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think, for themselves, threw difficulties in their way; and they looked that way for no other reason than because they could glide gently down the stream, without considering, perhaps, the difficulties of the voyage back again, and the time necessary to perform it in; and because they have no other means of coming to us but by long land transportations and unimproved roads." This danger was averted by the building of the Cumberland Road, the introduction of steam navigation on the Ohio, and the completion of the Erie Canal. Later it looked as if the use of the Mississippi and other natural avenues of communication would link the Middle West more closely to the South than the northeastern states, thus giving the South a preponderant influence in the inevitable struggle over slavery. This problem, however, was solved by the railways, which, unlike the rivers, ran east and west rather than north and south. The railway was thus a strong factor in the preservation of the Union. And since the Civil War, Western settlement has followed the railroad. It has been the great pioneering agency of the last half century, and is entitled to as much credit as the public land policy for the rapid settlement of the West.

In the development of our transportation facilities, however, the State has been from the very first an active partner of private enterprise. Not only has the State built roads, canals, and railways of its own, but it subsidized the private companies which engaged in similar enterprises, with prodigal liberality. Of the total state debts-$170,806,187 in all-contracted prior to 1838, $60,201,551 were chargeable to canals, $42,871,084 to railways, $52,640,000 to banks, $6,618,868 to roads, and $8,474,684 to miscellaneous objects. After the panic of 1837 there was little direct construction by the State of internal improvements, but national, state, and local governments vied with one another in assisting private companies by exemptions from taxation and by grants of land, money, and credit. How much these subsidies amounted to we do not know, but the aggregate must have been enormous, as appears from the statistics of land grants. "During the twentyone years between 1850 and 1871, at which time land grants were discontinued, more than 159,000,000 acres were placed at the disposal of railroad corporations by the federal government and 55,000,000 by the state governments." 1 In their origin and genesis, therefore, as well as in their essential nature, the railways are quasi-public institutions.

The Labor Movement. — In the preceding pages we have seen how capitalistic industry under a régime of free competition passed from an earlier period of cut-throat rivalry to a later period of combination amounting in many cases to monopoly. A similar phenomenon is discernible in the labor movement. At the beginning of the nineteenth century there were probably less than a dozen

1 Cf. Bogart, Economic History of the United States, pp. 195, 308, passim.

trades unions in the United States, and we actually know of the existence of only one. Between 1825 and the panic of 1837, however, they multiplied rapidly, and efforts were made to unite the scattered "locals" of separate trades into broader national unions, and to confederate the unions of different trades into municipal and district federations. These efforts were only partially successful, however, and it was not until after 1850 that permanent national unions were established, and not till the organization of the Knights of Labor in 1869 that a fairly permanent national federation was created. The Knights of Labor reached the zenith of its power about 1886, and since the panic of 1893 its place has been gradually taken by the American Federation of Labor, with which most American unions, except the Railway Brotherhoods and the socialistic unions west of the Mississippi River, are affiliated. In 1893 the membership of the American Federation of Labor numbered about 250,000. By 1906 it had grown to approximately 1,444,200. These figures give some idea of the strikingly rapid growth of trades unionism in the last fifteen years. As the membership of the American Federation of Labor is usually understated, and as there are probably from 500,000 to 700,000 members in organizations not affiliated with the American Federation, we conclude that the aggregate membership of American labor organizations at the close of the year 1906 amounted to about 2,300,000 persons, mostly men.

There are thus at least five periods distinguishable in the history of American trades unionism: the germinal period, 1789-1825; the revolutionary period, 1825-1850, so called because of the close connection in this period between trades unionism and more radical reforms such as socialism and coöperation; the period of nationalization, 1850-1865; the period of federation, 1865-1893; and the period of collective bargaining, 1893 to the present time. We speak of the present epoch as the period of collective bargaining because it is only in recent years that employers and the general public have recognized that the trades union is here to stay, and must be regarded as an irrepressible, permanent institution with which many employers of labor must bargain, whether they like it

or not.

