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FOR PREVENTION OF
RAILROAD STRIKES
REPORT OF
Committee on Public Utilities and Law
AND
RAILROAD STRIKES: THEIR MENACE AND
THEIR LESSON: BY HENRY R. TOWNE
September, 1916

ACTION ON THE FOLLOWING REPORT
HE Board of Directors of the Merchants' Association
T of New York at a meeting held September 21, 1916,
received and by a unanimous vote approved the fol-
lowing Report of the Committee on Public Utilities and Law,
and adopted the preambles and resolutions therein recom-
mended.
S. C. MEAD,
Iransportation Secretary *
Library
2 / 2.
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FOR PREVENTION OF RAILROAD
STRIKES
REPORT OF COMMITTEE ON
PUBLIC UTILITIES AND LAW
NEw York, September 13, 1916.
To the Board of Directors of
The Merchants’ Association of New York.
GENTLEMEN :
AVING in view the grave injury to the public insep-
H arable from railroad strikes, and the violation there-
by of the public's rights, we recommend the adop-
tion by The Merchants' Association of New York, of the
following preambles and resolutions:
Whereas, The people of the United States have recently been
confronted with the menace of partial or complete cessa-
tion of traffic on the railroads constituting the main
arteries of communication among the people, thereby im-
perilling their comfort, safety and ability peacefully to
pursue their customary avocations, and implying pos-
sibilities of Suffering, loss or injury as grave as those
resulting from a state of war; and,
Whereas, It is the right of the people, and a vital need, that
they shall be safeguarded in the future against the
3
danger thus implied, not only as to the railroads but also
as to all other important public utilities operated by the
corporations for the service of the people; and,
Whereas, No plan heretofore proposed provides, in the last
analysis, absolute assurance, under any and all circum-
stances, against the interruption, by deliberate intention,
of service by railroads and other public utilities; and,
Whereas, A plan based on the principal of a contractual re-
lationship between public service corporations and each
of their employees has been proposed and submitted to
this Association which it is believed would be effective
for that purpose, and which is regarded as entitled to seri-
ous consideration; now therefore be it
Resolved
I. That The Merchants' Association of New York, deeply
impressed by recent events and by the need of remedial
legislation which shall guarantee the uninterrupted op-
eration of public utilities, regards the plan for this pur-
pose, based upon the principal of a contractual relation-
ship, proposed by its former president, Mr. Henry R.
Towne, as embodying a possible Solution of the problem,
and commends the same to the fair and thoughtful con-
sideration of the public. *
2. That, in order to promote a general understanding and
discussion of said principle and plan, this Association
purposes to submit it to the Chamber of Commerce of
the United States Of America, of which this Association
is a constituent member, with the recommendation that
4
this proposition be submitted to the membership of the
Chamber by a Referendum, whereby to ascertain the
judgment of the business organizations of the country On
its merits.
3. That, for like reasons, the plan as submitted by Mr. Towne,
and his argument in support of it, be published in
“Greater New York,” and be printed for distribution to
the press and the public.
We further recommend the adoption of the following pre-
ambles and resolutions, requesting action by the Chamber of
Commerce of the United States:
Whereas, The functions of railroads and other public utilities
are exercised only by virtue of public authority, dele-
gated to the corporations solely to provide for imperative
public needs; whereby such utilities become public agen-
cies, subject to such control and regulation by law as may
be required in the public interest; and
Whereas, The public welfare requires that the operation of
public utilities be continuous and unimpeded; and
Whereas, Continuous and unimpeded Operation of public utili-
ties cannot be maintained if the employees of public
service corporations are free to quit their employment
at an indeterminate time; now, therefore, be it
Resolved, That the tenure of service of employees of public
service corporations, particularly of transportation cor-
porations, should be regulated by law in such manner that
each person who voluntarily elects to enter such employ-
5
ment shall, as a condition of such employment, be legally
obligated by contract to continue therein for a specified
term, during which term he may not lawfully quit that
employment nor the corporation lawfully discharge him
from its service, except as provided by such contract; and
that such contract should provide adequate penalties for
violation of its terms by either party.
Resolved, That The Merchants' Association of New York,
as a constituent member of the Chamber of Commerce of
the United States, requests that Chamber:
I. To cause a referendum vote of its members to be taken
upon the proposition stated in the preceding resolution.
