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Kindling a Flame under Federalism: Progressive Reformers, Corporate Elites, and the Phosphorus Match Campaign of 1909–1912

Published online by Cambridge University Press:  13 December 2011

David A. Moss
Affiliation:
David A. Moss is assistant professor of business administration at Harvard University.

Abstract

In 1909, the leaders of the American Association for Labor Legislation launched a campaign to eradicate phosphorus matches from the American market. Because phosphorus match workers often contracted a hideous disease called phosphorus necrosis (or “phossy jaw”), many European countries had already prohibited the poison matches from their markets. In the United States, nearly all interested parties supported legal abolition but found that the nation's federal system constituted a formidable obstacle. No state wanted to be the first to act (for fear of driving industry from its borders), and the federal government lacked the power to regulate intrastate economic activity. This article examines how, in order to circumvent the federalism obstacle, an alliance of academic reformers and business leaders worked to tax phosphorus matches out of existence—that is, to use the federal taxing power as a regulatory instrument.

Type
Articles
Copyright
Copyright © The President and Fellows of Harvard College 1994

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References

1 Andrews, John B. to Farnam, Henry W., 16 Nov. 1910, The Microfilm Edition of the Papers of the American Association for Labor Legislation, 1905–1945 (Glen Rock, N.J., 1973)Google Scholar [hereafter, AALL Papers], reel 4.

2 Founded in 1906 by a group of reform-minded academic economists, the AALL launched and led the Progressive Era movement for protective labor legislation and social insurance in the United States. The organization's leading members included Richard T. Ely and John R. Commons (professors of economics at the University of Wisconsin), Henry W. Farnam (professor of economics at Yale University), Henry R. Seager (professor of political economy at Columbia University), and John B. Andrews (Ph.D. in economics, who trained at the University of Wisconsin under Ely and Commons). See Moss, David A., “The Political Economy of Insecurity: The American Association for Labor Legislation and the Crusade for Social Welfare Reform in the Progressive Era” (Ph.D. diss., Yale University, 1992)Google Scholar.

3 “President's Annual Message,” Congressional Record, 61st Cong., 3d sess., 46, part 1 (6 Dec. 1910): 29.

4 The two letters are dated 11 Jan. 1911 and 22 Dec. 1910, respectively. Both are reprinted in House Committee on Ways and Means, White Phosphorus Matches, 61st Cong., 3d sess., 16 Dec. 1910 and 20 Jan. 1911, 309–10 and 328–30.

5 The issue of federalism and the related dynamic that I have termed “degenerative competition” (that is, legislative laxity at the state level resulting from economic competition among the various states) have received only scant attention from historians of American social welfare policy. The most valuable discussions of the subject are in Graebner, William, “Federalism in the Progressive Era: A Structural Interpretation of Reform,” Journal of American History 64, no. 2 (Sept. 1977): 331–57CrossRefGoogle Scholar; Graebner, William, Coal-Mining Safety in the Progressive Era: The Political Economy of Reform (Lexington, Ky., 1976)Google Scholar; Robertson, David Brian, “Policy Entrepreneurs and Policy Divergence: John R. Commons and William Beveridge,” Social Service Review 62, no. 3 (Sept. 1988): 504–31CrossRefGoogle Scholar; and Robertson, David Brian, “The Bias of American Federalism: The Limits of Welfare-State Development in the Progressive Era,” Journal of Policy History 1, no. 3 (1989): 261–91CrossRefGoogle Scholar. Significantly, the existence of downward competitive pressures on legislation at the state level has received considerable scholarly attention in a variety of other contexts, ranging from environmental law to banking regulation. In each case, as Harry Scheiber characterizes it, “federal effects have operated … to place practical upper limits upon a state's regulatory policies.” Charles McCurdy, for example, has shown that intense competition among the states destroyed their ability to regulate the trusts in the late nineteenth century, thus necessitating the development of a strong federal role in antitrust law. According to the 1904 Report of the Commissioner of Corporations (cited by McCurdy), state legislation “gravitated with remarkable dispatch ‘toward the lowest level of lax regulation.’ “ See Scheiber, Harry N., “Federalism and the American Economic Order, 1789–1910,” Law and Society Review 10 (1975): 71CrossRefGoogle Scholar; and McCurdy, Charles W., “The Knight Sugar Decision of 1895 and the Modernization of American Corporation Law, 1869–1903,” Business History Review 53, no. 3 (Autumn 1979): 304–42CrossRefGoogle Scholar. See also Zillner, Raymond T., “State Laws: Survival of the Unfit,” University of Pennsylvania Law Review 62 (1914): 509–24CrossRefGoogle Scholar. At present, there is no universally recognized, descriptive term for the phenomenon. Although economic game theorists might characterize it as a special case of the generic prisoners' dilemma, historians and public policy analysts require a more specialized term. A number of scholars have employed the phrase “race to the bottom,” and a 1974 Business Week article on banking regulation cited the bankers' expression, “competition in laxity” (“Are the Banks Overextended?” Business Week, 21 Sept. 1974, 54). The term offered here, “degenerative competition,” is by no means perfect but enjoys the dual benefit of being more compact and more comprehensive than either of the others.

