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Victor
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The Labor Spy
A Survey of Industrial Espionage
By Sidney Howard
I. Nature and Scope of Industrial Espionage
Espionage in industry is not a credible institution, not one which it is agreeable to contemplate. Nevertheless, the employer's practice of setting spies to observe and inform on workers in factory and union has, now, every appearance of firm establishment. It has been developing inconspicuously these many years. Only an occasional indiscretion in this place or in that has ever brought it any measure of public attention. Its doings are still far from a state of ideal publicity, but recent labor disputes have so frequently encountered it, have dealt with it over so wide an area that it can no longer be considered in terms of locality, of individual industries or even of particular crises. It seems to have become something of a factor in American industry as a whole.
Because this general view of the practice and nature of industrial espionage is written for a public not always in the employer's confidence, it is well to begin at the beginning. Given an employer suddenly face to face with the probability of labor trouble in his plant, ignorant of the character and point of view of his employees, with no access to their plans, very fearful of their organization. The result is almost inevitable panic and the labor spy exists to exploit this panic. He capitalizes the employer's ignorance and prejudice and enters the plant specifically to identify the leaders of the labor organization, to propagandize against them and blacklist them and to disrupt and corrupt their union. He is under cover, disguised as a worker, hired to betray the workers' cause. Espionage in industry is not a credible institution, but it seems to go on very generally.
The labor press of the last two years is filled with the records of spies discovered in unions and expelled from them. This in any part of the country where industry thrives. A chief of the Railroad Brotherhoods says that he has not often known "a unit large enough to be called a meeting and small enough to exclude a spy." A year ago spies were discovered in Passaic, New Jersey, in the mills of the American Woolen Company. At the very time of their exposure, the investigators of the steel strike were stumbling upon evidence of the practice around Pittsburgh. Spies and strike-breakers figured in the street railway riots of Brooklyn and Denver last summer, in the brass strike of last spring in Waterbury, in St. Louis, in Chicago, in the Northwest, in California.
In December ten important officials of the labor unions of Akron, Ohio, were exposed as confessed and convicted spies of the Corporations Auxiliary Company, a concern whose business is the administration of industrial espionage. Last spring two similar corporations entered the courts of Philadelphia and left there a complete (and unpublished) record of their proceedings in the employ of the textile manufacturers of Philadelphia. From this record much of the present evidence has been derived. Detroit and Milwaukee have recently legislated against the operations of such corporations. Decidedly, industrial espionage must be the affair of the whole country. When the Commission on Industrial Relations examined the workers and employers of American industry, it found scarcely one who had not an admission to make or a story to tell of the workings of the industrial spy system.
It is strange that this business should have gained such a hold. It is strange that the employer should not reasonably suspect its effects. Though he propose only to relieve immediate labor difficulties by the destruction of a particular union, he may well accomplish very different ends. This labor spy, often unknown to the very employer who retains him through his agency, is in a position of immense strength. There is no power to hold him to truth-telling. The employer who depends upon espionage rather than upon his own eyes is, in great measure, at the mercy of his spy. The very nature of the spy's business makes it necessary for him to do either of two things. He may falsify his reports or create, through his own influence upon the workers, a basis upon which to report the truth.
Wherefore we need not be surprised to find situations prearranged in the plant of a prospective client, strikes prolonged rather than broken, rioters furnished by espionage agencies along with strike-breakers, trouble fostered where peace has been. Mr. Coach of Cleveland, a leading industrial detective, buys the Columbus Labor News during the street railway strike in that city, and edits it to encourage the very agitation which he is being paid to break by the street railway company. In Minneapolis an industrial detective agency is caught working for both union and employer on the same strike. A spy brings to New York five hundred copies of the Communist Manifesto printed by the radical department of a detective company and distributes them about various organizations of workers. The Sherman Service officials, of Chicago, are indicted (and never tried) because they instruct their agents to "stir up as much bad feeling as you can possibly between the Italians and the Serbians. Spread data among the Serbians that the Italians are going back to work. Call up every question you can in reference to racial hatred between these two nationalities."
