LABOUR POLICY—FALSE AND TRUE




                           LABOUR POLICY—FALSE
                                 AND TRUE

                     A Study in Economic History and
                           Industrial Economics

                                    BY
                             LYNDEN MACASSEY

                              [Illustration]

               ‘Felix qui potuit rerum cognoscere causas.’

                       THORNTON BUTTERWORTH LIMITED
                     15 BEDFORD STREET, LONDON, W.C.2

                    _First published August 24, 1922_




PREFACE


Portions of some of the chapters in this book have already appeared
in _The Times_, the _Quarterly Review_, the _Edinburgh Review_, the
_Nineteenth Century_, the _Sunday Times_ and the _Evening Standard_, and
are now incorporated in their proper place in the larger scheme on which
they were originally written. I am indebted to the proprietors of those
publications for their kindness in permitting me so to reproduce them.

An old friend and valued colleague of mine in the Department of Shipyard
Labour—Mr. C. F. Farrar—did me the great service of assisting to get the
book through the press.

To my Secretary, Miss K. I. Toogood, I owe the preparation of the Index.

                                                                     L. M.

_August 12th, 1922._




CONTENTS


                                                                      PAGE

    Introduction.                                                       15

                   PART I. THE FALSE POLICY OF LABOUR

    CHAP.

    I The Labour Party’s Constitution and Its Defects                   21

        Origin of the Labour Party—Reconstitution in 1918—The
        Trades Union Congress—The National Joint Council—The
        Parliamentary Labour Party—The Labour Party, a Class
        Party—The Party’s Want of Leadership.

    II An Outline of the Labour Party’s General Policy                  32

        A National Minimum Standard of Living—Effective
        Personal Freedom—Socialization of Land and Industry—A
        Revolution in Public Finance—The Surplus Wealth for the
        Common Good—International Co-operation—No Protective
        Tariffs—Freedom of International Trade.

    III The Labour Party’s Adoption of Socialism                        40

        1. Meaning of Socialism.—The Common Characteristics of all
        Socialistic Creeds—State Socialism—Syndicalism—National
        Guildism—Nationalization and Democratic Control.

    IV The Labour Party’s Adoption of Socialism                         46

        2. History of the Alliance.—Labour’s Struggle for Political
        Power, 1825-1832—Labour’s Alliance with Revolutionary
        Socialism, 1832-1842—Labour’s Renunciation of Socialism,
        1842-1885—The Era of Constitutional State Socialism,
        1885-1905—The New Syndicalist Revolutionary Ferment
        of 1905—The Socialist Societies—The Social Democratic
        Federation—The Communist Party—The Fabian Society—The
        Independent Labour Party—The Socialist Labour Party—The
        Socialist Party of Great Britain—The National Guilds League.

    V The Labour Party’s Adoption of Socialism                          56

        3. The Home Socialistic Programme.—Nationalization of
        the Means of Production, Distribution and Exchange—The
        Labour Addendum to the Whitley Report, 1918—The Industrial
        Programme of 1918—Land Nationalization—The Control of
        Industry—Labour’s Report to the Industrial Conference,
        1919—Nationalization of the Coal Industry.

    VI The Labour Party’s Adoption of Socialism                         65

        4. The International Socialistic Programme.—The
        First International—The Old Second International—The
        International Labour Charter of 1919—The New Second
        International—The Geneva Resolutions on Socialism of
        1920—The Second International and Bolshevism—The Third or
        Moscow International.

    VII The Labour Party’s Adoption of Socialism                        76

        5. Approval of Direct Action.—The Meaning and Qualities of
        Direct Action—Direct Action on the Clyde, 1916—Conversion
        of the Labour Party to Use of Direct Action—Establishment
        of the Council of Action—Setting-up of Local Soviets.

    VIII The Labour Party’s Industrial and Land Policy                  85

        1. Details of the Proposals.—The Industries and
        Businesses to be Nationalized—Extension of Municipal
        Enterprise—Control of Capitalistic Industries and
        Businesses—Labour’s Agricultural Policy—Abolition of
        Landlordism—Councils for Agriculture—A Legal Minimum
        Agricultural Wage—Workers’ Control of Agriculture.

    IX The Labour Party’s Industrial and Land Policy                    92

        2. A Criticism.—What Capitalism is—Our Debt to
        Capitalism—The Alleged Defects of Capitalism—Where Reform
        is Admittedly Needed—The Failure of Past Socialistic
        Experiments—Limits within which Nationalization
        is Practicable—The Different Schemes of Land
        Nationalization—The Taxing-out Scheme—The State Purchase
        Scheme—The Socialistic Confiscation Schemes—The Conceptions
        Underlying Each Scheme—The Disadvantages of State Ownership
        of Land.

    X The Labour Party’s Policy for Unemployment                       106

        1. Work or Maintenance.—The Manchester Resolution of
        1917—The Memorandum on War Aims, 1917—The Memorandum on
        Unemployment after the War, 1917—The London Resolution of
        1918—The Prevention of Unemployment Bill, 1919—Labour’s
        Recommendations to the Industrial Conference, 1919—The
        Right Hon. A. Henderson’s Addendum—The Southport
        Resolution of 1919—The Resolution of September 1919—The
        Recommendations of the Joint Committee on Cost of Living,
        September 1920—Vote of Censure in Parliament, October
        1920—Resolution of December 1920—Labour’s Refusal to
        Co-operate with the Government, 1921—Labour’s Statement of
        Policy for Unemployment, 1921—Manifesto on Unemployment, 1921.

    XI The Labour Party’s Policy for Unemployment                      124

        2. Its Impracticability.—The Unsoundness of the
        Right to Work—The Failure of Work or Maintenance in
        France—Impossibility of Providing Suitable Work—Employment
        Depends Primarily on Demand—The Farm Colony Fiascos.

                    PART II. GOVERNMENT LABOUR POLICY

    XII War-time Labour Regulation and Its Effects                     133

        Co-operation between Employers and Unions at Beginning
        of War—The Unsettling Effect of Shortage of Labour—The
        “Treasury” Agreements of March, 1915—The Limitation of
        Employers’ Profits—Failure of Compulsory Arbitration—Effect
        of Relieving Employers of Responsibility for Labour
        Management—Increases of Wages and Prices—Relation of Wages
        to Cost of Living.

    XIII Normal Government Labour Policy                               142

        Government Departments Concerned—Conciliation and
        Arbitration—Whitley Councils—Industry’s Own Conciliation
        Machinery—State Conciliation Machinery—Statutory Minimum
        Wages—Employment Exchanges—The Work of the Ministry of
        Labour.

    XIV Government Labour Policy for the Coal Industry                 155

        Pre-war Conditions—The South Wales Strike of
        1915—Government War-time Control—The Sankey Commission—The
        Mining Industry Act, 1920—The Strike of October 1920—The
        Strike of April 1921—The Failure of Part II of the Act of
        1920—Royalties—Summary of Government Policy.

    XV Government Labour Policy for Railways                           164

        Pre-war Conditions—Government War-time Control—The Wage
        Agreement of March 1919—The Railway Strike of September
        1919—The Wage Agreement of March 1920—The Railways Act,
        1921—The Railway Conciliation Machinery of 1921—Sectional
        Railway Councils—Railway Councils.

    XVI Government Labour Policy for Agriculture                       171

        Government War-time Control—Government’s New Policy in
        1921—The Establishment of Joint Conciliation Committees
        in England and Wales—The Work of the Conciliation
        Committees—Agriculture and Unemployment Insurance.

    XVII Government Policy for Unemployment                            175

        1. State Unemployment Insurance.—The Present Scheme
        of 1920—Emergency Provisions—Temporary Act of March
        1921—Temporary Act of July 1921—Temporary Provision for
        Dependents’ Act of November 1921—Temporary Act of April
        1922—The Efficiency of the State Scheme                        176

        2. Construction Of Works of Public Utility.—Unemployment
        Grants Committee—The Scheme of 1920—The Extended Scheme of
         1921                                                          187

        3. Expedited Road Schemes.—The 1920-21 Programme—The
        1921-22 Programme—The Special Metropolitan Schemes—The
        Provincial Schemes—Conditions Attaching to Grants              191

        4. Poor Law Relief.—Principles Governing Administration of
        Relief—Ascertainment of Applicant’s Income—Assistance to
        Guardians to Carry out Works—Funding of Cost of Relief—Help
        to Poorer Metropolitan Unions—Assistance to Guardians to
        Raise Loans                                                    195

    XVIII Government Policy for Unemployment                           199

        5. Guarantee of Loans.—The Trade Facilities Act,
        1921—Policy of Advisory Committee—Difficulties of the
        Committee—Guarantees already Given                             199

        6. The Export Credits Scheme.—Specific Guarantees or
        Credits—General Guarantees or Credits                          204

        7. Other Miscellaneous Schemes.—Summary of National
        Expenditure                                                    207

                    PART III. THE TRUE LABOUR POLICY

    XIX The Outlook of the Worker                                      211

        Ignorance about Industry—Misconceptions as to
        Wages—Discontent and its Causes—Effect of Bad
        Environment—Fear of Unemployment—Dissatisfaction
        with Status in Industry—Belief in Agitation—Desire
        for Improvement—Low Conception of Work—Suspicion of
        Employers—The Worker and his Trade Union—The Worker and the
        Community.

    XX Reform of Industry instead of Socialization                     222

        The Three Dominant Aspirations of the Workers—Can and
        Ought they to be Satisfied?—The Vagueness of Labour’s
        Scheme of Reconstruction—The Recent Change in Labour’s
        Proposals—Reform of Industry _v._ Reconstruction.

    XXI The Human Relationships to be Rectified in Industry            230

        Capital and the Administrative Staff—Capital and the Manual
        Workers—The Manual Workers _inter se_—The Administrative
        Staff and the Manual Workers—Industry and the Consuming
        Community—Industry and the Nation.

    XXII The Right Relationship of Government to Industry              235

        1. The Policy for the Present Depression.—Establishment
        of International Peace—Reduction of National
        Expenditure—Lowering of Taxation—Stabilizing the
        Exchanges—Revision of Financial Policy—Reconsideration
        of Reparations Policy—Inter-Allies Debts—Export
        Credits—Bringing down Costs of Production.

    XXIII The Right Relationship of Government to Industry             246

        2. The Normal Position Of Government in Relation to
        Industry.—Regulation of Factory Conditions—Conciliation
        and not Intervention—Protection of the Community—Wages
        in Unorganized Industries—Industrial Research—Need of a
        Real Ministry of Labour—Regulation of Combinations and
        Monopolies.

    XXIV The Right Relationship between Employers and Employed         256

        1. Contentment in Industry.—(_a_) Provision against
        Unemployment.—Equalization of Demand for Labour—Insurance
        against Unemployment—Need of a Job-Finding
        Organization—Insurance by State or Industry—State
        Insurance—Insurance by Industry or Industries—Reform of
        Present Outdoor Relief System—Unemployment Insurance by
        Firms.

    XXV The Right Relationship between Employers and Employed          263

        1. Contentment in Industry.—(_b_) Human Status of the
        Worker in Industry.—The Slowness of Ordinary Conciliation
        Machinery—The Whitley Councils Scheme—Joint National
        and District Industrial Councils—Works’ Committees—The
        Slow Progress of Works’ Committees—The Success of Works’
        Committees on the Clyde—Executive Management a Matter for
        Employers.

    XXVI The Right Relationship between Employers and Employed         271

        1. Contentment in Industry.—(_c_) Remuneration of the
        Worker.—Uniform National Wages—Wage Relationships
        among the Workers—Wages and the Community—Are Higher
        Wages Practicable?—The Settlement of Wages—Systems of
        Remuneration—What is a Fair Wage?—Other Essentials to
        Industrial Contentment.

    XXVII The Right Relationship between Employers and Employed        280

        2. Co-operation in Industry.—The Workers’ Own Resort to
        Co-operation—The Marxian Argument against Co-operation—Some
        Workshop Applications—The Marxian Fallacy of the Origin of
        Capital—The Marxian Fallacy of Value—The Need of Sympathy
        in Workshop Life—The Need of Strict Justice—The Money Value
        of Sympathy in Industry—The Sympathetic Handling of Labour
        a Special Art—An Illustration of its Successful Application.

    XXVIII The Right Relationship between Employers and Employed       290

        3. Production in Industry.—The Importance of
        Production—What Production Depends on—The Workers’
        Notion of the Secret Fund—“Passing it on”—The Workers’
        Belief in Restricted Output—Introduction of Time- and
        Labour-Saving Appliances—Payment by Results—Subdivision and
        Simplification of Process—No “Niggling” at Prices.

    XXIX The Right Relationship between Industry and the Community     303

        The Formation of Sound Public Opinion—The Responsibility of
        the Consumer—The Duty of the Citizen.

    Index                                                              313




INTRODUCTION


Our great industrial difficulty, under modern conditions, is to combine
human development with human work, and persuade people to be industrious.
Formerly, men worked to benefit themselves; now, they are apt to refrain
from working for fear they may benefit other persons. The injury to
employers from such a course is evident; but the detriment to the workers
themselves is less obvious, and the calamitous effect on the community is
seldom realized. That difficulty is what we call “the Labour problem”; a
knowledge of the principles on which it can best be solved is our chief
national necessity.

This book strives to criticize the wrong, and indicate the right,
solution. The test which it applies is whether a solution places the
community before section or party, or is one designed primarily to
advance sectarian interests, political or industrial, either avowedly,
or speciously, under professions of solicitude for the public good.
Nowadays, one has to look well below the surface of words, however
distinguished may be their origin. There is little to choose between the
revolutionary Socialist, whose solution consists in thrusting industrial
democracy into supreme economic or political power through ruthless
direct action and then socializing industry, and the constitutional
anti-Socialist, who would solve the problem by pledges to inaugurate a
new industrial Heaven and Earth, and other “ninepenny-for-fourpence”
promises, which he has no honest conviction can be redeemed, and which,
if he seriously considered, he would know can never be fulfilled. On
the whole, during the last few years, the latter has proved the greater
menace to the nation.

Policies for the solution of the Labour problem fall, broadly speaking,
into two main categories. Those which insist upon, or imply, the
reconstruction of industry by eliminating private enterprise and the
capitalist. Of this type is the policy for which the Labour Party
stands—the vague abstraction of “nationalization and democratic control.”
All other policies are of the type which postulates, as essential
to industrial progress, continuance of the so-called capitalistic
organization of industry with, however, amendments and reforms of
varying character. There is not always that clear-cut distinction. Many
opponents of the Labour Party’s policy are advocates of the particular
method of socializing industries known as municipalization, and even of
the State running certain quasi-industrial ventures like the Post Office.
Such overlapping and border-line cases must always occur. Human affairs
can never wholly be regulated by precise formulae; were that possible,
the world would be a dull place wherein to live.

If the Labour problem is to be solved, there must be more clear thinking,
critical analysis, and decisive action on the part of the general public,
who forget how vitally they are interested. With the object of placing
before them its various elements in logical sequence and balanced
perspective, I have, after much consideration, adopted the following
scheme for this book: I set out in Part I the policy of the Labour Party
for solution of the problem, and examine its fundamentals; next, I
describe in Part II the Government’s Labour policy, so far as it has been
declared, or evidenced in departmental practice, and consider it; then,
lastly, I outline in Part III what, in amplification of the Government
policy and in opposition to that of Labour, I conceive to be the true
solution, and the one most calculated to promote the interests of the
nation.

The Labour Party heralds itself as “the true national democratic
party,” and as such claims to have formulated a national Labour policy,
which, on the most superficial examination, exhibits many indications
of purely sectarian objectives. My effort has been to appraise that
policy critically but fairly, and see how far it is likely to advance
the common welfare. This cannot be done unless one clearly appreciates
the industrial root on to which the so-called national democratic party
has recently been grafted, and from which it draws all its nurture and
virility. Part I, therefore, explains in some detail the history and
constitution of the Labour Party, and also the nature of the root, which,
called by the most euphemistic name, is merely a particular species of
Socialism. At the moment, the Labour Party does not seem unduly proud of
its lineage, nor inordinately anxious to force upon the attention of the
country its real socialistic aims. But it is essential that they should
be laid bare, and this I endeavour to do in Part I, not by quotations
from Labour leaders’ speeches, which express considerable difference in
views, according to the forum, are not conspicuous by consistency, and
are regarded as of no binding force by the Party. I give actual extracts
from official documents published by the Labour Party, not generally
known or accessible to the ordinary reader, and which state, if not with
clarity, at any rate in its own language, the principles to which the
Party declares that it has pledged the allegiance of all its followers.

The Labour Party arraigns before the bar of public opinion the present
Government, and, indeed, all past “Capitalistic Governments,” and
charges them with having neglected the interests of the workers, and of
being devoid of any consistent Labour policy. Such an accusation, if
sufficiently repeated, obtains a certain validity of currency, because
the public know little of what has been really achieved under Government
direction. I hold no brief for the present Coalition Government—I
have often criticized its unfortunate opportunist action in regard to
industrial matters, and do so freely in this book—but it is vital that
the public should understand, if only as the foundation on which to
build a new and amplified Labour policy, what it and former Governments
have done, at the expense of the nation, for the workers of the country.
This is the theme of Part II, and, as any future solution of our
Labour difficulties must be materially influenced by the effect upon
industry, upon employers and employed, of the emergency measures taken by
Government for the regulation of Labour during the war, a chapter in Part
II is devoted to this important matter.

In Part III I then proceed to the true purpose of the book—to indicate
in broad outline what seems to me to be the only possible Labour policy
for the future. It must satisfy, and be attuned to, the human qualities
of the workers; Part III, therefore, starts with a description of the
aspirations and sentiments of the workers as I found them in real life,
and then proceeds to set out the principles that I think should govern
the three greatest relationships in industry—that of the Government to
industry—that between employers and employed—that between industry and
the community.

In my treatment of the subject I have tried to avoid academic
disquisition, and to produce a discussion fitting as closely as possible
to the actual realities of workshop life, as they came within my
practical experience, first, as an engineer, and, later, in discharging
for Government the duties of many war-time offices involving the control
of labour. My own ascertainment of facts is opposed in many respects to
what has been stated by other writers, but some three thousand close and
intimate conferences during the war with employers’ organizations, Trade
Union executives, district and branch committees, together with many
mass meetings—at all of which careful notes were taken—to say nothing of
having one’s finger daily on the pulse of over one million men, supply me
with a groundwork of facts sufficiently convincing at any rate to my own
judgment.

That the Labour problem can eventually be solved with success by resolute
perseverance along the line of principles suggested in Part III I feel
certain. In the robust common sense of the British employer and the
British workmen I have the utmost confidence. Of its ultimate triumph
I am convinced. Time after time, during the war, when an industrial
catastrophe seemed inevitable, I have seen common sense, acting on the
national genius for compromise, serve to prevent both sides from going
over the brink of the abyss that suddenly yawned. Along these principles
a solution can be secured that will be stable and satisfactory alike
to employers, the workers and the community. The first essential step
to a solution is knowledge of the ingredients that make up the Labour
problem, and there is no book, as far as I am aware, available to the
general reader that states the matter plainly from a wide and practical
experience quite as I have striven to do. That is my apology for
publication of this book.

My criticisms, I trust, will leave no rancour; I have stated my views
with directness, but in words I have weighed, and there is nothing behind
them, for I am neither an employer nor a politician. I am but anxious to
see a brotherly, just and nation-saving solution of the problem. Labour
and I have had many a fierce tussle in the past, but I think we have
learned to respect each other. No section of the community so revels
in and honours straightforward and downright criticism as does Labour,
provided it is really honest and the critic is sincere. It is something
to be able to say, after so much official controversy as I have had,
that on no occasion did we ever descend from discussing principles to
personalities. I hope this book may not contain a single involuntary
lapse from that standard, as I count myself fortunate, in spite of acute
differences in economic views, to enjoy the friendship of many persons,
both great and humble, in the Labour movement, a valued possession I
would not lightly jeopardize. It is with principles, and principles only,
that this book is concerned, and not with persons.




Part I

THE LABOUR PARTY’S FALSE POLICY




CHAPTER I

THE LABOUR PARTY’S CONSTITUTION AND ITS DEFECTS

    Origin of the Labour Party—Reconstitution in 1918—The Trades
    Union Congress—The National Joint Council—The Parliamentary
    Labour Party—The Labour Party a Class Party—The Party’s Want of
    Leadership.


There are two great Labour organizations: the Trades Union Congress, with
its Executive, the General Council, which represents the industrial wing;
and the Labour Party, with its National Executive or Executive Committee,
representing the political wing. The distinction between industry and
politics—at no time kept clear—is fast disappearing.


Origin of the Labour Party

The Labour Party dates from 1900—when the Labour Representation
Committee was formed on the initiative of the Trades Union Congress,
the Independent Labour Party, the Social Democratic Federation, and the
Fabian Society. Of 15 Committee candidates who ran at the subsequent
General Election of 1900, 2 were returned—the late Mr. Keir Hardie and
Mr. Richard Bell—9 Trade Unionist members being also returned, but
not under the auspices of the Committee. Before 1900 prominent Trade
Unionists had stood individually for Parliament, and had, from time to
time, been elected. The first effective steps had been taken in that
direction by the Labour Representation League established in 1869, after
the Reform Act of 1868. In 1874, 13 candidates went to election, and
the first two “Labour members” were elected, one being the late Right
Hon. Thomas Burt. In 1880, 3 were returned; in 1885,11; in 1892,14; in
1895,12. The successful Labour candidates stood on an industrial and not
a “Socialist ticket”; where Socialists did stand they received scanty
support. At the election of 1885, the Social Democratic Federation ran a
candidate in Kennington and one in Hampstead: the former polled only 32
votes, the latter 29.

In 1886, the Labour Representation League having been dissolved, the
Electoral Labour Committee was constituted by the Trades Union Congress.
It soon fell under the influence of the Liberal Party, and this led to
Mr. Keir Hardie’s campaign, opened at the Swansea Trades Union Congress
in 1887, for an independent Parliamentary Party representing Labour. Mr.
Keir Hardie himself fought Mid-Lanark as an Independent Labour candidate
in 1888 unsuccessfully, but was returned for South-West Ham in 1892. At
his instance the Independent Labour Party was founded in 1893; it sent
28 candidates to the poll in 1895, with no success. But the political
activity of the Independent Labour Party soon roused the Trades Union
Congress. In 1899, at the Plymouth Conference, the Congress passed a
resolution directing its Parliamentary Committee to arrange a conference
of Trade Unions, Co-operative and Socialist Societies, to secure the
return of an increased number of Labour members to Parliament. As part of
the machinery the Labour Representation Committee was formed in 1900.

The constitution of the Labour Representation Committee in 1900 was as
follows: 41 Trade Unions, with a membership of 353,070 members; 7 Trades
Councils; 3 Socialist Societies, adding a further membership of 22,861,
making a total of 375,931. At bye-elections between the General Elections
of 1900 and 1906, three prominent candidates of the Labour Representation
Committee were elected: Mr. (now Sir) David Shackleton for Clitheroe, the
late Mr. Will Crooks for Woolwich, and Mr. (now the Right Hon.) Arthur
Henderson for Barnard Castle. The Newcastle Trades Union Congress of
1903 passed a strong resolution enjoining political independence, and
instituted a parliamentary fund. At the General Election in 1906, out of
50 candidates sponsored by the Labour Representation Committee, which
in that year re-christened itself “the Labour Party,” 29 were elected.
Under the chairmanship of Mr. Keir Hardie, the Parliamentary Labour Party
was immediately established with all the paraphernalia of a separate
political party in the House of Commons. At the General Election of
January 1910, out of 78 candidates, 40 were elected; at that of December
1910, out of 56 candidates, 42 were elected; at that of December 1918,
out of 392 candidates, 59 were elected. At the last election in 1918,
with a total vote in Great Britain of 9,690,109, 2,375,202 were polled by
Labour.


Reconstitution in 1918

At the Labour Party Conference at Nottingham in January 1918, a revised
constitution was proposed, which was ultimately adopted in London at
the Party Conference on February 26 of the same year. The case for
the new constitution was put before the Nottingham Conference by the
Secretary to the Executive Committee, the Right Hon. Arthur Henderson,
in these words: “It was no use the Executive using anything in the
nature of a social programme or talking about building up a new social
order and reconstructing society until they had taken into very careful
consideration their present position as an organized political force.
They had done so, and came to the unanimous conclusion that Labour, as
politically organized in the existing circumstances, was altogether
inadequate to the great task that lay immediately before it. They had
never in the proper sense claimed to be a national political party. This
limitation was inherited from the resolution carried at the Trades Union
Congress in Plymouth in 1899. They were a political federation consisting
of Trade Unions, Socialist bodies and Co-operative Societies, but in
recent years they had developed what were called Local Labour Parties.”
Mr. Henderson said the real question to be decided was whether, for
the purposes of best attaining political power and of so advancing its
party programme, the Labour Party should scrap the whole of its existing
political machinery and build up a political organization from a new
foundation depending only upon individual membership. “Speaking as an old
electioneerer,” he continued, “he did not mind saying that if they had to
begin afresh that would be the ideal at which he would aim, but in view
of the close proximity of a general election he could imagine no greater
mistake than to attempt to create a new organization based solely upon
individual membership.” The Party ultimately decided to adhere to the
existing scheme of a central industrial federation, but to graft on to it
such a form of electoral constituency organization, linked up with the
Local Labour Parties or Trades Councils, as would bring the federation
and the constituencies into close contact with the Annual Conference and
the National Executive of the Labour Party.

In the new constitution the Party thus expressed its intention:

    “(_a_) To organize and maintain in Parliament and the country
    a Political Labour Party, and to ensure the establishment of
    a Local Labour Party in every county constituency and every
    parliamentary borough, with suitable divisional organization in
    the separate constituencies of divided boroughs.

    “(_b_) To secure for the producers, by hand or by brain,
    the full fruits of their industry, and the most equitable
    distribution thereof that may be possible upon the basis of
    the common ownership of the means of production and the best
    obtainable system of popular administration and control of each
    industry or service.

    “(_c_) Generally to promote the political, social and economic
    emancipation of the people, and more particularly of those who
    depend directly upon their own exertions by hand or by brain
    for the means of life.

    “(_d_) To co-operate with the Labour and Socialist
    organizations in the Dominions and Dependencies with a view to
    promoting the purposes of the Party, and to take common action
    for the promotion of a higher standard of social and economic
    life for the working population of the respective countries.

    “(_e_) To co-operate with the Labour and Socialist
    organizations in other countries, and to assist in organizing a
    Federation of Nations for the maintenance of freedom and peace,
    for the establishment of suitable machinery for the adjustment
    and settlement of international disputes by conciliation or
    judicial arbitration, and for such international legislation as
    may be practicable.”

The new constitution maintains the Party as an industrial federation of
Trade Unions, Socialist Societies, Trades Councils, and Local Labour
Parties; but it establishes the principle of individual membership of
the Party through membership of the local organization. Every man and
woman, therefore, may now join a Local Labour Party. It is intended
to form a Labour Party in every parliamentary constituency, as a unit
of organization to which Trade Union local branches and Local Trade
Councils, Co-operative, Socialist, and other such societies will be
affiliated, and to which each individual local supporter of the Labour
Party will adhere. Every candidate for Parliament must be chosen
or approved by the local organization and accepted by the National
Executive. He must stand as a Labour candidate, and, if elected, must
agree to act in harmony with the constitution and standing orders of the
Party, and accept the decisions of Party meetings. He must include in his
electoral address those issues defined by the National Executive as the
Labour Party’s programme for the election.

The official adherence of the Co-operative movement to the political
Labour Party is rather interesting. For many years when motions were
brought forward in the Annual Co-operative Congress in favour of the
Co-operative movement taking up political activity, these resolutions
were invariably rejected by overwhelming majorities. However, in 1918,
at an emergency conference of the Co-operative movement in London on
October 16 and 17, it was decided to take political action. The reasons
which led the Co-operative movement to this decision were taxation
of Co-operative dividends, the alleged neglect of the Government to
make greater use of the Co-operative movement in dealing with the
national food supply, and alleged unfair treatment of the staffs of the
distributive societies under the Military Service Acts.

For the year 1917, prior to its reconstitution, the Labour Party’s
membership was as follows:

    123 Trade Unions, with a total membership of 2,415,383;
    239 Trades Councils and Local Labour Parties;
      3 Socialist Societies with a total membership of 47,140,

making a total affiliated membership of 2,465,131, which also
included the membership of the Co-operative and Women’s Labour League
affiliations. For the year 1920, the membership of the Labour Party was
122 Trade Unions, with a total membership of 4,317,537, 492[1] affiliated
Trades Councils and Local Labour Parties, 5 Socialist Societies,
representing a membership of 42,270, making a total membership of
4,359,807, which also included the membership of the Co-operative and
Women’s Labour League affiliations.

The Socialist Societies are the Fabian Society, which, in 1921, returned
a membership of 1,770; the Herald League with a membership of 500;
the Independent Labour Party with a membership of 35,000; the Jewish
Socialist Party (Poale Zion) with a membership of 3,000; the Social
Democratic Federation with a membership of 2,000.

By the accounts of the Party the total receipts for the year ending
December 31, 1920, were £62,000 odd, of which £49,000 represented
affiliation fees.


The Trades Union Congress

Turning from the Labour Party to the Trades Union Congress, “Labour’s
Annual Parliament,” this, when founded in 1868, consisted of 34
delegates, representing about 20 societies with an affiliated membership
of 118,367. In 1919, although all Trade Unions were not included, it
had grown to 851 delegates, representing 266 Unions and an affiliated
membership of 5,283,676. In 1921 it consisted of 810 delegates
representing a membership of 6,417,910. It may now be taken to represent
industrially the organized labour of Great Britain, and has the largest
Trade Union affiliated membership in the world.

The Trades Union Congress must be distinguished from the General
Federation of Trade Unions which was created under its auspices in
1899—now representing an affiliated membership of about 1½ millions—and
the chief object of which is to maintain Trade Union rights, and to
assist financially or otherwise affiliated Unions involved in disputes
with employers or employers’ organizations.


The National Joint Council

A scheme for co-ordination of Labour forces was recently worked out by a
Joint Co-ordination Committee representing the Parliamentary Committee
of the Trades Union Congress and the Executive Committee of the Labour
Party. A National Joint Council has been constituted representing the
General Council of the Trades Union Congress, the Executive Committee of
the Labour Party and the Parliamentary Labour Party. Its duties are to
consider all questions affecting the Labour movement as a whole, and to
make provision for immediate action on questions of national emergency,
and to endeavour to secure a common policy and joint action, whether
by legislation or otherwise, on all questions affecting the workers as
producers, consumers or citizens. The expenditure of the Council is met
in equal proportions by the General Council of the Trades Union Congress
and the Executive Committee of the Labour Party. The scheme also provides
for the establishment, under joint control of the General Council and
of the National Executive, of four departments organized to deal with
research and information, international affairs, publicity and legal
matters. In the memorandum which recommended the scheme for the National
Joint Committee, it was pointed out that in view of the enormous growth
of the Labour movement and the importance of presenting a united front
upon the great problems which lie before it, the need for co-ordination
was becoming daily more important. “If Labour is to realize its ideals it
must formulate a common policy and secure the maximum of common action.
The effectiveness of the Labour movement has in the past been dissipated
by overlapping functions, by duplication of effort, and by confusion
arising from conflicting policies.” The scheme is described as one which
enables Labour to speak with one voice on all questions of national
importance, and to pursue one uniform policy in support of its common
ends.


The Parliamentary Labour Party

What the Parliamentary Labour Party is, must also be explained. In 1906,
29 Labour members were, we have seen, returned to Parliament; they were
then constituted into a distinct Parliamentary party, Mr. J. Keir Hardie,
M.P., being elected Chairman, and a Vice-Chairman, Secretary and Whips
being also appointed. It is the practice of the Parliamentary Party at
the beginning of each session to review the resolutions passed at the
various conferences of the Labour Party and to take them as indicating
the principles on which the Parliamentary Party should proceed. About
the commencement of the session there is a joint meeting between the
Parliamentary Party and the National Executive of the Labour Party for
the purposes of deciding the various objects in respect of which Bills
should be introduced into Parliament or motions made. A general review of
the Parliamentary Labour Party’s activity since 1906 will be found in the
_Labour Year Books_ for 1916 and 1919.


The Labour Party, a Class Party

The Labour Party claims to be “the true national democratic party” in
challenge of the old party system. It recommends itself to the electorate
as “the party of the producers, whose labour of hand and brain provides
the necessities of life for all and dignifies and elevates human
existence,” “Producers have been robbed,” it says, “of the major parts of
the fruits of their industry under the individualist system of capitalist
production; and that is justification for the Party’s claims.”

The constitution of the Labour Party when examined definitely disproves
the contention that the Party either is or ever can be, while that
constitution lasts, a national democratic political party. By a political
party one understands, according to our British traditions, a party whose
members are united in support of common political principles, and not a
party whose object is to advance its own material interests. Whatever the
Labour Party may call itself, it is in fact a class party—that appears
clearly from its history. Up to 1900, when the Labour Representation
Committee was constituted, it was definitely Trade Unionist in its
organization. In 1900, as has been shown, seven local Trades Councils
were, for the first time, brought in along with three Socialist
Societies, but they only accounted for 22,861 out of 375,931 affiliated
membership. Between 1900 and the revision of the constitution in 1918,
the Party was obviously still comprised, in the main, of industrial
Trade Unionists. Individual members were, as has been explained,
nominally introduced into the Party in 1918, by throwing membership
open to members of Local Labour Parties and Trade Councils. It is
impossible, because the Labour Party has not the figures itself, to give
any comparison between the number of individual members of Local Labour
Parties and Trades Councils who are not Trade Unionists and the 4,317,537
members of the affiliated Trade Unions in 1920. But one thing is quite
clear—the individual member is wholly swamped by the Trade Unions’
membership and power. If the accounts of the Labour Party are examined
for 1920, it will be found that of the total affiliation fees of £49,000,
only about £1,382 is contributed by Trades Councils and Local Labour
Parties, which include a certain number of individual members, and £524
from five Socialist bodies; so that practically the whole of the income
of the Labour Party comes from the Trade Unions; they naturally exercise
the right to dictate policy and run the Party machine. When it comes to
the selection of the local Parliamentary candidate, if a Local Labour
Party or Trades Council runs a candidate they must themselves provide for
the whole expenses of the election, and that puts a serious difficulty in
their way; on the other hand, if a Trade Union selects a candidate it is
enabled, by means of its parliamentary levy, to pay the whole costs of
his election. As a result, in the great number of cases, Trade Unionist
candidates, with the financial backing of their Unions, are accepted as
Local Labour candidates—true carpet-baggers in the real sense of the
term, and probably wholly unknown to the district. One may learn from
experience the basis on which the Trade Unions select candidates. It is
considered a matter of prime importance by every Union to have members
of its own in Parliament, and its first consideration is whether he
is a sound and trusty member of his particular organization. As it is
considered essential that only men should be selected by a Union who have
an intimate knowledge of the working of the Union, the branch secretary
or the district delegate or district secretary or a member of the
executive or the general secretary of the Union is generally chosen, and
he, it should be noted, is picked out, not for his political experience
or enthusiasm, but as a trusty protagonist of his own trade body; he,
therefore, goes into Parliament primarily to advance the industrial
interests of his own particular Union and, so far as is compatible with
that, of Labour in general. This needs clearly to be understood by the
general public of this country. The Labour Party has no right to protest
against those who would institute a campaign against it on the ground
that the Labour movement, as at present constituted, is definitely class
and sectarian in its objects. There is ample justification for that
attack in the Labour Party’s own pamphlet _Trade Unionism and Political
Action_. The Labour Party will not for a very long time, if ever, be
a Party solely of individual membership; that would mean that the
Party would have to cut itself off from the enforced contributions of
affiliated Trade Unions, and rely upon the voluntary contributions of its
individual members.

The Labour Party prides itself on being the party of brotherhood—an
admirable sentiment, one too seldom encountered in the industrial world
to-day. We are entitled to test such a profession by examining to what
extent the spirit of fraternity operates amongst the 122 different Trade
Unions which are members of the Party. If any one part of the community
is torn by internecine strife it most certainly is the Trade Union
section. Consider for example the question of demarcation of work. If
we take trades like those of the shipwrights and the joiners, they are
separated by thin divisions; so much so that in one port shipwrights
do work which in another port is done by joiners. If anywhere there is
the least invasion by one trade into the work of the other the most
unbrotherly struggles ensue, resulting almost invariably in one Union
or the other calling their respective members out and so stopping
work in the port. Time after time during the war I had the fitting
out or refitting of urgently needed vessels held up by these kinds of
fratricidal disputes. Again, take trades like engineers, members of the
Amalgamated Engineering Union, and plumbers, members of the Plumbers’
Union—between them there is the most bitter animosity. Certain pipes on
board ship are, according to the custom of the port, bent and fitted
by the members of one Union, and certain other pipes, possibly of the
same material but a little larger or smaller, or of the same size but
of a different material, are bent and fitted by members of the other
Union. After the Jutland fight, I had most vital naval repairs held
up owing to the whole of the engineers in one large district going on
strike because plumbers had been put on to bore a few holes in the outer
casings of searchlights, as there were no available engineers to do the
work. Instances might be multiplied indefinitely of this industrial
enmity which is to form the basis of the new political brotherhood. We
have again the perennial dispute between the Amalgamated Engineering
Union and the National Union of Railwaymen in respect of the men in the
railway engineering shops, or the acrimonious controversy, growing in
intensity, between the General Workers’ Union, representing the unskilled
or semi-skilled men, and the Amalgamated Engineering Union. The former
Union asserts the right of an engineering employer to promote its members
from the job of general labourer “on the floor” to work semi-automatic
or other similar machines “in the shop,” which without question the man
is usually quite competent to do; on the other hand the Amalgamated
Engineering Union, or its district committee, claims that no person,
however competent, can be put on to work any of those machines unless
he is a member of the Amalgamated Engineering Union and receives in
respect of the work the prescribed rates of pay. So then we have this
curious paradox that the Labour Party, which knows that there exists,
and is quite incapable of extinguishing, this spirit of industrial
hostility amongst the various sections of its Trade Union membership,
still professes its ability to instil and enforce the spirit of social
brotherhood throughout the whole electorate. “By their works ye shall
know them,” The truth of the matter is that the sole cohesive political
force which the Labour Party can exert, apart from the Trade Unions’
industrial compulsion on their members, are the promises of better times,
less work, more time for leisure, more money to spend, by the abolition
of what it calls the “capitalistic” or private employer, and the
suggestion that thereby there will be some fund of money made available
for distribution amongst the members of the Party.


The Party’s Want of Leadership

What about the Labour Party’s leaders? Labour undoubtedly possesses
outstanding men of tried experience, ability and judgment, and others,
untried as yet, but of equal capacity and ability. I had the good
fortune during the war of serving at different times directly under
the Right Hon. A. Henderson, the Right Hon. G. N. Barnes, the Right
Hon. John Hodge, and the Right Hon. G. H. Roberts. I had also the
opportunity of comparing their ministerial gifts with those of other
Cabinet Ministers and Ministers of State. The Labour Ministers did not
suffer from the comparison; their respective records are unsurpassed for
foresight, decision, balance of judgment, statesmanship, organizing and
administrative ability, power of evoking the loyalty of their departments
and commanding the confidence of the public. The weakness of a Labour
Government will assuredly not lie in the personnel of its Ministers _if_
they lead—but will they be allowed to lead? So far the signs are not
encouraging.

Nobody who has not seen the working of the Trade Union machine from
inside has the remotest conception of the difficulties of the Trade
Union leader, or of the tyranny to which he is subject. He is in the
first instance usually a paid official of his Union, and if he takes or
advocates any political or parliamentary action which is considered in
any way to invade or infringe the trade rights and privileges of his
Union, he will assuredly fall from office at the next Union election.
Every leader must, therefore, keep one eye upon his own position and the
other upon the political principle which he is disposed to advocate. This
makes it exceedingly difficult for any Labour leader to take a strong
independent line which may excite even the suspicions of ill-informed
sections of his followers, still less their hostile opposition. I saw
over and over again during the war how frequently large committees of
Trade Unionist leaders would agree with the Government in London on the
adoption of some measure—it may have been for the suspension of a trade
custom in order to expedite production—and how it became quite impossible
to obtain their active assistance afterwards to put the agreement into
operation among their members, with the notable exception of some
few whose sturdy independence I never ceased to admire. But these,
unfortunately, perhaps as the result of their qualities, have little
influence in political Labour.

There is another aspect: the great unwritten law of the Labour movement
is solidarity at any price, and it frequently happens that the leaders,
in order to avoid splitting the Party, will adopt, against their
own better judgment, the proposals of extremists rather than face
disruption. The action of constitutionalists in the Labour movement, in
ultimately taking part in the recent formation of the Council of Action,
notwithstanding their own earlier protests, is a case in point.

No political party is immune from intrigue or from cabals and
conspiracies against its accepted leaders, but it is not an exaggeration
to say that the Labour movement is more impregnated than any other
movement in this country with those unlovely tendencies. You have only to
follow the course of a branch committee or a district committee election,
or the election of an executive committee-man or general secretary of a
Trade Union, to realize the prevalence and power of personal jealousies.
This is notoriously so in the political Labour world. Nothing cuts so
deeply at the roots of independent leadership as incessant conspiracy and
intrigue.




CHAPTER II

AN OUTLINE OF THE LABOUR PARTY’S GENERAL POLICY

    A National Minimum Standard of Living—Effective Personal
    Freedom—Socialization of Land and Industry—A Revolution
    in Public Finance—The Surplus Wealth for the Common
    Good—International Co-operation—No Protective Tariffs—Freedom
    of International Trade.


To appreciate the Labour Party’s industrial policy, it is necessary to
know, at least in outline, the general policy of which the former is
a part. As the basis of all social reform it is contended that “the
individualistic system of capitalist production based on the private
ownership and competitive administration of land and capital, with
its reckless profiteering and wage slavery, its glorification of the
unhampered struggle for the means of life, and its hypocritical pretence
of the survival of the fittest, must go.” With it must be eradicated
the “monstrous inequality of circumstances which it produces, and the
degradation and brutalization, both moral and spiritual, resulting
from it”—“along with it must disappear the present political system,
enshrining the ideas in which the capitalistic system naturally
finds expression.” The Labour Party advances a new basis of social
reorganization; it proposes to reconstruct society on four pillars
resting upon the common foundation of “the democratic control of
society in all its activities.” These four pillars are: “(1) Universal
enforcement of the national minimum; (2) the democratic control of
industry; (3) a revolution in national finance; and (4) the surplus
wealth for the common good.”


A National Minimum Standard of Living

The principle of the national minimum, it is claimed, contrasts sharply
with the principle of the capitalistic system, expressed either by
Liberal or Conservative policy. By the national minimum is meant the
assurance for every member of the community of a standard of life
conferring a reasonable minimum of health, education, leisure and
subsistence. One chief element is a legal minimum wage, to be revised
according to the level of current prices. As part of this national
minimum, the ambiguous principle of “equal pay for equal work” is
postulated in all occupations in which both sexes are engaged. The
Party also demands that the Government shall prevent unemployment, and
should it fail to secure for every willing worker a suitable situation
at the standard rate of wages, it shall provide such a worker with
maintenance in the form of out-of-work benefit paid through his Trade
Union. The National Unemployment Insurance Scheme should, it is insisted,
be extended, on a non-contributory basis, to every occupation. What is
affirmed as a fundamental is that “in one way or another remunerative
employment or honourable maintenance must be found for every willing
worker by hand or by brain in bad times as well as in good.” Complete
provision against involuntary destitution in sickness and in health, in
good times and in bad, must be assured for every member of the community.


Effective Personal Freedom

Democracy, the Labour Party asserts, implies effective personal freedom,
and involves the complete removal of all war-time restrictions on liberty
of speech, publication, press, travel, choice of residence, kind of
employment, and especially of any obligation for military service. These
sentiments, strange to say, come from the Party which denies the right of
the non-Union operative to work; and which claims for Trade Unions the
right to picket and the other privileges afforded by the Trade Disputes
Act, 1906. On the same principle, complete political rights are demanded
for every adult irrespective of sex, and for every minority, the right
to full proportionate representation in Parliament. The abolition of the
House of Lords is demanded, with the elimination from any new second
Chamber of any qualification based on heredity. Separate statutory
legislative assemblies are claimed for Scotland, Wales and England, with
autonomous administration in local matters; Parliament at Westminster to
be merely a Federal Assembly for Great Britain, controlling the Ministers
responsible for departments of central government; these Ministers,
with others representing the Dominions and India, to form a Cabinet for
federal affairs of the British Commonwealth.


Socialization of Land and Industry

The Labour Party stands for the removal from industry of the private
employer and the capitalist, the introduction of a new “scientific
re-organization of the national industries,” purged from the degradation
of individual profiteering, and regenerated on the basis of the common
ownership of the means of production; the equitable sharing of the output
among all who assist in any capacity in production; and the adoption of
“democratic control of industry.”

Accordingly the Labour Party would immediately establish the common
ownership of land, the common ownership and administration of railways
and canals, and their consolidation with harbours, roads, posts,
telegraphs, and the ocean-going steamer lines into a national service
of Communication and Transport, to be worked “unhampered by capitalist,
private or purely local interests, and with a steadily increasing
participation of the organized workers in the management, both central
and local, exclusively for the common good.” So also it would erect a
score of national central electrical generating stations, with which all
municipal electrical plants would be connected for distribution purposes.
For similar reasons, the Party demands the immediate nationalization of
coal-mines, with steadily increasing participation in the management,
both central and local, of the various grades of persons employed;
and insists that the retail distribution of household coal should
be undertaken by the municipal authorities or county councils, the
purpose to be achieved being the distribution in every local district
of household coal of standard quality at a fixed and uniform price
“as unalterable as the penny postage stamp.” The State expropriation
of profit-making industrial insurance companies is urged, also the
assumption by Government of the whole business of life insurance. Much
stress is laid upon the alleged necessity that Government should take
the manufacture and retailing of intoxicants out of the hands of persons
who find profit in promoting the utmost possible consumption of them,
and that each local authority should deal with “the trade” within its
district on the basis of local veto or limitation of licences or other
system of regulation.

Admittedly alive to the evils of centralization and the restrictions of
bureaucracy, the Party claims a free hand for local authorities, assisted
by grants-in-aid from Government sources, to extend widely the scope of
municipal enterprise. Local authorities should, it is asserted, not only
retail coal, but supply milk, and engage in other similar spheres of
trade. All members of local bodies ought, it is said, to receive their
necessary travelling expenses, and also be paid for time spent by them on
the public service.

The Labour Party would re-organize the whole educational system from
the nursery school to the university “on the basis of social equality”;
“each educational institution, irrespective of social class or wealth,
to be open to every member of the community on terms within his
reach”—everything in the nature of military training to be absolutely
prohibited. In regard to public health, the Labour Party holds that
Government should build at the national expense the requisite number of
dwelling houses, spacious and healthy, each having four or five rooms,
larder, scullery, cupboards, and fitted bath, spaced not more than ten or
twelve to the acre, and provided with a garden. National provision for
the prevention and treatment of disease, and the care of orphans, infirm,
incapacitated, and aged persons is also included as an indispensable part
of Labour’s policy.

In regard to agriculture and rural life, the Party has formulated a
number of proposals based on the Government’s immediately assuming
control of the nation’s agricultural land, and—

    “ensuring its utilization, not for rent, not for game, not
    for the social amenity of a small social class, not even for
    obtaining the largest percentage on the capital employed, but
    solely with a view to the production of the largest proportion
    of the food-stuffs required by the population of these
    islands under conditions allowing of a good life to the rural
    population with complete security for the farmers’ enterprise,
    yet not requiring the consumer to pay a price exceeding that
    for which food-stuffs can be brought from other lands.”

The means proposed to attain this end are large national farms, small
holdings made accessible to practical agriculturists, municipal
agricultural enterprises, and farms let to Co-operative Societies and
other approved tenants, under a national guarantee against losses due
to bad seasons. All distribution of agricultural food-stuffs—from milk
and vegetables up to bread and meat—is to be taken out of the hands of
dealers and shopkeepers, and is to be effected by Co-operative Societies
and local authorities “with equitable compensation for all interests
expropriated or displaced.”

The Labour Party also advocates Government importation of raw materials
and food-commodities, and Government control of the shipping, woollen,
clothing, milling, and other similar industries; the rationing both of
raw material and of food commodities, and the fixing of all prices on the
basis of accurate costing, so as to eliminate profiteering. It is, the
Labour Party says—

    “just as much the function of Government, and just as necessary
    a part of the democratic regulation of industry to safeguard
    the interests of the community as a whole and those of grades
    and classes of private consumers in the matter of prices, as it
    is by the Factory and Trade Board Acts to protect the rights
    of the wage-earning producers in the matter of wages, hours
    of labour and sanitation, or by the organized police force to
    protect the householder from the burglar.”


A Revolution in Public Finance

A complete revolution in national finance is overdue, in the opinion
of the Labour Party. Too long, it says, has our national finance been
regulated on a basis opposed to the teaching of political economy,
according to the views of the possessing classes and the desire for
profits of the financiers. There ought to be such a system of taxation
“as will secure all the necessary revenue to the Government without
encroaching on the prescribed national minimum standard of life of any
family, without hampering production or discouraging any useful personal
effort, and with the closest possible approximation to equality of
sacrifice.” The Labour Party accordingly would institute direct taxation
of all incomes exceeding the necessary cost of family maintenance, and
the direct taxation of private fortunes both during life and at death
for the redemption of the National Debt. It opposes taxation calculated
to increase the price of food or necessaries of life, and holds that
indirect taxation of commodities, whether by customs or excise, should be
limited to “luxuries.” It would retain and increase the excess-profits
tax and, until nationalization of minerals, the mineral-rights duty.
The unearned increment of urban land and mineral values it would divert
by taxation wholly into the public exchequer. Death duties would be
regraduated and heavily increased, so as to turn into the national
coffers all the wealth of every person deceased in excess of a quite
moderate amount to be left for family provision. In addition, the Labour
Party stands for “conscription of wealth,” described as “a capital levy,
chargeable, like death duties, on all property, with exemption of the
smallest savings up to £1,000, but rising rapidly in percentage with the
value of the property, for the purpose of freeing the nation of as large
an amount as possible of its present load of interest-bearing debt.”
Co-operative Societies would be left entirely free from this levy.


The Surplus Wealth for the Common Good

The fourth principle of the Labour Party’s policy of social
reconstruction is “the diversion to the common good of the surplus over
the expenditure required for the maintenance of the national minimum of
life.” This surplus is said to be embodied in the riches of the mines,
the rental value of lands superior to the margin of cultivation, the
extra profits of fortunate capitalists, now alleged to be absorbed by
individual proprietors, and devoted to the senseless luxury of the idle
rich. It is to be secured by nationalization and municipalization, and by
steeply graduated taxation of private income and riches. From it is to be
drawn the new capital which the community day by day will require for the
perpetual improvement and increase of its various enterprises, and for
which it is said to be dependent now on the usury-exacting financier.

    “It is in this proposal for the appropriation of every surplus
    for the common good—in the vision of its resolute use for
    the building up of the community as a whole instead of for
    the magnification of individual fortunes—that the Labour
    Party, as the Party of the producers by hand or by brain,
    most distinctively marks itself off from the older political
    parties, standing as these do essentially for the maintenance
    unimpaired of the perpetual private mortgage upon the annual
    product of the nation that is involved in the individual
    ownership of land and capital.”


International Co-operation

From Labour’s home policy we turn to foreign affairs. Its international
aims are “peace and co-operation between nations; the avoidance
of anything making for international hostility; the development
of international co-operation in the League of Nations,” and “an
ever-increasing intercourse, a constantly developing exchange of
commodities, a steadily growing mutual understanding, a continually
expanding friendly co-operation among all the peoples of the world.”
“Imperialism,” defined to mean extension of empire over countries without
reference to the wishes of the inhabitants of those countries, is
repudiated as rooted in capitalism, and springing only from a desire for
profits and for selfish exploitation of the natural resources belonging
solely to those inhabitants. “Protectionism” in any form, whether by
prohibitions on imports, embargoes, tariffs, differential shipping or
railway rates, for the purpose of limiting the amount or restricting
the free flow of foreign commodities into this country, is unreservedly
condemned. Protection for the benefit of a particular trade, or all
trades, while it may conduce to the immediate advantage of Labour, is
presumed to operate to the greater ultimate advantage of the capitalist,
and to strengthen his position. Anything tending to such a result is
“contrary to the true interests of Labour.” Protection is said to lead to
capitalistic rings, combinations and trusts, higher prices, diminished
consumption, reduced employment. This being so, Labour favours the free
importation of all foreign goods, and their sale at rates as low as are
consistent with their manufacture under unsweated labour conditions in
their land of origin.


No Protective Tariffs

All tariffs, especially if differential, must, so Labour contends,
inevitably create international friction, retaliation, enmity, and
ultimately active hostilities, and are to be more especially discarded,
inasmuch as they are the favourite instrument of capitalistic groups
eager to make profits out of international ruptures. Labour accordingly
objects to the protection of key industries for purposes of national
safety. “It is impossible to make either the British Empire or the
British Isles self-contained or self-supporting. Even if practicable,
the policy of self-sufficiency would indicate a provocative intention
to maintain a national condition of perpetual preparation for war.”
Therefore, except so far as is necessary to avoid the spread of disease
or prevention of accidents, there must be no restriction on the transit
or importation of any commodity. Imperial preference is likewise rejected
as a selfish attempt to reserve for the inhabitants of the British Empire
the raw materials and markets of the Empire, a course incompatible with
any kind of lasting peace, having regard to the resentment it would
provoke amongst the nations excluded from participating in these raw
materials or from supplying our imperial markets. Labour calls for “the
open door” in all our Colonies and Dependencies, and in “non-adult
countries,” meaning by this term “exploitable countries” like China and
Africa. The position of the capitalist has been so undermined by Labour’s
attack at home that capital, in Labour’s opinion, is now making its
real profits and consolidating its power by expropriating natives, and
compelling them to work for low wages.


Freedom of International Trade

In order to free Europe from “the rivalries of
Capitalism—Imperialism—Protectionism, which poisoned international
relations between 1880-1914,” Labour desires to see an economic side
of the League of Nations developed so as to secure the removal of
all economic barriers and maintain equality of trade conditions. But
surely it was Labour itself that called loudest for self-determination,
which has so grievously impaired the economic restoration of Europe. A
World Economic Council of the League ought to apportion the supplies
of food-commodities and raw materials and maintain credit in the
various countries so as to ensure fair allocation of raw materials,
the furtherance of production, the development of international lines
of communication, and the prevention of exploitation by trusts. As
an alternative to “the present profit-making capitalistic economic
system,” Labour proposes to use for purposes of international trade, an
organization on a world-wide basis of the different national Co-operative
movements. So long as foreign trade remains under the control of the
competitive and capitalistic system, Labour asserts that its general
international aims can never be attained.




CHAPTER III

THE LABOUR PARTY’S ADOPTION OF SOCIALISM

I. MEANING OF SOCIALISM

    The Common Characteristics of all Socialistic Creeds—State
    Socialism—Syndicalism—National Guildism—Nationalization and
    Democratic Control.


Socialism is too amorphous to admit of any workable definition. Each
age exhibits schools of thought, industrial and philosophic, which
define Socialism in different ways according to contemporary political
circumstances, economic conditions and industrial tendencies or their
interpretation of them. There is no more interesting study than to trace
out the variant meanings of “Socialist” from its first appearance in the
_Co-operative Magazine_ of November 1827 up to the present time, and to
note its successive contractions and extensions in political, ethical,
economic and social implications as decade succeeded to decade.


The Common Characteristics of all Socialistic Creeds

But certain brands of Socialism can be described if not defined. The one
common characteristic is abolition of the “capitalistic organization”
of industry. If we call this _A_, then we can say that all schemes of
Socialism can be reduced to the general formula _A_ + _x_, where _x_ is a
symbol standing for a very large number of variables which comprise the
methods by which the capitalist is to be extinguished; the terms on which
the present capitalists will be compensated or otherwise expropriated;
the persons or authority in whom the means of production—and probably
there should be added distribution and exchange—will be vested; the
persons or body to be responsible for the organization of industry and
for its control; the means by which capital will be found and prices
regulated; the relation in which the new industrial system will stand
to the community, and the various socialized industries to one another.
These are the practical points to which attention should be directed
rather than academic definitions.

Of the term “capitalism” and what is implied by it all kinds of
definitions are current. Socialists of different schools have their
own definitions embellished with epithets which vary in virulence
according to their particular trend of thought. Employers too have
their definitions, but it will be sufficient for our purposes if we
take capitalism to mean the existing scheme of industrial organization.
The basic vices of capitalism, according to all Socialists, are that it
is a system under which the owner of the capital employed in industry
possesses and controls the whole business of production and sale of the
output, buying, just as he buys raw materials for his business, the
labour power of the workman, paying him as little for it as possible,
and that in the form of a wage merely in respect of the time he is at
work; a system under which the employer maintains a reserve of unemployed
labour in order to provide for the variations in trade, while recognizing
no responsibility in respect of the workman at times when the employer
cannot or is not prepared to provide him with work. Under such conditions
the workman is said to occupy a quasi-servile status, to be a wage-slave
and entitled to no voice at all in the control of the industry. That,
without the usual garnish of abuse, is probably a fair description of the
present organization of industry as it is envisaged by the Socialist.
The two great incidents of capitalism which the Socialist therefore
seeks to eradicate are: the private ownership of land and capital; and
the employment on a wage-basis of hired labour. If only capitalism could
be abolished the workman would no longer see his employer and other
capitalists appropriating, in the shape of rent and interest and profits,
all the value of the product which the labourer is said to create over
and above the amount of his wages.

To capitalism, it is customary, and, indeed, necessary for his argument,
for the Socialist to attribute all the ills from which industry
suffers and most evils to which the community is heir. With the exit
of capitalism the Socialist says that unemployment would disappear
and adequate maintenance be secured for sickness, old age and other
incapacity, equality of opportunity afforded to all, full scope provided
for individual expression and development, and a universal millennium
inaugurated. In the minds of some Socialists there seems no limit
whatsoever to the mephitic influence of capitalism. Dr. Shadwell, in his
discerning articles in _The Times_[2] on “The Revolutionary Movement in
Great Britain,” mentions that the _Daily Herald_ of February 2, 1921,
found the cause of influenza in capitalism, and argued that unless the
latter is destroyed it will destroy mankind; conversely Dr. Shadwell
logically suggested we may assume that if capitalism is abolished
influenza will disappear!

We are now in a position to distinguish the principal schools of
Socialism that exist to-day. One will not find them formulating their
principles as crisply as I set them out. My object is merely to indicate
the main outlines.


State Socialism

First we have the State Socialist who advocates that the State should
acquire, as he generally says, the means of production, distribution and
exchange, or, to reduce it to practical terms, land and the national
industries. Taking, for example, a concrete case—the railway industry—the
State would take over all the railway undertakings in the country from
the various companies of shareholders who now own them and, under most
schemes of State Socialism, would compensate the shareholders by paying
them, in State securities, something approaching the capital value of
the net maintainable revenue of the undertakings. Under this system the
State steps into the shoes of the original owners of the railways and
acts as the employer controlling the industry and employing the workmen
just as the private owners previously did. The industry would be run by
a Government Department in Whitehall and, the State Socialist says, will
be run in the interests of the community and not for private profit,
inasmuch as the Government Department is, through its ministerial head,
responsible to Parliament, which represents the community.


Syndicalism

The next school is that of Syndicalism, which, curiously enough, was
really in its origin a British conception evolved in the revolutionary
phase of the Chartist movement, but afterwards touched up and elaborated
by Continental Socialists, especially in France, as by G. Sorel. Under
this system, the private owner would be evicted by the workers, who
would form some consolidated body, usually in the shape of an industrial
Union, including all persons concerned in the operation of the industry,
and that body would carry on the industry solely in the interests of
the workers. Possession of the industry would be secured by the workers
seizing the political power in the State, or, as is more generally
advocated, by direct pressure of such a kind, in the form of a general
strike or otherwise, as would enable the workers in all industries by
concerted action to seize the means of production. Regarding, as the
Syndicalist does, the capitalist as an idle and useless parasite who
battens on the labour of the workers, no compensation would be paid
to owners. The Syndicalist has not quite made up his mind whether he
will include the technical and administrative staff in the industrial
Union which will own and operate each industry, nor has he worked out
the relation to the State of individual industries or industry as a
whole.[3] Most Syndicalists assume that the State and its legislative,
administrative and executive organizations, as we know it, will cease to
function and come to an end under a syndicalistic regime, and that the
country will be governed by some organization representing the workers as
a whole. Except amongst certain revolutionary elements, Syndicalism has
not a strong hold on British labour.


National Guildism

Next we come to the school of Guildsmen, of which that section known
as the National Guilds have worked out their theory in the greatest
detail. This school says that State Socialism would mean a rigid
bureaucracy, and, so far as the workers are concerned, little advance
on the capitalistic regime, because the workers would really be in the
employment of the State and enjoy little or no voice in the control of
industry. On the other hand, they say that the syndicalistic conception
is doomed to failure because it makes no provision for including the
supervisory, technical, managerial and administrative staff in the
industrial organization that controls each industry, nor allows any
safeguards for the consuming community against the selfish exercise
of monopolies upon which the people are dependent for their necessary
commodities and services. Accordingly the National Guildist proposes
that the system of craft Trade Unionism that exists in this country
should be replaced by industrial Unionism under which all manual workers
employed in each industry would be enrolled in a comprehensive Trade
Union embracing the whole of the industry, which in course of time
would be expanded into an industrial Guild that would also include
all the supervisory, technical, managerial and administrative staff,
and that this Guild should be entirely responsible for the control
and organization of the work of the particular industry. Exactly how
the Guilds are to acquire the means of production in each industry
is not yet developed; some advocate acquisition by the State for a
small payment to the owners and then transference by the State to
the Guilds; others the forcible acquisition by the Guilds after such
gradually intensive action on the part of the workers as will bring
the capitalistic system of organization of the industry to an impasse.
A Guild Congress for each industry will regulate the affairs of that
industry, and a National Guild Congress of all industries the affairs
of all the industries in the country. Prices and other matters in each
industry which affect the consumer will be regulated by arrangement
between the Guild and local and central organizations representing the
consumers, and general matters in all industries affecting the community
will be adjusted by negotiations between the National Guild Congress and
National Consumers’ Organizations. Those who desire to follow out Guild
Socialism both as an industrial and a political conception should read
that most interesting and brilliantly written book by Mr. G. D. H. Cole,
_Guild Socialism Re-stated_; and investigate the Building Guilds.


Nationalization and Democratic Control

In Great Britain, political, industrial and social schemes of
reconstruction have never followed strictly logical lines; they have
invariably assumed a character of compromise, thereby giving effect to
national idiosyncrasies of temperament. Accordingly we find a large
body of Socialist opinion in this country advocating what it calls
“nationalization and democratic control.” Perhaps the best illustration
of what is meant by that baffling phrase is afforded by the scheme of
the Miners’ Federation of Great Britain for the reorganization of the
coal industry. In that scheme, which is explained in the Bill presented
to Parliament by the Miners’ Federation in 1920, the basic proposal is
that the State should buy out the coal owners and that there should be
established a National Mining Council. Since the Miners’ Federation as at
present constituted could not appoint the technical workers, this Council
would be composed, as to one-half, of representatives of the manual
workers in the coal industry, and as to the other half by representatives
of the Government. If, however, the Miners’ Federation could appoint the
technical workers, I rather gather that they would not have been prepared
to acquiesce in such duality of control. Under their proposal, the
one-half of the National Mining Council representing the workers would be
appointed by the Miners’ Federation and the other half would be persons
appointed by the Government to represent the technical, administrative
and commercial sides of the industry together with other persons to
represent the consuming community. This Council would determine the
annual output, fix prices and control finances. In addition, there would
be District Councils for each coal-mining district, one-half elected
by men working in the district, and the other half being technical and
administrative persons and representatives of the National Council.
Further, there would be Pit or Colliery Committees at every colliery
comprised exclusively of the managerial, technical and manual workers.
The manager as the person responsible for the governance of the mine,
would be responsible to the Pit Committee, and the Pit Committee and the
manager would be responsible for conducting the colliery.

It will be observed that this scheme of organization, which is probably
what the most thoughtful sections of Labour have at the back of their
minds as the kind to be applied to a well-organized industry, differs
from State Socialism in that the State is not the direct employer, and
differs from Syndicalism in that the workers have not autocratic control,
and differs from Guild Socialism in that the conduct of the industry is
not entirely by a Guild representative of all persons concerned in the
industry, but by a Council consisting as to one-half of representatives
of the miners and as to the other half of Government representatives.




CHAPTER IV

THE LABOUR PARTY’S ADOPTION OF SOCIALISM

2. HISTORY OF THE ALLIANCE

    Labour’s Struggle for Political Power, 1825-1832—Labour’s
    Alliance with Revolutionary Socialism, 1832-1842—Labour’s
    Renunciation of Socialism, 1842-1885—The Era of Constitutional
    State Socialism, 1885-1905—The New Syndicalist Revolutionary
    Ferment of 1905—The Socialist Societies—The Social Democratic
    Federation—The Communist Party—The Fabian Society—The
    Independent Labour Party—The Socialist Labour Party—The
    Socialist Party of Great Britain—The National Guilds League.


It is impossible to understand the present connection between the Labour
Party and Socialism without some small acquaintance with the history of
Labour’s attitude to Socialism in the past. That involves a retrospect of
Trade Unionism. Up to 1825, anything in the nature of a Trade Union was
rigorously suppressed by the Combination Laws, which, after considerable
agitation, were repealed by the Acts 5 Geo. IV, 95 and 6 Geo. IV, 129.
Although full freedom was not thereby secured for Trade Unions, yet
for the first time the right of collective bargaining was recognized—a
process of negotiation in course of which organizations of workmen could
withhold their labour in order to secure the rates of wages or conditions
of employment that they desired. As was naturally to be expected, this
led to an increase in the number of Trade Unions and of their power. But
fortune proved unkind. At the outset of their development there occurred
the financial crash of 1825, which caused wholesale commercial ruin and
widespread closing of works, reductions of wages and unemployment for the
four or five years following, with continual strikes by way of resistance
to wage reductions. The poverty and destitution of the working-classes as
compared with the wealthier section of the community led to dissemination
among the workers of revolutionary ideas, political and socialistic.
One can read in the newspapers of the time, even as far back as 1829,
familiar doctrines—that Labour is the only source of wealth—that the
working-men are the support of the middle and upper classes, the nerves
and soul of production, the foundation of the nation. From 1829, and
particularly through the Chartist days of 1835-1842, the Trade Union
movement which had previously concerned itself mainly in endeavouring
to increase wages and improve conditions of employment, was actively
associated with the middle classes in prosecuting revolutionary aims.


Labour’s Struggle for Political Power, 1825-1832

From 1829-32, the struggle swayed around the Reform Bill. Both Labour and
the middle classes combined to regard the enactment of that measure as
the opening of the door to social progress. Its failure to provide for
universal manhood suffrage shattered the hopes of Labour. Revolution had
for some time been whispered; a school of advanced Labour thought, when
working out to its logical conclusion the theory that labour was the sole
source of value, had evolved the doctrine of class-war.


Labour’s Alliance with Revolutionary Socialism, 1832-1842

Stung by disappointment through exclusion from the suffrage, organized
Labour embraced these revolutionary doctrines, arrayed itself definitely
against Parliamentary government, and insisted that the workers’ only
hope of salvation lay in direct application against the community of
their economic power. Robert Owen about that time was the leader of
socialistic thought in this country, and Labour adopted and adapted
certain parts of his policy as its official programme. Owen’s notion
substantially was that the machinery of production should be owned not by
the community, but by the particular section of workers who used it, and
that the Trade Unions concerned in each industry should be transformed
into national companies to carry on the trade. Profit-making and
competition were to be eliminated. The labour of the miner, for example,
would exchange on some time-basis with the labour of the agricultural
labourer. One enthusiastic Owenite, William Benbow, elaborated the
theory of the general strike as the means of enforcing the transfer
of industries from the capitalists to the workers. This was the first
official adoption by organized Labour in this country of socialistic
conceptions. The movement, however, collapsed in 1834, and was succeeded
by what is now known as Chartism. That term was at the time merely
understood to mean democratic parliamentary reform, its immediate object
being the conquest of political power, and its ulterior purposes, so far
as organized Labour were concerned, were the establishment of communist
colonies, the common ownership of land and of the means of production,
social reform, democratic political organization, greater freedom for
Trade Unions and improvement in wages and working conditions. There was
thus a combination of mixed forces working indiscriminately for social
reform, Trade Unionism and democratic parliamentary government. The
dominant notion was to obtain parliamentary power which was thought a
sufficient means to reform society, reorganize industry and purge the
nation of every kind of social and industrial disorder. As is well known,
there were two distinct parties in the Chartist movement, those who
advocated physical force and those who confined their argument to moral
suasion.

The year 1842 marks the culmination of Chartism and will be remembered
as the year of the general strike in the North of England, and of the
apparent imminence of a social revolt; but the collapse of the general
strike and the repressive action of the government took, for the time
being, all driving force out of the agitation. When times improved, and
trade started to prosper, Chartism lost ground; the Trade Unions began to
detach themselves from schemes of social revolution, and to make their
immediate objective the improvement of the conditions of the workers
in regard to wages and employment. Chartism continued as a political
movement, with varying fortunes, up to the year 1849. What it achieved
up to 1855 is thus summarized by Mr. Beer in Vol. II of his _History of
British Socialism_, p. 190:

    “After a desperate contest of thirty years’ duration, Chartism
    had come to an end. It had not been a struggle of a plebs for
    equal rights with the patriciate to spoliate and enslave other
    classes and nations, but a class-war aiming at the overthrow of
    the capitalist society and putting production, distribution,
    and exchange on a co-operative basis. The working-class was
    apparently defeated.

    “Baffled and exhausted through erratic leadership, untold
    sacrifices, and want of proper mental munitions, they retired
    from the field of battle, bleeding and decimated, but little
    aware of the great results they had achieved. They only saw
    the shattered ideals and broken hopes that lay strewn on the
    long path they had been marching and counter-marching from 1825
    to 1855, not knowing that it was from the wreckage and debris
    of those shattered ideals that the material was gathered for
    building and paving the road of social progress.

    “The advance which Great Britain had made in those thirty
    years in social reform and democracy was enormous. The
    Chartist period witnessed the first real Factory Act (1833),
    the first mining law for the protection of child and female
    labour (1842), the Ten Hours’ Day (1847), the reduction of the
    newspaper stamp (1836), the Abolition of the Corn Laws (1846),
    the repeal of the Corresponding Acts (1846). It bequeathed to
    the working-classes the co-operative store and co-operative
    production, more successful trade unions, and international
    sentiments. It forced the thinking men of the nation to regard
    the Labour problem as a serious subject for investigation and
    discussion. Finally, it imbued the thinking portion of the
    working-class with the conviction that Liberalism must first do
    its work, before Labour could come into its own, both in the
    legislature and in the factory. In short, from the catastrophes
    of 1832, 1834, 1839, 1842 and 1848, the lesson emerged that
    the revolutionary policy of ‘all or nothing,’ of a sweeping
    triumph by one gigantic effort, of contempt for reform and of
    the supreme value of a total and radical subversion of the
    old order, were foredoomed to failure. The generation that
    succeeded Chartism went into Gladstone’s camp and refused to
    leave it either for the social Toryism of Benjamin Disraeli or
    for the social revolution of Karl Marx.”


Labour’s Renunciation of Socialism, 1842-1885

Onwards from the year 1842, although individual Trade Unionists
and certain societies, which included no doubt members of the
working-classes, continued to promote Socialism, the British Trade Unions
advocated no scheme of Socialism as part of their official objects. They
contented themselves with improving their organizations, increasing
their members, making provision for friendly society benefits and of
introducing methods of collective bargaining instead of class-war and
of strikes. Mr. Beer again states the position at p. 195 of Vol. II,
_History of British Socialism_:

    “The twenty years following upon the collapse of Chartism
    formed the golden age of middle-class Liberalism. The glamour
    of its doctrines as set forth by Mill in his essay ‘On
    Liberty,’ the phenomenal growth of British trade and commerce,
    the unrivalled position of Great Britain as the workshop of
    the world, made British Liberalism the lodestar of all nations
    striving for freedom and wealth. Competition as the regulator
    of economic relations, free trade as the international bond
    of peace and goodwill, individual liberty as the sacred ideal
    of national politics, reigned supreme, and under their weight
    the entire formation of social revolutionary ideas of the past
    disappeared from view. The working-classes formed a part of
    triumphant Liberalism.

    “Gladstone, surveying his hosts in 1866, appeared quite
    justified in telling his Conservative opponents that there was
    no use fighting against his social forces, ‘which move onwards
    in their might and majesty and which ... are marshalled on
    our side.’ He might have addressed the same eloquent words to
    the leaders of the International Working Men’s Association,
    who with Karl Marx at their head, were precisely at that time
    making a serious attempt to resuscitate Chartism and detach the
    masses from the Liberal Party. Socialism and independent Labour
    politics came to be regarded as exotic plants which could never
    flourish on British soil.

    “The trade unions renounced all class-warfare and merely
    tried to use their new citizenship (1867) and their growing
    economic organization—the first trade union congress took
    place in 1869—with a view to influencing the distribution of
    the national wealth in their favour. Their aim and end was
    that of a plebs striving for equality with the possessing
    and ruling-classes. It was, despite some struggle for the
    legalization of trade unionism, a period of social peace, and
    it lasted till about 1880.”

This state of things continued in fact up to about 1885, and until that
date Socialism formed really no part of official Trade Union principles.