2. If said proposition is approved by such vote, to formulate
through a committee of the Chamber, co-operating
with public service corporations, representatives of their
employees, and others whose counsel would be of serv-
ice, a draft of a legislative bill suitable to effect the pur-
pose stated; to cause such bill to be introduced in Con-
gress; and to prepare a memorial for presentation to
Congress and for general public distribution in explana-
tion and support of the proposed legislation.
COMMITTEE ON PUBLIC UTILITIES AND LAW,
E. H. OUTERBRIDGE, Chairman,
EDWARD C. BLUM,
A. W. DUNNING,
JOHN C. EAMEs,
F. A. MOLITOR,
HENRY R. Town E,
CLARENCE WHITMAN.
6
RAILROAD STRIKES
THEIR MENACE AND THEIR LESSON
BY
HENRY R. TOWNE
August 30, 1916
HE events of August, 1916, have focussed public atten-
tion upon a National problem which imperatively calls
for solution. They have shown the existence of a
self-constituted power exercised as though co-ordinate with that
of the Federal Government, an imperium in imperio, which
the President of the United has felt constrained to negotiate
with, which has notified him of its terms, and whose terms
he has deemed it expedient to accept and to urge upon Con-
gress, as a basis for hasty legislation, in order thus to save the
people from threatened calamity deliberately plotted. Until
Congress acted the threat remained effective and the country
in painful suspense. The situation is intolerable, and the
public demands that a remedy be found.
That such a situation could develop is due chiefly to two
causes, namely, (I) the vast growth in number, size and im-
portance to the community of Public Utility Corporations,
and (2) the coincident and almost equal growth in numbers,
power, and influence, both for good and for evil, of Organized
Labor.
The history of the public utility corporation is substan-
tially similar in all its many fields, whether organized to oper-
7
ate railroads, trolley lines, etc., to supply gas or electric light
and power, or to operate telegraph and telephone lines. In
each and every case the State or the Community has endowed
the corporation with some of its sovereign powers, and has
granted to it a partial or complete monopoly of certain valu-
able privileges, in return for which the corporation has under-
taken to perform certain services for the community which
are so necessary or so useful as to justify the grant of the
privileges covered by its franchise. By the terms of that
franchise, and by the provisions of statute law, the corpora-
tion is bound to render the stipulated service as a condition of
the retention of the franchise.
The history of organized labor shows that its fundamental
purpose has been to benefit the industrial and social condition
Of its members in matters of wages, hours of work, and con-
ditions of employment by the force of concerted action and
influence where the power of the individual would be ineffect-
ive. With that purpose, when sought by legitimate means,
the enlightened public has always been in full and sympathetic
accord.
But, as to both groups, time and growth have wrought
changes which are profound in character and effect, which
have created new problems, and which demand new provision
for the adequate protection of the community from the mis-
use of the vast powers which it has delegated in the one case,
and permitted to develop in the other.
Taking, as an example in the first group, the case of a
typical railroad, we find that it was organized, perhaps 50 or
60 years ago, to afford communication between two adjacent
cities, and for the intervening territory; that it was urgently
needed and greatly desired, but the doubtfulness of the in-
vestment made the enlistment of capital difficult, and neces-
sitated perhaps the granting of Special concessions to attract
8
the necessary funds; that the road prospered, was extended
and was consolidated with others, and that today it is a vital
component in a great system; that it is no longer merely a
desired addition to previous means of communication, but a
vitally important factor in the industry, commerce and life
of a great community or of the nation; that in earlier years,
it abused its powers and privileges to oppress the people by
whom they were granted; that this evil was corrected by legis-
lation, both state and national; and that today, while Owned
by its stockholders, it is operated as a semi-public property,
under statutory laws and under the control and regulation of
Commissions created by the State or Federal governments,
which largely determine what it may do and what it may
charge for its services. In brief, the fact is now recognized
that it is a creature of the State, created by the people to
provide certain facilities essential to their welfare, and prop-
erly subject to such supervision and control as may be neces-
sary to protect the interests of the people.
