Leland Stanford and Employee Ownership

"Robber baron" Leland Stanford (who started Southern Pacific Railroad, served as U.S. Senator, and founded Stanford University) is not much remembered these days as a strong advocate of employee ownership, but, in fact, as he got older, it was central to his thinking. In founding Stanford, Leland Stanford directed that the university dedicate itself to studying worker cooperatives. He also pushed a bill in the U.S. Senate to foster worker coops. The bill was widely debated and earned Stanford something of a reputation as a "socialist," a view he strongly denied. In a newspaper interview on his bill, Stanford said:

"The one remedy for this tendency, which to all appearances has been ineradicable from the industrial system, is the cooperation and intelligent direction of labor. What I believe is, the time has come when the laboring men can perform for themselves the office of becoming their own employers; that the employer class is less indispensable in the modern organization of industries because the laboring men themselves possess sufficient intelligence to organize into co-operative relation and enjoy the entire benefits of their own labor. With a greater intelligence, and with a better understanding of the principles of cooperation, the adoption of them in practice will, in time I imagine, cause most of the industries of the country to be carried on by these cooperative associations."

Stanford worried that the accumulation of capital in too few hands would ultimately threaten capitalism itself, as well as be unfair to working people. His views presage the writings of Louis Kelso almost a century later in arguing for employee ownership. Stanford's bill was favorably reported out of committee, but illness prevented him from taking it to the floor and it never went further. At the university, there was a course in worker cooperatives in the first year, but Stanford's health problems prevented him from pushing the idea further. After he died, his successors quietly buried the idea. A fascinating article detailing this history can be found at this link.