CHAPTER VIII 
ACCEPTANCE AND GENERAL APPLICATION OF 
THE THEORY OF PRODUCTIVE 
EFFICIENCY 
In outlining trends in the development of various wage 
theories, reference has already been made to the action of 
railroad firemen and engineers in their Eastern and West- 
ern arbitrations during the period 1913-1915, and to that 
of all classes of railway employees in the acute contro- 
versies before the former United States Railroad Labor 
Board during the years 1920-1922. On these two occa- 
sions, the union representatives developed and put forward 
the theory of “increased productive efficiency” as the justi- 
fication for wage advances. 
Stated in its simplest form, the claim was made that the 
labor and responsibilities of employees had become greater, 
their output in terms of traffic units handled had increased, 
labor costs according to the same standard had decreased, 
and as a consequence, the assertion was made that they 
were entitled to a large degree of participation in the 
resultant net revenue gains of the transportation industry. 
It was freely conceded that these gains had in large meas- 
ure been made possible by increased capital investment, by 
new processes and inventions, and by managerial ability. 
After capital and management, however, had been prop- 
erly rewarded, it was contended that labor should have a 
share in the revenue gains through higher wages and con- 
sumers and shippers a participation also in the form of 
lower freight and passenger rates. In other words, as the 
result of the increased productive efficiency developed by 
"1 See pp. 32-40, 69-70. 
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