Baer Explains Operator Position

“Echoes from the Recent Pennsylvania Coal Strike, on Behalf of the Mine Owners and Operators”


George F. Baer, President of the Philadelphia & Reading Coal and Iron Company

Cassier’s Magazine, 23(April 1903): 727-735

I think there is, from lack of thought, much confusion in the minds of many people as to the rights, powers and duties which properly belong to industrial organisations, including both capital and labour organisations. In general, no one denies the right of men to organise for any lawful purpose; but the right to organise, and the power of the organisation when organised, must still be governed and controlled by the general law of the land under which individual and property rights are protected.

We constantly hear the phrase: "Capital organises. Why may not labour organise?" As if this settled the problem. But capital cannot organise for an illegal purpose. Organised capital is subjected to sharper scrutiny than any other kind of organisation. A possible violation of individual rights is at once seized upon by the public as requiring some new and drastic law, if existing laws are not sufficient to meet public expectations. For example, may capital organise in such a way that one manufacturer may employ pickets to surround the establishment of another competing manufacturer to prevent ingress or egress to the works, or interfere with the sale of its commodities by intercepting its customers, or interfere with the transportation of its products and the orderly conduct of the rival business? We concede to organised labour the same rights that we claim for organised capital. Each must keep, within the law. There cannot be one law for citizens and corporations and another law for labour organisations.

The lawlessness in the coal regions was the direct result of mistaken theories of the rights of the Mine Workers. It will not do to say that the leaders have not encouraged violence and crime. It is true, no doubt, that they did not directly advise it. They at times counseled against it and issued paper proclamations calling for peace, and at other times they have expressed regrets for it. Nevertheless, they are legally and morally responsible for the situation they created, and from which this violence and crime resulted.

They complain bitterly of the decisions of the legally constituted courts whereby riotous conduct, unlawful destruction of property and interference with legal rights of citizens are simply restrained. They even demand of their political supporters the passage of laws which will place trades unions above and beyond the customary and the ordinary jurisdiction of the courts. They blindly refuse to see that the peace and prosperity of the community and the rights of the citizen can be maintained only through the supremacy of the law and its just and equal administration. The overthrow of the civil power, whereby whole communities are at the mercy of the mob, so delights them that they cry out lustily against the soldiers who are sent to protect life and property. Why this denunciation of courts, of police, and of soldiers, if the measures to support a strike are to be only peaceful and persuasive? The law is a terror only to evil‑doers. In the exercise of lawful acts we need fear neither courts, police, nor soldiers.

We have been told time and again how boys to the number of over twenty or thirty thousand in the coal regions have been admitted to membership in the Mine Workers' organisation; how foreigners, without reference to the fact as to whether they are or are not American citi­zens, -‑foreigners of many nationalities and speaking diverse tongues, -‑with the boys, compose a majority of this organisation. These boys, like most boys, have not been disciplined to reverence law and order, and we do not expect boys to behave very well unless they are under strong restraint. The foreigners, many of them, have been governed in their old homes by stringent police regulations, The law, in the person of a policeman or a gendarme, confronted them everywhere. They have come to this country with confused ideas of what free government means. The distinction between liberty regulated by law, and license, is practically unknown to them. Therefore, when a powerful organisation of which they are members, led by men who are upheld and encouraged in a respectable community, tells them that. Force may be used to compel men to join their union, that scabs should be ostracised, that they are given power to suspend operations at a colliery where the employees do not join the union, is it not a direct invitation, -nay, more, a command to commit the violence and crime that characterised the reign of terror in the mining regions?

Men who teach these false doctrines, pose as they may, are inciting to riot. Every day they saw the results of their work in outrages against persons and property. They made no reasonable effort to restrain the violence. They even ease their conscience with the fallacy that until a man is convicted in the courts he is guilty of no crime, and, therefore, they can shut their eyes to what is going on around them.

The legal responsibility they incur gives them little concern. They assume that juries selected from among their own members or sympathisers will not find them guilty. They will not become incorporated for fear of civil suits resulting in heavy damages. Still, the moral and legal responsibility exists, even though there is at times no adequate remedy for its enforcement.

