T

HE four principal railroad brotherhoods are made up of the engineers, the firemen, the conductors, and the trainmen, with a total membership of 300,000, or 95 per cent. of the crews of the Nation's 60,000 locomotives and 2,000,000 cars. The greatest, richest, most powerful, and most respected of these four big brothers is the Brotherhood of Locomotive Engineers - the model for all brotherhoods. The Brotherhood of Railway Firemen, which has lately been most largely in the public eye because of its demands for a wage increase on all the North Atlantic roads, learned much of its methods from the engineers' order.

All four big brothers are the teachers of all the little brothers, including telegraphers, clerks, carmen, trackmen, switchmen, and the organized shop craftsmen. The big and little brothers together comprise the great majority of the country's 1,700,000 railroad employees. All are affiliated with the American Federation of Labor, except the four big brothers. What is it that holds these men together and gives them such great power as organizations? It is chiefly money. It is the millions of dollars paid in for dues and insurance and the resulting surplus funds. The handling of these vast sums gives these unions the complexion of great business enterprises, and the funds are administered in a way that has elicited the admiration of financiers.

The millions paid into the brotherhood treasuries are used to maintain the greatest system of benevolence known to the labor world. The engineers, who organ

ized fifty years ago, have insurance policies in force amounting to $130,000,000; they have paid out $24,000,000 to injured members and heirs. The firemen disburse $1,000,000 a year in injury benefits and have $87,000,000 in beneficiary certificates in force. The conductors' union has underwritten $100,000,000 of insurance and has disbursed $14,000,000 in benefits; it has paid $1,500,000 in monthly payments to aged and disabled members and has a reserve relief fund of nearly $2,000,000. The trainmen pay an average insurance of $2,350,000 a year and have disbursed $23,000,000 in benefits.

These organizations as a whole have underwritten half a billion dollars of insurance. They have paid out altogether $100,000,000 in benefits, at an administrative cost of from 1 to 1 per cent. And in addition to reserve funds each brotherhood has a separate strike fund always at the command of the chief. The engineers and conductors each have a strike fund of $100,000; and each has further immediately available resources of a million dollars for strike expenses.

Plenty

Insurance, then, is the strongest pillar of the railroad labor organizations. of money in the treasury is the first essential of success in retaining members in oneness of aim. When a member once begins paying his assessments, his interest is so bound up in the success of the union that he must remain loyal or suffer pecuniary loss. The chiefs are thus able to exercise control over the members; and such control increases in direct proportion to the increase of the reserve fund and of insurance in force.

The possession of surplus millions gives the brotherhoods an investing power. In what is the money invested? The Erie's vice-president, Mr. J. C. Stuart, said to a brotherhood leader: "You are the trustee of a fund of your union. You have three millions in your treasury. Is any of that money invested in railroad securities?" The answer was: "Not a dollar."

"And that," said Mr. Stuart, afterward, to Mr. Warren Stone, chief of the Brotherhood of Locomotive Engineers, "was a pertinent exhibition of the confidence that railroad men have in railroad securities."

"No brotherhood could afford to invest its money in the holdings of railroads," Mr. Stone replied. "If I had ten millions to invest to-day for my brotherhood, I would not put a dollar of it in a railroad. I would not dare." It should be added that Mr. Stone, as the leader of the greatest of the brotherhoods, is the leader of railroad labor leaders. As he goes, so go all the big and little brothers.

Brotherhood leaders deny that the reason they "dare" not invest in railroad holdings is the fear of strikes. They say the reason is that they find other securities "safer."

But railroad officials assert that the brotherhoods "dare" not risk their money in railroad securities because their value may depreciate through losses to the railroad due directly to strikes. One illustration of this point will suffice. There was recently a strike of 10,000 railroad clerks on the Illinois Central, in regard to which the editor of the official magazine of the clerks' brotherhood wrote:

The Illinois Central has lost six millions in earnings in the nine months since the strike was ordered. The greater part of the loss has been due directly to the strike. Illinois Central stock continues to tumble beautifully. We may see it offered as premiums with tobacco if the strike is not soon settled.

In what, then, are the surplus millions invested? The brotherhood leader of whom I asked this question replied: "Municipal bonds."

Another safe investment, from the brotherhood viewpoint, is real estate. In Ohio, a railroad federation is investing in farms. "I believe in this farm proposition as a source of revenue for the clerks'

brotherhood," said a member of that order. "I am in favor of buying and maintaining farms, the proceeds to be used for strike expenses."

The engineers entered into landlordism by putting up one of the finest office buildings in Cleveland. It is a twelve-story structure containing, incidentally, the executive offices of the order and an auditorium seating 1,500. It cost $1,250,000, and it yields an annual rental return of $100,000, all which is devoted to helping needy engineers.