Taking as an example of the second group, the case of a
typical trade union, we find that it was organized, perhaps
2O or 30 years ago, say by One of the building trades, to se–
cure for its members better conditions of employment than
they had previously enjoyed, that by concerted action they
had secured higher wages, shorter hours, and other advan-
tages; and that these results had been achieved in part by
resort to strikes when other means had failed. Assuming
that Strikes, when resorted to, have not been accompanied by
violation of law, it will be conceded that the purposes sought
and the results achieved were not merely proper but highly
commendable, and this has been the judgment of enlightened
public opinion. If at times, as the power of organized labor
has grown by vastly increased numbers and by the consolida-
tion of units, it has been abused, and has been exercised not
9
only for good but also for evil, we may properly attribute the
latter fact to bad guidance and leadership, rather than to bad
intentions on the part of the membership at large.
But when we come to consider a case which involves the
combination of the two groups we find a new condition affect-
ing the second group which requires consideration. In the
case above supposed, one of the building trades, there were
only two parties directly concerned, namely, the employer and
the employees; the public, while perhaps taking a sympathetic
interest, having no vital or direct concern regarding the out-
come. But when we consider a case involving both groups,
that is, a public utility corporation and some or all of its em-
ployees, we find that there are three parties directly concerned,
the third party, and the one having the chief interest, being
the public, the people, by whom the franchise was granted
under which the corporation exists and acts, and by virtue
of which the employees have been enabled to find employment
in its service. To this third party, the people, it is a matter
of vital concern that the service, to obtain which the fran-
chise was granted, shall not be interrupted, least of all by
either one or the other of the parties who are the beneficiaries
of the franchise, one of whom thus finds employment for
its capital and the other for its labor. Just as the former,
the public utility corporation, is required under its franchise
to perform the stipulated Service for the public convenience,
so also should the latter, the body of its employees, be re-
quired, as a condition of entering its employ, to abstain from
any act, of commission or Omission, tending to interrupt the
service or designed to have that effect. The act of entering
the employ of a public utility corporation is voluntary. Each
individual who enters it does so of his own free will. He
knows, or should know, that the corporation operates a public
utility, for the benefit and convenience of the people, and it
IO
should be required of him, by law, that, as a condition of
employment under such a corporation, he shall agree in ad-
vance not to do anything knowingly, alone or in combination
with others, designed or tending to interrupt the Service to
the people for which the corporation was chartered by them.
In so doing he would surrender no right to liberty of action
except the right to inflict injury on the public in the pursuit
of selfish ends, and this right is one which the people may
justly require to be surrendered by those who voluntarily
seek employment in a service created by act of the people for
the benefit of all the people, including organized labor itself.
In earlier days, there was little or no legislation for the
regulation either of the corporations or of labor, but both
have grown to a power and importance which makes regu-
latory legislation essential to the public welfare. It already
exists as to the public utility corporation, and its propriety
is universally conceded. It is equally needed and equally
proper as to those who choose to seek employment in the
service of the public utility corporation, and the people, for
the protection of their just rights, should see that it is
enacted as speedily as may be consistent with due regard for
the rights of all concerned, including those of the employees.
Such legislation would imply no antagonism to organized
labor; on the contrary, the co-operation of the latter in fram-
ing it should be welcomed and sought, and should be given,
and the legislation should be so framed as to leave all existing
legal rights of the employees unimpaired, save only that it
would prohibit concerted action designed to cause interrup-
tion of the service. Continuity of the service would be the
sole object sought. This is essential to the welfare of all the
people, and no group or class should be permitted to endanger
it. For the members of any group to claim or seek the right
to inflict vital injury upon all the rest of the community would
II
in effect be tantamount to a declaration that such members
were not loyal citizens of the State but public enemies.