6 Lee, R. Alton, “The Eradication of Phossy Jaw: A Unique Development of the Federal Police Power,” The Historian 29, no. 1 (Nov. 1966): 2CrossRefGoogle Scholar; Manchester, Herbert, The Diamond Match Company (New York, 1935), 1462Google Scholar; Chandler, Alfred D. Jr., The Visible Hand: The Managerial Revolution in American Business (Cambridge, Mass., 1977), 292–93Google Scholar; Andrews, John B., “Phosphorus Poisoning in the Match Industry in the United States,” Bulletin of the Bureau of Labor 20 (1910): 4247Google Scholar.

7 Andrews, “Phosphorus Poisoning in the Match Industry,” 59 and 39; Manchester, Diamond Match Company, 35–47.

8 Andrews, “Phosphorus Poisoning in the Match Industry,” 40.

9 Ibid., 106, 90, 33. In fact, women workers were exposed to phosphorus in match factories much more commonly than were men. Andrews's 1910 study of 3,591 workers in fifteen match factories identified 2,024 men, 1,253 women, 121 boys, and 193 girls (children being those under sixteen years of age). Overall, 65 percent of the workers were exposed to phosphorus in some way; yet 95 percent of the women and 83 percent of the children suffered exposure, leaving the male exposure rate at a comparatively low 44 percent. Indeed, the first match worker diagnosed with phosphorus necrosis was a woman.

10 Manchester, Diamond Match Company, 35–36, 70.

11 Andrews, “Phosphorus Poisoning in the Match Industry,” 86–140.

12 Manchester, Diamond Match Company, 35–36, 70; Andrews, “Phosphorus Poisoning in the Match Industry,” 41–42. A copy of the original U.S. patent is exhibited in House Committee on Ways and Means, White Phosphorus Matches, 61st Cong., 3d sess., 16 Dec. 1910 and 20 Jan. 1911, 340.

13 Andrews, “Phosphorus Poisoning in the Match Industry,” 37–38; Mahaim, Ernest, “The Historical and Social Importance of International Labor Legislation,” in The Origins of the International Labor Organization, ed. Shotwell, James T. (New York, 1934), 1Google Scholar: 10–11.

14 In instructing the German ambassadors and ministers who were to extend invitations to the other European powers, Chancellor Otto von Bismarck wrote,

The competition of nations in the trade of the world, and the community of interests proceeding therefrom, makes it impossible to create successful institutions for the benefit of working men of one country without entailing that country's power of compering with other countries. Such institutions can only be established on a basis adopted in common in all countries concerned.

