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THE RELATION OF THE C U C T LABOR A D CAPITAL
HRH O
N
Laymen's Council of Churches of Massachusetts
Copley Plaza Hotel, November 12, 1945
Ralph E.Flanders
The s u b j e c t

of t h i s evening's meeting, in the discussion of

which I am i n v i t e d to take p a r t , . i s one which has been a matter of
grave concern to me for a number of y e a r s .

As a C h r i s t i a n , brought

up in a Christian home by parents who lived t r u l y Christian l i v e s ,
my i d e a l s and some of my impulses have been fashioned on the moral
p r i n c i p l e s of the" Bible*
On the other hand, f i r s t as a wase earner, and in the end as
an employer of labor, I have found myself controlled by c e r t a i n
r e s p o n s i b i l i t i e s which do not completely p a r a l l e l the moral influ-v
ences which surrounded my youth*

This does not mean t h a t in any

large measure the early t r a i n i n g and t h e mature r e s p o n s i b i l i t i e s are
a t swords 1 p o i n t s , though they may be in some few p a r t i c u l a r s *

The

d i f f i c u l t y l i e s r a t h e r i n the seeming discovery t h a t C h r i s t i a n e t h i c s
are not concerned with some of the important moral r e s p o n s i b i l i t i e s
of modern l i f e *
In no area of business a c t i v i t y i s t h i s lack of consonance
more c l e a r l y defined than in labor r e l a t i o r s .

I t therefore seems

very much worthwhile to discuss with you t h i s evening some of the
problems involved, to see

whether they cannot be brought i n t o

sharper focus and thus have t h e i r solution
Such is the plan of t h i s t a l k .

assisted.

In c a r r y i n g i t out i t is my

i n t e n t i o n t o present the case of t h e businessman as f o r c i b l y as
possible, r a t h e r than to c a r e f u l l y balance the statement pro and
con as between the labor and management points of view*
F i r s t l e t us have a few words s e t t i n g the h i s t o r i c a l background of labor r e l a t i o n s since the beginning of the i n d u s t r i a l
revolution.



For a hundred years or more the r e l a t i o n s between

-2employer and employee were typically conducted on the basis of the
laissez faire economic philosophy.

The industrial revoluation did

greatly increase the productivity of "*reat Britain so that a higher
standard of living was possible, "but i t s immediate result was to
permit an increase in the population wbich kept pace with the increase of productivity and, by the competition of numbers in the
working class, set limits to the share of the total production which
they enjoyed.

I t was not until after the population increase had

come under purposeful control in the l a t t e r half of the 19th Century
that this mass competition of the working population with each other
permitted, under laissez faire conditions, any marked improvement in
the lot of the working people.

Since that chancre the standard of

living among British workmen has advanced scmewhat irregularly but
s t i l l continuously.

Their present problems center around the popu-

lation expansion inherited from the early industrial area, the inability to raise food in the British Isles sufficient to feed this
population, and the consequent necessity for a large export trade to
pay for the needed imports of food and raw materials.
I t may be mentioned in passing that there is grave doubt whether
any political changes in India can do of themselves very much to
improve the lot of. the common people of that country, until population srrowth ceases to press insistently upon produc t i v i t y .
This is an introductory example which illustrates the subject
of this talk - that a problem ordinarily discussed as one of morals
between erovemine* and subject races may have material considerations
underlying them which are more fundamental.
In this country conditions are somewhat different.

