Modern Robber Barons; W. H. Chamberlin

MODERN ROBBER BARONS WHAT little trade went on during the Middle Ages was considerably harassed by a group that has passed into history under the name of "robber barons." Entrenched in castles strategically built in mountain passes or on navigable rivers (the ruins of these castles are still a tourist sight on the Rhine and the Danube), the feudal owners levied more or less regular tribute on merchants and traders who passed within the neighborhood. The use of gunpowder finally proved the undoing of the robber barons, as of the feudal system in general. Their castles were vulnerable to artillery; and the in creasingly absolute centralized state acquired a mono ply of taxation rights as well as of political power. The term robber barons has been sweepingly and un fairly applied to the pioneer builders of America's in dustries and railway systems. Unquestionably there was some wrongdoing, fraud, and corruption during the big upsurge of opening up and developing the transMissis sippi West after the end of the Civil War. Standards of Mr. Chamberlin is a skilled observer and reporter of econO'mic and political conditions at home and abroad. He has written a number of books, has lectured widely, and is a contributor to The Wall Street Journal and many nationally known magazines.

59 60 WILLIAM HENRY CHAMBERLIN public life were not as high as they should have been; the moral letdown that usually follows big wars made itself felt. But, by and large, the good which these industrial pi oneers accomplished far outweighed the occasional spec tacular and highly publicized evil. The transformation of the West, from a land of open prairies and mountains thinly settled by bands of roving Indians, into new settled states made prosperous by farms, mines, and in dustries and served by ample rail communications, was one of the great achievements of economic history. It was done by enterprising management, free capital, and free labor. The process was certainly more efficient and infinitely more humane than the brutal compulsions employed for the same purposes in the Soviet Union and Red China. Abuse of Power in Unions Now there is a new breed of robber barons, those who abuse the vast power which increasing interdependence of the economy and mistaken one-sided legislation have placed in the hands of trade unions. These modern rob ber barons systematically abuse this vast power in order to pillage their fellow-citizens by means of intimidation, stoppage of essential facilities, the actual imposi tion on communities of grave inconveniences of all kinds.

What made the plight of the merchant in the Middle Ages still more difficult was that he had to buy off not one but many oppressors. Anyone who could erect a MODERN ROBBER BARONS 61 castle on a much used highway could cut in on the spoils. This situation is often duplicated in the twen tieth century. It is within the power not only of big trade unions, but of small segments of the membership of these unions, sometimes acting in defiance of the es tablished union leadership, to bring the wheels to a grinding stop and create a paralysis of an essential service. Happening to visit New York toward the end of Janu ary, I found America's largest city in a situation suggest ing that a foreign enemy was drawing a tighter and tighter blockade around its supply lines. Some six or seven hundred members of tugboat crews had quit their jobs because they were afraid that, a year hence, man agement might introduce efficiency changes that would require fewer operators.

Not content with the inconvenience which their con certed withdrawal of work created for the normal sup ply of New York City with food (this was less than they had counted on), they proceeded to tie up the whole transportation system of the eastern United States. They dispatched persuasive "goon squads" to railway junc tions, some of these located hundreds of miles from New York. They turned Grand Central into a ghost terminal. Because of the alleged grievance of a few hundred tug boat operators, tens of thousands of commuters in the New York area were prevented from reaching their jobs and thousands of railway workers were made temporarily unemployed. Sometimes in traveling in the Soviet Union I experi62 WILLIAM HENRY CHAMBERLIN enced considerable difficulty in getting out of a provin cial town because of delayed and chronically over crowded trains. I had never imagined there might be similar difficulties in New York. But on the day when I wished to return to Boston, every train had stopped and a blizzard grounded all planes. By good luck I was able to find a bus with an empty seat; but many people, some with more urgent reasons for travel than mine, must have been stranded as a result of a controversy in which they had no part or responsibility.

Soon after my return to Boston the workers of the MTA (Metropolitan Transit Authority), which oper ates the subway and bus system of Boston and the sur rounding area, took it into their individual and collec tive heads to report sick. This was to evade a state law that forbids strikes in public utilities. The idea was to wield the blackjack of causing immense inconvenience to the hundreds of thousands of people who use the MTA to get to their places of work in order to force management to sign on the dotted line what the union was demanding on a new contract. The robber baron character of this thinly disguised strike was all the more apparent because the pressure was not being used against a corporation that could show a profit. The MTA, which is publicly owned, has been deeply in the red for as long as the oldest Bostonian can remember; its annual deficit is covered by extra taxation levied on the citizens of Boston and its subur ban communities. What the union leaders were demand ing (and, needless to say, they got it) was that fellowMODERN ROBBER BARONS 63 CItizens, many earning lower wages and salaries than the union members, should dig deeper in their pockets to pay a wage increase that bore little if any relation to the labor market conditions.