See “Instructions of Prince Bismarck to the German Ambassadors and Ministers, February 8, 1890, Inviting the Powers to a Conference at Berlin, March, 1890,” reprinted in Shotwell, Origins of the International Labor Organization, 1: 471.

15 Mahaim, “Historical and Social Importance of International Labor Organization,” 8; Sir Malcolm Delevingne, “The Pre-War History of International Labor Legislation,” in Shotwell, Origins of the International Labor Organization, 1: 33.

16 Delevingne, “Pre-War History of International Labor Legislation,” 31–42, 47; Mahaim, “Historical and Social Importance of International Labor Legislation,” 10—12. The signatories to the Phosphorus Match Convention of 1906 were Germany, the Netherlands, Switzerland, France, Luxembourg, Italy, and Denmark. See “International Convention Respecting the Prohibition of the Use of White (Yellow) Phosphorus in the Manufacture of Matches, Berne, September 26, 1906,” reprinted as Appendix 14 in Shotwell, Origins of the International Labor Organization, 1: 495–97; John R. Commons, “The International Association for Labor Legislation,” Charities and the Commons, 12 Sept. 1908, 689, reprinted in the Microfilm Edition of the John R. Commons Papers (State Historical Society of Wisconsin, Madison, 1982), reel 16, fr. 683.Google Scholar

17 Note that the U.S. government was not one of the signatories to the IALL's Phosphorus Match Convention.

18 See Andrews to John R. Commons, 31 May 1909, AALL Papers, reel 2.

19 The one match factory not investigated in the study was located in Chico, California. See Andrews to Constance D. Leupp, 11 Sept. 1911, AALL Papers, reel 6.

20 Andrews, “Phosphorus Poisoning in the Match Industry,” especially 32—36. As Andrews's report for the Bureau of Labor demonstrates, it was not uncommon for leaders of the AALL to intertwine their work with that of public agencies. The association's investigation of the match industry commenced in 1909 on the basis of modest funding from the Minnesota and Wisconsin Commissioners of Labor. The U.S. Bureau of Labor had begun its own investigation in 1908 but turned it over to Andrews (along with $1,000 to cover expenses) as soon as the bureau's commissioner learned of the AALL's work on the subject. See Moss, “The Political Economy of Insecurity,” 214—20. According to Michael Lacey and Mary Furner, such close interaction between public agencies and private organizations appears frequently in the history of social investigation, not only in the United States but also in Britain. See Lacey, and Furner, , “Social Investigation, Social Knowledge, and the State: An Introduction,” in The State and Social Investigation in Britain and the United States ed. Lacey, Michael J. and Furner, Mary O. (New York, 1993), 362Google Scholar.

21 See Lee, “The Eradication of Phossy Jaw,” 7. According to Robert Wiebe, John Andrews's “exposure of ‘phossy jaw’ among the workers in phosphorus match factories remains a classic in the history of industrial health.” See Wiebe, Robert H., The Search for Order, 1877–1920 (New York, 1967), 128–29Google Scholar.

22 Miles Dawson to Charles D. Norton (secretary to President Taft), 3 June 1910, reprinted in House Committee on Interstate and Foreign Commerce, Health Activities of the General Government, part 6, 1910, 394.

23 House Committee on Ways and Means, White Phosphorus Matches, 62d Cong., 2d sess., 10 Jan. 1912, 73.

24 Dawson to Andrews, 17 May 1910, AALL Papers, reel 3.

25 Ibid. See also McCray v. United States, 195 U.S. 27 (1904); Veazie Bank v. Fenno, 8 Wallace 533 (1869); and McCulloch v. Maryland, 4 Wheaton 316 (1819).

