B 369658
DUPL
Problems of Labor and Industry
n Great Britain, France and Italy
Report of the
European Commission
of the
National Industrial Conference Board
November, 1919
National Industrial Conference Board
15 BEACON STREET, BOSTON, MASS.
THE
BRANCH OFFICE
724 SOUTHERN BUILDING, WASHINGTON, D. C.
HE National Industrial Conference Board is a co-operative
body composed of representatives of national and state
industrial associations, and closely allied engineering societies
of a national character, and is organized to provide a clearing
house of information, a forum for constructive discussion, and
machinery for co-operative action on matters that vitally affect
the industrial development of the nation.
FREDERICK P. FISH .
FREDERIC C. HOOD
MAGNUS W. ALEXANDER
Chairman
Treasurer
Managing Director
MEMBERSHIP
AMERICAN COTTON MANUFACTURERS' ASSOCIATION
AMERICAN HARDWARE ManufacturerS' ASSOCIATION
AMERICAN PAPER AND PULP ASSOCIATION
AMERICAN SOCIETY OF MECHANICAL ENGINEERS
ELECTRICAL MANUFACTURERS' CLUB
MANUFACTURING CHEMISTS' ASSOCIATION of the U.S.
NATIONAL ASSOCIATION OF COTTON MANUFACTURERS
NATIONAL ASSOCIATION OF FINISHERS OF COTTON FABRICS
NATIONAL ASSOCIATION OF MANUFACTURERS
NATIONAL ASSOCIATION OF WOOL MANUFACTURERS
NATIONAL AUTOMOBILE CHAMBER OF COMMERCE
NATIONAL Boot and ShoE MANUFACTURERS' ASSOCIATION
NATIONAL COUNCIL FOR INDUSTRIAL DEFENSE
NATIONAL ELECTRIC LIGHT ASSOCIATION
NATIONAL ERECTORS' ASSOCIATION
NATIONAL FOUNDERS' ASSOCIATION
NATIONAL IMPLEMENT AND VEHICLE ASSOCIATION
NATIONAL METAL TRADES ASSOCIATION
RUBBER ASSOCIATION OF AMERICA, INC.
SILK ASSOCIATION OF AMERICA
THE RAILWAY CAR MANUFACTURERS' ASSOCIATION
UNITED TYPOTHETÆ OF AMERICA
ASSOCIATE MEMBERSHIP
ASSOCIATED INDUSTRIES OF MASSACHUSETTS
ASSOCIATED MANUFACTURERS AND MERCHANTS
OF NEW YORK STATE
ILLINOIS MANUFACTURERS' ASSOCIATION
HD
4851
.N28
PROBLEMS
OF LABOR AND INDUSTRY
IN
GREAT BRITAIN, FRANCE
AND ITALY
REPORT
OF THE
EUROPEAN COMMISSION
OF THE
NATIONAL INDUSTRIAL CONFERENCE BOARD
Copyright 1919
NATIONAL INDUSTRIAL CONFERENCE BOARD
15 BEACON STREET
BOSTON, MASS.
HD
4851
N28
03-9.32
Geverni de!
3.7.32-
Foreword
THE accompanying report on "Problems of Labor and
Industry in Great Britain, France, and Italy" by
a special Commission of industrialists appointed by
the National Industrial Conference Board, is the result
of first-hand observation of industrial conditions in these
countries during the readjustment period following the
cessation of hostilities. It was the belief of the Board
that such a report on labor and industrial issues abroad
would be of direct and substantial service to American
industry in the consideration of its own problems of
industrial readjustment. This expectation, the Board
feels, is amply justified by the report.
The Commission was composed of the following:
CHARLES W. ASBURY, Chairman,
Vice-President and Treasurer The Enterprise Manufacturing
Company of Pennsylvania,
Philadelphia, Pennsylvania.
S. PEMBERTON HUTCHINSON,
President The Westmoreland Coal Company,
Philadelphia, Pennsylvania.
J. LAURENCE LAUGHLIN,
Professor Emeritus of Political Economy, University of Chicago,
Boston, Massachusetts.
OLIVER S. LYFORD,
Vice President Finance and Trading Corporation,
New York City, New York.
LOYALL A. OSBORNE,
Vice-President Westinghouse Electric and Manufacturing Company,
New York City, New York.
WILLIAM H. Van Dervoort,
President Root & Van Dervoort Engineering Company,
East Moline, Illinois.
iii
In the course of their inquiries in Europe, members of
the Commission visited leading industrial centers in Great
Britain, France, and Italy, and interviewed a large number
of prominent industrialists, government officials, and labor
leaders, all of whom showed the Commission every
courtesy. An Interim Report of the European Commis-
sion was published by the National Industrial Con-
ference Board in July, 1919. The full report herewith
presented gives, in a more extended form, the essential in-
formation gathered and the conclusions of the Commission.
The report presents the findings of the European Com-
mission, and not an expression of the official position of
the National Industrial Conference Board on the various
vital subjects discussed. The Board commends the report.
to the careful reading of manufacturers and business men
in the United States, and of students of industrial problems
generally.
The report deals primarily with the fundamental phases
of the various problems discussed. At the time the Com-
mission was making its field observations, industrial
conditions in the countries visited were in a state of flux
and some changes have since occurred. The Commission
has endeavored, by correspondence, and by interviews
with prominent European industrialists who have visited
this country or with American industrialists who have
visited Europe subsequent to the survey made by the
Commission, to keep advised of the significance of these
changes.
The Board desires to express its deep appreciation of
the generous sacrifice made by members of the Commission
of their time and convenience in order to make this in-
vestigation. It would especially acknowledge the valuable
services of Dr. Laughlin, who not only carefully outlined
the plan of the investigation, but who is largely responsible
for the co-ordination of material and the preparation
of the report itself. The Board feels that American
industry is under a real obligation to the members of
the Commission for the services thus rendered.
iv
NOVEMBER 12, 1919.
The National Industrial Conference Board,
Fifteen Beacon Street,
Boston, Massachusetts.
Gentlemen: We offer to you in this book the results of our
observations, interviews, and research on industrial, and parti-
cularly on labor, conditions in Great Britain, France, and Italy.
The subject is too vast to be dealt with comprehensively or in
full detail, but in so far as we have been able to do so, we have
given the essence of the situation. Many problems suggested
by our investigations must be left undeveloped; many opinions
and convictions, which we were not able for lack of time and
opportunity fully to demonstrate by facts, must be left un-
expressed.
It is our conviction that great new forces have been let loose
on the world which will affect every phase of human life,
industrial no less than political and social. Great Britain,
France, and Italy have been earlier and more deeply influenced
by these forces than our own country, and yet the problems
on both sides of the sea are in many ways strikingly analogous.
We feel, therefore, that it is peculiarly important for American
industrialists to know more about these forces in order that
they may learn valuable lessons from European experience.
Our industrial institutions are Anglo-Saxon in character;
American industry is a transplanted British industry, developed
and made unique by the ingenuity, the enterprise, and the
daring of our American pioneer spirit. Your Commission has,
therefore, given a very large portion of its attention to the labor
problems of Great Britain. What we could learn and under-
stand of the temperament and institutions of the Latin peoples
in France and Italy, that had an interesting bearing upon the
general industrial situation, has been included.
We want to acknowledge here the honor conferred upon us
in being chosen for this mission. The results of our labors
we shall leave to justify themselves.
It is our desire also to mention the cordial and generous
co-operation which we received everywhere. Business men
and officials showed us an earnest and sincere desire to help in
every way possible. In many cases we have expressed an
appreciation personally, but we wish to make this permanent
record of it.
Very sincerely yours,
CHARLES W. ASBURY, Chairman
S. PEMBERTON HUTCHINSON
J. LAURENCE Laughlin
OLIVER S. Lyford
LOYALL A. OSBORNE
WILLIAM H. VAN DERVOORT
V
Itinerary
Two
Your Commission sailed March 1, 1919, and returned
May 18, 1919. It visited establishments in the north of
England, in Scotland, in Wales, and in the Midlands.
About April 1st the Commission went to France and
studied conditions in the industries in the neighborhood of
Paris, Lille, Douai, Lyons, and Saint-Etienne.
members of the Commission went to Italy and visited
industries in Genoa, Milan, and Turin. In each country
high officials and executive managers furnished freely all
available information on the points of inquiry, and no
difficulty arose in seeing industrial works of all kinds.
In general it was attempted to get the point of view of
government officials, of employers, and of labor leaders.
vi
1. UPHEAVAL OF WAR
2. NEW CONDITIONS
3. WAR DEBTS
4.
CONTENTS
CHAPTER I
INTRODUCTION
EMPHASIS ON LABOR PROBLEMS
5. CAUSES OF DISCONTENT
6.
7.
MODERATE AND RADICAL ATTITUDES CONTRASTED
COLLECTIVE BARGAINING
8. "LABOR NOT TO BE TREATED AS MERCHANDISE
NATIONALIZATION OF INDUSTRY
PAGE
1
4
5
23 3 + LO
9.
10.
DEMOCRATIZATION OF INDUSTRY
11. ORGANIZATION OF MATERIAL
7
">
9
13
17
18
CHAPTER II
EFFICIENCY OF PRODUCTION
1.
DEPENDENCE OF THE PRODUCER ON EFFICIENCY
20
2.
RELATIVE COSTS IN AMERICA AND GREAT BRITAIN
20
3.
RESTRICTION ON OUTPUT.
21
4.
THE NETWORK OF RESTRICTIONS
22
•
5.
RESTORATION OF RESTRICTIONS
27
6.
BONUS AND PREMIUM SYSTEMS
29
7.
PIECEWORK
31
8.
PROFIT-SHARING AND EDUCATION
34
•
9.
ATTITUDE TOWARD SCIENTIFIC MANAGEMENT
35
10.
THE COAL INDUSTRY
38
11.
EFFICIENCY IN SHIPYARDS
40
12. EFFICIENCY IN WAR WORK
42
13. CONCLUSION
43
CHAPTER III
MANAGEMENT
1.
CONFUSED TALK ON ECONOMIC PROBLEMS
44
2.
3.
LITTLE ATTENTION GIVEN TO MANAGEMENT
MANAGER A SKILLED LABORER
46
48
ix
4.
DIRECTORS AS MANAGERS
5. SCIENCE OF MANAGEMENT
6. LABOR DEMANDS A SHARE IN Management
7.
CO-OPERATION AS A SOURCE OF MANAGERS
CHAPTER IV
ORGANIZATIONS OF WORKERS AND OF Employers
1. GREAT BRITAIN
2.
EDUCATION OF LABOR OFFICIALS
PAGE
49
50
51
52
54
59
3. FRENCH LABOR ORGANIZATIONS
4. ITALIAN LABOR ORGANIZATIONS
60
•
62
•
5.
EMPLOYERS' ASSOCIATIONS IN GREat Britain
63
6.
EMPLOYERS' ASSOCIATIONS IN FRANCE
7. EMPLOYERS' ASSOCIATIONS IN ITALY
66
•
67
CHAPTER V
UNIONISM IN GREAT BRITAIN
1. PRESENT TENDENCIES OF UNIONISM
·
STRENGTH OF TRADE UNIONS.
2.
3. LINES OF DEVELOPMENT
4.
INDUSTRIAL UNREST
5. LABOR DEFINITION OF COLLECTIVE BARGAINING
6.
CONCILIATION AND ARBITRATION
7. STRIKES AND LOCKOUTS
8. ATTITUDE OF BRITISH EMPLOYERS TOWARD UNIONISM.
CHAPTER VI
EMPLOYERS' ORGANIZATIONS
1. BASIS OF THE REPORT.
2. IMPULSE TOWARD Co-operation
3. Demand for REPRESENTATIVE BODIES
4. METHOD OF ASSOCIATION
8888
68
68
70
77
80
81
84
86
•
94
94
97
98
5.
FEDERATION OF BRITISH INDUSTRIES
100
6.
OTHER ASSOCIATIONS
103
7. CONTROL OVER MEMBERS
105
8. FUNCTIONS OF EMPLOYERS' ASSOCIATIONS
106
•
9.
NATIONAL ALLIANCE OF EMPLOYERS AND EMPLOYED
111
10.
SOME OTHER PURPOSES
114
11. FRENCH AND ITALIAN ORGANIZATIONS
116
12. RESULTS
119
13. SUMMARY .
122
X
CHAPTER VII
SHOP STEWARDS
1. THE QUESTION OF OUTSide Influence
2. SHOP STEWARDS .
3. EFFECT OF WAR CONDITIONS
4. ATTEMPT TO REGULARIZE SHOP STEWARDS
PAGE
123
123
124
127
•
5.
6.
EXPANSION OF FUNCTIONS OF SHOP STEWARDS
UNION TO ABSORB SHOP STEWARDS
130
132
CHAPTER VIII
WORKS COMMITTEES
1. JUSTIFICATION OF WORKS COMMITTEES IN SIMPLEST FORM 138
2. KINDS OF WORKS COMMITTEES
139
3.
COMMITTEES AS MACHINERY FOR SETTLING DIFFERENCES
145
4.
SHOP STEWARDS ON COMMITTEES
146
5.
FUNCTION OF COMMITTEES
149
•
CHAPTER IX
EIGHT-HOUR DAY
1. GREAT BRITAIN
151
2. FRANCE
159
3. ITALY
165
CHAPTER X
MINIMUM WAGE
1. IN GREAT BRITAIN
170
2. IN FRANCE.
176
3. IN ITALY.
178
1. IN GREAT BRITAIN
2. IN FRANCE
3. IN ITALY
•
CHAPTER XI
UNEMPLOYMEnt
180
188
189
xi
CHAPTER XII
HOUSING
PAGE
1. IN GREAT BRITAIN
191
2. IN FRANCE AND ITALY.
199
CHAPTER XIII
THE CO-OPERATIVE MOVEMENT IN GREAT BRITAIN
1.
ITS SIGNIFICANCE .`.
201
2. TYPES OF CO-OPERATION
201
3. HISTORY AND PROGRESS
202
•
4.
5. ENTRANCE UPON POLITICS
PRINCIPLES BEHIND CO-OPERATIVE MOVEMENT
202
206
6. RELATIONS TO LABOR Movement
207
•
7. RELATION OF BRITISH AND RUSSIAN CO-OPERATIVE
SOCIETIES
209
CHAPTER XIV
NOTABLE EXAMPLES OF WELFARE WORK
1. THREE PROMINENT INSTANCES IN GREAT BRITAIN
212
2. SCOPE OF CARE FOR EMPLOYEES
213
3.
EDUCATION AND EMPLOYMENT OF YOUNGER PERSONS
214
4. WORKING CONDITIONS
215
•
5. WAGES AND PROFIT-Sharing
217
6. HOURS OF LABOR.
218
7.
HOUSING
221
8. A FRENCH EXAMPLE
223
9.
CRITICISM
225
CHAPTER XV
INTRODUCTION TO POLITICAL LABOR Movement
1. FUNCTION OF THE STATE.
228
2.
POLITICAL versus INDUSTRIAL ACTION
230
3. LABOR IN PARLIAMENT
231
4.
LABOR IN THE CABINET
232
5.
INTERNATIONAL POLITICAL LABOR Movement
233
6.
DANGERS OF POLITICS
233
7. PLAN OF DISCUSSION
234
xii
CHAPTER XVI
THE WHITLEY PLAN
PAGE
1.
PRECURSORS OF THE WHITLEY PLAN
235
2.
FIRST WHITLEY REPORT
238
3. SECOND WHITLEY REPORT
242
4.
THIRD, FOURTH, AND FINAL REPORTS
243
•
5.
GOVERNMENT ENDORSEMENT OF WHITLEY PLAN
244
6.
AIM OF WHITLEY PLAN DIFFERENT FROM THAT OF Works
COMMITTEES .
245
7. FEAR OF GOVERNMENTAL INTERFERENCE
250
8.
9.
GOVERNMENT AID IN SETTING UP WHITLEY COUNCILS
ULTIMATE AIM TO GIVE LABOR A SHARE IN CONTROL
253
256
CHAPTER XVII
THE NATIONAL INDUSTRIAL CONFERENCE
1. A POLITICAL MOVE
258
2.
ATTITUDE OF GOVERNMENT AT CONFERENCE
260
•
3. REPORT OF PROVISIONAL JOINT COMMITTEE
264
•
4. REPORT ACCEPTED BY NATIONAL INDUSTRIAL CONFERENCE 267
5. MEETING OF JOINT COMMITTEE, MAY 1ST.
267
6. CRITICISM OF GOVERNMENT PROCRASTINATION BY NATIONAL
ALLIANCE
269
7. CONCLUSION
271
CHAPTER XVIII
POLITICAL INFLUENCES IN FRENCH LABOR MOVEMENT
1. THE GENERAL SITUATION
2.
ORGANIZATIONS OF EMPLOYERS AND EMPLOYEES
3. FRENCH LABOR IN THE WAR.
4. METHODS OF ORGANIZED LABOR IN FRANCE
5. ATTITUDE OF GOVERNMENT TO SYNDICATS
272
275
279
282
285
•
287
6. RELATION BETWEEN EMPLOYER AND EMPLOYEE
CHAPTER XIX
THE POLITICAL LABOR SITUATION IN ITALY
1. THE GENERAL SITUATION
2.
ITALIAN LABOR IN THE WAR.
3. ITALIAN LABOR SINCE THE ARMISTICE
293
298
•
303
xiii
CHAPTER XX
THE İNTERNATIONAL POLITICAL Labor Movement
PAGE
1. THE INTERNATIONAL LABOR MOVEMENT BEFORE THE WAR 308
2. THE INTERNATIONAL LABOR MOVEMENT IN THE War
3. THE INTERNATIONAL LABOR MOVEMENT AND THE PEACE
CONFERENCE
4. CONCLUDING SUMMARY
•
312
319
324
CHAPTER XXI
NATIONALIZATION OF BRITISH RAILWAYS
1.
INTRODUCTION
328
2. METHOD OF APPROACH
328
3.
GOVERNMENT CONTROL OF BRITISH RAILWAYS
329
•
CHAPTER XXII
NATIONALIZATION OF BRITISH COAL INDUSTRY
1.
INTRODUCTION
343
2.
OUTPUT
346
3.
RECOMMENDATIONS OF THE COMMISSION
362
4. SUMMARY .
370
CHAPTER XXIII
NATIONALIZATION OF "KEY INDUSTRIES"
1. SHIPPING AND SHIPBUILDING
373
•
2.
NATIONALIZATION OF "KEY INDUSTRIES"
378
3. SIGNIFICANCE OF KEY INDUSTRIES AND KEY MEN
381
CHAPTER XXIV
PROPERTY RIGHTS
1.
INTRODUCTION
382
2. SOCIAL LEGISLATION AFFECTING PROPERTY RIGHTS PRIOR
TO THE WAR
384
3. WAR MEASURES AND CLAIMS
385
4.
DEMANDS FOR CONTROL
388
xiv
CHAPTER XXV
FINDINGS OF EUROPEAN COMMISSION
1. INDUSTRIAL UNREST
•
2. EFFICIENCY OF PRODUCTION
PAGE
395
395
3.
MANAGEMENT
396
4.
UNIONISM
397
5.
EMPLOYERS' ORGANIZATIONS
398
6.
SHOP STEWARDS AND WORKS COMMITTEES
398
7.
EIGHT-HOUR DAY AND MINIMUM Wage .
399
8.
UNEMPLOYMENT
399
•
9. HOUSING .
400
10.
CO-OPERATIVE MOVEMENT
400
•
11.
12.
PROPERTY Rights
•
POLITICAL LABOR Movement
NATIONALIZATION
13. COAL INDUSTRY
14. KEY INDUSTRIES
15.
16. POINTS TO BE EMPHASIZED
400
402
402
403
403
403
XV
§ 1.
CHAPTER I
INTRODUCTION
UPHEAVAL OF WAR
It was just at the critical period of readjustment,
while the ravages of war were still glaringly evident,
while its shadow still darkened the minds of men
and while its passions still stirred their hearts, that your
Commission arrived in Europe. It was permitted us
to observe great peoples struggling back to a normal
living basis. Accepted institutions seemed loosened
from their old-time moorings; radical ideas were every-
where rife; great untried changes seemed to find almost
reckless acceptance. In all of this upheaval of war, your
Commission has centered its attention on economic pro-
blems, and particularly upon the problem of industry and
labor as affecting the relationship of employers and
workmen.
In the countries visited it was evident that the eco-
nomic life of the people had been greatly disturbed by
the war. Laborers had been withdrawn from industry to
a much greater extent than in America; new laborers,
women, those formerly unemployed, and foreigners,
had been introduced to fill urgent needs; the working of
demand and supply in all directions had been interfered
with; new machinery and processes had been devised to
aid unskilled labor; in many instances labor organiza-
tions had for patriotic reasons given up old restrictions on
output; production was shifted to the making of muni-
tions and articles needed for war; great changes in
industrial organization resulted; governmental control of
industry on a vast scale was inevitable; control by Govern-
ment Boards and price-fixing of most needed articles fol-
lowed; many new factories were built for war production,
and private concerns became "controlled"; shipping was
taken oyer by the State; and foreign trade, both exports
and imports, commerce in food and raw materials, espe-
cially in coal, became entirely deranged. These and other
considerations caused a mighty upheaval in industry.
1
This industrial unrest was partly psychological, partly
social, partly political, and partly economic.
It was
psychological in so far as it was a nervous reaction from the
strain of long hours of labor, the anguish, anxiety, and
suffering due to the war, and the more abstract clash of
new interests and ideals with old conventions. It was
partly social in that labor claimed a new economic po-
sition in society. It was tinctured with politics, because
the greatly increased strength and unity of labor organiza-
tions had caused socialist parties and political leaders
inside and outside of the trade unions to seek their support.
It was largely economic in that the cost of living was
pressing hard upon the workpeople in spite of greatly in-
creased wages. All in all, it was a time of violent readjust-
ment in all phases of life.
§ 2. NEW CONDITIONS
The fighting was some time past when your Com-
mission reached Europe; the problems of reconstruction
had already become practical issues. These problems
are not only of tremendous importance, but also exceed-
ingly difficult and delicate to handle. The process of
reconstruction needs time and wisdom. The long strain
of war and of prolonged physical exertion in the shops
and offices has led to an inevitable nervous reaction.
Irritation now develops on slight provocation. To this
have been added difficult economic influences, chief of
which has been the rise in cost of living to over 100 per
cent of pre-war prices. While members of different social
classes have come to value one another more highly through
common service in the trenches, yet there was evident a
tendency to settle back into the old social conventions.
The laboring classes, however, have won new prestige by
valiant conduct in the war, and their organizations have
increased in membership. Then, too, it was to be expected
that political parties would maneuver to secure leadership
over an electorate stirred by new issues. In all these
countries political forces have played a very large part in
the questions' of labor and industry.
The Governments were forced by the exigencies of war
to deal with large groups rather than with individuals;
thus organization among both workers and employers
was stimulated. Organized labor, especially in Great
Britain, has come out of the war greatly impressed by its
2
increased political and industrial power. A closer co-
operation among all the factors of production was neces-
sitated by a common danger during the war. This was
an element of strength which in some cases will continue,
but which cannot now be definitely counted upon. In-
deed, the rising tide of discontent among the laboring
classes has been aided, no doubt, by an international
propaganda springing from extreme elements of disorder.
New and often extreme demands are being made for
nationalization of leading industries and for a larger share
of control. With industry crippled by the war, these
demands have obviously aggravated what must in any
event have been, after so great a disturbance, a very
difficult situation.
§3. WAR DEBTS
Moreover, the huge war debts and the public credit of
European countries touch intimately all industrial con-
ditions. Industry and employment of labor cannot begin
effectively unless machinery, equipment, building, and
raw materials can be paid for. Indeed matters of public
credit seem to lie at the very basis of early reconstruction
and the restoration of normal labor conditions.
§ 4. EMPHASIS ON LABOR PROBLEMS
The problem to which your Commission devoted most
attention was to find the causes and significance of that
great seething unrest among the workpeople of Great
Britain, France, and Italy. The major emphasis is upon
conditions in Great Britain, because the problems there
are obviously most analogous to our own. We found
that the most significant aspect of this labor unrest and
its fundamental reason was the challenge being thrown
down to the present system of industry. Labor is aiming
at a vast extension of public ownership and a larger
measure of control over the management under which
industry is carried on. Through public ownership it
anticipates that the economic waste of competition will
be eliminated and, together with the profits now realized
by individuals, will be made available to the workers in
the form of higher wages.
Out of these demands has arisen the present tangled,
serious, and complex labor situation in Great Britain,
France, and Italy. To the outsider its most prominent
3
!
characteristic is the large increase in industrial disturb-
ances. The Shop Steward movement is in part responsible
for this in Great Britain. In France, the General Con-
federation of Labor, with its local and district organiza-
tions, has become greatly active since the armistice. In
Italy, although only a small per cent of the laborers are
organized, these are dominated by extremists. Here, too,
as is true to a less extent in France, the problem is a
general social one and is not at all confined to industrial
`questions.
Statistics of disputes show that the year 1918 was one of
great industrial disturbance, most of the demands being
for advances in wages. The first five months of the present
year, however, have been very much more unsettled. A
comparison in Great Britain between the first five months
of 1918 and the same period in 1919 shows that disputes.
have been 25 per cent more numerous, the number of work-
people involved more than three times greater and the
working days lost more than four times greater. Most of
these troubles have been in coal mining, the engineer-
ing and the shipbuilding trades. In France and Italy the
strike curve has the same tendency.
§ 5. CAUSES OF DISCONTENT
It was obvious that there was a widespread discon-
tent among the workers in all industries and in all
countries. Discontent in itself may not be a sign of
danger; on the contrary, it may be a healthy sign of
progress, morally and materially, towards a higher
standard. With such an attitude of mind there may be
general sympathy. In the present difficult conditions of
reconstruction, however, the inevitable discontent has
been magnified by a propaganda carried on by extreme
elements opposed to the proper conduct of orderly govern-
ment. The British Minister of Labour, Sir Robert Horne,
explained that:
The industrial unrest was due, among many things,
mainly to the following causes: the long strain of the war;
the nervous effect produced by the extreme industrial efforts
of the nation; the disturbance of normal economic life; the
rise in the cost of living; and, in a certain measure, an
absorption into English thinking of the revolutionary move-
ments of Europe.
4
The cause undoubtedly having the most practical im-
port is the high cost of living, due not only to a scarcity
produced by the emergencies of war, but to the high
rates of wages which have in turn added to the costs
of production. In addition, there must be considered
the effects of the depreciation of the monetary standard
following the giving up of the gold standard, which inevit-
ably caused higher prices. In Great Britain, during past
decades, British industry gave little or no attention to
the drab and distressing conditions of life surrounding the
workmen. While commercial supremacy seemed fairly
assured, little attention was paid to what the employer
ought to have done by way of anticipating the grievances
of labor. As a consequence, unionism and labor agitation
have been growing apace. A fertile soil in which such an
agitation could grow existed even before 1914. After the
upheaval of the war the situation naturally furnished
opportunity for the work of the extreme radicals. Dis-
content was fanned into a movement urging a radical
modification of the existing capitalistic system and even
of the structure of government. Certain socialistic ele-
ments propose to satisfy social unrest merely on a mate-
rialistic basis; that is, to solve social ills primarily by
the offer of larger material rewards. Such a policy does
not aim to supply the moral and educational forces neces-
sary to a higher standard of living.
Similar influences have wrought similar changes in
France and Italy. French industry has never reached the
development that is characteristic of the British, but in
those districts in the northeastern section of the country
where conditions are somewhat comparable, the same
tendency is revealed. Furthermore, differences in tem-
perament and in attitude of mind have manifested them-
selves differently. This is likewise true of Italy. The
Latin peoples have reacted more quickly and more.
violently to radical teachings, but they do not show the
steadfast adherence or the steadily accumulating force
behind them that may be seen in Great Britain.
§ 6. THE MODERATE AND RADICAL ATTITUDES
CONTRASTED
Two different states of mind must be recognized in
the labor world of Great Britain. On the one hand there
is the large body of workers imbued with a respect for law
5
and order, who, while endeavoring to improve their
material position, are not greatly influenced by radical
appeals to violence or against existing forms of property,
and who have a respect for a lawful government. On the
other hand there has risen a radical, even revolutionary
point of view which threatens not only the peaceful order
of society but aims in its extreme form at a domination of
the industrial system and an overthrow of orderly govern-
ment. But radical views have permeated all classes of
labor. All these radical views aim at nationalization of
essential industries, at "democratic" control, i.e., by the
workers themselves, of industry, and a "democratic" use,
i.e., for the workers themselves, of the powers of the
state. Moreover, there is probably a common agreement
among the majority of organized workmen in regard to
heavy inheritance taxation and the expropriation of large
landed wealth.
The great difference of attitude arises in regard to
methods of action and to speed in attaining their ends..
Some would rely on industrial action alone, that is on a
policy of force; some would continue political and in-
dustrial action separately; some would use industrial in
support of political action. British alliances and federa-
tions, however, as explained by the union labor leaders.
themselves, claim their organizations will be a means of
avoiding violent action. They aim at control over their
members so that unauthorized strikes will be impossible.
The unauthorized strike, they believe, will be unnecessary.
The more radical, however, feel that the rising forces of
"democracy" are on their side and that the present
capitalistic system is doomed. With some elements
employers obviously can expect to make reasonable.
adjustments if both sides come together. With the
radical element it must at once be admitted that even
reasonable proposals are not likely to bring about per-
manent adjustments, inasmuch as their ultimate object is
the control of industry, nationalization and dominance
over the state. No grant of intermediate concessions will
stop their ultimate demands.
The labor movement in France is strongly dominated
by radical leaders, who believe in revolutionary syndi-
calism. While they have taken over in large part the
doctrine of the Socialists, i.e., to destroy private owner-
ship of all means of production, these leaders find the
Socialists too conservative in their attitude toward the
6
existing industrial and political systems. The present
distressful situation of France, financial, industrial,
political, gives opportunity for the radicals to foment
trouble.
In Italy the same forces are at work, and it is felt by
your Commission that Italian industry will inevitably
drift into the same position as that of British industry if
the workers of Italy become fully organized, so that the
radicals can wield a stronger influence.
87. COLLECTIVE BARGAINING
The Commission found that out of the confusion of
voices discussing the critical industrial problems there
were certain catch phrases or slogans that ran from lip to
lip. These phrases were general and vague in character
and naturally received radically different interpretations
by the people using them. It is our judgment that such
vague phrases may become dangerous through their misuse
and through a lack of understanding of their economic
portent. So important is this point that particular atten-
tion is here called to certain of them.
“Whether the phrase 'collective bargaining' will
ever become established in common use in the United
States is perhaps doubtful," said a report prepared for
the Industrial Commission in 1901. Today one can
scarcely open a newspaper without running across the
expression. But, unfortunately, although in common
use, the term has an ambiguous meaning. It thus
comes about that a labor dispute may hinge upon the defini-
tion of this term. Certain workmen may strike for "the
right of collective bargaining"; the employers concerned
may assert that they have offered collective bargaining
and the offer has been rejected. Thereupon, the workmen
announce to the public that what was offered and refused
was not collective bargaining at all.
It is significant that workmen seem to count upon the
sympathy of the public in making demands for collective
bargaining. The phrase has become one to conjure with:
"the right to bargain collectively" has largely supplanted
the phrase "the right to organize," as the name for the
main issue of attack and defense with the non-socialistic
labor movement.
7
The ambiguity of the phrase "collective bargaining
arises from the fact that very largely it is a holdover from
a bygone controversy; the idea now embodied in the words
has outgrown the literal meaning of those words. The
formula "collective bargaining" was originally coined to
express the antithesis of "individual bargaining," and that
it did aptly enough. The formula won its way to general
use by the public, because economists and others main-
tained that in conducting "individual bargaining" under
modern conditions the workman was at a disadvantage.
The reasons for this alleged disadvantage one may find
in any textbook on economics. Translated into common
speech, the phrase "collective bargaining" now means to
the general public the equalization of bargaining condi-
tions between capital and labor; the securing of the
square deal" for the employee under modern conditions
where the employer is often a huge corporation. To labor
bidding for public support in its militant operations the
value of the term "collective bargaining," with such a
popular construction put upon it, is obvious.
CC
At the present day, however, the expression "collective
bargaining" is very largely a misnomer for the thing being
disputed by employers and workers. A more accurate
expression for the real subject of contention is "repre-
sentative bargaining." Many employers in the United
States and Great Britain today, outside the sweated in-
dustries, do not insist, as a matter of principle, that they
shall make arrangements with respect to employment
solely with each individual worker. They are willing
that the workers shall present united demands, that there
shall be debate, publicity, and a group-wise determination
of the conditions of employment, provided a good deal
more does not go along with that. The general public has
no conception of what that "good deal more" is or may
become. Very few people other than employers and
workingmen understand what has been called "the im-
plications of collective bargaining." But chief among
these "implications" is representation.
Whenever a group of workers bargains as a group with
the employer or his agent it has to be, except under the
most primitive conditions, negotiation conducted on the
side of labor by representatives of the workers. In these
days when a plant may have thousands of workers, it
would suit neither the employer nor the employees to have
8
}
intricate business dealings conducted in a sort of works
town-meeting. The essence of fully developed group
bargaining is, therefore, representation.
Here comes the rub and the up-to-date dispute. Who
shall be the representative of the collective body of
workers? Many employers insist that he shall be a person
in their employ, not an outsider. The organized employees
quite generally demand that he shall be an outsider, or, as
they express it in more general terms, a representative
of their own choosing."
(C
This is not the place to go into the merits of this ques-
tion but certainly it is important for every one to keep
clearly in mind the full meaning of the terms employed.
To the unionist in general "collective bargaining" means
group bargaining plus the intervention of the out-
sider. Some employers also accept this; but others hold
that collective bargaining means group bargaining con-
fined to their own workpeople with no intervention of an
outsider. That is, there may be collective bargaining in a
non-union shop.
§ 8. "LABOR NOT TO BE TREATED AS MERCHANDISE"
In this country, as well as abroad, there frequently
appears in the literature of labor unions the claim that
labor should not be treated, or valued, as a commodity.
As good a statement of this claim as any may be taken
from J. H. Thomas, the head of the National Union of
Railwaymen in Great Britain: 1
"They [the workers] are dissatisfied with the system
of society which treats their labour power as a mere com-
modity to be bought, sold, and used as though they were
machine-like units in the process of wealth production,
and they therefore demand that they shall become real
partners in industry, jointly sharing in the determination of
working conditions and of management."
In the United States this expression first came into
prominence in the Clayton Act of 1914. There as the
first sentence of Section 6 we read, "that the labor of a
human being is not a commodity or article of commerce."
The bearing of the expression as here used is wholly
legal; it is designed (as a part of the whole enactment) to
¹At National Industrial Conference, London, February 27, 1919.
9
amend the Sherman Anti-Trust Act so that labor organiza-
tions or their activities cannot be held by the courts to be
illegal under that act. This section then goes on to say
immediately following the foregoing introductory sen-
tence: "Nothing contained in the anti-trust laws shall be
construed to forbid the existence or operation of labor ...
organizations, nor shall such organizations, or mem-
bers thereof, be construed to be illegal combinations or
conspiracies in restraint of trade under the anti-trust
laws." The intent of the words that labor "is not a com-
modity," as here used, is clearly to exclude labor, as
connected with its organized activities, from the category
of the things which constitute "trade" or "commerce,'
which last is the subject-matter of anti-trust laws.
"Trade" or "commerce" consists in dealings in com-
modities; hence, if the rule stands that labor is not a
commodity, it would be difficult to hold that a labor
union was a monopolistic combination in restraint of
trade.
This phrase has since been heard on the lips of thousands
and it is important to inquire just what is meant by it.
We find it stated by a certain writer that "the conception
of labor as a mere commodity must yield to that of the
individual laborer as a human personality." And, again,
a certain labor organization demands that the "working
class" shall not have a "commodity status." Finally, the
doctrine has been recently embodied in the form of a bill
of rights as a portion of the Peace Treaty formulated by
the Commissioners on International Labor Legislation.
There we read: "The High Contracting Parties declare
their acceptance of the following principles
"1. In right and in fact the labor of a human being should
not be treated as merchandise or an article of commerce."
As first drafted, it read that “labor should not be regarded
merely as a commodity or article of commerce.”
It is obvious that we have here a doctrine that has
outgrown a local application to the particular law of a
certain country and has become a principle of labor
conditions with an international range of application.
Furthermore, it is to be observed that there is ambiguity
as to what that principle is. Notwithstanding the ap-
parent simplicity and directness of the terms employed
"the labor of a human being should not be treated as
10
merchandise") there is a double meaning involved,
the meaning of propaganda and the meaning of use.
The meaning of propaganda attaches to the laborer
himself as a human being. The unsophisticated citizen
gives ready and uncritical assent to the doctrine so
understood. "Of course," he says, "there should be no
such treatment of labor as would follow from regarding
labor as merchandise. If laborers were literally treated
as merchandise, that would involve a reintroduction of
chattel slavery." The average man thinks it well to
promulgate to the world that any and all forms of helotage
(modified slavery) should be a thing of the past.
But with labor leaders and their associates "the meaning
of use" in this formula attaches to "labor" in the sense of
labor power, not to the laborer himself, but to the thing
he sells. It is intended to establish the principle that labor
power is not to have its value or worth established in the
same fashion as obtains with ordinary commodities or
articles of commerce. The price of such things is deter-
mined by supply and demand; the price of labor power, or
wages, should be otherwise determined. This is the
practical application of the international doctrine. Labor,
in the sense of labor power, is to be exempted, more or less,
from the working of the natural law of supply and demand.
Here a distinction is to be drawn between those who
would have this exemption "less" and those who would
have it "more." The conservatives intend that the
doctrine that the wage of labor is not determined in the
same way as the price of other things bought and sold
(that it is partially exempt from the law of supply and
demand) shall carry with it little more than the implica-
tions of collective bargaining. They mean that the
standard or customary wage shall be maintained that
there shall not be individual bargaining and unregulated
competition with respect to labor. The exigencies of the
particular workman of any class or grade shall be ruled
out; he shall not take less than the standard wage because
he is hard up. The exigencies of the particular employer
shall be ruled out; he shall not offer less than the standard
wage because he is hard up. Finally, the exigency of a
general state of trade shall be in great measure ruled out;
the employers in general shall not offer lower wages than
the standard because business in general is depressed.
11
It is this last contingency, probably, that conservative
union spokesmen especially have in mind. They regard
it as highly important that in dull times they shall not
suffer a reduction of wages. But it is just at such times
that employers urging a reduced scale of wages insist
most on the sanction of the law of supply and demand.
The conservative labor men do not believe in the utmost
dependence on the market for labor in good times. They
believe in standardized and fairly stable wages or scales of
prices for labor power, to be maintained in bad times as
well as good as the basis of a standard of living. This
view does not by any means wholly reject the law of
supply and demand. It is simply the view that labor
power is a unique commodity (as being attached to a
human being) which should not, therefore, be governed as
regards its price by cut-throat competition or the un-
regulated sway of the law of supply and demand such as
would obtain under individual bargaining.
The radical labor men, on the other hand, cut loose
from the basis of the law of supply and demand entirely.
To them the application of the doctrine that labor is
not a commodity means that wages of labor shall be
determined, not by any fundamental reference to the
demand for and supply of labor, but by the needs or
wants of labor. When workmen, or their spokesmen,
demand that wages shall be fixed according to the needs
of those who furnish labor power, consideration of the
amount of and demand for the product is excluded;
consideration of the amount of profits of the employer
is excluded. We have no longer a "higgling" of the labor
market, no longer a dispute for a division of gains between
the employer and employees; we have simply each
group of laborers as representing its own interests trying
to collect from all the rest of society. For the funda-
mental evaluation of the market, the general appraisal
of worthwhileness by society, as a determiner of wages,
is substituted a fiat wage with no other sanction than
"we need the money.
""
The mere fact that a thing serves a human need does
not give it value. It must always have scarcity. When-
ever anything is unlimited in quantity it has no value
and no price. The recognition of scarcity as a force
directly affecting labor, as well as everything else, has
been the very basis on which trade unions are formed;
they are organized to raise wages by limiting the supply
12
of workers in a given place and industry. Opposition
by unions to strike-breakers or non-unionists is a fear
of the working of the law of supply and demand. More-
over, the higher wages for skilled, as contrasted with
unskilled, workers is due to the element of scarcity, or
monopoly, enjoyed by those who possess skill. The
principle of scarcity can dominate the influence of utility
or the capacity to render a satisfaction or a service.
That is, if skilled machinists were as numerous as ditch-
diggers they could get no more than the latter.
The extreme and radical interpretations emerging
from the doctrine that labor is not a commodity make
their rapid way into the minds of men to whose interest it
is so to interpret it. If those who establish that doctrine
had only in mind the regularization of supply and demand
that goes along with collective bargaining, then it is a
fresh illustration of the danger of launching principles
that are "too big for their purpose."
§ 9. NATIONALIZATION OF INDUSTRY
Another of the various modern catch phrases which
need elucidation is that of "nationalization" of indus-
try. It presents itself today in three distinct aspects.
First: There is a demand by various classes of citizens
actuated by various motives to continue in whole or
in part "the wartime control of industry,” — that is,
that greatly extended system of "governmental regula-
tion"
of capitalistic business which came into being
with the economic exigencies of the prosecution of the
war.
as
Second: There is the proposal by citizens desiring a
radical economic change, that the National Government
now constituted shall acquire ownership outright
of at least the more important industries and operate
them by its own agents in the public interest. This is
a demand for state socialism or collectivism -
ment ownership and operation," as it has been called.
govern-
Third: There is the demand by the members of a
certain economic class of society desiring radical economic
and governmental changes, that the National Govern-
ment as presently to be largely reconstructed shall take
possession of at least the more important industries and
operate them, not by its accustomed agents, but by
13
associations of the workers in those industries. This
proposal of "ownership by the state and management
by the workers" may be designated syndicalism, or
sovietism, or guild socialism in contrast to state socialism
or old-style governmental collectivism.
With the war came a change of degree of governmental
regulation of industry. Not merely industries "affected
with a public interest," according to established pre-
cedents, but virtually all industries were taken under
government "control" of the most rigorous sort. Inter-
ference extended far beyond "raising the plane of competi-
tion," as was done, for example, in the so-called factory
legislation antedating the war. The immediate object
of the new, all-embracing "control" was not so much
to correct the defects of competition as temporarily to
provide a substitute for competition. There was a
runaway market in every line; for the time being the
natural laws of supply and demand got utterly out of
hand; there were burdens on industry and finance too
heavy to be carried in ordinary ways; hence, the im-
provisation of an elaborate governmental "harness"
to distribute burdens, to organize forces, to direct pro-
duction and win the war. There was no philosophical
bias or class motive in all this. All sorts of citizens,
simply as citizens, supported their mixed-class govern-
ments in inaugurating this temporary quasi-socialization
of industry for war purposes.
Following the war comes the question whether this
war-created harness of control shall be continued or
not, or rather for what purpose it shall be continued.
In some quarters it is demanded that it shall be continued
for a limited term as a mere measure of necessity to
meet the practical and immediate difficulties of read-
justment. There are acute problems of distribution of
materials, for example, which occasion demands by ordi-
nary citizens that "shipping control" shall be retained in
the public interest. Again, the ordinary citizen smarting
under the high cost of living is prone to cry out against
profiteers" and to demand either price fixing or wage.
awards or both.
66
In this matter the motive is everything. For mixed
classes of citizens to advocate continuation of governmental
control of shipping to meet the exigencies of reconstruction
is a very different thing from a single class demanding
14
it with the view to permanently destroying private
enterprise. It is one thing for a member of a labor
organization to demand a governmental award of wages
because he wants more money with which to pay his
bills at present prices; it is another thing for him to
demand it in order to establish the new doctrine that
labor is not a commodity; that is, that wages are not to
be determined by supply and demand.
Nationalization, in the sense now before us, means a
permanent policy of continuing the wartime practices
of control for the purpose of displacing the pre-existing
practices. The British Labour Party has declared its
belief that the war resulted in the "collapse of a distinct
industrial civilization" which should not be restored;
it looks forward to "the progressive elimination from
the control of industry of the private capitalist." There-
fore it demands the retaining and the developing, after
the war, of "the present system of organizing, controlling,
and auditing the processes, the profits, and prices of
capitalistic industry." Hold fast all the ground that
has been won from the capitalist during the war, is the
idea of this first phase of nationalization.
The second phase of nationalization is the familiar
"Marxian" or state socialism. This idea differs from
the "control" sort of nationalization just discussed,
which was shown to be a hybrid system of private owner-
ship with quasi-governmental management, picturesquely
characterized in the House of Commons recently as
"socialism of the most muddled variety."
Traditional state socialism, in contrast, is a clean-cut
legal proposition,
the state owns and the state manages
and the state has full undivided responsibility. It is
to be noted that state socialism is not altogether a "class-
conscious" workingman movement; that is, the move-
ment for a conscious antagonism between the interests.
of employers and workmen. It is to be emphasized,
further, that state socialism of the traditional sort,
that is, the proposal of government ownership and govern-
ment management of industry, has lost ground heavily
during the war. This has taken place both with ordinary
citizens and with workingmen as a "class-conscious"
group.
1"'Labour and the New Social Order." Pamphlet of British Labour Party, p.12.
15
In England the working people had a most bitter
wartime experience with the Government as a manager
or employer once removed: the memory of the Munition
Tribunals, of broken promises and exasperating delays,
is still vivid. The workingmen of Great Britain, France,
and Italy are in exceedingly bad humor with "
red tape
and "bureaucracy." Most laboring men have decidedly
cooled toward socialism and probably would prefer a
private employer to the Government as an employer.
22
Why, then, it will be asked, if this is so, do the working-
men agitate for nationalization of the coal mines and of
the railroads in England? The answer is that they do
not propose to have the Government, as we have known it
in the past, own these enterprises and act as employers.
They wish neither private nor governmental employers.
The threatened strikes to enforce a new departure with
respect to the English mines and railroads are not for
the purpose of bringing in socialism as that term has
been understood in the past. A wholly new scheme is
in process of incubation.
This introduces us to the third and dominant phase
of nationalization in its present-day manifestations.
Old style socialism is not wholly dead, but it is pretty
well sidetracked as a live issue by this new movement.
The third phase of nationalization of industry, properly
called "syndicalism" in English, can be considered in
two aspects: (1) what it purports to be, and (2) what
it really is. It purports to be government ownership
with a mixed management - the general public and the
workers both represented in the management.
But the sharing of the management with the public
is only temporary; the ultimate aim is to have the workers.
in each nationalized industry the sole managers of that
industry. And the fiction of government ownership
will not long survive this concentration of the power
of management in the hands of the workers. Whoever
really manages will really own. What the scheme actually
amounts to in its economic aspect is to fully transfer
industry from the hands of the present owners to the
hands of the workers. The capitalistic system disappears.
The Government at most plays the rôle of a sort of
sleeping partner or rich uncle to finance the deal. First
and last, the thing is to be so managed that the worker
will not be under any bourgeois government. The
projectors of the scheme are determined about that.
16
The new style nationalized industry is next going
to be used to transform the government. This is to
be done partly by using the economic power of the
industry (carefully chosen as a so-called basic industry-
mines, railroads, shipping) to coerce the state, and
partly by means of a new plan of voting which funda-
mentally alters the basis of the state. Under the new
economic order citizens are to vote by and in the industries
to which they belong, not by and in the geographical
areas where they reside. This arrangement will enable
the working class to swamp all other classes, and we
shall then have a complete working-class government.
That is what "syndicalism" means a society organized
by industries and the workers controlling in each industry.
§ 10. DEMOCRATIZATION OF INDUSTRY
Another popular phrase is "industrial democracy,'
or the "democratization of industry." This phrase
rests upon a presumed analogy between the organi-
zation of a political state and the organization of
the modern industrial system. It is often said that,
just as men have secured political democracy, so now
there must be granted to them industrial democracy.
Political democracy has meant, on the whole, equal
suffrage in a broad sense, and is coming to mean universal
equal suffrage, within certain age, intellectual and moral
limits. It presumes the right of every man to speak,
act, think, and vote as he pleases, always with certain
social restrictions.
Something of this sort is contemplated for industry;
there is to be some kind of liberty, equality, and fraternity
in the workshop and office. Just as men are said, politi-
cally, to be born free and equal, so, industrially, men
are to become free and equal.
The unrest in the industrial world today has not its roots
solely in poverty and want. There is something deeper still
at work. Wage-earners are filled with a vague but profound
sentiment that the industrial system, as it now is, denies
them the liberties, opportunities, and responsibility of free
men.¹
This phrase, like every other of its ilk, absorbs its
coloring from the mind of the one who interprets it.
The conservative mind probably restricts the meaning
¹ Round Table, June, 1916.
17
to a more cordial, direct relation between employer
and employee, where the employer has regard for the
fact that his workmen are men and have a right to fair
dealing, to the necessaries and a fair share of the comforts
of life, to a "fair wage." Another attitude of mind would
probably endorse the principle of collective bargaining,
of a minimum wage, of carefully directed welfare work,
of the right for labor to organize and to strike. But so
far the industrial and political system of today remains
intact.
The radical interpretation will go much further than
this. It will declare that democracy in industry means
an equal voice in the management of industry. It will
run out in many directions; into the guildsman's idea
of a new industrial framework; into the socialist's state
ownership and control of the means of production;
into the syndicalist's idea of total annihilation of the
state; into a destruction of the wage system, the rights
of private property, the capitalistic system; into the
war of classes between bourgeoisie and the proletariat.
The subtle danger in such a phrase is the fact that it
runs through all of these gradations of meaning without
change in outward form. And, unfortunately, the user,
whoever he may be, is likely to be cited as endorsing
the most radical interpretation. Furthermore, it enables
the use of such a phrase to be "all things to all men”; a
conservative among conservatives, a radical among
radicals.
Your Commission feels that such Protean phrases.
let loose upon the world, especially at this time of violent
agitation, of widespread discontent, both industrial and
political, are particularly dangerous and demand cool
and careful analysis. The facts given in the following
chapters will demonstrate this conclusion and will clearly
justify the emphasis placed upon it here.
§ 11. ORGANIZATION OF MATERIAL
The material secured by your Commission through
interviews and research has been organized under
certain definite topics. It is proposed to touch upon
some general phases of productive efficiency in Great
Britain, France, and Italy, again with special emphasis
upon the situation in Great Britain. A special treat-
18
ment is given of management as a factor in produc-
tion, stating compactly the economic principles involved,
which have not been sufficiently recognized in present
day discussions of the labor problems. The labor pro-
blems themselves, which form the main theme of dis-
cussion, and which involve the great bulk of the material,
are discussed topically: to show, first, the labor union
program abroad; second, the character and extent of
organization among employees and employers; third,
the special significance of the development of the Shop-
Steward movement and of Works Committees; then,
to discuss the eight-hour day, the minimum wage, un-
employment; later, to point out the political elements
permeating the labor problem; lastly, to trace the move-
ment for nationalization of industry and the effect of
recent industrial and social activity upon property rights.
19
CHAPTER II
EFFICIENCY OF PRODUCTION
§ 1. DEPENDENCE OF THE PRODUCER ON EFFICIENCY
Each manufacturer is concerned directly with the
relation of his outlay to his production. In all com-
petitive industries this margin of difference between
outlay and product is vital to continuance in business.
Given a rising total cost, whether due to increasing
prices of materials, labor, taxes, or what not, — his
own possibility of continuing in production lies in his
ability to enlarge his output (that is, to increase the num-
ber of units of goods produced by a given quantum of
labor and capital) or to raise the selling price to the
consumer of each unit of product. In the latter case
the purchaser (in other words, the public) will have to
pay the added cost. If, therefore, producers in other
countries should become as efficient as American pro-
ducers, and if prices are limited by conditions in inter-
national markets, as they surely must be, American
manufacturers paying the higher labor rates would be
forced out of the competitive field.
§ 2. RELATIVE COSTS IN AMERICA AND Great Britain
Early in our investigations the question of efficiency
of production presented itself. Everywhere, especially
in Great Britain, there was expressed a fear of Ameri-
can competition, based on the belief that the war had
greatly increased the burdens on European industry
from which our country was largely free. But even
before the war our superiority in relative costs had become
apparent in certain lines of manufacture. This relative.
European disadvantage seems to be mainly due to inferior
manufacturing methods and organization. Although
America owes much to large scale production, good manu-
facturing methods, and superior factory organization,
such conditions, of course, do not obtain in all industries
to the advantage of her producers. On these matters,
however, it is of first importance to American producers
20
that they get all available knowledge regarding the
efficiency of production in other countries.
$ 3. RESTRICTION ON OUTPUT
In Great Britain, having a surplus of labor, a sys-
tem of restricting output had grown up previous to
the war. It was generally understood that "ca'canny"
methods were in existence in many British industries.
It was often stated that the policy of the employers
in reducing the piecework rate when wages rose to a
high level was the reason why some unions in self-defense
adopted the principle of restriction of output. In the
relative order of their importance, the leading reasons
for restriction of output by British trade unions are the
following: fear of rate-cutting by the employer, dread
of unemployment, the desire to protect inferior workers,
the wish to safeguard health, and the natural human
disinclination to strenuous labor. In regard to restriction
of output in connection with the war, certain unexpected
results happened. Under the stimulus of war conditions,
the introduction of improved machinery and the speeding
up of operations, it became clear to every one that labor
effort before the war had not been at its highest efficiency.
There is, in France, a very different attitude toward
this matter of increased output. French employers
told the Commission that before the war there had been
some adherence to the "make-work" theory, but that
now this seemed to be rapidly passing away. The laborers
of France appear to realize that a greatly increased pro-
ductive power is necessary for the country to recover
from the ravages of war and to carry the heavy financial
burdens imposed by it. A very important element
in this difference in attitude is the realization that France
has a distressing labor shortage. Workmen may not
now be secured so easily from Italy and Belgium as
formerly. There is, consequently, not the fear of un-
employment among French workmen, nor is there the
network of restrictions in French workshops as in British.
There has been in France, however, a strong movement
for the “English week," that is, a week beginning Monday
morning and ending at noon on Saturday, without
reduction in wages. French industry, also, is now working
under a law establishing the principle of an eight-hour
day, but with the promise by labor to equal in this
21
shorter work time the output of the longer nine or ten
hour day.
In Italy, where there is a surplus of labor, as in Great
Britain, the workmen are not sufficiently organized to
establish restrictions upon output. It must be remem-
bered, too, that Italy, like France, is largely an agri-
cultural country, and Italian industry has not developed
the intensity of the British.
§ 4. THE NETWORK OF RESTRICTIONS
In the period before the war the British labor
unions had established a complex system of restrictions.
on output. Just what is meant by the "network of
restrictions" is described as follows by a competent
authority:
This network of rules and agreements, usages and customs,
was more extensive than is usually realized. It covered differ-
ent points in different trades, and often in different districts
of the same trade. Taking the network as a whole, and at its
widest, it embraced not only the standard rates of wages
and the length of the normal working-day, together with
the arrangements for overtime, night work, Sunday duty,
mealtimes, and holidays, but also the exact classes of opera-
tives (apprenticed or skilled, semi-skilled or unskilled, labor-
ers or women) to be engaged or not to be engaged for various
kinds of work, upon particular processes, or with different
types of machine; whether nonunionists should be employed
at all; what processes should be employed for particular tasks;
what machines should be used for particular jobs; how the
machines should be placed in relation to each other, and the
speed at which they should be worked; whether one operative
should complete a whole job, or attend to only one machine,
or form part of a team of specialized operatives each doing
a different process. What wages, if any, should be paid in the
intervals between jobs or whilst waiting for material, and
what notice of termination of engagement should be given;
whether boys or girls or young persons should be employed at
all, or in what processes or with what machines, or in what
proportion to the adult workmen; whether the remuneration
should be by time or by the piece and under what conditions,
at what rates and with what allowances; and perhaps
where it prevailed most severely criticized of all, but by no
means universally existing - what amount of output by each
operative should be considered a fair day's work, not to be
considerably exceeded under penalty of the serious displeasure
of the workshop.¹
¹Webb: "The Restoration of Trade Union Conditions," Nisbet & Co.,
London, 1917, pp. 9–12.
22
It has been generally supposed that all of these restric-
tions were removed during the first year of the war at the
request of the Government. In actual fact by no means
all of these restrictions were given up. Those which were
removed other than those affecting hours and wages
concerned chiefly the employment of women and un-
skilled persons in munition works.
•
was to
It must be remembered that by no means the whole of the
network has been given up; . the Federation
get complete freedom for each employer to "dilute" labor by
setting one or two skilled mechanics to help and direct a score
of less skilled workers; to break up the jobs so as to bring them
within the capacity of semi-skilled workers; to introduce
automatic machinery and engage non-unionists and un-
apprenticed men, laborers, and women; to work, if need be,
an unlimited number of hours seven days a week, without
regard for Factory Acts or holidays; to substitute for the
standard time rates whatever piecework or bonus systems they
found convenient; and, above all, so to speed up the machin-
ery and abrogate all customary limitations on individual
output as to get the very maximum of production.
1
The evidence offered by manufacturers does not indicate
that trade union restrictions, except as affecting women
and unskilled labor, were removed during the war or are
at present inoperative. Many specific instances point to
this conclusion. In this connection we may quote the
statement of the President of the British Iron and Steel
Institute published during the last year of the war:²
When it was found that the demands of the Government
for a greatly accelerated production of shells required the
employment of girls in the projectile factory, owing to the
scarcity of skilled workers, these girls in all cases produced
more than double that by thoroughly trained mechanics.
members of trade unions-working the same machines
under the same conditions.
In the turning of the shell body the actual output by girls
with the same machines, and working under exactly the same
conditions and for an equal number of hours, was quite
double that by trained mechanics. In the boring of shells the
output was also quite double, and in the curving, waving, and
finishing of shell cases quite 120 per cent more than that of
experienced mechanics.
¹ Webb: "The Restoration of Trade Union Conditions," Nisbet & Co.,
London, 1917, pp. 16, 17.
2 National Industrial Conference Board, Research Report No. 8, “Wartime
Employment of Women in the Metal Trades," July, 1918, p. 36.
23
In an establishment where skillful handling of the men
tended to secure maximum production, two instances of
restriction were nevertheless quoted. In a certain depart-
ment the earnings per week uniformly averaged 25 per
cent above the timework basis. This 25 per cent was the
standard calculation for the difference between piecework
and timework. An official of the company was suspicious.
of this uniformity. After explaining to the men that he
must get at the real cost of the operation, he boldly
announced that he would cut the piece price 25 per cent.
Upon their objecting, he offered the men "anything you
like to make for a year." Within a fortnight some men
were earning 60 per cent above their former money.
This official said that trade unions in many cases did
restrict output, but he cited no actual examples. He said
the workers associated increased production with in-
creased strain and in many cases felt it was better to
earn a reasonable wage with less wear and tear than to go
on piecework with high earnings.
One of the large establishments formerly worked over-
time systematically, paying time and a quarter for such
overtime. The Works Manager carefully studied the
situation and came to the conclusion that the same amount
of work could be accomplished without any overtime.
With the consent of the management, he put an end to
overtime work and within two weeks they found that the
men were doing as much in nine hours as they formerly
did in eleven, and actually turned out more work, so that
the men made more money and the company got more
product without any overtime.
In the works of a large company doing machining of
shafts for electric generators, the work was done on the
piecework system the men being guaranteed their time
rate and the setting of the piecework price was based on a
very low average output per hour per man. The jobs them-
selves were of a type lasting from three days to one week.
Both unionists and non-unionists were employed in the
shop. The unionists were only permitted by their trade union
to earn one and one-quarter time and, when they were found
to be earning one and one-half time they were privately
warned by the shop stewards to slow down. The non-union-
ists were invariably in the habit of earning one and one-half
time and more. Unionists in many cases were found to be
earning only three-quarter time. However, a fairly rigid disci-
pline was maintained; and, when they were found to be
24
behind unit time they were warned, and finally discharged.
The description of the works managers (probably a personal
and prejudiced one) of the union employees was that they
were the "scum" and they looked upon the non-union work-
men as the pick of the men. He never knew of any case of a
unionist, after being warned against maintaining too high
an output, rebelling against the orders of the shop steward.
He stated that if the workman had disobeyed he would have
been brought up before his union and fined anything from five
shillings to a pound.
The works manager of another company stated that the
trade unions generally demanded that their members should
not earn more than one and one-third time. This he attri-
buted to the fear that piece-rates would be cut if earnings
were too high, and to the desire to "create" employment for
fellow workers. This restriction of output was not, so far
as he knew, formulated in black and white, but any man who
disobeyed the shop steward's orders in this regard would
undoubtedly be “branched" at his trade union meeting; con-
trary to opinion in the company previously referred to, he did
not think an actual fine would be imposed. His conviction was
that previous to the war the men were producing not more
than one-half and possibly only one-third their possible out-
put. He also stated that he found much more restriction in
connection with big and heavy manufacture than in the
making of small stuff, and evidently felt that the fear of un-
employment had much to do with it. As his firm had 2,000
male and 1,000 female employees it is possible that the
employment of women was a factor in the absence of restric-
tion on light work.
The experience of a Scotch establishment is another
illustration of restriction of output. Four new brass finishing
lathes were about to be installed in the main part of the factory
when one of the workmen quietly told the foreman that if they
would install those machines on the top floor away from the
rest of the shop and allow him to pick out a few men to operate
them, he would double the customary output. The foreman
accepted the suggestion, the machines were installed by them-
selves, the workman selected three other men, and the produc-
tion on those machines immediately went up to almost three
times that in the main body of the shop. This showed what
restriction had actually been carried on in the plant and what
the workmen could produce if they gave their best efforts.
In this case the piece-rate was retained and these men earned
very large wages. The superintendent of this establishment
stated that union officials do not urge the workers to try to
increase the output in shorter work hours, in spite of their
promises to increase production, and it is obvious that they
themselves do not expect this result.
25
The officials in one of the best equipped collieries in South
Wales, while they would not say so directly, apparently
believed in spite of what union leaders say about increased
production, that the men are silently but firmly working
against all labor-saving devices. Where coal conveyers,
machines for cutting, and so on, have been introduced,
something is always happening to them.
On the other hand, at a meeting with several manufacturers
one man claimed that the English workman did not have the
mentality or physical ability to handle some of the American
machine tools. For instance, Ingersoll-Rand drills, which
operate very successfully in America in quarry work, were a
failure when handled by an English workman in England.
This hindrance to efficiency, if it exists, may be partially
compensated for by more careful workmanship. In the manu-
facture of munitions, it was pointed out, in practically all cases
of feed and speed, speed of operation is very much below
United States and Canadian practice. Nevertheless, British
shops manage to turn out every week an output in quality and
quantity which seems to average equal to our good shops.
Repairs and rejections to scrap are less than in the United
States. The ample floor space required by the factory laws —
approximately 50 per cent more than usual in the United
States also helps to account for the satisfactory quality
of the output, as it contributes to efficient management.
The undeniable increase of production during the war,
it is clear, cannot be due solely to the withdrawal of the
union restrictions. In addition, there was an introduction
of new and effective elements of management, such as
large scale production, standardization of operations,
and the bringing in of new machinery by which repetitive
processes could be carried on by hitherto unskilled persons.
Consequently, a sweeping transformation occurred in the
organization of British industry. New processes and
new classes of labor were introduced.
[British industry has learned] the lesson of the economic
advantage of a large output, of production for a continuous
demand, of standardization and long runs, of the use of
automatic machinery for separate production of each compo-
nent part, of team-work and specialization among the opera-
tives, of universalizing piecework speed, and of not grudging
to the workers the larger earnings brought by piecework
effort. We do not think it is any exaggeration to say that the
15,000 or 20,000 establishments, large or small, in every con-
ceivable industry, with which the Ministry of Munitions, the
Board of Trade, the War Trade Department, and the Ad-
miralty have been in touch, are now turning out, on an
26
average, more than twice the product per operative employed
than they did before the war, whilst, assuming the same
standard rates of wages, grade by grade, the labor cost works
out considerably lower than under the old system.¹
The modification, however, in the whole character of
industry by these changes had not been anticipated.
Under the continued incitement and pressure of the
Ministry of Munitions, the employers in all the industries
supplying the thousand and one different things that the
Government required gradually transformed their factories
and workshops, not only as regards buildings and machinery,
but also as regards the hours of labor, mealtimes, overtime,
and holidays; the methods and rates of remuneration; the con-
ditions of engagement, suspension, and dismissal; the disciplin-
ary code, with its fines and other penalties; the relation of
the operatives to the machines and of the various grades and
classes of operatives to each other; and, above all, as regards
the grades, classes, ages, trades, and sex of the operatives
employed.¹
•
It is suggested that no such sweeping transformation
in the organization of British industry a transformation
occurring not in any one trade only, but simultaneously in
nearly all branches of manufacture - has taken place since
what is known as the Industrial Revolution of 1780-1825.2
They have not been restricted to the "Controlled
Establishments," now nearing 5,000 in number; nor to those
other thousands to whom some of the provisions of the Muni-
tions Acts limiting the freedom of labor have been applied
by official order; nor yet to the innumerable other firms
employed on "war work." Nor has their operation been con-
fined to the orders of the British Government or its Allies.
There is scarcely a branch of manufacturing industry that has
not been affected, from steel-smelting to the making of
scientific instruments, from saw-milling and shipbuilding to
every corner of the furnishing trade; from processes in all the
metals, and chemicals to work in leather, glass, pottery,
india rubber, textiles, paper, and food preparations, not even
wholly excluding the transport, distributive, and municipal
services.³
§ 5. RESTORATION OF RESTRICTIONS
Now that the war is ended and the obligation of
restoring the restrictions under Government promise is
1 Webb: "The Restoration of Trade Union Conditions," p. 38.
2 Ibid., p. 27.
³ Ibid., p. 28.
27
faced, it is discovered that the organic changes have been
such that it will be impossible to go back to pre-war
conditions. In the case of the Amalgamated Society of
Engineers alone
•
the restoration of "the practice ruling in our work-
shops, shipyards, and other industries" would involve,
(1) the exclusion of all the women, unapprenticed men, men
from other crafts, laborers, and in many factories also the non-
unionists, from all strictly engineering work; (2) the total
abolition of "dilution" and teamwork in all its forms; (3)
either the scrapping of the many millions of pounds' worth
of new automatic machines, or their manning, even when they
were used for simple operations, exclusively by skilled
engineers at the old standard rates; (4) the abandonment of
any form of "scientific management" wherever it has been
introduced; (5) in nearly all establishments the abolition
of piecework or bonus systems of remuneration, where they
have been newly adopted, and a resumption of the old weekly
standard rates; and, in short, (6) a return to the arrangement
under which a skilled mechanic, attending to a single machine,
occupied exclusively with a single job, did it from start to
finish at a fixed weekly wage.¹
Hence, in spite of the governmental promises to restore
the limitations on output, it is realized that restoration
cannot be carried out:
To put it plainly, we could not restore that part which
has been abrogated of the network of agreements and rules,
usages and customs, that existed before the war, even if this
could anyhow be done, without undoing, the new industrial
revolution; and without making, in a reverse direction, as
sweeping a change throughout British manufacturing in-
dustry as has been effected by that revolution. We may as
well admit to ourselves, straight away, that, in face of so great
a national loss, and of the opposition both of the employers
and of the new classes of operatives who would have to be
turned out, together with that of their sympathizers in other
social circles, no Government could insist on carrying out the
pledge; and that, in spite of its plighted troth, no Government
will try.2
There is some evidence that the more intelligent labor
leaders have come to realize the undesirability of restric-
tion. In a large establishment near Manchester, the
chairman of the works committee recognized that the
¹Webb: "The Restoration of Trade Union Conditions," pp. 47-48.
2 Ibid., pp. 49, 50.
28
workers must produce efficiently; but it was evident that
he retained the confidence of the men only by great tact
and skill.
A leader in trade unions explained, in connection with the
restriction of output by the use of machinery, that the intro-
duction of such improved machinery in peace time could only
have been effected after considerable trouble and opposition.
He was firmly of the opinion that the workers should reverse
their policy of restriction to one of productivity, as this
would lead to higher wages and more satisfactory conditions
for the workers. He stated, however, that he had worked very
hard trying to impress this policy upon the Unionists, but
that he was of the opinion that the rank and file of the
Unionists were still very firmly convinced that restriction of
output meant work for larger numbers; and he felt discouraged
because of his inability to shake this conviction. He also
seemed convinced that if the policy of restriction on output
was restored and enlarged, the result would be the crippling of
British industry.
In general, skilled workers wished to return to the old
practice of restriction of output; but the new workers,
who were unskilled, did not.
It may be seen, therefore, that, owing to the impossi-
bility of restoring the old restrictions on output, the labor
leaders will regard that fact as a reason why they should
be given equivalent advantages in some other directions.
If they yield in these demands, it will be to improve their
bargaining position in other matters. Already the British
Labour Party has shown its understanding of this bargain-
ing power by including among the "demands" in its plat-
form for the December, 1918, elections the following:
3. The complete fulfilment of the nation's pledge to the
trade unionists that they should be unconditionally reinstated
in respect of the trade union conditions and workshop customs
abrogated in the public interest; or else that the Govern-
ment should submit for their acceptance measures calculated
to achieve the same ends.
§ 6. BONUS AND PREMIUM SYSTEMS
Schemes for the stimulation of productivity have been
tried abroad to secure high speed war production.
The most widespread has taken the form of a bonus or
premium. The offer of a bonus or a premium for more or
better work has not been very popular with British
29
1
workmen. An elaborate system, however, was established
on the basis of a "day rate." By the day rate in this case
is meant the current rate before adding the Government
bonuses of 23 shillings and 6 pence, and 1212 per cent
added to the regular rate and to the bonus. For instance,
the regular rate of wages for a fitter at the present time is
30 shillings per week of 47 hours; added thereto is a bonus
of 23 shillings and 6 pence, and 12½ per cent on the
total, making the final rate, including bonuses, 70 shillings
and 3 pence. All wage rates were made up of these three
parts, the original basic wage established between em-
ployer and workman, the Government's addition of a flat
sum, 23 shillings and 6 pence per week, and a third part,
1212 per cent of wages plus bonus to meet the increase in
cost of living.
In France, likewise, there was a war bonus system
whereby a graduated sum was added to the wage on
account of the high cost of living (Primes cherte de vie).
It was so arranged that a workman drawing but 7.70
francs per day, the minimum, would receive 3 francs addi-
tional, and a woman worker drawing 6 francs per day, the
minimum, would receive 2 francs additional. As the
wage increased in both cases the additional amount
decreased, so that a workman drawing 17 francs per day
would get nothing additional, and a woman worker
drawing 14 francs would get nothing additional. The
basic rates were set by Rate Fixing Committees in each
political district.
The committee consisted of five workers (two women)
and five employers, nominated by the respective local syndi-
cats and appointed by the Minister of Munitions. The rates
set by these committees are minimum rates; good workmen
get more and sometimes much more. The same rates applied
to these same classes of labor throughout the district.
Prior to the war the condition, at least in the boot and
shoe industry, was different. Your Commission was in-
formed by leading manufacturers that
Previous to the war, labor union leaders (in the boot and
shoe industry) argued for a smaller production, in order to
leave work for more workmen. Dayworkers would not hustle.
The cutters in the shoe industry were mentioned by way of
illustration. These men are necessarily on a time basis to
insure good cutting and efficient use of skins. Old and young,
feeble and strong workmen all cut the same number of pieces
per day. A premium system was of no avail.
30
In Italy, also, your Commission found a war bonus
system in operation. It was stated to us that piece and
premium work is common in Italian shops. Wages were
increased by 25 per cent for overtime, a principle that
would hold under the new eight-hour day. The general
war bonus system established was to pay a certain amount
of wages per day and then add to it 25 per cent or 30 per
cent to cover the increase in living costs. Besides this
bonus, a premium is sometimes offered for increased
output.
The practically inevitable outcome of the wartime
bonus system has been that the workmen insist that these
bonuses shall be made permanent. In the same way the
seamen's unions are demanding that the war bonus to
sailors in the submarine zone shall be incorporated into the
peace time permanent wage. This same movement is
found in Great Britain, France, and Italy. The wages
that rose in the war emergency are not to descend in time
of peace, if the workmen can prevent it.
87. PIECEWORK
Piecework has been used much more effectively. It
has often given the workers higher wages, while manage-
ment gets a benefit by a spreading of the overhead charges.
The employers agreed that during the war piece-rates set
on a scale of effort and production prevailing before the
war should not be reduced; this removed the objection of
the workers and resulted in many cases in very high
productivity with consequent high wages. For instance,
women and unskilled workers on repetitive war work came
to earn more than the previous earnings of skilled men
working at day rates. In the main the objection to piece-
work has been that, when earnings rise the manager lowers
the rate and the interest of the worker in enlarging
productivity is removed. In the Amalgamated Society of
Engineers a particular job was paid for on a certain
allowance of unit time; and until recently employers.
offered a bonus on time saved. But it was claimed by the
workers that the reduced time was made the basis for a
reduction of the time allowance on a new contract.
Furthermore, the theoretical objection is generally held
that the worker cannot be expected to increase production
under the present system of distributing shares by which
it is claimed that an increased product goes to the em-
ployer. Consequently, it is urged that if the workers had
31
a larger share in the management of industry so that an
increased product would increase wages, there would be
no opposition to exerting effort to enlarge productivity.
There is evidence that restriction of output has been
avoided where there was no cutting of rates:
In a large establishment employing 17,000 men, the piece-
rates during the war were set on a basis which permitted a
first-class mechanic to earn double the day rate. The piece-
rates were set by the company on a basis permitting the
mechanic to earn twice the regular rate of 30 shillings, or a
total of 78 shillings per week. Some operators on piecework
made 200 per cent and even 300 per cent more than the regular
day rate. Mr. had not seen much evidence of attempt
by the men in one shop to hold down production in another
shop when the piece-rate was the same in both cases. The
men in two shops might, however, check up between the
shops and make sure that both were getting the highest rate for
the same piece. The piece-rates were set from a time study
made from the drawings and not by pace-setters or stop-
watch investigations. When the work was placed in the shop,
the piece-rates were announced, but each operator was given
time to try out the work before accepting the rate, and, if he
did not think the rate satisfactory, it was subject to negotia-
tion between the foreman and himself. The rate, when once
agreed upon by both sides, remained in effect throughout the
contract, unless a change was made in the operation. With
this policy, there was no difficulty in getting the men to
produce at rates which were, in the opinion of the company,
about at the limit of their capacity.
In commercial business the company would not be able to
grant such liberal piece-rates. For instance, at one time the
company was bidding on certain work in competition. The
Shop Stewards were called in and the necessity of setting
rates on a basis of 50 per cent above the day rate instead of
100 per cent was made clear to them, and this basis was
accepted by the men after the situation had been explained to
them. However, the workmen do not always accept the piece-
rates easily, and sometimes a matter runs along for a month
before the company and men get together.
The main reasons why the workpeople slacken in their
work and demand shorter working-hours are, in the first
place, the fear that there will not be enough work to go
around if they produce to the limit of their capacity; and,
secondly, they believe that under present conditions they
will not get any benefit out of the higher productivity.
When such apprehensions are removed, there is a tendency
toward agreement and co-operation.
32
One leader of the Iron and Steel Trades Confederation ex-
plained that in his organization the straight piecework system
prevailed. By mutual agreement piecework rates were
worked out on the conditions prevailing in the industry at any
particular moment. With the increased prosperity two pos-
sible lines of policy were followed. First, the improvement
by increase in the size of the furnaces without decreasing the
amount of manual labor required. The Confederation always
argued that the amount of manual labor per ton remaining
the same, there should be no change in the tonnage rate.
The employer gained enough from the decreased overhead
expenses to recompense him for the outlay on enlarged fur-
naces. Mr.
went back to the history of the trade some
years, and showed that the tonnage rate of 2 shillings and
6 pence per ton for handwork on furnaces had been con-
sistently maintained, but when new machinery for feeding the
furnaces was introduced, the men again by agreement arrived
at an allowance for the machinery, and based it on the work
of the third man of the gang employed on a furnace, so that
the tonnage rate was reduced one third. This is a second
method. The principle prevailing in the wages relations
between the smelters and the employers was that there must
be no change in rate unless there was a corresponding change
in conditions and methods of production. He stated that the
tradition of the steel smelters, one of the constituent unions
of the association, was opposed to restriction of output.
In a large establishment near Glasgow where piece-
rates are never reduced or cut except where a change in
design is made or where the method of doing the work is
materially improved, no difficulty was experienced with
the pieceworkers. On daywork, however, where the rates
are also guaranteed, slacking was very pronounced, and
the only way the workmen could be induced to produce
was on a premium or piece-rate basis by which they made
large earnings.
The worker's point of view regarding piece-rates as
expressed in a discussion with a representative of the
Commission was substantially as follows:
The rate-fixing department was, in the majority of works,
known as the "guessing" department. In British engi-
neering works no scientific system of rate-fixing prevailed.
Rates were fixed stupidly and unjustly. Any skilled and
honest representative of the workers could replace the present
type of rate-fixer, and thus give both employer and employee
a fairer deal.
On the foreman and the rate-fixer rested the onus of
responsibility for much of the alleged inefficiency in British
33
industry. A foreman was too often a bully, hard and in-
considerate. The rate-fixer, more often than not, set a rate
that was too high. If men worked at normal speed on rates
set so high, they would earn a wage that would be much above
the average, viz., 25 per cent above the time rate in the trade.
The rate-fixer was in the habit of meeting this situation, the
result of his own blunder, by cutting the rate. The secretary
of the local National Guild League, a brainy and silent man,
gave first-hand evidence of a conversation between a head
rate-fixer and his subordinate in which a rate that yielded
more than 33 per cent above time rates was discussed, and the
conclusion reached to “cut” it, on the ground that the work-
man was earning too much above the normal rate.
The workmen met this situation by restricting production.
They "soldiered"; they accepted the time-fixer's rate and
never showed what they were capable of doing. Practically
every man present confessed that prior to the war this was
their attitude. They feared the cutting of the price and un-
employment. The Chairman of the Shop Stewards said that
he was given twelve hours by the rate-fixer for an operation
which he found he could do in one and a half hours. He took
the twelve hours, though, for his rate would have been “cut,'
and he could see no other line of action. The present foreman
said that he was for four and a half months on a job where he
systematically restricted production, in the sense that he
accepted the time set and never exerted himself to lower it.
He would have received no advantage for doing so.
""
All present asserted that there has been no restriction
during the war. In the establishment where they worked, and
where the Shop Stewards had a large voice in affairs, the time-
rate was the fairly low one of 2 shillings and 6 pence an
hour, but there were many men whose rates were equal to 6
shillings an hour. This was a new firm which had learned
that it could afford high wages as long as it got high pro-
ductivity. If employers could learn that lesson, and could see
that democratically elected Shop Stewards could be as efficient
as the present foremen and rate-fixers, the "control of in-
dustry" demanded by the leaders in the Shop Steward
movement would be beneficial to everybody. The control
they demanded did not go any further than above defined.
Problems of buying and selling, and of finance, were beyond
the dreams of the capacities of the workers.
§ 8. PROFIT-SHARING AND EDUCATION
In the past, profit-sharing has been regarded as a way
out of these difficulties. After assigning a reasonable
return to the various grades of labor and a fixed interest to
capital, a division of the remaining profits to labor and
34
capital is involved in such a system. In some cases there
have been good results; but wherever there has been
confidence in the good faith of the management, it has been
found that such confidence generally permitted other
methods than profit-sharing to become quite as effective
in bringing about good relations between workmen and
employers. It is to be kept in mind, however, that,
with extreme labor leaders, profit-sharing has no favor,
because it recognizes the maintenance of the capitalistic
system which ought to be destroyed and succeeded by
Socialism. If the whole or even a partial control of in-
dustry is obtained by the workers, there is no reason for
talking about a share in profits.
So far as the labor force is concerned, every one knows.
that efficiency of production is really dependent on an
intelligent, trained, and willing body of workers. This
involves a thoroughly good method of general education
in the earlier years for all children. In this respect Great
Britain has been lamentably wanting. A system of
technical training for skilled artisans has been maintained
only by Germany, of all European countries. This is a
significant fact to be faced by the Allies in looking to the
future of industry. Skilled workers, other things being
equal, make low costs, large productivity, and allow high
wages. But back and beneath all these considerations
there must be found a moral code which will ensure a high
quality of goods, freedom from imperfections, pride in
work, as well as govern the health, conduct, and family
relations of the workers.
The British and French Governments are awake to this
situation. The British Board of Education under the
direction of Mr. Fisher is developing an extensive program
for general and technical education. Labor unions also
favor an extension of educational facilities, a raising of the
age limit for compulsory attendance at school, and better
technical training. The same problem is being faced in
France. Among many other effects of the war, it seems
possible that more extensive and effective education may
be one.
§ 9. ATTITUDE TOWARD SCIENTIFIC MANAGEMENT
The American method for increasing production by
a scientific study of the productive process, called by
various names, such as scientific management or efficiency
35
1
engineering, has been consciously adopted by but few
firms in Great Britain, France, and Italy. Indirectly,
however, the influence of the movement has been marked
in awakening interest and in suggesting minor changes in
methods. The attitude of organized labor to this move-
ment is worth noting.
The attitude of the British workmen towards scientific
management is decidedly hostile; they object to being
"Taylorized." The workers feel that, although the war
introduced quantity production into British industry by
necessity, quantity production in peace times may not be
suited to their own ends. They do not want to appear to
be opposing efficiency in the task of national restoration,
yet they hold that the principles of scientific management
are anti-democratic and tend to destroy that monopolistic
control of the trade unions over production which they
consider the safeguard of their standard of living and
economic power. Moreover, such institutions as scientific
management work against their National Guilds plan
for the ownership and control of capital in conjunction
with a democratic state. Accordingly, their trade unions
expect to reject a greater part of such "American methods"
until they are prepared to regulate the employers' applica-
tion thereof.
The following extract indicates the consensus of labor's
opinion on scientific management before its principles
were extensively introduced into British industry:
Though there are but few firms in England that have intro-
duced scientific management, the system has spread very
largely in America and an acute controversy has arisen as to
the effect of the system as a whole on the workers and their
unions. . . . All these controversies bring us back to the fact
that scientific management is as yet the servant of capitalism
and that there are but few chances of judging it on its own
merits. Where, however, it is unconnected with the "human
factor" of the wage-earner, scientific management has de-
veloped mechanical devices and acquired a "hand wisdom"
that should be of value in eliminating waste and increasing
the wealth of the whole community, whoever has industrial
control.¹
Later, G. H. D. Cole expressed in his article "Scientific
Management," the attitude of labor
the attitude of labor following their
'Labour Yearbook, 1916, p. 251.
36
further experience with applications of the Taylor system,
which in part is as follows:
The whole tendency of scientific management, as developed
by the employers and by the industrial experts today is anti-
democratic. It tends to the concentration of knowledge,
authority, and industrial power in the hands of the few, and
takes away from the worker not a little even of that small
share of responsibility and self-determination which he has
enjoyed in the past. Among the trade unionists, on the
other hand, the demand is continually growing that the rank
and file workers in the workshops should have a greater say
in the organization of their industry and in the control of
their working lives. Thus there is a clear opposition between
the two tendencies. . . . This means in practice the rejection
of most of those aspects of the system which the employers
are most anxious to establish.¹
""
The sympathetic attitude of the French workmen
towards scientific management, as shown in their labor
newspapers, is in decided contrast with the antagonistic
attitude of the British workmen. The shortage of labor,
together with the stringency of money and the necessity
for increased production are chiefly responsible for the
keen interest of the French wage-earners in "Taylorism
(the only scheme the French seem to know of) and their
demand for its rational application to the solution of their
national reconstruction problem. As with the British,
the chief problem confronting French labor is that of
control of the application of the system. To this end
labor leaders are urging the adoption of a council of joint
control which will include a workman delegate, an expert
physician, and a representative of the employers. This
scheme is a step towards co-operative management. In-
cidentally it will eliminate the "esprit patronal"
paternal attitude of employers which in the past was
found disagreeable to the workmen.
or
The following short excerpts from discussions on
scientific management, published in L'Information, indi-
cate the general attitude of the workers:
The Taylor system is . . . the only means of solving the
economic crisis resulting from the war.²
The application of the Taylor system, in whatever concerns
the ruling of labor, should be controlled by a workingman
delegate and an expert physician.³
1 The Labour Yearbook, 1919, p. 259.
2 Dr. Pillet, December 8, 1918.
Ibid, December 22, 1918.
37
Workmen by their syndical organizations and notably by
the General Confederation of Labor will enforce the general
acceptance of the knowledge of the scientific principles of the
organization of labor. They will fight the prejudices, yet too
common among workmen against perfection of technique, in
demonstrating that the true spirit of modern methods con-
sists in diminishing labor and useless effort, in increasing the
esprit de corps, and to cause all classes of producers to share
the profits of the increase in industrial productivity."
$10. THE COAL INDUSTRY
An illustration of reduced efficiency of production
is found in the coal industry, which is, of course, one of
primary importance not only to Great Britain but to all
her competitors. The ability of the British to produce.
coal cheaply and to employ it in the working up of raw
material has been essential to the maintenance of her
foreign trade. Since coal is an indispensable necessity for
all classes of the community, the coal-mining industry
could exercise a powerful influence in bringing industry
to a standstill. The expense of production of coal has
risen to such a point that America can successfully
compete with her in selling coal in many foreign markets.
Cheap British coal seems to have gone forever. One
reason evidently is the decreasing efficiency of the miners,
together with a demand for higher wages and shorter
hours of work. Fully 95 per cent of the miners have
organized in unions. They have been aggressive and un-
willing to compromise. In March, 1915, they refused to
sign the Treasury Agreement and were unwilling to sur-
render the right to strike. When the Government was
compelled to place them under the provisions of the
Munitions Act in July, 1915, they did not acquiesce. In
December, 1916, under authority of the Defense of the
Realm Act, the Government took control of the mines,
at the same time conceding a substantial increase in
wages.
In February, 1919, they demanded an increase in wages
of 30 per cent and a reduction in working hours of 25 per
cent, together with the acceptance of the principle of the
ultimate nationalization of the industry. The Govern-
ment appointed a Coal Commission whose report was
named from its chairman the Sankey Report. The
Government adopted and the miners ultimately accepted
¹ André Citröen, January 16, 1919.
1
38
this report, which recommended not only an increase of
2 shillings per day worked and a reduction, beginning
July 16, 1919, of the hours of labor from 8 to 7, but,
"subject to the economic position of the industry at the
end of 1920," the hours of labor per day were to be reduced
to 6 hours at and from July 13, 1921. In June, 1919,
after considering the question of nationalization, the Coal
Commission, in the main report, signed by Justice Sankey,
recommended immediate legislation for the acquisition of
the mines by the state. It then became a question whether
Lloyd-George's coalition government and the people
would accept the policy of nationalization thus proposed.¹
Along with this industrial disturbance in the coal in-
dustry has gone a serious reduction in the output of the
mines and a rise in the price of coal both for export and
for domestic consumption. Before the war the average
annual output for the coal mines was about 270 million
tons. In June, 1919, Sir Auckland Geddes informed the
House of Commons that the annual production from July,
1919, could not be more than about 217 million tons;
and he warned the public of the coming scarcity and high
prices of coal. Already coal had increased in price. Sir
Richard Redmayne, Chief Inspector of Mines, showed that
the wage cost per ton at the pit mouth had risen from
6 shillings and 4 pence in 1913 to 15 shillings and 4½ pence
in 1918. The cost of coal at the pit mouth had increased
from about 10 shillings in 1914 to 24 shillings and 10 pence
in September, 1918. The average selling price in Lon-
don in 1914 was 25 shillings and 6 pence a ton, while
the controlled public price in 1918 was 43 shillings and
6 pence, and in July, 1919, it was proposed to increase it
by 6 shillings.
As a consequence, American coal exporters have made
inroads into markets formerly supplied by Great Britain.
To Brazil, Argentina, and Uruguay shipments from the
United States have increased from 96,000 tons in 1910 to
1,619,000 tons in 1916; while British exports to these
countries had fallen off from 6,304,000 tons in 1913 to
1,105,000 tons in 1916. Of course much of this change
should be attributed to the difficulties in obtaining ship-
1
¹ Recent events inJuly, 1919, show a very serious situation. In Parliament
a strong opposition to nationalization has arisen. Thereupon the coal miners
have gone on a strike to enforce, among other things, the recommendations of
the Sankey Report. Sir Auckland Geddes explained that the rise in the price
of coal was dangerous to British industry; but the strike went on. Later in
August Lloyd-George refused to accept the principle of nationalization.