The last assertion is not an exaggeration but a plain State-
ment of fact. If such right is conceded to one group, it must
be conceded to all groups of employees of public utility cor-
porations, and if all such groups should conspire to arrest
the functioning of all public utilities greater injury, Suffering
and loss would thereby be inflicted on the community than
any foreign foe could possibly accomplish, and the majority
of the innocent victims would comprise the helpless women
and children. Cessation of functioning by the railroads would
mean deprivation of fuel (for heat, cooking and power) of
nilk for infants, of food, and of means of transit, and the
stoppage of mail service; by the trolley lines would mean
deprivation of means of urban transit to shops and places
of employment; by gas and electric companies would mean
deprivation of lighting (both public and private) and of the
power used by nearly all minor industries; by telegraph and
telephone lines would mean deprivation of all facilities for
quick and urgent communication; by water companies would
mean the cutting off of water supplies indispensable for power
purposes, for fire protection and to human life itself. The
possibilities thus involved would imply a catastrophe greater
in the sum of its suffering and horrors than of the dreadful
war which is now devastating Europe. Fortunately the
menace of such a catastrophe is removable by those whom it
threatens, the people, and it has become their plain duty to
remove it now by suitable legislation. To be completely ef-
fective, as to all public utilities, both Federal and State legis-
lation will be needed, but as the most imminent need is for
legislation relating to the railroads, and as their operations
consist very largely of interstate business which is subject to
Federal control, it is clearly expedient that the initiative
I 2
*
should be taken by Congress, especially as legislation enacted
by it, if wisely and conservatively framed, will serve as a
model or basis for legislation by the several states, and thus
tend to promote uniformity of practice throughout the country.
Remedial legislation of other kinds is proposed and is under
consideration, especially for the purpose of enforcing resort
to arbitration for the adjustment of disputes between em-
ployers and employees in cases where other means have failed,
and it is greatly to be hoped that such legislation, when per-
fected, may be enacted into law, but all such legislation thus
far proposed, however useful in other respects, fails to as-
sure the ultimate and vital object, namely, the absolute pre-
"ention of the interruption of the scrwice of public utility
corporations, by the concerted action of those who voluntarily
have sought and obtained the privilege of engaging in such
service. Until legislation is enacted which will accomplish
and assure this result the menace of catastrophe to the people
will remain. diminished perhaps, but not removed. It should
be removed, completely and finally. The way herein pointed
out is the only one thus far proposed which will accomplish
that result.
To facilitate the consideration of the proposition thus sub-
mitted there is given below an analysis of the plan, and a
tentative Outline of Some of its most essential features, to-
gether with a suggestion of a method for elaborating its re-
maining details, and for initiating the necessary legislation.
THE PLAN.
Any plan to regulate the relations between Public Service
Corporations and their employees should be based on recogni-
tion of the following fundamental facts: viz. –
I 3
. The Company enjoys a partial or complete monopoly,
granted by the State in order to secure for the people
the service which the Company undertakes to render.
. In return the Company is required to render that service
in conformity with statutory enactments, and under
the regulation of a State (or National) board or com-
mission.
. In order to perform that service the Company must act
through agents or employees, and it is equally necessary
and proper that these should be governed by statute,
and be subject to regulation by such board or commis-
sion. Heretofore this has not been done, or only in
slight degree.
. There are thus three parties concerned, viz. –
(I) The People: that is, the State.
(2) The Corporation, including its owners, the
stockholders.
(3) The Employees.
The plan should aim to recognize and safeguard equally
the rights and interests of each and all of these three parties.
. To do this, it should provide
(I) That the Company shall give adequate service,
and shall conform to the law and to the orders
of the board or commission.
I 4
(2) That persons who voluntarily become employees
shall conform to the laws and regulations, and
shall not conspire to impair the service.
(3) That the two parties, the Company and the em-
ployees, shall recognize and respect the para-
mount rights of the third party, the Public, to
adequate and uninterrupted service in return
for the grant of the franchise under which the
Company operates and by virtue of which those
who enter its service find employment.
Laws and Regulations which are based on recognition of
these facts and which are designed to accomplish these results,
are not merely proper and justifiable, but are logically called
for to define and assure the rights of the Companies and their
stockholders, the rights of their vast number of employees,
and, above all, the rights of the State, that is the People,
which is the grantor of the public franchise which is the basis
of the whole structure, the sole purpose of which is to obtain
for the people the service stated in the franchise. Opposition
to such reasonable laws and regulations would constitute a
menace to the common weal.
To accomplish these ends, there is needed legislation, State
or National, or both, which would authorize and require,
among other things, a contractual relationship between each
Public Service Corporation and each of its employees embody-
ing the following provisions, viz.—
I. An enlistment or enrollment contract for a stated term.
After a probationary period, in the case of a new em-
ployee; removable by mutual agreement, at the end of
term, in the case of an old employee.