The Era of Constitutional State Socialism, 1885-1905

Mr. and Mrs. Sidney Webb in their _History of Trade Unionism_, revised
edition, 1920, p. 374, describe the principles of the Labour Party about
1885 as follows:

    “_Laissez faire_ then was the political and social creed of the
    Trade Union leaders of this time; up to 1885 they undoubtedly
    represented the views current among the rank and file; at that
    date all observers were agreed that the Trade Unions of Great
    Britain would furnish an impenetrable barrier against Socialist
    projects. Within a decade we find the whole trade union world
    permeated with collectivist ideas, and, as _The Times_ recorded
    as early as 1893, the Socialist Party supreme in the Trades
    Union Congress. This revolution in opinion is the chief event
    of Trade Union history at the close of the nineteenth century.”

These two talented authors analyse the causes. They attribute it in
great measure to the “new unionism” of 1889 which was itself largely
the result of the wide circulation in Great Britain of Henry George’s
_Progress and Poverty_ during the years 1880-1882; the lecturing of the
late Mr. H. M. Hyndman and Mr. William Morris and other disciples of Karl
Marx; revelations of certain “well-intentioned if somewhat sentimental
philanthropists” of their experiences in the sweated industries and slums
of our great cities, as, for example, Mr. Charles Booth’s great work,
_Life and Labour in London_; depression in trade; the great Dock Strike
in 1889.

The attitude observed by the Trades Union Congress in regard to
socialistic proposals is instructive. Up to 1887, at five successive
conferences, amendments in favour of the nationalization of land had been
continuously rejected; at the Swansea Conference in 1887, a resolution
in no very definite terms was accepted in its favour. The extreme
socialistic conception of the advanced Trade Unionist of the nineties
was State Socialism to be secured by constitutional political action.
The power of action was to be derived from every working-class Socialist
becoming a member of his Trade Union, of his local Co-operative Society,
of his borough council, urban or rural district or county council. This
represented substantially the full socialistic creed of official Labour
up to about the year 1905. Mr. and Mrs. Sidney Webb thus epitomize it:

    “In short, there was from the collapse of Owenism and
    Chartism in the eighteen-thirties and -forties right down
    to 1900 practically no sign that the British Trade Unions
    ever thought of themselves otherwise than as organizations
    to secure an ever-improving standard of life by means of an
    ever-increasing control of the conditions under which they
    worked. They neither desired nor sought any participation in
    the management of the technical processes of industry (except
    in so far as these might affect the conditions of their
    employment or the selection of persons to be employed), whilst
    it never occurred to a Trade Union to claim any power over, or
    responsibility for, buying the raw materials or marketing the
    product.”—(_History of Trade Unionism_ (1920), p. 653.)


The New Syndicalist Revolutionary Ferment of 1905

Between 1905 and 1910 new socialistic beliefs of a Syndicalist character
began to be absorbed by sections of Trade Unionists, especially the
miners and the engineers, who soon exhibited a spirit of revolt not
only against the capitalistic system, but more especially against the
limited aims of contemporary Trade Unionism. There commenced, and up to
the beginning of the war, continued a definite struggle in the Labour
movement between the constitutional Trade Unionists who held tight
to their ideals of State Socialism, and the revolutionary industrial
Unionists, led by James Connolly, and Tom Mann, who preached their
doctrine of Syndicalism, advocating first the abolition of craft
Unionism—the system under which all workmen of a particular craft, for
example, engineers, are enrolled in their own craft Unions irrespective
of the industries in which they work—and its replacement by industrial
Unionism, that is to say, the enrolment in one Trade Union representing
each industry of all men engaged in that industry irrespective of their
particular craft or occupations, such as to a limited extent prevails in
the railway, mining and transport industries; secondly, the appropriation
of the means of production in each industry by the manual workers who
would produce the output, charge the price and conduct the industry.
Connolly, who was afterwards executed for complicity in the Irish
Rebellion of 1916, came from the United States of America in 1905, and
persuaded the Socialist Labour Party of Glasgow to link up forces with
the American Industrial Workers of the World. Mann, who was recently the
Secretary of the Amalgamated Engineering Union, brought the seeds of
revolutionary Syndicalism from Paris and sowed them personally by means
of a widespread campaign.

Without any doubt, the Socialist Labour Party, an organization not,
however, affiliated to the Labour Party, has contributed more than any
other agency to the spread of Syndicalism in England. It describes
itself as “a revolutionary political organization seeking to build up a
communist movement in this country.” It works “to sweep away the mass of
debris which was once known as the parliament institutions,” Those who
want to appreciate its activities in these directions ought to follow
them in Dr. Miliukov’s _Bolshevism—An International Danger_, and I can
personally vouch for and add to his testimony. The Socialist Labour Party
was indubitably the power behind the revolutionary propaganda before the
war among the miners and the railwaymen, and to some extent among the
dockers, and it was responsible for many of the numerous “irritation
strikes” in 1911-14 and for the Clyde strikes in 1916. Its disloyal
action during the war, through the medium of the workers’ committees
and shop steward organizations, is later described. The S.L.P. and the
I.W.W. were the original founders of the “Hands Off Russia Committee.”
Such has been the revolutionary ferment leavening English and Scottish
Labour since 1905—to it we largely owe our present recurrent outbursts of
industrial insurrectionism.


The Socialist Societies

There are, as previously explained, certain Socialist Societies
definitely affiliated to the Labour Party; others are unofficially
recognized, and there are yet others not recognized, either officially
or unofficially, which comprise numerous persons who through their Trade
Union or local organizations, or individually, are members of the Labour
Party. These advocate brands of Socialism ranging from State Socialism to
revolutionary Syndicalism.


The Social Democratic Federation

The Democratic Federation, founded in 1881 by the late Mr. H. M. Hyndman,
mainly as a federation of Radical clubs, with a veiled socialistic
programme embracing land nationalization, was the first attempt at a
political Socialist organization. In 1889 it became the Social Democratic
Federation, avowedly socialistic. Late in 1884 it split into the
Socialist League, under Mr. William Morris, pledged to a revolutionary,
anti-parliamentary programme; and the Social Democratic Federation, led
by Mr. Hyndman. But, captured by anarchists, the Socialist League broke
up, many of its leaders rejoining the Social Democratic Federation.
The Federation was affiliated to the Labour Representation Committee
on the formation of the latter in 1900, but soon withdrew, and in 1908
called itself the Social Democratic Party. It amalgamated in 1911 with
a number of local Socialist bodies and changed its name to the British
Socialist Party. In 1916 it was affiliated with the Labour Party. Later,
in 1916, it declared against the war and pursued a disloyal policy. This
attitude, mainly exhibited through its weekly newspaper, the _Call_,
led to considerable secessions from the British Socialist Party, and to
the foundation by the late Mr. H. M. Hyndman of the National Socialist
Party with its weekly newspaper, _Justice_, which, while advocating the
establishment of a Socialist Commonwealth on a democratic basis, actively
supported the war. On July 31, 1920, the British Socialist Party merged
its identity in the Communist Party, pledged to establish Sovietism and
the dictatorship of the proletariate.


The Communist Party

On January 29 and 30, 1921, there assembled at Leeds a Communist
Conference for the purposes of merging the various Communist bodies into
one party. One hundred and seventy delegates took part representing the
following bodies:—Communist Party of Great Britain; Communist Labour
Party; Communist Party (British Section of Third International); Aberdeen
Communist Group; Left Wing of Independent Labour Party; Industrial
Communist Party; Jewish Socialist Party; Bolton Communist Group; Croydon
Communist Group; Shop Stewards; South Wales Workers’ Committee.

Later on, April 23 and 24, 1921, another Communist Conference took place
in Manchester to settle the constitution and the rules. The party was
called the Communist Party of Great Britain, its ultimate purpose being
the establishment of a Communistic Republic and its immediate end the
abolition of the wage-system through a social revolution. As a means
of furthering a social revolution the party urges the adoption by the
workers of a Soviet or Workers’ Council system as it exists in Russia,
and “for a weapon against the massing of the forces of capitalism” the
use of “the dictatorship of the revolutionary masses,” This Party applied
for affiliation to the Labour Party, but that was refused at the Brighton
Conference in 1921 and again at Edinburgh in 1922. It is affiliated to
the “Red” or Communist International of Moscow. The best account of the
revolutionary organizations in this country is that contained in Dr.
Shadwell’s _Revolutionary Movement in Great Britain_, Grant Richards,
Ltd., 1921.


The Fabian Society

The well-known Fabian Society was founded in January 1884, and has
been affiliated to the Labour Party from its inception. It aims at
reorganizing society by emancipating land and industrial capital from
individual or class ownership and vesting them in the State. It advocates
transfer to the community of the administration of such industrial
capital as can conveniently be managed socially. As a result of this
transfer without compensation, “though not without such relief to
expropriated individuals as may seem fit to the community,” rent and
interest will be added to the reward of labour, and the idle class
now living on the labour of others will necessarily disappear. The
Society specially tries to influence local authorities so as to impart
a socialistic tendency to their administration. The Fabian Research
Department has conducted many valuable investigations into industrial
questions; since October 1918, it has been known as the Labour Research
Department; affiliation with it is open to Trade Unions, Socialist
Societies, Co-operative Organizations, Trades Councils, Labour Parties
and private individuals. Its object is to co-operate with the Labour,
Socialist and Co-operative movements in supplying information upon all
questions relating to labour, and it does so most effectively.


The Independent Labour Party

In 1893, the Independent Labour Party was formed. It owes its origin,
as has been stated, to the energy of Mr. Keir Hardie. The “I.L.P.”
was established “to secure the collective ownership of all the means
of production, distribution and exchange,” and “independent labour
representation on all legislative, governing and administrative bodies.”
Its original constitution stated:

    “That the object of that Party is to establish the Socialist
    State, when land and capital will be held by the community and
    used for the well-being of the community and when the exchange
    of commodities will be organized also by the community, so
    as to secure the highest possible standard of life for the
    individual. In giving effect to this object, it will work as
    part of the International Socialist Movement.”

The I.L.P. and its weekly paper, the _Labour Leader_, took up
persistently a pacificist attitude throughout the war, especially in
regard to compulsory military service. It is represented by four members
in the present House of Commons.


The Socialist Labour Party

In 1903, the Socialist Labour Party was established in Glasgow—by
secessionists from the Social Democratic Federation—on the lines of
the revolutionary American Socialist Party led by Daniel de Leon. It
is in close affiliation with the Industrial Workers of the World, and
actively agitates to further the Syndicalist conception of industrial
Unionism. All candidates for membership must subscribe to “class-war”—no
Trade Union official is eligible. The Party propagates revolutionary
political action, and also revolutionary industrial action of the
extreme syndicalistic type. The Party has between thirty and forty
branches throughout the country, owns the Socialist Labour Press, and
publishes a monthly paper called the _Socialist_. Although the majority
of its members are Trade Unionists, the party refuses to affiliate with
the Labour Party. Throughout the recent conflict it carried out an
implacable campaign against the war, and impeded in every possible way
its successful prosecution.


The Socialist Party of Great Britain

In 1905, other extreme Socialists broke away from the Social Democratic
Federation and formed the Socialist Party of Great Britain. Its declared
object is to wage war against all other political parties, either
“Labour or Capital.” It advocates the institution of the most extreme
Marxian regime, by means of such revolutionary political action as will
secure the “capture” of all the machinery of government whether national
or local. It publishes monthly the _Socialist Standard_ and is not
affiliated to the Labour Party, though it comprises many Trade Unionists.


The National Guilds League

In 1915, the National Guilds League was founded to advocate the cause of
Guild Socialism, which has been already described. There are two schools
of thought, one which hopes to secure National Guildism by evolving
industrial Unionism out of craft Unionism coupled with the Unions
securing an ever-increasing control over industry; the other by militant
or revolutionary tactics. The National Guilds League has a number of
branches throughout the country.




CHAPTER V

THE LABOUR PARTY’S ADOPTION OF SOCIALISM

3. THE HOME SOCIALISTIC PROGRAMME

    Nationalization of the Means of Production, Distribution and
    Exchange—The Labour Addendum to the Whitley Report, 1918—The
    Industrial Programme of 1918—Land Nationalization—The Control
    of Industry—Labour’s Report to the Industrial Conference,
    1919—Nationalization of the Coal Industry.


It will be sufficient to review the Labour Party’s official socialistic
policy in regard to home affairs starting from 1918. Previously to that
date, a number of resolutions had from year to year been passed, formally
as hardy annuals, at the Trades Union Congresses and the Labour Party’s
Conferences advocating nationalization of land, railways, mines and the
municipalization of a number of services of public utility. But from and
after 1918 the matter assumes a different complexion.


Nationalization of the Means of Production, Distribution and Exchange

In 1918, at the Nottingham Labour Party Conference a stock resolution was
passed in these terms:

    “That the Labour Party press for nationalization of all the
    means of production, distribution and exchange.”

The arguments of the proposer were that because of the existence
of landlordism and the power of the landlords, the people had been
driven off the land into towns and overseas, with the result that this
country had to depend on other countries for food-stuffs. There was no
discussion, and the resolution was passed _nem. con._


The Labour Addendum to the Whitley Report, 1918

The now famous “Committee on Relations between Employers and Employed,”
known as the “Whitley Committee,” which advocated the institution in
industries of Joint Industrial Councils, Joint District Councils and
Works’ Committees, presented the last of their five Reports to the Prime
Minister in 1918, dated July 1, 1918 (_Parliamentary Paper_ 1918, Cd.
9153). The Trade Union members[4] of the Committee who signed the report
appended this note:

    “By attaching our signatures to the General Reports we desire
    to render hearty support to the recommendations that Industrial
    Councils or Trade Boards, according to whichever are the more
    suitable in the circumstances, should be established for
    the several industries or businesses and that these bodies,
    representative of employers and employed, should concern
    themselves with the establishment of minimum conditions and the
    furtherance of the common interests of their trades.

    “But while recognizing that the more amicable relations
    thus established between Capital and Labour will afford an
    atmosphere generally favourable to industrial peace and
    progress, we desire to express our view that a complete
    identity of interests between Capital and Labour cannot be thus
    effected, and that such machinery cannot be expected to furnish
    a settlement for the more serious conflicts of interests
    involved in the working of an economic system primarily
    governed and directed by motives of private profit.”


The Industrial Programme of 1918

The new constitution of the Party which was adopted in 1918 was described
as a scheme to secure for the producers by hand or by brain the full
fruits of their industry and the most equitable distribution of them upon
the basis of common ownership of the means of production coupled with the
application to each industry or service of the best system of popular
administration and control, and to promote the economic emancipation
of the people, especially those who depend upon their own exertions by
hand or by brain for the means of life. In explanation of this rather
vague programme, the Party stated in a contemporary leaflet, that they
intended that the supplies of food and other necessaries of life,
especially bread, meat, milk, sugar, butter and margarine, water, coal,
light, and transport by rail, steamer, tram and bus, now almost entirely
controlled by monopolists, combines, trusts and rings, should be acquired
by the State to be administered nationally or municipally solely in the
interest of the public and the consumers. In the Party’s proposals for
reconstruction as contained in _Labour and the New Social Order_, which
was finally settled by the Labour Party Conference in June 1918, Labour
declared that it stood for:

    “The progressive elimination from the control of industry of
    the private capitalist, individual or joint-stock, and the
    setting free of all who work, whether by hand or by brain, for
    the service of the community and the community only,”

and registered its refusal

    “absolutely to believe that the British people will
    permanently tolerate any reconstruction or perpetuation of
    the disorganization, waste and inefficiency involved in the
    abandonment of British industry to a jostling crowd of separate
    private employers with their minds bent, not on the service of
    the community, but—by the very law of their being—only on the
    utmost possible profiteering.

    “What the Labour Party looks to is a genuinely scientific
    reorganization of the nation’s industry, no longer deflected by
    individual profiteering, on the basis of the common ownership
    of the means of production; the equitable sharing of the
    proceeds among all who participate in any capacity, and only
    among these, and the adoption, in particular services and
    occupations, of those systems and methods of administration and
    control that may be found in practice, best to promote, not
    profiteering, but the public interest.”


Land Nationalization

At the Southport Conference, 1919, a resolution in favour of land
nationalization was formally moved by the Miners’ Federation and carried
unanimously by the Conference without argument or explanation; it reads
thus:

    “Seeing that the land alone of all the factors of production is
    both indispensable to man and incapable of expansion by human
    agency, it is pre-eminently the rightful property of the nation
    as a whole. The present system which treats land as private
    property and prevents free access to it, hampers industry,
    checks production, crowds the towns by depopulating the
    countryside, obstructs the provision of good housing, lowers
    the standard of public health both physical and moral; this
    Conference strongly urges the Government to bring forward, as
    early as possible, some scheme for the nationalization of land
    so as to abolish the present unjust system of land ownership
    and land leasing. It strongly deprecates the action of the
    Government in preventing the completion of the valuation of
    the land, and demands that such valuation shall be completed
    as early as possible, with a view to the ultimate complete
    socialization of all land and minerals.”


The Control of Industry

In view of divergent proposals and the general lack of any precise
information as to the Party’s intentions in regard to the control of
industry, it is not surprising to find this resolution passed at the
Southport Conference, 1919, and, significantly, moved by the British
Socialist Party:

    “That it be referred to the Executive Committee to consider
    and report to a further Conference on the arrangements to
    be introduced into industry in order to provide Labour with
    facilities to control industry—that is to say, to participate
    in the promotion of undertakings, the negotiation of
    contracts, determination of the product, and the selection
    of markets—and the extent that such control by Labour can
    be secured, or is desirable, on the basis of the private
    ownership of land and capital. The Executive shall indicate the
    distinction between conciliatory Labour and Capital and the
    actual control of industry by the workers, and to that end is
    instructed to report on:

    “(_a_) The Industrial Councils and their bearing on the
    question.

    “(_b_) The co-partnership of Labour and Capital.

    “(_c_) The means to achieve the democratic management of
    industries in national ownership.

    “(_d_) How far the representation of Trade Unions, through
    their Executives or by ballot of the members, could ensure
    participation in actual control, and whether, for effective
    control, it is not necessary that the employees in the workshop
    or the pit shall construct an organization, integral to any
    scheme of democratic management.

    “(_e_) Whether the sole or partial management by Labour of
    industries in national ownership should be confined to the
    actual workers therein, or should include workers in other
    occupations.”

The delegate who moved the resolution pointed out that there were
different opinions in the Labour Party as to control; one section
advocating nationalization pure and simple, another a system of control
not necessarily involving nationalization, and that for the guidance of
the whole Labour movement an inquiry, as suggested by the resolution,
was essential so that “instead of having so many pious resolutions they
would have facts and data upon which to build their future policy and
activity,” The guidance sought has not yet been given.

At the same conference another resolution was adopted as follows:

    “That this Conference re-affirms its pledge of nationalization
    of industry, but, when nationalized, to come under joint
    control with adequate representation of the workers on the
    boards.”

The mover of it thought the previous resolution might include
co-partnership, and to that he objected. In co-partnership, he said, “the
workers interested became as great aristocrats as the ordinary employer.
Every industry ought to be nationalized and have adequate representation
under joint control.”


Labour’s Report to the Industrial Conference, 1919

In a memorandum by the Right Hon. A. Henderson, Chairman of the Trades
Union representatives, which was appended to the Report of the Industrial
Conference in 1919 (_Parliamentary Paper_ 1919, Cmd. 501) appointed to
inquire into industrial unrest, there occur these statements of Labour
policy:

    “CONTROL OF INDUSTRY.

    (p. ii.) “With increasing vehemence Labour is challenging
    the whole structure of capitalist industry as it now exists.
    It is no longer willing to acquiesce in a system under which
    industry is conducted for the benefit of the few. It demands
    a system of industrial control which shall be truly democratic
    in character. This is seen on the one hand in the demand for
    public ownership of vital industries and services and public
    control of services not nationalized which threaten the public
    with the danger of monopoly or exploitation. It is also seen
    in the increasing demand of the workers in all industries for
    a real share in industrial control, a demand which the Whitley
    Scheme, in so far as it has been adopted, has done little or
    nothing to satisfy. This demand is more articulate in some
    industries than others. It is seen clearly in the national
    programmes of the railwaymen and of the miners; and it is less
    clearly formulated by the workers in many other industries.
    The workers are no longer prepared to acquiesce in a system in
    which their labour is bought and sold as a commodity in the
    labour market. They are beginning to assert that they have a
    human right to an equal and democratic partnership in industry;
    that they must be treated in future not as ‘hands’ or part of
    the factory equipment, but as human beings with a right to use
    their abilities by hand and brain in the service not of the few
    but of the whole community.

    “The extent to which workers are challenging the whole system
    of industrial organization is very much greater to-day than
    ever before, and unrest proceeds not only from more immediate
    and special grievances but also, to an increasing extent, from
    a desire to substitute a democratic system of public ownership
    and production for use with an increasing element of control by
    the organized workers themselves for the existing capitalist
    organization of industry.”

    (p. vii.) “(_a_) A substantial beginning must be made of
    instituting public ownership of the vital industries and
    services in this country. Mines and the supply of coal,
    railways, docks and other means of transportation, the supply
    of electric power, and shipping, at least so far as ocean-going
    services are concerned, should be at once nationalized.

    “(_b_) Private profit should be entirely eliminated from the
    manufacture of armaments, and the amount of nationalization
    necessary to secure this should be introduced into the
    engineering, shipbuilding and kindred industries.

    “(_c_) There should be a great extension of municipal
    ownership, and ownership by other local authorities and
    co-operative control of those services which are concerned
    primarily with the supplying of local needs.

    “(_d_) Key industries and services should at once be publicly
    owned.

    “(_e_) This extension of public ownership over vital industries
    should be accompanied by the granting to the organized workers
    of the greatest practicable amount of control over the
    conditions and the management of their various industries.”

    “STATE CONTROL AND PRICES.

    (p. viii.) “(_a_) Where an industry producing articles of
    common consumption or materials necessary to industries
    producing articles of common consumption cannot be at once
    publicly owned, State control over such industries should be
    retained.

    “(_b_) State control has been shown to provide some check upon
    profiteering and high prices, and this is a reason why it
    should be maintained until industries pass into the stage at
    which they can be conveniently nationalized,”

    “CONCLUSIONS.

    (p. xi.) “The fundamental causes of Labour unrest are to
    be found rather in the growing determination of Labour to
    challenge the whole existing structure of capitalist industry
    than in any of the more special and smaller grievances which
    come to the surface at any particular time.

    “These root causes are twofold—the breakdown of the existing
    capitalist system of industrial organization, in the sense that
    the mass of the working class is now firmly convinced that
    production for private profit is not an equitable basis on
    which to build, and that a vast extension of public ownership
    and democratic control of industry is urgently necessary. It
    is no longer possible for organized Labour to be controlled
    by force or compulsion of any kind. It has grown too strong
    to remain within the bounds of the old industrial system and
    its unsatisfied demand for the reorganization of industry on
    democratic lines is not only the most important, but also a
    constantly growing cause of unrest.

    “The second primary cause is closely linked with the first. It
    is that, desiring the creation of a new industrial system which
    shall gradually but speedily replace the old, the workers can
    see no indication that either the government or the employers
    have realized the necessity for any fundamental change, or
    that they are prepared even to make a beginning of industrial
    re-organization on more democratic principles. The absence
    of any constructive, policy on the side of the Government
    or the employers, taken in conjunction with the fact that
    Labour, through the Trades Union Congress and the Labour Party
    and through the various Trade Union organizations, has put
    forward a comprehensive economic and industrial programme, has
    presented the workers with a sharp contrast from which they
    naturally draw their own deductions.

    “It is clear that unless and until the Government is prepared
    to realize the need for comprehensive reconstruction on a
    democratic basis, and to formulate a constructive policy
    leading towards economic democracy, there can be at most no
    more than a temporary diminution of industrial unrest to be
    followed inevitably by further waves of constantly growing
    magnitude.

    “The changes involved in this reconstruction must, of
    course, be gradual, but if unrest is to be prevented from
    assuming dangerous forms an adequate assurance must be given
    immediately to the workers that the whole problem is being
    taken courageously in hand. It is not enough merely to tinker
    with particular grievances or to endeavour to reconstruct the
    old system by slight adjustments to meet the new demands of
    Labour. It is essential to question the whole basis on which
    Our industry has been conducted in the past and to endeavour
    to find, in substitution for the motive of private gain, some
    other motive which will serve better as the foundation of a
    democratic system. This motive can be no other than the motive
    of public service, which at present is seldom invoked save when
    the workers threaten to stop the process of production by a
    strike. The motive of public service should be the dominant
    motive throughout the whole industrial system, and the problem
    in industry at the present day is that of bringing home to
    every person engaged in industry the feeling that he is the
    servant, not of any particular class or person, but of the
    community as a whole. This cannot be done so long as industry
    continues to be conducted for private profit, and the widest
    possible extension of public ownership and democratic control
    of industry is therefore the first necessary condition of the
    removal of industrial unrest.”


Nationalization of the Coal Industry

As illustrating the position taken up by the Labour Party in regard to
the coal industry, the following was the resolution settled by a Joint
Sub-Committee representative of the Executive Committee of the Miners’
Federation, the Parliamentary Committee of the Trades Union Congress and
the Executive Committee of the Labour Party, which was submitted to,
and passed by, all their local demonstrations throughout the country in
1919-20:

    “This Meeting declares:—

    “(1) That the coal of the country forms an obvious necessity
    to national life, and that its ownership should therefore be
    vested in the community.

    “(2) That the mines, machinery, and other means for the
    production and distribution of coal, being essential to the
    industry, should also be owned by the country.

    “(3) That the direction and conduct of the coal-mining
    industry, being of vital importance to the workers in the
    industry and the coal-consuming public, should be under the
    control of National, District and Pit Committees representative
    of the national Government and the various classes of workers
    including those engaged in the managing, technical, commercial
    and manual processes.

    “(4) That the objects to be sought by National Ownership and
    Joint Control on the lines indicated are:—

    “(_a_) To provide the maximum output of the coal consistent
    with the provision of adequate protection for the workers
    engaged in this most dangerous employment.

    “(_b_) The introduction of labour-saving appliances on the
    widest possible scale.

    “(_c_) A more economic working of coal mines consequent on
    the elimination of the interests of private land and royalty
    ownership.

    “(_d_) The remuneration of the workers in this industry on a
    scale commensurate with the dangers endured and sufficient to
    provide a healthy natural life for all concerned.

    “(_e_) The co-ordination of the distributive machinery of the
    trade by the elimination of existing private interests and the
    substitution of municipal and co-operative supplies at prices
    sufficient to cover costs of production and distribution.

    “This meeting therefore calls upon the Government to bring
    forward legislation for the national ownership of coal mines
    and minerals on the lines indicated, and in accordance with the
    recommendations of the Majority Report of the Coal Industry
    Commission.”

On March 11, 1920, a special Trades Union Congress was held in London
to consider what action should be taken to compel the Government to
nationalize the coal mines, and passed this resolution:

    “In view of the repeated refusal of the Government to
    nationalize the mines, in accordance with the Majority Report
    of the Coal Industry Commission, and in agreement with the
    terms of the resolution passed at the Glasgow Congress and
    the Special Congress held in December last, the Parliamentary
    Committee suggest the following forms of action as a means to
    compel the Government to adopt the nationalization of mines:—

    “(_a_) Trade Union action, in the form of a general strike;

    “(_b_) Political action, in the form of intensive political
    propaganda in preparation for a General Election;

    “In the event of (_a_) being carried, the necessary steps be
    taken to give effect to it in accordance with the constitution
    of each Union.”

The Congress decided against Clause (_a_) and in favour of Clause (_b_)
proposing political action.

At the Brighton Conference, 1921, there was moved by the Miners’
Federation and passed unanimously without a debate the following
resolution:

    “That this Conference views with regret the failure of
    the Government to introduce legislation for the purpose
    of nationalizing the mining industry, and reiterates its
    conviction that this industry will never be placed upon a
    satisfactory basis in the interest of the community until it
    is publicly owned and worked between representatives of the
    State and the technical and manual workers engaged in it, and
    resolves to continue to educate and organize working-class
    opinions until the Government are compelled to bring about
    this fundamental change in the management and ownership of the
    industry.”

The Chairman at that Conference, Mr. Alex. G. Cameron, in the course of
his address made these observations:

    “The fundamental truth is that the supporters of capitalism
    have proved to the world that so long as industry is run on
    its present lines the workers will have to submit to periods
    of unemployment and periods of over-employment and that the
    present capitalist system must go before there can be any
    permanent solution.

    “The workers, by the strength of their Trade Unions, may from
    time to time obtain improved conditions of employment, but
    until they obtain possession of the means of producing wealth,
    namely, the land, the mines, the railways, shipping, factories
    and workshops, they will remain dependent on a small section of
    the community providing them with employment. In other words,
    they will continue to be at the beck and call of those who own
    and control the capital of the country. They will, when the
    capitalists decide, be allowed to apply their labour to the
    production of wealth, but they will not be permitted to control
    its distribution.

    “Before the workers will be permitted to control industry
    effectively, or even the distribution of the products of their
    industry, they will first require to own the machinery and
    materials of industry. Such ownership will only be acquired
    when we capture political power; and political power will come
    only as a result of hard thinking and intelligent action at
    the ballot-box. Political power will also enable us to control
    credit, money, banking and everything which is fundamental to a
    nation’s foreign policy, and is the cause of most, if not all,
    wars from which the workers of the world have suffered.”

The Labour Party’s specific proposals for the nationalization of many
important industries and “their democratic control” are explained at
length in Chapter VIII.




CHAPTER VI

THE LABOUR PARTY’S ADOPTION OF SOCIALISM

4. THE INTERNATIONAL SOCIALISTIC PROGRAMME

    The First International—The Old Second International—The
    International Labour Charter of 1919—The New Second
    International—The Geneva Resolutions on Socialism of 1920—The
    Second International and Bolshevism—The Third or Moscow
    International.


The First International

It is important to note the connection before the war between the Labour
Patty and International Socialism. As far back as September 28, 1864,
the First International was formed in St. Martin’s Hall at the corner
of Long Acre and Endell Street, the site now occupied by Messrs. Odhams
and used for the publication of _John Bull_. That organization lived
under circumstances of great vicissitude as an international centre of
socialistic thought until it received its death-blow through the collapse
of the Commune In Paris in 1871. Its interesting career is described in
Mr. R. W. Postgate’s book, _The Workers’ International_, and in _The Two
Internationals_, by Mr. Palme Dutt.


The Old Second International

The Second International dates from the Paris Socialist Conference
of 1889, but was not constituted in its later form of a Central
International Socialist Bureau until 1913. In 1914, it included
twenty-seven countries with a membership of twelve millions; to it the
Labour Party was affiliated. It naturally fell into a state of suspended
animation during the war. Unsuccessful attempts were made at Zimmerwald
(1915), Kienthal (1916), and at Stockholm (1917), to revive the Second
International. Later, a Conference with the same object in view was
held at Berne in February 1919, where various Socialist and Labour
bodies assembled to further its revival and also to deal with a number
of political and industrial questions. This Conference was promoted by
Messrs. Arthur Henderson, Emile Vandervelde and Albert Thomas. It passed
an important resolution on “Democracy and Dictatorship,” part of which
was in the following terms:

    “The Conference hails the great political revolutions which,
    in Russia, Austria-Hungary and Germany, have destroyed the old
    regimes of imperialism and militarism and overthrown their
    Governments.

    “The Conference urges the workers and Socialists of these
    countries to develop democratic and republican institutions
    which will enable them to bring about the great Socialist
    transformation. In these momentous times, when the problem of
    the Socialist reconstruction of the world is more than ever
    before a burning question, the working-classes should make up
    their minds, unanimously and unmistakably, about the method of
    their emancipation.

    “In full agreement with all previous Congresses of the
    International, the Berne Conference firmly adheres to the
    principles of Democracy. A reorganized society more and more
    permeated with Socialism, cannot be realized, much less
    permanently established, unless it rests upon triumphs of
    Democracy and is rooted in the principles of liberty.

    “Those institutions which constitute Democracy—freedom of
    speech and of the press, the right of assembly, universal
    suffrage, a government responsible to Parliament, with
    arrangements guaranteeing popular co-operation, and respect for
    the wishes of the people, the right of association, etc., these
    also provide the working-classes with the means of carrying on
    the class-struggle.

    “Owing to certain recent events, the Conference desires to make
    absolutely clear the constructive character of the Socialist
    programme. True socialization implies methodical development in
    the different branches of economic activity under the control
    of the democracy. The arbitrary taking over of a few concerns
    by small groups of workers is not Socialism, it is merely
    Capitalism with numerous shareholders.

    “Since, in the opinion of the Conference, effective Socialist
    development is only possible under democratic law, it is
    essential to eliminate at once any method of socialization
    which has no prospect of gaining the support of the majority of
    the people.

    “A dictatorship of this character would be all the more
    dangerous if it were based upon the support of only one section
    of the working-class. The inevitable consequence of such a
    regime would be the paralysis of working-class strength through
    fratricidal war. The inevitable end would be the dictatorship
    of reaction....

    “It calls upon Socialists throughout the world to close their
    ranks, not to deliver up the peoples to international reaction,
    but to do their utmost to ensure that Socialism and Democracy,
    which are inseparable, shall triumph everywhere.”


The International Labour Charter of 1919

The Berne Conference formulated an International Labour Charter which was
afterwards submitted to the Council of Versailles for inclusion in the
Treaty of Peace, and was, to a considerable extent, incorporated in Part
XIII. The preamble of this Charter is important and reads thus:

    “Under the wage-system the capitalist class endeavour to
    increase their profits by exploiting the workers in the
    greatest measure possible by methods which, if unchecked,
    would undermine the physical, moral and intellectual strength
    of the present and future generation of workers. They impede
    the development and even endanger the very existence of
    Society. The tendency of Capitalism to degrade the worker can
    only be completely checked by the abolition of the capitalist
    system of production. Meanwhile, the evil can be considerably
    mitigated, both by the resistance of organized workers and by
    the intervention of the State. By these means, the health of
    the workers can be protected and their family life maintained.
    They make it possible for them to obtain the education
    necessary to enable them to fulfil their duties as citizens in
    a modern democracy.

    “The degree in which Capitalism is restricted varies to a
    very great extent in the different States. Through the unfair
    competition of backward countries, these differences endanger
    labour and industry in the more advanced States. The adjustment
    of national differences in the legal protection of labour by
    a system of international labour legislation has long been
    a pressing need. It has been rendered doubly urgent by the
    terrible upheavals and awful destruction of the vital forces of
    the people brought about by the war. At the same time, however,
    the war is bringing about the possibility of satisfying this
    need by the formation of a League of Nations, which now seems
    certain. The Berne Conference demands that the League of
    Nations, as one of its primary tasks, shall create and put into
    execution an International Labour Charter.”

At Berne a Permanent Commission was appointed to revive and draw up a new
constitution for the Second International. This Permanent Commission,
which included Messrs. Henderson, Stuart-Bunning and Ramsay MacDonald of
the British Labour Party, met at Amsterdam in April 1919, to continue
that work. There was also a “Committee of Action” appointed to deal with
certain executive matters, on which Messrs. Henderson, Stuart-Bunning
and Ramsay MacDonald were also placed. It was this Committee of Action
which went to Paris to interview the “Big Four” on various international
questions, including the insertion of the Labour Charter in the Peace
Treaty, and issued a manifesto on May 11, 1919, after the Peace Terms
were handed, on May 7, to the German delegates, stating that “this peace
is not our peace.”


The New Second International

At Lucerne, in August 1919, the Permanent Commission finished the
drafting of the new constitution of the Second International, and
arranged for a General International Socialist Conference to be held
at Geneva in 1920, to adopt it. That Conference took place in July
of that year. An invitation dated April 10, 1920, was sent out to
all Socialist and Labour Parties subscribing to, _inter alia_, the
following principle:—“(1) The political and economic organization of
the working-class for the purpose of abolishing the capitalist form of
society and achieving complete freedom for humanity through the conquest
of political power and the socialization of the means of production and
exchange, that is to say, by the transformation of capitalist society
into a collectivist or communist society.” The invitation, after
mentioning a number of socialistic questions to which the attention
of the Conference at Geneva would be directed, concluded in these
words:—“Convinced of the necessity of a great effort to ensure unity on
the basis of the traditional principles of the class-struggle and with
a view to international action ... we invite you to attend the Geneva
Conference.”

At the Geneva Conference the constitution of the Second International was
fixed; its declared purposes are as follows:

    “1. The political and economic organization of the
    working-class for the purpose of abolishing the capitalist
    form of society and achieving complete freedom for humanity
    through the conquest of political power and the socialization
    of the means of production and exchange, that is to say, by the
    transformation of capitalist society into a collectivist or
    communist society.

    “2. The international union and action of the workers in
    the struggle against jingoism and imperialism and for the
    simultaneous suppression of militarism and armaments, with the
    object of bringing about a real League of Nations, including
    all peoples master of their own destiny, and maintaining world
    peace.

    “3. The representation and defence of the interests of
    oppressed peoples and subject races.

    “These principles find three forms of expression in the
    working-class movement, each at different stages of
    development, but each necessary; the political, the industrial,
    and the co-operative. These must, as autonomous bodies,
    continue to strengthen their national influence and their
    international unity, and, at the same time, as their ultimate
    aims are common, and as they are aspects of one great world
    movement, they should take every opportunity for joint action
    in an internationalist and revolutionary spirit for the
    maintenance of the world’s peace.”


The Geneva Resolutions on Socialism of 1920

A number of resolutions were also passed, and those which relate to
“Socialization” are worthy of careful study; they were the draft of the
British Labour Party’s representatives and were in the following terms:

    “SOCIALIZATION.—By Socialization we understand the
    transformation from ownership and control by capitalists to
    ownership and control by the community of all the industries
    and services essential for the satisfaction of the people’s
    needs; the substitution, for the wasteful production and
    distribution with the object of private profit, of efficient
    production and economical distribution with the object of the
    greatest possible utility; the transformation also, from the
    economic servitude of the great mass of the actual producers
    under private ownership, to a general participation in
    management by the persons engaged in the work.

    “The continuous and rapid growth of monopolistic control of
    industry by Capitalism increases the power of private owners
    to manipulate the prices of all the necessaries of life, thus
    reducing consumers to despair. On the other hand, there is the
    growing unwillingness of organized labour any longer to support
    a system of production which keeps them in subjection and does
    not even enable them to raise effectively their standard of
    life. The consequent intolerableness of Capitalism renders
    every day more urgent the reconstruction of industry on the
    lines of Socialization.

    “Socialization will proceed, step by step, from one industry
    to another, according as circumstances in each country may
    permit. Objectionable as private profit-making enterprise is
    to Socialists, they will refrain from destroying it in any
    industry until they are in a position to replace it by a more
    efficient form of organization. Such a gradual process of
    Socialization excludes, in general, expropriation of private
    ownership without compensation; not only because it would be
    inequitable to cause suffering to selected individuals, but
    also because a process of confiscation would disturb capitalist
    enterprise in industries in which Socialization was not
    immediately practicable. The funds required for compensation
    will be derived from taxation of private property, including
    capital levies, income-tax and death duties, and the limitation
    of inheritances for the benefit of the State.

    “In a community of highly developed economic life, with an
    extensive population largely aggregated in urban centres,
    Socialization takes three main forms—namely, national,
    municipal and co-operative.

    “For instance, whatever may be provided for the administration
    of agriculture, the ownership of land should be national,
    provision being made for the maintenance and security of
    peasant cultivators, wherever such exist. Other industries of
    supreme national importance, such as the transport system, the
    generation of electricity and mines, should also be national.
    But the management of a large number of industries and services
    will be in the hands of the municipalities and other local
    authorities, and federations of these, not only the provision
    of water and gas and the distribution of electricity, but also,
    in some countries, the provision of food, clothing and housing.
    The production and distribution of household supplies of every
    kind will form, for the most part, the sphere of the consumer’s
    co-operative societies.

    “Industries which have not yet arrived at a state of
    concentration at which they are suitable for Socialization, or
    in which, for other reasons, Socialization is not immediately
    practicable, will be subjected to control by the community,
    with a view to effecting economies and improvements in
    production and distribution, fixing prices, and ensuring
    prescribed conditions of employment.

    “It is important to notice that, in the large measure of
    individual freedom that will be characteristic of a Socialist
    community, the adoption of the principle of Socialization does
    not include agricultural production by individual peasants
    of the nation’s land, or by independent craftsmen working on
    their own account, or by artists of any kind, or by members of
    the brain-working professions—provided always that they do not
    exploit the labour of other persons. On the other hand, the
    principle of Socialization excludes the ownership of natural
    resources or of the instruments of production in the large
    scale primary industries by individuals or associations of
    persons of any kind, together with the dictatorship of any
    person or group over the industry in which they work.

    “It is the function of the community as a whole to exercise
    control over the prices of commodities, and to provide whatever
    new or additional capital is required from time to time for
    Socialized industries.

    “ADMINISTRATION OF SOCIALIZED INDUSTRIES.—A principle of the
    greatest importance in Socialization is that control must be
    separated from administration. The control will be exercised
    by the popularly elected national assembly. The organ of
    administration in each industry or service must be entirely
    separate and distinct from those of the political government.

    “THE NATIONAL INDUSTRIES.—Each industry or service will require
    an organization appropriate to its special circumstances. As
    a general type it is suggested that a national industry or
    service should be provided with

    “(_a_) A national board to be composed of representatives of:

    “(1) the workers concerned in the industry;

    “(2) the management (including the technicians);

    “(3) the consumers and the community as a whole.

    “(_b_) Where considered necessary, also district councils for
    appropriate regional areas, to be similarly composed;

    “(_c_) Works’ committees for each factory, mine or other
    establishment.

    “In each national industry there will have to be separate
    machinery for collective bargaining between the management
    on the one hand, and each distinct vocation engaged in the
    industry or service on the other.

    “There should accordingly be a Joint Board for each vocation
    that has separately organized itself, whether in a trade union
    or a professional association. Each Joint Board should be
    composed in equal numbers of representatives of the management
    and representatives of the trade union or professional
    association concerned.

    “The Right to Strike—that is to say, to refuse collectively
    to continue to serve—cannot be denied to any man or woman
    consistently with freedom. When it is no longer a question
    of resisting the profit-making capitalist, but merely of
    obtaining from the community as a whole equitable conditions of
    employment and a proper standard of life, it may be expected
    that the public opinion of the community as a whole will be
    accepted as decisive.

    “MUNICIPAL SOCIALIZATION.—The large part of the industries and
    services of each community which will be in the hands of the
    local authorities will be directed by the popularly elected
    councils of the several localities, with participation in
    the management of their own services by representatives of
    the workers by hand or by brain. In municipal administration
    of industries and services there should be the same kind of
    machinery of Joint Boards for collective bargaining as in the
    national industries.

    “THE POLITICAL SYSTEM OF SOCIALISM.—The progressive
    disintegration of the capitalist system, which has been
    increasingly taking place during the years of war, and not less
    during the years of peace following the war, makes it ever more
    urgent that Labour should assume power in society. In the term
    Labour we include not merely the manual working wage-earners,
    but also the intellectual workers of all kinds, the independent
    handicraftsmen and peasant cultivators, and, in short, all
    those who co-operate by their exertions in the production of
    utilities of any kind.

    “1. It is an essential condition of this assumption of power
    by Labour that its ranks should be sufficiently united and
    that it should understand how to make use of the power in its
    hands.

    “2. Whilst the Congress repudiates methods of violence and all
    terrorism, it recognizes that the object cannot be achieved
    without the utilization by Labour of its industrial as well
    as its political power, and direct action in certain decisive
    conflicts cannot be entirely abandoned. At the same time, the
    Congress considers that any tendency to convert an industrial
    strike automatically into political revolution cannot be too
    strongly condemned.

    “3. The Socialist Commonwealth can come into existence only by
    the conquest by Labour of governmental power. The main work
    of a Labour Government will be to adopt, as the fundamental
    basis of its legislation and administration, both Democracy and
    Socialization.

    “Socialism will not base its political organization upon
    dictatorship. It cannot seek to suppress Democracy; its
    historic mission, on the contrary, is to carry Democracy to
    completion. The whole efforts of Labour, its Trade Union
    and Co-operative activities, equally with its action in the
    political field, tend constantly towards the establishment of
    Democratic institutions more and more adapted to the needs of
    industrial society, becoming ever more perfect and of higher
    social value.

    “It is to-day the forces of Labour that, in the main, ensure
    the maintenance of Democracy. Socialists will not allow
    factitious minorities, taking advantage of their privileged
    positions, to bring to naught popular liberty. Inspired by the
    great traditions of past revolutions, Socialists will be ready,
    without weakness, to resist any such attacks.

    “4. The franchise for a Socialist Parliament must be universal,
    applying with absolute equality to both sexes, without
    exclusions on grounds of race, religion, occupation, or
    political opinions. The supreme function of Parliament is to
    represent all the popular aspirations and desires from the
    standpoint of the community as a whole. It will deal with
    defence against aggression from without or within. It will
    be in charge of the property and also of the finances of the
    community.

    “It will make the laws, and administer the public business. The
    Ministers in charge of the various departments will be chosen
    from among its members; and the government of the nation will
    be its Executive Committee.

    “But it will be free to delegate particular powers and duties
    to any of the other organs of the community hereinafter
    mentioned, in order to secure the greatest possible
    participation of those personally engaged in each branch of
    social life. It will be for Parliament to safeguard not only
    the interests of the general public of consumers for whose
    representation on special boards and councils it will provide,
    but also the interests of the community as a whole in future
    generations.

    “5. It will be for Parliament to determine the general lines
    of social policy and to make the laws; it will decide to what
    industries and services the principle of Socialization shall
    be applied and under what conditions; it will exercise supreme
    financial control, and will decide upon the allocation of new
    and additional capital. In the last resort, it will exercise
    the power of fixing prices.

    “6. In the development and expansion of the productive life
    of the community, a large part will be played by the various
    organizations formed according to the productive occupations
    in which every healthy person will be engaged. Thus,
    provision must be made, in the manner hereinafter described,
    for the participation in the administration or service of
    representatives of all the different grades of workers, by hand
    or by brain, engaged in that particular industry or service.
    At the same time, each vocation, whether of workers by hand
    or of workers by brain, desires to regulate the conditions
    of its vocational life, whatever may be the industries or
    services among which its membership will find itself dispersed.
    Each distinct vocation may therefore group itself in a
    professional association, to which functions of regulation, of
    investigation, or of professional education may be entrusted by
    Parliament.

    “7. The organizations into which those engaged in the various
    industries and services will group themselves, whether trade
    unions or professional associations, may be made the basis of a
    further organ of social and economic life.

    “Alongside Parliament it may be desirable that there should be
    a National Industrial Council, composed of representatives of
    the various organizations of trades and professions into which
    the persons belonging to each occupation may voluntarily group
    themselves. Such a National Industrial Council would be free
    to discuss and criticize, to investigate and to suggest, and
    to present to Parliament any reports on which it may decide.
    Parliament may, from time to time, delegate to the National
    Industrial Council the drafting of measures applicable to
    industry as a whole, or of the regulations to be made under the
    authority of a statute.”


The Second International and Bolshevism

The British Labour Party was asked at the Geneva Conference to undertake
the responsibility of inviting all national Socialist and Labour bodies
not represented at Geneva to join like itself the Second International.
An appeal was sent out signed in December 1920, by Messrs. A. Henderson,
on behalf of the Labour Party, J. H. Thomas, and Harry Gosling, on
behalf of the Trades Union Congress, and Ramsay MacDonald, as British
International Secretary. This letter declared the position of the
Second International and also of the British Labour Party in regard to
Bolshevism in the following terms:

    “The great difficulty which confronts International Socialism,
    however, is the division of the movement into two camps as a
    result of the Russian Revolution of November 1918. Bolshevism
    tried to establish, not only over Russia, but over every other
    country in the world, the method of seizing political power
    by armed force, holding that power by the same means and
    changing the whole economic structure of society by decree
    and suppression. Since its first success in Russia, it has
    somewhat modified its position, and at the present moment in
    this country, it is informing its adherents that those who
    decry political methods are traitors to the cause of Communism,
    but that political action should be used solely to prove the
    abortiveness of the institutions which are to be captured.
    Obviously, such a compromise with the unclean thing is bound
    to defeat itself and will only make candidates who pursue such
    a policy ridiculous in the eyes of electors. It is political
    and revolutionary futility of the simplest kind. We do not
    wish, however, to argue out the matter. The policy may be more
    suitable to some countries than it is to ours, but obviously
    every Socialist who has any international instinct at all will
    see that an International based upon Moscow principles can
    never represent more than the smallest and least influential
    fraction of the Socialist movement in the various countries.
    The Second International has, therefore, rejected Bolshevism as
    the basis of its existence.

    “Moreover, the attempts made by Moscow to control national
    organizations not only in general Socialist policy, but in the
    details of their own national work, must prevent every such
    organization with any self-respect and any sense of national
    freedom from putting itself under such a yoke.”

The following statement as to the foundation upon which a Socialist
International should be constituted is also important:

    “There must be no doubt as to the basis upon which a
    Socialist International has to be built. It must secure to
    each Socialist group freedom to work in accordance with its
    own means towards its Socialist goal; there must be common
    determination to bring Socialism about; it must be prepared
    to give international support to all national strivings for
    liberty and self-government in ways determined by the nations
    themselves; it must in no way reject (as is now being attempted
    in some quarters) but unequivocally support the democratic
    method as that proper to the countries that have already
    gone through their political revolutions, and that have been
    put in possession of the political weapon by reason of the
    insurrectionary movements of their proletariat in days gone by.”


The Third or Moscow International

The Second International may accordingly be now regarded as
re-established, if not re-created, and the interesting speculation is
the extent to which it will secure the allegiance of Socialist parties
throughout the world as against the appeals of the Third International
or Moscow “Red” International. This latter deserves a short description.
In January 1919, just before the meeting of the Berne Conference, and
shortly after the Peace Conference at Paris had commenced, a wireless
invitation to the first Communist International Congress at Moscow was
sent out in the name of the Russian Communist Party, which was the name
adopted by the Russian Bolsheviks or Majority Social Democrats after the
Revolution of 1917. The Bolsheviks desired to distinguish themselves
clearly from Socialist or “social democratic” parties which, in various
belligerent countries, had supported their respective Governments. They
took the name from the Communist League for which Marx and Engels drew
up the famous Communist manifesto which they were commissioned to draw
up in November 1847, at the Congress of Communists in London. Lenin, in
his book, the _State and Revolution_, draws special attention to the
term “communist” as being more scientifically correct than the term
“social democrat” and endeavours to prove his point by quotations from
the manifesto. Following the lead of Moscow the various revolutionary
Socialist parties throughout the world have discarded their Socialist
appellations and called themselves Communists. One ought, therefore, to
realize that the term “Communism” has now taken on a new and different
meaning from its earlier significance. To-day Communism means the
principles of Marxian revolutionary Socialism and a scheme of social
and industrial organization constructed on those principles which are
peculiar to the Bolshevik regime in Soviet Russia. In his admirable
little book, the _Two Internationals_, which deals with the complex
subject most clearly and with very full documentation, Mr. R. Palme
Dutt very properly says that “care must be taken to distinguish this
sense of Communism from the sense in which it has been more generally
used in this country, namely, (1) the Communist Anarchism of Kropotkin,
(2) the conception of the abolition of all personal property, (3)
decentralization under a system of loosely associated local communes.
Communism corresponds rather to what is often referred to as ‘scientific
socialism,’ only with a special emphasis on its revolutionary aspect.”

The First Communist International Congress was held at Moscow in March
1919. It is called the Third International or Communist International;
its constitution will be found in the _Labour International Handbook_,
1921, page 190. Shortly stated its purposes are the overthrow of
capitalism, the establishment of the dictatorship of the proletariat and
of the International Soviet Republic; the complete abolition of classes
and the realization of revolutionary Socialism. Twenty-one conditions of
membership, together with instructions for its members, are laid down,
some of which are peculiarly illuminating as to Communist principles.
Condition 3 says that “the class-struggle in almost every country of
Europe and America is reaching the threshold of civil war. Under such
circumstances the Communist can have no confidence in bourgeois laws.
They should create everywhere a parallel illegal machinery which at
the decisive moment will do its duty by the party and in every way
possible assist the revolution. In every country where, in consequence
of martial law or other exceptional laws, the Communists are unable to
carry on their work lawfully, a combination of legal and illegal work is
absolutely necessary.”

The Communist Party of Great Britain is affiliated to the Third
International, but the Independent Labour Party of this country,
although it seceded from the Second International, refused to join the
Third International, and published a scathing criticism of Bolshevism or
Communism which appeared in the _Labour Leader_ of December 18, 1919. The
Independent Labour Party is affiliated to yet another International, the
body known as the Vienna International or the “Two and a Half.”

I have set out these details in order to show the nature and the extent
of the home and international socialistic programme which the Labour
Party has pledged itself, if given the opportunity, to carry into
operation.




CHAPTER VII

THE LABOUR PARTY’S ADOPTION OF SOCIALISM

5. APPROVAL OF DIRECT ACTION.

    The Meaning and Qualities of Direct Action—Direct Action on the
    Clyde, 1916—Conversion of the Labour Party to Use of Direct
    Action-Establishment of the Council of Action—Setting-up of
    Local Soviets.


Perhaps the greatest menace to ordered constitutional government is the
Labour Party’s acceptance of the method of direct action for enforcement
of its policy upon an unconforming community. Many distinguished leaders
of the Party have declared against the social dangers of wielding such a
weapon, but in spite of such admonitions the Party has resorted to it,
and created an elaborate machinery for its application; whereupon those
distinguished leaders turned round and supported it as forcibly as they
previously condemned it. Once any section of the nation becomes addicted
to the facile use of such a species of organized tyranny—because it is
nothing else—however humanitarian be the alleged aim or purpose, the
death-knell of law and order has been sounded.


The Meaning and Qualities of Direct Action

In the revised edition of their _History of Trade Unionism_ (1920) Mr.
and Mrs. Sidney Webb point out (p. 664) that when they published in 1897
their _Industrial Democracy_ the term “direct action” was unknown. In
point of fact, this name for the principle or practice of social coercion
through economic pressure made its advent into this country from France
and the United States of America in 1905. By 1912 it had passed into
full currency among advanced sections of organized Labour in Scotland
and parts of England, and in practice almost invariably implies either a
sectional Strike by a particular group or groups of labour, or a general
strike by all groups of labour combined. All strikes are not, however,
direct action. Wage-earners reasonably contend that as any individual
workman has the right to refuse to enter into or continue under a
contract of service, any group of workmen or all groups acting together
in a strike are entitled to exercise a like freedom. Mr. and Mrs. Webb
are disposed to call such a strike “an economic strike” and to use the
phrase a “non-economic strike” to designate a strike undertaken “not
for an alteration in the conditions of employment of any section of the
trade union world, but with a view to enforce, either on individuals, on
Parliament, or on the Government, some other course of action desired by
the strikers.” It is only strikes of the latter type that they place in
the category of direct action; in other words, they make the purpose of
the strike the test. That is too limited a definition of direct action,
but it would include such a case as the refusal in 1917 of the National
Union of Sailors and Firemen to work vessels by which two members of
the Labour Party were preparing, at the instance of the Government, to
travel on their way to Petrograd; also a like refusal of the same Union
in 1918 to carry Mr. Arthur Henderson and M. Camille Huysmans across the
Channel _en route_ for Paris, the object of the Union being to prevent
the organization of an International Socialist Conference. Another case
of the same kind was the action of the Electrical Trades Union in 1918
in “calling out” their members engaged in the Albert Hall in London
with instructions to appropriate the fuses—which did not belong to
them—so as to keep the Hall in darkness and prevent it being used for
any purpose, as a reprisal against the proprietors for cancelling the
letting of the Hall for a Labour demonstration. Further illustrations
of the “non-economic strike” were the threats of the compositors and
printers in certain London newspaper offices to cease work during the
railway strike in 1919 because of the adverse criticism of the railwaymen
by the editorial staff; the threat of the miners to close down the coal
mines in 1919 unless compulsory military service was abolished, and
unless military and naval action by the British Government against the
Soviet Government of Russia was discontinued; the scheme for a strike
put forward by the miners in August and September 1920 under the guise
of a claim for increased wages, but really for the political purpose of
forcing the nationalization of the coal industry.

The very name “direct action” indicates that the action in question
is alternative to some other action regarded as indirect, which is
invariably the orderly method of procedure, prescribed by industrial
agreement, or by the rules of the Trade Union, or by the Constitution
of the country. Hence, in my opinion, the fundamental quality of direct
action is its anarchic character. Some groups or individuals in the
Labour movement resort to anarchic action in preference to orderly
procedure, deliberately as recalcitrant minorities, who, bound by the
formal agreement of majorities, intend to prevent the view of the
majority being carried into effect. Others, impatient reformers who
regard orderly methods as too cumbersome and dilatory, and are either not
able or not prepared to work for gradual amendment, follow their example.
And one further sees direct action adopted with the ulterior object
of wrecking existing craft Trade Union organization, as for instance
by revolutionary Unionists in old skilled Unions like the Amalgamated
Engineering Union, or by revolutionary Syndicalists who wish to exercise
and develop all the latent power of manual workers so that the weapon of
the general strike may be sharp and bright on the day when it is to be
used to hack down the Constitution, and usher in the social revolution.
These, however, are special reasons. In the minds of great and slow
thinking sections of Labour, direct action has come to be regarded as the
easiest and quickest, sometimes as the only, road to political power.
Labour is greedy for political power; it intends to make its political
fortune, in the words of Horace, “_Si possis, recte; si non, quocunque
modo...._”

The anarchic character of direct action constitutes its real danger far
more than its non-economic purpose, if the purpose be non-economic,
which it very frequently is not. Just as any anarchic method betokens,
so does it beget, a lawless as distinguished from law-abiding quality
of mind. Human nature is not lawless in one sphere of its activity and
constitutionally minded in another, anarchic, for example, in industrial
affairs and orderly in politics. The same strain runs right through;
an undisciplined individual makes as bad a citizen as he does a Trade
Unionist. It was the anarchic character of direct action that impressed
itself most strongly on the writer’s mind during the anxious years
1914-1918 before any non-economic strikes such as those described above
had occurred.


Direct Action on the Clyde, 1916

Take for instance the strikes of March to April 1916, in the engine shops
of Clydeside, which the writer had to handle. The Government had made
with the Trade Unions the “Treasury” Agreements of March 1915, providing
for the suspension of Trade Union customs in order to accelerate and
increase output. The Amalgamated Society of Engineers Executive Council
had formally submitted the agreements by ballot to its members, who
by a large majority had accepted them. Acting under the agreements the
Government proceeded to introduce women into engineering shops throughout
the country with the co-operation of the A.S.E. Executive. But on
Clydeside members of the A.S.E. refused to allow women to enter the shops
on the agreed conditions, or at all.

Many of the shop stewards[5] in the engineering shops on Clydeside were
members of the Socialist Labour Party. The principles of the S.L.P.,
copied from those of the I.W.W., involve (see p. 54) class-warfare,
the destruction of the official Trade Unions and of all industrial
organizations except those of a similar type and creed to the I.W.W.
itself, the overthrow of all existing forms of constitutional government
and their replacement by a government of manual workers. The method
to be employed is direct action. Mr. Beer, in his _History of British
Socialism_ (Vol. II, p. 393), says: “The S.L.P. theories came nearest to
those of Lenin and Trotsky.”

On Clydeside in March 1916, the S.L.P. shop stewards saw their
revolutionary opportunity. The writer held innumerable conferences with
them trying to introduce harmoniously the agreed scheme of dilution
of labour, but as fast as he made progress with the assistance of the
Executive Council of the A.S.E. and their local Glasgow officials, it was
countered by preparations for obstructive direct action. Finally, the
direct actionists matured their plans. It is a principle of theirs always
to use the sharpest weapons. There was one immediately to hand. The
army in France was in dire need of heavy howitzers to smash the system
of trenches which the Germans had commenced to consolidate; Mesopotamia
urgently required flat-bottomed barges. These two classes of munitions
were being manufactured in engineering shops and shipyards on the Clyde.
The direct actionists therefore brought out, or tried to bring out, on
strike, all employees in every shop and yard where the howitzers or any
part of the howitzers or the flat-bottomed barges were in course of
construction, with almost complete success, and with disastrous national
results. But the Government met direct action by action more direct,
and deported from the Clyde the ringleaders, and the strike collapsed.
In this direct action strike the purpose was to nullify the agreement
between the Government and the Trade Unions as to the introduction
of women into the engineering trade, and to destroy the old craft
organizations of the A.S.E. and set up a new industrial organization for
that trade. The purpose, therefore, was economic, but the method was
anarchic.

Subsequently, the Clyde Workers’ Committee (a committee of Clydeside
shop stewards working in co-operation with the Socialist Labour
Party) established revolutionary Workers’ Committees in various
parts of England, and were behind similar direct action unofficial
strikes, repudiated by the Executives of all the Unions concerned, in
Barrow-in-Furness in June 1916, on the Mersey in the autumn of 1916, in
the engineering shops of England in May 1917, and at other times. These
were all economic strikes against trade agreements and arrangements
constitutionally concluded between the Government and the Unions. That
such anarchic strikes are entirely subversive of all law, order and
government in a Trade Union organization as well as in the body politic
needs no emphasis. They are just as dangerous to society as any strike
regularly declared by a Trade Union for a non-economic purpose.


Conversion of the Labour Party to Use of Direct Action

But to revert to the non-economic strike: Mr. and Mrs. Sidney Webb, who
have a wide knowledge of the currents and under-currents of opinions in
the industrial world, say on p. 672 of their _History of Trade Unionism_
(1920):

    “With regard to a general strike of non-economic or political
    character, in favour of a particular home or foreign policy,
    we very much doubt whether the Trades Union Congress could
    be induced to endorse it, or the rank and file to carry it
    out, except only in case the Government made a direct attack
    upon the political or industrial liberty of the manual
    working-class, which it seemed imperative to resist by every
    possible means, not excluding forceful revolution itself.”

The kind of direct attack by the Government which the writers had in mind
was action such as disfranchisement of the bulk of the manual workers, or
deprivation of the Trade Unions of their present rights and liberties, or
confiscation of their funds. Short of attempted measures like these, it
was the considered opinion of those eminently competent writers, looking
out over the Trade Union world as recently as the autumn of 1919, that
direct action would be rejected by the Trades Union Congress. But the
Portsmouth Congress of 1920 was yet to come.

The specific issue of direct action, in connection with the operations
against Russia, was brought before the Trades Union Congress in
September 1919, but was strategically shelved. Resolutions were, however,
passed demanding the cessation of operations against Russia and the
nationalization of coal. To enforce these demands, the Parliamentary
Committee was instructed in the former case to call a special Trades
Union Congress to decide what action should be taken; in the latter to
decide “the form of action to be taken to _compel_ the Government.”
This special Congress was held on December 9, 1919—by that time
nationalization had become the real issue—but pending the effect of
more forcible propaganda, direct action to enforce nationalization was
deferred until March 1920. In March, another special Congress was held
at which two means of enforcing nationalization were outlined to the
Congress—one a general strike, the other intensive political propaganda.
Congress decided (p. 63) on a card vote against direct action and in
favour of intensive political propaganda in preparation for a General
Election.

The solidarity of the Party was seriously endangered by the decision; the
direct actionists included influential sections of miners, railwaymen,
transport workers and engineers, to many of whom direct action had become
an article of belief. Many moderates and extremists, therefore, strove
to find an issue on which direct actionists and constitutionalists could
be persuaded to co-operate. The production of munitions of war for use
in Ireland and against Russia was chosen as the issue. It was cleverly
contrived, and at a special meeting of the Trades Union Congress in July
1920, a resolution was passed in favour of a general strike to compel the
Government to desist from armed intervention in Ireland and in Russia,
and instructing the affiliated Unions to make the necessary domestic
arrangements for such a strike. Moderate Labour was thus impaled on the
horns of an adroit dilemma, and the more pacificist it was, the more it
was impelled to vote for direct action. The Labour Party congratulated
itself that it had restored its all-essential solidarity; but the
solidarity achieved was more apparent than real—Trade Union domestic
arrangements for a general strike progressed with no enthusiasm.

Then came the Polish imbroglio which the extremists exploited to the
full in order to establish direct action as the recognized weapon
of organized Labour in this country. It is important to follow this
development. On August 6, 1920, the Labour Party, without the slightest
justification, publicly charged the Government with meditating a war
against Soviet Russia in support of Poland, and claimed that the workers
would be justified in refusing to render labour services in such a
war. A special emergency meeting of the Parliamentary Committee of the
Trades Union Congress, the National Executive of the Labour Party, and
the Parliamentary Labour Party met on August 9. “It felt certain,” so
the resolution ran, “that war was being engineered between the Allied
Powers and Soviet Russia,” and “warned the Government that the whole
industrial power of the organized workers would be used to defeat this
war.” Arrangements were made for a national conference of Labour, and all
affiliated organizations were advised to instruct their members to “down
tools” on instructions to that effect from the national conference.


Establishment of the Council of Action

On August 13, 1920, the national conference met, 689 representatives
of Trade Union executive committees, and 355 representatives of Local
Labour Party organizations and Trade councils. Three resolutions were
unanimously carried. The first endorsed the creation of the Council of
Action which had been formed on August 9 representing the Parliamentary
Labour Party, the Parliamentary Committee of the Trades Union Congress
and the Executive of the Labour Party. The second continued the Council
in being until it had secured: (1) a guarantee there should be no
military or naval intervention against the Soviet Government; (2) the
withdrawal of all British naval forces “operating directly or indirectly
as a blockading influence against Russia”; (3) “the recognition of the
Russian Soviet Government, and the establishment of unrestricted trading
and commercial relationship between Great Britain and Russia.” It also
authorized the Council to order any and every form of withdrawal of
labour which circumstances might require to give effect to the foregoing
policy, and called for swift, loyal and courageous action by every
Trade Union official, executive committee, local council of action, and
membership in general, in response to such an order. The third resolution
authorized the Council to take any steps necessary to give effect to the
decisions of the conference, and to “the declared policy of the Trade
Union and Labour movement.”

The effect of these resolutions was clear. Trade Unions handed over
their executive responsibility to the Council of Action, or “Committee
of National Security,” as one speaker called it. This Council could then
impose its will upon the nation through the direct action of seizing it
by the throat. That the will may be thought beneficent does not alter in
the slightest the anarchic quality of the action. The Chairman of the
Parliamentary Committee of the Trades Union Congress, in proposing the
second resolution, put it plainly: “Giving effect to this resolution does
not mean a mere strike; it means a challenge to the whole Constitution of
the country.” The report says there were prolonged cheers. He reiterated
the same statement at the subsequent meeting of the Trades Union Congress
in Portsmouth. The Chairman of the Executive Committee of the Labour
Party, in seconding the first resolution, was even more explicit:

    “When the action referred to was taken, if too much
    interference was attempted they might be compelled to do things
    that would cause the present authorities (i.e. the Government)
    to abdicate. They might be forced to tell them that if they
    could not run this country in a peaceful manner without
    interfering with other nations, they might be compelled,
    against all constitutionalism, to chance doing something to
    take the country into their own hands.”

There is nothing confused in this outlook. The speaker regarded direct
action as the method by which to achieve his ends. The Labour Party would
become the Government without the ordinary preliminary of a General
Election. The outsider wonders why the “International,” which was sung
immediately after the passing of the first and third resolutions, was
omitted after the second.

The whole of the Labour argument for this official inauguration of
direct action turned on the assumption that the Bolshevik Government
was standing in a white sheet and contemplated no ulterior threat to
Polish independence. Labour accepted Bolshevik professions to this
effect with credulous alacrity. Then came the amazing _dénouement_. It
turned out that, with characteristic Bolshevik duplicity, there had
been deleted from the draft of the proposed peace terms, communicated
to England, certain vitally important articles going to the root of
Polish independence, which, however, were inserted in that presented by
the Bolsheviks to the Poles at Minsk on August 19. The doctored English
version, after specifying the strength to which the Polish Army was to be
cut down, provided that all arms over and above those required for the
needs of the army as so reduced, “as well as of the Civic Militia,” were
to be handed over to Russia. In the Minsk version, the Civic Militia was
the crux of the terms; it was to be recruited from one class only, _the
workers_; to be in strength four times that of the regular Polish army,
and armed; in other words, a Red Army in Poland. This exactly enforced
Section 8 of Lenin’s Third International Constitution, which stipulates
for the “disarmament of the bourgeoisie and the arming of the workers
to defend Communism until Capitalism shall finally have been abolished.”
There was in truth at no time any argument from Poland to support direct
action. The reason for its adoption was far more accurately stated by
Mr. Robert Williams, the Secretary of the National Transport Workers’
Federation, a leading member of the notorious Council of Action. In
the _Daily Herald_ for August 25, 1920, he is reported to have said as
follows:

    “We felt that with the policy of Mr. Lloyd George, which sways
    to and fro according to events, we were menaced with war from
    the moment that the Poles were in peril. Together with several
    friends we drew up a manifesto which even the Conservatives
    among the Labour leaders signed, because they recognized
    clearly that they could no longer oppose the advanced elements
    _which had for so long insisted on the employment of direct
    action_.”

This recalls Lord Bacon’s aphorism on faction: “It is often seen that a
few that are stiff do tire out a greater number that are more moderate.”
The extremists had been struggling for ten years to establish the
adoption of direct action under all circumstances as Labour’s normal
weapon of attack. They succeeded because the chief anxiety of Labour
leaders, whether advancing at the head or running at the heels of their
flock, is always, at any price, to secure or conserve solidarity.


Setting-up of Local Soviets

Over 350 Local Councils of Action, in many districts called Soviets, were
organized to carry out the instructions of the central Council of Action.
Somewhat amusing was it to see how quickly the Council of Action, when
it realized that public opinion was setting strongly against it, at once
disclaimed any intention of calling a general strike in support of Soviet
Russia. All it intended at the utmost “was to veto the manufacture or
transport of munitions or equipment for the Poles,” The Council quickly
appreciated that the nation would not tolerate the application in this
country of revolutionary methods. One of the reasons advanced for the
formation of the Council of Action was to “prevent interference by the
British Government in the affairs of Soviet Russia,” No sooner, however,
was it formed, than two delegates[6] of the Council went to Paris, there
to interfere between the French Government and French Labour. A little
logic was infused into them by the French Government, who promptly
ordered them out of France.




CHAPTER VIII

THE LABOUR PARTY’S INDUSTRIAL AND LAND POLICY

1. DETAILS OF THE PROPOSALS

    The Industries and Businesses to be Nationalized—Extension
    of Municipal Enterprise—Control of Capitalistic Industries
    and Businesses—Labour’s Agricultural Policy—Abolition
    of Landlordism—Councils for Agriculture—A Legal Minimum
    Agricultural Wage—Workers’ Control of Agriculture.


We have already given a general outline of Labour’s policy; it
now remains to set out its particular proposals in regard to the
reconstruction of industry. These we take from _Labour and the New Social
Order_, published in 1918. If, as is not unlikely, readers feel aggrieved
by want of definiteness, it is not the fault of the author, but of the
Labour Party.


The Industries and Businesses to be Nationalized

“The Labour Party stands not merely for the principle of the common
ownership of the nation’s land, to be applied as suitable opportunities
occur, but also, specifically, for the immediate nationalization of
railways, mines, and the production of electrical power. We hold that
the very foundation of any successful reorganization of British industry
must necessarily be found in the provision of the utmost facilities for
transport and communication, the production of power at the cheapest
possible rate, and the most economical supply of both electrical
energy and coal to every corner of the kingdom. Hence the Labour Party
stands, unhesitatingly, for the national ownership and administration
of the railways and canals, and their union, along with harbours and
roads, and the posts and telegraphs—not to say also the great lines
of steamers which could at once be owned, if not immediately directly
managed in detail, by the Government—in a united national service of
Communication and Transport, to be worked, unhampered by capitalist,
private or purely local interests (and with a steadily increasing
participation of the organized workers in the management, both central
and local), exclusively for the common good. If any Government should
be so misguided as to propose, when peace comes, to hand the railways
back to the shareholders; or should show itself so spendthrift of the
nation’s property as to give these shareholders any enlarged franchise
by presenting them with the economies of unification or the profits of
increased railway rates; or so extravagant as to bestow public funds on
the re-equipment of privately-owned lines—all of which things are now
being privately intrigued for by the railway interests—the Labour Party
will offer any such project the most strenuous opposition. The railways
and canals, like the roads, must henceforth belong to the public, and to
the public alone.”

“In the production of electricity, for cheap power, light and heating,
this country has so far failed, because of hampering private interests,
to take advantage of science. Even in the largest cities we still
‘peddle’ our electricity on a contemptibly small scale. What is called
for, immediately after the war, is the erection of a score of gigantic
‘super-power stations,’ which could generate, at incredibly cheap rates,
enough electricity for the use of every industrial establishment and
every private household in Great Britain, the present municipal and
joint-stock electrical plants being universally linked up and used for
local distribution. This is inevitably the future of electricity. It
is plain that so great and so powerful an enterprise affecting every
industrial enterprise, and, eventually, every household, must not be
allowed to pass into the hands of private capitalists. They are already
pressing the Government for the concession, and neither the Liberal nor
the Conservative Party has yet made up its mind to a refusal of such a
new endowment of profiteering in what will presently be the life-blood of
modern productive industry. The Labour Party demands that the production
of electricity on the necessary gigantic scale shall be made, from the
start (with suitable arrangements for municipal co-operation in local
distribution), a national enterprise, to be worked exclusively with the
object of supplying the whole kingdom with the cheapest possible power,
light and heat.”