39
ping and to the obvious effect of the war on the distribu-
tion of coal. It remains true, however, that the United
States has been increasing the quantity of its coal exports.
to Italy, Sweden, Spain, and other countries. The ex-
planation of this change in exports is partially due to the
fact that, in the period up to 1912, the output in tons per
employee had fallen in Great Britain from 312 to 244 tons,
but that it had risen in the United States from 400 to 660
tons.
The relative efficiency of production is directly affected
by the use of mechanical coal cutters. Between 1903 and
1917 the number of machines used in the United Kingdom
increased from 643, producing over 5,000,000 tons of coal,
to 3,799 machines, producing over 27,000,000 tons of coal;
while in the United States in the same years the number
of machines increased from 6,658, producing over
69,000,000 tons of coal, to 16,197 machines, producing over
253,000,000 tons of coal. In fact, in 1912 and 1913 only
8 per cent of English coal was obtained by the use of coal-
cutting machinery as contrasted with probably 51 per
cent in the United States. It also is clear that the English
collieries and docks certainly in Wales are
are not
equipped with such modern labor-saving machinery as in
the United States. The absence of modern devices for
saving of labor in boiler houses and on the surface generally
is very noteworthy. No doubt before the war labor was
cheap and it was more profitable to employ labor than to
introduce machinery. In some parts of England, however,
especially in the Durham Field and on the docks at New-
castle and South Shields, better trucks and electric haulage
with modern tips and cranes have been introduced. The
attitude of organized labor to this introduction of_ma-
chinery is not clear. In the investigation of your Com-
mission, it seemed plain that, while open opposition might
not have existed, something was always happening to the
machinery to prevent its efficient use. In fact some
definite antagonism to machinery was clearly indicated.
§ 11. EFFICIENCY IN SHIPYARDS
From an inspection of the shipyards on the Clyde
some observations were made bearing upon efficiency of
production in this line of industry. A few modern, well-
equipped yards, with a good layout, were noted.
In
40
general, however, they are cramped for space and suffer
from the fact that the original plans had not anticipated
large expansion. The result is a cramped yard, with
poorly organized processing of material. The machine
shops had good machines, many of them up to date and
probably brought in to replace older types through stress
of war. There appeared to be in many instances a some-
what lavish use of labor for running the machines. This
may be due to tradition in the industry, from which in
general Europe suffers far more than America. Pneu-
matic riveters are supplanting handwork with steady,
if not rapid, progress. One foreman expressed the typical
attitude toward this process of substitution by saying:
We know that pneumatic riveters are coming, are bound
to come. They are faster, and speed in shipbuilding is now
demanded. The work of riveting, however, is not done so
well. We know that.
It is estimated that about one half of the riveting is
now done by pneumatic tools. The workers with these
machines make higher wages than hand riveters. This
is one device used by the management to secure their
adoption.
One phase of the situation which a foreigner cannot
appreciate is the influence of long association with the
industry on the part of workmen, and the universal pride
in achievement, in prestige, among the men. There is a
sense of being born and bred to the shipbuilding trade that
finds expression in all sorts of ways. Labor becomes less
mobile because the workmen have no idea of seeking work
elsewhere. There is a pride in the excellence of work done,
in the fine traditions of the firm that counts for much.
Such forces work for a strong undertow of conservatism
among the laborers.
British shipbuilding costs are rising, due to higher costs
of materials and higher wages demanded by workmen.
There does not appear any immediate likelihood of steel
or steel frames falling in price. Labor demands are con-
tinuing persistently. It was the consensus of managerial
opinion that the efficiency of workmen decreased with
increases in wages and increased with falling wages. As
in the case of coal, British shipbuilders are looking with
serious concern toward the United States.
41
$ 12. EFFICIENCY IN WAR WORK
Mention should be made in this connection of the
British war industries, that is, the munition factories.
Because many of these had to be built from the ground up,
and because others were so radically changed by the war,
they illustrate what British efficiency can do under stress
of circumstances and when released from peace-time
restrictions and inertia. A few items from the observa-
tions made by an American expert are noted below:
In practically all cases feed and speed and the speed of
operators are very much below United States and Canadian
practice. In spite of this British shops manage to turn out
every week an output which in quality and quantity seems to
average equal to our good shops. Repairs and rejections to
scrap are less than in the United States.
British tooling and general shop organization is much less.
highly specialized than in the United States.
Shops are very weak in conveyers, use of air spot welding,
high speed steel, and many other things which we find efficient.
Nearly all British shops have approximately 50 per cent
more floor space than those in the United States, by any
standard. This is partly due to British factory law, but is
of great advantage to efficient management. Comparatively
few shells are around a machine at any time, and these are
kept moving. Any defective shells are immediately repaired
or scrapped. Few are even visible in any shop. The better
handling of these points, together with the uniformly high
quality of forgings, is believed to account for the fairly satis-
factory quantity of output, notwithstanding that the feeds
and speeds and the speed of workers are low.
Almost all British shops are extremely light and pleasant
places to work in. Sanitary arrangements are excellent for
men and women. Majority of the shops are equal to the best
in the United States in this respect.
All parts of shops are kept scrupulously clean in most cases.
The war demand for high speed production has un-
doubtedly had a material effect upon industrial methods in
Great Britain, France, and Italy. A continued reiteration
of the superior productive methods of Germany and the
more effective use of machinery by the United States has
resulted in awakening an eager interest in the minds of
production managers. They want to know what these
methods are; they are more open-minded to new processes,
new labor-saving devices, better organization. It seems
42
generally agreed that scrapping of old machines will not be
such a heart-rending process in the future as it has been in
the past. The British mind is pretty thoroughly shaken
in this aspect of its insularity. French industrial and
commercial leaders are likewise keenly aware of the
coming competitive struggle. With the restoration of
material resources, they are growing ambitious to become
an efficient industrial nation.
§ 13. CONCLUSION
A part of the struggle in these countries to secure a
higher degree of productive efficiency is certain to be the
overcoming of labor's antagonistic attitude. Restriction
of output is not consistent with an attempt greatly to
increase output. It is a fundamental attitude that must
be changed. Thoroughgoing, cordial co-operation be-
tween employers and workmen is essential to efficient
production. One may wisely draw the conclusion, there-
fore, that our own industrial advancement should not be
menaced with the inevitable dangers arising from the
wrong point of view spread among our workmen - the
erroneous principle that more employment in a country
where there is a surplus of labor can be obtained by lower-
ing the production of each worker. The forces which,
undirected or wrongly directed, have already brought
British industries to a crisis, should not by our careless
passiveness be permitted to produce the same effects upon
our own.
-
43
CHAPTER III
MANAGEMENT
§ 1. CONFUSED TALK ON ECONOMIC PROBLEMS
There was found in all the countries visited by your
Commission a common element in the new labor move-
ment. This common element is a direct challenge to
the present industrial system. Workmen may talk of
this or of that subject, but behind it all and admitted over
and over again is the fairly well defined aim to establish a
new social and industrial order. This aim may appear in
a variety of phrases. It may be spoken of as the democra-
tization of industry, or as self-government within the
shop, or as democratic control, but the real essence of the
meaning is the same. There is, undoubtedly, however,
much loose and thoughtless talk on this subject by those
who are opportunists. They have not given serious or
long-continued thought to the economic significance of
the views which they present. In view of this fact, there-
fore, something needs to be said at this point about one
function in our industrial régime, which has been greatly´
obscured by lack of clear thinking, before the general
problems of labor are taken up. This is the function of
management.
In the published utterances of labor leaders there is
usually no clear distinction made between industrial con-
trol and the function of management. As an example of
Labor's attitude toward this subject, the following quota-
tion from the program of the British Labour Party will
serve:
It demands 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
brain, for the service of the community, and of the com-
munity only.¹
Or again:
The only solution of the industrial problem is the transfer-
ence of the control of industry from "private enterprise" to
1"Labour and the New Social Order." Pamphlet of the British Labour
Party, p. 12.
44
the organized workers by hand and brain, under a system
which will ensure that the workers will produce for use in-
stead of profit, as the servants of the whole community and
not of a privileged class.¹
Equally pertinent is the following:
Even now the industrial weapon, whether it be the strike
or negotiation backed by the threat to strike, can be used to
secure a foothold in control and to pave the way for the
assumption of management by the workers. Already there
are signs that this is happening."
The scope of demands by labor runs from a share in the
control of working conditions in the shop to the taking
over of the entire function of the employer. The quota-
tions given above are types of the radical attitude. The
following may be taken as an example of a more moderate
point of view:
Would it not be possible for the employers of this country
to agree to put their businesses on a new footing by
admitting the workmen to some participation
not in
profits, but in control? We workmen do not ask that we
should be admitted to any share in what is essentially the
employers' own business-that is, in those matters which do
not concern us directly in the industry or employment in
which we may be engaged. We do not seek to sit on the
Board of Directors, or to interfere with the buying of materials
or with the selling of the product. But in the daily manage-
ment of the employment in which we spend our working lives,
in the atmosphere and under the conditions in which we have
to work, in the hours of beginning and ending work, in the
conditions of remuneration and even in the manners and
practices of the foremen with whom we have to be in contact,
in all these matters we feel that we, as workmen, have a right
to a voice even to an equal voice with the management
itself. Believe me, we shall never get any lasting industrial
peace except on the lines of democracy.³
With more discernment of the complexity of the pro-
blem, an "intellectual" leader of the labor movement in
Great Britain has expressed as his opinion that extended
control by organized workmen has proven a failure:
Attempts of trade unions to engage in industry have been
uniformly and invariably financially unsuccessful, and no
1 "The Industrial Chaos." National Guilds Leaflet, No. 8, p. 4.
2 "National Guilds." Pamphlet of the National Guilds League, No. 1, p. 14.
3 Mr. Gosling: Presidential Address to the Trade Union Congress, 1916.
45
encouragement should be given to any trade union to find any
capital for industrial enterprises, whether under its own con-
trol or by self-governing workshops or what is usually styled
co-operative production.
And again:
The self-governing workshop has, however, proved by
universal experience to be inapplicable to any industrial
undertakings on a large scale, and therefore affords us no
plan of organization for the great mass of modern industry.
Even in the industrial enterprise that can be carried on in a
small way, the self-governing workshop, where the workers
enjoyed absolute autonomy, has proved by long and varied
experience to be, in all but very exceptional cases, neither
stable, nor, so long as it endures, economically efficient, and
that where any commercial success has been attained, it will
be found that it has been gained when there is a close market,
nearly always a partially tied market, such as co-operative
stores.1
The industrial unrest in Europe has given opportunity
for the radical labor leaders to make their opinions more
pronounced. In the confusion of such times, when the
minds of the great mass of men are not clear on the issues
at stake, there is always an opportunity for radicalism to
have vehement expression. It is also true that at such
times confused and inexact terminology may be very
dangerous. It is for this reason that the subject of
management is taken up at this point and discussed in
detail.
·
§ 2. LITTLE ATTENTION GIVEN TO MANAGEMENT
In the whole discussion of labor and its rewards, both
in Europe and this country, there is a lack of under-
standing as to the function and wages of management in
industry. The British workers often regard management
and capital as jointly antagonistic to labor. On the side
of employers there is little disposition to analyze the
general term "profits" and find out how much of their
gross return is due to the mere possession of capital (either
invested or borrowed); how much to insurance against
the various risks of bad debts, seasons, unexpected
panics, wars, obsolete machinery due to new inventions,
etc.; and how much to brains and skill of management.
Such ambiguity, where the owner of the capital is also his
1 Sidney Webb: Committee of the Fabian Research Department, 1916.
46
own manager, is perhaps natural; but in these days of
large production, which has necessitated the use of the
corporation, the separation of the management from the
shareholders (or owners of capital) is known to all.
Moreover, as concerns grow larger and operations become
more extensive, a division of the various duties of the
management into separate branches has become in-
evitable. Such a breaking up of what was once regarded
as the function of one manager has thrown much light on
the relation of management to the other necessary factors
of production.
In trying to get a practical understanding of the function
of management it is clear that it covers the following
heads:
(a) Buying of materials at the right time; foreseeing
market conditions often throughout the world, and deciding
how far to go in storing supplies ahead. Questions of foreign
imports and the price of exchange are to be mastered.
(b) Technical processes. The state of the arts in all coun-
tries, the power to decide whether a new invention will be a
commercial success, good judgment in adjusting machinery
to floor space, and sequence of processes, are matters requiring
a special training for years in any one industry.
(c) Selling. To know accurately home and foreign mar-
kets, to devise the best selling agencies for a particular kind
of product, to know when to sell and at what price, is vital to
the continuance of the industry.
(d) Financing all operations involved in buying and selling,
determining the form of credit, discriminating among buyers
as to integrity and promptness of payment, introducing cost
accounting, borrowing capital, discounting paper, while
dependent on an expert knowledge of banking at home and
abroad, require a very exceptional ability among managers.
(e) Organization. The capacity to organize an industry
into a well-knit whole, to know human nature, and to have
an instinct for selecting the right man for a given duty, to
keep all parts of the institution in proper co-ordination, to
reserve leisure to think, and to keep a grasp on the industrial
tendencies of the whole world, is essential to the highest type
of an executive.
The industrial manager is not a product of books or
education. He is born, not made. Training and educa-
tion will add to his intelligence and power, but his bent is
47
intrinsic. He is found only by being tried out in actual
experience. He comes to the top only by virtue of a great
need for such men and by a demonstration of his capacity
to satisfy that need. An artist may make a poor mathe-
matician and the son of a rich man may make a poor
manager, while the son of the soil may develop a capacity
for organization which may place him in control of a
house named after a founder of years long gone by. The
manager is the pivot of success for any concern. He is
the most important figure in the life of industry. He it
is who makes employment possible for a labor force of
thousands; and yet he is almost always a salaried man.
§ 3. MANAGER A SKILLED Laborer
It becomes obvious, then, that a manager is a man
paid for certain very necessary services to industry. He
is not paid for the possession of capital. If one were asked
to define any form of labor, it would be said that a
laborer is a person who provides a service to industry,
either physical or mental, in return for an agreed upon
payment. Therefore, a manager is a member of the
laboring classes, only he is distinguished by being a
highly skilled laborer. The services he renders are those
of a human being employed in industry. His function is
that of a rare, skilled worker.
When using the word "labor" it is to be remembered
that it is general in its meaning, like the word "trees."
There are various kinds of labor just as there are various
kinds of trees. From the unskilled manual laborer with
the pick and shovel there are strata of the slightly skilled,
the trained artisan, the skilled mechanic, the civil or
mechanical engineer, the specialist, up to the best known
organizers. The highest grade of labor differs from
another chiefly in capacity for better serving the purposes
of industry. Moreover, the wages of the manager are
determined on the same principle as that of any skilled
labor. That is the principle of scarcity. If skilled car-
penters were as numerous as day laborers they could get
no more than the latter. The mere fact of skill produces a
limited class. Further, the skilled hold their own because
they add either quantity or quality to the product. There
is thus a relation between what they produce and what
they receive. If any man taken at random off the street
were as competent to manage successfully a bank, a
48
factory, a railway, or a shipbuilding plant, then managers'
wages would be as low as that of day labor. But, in fact,
good managers, because of the difficulties of their posi-
tions, are very scarce, and the demand for them, as in-
dustry expands, becomes increasingly intense. The man
who, during the war, has shown high executive ability
has been pursued by the offer of very high wages. The
reason why one man gets only $400 a year and another
gets $40,000 is that marked capacity is rare. Indeed, if a
manager is successful in building up the business of a large
factory or a railway, - often taking it out of bankruptcy,
he may gain millions for his company, out of which
his managerial wages form an insignificant fraction. A
highly paid manager is, therefore, often the cheapest man
to his company. The manager is a laborer, and it is open
to any other laborer of skill to obtain the wages of skill if
he has the capacity. That is, the struggle for high wages
is not primarily a struggle between labor on the one hand
and capital on the other, but a struggle between differing
grades of labor accordingly as they possess more or less
industrial capacity. To demand higher wages without any
regard to capacity and skill leads only to a deadlock and a
fight against a rising cost of production, higher prices,
and a higher cost of living to all persons having fixed
incomes.
§ 4. DIRECTORS AS MANAGERS
It is to be noted, also, that although these managerial
functions may be split up and divided among various
persons, they do not cease to exist. It has long been
noted, for instance, that the directors of corporations who
represent the shareholders, exercise managerial power, and
yet they do not receive a direct salary for such work.
They are the ones who appoint the active executive man-
agers to carry out the general policy determined upon by
them. Thus, the success or failure of business enterprises,
expecially those of large size, may depend more upon the
sound judgment, foresight, ability, and industrial experi-
ence of the directors than on the executive chosen by them.
The executive head of an establishment usually appoints.
the heads of departments, assistants, and superintendents
and is largely responsible for the working of technical
processes, yet he not only has the co-operation of his
directors in these matters, but their active influence in
questions of finance, foreign markets, and organization.
49
One strong man among the directors, although giving but
little time to any one company, may greatly affect the
broad and vital policies of the house. Such men are more
often really managers than the appointed executives work-
ing on a salary. Without such ability in management the
returns to an industry would undoubtedly be much less.
And yet such directors receive no salary. Still they
contribute much to the returns. How, then, are they
compensated? For if they are not, this class of men would
not be developed nor be available in raising the efficiency
of industry. While some act from a desire to render a
service, some from a love of power, generally such men
obtain a pecuniary reward from their stock holdings, which
are often very large. They are, in fact, recompensed only
by the larger dividends they receive as stockholders when-
ever the success of their policies brings in larger returns
to the companies which they serve. Hence, large divi-
dends in many cases are due to the skill of management
of men who are not often recognized, but who are never-
theless the true causes of industrial success. Without
them earnings would often disappear. The presence of
these earnings of skill is no reason why they should be
claimed by some other factor of production that could
not have been the cause of them. They, moreover, render
a service to other investors. It is well known that in all
the great industries the vast majority of the stock holdings
are owned by persons able to buy but a few shares.
Hence, if capable directors aid in the earning of large
dividends for their own shares, the small investor obtains
the same proportional return on his modest capital.
§ 5. SCIENCE OF MANAGEMENT
It was pointed out to your Commission that in Eng-
land the problem of management had never received
serious study. The directors, it was claimed, were too
often badly fitted for their posts and were chosen rather
for their standing as financiers, for their power of com-
manding capital, for their ability to finance the purchase
of raw material or to sell the finished products, than for
their experience in and capacity for production manage-
ment. Said a member of the Technical Engineers'
Association:
English industry needs the technical engineer, whose out-
look is scientific, who knows science can find a way to produce
50
greater quantities, not merely of goods, but of comforts and
pleasures of life. The manufacturers need such men, although
at present they would not look favorably either on their
organization or on their aims. The workers need such guid-
ance, and, in their present receptive mood, are more ready
than the employer to welcome such guidance, though they
would still be very suspicious of such men, whom they regard
as employers' satellites. In general, the workers, though de-
manding control of industry, are aware that such control can
only come when the "staff" is on their side.
The aim is to isolate the problem of production manage-
ment from that of financing, of purchasing, and of selling,
to make this function a separate science or profession.
The manager in this sense will be essential both to em-
ployer and to employed. He is to be distinguished both
from the financier and the laborer; his field is the science
of management; his sole aim is to secure efficiency of
production.
§ 6. LABOR DEMANDS A SHARE IN MANAGEMENT
The lack of knowledge as to the various services
which are remunerated under the name of "profits" and
"dividends" probably accounts for much of the agitation
in favor of a greater control of industry by the workers
who provide no capital to the industry in which they are
employed.
In Great Britain, where the demands of labor have been
carried to the greatest extreme, various intentions as to
the extent of control over management have been ex-
pressed. It is urged that if the workers had a larger share
in the management of industry they would so modify the
methods of distribution that an increased product would
increase wages; in that case they claim that there would
be no opposition by the workers to exerting effort to en-
large productivity. It was also held that as long as
companies showed large profits they had the means for
paying higher wages. On the other side, it was claimed by
the employer that so-called profits were much misunder-
stood, and were really not in the form of cash, but only a
statement of what had been taken from the yearly pro-
ceeds of the industry for depreciation, risk, and the
enlargement of the industry, so that more labor could be
employed and more product turned out in the future;
that statements as to earnings were misleading, that they
51
often were only statements on paper of the form in which
parts of the proceeds from the sales of goods had gone into
various forms of the industry. The opposition on the part
of some workers to the necessary setting up of reserves
and the use of profits for the expansion of business facili-
ties is most unfortunate.
It is to be remembered, when organized labor refers to
the high published rates of dividends of some companies
as an evidence that they can pay higher wages, that in
many cases the increased productivity yielding such
results has not been traceable to the workers; in truth
it has been due to the devising minds in the management.
The steady increase in wages during many past decades
has often been possible only because methods and
machinery have enabled a large return to be earned out of
which higher wages could be paid. There are numerous
proofs of this general statement in our own economic
history; but it has been signally verified by frequent in-
stances which developed in the course of war production
in the United States.
§ 7. CO-OPERATION AS A SOURCE OF MANAGERS
The point has been sometimes raised that, if organ-
ized laborers took over the control of industry, they
would not have the managerial ability to carry on the
essential functions of management in these days of large
enterprises. To this it has been replied that the workers
have shown managerial skill of a high order in the co-
operative associations of Great Britain. Beginning with
simple distributive co-operation which required little
executive ability, the movements spread to productive
establishments for the manufacture of goods for the
distributive societies. Thus wholesale operations were
greatly extended. Without doubt the presence of the
need may have drawn out managerial ability from un-
expected sources; but, as in our savings banks and
friendly societies, men of standing and business experience
in the community have gratuitously aided the productive
co-operative movement out of public spirit. Thus the
facts do not necessarily show that labor can provide the
trained managerial ability for conducting large enter-
prises.
It is to be kept in mind, however, that it is folly to sup-
pose that executive power belongs to any one class, either
52
to the laboring or to the employing class. A man is
marked for managerial tasks, not because he is poor or
rich, but because of his individual qualities. In this day
of large enterprises many a man of executive power has
risen from the humblest origins. This, however, does not
prove that organized labor, should it get the control
of industry, would be able to command from its own ranks
men of pre-eminent managerial capacity who would work
for the average wages of the usual working-man. If wages
of management, for great industrial skill, are to be wiped
out in order to increase the wages of less skilled workers,
the inducement to skill and efficiency of production
disappears.
Some explain that labor organizations aim only at a
share of control over shop conditions; but, in fact, the
most intelligent and enterprising leaders, while admitting
that laborers may not now have in their ranks men com-
petent to assume charge of all the functions of manage-
ment, evidently look forward to the assumption of the
supreme tasks of management sooner or later. Their pur-
pose, however, in attempting to gain control is not so
much to increase the efficiency of production as to obtain
a position of authority through which wages may be fixed
at a rate more satisfying to the recipients of wages. That
is, it is assumed that wages can be increased at the expense
of some other factor in production. In the event that the
workers should obtain control of industry, it is clear that
it would result only in an exchange of managers. They do
not seem to realize that managerial jobs would be found
only for a few new managers in place of the old and that
the new managers would have to succeed in all the
functions above indicated; otherwise, the business would
fail and loss to all would follow.
53
CHAPTER IV
ORGANIZATIONS OF WORKERS AND OF
EMPLOYERS
§ 1. GREAT BRITAIN
Most American readers are not familiar with the
many different types of industrial and political labor
organizations or of employers' associations abroad. For
the sake of convenient reference, therefore, a list is given
here of the most important of such organizations, with
a brief sketch of their development and aims. This list is
not intended to be complete, but to identify those associa-
tions that have most influence.
Labor organizations may be divided, according to their
activities, into industrial and political. The two are not
always fully differentiated, but intimately interwoven
both in structure and functioning. The political organiza-
tion does not include all trade unionists nor is its mem-
bership confined only to trade unionists. The industrial
organization ranks first, both in time and in strength of
numbers and influence. Herewith are listed the main
organizations:
The Trade Union Congress, which is the annual deliberative
assembly of the trade union world, represents what its friends
describe as "the largest and strongest organized force ever
created by any class in any country for the purpose of mutual
protection." It dates from 1868, when 34 delegates met to
represent the interests of 118,367 trade union members. By
1918, its jubilee year, it had grown to comprise 881 delegates,
representing 4,532,085 members from 262 unions. It com-
prises most of the large unions and federations. Delegates
are elected on the basis of the numerical strength of their
unions, and vote in a block.
block. The Miners' Federation, for
example, sent 171 delegates to the Congress of 1918, and thus
cast nearly 20 per cent of the votes.
There is also a Scottish Trade Union Congress with a
membership, in 1918, of about 500,000, and also one for
Ireland, whose membership cannot be ascertained.
The program of the English Trade Union Congress calls.
for nationalization and control of railways, coal mines, land,
54
canals and waterways, larger housing provisions, and extended
educational facilities.
Out of its membership, the Congress elects a Parliamentary
Committee, 16 in number. Its functions are to watch all
legislation affecting labor; to initiate such legislation as the
Congress may direct, and to act as an executive of the
Congress in the interval between each meeting. The presen-
tation and discussion of the report of this committee con-
stitutes a large part of the annual proceedings of the Trade
Union Congress.
The President of the Congress is generally a leading repre-
sentative of one of the important unions.
Out of the activities of the English Trade Union Con-
gress have sprung two other national labor bodies: the
Labour Party and the General Federation of Trade Unions.
The former is a political organization, the latter an en-
deavor to obtain a strong, central industrial organization.
The Labour Party is a federation which represents organiza-
tion of trade unionism for political purposes. The member-
ship of the party, which was founded in 1900, is recruited
chiefly from the trade union world, but includes trades
councils, and two socialistic organizations. At its annual
conference in January, 1918, its membership was reported as
2,465,131, of which 2,415,383 belonged to the affiliated trade
unions. This figure for membership is based on the contribu-
tions made by the unions. As it is an established fact that
many unions do not pay contributions in accordance with
their full strength, the host of trade union support is even
greater than the figures indicate.
In 1917, the party extended the basis of membership by
opening its ranks to brain workers, and by giving women
four seats on its national executive of 23 members.
Labor had been represented in Parliament before the for-
mation of the Labour Party. In 1892, 15 labor men were
elected; in 1900, 11. But from 1900 onwards Labor turned
definitely towards political organization.
The decision in a famous lawsuit, the Taff Vale Case (1901),
having made labor officials responsible for damages inflicted
by union members during a strike, exposed all trade union
funds to possible confiscation. It was this decision which
turned Labor's attention to politics. In the election of 1906,
51 Labour members were elected, in the two elections of 1910,
47 and 48 respectively, and in 1918, 59 members.
The Secretary of the Labour Party is Mr. Arthur Henderson,
while on the national executive are J. R. Clynes, M.P.,
55
formerly Food Controller, Sidney Webb, Ramsay McDonald,
and Robert Williams. Among its parliamentary represen-
tatives are John Hodge, M.P., formerly Minister for Pensions.
Two members of the Coalition Ministry formerly belonged to
it, viz., G. N. Barnes and G. H. Roberts, both of whom have
held the positions of Minister for Labour. The two latter
withdrew from their party in November, 1918, when it severed
the party truce.
The administrative connection between the industrial
section as represented by the Trade Union Congress and
the political section, represented by the Labour Party, is
not self-acting. The Labour Party does not report to the
Trade Union Congress, but its members and leaders take a
dominating part in discussions and secure a solid backing
from the trade unionists. To secure united action, an
organization, known as the Joint Board, has been set up.
The Joint Board may be described as the machinery through
which the aims common to the industrial and political
sections of the Labour movement are realized. It was in-
stituted, originally, in 1905, to consist of representatives of the
Parliamentary Committee of the Trade Union Congress, the
executive committee of the Labour Party, and the managing
committee of the General Federation of Trade Unions. Its
purpose and aim were to organize for united action in the
electoral campaign of 1906. It has served to focus the
opinion of organized labor and has guided industrial policy
and Parliamentary action.
In 1916 the action of the Trade Union Congress in Birming-
ham led to the reconstitution of the Board without participa-
tion by the General Federation of Trade Unions.
Prior to using the political weapon, the Trade Union
Congress sought to gain greater strength for industrial
action by federations within its membership. Of these the
only one formed is the General Federation of Trade
Unions.
The General Federation of Trade Unions was established in
1899 with an initial membership of 43 unions and 343,000
individuals. In 1914 its union membership was 146; in 1918
its individual membership was 1,100,000, comprising about.
one-fourth of the organized unionists of the country.
It is virtually a strike insurance and benefit society. Its
members pay contributions at a regular rate per member,
and receive a certain rate of benefit when their members are
on strike. Its financial position has been gravely burdened by
56
the labor unrest of this century, while several of the large and
wealthy unions which had belonged, withdrew from it. Its
membership now consists of the cotton operatives, the dockers,
and many small craft unions.
It prefers to act by industrial rather than by political
means, and under the conservative leadership of its Secretary,
Mr. W. A. Appleton, was becoming somewhat divorced from
the general labor movement. The Trade Union Congress of
1916 objected to the overlapping which resulted from its repre-
sentation on the Joint Board, and has practically banned it.
More recently, dissatisfaction with the achievements of
the Labour Party has produced a powerful revival within
the trade union party for industrial federation of industrial
combinations. The motive of this movement is to secure
joint action in case of an industrial dispute of national
extent.
The Triple Alliance, the first of these federations, was
formed in 1915 from the three most powerful union federations
in Great Britain; viz., the Miners' Federation, the National
Union of Railwaymen, and the National Transport Workers'
Federation. The miners have 800,000, the railwaymen
350,000, and the transport workers 250,000 members. This
group of unions has power to impose economic paralysis upon
the country. They may act in matters of a national character,
and may not take action likely to affect the others until such
proposal has been submitted to the joint body for considera-
tion. Fortunately, all three bodies must be unanimous before
action is taken.
The constituent members of the Triple Alliance are among
the largest and most powerful unions in Great Britain.
The Miners' Federation of Great Britain is a federation of
18 district associations strongly centralized. Its 800,000
members comprise 85 per cent of the persons employed in or
about mines, except craft unions. Its dominant member is
the Miners' Federation of South Wales, which is so highly
socialistic as to be almost syndicalist. By reason of its
members, its organization, and its policy, the Miners' Federa-
tion is likely greatly to influence British trade unionism for
many years. Its President, Robert Smillie, is also Chairman
of the Triple Alliance, and is today a dominating figure in
British trade unionism. He was the driving force behind the
demands of the miners which led to the Coal Commission.
The National Union of Railwaymen resulted from amalga-
mation in 1913 of three railwaymen's unions, with a total
membership then of 170,000. Its membership has now
57
doubled; in fact, the figure supplied to the Trade Union
Congress in 1918 was 402,000 members. This union is
strictly industrial, comprising all persons engaged in the
industry, with the exception of a craft union, the Locomotive
Engineers and Firemen, with only 38,000 members, and a
professional union, the Railway Clerks' Association, with
66,000 members.
The most influential man in the union is its Secretary,
Mr. J. H. Thomas, M.P., one of the great orators of the labor
movement and one of its sanest and most trusted leaders.
The National Transport Workers' Federation embraces.
thirty unions of land and water transport workers, which
amalgamated in 1910. Its membership is estimated at a
quarter of a million members.
The moving figure in the Federation is the Secretary,
Robert Williams, who belongs to the more revolutionary
type of labor leaders. While a member of the national
executive of the Labour Party, he disbelieves in parliamentary
action, preferring the method of the strike for the achievement
of industrial aims.
•
A general movement towards amalgamation and federa-
tion has characterized trade unionism in Great Britain
since about 1911. Two of the constituent members of the
Triple Alliance came into existence as a result of that
tendency. Other federations have been formed in the
building and the textile trades, among tramway and
women workers, the iron and steel trades, and general
laborers.
The Iron and Steel Trades Confederation is a fine achieve-
ment towards centralizing trade union organization and
securing stability and industrial peace in the industry. It was
formed in 1917 out of four unions in the iron and steel trades.
Its total membership is about 75,000, and consists entirely of
highly skilled men, who maintain harmonious relations with
employers. Its secretary is Mr. Arthur Pugh, vice-chairman
of the executive committee of the National Alliance of
Employers and Employed.
The National Federation of General Workers is a federation
of unskilled workers. It was formed in May, 1917, out of
seven unions of general workers with a total membership
of over 700,000, including a number of women workers.
Although this is an industrial union, it is by no means militant.
Its objects are to take common action on wage movements
and questions of women's labor, to approach government
departments on behalf of affiliated unions, and "to maintain
greater harmony among the affiliated members."
58
The Federation of Engineering and Shipbuilding Trades
is a loosely knit federation of 27 unions with a membership
in 1913 of nearly 600,000. It was concerned very largely with
the questions of demarcation between the rival craft unions,
which composed it, and with the discussion of common objects
and grievances.
The Amalgamated Society of Engineers, which has since
seceded from the above federation is a powerful craft union
with about 275,000 members. It dates back to 1851. By
reason of the fact that its members are scattered through many
industries and because of its strict defense of craft privileges
against the unskilled and semi-skilled, it has occupied a
prominent place in the disputes and discussions in the
engineering trades since 1914.
§ 2. EDUCATION OF LABOR OFFICIALS
No account of British trade unionism can be complete
without including a statement of the efforts to promote
education for the workers of the country. Three organ-
izations among those which aim to promote such culture
have acquired some celebrity and influence.
Ruskin College, Oxford, was established in 1899 for the
purpose of providing education in the social sciences for
working class students. It is a residential college. Many
of its graduates have become leading officials in the trade
union world. The administration is in the hands of repre-
sentative labor leaders, and the college's chief support
comes from trade unions and kindred institutions.
The college conducts a correspondence course which is
very largely availed of, and arranges conferences on in-
dustrial questions. These conferences receive the support of
the Trade Union Congress.
The Central Labour College, London, arose from a strike in
Ruskin College, in 1909, against the growing conservatism,
as it was deemed, of the older college. The new college was
founded on the twofold principle of the necessary antagonism
of interests between capital and labor, and of the necessity
of a class conscious education of the workers. The college
is practically supported and owned by the National Union
of Railwaymen and the South Wales Miners' Federation.
Classes are organized in local centers under tutors who have
been educated in the Central Labour College. These preach
the idea of industrial unionism and teach Marxian economics
and especially the Marxian doctrine of economic determinism.
The Workers' Educational Association, founded in 1903 by
Albert Mansbridge and a small group who recognized the
59
connection between a higher level of general education and
any distinct social advance. In 1907 co-operation was
effected with the universities, and joint committees of
nominees of the universities and of the workers were set up in
most large centers of England. The chief characteristic of
the association is that it has organized working people to seek
their own education. A three years course is sketched for
each tutorial class, which has the right to select its own
course of study. In general, economics and industrial history
are chosen. Though its membership is only 10,000, it is
recognized as a powerful agency towards satisfying the
educational aspirations of adult labor. Although it is at-
tacked by the Central Labour College as reactionary, Cole
says, "As training grounds for active labor workers and
officials, they have so far proved not inferior to the classes
of the Central Labour College." Its President is Rev. William
Temple, son of the late Archbishop Temple. The association
also includes among its supporters many of the intellectuals
in England and Scotland.
§3. FRENCH LABOR ORGANIZATIONS
The workers of France are organized into syndicats,
which correspond to our trade unions. These syndicats
are organized in one or both of two ways. They are
federated into national federations, on the one hand, or
into local Bourses de Travail on the other. These
Bourses ("locals" or trade councils) are themselves
united in a National Federation of Bourses. The national
federations of industry and these departmental federa-
tions of the Bourses constitute the Confédération Générale
du Travail. No union may belong to the latter except
through membership of one or other of the two forms
of federations.
The number of syndicats organized in 1914 was given
as 4,846, with 1,026,303 members, of whom 89,364 were
women. Out of these 4,846 unions, 4,380 were linked
into 201 larger federations, covering 839,331 members.
In addition to this organization of industrial workers,
there are found organizations whose members are not
confined to workers.
These syndicats mixtes or jaunes (mixed or "yellow"
unions) are composed of both employers and employed.
They are mainly catholic in composition, are friendly to
employers, since their rules forbid strikes and since they arose
60
as an organized movement against what is known as revolu-
tionary syndicalism. In 1914 they were 233 in number and
had a membership of 51,111. Little movement towards
federation has characterized them, since they are largely
local in nature.
The Confédération Générale du Travail · the General Labor
Confederation known familiarly as the C. G. T. — dates
from 1895 and is the French analogue of the British Trade
Union Congress. Its membership reaches probably 500,000
to 600,000 individuals, but is irregular, because of the objec-
tion of French workmen to paying fees unless for some
direct benefit. Strictly speaking, the C. G. T. is the apex
of the French labor organization, in which unions, based on
the industrial principle, are grouped into a number of national
federations, which, in turn, are organized in the C. G. T. But
there is little centralization and much local autonomy; large
union funds are discouraged; political action is looked upon
as unimportant, while the general strike is regarded as the real
weapon of the working classes. The C. G. T. thoroughly
endorses this attitude on politics and the general strike; at
least two thirds of its membership is revolutionary, the rest
"reformist." The Builders' Federation, the largest of the
affiliated federations, and the Metal Workers', the third in
size, are revolutionary; the Miners', the second in size, are
"reformist."
The Secretary of the C. G. T. is M. Léon Jouhaux, who
is himself opposed to the general strike, and has summed up
his advice to war workers during the reconstruction period
in the formula maximum production in minimum time for
maximum wage.
As in England, the industrial organization of the
workers is paralleled by their political organization.
In the same way, too, a small committee, like the Joint
Board, exists to maintain effective cohesion and co-
operation.
The Parti Socialiste Socialist Party — represents the
political side of French trade unionism, its members, however,
being confined by no means to workers. It originated about
1880. In 1893 it elected 40 representatives to the Chamber
of Deputies out of 602 members. In 1906 it was reorganized
by the late Jean Jaurés under the title of "The United
Socialist Party." In that year it returned 54 deputies; in
1910, 76; in 1914, 102. At the same time there was a group
of Independent Socialists with 20 members in the House of
Deputies in 1906; 32 in 1910, and 30 in 1914. This socialist
group is one of the largest and most influential in the Chamber.
61
§ 4. ITALIAN LABOR ORGANIZATIONS
Labor organizations in Italy resemble those in France
inasmuch as both countries have a General Confederation
of Labor and a Socialist Party. But within each of the
Italian organizations there have been divisions which,
while threatened, have never materialized in France.
The Confederazione Generale del Lavoro - General Con-
federation of Labor is numerically the largest Labor
organization in Italy, comprising about 420,000 members.
Its organization, which dates from 1906, is similar to the
French C. G. T. Its political attitude is different, since it
co-operates with the parliamentary socialists and favors
political as well as industrial action. It has an immediate
program of an economic, social, and educational nature,
maintains its own insurance, relief, and savings funds, and its
own employment bureaus, and actively fosters the co-
operative movement. Of its total membership, about 125,000
belong to the Agricultural Federation, and it is among them
that the co-operative movement is strongest.
Its paid membership in 1914 was 320,858, of whom 195,858
were employed in industry. In 1917 its membership had
fallen to 237,560. This decrease was due in part to the
disturbing effects of the war, and in part to the attitude of the
C. G. L., which adopted a "neutralist" attitude and con-
sistently opposed intervention by Italy in the war.
The Unione Sindicate Italiana Italian Syndicalist Union
is a radical body which split off from the General Con-
federation of Labor and adopted a purely revolutionary
program. It has about 120,000 members. It repudiates
political methods of reform, and endorses direct action, the
general strike, and revolution in the interest of the working
classes.
Catholic unions, which are conservative and anti-revolu-
tionary, both in doctrine and action, account for about 120,000
workers, a large proportion of whom are women.
Independent unions, which are not organized in any one of
the above groups, total about 250,000 members, and resemble
the American Federation of Labor in their attitude towards
politics. They restrict their activities to the industrial or
agricultural spheres in which they are engaged, and aim at
economic and social betterment through "fair play" between
labor and capital.
The Italian Labor Union was formed in 1918 out of 18 of
these independent unions, and a number of other federations
and local associations. It was founded by the pro-war Social-
ists, in opposition to the General Confederation of Labor,
and favored an interventionist policy.
62
In January, 1919, this new federation claimed a membership
of 162,000 members. Though it favors political action in
accordance with the policy of the reformist socialist group
to which it is allied, it does so with reservations.
The political organizations of the workers in Italy
comprise three distinct groups of socialists, each of
which includes a large intellectual and middle-class
following.
The Italian Socialist Party, which dates in its present form
from 1906, is frankly revolutionary in character. It is
opposed to participation in the government, and, under the
leadership of Lazzari and of Serrati, editor of L'Avanti,
the Socialist labor daily, has been violently opposed to Italy's
participation in the war.
It has about 40 seats in the present Chamber of Deputies
out of a total of 508.
Contact is established with the General Confederation of
Labor by an organization similar to that of the Joint Board
in England. A committee from the Socialist deputies with the
officers of the Socialist party sits in joint council with the
executive officers of the General Confederation of Labor to
determine common action both in Parliament and the
Communes.
The Reformist Socialist Party was expelled from the former
party in 1912, when, as the right wing under the leadership of
Bissolati, it opposed approval of the general strike. It was
immediately organized and carried 20 seats in the election of
1913. In 1915 it was strengthened by the addition of the
more moderate leaders of the Socialist party.
The Italian Socialist Union was formed in 1918 at the same
time as the Italian Labor Union, in violent opposition to the
Italian Socialist party. Its membership is practically identi-
cal with that of the Italian Labor Union. Its policy was
interventionist, and consequently it has become merged with
the Reformist Socialist Party.
§ 5. EMPLOYERS' ASSOCIATIONS IN GREAT BRITAIN
Employers' associations in Great Britain are numerous
and, since the war, well organized. They consist of
local and national associations in the same industry, and
of national federations of several industries. The follow-
ing are only the leading federations and associations,
briefly characterized:
63
The Federation of British Industries, which came into
existence in 1916, is a federation of the trade associations
connected with the chief industries of the country. Its
membership consists of national federations, associations of
controlled establishments, and individual firms. In March,
1919, this membership was estimated at 172 trade associations,
15 associations of controlled establishments and 899 individual
firms. Its members pay an annual subscription of £100
($486). Its purpose is to act as an employers' parliament,
representing to the Government and the people the collective
voice of industry.
President: Sir Vincent Caillard.
Director: R. T. Nugent.
Address: 39 St. James Street,
London, S.W. 1.
The Engineering and National Employers' Federation is a
federation of employers in the engineering or metal trades
industry, formed very largely to deal with problems concern-
ing labor, and to negotiate with trade unions. During the war
the National Employers' Federation, which had hitherto
maintained a separate existence, amalgamated with it.
This federation had previously covered such industries as
plumbing, hardware, and so forth.
The Federation has an agreement with the unions in the
engineering trades covering employment, piecework, over-
time, apprenticeship, and provisions for avoiding disputes.
President: Sir Allan M. Smith, K. B. E.
Address: 24 Abingdon Street,
London, S.W. 1.
The Shipbuilding Employers' Federation is very similar in
composition and activities to the Engineering Federation, and
collaborates with it on most matters. It also has an agreement
with the shipbuilding unions, covering fluctuations in wages,
piecework, and provisions for settling disputes.
Secretary: A. R. Duncan,
Address: 9 Victoria Street,
London, S.W. 1.
The cotton industry has two federations, one of which
contains mainly the master spinners, the other mainly the
master weavers of the industry. The former is the Cotton
Spinners and Manufacturers' Association, the latter the
Federation of Master Cotton Spinners. Both deal very largely
with labor questions, and have a well-devised scheme for
handling industrial disputes.
There is also in Manchester an International Master Cotton
Spinners and Manufacturers' Association, which was composed
of representatives from various cotton producing and manu-
64
facturing countries. To this, however, American federations
in the cotton industry were not associated.
Cotton Spinners and Manufacturers' Association:
Secretary: William Stuttard,
Address: 12 Exchange Street,
Manchester.
Federation of Master Cotton Spinners:
Secretary: John Pogson.
Address: Commercial Buildings,
15 Cross Street,
Manchester.
The British Electrical and Allied Manufacturers' Association
is an association of electrical firms, organized in 1905 and
reorganized in 1918. Its purpose is to foster and protect the
electrical industry.
Director and Secretary: D. N. Dunlop,
Address: King's House, Kingsway,
London, W.C. 2.
The Association of British Chemical Manufacturers was
founded in 1916, its membership consisting of individuals
or corporations engaged in manufacture in the chemical
industries.
Secretary: Capt. George Mount, D. S. O.
Address: 166 Piccadilly,
London, W. 1.
The Woolen and Worsted Trades Federation consists of a
number of local associations dealing primarily with labor
questions. It originated in 1916.
Secretary: George H. Wood,
Address: 18 Pearl Assurance Buildings,
Market Street,
Bradford.
The Association of British Motor and Allied Manufacturers
is a trade association of individual firms, organized during the
war.
President: Mr. H. C. B. Underdown,
Address: 39 St. James Street,
London, S.W. 1.
The Federated Association of Boot and Shoe Manufacturers
was constituted in 1917 to deal with the problems created by
governmental control.
Secretary: F. J. Marquis,
Address: 13 Tavistock Square,
London, W.C. 1.
65
The Federation of Master Printers dates from 1902 and in
1919 consisted of about 100 local associations with about 5,000
members. It has instituted a costing system which is spread-
ing among the employers and has been endorsed by the
unions within the industry.
Secretary: A. E. Goodwin,
Address: 24 Holborn,
London, E.C.
1.
Apart from associations organized like the above,
and consisting of employers alone, is another association
whose membership consists of both employers and
employees. This is connected with employers' associa-
tions by the facts that its origin has largely to be credited
to the Federation of British Industries, and that manu-
facturers nominate one half of its controlling body.
This National Alliance of Employers and Employed was
formed in 1917 to promote the active co-operation of em-
ployers and employed in the treatment of questions generally
affecting labor and employment in all trades and industrial
occupations, and to secure the welfare of the industrial
workers of the country and the efficiency of its industries.
Secretary: A. H. Paterson,
Address: 64 Victoria Street,
London, S.W. 1.
§ 6. EMPLOYERS' ASSOCIATIONS IN FRANCE
The organizations of employers in France have tended
toward the type represented by the Chambers of Com-
merce in the United States. They have sought to
deal with general questions touching the industry as a
whole or with questions of trade. Such subjects as
freight rates, credit reports, insurance rates, foreign trade
conditions, come before them. With the secretaries of
each are associated experts to analyze and make available
the information that comes in.
Most of them support professional schools, lecture courses,
laboratories, etc., issue prizes for special work affecting the
trade involved, collect libraries of technical works, and
frequently undertake social welfare work in behalf of their
members and the workmen in their plants. Bulletins are
issued monthly and annually, and they are of the greatest
interest as throwing light on the development of the respective
trades.¹
1 Franco-American Trade, Report to the Manufacturers' Export Association
by the American Industrial Commission to France, 1916, p. 86.
66
They are generally known as employers' syndicats
(Syndicats Patronaux). The first employers' syndicat
was organized in Paris, 1857, and was called the National
Union of Commerce and Industry.
Of these employers' associations there were, in
1914, some 4,967. All together their members totaled
403,143, among whom there were 10,300 women members.¹
Industrial conditions during and since the war have
given them strength and activity. Your Commission
was told that French employers are getting together as
never before.
There is another type of organization in France in-
volving the employers. It is called the "yellow" (jaune)
or mixed syndicat, and is made up of a combination of
employers and employees. Of these there were, in 1914,
233 syndicats, with 51,111 members.2 Relatively weak,
the mixed syndicat has still accomplished something
in bringing the workman into association with the em-
ployer. The purpose of such syndicats is very similar to
that of employers' syndicats.
The French employers' associations, being relieved
from the burden of a tremendous labor problem, have
been free to turn to matters of trade. The Union of
Metallurgical and Mining Industries and Affiliated
Industries is a leading organization in the world for
complete and scientific information. Your Commission
met with some representatives of the Automobile Associa-
tion of France and found them keenly alive to the problems
of that industry. They were complacent about handling
the labor problem, but matters of finance, imports, raw
materials weighed heavily with them.
$7. EMPLOYERS' ASSOCIATIONS IN ITALY
Your Commission found a movement on foot to organize
the employers of all the important industries of Northern
Italy. We were told that the employers in the metal in-
terests are organized and working together. The textile
manufacturers also have their organization. There
met in Turin, April 23d, a convention of employers from
the entire industrial section of Northern Italy to discuss
the question of the eight-hour day and the minimum
wage. But, as in France, the labor union problem has
not brought them together into a complete organization.
¹ Bulletin de la Statistique générale de la France. Tome VII. Fascicule III.
April, 1918, p. 134.
2 Ibid.
67
CHAPTER V
UNIONISM IN GREAT BRITAIN
§ 1. PRESENT TENDENCIES OF UNIONISM
Unionism plays a large part in the industrial situation
in Great Britain. It is strong in numbers and well or-
ganized. The war has increased its strength, not merely
by accretion, but also by leading to greater internal
cohesion. Small units have been amalgamated into large
federations, and both small and large units have worked
towards greater unity in policy and action, with greater
striking power as a consequence.
At the same time, trade unionists have acquired a
larger sense of their political and social importance. A
ferment of unrest, directed mainly against the present
industrial structure, but with a definite political reaction,
has set in. The workers are demanding a higher standard
of living than they enjoyed before the war, which, trans-
lated into economic terms, means more pay and more
leisure. At the same time, they are demanding a larger
measure of control over industry and the nationalization
of mines, railroads, waterways, and shipping.
While trade unionism is, in general, recognized as a
fact and dealings go on between organizations of em-
ployers and trade unions, the general attitude is a source
of much perplexity, both to individual employers and
employers' associations. A spirit of concession and a
desire to amend the evils of long hours and low wages have
been met on the part of the workers by demands that
make the future of industry in Great Britain one of
great uncertainty. Nevertheless, the British Employer,
in general, is desirous of settling the problem of labor
unrest and of finding a solution that will do justice to both
labor and industry.
§ 2. STRENGTH OF TRADE UNIONS
The strength of trade unionism in Great Britain is
measured by figures supplied to the Department of
Labour Statistics and published annually in The Labour
68
Gazette. The latest figures carry down to the end of the
year 1917.¹ At that period there were known to the
British Department of Labour Statistics a total of 1,133
trade unions, registered and unregistered, with a member-
bership of 5,287,500, of whom 774,000 were women. Of
this total, the general labor group, with 12 unions, had
719,500 members, the railway workers, with 7 unions, had
498,000 members, the coal miners had 85 unions and
918,700 members, and the engineering group 58 unions
and 483,600 members. The total figures cited above do
not always include members serving with the forces,
especially in the case of the unions of less skilled workers.
There is reason to suppose as a rough estimate - that
the membership of trade unions in Great Britain at the
signing of the armistice was well over five millions.2
Convincing evidence of this growth is shown in the
figures of the English Trade Union Congress, the member-
ship of which leaped from three millions in September,
1917, to four and a half millions in September, 1918.
Outside of this group stands the General Federation of
Trade Unions, with a membership of a million, while the
Scottish Trade Union Congress reports a membership of
about half a million.
A certain measure of the degree of organization can be
obtained from the statistics of the total "occupied popu-
lation," or, as the phrase goes in the United States, of
those employed in gainful occupations. At the census of
1911³ the total "occupied population" in the United
Kingdom was 20,159,356, of whom 14,307,507 were males
and 5,851,849 females "ten years of age and over."
Boys and girls between ten and fifteen years of age
formed 18.3 per cent of the males employed in England
and Wales, and 10.4 per cent of the females. When these
are subtracted, and occupations non-industrial in char-
acter are excluded, the industrial population of England
and Wales over the age of fifteen years in 1911 was less
than eight million males and less than four million females.
When the figures for Scotland and Ireland, similarly differ-
entiated, are added, the number of males above fifteen
years of age engaged in industry was less than ten mil-
lions, and of females less than five millions. In that year
1 See The Labour Gazette, 1918, p. 485.
2 Compare with one made, though unsupported by evidence, in The Athenæum,
January, 1919.
³ See census of Great Britain and Ireland, 1911.
69
(1911) the trade union membership was officially placed
at 3,018,000, of whom 275,045 were women.¹ The figures
for 1917 suggest an average unionization of between 40
and 50 per cent, a figure confirmed by the Parliamentary
Under Secretary of the Ministry of Labour, Sir David J.
Shackleton, M.P., in an interview with the Commission.
In treating of this figure it must be remembered that it
represents merely an average covering both organized and
unorganized trades; and that many trades are highly
organized. The extent of organization is also illustrated
by the fact that occupations which in the United States
have almost no unions are in England highly organized.
Thus the agricultural laborers were reported at the
Trade Union Congress of 1918 to have had 80,000 mem-
bers. There is a National Federation of General Workers
with a total membership of 700,000. It is the "basic
industry" in Great Britain that has been most thoroughly
organized. "One half of the trade union membership is
in the engineering and shipbuilding industries, textiles,
and coal mining."
§ 3. LINES OF DEVELOPMENT
The recent development of trade unionism is of more
than historical importance. The war has led to an in-
crease in the numbers enrolled in trade unions. This is
shown by the following table. In this, the year 1906 is
taken as the starting point, merely because it marks the
beginning of the definite activity of the Labour Party.
It will be seen that, while there was an increase between
1906 and 1910, there was about the wave of progression
an uncertainty which ended in 1912. From thence on-
wards the increase became noticeable, and grew more
persistent and stronger as the war continued.
¹ Labour Yearbook, 1919, p. 302.
2 Kellogg and Gleason: "British Labour and the War," p. 175. Boni &
Liveright, 1919.
70
TABLE I: MEMBERSHIP OF ALL TRADE UNIONS, GREAT
BRITAIN, 1906-1917, WITH PERCENTAGE INCREASE OR
DECREASE COMPARED WITH THE PREVIOUS YEAR, AND
INDEX OF INCREASE ON BASIS OF YEAR 1906
Percentage
increase (+)
or decrease (-)
compared with
previous year
Index Number
(1906 = 100)
1906 .
1907
1908
1909
1910 .
1911
1912
1913
1914
1915.
1916.
1917 .
•
•
Year
Membership
at end of year
•
2,128,635
+10.0
100.0
2,425,153
+13.9
113.7
2,388,727
1.5
112.2
2,369,067
0.8
111.3
2,446,342
+ 3.3
114.9
3,018,903
+23.4
141.8
3,287,884
+ 8.9
154.5
3,987,115
+21.5
187.3
3,918,809
1.7
184.1
4,141,789
+ 5.7
194.6
4,399,696
+ 6.2
206.7
5,287,522
+19.1
248.4
This table shows that except for small decreases in 1908,
1909, and 1914, the increase in membership of trade unions
has been continuous and large. The last column of the
table measures the extent of the increase over the period.
Trade unions were in 1917 almost two and a half times as
strong in actual membership as they were in 1906.
This general calculation, while significant, does not
reveal the specific movement of increase within certain
strategic industries. While all trade unions have in-
creased in numbers, some have increased in greater pro-
portion, and their greater strength has altered the center
of industrial movement and the trend of trade union
development. The situation is depicted in Table 2:
71
TABLE 2: MEMBERSHIP OF TRADE UNIONS BY INDUSTRIES
1
1906-1917
1906
1907
1908
1909
1910
1911
1912
1913
1914
1915
1916
1917
GROUPS OF TRADES
Building
•
Mining and Quarrying
Metal, Engineering, and
Shipbuilding
Textile
Clothing
Railway Service
Transport (land and water)
General Labor
•
196,955 193,720 177,680 162,236 156,965 173,182 203,750 247,894 235,884 232,571 229,272 257,286
572,763 704,664 719,384 722,639 731,305 742,419 757,147 915,884 862,260 844,102 877,694 949,120
362,416 377,807 365,134 359,838 370,005 415,176 474,429 543,571 562,092 640,066 695,347 847,202
305,511 357,374 362,540 366,445 379,644 436,927 478,097 520,061 499,833 512,290 530,411 627,919
59,831 68,833 65,637 65,882 67,185 74,423 91,855 106,075| 102,288 113,925 121,656 149,756
102,085 138,887 118,713 112,130 116,214 185,573 202,329 326,369 337,082 384,534 424,960 498,263
98,667 110,319 111,329 111,907 129,009 328,025 312,445 374,831 366,137 355,833 378,912 404,846
109,345 125,136 110,927 111,498 118,745 227,306 251,787 330,300 364,581 452,629 509,083 719,579
¹ See Board of Trade Labour Gazette, 1914, p. 283, and Labour Gazette, 1918, p. 485.
72
From this table it may be seen that on the basis of 100
as the index for the year 1906, the groups of trades have
increased during the period 1906-1917 in the following
percentages:
TABLE 3: INDEX OF INCREASE IN GROUPS OF TRADES
1906-1917. (YEAR 1906=100)
Group of Trades
Building
Mining and Quarrying
Metal, Engineering, and Shipbuilding
Textile
Clothing
•
Railway Service
Transport (land and water)
General Labor
•
Index
of Increase
(Base 100)
130.6
165.7
233.8
•
205.5
250.3
488.1
410.3
658.1
A comparison of this table with Table 1 shows that the
increase in the building trade and in mining was below
the general increase for the period. That in textiles was
but slightly below, while in the metal and clothing trades
a fairly parallel movement was maintained. A great
increase in organization occurred in the railway service,
in transport, both land and water, and in general labor.
The building trades were never well organized, owing to
their casual nature, and even during the war never
attained more than 50 percent of their possible trade union
strength.
The miners have been strongly organized relatively,
since 1907, and the increase in their membership could
not, therefore, be so great. While the engineering trades
had always been strongly organized, the great increase in
munition workers, who may be classified into those trades,
led, during the war, to a considerable increase in union
membership. The increase within the railway service,
transport and general labor was due to other causes which
need further analysis.
Since 1911 a strong tendency in the direction of federa-
tion and amalgamation has existed within the trade
union world. This has been due to a realization on the
part of the unions of a great deal of overlapping and
duplication in organization, leading to demarcation dis-
73
putes and to unnecessarily duplicated negotiations. At
the same time the need for concentrated activity was
urged
“in the face of the growing combination on the part of the
employers, and the increasing element of state intervention." 1
The Transport Workers' Federation was formed in 1911,
and, as the figures in Table 2 show, this action led to an
enormous increase alike in the strength and numbers of
organized transport workers. The campaign for the
amalgamation of three railwaymen's unions into the
National Union of Railwaymen was in full swing in 1911,
1912 and 1913, being consummated in the latter year.
The negotiations are reflected in the increase in union
membership in the railway service during those years.
But nowhere have amalgamation and federation gone on
so fully as among the various general labor unions.
Smaller bodies have amalgamated with larger. Thus, in
July, 1918, the Dock, Wharf, Riverside, and General
Workers' Union, representing about 100,000 members,
was amalgamated with the National Union of General
Workers, which had a membership of 300,000. A year
earlier, May, 1917, a federation was established among
seven unions of general workers, known as The National
Federation of General Workers. This movement towards.
larger and fewer organizations was accompanied by a
great increase in the strength of union organization in the
ranks of general labor. It should be added that in 1914,
just prior to the outbreak of war, a scheme was proposed
for an amalgamation between the big general labor
unions and the National Transport Workers' Federation.
The crowning achievement of this movement towards
federation was the Triple Alliance, finally consummated in
December, 1915. This is an alliance among the Miners'
Federation of Great Britain, the National Union of Rail-
waymen, and the National Transport Workers' Federa-
tion for co-operative action in support of each other's
demands. Its ultimate aim is greater unity, greater
certainty, and greater success in industrial action for the
purpose of controlling the industries in which their
numbers are employed. Its adherents believe that the
weight and power it can exercise by a threat to paralyze
the economic life of the nation will enable it to secure its
aims without striking.
¹ See Cole, G. D. H.: "Introduction to Trade Unionism." Trade Union
Series, No. 4. Fabian Research Department, pp. 46–53.
74
Other steps have been taken to secure greater unity of
action. Thus the constituent federation of the Miners'
Federation of Great Britain, whose contracts with local
groups of employers terminated at various times, have
arranged that all contracts shall terminate simultaneously,
so that common action may be taken by the Federation
as a whole.
Synchronizing with these movements in the direction
of greater unity of action have been divergent movements
within the trade union world, revealing elements of
division and disruption. Some of these have arisen out of
dissatisfaction, first, with the results of the political
activity of the Labour Party, and, secondly, with the
principle of political action. It is charged that the Labour
Party, after more than ten years in Parliament, has
achieved little for the worker.
It is held, that more can be obtained by the use of the
economic strength of trade unions and by their power
to strike. Unionists holding this view have devoted much
effort to the amalgamation of laborers into one general
industrial union. This one big union, containing all the
workers in all industries, without regard to craft or degree
of skill, could ultimately control production. It is this
principle which led to the formation, and which domi-
nates the aims, of the Triple Alliance. Its influence upon
the position and influence of the Labour Party is seen in the
published accounts of the recent conference of that party
at Southport. At that conference, against the advice of
experienced Parliamentary leaders, it was resolved by a
vote of two to one, to call upon the Trade Union Congress
to take “industrial action" to compel the British Govern-
ment to abolish conscription and withdraw its troops from
Russia.
It is evident, therefore, that a strong and almost un-
checked tendency exists in British trade unionism to turn
aside from political action, and to use more direct and more
militant methods.
The significance of this tendency does not lie merely in
its method or its ultimate purpose, but in the fact that it
has arisen from the members rather than from the leaders
of trade unions. The movement, both towards federa-
tion and amalgamation, and towards industrial unionism,
springs from the "rank and file.”
75
་
It has one of its material causes in a loss of confidence
in trade union officials. The latter are being reproached
as too conservative and bureaucratic. They are said to
be too far removed from local conditions and from the
problems of the workshop. Though formerly workers
themselves, they have been so long out of touch with
actual factory conditions that they are deemed incom-
petent to discuss changes in processes and their effects
upon terms and conditions of employment. Whether these
charges are true or not, the fact remains that a con-
siderable section of trade unionists are dissatisfied with the
leadership of the trade union executive officials.
This movement, though not created by the war, was
intensified by it, and given wider opportunities for its
manifestation. It has shown itself in two ways. In the
first place, it produced a number of strikes in violation of
agreements made by the responsible trade leaders. From
the famous strike on the Clyde, in February, 1915,
to the Glasgow strike of January, 1919, this spirit of
revolt disturbed both the industrial and the trade union
world. In the second place, it resulted in the election by
the workers in the shops and factories, of shop stewards,
responsible, not to the trade unions, but to those who had
chosen them. While trade unions had long been accus-
tomed to appoint shop stewards to carry out specific
functions, these shop-elected stewards, with their pre-
tensions to a more representative position than the
executive officials of the unions, were a divisive element
within the trade union world. Further, their character-
istics, aims, and purposes are even more significant than
their unconstitutional relation to the trade union move-
ment. Most of them are theorists; some are industrial
unionists, as above defined, while others are "national
guildsmen." All of them stand
for a greater element of control over industry by the workers
through their industrial organizations, for a greater element
of trade union intervention in workshop management, for a
bigger say on the part of the rank and file workers in determin-
ing the conditions of their working lives.¹
A full discussion of the shop steward movement showing
its origin, development, and significance is given in a later
chapter.
¹ Cole, G. D. H.: "Introduction to Trade Unionism,” p. 56.
76
§ 4. INDUSTRIAL UNREST
Our survey has suggested the presence of much unrest
within the British Trade Union world. Many factors
have tended to produce this result. Some of these were
specially connected with the war and its widespread
consequences. Thus the fact that the cost of living in
Great Britain had advanced faster than the advance in
wages has been the most widespread cause of unrest. The
restrictions on personal freedom caused by the operations
of the Munitions of War Act, and the blunders of Govern-
ment departments in the administration of the manifold
matters connected with the war have created a want of
confidence in constitutional methods and orderly pro-
cedure that is the seed-bed of revolutionary agitation.
The feeling, engendered by the suspicion of much profiteer-
ing, that inequality of sacrifice had prevailed, the wide-
spread want of housing accommodation, and a discussion
of the ugly and unsanitary conditions under which many
lives are being spent, have led to a widespread revolt
against existing social conditions.
Behind all this industrial unrest is the expressed aim of
the workers of England for a higher standard of living.
They are no longer content with the low wages and long
hours of the pre-war period. They are demanding, not
merely wages commensurate with the increase in the cost
of living, but wages which will improve their economic
position and enable them to realize a higher standard of
life. To this end they consider that every worker should
be granted by law a standard minimum wage. They are
demanding also the reduction of working hours, and the
abolition of systematic overtime, so as to give the workers
more hours out of the shop.
This demand for higher wages and shorter hours is
seldom accompanied by recognition of the economics of
the situation. Thus, a demand is made not merely for a
week of 48, but for one of 44 or 40 hours. This latter and
more extreme demand is supposed to be based on the
fear of unemployment. It was urged, for instance, in the
Glasgow strike of January, 1919, that a reduction to 40
hours was necessary to afford employment for demobilized
soldiers. This argument reappears often in connection
with the shorter week, though, it must be noted, it is
seldom heard in the speeches or seen in the writings of
labor leaders. Again, the demand for higher wages is not
associated with that increased production out of which
77
alone the higher wages can be met. In this respect the
situation in British trade unionism differs widely from
that reflected by the motto of M. Léon Jouhaux, secretary
of the French General Confederation of Labor - maxi-
mum production in minimum time for maximum wage.
In fact, the fundamental reason for labor unrest and the
most significant characteristic of British trade unionism
today is its challenge to the present system of industry.
It is aiming at a vast extension of public ownership and at
a larger measure of control over industry. Through public
ownership it believes that the economic waste of competi-
tion will be eliminated, and, along with the profits now
realized by individuals, made available to the workers in
the form of higher wages. A larger measure of control
over industry is regarded as the necessary correlate of the
extension of democracy to the economic sphere.
This challenge to the present industrial structure fur-
nishes a part explanation for the frequency and violence of
many strikes. Men of narrow vision and much theory,
as many of the newer type of shop stewards are admitted
to be, are certain to lean to violent methods. They would
overturn before rebuilding. They reject compromises
and assume militant attitudes. One of the leaders of the
Coventry strike in December, 1917, writes in the following
extreme socialistic strain:
It should be obvious to the ordinary thinking man or
woman that the time has arrived when we should organize
ourselves on a class basis, and not one of craft, and work
shoulder to shoulder, men and women, with one common
object in view that of fighting the capitalist class, who
have divorced the workers from their rightful ownership of the
means of life.
Their appeal is to the class war,-"the only war that
really matters," as they phrase it.
But the attitude of other elements in British labor is
quite different. They realize that the changes involved
in their large program of reconstruction can only come
slowly. They recognize that there are differences among
industries that need to be considered, and that will
determine when and how the suggested policies should
be applied. They have no intention of killing the
industry in which they are engaged, and concerning the
economic position of which many of them are well in-
formed. They are quite radical in aiming at nationaliza-
78
tion; they are buoyed up by the hope that a spirit of
public service may be created to take the place of self-
interest, and they believe that such a spirit must be the
product of education and morality. The majority of
workmen have no liking for revolutionary methods. On
the contrary, they support the principles of law and
order. They prefer peaceful methods of settling dis-
putes. They co-operate with employers in various ways
and meet them or their representatives to adjust diffi-
culties. Statements made to the Commission show the
extent of this tendency:
The Federation has been able to deal with, and agree
with, the leaders of the union. The leaders of the unions were
in general able to discipline the men. The secretaries of the
unions were able to keep members well in hand; . . . there
were no serious strikes during the war.
The traditions of the Steel Smelters' union were all in
favor of peaceful bargaining with employers, high wages, and
no labor restrictions.
Mr. W. A. Appleton, late secretary of the General
Federation of Trade Unions, remarked:
Among the rank and file there is a spirit of the sportsman
and a desire not to do anything unfair or unjust.
Mr. A. H. Paterson, secretary of the National Alliance
of Employers and Employed, gave the following judgment
of the forces that could be relied upon to preserve the
balance:
The shrewd common sense of the British workman was an
infallible safety valve. The Britisher, whether employer
or workman, was an individualist in thought, and individuals
and unions can be relied upon to act upon their own judgment.
While there is much evidence in Great Britain of the
strength of an organized minority trying to control the
unorganized majority, the sober common sense, stubborn
individualism, and love for ordered and steady develop-
ment can be relied upon. This has already been shown in
the reaction to the “industrial action" resolutions of the
Labour Party conference at Southport. The Parliamentary
Committee of the Trade Union Congress declined to en-
dorse them. The annual conference of the Miners' Federa-
tion in July, 1919, also refused to allow its executive
officials to call a strike without a ballot of the members.
79
On latest advices, the leaders of the Triple Alliance have
decided not to attempt a referendum of its members, as
suggested by the annual Conference of the Miners'
Federation.
§ 5. LABOR DEFINITION OF COLLECTIVE BARGAINING
The chief method of trade unionism in achieving its
ends and purposes is that of collective bargaining. This
term is defined in an official English publication thus:¹
Those agreements under which the conditions of employ-
ment are governed by the terms of a bargain made between
employers or associations of employers and a group of work-
people employed by them, or an organization of which these
workpeople are members, and which represents their interests
(as opposed to those cases in which these conditions are
arranged between an employer and the different workpeople
whom he employes, separately).
This definition involves the ambiguity pointed out
previously in an analysis of the term.2 It was there
shown that a more accurate expression for the essential
principle of collective bargaining is representative bar-
gaining, and that the real issue in practice is the entrance
of an outside party, a union official, as a representative of
the workmen in a shop. Collective bargaining, in the
sense of group-bargaining and as contrasted with indi-
vidual bargaining, can be had without the existence of
unions.
It is clear, however, that the basis for collective bargain-
ing is laid in organization, and it is obvious that the strong
organization of trade unions described above provides the
opportunity and the machinery used in many trades for
obtaining trade agreements. Much of the machinery in
use is identical with that to be described later, under the
caption "Conciliation and Arbitration," this machinery
being intended for positive use in furthering trade
agreements.
This sort of negotiation often commences with local or
district unions. But the large amount of federation and
amalgamation previously described has made agreements
¹ Great Britain, Board of Trade: Report on Collective Agreements between
Employers and Workpeople. London, 1910, p. 11.
2 Cf. Introduction, pp. 7–9.
80
in most industries nation wide in character, and has con-
stituted the national executive of the trade unions the
supreme agent and the final court of appeal in this kind of
collective bargaining. Without its consent or that of the
district executive, no group of trade unions is allowed to
make agreements on the major matters involved in the
terms of employment, though local and specific matters
may be dealt with by the subordinate bodies.
The major subjects dealt with are those of rates and
methods of remuneration and hours of labor. Other
matters covered in these agreements are: the number of
men to be employed, the distribution of work in slack
times, the enticing away of workmen, demarcation,
restriction on apprentices and youthful labor, and a
multitude of details sometimes minor in degree or specific
to the industry.
During the war, there has arisen an inevitable develop-
ment in the direction of simple, non-union collective bar-
gaining within the workshop, not necessarily in opposi-
tion to the methods or the arrangements of district and
national trade union executives, but with more direct
reference to the specific problems of the establishment.
This has arisen from the creation of Works Committees
which, among other functions, have negotiated with fore-
men over particular piecework prices, bad material,
defective machinery, and so forth.
§ 6. CONCILIATION AND ARBITRATION
For the settlement of disputes between workers and
their employers, the unions have naturally not been
favorably disposed towards any intervention from outside.
which interfered with their own influence. Such inter-
vention has come from legislation and governmental
action.
The machinery created by Government consisted first
of a permanent court of arbitration set up in 1908, and an
industrial council created in 1911. These contained equal
numbers of employers and workers, and submission of dis-
putes to their mediation was entirely voluntary.
The exigencies of the war situation, however, brought
about a form of compulsory arbitration. At the Treasury
agreement of March, 1918, between the Prime Minister
81
and representatives of the trade unions, the latter, except
the Miners' Federation, agreed to prohibit strikes and to
submit all disputes to some form of arbitration. The
Munitions of War Act, passed in June, 1915, placed the
determination of this machinery of arbitration under the
Board of Trade, specifying that the award on any such
settlement should be binding on both employers and
employed.
About the same time, a strike in Glasgow over wages
led to the formation of a Committee on Production whose
prime purpose was to stimulate production. This com-
mittee, in considering stoppages of work, recommended
that any differences arising between workers and em-
ployers should be referred to an impartial tribunal nomi-
nated by the Government. The Government replied
by conferring on this committee of three persons the
powers they asked for. The committee, therefore, became
a court of arbitration rather than a committee on pro-
duction. Its personnel was, later, increased to 9 and after-
wards to 12 members consisting of 4 chairmen represent-
ing the public, 4 employers, and 4 labor representatives.
It sat in groups of three, each in the capacity of an arbi-
tration court. Its activities, which were terminated on
November 21, 1918, show it to have been the most active
of the conciliation agencies of the country since its forma-
tion. It was on the lines of its composition that the
Whitley Committee drew their proposal for a standing
arbitration council.¹ 1
The Munitions Act was responsible for the creation of
another measure of compulsory settlement of disputes.
By its provisions there was created a special tribunal for
each munitions area, consisting of a government nominee
as chairman, with two assessors, chosen from lists of em-
ployers' and employees' representatives constituted by
the Minister of Munitions. Where women formed a large
majority of the workers, a special court was created for
them, on which a woman sat as the employees' repre-
sentative.
By an act, the Wages (Temporary Regulation) Act,
passed on November 22, 1918, Parliament provided
machinery to replace both the Committee on Production
and the munition tribunals. As defined by the Minister
of Labour,
1 See the Whitley Committee: "Report on Conciliation and Arbitration."
82
the main purpose of the new act is to secure the maintenance
for a period of six months of the minimum wages generally
applicable at the date of the signing of the armistice,
except in so far as these minimum wages are varied by
arbitration or by agreement.
Wages above the minimum rate were to be subject to
negotiation, and as machinery for negotiation the act
provided interim arbitration tribunals, which replaced
the Committee on Production and the munitions tri-
bunals. Disputes were to be submitted to these arbitra-
tion courts only by the Ministry of Labour, and only when
both parties had jointly agreed to such submission. The
awards of these tribunals were binding on these
parties.
In general, these measures of compulsory arbitration
were disliked by trade unionists. In common with the
employers, they preferred to discuss the problems of their
industry only with those familiar with its conditions, and
hated restraint upon their freedom of action. Before the
war, the machinery of conciliation and arbitration estab-
lished by governmental agencies had been aided by
voluntarily created boards composed of equal numbers of
employers and employed. Thus, the Board of Trade,
which was the government agency for mediation in dis-
putes, and dealt in 1913, the year before the war, with 99
disputes, was supplemented in that year by the work of
325 voluntary conciliation boards and standing joint
committees. In this pre-war period there had been
established conciliation boards in such industries as coal
mining, iron and steel, engineering, shipbuilding, boot and
shoe, cotton and building trades. During the war, some
of these remained in existence, while the Committee on
Production was used as the medium to which the majority
voluntarily referred their differences. Industries which
fell under the control of the Committee on Production
were often characterized by special agreements between
employers' federations and the unions as to the periods
and terms under which they would refer their complaints.
to the committee. Agreements on these lines were
entered into in the engineering and foundry, chemical,
ship repairing, dock labor, building, soap, and candle
industries and trades.¹
¹ See Memorandum on Proceedings of the Committee on Production, May,
1917-April, 1918 (Cd. 9126) and May, 1918-November, 1918 (Cd. 70).
83
$ 7. STRIKES AND LOCKOUTS
In the achievement of its ends trade unionism uses
militant as well as conciliatory measures. The militant
are the more obvious and the more susceptible of measure-
ment. The number of strikes and lockouts is carefully
tabulated year by year. The following table summarizes
them according to number of disputes, number of work-
people involved, and the total number of working-days
lost, since the year 1906.
TABLE 4: NUMBER OF DISPUTES BEGINNING EACH YEAR,
NUMBER OF WORKERS INVOLVED AND AGGREGATE WORK-
DAYS LOST, GREAT BRITAIN, 1906–1918¹
Year
1906
1907
•
1908
1909
1910
1911
1912
1913
1914
1915
•
1916
1917
1918
Number of
disputes beginning
Number of
workpeople
each year
involved
486
217,773
Aggregate work-
days lost
each year
3,028,816
601
147,498
2,162,151
399
295,507
10,834,189
436
300,819
2,773,986
531
515,165
9,894,831
903
961,980
10,319,591
857
1,463,281
40,914,675
1,497
688,925
11,630,732
999
448,529
10,111,337
674
445,936
2,969,700
581
284,396
2,599,800
688
820,727
5,513,900
1,252
1,096,828
6,237,100
Analysis of this table shows how much labor unrest
existed prior to the war, culminating in 1912 in a number
of serious and long continued strikes. The year 1914
promised to surpass all but the year 1912. During the
first seven months of 1914 there were 836 disputes affecting
423,000 workers. The industrial truce which followed the
declaration of war reduced the disputes for the remainder
of the year to 137 in number, affecting only 23,000 workers.
The industrial truce, however, existed only in name,
though the strike record for the years 1915, 1916, and 1917
showed some diminution in numbers, duration, and in-
tensity of strikes. The year 1918, however, was stormier
than any year except 1913. The majority of disputes in
1918 were over demands for advances in wages, though a
large proportion of the remainder were over trade union
1 From Labour Gazette and official publications for years mentioned.
84
questions. It is obvious that, as the war progressed, the
strike and forcible methods for redress of grievances were
coming into greater favor.
Comparison of the early months of this present year
(1919) with that of the previous year only tends to
strengthen the impression that British labor is becoming
more and more militant. A statement of comparison
between the first five months of the two years 1918 and
1919 follows:1
TABLE 5: COMPARISON OF TRADE DISPUTES,
GREAT
BRITAIN, JANUARY-MARCH, 1919, AND JANUARY-MAY,
1919, DIVIDED ACCORDING TO GROUPS OF TRADES, AND
NUMBER, EXTENT, AND DURATION OF DISPUTES 2
January to May, 1918
January to May, 1919
Number of
Groups of Trades
Aggregate
No.
workpeople duration in
No.
Number of Aggregate
workpeople duration in
of
involved
working-
of
involved
dis-
in all
days of all
dis-
in all
working-
days of all
putes
disputes
disputes
putes
disputes
in
progress
in
in progress
in progress
disputes
in progress
Building
63
Coal Mining
39
883
30,000
249,000
58
82,000 | 417,000
100
8,000
522,000
91,000
2,506,000
Other Mining and
Quarrying
5
•
1,000
13,000
10
2,000 28,000
Engineering and
Shipbuilding
123
69,000 411,000
92
224,000
4,129,000
Other Metal
Textile
Clothing
Transport
Other Trades
Local Authority
Services
92228 2
46
42,000
211,000 65
38,000
256,000
20
23,000
111,000 24
18,000
114,000
5,000
74,000 27
11,000
102,000
4,000
20,000 50
41,000
176,000
80
23,000
160,000
110
31,000
323,000
5,000 34,000 45
5,000
46,000
Total
451
285,000 1,700,000 581
900,000 | 7,771,000
By inspection of this table, one sees that the disputes
were not much greater in number in 1919, but involved
more workpeople and a much greater loss in workdays.
The division by groups of trades shows unmistakably that
the two storm centers of British industrial life at the
period of the Commission's visit were in coal mining and
the engineering and shipbuilding trades. Most of these
disputes, too, were over questions of wages.
1 See the Labour Gazette, June, 1919, p. 245.
2 Labour Gazette and official publications for years mentioned.
85
§ 8. ATTITUDE OF BRITISH EMPLOYERS TOWARD
UNIONISM
Group attitude on any subject is a composite; it is not
single or simple in character. Inevitably, too, shades of
opinion find varying expression. An organized minority
will have the best channels of communication. On such a
problem as trade unionism, it is the undercurrent of
individual opinion that is most significant. The employer
in his office does not "talk for publication"; his is the
attitude of the man who must meet from day to day the
problems of management; he knows the "human ele-
ment" in every such problem. Your Commission lays
most stress, therefore, on such interviews. But, all in all,
the endeavor has been to get the essential elements in the
situation and to give them due weight.
The first point to keep in mind is that not all British
labor is organized. There are, perhaps, about five and a
half millions of workmen, including women, who are
members of unions, out of a possible fourteen millions.
This leaves a fair majority outside of any labor organiza-
tion. The Whitley Commission, for example, found it
necessary to divide British labor into three groups: (1)
workers in those industries in which organization on the
part of employers and employees is sufficiently developed
to render their respective associations representative of
the great majority of those engaged in the industry,
(Group A); (2) industries in which, either as regards
employers or employed, or both, the degree of organiza-
tion, though considerable, is less marked than the first
group (Group B); (3) industries in which organization is
so imperfect, either as regards employers or employed, or
both, that no associations can be said adequately to repre-
sent those engaged in the industry (Group C).'
1
Furthermore, about one half of the total number of
unionized workmen are in the basic trades, coal mining,
shipbuilding, engineering, and textiles.2 There are many
British employers, therefore, who do not have to face the
problem of unionism, who have had no experience with it,
and who probably have only an instinctive snap judgment
on it. There are others who have long had this problem
before them and who have faced the fact of a labor force
unionized upwards of 95 per cent of its total possible
¹ Great Britain. Ministry of Reconstruction. Committee on Relations between
Employers and Employed, p. 7. London, 1918.
2 Ibid., p. 59.
86
strength. Between these two extremes there are number-
less gradations. A condition of this kind would make
almost inevitably for a wide divergence in point of view.
Herein also becomes patent the error in speaking of British
labor, without qualification, as if it were wholly organized.
Nevertheless, relative to France, Italy, and the United
States, British labor is highly organized.
It seems to your Commission fair to say that in those
industries where unionization is concentrated, British
employers as a general rule are facing the facts. Those
industries have gone on, are still going concerns, with
organized workmen. A modus vivendi, a working basis,
more or less satisfactory, but sufficient to get on with, has
been developed. This is indicated not only by the fact
that business has gone on, but also by the fact that the
union rules and regulations, the "network of restrictions"
had to be accepted by the management.
The very
difficulty that the unions have had in establishing this
network, the very reluctance with which they gave them
up even in a dire emergency, demonstrates the fact that
employers did not welcome them; and, since the primary
motive for organization of unions was to establish them,
it follows that the employers did not welcome the unions.
The divergent attitude of employers appears also within
the group of industries with highly organized workers. A
representative of a famous engineering firm said to the
Commission that he
"very strongly advised that American employers keep clear
of union conditions as long as physically possible. We do not
advise collective bargaining [i.e., recognition of the unions],
because it is a constant source of annoyance and many petty
matters are brought in which otherwise would be forgotten.”
The general superintendent of a large engineering firm
very emphatically urged the American employers to keep
away from collective bargaining or any other moves that
would facilitate unionization. If employers will broaden
their attitude toward workers, the unions will find trouble in
getting members.
Another prominent employer declared:
"Personally, I will fight the workers' pretensions. I will
not compromise; any manufacturer who compromises is
yielding on principles vital to industry."
87
And still another shade of opinion was expressed by an
employer who said that
in dealing with their own employees they had been able to get
on with them better by themselves than by working through
larger (labor) organizations.
Said another:
"The employer must do one of two things; either put his
own house in order and try to do the straight thing by the
laborer so that unionism is not necessary, or deliberately
court unionism. Undoubtedly the first method is better."
Or this individualistic attitude:
Where employers prefer to deal with organized labor let
them go their own gait, but the right thing to do is to so
handle the situation that the necessity for unionization shall
not exist.
Another manager in Lancashire said:
"The present methods of collective bargaining are ab-
solutely the only way to handle the relationships between em-
ployers and employees. It should be realized, however, that
this method is only a temporary expedient, to be followed
only until a more correct plan, ethically, can be developed."
A works manager in the same locality
was heartily in accord with the union methods of handling
the relations between employers and employees.
A works manager, with experience of both American
and British conditions, remarked:
Officers of employees' organizations can influence them
better than if such organizations did not exist. I was strongly
anti-union before coming to England, but my experience has
convinced me that control of labor through organizations is
the right way, and I have found that shop organizations can
be handled more successfully by the works managers than if
they were not organized.
These interviews illustrate the various shades of opinion
held by individual employers in the industries where labor
is highly organized. They show, too, how difficult it is to
make an unqualified statement in regard to them. In-
dividual attitudes can be generalized only where they are
known to represent fairly the best judgment of the em-
88
ployers and cover all conditions. Your Commission states
the fact that practically every individual employer inter-
viewed by it was opposed to the complete unionization of
labor, and for practical reasons to be stated later on.
There appears to be a decided tendency on the part of
employers' associations, both in the interviews with your
Commission and in published statements, to express a
friendly attitude towards responsible organizations among
workmen. Thus, the secretary of one of the most im-
portant industries in England gave the following testimony
in an interview:
The secretary spoke cordially of the relation between the
federation (of employers) and the trade unions in that
industry. The leaders of the unions were in general able to
discipline the men. In this respect, the constitutional leaders
of the unions received the full support of the federation.
When any union broke away or when internal trouble arose,
the federation refused to deal with any disputes resulting
therefrom until the union leaders had sent their men back
to work.
The secretary of another employers' federation ex-
pressed
his confidence in the present methods of collective bargaining
with the unions, and also in the leaders of the unions.
He stated that the employers are well satisfied with the present
plan of collective bargaining.
A representative of a textile trade employers' association
told the Commission that
Employers and employees are equally well organized so that
the industry enjoys the advantage of having a strong group
on each side to represent them. . . . The labor aspect of the
industry is seen in the harmonious relations with employees.
Some employers' associations, such as the Federation of
Lace and Embroidery Employers' Association, Federation
of Master Printers, Midland Master Hosiery Bleachers,
Dyers, and Finishers' Association, have incorporated
under the law as trade unions in order to take advantage
of the British laws favorable to such organizations.
Here is clearly a palliating, conciliatory attitude, and
it is in marked contrast with the divergent views of
individual employers. Apparently, organized employers
want to put themselves on record as being just and rea-
sonable in their attitude toward labor problems. In
89
general, too, it seems, employers' organizations are willing
to meet with responsible labor organizations. Whether
or not such a policy has received unanimous endorsement
from the membership is another question. Most likely
there are diverse opinions within employers' organizations
as well as within labor unions. It is an authorized policy,
however, and has not been challenged.
The attitude of the British Government, as expressed
through the Industrial Council of the Board of Trade,
1913, composed of an equal number of employers and labor
leaders, through the government proposal of the Whitley
Councils, and through public statements by the Minister
of Labour, has clearly been friendly toward labor organiza-
tions. There can be no doubt that it is the policy of the
Government to seek for a responsible, organized body
among workmen with which to deal. In this attitude
there is also a political element, as will be shown in dis-
cussing the Whitley Councils and the Industrial Con-
ference.
The facts given in the preceding discussion demonstrate
how difficult it is to express in general terms the British
employers' attitude toward unionism, and at the same
time give due weight to each shade of opinion, to varying
conditions, and to diverse motives. It is a situation that
changes with each new experience. But your Commission
has endeavored, to the height of its ability, to select the
most significant and representative items and to give them
a just evaluation.
The most potent influence in the attitude of British
employers toward labor organizations today is their war
experience. In all our interviews we were impressed by
the conviction of British employers, freely spoken and
strongly emphasized, that the grave situation which
has now arisen between employers and employees is
mainly due to the neglect by employers for years past of a
proper interest in their employees. There is now no
question as to their being awake to the situation and as to
a desire to correct the wrongs of the past in a fine spirit of
humanitarianism and fair play; and they recognize that
their workers should have greater opportunities and
better conditions of life. Many of them are conscien-
tiously engaged in trying to find the means to bring about
this end.
It must be stated emphatically, however, by your Com-
mission, that practically all the individual employers
90
interviewed in Great Britain strongly advised against
complete organization of employees or the urging of any
policy which would lead to that end. They did not favor a
development of labor unionism, because of the practical
difficulties in securing a conservative attitude of mind
among labor leaders. They would welcome, however, and
co-operate with a moderate and conservative unionism.
As Sir Allan Smith, himself an employer, said to the
unionists, at the first meeting of the Industrial Conference,
February 27, 1919:
"You are under an absolute misapprehension as to the
attitude of the employers in the present state of difficulty
and unrest. Many of the employers are prepared to go much
further in the amelioration of the conditions under which you
work than some of you have any idea of."
The principle of organization versus organization
seems also to be well established. Employers' associa-
tions, by interviews through their officials and by state-
ments through the press, have endorsed the program,
in certain industries at least, of a complete organization
on both sides, by employers and by workmen. A large
part of this endorsement is undoubtedly due to a direct
faith in the ability of organizations to create responsible
parties to a trade agreement and to the practical necessity,
where industries and work groups are large, of dealing
not individually but through group representatives.
A part, however, is due to the exigency that arose in the
Shop Steward Movement, necessitating the choice of
the less of two evils. This is explained fully in the chapter
on Shop Stewards. Another part is due to the pressure
of Government in the war emergency, where it was
compelled to deal with employers and employees in
large groups.
This is demonstrated in the proposals
for the Whitley Councils and the Industrial Conferences,
as explained later. It is an opportunistic acceptance,
like many other industrial experiments, and not a calmly
reasoned and accepted policy.
