Capital And Labor

The followinr is a paper read liefore the Present Day Club, at Dayton, Ohio, by John H. Patterson, the president f a large factory in til at city. It deals so sensibly with the grand question of capital and labor that we give it entire, believing that every thinking person who reads the Courier'will be interested : Lincoln in his first message to con gress, said : "Capital is but the fruit of labor, and never could have exlsted if labor liad not first existed." This is true, and all will admit that the question is not whether earnings should belong oxcluslvely to laIjor or to capital, but what proportkun should be given to each. We must take int o account, that while labor is not a commodity, the various kinds have a certain market value in proportvon to the ir scarcity or abundanee. "We must remember, also, that capital is torced to bear all losses and risks, which are so great in the nianufacturing line that manufacturera demajid twice the return frorn such imvestments that other capitalists require. Justice to both classes demands that capital should be reimbursed for its outlay and receive a profit proportional to its investnient, wille labor should receive that proportion of the net earnings wWch are due to it. CENTRAUZATION OF CAPITAL AXD LABOR. It is upon tnis question of división of earnings that so much dissatisfactian is feit. The discontented note the tendency to centralization of capital which lias been both the nieans and the result of progress. This centralization of capital inakes the benefits of civilization accessible tx) all. One man's capital niisjht tie sufficient to build a railroad from one village to another, but it is the combined capital of many which is required to connect the Atlantic with the Pacific and make the whole land kim. When our earth iis yielding up oil in euch vast quantities that all nattons can be supplied írom the product of one oil field, no one man can assume the immense outlay attendant upon refining and supplying it for the commerce of t'he world. There is a centralization, also, of brain power. A premium is put upcm brains and there is a Jeinand for experts in all departments of trade. Techmical education is the rule and no one lias any use for the "jack at all trades." Some cry out that a few men are growing riehier every day, and that the working classes are growing steadily poorer. There is nothing upon -wlüch to found this statement, for wages have increased all over the country. "SVhen I was a boy doing all kinds of work on a iarni, workers were paid $8 per month and toard, wliile now they are paid $19. Again, tliere are certain influences which prevent t he continuance of wealth in any one class or family. We have no laws of entail to lock up fortunes, and at the death of the millionaire his fortane is widely distributed among those who spend it lavishly, not having earned it. There is a saying that there are but tvro generations from shirt slee ves to shirt sleeves. Senator Sherman said, "I apprehend no party of the rich against the poor and tyelieve that human wants and the natural tendencies of the human race will equalize us more and more as time goes on." Students of economies recognize. as an existing fact, that communities ■where one or more capitalists live are more prosperous than those where no large fortunes are found. It seems to be ome of the immutable iaws of our existence that we cannot accumulate anything which enriches ourselves without paying a toll which benefits others in the same porportkm. Andrew Carnegie says: '-Under our conditions, the millionaire who toils on is the cheapest artiele that the community secures at the price it pays for liirn, namely, his shelter, clothing and food." Any surplus which the millionaire rnay have after supplying hlmseli and supplying his family with the necessities of life is valueless to hlm unless it is used. If he employs 1% to extend his business or invests it in any otiher enterprise, he immediately furnishes employment to others ; if he puts it into the bank it is loaned to otters to use in carrying on their enterprises. Through whatever channels his money Ilows, large numbers are enriched liesides the capitalist. WORK AND WAGES. As all employés desire the largest posslble wages, and the employer deeires the largest return for the wages paid, the difficulty is to co-operate without antagonism. It is certainthat nearly all workmen will increase the-ir daily output provided they are assured of a larger return, and I have tVnind by experience that om ployers can afíord to pay high wages provided each man turns out propor tionately more work. I also be lieve that workmen should receive Tliis inreca.se whenever posslble. not when. bilt befare they ask for it. We believe in securing the best men for any position. and prefer to choose for positions of greater responsibility those who have served the company in lower capacities ; In other words, we promote f rom the ranks. In many cases vre pay by the day and prevent this method from becoming levelling by bolding out the hope of promotion. In fixing our rates we consider in each case a man's in tegrtty, habite, ability, industry, health, knowledge of the business, condition of his bench or work room and, if he is a foreman, the kind of men under Mm- in short, everythmg