Document 2JOmkGzjEZ3y0mdYJEL3ZLjYR

FILE NAME: Baldwin (BALD) DATE: 0000 DOC#: BALD063 DOCUMENT DESCRIPTION: Book Excerpt - The Baldwin Locomotive Works - Triumph & Eclipse 210 THE BALDWIN LOCC flV E WORKS Railway in OT- h - * . SYLVANIA (PMHC) " T ?"" S h ^ L , " " "l throughout.31 v ,,ntial strength lay in its ability to As these examples suggest, win cust0m products rapidly, marshal a skilled, labor-m.ens.ve ^ ^ ,, meeri,,g Us - demand, * " mP" 'aV' Pr,OTbUB^ m* K d i r e c t d J " : " Z A partners believed .bar TM , o d n c i n g indues, pteempnve manager, " 4is dKisi,,,,, it made sense to ^was - d an empty . c promi ^ mitiative. and .{^ ^ , " i s L Ttaeo^ ta. stressed individual effort, limired managed ranks, bur would 1 -- " dt cor > tomodva" a that after .900 generally exceeded ten rhormnd men. THE COMPANY AND ITS WORKERS ,,m m they received goo w^ ^ ,, ,, s 0f skill required to budd t T TM t H f C S h i* ". 'their jobs. These basic rene* defined the TRIUMPH AND ECLIPSE 211 com pany's producer culture. For forty years it had secured peace between labor and management. v . , , A fter 1897 Baldwin faced the difficult problem o f promotmg individual initiative in a workforce that had swollen to mammoth proportions almost overnight. Growing from 3,200 men to 18,500 between 1897 and 1907, the force quickly came to be dom inated by newcomers unused to the com pany s tradi tions. M ost o f these new men were outright machine tenders and laborers, t the fivefold increase in em ploym ent over the decade had accelerated Baldwins forty-year trend o f em ploying industrial operatives. Because Philadelphia s reser voir o f skilled workers was inadequate to provide for the com pany s expanding needs, Baldwin had to subdivide tasks rigorously so that new men needed only a narrow competency." Some evidence o f this transformation o f work is evident in the com pany's own definition o f skilled labor. In 1903 a Baldwin officer wrote, "A skilled workm an i s . . . one who is familiar w ith the use o f a tool, a m achine, or a process." " Com pared w ith the graduates o f Baldwins 1860s apprentice program, an em ployeesom petent to operate a single machine tool hardly qualified as a skilled worker. But the company s loose definition o f skill accorded w ith general trends in Am erican industry, trends so pervasive t at some craft unions would grudgingly accept such operatives as members. Though Baldwin needed these new men, their vast numbers threatened to overwhelm the errmpany-s produce, culture. Their highly specialised skdh were also incom patible w ith the firm's tradition o f internal promotions; many o f these new men we simply machine modern, changing their time fo r , ge. The company made no seem, of the 6 c that if workers begrn hmd together seeking bene, wages, they would be insmntly dismissed." But m addmnn nr Ais threat, the pmtnen sought some positive means to revrmhae the labor pannenhip o f earlier yearn,soin 1901 they inaugurated a new ^ ^ ^ d ce sh ip p m g m m h a d d ie d in d m la m ^ a c a su a lv o f workers' specialization under piecew ork T he com pany began the new program in part to counter the narrowing o f skill that piecework had ^s- tend. Baldwin's new system of worker training was an ample f ^ apprenticeship" movement in Am erican industry that dated to the late 890s. S L traditional apprenticeships, these programs aimed to train young men broadly in their chosen craft. T he novel aspect was an additional com ponent ofdassroom educator, generally in vo cato al subjects. U rtoe B a l ^ , m madrinent builders had never discontinued apprentTMdrrps dunng the Gdded A ge, so in this sector "renewed apprenticeship" would be a more accurate ``" S t o W s superintending panne., Smnuel Vaudain, devalued the program, and he comrnentedftequendy on its goals and benefits. Chiefly he argued that THE BALDWIN LOCOMOTIVE WORKS by instilling in these boys the "traditions of a plant, the company created a cadre of workers who would form the backbone . . . for the development of a good, loyal body of men." Vauclain also saw the program a, an antidote to the " `race suicide' of the trades," which had occurred as industrial employers killed off craft skills by piecework and specialization.16 Broad y trained prograr graduates would become leading workmen, contractors, anc. foremen. In renewing apprenticeship Vauclain sought to provide in the 1: tpersonal, teemin factory the same chance for individual recognition and advancement that ne and his fellow partners had enjoyed in the nineteenth ccnturv. To accomplish this variety of purposes Baldwin created a three-tiered apprenticeship program.38 First-class graduates would