It was known as “the Rockefeller Plan.” During the 1910s and ‘20s, it became America’s most widely embraced expression of corporate paternalism. Over one-and-a-half million workers at hundreds of U.S. companies—including General Electric, Westinghouse, DuPont, International Harvester, General Motors, Procter & Gamble, Standard Oil, the Pennsylvania Railroad, and Goodyear Tire—were covered by management-imposed schemes providing for employee-elected representatives, a grievance procedure, and delegates assemblies that offered recommendations regarding safety, sanitation, health and housing, recreation, education, and “industrial cooperation and conciliation”—meaning wages and working conditions. In short, the Rockefeller Plan was built around what organized labor would call a company union.

There were previous expressions of corporate paternalism in America, often involving company towns. For example, beginning in the 1820s, Lowell, Mass., the first large company town in America, was home to numerous textile factories staffed by young women who were housed in boardinghouses and encouraged to write poetry and attend improving lectures. Late 19th century logging towns such as Scotia, Calif., and Port Gamble, Wash., became utopian settlements in the deep woods. Hershey, Penn., built by chocolate man Milton S. Hershey in the early 1900s, featured electrified, centrally heated worker homes, a free playground and zoo, and a model school for orphan boys. The Rockefeller Plan added worker representation to this paternalistic tradition.

The Rockefeller Plan had shortcomings, of course, from the workers’ point of view. Companies were under no obligation to accept representatives’ recommendations or even listen to grievances. Nor was every industry enthusiastic about even this weak form of employee representation: Steel men, in particular, resisted coddling employees and constructed company towns that resembled fortresses. In Gary, Ind., for instance, United States Steel’s plants stretched all along the Lake Michigan shore and were separated from the rest of the city by a river that could serve as a moat in the event of a work stoppage. Scabs and supplies might enter the plants directly via the lake, thereby avoiding worker confrontations and picket lines.

The severe attitudes of steel executives were shaped by two particularly vicious strikes: The 1894 events at the Pullman railroad-sleeping-car maker, which spiraled into a bloody nationwide railroad strike involving 50,000 men; and the 1892 face-off at the Carnegie works at Homestead, Pa., where hundreds of Pinkerton guards battled strikers armed with cannons and other weapons.

But the Rockefeller Plan was itself the result of a vicious bloodletting: the 1914 conflict at Ludlow, Colo. In the fall of the previous year, a vigorous United Mine Workers organizing effort at mines across Huerfano and Las Animas counties preceded the publication of a number of ambitious strike demands, including union recognition, an eight-hour day, and the right of employees to live wherever they pleased, not just in company-built settlements. The Rockefeller-owned Colorado Fuel and Iron and other coal companies rejected these demands, employing the notorious Baldwin-Felts union-busting firm to punish the wayward workers. CFI’s chief, John D. Rockefeller Jr., vowed to “see the thing out, not yielding an inch.”

Company guards evicted miners from their company-owned housing. The strikers in turn set up numerous tent cities.

After hiring dozens of thugs from across the country, Baldwin-Felts men murdered a striker on the streets of Trinidad, Colo., and engaged in numerous shoot-outs with miners. A Baldwin-Felts armored car equipped with a Gatling gun attacked a tent city, killing two men and wounding a nine-year-old boy.

And then things got really ugly. The governor sent in the National Guard, which in April attacked the tent city of Ludlow with machine gun fire. In the late afternoon, they set fire to the tents. Two women and eleven children perished.

Workers did not take the attack lying down. The UMWA, the Colorado Federation of Labor, and the militant Western Federation of Miners called their members to arms. Subsequently, unionists killed more than 30 strikebreakers, mine guards, and National Guard troops. There was widespread destruction of mine buildings and bridges.