“But with railways and the generation of electricity in the hands of the
public, it would be criminal folly to leave the present 1,500 colliery
companies the power of ‘holding up’ the coal supply. These are now all
working under public control, on terms that virtually afford to their
shareholders a statutory guarantee of their swollen incomes. The Labour
Party demands the immediate nationalization of mines, the extraction
of coal and iron being worked as a public service (with a steadily
increasing participation in the management, both central and local, of
the various grades of persons employed), and the whole business of the
retail distribution of household coal being undertaken as a local public
service, by the elected municipal or county councils. And there is no
reason why coal should fluctuate in price any more than railway fares,
or why the consumer should be made to pay more in winter than in summer,
or in one town than another. What the Labour Party would aim at is, for
household coal of standard quality, a fixed and uniform price for the
whole kingdom, payable by rich and poor alike, as unalterable as the
penny postage-stamp.”

“But the sphere of immediate nationalization is not restricted to these
great industries. We shall never succeed in putting the gigantic system
of Health Insurance on a proper footing, or secure a clear field for
the beneficent work of the Friendly Societies, or gain a free hand for
the necessary development of the urgently called for Ministry of Health
and the Local Public Health Service, until the nation expropriates the
profit-making industrial insurance companies, which now so tyrannously
exploit the people with their wasteful house-to-house industrial life
assurance. Only by such an expropriation of life assurance companies
can we secure the universal provision, free from the burdensome toll of
weekly pence, of the indispensable funeral benefit. Nor is it in any
sense a ‘class’ measure. Only by the assumption by a State Department of
the whole business of life assurance can the millions of policy-holders
of all classes be completely protected against the possibly calamitous
results of the depreciation of securities and suspension of bonuses which
the war is causing. Only by this means can the great staff of insurance
agents find their proper place as civil servants, with equitable
conditions of employment, compensation for any disturbance and security
of tenure, in a nationally organized public service for the discharge of
the steadily increasing functions of the Government in vital statistics
and social insurance.”

“In quite another sphere the Labour Party sees the key to temperance
reform in taking the entire manufacture and retailing of alcoholic
drink out of the hands of those who find profit in promoting the utmost
possible consumption. This is essentially a case in which the people, as
a whole, must assert its right to full and unfettered power for dealing
with the licensing question in accordance with local opinion. For this
purpose, localities should have conferred upon them facilities:—

    “(_a_) To prohibit the sale of liquor within their boundaries;

    “(_b_) To reduce the number of licences and regulate the
    conditions under which they may be held; and

    “(_c_) If a locality decides that licences are to be granted,
    to determine whether such licences shall be under private or
    any form of public control.”


Extension of Municipal Enterprise

“Other main industries, especially those now becoming monopolized,
should be nationalized as opportunity offers. Moreover, the Labour Party
holds that the municipalities should not confine their activities to the
necessarily costly services of education, sanitation and police; nor yet
rest content with acquiring control of the local water, gas, electricity
and tramways; but that every facility should be afforded to them to
acquire (easily, quickly and cheaply) all the land they require, and to
extend their enterprises in housing and town planning, parks and public
libraries, the provision of music and the organization of recreation;
and also to undertake, besides the retailing of coal, other services of
common utility, particularly the local supply of milk, wherever this is
not already fully and satisfactorily organized by a Co-operative Society.”


Control of Capitalistic Industries and Businesses

“Meanwhile, however, we ought not to throw away the valuable experience
now gained by the Government in its assumption of the importation of
wheat, wool, metals and other commodities, and in its control of the
shipping, woollen, leather, clothing, boot and shoe, milling, baking,
butchering, and other industries. The Labour Party holds that, whatever
may have been the shortcomings of the Government importation and control,
it has demonstrably prevented a lot of ‘profiteering.’ Nor can it end
immediately on the declaration of peace. The people will be extremely
foolish if they ever allow their indispensable industries to slip back
into the unfettered control of private capitalists, who are, actually at
the instance of the Government itself, now rapidly combining trade by
trade, into monopolist Trusts, which may presently become as ruthless
in their extortion as the worst American examples. Standing as it does
for the democratic control of industry, the Labour Party would think
twice before it sanctioned any abandonment of the present profitable
centralization of purchase of raw material; of the present carefully
organized ‘rationing,’ by joint committees of the trades concerned,
of the several establishments with the materials they require; of the
present elaborate system of ‘costing’ and public audit of manufacturers’
accounts, so as to stop the waste heretofore caused by the mechanical
inefficiency of the more backward firms; of the present salutary
publicity of manufacturing processes and expenses thereby ensured; and,
on the information thus obtained (in order never again to revert to the
old-time profiteering) of the present rigid fixing, for standardized
products, of maximum prices at the factory, at the warehouse of the
wholesale trader, and in the retail shop. This question of the retail
prices of household commodities is emphatically the most practical of
all political issues to the woman elector. The male politicians have
too long neglected the grievances of the small household, which is the
prey of every profiteering combination; and neither the Liberal nor the
Conservative Party promises, in this respect, any amendment. This, too,
is in no sense a ‘class’ measure. It is, so the Labour Party holds, just
as much the function of Government, and just as necessary a part of the
democratic regulation of industry, to safeguard the interests of the
community as a whole, and those of all grades and sections of private
consumers, in the matter of prices, as it is by the Factory and Trade
Boards Acts, to protect the rights of the wage-earning producers in the
matter of wages, hours of labour and sanitation.”


Labour’s Agricultural Policy

An official pamphlet called the _Labour Party and the Countryside_
states Labour’s agricultural policy “as settled by representatives of
the Party’s 300,000 affiliated agricultural members.” With pride it is
announced that members engaged in industry and living in towns had no
finger in it. It is claimed to be the fruit of practical experience—the
conclusion of experts. Endorsed by the National Executive of the Labour
Party, it is stated to crystallize the principles upon which the Party
will deal with agricultural and rural problems. The basis is to be the
non-sectarian principle of “increased production of food stuffs by the
employment of more British labour on better cultivated British land.”
The Coalition Government is charged with repudiating this principle and
with having perpetrated in 1921 a shameless and scandalous deceit in
“scrapping” the Corn Production Acts, 1917 and 1920.


Abolition of Landlordism

First and foremost, land is to be nationalized. Many evils and much
oppression are attributed to private ownership. Landlords have obstructed
every measure of land reform; thwarted food production; obstructed
housing, small holdings and land reclamation; demanded extortionate
prices for land for public needs and appropriated as unearned increment
a large part of the value of every tenant’s improvement. “For the Labour
Party” therefore “the substitution of public for private ownership in
land (subject to equitable treatment of each person whose property is
required for the public good and to a proper security of tenure for
the home and the homestead) underlies in principle all its specific
proposals.”


Councils for Agriculture

Councils for agriculture are to be constituted for each county, one-third
thereof elected by farmers, another one-third by farm labourers and
the remaining one-third nominated “by the various public authorities
in the county, including the county council, to represent the public
interest.” Some good work is credited to the existing county agricultural
committees, but they are condemned as hampered by their constitution.
Members of the councils would receive travelling expenses and payment for
time spent on public service. The primary duty of each council would be
to supervise farming in the county and secure and maintain an all round
improvement in cultivation, an increase in the area under plough and an
aggregate increase in the production of food stuffs. In the event of bad
farming, councils would have power to take over the land and cultivate it
in the public interest. A Central National Council of Agriculture would
advise the Minister of Agriculture.


A Legal Minimum Agricultural Wage

A legal minimum wage (whether on a national or district basis is not
stated, but presumably the latter) and standard conditions of employment
are to be established for every farm, market garden and fruit orchard
worker and gardener in domestic employment, to all of whom the National
Unemployment Insurance Scheme would be extended. This in the first
instance is to be effected by re-establishing the National Wages
Board and County Wages Committees of the Ministry of Agriculture, the
abolition of which in 1921 is characterized as a “flagrant breach of
faith.” The fund out of which increased wages are to be paid is to be
created out of the profits of better farming, increased production,
organized marketing, less costly transport, lower retail prices of
farmers’ supplies and the elimination of profits now taken by unnecessary
middlemen. A national scheme of insurance managed on a co-operative basis
by agriculturalists themselves is to be established against the risk of
unfavourable weather and sudden falls in world prices.


Workers’ Control of Agriculture

“Democratic control” is to be introduced into the agricultural industry
as in other industries, “to supersede the economic dependence of the
agricultural worker on the farmer for employment and livelihood with the
implication of inferiority involved.” The operation of the councils of
agriculture is to be a step towards that end. But the statement of policy
is prudently non-committal and the full meaning of “democratic control”
and its implications, so far as agriculture is concerned, receives no
explanation.




CHAPTER IX

THE LABOUR PARTY’S INDUSTRIAL AND LAND POLICY

2. A CRITICISM

    What Capitalism Is—Our Debt to Capitalism—The Alleged
    Defects of Capitalism—Where Reform is Admittedly Needed—The
    Failure of Past Socialistic Experiments—Limits within which
    Nationalization is Practicable—The Different Schemes of Land
    Nationalization—The Taxing-out Scheme—The State Purchase
    Scheme—The Socialistic Confiscation Schemes—The Conceptions
    Underlying Each Scheme—The Disadvantages of State Ownership of
    Land.


We propose now to offer some broad criticisms upon Labour’s Industrial
and Land Policy.


What Capitalism Is

The primary object, as we have shown, of the Labour Party is to abolish
capitalism. What, therefore, do we understand by that? It cannot be
better described than has been so admirably done by that distinguished
writer, Mr. Hartley Withers, in the _Case for Capitalism_, p. 13:

    “The present system under which we work and exchange our work
    for that of others is that commonly described as Capitalism.
    Under it each one, male or female, can choose what work he
    will try to do and what employer he will try to serve; if he
    does not like his job or his employer, he can leave it or him
    and try to get another. He cannot earn unless he can do work
    that somebody wants to buy, and so he competes with all other
    workers in producing goods or services that others want and
    will pay for. His reward depends on the success with which
    he can satisfy the wants of others. Whatever money he earns
    in return for his labour he can spend as he chooses on the
    purchase of goods and services for his own use or for that of
    his dependents, or he can invest it in opening up a business or
    industry on his own, account, or in shares and debts of public
    companies, and debts of Governments or public bodies; these
    securities will pay him a rate of profit or interest if the
    companies or debtors prosper and are solvent. Whatever money
    he earns by labour or by investment he can, after paying such
    taxes on it as the State demands, hand on to any heirs whom he
    may name.

    “The system is thus based on private property, competition,
    individual effort, individual responsibility and individual
    choice. Under it, all men and women are more or less often
    faced by problems which they have to decide and, according as
    their decision is right or wrong, their welfare and that of
    their dependents will wax or wane. It is thus very stimulating
    and bracing, and might be expected to bring out the best effort
    of the individual to do good work that will be well paid so
    that he and his may prosper and multiply. If only every one had
    a fair start and began life with an equal chance of turning his
    industry and powers to good account, it would be difficult to
    devise a scheme of economic life more likely to produce great
    results from human nature as it now is; by stimulating its
    instincts for gain and rivalry to a great output of goods and
    services and by sharpening its faculties, not only for exercise
    in this purely material use, but also for solving the bigger
    problems of life and human intercourse that lie behind it.”

The capitalistic system dates from the Industrial Revolution (1780-1830),
when domestic industry was replaced by factory production. Since those
days, as Labour was plentiful and ill-organized and capital more
difficult to obtain, the capitalist occupied relatively to the worker
a stronger position in industry. This transient incident is what Mr.
Sidney Webb in his _A Constitution for a Socialist Commonwealth of Great
Britain_ describes as “the central wrong of the Capitalist System”:—

    “But the central wrong of the Capitalist System is neither the
    poverty of the poor nor the riches of the rich: it is the power
    which the mere ownership of the instruments of production gives
    to a relatively small section of the community over the actions
    of their fellow citizens and over the mental and physical
    environment of successive generations. Under such a system
    personal freedom becomes, for large masses of people, little
    better than a mockery. The tiny minority of rich men enjoy,
    not personal freedom only, but also personal power over the
    lives of other people; whilst the underlying mass of poor men
    find their personal freedom restricted to the choice between
    obeying the orders of irresponsible masters intent on their own
    pleasure or their own gain, or remaining without the means of
    subsistence for themselves and their families.”


Our Debt to Capitalism

Labour’s proposal, therefore, is to abolish capitalism and replace it
by that brand of Socialism known as “nationalization and democratic
control.” We should first realize what we owe to the capitalism which
we are asked to destroy. Our first debt is certainly liberty. This is
convincingly worked out by Mr. Harold Cox in his _Economic Liberty_, p.
2. Liberty to possess and use property consistently with the good of the
community, liberty to buy, to sell, to work, to strike, in fact complete
liberty in all economic relations. This is to be surrendered and replaced
by the bureaucratic control of the State Socialist, or the equally
autocratic control under the scheme of the Guild Socialist. Liberty is
a prize not hastily to be relinquished. This capitalistic system is not
the selfish system as described by Labour. It can only exist provided
it supplies commodities and services, of which the community stands in
need, at prices which the community can afford to pay. That is no light
responsibility. One of the necessary consequences of any socialistic
organization of industry is that the community must use and pay for such
commodities as it is convenient and desirable for industry to produce;
under any socialistic regime, therefore, the consumer, instead of being
an object of regard, becomes a mere wheel in the mechanism of production.

The capitalistic system develops energy and thrift, though the former
has been largely neutralized by the sterilizing effect of Trade Union
doctrines against output, and the latter frustrated by the inability
of industry as a result of production thus restricted to pay high
wages. Under a socialistic regime the worker is to receive not wages
but “pay” and whether he works or not. All progress in industry depends
upon initiative and enterprise and the readiness to take risks. To-day
risks are assumed by the owner of capital and, if they materialize,
they are borne by him and not by the workers or the community. It would
be ludicrous to say that either the State under State Socialism or
industry under any form of democratic control would or could exert the
same initiative or show the same enterprise as the private capitalist.
Economic history teems with examples of great industries now employing
thousands of workers which were originally established by capitalists
who, stubbornly persistent, refused to accept failure and by sheer
dogged enterprise won through. The world has wonderfully prospered under
the capitalistic organization in industry. We see social conditions
enormously improved, innumerable social reforms effected, the welfare
and well-being of the people prodigiously advanced. Sir Josiah Stamp—an
outstanding authority—said in 1921, as a result of a statistical
investigation, “the ordinary person of to-day is four times as well off
in real commodities as the person in the corresponding stage in the
scale in the beginning of the nineteenth century.” During this hundred
years the population has quadrupled. The lot of the worker steadily
progressed from 1800 up till 1900, when, in certain industries, there set
in tendencies of retrogression. It has been one continuous record of rise
in standard of living, and in wages, both nominal amount and purchasing
power, due to improvement in production from the introduction of
machinery, development of food production in new countries, and expansion
of our export trade. This has been largely the result of the capitalistic
organization of industry, and of its ability to meet the demands of the
consumer, and of the extraordinary elasticity inherent in the system of
adapting itself to varying circumstances.

Without the machinery provided by the much-abused capitalist Labour would
to-day be “scratching the ground” to extract a penurious livelihood. The
capitalistic organization of industry would never have survived, had it
not been in the main economically sound, and, on the whole, a system
which made for the good of society. This is the system which is to be
wholly destroyed by the Labour Party because of certain alleged defects,
and replaced by an untried socialistic regime.


The Alleged Defects of Capitalism

First, it is said that under capitalism the incentive stands ethically
condemned in that an employer is actuated wholly by a desire for his own
private profit. I fail to see any turpitude in that motive; an employer
can only make profit if he succeeds in serving the community. There are,
of course, some—I personally have met very few—employers who deliberately
try to foist on credulous consumers an adulterated or spurious article.
But it is exactly for the same motive, namely, for profit, that the
worker serves his employer, or, if that is an unacceptable analogy, that
a member of a gang of workers serves his fellow-worker who is head of the
gang and employing him. There are just as many workmen, indeed more, who
are ready to pass off bad work upon their employer as employers prepared
to pass off bad work upon the community.

As against this incentive of private profit the Syndicalists would
substitute the imaginary incentive that each worker would work for
the good of his own group of workers; the National Guildist that each
worker would work for the benefit of his Guild of workers, and the State
Socialist that each worker would work for the State. Reduced to its
elements, it means that each worker would, in the end, work for what
he could get out of it, or if he found that he got the same advantage
without working so hard, then he would not work so energetically. The
suggestion that workers would work more vigorously for the community
or State is so absolutely contrary to my own experience that I find it
difficult to treat the suggestion with respect. It was never so during
the war—in Government factories, dockyards, arsenals, there was just as
much restriction of production as in the works of private employers, and
considerably more strikes. In none of our municipal services is it found
to be a fact. The railway strike of September 1919, while the railways
were under Government control, is only another illustration of the
falsity of the suggestion.

It is said that Labour under the capitalistic system is bought and
sold as a commodity. That is one of those phrases which expresses
more than is meant. The lawyer sells his legal advice, the surgeon
his operative skill, the musician his powers of technique, taste and
expression just as a person who owns a commodity sells it. I cannot see
any moral degradation whatever in the worker accepting wages any more
than a private lawyer accepting his salary in a financial house, or a
house-surgeon accepting his in a hospital or an organist his in a parish
church. All of them are subject to notice terminating their engagements,
just as a manual worker—not probably a week’s notice, but some longer
period. The accusation is put even higher and the capitalist is called
a thief, in other words, that he is appropriating in the shape of his
own profit something which ought to belong to Labour. This proposition,
palpably untrue, is so generally accepted by the workers that it deserves
some examination. If a Trade Unionist, say a foreman plater, in one of
our large ship repairing centres, works hard and makes, as he does in
normal times, a big income, he may do one or two things with it; he may
spend it on his own amusements or in wasteful extravagance; on the other
hand, he may save and invest it, as I have known many do, in a small
industrial concern in his own district. In the first case he is by common
consent an honourable, if a foolish, man, in the second he certainly will
not be called a thief. He has used by investment a part of his wealth
for the purpose of producing more wealth, and his resultant increase of
wealth is not robbery of the workers in the concern in which his money
is invested. But then he is a member of the Labour movement. Between
such a case and the case of the financial house which makes a business
of collecting the savings or surplus wealth of thrifty persons for
investment in industry, there is no difference in principle whatsoever.

Capitalism implies competition, and competition, Labour says, must
be eradicated out of social and industrial activity. Why competition
should be a good thing in every walk of human life and provide a
healthy stimulus, and yet not provide an equally beneficial stimulus
in industrial and commercial affairs is hard to follow. What Labour
really intends to say is that competition acts so as to depress wages
and lower the standard of living of the worker. That is only one side;
competition acts so as to increase demand for commodities and the volume
of employment, and, if production were not restricted, would increase
wages. Then it is said that the capitalistic organization of industry
involves economic waste, by which is meant that industry is carried on
less efficiently under private management than it would be either under
Government or under “democratic control.” If there is waste it is the
capitalist who suffers, the Trade Unionist always receives his standard
rate of wages. If there is waste on the employers’ side, as of course
there is in some badly organized shops, there is greater waste in the
shape of restricted production on the part of the worker. Organization
and efficiency are, of course, essential to industrial progress, but
to suggest that these essential qualities are better obtained under
bureaucratic or democratic control is at variance with our experience
during the war and of present conditions in Russia where democratic
control has laid the hand of death on industry.


Where Reform is Admittedly Needed

It must not be assumed that the capitalistic system of organization of
industry is perfect and needs no reform; unfortunately, it exhibits
a number of well-marked deficiencies. First of all, an employer only
employs a man as long as he desires or finds he can profitably do so, in
just the same way that the workman only works for an employer as long
as he finds it suits him and no better job is forthcoming. One defect
certainly of the present capitalistic system is the failure of employers
in industry as a whole or of each industry in particular to provide
against unemployment. On this matter I have a good deal to say in a
subsequent part of this book. Again, in the past there was a regrettable
tendency which, in recent years, has happily disappeared amongst the
best employers, to disregard the human qualities, aspirations, needs
and susceptibilities of the worker, coupled with a neglect to provide
effectively for his welfare and well-being in the works. This, however,
is nothing intrinsic in the capitalistic organization of industry; I have
heard equally bitter complaints by the workers when I have been sitting
as arbitrator in disputes between employees of the “non-capitalistic”
co-operative societies and the societies’ democratic managements.

There is, however, a complaint against capitalism which, although it
has been very largely remedied in recent years, yet in normal times,
immediately prior to the war, certainly existed—that was the insufficient
distribution amongst the workers of the product of the industry;
capital in many cases received an undue share of the reward. This was a
short-sighted policy; for good wages to the workers, provided the workers
give good output, results in the workers possessing good purchasing
power; and as so many workers are also consumers, this results in a good
demand for commodities and so is to the benefit of manufacturers, and the
community. But if some employers appropriated by way of profit an unduly
large share of the product of industry, the workers did exactly the same
if opportunity presented itself. One has illustrations of this in the way
in which, by agreement between the building employers and the building
Trade Unions, costs were forced up by wage-agreements which largely
contributed to the shortage of housing and placed the unskilled builder’s
labourer in a wage-position substantially higher than that of the skilled
engineer tradesman, who normally stands on a higher wage-level.


The Failure of Past Socialistic Experiments

When we are discussing on a priori hypotheses the practical operation of
the elemental motives of average men and women, it is wise to learn what
experience has to teach us. There have been at least seventy attempts to
carry secular Socialism into effect, of which five only survived their
fourth year of life. There was the new Harmony Community of Equality,
financed and founded in America in 1825 by Robert Owen. One of its
articles of constitution provided that “every member shall render his or
her services for the good of the whole.” It was a disastrous failure.
Owen had supplied lands, houses and the use of capital, giving to some
persons leases of large tracts of land for 2,000 years at a nominal rent
and for moral considerations only. Addressing the settlers in 1827,
he said: “I find that the habits of the individualistic system are so
powerful that these leases have been, with few exceptions, applied for
individual purposes and individual gain.” There was also the Brook Farm
Phalanx, established in 1842, with which Emerson was associated; the
Wisconsin Phalanx, established in 1844, and the North American Phalanx, a
few years later.

The leading facts and the history of these Socialistic adventures ought
to be read in Mr. W. H. Mallock’s the _Limits of Pure Democracy_, Book
IV, chap. 2, p. 201, where they are set out with much acute criticism.
The last of these great experiments was in 1893, when William Lane
established his “New Australia” in Paraguay. In Lane’s constitution the
workers were controlled and directed by officials of their own choosing.
The colony came to sad grief and ultimately decided by vote that every
man should be entitled to dispose of the fruits of his own industry. A
new grant of land was made by the Government to a large number of the
original colonists; they retrieved their failure and became, under the
stimulus of each working for himself, successful farmers. The causes
of the unhappy end of those great adventures are summed up thus by Mr.
Mallock (p. 216):—“To speak broadly they may be reduced to two, one
of them inhering in the nature of all collective industry, the other
inhering in the nature of human beings with the sole exception of small
and essentially select minorities. The first of these causes was a want
of ability in industrial direction. The second was a want of any general
sentiment sufficiently strong and persistent to ensure that directions,
if given, should be accepted with submission on the one hand and carried
out with a diligence punctual and sustained on the other, under a social
system the essential object of which was to render the conditions of the
worst worker equal to the conditions of the best.”


Limits within which Nationalization is Practicable

Labour, of course, will say that these small experiments have no bearing
on the question of the nationalization and control of great industries.
To some extent they are right. There are, however, certain definite
limits to successful nationalization. An industry which is confined to
rendering services is a totally different thing to an industry whose
business it is to produce commodities. There is nothing like the same
severe restrictions on efficiency in the former case as in the latter.
The services may indeed be of such a character that they can only be
efficiently carried out under the State or under a municipality If
the service is one the successful provision of which depends upon a
monopoly being preserved, there may be a case for nationalization; as
illustrative of this, one may take the case of the Post Office. Again, a
comprehensive service may be necessary, in parts of the country where it
has to be provided at a loss, in other parts where it can be provided at
a profit-the loss in the former case being made good out of the profit
in the latter. Under such conditions nationalization may be the only
possible procedure. Sometimes continental analogies for nationalization
are adduced, but the continental temperament and tradition have been
entirely different from those prevailing in this country. There was never
in Latin countries the same spirit of private enterprise as with us; in
the former, public opinion relied on the State to provide all services
in the nature of public utilities. Where there has been an opportunity
of comparing the efficiency of services provided by the State with those
provided by private enterprise, the comparison is always against the
State. One has only to read _German v. British Railways_, by Edwin A.
Pratt (P. S. King & Son, 1907), _Historical Sketch of State Railway
Ownership_, by Sir William Acworth, K.C.I.E. (John Murray, 1920), to
realize some of the drawbacks of nationalization. The Socialist in this
country invariably falls back upon the Post Office as a convincing case
of the success of State management, but the business community will
hardly be prepared to accept the Post Office as a conclusive argument of
the efficiency of nationalization.


The Different Schemes of Land Nationalization

What the Labour Party means by “public ownership” of land is not clear.
The term “nationalization” is equally vague. In reference to land, it
is commonly used to mean some form of “communization,” that is to say,
acquisition and ownership either by the whole community or a section of
the community. The former is true nationalization, i.e. ownership by
the nation; the latter is “municipalization,” i.e. ownership by a local
authority. Municipalization of land has, however, rather disappeared as a
proposition.

All land nationalizers assume that ownership embraces two fundamental
rights. (1) The right to draw a revenue from the use of the land, i.e.
to receive the rent. (2) The right to control the way in which the land
shall be used. They describe these two rights as the “right to rent,” and
the “right of control” respectively. Where land is held in fee-simple the
right to rent and the right of control are usually vested in one and the
same person, namely the owner. Where, however, the relation of landlord
and tenant has been created by a contract of tenancy, the right to rent,
when it exists, is usually vested in the landlord. The right of control
is vested partly in the landlord and partly in the tenant. The landlord’s
powers, partial or otherwise according to circumstances, of controlling
the uses to which the tenant may put the land, depend upon the contract
of tenancy.

Schemes of land nationalization fall into one of three classes according
to their effect on the right to rent and the right of control. First,
where the whole revenue of the land is ultimately to go to the State,
but possession and the right of control of the land is to remain as it
is under private ownership. There, transference of land revenues to the
State is to be effected by growing national taxation of land values. This
is the scheme of the school of land nationalizers who follow Mr. Henry
George, and are mainly represented by the English League for the Taxation
of Land Values. It is fully explained in Mr. George’s book, _Progress
and Poverty_, and will be called the “George scheme” or “taxing-out
scheme,” Second, where the right of control of the land is to be taken
from private owners and vested in the State by State purchase, but the
owners are to suffer no substantial loss of revenue. They are to receive
Government Bonds of such capital value as will produce an annual interest
equal to the net rent of the land in question. This is the plan of the
Land Nationalization Society, of which the late Dr. Alfred R. Wallace,
F.R.S., O.M., was the Chairman. It will be called the “Nationalization
Society’s scheme” or the “state purchase scheme.” Third, where the
present owners are to be expropriated, and deprived of the right to
rent, and the right of control, and so lose all or a very considerable
portion of their income so far as derived from land. Socialists other
than the State Socialists who subscribe to the programme of the Land
Nationalization Society advocate this policy. Some of them would allow
the owners compensation, but nothing like sufficient to maintain their
present income. For example, the National Guildists would pay trifling
compensation in State Bonds equal in nominal value to the capitalized
value of an annuity for two to three years of the same annual amount as
the net rent. The Syndicalists, on the other hand, would confiscate the
entire private property in land without any compensation whatsoever.
These various schemes described under “third” will be called the
“socialistic schemes.”


The Taxing-out Scheme

Mr. George thus describes his “taxing-out scheme” at p. 288 of _Progress
and Poverty_:

    “I do not propose either to purchase or to confiscate private
    property in land. The first would be unjust; the second
    needless. Let the individuals who now hold it still retain,
    if they want to, possession of what they are pleased to call
    _their_ land. Let them continue to call it _their_ land. Let
    them buy and sell, bequeath and devise it. We may safely leave
    them the shell if we take the kernel. _It is not necessary to
    confiscate land, it is only necessary to confiscate rent._”

In regard to the “George scheme,” the whole point is whether there is any
special justification for confiscating an income derived from land as
compared with other incomes.


The State Purchase Scheme

The object of the “Land Nationalization Society’s scheme” as published
is “to establish public ownership of land by means of fair compensation
based on its value as ascertained for purposes of taxation.” It is
insisted that the State should take possession of agricultural land first
and of house property at a later period.

Public ownership, it is claimed, will secure:

(1) That the use of land will be easily obtainable by all classes of the
community without being subject to the veto of any landowner.

(2) That the best possible conditions of tenancy will be established so
that all State tenants will have the same security as freeholders have
to-day and full right to the value of the improvements they make.

(3) That the community will be able to determine in the general interests
of all to what uses the land shall be put.

(4) That ultimately the whole value of the land will be secured for the
common good.

This, of course, is only a summarized statement of the alleged benefits
of State purchase. They are expanded into great detail by the Land
Nationalization Society in its various publications.


The Socialistic Confiscation Schemes

The chief characteristic of the “socialistic schemes” is confiscation
pure and simple. How exactly that is to be effected depends upon
the particular school of Socialism; the constitutionalists say by
legislation; the revolutionaries say by direct action culminating in the
social revolution.


The Conceptions Underlying Each Scheme

The fundamental conceptions underlying the schemes are as follows:

(_a_) The _Georgites_ contend that the bare land was given by God to the
human race but was afterwards stolen by robber barons, or taken by wicked
kings from the people and handed over on fictitious grounds or nefarious
reasons to courtiers who did the royal will.

(_b_) The _Land Nationalization Society_ builds up the whole of its case
for State purchase upon this basic axiom:

“All men have an equal right to live, and as no man can live without
land, it follows that all men have an equal right to the use of the land
that is necessary to sustain their existence.” Notwithstanding this, land
still remains private property; the private owner is supreme in regard
to it; he can exclude everyone from it with dire economic results. Only
under State ownership, says the Nationalization Society, can this be
remedied.

(_c_) The _Socialists_, that is to say, the National Guildists and
Syndicalists, found their scheme on both the foregoing assumptions, the
Syndicalists in addition claiming that no rent should be paid even to the
State, but that the land should belong outright to, and be distributed
among, the people.

As a matter of practical politics the State purchase scheme of the
Nationalization Society is of chief moment. Although the Georgites and
the Socialists are active and vociferous, their respective schemes are of
much less relative importance. Even assuming that the land was originally
acquired by private persons by robbery or injustice, the best equitable
answer to the “taxing-out scheme” is probably that of the Nationalization
Society:

    We answer that while the land is _ours_ by every moral right,
    and we propose to assume possession of it by compulsory
    process, we recognize that a very large number of honest men
    (neither robber barons nor their descendants) have invested
    actual earned money in land, either as individuals or as
    members of building, insurance and co-operative societies and
    trade unions.

    “Therefore, we do not propose to confiscate that money (i.e.
    that portion of the rent which represents the value of the bare
    land) and leave to them what is theirs (i.e. that portion of
    the rent which represents the value of the improvements)” (_The
    Land Nationalizer_, May, 1919, p. 5).

The Secretary of the Land Nationalization Society writes thus:

    “We who favour compensation justify it on grounds which appear
    to us to be grounds of equity. We say that the landlords of
    the present day did not found the system of private property
    in land, and should not be punished (by spoliation) as if they
    did. The original wrongdoers are dead and past punishments.
    Neither are the present landlords alone responsible for the
    maintenance of the system. That system is supported by the
    well-to-do classes generally, who look upon land as legitimate
    private property, and even by the great mass of unthinking
    landless people who send a majority of landlords and friends of
    landlords to Parliament at every chance they get. If landowning
    is a crime, then the majority of the British people are aiders
    and abettors of it.... We must be prepared to give a fair value
    for the land whether it be held by a duke or a working man.”
    (_State Land Purchase_, by Joseph Hyder, p. 3.)

The practical answer to the “George” or “taxing-out scheme” is that it
is not possible to separate the value of the land from the value of the
improvements on it. Anything which mankind has added to the natural land
is capital and should, according to the George view, be inviolate. In
proposing, as “the George scheme” does, only to allow for “the value of
the clearly distinguishable improvements made within a moderate time,”
capital is being confiscated. That is, something is being confiscated
which was not stolen. If one form of capital may be confiscated, why not
all forms?

The Land Nationalization Society has formulated many objections to the
“George” or “taxing-out scheme” apart from its injustice. They say it
would be an interminable process, that it would not be effective—witness
the failure of the heavy land taxation in Canada, New Zealand or
Australia, to cheapen land or eliminate landlords—that the public would
not accept it. So many persons are owners of small pieces of land, it
would tend to increase the number of landlords instead of reducing them.

The way in which the advocates of State purchase try to make out their
case is very simple, and they do it with great ingenuity. They first
endeavour to prove their basic axiom of “the right to live” by appeal to
the great English common lawyers, writers on Sociology and authorities
on Political Economy. Having done that to their own satisfaction, they
proceed to give at length illustrations of alleged despotic and churlish
action on the part of landowners. The favourites are the Highland
Clearances and landlordism in Ireland. Then in the same vein they bring
forward a great collection of cases of alleged refusal of land by
landowners for works of public importance, or exaction by landowners of
what is said to be (without any evidence) a wholly unreasonable price for
land for public purposes (see, for instance, Chapter V, “The Extortion
of High Prices for Land” in _The Case for Land Nationalization_, by
Joseph Hyder, Simpkin, Marshall & Co.). All these evils are said to be
directly due to private ownership in land. These cases, if they ever
existed, are amply remedied by recent Acts facilitating the acquisition
of land.[7] Having got so far, every hardship or evil to which a farmer
or agricultural labourer is subject is likewise under the same chain of
reasoning ascribed (without proof) to private ownership in land. If,
therefore, the basic axiom is to be vindicated, private ownership must be
done away with. There is no logic in such reasoning, even assuming that
the basic axiom in its widest extension is sound—as a matter of fact it
is not. All these illustrations show is that the present land system may,
in certain respects, require reform, not that it ought to be abolished.
The argument makes out no case for the complete eradication of the whole
landlord system, still less for State purchase. The fallacy lies in the
wholly unproved assumption that State ownership is the only alternative
to an unreformed land system.


The Disadvantages of State Ownership of Land

It is difficult to state succinctly the many objections[8] to State
ownership of land:

(_a_) The first is the incompetence of the State through a rigid
bureaucratic administration subject to political pressure to manage
efficiently or economically a highly technical industry like agriculture,
one whose conditions vary in every district and indeed on every estate
(which is admitted by the Labour Party), or indeed the land on which the
complex industry directly depends.

(_b_) State purchase would entail an enormous addition to our National
Debt which we cannot afford, and for which there is no justification.

(_c_) If landowners were bought out, it is clear that the State would
have to make itself responsible for finding annually a vast amount of
capital for improvements, and also working capital for the very large
number of peasant and other smallholding tenants. It would not, and could
not, do it adequately nor as satisfactorily nor to the same extent as
existing landowners. If it did, this speculative use of national funds
would be quite unjustifiable.

(_d_) If it is desirable to cut up large estates and farms and to
establish a vast number of peasant holders in the shape of State tenants,
and all the evidence from Ireland and other countries is strongly against
the expediency of this course, it can be done without the abolition of
private property in land.

(_e_) One thing is certain, that State ownership will not tend to
increase production, but will have the opposite effect.

(_f_) It is equally clear that States ownership involves no improvement
of the lot of the agricultural labourer, but rather the reverse.

(_g_) There is not the land monopoly alleged. This appears from the fact
that over one-half of the cultivated land in England and Wales consists
of holdings of comparatively small extent—80 per cent, of the existing
farmers farming holdings of under 101 acres.

(_h_) Tenant farmers do not want State purchase.




CHAPTER X

THE LABOUR PARTY’S POLICY FOR UNEMPLOYMENT

1. WORK OR MAINTENANCE

    The Manchester Resolution of 1917—The Memorandum on War Aims,
    1917—The Memorandum on Unemployment after the War, 1917—The
    London Resolution of 1918—The Prevention of Unemployment
    Bill, 1919—Labour’s Recommendations to the Industrial
    Conference, 1919—The Right Hon. A. Henderson’s Addendum—The
    Southport Resolution of 1919—The Resolution of September
    1919—The Recommendations of the Joint Committee on Cost of
    Living, September 1920—Vote of Censure in Parliament, October
    1920—Resolution of December 1920—Labour’s Refusal to Co-operate
    with the Government, 1921—Labour’s Statement of Policy for
    Unemployment, 1921—Manifesto on Unemployment, 1921.


The Labour Party claims to have foreseen the present prostration of
industry, and asserts that it recommended in advance of the disaster
complete preventives and remedies which, if they had been adopted, would
have neutralized the present world-wide conditions of unemployment. The
successive statements of policy issued, and resolutions passed by the
Labour Party and the Trades Union Congress since 1917 on the subject of
unemployment, disprove conclusively any such claim of prescience.


The Manchester Resolution of 1917

At the Labour Party’s Annual Conference in 1917 a resolution asserted
that the Government could, if it chose, prevent any considerable
unemployment in this country, by maintaining from year to year a “uniform
national demand” for labour. This was to be done by co-ordinating the
carrying out of public works, and of orders for State Departments and
local authorities. “To prepare for the possibility of there being
extensive unemployment either in the course of demobilization or in the
first years of peace,” the Government was called upon to arrange for
immediate execution, either directly or through local authorities, of
the most urgently needed public works. These were described as housing
to the extent of two millions sterling, new schools, roads and light
railways, reorganization of canals, afforestation, land reclamations,
harbour development, etc. To reduce the risk of adult unemployment it
was urged that the school age should be raised to sixteen, scholarships
established, and hours of labour shortened for young people, and a
48-hour week introduced generally without reduction of wages. It will
thus be seen that Labour, in 1917, in exercise of those powers of
prevision now so amply arrogated to itself, thought that unemployment
after the war would be so limited in this country that it could be
remedied by the adoption of the simple measures mentioned above.


The Memorandum on War Aims, 1917

In London, in December 1917, a _Memorandum on War Aims_ was approved at
a Special Conference of the Labour Party and the Trades Union Congress,
and in February 1918, was accepted by the Third Inter-Allied Conference
held in London of Foreign Allied Labour and Socialist organizations. This
Memorandum proceeded in the same strain. Section 5 urged the Socialists
and Labour Parties of every country to press their Governments to
execute numerous public works, roads, railways, schools, houses, etc.,
at such rate in each locality as would, when superadded to capitalistic
enterprise, maintain a uniform demand for labour and so “prevent there
being any unemployment.” Then followed this fallacious proposition: “It
is now known that it is in this way quite possible for any Government
to prevent, if it chooses, the very occurrence of any widespread or
prolonged involuntary unemployment,” and this comment, “if such is
allowed to occur it is as much the result of Government neglect as is any
epidemic disease.”


The Memorandum on Unemployment after the War, 1917

There was also issued, in 1917, a Memorandum called the _Problem of
Unemployment after the War_, adopted by the Joint Committee on Labour
Problems after the War, representing the Parliamentary Committee of the
Trades Union Congress, the Executive Committee of the Labour Party,
the Management Committee of the General Federation of Trades Unions
and the War Emergency Workers’ National Committee. Its proposals for
the prevention of unemployment are worthy of analysis. It maintained
that unless prevented by concerted action there would be considerable
unemployment after the war, and from these specific causes, namely, the
discharge of munition workers, delay in works changing over from war to
peace production, congestion of ports, demobilization of the Army and
Navy, difficulties in securing adequate industrial capital. Again the
remedy recommended was the maintenance from year to year of a uniform
national demand for labour by the Government and local authorities giving
out their orders “in such a way as to make them vary inversely with the
demands of private employers.” The public works that were to be executed
were much the same as before: housing schemes, water and drainage works,
parks, schools, public libraries, works planned by the Development
Commission and Road Board and held up owing to the war, the development
of agricultural and rural industries on a national and co-operative
basis, afforestation, and the execution of Government printing postponed
during the war. The Government was also pressed to encourage works of
which the output, like bricks and cement, were necessary for the carrying
on of other work, for example, building.

There could be nothing plainer than this sentence in the Memorandum:
“It may be urged that no such action would keep up the demand of other
countries for our products, and thus the export trades might fall off; it
may be assumed, however, that the principal export trades will certainly
be busy (coal, machinery, shipbuilding, constructional iron and steel and
all woollen goods) and the home demand for cotton goods is also expected
to be brisk.” It is obvious, therefore, at this date that the Labour
Party never contemplated the present depression in our export trade.

The proposals of this Memorandum were in advance of previous
recommendations. To enable local authorities to execute public works,
legislation was demanded to facilitate the acquisition of the necessary
land. The Government was to use for national purposes the 200 national
factories, but for what purpose the Memorandum is eloquently silent. A
systematic plan of short-time with full wages was to be introduced for a
certain limited period in Government dockyards, arsenals and factories,
when the final adjustment to peace-time conditions was taking place. To
prevent an overstocked adult labour market there was to be no employment,
partial or otherwise, of children under the school-leaving age, which was
to be raised to sixteen, and only part-time employment up to a maximum
of a 30-hour week for young people between sixteen and eighteen years,
the balance of whose normal working week was to be devoted to physical
and technical training and education. Twenty thousand additional scholars
were to be trained as school teachers, and additional bursaries granted
to the secondary schools, universities and technical colleges for pupils
from the elementary schools, who would otherwise go into industry.
Overtime was to be prohibited, and an 8-hour day to be imposed by statute.

The Memorandum claimed maintenance, apart from the Poor Law, for all
persons who were unemployed and for whom no suitable work could be found.
Where persons were entitled to unemployment benefit from the Trade Unions
they should receive it and in addition be paid unemployment benefit under
the Unemployment Insurance Acts; the rate of benefit, under those Acts,
to be increased to a sum to be fixed in regard to the prevailing cost of
living. Unemployed persons who did not receive benefit under the Acts,
and those who had received it, but had run out of it, should be paid
maintenance up to a total sum per week fixed in due relation to the cost
of living. Trade Unions paying unemployment benefit were to receive a
Government subsidy.

In addition the Memorandum called for wide extension of the National
Insurance Act, 1911, and for abolition of its restriction to a limited
number of trades, and also for amendment of the National Insurance (Part
II) (Munition Workers) Act, 1916, which brought in munition workers and
persons engaged in metal and chemical industries under the Act of 1911,
and created, it was said, invidious distinctions, as for example, between
a worker who would be insured if engaged on a particular article needed
for use in war, but who would not be insured if engaged on the same type
of article when it was needed for ordinary commercial use. The Memorandum
also called for amendment of the Act of 1916 in regard to its application
to women, and for the extension generally to women of the National
Unemployment Insurance Scheme.


The London Resolution of 1918

When one passes to the year 1918, we find no indication whatever that the
Labour Party had any premonition of the decline in trade which commenced
in the spring of 1920, or were gifted with any widening vision as to
the remedies required to meet it. This appears from the proceedings
of the Labour Party’s Annual Conference in that year, and from the
resolution which was passed on the prevention of unemployment. This
resolution, after declaring that the years immediately following the war
would probably include periods of grave dislocation of profit-making
industry, called upon the Government to arrange the carrying out of the
next succeeding ten years’ programme of national and local government
works, including housing, schools, roads, railways, canals, harbours,
afforestation, reclamations, etc., in such a way as “any temporary
congestion of the labour market may require.” This resolution solemnly
and without reservation committed the Labour Party to this sweeping
generalization:—“Now that it is known that all that is required to
prevent the occurrence of any widespread or lasting unemployment is that
the aggregate total demand for labour should be maintained year in and
year out at an approximately even level, and that this can be secured by
nothing more difficult or revolutionary than a sensible distribution of
the public orders for works and services so as to keep always up to the
prescribed total the aggregate public and capitalist demand for labour,
together with the prohibition of overtime in excess of the prescribed
normal working day, there is now no excuse for any Government which
allows such a calamity as widespread or lasting unemployment ever to
occur.”

One can thus realize what, up to the end of 1918, were the sovereign
panaceas of the Labour Party for the prevention of unemployment after the
war. Let us proceed to trace from and after 1919 the recommendations of
Labour, which it is now said, had they been adopted by the Government,
would have averted the present conditions of unemployment.


The Prevention of Unemployment Bill, 1919

On March 21, 1919, the Labour Party brought to second reading in the
House of Commons their “Prevention of Unemployment Bill,” which embodied
only the old principles that Labour had been advocating since 1900,
to meet seasonal and cyclical unemployment. The Bill in no sense met
the present abnormal trade depression, and was rejected. It proposed
to vest in the Minister of Labour all powers and duties in regard to
unemployment insurance, the prevention of destitution, and the relief
of the able-bodied poor. It provided that the Minister should advise
the Treasury how the various Government works and services should be
organized and apportioned over different seasons of each year, and spread
over different years, so as “to regularize” the national aggregate demand
for employment, including both public and private employment, as between
the different seasons of the year, and as between the good and bad years
of a trade cycle, and so, by maintaining at an approximately constant
level the national aggregate demand for labour both by private employer
and by public departments, prevent irregularity of employment. It also
put the Minister under an obligation to establish and maintain such
institutions as he should deem requisite, in which he was to provide
for able-bodied persons entitled to public assistance under the Act,
and for whom no suitable situation could be found, such employment of
an educational character and such physical and mental and technological
training as he should think fit. All persons admitted to such
institutions were to be provided by the Minister with proper maintenance.
The Bill in addition proposed to constitute as the local unemployment
authority, who were to act through an unemployment committee, the London
County Council in respect of the Administrative County of London, and the
council of every borough and urban district of a population of 20,000 or
over, and the county councils in respect of the rest of an administrative
county. Each such council, acting through the unemployment committee, was
to be bound to organize all work—manual or clerical—under its control, so
as to maintain the labour demand in its district at a constant uniform
level. In addition, each such council was to be put under obligation to
provide every person, for whom suitable employment could not be found,
with such maintenance as its medical officer of health might certify to
be necessary to maintain such unemployed person and his dependents in a
state of physical efficiency. All the expenses of the local unemployment
authorities in carrying out the Act were to be met out of the local rates
to the extent of a 1_d._ rate; all expenses over the proceeds of a 1_d._
rate were to be recovered from the Treasury. There was no limit whatever
to the charge under the Bill[9] upon national funds.


Labour’s Recommendations to the Industrial Conference, 1919

The next important declaration in 1919 by Labour in respect of
unemployment is contained in the _Joint Report of the Provisional
Joint Committee presented to the Meeting of the Industrial Conference,
Central Hall, Westminster, April 4, 1919_ (_Parliamentary Paper_,
1920, Cmd. 501). It will be remembered that on February 27, 1919, the
Government called together, under the shadow of a miners’ strike, a
Conference consisting of representatives of employers and Trade Unions
to consider the industrial situation. That Conference, after expressing
its opinion that any preventible dislocation of industry was always to
be deplored and in the then existing critical period of reconstruction
might be disastrous to the interests of the nation, resolved to appoint
a Joint Committee to consider, amongst other things, the question of
unemployment and its prevention. A unanimous report was presented by the
Joint Committee, signed by the employers’ representatives and also by
the Trade Unions’ representatives, the latter representing all the great
Trade Unions, with the exception of the railwaymen, the miners and the
transport workers.

In their Report the Committee stated that they had not had sufficient
time at their disposal to investigate thoroughly the problem of
unemployment, and therefore would only indicate briefly some of the
steps which might be taken to minimize it or alleviate it. As aids
in this direction they recommended organized short-time, the working
of overtime only in special cases, postponement, until bad times,
of Government non-urgent contracts, prosecution without delay of a
comprehensive housing programme, State development of new industries
such as afforestation, reclamations of waste lands, development of
inland waterways and, in agricultural districts, the development
of light railways and/or road transport. In addition the Committee
recommended that the normal provision for maintenance during unemployment
should be on a more adequate scale, and be wider in its application
than was provided by the then existing Unemployment Insurance Acts,
and advocated the extension of the National Unemployment Insurance
Scheme to underemployment (i.e. workers on short-time or casual
employment for less than a full working week). They also recommended
the provision of facilities whereby workers while unemployed and in
receipt of unemployment benefit could obtain access without payment
of fees to opportunities for continuing their education and improving
their qualifications. Child-labour, they advised, should in times of
unemployment be limited, and sickness and infirmity benefits increased,
the age of qualification for old age pensions reduced and the amount of
the pension increased.


The Right Hon. A. Henderson’s Addendum

The Memorandum by the Right Hon. Arthur Henderson, on behalf of the Trade
Unions’ representatives, appended to the Report, dealt further with the
question of unemployment. This Memorandum, while in no way disagreeing
with the Joint Report which the Trade Union representatives had signed,
stated (p. v.) that “the prevention of unemployment and provision
against unemployment should have been one of the first thoughts of the
Government as soon as the question of industrial reorganization began to
be considered. The workers fully understood that steps were being taken
to bring into immediate operation, upon the conclusion of hostilities,
a permanent scheme both for the prevention of unemployment wherever
possible, and for the maintenance of the unemployed where this could not
be done.” Further, “we are of opinion that the unequal distribution of
wealth which prior to the war kept the purchasing power of the majority
of the wage-earners at a low level, constituted a primary cause of
unemployment.” Then followed this finding (p. viii): “We are of opinion
that a general increase in wages by improving the purchasing power of the
workers would have a general and permanent effect in the direction of
limiting continuous unemployment by bringing consumption up to something
more like equilibrium with production.”

They accordingly recommended (p. viii) first:—the appointment of a
sub-commission to investigate (1) the whole problem of unemployment
and especially under-consumption as a cause of unemployment; (2) the
allocation of all Government contracts in such a way as to steady the
volume of employment, and (3) the co-ordination of orders given by
State Departments and local authorities; secondly, the establishment
of a comprehensive scheme of unemployment provision extending to all
workers on a non-contributory basis, providing for adequate maintenance
of all workers unemployed, and for the making up of maintenance pay
to workers under-employed. All were to receive a flat rate of benefit
with a supplementary allowance for dependent children. The scheme was
to be administered directly through the Trade Unions, or, where such
were not available, through the Employment Exchanges, which were to be
placed under joint committees equally representative of employers and
Trade Unions. The Government were to pay to a Trade Union, providing an
additional benefit out of its own funds, a subsidy equivalent to 50 per
cent. of the amount expended by the Union on unemployment allowances. In
addition special provision was recommended for the maintenance of widows
with dependent children and for the endowment of mothers “to prevent
their being forced into industry against the interest of society.”


The Southport Resolution of 1919

In June 1919, the Labour Party again considered at its Annual Conference
the question of unemployment, and passed a resolution that full and
adequate maintenance should be granted by the Government, through the
Trade Unions concerned, for unemployed persons, mothers with dependent
children and unable to work, juveniles leaving school and becoming
unemployed below the age of eighteen, women receiving training under the
Government’s training schemes, and women whose out-of-work donation had
ceased and who had not secured suitable work from the Labour Exchanges.


The Resolution of September 1919

Again, in September 1919, the Trades Union Congress passed a resolution
affirming the right of every member of the community to work or to the
receipt of maintenance, and accordingly called upon the Government to
regulate national and local authorities’ work, and to organize schemes
of “socially necessary” work so as to provide employment, and, failing
that, to provide adequate maintenance for all workers who could not find
suitable employment, and facilities for training while they were out of
work. This resolution contained this interesting sentence: “It deplored
the inaction of the Government during the past year which had wasted the
resources of the nation by allowing hundreds of thousands of willing
workers to remain in a state of enforced idleness at a time when the
needs of the world called imperatively for increased production.”

The decline in trade and failure of demand for commodities first appeared
in the summer of 1920, and gradually increased in severity as that year
went on.


The Recommendations of the Joint Committee on Cost of Living, September
1920

In September 1920, a Joint Committee on the Cost of Living was appointed
by the Labour and Co-operative movements. That Committee made certain
recommendations which were not original but a mere reiteration of matters
which the Government had previously indicated were of prime importance
in connection with the restoration of international trade. The measures
which this Committee claimed to be essential for the revival of industry
and restoration of trade were as follows:

(1) The re-establishment of international peace;

(2) The definite fixing of war indemnities at reasonable amounts;

(3) Rehabilitation of currencies;

(4) In countries where a return to the gold standard was impracticable,
the establishment of a new parity of exchange;

(5) The exchange of goods between different countries by barter pending
re-establishment of the machinery of exchange;

(6) An international loan by the League of Nations to enable impoverished
countries to resume normal production.

But there was nothing in this programme which was not at this time well
under the consideration of the Government.


Vote of Censure in Parliament, October 1920

On October 21, 1920 (see _Parliamentary Debates_, Vol. 133, 1115), the
Labour Party unsuccessfully moved a vote of censure in the following
terms:

    “That this House views with regret the growing volume of
    unemployment, and, recognizing the responsibility of the State
    towards members of the community who are bereft of the means
    of livelihood, is of opinion that every possible step should
    be taken to arrest the decline in trade and industry and to
    provide work or, in default, adequate maintenance for those
    whose labour is not required in the ordinary market.”

The current views of the Labour members in respect of unemployment were
very fully stated, and the parliamentary debate should be read. Shortly
put, their points were these:

(1) The unemployment problem is a national problem; it can only be
successfully solved by the State; it ought not to be left for local
treatment by local authorities.

(2) Work should be found by the Government for every workless citizen,
willing to work, and, failing that, adequate maintenance.

(3) The volume of agriculture should be increased and smallholdings
encouraged.

(4) Trade relations should be established with Russia, Bulgaria, Turkey,
and other former enemy countries.

(5) The Government should establish new trades and industries in this
country.

(6) Public works should be undertaken, like afforestation, main and other
roads.

Critically read, the debate seems strangely barren of any really
constructive suggestions by the Labour Party.

Later, on December 16, 1920, the Labour Party sent a deputation to the
Minister of Labour to urge him to accept the following propositions in
regard to unemployment:

(1) That unemployment insurance is no remedy;

(2) That it is the Government’s duty to provide for the unemployed useful
work in various Government establishments;

(3) That a grant should be made to the Distress Committees under the
Unemployed Workmen’s Act, 1905, in order that local schemes for the
provision of work might be put in hand;

(4) That the principle of the out-of-work donation granted after the
armistice should be restored for the benefit of every unemployed
person not covered by unemployment insurance, and that provision should
be made whereby persons at present unemployed, but not covered by the
Unemployment Insurance Act, would receive benefits under that Act.

This last point was conceded by the Government subsequently in the House
of Commons.


Resolution of December 1920

On December 29, 1920, the Labour Party Conference, called to consider
the report of the Labour Commission in Ireland, proceeded somewhat
inconsequentially to discuss the problem of unemployment in Great Britain
and subsequently passed the following resolution:

    “That this Conference, realizing that the growing volume of
    unemployment and under-employment is due in a large measure to
    the interruption in world trading following on the war and the
    defective peace treaties, in addition to the folly of British
    and allied policy in relation to the Soviet Government of
    Russia, condemns the British Government for the unwarrantable
    delay in securing peace and opening trade relationships with
    the Russian Government.

    “The Conference further condemns the Coalition Government for
    failing to make provision for the prevention of unemployment
    and for the proper treatment of unemployed persons; it calls
    attention to the fact that in February 1920, the Labour Party
    in Parliament introduced its Bill for the prevention of
    unemployment, containing provisions for the maintenance and
    training of unemployed persons, which the Government refused to
    accept.”

The last paragraph of this resolution is important. It has been customary
in recent years for Socialist advocates to assure the workmen that
unemployment can never exist under any of the types of socialistic
organization of industry, but that it is an evil peculiar to what they
call the “capitalistic regime,” and that unemployment is merely one of
the devices of the employer to break down Trade Union conditions and so
lower wages. How exactly the consumer, who, after all, is the person who
really controls the production of commodities, is to be persuaded to
consume and pay for more commodities under a socialistic organization
of industry than under a capitalistic system is not-perhaps wisely
so-explained, but the suggestion of the final paragraph is that were
the present “pernicious economic system” abolished and the Labour Party
in power, then if its Government were unable to provide work it could
and would provide maintenance and, the ordinary worker is told, at full
Trade Union rates of wages. As to how such scheme is to be financed the
resolution is sagaciously silent.


Labour’s Refusal to Co-operate with the Government, 1921

In January 1921, the Government decided to set up two Committees on
unemployment and invited Labour to join one of the Committees. Labour
took the view that the terms of reference were too narrow to serve
any useful purpose, whereupon the Government at once expressed its
willingness to widen the terms, but on January 11, at a Joint Committee
of the Parliamentary Committee of the Trades Union Congress and the
Executive Committee of the Labour Party, it was unanimously decided that
Labour would not accept the invitation of the Government to join in any
inquiry into unemployment. The public resentment aroused by that attitude
soon convinced the Labour movement that it had put itself entirely in
the wrong, and it tried energetically to put the blame for its decision
on the Government. Labour leaders charged the Government with lack of
frankness and straightforwardness in regard to the terms of reference,
without giving any corroborative particulars whatsoever beyond that
unsubstantiated general statement; they contended that co-operation with
the Government had never led to anything—forgetting entirely the many
benefits which during the war were secured to Labour both in rates of
wages and conditions of employment wholly through co-operation with the
Government. Truly memories were short. Then finally Labour unconvincingly
charged the Government with failing to keep faith, or, if faith had
been kept, with keeping it unwillingly and ungraciously, and only as
a result of Labour’s agitation. The first proof adduced in support of
this latter contention was the action of the Government in regard to
the Joint Industrial Conference of 1919. The Conference, Labour said,
was originally called by the Government; the Joint Committee presented
a unanimous report which the Conference accepted; the Government took
no action to give effect to the recommendations of the report and the
Committee ultimately resigned, and the Conference dissolved. The second
case on which Labour relied was that of the Royal Commission on the
Coal Industry of 1919; the majority findings recommended alteration
of the then existing system of control of the mining industry; “to
these the Government refused to give effect.” The inaccuracy of this
statement will be seen from Chapter XIV. The Government would not accept
nationalization. “Labour,” so it was declared, “has lost all faith in the
good intentions of the Government, and refuses to allow itself to be used
once again as a smoke screen.”


Labour’s Statement of Policy for Unemployment, 1921

As a counterblast to the Government’s Committees of January 1921, the
Labour Party in that month produced an elaborate programme to deal with
unemployment. This will be found in a pamphlet entitled _Unemployment: A
Labour Policy_, issued in January 1921. The whole of the suggestions fall
under two main heads:

(1) Maintenance of the unemployed and under-employed, and

(2) Provision of work.

The categorical demand was repeated that work should be provided by the
Government, and that if work is not, or cannot be, provided, then all
unemployed and under-employed should be fully maintained at the expense
of the State.

In regard to unemployment benefit, every one for whom no suitable work
was available at the Employment Exchanges, or through his or her Trade
Union, was to be paid maintenance, which, including benefits under the
Unemployment Insurance Acts, should amount at least to 40_s._ per week
for each householder and 25_s._ per week for each single man or woman
over eighteen, with additional allowances for dependants. Increases
in these rates were subsequently claimed as the year went on. Neither
maintenance nor benefits under the Unemployment Insurance Acts should
be limited to any period of time, but should continue as long as no
suitable work was available. In the case of under-employment resulting
from short-time, the maintenance allowance should be of such an amount
as, when added to the actual earnings, would yield a sum equal to the
amount of maintenance which the worker would receive if he were totally
unemployed.

Training schools were to be provided for women attracted into industry
during the war but who, after the war, found themselves unable to secure
permanent peace employment. The local educational authorities, assisted
by grants from the Exchequer, were to provide courses of training for
unemployed male workers. To relieve adult unemployment the Board of
Education should be authorized at any time to raise the school-leaving
age, and should be restrained from discouraging local educational
authorities from making by-laws raising the age of full-time attendance.
Local education authorities should be urged to submit fresh schemes for
schools, etc., under the Education Act of 1918. Any exemption from school
attendance below the age of fourteen to be made illegal; local education
authorities to proceed with schemes of “continuation education”; the
Government to increase the number of free places in secondary schools
and provide maintenance allowances to all free-place pupils in need of
them. The number of free-places in all centres of higher education to be
increased, maintenance allowances to be given under grant from the Board
of Education to persons holding such places; training centres for young
persons unemployed to be opened by local educational authorities under
grants from the Board of Education.

“Socially necessary” work was to be provided for all. This was to be
facilitated by the withdrawal of juvenile labour, and the general
introduction of a 44-hour week without reduction of wages, coupled with
a drastic regulation of overtime. The work so provided should not be
“relief works,” but of a “socially productive character” carried out
under regular wage-earning employment by workpeople in the appropriate
trades. Work merely providing employment for the unemployed without
social results was characterized as wasteful for the community and
demoralizing to the workers.

The Labour Party tries of set policy to make the Government the
scapegoat; so the Report delivered itself as follows:

    “We recognize that the insensate policy of the Government
    during the last two years both in home and foreign affairs has
    brought the nation to the point at which wholesale relief is
    the only alternative to wholesale starvation, and that those
    who suffer by it must be provided for directly out of the
    pockets of those more fortunately situated.”

In order to increase the volume of employment the Government was enjoined
to put in hand, at once, as much as possible of its works programme for
the next decade, and cause commodities ultimately needed by the State to
be manufactured forthwith; and local authorities and public bodies were
similarly called upon to anticipate their requirements. Road improvements
were demanded on a much larger scale, and afforestation and foreshore
reclamation. Then came the recommendation that the Government should
compose its differences with the Building Trade Unions by giving them
a guarantee of an adequate minimum housing programme for the next five
years, so as to meet “their reasonable claim for safeguards against
unemployment”—this to induce the Building Trade Unions, who had more
housing work than they could do, to allow unemployed unskilled men,
mainly ex-service men, to enter temporarily the building trade! The
report alleged that many raw materials and other necessary supplies
were being held up by capitalists, for instance, cement, bricks, light
castings; to remedy this supposititious state of affairs the Government
was urged to take drastic steps to compel the production of these
materials in the required quantities. An enormous amount of work in
respect of the construction, improvement and repair of railways, roads,
waterways and harbours, it was said, ought no longer to be postponed.
Schools and other public buildings should be built. The embargoes laid
upon borrowing by local authorities should be removed and loans provided
for them through the Public Works Commissioners or otherwise by the
State to enable them to carry out local public works. The Government was
required to resume through county agricultural committees its war-time
powers to enforce the proper cultivation of land.

Then follows a series of measures for the restoration of overseas
commerce. The root of the problem of unemployment lay, it was said, in
the revival of industry and of commerce abroad. “The Government had
shirked that duty,” and these were Labour’s demands:

(_a_) An end to be put to wars, and all expenditure on armaments and
semi-warlike expeditions in this and other countries.

(_b_) The immediate inception of trade with Russia, and normal political
relations with the Soviet Republic. The Russian Government was known to
be ready to supply to this country large quantities of timber, hide,
flax, platinum and gold in payment of extensive supplies which it needed
of railway equipment, means of transport, agricultural machinery,
implements of all kinds, clothing, boots, and a thousand and one other
commodities. This necessitated and justified the immediate conclusion of
an effective trade agreement with Russia.

(_c_) The restoration of production in, and trade with, other continental
countries, but not under the export credits scheme of the British
Government—which is “merely an attempt to enable British manufacturers to
palm off their surplus goods upon foreign countries instead of supplying
the goods to those countries which they really need.” The ordinary
normal course of international trade is then described, with this naïve
observation. “At present, however, conditions in Central Europe are such
that, without further assistance, it is very doubtful if this normal
trade transaction would be carried out.” The report is most admirable in
its modesty as to what “further assistance” it recommends. We may assume
that if a recommendation had been available, that would stand criticism,
it would have been proffered.

The only proposals which the Report advocated were as follows:

(1) The fixing of the German indemnity at an amount which is both
reasonable and practicable in order to end uncertainty and encourage the
re-establishment in Germany of normal production.

(2) Credits to be provided for “several European countries”
(unfortunately left anonymous), and to be devoted to the production
of commodities of which there is no danger of overproduction, and the
provision of transport facilities; the granting of these credits to
be conditional on the removal by the benefiting-state of all barriers
against trade and on rehabilitation of its currency.

(3) All Governments boldly to intervene to arrange on a large scale the
barter of whole stocks of surplus commodities. “This, while yielding no
profit to speculators, would do much to revive economic prosperity and
set going the wheels of industry.”

(4) The reorganization of the continental transport systems and the
institution of unified control, under the League of Nations, of the
railway system between Germany and Russia.

(5) The encouragement and fullest possible use, for trade transactions,
of the Co-operative movements of the various nations of Europe.

The Report expressed a halting agreement that large sums of money
would be required in respect of the maintenance of unemployed and
under-employed, the undertaking of work of social utility, and the
financing of schemes for the revival of British industry and the
restoration of industry and commerce abroad. It did not attempt to
discuss how this money was to be provided; it disposed of the whole
question by this facile observation: “We shall be met at once by the
criticism that sufficient money cannot be found to meet our demands. We
do not believe it. We refuse to be put off during this grave national
crisis, imperilling the welfare of the whole population, with pleas of
financial stringency.” Reference was made to large sums of money which,
it was stated, were being spent by the Government on unjustifiable
purposes, for example, on expeditions in Mesopotamia, operations in
Ireland and in other places. Money, instead of being so expended,
should be devoted to the relief of unemployment. If such retrenchment
of military and other wasteful expenditure did not yield the total sum
required, then, said the Labour Party, “other resources must be tapped,”
but those resources are not indicated. “While an increasing number of
families are daily sinking into starvation, the well-to-do classes have
suffered only minor embarrassments. Luxuries must go, if needs be, to
provide the means of life and livelihood for those in distress.” Hardly
a constructive financial scheme.


Manifesto on Unemployment, 1921

The last important announcement was the _Manifesto on Unemployment_
issued by the Parliamentary Committee of the Trades Union Congress
and the National Executive of the Labour Party after the Trades Union
Congress at Cardiff in 1921, “for the information of the Government and
the public.” It declared, in now familiar language, that unemployment is
a national problem, and that the Government is wholly wrong in adopting
measures of local treatment. No district, it is asserted, has any control
over, or any responsibility for, its unemployment. To make districts
responsible is to subject working-class areas of low rateable value to
excessive and unjust burdens which they cannot bear and which ought in
equity to be spread over the whole country. The Party expressed its
strong objection to the limited advances made by the State to the local
authorities in respect of relief works, especially to the necessity
for so much expenditure being raised by local loans, by that method
placing, it was said, the burden upon the backs of ratepayers of the
very areas whose affliction was already the greatest. Once again the
Trades Union Congress at Cardiff reaffirmed what was described as the
fundamental principle—“the duty of the State to provide work or adequate
maintenance for every willing worker.” Accordingly the Government was
required to discontinue countenancing wage reductions, and to stimulate
normal production by maintaining the purchasing power of the workers and
thereby sustain the whole market. It is also affirmed that sufficient
orders for work to relieve unemployment will not be forthcoming except
on the basis of national credit. The Government Departments are urged
to anticipate, and now place orders for, their future needs, and the
Government itself is recommended to place substantial orders for staple
commodities with manufacturers, at prices agreed after an examination
of costs, and to export these commodities on credit to continental
countries needing them, selling them either directly to the Governments
of those countries or to Co-operative Societies or other organizations
in them, and at the same time to arrange for the sale or other disposal
at home of any remaining portions of the stocks of such commodities. In
addition a 40-hour working week should be introduced. This, it is said,
would result in (i) the maintenance of the morale and efficiency of the
people; (ii) the maintenance of machinery in working order pending the
return of normal trade; (iii) the maintenance and improvement of the
home trade and the stimulation of foreign commerce; (iv) the saving of
enormous sums on unemployment benefit and poor law relief. So, it was
claimed, the problem of unemployment could be reduced to proportions
capable of being adequately dealt with by public works. These formed the
next consideration. The Government was requested to prepare a list of
schemes of national works in the order of their demand for labour, giving
preference to those most calculated to foster the revival of industry,
comprehensive housing schemes to be included prominently amongst them.
The Government’s distinction between schemes of public works as revenue
producing and non-revenue producing, it was admitted, was sound, and
should be maintained, but in the case of the former, the Government
should make a grant of 75 per cent. of the necessary expenditure and
lend the remaining 25 per cent. to local authorities free of interest
for three years, the rate of interest thereafter being 3 per cent.,
with arrangements for repayment at stated intervals. In the case of
non-productive schemes, the Government to make a grant of 90 per cent.
of the necessary expenditure and lend the remaining 10 per cent. to
local authorities free of interest for five years, at the end of which
time interest and repayment should be the same as in the case of the
productive schemes. “If, however, employment is still not forthcoming
for all workers, provision for maintenance must be made by means of
unemployment insurance benefits on an adequate scale.”

In Part II of this book it will be seen how far the Government has gone
for the purpose of alleviating unemployment in the directions desired by
Labour.




CHAPTER XI

THE LABOUR PARTY’S POLICY FOR UNEMPLOYMENT

2. ITS IMPRACTICABILITY

    The Unsoundness of the Right to Work—The Failure of Work or
    Maintenance in France—Impossibility of Providing Suitable
    Work—Employment Depends Primarily on Demand—The Farm Colony
    Fiascos.


The utter impracticability of Labour’s principle of “work or maintenance”
is almost self-apparent. The primary cause of unemployment is want of
work, the result of economic forces, but the cure of unemployment,
according to Labour, is to be the provision of work by the Government in
the teeth of adverse economic conditions. The work is to be “suitable
work,” and obviously must be either (1) the production of commodities
and services which the consuming public will buy, that is to say,
remunerative work, or (2) the execution of public works which, up to
that time, have not been constructed, but which, although economic
circumstances have not justified their construction before, are deemed
proper to be carried out if work has to be found for unemployed persons.
Their appropriate name is “relief works.” The maintenance is to be such
weekly sum as the local medical officer of health deems necessary to
maintain each unemployed person and his dependants in a state of physical
efficiency. The Unemployed Workmen’s Bill, introduced by Mr. Ramsay
MacDonald in 1907, was the first Bill enunciating the right to work. In
1908-9 similar Bills were introduced by the Labour Party under the same
title. In 1910-11-12, Bills for the same object, called The Right to Work
Bill, were introduced by members of the Party.


The Unsoundness of the Right to Work

Attempts were made to describe this principle of work or maintenance
as the logical result of the Elizabethan Statutes, under which parish
authorities were bound to provide work for the unemployed at wages paid
out of a fund collected from persons of substance in the parish, at first
voluntarily subscribed, but later raised by tax, and were accustomed to
grant “relief in lieu of labour” to persons out of work, for whom work
could not be found. Owing to the difficulty of finding work the overseers
resorted largely to the latter alternative. The Labour Party’s Bill,
needless to say, omitted the stern Elizabethan methods provided by law
for treatment of the work-shy—whipping, boring through the ear—and for
those who ran away, imprisonment for life. The social and industrial
abuses to which the system gave rise in the early days of the nineteenth
century are well described by Mr. Harold Cox in Chapter 5, “The Right
to Work,” of his book _Economic Liberty_. It is to be feared Mr. Thomas
Pearce (p. 57), labourer in husbandry, who was examined before the Poor
Law Commissioners of 1834, would even to-day experience similar treatment.

    “Asked whether in his parish there were many able-bodied men
    ‘upon the parish,’ he replied:

    “_Ans._ There are a great many men in our parish who like it
    better than being at work.

    “_Ques._ Why do they like it better?

    “_Ans._ They get the same money and don’t do half so much work.
    They don’t work like me; they be’ant at it so many hours, and
    they don’t do so much work when they be at it. They’re doing
    no good, and are only waiting for dinner-time and night; they
    be’ant working, it’s only waiting.

    “_Ques._ How have you managed to live without parish relief?

    “_Ans._ By working hard.

    “_Ques._ What do the paupers say to you?

    “_Ans._ They blame me for what I do. They say to me, ‘What are
    you working for?’ I say, ‘For myself.’ They say, ‘You are only
    doing it to save the parish, and if you didn’t do it you would
    get the same as another man has, and would get the money for
    smoking your pipe and doing nothing.’ ’Tis a hard thing for a
    man like me.”


The Failure of Work or Maintenance in France

One would have thought the experience of the French Revolutionary
Government of 1848 would have been conclusive as to the right to work.
Louis Blanc had published, in 1839, his great work, _Organisation du
Travail_, in which he preached the right to work and urged on the French
Government the advantages of its embarking on industrial production.
The Government was to raise a large loan, and with it establish and
equip national factories in every branch of industry. Workmen were to be
employed, but were to determine by popular election the grades of the
different workers. The net profits were to be divided into three parts,
one to be distributed equally among the workers, the second to be devoted
to the maintenance of the old, incapacitated and the sick, the third to
provide capital for extensions and renewals of the industry. The French
Government appointed Emile Thomas to set up _ateliers nationaux_, having
previously issued a decree that the Provisional Government of the French
Republic bound itself to guarantee the existence of the worker by means
of work and to guarantee work for all its citizens. The comic and the
tragic side of that great adventure are well described in _Histoire des
Ateliers Nationaux_, by Emile Thomas, and in _The Right to Work_, by J.
A. R. Marriott, M.P., Oxford University Press, and are too well-known
to require repetition. They proved a disastrous industrial and economic
failure, which of itself led directly to the revolution of June 1848.


Impossibility of Providing Suitable Work

At one time Labour proposed that only work should be provided for every
unemployed person, not “suitable work,” but the ludicrous absurdity
of this proposal became too obvious when it was seen to involve, for
example, the transference of the skilled shipwright or boilermaker
from the Tyne or the Clyde to work on afforestation in the Highlands
of Scotland, or on roadmaking, or some other work of which they had no
experience, in another remote part of the country. Now the demand has
been modulated into one for “suitable work,” which, at any rate, looks
more sensible on paper. Whatever chance, however, there may be of finding
some work for persons unemployed, there is much less scope for finding
suitable work. The lines of demarcation, which confine in water-tight
compartments the work of every trade, are so closely drawn, and the
determination of every Trade Union is so inflexible as to allow at no
time any other person than its own members to engage upon the work of its
particular trade, that at times of trade depression it is most difficult
to find suitable work. If no suitable work can be found in the district,
it can hardly be suggested that in times of depression shipwrights and
boilermakers on the Clyde, if they are out of work, should be moved to
other places, for example, to the Tyne or the Mersey, where there would
be, from the nature of things, local men of their own craft available.