becon e top mechan ics, tool room hands, and layout men. Contractors and sub: iremen came largely from the second class, while the third class was on a ,ra|emor> leaving to foremanships or the executive ranks. A superintendent o: apprentices, Nathaniel W. Sample, oversaw the program. He had indentured as a macniim at Baldwin in 1859, so the new program had a direct tie to m predecessor, foremen and contractors in each shop were responsible tor the boys training, and the apprentices rotated througn eiitierent departments .1 actj.uic on experience. First-class machinist bovs started out on planer-, passed tiuougn nine intermediate tvpes of machinist s work, and ended up n tue v. u.,i.;v _ task of setting locomotive valve gears in the erecting s.nop.1 After me v\ o .a whistle blew, first- and second-class apprentices had to atte" J mgnt wa-ws in a variety of technical sublets at one of I'hiladelpma s mans \0cat1o.1H Such classwork in algebra, geometry, and mechanical draw. ig was r.e. mm, the "new apprenticeship, which sought to impair theoieti,. ai to i.,|\.o .s' addition to manual skills. Diaries kept bv a drafting room apprentice, Vernon Got vals. rrom 1900 : 1911 describe one young man's training.''1Gotwals began at simple ga> on: v. quickly brought along. Working under the tutelage of seni. r men, tne voting apprentice was soon turning out quite demanding drawing, such as designs 1 new boilers and erecting plans for complex Mallet designs. 1 he pay was mew and his workday often stretched to ten p .m . on the nights he did not attend electrical-engineering or physics classes at Drexel Institute Despite the low 1 and long hours, he loved his job, often spending his lunch hour in the erect 1 shop watching as skilled erectors rendered his plans in stee.. The evidence suggests that Gotwals's experience was tv. ical and that appi ticeships were in high demand. From the company's view; oint the program proved an incomplete success, however. After seven years \ auclain reported the training system "has been highly beneficial to 11s. \Xe do not now need t consider going outside to hire skilled men. 11 While true e rough, it also app that most apprenticeship graduates soon left the company s employment. F: TRIUMPH AND ECLIPSE 213 :w occasion is jnknown. but sometime after 1902 a photographer found these Baldwin apprentices congregating in front of the massive plant on Broad Street, library or YCRl.sS Jooi to 1910. '.30c boys entered the program, but in 1910 onlv 230 apprentice graduates weie working at Baldwin.'*3 This poor retention suggests that the program large v necame a pipeline to the managerial ranks rather than a svstem or worker tra mng.`3 Graduates not tapped for management positions evidently ontuincd bet!. r-pavmg or less specialized jobs outside locomotive building. Although tie program fell short of Vauclain's stated purpose of creating a arge cadre of loyal workers, it did provide noteworthy benefits. During their terms the apj "entices provided an inexpensive pool of increasingly skilled labor." N'o d. am: great numbers of bovs were the sons of Baldwin workers, and tnese fathers must have appreciated the training given their sons. The new training syste n also represented a modest effort by Baldwin's partners to bridge the gap with tieir workers that had widened with the company's overall growth and division of labor. Finally, the program provided good public relations. 1 he Baidu in company received frequent press coverage in the earlv years of the twentieth century, and the apprentice program contributed to the attention. For forty yearn editors in search o f good copy had been drawn to this firm, a giant of Air erican industry making a mysteriously powerful product that symbolized n an s technological triumph over nature. Circa 1900 Baldwin's officers began to contribute to the coverage, writing so many articles as to suggest a purposeful public relations campaign.'15 Although the general public seldom purchased locomotives, there was a widespread Progressive-era concern with 'the labor question." The partners took pride in their company's forrv-vear 214 TUB BALDWIN LOCOMOTIVE WORKS heritage o f labor peace, in contrast to die strife so com mon during the G ilded Age. As Progressives turned to the m ediation o f such conflict, Baldwin seemed to have some answers.46 In 1902 the N ational C ivic Federation sponsored an "industrial conference" to examine opportunities for a rapprochement between Am erican labor and capital, and at that m eeting Baldwin was cited for its tranquil labor relations. To examine this success a reporter, E . A . Bingham , visited the firm, writing up his findings in an article