I5
2. A “Service record” of each employee, to be kept.
3. Preference in promotions, and in retention in the service,
to be based on such records.
4. Penalties for violation of the contract by either party, to
consist of cash fines.
5. Fines against Company to be collectible from a fund created
by the Company and vested in a trustee.
6. Fines against an employee to be collectible from a fund
created by the Company's retaining, say 20% of his
wages until the fund equals two week's wages (would
require Io weeks). The Company to pay interest at
5% on this fund, and to repay it when the employee
leaves the service as prescribed in the contract, or dies.
The fund to be in the custody of a trustee.
7. Schedule of fines to be fixed by law and stated in the con-
traCt.
8. Assessment of fines to be determinable.
(a) By mutual consent, duly recorded.
(b) By joint Board of Award, duly appointed.
(c) By Public Service Commission on appeal.
(d) By legal process.
9. The Company to have the right to terminate the contract.
(a) Because of misconduct by the employee. “Mis-
conduct” to be defined by law and in the con-
tract, and also the fines attaching thereto.
I6
(b) Because of slack business or excess of help. In
this case the employee to receive either 30
days' notice, or two weeks' pay and immediate
release.
(c) Because of disability or superannuation of em-
ployee, on stated notice, Subject to such pen-
Sion provisions, if any, as may exist.
IO. The employee to have the right to terminate the contract,
(a) Because of valid family or personal necessity.
In which case, honorable discharge, without
penalty.
(b) Because of sickness or of unfavorable effect on
health.
(c) For cause not stated, upon fair notice, say 30
days, without penalty if with the Company's
consent; otherwise subject to fine, as provided
by law and stated in the contract.
II. Violation of the contract by the Company, if duly estab-
lished, to subject it to stated fines, payable to the em-
ployee, from the fund vested in a trustee.
I2. Violation by the employee, if duly established, to subject
him to fines collectible by the Company from the fund
held for that purpose by a trustee; and also, under speci-
fied conditions, to forfeiture of wages earned but not
yet paid.
13. The Company to recognize the right of the employee to
membership in any lawful organization, and not to
discriminate against him on such account.
17
I4. The employee to respect the right of the public to un-
interrupted Service, and not to combine with others to
cause its interruption.
I5. The employee to have the right, alone or in combination
with others, to request concessions, in wages, hours
of work, or conditions of service, from the Company,
and the Company to give prompt and fair consideration
to all such requests when properly presented, and not
to discriminate against any employee because of partici-
pation therein.
I6. The employee to have the right of appeal, from acts or
decisions of the Company, to a “Joint Board of Award,”
constituted under the law by joint action of the Com-
pany and its employees, as a Board of Arbitration.
I7. Both the Company and its employees to have the right of
appeal from the rulings of the “Joint Board” to an ap-
propriate Federal or State Commission, whose decisions
shall be conclusive and binding, unless and until reversed
by a court decision.
18. During the term of any contract between the Company
and an employee the discharge of the employee by the
Company (except as provided in No. 9 above), or the
cessation of service by the employee (except as provided
in No. IO above), to be constituted an offence at law,
and to be punishable as the law may prescribe.
The foregoing is merely an outline of the most essential
features of the proposed “contractual relationship” between
the Company and each of its employees; it does not pretend
I8
to be comprehensive, complete or final. Probably many vari-
ous forms would be needed to meet the many varying condi-
tions existing in various localities and in the various public
utilities.
While legislation on these lines should ultimately be enacted
by the several States, to apply to intra-state corporations and
their employees, legislation by Congress, to apply to all inter-
state business, would also be needed and preferably should
precede State legislation, because of the resulting tendency to
promote uniform practice throughout the country.
The ideal method for inaugurating such a plan would be as
follows: viz.—
I. For some broadly representative national body, such as the
Chamber of Commerce of the United States, to formu-
late, endorse and present an outline of its essential fea-
tures, and to invite widespread public discussion and
suggestion as to details.
2. The Chamber of Commerce of the United States there-
after, in co-operation with representatives of public
service corporations and their employees, to draft a
legislative bill suitable to effect the purpose stated; to
cause such bill to be introduced in Congress; and to
prepare a memorial for presentation to Congress and
for general public distribution in explanation and sup-
port of the proposed legislation.
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