Employment Depends Primarily on Demand

If workers are employed to produce commodities and services, and nobody
wants to buy them, it is obviously absurd to place workers on that class
of production. On the other hand, if they are called upon to produce
commodities and services which people do want and are prepared to buy at
a remunerative price, those goods and services can, and ought to, be
provided by the ordinary machinery of industry which is normally engaged
upon their production; to put unemployed upon that work is merely to
compete with, and undercut, those workers who are ordinarily engaged upon
that species of output, and throw them out of employment, making the case
no better than before. The truth is, as Mr. Harold Cox so forcibly puts
it in _Economic Liberty_, p. 74:

    “It becomes clear that we cannot increase the sum-total of paid
    employment unless we also increase the volume of commodities
    and conveniences which all men want. None of the schemes ever
    proposed for State employment for the unemployed do this. They
    are all designed not to produce things that somebody wants,
    but to provide an excuse for paying wages to people who cannot
    find work. In every case the work is made for the sake of the
    workman, and that very fact implies that the work is not wanted
    for its own sake.”

That brings us directly to the question of “relief works.” The only
economic justification for them is, that when, on humanitarian grounds,
payments have to be made out of public or municipal funds for the
maintenance of unemployed persons and their dependants, it is better,
instead of giving a dole without requiring any work, to ask for work
which may confer some benefit on the community paying wages for it. The
irony of the position is that the Trade Unions always ask that the wages
paid shall be full Trade Union rates, forgetting entirely that the work
is not remunerative work and that it is not at the time wanted by the
community, but only provided by the community at an economic loss.


The Farm Colony Fiascos

We have had some experience of attempts to provide “remunerative work.”

The Hollesley Bay Farm Colony was established in 1905 by the Central
Unemployed Body; the total expenditure on it between 1905 and March
31, 1912, was £178,253, the total realized by sales of produce of the
colony during the same period was £41,755, showing a net loss during
that time of £136,498. (See _Sixth Report Central (Unemployment) Body_,
1913, pp. 7 and 16.) Mr. John Burns, President of the Local Government
Board, speaking in the House of Commons, March 13, 1908 (_Parliamentary
Debates_, Vol. 186, 70), said in regard to the Hollesley Bay colony: “The
labour and the work of these men is brought into competition with the
local market gardeners and farmers, and when I go down to Hollesley Bay I
am confronted with small deputations of professional decent agricultural
labourers and servants of market gardeners, complaining of the fact
that our attempt, well-intentioned, charitably inclined, and fed with
State money, on behalf of the unemployed, is dispossessing the decent
agricultural labourer.” The South Ockenden Farm Colony was established
by the West Ham Guardians. Mr. John Burns said, in regard to it: “In
the whole time that that colony has been in operation—and no one will
but admit that I have given it the most generous and the most fatherly
assistance—out of the 790 who have gone through that colony, its object
being to train men for the land and to take them back to the land, there
is not a recorded instance of the men going back to agricultural work”
(_Parliamentary Debates_, Vol. 186, 70). On the same occasion Mr. Burns
referred to the Laindon colony established by the Poplar Guardians: “I
saw an old agricultural labourer between sixty and sixty-five years old,
digging in a field within 200 yards of the colony, getting 15_s._ or
16_s._ per week”—Mr. Burns had previously mentioned that the average cost
per week per man on the colony was 24_s._—“I said to him, ‘How long does
it take you to dig an acre of land?’ He said, ‘It takes me a fortnight to
dig an acre of that land.’ I went across the rail and found on the public
works sixty-seven able-bodied men ... taking ten days to dig an acre and
a half.” Thus, in the colony each man was digging at the rate of one acre
in 446 days, while the old agricultural labourer on the adjoining land
was digging one acre in 14 days. It will be remembered that the express
object of the Central Unemployed Body in setting up these colonies was
to provide productive work for the unemployed. No wonder that Mr. Burns,
with his great experience, expressed himself in the following terms, July
19, 1906 (_Parliamentary Debates_, Vol. 161, 425):—

    “I believe that relief works ought to be the last resort of
    any community. They sterilize volition, sap self-reliance, and
    introduce into industry those very conditions of irregularity
    and low pay which we are seeking to remove.... If the works are
    State-aided, charity-fed, tax-founded, or rate-subsidized, they
    will only be a form of public benevolence that will divert the
    right money in the wrong way to wasteful ends with demoralizing
    results. New works unproductive and unremunerative, fed by
    rates and taxes, are about the worst form of relief that can be
    imagined.”

Mr. Burns’s conclusion will be confirmed by every person who has any
experience of relief works. The work done is per unit immensely more
costly than if it were done under normal industrial conditions; the men
know it is not serious work, and therefore do not work.

If relief works have to be provided—and the unemployed cannot be left
to starve—what the works shall be, the conditions under which they
shall be executed, the extent to which the State ought to go, raise
extraordinarily difficult questions calling for the nicest judgment.

It is wholly unnecessary to emphasize the evil of doles, whatever form
they take, whether Poor Law outdoor relief or anything else. I have had
many cases under my personal notice of men who, being offered work at
reasonable rates of pay, refused to take it, stating that they were doing
better out of their various payments for unemployment—and they were.




Part II

GOVERNMENT LABOUR POLICY




CHAPTER XII

WAR-TIME LABOUR REGULATION AND ITS EFFECTS

    Co-operation between Employers and Unions at Beginning of
    War—The Unsettling Effect of Shortage of Labour—The “Treasury”
    Agreements of March 1915—The Limitation of Employers’
    Profits—Failure of Compulsory Arbitration—Effect of Relieving
    Employers of Responsibility for Labour Management—Increases of
    Wages and Prices—Relation of Wages to Cost of Living.


Many of our industrial difficulties to-day are due to the effect that the
war, and especially the measures which it was necessary for Government
to take during the war, have had upon the psychology of the workers. To
attempt a description of those measures in their entirety would be wholly
outside the scope of this book; those who wish to study them will find
a full and lucid description in _Labour Supply and Regulation_, by Mr.
Humbert Wolfe, C.B.E., shortly to be published by the Oxford University
Press. I am only concerned to deal with them so far as they provide
guidance for future policy.


Co-operation between Employers and Unions at Beginning of War

The most remarkable feature of the early days of the war was the
spontaneous co-operation between employers and workpeople. On August 4,
1914, the Clyde shipbuilding and engineering employers and employees
unanimously agreed to recommend their respective constituents to assist
in every possible way all firms employed on urgent Government work. On
August 10, a similar recommendation was adopted by the shipbuilding and
engineering employers and employees on the Tyne. The matter was carried
still further; on August 25, at a Joint Committee of the Parliamentary
Committee of the Trades Union Congress, the Management Committee of the
General Federation of Trade Unions and the Executive Committee of the
Labour Party, the meeting resolved that a strenuous effort should be made
to terminate all existing trade disputes, and that whenever new points of
difficulty should arise during the war, a determined attempt should be
made by all concerned to reach an amicable settlement before resorting
to a strike or lock-out. The spirit of this resolution was carried into
immediate effect. In July 1914, there were in existence over 100 trade
disputes, implicating 72,000 men; this number fell to twenty during
August, in which only 9,000 workpeople were concerned; at the beginning
of 1915 the number was reduced to ten, and in February 1915, to none at
all. The number of fresh disputes which arose between August and December
1914, was very small. That showed the effect that clear appreciation of
the national needs had both upon employers and employed.


The Unsettling Effect of Shortage of Labour

This happy state, unfortunately, did not long continue; and looking back
the reasons are now quite clear. When the war broke out unemployment
was generally feared, so much so that a Government Committee on the
Prevention and Relief of Distress was appointed which invited mayors
and provosts throughout the country to form local committees to deal
with unemployment. The Local Government Board urged local authorities to
expedite public work; even the Director of Army Contracts appended to
Government contracts a memorandum advising contractors that in executing
the work they should arrange for the employment of as large a number
of men as possible instead of working overtime. By December 1915, not
unemployment, but a grave shortage of skilled engineering workmen proved
to be the national difficulty. Various attempts were made to remedy the
shortage; first, by transferring skilled men from commercial work to
munitions work; next, by obtaining the release of skilled men from the
Colours; thirdly, by importing skilled Belgian refugees and mechanics
from Canada; fourthly, in some districts, by forming “king’s squads”
or mobile companies to work wherever they were most needed. All these
methods proved quite inadequate and the sole remaining course left open
was to make the best use of the skilled men who were actually available,
that is to say, to remove them from work on which unskilled men or women
could be employed and up-grade them on to the most difficult skilled
work which only a tradesman could undertake, or put them as supervisors
over the unskilled labour so brought in. This is what was popularly
known as “dilution,” but its successful introduction involved a definite
suspension of Trade Union customs.

In the late autumn of 1914, it was discussed at various conferences
between the employers’ federations and the unions, but without success.
In January 1915, the Government entrusted the problem to the Board of
Trade, and in February the Committee on Production under the chairmanship
of Lord (then Sir George) Askwith was appointed to formulate a programme
for Government action. It is easy, of course, to be wise after the event,
but it was an unfortunate circumstance, and deprecated by employers
themselves, that it should, in the first instance, have been left to
“Capital” to propose to the Trade Unions suspension of customs and
practices which the Trade Unions had spent years in establishing, and
which were regarded by the average workman as the bulwarks of his trade
rights. All these customs, for example, the limitation of apprentices;
the restriction on the working of certain machines by skilled men only;
the remuneration of overtime; the limitation of output; the exclusion of
women and also of men who had not served an engineering apprenticeship,
were designed for the purpose of building up a system under which the
Trade Union craftsman would have a monopoly of his trade, and be secured
as far as possible against unemployment. It was regarded by the men as
the natural instinct of every employer to break through these rules,
and so, by securing the right to bring in unskilled labour, to reduce
the standard of wages of skilled men. In spite of all undertakings by
employers that the alterations in working conditions would be only
for the period of the war, the workmen were never convinced that such
measures were really necessary in the interests of the country or
anything but devices of unscrupulous employers. Had Government in the
first instance undertaken the negotiation of these proposals, and not
left it to the employers, the history of munitions production would have
been very different.


The “Treasury” Agreements of March 1915

It was the Trade Unions themselves who represented to the Government that
if anything was to be done in the direction of suspending trade customs,
the Government would have to take the matter into their own hands. So,
in March 1915, a conference was held at the Treasury, when the Cabinet
made a direct appeal to the Trade Unions of the country, and concluded a
treaty known as the “Treasury” Agreement which, had it been successful,
would have secured for the war period a suspension of strikes and of
all restrictions upon output. The treaty, however, turned out to be
completely ineffective, and the cause is illuminating. At the beginning
of March the cost of living had gone up, according to the Board of Trade
statistics, to 15 to 20 per cent. above the July 1914 figure. There
was a general outburst throughout the country against profiteering;
Labour reprinted and circulated Mr. Bonar Law’s famous statement that
“well-managed ships to-day are making simply enormous profits, and those
profits come from the very cause for which the people of this country
are making sacrifices in every direction and even giving their lives”
(_Parliamentary Debates_, 1915, Vol. 69,793). The result was an immediate
increase in strikes. The following were the stoppages of work reported to
the Board of Trade:

Number of disputes in progress at beginning of 1915, 10.

    During January 1915   30 fresh disputes.
       ”   February  ”    47   ”       ”
       ”   March     ”    74   ”       ”
       ”   April     ”    44   ”       ”
       ”   May       ”    63   ”       ”


The Limitation of Employers’ Profits

The Amalgamated Society of Engineers was represented at the Treasury
Conference; its representatives, however, had been instructed not to
agree to any scheme until they had reported it to, and obtained upon it
the instructions of, their Executive Council. On that becoming known
to the Government, the Chancellor of the Exchequer convened another
conference on March 25, 1915, at the Treasury with the Amalgamated
Society of Engineers, and a further agreement was there signed. At
the conference the Amalgamated Society of Engineers insisted that the
Government should take steps to regulate employers’ profits, arguing
that it was unfair to prevent the workman from using his tremendously
increased economic power and at the same time leave employers free to
use theirs. A supplemental agreement was then made with the Amalgamated
Society of Engineers containing this clause: “That it is the intention of
the Government to conclude arrangements with all important firms engaged
wholly or mainly upon engineering or shipbuilding work for war purposes
under which their profits will be limited with a view to securing
that benefit, resulting from the relaxation of trade restrictions or
practices, should accrue to the State.” The national need for limiting
employers’ profits had been emphasized previously by the Committee
on Production. This recommendation had the strong approval of Lord
Kitchener; speaking in the House of Lords on March 15 (see _Parliamentary
Debates_, 1915, H. of L., Vol. 18,723) he said: “Labour may very rightly
ask that their patriotic work should not be used to inflate the profits
of the directors and shareholders of the various great industrial and
armament firms, and we are therefore arranging a system under which
the important armament firms will come under Government control, and
we hope that workmen who work regularly by keeping good time shall
reap some of the benefits which the war automatically confers on these
great companies.” Negotiations were undertaken by the Government with
various armament and shipbuilding firms with a view to the Government
taking possession of them, but these broke down and the Government
abandoned the idea. Other negotiations to limit, first, dividends, and
then, alternatively, net divisible profits, also collapsed and nothing
came of them. The fact that workmen were prevented from forcing higher
wages while employers were left free to make higher profits completely
nullified the “Treasury” Agreements and something had to be done. On June
9, 1915, the Ministry of Munitions was constituted by Act of Parliament.
Immediate steps were taken to draft the Bill which afterwards became the
Munitions of War Act, 1915. The Government appreciated the importance of
getting the Bill agreed to by Labour, as indeed they ultimately succeeded
in doing. The first point on which Labour insisted was the limitation
of profits of the employers. This was ultimately provided in Section
5. It only applied to “controlled establishments,” and until the later
introduction of the Excess Profits Duty the owners of non-controlled
establishments were allowed to make such profits as they thought fit. But
it was shutting the stable door after the steed was stolen. Throughout
the war, Labour never got rid of the notion that the profits of employers
were not restricted until Labour had forced the Government to restrict
them, and that even then the restriction was on a wholly inadequate scale.


Failure of Compulsory Arbitration

The substantial effect of the Munitions of War Act, 1915, was to give
statutory force to the “Treasury” Agreements. The obligations which
the Act imposed upon the owners of controlled establishments were
substantially the safeguards for Labour contained in the “Treasury”
Agreements, and upon Labour the provisions contained in those Agreements
preventing stoppages of work. Part I of the Act provided for the
settlement of labour differences and in certain cases for the prohibition
of strikes and lock-outs, and for compulsory arbitration. It might well
be thought that the circumstances of the war provided a unique occasion
for the success of compulsory arbitration, but it was a failure, signal
and complete. A great many Unions at first acquiesced in arbitration
because as long as prices continued to rise, advances of wages were more
or less automatically awarded, so as to adjust wages to cost of living.
When, however, the Unions refused to go to arbitration, or, if they went,
to comply with the award, it was impossible to make them. If 100,000
men cease work it is impracticable to prosecute or fine all of them;
to select a certain number soon raises cries of victimization, those
prosecuted are made martyrs, and funds are raised by their colleagues
for payment of their fines. While the pretence of enforcing awards was
maintained for a certain time, everybody concerned in the administration
of the Munitions Act knew that compulsory arbitration was a broken reed.
This was proved in the very month the Act was passed, namely, June 1915,
in the case of the miners’ strike in South Wales, to which reference is
made on p. 156. But in view of the absolute dead-lock at which collective
negotiations between employers and trade unions had arrived by the end
of 1914, it was essential for the Government to undertake the general
regulation of labour itself, and the powers for doing so were conferred
on the Minister of Munitions by the Munitions of War Act, 1915. Much
adverse criticism has been levelled at the labour administration of the
Ministry, but State regulation was the sole remaining remedy; if this be
remembered, it must be conceded that labour was regulated as efficiently
as circumstances allowed.


Effect of Relieving Employers of Responsibility for Labour Management

One unfortunate, though inevitable, effect of the Munitions of War Act,
and the regulation of labour by the Ministry of Munitions, was the extent
to which employers ceased to manage the labour in their own works. Though
profits were limited, work was plentiful, and prices ample; they were
assured of business without much effort on their part. In addition,
many employers resented, and probably not unnaturally, the intervention
of the Ministry of Munitions in labour disputes, and when disputes did
arise, instead of endeavouring to settle them with the men, contented
themselves with reporting them to the Ministry. On the other hand, Trade
Unions found it an easier matter to report disputes to, and discuss them
with, the Ministry rather than go to the trouble, as before the war, of
discussing them with each individual firm. Whatever may have been the
real cause, the effect undoubtedly was that the passing of the Munitions
Act in 1915, inevitable as it was, has contributed materially to the
aloofness which now exists between employers and their workers.

It was not in the normal administration of labour by the Ministry of
Munitions that harm occurred—it was when, for political considerations,
particular action was forced upon the Ministry by politicians, that real
detriment was inflicted upon industry. An example of that is the famous
12½ per cent. bonus. It is well-known that the Ministry and the Admiralty
were strongly opposed to that fatal action, but it was thought expedient
for Government to try and placate Labour not merely in reference to
then existing difficulties, but with a view to possible political
developments, and so the bonus was given. As Director of Shipyard Labour
of the Admiralty, with over a million men who would be affected by the
decision, I strongly protested against it. My protest was registered on
the War Cabinet minutes; I stated it would subject the country to an
extra annual wages bill of 95 million sterling; I was wrong to the extent
of 7 millions, it proved in the end to be 102 millions.


Increases of Wages and Prices

One important question is the position in which the war left the
workmen so far as standard of living is concerned; that involves some
consideration of wages and prices. It is unnecessary for me to discuss
that at length; Professor Bowley in _Prices and Wages in the United
Kingdom, 1914-1920_, Oxford University Press, has now most ably dealt
with the matter, and reference should certainly be made to that book on
this crucial question. In his speech on January 29, 1920, at the Annual
Meeting of the London Joint City and Midland Bank, Ltd., the Right Hon.
R. McKenna succinctly described how prices rose:

    “At the outbreak of war, throughout its course, and right down
    to the present moment, the Government have been large buyers
    of commodities, greatly in excess of their normal demands. The
    first consequence of the immense Government purchases was to
    stimulate production. Machinery was used to its full capacity;
    the number of people employed was greatly increased; women took
    the place of men, and there was a very considerable addition
    to the total national output. But enlarge the output as we
    would, it could not keep pace with the nation’s requirements.
    Demand outstripped supply, and, just as it happens when a
    period of comparative trade depression is succeeded by a
    trade boom, there was a natural rise in prices. At once more
    currency was needed, partly to pay the wages of the larger
    number of workpeople employed, partly because with higher
    prices shopkeepers keep more money in their tills. To the
    extent that more currency was issued the spending power of the
    community was increased. But up to this point the increase was
    not great. A new condition had to be introduced before any
    considerable rise could take place. There must be not merely
    an increase in currency, the total of which, in any case, only
    represents a small part of the public spending power; but,
    far more important, there must be a serious addition to Bank
    deposits. It was not long before this new condition arose.
    To meet the daily growing expenditure the Government had to
    borrow freely from the public, from the banks, and from the
    Bank of England. It is unnecessary to recapitulate the effects
    of this borrowing. Bank deposits increased enormously. There
    was no proportionate increase in the supply of goods and the
    usual consequences followed. Prices began to rise rapidly.
    The rise in prices was next followed by general demands for
    increased wages. As these now rose the cost of production rose
    too, and another turn was given to the screw on which prices
    were steadily mounting. But higher wages have got to be paid
    in legal tender money. In the course of the week the bulk of
    the money paid out in wages comes back through the shops to the
    Banks, and is paid out by them again to meet the next week’s
    requirements. But, as prices and wages rise, not all of it
    comes back, and each week a larger amount is retained in the
    pockets of the people, in the tills of shopkeepers, and in the
    tills and reserves of the Banks.

    “We may stop here to ask, is there any stage in this process
    at which it would have been proper to limit the issue of
    currency? The main demand for currency is to meet the weekly
    wages bill. If wages increase, whether because more workpeople
    are employed, or because rates are higher, additional currency
    must be brought each week into circulation. If the supply were
    cut off, a substitute would have to be found. At the outbreak
    of war there was not enough legal tender money to satisfy our
    additional requirements and at once postal orders and even
    postage stamps were used to make good the deficiency. If men
    and women are to be employed and paid, means of paying them
    must be found, and an arbitrary limitation of currency would
    merely inflict intolerable inconvenience upon the public.”


Relation of Wages to Cost of Living

It is customary to measure the cost of living among the working-classes
according to the basis of the Ministry of Labour. The Ministry works on
an average pre-war working-budget of food, rent, clothing, light and
fuel, and miscellaneous items, and ascertains its cost month by month.
(See _Labour Gazette_, February 1921.) The cost in July 1914, is taken as
100, the greater cost each month since appearing as 100 and something;
this is called the “index-number.” What the Ministry does, therefore, is
to measure the average increase in the cost of maintaining the pre-war
standard of living of the working-classes; it does not, however, take
in account any modification of the standard, which, of course, was
customary; as for instance margarine used when butter was not obtainable.
Lord Sumner’s Committee on the Cost of Living to the Working Classes
(_Parliamentary Paper_, 1918, Cd. 8980), showed by actual investigation
that the index-numbers of the Ministry did not then represent current
conditions, but were too high. On the other hand, the Joint Committee on
the Cost of Living[10] is of the opinion the figures are under-estimates.
All these matters are discussed very fully in the book by Professor
Bowley, who gives his own modified index-numbers. Professor Bowley
sums it up in these words: “There can be no doubt that some sections,
especially the worst paid of the working-classes, were better off in
the summer of 1920 than before the war, and it is probable that other
sections were worse off. It is not possible to decide whether the average
of all wages, measured in purchasing power, had risen or fallen.” If,
however, one takes the wages in certain trades, for example, railways,
mining, and engineering, and compares them with the cost of living since
July 1914, they appear in the following relation:

    ----------+---------+----------+--------+--------+--------------------
              | Ministry| Professor|        |        |
              |of Labour| Bowley’s | Railway| Miners’|    Engineers’
              | Cost of | Modified |  Wages.| Wages. |      Wages.
              | Living  |  Index   |        |        +--------+-----------
              | Index.  | (p. 106) |        |        |Skilled.|Unskilled.
    ----------+---------+----------+--------+--------+--------+-----------
    July 1914 |   100   |    100   |   100  |   100  |   100  |   100
      ”  1915 |   125   |   (120)  |   110  |   113  |   110  |    —
      ”  1916 |   145   |   (135)  |   120  |   129  |   111  |    —
      ”  1917 |   180   |   (160)  |   155  |   136  |   134  |   154
      ”  1918 |   205   |    180   |   195  |   187  |   173  |   213
      ”  1919 |   210   |    185   |   225  |   224  |   199  |   255
      ”  1920 |   252   |    220   |   280  |   260  |   231  |   309
    ----------+---------+----------+--------+--------+--------+-----------




CHAPTER XIII

NORMAL GOVERNMENT LABOUR POLICY

    Government Departments Concerned—Conciliation and
    Arbitration—Whitley Councils—Industry’s Own Conciliation
    Machinery—State Conciliation Machinery—Statutory Minimum
    Wages—Employment Exchanges—The Work of the Ministry of Labour.


Before the creation of the Ministry of Labour in 1916, a general
surveillance of labour conditions was maintained by the Chief Industrial
Commissioner’s Department of the Board of Trade. The Ministry of Labour
was formed in 1916 and absorbed the Chief Industrial Commissioner’s
Department, and took over also from the Board of Trade the administration
of Unemployment Insurance, Trade Boards and Labour Exchanges.


Government Departments Concerned

The Statutes under which the Ministry of Labour acts are: Conciliation
Act, 1896, and Industrial Courts Act, 1919, in relation to conciliation
in, and settlement of, labour disputes; Labour Exchanges Act,
1909—establishment and administration of Employment Exchanges;
Unemployment Insurance Acts—insurance against unemployment; Trade Boards
Acts, 1909-1918—fixing of statutory minimum rates of wages. In addition,
the Ministry has a number of temporary duties such as the training of men
disabled in the war and of youths whose apprenticeship was interrupted
by war service. Certain other branches of labour legislation are
administered by other Government Departments as shown below: (1) The
Factories and Workshops Acts and allied legislation dealing with the
hours of employment of women and young persons, the health and safety
of the workers, dangerous and unhealthy trades, etc., and the Shops
Acts, regulating the hours of employment of shop assistants, by the
Home Office; (2) Employment so far as dependent on the Education Acts,
by the Board of Education; (3) The Mines Acts, regulating the hours and
conditions of employment of persons employed underground in coal mines,
by the Board of Trade (Mines Department); (4) The Health Insurance Acts,
dealing with the insurance of workpeople against sickness, and the
Workmen’s Compensation Acts, dealing with compensation in the event of
accidents arising out of, and in the course of, a workman’s employment,
by the Ministry of Health.


Conciliation and Arbitration

The general machinery for settlement of industrial disputes in this
country by conciliation and arbitration is composed of (1) conciliation
machinery within the industry, (2) State machinery. The former consists
of voluntary machinery comprising (i) Joint Industrial Councils—these
being bodies upon which organized employers and workpeople are equally
represented, set up in a number of industries in accordance with the
recommendations of a Committee appointed in 1916 and presided over by
the Right Hon. J. H. Whitley, M.P., now the Speaker of the House of
Commons; (ii) permanent voluntary conciliation boards—an older form
of joint body equally representative of employers and workpeople, but
differing from the Joint Industrial Councils in that the conciliation
boards tend to confine their activities mainly to questions of wages
and working conditions while the Councils take into consideration
all matters appertaining to the industry; (iii) recognized procedure
arranged by organizations of employers and workpeople, not having a
formally constituted conciliation board, providing for the discussion of
differences as and when they arise.


Whitley Councils

Up to the end of 1921 Joint Industrial Councils had been established in
73 industries and services; 15 are at present in suspense; 1 has been
absorbed by another Council. In addition, there are 10 active Interim
Industrial Reconstruction Committees in trades to which the Whitley
Scheme cannot as yet be fully applied owing to lack of organization.
The Joint Industrial Councils and Reconstruction Committees at present
functioning cover about 3¾ million workpeople. The Whitley Scheme
contemplates the establishment, under the National Joint Industrial
Councils, of District Councils—equally representative of employers and
employed—and Works’ Committees, comprising management and men in equal
numbers, and many such bodies have been formed. The activities of Joint
Industrial Councils have been directed largely to the settlement of
wages claims and the adjustment of working hours, two problems forced
into special prominence by the abnormal economic conditions of the past
few years. But other questions of working conditions, e.g. overtime
payments, payments for holidays, walking-time allowances, out-working and
subsistence allowances, fines for late arrivals have also been discussed
by the Councils. Some have considered the problem of unemployment and
arrangements for contracting out of the National Unemployment Insurance
Scheme; others have prosecuted statistical investigations and research
into their particular industries; all of them have considered questions
of welfare in conjunction with the Home Office; certain of them have
considered some commercial matters which affect their industries. The
Government agreed to regard a Joint Industrial Council as the Standing
Consultative Committee for its industry, and in a number of instances
matters such as the foregoing have been discussed on the initiative of
the Government. A few Joint Industrial Councils do not deal with wages
questions, viz., building, boot and shoe, paper making, printing, and
metallic bedsteads, as machinery for the settlement of wages existed in
these trades before the Councils were established and it was thought by
the industries better to continue such machinery. Certain industries
in which organization of employers and employed is well developed,
such as iron and steel, coal, cotton, engineering, shipbuilding, have
not favoured the formation of a Joint Industrial Council. In them
conciliation boards or some well-recognized machinery is in existence for
the settlement of disputes.

These facts show the results which have attended the efforts of the
Ministry of Labour, acting in tactful co-operation with the employers and
employed in various industries, to set up Joint Industrial Councils.


Industry’s Own Conciliation Machinery

A unique feature of industrial evolution in the United Kingdom has been
the establishment of permanent voluntary Conciliation Boards in very many
industries, by agreement between employers and workpeople, unsupported by
legal enactment, and depending solely for their success on the goodwill
of the parties. Such Boards have existed for many years past. The Board
established in the Nottingham glove and hosiery industry in 1860 is
probably the first example of permanent machinery in any industry for
the systematic treatment of labour disputes. There is a large number of
Conciliation Boards in existence. The value of Conciliation Boards (as of
Joint Industrial Councils) depends on their ability to prevent stoppages
of work rather than on power to settle strikes or lock-outs which may
have already taken place. In most cases, the rules of Conciliation Boards
provide that no stoppage of work shall be permitted pending consideration
of the difference by the Conciliation Board—in some cases, the rules
state that, if a stoppage of work has occurred, the Board will refuse
to discuss the matter until work has been resumed. The membership of
a Board consists usually of equal numbers of representatives of the
employers’ associations and of the Trade Unions, parties to the agreement
establishing the Board. Accordingly, it not infrequently happens that
the two sides of the Board are equally divided on the question brought
before them, and the efficacy of a Board as an instrument for composing
differences depends largely upon the steps normally adopted for resolving
such a dead-lock. The rules of some Conciliation Boards contain a clause
providing that, in the event of failure of the parties to effect a
settlement of a dispute, application shall be made to the Ministry of
Labour for the appointment of an umpire, arbitrator or conciliator. The
changed conditions during the war, and the special war-time provisions
which were necessary for dealing with disputes, had a remarkable effect
upon the forms of conciliation machinery in this country, with the result
that, in several important industries (e.g. building), the machinery is
under revision.

An illustration of the working of Conciliation Boards is afforded by
those in the iron and steel industries, which, although now under
reconsideration in some districts, have been in existence for many
years. In them the remuneration of the majority of the workpeople is
regulated by sliding scales under which wages rise and fall in accordance
with prescribed advances or reductions in the selling price of the
manufactured article, this price being ascertained by accountants at
specified intervals. Although the general adjustment of wages is the
main object, other useful functions are exercised in these trades by
the Boards. Amendments of the sliding scale, alterations in method of
working, fixed rates for special classes of work, variation of prices
according to difficulties in manufacture, and other similar questions
have come under the consideration of the Boards. The Conciliation Boards
in the manufactured iron and steel trades show a great similarity in
constitution and procedure. They are composed, not of representatives of
employers’ and workpeople’s associations, but of one representative of
the workpeople and one of the employers from each of the works affiliated
to the Board. Their methods of procedure are alike in affording
opportunities for the parties to a dispute to arrive at a settlement by
themselves, the services of the Board not being sought until other means
have failed. Their rules stipulate that individual causes of complaint
must first be discussed between the aggrieved workmen and the employer
or his representative. In all cases, except that of the South Wales Iron
and Steel Wages Board, the rules provide that, failing a settlement, the
question shall then be discussed between the workman, accompanied by his
Board representative, and the employer or his representative. In the case
of some of the Boards, questions which have passed this stage without
a settlement are referred to a Standing Committee, and it is only on
the failure of this Committee to effect a settlement, that matters are
brought before the Board itself.

For many years the boot and shoe industry has been covered by a series
of Local Conciliation Boards existing in all the centres of the
industry—questions affecting the industry as a whole being dealt with
at National Joint Conferences presided over by an independent Chairman
appointed by the Ministry of Labour. Each Local Board appoints a
Committee of Inquiry consisting of two manufacturers and two workmen; in
case of disagreement, each side of the Board elects an Arbitrator to whom
is remitted for arbitration any dispute referred to the Board and which
the Board is unable to settle. Should the two Arbitrators not agree the
questions are referred to an Umpire appointed by themselves or by the
Ministry of Labour. The rules of the Local Conciliation Boards provide
that the procedure to be followed in cases of dispute between an employer
and his workmen shall be as follows: (_a_) the workmen shall first bring
the matter before the employer or foreman; (_b_) should they not be
able to agree the representatives of the Employers’ Association and the
representatives of the Workmen’s Union shall endeavour to settle the
matter in dispute; (_c_) if these representatives are unable to arrange
terms the Secretary of the Board shall forthwith advise the Committee of
Inquiry of the dispute; (_d_) in the event of the Committee of Inquiry
being unable to settle the dispute it shall be referred to the Board,
and, failing a decision, then to the Umpire or Arbitrators, who shall be
asked to give their decision within seven days from the date of hearing.
This conciliation scheme is the most important of the few to adopt the
system of financial penalties.

In addition to the Conciliation Boards, there is a variety of
arrangements which, although not coming within the definition of a
Conciliation Board, provide definite procedure for the consideration
and settlement of differences. Two examples may be given: the highly
organized cotton industry has not adopted conciliation board procedure,
but the “Brooklands” Agreement, signed in 1893, at the termination of
the great contest, provided for many years machinery for settlement of
disputes in the spinning branch of the industry. This Agreement has
now been superseded by new provisions for avoidance of disputes. As
regards other sections of the industry, the principal agreement is that
existing between the North and North-East Lancashire Cotton Spinners
and Manufacturers’ Association and the Northern Counties’ Textile
Trades Federation. Under this agreement, the procedure is similar to
that adopted in the case of the Brooklands Agreement and provides for
a meeting of representatives of employers and operatives in the branch
of trade affected; if no settlement is arrived at, the dispute is to
be brought before a joint meeting of the members of the Employers’
Association and the Amalgamated Association of Trade Unions formed in the
section concerned; if this meeting fails to effect a settlement, then
the matter is to come before a joint meeting of representatives of the
Manufacturers’ Association and the Northern Counties’ Federation. Until
all these steps have been taken and have failed, no strike or lock-out
notices are to be given. An important feature is a provision that, in
cases of stoppages of work, meetings of the representatives of the
signatories shall be held at intervals of four weeks in Manchester until
the dispute has been settled.

Similarly, Conciliation Boards have not been adopted in the engineering
trades. The principal agency for conciliation in these trades is that
afforded by the “Terms of Settlement” signed in 1898 on the termination
of the great dispute which had commenced in the previous year. This
agreement, revised in 1907, provides, _inter alia_, for the discussion
of grievances in the first instance by employers and workpeople or
their representatives. Should a settlement not be effected by this
method, a local conference of employers’ and workpeople’s associations
may then be called to consider the matter, and if the question still
remains unsettled, it can be referred to a central conference between
the Executive Board of the Employers’ Federation and the Executives of
the Trade Unions signatory to the agreement. No stoppage of work is
permissible until this procedure has been fully carried out. An agreement
dated May 20, 1919, amplified the previous agreements by the recognition
of shop stewards and the institution of Works’ Committees.

This voluntary machinery (i.e. permanent voluntary conciliation boards
and recognized procedure for discussion) covers a number of the
principal trades of the country, such as building, coal mining, iron
and steel, engineering, shipbuilding, cotton, boots and shoes. Before
the war, there were some other industries of considerable importance in
which Conciliation Boards or other permanent machinery did not exist,
presumably owing to lack of organization of the parties, e.g. dockers,
carters, seamen, agricultural workers. This has to some extent been
remedied during and since the war.


State Conciliation Machinery

Supplementary to the Whitley Councils, voluntary conciliation boards
and similar procedure, which are responsible for the settlement of the
bulk of the differences that arise, there exists the State machinery—on
the one hand, the Industrial Court; on the other hand, the Trade Boards
for poorly organized trades. The Industrial Courts Act, 1919 (which
for practical purposes embodies the Conciliation Act, 1896), defines
the Government’s powers of intervention in industrial disputes, such
intervention being necessary in cases where the joint machinery is not
adequate or where the joint machinery has failed to effect a settlement.
The Act sets up a permanent Court of Arbitration,[11] to which recourse
can be had by parties to industrial disputes if both parties to the
dispute consent. Although permanent provision for voluntary arbitration
is thus made by the establishment of the Industrial Court, it has been
the policy of the Ministry of Labour, if not always the practice of
the Cabinet, that trade disputes should be settled as far as possible
by negotiation between Employers’ Associations and Trade Unions. When
this fails or a Joint Industrial Council, or a Conciliation Board
cannot arrive at an agreement, the Industrial Court is an independent
authoritative tribunal to which such differences can be referred.

Should the parties so desire, a dispute can be referred by the Minister
of Labour under the Act either to a single arbitrator appointed by him
or to a special Board of Arbitration composed of members selected by the
parties from panels of persons appointed by him to act on these Boards.
Reference to the Industrial Court is, however, the normal procedure. A
dispute may be referred for settlement under the Industrial Courts Act
only after the exhaustion of all available means for conciliation already
existing in the trade. Under the Industrial Courts Act, the Minister
has power to establish a Court of Inquiry to investigate the causes and
circumstances of any industrial dispute, whether the dispute exists or is
merely apprehended; moreover, to this course the consent of the parties
is not required. These Courts have no power to settle the dispute by
arbitration, but are restricted to making a report which serves to put
before the public an impartial account of the merits of the case, with
possibly a recommendation as to the best course to be pursued to effect a
settlement.

The policy of the Ministry of Labour is to place the prime responsibility
for the harmonious working of industry upon the employers and employed
in each industry, and only to intervene when negotiations between the
employers and the Trade Unions have broken down, and then merely for
the purpose of bringing them together again and trying to promote a
solution of the difficulty acceptable to both sides. Since the armistice,
the industrial situation has been peculiarly difficult, and in certain
disputes, there has been a political as well as an industrial element
which would have made a settlement almost impossible whatever machinery
existed, but on the whole it may be claimed that the existing policy of
the Ministry of Labour has been fully justified by the results.


Statutory Minimum Wages

Voluntary conciliation machinery can function successfully only in
those trades where both employers and workpeople are sufficiently
well-organized to enable a collective agreement to be made effective.
There must always remain a large section of industry which is poorly
organized and for which other means are required for the proper
regulation of conditions. State action has accordingly been found
necessary to enable the less well-organized trades to fix minimum wages
and to enforce proper observance of them; this has been done by means of
Trade Boards. The Trade Boards Act of 1909 was passed with the avowed
object of eradicating the evils of “sweating”; four trades only were
included under the Act, but power was given to the responsible Department
(then the Board of Trade) to bring additional trades under the Act from
time to time by Provisional Order. In 1918, an amending Act was passed
substituting procedure by Special Order for procedure by Provisional
Order and modifying the description of the trades which could be brought
under the Acts. The Minister of Labour is empowered to extend the Trade
Boards Acts to trades to which the Acts do not already apply, if he
considers there is no effective machinery in them for the regulation
of wages, and that, in view of the rates of wages prevailing in them,
a Trade Board is desirable. For this purpose an investigation into the
conditions in the industry is first made and, if there be a _prima facie_
case for the application of the Acts, the Minister gives notice of his
intention to make a Special Order under the Acts. A period of at least
forty days must be allowed, in which, if objections are received, the
Minister must order a public inquiry to be held by some person not in
Government employment, unless he decides to amend or withdraw the order,
or unless the objections are merely frivolous. On receiving the report of
the inquiry, the Minister then decides whether he should make an Order
with a view to establishing the proposed Trade Board or not.

A Trade Board consists of an equal number of representatives of employers
and of workpeople in the trade, to whom are added a neutral chairman
and two or four persons unconnected with the trade, who are known as
“appointed members.” Where there is any organization among the workpeople
or employers, the Trade Unions and employers’ associations are asked to
nominate representatives. Where there is no effective organization, the
only practicable method is for the Minister to nominate members selected
to represent the various types of work done in the trade and the various
districts where it is carried on. The number of members varies according
to the needs of the trade. Where women are largely employed in the trade,
at least one of the “appointed members” must be a woman.

A Trade Board must fix a minimum rate or rates of wages for time-work.
Where no other rate has been fixed, piece-workers must be paid at rates
sufficient to yield to an ordinary worker at least as much money as the
minimum time-rate. It also has power to fix general minimum piece-rates,
a guaranteed time-rate for piece-workers, a piece-work basis time-rate
on which piece-work prices must be based, overtime rates, and for this
purpose the Board has power to declare what is the normal number of
working hours per week in the trade. A Board can, if it thinks fit, fix
minimum rates of wages for all classes of workers throughout its trade,
or, if it chooses, fix only a general minimum time-rate, and leave other
rates to be settled between the employers and workpeople themselves. When
a rate has been fixed, every employer in the trade must exhibit the Trade
Board’s notice, giving full particulars of the rate, in his factory, or
in the place where work is given out. Any employer who pays wages at less
than the minimum rate is liable to a fine of £20 for each offence and to
a further fine of £5 for each day after his conviction on which he fails
to pay the legal rate. Any worker who thinks he is not receiving the rate
due to him may complain to the Minister of Labour or to the Trade Board.

The number of Trade Boards at present in existence is 44. Of these 5
are for England and Wales, 5 for Scotland, and 34 for Great Britain.
By May 10, 1922, 30 Boards had been set up in Ireland. These Boards
covered in all approximately 3 million workpeople. The Trade Boards are
independent bodies, though they are financed and staffed by the Ministry
of Labour and though their rates are subject, as described above, to
confirmation by the Minister. The Minister of Labour has announced his
intention to introduce legislation dealing with the recommendations of
a Committee appointed in September 1921, under the chairmanship of Lord
Cave, to inquire into the working and effect of the Trade Boards Acts
(_Parliamentary Paper_, 1922, Cmd. 1645). A statement of the Government’s
new policy appears at p. 286 of the _Labour Gazette_ for July 1922.


Employment Exchanges

The Ministry of Labour is responsible for the administration of the
Employment Exchanges established under the Labour Exchanges Act, 1909,
which now number over 400 in Great Britain. The work of the Exchanges
falls under two main heads, viz., that of bringing together employers
requiring workpeople, and workpeople desiring employment, and that of
administering the National Unemployment Insurance Scheme. As illustrating
the amount of work performed by the Exchanges during the seven years 1914
to 1920 inclusive, the average number of yearly placings was 1,360,000.
The organization of the Exchanges provides a ready means of bringing
a demand for labour from any part of the United Kingdom into touch
immediately with a supply in any other part. Railway warrants are issued
by the Exchanges in necessitous cases subject to a signed undertaking
being given, either by the workman or his prospective employer, to repay
the amount involved.

Women are dealt with in a separate department of each Exchange, which,
in all but the very smallest Exchanges, is in charge of a woman officer
and is staffed by women. The administration of unemployment insurance has
greatly increased the work of the Exchanges in connection with women.
Under the old Insurance Acts about 500,000 women were insured against
unemployment, but this number has been increased to 2,750,000 under
the Unemployment Insurance Act of 1920. Since the war, in addition to
dealing with industrial and commercial occupations, the Exchanges deal
with private resident domestic service as a permanent part of their
work, and also with applicants who are desirous of obtaining employment
over-seas. They co-operate with the Central Committee on Women’s Training
and Employment in selecting women for training courses. In all these
matters, and in interviewing and advising unemployed women, valuable
assistance is rendered by the Women’s Sub-Committees of the Local
Employment Committees. Boys and girls under the age of eighteen are dealt
with in a special department of each Exchange, except in the case of the
smallest Exchanges. In about 250 areas, Juvenile Employment Committees
have been set up in connection with Juvenile Departments of Exchanges.
These Committees have been appointed under the Labour Exchanges Act,
1909, the Education (Choice of Employment) Act, 1910, or the Education
(Scotland) Act, 1908.

During the war, the Exchanges were very largely used by the Government
for the purpose of organizing the supply of labour for munitions and
essential services. The various measures included schemes for (1)
registration and enrolment so that skilled and other essential workers
could be removed from one part of the country to another, (2) the
temporary release of serving soldiers for munitions and essential work,
(3) the supply of substitutes to enable more workers to be recruited in
the army from essential industries and services, and (4) the recruitment
of women workers for munition work.

The Juvenile Employment Committees consist of representatives of
educational and industrial interests in the districts, together with
other persons especially concerned in promoting the welfare of boys and
girls. In the year 1917, the Minister of Labour decided to associate with
each Employment Exchange a Local Employment Committee (at first known as
a Local Advisory Committee) to secure for the Exchange the full benefit
of local knowledge and to bring it into close touch with employers and
workpeople in the district. Local Employment Committees are composed of
equal numbers of representatives of employers and workpeople, together
with a certain number of additional members (not exceeding a third of the
total membership) who are not necessarily connected with industry—among
the additional members representation of ex-service men is provided for.
The Chairman is nominated by the Minister and the Committee themselves
appoint a Vice-Chairman. It is one of the most important duties of these
Committees to keep a close watch over the state of employment in their
area. Where the local unemployment is severe, it is open to them to urge
upon local authorities and private employers the need for widening the
field of employment where necessary, and also to advise the Minister with
regard to any difficulties which might be removed by departmental action.
At the present time the Committees assist in the selection of men from
the Exchange registers for employment under schemes devised to relieve
abnormal unemployment. _See_ pp. 187 and 191.


The Work of the Ministry of Labour

The Committee on National Expenditure[12] (see _Parliamentary Paper_,
1922, Cmd. 1581) proposed to abolish the Industrial Relations Department
of the Ministry of Labour. They observe that “with the knowledge that, in
the end, there will be Government intervention, neither side will have
the same incentive to make the final proposals which might lead to a
settlement of the dispute.” This appears to me an exceedingly hazardous
proposal. Anyone with experience of industrial disputes knows that
occasions occur when reason disappears, tempers rise and responsibility
vanishes, and neither side will meet the other. It is essential in such
circumstances for a Government Department to act the go-between if the
community is not to suffer. At some time intervention is imperative, and
it is a question whether it should be that of the Ministry of Labour
working on a consistent policy or of the Cabinet in Downing Street which,
lacking the industrial experience of the Ministry, is apt to settle a
dispute on any policy, but this question I discuss later at length. The
Committee on National Expenditure found that, so long as unemployment
insurance is on the present basis, Labour Exchanges are required as
agencies for checking payments of unemployment insurance benefits,
but not as Labour Exchanges; they recommended that if unemployment
insurance by industry could be secured that the Labour Exchanges should
be abolished. It is quite clear that that cannot be done, nor does the
Committee recommend it to be done while the present National Unemployment
Insurance Scheme continues. If insurance by industry is found to be
practicable, it may be necessary, from motives of economy, to abolish the
Exchanges. Apart from that justification it would be, I think, greatly to
the national detriment to do so. While an employer cannot take all his
labour through the Exchanges, employers generally learned during the war
to appreciate their value. Trade Unions started by being suspicious of
the Exchanges, largely because the local delegate of an organized Trade
Union regarded it as an important piece of patronage to supply labour of
his trade to employers in his district, and he considered the exercise
of that patronage as no unimportant factor affecting his re-election.
Although in certain districts, no doubt, Exchanges can be abolished, in
the main industrial centres their continuance is essential particularly
for trades which are ill-organized.

I can say from my own practical experience during the war that the
munitions industries could not have been conducted without the expert
services rendered by the Labour Exchanges. As Chairman of the Clyde
Dilution Commission and of the Tyne Dilution Commission, as Commissioner
for Dilution on the Mersey and in Barrow-in-Furness, as Director of
Shipyard Labour, I worked in the closest touch with them. Their officers
were invariably men known to, and respected by, local employers and Trade
Unions, and possessed a complete grasp of district labour conditions. The
work they did in the early days of the war, both in connection with the
Ministry of Munitions and the Admiralty, in settling labour differences,
is as notable as it is unknown. They formed the nucleus on which the
local labour staffs of the Ministry of Munitions and the Admiralty were
ultimately built up.




CHAPTER XIV

GOVERNMENT LABOUR POLICY FOR THE COAL INDUSTRY

    Pre-war Conditions—The South Wales Strike of 1915—Government
    War-time Control—The Sankey Commission—The Mining Industry Act,
    1920—The Strike of October 1920—The Strike of April 1921—The
    Failure of Part II of the Act of 1920—Royalties—Summary of
    Government Policy.


Pre-war Conditions

The relationship between employers and employed in the coal industry has
been more profoundly modified during the war than in any other great
national industry. Before 1914, there existed the Coal Mines Regulation
Acts, 1887-1908, and later the Coal Mines Act, 1911, which consolidated
and re-enacted with amendments many earlier Acts dealing with employment
in mines, payment of wages, and other matters affecting mining. The Act
of 1908 limited the hours of work underground to eight per day exclusive
of one winding. By the Coal Mines (Minimum Wage) Act, 1912, provision
was made for the fixing of minimum rates of wages for miners in each
mining district by Joint District Boards of mine owners and miners.
Before the war, and indeed up to September 1917, wages were expressed
at varying percentages above district basis rates, which had been fixed
at various times in the different districts. In one district, Durham,
the percentages varied with the selling price of coal. This system was
introduced into Northumberland also in 1914. A similar system was at
one time in operation in South Wales, but had been abandoned before the
war. In October 1912, the Miners’ Federation adopted the Nationalization
of Mines and Minerals Bill for constituting coal-mining a Government
industry to be worked by a Government Department. Then came the war.


The South Wales Strike of 1915

The South Wales miners gave notice to terminate on June 30, 1915, the
peculiar agreement under which, since March 1910, their wages had varied
within a minimum of 35 per cent. and a maximum of 60 per cent. above the
basis rate of 1879, according to the selling price of large coal f.o.b.
in Welsh ports. When coal sold between 14_s._ and 14_s._ 9_d._ per ton,
wages were 50 per cent. above the 1879 basis, and they were raised or
lowered by negotiation for each 1_s._ up or down in the price. In March
1913, wages had reached the maximum and had remained there. The prices of
Welsh coal in 1915 on yearly contracts, on which the bulk of the business
was done, were 18_s._ to 19_s._ per ton, prices for other coal being up
to 35_s._ per ton. The South Wales miners demanded a new standard 50 per
cent. over the 1879 basis; abolition of the maximum; a new minimum 10 per
cent. above the new standard to be paid when the average selling price
of large coal was at or below 15_s._ 6_d._ A selling price of 15_s._
6_d._ meant, under the 1910 agreement, wages 57 per cent. above the 1879
basis—and under the claim meant wages 65 per cent. above that basis. The
rest of the miners in Great Britain had claimed a war bonus of 25 per
cent. on earnings, and Lord St. Aldwyn had awarded 17½ per cent., which
was accepted. The South Wales miners’ chief purpose was to establish a
higher minimum as against a post-war depression in trade, and to secure
during the war higher wages as coal mounted in price. Negotiations
between owners and miners broke down—the former agreed to, the latter
refused arbitration—the Navy relied on South Wales for coal—a strike was
imminent. Mr. Runciman, the President of the Board of Trade, offered the
South Wales Miners’ Executive generous terms which the Executive accepted
“as the basis of negotiations,” viz., a new standard 50 per cent. above
1879 provided that the alteration of the standard should not in itself
effect an immediate change in wages; abolition of the maximum and minimum
of 1910; and the levelling up of rates of certain men. The men rejected
these terms—Mr. Runciman very properly would go no further. Mr. Lloyd
George then secured the issue of a Royal Proclamation under the Munitions
of War Act, 1915, making it an offence punishable under that Act to take
part in a strike in the South Wales mining industry, whereupon 200,000
men promptly struck work by way of reply. Mr. Lloyd George himself went
to Cardiff and the strike was settled by the Government giving to the
miners practically all they had asked, with full indemnity against their
breach of the Munitions Act. It was the first time the Government had,
measured its strength against organized Labour and the Government’s
capitulation had a far-reaching repercussion. Compulsory arbitration was
discredited and by the Government.


Government War-time Control

The nation’s dependence on coal was manifested early in the war; output
fell as miners loyally responded to the call for men; prices rose as
domestic consumers competed with munition industries for fuel. Early in
1915 exports of coal had to be curtailed by Government—in July 1915, the
Price of Coal Limitation Act had to be enacted, limiting the price to be
charged for coal at the pit’s mouth. Our Allies began to protest against
the price charged to them for coal, and coal-owners, exporters and
shipowners agreed voluntarily with the Government to limit the price of
Ally coal. But that did not go far enough, and ultimately in 1917 under
D.O.R.A., powers were conferred on the Board of Trade to regulate prices,
and the distribution and transport of coal both for home and Ally use.

Trouble continued to develop in the South Wales mines, and the supply
of essential steam coal was in danger. The Government accordingly took
over, from December 1, 1916, control of the South Wales coal-field,
and as, elsewhere, industrial and transport difficulties were causing
great anxiety, they also took over, from March 1, 1917, the rest of the
coal-mines in the country, and constituted a Coal Mines Department.
The actual management of individual mines was left to their respective
owners, the Department directing them how to dispose of their supplies
so as best to meet the needs of the country. It was inevitable that as
control of the mines had been transferred to the Government, the wages of
mine-workers could be a matter no longer for district adjustment but for
national settlement by Government, and, since 1917, this was the course
adopted. It is unnecessary to go into the question of miners’ earnings,
they will be found in the volume of Appendices to the Coal Industry
Commission’s Report (_Parliamentary Paper_, 1919, Cmd. 361, pp. 55 and
109). An admirable comparison as between 1914 and 1920 is contained in
Professor Bowley’s book, _Prices and Wages in the United Kingdom_. The
point to be noticed is that after 1917 wages were paid really out of a
national pool consisting of the aggregate profits of the coal industry
with the national exchequer behind them. As a result of control, some
coal-owners, from their position and circumstances, realized large
profits; others suffered considerable losses. To provide compensation
for the latter, under an agreement made between the mine-owners and the
Coal Controller, scheduled to, and confirmed by, the Coal Mine Control
Agreement (Confirmation) Act, 1918, a fund was provided by pooling a
prescribed percentage of excess profits. The disparity in the relative
profit-making capacity of firms which had always existed was of course
materially intensified by control; before the war it had not, however,
materially affected industrial conditions. Events soon proved the
impracticability of continuing the 1918 compensation provisions. There
had existed arrangements for securing supplies of coal to our Allies
at prices approximating to those charged in this country for inland
consumption—these were terminated in 1919, and the prices of export coal
immediately mounted. Some coal-owners, who were granted export permits,
realized large profits; others, who had previously suffered loss owing
to their being restricted to inland trade, continued to labour under
heavy financial difficulties, which were made still more onerous by the
reduction of the price of household coal by 10_s._ per ton in December
1919. To maintain the compensation arrangements of 1918 would have
involved the State in heavy subsidies, as a large share of the export
profits would have been left in the owners’ hands, and loss, for which
compensation would have to be paid, would still have been inflicted on
collieries producing for the home market. The Coal Mines (Emergency) Act,
1920, was accordingly passed, which repealed the Act of 1918 from April
1, 1919, and provided a new fund from which compensation was to be drawn
for collieries working at a loss, but into this fund all excess profits
were to be paid, and not a percentage only, as in the case of the 1918
fund.


The Sankey Commission

The shortage of coal, of labour and of transport in 1918, when the German
offensive was at its height, led to the rationing of coal, gas and
electricity, which continued for about two years. After the Armistice,
in November 1918, trade activity increased, the industrial demand for
coal grew, and the domestic demand as well, when demobilization was
accelerated. The Coal Mines Department only just managed, with the
greatest difficulty, to secure an equitable distribution of coal, and
this it accomplished with great efficiency. These difficulties were
increased by the miners’ threat to strike in the beginning of 1919
unless demands for increased wages and reduced hours were conceded. The
Government replied by passing the Coal Industry Commission Act, 1919,
which set up a Commission under the chairmanship of Mr. Justice Sankey.
The Interim Report of the Commission (_Parliamentary Papers_, 1919, Cmd.
84, 85 and 86) recommended a national increase of 2_s._ per shift to all
adult colliery workers, a 7-hour day underground and 46½ hours per week
for surface workers as from July 16, 1919. These recommendations were
put into operation by the Government. Section 1 (_f_) of the Act required
the Commission to inquire into “any scheme that may be submitted to, or
formulated by, the Commissioners for the future organization of the Coal
Industry, whether on the present basis, or on the basis of joint control,
nationalization, or any other basis.” On this matter the Commission
presented four reports (see _Parliamentary Papers_, 1919, Cmd. 210 and
360): (1) by the Chairman; (2) by the Labour representatives; (3) by the
representatives of coal-owners and employers in other industries, except
Sir Arthur Duckham, and (4) by Sir Arthur Duckham. Reports (1) and (2)
recommended nationalization of the industry; report (3) acquisition of
royalties by the State, the continuance of private enterprise coupled
with the establishment of Pit Committees representative of management and
miners, and District Councils and a National Council representative of
coal-owners and miners—for the purpose of discussing working conditions
and other questions in the settlement of which both parties are
interested; report (4) recommended State acquisition of royalties, the
district unification of colliery interests to be worked through District
Coal Boards, on which the workers would have some representation, with
a Pit Committee at each mine. Each of the four Reports recommended the
setting up of a Mines Department.


The Mining Industry Act, 1920

The Government announced, in August 1919, that they could not accept
the policy of nationalization, but intimated their readiness to apply
the Duckham scheme, but the owners and the miners objected to this.
Subsequently, the Government put forward a scheme which was ultimately
incorporated in the Mining Industry Act, 1920, providing a compromise
mainly on the principles of Report (3)—that of the representatives on
the Commission of the coal-owners and employers in other industries.
This provided for (1) regulation, for a period not exceeding one year
from August 31, 1920, of the export of coal, and of the pit-head price
of home coal and bunker coal for coastwise shipping; (2) the future
ordering of the industry on a permanent basis, by the co-ordination of
all the Government’s powers and duties in regard to mines and minerals
in the hands of a single Department—the Mines Department of the Board of
Trade created by the Act; (3) the grant to the mine-workers of a greater
voice in the ordering of the industry by means of representation on
Pit and District Committees and Area and National Boards, and (4) the
constitution of a fund to be applied for purposes connected with the
social well-being, recreation and conditions of living of workers in or
about the mines and for research and mining education. The Government
also decided that the control of the coal industry, which had been
essential as a war-measure, should be removed as soon as export prices
fell to something approximating to the inland price. A start was made, in
June 1920, in the direction of freeing the distribution of inland coal
from restriction by placing it in the hands of local committees of the
coal trade.


The Strike of October 1920

Consistently from the beginning of 1920, the Miners’ Federation had
advanced new wages claims—the complicated details of which will be found
in the _Labour Gazette_ for August, September, October and November
1920. They contended that their wages had not kept pace with the cost of
living—that the coal trade was able to afford the increases claimed—that
if wages had been nationally governed by price, as they used to be
locally governed, either expressly or virtually, all districts would
have received a considerable rise in wages. It was strongly argued
that the Sankey National Award of 2_s._ was intended to improve the
pre-war standard of living of the miners, and not to meet war-time
increases in cost of living—a contention for which it is hard to see
the justification. Negotiations broke down, and a miners’ strike began
on October 18, 1920, and continued till November 4, 1920, when it was
settled on terms agreed between the Government, the Mining Association
and the Miners’ Federation. The first clause of the Agreement was as
follows:

    “(1) Recognizing that on the increased production of coal there
    depend not only the prosperity of all who are engaged in the
    coal industry, but also the welfare of the nation and the cost
    of life of the people, and having in view that this urgent need
    can only be met if the miners and mine-owners throughout the
    country work together cordially for this common purpose; and
    further, having regard to the necessity of setting up machinery
    for regulating wages in the coal trade so as to get rid of
    present anomalies and provide against future difficulties,

    “The Mining Association and the Miners’ Federation solemnly
    pledge themselves to make every effort to achieve these objects.

    “To that end they shall:

    “(_a_) Co-operate to the fullest extent to obtain increased
    output, and for this purpose will arrange to set up district
    committees and a national committee;

    “(_b_) Proceed forthwith to prepare a scheme for submission to
    the Government at the earliest possible moment, and not later
    than March 31, for the regulation of wages in the industry,
    having regard, among other considerations, to the profits of
    the industry, and to the principles upon which any surplus
    profits are to be dealt with.”


The Strike of April 1921

Prolonged negotiations then took place between owners and men under this
settlement. These revealed a fundamental difference: the owners were
claiming to return to the old district basis of wages; the miners were
insisting on continuance of a national pool and the national settlement
of wages as under control. No agreement had been concluded when all
remaining Government control was terminated on March 31, 1921, by the
Coal Mines (Decontrol) Act, 1921. In spite of failure to agree, both
miners and owners indicated their willingness to do all possible to
avoid a stoppage. A conference took place, on March 30, 1921, between
both sides and the President of the Board of Trade, the miners asking
for a continuance of Government subsidy to the industry as long as
the then existing depression of trade lasted, but this the Government
refused. The owners had previously issued notices terminating contracts
of employment on March 31, and indicating the new terms upon which men
would be re-engaged. Practically all the men ceased work in accordance
with this notice, and refused to resume on the new terms. A stoppage
of work took place from April 1 to July 4, 1921. On June 25, terms of
settlement were arranged between the Mining Association and the Miners’
Federation which were accepted by the votes of a large majority of miners
on July 1. This agreement (_Parliamentary Paper_, 1921, Cmd. 1387) was of
a remarkable and far-reaching character. By it the miners dropped their
claim for a national pool; provision was made for the constitution of
a National Board, consisting of equal numbers of persons chosen by the
Mining Association and by the Miners’ Federation, and of District Boards
consisting in equal numbers of persons representing owners and workmen in
each district—each Board having an independent Chairman. It was provided
that (1) the proceeds in each district of the mining industry should be
determined by independent accountants appointed by each side to check by
joint test audit, the owners’ books; (2) standard wages for each district
should be fixed on the basis of the district basis rates of March 31,
1921, plus district percentages of July 1914, plus percentage additions
for piece-workers made on the reduction of hours from eight to seven;
(3) minimum wages should be standard wages plus 20 per cent.; (4) for
each district the total should periodically be ascertained for certain
test periods of the standard wages, the cost of production other than
wages, and standard profits at the rate of 17 per cent. of the standard
wages. This aggregate should then be deducted from the amount of the
district proceeds for those periods, and 83 per cent. of the surplus
should be applied for payment in the district of an increase of wage
above the minimum rates. But 83 per cent. might not be, and indeed in
some districts has not been, enough to bring standard wages up to minimum
wages. As against this contingency Parliament voted, on July 1, 1921, a
subsidy which was not to exceed £10,000,000 to be used to prevent the
reduction of adult wages in any district exceeding 2_s._ per shift during
July, 2_s._ 6_d._ during August, and 3_s._ during September. £7,000,000
was actually expended under this arrangement.


The Failure of Part II of the Act of 1920

Difficulties have arisen in connection with the working of Part II of
the Mining Industry Act, 1920, relating to the appointment of Pit and
District Committees and Area and National Boards on which owners and
workers were to be represented. Section 10 provided that Area Boards
should formulate wages schemes, having regard among other considerations
to profits of the industry within the area. On the introduction of
the Bill for the Act of 1920, the Miners’ Federation announced their
intention not to assist in working the Act in view of their objection to
the settlement of wages on any other than a national basis. Having agreed
to a district wages basis in the agreement of July 1921, they decided,
in August 1921, to co-operate with the Mines Department in working
Part II of the Act. Meanwhile, the owners who originally acquiesced
in the terms of the Act, and through spokesmen in Parliament agreed
to work it, similarly changed their minds, and the Mining Association
announced about the same time that, as the Agreement of July 1921, had
in their view achieved the objects aimed at in Part II of the Act, the
re-imposition of any measure of Government control over wages and allied
questions would be contrary to the best interests of the industry itself
and of the community, and through the administration of Part II of the
Mining Industry Act would add unnecessarily to the burden of taxation.
The correspondence between the Mines Department and the Association is
printed in _Parliamentary Papers_, 1921, Cmd. 1551, and 1922, Cmd. 1583,
and deserves consideration. In view of the attitude of the owners, the
Secretary for Mines made a report to Parliament as required by Section 17
of the Act, and as within thirty days from February 7 no resolution to
the contrary was passed by Parliament, Part II of the Act has ceased to
have effect. The statutory right on the part of the workers to a voice in
the ordering of the coal-mining industry is therefore at an end, and the
position is governed by the Agreement of July 1921.


Royalties

Reference is necessary to the State acquisition of royalties, on which
there was unanimity amongst the members of the Sankey Commission. One of
the principal reasons advanced why the State ought to own the coal was
that no unreasonable obstacle should be placed in the way of mining coal,
and that due attention should be directed to conserving our principal
national asset, which is also a wasting asset. The Government accepted
the recommendation, but in the present financial condition of the country
it is obviously impracticable to give effect to it.


Summary of Government Policy

Briefly summarized, the Government’s Labour policy in connection with the
coal-mining industry is as follows:

1. The industry must be worked by private enterprise.

2. The functions of the Government in connection with mining should be
centralized in a Mines Department.

3. Such assistance as a Government Department can render in (_a_) the
collection and publication of information; (_b_) removing obstacles to
production; (_c_) the formulation of drainage schemes; (_d_) preventing
wasteful working of a great national asset; (_e_) ensuring the safety and
health of the workers, and (_f_) assisting, when asked to do so, in the
settlement of disputes, should be rendered through the Mines Department.

4. Providing the means (through the Miners’ Welfare Fund) for improving
the amenities of mining centres.

5. Encouraging research into the particular problems affecting the health
and safety of workers in the industry.

The Mines Department, established under the Act of 1920, is responsible
for dealing with one of our most important industrial problems, and
the success of its administration up to the present time is full of
encouragement for the future.




CHAPTER XV

GOVERNMENT LABOUR POLICY FOR RAILWAYS

    Pre-war Conditions—Government War-time Control—The Wage
    Agreement of March 1919—The Railway Strike of September
    1919—The Wage Agreement of March 1920—The Railways Act,
    1921—The Railway Conciliation Machinery of 1921—Sectional
    Railway Councils—Railway Councils.


Pre-war Conditions

As Labour proposes on the first opportunity to nationalize the railways,
the relationship between the men and the companies is important. Under
an Agreement of November 6, 1907, Conciliation Boards consisting of
representatives of the companies and the men engaged in the manipulation
of traffic had been appointed to deal with questions of hours and wages
and working conditions. A railway strike occurred in 1911, and it was
stated that one of the reasons for the strike was the dissatisfaction of
the railway men with the working of the Railway Conciliation Scheme. The
Government then appointed a Royal Commission to investigate the working
of the scheme and to report what changes, if any, were desirable, with a
view to a prompt and satisfactory settlement of differences. The Royal
Commission reported in October 1911, and suggested a new scheme which,
with some alterations agreed between the representatives of the companies
and of the Unions, was adopted in December 1911. This scheme the Unions
gave notice, in December 1913, to terminate at the end of November 1914,
at which date they expressed their intention of advancing a national
programme for increased wages and a 48-hour week.


Government War-time Control

On August 4, 1914, under an Order in Council made in pursuance of
the Regulation of the Forces Act, 1871, the Secretary of State for
War issued a warrant—which he renewed week by week, until August
1919, when statutory possession vested in the Minister of Transport
under the Ministry of Transport Act, 1919, rendered its continuance
unnecessary—authorizing the Board of Trade to take possession of
practically all the railways of the country. This was done, but the
railways continued to be conducted by their respective managements
acting under the instructions of the Railway Executive Committee. On
October 1, 1914, a truce agreement was concluded between the companies
and the Unions, continuing the 1911 Conciliation Scheme, but making it
terminable on six weeks’ notice. Alike with other trades the railwaymen
received increases in wages from February 1915, on to November 1918.
Up to September 1918, men of eighteen years and over received a
war-wage advance of 30_s._ per week. In November 1918, a sliding scale
was arranged under which the war-wage was to rise and fall with the
index-number of retail prices as published in the _Labour Gazette_. An
additional 3_s._, raising the war-wage to 33_s._ per week, was given in
November 1918.


The Wage Agreement of March 1919

Following the Armistice, the National Union of Railwaymen gave notice
to terminate the truce agreement of October 1914, but early in December
1918, the principle of an 8-hour day[13] was conceded by the Government
for all members of the wages staff as from February 1, 1919. In March
1919, an agreement was made between the Government, the Railway Executive
Committee and the Unions which provided for increased rates for overtime,
night-duty and Sunday-work, but provided for stabilizing other wages till
December 31, 1919. An important provision was contained in it providing
for a continuance of negotiations to standardize rates so that all men
throughout the country doing the same work under the same conditions
should receive the same rate of wages. This agreement also provided for
the setting up of a joint committee consisting of representatives of the
Railway Executive Committee and the two Unions concerned[14] to deal
with questions of pay and conditions until “some final arrangement is
arrived at in regard to the future position of railways.” The agreement
stipulated that “when the new Ministry of Ways and Communications is set
up it is the intention of the Government to provide in the organization
for, and avail itself fully of, the advantage of assistance, co-operation
and advice from the workers in the transportation industry.” Standard
rates were agreed between the Government and the two Unions for drivers,
firemen and cleaners by an agreement in August 1919, and negotiations
were continued to standardize the rates for other railwaymen.


The Railway Strike of September 1919

The Government’s proposals for standardization were rejected by the
Unions, who precipitated a strike, on September 26, 1919, on the railways
throughout Great Britain. Terms of settlement were signed, on October
5, 1919, providing for standardization at the then existing level of
wages up to September 30, 1920, and providing that no adult railwaymen
in Great Britain should receive less than 51_s._ per week so long as the
cost of living was not less than 110 per cent. above pre-war level. Work
was resumed on October 6. Subsequently an agreement was made between the
Government and the two Unions that, apart from the wage negotiations then
in progress, questions of wages and conditions of service should, during
the remainder of the period of control under the Ministry of Transport
Act, be dealt with by a Central Board consisting of five railway
representatives and five representatives of the two Unions. Failing
agreement by the Central Board, disputes should be referred to a National
Wages Board consisting of four railway managers, four railway workers
or their representatives, and four users of railways, one nominated by
the Parliamentary Committee of the Trades Union Congress, one by the
Co-operative Union, one by the Federation of British Industries, and one
by the Associated Chambers of Commerce, with an independent chairman
appointed by the Government. The agreement also provided for Local
Committees, to which matters of local importance would be referred. The
Railway Executive Committee became unnecessary in view of the Ministry of
Transport Act, 1919, and a new Advisory Committee was set up, consisting
of twelve general managers and four representatives of the workers.


The Wage Agreement of March 1920

As a result of the negotiations, an agreement was completed on March
20, 1920,[15] providing for standardization of rates of pay, for wages
to rise and fall according to cost of living, and for a standard rate
below which wages should not fall. This is one of the most important
industrial agreements. The principle of the arrangement was as follows.
There were many classes of men on different railways graded by different
names and receiving different rates of pay although doing substantially
the same work. These various classes were reduced into a small number of
specified grades. Further, in regard to certain grades, the country was
divided up into sections, for example: (1) London area; (2) provincial,
industrial and mining areas and large towns, and (3) rural districts.
Then, on a system of averages, the mean pre-war weekly rate of pay of the
men of a particular grade on all the railways in a particular section
of the country was ascertained; to that a sum of 38_s._ as war-wage was
added. This combined sum was to form, as from January 1, 1920, the wage
to be paid as long as the cost of living remained at 125 per cent. above
pre-war cost of living. For every five points rise or fall in the cost
of living there was to be an increase or reduction of 1_s._ per week.
Standard or minimum rates were fixed representing generally 100 per cent.
increase on the average pre-war rates of the respective grades. These
were rates below which wages would not fall, however much the cost of
living might go down. This agreement provided on a more fully developed
basis for a Central Wages Board of ten members, five representing railway
administration and five the Unions, and for an appellate or National
Wages Board of twelve members, four representing the railway companies,
four the Unions and four the users of the railways, with an independent
Chairman appointed by the Government. In promulgating the settlement the
Government made this announcement: “In dealing with questions of wages
it has been kept clearly in view by the Government that some addition
to railway wages was due before the war, and that the claims of the
railwaymen to a higher standard of remuneration were only then postponed
because of the country’s necessities.” After this agreement certain
claims for improvements in pay and working conditions were submitted by
the Unions to the Central Wages Board, and, on the latter’s failing to
agree, referred to the National Wages Board. The Board by a majority
agreed that certain advances of wages should be given, but they said they
could not be justified on the ground of increase in the cost of living as
that was provided for by an automatic advance under the sliding scale.
The Government agreed to the advances being given.

The wages, therefore, of railwaymen in the conciliation grades consist of
certain rates agreed upon in March 1920, which represented the average
pre-war weekly rate of pay of the men in any grade or group of grades,
plus 38_s._ per week, together with further increases ranging from
2_s._ to 7_s._ 6_d._ per week, or 2_s._ to 8_s._ 6_d._ in the case of
signalmen, granted in June 1920, by the National Wages Board, the whole
being subject to variations under the sliding scale, whereby there is a
reduction or increase of 1_s._ per week for every fall or rise of five
points in the cost of living as shown in the figures published by the
Ministry of Labour. Adjustments in the bonus due under the sliding scale
are considered by the Central Wages Board. A difference arose in regard
to the operation of the sliding scale, and a _modus operandi_ was agreed
on by the Central Wages Board which is described in the _Labour Gazette_
of April 1921.


The Railways Act, 1921

On August 19, 1921, the Railways Act, 1921, was passed, and Section 62
provided that, as from the date when the railways ceased to be in the
possession of the Minister of Transport—which was August 15, 1921—and
until otherwise determined by twelve months’ notice, such notices not
to be given before January 1, 1923, all questions of wages, hours and
conditions of railway servants should, in default of agreement between
a company and the Unions, be referred to the Central Wages Board, or on
appeal to the National Wages Board. The Act reconstituted both Boards,
and provided that the Central Wages Board should consist of eight
representatives of railway companies and eight representatives of the
railway employees—four appointed by the National Union of Railwaymen,
two by the Associated Society of Locomotive Engineers and Firemen, and
two by the Railway Clerks’ Association. The National Wages Board was
provided to consist of six representatives of the railway way companies,
six representatives of the railway employees—two appointed by the
National Union of Railwaymen—two by the Associated Society of Locomotive
Engineers and Firemen, and two by the Railway Clerks’ Association—and
four representatives of the users of railways—one appointed by the
Parliamentary Committee of the Trades Union Congress,[16] one by the
Co-operative Union, one by the Associated Chambers of Commerce, and one
by the Federation of British Industries, with an independent Chairman
nominated by the Minister of Labour. The Minister has nominated Sir Wm.
Mackenzie, K.B.E., K.C.—the President of the Industrial Court.