2
No small item in the British employer's attitude is
his stubborn and persistent individualism. There is,
on the one side, a feeling that may be expressed by saying
that an employer believes his shop is his castle and that
he has an inalienable right to manage it as he wills. It
¹ Cf. pages 123-37.
2 Cf. Chapters XVI, XVII.
91
is his problem, and he may be relied upon to handle
it with firmness and justice. In so far as this feeling
extends, he resents all encroachments by unions or by
the Government upon what he believes to be his preroga-
tives. There is, on the other side, and developing from
the same source, the feeling that once the rules and
regulations of trade unions have been established, once
involved in the network of restrictions, once adjusted
to the "harness," and business still goes on, there is no
need to change. "Don't stir up a hornets' nest." Un-
doubtedly, this characterizes a goodly number of British
employers. It would lead them to say that such a situa-
tion should be avoided, if possible, but once involved in
it, one must make the best of it; it might become worse.
The British workman, in a country with a surplus of
labor, has his haunting fear of unemployment. The
British employer, in an industry highly unionized, has
his haunting fear of radicalism. An organization that is
safe in the hands of reasonable, steady, and conservative
leaders becomes a menace in the hands of irresponsible
leaders. The Triple Alliance and the Miners' Federation
have been showing the reason for such a haunting fear
among employers. So likewise the "rank and file"
movement and the "unauthorized strike." The British
employer, generally speaking, is loath to let a movement
get started until he sees where it may lead to. He states
as his belief that the great mass of workmen are normally
reasonable and conservative; that many who are members
of unions take no really active part; that at the final
moment of definite action, if not before, the majority
will stop to ask whither they are going; that this same
group will respond readily to a fair, courageous, un-
equivocal attitude on the part of employers; that they
are not Bolshevistic unless stampeded by the wrong kind
of leaders.
Nevertheless, he has this ever present fear that radical
leaders may dominate the unions in this period of wide-
spread unrest, and that if this happens, an industrial
catastrophe is inevitable. The British employers are
just beginning to sense definitely the fact that socialistic
preaching, carried on with persistence from the "soap
boxes," by pamphlets and newspapers, through books
and periodicals, has seeped into the thinking of many
workmen, and that the effects of this preaching are
to be seen in the radical attitude of trade union leaders
92
today. Here is a two-edged sword. The agitators need
to be held in check, to be disciplined by common sense
and sober judgment. A strong organization led by the
right kind of men could do this. But organization of
workmen gives greatly increased power for evil as well
as good, and the risk of this organization being dominated
by radical leaders arises. This, too, is a part of the
British attitude.
The real issue, however, of the trade union problem
in the mind of the generic British employer is the intro-
duction of an outsider, a third party, to act as a repre-
sentative of his own workmen in the matter of collective
bargaining. He objects to governmental interference
in the management of his business; but he objects much
more, and on principle, to a union representative from
outside the shop. To the Government and to the outside
union representative he says: Let me alone so that I
can deal with my own workmen. We know the problem
as no one else can know it. It is mutually ours.
can find a way out.
We
93
CHAPTER VI
EMPLOYERS' ORGANIZATIONS
§ 1. BASIS Of the Report
During its stay in Great Britain, the Commission
sought to obtain information about the nature and
extent of the co-operation which exists among employers.
Any full and complete study of the situation was im-
possible. The subject was a virgin field for investigation,
and called for much patient inquiry. The number of
associations in existence was too great for study in so
short a space of time. In 1914 they were reported to
amount to no less than 98 federations or associations
national in scope, with 1,460 local associations.¹ At the
date of our inquiry they were obviously more numerous,
since the Federation of British industries alone reported
a total of 169 associations, mostly national in scope.2
It was possible, however, for brief interviews to be
held with the secretaries or directors of several of the
federations or national associations that were located
in London or in one or two provincial towns. In all,
twenty-four interviews of this nature took place. In
addition documentary material was sought, but in few
cases did this give a living picture of the employers'
associations concerned. Much of the evidence thus
obtained was scattered and fragmentary. Material of
this order was secured in regard to thirty-seven associa-
tions in all. No investigation was made of local associa-
tions.
$ 2. IMPULSE TOWARD CO-OPERATION
In general, the impulse toward co-operation has lain
in the sense of common interests. Wherever an associa-
tion or federation has been formed, the furtherance of
the interests common to all members of the industry or
trade has been given as its chief impulse and aim.
¹ Seventeenth Abstract of Labour Statistics of the United Kingdom, 1915, p.
197. Quoted in: British Industrial Experience During the War. Part III.
"Manufacturing Industries," by W. Jett Lauck, p. 930. (Senate Document
114, 66th Congress, First Session.)
2 See page 64, ante.
94
The significance of this obvious principle lies in the
fact that co-operation was never effective until this sense
of common interests was aroused. Such recognition was
singularly slow in asserting itself in Great Britain. An
excessive individualism has been characteristic of British
industry in the past. Employers were suspicious of their
fellow employers. They declined to share ideas with them,
fearing that by doing so they would injure their own
business.
British manufacturers in years gone by were extremely
individualistic and would not co-operate with one another on
any subject whatever.
the reason why federation has not been as fully adopted
in this country as in others. I think it is principally owing
to a sense of exaggerated individualism.¹
This attitude of suspicion and fear was often discussed
with representatives of the Commission by manufacturers
who were familiar with the United States. An English
cotton manufacturer told how he had years ago visited
the New England cotton centers under the guidance of
mill managers who were taken into the mills of rival
firms and shown new machinery and new processes without
hesitation or fear. Such friendly action would have been
impossible at that time in Great Britain.
But the war had altered this spirit of mingled fear,
suspicion, and exaggerated individualism. A common
national danger and a common opportunity to serve the
nation impelled employers towards co-operation. Indus-
tries, like the chemical and electrical, found that German
competition in pre-war days had weakened them internally
and reduced their capacity to serve the nation at strategic
industrial points. The national danger was a stimulus
and impulse, while the added wealth and efficiency which
resulted from removing German competition and over-
coming the handicap it had imposed, furnished the
material basis for co-operation.
Government action during the war had operated
powerfully to compel co-operation. In some industries.
the whole supply both of raw materials and of manu-
factured products was brought under control. Supplies
of such products as leather, wheat, and wool were limited
and their distribution strictly regulated. But control
¹ See Report of General Meeting of Federation of British Industries, October
and December, 1918.
95
went even farther. When the output of a factory was
requisitioned, the manufacturer was paid the cost of
production, plus a reasonable profit. To enable this
profit to be calculated, manufacturers were required
to furnish information as to output, cost of production,
and profit during previous years, and to submit to a
census of machinery, labor employed, productive capacity,
and supply of raw material. The method of control,
which was often in the hands of civil servants quite
unfamiliar with the industry, aroused much criticism
from manufacturers. It was out of such circumstances
that the Wool Textile Association, for instance, arose
in 1917, and confronted the Central Wool Advisory
Committee set up by the War Office with a demand
that the control of wool should be taken out of the hands
of officials and placed under a board of practical men.
The extent of government control and the possibility
of its continuance after the war have stimulated a certain
amount of association in self-defense. This motive is
seldom avowed, except in the case of the Imperial Com-
mercial Association, founded in May, 1918. This asso-
ciation gives the following three reasons to justify its
formation.
(1) Business men are menaced by rapidly growing State
Departments (they numbered eighty, January, 1919) armed
with autocratic powers which are being used to cut down and
impair a commercial system which is the outcome of centuries
of individual effort and enterprise.
(2) Business men are being forced to disclose their methods.
of business, sources of supply, and customary markets, to
their detriment.
(3) The state as a trader stands self-condemned, through
inefficiency and gross prodigality.
While this association is more largely commercial than
industrial, its action and motives reflect the attitude
present in some of the employers' associations.
Government control, however, did not necessarily
stimulate the motive of defense. In many cases, co-
operation with the national Government was a more
potent motive to trade association. The milling trade,
which was called upon to handle a difficult food situation,
was converted from a voluntary trade association into a
federation that could act as a whole. In the boot and
96
shoe trade a similar result was achieved. Before the war
this trade was one of the most individualized.
In 1914 it had no common standard of production, no
common basis of costing; it had not established any definite
principles of factory management; it had no common policy
for supplying its home customers or for developing oversea
markets.
But with the war came governmental control of the
supply of raw leather and hides, governmental requisi-
tioning of all products, and pressure for a large quantity
of durable products of a high quality. Response to this
demand compelled the best firms to educate inferior firms
in efficiency.
·
In all the local centers costings committees met and pooled
their knowledge; and on a national committee the leaders
associated and shared the experience of their own district.
The trade found itself able to consider its problems with a
breadth of vision and a courage undreamed of in the days
of peace. It had in fact become a federation.
On this basis of practical co-operation, the formation
of a federation of these local associations was a simple
matter.
§ 3. DEMAND FOR REPRESENTATIVE BODIES
In another way, the pressure of the war tended to make
association among employers more complete and exten-
sive. The Government wished to have representative
bodies with which to deal in any matter. Such centrali-
zation made administration easier. The government
department dealt with a body representative of the in-
dustry, and this representative body made the wishes of
the officials known throughout the industry. Where the
industry was well organized previously, the effect was to
increase its membership almost to the total. Where the
industry was poorly organized, probably because of its
seasonal characteristics, as in the building trade, the effect
was to increase the strength of the organization. Where
the industry was unorganized previously, it was urged
into organization, sometimes with an immense measure
of success.
The reaction from this pressure towards complete or-
ganization of the employers in an industry is of consider-
able significance. In practically no industry are all the
97
employers included in the national federation or associa-
tion. In many, the percentage is over 90, but in the
Builders' Federation, for example, it drops as low as 50.
The employers who were associated, were bound by gov-
ernmental regulations, particularly in respect to arbitra-
tion awards of wages and hours. While in many of these
respects the non-associated employers were subject to the
same law, there were certain disadvantages to which the
latter were not subject that led the associated employers
to demand that association should be made compulsory.
In fact, it had become customary for awards concerning
wages to be extended to all members of an industry,
whether or not in the association which had taken action
in the matter. Thus while association had not been made
compulsory, it was practically so. Individuals, finding
that their refusal to join the association in their industry
did not absolve them from the awards of arbitration
tribunals, held out no longer.
§ 4. METHOD OF ASSOCIATION
Another factor led to a strengthening of the impulse
towards the formation of employers' associations. The
war had been accompanied by a growth in trade union
organization. This produced a twofold reaction on the
part of employers. Some, in self-defense, sought to
increase the strength of their organizations so as at least
to parallel that of the trade unions. This motive operated
particularly in industries that were badly organized, and
which employed a large number of general laborers, one
of the occupational groups in which unionization increased
greatly during the war. Contemporaneously with this
increase in union strength and a consequent quickening
of the motive of self-defense came a widespread move-
ment in the direction of securing more harmonious in-
dustrial relations. The publication of the report of the
Commission of Inquiry into Industrial Unrest¹ and of
the Whitley Report,2 coupled with a desire to assist in
raising the employees' standard of life, co-operated to
bring about certain associations for the definite purpose
of establishing amicable arrangements and relations be-
tween employers and employed, and of avoiding and
settling strikes and industrial warfare. The Federation
¹ Reprinted by U. S. Bureau of Labor Statistics, Bulletin 237.
2 Reprinted by U. S. Shipping Board.
98
1
of British Industries, established in 1916, put this pur-
pose foremost among its aims and co-operated in the
establishment of the National Alliance of Employers and
Employed, whose first object is
to promote active co-operation of employers and employed
in the treatment of questions generally affecting labor and
employment in all trades and industrial occupations.
Six other important manufacturers' associations formed
during the war have either definitely stated such a pur-
pose or have formed a subsidiary association to deal with
labor matters.
The organization of employers' associations under the
stimuli just described has taken a twofold direction. In
the first place, individual employers and firms who had
formerly stood apart from their fellows, joined some local
association of their own industry or, where regulations.
permitted, became members of a national association or
federation. This process was one of the enrollment of
individual firms in associations. The second direction
that the process took was that of the federation of local
associations into national associations within the same.
industry. This completed the process of centralized
representation. Simultaneously, there was a process in
which the two tendencies were united, namely, the crea-
tion of a super-federation covering all industries in which
national associations could themselves be members. This
super-federation was the Federation of British Industries.
A schematic representation of this form of association
would show individual firms joining their local associa-
tions, and the latter federating into national associations,
and the national associations joining the Federation of
British Industries. (See Type 1.)
But as was consonant with the British love of local
autonomy and of individual action, the actual processes
of organization had none of this rigid uniformity. Indi-
vidual firms do not always join a local association in their
own industry. They sometimes help to form local federa-
tions of employers in various industries (Type 2), or them-
selves subscribe to the Federation of British Industries,
which receives individual firms as members (Type 3).
Further, local associations in an industry do not always
federate into a national association. Sometimes, by
reason of the localized nature of British industry, the local
99
association covers the whole industry or the whole of the
competitors within a section of the industry, and thus is
equivalent to a national association. Again, the em-
ployers in an industry may be so scattered that a local
association is not possible, and a national organization is
the only possible form (Type 4). In addition, there are
a number of national associations, regularly formed of
local associations, which are not themselves members of
the Federation of British Industries (Type 5).
Of 29 associations concerning which information was
obtainable, 9 belonged to Type 1, 6 to Type 2, 12 to Type
4, and 2 to Type 5. Type 3, which did not pertain to asso-
ciations, was not represented at all, though it should be
noted that the membership of such national associations
as the Federation of British Industries and the Imperial
Commercial Association was composed largely of this
type. The 9 associations scheduled as belonging to the
first type are among the oldest and most powerful em-
ployers' federations in Great Britain. They had been
fully organized into local and national associations before
the formation of the super-federation. On the other hand,
of the associations included under Type 4, which is differ-
entiated from Type 1 by the absence of local associations,
several were new, while others were associations that could
not be localized.
Within these various types of associations there is a
conflict between centralization and decentralization of
control. Some federations have iron-clad rules enabling
them to control not only the local associations that com-
prise their membership, but also the individual firms that
belong to the local associations. Nevertheless, manu-
facturers show a decided preference for local autonomy.
Their motto is "centralization for policy but decentraliza-
tion for administration.”
§ 5. FEDERATION OF BRITISH INDUSTRIES
At the apex of the pyramid of organization stands the
Federation of British Industries. This body, which came
into existence in 1916 at the suggestion of Mr. Dudley
Docker, afterwards its first president, is a federation of
the trade associations of every important industry in the
United Kingdom. In March, 1919, its membership com-
prised 172 trade associations, 15 associations of controlled
establishments, and 899 individual firms. Its total mem-
100
bership was at that time 1,086 in number, each of whom
paid an annual subscription of £100 ($486), giving the
Federation an annual income of over half a million dollars.
Its membership was estimated in October, 1918, to repre-
sent some 17,000 firms, twenty billion dollars' worth of
capital, and four million employees.
The membership of the Federation is based on two
principles. Firms and associations must be bona fide
British firms engaged in production, preferably with an
export trade. On the other hand, however, the Federa-
tion cannot be compared to a trust or combine, since its
members have come together for the good of industry as
a national factor, not for the purpose of buying and selling
the goods specific to each industry. It is an employers
parliament, not a combine or cartel.
Among its aims and objects is an article sketching the
purpose and form of the Federation. It is said to have
been organized to promote, encourage, and where neces-
sary form, effective representative associations in each
industry and trade, and to collect these associations into a
central federation for dealing with matters of common
interest and for mutual support. This central Federation
was to be organized in such a way as to enable each in-
dustry or trade to express its views through a self-selected
channel, and British industry as a whole to be represented
adequately in negotiations with the Government or any
other representative body.
On the other hand, the Federation does not intervene
in any way in the internal affairs of an industry, nor con-
cern itself with regulating prices, wages, or conditions of
employment unless requested to do so by the association
representative of the industry concerned. The Federa-
tion as a whole advocates no particular economic, political,
or social program, restricting itself to ascertaining and
expressing the views of its members. It thus explicitly
restricts itself to the general interests of industry.
The organization is placed on a representative and self-
governing basis. The members have divided themselves
into seventeen main industrial groups. Each group has
divided the industry it represents into subgroups which
represent the various trades within the industry. In
cases where the trade contains several important and
diverse branches, it is further subdivided into sections.
Each group and subgroup and section has its own standing
committee elected by the members in each subdivision.
101
A further division is made geographically.
Sixteen
districts have been allocated, each with its own standing
committee and district or organizing secretary. This
committee deals with local matters and advises the
Federation on such questions of general interest as can,
from their nature, be dealt with more effectively on a local
than on a trade basis. This same district organization
is repeated in the case of the controlled establishments.
By this means the principle of decentralized administra-
tion is given the fullest possible scope.
The government of the Federation is in the hands of a
Grand Council which is elected by the groups, each group
choosing a number of councilors proportionate to its size
and importance, as measured by the number of work-
people on the payroll of its members. An association
may choose one representative for every 20,000 employees
or part thereof engaged by the members in a sub-group.
Individual firms are represented on the basis of one repre-
sentative for every 40,000 employees or part thereof
(over 2,000) engaged by the individual members in a sub-
group. Each federation district and each association of
controlled firms has also one representative on the Grand
Council.
This basis of representation results in a very large mem-
bership for the Grand Council, which had nearly 280
members in March, 1919. The Council meets monthly
for the discussion of questions of policy that concern the
whole of British industry. It is obviously more of the
nature of a representative Parliament than an executive
council. It is too large and unwieldy for the latter pur-
pose; hence a smaller body, corresponding to a cabinet,
has been set up, to meet weekly for carrying on the admin-
istration swiftly and efficiently. This central executive
is chosen by the representatives of the groups, organized
as electoral colleges, allotting one representative for every
100,000 persons in the employment of the members of
the group. In addition, the combined associations of
controlled firms are allowed to elect not less than two
representatives. The result is a central executive of
fifty-five members which, while large, is reduced to a
workable size by the large proportion of absentees at
each meeting. Members living in distant parts of Eng-
land are unable, in many instances, to attend a weekly
meeting in London. In consequence, seven members of
the executive committee constitute a quorum.
102
;
This account of the organization of the Federation of
British Industries reveals it as a representative body so
constructed as to be unable to do anything other than
speak in the name of all industry. So carefully are
various interests balanced, so wide a diversity of political
and fiscal opinions are there represented, that sectional
or partisan action is at least difficult. In an official
account¹ the results sought to be achieved by the elabo-
rate system of representation above described are thus
set forth:
It [the Federation] cannot be pledged to advocate any
particular economic, political, or social program, but
only to examine such programs from the point of view of
the well-being of British industry as a whole. Nor can its
machinery become subservient to any particular interest.
The wide diversity of interests and political views repre-
sented within an organization so large, is in itself a guarantee
that any decisions arrived at on such matters will be national
in the truest sense.
§ 6. OTHER ASSOCIATIONS
The majority of federations and national sasociations
other than the Federation of British Industries are based
on local associations. They represent a grouping of local
associations in the same industry with the specific object
of dealing with industrial conditions common to that
industry.
The basis of the representation of the local association
on the national federation is of a threefold order.
(1) The simplest and most common is that the number
of employees determines the number of representatives
each local association may send. In making provision
for the enforcement of this article an arbitrary quantum
has to be stated with a margin large enough to give an
undue representation to smaller associations. Thus
the Federation of British Industries, as shown above,
allows one representative for every 40,000 or part thereof
over 2,000. On this basis it is obvious that equal repre-
sentation would be granted to firms or associations with
4,000, 8,000, 25,000, or any other number of employees
up to and including 40,000.
1 Bulletin of the Federation of British Industries, Lyons Fair edition, March,
1919.
103
(2) This objection has led two of the more highly
organized federations to base representation on the
wages bill. In one of these federations the representation
of the local federations is adjusted annually on the basis
of the percentage which the local association's wages
bill for the last financial year bears to the total wages
bill of the whole federation. One representative is allowed
for each 4 per cent or part thereof. In the other federation,
the system is the same except that the local association's
wages bill is calculated on the basis of the three preceding
years, and one representative is appointed for each 3
per cent or part thereof, which the association's wages
bill bears to that of the federation.
(3) One or two other associations base representation
upon the contribution made by each association to the
funds of the central federation. This is especially true in
the cotton industry, where contributions are based on
a payment per loom or per spindle. It is interesting to
observe that, in this case, the central committee of the
federation can levy upon the local associations.
Not all federations are composed of local associations.
pure and simple. Some include single firms, in the same
way as the Federation of British Industries. This is
particularly true of the clay industry, which is very
diversified and comprises individual firms situated in
parts where there is no opportunity for the forming or
joining of local associations. The problems of such
firms are special and local, but on larger questions of
policy the national federation is their safeguard. In
this federation, the system of trade sections, described
below, is adopted as well as that of local associations.
Two federations, one recently formed, the other twenty
years old, include distributers, both individuals and firms,
among their members. In the type of federation described
as Type 4, local associations, except as representative
of the whole industry, and, therefore, national in scope,
do not exist.
In these federations the members are divided into trade
sections, according to the characteristic articles they pro-
duce. Thus, the clay industries are divided into fifteen
trade sections, the chemical industry into twelve, the
electrical into nineteen or twenty, the silk into five, and
so on. These sections have the same functions and
as local associations and the same independence.
powers
104
The relation between these sections and the national
federation is in each case a combination of local autonomy
with executive oversight. The sections discuss their own
specific problems, but are linked together by the executive
council of the national federation. In some cases the
members of the executive are the officers of the sections.
In other cases, where the connection is not so definite,
the general secretary sits on each section, thus precluding
it from breaking away in policy or action from the execu-
tive. In another federation, the General Council reviews
and criticises the policy and actions of each section and
offers suggestions for its guidance.
Local associations are comprised of individual firms
which have co-operated for the treatment of problems.
peculiar to a locality or to the industry within that
locality. In most cases they cover a large proportion
of the establishments within the locality. Their structure
is simple. Where the association is large and wealthy,
it has a full-time secretary. Committees are appointed
for specific functions, though often the whole work is
carried on by the Secretary and the Executive Committee.
Delegates are appointed to represent the local associations
on the district and national associations in which they
elect to enroll themselves as members.
§7. CONTROL OVER MEMBERS
The regulations of federations and associations differ
greatly in respect to the control exercised over members.
Almost all contain a provision for withdrawal of member-
ship, but owing to the nature of the association, this
withdrawal is purely voluntary. Many other associa-
tions provide for fines and expulsion. Several federa-
tions require the local associations affiliated with them to
make provision for the expulsion of any one of their
individual members by the general meeting of the feder-
ated association. At the same time, the latter has a
provision for the expulsion of any of the local associations.
forming its membership, provided only that such expul-
sion is endorsed by a two-thirds majority in a referendum
of the remaining federated associations. These same
associations require that no step of general importance
should be taken by a local association without consulting
the Executive Board of the national federation.
105
There was a feeling on the part of some federations
that strict control of the membership was a corollary of
the prevailing industrial situation. This was especially
manifest in the engineering federations where the strength
of labor organizations was a challenge to employers. In
an interview, the secretary of one of these declared:
Only by disciplining every employer within the industry
and compelling him to follow the general labor policy of the
employers within that industry could the employers hold their
own against such militant unions as they had to contend with.
The secretaries of seven federations declared their
support of the principle that employers should all be
compelled to enroll in the association representative of
their trade. This principle was also endorsed for reasons
of governmental action by Sir Robert Horne, Minister
of Labour, in the formula: "Every employer in his asso-
ciation; every worker in his trade union.
22
While such a co-ordination and centralization has the
support of powerful factors in English industrial life,
the aversion to centralization and the love of local and
individual autonomy will probably cause the structure
above outlined, in various types, to remain the utmost
achievement of organization of employers.
$8.
FUNCTIONS OF EMPLOYERS' ASSOCIATIONS
In dealing with the functions of employers' associations,
a distinction must be observed between those which are
purely trade associations and those whose primary pur-
pose is the handling of labor questions. While these two
functions are not invariably separated, there is a growing
tendency in that direction. Some federations, such as
the Engineering and National Employers' Federation,
have always dealt with labor questions. The Shipbuild-
ing Employers' Federation deals almost exclusively with
such questions. The Employers' National Council for
the Clay Industries was formed to work out the principles
of the Whitley Report. But several of the new associa-
tions had separated the treatment of trade and labor
questions, sometimes going to the extent of setting up a
separate organization.. Thus, the Federation of British
Industries, in order to carry out its second object,
106
the promotion and encouragement of free and unrestricted
communication and discussion between masters and workmen
with a view to the establishment of amicable arrangements
and relations between masters and workmen and to the
avoidance and settlement of strikes and all other forms of
industrial warfare between masters and workmen,
had assisted greatly in setting up the National Alliance of
Employers and Employed, for the treatment of labor
questions. The chemical and light leather industries
had similarly set up separate organizations for the same
purpose. Two other federations which had arisen during
the war were able to refer their labor troubles to the En-
gineering and National Employers' Association, of which
they were members.
The functions of trade associations are many and diverse.
A summarized statement of the chief among those of the
Federation of British Industries will serve as a guide to
what is to be found in the case of other federations. The
first object is the organization of itself as a federation.
The second has been quoted above.¹ The chief of the
long list of those remaining are:
(i) Promote the interests of manufacturers, assist the or-
ganization of industries and particularly the develop-
ment of industries of all kinds.
(ii) Promote and develop schemes to establish and
maintain communication between manufacturers and
customers desirous of purchasing their goods.
(iii) Afford facilities for communicating and interchanging
views between manufacturers and government depart-
ments so that the latter may be fully seized of the
views of such manufacturers on matters affecting the
industries in which they are engaged.
(iv) Watch over legislation and the administration of laws.
(v) Provide legal aid for members in such matters as
patents and trade-marks, and where the interests of
the Federation are involved.
(vi) Collect and circulate statistics and information on
matters connected with or affecting industry, science,
and commerce.
(vii) Provide a central medium of useful and confidential
information and advice.
1 See page 100, § 5.
107
(viii) Promote and encourage scientific research, improve
technical, scientific, and general knowledge of manu-
facturers, and take educational measures for these
purposes.
(ix) Circulate information as to nature and merits of
inventions and assist and encourage the exercise of
inventive skill.
(x)
Employ travelers to promote the interests of British
manufacturers and producers and obtain information
likely to be of use to them.
These general purposes are found duplicated in most
other associations. The promotion of the interest com-
mon to manufacturers in that industry forms the main
object of most federations and associations. To repre-
sent the industry in all questions arising out of govern--
mental action is especially to be found among the func-
tions of those associations created during the war. To
watch over legislation, while not figuring largely in the list
of functions, is only absent because achieved without
overt action by the federation itself.
Quite a number of associations are ready to give pecu-
niary aid or legal advice to their members or indemnify
them when action in accordance with the policy of the
association has caused them loss. Several associations
are publishing statistics and collecting confidential in-
formation that may be of service to the industry.
It is significant that no object occurs so frequently
in the list of aims as that of the promotion and encourage-
ment of scientific research and of technical education.
Industries like the silk, lace embroidery, clay, boot and
shoe, rubber, chemical, electrical, and engineering are
among those which are seeking to improve technical
processes and further the technical efficiency of both
employers and employed. The printing industry, and,
in part, that of lace embroidery, have taken up systems
of scientific cost accounts and appraisement.
In some cases there was a preference shown for some
form of protective tariff within the near future, but action
along such lines was not found among the objects of any
association.
Some of the associations are registered as companies,
but few of them so openly avow their purpose to promote
trade and commerce as does the Federation of British
108
•
Industries. It should be observed, however, that the
latter is concerned, so far as it undertakes the object, with
the furthering of trade in general, especially oversea trade.
At its annual general meeting, October 31, 1918, it passed
the following resolution on domestic trade:
That with a view to consolidating the industries of this
country and reducing speculative fluctuations in prices, mem-
bers of the Federation of British Industries are recommended
as far as possible to draw their requirements of manufactured
products from members of the Federation.
In reality, however, as the chairman's remarks indicate,
it was intended to weld together British industry and
give "a real preference to British trade in British mar-
kets." The commercial aspect of the activities of the
Federation, however, is centered on developing foreign
trade so as to oust Germany from world markets. An
Overseas Trade Committee was appointed which first
sought to press the Government to take action to represent
British commerce in foreign countries. As a result of this
pressure the Government accepted the principle of com-
mercial attachés. Further action by the Federation was
hindered by the refusal to set up an organization which
would be in any way concerned with negotiating business.
At length, however, a proposal was made that commis-
sioners or representatives of the Federation should be
appointed in foreign centers of trade. These men were
to inform manufacturers generally through the Federa-
tion, of the industrial, political, and social conditions of
the countries they were in; and generally to foster British
industrial and financial interests.
While no other federation openly aims at developing
trade, several do give attention to foreign trade, and
more of them achieve some form of price-fixing. One
association states its objects thus:
•
In order to avoid in future the selling below cost price, the
selling of [goods] of too slack qualities, the piracy of . .
designs and patterns, the diversion of orders from their proper
owners . . the objects of the association shall be . .
(a) To fix a minimum cost price.
•
(b) To regulate qualities and fix standards of goods. .
This association imposes a fine of £50 ($243) for under-
selling, for discounts or dishonest bookkeeping. Another
association, which imposes a similar fine for breach of its
109
:
1
rules, aims "to prevent unfair competition among mem-
bers of the association and the cutting of prices, and unfair
attempts to get work for themselves from the customers
of other members." It regulates prices at which work
shall be executed by members, provides that no member
shall carry out contracts at lower prices than the mini-
mum fixed, and requires all members to advance prices
at once on the fixing of the minimum. Another association
which seeks to obtain a "fair market price” (“no artificial
inflation of prices is contemplated") for its product has
a selling committee to fix a minimum price and settle
export selling terms and forms of contract. The whole
of the product made for export is placed in the hands of
this selling committee.
Most employers' associations that are not registered
as companies, devote attention to labor matters. While
there are some that are exclusively devoted to the treat-
ment of such questions, there are few that do not give
them a large place in their functions. In fact, many of
these employers' associations are registered as trade
unions, thus acquiring a legal status as an association
regulating the "relations between workmen and masters,
or between workmen and workmen, or between masters
and masters, or the imposing of restrictive conditions on
the conduct of any trade or business."
Many of these associations include among their objects.
the regulation of wages and hours and the settlement of
disputes. These objects are achieved by negotiations
between the district and national executives of employers'
and workers' organizations. But the most frequently
occurring object in relation to labor is the establishment
of machinery for promoting amicable arrangements and
relations between employers and workers. This object
is achieved in various ways. The Federation of British
Industries has set up the National Alliance of Employers
and Employed as an organization for establishing indus-
trial harmony. Two other associations have in a similar
way set up separate organizations to deal with labor
problems. Fourteen associations have established Joint
Standing Industrial Councils on the Whitley Plan. The
principle of conciliation is adopted in three industries,
shipbuilding, engineering, and cotton, by means of joint
rules drawn upon agreement between employers and
employed. Six other associations have some form of
conciliation, while another three, all in the engineering
110
i
industry, leave their labor troubles to the federation in
that industry. The remaining associations do not deal
with labor problems at all.
§ 9. NATIONAL ALLIANCE OF EMPLOYERS AND EMPLOYED
The importance and significance of the National
Alliance of Employers and Employed as an organization
for common action towards industrial co-operation is so
great as to call for extended comment. The suggestion
of such an organization was made in December, 1916, at
a meeting called to deal primarily with demobilization.
The sense of the meeting was that the cordial and whole-
hearted co-operation of employers and employed was
vital to the success of any scheme dealing with recon-
struction problems. By March, 1917, an organization on
this basis had been created, and by November, 1917, had
approved a constitution admitting associations of em-
ployers, trade unions, individual companies, firms, and
individuals to membership. Later, the terms of affiliation
were arranged, so that the two former groups alone were
entitled to elect the Central Council, while the three
latter groups were classified as associate members. The
organization of the Alliance has come to consist of local
committees, area or district committees, and federations
grouped according to geographical and industrial con-
ditions.
The General Council of the Alliance is composed of
representatives of employers and workers, each employers'
association and each labor organization having the right
to appoint two members, and each area or district com-
mittee to appoint one employer and one workman. The
respective parties are not equal in numbers on the General
Council, but they are on the Executive Council, which
consists of not more than twelve members on each side.
District Committees also consist of equal numbers from
each party.
The aims of the National Alliance of Employers and
Employed, expressed in general terms, are to promote the
active co-operation of employers and employed in the
treatment of questions generally affecting labor and em-
ployment in all trades and industrial occupations, and to
secure the welfare of the industrial workers of the country
and the efficiency of its industries. More specifically, its
program names the following points as those to which
111
the joint committees it sets up should direct their atten-
tion:
1. A living wage "sufficient to enable the workman to main-
tain a decent standard of life for himself and those depend-
ent upon him, and to provide for the future. Beyond
this minimum, the method of remuneration to be such as
will give the workman an incentive to use his best efforts
on behalf of the industry in which he is employed."
2. Regulation of hours of labor.
3. Women to be paid at equal rates with men, if work, skill,
and output are equal.
4. Improvement of the conditions under which work is
generally carried on.
5. Satisfactory housing conditions for all workers.
6. Opportunities to be given to workers to obtain a practical
and technical knowledge of the trade, and encouragement
given to them to take a keen interest in the efficiency and
success of the works, and to afford the management the
benefit of their knowledge and experience. The interests
of workpeople in their inventions to be safeguarded.
7. Joint committees to consider wages and hours in relation
to the financial interests of the industry, and to consider
questions of the efficiency of the plant and methods of
production.
8. Every inducement to be offered to ensure the production
of the maximum output of which each individual is capable,
and every worker to be allowed to receive as much as the
nature of his work and his capacity will enable him to earn.
9. Endeavors to be made to keep workers employed during
times of slack trade.
10. Associations of employers and employed to be encouraged,
and agreements arrived at between them to be accepted
and loyally adhered to.
11. Local and national efforts to be made to insure that every
child shall have the opportunity of obtaining a liberal
education and the technical training required for the
particular calling for which it is shown to be fitted.
In a note attached to the statement of its objects, the
Alliance declares that it
will not, unless specially requested to do so, interfere with
arrangements existing between employers' associations and
trade unions for the settlement of questions affecting wages,
hours, and conditions of labor.
112
The activities of the Alliance have been varied. Most
of them are carried out through the district committees.
Some of these latter have been called upon to arbitrate in
disputes. Others are taking practical action on the
housing question. The committee in one center had
concentrated on the problems of the joint organization
of trade, unemployment, co-partnership, and profit shar-
ing. This center, reporting on unemployment, made the
following significant observation:¹
On broad lines it may be deduced that until steps are taken
which will reduce the great fear of unemployment from the
masses of the workers, that increased output, so necessary for
the future of the country, cannot be hoped for.
The Alliance as a whole took certain steps in educating
public opinion and placing its project before the Prime
Minister, so that the exact form taken by the National
Industrial Conference on February 22d was due to its
initiative.
For the use of the district committees and affiliated
organizations, the Alliance is developing a Bureau of
Industrial Research, aiming to supply the fullest possible
information on particular problems which concern equally
the welfare of employers and trade unionists.
The efficiency of such a method of co-operation as the
Alliance represents may be judged from the testimony of
Mr. E. Manville, M. P., President of the Associated
Chambers of Commerce of Great Britain, and the Vice-
Chairman of the Executive Committee. Speaking of an
association of two years with the activities of that com-
mittee, he said:
During the whole of this time I have never known a dead-
lock to occur between the employers and trade unionists
serving on it on any vital point.
How far it has been necessary to go sometimes in
placating labor is seen in the pronouncement of its North
London committee, representing nine manufacturers and
nine labor leaders. This committee has put out the
following basic principles of a working arrangement
between capital and labor.2
¹ Unity (official organ of the National Alliance), June, 1919.
2 See The Times, March 14, 1919, and Unity, April-May, 1919.
113
1. Industry rightly belongs neither to the capitalists nor to
labor.
2. Capital and labor are morally and economically partners
in industry, and by reason of their different functions no
distinction can exist in the relative importance of the ser-
vices rendered by each.
3. Neither the control of industry nor its benefits can be
rightfully claimed, or advantageously possessed, either by
owners of capital invested or labor engaged, to the ex-
clusion of the other.
4. The function of capital is that it be applied productively
and sufficiently for the general good.
5. The function of labor is to produce to its full capacity.
6. The "standard of living," representing as it does the
division of the commodities produced by the community
amongst its members, is directly proportional to produc-
tion, provided that the said division is equitable, having
regard to services rendered.
7. The rewards rightly due for services rendered are as follows:
First, to labor a reasonable living wage; secondly, to
capital, in respect of money secured by assets, a reasonable
fixed rate of interest, sufficient to secure its employment;
thirdly, to labor, 50 per cent and to capital 50 per cent of
the net divisible profits.
8. The term "labor" comprises workers both by hand and
brain, and includes management.
§ 10. SOME OTHER PURPOSES
The joint rules in force in the shipbuilding, engineering,
and cotton industries provide for automatic conciliation,
guaranteed by representative bodies on each side. In
each case, no lockout or strike is to occur till a regular and
definite procedure is adopted, providing for conference
between representatives of either party. In the ship-
building industry, when yard committees, district and
national committees have failed to adjust a dispute,
arbitration is resorted to. In the engineering or metal
trades the final step is one of conciliation at the hands of
the national executives of the employers' and workers'
organizations respectively. In the cotton industry the
same procedure before local and national joint bodies
representative of either party is carried out. But the
rules further provide that during the continuance of a
strike or lockout periodical meetings shall be held between
114
the national executives of the parties. These meetings are
to take place every four weeks,
until the dispute be settled, and without any formal applica-
tion by either party for any such meeting.
Other objects of employers' associations dealing with
labor problems sometimes include measures of common
defense. Thus the general secretary of the national
federation is in three cases required to collect particulars
of all local demands, strikes, and disputes, so that the
Federation may be forearmed. Other associations refuse
to employ men on strike or locked out from the workshop
of another member of the same association, provided that
the dispute has been approved by the association. In
several cases, an inquiry form is circulated among members.
of associations giving particulars of the industrial standing
of an applicant for employment. In one case, the regula-
tions provide that one employer may not "poach" upon
the workers of another employer in the same association.
In two associations, lockouts may not be ordered except
on a two-thirds majority, in one case taken by a referen-
dum among the federated associations, in the other
case by a vote of the executive, confirmed by a three-
fourths majority in a general meeting of the association.
Two associations revealed the presence of an effort to
give both manufacturers and workers a clearer idea of the
economic problems of the industry. In other cases, the
need was recognized, though nothing had been done.
Other associations, in which the Whitley scheme for joint
industrial councils had been adopted, expected that a
common process of discussion upon the economic needs of
the industry would have an educative effect. Others
found that the meetings of the associations, whether
local or national, did much to call forth from manufactur-
ers a clearer exposition of their position than the public
were accustomed to get. Thus, in The Builder, the offi-
cial organ of the Builders' Federation, there occurs the
following statement:¹
Organization is the builders' most effective weapon in
dealing with labor difficulties, whilst it is also the only effectual
means of educating the public as to the rights of a class of men
who are more frequently unjustly criticized and condemned
than those of any other calling.
¹ The Builder, August 10, 1917.
115
The secretary of the Builders' Federation, in an inter-
view showed how the activities of the Federation were
aimed towards the uplifting of the industry and the
economic education of builders generally. An attempt
was being made to get the industry professionalized, so
that the lump contract system could be replaced by that
on which architects work, and standard forms of estimates
and contracts and standard methods of measuring quan-
tities adopted.
The efforts made by the two associations which have
attacked the economic problems of their industry are
interesting. One, which manufactures an article beyond
the reach of workers, has put out a statement to its work-
ers analyzing the cost of production of that article, and
stressing the conclusion that this article can only come
within the reach of the workers by reason of increased
output on their part and a consequent reduction in the
unit cost of production. The other association, the Fed-
eration of Master Printers, has a cost system which was
worked out by a committee of the Federation and is in
operation in almost all large workshops in the industry.
The Federation is starting an educational propaganda.
mainly to show employees the economic basis of the
system, and the degree to which it includes and protects
their wages. The joint Industrial Council for the indus-
try has endorsed the system, including among its "agreed
principles" the following:
That all employers should adopt and use for costing and
estimating a uniform costing system approved by the Na-
tional Executive or be guided by any schedule of hourly cost
rates issued for their district and approved by the National
Executive.
§ 11. FRENCH AND ITALIAN ORGANIZATIONS
The organizations of employers in France have tended
toward the type represented by the Chambers of Com-
merce in the United States. They have sought to deal
with general questions touching the industry as a whole
or with questions of trade. Such subjects as freight rates,
credit reports, insurance rates, foreign trade conditions,
come before them. With the secretaries of each are
associated experts to analyze and make available the in-
formation that comes in.
116
"Most of them support professional schools, lecture courses,
laboratories, etc., issue prizes for special work affecting the
trade involved, collect libraries of technical works, and fre-
quently undertake social welfare work in behalf of their mem-
bers and the workmen in their plants. Bulletins are issued
monthly and annually, and they are of the greatest interest
as throwing light on the development of the respective trades.'
They are generally known as employers' syndicats
(Syndicats Patronaux). The first employers' syndicat
was organized in Paris, 1857, and was called the National
Union of Commerce and Industry.
Of these employers' associations there were, in 1914,
some 4,967. All together their members totaled 403,143,
among whom there were 10,300 women members.2 In-
dustrial conditions during and since the war have given
them strength and activity. Your Commission was told
that French employers are getting together as never
before.
3
There is another type of organization in France in-
volving the employers. It is called the "yellow" (jaune)
or mixed syndicat, and is made up of a combination of
employers and employees. Of these there were, in 1914,
233 syndicats, with 51,111 members. Relatively weak,
the mixed syndicat has still accomplished something in
bringing the workman into association with the employer.
The purpose of such syndicats is very similar to that of
employers' syndicats.
The French employers' associations, being relieved
from the burden of a tremendous labor problem, have been
free to turn to matters of trade. The Union of Metal-
lurgical and Mining Industries and Affiliated Industries
is a leading organization in the world for the comprehen-
siveness of its scientific information. Your Commission
met with some representatives of the Automobile Asso-
ciation of France and found them most keenly alive to the
problems of that industry. They were complacent about
handling the labor problem, but matters of finance,
imports, raw materials weighed heavily with them.
Your Commission found a movement on foot to organ-
ize the employers of all the important industries of North-
ern Italy. We were told that the employers in the metal
1 Franco-American Trade, p. 86.
2 Statistique Generale, p. 134.
3 Ibid.
117
interests were organized and working together. The
textile manufacturers also have their organization. There
met in Turin, April 23d, a convention of employers from the
entire industrial section of Northern Italy to discuss the
question of the eight-hour day and the minimum wage.
But, as in France, the labor union problem has not brought
them together.
There is the Società Italiana per Azioni (Association
of Anonymous Share Companies), which is said to be the
most important manufacturers' association in Italy. A
plan has been drawn up for the constitution of a General
Confederation of Italian Industry.
STATUTE OF THE GENERAL CONFEDERATION OF ITALIAN
INDUSTRY
1. There is constituted, with seat in Rome, the General
Confederation of the Italian Industry.
2. The Confederation intends to promote and protect in all
fields the general interests of the national production.
3. There are admitted to join the Confederation:
(a) All national companies of Industry and Association
of the Share Companies. (Section A.)
(b) Industrial Associations devoted specially to the study
and solution of problems relative to intercourse be-
tween manufacturers and labor. (Section B.)
(c) Associations of Manufacturers with only a regional
and local character. (Section C.)
4. The Office of Presidency of the Confederation will decide
without appeal upon the admission of companies.
5. The Confederation is ruled by a Board of Delegates and
the President.
6. The Board of Delegates is formed by four representatives
of the Association among Share Companies, by a repre-
sentative of all associations included in Section A and of the
Directions of Sections B and C.
7. Said Board meets once every six months, and also at
different extraordinary periods if the President considers
it necessary, or if it be demanded by at least three associa-
tions. In the Board presided over by the General President
each member present is entitled to a vote.
8. For the validity of meetings, there is necessary, in a
first convocation, the presence of at least one third of the
members; in a second convocation the meeting is valid
whatever be the number of the members present, and the
deliberations are taken by the majority of those present.
118
9. The meetings of the Board can also be held in different
towns, out of the confederal seat. They are assembled
by the President with a notice to be sent round at least ten
days before the date fixed for the meeting, except in emer-
gency cases in which said notice can be made by wire.
10. The Board has authority to appoint the General President,
to approve the budgets, and to decide the general direction
of the actions of the Confederation; the President has
the widest power upon the organization and the working
of the Confederation.
11. The President's office is formed by the General President
and by four Vice-Presidents; two of these are appointed by
Associations of Section A; the other two will be, by
authority, Presidents of the Direction of Sections B and C.
12. The General President is appointed in the first yearly
meeting of the Board and can be appointed again for four
years consecutively.
13. Sections B and C shall have each a special Direction formed
by five members appointed by the Associations inscribed
in the respective sections. The appointment will be made
in the first three months of each year, by voting through
correspondence.
14. Each of the Sections B and C will make its own rules, to be
approved also by the President's Office.
15. The yearly contribution of the Associations to the Con-
federations is fixed as follows:
(a) 1,000 lire for Associations of Section A.
(b) 0,10 lire per each workman controlled by the Associa-
tions of Section B.
(c) 250 lire for Associations of Section C.
The rules of Sections B and C can fix special contributions
for their associated parties.
16. The Association that does not observe the rules of the
Confederation can be excluded from same, by decision
without appeal of the Board, based upon the majority of
two thirds of the members present.
§ 12.
RESULTS
The results achieved by the formation of employers'
associations with purposes and aims as sketched have
been manifold. In the case of the associations inaugu-
rated during the war, it is difficult to disentangle the
results due to the national pressure from those which
followed upon co-operation with other employers. The
national needs can, however, best be regarded as the
119
stimuli which furnished the motive for association, and
made the 'results of association appear more readily and
speedily.
The first general result was a quickening of industry.
The jealousy and individualism which had stood in the
way gave place to a readiness to share ideas and to work
towards a common end. The process of sharing ideas
had its reverse in revealing deficiencies, while co-opera-
tion between persons engaged in the same industry meant
doubled efficiency. A speaker at the annual meeting of
the Federation of British Industries, December, 1918,
recounted the experience of a friend, who
said that there was one firm only in his experience who had
discussed certain matters with him without any reserve at all.
Each had told the other exactly what it was doing, one firm
being at one end of the process and the other at the other.
They put their information on the table together, and he had
no hesitation in saying that the result of exchange of views
was to reduce cost by 10 shillings a ton. The information at
the disposal of one just supplemented the information at the
disposal of the other.
This personal experience has been repeated in that of
several of the industries which were organized during the
war, and by discussion and the interchange of information
acquired fresh strength and resourcefulness, as well as
added efficiency.
Further, the formation of employers' associations has
enabled employers to represent their cause more effectively
before the public, the Government, and the trade unions.
The process of organization has necessitated a certain
quantity of economic augmentation, and the public
has learned to find among employers¹ advocates and
defenders who would have remained silent in their own
cause, but have come forward to speak for industry
generally.
The Government, too, whose activities were so greatly
extended during the war, has learned where to look for
guidance concerning industry now that industry is so well
organized. The earlier position is illustrated by a state-
ment of Mr. Dudley Docker, first President of the Federa-
tion of British Industries.
1 For instance, Mr. W. L. Hichens, Mr. Samuel Turner, Mr. Ernest Benn, and
others.
120
If the Government ever took the trouble to ascertain the
views of the manufacturer, or of the large employer of labor,
they have in the past generally selected some individual at
haphazard, who had no right to do more than give his indivi-
dual opinion and was incapable of voicing the views of British
trade.
Even when the Government did choose to consult an
association they did not consider larger associations
which would be affected by their action. A glaring
illustration of the effects of such a policy occurred in con-
nection with the granting of the 1212 per cent bonus to
time workers by the Minister of Munitions, in 1917. Mr.
Churchill consulted the Engineering Employers' Federa-
tion, which made strong representations on several
points, but especially as to the effect which the granting
of an advance in the case of any particular class or classes
of time workers would have on any other classes of
workers. Mr. Churchill disregarded this advice, and
failed to consult other associations. The sequel was the
extension of the bonus to practically all time workers
throughout the country, with a corresponding bonus for
pieceworkers. The effective organization of each in-
dustry, and the creation of the Federation of British
Industries as the representative of all employers has given
the Government effective channels through which to act
in relation to industry.
At the same time the increase in strength of employers'
associations has paralleled that of trade unions, and thus
created an equilibrium. Since trade unions are recog-
nized, and collective bargaining carried on with them,
this equality has no implication of defense, yet it has
considerable significance in the obtaining and keeping of
just agreements. Further, it secured uniformity in agree-
ments concerning wages and hours. Prior to a more
complete degree of organization, individual employers
found their well-organized employees following a policy
of attacking each employer singly, and thus producing
an inequality of concessions and conditions that was very
damaging.
The growth of associations has strengthened the smaller
firms within an industry and has given the industry itself
greater assurance. One effect of this increased strength
and confidence is the growing tendency toward price-
fixing mentioned in the discussion of the functions of asso-
121
ciations. While some of this is due to government control
during the war, and to the circumstances under which
many of the associations came into existence, its continu-
ance is intimately correlated with the more complete
organization of the industry.
§ 13. SUMMARY
The functions of employers' associations, especially in
Great Britain, cover practically the whole range of indus-
trial purposes. Measures are taken to strengthen and
develop industry and promote the interests of manufac-
turers therein. The efficiency of the industry is a prime
matter of concern, and scientific research and technical
education are promoted as means to that end. The
science of statistics is being used to inform and guide
manufacturers on matters that hitherto lay outside their
ken. Matters of price-fixing and better organization
for selling are receiving attention. On the side of labor
relations, while questions of wages and hours and the
actual settlement of disputes constitute a large part of the
problems of associations, the chief trend of activity is in
the direction of the establishment of machinery for pro-
moting amicable arrangements and relations between
employers and workers. Some little attention is given
to matters of common defense against the activities of
trade unions and to forms of economic education.
122
1
CHAPTER VII
SHOP STEWARDS
§1. THE QUESTION OF OUTSIDE INFLUENCE
Out of the unrest and general discontent among
British workers of the present day, new sets of demands
are being brought forward by various agencies in organ-
ized labor. Not only are many of these new demands very
extreme and far-reaching in character, but the agencies
also through which they are being urged are significant.
There is a widespread and determined desire on the part
of labor to take over a share of industrial control, and
organizations for carrying through such a policy are
developing.
A point of marked importance to employers is as to the
methods of dealing with their workers. Shall outside
influences, through unions, through delegates of unions,
or councils organized by governmental action, enter into
the settlement of disputes arising in local establishments
between individual employers and their employees?
Shall labor have authority to decide on matters of manage-
ment hitherto reserved to the owner of the establishment?
Here is to be found, undoubtedly, the crux of the question
as to the attitude of employers to shop stewards, works
committees, joint councils, and industrial conferences.
It is one thing to have an opportunity for employers and
their employees to confer together in a committee repre-
senting the whole body of workers in an establishment on
matters of local and mutual concern; it is quite a different
thing to have outside forces enter to apply general policies
in individual establishments. The latter methods stir up
the antagonism arising from the natural desire of men to
settle their own affairs without outside dictation.
§ 2. SHOP STEWARDS
Before the war the majority of British Trade Unions
had officials in the shops, known by various names—such
as "Shop Delegates, Collectors," or "Shop Stewards,"
but they had no place in the settlement of disputes
99 66
123
between workers and employers.¹ In the main, these
union shop stewards aided the purposes of the unions
by such duties as collecting dues, bringing newcomers
into the organization, and watching for violations of
union rules and customs. These delegates claimed the
privilege of going freely about the shops without notifying
the foremen; but such concessions were not granted by all
employers. It is to be noted that these officials were
imported into an establishment to serve the purposes of
an outside body which professed a concern as to the in-
terests of individuals employed therein. If originating
in other ways, they soon became absorbed into the trade
union organizations.
The functions of shop stewards began to change with
changes in the nature of the laborers' demands. They
appeared upon committees for the arrangement of prices
for piecework. Originally they were representatives of
their crafts. Elected at the start by the unions, their
relation to the unions has varied. Sometimes the
branch selecting them did not have a large membership
in the works where they were placed. Sometimes they
were appointed by the district committee. Thus they
formed a kind of machinery which did not always provide
a direct medium of dealing between the employer and his
own workers. Too often they came from forces working
outside the individual plants.
3. EFFECT OF WAR CONDITIONS
In addition to the industrial unrest that had been
gathering before the war, new conditions produced by
the war aggravated the situation. As we have seen, the
introduction of new automatic machinery, together with
the employment of semi-skilled and unskilled laborers
(i.e., dilution), and the withdrawal of some union restric-
tions, raised many new questions. The labor policy of the
Government in state-controlled industries was also vacil-
lating and uncertain. Many misunderstandings were
caused by the action of governmental officials which
were charged against the employers. Official regulations
regarding dilution stirred up antagonism. In addition,
1 The American "walking delegate " is a person not employed as a worker in
the individual shop; the British "shop steward" is so employed. The word
works," as used in this discussion, means shop or plant or manufacturing
establishment.
124
the steady preaching of socialistic doctrine that labor was
the chief, if not the sole, factor of production began to
raise claims for a share in industry corresponding to the
new teachings. Thus discontent grew and widened.
Out of this situation during the war there developed
a loss of confidence in the power and prestige of the trade
union authorities:
In many cases the trade union representatives have by
constitutional methods endeavored, but in vain, to procure
the settlement of difficulties. The workpeople have gained
the impression that, if they wish for any improvement in their
conditions, they must take the matter into their own hands
and bring pressure to bear upon the Government. Action by
the men themselves has been able to force the Government to
decide that which they had refused or delayed to decide when
approached in a constitutional way by the trade union
representatives. The result has been a loss of confidence in the
trade union itself.¹
That is, the shortcomings of government management
increased the difficulties of the labor situation.
In connection with "dilution," the skilled workers
feared a loss of status for skilled crafts and a lessened
power of their craft unions. If they took in the new work-
ers, it tended to transform craft unions into those based
on an industry. In the emergencies of the generally
disturbed situation, ambitious, radical young men saw
their opportunity to gain power and influence through
the position of shop stewards. Working within their own
individual shops, appealing to the fear of craft destruction
and other causes of discontent, they secured a very large
following even among those workers who had once dis-
approved of the methods of some shop stewards. This
rising tide of new forces became known as the "Rank-
and-File Movement," or the "Shop Steward Movement,"
and soon became a serious menace to the authority of the
established unions. The rank and file proposed to act
unofficially and independently of the union leadership.
The result was the calling of what was termed the "un-
authorized” strike (that is, unauthorized by union offi-
cials), organized by the shop stewards, which first broke
out on the Clyde in February, 1915.
There then was organized out of the shop stewards a
strike committee known as the "Clyde Labour With-
1 "Commission of Inquiry into Industrial Unrest, London and Southeastern
Area," p. 5, par. 7.
125
drawal Committee," which engineered the strikes on the
Clyde in March and April, 1916. In effect, these strikes
were brought on to force a recognition of the shop ste-
wards movement by employers, the trade unions, and by the
Government. Elsewhere "Workers' Committees," after
the Clyde model, were established, followed by strikes
at Barrow (June 26-July 2, 1916), Sheffield (November
16-19, 1916), Manchester (November 30-December 5,
1916), Tyne (March 19-25, 1917), Swansea (June 25-July
2, 1917), Mersey (July 6-18, 1917), and, finally, of 50,000
aircraft workers at Coventry (November 26-December
3, 1917).
It is obvious that the terms "Shop Stewards" and
"Works Committees" must be used with discrimination.
The revolutionary element among laborers expressed itself
in these agencies. They made an effort for an expansion
of their policy in a National Industrial Council of Shop
Stewards and Workers' Committees to secure "a clearer
perception of working-class industrial needs and more
cohesive action in the direction of their attainment."
Their objects were no longer the correction of shop prac-
tices and the like. As a separatist body they antagonized
the regular unions, because these were considered too
slow and too conservative, and they presented new
demands on industry as a whole. They claimed that,
under the new and complicated conditions produced by
the war, the union leaders had become detached from the
practical problems of the shop and were thus unfitted to
meet the managers and experts at conferences.
On technical points bargains are frequently made which
work out badly in practice; the men chafe under the agree-
ments; they lose confidence in the leaders; and the results
are obvious in the lack of discipline and the growing number
of unauthorized strikes.2
Thus, while the shop stewards were set against the
union leaders, by a curious paradox the employers were
induced to turn to the more radical shop stewards. As
we have seen, the natural attitude of the employer was
to deal directly with his own men rather than with forces
outside the shop, such as union organizations having a
general or national policy. Therefore to the employer
the shop steward system seemed to furnish a return to
1 The Engineer, January 4, 1918.
2 Ibid.
126
direct dealings between the individual employer and his
own workers. But if he relied on this hope, he soon
found himself dealing with a general point of view more
radical than that of the unions.
When employers were invariably in favor of settling local
disputes locally and with their workmen, the trade unionists
demanded nothing less than national settlements. There was
much agitation and there were many strikes on this very
question. The unions eventually won their point, not so much
by argument as by force. Now that the employers, reluctantly
forced into a policy of national treatment of local questions,
desire to settle down and make the best of the new conditions,
and observe the rules of this trade-union created procedure,
the men have switched back to the principle of local auto-
nomy.1
""
Thus there has arisen a tendency, especially with
government officials, as in the proposals for Whitley
Councils and Industrial Conferences, to support the union
authority as the lesser evil. But, since the leadership
among shop stewards is in the hands of radical and even
revolutionary young men, it remains to be seen whether
their policy will be forced on the established unions,
or whether the latter will dominate the "rank-and-file'
movement and confine the shop stewards to purely ad-
ministrative functions. Recent events, however, as in
the case of the coal miners, show that the extreme element
has got out of hand and is determined to use "industrial
action," or a policy of force. The power of the revo-
lutionary movement was such as to draw in many of
the shop stewards who ceased to report to their trade
unions. They have become "class conscious men and
women who have in view neither the restitution of war
conditions nor 'the permanent improvement of relations
between employers and employees.'
992
§ 4. ATTEMPT TO REGULARIZE SHOP STEWARDS
The next step in the evolution came with an effort of
the established unions to "regularize" the shop stewards.
by confining them to administrative functions, and by
recognizing their committees as official committees of
the unions. The point of interest, of course, resides in
¹ The Engineer, January 4, 1918.
2 Cf. J. T. Murphy, in Solidarity, the organ of Workers' Committees, October,
1918.
127
noting how far the union policy has been made more
radical in carrying out such a compromise. It is clear,
however, that the explosive power of revolutionary
purpose, even if its influence through shop stewards
should be limited, will break out in another form, until
it is squarely met and subdued. For the present, it
should be recorded that after the Coventry strike (Nov-
ember 26-December 3, 1917), thirteen of the principal en-
gineering trade unions, not including the Amalgamated
Society of Engineers, declared their policy in the well-
known Shop Stewards' Agreement, December 20, 1917:
With a view to amplifying the provisions for avoiding dis-
putes it is agreed:
1. The workmen who are members of the above named
trade unions employed in a federated establishment, may
appoint representatives from their own number to act on their
behalf in accordance with the terms of this agreement.
2. The representatives shall be known as shop stewards.
3. The method of election of shop stewards shall be
determined by the trade unions concerned, and each trade
union party to this agreement may appoint shop stewards.
4. The names of the shop stewards and the shop or portion
of a shop in which they are employed and the trade union to
which they belong shall be intimated officially by the trade
union concerned to the management on election.
5. Shop stewards shall be subject to the control of the trade
unions, and shall act in accordance with the rules and regula-
tions of the trade unions and agreements with employers so far
as these affect the relation between employers and work-
people.
6. In connection with this agreement shop stewards shall
be afforded facilities to deal with questions raised in the shop
or portion of a shop in which they are employed. In the course
of dealing with these questions they may, with the previous
consent of the management (such consent not to be unreason-
ably withheld), visit any other shop or portion of a shop in the
establishment. In all other respects they shall conform to
the same working conditions as their fellow workmen.
7. Employers and shop stewards shall not be entitled to
enter into any agreement inconsistent with agreements
between the Engineering Employers' Federation or local
associations and the trade unions.
8. The functions of shop stewards so far as they are con-
cerned with the avoidance of disputes shall be exercised in
accordance with the following procedure:
128
(a) A workman or workmen desiring to raise any question
in which he or they are directly concerned shall in the
first instance discuss the same with his or their foreman.
(b) Failing settlement, the question shall, if desired, be
taken up with the management by the appropriate shop
steward and one of the workmen directly concerned.
(c) If no settlement is arrived at, the question may, at the
request of either party, be further considered at a
meeting to be arranged between the management and
the appropriate shop steward together with a deputa-
tion of the workmen directly concerned. At this meet-
ing the organizing district delegate may be present, in
which event a representative of the Employers' Associa-
tion shall also be present.
(d) The question may thereafter be referred for further
consideration in terms of the provisions for avoiding
disputes.
(e) No stoppage of work shall take place until the question
has been fully dealt with in accordance with this agree-
ment and with the provisions for avoiding disputes.
9. In the event of a question arising which affects more
than one branch of trade or more than one department of
the works the negotiation thereon shall be conducted by the
management with the shop stewards concerned. Should the
number of shop stewards concerned exceed seven, a deputation
shall be appointed by them not exceeding seven for the
purpose of the particular negotiation.
10. Negotiations under this agreement may be instituted
either by the management or by the workmen concerned.
11. The recognition of shop stewards is accorded in order
that a further safeguard may be provided against disputes
arising between the employers and their workpeople.
12. Any questions which may arise out of the operation of
this agreement shall be brought before the executive of the
trade union concerned or the federation, as the case may be.
It will be observed that recognition was given to shop
stewards chosen by the unions. Nevertheless, the
Coventry idea of workers' committees, looking towards
One Big Union, irrespective of crafts, persisted among the
shop stewards and must make itself felt in the unions.
It is to be noted, in addition, that the agreement of
December 20, 1917, was brought about as the result of a
conference between the employers' federation and the
trade unions; that is, the unions obtained help from the
employers, or vice versa, in measures to hold the extremists
within bounds; but in doing so the employers gave
ground.
129
In effect, what has to be reckoned with is not merely
shop stewards and their works committees, but a point.
of view represented by the so-called "Shop Stewards'
Movement," in whatever form it appears, which aims
at a control of industry.
Such an influence, therefore, varying according to the
strength of the "rank and file" within the unions, will
color the claims and action of works committees. Indeed,
the committees formed under the Whitley plan will un-
doubtedly have to face these influences and the persistent
claim for an increasing control over industry. The ques-
tion is: At what limit of control will the demands be
satisfied? If the extremists more and more dominate
the labor organizations, their radical demands will in-
crease; and British industry will be marked by the passing
of management into the hands of those who have con-
tributed no capital to the enterprise. The issue is clearly
joined. At what limit must the employer make a stand
and refuse further concessions in the interest of national
efficiency of production?
Committees, or stewards, or any machinery of com-
munication between the employers and workers, are not
in themselves the real solution of labor troubles. The
crux of the matter is, what policy, what objectives, have
the workers in mind, for the accomplishment of which
the machinery of committees, stewards, or unions are
created? Radical ideas, if they get in, will permeate
general thinking on labor, just as dye will color the water
in any cask, no matter what kind of a cask it is. As
Mr. Cole has said,¹ the Shop Stewards' Movement
"provides at least the nucleus of the machinery through
which trade unionists can hope, by gradual extension of their
power, to assume control in the workshop."
§ 5. EXPANSION OF FUNCTIONS OF SHOP STEWARDS
In their origin, shop stewards began as trade union
delegates to watch over the observance of union rules
regarding the details of workshop conditions. It has
been learned that the workers can exercise control over
the workshop only through some organization within the
workshop. The original shop steward was a repre-
1 Cole, G. D. H.: "The New Forces in British Labor," The Dial, December 14,
1918, pp. 539-41.
130
і
sentative of his craft, and usually a skilled craftsman.
But with the war came many semi-skilled and unskilled
workmen into the shops not represented by the former type
of steward. The fundamental idea of the Shop Steward
Movement is an amalgamation into one union of all the
workers of a given industry, irrespective of skill. This
jumps with the larger conception of One Big Union of all
industries, to be used, if necessary, in a general strike.
It was the technical and administrative problems
within the workshop, mainly connected during the war
with the conflict of interests between the skilled and the
unskilled workers due to the introduction of automatic
machinery and "dilution," which brought shop stewards
to the front. Such a situation raised further questions as
to "payment by results" and basic piece-rates. Whatever
general agreements were made, inevitably there would
be a need of determining their local application in the
individual workshop. Hence the proposal for the ap-
pointment by the workers of a separate rate-fixer to adjust
rates with the rate-fixer of the firm.¹ Such an official,
however, under whatever name, would be the equivalent
of a shop steward.
In still another way is the encroachment on manage-
ment proposed by urging the selection of foremen by
the workers themselves. Leaving disciplinary questions.
aside, the technical duties of the foreman bring him into
direct contact with the workers and their shop stewards.
Most employers would naturally regard the selection of
foremen as an essential function of the management.
To transfer the appointment of foremen to the workers
would obviously mean-to quote Mr. Cole²- "that the
shop stewards shall take the place of the foremen ap-
pointed by the management.'
""
Where employers express opposition to dealing with
shop committees, it most frequently results from lack of
confidence in the shop stewards. They prefer to bargain
with long established officials of the trade unions whose
conservatism is a surer guarantee of the permanent char-
acter of the agreement. In the cotton trade, where a very
elaborate and successful system of collective bargaining
has been worked out, the shop steward system is practi-
cally non-existent and not favored at all by cotton mill
1 Cf. Sidney Webb: "The Works Manager Today," pp. 55-102.
• The Dial, December 14, 1918.
131
operators. The secretary of the Federation of English
Cotton Spinners and Manufacturers' Associations ex-
pressed the view that shop stewards in other industries
are usually agitators, who work contrary to the policies
of the union officials. Nearly the same situation exists
in the Engineering Employers' Federation, which refuses
to recognize unofficial shop stewards, because their
labor agreement through the constitutional leaders of
the unions is precise and definite in its machinery for
arbitration. The secretary of this federation spoke
cordially of their relations with the trade unions and was
of the opinion that the Shop Steward Movement would
"settle down.”
This statement coincided with the opinion of a Scottish
employer, who felt that the shop stewards could not
break down conservative trade unionism. He said that
the shop stewards had made many efforts to obtain
control of industry, but so far had been defeated every
time. He personally differed from most manufacturers
in the country, in holding that the worker's pretensions
should be fought. He would not compromise with them
and said that manufacturers who compromised were
yielding on principles vital to industry. He believed
the ultimate result of present tendencies would be a con-
siderable strike, in which the radicals would be utterly
broken.
§ 6. UNION TO ABSORB SHOP STEWARDS
In frequent instances, however, arrangements have
been made with the union for employers to treat directly
with the shop stewards.
The director of production in a small arms manufacturing
establishment said that there had been shop stewards in the
works for many years but they were not recognized by the
unions until two or three years ago, when the unions decided
it was better to recognize them than fight them. Originally
the shop stewards were not appointed by the unions but had
the backing of the men in the shops. The shop stewards form-
erly tried to get concessions by unconstitutional means; later
their procedure was in line with union methods. Their early
attempt was to improve their position by getting something
for the workers which the unions could not get. They tried
to break away from the unions, secure all the funds and the
authority. These attempts were more successful, the director
stated, in London than in the Birmingham district.
132
The unions recently asked this company to recognize the
shop stewards in order that they might become a link in the
chain of unionization. About six months before the Com-
mission's study of conditions, the company agreed to handle
labor disputes through the shop stewards, but during that time
the latter had never come forward with any proposition. The
manufacturers require that the stewards shall be appointed
by the unions. A man with a grievance now goes first to the
shop steward for redress; and the stewards handle many of
the personal matters satisfactorily.
In answer to a question as to the advisability of the shop
committee method of management, the director stated that it
might be all right if the functions of the committee were
adequately defined. The trouble is that the radicals in an
organization will not define its position. Therefore he would
advise keeping away from the shop committee plan as long as
possible.
The representatives of an engineering firm reported
that the company can get on very satisfactorily, as long
as they negotiate directly with the unions, but the shop
stewards, who are usually young men or agitators, cause all
the trouble. Hence they are trying to strengthen the
hands of the union leaders and to hold down the shop
stewards. They also related the experience of another
establishment manufacturing range finders and apparatus
which required highly skilled workers. The employers
have done everything possible for the men. A works
committee was started, but it was captured by the extrem-
ists. They presented such radical demands as a share in
the management and profits. Instead of helping matters,
the works committee created a barrier between masters
and men.
The success of the radicals in obtaining control in this
plant corresponds to the admission by a government
official that an open election of shop committees would
probably result in shop stewards of the Coventry type
being elected. Several employers indicated that they
considered shop stewards to be Bolshevistic. An expla-
nation of these radical tendencies was offered by the
Assistant Secretary of the Chief Industrial Commissioner.
He claimed that the general educational system of Great
Britain had awakened the minds of some men of great
ability in the working class. These men entered trades
and after a few years found themselves facing a future
that offered little opportunity for their advancement.
Under such circumstances they grew restless and dis-
133
contented, and speedily became leaders of revolt. These
were the men who gave labor its intellectual strength and
formed the shop steward movement.
That increased power in the hands of the shop stewards.
tends to disorganize the unions was the opinion of the
secretary of the Iron and Steel Trades Association. This
organization is a federation of three unions covering 38,000
workpeople. The secretary said that the system of
organization in his federation offered no opportunity for
what are called official shop stewards, i.e., those ap-
pointed by the union. Organizers (whose functions are
somewhat similar to those of shop stewards) were
appointed by the executive of the federation, which thus
kept a check on men who were their local agents. On the
other hand, the Amalgamated Society of Engineers, which
had long had official shop stewards, had less central
control and more local autonomy. In illustration of
the effect of local autonomy the secretary said that the
central executive of the A. S. E. had recently obtained an
injunction against one of its district branches.
This view as to the present disorganization was cor-
roborated by the director concerned with labor in one of
the establishments visited by the Commission. He
regarded the "rank-and-file" movement as the most
serious aspect of the situation. Men are breaking away
from the restraints and agreements of their stewards as
well as from their trade union delegates.
The following account of an interview with several
shop stewards by a representative of the Commission
makes clear their general attitude, plans, and hopes.
Among the shop stewards present was one who had been
twice imprisoned under the Munitions Act for inciting men
to strike, and now could get no work in any engineering estab-
lishment, and was devoting his time to propaganda. At this
new job he could not get enough to live upon, and was com-
pelled to take up repairing in his old trade. A second was the
chairman of the local shop stewards' committee, while the
third was a foreman in a local factory that had arisen during
the war, where most of the men present were employed, and
where alone in Coventry, shop stewards received recognition
from employers. The reasonableness and moderation dis-
played respectively by these men was in inverse order to that
in which they have been named. The two former shop
stewards had been in America, the first in Chicago, the
second in Pittsburgh.
134
These shop stewards were all loud in their denunciation of
the executive officials of the trade unions. The men them-
selves were each trade unionists of many years' standing, and
the local shop stewards' chairman was a member of the local
executive committee of the A. S. E. They had not made up
their minds whether the right course for the movement was
to work from within the trade union movement and alter it
by evolutionary methods, or seek to smash it by revolution.
They held that trade unionism was too autocratic to be
permitted to continue as at present, and yet feared that the
masses were too "apathetic" to support revolutionary
methods. Their protests against the executive officials of
their union (A. S. E.) contained the following counts:
1. The officials are too far removed from local conditions and
from the problems of the workshop. This well-worn com-
plaint was enunciated in all its fullness.
2. The officials are not responsible to the workers for their
actions, nor do they consult them even when ostensibly
fighting their cause. Thus, in the various strikes which
had occurred at Coventry, the executive officials were
alleged never to have consulted the strikers as to their
grievances. This charge probably meant that they had
never consulted the shop stewards. It was alleged,
further, that the officials had discussed the question of the
dismissal of the head shop steward of a certain firm with
the employer, although the man in question had never been
interviewed on the matter by the executive. This com-
plaint was given as first-hand evidence by the steward,who
had a seat on the local executive of the A. S. E. There is
certainly very bad blood between the shop stewards and
the district secretary of the A. S. E. The latter is held
responsible for the failure of the shop stewards to get the
footing they sought.
3. The officials are often not representative of the workers.
Thus, the president of the local executive of the A. S. E.
had received only a total of 500 votes at his election,
although the town contained thousands of members of his
craft.
The shop stewards, in contradistinction, seek "democratic
organization" of industry, with the employees in the work-
shop as the ultimate source of sovereignty. They hold that
workers' committees (shop stewards) should be elected by all
the workers in the workshops, without regard to craft, and all
questions of policy and action should be referred back to the
rank and file for ratification. A local dispute arising, the
course of action to be taken would be decided by public
discussion of all the employees in all the workshops, who
would give a mandate to their representatives, the shop
stewards. A national stoppage would be decided upon in the
135
same way. No provision exists in this cumbrous machinery
for settling disputes.
The ultimate end of the shop steward movement was ac-
knowledged to be that of obtaining a large measure of control
over industry. The movement seemed to its supporters the
obvious means for securing such control. The two essential
men in industrial organization whose places must be filled
before control of industry by the workers can be achieved are
the foremen and the rate-fixer. The shop steward is obvi-
ously the rival of, and in the minds of his supporters a better
man than, the foreman. In matters of discipline and super-
vision the stewards, in shops where they were recognized,
practically reduced the foreman to the position of a looker-on.
In technical matters, many shop stewards were at least
equally as well fitted as any foreman to supervise mechanical
operations. Speaking generally, whatever the shop organiza-
tion adopted, the steward could readily and effectively replace
the foreman.
In the establishments where they worked, and where the
shop stewards had a large voice in affairs, the time-rate was
the fairly low one of two shillings and six pence an hour, but
there were many men whose rates were equal to six shillings
an hour. This was in a new firm which had learned that it
could afford high wages as long as it got high productivity. If
employers, according to these stewards, could learn that
lesson, and could see that democratically elected shop
stewards could be as efficient as the present foremen and
rate-fixers, the "control of industry" demanded by the
leaders in the shop steward movement would be beneficial to
everybody. The control they demanded did not go any
further than above defined. Problems of buying and selling
and of finance were beyond the dreams or the capacities of
the workers.
The workers present at this interview, however, were very
dubious of the future of the shop steward movement. It had
been defeated in Coventry, and, from their standpoint, had lost
its opportunity. It was in the same position in the Clyde and
elsewhere in the North. It had no footing in the South at all.
The general discussion revealed two other points:
1. The chairman of the Shop Stewards' Committee, who was
Chief Shop Steward in the establishment where he worked,
exercised the same privilege as Kirkwood claimed at
Glasgow, in March, 1916, namely, that of leaving his work
(piecework) at any time to go around the factory to deal
with any matter covered by his functions as a shop
steward. This privilege was never challenged by any one
except the head of the firm, whose challenge consisted
merely in wanting to know the business on which the chief
shop steward might be engaged at the moment of meeting.
136
2. The "recognition" granted in Coventry in December, 1917,
was not the sort of recognition fought for. It was merely
recognition of official shop stewards. The A. S. E.,
which refused to sign the agreement of December 20,
1917, agreed only to the first four articles, and sought
for a larger sphere for the shop stewards. What the
A. S. E. sought has not been revealed in published form,
though the strained relations between the shop stewards
and the local A. S. E. lead one to believe that its aims
would not be identical with those of the shop stewards.
137
§ 1.
CHAPTER VIII
WORKS COMMITTEES
JUSTIFICATION of Works COMMITTEES IN Their
SIMPLEST FORM
A means of communication between employers and
workers is a practical necessity; matters of mutual interest
necessarily arise for common consideration. There must
be, moreover, the machinery for discussion of the many
questions sure to develop respecting shop practices,
grievances, wages, hours, and the like. Hence the natural
development of some body which would represent the
workers in conferences with the managers regarding
affairs in the shops. This need arises even where the
employer is dealing directly with his own men without
interference from outside influences. The practical situa-
tion, however, due to the purpose of unions to impose
general rules in behalf of workmen in the shop, due to
the rank-and-file movement, and due to very extreme
demands for a share in the management, calls for adjust-
ment of problems of a complicated character. This
makes the dealings of an employer with his workers far
from simple.
As part of this machinery for aiding in a joint under-
standing great reliance has been placed by some on shop
committees. Sometimes there are found obstinate em-
ployers who refuse to allow any interference with their
self-devised policies in regard to everything relating to
the management of the shop. Also, there are employers
who can establish cordial relations with the men in their
employ, no matter how numerous, without any intervening
body. But, in the main, the psychology behind works
committees is found in the very human tendency to have
grievances due to misunderstandings or through distrust
of what is unknown. Hence, it has been claimed that
real friction can be avoided by providing a means for the
ventilation of grievances in the stage before they have
become acute. Sometimes, by common discussion and
mutual exchange of information, the so-called grievances
may be shown to be unfounded and are disposed of before
138
they take on any importance. If all employers and all
workers were reasonable and fair-minded the matter
might be left at this point; but the yeasting of unrest is
here; new demands are being made, and control of industry
is being claimed. Under these circumstances a variety
of considerations arise to be discussed.
§ 2. KINDS OF WORKS COмmittees
Although shop stewards have long existed in establish-
ments as the watchers for their unions, shop committees
are of recent origin, being mostly the outcome of war
conditions. Various functions have been assumed by
committees, such as the following:
(1) Social Union Committees, which are made up from the
workers for the furtherance of games, recreation, study-
circles, picnics, and the like.
(2) Welfare Committees, which deal with shop conditions,
such as ventilation, dressing and wash rooms, sanitation,
provision for heating tea-cans, canteens, and the like.
(3) Industrial Committees, which deal with work conditions,
hours, piecework, and remuneration of labor within the
works.
For our investigation we were concerned primarily
only with the last of these three kinds. It was urged,
however, that industrial committees, which are engaged
on controversial questions, should not have control of
welfare and social activities, because they are likely to
develop a spirit of partisanship which is alien to the
spirit of harmony and good fellowship. The relation of
employers to workers on vital industrial matters appears
in connection only with industrial works committees;
and the functions claimed by these committees vary
with their make-up. They vary from matters of shop
conditions to the executive control of the industry; and
much depends on whether or not they are made up of shop
stewards or some one chosen from the "rank and file."
First, we may take up the cases concerned with simple
shop questions, with no jurisdiction over wages.
It is apparent that the successful functioning of shop
committees under these conditions must be in large part
dependent upon the attitude of management and men in
the individual establishment. Where the disposition to
co-operate already exists, conditions will be favorable to
139
such a system. The experience of a large electrical manu-
facturing firm, which itself took the initiative in the
installation of shop committees, is enlightening in this
connection:
The manager of the works, who is heartily in accord with
the union methods of handling the relations between em-
ployers and employees, believes firmly in the shop committee
method. He is continually developing and strengthening
the committee idea. In an interview with members of the
Commission he expressed the view that, with tact, broad-
mindedness, and the capacity for leadership, a works manager
can get far better results from his organization if a strong shop
committee exists.
In closing he stated that employers generally in England
see that it will take great tact and integrity to restore normal
conditions. During the war these employers have gone a long
way toward appreciation of the workmen's side of the case,
and he believed that unless there were an explosion in the
near future, a proper solution of the problem would be found.
This attitude of confidence on the part of the management
is evidently to a considerable degree reciprocated by the men.
The chairman of the works committee in this establishment
is a man of unusual intelligence and character. He is a boring-
mill hand and a pieceworker. When occupied with committee
affairs he is paid on a day basis. Although the company
would be glad to pay him three or four times his present wage
if he would take a position as foreman, he prefers to devote
his life to the interests of the workingmen, which he handles
in a very intelligent and broadminded manner. He came to
meet the Commission in his overalls and with his hands
covered with oil, but was entirely at his ease in discussing
labor matters. Although he was self-educated, chiefly by use
of a private library in his native town, he used the best of
language. He is a Socialist and a member of the Labour
Party, and otherwise an advocate of advanced ideas.
Eventually, he said, the men wish to have representatives
on the board of directors of the company. They realized, how-
ever, that the time had not yet come for this. He claimed that
a director appointed from among the men could contribute
more than many of the present directors, who usually know
very little about the business. He pointed to the co-operative
societies as evidence of the managerial ability of workmen.
The Co-operative Wholesale Society does a business of a
hundred million pounds sterling per year.
Through all his conversation the chairman of the works
committee showed that he realized the necessity to the com-
pany of making a profit and that the workers must produce
140
efficiently to accomplish this. If shop committees could
always be led by men of this type, there would be no question
as to their justification. It was evident, however, that only
the greatest justness and steadiness on his part could preserve
his standing with the men. They were already suspicious of
him, because he is frequently called into conference in the
manager's office. While the company would gladly pay for the
time he has to spend on grievances, he cannot accept this, as
it would undermine the confidence of the men.
The Commission obtained considerable information regard-
ing the organization of the works committee by this company.
It was formed at the end of January, 1917. Each shop and
department has an elected representative, from whom in turn
the members of the works committee, fifteen in number, are
selected. They meet in conference with two representatives
of the management, one of these being the works manager
himself. Although officially he has only one vote and only
the same privileges as the rest of the committee, his position
gives him more weight than any other member. Through the
full weekly record of the proceedings, the management is kept
informed of all differences or grievances expressed in the
committee. As the management discovered that it might be
advantageous to bring the superintendents and foremen into
closer touch with these problems, it was later arranged that
superintendents in turn should attend the weekly meetings,
while foremen are represented by a delegate from the fore-
men's association.
Problems handled by the works committee are of mutual
interest to management and men. Among those considered
are apprentice training, ventilation of canteens, traveling
facilities, and similar questions. A matter which has caused
friction between foremen and men is the submission of
patentable ideas. Works committees have assisted the
management to know more about those trifling vexations
which nevertheless hinder production, lower efficiency, or
ultimately lead to strikes. Indeed, one of the most important
functions of the committee is the consideration of individual
complaints. Its effectiveness in this respect is demonstrated
by the fact that it has settled ninety per cent of the griev-
ances. The subject of wages is not under the jurisdiction of
the committee.
A representative of the company gave a specific instance
to show how intelligent shop committees can get at facts and
comprehend economics. As the company had found it could
buy iron castings more cheaply than it was producing them,
it considered closing its own foundry. The shop committee
was called in for a conference and the situation explained to
its members. They were told that, inasmuch as a decision to
close the foundry would throw a considerable number of men
141
out of employment, the management thought the workmen
should understand the circumstance and give the manage-
ment the benefit of any suggestions. The committee quickly
put its finger on the weak spot in the situation. They in-
vestigated conditions at the foundry from which the castings
were to be bought and found that higher piece-rates were being
paid there than in the company's own foundry. The differ-
ence in cost was not due to the direct labor costs but to the
overhead expense involved in the maintenance by the com-
pany of an expensive selling organization with offices in
various cities, a staff for development work and other large
general expenses not necessary in a foundry. It was this large
overhead expense, spread over the foundry as well as the
other departments of the business, which produced the
apparently high cost of castings.
In other cases where works committees have been
successfully inaugurated, it appeared that there had
already been a long record of successful dealing with
employees. The Builders' Federation, which believes in
works committees as a means of redressing grievances
and securing peace and quiet in the trade, had already
formulated a plan of its own prior to the adoption of the
Whitley scheme.
A firm which has an international reputation for its welfare
work has a works council consisting of sixty members. The
unusual size of this committee is due to the insistence of the
workers that every department of the works be represented.
This large council represents only one per cent of the total
employees. Although the management declined to allow
election of foremen by the works committee, it does submit
the name of a proposed foreman for discussion and criticism,
final voice being reserved to the directors.
No foreman has the absolute right of discharge, but his
proposal must be endorsed by the board of directors. Even
then the man has the right to put his case before the works
council or the trade unions for review. This practice corre-
sponds to the demand of a radical British labor man that the
employer be required to demonstrate before a committee of
workers his reason for discharging an employee. This speaker
claimed that the workers do not want anything to do with
technical or commercial aspects of business, but to have a
voice in the conditions under which they worked. It is to be
noted that this does not correspond to the ultimate demands
cited above as expressed by the chairman of a works com-
mittee.
Another question submitted to the works committee is the
allocation of hours, their number being determined by the
142
management. Other matters which have come before the
committee of this firm are the yearly holiday and means of
securing co-operative enjoyment of it, the hospital work at
the establishment, libraries, and the place of the administrative
staff on the council.
The general tendency in organized trades is for shop
stewards to be elected to the shop committee. In the
view of one government official, works committees should
be composed of the official shop stewards, that is, those
recognized and endorsed by the trade unions. In any
case, the members of these committees would be trade
union representatives. It would seem preferable that
each union in a shop, provided it were reasonably strong,
should have a representative in the works committee.
Such representatives would under normal circumstances
be the shop stewards who are the officially accredited
representatives of the unions in the shops. It was
pointed out that in such a case the shop steward would
be only indirectly elected by his fellows and the question
was asked, what would be likely to happen in case of an
open election of representatives to the shop committee?
It was admitted that unofficial shop stewards of the
Glasgow and Coventry type, of the rank-and-file move-
ment, would be likely to be elected, and the matter would
then become an internal one for the trade unions. The
official view seemed to be that recognition of the trade
unions entailed the co-ordination of the shop stewards
with the works committee system:
In a manufacturing establishment widely known for its
satisfactory labor conditions, shop stewards elected by the
workers and endorsed by the trade unions are recognized by
the firm. Complaints on trade union points are heard through
the shop stewards, but they have intimated to the firm that
"not one tenth of the complaints they hear are ever brought
to the management."
In the woolen and worsted trades, according to the
secretary of their association, works committees have
not yet arisen. Shop stewards, meaning trade union
representatives of the men in particular occupations and
mills, do exist and are more or less semi-officially recog-
nized.
The works manager of one company, which has had no
strikes during the war and only one strike in twelve years,
stated that a very considerable portion of his time is occupied
143
in meeting committees and in handling labor questions in
their plant. When a committee is called into conference by
the company, their time is paid by the company at the estab-
lished day rates, but when the committee calls the meeting its
members lose their time.
In this case the committees are elected in the association
rooms of the unions and are made up of the shop stewards
selected by the different unions. While the shop stewards, as
such, represent the particular unions, the shop committee
represents the employees of the entire plant. The works
manager said that not more than twenty-five per cent of the
men attend an election, largely because British workmen are
lethargic and follow the self-appointed leaders. Neverthe-
less, the committees are fairly representative, as they are
composed of men who can formulate and express opinions
most clearly. A secret ballot on the company's premises.
would not make any material difference in the personnel of
the committees.
The works manager of an establishment manufacturing lace
nets gave an account of the firm's experience with works
committees to a member of the Commission. This factory is
situated in an agricultural district where there is no labor com-
petition. The workpeople possess high technical skill and
moral character. Prior to the war they had no union affilia-
tions. To secure some means of making their representations
to the management, a works committee was inaugurated many
years ago. Elected representatives of the workers met the
management regularly or when some special occasion arose.
No attempt was made to give the management equal repre-
sentation. The works manager met the committee, calling
in any foreman or superintendent who might be concerned
in the matter in dispute. In the opinion of the works manager
this system was a great success. There had never been a strike
in the works, and the management never made any changes
in wages, methods of wage payments, hours of labor, condi-
tions, etc., without first acquainting the works committee of
its intention and working out a plan agreeable to both parties.
Since the formation of the Whitley Council in the industry,
as the workers realized that they had no voice in the Council,
being unorganized, a fair proportion of them had joined the
union.
While the isolated situation of this factory gave it
rather unusual opportunities to work out its labor pro-
blems on a satisfactory basis, its experience goes far to
show how much depends upon the spirit of both the work-
ers and the management. In the absence of outside pres-
sure, the workers would probably have continued unor-
144
ganized, so far as trade union affiliations were concerned.
This situation, however, was evidently based upon mutual
respect and fair dealing.
A clear distinction should be maintained between the
shop committee and the shop stewards. As already
stated, the shop committee is often chiefly or wholly
composed of shop stewards. But, in general, the shop
steward was a recognized trade union official elected by
his shopmates authorized to perform certain functions
in the particular plant, long before shop committees came
into existence. During the war, however, these shop
stewards, whose chief duties were originally the collection
of union dues and the enforcement of union rules, came to
be more and more the representatives of the workers to
the management, even to the point of usurping the func-
tions of trade union officials empowered to deal with
employers. This growing power of the shop stewards,
together with their radical tendencies, as demonstrated
at Coventry and elsewhere, has aroused very considerable.
friction within many of the unions.
§ 3.