26 De Geofroy v. Riggs, 133 U.S. 258 (1890), 297; Dawson to Andrews, 17 May 1910, AALL Papers, reel 3.

27 House Committee on Ways and Means, White Phosphorus Matches, 62d Cong., 2d sess., 10 Jan. 1912, 5. On Dawson's reasoning, see also Dawson, Miles M., “Brief upon the Bill to Tax Matches Manufactured by the Use of White or Yellow Poison Phosphorous,” New York, 30 Dec. 1910Google Scholar, in Farnam Papers, group 203, ser. 2, box 252, folder 3266, Yale University Manuscripts and Archives.

28 When describing the history of the bill on the House floor the following February, Esch openly admitted that AALL reformers had drafted the bill and that he had introduced it at their request. See Congressional Record, 61st Cong., 3d sess., 46, part 4 (27 Feb. 1911): 3629.

29 At the time, a box of matches (ranging in quantity from 500 to 1,000 matches) typically cost about five cents.

30 Andrews to John J. Esch, 3 June 1910; Esch to Andrews, 4 June 1910; Andrews to Farnam, 3 June 1910; Esch to Dawson, 11 June 1910; [Irene Osgood?] to Andrews, 16 June 1910; Andrews to Farnam, 21 June 1910—all AALL Papers, reel 3.

31 O. C. Barber to Charles E. McKenna, 15 March 1909, reprinted in House Committee on Interstate and Foreign Commerce, Health Activities of the General Government, part 6, 390.

32 According to Farnam, the Diamond Match Company began to cooperate in the legislative campaign only after the AALL documented cases of Diamond Match workers with phosphorus necrosis, cases that Diamond previously had denied existed. Apparently, Diamond's dentist had overlooked cases of the disease in order to maintain his position with the company. See Farnam to Irving Fisher, 19 Jan. 1916, AALL Papers, reel 16.

33 See Edw. R. Stettinius (president, Diamond Match Company) to the Ways and Means Committee, 18 Jan. 1911, reprinted in House Committee on Ways and Means, White Phosphorus Matches, 61st Cong., 3d sess., 16 Dec. 1910 and 20 Jan. 1911, 332–33.

34 W. A. Fairburn (superintendent, Diamond Match Company) to Andrews, 15 July 1910; Andrews to Fairburn, 18 July 1910; Andrews to Stephen Bauer, 25 July 1910—all AALL Papers, reel 3; Andrews to Farnam, 2 Dec. 1910, AALL Papers, reel 4.

35 The licensing agreement also required the licensees to pack their sesquisulphide matches in a very specific manner, ostensibly for safety purposes. The agreement and a letter from Stettinius to the Committee on Ways and Means explaining the agreement are reprinted in House Committee on Ways and Means, White Phosphorus Matches, 61st Cong., 3d sess., 16 Dec. 1910 and 20 Jan. 1911, 332–36.

36 At a subsequent congressional hearing, a representative of the independent match manufacturers was asked whether he and the other independents acceded to the agreement with Diamond because they viewed it as a sound business proposition or because they felt compelled to do so. The witness responded pointedly, “Through fear of impending legislation.” See House Committee on Ways and Means, White Phosphorus Matches, 61st Cong., 3d sess., 16 Dec. 1910 and 20 Jan. 1911, 301–2.

37 The 11 Dec. 1910 letter from Stettinius to the independents as well as the revised agreement of 22 Dec. 1910 are reprinted in House Committee on Ways and Means, White Phosphorus Matches, 61st Cong., 3d sess., 16 Dec. 1910 and 20 Jan. 1911, 336–38.

38 One significant change in the new version was that all importation and exportation of white phosphorus matches would be prohibited as of 1 July 1911. H.R. 29469 is reprinted in House Committee on Ways and Means, White Phosphorus Matches, 61st Cong., 3d sess., 16 Dec. 1910 and 20 Jan. 1911, 349–51.

