CHAPTER VII

THE SPIRIT OF THE CORPORATION To one interested in social and industrial questions a tour over the vast properties and plants of the United States Steel Corporation can hardly fail to be of great educational value. It has been the writer’s good fortune to be able to make such a tour on more than one occasion. He had expected to be, and was, impressed by the various processes whereby iron ore is converted into steel ingots and then into rails, tubes, structural shapes, plates, bars, wire, nails, tin plate, and other products; by the monster machines used for loading and unloading ore; the blowing furnaces, pools of molten metal; the great rolls through which the red-hot steel is passed on its way to becoming a finished article of commerce; the mining of coal from the bowels of the earth, and the thousand and one other sights of what is probably the most spectacular of all industries. But the more lasting impression was made not by the mechanical apparatus but by the human factor, the manner in which the vast human machinery that makes the Corporation was handled; the organization that made it possible for an army of more than a quarter of a million men to work in complete harmony and to a single end. In a word, the spirit of the Corporation. As one becomes more and more familiar with the great company’s activities at first hand, more and more does it become plain that the entire organization is permeated with this spirit. From Judge Gary, its chairman and chief executive, and James A. Farrell, its president, who directs the manufacturing and commercial operations, down through the heads of the various constituent companies, and so through the subordinate officials, through those whom we may call the non-commissioned officers of the steel army, the foremen and mine captains, and finally among the men, both skilled workers and common laborers, there is evidence nearly everywhere of a universal sentiment of loyalty, of personal interest in the fortunes of the big company and of the will, on the part of each man, to give the best in him for the general result. The above statement was originally penned six or seven years ago, after the writer’s first tour of the Corporation’s plants. Since that time the world has seen a general upheaval of labor. The Corporation itself has had to fight a great strike, and it would therefore be natural to suppose that the spirit of the Corporation had been adversely influenced during these trying years, but a recent visit to the Corporation’s plants did not bear out such a presumption. Rather, it left the impression that in spite of general labor unrest and notwithstanding the efforts of labor leaders to destroy it, the spirit of loyalty and coöperation is still strong in the great mass of the workers. What is the reason for this spirit? How had it been possible to leaven with it so great a mass of men of different nationalities and varying degrees of intelligence? An excellent answer to these questions was furnished by one of the men, not one of the executives or operating heads, but one of the rank and file. He said: “In the Steel Corporation the man who gives gets. Question those who are in the higher positions, who are drawing big salaries, and you will find that they all worked their own way from the bottom. Several of the men holding important jobs, now my bosses, I knew when they held little ones, and in every case I was satisfied that the advancement they got they fully deserved. I don’t believe that there is a single official of the Corporation, or of any of its subsidiary companies, who got his job through pull. Hard work is the only key to success with us, and it is a sure one. In brief, I feel bound to give this Corporation a square deal because I know that it will give me a square deal.” A square deal--that is the secret of the Corporation’s spirit. The desire for justice, for fair and full recognition of fair and full service, is deep grounded in every man, and the management of United States Steel, by giving each worker the assurance that he will get just what is his due, has secured for itself the entire coöperation of most of its employees and has, as a result, an organization that probably could not be equalled elsewhere in the industrial world. The Steel Corporation is a true democracy. No position in it, however high or responsible, is beyond the reach of any employee who proves his ability to handle the job. Farrell, now president, started as a laborer in a wire mill. The late Thomas Lynch, for many years head of the Frick Coke Co., handled a pick in the coal mines of that concern. Charles M. Schwab and William Ellis Corey, two former presidents of the Corporation, both started from the very bottom, as did Alvah C. Dinkey, one-time head of the Carnegie company, and a number of others. Even Gary, although he did not become connected with the steel industry until in middle life and after he had made a marked success in the legal field, was not the son of a wealthy man, and won his way to fortune by hard work combined with unusual business ability. There is no open sesame to honor and advancement in the big company, nor for that matter in the steel trade as a whole; the keys to success are ability plus energy. “Nor could it be otherwise,” said one of the men who had himself climbed the ladder; “in steel making harmonious team work is essential to good results, and the natural leader rises to the top by the general recognition of his fellows.” Efficiency, that supreme factor in large output and big profits, has become a fetish in industry in recent years. In its final analysis, “The Spirit of the United States Steel Corporation” is efficiency, not applied merely to the mechanical processes of manufacturing, but to the human element behind these processes; the efficiency that abides in a healthy, well-housed, and contented workman. The Corporation has always taken a keen interest in matters affecting conditions of labor. It has lent its influence, its money, and the time of its officials to better these conditions, to provide more attractive homes and more sanitary and healthful conditions for its men, better educational facilities for their children, and wholesome amusement for all. For itself, the big company expects the benefit from the resultant increased efficiency and loyalty. For the worker, the most important gain is added