The Labor Spy

A Survey of Industrial Espionage

By Sidney Howard

First published in The New Republic in 1921


I. Nature and Scope of Industrial Espionage

II. Industrial Harmony

III. The Spy At Work

IV. Weights and Measures

V. Recruiting and Training

VI. The Character of the Spy

VII. Violence


The Labor Spy by Sidney Howard

The Labor Spy

A Survey of Industrial Espionage

By Sidney Howard

II. Industrial Harmony

The industrial detective has solicited his business in his own words. Since he speaks with such conviction on matters which men are less anxious than they might be to believe, it seems worth while that he should display his own wares.

In the injunction suit brought against the Butler Agency of Philadelphia by the Sherman Service Inc., Mr. Sherman, in the Bill in Equity, describes his business very eloquently as:

". . . establishing and maintaining peace and harmony, good will and efficiency in manufacturing, industrial and business enterprises among the employes and between the employes and employers thereof, throughout said territory, the resultant effect contributing to the stability of our national structure and greater mutual productivity to employer, employes and community. . . ."

And, said Mr. Sherman on the witness stand:

"We send representatives into a plant for the purpose of investigating and in order that they may report the real existing conditions in the plant. We term that 'invisible service' because we believe we can develop the unbiased and unprejudiced facts more clearly by invisible service. We receive daily reports from these individuals. We submit to our clients the substance or pith of these reports together with such recommendations as we believe essential . . ."

In 1917 the organization then bearing Mr. Sherman's name published a book which they withdrew almost immediately.

"The employees of a manufacturing house of national prominence submitted demands for a ten per cent increase. The company offered a five per cent advance, but, after several conferences without avail, over twelve hundred went out on strike.

"There had been no union among that particular trade, and, inasmuch as over two hundred thousand are employed in the trade throughout the United States, a certain union made a very concerted effort toward having the strikers organize . . . The company, on the other hand, being one of about fifty others controlled by one corporation, was equally persistent in preventing the above mentioned union from being successful. . .

"We were called in and given carte blanche . . . Six secret operatives, two of each nationality most prevalent among the strikers, were detailed to learn the inside conditions, the acts and contemplations of the strikers and their leaders, who the most violent agitators were, the moral and financial support of the strikers and their organization, and, primarily, to gain positions of confidence and influence among the men so as to be able to render an effective service at the psychological time.

"After about two weeks ... the mill reopened. Invitation was given to all former workers to return under the terms offered by the client.

"Almost simultaneously we detailed several of our recruiting agents to hire men suitable for permanent employment. We were permitted to offer whatever salary we deemed advisable. . . . Also we were to furnish them with bed and board during the strike. . . .

"These workers were not delivered to the plant until the second day after the mills had reopened, so that the importation did not affect those of the strikers who desired to go into work of their own accord. As no more than a dozen went in, fifty workers were delivered on the second day. Accompanying these workers were ten able-bodied guards of commanding appearance. . . . The appearance of the workers and the manner in which they were protected amazed the strikers. . . .

"For the next few days there was no apparent change in the situation. The strike leaders were very active; they maintained a severe picket line, enthusiastic speeches were made. . . .

"In the meantime we continued to import help ... in groups of from fifty to seventy-five a day. Although we were very discriminating in our selection of workers whom we recruited, we found it expedient to detail four secret service operatives, hired in the same way as the other workers, to live in the different barracks and check any agitation which might arise among the recruits and to immediately report on any labor agitator or strike sympathizer who might have been hired accidentally. Through this service we were able to keep the factory one hundred per cent clean with loyal workers.

"The operatives originally detailed to cultivate the strikers had, in the meantime, gained positions of influence, two having become officers in the local union which had been started.* About eight additional secret service operatives were then detailed to augment the work of the others, and, after the plant had been opened about two weeks, we made a concerted effort to induce the strikers to return to work. ... In a very careful way our operatives caused the shopkeepers who catered to the strikers to realize that it was unprofitable for them to have the strike continue, and that it would be wisdom on their part to encourage the strikers who were their customers to return to work.

"The results . . . were soon forthcoming. Several of the strikers returned. The union leaders, however, became more active. . . .

"Through our secret operatives, and particularly those who had gained influential positions in the local organization, we were able to anticipate every move of the strikers and leaders and by this means . . . were able to have several arrests made which resulted in proper convictions.

"This inspired confidence in many more strikers and they returned. . . . We engaged luxurious seven-passenger automobiles to convey them in groups between their residences and the factory. With each group we detailed a guard. This extraordinary form of transportation and the excellent protection afforded, served as a temptation for many strikers to return. . . .