Instead of

bavin < to wait until population growth was under control before
*
workers could set an increasing sh are of production, their interests



-3were to a considerable extent preserved by the opportunities offered
by the public lands available on our frortiers*

The new srene rations

had an alternative to seeking work as employees in a business*
could 20 West, and they did sro West*
*

They

The process of population

growth therefore did not hold them down as i t did in England in the
early years*

At the same time the expansive development of the

frontier offered new business opportunities as well, so that there
was a continued Increase of opportunity for the ordinary man both
Inside and outside of business*
As a result of these influences in the United States, the rise
in living standards has had an almost uninterrupted history in this
country without lone: periods of stagnation*

In fact the longest

period of marking time took place d urine the ^reat depression of
tte

1950 f s , and then at a higher general standard of living than

is to be found in any other country at any other time although, of
course, the period involved a cere at many individuals and families
in serious privation*
I t was more than a generation aero that the frontier was fully
occupied*

What has kept up our expansion since that time** The

improvement in living conditions in this century has come rrom tte
occupation and development of frontiers that are net sreoecraphJcal;
they are frontiers of science

engineering ancl industry*

Wot merely

new inventions like the automobile and the radio, and numerous items
of household equipment, but also new business manae;enc nt ideas and
techniques have constituted a frontier, which like the old geographical one, has offered us new opportunities for production, employment,
and raised standards of living*
There is no evidence that this frontier ha? yet been fully occupied or that i t s stimulating effects on our economy is wear In* away*



So far as we can see into the immediate future, i t s beneficial
effects should continue •
There are-, however, differences in the effects of the flreocrraphlcal and scientific frontiers.

The P e Graphical frontier war much
*o

more directly effective on the individual employee in connection vdtl
work opportunities and tine

wages which could be rained frcm work*

I t was also more nearly automatic in i t s action and was thus more
effective in a lalssez faire economy*

That the si Nation on the

whole was favorable is evidenced by the continued rise in the standard of living wbi le i t s influence was paramount*
The modern non-ereoorrapbieal frontiers, however effective they
may be, have certain difficulties

attending them*

They are nowhere

near so automatic, and their effects are subject to wide and sometimes violent fluctuations.

Only the weather can seriously disturb

the rate of consumption of people 11 vine: in a simple agricultural
economy, or in a more elaborate one based on agriculture.

O the
n

other hand, a highly industrial economy is subject to a number of
influences which are d i ^ i cult to control*

A o < them are speculamn ?

tion In inventories, real estate <\nd securities, the expansion and
contraction cf credit, forced liquidation and deflation, larsre
volumes of funds hoarded rather than spent for consumption or Investment, etc*
Progress is no longer automatically assured*

A high level of

profitable productive employment is no longer automatically assured*
Life has become complicated.

W have concluded * at w Mve to orab
e
e

the handles of this complicated mechanism and thus apply controls
to i t .

It is exceedingly dangerous to work these handles without

knowing what they do, and knowing what the secondary *.nd tertiary
effects may be.



To discuss this general problem of controls Is no

part of the purpose of this talk*

Let i t only be said that i t is

probably true that the technique of Tabbing and turning of tens of
thousands of l i t t l e handles is beyond the ability of the human m5nd
to master •

The best we can do is to study the effects of, and to

wisely operate, a few of the major valve bandies, the Inter-relations
of whose effects we have sane hope

of comprehending*

One of these areas of ccntrol, however, does relate to tte
subject under discussion*

Wage rates and working conditions are no

longer left to laissez faire for automatic determination*

They are

instead detennSned by negotiation in which political pressure an3
tte threat of strikes and lockouts are major determining factors*
As already indicated, i t is m purpose to s u r e s t some of the diffiy
cult? es and dangers of this process from the employer's stand point.
In the f i r s t place, the tremendous amount of time and nervous and
mental energy which has to be ejven to the subject of labor relations, comes as a disconcerting discovery to us industrialists of
an older generation*

I t is only matched by the live expenditure of

time and enerpry required for carrying on our relations with the
Federal government.

There is some hope that the end of the war and

the eventual liquidation of our war production will greatly diminish
our Government relations*
mism in the

It is difficult

to have the same opti-

labor area.

W older businessmen were brought up to crncorn ourselves to
e
the full limit of our time and powers with such subjects as purchasing, production, transportation, sales and financing*

Close

reasoning and w se action in these fields resulted in business
3
success and business expansion and was the raw material out of which
the waste earner's increased standards of living were made.