со
COMMITTEES AS MACHINERY FOR SETTLING
DIFFERENCES
It must be obvious that very much depends upon the
functions and policies assigned to, or assumed by, a works
committee. In itself a committee means little; the pur-
pose and spirit which animate it mean a great deal. A
committee dominated by men representing the workers
in a non-union shop and dealing directly with an employer
is one thing; a committee representing the policies of the
established labor unions is another; and a committee
composed of shop stewards representing the rank-and-
file movement is still another. Therefore no general
statement about the desirability of creating works
committees can be made. In themselves they are no
remedy for discontent. What really matters is that,
under existing conditions of unrest, the demands of labor
are so extreme that they cannot be granted without the
destruction of industry.
It is the point of view rather than the machinery of
joint discussion through which such views are conveyed
which is pivotal. If committees come determined to
ask for control of industry and nationalization, labor
145
troubles are not settled by discussion. The methods of
the Triple Alliance are a sufficient illustration of this
statement. It shows a rather naïve state of mind to
assume in these days that works committees are a cure-all.
There is no remedy but such an education in economics
as will make clear to laborers and to the people in general
that certain demands now urgently pressed by labor
leaders aim directly at the loss of national prosperity.
Committees in themselves are merely the machinery
through which conflicting claims are presented.
§ 4. SHOP STEWARDS ON COMMITTEES
We have previously given testimony regarding com-
mittees exercising simple functions with no control over
wages. They gradually, however, take on additional
powers. The shop stewards found opportunity for
activity on committees for the arrangement of piece-
rates, especially on new work which was not covered by
the shop "log," or list of piece-rates that had been estab-
lished by previous negotiations between employers and
trade unions. From time to time new functions were
assumed.
During the war, when the Government controlled in-
dustries, some experience was had with local joint com-
mittees of employers and employees. But this experience
bears rather on the weakness of governmental manage-
ment than on the value of committees. Early in the war
such local committees had been organized in a number of
places. After the Munitions of War Act, 1915, the
Departmental Labor officers, under the bureaucratic
impulse, assumed greater power for themselves. To
this both employers and workmen objected and urged
the return to local committees. An agreement was
reached in February, 1916, on which the labor comment¹
was as follows:
"The whole question of Local Joint Committees has been
remitted to the Ministry of Munitions. It has, however, been
remitted under certain guarantees: (i) Local Committees
are to be established in every area; (ii) on these Local Com-
mittees the engineering unions are to elect the workers'
representative; (iii) the Local Committees are to be em-
powered to act as initial courts; (iv) before them are to
come cases that may lead to serious difficulties, and they are
¹ The Herald, a radical labor weekly, edited by George Lansbury.
146
to have power to settle them; these local courts are to have
power to issue leaving certificates, and thus to take from the
Munitions Tribunals their main and irritating function."
That is, the war led to arrangements by which new
powers were taken over by joint committees. These
local committees were introduced in various munition
areas of the metal industries. Likewise, under some of
the Control Boards, notably the Cotton Control Board
and the Department of the Coal Controller (both under
the Board of Trade) joint committees were established.
As an example of how an extension of privileges is
seized upon by existing committees, the case¹ of Sir William
Beardmore & Company, of Glasgow, may be cited: As the
result of dilution, the following were the first articles of
an agreement reached in March, 1916:
Section 1. That the income of the new class of labor be
fixed, not on the sex, previous training, or experience of the
workers, but on the amount of work performed, every effort
being made to secure the maximum of output.
Section 2. That a committee appointed by the skilled
workers be accepted by the employers with power to see that
this arrangement (respecting rates of wages for "the new class
of labor") is loyally carried out. Failing agreement between
employers and committee, the matter to be referred to a final
tribunal, mutually arranged, or, failing agreement, appointed
by the Board of Trade.
Soon after this agreement had been made a strike broke
out at the Parkhead Works, the origin of which was thus
explained by Dr. Christopher Addison, then Parliamentary
Secretary to the Office of Munitions, to the Commons,
March 28, 1916:
"The present series of strikes commenced on March 17th,
when one of the members of this committee (the Clyde Work-
ers' Committee) insisted that he should be entitled during
working hours, without the permission of the management,
to leave his work in his own department for the purpose of
investigating what was being done with unskilled labor,
interviewing the women introduced, and examining into their
rate of wages and other matters. The management, whilst
offering to afford the men all reasonable facilities for this
purpose, felt themselves unable to accede to his request and
referred the matter to the Clyde Commissioners. The man
1 The Engineer, March 3, 1916.
147
in question (one Kirkwood), however, and his associates
declined, in breach of their own agreement, to place the matter
before the Commissioners and succeeded in bringing out
about one thousand men in these works."
In effect, the skilled workers had chosen their convener
and his associated shop stewards as the committee under
Section 2 of the Agreement, men who represented the
"rank and file." Whereupon the Amalgamated Society
of Engineers repudiated the strike as unauthorized by
their union; but the strike, which was really for the recog-
nition of the Shop Steward Movement, went on.
Some
of the leaders of the workers' committee, among whom
was Kirkwood, were arrested and deported. Finally,
the men returned to work, but in the end the shop
stewards forced the unions to regularize them.
In one establishment your Commission found that a
works committee had been started but that it had been
captured by the extremists. They insisted on a share
in the management and a share of profits, submitting
demands which were absolutely impossible. Instead of
helping to bring about a satisfactory relation, the works
committee created a barrier between the employers and
their workers. There was a tremendous strike in 1918.
A bad situation was created which will require a long
period of time to overcome.
As an example of still further encroachment on the
functions of the management by works committees is the
proposal of the "collective contract," by which the
workers assume the whole work of production throughout
the establishment.¹ The Paisley Trades and Labour
Council suggested that a works committee should act
as the sole medium of contact between the firm and the
workers, and to exercise full bargaining powers on behalf of the
men and women in the department in fixing time allowance
where the premium bonus operates, and rates where piece-
work obtains. Individual bargaining disappears; collective
contract supplants it.
Under such a system the workers would do a piece of
work in their own way, under foremen and supervisors.
appointed by themselves. The employer's foreman would
then be only the agent of the employer, inspecting and
¹S. G. Hobson: "The Collective Contract,” The New Age, August 29, 1918.
148
accepting the work of the contracting group of workers.
Matters of discipline would pass into the hands of the
works committee, elected by all the trade unionists or
all the workers.
When the Whitehead Torpedo Works, Ltd., proposed a
Joint Council, after the suggestion of the Whitley Com-
mittee in 1918, the workers responded by offering the
plan of a "collective contract." Individual piecework
would be abolished. The works committee, fully repre-
sentative of the different trade unions, would take the
contract, hire the workmen, regulate the hours of work,
and supervise apprentices and their vocational training.
This scheme was claimed to be only a short step along the
road to industrial democracy, since there would still re-
main the "iniquitous wage system," together with the con-
trol of capital and industry by the capitalist; "that even
a small share in control brings the power to restore the
defensive position and make it stronger.
""
§ 5. FUNCTIONS OF COMMITTEES
The functions of a simple works committee, working
in connection with the individual employers include,
perhaps, (a) the inquiry into grievances reported by the
workmen; (b) the discussion with the management of
those it considered genuine; (c) consideration of com-
plaints about wages and piece-rates affecting individuals;
(d) examination of questions relating to the health and
safety of the workmen; (e) consultation with the manage-
ment on awards, orders, and circulars; and (f) a considera-
tion generally of conditions of work in the shop. Such
committees are usually made up only of workers, and are
distinct from joint councils formed from both employers
and employees.
We have seen, however, that works committees may
extend their functions far beyond those of the type just
mentioned; that is, everything depends on the state of
mind in those who elect and form these committees. A
useful piece of machinery may be turned into a revolu-
tionary instrument.
As regards the theory that industrial unrest can be re-
moved by the creation of machinery for joint discussion,
it is to be observed that the success of such proposals
149
depends on the assumption that a spirit of fairness and
good will already exists on both sides. The testimony
given above shows that in the discontent of today, such an
assumption cannot be taken for granted. In very truth,
the main thing to be kept in mind is not the mere ma-
chinery for discussion, but whether the new demands are
in their nature such as can be granted without weakening
industry.
150
CHAPTER IX
EIGHT-HOUR DAY
§ 1. GREAT BRITAIN
The weekly hours of employment in Great Britain prior
to the war centered somewhere around the figure 54. An
investigation made by the Board of Trade in 1906 showed
that the average hours in a full week in the textile industry
were somewhere near 55; in the clothing trades — that
is, clothing, boots and shoes, hats, gloves, and even in
laundries - it was from 50 to 54 hours.
These hours prevailed at the outbreak of the war, and,
where not increased by the pressure for munitions, con-
tinued until the end. Thus, after the armistice, hours are
reported as follows in specified trades: textiles, both wool
and cotton, 55½ hours per week; engineering trades, 54,
and even 58, per week; boot and shoe operatives, 5212
hours per week. It may be stated, therefore, that the
average weekly hours in British industry up to the close
of the war was about 54.
Legislative efforts to reduce hours date far back, but are
found in most recent form in the Factory and Workshop
Act, 1901, which applies to the labor of women, and boys
and girls between thirteen and eighteen years of age.
The restrictions imposed by this act, summarized, are
as follows:
(1) The maximum weekly hours for such persons was 60.
(2) Sunday labor was forbidden.
(3) Night work was forbidden for women and girls, but
was allowed for boys over fourteen years of age in such
trades as blast furnaces and iron mills.
(4) No woman, boy, or girl, could be employed continuously
for more than 5 hours without a meal interval of at
least one-half hour.
(5) Women, but not boys and girls, might be employed in
certain industries for two hours' overtime beyond the
ordinary daily hours (which were not to exceed 101½) on
any day except Saturday, but not for more than three
days in any one week, or 30 days in any one year.
151
No restrictions were placed upon the hours of employ-
ment of men.
Though the legal hours of employment of women and
young persons were as high as 60, in actual practice the
weekly hours prior to the war were substantially below the
limits stated. This was partly due to the action of em-
ployers, and partly to the action of trade unions which
had forced shorter hours for males, thus automatically
reducing the hours for women below the legal limit.
The war produced an important extension of the hours
of labor. The Health of Munition Workers Committee
(1918) in its Final Report states the position thus:¹
At a very early stage of the war the ordinary restrictions
on hours of employment were widely relaxed. Sunday labor,
previously forbidden for women and young persons, and
practically unknown for men save in a few continuous pro-
cesses, became common. Night employment, which for fifty
years had been abolished entirely for women and in the main
for boys, became regular. The strain of these hours, in itself
severe, was increased through large numbers of men and
women taken into employment being unaccustomed to such
labor, or being physically less able to bear the strain than the
selected body of laborers previously employed. . . . The
employment of men for 70 to 90 hours a week was common,
for over 90 hours was not infrequent, and there were even
cases of hours in excess of 100. The highly skilled workers
(tool and gaugemakers, tool-setters, etc.), were generally
the most difficult to obtain and were thus most frequently
employed for long hours.
These abnormally long hours were purely a war-time
measure, and in those circumstances, it is significant to
examine the grounds on which they were adopted. These
grounds are stated in the Report thus:2
1. The dearth of workers and other causes prevented any
general adoption of the shift system.
2. The demand for output was urgent and immediate, and
had to be met even at some risk of future breakdown.
3. Patriotism introduced a new incentive which rendered
unreliable all previous experience as to the number of
hours which could be successfully worked.
4. Even though the rate of output might be reduced, and the
cost of working increased, these long hours did result in a
larger output than short hours would have done.
1 "Health of Munition Workers' Committee, Final Report," p. 30.
2 Ibid., p. 30.
152
The maximum hours worked by women is suggested in a
General Order from the Home Office in September, 1915,
by which women and boys and girls over sixteen were
allowed to work 672 hours a week. But overtime was
allowed, so that in special cases women employed as
munition workers toiled for 70 to 80 hours a week.
As the strain of the war is responsible for some con-
siderable part of the existing situation, it is significant, in
considering the question of hours of work, to note the
effect of the long hours worked under national stress. The
Committee on Health of Munition Workers stated the
"serious objections" to these long hours, based on certain
physiological and psychological results:"
1
1. They [long hours] are liable to impose too severe a strain
on the workers.
2.
3.
A large proportion of the hours gained may be lost
through broken time; the workers become exhausted
and take a rest; sickness tends to increase, at any rate
among the older men and those of a weak constitution.
They lead to an undue curtailment of the periods of rest
and sleep available for those who have to travel long
distances to and from their work.
4. The fatigue entailed increases the temptations of men to
indulge in the consumption of alcohol. They are too tired
to eat, and therefore seek a "stimulant."
By January, 1916, it was clear that hours should be
reduced. In that month the Health of Munition Workers'
Committee suggested that the average weekly hours of
employment for men should not exceed 65 to 67, exclusive
of mealtimes, spread over a 13 or 14 hour working-day; that
boys under sixteen should be limited to 60 hours per week,
and forbidden to work at night; and that employment for
women and girls should be limited to 60 hours. In a
general order from the Home Office in September, 1916,
the hours for women, boys, and girls were reduced to some-
thing approximating the recommendations of the com-
mittee. There was also a somewhat general reduction in
hours in munition establishments, thus reducing the hours
of men. Nevertheless, the Health of Munition Workers'
Committee, in its Final Report (April, 1918), advocated
that hours of work should be further reduced. Their
1 "Health of Munition Workers' Committee, Final Report," p. 30.
153
conclusions, which are of interest because of the various
factors taken into account, follow: 1
1. The scientific data collected for the committee and the
experience gained during the past two years combine to
support the view that the length of hours of employment
provisionally recommended two years ago are now too
long and can be reduced without loss of output.
2. By economizing time, apart from any increased rapidity
of working, the hourly rate of output can be considerably
increased.
3. Though hours of work have been much reduced during
the past two years, the time is ripe for further substantial
reductions. What the extent of the reduction should be
in any particular case can only be determined after
considering a number of factors such as the physical or
mental strain of the work, the extent to which the pace of
the work is governed by the machine, the factory environ-
ment, the physical capacity, the age, sex, and experience
of the worker, the suitability of the food taken by the
worker, the arrangement of hours of work and conditions.
outside the factory, e.g., housing and transit.
No evidence is available as to what action was taken in
munition factories in consequence of this report.
With the signing of the armistice, a powerful agitation
commenced for shorter hours. This movement is con-
nected directly with the long hours and the intense strain
of the war period. The long hours of the munition fac-
tories brought an appreciation of leisure as an element
which labor was demanding to secure better living condi-
tions. There was also a widespread desire to find in the
reduced hours a temporary remedy for unemployment.
Indirectly the demand for shorter hours is connected with
that for a share in the control of management. The
workers held that the immense productive capacity of
industry manifested during the war left a margin for
reduced hours, and that a voice for labor on questions of
control would assist in maintaining that margin.
The first industry from which the demand arose was the
engineering trades, which promptly asked for a 44-hour
week, instead of the 54-hour week in general vogue. The
employers rejected the demand, but the two chief em-
ployers' associations, the Engineering and National
Employers' Federation and the Shipbuilding Employers'
Federation, met with the Amalgamated Society of Engi-
1 "Health of Munition Workers' Committee, Final Report,” p. 122.
154
neers and the unions affiliated to the Engineering and
Shipbuilding Trades' Federation, and agreed upon a
47-hour week without any reduction in wages. This offer
was submitted to a ballot of the unionists of the engineer-
ing trades, and was carried by 286,545 votes to 148,526.
Today these employers intend to stand firm for no
reduction below 48 hours per week. The executive of the
railway unions agreed to accept for the railway workshops
the same conditions as the engineers had adopted. This
agreement for the 47-hour week provided also that time
rates for day and night shifts and all premium bonus
earnings were to be increased so as to bring the earnings
on the reduced hours up to the level of previous earnings.
No changes, however, were to be made in piece-rates or
"lieu" rates. The starting hour was advanced con-
siderably in most establishments, and the breakfast
interval was done away with. The questions of piece and
"lieu" rates and the starting hour proved exceedingly
troublesome. Further, although the total vote taken by
the Associated Society of Engineers and allied unions was
affirmative, the boilermakers, as a separate union, carried
a vote against the agreement, and several other unions,
such as pattern makers and shipwrights, had substantial
minorities against it. Consequently, when the altered
domestic arrangements, arising from the different hour of
starting, proved inconvenient, and a widespread reduction
of earnings resulted from working reduced hours at un-
altered piece-rates, there was considerable trouble in the
engineering and shipbuilding trades. This lasted all
through the month of January, 1919. Practically all the
strikes that resulted were unauthorized, and the em-
ployers in the industry lent their support to the trade
union officials who were endeavoring to hold their men to
the ballot and the agreement.
The position was complicated by a demand in Scotland
for a 40-hour week, based on the alleged need for reduced
hours to remedy the unemployment of demobilized
soldiers and sailors. This demand led to considerable
trouble in Glasgow and along the Clyde. These strikes
also were, in general, unauthorized by the Engineering
and Shipbuilding Trades Federation, though backed
by the Scottish Trade Union Congress and by several of
the Scottish trade unions. In this case, again, the em-
ployers and even the Government supported the trade
union executives in their endeavor to secure the working
155
of the 47-hour scheme. The effect of this turmoil upon the
attitude of Scottish employers towards trade unions was,
however, apparent at the time of the visit of the Com-
mission. It should also be added that the Executive
Committee of the Amalgamated Society of Engineers
suspended their secretaries and committees in three
districts because of their unconstitutional and un-
authorized action.
The railwaymen also began to agitate soon after the
armistice for an 8-hour day. Early in January, the
President of the Board of Trade, who is responsible for
the administration of the railways, announced that the
principle of the 8-hour day was conceded and would be
given effect from February 1st. The several systems of
hours in vogue made the application of the principle one
of considerable difficulty, and led to protracted negotia-
tions. The question of whether a definite meal period was
to be allotted and was, or was not, to be included in the
8-hour day was one of the most vexing problems. The
"advanced" sections of the men sought to obtain an
8-hour day "over all," that is, including mealtimes, the
equivalent of only about 42 hours duty per week. Event-
ually, a settlement was reached that the standard week
was to consist of 48 hours, the standard week's wages were
to be guaranteed, overtime paid for time worked each
day in excess of the standard, meal hours and similar
arrangements to remain unaltered.
The miners, who had had an 8-hour day for several
years, preferred at the same time a demand for a 6-hour
day. The results of their demands and what was granted
them are discussed fully in a later chapter.¹
From the Transport Workers' Federation came a de-
mand for a 44-hour week. The employers offered a 48-
hour standard week, and the Minister of Labour suggested
that the question of hours be submitted to arbitration.
Employers refused the latter suggestion. Eventually,
after protracted negotiation, the 44-hour week was
secured without loss of earnings.
In the textile industries a similar movement took place.
The woolen and worsted section of this industry dealt
with the matter through its Joint Standing Industrial
Council, which had been formed before the plan suggested
by the Whitley Commission. Representatives of the
4 See Chapter XXII, page 343.
156
employees on this council asked for a reduction of hours
from 551½ to 44 per week. The employers were ready for
a reduction, and no difficulty was experienced in arriving
at a compromise of 48 hours per week. In the cotton
industry a similar demand was made, that is, for a reduc-
tion from 55½ to 44 hours per week. In this case, the
trade was in a bad way, because of restrictions and the
submarine blockade. Its future, too, was a matter of
deep concern. Such a serious reduction threatened to
increase the cost of production greatly and to make
competition difficult in the world market, because a
shortening of hours and the time during which the
machinery was running, clearly reduced the quantity of
the product. The employers, therefore, offered a reduc-
tion to 491½ hours a week. The matter was discussed for
months in the joint committees characteristic of this
industry. Eventually, a strike precipitated the acceptance
of the employers' later offer of a 48-hour week.
In other industries a similar movement was taking
place. The hours prevailing in each, according to latest
information of reduction, are shown in the following
table:
49 Hours: Silk.
48 Hours: Iron and steel.
1
Tramway workers.
Omnibus drivers.
Laundry workers.
Textile bleaching and dyeing.
Hosiery.
Furniture warehousing.
Bobbin and shuttle making.
Saddlery and harness making.
Clay industries.
Carpet making.
Boot and shoe.
47 Hours: Gas workers (dayworkers).
Furniture makers.
Rubber.
Flour milling (dayworkers).
Tinplate (dayworkers).
Spelter (dayworkers).
Farriers.
Vehicle builders.
Jewelry makers.
Chemical workers.
Match makers.
¹ See Labour Gazette, January-June, 1919.
157
44 Hours: Engineers and firemen in cold storage works.
Plumbers.
Dock laborers.
Flour milling (shift workers).
Pottery makers.
Building trade operatives (Scotland).
Confectionery workers.
This list by no means represents the sum total of
reduction in hours achieved in Great Britain. Many
trades which have not decided upon a uniform week have
submitted to considerable reductions in hours, perhaps
temporarily, to absorb unemployed members of the trade
or probably as an experiment.
Further, the general preponderance of the 48 and 47
hour week in the above list does not represent a position.
of stable equilibrium. The workers are not satisfied with
these hours. There is a general demand for a 44-hour
week. The various unions in the engineering trade have
authorized their executives by an overwhelming vote to
approach the employers with a request for the 44-hour
week without reduction of earnings. Negotiations are now
proceeding, but the employers are unwilling to go below
48 hours. The National Federation of General Workers,
too, which is strong in numbers though not in cohesion,
is also putting forward a demand for the 44-hour week.
As this federation comprises the less skilled and unskilled
workers in the smaller and more scattered industries, com-
pliance with this demand would bring many industries
into the 44-hour group.
The question of hours of employment has been a matter
for consideration by the provisional joint committee of the
National Industrial Conference. The committee, which
consisted of 30 employers, representing as many trades.
and industries, and 30 trade unionists, representing an
equal number of trade unions, was
unanimous in recommending the principle of a legal maximum
of normal hours per week for all employed persons. The num-
ber of hours they recommend is 48; but they recognize that
this number may be reduced by agreement, and that there
are also exceptional cases in which it may be necessary that
it should be increased.
Its detailed recommendations include suggestions that a
maximum week of 48 hours should be legally established
158
by act of Parliament, and should apply generally to all
employed persons. Provision, however, should be made
for exemption or variation where an agreement had been
reached between representative organizations of em-
ployers and employed for a lower or higher maximum, and
for action to consider a variation where no such agreement
had been reached.
Since this committee reported on April 4th, it has
given attention to the terms of a draft bill prepared by
the Ministry of Labour to give effect to their recommenda-
tions. The announcement has been made¹ that agreement
had been reached between the Minister and the joint
committee, and that the bill would soon be presented to
Parliament. It should be noted that this measure, which
will provide for a basic 48-hour week rather than an
8-hour day, represents a practical proposal commanding
the united support of employers and employed. There is,
however, among certain groups of laborers, a demand for
a 44-hour week, or one even shorter.
§ 2. FRANCE
The prevailing hours in French industry before the
war were from 10 to 101½ hours per day. In the language
of the labor code, in which the hour named was fixed
as and from March, 1913, the day's work of an adult man
in factories was not to exceed 10 hours of effective labor.
For women eighteen years of age and over the same reg-
ulation was in force, except that periods of rest not less
than an hour in all were to be allowed in the course of
the day. By a decree of June 30, 1913, women employed
in certain seasonal industries could be employed at night
for a maximum of 10 hours. This night work must not be
prolonged beyond 12 hours out of the 24, nor exceed 60
days in the course of the year. In contrast, miners and
underground workers had the 8-hour day by a decree
dated December 31, 1913.
With the opening of the year 1919, the question of the
8-hour day came up, chiefly through political influences.
Left to themselves no very active demand would have
come from the workers themselves. It came in connec-
tion with the resolutions of the Commission on Inter-
national Labor Legislation attached to the Peace Com-
¹ The Times, London, June 17, 1919, p. 10.
159
mission. In addition, the political influence of the
recommendations made by the National Industrial Con-
ference in Great Britain and those which the Government
in Italy brought to bear on employers, were used to affect
the French action. Indeed, as regards the United States,
it was wrongly stated that a national 8-hour day was
already in force. On this basis, they argued that France
could not remain behind these other countries. Thus
the pressure in favor of the law was largely political.
Your Commission was informed that no serious demand
for the 8-hour day came from the general rank and file
of the workers. Nor did the employers willingly accept
the principle. Legislative action came about by pressure.
from governmental sources. A proposed 8-Hour Law was
drawn up by M. Colliard, Minister of Labor, and sub-
mitted to the Chamber of Deputies, and to a joint com-
mission of employers and trade unionists. This committee
was that set up by employers' associations and trade
unions to guide the French section of the Commission on
International Labor Legislation.
The employers on this committee protested in a pub-
lished statement, April 2d, against the proposed law and
pointed out the grave economic position of the country,
putting forth the following statements:
1. That the total production of France before the war was
about eight billion dollars.
2. That nearly 2,000,000 workers, or about 9 per cent of
those engaged in industry, commerce, and agriculture,
had been killed or maimed.
3. That in this loss of workers, France had been struck one
and a half times more than Germany, two and a half times
more than Belgium, five times more than England and
Italy, fifty-six times more than the United States.
4. Together with the frightful reduction in births, the effects
of which would be felt even until 1950, the diminution of
20 per cent in the hours of labor from 10 to 8 would
cause a reduction in the total production of France of about
30 per cent, which, on the figure of pre-war production,
would mean about $2,400,000,000, only a small part of
which could be won back by increased production.
Arguing on this basis, the employers declared their
certain belief that a uniform and rapid reduction in the
hours of labor would exert a disastrous influence on
160
national production. While denying that France was
"notoriously backward" in the use of machinery, they
declared that machinery and mechanical organization
could not make up the deficit, for they would be inappli-
cable in the many small industries whose works repre-
sented 90 per cent of the factories of France.¹
Having pointed out the economic error which, in their
opinion, was about to be committed, and realizing that
the political circumstances were beyond their control,
these employers admitted that it would be neither wise
for them to postpone the practical examination of the
proposal, nor practical to refuse their collaboration in
studying the manner of its application and in diminishing
its dangers. It was in this spirit of grave dismay and to
this extent that the employers of France endorsed the
legislative 8-hour day.
The attitude of the workers' representatives was that
production could be maintained and to that effect they
have given their promise. They seem to believe that
with an intelligent use of the principles of scientific
management and an increased use of machinery, much
can be done to make up for the inevitable loss of produc-
tion. In a labor program drawn up by Léon Jouhaux
(Les Travailleurs devant la Paix) this general attitude is
expressed as follows:
For the working class a maximum production in mini-
mum working time for maximum wage.
For the producer- maximum development of shop
equipment to produce maximum output with minimum
expense of production.
It must be said to their credit that French workers give
not even the shadow of endorsement to the "ca'canny"
methods of the British trade unionist. But it must also
be said that there is much "slack" in the organization of
French factories. Employers remarked that the French
workpeople were not disposed to steady, continuous effort.
They are slow in getting started, and like to walk around
considerably. While this condition admits of the possi-
bility of increased hourly production, it, nevertheless,
serves to show the extent of the challenge which the
8-hour day makes upon French industry. The difficulties
1 Cf. Chapter XVIII, § 5.
161
in increasing and perfecting machinery and in finding an
increased work force were not faced in any discussion
preliminary to the passage of the bill.
The legislative proposal was introduced April 8th,
passed April 17th by the Chamber of Deputies, and by the
Senate April 18, 1919. The law was immediately pro-
claimed. It provided that in all industrial and com-
mercial establishments the duration of effective labor was
not to exceed either 8 hours per day or 48 hours per week,
or an equivalent limitation established over a period of
time other than a week. The law applied to all industrial
and commercial establishments, public or private, lay or
clerical, educational or charitable. The public administra-
tion was to lay down rules as to the operation of the law in
each occupation, industry, commerce, or class of business,
either in the whole territory or for any one region. These
regulations are to take effect at the request of one or more
organizations of employers or workers, national or regional.
In all cases these organizations are to be consulted, and
should report within a month. These rules, moreover,
should accord with agreements (wherever they exist)
between the organizations of employers and workers.
The regulations are expected to deal especially with:
1. The distribution of the 48 hours per week so as to allow a
rest on Saturday afternoon, or any equivalent arrangement.
2. Arrangement of hours in any other period than a week.
3. The extension of the actual hours of labor obtaining in any
occupation or business shall be spread over such periods.
as will conform to the general provisions of the law.
4. Allowances for apprentices or occasional labor.
5. Allowances for temporary emergencies or the national needs.
6. Fixing the hours of rest and of effective labor.
7. The region to which the rules apply.
A second article declares that no reduction of wages is to
follow the reduction in hours.
The law made no provision for the date at which it was
to come into operation. It established the principle,
leaving to the industries concerned to make those adjust-
ments called for by the endorsement of the principle. It
was expected that a reasonable time would be allowed.
employers to arrange for the altered organization of their
workshops. Many industries were able to fix June 1st
162
for the application of the 8-hour day. But the readjust-
ment of wage scales, particularly piece-rates and minimum
rates, gave much trouble. In consequence, few industries
were really adjusted to the new conditions by June 1st,
and a whole crop of strikes arose. Before the 8-hour law
had been passed an agreement on the same basis had
been entered into between the employers and workers in
the metal trades. In the discussion they were concerned
chiefly with the methods of application of the principle.
The difficulties in the way of its application were chiefly
those incidental to the inauguration of three shifts instead
of two, viz., the modification and increase of machinery
and the recruiting of an enlarged work force. The agree-
ment which covered the metal and allied trades provided
for a day of 8 hours effective labor. The unions asserted
in the agreement their willingness "to adapt themselves
sympathetically to the development of machinery and to
rational methods of work so that production should
rapidly find that equilbrium indispensable to the general
well-being." The agreement stipulated that the 8-hour
day should not come into force until June 1, 1919, while
in foundries where processes were continuous, employers
would have until six months after the signing of peace to
make the necessary adjustments.
The strike in the metal trades, which broke out in June,
was in strange contrast to the agreement arrived at in
April, 1919. The difficulties encountered in this trade
will illustrate the whole situation throughout France in
June, 1919. The agreement signed in April by the metal
trades had provided for either 8 hours worked per day or a
weekly maximum of 48 hours with the Saturday half
holiday. Later the workers claimed a minimum wage,
specifying weekly payments for various grades with equal
pay for women. Further trouble arose over the regula-
tion of piece-rates and the question of maintaining produc-
tion. The employers held that, although time rates were
to be the same for the shorter day, there was no provision
made for revision of piece-rates except in the case where,
without modification of machinery, these rates would not
permit the workers to reach their usual earnings. The
workers replied that it was incumbent on the employers
to transform their machinery and introduce modern
methods. The workers said: "With that [machinery]
which we possess, it is impossible for us to furnish in
eight hours what we furnish now in ten." Other smaller
163
matters of safety and welfare seemed to have been
brought forward. Agreement was not reached; the metal
workers struck and had not resumed work at the end of
June.
The miners, among whom the 8-hour day was in
operation, also struck for a new calculation of the 8-hour
day. According to the law of December 31, 1913, the
day's labor in mines was to count from the usual hour of
entrance into the pits of the last workers going down to
that of the first workers coming up. The miners now
asked that it should be counted from the first man down
to the last man up. It was estimated that this would
mean only 6 hours 50 minutes or 7 hours effective work.
The official reporter to the Senate,¹ in discussing this
situation, pointed out that a great diminution of produc-
tion was to be expected. Already France was in need of
fifty million tons of coal yearly, to be obtained from other
countries, and further reduction of her own production
would be disastrous. Nor were the French miners any
more successful than the British in maintaining produc-
tion. The following figures for the first four months of
1918 and 1919 were supplied to the Senate:
MONTHLY PRODUCTION IN TONS OF FRENCH COAL MINES
FOR JANUARY-MAY, 1918, AND JANUARY-MAY, 1919
Month
January
February
March
April
•
May
Total ..
1918
1919
2,045,000
2,304,000
2,455,000
2,034,000
2,681,000
1,887,000
2,243,000
1,635,000
1,896,000
1,595,000
11,320,000
9,455,000
The Government at first opposed the miners' demand,
but suddenly “changed face" and adopted a projected
law which granted their demands. This law was promul-
gated on June 24, 1919.
In some other industries the 10-hour law is still in effect.
After some experience with the working of the 8-hour
day, certain French manufacturers have voiced their
complaint against the operation of the 8-hour law in
French industry during this critical period. Many articles
have appeared in the French press on this subject. One in
¹ See verbatim report, L'Information, “Ouvrière et Sociale," June 22, 1919, p. 3.
164
The Figaro suggests that it may be necessary to permit
some flexibility in the application of the 8-hour law,
especially at this time. La Chambre syndicale du Cycle
et de l'Automobile, on July 16th, addressed to the Minister
of Labor an open letter which appeared in many French
papers. They urged in this letter that the application of
the 8-hour day at present will be disastrous to this type of
industry and that for some time to come the old workday
should be restored. In reply to this letter, the Secretary
of the C. G. T., M. Léon Jouhaux, in an article in La
Bataille of August 26th, declared that organized labor shall
stand fast for the application of the 8-hour day in all
industries.¹
§ 3. ITALY
Up to the month of February, 1919, the day's work in
most Italian industries ranged from 10 to 101½ hours, or
from 60 to 66 per week. After the close of the war, the
demand for an 8-hour day arose. This demand may have
been due to the reaction from the long hours previously
worked, but its two chief grounds lay in the fear of unem-
ployment due to the demobilization of the troops and in
the general movement in labor circles in Great Britain and
France in favor of an 8-hour day. The strength of the
fear of unemployment is shown by the unreadiness of the
Italian Government to demobilize its troops. By June,
1919, in which month a majority of American and British
soldiers had been demobilized, Italy had demobilized only
2,200,000 of her troops, and still had nearly 2,000,000 in
service. Her industries were not ready to absorb these
troops; hence the demand on the part of the workers for
reduced hours.
The earliest of the recent efforts to obtain an 8-hour
day was initiated at a congress of the Confederazione
del Lavoro (Confederation of Labor) held at Milan in
September, 1918. This gathering adopted the 8-hour
day as one of the post-war demands. From the sign-
ing of the armistice, the various trade unions affiliated
began to take steps to approach employers. In February,
1919, a meeting was held with employers in the metal
trades, and an agreement arrived at. A working week of
48 hours was to be introduced in the engineering section
from May 1st, and in continuous processes from July 1st.
¹ L’Information, “Ouvrière et Sociale,” August 28, 1919.
165
The agreement specifies¹ that in engineering establish-
ments, shipbuilding yards, and allied trades, hours were to
be reduced from 60 or 55 to 48 per week. In foundries,
where continuous processes were worked, a two-shift
system of 12 hours each was to give way to a three-shift
system of 8 hours. It was agreed that the shifts were to be
worked, where possible, without an increase in the work
force. The weekly schedule in the case of such shift of
workers could be varied from the 48-hour week, but was
not to total more than 144 hours in three weeks.
The next industry in which the 8-hour day was asked
was the textile industry. In this industry the position of
the manufacturers was exceedingly difficult.
It was
generally understood that the unions were taking advan-
tage of the critical situation produced by the difficulties in
securing the peace terms demanded by Italy, and were
threatening strikes and disorder. Under the pressure of
the Government, who seemed anxious to prevent an
upheaval at this time, the employers reluctantly
acquiesced. Already the costs in the cotton mills, as
compared with pre-war times, had been trebled. The
shorter hours would add to this disability. Their views
are presented in a resolution carried at a meeting of cotton
manufacturers held in Milan on March 14th.2 The
resolution follows in full:
At a special meeting of cotton manufacturers the report
of their delegates who were present at the conference with
the representatives of the workers' organizations was read.
It confirmed all the reasons of a technical and economic
character which have convinced the cotton manufacturers
that the reduction, at a single stroke, of the working week to
48 hours would (1) increase the cost of production in Italy in
comparison with that of countries more advanced industrially,
especially Great Britain (even if there, too, the hours be rc-
duced to 48), so that it would become impossible for Italian
goods to compete in foreign markets with British products;
and (2) threaten seriously the Italian cotton export trade
(which comprises 40 per cent of the total output). An
immediate contraction of manufacturing activity must
therefore be regarded as probable.
Consequently, the manufacturers, while declaring them-
selves ready to grant an immediate reduction of working time
to 54 hours a week, maintain that further reductions could
1 Labour Gazette, London, March, 1919, p. 86.
2 See Labour Gazette, April, 1919, p. 128, quoting La Tribuna, March 15th.
166
and should be made in Italy at a date subsequent to reductions
in countries more advanced industrially, and only after a suffi-
cient interval for experiment and preparation. In any case
it would be absolutely unjustifiable, from the logical point
of view, to adopt the 48-hour week before its adoption in
Great Britain.
On the other hand, in view of the declaration of the repre-
sentatives of the textile trade unions that (while acknowledg-
ing the basis of the arguments advanced by the employers)
it is their intention to obtain by any and every method (not
excluding a strike) and not later than May 1st, the reduction
of a working week to 48 hours for the textile trade throughout
Italy: furthermore, in view of the declarations by the
representatives of the General Federation of Italian Trade
Unions, of its complete accord with the textile organizations,
and of its intention to support the demand for reduced hours
by all means in its power (including even a general strike of
all workpeople), the manufacturers consider it their duty, in
the difficult and hazardous period through which the country
is passing, not merely to avoid taking the responsibility of
refusing (which, in any case, would fall on the other side), but
even to avoid the giving of a pretext for disorders of in-
calculable extent and seriousness. Consequently, the manu-
facturers intend to reduce the working week, as from May 1st,
to 48 hours; but they disclaim responsibility for the results
of the decreased economic activity which, in their opinion,
will follow this reduction in working hours, to the detriment
of both parties and of the country.
The manufacturers proceed to nominate the four delegates
and three substitute delegates, who, acting in concert with
delegates of other textile trades and representatives of the
trade unions, are to construct a working timetable, the dele-
gates being commissioned to make arrangements to insure:
(1) that the new 48-hour week shall be enforced throughout
Italy on May 1st; (2) that the same reform shall become
international as soon as possible; (3) that the new working
hours shall be strictly enforced in practice so as to guarantee
a yearly total of hours on which manufacturers may rely
and to make these hours real working hours, without
exceptions of any kind; and (4) that the other demands of
the workmen shall be duly moderated because of the full
concession made by the employers in the matter of hours
of work.
In the shipbuilding industry, your Commission was
informed:
that already the principle of the 8-hour day had been accepted
but that the details of its operation were to be determined.
upon later. Under the 8-hour day the laborers had not pro-
167
duced as much as in the 10 hours. Inasmuch as under the
10-hour day there has been slowness in arriving and departing
and no strenuous working during the day, they thought
that they were obtaining nearly as much in product under
the 8-hour day as under the 10, and that the compensa-
tion for the difference was in the great tranquillity obtained
by granting the request of the unions.
Another employer in this field said:
In regard to the problem of the 8-hour day, when they had
the 10-hour day they practically got the equivalent of 9 hours
of work, since men were slow in coming and early in getting
away. Under the present arrangement of 8 hours, they were
promised a better spirit of work. At the present moment the
men were prompt in their attendance and the hours ran from
7.30 to 11.30 and 1.30 to 5.30. Nevertheless, he said, they
did not get as much product as before under the 10 hours.
When asked why they were willing to accept the 8-hour day,
he reasoned that it was necessary for the employers to stand
together.
In the silk industry where wages had been recently
increased by 20 per cent, the proposal for an 8-hour day
was regarded with dismay. One employer said:
Now there is a demand from the laborers for the 8-hour day
with the same rate as formerly paid for 10 hours. To this we
shall present strenuous opposition. This additional rise in
wages means still greater cost of production and if carried
through would mean ruin to the silk mills. In reeling and
throwing silk, costs are now 40 per cent above those of Japan,
who has already driven Italy out of the American market.
Indeed, they had been presenting their case before the
Government at Rome at the present moment. Although the
Government had bought up the silk crop under a valorization
scheme, it favored the 8-hour law. It would be absolutely im-
possible for them to accept the 8-hour law, and they objected
to the passage of the law by Parliament and its enforcement
in the industry; rather than accept the 8-hour day, they would
be obliged to resort to lockouts. It was explained that the
work on the silk required a very delicate touch and the hands
of operatives must be in proper condition. If the 8-hour law
were introduced, it would not mean that the workers (who
were closely connected with the land) would cease from work
those extra two hours. In actual fact, they would resort
to rough work on the farms for two hours and their hands
would be spoiled for the delicate silk work. From every point
of view, they found the operation of that law in their industry
was likely to be disastrous. In the silk industry it is not
possible to use extra shifts of a shorter number of hours,
168
because they can work only in full daylight. In connection
with the competition of Japan, the Swiss establishments had
made a suggestion that Switzerland and Italy would accept
the 8-hour law if Japan would, but Japan had refused.
On the general question, a high authority gave his
opinion against the wisdom of the law:
As to the 8-hour law, it was not a good thing for the men,
since a shortening of the hours only resulted in more drunken-
ness. The reduction of the hours under conditions where
there are no pleasant gardens and homes for the men works
badly. The resort to drinking places is an inevitable con-
sequence of no desirable places for recreation.
An important financier confirmed this view:
In regard to the 8-hour law, he emphasized the fact that
there were no clubs or suitable places for recreation for
laborers; therefore, the reduction in hours to 8 would not only
be no gain, but a positive loss to the men.
In Italy politics had already been interwoven with
industrial questions. As has been said, only a small
percentage of laborers is organized into unions; but the
extreme radicals control them. They are the ones who
make speeches, threaten, and, when striking, resort to
violence. Thus they frighten the general body of peaceful
workers into joining them in any crisis; and they succeed in
intimidating the employers. In recent months, of course,
the absorbing question in Italy has been her attitude to
the proposed terms of peace. Taking advantage of this
situation the extremists have increased their demands,
and to avoid a general strike while the Peace Congress
was in session at Paris, the Government brought great
pressure to bear on employers to meet the demands of
labor. As a consequence, not so much because of the
demands of organized labor as to meet the exigencies of
politics, the employers have generally accepted the
principle of the 8-hour day.
169
CHAPTER X
MINIMUM WAGE
§ 1. IN GREAT BRITAIN
The movement towards the establishment of a minimum
wage in the United Kingdom arose from an outcry
against "sweating" and underpayment in a number of
trades in which women chiefly were employed. Much
public agitation and discussion followed. A Sweated
Industries Exhibition was held in London. An inquiry
was made by the Board of Trade into earnings and
hours, and revealed the wages of women in nearly every in-
dustry, except the cotton textiles, to be "below a decent
subsistence level." A Select Committee of the House
of Commons investigated the matter and proposed the
establishment of Wages Boards for certain selected
industries.
Out of the report of this committee sprang the Trade
Boards Act of 1909, which specified four industries.
selected as not only the most sweated, but also those
which, because of the varying economic factors affecting
prices therein, were likely to afford the best field for
experiment. In 1913 four additional trades were added.
The war produced no change in the number or scope of
the trade boards. The approach of peace, however, led
to a new act, The Trade Boards Act of 1918, which
aimed to simplify, expedite, and extend the procedure of
the earlier act. In the dislocation of industry which
could be expected after the war the problem of wages
for unskilled and unorganized workers might come up.
Women returning to their old trades from munition
making, it was felt, might need to be protected against
their own competition, while women remaining in occupa-
tions formerly confined to men might need the same type
of protection against the returning soldiers. The new
act simplified the procedure of administration so that
any apparent need for action in an industry could be
speedily met, widened the power of the Minister of
Labour in applying the act to new trades, and accelerated
the machinery.
170
१
The first four trades brought under Trade Boards in
1909, because the prevailing rate of wages therein was
"exceptionally low as compared with that in other
employments," were tailoring, paper-box making, lace
finishing, and certain kinds of chain making. In 1913
the formation of boards was carried out in four other
trades: Sugar confectionery and food-preserving, shirt-
making, hollow-ware making, cotton and linen embroid-
ery. Later the hollow-ware trade was divided in two,
boards being established for metal hollow-ware and for
tin boxes, respectively. The Act of 1909 provided that
a separate Trade Board must be established in Ireland
to deal with any one of the selected industries represented
in that country. There were five of these. Hence,
from 1913 to 1918, there were in existence nine Trade
Boards in Great Britain and five in Ireland.
Since the passing of the act of 1918, the act has been
extended, not to trades whose wages were "exceptionally
low," but to those where, on account of defective organi-
zation, wages were unduly low or where there was reason
to apprehend an undue fall in wages when the special
war conditions had passed. Under the terms of this
extended jurisdiction, the Minister of Labour has extended
the application of the act to the following trades: aerated
waters; tobacco; rope, twine, and net; boot and shoe
repairing; laundry; paper bag; brush and broom; hair,
brass, and fiber; corset; flax and hemp spinning; jute
weaving; jute, flax, and hemp finishing; the fur trade;
women's clothing, and the hat, cap, and millinery trades.
This makes a total of fifteen new Trade Boards up to
July 1, 1919.
Each Trade Board consists of two classes of members.
First, it contains equal numbers of representatives of
employers and of workers. As the latter have in many
cases no organization through which they can elect
representatives, the Board of Trade has the right alter-
natively to nominate on their behalf. It should be noted
that these representatives need not themselves be either
employers or workers. As a consequence, the employers
included among their representatives on two boards their
legal adviser, while the employees have had the help
not only of trade union secretaries, but of men and women
who took a leading part in the anti-sweating agitation.
Secondly, what are defined as neutral persons, are
appointed to the Board by the Government department:
171
They are not officials of the department, but persons chosen
from outside, selected in some cases for their special knowledge
of industrial conditions, and in all on grounds which appear
to insure that they will bring impartiality and intelligence to
the consideration of the problems laid before them.¹
This appointed element is restricted both in numbers
and in power. It must always be less than half the
total number of representatives of both parties on the
Board. Thus the appointed members of the Chain
Trade Board, the first one set up, number only three
out of a total of fifteen. On the Tailoring Trade Board
they number only five out of a total of forty-nine, and
on the Box Trade Board, three out of thirty-five. In the
deliberations of the Board, these members rarely initiate
proposals or discussions. But their power is very con-
siderable, since they have the determining voice in all
matters on which agreement is not reached between the
employers and the workers.
The chief function of a Trade Board is to fix minimum
rates of wages, that is, the limit below which wages may
not legally fall. Scales of wages are not set up, nor is
there any implication that the minimum named is to be
the maximum paid. Employers may offer, and workers
may seek to secure, higher wages. A minimum time-rate
must be fixed by each Trade Board, but piece-rates are
optional. That is, in an industry where piece-rates
prevail, the Board may fix the piece-rates or may leave
them to the employers. In the latter case, however,
it is obligatory upon him to calculate the rates so that
earnings for an ordinary worker shall not fall below what
would have been received on the minimum time-rate
basis. The penalty for failure to pay the proper rates
is to be not more than £20.
The work of the Boards has been to set out minimum
rates in the various industries. As required by law,
there had always to be a minimum time-rate fixed, but
chain making and lace finishing are the only trades
known to have minimum piece-rates as well. In certain
sections of the box-making trade minimum piece-rates
were fixed, but not for the whole trade. The provision
that the employers' piece-rates should be so fixed as to
allow the ordinary worker to earn an amount equivalent
to what could be earned on the minimum time-rate, gave
¹ Constance Smith, "The Working of the Trade Boards Act in Great Britain
and Ireland,” Journal of Political Economy, July, 1914, p. 611.
172
some difficulty in certain trades. The trouble arose
over the definition of "ordinary worker." No definition
was adopted, but instead it was decreed that a certain
proportion of workers must be earning at least the mini-
mum as above defined. In the tailoring trade, this per-
centage was fixed at 80 and in the box making at 85
per cent. This allowed a fair margin for slow workers.
It should be noted that the wage rates fixed covered the
lowest paid workers in the United Kingdom. In the
following table will be found the time-rates and expected
earnings for adult persons for the various boards in
existence in 1916:1
MINIMUM TIME RATES AND EXPECTED EARNINGS FOR
ADULTS IN VARIOUS INDUSTRIES UNDER TRADE BOARD
ACT, 1916
Adult Males
Adult Females
Trade
Per
Hour
Per
Week
U.S.
Curr.
Per
Per
U.S.
Hour
Week
Curr.
Chain-making
Tailoring
Paper-box making
5d. to 7d.
22,.*
$5.36
.
234d. 14s.*
$3.41
6d.
25s. 6d.
6.21
3½d. 14s. 10½d.
3.62
6d.
| 26s.
6.33
3d.
13s.
3.16
Lace finishing
No males employed
234d. 11s. 11d.
2.90
Sugar, confection-
ery, and food pre-
serving
6d.
26s.
6.33
3d. 13s.
3.16
Tin-box making
6d.
26s.
6.33
•
34d. 14s. 1d.
3.43
Hollow ware.
•
•
5½d.
23s. 10d.
5.80
3d. 13s.
3.16
*Average piece-rate earnings.
These wage rates, low as they are, represent a significant
increase. In the case of the chain-making industry the
piece-rates set represented an increase of from 19 to 67
per cent, according to the class of work done.2 In the
tailoring trades the increase is reported to have extended
to at least 38 per cent of the women pieceworkers and
about 25 per cent of the men.³ In the box trade some
52 per cent of the workers would have received an increase
of wages.¹
¹ Labour Yearbook, London, 1916, p. 218; 1919, pp. 324-27.
2 R. H. Tawney: "Studies in the Minimum Wage," 1914, p. 131.
R. H. Tawney: "Minimum Rates in the Tailoring Industry," London, 1915,
p. 253.
M. E. Bulkley: "Minimum Rates in the Box-Making Industry," London,
1915, p. 89.
173
In general it may be concluded that the Trade Boards
have raised wages considerably, especially among the
less skillful workers.
There is no general tendency for the minimum wage
to become the maximum; on the contrary, it is the wage
of the poorest paid that seems to have been raised, while
that of the more efficient workers was less affected. The
fixing of minimum rates in these unrepresentative trades
is held to have resulted also in "better organization
àmong the employers and in improvements in the equip-
ment and organization of their factories." Though
prior to their extension, in 1918, they covered 375,000
workers, they cannot, because of the circumstances.
characterizing the industries included, be considerable
factors in the industrial situation. Their chief value
must always lie in the protection they afford to women
and young persons in the less organized trades.
The first extension of the wage board outside the
sweated trades occurred in 1912. In that year, the
miners demanded a guaranteed general minimum wage,
covering all grades of workers, though varying from
district to district. The demand was enforced by a strike.
After three weeks, the Asquith government brought
in and passed the Coal Mines (Minimum Wage) Act,
1912. This act did not name any specific minimum daily
wage, but adopted the principle that miners were entitled
to a minimum wage if they complied with certain con-
ditions as to regularity or efficiency of work. For the
fixing of the minimum rates and the determination of
the conditions as to regularity and efficiency of work,
Joint District Boards were to be set up. These were to
consist of equal numbers of representatives for employers
and workmen, respectively, with an independent chairman
appointed by agreement between the two sides, or,
in default, by the Board of Trade. It is important to
note that there had existed in each mining district a
Conciliation Board or Joint Committee for the regula-
tion of wages, and that, in almost every case, by slight
modifications, this became the District Board.
The chief effect of this act seems to have been exerted
upon the wages of the unskilled underground workers,
who were upon a day-wage basis. These men form, next
to the coal hewers, the most numerous group of em-
¹ See the official view of the Board of Trade, London, in Third Report, New
York State Factory Investigating Commission. Appendix III, pp. 243–44.
174
i
ployees in the mine. Their average wage after the passing
of the act was somewhere around five shillings a day or
thirty shillings per week of six days.
The next extension of the principle was to agricultural
laborers in terms of the Corn Production Act, 1917.
This act provided for Wages Boards, constituted in the
same form and for the same end as the Trade Boards.
They are to consist of representatives of employers and
workmen, in equal proportions, and of members appointed
by the Board of Agriculture. They are to recommend
minimum rates of wages, and differential rates for overtime
employment. The principle governing the determination
was that contained in the definition of minimum wages as
wages which in the opinion of the committee are adequate
to promote efficiency, and to enable a man in ordinary case
to maintain himself and his family in accordance with such
standard of comfort as may be reasonable in relation to the
nature of his occupation.
The act went a step farther than the Coal Mines
(Minimum Wage) Act, 1912, in that it specified that the
minimum time-rates fixed for able-bodied men must be
such as would secure a weekly wage of at least 25 shillings
a week. The first award of the Board specified a minimum
of 30 shillings, and fixed the hours of work at 54 per
week in summer and 48 in winter. Later awards ex-
tended this rate fairly widely over the country, but in
certain parts the rate was made 35 shillings, 36 shillings,
and even 36 shillings 6 pence per week. In March, 1919,
all rates were revised, and approximately 6 shillings and
6 pence per week added, so that the range of wages is
now from 36 shillings 6 pence to 42 shillings 6 pence.
During the war a minimum rate was fixed for women
doing men's work in munitions. This was fixed at £1
and afterwards raised to 24 shillings.
The question of minimum wage in Great Britain was
touched by the report of the Provisional Joint Committee
of the National Industrial Conference, April 4, 1919.
This committee, consisting of 30 employers and 30
representatives of the trade unions recommended that
minimum time-rates of wages should be established
by legal enactment, and ought to be of "universal appli-
cability." It recommended, further, that a Commission
should be appointed to report
as to what these rates should be, and by what methods and
what successive steps they should be brought into operation.
175
§ 2. IN FRANCE
The minimum wage in France as in England arose
out of an outcry against sweated labor in home work.
Since the beginning of the present century many propo-
sals of a law to deal with the matter had been made in the
Chamber of Deputies. From 1910 the question became a
practical one, though its progress through the Chambers
was very slow. The law which is in force today was
introduced in 1911, was carried unanimously by the
Chamber of Deputies in October, 1913, and after a unani-
mous vote in the Senate and slight alterations became
law on July 10, 1915. Its date makes it appear a war
measure, but its history shows it to have arisen from the
same social conditions and the same motives as prompted
the English act.
The provisions of the law apply to all female workers
executing work at home on clothing, hats, shoes, lingerie
of all kinds, embroidery, lace, feathers, artificial flowers,
and any other work entering into the clothing industry.
The provisions of the law can be extended, however, on
the advice of the Conseil Superieur de Travail (Superior
Labor Council), to homeworkers other than those named
in the act.
The law provided that minimum rates of wages were
to be fixed by the labor councils created by the Act of
July 17, 1908. These councils consisted of equal numbers
of employers and employees. But as few of these were
actually in existence, the act provided that, in their
absence, there should be two types of boards; one, comites
de salaries (wages boards) and the other, comites profes-
sionnels d'expertise (board of trade experts). The wages
boards were to consist of the justice of the peace in the
chief town of each department, acting as ex officio presi-
dent, two to four male or female home workers, and an
equal number of employers in the industries named.
The boards of trade experts were to be composed of two
female workers and two employers of the clothing trade,
with the justice of the peace as president.
It is the duty of the wages boards in each district to
ascertain what is the average wage customarily paid to
factory workers of the same profession and of average
skill. On that basis it has to fix a minimum rate "such
as will enable a female worker of average ability to earn
176
in ten hours a wage equal" to this average wage. This
rate is necessarily a time-rate.
Where a piece-rate has to be fixed, on account of the
nature of the work, the board of trade experts come into
function. It is required to ascertain the average time
necessary for the execution of piecework for all the vari-
ous articles and the various classes of female workers
in the occupations and districts subject to its jurisdiction.
On the basis of this ascertainment of the average time.
required, a piecework rate is arrived at by multiplying
the time required by the minimum time-rate set by the
wages board. These minimum piece-rates, which prevail
very largely in the industries covered, are to be revised
every three years.
When a scale is fixed, it has to be announced and a
period of three months allowed for appeals. These ap-
peals may be made to a central commission sitting in
the Ministry of Labor in Paris, and composed of equal
numbers of employers and workers. If no appeal is taken,
then, after the expiration of the period of three months,
the minimum wage rate becomes compulsory upon
employers.
In the administration of this law wages boards have
been set up in all departments and all these boards have
fixed minimum rates. Further, boards of trade experts
have been set up in all but four departments. Up to
October 1, 1918, these latter boards totaled 295,¹ of
which 123 were for dressmaking, 84 for lingerie, 39 for
footwear, and 35 for embroidery. In 1917, the latest
year for which complete information is available, 6,445
employers and 215,218 employees were reported as being
under the operation of the law.
The result of the scale of wages has been that wages
of 15 centimes per hour (3 cents) have completely disap-
peared, while wages of less than 20 centimes (4 cents)
only remain where cost of living is low.2 Wages have
been appreciably raised and brought nearer to the actual
basic cost of living.³ 3
Certain steps have been taken to give minimum wages
to women employed on war work. Thus, a minimum
4
1 Bulletin du Ministère de Travail, October, 1918, pp. 362-84.
2 Duchêne, G.: “Les Progrès de la legislation sur le minimum de salarie.”
Paris, 1918, p. 62.
³ Ibid., p. 63.
* Ibid., pp. 80-2.
177
piecework list for work on soldiers' clothing was set up
early in the war. Minimum wages were named in regu-
lations concerning the employment of women in base
camps. The permanent commissions of arbitration and
conciliation set up in January, 1917, to deal with disputes
among munition workers were required to establish scales
of minimum time and piece wages. These are described¹
as
basic wages below which one could not go, since they repre-
sented the sum considered indispensable for the existence of
the worker.
In these cases the minimum wages fixed were 65 to 75
centimes (1212 to 15 cents) per hour, according to the
nature of the work.
There is a movement towards the establishment of a
minimum wage in other trades. In June, 1917, the
Congress of Marine Workers passed a resolution demand-
ing the establishment of minimum wages for the women
in that vocation. In that year, after the strikes of the
months of May and June, certain collective agreements
contained minimum scales. In the demands of unions
associated with the 8-hour day there is frequent mention
of minimum wages. This was true in the case of the
miners and metal workers, two of the strongest trade
unions in France.
§ 3. IN ITALY
In Italy the demand for a minimum wage has risen
more recently. It is now associated with the demand
for an 8-hour day and is stronger in the metal industries
than in those which in France and England have been
associated with "sweating." Thus, in the textile industry
in Italy, no pressing demand for a minimum wage has been
made. The workers in this industry are mostly young
peasant girls who enter at an early age and do not remain
very long, as they generally marry. On the other hand,
practically all the metal industries in Italy have agreed
to the principle of the minimum wage, though at the
time of the visit of the Commission no endeavor had been
made to establish an agreed amount. The demand for
such a wage is met also in the printing trade.
¹ Renard, G.: "Répercussions Economiques de la Guerre," p. 271. Paris,
1917.
178
A few figures were obtained to show a basic wage that is
being contemplated for the minimum wage of the un-
skilled worker in Italy.
It has been proposed to fix the wage of the unskilled work-
men at about 13 lire. Before the war these men earned 6 or
8 lire. Today the skilled men earn about 20 to 23 lire.
The question of the minimum wage had not reached a
climax at the time your Commission visited Italy. A
meeting was held at Turin on April 23, 1919, by the
employers of most of the industries in northern Italy for
the purpose of considering the matter of minimum wage.
It was said at the time that the principle would un-
doubtedly be accepted.
179
CHAPTER XI
UNEMPLOYMENT
§ 1. IN GREAT BRITAIN
The general problem of unemployment in Great
Britain has received a considerable amount of attention.
As an older country, where opportunities are restricted
as they are not in the United States, where industrial
stratification is more rigid, where the cycles of the
world's trade are more keenly felt, and where there has
been a surplus of labor, Great Britain is familiar with
unemployment as a constantly recurring phenomenon.
To the workers, the fear of unemployment is a constant
nightmare. This fear was given to the Commission in
many cases as the chief reason why the workpeople had
restricted production and had demanded shorter working
hours. They were laboring under the fallacy of the
limited work-fund theory, a fallacy which is not confined
to the laborers of Great Britain.
Action has been taken in Great Britain to avoid at least
the worst effects of unemployment. The National
Insurance Act, 1911-1916, contains provisions for un-
employment insurance in certain highly skilled and
munition trades, and for a subvention to trade unions.
that give out-of-work pay.
A contribution of 5 pence
weekly is made by the employer, who deducts one-half
of it from the employee's wages. The state contributes
one penny per head and all the expenses of administration.
Out of the fund formed by these contributions, unemploy-
ment pay at the rate of 7 shillings per week is made
to all who have been involuntarily unemployed for at
least six days.
The unemployment existing in Great Britain at the
time of the visit of the Commission was different in
character and intensity from that which marked pre-war
days. The latter was generally related to cycles of bad
business or to the casual and disorganized character of
certain industries. The former was a direct concomitant
of the reconstruction period. It was
period. It was an accompani-
ment of the huge turnover from war to peace.
180
The signing of the armistice brought to a close the period
of intense war-time activity in the munition factories
and foreshadowed the demobilization of the army. These
factories, where nationally owned, were closed and their
employees discharged. Where privately owned, they had
to be converted from their functioning as munition fac-
tories to the manufacture of their former products.
In the process of conversion, the munition workers
who could not be employed under the new conditions,
especially women and certain semi-skilled men, were
thrown into unemployment. Even the skilled hands
would remain unemployed so long and so far as the in-
dustry was not able to return speedily to peace-time
production. At the same time, a general movement of
displacement of women by men went on with varying
degrees of force, tending to increase the number of women
unemployed.
The beginning of demobilization had a twofold effect
upon the unemployment situation. In the first place, it
threw a large number of men upon a labor market that
was already overloaded, because of the difficulty of
restarting under which industry was suffering. Secondly,
as many employers had given a pledge to take back men
previously employed, the demobilization of soldiers set
up a differentiation against civilians, who were discharged
to make room for soldiers. The figures for both soldiers
and civilians were large. At least four million soldiers
were to be demobilized, and at least a million civilians
had entered industries where there would be no room for
them.
In view of the seriousness of the position, judged
by the numbers involved and the difficulty certain to
be met in the readjustment of industry, the British
Government had three courses open to it. It could
have left each individual to find employment unassisted.
It could have kept the munition factories busy until the
signing of peace. It could give a form of unemployment
benefit. In view of the large numbers who would be
unemployed and of the large amount of industrial unrest
that was already abroad, the first method was unsafe.
The second was wasteful and demoralizing. The third
method was in accordance with the principle of the coun-
try's national insurance scheme, and was the one adopted.
The full measures taken to adjust industry to the
181
new conditions of peace are to be found in an official
notice from the Minister of Munitions, dated November
13, 1918, and addressed to contractors, subcontractors,
and workpeople. This notice recognized that the task
of transformation involved "the disturbance and disloca-
tion of industries and workshops," and that "very large
numbers of workpeople will have to change their employ-
ment, and in many cases their present abodes."
The measures proposed were "solely intended to bridge
over the inevitable period of dislocation." These included
the abolition of overtime, replacing piecework by time-
work, and reducing hours on the same, and subsidizing
wages on short time, where they fell below a minimum
of 30 shillings per week for men and 25 shillings for
women.
But the most significant measure taken was one provid-
ing for unemployment pay. This was apparently the
fully prepared scheme of the British Government, worked
out in advance of the signing of the armistice. The
proclamation above referred to states:
To provide for the abnormal period that must immediately
follow on the cessation of hostilities, the Government has
adopted as a temporary measure the following general scheme
of noncontributory unemployment donation, which has been
laid before them by the Minister of Reconstruction in agree-
ment with the Minister of Labour.
This scheme consisted in the payment of a noncon-
tributory unemployment donation for a maximum of
thirteen weeks out of the total period of six months
during which the scheme was to be in force. Demobilized
civil war workers were to receive weekly benefits on the
following scale.
Men over eighteen years
Women over eighteen years
Boys
Girls
24 shillings.
20 shillings.
12 shillings.
10 shillings.
An allowance was also made of 6 shillings per week in
respect of the first dependent child under fifteen years of
age, and 3 shillings for each additional dependent child
under that age. On December 12, 1918, in the midst of
the general election, the allowances were increased thus:
Men over eighteen years
Women over eighteen years
Boys
Girls
29 shillings.
25 shillings
14 shillings 6 pence.
12 shillings 6 pence.
182
Towards the end of February it was clear that large
numbers of people had not been able to get any employ-
ment, and had consequently exhausted the amount of
assistance they might receive under the scheme. Further,
it had become plain that the amount of the donation was
such as to encourage idleness, and deter men and women
from any assiduous search for employment.
Under the circumstances the Government decided to
extend the scheme for a further period of six months,
with the same restriction of pay to a maximum of
thirteen weeks, but on a lower scale. The donation for
men was reduced to 20 shillings, and for women to 15
shillings. This reduced scale has been in operation from
May 24th.
At the same time members of the forces upon demobili-
zation were entitled to receive, in addition to other allow-
ances, an out-of-work donation during the twelve months
following their demobilization for a maximum period
not exceeding twenty-six weeks.
To avoid fraud several conditions were enforced. No
payment was made for the first three days of unemploy-
ment. Holders of unemployment policies were required
to sign them daily while out of work. Juveniles were
required during the period of this unemployment to
attend a course of instruction approved by the Board of
Education. Persons applying for an additional policy
providing for unemployment pay during the second six
months must satisfy the Local Advisory Committee of the
Employment Exchange that they were normally in
employment, were genuinely seeking work and unable to
obtain it. The test imposed in respect to the two latter
conditions did not necessitate the acceptance of work at
rates lower than the employment donation. Where
work was refused, employment officers were at liberty to
discontinue paying the employment grant, but the
applicant could appeal to a Court of Referees.
The number of persons receiving unemployment dona-
tions has reached a high figure. The figures for women
unemployed rose rapidly. By February 28, 1919, they
were 494,471, and next week, March 7th, which marked
the culmination of the number of civilians unemployed,
they were 494,365.
In this latter week the number of men civilians unem-
ployed reached its maximum, 234,402.
183
Including boys and girls, the total civilians drawing
unemployment pay in this week of maximum figures was
790,521. Of these, as shown above, women formed 62.6
per cent, men 29.6 per cent.
At the same time the members of the forces were being
demobilized, but with less speed. By May 9th, the
figures among these persons had reached their maximum
when they stood at 409,959. The maximum number of
civilians and members of the forces applying for unem-
ployment pay was 1,093,400, a total reached in the week
of May 2d. By the end of June this figure had been
reduced to 606,125, of whom 253,282, were civilians and
372,843 members of the forces.
The cost of the scheme during the period when the num-
bers were largest was estimated at £1,000,000 ($4,866,500)
a week. A total sum of £25,000,000 was set aside for
the purpose of meeting the costs of the experiment.
It must be understood that the individuals included
in the weekly totals did not remain continuously un-
employed. Of the civilians recorded as unemployed
up to June 27th, 85 per cent of the men and 90 per cent
of the women had ceased to draw the donation. The
corresponding average for demobilized men was 85. In
other words, 85 per cent of the men demobilized from
the army and 85 per cent of those dismissed from civilian
employment had again been absorbed into industry,
while 90 per cent of the women had found other employ-
ment, not necessarily in industry.¹ As the number of
troops demobilized was officially given at over four mil-
lions and of civilians at between one and two millions,
it is apparent that the process of adjustment had been
on a large and successful scale. It is noteworthy, also,
that employers were redeeming their promise to reinstate
soldiers and sailors in their former employment, and in
so doing had decreased the percentage of civilians obtain-
ing reemployment.
The period within which work was found by the un-
employed was, in the majority of cases, shorter than the
maximum period of thirteen weeks during which the dona-
tion was payable. An analysis made by the Director of
Statistics of the Ministry of Labour, covering 99 per cent.
of the policies lodged on May 2d, is of interest on this
point.2
1 Labour Gazette, May, 1919, p. 187.
2 Ibid.
184
PERIOD OF PAYMENT ON UNEMPLOYMENT POLICIES LODGED MAY 2, 1919, DISTRIBUTED
ACCORDING TO MILITARY STATUS AND SEX OF APPLICANTS
Duration of Payments
121-155 days
79-120 days
61-78 days
49-60 days
1-48 days
Policies lodged but no payment made
Total
Civilians
Demobilized members of the forces
Grand
Men Boys Women
Girls Total
Men Women Total
Total
1,139
22,658 1,046
51 2,310
36
3,536
5,695
23 5,718
9,254
35,479
1,211
60,394
33,206
2,896
94,537
3,595
134,234 S
55,806
313
56,119❘ 250,747
23,592 2,237 50,380
2,774.
78,983
115,757 14,028 206,405
304,974
792
305,766 738,558
17,619
353,809
16,635 2,614
25,985
3,102
48,336
35,676
188
35,864 84,200
212,987
22,872❘ 415,096 | 28,337
679,292
402,151
1,316
403,467 1,082,759
185
Of the civilian total of 679,292, only 63,930, or a little
over 9 per cent, were drawing donations for more than
thirteen weeks at the reduced rates. At the end of June
the percentage had increased to 27.41 To the end of
April the total number of extensions granted was 85,529,
and the number refused, 27,587. Among the latter were
22,000 girls available for domestic service who had refused
work of that kind. Most of these refusals on the part of
the girls available for domestic service were referred to
Courts of Referees and 17,000 of them were upheld.
Some of the difficulty encountered in placing persons
in employment was due to the action of employers in offer-
ing wages at pre-war rates. Fifty per cent of the vacan-
cies announced for officers from the army were at £250
($1,215+) a year. In other cases, persons employed in
munitions or engaged in the trenches had lost their skill.
Further, the normal paths of advancement in industry
for young boys and apprentices had been seriously dis-
turbed, so that a large measure of training was required
before some of these could function efficiently in industry.
But the great difficulty was that industry was stagnant.
Some of Great Britain's largest markets were closed to
her, such as the Central Empires and Russia. Distant
markets like China, Japan, Australia, and New Zealand
were practically shut off by lack of shipping. Engineer-
ing works were, to a large extent, idle. There were at
least 100,000 men out of work in that industry, and only
2,693 vacancies had been notified to exchanges. Un-
employment was, therefore, correlated with stagnation in
industry.
Criticism of the scheme came from various sources.
To some men it was a dole, a relic of charity and the old
Poor Law. To others it was a rash and thriftless expendi-
ture of the public money, a "wild-cat" measure that would
not exert its anticipated influence in stopping industrial
unrest and unemployment. Some denounced it, quite
rightly, in respect to the earlier payments made, as an
obvious inducement to idleness. It should be noted that
in practice it did not operate powerfully nor in a large
number of cases, to prevent men seeking work. Much
criticism was directed against the large number of women
included in its provisions, the assertion being made that
the majority of them were not employed before the war,
1 Labour Gazette, July, 1919, p. 282.
186
were consequently returning to their domestic duties,
and had no rightful claim to an unemployment donation.
Some justification for this criticism is found in the fact
that only 52 per cent of the women applied for an exten-
sion of their donation, and of that proportion 30 per cent
were rejected. But, on the other hand, this number
was stated by the Minister of Labour as only amounting
to "roughly 40,000," or 10 per cent of the total number
of women drawing unemployment pay. At the same
time it must be remembered, in considering the number
of women unemployed, that the cotton industry was
suffering seriously from the effects of the blockade.
The total unemployed therein was 100,000, at least 60
per cent of whom were women. Further, a total of
66,000 women had been placed in some form of domestic
service since the armistice.
On the labor side the scheme was denounced as inade-
quate. The donation, especially after the announcement
of its reduction, was declared to be too small. The
reduction was received with bad grace. The administra-
tion of the act was condemned as harsh. It was said
that women were being forced back into the sweated
trades. It was held that the Government should do
something to start industry moving, and to that end
should set the national factories in operation under
state control and carry forward its program of housing
and public works.
Their complaint was that the Government had limited
themselves in their policy merely to the plan of paying out
state benefit. They had not taken steps to find out what the
worker wanted. His first claim was to work, and his claim
to state money came after the state's inability to find him
work.
There were factories and workshops and many material
means available which could be brought into close touch with
Labour, which was willing, if the Government could overcome
their objection to any kind of organized effort, to provide work
instead of unemployment benefit. It was objected that this
would not produce economic results, but it would pay the
Government even to have production at a loss rather than
paying out money week by week for providing nothing.. It
not only provided nothing, but brought in its train certain
disadvantages harmful to the state as well as detrimental to
individuals.¹
1 J. R. Clynes, M.P., speech in House of Commons, April 29, 1919, reported
in The Times, April 30th.
187
While the Government did not take any action to
operate the national factories, preferring rather to sell
them to private enterprise, it made considerable sums
available for housing, repairs to roads, erection of gas-
works and waterworks, and other schemes.
The time is not opportune for a judgment upon the
scheme. It is a temporary measure, a part of the long
and difficult process of readjustment to peace conditions.
The general tone of public criticism is not averse to it on
principle. The Times, in an editorial,¹ says:
Indeed, the case for it as an interim policy between war and
peace was overwhelming, and was hardly challenged in the
House yesterday.
As a temporary measure it has ensured a certain amount
of industrial peace. But a distinct fear was abroad that
it would become a permanent feature and a continued
monetary burden upon the country. No section of
opinion was inclined to tolerate such a result.
§ 2. IN FRANCE
сод
There is normally a shortage of labor in France, so that
the question of unemployment has never loomed large
there. It was necessary before the war to import work-
men for seasonal demands from Belgium and Italy. If
industry can once more get started toward its restoration,
whatever idle labor there is in France will be quickly
absorbed. Demobilization plans have been so arranged
as to permit this absorption with the least possible degree
of idleness.
One large manufacturer told the Commission:
There will be plenty of work for common labor on the
highways, railroads, buildings, etc., but I am much concerned
about the skilled men.
The Government has appropriated some 6,000,000
francs for public works, and engineers have been released
from the army in order to get the work of restoring the
devastated areas under way.
There has been in France the fully equipped machinery
for dealing with unemployment, in the Bourses de Travail,
or labor exchanges, of which there are 144 throughout
¹ April 30, 1919.
188
the country, with 486,404 "adhering effective syndicats."1
These organizations, described in detail elsewhere,² are in
touch with the whole situation. They are institutions
established by organized labor itself and controlled by it.
They supplanted the previous Government exchanges.
Consequently, there has been no need for a war emergency
organization to care for unemployment problems.
The real problem in France is to get business started;
it is a problem of finance. If raw materials and coal can
be had, if the wrecked plants in the occupied territories
can be set running, the unemployment problem will
disappear. In fact, there may then arise a situation
wholly reversed; it may become a question of where
sufficient labor power can be had. It was estimated to
your Commission that about 25 per cent of the cotton
mill capacity should be in condition to resume operations
in six months, that the woolens, lace, carpet, and silk
factories should have developed about the same relative
capacity in the same period. At the time of our visit
many manufacturers were having great difficulty in
financing. The Government policy in restricting imports
was further aggravating the difficult situation.
§ 3. IN ITALY
Unemployment was a vital problem in Italy when your
Commission visited that country. There was need of
coal and raw materials with which to start the factories
and so increase the labor demand. The social and
political situation was such that the Government did not
dare to demobilize her troops and let them return to a
jobless civil life. Fortunately Italy is essentially an
agricultural country and does not present an unemploy-
ment problem of the character found in Great Britain.
The Italian situation is briefly summed up in the follow-
ing words from an Italian thoroughly conversant with
conditions:
The chief difficulty confronting Italy was that of the
employment of the four million soldiers who would soon be
demobilized. It was quite probable that emigration from the
country would set in for two reasons. First, Italian agri-
culture could not expand so as to employ this large army, nor
1 Statistique générale, p. 136.
2 Cf. "Political Influences in French Labor Movement," Chap. XVIII, p.272.
189
were the industries of Italy in such a condition as to absorb
them. Italy was in need of raw materials, and of financial
credit which would enable industry to be restarted. Secondly,
emigration to neighboring countries for seasonal periods had
been going on before the war. During the war 60,000 laborers
had been sent to France, and there is anticipated an extension
of this demand for Italian labor in Belgium and devastated
France.
Like Great Britain and France, Italy instituted a
system of "unemployment donations." Said one author-
ity to a member of your Commission:
At the present time, Italy, like other countries, is paying
high unemployment donations. They are so high that it has
had the effect of bribing men to be lazy as long as they received
these sums.
Prior to the war, the placing of labor in Italy was left
to private enterprise; that is, the individual industrial
concerns looked after their interests, or unauthorized (by
the Government) bureaus or labor exchanges performed
this service. There were a few exceptions. In Lom-
bardy and Romagna, for instance, labor organizations had
their own exchanges. It is estimated that in Milan these
organizations placed about 50 per cent of the workmen.
In Romagna, the labor organizations "monopolized
entirely the concession of labor to conductors of land
estate industries." During the war Italian industry
like the French passed under military control. A decree
of November 17, 1918, provided that in those regions
where private initiative does not develop agencies for
exchange of labor, special commissions for the "channeling
of labor" are to be created by municipal and provincial
administrations. These are to be made up of an equal
number of representatives of the industrial and of the
working classes. There is to be in Rome, under the
direction of the Ministry of Industry and Labor, a central
office, a clearing house of information for the country.
Under this decree the Association of Anonymous Share
Companies (Società Italiana per Azioni) and the General
Confederation of Labor (Confederazione Generale del
Lavoro), one the chief manufacturers' association, the
other the most powerful labor organization in Italy,
have together organized twenty-four "placing agencies"
throughout the country.
190
CHAPTER XII
HOUSING
§ 1. IN GREAT BRITAIN
The housing problem, one of the most urgent of the
reconstruction measures facing Great Britain, is inti-
mately related to the industrial situation. This rela-
tionship is of a twofold order.
In the first place, the want of sufficient and suitable
housing accommodation was regarded as a large factor
in industrial unrest. This was evidenced during the
war, especially in such areas as were specially called upon
for war work. Thus the report of the Commission of
Inquiry into Industrial Unrest mentions the Newcastle,
Barrow, London, and Southeast districts, and Wales
and Scotland as areas where the disturbing influence of
an acute housing problem was manifest. Houses there
were scarce, and living conditions, accentuated by the
patriotic necessity of taking lodgers, were a burden and an
irritation. Nor did the cessation of the war do anything
but increase this unrest. Demobilized soldiers returned
to find no houses in which to live. In city and country
alike, younger people, looking towards marriage, found it
difficult to obtain homes and joined in the demands for
better housing conditions.
In the second place, the housing problem is related to
that of unemployment. All through the war both
problems were obvious and were frequently discussed
together. It was held that the pressing nature of the
housing question should lead to priority in its treatment
after the war. This would tend to lessen the degree of
unemployment by setting the wheels of industry moving
in the building trades. Carpenters, joiners, brickmakers,
bricklayers, plasterers, glaziers, plumbers, and others,
many of them members of trades seasonal in nature,
often with an abnormal measure of unemployment,
would be set to work, and their consuming power would
assist in finding employment for others. The discussion,
therefore, of housing has been associated particularly
191
with the questions of industrial unrest and of unem-
ployment.
The
The housing problem dates from before the war.
British census report of 1911 shows a serious shortage of
housing accommodation as measured by "overcrowding."
In that report the number of persons in England and Wales
living more than two to a room was over 3,100,000, or
one-tenth of the population. In Scotland the condition
was even worse. On the English standard of over-
crowding, the percentage of persons in Scotland living in
overcrowded conditions was nearly one-half the popu-
lation. It should be added that this shortage of housing
accommodation was not confined to the cities; it was
even more evident in rural centers. An estimate pre-
pared in 1912 showed a need in rural areas of at least
120,000 houses.
The difficulty experienced during the war was that of
finding shelter in certain areas for the large numbers of
incoming war workers, and of preventing the increased
demand for houses from raising rents to a prohibitive
figure. Certain older districts, such as Woolwich and
Coventry, increased their population enormously, while
areas hitherto unused for industry, such as Gretna Green,
became sites for large national factories.
The extent of the problem at the conclusion of the war
has been carefully estimated. The Reconstruction Com-
mittee early in 1917 chose six of its members to act as an
Advisory Housing Panel with an invitation "to complete
a review of the housing question as it was likely to present
itself at the close of the war, and to prepare a memorandum.
on the subject."1 The figures accepted and published
by this committee refer to houses not above a rental value
of 8 shillings a week. Among houses of this value, there
was an estimated deficiency of new buildings that by the
end of 1917 would amount in England and Wales alone
to 175,000 houses. This deficiency was due entirely to
the cessation of building during the war. The normal
annual increase required to meet the needs of the growing
population and replace old structures was estimated at
75,000. If the war ended in 1917 a total of 250,000
houses of the class specified would need to be built in 1918.
So by calculation 325,000 houses would be needed in
1919, and if nothing were done in that year towards an
1 "Housing in England and Wales," London, 1919, cd. 9087.
192
alleviation of the scarcity, 400,000 would be needed in
1920. In addition it was held that at least 50,000 new
cottages would be needed in rural areas.
In Scotland the number of new houses required was
set at a minimum of 120,000 by a Royal Commission
appointed to inquire into the Housing of the Industrial
Population in Scotland.
The above calculations take no account of houses that
were not fit for habitation. In 1914 these were estimated
for England and Wales at not less than 400,000. In
Scotland they could not be less than 100,000. In sum,
the total number of houses called for in Great Britain,
including new houses and those to replace existing in-
sanitary structures, does not fall far short of a million.
The causes of this scarcity which has been cumulative
during at least ten years must be examined, since they
determine in part the financial aspect of the present
problem. The first reason given¹ is that the Finance Act
of 1910, taxing the unearned increment on land, had
discouraged the speculative builder and other investors
in real estate. Further, real estate had become less
tempting as an investment with the increase in the
earning power of securities. At the same time, even
before the war, building materials had increased in price,
thus discouraging the building of new houses. A further
factor in the shortage which existed prior to the war had
been the increased activity of the sanitary authorities
under the Housing and Town Planning Act, 1909. This
act required landlords to see that their houses were
reasonably fit for human habitation, and gave local
authorities the right to require the carrying out of any
repairs deemed necessary or to close the house against
tenants.
Certain measures had been taken to deal with the pre-
existing scarcity. Outside of private enterprise, which
had been responsible for the erection of 95 per cent of
the houses built prior to the war, government action had
been sanctioned in two successive legislative measures.
The first of these was the Housing of Working Classes
Act, 1890, which allowed the Local Government Board
to advance money to local authorities (municipalities and
rural district councils) for the erection of houses. In
¹ Rowntree, B. Seebohm, and Pigou, A. C.: "Lectures on Housing,” pp. 8-9.
Manchester, 1914.
193
1909 the powers of the local authorities under this act
were extended, while the Local Government Board was
authorized to act where the local authorities were reluctant
to move. This extended power was conferred by the
Housing and Town Planning Act, 1909.
The latter act was coming more and more into favor
prior to the war, and the war pressure for housing accom-
modation increased the demand for loans. The move-
ment in amount of money loaned to local authorities for
the financial years 1911-17 inclusive is shown in the fol-
lowing table:1
Year ending March 31st
1911
1912
1913
1914
1915
1916
1917
Amount Loaned
£101,210
£229,011
£395,432
£759,440
£1,125,176
£502,904
£58,531
Another act making provision for government aid
was passed on August 10, 1914, a few days after war was
declared. This act, however, was regarded as a meas-
ure for dealing with unemployment, and although an
expenditure of £4,000,000 was authorized, the powers
granted under the act had to be exercised within a year
from its passing. The fact that the period of unemploy-
ment for which provision had been made was short and
the various restrictions under the act combined to make
it inoperative.
While much was being done by local authorities under
the acts of 1890 and 1909, to remodel unsightly tenements
and build new ones, mainly in city areas, there was a
growth of co-operative housing schemes and a movement
towards "garden cities." Mention has been made
elsewhere in the report of the efforts of Sir William Lever
(now Lord Leverhulme) at Port Sunlight and of the
Cadburys at Bourneville.2 At the same time, however,
schemes more definitely co-operative were being launched
at Letchworth, Hampstead, Ealing, and elsewhere. A
description of that at Letchworth will illustrate the
method and its significance. A company was formed,
shares being of the value of £10, interest thereon being
limited by law, as in the case of all public utility societies,
to 5 per cent per annum. This company bought up at
first 3,800 acres (later adding 700 acres) of agricultural
Quoted in Labour Yearbook, 1919,
2 Cf. Ch. XIV, §7, pp. 221-23.
p. 209.
194
land in Hertfordshire, thirty-four miles from London. A
railway ran through the land which could be utilized for
factories as well as for homes. The city was planned so
as to allot 1,500 acres to the town proper, leaving 3,000
acres of agricultural land for small farms and small hold-
ings. An area near the railways was reserved for factories.
Not only has the company developed the land and
built the city, but it has also established gas, water, and
electric light, provided sewers and organized domestic
transportation. At the same time it has set out to develop
the factory area. Such is the situation of the town that
manufacturers who wish to establish factories must bring
their operatives with them and house them in the city.
The results have shown that there is no necessary con-
nection between manufacturing and the dismal, drab
conditions of many of England's largest cities. Manu-
facturers have come to Letchworth; about thirty in-
dustries have already been established. Their operatives
are housed in the city, paying rents within their reach and
enjoying the amenities of civilization. The city built
to accommodate 35,000 people has now over 10,000 in-
habitants. It represents one of many attempts by means
of co-operative enterprise to find accommodation under
healthier conditions for the overcrowded inhabitants of
English and Scottish cities.
The first measures during the war were preventive in
character. To prevent rents from being raised unduly
under the urgent need of housing accommodation, there
was passed in 1915 and amended in 1917 an act known
as The Increase of Rent and Mortgage Interest (War
Restrictions) Act, 1915. This was made to apply to
houses below a certain "standard rent," that term being
defined as the rent at which the premises were let on or
before the day preceding the declaration of war. By its
provisions the rent of a house or of a room could not be
increased above the standard rent unless the landlord
had made improvements, and in that case the rent could
not be increased more than 6 per cent of the capital value
of the improvements. No tenant could be ejected while
the proper rent was paid and the conditions of the tenancy
observed, except for certain specified causes.
The next step taken by the Government was the
erection of model housing centers in certain places where
195
large numbers of munition workers had congregated.
In some cases these were built near older centers, in other
cases, as at Gretna, in parts that were formerly almost
uninhabited. The best known of the former is that of
Well Hall in Eltham, Kent, about a mile from Woolwich
arsenal. This consists entirely of permanent dwellings
for workmen, and from the architectural and social
points of view is one of the most remarkable examples
of housing in Great Britain. The whole cost of the
construction of the scheme was borne by the Gov-
ernment. The rentals range from 7 shillings for a two-
roomed house with scullery and bath, to 15 shillings and
6 pence for a four-roomed house with similar accommo-
dation. Where shelter of a temporary or semi-temporary
nature had to be provided for war workers, this was
done by building the shell of a permanent house and using
the undivided interior for a hostel. In certain other
cases, however, as at Eastriggs, temporary accommoda-
tion was built more extensively. In general, however,
the government policy was to avoid the building of
temporary structures, because they tended to remain and
degenerate into slums. Consequently, such efforts as
those at Gretna and Well Hall remain as permanent
contributions to the problem of providing more and
better houses, whether in proximity to cities or in new
and hitherto unutilized areas.
Discussion of the difficulties which in their sum form
the housing problem has been searching in character and
nation-wide in extent. This has shown that the obsta-
cles to a rapid building program are mainly financial in
nature. Stress is laid on the urgent national necessity.
Houses are needed in large quantities. Every possible.
agency is to be put into operation and turned towards.
the building of houses. It is generally conceded that
the problem is too large for unaided private enterprise.
As a matter of practice, builders at the close of the war
were giving their chief attention to the erection of fac-
tories and workshops. In 1917 the value of such build-
ings erected was more than nine times that of dwellings
built in the same year, whereas in 1911 the value of
dwellings erected was three times that of factories. The
erection of houses was no longer a profitable investment.
Capital was scarce, rates of interest and cost of materials
and wages were high. Houses were at least twice as
expensive to build as before the war, and the increased
196
cost was reflected in the rent. Where tenants formerly
paid 8 shillings a week, the rent would now reach towards
£1 a week. Such a rent was beyond the reach of the
majority of English artisans, and anything lower was a
certain loss to builders and investors. Further, values
were likely to drop in the course of several years, and
houses built at the "top" of the market would be certain
to shrink in both capital and rental value. It was these
reasons which have produced the general opinion in
Great Britain that the housing problem is too vast and
too risky for unaided private enterprise.
With private enterprise thus ruled out by the abnormal
financial difficulties of the situation, public opinion in
England has accepted the housing problem as one of its
post-war burdens. The state had to bear the loss likely
to be involved in the building of so many houses at the
"top" of the market. It had to finance present schemes
so that private builders can contract for them. It had to
make arrangements whereby the period of transition to
normal values can be safely crossed alike by rating
authorities and individual tenants. This is the principle
underlying the Housing and Town Planning Act intro-
duced into the British House of Commons on April 7, 1919.
This act makes it the duty of a local authority, such
as a municipality, within three months after the passing
of the act, to submit a scheme for dealing with whatever
rehousing is necessary within the area over which it
has jurisdiction. Where such a scheme is submitted and
accepted it must be carried out by the local authority.