Furthermore, it is the boast and project of the industrial spy that he can corrupt a union out of existence. Says Mr. Coach, of Cleveland: "I own every union in this town," which is to say that he controls the union executives. And there seems excellent reason to believe that this kind of control goes high in the ranks of union labor executives. It is a common plaint that American union leaders are not trustworthy. This kind of systematic corruption and demoralization cannot better the situation whatever claims be put forward in its defense. Labor leaders must be dealt with. Who fosters corruption must, in the end, deal with the corrupt.*
Briefly, to retain a spy is to set, between employer and employee, a middleman whose business it is to stimulate the prejudice of the one against the right of the other, whose very livelihood depends upon the existence and continuance of trouble, whether real, imaginary or provoked. Industrial espionage is a curious substitute for industrial relations. In American industry it is an amazingly general and characteristic substitute and the evidence of its work is unbelievable and cannot be denied.
It is most amazing of all that employers should have thought it profitable. But the scale of organization of industrial espionage stifles any doubt of its scope. Only a tremendous clientele can justify it. It operates through the secret service departments of great corporations; the railroads, the United States Steel Corporation, the Western Union Telegraph Company and like corporations. It operates through the spy services of employers' associations; The National Erectors' Association, The National Manufacturers' Association; The National Founders' Association, Strike insurance companies maintain spy services. And, finally, a dozen vast detective organizations with branch offices in every manufacturing center, together with hundreds of smaller local agencies, devote themselves exclusively to training and furnishing industrial spies, agents provocateurs, and strike-breakers. It would be interesting to know how many men the business employs. One can only guess at thousands.
Engineers and Conciliators.
These industrial detectives prefer, nowadays, to be known variously as "Harmonizers and Conciliators." as "Service Corporations," as "Engineers—Commercial, Financial and Industrial." The original Pinkerton first discovered the possibilities of the detective in industry, and himself put agents to work in the long defunct Knights of Labor. Almost to a man the industrial detectives are one-time criminal detectives. Mr. Coach, of Cleveland, explains the change tersely. "There's more money in industry," he says, "than ever there was in crime."
The Pinkerton National Detective Agency carries on the industrial work of its founder through thirty-five branch offices. The machine guns of Baldwin Felts fight the unions of Colorado and of West Virginia alternately. The Corporations Auxiliary Company, masquerading under a dozen different names, specializes at electing its agents to union office (as in Akron) and issues to its clients a bi-weekly bulletin of labor information gathered by under-cover methods in every state in the country. The Thiel Detective Service Company, very old and very well established, furnishes spies to factories from the smallest Paterson silk plant to the immense producing organization of the Pierce Arrow Motor Car Company. William J. Burns maintains thirty-five branch offices, industrial and radical departments, and collects numerous thousands. Mr. R. J. Coach, of Cleveland, who "owns every union in his town, " will not admit that he has ever failed to crush a union and has, in at least one case, put ten thousand strike-breakers into a single strike. Bergoff Brothers and Wadell, of New York, claim that they can raise the same number in seventy-two hours. Mooney and Boland, in Chicago, the Gorton National Agency of the same city, do business broadcast. Any city will list a dozen smaller corporations dedicated to the same service. Last, and, perhaps, most important, The Sherman Service, Inc., buys pages of the New York Times to proclaim its doctrines of harmony in industry, has its employees exempted from the military draft, admits of no competitor, supplies its agents to the modest laboratories of Thomas A. Edison and to the hundred mills of the American Woolen Company, and pays, in a single year, an income tax of $258,000.
The Industrial Detective Solicits Business.
These brief quotations from letters of industrial detective agencies serve the end of illustrating the kind of promise which they hold forth to the client-employer in the hours of his need.
From Dunn's National Detective Agency, Detroit:
We are in a position to place in your plant, laborers, mechanics, clerks, bookkeepers, in fact people of any vocation to obtain information as to a forerunner of labor trouble.
We will furnish guards on very short notice, and will break a strike in a way that will obviate the necessity of your being forced to use union or other employes not of your own choosing. . . .
From Murphy Secret Service, Detroit:
. . . The head of this agency having about as much use for a strike-breaker as he would have for a thief.
We have the reputation of being several jumps ahead of the old style way of settling capital and labor difficulties, and we feel that anybody in business who allows his affairs to reach the labor strike stage, especially if operating on the open shop theory, is . . . behind the time.