Another example of blackjack tactics was the action of airline flight engineers in stopping airline transportation because they did not like a decision of the National La bor Relations Board that one union should represent them and the airline pilots. Perhaps it required the wis dom of Solomon to decide whether there should be one union or two. But a husband prevented from flying to the bedside of a critically ill wife might reasonably re sent being made the innocent victim of this all too fre quent type of union Hjurisdictional" dispute. Above the Law The status of the medieval robber barons depended on their ability to deport themselves as above the law; and this is equally true as regards their modern suc cessors. The rule of law, the conception that no one may do what is legally forbidden to others, is part of the fabric of a free society. But, where trade unions as or ganizations or their leaders and agents as individuals are concerned, this rule is more often broken than ob served.

The disgruntled tugboat workers could stop all trains; the MTA workers could deprive a big metropolitan community of essential transportation; the flight engi neers could ground the airlines, all with complete im64 WILLIAM HENRY CHAMBERLIN punity. Suppose the shoe had been on the other foot. What would have happened if the managements of the railways, of the MTA, of the airlines, had decided to shut down service because they were dissatisfied with the revenues they were receiving? They would certainly have been permitted to do no such thing and would probably have found themselves in jail. Union-Inspired Violence The Congressional Committee headed by Senator Mc Clellan, investigating racketeering and illegal practices in the trade-union movement, produced a mountain of incontrovertible evidence that many union organizers should be behind bars for outrageous violations of the laws protecting persons and property against violence and destruction. Indeed, not a few of these organizers have "served time," not for anything connected with labor-management disputes, but for acts of common criminali ty.

Typical cases of union-inspired violence that occurred during an "organizing" campaign for the Teamsters' Union in the South were the blinding of a truck driver in Nashville with tear gas and the burning of two truck drivers in Atlanta with a "Molotov cocktail." These events took place as the McClellan Committee was in vestigating the case of a Texas union organizer, one Raymond Shafer, who invariably resorted to the Fifth Amendment while under questioning. Mr. Shafer's activi ties, according to evidence and testimony introduced at MODERN ROBBER BARONS 65 the Committee hearing, included bribing Mexicans to burn trucks, trying to arrange the murder of an employer whom he disliked, and ordering that a man who had in curred his displeasure should be beaten unconscious and have the word "rat" etched into his face with acid. Most trade-union leaders may be personally upright men, pursuing the interests of their fellow-members as they see them. But a minority, as shown by the McClel lan Committee investigation, are deeply imbedded in a mire of corruption, gangsterism, and sordid connections with the underworld.

The prolonged and bitter strike waged by the United Auto Workers against the Kohler Company, manufac turers of plumbing equipment, furnished interesting and significant illustrations of the "above the law" arrogance of the trade-union bosses. Many individual workers did not want this strike and in the end it petered out, the company carrying on production with the considerable part of its work force that was satisfied with conditions and with newcomers who were hired to replace the die hard strikers. From the beginning, the U.A.W. resorted to the crud est methods of intimidation and violence, with little opposition from union-backed local government officials. First there was mass picketing, which made it impossi ble for the considerable number of employees who wished to get into the plant to do so. When "mass pick eting" was stopped by legal injunction, there was a campaign of individual intimidation, with such features as continuous ringing of nonstrikers' phones to shout 66 WILLIAM HENRY CHAMBERLIN obscenities, throwing "paint bombs" into the houses of nonstrikers, and sabotaging their cars.

When this sort of thing also failed to stop production at the Kohler plant, the union put on an intensive sec ondary boycott and made a nationwide effort to induce buyers, by threats and propaganda, to cease dealing in Kohler equipment. Professor Sylvester Petro, in his ana lytical little book, The Kohler Strike: Union Violence and Administrative Law) remarks as follows on the highly one-sided character of much current labor leg islation: Had the Kohler Company attempted to induce other firms to refuse to deal with the V.A.W. or to hire Kohler strikers, it would have been held guilty of an unfair labor practice with extremely serious consequences ... yet the V.A.W. was priv ileged to spread economic harm all over the country, not only to Kohler, but to its entirely innocent distributors and other neutral third parties. Despite all these patently illegal activities on the part of the trade union, the National Labor Relations Board in 1960, after the strike had been effectively ended for years, ordered the Kohler Company to rehire the strikers on the ground that the company had allegedly engaged in Hunfair labor practices." Professor Petro attributes this decision to a belief that a union must never lose a strike.

