Meeting of August 21, 1919

The Commonwealth Club of California held its regular monthly meeting at the Hotel St. Francis, San Francisco, on Thursday, August 21st, 1919. At the conclusion of the recess that followed the dinner and business meeting, President Boynton called the meeting to order as follows:

Remarks by President Boynton

THE PRESIDENT: Tonight we have a further report from the Committee on Industrial Relations, which committee made a preliminary report May 15th. Some of the conclusions reached by the Section will be announced.

The report for the Committee will be made by its very energetic chairman Mr. Rettenmayer.

Report of Section on Industrial Relations

MR. RETTENMAYER: The interest awakened through the meeting held in May favorably influenced the progress of the work of the Section on Industrial Relations. The Section held weekly meetings besides special meetings of committees which were appointed for the study of specific questions. Extraordinary interest is manifested in the work, largely so because the problem is so paramount in importance and also for the reason of the enlightening effect upon the minds of those who seek the truth as well as for the service the Section may be to all parties to industry.

The Section at present embraces in its membership, duly appointed representatives of the

San Francisco Labor Council

The State Federation of Labor

The Typographical Union

The Metal Trades Association
Manufacturers

Merchants

Members of the Medical and Legal Profession

An Artist

Bankers

An Analyst

A Construction Specialist

and now we are advised that the San Francisco Chamber of Commerce has just appointed Mr. George C. Boardman to represent that body at our meetings.*

Appreciating that the first step was the outlining of a course or plan, a committee was appointed at a meeting held on the second day of June. * Mr. Charles A. Day was subsequently appointed a substitute for Mr. Boardman.

This committee reported at the succeeding meeting on one of a number of questions which are considered fundamental in the form of affirmation and question:

"In any industry there are three interests concerned, labor, capital and the public."

"What are the specific interests of each and the percentage of interest of each in relation to industry?"

The discussion of this affirmation and question brought out the following statements and questions:

"Labor and capital are opposed to public interest."

"Labor and capital have pecuniary interest only."

"Public interest is more than a pecuniary one."

"Public interest will limit the pecuniary interest of labor and capital by law."

"Management should be considered as identified with capital interest as opposed to labor interest."

"Management is a part of labor interest."

"Public interest is concerned in limiting the profits of capital interest and the wages or salary of labor interest."

"Public interest demands a fair deal and protection of society." "Into which group does professional service fall?"

"Are stock brokers, commission merchants and promoters capitalists?"

"Capital should get a limited annual return on investment in an industry with reserves to be set aside for unprofitable years."

"Labor should receive a minimum wage adequate to comfort, progress and protection against the hazards of life."

"Percentage of profit on invested capital and minimum wages in every industry should be fixed by law."

"Government regulation of profits and government price-fixing and wage regulation are not satisfactory."

"Public interest is the dominant one."

"Capital is impersonal."

"Managers may be considered as promoters of capital interest and opposed to labor interest."

At the meeting held on June 16th the Section determined, by a large majority vote, that there are three parties to industry-capital, labor and the public. That capital is the money value invested to create and maintain a going concern; that labor be defined as the persons who contribute mental and physical effort to the operation of a business or industry; and that the public includes all persons affected by the operation of business or industry other than those supplying the labor or

capital. As intimated, the conclusions were not unanimous-some contending that management was a separate party to industry, while one member maintained that management is a part of capital.

Our meeting of June 30th was attended by Mr. Edward F. Adams, former President of the Club, and his daughter who has just returned from Italy where she was engaged in Red Cross work. Mr. Adams suggested that the Section take up definite topics for investigation which should include inquiry into housing, nourishment, clothing and recreation. He also stated that wages expressed in money meant nothing today, and that an effort should be made to determine what the poorest paid section of workers should have, and thus establish a mini

mum.

The question whether the workers shall have representation on the boards of directors was discussed at the following meeting. This brought out the contentions that the directors of corporations do not in fact direct their affairs-that through action of law the controlling stock interest determined all acts of corporations-that managers and executives strongly influenced directors; that directors more often legally approve of managers' policies after execution than they do formulate plans and policies for managers to carry into effect; that labor directors would bring to the attention of the board the actions of managers which mitigate against labor's interest; and that, therefore, managers would consider labor's interest as well as capital's in the conduct of business.

The subject of profit-sharing was discussed in connection with this, but no definite conclusion was reached. As a means of making for better relations between capital and labor, which is the prime object of the Section, it was unanimously agreed that the first step toward the establishment of better relations is that there be a voluntary organization of employers, and a voluntary organization of employees in each industry, starting locally, and that there be a joint committee representing both employers and employees, and that such joint committees should continuously study the conditions and problems of the industry, and submit reports and recommendations from time to time to their constituencies.

On the question as to the proper application of the returns of industry, the Section reached the following conclusions:

Social justice demands in each industrial unit

1. A fair wage to labor.

2.

A fair return to capital over its whole period of investment.

3. The creation of reserves to insure for a reasonable period returns for capital and labor.

4. The application of profits for dividends to a reasonable extent for both capital and labor.

5. Sufficient control of the industry to prevent exploitation of the public.

The meeting of August 4th, was attended by Professor Charles Cestre of the University of Paris who gave an informal talk, pointing out the differences between French and American labor movements.

The report on the question

"What factors are to be considered in arriving at a fair wage for labor?"

as presented by Mr. Theodore Johnson, was discussed and the following conclusions reached:

(a) All wage determinations to be based upon the family as the unit to be provided for.

(b) All determinations to be sufficiently elastic to allow for abnormal and unforeseen changes in any of the factors taken into consideration.

The following basic factors should be considered in arriving at a fair wage for labor:

1. Cost of living, including generally the following main items: (a) Food

(b) Shelter, including furniture, utensils, etc.,

(c) Clothing and shoes,

(d) Fuel, heat, light, water,

(e) Transportation,

2. Education, including schooling, literature, Church and other dues for membership in various organizations.

4. Provision against the common hazards of life, such as sickness, child birth, unemployment, old age, death.

5. Provision to meet extraordinary needs or permitting savings. Nature of work and ability to serve.

6.

At the meeting held last Monday the Section reached the following conclusions on the report submitted by Mr. Geo. H. Eberhard and Mr. Russell Lowry on the question of factors to be considered in arriving. at a fair return to capital invested:

1. A basic rate equal to the return actually realized from investments of a perfectly sound character, free of risk, and requiring no attention or skill.

2. An additional rate sufficient to compensate for the hazard and inconvertibility.

The question of public interest in industry will be the subject for discussion at our next meeting.

The industrial problem needs our close study.

The future may make great demands upon the leaders of labor and capital.

The responsibility of preserving order and effecting change by peaceful methods rests upon these leaders, the professional and business men. (Applause.)

THE PRESIDENT: The statement on behalf of Labor will be presented by the President of the San Francisco Labor Council. I have the honor of introducing Mr. Wm. T. Bonsor.