If no scheme is submitted the Local Government Board
can require such a scheme to be prepared or, in default,
prepare the scheme and have it carried out. These meas-
ures are intended to insure that no one of the 1,800 local
authorities in England and Scotland can evade its obli-
gations under the bill, which extend not merely to new
houses but also to provision for dealing with unsatis-
factory houses and slum areas.
The financial provisions of the bill are intended to meet
those conditions previously described which made the
task too onerous for private enterprise and too risky for
speculative builders. When a scheme is approved, the
Local Government Board undertakes to finance it for
a provisional period, estimated at seven years, during
which an annual subsidy will be paid by the Government
197
towards interest and upkeep, provided the local authority
has expended at least the equivalent of a municipal rate
of a penny in the pound. At the end of the provisional
period, when values have reached a normal level, a revalua-
tion would take place, and, if necessary, a subsidy would
still be paid so that the annual charge upon local authori-
ties would not exceed the penny rate. It was hoped that
at the end of this period rent that would bring a return
on the investment could be charged.
In other words, the financial provisions mean that the
Government finds a large proportion of the money needed
to commence housing undertakings, lends it for a period
of from thirty to eighty years, and bears the loss in-
volved in building at the "top" of the market. The
local authorities are required to bear the burden only up
to the limit of the proceeds of a penny rate.
By
Assistance was also to be given both to the formation
and the financing of what are known as public utility
societies. These societies had always been able to
borrow two-thirds of their necessary capital from the
Government at the lowest market rate of interest.
the new act they were to be enabled to borrow up to
three-fourths of their needed capital, and would receive
a subsidy equal to 40 per cent of the annual loan charges.
The significance of this aspect of the problem lies in
the fact that many firms and corporations are ready to
assist towards the housing of the workers necessary to
the development of their industry by taking stock in
these societies. The movement towards recognition of
public utility societies as factors in the solution of the
housing problem arose from the Federation of British
Industries, which pointed out how employers would
thereby be enabled to contribute towards the provision of
accommodation for their workpeople.
For the supply of materials much is expected from the
Ministry of Supply. The chief difficulty concerned
bricks, for the brickyards of the country had been almost
entirely closed during the war and needed time to get into
working order. The Ministry of Supply has undertaken,
however, to supply to local authorities and public utility
societies such articles as bricks, drainpipes, cement, and
glass. It was asking manufacturers also for the wholesale
production at the lowest possible rate, of internal fittings,
and was suggesting the standardization of certain fixtures.
198
such as doors, windows, and furniture, in order to cheapen
production without diminishing artistic effect.
It should be added that a Women's Housing Sub-
Committee had been appointed early in the history of
the Ministry of Reconstruction, and had given attention
to such matters in the planning of houses as were essen-
tial from the point of view of health and the convenience
of the housewife. The recommendations of this sub-
committee covered a wide range of domestic and social
conveniences. Some of these had received attention in
the planning of Gretna and Well Hall, while all of them
are likely to receive attention in the new plans. In so far
as the stress laid on them indicates a distinction between
the older and the newer style of housing, their acceptance
reveals a wider idea of comfort and an increase in the
standard of life among the working classes of Great
Britain.
The housing problem in Great Britain should be recog-
nized as one of considerable size and significance. Its
solution is expected to assist in reducing unemployment
in the building trades and in calming industrial unrest.
The financial position, with interest rates high and labor
and materials at a high price, is such that real estate
investment represents a certain loss through decline in
values. Private enterprise is thus precluded from the
field, while public opinion, endorsed in this instance by
such a manufacturers' organization as the Federation of
British Industries, is opposed to the subsidizing of the
private contractor. Steps have been taken accordingly
for the Government to undertake the financial loss and
initiate and compel an adequate effort towards the solu-
tion of the housing problem. This effort is receiving the
endorsement of Parliament and of every section of the
nation.
§ 2. IN FRANCE AND ITALY
In these countries the problem of housing is not indus-
trial, but social; it is not the result of intense industrial
development, but of war devastation. In consequence,
its solution does not lie in a readjustment of industrial
relationships, but in a successful means of obliterating
the ravages of war. There is none the less a responsibility
on Government in this matter. A discussion of it, how-
199
ever, lies outside the bounds of our investigation. We
were informed that the French Government was assist-
ing in the building of houses both large and small for
the working people. It is true that where in France new
munition factories were built in new localities, workmen
were hurried to these places in such numbers that they
could not be housed decently. Workmen were separated
from their families, slept in insanitary rooms, in relays,
`and endured many hardships of this character.¹ Never-
theless, it must be insisted, this was a war condition, not
an industrial condition.
1
1 Cf. La Bataille, "Les Ouvriers dans la guerre."
200
CHAPTER XIII
THE CO-OPERATIVE MOVEMENT IN
GREAT BRITAIN
§ 1. ITS SIGNIFICANCE
The co-operative societies in Great Britain are significant
for two reasons. In the first place they embrace a large
number of the wage-earners in their membership and sell
to them a quantity of goods so great as to make the
co-operative societies the largest single distributers in the
country. Secondly, the relations of this large movement
to the trade union movement have recently undergone
a change tending to place the financial resources of the
former at the disposal of the latter and to secure for
the co-operative movement greater support among the
members of the working class. Because of its past record
and achievements and because of its possible future
influence, the co-operative movement is, next to trade
unionism, the most significant factor in the economy of the
workers of Great Britain.
§ 2. TYPES OF CO-OPERATION
The co-operative movement consists of two types of
societies, one devoted to production, the other to distribu-
tion. Although productive societies furnish a vital
exemplification of the principle of co-operation, they are
generally considered separately from the co-operative
movement as an industrial factor. Much of this pro-
ductive co-operation is in agriculture, and is strongly
developed in Ireland.
The organizations are of two types: (1) retail societies.
whose function is that of distribution, (2) wholesale
societies that purchase, sometimes produce, the articles
that the retail societies need. The wholesale societies in
reality are national federations of the retail societies, there
being one for England and another for Scotland.
201
§ 3. HISTORY AND PROGRESS
In the history of the movement, as in its organization,
the retail societies form the basis and unit. They date
from the famous Rochdale Pioneers, who established in
1844 the society that was to prove the model of the modern
type of co-operative distribution. The movement spread
rapidly among the working classes, but did not attain any
considerable financial importance. At the end of twenty
years its total yearly trade was under £3,000,000. But
from 1864 onwards the Wholesale Societies became organ-
ized, and the movement grew more vigorous. By 1884 the
total yearly trade was £30,000,000. In 1914¹ this figure
had become £147,550,000, to which the English Co-opera-
tive Wholesale Society contributed nearly £35,000,000, the
Scottish Co-operative Wholesale Society over £9,000,000,
the greater part of the remainder coming from the trade of
the retail societies, which numbered 1,390. The member-
ship of the movement in that year was over 3,200,000
persons, representing with their families a considerable
proportion of the working population. It should be noted
that the societies are strongest in the Midlands and
northern England, in the large industrial centers.
§ 4. PRINCIPLES BEHIND CO-OPERATIVE MOVEMENT
The co-operative movement is based on certain prin-
ciples which lead its supporters to argue that it will play a
large part in the social economy of the future. It is marked
by the fact that the necessary factor of capital is supplied
by its own members. When a retail society is founded,
the members must take up at least one share of £1 paid,
if desired, by small instalments, or held back from the
dividends. On all shares taken up a certain specified
interest rate is paid. Further, the society makes a profit
on its transactions and after paying interest and setting
aside certain reserves, distributes this as a dividend
among its members.
In reality, however, the position of the shareholder is
greatly different from that of one in a joint stock com-
pany. His holdings are limited in quantity, and the
degree of his control over the society bears no relation to
his capital invested. His profits, too, unlike those in a
1 For statistics see Labour Yearbook, 1916, p. 392.
202
joint stock company, are increased by the strength and
growth in numbers of the co-operative society of which he
is a member.
This is because the profits distributed are not profits, in
the ordinary sense of the word. The co-operative societies
do not seek to make gain. They sell to themselves; hence
will buy or produce only that for which a demand is
fairly clearly demonstrated. Their aim also is to sell at
cost price which covers all the expenses of production and
distribution. But calculation to a nicety of the actual
cost of distribution of so many goods is impossible. It is
also more politic to sell at prices which are somewhat near
those in vogue in other retail stores. Hence, the co-
operative societies, as a matter of practical expediency,
sell goods at prices which permit non-co-operative busi-
nesses to make a profit. At the close of each year a
balance is struck, and a "profit" declared and distributed
as a dividend. In reality, this profit is only the excess
charges over the cost of distribution, and its return to the
consumer signifies the canceling of the profit.
The dividend paid is based on purchases made by the
consumer. This fact has an important reaction upon both
the society and the dividends themselves. If the dividend
is really the excess charges over the cost of distribution
then an increase of dividend will come from whatever will
diminish the cost of distribution. An increase of member-
ship giving increased turnover, and relatively decreased
costs, is obviously one of the most effective economic
means towards that result. The fact, therefore, that an
increase in the rate of dividend is to be looked for rather
from an increase in membership than from other factors
has stimulated the growth in numbers that has char-
acterized the history of the movement.
The dividend paid to the consumer has a threefold
influence. In the first place it is a savings bank to the
member, who, in many cases, is the housewife. The
dividend is often spent again in the stores, or is allowed to
accumulate up to the limit of capital stock permitted to
each member, and then withdrawn for the purchase of a
house or some such purpose. In this sense the co-
operative movement makes thrift possible. Secondly,
the basing of the dividend upon purchases is an induce-
ment both to further purchases and, as explained above,
to increased membership. The movement, therefore, is
203
under no need to advertise, and saves much on that
score. Thirdly, the custom of leaving the dividends to
accumulate gives financial stability, not merely to the
retail societies but to the whole movement. This custom
has threatened at times to prove a trouble to the directors,
who have reduced the rates of interest but without any
appreciable effect on the capital deposited with them.
The presence in the movement of these reserves of capital
forms the temptation to the co-operation with trade unions
that has arisen recently. If these savings are loaned to
the trade unions, the operation is, of course, not a sound
business transaction.
The ultimate control of the movement is vested in the
individual member of the retail society. Every member
has but one vote, and must attend the annual meeting to
exercise it. The immediate control is in the hands of a
management committee, from eleven to fourteen in num-
ber, elected from the members at the general meeting.
No salary is paid to the members of this committee, but a
remuneration is voted them from time to time at the
general meeting. They control the salaried and wage-
earning staff, being directly responsible for their engage-
ment and conduct. The Co-operative Wholesale Societies
are federations of societies and both are governed by
directors popularly elected from the representatives of
the societies.
This form of democratic government and control is open
to the tendency for members to interfere with unimportant
details of management. In effect, this form of criticism at
annual meetings is said to have proved wholesome rather
than deleterious. In fact, also, the success of the move-
ment has given the managing committees considerable
prestige, while the directors of the wholesale societies
hold what is practically a permanent position. It should
be added that they are paid a salary of £400 a year.
The war is held to mark a new turning point in the
history of the co-operative movement in Great Britain.
Its effects on the movement have been various. It has
strengthened confidence in co-operation as a method by
which goods can be retailed at the lowest possible price.
At the commencement of the war, when prices began to
soar, the co-operative societies exerted their full strength
to hold them down. They urgently advised their members
to prefer low prices to high dividends, and to a large
extent they were successful. Their action led to an
204
increase in their membership of a little over 20 per cent
and strengthened the feeling against an illegitimate rise
of prices. The following extract¹ illustrates a way in which
governmental interference became a matter of complaint:
The Government became the sole importer of wheat. The
Scottish C. W. S. (in conjunction with the English C. W. S.)
had a great network of organizations for the collecting of
wheat all over Canada: it had its grain elevators studded
along the great arteries and on the shores of the Great Lakes;
and it had its own depot at Winnipeg. . . . Eventually, the
co-operators were forbidden the benefits of their own foresight
and thrift. They were, first of all, balked by shippers on the
other side; and then, when they complained, the Wheat Com-
mission decided that the Scottish C. W. S. wheat must be sold
to the government agent in Canada. The wheat collected
had, therefore, to be sold. The agent obtained his commission
on the transaction. The Wholesale had to purchase its wheat
from the Government's agent on this side; he, too, had to
receive his commission; and the Wholesale, instead of obtain-
ing always the first qualities of grain, had to take what it could
get.
Eventually, in view of the rising market and measures of
government control, it was found impossible for the co-
operative societies to hold general prices down. They
began to sell, in accordance with their usual policy, at or
near the prevailing market rate. Consequently, large
surpluses began to appear on their balance sheets, and an
agitation was commenced aiming to bring them under the
income tax and excess profits duties. Hitherto, on the
ground that they did not make profits, they had been
excused from income tax. To the anger and amazement of
the members, the excess profits tax was applied to their
dividends.
Because of the increase in the basic cost of the materials
distributed and in order to utilize the balances now
subject to the excess profits tax, the movement launched
forth into a whole series of productive enterprises. Ten
thousand acres of wheat-growing land were bought in
1917, while estate after estate in England was purchased
till the total land held there amounted to over 32,649
acres. Extensions took place in existing factories and
many new ones were set up. A Northumbrian coal mine
was acquired in 1917 at a cost of £50,000. The total
1"The People's Yearbook and Annual of the English and Scottish Wholesale
Societies," 1919, p. 77.
205
éxpended by the English Co-operative Wholesale Society
on land, factories, and buildings from the beginning of the
war till the end of 1918 had reached over £1,500,000.
§ 5.
ENTRANCE UPON POLITICS
But the most significant and epoch-making reaction
of the co-operative societies to war conditions has come
in their determination to enter the political arena. The
events described above were the main causes of this
decision. As the Labour Party felt themselves driven into
political action by the Taff Vale decision, so the co-
operators were spurred to use their powers and numbers.
politically by the application to their balances of the
excess profits tax. A special congress in October, 1917,
drew up a scheme for securing direct representation for
co-operators in Parliament and on local administrative
bodies. The platform of the party¹ calls for the organiza-
tion of the processes of production, distribution, and ex-
change on co-operative lines in the interests of the whole
community, for the elimination of profiteering by legisla-
tive or administrative action, for taxation of land values,
the establishment of a national credit bank, adequate
housing, and a more democratic system of education.
Their manifesto2 issued before the general election in
December, 1918, at which ten co-operators stood as candi-
dates, declared that co-operation had
protected the consumer from having to submit to the prices.
fixed by syndicates and other concerns out of proportion to
the actual value and cost of daily necessities.
Further, it had
demonstrated that one of the best means of abolishing many
of the social evils at present existing is by the elimination of
the competitive industrial system, which enriches the few at
the expense of the many, and [by] the substitution of mutual
co-operation for the common good as the basis of all human
society.
To many among the movement, co-operation is a social
philosophy on which can be erected a new social order.³
1“People's Yearbook,” 1919, pp. 377-79.
2 Ibid., p. 379.
³ For treatment of the subject from this point of view, see Woolf, Leonard S.:
"Co-operation and the Future of Industry." George Allen & Unwin. Ruskin
House, 1918.
206
§ 6. RELATIONS TO THE LABOR MOVEMENT
The significance of this entrance upon political activity
lies in the relations between the co-operative and the labor
movements. By reason of the character of its member-
ship, the co-operative movement in politics will be a
branch of the labor organization.
The co-operator and trade unionist find that their political
(in the broad sense) and social ideals are the same, and that
in particular cases they are almost always pursuing the same
political and social objects.¹
The Labour Party had always been the solitary champion
of co-operative interests in the House of Commons, while
the two movements claim to be interested in common
in the improvement of education and the betterment of
social conditions.
The co-operative movement had begun before the war
to show both the nature and extent of its sympathy with
trade unionism. In the coal strike of 1912, the Northum-
berland unions at length reached the limit of their funds
and wished to borrow money. The English Co-operative
Wholesale Society's bank came to their relief and advanced
£70,000. The retail societies in the district allowed
members to withdraw all their accumulated capital,
declared an interim dividend, and temporarily reduced
prices to "bed-rock." This action on the part of the
retail societies was in turn made possible by the guarantee
of the banking department of the C. W. S. Further, in
the Dublin strike of 1913, the C. W. S. accepted an order
from the unions for the dispatch of shiploads of food to
the strikers and their families.
In view, therefore, of the determination of the co-
operators to adopt political action, and the perception
by the trade unions that they could find financial support
from the co-operative movement, a rapprochement was
effected in October, 1917. A United Advisory Council
of Trade Unionists and Co-operators was set up. In a
general statement of the objects to be furthered and
attained by this council, it was declared incumbent on
trade unionists to become members of their local co-
operative societies, and employees of co-operative societies
to join their trade unions. The three most significant
objects of this entente cordiale follow:2
¹ Woolf, Leonard S.: "Co-operation and the Future of Industry,” p. 69.
Cf. pp. 69–74.
2 Ibid., pp. 93–4.
207
The consideration of how far it is practically possible for the
surplus capital of the respective movements to be utilized for
the promotion and development of co-operative enterprise,
and making of recommendations thereon.
The examination of the facilities for banking and insurance
now offered by the co-operative movement, to see where these
can be extended and improved or made more adaptable to
working-class requirements, especially with regard to the pro-
vision of facilities through the various co-operative stores in
the country, so that cheques presented by trade unions can
be honored in such manner as will best meet the convenience
of the trade unions and the co-operative societies.
The consideration of how far it is desirable and possible to
insure the unrestricted distribution of food supplies, or the
payment of benefit during important trade disputes by
issuing through the various branches of the Co-operative
Movement food coupons or loans from the Co-operative
Wholesale Society's bank on the security of trade-union assets.
In essence this is an offensive and defensive alliance
whereby the trade unions give their support to co-
operative enterprise, and the co-operators become the
bankers and distributers of food for trade unions during
times of strike. Whatever one may think of the business
transaction, it means that the trade unions have strength-
ened themselves at their two weakest points, finance and
food. The English Co-operative Wholesale Society's
bank has an annual turnover of nearly £200,000,000,
while the capital and reserves of the whole movement
in England and Scotland reach £65,000,000. While the
funds of the unions are by no means inconsiderable, the
addition of those of the co-operative movement will
strengthen them greatly. While it by no means follows
that a solid working alliance between co-operators and
trade unionists has been evolved, there is an obvious
tendency for the movement to link itself with Labour
politics. There is, however, a great deal of conservatism.
among the members who are, in general, among the
higher paid of the skilled workers, and it is generally felt
that effective political action by the co-operative move-
ment will require "an immense and persistent educational
and political campaign." Such a campaign has not yet
been instituted and the whole spirit of the movement
is against its institution. It is probable that political
representation will fall into the background, but that the
208
two movements will follow a parallel course on social
questions, each complementing the other in a silent,
practical fashion.
§ 7. RELATION OF BRITISH AND RUSSIAN CO-OPERATIVE
SOCIETIES¹
International co-operation between the Russian and
British co-operative movements dates from 1916. In
that year, the Moscow Narodny Bank, created in 1912
by Russian co-operative societies and controlled by them,
and which on account of its banking transactions with
Russian co-operative organizations was in a sense repre-
sentative of them, opened a branch office in London.
Before this, the Union of Siberian Creamery Associations,
desirous of placing its butter and other dairy products
on the British market and of purchasing British manu-
factured goods for its retail stores, had established an
office in London. The Moscow Narodny Bank in 1917
did a business of 6,000,000,000 roubles, equivalent at
normal rate of exchange to $3,000,000,000. The Union
of Siberian Creamery Associations in the same year sold
goods valued at 160,367,000 roubles (about $80,183,500);
its membership consisted of 2,038 co-operative creameries,
besides 1,859 distributive co-operative societies. Two
powerful Russian co-operative organizations were thus
existing in London, while other Russian co-operative
societies were contemplating the establishment of branch
offices.
Nothing might have come of this had not the war
created a situation which both British and Russian co-
operative societies had to meet. The British needed
raw materials; Russia needed manufactured articles.
Russia had butter, eggs, wheat, flax, timber, sugar, and
hides in abundance, but required clothing, shoes, tools,
domestic utensils, seeds, and chemical manures. These
articles the mills and factories of the Co-operative Whole-
sale Society, Ltd., and the agricultural departments of
the Scottish Co-operative Wholesale Society, Ltd., and
the Irish Agricultural Wholesale Society, Ltd., could
supply. Moreover, the war had created in Great Britain
an interest in all things Russian and this interest was
1 Cf. Rockel, Frederick A.: "An Experiment in International Co-operation."
Pamphlet published by Russo-British Co-operative Information Bureau, 1919.
Also, Russian Co-operator.
209
reciprocated in Russia. Both countries were united as
allies; each was in need of materials which in large meas-
ure could be supplied by the other.
As a result, early in 1917, a joint committee of English,
Scottish, and Irish Wholesale Societies was appointed to
confer with representatives of the Moscow Narodny Bank
and the Union of Siberian Creamery Associations with a
view to agreement upon some plan that would make
effective this mutual desire to promote trading between
the co-operative societies themselves.
These deliberations led to a decision to set up a com-
mittee of representatives of such of the Russian societies
as had branch offices in Great Britain and of representa-
tives of the English, Scottish, and Irish societies. The
name of the newly created body was the Russo-British
Co-operative Information Bureau. As first constituted,
this comprised representatives only of the Moscow
Narodny Bank, the Union of Siberian Creamery Associa-
tions, the Co-operative Wholesale Society, Ltd., the
Scottish Co-operative Society, Ltd., and the Irish Agri-
cultural Wholesale Society, Ltd. With the arrival of
representatives of other Russian co-operative organiza-
tions empowered to establish offices in London, the
number of Russian societies included was increased.
The Moscow Union of Consumers' Societies (which has
since become the All-Russian Central Union of Con-
sumers' Societies-known in short as "Centrosyus"),
the Union of Siberian Co-operative Unions-known as
"Zakupsbyť" (meaning "purchase-sell"), and the Central
Association (or All-Russian Co-operative Union) of Flax
Growers, were added in the order named.
What the addition of these societies meant may be
indicated by their constituent membership and amount
of business turnover. The All-Russian Central Union
of Consumers' Societies (Centrosyus) is composed of 20
co-operative societies of over 10,000 members each, and
307 unions of co-operative societies with a membership
on January 1, 1918, of 10,241,047 persons; its business
for the year 1918 aggregated 1,000,000,000 roubles
(about $500,000,000). The Union of Siberian Co-opera-
tive Unions (Zakupsbyt) represents 29 co-operative
unions to which are affiliated 9,520 consumers' societies,
creamery and fishery associations, and other organiza-
tions in the Urals, Siberia, and the Far East; its service
210
extends to 2,696,529 members, who with their families
number about 10,000,000 souls; its turnover between
January 1 and November 1, 1918, amounted to 98,623,446
roubles (about $49,311,723). The Central Association
of Flax Growers comprises about 3,500 societies of flax
growers with a membership of 3,500,000; in the agricul-
tural year 1917-1918 it collected over 2,000,000 poods
(about 36,000 tons) of flax, 1,000,000 poods of which were
sold to the British market.
The addition of these members gave greater strength
to the Russo-British Co-operative Information Bureau.
Difficulties were, however, encountered from the first.
Great quantities of butter from Siberia were exported
in the early part of the war, but, in 1916, an embargo
on this trade was laid by Russian authorities in order to
meet the increasing demands of the army at home.
Wheat, too, had been exported in large quantities; the
bulk of this was raised in South Russia and sent to
England from the ports on the Black Sea. The entry of
Turkey into the war closed the Dardanelles and shut off
the Black Sea ports from commerce with Europe. The
Baltic Sea was equally inaccessible owing to the presence
of a German fleet at the northern end of the Kiel Canal.
Archangel was free from enemy interference, but the
port is ice-bound a great part of the year. Vladivostok,
although open to trade, was congested, and the breakdown
of the Trans-Siberian Railway left the docks and store-
houses filled with goods and made storage and trans-
portation difficult.
The Russo-British Co-operative Information Bureau
has, therefore, been giving its time to preparatory work.
To acquaint the constituent societies of the resources
and services available to the co-operatives of each country,
many reports have been prepared and circulated. Numer-
ous conferences have been held and interviews with
government officials exchanged. In addition, consider-
able efforts have been made in behalf of the extension
of the co-operative movement, for the elimination of the
middle-man and against centralization of trading activity
in private monopolies. A business deputation is to be
sent to Russia as soon as conditions warrant. The
Russian Co-operator, a journal devoted to the interests
of the constituent societies, is being published.
211
CHAPTER XIV
NOTABLE EXAMPLES OF WELFARE WORK
§ 1. THREE PROMINENT INSTANCES IN GREAT BRITAIN
Among British firms that have achieved success in
dealing with their employees three stand out pre-emi-
nently. These three are not merely successful and well
established in their respective industries, but their
schemes are comprehensive and well known. The three
referred to are those of Rowntree & Company, Ltd.,
York; Cadbury Brothers, Bournville, and Lever Brothers,
Port Sunlight. The two former are manufacturers of
cocoa and chocolate products; the latter is the famous
soap manufacturing firm, of which Lord Leverhulme is
the managing director. The two former agree in having
a large percentage of women and girls in their employ,
and in being under the control of the Trade Boards in
regard to wages. The latter firm in normal times em-
ployed only 25 per cent women, although at the time of
investigation (April, 1919) the percentage was 50.
All three firms concurred in their conception of care
for their employees as being "good business." This
view was founded on the breadth of the betterment
systems in vogue in each establishment. What welfare
means to these employers is thus set forth by Lord Lever-
hulme in an address to the students of Sheffield University,
September 24, 1918:
"I know that there is a preconceived false idea in many
minds that welfare work in factories is largely a question of
canteens, model villages, free libraries, and so on; but, in my
opinion, welfare work in factories is much more a question
of wages and hours, of ventilation in the factory, of cubical
air space, and of heating and lighting and sanitation. Every
fact, circumstance, and condition of employment affecting the
workers engaged in a factory or office-mentally, physically,
or materially must come within its scope.
"1
Consequent upon this conception, one finds not only
that canteens are provided, but that large, airy, and taste-
¹ Lord Leverhulme: "The Six-Hour Day and Other Industrial Questions,"
p. 183. Allen & Unwin, 1918.
212
fully designed dining rooms have been erected for em-
ployees. Health is not considered merely a condition
to regular and efficient attendance, it is the personal
concern of one or more of the administrative staff, who
arrange for medical attendance, dental attendance, holi-
days, or a visit to a convalescent home. Hours of labor
are not regarded as a mere economic factor, of concern
chiefly to the employer; they are reduced on the em-
ployer's initiative to the lowest practicable scale, and
allocated throughout the week according to the collective
wish of the employees. Wages are not merely a factor
in production cost, to be kept down to the lowest limit;
they are the rewards of workers, who must receive the
highest wage that it is possible to pay them, and must
thereby be attached to the establishment in which they
have worked. In short, industrial betterment as con-
ceived in these three establishments, is the voluntary
and organized effort of socially minded and highly suc-
cessful business firms to render more agreeable every
condition of employment. It is based on the principle
that "no business can be run successfully which was
not regardful of the interests of the men and women
employed therein.”¹ It has succeeded largely because
there has been in it much of the spirit of co-operation
without which no machinery and no organized effort can
achieve success.
§ 2. SCOPE OF CARE FOR EMPLOYEES
The care given to employees covers the following
subjects:
1. Health, including medical and dental care, safety devices,
canteens, and provisions for meals.
2. Recreation, comprising physical instruction, provision of
sports grounds and swimming pools, clubs, libraries, and so
on.
3. Education, particularly of young people between fourteen
and seventeen years of age. There are also plans for adult
education and for that of deputy forewomen.
4. Working conditions, including the questions of hiring and
firing, the cleanliness and neatness of the buildings, and
the possibility of the employees' suggesting improvements.
5. Pensions and savings as provision for yearly or seasonal
holidays and for old age.
¹ Lord Leverhulme, in an interview, London, April 28, 1919.
213
6. Wages and profit sharing, or the use of the wage relation
so as to produce a spirit of satisfaction throughout the
establishment which will find itself reflected in efficient
service.
7. Hours of labor, including the length of the workday or of
the work week, and the distribution of the week's work.
8. Housing schemes, as measures for making the home life of
the worker more agreeable and thus promoting his effi-
ciency.
While all of these are interesting, attention will be
given in this report only to those more intimately related
to working conditions and labor relations.
§ 3. EDUCATION AND EMPLOYMENT OF Younger
PERSONS
All three establishments covered by this investigation
give attention to education. They required all persons
under eighteen years of age, accepted for employment,
to agree to attend educational classes until they attained
the age of eighteen years. The restrictions imposed by the
war upon educational finances, and the insertion in the
Education Act (1918) of provision for similar continua-
tion classes, have altered the situation so that their edu-
cational schemes are now almost a matter of history.
They occupied a definite place, however, in the scheme
of care for employees as measures to fit the worker for
his task and offer him opportunities for advancement.
The curriculum at Rowntree's comprised gymnastics,
mathematics, English, and woodwork for boys, and gym-
nastics, needlework, cookery, and housewifery for girls.
The last subject forms the main item in the third year
of the course, and is practically demonstrated in two
cottages built for the purpose. At Cadbury's, the course
for boys during the first two years included English,
arithmetic, history, geography, science, and art. After
that period the curriculum becomes more specialized,
taking a commercial direction for boys engaged in the
office, and technical for those on the industrial side.
For girls the training is domestic, and includes physiology,
industrial history, dressmaking, home nursing, cookery,
and laundry work, terminating, as at Rowntree's, with a
year's course at a typical cottage in the village. At
Lever Brothers, the course for boys is somewhat similar
214
to that just described. A pre-vocational stage, covering
the years fourteen to sixteen was devoted to a general
education, giving a satisfactory groundwork of knowledge
adequate for the development of some special interests
a knowledge of English, commercial geography, elemen-
tary mathematics, and arithmetic. From the age of six-
teen the students specialized along some line that would
"help them in the office or in the workshop, and give
them enjoyment in their work."
Their educational schemes have, except at Bournville,
been established and maintained by the firm. The
teaching staff is paid by the firm, and all buildings and
equipment supplied. Lever Brothers reward students
whose educational progress is marked, by granting them
advances in weekly pay proportioned to their progress.
At Bournville, where the founders are greatly inter-
ested in the Adult School Movement, considerable impetus
is given to continued education. It is noteworthy that
the firm early in 1917 arranged that its young people,
whose school attendance was limited to one half-day per
week, should have the option of attending twice per week,
if their parents desired it. This opportunity was seized by
35 per cent of the boys and 40 per cent of the girls, though
no pay was given directly, only bursaries for good prog-
ress, covering one-third of the total number of students
entered being offered. The second half-day is devoted.
in the case of the boys to science and metal work, and
in the case of the girls to art. Many students ask for the
continuation of their classes after they have passed the
compulsory age, and this request has been met. There
is also a works school, where a number of special classes
are held, dealing with subjects of pertinent interest to
the firm, such as box making, biscuit making, confec-
tionery, and office routine. Recently there has been
instituted a class for the training of deputy forewomen.
§ 4. WORKING CONDITIONS
The questions of "hiring and firing" are held by these
firms to be measures of the extent to which men and
women are fitted into their workshop conditions and
made comfortable and contented. No one of the three
establishments gives quite such prominence to this
matter as does the firm of Rowntree. Neither of the
215
other two firms utilizes an employment manager. At
Bournville the local labor exchange sends along applicants
from whom foremen select those whom they prefer. At
Rowntree's there is an employment manager for each
of the sexes. These persons select applicants for em-
ployment, follow them up during the early weeks of their
engagement, report on their fitness for their present
position, deal with all necessary readjustments, report
to the directors on the qualifications of prospective fore-
men, and handle the whole question of dismissal of em-
ployees. Their action in keeping in touch with new
employees is held by them to result in better work and a
more contented attitude on the part of the employees.
By having charge of readjustments, the employment
managers are able to stop the favoritism which foremen
often show, to the detriment alike of the firm and the
workers, and to put men in places where they can work
best, thereby reducing the labor turnover.
In the matter of dismissals, the firm acts on the prin-
ciple that no man should be discharged from the regular
staff except on account of bad work or proved unfitness,
or for some grave offense. In every case full investiga-
tion is made by a departmental head, and the matter is
reported to the employment manager. The latter then
seeks to find out whether the employee in question
might not prove more satisfactory if put on another class
of work. This method is followed where the employee
has given notice. Dismissal cannot take place ultimately
except with the sanction of one of the directors. Concrete
illustration of the firm's method was given at the period
of investigation. A large number of temporary men.
had been employed during the war, and their places were
wanted for men who had returned from active service.
The temporary men were given a month's notice to find
a new place, and a week's wage in place of the annual
summer holiday at the end of July. Should any of
these men not get work outside the establishment, he
was offered casual work cleaning the premises. The
firm apparently did not wish even a temporary worker
to suffer unemployment.
The employment department is also required to
arrange for the transfer of men from departments which
are short of work to those which are busy. This method,
together with the regulation of work so as to avoid heavy
overtime at one period of the year and slackness at
216
another, makes it quite an unusual occurrence in Rown-
tree's establishment to dispense with employees owing
to lack of work. In case of illness, an employee's place
is kept open for him so long as there is a reasonable chance
of his recovery.
The interest of the workers in their conditions is stimu-
lated in a variety of ways. All three firms give facilities
and offer prizes for suggestions from the employees con-
cerning reduction of waste, increase of output, betterment
of transporting material, improvement in factory organi-
zation, or greater safety. While much is done for them
under welfare schemes, into which an element of pater-
nalism enters, the workers retain a great deal of interest
and pride in their establishment and do much to keep
up its name and reputation.
§ 5. WAGES AND PROFIT-SHARING
"The establishment of a satisfactory level of wages is
the first step in industrial betterment." Acting on this
view, Messrs. Rowntree & Company lay stress on secur-
ing as high a wage as they consistently can for their
employees. A similar principle obtains in the works
of Cadbury Brothers, where the firm pays the highest
wages possible, in accordance with Trade Board awards
or agreements with trade unions. The minimum fixed by
the firm, which is never allowed to become a general
maximum, is often above that fixed by the particular
trade union. Rowntree & Company establish a theo-
retical minimum which also is considerably above that
fixed under the Trade Boards Act and also above the
local standard rates. Measures are then taken to see
that no worker falls below that minimum. The wages
of each employee are calculated every week on a basis
of full time, and summarized each quarter. They are
then compared with the firm's theoretical minimum.
Where the wages of any more than a small proportion
of employees in any department fall below this minimum,
inquiry is made into the working of the department, and
steps taken to correct the reason. The earnings of piece-
workers are examined every week by the same standard,
and, where they fall below the minimum, an endeavor
is made to put the matter right by paying a little special
attention to the worker, or by transferring him or her to
some other class of work. The firm, in one of their
217
printed pamphlets, expresses the following judgment upon
their action:
"There is no doubt that this systematic and detailed
inspection of wages has resulted in a considerable increase in
the average wage, and in greater satisfaction amongst the
workers." i
Lord Leverhulme, in his various establishments at
Port Sunlight and elsewhere, pays the trade union rate
of wages or the current rate of wages in trades where
there is no union. But, as an employer, he is conspicuous.
for his success in evolving a co-partnership plan which,
after many changes, has taken a form that overcomes
many of the objections to profit-sharing in general.
This scheme of co-partnership is based upon full wages
to management and labor, and a reasonable rate of interest
to capital. Certificates are given by the firm to employees.
in proportion to wages or salary, the general percentage
to wages being 10 per cent. The allotment, however,
is proportioned further to fidelity and thoroughness of
service, so that the slacker receives nothing, the apathetic
from 5 to 10 per cent, and the enthusiastic more than 10
per cent.
Persons who share as copartners must be at
least twenty-two years of age, and must have served the
firm at least four years. Employees on the general staff
give a pledge not to waste time, labor, materials, or
money in the discharge of duty, but loyally and faith-
fully to further the interests of the company.
The partnership certificates have no commercial value.
They do not represent capital, and cannot be disposed of.
They are a gift from the firm, comprising a claim to a
proportion of the profits of the company. The dividends
on these partnership certificates are lower by a margin
of 5 per cent than the percentage paid on the ordinary
shares. They are paid in a distinct class of preferred
ordinary shares, the accumulation of which gives the
employee a real and reasonably considerable interest
in the firm.
§ 6. HOURS OF LABOR
The aim of all the welfare schemes now under descrip-
tion is to reduce the hours of labor to the lowest point
consistent with economy and efficiency of production.
¹ Rowntree & Co., "Industrial Betterment at the Cocoa Works, York," p. 14.
218
The three respective employers have always stood out
among those who work a short day. Thus, Rowntree's
reduced from a 53-hour week to a 48-hour week as far
back as 1896, while Cadbury's, surrounded by firms
where a 54-hour week was general, were working in 1912
a 48-hour week for men and a 42-hour week for women.
In both firms, which have a seasonal trade, overtime is
carefully watched by the directorate, in order to reduce
it to the lowest limit.
At present both firms have recently reduced their
hours, by common agreement within the trade, to a
44-hour week. In both cases the week-end rest has been
extended. At Rowntree's the employees were requested
to vote for the division of the work week they preferred.
Out of three alternatives the five-day week, by which
Saturday morning labor was dispensed with, was endorsed
by a large majority. At Cadbury's an average week of
44 hours is worked monthly. But by lengthening the
first three weeks of the month by a little over an hour,
it is possible, every fourth week, for all employees to be
free from four o'clock on Friday afternoon till starting
time on the following Monday morning. The night
shift at this establishment is shorter than the day shift,
and lasts only till about 2 A.M. As it is worked only five
nights in the week, and receives the same pay for shorter
hours, it is preferred by many men, who stay on it for
years.
At Lever Brothers' it is proposed to adopt two shifts
of six hours instead of the single shift of eight hours
which at present prevails. This proposal is so important,
both in relation to industry and to welfare in its more
restricted sense, that the address of Lord Leverhulme
to the annual meeting of shareholders of the company,
held March 27, 1919, deserves quotation:
"We had intended to do this twelve months ago.
We have now worked out our scheme, and I may tell you that
all the trade unions consulted are most anxious to make the
scheme workable and satisfactory, and that the Government,
as far as the state of the law will permit, are equally anxious.
It is anticipated that the consent of the Home Office will be
given to the draft proposals which have now been submitted
to them. The general features of the scheme are: first, with
regard to dayworkers and pieceworkers, that we shall work
in two shifts - six hours each shift. The morning shift will
commence at 7 o'clock, and, after a break of a quarter of an
219
hour from 8.45 for some light refreshment, they will continue
until 1.15 P.M. At 1.15 the morning shift work for the day
will be over. They will not return to their work until 7 o'clock
the next morning. This makes a total of six working hours
per day, with fifteen minutes break for a meal, for six days
in the week Monday to Saturday included.
"When we come to consider the afternoon shift, there is a
strong feeling and desire to retain the Saturday afternoon half-
holiday, notwithstanding that every alternate week there
will be a whole week of half-holidays: and to meet this wish
the afternoon shift will work only five afternoons, the average
being 7 hours 12 minutes each afternoon, instead of six after-
noons of six hours. Therefore the afternoon shift will com-
mence at a quarter past one (there will be a break of half an
hour for refreshment from 4.45 to 5.15 P.M.) and will stop
at 9 P.M., but on Friday work will stop a quarter of an hour
earlier, at 8.45, so that the weekly average is 36 hours."
For workers in continuous processes another readjust-
ment was necessary. The three shifts of eight hours were
to become four shifts. In order, however, that the home
life should be as little disturbed as possible by the night
shift, that shift was to work 8 hours, from 10 P.M. until
6 A.M.
But as the shifts were changed weekly, and the
remaining 16 hours of each day were divided into three
shifts, each worker on these processes would have short
days for three successive weeks to counterbalance this
longer night shift.
Two other points in connection with the scheme should
be noted. The light meals given to the morning and
afternoon shifts are to be provided at the firm's expense.
This is done in order to simplify the catering, and save
time and trouble. The refreshments will consist of tea,
coffee, cocoa, bread and butter, and sandwiches.
Further, "the rate of wages will be exactly the same
for a 36-hour week as for a 48-hour week." This state-
ment, while not explicit in itself, seems, when taken in
connection with the context, to imply that the rates per
hour or per piece would be so adjusted as to give the same
earnings for the shorter week. Throughout his argument
Lord Leverhulme seems always to have guaranteed the
same total wage earnings, but to have taken the risk
of not securing the same production in 6 hours as in 8
hours.
!
220
CC
§ 7. HOUSING
Each of the welfare schemes investigated has a housing
scheme attached. The two best known are those of
Cadbury's, at Bournville, and Lever Brothers, at Port
Sunlight. The little village of New Earswick, near York,
about one mile and a quarter from Rowntree's establish-
ment, is much less known. This is due to the fact that
the policy of this firm differs from that of Cadbury and
Lever Brothers. The latter describe their works as
'a factory set in a garden." The villages of Bournville
and Port Sunlight are far more pretentious and are towns
rather than villages. They are adjacent to the factories
and are splendid advertisements of the firm. The York
village, however, is removed from Rowntree's works and
is obviously designed as a model for the many small
villages in which England abounds. It was founded by
Mr. Joseph Rowntree, the senior member of the firm,
just as Bournville was founded by Mr. George Cadbury,
senior, the senior member of the firm of Cadbury Brothers.
Both are now under the care of village councils which
are further under the supervision of the Charity Com-
missioners.
The village of New Earswick is an attempt to solve the
housing problem of building cottages that would let at a
rent within the means of the working classes. Wages at
York and in the vicinity have always been low, so that
cottages that would meet this need must necessarily be
unpretentious. Those in New Earswick are solid and
comfortable, and were let at a rate varying from 4 shillings
to 8 shillings ($1.00 to $2.00) per week with municipal
rates in addition. They consist generally of a living room,
kitchen, and scullery on the ground floor, and two or
three bedrooms above. They have a fair sized tract of
ground attached to them for a garden.
Bournville has nearly 1,000 houses and a population
of over 4,000. It dates back to 1879, though the greater
part of the building dates from 1895 onwards. It was an
attempt to make the home surroundings of the worker
more comfortable and conducive to efficiency.
The founder is desirous of alleviating the evils which arise
from the insanitary and insufficient accommodation supplied.
to large numbers of the working classes, and of securing to
workers in factories some of the advantages of outdoor village
life, with opportunities for the natural and healthful occupa-
tion of cultivating the soil.
221
The rents were to be fixed at a rate accessible to persons
of the laboring and working classes, without being so
low as to become bounty or an act of charity. Prior to
the war, houses here also were let on the estate at from
4 shillings to 8 shillings per week, municipal rates extra.
The trusts administering these two estates treat them
as business propositions. The income received from
rents and every other source is received and administered
by the trustees, who seek to show that the housing
scheme is not an act of philanthropy but a financially
practicable scheme. The trustees of the village of New
Earswick are required by the trust deed to secure a net
return of at least 32 per cent on the capital outlay,
while the Bournville trustees obtain a net return of
nearly 4 per cent on the cost of the site and buildings
after all outgoings have been provided for.
Neither of these villages is reserved entirely for the
employees of the firms of the founders, nor was it intended
primarily for them. Only from 30 to 40 per cent of the
inhabitants of each village are employed in the respective
establishments.
Port Sunlight is different in many regards from the
two villages just described. It is a little larger than
Bournville, containing in 1917 over 1,100 houses and a
population of 4,600. The village is a part of the industrial
organization of Lever Brothers' works, and cannot be
considered apart from them. It is reserved entirely for
employees of the firm. It is connected with the system of
prosperity-sharing." So far back as 1900 the founder of
the village declared:
One of the best methods for the application of the principle
of Prosperity-Sharing is to be found in building cottages to
be let to labor at low rentals.
The houses at Port Sunlight have, therefore, been
built out of the profits of the business. They have not
been built to pay. They are not let to tenants at a com-
mercial rent, but at one just sufficient to cover upkeep
and repair. No charge is made against the maintenance
account for the interest on the capital outlay. The
maintenance account in 1916, which just about balanced
with the proceeds from rents, was nearly £13,000, while
the interest on capital outlay was £31,507. The rents
charged for the cottages before the war varied from 3 shil-
lings 9 pence to 8 shillings 6 pence (90 cents to $2.00) per
222
week, including rates and taxes. It is obvious that the
addition to the rent rate of the interest on capital outlay
would raise the rate to a figure far above the average
paid by an English artisan. In addition to bearing
the burden of the capital outlay, the firm looks after the
upkeep of the front gardens of the tenants, and of the
roads, parks, and walks.
§ 8. A FRENCH EXAMPLE
A French example of welfare work, of mushroom war
growth, is the factory of M. André Citröen at Quai de
Javel, Paris. In 1914 the space occupied by the Citröen
factory was in large part covered with the factories of the
Aciéries de France; in part it was vacant space en-
cumbered by broken masonry. The entire area is twelve
hectares and the buildings cover eight of these.
During the war the factory made projectiles, but
since the armistice it has been transformed into an auto-
mobile manufacturing plant. For this peace-time purpose
the shops are being rearranged and expanded to prepare
for the manufacture of one hundred automobiles per day.
A standard touring car at a moderate price is to be made.
The manufacturing process is patterned after what M.
Citröen could learn from the technical press news of
American methods. The routing of material has been
carefully thought out and the buildings are admirably
arranged in this particular. It is the intention of making
from raw material as completely as possible; he is there-
fore making his own gears, steel castings, iron castings,
bronze castings, tubes, forgings, etc.
As a war factory the Citröen plant has been most
successful. M. Citröen attributes a large part of his
success to the welfare work carried on in his plant. Just
as the British manufacturers said they were doing
welfare work as business, not as philanthropy, so here the
work is said to be done as a pure matter of business and
not as a philanthropy. The cost for welfare work during
the war, when the plant was operating at maximum
capacity, was not more than 3 per cent of the annual
payroll and in normal times should not exceed 4 per cent.
The company provides, free of charge to employees,
all medical services. There are nurses for first aid service,
a surgical room with attendant surgeons, a "cabinet
223
dentaire," the greatest innovation realized at the Citröen
plant, for all sorts of dental work, an infirmary, and a
special room (dans la salle speciale de la Poupommiere)
for mothers to leave their babies in and to which they
come at stated periods for nursing them, and in connec-
tion with it a kindergarten for older children.
The Citröen plant has also a restaurant where meals
are served at modest prices, a dressing room for the
workers, a moving picture show, an employees' club with
a library, six billiard tables, card tables, and lounge room,
a writing room for all employees, lavatories, baths,
and a co-operative sales room for foodstuffs, work gar-
ments, and so forth.
"They work with an air of content, and that expression
has impressed us in the course of this visit, for the faces
of all appear to reflect it.
"That explains itself; the personnel of the Citröen plant
lives in healthy shops; it carries on its work with an
equipment and according to methods protected as much
as possible; it knows that a true intelligence directs the
whole.
"This personnel understands also that one has not
desired to see in it only a machine for labor, but that
one has had care for its health, for its well-being, for its
intellectual life, that one treats it with dignity, in seeking
to furnish it the opportunity to elevate its moral char-
acter; it feels, not alone an intelligence but a heart directs.
them."1
There had been only two general strikes in the Citröen
shops during the war. One was a part of a general
strike throughout the country for more wages; the other
was a general strike for peace. About two weeks after
our interview with M. Citröen there was a local strike
there for higher wages and other changes in working
conditions. We were not advised of the outcome of the
strike, but we were given to understand that M. Citröen
had decided to inaugurate a shop committee plan of
handling labor disputes.
An expression of attitude by a labor official was obtained
by your Commission. Said this official:
I am opposed to the welfare methods of M. Citröen. I
think employers should give the workmen a good plant and
1 "Une Visite aux Usine André Citröen." Booklet published by M. Citröen.
224
should help them to get high production, but should cut out
"fancy" welfare work.
It is likely, however, that these things really appeal to
French workpeople. The veteran labor leader, M. Rivelli,
of the seamen's union and of the C. G. T., said to the
delegates of the International Seafarers' Conference in
London, February 25, 1919:
The French Seamen prefer their own laws to the American
Seaman's Act, because the French workman is not primarily
interested in wages, but in the conditions under which he
works. He wants to be comfortable, to have as much freedom
as possible, so that tasks do not become too irksome.
There can be no doubt that the Citröen plant has made
a name for itself throughout France, and is a notable
instance of the adoption of the latest ideas in welfare
work.
§ 9. CRITICISM
The schemes above described represent the efforts of
three of the most progressive employers of England and
one of France to improve the human relations which lie
behind industrial relations of employers and employed.
All these employers are averse to their efforts being
considered a sort of "philanthropic addendum" to busi-
ness. Rowntree & Company consider that such work,
“if conceived and carried out on right lines and in the right
spirit, undoubtedly pays from a purely business standpoint.
It means the humanizing of business relationships, and
consequently the bettering of conditions of labor, and the
greater contentment of the workers. Men who are well paid,
who work under good auspices, and feel that their employers
desire to treat them with justice and consideration, are not
only more cheerful, but more vigorous, than those who are
merely regarded as machines."1
Lord Leverhulme is most emphatic in this view that
there is no philanthropy in business. Speaking of the
need of co-operation between management and labor,
he said:
"The only way these two can create a fund to increase pro-
fits out of which wages and profits are paid, out of which
it is possible to pay the highest rate of dividends and wages
is to increase the quality of the product and increase the
¹ Rowntree & Co.: "Industrial Betterment at the Cocoa Works, York,” p. 8.
225
quantity of the product: that can be done only by becoming
more efficient. It cannot be done by working a greater or less
number of hours; it can be done only by making men in every
way more efficient." 1
Referring to his system of copartnership, he asserted:
"The cultivation of a spirit of copartnership and of a keen
interest in the firm in which the employee-workers are en-
gaged, is not philanthropy but sound policy."2
In a speech at Port Sunlight, in 1914, he explained his
aim as:
The desire to try and make an industrial community that
would be producing more goods and better goods, earning
higher wages in fewer hours, and be better conducted, better
developed, better trained, and better fed than any other
community in the same business.3
In short, it must be acknowledged that these schemes.
are the efforts of highly successful employers to establish
their businesses upon a basis of fair dealing and of a wide
and comprehensive interest in the human welfare of those
who are in their employ. No one can deny the large
measure of success these schemes have met with. Their
success can be explained in various ways:
1. The schemes have been a splendid advertisement
for the firms. Prof. Sir William J. Ashley, commenting
on this obvious fact, regards it as one that "shows
there is such a thing as a consumers' conscience," and as
significant because it reveals a correlation between what
is known as "good business" and the manufacture of goods
under satisfactory working conditions.
2. The schemes tend to reduce working "costs."
"Waste not, want not" is the copartnership motto in
Lever Brothers' establishment, and "anti-waste" bulletins
are as conspicuous in their factories as are the "safety
first" bulletins previously mentioned. But just as im-
portant as the prevention of waste, both in respect of
time and materials, is the better adaptation of the full
mental and physical powers of the employee to his work
which results from stress on the human element.
¹ Lord Leverhulme: "The Six-Hour Day and other Industrial Questions,"
1918, p. 67. For M. Citröen, see above, p. 223.
2 Ibid., p. 304.
³ Progress, journal of Lever Brothers, July, 1914, p. 39.
226
The founders of these schemes are all men of large
vision and of keen business sense. They are the per-
sonalities behind the schemes, which, in the hands of
smaller men would probably not achieve such success.
Their efforts, which never stagnate nor reach a climax
of satisfaction, are dominated by an impelling motive
of social service.
In criticism, however, it should be said that a large
element of paternalism enters into their plans. In the
case of Rowntree and Cadbury, this is largely unconscious.
Mr. B. Seebohm Rowntree, in an interview, said he had
come to regard welfare work as too paternalistic to agree
with modern democratic notions. At Cadbury's there
is an ever-present sentiment in favor of the participation
of the employees in the control of the various recreational,
educational, and social activities comprised in the scheme.
Though the firm has so many betterment plans, it has
no welfare supervisor nor any employment manager.
The firm supplies the institutions and machinery, but
does not seek to control their entire working.
On the other hand, the control of Port Sunlight is
undoubtedly paternalistic. Lord Leverhulme, whose per-
sonality has a great attraction, on whatever side he may
be approached, is the dominating element in the industrial
and civic organization of the village. Yet there are
elements of opposition and reaction to this paternalism.
The administrative staff of the works used to live in
Port Sunlight alongside of the employees. The latter
came to feel, however, that oversight was thereby being
extended from the works to the village, and that men
were discriminated against in the works for events in the
village life. The trouble grew so acute that Lever
Brothers withdrew the managers from the village, and
they no longer live there.
The Citröen plant is yet too new in experience for any
deduction. So far it is a pronounced success.
Yet, notwithstanding these criticisms, one must admit
the intimate connection which exists between the success
and efficiency of these companies and the fair dealing and
co-operation which exists between them and their em-
ployees.
227
CHAPTER XV
INTRODUCTION TO POLITICAL LABOR MOVEMENT
§ 1. FUNCTION OF THE STATE
In considering the outside influences which may at
times enter to affect the adjustments between individual
employers and their workers the most important are
those arising from the action of the Government. There
is general agreement that the state should at least afford
protection to the life and property of all citizens, rich
or poor. This fundamental right is more necessary to
the poor than to the rich, because the former may not
be able to replace a loss out of other wealth. He suffers
most who loses all. Thus, if only one horse is taken, the
enforcement of rights to property are more important to
the owner of one horse than to the owner of a hundred
horses.
The functions of modern government, however, extend
beyond the mere protection of life and property. In other
words, the right of property and the industrial relations
of men have, with the growth of new conditions, become
more or less complicated. The face of the business
world has been changing; with new methods of trade,
the abolition of distance, the rise of the corporation, the
change in ways of transportation, the coming of the
era of new power, the rights of individuals in all these new
relations have become complex and in need of definition.
In the regulation of monopolies and commercial_opera-
tions new and difficult problems are legion. In this
extension of the field of business activity there arise new
questions as to the true policy of the state. On the one
hand it is assumed that the state should confine itself
to a pure laissez-faire policy; on the other, that it
should interfere whenever possible. On such matters an
insight arising from experience is now inclining men to
think there is no hard and fast obligation, no burden of
proof either in favor of or against an intervention of
the state. Each particular case should be decided on
its merits.
228
In such a procedure, however, there is a general prin-
ciple governing the purpose of the state. The essential
aim of democratic society should be to allow the largest
possible liberty to the individual consistent with the
rights of others; that is, each individual can have the
largest liberty only under law. It should be the purpose
of government to develop the greatest possible individual
initiative and enterprise in industry limited only by the
accepted rights of other members of society. The com-
plexity of the modern laws of property are due mainly
to the necessity of defining and justly protecting the
rights of each citizen. On this basis the state cannot
interfere in industry to further the claims of one class
against another class. It must act impartially and only
in the interests of society as a whole, as demanded by the
majority of its voters. To impose the opinion of a small
group upon the state as a whole is tyranny.
In actual practice, as seen by your Commission in
Europe, there has been no little intervention by the state
with the operations of industry. It is a question whether
such action has had for its end the largest individual
liberty of the citizen consistent with the full recognition
of the rights of others. Nor is the reason for this short-
coming in the particular field of the relations of employers
to their workers hard to discover. The state can act only
through the men chosen as its officials. In a democracy
these men obtain place chiefly by political methods.
In the very nature of things, the agents of the state, when
they approach an industrial dispute, are outsiders; and
the problem is inevitably treated with an eye to its effect
on the political fortunes of the government in power.
That is, it is almost impossible not to transfer the solution
of an industrial difficulty from the realm of economics
into the realm of politics. Under such motives the
development of the largest individual enterprise, out
of which society as a whole would gain most, will not be
obtained.
Since government officials take no industrial risks and
cannot have the quality of action due to the possibility of
loss or gain, it stands to reason that a policy adopted by
the individual manager to secure industrial efficiency
weighs very little with them. If such a policy, however,
should violate the rights of others, as in the employment
of children, or by insanitary or dangerous conditions,
regulation by the state is wholly justified. But when
229
the state enters to regulate the wages of labor, to change
the operation of economic laws affecting the cost of
materials and the prices of goods, it cannot be fair and
just to all parties concerned unless it is omniscient and
omnipresent. That democratic government can be all
that, no one pretends. Moreover, in the countries
visited, it should be remembered that the attitude of the
state was everywhere affected by the long-continued
preaching of socialism, in whose tenets a resort to the
state for industrial control is an essential doctrine. It
is to be noted, therefore, that an exaggerated dependence
on the state was to be found in all measures relating to
labor, even in the circles determining the terms of peace at
Paris. The effect of socialistic doctrine in coloring the
situation in Great Britain, France, and Italy must be
always kept in mind.
§ 2. POLITICAL VS. INDUSTRIAL ACTION
Organized labor has had two general methods of action
to secure its desired ends. One of these is called industrial
action and the other political action. Industrial action
has been discussed in detail in previous chapters. It was
there shown that this is an appeal to force, that its mani-
festations are strikes, sabotage, "ca'canny" methods; that
is, "direct" industrial action. Political action, on the other
hand, means, first, to secure through the election or
control of political representatives a predominating
influence in the existing Government in order to obtain
favorable legislation; second, the active part that the
Government has played and is playing in an attempt to
settle the difficult labor problems, and, third, in general
the application of the principle that the relation between
employers and employed is a matter for legislative action.
Where the powers of Government are brought into play,
there is a third party to every controversy. Its interests
are supposed to be broad enough to cover those outside
of any immediate industrial disagreement. Presumably,
it is not a disinterested third party, therefore, but a more
broadly and profoundly interested party than either of the
others. It has been found that the Government in Great
Britain and on the continent has been not only an inter-
ested but also an active third party in the general rela-
tionship between employers and employed.
It is with political action that this discussion has chiefly
to do. There should be no preconception that political
230
}
action is in itself wrong. It has a legitimate field of
endeavor; its misuse and its abuse alone are to be con-
demned. It is only a method, and it is the motive behind
it that is really important. A general survey will be
made here to show what political forces are being used
by labor organizations to secure their ends and what
motive lies behind them, what active part Government
has taken in labor controversies, and what the resulting
situation is internationally. Organized labor in Great
Britain has turned toward political action during war,
so that particular emphasis will be laid upon activities
there. In less detail the situation in France and Italy
will be sketched.
In taking up the discussion of political influences as
they have had to do with labor problems, it is necessary
to keep clearly in mind the distinction between the
methods of socialism and the methods of unionism.
Without attempting to record all the shades of difference,
it may be said that the broad distinction between the
two is that trade unionism looks primarily to industrial
methods and that socialism looks primarily to political
methods. By this definition it will be seen that socialist
parties are essentially political in their activities, while
trade unions are primarily interested in industrial action
and will use political action only incidentally. It has
been said by a well-known writer¹ on this subject that:
"The average workingman has a much more important,
necessary, and continuous function to fill as a member
of the Labor Unions than as a member of the Socialist
Party." It is necessary at once, however, to add an
important qualification, namely, that this distinction is
not true of Great Britain. The dominant political party
which there represents the labor interests is the British
Labour Party and it is not in inception or primary purpose
a socialist party. A clear idea of the European situation
can be gained, however, only by keeping in mind that
the trade union movement is primarily an industrial
movement and that the socialist movement is primarily
political.
§ 3. LABOR IN PARLIAMENT
Labor interests are represented more extensively in
foreign legislative bodies than is true of the United States.
In the French Chamber of Deputies out of a total member-
¹ Walling: "Socialism As It Is," p. 380. Macmillan, 1913.
231
ship of 602, there were 102 Unified Socialists and 30
Independent Socialists, making a total of 132 representa-
tives of the workers' interests. This was for the year 1916.
In Italy the Chamber of Deputies consists of 508 mem-
bers, of whom 77 are Socialists and 3 Syndicalists. In
Great Britain, out of 670 members of the House of
Commons, the Independent Labour Party had 36 repre-
sentatives in October, 1918. In the present coalition.
government, the Labour Party has 59 members of Parlia-
ment out of 700, and polled at the December, 1918, elec-
tion 25 per cent of the total vote. These figures show
that labor organizations in Great Britain and on the con-
tinent have been active in politics and are sufficiently
strong to have a good representation in legislative bodies.
§ 4. LABOR IN THE CABINET
Not only has labor now a strong representation in the
Parliaments of European governments but it also has a
Cabinet member appointed in its interest in the Cabinets
of England, France, and Italy. There is in each of these
governments a special department called the Ministry
of Labor that is given over exclusively to the interests of
labor. During these periods of industrial unrest these
Ministries of Labor have been active in response to the
very difficult problems which have faced them.
Under the unusual conditions brought about by the
European war Special Committees have been appointed
to meet the emergency problems that have arisen. An
illustration of these Special Committees is to be found in
the Reconstruction Committee appointed by the British
Government. It had a sub-committee whose particular
duty it was to inquire into relationships between employers
and employed. The activities of this sub-committee are
of considerable importance and will be discussed in detail.
But prior to the war the British Government had often
stood as arbitrator between the employers and the work-
ingmen. "For many years the [British] Government
represented by Mr. Lloyd-George or Mr. Winston
Churchill had acted as arbitrator in every great industrial
conflict and had secured many minor concessions for
the Unions." The Liberal Party, under the leadership
of Mr. Asquith, has also been sympathetic to labor.
¹ Walling: "Socialism As It Is," p. 361.
232
§ 5. INTERNATIONAL POLITICAL LABOR MOVEMENT
A movement had gained considerable headway prior
to the war to unite workingmen of all countries into a single
organization. To understand the existing situation it will
be necessary to give a brief survey of the development
of this great movement. Plans for an international
convention had been made for Vienna in 1914 which was
interrupted by the declaration of hostilities. It is inter-
esting to note that one of the chief themes at this conven-
tion was to be the attitude of workingmen toward war.
Several attempts were made during the conflict to get
international representation at a meeting in some neutral
country. While they were largely unsuccessful, there was
held at Berne, Switzerland, on February 3, 1919, an inter-
national convention of socialists and of trade unions.
These two meetings, while distinct in organization and in
purpose, yet worked together in close co-operation. The
chief result of these meetings was the Labor Charter
which was presented to the Peace Conference at Paris.
On February 24, 1919, there met in London the Interna-
tional Seafarers' Conference. At this convention were
representatives of the most important Seamen's Unions
from all the principal maritime countries in Europe, except
Germany and Holland. Delegates were sent from the
United States who took a leading part in this convention.
The culmination of the international movement, however,
has undoubtedly been the formation of a Commission on
International Labor Legislation which met in connection
with the Paris Peace Conference. The results of this
Commission are so important as to deserve individual
discussion.
§ 6. DANGERS OF POLITICS
One cannot speak of political action in connection with
the labor movement as if it were a matter of more or less
indifference to choose between industrial and political
action. There is in the latter an inherent danger which
does not belong to the former. Political leaders are too
often not broad-minded, far-seeing, socially interested
men. The very nature of their duties takes them out of
the workshop and direct contact with industry, as British
and French labor spokesmen have so often declared.
Preferment is secured by them, not through efficient
production or any other industrial achievement, but by
233
securing votes. And vote-getting is a profession in
itself, wherein opportunism, the immediately expedient
action, is a large factor. The shadow of a coming election
falls far before it.
Not only does political activity have a non-industrial
basis, but the subject matter of industrial problems
also is in large part not suited for legislative action.
Many industrial problems are individual to a plant and
of technical character. To meet them effectively there
is need for an intimate familiarity with the industry and
for a flexible and quickly adjustable arrangement. Mem-
bers of legislative bodies cannot furnish this familiarity
or this flexibility.
And one further point. Where the Government steps
into an industrial controversy as a third party it does.
not and cannot express the judgment and will of the
"public." It is not the vox populi, the voice of the
people, that speaks, because public opinion is relatively
slow in forming, and even in the most democratic countries
cannot have immediate or direct expression. The group
is too large to make this possible, and, besides, political
expediency can almost never be eliminated. The govern-
ment official often expresses what he thinks is the opinion
of the public or even what he wants that opinion to be.
$7. PLAN OF DISCUSSION
It is proposed to pursue this survey (a) by tracing the
development in Great Britain of the Whitley Councils
and showing their political significance; (b) by treating
in the same way the Industrial Conference in Great
Britain; (c) by giving a brief survey of political influences
in France, and (d) in Italy; and (e) by a rather full discus-
sion of the international political labor movement.
234
§ 1.
CHAPTER XVI
THE WHITLEY PLAN
PRECURSORS OF THE WHITLEY PLAN
In Great Britain much is to be learned as to the wisdom
of the intervention of the third party, the Government,
in the settlement of disputes arising between employers
and their workers. Such intervention, of course, was
tentative and remote in the beginning, and largely the
outcome of governmental methods during the war. In-
stead of direct entrance into the affairs of individual
establishments the Government tried to establish a
general plan of bringing about settlements between
workers and employers. It used its influence to have
such a plan adopted, however much such action savored
of governmental interference. One such scheme, supposed
to fit in with previous experience, and least likely to
create opposition, was the Whitley Plan, to which no
little attention has been drawn.
Before discussing the first Whitley Report, which
appeared in March, 1917, it is important to point out that
its general principles had long been under examination
and had even been put into practice previous to its
publication. Of course the idea of joint boards was in
any case familiar to English industry, because employers
and labor had for many years been co-operating on joint
conciliation committees. In 1913, for instance, 195
boards and joint committees took action within the know-
ledge of the Board of Trade, and together they dealt
with 4,070 cases of dispute. Their success is evidenced
by the fact that they settled 2,283 cases; 291 cases
were settled by umpires whom the boards and joint
committees appointed, and in only 31 instances did any
stoppage of work occur. In some cases the function of
these boards was extended to cover the discussion of
grievances, rates of pay, and similar causes of dispute,
even before an actual disagreement had arisen. Reference
to these boards was in all cases voluntary.¹
1 "Labour, Finance, and the War," p. 33. A. W. Kirkaldy, Ed. London, 1916.
235
Turning to the more immediate precursors of the
Whitley Plan, a proposal¹ made by Mr. Malcolm Sparkes,
a building trades employer in London, to the unions in
the building trades, called for industrial representation
in a "National Industrial Parliament for the Building
Industry." This plan, offered early in 1916, involved the
setting up of district boards by both employers and
unions, which would discuss the proposals of the industrial
parliament and furnish local facts and statistics. A
successful trial of the scheme was made by the painters
and decorators. It was subsequently endorsed by the
National Associated Building Trades Council.
According to a contemporary account² of the experi-
ment in the Painting and Decorating Trade, the National
Council was to have met four times a year, but the amount
of business necessitated its meeting twice as often. The
District Councils at which the masters' chairman and
the men's chairmen presided alternately, met regularly
and did much to avert and to settle disputes. A notable
spirit of harmony and co-operation prevailed. The
chief questions under discussion, however, were equali-
zation of real wages, first in a given district and then
on a national scale; prevention of unemployment by
better organization of the industry; employment of
disabled soldiers on such terms that their pension shall
not be allowed to depress the wage standard; promotion
of technical training and research; conditions of ap-
prenticeship; pooling of schemes and suggestions for
better conduct of the industry. Considerable progress
in fixing a standard wage was made, for example, in the
Manchester area and in Northeast Lancashire, where
a time-rate for painters was set. The chief difficulty
was encountered from non-federated employers and
unorganized men, who did not conform to the standard
rate. In some cases employers and unions co-operate
to force their organization. While it is evident that the
scheme worked toward industrial harmony there was a
certain danger to the general public. A combination
of employers and employees might agree to raise prices
and wages to the detriment of the consumer. Yet this
appeared rather remote in contrast with the real ad-
¹ Harris, H. Wilson: "The Whitley Scheme at Work." Contemporary Review,
December, 1917, pp. 645–47.
2 A Memorandum on Self-Government in Industry, together with a Draft for a
Builders' National Industrial Parliament, London.
236
vantages gained by the National Painters' and Decorators'
Joint Council.
At a convention held in April, 1916, representatives
of iron and steel firms appointed a committee to draw
up a plan for organizing this industry. The report of
this committee recognized the need for co-operation with
labor and recommended the formation of a National
Advisory Council of Industry composed of representatives
of employers and of employees. These two sections might
meet either jointly or separately. The meetings should
be presided over by an impartial Minister of Industry
whose appointment or retirement should not be dependent
upon a change of government. Local councils might be
formed in addition to the National Council.
The London Times of December 11, 1916, reported a
conference of Scottish industrial, commercial, labor, and
agricultural associations which favored the formation
of such a National Advisory Council and urged the
appointment of a Minister of Industry.
The Garton Foundation published a memorandum¹ in
October, 1916, which had already received the suggestive
criticism of employers, representatives of labor, and
public officials. It was an effort to offer a consistent
program for the after-war situation in Great Britain.
Its final section contained recommendations for co-
operative management through industrial councils and
works committees.
""
In Chambers Journal of October 21, 1916, an article²
by E. T. Good, on "The Labour Problem and Its Solution,
contained the following recommendation:
My suggestion is that in all our large industrial establish-
ments we should form what I may term consultative com-
mittees. The committees should consist of elected representa-
tives of the workmen and an equal number of foremen,
managers, directors, or shareholders. They should meet
regularly and freely discuss all matters affecting the works,
the men, and the trade. By this means not only would
valuable improvements often be proposed, but misunder-
standings on both sides would be cleared up and many griev-
ances would be remedied before they develop into disputes.
1 Memorandum on the Industrial Situation after the War. The Garton
Foundation, London, October, 1916.
2 Good, E. T.: "The Labour Problem and its Solution." Chambers Journal,
October 21, 1916, pp. 746-49.
237
Next I would have industrial district councils, composed
of representatives of our chambers of commerce, employers'
associations, trade unions, and friendly societies. These
bodies could smooth out local labor troubles, promote good
feeling between the labor and capitalistic organizations, and
give advice and assistance to the municipal, educational, and
other authorities.
Finally I would suggest the formation of a national council
of industry composed of labor leaders and representatives of
employers. This council, besides acting as a supreme tribunal
in such labor disputes as failed to be settled locally, could
conduct inquiries and make reports and recommendations
upon general industrial, commercial, and social questions,
supplying workmen, employers, and statesmen with informa-
tion necessary to a correct understanding of the problems of
labor and industry. It is not by such artificial devices as co-
partnership and not by Government interference or arbitration
that we can reasonably expect to solve the labor problem, but
by the spread of knowledge and by voluntary co-operation
between labor and organized capital, trade unions and em-
ployers' associations. Let us have labor and capital jointly
organized. It is not sufficient that the labor leaders and the
representative employers come together only on the occasion
of disputes. We want them to work together constantly in
combination for the common good.
Hence, it appears that the principle of joint councils
for constructive industrial work, as well as merely for
the settlement of disputes, had been brought to the
foreground by persons directly engaged in industry
even before the publication of the first Whitley Report
by the Government sub-committee.
§ 2. FIRST WHITLEY REport
war
Comparatively early in the progress of the
there was abundance of discussion in the British news-
paper and magazine press regarding after-war problems,
particularly in relation to the reconstruction of industry.
The radical changes in the labor situation caused by trade
union acquiescence in the Treasury Agreement and the
subsequent increase of Government control over industry
made such questions loom large before the British public,
the more as the progress of the war was accompanied
by ever increasing labor unrest. Numerous public and
semi-public associations formulated more or less elaborate
reconstruction programs and from various sides the
238
Government was urged to take an active lead in such
plants.
In March, 1916, the growing demand for peace pre-
paredness led to the setting up of a Reconstruction Com-
mittee by the British Prime Minister. One of the sub-
committees appointed was that officially entitled the
Sub-committee on Relations between Employers and
Employed. Set up in October, 1916, under the chairman-
ship of the Right Hon. J. H. Whitley, M.P., and composed
of employers, representatives of labor and of the Govern-
ment, it came to be known as the Whitley Committee,
its reports as the Whitley Reports, and its proposals as
the Whitley Plan.
The "terms of reference" of this sub-committee were:
(1) To make and consider suggestions for securing a
permanent improvement in the relations between em-
ployers and workmen.
(2) To recommend means for securing that industrial
conditions affecting the relations between employers and
workmen shall be systematically reviewed by those
concerned, with a view to improving conditions in the
future.
The proposals of the first Whitley Report,¹ which
appeared in March, 1917, were definitely limited to those
main industries "in which there exist representative
organizations on each side." In fact, the committee
declared its
"considered opinion that an essential condition of securing
a permanent improvement in the relations between employers
and employed is that there should be adequate organization
on the part of both employers and workpeople."
The means to carry out the agreements and arrangements
made for the several industries and the ultimate success
of the proposals for joint co-operation, it was stated,
were dependent upon this organization. No attempt
was made in this report to provide for the unorganized
industries.
In reply to a question by the Reconstruction Com-
mittee as to the basis for determining what degree of
¹ Great Britain. Reconstruction Committee. Sub-committee on Relations
between Employers and Employed. Interim Report on Joint Standing Indus-
trial Councils, p. 8. London, 1917.
239
organization would justify the establishment of Industrial
councils, the committee offered a classification contained
in the Appendix. In somewhat fuller form the second
report¹ (October, 1917) offered the same grouping as
follows:
Group A. Industries in which organization on the part
of employers and employed is sufficiently developed to
render their respective associations representative of the
great majority of those engaged in the industry.
Group B. Industries in which, either as regards employers
or employed, or both, the degree of organization, though
considerable, is less marked than in Group A.
Group C. Industries in which organization is so imperfect,
either as regards employers or employed, or both, that no
associations can be said adequately to represent those engaged
in the industry.
The proposals of this first report applied solely to
Group A.
Expressing the view that "it is vital that after the war
the co-operation of all classes . . should continue, and
more especially with regard to the relations between
employers and employed," the specific recommendation
of the committee to secure this end was for the formation
of joint standing industrial councils in the several in-
dustries where they did not already exist. These councils
were to be composed of representatives of employers
and employed and were to be organized on a national,
a district, and a shop basis. The National Industrial
Councils were to be organized first through the co-
operation of existing employers' associations and trade
unions. They in turn should develop the District Councils.
and Works Committees. The details for these joint
committees were not worked out, as conditions would
necessarily vary in the different industries, and as it was
considered desirable that the scheme adopted should be
a matter for agreement between the employers' associa-
tions and trade unions concerned.
The committee had defined as the general purpose of
such representative organizations,
"the regular consideration of matters affecting the progress
and well-being of the trade from the point of view of those
1 Great Britain. Ministry of Reconstruction. Committee on Relations
between Employers and Employed, p. 7. London, 1918.
240
engaged in it, so far as this is consistent with the general
interest of the community."
Among such questions, which might be dealt with by
National Councils, District Councils, or Works Com-
mittees, according to the decision based on conditions.
in the particular industry, were the following:
(I) The better utilization of the practical knowledge and
experience of the workpeople.
(II) Means for securing to the workpeople a greater share
in and responsibility for the determination and
observance of the conditions under which their work
is carried on.
(III) The settlement of the general principles governing the
conditions of employment, including the methods of
fixing, paying, and readjusting wages, having regard
to securing for the workpeople a share in the increased
prosperity of the industry.
(IV) The establishment of regular methods of negotiation
for issues arising between employers and workpeople,
with a view both to the prevention of differences and
to their better adjustment when they appear.
(V) Means of ensuring to the workpeople the greatest
security of earnings and employment, without undue
restriction upon change of occupation of employer.
(VI) Methods of fixing and adjusting earnings, piecework
prices, etc., and of dealing with the many difficulties.
which arise with regard to the method and amount
of payment apart from the fixing of general standard
rates, which are already covered by paragraph (III).
(VII) Technical education and training.
(VIII) Industrial research and the full utilization of results.
(IX) The provision of facilities for the full consideration
and utilization of inventions and improvements
designed by workpeople, and for the adequate safe-
guarding of the rights of the designers of such im-
provements.
(X) Improvements of processes, machinery, and organiza-
tion and appropriate questions relating to manage-
ment and the examination of industrial experiments
with special reference to co-operation in carrying new
ideas into effect and full consideration of the work-
people's point of view in relation to them.
(XI) Proposed legislation regarding the industry.
241
The committee suggested that the Government put
these proposals before the public, the employers' and
workpeople's associations with the request that they
adopt measures for the establishment of National In-
dustrial Councils where they did not already exist. The
initiative in forming councils was left to the associations
concerned. The Government was to act only in an
advisory capacity at the preliminary meetings of a Council,
if desired, and stand ready to furnish such helpful in-
dustrial information as was at its disposal. On request
of a council the Government should also stand ready to
nominate a chairman. While it was affirmed that "the
state never parts with its inherent overriding power,'
it was the view of the committee that "such power may be
least needed when least obtruded."
§3. SECOND WHITLEY REPORT
""
The second Whitley Report,' which appeared in October,
1917, after classifying² industries as A-organized, B—
partly organized, and C-unorganized, offered proposals
for the two latter groups. The plan already outlined in
the first report could be adapted to Group B. As many
women were employed in these industries, it was sug-
gested that they should be represented on the councils.
For Group C the establishment of Trade Boards appeared
a reasonable solution, but with a legislative extension
of their powers which should enable them to initiate and
conduct inquiries on all matters affecting the industry
as well as to fix a minimum standard of wages as in the
past. It was also suggested that the Trade Boards might
facilitate the transition to Industrial Councils as the
industry became more organized.
The modifications of the Whitley Plan for the less
organized and unorganized industries involved a con-
siderable enlargement of Government influence. In
the case of Group B there should be attached to the
Council
one or at most two representatives of the Ministry of Labour
to act in an advisory capacity."
It was not proposed, however, that these Government
representatives should possess a vote or that they should
¹ Great Britain. Ministry of Reconstruction. Committee on Relations
between Employers and Employed, p. 7. London, 1918.
2 Ibid. See p. 6.
242
remain members after the industry became further
organized, except at the wish of the Council. Moreover,
it was to be left to the Ministry of Labour and the or-
ganizations concerned to determine the degree of organi-
zation which should be reached in an industry before a
National Industrial Council should be established. The
Committee explicitly stated:
"In Group C industries we think that organization will be
encouraged by the use of the powers under the Trade Boards
Act, and where National Industrial Councils are set up we
recommend that the 'appointed members' of the Trade Board
should act on the Councils in an advisory capacity. Briefly,
our proposals are that the extent of state assistance should
vary inversely with the degree of organization in industries."
§ 4. THIRD, FOURTH, AND FINAL REPORTS
In October, 1917, the Whitley Committee issued a
supplementary report¹ which more specifically defined
the functions of the Works Committees, organization of
which had been recommended in the first and second
reports. Rates of wages and hours of work, in the
opinion of the committee, should be settled by district
or national agreement,
.. but there are also many questions closely affecting
daily life and comfort in, and the success of, the business, and
affecting in no small degree efficiency of working, which are
peculiar to the individual workshop or factory. The purpose
of a Works Committee is to establish and maintain a system
of co-operation in all these workshop matters.
The committee made no definite suggestions for a
constitution, feeling that details should be adapted to
the particular circumstances. It emphasized the pre-
supposition of "frank and full recognition" of employers'
and employees' organizations and warned against the
use of Works Committees in opposition to trade unionism.
For further guidance in forming works committees the
committee pointed to a memorandum2 in preparation.
by the Ministry of Labour which would summarize
existing experience.
¹ Great Britain. Ministry of Reconstruction. Committee on Relations
between Employers and Employed. Supplementary Report on Works Com-
mittees. London, 1917.
2 Report of an Inquiry as to Works Committees made by British Minister of
Labour. Reprinted by Industrial Relations Division. U. S. Shipping Board,
Emergency Fleet Corporation, Washington, 1919, p. 131.
243
The fourth report¹ of the Whitley Committee, pub-
lished January, 1918, dealt with conciliation and arbi-
tration. The committee expressed itself as opposed both
to compulsory arbitration and to compulsory prevention
of strikes or lockouts pending an inquiry. War experience
had shown that compulsory arbitration did not prevent
strikes and there was "no reason to suppose that such a
system is generally desired by employers and employed.'
While the continued use of existing machinery for
arbitration and conciliation was recommended, the
committee also advised the creation of a Standing Arbi-
tration Council, modeled after the Wartime Committee
on Production to which
differences of general principles and differences affecting whole
industries or large sections of industries may be referred in
cases where the parties have failed to come to an agreement
through their ordinary procedure. .
The importance of first hand knowledge of industry
and of the standpoints of employers and employees was
emphasized for members both of the tribunal and of the
staff serving it. If the parties concerned agree, cases
might be settled by a single arbitrator.
2
The final report of the Whitley Committee merely
summarized the proposals of the four preceding reports
and urged their wider adoption. Further investigations,
the committee felt, could be more profitably undertaken
by the joint organizations in the several trades.
A note appended to the report by five members of the
committee expressed the view that, however Industrial
Councils might further industrial peace and progress,
a complete identity of interests between capital and labor
cannot be thus effected, and that such machinery cannot be
expected to furnish a settlement for the more serious conflicts
of interest involved in the working of an economic system
primarily governed and directed by motives of private profit.
§ 5. GOVERNMENT ENDORSEMENT OF WHITLEY PLAN
Two days after the appearance of the second Whitley
Report the Minister of Labour sent a circular letter to
¹ Great Britain. Ministry of Reconstruction. Committee on Relations
between Employers and Employed. Report on Conciliation and Arbitration,
p. 5. London, 1918.
2 Great Britain. Ministry of Reconstruction. Committee on Relations
between Employers and Employed. Final Report, p. 4. London, 1918.
244
employers' associations and trade unions in which he
recommended the formation of Whitley Councils in the
following terms:
The Government desires it to be understood that the
Councils will be recognized as the official standing Consulta-
tive Committees to the Government on all future questions
affecting the industries which they represent, and that they will
be the normal channel through which the opinion and experi-
ence of an industry will be sought on all questions with which
the industry is concerned. It will be seen, therefore, that it
is intended that Industrial Councils should play a definite and
permanent part in the economic life of the country, and the
Government feels that it can rely on both employers and work-
men to co-operate in order to make that part a worthy one.
The fundamental reason why it was decided by the
War Cabinet
"to adopt the Report as part of the policy which they hope
to see carried into effect in the field of industrial reconstruc-
tion,"
was explained to be that
"the absence of joint representative bodies. . . had been
found to render negotiations more difficult than they would
otherwise have been."
The proved value of a Joint Board of Control in the
Cotton Industry was cited.¹ Among the problems which
would be considered with the Whitley Councils were
mentioned demobilization, resettlement of munition work-
ers in civil industries, apprenticeship, training and
employment of disabled soldiers, control of raw materials,
and settlement of the more permanent questions which
have caused differences between employers and employed
in the past.
§ 6. AIM OF WHITLEY PLAN,DIFFERENT FROM THAT OF
WORKS COMMITTEES
It is to be noted that the Whitley Plan had a different
aim from that of Works Committees. The latter were
intended to provide a means of communication and dis-
cussion between employers and workers in individual
plants. Whitley Councils, however, while hoping to do
all that was expected from Works Committees, had an
1 The Cotton Trade, however, refused to adopt the Whitley Plan.
245
additional purpose. They were supported by the Gov-
ernment, with the intent of granting something in the
way of control over industry to the workers. Such a
purpose was even put forward as an argument in their
favor:
"Assuming that attempts are made to set up committees,
as recommended by the Report," he said," "there are two
main directions in which we may expect good results almost
immediately. They will bring employers and employed into
more frequent personal contact, and will so tend to enable each
to understand the difficulties of the other, and remove a good
deal of the present bitterness of feeling, which by no means
necessarily follows even from deep differences of principle. If
the interests of employers and employed will still be different,
it may at least help them to respect and understand one
another. Secondly, the Whitley Report goes much further
than any previous official action in recognizing the right of
labor to a share in the control of industry. It not only gives
increased responsibility to the leaders of labor, but also to the
rank and file in the shop committees. It has even been said
that the educational value of the Whitley Report should be
such as to evolve gradually a new type of industrial citizen.”
While the relation between individual employers and
their workers might be affected in minor questions, the
same writer saw that the fundamental questions would
still have to be fought out on the national field. In
considering what ultimate result might be expected from
the general adoption of the proposals of the Whitley
Report, he felt that the tendency would be
"to remove the small causes of friction and misunderstanding,
to force employers and employed respectively into enormous
single organizations covering whole industries, and in each
industry to leave great and well organized armies to fight out
with one another the fundamental questions of control and
reward."
Although some employers were likely to try to find in
the Whitley Plan a refuge against the radical labor ele-
ments, their approval when given was guarded. The
Federation of British Industries approved the general
principle of the scheme. Its recommendations, issued
August, 1917, stated that:2
¹ Simon, E. D.: "Labour from an Employer's Point of View." Contemporary
Review, May, 1918, pp. 551-58.
2 Federation of British Industries: "Industrial Councils. Recommendations
on the Whitley Report," p. 4. London, August 3, 1917.
246
{
The Government ought to go far to recognize and give an
official standing to organizations representative of employers
and workpeople, respectively, and to encourage the develop-
ment of such organizations.
At the same time the Federation urged that:
There should be no suggestion whatever of Government
pressure or coercion, and that each trade shall be free to build
up its own organization voluntarily and on lines best suited to
its peculiar needs.
The Federation, however, was not in favor of entrust-
ing constructive work to district or works councils.
Although they might bring up for consideration matters
of general interest, the final decision should be a function
of the highest council. This highest council, according
to the Federation's program, should be composed of
representatives of employers and employed from all
industries.
In a later report by the Federation of British Industries.
the following position has been taken on Whitley Councils:
Generally speaking, we think that the objects which we
have in view can best be obtained by carrying out with all
possible speed the recommendations of the Whitley Report.
In regard to National and District Industrial Councils, where
the conditions of the trade permit, these recommendations
have repeatedly been approved by the Federation, and we
desire once more to state in emphatic terms our approval of
them, and especially of the proposals for District Councils.¹
It is further declared that the success of the Whitley
Councils will necessarily depend on the loyal acceptance of
their decisions by both sides. Some Councils, they
declare, have already applied for legislation to give legal
validity to their decision.
2
One employer of standing wished to give definition
to the proper functions of the joint standing industrial
councils recommended by the Whitley Committee. In
the first place such a council "must be absolutely debarred
from doing any work that can be done by an individual.”
The liberty of the individual to carry on his own business
in his own way must be preserved. Nor should it under-
take duties which could be performed by any sectional
1 Federation of British Industries: "The Control of Industry, Nationalization,
and Kindred Problems," p. 7. July 30, 1919.
2
Benn, Ernest J. P.: "The Higher Direction of Industry." Contemporary
Review, June, 1918, pp. 671-79.
247
organization, employers' organization or trade union, or
by any group of employers or employed.
With these reservations, there remained, according
to Mr. Benn's view, a large field of work which would
include readjustment after repeal of war regulations,
higher control of industry, especially with regard to
distribution of raw materials, redemption of trade union
pledges, demobilization, and apprenticeships. Beside
these immediate problems, suitable permanent activities
for the joint industrial councils would be the encourage-
ment of scientific research and education and the organi-
zation for export trade.
By the Federation of Lace and Embroidery Employers'
Associations
it was held that certain subjects mentioned were not properly
the concern of workpeople and employers, and that such as
supply and allocation of raw materials, financial facilities and
stability of home manufactures, are the intimate concern of
employers and their associations alone.
But in the main there was a more favorable attitude
to the plan among employers than among the unions.
The railway unions and the miners rejected the Whitley
Scheme because they were demanding that the workers
should control the railways and the mines, respectively.
Moreover, as they have a monopolistic position, they
incline to favor direct action to secure their demands.
That the same view is influential among workers in the
engineering trade is demonstrated by the speech¹ of J. E.
Mills, of the Amalgamated Society of Engineers, at the
last Trades Union Congress, in which he said:
The Whitley Report is all very well for those sections of in-
dustry for which we have had to secure justice by wage boards
and other items of state interference, but when the organized
workers are able to make definite claims and to back them up,
the need for the Whitley Report has gone. We do not require
the Whitley Report and I hope the Congress will think twice
before they pass any resolution accepting the principles of this
report, which, after all, is asking us to lie down, the lion and
the lamb together, and see who comes out of it with most of
his skin left.
A similar position was taken by W. L. Cooke, of the
Locomotive Engineers, and by E. H. Jarvis, of the Amal-
gamated Carpenters, who claimed that
1"Trades Union Congress," p. 308. Derby, 1918.
248
The employers are making preparations to secure a domina-
tion of the working classes after the war, and our members are
taking corresponding measures to defend their position.
Although the ideas expressed in the Whitley Report may be
good, and we hope they may be worked out in a peaceful man-
ner, the report does not commend itself to our members.
The Whitley Plan has been rejected in a number of
trades because they already had agencies in existence
which were fairly satisfactory to both sides.
In the Cotton Industry the Commission were told
"that the employers are well satisfied with their present plan
for collective bargaining. They object seriously to the sub-
stitution of the Whitley Plan, which involves bringing in
outsiders not selected by the parties to the dispute and who
may not be familiar with the business. A stranger to the busi-
ness, even though his impartiality is well known, cannot judge
correctly of the relative merits of the controversy.