We do not object to our employees joining labour organisations. This is their privilege. But we will not agree to turn over the management of our business to a labour organisation because some of our employees belong to it. Our employees, union and non‑union, must respect our discipline. It is essential to the successful conduct of our business, and is peculiarly necessary in mining operations to prevent accidents. We must be left free to employ and discharge men as we please. If any of our officers abuse this privilege, then it is our duty to hear the case and review the action so that substantial justice may be reached. But we do not admit the right of an organisation, the moment we exercise the power of discipline, to coerce us, before inquiry, by strike, or interference with our management.

The employer ought, I think, to meet his employees personally or a representative of such employees, provided such representative acts only for the particular employees and does not act in the interests of persons who are not employees of the particular colliery. To illustrate, --in a controversy as to conditions existing at one colliery, the employees of that colliery must limit their demands to the particular conditions affecting that colliery, and if they see fit to be represented by some one acting as their attorney, ‑‑we do not care what name they give him, he may be president, or a vice‑president, or anything else, ‑‑he must be limited in the same way, he must not inject a theory as to what would be fair towards employees of another company a hundred or a thousand miles away.

It is on this account that we have objected to the interference of the president of the United Mine Workers in our business. If he simply represented our own employees and was acting exclusively for them, there could be no objection to dealing with him. But he represents an organisation having for its object some Utopian scheme of uniformity of wages and conditions in the mining of coal all over the United States. And instead, therefore, of considering only the questions at issue between our employees and ourselves he is considering a general proposition which relates to all the coal miners dwelling under the sun. The fact that the miners' organisation does restrict the quantity of coal a man may mine is clearly proven. It is not only proven, but it is defended as a right. Restriction on production, limiting the quantity a man may produce, seems to be based on the theory that this is essential to give employment to the many. The illustration given by one of the miners' attorneys was this, that if there is only a loaf to divide, you must divide it equally and give no one man more than his just proportion. The illustration is fallacious in this, that it is not germane to the subject. Labour is not a division of an existing thing. It is a power which produces things. Labour is not the loaf, but that by which in various forms the loaf is produced. Any restriction, therefore, on labour must necessarily reduce the number of loaves which are essential to feed the hungry.

To limit the right of exertion, of work, is to limit production. It is not only a wrong done to the individual, but it is a violation of sound economic principles, and, therefore, an injury to society. The ultimate effect of restricting production so as to divide employment and increase wages, must be to keep on dividing the wage fund as often as new men seek employment. There must be a limit to an increase of wages, but there can be no limit to the increase of workmen. The process must inevitably lead to the destruction of the industry or the reduction of the wages of every man to a sum barely sufficient to sustain life. Wages can increase only when each individual is left free to exert himself to his fullest capacity, thereby creating which, in turn, gives new employment, --creates demand for commodities and demand for workmen to produce them. Only in this way can the wage fund be increased.

The country is agitated over the possible dangers to the common welfare by combinations of capital. These combinations, or rather consolidations of many interests into one common company, are all based on the theory that they will result in greater economy, that the cost of production will be decreased, and that the public will be benefited in many ways, especially by regularity in production, stability of employment, and reduction in cost to the consumer.

The criticisms as to over‑valuation and capitalisation are financial questions, and only indirectly affect the public economic questions. If men see fit to invest their money in watered securities, that is their business, and the public is not responsible for ultimate losses. Economic laws will in the final windup work out the financial problem. But the public are rightly anxious as to the effect on the consumer.

All free men oppose monopoly. It is instinctive, and the possibilities of it alarm us. The mere fear of it suggests all manner of devices to prevent it. It is unquestionably true that if the recent combinations of capital, instead of proving a benefit to the public, as their organisers honestly believe, shall prove detrimental and result in creating monopolies guilty of extortion and oppression, legal and peaceful remedies will surely be found to curb their rapacity and oppression. But these large industrial combinations produce only things which are desirable, not absolutely necessary to sustain life. If the price of steel or any other like commodity is too high, or its production is stopped by striking workmen, for the time being, because of low wages, or by owners because of low profits, the public will be put to temporary inconvenience, but it can cause no general suffering.

