Solving the labour problem at Imperial Oil: welfare capitalism in the Canadian petroleum industry, 1919-29

Labour/Le Travail, Spring, 1998 by H.M. Grant

H.M. Grant, "Solving the Labour Problem at Imperial Oil: Welfare Capitalism in the Canadian Petroleum Industry, 1919-1929," Labour/Le Travail, 41 (Spring 1998), 69-95.

ON THE TENTH anniversary of its "Industrial Representation Plan," the Imperial Oil Company's Review explained that: "The Plan was simply an expression of appreciation on the part of the Directors in connection with the length of service and the loyalty of their employees." It emphasized that its experiment with corporate welfarism "was not the outcome or the result [of] strikes or dissension in any way; fortunately, the Company had never experienced any difficulty in regard to labour." (1) In a similar vein, Reverend Dr. Daniel Strachan, the Presbyterian minister hired as "Assistant to the President on Industrial Relations," protested at the National Industrial Conference of 1919 that the Plan was not designed to usurp unionization: "I am not spending my time, as a serious man, to defeat any organization; I am not putting my life and my service into this work of industrial relations for the purpose of upsetting any plan of any organization. It would be foolish to do that." (2)

These public pronouncements stand in sharp contrast to the private concern expressed by executives of Imperial Oil over growing labour unrest in all of its refineries as World War I drew to a close. When informed of union activity on the west coast, Company President, C.O. Stillman, wrote to Strachan that:

Our friends [at Standard] should understand that we are constantly struggling against the same problem [of labour unrest] ... it extends from the Ioco Refinery in British Columbia through to Regina, Sarnia and (from information we recently obtained that the labour organizations were organizing our men in Montreal), to the Montreal refinery, and, naturally, it will only be a short time when Halifax is in the same position. (3)

Strachan's response stressed the urgent need for action:

I too learned ... that the unions were very active and I felt no time was to be lost in getting those plants organized on a non-union basis. ... If we can get in before the unions have the balance of power we can organize on our own lines and they can simply whistle but if we wait too long, the labour end will have us by the throat. (4)

In 1919, therefore, Imperial Oil joined the ranks of the "progressive minority" of Canadian firms which embraced a "new industrial philosophy." Predicated upon the benevolent treatment of workers as an act of "enlightened self-interest," the logic was consistent: joint labour-management councils would replace industrial conflict with workplace harmony; accident, sickness, death, and pension benefits would reduce absenteeism and turnover; and a share-purchase plan would foster company loyalty and undermine class consciousness. In short, labour's cooperation could be purchased and trade unionism made redundant.

Welfare capitalism is portrayed as an aberration in the history of North American industrial relations. In the United States, it was seized upon in the wake of labour unrest during World War I, but largely repudiated by both managers and workers during the 1920s. According to Brandes, workers never "genuinely embraced" the paternalism of their employers; Montgomery concurs that workers were "not greatly impressed"; and Bernstein contends that welfarism failed because it never addressed shop-floor concerns. (5) Many employers were equally unconvinced. Proponents of scientific management labelled welfare experiments a "sociological joke," and once the pressure of tight labour markets abated, firms abandoned paternalist approaches in favour of traditional methods of close supervision, the drive system, and wage incentives to control worker effort. (6) Despite Brody's argument to the contrary, few company programs survived intact into the 1930s; and the myth of labour as "equal partners" was shattered as firms retrenched in the face of declining profits during the Great Depression. (7) If any semblance of life still remained, the death knell was sounded by Section 8a of the Wagner Act (1935), which defined employer support for a company union as an unfair labour practice.

Evidence for Canada is both more fragmentary and more ambiguous. In the aftermath of World War I, Canadian workers were poised to assert greater control over their economic and political lives. Naylor describes the "labour revolt" in Ontario, and Kealey documents how the rank-and-file across the country "defiantly challenged" the Royal Commission on Industrial Relations, and articulated coherent alternatives to industrial capitalism. (8) Corporate welfarism is one of several factors contributing to the decline of unionization in the 1920s and the failure to establish a "new democracy." (9) In simple quantitative terms, company unions were more prevalent in Canada than the United States, covering up to half as many workers as unions did in 1920. This is probably due to the predominance in manufacturing industries of subsidiaries of American corporations--International Harvester, General Motors, General Electric, U.S. Rubber, and Imperial Oil--that parroted the industrial relations initiatives of their parent companies. (10) But large Canadian-owned firms also adopted employee-representation plans and comprehensive welfare programs, albeit with mixed results. The industrial council at Massey-Harris, for instance, had little influence over wages and employment during buoyant economic times; completely broke down when production declined; and otherwise "limped along" until the plant was unionization in 1943. (11) In the steel industry, Heron notes that company unions and welfare schemes failed to address the shop-floor experience of workers and thus made little inroads in the face of demands for union recognition. Even the heralded employee-representation plan and profit-sharing scheme at Dofasco fits uncomfortably into the general pattern in that it was not introduced until 1936. (12)