""
Among others the engineering trade unions had a
definite and organized system of negotiation between
employers and workers and claimed that their scheme
was superior to that of the Whitley Committee. The
tinplate industry, which was highly organized, also had a
successful system of conciliation which the members
refused to jettison in favor of the Whitley Scheme.
The Building Trades adopted a plan of their own,
January 30, 1918, saying that:
If this scheme is not accepted by the industry they would
have foisted on them by the Government a scheme under
which the Government would have the selection of representa-
tives. They felt that the scheme sugggested by their com-
mittee was far preferable, as they would keep the management
of their affairs in their own hands.
Probably in part as a response to public discussion and
criticism, the Minister of Reconstruction and the Minister
of Labour issued a joint memorandum¹ in June, 1918,
which admitted "in the light of experience" the necessity
for certain modifications of the proposals of the second
Whitley Report. The special type of Council for Group
B industries was abandoned, and no Government officials
were to be attached, "except on application of the Indus-
trial Council itself." Trade Boards and Industrial
Councils were to be kept entirely distinct.
¹ Great Britain. Ministry of Reconstruction. Industrial Councils and Trade
Boards. Memorandum by the Minister of Reconstruction and the Minister of
Labour, p. 4. London, 1918.
249
Discussion¹ at the Trades Union Congress in 1917 also
indicated fear of too much Government intervention,
perhaps leading up to a scheme of compulsory arbitration.
Opposition came, on the whole, from speakers in those
unions which already had a secure position and permanent
arrangements for dealing with employers. It was also
claimed that fuller control of industry should be given
to labor.
§ 7. FEAR OF GOVERNMENTAL INTERFERENCE
One cause of opposition to the Whitley program
was the fear of governmental interference. This fear
was expressed to our Commission in many ways.
The National Alliance of Employers and Employed,
which owes its inception in large part to the Federation
of British Industries, urged that governmental oversight
should be reduced to a minimum. The following extract
from an article2 appearing in its official organ, Industrial
Unity, in September, 1918, indicates the general line of
objections offered by the Alliance:
One of the temporary stumbling blocks to the adoption of
the Whitley Scheme was the strenuous advocacy by the
Government. Then, too, at the beginning, there was much
talk of the whole scheme being permanently under the patron-
age of the Ministry of Labour. There were references to
liaison officers, of special departments, of new permanent.
officials, of records, etc., and trade unions who have long since
become tired of the Registrar-General and a host of other
bureaucratic busybodies, do not wish to become connected
with any more Government Departments. The National
Alliance of Employers and Employed criticized this side of the
advocacy of the Whitley Committees, and largely because of
its criticism that point of view has been modified and even
repudiated by responsible ministers.
It had been the intent of those presenting the plan that
the employer would take the initiative in creating Whitley
Councils. This, however, was in fact not done. Con-
sequently, it was said that some directing and stimulating
hand from the Department of Labour was proving to be
desirable. It was this intervention that caused more or
less antagonism.
¹ Trades Union Congress. 49th Annual Report, 1917, pp. 226–35.
2 Industrial Unity. Periodical Report of the National Alliance of Employers
and Employed. London, September, 1918. Vol. I, No. 5, p. 33.
250
An official of a large manufacturing establishment
visited by your Commission said:
This company objects to the Whitley plan because of the
introduction of politicians. The company believes that the
masters and men can get together and handle their differences
better without calling in any politicians. This Whitley Plan
is considered a most dangerous experiment. Shop Com-
mittees, also, should be avoided whenever possible. The
anarchistic element will always lead because the sane men keep
quiet.
A leading employer in the printing trades reported to
us as follows:
His opinion was that the Ministry of Labour, for the
Government, was trying to induce the employers to aid in and
accept the organization of the workmen in trade unions. That
is, when the Government was called in to treat disputes,
obviously they found it of advantage to act with organizations
both of laborers and of employers. From the political point
of view there was a strong tendency to urge employers to
assist in the organization of employees. He thought this
unfortunate, because in dealing with their own employees they
had been able to get on with them better than working through
larger organizations. He thought the schemes proposed by the
Government and in the Whitley Program likely to be
disadvantageous. The men who formed the Works Com-
mittees were the extremists who tried to get possession of the
machinery of the unions and had very radical aims in view.
He therefore felt strongly that the employers must organize
to resist this tendency.
The manager of a great shipbuilding plant said that
he was not at all favorable to the Whitley Plan, owing to the
fact that it provides for a central national organization in
which the political influence is certain to be strong.
Also, the head of a large Birmingham establishment
said to us:
I am not in favor of the Whitley Plan, as it introduces
politicians into the regulation of labor matters.
Mr. W. A. Appleton, of the General Federation of Trade
Unions, expressed himself thus:
He would keep the politicians off. The workers and em-
ployers should first take up matters with committees of their
own people. If necessary, they may themselves agree on a
251
chairman who is an outsider, but this chairman should not
be nominated by the politicians. Likewise, if operating as a
local organization, the chairman should be selected by the
local organization and not by the National Government.
Also, in case of national organizations, the matter should be
settled without the interference of Government if possible.
As bearing on the delicate question of the organization
of Government employees, the British experience shows
how easily the political views spread throughout the whole
system. In the Trades Union Congress (September,
1918), the following resolution was introduced:
That this Congress call upon the Government to apply the
principles of the Whitley Report to all departments of state
service.
A member of the Postal Engineers, in seconding the
motion, remarked that
What is good enough for the Government to preach to the
employers is good enough to be applied in their own depart-
ments.
On the 20th of February, 1919, a preliminary confer-
ence¹ was held between members of trade unions having
members in Government employ and Government officials,
at which the Minister of Labour stated that:
The Government is whole-heartedly supporting that [the
Whitley] principle, and that we agree that it shall be carried
out in the most complete fashion in all the shops and yards
for which the Government is responsible.
The conference accepted a draft scheme for Whitley
Councils which had already been approved by the War
Cabinet and appointed a provisional committee of trade
unionists and representatives of Government departments
for setting up the Councils. It also recommended pro-
vision for reference to arbitration by a Standing Arbi-
tration Council in any cases in which the Treasury or
the employing departments are not prepared to approve
and adopt a recommendation of the Joint Council. The
Provisional Committee has now drawn up draft consti-
tutions for Departmental Joint Councils, Trade Joint
Councils, for (a) Shops, (b) Departments, (c) Works or
Yard, and (d) Trade Committees in local establishments
under Government departments.
2
¹ Great Britain: Labour Gazette, March, 1919, pp. 81-82.
2 Great Britain: Labour Gazette Supplement, June, 1919.
252
The movement for joint councils has also spread to
municipalities in England, since it is reported¹ plans
for a National Council for employees of local authorities
have been drawn up by a committee from the large
municipal associations on the one hand and representatives
of twelve large trade unions on the other. The Bradford
City Council has already organized a joint consultative
board of the corporation and its employees, consisting
of thirty-two members, one half representing the corpora-
tion, the other half the respective groups of employees.
Other municipalities are considering the formation of
similar local boards.
§ 8. GOVERNMENT AID IN SETTING UP WHITLEY
4
COUNCILS
With some general reluctance on the part of the workers,
combined with a fear of outside interference on the part
of employers, the formation of Whitley Councils has not
met expectations. And yet very active help has been
given by the Ministry of Labour. The Ministry of
Labour has a staff of men trained in economics, skilled
in British industrial history and in knowledge of industrial
problems. On request one of these men is sent to any
group of employers or trade unionists to explain the
scheme and to give any assistance required in setting up
the machinery. Explanatory pamphlets have also been
issued, one of which has reached a total issue of 200,000.
By the middle of June, 1918, two industries (pottery
and building trades) had completed the organization of
Whitley Councils and held their first meeting and another
(heavy chemicals) had approved its draft constitution.
A draft constitution had been formulated by 11 trades
(baking, cable-making, carting, electrical contracting,
furniture, gold, silver, and jewelry, leather goods and
belting, printing, rubber, silk, vehicle building). In three
other trades (boot and shoe, tramways, woolen and
worsted) a provisional committee had been appointed
and a conference held to consider the proposition. A
statement in the London Times at the close of 1918 showed
that councils had been set up in 19 different trades, and
were being arranged in 14 others. In some 27 other
trades what are called interim industrial reconstruction
committees were in existence.
¹ U. S. Monthly Labor Review, April, 1919, pp. 157-58.
253
The earliest council¹ set up was that in the pottery
industry, which held its first meeting, January 11, 1918.
The objects of the council were stated to be "the advance-
ment of the pottery industry and of all connected with it
by the association in its government of all engaged in the
industry." The questions on which the Council could
take action were similar to those outlined in the Whitley
Report. They differ only in being more concrete, and
therefore of more significance. Among them are to be
found such topics as regular consideration of wages,
piecework prices and conditions, with a view to estab-
lishing and maintaining equitable conditions throughout
the industry; to assist maintenance of such selling prices
as will afford reasonable remuneration to both employers
and employed; the regularization of production and
employment as a means of insuring to the workpeople
the greatest possible security of earnings and
the collection of full statistics on wages, making and selling
prices, and average percentages of profits on turnover, and
on materials, markets, costs, etc., and the study and promo-
tion of scientific and practical systems of costing to this end.
All statistics shall, where necessary, be verified by chartered
accountants, who shall make a statutory declaration to secrecy
prior to any investigation, and no particulars of individual
firms or operatives shall be disclosed to any one.
The membership of the Council consists of 30 manu-
facturers' representatives, including salaried managers,
appointed by manufacturers' associations, and 30 work-
people, including several women nominated by the
trade unions.
At the National Industrial Conference in February,
1919, the Minister of Labour reported² that
through the mechanism of the Ministry of Labour 26 Indus-
trial Councils have come into existence and 24 more are on the
way. These will cover 22 millions of workmen.
In June, 1919, National Joint Industrial Councils.
had been established³ in 33 industries:
asbestos manufacture; bread baking and flour confectionery;
metallic bedsteads; bobbin and shuttle making; building;
chemical trade; china clay; coir mat and matting; elastic
¹ Great Britain, Labour Gazette, February, 1918..
2 Great Britain. Report of the National Industrial Conference, February 27,
1919, p. 11. London, 1919.
³ Glendenning, J.: "The Whitley Councils," Fortnightly Review, June, 1919,
pp. 958-64.
254
web, cord, braid, and smallwares fabric; electrical contracting;
electricity supply; furniture; gas; gold, silver; horological
and allied trades; hosiery; hosiery (Scottish section);
local authorities; non-trading services (manual workers);
made-up leather goods; match manufacture; packing-case
making; paint, color and varnish; waterworks undertakings;
welch plate and sheet trades; pottery; road transport; rubber
manufacture; sawmilling; silk; tin-mining; vehicle building;
wallpaper making; woolen and worsted; woolen and worsted
(Scottish section).
In addition, provisional committees had been appointed
to draft constitutions for National Joint Industrial
Councils for the following industries:
boot and shoe manufacture; carpets; flour milling; musical
instruments; needles and fishhooks; newspapers; printing;
roller engraving; shipping; surgical instruments; tramways;
wire drawing.
At last reports some 42 Councils were in existence; but,
according to a representative of British Labor speaking
in this country, only three or four are really active. It
has been claimed that the Trade Board is a far more
effective instrument for the workers.'
A significant case, showing the force of local repre-
sentation, was found by the Commission in the milling
trade. The employers' federation of the milling trade
had adopted the Whitley Scheme in its relations with
workpeople. Beginning in the opposite order from that
recommended, many firms have set up Works Committees,
several District Councils are in existence, and the National
Council was in process of formation. As the flour millers
were not sufficiently organized twelve months ago to
set up a National Council, they preferred to start from the
bottom up, and were at first threatened with refusal of
recognition by the Ministry of Labour. In 1917 this
association was reorganized and now has affiliated with
it 17 local associations in the United Kingdom.
Representatives of the Ministry of Labour informed
the Commission that one of the greatest perplexities
in the application of the Whitley Program was the
position of the salaried staff. The difficulty was to place
them in the bi-partite division of the Councils into
employers and employed. In one industry the clerks
had ranged themselves on the side of the workers. In
¹ Miss Margaret Bondfield. Tremont Temple, Boston, July 9, 1919.
255
the pottery trade the managers who had been given a
seat on the committees had also ranged themselves on the
workers' side. In the electrical trade great difficulty
had been experienced with the electrical power engineers.
These men formed one fifth of the total employees in the
trade and were pivotal men. The industry could not
continue without them while they could, and had, run
the power stations even when the general laborers had
struck. A similar situation had arisen with the manu-
facturing chemists. Employers were only the financiers.
in this industry; the laborers were mostly unskilled;
the manufacturing chemists were the brains of the in-
dustry. In these two latter industries the question of
the representation of the salaried staff was still under
discussion. The position of the Ministry of Labour was
that the parties, employers and employed, must settle
this matter of policy between them without governmental
interference.
§ 9. ULTIMATE AIM TO GIVE LABOR A SHARE IN CONTROL
There can be no question that the intent of the Whitley
Councils, in which governmental pressure is brought
to bear, is to give labor a larger share in the control of
industry than it has had in many trades. This intent
seems to be more than that indicated by Mr. Whitley
himself at a summer conference of Industrial Councils
at Oxford, when he was reported to have said:
It has been too much the habit, in days gone by, to think
that the interests of those who had been described as the
workers a misdescription, he thought, or a partial descrip-
tion in industry began and ended with the number of hours
they worked and the amount of wages they drew. Every
man and woman engaged in an industry ought to have some
interest in that industry beyond the wages or salary they are
entitled to. The barrier which hitherto in most instances
had sharply defined classes had no proper reason for existence
any longer. It is possible, both in the individual factory and
workshop and in the councils of industry as a whole as part of
the great national effort, that there should be joint working,
constructive co-operation on the part of all persons, men and
women, engaged in that industry.
Such a consummation is devoutly to be wished; but it
is a question whether the means actually adopted will
accomplish the desired end. Among the questions to be
dealt with by the councils is a settlement of the general
256
principles governing the fixing of wages. Certainly these
councils deserve to be immortalized if they solve what
the economic world has been struggling with for genera-
tions.
The means to the end in this scheme is based on union-
ism. At the Ministry of Labour it was stated that trade
unionism was recognized as the starting point of the
organization of the Whitley Councils; that the scheme
was a constructive step, an advance from the defensive
policy alike of employers and trade unions to one of
co-operation.
That the scheme is based on unionism is clear, not only
from the governmental pressure to secure full unionization,
but also by its executive action. It has no place for
non-union men; it refuses governmental care to un-
organized labor.
In the printers' trade, after the strike of 1911 many great
printing establishments had become "open shops." When
the formation of a Whitley Council was suggested it became
apparent that these non-unionists could not be represented
without organization. The "open-shop" employers there-
fore organized an "Alliance" which included themselves and
their employees, had it registered as a trade union, and asked
for representation on the Whitley Council. The printing
trades unions objected to this "blackleg," and the Minister
of Labour refused to recognize it. The negotiations were long
and protracted, since the Federation of Master Printers could
exercise no compulsion over their employer members. Event-
ually, when the plan of the Industrial Council was drawn up,
its members were to be employers, who were members of the
Federation of Master Printers or employed members of a
federated trade union, and trade unions. There was added,
with obvious reference to this "Alliance," the following
restrictive sentence: "No members of any organization not
in harmony with the objects of both Federations shall be eligi-
ble for membership of the Industrial Council."2
The Whitley Program, therefore, becomes one of the
illustrations of the operation of political influences
intervening in the settlement of labor questions. It is
a far cry from the formation of simple Works Committees
in which individual employers and their workers meet
to settle disputes of a local and immediate character.
The invisible hand that Adam Smith immortalized is
now no longer invisible.
¹ See III in list of First Whitley Report. Supra, p. 241.
2 The Builder, Vol. 134, p. 80.
257
CHAPTER XVII
THE NATIONAL INDUSTRIAL CONFERENCE
§ 1. A POLITICAL MOVE
An intervention of the British Government in in-
dustrial matters of a much more obvious political
character appears in the recent creation of the National
Industrial Conference. The critical situation produced
by the Triple Alliance in the early part of 1919 and the
acute fear of a cessation of basic industries led to a
demand for governmental action. Here was presented
a case where economic questions were approached from
the political point of view. While it was in the very
nature of the case impossible for a Government to furnish
a solution of the fundamental problem, nevertheless
an attitude of the public mind had arisen which expected
the impossible; and the Government was forced to
"do something."
The action desired was to call a joint conference of
employers and workers. The Government had already
been urged to take this course by the Executive Com-
mittee of the National Alliance of Employers and Em-
ployed as early as September, 1918. The project was,
according to Unity,'
1
for a great national conference, not on the old lines, where
the representatives of Capital and Labor met separately
(the former to pass pious condemnations, the latter to pass
pious resolutions), but on entirely new lines. The scheme
aimed at securing that employers and trade unionists should
deliberate together as the two partners in industry, and, in
conjunction with representatives of the State, produce an
agreed and practical industrial policy.
The Government was regarded by some as failing to re-
spond to expectations and was blamed for inaction and
vacillation:
Politicians have traded concessions to Labour for Labour
votes whilst denouncing Labour as Bolshevism to placate the
Middle Classes.
¹ March, 1919, p. 2.
258
One thing, however, is quite clear; the Government
has utterly failed to provide a means or institute a policy
which shall stem the drift toward revolt, let alone bring
industrial peace.¹
The National Alliance complained that the Government
did not even trouble to consider its scheme of a conference
until the industrial unrest became extremely grave.
On the other hand, the point was raised that if the
Government would justify its primary function of keeping
order, the economic questions, quite beyond the sphere
of political action, should be allowed to work themselves
out.
Sir Allan Smith, of the Engineering and Shipbuilding
Employers' Federation, speaking at the National In-
dustrial Conference insisted that 2
the whole experience of the past twenty years has proved
that if the Government will leave us alone, we are far better
able to settle our troubles than we should be under the
aegis of any outsider.
But the Government seemingly wanted something in
addition to the Whitley Plan, although the Minister of
Labour during his opening speech explained that agree-
ments between employers and workmen regarding fixing
of hours were already in operation covering three million
of workmen and that negotiations were going on for
trades which would cover two million more (referring
obviously to the Whitley Councils).
This situation induced the Government to take some
additional action for a general consideration of the
industrial problems facing the nation. On February 18th³
the Ministry of Labour announced that a National In-
dustrial Conference would be held to confer with the
Minister of Labour, the Prime Minister, and other repre-
sentatives of the Government, regarding means for
allaying industrial unrest. Invitations to send repre-
sentatives were issued to employers' associations and
federations, trade unions and federations of trade unions,
joint industrial councils, interim industrial reconstruction
committees, trade boards, and certain other important
¹ The Organizer, February, 1919, pp. 153–54.
2 Great Britain, Report of the National Industrial Conference, February
27, 1919, London, 1919, p. 19.
3
³ Spectator, February 22, 1919, p. 218. Great Britain, Labour Gazette, March,
1919, p. 78.
259
interested committees, such as the Parliamentary Com-
mittee of the Trade Union Congress, the Parliamentary
Committee of the Scottish Trades Union Congress, the
Federation of British Industries, the National Alliance
of Employers and Employed. When the Congress
convened on February 27th, about 300 representatives
of employers and 500 representatives of workpeople
were present.
§2. ATTITUDE OF GOVERNMENT AT CONFERENCE
It was the purpose of the Government representa-
tives in conducting the Conference to put the leading
problems before the delegates and give the opportunity
for free discussion before any action was taken. With
this object in view the Minister of Labour as Chairman
opened the Conference by pointing out that the in-
consistent demands of the various unions had resulted
in disputes, the continuance of which would endanger
the very existence of the country. For this reason,
he said,
it was decided to invite this large and responsible assembly
to come here for the purpose of giving to the Government the
best of their advice and assistance.
After this introduction he reviewed the main phases
of the labor problem, touching upon unemployment,
hours of labor, wages, housing, cost of food, strikes, and
the redemption of war pledges. Outlining the general
position of the Government in these matters, he again
appealed to the Conference for assistance in the solution
of these internal difficulties.
Immediately upon the close of this appeal for co-opera-
tion, a discordant note was struck by the representative
of the Amalgamated Society of Engineers, who character-
ized the Conference as "somewhat similar to that which
met in May of 1789, at Versailles, when representatives
of the various departments of France listened to a very
important speech from the Crown." From this beginning
one trade union speaker after another went on with
criticisms of the Government and recriminations against
the employing class. In fact, Mr. J. H. Thomas, of the
Railwaymen, practically put an ultimatum for the
:
260
Triple Alliance before the Conference in the following
words:
The workers, and I speak more especially for the members
of our threefold organization, are determined to shorten
materially the hours of labor in their respective industries.
They are dissatisfied with the system of society which treats
their labor power as a mere commodity to be bought, sold,
and used as though they were machine-like units in the process
of wealth production, and they therefore demand that they
shall become real partners in industry, jointly sharing in the
determination of working conditions and of management.
Labor becomes increasingly alive to its sovereign power, and
will shirk no responsibility, but equally it will be denied none
of its rights and privileges. The Miners, Railwaymen, and
Transport Workers stand unalterably for ownership by the
State of the mines, railways, and the means of inland and
coastal transport.
So far there had been no speaker for the employers.
In response to a suggestion that employers should be
heard from, Sir Allan Smith, of the Engineering and Ship-
building Employers' Association, rose to plead for modera-
tion and a reasonable discussion, instead of the recrimina-
tion and vague statements of aspiration that had been
heard from the labor spokesmen. He also suggested a
resolution that
an Industrial Committee consisting of twenty representatives
of the employers, twenty representatives of the unions, and
(whatever number is decided to be wise) representatives of the
Government Departments, under the presidency of the
Minister of Labour, be appointed to consider and report to a
further meeting of this Conference, on the causes of the
present unrest and the steps to safeguard and promote the
best interests of the employers, the workpeople, and the
State, and, second, that, in view of the urgency of the situa-
tion, it be a direction to the committee to present an Interim
Report or Interim Reports as soon as it is in a position to
do so.¹
From this time on the Conference assumed a more
reasonable tone. A disposition to put aside differences
and to co-operate in seeking a satisfactory solution was
manifested. Mr. J. R. Clynes stated that his chief
concern was lest Labor ask too much at one time for its
own good, and said that so far as he understood the
1 ¹ National Industrial Conference, February 27, 1919, p. 21.
261
resolution of Sir Allan Smith, he endorsed it. Mr. Arthur
Henderson agreed that since the present problems were
not merely temporary in character, the resolutions for
a permanent Industrial Council, with thirty representa-
tives of each side, should be passed, and that the subjects
for investigation should be wages, hours of labor, in-
dustrial relations, and unemployment.
At the close of the discussion the Prime Minister
answered some of the objections raised by various speakers
and pointed out that the first condition for renewed
prosperity was the restoration of confidence. He appealed
to all parties to co-operate for this purpose and suggested
for adoption a revision of resolutions already offered by
Sir Allan Smith and Mr. Arthur Henderson. In its
revised form the resolution adopted by the Conference
was as follows:
That this Conference, being of the opinion that any pre-
ventable dislocation of industry is always to be deplored, and,
in the present critical period of reconstruction, might be dis-
astrous to the nation, and thinking that every effort should
be made to remove legitimate grievances and promote
harmony and good will, resolves to appoint a Joint Committee,
consisting of equal numbers of employers and workers, men
and women, together with a chairman appointed by the
Government, to consider and report to a further meeting of
this Conference on the causes of the present unrest and the
steps necessary to safeguard and promote the best interests of
employers, workpeople, and the State, and especially to con-
sider, and report to a further meeting of this Conference on
the causes of the present unrest and the steps necessary to
safeguard and promote the best interests of employers, work-
people, and the State, and especially to consider:
(1) Questions relating to Hours, Wages, and General Condi-
tions of Employment.
(2) Unemployment and its prevention.
(3) The best methods of promoting co-operation between
Capital and Labor.
The Joint Committee is empowered to appoint such
sub-committees as may be considered necessary, consisting
of equal numbers of employers and workers, the Government
to be invited to nominate a representative for each.
In view of the urgency of the question the Joint Committee
is empowered to arrange with the Government for the re-
assembling of the National Conference not later than April
5th for the purpose of considering the report of the Joint
Committee.
262
It is worth noting that opposition to the passage
of such a resolution came from two sources. Some
delegates objected that they had no mandates from their
organizations to take action. Another small group
claimed that the Conference in spite of its majority of
workers' delegates could not be regarded as an accredited
delegate conference of the labor movement.
It was
asserted that some members represented only compara-
tively few dozen people on an industrial council. In
spite of the refusal of the Triple Alliance and the Amalga-
mated Society of Engineers to be a party to the resolution,
however, it was passed by a majority of those present.
At separate meetings of the delegates thirty members
of the Joint Committee were chosen for each side, two
women being included among the representatives of
workpeople. As independent chairman the Government
appointed Sir Thomas Munro; Sir Allan Smith was
elected chairman for the employers and Mr. Arthur
Henderson for the workers. At the first meeting of the
Joint Committee, March 4th, the work was divided
among three subcommittees, with the following terms
of reference:
"(1) To make recommendations concerning:
(a) The methods of negotiation between employers
and trade unions, including the establishment of a per-
manent Industrial Council to advise the Government on
industrial and economic questions with a view to maintain-
ing industrial peace.
(b) The method of dealing with war advances, and
(c) The methods of requesting wages for all classes of work-
ers, male and female, by legal enactment or otherwise.
“(2) To make recommendations as to the desirability of
legislation for a maximum number of working hours and a
minimum rate of wages per week.
"(3) To consider the question of unemployment, and to make
recommendations for the steps to be taken for its prevention,
and for the maintenance of the unemployed in those cases
in which it is not prevented, both during the present emer-
gency period and on a permanent basis.'
¹ Report of Provisional Joint Committee, p. 3.
>>1
263
§ 3. REPORT OF PROVISIONAL JOINT COMMITTEE
The full report¹ of the Joint Committee was pre-
sented to the members of the National Conference some
days before its reassembly on April 4th. In submitting
its recommendations the Joint Committee stated that it
had been impossible
to attempt any exhaustive investigation into every aspect
of unrest, to examine fully the relation between under-
consumption and unemployment, between wage standards
and purchasing power, the relationship of production to the
whole economic and industrial situation, and many other
fundamental but complicated matters of discussion.
Hence it advised the establishment of a permanent
National Industrial Council for investigation and con-
tinuous review of such questions.
It also put itself on record as favoring the steps being
taken in favor of international regulation of labor condi-
tions.
The following definite conclusions were drawn by the
Joint Committee:
HOURS.
(a) The establishment by legal enactment of the principle
of a maximum normal working week of forty-eight
hours, subject to
(b) Provision for varying the normal hours in proper cases,
with adequate safeguards.
(c) Hours agreements between employers and trade unions
to be capable of application to the trade concerned.
(d) Systematic overtime to be discouraged, and unavoidable
overtime to be paid for at special rates.
WAGES.
(a) The establishment by legal enactment of minimum
time-rates of wages, to be of universal applicability.
(b) A Commission to report within three months as to what
these minimum rates should be.
(c) Extension of the establishment of Trade Boards for less
organized trades.
¹ Great Britain. Industrial Conference. Report of Provisional Joint
Committee for Presentation to Further Meeting of Industrial Conference,
April 4, 1919. London, 1919. XXVIII, p. 14.
264
(d) Minimum time-rates agreements between employers and
trade unions to be capable of application to all em-
ployers engaged in the trade falling within the scope of
the agreement.
(e) Wages (Temporary Regulation) Acts, 1918, to continue
for a further period of six months from 21st May, 1919.
(f) Trade Conferences to be held to consider how war
advances and bonuses should be dealt with, and, in
particular, whether they should be added to the time-
rates or piecework prices, or should be treated sepa-
rately as advances given on account of the conditions
due to the war.
RECOGNITION OF, AND NEGOTIATIONS BETWEEN, ORGANIZATIONS OF
EMPLOYERS AND WORKPEOPLE.
(a) Basis of negotiation between employers and workpeople
should be full and frank acceptance of employers' organi-
zations and trade unions as the recognized organizations
to speak and act on behalf of their members.
(b) Members should accept the jurisdiction of their respec-
tive organizations.
(c) Employers' organizations and trade unions should enter
into negotiations for the establishment of machinery,
or the revision of existing machinery, for the avoidance
of disputes, with provision for a representative method
of negotiation in questions in which the same class of
employers or workpeople are represented by more than
one organization respectively, and for the protection
of employers' interests where members of trade unions
of workpeople are engaged in positions of trust or
confidentiality, provided the right of such employees
to join or remain members of any trade union is not
thereby affected.
UNEMPLOYMENT.
(1) Prevention of Unemployment.
(a) Organized short time has considerable value in periods
of depression. The joint representative bodies in each
trade afford convenient machinery for controlling and
regulating short time.
(b) Government orders should be regulated with a view to
stabilizing employment.
(c) Government housing schemes should be pressed forward
without delay.
(d) Demand for labor could be increased by State develop-
ment of new industries.
265
(2) Maintenance of Unemployed Workpeople.
(e) Normal provision for maintenacne during unemployment
should be more adequate and of wider application, and
should be extended to under-employment.
(f) Unemployed persons, and particularly young persons,
should have free opportunities of continuing their
education.
(g) The employment of married women and widows who have
young children should be subject of a special inquiry.
(h) The age at which a child should enter employment should
be raised beyond the present limit.
(i) Sickness and Infirmity Benefits and Old Age Pensions
require immediate investigation with a view to more
generous provisions being made.
NATIONAL INDUSTRIAL Council.
(a) A permanent National Industrial Council should be es-
tablished to consider and advise the Government on
national industrial questions.
(b) It should consist of 400 members, 200 elected by em-
ployers' organizations and 200 by trade unions.
(c) The Minister of Labour should be President of the Council.
(d) There should be a Standing Committee of the Council
numbering 50 members and consisting of 25 members
elected by and from the employers' representatives,
and 25 by and from the trade union representatives,
on the Council.
The employers on the Joint Committee found it
impossible to complete a statement on production which
they had intended to submit with the report. The
trade unionists, however, did offer a provisional scheme
for trade union representation on the National Industrial
Council and an extended memorandum, apparently
without any official status, on the causes of and remedies
for industrial unrest, both of which were included as
appendices to the report "by their express wish that it
shall be published in this report." They were inclined
to hold the Government responsible for a considerable
share of the labor unrest. For instance:
Not only social theorists, but also the most prominent
spokesmen of the Government have constantly told the
workers that we should never revert to the old conditions
of industry and that an altogether higher standard of life
and an altogether superior status for the worker in industry
266
would be secured as soon as the immediate burden of hostilities
was removed. The Prime Minister himself has urged an
official deputation from the Labour Party to be audacious, and
the promises of drastic industrial change made by the Govern-
ment are too numerous to chronicle.
The lack of any
comprehensive industrial or economic policy on the part of
the Government or the employers must therefore be regarded
as one of the principal factors in the present labor unrest.
While specific remedies, some of which coincided with
the proposals of the Joint Committee, were suggested
for particular difficulties the memorandum held that the
real cause of unrest was the conviction of the working
class that production for private profit must be largely
superseded by public ownership and democratic control
of industry. The latter demand, it was asserted, the
Whitley Scheme had done little or nothing to satisfy.
§ 4. REPORT ACCEPTED BY NATIONAL INDUSTRIAL
CONFERENCE
At the renewed session¹ of the Conference on April
4th, after full joint and separate discussion of the com-
mittee's proposals by the two sections of the Confer-
ence, Mr. Arthur Henderson's motion was carried, that
the report be submitted for acceptance to the various
constituent organizations as soon as the Government
had officially declared its readiness to carry its recom-
mendations into effect.
In the absence of the Prime Minister, the Minister of
Labour did not commit the Government to all details
of the report, but said he believed its principles would
be approved. He pointed out that the proposals regarding
industrial negotiations, allocation of government con-
tracts, development of industries, housing construction,
Trade Boards, the revision of old age pensions, and the
continuation of the Wages (Temporary Regulation)
Act were already being carried out by the Government.
§ 5. MEETING OF THE JOINT COMMITTEE MAY 1ST
On May 1st, at a meeting of the Provisional Joint
Committee the intentions of the Government were
further defined by a letter from the Prime Minister,
which was read by the Minister of Labour, part of which
was as follows:
¹ Great Britain. Labour Gazette, April, 1919, pp. 124–25.
267
Though I cannot commit myself to every detail, as many
of them are complex and technical, I may say at once that I
fully accept in principle your recommendations as to the
fixing of maximum hours and minimum rates of wages. As
regards hours, a bill is now being drafted to give effect to your
recommendations, and will, I hope, be introduced at a very
early date. I think you will find that it fully carries out the
principles set forth in your report, though, as you have recog-
nized, elasticity must be provided in order to meet the special
circumstances of particular industries.
There are certain industries, such as agriculture, in which
seasonal and other conditions necessitate special consideration;
and some cases, such as those of seamen and domestic ser-
vants, in which it would be impossible to enforce a week of
forty-eight hours; but I agree that the act should otherwise
apply to all industries in which a legal limitation of hours is
practicable, and that, where exceptions are necessary, they
should be applied for by those concerned through the ma-
chinery which you have suggested in your report.
As regards wages, I accept the principle that minimum
rates of wages should in all industries be made applicable by
law. The question of the best method of doing this, however,
is complex and full of difficulties, and I do not think that it
would be possible to frame legislation until a scheme for
carrying out the principle of minimum rates has been fully
worked out. I therefore gladly accept your suggestion that
the Government should, in the first place, set up a Commis-
sion with wide terms of reference to report on the whole
matter. As regards the extension of the Wages (Temporary
Regulation) Act, a bill has been prepared for this purpose and
has been introduced.
In regard to unemployment, I understand that your com-
mittee was unable to make any definite recommendation as to
how the present provision against unemployment should be
extended, though they were unanimous in thinking extension
necessary. In view of the short time at your disposal, I do not
think that the committee could be blamed for this, but the
question of unemployment is one of the most urgent and im-
portant of the problems confronting us, and until it is satis-
factorily solved I do not feel that we shall have really effected
one of the most vital improvements in our social conditions.
I therefore hope that this is the first question to which the
National Industrial Council will address itself.
I cordially welcome your proposal to set up a National
Council, and hope that you will take steps to bring it into
being as quickly as possible, as I am sure that it will be of
great value in assisting the Government to improve industrial
conditions.
268
As further action was now dependent upon the legisla-
tive enactment of recommendations of the Joint Com-
mittee, it was resolved to adjourn until such time as
decided upon by the chairman. In the mean time, the
various constituent bodies would consider the reply of
the Government and their attitude thereon.
§ 6. CRITICISM OF GOVERNMENT PROCRASTINATION BY
NATIONAL ALLIANCE
Just as the National Alliance of Employers and Em-
ployed had deprecated the Government's reluctance to
call a joint conference, it now condemned the delay in
putting the recommendations into effect. In an editorial
in Unity¹ it was pointed out that the report
•
was signed unanimously by the most representative body of
trade unionists and employers ever brought together.
It was an instance typically British, of the sane, careful
majority, that is usually passive and indifferent, rousing
itself for an effort of social reconstruction. The disruptive
elements in society on both sides hate this movement. The
persons who make up these elements are hoping against hope
that the recommendations will not be embodied in legislative
proposals.
The Government was accused of pursuing a very
dangerous hand-to-mouth policy and the lack of definite
assurance of immediate action in Mr. Lloyd George's
letter was condemned. Vague suggestions, hopes, and
sympathy without action were risking the stability of
society. Only legislation embodying the recommenda-
tions of the National Industrial Conference could, in
the opinion of the National Alliance, avert the danger of
further unrest and set the industrial machinery running.
Further delay would justify the accusations of radical
groups and convince organized labor that only drastic
disturbances could secure reforms.
2
The dissatisfaction felt among employers with Govern-
ment handling of industrial matters was reflected in the
reply of one of the largest employers of labor, himself
resolutely set against any other than an autocratic solution
of industrial administration. When asked which of the
two alternatives, state government or joint-committee
¹ Unity, June, July, 1919, p. 1.
2 The Organizer, April, 1919, p. 385.
269
government of industry in its full sense, he would prefer
if he were forced to a choice, he declared unhesitatingly
in favor of the latter, as immeasurably less likely to
result in stagnation and congestion. In the same number
of The Organizer which reports this view it is stated as
the opinion of many present at the National Industrial
Conference that it was a
not very hopeful or necessary experiment, too vague in its
terms of reference, too haphazard and incomplete in its con-
stitution, and rather open to the charge of being a political
device to gain time.
Another view¹ of the plan for a permanent National
Industrial Conference was taken by Mr. E. J. P. Benn,
who had been a warm advocate of the Whitley Councils.
He claimed that the establishment of an industrial
parliament on a basis of direct representation would be
a Government breach of faith with the Whitley Councils,
since it had been promised that they would be regarded
as the normal channels of communication between their
industries and the Government. It was his belief that the
Government was by this means making a furtive attack
on the Whitley Councils, which it wished to obstruct
because they “do not provide jobs for officials." If there
was to be a National Industrial Conference, the delegates
should be drawn from the joint industrial councils.
On the other hand, an article in the June Fortnightly
Review 2 claimed that the National Conference will give
a new sanction to the Whitley Report and quicken the
establishment of joint industrial councils. The writer
said that while the Conference was characterized by
plain speaking on both sides, it was evident that both
employers and workpeople would welcome machinery
which would bring them to a clearer understanding.
It is not too much to say that the resumed Conference,
which met on April 4th, proved that the necessary kind of
machinery had been devised.
The achievement of the Conference proved, in his
opinion, that
1 Ways and Means, April 5, 1919, pp. 144–45.
2 Glendenning, James: "The Whitley Councils." Fortnightly Review,
June, 1919, pp. 958-64.
270
the vast body of employers and workpeople are sincerely
anxious to clear away avoidable misunderstanding and to
base industry now, and in the future, upon a solid foundation
of good will and co-operation.
§ 7. CONCLUSION
It will be seen from this survey that the National
Industrial Conference was a "last act" by the British
Government to avert an industrial crisis. There was a
growing volume of voices demanding the Government to
do something," for the threats of the belligerent Triple
Alliance seemed likely, if carried out, to tie up all industry.
The "something" done by the Government was this
get-together meeting where complainants had a free
chance to speak their minds. What permanent results
will issue from it cannot now be surmised. It is clear,
however, that for a brief breathing space the Government
averted a crisis; the Industrial Conference held the
center of the stage for a time, fulfilled the demand for
doing something. Then a new activity diverted public
attention to the Miners' Federation and the Coal Com-
mission. Such widespread publicity for the demands of
organized labor has at least one beneficent effect, so far
as the Government is concerned: it enables popular
opinion to form itself sufficiently for the officials to chart
their course. The real solution of the industrial problems,
however, remains as before with the workmen and
employers.
271
CHAPTER XVIII
POLITICAL INFLUENCES IN FRENCH LABOR
MOVEMENT
§ 1. THE GENERAL SITUATION
The labor situation in France is distinctly different from
that in Great Britain. One distinction lies in the amount
of the labor supply; Great Britain has a surplus of labor,
France a deficiency. This fact modifies the entire indus-
trial aspect. For example, there is not found in France the
opposition on the part of the workingmen to the intro-
duction of labor-saving machinery or to dilution, especially
the introduction of women workers, as in England. In
addition, there is a sympathetic attitude toward scientific
management among French workmen, and, in contrast
with Great Britain, the fundamental working principles
of organized labor in France show a decidedly more open
spirit of co-operation. The Program of the General
Federation of Labor (Confédération Générale du Travail),
the most powerful labor organization in France, as an-
nounced by its Secretary, M. Léon Jouhaux, reads:
"The formula for the working class should be a maxi-
mum production in the minimum working time for a maxi-
mum of wages.
"For the employer — a maximum development of shop
equipment to produce a maximum output with a minimum
expense of production.
The difference in temperament between French and
British workmen is also significant. The French can be
more quickly and greatly influenced by ideas than the
British, who demand facts. The idea that France must
be defended, even though Germany was stronger and
better prepared, explains why she rose to the occasion so
marvelously in the late war. There is, therefore, the
possibility that in time of unrest an idea might be used
by unscrupulous leaders to arouse the French working
classes to a sudden frenzy. As one manufacturer said to
the Commission,
¹ Les Travailleurs devant La Paix, "Un Programme.”
272
"The French mind is governed by ideas, not by facts.
There is no danger in our labor situation while men are at
work. It is the idle man who is dangerous. Normally, about
10 per cent of our workers in the automobile industries are in
the unions, but in time of strike this may run up to 100 per
cent."
In France industry has not reached the point of con-
centration or intensity found in Great Britain. There
are few factories throughout the country, probably less
than 10 per cent, that have more than 50 workmen, so
that direct, personal relations between employers and
employees are readily maintained. In the northeast
section there was, prior to the war, a concentration com-
parable to the British situation, and the Metal Trades'
Union shows many similarities to British unions; it is
among the most radical. In the same category is the
miners' and textile workers' syndicats. It is significant
in this connection also to know that 70 per cent of the
army was made up of agriculturists. French industry,
too, differs from British in its character. Large scale
production on standard patterns is not a characteristic
of French manufactures. Things made in France have
individuality, distinction, a touch of art, an element of
style, that gives play to the workman's love for aesthetic
qualities even in everyday useful articles.
French
foreign trade has always had a large element of style in
it; articles de Paris, or articles de luxe, have been one of
the most important items. Such trade is most sensitive
to all financial and industrial disturbances, so that an
element of instability permeates French industry. This
is bound to be reflected in the labor situation.
It is well to keep in mind, also, the fact that land in
France does not run to large but to small holdings. The
agricultural syndicats, therefore, have in them a strong
influence of proprietary responsibility. In general,
the French people are a race of property and bond-
holders," and such radical ideas as Bolshevism and
advanced socialism find a strong obstacle in this fact.
Said one French manufacturer to the Commission:
"Socialism is not popular with the great majority of the
French workpeople. A large proportion of the peasants own
land, and many of the workers in the cities have property."
France is generally considered the hotbed of radical
political ideas. "Revolution," it has been said with
273
shrewd sarcasm, "is the Frenchman's luxury." The
effects of the French Revolution certainly persist, and
since the Waldeck-Rousseau Ministry of 1899, the French
Government has been distinctly radical.¹ It is a favorite
saying in labor circles that as the French Revolution
brought political freedom and equality, so the industrial
revolution to be achieved by organized labor will bring
industrial freedom and equality. Political tradition is
a potent factor in the present labor situation.
The disastrous effects of the war have accentuated
French industrial problems. It has been calculated by
French employers that 2,000,000 workers were killed or
maimed by the war, a loss of at least 9 per cent of effective
labor, that French workers had lost one and a half times
more than Germany, two and a half times more than
Belgium, five times more than England and Italy, fifty-six
times more than the United States, that there was certain
to be a frightful reduction in the birth rate for years to
come, and that these things coupled with a shortening of
the workday from 10 to 8 hours, would cause a decrease
in production of French industries of $2,400,000,000 or
30 per cent. The real difficulty in France today, however,
is to find the credit with which to obtain coal, materials,
and, in the devastated area, machinery to enable factories
to employ labor, turn out goods, begin to export, and help
to improve the foreign exchange and the value of the
franc. The burden of debt is very heavy. Hitherto
indirect taxes have been relied upon, but today the
country is faced with the necessity of a resort to direct
taxes, especially on incomes, to which there will be bitter
opposition by peasants as well as by the middle and richer
classes.
2
In short, the vital question for France today, indus-
trially, commercially, financially, is credit. Unless taxes
that produce results are imposed there can be no proof
to her creditors that France can carry the interest on her
debt, together with the other burdens of the war and her
normal budget. Until this proof is given, little credit is
likely to be forthcoming. But drastic taxation laws.
would most likely be so unpopular that any Ministry
proposing them would be driven from office. In such
situation business is largely at a standstill, and, it must
1 Levasseur: The Annals, Labor and Wages.
2 La Question de la journée de huit heures.
274
be added, there seems to have been on the part of govern-
mental authority an impractical opposition to imports,
a policy which prevents any considerable employment of
labor. But M. Loucheur, the official responsible for this
policy, has failed to secure a vote of confidence and must
go, and the restrictions are being relaxed. France must,
as often before, rely on the thrift and persistent industry
of her people.
The entire French industrial situation must be inter-
preted in the light of the soul-stirring unrest created by
the war.
The inevitable nervous reaction from the four
and a half years of struggle, the incalculable losses in
property, in life, in human energy, the disruption of
normal trade, the mobilization of men and industry for
war, the extension of governmental control are all parts
of the problem. On the background of this general situa-
tion it is now proposed to throw the details of the labor
problem in France.
§ 2. ORGANIZATIONS OF EMPLOYERS AND EMPLOYEES
As in all industrial countries, so in France there are
the two overlapping organizations among workingmen.
One is the organization along some kind of trade or in-
dustrial lines; the other on a political basis. The former
is called in French the syndicat, which "is a union of
workingmen, on a trade or on an industrial basis, for the
defense of economic interests."¹ That is, a syndicat is
equivalent to the English trade union, and the abstract
principle for which it stands, called in French syndicalism,
is equivalent to the English unionism. Although the words
syndicat and syndicalism have taken on the peculiar flavor
characteristic of French temperament and philosophy,
they will be used as synonymous with the English words
Unions and Unionism throughout this discussion. The
other type of organization is the Socialist Party, political
in character and in aims.
Of the labor organizations on a trade or industrial basis,
the foremost and the dominating one is the General Con-
federation of Labor (Confédération Générale du Travail),
commonly spoken of for the sake of brevity as the C. G. T.
It is a national organization made up of "National Federa-
tions of industries and trades, of National Syndicats,
¹ Levine, L.: "Syndicalism in France. Studies in History, Economics, and
Public Law," Vol. XLVI, 1911–1912, p. 5.
275
of isolated syndicats (in that case only if there is no
national or regional federation of the trade, or if the
federation does not adhere to the Confederation), and of
Bourses de Travail (Labor Exchanges), considered as
local, departmental, or regional central unions."1
This dominating Confederation divides into two parts;
one the Labor Exchanges (Bourses de Travail), the other
the Confederal Committee. The exchanges are really
labor community centers in essence; they are centers for
talk, for employment work, for public meetings, for
making announcements, for propaganda service, etc.
The first one was established in Paris, 1884, and from
that time on began to displace the Government labor
exchanges. In 1914 there were 144 exchanges, with
486,404 "adhering effective syndicats."2 From their
functions it may be seen that they correspond in a broad
way to the New England town meetings. They have
always proved to be the source of radical activities of
organized labor.
66
The Confederal Committee is formed by delegates of
adhering organizations," that is, members of the Č. G. T.
There is one delegate for each organization, although a
single delegate is permitted to combine in himself the
power to speak for at most three organizations. This is,
then, the national representative of the labor unions of
France. It meets regularly, and extra meetings may be
called by the secretary. It deals with national questions
or those of interest to different syndicats beyond the scope
of the exchanges. It has connections with the inter-
national federation of trade unions. At present, it claims
about 600,000 members. Admittedly, it speaks for
French organized labor. The most prominent members
in the C. G. T. today are MM. Albert Thomas and
Léon Jouhaux.³
Political organizations to represent the Socialists of
France have had a checkered career. Time and again
political differences have broken the ranks, and the
"left wing" has started a rival party. Almost always,
too, the revolt has followed the strong leadership of some
individual, and so there have been Guesdists, the Brous-
1 Levine: "Syndicalism in France," p. 162.
2 Annuaire Statistique, 1914–1915, p. 136.
3 For a full treatment of these organizations, see Levine: "Syndicalism in
France," Chapters II-VII. Cf. also "Labor Organizations," Chapter IV.
276
sists, the Marxists, the Allemanists, the Blanquists, or
the theories of some "school," and so has developed
numerous "isms." Successful politicians have risen from
the socialist ranks, also, such as Millerand, Jaurés, and
Viviani. Like all socialist movements, the French has
appealed especially to two classes, the "intellectuals"
and the workingmen. Without following through in
detail their growth, it may be said that since 1899 the
Socialist Party has been a strong one in France, even
though its achievements have not been great; that
there are today two socialist political groups, the United
Socialists and the Independent Socialists; that together
they have 132 deputies in the French Chamber out of
602; and that they have had as premiers such men as
Millerand and Viviani. They are distinctly to be reck-
oned with.
The Socialist Party and the syndicats in France, as
elsewhere, certainly have the same tap root which runs
deep into industrial problems. It has not been possible,
however, for them either to unite or to work in harmony
together. The Socialist group was split off from the
C. G. T. on the basis of methods; it was the old division
between industrial or direct action and political action,
with a characteristically French slant to it. The split
was begun at the Congress of Marseilles, 1879, and
completed at Havre, 1880.
"The Socialists called upon the workingmen to participate
in the parliamentary life of the Community. Political absten-
tion, they asserted, is neither helpful nor possible." 1
The one party, the parliamentary socialists, or Collecti-
vists, while agreeing with the other party, the Communist-
Anarchists, that all means of production should be appro-
priated, believed that the emancipation of the workmen
could be secured through a socialized state. The Com-
munist-Anarchists, on the other hand, held that "the
first act in the Social Revolution, in their opinion, had to
be the destruction of the state."
52 One writer has said
that parliamentary action is
772
“a pell-mell of compromise, of corruption, of charlatanism,
and of absurdities, which does no constructive work, while it
destroys character and kills the revolutionary spirit by hold-
ing the masses under a fatal illusion.'
¹ Levine: "Syndicalism in France," p. 55.
2 Ibid., p. 54.
3
13
Pourquoi Guesde n'est-il pas Anarchiste,” p. 6.
277
The split upon this issue has been permanent. Never-
theless, there is here, too, an overlapping. In the C. G. T.
are those who believe in political action but more in the
labor syndicat. The reverse may be said of the Socialist
Party as regards the destruction of the state. The line
of demarcation must not be too sharply drawn.
The French social thinking has been deeply affected
by the influence of Marx. The radical impulses of 1848
are still probably more active in France than anywhere
else. An international idealistic appeal was sure to catch
the interest of the French mind, and so, as early as 1891,
after the Brussels Congress, there was established an
International Secretariat to unite the French labor move-
ment with the world-wide labor movement. While this
particular organization was never strong and disappeared
in 1896, connection with the international labor `move-
ment has been kept up by the C. G. T. as well as by the
Socialists.
Such associations as the employers of France have,
are formed either on an industry as the basis or on the
basis of a political region such as a "department." There
seems to be no national organization of producers. Your
Commission talked with representatives of the Automo-
bile Association of France, who told us that most em-
ployers and most employees were apathetic toward
labor problems, but that the employers were beginning
to get together. It is well to note, however, that some
at least of the functions of employers' associations are
being performed by the Chambers of Commerce, of which
there are 155 in France.
"The purpose of the Chambers of Commerce is to advise
the Government, and to give information on all industrial,
commercial, agricultural, and transportation matters, es-
pecially with a view to promoting the prosperity of the
locality which they represent, and to undertake the execution
of certain public works and the administration or superinten-
dence of public services which vary according to circumstances.
Accordingly, they operate trade schools and museums, give
public lectures, etc. The Government invariably seeks the
advice of the Chambers of Commerce on all matters affecting
the productive and distributive interests of the section, such
as Commercial Exchanges, joint boards of employers and em-
ployees for the purpose of adjusting difficulties between
employers and labor, known as conseils des prud'hommes
278
(committees of wise men), and also on matters regarding
certain taxes, public works, etc., and on tariff and customs
questions."1
Here, then, in the committees of "wise men" is the
machinery for getting the employer and his workmen
together. It is under governmental control, with the
Chambers of Commerce as advisers. Taken in connec-
tion with the smallness of the general run of industries,
the proper spirit of co-operation on the part of employers
and workmen will readily correct defects and make these
councils or some modification of them effective.
§3. FRENCH LABOR IN THE War
Organized labor in France, prior to 1914, had long held
strong anti-militaristic opinions. It had objected to the
legislation for compulsory military training and had
opposed its enforcement when passed.
"The brilliant leader Jaurés openly advocated the abolition
of the army and the creation of a national militia. Some anti-
militarists, like Hervé, carried their theories beyond all bounds
and rhetorically talked of dragging the national flag in the
mire." 2
The years from 1907 on were filled with the troubles
due to the strained and unsatisfactory relations between
France and Germany and with internal political, religious,
and labor difficulties. It was not until after the Agadir
affair (1910) that the French people saw the irrepressible
conflict with Germany and rallied to the support of the
army. Even then the C. G. T. fomented trouble by
propaganda among the soldiers in training and in one or
two cases succeeded in stirring up a revolt against the
extended time of compulsory service. At the Congress of
Marseilles, September, 1908, a resolution was passed
which embodied the following:
"That whereas, consequently, every war is but an outrage
against the workingmen; that it is a bloody and terrible
means of diverting them from their demands, the Congress
declares it necessary, from the international point of view,
to enlighten the workingmen, in order that in case of war they
may reply to the declaration of war by a declaration of a
revolutionary general strike.”³
1" Franco-American Trade," p. 97.
2 Wright:
"The Third French Republic," Houghton, Mifflin, 1916, p. 166.
3"XVI Congrès National Corporatif," p. 213.
279
There was a distinct movement by the C. G. T. to put
aside anti-militaristic propaganda in 1913. Such leaders
as Jouhaux and Merrheim were weary of these agitations
that constantly disrupted the ranks of organized labor.
They wanted to return to matters purely industrial upon
which the majority could agree. Nevertheless, the
C. G. T. stood on record against any declaration of war.
This was the situation as the war cloud lowered in the
summer of 1914. And when Austria's ultimatum was
sent to Serbia, and Germany rallied to the aid of her
ally, a delegation of German workmen was hastily sum-
moned to Paris for consultation with French organized
labor leaders. No agreement could be reached, and the
delegation hurried back home. Then came the inva-
sion of Belgium, the call of the Government for the
French people to defend their country. Organized labor
responded with a spirit that thrilled the world."
1
There was no inconsistency in the French mind between
profession and action. It is a characteristic of French
intellect to demand a logical sequence. War was a no
less "monstrous thing" (la chose monstrueuse) than before,
but this war aimed a blow at the foundations of freedom
and justice, for which organized labor stood. And French
laborers rallied to the work of war on the battle line
and in the shop with a cry on their lips which showed
how they reconciled the previous anti-war professions
with their present actions: "Guerre à la guerre!" (War
against war.) This may have been in part the emotional-
intellectual appeal of ideas to the French mind, but it is
also a steadfast expression of purpose and is in absolute
accord with their subsequent actions. In fact, the labor
situation in France today has largely grown out of this
attitude.
Like labor organizations elsewhere, French workingmen
suffered much and yielded much during the war. They
obeyed the call to shoulder arms and left workshop and
farm. They returned at call to apply their skill in supply-
ing munitions of war. They submitted to being moved
to new districts where new factories sprang up. They
endured being huddled together, occupying temporized
beds in relays, being separated from their families, being
forced to live and to work in insanitary conditions,
having the working-day lengthened, they submitted
1 Cf. La Bataille, 1914.
280
1
even though protestingly. One of their leaders, M.
Albert Thomas, became Minister of Munitions. In the
early period of the war strikes almost ceased. As the
cost of living pressed more and more heavily on them,
the workers did resort to this old weapon for increasing
wages.2 The strike curve in France only shows the same
trend as in every other warring country. On the whole,
French organized labor upheld the war.
When the armistice came, labor organizations began to
function more actively. M. Léon Jouhaux, Secretary of
the C. G. T., published his pamphlet, "Les Travailleurs
devant La Paix," in which he states a program for labor
to follow. This will be discussed later in detail. The
high cost of living increased; unemployment increased;
demobilization was delayed; wages seemed inadequate.
The unprecedented reception of the American President,
whose fourteen points they endorsed, who was acclaimed
by French workingmen to be their spokesman, was
followed by reaction at unattained results. A threatened
railway strike in January was suppressed by the Govern-
ment; an actual strike by the miners succeeded in shorten-
ing their day and increasing their wages; an impending
strike of the postal unions was averted by being converted
into a "silent strike" for the brief space of one hour.
Here and there local strikes occurred. But these do not
demonstrate clearly the seething unrest among the masses
of people.
J
After the passage of the Eight-Hour Act, on April 18th,
agreements to bring it into operation had been made and
published, and then a violent spasm of strikes broke out.
They began with a strike of employees in the banks and
Exchange, then spread to food, clothing, metal, building
trades, and to the mines. In the metal trades it was
estimated that 150,000 workers were out. Threats of
other strikes came thick and fast, from the plumbers,
lithographers, nickel polishers, butchers, makers of
flowers and feathers, dramatic artists, picture-show
artists, carriage repairers, gas-lighters. The burden of the
demand was the eight-hour day, and a close second was
increase of wages. The apparently cheerful optimism
of many employers whom the Commission interviewed
did not seem to be justified by later events.³
¹ Cf. Léon Jouhaux: "La Bataille, Les Travailleurs dans la Guerre."
2 Cf. Roger Picard: "Les Grèves et La Guerre, Enquêtes Soumises au Comité
National d'Etudes Sociales et Politiques," 1917.
³ See copies of L'Information and La Democratie Nouvelle for period.
281
Apparently something had held the radical elements in
organized labor in check hitherto. They were probably
restrained by the hope and faith in the Peace Conference.
As has been pointed out, only credit and a wise, speedy
financial policy can save the situation from disaster.
§ 4. METHODS OF ORGANIZED LABOR IN FRANCE
Political leaders in France have proved disappointing
to organized labor, one and all. When raised to power
they seemed to assume an attitude of compromise with
the capitalist government. As a matter of fact, it is
true that Millerand, Briand, and Viviani sought com-
promise. But the syndicalists have had a more deeply
seated reason for refusing to follow political leaders. The
only way to hold labor together for unified action was in
their opinion to play up the clash of class interests.
A harmony between the bourgeoisie and the proletariat,
such as Waldeck-Rousseau sought, would be disastrous
to syndicalism. The preaching of an uncompromising
class struggle and the disappointment in the actual
accomplishment of radicals in power have discredited
political leaders with syndicalists.
66
It may be observed that even while the French Govern-
ment has come more and more under the influence of
radical socialists, syndicalism has trended definitely
away. That is, while the Government was becoming
socialistic, the workers were becoming revolutionary.
'At the Congress of Lyons, 1901, the C. G. T. may be
said to have entered definitely upon the revolutionary
pact. In 1906 the breach between the C. G. T. and
the socialists was attempted to be closed with some hope
for success, but not for long. With the election of M.
Léon Jouhaux as Secretary of the C. G. T., in 1909, the
triumph of revolutionary syndicalism was once more
secured.2
991
Some leaders have come forward who were not seeking
political preferment, such men are MM. Léon Jouhaux
and Albert Thomas. To be sure, they hold varying shades
of radicalism and have not always been able to agree
on the course of action on each occasion, but in the main
they have really led the syndicalist movement. Broadly,
1
¹ Levine, "Syndicalism in France,” p. 122.
2 Some kind of a common working basis between the C. G. T. and the Socialist
Party was again secured at a joint meeting, July, 1919.
282
they have held that it is necessary to overthrow the politi-
cal state and substitute an industrial state. Patriotic
sentiments, according to their doctrine, mean nothing.
"The workingman's country is where he finds work."
As the resolution passed at Marseilles, 1908, has it: "The
Congress repeats the formula of the International: "The
workingmen have no fatherland.""
""
Just what the new state is to be, the common working-
man has probably only vague ideas. In the apt French
phrasing it has been called the "unnamed state.' Some-
thing definite has, however, been described by the leaders.
It is to grow out of the existing syndical organizations
and to become a system of "economic federation."
"According to the idea of economic federalism, the
syndicat will constitute the cell of society." Apparently,
too, the Labor Exchanges would take care of local and
district problems, while the C. G. T. would look after the
more general ones. Railroads, for example, would become
a problem for the C. G. T., and likewise, presumably,
telegraphs, telephones, and postal service.
Laborers were first organized in France to secure their
aims without a strike² but experience taught them early
the effectiveness of the strike weapon. The success of
the widespread strikes in the United States, 1866-67, and of
their own strikes in 1869 had great effect. Labor delegates
presented to the Minister of Agriculture, Commerce, and
Public Works in 1868 a memorandum in which it is stated.
"We are all agreed to proceed by way of conciliation.
•
It is thus to avoid strikes, guaranteeing at the same time the
wages of workingmen, etc.”³
The idea of the general strike found adoption in the
C. G. T. Congress of Tours, 1896, and has continued as
part of its program. Theorizing there had been, in
unceasing flow. Frenchmen may be bored with politics,
as some have claimed, but they enjoy discussion, theoriz-
ing, analyzing, building up an imaginative world. There
is another side, however, a clear-cut realism which dis-
played itself emphatically in the Paris Peace Conference.
When it comes to action the plan must be a practical one,
taking frankly into account all the selfish weaknesses of
human nature. This is doubtless one powerful cause for the
trend away from political action toward industrial action.
¹ Levine, p. 134.
2 Lagardelle, “Evolution des Syndicalistes,” pp. 218–19.
3 Quoted, Levine, p. 37.
283
As has been pointed out above, the election of Jouhaux,
1909, as Secretary of the C. G. T., secured the triumph of
revolutionary syndicalism. In stating one phase of his
doctrine, he said:
"It is necessary that the Proletariat should know that be-
tween parliamentary Socialism, which is tending more and
more toward a simple democratization of existing social form,
and Syndicalism, which pursues the aim of a complete social
reformation, there is not only a divergence of methods, but,
particularly, divergence of aims.'
"1
The divergent methods to secure the divergent aims,
endorsed by the C. G. T., are strikes, the label, boycotts,
and sabotage.
There is one very practical fact that made industrial
action of a sudden, overwhelming, effective sort especially
appeal to French workingmen. This is the poverty of
the syndicats. The dues are very low and poorly paid in.
There is reiterated complaint from syndicat officials
that the funds are not sufficient to carry on the work. It
was never possible to accumulate large reserve funds. A
strike situation, such as occurred among the Yorkshire
miners in England, where "the strike committee has
already disbursed £250,000 in benefits," would be
incredible in France. French workmen cannot afford
prolonged idleness; they must, therefore, resort to swift,
immediately effective action, or to persistent nagging
methods while work goes on. The latter is sabotage; the
former is the general strike. Both are industrial action.
The general strike has gained wide acceptance among
French workers. The first vote on it as a method was
taken by the Syndicats at Bordeaux, 1888. It was then
conceived of as being "a peaceful cessation of work," or
a "peaceful strike with folded arms." The labor leaders
at least pretend to believe that almost in the twinkling
of an eye industry will be transformed if the general
strike is effectively used. Up to the present, something
has always gone wrong with the plans.
In actual practice it has been found that the general
strike, even when not involving all industry, can be used
with considerable effect to secure political aims of less
consequence than the total annihilation of the state. It
has been used as a political weapon. Take, as an example,
¹ Quoted by Levine, p. 200.
2 Industrial News Survey, Vol. III, No. 24, p. 5.
284
the Labor Day (May 1, 1919) demonstration, when the
order went out from C. G. T. headquarters that all
economic activity involving labor must cease for the day
in order to show the supreme importance of workers to
such activity. It is to be remembered that while only
about 20 per cent of French labor is organized, and pro-
bably not more than 600,000 organized workers out of a
possible 1,100,000 adhere to the C. G. T., the general
strike policy involves other than peaceful methods toward
unorganized workers if they refuse to comply with orders.
Or take the vote for a general strike of June 12, 1919, as a
protest against the delay in signing peace terms, the high
cost of living, the threat of taxes, the intervention in the
Russian and Hungarian revolution, and the delay in
demobilization.
It seems clear, therefore, that while the syndicalists
have rejected the political methods of the socialists, and
while, intellectually, they reject any compromise with the
state, they, as a practical fact, are willing to have one of
their leaders in the Ministry, and do use their industrial
methods to secure political aims. The syndicalists may
be said to employ politico-industrial methods.
§ 5. ATTITUDE OF GOVERNMENT TO SYNDICATS
When syndicats first began to be formed there were
strict laws prohibiting them. Only in 1868 did the
Ministry declare that, without changing the law, it
would tolerate labor organizations. In 1871 the right
to strike was recognized. The syndicats were thence-
forward free to pursue their development. From time
to time, however, as in the railway strikes of 1910,
the Government has called the strikers to the colors, thus
putting them under military discipline. This was done
in the railway strike of last January, although the temper
of the workers was such that its efficacy was for a time in
doubt. In general, during the war, French industry
was strictly under military control, which was necessarily
opposed in principle to syndicalism. The Government
has not, on the whole, been hostile to the syndicats, but
rather conciliatory and placating.
It has already been pointed out that since the Waldeck-
Rousseau Ministry (1899) the French Government has
been predominantly radical. The Socialists have had
their own representation in the Chamber of Deputies,
as the following table will show:
285
Year
1893
1906
1910
1914
MEMBERS IN CHAMBER OF DEPUTIES (602)
United
Socialists
Independent
Socialists
Total
40
40
•
54
20
74
76
32
108
102
30
132
•
They have had their prime ministers, such as Millerand
and Viviani, and their members of the Cabinet. One
effect of Socialist politicians has been a placating policy
on the part of the Government toward labor, and Socialist
affiliations have been no great barrier to political success.
A considerable body of legislation friendly to labor
has been passed in France. A few examples will be noted:
the right to strike, 1871; a ten-hour day law, March 30,
1900; old age pension law, 1909, since modified as the
result of labor complaints; conciliation and arbitration
law, 1917; eight-hour day law, 1919. The results of the
Commission's inquiries seem to show that the conciliation
and arbitration law is neither widely known nor effectively
applied. The eight-hour day law was secured during the
Peace Conference through considerable political pressure
and with the most reluctant consent of the employers,
whose objections are given below.¹ The political pressure
is discussed more in detail in a later section.2
¹ Position taken by Employer Members of a committee including employer and
labor leaders, appointed by the Minister of Labor to investigate eight-hour day.
The employer members of the International Commission of Labor Agreements
representing the various branches of French Industry consider a résumé of
their viewpoint expedient at this stage of the Commisssion's investigations.
Consulted by the Minister of Labor as to whether the principle of the eight-
hour day should be included in the Peace Treaty, the employers declared that,
in their opinion, such a principle should not be inserted in the Treaty.
The employers have proven by official statistics that:
1. Before the war the total national production was valued at about 40
thousand million francs.
2. The death or incapacitation of almost two million Frenchmen in their
prime has diminished the number of industrial, commercial, and agricultural
producers about 9 per cent.
3. In this loss of manual labor France is affected:
1½ times more than Germany,
2
5
CC
،،
،،
Belgium,
England,
5 times more than Italy,
56
CC
k
the United States.
4. The shocking lowering of the birth rate in France, which will be felt
until 1950; the 20 per cent reduction of the working-day owing to the substitu-
tion of the ten-hour by the eight-hour day. This will result practically in a 30
per cent reduction of the productive capacity of France, which will bring about
a deduction of 11 or 12 thousand million francs from the 40 thousand million
cited above. Only a negligible part of this loss could be retrieved by an increase
in production.
2 Cf. “International Political Labor Movement," Chap. XX, p. 308.
286
After this specfic statement of the stand taken by employers
the general economic conditions of France are briefly dis-
cussed. Owing to the serious situation the manufacturers feel
that a general and simultaneous reduction of working hours
in the various branches of industry would have a "disastrous
effect" on national production. They believe that were they
not to state this opinion frankly they would be “breaking
faith with their professional and civic obligation."
They point out that the eight-hour day would cause agri-
cultural labor to inmigrate into the cities. Particularly as
about 55 per cent of the men lost in the war were agricultural
laborers, this effect of the eight-hour day would be serious.
Furthermore, the employers emphasize that even a further
development of machinery will not counteract the loss of labor
resulting from the eight-hour day, particularly as in the main
industries of France even highly specialized machinery cannot
replace labor.
If this eight-hour day clause is included in the Peace Treaty,
the employers suggest that their Government receive for
France special privileges along this line.
As the representatives of labor have stated that the eight-
hour day will not decrease production, the employers are ready
to investigate measures to bring this about. Such an in-
vestigation should include the consideration of the following
points:
1. General regulations covering hours of work: limitations
by day, week, year, etc.
2. Extensions and agreements which may be provided
either for industry as a whole; for certain industries;
for certain regions, particularly the invaded ones;
extensions and agreements should maintain or restore
the minimum local or regional production.
3. Permanent derogations to be instituted for certain indus-
tries the execution of which would not fit into the general
regulations.
4. Temporary derogations to be instituted for the industries
as a whole, in case of unusual increase of work, national
necessity or accidents.
§ 6. RELATION BETWEEN EMPLOYER AND EMPLOYEE
We come now to the real point at issue; what is the
relation between the French employer and his workmen?
The Commission secured evidence on the question from
both sides, and can sum up its findings as follows:
(1) There seemed to prevail a general spirit of op-
timism or even nonchalance as regards the labor situation,
287
and particularly on the part of employers. The labor
problem did not appear to them to be the most pressing
one they had to face. Said one employer:
"With plenty of work, there is no serious labor problem
in France."
Said another:
"There is no cause for worry about the labor situation in
France; the only serious trouble is financial."
They seem to feel, too, a confident strength in their posi-
tion and to believe that, if reconstruction work begins soon
and unemployment disappears, they can handle any such
problems as may arise. It is the idle French worker
who is dangerous, not the radical leader or the syndicat.
And on the labor side, a similar optimistic assurance was
expressed by a prominent leader:
"Until recently, tradition has governed both masters and
men and they have insisted on continuing to work as they
always have done before. Now both are ready to advance."
(2) The French employers do not seem to feel that
theirs is a unionized labor problem so much as a general
social problem. It was agreed that syndicalism was
spreading rapidly among French labor at the present
time, but there was, nevertheless, no apprehension
directly from this fact.
"Labor Unions are not strong, except in the large concerns,
and there are not many large concerns in France. 90 per cent
of the shops employ not more than fifty men each. In these
small shops there are no labor troubles."
Or, again:
"French labor can easily be controlled with a firm hand.”
"The employers in the Lyons district are working in close
co-operation. They are also getting along very well with the
better class of labor leaders."
(3) There was no evidence of collective bargaining
between French employer and employee. The working
contract runs on the basis of an individual contract in
France. An employer from a large plant said that his
company made individual written contracts with the
men. He gave the Commission some copies of the regular
form of contract:
288
3
"There was," he said, "no serious objection to these
individual contracts by the labor unions. The workmen
favor them strongly. The Frenchman likes to feel that he is
making his own agreements, and likes to see his name signed
to an agreement. Any difficulties that arise out of these
agreements are settled by the Conseils des Prud'hommes."
M. André Citröen said to the Commission in regard to
his own shop and to the situation in general:
"There is no collective bargaining in this shop, and this
[collective bargaining] is not a general practice in France."
(4) There does not seem to be the attitude of French
labor, as is true of British, to restrict output. One
manufacturer after another told the Commission that
such a disposition was not now to be found among their
workmen. It has been noted that France is different
from Great Britain in being a country with a deficiency
and not with a surplus of labor. This may be one reason
for labor's attitude. The result is that the syndicats look
with approval upon the introduction of labor-saving
devices, of women workers, and scientific management
schemes. Even while demanding an eight-hour day, the
labor leaders tell the workmen that production must be
kept up and increased.¹ The program of the C. G. T.
as announced by Léon Jouhaux has been cited. Some
employers feel confident the new and more efficient
methods will quickly develop out of this co-operative
attitude. Said one:
"During the war all workers began to realize that efficiency
is the only way out for the French industries. They dis-
covered that the old ideas were based on bad economics and
now they are doing much better work. The union leaders are
arguing for high efficiency."
A prominent labor leader declared:
"The French workman is very adaptable. He will soon
learn methods of high production and intensive operation.
There are not enough workpeople to produce the
country's necessities; therefore, the labor unions fully approve
of the adoption of efficiency methods, and the workmen are
demanding labor-saving machinery."
(5) The French employers appear to have a sympa-
thetic understanding of the laborers' working methods.
¹ A. Thomas: L'Information, March 23, 1919.
289
They feel that they cannot push their workmen too hard
or hold them up to regulations that are too strict.
•
"French workpeople are not disposed to steady, continuous
effort. They are slow in getting started, and they have to walk
around considerably. They will not concentrate their efforts
sufficiently to accomplish as much work in eight hours as they
formerly did in nine or ten. A Frenchman naturally resents
being ordered about. Even in war he had to be given much
personal latitude as a soldier. Individualism is a great factor
in the French disposition."
"There is no serious objection of French machinery workers
to the sixty-hour week. The eight-hour day is desired only by
the agitators. The average French workman could probably
do as much work in eight hours as in ten, but that is not the
French way of working. A Frenchman naturally prefers to
stop occasionally and walk around the shop."
It is probable that the trait here referred to as “indi-
vidualism" would be called by an American, temperament.
The French are certainly not individualistic, as the British
are.
(6) It is noteworthy, too, that the men interviewed
were united in their praise of women workers. There
are a great many in France, even in time of peace. The
official figures for July, 1917, are 626,881 women workers.
A silk manufacturer of Lyons said 80 per cent of his
employees were women; another manufacturer of the
same city said in his force of 3,000 there were 300 women.
Of the character of their work, one man declared:
"Women have been found better than men in all jobs.
They are more sober, work harder, and save their money."
It may be added that organized workmen have not
only not objected to the introduction of women workers,
but have demanded equal pay for equal work.
(7) Apparently not much has been done as yet in
the matter of welfare work. The subject was, however,
in the minds of the men interviewed. Some admitted
frankly that shop conditions were bad and must be im-
proved; some were taking up with welfare suggestions;
in one conspicuous case welfare work was being done
successfully. This last was the Citröen plant.
M. Citröen attributes a large part of his success to the
welfare work carried on in his works. This work is done as a
290
pure matter of business, and not as a philanthropy. When he
was operating at maximum capacity, the total cost of the wel-
fare work, including depreciation, was not more than 3 per
cent of the annual payroll, and in normal times it should not
exceed 4 per cent.
The company provides all medical services free, including
surgery, dentistry, etc.
Many families have all their representatives in the works,
fathers, mothers, and children. The mothers are given time
to nurse babies in the middle of the morning and in the middle
of the afternoon, special rooms being provided for the purpose.
Babies, and children of the kindergarten age, are taken care
of by nurses and teachers paid by the company. M. Citröen
showed us an admirable building situated in the midst of a
beautiful garden, and provided with all modern conveniences,
including an artistic kindergarten room.
The attitude of labor is not wholly in sympathy with
this experiment. One labor leader said of it:
"I am opposed to the welfare methods of Citröen. I think
the masters should give the men a good plant and should help
them to get high production, but should cut out the fancy
welfare work."
About two weeks after the interview with M. Citröen,
there was a local strike in his works for higher wages
and other changes in working conditions. The Com-
mission was advised that M. Citröen had decided to
inaugurate a shop committee plan of handling labor
disputes. What was the outcome of the strike was not
reported to the Commission.
(8) There has never been the question of recognizing
labor unions in France as in England or the United States.
The generally tolerant attitude of French employers is
also reflected here, and apparently the war has improved
One labor leader complained rather bitterly that
"only a few masters of industry in France will confer
with labor leaders without bitterness." An official of a
large employers' association, however, said:
it.
"Employers are developing with the union leaders a
plan for an employment bureau, managed by the workers and
employers jointly, not by the politicians."
One company does "not exclude workmen because of
union membership, but there is a limit to the permissible
amount of union activity during company hours." A
manufacturer said:
291
ery
"Before the war employers were opposed to dealing with
labor leaders. During the war the Government had to deal
with labor leaders, as the government officials did not have
time to deal with workpeople individually. Employers were,
therefore, forced to do the same. Now the employers are
disposed to continue this practice, believing that the results
will be satisfactory. No bitterness has developed in the
discussion with labor leaders."
(9) On the whole, there seems to be no lack of machin-
for bringing the French employer into contact with his
men. Some employers said that they had not used even
the Councils of Prud'hommes; others said many small
problems were settled by the Councils. Apparently the
spirit of co-operation makes elaborate machinery un-
necessary, even in the large plants. One manufacturer
gives an hour a day, from six to seven in the evening, to
meeting any of his men who have complaints to make.
Another summed up the matter by saying:
"Most employers keep in touch with their men. This is
the best way to control labor."
(10) The French industrialists that were interviewed
by the Commission thought there was much loose talk
about Bolshevism in labor circles. There was, however,
in their judgment, no danger in that direction unless
industrial conditions grew worse or failed to improve.
!
292
CHAPTER XIX
THE POLITICAL LABOR SITUATION IN ITALY
§ 1. THE GENERAL SITUATION
Italy is not a highly industrialized country. It has,
however, a surplus labor population that has been kept
"skimmed off" by emigration for long-term employment
in foreign oversea lands or by migratory work in neighbor-
ing states. Italy has for years furnished a supply of
workmen to the northeastern section of France and the
region along the Rhine. The bulk of Italian workmen at
home are engaged in agriculture. Out of a total popula-
tion, in 1917, of 36,716,522, there were 9,026,076 "oc-
cupied" with agriculture; 4,945,994 were engaged in
industry; 921,578 in commerce. There were 2,476,833
male and 1,319,728 female proprietors of land and facto-
ries. Such an industrial and commercial distribution of
population must have an important effect upon the labor
movement.
The financial burden of Italy is tremendous. It was
explained to your Commission that the war cost was
about 80,000,000,000 lire. In 1913 the annual budget
called for 1,600,000,000 lire; the interest on the present
debt is 4,000,000,000 lire; the total annual income needed
is 6,600,000,000 lire. Added to this is the most unfavor-
able condition of foreign exchange, which cannot be
corrected without goods to export. Factories cannot be
started without coal and raw materials, and Italy does
not possess either of these in substantial quantities.
They must come from outside the country and credit
must be established to make the purchases. As an illustra-
tion of what this situation means the following prices,
which were in force from 1917 on, are given:
Coal for steam (Cardiff, splint)
Anthracite cobbles
Metallurgic coke
Pig-iron ematites
Hard steel for shells
•
•
per ton
385 lire
405
(C
(C
515
CC
(C
800
(C CC
900
CC
850
པ༷
Soft steel for shells
1 "Forze Economiche Italiane,” p. 1.
293
Hard plated steel
Soft plated steel
Rods
Plates
CC
per ton 1,350 lbs.
1,200
(C
1,200
CC
1,400
(C
306
Under such a burden of debt and prices social unrest is
inevitable. Almost in desperation, projects are being
considered looking toward forced loans from those who
have benefited financially by the war, or even the re-
pudiation of internal debts. Socialistic and other radical
doctrines are bound to flourish.
"Never since the unification of Italy has industry been
faced with such a crisis, so rich in promise, so filled with
peril." 1
The many Italians who have gone from their home land
as colonists or to work for a considerable period abroad
have always been a substantial source of revenue to Italy.
They have shown themselves to be industrious and thrifty,
and have accumulated large sums in savings banks in
addition to allowances sent home from time to time.
The sums sent home from the United States have
amounted annually to about $80,000,000. From those
Italian emigrants who have gone to Argentina, an annual
sum of something like $50,000,000 has been returned.
As a result of the war, Italy has placed an external debt
with the United States and Great Britain of about
$2,500,000,000, the interest on which, at 5 per cent, would
amount to about $125,000,000, or approximately the
sum she could expect as a credit in the international
account from her emigrants. A large per cent of these
emigrants answered the call of Italy to come and fight
for her preservation and are now to be cared for. It is
stated that the Italian Government is planning to carry
out a more enlightened policy of colonization to draw off
her surplus population.
There has been in Italy much unrest and dissatisfaction
due to the slowness with which demobilization has taken
place. The Government held that there was no need for
a carefully laid plan for returning pivotal men, as in
Great Britain, because of the very large agricultural
element. In general, it was arranged to release the older
men first. There was, however, a decided reluctance on
¹ Amoroso, L.: "Situazione Economica," Giornale degli economisti e rivista
di Statistica, April, 1919.
294
the part of the Government to let the soldiers go back to
jobless industrial centers. It has already been pointed
out that industry could not start moving without raw
materials and coal, and these could not be had without
foreign credit. In the final analysis the problem in
Italy, as in France, is one of finance.
Industrial and political influences were interactive in
causing agitation in Italy. The war, it must be remem-
bered, did not receive unanimous support. The Ministe-
rial Government was never too secure. The propaganda
for securing broader stretches of enemy territory, including
Fiume, tended toward unrest. The high cost of living was
pressing sorely on the great masses. The lack of industrial
activity was disheartening. Outside influences from
enemy countries were still at work.
The Germans had in the past maintained an active propa-
ganda among the leaders of labor unions and Socialists. In
one case, such a leader had accumulated property worth a
million lire and had become a member of Parliament. The
Germans did this on the ground that they could influence the
labor element, because they would believe what one of their
own numbers said, while they would not take the word of an
employer.
The General Confederation of Labor (Confederazione
Generale del Lavoro), with its 420,000 members, co-
operates with the parliamentary Socialists. As elsewhere
the Socialist parties depend largely on the working classes
for their clientele; the Italian Social Union, formed in
1918 in evident opposition to the Italian Socialist Party,
is in membership practically identical with the Italian
Labor Union. All of these influences, political and indus-
trial, have been increasing the seething unrest throughout
Italy.
As tending to neutralize the disturbing influences
indicated above have been the high prices that agri-
culturists received for produce and the high wages and
war bonuses received by industrial workers.
The re-
turning soldiers have, therefore, found their families
better off than they expected.
The men returning from the army, who had formerly been
peasants, were happily surprised at finding their families at
home in better financial condition than they had expected.
The reason for this was the prices of agricultural products
produced by their families had become very high during the
295
war, and, as a consequence, they had more actual money for
what they produced than ever before.
The employees of the largest industrial establishment in
Italy had averaged before the war about 6 or 8 lire per day.
During the war this average had increased to about 18
or 20 lire, and on piecework some men made as high as
$20 per day.
Italian labor is not highly organized, not more than
20 per cent being in unions. This small minority, how-
ever, is the radical element, and by use of violence forces
others to follow its lead. It is this policy that gives a
radical reputation to Italian labor. The new element
in the situation is the organizing of office forces, the fore-
men, the clerks, the superintendents, the draughtsmen,
the bookkeepers. As in Great Britain, unionism is con-
centrated in the large basic industries. The three im-
portant organizations are the General Confederation of
Labor, with 420,000 members, the Italian Labor Union,
with 120,000, the Catholic Unions, with 120,000. The
Independent Unions, with a membership of 250,000,
resemble most closely the American Federation of Labor
in their policy. A newly formed organization, the Italian
Labor Union, was founded in 1918, with a membership
of about 162,000, and is opposed to the General Confedera-
tion.
The Italian laborer, like the French, is unwilling to pay
burdensome union dues. Membership is, therefore,
variable, leaping up to portentous figures in a crisis,
falling to a small per cent in peaceful times. Unions
cannot accumulate large reserve funds and are unwilling
to face a long drawn out strike. In Italy, therefore, as
in France, the movement for a general strike, to paralyze
all industry and bring the crisis immediately, gains
headway. The figures of membership at any one time.
may be deceptive.
Unity in Italian labor organizations is largely super-
ficial. One and all they contain violent explosive power.
This fact has long been true of them, as their history shows.
The Italian Labour and Socialist movement, like that of
France, has been subject to serious divisions, resulting in the
formation of continually shifting groups, which prevent the
creation of a united organization. Moreover, as in France,
there is a strong element of Syndicalism in the Trade Unions,
which hinders effective co-operation between those bodies and
the political movement.
•
296
There have been three main sections in the party. One led
by Turati is reformist in character, believing in political
action and evolutionary socialism. Arturo Labriola was the
head of a second section of extremists. He left the party in
1907 to form a separate body of Syndicalists. Professor
Ferri was the leader of an intermediate group known as
Integralists. In 1906, owing to internal disputes, 30 Socialist
deputies resigned their seats, and 25 were re-elected. In the
same year at the Congress of the party, the Syndicalist
element was defeated by a majority of five to one, and left the
party. But contention persisted between the other groups,
and at Milan in 1910 the followers of Turati carried a resolu-
tion in support of their view and policy against the Revolu-
tionists and Integralists by a large majority.
The war in Tripoli caused further discord. The Govern-
ment were at first supported by the Socialists, but later most
of them withdrew their support. Several deputies were ex-
pelled, who then formed a new reformist party of their own.
Professor Ferri resigned from the party and the Chamber,
and was re-elected as an independent. These dissensions,
however, although fatal to unity and effectiveness, have not
prevented the rapid growth of Socialist representation in
Parliament.¹
No better commentary can be made on the volatile
temperament behind the Italian labor movement than
this statement of facts. It shows how socialistic ideas,
are sifting down into the minds of workmen, but that the
reaction is to make those minds less easily controlled by
an organization. Here lies an element of safety and an
element of danger; an appeal will bring quick results,
whether that appeal is to the better impulses or to the
worse. At any rate, Italian labor organizations are builded
upon a powder mine.
Much blame for the social and industrial unrest in
Italy is cast upon the Government. The criticism is aimed
not at a wrong policy but at the lack of any policy at all.
There has been a failure, it is said, to provide any system
of public service to bridge over the readjustment period;
no readjustment of industries themselves has been under-
taken by the Government; there is no financial policy,
although bankruptcy stares the Government in the face;
there is notorious disorder in all Government service.
This lack of definite stand is said to be due to political
subterfuge. The result of these recriminations is an
unstable and therefore a timorous ministry.
¹ Labour Yearbook, 1916, p. 416.
297
§ 2. ITALIAN LABOR IN THE WAR
66
The story of Italian labor during the war is largely the
story of industrial mobilization. Again, it must not be
understood that there were no disturbing influences,
but on the whole, as indicated in the account given below,
"the results seem good." Outside the economical
divergences," as, for instance, the high cost of living,
where differences were settled in a friendly way, the work-
people of Italy have "proved very active and disciplined
during the war." There were but few strikes and those
involved a small number of men.
The chief nucleus for the mobilization of Italian
industries and the ones that formed the principal part
of the mobilized industries were the so-called "auxiliary"
or controlled establishments.¹ In order to intensify and
to ensure the continuity of war production, it was con-
sidered necessary to put the principal factories for the
making of munitions and war materials under the control
of a special system. The firms that were placed under
that system bore the name of "auxiliary" establishments.
The general system of control was known as "auxiliarity.”
The system was introduced for the first time by the decree
of August 22, 1915. A following decree on July 5, 1917,
also applied to those industries that did not serve directly
the production of war material but concerned national
economy and the general welfare of the country. An
industrial establishment could be officially declared
auxiliary when its importance and the character of its
production rendered military supervision necessary.
Such supervision was frequently sought by establishments.
Under the decree of the King, announced June 26, 1915,
a system of industrial mobilization was immediately
sought for. The organization, it was claimed, must.
fulfill the following conditions:
1. It must be simple, decentralized, capable of quick action,
with local executive officials who could act promptly and
who could be in direct contact with the industries.
2. It must perform with the highest possible uniformity
throughout the entire country by means of general instruc-
tions and directive ideas from a general headquarters,
which, naturally, had to be in Rome, the demands of the
Arms and Munitions Board.
1 The material for the rest of this section is taken from a report made to the
Commission by Signor Cavaliero Enrico Toniolo.
298
3. It must provide the workmen, both civil and military, with
a means of demanding fair treatment and with a power of
appeal in case they should feel their rights were infringed
upon.
And all this without the least interruption of work.
A central committee, therefore, of industrial mobiliza-
tion was organized in Rome and sub-committees, called
Regional Committees, were organized in various local
centers. The rapid increase in the number of establish-
ments brought under control can be seen from the follow-
ing figures taken from successive reports:
Number of
Report
I
II
V
_=BR>>
III
IV
VI
•
Number of
Establishments
Number of
Skilled Workmen
125
•
111,400
290
173,000
800
325,000
1,000
450,000
1,600
546,000
1,750
604,000
These reports do not include several establishments of
minor importance.
The number of establishments outside of military
control and the number of skilled workmen employed in
them are shown by the following three reports:
Date of
Report
December 31, 1916
June 30, 1917
October 31, 1917
•
•
•
Number of
Establishments
Number of
Skilled Workmen
1,650
89,000
1,700
100,000
1,820
105,000
If to the controlled and uncontrolled establishments one
adds the numerous military establishments that in the
aggregate employed about 70,000 workmen, a total of
over 3,600 workshops with an aggregate of over 780,000
skilled workmen will be reached. A few months after
the period covered by the reports, the number had
mounted to over 1,200,000 skilled workmen. Even this
number does not include several other hundreds of
thousands of workmen and workwomen belonging to
manufacturing industries of various sorts.
299
Among the 780,000 workmen employed in the manu-
facture of arms and munitions, only about 280,000, or 37
per cent, had been exempted from active military service.
This means that about one man out of three capable of
serving in the army was kept working in the munition
factories. It may be seen from these figures that a very
small percentage of able-bodied men was kept back from
active military service. As a matter of fact, the great
majority of those who worked in the factories belonged
to the military class of some year preceding 1890. Before
the end of the war those men belonging to the classes of
1890 and 1891 were recalled from the front line for service.
in munition factories. The great body of workers had
to be recruited, therefore, from older men and from those
too young for military service and from women workers.