"The company had no further need of conference with the labor leaders and at our advice denied interviews to any and all labor organization officials.

"After eight weeks . . . the strike was declared off. All hands went back in a body on the following day. . . .

"The weekly meetings of the local union discontinued. The leaders of the strike were gradually discharged for one reason or another. . . . Our operatives, surrounding themselves with many of the former strikers, upon meeting days, and going away upon recreation trips with them, the attendance at the meetings gradually diminished. At these a sufficient number of operatives were detailed to use the proper influence to promote legislation favorable to our client.

". . . Then it was comparatively easy to start dissension among the leaders which increased to the extent that each gathering resulted in a fight. These occasions allowed our secret operatives to further illustrate the fact that the leaders were out for personal gain. . . . Finally, by properly applied methods, the union charter was returned and the local abandoned.

". . . The local union was disorganized, and that national industry, of which our client is the great majority, has not been unionized."

The book tells other stories of strikes no less successfully broken and of unions similarly wrecked. One clips sentences:

"Our operatives have obtained positions of influence in the union so that they can easily influence the affairs within the organization in the proper direction for the welfare of the client."

We had been successful in splitting the union into three factions, one controlled by the committee, one by a Polish leader, and one by the president. ... A meeting was called and the Italian employee whom our operative had been cultivating and influencing fought against the secretary. These matters resulted in a general fight. The proper time had arrived to extreminate the trouble-making organization. We detailed a number of guards and they were immediately deputized. Ejectment papers were served upon the committee and they were ordered to leave town, which they did. ...

Our operatives were successful in being able to take over virtually the entire management of the . . . Union.

This book is indubitably the most instructive item in the library of industrial espionage literature. That it is so, certainly accounts for its withdrawal from circulation.

Following the Sherman Service advertisement: "How can Sherman Service be misunderstood?" is the whole welter of harmony and conciliation. Says Sherman, again:

"No employer, no manufacturer or worker on earth need misconstrue our object.

"No man, no organization, no movement that is honest and above board has anything to fear from Sherman Service."

This from the New York Times advertisement of November 5, 1919. The motto of the R. J. Coach Secret Service Company of Cleveland, is significant.

"Man, know thyself, is a divine command, but, man, know those in whom you are obliged to put faith and trust is a human necessity without which no substantial success in this world can be achieved."

Mr. Coach may be taken as the originator of this literature of harmony through which the industrial detective advertises his wares.

"In their silent, secret, effective way, the industrial operatives uproot relentlessly the weeds of dishonesty, disloyalty and discontent. Through their efforts unity of purpose is established between employer and employee. Our operatives soon end the reign of labor agitator in shop or factory. We do not care to say more on this subject."

All of this in the words of the industrial detective taken from his own works. His phrases in his parlance of harmony and conciliation—"we keep them happy and contented"—"We bring about a closer understanding between you and your employee"—"Give the human element more consideration"—"Selflessness, sincerity and honesty are the three factors which capital must use," are appalling. It is a strange thing to superimpose these noble thoughts upon the actual meaning behind them. But the final indictment of the industrial detective is the comparison of two passages gleaned again from the writings of Mr. Sherman's agency.

"It is then a simple task to thoroughly impress upon the alien that this country offers advantages that no other country offers its citizens. We show him that he should be part of this country and enjoy is citizenship."

Against which the famous instructions to the operative of the steel strike:

"We want you to stir up as much bad feeling as you possibly can 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."**

"We cannot readily bring ourselves to associating this sort of thing with the employer of this country. Yet here is the industrial detective with his hundreds of branch offices and his thousands of spies and his income tax of $258,000 in a single year. Some one must pay the piper since he enjoys such prosperity.

The New Republic, February 23, 1921.

*This practice is not confined to any one agency. "It was the policy ... to place men called 'Company Operatives' in different branches of work in the different shops and charge the employers so much for each operative. Each operative was given an expense account and it was his duty to make friends with everybody, especially the agents and men high up in the organizations and the men who held positions in the locals. The Company offered me a bonus of fifty dollars to get a secretary's job in one of the locals in order to pet the names and addresses of the men. . . ." —Affidavit of Eckhardt Gieser, one time operative of the Corporations Auxiliary Company.

**Publication of these instructions brought about a raid on the Chicago office of the Sherman Service, Inc., by the Military Intelligence and the States Attorney of Cook County which resulted in the indictment of an official of the agency. The indictment was subsequently quashed.