that will Onable ue to fix a just rate for each man. We pay a great many by the piece work system, and in fixlng rates we seek to elimínate all guess work by timing each operation in accordance with statistics. In order that our men may not fear to increase -their output, we guárante that no reduction Wil] take place within a certaiu time. During the last few years in walch we had the syst-em in operation we have had no labor troubles. This is the more remarkable, as strikes are more common in large factories than in email ones. Our oíd idea of increasing proiits was to cut down the pay roll. This was a eliorteighted plan, for the small amount saved in this way diniinished by just so much our ability to supply those wants of our prospective customers which would net us a far larger return. It is well known that white sheep eat more than black sheep, for there are more of tiïem. We can make more by taking from our large number of customers than from a small number of employés. Our present plan of paying dividends, as it were, is to increase the pay roll. We pay twenty of the officers, in addition to their salaries, monthly dividends in proportion to monthly shipments. In return tor this, our employés have concentrated their lentire effort upon the work of convincing and supplying one million prospective customers. We thus get a sufficient return to clearly demónstrate that our methods do not spring from philanthropy alone. We have been rewarded by the iaithful, friendly services oí our ijeople, who have become a home-loving, home owning community, and have found th-at whatever benefits them benefits us, while loss to them, in any way, means a corresponding loss to us. Another method M-hich we cmploy, both as an act of justiee and to promote a friendly feeling amng all employés, is to award prizes of money and diplomas to workmen for the beet suggestioas for improvements in the manufacturing department. Xhis encourages our men to read observe and tbink, which makes them more efficiënt. Our business is peculiar and, as it is a factory and not a school, we employ only skilled workmen. "Ve make an exception in the case of our salesmen who are of necessity oibliged to prepare themselves in the agents training school. This instruction is given to them at the company's expense, in a school established by us. By paying premiums for hard work and intelligent co-operation, we maintain a high quality of production, a high quality of work, with a steadily diminisliing cost. iSelf respect among out workmen is constantly on the increase ; a large proportion of them attend church, and a general air of intelligence is taking the place of the tread-mill methods from which we suffered in our old factory. Organizatipn is our watch-word. With perfect organization, one of the greatest examples of which is seen in the Catholic church, whose chief strength lies in its organization, we have not the ideas of a few, but all the ideas of all our men, in every capacity. We accomplish this result without a superintendent, by a series of committees which increase in importance as tlicy reach the highest committee. This representation by committees prevenís íavoritism and gives each man a voice. As a further means of preventing favoritism, no foreman is allowed to employ ais relatives under him. We havo never objected to Trades Unions among our people, but have found that our best men do not always care to Joi-n them, for our practice of rewarding any increased ability satisfies their sense of justiee. WIIAT THE KMPI.OVKIi CAX DO FOR THE K.MI'I.OYË. The employers of large numbers oí' men are apt to grow apart from their workmen. Under our new eystem they grow together, and instead of strikes we have conferences. Sucli men as Carnegie, Annour and Fratt have found it expedient to establish librarles, workmen's clubs and manual training schools, and soften the harsh relations so oftm existing between the two classes. Few manufacturera can afíord to establish largo clvarities, but all may and should perrorni these email acts which are necessary to the health of their employés, such as providing proper lavatories, and well-ventilated workrooms, made clean and cheerful by whitewash and paint. The increased capacity ior work whlch the occupants will galn wlll provo a sufíiclent return. We have found that our men are affected by thelr Burroundings, and w"hen they see that the best workers receive the best rates and that they move quickly and work harder, the rest soon get into the same spirit and the whole shop takes on a more raptd pace. We have found that to accomplish the the largest aniount of work possible our men must be healthy. We therefore endeavor to teaeh them how to take care of their health. The whole office force is given systematic calisthenic exercises in the uiiddle of each morning and afternoon. When our new building is completed there will be baths, where each employé may bathe once a week, in the company's time. As a further aid to health we have given each woman in the company's employ a membership in the cooking class in this city. ïo those who do not see the conuection between the question of health aud the matter of conducting a payiug business we would gay that a healthy operative turns out more work than a dyspeptic. i WOMEN IN THE FACTORY. Many