Some of the brothers actively urge that the unions exercise the power of their purchasing strength which is represented by the more than a billion dollars a year earned by the members of the orders. "The purchasing power of the union dollar rightly applied," says the journal of the carmen's brotherhood, "would ameliorate many unjust conditions. Let's put the union label where Big Business will take notice right on our dollar bills."

Such is the size of the dollar mark that is the backbone of every railroad strike movement. But where does a strike movement originate? Who starts it? The initial step is taken in the executive offices, where the chief measures his own dollar mark and notes the dimensions of the dollar mark of the various roads. It is he who knows best when and where to make a "touch." He is always the "moving spirit." Mr. E. D. Robin, counsel for the New Haven Railroad, once said of Chief Stone: "He is a feudal baron whose men follow him blindly.” Stone replied: "The door of every operating official is open to me. That is because there are seventy-two thousand men behind me who do follow me blindly."

Mr.

with 90 per cent. of the roads while the four Big Brothers have contracts with every important road, 240 in all.

The brotherhoods used their strength to secure the seniority clause in contracts, whereby the oldest man in the service of a road has preference in promotion. Chief Stone said: "Before the engineers were thoroughly organized, I knew men who had fine runs because they gave a rake-off to some official. One man had the finest limited run in the West because he kept the superintendent supplied with chickens. That's why we fought for seniority.

But sometimes satisfactory contracts cannot be readily secured, as the brothers say, "with the hat off." It is then that the leader exercises his control over his men by securing from them a strike vote. And, in a statement given to me on this subject, the chairman of the board of one of the greatest of the western roads said: "I do not recall a single instance in which a vote was taken by a brotherhood on the question of strike where the vote was against the strike."

With the strike vote in his pocket, the leader now returns to the railroad managers and in nine cases in ten gets the desired contract. The threat of strike has accomplished far more for the brotherhoods than actual strike.

Several months ago, when the roads out of New York refused to grant a wage increase to the engineers, Mr. Stone said to the railroad managers: "I believe you are making a fatal mistake. If my men vote to strike and I order them out, not a wheel will turn and New York will not have a pound of food at the end of a week. Freight cannot be transported and all industries will come to a standstill. I suggest that you reconsider your decision."

A managers' committee representing fifty-two roads "reconsidered" and again refused. Forthwith Chief Stone secured a strike vote from his men and then told the committee that unless they raised the engineers' pay, he would order out 30,000 throttlemen and not a wheel would turn east of Chicago. He declared that the strike would put all eastern cities on a starvation basis, that countless breadwinners would be thrown out of work, and

that the business world would lose millions. The matter was finally compromised through arbitration. "But the whole business was forced," said one railroad manager. "It was forced by the strike vote, the Big Stick of brotherhoodism." And as a still more convincing proof of the potency of the Big Stick, President Worthington, of the Chicago and Alton, said that, in 1911, he granted higher wages to men on his road, when the road could not afford it and hence against his better judgment, "because I was forced to, being confronted by the threat of a strike."

Again, Chief Stone one day asked Vice-president Stuart, of the Erie, why certain roads gave the men an increase of pay, in 1910, amounting to millions of dollars annually, though asserting that they could not afford it. "We had to," Mr. Stuart answered. "The men threatened to strike. We were facing a crisis."

"Then the way for me to get a raise now," Mr. Stone retorted, "is to create another crisis."

And when I asked the president of a great western road why the western lines had granted certain demands of the men for advanced pay, he replied: "Employees on certain lines demanded increases and it seemed wise to those properties to grant such advances rather than imperil the value of their securities. The demand to 'pay or we strike' came at a time when business was at its maximum and when the question had to be decided by the railroad companies whether they would stand a 100 per cent. ruin or a 50 per cent. So we granted the increase. These increases have invariably been the result of crisis, compromise, or arbitration, but always they have been forced by the leaders."

Brotherhood power, however, is not exercised solely through the leaders. Legislative boards are provided for in the constitutions of the orders and the members of these well organized boards look after the men's interests in respect to legislation in Washington and in the various state capitals. They interview candidates and office holders, whose views on labor are then imparted to the brothers with a warning as to which politicians are "foes of labor."

The railway bill of 1910, as originally

introduced in Congress, contained a clause fixing certain responsibility on organized railroad labor. The brothers did not like that clause. It was eliminated. And Senator Root, who had supported the clause, was called a "foe of labor." The official magazine of the clerks' brotherhood urged, "At the next election, if any candidates are stockholders in railroads or are foes of labor, don't vote for them." And the carmen's brotherhood magazine said: "When candidates are up for election, make them declare themselves on labor. If they are foes, go on strike on election day."

The brothers have thrown their hats into the political ring, too, to secure higher rates for the railroads.

Every railroad official with whom I talked declared that these brotherhoods should be subject to Government regulation, as the railroads are. They argued that when labor breaks its contracts with

employers and threatens the country with starvation, regardless of the public's rights, labor should be restrained by the intervention of Federal authority.