From Robert J. Foster, Foster Service, 286 Fifth Avenue, New York:
First—I will say that if we are employed before any union or organization is formed by the employees, there will be no strike and no disturbance. This does not say that there will be no unions formed, but it does say that we control the activities of the union and direct its policies provided we are allowed a free hand by our clients.
Second—If a union is already formed and no strike is on or expected to be declared within thirty to sixty days, although we are not in the same position as we would be in the above case, we could—and I believe with success—carry on an intrigue which would result in factions, disagreements, resignations of officers and a general decrease in membership; and, if a strike were called, we would be in a position to furnish information, etc., of contemplated assaults.
From Schindler, Inc.. 149 Broadway, New York:
Information supplied by our secret industrial operatives and corroborated through other sources indicated that we are on the eve of extensive industrial disturbances. There seems to be an extraordinary agitation in favor of a 44-hour week and a substantial increase in wages in a number of different lines. . . .
Service retained now will enable you to prepare to meet to the best advantage whatever situation may confront you as a consequence of the present agitation and in this connection we beg to remind you that "forewarned is forearmed."
An acknowledgment would be appreciated as an indication that this letter has not fallen into the hands of an unauthorized person.
From William J. Burns, Woolworth Building, New York:
. . . Ever since the McNamara case we have made a close study of labor difficulties and have perfected our industrial organization. . . .
In pursuing this character of work we have organized this department in such a way that we are in a position to anticipate these labor difficulties in all industries, and by this method apply what we call preventive measures.
From The International Auxiliary Company, alias the Eastern Engineering and Contracting Company, actually the Corporations Auxiliary Company. Room 702, 291 Broadway, New York. Branch offices in various cities but under different names so that the real size of the company cannot be estimated:
. . . The study of industrial and labor problems has been the sole business of this company for over a quarter of a century and to carry on this work we have surrounded ourselves with men and women of different trades and nationalities who form a part of a far-reaching organization, the mission of which is harmony in the operating of these various industries.
Our representatives are employed on a plane of equality with your other employees and study and report each day on the conditions actually existing as seen by them from a workman's viewpoint. . . .
We have been particularly successful in handling situations which are continually arising in organized labor circles. . . . Wherever we have the organized labor movement to contend with, we endeavor to use the influence of our representatives toward creating the proper attitude of those around them. . . . We start on every operation with the idea of making our operative a power in this little circle for good, and, as his acquaintance grows, the circle of his influence enlarges. . . . The cost of the service is very nominal, and the best proof we have of its value is the tremendous growth of our service in the corporations that we have had the privilege of serving in years past.
From The Corporations Auxiliary Company, Continental National Bank Building, Chicago:
Don't you think it would pay you to know your men, know every man in your employ . . .? It can be done quietly and inexpensively by the use of the Corporations Auxiliary Company's Industrial Inspection Service. . . .
Wherever our system has been in operation for a reasonable length of time considering the purpose to be accomplished, the result has been that union membership has not increased if our clients wished otherwise. In many cases local union charters have been returned without publicity and a number of local unions have been disbanded.
We help eliminate the agitator and organizer quietly, and with little or no friction, and, further, through the employment of our service, you will know at all times who, among your employees are loyal and to be depended upon. . . .
From Industrial Service Company, 181 Tremont Street, Boston, Massachusetts:
The heads of the American Federation of Labor are making war plans. They believe the "open shop" crusade is intended to undo everything union labor has accomplished. . . . There are men in your employe who will fight to the last before they will be willing to have their pay envelope reduced. . . . Our business is to act as labor mediators, and to prevent strikes. There are things you just CAN'T put down in a letter.
By such letters does the industrial detective recruit his clientele.
— The New Republic, February 16, 1921
*According to the frank statement of President Ray, of the Ray Detective Agency of Boston, the president, secretary and treasurer of the local ice man's union were, until quite recently, all in the employ of his agency. These spy-officials were able, among other activities, to engineer the union through a dance which left it $500 in debt. A former president of the Bay State Carmen's union was one of Ray's regular detectives. He has since gone west to establish an agency of his own.
Go to: II. Industrial Harmony