CHAPTER XXVI

THE INCORPORATION OF TRADE UNIONS

Associations of Employers Unincorporated. The Claim of Employers. Incorporation Voluntary or not at All. Trade Unions Maintain Agreements. Moral Responsibility. Senator Hanna on the Indianapolis Convention. Responsibility Increased by Trade Agreements. Incorporation does not Create Responsibility. A Man's Word and his Bond. The Limits of Union Responsibility. Contradictions. The Taff Vale Case. Vagueness of the Law. Hostility of Judges. Fears of Workingmen. How Incorporation Laws should be Framed. Hostility to Incorporation not Hostility to the Law. Dangers of Incorporation. Needless Litigation. Home Rule for Unions. The New York Stock Exchange Unincorporated.

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URING recent years there has been a growing demand, urged persist

ently both by friends and enemies of organized labor, that trade unions should incorporate. It is argued that labor unions, at present for the most part unincorporated bodies not directly recognized by law, should become incorporated in somewhat the same manner as business enterprises. The law recognizes two classes of corporations, those "for profit" and those "not for profit," and it is held that unions should enroll themselves among the latter, and thus acquire ability to sue and liability to be sued. The result, we are told, would be to make labor unions more conservative and more responsible.

This solicitude on the part of many opponents of organized labor should, in a certain sense, be gratifying to unionists, since it is a flattering recognition of the power of organized labor. As long as the unions were small, feeble, and incompletely organized, no loud cry was raised for incorporation, since any employer could lock out his men or refuse to deal with the union. However, the extraordinary growth in the number and power of unions has evoked a strong sentiment for incorporation and for increased responsibility.

Viewed superficially, there appears at first glance some justice in the claim of employers that unions should incorporate. The employers assert that in making trade arrangements with labor unions they are risking vast sums of money invested in valuable properties. They aver that for any breach on their part of these contracts, they, the employers, are legally responsible, whereas for a similar breach on the part of the workmen, no one is answerable. Trade unions, it is maintained, should put themselves into a position where they may sue and be sued, and should accept all the benefits and all the responsibilities of a legal body incorporated under the laws of the state. If the union will not willingly incorporate, say some employers, then it should be forced to do so.

In all the vague talk upon the subject of incorporation one thing at least is clear, that incorporation must be either voluntary or not at all. The constitutions of the United States and of the several states protect the individual workman or group of workmen, as well as all other persons, from being forced against their will into an incorporated organization. No law compelling a labor union or any person or body of persons to incorporate would for a single moment be upheld by the courts. Incorporation is always a privilege, never an obligation, and a charter must be accepted before it becomes valid. The courts of the several states have repeatedly declared that "no man can be compelled by the legislature to become a member of a corporation without his consent." To refuse to allow a union to exist unless incorporated would be to deprive citizens of the right of lawful assembly as well as of the right to enter freely into contractual relations. Finally, apart from all other reasons, to legislate labor unions into the acceptance of charters would be unconstitutional, since it would be class legislation affecting only certain groups or associations, while leaving other classes unaffected. It is, of course, conceivable that stringent laws might be passed attacking labor unions with the purpose of compelling them to incorporate, rather than incur the animosity of the legislature. The general effect of such restrictive legislation, however, is simply heightened secrecy and increased irresponsibility, and not an approach to greater openness. It there

fore seems clear that the question of incorporation or non-incorporation is one for the unions themselves to determine and is not a question to be decided for the unions by the legislatures of the states.

Even though the unions cannot be directly forced by the legislatures into incorporating, they should not, on this account, refuse to give due consideration to this or any other seemingly reasonable demand that may be made by the employing classes. The proposal to incorporate should receive a respectful hearing and should be considered upon its merits, the question of the advantages or disadvantages of incorporation being decided upon the probable effect which it will have upon the labor unions and upon the country at large.

