First World War Centennial

XVI

THE FUTURE CORPORATION

THE development of a national government by the industrial corporation presupposes that the social functions of the industrial cor­poration, which are now being developed, have been extended in all corporations and grown to an activity equal in importance and scope, and directed by equally big men, as the technical, administrative, and financial activities of the corporation. It would hardly be safe, even with the control exerted by an inhibitory tribunicial power, to intrust the entire constructive gov­ernment of our nation to the industrial cor­porations of to-day, with their very different stages of social development.

For the small individual producer of bygone days there was no social responsibility or duty, but his business was his private property, to carry on in any manner he liked, subordinate

only to the national laws. But when the indus­tries became organized in larger and larger cor­porations, and, as inevitably must be the case with the continuing industrial development of our nation, industries and groups of industries become essentially controlled by corporations, and the corporation comprises the joint pro­ductive activity of many thousands of em­ployees, then a social responsibility, and with it a social duty, arises in the corporation, and the corporation can no more be entirely private property, however much its legal owners may consider it such. In organized society there can be no unrestricted private property in any­thing which may affect or influence public wel­fare and public interest. This is, and always has been, the law of every civilized community. Thus with the growth of the corporation, a new relation of mutual responsibility with the public arises. This is fully recognized by all the more progressive and thus more successful corpora­tions, and its recognition is the foundation of the rapidly increasing activities of the corpora­tions in social relation with their employees, with the public at large, with educational sys­tems and institutions, public policy committees, national associations, etc.

Politically, the issue was first raised in the great coal strike, when the President of the United States forced the contending parties to arbitrate, and since that time the responsibility of the large industrial organizations to the na­tion has been universally established, has been recognized as a part of our law.

But, unfortunately, there are still a few large and powerful corporations which more or less refuse to recognize their social responsibility to society, which insist that they are private prop­erty, responsible to nobody but their stock­holders, and attempt in their actions toward the public to carry out this policy. It is these cor­porations which continuously feed fuel to the public hostility toward corporations, which undo what is being accomplished in establish­ing better relations between corporations, em­ployees, and public by those corporations who are realizing their social responsibility and liv­ing up to it—and which latter thus inversely would gradually bring the public to a realization of its social responsibility toward the corpora­tion as modern industry's most successful embodiment.

Illustrations of this can be seen in the dealing of corporations with the complaints of the pub­lic; from corporations which discourage com­plaints, whether just or unjust, by any means, apparently endeavor to make it as inconvenient and uncomfortable to the complainant as pos­sible, to make him feel like a criminal, and thereby effectively discourage any further com­plaint. With such corporations nobody who once made a complaint will ever like to make another complaint, but neither will he ever have a good word for the corporation, but can be counted forever after among its enemies.

Then there are powerful utility corporations, which make the complaint department a careful study of their best men, select qualified officers with considerable social sense for handling complaints; they encourage complaints, show the complainant attention, explain to him the why and wherefore, and in nine cases out of ten leave him not merely satisfied, but a friend and defender of the corporation, and they find that this method of dealing with complaints, while it may cost more than merely discourag­ing complaints by inattention, will pay for itself as one of the most effective means of creating friends for the corporation among the public.

Again, there are corporations, stores, hotels, etc., whose principle in dealing with complaints is that the complainant is always right, their own employee wrong; it is unfairness in the opposite direction, unjust to their own em­ployees, and often ineffective toward the com­plainant, who, as a rule, is more satisfied by being given reasons and explanations rather than by being told that the employee will be punished.

The same applies to claims, and to practically every activity in which the corporation comes into contact with the public; we find all kinds of attitudes, from the alleged "the public be d——d," to that of the modern corporation against which no justified hostility could ever have arisen even by the most exacting.

The future success of our country as industrial nation depends on the extent to which co-operation can be developed within the industrial corporation, and between public and corpora­tion. This is realized more and more, and in­creasing efforts are made to bring about co-operation. Thus, in most modern corporations some work is done to establish co-operation, in some much time and attention are devoted hereto by the highest officials.

Unfortunately, due to the strong individual­istic temperament of most corporation leaders, many of these activities are paternalism rather than true co-operation. Co-operation implies two parties coming together. Thus there may be co-operation between employer and employ­ees, co-operation between the public and the corporation; but co-operation of the employees with the employer in plans devised and intro­duced by the employer, of the public with the corporation on a basis established solely by the corporation, is a misnomer, and such one-sided attempts of co-operation not infrequently lead to the reverse, to strained relations and antag­onism, and that naturally, in a democratic na­tion, where everybody believes that he knows best what is good for him.