His part

in i t was on the whole not too unjustly determined by competitive




forces s t i l l acting in the early decades of this century•
The f i r s t World War, the great depression, and the second World
War, brought labor problems which had to be met and solved as
of major importance in business.

iO

actcr s

They sr e at the present moment

major factors in business success and failure, and there is nothing
to lead us to believe that their importance Js lively to diminish*
W ttereforr have to hire specialists to handle labor relations as
e
well as to manage our purchases, our production and our sales.
Periodically, however, problems get to be so pr^at that hired help
cannot reach the solutions and the major executives have to rive
themselves over to this new proup of problems.
As already said this is unpalatable.
disturbing.

I t is discouraging and

W had been taught to make and to s e l l , and to think
e

Instead about getting along with our employees, and nearly neorlectine
the problems of manufacturer and selling as new

on occasion has t o

be done, is something which the new generation of businessmen may
become acclimated t o , but for us older men i t comes as an unexpected
artl embarrassing necessity.

W had better accustom ourselves to i t ,
e

however, for i t has become a permanent element in business responsibilities.
N w for e few words as to the >*uMness p^int of view in this
o
new area of discussion and conflict.

Let m add that these words
e

come from one whose employees have chosen to deal collectively with
management and who is endeavoring to live up to the ]£bter and s p i r i t
of the situation.

The unfavorable aspects to date in m own expery

ience have been principally the heavy drain on the time and energy
o^ responsible

officials.

Jn the f i r s t place i t appears from the business sJ de of the
fence that many situations are developing wflcb will rot be solved



by discussion, but may have to pass on into conflict.
a weapon*

The stri 1 ^ is

I t is a weapon of conflict, not a tool of discussion.

lockout belongs to the same category.

The

I t used to be that the threat

of a strike was the last resort when negotia t i m s came to an impasse.
In too many instances in the present situation the vote to strike is
the first

step, not the l a s t .

Combat is assumed, not avoided.

This

is not a situation easily amenable to a real meeting of minds on the
merits of tte questions at i^sue.

The appeal is made to another

tribunal than that of justice and fair JTJdspment.
Another unfortunate tendency i s that, toward Industry-wide or
nation-wide wage and hours policy ir spite of wide variations in
conditiors.

I t is assumed, for instance, that an increase that can

be given by an industry whose labor costs ere* small compared with i t s
capital costs can be transferred without price adjustment to Indust r i e s whose labor costs are high with reference to their capital or
other n on-labor costs.

There is also the threat of applying tte

wage rates which can be paid by the rnost sue cess fill and best managed
firm in an industry to others which for various reasons c;mrot so
easily carry the load, without a price adjustment which may be either
unwise or impossible.

Another danger is that of interfering with

the plowing back of earnings into a company to expand employment
which is permitted, although to an inadequate decree, by the 194 6 tax
laws*

This policy, favorable to labor, can be destroyed by the

determination to transfer an undue percentage of the profits to the
payroll.
Not enough attention has Ven given by tcx law legislators,
Federal administrators, labor leader?, or even by business itself, to
removing some of the tax burdens n w lalid upon the job maker as
o
distinguished from the



job holder.

H w many of us realize that in
o

the great era of industrial expansion in this country, business firms
paid no federal taxes and put in anyamount of their profits to build
up production and employment; ard that likewise investors could put
mcrey into ^rowino: businesses with some expectation of personal
profit, instead of having to have almost the whole amount paid in to
the federal government?