called " T he Labor Situation at the Baldwin W orks." 47 Bingham repeatedly cited examples o f Baldwin's producer-culture traditions. H e led by describing the firm's status as "an old-fashioned partnership [in which] from the front office to the ash heaps the old idea o f partnership and reward and prom otion is realized in a fashion that makes the works unique." Even a new apprentice "knows that if he is faithful and bri ght . . . he m ay be a partner someday." O rdinary workers were m otivated by the chance for prom otion and by the piece-rate pay system, since "no lim it is put upon a man's skill___ T he m ote he earns for him self, the more he makes for his employers." Bingham's article did not describe actual conditions at Baldwin in 1903 so much as summarize the old nineteenth-century ideology that management sought to perpetuate. But the com pany's expansion after 1897 had rendered much o f its culture anachronistic even as an ideology, let alone as a statement o f actual conditions. By 1903 trusts and corporations, not "old-fashioned partnerships," ruled Am erican business. Since 80 percent o f apprentices left Baldwin's em ploym ent, evidently few believed that their own careers could parallel the rise o f partners like W illiam Austin or Samuel Vauclain. These owners may have thought that "no lim it is put upon a man's skill," but eight out o f ten apprentices evidently decided that Baldwin had little to offer them. The Baldwin partners clung to this culture, despite its increasing irrelevance, because it had sustained and justified their own careers while serving their com pany well for a h a lf century. D uring the G ilded Age Baldwin backed up its individualist rhetoric w ith high pay and wage increases. As the industry leader it could afford such policies, which sim ultaneously blunted workers' desires for union representation while securing com petitive advantages for the firm. A fter the late 1890s the partners still clung to the old ideology, but they had to abandon the wage policies that gave force to the rhetoric. Philadelphia was nationally known as an open-shop city hostile to unionism, which gave the Baldwin partners m ore latitude in their internal policies. But the firm's overall growth also increased the likelihood that at least some workers would eventually challenge management. TRIUMPH AND ECLIPSE 215 C LI MA X A N D C H A N G E , 1 9 0 6 --I 9 0 9 In 1,906 the Baldwin company employed 17,400 men, and it made 2,666 locomotives and other products worth over $46 million.48 It was a banner year, thanks to the financial strength o f American railroading. Business was so good that a congestion o f parts and workers crowded the factory, despite the expansions o f only four years earlier. W ith no fiirther remedy available in center-city Philadelphia, the partners finally decided to strike out for the suburbs. In M ay 1906 they purchased a 185-acre site at Eddystone, just south o f the city. By year's end, foundry operations had been moved down to Eddystone, where a thousand Baldwin workers toiled.49 The Pennsylvania Railroad and ' the Baltimore and O hio traversed the site, which also fronted on the Delaware River. W ith plenty o f land available for growth, it was the ideal location for an entirely modern locomotive plant capable o f meeting the demands o f the future. Eddystone was Baldwin's response to the evident financial strength o f its U.S. railroad customers. But by 1906 the great consolidation systems that dominated American finance and commerce had become targets o f public hostility, largely because o f that domination. President Theodore Roosevelt, the Congress, and much o f the country saw these powerful corporations as exploitative monopo lies, requiring close regulatory oversight for the national good. Their chosen instrument was the Hepburn Act, a law enacted in June 1906, which removed ultimate review o f railway rates from the Supreme Court and gave that power to the Interstate Commerce Commission. The commissioners would wield their power vigorously.50At first, however, there was little outward evidence o f any fundamental change in either railroading's financial health or Baldwin's flush order books. While 1906 saw record output for the firm, 1907 promised even more business. Then October saw a sharp fall in the value o f shares traded on the New York Stock Exchange. The bears' stampede set off the Panic o f 1907 and a subsequent depression. The economy had been overheated for months, but financial analysts attributed the Wall Street slump to unfriendly legislation, particularly the Hepburn Act." 51 The 1907 Panic, often called "the bankers' panic," did not have the dev