self-respect. George G. Crawford, president of the Tennessee Coal, Iron & Railroad Co., says on this point: “Summed up, the end of all social betterment work is the inculcation of self-respect. The worker possessing this attribute is worth more to himself, to his employer, and to society generally, than the man lacking it. Without self-respect, he remains a common drudge, his value at best stationary, but more likely receding. With it comes ambition and energy, and it is only the short-sighted employer who does not set high store on these qualities and encourage their growth. The lowest kind of labor is always to be had, but the men with ambition and the will to make good that ambition, the men of real value to themselves, are not so easy to find--and they are many times more necessary!” Mr. Crawford pointed out that many young men who might be marked out for advancement in the steel industry, where their energy and ability would be quickly recognized and rewarded, prefer to go into offices or stores as clerks, although the field of advancement there is much smaller because natural conditions in a steel mill or coal mine, unless mitigated by the efforts of the employer, were such as to injure their self-respect. By surrounding living conditions in the industry with those things that make for clean, decent manhood such men would be attracted and the employing corporation would thereby open to itself new fields for recruiting to its organization the highest type of men. The work done by the Corporation in making conditions at its plants more safe and sanitary, in endeavoring to improve home conditions among its workers, in providing better educational facilities for their children, and so on, will be detailed in another chapter. Any official of the Corporation or of such concerns as have worked along similar lines will tell you that the installation of these helps to better living is plain, practical business. That the gain in efficiency pays many times over the outlay involved. They studiously deny altruistic motives. But the observer who has an opportunity to become familiar with their activities can hardly help arriving at the conclusion that the men who engage in this work for the improvement of working conditions usually become engrossed in it for its own sake. That the human side of the work, deny it as they will, eventually and inevitably comes to occupy the chief place in their minds. [Illustration: “Drawing” Bee-hive Coke Ovens] Under the Corporation’s stock subscription plan many thousands of employees have become stockholders of the great company. It has been suggested by those who see nothing but menace to the workers in every action of a big corporate enterprise, by those to whom the very word “corporation” is anathema, that this plan had for its real object the subjugation of the worker by inducing him to invest part of his wages in the securities of the employing company and then demanding from him unswerving obedience; enslaving him by holding over his head the fear of the loss of his investment. It has been claimed that the plan was a master stroke to give the Corporation the whip hand in the event of a strike. It is, of course, impossible to argue motives, but the plain facts are that the plan has not worked out this way. [Illustration: “Pushing” Coke in By-Product Oven] [Illustration: The Other Side--Coke Falling into Car Two Views of Modern By-Product Oven] Far from instilling the spirit of fear into the men, it is noticeable that stockholding employees regard themselves, and rightly, as owners in the vast enterprise of which they are a part, that they feel a genuine interest in its welfare and work wholeheartedly to further its interests. They take a pride in the Corporation that is very real and apparent and it is not strange that this should be so. If the Corporation designs to make its workers subservient it is ipso facto defeating another great end it is unquestionably striving for--efficiency. Because self-respect and servility are implacable enemies and cannot exist together. The offering of stock to employees on attractive terms is merely another efficiency measure. Each employee who is a part owner in the business works for more than his wage. “His heart is in his work and the heart giveth grace to every task.” Moreover, the plan encourages thrift, and every employer knows that a thrifty worker is more reliable than his spendthrift brother, less prone to the inefficiency induced by financial worries. Finally, the having of a stake in industry and through it, in the country’s prosperity, makes a man a better citizen and increases his independence and self-respect. If the subject of self-respect appears to be harped on to some extent, it is because it is of paramount importance, its influence affecting not only the worker and his employer, but the whole community. If the writer were asked to sum up in a few words what the Steel Corporation has done for industry, these words would be: It has exerted an enormous influence in helping the worker, the common laborer, to become a self-respecting citizen. The tangible gain to the Corporation has been enormous. The intangible gain, although it cannot be measured, has almost certainly been many times as great. The management of the big company realized that the workers’ rights to a decent life were fully as important as the rights of capital, and that more, both in mental satisfaction and in profit, was to be gained from a recognition of these rights than from their denial. Perhaps, too, it saw that sooner or later the day would dawn when the worker with his hands would demand fair treatment, and it had the foresight and the courage to hasten the dawn of that day. In the matter of wages the Corporation’s course has been in entire harmony with its general policy toward the worker. Since its organization in 1901 it has many times, and always voluntarily, increased wage rates, and in doing so it has set a lead which other steel companies have found themselves forced to follow. Only once has it ever reduced wages and then but a small amount and only after the dividend on the common stock had been eliminated. The wages were soon restored and frequently thereafter advanced. Its principle has been that capital and labor both have important rights in the financial results of industry, but that labor is perhaps more directly concerned and