THE QUARTERLY JOURNAL OF ECONOMICS JULY, 1895 INDUSTRIAL ARBITRATION IN THE UNITED STATES. THE years 1886 and 1887 marked an important departure in arbitration legislation in the United States. Up to that time five States besides Massachusetts and New York had passed laws providing statutory machinery for the voluntary settlement of disputes between employers and employees,- New Jersey in 1880 and 1886, Pennsylvania in 1883, Ohio in 1885, Kansas and Iowa in 1886. An analysis of the Pennsylvania, Kansas and Iowa laws appears below in the accompanying table. All this was essentially permissive legislation, providing more or less legal formality and "red tape" for such employers and employees as could agree to submit their differences to arbitration,-in other words, for doing what could often be done in a simpler and more satisfactory way without the aid of the statute. Ordinarily, these laws simply provided for the creation of local boards of arbitration in each county, usually upon joint petition to the Court of Common Pleas of a specified number of employers and employees. Whether the legal formalities were greater or less, however, seems to have made no perceptible difference in the results. Diligent inquiry failed to reveal that the laws were of any real use. Even in States like Pennsylvania, Ohio and New Jersey, where resort to private arbitration facilitated by sliding scales and by standing committees representing labor organizations or boards of trade-was found to be increasing, employers and employees evinced a decided aversion for the statutory machinery, and a preference for doing the business of arbitration in a way that best suited the exigencies of the occasion and the traditions of the trade concerned. Pennsylvania found her law unsatisfactory in three trials. The other States in question had not even thought the statutes worth trying. The beginning of the significant departure, however, is to be found in Massachusetts and New York. In 1886 each of these States passed a law inaugurating a new system of arbitration, consisting of the usual provisions for local boards of first instance, plus a permanent State board of three persons, appointed by the governor and having jurisdiction over the whole State in cases of appeal from the findings of the local boards. The legislative optimism which anticipated a resort to arbitration sufficient to occupy both local boards and a court of appeals was as little justified by the experience of Massachusetts and New York as it had been by the experience of other States. A year convinced the permanent boards of both States that, as courts of appeal, they were superfluous,- not because the local tribunals were sufficient and not because there was any dearth of disputes to settle, but because no local boards were ever called into existence. The experience of Massachusetts and New York was simply entirely in keeping with the testimony of labor bureaus and other experts as to the practical failure of such arbitration laws wherever they existed in the United States.* In 1886, therefore, Massachusetts and New York differed from these other States simply in having a permanent State board of appeal, appointed by the governor, with nothing to do. Naturally, these permanent boards sought to justify their existence. As the disputants did not appeal to them, they appealed to the disputants; and, spite of the fact that according to official interpretation of the statutes they were simply boards of appeal with no power of initiative in the settlement of disputes, they proceeded to tender their services as mediators whenever considerable strikes occurred. The very modest success attending these attempts at mediation and conciliation convinced both boards that they had a useful mission as official peacemakers, acting in the name and with the authority of the State, whatever their failures in other respects. Accordingly, the legislatures of New York and Massachusetts took the second step in the departure referred to. Early in 1887 each State passed an act reorganizing the State board and granting increased powers with special reference to taking the initiative in the work of mediation and conciliation. In addition to the old right of appeal from local boards, it was provided, first, that the parties to the dispute could elect to submit to the State board in the first instance; and, more important still, that the State board should have not only the right, but the duty, of initiative in the settlement of actual or impending strikes or other disputes. As reorganized in 1887, the Massachusetts Board of Arbitration and Conciliation and the New York Board of Mediation and Arbitration represented, therefore, an important innovation in the way of State intervention between employers and employed. These permanent tri * For more detailed information on this point, see this Journal, July, 1887, p. 487, "Action under the Labor Arbitration Acts." bunals of three men, with the duty of initiative, had all the powers conferred upon the local voluntary boards called into existence by joint petition of employers and employed, the power to subpoena witnesses, enforce the production of books and papers, and perform functions of an ordinary court. So far as the new power of initiative was concerned, it is to be observed, first, that the board must at once put itself in communication with the contestants, and tender its services; second, that upon the joint application of both parties it must proceed to investigate and settle the questions in dispute,- decisions to be binding six months, or until sixty days after notice given to either party; third, that, in case either party or both parties refused to accept the offices of the board, it might proceed to a thorough investigation for the purpose of declaring which of the contestants was to be blamed for the breach of industrial peace. Finally, the proceedings and findings of the boards were to be made public, and once a year reported to the legislature. It Obviously, this was not compulsory arbitration. might, however, involve compulsory submission to investigation at the instance of aggrieved employers or employees, compulsory submission of books and accounts to examination, and public condemnation by means of a published verdict expressly addressed to public opinion. The degree of coercion would of course depend, on the one hand, upon the susceptibility of the censured party to the unenviable notoriety attending this official pillorying, and, on the other hand, upon the degree to which public opinion was interested in the controversy and espoused the cause of the aggrieved party. As might be anticipated, experience has shown that personal equation to be very variable, public opinion being somewhat capricious, and the most culpable persons sometimes indifferent to it. Nevertheless, the element of coercion is a real one; and the alternative presented to the party which declines to have media |