39 Ibid., 286.

40 Ibid., 287–91.

41 Ibid., 292–301.

42 Ibid., 303–5.

43 Andrews to Esch, 26 Dec. 1910; [Joseph Chamberlain?] to Charles Neill, 29 Dec. 1910; Neill to Chamberlain, 3 Jan. 1911; Telegram, Andrews to Osgood Andrews, 6 Jan. 1911; Andrews to Anne Morgan, 9 Jan. 1911—all AALL Papers, reel 4. A copy of Diamond Match's indenture assigning its patent to the trustees is reprinted in House Committee on Ways and Means, White Phosphorus Matches, 61st Cong., 3d sess., 16 Dec. 1910 and 20 Jan. 1911, 338–39; Counsel, AALL to Metropolitan Match Company, 5 Jan. 1911; and Andrews to Charles D. Norton, 13 Jan. 1911, both AALL Papers, reel 4. For copies of a letter from the trustees to President Taft asking him to call on Diamond to abandon its patent, Taft's reply, and the certificate from the Commissioner of Patents canceling Diamond's sesquisulphide patent, see House Committee on Ways and Means, White Phosphorus Matches, 61st Cong., 3d sess., 16 Dec. 1910 and 20 Jan. 1911, 347–49.

44 Minutes of Executive Committee Meeting, 25 Jan. 1911, AALL Papers, reel 61; Notes on talk with Sereno E. Payne and E. J. Hill, 29 Jan. 1911, Farnam Papers, group 203, series 2, box 252, folder 3266; Henry R. Seager to Andrews, 10 Feb. 1911, AALL Papers, reel 4.

45 House Committee on Ways and Means, White Phosphorus Matches, 62d Cong., 2d sess., 10 Jan. 1912, 37–38, 49–50, 89–92.

46 Ibid., 16–17.

47 Ibid., 79.

48 Ibid., 88.

49 Seager to Farnam, 23 Jan. 1912, AALL Papers, reel 6.

50 Esch to Andrews, 28 Feb. 1912, AALL Papers, reel 7; Congressional Record, 62d Cong., 2nd sess., 48, part 3 (26 Feb. 1912): 2489; Esch to Andrews, 29 Feb. 1912, AALL Papers, reel 7.

51 Telegram, Esch to Andrews, 4 March 1912, AALL Papers, reel 7; Congressional Record, 62d Cong., 2d sess., 48, part 4 (11 March 1912): 3148.

52 House Committee on Ways and Means, Taxing White Phosphorus Matches, 62d Cong., 2d sess, 11 March 1912, H. Rept. 406, 2.

53 Ibid., 1–8.

54 Congressional Record, 62d Cong., 2d sess., 48, part 4 (28 March 1912): 3967–68.

55 Ibid., 3971.

57 Ibid., 3974–75.

58 Andrews to Esch, 16 March 1912, AALL Papers, reel 7; Senate Committee on Finance, Tax Upon White Phosphorus Matches, 62d Cong., 2d sess., 2 April 1912, S. Rept. 541; Congressional Record, 62d Cong., 2d sess., 48, part 5 (3 April 1912): 4234–41.

59 Congressional Record, 62d Cong., 2d sess., 48, part 5 (3 April 1912): 4234, 4235, and 4238.

60 Ibid., 4236.

61 Ibid., 4240.

62 Ibid., 4241 and 4240.

63 Ibid. (12 April 1912): 4679; Andrews to Seager, 12 April 1912, AALL Papers, reel 7.

64 Manchester, Diamond Match Company, 81.

65 Alice L. Hainen to Andrews, 2 Aug. 1912, AALL Papers, reel 7; Farnam to Irving Fisher, 19 Jan. 1916, AALL Papers, reel 16.

66 Weinstein, James, The Corporate Ideal in the Liberal State, 1900–1918 (Boston, Mass., 1968), ixGoogle Scholar.

67 See, for example, McCormick, Richard L., “The Discovery That Business Corrupts Politics: A Reappraisal of the Origins of Progressivism,” American Historical Review 86, no. 2 (1981): 246–74CrossRefGoogle Scholar.