If we look somewhat more closely into the arguments of those who favor incorporation of trade unions, we will find good ground for refusing to take a step in this direction without due consideration. The usual cry is that unions should become incorporated in order to become more responsible and, therefore, more conservative, but few people ask themselves what they mean by responsibility, or whether the unions are not already as responsible and scrupulous in keeping their engagements and agreements as they would be if incorporated. The chapter on trade agreements will show that arrangements made on a large scale between employers and employed have usually been conscientiously maintained and lived up to by both sides. There is such a thing as a moral as well as a legal responsibility, and in many cases the word of a man or an organization will bind him, when, if it were a legal agreement, he might hire a lawyer to drive a coach and four through it. As a rule the men keep their contracts with admirable fidelity. "I do not believe, under the present condition of things," says Marcus A. Hanna, United States Senator from the State of Ohio, "in incorporation of trade unions. . . .. The test has come, for, when in their dire extremity, the anthracite miners of Pennsylvania appealed to their fellows in the bituminous fields in the West to come out and strike in sympathy, in order that conditions might be forced upon this country which would enforce a settlement of the trouble. . . . . the bituminous coal miners,

with calm, cool judgment and loyalty to their agreement, voted unanimously against a sympathetic strike."

The way to make unions responsible is to give them something to be responsible for, in other words, to make a trade agreement with them. Such agreements for large industries should not be merely local, made upon the sole authority of a small body of men liable to be swept away by excitement, or of a single small employer, subject to the incalculable competition of the local market, but should be broad and general, involving, if possible. the whole industry and binding employers and men for a year or a period of years. The breach of an agreement of this sort involves consequences compared to which the damages that could be claimed by an employer or collected from even a wealthy union, whether incorporated or unincorporated, would be small indeed. Too much stress is laid upon the argument that the employer is responsible financially, whereas the employees are responsible merely morally. In the first place, it is not the fact. The great organizations of employers, the National Association of Manufacturers, the Typothetae, the associations of coal operators and of other employers are not incorporated. Apart from this fact, however, neither the workmen nor the union making a trade agreement for a particular city or for a whole region have, as a rule, a remedy at law for its violation. The union cannot recover damages, because its interest in the contract and the damage sustained by it are, from a legal point of view, merely hypothetical, while the individual workmen fail to secure damages owing to the fact that they are not parties to the contract and for various other reasons. Even where the damage can be proved, the amount is not easily ascertained. In the case of the Garment Workers, who had made contracts with the employers, it was recognized by the union that it was practically impossible to estimate losses or damage incurred, even if they were recoverable. In this particular instance bonds had been given by employers for the faithful performance of contract obligations, but even in this case, the union failed to recover by means of a forfeiture of the bond. The employers did not deny that violations had been made, but merely claimed-and their claim was sustained by the court-that

their contract was not free, but obtained under duress, since, but for the contract with the union, they could not have remained in the business. There are many cases where a man's word is better than his bond or than a guarantee fund. The obligation resting upon the miners and operators to accept the award of the Anthracite Coal Strike Commission is purely moral. and in no sense legal, and yet both parties to the controversy have recognized and will continue to recognize that this obligation is stronger than any mere legal obligation, which might be avoided through technicalities of the law or the shrewdness of attorneys. Finally, it may be stated, as showing that both employers and workmen trust to the moral rather than the legal sanction of agreements, that where employers actually do break their contracts, the workmen strike and do not sue.

Even if the liability of the unions for the fulfillment of their contracts were not sufficient, and even if it were desirable and necessary to increase this responsibility, there is no good reason for believing that such a result would come from the mere incorporation of trade unions. Incorporation does not create funds, nor does it always make existing funds attachable. The object of incorporation in the capitalist world is not to create but to limit responsibility. Mere incorporation would not accomplish the purposes of those who advocate it and nothing short of a guarantee fund deposited by a union, whether incorporated or unincorporated, could have this effect, it being even doubtful whether this measure itself would be successful. Perhaps one of the chief aims of some of the adherents of incorporation is to make the unions responsible for things for which the law does not at present hold them answerable. Some of the advocates of incorporation of trade unions seem to desire by this means to make the unions responsible in cases in which individual men strike or leave the employ of a company which has signed a contract with the union. Such a responsibility, however, is and should be beyond the legitimate province of the union. Except in such contracts as some made by the Longshoremen, the trade union is not a guarantor of a labor supply and does not agree to do a certain amount of work or to furnish a certain amount of labor. A contract entered into by