But if we are over‑anxious as to the probable effect of these mere possibilities of monopoly (I say possibilities, because it is not probable that in a rich, energetic country like ours any such industrial monopolies can be either created or maintained) what must be the measure of anxiety: as to placing the control of the fuel of the country in one organisation, and that, too, an organisation without capital or responsibility?

Fuel is the life's blood of our age. It is as essential as food. Food production can never be monopolised. However low the wages and small the reward of the tillers of the soil, the labour reformer has not succeeded in controlling farming. The farmers know no restriction in hours of labour.

But what of fuel? Without a dollar invested in property, the fuel of the country has been absolutely monopolised. Not a ton of coal could be mined in the United States without the consent of the United Mine Workers of America unless it was mined protected by guns and at the risk of destruction of life and property. Is this a serious situation? The dangers from combinations of capital are mere possibilities, but the results of the fuel monopoly are actual.

We are not left to conjecture. The facts are before us. The United Mine Workers have created a monster monopoly. They did shut up the anthracite mines for more than five months. They taxed the bituminous labourers and all labourers over whom organised labour had control to support the strike. The owners of bituminous mines, some in self‑defence, others in the hope of gain, contributed freely to the strike fund. The public contributed freely. More than three million dollars were raised to carry on what they called the industrial war. With what result? The price of both anthracite and bituminous coal more than doubled. The supply was inadequate. The public was suffering not only from the high price, but from the scarcity of coal. Industrial operations closed down and men were thrown out of employment. All over the land, except in the districts that could be supplied by the great anthracite coal companies, the poor, the honest workman and the well‑to‑do suffered for want of fuel. In the middle of winter, in a land of plenty, this gigantic monopoly had the power to create a scarcity of fuel and bring distress upon a whole nation.

It is seldom that the violation of sound economic business rules so quickly brings with it such a series of disasters. How far the public will take to heart the lesson that has been taught is, of course, as it always is, an unknown problem. But this Commission represents the dignity which ever must uphold law and order, the justice that is inherent in righteous judgment, and the wisdom that can respect the progress and mighty achievements of our social and business conditions which have produced such marvelous prosperity. And, holding fast to that which is good, it will be slow to recommend a new order of things that may lead to the dire results which a six months' trial has already produced.

But someone will say, "Oh, all these direful results might have been averted by you operators." How? By a surrender to unjust demands. Yes; the evil day could have been postponed.

Let us not deceive ourselves. Men charged with the management of property, conscious of no wrong‑doing, believing they are dealing justly with their employees, ought not to surrender at the dictation of labour leaders whose reputation and subsistence depend upon their success in formulating impractical demands, and thereby stirring up strife. The record shows that an honest effort was made to convince the United Mine Workers that their demands were unjust.

The anthracite coal trade has for fifty years been a most perplexing problem. It has, perhaps, aroused greater expectations and caused more disappointments than any large business enterprise in the country. To the untutored mind it seems so easy to dig coal and to sell it at a profit. But to the men who have given their best thoughts and years to the problem it becomes one of the most complex of all industrial problems. Indeed, when I look back over more than thirty years of my own connection with the Reading system and recall the struggles of the system and the able men who have gone before me, it seems that their labours were like those of Sisyphus.

You know that coal cannot be well stored. Bituminous coal cannot be stored in very large quantities because it is apt to ignite. Anthracite coal can be stored, but the cost of storing it is very great. We have made some experiments as to storing coal and picking it up again. The cost, with the breakage and the lowering of the grade of the coal, amounts, as near as we can get at it, to twenty‑six cents a ton. We have found that we cannot store coal and must not overlook the fact that if wages go up, then materials and supplies necessarily participate in the increase, and the general cost of mining coal is increased. The proportion of wages on a ton of coal is about $1.45 to $1.50 This represents the average cost under the present conditions of producing a ton of coal, ‑‑that is, the wage labour of producing a ton of coal, ‑‑and from 40 to 45 cents represent the supplies that go into the cost of the coal. Our coal roundly costs us about $2 to put on the car, and $1.45 to $1.50 represent wages.

