but it is of supreme importance for business executives to take into account the evils of unemployment, and to make the position of the employee as secure as possible. I have not been in business for fifty years without knowing how difficult that is. But a good deal can be done.

First of all, the employer must determine to avert unemployment so far as this is humanly possible. There are a number of things he can do to regulate the demand for labor. He can build up stocks when trade is slack. He can put a novelty on the market which yields no profit, but which provides employment for workers whom he would otherwise have to dismiss. If he merely looks at his balance sheet, he may not think this worth the worry. But I submit that in industry generally, we must give up looking only at our financial balance sheet. We must take the human factor into account also.

The next essential is to mitigate the hardships of unavoidable unemployment. There are various ways of doing this. It is not a very costly matter to organize a fund to which both the workers and the firm contribute, and which, when a man is laid off, or put on short time, supplements what he receives from statutory funds. I have seen that plan work well, and it has been greatly appreciated. In all these things, unless there are special reasons to the contrary, we should provide, at any rate, for the lower paid executives and not merely for the wage earners.

I now come to the workers’ status in industry, and here the fundamental consideration is that workers of all grades and races shall be regarded by directors and administrative staff not as servants, but as co-operators, which, of course, is exactly what they are.

Once that attitude is adopted, a great many results follow as matters of course.

While recognizing that no business, or enterprise of any kind, and under any regime, can function efficiently without discipline, an effort should be made to exercise that discipline with scrupulous fairness, and not to make it more onerous than is absolutely necessary for efficiency.

It is often said that, in fairness, workers, as such, should be appointed to seats on the boards of directors. It must, however, not be forgotten that the administration of a business is a skilled job, and should be placed in the hands of those best qualified to do it well. I do not advocate the policy of placing workers’ representatives, as such, on boards of directors, but the road to the board should be open to everybody, irrespective of his social class. Let the best man win!

However, though the general administration of a business, and especially its financial and marketing policies, should be in the hands of trained experts, working conditions so far as is consistent with complete efficiency, should be mutually agreed. After all, what the workers really want is not to undertake the difficult and highly skilled work of administration, but to have a large say in determining the conditions governing their day-to-day life in the factory. How far can these be determined by democratic methods?

[9] In a democracy the people make their own laws; they have a say (though often a very indirect one) in the appointment of those who administer the laws, and they are protected by impartial Courts of Justice against unfairness in their administration. These three attributes of democracy can be largely introduced into our industrial organizations.

In our factory, every working rule is fixed by mutual agreement between the management and the rank and file workers. No director can make or alter a rule on his own responsibility; nor can the Board of Directors do so, “and this arrangement has worked successfully for ten or fifteen years.

The administrative officers in whose selection the workers are most directly ‘concerned, are the overlookers. These overlookers are in constant contact with them, and the workers’ happiness depends largely on the character of the persons selected to fill these posts. We never appoint an overlooker without consulting representatives of the workers from the department concerned. We feel it necessary to retain the rights to the final word, but so far as I can recollect we have never, in all the years during which we have followed this practice, been obliged to exercise it. Every appointment has been made by mutual agreement.

In our own factory, if any man is punished, suspended or dismissed for breach of a work rule, or for theft, or for any fault not affecting the performance of his work, and thinks he has been unjustly punished, he can go to a court consisting of two members appointed by the workers, two by the management, and an agreed chairman with a casting vote, and he is tried by that court. In one instance, the matter had been brought before the Board of Directors, who said: “The man must be dismissed.” He was dismissed, but he appealed to the Court, and was reinstated. The whole proceeding did not weaken the authority, of the directors in the slightest. Rather it testified to their recognition of justice as the final authority, and their readiness to admit any mistake on their own part. Thus, for the last twelve or fifteen years in a factory with seven or eight thousand employees, it has been found practicable, without lowering efficiency by a millimeter, to work under a system in which the three chief attributes of democracy, the making of laws, the appointment of officers to administer them, and the protection of an impartial court of justice against unfair treatment—find a place.