Thus there are instances of corporations, still essentially controlled by one man, who created and originated the business, and who was deeply interested in the welfare of his employees, where extensive social work was done for the employees, often under the immediate personal supervision of the owner of the corporation. Excellent sanitary facilities, recreation-rooms, li­braries and reading-rooms, lectures and lecture-rooms, gymnasium and athletic fields, social centers and lounging-rooms, parks and play­grounds, in short, anything that could make the employees happy and contented, were provided by the corporation, regardless of expense, and quite likely the thanks was a general strike for some petty reason, such as that the towels in the toilet-rooms were washed in a non-union laundry. The consequence naturally was a thorough discouragement of the corporation owner, over the utter lack of appreciation and thanklessness of the employees. But was this justified? Or was not the entire social activity a violation of the fundamental principle of co-operation?—that is, of working together, and based on the conception of the business owner that he knows better what is good for his em­ployees than they know themselves—a con­ception which, even if it should be true, would necessarily lead to the resentment of those who by implication are given to understand that they do not know what is to their interest, but have to have a guardian.

This is the most serious defect of much of to-day's social work in the corporation; it deals with the things which the employer believes the employees want or should want, but not what they wish, and thus it is tainted, in the opinion of the men, with paternalism and charity.

It is true that the corporation leaders may, in some respects, know better than their em­ployees what is to the interest of the employees; with the broader view from their position they should know better. But this does not change the situation. So does the political boss in most cases know better what is in the interest of his party than does the individual party member; but still he does not order, but persuades and convinces, otherwise he could not long remain the leader. Now, in our industrial organiza­tions the most important and most beneficial results would be the recognition by all the cor­poration employees, of the corporation leaders as the leaders in the social activities of the cor­poration. But this first requires convincing the employees that the social activity of the corpora­tion leaders is in the employees' interests. This is a very difficult problem, in view of the ex­tensive suspicion of employees against any new action of the employer. Unfortunately, quite commonly the difficulty of the problem of es­tablishing social relation is very imperfectly recognized by the corporation leaders; compare the letter written by a corporation to some prominent customer with the notice informing the employees of some social activity intro­duced by the corporation; the utmost care, which is taken in the former not to offend any—whether just or unjust—sensitivity of the cus­tomer, while in the latter letter often no thought is given to this feature of form, but it is assumed that the employees should be thankful. But it is the corporation which introduces social ac­tivities to establish co-operation, as it is the corporation which, from its broader view, sees the necessity of greater co-operation, while the employees do not see it yet, but suspect the new movement as hostile to their interest, and thus need convincing that it is not so, require the same careful consideration which is given to the particular and easily offended customer.

Herein really lies the weak point of our pres­ent industrial organization. Thus, where social activities exist, we often have two kinds of as­sociations; both consist of practically the same employees, both are entirely free in the election of their officers, and still entirely different types of men are elected in the two organiza­tions. In the labor unions, "demagogues" and "agitators" may be elected, but in the social organization, the sick-benefit societies, etc., the same men elect as officers good and stable-minded conservative workmen. Often when seeing this, we deceive ourselves about the "good sense" of the men, that when their own money is concerned, in the benefit society, they do select good officers, even if they allow agita­tors to run their labor unions. But, helas! when some really serious problem arises, such as jeopardizing their existence by a strike, it is the union officers whom they trust and follow, not the conservative officers of the social organ­ization, the benefit society, etc.

What is the meaning of this? Is it not the feeling underlying in the minds of the men that the labor union is recognized as an employees' association, even by those outside of the union, while the other organizations are considered as "associations of employees by the employers," and as such do not receive the same interest and confidence; and when choosing officers for the latter organizations such men are chosen as the members believe the corporation would like to see chosen?

This is the great problem which has not yet been solved in bringing about co-operation with­in the corporation; co-operation implies organi­zation, and how can organizations, independent and not managed and controlled by the corpo­ration, be brought about which are accepted as bona fide independent organizations of em­ployees, and not considered as sham organi­zations and treated as such? A great deal of trial and failure will undoubtedly be necessary to solve this problem. Sometimes an organiza­tion, which was treated listlessly and without interest for years, picks up suddenly by some men getting into it, and then gets efficient and recognized as independent.

If co-operation could be established between the corporations and the labor unions, within the limited scope of those activities in which the two organizations' interests are plainly the same, such arrangement would immediately receive the recognition of the employees as truly co-operative. But, unfortunately, in most places the relations between the two organizations are too strained to make such co-operation feasible and safe for the corporation. Furthermore, there is the fundamental difficulty that the labor union is national in scope, and the local organization United in power and authority, depending on the national body, and it would necessarily be difficult for a corporation to enter into relations with an organization which is not independent.

The same difficulty of bringing about real co-operation exists also between the corporations and the general public. It is the well-recognized defect of the American business man, which has largely kept American business out of the world's market; disinclination to consider any other viewpoint but his own, failure to con­sider the foreign customer's peculiarities, hab­its and wishes, and insistence on the adopted "standard" way of doing business. Within our country, less difficulty is experienced, as pro­ducer and customer both have similar habits and methods of business. Trouble is liable to arise only in the dealings between private and public corporations, such as municipalities. The attitude of some private corporations in making their proposition to the municipality in the form they consider as just and proper, and then standing pat and refusing to consider any other arrangement, has led more than once to unnecessary controversies—usually to the disad­vantage of the private corporation, as obvious with the present attitude of the public toward the corporation. Especially such is liable to occur with smaller corporations, or smaller branches of large corporations, which cannot have sufficiently broad-minded men at the helm.

