Banker, born at Piqua, Ohio, September 7, 1849. In 1890 organized the Union Savings Bank & Trust Company of Cincinnati. Trustee of College of Music, Cincinnati Art School and Cincinnati Law School. Is a director of many banking associations.

THE RELATION OF CAPITAL AND LABOR

BY JACOB G. SCHMIDLAPP.

IN THE August (1911) issue of THE EDITORIAL REVIEW I wrote an article on Profit Sharing, Pension and Annuity Funds, in which I outlined the salient features of an organization that has for twenty years been successfully conducted by the Union Savings Bank and Trust Company of Cincinnati, Ohio.

In the present contribution I shall endeavor to set forth other aspects of the important question of the relations of Capital and Labor, about which so much controversy is being carried on today.

Some manufacturers may have found that Profit Sharing could not be applied to their factories. What is akin to it, however, can be so applied. I refer to the Bonus Plan and most earnestly I urge employers to find some incentive that shall give the wage earner greater interest in his work and to compensate him for increased efficiency. Employers can afford to be very liberal in the division of profits that extra effort on the part of the workman produces for the expense of the plant being already provided for, the overhead unit cost for the increased output will go entirely to the firm or company. This plan is being tried by some manufacturers in Cincinnati with good results, and in one plant where the majority of the workers are girls, the average bonus during the past year was sufficient to care for their savings fund. The gain to the company has been even more than the total bonus.

This idea is not brought forward with any motive of reflection on the plans of the labor unions. However, the more closely allied labor becomes to the institution for which it works, the necessity for, and expense of, outside organization is lessened. Under present conditions the demands of labor organizations and even some of the claims of the Socialiste must be considered by employers.

In England the minimum wage plan is being tried. This is one that is not in sympathy with the ideas of the economist. We are always freer, however, to criticize the conditions in a foreign country than those in our own, and it may not be uninteresting to outline the working of this new plan.

The so-called Trades Board Bill of 1909 applied to only four industries. In order that the justification for this Act may be understood and the conservative way in which the Arbitration Board handled it may be realized, some startling facts must be borne carefully in mind. The average weekly wage, for instance, of the women chain makers at Cradley Heath was found to be from four to seven shillings. The conditions in the so-called sweat factories in the Nottingham lace trade were somewhat similar. There a minimum rate of two and three-quarters pence was fixed, with the understanding that, after a year, it would be increased to three pence per hour. From the low wage originally paid it will be obvious that some action, either by the State or by other bodies, was absolutely necessary in these factories.

I am of the opinion that in the United States under our form of government, and where our efforts, so far to lower prices by enforcing competition have resulted in higher cost, the State should be relieved as much as possible from the necessity for interference of this kind. This can be accomplished here by employers who sympathize with the demands of labor using their best efforts to ameliorate the laborer's condition.

In an organization in Cincinnati with which I am associated, a scientific test is being made of school children over the age of fourteen applying for work certificates. Experts have found that in making psychological tests the sociological condition of the family is revealed, and vice versa. In examining the intellectual condition of the child, the home conditions of the family are found reflected. This is not universally, but very generally, true.

Years ago, under different conditions in factories, it was possible for us to judge from the disposition of an employer the kind of workmen who, as a rule, were under him. The contentment and prosperity of the workman always reflected the power and interest of their employer. The same moral influence arising from close personal contact between master and apprentice has unfortunately been largely lost in our great industrials; but I believe that, if the effort is made, a master mind could again bring about a similar relationship by using his influence through the heads of departments who, in their turn, would extend it to the laborers under them. That this could be done with profit to both the establishment and the employee no one doubts.

I have referred to the theories of Socialists and said that some of their demands should be considered. The harm they do is not so much in their theories as it is in the preaching of them. Afflicted as they believe themselves to be, they go about instilling even into children the gloom that is in and about them, and that they must not expect any change until their theories are instilled into our form of government. How much better it would be if they preached sunshine instead, and advised their children to try to improve their condition, and to overcome the drudgery of their employment, which they can largely do by taking an interest in their own work, and by trying to do better each day than they did the day before.

I have said heretofore, and I repeat it now, that I believe the safety of society is in economy, both for individuals and for nations. When the laborer shall get into position so that he can save a dollar per week, and when the employers shall be willing to care for this upon a six per cent. basis, the former will have accumulated at the end of a lifetime's work -say forty years-$8,000, a splendid nest egg for the second generation. If this were the average accumulation of the ten million wage earners of this country for forty-seven years, they would be in entire possession of the present wealth of the nation. This is a way in which the Socialist can legitimately work out his theory of more equitable ownership of lands and capital. Let him instead of preaching despair, teach the wage earners that by saving one dollar per week, their families may become the world's capitalists.

I have said ten million wage earners. This is a little less than one-third of the gainful population of the country, and I assume it is safe to say that at least this amount has an average wage of a little over $12 per week. If we included all those in gainful occupations, it would only require a saving of five cents per day to meet with the same result of shifting capital from the idle rich, as the Socialist is pleased to say, to the deserving poor, and lest this article may get into the hands of one of the disciples of the cause I am referring to, who might misunderstand me, I will say that by the nation's wealth I mean everything-not only the banks and factories, palaces and farms, but everything contained therein.

I want also to make clear, however, that in no way would I have this policy of saving carried to such an extent as to