More than 200,000 women and boys were at work in these
factories.
The Italian Government has expressed its appreciation
and gratitude for the splendid work done by this group of
workmen "fighting, too, its own war out," against techni-
cal difficulties of all kinds, against danger of poisonous
products, and against risks of explosions. This army also
had its victims, its dead, its mutilated, due to the mishaps
and misfortunes that could not be prevented and that were
increased by the speed of the work and the lack of skill
among the workmen.
The chief features of the system of control were as
follows: first, the Government undertook to provide the
controlled firms with raw material, especially those whose
raw materials came from a foreign source and the supply
of which might grow scarce if left to the individual firms.
In order to secure an ample supply of materials, a system
of control and distribution was established for coal, steel,
gasoline, etc. This system of distribution was entirely
under Government control. Second, the Government
undertook also to insure to the controlled establishments
the necessary skilled workmen by exemption from military
service, by professional training, and by bringing in skilled
workmen from colonies. In order to provide training
for the unskilled workmen, schools were established and
placed in charge of soldiers who were not able to be on
active service, in Turin, Milan, Modena, Genoa, Rome,
Naples, and Palermo. These schools have trained more
than 12,000 workmen.
300
The controlled establishments were under strict military
discipline so that they were not allowed to refuse to carry
out the work assigned them, which concerned military
affairs. Every order had to be carried out even if in
doing so new or increased equipment was made necessary.
The closing down of plants, strikes, slackness, sabotage,
and every action that would interfere with high speed
production was prohibited.
Under the system of prohibition and restriction imposed
by military discipline, it became necessary for the Govern-
ment to set up some kind of machinery for the handling of
differences that arose between workmen and employers.
There were the questions of wages, of prices of products,
and of grievances which had to be answered. For the
examination of differences arising between employers and
employees, Regional Committees of Industrial Mobiliza-
tion were formed, to which the power of making final
decisions was given. An appeal from the decision of the
Regional Committee to the Central Committee of In-
dustrial Mobilization at Rome was possible.
The principle was announced at the time of mobilizing
industry that conditions of labor should remain the same
as those prior to the war. Nevertheless, some freedom
of action was granted to skilled workmen who were
dissatisfied with conditions of work and of living. No
changes in wage contracts, however, could be made
without the approval of the Regional Committee and of
the Central Committee of Industrial Mobilization.
During the war wages were increased from time to time,
either under the form of indemnity for the high cost of
living or as an increase of pay fully justified by the prices
received for the products.
There was, at first, an unregulated extension of work.
hours due to the demand for high speed production in
military establishments. After a time, however, the
Committees of Industrial Mobilization succeeded in
restoring the pre-war work hours, or, at least, in reducing
them sufficiently to avoid excessive strain and exhaustion
of the workmen. With the entrance into the arms and
munition factories of women workers and boys, further
restrictions in the length of the workday were made.
necessary.
Special circulars were sent out by the Industrial Mobili-
zation Board regarding the wages to be paid to military
301
workmen. These workmen were divided into six classes.
and a minimum wage was established for each class.
From the employers in these military establishments, the
workmen were supposed to receive a wage equal to civil-
ians who were doing the same kind of work. The result
was that many military workmen received wages much
higher than the minimum fixed by the wage list. For
instance, a coppersmith detailed to factory work from
active service succeeded in getting 8 lire a day. The
same amount was paid to an electrician, a turner, a
carpenter and plate-layer. There were some such work-
men that succeeded in getting even more than 10 or 12
lire per day.
For the soldiers who were called into active service,
the Government settled subsidies upon their families
according to the following list:
Wife
Character of Individual
Each child
Single parent
•
Single brother or sister (age twelve years)
Each other person
Large
Parishes
Other
Parishes
[Lire]
[Lire ]
per day
0.85
0.75
0.45
0.40
0.85
0.75
0.85
0.75
0.45
0.40
When a soldier was detailed to factory work, his family
ceased to receive the subsidy. It might be, however, that,
if the military workman did not receive sufficient pay or
was called far away from his family, the Board would
reestablish the subsidy.
In order to insure continuity of work and to avoid all
industrial difficulties that would delay output and to
prevent strikes, all workmen in military establishments
were liable to become subject to military discipline at
the discretion of the Board. In this way, the giving up
of work was equal to desertion from the army, and there-
fore punishable according to the military criminal code.
Any kind of insubordination or any refusal to follow
orders, even of a technical character, were punishable
according to military rules. This system was adopted by
the regulation established August 22, 1915. It was later
modified and appeared in final form in the decree of
November 5, 1916. The judges in cases of this kind
:
302
were selected from the military tribunals. Supervision
for inforcing of discipline was entrusted to army officers.
These officers, however, did not supplant the authority
of foremen or directors in the plant. They were rather
used to reinforce the rigid discipline in each establishment.
In this way it was possible to maintain a fairly limited
number of army officers employed in such service. The
proportion on the average was about one officer for each
2,000 workmen. The mode of punishment most generally
used was military imprisonment. The entire system was
adopted without objection and gave on the whole good
results. The number of cases of serious discipline did not
reach an average of two per day for each 10,000 workmen.
Under this system of discipline, individual absences
not justified decreased about one-half in comparison
with the preceding period. Strikes of an economic nature
almost entirely vanished. There were some isolated
cases of strikes, but they were limited to single firms and
were of short duration. There were practically no cases
of factories closing; there were no lockouts. Dismissals,
resignation, transfer from one establishment to another
without permission were absolutely regulated. The
number of cases settled by Regional Committees up to
August, 1917, was 289 and involved 170,000 workmen.
The differences settled by arbitration numbered 81 and
involved 63,000 workmen. There were 30 appeals from
the Regional Committees to the Central Committee.
§3. ITALIAN LABOR SINCE THE ARMISTICE
The period since the signing of the armistice has been
one of increasing unrest among Italian workpeople. Al-
though not highly organized, the workmen of Italy who
«re radical make up the primal force of labor unions and
are able to swing into line, in the emergency, a large
number of the unorganized.
From among the unions come the agitators, and these
have found fruitful fields in Italy since November 11th.
The ferment that was repressed during the war rose when
the fighting was over, flashing out here and there in
strikes and riots. Gradually there floated into definition
a plan for a general strike to secure, as the radicals put it,
"the dictatorship of the proletariat." The first date set
for such a strike was Labor Day, May 1st, but this proving
303
abortive, a second date, July 21st, was set. As this day
approached, labor disturbances increased in number and
violence, but the movement failed to culminate in a
general strike.
As in France and Great Britain, the causes of unrest.
in Italy are partly social, partly political, and partly in-
dustrial. The widespread poverty in Italy has been
accentuated by the excessively high prices of foodstuffs
and wearing apparel. Bread riots have been of frequent
occurrence and of violent character since the armistice.
Political dissensions were rife in Italy during the war and
instability marked the Ministry that was finally displaced
in June. The Fiume incident points the moral here. The
big economic problems in Italy have been (a) finance,
(b) industrial readjustment to peace-time basis, (c) coal
and raw materials, and (d) transportation. These are,
of course, interacting influences, the lack of foreign credits
preventing the purchase of raw materials which in their
turn were essential to a revival of industry, and the lack
of transportation preventing the import of coal. Without
the desired revival of industry, the soldiers were kept
mobilized to obviate unemployment and prices rose until
they were 40 per cent higher than elsewhere.
1
During the war wages had risen rapidly in Italy, as
elsewhere. After the armistice the demands of labor
were often extravagant in character. In one large plant
visited by the Commission there was a serious strike.
Some time before, they granted the eight-hour day; then their
clerks, bookkeepers, and office help formed a syndicat and struck
for a 30 per cent advance on the first 100 lire of the monthly
wage and 10 per cent on the second 100 lire of the monthly
wage. The company conceded these rates and the men re-
turned to work. The present wage for this class of work runs
from 400 to 1,200 lire per month. Following this the engi-
neers, who include designers, draftsmen, shop superintendents,
foremen, instructors, etc., seeing how easily the office force
had secured their demands, formed a syndicat consisting of
1,000 employees and demanded classification into three grades,
each group to receive 1,200, 1,800 and 2,400 lire per month,
respectively. As these rates were extortionate and entirely
beyond the company's ability to grant, they refused the de
mand and the men struck.
¹ London Times, March 29, 1919.
304
Said another:
It is a part of the policy of labor to ask for a share in the
management. They make an undisguised claim over the con-
trol of industry. They make increasing demands upon the
employers, believing that if the employer will be unable to
exist under these new conditions, they unhesitatingly demand
that they should then take over the property. Thus the labor
demands lead inevitably to socialistic control over property.
And further:
The claims of the laborers (on Tramway System of Rome)
became so extreme as to wages and other matters that the
expense of operation made the tramway unprofitable at the
present rate of fares. The only solution was an increase in the
fares. It was realized that if they were raised by a private
company there would be such opposition to it as to make it
impossible.
In the silk industry
it was explained that the Italian costs were 40 per cent more
than those of Japan. Consequently, the Italian establish-
ments had lost the American market already for at least two
years. . . . The high Italian costs were largely due to wages.
In March there had been a rise in wages of 20 per cent. Now
there was a demand from them for the eight-hour day with
the same rate as formerly paid for ten hours.
The Government, it has been claimed,¹ has been without
a policy; it has drifted or has veered and tacked to catch
the shifting political breeze. Some things, however, the
Government has done to allay the general discontent.
Important among these is the political pressure brought
to bear upon employers to adopt the principle of a mini-
mum wage and of an eight-hour day. The tendency of the
minimum wage and the eight-hour day, however, was to
increase further the cost of living, and bread riots became
more violent. Nor did such a movement start the wheels
of industry or secure raw materials and coal. Of more
direct effect was the decision by the Government to fix
the price of bread and wheat, and to distribute 3,500,000
pairs of "national" shoes within the year. A card system
has been developed for distributing the supplies of wearing
apparel, by means of which 750,000 pairs of shoes, 50,000
meters of heavy cotton-wool goods, 71,000 meters of light
cotton-wool goods, 68,000 meters of flannels are already
¹ Amoroso, Luigi: Giornale degli Economisti e revisti di Statistica, April, 1919,
"La Situazione Economica.”
305
in distribution. The Minister of Industry and Commerce
has determined to continue "on his own account" the
manufacture of goods in forty plants. The output of
these plants is expected to reach 20,000,000 meters of
cloth. Some 5,000,000 meters have already been put on
sale at less than market price. A movement is also being
agitated for public works to be started in order to give
employment.
1
A generous act of Italy's King has done much to endear
him to the common people and also to allay discontent.
He has given to the state for distribution among the
peasants a large part of his crown lands. This generosity
on the King's part will no doubt find a response among
his people and tend to make them more tolerant during
this trying period.
In many respects the labor situation in Italy resembles
that of France. There is the same overwhelming burden
from the war, the same temperament, similar radical
influences, an energetic and radical organized minority,
an appeal to the general strike for quick results, a following
of leaders that rise in a crisis, a strong trend among the
unorganized masses toward conservatism and serious.
consideration of problems, dissensions over political and
religious questions, extravagant demands by irresponsible
leaders. Italy, however, has a surplus of labor; Italy
lacks natural resources. She cannot maintain her popula-
tion from her own efforts. Foreign loans, avenues for
drawing off her surplus labor, trade relations abroad
are essential to the welfare of all, and especially to the
workpeople. The restlessness among her working popula-
tion, especially in the industrial centers, can be allayed
only by returning prosperity. This basic fact is now
coming clear in the minds of industrial leaders. As in
France, it is the idle workman who is dangerous. Dis-
rupting influences, from Germany or elsewhere, will not
likely make great headway among Italian workmen who
are employed.
In Italy, politics had already been interwoven with
industrial problems. As has been said, only a small per-
centage of laborers is organized into unions; but the
extreme radicals control them. They are the ones who
make the speeches, threaten, and, when striking, resort to
violence. Thus they frighten the general body of peaceful
¹ Commerce Reports, September 6, 1919.
306
workers into joining them in any crisis; and they succeed
in intimidating the employers. In recent months the
absorbing question in Italy has been her attitude to the
proposed terms of peace. Taking advantage of this
situation, the extremists have increased their demands and
to avoid a general strike while the Peace Conference was
in session at Paris, the Government brought pressure to
bear on employers to meet the demands of labor. Political
and other disturbing and disquieting influences would
lose much of their force among Italian laborers if finances,
raw materials, and food were supplied.
307
CHAPTER XX
THE INTERNATIONAL POLITICAL LABOR
MOVEMENT
§ 1.
INTERNATIONAL LABOR MOVEMENT BEFORE THE
WAR
Political activity in behalf of labor interests became
international through socialistic propaganda. It was
this spirit of propaganda that inspired the Communist
Manifesto of 1848, which launched the crusade of Karl
Marx and Frederick Engels. In the previous year an
international organization, called the Communist League,
had been made in London. The reaction to this radical
movement was so successful, however, that the League
was overwhelmed and disappeared.
To an exhibition held in London, 1862, came a deputa-
tion of French workingmen. They met with representa-
tives of English workers and laid the foundation for the
International Association of Workingmen. Karl Marx
drafted the constitution, radical and socialistic in charac-
ter, which was adopted at a meeting in Geneva, 1866.
A third congress at Brussels, 1868, included delegates from
England, France, Germany, Belgium, Italy, Spain, and
Switzerland. The Franco-German War interrupted its
activities for a time, but a congress met at The Hague,
1872, and another, the last, at Geneva, 1873. In its day
it created considerable sensation, and continental govern-
ments were somewhat alarmed at the doctrines preached.
Its actual achievements, however, were small.
Then followed a period of reaction and inactivity,
until in 1889, on the centennial anniversary of the French
Revolution, there assembled in Paris an International
Socialist Congress. This congress was engineered by the
French Socialist parties. It quickly divided into two
groups, one following the Marx model and called the Marx-
ist Congress, and the other, an opportunist group, called
the Possibilist Congress. Later meetings of these groups
were held, Brussels 1891, Zurich 1893, London 1896, and
Paris 1900. It was at the Paris Congress, 1900, that a
308
new central organization was formed called the Inter-
national Socialist Bureau, which still exists as the chief
international machinery for political activity in spreading
socialistic doctrines. Its requirements for affiliation are
sufficiently suggestive of the principles for which it stands.
"(1) All associations which adhere to the essential prin-
ciples of socialism; socialization of the means of production
and distribution; international union and action of the
workers; conquest of public powers by the proletariat
organized as a class party.
"(2) All constituted organizations which accept the
principle of class struggle and recognize the necessity for
political action (Legislative and Parliamentary) but do not
participate directly in the political movement."
As has been said, the socialists are primarily concerned
with political action; the socialist movement is a political
movement. Incidentally, industrial action may have
been encouraged for a definite purpose, as when, through
the International Association of Workingmen, the
British Trades Unions made substantial contributions to
the French and German strike funds. In France, Italy,
and Belgium, today, the organized labor movement very
largely finds expression, politically, through a socialist
organization. This is not true of England, where the
organized labor movement has been unique in remaining
chiefly industrial.
British labor first found political representation through
the established political organizations. In 1874, long
before there was an official labor party, Thomas Burt
and Alexander Macdonald were "returned."
It was,
of course, in the Liberal Party that labor found most
sympathy, but it worked directly through its own Labor
Representation League. Socialistic organizations_began
in England in the early eighties. The Democratic Federa-
tion was formed in 1881, subsequently split into two
sections, one following William Morris, and calling itself
the Socialist League, the other following H. M. Hyndman,
and known as the Social Democratic Federation. The
Fabian Society was organized in 1884, representing the
“intellectuals." All of these organizations found voice
in the Trades Union Congress.
Lack of success caused the opening of a new campaign
under the leadership of J. Keir Hardie, a representative of
309
the Ayrshire miners, who declared at a meeting of the
Trades Union Congress in 1887 for the political independ-
ence of labor. To this cause he devoted the rest of his
life. Two years after this declaration came the great
Dock Strike of 1889. On top of this came a stimulation
through the lectures by Henry George on Single Tax
and Land Reform. In 1893 there was called a meeting
of representative social and labor bodies at Bradford
over which J. Keir Hardie presided. Prominent also
at this time were John Burns and J. Havelock Wilson.
From this meeting came the Independent Labour Party.
"The Conference declared: That the object of the In-
dependent Labour Party shall be to secure the collective
ownership of all the means of production, distribution, and
exchange, and its immediate aims independent labor repre-
sentation on all legislative, governing, and administrative
bodies.'
>>1
This is still an active political party. In 1916 it had
nearly 800 branches and 60,000 members. It is not,
however, as will be shown, the real political backbone of
the British labor movement.
Success did not attend the early steps of the Inde-
pendent Labour Party; its representation fell off sharply
in the 1895-1900 Parliament. This lack of success led
to a broadening of the political movement. At a Trades
Union Congress in 1899 a resolution was passed "to
invite the co-operation of all Co-operative, Socialistic,
Trade Union, and other working-class organizations to
jointly co-operate on lines mutually agreed upon in con-
vening a Special Congress of representatives from such of
the above-named organizations as may be willing to take
part to devise ways and means for the securing of an
increased number of Labour Members to the next Par-
liament."
In accordance with this resolution there met in London
a conference of delegates on February 27, 1900, which drew
up a constitution forming the Labour Representation
Committee. It was this organization that was pre-
dominant in the British political labor movement from
that time until by the adoption of a new constitution in
February, 1918, it became the Labour Party. Today
this is the strongest British labor political organization.
1 Labour Yearbook, 1916, p. 345.
310
It was this political organization of workers that stood
solidly for legislative enactment to overthrow the prece-
dent in the Taff Vale Case, 1902, which held a striking
union for damages under a broken work contract, that
opposed with equally successful stubbornness the Osborne
decision, 1910, which prevented the use of union funds.
for political purposes. It is this party that forms the
moderate center in labor politics.
Various congresses of labor unions of a limited inter-
national character, such as the International Miners'
Federation, the International Textile Workers' Federation,
had met intermittently before the formation of the
International Trade Union Secretariat in 1901. Until
recently this has never been a labor organization strong
enough to be compared with that of the Socialists. Its
purpose was clearly defined at a Conference held in
Dublin, 1903, which showed it to be not much beyond an
international labor men's news service bureau. Strike
statistics and similar data are published annually by it.
In 1912, it is claimed, the number of members affiliated
with the International was 7,395,361, and that it em-
braced the trade union movements of twenty-one
countries in fact, all countries with any considerable
trade union activity except Australia, Bulgaria, and
Argentina. For 1916, claim was made for a membership
of 15 millions.¹
This International Federation of Trades Unions, as
it is now called, included before the war the French Con-
fédération Générale du Travail, the American Federation
of Labor, the General Commission of German Unions,
the General Federation of Trades Unions of Great Britain
(not the British Trades Union Congress), and many other
trade union bodies throughout Europe. It was from this
organization, by a proposal emanating from the American
Federation of Labor, that the "suggestion" was first made
to have labor representatives at the Peace Conference.
But, as has been shown, the task of bringing these labor
unions together upon some definite, agreed policy and
joining with them the great bulk of socialist organizations
did not come down from this super organization but up
from the British trade union movement.
It is necessary to keep this background of development
in mind, not only to understand the attitude of labor
¹ Labour Yearbook, 1916, pp. 426-27.
311
during the war, but also to appreciate the existing situa-
tion. Everywhere your Commission found that in the
opinion of manufacturers, "politics," in its bad
in its bad sense,
was a part of the great labor problem.
"Trade unions are being misled by politicians," said one
prominent Englishman interviewed by us. "They are the
most irresponsible leaders, since they can throw responsi-
bility for mistakęs or omissions on the Government, and can
promise liberally what they know to be impossible."
Said another:
"At present there is far too much reckless and injurious
talk by politicians in the government services and in the
trades unions."
The development in England is of peculiar significance,
first, because British labor has assumed a leading part in
the present international movement, and, second, because
in contrast with American experience this is a political
labor movement and in contrast with the experience on
the continent it is a trade union, not a socialist, movement.
It is now proposed to show how this British political
labor movement set about consolidating opinion at home
and formulating a program, then how it reached out to
unify and specify the aims of Inter-Allied Labor, and,
with this accomplished, how it launched a "political offen-
sive" against the Central Powers. Incidentally there
will be described the entrance of political action more and
more into industrial problems. The culmination of this
new movement, as has been suggested, was the Inter-
national Labor Conference in connection with the Paris
Peace Conference, which will be taken up in detail.
§ 2. THE INTERNATIONAL LABOR MOVEMENT IN THE
WAR
In every country there has been a radical element
opposed to war. In 1913 the International Socialist
Organization made protest against the larger powers
being drawn into the Balkan imbroglio. In 1914 there
were demurrers in Germany, in France, in England.
The Socialist Party in Belgium stood by the Government;
opposition was individual. Throughout the struggle, too,
there has been this nucleus of pacifists in the labor group,
the radical socialist part.
312
Labor, however, found a place in the war governments.
In England the Asquith Ministry sought the co-operation
of the trade union members of Parliament and selected
for important offices such men as Arthur Henderson,
Roberts, and Brace. Many more came in under Lloyd-
George, conspicuously J. R. Clynes, John Hodge, and
G. N. Barnes. In France there was M. Albert Thomas,
and in Belgium, M. Vandervelde. What labor had not
achieved by ballot was secured by appointment.
Under the drastic demands of war the governmental
control increased; regulations became ever more stringent.
It was inevitable that labor must yield many things.
As has been shown, that bundle of rules and regulations
which British trade unions had struggled so long to
secure, having to do with length of day, output, and
working conditions, was discarded under the promise
of restoration after the war. It was agreed, also, except
for the miners, that differences should be settled by
arbitration and not by strikes. In other words, for the
period of the war a truce was declared between employers
and employed. It should be noted, however, that labor's
position has been so powerful during the war that it has
received practically what it demanded.
What, then, had become of that splendid array of
principles put forth by the international socialist organi-
zation? Labor, for the most part, in every country had
stood behind its Government; labor was fighting itself.
And in the midst of this struggle there met, in 1915 the
neutral Socialists at Copenhagen, the Socialists of the
Central Powers at Vienna, and the Socialists of the Allies
at London, and each conference reiterated almost identi-
cally the same doctrine. The Allied Socialists justified
their war stand on the grounds that Germany had invaded
Belgium and France and threatened the existence of
independent nationalities. The Socialists of Germany
and Austria spoke only in general principles.
The International Socialist Bureau continued some
activity from its new headquarters at The Hague. Noth-
ing except an interchange of views came of it. After
the Russian revolution, 1917, the International moved to
Stockholm. A Dutch-Scandinavian Committee, with
Branting, the leader of the Swedish Socialist Party, at
the head, was formed. The "Stockholm project" was
launched, but the British and French would not at first.
313
•
consent to take part. It was necessary for the Allies
first to know where they themselves stood before their
co-operation could be secured for an international con-
ference; they would not be stampeded. Later when it
was decided to send delegates the British Government
refused them passports.
The first real attempt of allied labor to get together on
a practical working basis was at the Congress in London,
August, 1917. Here were representatives from eight
allied nations, including Belgium, France, Russia, and
England. The important point to be noted is that this is
a political trade union movement, not a Socialist move-
ment. The latter had failed; it was now left to trade
unions to try their skill. The first attempt was a failure.
No agreement could be reached either on a statement of
principles or on a statement of war aims.
Not daunted by this first experiment, after a preliminary
discussion in Paris among the leaders, another Congress
was called for London, February, 1918. To this the
American Federation of Labor was invited but no dele-
gates attended. Russia also was absent; the Brest-
Litovsk negotiations were then on. The leading spirit
in this conference was undoubtedly Mr. Henderson, who
had been a government agent to Russia, who had been
refused a passport to Stockholm, and who had resigned
from the war cabinet. It was a labor and Socialist con-
gress, with the trade union element in control.
This was in every way an important conference. The
character of leadership in organized labor for the rest of
the war was there determined; from it came the specific
declaration of the aims for which labor was fighting and
the conditions which they would strive after the war to
realize. It marks a distinct victory by the trade union
movement over the Socialist movement and the taking
over by the trade unions of a large part of the socialistic
program. From this time on, until another movement
begins, labor's political and industrial aims and methods
are fused. One cannot understand the British labor
situation today without this knowledge.
These aims embodied in the resolutions passed at this
Inter-Allied conference are so significant in themselves.
as to justify a summary. Furthermore, it is to these aims
that British labor has clung with all of its world-famed
bulldog tenacity. They were reaffirmed in the midst.
314
of the great German 1918 drive, and to them was added
a reconstruction program. They are today the program
of a majority of British laboring men. They have, in
part, found expression in the Treaty of Peace and in the
League of Nations. With them British industry must
cope. On the basis of them British labor is willing to
meet the world in trade. They form the British labor
movement's politico-industrial program and British labor
proposes to teach them to all working classes of the world.
The main points of the significant resolution passed at
the Inter-Allied Congress in London, February 20-24,
1918, may be briefly summarized as follows:
1. While not definitely allocating the causes of the
war, the Congress declared it would fight to remove
those causes which underlie modern capitalistic society
and especially "the aggressive policy of Colonialism and
Imperialism.'
""
2. The world can be made safe for democracy only
by establishing throughout the world the right of
peoples to self-determination by means of a League of
Nations. "The Conference expresses its agreement
with the propositions put forward by President Wilson."
3. The supreme right of each people to determine its
own destiny must be applied in settling questions of
reparation, restitution, and territorial readjustments.
4. In economic relations it declares:
(a) for the opening without hindrance of all lines of marine
communication;
(b) against an economic war, by means of tariff or mono-
polism, or military and fiscal alliances;
(c) for conservation of resources at the same time with their
speedy development;
(d) for an international agreement for the enforcement in
all countries of the legislation on factory conditions, a maxi-
mum eight-hour day, the prevention of "sweating" and
unhealthy trades necessary to protect workers against ex-
ploitation and oppression, and the prohibition of nightwork
by women and children;
(e) for the principle of “no cake for anyone until all have
bread," to be secured by continued government control and
a pooling of international resources.
315
for the prevention of unemployment of demobilized
soldiers and of displaced civilians by temporary relief and by
government enterprises.
(g) for an international congress of labor and socialist
movements to remove misunderstandings and to work for
freedom of propaganda.
The significance of these resolutions is self-evident. It
may be well, however, to call attention to the fact that
many of them have been carried forward through the
peace parleys. One should remember also that these
were framed by an Inter-Allied Congress during the
darkest days of the war. While there is enough radicalism
to hold together the socialist groups, there is still a moder-
ateness about them to appeal to the more conservative
laboring man.
Of more immediate and vital importance, however, in
the industrial situation today is the program for recon-
struction which was set forth in a resolution adopted by
the British Labour Party in a meeting at Nottingham,
January 23-25, 1918. The main points are summarized
below:
1. "The view of the Labour Party is that what has
to be reconstructed after the war is not this or that
Government Department, or this or that piece of
social machinery, but, so far as Britain is concerned,
society itself."
2. The new society is to be built up "on a delib-
erately planned co-operation in production and dis-
tribution for the benefit of all who participate by hand
or by brain," "on a systematic approach towards
a healthy equality of material circumstances for every
person born into the world," "in industry as well as
in government, on that equal freedom, that general
consciousness of consent, and that widest possible
participation in power, both economic and political,
which is characteristic of Democracy."
3. "The Four Pillars of the House that we propose
to erect, resting upon the common foundation of the
democratic control of society in all its activities, may
be termed, respectively:
(a) The Universal Enforcement of the National Minimum;
(b) The Democratic Control of Industry;
(c) The Revolution in National Finance; and
(d) The Surplus Wealth for the Common Good." 1
¹ Cf. "Labour and The New Social Order," p. 12.
316
Behind this political program there stand today such
labor leaders as Arthur Henderson, J. H. Thomas, J. R.
Clynes, J. Ramsay MacDonald, and Sidney Webb.
Among them does not occur the name of a newer, ener-
getic, radical leader, Robert Smillie, president of the
Lanarkshire Miners' Union (Scotland), president of the
Miners' Federation of Great Britain (800,000 members),
and chairman of the Triple Alliance of Railwaymen,
Transport Workers, and Miners. He is spokesman for
the extremists and for the "rank and file," and probably
is the best exponent of industrial action for both political
and economic control. His following is strong, inde-
pendent, aggressive, domineering. It is not willing to
wait for the success of the step-by-step movement; it
does not endorse that part of the moderate Nottingham
resolutions which reads:
"We do not, of course, pretend that it is possible, even
after the drastic clearing away that is now going on, to build
society anew in a year or two of feverish 'Reconstruction.'
What the Labour Party intends to satisfy itself about is that
each brick that it helps to lay shall go to erect the structure
that it intends and no other."
The political labor element led by Smillie is for feverish
reconstruction. The activities of the Triple Alliance
described above mark the advance of this radical element.
The passage that states most compactly the issues of
the Labour Party program is quoted below:
"But unlike the Conservative and Liberal Parties, the
Labour Party insists on Democracy in industry as well as in
government. It demands 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 of the
community only. And the Labour Party refuses 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 nation needs is
undoubtedly a great bound onward in its aggregate produc-
tivity. But this cannot be secured merely by pressing the
manual workers to more strenuous toil, or even by encouraging
317
the "Captains of Industry" to a less wasteful organization of
their several enterprises on a profit-making basis. 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 occupa-
tions, of those systems and methods of administration and
control that may be found, in practice, best to promote, not
profiteering, but the public interest.'
"1
A further point is worthy of notice. There is a firm
stand taken on the question of nationalization.
"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 pro-
duction of Electrical Power. . . . The Railways and Canals,
like the Roads, must henceforth belong to the public, and to
the public alone."
In the same category are Health and Life Insurance.
There is no specific single method advocated by which
these objects are to be achieved. Obviously, however,
the existing government machinery is assumed to con-
tinue, even though its control is to pass over to labor.
A very large part of its reconstruction program is to be
the result of legislation; for example, "the revolution in
national finance" is a taxation of capital, a "steeply
graduated income tax," the Factory, Mines, Railways,
Shops, Merchant Shipping and Truck Acts, and the Acts
on Public Health, Housing, Education, and Minimum
Wage are all legislative acts. To this extent, and further,
the method is one of political action. The "step-by-step"
movement is in the main a political labor movement,
that is, an advocating of political action. This is the
moderate center of the British Labour Party.
The British Labour Party itself, and the Inter-Allied
Congress, especially, behind these resolutions, are com-
posed of many discordant elements. It is remarkable
that agreement was so far secured, for beyond them is
wide divergence in aims, purposes, and methods. There
are local and more general organizations that endorse
¹ See Kellogg and Gleason: "British Labour and the War," pp. 382-83.
318
sabotage, strikes, "ca'canny" methods, all forms of
industrial action. Pressure of circumstances, such as
the continued high cost of living, might in a brief time
squeeze a majority out of the moderate "center" into the
radical "left." British, French, and Italian experience
since the armistice has shown frequently a quick resort.
to direct industrial action.
The conclusion clearly is that in this new, unified move-
ment, international in character, there is a combination of
the political and industrial methods. In order to swing
enough radicals from the Left and conservatives from the
Right to make up a moderate Center majority, such a
combination was necessary. So successfully was it done
that neither the radicals under Robert Smillie's leadership
nor the pure Trade Unionists, like Hughes of Australia,
nor the German-hating seamen's unions, nor the red-dyed
Socialists could break it up. It was this compromise
policy that carried the day in time of war, that was re-
endorsed in the more favorable military situation of
September, 1918, and that most potently influenced the
Peace negotiations.
§ 3. THE INTERNATIONAL LABOR MOVEMENT AND THE
PEACE CONFERENCE
The Inter-Allied Labor and Socialist Congress had not
neglected to equip itself with the proper machinery of
organization to carry on its work. À committee of three
was appointed (a) "to secure from all the Governments
a promise that at least one representative of Labour and
Socialism will be included in the official representation
at any Government Conference," and (b) "to organize a
Labour and Socialist Conference," international in
character and including the Central Powers, for the
purpose of discussing points of view. The members of
this committee were M. Albert Thomas (France), M.
Emile Vandervelde (Belgium), and Mr. Arthur Henderson
(Great Britain).
It took some time after the unexpectedly sudden collapse
of the German military organization to recover and get
under way. A distraction to British labor occurred in
the December election. Preliminary arrangements were
finally made for an international conference of trade
unions and of Socialists in Berne, Switzerland, for January
319
27, 1919. Delays arose that necessitated postponement
until February 3d to 5th, when the Socialist International
and the Trade Union International met as separate or-
ganizations but closely co-operating. The meetings do not
appear to have had great significance. American and
Belgian labor delegates refused to attend because delegates
from the Central Powers were invited, while there was
still technically a state of war.
The chief item reported from the International Socialist
Congress was a resolution to the effect that the League
of Nations, to be formed, should have representatives
from the Parliaments and not from the Cabinets of States.
There was otherwise an endorsement of the League of
Nations idea. This meeting also marks the resuscitation
of the International Socialist Bureau.
The International Trade Union Congress opened on Feb-
ruary 5th, with fifty-one deputies from fourteen countries.
The main, tangible achievement of the trade union
conference was the drafting of a labor charter. Since
these so-called "demands" were largely met in the report
of the Commission on International Labour Legislation
working with the Peace Conference, their significance is
not great. The points of importance are:
1. The immediate establishment of a League of Nations.
2. A charter of labor legislation designed to equalize in-
dustrial conditions in every country, and to remove as
far as possible the economic antagonism of nations which
leads to war.
3. A policy looking toward an understanding with the
revolution in Central Europe and Russia.
4. The reconstitution of a strong international organization.
Since the Inter-Allied Congress in London, February,
1918, there had been persistent pressure for labor repre-
sentation at the World Peace Conference. This desire
was realized when, Saturday, January 25th, the delegates
to the Paris Peace Conference resolved, "that a Čom-
mission composed of two representatives apiece from the
Five Great Powers and five representatives to be elected
by the other powers represented at the Peace Conference
be appointed to inquire into the conditions of employment
from the international aspect and to consider the inter-
¹ The Times, February 8, 1919.
320
national means necessary to secure common action on
matters affecting conditions of employment, and to
recommend the form of a permanent agency to continue
such inquiry and consideration in co-operation with and
under the direction of the League of Nations."1
Members of this Commission were immediately ap-
pointed and met for the first time on February 1st. The
work of this Commission is familiar knowledge, but
attention is called to it specifically in order to demonstrate
that as a result of their labor there is now prepared the
machinery in the International Labor Bureau for common
international political action in the interests of labor.
The report falls into two parts: The first has to do
with the International Labour Conference that is to
meet "at least annually" for a frank and free discussion
of labor problems. The first of these conferences is
planned to be held at Washington, October 29, 1919.
Agenda is already prepared for it.
The second proposal is for an International Labor
Office to be established at the seat of the League of
¹ Report of the Commission on International Labour Legislation, Paris, p. 1.
2 The Commission was composed as follows:
United States of America: Mr. Samuel Gompers, President of the American
Federation of Labor; Hon. E. N. Hurley, President of the American Shipping
Board. (Substitutes: Hon. H. M. Robinson, Dr. J. T. Shotwell, Professor at
Columbia University.)
The British Empire: The Rt. Hon. G. N. Barnes, M.P., Member of the War
Cabinet. (Substitute: Mr. H. B. Butler, C. B., Assistant Secretary, Ministry
of Labour.) Sir Malcolm Delevigne, K.C.B., Assistant Under-Secretary of
State, Home Office.
France: Mr. Colliard, Minister of Labour. (Substitute: Mr. Arthur Fon-
taine, Counsellor of State, Director of Labour.) Mr. Loucheur, Minister of
Industrial Reconstruction. (Substitute: Mr. Léon Jouhaux, General Secretary
of the Confédération Générale du Travail.)
Italy: Baron Mayor des Planches, Honorable Ambassador, Commissioner-
General for Emigration; Mr. Cabrini, Deputy, Vice-President of the Supreme
Labour Council. (Substitute: Mr. Coletti.)
Japan: Mr. Otchiai, Envoy Extraordinary, Minister Plenipotentiary of
His Majesty The Emperor of Japan at The Hague. Mr. Oka, formerly Director
of Commercial and Industrial Affairs at the Ministry of Agriculture and Com-
merce.
Belgium: Mr. Vandervelde, Minister of Justice and of State. (Substitute:
Mr. La Fontaine, Senator.) Mr. Mahaim, Professor at Liège University,
Secretary to the Belgian Section of the Association for the Legal Protection of
Workmen.
Cuba: Mr. De Bustamante, Professor at Havana University. (Substitutes:
Mr. Raphael Martinez Ortiz, Minister Plenipotentiary; Mr. De Blanck, Min-
ister Plenipotentiary.)
Poland: Count Zoltowski, Member of the Polish National Committee, after-
wards replaced by Mr. Stanislas Patek, Counsellor of the Court of Cassation.
(Substitute: Mr. François Sokal, Director-General of Labour.)
Czecho-Slovak Republic: Mr. Benès, Minister for Foreign Affairs, afterwards
replaced by Mr. Rudolph Broz.
321
Nations, that is, at Geneva, Switzerland. "It will be
controlled by a Governing Body of 24 members. .
Like the Conference, the Governing Body will consist of
representatives of the Governments, employers and
workpeople. It will include 12 representatives of the
Governments, 8 of whom will be nominated by the States
of chief industrial importance, and the remaining 12 will
consist of six members nominated by the employers'
delegates to the Conference, and six nominated by the
workers' delegates."
The Labor Commission took this occasion also to make
a pronouncement of what are called "declarations of
principle in regard to matters which are of vital importance
to the labor world." As they now stand they are to be
incorporated into the Treaty of Peace:
"The High Contracting Parties declare their acceptance of
the following principles and engage to take all necessary steps
to secure their realization in accordance with the recommenda-
tion to be made by the International Labour Conference as to
their practical application:
1. In right and in fact the labour of a human being should
not be treated as merchandise or an article of commerce.
2. Employers and workers should be allowed the right of
association for all lawful purposes.
3. No child should be permitted to be employed in industry
or commerce before the age of fourteen years, in order
that every child may be ensured reasonable opportunities
for mental and physical education.
Between the years of fourteen and eighteen, young
persons of either sex may only be employed on work
which is not harmful to their physical development and
on condition that the continuation of their technical or
general education is ensured.
4. Every worker has a right to a wage adequate to maintain
a reasonable standard of life having regard to the
civilization of his time and country.
5. Equal pay should be given to women and to men for
work of equal value in quantity and quality.
6. A weekly rest, including Sunday, or its equivalent for all
workers.
7. Limitation of the hours of work in industry on the basis
of eight hours a day or forty-eight hours a week, subject
to an exception for countries in which climatic conditions,
the imperfect development of industrial organization, or
322
other special circumstances render the industrial effi-
ciency of the workers substantially different.
The International Labour Conference will recommend
a basis approximately equivalent to the above for
adoption in such countries.
8. In all matters concerning their status as workers and
social insurance, foreign workmen lawfully admitted to
any country and their families should be ensured the
same treatment as the nationals of that country.
9. All States should institute a system of inspection in
which women should take part, in order to ensure the
enforcement of the laws and regulations for the protec-
tion of the workers.
It is well at this point to note one phase of the inter-
national labor movement not wholly in harmony with
the majority opinion. The seamen were opposed to the
Nottingham resolutions; they did not propose to have
anything to do with the German workingmen until they
were properly punished. This attitude resulted from
the fact that the seamen had borne the brunt of the sub-
marine campaign. They were thoroughly embittered by
it. They objected to any British delegates going to a
conference where German delegates were to sit; they
refused to carry Mr. Arthur Henderson across the Channel.
Their activities are worth attention because, contrary to
the general trade union movement that has been traced,
they stand solidly for industrial action. Note one signifi-
cant resolution that passed the International Seafarers'
Conference, held in London, February, 1919.
"Resolved, that this International Seafarers' Conference,
to ensure to seamen of all nations the application of the
minimum wage already approved, decide to retain in the
harbors the ships whose owners refuse to pay that minimum
wage."
"" 1
The London Seafarers' Conference was adjourned on
motion to meet a few days later in Paris. Opposition
had already developed to joining with the Labor Com-
mission there because it was felt that the seamen's
problems were unique and not understood or appreciated
by the landsmen, while the latter would be greatly in the
majority. At this adjourned meeting in Paris it was
decided to have no connection with the International
¹ Carried unanimously.
323
Labor Commission. The International Union of Seamen,
therefore, stand today independent of other international
labor organizations and in favor of industrial action to
attain their ends. The individual seamen's unions,
nevertheless, are nationally trying to legalize the minimum
wage, the eight-hour day, and to standardize by means of
legal enactment the conditions of employment.
§ 4. CONCLUDING SUMMARY
In a broad view this was the political background of the
situation that the Commission found in Europe. Running
like a purple thread through the industrial unrest was
this political influence. And yet so closely is it connected
with industrial action that it is impossible to isolate it
definitely. Every industrial activity has its political
phase. Labor leaders were achieving political preferment.
W. T. Cramp, of the National Union of Railwaymen, is
reported as saying at the June, 1918, meeting:
"The position [of labor] cannot be met by industrial action
alone. The incidence of taxation and many other problems
must be fought out in Parliament."
Said J. H. Thomas to the Postal Unions, January 17, 1919:
"I want to see the political machine and the industrial
machine working side by side. I want to see a strong Labour
Party in Parliament.'
>>1
And, again, the same leader said to the National Union of
Railwaymen on February 9, 1919, when they complained
of the reactionary character of the coalition government:
"If it is reactionary, it is a reflex of your own intelligence.
In a democratic country where men and women can exercise
their political freedom, it is madness for them to try to do by
industrial action what their own intelligence ought to have
told them to do at the ballot box."
Labor leaders in Europe, and in Great Britain especially,
have learned the political power that lies in industrial
action. There is great political power, too, in the very
mass of the labor movement. When even a substantial
part of the five and a half millions of organized British
workingmen can be swung behind a political demand
the effect upon the attitude of government officials will
The Times, February 18th.
324
be tremendous. Employers will find a pressure by the
Government for granting the labor demand. There is
also the more subtle method, largely psychological in
character, of intimidation by means of industrial demon-
stration. Such, for instance, is the "silent strike" in
France of Labor Day (May 1st), when every shop, every
factory, every bakery, every mill, every bank was closed;
when even the largest hotels were turned into "help-
yourself” cafeterias, and when guests had to make their
own beds, if they were made at all; when no car wheel
turned, no bus, taxi, or tram ran on the street, throughout
all France, for the sole purpose of demonstrating the
essential importance of labor in all phases of modern life.
This was labor "playing politics."
It entered the international phase when a movement
was started to extend such a “silent strike" throughout
the world of organized labor on July 20th and 21st. The
plan was a failure because British and French labor would
not endorse it, but it did materialize in a small way in
local strikes here and there and in a considerable dis-
turbance in Italy. The important fact is, however, that
such ideas are in the minds of labor agitators. It is
labor "playing politics" but with an organized machinery
of great strength for good or ill. European employers
have reason not only to feel irritation at these nagging
methods, but also to have a bit of the "fear of God" in
their hearts because of what may happen if labor should
under stress of circumstances swing too far to the radical
Left.
British employers interviewed by the Commission often
complained of the fact that pressure was brought to bear
upon them by the Government to accept the demands of
workmen. The Whitley Scheme, for example, was
adopted by some employers, under Government pressure,
but with great reluctance. It would appear that some
of the force behind this pressure was due to an antecedent
pressure upon the Government by labor. Political
action may work both directly and indirectly; that is,
through a direct, immediate control of the Government,
and by an indirect means through elected or appointed
officials. Candidates may be led to make extravagant
promises before election for political effect only to be
sharply and insistently reminded of them after election.
A coming election, too, like all other events, casts its
shadow before it; officials who are looking to re-election
325
will be tempted to trim their sails to suit the political
breeze.
An instance of the same thing occurred in France when
a proposed eight-hour day law was before the Chamber
of Deputies. Certain employers were led to believe that
such a law prevailed or was to prevail immediately else-
where, that it was useless to resist the inevitable. Be-
tween the pressure by labor from below and by the Govern-
ment from above, they yielded with only the protest
referred to elsewhere.¹
The political action in labor matters is in Europe a
double action. Forces are at work from below and from
above. Organized labor is in politics to seek favorable
legislation for itself. From above the Government for
many reasons, and all political, is "suggesting" further
“interference" in industry. The employer finds himself
in the jaws of a political nutcracker, one jaw of which
is organized labor and the other is Government. For
the moment he seems caught in "the fell clutch of cir-
cumstance."
Political action, in its international aspects, aims at
different sorts of changes. In so far as it is possible,
with "due regard to climatic, geographical, and raciai
characteristics," these changes are to become standardized
throughout the world of organized labor. One pathway
taken _by_political action leads to standardized social
reform. Changes of this sort affect society as a whole,
as it lives rather than as it works. Examples are health
insurance, unemployment insurance, education, housing.
Another pathway taken by political action leads to
industrial changes. These affect the workers as workers,
as producers. They likewise and therefore strike more
directly into the managerial problem. Examples are the
eight-hour day, the minimum wage, the nationalization
of industry, and equal pay for men and women. The
theory is that these are matters for legislation just as
much as the problem of general social reform. When
the theory is applied, it is found that a third party has
been introduced into the bargaining process between
employer and employee,—namely, the Government.
This, then, is the situation in Europe today. Labor
has found a voice through the League of Nations to make
1 See "French Political Labor Movement," p. 286.
326
itself heard round the world. It has the machinery now
ready for international, co-operative political action, and
it is awake to the potential power that lies here. Both
the International Socialist Bureau and the International
Federation of Trades Unions are busy reconstituting
their organizations. Internationally and nationally, labor
is in politics with its industrial weapon ready. America
is not isolated from this movement, cannot remain aloof.
It is a situation to be faced in all countries recently at
war and in all neutral countries where labor is organized;
it is spreading out to touch the uttermost parts of the
organized labor world.
Organized labor, like "business," organized and un-
organized, is "in politics." Both can now play the game
fairly or unfairly, for good or for ill; it is the motive, not
the means, that counts. How far political action can or
will go in the attempt to make the necessary reconstruc-
tive adjustments is still an open and possibly an un-
considered question. There are undoubtedly problems
not fitted for legislative action. Labor has today the
advantage in a better organized international movement,
a better machinery for international propaganda, and
the stimulation of newly realized power. All political
activity needs to be carefully considered and wisely led.
There is always the danger that conservatives may
obstruct or that radicals may mislead. In Europe today
the instant rebound from political obstruction is industrial
action. The safe course is the right attitude and spirit
on both sides, a spirit of tolerance, of sanity, of “step-by-
step" progress, of sincere co-operation and full and
sympathetic understanding.
327
CHAPTER XXI
NATIONALIZATION OF BRITISH RAILWAYS
§ 1. INTRODUCTION
It has been shown above¹ that there is much vagueness
in the concept "nationalization." It has clinging to it
certain historical associations, certain socialistic preach-
ments, certain war emergency measures that are confusing.
Latterly, too, it has begun to take on a new and radical
significance. The various interpretations of the term as
used today will fall into one or the other of three general
aspects:
1. Nationalization may mean a continuation, in
whole or in part, of the wartime control of industry;
that is, the greatly extended system of "governmental
regulation" of business which came into being with the
exigencies of the times.
66
2. There is, too, the proposal by some citizens for
government ownership and operation." This means
that the national government, as now constituted,
shall acquire ownership outright of at least the more
important industries and will operate them by its
own agents in the public interest.
3. The newest phase which this term has assumed is
that the national government, not as it has been or is,
but as it is proposed presently to make it, shall take
possession of at least the more important industries
and shall operate them not by its accustomed agents
but by associations of the workers in these industries.
This is "ownership by the state and management
by the workers" and marks the introduction of a new
principle.
§ 2. METHOD OF APPROACH
It is proposed in the following discussion to show
what has been done, in actual practice, in the process of
nationalization in Great Britain and what demands are
being made by British organized labor for the future in
1 Chapter I, p. 13.
328
this regard. The subject will be approached through a
study of British experience with "nationalized" railroads,
of the demands for a nationalization of British coal mines
and other “key industries."
§ 3. GOVERNMENT CONTROL OF BRITISH RAILWAYS
Within twenty-four hours after Great Britain declared
war on Germany, the British Government, under pre-
existing legislation, took possession of practically the
whole railway system of the country. A Railway Execu-
tive Committee was appointed, under whose direction the
several general managers of the leading British railways
were to work. The administrative personnel was retained
to carry on the actual operation of the roads. Between
these operating officials and the military authorities, the
Railway Executive Committee formed a liaison.
At once Government traffic had priority on all railway
lines. In accordance with prearranged plans the pas-
senger trains were mobilized and within the space of ten
days carried to the Channel 120,000 troops "without a
hitch."
"War broke on August 4th. Ten days later the first British
Army, 120,000 strong, were in France with full equipment
and supplies. Under the mobilization schedules prepared
years before the war, trains were operated at fixed intervals
and came into Southampton every twelve minutes for sixteen
hours of every day, or from dawn until dark. The regula-
tions provided that if a train were over twelve minutes late,
it should lose its turn on the schedule and should be side-
tracked until the whole troop movement was completed.
Not a single train lost its turn. In fact, most of the trains
arrived at Southampton from twenty to thirty minutes
ahead of schedule. This one movement of the first
Expeditionary Force called for 1,500 trains."1
After this first flurry and in accordance with the dictum
that business should go on as usual, the Executive Com-
mittee announced that there would be no further serious.
restriction on railway traffic, and that business men might
expect to carry on their usual transactions. A determined
effort was made during the early months of the war to
keep business at a normal level, in spite of the Govern-
¹ Dixon and Parmelee: Carnegie Endowment for International Peace. "War
Administration of the Railways in the United States and Great Britain,”
p. 104. Oxford University Press, 1918.
329
ment's first call for right of way. The London Railway
News is quoted as follows:
•
"There was also a steady movement in favor of the resump-
tion of some of the curtailed facilities, when the initial
uncertainty and alarm settled down. Gradually normal
conditions were restored."
" 1
Gradually, however, during the succeeding years of the
war, one restriction after another was imposed, while
business was compelled to adjust itself to war conditions.
As a whole, on the operating side, the British roads
made a good record for efficiency during the war. They
handled 40 per cent more traffic than they were built to
handle, and did not break down under the strain. The
general public was, of course, inconvenienced, especially
with regard to passenger traffic, and there was much
grumbling about it. But the necessary transport business
of the country was performed and with very few accidents.
This feat was accomplished notwithstanding the grand
error at the outset of the war of allowing half of the male
employees of military age to volunteer to the colors.
Many were returned later to their essential civilian
employment, but to the end of the war the roads had to
operate with a largely untrained and an inadequate staff.
Altogether the record of operating efficiency under these
conditions was most creditable. The Government had
a share in this accomplishment through its measures of
unification; but here also, and here alone, the companies,
as private business organizations, had some degree of
responsibility and influence.
The service to the Government by the British railway
system was of high efficiency. How the railways met the
first mobilization demands has already been indicated.
"Their military transportation work throughout the whole
war has been of the same high order. They contributed
thousands to the colors, many of whom served in France in
the construction, reconstruction, or operation of war railways.
They loaned equipment to be shipped cross-channel, and
contributed bridges and even rails and ties from out their own
roadbeds. In fact whole branch lines were in some cases torn
up and transported bodily to France. They loaned skilled
men to munition works and other branches of war industry.
¹ Dixon and Parmelee: Carnegie Endowment for International Peace. "War
Administration of the Railways in the United States and Great Britain,"
p. 110. Oxford University Press, 1918.
330
Skilled boilermakers from some of the railway shops were
detailed to service in naval dockyards."
On the financial side, however, British railways broke
down utterly during the war. That is, they emerged
from the war, on high Government authority," financially
in a semi-paralyzed state." For this the Government
had sole responsibility. The principle that distinguishes
a private business enterprise from a Government enter-
prise, particularly when the Government operates in war-
time or other emergency, is that private enterprise runs
on a basis of costs, while the Government enterprise is
judged by effectiveness, by accomplishments, whatever
the cost. Nevertheless, when peace times return the
Government operation will be tested on the basis of
costs relative to revenues. It is the judgment by this
standard that declares the British railway system finan-
cially semi-paralyzed.
Government traffic not only had right of way over
ordinary traffic but, to simplify accounting, it was carried
free of charge. Also, the accounting was much simplified
with respect to commercial traffic. For example, pro-
rating between the different companies ceased; each
company took and kept as revenue the charges for such
private traffic as originated on its own line. In return for
the services rendered it without direct payment, the
Government guaranteed dividends and interest to the
several companies, using the year before the war as the
standard. By as much as the net income of any road fell
short of covering its 1913 fixed charges and dividends, the
Government made up the deficit.
The question of the financial success of governmental
wartime control of British railways has been obscured
by a rather inconsequential debate over what sort of a
"bargain" the Government had made with the railway
companies. There have been complacent statements in
high quarters that the result showed that the Government
had made "a very good bargain."2 Although compara-
tively unimportant, it is worth while to go into this subject
somewhat to correct an error. The basis of the supposed
"good bargain" is to compare what the Government
paid on its guarantee of interest and dividends with the
"War Administration of Railways in United States and Great Britain,"
2 Mr. A. Bonar Law, speaking for the Government in 1916.
pp. 107-8.
331
value ("at pre-war authorized rates") of what it received
in the way of transport services performed by the railways
without direct compensation. For the war period the
aggregate of the unpaid-for services of the railways in
round figures is $545,000,000 and the aggregate of the
Government payments on guarantee is $464,000,000.¹
The difference of $81,000,000 looks like a saving which the
Government made by reason of its financial arrangements
with the roads.
But two considerable items have been omitted from
this brief statement of the account. On the one hand,
there were additional services performed for the Govern-
ment without direct charge, by the "steamboats, docks,
and canals" owned by the railways, estimated roughly
at a maximum of $73,000,000; and on the other hand,
there was a suspense account due the railways for "eventu-
ally making good the extra wear and tear arising from
additional traffic" (and for adaptation of equipment and
replacement of stores), estimated to be perhaps as much
as $195,000,000.2 Thus, the corrected revenue and
expense
account for the Government on this transaction shows,
in place of a gain of $81,000,000, a loss of about $41,000,000.
And this is for the period of the war only, ending with
1918. For the two years following the close of the war,
the scale will turn more heavily against the Government.
The guarantee of the Government continues in full force
and the expense of operation has increased so enormously
that the Government will have to meet this guarantee
in full. During the war in spite of rising costs, and the
impediment of Government "priorities," the railways
were able to earn from their ordinary traffic up to 1918
considerable sums ($492,000,000 in the aggregate) toward
meeting their fixed charges.
The complete record for the period of the war and for
1913, the year used as the basis for guaranteed returns,
is shown in the following table taken from the British
White Paper:
1 The pound sterling is reduced to dollars by multiplying by 4.86.
2 White Paper of the Board of Trade, entitled "Railway Working_During
the War" (Cd. 147), as condensed by Mr. J. H. Parmelee, footnote to Table 4.
This Suspense Account of nearly $200,000,000 for "extra wear and tear," etc.,
is additional to the deferred maintenance "arrears to be carried out"-with
respect to permanent way and rolling-stock which the railways were permitted
to charge to Income Account and which for the whole period of the war aggre-
gates $168,000,000. (Compare Table 1 of the White Paper, see p. 333.)
From other evidence, also, it is clear that the plant of the British railways has
come out of the war in a very much rundown condition.
332
TABLE I:
REVENUE EARNED AND EXPENDITURE OF BRITISH CONTROLLED RAILWAYS IN RESPECT OF RAILWAYS
WORKING FOR THE YEAR 1913 AND FOR THE PERIOD OF GOVERNMENT CONTROL TO DECEMBER 31, 1918
Period
Period of Government control
Item
Year 1913
Aug. 5
to
Dec. 31, 1914
Year 1915
Year 1916
Year 1917
Year 1918
RECEIPTS:
1. Passenger train traffic
$263,258,544
|
2. Goods train traffic
333,605,889
$92,906,852 $255,865,172 $267,432,819 $290,579,606 $339,775,453
130,721,782 349,192,559 364,061,161 361,632,379
|
352,317,124
3. Estimated amounts which would have been received for gov-
ernment traffic if charged for at pre-war authorized rates
17,032,750
50,023,260
100,488,972
173,727,013 203,989,198
4.
Total
•
596,864,433
240,661,384
655,080,991
731,982,952
825,938,998
896,081,775
5.
Less expenses of collection and delivery
24,783,478
9,493,651
25,996,220
27,794,304
31,981,353
38,182,204
6.
Total traffic revenue earned
572,080,955
231,167,733
629,084,771
704,188,648
793,957,645
857,899,571
7.
Mileage, demurrage and wagon hire
733,279
8,366
47,905
44,358
24,128
8.
Miscellaneous
4,843,866
2,017,763
5,254,745
5,648,629
5,484,073
6,314,527
9.
Total revenue earned
577,658,100
233,193,862
634,387,421
709,881,635
799,465,846
864,214,098
EXPENDITURE:
10. Maintenance and renewal of way and works
57,513,806
22,501,299 56,442,806
58,030,380
64,557,091 78,570,450
11. Maintenance and renewal of way and works-arrears to
be carried out
12. Maintenance and renewal of rolling stock
64,518,193
3,894,485 14,525,320
26,734,600 66,871,409
24,603,121 30,572,224
74,027,354
31,560,362
85,752,134 106,519,110
13. Maintenance and renewal of rolling stock-arrears to be
carried out
1,535,118 12,053,118
15,585,910
17,850,288 16,191,084
14.
Locomotive running expenses
83,366,362
33,669,654 93,417,295
110,002,780
120,411,070 145,866,846
15. Traffic expenses
113,198,513
45,772,250
120,393,039
133,332,206
16. General charges
12,644,184
5,328,418
12,825,904
13,100,939
159,488,943 202,551,930
14,044,583
15,284,942
17.
Law charges and parliamentary expenses
1,101,513
433,308
959,917
909,072
859,020
904,254
18. Compensation (accidents and losses)
5,637,602
1,429,583
5,727,179
6,087,573
6,205,717
7,087,717
19. Rates, taxes, etc.
22,898,167
10,108,261
24,644,185
23,552,395
23,752,306
25,661,809
20. Government duty
1,383,843
394,678
1,242,617
1,426,731
21. Payments under National Insurance Act, 1911
1,941,100
755,242
1,769,712
22. Running powers
Cr. 528,984 Cr.
3,947
15,933
1,723,354 1,763,323 1,730,021
18,522 Cr. 5,884 Cr. 8,103
23. Mileage, demurrage and wagon hire
1,167,551
136,875
248,853
223,669
311,174
806,598
24.
Miscellaneous
764,717
363,635
927,745
1,010,266
1,230,198 1,656,518
25. Allowances to dependents of men serving with H. M. forces
26. Watching, patrolling, etc.
689,500
1,621,640
2,323,389
3,033,752
3,460,125
928,192
103,365
42,348
28,518
34,684
27. Payments to staff-Armistice day
28.
Total expenditures
29.
Balance of revenue earned over expenditure
1,221,068
365,606,567
154,671,151
413,790,037
466,000,009
529,854,456
639,099,415
212,051,533
78,522,711
220,597,384
243,881,626
269,611,390 225,114,683
333
Britain—(Pounds
SOURCE: "Railway Workin During the War"- Great Britain (Pounds converted to dollars)
The condensed income account of British railways for the
period 1913-1918 is given on page 335. It will be seen that
the operating revenues increased from $577,658,100 in
1913 to $611,557,876 as an annual average for 1914-1918,
or 5.9 per cent. This latter figure, however, includes no
payments for Government traffic. Operating expenses
increased from $365,606,567 in 1913 to $499,842,356 as
an annual average for 1914-1918, or 36.7 per cent. The
net revenue fell from $212,051,533 in 1913 to $111,715,520
as four-year average, or 47.3 per cent. This figure includes
no payments for Government traffic. The Government
paid on its guarantees an annual average of $105,222,441.
2
The matter of supreme importance respecting railway
finance in England during the war was not the inconsider-
able profit or loss of the Government, but the fact that
the whole railway system came out of the war financially
wrecked in "a semi-paralyzed state," again to quote.
Sir Eric Geddes.¹ There were several reasons for this
outcome. For one thing the railways were not allowed
to raise their rates for ordinary freight traffic during the
war. In 1917 the passenger rates were raised 50 per
cent, not so much for the purpose of increasing revenue
as to discourage travel. Freight rates remained stationary
in spite of the rapidly increasing operating expenses.
This last consisted chiefly in the enormous advance of
wages to railway labor. It is conceded by all authorities
that British railway wages before the war were very low-
far lower than in the United States and insufficient to
afford decent living conditions. Also it is conceded that
special war advances in wages were necessary to enable
the earnings of railway workers to compare favorably
with the earnings of the munitions workers.
It is a
question, however, whether the advances of railway
wages owing to political influence were not needlessly
excessive. However this may be, the result of the succes-
sive concessions to labor was that by the end of the war
the increase of wages amounted to more than the total
payroll before the war. And this was not all. The
movement had acquired a momentum so that operating
expense for labor continued to mount upward after the
¹ London Times, March 18, 1919, verbatim report of the debate on the
Ministry of Ways and Communications Bill.
2 In the course of time this caused the railways to undercut so much the
coastwise traffic as to cause, even after the war, great unnecessary congestion
on the railways.
334
TABLE 2:
CONDENSED INCOME ACCOUNT OF BRITISH RAILWAYS
(From Railway Gazette, May 16, 1919, pp. 822-23)
Operating revenue
Operating expenses
Net revenue
Item
Government payments on account of guarantee
Adjusted net revenue
Estimated amount Government would have paid for war
traffic if charged for at pre-war authorized rates
Year 1913
(Standard for
government
guarantee)
Annual average
Aug. 5, 1914
to
Dec. 31, 1918
Period
Aug. 5, 1914
to
Dec. 31, 1915
Year 1916
Year 1917
Year 1918
|
466,000,010
143,392,653
105,222,441 77,605,292
216,937,961
68,324,074
529,854,456 639,099,415
95,884,377 21,125,486
117,164,725 200,749,578
309,669,376
211,716,727
213,049,102 221,875,064
123,691,918
67,056,010
100,488,972 173,727,013
$577,658,100 $611,557,876 $800,525,273 $609,392,663 $625,738,833 $660,224,901
365,606,567 499,842,356 568,461,189
212,051,533 111,715,520 232,064,084
203,989,197
NOTE: In addition the railways performed services by means of steamboats, docks, canals, etc., for which no charges were made. The value of these services
is roughly $48,665,000 to $72,997,500. On the other hand, the cost of eventually making good the extra wear and tear arising from additional traffic will approximate a
large amount, perhaps as much as $194,660,000 for the period of control.
335
war was over. And to this is to be added the increase of
other operating expenses beside that for labor.¹
In the recently published White Paper of the Board of
Trade already referred to, one finds the following Table 3:
STATEMENT OF ESTIMATED INCREASED COST IN WORKING
RAILWAYS DURING THE FINANCIAL YEAR ENDING MARCH
31, 1920, AS COMPARED WITH THE YEAR 1913
War wage and other concessions..
Eight-hour day and new concessions re-
•
$277,000,000
cently granted or still under discussion $97 to 121,000,000
Extra cost of material and coal...
131,000,000
$505 to $529,000,000
It was evidently upon the basis of the foregoing table
that Sir Eric Geddes made the statement, which attracted
such wide attention, in his speech of March 17th, on the
second reading of the Transport Bill, that "today the
railways are being worked at a loss of something like a
quarter of a million [pounds] a day a hundred million
[pounds] a year." There followed immediately an ex-
pression, not so widely quoted, that showed that it was
not net loss but increase of cost of which Sir Eric Geddes
was speaking; "the best estimate I can get is somewhere
about £90,000,000 or £100,000,000 [$437,000,000 or
$486,000,000] in increased cost." But later in the speech
he returned to the first form of statement:
"Up to the time of the armistice, the Government traffic
practically made up [offset] the deficit, but since the armistice
the deficit on railways has been steadily increasing. That
makes the £90,000,000 or £100,000,000 a year which are short."
Now to get the true "loss" or "deficit," obviously,
one must deduct the increase of revenue from the increase
of costs. During the war the revenues of the railways,
as shown by Table 1 of the White Paper increased
by $83,000,000.2 With the normal growth of business
and especially if reasonably increased freight rates were
put into effect, in the future one might expect that the
increase of traffic revenue might still further offset the
increase in operating costs inherited from the war. Both
in Sir Eric Geddes's speech on the Transport Bill and else-
where, there seems to have been a tendency on the part
of those favoring Government control to paint the picture
¹ A general railway strike was called September 27th, for further wage increases.
2 Exclusive of what never should have been included in the Table "the esti-
mated amounts which would have been received for Government traffic if
charged for at pre-war authorized rates." Cf. p. 333.
336
of the financial condition of the railways, present and
future, in unduly black colors. But the actual situation
is certainly bad enough. The books of the railways of
Great Britain collectively are far from balancing. There
is the vital question: What is to be done to meet a situa-
tion which is, admittedly, on all hands, "very serious"?
Actual expenditures charged to "maintenance and
renewal of way and works" increased 36.6 per cent in 1918
as compared with 1913, while the annual average was
10.5 per cent greater than in 1913. "Maintenance and
renewal of rolling stock" increased 65.1 per cent in 1918
over 1913, the annual average being 26.5 per cent greater
than in 1913. These charges for the war period were
unduly low because maintenance was necessarily deferred
on account of lack of adequate supplies of labor and
materials; the Government therefore permitted the rail-
ways to charge to expenses and set up in the form of
reserves, each year, such sums as could be used eventually
to repair the wear and tear that arose from heavy war
traffic. These sums (which appear in Table 1 as arrears
to be carried out") aggregated $105,155,512 for mainte-
nance of way, and $63,215,518 for maintenance of rolling
stock, or a total for maintenance arrears of $168,371,030,
the annual average being $38,184,789. A large part of
the $168,371,030 reserve thus set up has been invested
in Government War Bonds, until such time as the renewals
can be carried out.
TABLE 4:
66
MAINTENANCE EXPENDITURES FOR THE YEAR
1918 AND ANNUAL AVERAGE FOR THE WAR PERIOD AS
COMPARED WITH 1913
Item
Year 1913
Annual
Average
Aug. 5, 1914
to
Dec. 31, 1918
Year 1918
Per cent
of Increase
Annual
Aver'ge
1918
over
over 1913
1913
Maintenance and re-
newal of way and
works
$57,513,806
$63,540,846 | $78,570,450 | 10.5
36.6
Arrears to be carried
out
Total charge.
57,513,806
23,854,416
87,395,262
31,560,362
110,130,812 52.0 91.5
Maintenance and re-
newal of rolling stock 64,518,193 81,643,976 106,519,110 26.5 65.1
Arrears to be carried
out..
Total charge.
•
Total
14,340,373
16,191,084
64,518,193 95,984,349 122,710,194
48.8 90.2
50.3 90.81
Maintenance $122,081,999 $183,379,611 $232,841,006
¹ Condensed from British White Paper, by Julius H. Parmelee.
337
The remedy for the exceedingly difficult situation urged
by Labor and some others has been "nationalization."
On the other hand, there have been conservative con-
structive measures suggested, such as the bill put forward
by the Federation of British Industries. The remedy
which has been adopted, being embodied in the Govern-
ment's Ministry of Ways and Communication Bill (the
Transport Bill) already referred to is disguised nationali-
zation. As this Report of your Commission is being
prepared for the press, it is announced that the Transport
Bill, considerably amended, has passed and under it
Sir Eric Geddes has been designated as the first Minister
of Transport. The very sweeping powers of the new
Minister over not only railways, but roads, tramways
(other than municipal), docks and harbors and canals,
are conferred in terms for only two years. Ostensibly
it is a temporary measure to meet the present crisis;
also, it is ostensibly a measure confined to "control" or
"unification," with some limited powers of construction
and purchase. The private companies are still “to run"
the roads but under the co-ordinating authority of the
Minister, who also has authority over rates and fares
to be charged and wages and salaries to be paid. The
owners of the roads are still owners at law with their
incomes guaranteed. Ostensibly the question of whether
the country is to have strict nationalization of the railways
or not, is to be decided by Parliament at the end of the
two-year experimental period.
In fact, however, the die has been cast; the decision
has been made. So eminent a critic of the Government's
measure as Mr. W. M. Ackworth, himself favorable to
the bill, has discussed the subject at length in an article in
the Quarterly Review for July, 1919, which reveals
fully the true action taken. Mr. Ackworth at first seeks
to direct his arguments to a defense of "nationalization
as an interim measure, at least, though not necessarily
as a permanent policy," but he ends with outlining the
best forms of administration to be set up, on the assump-
tion that nationalization has to come. and the process
has to be "carried through." His article as a whole
"smacks" of permanent nationalization. Mr. Ackworth
was a member of the "Railway Advisory Panel" ap-
pointed by the Board of Trade in November, 1917,
to consider the question of the future of the railways.
In the Review article here referred to he elaborates the
66
""
338
arguments in favor of the Transport Bill previously
enunciated by Sir Eric Geddes in his speech in Parliament.
In outline they are as follows:
1. If the railways are ever to pay their way again,
there must be revolutionary changes.
2. On the one hand, receipts must be largely increased;
on the other hand, expenses must be greatly reduced.
3. "That the higher charges are made on the authority
of the state for the direct benefit of the taxpayer is the
only ground on which we can expect them to be submitted
to."
4. The chief reliance in restoring equilibrium must be
increased economies reducing the expense of conducting
transportation.
5. This last can be achieved only by an engineering
reconstruction of permanent way and equipment, and
other extensive measures of standardization, which will
make possible as heavy train loads and low ton-mile
costs as the geographical conditions of England permit.
6. But "long trains of fully loaded trucks mean less
rapid dispatch of traffic." English traders accustomed
to an express service "at goods rates" will find their
"hereditary methods" in this and in other particulars
seriously interfered with. In like manner the traveling
public must submit to marked "reductions in facilities.
formerly given.'
""
7. With respect to shippers and passengers alike
"the state alone can face and overcome their recalci-
trance.'
This last is the distinctive idea in the whole line of
argument employed by Mr. Ackworth. Vast changes in
the conduct of British railroading must be made which
will raise vast objections on the part of the public; and
the state alone can meet those objections.
The distinctive feature of Sir Eric Geddes's defense of
the Government's measure is the necessity of "unifica-
tion," not only of the railways but of the whole system
of transportation of Great Britain — canals, roads, docks,
and harbors,— everything that has to do with land
transportation.
339
"The era of competition is gone.
""
"The transportation agencies of the country today are
barren and paralyzed. . . ."
"We have got to trust somebody or some one to get co-
ordination."1
And that somebody, it is assumed, must be the state;
the state alone as manager, not merely as a helper of
private enterprise by means of appropriate legislation.
The chief subject handled by both, on which Mr.
Ackworth and Sir Eric differ, is the possibility of finding
relief to a considerable degree from raising freight rates.
Sir Eric waives that consideration and looks solely to
economies from unification, etc. Mr. Ackworth says
"there is no question that goods rates will have to be
drastically raised."
In the Parliamentary debate on the second reading
of the Transport Bill, March 17, 1919, the strongest plea
in opposition was put forward by Mr. M. Stevens, one
of the largest shippers of England. He maintained that
great changes in economy in working the railways were
indeed called for and possible. He denounced strongly
the competitive waste of present methods which should
be remedied by thoroughgoing reforms. But, he held
that these improvements could be accomplished without
even temporary nationalization. One-half the huge
increase of wages which accounted for Sir Eric's loss of
£100,000,000 a year was spent, he said, on services
which "had nothing at all to do with the conveyance of
traffic by the railways." If the railways would do "what
the traders had urged for years," that is, "make a separate
rate charge for conveyance," and also cease doing “carting
or any terminal services below cost," it would be found
that “the loss of £100,000,000 would be rapidly reduced.”
He ended by suggesting that the bill which had been
prepared by the Federation of British Industries be taken
up and given a second reading.
Apparently the plans opposed to the Government's
scheme were given scant consideration. The Transport
Bill virtually committing Great Britain to ultimate
1
¹ Not merely financially paralyzed, as stated elsewhere in the speech, but
suffering from long-standing retarded development. Examples of the fact of
retarded development of railways in Great Britain could be multiplied. For
instance, the 700,000 privately owned freight cars (half the total number) which
occasions non-standardization of brakes, etc., and an enormous return-empty
mileage. The Minister will have power to buy out the private car owners.
340
(C
""
""
nationalization of railways, and all other means of land
transport as well, was passed practically as a piece of
panic legislation." The country was appalled by the
existing railway financial burden; it was believed that
that burden must be chiefly removed by transport econo-
mies; it was assumed that those economies could only be
achieved on a sufficient scale through the unifying control
of the Government. Mr. Ackworth is too deep a student
of the world's railway history not to realize that some-
thing more than assumptions are needed with respect
to "economies" to be realized at the hands of the Govern-
ment. "Five-sixths of the upper and middle classes,'
he says, "on principle object to state management.'
They ask: "What is the use of talking of economy?
The Government with its bureaucratic, dilatory, red-tape
methods, will dissipate through inefficiency all the theo-
retical economies on which you lay stress.
The answer
which Mr. Ackworth makes to this objection is significant
indeed: the Government is now going to succeed in this
vast undertaking (it is going to "face and overcome
the popular disapproval which previously he had men-
tioned as the great obstacle to economy) by adopting new
methods which mean in effect the abandonment of
democracy. "Subject to the general approval of Parlia-
ment," we read, "the railways must be an almost auto-
nomous service, conducted on other than civil service
methods, and left to work out their salvation with some-
thing of the same freedom which the Home authorities
concede to commanders in the field." In short, a semi-
military autocracy is to do the trick of achieving economies
where they have never been achieved before.
""
The powers originally granted by the Transport Bill
were so sweeping that British public opinion practically
rebelled against them. The right of proceeding under
Orders in Council "to establish, maintain, and work
transport services by land or water" has been eliminated
rom the measure as enacted, and also power over “the
supply of electricity." Not the least significant of the
items omitted is the following, which stood in the original
draft of the bill:
"Any rates, fares, tolls, dues, and other charges, directed
by the Minister shall be deemed to be reasonable, and may
be charged, notwithstanding any statutory provisions limiting
the amount of such charges or increases therein."
•
341
This clause as revised now reads:
"Notwithstanding anything contained in this Act the
rights of a consignor or consignee of goods or minerals...
under the Railway and Canal Traffic Acts . . . shall not
be deemed to be affected."
The demand for the nationalization originated with
the Labour Party. Encouragement of a campaign sort
came from the Coalition Government prior to the last
elections, but with the formation of the Ministry of
Ways and Communications the measure was more or less
sidetracked. The present Government shrinks from the
responsibility of direct ownership and control. British
individualism, finding strong expression through the
shippers, needless to say, is opposed to nationalization.
As one man conversant with the situation has said:
"Whether or not we shall have government ownership
depends entirely upon what happens in the next two years.
The Ministry of Ways and Communications will certainly
do everything possible to avoid it. Much depends upon
the financial position. If it is found that at the expiration of
two years the railways are fairly self-supporting and in no
great financial danger, they will probably be returned to the
proprietors but with a considerable and, I think, beneficial
degree of elimination of unnecessary competition, the general
pooling of wagons, collective purchasing, and a number of
other things which will tend to reduce operating costs and
which, for that reason, will be highly beneficial. There are
altogether too many railway companies in England and a
great deal could be saved in administration and overhead
charges if consolidation took place. It is quite possible that
for operating and administrative purposes we shall see the
railways of the United Kingdom grouped in from five to seven
districts, each under the direction of a general manager and
headquarters staff."
342
CHAPTER XXII
NATIONALIZATION OF BRITISH COAL INDUSTRY
§ 1. INTRODUCTION
Her ability to produce coal cheaply and to employ it
in the manufacture of raw materials has been the founda-
tion of Great Britain's industrial supremacy. She is
primarily a manufacturing and exporting nation. Her
trade and industry have had two phases. Aided by
the ownership of a large proportion of the world's shipping
and by a free trade policy, she has bought raw and partly
manufactured materials and brought them to her factories
for manufacture, in successful competition with nations
whose raw materials lay closer at hand. Further, aided
by cheap coal and cheap labor, she has been able to
manufacture these materials and export them.
Her people are, consequently, employed mainly in
industries, the products of which must be sold on the
markets of the world. A shrinkage in demand for these
products tends to produce unemployment, business paraly-
sis and national loss. Such a shrinkage could result from
the ability of other nations to supply goods to foreign
markets at a lower price, or from the inability of Great
Britain to continue to produce as cheaply as she formerly
produced.
Her industrial supremacy has, by no means, remained
unchallenged. Prior to the war, Germany was putting
cheaper goods upon many markets, even in the British
Dominions, where cheapness counted. The United
States of America were challenging her manufacturers
with products manufactured by high priced labor
which was so efficient as to reduce the labor cost per unit,
and thus render their competition a serious matter for
British foreign trade.
The war, however, dealt a serious blow to her export
trade. Her tonnage in ships was greatly reduced by the
submarine losses, and by the transportation of soldiers
and war material. As a consequence there was a diminu-
tion in the volume of her export trade. Export restrictions
343
swept some of it away at a stroke. The heavy demands
upon her factories to supply war demands turned them to
domestic production, primarily. Her mounting war
debt, while not converting her entirely from a creditor
to a debtor nation, yet caused her to borrow abroad,
after disposing of a large quantity of foreign securities.
The condition of her public credit, therefore, increased
the urgency for larger quantities of exports. At the same
time her former markets were going to other countries.
The United States entered South America; Japan
pushed her goods in the Orient. In sum, the war ended
with a great challenge to the foreign trade of Great
Britain.
But the two elements of her former success in manufac-
ture no longer existed. Cheap labor, as the foregoing
chapters of the report have shown, had acquired a new
status. Cheap coal seemed to have gone forever. The
situation in the coal industry was such as to create national
concern. The miners of the country, in January and
February, 1919, asked for an advance of 30 per cent in
their wages and a decrease of the working-day from
eight hours to six hours, with the application of the
principle of nationalization to the ownership of the mines.
The significance of this demand arose in part from the
character, powers, and strength of the Miners' Federation.
This body consists of 800,000 mine workers, covering
fully 95 per cent of those employed around mines. Strong
numerically, they have been, further, most aggressive
and truculent. They have never been so amenable to
the processes of compromise and conciliation to which
even some of the most militant unions submitted during
the war. Thus, they refused to sign the Treasury Agree-
ment, March, 1915, being unwilling to surrender the right
to strike. By a series of strikes from August, 1914,
onwards against the employment of non-unionists, they
forced their employers to agree to compulsory unionism.
The compulsory arbitration of the Munitions Act repelled
them, since the Coal Mines' Minimum Wage Act, which
had been passed in 1912 to settle a disastrous strike, had
given them machinery for the voluntary settlement of
disputes.
In July, 1915, the miners of South Wales struck and
compelled the Government to proclaim them as coming
344
under the provisions of the Munitions Act. This did
not ensure either continuity of production or industrial
peace, and in December, 1916, the Government, under
the authority of the Defense of the Realm Act, took
control of the mines of South Wales, at the same time
conceding the miners a substantial increase in wages.
The rest of the coal fields of Great Britain were pro-
claimed under Government control in March, 1917.
Throughout the war, then, they had given considerable
trouble to the country and the national Government,
and had seriously hampered the production of munitions.
Important as the coal mining industry is to the nation,
and serious as a nation-wide strike within it would be,
the situation had been intensified since the formation of
the Triple Industrial Alliance in December, 1915. By
this amalgamation the coal industry came to occupy a
strategic position in the British world of industrial
relations. In this Triple Alliance the miners are pre-
dominant, because of their numbers and because their
President, Robert Smillie, is also the chairman of the
Alliance. These three associations of miners, railway
men, and transport workers are pledged to take joint
action on a subject of industrial dispute, and could,
probably, effectively stop the wheels of industry. Under
this threat the potential damage the miners might
inflict compelled serious attention to their aims.
The demands they made in February, 1919, were
obviously such as to exercise also a far-reaching effect
upon industry. An increase in wages of 30 per cent and
a reduction in working hours of 25 per cent could not but
have the effect of increasing the cost of coal beyond a
price that was already abnormally high. This increase
in cost of coal would influence cost and quantity of
production in iron, steel, machinery, and shipping, and
materially reduce the volume of exports. Should the
new price of coal prove to make its export unprofitable,
more than one-tenth of the former foreign exports of
the country would have been lost at a stroke. Freights
on raw materials and food would be considerably in-
creased. A general increase in the prices of goods produced
for the home market and a rise in the cost of living would
result. Even without the impetus and impulse of direct
invitation, this advance in the cost of living would in-
evitably result in demands for increased wages in other
industries. In certain of these industries, where labor
345
costs formed a considerable item, these increased wages
would prove more serious than the effect of the increase
in the price of raw materials and other cost-determining
factors which had resulted from the war.
In view, therefore, of the far-reaching effects which an
increase in the price of coal might have upon industry in
general, the Government refused at first to make any
considerable advance in wages. In order to bring the
advance in miners' wages during the war to a parity with
the advance in the cost of living, the Minister for Labour
replied to their demand with an offer of an addition of
one shilling per day to the war bonus of 18 shillings per
week which miners in general were receiving. In appear-
ance this was an advance of 33% per cent. But what
the miners were asking for was an advance of 30 per cent
upon their earnings, according to the complicated sliding
scales in vogue, upon which the war wage would still
remain a bonus. Their demands exceeded the offer made
them by as much as their earnings exceeded the war
bonus. As the government offer took no account of
their other demands for reduced hours and the national-
ization of the mines, the miners determined by an over-
whelming majority to strike and fixed the date for their
withdrawal from the mines.
The situation was too serious to allow matters to drift.
While the miners' demands were before the country, the
railway men and the transport workers were making
demands of their own. Any policy which, whether by
default or by inadvertence, led these three groups of the
Triple Alliance to act in unison, would have precipitated
the most serious conflict England had ever known in her
industrial history. Parliamentary and constitutional
government would have run grave risks of being over-
thrown by force. The Government, therefore, took the
situation seriously in hand, and appointed a Royal
Commission with statutory powers "to inquire into the
position of, and conditions prevailing in, the coal in-
dustry."
§ 2. OUTPUT
The evidence presented before the Commission showed
that the coal industry in the United Kingdom consisted
of 3,300 mines, owned by 1,452 companies or individuals.
Of these, 434 owned small mines producing only about
2,000 tons a year each. The larger mines were about
346
1,000 in number. The output from these mines in millions
of tons for a number of years prior to and during the war
is shown in the following table:¹
1
OUTPUT OF COAL MINES, GREAT BRITAIN, 1909–1918
Year
1909-1913 (average)
•
1912-1913
tt
1914
1915
1916
•
Output
(Million tons)
270
274
266
253
2562
2482
226
1917
1918
In this table the average for the years 1909-1913 was
computed and used as a basis for comparison. The aver-
age for the years 1912-1913 stood somewhat above that
for the five-year period, but there has been a consistent
decline in output from the commencement of the war.
The average for 1918 is lower than any in the series.
At the same time output per person employed had also
decreased. The position as stated in official figures
supplied to the Commission by the financial adviser
to the Coal Controller is set forth in the following table.
While these figures are not open to the deduction that the
coal hewers were growing less and less efficient, since
the output is measured in terms of all the persons em-
ployed in the industry, they do give an impression of
the increasing labor cost that fell upon each ton of coal
mined.
OUTPUT OF COAL MINES, GREAT BRITAIN, SELECTED YEARS
FROM 1889 TO 1918 EXPRESSED IN TONS PER PERSON
EMPLOYED
Years
1889-1893 (average)
Tons per person
employed
1899-1903
CC
1907
1908
1909
1910
1914
1915
1916
1917
1918 (first six months).
1918 (third quarter)
1 The Labour Gazette, June, 1919, p. 225.
282
288
289
•
269
266
257
252
270
260
247
•
245
235
•
347
As a result of increased wages and decreased relative
output the labor cost per ton of coal mined had increased
greatly. Sir Richard Redmayne, Chief Inspector of
Mines, gave official figures to show that the wage cost
per ton in 1913 was 6 shillings and 4 pence, but in the
third quarter of 1918 it had risen to 14 shillings 4½
pence. The Sankey Interim Report contains an appendix
with a table showing the various items of cost and profit
on a ton of Derbyshire coal. The wage item contained
therein is 13 shillings 5 pence, representing nearly 64 per
cent of the cost of the coal at the pit-mouth.
The chief item in this increase has been the increases in
wages paid to miners since the war began. In May, 1915,
they were granted a war bonus varying from 10 per cent
to 20 per cent according to local conditions. În July,
1915, they obtained a new standard scale as a minimum,
with bonuses on wages paid in May of that year ranging
from 1512 per cent to 1834 per cent. These bonuses were
followed by further increases later in the year. In 1916
the hewers of Northumberland obtained an advance of
48 per cent, in Durham 322 per cent, in the Midlands
81½ per cent, in Scotland 3114 per cent, and in Wales 30
per cent. In 1917 the Controller of Coal Mines granted
a war bonus of 1 shilling 6 pence per day for workers over
sixteen years of age. In 1918 another advance was made,
exactly equal to that given in 1917, namely, 1 shilling
6 pence per day for workers over sixteen years of age. The
total of these increases is reckoned at 18 shillings per week.
No official figures of actual wages paid were put before
the Commission. Mr. Vernon Hartshorn, M.P., and a
representative of the miners of South Wales, repeated
before the Commission what he had asserted in Parlia-
ment:
The pre-war wages of the day-wage men in South Wales
were as follows:
21,693 with an average weekly wage of 26s. 8d.
11,300 with an average weekly wage of 29s. 6d.
22,717 with an average weekly wage of 31s. 10d.
Over 80 per cent of the day-wage workers got less than 32s. a
week. There were only 12,283 getting above 32s. a week,
and about 1,200 out of a total of nearly 69,000 who got over
£2 a week. The average for day-wage men worked out at 30s
10d. per week.
348
So far as pieceworkers were concerned, there were
21,792 hewers whose average wage was 36s. 8d.
10,519 hewers whose average wage was 39s. 3d.
12,886 hewers whose average wage was 45s. 6d.
10,972 hewers whose average wage was 52s. 10d.
making 88.8 per cent of the total.
Only 216 out of the whole of the pieceworkers were earning
more than £1 a day. The average weekly wage worked out
£2 5s., and the average for all underground workmen over
twenty-one years of age at 37s. 9d. a week.
The general average increase in wages during the war for
mine workers in South Wales was 86.4 per cent, and for the
whole country the average advance was 81 per cent.¹
Evidence from outside the Commission is furnished
by a Lancashire mine owner who had been called upon by
the Coal Controller to furnish exact particulars of the
average earnings of all his employees during June and
November, respectively, in the years 1913-1918, with the
exception of 1915. The table was published in The Times²
and is reproduced on page 350.
The average annual earnings of all colliery workers,
both men and boys, as accepted by the Commission, were,
for the year 1913, £82 a year, and on the basis of the
September quarter of 1918, at the rate of £169 a year, an
increase of 106 per cent. It should be added that the
cost of living during the same period had advanced 120
per cent.
Along with these increases in wages had gone increases
in the price of coal at the pit-mouth. By the Price of
Coal (Limitation) Act, 1915, an advance was sanctioned
but limited to 4 shillings per ton above the price
prevailing at corresponding dates in the twelve months
preceding June 30, 1914. In July, 1916, a further advance
of 2 shillings 6 pence per ton occurred. In October,
1917, following an increase in wages given to the miners,
the pit-head price of coal was advanced 2 shillings 6 pence
per ton. In June, 1918, an advance in price occurred of
2 shillings 6 pence per ton to cover the increased wage
granted. The sum total of these advances increased the
cost of coal at the pit-mouth from about 10 shillings in
1914 to 24 shillings 10 pence in September, 1918. The
1 The Times, March 17, 1919.
2 Ibid., February 18, 1919.
349
EARNINGS OF COLLIERY WORKMEN
EXTRACT FROM OFFICIAL RETURN MADE BY A LANCASHIRE COLLIERY FOR FOUR WEEKS IN JUNE AND
NOVEMBER IN THE YEARS 1913, 1914, 1916, 1917 AND 1918
Average Earnings per Man per Shift During Four Weeks
June
Class of Workmen
1913
1914
Nov. June Nov. June
1913
Nov.
June Nov. June
Nov.
1914
1916
1916
1917
1917
1918
1918
s. d.
s. d.
s. d.
s. d.
s. d.
s. d.
s. d.
s. d.
s. d.
s. d.