The avowed aim of the trades union is a complete combination of all the workers in a given occupation or industry. The Brotherhood of Locomotive Engineers, for instance, probably counts among its members more than 90 per cent of all the locomotive engineers in North America, although there are few trades which are so completely organized as this. With the passage of time, moreover, the trades unions have made increasing use of the monopolistic principle of the closed shop - the principle which leads union men to refuse to work with nonunion men, and which finds expression in the trades-unionist's new commandment: "Thou shalt not take thy neighbor's job." Very recently several authoritative court decisions have held that labor combinations, particularly national or international combinations, are contracts or agreements in restraint of trade, and as such are illegal under the federal or state anti-trust acts. This is but official recognition of the fact that the forces which have led to the rapid development of trades unionism since the Industrial Revolution are the same forces which explain industrial combination and consolidation. The anti-trust acts need amendment: not all combinations in restraint of trade, but only unreasonable combinations, should be prohibited. The development of powerful combinations in the labor world has engendered a counter movement among the employers, which expresses itself concretely in the modern employers' association. Such organizations are not new; we have record of such an association among the master shoemakers of Philadelphia in 1789. But in recent years these associations have become permanent, formal, and aggressive. They fight the labor organizations with their own weapons, matching the lockout against the strike, the black list against the boycott, and the "labor bureau" against the "unfair list" with which the reader of trades-union journals is familiar. Most of the employers' associations, like most of the trades unions, have associated themselves for common action in a large national federation, the Citizens' Industrial Association of America, with which, in December, 1903, there were affiliated sixty national employers' associations, sixty-six state and district associations, and three hundred and thirty-five local or municipal associations of employers.

The bitter conflict between organized labor and organized capital has forced the State, in the interest of industrial peace, to inaugurate "Wage Boards" and Boards of Arbitration and Conciliation. Some of these, such as the New Zealand Court of Arbitration, are empowered to enforce their awards upon employers and employees; while others, like the Canadian and some of the American State Boards of Arbitration, have no power to settle disputes authoritatively, although they may make "compulsory investigations" and publish their finding as to the equities of the case. These and similar topics, however, are reserved for more detailed discussion in a later chapter.

State Regulation of Industry. The growing interference of the State in the conflict between capital and labor brings us naturally to the general subject of the State in relation to industry. When the American colonies were planted, mercantilism was the dominant political philosophy; but, as we have seen, mercantilism gave way to a philosophy of individualism in the eighteenth century, under the combined influence of the reaction against the English Navigation Acts, the natural antipathy of a frontier community to legal restraint, the philosophy of Locke, and in a minor degree the teachings of the French physiocrats. The triumph of individualism, as a philosophical system, came at the critical period when our State and federal constitutions were in the making, and it thus became intrenched in the organic law of the nation, giving constitutional sanction to the doctrine of laissez-faire, and establishing a constitutional guarantee of freedom of contract, in accordance with which adult men were left "free" to work as long as they "pleased" (or were compelled), for whatever wages they were "pleased" (or forced) to accept. Under the influence of these doctrines, for instance, our courts have annulled such wholesome regulations as laws prohibiting payment of wages in store orders, and statutes limiting the hours of labor of men in bakeshops, or other exhausting occupations. Decades of experience have amply proved that the average wage earner is too weak to protect himself against many evils; but our constitutional law has made it exceedingly difficult for the State to protect him. Fortunately, however, the American people have a fashion of bend

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ing their constitutional law to fit the facts, not blinding themselves to the facts by worshiping the law; and in recent years the Supreme Court of the United States has progressed so far as to sanction a state law restricting the hours of labor of men in underground mines and smelters, although many of the state Supreme Courts are far less enlightened.

It is impossible to show in detail how the free trade and individualistic tendencies of the Revolutionary period gave way to a constantly growing programme of State interference. The doctrine of laissez-faire was never adapted in its entirety, and year by year we have moved farther and farther away from it. State interference began with the adoption of a tariff act in 1789, "for the support of the government, for the discharge of the debts of the United States, and the encouragement and protection of manufactures"; reached almost a maximum in the Embargo Act of 1807; showed itself in the policy of internal improvements and State aid to turnpike, canal, and railroad companies; brought us the great mass of labor and factory legislation which has been adopted by so many states since the Civil War; led in turn to the Interstate Commerce Act of 1887 and the Sherman Anti-Trust Act of 1890; and finally culminated in the new Interstate Commerce Act, the National Meat Inspection Law, and the National Pure Food Law. Excessive competition among laborers, which forced them to accept work under conditions destructive of physique and morals, has led to the factory acts, prohibition of child labor, and limitation of the hours of labor of women; excessive competition leading to the adulteration of products and their manufacture under insanitary conditions has given us the Meat Inspection and Pure Food laws; excessive competition among corporations, leading to combination and oppressive monopoly, has brought us the anti-trust acts and regulation through state and national commissions. Whether the individualistic character of industrial society endures or disappears, individualists and socialists alike are now agreed that the State must interfere. As a prominent English statesman expressed it, "We are all socialists now," although he merely meant by this statement that the passive theory of government has been wholly discredited.

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