Next, we should tell the workers as much as we can about the business. If we want co-operation, we must trust our co-operators. How can co-operation be expected from mere “hands?” A true spirit of fellowship and cooperation between employer and employed should permeate the whole of the business. We should let the workers know that any suggestions they may make will receive careful and sympathetic consideration. How often do directors tell the workers how the business is doing, tell of their problems, and of any difficulties they think the workers could help them to solve? If the workers are kept in ignorance of the vital facts of the business, how can you expect real co-operation? Surround the workers with conditions encouraging each one of them to do his best because he feels that the industrial world is like a vast playing field, and that the game needs him. Make it clear that your policy is based on the assumption that industry should be conducted as a universal service and not in the interests of a favored class, and the whole situation will change for the better.

[10] I must deal, very briefly, with the question whether after meeting the just claims of consumers and workers we can make business pay. The point at issue here is, of course, whether the application of the principles I have outlined would render unprofitable, industries which would otherwise have been conducted at a profit. My view is that this would only be so in an unimportant minority of cases, for we must not forget that the cordial cooperation of the workers, although its value cannot be accurately measured, is an asset of immense value to any business, and has an important effect on the balance sheet. Undoubtedly, there may be a few industries which are essential to the national well-being, but which, for one reason or another, cannot be made to pay after providing for at any rate an adequate minimum standard of well-being for the workers. In such cases, it may be necessary for the government to come to their assistance. Possibly certain branches of agriculture might need such help.

There remains a peculiarly difficult problem. What is the duty of the would-be Christian business man towards his competitors? Is he to develop his business as widely and rapidly as he can, knowing that by so doing he may crush out less efficient men, or men commanding less capital? When I state my answer to that, speaking generally, his first duty to the community and to the workers who are dependent on him for a livelihood is to spare no effort to raise the efficiency of his business, I speak with certain reservations. First, he must “fight fair.” He must use no weapon which he would legitimately resent if it were used against himself, and he must show to his competitors all the consideration which he himself could reasonably desire from them, if he were weak and they were strong. Personally, I believe that competition in one form or another will always be necessary to mankind; but I believe that, as time goes on, certain basic human rights will be placed beyond its purview. Meanwhile, the business man must never be content with merely doing his best for those more immediately connected with him, and making his own business more and more efficient. He must realize that the whole industrial body is “brie; and he must strive towards a condition of things in which no human being who is honest, industrious and capable, whether he be employer or worker, shall be denied the opportunity to earn a proper livelihood from industry.

In conclusion, let me urge you not to regard lightly the question with which I have dealt. The sands, believe me, are running out.

Every day, workers of all grades are becoming more insistent in their demand that industry shall be so conducted and so co-ordinated as to serve the highest ends of the community as a whole. If, as employers and business executives, we ignore the profound change which has come over the mentality of the workers, we are making a mistake.-which may cost the country very dear. I do not imply that there will inevitably be bloodshed, as in Russia, where revolution arose because industry (including agriculture) was not conducted in the interests of the whole community but in those of a class. But I do say, and it is of profound importance, that if the fair-minded and public-spirited members of the industrial army let things drift, they are playing into the hands of the extremists of the right and left, and instead of evolutionary progress, there will be a bitter struggle, the end of which no man is able to predict.

[11] Some optimists declare that there will never be class war in the English-speaking countries. I often suspect that there is class war now! I suspect that countless employers, whether through want of thought or want of heart, use their economic power to impose upon the workers conditions which actually militate against the communal well-being. And today some Unions are seeking to impose similar conditions on employers. Such acts are, virtually, acts of war.

We are creatures of habit, and we cease to notice things to which we have long been accustomed. That is why so many of us acquiesce in industrial conditions which are so distinctly wrong that we afterwards wonder how we tolerated them. Meanwhile, the workers who live under such conditions, and are compelled to realize them are determined that they shall be put right. Shall we take the initiative in reforming them? Or shall we reverse Nelson’s policy—turn a blind eye to the signal “Advance,” and wait till after, perhaps, a long and bitter struggle, the stewardship to which we were unfaithful is taken away from us?

There can be but one answer to that question. And it is for open-minded, impartial, and public-spirited people to lead the way to avert class war and industrial strife of any description by removing the reasons for it.

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