The production of coal is one of the few industries in which there are three parties to be considered: ‑‑first, the operator, because he controls the business, ‑‑for the present at least; second, the workmen; and third, the consumer. In most industrial operations the consumer is only indirectly interested. He need not purchase the things if their cost is too great; but coal he must purchase. If he is a manufacturer, he requires it for power, and everyone needs it to cook his breakfast and warm his home. The price cannot be arbitrarily fixed. It is undoubtedly true that the mine workers must receive an adequate compensation, measured by like wages under similar conditions in other industries, and, I take it, ‑‑with some hesitation, ‑‑that the operator may be permitted, under a normal condition of society, to have a little profit on the capital and work lie bestows in the business. If the anthracite mine operator fixes the price on anthracite coal so high that the manufacturer cannot use it, the manufacturer will do one of two things, -‑purchase bituminous coal, or, if in the locality of his manufactory that cannot be had to advantage, he will abandon the site of his manufactory and go to a more favoured locality where fuel is cheap and plentiful. In this problem of manufacturing, fuel is the foundation of everything. It, therefore, becomes a business duty and a business necessity to see that manufacturers are given coal at a reasonable price. If they cannot get it, they will be driven out of business. And if they are driven out of business, then the sources of trade for the railroads fail.

These are problems that captains of industry in these days must consider, and must daily consider, ‑‑how to increase the wealth of the community they are serving by increasing its prosperity, --because only in that way can they add to their revenues; how to return to their stockholders a just payment for the money they have invested, and how to give honest wages, fair and full wages, to the men they employ. These are burdens. You may think they are light; but to a man who is charged with responsibility they become terrible realities.

What, then, can be done practically? If you increase wages, what will you accomplish? If they are too low, increase them; it will pass on to the consumer, and that consumer will be the rich and the poor. If they are just, then let them alone.

What evidence have you that they are unjust? We were led to believe, when an attack was made upon the horrible conditions in the anthracite fields, that a condition existed whereby men were being oppressed. Attention, however, has been called to the fact that on the basis of wages supposedly being paid in the anthracite regions, the advance claimed makes less than the wages that have actually been paid.

Now, that the wages are fair we demonstrated by a number of things to which I want to call your attention. You will remember that it has been said that one of the evils in the coal region is that there is too much labour there. What does that indicate? Why, that labour there is attractive. There is plenty of work in the United States, and those men could get employment elsewhere. Are you going to increase the rate of wages, and attract still more people there to sit down and wait in the hope of getting enough money in a day to support them for a week? Will you improve the congested labour condition in the anthracite fields by raising the price of wages so as to attract all unemployed labour into that field and bring on a worse condition of things?

Remember how easily the trade of anthracite mining is acquired. There is no apprenticeship, such as in ordinary trades; no such conditions as many of us went through when, as boys, we served as apprentices, working night and day to acquire a trade, with little or no remuneration.

Under the mining laws of Pennsylvania a man, of course, must be a certified miner. But each year hordes of strong men come from over the sea. They come as labourers and obtain work in the mines. They are paid larger wages than they ever dreamed of in their own countries, ‑‑from $1.50 up to $1.75 or $2 a day. They work as labourers for two years in the mines receiving this pay, and at the end of two years they can become certified miners. This is the only apprenticeship they serve. After that they can go into the mine early in the morning and drill their hole and blast their coal, and at eleven o'clock walk out to smoke their pipe and enjoy leisure.

It is no skilled trade. There is no apprenticeship such as prevails in the arts, -‑with the carpenter and the mason and the bricklayer and all artisans, and, above all, the machinist, who has to devote years to acquiring great skill. Are these men who work five and six hours a day, and earn the sums of money we have shown you that they do earn, to become public pensioners at the expense of every honest workingman in this city and in all the cities of the seaboard? Shall he be made to buy coal to keep himself warm and to cook his meals at an unfair price?

If there is any sociological question involved here it requires you to consider most carefully whether, in trying to do some favour to the coal miners in the anthracite regions you are not only going to work injustice to the operators, but you are going to do a wrong to every consumer of coal.