writers have said that factory work has had a bad effect upon the health of women and girls. We have succeeded in refuting this statement so far as it applies to our factory. The women begin work later than the men and leave earlier; we give them fifteen minute's recess witfa calisthenics, in the middle of each morning and afternoon, a half holiday every Saturday and a whole day's holiday once each month. They all receive six full day's of ten hours each, and earn about a dollar per day. They work in clean, airy rooms, separate froin the men, under forewomen of high character. Each department has a colored janitress, and we serve gratis each day, from three kitchens, hot coffee, tea and soup, or sonie otlier nutritious food, such as baked beans, potatoes meat, and rice. We find the average cost of these lunches to be three cents each and that by reason of them each woman does onetwentieth more work eacli day. This amounts to flve cents apiece making the gain two cents or 66% per cent. We noticed an instant improvement ia the general health of thè women ; there was less delay from sickness, fewer absences and an ability to work harder and more enthusiastically than when they ate cold food. In fact, I do not know of any privilege given to them which has proved of greater benefit to them and to the compauy. We give them rest rooms provided with cots, a liraited membership in the Women's Gymnasium, clean aprons and sleeves, and in every way consult our own interest by improving their health aud increasing their capacity for work. We have found that when hours of labor are shortened and safeguards to health adopted, persons of education and superior mental calibre are immediately attracted to the work, and it is easier to retain them after they have become skilled. It is safe to estímate that three skilled women remain with us each year who would have left our employ to seek positions in offices if we had not adopted this new policy. We estímate that each skilled worker who remains with us each year because she has no inducement to seek a better position elsewhere, nets a return of at least 2)4 per cent upon the time and money expended. CONVENTIONS AND CLUBS. We hold three conventions each year which are attended by our agents and about two hundred of the people in the factory. At these meetings, which continue for a week, we genérate more enthusiasm than could be obtained from any other single method, and the more conventions we have, the more our business grows. In addition to the Advance Club which I have already alluded to, we have an Officer's Club of twenty-two members. This is a daily convention at which social and business questions are brought up for exchange of ideas. It often has for its guests represenative commercial mep and others. A Social Club of tlie employés living near the factory is held in thelibrary three times a week on Sunday afternoons. Here the literary and social side of our employés is cultivated. We supply them with magazines and other periodicals and the daily papers, while cigars are furnished at cost. Business men, ministers and others are invited to address them. This effusion of life produces growth, enthusiasm, and the most friendly relations between the employés and the officers of the compauy. THE NEW SYSTEM AND THE OI.D SYSTEM. Our system is the new factory system and is as great an improvement over the oíd as the new High school is over the old High school. Under the old system, too rnuch merit in an employé was side tracked before it carne to the notice of the offlcers-; the work'men were nearly all eye servants who did their best only whenaforeman was watching, and those who were slow and dull did not get much aid. In the new factory, dull ones are awakened to effort by the example of others who were formerly almost as dull as themselves. Our new factory life is an educator which trains workmen to regard the factory as a fine piece of mechanism in which each individual is an important part. The intelligent co-operation required of each person.is a powerful aid to good citizenship. A Dayton manufacturer said to me : "You are making a pace for us which we cannot follow. " I replied: " It won't cost you anything to put a respectable woman over the twenty-five girls in your factory and give them clean, airy, suitable work-rooms. " We were long ago impressed witli the idea that many changes should be made in our system, but were timid in taking any steps. Many prejudices had to be overeóme before the desire to deal justly with our employés took effect. When we saw, not only that it was just, but to our own interest to adopt a system of mumutality, we gradually made the change. We learned that in order to gain unusual ends one must adopt unusual methods. We now aim for co-operation and the ■strength there is in union, and the more we strive for this, the more success we meet. It seems to us, after trying both the old and the new factory system, that in the latter lies the dos st realization of the words of Abram Hewitt, who said : " Beyond all dreams of the Golden Age will be the splendor, majesty and liappiness of the free peoples wlien, fuliïlling the promise of the ages and the hopes of humanity, they sliall learn to make equitable distribution among themselves of the fruit of their common labor.