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 Western
 arbitrations during the period 1913-1915, and to that
of all classes of railway employees in the acute controversies
 before the former United States Railroad Labor
Board during the years 1920-1922. On these two occasions,
 the union representatives developed and put forward
the theory of “increased productive efficiency” as the justification
 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 measure
 been made possible by increased capital investment, by
new processes and inventions, and by managerial ability.
After capital and management, however, had been properly
 rewarded, it was contended that labor should have a
share in the revenue gains through higher wages and consumers
 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.

16m