should therefore be the last to suffer in times of stress. Since 1901 the average wage rate of the steel worker has been increased approximately 237 per cent. and this increase has been due almost entirely to the Corporation’s stand on this question. Any one who doubts this has but to ask the competitors of the big company to be convinced. In 1911, when steel prices were at an unprofitable level and business was slack, the heads of more than one independent company expressed the opinion that a reduction in wages, what they called the liquidation of labor, was necessary, even imperative, but that they were restrained from attempting this liquidation while the Steel Corporation continued to pay its men the old rate. They said in effect: “The United States Steel Corporation boosted wages to the present high level. Let it take the lead in lowering them.” But the Corporation refused. Instead, with the first signs of an improvement in business, it gave wages another boost. Again in 1914, in the face of the worst period of depression in years, and with world industry demoralized as a result of the outbreak of the European war, and in spite of the fact that the Corporation had been compelled to forego the payment of the dividend on its junior stock and was not fully earning its preferred dividend, its management refused to let the worker suffer. So strong was the sentiment throughout the trade at this time in favor of the liquidation of labor that a wage cut was looked on as not only justified, but inevitable, and it is generally understood that even in the Corporation it was only the insistence of Judge Gary that prevented its occurrence. At the present writing, world industry is going through a process of deflation from the high prices induced by the war. In some instances the effect is already visible on labor. Cotton mill workers in some parts of New England have themselves suggested a decrease in pay to keep the wheels of industry running. In the steel trade costs are admittedly high and wages constitute the chief factor in costs. But if one may conclude from Judge Gary’s public utterances in recent months the thought of reducing wages at present is far from the mind of the Corporation’s management. A liquidation of labor may occur later, but if it does, it is a reasonable assumption that, so far as the Steel Corporation is concerned, it will not take place until living costs have been at least sufficiently deflated to make the new real wage of the worker as distinct from his money wage, at least as high as it is to-day. Average wages paid by the Steel Corporation to its employees during the past eighteen years have been as follows: 1902 $716.88 1903 720.08 1904 677.18 1905 710.78 1906 729.86 1907 765.18 1908 729.44 1909 775.77 1910 800.95 1911 819.85 1912 856.70 1913 909.50 1914 905.36 1915 925.06 1916 1,042.41 1917 1,295.87 1918 1,684.58 1919 1,902.13 1920 (partly estimated) 2,169.00 Although the average wage in 1914 was some four dollars less than in 1913, the average day wage to the worker, exclusive of the administrative and selling cost, was $2.88, compared with $2.85 the previous year. This is significant as indicating the policy of the Corporation to equalize as much as possible the amounts paid to different classes of workers. In instituting advances, it has always been the lowest classes of labor that have benefited most. The workers themselves have testified to satisfaction with this policy and their recognition of its essential justice. The Steel Corporation has been subjected to occasional attacks because of its attitude toward labor unions. It neither encourages nor approves unionism. It does not contract with unions as such. It stands for the open shop. As it is plain that this biggest of all employers has not sought to crush the worker, that it has, in fact, done much to make his lot better and brighter, the question may fairly be asked why it is opposed to dealing with organized labor. The reason is not far to seek. Unionism is opposed to efficiency, it destroys the _esprit de corps_ that is so important in getting the best results from a large body of men. It prevents promotion according to merit. In its very essence it is antagonistic to the employer; it sets labor and capital into two distinct and constantly armed camps; it would make war between capital and labor. And the management of the Corporation believes that the only workable solution of the whole industrial problem is to bring labor and capital into friendly coöperation, to give labor a part in the earnings of industry, making the interests common. This cannot be accomplished in a hurry. A movement of so vast a magnitude must necessarily take time. But had the Corporation’s employees been organized it is doubtful if the betterment of conditions of its workers, and consequently of the steel workers of the country, would have progressed as rapidly as it has. The labor union, if used to help the oppressed worker, is unquestionably a beneficial factor in industry. Used as it too often is, to promote the selfish interests of its leaders, and to impinge upon the rights of the public at large, it is just as surely a great evil. The logical result of union labor as preached by its principal exponents is to cripple initiative, and to oppress the worker who prefers to stand on his own feet. And, in America at least, the majority of the workers are of this independent type. And in maintaining its policy of the open shop the Corporation has been fighting the battles of this class of workers. The writer has tried to show that loyalty and coöperation permeate the United States Steel Corporation. That it is the result of the endeavor on the part of the big company to give to the men who make up its organization absolute justice, the square deal; its effort to make the worker, even the poorest, an independent, self-respecting citizen, and to give to every man in its mines, mills, offices, etc., an opportunity to share in the profit derived partly from his efforts. All this to promote efficiency, the “spirit of the Corporation,” to increase the value of the worker to himself, to his employer, and to the community. He believes that the facts justify the statement made in an earlier chapter that the organization of the United States Steel Corporation was the greatest step that has ever been made toward the highest form of socialism.