Partly by the necessities of war taxation,

partly by the imbecilities of the immediate prewar taxation, we as a
nation expressed our determination that we would m c e i t so ha? d as
d
to be well nirti impossible far private enterprise to expand employment and the standard of living.
Organized labor in i t s negotiations can if i t is similarly
unwise demand that profits be so largely diverted into payrolls that
the expansion on wbich labor f e future progress depends will be
stifled.
In the face of these imminent possibiliti es

p

or harm and the

throwing of the negotiations at the s t a r t in too many cases into the
area of combat rather thar judicial determination, employers would be
less than human i f they did not threaten with the lockout as tfce only
weapon of defense against the brandished weapon of the s t r i k e .
There is another factor which supports a stiffened

resistence

or even a combative attitude o the part of the employer*
n

It is,

I believe, generally considered amoncr businessmen that Jr some
instances the unions have a very poor record of cooperation with
employers who have gore out of their way to cooperate with them*
believe this t o be true in the Detroit district*

I

I t has availed

nothing to the manufacturer, beatin in the union election, w o abanh
dons his position and pioes cut wholeheartedly for cooperation*
avails nothing that the head of an automobile industry should be
temperamentally disposed to cooperate on a reasonable basis with



It

-9his employees and, through union machinery, should m r e every effort
d
to do so*

In too many instances such attitudes have been interpreted

as evidences of weakness, and or^arired labor has been correspondingly unjust and outrageous in i t s actions particularly in the day to
c?ay contacts in labor-management relations, which to TO make up the marl
burdensome of the problems which the businessman faces today,
I a not saylna that business has not deserved some of the
m
di fficialtie s which now face i t .

As a whole we carrtd over too far

into the new period our assumptions that labor relations would take
care of themselves.

Ve neglected them in the recent years when they
-

had become a primary responsibility of business management.

All this

is true, but i t is also true that there is no way out alon^ the road
which sane elements of labor are at this moment foil owl n*r.
Should this discourse be quoted at a l l , i t may happen that i t
Is so quoted, by using separate passages out of their context so as
to indicate that your speaker holds a hostile anti-worker point of
view.

This is not the case.

This jj3 an ey parte presentation and

a much needed one, since on occasions of th?s sort i t is the custom
to srloss over difficulties and conflicts, and to c&ve expression to
lofty platitudes instead of facing unpleasant r e a l i t i e s .

W will
o

find the solutions to these problems more quickly i f we describe
their? r e a l i s t i c a l l y than will be the case if w avoid the r e a l i t i e s .
e
That Is the reason for the turn this address has taken.
The situation is indeed capable of solution.

Perhaps a better

way to put it is to say that ten thousand situations of this sort
are capable of ten thousand solutions.

They are capable of solution

when honest and just men meet across the table and through honest
discussion come t o just conclusions.

They ore not cnpable of solu-

tion on a nation-wide or an industry-wid e basis.



In that way i t

-10*
is difficult to find solutions other than by conflict, $id social
justice is seldom attained by that route*

I t is fortunate for Few

England employers and employees tha*- we have not often or deeply
been drawn into national labor disputes.

W have tended to settle
e

them man to man.
That does not mean that there are not nation-wide and industrywide things to be done.

I t does not even mean that the Federal

Government should not do them.

Much depends on federal administration

an3 administrative policy in maintaining conditions of business health
under which i t is possible for employers ard employees to met across
the table an^ ,1ustly devise a payment for joipt services of a l l
parties concerned, which is dravn from Inro-e onourh production so
that i t serves an increasing standard of living•

Those Government

measures to be effective must, as indicated earlier, be of the la r ere
scale sort and in fields which are properly governmental.

The Fu^ray

P i l l offers the opportunity for developing such policies and in putting them into effective use.

Let us hope that the opportunity will

rot be missed.w

hen speaking to a Christian audience and in the presence of

Christian leaders, I a quite aware of the fact that what I have been
m
saying up to this point has l i t t l e reference to Christian ethics and
ideals*

Once or twice the word "justice 11 has been used, but for the

mcFt part T have been concerned with the mechanisms of production
and distribution, the material rewards of labor, maracrerncnt and capital and with other earthly things.