The Railway Conciliation Machinery of 1921

The Act further provided that councils on the lines of the Whitley
Councils should be established for each railway company on the general
basis of schemes to be prepared by a committee consisting of six
representatives of the General Managers’ Committee of the Railway
Clearing House and six representatives of the National Union of
Railwaymen, the Associated Society of Locomotive Engineers and Firemen,
and the Railway Clerks’ Association. These schemes, which have now been
prepared, provide for: (1) local consultation; (2) local departmental
committees; (3) Sectional Railway Councils, and (4) Railway Councils. At
stations or depôts with a number of employees in a department or group
of grades less than seventy-five, such employees are to be entitled to
appoint representatives to discuss local matters with the Company’s local
officials. At stations or depôts where the number exceeds seventy-five,
a committee is to be set up, consisting of not more than four elected
representatives of the employees in the department or group of grades
concerned, and not more than four representatives of the company. The
objects of the local committee are to provide a recognized means of
communication between the employees and the local officials, and to give
the employees a wider interest in the conditions under which their work
is performed. A local committee is to discuss: (_a_) suggestions for the
satisfactory arrangement of working hours, breaks, time-recording, etc.;
(_b_) questions of physical welfare; (_c_) holiday arrangements; (_d_)
publicity in regard to rules; (_e_) suggestions as to improvements in
organization of work, labour-saving appliances and other matters; (_f_)
investigation of circumstances tending to reduce efficiency, and (_g_)
the correct loading of traffic to ensure safe transit and the reduction
of claims. Before a matter is discussed by a local committee it must
first be submitted by the employees to the officials of the company in
the ordinary manner, but, failing a satisfactory reply within fourteen
days, it may be reported to the secretary of the employees’ side of the
committee. The company in the same way must exhaust the constitutional
machinery.


Sectional Railway Councils

Sectional Railway Councils will consist of not more than twelve elected
representatives of the employees, and not more than twelve appointed
representatives of the company, and not more than five Sectional
Councils are to be established on any railway. Each side will have its
own secretary, who will have the right to take part in the proceedings.
If one takes a railway on which the whole staff of the company is
divided into the usual five sections, viz., (1) clerks, station-masters,
supervisors, etc.; (2) locomotive men; (3) traffic department men;
(4) goods and cartage staff, and (5) permanent way department men,
platelayers, etc., each section will elect representatives to the
Sectional Council, and the number of representatives of each section
will be according to the proportion of the employees in the groups of
the grades in the section. In addition, the number of representatives
elected to each group of grades will be distributed as nearly as possible
by districts. Sectional Councils will deal with: (_a_) local application
of national agreements relating to standard salaries, wages, hours of
duty and conditions of service other than subjects submitted directly to
the Central Wages Board by railway companies or the Trade Unions; (_b_)
suggestions as to operating, working and kindred matters; (_c_) other
matters in which the company and the employees are mutually interested,
such as co-operation with a view to securing increased business, greater
efficiency and economy, the well-being of the staff, recruitment and
tenure of service, etc.; (_d_) subjects remitted by the Railway Council
to a Sectional Council.


Railway Councils

For each railway a Railway Council is to be appointed consisting of not
more than ten representatives of the company and ten representatives of
the employees. The representatives of the employees will consist of two
members of each Sectional Council; each side will have a secretary with
power to take part in the proceedings. The Railway Council will deal with
all matters with which a Sectional Council can deal, and which are of
common interest to two or more sections, but it can deal with no matter
before a Sectional Council has had an opportunity of considering it. If
a Sectional Council is unable to agree on any matter, the employees’
side may refer it to the Trade Unions concerned, or the Council may, by
agreement, refer it to the Railway Council. If a Sectional or a Railway
Council cannot agree on any question of the local application of national
agreements in regard to rates of pay and conditions of service, the
matter of difference may be submitted by the employees’ side to the
Trade Unions concerned, who take it up with the Company, and, failing
agreement, may refer it to the Central Wages Board. Before employees can
submit any question to a Sectional or Railway Council they must first
submit it to the company to consider in the ordinary way, but, failing a
satisfactory answer within twenty-one days, the facts may be reported to
the employees’ secretary of the Council concerned, and the company itself
must proceed in the same way. The working of the Railway Councils and
Committees will be followed with the greatest interest by all concerned
in the development of industrial conciliation machinery.




CHAPTER XVI

GOVERNMENT LABOUR POLICY FOR AGRICULTURE

    Government War-time Control—Government’s New Policy in 1921—The
    Establishment of Joint Conciliation Committees in England and
    Wales—The Work of the Conciliation Committees—Agriculture and
    Unemployment Insurance.


Government War-time Control

The necessity during the war of encouraging the production of food at
home led to the Corn Production Act, 1917, which provided for control
by the Ministry of Agriculture of cultivation, the constitution of an
Agricultural Wages Board to fix minimum rates of wages for persons
employed in agriculture, and for guaranteed minimum prices for wheat and
oats. Minimum rates were fixed, and from time to time varied. Although
the Board did not wipe out wholly the pre-war county agricultural
wage-differentials, they very largely reduced them—the final percentage
of increase varying from about 110 per cent. to 230 per cent. over
pre-war. After the Armistice, the Government wisely realized it would
be a mistaken policy to try and continue to fix minimum prices for oats
and wheat, or to control cultivation and regulate wages. When wholesale
prices broke in 1921, and the community became unable to pay the minimum
prices, the Government decided it would be unsound finance to maintain
prices and wages out of a national subsidy. In war-time it may be right
to compel farmers to grow wheat and oats because of the country’s
needs—it is wholly wrong to do so in peace-time—the right policy is to
leave them to cultivate their land as they, in their own interests, think
fit.


Government’s New Policy in 1921

The Corn Production Acts (Repeal) Act, 1921, was thereupon passed.
That Act abolished minimum prices and wages, created a special fund
of £1,000,000 for agricultural development, and provided that the
Minister of Agriculture as respects England and Wales, and the Board of
Agriculture for Scotland as respects Scotland, should be empowered to
take steps to secure the voluntary formation of local Joint Conciliation
Committees, representative of persons (whether owners or occupiers of
agricultural land) employing persons in agriculture, and of agricultural
workpeople, for the purpose of dealing with rates of wages, hours of
work and conditions of employment. The Act provides that a rate of wages
agreed upon by a Joint Conciliation Committee, and on the Committee’s
application, confirmed by the Minister and duly advertised, becomes the
wage legally payable in the area, unless the Committee certifies that
under the special circumstances of a particular case it is satisfied that
a contract for a lower rate is fair and reasonable, or, in the event of
the Committee refusing so to certify, the Court in which proceedings
are taken for the recovery of the rate agreed by the Committee is so
satisfied.


The Establishment of Joint Conciliation Committees in England and Wales

As the Ministry of Agriculture’s function is confined to moral suasion,
the task of getting these Committees established is a difficult one, and
the Ministry is to be congratulated on the progress it has made. Many
farmers are still incensed at the repeal of the Corn Production Act, and
the resulting loss to them of a substantial subsidy on wheat and oats,
and are inclined to resent any action by the Ministry. The leaders of
the workers are equally incensed at the abolition of the Agricultural
Wages Board with its compulsory powers, and demand its re-establishment.
The scheme of Conciliation Committees, moreover, was launched at an
unpropitious time. Prices were falling rapidly, and farmers, after having
cultivated their crops throughout the year on the basis of a fairly high
cost of production with wages at a high level, found themselves compelled
to sell their produce at prices less, in many cases, than half those
of the previous year. In consequence they pressed for substantial and
immediate wage reductions. From the workers’ point of view the autumn
of 1921 was equally inopportune for initiating a new system of settling
wages, as, owing to the favourable summer, work on the farm was well
advanced and farmers were in a position to reduce their staffs. In
addition, the growing amount of unemployment materially weakened the
workers’ bargaining power.


The Work of the Conciliation Committees

The greatest tact and discretion was, therefore, necessary to avoid
any appearance of undue interference by the Ministry, and at the same
time powerful persuasion had to be exercised to induce both sides
to come to an agreement. The officers of the Ministry (assisted by
officers appointed for the purpose by the Minister of Labour) have,
notwithstanding all these difficulties, succeeded with signal ability in
embedding already the roots of the scheme deep down into the agricultural
industry. In the short time which has elapsed since the passing of the
Act of 1921, 61 Committees have been established, covering the whole of
the country, and of these, 54 have made agreements, though in some cases
they have only been for short periods. In the remaining 7 areas, although
efforts to agree have been made, no agreement has yet been reached.

The rate of wages which is now being paid generally for male agricultural
workers is about 30_s._ to 32_s._ for 48-50 hours, and many Conciliation
Committees have agreed on these rates. In the north of England the rates
are usually somewhat higher, while in East Anglia and in several counties
where no agreements have been reached the employers refuse to offer more
than 30_s._, a rate which the workers equally refuse to accept. These
rates compare with the Wages Board rate of 46_s._ for 48-50 hours, which
was in force up to the beginning of September 1921. The Wages Board at
their last meeting reduced this rate to 42_s._, which was the rate in
force when the Conciliation Committees came into being. There was a fall
in October 1921, to 36_s._ per week, followed by a gradual diminution
to the rates mentioned above. Long period agreements running up to
the beginning of October 1922, were successfully concluded in several
counties with the assistance of representatives of the Ministry of
Agriculture, at 32_s._ for 48 hours up to the beginning of March 1922,
and 31_s._ for 50 hours over the remainder of the period. These long
term agreements are a hopeful feature. The farmer gets a settled rate of
wage when farm operations are in full swing, including both hay and corn
harvest; the labourer gets a certain minimum wage, under which he will
benefit by further falls in the cost of living during the currency of the
agreement. At the same time, the rates now operative make full allowance
for the changes to date in the cost of living. Taking the pre-war average
cash wages at 16_s._ 9_d._ per week, the comparative figure based on
the cost of living index number for June 1, 1922, of 80 per cent. over
July 1914, would be 32_s._ 2_d._, and it is probably true to say that
the agricultural labourer has experienced, since October 1921, a greater
reduction in wages than most other trades. From the farmers’ point of
view, however, the fall in wages is more than justified by the drop in
prices, which has been appreciably more rapid than the fall in the cost
of living.

One most encouraging circumstance is the extent to which concluded
agreements are faithfully observed by the farmers. The Committees have no
direct power to enforce their decisions; they may send their agreements
to the Minister of Agriculture for confirmation and then under the Act
payment of the agreed rates becomes recoverable at law. As yet five
Committees only have asked for confirmation of their agreements. On the
whole, employers are opposed to confirmation, and the workers do not
demand it. Although the agreements are in the main observed by employers,
the workers’ representatives complain that this is not so in every case.
If there were any serious tendency towards non-observance the employers
on the Conciliation Committees would agree to submission of agreements
for confirmation; they would not allow some employers to evade payment
of the agreed rates while others paid. The absence of any such general
demand indicates that, substantially, the agreed wages are being paid.


Agriculture and Unemployment Insurance

The Labour Party makes the singularly disingenuous complaint that the
Government does not apply the National Unemployment Insurance Scheme
to persons engaged in agriculture. The true facts are that on December
2, 1920, the Agricultural Wages Board appointed a Committee, under the
chairmanship of Sir Henry Rew, K.C.B., comprising representatives of
employers and also representatives of unions whose members were engaged
in agriculture, to report upon the extent to which the Unemployment
Insurance Acts could practicably, and with benefit, be applied to
agricultural workers. The Report of the Committee (_Parliamentary Paper_,
1921, Cmd. 1344) was unanimous, and to the effect that there was general
opposition both by employers and workers to the inclusion of agriculture
under the provisions of the Unemployment Insurance Scheme. One of the
workers’ representatives, a signatory to this finding, appended a note
to say that he believed in some districts there was an undoubted desire
of the agricultural workers to be included under the Act—notwithstanding
that, neither his finding nor that of the other workers’ representatives
recommended the extension of the Unemployment Insurance Acts to
agriculture.

No one who is aware of the difficulties, especially in the agricultural
industry, of successfully introducing methods of collective bargaining,
could fail to appreciate the soundness of the policy of Joint
Conciliation Committees, or fail to rejoice at the steady progress which
the Ministry of Agriculture is making.




CHAPTER XVII

GOVERNMENT POLICY FOR UNEMPLOYMENT

    1. State Unemployment Insurance—The Present Scheme
    of 1920—Emergency Provisions—Temporary Act of March,
    1921—Temporary Act of July, 1921—Temporary Provision for
    Dependents’ Act of November, 1921—Temporary Act of April,
    1922—The Efficiency of the State Scheme.

    2. Construction of Works of Public Utility—Unemployment Grants
    Committee—The Scheme of 1920—The Extended Scheme of 1921.

    3. Expedited Road Schemes—The 1920-21 Programme—The 1921-22
    Programme—The Special Metropolitan Schemes—The Provincial
    Schemes—Conditions Attaching to Grants.

    4. Poor Law Relief—Principles Governing Administration of
    Relief—Ascertainment of Applicant’s Income—Assistance to
    Guardians to Carry out Works—Funding of Cost of Relief—Help to
    Poorer Metropolitan Unions—Assistance to Guardians to Raise
    Loans.


Unemployment is to-day a burning question; it will always be in industry
an outstanding difficulty. The main lines of Government policy are,
therefore, important; they are of comparatively recent date. From 1890,
and indeed before, Metropolitan borough councils and their predecessors,
the vestries, and the principal provincial local authorities had been in
the habit of providing relief works every winter for the unemployed, each
on its own method and without investigating the necessitous circumstances
of applicants for work. Local Labour bureaux—really Labour Exchanges—had
been established in London by some vestries and metropolitan borough
councils without statutory authority. Their establishment was formally
authorized by the Labour Bureaux (London) Act, 1902. In 1905 Lord (then
the Right Hon. Walter) Long, when President of the Local Government
Board, inaugurated a voluntary scheme consisting of central and district
committees in London to collect funds and provide work to deal with
distress arising from unemployment. The practical operation of this
scheme was deemed sufficiently successful to warrant the passing of the
Unemployed Workmen’s Act, 1905, which provided for establishment, by
order of the Local Government Board, of a statutory Central Unemployed
Body and metropolitan Distress Committees in London, and outside London,
of Distress Committees with central and local powers in each municipal
borough or urban district with a population of not less than 50,000,
and for the rest of a county, of Central and Local Committees. Then, as
has been described, the State Labour Exchanges were authorized in 1909.
Their establishment was the first attempt of Government to deal with
unemployment on a considered policy.


1. STATE UNEMPLOYMENT INSURANCE

The next deliberate step was the scheme of State insurance against
unemployment instituted by Part II of the National Insurance Act,
1911. It applied compulsorily to about 2½ million workmen in building,
shipbuilding, engineering, construction of works and vehicles,
iron-founding, and, to an extent, saw-milling, but not to non-manual
workers. The contribution per week was: employers, 2½_d._; workmen,
2½_d._; State, 1⅔_d._, the State contribution being thus one-fourth of
the whole. The benefit assured was 7_s._ per week for fifteen weeks, but
nothing during the first week of unemployment, and, when payable, only
at the rate of one week’s benefit for every five contributions paid. In
1916, the National Insurance (Part II Amendment) Act, 1914, brought in
under the scheme a further 1¼ million workpeople employed in certain
trades, principally metals and chemicals, and engaged in the manufacture
of munitions of war. At the Armistice, the scheme therefore only covered
some 3¾ million persons. This provision was wholly inadequate to meet
the unemployment which ensued. A scheme of free out-of-work donation
was instituted by the Government for both civilian workers and for men
and women discharged from the Forces. This scheme remained in operation
from November 1918, until November 1919, for civilians, and until March
1921, for ex-members of the Forces, and, in a few special cases, somewhat
longer.


The Present Scheme of 1920

It was plainly necessary to make further provision, so a Bill for
the extension of unemployment insurance was introduced in the House
of Commons, first in December 1919, and again in February 1920, and
passing into law in August as the Unemployment Insurance Act, 1920, came
into operation on November 8, 1920. It is the statute under which the
permanent National Unemployment Insurance Scheme is regulated—by it all
previous enactments relating to unemployment insurance are repealed. This
Act brings into insurance practically the whole industrial population,
and also non-manual workers whose remuneration does not exceed £250 per
annum. It excludes, however, agriculture and private domestic service,
and empowers the Minister of Labour to grant certificates exempting the
permanent employees of certain public undertakings, but, save in the
case of railway servants, the numbers engaged in such specially excepted
employments are not large. The total number of workpeople insured as the
result of this Act is about twelve millions. The contributions prescribed
by the Act of 1920 (since temporarily increased) are as follows:

    -----------------------------+-----------+-----------+-------------
                                 |Employer’s |Employee’s |    State
                                 | Share.    | Share.    |Contribution.
    -----------------------------+-----------+-----------+-------------
    Men                          | 4_d._     | 4_d._     |  2_d._
    Women                        | 3½_d._    | 3_d._     |  1⅔_d._
    Boys  (over 16 and under 18) | 2_d._     | 2_d._     |  1⅓_d._
    Girls (over 16 and under 18) | 2_d._     | 1½_d._    |  1_d._
    -----------------------------+-----------+-----------+-------------

The scheme is mainly worked through the Employment Exchanges. An
unemployment book is issued to every insured worker, and, on obtaining
employment, he is required to lodge it with his employer, who keeps
it while the employment lasts, and when paying wages must affix to it
a stamp of the value of the combined contributions of himself and the
worker.

The books are valid for twelve months, from the beginning of July in one
year to the beginning of July in the following year—a period known as the
“Insurance Year.” Every July the books are exchanged. Employers usually
lodge the books of their workers in bulk at the Employment Exchanges,
where fresh books are written up for the ensuing year, but a workman has
the right to take his old book himself to the Exchange and obtain his new
book for the ensuing year.

Workmen are also entitled to receive from the Department, on application,
a statement showing the condition of their accounts.

The stamps representing contributions are sold at Post Offices, and the
proceeds of sales are paid over weekly by the General Post Office to
the Ministry of Labour. The remittances are placed to the credit of the
Unemployment Fund established under the Act, and the State contribution
is added to the amounts so received, and similarly credited to the Fund.
When the Fund is in credit, i.e. when the revenue is more than sufficient
to pay the benefits accruing due, any surplus moneys are handed over
to the National Debt Commissioners for investment on behalf of the
Fund. Owing to employment being exceptionally good immediately before
and during the war, the Fund accumulated a considerable surplus, which
amounted, in November 1920, when the Act of that year was passed, to
about £20,000,000.

The benefits prescribed in the Act of 1920, which were afterwards
temporarily varied, are 15_s._ a week for men and 12_s._ a week for
women, with half-rate for boys and girls. Benefit was provided to
be payable after the first three days of unemployment, afterwards
permanently increased to six by the Unemployment Insurance (No. 2)
Act, 1921, which constitute a “waiting period,” and for a maximum of
twenty-six weeks in any “insurance year.” It was fifteen weeks in the
Act of 1920, but this was increased to twenty-six by the Unemployment
Insurance Act, 1921. The amount of benefit must not in any event exceed
the proportion of one week’s benefit for every six contributions paid,
i.e. one day of benefit for each contribution. This limit is in certain
cases temporarily suspended by the Unemployment Insurance Act, 1921.

The conditions for the receipt of benefit are that a prescribed number of
contributions have been paid, viz. a minimum of twelve under the Act of
1920—in certain cases temporarily relaxed by the Unemployment Insurance
Act, 1921; that applications for benefit have been made in the prescribed
manner; that the contributor proves that since his application he has
been continuously unemployed, capable of, and available for, work, but
unable to obtain suitable employment, and that he has not exhausted his
right to benefit. The workman is disqualified[17] from benefit if his
unemployment is caused by a stoppage of work due to a trade dispute
at his place of employment, or if he has lost his employment through
misconduct or by voluntary resignation without just cause. Nor is benefit
payable while the workman is an inmate of a prison or a workhouse or
any other institution supported out of public funds, nor whilst he is
resident outside the United Kingdom. Should he be in receipt of sickness
or disablement benefit under the Health Insurance Acts or of an old age
pension, he can claim no benefit.

Once an insured worker becomes unemployed, the employer must return
to him his unemployment book, which he must lodge at the Employment
Exchange, where he may claim benefit. When a claim is made, an inquiry
is addressed by the Exchange to the last employer of the workman as
stated by him on the claim form, in order to ascertain whether the
conditions for the receipt of benefit are satisfied, and whether any
of the disqualifications apply. During the currency of his claim, an
unemployed insured worker must attend at the Exchange as evidence that
he is unemployed. There he signs a declaration during the normal working
hours of his trade that he is unemployed and unable to obtain suitable
employment. In normal times, the frequency with which unemployed insured
workers have to attend for this purpose is as follows: If the worker
lives within two miles of the nearest Exchange, he is required to attend
daily; if he lives between two and four miles from the Exchange, he
attends every other day; between four and six miles, he attends once
a week, and furnishes a declaration signed by two persons that he is
unemployed; if he lives more than six miles from the nearest Exchange,
he is not required to attend there personally for the purpose of giving
evidence of unemployment, but may forward a certificate signed by two
persons as to the continuance of his unemployment. Claims for benefit
are adjudicated upon, in the first instance, by officers appointed under
the Act known as insurance officers. The manager of the Exchange acts as
an “insurance officer” and authorizes payment of obviously valid claims.
Those as to which doubt arises are sent to the Chief Insurance Officer
in London for adjudication. If the insurance officer’s decision is
unfavourable to the claimant, the latter has a right of appeal to a Court
of Referees, consisting of an independent chairman, a representative of
employers and a representative of the contributors. The chairman and the
panels are appointed by the Minister of Labour. Either the insurance
officer, or the Trade Union to which the claimant belongs, or the
claimant himself, if leave is given to him by the Court, has a further
right of appeal from the recommendation of the Court of Referees to an
umpire appointed by the Crown, whose decision is final and conclusive.

While all claims to benefit have, in the first instance, to be made
at an Employment Exchange—where benefit is in general paid—power is
given to the Minister under Section 17 of the Act of 1920 to enter
into arrangements with associations of contributors (practically all
Trade Unions) under which members of such associations may prove their
unemployment and receive their benefit through the machinery of the
association. Before such an arrangement can be made, the Minister has
to be satisfied that the rules of the association provide for payment
out of its own funds of unemployment benefit to its members, and that
the association has in operation a system for obtaining notification of
opportunities of employment and of placing its members in employment.
State benefit paid out by associations under this arrangement is
subsequently repaid to the association from the Unemployment Fund.
The associations are further entitled to a grant-in-aid of their
administrative expenses not exceeding 1_s._ for every week of State
benefit paid to their members under the arrangement. Shortly before the
decline in trade, which began in the autumn of 1920, arrangements were
completed or were in course of completion under Section 17 with nearly
200 associations having a membership of nearly 4,000,000 persons. Owing,
however, to the increase of industrial depression and the consequent
strain on the financial resources of the associations, a number of
these arrangements were either terminated or not completed. The number
of arrangements in operation on July 31, 1922, was 145, covering a
membership of rather more than 1,000,000.

A new and important provision of the Act of 1920 was the right given to
industries to contract out of the State scheme and institute special
schemes of compulsory insurance for their own workers. Before a special
scheme can be approved it has to be submitted by a Joint Industrial
Council or an association fully representative of the majority of
employers and employed in the industry. The Minister has to be satisfied
that insurance against unemployment in the industry can be more
satisfactorily provided by a special scheme than under the general scheme
of the Act. The special scheme must cover all the employed persons in the
industry, and the benefits must be not less favourable on the whole than
the benefits provided by the Act. The industries which might naturally
be disposed to contract out of the general scheme are those in which
unemployment is less than the average rate of unemployment in all the
industries included in the general scheme. In other words, only those
industries might be expected to contract out which could, by reason
of their lower rate of unemployment, provide greater benefits for the
same rate of contribution as under the general scheme, or the same or
a slightly better rate of benefit for a lower contribution. As against
this, the rate of State contribution payable to a special scheme is
reduced to a sum not exceeding three-tenths of the contribution which
would otherwise be paid by the State in respect of contributions from
the industry if the employers and employed persons in the industry
remained in the general scheme. Only one special scheme has, so far,
been approved, viz. that for the Insurance business, which covers about
80,000 persons. In view of the temporary emergency provisions made in
the Unemployment Insurance Act, 1921, and the Unemployment Insurance
(No. 2) Act, 1921, to meet the abnormal amount of unemployment, it became
necessary to suspend the right of additional industries to contract out
until the Unemployment Fund again attains a position of solvency.

A feature of the State scheme which is open to criticism is the right of
insured persons to receive a refund in respect of their contributions.
This provision follows generally the lines of Section 95 of the Act of
1911. The refund made is the excess of the employed person’s share of the
contributions paid in respect of him, less any benefit he has received.
Refunds are not payable unless the employed person has reached the age of
60 and has paid in the aggregate a specified number of contributions.


Emergency Provisions

Owing to the acute industrial depression, it has been necessary to
add to the permanent scheme a number of temporary provisions. It was
realized, when the Act of 1920 was being framed, that special provision
was required to meet unemployment occurring immediately after the passing
of the Act amongst persons who were being brought into compulsory
insurance for the first time. Accordingly, Section 44 of the Act of
1920 provided that, for twelve months after the commencement of the
Act, i.e. up to November 8, 1921, eight weeks’ benefit might be drawn
if four contributions had been paid. Between the passing of the Act on
August 9, 1920, and its commencement on November 8, 1920, the industrial
situation materially worsened, and when the Act came into operation
considerable numbers of workpeople were unemployed who had not paid even
four contributions. The Unemployment Insurance (Temporary Provisions
Amendment) Act, 1920, was accordingly passed in December 1920, providing
that if an unemployed person could show that, although no contributions
had been paid in respect of him under the Acts, yet he had in fact been
employed in an insurable occupation in each of ten weeks since December
31, 1919, or of four weeks since July 4, 1920, that would count as
equivalent to payment of four contributions under Section 44 of the Act
of 1920, and eight weeks’ benefit might be paid to him.


Temporary Act of March, 1921

Unemployment continued to grow, and early in 1921 it was apparent
that many persons, who would normally have paid contributions and so
qualified for benefits under the Act of 1920, were disqualified because,
owing to the exceptional industrial position, they had not been in a
position to pay contributions. The Unemployment Insurance Act, 1921,
was therefore passed in March, 1921, which came into force immediately,
and made special provision for the payment of unemployment benefit to
persons who were not qualified for benefit by reason of not having paid
contributions. Under the Act of March, 1921, it was provided that during
each of two special periods, the first from March 3, 1921, to November
2, 1921, the second from November 3, 1921, to July 2, 1922, unemployed
persons might draw up to a maximum of sixteen weeks’ benefit provided
they showed:

    (1) That they had been employed in each of not less than twenty
    weeks since December 31, 1919 (ten weeks for ex-members of H.M.
    Forces).

    (2) That they were normally employed in an insurable occupation.

    (3) That they were genuinely seeking whole-time employment but
    unable to obtain it.

The decision whether applicants for benefit satisfy the special
conditions prescribed by the Act of March, 1921, rests with the Minister,
but was given the power to refer questions relating to compliance with
the requirements to the Local Employment Committees. This power has been
freely exercised, and in practice the recommendations of the Committees
in regard to cases submitted to them for consideration are usually
accepted by the Minister.

The Act of March, 1921, increased the rates of benefit to 20_s._ a week
for men and 16_s._ a week for women, with half-rates for boys and girls.
Arrangements were also made for an increase in the rates of contributions
as from the beginning of the next ensuing insurance year, viz. July 4,
1921, but these were again increased by a subsequent Act. Notwithstanding
the special provision of benefit made by the Act of March, 1921, large
numbers of persons who remained unemployed and had exhausted their rights
to benefit in July 1921. It was, therefore, decided to introduce fresh
legislation, making further provision for this class of case.


Temporary Act of July, 1921

The solvency of the Unemployment Fund had been impaired by the Act
of March, 1921, and at the same time distress from unemployment was
increasing. The Unemployment Insurance (No. 2) Act was, therefore, passed
on July 1, 1921, which gave power to the Minister to extend the maximum
period of benefit which might be drawn in each of the two special periods
prescribed by the Act of March, 1921, by six weeks, making the maximum
period of benefit twenty-two weeks, instead of sixteen. A great number of
six-week extensions were granted, dating from February 22, 1922, which
expired on April 5, 1922. At the same time the rates of benefit were
temporarily reduced to 15_s._ a week for men and 12_s._ a week for women,
with half-rates for boys and girls as long as the “deficiency period”
lasts, i.e. (Sect. 16) until the Treasury certifies that the Unemployment
Fund is solvent; and the waiting period of three days in the Act of 1920
was permanently raised to a week as under the original Act of 1911. The
contributions payable from July 4, 1921, were increased under the Act of
July, 1921, to the following amounts:

    -------+-----------+-----------+-------------
           |Employer’s |Employee’s |   State
           |  Share.   |  Share.   |Contribution.
    -------+-----------+-----------+-------------
    Men    | 8_d._     | 7_d._     | 3¾_d._
    Women  | 7_d._     | 6_d._     | 3¼_d._
    Boys   | 4_d._     | 3½_d._    | 1⅞_d._
    Girls  | 3½_d._    | 3_d._     | 1⅝_d._
    -------+-----------+-----------+-------------

These rates of contributions were payable until July 1, 1923, or the
expiration of the deficiency period, whichever is the later, after which
the rates prescribed in the Act of 1920 were restored.

It has to be borne in mind that the provisions made by the Unemployment
Insurance Acts of December, 1920, March, 1921, and July, 1921, are
temporary only, and not part of the normal State scheme. The Act
of March, 1921, authorizes the Treasury to advance moneys to the
Unemployment Fund up to ten million pounds; this was increased to twenty
million pounds by the Act of July, 1921. It has been necessary for the
Treasury to make advances to enable the Fund to pay the benefits: the
amount owing by the Fund to the Treasury on December 31, 1921, was
approximately eight million pounds.


Temporary Provision for Dependents’ Act of November, 1921

As part of the temporary emergency programme of the Government to
alleviate the abnormal unemployment existing in the autumn of 1921, the
Unemployed Workers’ Dependents (Temporary Provision) Act, 1921, was
passed on November 9, which made provision for the payment of allowances
to the wives and dependent children of unemployed workers who were
in receipt of benefit under the Unemployment Insurance Acts. This
provision, as made by this Act, was for a period of six months only—to
end on May 7, 1922. The Dependents Act provided that persons who were
liable to be insured under the Unemployment Insurance Acts and their
employers should, for a period of six months from November 7, 1921 (which
period might be extended in the event of any deficiency occurring in the
Fund) pay additional contributions for the purpose of creating a Fund
separate and distinct from the Unemployment Fund, out of which allowances
for dependents would be paid. To the contributions of employer and
employed, the State made an addition.

    -------+-----------+-----------+-------------
           |Employer’s |Employee’s |   State
           |  Share.   |  Share.   |Contribution.
    -------+-----------+-----------+-------------
    Men    | 2_d._     | 2_d._     | 3_d._
    Women }|           |           |
    Boys  }| 1_d._     | 1_d._     | 2_d._
    Girls }|           |           |
    -------+-----------+-----------+-------------

Grants were made at the rate of 5_s._ per week for a wife and 1_s._ a
week for each dependent child.


Temporary Act of April, 1922

Yet still further emergency legislation has been necessary to meet the
continuance of unemployment. On March 13, 1922, there were in Great
Britain 1,690,000 insured persons registered as wholly unemployed
and 225,000 as on short-time. Of these, large numbers began to run
out of benefit on April 5, the date at which expired the six weeks’
extension of benefit under the Act of July, 1921, each subsequent week
adding to this number. On July 2, 1922, the whole of the emergency or
“uncovenanted” benefit provided by the Temporary Act of March, 1921,
would have wholly expired. In addition, on May 9, 1922, the Unemployed
Workers’ Dependents (Temporary Provision) Act, 1921, came to an end.
The Government accordingly passed the Unemployment Insurance Act, 1922,
which came into operation on April 6, 1922. The effect of its complicated
provisions can be shortly summarized. It terminated the second special
period under the Act of March, 1921, at April 5, 1922, instead of July 2,
1922, as by that Act provided. It then prescribed a third special period
and a fourth special period, the third from April 6, 1922, to November 1,
1922, the fourth from November 2, 1922, to July 1, 1923. During the third
special period, insured persons no longer entitled to benefit under the
permanent insurance scheme will be allowed to receive “uncovenanted”
benefit for an aggregate of fifteen weeks, increased to twenty-two weeks
by the Unemployment Insurance (No. 2) Act, 1922—passed July 20, 1922. As
this fifteen weeks’ benefit had to cover thirty calendar weeks, it was
divided up into three periods of benefit with a gap between each of five
weeks, reduced to one week by the Act of July 20, 1922. During the fourth
special period, twelve weeks’ benefit will be paid, with two possible
further extensions of five weeks each. The insurance benefit remains,
under the Act of April, 1922, at the same level as before, namely 15_s._
per week for the men and 12_s._ for the women, with the additional
benefit provided by the Dependents’ Act of November, 1921, 5_s._ per
week for the wife, and 1_s._ per week for each child. The rates of
contributions by employed persons, employers and the State are the totals
of the contributions under the Act of July, 1921, and the Dependents’ Act
of November, 1921, and are, therefore, as follows:

    ---------------+-------------+-----------+-------------
                   | Employer’s  |Employee’s |   State
                   |   Share.    |  Share.   |Contribution.
    ---------------+-------------+-----------+-------------
    Men            | 10_d._      | 9_d._     | 6¾_d._
    Women          |  8_d._      | 7_d._     | 5¼_d._
    Boys under 18  |  5_d._      | 4½_d._    | 3⅞_d._
    Girls          |  4½_d._     | 4_d._     | 3⅝_d._
    ---------------+-------------+-----------+-------------

These will be the contributions until the end of the deficiency period as
defined in Section 16 of the Act of July, 1921.

From June 1921, to March 1922, the Unemployment Insurance Scheme was
continuously carrying an average of 1¾ million persons, and 53½ million
pounds of benefit were distributed; the Government’s estimate is 1½
million persons wholly unemployed from April 1922, to June 1923. These
figures will involve the payment of sixty million sterling in benefit for
those fifteen months; of this amount the State will ultimately contribute
one-quarter of the whole as against one-fifth under the permanent scheme
of the Act of 1920, and the liability of the State will continue at the
higher figure until the end of the emergency period. For the financial
year 1922-23, the estimates provided for £12,196,130 as the State’s
contribution to the Insurance Fund and £551,760 to the Dependents’ Fund,
making a total of £12,747,890. In April fourteen millions of the twenty
million borrowing powers conferred on the Minister of Labour by the Act
of July, 1921, were exhausted, and it was estimated that the whole
twenty millions would be exhausted by July 1922. The Act of April, 1922,
therefore increased the borrowing powers of the Minister from twenty
millions to thirty millions sterling.


The Efficiency of the State Scheme

This was investigated by the Committee on National Expenditure (_see_
First Report _Parliamentary Paper_, 1922, Cmd. 1581, p. 144). They
recommended, and properly so, that the question should be carefully
explored of placing unemployment insurance on the basis of insurance by
industry. They also urged an investigation by a committee of experts of
the administration of the State scheme with a view to its improvement.
Very considerable simplification and improvement would appear to be
possible judging from the report of Sir Alfred Watson, the distinguished
Government Actuary. The cost to the taxpayer of Unemployment Insurance
and Employment Exchanges since 1912-13 is stated in the Report of the
Committee on National Expenditure to be as follows:

  -------+--------------+-------------+------------+------------+---------
         |              |Appropriation| Net Charge |            |
         |Administrative|     from    |to Exchequer| Government |  Total
         |     cost     | Unemployment| on account |Contribution|Charge to
         |   (gross).   |     Fund.   | of Admini- |  to Fund.  |  Votes.
         |              |             |  stration. |            |
  -------+--------------+-------------+------------+------------+---------
         |      £       |      £      |      £     |      £     |    £
  1912/13|    640,000   |    151,000  |    489,000 |    378,000 |  867,000
  1913/14|    769,000   |    246,000  |    523,000 |    602,000 |1,125,000
  1914/15|    764,000   |    227,000  |    537,000 |    546,000 |1,083,000
  1915/16|    834,000   |    231,000  |    603,000 |    538,000 |1,141,000
  1916/17|    905,000   |    329,000  |    576,000 |    746,000 |1,322,000
  1917/18|  1,168,000   |    445,000  |    723,000 |  1,007,000 |1,730,000
  1918/19|  1,950,000   |    455,000  |  1,495,000 |    994,000 |2,489,000
  1919/20|  3,613,000   |    459,000  |  3,154,000 |    912,000 |4,066,000
  1920/21|  4,593,000   |  1,115,000  |  3,478,000 |  2,200,000 |5,678,000
  1921/22|  6,039,000   |  3,250,000  |  2,789,000 |  6,720,000 |9,509,000
  1922/23|  5,020,000   |  4,150,000  |    870,000 |  8,231,000 |9,101,000
  -------+--------------+-------------+------------+------------+---------

The above figures do not include the cost of the Unemployed Workers’
Dependents Act, which is financed independently of the Unemployment
Fund and which imposes on the Vote charges of £2,192,000 in 1921/22 and
£670,000 in 1922/23.

In my judgment, one thing is certain: if the National Unemployment
Scheme had not been administered, as it has been, by the Ministry of
Labour through the past and present dark days of depression, there
would have been a serious upheaval in this country. The very fact that
a worker could go and discuss his position with a sympathetic official
of the Labour Exchanges helped to soothe his feelings of resentment
against his unhappy lot. The receipt of benefit over the counter of
a State institution encouraged him to believe that the State took
an interest in the welfare of himself and his dependents. Whether,
therefore, unemployment insurance by industries as a whole or each
industry separately may or may not be arranged in the future, it would
be exceedingly ungrateful of the people in this country to overlook the
national work that has been performed by the Ministry of Labour and the
officials of the Employment Exchanges under most difficult circumstances.


2. CONSTRUCTION OF WORKS OF PUBLIC UTILITY


Unemployment Grants Committee

In December 1920, the Government decided financially to assist local
authorities to enable them to put in hand works of public utility in
order to relieve unemployment, and appointed the Unemployment Grants
Committee, under Lord St. Davids as Chairman, to receive applications for
grants, examine schemes and allocate funds.


The Scheme of 1920

The Committee was instructed to observe, amongst others, these general
principles:

1. Works were to be approved only in cases where the Ministry of Labour
certified that serious unemployment, not otherwise provided for, existed
in the area administered by the local authority undertaking the work.

2. The works were to be such as would be approved by the appropriate
Government Department as suitable works of public utility.

3. The grant was not in any case to exceed 30 per cent. of the wages bill
of additional men taken on for the work.

4. Preference in employment was to be given to unemployed ex-Service men.

The powers of the Committee were subsequently extended as follows:

(i) The grants could be increased from 30 per cent. to 60 per cent. of
the wages bill.

(ii) The Committee was authorized to assist, in addition to local
authorities, (_a_) “public bodies”—being any board, commission, rating
authority or trustees, or other body or persons who manage or undertake
works in pursuance of statutory powers, not being a body trading for
profit, and (_b_) through the local authority—boards of guardians,
distress committees and voluntary agencies.

A sum of £2,000,000 was placed at the Committee’s disposal for the
financial year 1921-22, and a further sum of £630,000 for 1922-23. All
this money has been allocated, though not spent (see Table p. 189),
and has provided, or is providing, direct employment for approximately
110,000 men for varying periods. Nearly as many more are indirectly
employed in the preparation of materials for use on the approved works in
factories, workshops, quarries, etc. Almost 3,000 applications from local
authorities have been considered in detail, of which over 2,000 have been
granted. The total capital cost of the works so financially assisted is
estimated at approximately £9,000,000.


The Extended Scheme of 1921

In September 1921, the Government directed the Unemployment Grants
Committee to undertake the administration of a further scheme for the
relief of unemployment through local authorities. The new scheme provided
for giving to local authorities, who put in hand works of public utility
for the relief of unemployment, financial assistance on the following
basis:

(_a_) _In the case of revenue-producing works_: Grants equivalent to 50
per cent. of the interest for five years on loans raised for a period of
not less than 10 years in order to meet expenditure oil approved schemes.

(_b_) _In the case of non-revenue-producing works_: Grants equal to 65
per cent. of the interest and sinking fund charges on loans, raised to
meet expenditure on approved schemes for a period of half the term of the
loan, subject to a maximum period of fifteen years’ grant. Both classes
of grants were conditional on the work being commenced before January
1, 1922, and completed before March 31, 1923. The commencing date was,
however, subsequently extended. A provisional limit of £10,000,000 was
originally fixed as the total capital value of the approved works to
which these two grants were to be applied. Local authorities, however,
took up the Government proposals with so much enthusiasm, and the work of
examining and approving the Schemes was accomplished so expeditiously,
that by the end of 1921 schemes to the capital value of nearly
£10,000,000 had been approved, and many others were under consideration.

The Government accordingly decided, in December 1921, to increase from
£10,000,000 to £13,000,000 the capital value of the works which might
be approved for these grants; and on the further development of the
work, in January 1922, again extended the limit from £13,000,000 up to
£18,000,000. Works up to the limit are certain to be approved. Up to May
31, 1922, the capital value of the works approved was:

    Revenue-producing works                    £4,587,005
    Non-revenue-producing works                12,655,358
                                              -----------
                                        Total £17,242,363

    (For details, _see_ Table p. 190)

The amount of direct employment which it is estimated will be given by
these works is 629,113 men-months. The amount of employment indirectly
given in the preparation of materials will probably amount to as much
more. The cost to the Exchequer of the national financial assistance
afforded to these works must necessarily at the present time be somewhat
of an estimate, as the loans raised by the assisted authorities are
for varying periods, with the result that the grants vary from periods
of two-and-a-half up to fifteen years. The burden to the State is a
diminishing one, and is spread over a period of fifteen years, but the
total amount of the burden so distributed will probably amount to about
£8,700,000.

The work done by the Unemployment Grants Committee has been of an
extraordinarily difficult and complicated character and most capably
directed. It has been no easy task to exercise a wise and statesmanlike
discretion, amid the welter of proposals, the pressure for financial
assistance and the stringent limitation on the latter. So far as it is
possible to administer relief works on a sound basis the Committee has
achieved it.

ANALYSIS OF APPROVED SCHEMES ASSISTED ON THE BASIS OF 60 PER CENT. OF THE
WAGES COST.

_Up to May 31, 1922._

    -----------------------------------------+--------------+-------------
            Nature of Scheme.                |    Amount.   | Percentage.
    -----------------------------------------+--------------+-------------
                                             |      £       |
    Roads                                    |  1,002,284   |   36.0
    Parks, recreation grounds, cemeteries    |    623,604   |   22.3
    Gas, water, sewerage and sewage disposal |    474,650   |   17.0
    Tramways                                 |    201,721   |    7.2
    Painting                                 |    200,053   |    7.2
    Docks, harbours, quays                   |     92,235   |    3.3
    Land reclamation                         |     57,303   |    2.0
    Electricity                              |     48,675   |    1.8
    Miscellaneous                            |     90,093   |    3.2
                                             +--------------+-------------
                             Total           |£2,790,618[18]|    100%
    -----------------------------------------+--------------+-------------

ANALYSIS OF APPROVED SCHEMES ASSISTED ON THE BASIS OF GRANTS OF INTEREST
AND SINKING FUND.

Up to _May 31, 1922_.

    -----------------------------------------------------------
                           Non-Revenue Producing.
    ----------------------------------+-------------+----------
                                      |  Value of   |Percentage
        Class of Work.                |    Loan     |    of
                                      |  Sanction.  |  Total.
    ----------------------------------+-------------+----------
                                      |       £     |
    Roads                             |   6,948,969 |    54
    Sewers                            |   3,585,239 |    29
    Parks                             |     758,997 |     6
    Water (Scottish)                  |     498,860 |     4
    Sea defence                       |     484,536 |     4
    Public Instns.                    |     267,063 |     2
    Miscellaneous                     |     111,694 |     1
    ----------------------------------+-------------+----------
        Total                         | £12,655,358 |   100%
    ----------------------------------+-------------+----------

    -----------------------------------------------------------
                            Revenue Producing.
    ----------------------------------+-------------+----------
                                      |  Value of   |Percentage
        Class of Work.                |    Loan     |    of
                                      |  Sanction.  |  Total.
    ----------------------------------+-------------+----------
                                      |       £     |
    Electricity                       |   1,976,614 |    43
    Water                             |   1,334,097 |    29.5
    Tramways                          |     916,562 |    20
    Gas                               |     145,365 |     3
    Cemeteries                        |      51,942 |     1
    Miscellaneous                     |     162,425 |     3.5
    ----------------------------------+-------------+----------
        Total                         |  £4,587,005 |   100%
    ----------------------------------+-------------+----------

    -----------------------------------------------------------
                              All Schemes.
    ----------------------------------+-------------+----------
                                      |  Value of   |Percentage
        Class of Work.                |    Loan     |    of
                                      |  Sanction.  |  Total.
    ----------------------------------+-------------+----------
                                      |       £     |
    Roads and footpaths               |   6,948,969 |    40.5
    Sewers, sewage disposal           |   3,585,239 |    20.3
    Electrical undertakings           |   1,976,614 |    11.6
    Water undertakings                |   1,832,957 |    10.6
    Tramways                          |     916,562 |     5.4
    Parks and Recn. Gds.              |     758,997 |     4.5
    Sea defence and river embankments |     484,536 |     2.8
    Public Institutions               |     267,063 |     1.6
    Gas undertakings                  |     145,365 |      .8
    Cemeteries                        |      51,942 |      .3
    Miscellaneous                     |     274,119 |     1.6
    ----------------------------------+-------------+----------
        Total                         | £17,242,363 |   100%
    ----------------------------------+-------------+----------

N.B.—The roads assisted by the Unemployment Grants Committee, while
distinct from the Expedited Road Schemes of the Ministry of Transport,
nevertheless were all examined by the latter Ministry before approval by
the Committee.


3. EXPEDITED ROAD SCHEMES

To meet the extension of unemployment, in the autumn of 1920, the
Government created a special fund for expediting the construction of
new arterial roads and the improvement of existing roads of importance.
The fund amounted to £10,400,000, consisting of: (1) £4,000,000 to be
contributed from the Road Fund (established under Sections 2 and 3 of
the Roads Act, 1920, from the proceeds of the duties on mechanically
propelled vehicles and horse-drawn carriages and drivers’ licences,
less £600,000 payable to Local Taxation Account); (2) £1,200,000 to
be contributed by the Treasury, and (3) £5,200,000 in loans from the
Treasury to local authorities. The scheme provided for a grant from
this fund to local authorities who expedited road works approved
by the Ministry of Transport, of one-half of the cost, and if the
local authorities were not able to find the other half, for a loan
for that amount repayable within five years, at Treasury rate of
interest. A condition was that one-half of the cost of the work should
be labour cost; if the latter fell below one-half, the grant would
be proportionately reduced. In addition the Government passed the
Unemployment (Relief Works) Act, 1920, on December 3, 1920, which by
the Expiring Laws Continuance Act, 1921, is continued in force till
December 31, 1922. This Act expedites and simplifies the procedure for
compulsorily acquiring and entering into possession of land for works of
public utility intended to mitigate unemployment.


The 1920-21 Programme

On March 31, 1921, the commitments on this special fund, in respect of
road works commenced to relieve unemployment, were as follows:

    ---------------------+---------+-----------+-----------+-----------
                         |  No. of |           |           |
                         | Schemes.|   Grant.  |    Loan.  |  Total.
    ---------------------+---------+-----------+-----------+-----------
                         |         |     £     |     £     |     £
    Metropolitan area    |   23    | 1,200,000 |   623,000 | 1,823,000
    Remainder of England,|         |           |           |
      Wales and Scotland |  130    | 1,762,000 | 1,255,000 | 3,017,000
                         |         |           |           +-----------
                         |         |           |           |£4,840,000
    ---------------------+---------+-----------+-----------+-----------

A description of the schemes will be found in the “Report on the Road
Fund for 1920-21,” _Parliamentary Paper_, 1921, Cmd. 245.


The 1921-22 Programme

The continuance of unemployment necessitated still further efforts, and
in the autumn of 1921 the Government, with the assistance of the Ministry
of Transport, again took action. It was decided to allocate a further sum
of £2,000,000 from the Road Fund for road works in areas in which the
Ministry of Labour certified that serious unemployment existed, for the
relief of which no other provision was available. This sum of £2,000,000
was allocated as follows:

(1) £1,000,000 to special road schemes estimated to cost £2,250,000 in
Essex and Kent to be carried out by unemployed labour resident within the
County of London, the Government undertaking to provide the difference
between the cost of the works £2,250,000 and the £1,000,000 contributed
by the Road Fund, viz., £1,250,000 less such contributions as could be
obtained from the local authorities in whose districts the roads were
situated.

(2) £1,000,000 to road works in the provinces other than the schemes
referred to under (1).

The allocations for the unemployment road programmes of 1920-21, and the
above for 1921-22 overlapped; a readjustment was necessary. The present
readjusted allocations are now as follows:

    1. _1920-21 Programme._               £
        (1) London (Arterial Roads)  1,139,364
        (2) Metropolitan Area           96,437
        (3) Provinces                2,260,093
        (4) Reserve                    489,106
                                     ---------
                                               { £3,065,000 Road Fund.
                                    £3,985,000 { £920,000 Exchequer
                                     --------- {   Contribution.

(The £920,000 Exchequer contribution represents the authorized total of
commitments against the £1,200,000 provided in Sub-head B. of the Road
Grants (Unemployment Relief) Vote, 1921-22; the balance viz., £280,000,
has been surrendered.)

    2. _1921-22 Programme._
        (1) Special London Schemes: (_a_) Road Fund         £1,000,000
                                    (_b_) Ministry of Health (U.R.)
                                          Vote £1,250,000, less local
                                          authorities’ contributions.
        (2) Other Schemes (Road Fund)                       £1,935,000

    3. _Loans to Local Authorities under Sub-head A. of Road
          Grants—Unemployment Relief-Vote._
        (1) In respect of the schemes under the 1920-21
          programme, as above, up to a total of             £3,985,000
        (2) in respect of schemes to be transferred from
          the 1920-21 programme to the 1921-22 programme
          up to a total of                                     402,671
                                                            ----------
                                                            £4,387,671
                                                            ----------

The total commitments, therefore, in respect of road works to relieve
unemployment are £12,557,671, less the local authorities’ contributions
under 2 (1) (_b_) above.

By the end of February 1922, the funds had been fully allocated to
particular schemes, although in a few cases the details had not been
completely settled nor the grants finally made.


The Special Metropolitan Schemes

Following the practice of 1920-21, a separate allocation was made in
1921-22 for dealing with unemployment in the Metropolitan Police Area.
The distress in that area is relatively so serious that special steps
had to be taken to cope with it. The conclusion, without doubt rightly
come to by the Ministry of Transport, was that it was better to carry
out schemes in Essex and Kent on which a large number of men could be
employed than road works in the built-up metropolitan area on which only
a small number could be usefully engaged. The labour engaged on these
works is obtained through the Labour Exchanges in London.

The special London Schemes are as follows:

    (1) Widening and improvement of the London-Tilbury Road,
    including new by-passes at Rainham and Purfleet.

    (2) Construction of new road 21 miles in length from Tilbury to
    Southend in continuation of the Greater London “Eastern Avenue”
    already in progress.

    (3) Widening and improvement of existing trunk roads in North
    Kent:

    (_a_) Erith-Dartford Road.

    (_b_) London-Folkestone Road.

    (_c_) London-Dover Road.

    (_d_) Watling Street (Dartford-Strood).


The Provincial Schemes

In the provinces so large a number of schemes have been put in hand that
only a few typical cases can be mentioned.

    Wallasey is widening her principal exit to the Wirral area and
    Birkenhead.

    Middlesex County Council is undertaking the widening to 60 feet
    of Kingsbury Road, which connects Kingsbury, Hendon and Harrow.

    Lancashire County Council is constructing anew road so that
    through traffic between Preston and Liverpool may “by-pass”
    Ormskirk. They are also improving the road from Liverpool to
    Prescot, parts of the existing road being widened, and the line
    and width of the remainder being improved by new construction.

    Glasgow has widened an existing road and constructed two
    sections of new road, thus affording a connection between her
    principal south-western exits, and has also widened the road
    to the south-east. In addition, a commencement is now being
    made upon the widening to 80 feet of the road to Milngavie and
    Paisley.

    Bolton has taken in hand the widening to 60 feet of Wigan Road.

    Coventry is constructing a new road which will connect two of
    her north-western exits, and is widening to 50 feet Barker’s
    Butts Lane, which will afford an additional convenient outlet
    in the same direction.

    Norwich is constructing a section of a ring road round the
    city, including the erection of three new bridges.

    Redcar and Eston are constructing a new road between Redcar and
    Grangetown, part of a scheme for providing better communication
    between Middlesbrough and Redcar.

    Neath Rural District Council is constructing a new road through
    the Dulaid Valley, which will be a great improvement upon the
    winding, narrow and steep road that has hitherto been the only
    route through this industrial area.

    Plymouth has widened the main road from Devonport to the north,
    and another road which will afford a less congested route from
    Plymouth towards the west.

    Birmingham has in hand several extensive road widenings,
    forming part of her town planning scheme.

    Southport is constructing a section of new road to enable
    traffic to and from Liverpool to avoid an exceedingly narrow
    portion of the existing road.

    Durham County Council is constructing a section of new road
    from Easington towards Hartlepool which will provide a much
    shorter route for East Coast traffic.


Conditions Attaching to Grants

Since the initiation of the 1921-22 Roads Programme, the following
conditions have been attached to all grants made from the Road Fund
towards the cost of road works started with a view to relieving
unemployment:

    (_a_) Unskilled labour to be employed to the fullest extent
    practicable.

    (_b_) All unskilled labour for a probationary period of six
    months to receive a rate of wages not in excess of 75 per
    cent. of the local authority’s rate for unskilled labour. This
    requirement of a lower rate of wages than the prevailing local
    rate does not apply in cases where the work is carried out by
    contract.

    The reduced rate of 75 per cent. does not apply to skilled men,
    employed in their trade, nor to properly qualified navvies.

    In cases where the men are employed for not more than three
    days in the week the reduced rate applicable is increased from
    75 per cent. to a maximum of 87½ per cent.

    The probationary period may include the time during which
    the man has been employed on Government-assisted works under
    previous schemes.

    The reduced rate (for the probationary period) must be
    calculated to the nearest farthing per hour.

    (_c_) All unskilled labour to be obtained through the
    Employment Exchanges, which give preference to ex-Service men,
    and do not submit unskilled men for engagement unless they have
    been registered at an Employment Exchange for at least seven
    days.


4. POOR LAW RELIEF

In this country the traditional method of alleviating distress resulting
from unemployment has been by Poor Law relief administered by Boards of
Guardians. During 1920 and 1921, many persons who were uninsured and
faced with destitution, and many persons who, though insured, found
the benefit insufficient for the maintenance of themselves and their
families, came to the Guardians for relief. There were three times as
many people in receipt of out-door relief during the winter of 1921-22
as there were in 1915, and two and a half times as many as in 1910.
This has necessitated the raising of large sums by Guardians and heavy
increases in the Poor Law element in local rates. The administration of
out-door relief under circumstances such as the present is a matter of
the greatest difficulty. Guardians are, not unnaturally, disposed on
humane grounds to give relief on as generous a scale as possible, which
varies according to the Guardians’ views and the district. On the other
hand, this results in heavy charges on ratepayers, and a preference
in many of the able-bodied recipients for doles instead of work, and
possibly thereby an aggravation of unemployment. The general supervision
of the work of the Guardians falls to the Ministry of Health, and that
Department has undoubtedly discharged that invidious duty with judgment
and efficiency.


Principles Governing Administration of Relief

By a circular letter dated December 29, 1920, the Minister of Health
directed the attention of Guardians to the fact that under Article 12 of
the Relief Regulation Order, 1911, they could not grant outdoor relief on
a wholesale scale, or depart from the standard prescribed by that article
unless under special circumstances—they were, therefore, bound to examine
into the special circumstances of each particular case, and report to
him any departure from the ordinary practice. This was a most necessary
admonition in view of the amount being distributed from State funds
in the shape of out-of-work donation and pensions. Again, by Circular
240 dated September 8, 1921, the Minister of Health reverted to this
important matter and indicated the rules which, in his opinion, and that
of the Association of Poor Law Unions, should govern the administration
of relief. The first was that as Poor Law relief should be restricted
to what was necessary to relieve distress, the amount thereof should
be calculated on a lower scale than the earnings of the independent
workman maintaining himself by his own labour. I need hardly stop to
criticize the Labour contention that the relief should be of no less
amount than the full Trade Union rate of wages of the recipient—it would
be as demoralizing to the recipient as it would be disastrous to the
community. The second rule was that no relief should be given without
full investigation of the circumstances of each applicant, obtaining from
the latter a signed statement of the total income of the household from
all sources. The third rule was that the greater proportion of the relief
granted should be given not in money but in kind, i.e. goods supplied
on presentation of an order drawn on the Guardians’ own out-relief
distribution stores or on local tradesmen. Guardians were further urged
to make, by way of loan, all relief given to or on account of any person
over twenty-one, or to his wife or any member of his family under
sixteen, in cases where there was a reasonable prospect of the recipient
being able to repay within a reasonable period.


Ascertainment of Applicant’s Income

A very important scheme for the voluntary registration of income from
public sources such as pensions, allowances or grants from the Ministry
of Pensions, or Local War Pensions Committees, unemployment benefit
under the Unemployment Insurance Acts, dependents’ allowances under
the Unemployed Workers’ Dependents (Temporary Provision) Act, 1921,
and from other sources, was put into operation with great success in
certain local districts under the auspices of the National Council of
Social Service, which pressed the general adoption of the scheme upon
the Government. A somewhat analogous scheme was later outlined by the
Minister of Health for districts where such voluntary registration
schemes were not in operation, which is described in Circular 261
dated November 23, 1921, and provided that similar information should
be communicated by the Government Departments concerned to Boards of
Guardians. At the same time, the Minister warmly endorsed the principle
of voluntary registration. Guardians ought, of course, before giving
out-door relief, to ascertain the weekly income of all the members of an
applicant’s household. The only sources of income which are not to be
included are the first 5_s._ received from a Friendly Society as sick
pay (Outdoor Relief (Friendly Societies) Act, 1904) and the first 7_s._
6_d._ of sickness benefit (National Insurance Act, 1911, as amended by
the National Health Insurance Act, 1920). On the other hand, Section 6
of the Unemployed Workers’ Dependents (Temporary Provision) Act, 1921,
suspended during the currency of that Act (i.e. up to May 10, 1922) the
provisions of the Unemployment Insurance Act, 1920, forbidding Guardians
to take account of the first 10_s._ of unemployment benefit. Section 14
of the Unemployment Insurance Act, 1922, made this suspension permanent
and further enables benefit due to any person in respect of any period to
be paid to the Guardians, if and so far as they have given that person
out-door relief which they would not have given if the benefit had been
punctually paid.


Assistance to Guardians to Carry out Works

In a number of cases the Minister of Health has facilitated the
undertaking by Guardians of works of excavation, road improvement and
the like for the provision of employment, and has allowed a variation
of the regulations in force so as to enable Guardians undertaking such
works to employ direct labour upon them instead of, as in the ordinary
course, resorting to a contractor. In this way Guardians are enabled
to select the labour from the ranks of those already destitute. In
other cases in which Guardians have themselves been unable to provide
any work, arrangements have been made by the Minister of Health by
which works, which could not ordinarily be undertaken under the scheme
of the Unemployment Grants Committee, are put in hand by the sanitary
authorities, the labour engaged being supplied by the Guardians, and, in
view of the importance of providing work rather than relief, the Minister
has undertaken to give any sanction necessary to cover the contributions
made in this connection by the Guardians to the sanitary authorities
executing the Works, so long as the poor-rate does not incur a charge
greater than the cost of relief which, but for the works, would have had
to be given.


Funding of Cost of Relief

The cost of relief is normally a charge upon the current rates. There
have been cases where the unexpected increase in the cost of relief
resulting from unemployment upset the estimates of annual expenditure
made by the Guardians and placed them in serious financial difficulties;
and again, others where this annual cost is so heavy as to place an
unreasonable immediate burden upon the ratepayers. To meet these abnormal
cases, power was given by the Local Authorities (Financial Provisions)
Act, 1921, to fund the cost, and for that purpose to authorize the
raising of temporary loans for a period not exceeding a maximum of ten
years. Temporary loans amounting, up to the middle of July, 1922, to
£6,204,776 have been sanctioned by the Minister of Health under this
Act, the usual period allowed for repayment being two years, though in
several cases as much as five years has been allowed.


Help to Poorer Metropolitan Unions

Poor Law relief in London is always a matter of exceptional difficulty,
and there has, since 1867, been a Common Poor Fund, through the agency
of which certain Poor Law expenses are pooled and charged to the whole
of the unions in London. During the war, this Fund was placed on a
stereotyped basis, but with the rise of prices and with the growth
of unemployment relief, hardship was caused to the poorer unions. An
emergency arrangement was accordingly made for placing this Fund on an
unstereotyped basis, much to the advantage of the poorer unions. Later,
by the Local Authorities (Financial Provisions) Act, 1921, certain
additional expenses in each union, and particularly the cost of out-door
relief, so far as this was given within a scale and subject to conditions
prescribed by the Minister of Health, were added to the expenses of a
union chargeable on London as a whole. By this Act the burden of out-door
relief in boroughs such as Poplar has been very greatly lightened by
being spread over the wealthier boroughs like Kensington and Westminster.
The Minister of Health, by Statutory Rules and Orders 1922, No. 3,
prescribed the scale. It is, of course, within the power of Guardians to
exceed the scale to meet exceptional needs in any particular case, but
not at the cost of the Common Poor Fund.


Assistance to Guardians to Raise Loans

In cases where a Poor Law authority is in danger of being brought to a
standstill by inability to raise from other sources loans sanctioned by
the Minister for current expenditure, the Minister is empowered himself
to advance the necessary money, on such terms and conditions as may be
recommended by a Committee established under the chairmanship of Sir
Harry Goschen, K.B.E. Up to the middle of March 1922, it had only been
necessary to place three applications before this Committee.




CHAPTER XVIII

GOVERNMENT POLICY FOR UNEMPLOYMENT

    5. Guarantee of Loans—The Trade Facilities Act, 1921—Policy of
    Advisory Committee—Difficulties of the Committee—Guarantees
    already Given.

    6. The Export Credits Scheme—Specific Guarantees or
    Credits—General Guarantees or Credits.

    7. Other Miscellaneous Schemes—Summary of National Expenditure.


5. GUARANTEE OF LOANS

The Trade Facilities Act, 1921, represents the most important of the
constructive proposals which resulted from the conferences held by the
Prime Minister at Gairloch in the autumn of 1921. The general opinion
of the experts summoned to those conferences was that a large amount
of new constructional work (extension and electrification of railways,
construction of docks, extension of manufacturing works, etc.), which
would normally have taken place during the war, still required to be
carried out, but that such work was being held up by the high costs
of manufacture and the high rates which had to be paid for money. It
was felt that although much of this work was urgently needed for the
proper service of the public handling of trade, the placing of orders
might be deferred indefinitely in the hope of a fall in prices, and
meanwhile the Government would be compelled to go on paying unemployment
doles. If, however, cheap money could be provided, one at least of the
main obstacles would be overcome, and this might in many cases afford
sufficient inducement to commence the works immediately.


The Trade Facilities Act, 1921

Under the Trade Facilities Act, the Treasury is empowered to give a
guarantee of principal and/or interest on a loan to be raised “by any
government, any public authority, or any corporation or other body
of persons,” the proceeds of which loan are “applied towards or in
connection with the carrying out of any capital undertaking or in, or in
connection with, the purchase of articles, other than munitions of war,
manufactured or produced in the United Kingdom required for the purposes
of any such undertaking, provided that the aggregate capital amount of
the loans, the principal or interest of which is guaranteed under this
section, shall not exceed the sum of twenty-five million pounds.” An
Advisory Committee—Sir Robert Kindersley, G.B.E., Sir William Plender,
G.B.E., and Colonel Schuster, M.C.—was appointed to recommend to the
Treasury, the cases in which, in its opinion, a guarantee should be given.

The Committee’s power is limited in two ways. In the first place it can
only recommend a guarantee on a loan (i.e. it cannot guarantee an issue
of shares). In the second place, the Committee has no power to recommend
a guarantee “except for the purpose of a capital undertaking”(i.e. it
cannot guarantee “working capital”). Many manufacturers in the country
have orders on hand from foreign purchasers which they are unable to
execute because they cannot finance themselves for the period between the
date on which the orders are put in hand and the date on which payment is
received from the foreign purchaser. Cases of this sort come under the
Export Credits Scheme, and not under this scheme. The Act empowers the
Committee to recommend a guarantee of a loan by a foreign Government,
municipality or company, even though the articles (e.g. steel rails)
manufactured with the proceeds of the guaranteed Joan were to be erected
or used outside this country, provided always that the proceeds of the
guaranteed loan itself were spent on goods manufactured in the United
Kingdom.

The Trade Facilities Act thus enables new works to be undertaken which
would otherwise have been postponed indefinitely. This on the one hand
provides work directly and indirectly, and so avoids the demoralizing
influence of the dole. On the other hand, if the scheme is wisely
administered, no liability should fall on the Government, that is to
say on the individual taxpayers. An assurance as to the wisdom of its
administration was afforded by the composition of the Committee itself,
combined with the pledge given by the Chancellor in the House of Commons
that the Government would not interfere with the Committee’s discretion.
It was thereby made certain that sound business considerations rather
than political expediency would be the guide to the Committee’s
activities.


Policy of Advisory Committee

While the greater part of the guarantees are given to companies and
undertakings operating in Great Britain, the Committee considers that
(subject, of course, to the material being bought in this country)
it would help to advance general economic restoration if part of the
fund were allotted to enterprises abroad, e.g. in the extension and
improvement of foreign railways. By that means the foreign country’s
productive and purchasing power would be increased and she would resume
her place as a supplier of the world’s necessities and as a purchaser
of the world’s—and Great Britain’s—manufactured goods. The difficulty,
however, of dealing with foreign loans is that the countries which
chiefly require assistance are those suffering from a heavily depreciated
currency, and accordingly the service of a sterling loan would place so
onerous a burden on them that it would be more than doubtful whether they
could bear it and meet their obligations. To find adequate security in
such cases is, therefore, a great difficulty, to which there is added the
unwillingness of such countries to pledge even the inadequate security
which it is within their power to give, and the record of many of these
countries as regards their past obligations has not been such as to
inspire confidence. The Committee keeps always before it the fact that
it is a custodian of the Public Purse, and that much more harm than good
would be done by recommending guarantees in cases in which the risks are
greater than the principles of sound commercial prudence would accept.

The principles on which the Committee acts are these:

First, that its principal duty is to assist in the extension of
sound undertakings with proved good management which are deferring
well-thought-out plans of extensions or new works owing to the difficulty
of raising money on reasonable terms under present abnormal conditions.
It does not feel that it is called upon to recommend a guarantee in cases
of a speculative nature for which, even in normal times, the promoters
would have found difficulty in raising money. Nor does it think that it
ought to recommend guarantees to relieve undertakings from financial
embarrassments incurred through lack of ordinary commercial foresight
on the part of those responsible for their management. A guiding rule
is that the Government’s liability should be as small as possible, and
that a good commercial Security should be obtained in every case. In the
second place, the Committee, realizing the gravity of the unemployment
problem and the demoralizing effect of the continued receipt of doles,
prefers those schemes which can be put in operation immediately rather
than schemes which would take some considerable time to mature. In the
third place, the Committee favours schemes of public utility. These
fall into two classes. In the first place, there is a public utility
undertaking as ordinarily understood, i.e. a corporation working under
statutory powers and not trading for profit. In the second place are the
companies, such as railway companies, which carry out an indispensable
national service, and which in actual practice cannot earn excessive
dividends for their shareholders. The reason for this preference has been
partly the direct benefit to the general community from the improved
facilities for the public thereby rendered possible, and partly the
feeling that the guarantee could more properly be given to undertakings
in respect of which it was unlikely that Government assistance would
result in the earning of a large profit for private promoters and
shareholders. In the fourth place, the Committee insists that all
contracts must be on the basis of competitive prices. It feels that it
would be wrong for the Government guarantee to be given in any case in
which an unreasonably high price was going to be paid for the materials.
Not only would such a course be unjust to the taxpayer by making the
Government responsible for money going, not into wages and materials,
but in paying high profits to manufacturers; it would be against the
best interests of the country as a whole, since it would be impeding the
return to a level of prices on which this country could meet foreign
competition.


Difficulties of the Committee

The Committee has encountered many difficulties. The most important
of these has been the lengthy negotiations necessary in every case.
Frequently, the application when submitted is not on lines which the
Committee feels justified in approving, and protracted discussions
are required to reduce it to a business-like and acceptable form.
The Committee in fact has been in the position practically of an
issuing house which had to issue £25,000,000 worth of securities of
every possible kind and variety in a very short time. Every one with
experience of this class of business will realize what that means. As
the Committee’s power is limited to recommending the guarantee of loans,
it has found a difficulty in the fact that many companies, at the time
of making their application, have not possessed the necessary borrowing
powers. Meetings of shareholders and debenture holders have frequently
been necessary in order that these powers might be sanctioned. In other
cases, the companies have required Parliamentary approval for an increase
in their loan capital. All of these difficulties have taken time to
surmount, but the Committee has always instructed applicants to start
the preliminary work of obtaining their tenders, etc., as soon as it
has decided the broad lines on which a guarantee could be given, so that
real work can be commenced and men employed from the very moment that the
necessary formalities are completed.


Guarantees already Given

Guarantees have been given in numerous cases. Work which otherwise would
not have been done has been provided in the shipbuilding and repairing
business, in the construction and improvement of docks and canals, in the
extension of railways, in the electrification of railways, and in the
extension of a number of electrical undertakings. This has facilitated
the employment of direct labour in a number of places, and in addition,
orders for the manufactured goods, principally cement and iron, have been
placed in the manufacturing towns of the North and Midlands. To take a
concrete instance, a guarantee has been given to the London Underground
Railways for extensions. This means an immense amount of direct
employment; it entails the placing of large orders for new locomotives
and rolling stock. The men for whom employment has been found would
otherwise have been living on the dole. Not only is their moral improved,
but their purchasing power is increased, and the prosperity of industries
as a whole has been fostered. Further, new tracts of country will be
opened up for the Londoner and an impetus given to the construction of
houses in suburban areas. This example, which is chosen at random from
a number of others, shows the beneficial effect for the community as a
whole, of the guarantees which have been given under the Trade Facilities
Act.

Two White Papers (1922)—62 and 121—state that up to June 29, 1922, the
Treasury has stated its willingness to guarantee principal and interest
on loans of an amount of £17,042,143 for periods of years varying from
four to twenty-five in respect of a number of enterprises of which the
following are typical: Harland & Wolff (£1,493,345), ship repairing works
on Thames and dock and wharf on Clyde; South Eastern & Chatham Railway
Company’s Managing Committee (£6,500,000), electrification of suburban
lines; London Electric Railways Company (£6,000,000), enlargement
of tunnel of City and South London Railway, and extension of London
Electric Railway from Golders Green to Edgware; Calcutta Electric Supply
Corporation (£500,000), purchase of generating and transforming plant and
cables; Rhymney Valley Sewerage Board (£250,000), sewage disposal and
sewerage scheme for urban districts in Rhymney Valley.


6. THE EXPORT CREDITS SCHEME

Under the Overseas Trade (Credits and Insurance) Act, 1920, the Overseas
(Credits and Insurance) Amendment Act, 1921, and the Trade Facilities
Act, 1921, the Government has done much to relieve unemployment by
assisting the manufacturer to export his goods from the United Kingdom.
The Government’s plan is known as the “Export Credits Scheme”; it is
administered by the Department of Overseas Trade. Its main essential
is that the Government will guarantee bills drawn by United Kingdom
exporters on customers abroad as against shipment of goods exported from
the United Kingdom, when such bills are submitted through the exporter’s
banker with the banker’s recommendation for guarantee attached, and the
circumstances are such as bring the case within the scheme. The goods
must be commodities (other than arms and ammunition) wholly or partly
produced or manufactured in the United Kingdom, and include coal; but the
Government will not assist to finance goods to be shipped on consignment,
or the carrying of stocks either in the United Kingdom or elsewhere. The
sum of outstanding credits must not at any one time exceed twenty-six
millions sterling. The sum now outstanding is sixteen millions.

A lucid statement of the history, nature and working of the scheme by Sir
Philip Lloyd-Greame, M.P., the Parliamentary Secretary to the Department
of Overseas Trade, appears in the _Accountant_ for February 4, 1922.
The scheme does not supplant, but supplements, the ordinary commercial
machinery of finance by providing credit in cases where, although the
trade involved is inherently sound, bankers and financial houses are
not disposed, or in a position, to supply the necessary accommodation.
The closest co-operation is maintained with the banks. By letter of
October 14, 1921, from the Bankers’ Clearing House to the President of
the Board of Trade, which appears in the _Accountant_, the Committee of
London Clearing House Bankers expressed their willingness “to take all
such steps as lay within their power to encourage the operation of the
scheme, especially having regard to the object which the Government had
in view, that of ameliorating the present conditions of unemployment.”
The Department of Overseas Trade is assisted by an expert and experienced
business committee representative of the Joint Stock Banks, the Eastern
Banks, the Accepting and Discount Houses, and manufacturers and merchants.