astating effect on the general economy that followed the 1893 stock market sell-off. For example, thanks to deep price cuts U. S. Steel ran at 75 percent o f capacity in 1908, and a year later its mills faced a backlog o f orders.52 But in the neighborhoods around Baldwin's Bush Hill factory, the panic was a disaster. As 1908 opened, pay cuts and layoffs swept the plant that only five months earlier had employed twenty thousand men working two shifts. Even as it slashed the workforce, Baldwin took contracts at prices below cost, trying to keep some portion o f the organization alive.53 By July the force totaled forty-six hundred nil'll on .i twenrv-tivc-hour workweek. Hunng in - rolled out of the erecting shop, the lowest sales re. were sobered hv the low volume of business bur o.pcsnw rime. Instead the next two rears brought a numher ot mi On March 190s), one of Baldwins six partners, \\ i Hired originally bv Matthias Baldwin, Hcm/es .i.iu m .. partnership since 1O0. He held a 20 percent miriest .1, !I! S6 million. His will contained the usual terms torbiddm; ib O' for pavment of Ills ownership interest, hut Hens/e\ s s.c. time in Baldwin's finances.'1 The firm had borrowed he., expansions in the boom just past, and ousmess \wo then hnancial demands loomed m mat two pattneis. 1 nopm- ( lotiverse, were ninety-three and sixty-nine news oid. 2" decided to incorporate the firm, hoi \cais tlr.i u ' 1, managerial autononn the partnership toim piosiUec. . I 11. ohmttivc had pained aceevh u> die pnhiK ^aj-' ' ` " -1, if; IHml. *1! V..O HUMlHihle d.'i.U [XlldW'SIl kk'O'eilm duc'lA - 1 1:K or|H H\l LK)M Baldwin IcM' 1.1111Ok! MI, mO. 1\ Ms:.- 1tf u\\ m/rship and nianJiynienP sik HI TRIUMPH AND ECLIPSE 217 LINES OF DIVISION, 19IO Baldwin's firs: forav into the bond market required careful handling to launch the firm as a nlue-chip investment. Negotiations to place the issue through the investment banking houses of Brown Brothers and Kuhn, Loeb & Co. proceeded in February and March 1910. While the financiers were hammering out the details, bedlam broke out in the streets of Philadelphia. On February 19, 1910. over fiv.* thousand union motormen and conductors struck the Philadel phia Rapid Transit Company (PRT).5' The strike quickly turned ugly, with a number of public disturbances. On February 23 a riot broke out in front of Baldwin's works on Broad Street, Philadelphia's main thoroughfare. The trouble seems to havr started between picketing PRT strikers and police assigned to protect the t"ollevs running down Broad Street. Baldwin workers in the street during their lunch hour began jeering at the bluejackets. Never known for brilliance or restraint, the Philadelphia police responded to this provocation by firing on rwc locomotive workers, wounding one in the leg.58 The commotion drew more or Baldwin's men outside. Vice president William Austin described what happened next: The polio- ran the men back into the shop and then trouble began. Before anvone kr ew what started it we heard pistol shots. I looked out of the office window and saw a long line of policemen, about 1 dozen, lined up in tront of the Widow Street Shop actually firing into the second and third story shop windows. Thev were answered bv a vollev of nuts, bolts, washers, shaft hangers, hon rods, etc., some very heavv, and all calculated to kill if landed in the rigl t spot. The police shot at least 200 shots into the shops. Fortu nately no .me was hurt on either side but for a while it was very serious business." This incident became front-page news around the country; the Duluth Minn.) Xch-S Tribune headlined it as the "Battle of the Baldwin Works." The company's management no doubt hoped that calm would soon return, but Baldwin's workers were enraged by the police action, described even by the sober Philadelphia Evening Bulletin as "Russian rule." 60 With the power of the city, the state, and the PRT all allied against the striking carmen, Philadelphia's labor leaders turned up the heat. On March 4 an umbrella grt up for organized labor, the Central Labor Union, declared a general strike in all industries throughout the city in sympathy with the carmen. It was a desperate gamble, of dubious legality, which American Federation o f Labor president Samuel Gompers refused to endorse; but by the second day up to one hundred thousand workers around the city had quit work. In its second week the general .