I have heretofore called attention to the sliding scale. I intended to discuss the question of eight hours a day; but I will let that go. Enough has been said upon that subject. I do not believe in the theory. There are some trades where eight hours are enough, but there ought to be no limitation on work in the collieries. If the breaker time is reduced to eight hours per day, the output of coal would be so restricted that the cost of coal would be increased enormously. Of course, the answer would be, "Build new breakers and sink new shafts." That is easily said. Expend another half million dollars at each colliery, and then the public would have to pay the cost. It is one of the things that you cannot help. If you are oppressed in one direction, and the price has to go up, the public is the forgotten man; but there is where it falls all the time. The consumer pays for it. And those of us who stand up to protect the consumer, who represents the average man in the community, are always to be treated as merciless, tyrannical men.

That brings me to say one word in defence of our own companies. I submit that the companies I represent, the Philadelphia & Reading Coal and Iron Company and Lehigh & Wilkesbarre Coal Company, have suffered the most at the hands of these people, in that a number of our collieries are destroyed. Where is the evidence of our wrong‑doing? What have we done? Have we ill‑treated our men? Have we wronged them in any way? Is there any testimony here to cast a shadow of doubt on the integrity and the honesty and the fairness of these companies in dealing with their men? Who is there that will dare to say, or has said, that the humblest man in our employment has been refused redress or consideration of any complaint?

Superintendents tell you that they hear every complaint and treat it justly. Such is their instruction. This company is too big to be dishonest. It means to deal fairly with all men. It means it because its management is honest and its policy is honest. And I protest that nothing has been more unfair than to drag us here into a controversy of this kind, without showing that there was any wrong done, or that anything in our system needed to be corrected.

Now, then, what is the practical suggestion that I have to make? I would gladly see a return to the sliding scale. For some reason or other the sliding scale meets with little favour among, labour leaders. You are asked to fix the price of coal practically for three years. I am not a prophet. I do not know what the business conditions of the next three years will be.

I can hope that the general prosperity of the country will continue so that wages can be even increased. But I know, as a business man, that I am not willing to commit myself to the payment of wages for three years based upon the existing condition of things. I do not know the day nor the hour when a break may come, and, as a cautious man of the world, charged with grave responsibilities, I want some system adopted that will work like the governor on an engine and regulate the speed at which we go.

I want to say that, while it is entirely true that some of the men have not been as prompt as we wished them in working on holidays, and some of them have shut down the breakers at one colliery and another to go to a funeral, and sometimes in times of great distress they would not work when we thought they ought to work, I will say that, taking the whole situation through, the behaviour of men in our companies since the strike is over has been admirable. They have rendered efficient work, and produced all the coal which, under the circumstances, could be produced, unless they had worked on these exceptional holidays, and while that would have been desirable, you cannot ignore the conditions and the traditions of people. These foreigners come here with many holidays. They have been accustomed to observe all their holidays. I am not going to find fault with a man who keeps his native holiday, even though it does deprive us of a little coal. There are some things that must be allowed to individual freedom, and this is one of them.

Now, what is my proposition? That the rate of wages now paid shall be the minimum basis for the next three years.

That from the first of November to the first of April, 1903, all employees, other than contract miners, shall be paid an additional five per cent.

That on and after April, 1903, for each five cents in excess of $4.50 per ton on the average price realised for white ash coal in the harbour of New York, on all sizes above pea, wages shall be advanced one per cent.; the wages to rise or fall one per cent. for each five cents increase or decrease in prices; but they shall never fall during the next three years below the present basis.

Now, before I give the result, let me just explain what that means. We will take the risk of guaranteeing for three years the present basis of wages. I say risk. We take a great risk in doing that. It means that the price of coal must be kept in New York harbour $4.50, or otherwise we are carrying on operations at a loss. We are willing to take that risk, and to pay, in addition, one per cent. increase in wages for each five cents increase on coal, taking the prices at New York harbour, which eliminates all calculations, as a basis.

The average price for each region to be ascertained by a competent accountant, to be appointed by judge Gray, chairman of the Commission, or by one of the United States Circuit judges holding courts in the City of Philadelphia, the compensation of the accountant to be fixed by the judge making the appointment, and to be paid by the operators in proportion to the tonnage of each mine; each operator to submit a full statement each month to said accountant of all the sales of white ash coal, and the prices realised therefrom, f. o. b. New York, with the right of the accountant to have access to the books to verify the statement.