68 The interpretation offered here might be classified as a “weak” version of the corporate liberal thesis. In contrast to “strong” versions, in which business elites are portrayed as hegemonic forces in the reform process, the “weak” version highlights not only the important role of business elites but also those elites' genuine dependence on the initiative and support of academic and middle-class reformers. For classic renditions of the “strong” corporate liberal thesis, see Kolko, Gabriel, The Triumph of Conservatism: A Reinterpretation of American History, 1900–1916 (New York, 1963)Google Scholar; Kolko, Gabriel, Railroads and Regulation, 1877–1916 (Princeton, N.J., 1965)CrossRefGoogle Scholar; and Weinstein, The Corporate Ideal in the Liberal State. For further discussion of the “weak” corporate liberal thesis, see Moss, “The Political Economy of Insecurity,” 50–52.

69 During the Progressive Era, the federalism-degenerative competition dynamic served as an insuperable obstacle to the enactment of many forms of social legislation, including unemployment and health insurance. one prominent exception was workers' compensation (accident insurance), which was enacted in forty states between 1911 and 1920. Degenerative competition failed to block the emergence of workers' compensation laws because a common law remedy for industrial accidents already existed in every state. The pre-existence of employers' liability at common law, which allowed injured workers to sue for damages, meant that the introduction of workers' compensation in one state would not create enormous new costs from which employers in other states were exempt. One manufacturer, who warned that states enacting health or unemployment insurance would put their industries at a severe competitive disadvantage, admitted that workers' compensation was not subject to the same complaint. “Workmen's compensation,” he wrote, “has never been considered as an entirely new expense, because it replaced the old employers' liability, the average cost of which was a large percentage of the present charges resulting from accident.” See Nelson, John, “New Menace of Higher Manufacturing Costs,” The Iron Age 98, no. 2 (13 July 1916): 87Google Scholar. Of course, some employers objected to the introduction of any new cost, but their arguments carried less weight when applied to proposed systems of workers' compensation than to most other forms of social welfare legislation. See Moss, “The Political Economy of Insecurity,” especially chaps. 7 and 8.

70 The Supreme Court upheld the federal taxes on opium and inheritance in United States v. Doremus, 249 U.S. 86 (1919), and Florida v. Mellon, 273 U.S. 12 (1926), respectively; it struck down the Child Labor Tax Act in the Child Labor Tax Case, 259 U.S. 20, 38 (1922). The unemployment insurance provisions of the Social Security Act were based squarely on the federal taxing power. The statute levied a 3 percent federal tax on payrolls with the promise of a 90 percent offset for employers who contributed to satisfactory state unemployment insurance plans. As expected, every state in the union enacted a satisfactory plan within two years. Curiously, Secretary of Labor Frances Perkins had been alerted to the taxing-power option at a party in 1934, where Justice Harlan Fiske Stone whispered to her knowingly, “The taxing power of the Federal Government, my dear; the taxing power is sufficient for everything you want and need.” Perkins, Frances, The Roosevelt I Knew (New York, 1946), 286Google Scholar. See Report to the President of the Committee on Economic Security, 17–20; Public Law No. 271, Title IX, sections 901 and 902; Malisoff, Harry, “The Emergence of Unemployment Compensation I,” Political Science Quarterly 54, no. 2 (June 1939): 252Google Scholar; The Social Security Act was upheld as constitutional by the Supreme Court in two cases decided on 24 May 1937, Stewart Machine Co. v. Davis, 301 U.S. 548, and Helvering v. Davis, 301 U.S. 619.

71 Altmeyer, Arthur J., The Formative Years of Social Security (Madison, Wisc, 1966), 1415Google Scholar. See also Cohen, Wilbur J., “The Development of the Social Security Act of 1935: Reflections Some Fifty Years Later,” Minnesota Law Review 68, no. 2 (Dec. 1983): 399Google Scholar.