The standard attitude of the industrial cor­poration has been, and largely still is, to avoid publicity, that is, not to give information to the public on the actions, attitude, and intentions of the corporation, their reasons and causes, not to explain and defend; in short, not to make any publicity campaign, but to endeavor to act fairly and justly and business-like, and expect the public to recognize and appreciate this. Probably by this time most of the corporations have been thoroughly disillusioned in this ex­pectation, and a whole class of literary men—and women—have grown up making a comfort­able living out of "kicking the corporations." To illustrate: many of those who were in the oil business in the early days, who tried to do the same as Standard Oil did, but did not suc­ceed where Standard Oil succeeded, have been hounding Standard Oil for years, until finally the Government dissolved Standard Oil and "re­stored competition" by dividing it into thirty-four competing companies, and so reduced the price of gasoline—and if you do not believe the latter, kick yourself, because there is no more a large corporation to hold responsible, as Stand­ard Oil is dissolved. And so throughout the en­tire field of industrial production, our Govern­ment, backed by public opinion, is still "trust-busting," while all other civilized nations are organizing their industrial production.

But the industrial corporation was to a large extent to blame for the growth of this hostility; it was too self-centered, self-satisfied, apprecia­ted too little the effect of public opinion, the hostility which arises from the use of secretive methods, and the advantage of explaining its actions to the public.

Especially in a rapidly growing democratic nation, it is not reasonable to expect anybody to go to special pains to find out what others do, but everybody, to be judged fairly, must come out before the public and explain his ac­tions and their reason, must be ready to defend himself. This the corporations have not done, and their enemies have done it for them, with the results seen to-day.

In the last years a change has come and more and more corporations appreciate their respon­sibility of informing the public, and many have done very efficient and very effective work in giving the public a better understanding of the corporation's activity. But while technical and engineering publicity of corporation activity has been fairly effective, the attempts of cor­poration men to represent to the public the social and industrial activity of the corporation have often been dismal failures and utterly un­convincing. Most of them were written in the style of the lawyer's brief—that is, giving at length all the favorable features, and suppress­ing or glossing over the unfavorable ones—and the picture drawn thus is so obviously untrue that it carries no conviction. On the other hand, if a true and fair representation is made of the corporation as modern industry's most efficient tool, as a necessary step in the ad­vance of our civilization, as an organization of human beings and for human beings, but as a structure under the laws of evolution, still im­perfect in some respects, open to improvements in others, with weaknesses well recognized but impossible to remedy immediately, because there are not enough men big enough to do it—if this picture is drawn, the writer will cer­tainly find himself quoted by isolated sentences picked out from his statements and put to­gether so as to represent exactly the opposite from what he explained. If he is a corpora­tion man it certainly will be heralded as a con­clusive evidence of the badness of the corpo­ration, that even a corporation man has

condemned it—and in reality he explained ex­actly the opposite. But such is modern literary "art," as we find it, from daily newspapers to monthly magazines; it is dishonest and dis­honorable to garble quotations, single out in­dividual sentences, and arrange and interpret them so as to make them give the opposite im­pression from that which the writer intended to convey, but, nevertheless, many writers and editors, who in every other respect are thoroughly honest, would consider it entirely proper by such methods to make somebody apparently express an opinion which he never held.

Thus the situation stands: to explain the corporation by giving only the favorable side, only praise, is ineffectual and unconvincing, because everybody realizes that nothing is per­fect. To give a true representation would be convincing to the fair-minded reader, and would quickly dispel the unjustified hostility now existing against the corporation. But it would by quotation, omission, and inference be perverted to give exactly the opposite meaning, and thus is liable to do harm. To say nothing, avoid all publication, as has largely been done heretofore, makes the corporation helpless against the intentional and, what often is much worse, because more impressive, unintentional misrepresentation.

The only remedy apparent seems to be to entirely throw open the discussion, give infor­mation to the fullest extent, and count on the public gradually realizing what is unfair mis­representation and what is reasonable. Here most effective would be the assistance of those numerous writers who are not connected with corporations nor with the muck-raking crowd, but have retained an attitude of independence and fairness, and therefore are listened to by the fair-minded. And there is within the huge modern industrial corporation a wonderful field of romance and interest, still unknown and un­touched by any writer, which in the hands of a Kipling or a Jack London would give most wonderful stories, more interesting and fasci­nating than any of the tales or novels of bygone ages of the world's history; the creation of prosperous industrial cities in the sandy deserts of the lake shore; the control in the service of man, for power production in the steam-turbine, of the steam jet which issues from the high-pressure steam-boiler at speeds so terrific that, compared with it, the monster shells of the high-power guns which have smashed Europe's strongest fortifications are crawling with a snail's pace, or the tragic search for years through all the continents and islands of the known and unknown world, for a fiber to make the Edison lamp filament; and when it was found and the discoverer returned, chemistry had in the laboratory created a fiber still su­perior. The history of the creation of the United States Steel Corporation, if it could be written, probably would be more fascinating and of more human interest than the history of the birth of many a nation.