` trike began losing strength as sympathy with the PRT strikers gave Zl8 THE BALDWIN LOCOMOTIVE WORKS The "Battle of the Baldwin Works,' as the Duluth News Trwune headlined the storv, was only one of manv bitter incidents in Philadelphia's 1913 streetcar strike, which also saw the bom sing of a car barn, inces sant stoning of cars run by replacement motormen, and repeated battling between police and large crowds of strike sympa thizers. But newsaaper editors across the country gave wide play to wire-service photos of police firing at random into Baldwin's fortresslike factory-- images symbolizing the sitriolic passions that ruled the entire c tv. M i n n e s o t a HISTORICAL SOCIETY way to the hard reality of food and rent money.61 But Baldwin's workers were just beginning their fight. Baldwin's employees were un willing to join the general strike en masse, but a substantial number had grievances against their own employer, grievances that drew them to eve ning rallies and meetings.62 Thanks to the accounts of informants who reported to superintendent Vauclain, we can see how the sympathy strike turned into an action against the Baldwin company itself. On March 9. five davs into the general strike, a rally held at Philadelphia's Labor Lyceum "was crowded, mostly with men from the Baldwin plant.'' 63 Speakers exhorted the men to join unions, arguing that they were underpaid and urging them to attend a special meeting, for Baldwin men only, to be held the next day. At that gathering an erecting shop worker argued that Vauclain was guilty of "bad faith" for not restoring wage cuts exacted during the 1908 recession.6'1 Bv March 12 thirty-five hundred Baldwin employees had banded together in an organization known simply as the "Baldwin Workers" to petition the company.63 It is unclear and ultimately unimportant how much of this protest arose spontaneously among Baldwin men rather than having been elicited bv labor organizers. National unions like the International Association o f Machinists and others quickly sensed their opening. The IAM had begun to organize Alcos workers in January 1910, and preserving that advance alone offered a sufficient argument for hurrying organizers into the Baldwin plant.66 But groups o f Baldwin men also acted purely independently; for example, men from one machining department petitioned Vauclain for ihe return of pay cuts, a Saturday half-holiday, and time-and-a-half wages f ar overtime. In the TRIUMPH AND ECLIPSE 219 workweek ending Saturday March 19 roughly twenty-five hundred employees : at of twelve thou1and did not report for work.67 Most evidently returned the f blowing week, but organizing continued, as did petitions seeking Saturday 1 alf-holidavs with to pav cut. Workers also complained about piece-rate cuts, me narrowing of sLlls under piecework, and unfair treatment by contractors.68 Samuel Vauclain was not about to tolerate unions in his plant, but a number id factors forced him to take a conciliatory stand, at least publicly. Negotiations m place the sio million bond issue with the bankers were almost complete, . nd an open breach with the workforce could only hurt bond sales.69 Also, tne locomotive market was finallv picking up in the spring of 1910 after two r ad vears. At least ror now, Vauclain preferred making engines to breaking anions. Ascribing tome minor troubles to the sympathy strike, he announced n March 12 that r ew orders would shortly bring an increase of four thousand : ten in the workfo we. and he urged all to roll up their sleeves and get to work. 0 1 lis emplovees did ust that, union and nonunion alike; bv August, sixteen nousand men filled the shops at Broad Street and Eddvstone. As spring gave vav to summer, Baldwin's labor-management relations re ; rained outwardlv quiet. The company avoided provoking an open break, while ' others concentra ed on organizing. Evidence suggests that at the contest s ; pening, anticorrq anv sentiment was strongest among immigrant workers in 'unskilled or unsk lied positions, although a number of skilled men also joined lire union cause. 1 After three months of organizing, Philadelphia Locomotive i odge No. 466 of he IAM claimed two thousand Baldwin machinists as mem i ers. ' Other trade- joined these men, and bv 1911 a total of thirteen different , raft unions, all American Federation of Labor affiliates, were represented in Baldwin's two locomotive plants. 3They included locals o f the patternmakers, 1nolders, blacksmr ns, boilermakers, asbestos workers, and metal polishers unions. To create internal cohesion and present a united front, representatives of each Baldwin local sat on the `'Locomotive Builders Council," which sought no coordinate the <ctions of all trades. '1 Vauclain was aim busv wooing workers that summer. In response to their petitions he granted a paid Saturday half-holiday. He also moved to bring the , ontractors under fighter rein, issuing new Shop Rules in July that increased rmancial controls over the contractors.' 