The scheme now applies to all countries in the world, but not to British
India, Ceylon and the Straits Settlements, where there are large
unabsorbed stocks and in respect of which adequate banking facilities
exist, nor to Russia. New credits may be granted up to September 8,
1923, but all credits must be liquidated by September 8, 1927. Credits
of two kinds are granted—“specific credits,” and “general credits.” The
former are given in respect of particular transactions, for example, the
completion of a large engineering or constructional contract abroad; the
latter are credits up to specified amounts for specified countries and
for specified periods in respect of goods not necessarily sold at the
time the credits are given, and are intended to meet the convenience
of merchants doing business abroad on short term credits. A United
Kingdom merchant selling small quantities of commodities abroad through
some travelling representative finds it quite impossible to submit
each transaction to the approval of the Export Credits Department. The
merchant can thus enter into transactions abroad up to the amount of the
general credit without any reference to the Department, while the latter
undertakes to guarantee the bills drawn within the agreed period for the
goods that are shipped. The bills carrying the Department’s guarantee are
regarded in the discount market as “first-class bills.” The Department
prefers that the bills should be of as short duration as possible, but
permits renewals provided that the credit is not extended beyond twelve
months. With the Government guarantee that the bill drawn by the foreign
customer or his agent will be met, the United Kingdom exporting merchant
can thus borrow on the security of the bill at the ordinary market rate
in the customary way.


Specific Guarantees or Credits

In case of specific credits the Department will guarantee up to 100 per
cent. of the bills drawn against the shipment where the credit does not
exceed twelve months, and up to 85 per cent. in cases where the credit
exceeds twelve months. Two bills, in the latter case, are usually drawn,
one for 85 per cent. of the transaction which is guaranteed for the full
amount of the draft, and the second for the balance of 15 per cent. which
is not guaranteed. The Department does not require a bill to be accepted
before guaranteeing it. If security is to be deposited by the importer,
the Department requires a letter of guarantee from the importer’s bank,
which must be an approved bank, that the bill will be accepted and
that approved security will be deposited immediately upon the first
presentation of the documents to the importer, and the Department
assesses the value of the security so deposited. If no security is to be
deposited, the Department requires a similar letter of guarantee, or some
other satisfactory evidence that the bill will be accepted.

In case of default by the importer to accept or meet the bill when due,
the Government has no recourse against the United Kingdom exporter
where the importer, in the first instance, deposited security assessed
as sufficient by the Department to cover the whole amount guaranteed.
The importer may, however, have put up some security, but security not
deemed enough by the Department to cover the whole amount guaranteed. In
that event, the Department retains recourse against the United Kingdom
exporter for 50 per cent. (when 85 per cent. or less of the bill has been
guaranteed), or for 57½ per cent. (when 100 per cent. of the bill has
been guaranteed) of the difference between the amount guaranteed, on the
one hand, and, on the other, the total of the amount (if any) paid by the
importer, plus the amount which the security was accepted as sufficient
to cover or which the security, when realized, yields, whichever is the
greater. When the importer puts up no security the Government retains
recourse against the United Kingdom exporter for 50 per cent. of the
difference between the amount guaranteed and the amount (if any) paid
by the importer, where 85 per cent. or less of the amount of the bill
has been guaranteed; where 100 per cent. has been guaranteed—for 57½ per
cent. of that difference.


General Guarantees or Credits

In the case of general credits, when the Government accedes to an
application made through a bank, say, to guarantee for six months bills
up to a sum of £10,000 drawn by some particular United Kingdom exporter
as against shipment of goods to Rumania, the Government would guarantee
each bill up to its total value at such rate of commission as the
Department may fix. At the end of the six months, if the amount of the
guaranteed bills totals up to, say, £9,000, that represents the liability
of the Government. When afterwards the bills fall due, and there is any
loss, the Government has recourse on the United Kingdom exporter for 57½
per cent. of the ultimate loss. The Government does not require that any
security shall be put up by the importer, but is prepared to consider the
offering of special terms when security is put up.

The Government is also prepared to make arrangements with approved
banks, banking houses, and credit associations under which, for an
agreed premium, the Government will assume responsibility for a share
not exceeding 70 per cent. of any loss incurred by such banks, etc.,
in respect of transactions carried through by them for United Kingdom
exporters, which comply with the same conditions as to the nature of the
goods as those prescribed under the Export Credits Scheme.


7. OTHER MISCELLANEOUS SCHEMES

Money has been allocated by the Government to assist schemes of land
improvement, drainage and farm water-supplies so as to provide employment
for agricultural workers, also forestry schemes and light railways:

    _Ministry of Agriculture:_                              £
      Land Drainage                                      388,000
        Of this £113,000 is recoverable from drainage
          boards and landowners.
      Farm water-supplies                                  9,600
        The balance of cost, £18,600, is borne by
          landowners.
    _Scottish Board of Agriculture:_
      Land Drainage (half cost of schemes)                21,000
    _Forestry Commission:_
      Unemployment schemes in addition to the normal
        estimates                                        206,000
      Additional expenditure thereon by landowners
        and local authorities                            141,000

In the sum of £5,500,000 set aside during the winter 1921-22 for general
unemployment relief, provision was made for assistance to approved light
railway schemes. Up to June, 1922, two such schemes had been approved for
grants from the Treasury equal to half the total cost, subject to maximum
grants of £162,500 in all.

From time to time steps have been taken to assist in relieving the
situation by special measures operating in Government industrial
establishments. A short-time system was introduced into War Office
and Admiralty establishments to spread employment. The highest number
of additional men thus engaged was 9,900. No additional men are now
employed. Alternative work, e.g. waggon repairing, manufacture of medals,
coin-blanks, locomotives, new wagons and miscellaneous articles for the
Post Office and for private firms, has been carried out in War Office and
Admiralty establishments. The highest number of men employed thereon was
8,800. The Office of Works undertook an emergency programme of decorative
and repair work in Government Departments during the winter 1920-21,
when the highest number of additional men thus engaged was 2,600. During
the winter 1921-22, this Department also undertook relief work in the
Royal Parks, the highest number of additional men employed on this work
being 390. The expenditure in both classes of scheme was about £127,000.
The sum of £563,000 was also set aside during the winter 1921-22 for
accelerating Government contracts whereby employment was found for some
600 men.


Summary of National Expenditure

As between the Armistice and May 19, 1922, there has been devoted to the
relief of unemployment out of public funds the total sum of £281,216,460,
under the following heads:

    1. _Granted by Government:_                              £
      (1) Unemployment Relief Works                      26,819,600
      (2) Out-of-Work Donation and Unemployment
            Benefit                                     144,000,000
      (3) Resettlement Training }
          Civil Liabilities     }                        31,972,000
          Overseas Settlement   }
      (4) Export Credits Scheme                          26,000,000
      (5) Guarantee of Loans                             25,000,000
      (6) Accelerated Government Contracts                  563,000
      (7) Land Settlement of Ex-Service Men               1,523,860
      (8) Loans to County Councils for Small Holdings
            for Ex-Service Men                           12,269,000
                                                        -----------
                                                        268,147,460
    2. _Appropriations from Non-Government Sources:_
      (1) Contributions by Local Authorities to 1 (1)
            above                                        12,694,000
      (2) Contributions from National Relief Fund to
           1 (3) above                                      375,000
                                                       ------------
                                                       £281,216,460
                                                       ------------

In addition, local authorities have initiated, without Government
assistance, relief works on which, between the commencement of trade
depression in September 1920, and May 19, 1922, an aggregate of wages of
at least £450,000 has been paid. Guardians have during the same period
expended at least £60,000,000 on out-door relief. The above figures
exclude the temporary loans by the Ministry of Health to embarrassed
Guardians.

The really critical time in regard to unemployment will be the
forthcoming winter, 1922-23. Trade Union out-of-work benefits have shrunk
and dwindled through lack of funds. Homes and furniture, utensils, etc.,
with two winters’ hard times have wasted down to the bare bone, clothing
is worn out, and there is little or no reserve of resources; in some
districts conditions fill one with apprehension. Added to the natural
gravity—social and economic—of the situation, is the quite definite
attempt of the Communists to exploit subterraneously these unhappy
circumstances for revolutionary purposes.




Part III

THE TRUE LABOUR POLICY




CHAPTER XIX

THE OUTLOOK OF THE WORKER

    Ignorance about Industry—Misconceptions as to Wages—Discontent
    and its Causes—Effect of Bad Environment—Fear of
    Unemployment—Dissatisfaction with Status in Industry—Belief
    in Agitation—Desire for Improvement—Low Conception of
    Work—Suspicion of Employers—The Worker and his Trade Union—The
    Worker and the Community.


My endeavour, henceforward, will be to state, as concisely and clearly
as the subject permits, the main principles of policy which, in my
judgment, should be applied to industry and its problems. As a necessary
preliminary one must indicate the characteristics of the worker, his
sentiments and aspirations, his defects, his virtues. After years of
continual intercourse with labour, I confess my failure to meet in the
flesh the workers as depicted in current revolutionary publications;
nor have I succeeded in discovering among them that alien race with
sympathies and sensibilities different from those of the rest of the
community, ever moved by materialistic motives, always pursuing some
irrational course of foolish selfishness as described in another type
of literature. Against the unwarranted accusation that the British
working-man in his opinions, feelings and sentiments is at all a
different person from the ordinary British citizen, I have never ceased
to protest. That he often suffers from a limited outlook, reacts to
prejudice, and cherishes at times a grudge against society, I am not
going to deny; but after working among workers, and, later, spending
a great part of the war-period in controlling one million workmen of
every description, and meeting in familiar intercourse their Trade Union
executives, their district committees and their own deputations in
numerous shops and yards, I can truthfully say that I generally found
the worker a human being who is open to reason and to acceptance of a
view substantially fair and just, once his ignorance is dissipated,
his prejudices removed, and his humanity recognized. He has, however,
no patience for humbug, rhetoric or cant. The trouble is that he has
not been treated in the past as a sentient and rational person by
politicians, or even his own Trade Union leaders—the main cause of our
present industrial difficulties.


Ignorance about Industry

When in retrospect I recall my impression of the outstanding
characteristic of the British working-man as I knew him in the workshops,
I unhesitatingly fasten on his appalling ignorance of economic matters.
Few of the “rank and file” have any conception whatsoever of the factors
and forces which constitute that type of economic activity known as
industry, still less of the contribution of industry to our national
prosperity. And in regard to commerce and its part as the handmaiden
of industry, their ignorance is even more profound. There never plays
upon their imagination the least glimpse of the wonderful complexity of
the mechanism of finance nor of the amazingly intricate organization
of buying and selling. Who can blame them—they have never been told.
I have kept a meeting of workmen keenly interested for an hour, after
the conclusion of some official business, in a simple explanation of
the functions played by finance in industry, and of the various kinds
of financial operations entailed in the marketing of the product of
their particular factory. Workmen respond to sympathetic education
with cheerful alacrity. One of the expedients to which the Department
of Shipyard Labour resorted was the institution of talks with workmen
in various ship-repairing districts of the rôles being played in the
stirring circumstances of the times by naval and merchant ships which
were in dry-dock in local shipyards for reconditioning or repair. It had
a most stimulating effect; men found themselves no longer sluggishly
working upon an uninspiring metal hulk, but upon a living ship redolent
with stirring associations, engaged in performing for the nation
functions and duties which they could readily understand. There was less
time lost, less sleeping on night-work, fewer stoppages of work; greater
expedition, larger output.


Misconceptions as to Wages

The rate of wages is a matter ever present to the mind of the worker.
It is the question of most general discussion in normal times; but at
all times there is a strange failure to appreciate the true facts of the
position. The average workman thought, before the war, that his employer
was always able to raise his rate of wages, if not to the particular
level demanded, at any rate sufficiently to afford a substantial
increase, and that only the employer’s selfishness stood in the way
of this being done. Such most certainly was the opinion generally
entertained by Labour when, during the war, the State became virtually
the employer. Time after time bodies of workmen told me in perfect good
faith that there was no difficulty whatever in the Government paying the
rate of wages which they claimed. It seemed to them wholly immaterial
that they were being paid, not out of the product of their work, but out
of money borrowed by the State, with all the consequent inflation of
currency and rise of prices. While, at the end of the war, many of the
more enlightened Labour leaders appreciated, and a few, whom I honour,
publicly denounced, the futility of the mad race of wages after prices,
the average workman never was able to grasp it. There was a simple way,
he thought, of compensating him for increased prices—merely to raise
wages. Much of our industrial trouble to-day is due to the spurious
appearance of prosperity which was caused by the high nominal wages of
the war-period, and to the notion engendered in the mind of Labour that
the Government could now, by resorting once more to war-time methods of
controlling industry, create the same prosperity as existed immediately
after the war. There is a foolish belief even among moderate men that the
Government refrains from doing so in the interests of employers, in order
to bring about a reduction of wages and a retrogression in conditions of
employment, and to weaken the power of the Trade Unions.


Discontent and its Causes

One who moves among the workers cannot fail to be struck with the
discontent which permeates them. Some people call it “industrial unrest,”
and condemn it as a menace to society; they forget that discontent
with existing conditions is an essential element of progress. Society
advances, not by uniform and rhythmic strides in a fixed direction, but
by convulsive movements which, if plotted on a plan, would present the
appearance of gyrations to right and left of the axis of progression,
but generally register a forward march. In our democratic organization
of society, where the mutual relations of constituent elements of the
community are so generally governed by common-sense compromise, no
section that was passive could ever hope to better its social conditions.

There are several causes for the prevalent dissatisfaction, of which
probably the most potent is the increasing standard of education. Those
who take the trouble to compare the education of our industrial classes
of to-day with the lack of education of the workers at the beginning
of the nineteenth century, as described in some of the first Factory
Inspectors’ reports, cannot fail to realize what enormous progress has
been achieved; and this progress has—and happily so—given birth to a new
vision. One of the first effects of education is to stimulate aspirations
for improvement of material conditions, and the social observer generally
finds that the first aspirations created in this direction by education
are frequently not kept within the bounds which a fuller education and a
wider experience ultimately impose.


Effect of Bad Environment

As, during the decades immediately before the war, the outlook of the
workers widened under the influence of education, and especially as a
result of the facilities for travel from the towns into the country for
holidays and recreation, there has arisen an increasing dissatisfaction
with industrial surroundings and home conditions. Nor is that surprising.
Owing to the aggregation of factories during the industrial revolution,
as near as possible to the centre of towns, and the huddling of houses
in crowded, fetid and ill-built courts, as near as possible to the
factories, a condition of things grew up, and indeed in many large towns
still continues, more than sufficient to cause industrial discontent.
Men are told by Socialist proselytizers the plausible story that such a
state of things is one of the inevitable concomitants of the capitalistic
organization of industry—a statement quite untrue. What caused it
was the impotence of municipal organization in those days to control
town planning or regulate the construction of streets and erection of
houses, and the insufficient development of the social conscience as to
the things which ought to be done for the good of the community. Some
of our successful leaders of industry have conclusively demonstrated,
by the most convincing of tests—viz., the commercial success of their
venture—that there is no necessary connection whatsoever between bad
industrial environment and the prosperity of their “capitalistic”
works. Take for example Lord Leverhulme’s beautiful garden village at
Port Sunlight, and many similar model villages connected with other
industrial undertakings. Nothing more conduces to industrial contentment
than a comfortable home; no one can expect contentment in the occupants
of many of the old houses which still disgrace some of our industrial
centres, with their leaky roofs, rotten floors, muddy backyards and
general structural decay, in which it is impossible to keep things nice,
or children tidy, or household effects clean. Our municipalities are
doing great work in sweeping away dwellings of this kind. Their final
disappearance is a matter of expense and rates, for removal is costly.
Local authorities are performing wonders in keeping, so far as they can,
old buildings fit for human habitation, but there is a limit to the
process of patching up ancient and dilapidated houses.


Fear of Unemployment

Another active cause of industrial discontent is insecurity of
employment. If this week a man is in work and has no certainty of work
next week—a condition even in normal times of large numbers of the
industrial population—he is persistently oppressed by a desolating
fear. Want of work is the menacing spectre which haunts the background
of every working-class home. Intermittent employment produces serious
decay of human fibres and moral degeneration—an inevitable result of the
discouragement caused by fruitless seeking after work, and of the shifts
to find food for wife and family. The inability to organize any uniform
routine of living leads straight away to improvidence: when a man is in
work one week, he spends all he has, relying on continuance of the work;
next week, if unemployed, he has nothing except perhaps some unemployment
pay or benefits. It is systematically rubbed into him by exponents
of Socialism that unemployment is solely caused by the capitalistic
organization of industry, that there can be none under the Socialists’
regime, as if any socialistic scheme for the reorganization of industry
is going to compel the consumer to buy more commodities and services than
he would be prepared, or able, to buy under capitalistic production.


Dissatisfaction with Status in Industry

A contributing cause to industrial discontent of growing moment is
what the worker describes as the denial to him of a human status in
industry. He complains, especially in the matter of being taken on or
discharged or put on overtime or night-work, indeed, with respect to
the whole conditions of his employment, that little or no regard is
paid to him as a human being. He is content to accept the theory of the
Labour intellectuals—it is certainly not his own conception—that he is
a wage-slave taken on and discharged just as it suits his employer’s
interests, and that his labour is bought and sold on the same principles
as any other raw material in industry. The old paternal relation of
employer and employed, unfortunately much weakened by the introduction
of the factory system, has undoubtedly disappeared with the conversion
of family businesses into vast joint-stock company concerns; personal
touch between the master and his men no longer exists. There is, however,
no ground for suggesting—as Socialists are fond of instilling into the
minds of the workers—that this is still another inevitable result of
the capitalistic organization of industry. In some of the largest and
greatest of capitalistic works, workers can be, and to my knowledge are,
treated with consideration and sympathy. Their human values can always be
respected and full human status accorded to them if only the right spirit
prevails between employers and employed, and proper machinery exists for
its infusion into workshop life.


Belief in Agitation

Discontent, expressed in constant agitation, has unfortunately been
of practical value; that is one reason why it is so rife in industry
to-day. No substantial increases in wages or improvement in working
conditions have, in the past, been conceded voluntarily by employers, but
only after pressure by the Unions, subject, of course, to considerable
qualifications in special cases. It is more or less inevitable that
it should be so, having regard to the way in which the machinery of
collective bargaining has been operated by both sides. Every time, when
an increase of wages, or an improvement in conditions is demanded and
refused, and then ultimately given under threat of a strike, it feeds
the springs of future discontent and confirms in the workers’ minds
the efficacy of agitation. In the latter days of the war the unsettled
condition of industry was largely due to the fact that in the earlier
days wage-increases had been refused and then conceded by the Government
under pressure of strikes and threats of stoppages by the workers. Each
time such capitulations took place it seriously ministered to the spirit
of discontent.


Desire for Improvement

When one turns to other forces now commencing to pulsate through Labour,
one is impressed by the increasing general desire for mental and cultural
improvement, at times pathetic in its search for simple gratifications.
Some persons scoff at this seeking after higher things by the
working-classes; their scorn is ill-timed, and their irony misdirected.
There is rapidly developing, I am glad to say, an increasing movement
in this direction. Those engaged in social work in our great industrial
centres can testify to the innumerable ways in which this aspiration is
finding healthy expression.

More than one foreign observer has recorded his opinion that the
stability of the British Constitution is materially due to the strong
attachment to, and sentiment for, family life that prevail in this
country. No member of the community is a stronger supporter of family
life than the British working-man; no one is prepared to make more
substantial sacrifices for its maintenance and preservation, no one more
frequently has to make them. In this respect the British worker is one
of the greatest living individualists, and the strength of his family
individualism will never let him be converted into a thoroughgoing
Communist. Theorists may talk to him till tired of working for the State
and the community—I had to use that argument in war-time—he will answer
them, as I have been answered on the Clyde: “I work for the wife and
bairns.”


Low Conception of Work

In regard to his conception of work the British working-man is hopelessly
wrong in his outlook. Some find pleasure in work; the manual worker is
not one of them. He has come to regard work as a species of thraldom,
instituted, not for his profit or improvement, but solely for the
maintenance of his employer and the swelling of his profits. This, of
course, is merely a weak dilution of the Marxian fallacy. The modern
manual worker, because he has never been taught to look upon work as
a moral duty or upon industry as one of the highest forms of national
service, sees no dignity in work, and is sensible of no obligation
incumbent on him to work to the best of his ability or even for the
duration of the working day. The number of expedients to which I have
known manual workers resort—in other respects honest, upright men—in
order to scamp the job, or cut time, would be perfectly surprising to
those not conversant with industry. To-day the moral obligation to work
seems inverted into a duty to do as little as possible for the wages.
Sometimes the motive is to make the job last longer, at other times, to
assist unemployment by making work go round, and, where remuneration is
based on payment by results, for less altruistic reasons, to force up
the prices paid for the job. But although the Marxian doctrine—that the
more work an employee does the more he contributes to the betrayal of
his brother workers by assisting the employer to amass illicit gains out
of their exploitation—explains much of the work-shyness and “ca-canny”
of to-day, there are other reasons. One is the extent to which work is
subdivided in modern factory organization. In an engineering shop, a job
done thirty or forty years ago by a skilled man on a general purpose
machine is now subdivided into a large number of constituent operations.
These will be performed by different workers on different semi-automatic
machines, and the finished part will be assembled by another set of
workers into the final product. In the old days the tradesman saw the
finished article gradually taking shape under his creative craftsmanship;
to-day no worker sees anything but the single operation which he
performs. As a result, there is little to minister to the instincts
of a craftsman. The workman employed on such repetition work becomes
quickly apathetic, his interest relaxes, his inventiveness atrophies, his
initiative dies, he degenerates into a cog, and, being human, into an
inefficient cog, in the vast mechanism of industry. These methods of mass
production are quite inevitable in modern efficient practice, and the
only antidote is to encourage the workers to acquire a wider interest in
industry, and in the prosperity of the works in which they are employed,
and to cultivate a spirit of culture so that their minds may be filled
with other things which satisfy their human aspirations, and replace the
noble satisfaction which a tradesman used to feel as the creation of his
handicraft grew beneath his skill.


Suspicion of Employers

If asked what was the strongest sentiment I found permeating the
workshops, I should answer, suspicion of employers. In some districts it
is worse than in others; in some works it is worse than in other works
in the same district. Many reasons have been advanced for its existence,
but the real explanation is simple. Between the fifties and the eighties
of last century, when the machinery of collective bargaining was coming
into operation, the principle of action adopted by many employers
was “enlightened self-interest”—the individualistic theory that an
employer best served his own interests, and, automatically by so doing
the best interests of the country, by furthering on all occasions his
own advantage. To call this greed or selfishness is wrong. It implied
no callous disregard of the rights of the workers, but it did involve
such a bias of mind that the interests of employees were subordinated
in the scheme of industry to those of the employers. In the course of
collective bargaining, of manœuvring for position, of higgling, many
managements contracted the habit of seizing upon any circumstances
which might enable them to cut piece-rates and time-allowances, bring
down wages, revise conditions of employment, and adopted the invariable
attitude of resisting all the demands of their employees. Such employers
have disappeared, but “the evil that men do lives after them.” Not
unnaturally, the workers learned to decipher some hostile motive
behind each action of their employer, however apparently beneficent,
and regarded everything he did with unalloyed suspicion, and as calling
for the closest scrutiny. This is the cause of the want of confidence
in the industrial atmosphere to-day. While it continues so charged with
mistrust, confidence between all persons concerned in industry, which
is necessary for production and essential for smooth running of the
industrial machine, can never flourish. All employers unreservedly now
deprecate this unhappy condition of things, many have gone to exceptional
trouble to dissipate the blight on industry of such distrust, but
memories are long, industrial prejudices tenacious, and it will take time
and much effort to forge a bond of trust.


The Worker and his Trade Union

The attitude of the British worker to his Trade Union reflects the
British temperament. Abroad one sees the workers follow their Unions in
matters both industrial and political; in this country there is no such
general surrender of individual judgment. So far as industrial questions
are concerned, with the exception of some smaller Unions whose members
seem always in a seething condition of revolt, and certain revolutionary
elements in some of the great Unions, the majority of Trade Unionists
will follow their own Union leaders. That, however, is a very different
thing from following the general lead of the combined Trade Unions as
expressed through the Trades Union Congress or the Labour Party. As one
result of the craft organization of industry in this country, which at
times during the war showed signs of disintegration but now seems more
firmly established than ever, the Unions are almost as suspicious of
one another’s motives—a result of the fear of one trade invading the
other’s work—as Labour in the mass is suspicious of the employers. Where,
however, a question is, rightly or wrongly, represented to involve a
principle directly affecting the common interests of all workers, the
Trade Unionist has been so well drilled in the virtue of solidarity that
he will, generally, range himself under the banner of organized Labour.
In regard to political matters there is no such docility, although
compelled to contribute to his Union’s political fund. To-day he is
forced to do so, in spite of his power to object under the Trade Union
Act 1913; if the Trade Union Act (1913) Amendment Bill 1922 passes,
he will not be liable unless he expressly agrees. There is evidence
of independence in the results of the General Election in 1918 and of
by-elections since, where very large sections of the workers have
voted, not for the official Labour candidate, but for the candidate of
another political party opposing Labour. This fact undoubtedly explains
the strenuous efforts of the Labour Party to formulate a composite
political programme which will appear to its Trade Unionist members as an
industrial programme, and to non-industrial supporters as one primarily
of a social character.


The Worker and the Community

The worker’s conception of himself in relation to the community invites
a comment. As a substitute for a convincing argument that the interests
of the worker are entirely separate from, and opposed to, those of the
rest of the community organized on a capitalistic basis, the worker
has been assiduously encouraged to develop his “class-consciousness.”
If by any process of auto-suggestion he can convince himself that what
tends to promote the general common weal does not tend to further the
interests of Labour, but generally runs counter to them, he may more
surely be relied on to adopt an attitude of militant antagonism to
continuance of the present organization of industry and society. The
efforts of extremists are continually directed to foment this feeling
of class-consciousness until it culminates in class-warfare. I have had
wide opportunities for gauging the prevalence and depth of the sentiment,
and though one found it in active operation among certain groups of
men on the Clyde, in Barrow, on the Mersey, and in a few other centres
of advanced industrial thought, I never encountered much of it amongst
the general body of working-men. They do not accept the proposition
that they stand, as beings apart, in a separate category from the rest
of the community. Indeed, in the latter days of the war, many Unions,
recognizing the interests of their members as consumers rather than as
producers, abandoned the policy of increasing wages and strongly urged
the regulation of prices instead, so much did the circumstances of
consumption affecting their members as citizens exceed in importance
matters touching their special interests as workers.

One may carry this a stage further. In spite of the ranting of extremists
that the war was an effort of capitalists to advance their own financial
ends, and utterly inimical to the interests of the workers, Labour in
this country stood shoulder to shoulder with the rest of the community
and willingly underwent the greatest sacrifices both in the matter of
military service and in regard to the suspension of Trade Union rights
and customs. Had the Government at the beginning of the war courageously
conscribed every person for national service, many galling disparities
would never have arisen, and gross inequalities of sacrifice would have
been forestalled, the aggravation of which, towards the end of the war,
and not without justification, upset the equanimity of the workers and
caused serious industrial upheavals. It should never be forgotten that in
the early days of the war universal national service was strongly urged
by prominent Labour leaders, but was killed by the cries of “Business as
usual,” for which members of the Government were alone responsible.




CHAPTER XX

REFORM OF INDUSTRY INSTEAD OF SOCIALIZATION

    The Three Dominant Aspirations of the Workers—Can and Ought
    they to be Satisfied?—The Vagueness of Labour’s Scheme of
    Reconstruction—The Recent Change in Labour’s Proposals—Reform
    of Industry _v._ Reconstruction.


The Three Dominant Aspirations of the Workers

The organization of industry cannot continue in its present state of
instability; something must be done. The Socialist who would reconstruct
industry, the anti-Socialist who would reform it, each assumes it to be
necessary to satisfy aspirations of the workers that are not satisfied
under conditions as they exist to-day. The three greatest aspirations
animating the workers are, in their order of relative importance: first,
removal of the ever-present menace of unemployment; secondly, recognition
in industry of the worker’s human status; thirdly, distribution, as of
moral right, of an equitable share of the product. Talk, as I did during
the war on over three thousand occasions, to the ordinary working-man,
those are the three basic sentiments you find swaying him. All the
intricate schemes for reconstruction of industry which the fertile
and fervid imaginations of the Labour intellectuals have evolved are
largely unintelligible to him, and leave him unmoved and cold. He cares
nothing about the delicate and subtle regimentation of industry and
society as Guild Socialists would have it; he wholly fails to grasp,
indeed, is acutely suspicious of, a Socialist commonwealth constructed
and controlled on a vocational or functional basis. The test which he
applies to such complex and conjectural conceptions is their efficacy in
satisfying those three great fundamental aspirations. But that is too
restricted a purview for an aspirant political party, and was astutely
declared by the old parliamentary hands of the Labour movement to
constitute too narrow a class-basis to support a popular appeal. Hence it
was that all the non-industrial doctrinaires—and there are many of them
attached to the Labour Party—were set to work to compile a new Social
Contract. Scores of pamphlets have now been published descriptive of the
policy of the Party on every conceivable topic—political, administrative,
judicial, local government, social, and industrial—national, imperial and
international. If formulation on paper of ideals of humanitarianism, and
quixotic Utopianism, without any consideration of cost or practicability,
is statesmanship, the Labour Party’s policy is truly admirable. It
outlines in glowing splendour a wonderful new mechanism of politics,
society and industry, in which every exterior part falls into place with
the smoothness and precision of a model engine constructed out of a box
of parts—but, like the toy, with no works inside. That this mysterious
mechanism may provide in some subtle and not very obvious way, the means
of securing the three fundamentals is its only recommendation in the eyes
of the great mass of Labour.

If it is right to assume that the ordinary worker’s dominant desire is
to obtain reasonable satisfaction of these three aspirations, and of
the soundness of that assumption I entertain no doubt, for at my three
thousand odd conferences and meetings with Labour during the war—at all
of which accurate notes were taken of the subjects of discussion—these
were the three foremost topics, two questions arise: Are these three
aspirations proper ones to be satisfied? If so, how can they best be
satisfied with due regard to the interests of the community?


Can and Ought they to be Satisfied?

There is in regard to unemployment but little difficulty in coming to a
sound conclusion. Unemployment, and to a less extent under-employment,
is on every ground—humanitarian, social, economic—a curse so great
that no reasonable effort should be spared to reduce to a minimum the
probability of its occurrence, and to mitigate as far as possible its
dire effects when once it has supervened. Many will differ as to how
far it is right to go in the provision of measures of alleviation, but
that is a difference more in degree than in principle. In regard to the
investiture of every worker in industry with “human status” there is a
more radical cleavage in opinion. While few employers will contest the
right of the workmen through their constitutional representatives to
voice their demands for settling wages and conditions of employment,
and such demands—backed up by the power to apply economic pressure—are
effectively voiced by the Trade Unions, most employers will deny the
right of the workers “to interfere in the management.” It would be quite
impossible to have two sets of persons attempting to manage a factory,
or to direct the conduct of the business on the commercial side. But
between the fixing of wages and conditions of employment, in which
it is admitted that Labour should have a real voice, and the actual
executive direction of a business in which it is clear that Labour could
not exercise a voice, if efficiency is to be preserved and discipline
remain unimpaired, there is a wide sphere of matters which are proper
to be discussed between employers and representatives of the workers,
and which, when discussed and settled, can be left for executive action
to the employers. There is ample room for compromise. The confusion
surrounding the catchwords of “a voice in conditions,” “interference in
the management,” wants to be cleared away before any more harm is done.

On the question of remuneration there is really, if the matter be closely
examined, no difference whatever in principle. Most employers agree with
the unions that the worker is entitled to a fair share of the product;
they disagree as to what proportion of the product constitutes a fair
share—a dispute not as to principle but as to quantum. No employer, so
far as my experience goes, would contend that he was entitled in good
times to pay his workers nothing more than a bare subsistence wage,
and appropriate for himself as profit all the balance of revenue after
payment of working expenses and the market rate on capital. What usually
happens in bad times is that the workers in employment get, as a first
charge on the product, wages much higher than subsistence rates, and the
shareholders go without return, which results in great deprivation to
many whose meagre incomes consist of such dividends. The more critically
one examines the three fundamentals the more one is irresistibly driven
to the conclusion that there are no issues between employers and the
workers in regard to any of them which cannot form the subject of fair
collective bargaining. But that is what is denied by the intellectuals of
the Labour Party, entirely on their own a priori reasons. Happily their
doctrinaire conclusions meet with scant respect from the general body of
workers.


The Vagueness of Labour’s Scheme of Reconstruction

There are only two possible courses for the future—either to reconstruct
industry on some entirely new basis, or to maintain the present
system of organization and introduce reforms which will cover the
three fundamentals as a first beginning. That really is the question
on which a decision must sooner or later be taken by the nation, and
far-reaching national consequences will turn upon it. Labour says:
“Destroy the present industrial system, and replace it by something
based on public, and not private, ownership of the means of production.”
Did we know exactly what Labour’s scheme of reconstruction is, it could
be critically examined in detail, and its practical effect on the
prosperity of industry, the welfare of the worker and the good of the
community dispassionately considered. But Labour with prudent reticence
has not provided us with any official scheme. Different sections of
Labour have tabled all kinds of variant and in many cases discordant
schemes which agree in one respect only—the elimination of the private
employer. All that the Labour Party tender in the way of constructive
reorganization is the vague formula of “nationalization and democratic
control,” Nor will the Party undertake to say what is the method and kind
of industrial control—a matter on which depend the whole efficiency and
success of industry—which it has in mind. The truth is, the Party has not
succeeded in devising any scheme of industrial control on which it can
agree, and the Executive Committee, though instructed to report on that
question, has either been unable to do so, or have found it expedient to
postpone committing itself (_see_ p. 58). Yet the Party, after invoking
fire from Heaven on the Government as retribution for its policy of
opportunism in regard to industry, calls upon the country to witness
that Labour has a considered and well-thought-out industrial policy,
which it euphemistically calls “democratic control,” and announces with
ingenuous _naïveté_ that it is such a system as will always harmonize
with the special circumstances and requirements of each industry! Who
is the opportunist? The Government in adhering to continuance of the
established organization of industry—on which the greatness of England’s
trade and commerce has been built up—or the Labour Party, which, without
any clear idea of what it would put in its place, would destroy the
existing organization in the complacent expectation that by some process
of abiogenesis a better system will soar like the Phoenix from the ashes?
There would be a short and sharp retort from the members of any of the
great Trade Unions, for example the Amalgamated Engineering Union, were
the Labour Party to propose to reconstruct that proud organization on
the basis of a resounding formula. The Executive Committee of that
Union—supposing it, agreed to consider any such gratuitous suggestion
from even a Labour source—would insist—at least it always did with me
during the war—that general phrases should be reduced into clear, crisp
and definite proposals, each one of which could be subjected to a
microscopic scrutiny of the most searching kind, sufficient to reveal
its true nature, its effects direct and indirect, and its remotest
implications. Is not the nation entitled to similar information? In
Part I, chapter IX, I outline the injury to industry and the country
that would inevitably result, in my judgment, from any socialistic
reconstruction of industry. Here I am only concerned to show that when
the flowing garments of flowery phraseology are respectfully removed,
they are seen to cover nothing but a hollow lay-figure without the least
semblance to even an articulated model. This is what we are invited by
the Labour Party to set up and worship as the future genius of British
industry.


The Recent Change in Labour’s Proposals

Labour has started from the wrong end—not to ascertain what are the
defects in the present industrial system and the manner in which they
can best be remedied—but how to get rid most easily of the private
employer under the honest but uncritical and irrational belief that
unless he is removed the defects cannot be remedied. This was the
notion of Labour in the days when first it embraced State Socialism.
Nationalization of industries, under which the Government would replace
the private employer, was described in radiant language as “the
charter of salvation of the working-classes.” Then Labour acquired
some experience of the State as a “model employer”—in the Post Office,
in the Royal Dockyards, in Woolwich Arsenal, and in other Government
factories. With the disappearance of the private employer the workers
in such nationalized industries found to their surprise and clamant
regret that their conditions were not better, but were worse. The
State, they discovered, was not so considerate a master as the private
employer—not so disposed to recognize Trade Unions, or introduce Trade
Union conditions, or pay standard rates of wages. Was ever a complacently
cherished conviction so rudely shattered! Any critical inquirer would
have stopped to consider whether after all it was right, with this
practical experience, to assume that the only way to improve industrial
conditions was to put an end to the private employer. Some prominent
Trade Unionists did pause to think, and more than one has told me of
his consequent renunciation of Socialism. So the old doctrine died,
and some other doctrine was urgently needed—a fitting opportunity for
the intellectuals. A new ship had to be constructed on the old keel of
the abolition of private ownership, and this time it had to float. And
after all, was anything easier? It had become fashionable, during the
war, to talk of the rigidity of bureaucracy, and the inelasticity of
bureaucratic direction—precisely the same thing might have been said
with equal justice about the Trade Unions, for they are bureaucracy _in
excelsis_—but no one thought of it. On the other hand, men’s ears were
dinned with the mobile excellencies of democracy, its extraordinary
versatility in adjusting men to their environment, and in modulating
the qualities of the latter to its human content, and the air vibrated
with theories of political self-determination. Democratic Government was
being hailed as the balm for Europe, and what was more natural than that
industrial self-determination under the name of “democratic control”
should be acclaimed by Labour as the restorative of industry. So the new
ship was built and called “Nationalization and Democratic Control.” Put
into the water in 1918, it still lies a mere hull, unengined, unfinished
and unclassed.

But taught by war-time experience, the Labour Party has become more
cautious. It no longer contends as it used to do that all industries
can be nationalized—an admission, the importance of which should not be
overlooked. It would nationalize and democratically control only some
of the great national industries, the smaller and less well-organized
industries it will leave, for the present, alone. It even goes so far as
to admit the economic necessity for the continuance of many middlemen.
The industries that it would nationalize are those that were small
and badly organized once, but which responded to the enterprise and
initiative of the pioneers who made them and so grew great. This, when
stripped of dialectics, means that Labour is satisfied that its regime of
nationalization and democratic control whatever else it can achieve—and
as to that we are left to speculate—cannot supply the enterprise and
initiative requisite for the development of budding industries. At what
stage in the growth of an industry Labour’s machinery of nationalization
and democratic control can step in and infuse those two great qualities
which are essential for vitality and progress, at a voltage higher than
can be generated under private ownership, no information whatsoever is
vouchsafed to us.

Those who have studied with a critical eye the official details of
Labour’s industrial policy in chapter VIII, will have noted that the
same veil of indefiniteness enshrouds the practical working out of
“nationalization and democratic control.” Is it to mean an increased
financial burden on the State? No details. How is the requisite capital
to be procured when we have performed the national obsequies over the
private capitalist? No details, except that it will be derived from a
mythical “national surplus” which now, at any rate, does not exist. By
what means are the waste and inefficiency which experience has shown to
be inherent in bureaucratically administered industries to be obviated?
No details. What is the mechanism which is going to compel the home
consumer to increase his consumption and the foreign consumer to buy
commodities which he will not, and cannot, buy to-day? No information.
Where will the secret fund be situated, and how is it to be formed, which
is going to finance higher wages and better conditions than under the
present scheme of industrial organization? We are not informed—that it
cannot be built up from employers’ profits is clear from chapter XXVI.
For the answers to these practical questions of crucial importance,
and to many others, we are left groping in the dark. All we are told
is that learned intellectuals of the Labour Party, out of their wealth
of industrial research and ample gifts of prescience, when the proper
time comes, will open their Pandora’s box and reveal the secrets. Is the
nation prepared to gamble its existence on that assurance?


Reform of Industry _v._ Reconstruction

Happily for the country, the ordinary worker is no more intrigued with
the intellectuals’ proposals for the reconstruction of industry, or
society or the State than he is with their schemes for the reconstitution
of his Trade Union, all of which he has with contumely turned down.
What he is most keenly interested in is whether their proposals are
the soundest, safest and quickest way to afford him relief against
unemployment, and give him a human status in industry and a fair share
in the product. He has not at all accepted the Labour Party’s portentous
declaration that nothing short of “nationalization and democratic
control” can confer those benefits.

Let us then start from the ordinary workers’ standpoint. It is fair,
it is commonsense, it is characteristically practical. We can say to
them with absolute fairness that what Labour is asking the country to
do is to take a jump into the unknown, and for the existing industrial
system with which we are familiar, and which is always capable of
improvement—for that is an uncontrovertible fact proved by our past
industrial history—to substitute a new industrial system of which we
have no experience, of the practical operation and effects of which
nothing whatever is ascertainable, a venture which is subject to risks
so grave and possibilities so disastrous as to endanger the whole
industrial and commercial prosperity of this country. We can then offer
the workers an alternative scheme which, while reforming the fundamental
defects that at present exist in our industrial system, will not alter
its basic principles. Unless the psychology of the worker undergoes some
cataclysmic change, what he will say is: “Take your scheme of reform, if
it deals fairly with unemployment, my human status in industry and my
share of the product, it will serve as a beginning.”




CHAPTER XXI

THE HUMAN RELATIONSHIPS TO BE RECTIFIED IN INDUSTRY

    Capital and the Administrative Staff—Capital and the Manual
    Workers—The Manual Workers _inter se_—The Administrative
    Staff and the Manual Workers—Industry and the Consuming
    Community—Industry and the Nation.


Before we can construct any scheme of reform of our industrial system we
must have a clear idea of what is industry. In the prosaic language of
economics it is a purposive production of commodities and services, the
immediate object of those engaged in it being to provide, through the
result of their work, the material means of satisfying their wants and
desires.

Viewed in broad outline, industry will be seen to involve three
fundamental processes:

(i) The combination in due proportion of the five things requisite for
all production, viz., capital, enterprise, organization, labour—both hand
and brain—and natural forces and resources.

(ii) The realisation of the product—industrial work is nowadays useless
unless and until the product is marketed. The amount realized depends
mainly on the public demand for the product, and invariably the cheaper
the selling price, the greater is the demand.

(iii) The division of the realized surplus amongst those associated in
production.

Further, it will also be observed that industry necessarily involves six
fundamental human relationships, the importance of which has been much
neglected in the past.

1. _The Industrial_, i.e. between the classes of persons associated
together in industry:

(_a_) Capital and the Administrative Staff.

(_b_) Capital and the Manual Workers.

(_c_) The Administrative Staff and the Manual Workers.

(_d_) Manual Workers between themselves.

2. _The Social_—between industry and the community.

3. _The National_—between industry and the nation. These relationships
are of paramount importance. The individual is no longer the unit—in
things industrial, it is the group of those associated in production—in
things social, it is the community—in things national, the whole people.
Each small group is included in, and directly reacts on, a larger group.
Labour, in its _Official Policy for Reconstruction after the War_, truly
says: “We are members one of another. No man liveth to himself alone. If
any, even the humblest, is made to suffer, the whole community and every
one of us, whether or not we recognize the fact, is thereby injured.” How
frequently Labour forgets its own irrefutable proposition! The problem
then is so to organize the processes of industry and harmonize the human
relationships involved in it, that to the utmost practicable extent
productive efficiency will be secured, the human qualities of all those
associated in industry recognized, their capacities fully developed and
utilized, their aspirations satisfied, and their respective services
co-ordinated to promote the benefit and happiness of all of them, the
good of the community, and the welfare of the nation.


Capital and the Administrative Staff

Let us first examine the relationship between Capital and the
Administrative Staff. In the Administrative Staff, I include every one
from the managing director down to the gate-keeper. They are the brains
and mechanism of the organization and management, the connecting link
between Capital and Labour. The success of an employer’s business is
dependent on their tact, judgment, and power of governing men, but
Capital has not yet risen to that conception. It has not conceded to the
Administrative Staff a status commensurate with their enormous private
and public responsibilities, nor, except at the very top, adequate
financial recognition. The art of managing men so as to get the best out
of them and secure their cordial co-operation, is generally considered
by Capital to be a customary by-product of technical ability. In truth,
it is a special qualification requiring its own special training,
exceptional attributes of mind and temperament, and particular fibres of
character, of the possession of which technical ability is no criterion
whatsoever. If industry is to progress, Capital must elevate its
conception of the duties of the Administrative Staff and recognize that
administration, even in its lowest branches, is work as skilled as that
of an expert craftsman.


Capital and the Manual Workers

We must next scrutinize the basic industrial relationship between Capital
and the Manual Workers. Permeating it, we find, as the result of the
causes already mentioned, seething discontent and active antagonism—not
cordiality—not mutual confidence, but unreasoning distrust. We see on
both sides black suspicion twisting the motive behind every action, and
the task is to create contentment among the workers, and enlist their
hearty co-operation with employers in the process of production.


The Manual Workers _inter se_

The Manual Workers are far from being a happy family. In this country
all work in every industry is allocated by tradition or Trade Union
agreement to this trade or that trade as its sacrosanct preserve. Woe
betide an unskilled man who invades the industrial territory of a
tradesman! These rigid lines of demarcation of work are the cause of
untold industrial friction and operate most detrimentally to prevent an
employer introducing modern methods or installing time- and labour-saving
appliances. There is no greater need in industry than for a peace-treaty
between the warring Trade Unions under which this system of dividing work
into so many water-tight compartments will be modified.


The Administrative Staff and the Manual Workers

The Administrative Staff has not yet attained to a true conception
of their great part in industry. I often found that, so far as their
relationship to Labour is concerned, they are inclined to regard their
general functions as solely to maintain discipline. The preservation of
robust discipline is a vital matter. Too often discipline is bolstered
up by arbitrary and dictatorial methods, to which means weak men usually
have recourse. That, if not productive of immediate friction, certainly
sows broadcast the seeds of trouble and unrest. The vital matter,
the atmosphere of the shop, is mainly dependent on the conciliatory
personalities of the Administrative Staff. What has to be remembered in
industry is that despotism is not leadership, and arbitrariness is not
good government. “The moral effects of good leadership,” as Professor
McDougall truly says in _The Group Mind_, “work throughout a mass of men
by subtle processes of suggestion and emotional contagion rather than
by a process of purely intellectual appreciation.” This many employers
have yet to learn; they regard courtesy on the part of the Administrative
Staff in dealing with Labour as cowardice, and consideration as
subversive of good discipline. But consideration is the oil which makes
shop wheels go round, and there never was more scope for its application
in industry than at the present time, especially in such things as
interviewing, selecting and taking on, promoting and dismissing men, and
dealing with shop complaints.


Industry and the Consuming Community

Industry as a whole does not appreciate the close relationship between
itself and the community, nor its responsibilities to the community. In
reality industry has to rely on the community for innumerable services,
and for many facilities vital to its existence, and to its prosperity,
and for a market for its product. Yet almost invariably strikes and
lock-outs are called, regardless of the effect upon the consuming public.
In fact, Labour claims the right to use its economic power in furtherance
of its own interests, irrespective of the damage to the community. If,
under compelling necessity, the community attempts to carry on the
services for itself, or provide the commodities of which by organized
strikes it is deprived, it is charged with anti-social conduct, and
condemned for declaring a class-war against Labour, those who assist
being stigmatized as strike-breakers and black-legs. Labour has gone even
further in recent years. In a number of cases it has deliberately adopted
the policy of depriving the community of essential services through
strikes, in order to produce such social hardship as will drive the
community to constrain employers to accept Labour’s industrial demands.
There have also been recent instances of agreements between employers
and Trade Unions—as in the building industry—by which wages have been
forced up to unreasonably high rates simply because those industries
were necessary to the community and, with the knowledge that whatever
the resulting cost of the product might be, the community would have to
pay. At the same time, the community is largely dependent upon industry,
and if the whole of an industry, or each section of it, fulfils its
obligations to the community, the community must perform certain duties
in return. I speak more fully of these later.


Industry and the Nation

Industry will never progress to vigorous and healthy development unless
our conception of the relationship between industry and the nation is
radically revised. That conception to-day is mean, stunted, and utterly
devoid of any power of inspiration. Industry I have defined, in the
language of economics, as the production of commodities and services
for the purpose of satisfying the wants and desires of men. On this
commonplace process, which sounds so dull in definition, and on none
other, the future well-being of our country and the practicability
of further social improvements and reforms depend. Production ought,
therefore, to be regarded as the principal means of advancing the
happiness, social welfare and material prosperity of the nation, and
industry, the chief instrument in that beneficent work, as the highest
and the noblest form of national service.




CHAPTER XXII

THE RIGHT RELATIONSHIP OF GOVERNMENT TO INDUSTRY

    1. The Policy for the Present Depression—Establishment of
    International Peace—Reduction of National Expenditure—Lowering
    of Taxation—Stabilizing the Exchanges—Revision of Financial
    Policy—Reconsideration of Reparations Policy—Inter-Allies
    Debts—Export Credits—Bringing down Costs of Production.


In approaching the formulation of a national industrial policy, we must
first determine the proper relationship of the Government to industry.
That involves consideration of what special action the Government can,
and should, take in these exceptional times of abnormal trade depression
to assist the restoration of industry, and of the position in which the
Government should stand to industry in normal times.


1. THE POLICY FOR THE PRESENT DEPRESSION

The present depression in trade and decline in industry are primarily due
to the world-war. The causes are not clearly appreciated by the general
public; they are international as well as national, and call for action
abroad as insistently as for remedies at home.

The causes are: first, a definite lack of demand from foreign markets for
commodities of which this country was, before the war, a producer. It
was customary, until recently, to hear it said that the countries of the
world are crying out for our goods. That is not an accurate statement. A
very considerable proportion of the foreign markets, open to this country
before the war, has now, for the time being at any rate, definitely
disappeared. I have had opportunities of discussing this question
with foreign business men who have special knowledge of continental
conditions. All were definite as to this want of demand; the explanation
they said was simple—the devastation resulting from the war and the
absence of settled and stable government. They described the most amazing
expedients and contrivances to which resort is made in foreign countries
in order to avoid the purchase of what in normal times would be
ordinary trade machinery and equipment. Then next comes the inability of
continental countries to produce commodities which—to use the compendious
phrase in economics—they require to exchange for commodities from other
countries, either because their mechanism of production is rusted or
ruined as the result of the war, and they have not capital to renew it,
or from inability to buy from abroad because of impoverishment resulting
from the war, or the adverse balance of exchange against them. When one
turns to this country, we see British manufacturers unable to sell to
customers in many continental countries because of the uncertain credit
of the foreign buyer, and, where credit is sufficiently satisfactory,
or constitutes an insurable risk, because of the sharp variations in
exchange. A manufacturer in this country may be in a position to do firm
business with a foreign buyer at a given rate of exchange which is just
sufficient to ensure a small percentage of profit; a violent fluctuation
in the exchange at the time payment is effected may entirely eliminate
all profit and possibly convert it into a serious loss. Then again, the
high cost of production in this country, especially of manufactured
commodities where the wages of labour form 60-85 per cent. of the total
cost of production, makes it impossible for the British manufacturer to
sell sufficiently cheaply abroad, especially in the face of competition
of similar goods produced in countries with a depreciated currency which
stands at an external value much below its internal value. In addition,
some countries to which we have lent money, and which pay us no interest
thereon, are erecting heavy tariff barriers against us, and by subsidies
and restrictions on coastwise trade and emigration are injuring seriously
British shipping and trade.


Establishment of International Peace

International trade implies mutual dependence. If one country goes out
of business it injures all other countries, even those that never traded
directly with it. Trade must languish in countries where conditions are
unsettled. It should be the first aim of the Government in concert with
its Allies to establish peace generally throughout the world. That has
been authoritatively declared. In accordance with arrangements made
by the Council of the League of Nations, an International Financial
Conference was convened at Brussels on September 24, 1920. The duty
entrusted by the Council to the Conference was to study the international
financial crisis and seek for means of remedying it and of mitigating the
dangerous consequences arising from it, subject to the provision that
no matter included in the then pending negotiations between the Allies
and Germany should be discussed. There were eighty-six members at the
Conference, representing thirty-nine different countries.

As the chief essential for the recuperation of industry and the revival
of trade, the Conference insisted on the establishment of a real, as
distinct from a paper, peace:

    “First and foremost the world needs peace. The Conference
    affirms most emphatically that the first condition for the
    world’s recovery is the restoration of real peace, the
    conclusion of wars which are still being waged and the assured
    maintenance of peace for the future. The continuance of the
    atmosphere of war and of preparations for war is fatal to the
    development of that mutual trust which is essential to the
    resumption of normal trading relations. The world must resolve
    the rivalries and animosities which have been the inevitable
    legacy of the struggle by which Europe has been torn.”

    “The security of internal conditions is scarcely less
    important, as foreign trade cannot prosper in a country whose
    internal conditions do not inspire confidence. The Conference
    trusts that the League of Nations will lose no opportunity to
    secure the full restoration and continued maintenance of peace.”

    “The Conference affirms that the improvement of the financial
    position largely depends on the general restoration as soon
    as possible of goodwill between the various nations; and
    in particular it endorses the declaration of the Supreme
    Council of March 8, 1920, ‘that the States which have been
    created or enlarged as a result of the war should at once
    re-establish full and friendly co-operation, and arrange for
    the unrestricted interchange of commodities in order that the
    essential unity of European economic life may not be impaired
    by the erection of artificial economic barriers.’”


Reduction of National Expenditure

If trade is to be resuscitated, there must be a ruthless curtailment of
national expenditure, an inflexible renunciation of everything resulting
in expense which is not absolutely essential to present national
existence. On this question the Financial Conference spoke clearly:

    “The statements presented to the Conference show that, on an
    average, some 20 per cent. of the national expenditure is
    still being devoted to the maintenance of armaments and to
    preparations for war. The Conference desires to affirm with the
    utmost emphasis that the world cannot afford this expenditure.
    Only by a frank policy of mutual co-operation can the nations
    hope to regain their old prosperity, and to secure that result
    the whole resources of each country must be devoted to strictly
    productive purposes. The Conference accordingly recommends
    most earnestly to the Council of the League of Nations the
    desirability of conferring at once with the several Governments
    concerned with a view to securing a general and agreed
    reduction of the crushing burden which, on their existing
    scale, armaments still impose on the impoverished peoples
    of the world, sapping their resources and imperilling their
    recovery from the ravages of war.”

The Washington Conference has made some progress along this line.

The matter was emphasized in more detail in the following resolution
unanimously adopted by the Financial Conference:

    “It is, therefore, imperative that every Government should,
    as the first social and financial reform, on which all others
    depend—

    “(_a_) Restrict its ordinary recurrent expenditure, including
    the service of the debt, to such an amount as can be covered by
    its ordinary revenue.

    “(_b_) Rigidly reduce all expenditure on armaments in so far as
    such reduction is compatible with the preservation of national
    security.

    “(_c_) Abandon all unproductive extraordinary expenditure.

    “(_d_) Restrict even productive extraordinary expenditure to
    the lowest possible amount.”

The effect on industry of unnecessary national expenditure is immediate,
direct, and, at these times, absolutely calamitous. The greater the
national expenditure the higher necessarily must be the taxation required
to provide for the interest on, and the redemption of the debt. Every
penny absorbed in unnecessary taxation is so much money diverted from
reproductive industry. If a manufacturer is paying 6_s._ 8_d._ in the £
in income-tax and super-tax, the effect is the same as if he worked as a
bond-slave to the Government for four months in the year, during which
time the Government appropriated the whole of the output of his factory.


Lowering of Taxation

For the restoration of industry an immediate reduction of taxation
is imperatively required. The dangerous height to which taxation has
mounted operates with devastating results on industry. Many business
firms have had to sell securities to pay their taxes; these have been
purchased by American investors. The Government points with pride to the
improvement of American exchange; at whose expense? Certainly, in part,
at that of British industry. While firms have thus to sacrifice capital
assets, or even to borrow money to pay current taxation, industry can
never be restored, and each month it continues, the period of industrial
convalescence is materially prolonged. Case after case has come before my
personal observation where employers, content to make a small margin of
profit or no profit at all, but only sufficient to cover standing charges
and prime costs, have deliberately decided, when faced with certain loss
owing to the grinding burden of taxation, rather than embark any new
capital in extending their businesses, or in adding to them some new
branch of industry which would have provided employment for many men, to
put their money on bank deposit or invest it in gilt-edged securities.
The effect of such a course on industry and unemployment is disastrous.
If initiative and enterprise, which, in this country, form the life-blood
of industry, are to escape extinction, then taxation on industry must
speedily be reduced. The directions in which business men are pressing
for alleviation from the insupportable oppression of taxation are in
the reduction of the rate of income-tax, exemption from super-tax of
reserves invested in the business, and abolition of the corporation
profits tax. The latter falls entirely upon the ordinary shareholders in
addition to income-tax; preference shareholders and debenture holders are
not mulcted, but receive in full their prescribed rate of dividend or
interest less income-tax. The corporation tax thus operates as a severe
deterrent on initiative, especially in regard to the starting of new,
and extension of existing, enterprises. There is also a growing volume
of opinion in favour of funding certain annual national expenditure,
e.g. pensions, as an alternative to raising the necessary expenditure by
taxing. Better surely the disadvantages of borrowing with the advantages
of a revival of trade, than the satisfaction of theoretically sound
finance with the misfortune of being overtaken in the race for foreign
markets by continental competitors.


Stabilizing the Exchanges

Labour contends that the Government can materially assist industries
which cater for our export trade by stabilizing the exchanges. It appears
to contemplate reversion to some such system as “pegging” the exchanges,
which was customary during the war. The International Financial
Conference pronounced on that procedure as follows:

    “Attempts to limit fluctuations in exchange by imposing
    artificial control on exchange operations are futile and
    mischievous. In so far as they are effective, they falsify
    the market, tend to remove natural correctives to such
    fluctuations, and interfere with free dealings in forward
    exchange which are so necessary to enable traders to eliminate
    from their calculations a margin to cover risk of exchange,
    which would otherwise contribute to the rise in prices.
    Moreover, all Government interference with trade, including
    exchange, tends to impede that improvement of the economic
    conditions of a country by which alone a healthy and stable
    exchange can be secured.”

On the other hand, “the present chaotic conditions of the exchanges
makes international trade,”—to quote the Federation of British
Industries—“instead of being a matter of reasonable foresight and
calculation, a game of chance, in which the rules and stakes are
perpetually altering without the will or knowledge of the player.”

It does not seem that much can be done in the direction of steadying
the exchanges except to put such pressure as is practicable on foreign
countries to cease inflation by printing paper money, to balance their
budgets, and to stabilize their currencies and re-anchor them to gold,
though not necessarily in the same parity as pre-war, at the same
time adding to the national wealth, on which sound currency is based,
by increasing national production, decreasing consumption, reducing
expenditure, and prompting public and private economy.


Revision of Financial Policy

Business men contend that stability and not inflation or deflation
should have been aimed at by the Government, and that industry has been
gravely injured by the instability resulting from the Government’s
financial policy of deflating with the object of restoring an effective
gold standard. In pursuance of this policy, towards the end of 1919, the
bank rate was raised from 5 per cent. to 6 per cent., and Treasury Bill
rate from 4½ per cent. to 5½ per cent.; then in April 1920, the bank
rate was further raised to 7 per cent.[19] and the Treasury Bill to 6½
per cent. Appended to the Report of the War Wealth Committee, published
in May 1920, is a Treasury Memorandum explaining the policy. Inflation
and deflation are ambiguous terms; the Government has explained its
understanding of them to be the increase or decrease respectively of
purchasing power relative to the amount of commodities available for
purchase—purchasing power being measured by the amount of bank deposits
and currency in circulation. A masterly description of the nature and
effect on industry of the Government’s policy was given by the Right
Hon. R. McKenna at the Ordinary General Meeting of the London Joint
City and Midland Bank, Limited, on January 28, 1921. Mr. McKenna drew
the distinction, almost invariably overlooked, between “speculative
inflation”—a temporary condition remediable by making money dearer and
restricting credit—and “monetary inflation”—a more or less permanent
condition which cannot so be remedied. In regard to the latter he said:
“Dear money and a rigid restriction of credit, so far from proving an
effective means of restoring trade to a wholesome condition, could only
aggravate our evils.” Monetary inflation was due to gigantic war-time
borrowing by the Government, not for increasing industrial production,
but almost entirely for consumption. As loans remained outstanding after
the commodities had been consumed, there was an immense increase of
purchasing power relative to the amount of commodities available for
purchase. Mr. McKenna pointed out that the first effects of an attempt at
monetary deflation would be to cause severe trade depression, manifesting
itself in a fall in wholesale prices, due to goods being thrown upon
the market by traders who were unable to carry their stocks or who had
failed in business; a diminution in production; a reduction in prices; a
growth in unemployment; reduced purchasing power of wage-earners, and so
a further fall in wholesale and retail prices, and later, in consequence
of the trade depression, a decline in national revenue without any
diminution of the permanent liabilities of the Government. To pay taxes
traders would have to borrow from their banks; to meet national expenses
Government would have to resort to bank loans, and credit inflation would
again ensue. Mr. McKenna conclusively showed that monetary deflation can
only be achieved through repayment of the immense Government loans, which
cannot be effected by the imposition of additional taxation, as that
would bring immediate ruin upon our commerce and manufacture, but only
from funds secured by the most rigid economy in national expenditure,
and by increasing the commodities available for purchase through the
stimulation of production and of trade.

There are some drastic remedies which leave the patient cured of
his disease, but dead from general debility; monetary deflation, as
practised by the Government, is one of them. It is no satisfaction to
the manufacturer whose works are closed down, or the worker who is
unemployed, to be told that the currency is being restored to pre-war
parity of exchange. They see in the United Kingdom and the United
States—exponents of this process—a larger proportion of the population
unemployed than in any other industrial country, and these are the two
wealthiest countries in the world, with the greatest foreign trade.


Reconsideration of Reparations Policy

No one suggests that Germany should be relieved from payment of
reparations or that the Government should be dissuaded from insisting
on payment by any fraudulent bankruptcy on the part of Germany. At the
same time there is real urgency for clear thinking and decisive action on
the part of the Government in regard to the amount and mode of payment.
The Government’s original figure of 20,000 millions turned out to be a
ridiculous over-estimate, afterwards reduced by the Ultimatum of London
to a maximum yearly payment of 400 millions. To make the payment, the
surplus of the value of Germany’s exported saleable commodities over the
cost of her imported raw materials and food must at least equal that
amount. Pressed to provide that surplus she must necessarily undersell
our manufacturers in foreign markets, which she will and can do by
depreciating the mark in foreign exchange so as to keep its external
below its internal value. This results in a premium on German exports,
and the undercutting of our commodities in those markets. Mr. McKenna’s
reasoned speech to his bank on January 27, 1922, is worthy of close
attention. “Before Germany could meet her full liability,” says Mr.
McKenna, “before she could develop her foreign trade to such a degree as
to have an exportable surplus of 400 millions a year, the foreign trade
of this country, her chief competitor, must dwindle into insignificance.”
Speaking from the economic point of view, he goes on to point out that
Germany can pay annually “to the full extent of the export surplus her
trade can give her without forcing the external value of the mark below
its internal value ... she can pay in specified commodities, which in
our case might include sugar, timber, potash, and other materials which
are indispensable to us, but which we either do not produce at all or in
insufficient quantities. She can pay also by the surrender of any foreign
securities her nationals may possess, so far as they can be traced, and,
if the Allies are willing to accept this form of payment, by the direct
employment of her labour in reconstructing devastated areas.” There can
hardly be much question that vacillation in the reparations policy has
been productive of serious injury to our foreign trade.


Inter-Allies Debts

The restoration of international trade depends also on a sound and
sensible recognition by those of the Allies who are creditor nations of
the economic effects of enforcing payment of the indebtedness to them by
the Governments of debtor nations, coupled with such action as they, in
the interests of civilization and of their own countries, find themselves
able to take in the direction of modification. Government war-debts have
produced for no debtor country any increase of its national wealth; they
can be paid by the debtor country only out of its capital or its income.
In regard to the first alternative, no debtor country can possibly, under
any scheme of finance, pay its government war-debts out of capital,
that is to say, out of home or foreign securities in the hands of its
Government or its nationals, or out of cash balances standing to the
credit abroad of either or both of them. If those debts are to be paid
at all, it must be out of income, that is to say, out of the surplus
realized by the export of natural products, manufactured goods, services
and “invisible exports,” after payment of the expenses involved in
producing such surplus, e.g. cost of raw material, labour involved in
manufacture, and other costs of production and expenses of rendering
the services. Now, the dominant fact to-day is that the debtor nations’
available surpluses are either insufficient, or not more than sufficient,
to cover their pre-war debts. How then in each case is the surplus to be
so enormously increased as to cover the fresh indebtedness resulting from
the Great War? In one way only—by enormously increased production, and by
a reduction in the national standard of living. Nothing is more certain
than the absolute impossibility of any debtor country being able to pay
its war-debts under its present standard of production and of living.
Supposing, however, it to be practicable, and that it is determined to
compel each debtor country to create the requisite surplus, what would
be the peril to international trade of such forced payments? Mr. F. C.
Goodenough—the Chairman of Barclay’s Bank—has explained the position with
cogent clarity; his illuminating exposition will be found in _The Times_
of April 11, 1922.

First let us consider how much of the needed surplus can be created by
increased production. It obviously involves enormously greater output on
the part of labour each working hour, the introduction of very greatly
improved organization and of time- and labour-saving appliances, which,
apart from the new spirit it would demand in industry, would entail a
drain upon capital resources for their provision, that, at this present
time of scarcity, could not be met, and a general alteration in price
levels. Our difficulty to-day is to attain even to our pre-war standard
of efficient and effective output. We are living to-day largely upon
our capital and not upon income. But, assuming that debtor nations can
go some way towards paying their war-time indebtedness by increased
production, they plainly cannot go anything like the full length; they
must fall back, if pressed, on a reduction of their standard of living
which would be primarily effected by a reduction in industrial wages.
Then mark the effect upon creditor nations. If wages in a debtor nation
are reduced, and costs of production are correspondingly brought down
without any equivalent diminution in the efficiency of labour, that
debtor nation is in a position, and, if put under pressure to pay its
war-debts, is compelled to put its manufactured commodities into foreign
markets at prices considerably lower than its creditor nation with a
higher standard of living can afford to do. This unfair competition
applies not merely to creditor nations, but to all nations trading in the
same competitive foreign markets. But, then, follow the matter one stage
farther: if the other nations, under the stress of this competition,
bring down their costs of production to the same level, the debtor nation
loses its preferential position in the foreign markets and ceases to be
in a position to pay its war indebtedness.

Even by means of increased production, and a reduced standard of living,
a debtor country may be unable to meet its war indebtedness in full.
Should it be forced to do so, it must borrow the balance of the money
annually due, which can seldom be achieved by external or internal
loans, but usually by increase of paper currency which soon brings its
own retribution—national bankruptcy. The total amount of Inter-Allied
Debts, as between the United States of America, Great Britain, France,
Italy, Russia and Belgium, is 4,000 millions sterling, to which, if the
Reparation payments of 6,600 millions sterling are added, makes a total
of 10,600 millions sterling which does not include the war-debt owing by
each country to its own nationals nor by the Dominions to Great Britain.
Mr. Goodenough’s suggestions were eminently practical, that the amount
to be paid by each debtor nation should be fixed as soon as possible,
so as to clear away the present disturbing atmosphere of uncertainty,
that bonds for as long a period as practicable should be created by each
debtor country representing the total amount of its national war-debt,
and that these should be gradually offered to the public for investment
supported by the national guarantees of the debtor country. Bonds handed
by one debtor nation to a creditor nation in respect of a debt could be
endorsed by the latter nation to another country in respect of a debt
owing by the endorsor to the endorsee, and so find a ready market among
investors all over the world. Each country creating a bond would be
compelled to provide a fund out of its own taxation for the redemption of
its own bonds. The scheme of Mr. Goodenough urgently needs consideration,
as the whole question of Inter-Ally indebtedness calls for a decision.


Export Credits

Acting with prudence, and exercising co-operation with business men, the
Government can, as experience has shown, beneficially use its credit to
assist sound trading between this and foreign countries and to enable
works to be carried out which provide employment; and so long as the
Government employs the normal machinery of finance and commerce, much can
be done in this way to further the restoration of trade and industry. The
Export Credits Scheme administered by the Department of Overseas Trade
is conferring substantial benefits on industry in stimulating orders
from abroad, and developing markets to replace those permanently lost
or temporarily closed to us in countries which are, at the time being,
potential producers of commodities exchangeable for the commodities we
produce. The guarantee of loans so ably administered by the Advisory
Committee under the Trade Facilities Act, 1921, is materially encouraging
sound commercial business.


Bringing down Costs of Production

But after all is said and done, we are living in a fool’s paradise if
we think that, even when financial equilibrium and stability have been
attained, we shall be able to compete in foreign markets at our present
_real_ costs of output. Wages constitute the greatest proportion of costs
of production in every industry, and wages will have to be reduced—the
standard of living of 1920-1 cannot be maintained. A lower standard of
profits must likewise be accepted by employers. There must be equality of
sacrifice all round. Labour argues that reduction of wages in industry
means diminished national purchasing power, and consequently increased
trade depression. That is only true when there is an effective demand at
existing prices for the output of industry. The object now is to reduce
costs so as to get down to a price at which demand may be effective. The
foolish expectations nurtured by the working-classes of getting out of
the war a higher standard of living than they enjoyed before the war was
largely due to the utterly impossible—and sometimes grotesque—pictures
painted by members of the Government of “the good times coming.” These
reductions in cost by reductions of wages and profits can be immediate;
any reductions in cost of production through improvement of management,
organization and plant or increasing the efficiency of labour’s output,
while necessary for the permanent well-being of industry, are too slow
acting for the present emergency.




CHAPTER XXIII

THE RIGHT RELATIONSHIP OF GOVERNMENT TO INDUSTRY

    2. The Normal Position of Government in Relation to
    Industry—Regulation of Factory Conditions—Conciliation and not
    Intervention—Protection of the Community—Wages in Unorganized
    Industries—Industrial Research—Need of a Real Ministry of
    Labour—Regulation of Combinations and Monopolies.


2. THE NORMAL POSITION OF GOVERNMENT IN RELATION TO INDUSTRY

We must now consider the relationship of Government to industry in normal
times. Whether or not any particular industries should be nationalized
and thereafter conducted as State industries or under some other system
than the present, are constitutional questions to be decided by the
Government in power in accordance with what they believe to be the will
of the people. That the author of this book is strongly opposed to
nationalization as a general principle of industrial organization is
sufficiently apparent from what has already been written and for the
reasons given. Assuming, however, that there is no nationalization of an
industry, but that it continues on a reformed basis of private ownership,
it is important to discuss under what circumstances the Government ought
to intervene in regard to any question affecting the administration and
control of that industry, or, indeed, of all industries in general. Our
recent experience of Government direction of industries, both during
and after the war, assists us in answering that question. If, as during
the war, a large supply of munitions has to be organized at a moment’s
notice, and maintained irrespective of all considerations of economy
and industrial efficiency, probably no other course would remain but
for the Government of the day to control the industries concerned; but,
in normal times, when economy of production is imperative, industrial
efficiency essential, and enterprising and far-sighted administration
of paramount importance, Government direction has shown itself to be
quite hopeless. Employers and Trade Unions are in firm agreement on
this point, that Government control of industry spells ineptitude,
incompetence, extravagance, and confusion all along the line. We may,
therefore, emphasize this as the first cardinal principle regulating the
relationship of Government to industry: that the circumstances are few
and seldom arise which justify intervention by Government in the economic
administration and control of any industry.


Regulation of Factory Conditions

The Government is however bound to assert its right to intervene, in
order to prevent the existence of, and, where they have arisen, to
remove, industrial conditions which are injurious to the health and
welfare of the workers as a whole or any particular section of them. This
is action in respect of which every Government would always have behind
it the full approval of the social conscience. But for the intervention
of the Government in days gone by, the dehumanizing conditions attending
child-labour and the employment of women in workshops would never have
been removed, and English factories would not be to-day as they are, the
first in the world for health, sanitation and good amenities. In the
early days of last century, when factory legislation was first proposed,
the employers of one large Yorkshire woollen town came in formal
deputation to London to protest that, if there were any interference by
Act of Parliament with their liberty to employ as they pleased, in their
woollen manufactories, young children for such hours as they thought fit,
a death-blow would be struck to the trade of England. Those days have
gone, and with them that class of employer.

Under the Factory Acts and the skilled and far-sighted supervision of
the Home Office Factory Inspectors, an immense amount has been done to
promote the health of the workers, the safety of their occupations,
and freedom from preventible dangers. None but the most hardened of
individualistic employers—and few of them now remain—object to sound and
reasonable State regulation in matters such as these. He welcomes it for
his own protection.


Conciliation and not Intervention

It is more in regard to industrial disputes concerning wages and
conditions of employment that the Government is too prone to intervene.
There must always be a Ministry of Labour to keep in close touch with
industrial disputes. Such a Ministry, though it should in the first
instance leave employers and employed to discuss matters through the
conciliation machinery that exists in each particular industry, yet, by
discreet and impartial action, can do most valuable work in smoothing
over ruptures in negotiations when neither side from motives of dignity
or strategy will move. That is a different thing altogether from the
Cabinet rushing in. The public will never know the extent to which
industrial harmony in this country has been preserved on occasions of
stress by the efforts towards conciliation exerted by the Ministry of
Labour and its predecessor, the Conciliation Department of the Board of
Trade, and sometimes under the greatest difficulties. At times when the
Ministry had arranged between employers and Trade Unions a formula for
the solution of a wage dispute or the termination of a strike or other
industrial controversy, the recalcitrant leaders of some Union, entering
into temporary alliance with other turbulent spirits, would speed found
in deputation to the Cabinet at 10, Downing Street, and seldom be denied
admission. Frequently, other terms would be suggested by the Cabinet for
the sake of peace, probably more favourable to the workers than those
arranged by the Ministry of Labour. The results were disastrous, the
prestige of the Ministry suffered a serious relapse, the repute of the
Trade Union leaders who agreed terms with the Ministry was damaged in the
eyes of their members almost irretrievably, the rebellious section of the
Union was given a resounding advertisement at the expense of industrial
constitutional government—no surer way to sow the seeds of disruption and
indiscipline in any Union.