That this has been so is to me at

?'V.ot a matter of crr°at interest ^nd importance.

As T indicated in

tte beginning* of t h i s talk, i t has become plain to m as I srow older
e
that the man in active business life finds himself concerned with a
set of values which may be in some eases contradictory to the



-11values vMch he has been taught, but in many more cases seem to be
off to one side of those values, which in their turn seem to be inapplicable.
Perhaps this business responsibility keeftly felt by businessmen
can best be expressed as the responsibility for keeping things Ting*
This is r-o lierbt responsibility.

I t is « responsibility

infinitely

heavier than anything of i t s kind which has devolved upon men ?lnce
the ccllepse of the R m n Empire - which, by the way, was not kept
o a
p:olno>

"Bread and circuses" did not solve their problem.

That responsibility is n w very crreat*
e
plex and delicately poised, that of i t s e l f

Civilisation is so comi t tends to ^et out of

<*ear, if crrouips of people, whether as consumers, manufacturers,worte rs
merchants or

culators behave unwisely or within certain types

of shortsighted selfishness.
Not merely must i t s i n s t a b i l i t i e s be recognised and compensated
for, but tte maintenance of i t s stricture a? rx whole i s exceedingly
important.

The very lives of those who 3ive under i t are dependent

upon the maintenance of i t s operations.

A few thousands of Indians

was a l l that this State could support In a barbarian economy.

A few'

tens or a very few hundreds of thousands was all th3t i t could support
in the sirrp^e agricultural economy of our forefathers.

This delicate-

ly poised industrial economy permits millions to live in this State
with far more of material blessings than had their pioneering ancestors, or their original predecessors, the Red Mm •
«

It i s net a matter

of purely academic concern that this complicated machinery should be
kept in rood working order.

I t is really a matter of life or death,

for if i t docs not operate* a ^odly perc^tacre of those whose lives
are deperient upon i t will perish,
sibility.



^eepinc? i t ^oingis a ^rave respon-

HxpandJns and improving i t s operations as an instrument of

-12s1 is a s t i l l greater responbiM l i t y and <n even more diffi**
cult one* This is the area in w Lf the modern businessman finds
W co
his responsibilities!!
This being the case, I think i t should be clear to those of
you concerned primarily with religion that sane sort of a bridge
needs to be built over to us materially-minded businessmen to span
the ffulf which row lies "between us*

Are oiir responsibilities real?

^rhat has Christian ethics to say about the mechanism by w^ich these
intricate operations are carried out4?

Does our field of responsibi-

l i t y relate to a natural order, while you are concerned v&th a
spiritual order?

What are the relationships between ouch a natural

order and a spiritual order?
Years aiao I read a l i t t l e book entitled, "The foundations of
Ethics11, written by a your? disciple of wjlliara Jares*

The 3 a en. he

developed is that selfishness, if sufflcieutly far-sichted, becones
idertical with wisdom and virtue.

This is an approach to the problem

of morality from the direction of the material order rather than from
divine revelation.

Does i t arrive at the same ends9

These questions as to the
have loner interested me*

roral responsibilities of modern man

I believe they have interested some other

men actively ensraered in.business*

I t may be that they areo^nt in

part for the loss of vital contact between businessmen and the churcher
I have found no definite recognition of the existence of these problems on the part of religious teachers*

T leave them with

Ralph E.Flinders
20 Pearl Street
Boston, Massachusetts
After the mretin^ w had nn informal discussion in w^ich I crave
e
a specific example of the direct inapplicability of n Christian prin.
ciple to a modern problem*




If we "turn the other cheek" or

ff

eo th>

-13second mile" in a labor controversy, w may fird oirselves not only
e
diminishing stockholders 1 profits but decreasing job opportunities.
Whether in the case of our plant or of our national economy, the
interests of tie wage earner may on occasion be bost served by a
stiff backbone behind the shirt front of management.