5 Private shorthand notes kept by Bald win's president, W iliam Austin, over that summer also show a determined effort no root out contractors' abuses.-6 The officers' main concern was contractors' i xploitation of the company, not workers. But by curbing the autonomy of ' hese production tosses, Austin and Vauclain reached out to many workers whose dissatisfacti m was primarily directed at the contractors who oversaw i heir workday. To .ecure workers' loyalty even further, Vauclain raised wages by ,;n average of 7 peicent over the level paid during the boom of 1907.,7 As 1911 220 THE BALDWIN LOCOMOTIVE WORKS opened, a curious calm had fallen over Baldwin's labor-management relations as the company and union men each vied for the alle giance o f uncommitted w o rk ers. While neither side would outwardly provoke rhe other, both sought to build strength for the coming showdown. MANAGEMENT STRIKES BACK, I9II In the spring of 1911 Baldwin's officers were again juggling financial affairs with issues in the workforce. The bond issue of the previous year had sold well, but the company was still hungry for cash. The officers c.ecided to reincorporate to allow a public stock offering. Vice president Alba Johnson opened negotiations with Philadelphia's Drexel & Co. and White, Weld & Co. o f New York to take the company public. At the same time, Samuel Vaudain decided to break the unions' grip before it got any stronger. Vauclain moved with exact calculation at precisely the moment of his own choosing. On June 1, 1911, he announced a new "Employees' Beneficial Associa tion." 78 The association was a novel departure for Baldwin, which had generally avoided such programs of welfare capitalism. It included an employee payroll deduction savings plan, injury and illness benefits, and death benefits for the heirs of men killed on the job. These provisions were available only to members of the association, but the firm placed few restrictions on eligibility. Finally, association members enjoyed preferential rehiring in the event o f layoffs. While aspects of the plan were undeniably generous, altruism alone hardly motivated it.'9 Vauclain created the association to hold the loyalty o f his nonunion men and perhaps win back some who had gone over to the union side. Just before producing this carrot, Vauclain wielded his large stick. The 1910 upswing in orders had proven brief, and with sales off the superintendent seized the moment. On May 26 the company announced an impending layoff of twelve hundred men. Calculated to produce a showdown, the layoffs plucked union workers from all departments.80After a pro-t.nion boilermaker was discharged, the boilermakers walked off the job, and men in all the organized trades quicklv followed. None o f the national unions involved had authorized a strike, but the strikers could take heart from the evident solidarity of trades in the plant. Thanks to the industrially organized Locomotive Builders Council, the thirteen striking unions spoke with one voice. By June 8 the council claimed that 10,700 men out of a force totaling 13,000 had laid down their tools.81 In fact the unions were putting up a brave but false front. Baldwin's payroll records for the first full week of the strike reveal that slightly more than half of the workers refused their call and stayed on the job.82 The company said little in response to the walkout, announcing simply that strikers seeking to return could apply only as individuals; Baldwin refused to deal with unions or union members per se. On June 24 the company knew it would ultimately prevail, for TRIUMPH AND ECLIPSE ountry? Would you like to be the property o f JiPierpont Morgan ? If you pride yourself on being a freeman,, you will answer: NO 1 But how are you going to stop it, i f Morgan gets hold of all the land and industries? Morgan has just got hold of the Baldwin>'Locomotive Works. He has inflated its capital many millions of dollars; and he has made up his mind to squeeze additional dividends, on the watered stock, out o f themen who work at the Baldwin plant. The workers object. They are out on strike. They do not intend to he starved into submission. And they will not surrender, if you will help them. Do you want them to be Morgan's slaves? Do you want to he one yourself?' If you do not, then help the men who are out on strike at Baldwin's. Tomorrow an authorized collector, with proper credentials, will call at your home. Give whatever money you can to the strike fund. Every penny counts; every dollar will tell. STRIKERS RELISEIFMOCNOKMNMEBIETLT, ECEha,irm an, 2 3 2 North 9th St. JOHN J. MILLER, Secretary. To