Protection of the Community

But it will be asked what is to happen when the employers and Unions
concerned in our great national industries decline to come together. In
that event, the Government, through the Ministry of Labour, must, as
the latter has so frequently done with tact and efficiency, endeavour
to bring the two sides to a conference. That can usually be done. The
Ministry has power under the Industrial Courts Act, 1919, to appoint a
Court of Inquiry, but this power in practice is of little use unless
both sides agree. Public opinion, however, can always be relied on
strongly to resent employers and unions standing at arm’s length; but
before it can, or will, operate, a definite open effort must be made
to put them into touch with one another. Negotiations once instituted
may culminate in an agreement, or end in a rupture, so that a strike or
lock-out appears inevitable. Then there is generally but one sound course
for the Government to pursue: at once to refer the dispute through the
appropriate Government Department to the Industrial Court, and obtain
its impartial and experienced decision upon the issue. Whether either
or both parties will submit to the arbitrament of the Court is purely
voluntary—we have not compulsory industrial arbitration in this country.
It has failed in Canada and Australia; it failed here disastrously during
the war. If men are to be compelled to accept an award, employers must be
compelled, if the Court so decide, to carry on their works at a loss. But
the public has no patience with any party to a wages dispute who will not
agree to the reference of his claim to an independent tribunal, or who,
having agreed to the submission, refuses to accept the award. One of the
most important present-day functions of such a tribunal is to analyse the
claim and see to what extent the claim is a genuine industrial demand,
or part of the revolutionary programme of extremists for squeezing all
private profit out of industry so as to force “nationalization and
democratic control” or some other favourite socialistic scheme. The one
fatal course is for the Cabinet to attempt itself to handle industrial
disputes.

Still, after or without an inquiry by the Industrial Court, a strike or
lock-out may occur. Then the primary duty of the Government is to stand
firm, refuse all concessions, and protect the community; nothing less is
adequate for the maintenance of social order. Too often employers and
Unions complacently think that the Government should stand aside and
let them fight it out over the prostrate public. In saying that they
forget the paramount interests of the community. Every principle of
democratic government negatives the right of a section of the community
so to attempt to enforce its arbitrary will, and where, by refusing an
independent arbitration and then calling a strike or lock-out, it does
so, it is the plain duty of the Government to provide for the continuance
of public services and to maintain a skeleton organization in being for
that purpose. This is not acting as strike-breaker between employer and
employed. But let not the measures for the protection of the community
be taken in stealth. Why should there be any secrecy about the matter?
The obligation and intention of the Government always so to act should be
openly affirmed. As Labour has officially adopted the anti-social policy
of “direct action,” the Trade Disputes Act of 1906 should be repealed.
Whatever reason of political expediency—there was none in law or in
logic—justified the application of the Act to cases of economic strikes
between employers and employed, no pretext remains for its retention in
cases of strikes against the community, especially where an independent
inquiry has been refused. The Government can successfully measure its
strength against any such strike, if only it will give the fullest
possible publicity to the issues, for public opinion will always split
like a steel wedge the solidarity of such anti-social action.


Wages in Unorganized Industries

One particular class of wages questions does demand intervention by
the Government. In well-ordered industries, where organizations exist
effectively representing the employers and employed engaged in the
industry, wages and conditions ought to be left as matters for collective
bargaining. There are, however, many industries which are so scattered
through the country or so subject to conditions incompatible with good
organization as to make collective bargaining impossible. In them
reasonable minimum wages and conditions must be secured, and it is the
duty of the Government to see that such provision is made, unless it is
prepared to acquiesce in “sweated labour trades.” Hitherto, the provision
has taken the form of a Trade Board for the industry under the Trade
Boards Act, and there is no doubt that type of organization must continue
in appropriate cases. Much criticism has been levelled against the Trade
Boards, on which Lord Cave’s Committee[20] has now reported fully. From
their inception up to the war, Trade Boards on the whole were successful.
The defects that subsequently developed in the system were due to the
fact that the far-flung series of Trade Boards, constituted immediately
after the war, had none of the experience nor traditions of the old
Boards; their chairmen and independent members were very largely persons
without practical experience of industrial problems, and necessarily of
that category, because of the large number of such appointments to be
filled. They did not confine themselves to prescribing minimum wages and
conditions—their proper function—so as to avoid sweated conditions, but
they attempted to regulate actual wages and conditions, a very different
matter. They also applied war-time standards to peace-time circumstances,
and that naturally plunged a nascent and struggling industry into great
difficulty.


Industrial Research

Industrial research becomes daily more essential for industrial progress.
It has been developed to a greater extent in Germany and the United
States of America than with us. Much of the industrial prosperity
in those two countries is due to the establishment of associations,
and, indeed, of highly developed departments by individual firms for
industrial research. Much is being done, and still more remains to be
done, by individual firms and by trade associations in this country
in that direction. There is no doubt that this kind of work can more
effectively be conducted in that way than by any Government Department,
but, at the same time, a Government Department is required to co-ordinate
and stimulate rather than to control such private efforts. In this way,
most valuable work is being done by the Department of Scientific and
Industrial Research. This will always remain an important sphere for
Government industrial activity.


Need of a Real Ministry of Labour

If we are to have anything like effective and efficient labour
administration, a Ministry of Labour is essential. Those who call
for abolition of the Ministry are truly neophytes in the art of
industrial government. Convinced believers, let us assume them to be,
in the principle of _laissez-aller_, they actually think that if the
Ministry disappeared there would be an end of all intervention by
Government between employers and employed. What uninformed criticism!
They forget that the Home Office has control of the administration of
the Factory Acts—a matter embracing working conditions and welfare of
workers which goes right to the root of the Labour problem. They omit
to notice that the Mines Department of the Board of Trade exercises
supervision over the conditions of employment and wages of miners; that
the Ministry of Agriculture is responsible for the Joint Conciliation
Committees which deal with exactly similar questions in agriculture;
that the Ministry of Transport does the same in the railway service,
and that the Ministry of Health has jurisdiction over health insurance
so largely handled by the Approved-Societies-sections of the Trade
Unions, and over the administration of the Poor Law relief which so
nearly touches the unemployment problem. These various jurisdictions
are admittedly to stand—it could not be, and indeed is not contended
otherwise. The Ministry of Labour is, however, to disappear, and its
responsibilities—unemployment insurance, trade boards, labour exchanges,
conciliation of trade disputes, co-ordination of Labour administration
in this country in conformity with the International Labour Organization
created by the Peace Treaty—are to be extinguished or tacked on as
appendages to other departments. The resulting position is too ridiculous
to contemplate. Under such circumstances the Government could never
be advised on any basis of consistent administration and policy in
regard to any labour question; continuous touch would be lost with the
representative Trade Union federations; there would be as many opinions
as there were departments implicated. Whenever a national strike was
imminent in any great industry, the Government would have to organize an
improvised committee of the Departments concerned in labour—probably few
of them even remotely connected with the particular industry affected—and
try to evolve an _ad hoc_ policy. We are suffering still from the
effects of opportunist action of that kind and want no repetition. And
when Government intervention in a national strike becomes inevitable
for the protection of the community, he would be a bold man who would
prefer negotiations by the Cabinet conducted on no set principle and
founded on no experience of industrial conditions, to negotiations by the
Ministry of Labour, which does conduct such business on a settled basis
of principle, knowing the interconnection of trade with trade and the
effect which a concession like the 12½ per cent. bonus to one section of
industry produces upon all other sections, and appreciates the danger
of settling strikes in the way the South Wales Coal Strike of 1915 was
settled.

It has been amply proved by bitter experience that no branch of human
activity stands in more urgent need of even administration on uniform
and consistent lines than does labour. Granted that employers and
employed should settle between themselves so far as possible their own
disputes, there comes inevitably a stage when a settlement or failure
to settle intimately affects the community. It is then that the offices
of a properly constituted Ministry of Labour come into play. If it is
desired to leave the public merely as a football between employers and
employed then abolish the Ministry. Far from abolishing it, in my view
it ought to be consolidated and vested with extended powers. It ought to
be made in fact, not merely in name, a real Ministry of Labour. All the
powers of the other Government Departments which relate to labour should
be transferred to it, so that there would be one central department
charged with and responsible for the administration of all labour in this
country. A great part of the labour disorganization during the war which
has been used as an argument for abolition of the Ministry of Labour,
and in derogation of the great national services performed by it, was
entirely due to this clash between different departments in regard to
labour administration: the Admiralty bidding against the Ministry of
Munitions by paying higher wages to the same class of men and settling
strikes on more advantageous terms to the workers; the Agricultural
Wages Board of the Ministry of Agriculture putting up wages of
agricultural labourers to a height that upset the country railway porters
who were drawn from them. Innumerable other instances could be given, all
directly due to the sub-division of labour administration among a number
of different and hostile Government departments. It is not unimportant
in this connection to remember that when, in the beginning of 1917, the
Ministry of Labour, which was originally a conception of the Trades Union
Congress, was formed by Mr. Lloyd George’s first Coalition Government,
it was intended to transfer to it all the labour powers of the other
Government departments. This was fiercely resisted by every department
which it was proposed to denude of any powers, and in great measure
successfully. As a result of that internecine warfare, the present
Ministry of Labour is unhappily but an emasculated edition of the fully
endowed central department that Mr. Lloyd George wisely had in mind. The
wonder is that it has done as well as it has with such a disappointing
limitation of powers. But apart from home labour administration, we
shall get into most serious international complications, and very great
domestic difficulty, if proper touch is not maintained with, and the
interests of the country properly voiced in, the International Labour
Organization which exercises now very considerable influence over labour
legislation and administration in every country, party to the League
of Nations. That cannot possibly be managed if the responsibility is
to be scattered over half a dozen partially interested and wholly
unco-ordinated Government departments.

If the labour sections of other Government departments were united with
the Ministry of Labour, very great economies could be effected: factory
and trade board inspectorates could be combined; health and unemployment
inspectorates could also be amalgamated; in fact, one central
inspectorate could well perform all the four kinds of inspection duties.
These are but a few illustrations. The various labour duties performed
by the different Government departments are so obviously one and the
same that it is inconceivable why the overlapping which exists should be
tolerated any longer. It is the one thing in our labour administration
that passes the comprehension of foreign critics.

Some of those who suggest the abolition of the Ministry of Labour propose
to constitute in its place a National Industrial Council, consisting of
an equal number of representatives of Employers’ Associations and Trade
Unions with a chairman nominated by the Government, as recommended by
the Report of the Provisional Joint Committee of Employers and Trade
Unions to the Industrial Conference, convened by the Government on
February 27, 1919, when the miners’ strike was threatening. The duty
of the National Industrial Council would be to make recommendations in
regard to controversial industrial matters. If the Unions _bona fide_
will undertake to use such a Council, or Parliament of Industry as it is
sometimes called, for the purpose of promoting good relations between
employers and employed, its creation would be of value. That implies
the continuance in industry of the private employer. But, on the other
hand, if the Unions intend to work for the elimination of the private
employer from industry, as they declared their intention to do in the
Memorandum (_see_ p. 59) annexed by the Right Hon. Arthur Henderson to
the Report of the Provisional Joint Committee, then the creation of a
Parliament of Industry would be a farce, and merely degenerate into an
organized means to the Unions’ real end. In any event, the scope of
a National Joint Council is limited. No Union will acquiesce in the
judgment of other Unions on its domestic affairs—imagine boilermakers
accepting the decision of plumbers, electricians and fitters on a
question concerning the demarcation of boilermakers’ work. As it was,
miners, railwaymen and transport workers absented themselves from the
Industrial Conference in 1919. Moreover, employers and Trade Unions will
always agree, to the serious discomfiture of Government, on reforms of
which the expenses are to fall not on industry but on national funds, but
the question of such expenditure is surely one to be reserved exclusively
for Parliament. The Ministry of Labour has always the General Council to
consult, which represents the whole of organized labour, and the National
Confederation of Employers’ Organizations, reinforced for consultation
with any employers’ organizations outside that Confederation. If a joint
conference with employers and Trade Unions is desired by Government such
can always now be easily arranged.


Regulation of Combinations and Monopolies

Combination is inherent in industrial progress; this is fully recognized
by Labour. The addendum to the Report of the Committee on Trusts
(_Parliamentary Paper_, 1919, Cd. 9236) signed (amongst others) by
such stalwart members of the Labour Party as Messrs. Bevan and Sidney
Webb, stated: “We have to recognize that association and combination in
production and distribution are steps to the greater efficiency, the
increased economy and the better organization of industry; we regard this
evolution as inevitable and desirable.”

This fact compels the Government to protect the consuming public against
exploitation by combinations and monopolies. The principles along which
such protective action should proceed are indicated in the Report of this
Committee, which has received the official approval of the Federation
of British Industries. Shortly put, they throw on the Board of Trade
the duty of inquiring into any reasonable complaints, of referring
any questions arising out of their inquiry to a special tribunal for
investigation and report, and of recommending to the Government action
for the remedying of any grievances found to exist by the tribunal.
The Federation properly insists upon two safeguards: first, avoidance
of any restriction prejudicing the position of British industry in
the export trade, and, secondly, caution against any communication to
foreign competitors of information regarding British trade associations
or combines. There have been suggestions made by some public men that
statutory limits should be placed upon dividends of industrial concerns.
Such restrictions have in the past been imposed upon the payment of
dividends by companies supplying, under powers of statutory monopoly,
public necessities like gas and water, but economic history shows
conclusively that anything in the nature of a statutory limitation of
dividends for concerns not supplying a monopoly but marketing its product
in a competitive market is seriously destructive of efficiency and
enterprise.




CHAPTER XXIV

THE RIGHT RELATIONSHIP BETWEEN EMPLOYERS AND EMPLOYED

1. CONTENTMENT IN INDUSTRY

    (_a_) Provision against Unemployment—Equalization of
    Demand for Labour—Insurance against Unemployment—Need of a
    Job-Finding Organization—Insurance by State or Industry—State
    Insurance—Insurance by Industry or Industries—Reform of Present
    Out-Door Relief System—Unemployment Insurance by Firms.


Reform of the relationship in industry between employers and employed
involves three things: securing contentment, achieving co-operation,
increasing production; these constitute the dynamic trinity. Only when
contentment can be secured is co-operation made possible; without
co-operation there never can be efficient production; production alone
can create the prosperity which is the sole source of the financial
ability of any industry to pay high wages and maintain good conditions of
employment. Contentment does not mean stagnation; it means willingness to
progress under an accepted system—in other words, evolution.


(_a_) Provision against Unemployment

If we are to secure contentment in industry, unquestionably the first
matter to be dealt with is unemployment. A distinction must be drawn
between normal unemployment—the result of seasonal or cyclic depressions
in trade, which arise from circumstances well-known in industry, either
affecting the world at large or peculiar to some country in particular,
or special to some national industry—and the abnormal unemployment
which has resulted from the Great War. We are now considering normal
unemployment. What Government should do to deal with the abnormal
unemployment occasioned by the war we have already discussed in Chapter
XXII.


Equalization of Demand for Labour

In regard to normal unemployment there are two things only which can
be done:—first, to reduce, so far as possible, fluctuations in the
demand for labour between one year and another, and one season of the
year with another season of the same year, and, secondly, to make the
best provision economically practicable for the maintenance during times
of trade depression of persons who are unemployed or under-employed.
It is most difficult to “equalize the demand for labour.” In ordinary
commercial business that is a matter largely outside the power of
Government, employers, or Trade Unions. It is one of the privileges which
is reserved for the consumer. The only directions in which fruitful
action can be taken are to provide a system such as exists under the
Labour Exchange organization, or that of certain Trade Unions, whereby
the workman out of a job can be put in touch with the employer who wants
labour of his particular description, and to arrange the execution of
public works by Government Departments or local authorities, and the
manufacture of stores or equipment for public purposes, the amount of
which is more or less standard, so that by postponing some and expediting
others some advance is possible towards making more uniform the demand
for labour as between good times and bad. But the limits within which
this is a practicable policy are much narrower than is generally
realized, and immensely more restricted than is suggested by the Labour
Party.


Insurance against Unemployment

Although to prevent unemployment is impossible, happily a great deal
can be done to mitigate the evils of unemployment when it does occur.
Under no system of organizing industry—in spite of the contentions of
the Labour Party that under its socialistic reconstruction of industry
there would be no unemployment—can any person be guaranteed continuous
work. It is possible, however, to spread the income of the industry
in good times over bad times, so that when the latter supervene there
will be something coming in to the worker for him to live on. This is
not a dole as some people call it, but rather in the nature of deferred
pay. With that in operation there would be an end to what is called by
Labour the “wages system.” The worker would no longer be paid wages for
such time only as he is employed, but would receive pay for the time he
works and also pay during the time he is unable to work because of trade
depression. There must be in all industries, both on the side of labour
and of the employer, a reserve of productive capacity to meet the peak
demands, and all employers with few exceptions recognize that it is their
duty to apply some of the profits of good times for the maintenance of
this reserve of labour in their industry when unemployed at times other
than peak times, and of the general body of labour when unemployed or
under-employed at times of trade depression. But the provision against
unemployment must be a joint fund to which both the employer and the
worker contribute during good times.


Need of a Job-Finding Organization

As ancillary to any scheme for provision against unemployment, there
must be some effective organization in existence whose duty it is to
endeavour to ascertain where there are any vacancies for workmen in which
men who are unemployed can be started. Obviously this is necessary both
in the interests of the industry and of the actuarial solvency of the
fund provided against unemployment. Unfortunately a substantial number of
persons will always exist who prefer not to do work but yet be paid for
it.


Insurance by State or Industry

The next question is by whom shall the provision for unemployment be
made? Shall it be by the State or by industry, that is to say, all
industries acting collectively, or by each industry for itself, or shall
it be by individual firms? We shall consider these cases separately.

It is characteristic of the times that when persons have omitted to do
what they should have done and then find themselves in difficulties
by reason of their omission, they call upon the State to remedy their
deficiency. Eliminating the question whether the State out of its own
financial resources should make any addition to the fund contributed by
employers and employed for provision against unemployment, Government
administration of the fund is necessarily less efficient and more
expensive than administration by industries or by firms. Some striking
figures have been published in _The Times_ of January 25, 1922. It
was stated at the National Federation of Employees Approved Societies
by a gentleman representing the British Xylonite Company that his
firm’s scheme of unemployment insurance cost only £334 per £10,000 to
administer as against the Government’s £1,000 per £10,000. It must be
remembered, however, that the Government scheme has to cover multifarious
trades—organized, semi-organized and those not organized at all. But
still, after making all due allowance for that fact, there appears to be
no question that a Government scheme does necessarily, from the inability
to maintain close supervision, afford opportunities for waste and abuse
which would not arise under a system of closer control.


State Insurance

The details of the Government scheme have been described. The Labour
Exchanges have, in the face of great difficulties, performed the
administration with efficiency, but no one with experience of industrial
conditions during the last two years could fail to realize that the
administration of unemployment insurance is not proper work to be
undertaken by any Government Department. The proper function for the
State is to see that all possible provision is made against unemployment
but not to undertake the work itself. In 1920 a Committee of Inquiry
was appointed by the Minister of Labour to inquire into and report upon
the Labour Exchanges. The majority of that Committee reported that “the
administration of unemployment insurance by industries on behalf of their
own members was the most desirable system in the end, particularly from
the point of view of obtaining technical knowledge in the placing of
workmen, the creation of a corporate pride in each industry, and a sense
of responsibility for unemployment in the industry.” The Geddes Committee
has recommended that this question should be further explored, and the
Minister of Labour is taking steps to do so.


Insurance by Industry or Industries

That industry should provide for its unemployment is obviously
reasonable. The taxpayer has no control over industrial conditions,
or over the wages which are paid, or the conditions of employment
in operation, and in respect of such matters industry is under no
responsibility to the taxpayer. Should this provision be made by each
industry in particular or by industry as a whole? It would be impossible
to form a scheme under which each industry would provide against its own
unemployment. There are many industries, ranging from those most highly
organized with employers and Trade Unions acting, and accustomed to act,
collectively and with some experience of the ratio of their unemployment,
down to industries which have no organization whatever nor any collective
machinery available for the operation of an insurance fund nor any
knowledge of their own unemployment. It is only a highly organized
industry that could undertake to provide for its own unemployed, and not
all highly organized industries, but merely a selected few—those which
are clearly separated off from other industries. To all but the initiated
it is surprising how industries are interlocked. If we take, for example,
the engineering industry, and industries like iron and steel, nuts and
bolts, bicycle parts and innumerable others, there is great interchange
of labour, especially unskilled. A large West-end store will be engaged
in fifty to sixty different industries. How would its interests in each
industry be separated? There is no doubt that it is to the financial
advantage of a highly organized clearly demarcated industry to provide
for its own unemployment insurance as compared with participation in a
State Scheme.

Sir Alfred Watson, the Government Actuary, before the Committee of
Inquiry on the Labour Exchanges, pointed out the great financial benefit
it would be to the principal industries to provide their own unemployment
insurance, and referred to the large margin there would be available
for the actual costs of the benefits. In a most interesting pamphlet
published on “Unemployment Insurance,” Mr. Henry Lesser, the President of
the National Federation of Employees Approved Societies, states that in
one industrial undertaking employers and employed pay in respect of the
National Unemployment Insurance Scheme over £22,000 per year, but that in
normal times the persons employed in that particular firm do not receive
in the aggregate in unemployment pay more than £800 a year, a case, he
says, which may be taken as typical of the whole of the industry in
question.

One outstanding advantage which would result from each industry effecting
its own unemployment insurance would be the feeling it must undoubtedly
engender in the minds of both employers and Trade Unions of their
responsibility for the combined working of the industry, and the effect
it is bound to have in producing a better spirit between the two parties
and amongst the men, who will no longer feel that they are taken on and
discharged merely as it suits the interests of the firm. A thorough
investigation should be made as to what industries could undertake their
own unemployment insurance, and whether it is better that they should do
so, or come into a general scheme of insurance by all industries. The
ordinary objection of employers and Trade Unions representing “good”
industries, i.e. those with a low rate of unemployment, is that they
are paying for the “bad” industries with a high rate, but is not that
rather the essence of insurance? It may well be that only insurance by
all industries acting collectively is possible. If such turns out to be
the case, that plan should be adopted ready for carrying into practical
operation on the approach of more normal times. Industries which rely
mainly on casual labour are a more difficult proposition. Decasualization
is essential, and that must be effected by some means of restricting the
free influx of labour into the industry, as has been done in the Dock
Labour Scheme in Liverpool. The efficiency of the Liverpool method is
undoubtedly due to the co-operation between the dock labour employers and
the Unions; it has been most strikingly successful. It affords a basis
for procedure in very many industries. There must, however, I am afraid,
remain a residuum of unemployment insurance to be handled by the State,
in the absence of any other authority, on the lines presumably of the
present National Unemployment Insurance Scheme, but it would be reduced
to small proportions if all the great industries of the country were
providing for their own unemployment.


Reform of Present Out-Door Relief System

In connection with unemployment, the present system of Poor Law relief
wants overhauling. The provision of relief by the Guardians (in addition
to, or substitution for, unemployment insurance benefit) on varying
standards in different places throughout the country is extremely
wasteful and disturbing to social harmony. If this is taken out of the
hands of the Guardians, as has already been recommended by both the
majority and minority reports of the Poor-Law Commission, and committed
into the hands of some local authority—because local responsibility is
essential for the spending of money raised by local rates—it would mark
progress of no uncertain kind. Absolute standardization is impossible,
because of the varying social circumstances and indeed social outlook
in different parts of the country, but, after allowing for this, much
greater approximation to uniformity could be secured.


Unemployment Insurance by Firms

Without any doubt the best approach to insurance by industries or by
industry as a whole is to start with insurance by firms. An admirable
beginning has been made in this direction by the National Federation of
Employees Approved Societies—particulars of this scheme can be obtained
from the Secretary to the Federation, c/o British Thomson-Houston Co.,
Ltd., Rugby—it is also described with great clearness by Mr. Lesser in
the pamphlet referred to on p. 260. The experience of the Federation
is most instructive. In many works, before the days of National Health
Insurance, there were sick clubs which provided for members unemployed
through illness, benefits from a fund to which employers and employed
alike contributed. Both employers and employed viewed, with considerable
regret, the proposed absorption of these clubs into the new Approved
Societies established under the Health Insurance Act, and to obviate
that fate reconstituted their clubs with the approval of the Insurance
Commissioners into “Works Societies,” and obtained official sanction
for these Societies to administer the State scheme. Later these Works
Societies decided to undertake the administration of unemployment benefit
at their respective works under Section 17 of the Unemployment Insurance
Act, 1920. There were three conditions precedent: first, that the Society
must provide for payment out of its own voluntary funds of an additional
unemployment benefit equal to one-third of that payable under the
Act—that is to say, if the State benefit was 15_s._ the Society must add
to that at least another 5_s._ out of its private fund and so pay a total
benefit of 20_s._ The second stipulation was that the Society must have
a system for ascertaining the rates of wages and the general conditions
of employment prevailing in all occupations in which its members were
engaged; these particulars were always well-known, and there was not much
difficulty about that. The third requirement was that the Society should
have an effective system of ascertaining vacancies for employment—this
meant some organization distinct from the Labour Exchanges. Such an
organization was finally obtained through the co-operation of the local
Chambers of Commerce, who receive from their associated firms particulars
of vacancies which the Chambers send on to the different Works Societies.
The scheme works exceedingly well. It was first adopted by the South
Metropolitan Gas Co., and later by the Gas Light and Coke Co., Messrs.
Debenhams, the British Thomson-Houston Co., Ltd., Taylor Bros. & Co., J.
T. & J. Taylor, Ltd., and a number of other firms. The Society acts as
the State’s agent with regard to paying out the State benefits, and in
addition pays at the same time a supplementary benefit of one-third of
the State benefit, for which an extra contribution is generally levied
on the workers at the rate of 2_d._ per week, and most of the employers
contribute to the supplementary benefit fund. One cannot fail to be
struck in reading Mr. Lesser’s pamphlet by the extraordinary success
of the Federation’s scheme in producing co-operation and good feeling
between masters and men. With the experience which firms get through
putting into operation a method of unemployment insurance of this kind,
the way is opened for the institution of a wider scheme of grouped firms,
and ultimately for insurance by industry or industries.




CHAPTER XXV

THE RIGHT RELATIONSHIP BETWEEN EMPLOYERS AND EMPLOYED

1. CONTENTMENT IN INDUSTRY

    (_b_) Human Status of the Worker in Industry—The Slowness
    of Ordinary Conciliation Machinery—The Whitley Councils
    Scheme—Joint National and District Industrial Councils—Works’
    Committees—The Slow Progress of Works’ Committees—The Success
    of Works’ Committees on the Clyde—Executive Management a Matter
    for Employers.


(_b_) Human Status of the Worker

The next most pressing reform in our present industrial system is to
secure for the individual worker a definite status in industry. To
describe what is intended is easier than to define it. At present the
individual worker complains that the government of industry is conducted
by the employer entirely as the latter thinks fit. He calls it the
“domination of capital”; he describes himself as treated with scant or no
consideration, and undoubtedly he draws all his industrial inspirations
from an atmosphere in which there is little apparent development of his
human personality. The worker is right and he is wrong. He forgets that
the conduct of industry to-day is not a matter in the uncontrolled hands
of any employer. He loses sight of the fact that in all well-organized
industries the conditions of employment which prevail have been the
matter of extensive adjustment between the employers’ organizations and
the Trade Unions, negotiated, of course, centrally beyond the horizon of
the individual worker.


The Slowness of Ordinary Conciliation Machinery

The real feeling that the worker is trying to express is his sense of
personal insignificance in a great factory, accentuated, when grievances
arise, by the difficulty, in large works, of securing prompt discussion
of them between the workers and the management. All that can be done is
for the worker to report the matter to the shop steward of his particular
craft in the department, who will no doubt report it to the secretary
of his Trade Union district committee. The latter will put it forward
for consideration by the committee and take their instructions upon it,
and the committee will, in course of time, send down him or the district
delegate to the works to see the employer. A discussion will take place,
the results of which the district delegate will report back to the
district committee. If the matter is amicably settled there is an end
of it; if, on the other hand, it still remains in dispute, the district
committee may decide to refer it to the executive council of their Union.
The executive council will then remit it to the central organization of
the employers, to be considered by them at their next meeting. The matter
may be then adjusted, or it may be left over for discussion at one of
the periodical joint central conferences. While this ponderous machinery
is functioning the individual worker is left face to face with the
remembrance of his grievance, and it is not surprising that he gradually
acquires a sense of inferiority and a feeling of being neglected, through
his ignorance that the mills of conciliation grind slowly. The object
first and foremost must be to adapt existing, or provide new, machinery
in all industries to enable grievances to be speedily discussed in the
works in which they arise. It may be found when they are investigated
that they involve some issue common to all the works in the district
engaged in the same industry. Obviously, then, that is a matter to be
discussed between the district employers and the district committees
of the Trade Unions, or through the district conciliation machinery,
whatever it may be. In course of the district discussions it may be
ascertained that the matters of controversy have raised some national
question, then, obviously, for the sake of industrial uniformity, these
questions should be considered nationally between the organizations
representing all the employers in the country engaged in the particular
industry and the Trade Unions representing the men, or through the
appropriate national conciliation machinery.

These are the general lines along which, as Part II shows, industrial
conciliation machinery has developed. In the highly organized industries,
there is machinery, district and national, but not as a rule works’
committees. The drawback in all industries is the delay.


The Whitley Councils Scheme

The want of such machinery became apparent in many imperfectly organized
industries in the early part of the war, and in October 1916, “the
Whitley Committee” was appointed by the Prime Minister with the
following terms of reference:

(1) To make and consider suggestions for securing a permanent improvement
in the relations between employers and workmen.

(2) To recommend means for securing that industrial conditions affecting
the relations between employers and workmen should be systematically
reviewed by those concerned, with a view to improving conditions in the
future.

Of this Committee the present Speaker of the House of Commons, the Right
Hon. J. H. Whitley, was Chairman. It comprised representatives of the
employers and also of the Trade Unions engaged in some of the great
industries. The Committee presented five reports recommending what is now
known as the Whitley Councils Scheme.


Joint National and District Industrial Councils

In its first Report (_Parliamentary Paper_, 1917, Cd. 8606) the Committee
recommended the establishment for each of the principal industries of a
triple form of organization, representative of employers and employed,
consisting of National Joint Councils, Joint District Councils and Works’
Committees, each of the three forms of organization being linked up with
the others, so as to constitute an organization covering the whole of
the trade, capable of considering and advising upon matters affecting
the welfare of the industry and giving to Labour a definite and enlarged
share in the discussion and settlement of industrial matters with which
employers and employed are jointly concerned, each Council and Committee
exercising such powers and duties as are determined by negotiation
between the employers and the Trade Unions in the industry in question.

As part of its second Report (_Parliamentary Paper_, 1918, Cd. 9002)
the Committee proposed for trades in which organization is weak or
non-existent the adoption of the system of Trade Boards, and for trades
in which organization was considerable, but not yet comprehensive, a
system of Joint Councils, with Government assistance, to be dispensed
with in each case as soon as these industries advanced to the stage
when the full organization could successfully be created for them. The
Committee also proposed a scheme in its second Report under which the
National Joint Council of an industry, once it had agreed upon a minimum
standard of working conditions for those employed in the industry, could
secure the enforcement of those conditions either throughout a given
district or over the whole country.


Works’ Committees

Prominently in its third Report (_Parliamentary Paper_, 1918, Cd. 9085)
the Whitley Committee emphasized once more the need for the constitution
in each factory or workshop, where the circumstances of the industry
permitted, of a Works’ Committee, representative of the management and
the men and women employed, to meet regularly to consider questions
peculiar to the individual factory or workshop which affected the life
and comfort of the workers.

In the Committee’s fourth Report (_Parliamentary Paper_, 1918, Cd. 9099)
it recommended the establishment of a standing Arbitration Tribunal
to deal with cases where the two sides of a Joint Industrial Council
had failed to come to an agreement and wished to refer the dispute for
settlement by arbitration.

The far-sighted proposals of the Whitley Committee represent the
machinery that is necessary if the government of industry is to be a
matter of mutual arrangement between the employers and the employed.
Great progress has already been made in establishing Whitley Councils; in
some industries they have operated remarkably well, and have succeeded
in conferring a very considerable measure of joint self-government on
employers and employed. But in other industries where they have been
started they have not worked so satisfactorily. On paper no doubt the
number of National Joint Industrial Councils which have been established
appears large, and the number of Joint District Councils substantial,
but their effect in avoiding disputes in some industries is negligible.
The reason, in my opinion, is that too much attention has been paid to
setting up National Councils and too little to forming Works’ Committees.
Progress would have been much more marked if employers generally had been
prepared to press forward more enthusiastically with the constitution of
Works’ Committees—they are the crux of the position. It is they which
deal directly with the individual worker who is necessarily out of
personal touch with the Joint National or District Councils.


The Slow Progress of Works’ Committees

There are several explanations of employers’ want of sympathy with
Works’ Committees. In a number of establishments where they were
formed the workers used them to deal, not with matters in which the
employer and the employed were jointly interested, but with matters
of executive responsibility solely appertaining to the employer. This
was done sometimes out of keenness, sometimes out of ignorance; in
some localities it was a definite attempt on the part of revolutionary
elements to use these workshop committees as a means of acquiring the
control of the industry. Again, enforcements of discipline were treated
as illustrations of the “domination of capital” and tabled by the workers
as matters for joint agreement. In some works, it has been surprising
to me how far employers have been able to go in discussing matters of
discipline, even to the extent of making dismissals for infraction of
works’ rules a matter for consideration by the workshop committee. That,
I am afraid, is a course which cannot be recommended. I have had some
experience of the endless agitation which simmered in one yard where that
particular plan was followed.


The Success of Works’ Committees on the Clyde

In the stormy days on the Clyde in the spring of 1916, I had, as Chairman
of the Government Commission for Dilution of Labour, remarkable proofs
of the extent to which workshop committees, when loyally supported by
employers, operate to create industrial contentment. Up to that time the
skilled men in the engineering shops on the Clyde had firmly refused to
comply with the “Treasury” Agreements of March 1915, accepted on ballot
by their own Trade Union, and declined absolutely to permit any woman to
be introduced for the purpose of doing work previously done by a man or
even a boy. The Executive Council of the A.S.E. confessed their entire
inability to persuade their Clyde members to comply with the Agreement,
and left the matter to the Clyde District Committee. We, as a Commission,
found the Clyde District Committee willing to assist, but powerless.
It then occurred to us that the best way to achieve our purpose of
introducing women was to establish in each workshop a workshop committee
consisting of an equal number of workers and management. We explained the
scheme of dilution to the committee, leaving it to be discussed between
the men on the one side and the management on the other, all information
being given and objections, so far as possible, being met by us in the
course of the discussion. The workers’ side of the committee would then
report to a mass meeting of the workers and come back in a day’s time
to a further meeting of the committee, when adjustments, if necessary,
would be made by us in the scheme. The result was truly amazing; the men
who previously had been adamant against dilution soon realized there
was no desire on our part to force some cast-iron proposal down their
throats, and that there was a definite opportunity reserved to them as
of right for discussing matters, for eliciting information on doubtful
aspects, for pointing out and securing a remedy for objectionable
features and for introducing safeguards for the protection of their
craft. Hostility softened into suspicion, suspicion mellowed into
confidence, and confidence in time begat co-operation. Almost insensibly
the scope of these committees widened by general consent, and other
workshop grievances, apart altogether from dilution, were submitted for
discussion and disposed of in the same amicable way. The engineering
employers on the Clyde wholeheartedly supported the scheme, and a number
of them voluntarily took the initiative in enlarging the sphere of
matters to be discussed. It should not be forgotten that this was in one
of the most revolutionary districts of the country, where for their own
purposes extremists had been long fomenting workshop grievances. When
those grievances were remedied in this way there was very little left for
the extremists to turn to their own ulterior ends, and the Clyde settled
down. After the Commission was dissolved in October 1916, by the Ministry
of Munitions, which did not like to see an outside authority doing
successfully what it had previously failed to do, the influence for good
of these committees rapidly declined under the hard hand of bureaucratic
control.

At first I had entertained fears of Trade Union hostility to workshop
committees, because local delegates are apt to think that the discussion
of workshop grievances is a matter entirely for them, which, if
appropriated by a workshop committee, may impair the necessity for
their official existence. This difficulty, however, we surmounted in a
very simple way. The committee consisted as a rule of seven or eight
members elected by the workers in the shop, and an equal number of the
representatives of the management. Notice of any meeting of the committee
and of the agenda before the committee would be sent to the district
delegate of the Union concerned, who would be invited ex-officio, if he
cared, to attend and take part in the proceedings. As a rule the delegate
invariably did attend, and his presence was most helpful.

In the course of six months’ work the Clyde Commission established nearly
200 workshop committees which met each week, and had the satisfaction
of seeing them dispose of workshop grievances and other works disputes
in a harmonious, business-like and effective manner. It produced the
best possible feeling among the men; they felt—as many of them told me
personally—they were no longer under the heel of the foreman, but had
an opportunity of putting their complaints fully before the management,
being called, of course, as witnesses by the workers’ side of the
committee. They felt, they said, that their labour was being no longer
treated as merely raw material in industry, and that they had at last
attained a human status. This, however, we did insist upon, that a worker
had to go through the constitutional shop procedure for disposing of his
grievance before it could be brought up at a meeting of the committee; in
other words, if shop procedure provided for the question being dealt with
by the foreman with an appeal from him to the manager, that it should
be exhausted before the committee could take the matter up. In the same
way the worker had to exhaust his Trade Union procedure, reporting the
matter, it may be, to his shop steward, who would follow the progress of
the controversy in the accustomed manner.


Executive Management a Matter for Employers

The cause of what I hope is only a temporary stoppage in the progress
of Joint Councils and Works’ Committees is due to the fact that extreme
sections of Labour have taken the view that these Councils and Committees
seriously interfere with their projects of bringing industry to an
end, so as to enable the workers to acquire control of it, and have,
therefore, instigated the workers in certain districts to advance demands
going to the very root of the employer’s right and responsibility to
manage his business, which do not admit of discussion. The employers
rightly have objected to this. But for the way in which moderate workmen
have unwittingly lent themselves to these tactics, there is no doubt
that the scheme for Works’ Committees would have made greater headway.
To give an actual illustration: One of our mammoth liners, in shipyard
after being repaired, required a few hours’ overtime on the part of six
fitters to enable her to go to her home port to load for departure. The
fitters refused to work overtime until the matter was discussed between
their shop steward and the management; a discussion took place, the
former would not agree, and insisted on convening his workshop committee
in a couple of days. The ship was all this time being detained, and
eventually had to sail, as she could wait no longer, but as a result of
the delay, she missed the tide at her home port. While a limitation on
the total amount of overtime to be worked per working week is a matter
for legitimate agreement between management and men, when and how the
overtime is to be worked is obviously a question for the management.
The Whitley machinery is admirable, but however excellent it may be, it
can do nothing unless there is the right spirit on both sides—a spirit
of compromise and mutual endeavour to arrive at some fair and equitable
basis of self-government, leaving it to the employer to manage his works
in accordance with the principles that have been agreed. Labour cannot
seek to settle the principles by negotiation, and in addition manage the
works. No employer claims to dictate what the principles shall be.




CHAPTER XXVI

THE RIGHT RELATIONSHIP BETWEEN EMPLOYERS AND EMPLOYED

1. CONTENTMENT IN INDUSTRY

    (_c_) Remuneration of the Worker—Uniform National
    Wages—Wage-Relationships among the Workers—Wages and the
    Community—Are Higher Wages Practicable?—The Settlement of
    Wages—Systems of Remuneration—What is a Fair Wage?—Other
    Essentials to Industrial Contentment.


(_c_) Remuneration of the Worker

Contentment in industry depends next on a sound and equitable policy
for remuneration of the workers. That implies the summary rejection of
all attempts to fix wages on abstract formulae which pay no regard to
the circumstances of an industry, or conditions affecting the marketing
of the product. If we adopt socialistic nomenclature and call the
remuneration of the workers “pay,” and assume elimination of the private
employer, and each industry conducted under “democratic control,” even
then the gradation of pay between different classes of workers, the
rate of pay of each class, the relation between the general standard
of pay in one as compared with other industries would depend entirely
on the same circumstances as now, and, if the concrete results of past
industrial experience are to be disregarded, would be in each case a
matter for experimentation, and for practical adjustment and not for
pseudo-mathematical solutions.


Uniform National Wages

One of the demands of workers in many industries which, before the war,
paid in different districts rates of wages varying according to local
economic circumstances, is for uniform national wage rates. This is a
result of the war. There was, during the war, no time to consider the
wage-circumstances of individual works—the pressing need was munitions at
any price—hence Government Departments responsible for production were
compelled to treat wages in industries under their control, especially
those in which there had been no pre-war defined district practice,
on a more or less uniform national basis. Thus, substantially the same
standard, as distinct from minimum, rate of wages for the same grade of
workers came in time to operate generally throughout the country, in all
works in a particular munitions industry. In some of the more highly
organized industries the addition of the same war advance preserved
district differentials of the same pre-war nominal amount, but the
pre-war ratios of the district wages to one another were greatly reduced.
So workmen in a particular district, where, for economic reasons, wages
had been lower than in other districts, found themselves on much the
same wage-level as workmen in the highest pre-war rated district. A
difference of 5_s._ between 35_s._ and 30_s._ per week is very different
from 5_s._ between 80_s._ and 75_s._ Naturally, the worker will not
willingly surrender that position; hence the claim to-day in many
industries for standard national rates. It is an impracticable demand
under ordinary commercial conditions, save in exceptional cases where you
have one employer running all works in an industry, as the Government
did munitions during the war, or different employers each possessing
balanced undertakings which comprise establishments both above and below
average efficiency. The demand for standardization is illustrated in the
railwayman’s wage settlement; numerous classes of men (excluding drivers
and firemen) previously in railway service have been reduced to a small
number of grades, and the individual in those grades receives, generally
speaking, one of three descending national rates of pay according as his
work is in the London area, one of the provincial towns, or in a rural
part of the country. Sailors’ and stokers’ wages are also standardized,
the same rates of pay for the same class of man being paid in vessels in
the same trade category. It is obvious, however, that neither railways
nor shipping nor docks are analogous to industries consisting of an
enormous number of widely different concerns. On the other hand, it is
quite practicable to have uniform national conditions of employment,
overtime, night-work, Sunday-work, etc., and in many industries there is
such national uniformity.


Wage-Relationships among the Workers

The war destroyed the delicate pre-war wage-relationship between the
different classes of skilled, semi-skilled, and unskilled labour—in some
cases the new relationship is a complete inversion of the old. This was
partly the result of Government Departments concerned in production—the
Admiralty, War Office, Ministry of Munitions—advancing wages of men under
their control independently and without reference to one another, in
some cases actually enticing men to their employment; partly of strong
sectional Trade Union pressure, and partly of the celebrated 12½ per
cent, bonus to time-workers, and 7½ per cent. bonus to piece-workers.
Since the war, the want of balance has been aggravated by the action of
employers and Trade Unions in industries supplying a national necessity,
e.g. building, whereby wages were so raised that unskilled men were
paid more than skilled men in a trade like engineering. There is no
more active cause of industrial discontent. As an illustration of how
it operates, at the Dockers’ Inquiry, the Transport Workers’ Federation
protested against any comparison between dockers’ wages and those of
other workers—they termed it a “capitalistic device” to deprive dockers
of their rightful advance. The Transport Workers were members of the
Triple Alliance; the railwaymen were also members. A few weeks later the
railwaymen were claiming before their Central Wages Board an increase in
wage because the dockers had obtained a minimum wage of 16s. per day. It
is therefore vital to get back to, and as far as possible preserve, the
pre-war wage relationships.


Wages and the Community

Public opinion is beginning to insist, as it ought to do, on recognition
of the interests of the consuming community, which in the past have been
wholly ignored. If an increase in wages in an industry is, and can be,
secured by an increase in price, as when the output is a necessity, the
workers in that industry benefit at the expense of the workers in other
industries, and of the consumers generally. In other words, the public
pays, as in the case of housing. If an all-round increase in wages in all
industries is financed by a general increase in prices, then all prices
are higher, and the commodity purchasing power of the increased wages is
no greater than that of the wages before increase, and again the public
suffers from the general rise in prices. Already a beginning has been
made in recognizing the interests of the community in placing public
representatives upon the Railway National Wages Board.


Are Higher Wages Practicable?

It is essential to realize the practical difficulties in the way of
the workers getting the higher wages which all would like to see them
receive. There was a Census of Production in 1907 which included all the
manufacturing industries and mining, and covered half the wage-earners
in the United Kingdom. It ascertained the “net output” for each industry
for the year by estimating the selling value of the gross product, and
subtracting therefrom expenditure on raw materials, including the product
of other industries which were further worked up, and fuel and some other
items. The net output thus obtained is obviously for each industry the
only fund from which first, wages, salaries, interest on capital, rent,
royalties and profits are, or can be, paid, and secondly, taxes, rates,
depreciation, advertisement and sales expenses. Professor Bowley, in his
_The Division of the Product of Industry_, Oxford: Clarendon Press, 1919,
takes the total net output of £712,000,000 for the industries covered
by the Census of 1907, and works out how much of it should be allocated
against the first set of items. I set out below in tabular form his
results (pp. 37 and 52):

                                                     £.       Per
                                                              cent.

    Wages                                       344,000,000     58
    Salaries under £160                          24,000,000      4
    Salaries over £160                           36,000,000      6
    Interest on Capital at 4 per cent. and rent  48,000,000      8
    Royalties                                     7,000,000      1
    PROFITS                                     133,000,000     23
                                               ------------    ---
                                               £592,000,000    100
                                               ------------    ---

Professor Bowley (p. 52) pertinently observes: “How far this 23 per
cent., or £133,000,000 together with a relatively small sum (probably
well under £10,000,000) for the salaries of managers of companies,
is an excessive or unnecessary remuneration for the organization of
industry employing 6,000,000 wage-earners and £1,200,000,000 capital,
and producing £340,000,000 wages is a question that may properly be
debated: _it is this sum that formed the only possible source of
increased earnings in this group with industries conducted as before
the war and production at its then level_” (the italics are mine).
Supposing the absurd: that in 1907 the whole of this £133,000,000 had
been taken from employers, and handed over to the wage-earners, the total
average earnings of men fully employed in the industries in question, as
Professor Bowley shows (p. 39), would have been only 41_s._ 6_d._ per
week. Supposing half of the £133,000,000 had been handed over, the total
average earnings of men fully employed (including tradesmen) would have
been 35_s._ 2_d._ per week. But even to have handed over half, would,
by reason of the great disparity between the profit-earning power per
man employed of different firms in the same industry, have resulted in
closing down many of the less profitable concerns. These figures show
conclusively that in industry, as a whole, though there may be exceptions
in certain particular industries, the ability to pay higher permanent
wages depends upon greater and more efficient production.


The Settlement of Wages

Wages and conditions of employment must always be matters of collective
bargaining between employers and employed and not for superimposition by
Government upon either or both of them. In my view, national settlement
of wages and conditions in an industry is essential to wage stability. A
national settlement does not, however, involve a uniform national wage.
Complete discussion and national settlement entail for each industry
the organization of all the employers into one effective federation,
and of all the workers, not necessarily into one Union, but into Unions
which are embraced in one executive federation. Only where responsible
representative and disciplined federations of employers and workers
exist in an industry can there be effective national negotiation of
wages questions, or in industries in which Whitley Councils exist,
between the two sides of the Council. I look forward to the time when
the organization in each industry for the settlement of all industrial
conditions will be developed into an organization consisting of
representatives of (1) employers; (2) administrative and technical and
supervisory personnel; (3) Trade Unions, and (4) consumers. Questions
affecting the industry as a whole would be settled by all four sections;
questions, e.g. of wages, by the representatives of the employers, Trade
Unions and consumers. If a wage agreement is negotiated in any industry
providing for excessive wages and therefore high costs of production and
high prices, is it to be unchallengeable when the industry is a public
necessity? There were many such agreements made during and immediately
after the war. I see no way of reviewing such agreements when once made;
all attempts by Government to do so under the Munitions of War Acts were
unsuccessful. The only practicable method of safeguarding the consuming
public is to have, as I suggest, efficient representatives of the public
present at, and entitled to take an active part in, the joint conferences
of federated employers and Unions when wages are being negotiated, as on
the Railway National Wages Boards.


Systems of Remuneration

No one can dogmatize and say what system of industrial remuneration
should be adopted, whether time, piece-work—collective or
individual—premium-bonus, bonus on output, profit-sharing, or
co-partnership. That all depends upon the conditions of the industry, its
peculiar psychology, especially its past history; it must always be a
matter for negotiation. But I am the strongest believer in a fair system
of payment by results, as being, under proper safeguards, the best for
the worker, the employer and the consumer. A steel worker or boilermaker
will swear by it; a carpenter or joiner calls it “the device of the
devil.” Hence my reference to industrial psychology.


What is a Fair Wage?

Wages are, and can only be, payment for work done and services rendered
by the “wages staff.” There must always be a maximum limit to wages and a
minimum. The employers’ maximum is a wage beyond which any advance, with
other costs of production remaining constant, would prevent the marketing
of the product at a commercial profit commensurate with the nature of the
enterprise. The theoretical minimum is a “living wage,” i.e. bare cost
of subsistence, but the Trade Union minimum wage, which is the practical
minimum in industry, is much higher than the subsistence wage. It is a
wage which in the particular industry provides for subsistence for the
worker and his or her dependants, including therein food, rent, fuel,
light, clothing, fares, Trade Union subscriptions, etc., and reasonable
enjoyment and recreation. Trade Union minimum rates for different trades
varied before the war from one another by “vocational differentials.”
A skilled man’s rate exceeded that of an unskilled man by a recognized
excess; the excess is the trade differential in respect of the skill
required of the particular tradesman, the length of apprenticeship
necessary to acquire it, the nature of the occupation and so forth. The
higher rate of the skilled man is naturally reflected, as statistics
show, in a higher standard of living. The whole problem in arriving at
a fair wage is to determine at what point, if any, between the existing
Trade Union minimum and the employers’ maximum, the wage ought to be
fixed, in justice to the workers, employers and the public.

By way of preliminary I would emphasize that no fair wage can be
fixed on any basis of a priori reasoning. It involves constructing a
theoretical household budget, adopting an empirical standard of life,
with no relation whatsoever to the normal circumstances of any section
of the industrial community, ignoring economic conditions, and assuming
that industry can or ought to pay a sufficient wage to maintain that
standard. That is the fatal method of the doctrinaire. The usual
procedure is for the Trade Unions to demand an increased wage, and swear
by all the gods that the employers can easily pay it. The employers then
assert with equal emphasis their inability to pay any increase. Sometimes
a compromise is reached and sometimes not. There should be, and indeed
is, a better method of procedure.

First, there ought to be ascertained the wages which the industry is
economically able to pay at the then prevailing market prices for its
product; we may conveniently call them “ability wages.” They cannot be
determined by picking out and assuming as typical—a frequent stratagem
of Labour—individual firms which are making substantial profits. The
industry must be taken on a national, it may be sometimes on a district
basis, extreme cases at both ends of the scale ruled out, and a proper
estimate struck on methods of accountancy, making due allowance for the
trade outlook and for all the expenses and risks present and prospective,
which, from the conditions of the industry in question, fall upon the
employers. Labour insists on the Trade Union rate of wages being paid
by all firms, whether making large profits or none at all. To consider
therefore the industry as a whole is equitable. Employers making
exceptional profits cannot be taken as norms for wages; so far as their
gains are contrary to public policy, they can only be dealt with by a
“wise and wary Chancellor of the Exchequer.” That an “ability to pay”
estimate can be prepared in respect of an industry by competent joint
accountants on a basis convincing to Labour has more than once come
prominently within my own practical experience. The great point is to
prove to the workers that they are getting a fair share of the product of
industry under its then existing conditions. It is much more important to
satisfy them on that point than to pay them a high wage. If they get a
higher wage than the industry can pay, and are not satisfied, they will
firmly believe that a still higher wage could and ought to be paid. There
is only one way to prove the equity of the wage—to put all the cards on
the table, and show the Trade Union representatives at the conference
what the exact conditions of the industry are, and what are the maximum
wages which the industry as a whole can pay.

Secondly, an exact statement is required of the wages paid in other
industries to workers comparable with the workers in the industry in
question—these may be termed “comparable wages.” They are obtainable
from statistics compiled by the Ministry of Labour, but not published in
collated form.

There are in practice two objects to achieve. First, to ensure that each
grade of worker gets a fair wage which corresponds to the “ability wage,”
and secondly, to try and keep the wages of workers in one industry in
proper wage-relationship with the wages of comparable workers in other
industries. If the existing wages are less than the “ability wages,” and
the latter are either equal to, or less than, the comparable wages, there
ought to be an advance of the existing wages up to the ability level,
and, in my view, a further advance beyond ability level towards, but
not exceeding, the comparable wages-level, if the circumstances of the
industry are such, as for example, in respect of foreign competition,
that the market price of the product can be increased by the necessary
amount. It is so essential for the harmony of industry that the wages
of comparable workers should be generally on the same level. There
is no difficulty in practice in saying who are comparable workers.
Industrial experience and tradition have firmly settled that. In the
case, comparatively rare in practice, where the level of ability wages
is higher than the level of comparable wages, other considerations
arise. Some employers contend that to pay in one industry that can
afford it a higher rate of wages than in comparable industries that
cannot afford it is to upset the equilibrium of wages in those latter
industries, and incite the workers in them to ask for the same wages
rates, thus involving a charge upon the whole or a section of the public
forming the consumers of the product of those industries with the usual
results. Other employers assert that comparable wages are the criterion
of fair wages, and as employers have to stand the risk of paying Trade
Union wages when profits are not adequate, so, therefore, employers,
when profits are exceptional, should be entitled to retain what remains
after comparable wages are paid. I do not see why the employer should be
entitled to appropriate in such a case the difference between the ability
wages and the comparable wages. In my view, if an industry is shown by a
joint cost investigation to be able to pay wages which are higher than
comparable wages, the amount of the proceeds of the industry beyond the
sum necessary to pay wages at comparable rates should be divided equally
between employers and workers and consumers—in the case of the latter by
a reduction in price. The workers thus secure a share in the prosperity
of the industry.

Some wage complexities due to the war urgently need adjustment. Flat
additions as war bonuses on piece-work or tonnage-rates are unsettling
anomalies; they should be incorporated in new piece—or tonnage—rates.
Their existence hinders output. War advances and war bonuses; which,
though originally different, are now in practice indistinguishable,
should, so far as not withdrawn, be merged into the permanent rate or
price—in one-half of industry they have already been merged—difference of
treatment only causes unrest. It cannot be too strongly emphasized that
high rates of wages do not necessarily mean high earnings—they frequently
mean no earnings and no work. Increasing the productive efficiency of
labour does increase the ability of industry to pay. Such alone is the
one sure road to higher earnings.


Other Essentials to Industrial Contentment

There should be open to the workers in this country an opportunity of
rising, that is, of transfer from the wages side to the salaried side
of the staff as is afforded by American employers. Why there should be
such reluctance among so many English employers to promote men from the
wages side I have never appreciated. During the war I had a large number
of workmen under me at the Admiralty, who, after the war, were appointed
to responsible positions on the administrative side of industry in the
establishments of some broad-minded employers, and have abundantly
justified their selection.




CHAPTER XXVII

THE RIGHT RELATIONSHIP BETWEEN EMPLOYERS AND EMPLOYED

2. CO-OPERATION IN INDUSTRY

    The Workers’ Own Resort to Co-operation—The Marxian Argument
    against Co-operation—Some Workshop Applications—The Marxian
    Fallacy of the Origin of Capital—The Marxian Fallacy of
    Value—The Need of Sympathy in Workshop Life—The Need of Strict
    Justice—The Money Value of Sympathy in Industry—The Sympathetic
    Handling of Labour a Special Art—An Illustration of its
    Successful Application.


The establishment of co-operation in industry between employers and
employed is a matter almost entirely of the mind and spirit; it depends
upon the elimination of the mutual suspicion that at present exists;
it involves the creation of confidence; it entails the dissipation of
certain economic fallacies that obsess the workers and also unprogressive
employers.


The Workers’ Own Resort to Co-operation

Labour thoroughly well recognizes the productive power of the spirit of
co-operation. In certain trades men work in squads, and the members of
the squad share in agreed proportions the total price for the squad’s
collective work. Many shops are paid on the output bonus system or on
a “fellowship” basis. Under such conditions the earnings of the squad
or shop, within the limits fixed for normal output, depend on the full
co-operation of each member of the squad or shop. Co-operation is then
recognized as a moral duty. It is almost invariably afforded without
stint, if not it is sternly exacted. Many skilled men also paid on
output are assisted by semi-skilled or unskilled “helpers” paid a fixed
time wage, irrespective of output. Although the increased efforts of
the “helpers” result in increased earnings only for the skilled men, in
general co-operation is usually forthcoming from the “helpers,” and if
not it is unconditionally demanded. There is no difficulty in identifying
the doctrines to which the workers appeal in justification of their
present attitude of non-co-operation with employers—they all come from
Marxian Socialism. They are encountered everywhere in workshop, Trade
Union branch and district committee, and form the foundations of belief
amongst industrial democracy.


The Marxian Argument against Co-operation

Though it is not possible to crystallize the Marxian doctrines with
absolute precision of language into a few lines of print, they may be
stated in simple words, with tolerable accuracy, as follows:

    “Production is the process of applying labour-force to raw
    material, and the exchange or market value of the commodity
    which is the product is created by the labour-force expended by
    the labourer in working. That value, which solely results from
    the labour so expended, is measured by the time occupied by the
    labourer upon the production of the newly-created commodity in
    question. The labourer is paid by his employer a wage which
    represents the ‘exchange value’ of his ‘labour-force.’ But the
    employer has obtained the ‘use-value’ of the labour-force,
    and disposes of the newly-created product in the market at a
    selling price which, after making allowance for the costs of
    production before and after the application of labour-force,
    is higher than the wage paid to the labourer. The excess is
    ‘surplus value.’ This surplus value in primitive industry is
    appropriated wholly by the employer, but in industry more
    highly developed is apportioned out among the different
    classes of capitalists in the shape of ground rent, interest,
    manufacturers’ profits, and commercial profit.”

In the doctrines of Marx there are three fundamental propositions: the
first, that money is the primary form of capital; the second, that the
value of a commodity is measured by the amount of labour expended upon
it; the third, that the capitalist buys the use-value of a day’s labour
in exchange for its market value, pocketing the surplus value, which is
the difference. As long as we allow these theories to remain victorious,
industry to-day is merely a process by which the capitalist constitutes
himself the conduit-pipe to the sale-room for the workman’s labour, and
as the latter passes through his hands filches for himself the “surplus
value.”


Some Workshop Applications

As I write I have beside me a mass of leaflets, pamphlets and writings,
which came into my possession during my recent industrial work, all
reeking with this pernicious Marxianism. Some extracts from the _Red
Catechism_, handed to me by way of argument in a shipyard, will give an
idea of the doctrines:

  Who creates all wealth?            The working-class.

  Who are the workers?               Men who work for wages and receive
                                       only a portion of what they earn,
                                       the other part going to keep the
                                       idle classes.

  Who creates all poverty?           Our capitalistic society.

  What is a wage-slave?              A person who works for a wage, and
                                       gives all he earns to a capitalist.

  What proportion does a wage-slave  On the average about a fourth.
    receive of what he earns?

  What is an exploiter?              One who employs a man and makes him
                                       produce three or four times the
                                       amount he receives in wages.

  How do capitalists become rich?    By employing labour and exploiting it.

  The question of merit does not     No. It is only used as a hypocritical
    enter into the reward of           subterfuge to hide the robbery of
    capital, then?                     labour.

These are only a few quotations, the list could be amplified enormously.


The Marxian Fallacy of the Origin of Capital

The Marxian proposition that money is the first form of capital is a
discordant and disruptive delusion. Marx declared that all capital was
derived from the profits obtained by paying labour less than the value
it created. On this hypothesis the capitalist assists in no way in the
business of production. He is in the position of reaping what he has not
sown. He is a bandit who holds up to ransom the whole world of workmen.
He lets labourers off with their lives, that is to say, with wages just
sufficient for their subsistence and the reproduction of their species,
thus securing the maintenance of a supply of labour, on condition that
the labourers hand over to him practically the entire value of their
labour. As long as such doctrines are taught to the young worker and are
accepted by the old, of what good is it to prate about co-operation? It
is about as sensible to advocate co-operation between a host and its
parasite, between a vampire and its prey, between a highway robber and
his victim. Yet that is the vain task on which so many eminent persons
are now wasting their eloquence.

The first essential is boldly and openly to challenge this Marxian
doctrine of the parasitic character of capital. There will never be,
there cannot be, co-operation between capital and Labour until Labour has
learned what capital is and the function it plays in production. Labour
is ready to learn. I have found it possible to sustain the interest of
workmen while explaining that capital consists primarily of things that
are not money, of goods upon which people subsist while producing other
goods, of factories, machinery, and raw material; that capital is a
definite agent in production, capable of application, not merely by the
conventional employer, but by every man; that it is something which,
when used in production, is consumed, so that he who adventures it must
possess such experience and judgment as will enable him to surmount the
risk of loss, and obtain a return sufficient to replace the capital
that has been consumed, and to recompense the lender for his thrift and
remunerate himself for the services he has rendered and the risk to
which he has been subjected. These particular aspects of capital, from
their very novelty and unexpectedness, catch the immediate attention
of Labour, so much so that in some districts the workmen, of their own
accord, arranged meetings and invited me specially to discuss with them
the character and function of capital in modern industry and the extent
to which Labour was dependent upon it.

But realities must be faced. There is no good in evading the fact that
while capital is essential and of incalculable benefit to humanity, it
can, at the same time, like any other human possession, be used so as to
cause inconvenience, injustice, distress, degradation, death. In short,
the use of capital may be socially beneficent, or it may be maleficent,
anti-social. The invariable example which the workman adduces of its
anti-social use is “profiteering” in many of its accustomed forms. It
is a great misfortune that there is no precise term in use to describe
the particular function of capital as an agent in production. Aristotle
distinguished on arbitrary principles which he enunciated, and derived
from the conditions of his time, between the natural beneficial use of
wealth, which he calls “economics,” and the unnatural abuse of wealth,
which he calls “chrematistics.” His principles are out of date, the
terminological distinction which he attempted was sound. This is what
happens always in industrial discussion: employers, thinking of the
beneficent function played by capital in production, emphasize the
dependence of Labour on capital—Labour, thinking of the anti-social uses
of capital, and reasoning from the particular to the general, retorts
that capital is the cause of all Labour’s troubles. If both employers
and workers could, by appropriate terms, get down to discussing the same
thing, there would be substantial prospect of agreement; to-day there is
none.


The Marxian Fallacy of Value

The next notion in the workman’s mind subversive of co-operation is his
idea, derived from Marx, that “the value of a commodity is the amount
of abstract human labour embodied in it.” If this be true, as so many
workmen now fervently believe, it follows that the employer contributes
nothing whatever to the value of the manufactured product, and that
the only value-producing agency is labour. In truth neither workman
nor employer creates value; both unite to perform services or produce
things which other circumstances, e.g. demand, cause to be of value, and
they do so because of that value. But the material point is that the
Marxian doctrine rules out co-operation. Logically, it implies that the
only possible remedy for the present lot of the worker consists in the
complete demolition of the present organization of industry. The worker
who accepts the Marxian theory of value, with its corollary theory of
surplus value, is a weak-kneed individual and a traitor to his brethren,
if he be cajoled for a moment into co-operating with his employer, or
if he hesitates to fight whole-heartedly for the eradication of the
employer, root and branch, from the industrial system.

The difficulty I have experienced in attacking this Marxian heresy is the
common one which confronts any opponent of a popular doctrine accepted on
faith and not on logic. A reasoned explanation of the fallacy is often
not understood, a striking refutation is regarded as an extreme instance
to which no reasonable person would ever suggest that the principle
applied. When I have put the classic case of a man who discovers a
precious stone, picks it up and finds it is worth, say, £50, and have
suggested that the labour-force exerted by the finder in reaching down
and lifting up the stone and carrying it to a purchaser cannot surely be
the sole cause of its value, the answer has at once been made: “That is a
case of raw material, and not a manufactured article.” I have then taken
the case of some manufactured article like “pigs” or “ingots.” These when
made were of a certain value, but they were put into store as against a
rising market and became, subsequently, of greater value. According to
Marx, the magnitude of the value of any commodity is determined by the
amount of the labour socially necessary for its production and embodied
in it under the normal conditions of production, and with the average
degree of skill and intensity prevalent at the time. This amount of
labour, in the case of the “pigs” and “ingots,” was the amount expended
when they were first made, but since then, without the expenditure of any
more labour, their value has greatly increased. The increase in value
cannot obviously be attributed to the addition of “abstract”or any other
kind of labour.

It is surprising how many workmen have learned quite glibly the outlines
of the Marxian value and surplus value argument, and can express it by
rote in flawless Marxian terminology. Even accepting it, as it has
been so truly described, as “the greatest intellectual mare’s nest of
the last century,” without any question it is an argument that has to
be seriously considered. It must be driven by economic education out
of the workers’ list of cherished convictions. No good will come of
treating it with flippancy, or pouring ridicule upon it. I made it my
practice to take up the argument stage by stage, emphasize what appeared
to me to be the flaws, and then finish off with a number of practical
workshop illustrations of cases where the argument fails egregiously
to hold water. To be convincing, and to drive each point well home,
takes a considerable amount of time, but it is well worth it. Few
persons appreciate the extent to which this Marxian sophistry prevents
achievement of the co-operative ideal in industry.

There is just one word of warning necessary. According to Marx, the
workman receives from the employer the exchange value of his labour-force
or power on handing over to the employer its use-value. Marx maintained,
and unfortunately in the past there has been much to add force to his
contention, that Labour in return received a wage no more than equal
to “bare subsistence” or “bare cost of production of labour-power.” In
many cases the past level of wages cannot be defended, and it would be
foolish to try and vindicate it. But this much can be said, real wages
have risen very considerably since Marx’s day, and without any overthrow
of the industrial system. Such a result is absolutely in contradiction of
his prophecy, and at variance with his doctrine. It strongly suggests the
wisdom of constructive evolution as opposed to destructive revolution.


The Need of Sympathy in Workshop Life

The power of these economic fallacies is enormously reinforced by the
injustice and want of sympathy that too often surrounds the industrial
relationship between employers and employed. That atmosphere is due to
old-fashioned employers holding fast to crude individualistic notions
of industry, to the idea that a workman is the animated machine—ἔμψυχον
ὄργανον—of the Greek philosophers—an “economic unit” without soul,
sensibility, ideals or aspirations, who still labour under the
discredited obsession that justice and sympathy are incompatible with
discipline and the firm handling of labour. Of course, justice and
sympathy can have no place in a creed where labour is merely one of a
number of troublesome items of the cost of production. Neither is shown,
neither is expected. That type of employer has never recognized that
capital, brains and manual labour fill separate and distinct rôles in
industry. He looks upon himself as the all-dominant personality and
Labour as his feudal and dependent hireling.

Now domination, or any attempt at, or suspicion of it, is quite
incompatible with co-operation; in fact, the least semblance of it in
industry will speedily kill any latent spirit of co-operation. Nor does
it matter in the slightest on what ground the domination is based or
asserted. It may be on intellectual superiority, technical experience,
organizing capacity, social standing, I care not what; it is the poison
of all industrial harmony. As soon as it appears there is straightway an
end of all co-operation in any democratic organization, and sectarianism
and strife mark the reaction that immediately ensues. Mutual agreement
is the essential basis of co-operation, both from the objective and
subjective points of view. To secure agreement there must be the spirit
to agree, and the existence of that spirit depends almost entirely on
the knowledge and belief that matters of industrial controversy will
be considered and adjusted on principles of justice and equity. My
experience of industry has left me convinced beyond all doubt on one
point—there is, deep down in the heart of the British workman, a sense of
justice and fair-play. Often it takes time and trouble to vitalize it,
to assist it in freeing itself from the tentacles of ignorance, Marxian
sophistry and revolutionary formulae which entangle it, as weeds do a
swimmer struggling to gain the surface, but in the end, if it gets a
chance, it will assuredly triumph.


The Need of Strict Justice

The unenlightened employer has not yet given it a chance. He does not
believe in its existence, nor in its efficacy as a moderating influence.
There are no conceivable circumstances, he will tell you, which Labour
will not unjustly use for its own aggrandisement, if an opportunity
coincides with power. That in the past has, unfortunately, been the
tradition on the part of reactionary employers no less than on the part
of Labour. In regard to either justification or excuse, no distinction
whatsoever can be drawn between the two. Propositions and proposals
founded on equity and reason can, with confidence, be submitted to the
workman’s sense of justice. In many instances during the war, I have
appealed to this sense of justice with signal success in shop matters
of peculiarly acute trade controversy. Even in regard to victimization
disputes, always formidable questions, productive often of almost
intractable controversy, that is to say, cases of dismissal, fine
or reducing, on grounds alleged by the men of the prominence of the
“victim” in furthering the interests of his Trade Union, or because of
alleged breaches of unwritten shop law, invented, it would be said, by
some vindictive foreman. When masters and men have failed to adjust the
difference—the former taking their stand on “their right to maintain
discipline,” the latter on their duty “to protect their Trade Union
interests”—I have invariably found it possible to settle the dispute by
getting down to principles of fair-play. If the workman who has been
“dealt with” was a shop steward, and was really using his employer’s time
for doing his Trade Union branch work when he might and ought to have
been doing his shop work, the men have accepted the position that, after
notice, the employer is entitled to take exception to that procedure.
On the other hand, if he has only been utilizing for Union business the
many periods of time which occur in the best organized shops when he is
“waiting for work” or “standing by,” and has done it in such a way as not
to interfere with his shop work, then the men claim that he has only done
what he was entitled to do, and that an employer who objects to him doing
Union business under such circumstances is really out against the Union.
Most fair-minded people would probably draw the same inference.


The Money Value of Sympathy in Industry

There are to-day many employers, managers, under-managers, and foremen
who still act on the dogma that there is nothing to be got out of the
sympathetic handling of labour. “It’s so much cutting air,” more than one
has said to me. If an employer of this type honestly believed there was
money in it, he is far too keen a business man not to try it. But to many
employers Labour is still only a machine which, as long as it runs in any
sort of way, is to be left severely alone; when it jerks or sticks it is
to be lubricated with smooth words, professions of the employer’s anxiety
for its welfare, “soft sawder,” for which the men, naturally, have the
utmost contempt.


The Sympathetic Handling of Labour a Special Art

A very large number of employers have not realized yet that the
sympathetic management of labour is a special art, calling for peculiar
qualities of temperament and tact. Until that is accepted as sound
economics there can never be co-operation. Technical experience is
the usual qualification required of a foreman, seldom, if ever, is
the least regard paid to his ability to handle men sympathetically
so as to get the best out of them. Yet that, much more than technical
capacity, contributes to workshop efficiency. There are many persons
wholly unfitted by nature to have the charge of men, more especially to
perform the responsible duty of taking on and discharging them. Their
presence in a shop is a chronic source of irritation, and keeps the
men’s backs perpetually up. Co-operation, under such conditions, cannot
exist. An outsider entering the shop can feel the strained relationship
almost intuitively. A sort of nervous tension seems to pervade the
place. No cheery words are exchanged between men and manager, as the
latter passes through the shop. A notice is often found in the office:
“Workmen must wipe their feet before entering.” As a workman said to me:
“No such direction is given to anyone who comes to place an order,” How
much better to say to every one, “Please wipe your feet.” If a workman
wants to see some one in authority he is kept hanging about, losing his
piece-work earnings, or is brusquely told that the manager is engaged,
while all the time he sees customers admitted with welcome to the office.
One manager frankly told me that but for his clerk, who artfully got rid
of the workman always wanting to see him, he would never have had any
time to do his business. That indicates the attitude of mind that good
employers are fighting against. It is not considered by unprogressive
employers any part of the recognized duty of a manager to apply sympathy,
understanding, and tact to the treatment of Labour. There is no doubt
it requires very great time and patience and prolonged study and
investigation of numerous circumstances which are on the surface trivial.
A manager is often loath to devote to work of that kind time and energy
which he thinks, and which many employers certainly think, can more
profitably be spent in technical and commercial activity.


An Illustration of its Successful Application

But assuming that management will accept the teaching of the best
employers that the sympathetic handling of labour is an employer’s duty,
and, apart from that, is good business, the problem then will be how to
make and sustain such an appeal to the worker that he will be induced
to co-operate with the management. A similar problem confronted myself
during part of the war period when, as Director of Shipyard Labour, I
had charge of the labour in some 2,500 firms, employing something like
one million men. Output had to be secured and maintained at all costs,
so when any trouble occurred my Department had to intervene if the
management and men failed to come to a speedy settlement. When forming
the Department I gathered together a small band of enthusiastic and
far-sighted employers and Trade Unionists, and in conjunction we made a
determined and intensive effort to get right down _au fond_ and strike
the chords in industrial human nature, on whose vibration co-operation
is dependent. Some simple principles were formulated, which, later, as
experience grew, were modified in detail. These were made the basis
of the appeal, not merely in mass meetings, Trade Union lodges, and
elsewhere among the men, but also, with the assistance—and it was loyally
given—of the employers, carried into daily workshop practice. At the
time when these principles were first put into operation, there were
close on 200 strikes a week in the 2,500 firms. After a twelve-months’
regime the strikes which had fallen regularly, month by month, came
down to under ten a week. Some employers denied that the principles had
anything to do with the diminution of strikes. One of the most prominent
described them as “so much pap.” But the Trade Unions took a different
view, and I hold many personal letters from some of the principal Unions
attributing the whole of the improvement to the sympathetic regime that
had been put into operation—it was really nothing more than carrying
sympathy and strict justice into all the details of workshop life. Far
be it from me to suggest that any State department, without executive
responsibility, can run labour as well as a private employer who has
that responsibility; the point is that enormous improvement in the
co-operative spirit between employers and employed can be effected by the
adoption of a well-developed _methodized_ system of handling labour based
on sympathetic principles.