None of which was good for the bottom line or Rockefeller public relations, of course. In what would become an iconic labor image, the socialist periodical The Masses ran a cover illustration showing a miner standing over his murdered wife and children and firing back at attackers. The accompanying article, by Max Eastman, was entitled “Class War in Colorado.” Activist/author Upton Sinclair organized demonstrations outside the Rockefellers’ New York offices at 26 Broadway and the family’s private Hudson Valley compound, Kykuit. Helen Keller, famous as a writer and spokesperson for the handicapped, told reporters: “Mr. Rockefeller is a monster of capitalism.”

Junior, as the younger John D. was known, decided that he should perhaps moderate his anti-labor stance. As luck would have it, he came to meet William Lyon Mackenzie King, a former Canadian deputy labor minister who believed in labor-capital accommodation in the spirit of Christian brotherhood. Rockefeller appointed King to head the Rockefeller Foundation’s new industrial relations department, and it was from that position that King devised the employee-representation plan. By the fall of 1915, John D. himself was touring Colorado, lecturing various meetings about the plan’s details.

William Lyon Mackenzie King

Rockefeller was on the leading edge of what would shortly become known as “welfare capitalism.” Another leading advocate of the trend was retail magnate Edward Filene, who made his downtown Boston department store into a laboratory for capitalist social experimentation. Like Rockefeller’s initiative, the Filene’s Cooperative Association gave workers a role in determining wages and allowed arbitration of disputes. To attract what Filene called “a better class of workers,” his company provided a clinic, a library, a credit union, help with rents, pensions, and profit-sharing.

The last of these became a particularly popular way of building employee loyalty and productivity. By 1927, almost 400 companies engaged in employee profit-sharing plans. Even steel companies joined in: At Bethlehem Steel, workers owned $40 million of company stock, and U.S. Steel’s plan became a model for many corporations. At Firestone Tire, every one of 14,000 employees was a shareholder.

By the 1940s, though, the fad for welfare capitalism had subsided—a victim of renewed labor conflict in the 1930s and ‘40s and of the conflict model enshrined in the National Labor Relations Act. Under that law, labor and capital were intended to engage in “economic warfare,” with the state acting as a neutral able to moderate the most severe clashes and bring things to a sensible conclusion.

Since the 1980s, that model, too, has seemed broken: Unions have seemed overmatched by hostile corporations, extreme-right pols and pundits, and anything-but-impartial government.

Meanwhile, even though they are sometimes hard to spot, a few outposts of welfare capitalism remain. Reminiscent of the Rockefeller Plan, a growing number of companies have developed in-house, non-union grievance procedures. Somewhere between 15% and 25% of private-sector employers now require binding arbitration of employment disputes. That means that two to three times as many workers are covered by such “company union”-like provisions as by union grievance procedures.

Then there are the “nanny corporations.” Kaiser Permanente, a pioneer in offering medical care to its employees, remains active in promoting health across the globe. Corning Inc. has proved a mainstay of its upstate New York hometown, spiriting downtown renewal and spending millions each year on local education and child-care efforts. Famously, such Silicon Valley stars as Google and Microsoft provide all-but-enveloping employee perks, from high pay to nap rooms and free meals. More than 70 Chicago-area employers now offer housing aid to their workers, facilitating thousands of home purchases. And although benefits are reduced every year, company-paid health plans are a key part of Americans’ social safety net, frayed as it is.

Is corporate welfarism simply a con, a thinly veiled form of exploitation—or something more? To be sure, such efforts will never be comprehensive—obviously, the unemployed get nothing—and companies cannot be counted upon to stick with such measures through good times and bad. Employment-dispute arbitration procedures probably benefit companies more than they do employees. The various perks listed above are surely intended to help companies retain skilled and necessary employees. Still, answer this: Would you rather work at Bloomberg, where a writer’s every keystroke and work break is monitored, or at Google, where management seems to feel that workers’ creative juices are stimulated by an atmosphere of play and freedom? At Wal-Mart, where benefits are bare-bones, or at Kaiser, where, for whatever self-interested reasons, management seems to take employee health seriously? In such dark times as these—and with no better alternative in sight–a little bit of extra can count for a lot.

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