Should this philosophy prevail, should all risk be taken out of striking, there is no limit to the inflationary pressures that would be set loose by wage demands that would bear no relation to market conditions. Professor MODERN ROBBER BARONS 67 Edward H. Chamberlin, in his thoughtful booklet, The Economic Analysis of Labor Union Power) notes that trade-union members today fall within the middle in come rather than the low income sector of our society and goes on to make this point: One effect of trade-union policy, with respect both to wages and to nonwage fringe benefits, working rules, etc. which raise costs and thus prices, is to diminish still further the real in come of the really low-income groups, including not only low income wage receivers, but also such other elements of society as "self-employed" and small businessmen, students, old people and other unemployables, insurance beneficiaries, pensioners, etc., etc. Those who are really concerned with the lot of the underprivileged in our economy will hardly be impressed by the claims of the trade-union sector. Today's underprivileged are to be found elsewhere.

Biased Laws One big factor which makes it possible for union bosses to levy tribute on industry, and indirectly on those who buy industry's products-which means most of the population-is distinct bias in current laws regulating labor-management relations and in the administration of these laws. It has already been shown that the NLRB showed less than impartial wisdom in reinstating the Kohler strikers. More recently, the Supreme Court threw out a number of rulings of the NLRB which were de signed to give some protection to nonunion workers and to implement the provision of the Taft-Hartley Law which forbids the closed shop. The NLRB had ruled that it was unfair to nonunion 68 WILLIAM HENRY CHAMBERLIN workers to provide in a contract that the foreman of the composing room and the mail room must be a member of the International Typographers Union. For the same reason it forbade the hiring of casual workers through a union-operated hiring hall, reasoning quite plausibly that a nonunion member would have slight chance of employ ment through such a hall. It also found that labor and management must refund to employees all union dues collected under an agreement which had been ruled to constitute an illegal closed shop.

The Supreme Court in several decisions has been very sensitive to the rights of accused communists and sub versives and to the claims of certain minority groups. But its consideration, in these cases, did not extend to workers who might prefer not to be union members. By knocking the NLRB decisions on the head, it made very difficult the implementation of the law of the land against the closed shop. The Contributing Factors What has made it possible for leaders of organized labor-even small minority segments of organized labor -with increasing boldness and effrontery to inflict serious loss to the economy and inconvenience to the commu nity in order to enforce their exactions, in the true style of the robber barons of the Middle Ages? Several fac tors enter into the situation. More and more workers have been induced or intimidated into JOInIng trade unions. Our whole industrial setup has become more MODERN ROBBER BARONS 69 interdependent, so that comparatively small groups can paralyze essential functions of production and transpor tation. During the last thirty years trade-unionism has been getting a flagrantly favorable bias in the enactment, still more, perhaps, in the enforcement or nonenforce ment, of the laws.

And the victims of the new robber barons show little spirit, like the peaceful merchants who regularly paid tribute to the masters of the frowning castles on the Rhine. When a few hundred tugboat workers were able to stop all railway transportation in the New York area, throwing thousands out of work and creating the grav est inconvenience for tens of thousands more, it would have been interesting to see what would have happened if a few thousand frustrated embattled commuters had banded together and engaged in a little spirited "mass picketing" themselves around the union headquarters and around Grand Central Station. But the "innocent bystander" victims of interruptions of transportation and shipping and other essential services usually display a patient submissiveness that is only calculated to encour age further exactions. The heart of the matter is to bring the vastly larger and more powerful trade unions of the present time under the same rule of law that applies to other citizens.

Nine-tenths of the robber baron activities would cease if the simple rule were thoroughly enforced that mem bers of a union as individuals or a trade union as an organization may not do things (from throwing rocks at nonstrikers' cars to organizing secondary boycotts) 70 WILLIAM HENRY CHAMBERLIN that would land anyone else in jail. New legislation is less needed than is enforcement of present laws against vio lence, threats, assault and battery, and the like. Consid eration also should be given to repeal of all measures the effect of which gives special advantage to trade unions. In that event, it might not be such a rare news item when a company, confronted with big new wage demands unwarranted by conditions of the market, will stand up and fight not only for its own but also for consumer interests, as the Kohler Company did under challenge.