rally financial support, the strike leaders circulated handbills playing on J. P. Morgan's involvement in Baldwin's 1911 public stock offering. For many working men and women, Morgan personified the merger or trust movement, which in their view had resulted in labor's enslavement to capital and Wall Street interests. Smithsonian institution on that payday and every one thereafter, employment slowly swelled as strikers returned and the firm hired new men.83 As the strike crumbled, the company turned away hundreds o f reinstatement applicants whom it considered labor militants. All returning workers had to turn in their union membership cards to get their jobs back.84 W ith some two thousand men still holding out, the Locomotive Builders Council finally declared the strike over on August 29,1911. Almost thirty years would pass before organized labor returned to the Baldwin plant, overcoming management's continued resistance with the intercession o f the federal government during the New Deal. While Vauclain made no public comment either during or after the strike, he had provoked it, and the outcome clearly suited him. By breaking the unions the firm had maintained its "right to manage." This was no small matter for capital equipment builders. Given their circumscribed influence over marketing and innovation, these companies generally believed it essential to retain control over production. But the strike also represented a failure for Vauclain, one that he felt deeply.85 His career had revolved around work and workers since the age o f sixteen, when he first took up the chisels and files o f a machinist. He identified with these men who extracted a livelihood from the skills in their hands, and he thought he knew their concerns. W hile business advantage motivated his abhorrence o f unions, he sincerely believed in the virtues o f individual effort, initiative, THE BALDWIN LOCOMOTIVE WORKS and personal advancement, and he saw organized lanor as antith principles. Such ideas had guided his own rise iron aoprennee t surely their merit was evident to all. During iris rv.er.tv-Iive year superintendent he had tried to foster this producer culture thro: company. Baldwin's production records and its heritage of labor seemed to confirm his beliefs. Although he had precipitated the 191; strike, it came as a personal hit six thousand men had cast their lot against bum. ins company, arel his u During the strike Vauclain went to four old employees whose tenure da; to Matthias Baldwins era and asked them to write down their rcvolieait o f the i860 walkout."6 Perhaps something of value could be learned rum incident when workers of another era had broken with the company s 11 Matthias Baldwin, and Charles Parry. On both occasions sinkers had ar for time-and-a-half wages for overtime. Shortly after beating hac e organ labor in 1911, Vauclain granted that ftftv-vear-oid demand. After the sin also ended the 1901 apprentice program. Most graduates left Baldwin ai completing their terms, and clearlv the program had failed to in ter "a g loval body of men. b The walkout demonstrated that the company s traditions and its wot culture provided no shield against labor unrest. But slightly more than ! Baldwin's workers had spurned the unions' cai! tc strike, lo ackrowiedg TRIUMPH AITS ECUPSE loyalty, Vaudain created the Baldwin "Loyal Legion." M embership was lim ited to those who had worked throughout the strike. Members wore a solid gold badge d m indicated their years o f sendee w ith the company. As o f February 1912, 42 percent o f Baldwin's eighty-five hundred men were in the legion. O ver fifteen hundred members had seniority ranging from eleven to sixty-two years.8 Although the com pany's interests, traditions, and culture had been shaken by the strike, they still received the support o f many employees. HOLLOW TRIUMPH, I9I I - I 915 W h ile Vauclain was besting the unions in the summer o f 1911, A lba Johnson was managing Baldwin's reorganization as a publicly held corporation. T he firm finally joined the m odem corporate world in 19x1, w ith its stock traded on the N ew Y ork and Philadelphia exchanges, w ith consolidated QCSQItlVC pOWSfS Hi the com pany president, and w ith oversight by a board o f directors that for the first tim e included outside directors.84W ith its up-to-date financial structure and its trium ph over union labor, Baldwin's officers felt poised for further growth and a bright future, but that future proved difficult to manage. T he 1909 incorporation had given Baldwin a capitalization o f $20 m illion. In 1911 three brokerage houses working in concert restructured the firm's finances to create a new corporation possessing a capital base o f $40 miEion, equally divided between preferred and com mon stocks.40W hen word o f this overnight doubling in capitalization came out during the strike, union leaders pointed to stock watering at the hands o f J. P. M organ, but the charge lacked merit. Under tire regular fm andal practice o f the day "preferred shares represented a firm's tangible assets, whereas com mon shares had as their basis good wiE and earning power." 