The brothers argued, on their side, that they did not need laws to make them keep their contracts or respect the public's rights. One leader said to me: "The infrequency of railroad strikes shows that we keep our contracts voluntarily and do not attempt to deprive the people of the necessities of life through stopping the wheels." This leader pointed out also that the brotherhoods have set an example for the whole labor world to follow in observing the sacredness of contract.

In the summing up, the fact remains that, however arbitrarily the power of the brotherhoods is exercised, there is less opposition to unionism on railroads, less. actual warfare, than is found in any other great industry.

O

UR aphoristic Speaker Reed first called us "A Billion Dollar Country." But the Industrial Revolution was no respecter of nationalities; and not only America, but every industrial land, is face to face with billion dollar business. And every country is meeting it in characteristic manner, determined by legal and governmental habit, and by ethnic temperament.

As America is the home of the trust, so Germany is the home of the cartell. Of these combinations there are three types. First, is the "Selling Agreement," in which a minimum price is fixed, allowing, therefore, some elasticity in price movements and not affecting the output, the distribution of business, nor the quality of the article. The industries that make finished products, like furniture or lace,

usually use this form of combination. The second and more complete type of merger is the "Sales Syndicate." Here the members pool their products and turn them over to a committee appointed by the members of the cartell. This central board or committee fixes the selling price, distributes the business, sells the product and apportions the profits. Every constituent company thus surrenders its market, but it retains its corporate individuality. This is the most popular form of the cartell, and is peculiarly adapted to the manufacture of half-finished products, like building material, pig iron, and steel ingots. The great coal syndicate and steel syndicate belong to this form.

The third type is inflexible. It embraces the "organized cartells." This is an actual consolidation of numerous companies. The German corporation law

permits many forms of organization, such as civil partnerships, commercial partnerships, etc., whose distinctions are highly technical. But, whatever the outward legal form, the "organized cartell," is the severest type of merger known to German law. And it stops just short of being a trust in our sense of the word. There is no actual merging of ownership. The Germans make a good deal of this difference, and boast that they have no "vicious American trusts." The head of one of the greatest cartells assured the public, at the time his combine was organized, "We do not wish to emulate the American trust, which destroys not only selfdependence, but all technical progress."

This is merely a distinction without a difference. For the truth is, these German cartells are just as effective in Germany, under German conditions as the American trusts under American conditions. In business the market and the price are the elements that rule; and when you have surrendered control of your limited market, and given up the right to fix your own price, there is little in the plea of technical ownership. Nor are the cartells' methods any milder than our trusts' methods. Take, for instance, one of the greatest of these cartells, the "Steel Syndicate,' organized out of a pooling of steel interests about ten years ago. It gradually drew into its circle all the great steel manufacturers excepting Krupp and the Phoenix Works. When Krupp got a guarantee of the share of the business he demanded, he entered the combine, and "Phoenix" remained the colossal "scab" of the German steel industry. Then the syndicate got busy. Pressure was brought to bear on the banks, which are very powerful in Germany, and the banks put the weights on the stockholders, and the stockholders put the thumb-screws on the directors of "Phoenix", and in the financial torture the steel giant writhed into the Combine.

What is the attitude of the Government toward these all-embracing cartells? Here we must inquire into the imperial policy as to railway rates and the tariff, as well as into the laws and their adjudication by the courts.

But first of all, let me assure the reader that the word "monopoly" has no terrors for the German. The policy of the German Government is to stimulate industry, not to regulate it. The key to the German trust situation is the ambition of the Emperor to fix his "place in the sun."

With this in mind, let us begin with the protective tariff. The German tariff policy puts a duty on food stuffs and manufactured goods, and leaves raw material on the free list. The duties are not so high as those of the American tariff but they are high enough to protect! The tariff law is the resultant of two opposing forces: the landowner, especially the feudal landlord, on one side and the manufacturer, especially the great manufacturer, on the other. The landed proprietor wants a duty on foods and grains. to raise the price of his products, the manufacturer wants a duty on manufactured products to raise the price of his output. But the manufacturer prefers cheap food, for it lessens wages, and the farmer prefers cheap clothing and machinery, for it lessens cost of production. The tariff act fairly satisfies both. It establishes a minimum grain duty, and authorizes commercial treaties on a preferential basis. So there is a political union of the big farmer and the big manufacturer for mutual profit.

In 1903, the Department of the Interior began an investigation of the cartells with the clearly avowed purpose, not of eliminating them, but to discover if further laws were desirable for their regulation. This inquiry, which lasted three years, and was conducted in the painstaking German manner, reached the general conclusion that no new legislation was desirable, and that, while great industrial combinations have some disadvantages, they are more than offset by their advantages, and that neither the interests of private individuals nor of the country are jeopardized by cartells. This remains the official attitude.

The Government has an opportunity to carry out practically its policy in the running of the railways. In Germany all the railways, as well as telegraph and telephone lines, are owned and operated