Co-operation is a vital essential for the reconstruction of industry.
It is the true antidote to revolution. It will only be forthcoming
in industry when sound economic conviction operates in an atmosphere
and environment of justice and sympathy. As long as economic fallacy
is allowed to permeate the minds of employers and employed, leading
them to reject or belittle the material advantages of co-operation by
representing it as inimical to their respective interests, and as long
as the want of sympathy and justice continues to feed that fallacy,
co-operation will never emerge as an integrating force in industry. The
remedy is, therefore, obvious.




CHAPTER XXVIII

THE RIGHT RELATIONSHIP BETWEEN EMPLOYERS AND EMPLOYED

3. PRODUCTION IN INDUSTRY

    The Importance of Production—What Production Depends on—The
    Workers’ Notion of the Secret Fund—“Passing it on”—The
    Workers’ Belief in Restricted Output—Introduction of Time- and
    Labour-Saving Appliances—Payment by Results—Subdivision and
    Simplification of Process—No “Niggling” at Prices.


The Importance of Production

It is unnecessary to stress the national, the social, the industrial
need for production. That does not mean more output with no improvement
in the ratio of efficiency. It means more output accompanied with
increased efficiency and therefore lower cost of production. It is
on cheapness of output that the demands of the home and the foreign
consumer for commodities largely depend. Restriction of output means
for the community high costs of commodities, less purchasing power, a
lower standard of living; it means that there will not be available
either the wealth to finance social reforms, or the capital required
for industry, and therefore worse conditions and less work for the
workers; it means reduced export trade and adverse exchanges. Apart
from production, there is no fund from which labour can be paid, the
only fund is that consisting of the commodities and services and values
which are produced. As the fund is made greater by the joint efforts of
employers and workmen, so can the wage paid to the worker be increased.
One worker is needed to realize the goods, values or services produced by
another worker. If both increase their output as much as is reasonably
practicable, each has the maximum available for exchange, and both can
secure for themselves the greatest possible standard of living. On the
other hand, if one particular worker limits his production, say, by
one-half of its reasonable maximum, he not only injures himself and
his dependents, because he throws away the opportunity of disposing
of one-half of his labour, but he also injures the other workman
who, directly or indirectly, exchanges with him, and who would like
to exchange the whole of the goods and values and services which he
produces, but who is prevented from disposing of more than one-half by
reason of his opposite number’s selfish and stupid action. The present
national standard of living can by no human ingenuity be maintained under
to-day’s conditions of output.


What Production Depends on

Lord Weir has truly pointed out[21] that there are only four methods of
improving the volume and efficiency of our national production:

(1) An increase in intensity of effort per operative hour;

(2) An increase in the number of operative hours per individual per day;

(3) An increase in the number of operative individuals;

(4) A perfecting of methods, processes and organizations, by which waste
of operative hours is eliminated.

Accepting this as an accurate statement, which it is, of how alone output
can be increased, I wish to point out the immediate obstacles to an
achievement of these four objects. They are these:

In regard to (1)—the workman’s low conception of work, his tendency, in
many trades, to lose time, his inveterate belief in restriction of output.

In regard to (2)—the conception of organized Labour that the present
47- or 48-hour ordinary working week is a social reform with which no
tampering will be permitted, and that if in times of trade prosperity
more hours are necessary, they ought to be worked as overtime.

In regard to (3)—the insistence of the Trade Unions, in this country,
on their rigid lines of demarcation of work—in other words, on certain
work being always reserved for certain Unions, without reference to the
prevailing industrial or commercial conditions.

In regard to (4)—the opposition of the workers to the introduction of
time- and labour-saving appliances, or of payment by results—and Lord
Weir adds: the killing of the spirit of enterprise among employers,
as the result of the taxation policy of the Government; the lack of
reciprocity and co-operation on the part of the Trade Unions, amounting
to active obstruction; and bad statesmanship on the part of the
employers’ organizations.

To state these four methods in their order of relative practicability,
they run (1), (4), (3) and (2). All the obstacles enumerated above to
securing greater production by methods (1), (4) and (3), are the fruit of
unsound economic theories that have for many years past been sedulously
instilled into Labour, and are now accepted by it as part of its everyday
rule of life and conduct.


The Workers’ Notion of the Secret Fund

Foremost, in normal times, comes the erroneous belief that all the
aspirations of Labour for increased remuneration, shorter hours,
improved conditions of employment, can be satisfied to the full out of
the existing profits of employers and current production. This has been
argued incessantly before myself. It is honestly believed that all that
is necessary to liquidate the demands of Labour is to devote to that
purpose part only of the existing profits of industry, in their entirety
said to be appropriated by avaricious employers. The sole impediment
is considered to be the greed of employers, coupled with the fact that
as industry is now organized they hold the money-bags. But this error
can be exposed if the demands of Labour are reduced to a definite
charge per annum on the industry in question, and each particular
establishment involved. It can usually be shown on the actual accounts in
typical establishments, at any rate in the engineering and shipbuilding
industries, that the demands of Labour could not be met out of existing
profits. In fact, in many cases, if the whole of employers’ profits were
handed over to Labour, and Capital left without any return whatsoever,
the demands of Labour could not be satisfied to anything like the full
extent.

This delusion is one of the most pernicious in industry, because of its
widespread acceptance and its fatal results. It has been fostered by the
war conditions, as has already been explained. Employers made profits
which exceeded in many cases those retainable under the Munitions of War
or Finance Acts, and so it frequently did not matter to them what rate of
wages they paid in order to expedite work. Moreover, war advances, far
above the rate of wages, were distributed under order of the Government
Courts of Arbitration to cover the increased cost of living arising out
of the abnormal conditions resulting from the war. These war advances
were generally paid by Government, in addition to the contract price for
munitions. Thus the workman saw very high nominal rates of wages paid,
and the employers at the same time making much greater profits than they
could by law appropriate. Nothing was, therefore, more natural than
to suppose that all demands could on the current basis of output be
satisfied out of existing profits.


“Passing it on”

Accepting, as will some sections of Labour, that their demands cannot
be met out of employers’ profits on present output, the alternative
is, they say, that the manufacturer must raise his selling price by an
amount sufficient to cover the extra cost. In this it is assumed, of
course, that the rate of production remains the same. It is a fixed
idea that every manufacturer and the owners in every industry can raise
prices without any difficulty whatsoever. In discussing this delusion,
as I have frequently done, it becomes quite obvious that workmen do not
appreciate the effect which an increase in the cost of production has
in reducing the ambit of the market for the sale of the commodity in
question, or in lessening the demand for it in a specific market, with
consequential curtailment of employment, and undermining of standard
rates of wages. The regulation retort is that any trade not able to pay
proper wages ought not to live. That, of course, depends on what is
“proper,” When the wages are starvation wages, every one will agree the
industry ought not to live. When the wages, though sufficient to cover
(1) subsistence, are not sufficient for (2) reasonable amenities of life,
nor to allow adequately for (3) trade-skill, there may be difference
of opinion, according to the circumstances of the particular industry,
whether it should be maintained or not. When, however, full and adequate
remuneration is paid to cover (1), (2) and (3), it is suicidal policy for
Labour to insist on such advances in wages as must kill the industry.

In advancing the contention that if the employer cannot, out of his
existing profits, pay the advance on wages claimed, it should be added to
the sales price, workmen invariably repudiate as wholly immaterial the
resultant effect on trades other than their own, and especially on the
consuming community. If those claiming the advance are engaged in what is
inelegantly called a “key industry,” that is to say, where their output
is raw or semi-raw material for other industries, it is obvious that
any rise in its cost may inflict serious damage on both employers and
employed in the dependent industries. But the workman’s retort is “let
them pass it on.” I have had that put to me on hundreds of occasions. The
effect on the community is dismissed as quite irrelevant.

During the war, the fashion of general advances in wages to cover
increased cost of living came into vogue. The consequent reaction on
prices set up the “vicious circle” known to all economists where a
general advance in wages raises prices, thus forcing up the cost of
living, and so creating a fresh demand for a further increase in wages.
Over and over again by simple illustrations I have tried to make this
“vicious circle” clear to workmen. I have always been much impeded by
one circumstance. In the early days of the war, in certain districts, as
soon as a general advance in wages was awarded by the wages tribunals, or
conceded by Government, the various lodging-house keepers put up their
rents for rooms, or their charge for board. This was stigmatized by
Labour as “profiteering.” Arguing by analogy, the workpeople contended
that when a general rise in prices followed a general advance in wages,
it was entirely due to profiteering. It was never admitted by the
workmen that any part of the rise in prices was the natural, inevitable,
logical result of the general advances in wages, through the increase
of purchasing power operating on the same supply of commodities. War
experiences have equally confused workmen’s minds with regard to the
effect of high wages on the volume of employment. Whatever glimmering
suspicion the workmen had before the war that an advance in wages in
many industries tended directly, through increased cost of production,
to bring about unemployment, has now practically been dissipated by the
war. Time after time, I have been told that none of the general advances
in wages during the war has ever caused unemployment. The explanation,
of course, is that during the war workmen were not to any great extent
producing commodities for an ordinary commercial market, but munitions of
war for the Government, and all they could turn out the Government could
take, so insatiable was its demand.


The Workers’ Belief in Restricted Output

We come to another dangerous and widespread fallacy, the assumed
advantage of restricting output. This declares itself in many varied
forms. One of the commonest is a definite limitation on the tonnage, or
feet lineal or square of the day’s work. When the day’s work is completed
the workman, if paid on time, will frequently remain at work, but doing
nothing until the “hooter goes.” In other cases if paid on a piece-work
basis, the workman will sometimes leave the shop after his day’s work or
“stint” is finished. I have investigated cases where workmen coming on
at 7 a.m. finished their day’s work and went home by 10.30 or 11 a.m.
Other methods of reaching the same end are less open. The operative,
instead of finishing his work early and then allowing his machine “to
cut air” for the rest of the day, will with nice calculation slow down
all day long so as to spin out the allotted day’s work more or less
uniformly over the working day. Industrial experience during the war
has proved the existence, to an almost inconceivable extent, of this
latter method of limiting production. Perhaps I can best illustrate it
from some cases within my personal knowledge. In one instance some boys
straight from a board school were put on to do a simple operation from
which men had been withdrawn for more arduous duty. Working at the men’s
piece-prices, they averaged £4. 15_s._ per normal working week against
the men’s £2 10_s._ That meant the boys turned out—nor were they any the
worse for it physically—almost twice the men’s output. Women I put on
to replace men at some simple machining operations made, after a short
period of training, £6-£10 per week, against the men’s £4-£5. The women
were paid the men’s piece-prices for the operation. In another case men
who were working on piece-work, after learning of the announcement of
the Minister of Munitions that under no circumstances would piece-prices
be “cut,” speeded up their output by 120 per cent. These are only a few
selected illustrations out of a large number.[22] They are concrete
exemplifications of the appalling extent to which the false doctrine of
limiting output is rampant in industry—operative as an active orthodox
Trade Union principle.

By limiting output the workman genuinely believes that he is performing
a moral duty to himself and to his trade. He argues first, that he is
reducing unemployment by making the work go round; secondly, that he
is keeping up the value of his handicraft by putting a premium on its
application. Workmen have described to me the difference between possible
and actual production as being “their reserve fund.” Over and over
again this policy has been justified to me by reference to the action
of commercial trade combinations which pool orders and limit the output
of the works of certain of their members in order to ensure business
for other members less fortunately situated, and also by reference to
groups of manufacturers who systematically keep up prices by “keeping the
bottom in the market” through restricting the quantity of their output
that is offered for sale. The workmen will tell you in words to which
no economist can object that value is due to utility and to limitation
of supply. What he overlooks is that all that is thereby established
in practice is a minimum rate of wages, and that maximum earnings
depend on maximum output. There are many classical instances, well
within memory, where unemployment in certain trades was in fact almost
entirely abolished by restricting the output of those employed, notably
by discontinuing the then existing systems of payment by results—“blood
money” as it was called. These recollections live. But, as a matter
of fact, these instances prove nothing. They occurred just about the
commencement of a depression in trade, and, in fact, the extra cost of
production subsequently caused by the limitation of output, accelerated
the unemployment in those very trades. Still working men, like most men,
argue from particular cases of personal experience to universals.

The only way to attack the heresy is from the concrete illustration
drawn from the United States of America. There restriction of output is
not merely unknown, it is definitely repudiated by the Trade Unions.
Unfortunately, many labour intellectuals who have no knowledge of
American conditions pervert the facts and hold up to execration the
industrial organization in the United States of America. “Scientific
management,” they have told the British workman, “is merely cunningly
devised slavery in which the shackles of serfdom are so precisely
adjusted that the workman is a mere cog, helplessly and inhumanly
enmeshed in a grinding anti-social mechanism.” The average workman,
however, pays little attention to rhetoric and rodomontade, from
whomsoever it may emanate, and I have succeeded in satisfying bodies of
workmen as to the value of production by taking an American establishment
and giving the output, hours and remuneration per man per annum, or
any other convenient period of time, along with the output, hours and
remuneration per man for the same period in a comparable establishment
in England. The output will be expressed in pounds sterling of wholesale
market prices. This really does sink in. Then the moral can be driven
home. The vital truth can be shown that in a well-run establishment, as
output increases, the cost of the fixed charges per unit of production
decreases. Consequently every percentage increase in output—assuming no
“softening” of the selling price—results in a larger percentage increase
in the amount available for division between workmen and employer.
If that division is effected on equitable lines, there is an obvious
advantage to the worker. That is why the workman in the United States
of America can take home much higher real earnings than his brother in
this country. It is not difficult to satisfy the hard-headed practical
English worker that these higher American earnings are neither manna
dropped from heaven nor doles from more compassionate employers.

If there is scepticism as to the value to Trade Unions of production,
there is complete apathy as to the necessity of production for the
nation’s sake. What is wanted is to secure conviction of the need by
simple homely illustrations. The extent to which in any community
increased production conduces to plenty, and plenty to employment, good
wages, a higher standard of living, and low prices is beyond the present
ken of Labour. In other words, the proposition that the prosperity of a
country depends upon the production in the country obtains no credence
whatsoever; it is generally treated by working men as a sheer irrelevance.

On the other side of the account some reactionary employers, and
under-managers and foremen, cling to the hoary fallacy that however high
the output may be, workmen are never worth high earnings. Such persons
seem to think that the payment of high wages, even when accompanied
by high output, is a reflection on the management of the shop. They
constantly argue that high wages degenerate the workmen, and lead to
lost time. In order to reduce earnings, when they are considered to be
inordinately high, the piece-prices are “cut,” and time-allowances are
“docked.” This is a peculiarly English folly. No American employer would
dream of it. The results in England are disastrous. With the fear of
having his trade-prices reduced, the workman will not “go all out,” but
will limit output and maintain his earnings at such a figure as he thinks
will not stimulate the employer to reduce prices or time-allowances. In
commencing a piece-job the operative will deliberately go slow so as to
get a high price fixed, and thereby allow for any future cutting. The
employer ought to know that the more jobs that pass through or over a
workman’s machine or bench in the shift or working day the greater is the
number of jobs over which standing and fixed charges and the invariable
portion of the working costs are apportioned, and, therefore, the smaller
is the debit on each operation and the lower is the cost of production.
If the employer can get high production, it is to his direct interest to
allow high earnings for it. This is well accepted by American employers,
and represents normal shop practice in the United States of America.


Introduction of Time- and Labour-Saving Appliances

Anyone acquainted with industry in the United States of America and in
England cannot fail to notice one further striking contrast. In the
United States of America time- and labour-saving appliances, machines and
methods are being continually put into service by employers, and loyally
operated by labour. It is recognized as being in the joint interests
of them both. It clearly is. Anything that results in a net reduction
of output-cost, after allowing for extra interest and depreciation,
benefits not merely employers, but also employed. In England, however,
workpeople seriously regard time- and labour-saving devices as inimical
to their interests, and subversive of trade-rights. It is contended that
the introduction of such devices leads to the displacement of labour
and to unemployment. In this connection labour has learned nothing from
experience. Improved machinery has enormously bettered the worker’s lot.
In the United States of America the resultant reduction in output-cost
is admittedly the reason for the much higher real wages of American
workmen as compared with their English and Scottish confrères. Nor
has it led to unemployment in the United States of America. There is
no reason why it should do so even temporarily. The introduction of
time- and labour-saving appliances is always a gradual process in any
factory. Ordinary foresight and organization by an employer ought to
enable any men displaced still to be retained in employment. But many
English employers have impeded the introduction of labour-saving devices
by haggling over the readjustment of piece-rates in respect of the
installation of machines giving improved output. The American employer,
on the other hand, tries, after allowing for the costs of the new
machine, to maintain, as far as possible, the old piece-rates, with the
result that the workmen’s daily earnings are increased by its use. The
English employer is inclined to think that he is justified in reducing
piece-rates so long as the workmen’s daily earnings are maintained. It
is unnecessary to point out which policy is most likely to attract the
wage-earner to the use of improved machinery.


Payment by Results

Nothing in industry is surrounded by so much confusion and ignorance,
both among employers and employed, as the question of payment by
results. The value of this method of payment in promoting production is
indisputable. I have many actual cases in mind where the introduction of
piece-work in place of time-work resulted in an increase of output up
to 110 per cent., thereby materially reducing the cost of production.
Yet while in some trades, for example the cotton trade, the operatives
refuse to work on any basis other than piece-work, in other trades,
for example carpentering and many sections of engineering, piece-work
is considered a “pestilential system” [_sic_] tending to unemployment,
degradation of the worker, and untold evils. It is in regard to payment
by results on the premium bonus system that the greatest misconception
prevails amongst both masters and men. That is a system under which a
time is fixed for each job. If the job is done in less than the fixed
time, the time saved is divided in a definite proportion between employer
and worker—generally half and half in England—and the latter paid for
his portion at his ordinary time-rate. The system has provoked in this
country, unlike the United States of America, the greatest animosity on
the part of the Trade Unions. Their point is that on a piece-work basis,
where the man is paid a definite price for each article or operation,
the more he does the more he is paid. For all time he saves in finishing
an article, he receives the full benefit, the employer’s benefit being
the lower cost of production resulting from increased output. What right
then, it is argued, has the employer, like a parasite, to make anything
out of the time which the worker saves on the premium-bonus system. The
argument is plausible, but misleading. It entirely overlooks the fact
that under a piece-work system, where the workman is paid for all the
time saved, prices are necessarily fixed on a much less liberal basis
than time allowances on a premium-bonus basis. In the latter case, just
because the employer gets a share of the time saved, he can adjust the
rate generously, or as rate-fixers put it, “fix the price loosely.”
If production is to be furthered in this country, the whole system of
payment proportioned to output must be lopped free of its perversion by
certain employers, and emancipated from the prejudice of Trade Unions.
When displayed intelligibly in its true economic characteristics, the
system will speak for itself. The actual rates to be fixed under any
particular system are, of course, a fair matter for collective bargaining.


Subdivision and Simplification of Process

An idea is commonly encountered among the rank and file that to keep
up the labour costs of every operation or job is the best way to
maintain the general value of the labour of the operatives concerned. An
illustration may be taken from the engineering industry. In engineering,
as is well known, England was the pioneer. The practice in the early
days was for a skilled turner or millwright, or other craftsman, to
undertake a job, perform all the necessary machine and bench operations,
and carry it through to completion. Later, as work increased in volume,
and still later in diversity, there gradually evolved a differentiation
between the turner and the fitter, and in more recent times, between
turners and fitters and other kinds of engineering craftsmen. But the
essence of the business was that every person concerned in the work
should be a tradesman, or skilled man. In recent times, the employers
succeeded in establishing “their right”—which is now being questioned—to
promote unskilled men, perhaps shop labourers, to work certain classes
of machines, capstan and turret lathes, etc. These men were graded as
machinists, and when the trade became organized generally received
about three-fourths of the skilled turner’s rate. They were designated
“semi-skilled” men. The point to be observed is that any operation
among the many thousands that constitute skilled work is deemed to be a
“skilled operation,” performable only by a skilled man, and if in special
circumstances it is undertaken by any other person, supposing such an
improbable case, it carries the full skilled rate of pay. Very similar,
but somewhat less rigid, conventions exist in regard to semi-skilled
work. The inflexible way in which the engineering Unions enforce these
trade practices has certainly reserved exclusively for skilled men a
large sphere of work, but it keeps up production costs, and retards
development of the industry. Whenever a new and improved machine has been
introduced, a machine, say, of a type where the skill was mainly in the
machine, and no longer to anything like the same degree required of the
worker, there has been a constant struggle between the Unions and the
employers as to whether the machine should or should not be operated by
a skilled man. Sometimes the employers have won, sometimes the Unions—it
is a pure question of relative strength. But the obvious waste of skill
in employing one skilled man on one of these machines when he could
manage two or more, and the payment of the skilled rate, all added to the
prevailing limitation of production, have discouraged English employers
from installing up-to-date appliances and so cheapening production.

This is not all the story. In the United States of America the invariable
practice is to subdivide every job into its simple constituent
operations, allocate each simple machine operation to a machine expressly
designed, or “set up” or “rigged” for that special operation, and
capable of being tended by an unskilled person after a small modicum of
training. So also in regard to non-machine operations, that is to say,
assembling or fitting. Each operation is allocated to a special person,
in the first instance probably quite unskilled, who becomes proficient
and efficient at this one line of work. There is little or no haggling
about the remuneration of these unskilled operatives. The volume of
production and the consequent ability to pay high wages obviate that. It
is never contended by the Machinists’ Union that all of these subdivided
operations must be done by skilled men, and by them only. Yet in England
it is practically a rule that no man in a Union engineering workshop may
lift a file and do the smallest amount of “rough” filing unless he is a
skilled fitter.

It is a platitude to insist that the natural and efficient evolution of
industry involves subdivision. It is, in fact, the governing condition of
efficiency and low production cost. It is equally evident, from American
experience, that there is nothing in subdivision really hurtful to the
skilled men, their trade, or their standard of remuneration. Subdivision
in the United States of America has led to an enormous output. All
the vast number of machines in service must be set up, repaired, and
periodically overhauled. Only the skilled men can do that. The machine
“tenders” or “minders” must be supervised. That, again, is work for
skilled men. All the tools for the machines must be ground, repaired,
and in most cases “set up”—more work for which skilled men alone are
suitable. In short, in the United States of America, the skilled men
enjoy better conditions, a higher status, and receive greater real wages
than the skilled men in this country. The latter must be helped to
realize, and quickly, that their present policy of preserving for skilled
men exclusively each simple constituent operation now included in skilled
men’s work is detrimental to their interests, is stifling industry, and
strangling the trade of the nation.


No “Niggling” at Prices

At the same time, a stern caution must be administered to certain
employers. With labour charges forming so large a proportion of the costs
of production, some employers are constantly on the alert to pull down
wages by fair means or foul. A slight alteration is made in the method
of manufacture, or some device that would not deceive a first year’s
apprentice is fitted to a machine, and it is then claimed that the work
has become such as entitles the employer to put unskilled or semi-skilled
men on to it, or alternatively, to reduce the skilled man’s price. Sharp
practice of that sort sours the shop. It intensifies enormously the
difficulty, at present great enough, of the good employer, struggling
to reorganize his business fairly and properly on efficient and honest
subdivision lines. Present trade customs, as long as they effectively
exist, must be honoured. No employer should be entitled to vary the
accepted trade grading of the work or its accompanying rate of wages
or prices unless there is a genuine and substantial change in process
or machinery which in reality supplants the skill of the worker and
manifestly increases production.

So far as improvement of production is concerned, the difficulty first,
last, and all the time is the bitter enslavement of the mind of the
worker, and, if I may borrow the phrase, the “collective mind” of
the Trade Unions, by economic fallacy, and this must be attacked and
vanquished before any real progress can be made. The remedy is education.




CHAPTER XXIX

THE RIGHT RELATIONSHIP BETWEEN INDUSTRY AND THE COMMUNITY

    The Formation of Sound Public Opinion—The Responsibility of the
    Consumer—The Duty of the Citizen.


If too little consideration for the community has been exercised by
industry—and that is unquestionably proved in the foregoing chapters—the
community has scarcely realized its duties to the workers in industry.


The Formation of Sound Public Opinion

Industrial disputes in the long run must be decided by the force of
public opinion. In the past there has been far too great an inclination
on the part of the public to dissociate themselves from industrial
controversy as though it concerned them not. Apart from the direct
economic effect of any great strike upon the consuming public, the
community is under a definite moral obligation to try and reach a
right conclusion on the issue and to use the weight of its opinion to
secure a fair and equitable settlement. In the course of any strike of
importance immediate tribute is paid by both sides to the power of the
public. This is evidenced by the various statements of their respective
cases which emanate from each side. Labour is specially sensitive to the
control of public opinion, and is the first to realize the hopelessness
of protracting any strike against which public opinion is hardening.
Therefore, both in regard to ascertainment of facts and an intelligent
determination of the merits of each industrial controversy, the public is
laid under great obligations. It is one of labour’s chief complaints that
the average shareholder makes no effort whatever at general meetings of
his company to ascertain the facts in regard to strikes or lock-outs, or
to regulate his investments with some regard to his company’s treatment
of its workers. This complaint is justified.


The Responsibility of the Consumer

Every consumer has definite responsibilities. In the middle of last
century he was almost omnipotent, and industry’s chief object was to
meet, indeed to anticipate, his desires. His power to-day is not
so unrestricted by reason of the competition between consumers in
different nations for limited world supplies, and because of the better
organization of employers and employed. But still the consumer has
immense power, and in the interests of industry, society, and, indeed,
of the nation, he ought to realize his duties. The day has long gone
past when it was thought that all expenditure by a consumer, whether in
necessaries or luxuries, conduced alike to the benefit of trade and the
increase of the national wealth. It is now recognized that at all times
the supply of labour and raw material and capital—“the wealth heap,”
as Mr. Hartley Withers graphically describes it in his _Poverty and
Waste_—is limited. If, therefore, any consumer demands that more luxuries
be produced than necessaries, there must be fewer necessaries for those
who want them, and those at higher prices because we are expending on
luxuries capital and labour and raw materials otherwise available for the
production of necessaries. Even if at any time the supply of necessaries
exceeds the demand, that does not justify the production of luxuries.
If luxuries are demanded, capital and labour and raw materials must be
more or less permanently hypothecated for their production. If, on the
other hand, luxuries are dispensed with, then capital and labour will
be diverted to the production of necessaries, with consequent reduction
of prices and improvement in real wages of workers as the supply of
necessaries increases. As capital more or less automatically tends to
flow to whatever class of production affords the greatest remuneration,
it is really only the consumer who can control in what particular class
of production it is invested. A question will always remain: What is
unreasonable luxury? That is, of course, a question which each person
must answer for himself, but anything, as I view the matter, is a
reprehensible luxury when its production results in the consumption of
wealth or attraction of labour which is needed for more urgent national
purposes. If any consumer is in doubt, he can save instead of spend. He
can invest his savings in industry, or, if not, leave them on deposit
with his bank, which can do it for him. By this means new permanent
industries will be started, production of necessaries increased, wages
and purchasing power improved, and a definite service rendered to the
community by the establishment of undertakings which, if sound and
properly managed, will supply employment, and increase and circulate
wealth in a way the production of a luxury could not attempt to rival.
The consumer has a duty nowadays to think.

There is a much smaller supply of wealth than most persons realize,
which accentuates the duty of every person to use his income in the
manner most beneficial to the community. In his book _The Division of the
Product of Industry_, Professor Bowley shows (p. 47) that if we take the
tax-paying income for 1911 of residents in the United Kingdom derived
from home sources, viz. £742,000,000, and from it subtract (i) earned
incomes—giving no earner more than £160 per annum—(ii) farmers’ incomes,
and (iii) endowed charities, the balance left is only £550,000,000.
Subtracting from this latter figure the pre-war amounts required for
national saving and national expenses there remained only 200 to 250
millions “which on the extremist reckoning can have been spent out of
home-produced income by the rich or moderately well-off on anything
in the nature of luxury.” This sum would have been little more than
sufficient to bring the average wages of adult men and women up to a
minimum of 35_s._ 3_d._ weekly for a man and 20_s._ for a woman, which
Mr. Rowntree in _The Human Needs of Labour_ estimates as reasonable—with
prices as at July, 1914. Professor Bowley puts it in yet another way.
Before the war, there were about 10,000,000 households each containing
on an average about 4½ persons, of which nearly 2 in each household
were wage-earners. If the total home income had been divided equally
round, the average net income per family, after all rates and taxes were
paid and an adequate sum invested in home industries, would have been
nominally £153 from home income, which, if the balance of income brought
home from abroad and not re-invested abroad were also divided equally
round, would be increased to £162 per annum. The equal distribution of
income would, of course, have enormously increased prices. Professor
Bowley observes: “When it is realized that the whole income of the nation
was only sufficient for reasonable needs if equally divided, luxurious
expenditure is seen to be more unjustifiable even than has been commonly
supposed.”

The Brussels International Financial Conference said: “Above all, to fill
up the gap between the supply of, and the demand for, commodities, it is
the duty of every patriotic citizen to practise the strictest possible
economy, and so to contribute his maximum effort to the common weal. Such
private action is the indispensable basis for the fixed measures required
to restore public finances.”


The Duty of the Citizen

The principles of Labour policy which I have outlined are generally in
the direction of freedom and in its best sense individualism, looking
rather to the development in industry of co-operation than to struggle
and the use of power to settle differences and express the balance
of economic forces. But industrial freedom and individualism impose
correlative responsibilities on all citizens, especially in regard to the
maintenance of efficient social services. At first sight, any mention of
social services may appear a contradiction of the argument developed so
far. Social services to many minds are inevitably associated with relief
in the narrow sense of the word, conceived as a concession to the clamour
of Socialist theorists. In reality they are the growing expression of an
increased social sensitiveness. No State can be healthy which is based on
a foundation of hardship and suffering. Certain abuses must be removed,
and certain conditions remedied. In any advanced economic society the
State must take action, has taken action, and will in future extend its
action. The social conscience, to anyone who reads history, is a real
and growing force. But to be sound and effective it must of necessity be
based upon voluntary individual co-operation.

As things are to-day, we must recognize that State activity in social
services is in many branches ahead of the understanding of the ordinary
man. It has, through the nature of our political machinery, developed
in a specialized manner, which throws a heavy burden upon legislators
and administrators whether voluntary or official. There is a consequent
confusion, lack of co-ordination, and overlapping of effort which leads
to waste, not merely of money, but of what is, in the long run, more
important—human enthusiasm, effort and efficiency. In dealing with this
problem, the individual is of vital importance. The average citizen must
know more, take more interest, and render more service, if order and
economy are to take the place of confusion and waste. The necessity for
this individual interest is reinforced by the present financial situation.

We are, as a nation, recovering, in fact, becoming slowly convalescent,
from the effects of war-time and post-war inflation of money and credit.
We have realized that sound finance and the balancing of the Budget
are the necessary foundations of prosperity. Other European nations
are still enjoying the temporary delusive prosperity that can always
be obtained by inflation and dishonest finance. To carry the economic
argument one stage further, we must realize that the State can only carry
non-producers to the extent to which industry can obtain a surplus, after
providing for wages, interest, replacements, etc. The State cannot, by
any arrangement of taxation, loans or administrative activity, provide
an artificial standard of life, which is not earned by human individual
activity. There is, therefore, urgent need for education in finance, in
both its public and private aspects. Some of us are learning the lesson
by the bitter experience of high rates and taxes, others by the hardships
of unemployment. But out of this experience much good is coming. We
are learning the true and permanent bases of national prosperity. The
dangers of Great Britain to-day are not to be found in Red Revolution.
Democracy will fail, if it fails at all, from a lack of understanding of
economics and finance. Politicians without scruple or foresight may hold
out bribes of immediate material advantages, trusting to some juggling
of figures to enable them to redeem their promises. During the war, the
National Savings Committee, by a steady education in economics—converting
financial theories of currency, goods and services into the terms of men
and munitions—educated the general public into the social consequences
of spending and thrift. The control of national finances so established
under the patriotic stimulus and urgency of war is no less necessary in
peace.

The history of social legislation in the twentieth century is the
expression not merely of democratic pressure, but of the increased
social sensitiveness to the national conscience, awakened by individuals
of outstanding merit protesting that certain evils should no longer
exist. As the industrial revolution worked itself out, it was possible
to ascertain, by patient investigation, its weaknesses and evils, and
to provide certain remedies. Based on a steadily growing prosperity,
its record is worth reciting; a wide extension of education providing
in increasing degree an opportunity to the able men and women in all
ranks of society to develop their individuality; a general standard of
education which proved its value in increasing temperance, diminished
crime, and growing sense of public spirit, culminating in attention to
the physical condition of school-children, that in normal times would
have given every child a happy healthy childhood. In public health,
the elimination of the most dangerous infectious diseases, a steady
improvement of sanitary conditions, and an education in preventive
medicine, that can be proved by statistics to have been directly
remunerative. On the positive side, an extension of infant welfare work,
which, relying on the natural affection of mothers, and calling upon them
to develop their own individuality, has for a small expenditure reduced
the infant death rate by half. Health Insurance on a contributory basis
has lessened the sham of sickness in the wage-earner’s family, and as
the results of the quinquennial valuations of Approved Societies are
more widely known and understood, will overcome any remaining adverse
criticism. Old age pensions have removed the fear of an old age spent in
dependence on grudging relatives, or on the Poor Law, with its deterrent
associations. The treatment of unemployment has gained in efficiency and
thoroughness by the steady gaining of experience—the Labour Bureaux,
Unemployment Insurance, the use of State credits to finance international
trade and guarantee extensions of industry at home are laying foundations
of a new order—the irregular activities of voluntary organizations and
local authorities in emigration have developed into an Imperial Scheme
for Overseas Settlement. Under the existing conditions of financial
stringency, we have to consider how this burden can, in the future, be
borne. How much of the national income can, in the years immediately to
come, be devoted to services admittedly admirable in their objects? One
fact becomes clear: at all costs we must hold on to the main essentials
in the public services and keep the machinery in working order so that it
will be ready for expansion when financial conditions make it possible.
The fall in prices, resulting in a reduced cost of living, lower war
bonuses, lower cost of materials, is bringing, and will bring, even
further relief to the taxpayer and ratepayer. The adjustment, however,
lags behind the change in individual circumstances, and is the cause of
much criticism of those in authority. If, however, this policy of holding
on to essentials is to be carried out, there will have to be an increased
measure of economy—economy, not merely of money, but, in its original
Aristotelian sense, of management of a household. This can only be done
by attention to details, by a higher standard of public spirit, by which
the services in health, education, etc., are looked upon by those who
benefit as something for which they pay, and for which, in the long
run, they are responsible. If the desire for education were widespread,
there would be an immediate economy in school attendance officers, rota
committees, and all the machinery devised to block the holes in the
educational net. If the individual standard of care for health were
raised as it can be raised by such movements as health weeks, baby weeks,
etc., there would be a consequent reduction in the expenditure on Public
Health. But the largest measure of economy of the household management
type would come through a co-ordination of the activities of national
departments, local authorities and voluntary organizations. Attention
has recently been called to the advance of expenditure due to the system
of grants-in-aid to local authorities, by which local authorities are
led to spend money on the false assumption that the ratepayer will
gain something to be paid for by the taxpayer. The discrepancy between
the rating system and the tax-paying system is the root cause of many
difficulties, but a wider understanding of finance would obviate the
grosser evils.

Under our English system of government, all recent legislation has
been of specialized character dealing with specified classes, or a
particular evil. As each need was recognized, a special administration
was set up to deal with it, and we now have innumerable inquiry
officers, inspectors, officials of various grades administering Acts
of Parliament and regulations in varying ways. The whole relationship
of national departments and local authorities requires revision and
reorganization. Owing to the burden of rates on the ratepayer driving the
local authorities to rely more and more upon subsidies from the National
Exchequer, and to their refusing to undertake new burdens, social
services have been identified with departmental activity, red tape and
bureaucracy. Local government has suffered from a gradual atrophy.

Now, under pressure of financial stringency, is the time to overhaul
our social machinery. It needs the services of the best brains that the
country can produce. The problem has two aspects. First comes financial
policy. Owing to the complexity of administration, no local check can
exist on the total expenditure in any area. Inquiry is urgently needed,
on the lines of the national return known as the Drage return, setting
out for each local government area the sums paid by the local authority,
Health and Education, etc., the Poor Law, and the National Ministries of
Pensions, Labour, etc. At present the facts are not known, and, indeed,
are not available. Secondly, in administration, we need a co-ordination
of investigation and inquiry, and some measure of co-ordination in the
payment of relief; at the very least, a register of assistance by which
overlapping in payments and machinery could be avoided. The extent to
which either of these movements could be successful depends almost
entirely upon local interest. Any scheme set up by Government would
but add to the general confusion. Economy in this sense is a strict
inquiry and attention to detail, and is a service which can only be
rendered by those of business experience and ability. Finally would
come a reorganization of the Poor Law, not in any spirit of hostility
to those who have done such admirable work in spite of abuse and
misrepresentation, but a reorganization on to new areas coinciding with
the other areas of local government, and more nearly adjusted to the
present industrial conditions.

As a social policy, the insistence on economy will seem dull, but the
comment of the old lady about husbands that the good ones are dull
applies equally to social policy. The future development of social
services must depend upon the economic and financial future. No one under
present conditions can advocate fresh channels of expenditure, or the
widening of existing channels. This is not a confession of failure, or an
admission of social stagnation. We can no longer measure social reform by
the gradually increasing sums of money spent in particular specialized
services. We must, for a future as long as we can foresee, measure
social progress in the terms of the social service that the individual
is prepared to render. As a preparation we need two elements: (1) wider
economic education; (2) wider knowledge of social conditions, and the
provision for dealing with social evils. For the first the development
of the Savings Movement is a guide. Started in 1916, with the twofold
function of economic education and the provision of facilities for the
small investor, it has grown into a financial instrument of unlimited
possibilities.

In the six months ending March 31, 1922, £93,000,000 have been
invested in Savings Certificates, a sum which is more remarkable when
one considers the conditions in industry during this time. By a wise
foresight, arrangements have been made by which local authorities can
borrow from the Public Works Loans Commissioners 50 per cent. of the
money raised in the area of any local authority. In brief, this means
that £46,500,000 per annum of new capital is being saved, and made
available for works of public improvement if required, while another
£46,500,000 will be available for the repayment of ways and means
advances which will thus set free bank credits for the financing of
private trade. It is a steady regular funding of the floating debt by
money which is actually saved. As a measure of comparative magnitude of
millions it is well to point out that the total cost of Old Age Pensions
for the past financial year was £21,750,000, and the total cost of Poor
Law in the year ending March 31, 1920, was £28,500,000. This measure of
success has concealed to some extent the other function of the Committee,
viz. economic education. In the last analysis the problem of unemployment
becomes one of finance. So far as it can be alleviated by measures of
insurance or relief or emigration, taxation and rates will provide
the means, but beyond all compulsion, the individual has a measure of
responsibility. Wise spending, the avoidance of waste and extravagance,
will do more to restore the foundations of industry and credit than
any action by Government. Just as during the war it was possible to
divert goods and services from private ends to the main national need of
providing men and munitions necessary for victory, so to-day a conscious
control of individual expenditure, including a measure of personal thrift
and saving, will mean lower rates of interest, a larger amount of credit,
and a general improvement of trade and employment.

As regards the second element, viz. the wider knowledge of social
conditions, foundations are being laid by voluntary effort. In all the
big industrial areas a growing measure of interest is being taken in
social conditions. The pre-war voluntary associations are realizing
their inevitable connection with the Government Departments and local
authorities. Councils, representative of local authorities and voluntary
associations, have been formed, based, not on the Victorian ideal of the
Lady Bountiful, but on the juster, saner ideal of a common citizenship
owing service to the community. Practical steps are being taken to reduce
the chaos and overlapping in effort and money: in one place a survey
of local conditions; in another a handbook of information on the local
provision; in yet another a system of mutual registration of assistance
and relief, and finally, an investigation into the total sums spent out
of public funds in social services. Underlying it all is the personal
service rendered by social workers, as welfare workers, Guilds of Help,
prohibition officers, infant welfare workers, etc. Out of experience
has come the understanding that two types of co-operation are needed:
first, the co-operation of experts in co-ordinating questions of policy;
secondly, the co-operation of individual citizens in solving the problems
of the individual in trouble. From a wide experience of industrial
unrest there is a firm conviction that the hard cases, the unintentional
injustices, the administrative difficulties, summed up by the phrase “red
tape,” are a more fruitful source of trouble than the larger grievances.

This advocacy of personal service in many fields and in differing degrees
is not the vapouring of a social visionary, but is an expression of the
genius of our race. Every reform, every method of social advance, has
owed its existence to the enthusiasm of volunteers trying a new idea,
finding it work successfully, and then convincing others that it should
apply throughout the country. It is not muddling through, but the onward
march of individual freedom, which includes a freedom to combine and a
freedom to persuade and convince others that a new way is the right way.
The Teutonic method of social improvement by compulsion, not for its
own sake, but for military purposes, influenced English thought for a
generation. The result is seen in a development of the State far beyond
the capacity or desires of our people. The remedy is to be found, not
in a further treatment of homœopathic doses of the same medicine, but
by relying upon the natural, healthy development of the national spirit
through and in the individual.

The uncovenanted service that is needed from each member of the community
“is inspired service that is not measured in cash, about which there are
no overtime disputes, and in which time and a half or double time is
welcomed rather than objected to. And is not that the kind of service for
which the world is pining? Unless we can do away with the nicely balanced
give and take we shall not make progress in alleviating the sufferings of
humanity.” And there is an even broader vision. As against the extreme
Socialists who preach class-warfare, and try to sever class from class,
there is only one true antidote—some strong, compelling, active principle
that tends to bring together all classes, not for selfish ends, but
springing from an ever-present sense of the brotherhood of men.




FOOTNOTES


[1] This is only the number directly affiliated; there are in all 2,350
divisional and Local Labour Parties and Trades Councils.

[2] Reprinted, with additions, as _The Revolutionary Movement in Great
Britain_. Grant Richards, Ltd., 1921.

[3] A good exposition of this school of Socialism is to be found in
Professor J. A. Estey’s _Revolutionary Syndicalism_.

[4] Rt. Hon. J. R. Clynes; Messrs. J. A. Hobson, J. J. Mallon and Misses
Susan Lawrence and Mona Wilson.

[5] The shop stewards, normally, are persons elected by the men of each
craft in each department of an engineering shop to act individually, or
through a “convener” of all the shop stewards of the particular craft as
the connecting link between the men of that craft in the works and the
district delegate or district committee of the craft Trade Union.

[6] Messrs. Adamson and Gosling.

[7] Small Holdings and Allotments Acts, 1908 to 1919; The Acquisition of
Land (Assessment of Compensation) Act, 1919; Small Landholders (Scotland)
Acts, 1886 to 1919; Land Settlement (Scotland) Acts, 1919 and 1921; etc.

[8] See _Land Nationalization_, by Harold Cox, 2nd Ed., 1906. Methuen &
Co.

[9] A similar Bill was introduced in the Session of 1922.

[10] Joint Committee of Trades Union Congress, Labour Party, Co-operative
Unionists—Final Report, 1921—(Co-operative Society, Ltd.).

See also:—

    1st Report Civil Service Association. _Times_, April 17, 1922.
    2nd   ”      ”      ”        ”           ”     July 18,   ”

[11] Sir Wm. Mackenzie, K.B.E., K.C., is President.

[12] “The Geddes Committee.”

[13] In fact many railway men work more than 8 hours per day, receiving,
for the excess hours, overtime pay.

[14] The National Union of Railwaymen and the Associated Society of
Locomotive Engineers and Firemen.

[15] The principle had been agreed in January 1920.

[16] Now the General Council of the Trades Union Congress.

[17] The propriety of this disqualification has been referred by the
Minister of Labour to a Committee for consideration and report. (See
_Labour Gazette_, July 1922, p. 287.)

[18] The total value of the _effective_ allocations is £2,630,000,
inasmuch as approximately £160,618 will not ultimately be payable.

[19]

    1921. April 28. 6½ per cent.
          June 23.  6     ”
          July 21.  5½    ”
          Nov. 3.   5     ”
    1922. Feb. 16.  4½    ”
          April 13. 4     ”
          June 15.  3½    ”
          July 13.  3     ”

[20] Committee of Inquiry into the Working and Effect of the Trade Boards
Acts—_Parliamentary Paper_, 1922, Cd. 1645.

[21] Address to Glasgow Chamber of Commerce, Oct. 18, 1920.

[22] See other illustrations reported by me to the Government, p.
302, _Industrial Problems and Disputes_, by Lord Askwith.




INDEX


For convenience of reference this index is divided into Parts as follows:

    PART I ACTS OF PARLIAMENT, STATUTORY ORDERS, ETC.
    PART II PERSONS
    PART III PLACES
    PART IV PUBLICATIONS
    PART V ORGANIZATIONS
    PART VI SUBJECTS


PART I. ACTS OF PARLIAMENT, STATUTORY ORDERS, ETC.

  Acquisition of Lands Acts, 104


  Coal Industry Commission Act, 1919, 158
    Mines Control Agreement (Confirmation) Act, 1918, 157
      (Decontrol) Act, 1921, 161
      Emergency Act, 1920, 158
      (Minimum Wage) Act, 1912, 155
      Regulation Acts, 155

  Combination Laws, 46

  Conciliation Act, 1896, 142

  Corn Production Act, 1917, 89, 171, 172
      1920, 89
    Acts (Repeal), 1921, 171


  Education Act, 1918, 118
    Acts, 142
    (Choice of Employment) Act, 1910, 152
    (Scotland) Act, 1908, 152


  Factory and Workshops Acts, 142, 247


  Health Insurance Acts, 142, 178, 196, 262


  Industrial Courts Act. 1919, 142, 148, 248


  Labour Bureaux (London) Act, 1902, 175
    Exchanges Act, 1909, 142, 151, 152

  Local Authorities (Financial Provisions) Act, 1921, 197, 198


  Metropolitan Common Poor Fund (Outdoor Relief) Regulations, 1922, 198

  Mines Acts, 142

  Mining Industry Act, 1920, 159, 162

  Ministry of Transport Act, 1919, 166

  Munitions of War Act, 1915, 137, 138


  National Health Insurance Acts (_see_ Health Insurance Acts)
    Insurance Act, 1911, 109, 176, 196
      (Part II Amendment) Act, 1914, 176
      (Part II) (Munition Workers) Act, 1916, 109


  Outdoor Relief (Friendly Societies) Act, 1904, 196

  Overseas (Credits and Insurance) Amendment Act, 1921, 204
    Trade (Credits and Insurance) Act, 1920, 204


  “Peels Act,” 1825, 46

  Prevention of Employment Bill, 1919, 110

  Price of Coal Limitation Act, 1915, 157


  Railways Act, 1921, 168

  Reform Act, 1832, 47

  Representation of the People Act, 1832 (Reform Act), 47

  Regulation of the Forces Act, 1871, 164

  Relief Regulation Order, 1911, 195

  Right to Work Bills, 124

  Roads Acts, 1920, 191


  Shops Acts, 142


  Trade Boards Acts, 142, 149, 250

  Trade Disputes Act, 1906, 33, 249
    Facilities Act, 1921, 199, 200, 203, 204, 245

  Unemployed Workmen’s Act, 1905, 115, 175
      Bill, 1907, 124
    Workers’ Dependents (Temporary Provision) Act, 1921, 183, 184, 185,
        186, 196

  Unemployment Insurance Act, 1920, 176, 262
      (Temporary Provisions Amendment) Act, 1920, 181
      Act, 1921, 178, 180, 181, 183
      (No. 2) Act, 1921, 178, 181
      Act, 1922, 184, 197
    (Relief Works) Act, 1920, 191
    Insurance Acts, 109,116,118,142, 174, 183, 184, 196


  Work, Right to, Bills (_see_ Right to Work)

  Workmen’s Compensation Acts, 142



PART II. PERSONS.

  Acworth, Sir William, 100

  Askwith, Lord, 135


  Barnes, Rt. Hon. G. N., 30

  Beer, M., 48, 49, 79

  Bell, Richard, 21

  Benbow, William, 47

  Bevan, E., 254

  Blanc, Louis, 125

  Booth, Charles, 50

  Bowley, Professor, 139, 157, 274, 305

  Burns, Rt. Hon. John, 127, 128

  Burt, Rt. Hon. Thomas, 21


  Cameron, Alex. G., 63

  Cave, Lord, 250

  Cole, G. D. H., 44

  Connolly, James, 51

  Cox, Harold, 93, 105, 125, 127

  Crooks, Will, 22


  Duckham, Sir Arthur, 159


  Emerson, 98

  Engels, 73

  Estey, Prof. J. A., 43


  Farrar, C. F., 9


  George, Rt. Hon. D. Lloyd, 156, 253

  George, Henry, 50, 101

  Goodenough, F. C, 243, 244

  Goschen, Sir Harry, 198

  Gosling, Harry, 72


  Hardie, Keir, 21, 22, 27, 54

  Henderson, Rt. Hon. Arthur, 22, 23, 30, 59, 65, 67, 72, 77, 112, 254

  Hodge, Rt. Hon. John, 30

  Huysmans, Camille, 77

  Hyder, Joseph, 104

  Hyndman, H. M., 50, 52, 53


  Kindersley, Sir Robert, 200

  Kitchener, Lord, 136


  Lane, William, 98

  Law, Rt. Hon. A. Bonar, 136

  Lenin, 73, 79

  Leon, Daniel de, 54

  Lesser, Henry, 260, 261

  Leverhulme, Lord, 214

  Lloyd-Greame, Sir Philip, 204

  Long, Lord, 175


  MacDonald, Ramsay, 67, 72, 124

  McDougall, Professor, 232

  McKenna, Rt. Hon. R., 139, 240, 242

  Mackenzie, Sir Wm., 148, 168

  Mallock, W. H., 98

  Mann, Tom, 51

  Marriott, M.P., J. A. R., 126

  Marx, Karl, 49, 50, 73, 280, 251, 282, 283, 284, 285

  Miliukov, Dr., 52

  Morris, William, 50, 52


  Owen, Robert, 47, 98


  Palme Dutt, R., 74

  Plender, Sir William, 200

  Postgate, R. W., 65

  Pratt, Edwin A., 99


  Rew, Sir Henry, 174

  Roberts, Rt. Hon. G. H., 30

  Rowntree, B. Seebohm, 305

  Runciman, Rt. Hon. Walter, 156


  St. Aldwyn, Lord, 156

  St. Davids, Lord, 187

  Schuster, Col., 200

  Shackleton, Sir David, 22

  Shadwell, Dr., 41, 53

  Stamp, Sir Josiah, 94

  Stuart-Bunning, Mr., 67


  Thomas, Albert, 65

  Thomas, Emile, 126

  Thomas, Rt. Hon. J. H., 72


  Vandervelde, Emile, 65


  Wallace, Dr. Alfred R., 101

  Watson, Sir Alfred, 186, 260

  Webb, Mr. and Mrs. Sidney, 50, 76, 80, 93, 254

  Weir, Lord, 291

  Whitley, Rt. Hon. J. H., 143, 265

  Williams, Robert, 84

  Withers, Hartley, 92, 304

  Wolfe, Humbert, 133



PART III. PLACES.

  Berne (Socialist Conferences), 65, 67, 73;
    Reconstitution Second International, 65

  Brook Farm, Socialist Phalanx at, 98


  Clyde, Strikes of 1916, 52;
    Causes of, 52;
    How engineered, 79;
    Success of Works’ Committees on the, 267;
    Workers’ Committee, 80


  Geneva, Resolutions on Socialism, 67, 68


  Hollesley Bay, Farm Colony at, 127


  Kienthal Conference, 65


  Laindon, Colony at, 128

  Lucerne Conference, 67


  Minsk, 83

  Moscow, 74


  North America, Socialist Phalanx in, 98


  Paris, 65, 67, 73, 77

  Poland, 81, 83

  Poplar, Guardians, 198

  Port Sunlight, 214


  Russia, 77, 82, 83, 84, 120


  South Ockenden, Farm Colony at, 128

  South Wales, Miners’ Strike 138, 155

  Stockholm Conference, 65


  Vienna, 75


  Washington, Conference at, 238

  Wisconsin, Socialistic Phalanx at, 98


  Zimmerwald Conference, 65



PART IV. PUBLICATIONS.

  “Accountant,” 204


  “Bolshevism, an International Danger” (Miliukov), 52


  “Call,” 5

  “Case for Capitalism” (Withers), 92

  “Case for Land Nationalization” (Hyder), 104

  “Co-operative Magazine,” 40


  “Daily Herald,” 42, 84

  “Division of the Product of Industry” (Bowley), 274, 305


  “Economic Liberty” (Cox), 93, 125, 127

  “Edinburgh Review,” 9

  “Evening Standard,” 9


  “German _v._ British Railways” (Pratt), 99

  “Group Mind” (McDougall), 232

  “Guild Socialism Restated” (Cole), 44


  “Historical Sketch of State Railway Ownership” (Acworth), 100

  “Histoire des Ateliers Nationaux” (Thomas), 126

  “History of British Socialism” (Beer), 48, 49, 79

  “History of Trade Unionism” (Webb), 50, 76, 80

  “Human Needs of Labour” (Rowntree), 305


  “Industrial Democracy” (Webb), 76


  “Justice,” 53


  “Labour and the New Social Order,” 57, 85

  “Labour International Handbook,” 74

  “Labour Leader,” 54

  “Labour Party and the Countryside,” 89

  “Labour Supply and Regulation” (Wolfe), 133

  “Land Nationalization” (Cox), 105

  “Life and Labour in London” (Booth), 50


  “Nineteenth Century,” 9


  “Official Policy for reconstruction after the War,” 231

  “Organization du travail” (Blanc), 125


  “Poverty and Waste” (Withers), 304

  “Prices and Wages in the United Kingdom” (Bowley), 139, 157

  “Progress and Poverty” (George), 50, 101


  “Quarterly Review,” 9


  “Red Catechism,” 281

  “Revolutionary Movement in Great Britain” (Shadwell), 41, 53

  “Revolutionary Syndicalism” (Estey), 43

  “Right to Work” (Marriott), 126


  “Socialist,” 55

  “Socialist Standard,” 55

  “State and Revolution” (Lenin), 73

  “Sunday Times,” 9


  “Two internationals” (Palme Dutt), 65, 74

  “Times,” 9, 41, 191, 243

  “Trade Unionism and Political Action,” 29


  “Unemployment: A Labour Policy,” 118


  “Workers’ International” (Postgate), 65



PART V. ORGANIZATIONS.

  Amalgamated (Society of Engineers) Engineering Union, 29, 30, 78,
        136, 267

  American Socialist Party, Connection with Socialist Labour Party, 54


  Bolsheviks, 73

  British Socialist Party, 53, 58

  Building Trade Unions, 119


  Communist Party of Great Britain, 53, 74


  Electrical Trades Union, 77

  Electoral Labour Committee, 21


  Fabian Research Department, 54

  Fabian Society, 21, 25, 53

  Federation of British Industries, 239, 255


  General Federation of Trade Unions, 26

  General Workers’ Union, 30


  “Hands Off Russia” Committee, 52

  Harmony Community of Equality, 98

  Herald League, 25


  Independent Labour Party, 21, 25, 54, 74

  Industrial Workers of the World, 51, 55, 79

  Interim Industrial Reconstruction Committees, 143

  International Labour Organization, 253


  Jewish Socialist Party, 25

  Joint Council, 26


  Labour Party, Evolution of, 21;
    Constitution, 1900, 21, 22;
    Reconstitution, 1918, 22;
    Objects, 23;
    Membership, 25;
    Finance, 25;
    Sectarian characteristics, 27;
    Want of leadership, 30;
    General Policy, 32;
    Adoption of Socialism, 46;
    Home Socialistic Programme, 56, 85, 224, 226;
    International Socialistic Programme, 68;
    Approval of Direct Action, 76;
    Policy for Unemployment, 106, 124

  Labour Representation Committee, 21, 22, 52

  Labour Representation League, 21

  Labour Research Department, 54

  Land Nationalization Society, 101

  League of Nations, 37, 38

  Local Labour Parties, 23, 28


  Miners’ Federation of Great Britain, 44

  Ministry of Labour, The work of the, 153;
    The need of a real, 251

  Ministry of Munitions, 137


  National Council of Social Service, 196

  National Federation of Employers’ Approved Societies, 258, 260, 261

  National Guilds League, 55

  National Joint Council, 26

  National Socialist Party, 53

  National Union of Railwaymen, 30

  National Union of Sailors and Firemen, 77


  Parliamentary Labour Party, 22, 27

  Plumbers’ Union, 29

  Post Office, 99, 100


  Shipyard Labour Department, 212, 288

  Social Democratic Federation, 21, 25, 52, 55

  Socialist Labour Party of Glasgow, 51, 54, 79

  Socialist League, 52

  Socialist Party of Great Britain, 55

  Socialist Societies, 52


  Trades Councils, 22, 25

  Trades Union Congress, 21, 25, 50, 122


  Women’s Labour League, 25

  Works’ Societies, 262



PART VI. SUBJECTS.

  Administrative Staff, Capital and, 231;
    Manual Workers and, 232

  Agitation, Workers’ belief in, 216

  Agriculture, Councils for, 90;
    Government’s new policy in 1921, Repeal of Corn Production Act,
        1917, a “breach of faith,” 171;
    Government war-time control, 171;
    Joint Conciliation Committees, 172;
    Labour’s Policy for, 35, 89;
    Unemployment Insurance, 174;
    Control by Workers of, 91;
    Wages Board, 171, 172, 173, 174

  Approved Societies, National Federation of Employees, 261

  Arbitration, Industrial, under Munitions Act, 137;
    Failure of compulsory, 137;
    under Industrial Courts Act, 148, 248

  Aspirations, The Three Dominant Industrial, 222

  Ateliers nationaux, Failure of, 126


  Bolshevism, An International Danger, by Dr. Miliukov, 52;
    Repudiation of, by Second International, 72;
    The Essentials of, 73

  “Brooklands” Agreement, 1893, 146


  Capital, Marxian Fallacy of the Origin of, 282

  Capital, and Administrative Staff, 231;
    and Manual Workers, 231

  Capitalism, 38, 41;
    Alleged defects of, 95;
    Our Debt to, 93;
    Meaning of, 92;
    Socialists’ description of, 41;
    Where Reform is needed, 97

  Census of Production, 1907, 273

  Chartism, Labour’s connection with, 47

  Chief Industrial Commissioner’s Department, Absorption in Ministry of
        Labour, 142

  Citizen, The duty of the, 305

  Coal Industry, Failure of Part II of 1920 Act, 162;
    Government war-time control, 157;
    Mining Industry Act, 1920, 159;
    Pre-war conditions in, 155;
    Royalties, 163;
    South Wales Strike, 1915, 155;
    Strike of October 1920, 160;
    Strike of April 1921, 161;
    Government policy, 163;
    Sankey Commission, 158;
    Government’s action on Report of, 117

  Combinations and Monopolies, Regulation of, 254

  Committee on Production, 135, 136

  Communism, Its meaning, 74;
    First Communist International Congress, 74;
    Communist Party of Great Britain, 53, 74

  Community, Industry and, 233;
    Protection of, 248;
    Workers and, 220;
    Wages and, 273

  Competition, Labour’s objection to, 32, 58, 96

  Conciliation, Machinery for, Industry’s own, 143, 144;
    State’s, 148;
    Preferable to intervention, 247

  Consumer, Responsibility of the, 303

  Contentment in Industry, What it depends on, 256, 263, 271, 279

  Control of Industry, 58, 60

  Co-operation, Between Employers and Unions at beginning of war, 133;
    The Marxian argument against, 281;
    The Workers’ own resort to, 280;
    Methods of securing, 289

  Co-operative Movement, 24, 39, 121;
    Emergency Conference of, 25

  Cost of Living, Labour Party Committee on, 141;
    Recommendations of Joint Committee on, 114;
    Relation of Wages to, 140;
    Summer Committee on, 140

  Council of Action, 31;
    Establishment of, 82

  County Wages Committees, 90

  Currency, Inflation of, 139


  Debts, Inter-Allies, 242

  Demand for Labour, Equalization of, 256

  Demarcation of work, between Trade Unions, 29;
    Effect on industry, 300

  Democracy and Dictatorship, 66

  Depression, Policy for Present trade, 235

  Dilution, Meaning of, 134;
    “Treasury” Agreements, 135;
    How introduced on Clyde, 267

  Direct Action, Meaning and qualities of, 76;
    Labour Party’s adoption of, 80, 81;
    On the Clyde, 1916, 78

  Discontent and its Causes, 213

  Dockers’ Inquiry, 273

  Dock Strike, 1889, 50


  Educational System, Reorganisation of, 34, 118

  Electricity, Nationalization of production of, 85, 86

  Employers, Suspicion of, 218

  Employment, Dependence on demand, 126

  Employment Exchanges, 142, 151, 176, 177

  Environment, Effect of bad, 214

  Exchanges, Stabilizing the, 239

  Executive Management a matter for Employers, 269

  Expenditure, Reduction of National, 237

  Export Credits Scheme, 200, 204, 244;
    General Guarantees, 206;
    Specific Guarantees, 205


  Factory Conditions, Regulation of, 247

  Farm Colony Fiascos, 127

  Finance, Labour’s Scheme of, 121;
    Labour’s vagueness with regard to, 227;
    Revolution in Public, 36

  Financial Policy, Revision of National, 240


  General Election of 1900, 21;
    of 1906, 22;
    of 1910, 22;
    of 1918, 22

  “George Scheme,” For confiscating rent, 101;
    Argument for, 102;
    Answer to, 103

  German indemnity, 121

  Government’s normal labour policy, 142;
    Policy for present depression, 235;
    Proper normal relation to industry, 246;
    Policy with regard to coal industry, 155;
    Railways, 164;
    Agriculture, 171


  Human Relationships in Industry, Enumeration of, 230

  Human Status in Industry, Dissatisfaction of worker with, 215, 222,
        223;
    Means for conferring on workers’, 263


  Ignorance of Worker about Industry, 212

  Imperialism, 37, 38

  Improvement, Desire for, 216

  Industrial Conference, 1919, 117;
    Labour’s recommendations to, 111;
    Labour’s Report to, 59;
    Rt. Hon. A. Henderson’s Addendum to, 112

  Industrial Conciliation Machinery, Description of, 143, 144, 147;
    The Slowness of Ordinary, 263

  Industrial Research, 250

  Industrial Revolution (1780-1830), 93

  Industries and Businesses, Control of Capitalistic, 88;
    to be nationalized, 85

  Industry, and the Consuming Community, 233;
    and the Nation, 233;
    Ignorance about, 212

  Insurance, by Industry or Industries, 259;
    by State or Industry, 258;
    State, 259

  Insurance Companies, Nationalization of, 87

  Inter-Allies Debts, 242

  Internationals, The First, 65;
    The Old Second, 65;
    The New Second, 67;
    The Third or “Moscow,” 53, 73;
    Vienna or “Two-and-a-half,” 75

  International Co-operation, 37

  International Financial Conference 1920, 236, 305

  International Labour Charter, 1919, 66

  International Peace, Establishment of, 236


  Job-Finding Organization, Need of a, 258

  Joint Industrial Councils, 143, 265

  Joint National Councils, 265

  Justice, The Need in Industry of Strict, 286


  Labour Exchanges, _see_ Employment Exchanges.

  Labour, Government Departments concerned in administration of, 142

  Labour Management, Effect of relieving Employers of responsibility
        for, 138

  Labour Party, _see_ Organizations

  Labour Problem, What it is, 15;
    Solution of, 18

  Landlordism, Labour’s proposal for abolition of, 90

  Land Nationalization, 58;
    Conceptions underlying each Scheme, 102;
    different schemes of, 100;
    “George” or Taxing-out Scheme, 101, 102, 103;
    Nationalization Society’s or “State Purchase” Scheme, 101, 102;
    Socialist Confiscation Schemes, 101, 102, 103;
    Disadvantages of, 105

  Liquor Control, 87


  Maintenance of Workers, 114, 115, 118, 122, 124

  Manual Workers, Administrative Staff and the, 232;
    Capital and the, 231;
    _Inter se_, 232

  Mines, Nationalization of, 85, 86

  Municipal Enterprise, Extension of, 88

  Municipal Socialization, 70

  Municipalization of Land, 100


  Nation, Industry and the, 233

  National Expenditure, Committee on, 153, 186;
    Reduction of, 237

  National Guildism, 43, 95

  National Industries, 70

  National Joint Council, 26

  National Wages Board, 90

  Nationalization and Democratic Control, 15, 44, 227

  Nationalization, Limits within which it is practicable, 99

  Nationalization of Land, 58;
    Different schemes of, 100;
    of Mines, 85, 86;
    of Insurance Companies, 87;
    of production of electrical power, 85, 86;
    of Railways, 85;
    of the means of production, distribution and exchange, 56

  Nationalization Society’s Scheme of Land Nationalization, 101

  “New Australia,” 98

  Nottingham Glove and Hosiery Industry, 144


  Outdoor Relief, Reform of Present System, 261

  Output, Workers’ Belief in Restricting, 294


  Parliament of Industry, 254

  “Passing it on,” 293

  Payment by Results, 298

  Peace, Establishment of International, 236

  Personal Freedom, Effective, 33

  Political Power, Labour’s Struggle for, 47

  Poor Law Relief, 195;
    Ascertainment of applicant’s income, 196;
    Assistance to Guardians to carry out works, 197;
    to raise loans, 198;
    Funding the cost, 197;
    Help to poorer Metropolitan Unions, 198;
    Principles governing administration, 195

  Prices, No “Niggling” at, 301

  Problem, the Labour, What it is, 15

  Process, Subdivision and simplification of, 299

  Product of Industry, Equitable share of, 222, 224;
    Insufficient distribution, 97

  Production, Importance of, 256, 290;
    What it depends on, 256, 291;
    Obstacles to, 291, 302;
    Need for immediate reduced cost of, 245

  Profits, Limitation of Employers’, 136

  Promotion, 279

  Protectionism, 37, 38

  Public Opinion, Formation of Sound, 303

  Public Works, 123


  Railways, Conciliation Machinery of 1921, 168;
    Councils, 170;
    Government war-time control, 164;
    Nationalization of, 85;
    Pre-war conditions, 164;
    Sectional Councils, 169;
    Strike of September 1919, 166;
    The Railways Act, 1921, 168;
    Wage Agreement of March 1919, 165;
    Wage Agreement of March 1920, 166

  Reconstruction, The Vagueness of Labour’s Scheme of, 224

  Reform of Industry _v._ Reconstruction, 228

  Relief Works, 124, 127, 128

  Remuneration of the Workers, 271;
    Systems of, 275

  Reparations Policy, Reconsideration of, 241

  Right to Strike, 70

  Right to Work, Unsoundness of, 124

  Road Fund, Report on the, 191

  Road Schemes, Expedited, 191;
    1920-21 Programme, 191;
    1921-22 Programme, 192;
    Conditions attaching to Grants, 194;
    Provincial Schemes, 193;
    Special Metropolitan Schemes, 193

  Royalties, 163


  Sankey Commission, The, 158

  Secret Fund, Workers’ Notion of the, 292

  Shop Stewards, 79

  Shortage of Labour, Unsettling Effect of, 134

  Social Service, 306

  Socialism, Definition of, 40;
    Origin of name, 40;
    Basic characteristics, 40;
    First adopted by Labour (1832), 47;
    Renounced by Labour (1842-85), 49;
    Different kinds, 40;
    Revolutionary, 47;
    Earliest form, 47;
    Recent form, 51;
    Direct Action, 76-84;
    State Socialism, 42, 50, 226;
    National Guildism, 43;
    Syndicalism, 42;
    Nationalization and Democratic Control, 44, 225, 227;
    Home programme, General outline of, 56-64;
    Industry, 85-88;
    Land, 89-91;
    Criticism of, 92-105;
    International Programme, 65-75;
    Geneva Resolutions, 68;
    Socialist Organizations, Home, 52
      International, 65-75;
    Marxian Doctrines of, 280, 281, 282, 283;
    Failure of Experiments in, 98

  Socialist Confiscation Schemes, 101, 102, 103

  Socialistic Experiments, Failure of Past, 98

  Socialization, 68;
    of land and industry, 34

  Socialized Industries, Administration of, 70

  Soviets, Setting up of local, 84

  Standard of Living, 139;
    A national minimum, 32

  State Conciliation Machinery, 148

  State Control and Prices, 60

  State Ownership of Land, The Disadvantages of, 105

  State Purchase Scheme, 101, 102

  State Socialism, 42, 95;
    Era of, 50

  Surplus Wealth for the Common Good, 36

  Suspicion of Employers, 218

  Sympathetic Handling of Labour, a special art, 287;
    An illustration of its successful application, 288

  Sympathy in Workshop Life, The money value of, 287;
    the need of, 285

  Syndicalism, 42, 95

  Syndicalist Revolutionary Ferment, 1905, 51


  Tariffs, Protection, 38

  Taxation, Lowering of, 238

  Taxing-out Scheme, 101

  Time- and Labour-saving Appliances, Difficulties of Introduction of,
        297

  Trade Boards, Acts, purposes of, 149;
    Administered by Ministry of Labour, 142;
    Need of, 250;
    Cave Committee’s recommendations, 250;
    Mistakes of, 250

  Trade Facilities Act, 1921, Guarantee of Loans under, 199;
    Policy of Advisory Committee, 200;
    Difficulties of Committee, 202;
    Guarantees already given, 203;
    Beneficial effect of, 245

  Trade, Freedom of International, demanded by Labour, 38

  Trade Union, The Worker’s attitude to his, 219

  Trade Unionism, Development of, 46

  Trade Unionism and Political Action Sectarian Programme, 29

  Trades Councils, Inclusion in Labour Party, 23;
    Political Subjection to Trade Unions, 28

  Trades Union Congress, Functions of, 21;
    Labour’s Parliamentary Representation, Furtherance of, 22;
    Unemployment, joint manifesto on, 122;
    Constitution of, 25;
    Socialism, attitude towards, 50

  Training, demanded by Labour for all persons unemployed, 111;
    Women, 118;
    Young people, 119

  Transport Systems, Reorganization of Continental, recommended by
        Labour, 121

  Transport Workers’ Federation, Contentions of, at Dockers’ Inquiry,
        273

  “Treasury” Agreements, 1915, Repudiation by Clyde Engineers, 79, 267;
    Negotiation of, 135, 136;
    General failure of, 137;
    Enforcement of, by Munitions Act, 137;
    Purpose of, 135

  Trusts, Report of Committee on, 254

  Unemployment (_see also_ Export Credits Scheme; Poor Law Relief; Road
        Schemes; Trade Facilities Act), Injurious effect of, 215;
    Total prevention impossible, 126;
    Provision against, essential for contentment in industry, 256;
    What can be done, 256;
    Labour policy for, 106-123;
    its unsoundness, 124;
    Government policy for, 175-208;
    Labour’s refusal to co-operate, 117

  Unemployment after the War, 1917, Memorandum on, 107

  Unemployment Insurance, Need of proper Scheme, 257;
    Insurance by State, 259;
    Insurance by industry or industries, 259;
    Insurance by firms, 261;
    The State Insurance Scheme, 176-187;
    cost of, 208;
    Acts of Parliament, _see_ Part I


  Value, Marxian Fallacy of, 283


  Wages, Legal minimum agricultural, 90;
    and prices, increase of, 139;
    and the community, 273;
    are higher wages practicable, 273;
    in unorganized industries, 250;
    Misconceptions, as to, 212;
    Relation to cost of living, 140;
    Remuneration of the worker, 271;
    Settlement of, 275;
    Statutory minimum, 149;
    Systems of remuneration, 275;
    12½ per cent. bonus, 139, 252, 273;
    Uniform national, 271;
    Wage relationships among the workers, 272;
    What are fair, 276

  War Aims, 1917, Memorandum on, 107

  War Wealth Committee, Report of, 240

  Whitley Committee, 56, 264

  Whitley Councils, 143, 264

  Whitley Report, 1918, Labour Addendum to, 56

  Work, Workers low conception of, 217

  Work or Maintenance, 106, 111, 118, 122, 124

  Work, Right to, Bills to confer, 124;
    Unsoundness of claim, 124;
    Failure in France, 125;
    Impossibility in practice, 126

  Workers, Ignorance about industry, 212;
    and about Wages, 212;
    Discontent and the causes, 213;
    Effect of bad environment on, 214;
    Fear of unemployment, 215;
    Dissatisfaction with status, 215;
    Belief in agitation, 216;
    Desire for improvement, 216;
    Low conception of work, 217;
    Suspicion of employers, 218;
    Relationship of, to Trade Union, 219;
    to community, 220;
    Three dominant aspirations, 222;
    Relationship of, to capital, 231, 256, 263, 271, 279, 280, 285, 286;
    to administrative staff, 232;
    to one another, 232;
    _Fallacious views on_:
      Co-operation, 281;
      Capital, 282;
      Value, 283;
      “Secret Fund,” 292;
      “Passing it on,” 293;
      Restricting output, 294;
      Time- and labour-saving appliances, 297;
      Payment by results, 298;
      Simplification of process, 299

  Works’ Committees, 143, 265, 266;
    Slow progress of, 266;
    Success on the Clyde, 267

  Works of Public Utility, 187;
    _see also_ Road Schemes, Unemployment


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