Why Unions Were So Divisive

By Samuel Phineas Upham

In the early 1900s, just after the American Civil War, New York was faced with a unique challenge. It needed to restructure itself, because it had lost significant revenue generated through Southern business interests. This restructuring was helped in large part by immigrants from Ireland, who had moved to New York to escape the potato famine.

Coupled with the city’s sizable African American population and New York had a decent-sized workforce for factories and manual labor. The problem was labor standards, which were about to get a shot in the arm. Strikes were breaking out in the wharfs and piers of New York Harbor, which was busy producing fish and other canned goods while moving stock in and out of port.

Those workers were banding together all across Boston, Philadelphia, Chicago and other major cities in search of higher wages and favorable working conditions. Business interests invoked an English common law called “restraint of trade”, which functioned like a modern day non-compete agreement. They argued that the collusion of wages violated this statute because it gave groups of workers an unfavorable advantage that a single worker might not have otherwise had.

Of course today’s reader might not see the divisiveness in this argument, but it was the hot topic of the day. Newspapers ran headlines and eloquent op-eds on the topic, while business leaders argued ferociously for their right to run a business the way they saw fit.

The reason why worker’s rights prevailed had to do with the courts, which provided precedent that established how workers could collude for wages ethically and legally.

About the Author: Samuel Phineas Upham is an investor at a family office/ hedgefund, where he focuses on special situation illiquid investing. Before this position, Phin Upham was working at Morgan Stanley in the Media and Telecom group. You may contact Phin on his Samuel Phineas Upham website or Facebook.