Laboring for Freedom: A New Look at the History of Labor in America

By Daniel Jacoby | Go to book overview

Chapter 5
Incorporating Paternalism

[O]ne of the most serious problems of all modern politics . . . is not how to reconcile freedom and equality but how to reconcile equality and authority.

-- Hannah Arendt, On Revolution

By the 1920s most Americans had abandoned the prospect of being their own boss. In 1900 only one in three workers over age ten lived on a farm; by 1920 that number had fallen to one in four, and all portents for the future were that the trend would continue. Until 1910 this decline was only in percentage terms, but the 1920 census marked the first time that the actual number of farmers fell. Between 1900 and 1940 the number of workers in other forms of self-employment rose from 3.9 million to 5.6 million, but these, too, did not keep pace with a labor force that increased from 28.4 to 55.9 million. Statistics for all self-employed workers, including those on farms, fell from about one-third to one-quarter of the total. 1 The prospects for achieving independent employment had dimmed notably. The businesses, particularly the larger ones, on which workers came to depend began to perceive and assume responsibility for more than wages. The ways in which they did so form an important chapter in the history of labor freedom.


The Advent of Large Firms

The expansion of big businesses accelerated at the turn of the century. In the late nineteenth century, to create vast industrial empires, a few entrepreneurs seized opportunities opened by the completion of the rail network. John D. Rockefeller, for example, tied his oil refineries to a huge distribution network in order to sell at retail. Rail carriers thanked Rockefeller's Standard Oil for the privilege of hauling his tanker cars by awarding him secret rebates. The resulting cost advantage helped Rockefeller integrate oil drilling, refining, and distribution into one big firm. By the 1890s, Standard Oil's lawyers perfected the modern general purpose corporation, a form of

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