91 Baldwin's top office rerained control through a m ajority stock interest while the investing public avidly bought shares that came on the m atter. Savvy investors like Pierre du Pont added Baldwin equities to their portfolios, seeing a profitable com pany w ith a prom ising future.42 Indeed, Baldwin generally earned com fortable profits every year until W orld W ar I, when locom otive and m unitions sales to the Allies boosted its margins even higher 93 Baldwin's officers were certainly optim istic about the future. T h ey had sought tire 1911 restructuring largely to provide capital for expansion. Given the com petition w ith A ico, Vaudain in particular was determ ined to take advanrage o f this newfound ability to expand in anticipation o f renewed demand. A lthough Broad Street and Eddystone ran at only 75 percent o f capacity in 1911, Baldwin laid plans for a new locom otive plant in the W est, purchasing 370 acres o f land in East Chicago, Indiana. Sales were no better in 1912, but Vaudain com pleted a new erecting drop w ith 7 acres under roo f at Eddystone during theyear.94 The irony o f plant expansions during a period of overcapacity underscores a unique problem facing the locomotive builder. Because the railroads, rather than Baldwin, directed the overall character o f innovation in locomotives, the builder could have a plant that was simultaneously too small and too large. In 1912 the carriers did not buy in large quantity, compared with sales before the panic, but they did order even bigger locomotives. Despite the idle capacity of 1912, meeting the railroads' technical requirements required a larger erecting shop. This capital burden came on top o f inexorable increases in labor-intensity, with the growth in road locomotives finally forcing Baldwin in 1911 to lengthen its List System production timetable for engines from eight to twelve weeks.95 Despite such problems, Alba Johnson, Samuel Vauclain, Wall Street finan ciers, and the investing public all saw a promising future for Baldwin after its incorporation. But in the years after 1906 a fundamental challenge was shaping up for the builder and for American railroading itself. Since the passage o f the Hepburn Act America's railroads had become increasingly debilitated. Their sickness arose from a combination o f inflation, which pushed up their costs, and regulation, which froze the rates they could charge shippers. In this squeeze, railroad profits and purchasing inevitably suffered. The Hepburn Act o f 1906 had signified a new regulatory climate for the railroads, 1 determined resolve to rein in these powerful corporations. That determination became apparent in 19x0, when the Interstate Commerce Commission rejected the carriers' petition for a rate increase. Comparing 1910 with the flush times o f 1907, railway traffic had increased by 10 percent while earnings had actually declined. But the regulators were unmoved. The IC C rejected renewed requests for rate relief in 1914 and again in 1915. By that time the carriers were confronting a grim financial situation. Profit margins steadily declined between 1907 and 1914, although railway traffic increased by almost 25 percent over the same period. The lines faced record demands for transportation services, but without adequate profits they could not modernize their systems to meet that demand efficiently. Albro Martin estimates that in the seven years following the passage o f the Hepburn Act, American railroads suffered a capital investment deficiency o f $5.6 billion.96 In 1907 the nation's railroads stood on a pinnacle o f profits and achievement. By 1917 these same companies were so broken down that the federal government had to nationalize the system as an emergency measure during World War I. Few observers in 1907 could have predicted that the IC C would cripple the nation's largest industry over the next decade. Even those Wall Street financiers who held a direct stake in railroading's financial health did not comprehend the dimensions o f the problem until after 1912.97 Baldwin officers also failed to realize that the boom conditions o f 1898-1907 would never return. In January 1913 president Alba Johnson announced expansion plans to give