1. Coalgetters
8 8
8 11
10
0
9 8
14 4
14 1
15 1
17 1
17 2
18 10
2. Trammers and haulers
6 4
6 5
6 4
6 4
8 0
7 6
8 7
9
4
9 2
10 9
3. Deputies, firemen, examiners
7 1
7 0
8 0
7 7
9 11
11
7
11
1
12
0
12
8
14 3
4. Mechanical haulage hands:
(a) Men
3 9
4 3
4 0-
4 9
5 2
6 6
6
0
8 0
(b) Boys
2 8
2 5
2 5
2 6
2 11
3
1
2 10
4 11
4 1
4 7
5. Other underground labor
5 9
5 9
5 11
5 11
7 3
8 1
7 6
9 4
10
1
12 7
6.
Enginemen
5 5
5 6
5 5
5 6
7 2
7 5
7 6
9 0
8
4
10
9
7. Pit-head men
4 4
4 4
4 2
4 2
5 8
5 6
5 11
7 4
7 5
9 3
8.
Persons employed on or about screens :
(a) Men
4 10
4 5
4 10
4 10
5 9
5 9
2
7 6
7
9
9 10
•
(b) Boys and Girls.
1 8
1 8
1 7
1 9
20
2 0
2 2
3 4
3 5
4 5
9. Stokers and boilermen
4 10
4 10
4 11
4 10
6 4
6 5
6 6
7 9
7 5
9 5
10. Tradesmen: i.e., joiners, blacksmiths, etc.
4 10
4 11
4 10
4 8
5 5
5 9
6 5
8 9
8 6
9 10
11. Other surface labor
3 3
3 5
3 8
3 9
4
6
4 5
4
8
6
3
5
7
7 0
350
average selling price in London in 1914 was 25 shillings
6 pence a ton, while the controlled public price in 1918 was
43 shillings 6 pence.
Much stress was laid in the evidence before the Com-
mission on the profits earned by the industry before the
war. It was sought to show that the industry was pro-
fitable enough to bear the added cost of the higher
standard of living that the miners were demanding. The
figures indicated that the profits were very great. Mr.
Arthur Lowes Dickinson, financial adviser to the Coal
Controller, put in a table showing net profits of coal
mines after deducting depreciation and royalties. This
revealed the following amounts in millions, together
with the profit per ton.
PROFITS OF COAL MINES, EXCLUDING DEPRECIATION AND
ROYALTIES, 1909-1918
Year
1909-1913
1912-1913
1914
•
1915
1916
1917
Profits
In Million Pounds
Per Ton
13
S. d.
1
18½
1 42
152
1 1/2
212
1 8
3834
2 11
2734
2 22
•
39*
3 62*
1918 (third quarter)
*Calculated on a yearly basis.
The gross profits of the whole industry, including coke
and by-products, were demonstrated to have increased
greatly during the war. Mr. Ernest Clark, of the Board
of Inland Revenue, placed before the Commission the
figures supplied to the Income Tax Commissioners for
the assessment of income tax and excess profits duty.
The total profits of the whole industry of coal and its
by-products, subject to deductions for interest, royalties,
excess profit duty, coal mine excess payments and general
taxation, for the years 1914–1917, were given as follows:
£20,687,000
33,888,000
1914
1915
1916
50,546,000
1917
37,081,000
:
351
:
After deducting royalties, profits, and interest subject to
taxation, the following profits remained in the industry,
expressed in million pounds, and as a figure per ton of
coal mined:
£14,889,000 equal to 1s. 1d. per ton
28,245,000 equal to 2s. 3d. per ton
1914
1915
1916
1917-
44,376,000 equal to 3s. 6d. per ton
31,260,000 equal to 2s. 6d. per ton
The capitalization of the industry in 1914 was equal to
£135,000,000. But a large part of the profits had been
reinvested, for the capitalization had increased till in
1917 it was £154,000,000.
The profits of the industry did not go as a whole to the
coal owners. Royalties and way-leaves were paid to the
owners of colliery land as follows:
1914
£5,898,000
1915
9,743,000
1916
6,270,000
1917
5,921,000
Further, the Income Tax Commissioners, in terms of the
Excess Profits Duty, took 80 per cent of the excess profits
above the average of any two out of the three years
preceding the war, while of the remainder, the Coal
Controller took three-fourths, leaving only 5 per cent of
the excess profits to the owners. On this basis, however,
as the official figures of the Board of Inland Revenue
showed, the percentage of profits on the estimated capital
was:
1914
11
per cent
1915
18.7 per cent
1916
22.5 per cent
1917
17.2 per cent
Nor were all coal concerns equally profitable. Evidence
was given by the Financial Adviser to the Coal Controller,
showing that 31 per cent of the collieries produced 62 per
cent of the output at a profit, while 15 per cent of the
collieries produced 13 per cent of the output at a loss. In
later evidence he presented a summary of colliery returns.
for the months of November and December, 1917,
comprising 75 per cent of the total tonnage, showing the
collieries making profits and those making losses. The
number of collieries in the first list was double that in the
352
second, but their output was nearly five times as great.
The average profit per ton realized was 2 shillings 3 pence,
the average loss per ton was a little over 2 shillings. Loss
fell most heavily on South Wales, where the output realized
at a loss was 58 per cent of that realized at a profit, the
amount of loss in shillings per ton being heavy.
It should be observed that the amount of 15 per cent of
the excess profits which the Coal Controller retained was
used to compensate the owners, who were compelled to
produce at a loss, and that the advance in price made in
1918, which was entirely unprompted by either statistical
or actuarial calculations was used to bring mines which
were not yielding a profit up to the profit-yielding margin.
It should be noted that this was an endeavor to fix the
price of coal by the cost of production of the least efficient
mines, with the result of larger profits to the more efficient
and added cost to the consuming public. The action was
held to be justified on the ground that the nation required
every ton of coal that was obtainable, and to that end the
mines which were heavily handicapped must be made
profitable.
The bulk of these profits seems to have been obtained
from the export trade in coal. A table put in as evidence
by the financial adviser to the Coal Controller showed
both the relative size and profit of the domestic and
export trade for three-quarters of the year 1918. The
table follows:
COMPARISON OF PROFITS IN EXPORT TRADE IN COAL, GREAT
BRITAIN, QUARTERS ENDING MARCH, JUNE, SEPTEMBER,
1918
Tons of coal sold inland
Tons of coal sold for export
Profits per ton on domestic coal
Profit per ton on exported coal
Quarter ending Quarter ending
Mar. 31, 1918 June 30, 1918
31,069,341
9,217,210
8.24d.
6s. 6.8d.
28,073,037
9,911,600
1.86d.
7s. 0.35d.
Quarter ending
Sept. 30, 1918
22,822,169
9,750,214
1s. 6.57d.
10s. 0.38d.
While no fuller examination was made of the foreign
trade in coal, it was demonstrated that the coal industry
itself depended on this foreign trade. Its loss would
have far-reaching effects. Coal owners were very nervous
about American competition and the inroads American
353
coal exporters had made into markets formerly supplied
by Great Britain. Referring to Brazil, Argentina, and
Uruguay, a witness gave the following figures of the
United States shipments of coal to those countries:
Year ended June 30, 1910
Year ended June 30, 1914
96,000 tons
440,000 tons
Year ended June 30, 1915
1,195,000 tons
Year ended June 30, 1916
1,619,000 tons
While the trade of the United States with those coun-
tries was increasing, that of Great Britain was declining.
The same witness cited the following figures as the exports
of Great Britain to the same three countries during the
years 1913-1916:
1913
6,304,000 tons
1914
4,611,000 tons
1915
2,449,000 tons
1916
1,105,000 tons
More serious was the entrance of American coal into
Europe. In 1912 the exports of Great Britain into the
South American countries just named formed 9 per cent
only of her total exports, while her European and Medi-
terranean markets took over 87 per cent of the total. The
quantity exported to French or Mediterranean ports was
31,132,000 tons.¹ But America was opening up trade
with Italy. Her exports to that country were estimated
by witness as follows:
EXPORTS OF COAL FROM U. S. A. TO ITALY, 1911–1917.
312,754 tons
1911
1912
339,064 "
1913
486,040
<<
1914
693,140
1915
2,839,979
،
1916
1,069,877
CC
1917
393,000
،
These figures show how marked had been the increase
in the quantity bought by Italy during the war period
till the submarine war made shipping scarce in 1917.
Coal had also gone from the United States to Sweden and
Spain. The total amount exported to all European
countries from the United States was estimated as
follows:
1913 about 727,000 tons
1914 about 914,000 tons
1915 about 3,442,000 tons
¹ See H. Stanley Jevons: "The Coal Trade," pp. 682-84.
354
·
The United States. was going ahead rapidly. She had
increased her output enormously, possessed cheap coal, had
now a large fleet of steamers, and was desiring new outlets
for her increased output. She was now offering coal
•
in the European markets, and was assisted by the fear in the
minds of many of the buyers that there would not be
sufficient British coal to supply their needs.
Another witness gave evidence on American competi-
tion in South America:
There was considerable prejudice against American coal,
owing to its appearance, it being small and friable, but when
shipments from the United Kingdom became difficult and
almost ceased, consumers were obliged to take American
coal, and they soon discovered that it was nearly as efficient
as second-class Welsh Admiralty coal for steam-raising
purposes.
During the war the Americans made every effort to send
coals to South America, and they succeeded to a remarkable
degree. Since the armistice and, indeed, before the armistice
was signed, very great efforts were being made by American
shippers to obtain orders for coals, and a great many contracts
had been entered into. Shippers of British coals were, of
course, not in a position to compete, so that the Americans had
obtained a firm hold, especially in Brazil.
The stress laid on the danger to Great Britain's export.
trade in coal from American competition led to many
interesting comparisons and contrasts with coal production
in America. Evidence and independent observation
revealed great and significant contrasts. The output of
coal in the United States is so much greater that com-
parisons of quantity are invalid. The United States
has one-half the available coal supply of the whole world.
But comparisons in output per individual are valid. Here
one finds that the output over a length of time had been
growing only 2 per cent per year in Great Britain, 4 per
cent in Germany before the war, and 6 per cent in America.
This disparity in increase of production was not due to
smaller numbers engaged. Great Britain employed
300,000 men and boys more than the United States, yet
the total quantity mined in America in 1912 was nearly
twice as great. Further, the output per ton per employee
over the same period of years had fallen in Great Britain
from 312 to 244 tons, but in the United States it had
3.55
risen from 400 to 660 gross tons.¹ In Australia and New
Zealand, where the miners were of the same type and
race as in Great Britain, the output per man was well
over 500 tons.2
The reasons for this low output³ lend reality to the coal
situation in Great Britain. Coal is scarcer in that country
than in the United States of America. It has been
worked for a longer time, and some of the most easily
available seams are exhausted. The coal face has receded
from the shafts first put down, so that coal is now more
costly and difficult to get. Shafts are growing deeper.
As a consequence of these two facts, and of the absence
of mechanical haulage, the management has difficulties
in furnishing a constant supply of trucks to carry off the
coal produced by the miners.
Further, the nature of the seams and the geological
difficulties experienced militate against increased output.
Narrow seams, only 16, 20 and 30 inches wide, are worked
in many cases. The anthracite miners in South Wales
are continually struggling against "faults," and their
output is seriously reduced and the cost of production
increased thereby. The following note on the Welsh
coal fields, the richest and yet (as shown earlier) the
most unprofitable of the English deposits, will show the
realities of the situation:
5
"Geologically, the strata are more disturbed than those
of any other British coal field. Besides the frequent 'faults,'
i.e., actual fractures or displacements of the strata, there are
also 'washouts' where the coal becomes very thin or dis-
appears altogether for a few yards without there being
any ‘fault.' In the anthracite area this disturbed condition
is generally so serious as to render it difficult to work the coal
on a very large scale, that is, in pits employing anything
approaching the numbers of men employed in the steam
coal collieries. It also renders operations in this area more
1 Data furnished by U. S. Geological Survey place average tonnage per man
in 1914 at 673 (short) tons. Quoted in Coal-Mine Fatalities in the United
States, 1918, compiled by Albert H. Fay, U. S. Department of the Interior,
Washington, 1919.
2 For the comparisons made in this and preceding paragraph, see Sydney
Brooks: "Some Problems of Coal," Nineteenth Century, March, 1919.
3 This discussion does not refer to the reduction in output per man during
the war period, which was explained by Sir Richard Redmayne as due largely
to the withdrawal of 400,000 men for military service. "They constituted
the fittest possible men in the mines, and their places were taken very largely
by men of lower physical standard."
* See H. Stanley Jevons: "The Coal Trade" (1915).
' See p. 353.
356
speculative and the adoption of standardized rates of wages
more difficult than elsewhere. Next, the character and
quality of much of this South Wales coal give it a practical
monopoly in the markets to which the bulk of it is dispatched.
Thus, the best steam coal, so essential for the navy, is abso-
lutely unrivaled in any part of the world; the best bituminous
coals owing to their hardness, can stand all kinds of climates,
while the anthracite coal of the west has no serious rival any-
where except that of Pennsylvania. Now 'the same causes
which have given Welsh coals their superiority are also re-
sponsible for having made mining in this coal field more
costly and more dangerous than in the other coal fields of the
United Kingdom. The Welsh coal is dry and fiery, and owing
to the dryness of most of the mines the fine coal dust is a con-
stant source of danger. Loose-jointed coal and loose or
rotten roof are also more frequent in South Wales than else-
where, so that there are numerous accidents, frequently
fatal, from falls of the face of coal, as well as from falls of the
roof.'
1
Some of this difference in output must also be credited
to the fact that mechanical coal cutters have not as great
a vogue as in the United States. The following tabular
statement of the position was presented to the Com-
mission by Sir Richard Redmayne, Chief Inspector of
Mines:
ANNUAL GROWTH IN THE USE OF MECHANICAL COAL
CUTTERS AND COAL OBTAINED THEREBY, UNITED KING-
DOM 1903-1917, U. S. A. 1903-1916
United Kingdom
United States
No. Machines
Tons Mined
No. Machines
Tons Bituminous
Coal Mined
1903
643
5,245,578
6,658
69,620,441
1904
755
5,744,044
7,671
70,261,158
1905
946
8,102,197
9,184
92,318,261
1906
1,136
10,202,506
10,212
106,113,863
1907
1,493
12,877,244
11,144
123,703,413
1908
1,659
13,508,510
11,569
109,985,120
1909
1,691
13,728,902
13,049
127,229,355
1910
1,959
15,747,558
13,254
155,368,119
1911
2,146
18,309,269
13,819
159,068,961
1912
2,444
20,053,082
15,298
187,981,091
1913
1,897
24,369,516
16,379
216,447,958
1914
3,093
23,976,367
16,507
194,999,363
1915
3,089
24,087,684
15,692
217,176,385
1916
3,459
26,303,110
16,197
253,295,960
1917
3,799
27,626,298
(Not available)
¹ See Report of Commission of Inquiry into Industrial Unrest, Great Britain—
U. S. Bureau of Labor Statistics Bulletin, No. 237.
357
The significance of this table is increased when one
uses comparative figures. The average production in
Great Britain for 1912-1913¹ was 274 million tons, of
which an average of only 22 million tons, or 8 per cent,
was obtained by the use of coal-cutting machinery. The
figure for the number of tons mined by machinery in
1917 was only 10 per cent of a normal year's output. On
the other hand, the amount of bituminous coal cut in
the United States in 1914, the only year for which figures
are readily available, was 51.7 per cent of the total."
A less reliable estimate for 1912 shows a figure of about
40 per cent.³
Independent observation revealed other points of
contrast with America. In one of the best-equipped
collieries in South Wales the main haulage was done by
cable which was nearly two miles long. In America
electric motors would have been used. At the dockside,
where coal is brought for export, one is struck by the
large number of men employed instead of labor-saving
machinery being used. Prior to the war labor was too
cheap in Great Britain. If more work or more production
was needed it cost the employer less to hire a few more
men than to put in labor-saving machinery, while the
objections of the workers to that machinery supplied
him with a stimulus in the same direction. Docking
accommodation at Cardiff was antiquated, and docks
were badly laid out. For instance, the railroad tracks
reached the pier at right angles to the line of docks. This
necessitated every railroad wagon being put on a turn-
table and turned around, an operation which was per-
formed by hand labor. The export trade was obviously
loaded with an added burden of cost by such uneconomical
unloading facilities.
The same absence of economy was observed in the
haulage of coal. Most railroad coal cars have a net
capacity of ten to twelve tons, with a "tare" of above 50
per cent of the net loading of the wagons. Most of the
hauls are for a short distance only. The average length
of haul in South Wales was from twenty to twenty-five
1 See Table, p. 347.
2 Department of the Interior, U. S. A. Bulletin 115, p. 187.
³ Ibid., pp. 120, 123, 126, 129.
4 By S. Pemberton Hutchinson, President, Westmoreland Coal Company,
a member of the European Commission of the National Industrial Conference
Board.
358
miles, while in the distribution of domestic coal, short
haulage preponderated. This shorter haulage increases
the proportion of cost per ton per mile relatively to the
cost of the longer hauls in the United States, a disadvan-
tage from which Great Britain cannot escape.
But a
great economy would be effected in the handling of coal
if larger cars and longer trains were used. It must be
recognized, however, that such alterations would involve
a great expenditure of money on tunnels, bridges, plat-
forms, and so forth. The substitution of larger cars,
further, would involve a complete change in the handling
equipment of the docks.
It should be stated that the North-Eastern Railway,
which serves the Durham field, has sought to better its
handling capacity by building trucks of thirty to forty
tons capacity, and has experimented with electric haulage
for mineral traffic. The docks at Newcastle and South
Shields are fitted with elaborate and gigantic tips and
cranes.¹
1
The contrast between the United States and Great
Britain reveals the great difficulties the coal industry
in the latter country has in competing with the former.
Many of these difficulties, as suggested above, are inherent
in the very situation. This is particularly true in the
matter of coal-cutting machinery. The conditions pre-
senting difficulty under this head were summarized by
the Royal Commission on Coal Supplies, 1905:2
"There are, however, certain conditions under which
machines cannot at present be worked to advantage, viz., (1)
where the roof or floor is bad, (2) where there are numerous
faults or dykes, or (3) where the seams are highly inclined.
So, too, in the case of very soft coal there is the danger of falls
from the face and damage to the machines.'
""
As Sir Richard Redmayne reminded the Commission,
mechanical coal cutters could not be supplied broadcast.
They could not be used in South Wales, and the old and
nearly exhausted fields of Durham and Northumberland
do not employ them. On the other hand, in the coal
fields of Yorkshire and the Midlands the undisturbed
nature of the coal measures is very favorable to the em-
ployment of machines and the newer mines are adopting
them extensively.
¹ H. Stanley Jevons: "British Coal Trade," p. 61.
2 Ibid., p. 213.
359
Their use is recommended also by every kind of
economic advantage. Under present conditions of the
high price of coal they would cheapen production, since
machine work is less costly than handwork, even in thin
seams. They have advantages of a technical kind in the
working of the mines and in producing a larger proportion
of vendible coal.
Whether their introduction in larger numbers would
be welcomed by organized labor is not clear. The figures
show that while miners were volunteering for the war to
the number of 300,000,¹ coal-cutting machines were
being introduced in large numbers. During the period
1909-1913, the years chosen for the estimate of output
by the Commission, the average number of machines in
use was a little over 2,000. In 1914 it was 3,093; in
1917, 3,799. The chief miners' witness, Mr. William
Straker, secretary of the Northumberland Miners' Associa-
tion, recognized their advantage in increasing output.
"Where coal-cutting machines had been introduced, he
thought it was safe to say that the output per man on the coal
face had been at least doubled."2
On the other hand, coal owners gave positive evidence
concerning the dislike of the miners to such machinery.³
"If the workmen's antagonism to machinery could be got
over, probably a slight increase might be brought about
by the introduction of further coal-cutting machinery and the
use of conveyers in thin seams.
"The men had not always been prepared to meet the owners
when machinery had been introduced, and the output had
consequently not improved as it otherwise would have done.
"The miners had not helped in the past to increase produc-
tion by the introduction of mechanical appliances.
I am
"The workers were against the use of conveyers.
tolerably safe in saying we have more conveyers on the scrap
heap than in the pit. We have done our best to work them.
When I have put in coal conveyers, the men have not tried to
make them successful."
The minority report presented by the coal owners on
March 20, 1919, contained the following reference:4
1 This is the figure for volunteers. Ultimately another 100,000 were obtained
by "combing out."
2 The Times, March 15, 1919, p. 6.
3 The Times, March 13, 14, 1919.
* Interim Report by Messrs. Cooper, Forgie, and Williams, p. 6.
360
"It was alleged that in the past the workmen had in some
districts not assisted in making coal-cutting machinery and
conveyers a success, but rather the contrary."
Evidence was also given showing that a large measure
of reduced output was due to voluntary absenteeism.
This was put as a maximum before the war at from 12 to
15 per cent, and 9 per cent during the war. An estimate
was given several times that 5 per cent of this absenteeism
was avoidable, and that reduced hours of working would
eliminate some of it.
Much attention was paid during the inquiry to the
subject of housing. The Sankey Report, which was
accepted by the Government "in the spirit as well as
in the letter," reached the following conclusion and
recommendation on this point:
Although it is true that there is good housing accommoda-
tion in certain districts—and to some extent-there are
houses in some districts which are a reproach to our civiliza-
tion. No judicial language is sufficiently strong or sufficiently
severe to apply to their condemnation.
It is a matter for careful consideration whether 1d. per ton
should not be at once collected on coal raised and applied to
improve the housing and amenities of each particular colliery
district. A penny per ton on our present output means
about £1,000,000 a year.
The housing conditions within the mining industry vary
in accordance with districts and district customs. Thus,
in the older and almost exhausted fields of Durham and
Northumberland, "the dwellings of the people are old
and insanitary," but the fact of the approaching exhaus-
tion of the coal and the absence of any industry to take
its place has impeded any effort to remedy this state
of things. The conditions in Scotland came in for much
condemnation. There the colliery companies own the
bulk of miners' cottages. The prevailing type of cottage
is of a low order, and makes but scanty provision for
ventilation, heat, decency, or sanitation. In Yorkshire,
however, conditions are somewhat better.
Although its housing accommodation is not, in most parts,
actually deficient, the cottages are usually only small brick
boxes put up in monotonous rows by jerry-builders. The
miners live in dirty, ill-made, noisy streets, under a murky
¹ H. Stanley Jevons: "The British Coal Trade,” p. 63.
361
atmosphere; and many of the cottages being built back to
back there is no through ventilation and no privacy.
The housing conditions in the neighborhood of the large
new pits which are being sunk in South Yorkshire are being
very greatly improved by the movement for building model
colliery villages on garden city lines.¹
1
The houses in South Wales, while described by a com-
petent authority as "not at all satisfactory "2
are, "taken
as a whole," probably better now than in any of the other
principal coal fields, except perhaps the new South
Yorkshire field. There is, however, a great scarcity of
houses due to the fact that the companies do not build
houses, and the co-operative building clubs, through
which the miners had managed to build their own houses,
are becoming extinct.
It should be remembered in this connection, however,
that poor housing conditions for workmen are not con-
centrated in any industry or, for that matter, in any
district. Bad conditions may be found in various parts
of England and in various industries. The slums have
for many years been a part of England's industrial
development. For a further and more complete dis-
cussion of this point, the reader is referred to Chapter XII.
§ 3. RECOMMENDATIONS OF THE COMMISSIONS
On the basis of the evidence furnished it, the Coal
Commission presented its report on March 20, 1919.
Three separate reports were prepared. The coal owners,
three in number, replied to the request of the miners
for 30 per cent increase in wages and a reduction of hours
from 8 to 6 per day, with a recommendation of an advance
of 1 shilling 6 pence per day and a reduction of hours to
7 per day. Representatives of the miners, three of whom
were members of the executive of the Miners' Federation,
and three others economists appointed by the Govern-
ment on the nomination of the miners to watch the
workers' interests in other industries, held that both
claims of the miners were justified. The third report
was presented by the Chairman of the Commission, Mr.
Justice Sankey, and the three employers named by the
Government on behalf of other industries. This Report,
1
¹ H. Stanley Jevons: "British Coal Trade," p. 63.
2 Ibid., p. 126.
362
which the Government adopted and the miners ultimately
accepted, recommended an increase in wages of two shil-
lings per shift or per day worked, and a reduction, as and
from July 16, 1919, of the hours of labor from 8 to 7, and,
"subject to the economic position of the industry at the
end of 1920," to 6 hours per day as and from July 13,
1921.
The demand for nationalization was accepted by the
six miners' representatives. The two other groups were
unready to pronounce judgment on the subject, which had
not been fully discussed before the Commission, since
precedence had been given to the questions of wages
and hours. The Sankey Report, however, was by no
means neutral in regard to the future of control in the
industry, as the following sections will show:
Even upon the evidence already given, the present system
of ownership and working in the coal industry stands con-
demned, and some other system must be substituted for it,
either nationalization or a method of unification by national
purchase and/or by joint control.
We are prepared, however, to report now that it is in the
interests of the country that the colliery worker shall in the
future have an effective voice in the direction of the mine.
For a generation the colliery worker has been educated socially
and technically. The result is a great national asset. Why
not use it?
From this basis these Commissioners proceeded to
report that economies resulting from improved methods
should result in the industry yielding even better terms
to the workers than those recommended in the Report,
while at the same time giving a fair return to capital.
The result of the colliery workers having an effective
voice in the direction of the mine and better wage terms,
should
enable them to reach a higher standard of living to which,
in our view, they are entitled, and which many of them do not
now enjoy.
The Sankey Report further recommended that future.
sessions of the Commission should deal with suggestions
as to the different ways in which economies and improve-
ments in the coal industry could be effected, and that
these suggestions should be carried into operation and
tested through the machinery of the Coal Controller's
363
office, the continuance of which was also recommended.
At the same time these Commissioners urged that
certain units of economy and units of improvement should
be taken in hand at once. The following were named as
desirable improvements or economies:
(1) Housing.
(2) Baths at the pit-head.
(3) Clearance.
(4) Continuity of transport from the colliery.
(5) Reduction of voluntary absenteeism.
(6) Use of machinery in mines:
(a) Coal cutting.
(b) Coal conveying.
(c) Underground transit.
(7) Pooling of wagons.
(8) Elimination of unnecessary distribution costs.
(9) Uniformity of accounting.
The Sankey Interim Report was endorsed by the
Government and public opinion and accepted by the
miners. Obviously most of its suggestions were experi-
mental in nature. Their success depends upon securing
economies in production and increasing output. The
whole of the evidence, as well as the tenor of argument
in the Report, makes this clear. The Times, in an editorial
comment, recognized the situation:
The proposals relating to the progressive reorganization of
the mining industry and the economies which it is expected
to effect in all branches of the industry form the foundation
of the whole report. If these economies are not secured,
the whole structure collapses.
In this extract, The Times, which said that the report
undoubtedly marks a turning point in the industrial system
of the country,
and characterized its recommendation on control of the
mines as "a most remarkable pronouncement," acknow-
ledged that failure to increase output must lead to
economic disaster. Yet, with the optimism characteristic
of the British, it concluded its discussion with the hope
that the reorganization of the industry would raise the
output to the level of the 287 million tons produced in
1913. Till that result is achieved, the action recommended
by the Sankey Report must be considered an experiment.
364
The report also necessitated a further inquiry into the
question of nationalization, which was not definitely
decided in the earlier report. After some considerable
delay, due to the miners' ballot on the acceptance or re-
jection of the report, the Commission commenced an in-
vestigation of the question of nationalization on April 23d.
The terms of reference of this second inquiry were those
set out in certain clauses of the Coal Industry Com-
mission Act, 1919, the chief of which follow:
(1) 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;
(2) The effect of the present incidence of and practice in
regard to mining royalties and way-leaves upon the coal
industry and the cost of coal, and whether any and what
changes in these respects are desirable;
(3) The effect of proposals under the above heads upon the
development of the coal industry and the economic life of the
country.
After an inquiry lasting nearly two months, the Com-
mission issued four reports. One was signed by the Chair-
man (Mr. Justice Sankey) alone. A second short report
was signed by the three miners' representatives and the
three who were nominated on their behalf by the Govern-
ment. A third was signed by the three coal owners and
the two representatives of consumers' interests. The
fourth came from Sir Arthur Duckham, the third repre-
sentative of the consumers' interests. The six miners'
representatives finding themselves "in substantial agree-
ment with the Chairman's report," presented only a short
report in which they stated their disagreement with him
on minor points. Sir Arthur Duckham differed from the
coal owners and other manufacturers more in his method
of dealing with the industry in the future than in his
views on the present conditions and needs. The reports
may, therefore, be discussed in relation to the general
topic of this section, the future of the industry.
A distinction exists in the reports between the future
ownership of the mineral deposits of coal and the future.
control of the industry. All the reports agree that the
private ownership of coal is wasteful and nationally
disadvantageous. Sir Arthur Duckham concludes, with
365
reference to all minerals, that private ownership "has
not been and is not in the best interests of the commun-
ity." While recognizing that the great development of
the industry has been due to private enterprise, he admits
that "grave losses to the community have been caused
by lack of co-ordination in the efforts of private enter-
prise." Mr. Justice Sankey names several respects in
which private ownership is held to have hindered the
development of the industry. On the other hand, the
coal owners and their two co-signatories, while finding
no "reasonable ground for preferring state ownership of
the industry," yet declare for state ownership of the coal
deposits. After considering the difficulties in the way
of full utilization of the national resources in coal, and
"the defects arising from the present system of owner-
ship," they register their conclusion
that the most effective method of dealing with the problem
in the national interest would be for the state to acquire the
ownership of the coal.
Under state ownership there would be one owner instead
of several thousand owners, and the difficulties caused under
the present system will be effectively dealt with.
On the matter of royalties, all are agreed that they
should cease. The majority are in favor of paying a
fair valuation for these rights. The three officials of the
Miners' Federation, however, do not agree to any com-
pensation for these mineral rights, except a "grant of
compassionate allowances where the expropriation would
deprive persons of their means of livelihood.
""
Though the majority of the Commission was in favor
of the nationalization of the industry, the objection of
the coal owners and manufacturers was decided and pro-
nounced. Sir Arthur Duckham wrote:
Many advantages have been claimed for nationalization;
practically none has been sustained. Many cogent objections
have been advanced against nationalization, the majority
of which have not been refuted. The nationalization of the
coal-mining industry would be an unprecedented and colossal
experiment.
The other owners and manufacturers had
come to the conclusion that the nationalization of the coal
industry in any form would be detrimental to the development
of the industry and to the economic life of the country.
366
Mr. Justice Sankey recommended that the principle of
state ownership of the coal mines be accepted, and that
Parliament be invited to pass legislation acquiring the
coal mines for the state three years hence, paying fair and
just compensation to the owners. His report on this
matter was accepted without qualification by the six
coal miners' representatives.
The adoption of the principle of nationalization in-
volved some form of Government control. In accordance
with the British constitutional system this necessitated
a Minister of Mines, appointed by the Government,
sitting in and responsible to Parliament. Sir Arthur
Duckham's scheme, which did not endorse nationalization
of the coal mines, yet necessitated a Ministry of Mines
to have control and oversight of all mines. So the owners'
and employers' suggestions of the state ownership of
coal called for a Mines Department, which, it was recom-
mended, should have at its head a responsible official
thoroughly acquainted with the mining industry.
Political control, however, of the mines was objection-
able to the owners. Their views were stated thus:
The danger due to political influence has been frankly
admitted, but it is claimed that safeguards can be provided
against political interference in industry or commerce. How-
ever feasible this may appear in theory, the democratic system
of government makes safeguards impossible when the exi-
gencies of a political situation dominate a question. We have,
therefore, come to the conclusion that the provision of safe-
guards against political interference is not within the region
of practical politics.
All reports agree that the miners should be given some
form and degree of representation in the control of the
industry. Sir John Sankey recognized the bases of this
demand on the part of the miners. He pointed out
that education had produced this "higher ambition of
taking their due share and interest in the direction of the
industry to the success of which they, too, are contribut-
ing." The owners reported that the evidence showed
coal owners generally were prepared to increase facilities
for the workers to acquire a greater knowledge of and
interest in the industry. They themselves, in common
with Mr. Justice Sankey, put forward a complete scheme
of joint representation of employers and miners. Sir
367
Arthur Duckham, on the other hand, conceded but
limited recognition to the miners.
Mr. Justice Sankey's scheme provided for a system of
administration for the miners to be carried on during the
three years before the mines came fully under public
ownership. The owners and manufacturers, who opposed
public ownership, were in favor of joint representation to
encourage co-operation and to enable each party to bring
forward for discussion any question of mutual interest.
Sir Arthur Duckham suggested a District Coal Board
which was to unify the working of the mines under
private ownership. On each of these boards there were
suggested seven directors, two of whom should be elected
by ballot of the workers in the area.
The scheme of representation drawn up by Mr. Justice
Sankey consists of a local mining council in each mine,
a district mining council in each of fourteen suggested
districts, and a national mining council. The object of
the local mining council is
to take advantage of the knowledge of the workers by allowing
them to sit on the councils for the purpose of advising the
manager and to give them an effective voice in all questions
where their own safety and health are concerned.
The district mining councils are intended
to prevent the bureaucratic running of the industry by causing
it to be controlled locally by a council of fourteen, upon which
there is equal representation for the miners, for the consumers,
and for the persons acquainted with the commercial and tech-
nical side of the industry.
The National Mining Council is defined in like fashion
by Mr. Justice Sankey as
a body composed of members of the district mining councils
who shall meet at stated intervals to discuss and advise the
Minister of Mines on all questions connected with the in-
dustry. The Minister of Mines will be assisted by a standing
committee of eighteen members elected from and by the
National Mining Council, who will meet regularly for the
purpose of superintending the operations of district mining
councils.
On the local mining council, which is to consist of ten
members, three of whom are to be ex-officio, being
managers, the workers are to have four members elected
368
by ballot of the mine. On each district mining council,
with its twelve members, the miners are to have four mem-
bers similarly elected. The National Mining Council is to
be elected from the district mining councils by proportional
representation. No specified proportion is reserved for
the miners, but on the standing committee of eighteen
members elected from the National Mining Council six
are to represent the workers.
It should be said that the six labor members of the
Commission suggested that fuller representation of the
miners was necessary to secure their cordial co-operation
in the success of the industry. The scheme they preferred
to that of the chairman gave half the seats to the miners.
The coal owners recommended also a scheme of pit
committees, district councils, and a national council.
These various committees differ little in form from those
in existence in the industry at present except that equal
representation of management and miners is specified.
The district councils might be co-ordinated, it is sug-
gested, with the existing conciliation boards, and the whole
plan might be co-ordinated to that proposed in the Whitley
Report.
In his scheme for the administration of the industry
under national ownership, Mr. Justice Sankey makes
provision for the representation of other interests than
those of the owners and the miners. On the district
mining councils four persons are to represent the con-
sumers and two each those interested in the technical
and commercial side of the industry. In iron and steel
districts two at least of the consumers' representatives
are to represent the dominant trades, and in shipping
districts two at least shall be recognized coal exporters.
On the standing committee of the National Mining Coun-
cil, which is to superintend the operations of the district
mining councils, in addition to six representatives of the
workers, there are to be six representing consumers and
six the technical and commercial side of the industry.
The significance of the second report of the Commis-
sion was overshadowed somewhat by the evidence on
reduced output tendered at the close of the inquiry.
Official figures supplied by the Coal Controller showed
that the first twenty weeks of 1919, ending May 24, 1919,
were much less productive than a similar period in 1913,
the basic year adopted for comparison in most official
369
tables supplied. The average number of men employed
during these periods was almost identical, but there had
been a reduction in total output and in average output
per man per week. The cause for this was to be found
in a reduction in the average number of days per week
on which pits raised coal and in an increase of nearly
20 per cent in absenteeism. On the basis of the first
twenty weeks of the year 1919 the total output for that
year, without reduction in hours, could not exceed 242,-
000,000 tons as compared with 287,000,000 tons in 1913,
a decline of 15.7 per cent in efficiency of output. But,
allowing for the reduction of hours after July 16th, conse-
quent on the acceptance of the provisions of the first
Sankey Report, the estimated output for the year 1919
was 228,000,000 tons, a decline of over 25 per cent on the
1913 figure. The estimated output for twelve months
from July, 1919, under the reduced hours and on the
basis of the first twenty weeks of the year was put at
217,000,000 tons.
This reduction in output meant that both domestic and
foreign consumption must be restricted. Domestic con-
sumption in 1918 was 62% per cent below that of 1913,
and it would be necessary to continue both this degree
and form of control. Foreign export of coal would be
even more seriously affected. In 1913 the export had
totaled 77,000,000 tons; in 1918, 34,000,000. For the
twelve months from July, 1919, it would need to be re-
stricted to 23,000,000 tons per annum.
In
The decrease in production was held to involve a
deficiency on the working of the industry of £46,000,000,
equivalent to 4 shillings 3 pence per ton of output.
consequence of this official calculation, the Government
announced that the price of coal to the domestic consumer
would be increased 6 shillings ($1.50) per ton from July,
1919.
§ 4. SUMMARY
At this point, the study of the coal situation in England
must be brought to a close and its results summarized.
(1) The output of coal has been steadily decreasing
since 1913, and is likely to be lower still under the reduced
hours which are operative since July, 1919.
370
(2) This has necessitated a considerable reduction in
the quantity of coal available for export, and in a significant
reduction in that available for domestic consumption.
(3) France and Italy, both large consumers of British coal,
find Britain unable to supply their wants.
(4)
The situation leaves the markets of South America and
of certain sections of Europe open to the coal exporters of the
United States.
(5) With the decrease in output has gone an increase in
price. This adds a burden to the domestic consumer, and
an equal burden on British manufacturers. Cost of produc-
tion has been largely increased.
(6) Increasing cost, together with decreasing quantities,
of coal for export, has gravely affected British foreign trade.
This effect in its turn tends to react upon the cost of living for
the masses and the cost of production for the manufacturer.
(7) Public opinion has come to accept the principle of
public ownership of the coal as distinct from that of the coal
mines. Coal is recognized as the nation's greatest asset. The
present system of exploiting that asset is recognized as
wasteful.
(8) Against nationalization of the industry, that is, pub-
lic control of the mines and of the process of extracting and
selling the coal obtained, there is considerable opposition.
This is based on the following grounds:
(a) Government control would be more costly and in-
efficient. Though profits were large during the war, the
normal margin is very small.
(b) The present system of control and management is
not without its faults, but it has a record of business-
like development behind it. Its faults can be cured
by economies and by larger use of machinery. These
remedies cannot be looked for under government
control.
(c) The alarming reduction in output is not to be cured by
government ownership. It is doubtful if their installa-
tion under private ownership could offset the reduc-
tion in output manifest during recent years, or
expected consequent upon shorter hours.
(d) Nationalization seems directed less to secure the
national welfare than to give the miners a larger
share in the control of the industry. As the report
of the coal owners (June 20, 1919) shows, it is possible
to secure this latter end without using the method
of nationalization.
371
(9) The British coal trade and with that British industry
and foreign trade need increased productivity on the part of
the miners. Without an increased supply, British coal cannot
again be cheap. Without cheap coal, Britain is likely to lose
her supremacy as a manufacturing and an exporting nation.
NOTE: The British Government, through its Prime Minister, Mr. Lloyd-
George, rendered its decision on the Sankey recommendations August 18, 1919.
It was a refusal to accept the proposed nationalization, but it provided for the
purchase of the royalty rights by the state. This counter-proposal of the
Government was rejected by the Trade Union Congress of Glasgow on Septem-
ber 12th. At this Congress the proposition that "The Congress declares
against the principle of industrial action in purely military matters" was laid
on the table by a vote of 2,255,000 against 2,086,000.
372
CHAPTER XXIII
NATIONALIZATION OF "KEY INDUSTRIES"
§ 1. SHIPPING AND SHIPBUILDING
Next after mines and railways the most important
proposal for nationalization in Great Britain pertains
to shipping. With the exception of the demands of Sir
Leo Chiozza Money, the proposal did not extend to all
shipping, but only to "the great lines of steamers" and
in some quarters the project was confined to making
the ships acquired by the Government during the war
"the nucleus of a national fleet."
At the time of the investigation of your Commission this
feature of proposed extension of Government control
had become a dead issue. Instead of advancing toward
increased Government influence, from the beginning of
the new year the Shipping Controller rapidly relinquished
the control of shipping and freights that had been estab-
lished during the war. The Government also withdrew
from the business of shipbuilding in private yards, making
over the contracts for unfinished Government ships to
private interests. And, finally, it offered for sale the
Government-owned shipbuilding plants, of which more
in particular will be said presently. Besides these acts
of industrial demobilization, the Government definitely
announced to the country that it would not propose the
nationalization of shipping.
The basis for this decision of the Government is to be
found in the pre-armistice "Reports of the Departmental
Committee appointed by the Board of Trade to Consider
the Position of the Shipping and Shipbuilding Industries
After the War." In these reports, especially in the
Final Report, there was an exhaustive marshaling of
evidence and clear-cut recommendations that must have
impressed the whole country. The committee found that
the position of British shipping after the war would be
serious indeed. "The prospect," they said, "after our
¹ Cf. the "Program for Reconstruction" of the Labour Party.
373
unparalleled exertions, is deplorable." Again they
said, the grave situation which has now resulted may
have the effect that British shipping "may fall behind in
the competitive race and definitely lose the ascendency
which has been the keystone of the Empire and a condi-
tion of our industrial existence."2
Throughout this report the committee takes the posi-
tion that the interests of British shipping are virtually
identical with the interests of traders and industrialists
throughout the nation. Everything must be done to
restore the confidence of shipowners, in the interest of
the general public. To the same ultimate end shipping
should be allowed to make good profits during the limited
period of trade activity that would follow the conclusion
of peace. It also "should be freed at the earliest possible
moment from the burden of war taxation." At the end
of the war
"our industrial position will be potentially very strong,
whereas we shall be left with a mercantile marine quite in-
adequate to meet our needs or to recover its former share of
the world's carrying trade. It will be necessary to make
the restoration of the mercantile marine the first charge on
the national resources unless our industry and our export
trade are to be seriously crippled, and we are to suffer the
consequences that would attend our decline to the level of a
second-rate maritime power.
3
The report has very little to say specifically on Govern-
ment ownership of shipping. In the one place where it
does touch on the subject it brings out an objection not
often considered by the general public-and that is the
difficulty that would rise from contact of the Government
in a business relationship with other Governments.
"It is inconceivable," the committee says, "that if state
ownership be substituted for private enterprise, the state
should continue the carrying trade between one foreign
country and another. It would inevitably have to confine
its activities to regular services between different parts of
the Empire and between the Empire and foreign countries;
and the world's carrying trade in a wider sense, especially as
typified by the world-wide operations of the tramp steamer,
which has formed an integral part, if not the backbone, of
British marine enterprise, would be lost to this country.'
""
1 "Departmental Committee on Shipping and Shipbuilding" (Cd. 9092), p. 63.
2 Ibid., p. 62.
* Ibid., p. 62.
4
♦ Ibid., p. 63.
374
With respect to Government activities connected with
shipping, by far the greater part of the report deals with
the subject of "Control," the elaborate system of
Government regulation of maritime business built up dur-
ing the war. The report makes the most decided state-
ments on this subject. Thus we read:
"We believe that the continuance of Government operation
and control is bound to extinguish private enterprise and
lead to state ownership."
Again:
“the first and fundamental condition of reconstruction is the
early removal from shipping of Government operation and
control. Such control . . . always tends to paralyze indi-
vidual effort. Especially is this so in an industry like ship-
ping, which is everywhere exposed to international
competition and depends for success on elasticity and freedom
from restrictions."
Still, again:
"the one fundamental condition of our maritime recovery is
the early release of shipping from Government control, the
maintenance of private enterprise in shipping and ship-
building, and the consequent repudiation of any scheme of
state ownership in either industry after the war."1
The committee's denunciation of war-time control of
shipping (that is, its continuation after the war, strenu-
ously advocated by the radicals) was well seconded in
other quarters. Said Lord Inchcape, Chairman of the
Peninsular and Oriental Company, at the annual meeting
of the company in December, 1918,
"the whole community is sick to death of control and permits
and licenses and priority certificates of all classes."
A few days afterward Lord Inchcape gave specific
examples in a letter to The Times of what he meant by the
above expression. He cited recent cases of his being
unable to get permits or licenses to ship propeller shafts
and frames out of the country for the repair of his ships.
In this matter shipping merely suffered along with
other industries in general.
"Trading associations," said Sir Eric Geddes, "are referred
from pillar to post, from department to department, from
committee to committee. The priority, the licenses, the
1 “Departmental Committee on Shipping and Shipbuilding" (Cd. 9092),
pp. 63 and 70.
375
control, and the permit, which have been the lodestars of
our industrial life during the last four and a half years, have
got to go.
" 1
Mention has already been made that the Govern-
ment withdrew from its war-time merchant shipbuilding
enterprises early in 1919. This consisted, on the one hand,
in the sale of 137 standard steamers under construction,
to Lord Inchcape and Sir Owen Philips, to be completed
and resold by them without profit; on the other hand, it
consisted in the offering for sale of the Government's
own merchant yards at Chepstow and Beachley. These
plants were first offered by the Government to certain
trade unions and to the co-operative societies, but the
offer was refused; there was no desire by labor to acquire
a "white elephant." And, indeed, the taxpayers had
suffered heavily through these ill-starred enterprises.
Approximately twenty million dollars was spent and not
a single ship built and launched. The general style of
the conduct of the business was to proceed "as if getting
ready for the next war.” There were constant changes
in plans; there was mismanagement and lack of order
of the grossest sort.²
The shipbuilding plant at Chepstow had been begun
in 1916 by the Standard Shipbuilding Company at a time
when merchant shipbuilding in the United Kingdom was
at a very low ebb because of concentration of labor and
resources on naval work for the Admiralty. Certain
leading shipping men foresaw the crisis that was to come
and launched their enterprise under the most favorable
auspices. In August, 1917, the Government dispossessed
the Standard Shipbuilding Company, because it had
novel plans of building so-called "fabricated" ships by
means of military labor and German war prisoners. This
plan did not work because of the strenuous objection of
the trade unions (which might have been foreseen) to
conscripted men at army pay being used in such civilian
occupations.
Most of the criticism of the "fiasco at Chepstow" has
been directed to the details of mismanagement on the
spot, which made the place one of several which became
"household words for official waste and incompetence."
But of far greater significance than the money wasted at
1 The Times Trade Supplement for February, 1919, p. 268.
2 Cf. the amazing disclosures in a series of articles in The Times during March.
376
Chepstow (with no ships to show for it) was the indirect
influence of the work done there in preventing the pro-
duction of ships in private yards elsewhere. The "pri-
ority" for materials to go to Chepstow (and be dumped
down there in utmost confusion) seriously crippled private
shipyards, but most of all the yards were disturbed and
hampered by the disastrous effect upon labor of the novel
plans of the Government. The attempt to get civilian
work done by men under military discipline aroused and
angered labor so thoroughly that it was a long time before.
their suspicion and resentment was allayed; and this at a
time when it was of the utmost importance to have co-
operation and good feeling between the shipbuilders and
the unions throughout the nation.
The conclusion of the war has left Great Britain short
of shipping, as all the world knows, and the greatest
demand will be put upon her private shipbuilders. The
Departmental Committee, cited above, maintains that
it will be necessary "immediately on the conclusion of
peace to complete annually not less than two million tons
net of merchant shipping," which is about double the an-
nual output before the war. Notwithstanding this
pressure upon the British shipbuilding facilities, the
committee recommends that there be no restrictions on
"the building in British yards of ships on foreign account."
Such restrictions would be of no effect in case there is a
sufficient demand from shipowners. But, on the other
hand, in case there is a temporary dearth of British orders,
such restrictions
would prejudice still further our shipbuilding industry and
ensure its transference to other countries. At a later date
the restoration of British shipping would be impeded by the
absence of a sufficient shipbuilding industry in this country.
1
It was said above that nationalization of shipping in
Great Britain had become early in the present year a dead
issue. Such was, indeed, the case so far as any direct
urging by the Government was concerned. But it is of
considerable significance that an attempt was made by
indirection to drive in the thin edge of a wedge in this
matter. In the bill creating a Ministry of Ways and
Communications (the "Transport Bill") introduced in
Parliament in February, 1919, it was provided that the
Ministry under an Order in Council might be authorized
1 "Departmental Committee on Shipping and Shipbuilding" (Cd. 9092), p. 67.
377
"to establish, maintain, and work transport services by
land and water." This was in addition to the authority
to acquire water services (the Channel boats chiefly)
carried on as ancillary to the railways. Under a storm
of protest this particular project, which meant the pos-
sibility of Government lines of steamships competing
with privately owned lines, was dropped.
§ 2.
NATIONALIZATION OF "KEY INDUSTRIES
""
During the war the expression "key" or "pivotal"
industries came into extensive use in England. Such
industries are of small magnitude in contrast to the great
staple trades (such as coal mining, iron and steel industry,
shipbuilding, and the various textile industries), but they
are nevertheless important because upon them are de-
pendent whole series of processes in the general industrial
system. The commodities supplied by such small but
strategic industries "are essential to national safety as
being absolutely indispensable" to the more important
industries: hence, the figure of speech of a "key.
""
The Parliamentary Committee on Industrial and
Commercial Policy, in its Interim Report on Certain
Essential Industries (Cd. 9033), discusses the situation
at some length with respect to synthetic dyes, spelter,
tungsten, magnetos, optical and chemical glass, hosiery,
needles, thorium nitrate, barytes, limit and screw
gauges, and certain drugs. The uses of each of these
articles of commerce is set forth, together with the reasons
why, before the war, they were supplied "entirely or
mainly" from enemy sources or sources under enemy
control. Magnetos, for example, are a "key" to all
forms of application to the arts of internal combustion
engines, and before the war were supplied to Great
Britain almost exclusively by the Bosch Company of
Stuttgart. The committee says that it is informed that
"but for the large stock held in this country by that
company, the military position at the outbreak of war
would have been very serious." In like manner the war
brought the discovery of how dependent cartridge-
making is upon a sufficient supply of spelter (zinc), and
also the fact that the chief source of supply of ore for
spelter within the British Empire, the Broken Hill mine,
of West Australia, had come under the control of German
interests. With almost all the "key" or "pivotal" in-
378
dustries, there is the pivotal natural resource and the
pivotal manufacture. Thus, tungsten is used as an alloy
in making high-speed steel, upon which, therefore,
the whole machine-tool making and machine-tool using
industry depends. The source of this metal is chiefly an
ore called wolfram, and two of the four leading and
approximately equal sources of supply are within the
British Empire. But the smelting of the ore, which is
not mined at all in Germany, was before the war almost
wholly confined to Germany, "where the manufacture
was carried on in association with large chemical under-
takings." The Germans were able and willing to treat.
the low grade ores, such as British and American firms
would not buy, and so came into "control also of most
of the supplies of the best ore." The result here, as with
the other so-called "keys," was great embarrassment to
the major British industries when war clogged the ordinary
channels of commerce. It became obvious to the British
public that such conditions with respect to these small,
and therefore formerly overlooked, trades must not be
suffered to continue; the "future safety of the nation"
was involved.
The remedy for the situation was as various in form
as the special circumstances of each key industry itself.
The most general recommendation of the committee.
was the establishment of a permanent Special Industries
Board to watch over the development of the key indus-
tries, and to take such detailed measures as were necessary
from time to time for their promotion and assistance.
Again, there were suggestions of prohibition of export
from the British Empire of the raw materials concerned,
or the control of such export by licenses and heavy duties.
Still again, there was the proposal (actually carried into
effect during the war) of encouragement of manufacture
in these directions within the United Kingdom by means
of prohibitions of import, heavy import duties, and by
the payment of subsidies. The whole trend of policy
with respect to the key industries has little direct connec-
tion with "nationalization," as that term has been defined:
its chief significance is its bearing upon the future fiscal
system of Great Britain. It may well come about that
the handling of the key industries, as outlined above,
1
¹ See passim, the "Final Report of the Committee on Commercial and In-
dustrial Policy After the War" (Cd. 9035); also passim, the "Final Report of
the Dominions Royal Commission" (Cd. 8462).
379
may be a prominent factor in bringing in a general policy
of protection.
But, although the subsidizing and public control of
key industries have thus come about (as wartime "con-
trol" in general) for general public reasons, and not as a
part of the particularist nationalization movement,
there have been, nevertheless, some indications of the
possibility of its being drawn into that movement. Thus,
a writer in a current number of the Contemporary Reviewi
suggests that it would be better than subventions for the
Government "to take over these industries," assuming
full business responsibility for them, and "using any
profits to lighten the burden that rests upon the tax-
payers." This last is the leading popular argument for
nationalization in every direction at this time of moun-
tainous debt and crushing taxation. Industries are to
be "taken over" by the Government and the profits
which will then somehow miraculously emerge are to be
used in relief of taxes.
Before leaving this general topic mention should be
made of still another key or pivotal industry not com-
monly listed as such, and that is the large scale manu-
facture of electricity for power. Even before the war
it was prominently agitated in Great Britain that the
power for manufacturing of the future should be electricity
produced at huge central stations near the coal mines
and distributed throughout the manufacturing areas.
During and since the war this project has attracted more
and more attention. The great possibilities of saving of
coal by this means are obvious. Also the concentration
of dependence of manufacturing in general upon these
central sources of power is obvious. Clearly such great
centralized power-producing and distributing systems
would be “keys" indeed. Hence it is not surprising that
the advocates of nationalization are keen upon their
capture. A prominent plank of the Labour Party program
for reconstruction is the demand that "so powerful an
enterprise" as these "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, . . . must
not be allowed to pass into the hands of private capital-
ists." And this demand is in the way of being realized,
because one of the clauses of the bill creating the Ministry
¹ August, 1919.
1
380
of Ways and Communications (the Transport Bill,
already alluded to) gives this new department of the
Government control over "the supply of electricity."
The reason given for the inclusion of this feature in a
"transport" measure is that the lines of railway afford
the safest and cheapest avenues for the distribution of
electricity from the generating stations. Furthermore,
the proposed electrification of the railways is linked up
with the project of "super-power stations.
22
§3. SIGNIFICANCE OF KEY INDUSTRIES AND KEY MEN
This concept of key industries has spread to other
economic activities. In demobilization the British plan
was to release pivotal men in order that industry might
be set going most quickly. These pivotal men either had
the skill necessary for management of key activities,
or ran machines that were pivotal to a whole series of
other machines. The fact is that there is no end to the
pivotal positions in our interlocking industry. A certain
material may be pivotal, or a certain industry, or a
certain group of men, or a certain individual, or a certain
machine. But one should not stop here, because the
various parts of a machine may be looked upon as pivotal
or the fingers or eyes or feet of the workmen. The princi-
ples aimed at in all this talk of pivotal men and pivotal
industry are simple. Ours is a co-operative industry;
all men, all machines, all industries work together. Some
operations are primary, some secondary, but from a
certain point of view any one, practically, may become
pivotal.
381
CHAPTER XXIV
PROPERTY RIGHTS
§ 1. INTRODUCTION
Although the subject of property rights may seem at
first glance to have little connection with the investigation
of industrial conditions in Great Britain, no one can
analyze the theories of social reformers in that country
or estimate the motives that furnish the stimulus to their
activities without becoming conscious of an altered atti-
tude towards property and towards the rights involved
in the ownership thereof. Fundamentally, most of the
changes which are occurring in industry and politics in
Great Britain are alterations in the conception of property
and in the sphere and function of property owners.
From about the year 1906, when the Liberal Ministry
of Campbell-Bannerman came into power, till the present
day, there has been a steady and cumulative movement
that has tended to lay stress on state ownership and
control of property. During the war this movement,
which had previously been political in essence, was
reinforced by certain industrial theories, the strength and
significance of which were becoming manifest at the time
of the visit of the Commission.
To make the subject clear and to enable one to under-
stand the significance of the social currents just suggested
there is need for a definition and analysis of the concepts
of property and property rights. By property is usually
meant some definite object exclusively controlled or
possessed. This is the more common designation of the
term. Thus, a man speaks of an automobile, a house, a
piece of land, or a number of shares in a corporation as his
property, or one may speak of a park as being public
property. Behind this reference to the object possessed
there is the right to control or possession. In some
cases this is taken to be implied in the designation “prop-
erty"; in other cases the more correct term “property
rights" is used.
Property rights depend for their meaning and their
assertion on the consent of organized society. Nothing
382
is held by right except in so far as its holding has secured
recognition from others and will be maintained by them.
This is the essence of what is implied in a right. In this
connection there arises the most fundamental distinction
between property rights, namely, that between private
and public property. Private property exists where
society has recognized the exclusive right of an individual
to the control and possession of some object or objects.
But society may vest control or possession in itself and
thus set up what is known as public property.
The historical nature of the institution of property is
well known to the student of social institutions. The
form and significance of property have altered in accord
with varying social and economic opinions of society.
Property owned by the state has become private property,
as in the days of the settlement of the western part of the
United States. At other times private property has be-
come state property.
Various principles have determined the form, whether
private or public, which property has assumed. Promi-
nent among these principles today is that of the public
interest. This principle leads, in the first place, to the
limitation of property rights, as in the matter of eminent
domain and inheritance duties. But it is involved more
powerfully in justification of the transfer of private
property into the hands of the state. While each specific
transfer needs separate consideration, it is generally
agreed that no lesser principle than that of public interest
can justify such an alteration in the form of property
holding.
To understand how recent industrial changes in Great
Britain have affected property rights, notice must be
taken of the fact that property implies control as well as
possession. So far as applicable to objects, this control
arises from possession. As such, it may be control for
use, as in the case of the ownership of an automobile, or
for power, as in that of the ownership of capital. This
control for power implies control over the services and
activities of other men. The holders of property have in
their hands the instruments whereby wealth is to be pro-
duced. In return for granting access to their property,
the holders claim control, not merely in the sense of
possession, but in respect of the conditions under which
use is allowed and also of the relations among men
383
engaged in the use of their property. The factors in
economic production, to be more specific, are thus instru-
ments in the control of the owners of property. Any
effort to alter the form or degree of this element of control
or to set up a new type of economic organization will
tend to change the extent and form of property rights.
This fact constitutes the significance of many of the
industrial movements sketched in earlier stages of this
report.
Discussion of the subject will follow the periods of
time determined by the war. In the pre-war period
there were many legislative measures dealing with the
land and new forms of taxation intimately related to
the social concept of property. During the war such
measures as the Excess Profits Tax and the suggested
levy on capital indicate the strengthening of the idea of
public interest over the absolute rights of private property
so strongly entrenched in English thought and English
law. Since the war the demand for nationalization
and the aim of the workers to secure control of manage-
ment and of the conditions of the employment relation
indicate that property rights of that sort are changing
under the pressure of a new ideal of social and economic
organization.
§ 2. SOCIAL LEGISLATION AFFECTING PROPERTY RIGHTS
PRIOR TO THE War
For several years prior to the war the financial pro-
posals of the Liberal Administration then in power were
directed towards carrying out measures of social legisla-
tion. Schemes for old age pensions, labor exchanges, and
health insurance were launched, each calling for new
and added expenditures. It was the contention of the
Liberals that the money for these schemes could be ob-
tained by a form of taxation which would divert to social
uses those advantages that wealthy people had obtained
from society itself. Particular attention was devoted to
the land question, in which matter it was held that every
increment of value that does not depend on improvements
made by the landowner should be subject to a special
tax. The principle behind this whole budget has been
described by a leading sociologist thus: "to divert every
form of economic rent to public coffers.""
1 Hobhouse, L. T.: "The Labour Movement," p. 118.
384
Of the two chief measures in the Lloyd-George Budget
of 1909-10, the most important in its social significance
was the land tax. By the clauses relating to this matter
in the Finance Bill, 1909-10, a tax of 20 per cent was
placed on the unearned increment upon land where
this unearned increment was due to the growth and work
of the community and exceeded more than 10 per cent
of the site value at a specified period. At the same time
a tax of one halfpenny in the pound was laid upon un-
developed land of a value of more than £50 an acre that
was being held back from use especially in building.
Further, a new tax of 5 per cent was imposed upon mining
rents and royalties.
As a financial expedient, that on land values was not
a success. It yielded in 1910-11 only a little over
£500,000, and at its maximum never more than £750,000.
During the war its yield was almost negligible. Its
significance lay rather in its revelation of an altered
temper towards the land question and to the vested rights.
so long associated therewith. The echoes of the struggle
over this matter have not yet died out in England, and
the attitude of the miners' representatives at the Coal
Commission is convincing evidence of the scrutiny to
which advanced thought in Great Britain is subjecting
ancient rights and privileges.
The
At the same time increased duties were levied on estates
bequeathed at death. These duties had been in existence
for some time but were only moderate in their rate.
Lloyd-George Budget increased the scale, particularly
in the case of estates of a higher value. These taxes
were far more productive than those on land values,
and levied a larger toll upon property. But because
they were not new, and because the right of the state had
come to be recognized in this particular, they did not
create quite the same feeling of disturbance as did those
which were aimed to create a "landed revolution."
§ 3. WAR MEASURES AND CLAIMS
During the war various forms of taxation of a new order
were enforced tending to divert to state uses much that
had hitherto been considered the exclusive right of the
property owner. Most of this taxation concerned the
limitation of profits or was an effort to ensure that war-
time profits should return in large measure to the state.
385
But in addition there arose, consequent upon the large
national debt incurred in the war, a suggestion for the
extinction of a large part of that debt by a levy on capital.
The first of the measures of taxation was the Munitions
of War Act, 1915. Sections of this act provided that any
excess of net profits made in controlled munition establish-
ments over a standard amount should be paid into the
national exchequer. The standard amount of profits was
defined as the average of the net profits for two years
preceding the war. This measure was designed to ex-
propriate all profits in munition making, due exclusively
to the war. That is, it confiscated war profits. It is
interesting to observe that this levy "was shown by
experience to be defective," and produced much less than
was anticipated. It was a restriction of profits that
dried up the source of the motive towards making large
profits. In the words' of Mr. A. Bonar Law, the levy
had this great disadvantage, that once a certain amount of
profit was made, nothing more could be made in conse-
quence—i. e., all incentive beyond a certain point was taken
away.
As a result the amount collected from all the controlled
firms was "practically negligible."
The Excess Profits Tax, the second measure of taxation,
came into force in November, 1915. It represented a tax
not on war profits so much as on war-time profits calcu-
lated on the basis of the profits arising from any trade or
business during the period August 4, 1914, to July 1, 1915.
Where the profits in that period exceeded the pre-war
standard of profits by £200, a duty was to be imposed
on the excess above that amount. The pre-war standard
of profits was defined as the average profit arising from
any two of the three last pre-war trade years, to be
selected by the taxpayer. The rate of taxation was at
first fixed at 50 per cent. In April, 1916, the rate was
raised to 60 per cent, and in May, 1917, to 80 per cent.
It remained at this figure till April, 1919, when it was
reduced to 40 per cent. In the financial year 1917-
1918 this tax realized £220,000,000, or nearly one-third
of the total revenue for the year.
Notice ought also to be taken of the use in war time.
of the Income Tax to levy large toll upon the incomes of
1 "Industry and Finance," ed. by Prof. A. W. Kirkaldy, London, 1917, p. 304.
१
• Quoted ibid., p. 308.
386
the rich. At the beginning of the war the rate of income
tax previously in existence was increased 40 per cent, the
exemption limit lowered, and the relief granted for
dependents slightly decreased. At the same time the
scale of the supertax was extended. In further budgets
the rates were increased both for ordinary incomes and
for those paying supertax. By the budget of 1918 earned
incomes below £2,000 were taxed on a scale ranging from
3 shillings to 5 shillings and 3 pence in the pound. Above
£2,000 a supertax began, so that incomes above £10,000
bore a supertax of 4 shillings 6 pence, that is, a total tax
of 9 shillings 9 pence in the pound, or 48.75 per cent.
Another measure of considerable economic significance
was that of the "mobilization" and, later, the requisition-
ing of securities. To steady American exchange in the
early days of the war and to meet the large indebtedness
of the Allies to America for munitions, the Government
needed control of foreign and colonial securities. It
offered to purchase or borrow such securities at the current
market price. In August, 1916, the British Treasury
made further efforts to obtain control of such securities,
imposing in its Finance Act, 1916, a penal additional in-
come tax of 2 shillings in the pound upon income derived
from such securities. Eventually, in January, 1917, the
Treasury applied the Defence of the Realm regulations to
such of these securities as it deemed expedient to secure,
and requisitioned them at their full capital value.
At the close of 1917 and the beginning of 1918 there
arose a proposal for a levy on capital. This scheme.
was fathered by the Labour Party, with Mr. Sidney Webb
as the chief advocate. In its first form, as advanced by
the Labour Party, it was to be a method of war finance,
but later it was advocated only as a means for the re-
demption of the war debt. In their scheme of reconstruc-
tion,¹ adopted in January, 1918, the Labour Party put their
proposal forward in the following terms:
It will be imperative at the earliest possible moment to free
the nation from, at any rate, the greater part of its new load of
interest-bearing debt for loans which ought to have been levied
as taxation; and the Labour Party stands for a special capital
levy to pay off, if not the whole, a very substantial part of the
entire National Debta capital levy chargeable like the
¹ Known as "Labour and the New Social Order,” quoted in Kellogg and
Gleason, "British Labour and the War," p. 389.
387
Death Duties on all property, but (in order to secure equality
of sacrifice) with exemption of the smallest savings, and for the
rest at rates very steeply graduated, so as to take only a small
contribution from the little people and a very much larger
percentage from the millionaires.
In the platform of the party in the elections of Decem-
ber, 1918,¹ a more concrete form was given to the demand,
which was there termed the "conscription of wealth."
This means the substitution for a large part of the existing
income tax of a carefully graduated capital tax, exempting
possessions under £1,000 and taxing very lightly those under
£5,000.
The proposal, however, has not made much headway..
It is open to many objections that are felt to have great
weight. These have been expressed in a leading article
in The Economist.2
It penalizes those who save, lets off those who squander,
involves great delay, and gives great opportunity for dis-
honesty in the matter of valuation, and by depriving vigorous
business men of a slice of their capital it checks their activity
at a time when all the energy of the nation will be needed to
cover and heal the scars of war.
In general the British public is inclined to carry the
financial burden through taxation rather than by such
a violation of property rights as is involved in the levy on
capital. The general support which the Labour Party's
proposal at first received has receded, and public opinion
is at present fairly averse to such action. Nevertheless
the significance of the proposal is not diminished by its
seeming failure. It shows how advanced is the concept
of property as being regulated in its form and control by
the principle of public interest.
§ 4. DEMANDS FOR CONTROL
With the prospect of peace and in view of the altered
economic conditions of England consequent upon the
war came a demand for the nationalization of certain
industries. It was held by those who supported this
demand that control by private employers meant
¹ Quoted in Kellogg and Gleason, p. 417.
• The Economist, January 5, 1919, p. 3.
388
not .
the service of the community, but by the very
law of their being only . . . the utmost possible profiteer-
→
ing.¹
1
On the basis of this attitude towards private ownership,
and because of a belief that Government control during
the war had reduced profiteering,² the Labour Party began
to advocate the immediate nationalization of the railways,
mines, and the production of electric power. Explaining
their plans in more detail, and with particular reference
to transportation, they declared³
unhesitatingly for the national ownership and administration
of the railways and canals, and their union, along with harbors
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. . . The railways
and canals, like the roads, must henceforth belong to the
public and to the public alone.
•
What has been done in the direction of meeting this
demand has been fully explained in a preceding chapter.
Suffice it here to add in summary that proposals have
been made for the nationalization of mines, railways,
electric power, banking, shipping, industrial and life
assurance.
The Labour Party's platform also called for a continu-
ance of Government control and price fixing such as was
4
It declared itself in favor of
carried on during the war.
retaining and developing
the present system of organizing, controlling, and auditing
the processes, profits, and prices of capitalist industry.
It held that the publicity of this procedure was effective
in bringing inefficient firms up to a higher level of effi-
ciency, while "cost accounting," together with the author-
itative limitation of prices, formed the only effective
security against profiteering.
1 “Labour and the New Social Order," quoted in Kellogg and Gleason, p. 382.
p. 386.
• Ibid.,
• Ibid., p. 383.
♦ Ibid., p. 410.
389
This extension of Government ownership and control
was seconded by a demand on the part of the workers for
a share in management. The program of the Labour
Party in connection with transportation shows that they
shared this aim. But its chief protagonists are the
National Guildsmen, whose views have shaped greatly
the demands of the miners, and whose leading thinker,
Mr. G. D. H. Cole, is the chief of those "intellectuals'
whose abilities are at the service of the workers of England.
""
The views and aims of the National Guildsmen go
beyond the principle of nationalization. To them na-
tionalization is secondary to the control of production by
the worker in the capacity of producer. "National man-
agement is not inadequate, but wrong." They regard
nationalization as only state capitalism, the refuge of
the capitalist when he finds that the aims and methods
of the workers are threatening his profits.
Nationalization is inevitable, not because it is the policy
of the Labour Party, but because it is rapidly becoming sound.
capitalist economics.2
Its method of control is necessarily bureaucratic, and
is thus entirely opposed to the democratic control of
industry that the Guildsmen seek.
Yet the opposition of Guildsmen is only to nationaliza-
tion as a goal, not to it as a step towards their goal. They
are confident that nationalization of mines and railways,
for instance, will come before Guild control can be
achieved, but nationalization in their opinion is not a
necessary prerequisite in any industry and certainly
not in other than public utility services. It does not
matter whether the control of industry is to be wrested
from the state or from private capitalism. But nationali-
zation will help industry on towards its goal in the
Guildsmen's economic order. It will give unified manage-
ment, but it will precipitate a “battle between bureaucracy
and freedom." It will be a valuable step onwards, but
every time that such a step is gained the workers
must present a definite and concrete demand for a share in
control.3
1 Cole, G. D. H.: "Self-Government in Industry," p. 197. See the argument
of pp. 198-225.
2 Ibid.,
p.
252.
› Ibid., p. 221.
390
In view of this attitude it is interesting to observe
that the miners' scheme for the control of the coal mines
ran along similar lines. Mr. William Straker, Secretary
of the Northumberland Miners' Association, and a
member of the executive committee of the Miners' Federa-
tion of Great Britain presented the scheme before the
Coal Commission on March 14, 1919.¹ In this plan the
miners asked for nationalization and joint control. They
would have nothing to do with private ownership. That
had served its day and generation, which was past. They
wanted nationalization in order to do away with private
ownership. But they did not want bureaucratic admin-
istration; they wanted the worker to have a share in the
management of the industry. Hence, they proposed
that the control of management should be in the hands
of a mining council, half of whom should be appointed by
the Miners' Federation of Great Britain.
În this case
we see the definite advocacy of a policy like that suggested
by the Guildsmen as a step towards the ultimate goal,
that
the state should own the means of production; the guild should
control the work of production.²
The aim of the Guildsmen is the expropriation from the
present owners of the materials of production from both
their possession and control and from control also of
human beings through the wage relation and the abolition
of the wage system. The organizations advocated by
the National Guilds are to be
self-governing associations of workers arising out of the
trade unions and controlling industry in conjunction with a
democratized state.³
They are to constitute
a system by which the control of industry might be shared
between the organizations of producers and consumers, so as to
safeguard the interests of the community of consumers and
at the same time to give the workers freedom to organize pro-
duction for themselves.*
This organization of production by the workers is to
begin in the workshop and the factory. Just how
1 See The Times (London), March 15, 1919, p. 6.
2 Cole, G. D. H.: "Self-Government in Industry," p. 109.
³ Ibid., p. 21.
♦ Ibid., p. 6.
391
and where it shall begin and what form it shall take are
keen subjects of debate among advocates of this theory.
The chief suggestions are that the workers must continue
their organization till they have a complete monopoly
of their labor power,' and must then begin on the process
of detaching the managers, foremen, and managing
directors alike, from dependence on capitalism and
attaching them as allies to trade unionism. The latter
process can be carried out
by the strengthening of trade union organization in the work-
shop, by a closer and closer relating of trade union machinery
to the organized life of the workshop, and by the gradual win-
ning over from capitalism of the grades of supervision and
management, beginning with the wresting by Labour from its
enemies of the right to choose and control foremen and supe-
riors in every industry.2
3
In general it is recognized that the workshop must form
the starting point of control, and that the first step will
be the replacing of the employers' foremen by the workers"
shop stewards. The most advanced step proposed is that
of the collective contract, whereby the employer would
pay a contract price to a certain group of his workers,
who would carry on production and distribute the con-
tract price among the group. The workers would organ-
ize themselves into a "factory fellowship" to settle the
details of the work. A group of Guildsmen at Weymouth
are on record as having formulated the terms of such a
collective contract. These are as follows:4
1. The necessary preliminary would be the election of the
workers' committee, fully representative of the different
trade unions.
2. Individual piecework would be abolished and the
committee would undertake the work by collective contract..
3. Workmen would be engaged by the committee, and
the hours of work would be regulated by them. In like man-
ner apprentices and their vocational training would be
under the entire supervision of the committee.
It is the idea of the Guildsmen that by such measures
the control which the capitalist exercises over the processes.
of production would be "atrophied."
¹ Hobson, S. G.: "Guild Principles in War and Peace,” p. 159.
2 Cole, G. D. H.: "Self-Government in Industry,” p. 173.
Gallacher and Paton: "Towards Industrial Democracy, a Memorandum on
Workshop Control."
• The Guildsman, March, 1918, p. 2.
392
""
But the employer has also control of "exchange,'
that is, of finance, and this, too, must pass into the hands
of the workers before Guild ideas can be realized. The
first step in this direction will probably be that the state
will
assume the rôle of banker, financier, and merchant, while
labor is developing its control of production.¹
By taxation, and by the control of banking, and of home
and foreign investments, the state will be able to strike at the
economic power of capitalism.²
If these measures of industrial and political action do
not suffice, there remains "the remedy of the catastrophic
general strike," which, it is believed, could not fail. This
step is described as "the last stage of the coming social
revolution," and as one that can be successful only after
long preparation and actual achievement in organization
of industry and in control of production. But whatever
the method, the aim of the Guildsmen is such a measure
of control over management and industry as will realize
their ideal of industrial self-government.
The Guildsmen, however, are not Syndicalists. They
agree with the Syndicalists in their demand for the owner-
ship and operation of industry by the workers. They
do not, however, join with the Syndicalists in their
demand for the abolition of the state. They would
retain the state as the representative, on the one hand,
of civic and political interests, and, on the other hand,
of the rights of the consumer.
The workers ought to control the normal conduct of in-
dustry; but they ought not to regulate the price of com-
modities at will, to dictate to the consumer what he shall
consume, or, in short, to exploit the community as the in-
dividual profiteer exploits it today.3
To defend the rights of the consumers, and to control
the division of the national product, a democratic state
will be needed. This state, however, will probably be
somewhat different from that which exists today, for
in the society of today the state is a coercive power, existing
for the protection of private property, and merely reflecting
in its subservience to capitalism, the economic class structure
of the modern world.*
¹ Cole, G. D. H.: "Self-Government in Industry,” p. 180.
2 Ibid., p. 182.
³ Ibid., p. 108.
4 Ibid., p. 104.
393
The preceding analysis has tended to show how, in
Great Britain, both the concept and the form of property
rights are altering. The tendency is undoubtedly towards
an increase in the extent and scope of state ownership
of property and towards greater stress on the concept of
public interest as the ultimate justification for ownership,
use, and control of all property. This has been par-
ticularly manifest in the question of the land. While
taxation dealing with this question has been insignificant
in financial returns, the discussion which centered around
these measures has had a noticeable effect upon the
disposal of landed property and upon such a question as
the ownership of mineral deposits.
In the taxation of the war period there has been a re-
striction of property in the sense of use or enjoyment, and
a diversion of such use to the needs of the state. Through
death duties, income taxes, and excess profits duties, men
have had to surrender large portions of what they had
hitherto enjoyed full use of. Along with this surrender
of private property has gone a demand for the restoration
to society of direct ownership in certain things held
essential for the development of the "democratic" state.
This demand for national ownership and administration
was coupled with a further demand for restriction of
property in the sense of control. Without leading,
necessarily, towards confiscation of private property, this
movement does involve the curtailment of private pro-
perty, and has become one for the sharing of control with
those who previously were themselves in the control of the
property owner.
394
CHAPTER XXV
FINDINGS OF EUROPEAN COMMISSION
Your Commission has summarized here the essential
points of its findings from a study of the industrial and
labor problems in Great Britain, France, and Italy. The
reader with little leisure will be able to get from these
the gist of the complete discussion within small compass.
It is also possible to identify readily the points of particu-
lar interest and to turn at once to a fuller treatment of
them. These findings can in no way take the place of
the complete text; they can serve only as a summary.
§ 1. INDUSTRIAL UNREST
Your Commission found, in the countries visited, the
social and economic bases of industry shaken to their
foundations. The war had wrought great changes in
industrial organization, in state control, in finances, in
the distribution of wealth, in social groups. A readjust-
ment to peace conditions in all phases of life was being
found a difficult task. There was widespread discontent,
particularly among the laboring classes, due mainly to
the long strain of the war, the nervous effect produced
by the extreme industrial efforts of the nation, the dis-
turbance of normal economic life, the rise in the cost of
living, and to the absorption of ideas from the revolution-
ary movements of Europe. In this condition of unsettle-
ment radical labor leaders were growing bolder and were
increasing their following. Catchwords and slogans,
such as "nationalization," "collective bargaining," "demo-
cratization of industry," of wide appeal but of vague
and uncertain import, were being used as rallying cries.
It is with a vision of these peoples in mind, painfully
struggling back to a tolerable working relationship, that
your Commission presents its analysis of this situation.¹
§ 2. EFFICIENCY OF PRODUCTION
The industrial situation in Great Britain has been
aggravated by long years of the fallacious economic
1 For a full discussion of these points, see Chapter I, Introduction, pp. 1-19.
395
teaching among the workmen, that restricted output
was necessary to avoid unemployment, and by long years
of neglect of their employees by British employers. The
labor unions had imposed upon many plants a "network
of restrictions" which they were very reluctant to have
removed even in the war emergency, and even with a
guarantee of their restoration. It is now being found
neither possible nor desirable to restore them, and labor
is using this fact as a basis for new bargaining. This
situation does not exist in France, where there is a shortage
of labor, or in Italy, where unions are not strong and where
agriculture, as in France, is the chief industry. In all
countries similar systems of war bonuses to stimulate
production and to meet increasing cost of living existed.
There was a universal demand by labor for these war
bonuses to be made a permanent part of peace-time wages.
Piecework is the prevailing method of payment where
the nature of the work permits. The demand for high
speed production during the war awakened a great
interest in the principles of scientific management in
Great Britain, France, and Italy. Objection to the
introduction of such principles is encountered on the
part of British labor; French labor welcomes all labor-
saving devices that will increase production, provided it
may have some voice in the way they are to be used;
Italian labor feels their desperate need for an increase
in output and will co-operate in new methods. America
has had a clear superiority in the use of machines and in
large scale production. The industrial awakening in
western Europe, however, must not be underestimated.¹
§ 3. MANAGEMENT
Organized labor in Europe is making a loud demand
for a new "industrial order." There is in this demand a
direct challenge to the existing "capitalistic" system.
Organized labor is demanding a share in management.
In the criticisms launched against the present system
there is much confusion of mind as to the economic
function of management in which labor desires to share.
Managerial functions include buying materials, mastery
of technical processes, selling the product, financing the
undertaking, organizing the factors of production. The
manager is a laborer himself. In the corporate form of
1 Full discussion in Chapter II, pp. 20-43.
396
organization the directors are managers. No group has a
monopoly on managerial ability, which is largely innate;
it is and should be drawn from all walks of life. Its
rewards are largely the result of a scarcity of the required
ability.¹
§ 4. UNIONISM
The ranks of trade unionists have been augmented dur-
ing recent years in all countries visited, but especially in
Great Britain, where there are upward of five and a half
million members out of an estimated possible strength of
fourteen millions. There is a concentration of union
organization in the basic industries, such as coal mining,
shipbuilding, textiles, and engineering, which account
for one half of the total. While there is in British labor
unions a decided tendency toward consolidation and unity
through amalgamation and absorption, as in the Triple
Alliance, there is still much "explosive power" within
them. This is demonstrated by the recent "unauthorized
strikes" and the development of independent assertiveness
in the "rank and file movement." On the surface, the
attitude of British labor is truculent, bellicose, and unruly;
extravagant demands are being made without regard to
economic considerations, as in the coal industry. The
British public, and many employers, believe that the mass
of laboring men can be relied upon for conservative, well-
considered action. British organized labor wants col-
lective bargaining in the sense of a recognition of the
union, and does not want compulsory conciliation and
arbitration. The miners refused to agree not to strike
even during the war. Strikes and disputes were on the
increase during the last two years of the war and have
been more numerous since the armistice. Practically
all the British employers interviewed were opposed to
complete unionization on principle, even though they had
accepted union restrictions in the shops. Employers'
associations have repeatedly declared themselves to be
ready and willing to deal with associations of employees.
Unionization is apparently encouraged by the state for
practical and for political purposes. British employers
have a newly awakened interest in their labor problems
and are in the mood to do much to make labor conditions.
better.2
¹ Cf. Chapter III, pp. 44-62.
2 Full discussion, Chapter V, pp. 63-98.
397
§ 5. EMPLOYERS' ORGANIZATIONS
British employers have been driven to put aside much
of their individualism and to get together during the
war. The Government is now encouraging this ten-
dency for after-the-war trade with such results as may
be seen in the shipbuilding and marine engineering in-
dustries. There has been a considerable development
also along the line of employers' associations with the ma-
chinery for dealing with both trade and labor problems.
The same forces are at work in France and Italy. Ameri-
can business men should watch this trend.¹
§ 6. SHOP STEWARDS AND WORKS COMMITTEES
A great change has come in the position of shop ste-
wards. In their origin the shop stewards began as trade
union delegates to watch over the observance of union
rules regarding the details of workshop conditions. With
the opening of the shop doors to great numbers of semi-
skilled and unskilled workmen, they took on new func-
tions; they began to build up their own following, and,
with increased power, demanded official recognition by
the unions. The shop stewards were desirous of becoming
shop foremen in functions and to be the official repre-
sentatives of the unions. So radical were these shop
stewards, so dangerous in their ambitious leadership, so
extravagant in the demands for control, that the em-
ployers were driven to aid the unions in subduing them.
Coventry has been the hotbed of the shop steward move-
ment, where the great strikes of 1916 and 1917 were
engineered by them.2
The British Works Committee is an organization, with
the shop as the unit, which affords the machinery for
bringing employers and workmen together for the dis-
cussion of their common problems. These are of recent
origin. They have three types of functions: (1) Social
union committees, (2) welfare committees, and (3)
industrial committees. Only the last type is of im-
portance here. They have functioned badly or well
according to the spirit that animated each side. Some
sort of machinery for a full, free, and frank discussion
of common problems is necessary. They are a means to
an end, not a panacea.³
1 Full discussion, see Chapter VI, pp. 94-122.
2 See Chapter VII, pp. 123-137.
³ See Chapter VIII, pp. 138-150.
398
§ 7. EIGHT-HOUR DAY AND MINIMUM Wage
There is a movement in Europe, as well as here, to
standardize and to constitutionalize by governmental
action the length of the workday and a minimum wage.
A law was passed by the French Chamber of Deputies,
on April 18th, establishing the principle of an eight-hour
day and leaving its application to each industry to the
Minister of Labor. The former workday was 10 or 101/2
hours. The same thing was being agitated in Italy. In
England the demands were not only for an eight-hour
day, a 44-hour week, but the miners were demanding a
six-hour day with a five-day week. The work week in
England has hitherto centered around 54 hours. It is
contemplated that there shall be no reduction in wages,
and that the war bonuses will be incorporated in the
peace-time wage.¹
The principle of the minimum wage has come to have
increasing importance in all countries visited. In Eng-
land the minimum wage was first applied to "sweated"
trades, but now extends not only to poorly paid industries,
where a large proportion of the workers are women, but
also to miners and agricultural laborers. There is machin-
ery for its extension in the Trade Boards Act of 1918, and
there is evident the spirit to do so, in the report of the
Joint Committee of the National Industrial Conference,
April 4, 1919. A minimum wage law passed the French
Senate and became operative July 10, 1915. It is not a
war measure and is to be administered by wage boards.
in each Department. The question of a minumum wage,
though agitated along with the eight-hour day, had not
reached a climax at the time your Commission visited
Italy.2
88. UNEMPLOYMENT
There were "unemployment donations" in Great
Britain, France, and Italy for demobilized soldiers and
for civilian war workers thrown out of employment.
The donation in Great Britain ran up to 29 shillings per
week for adult men and 25 shillings per week for adult
women. Its application followed the principles in the
apportioning of trade union benefits to secure some check
on the unemployed. The peak of the load for unem-
¹ See Chapter IX, pp. 151-169.
2 See Chapter X, pp. 170-179.
399
ployment came in May; for soldiers, May 9, 409,959, for
civilians, 683,441; total 1,093,400. A sum of £25,000,000
had been set aside for this purpose, and when the numbers
were highest there was an estimated expenditure of
£1,000,000 per week. It was a war expediency and pro-
bably with all its faults helped to allay some discontent.¹
§ 9. HOUSING
Another social problem, like unemployment, is the
housing problem. In France and Italy this is a matter
for reconstruction, but in England it had to do with
industry. The total number of houses called for in Great
Britain, including new houses and those to replace
existing insanitary structures, does not fall far short of
a million. The Government authorized the expenditure
of £4,000,000 by the Housing Act of 1914; regulated
rents by acts in 1915 and 1917. To direct post-war
building is the House and Town Planning Act of 1919.
The British Government stands ready to initiate the
building and to furnish the capital and to sell on long, easy
terms.2
§ 10. CO-OPERATIVE MOVEMENT
There is a recent development among the co-operative
societies in Great Britain that is of considerable interest.
This is the new relation between the trade unions and
the co-operative societies when the latter have put their
financial resources at the disposal of the former. Many
workingmen were already members of the societies, and
this was an appeal to secure a large clientele. A liaison
has been established between British and Russian co-
operative societies. The societies were driven into politi-
cal action by the attempt of the Government to apply
the excess profits tax to them. They will become a branch
of the Labour Party.3
§ 11. POLITICAL LABOR Movement
Your Commission found the labor situation in western
Europe shot through and through with political influences.
Labor organizations and socialist parties naturally overlap
to a very great extent in membership, socialist parties
¹ See Chapter XI, pp. 180-190.
2 See Chapter XII, pp. 191-200.
* See Chapter XIII, pp. 201-211.
400
looking to workpeople for their chief clientele. Con-
versely, trade unions have taken over the socialistic
teachings and have shaped their programs to secure a
socialistic order of society.
(a) The Labour Party of Great Britain has taken the
lead in an international movement for a "new social
order," which involves "the universal enforcement of
the national minimum wage, the democratic control of
industry, a revolution in national finance, and the
taking of surplus wealth for the common good." Their
boldly expressed determination is to secure for the
workers a larger and larger control over the management
of industry.
(b) The British Government has encouraged the
organization of workmen in order to have a responsible
party with whom to deal in case of emergency. There
has been, too, an element of “politics" in its advocacy
of the Whitley Plan for district and national trade
councils,¹ and many employers have been compelled to
accept such unnecessary machinery through Govern-
ment pressure.
(c) When the Triple Alliance issued its ultimatum,
threatening to tie up all British industry if their de-
mands were not granted, a National Industrial Con-
ference was called by the Prime Minister to avert
the crisis. It was a temporarily successful move,
but the danger still threatens.2
(d) In France, the labor situation is much easier,
even though the General Confederation of Labor is
committed to a radical program and has been fomenting
trouble through local and general strikes. France
had a shortage of labor before the war, and with the
terrible war losses there will be a much more serious.
deficiency now. French workmen are not organized
more than 20 per cent. of possible strength. It was
the consensus of opinion among those interviewed
that if raw materials and coal can be had and the
financing of manufacturing operations can be secured,
there will be no serious labor trouble. France's indus-
trial problem is one of finance. Hers is a people
of property and bondholders; though it is the hot-
¹ Cf. Chapter XVI, pp. 235-257.
2 Cf. Chapter XVII, pp. 258-271.
401
bed of revolutionary ideas, there seems now no dan-
ger of Bolshevism gaining headway.¹
(e) In Italy labor is restless, though not highly
unionized. It is divided into conflicting sections,
whose differentiation has been due, historically, to
political attitudes.2
(f) A politico-industrial movement, that is, a move-
ment to secure industrial results through political
activity, has become international. New machinery
has been proposed as a part of the treaty of peace at
Paris in the International Labor Office. The announce-
ment of the so-called "Bill of Rights" of organized
labor, which has been included in the treaty, is also
of world-wide political influence.³
12. NATIONALIZATION
In Europe generally, and especially in Great Britain,
there has arisen a demand for nationalization of various
industries. This is not merely a demand for national
ownership but also one for national administration,
generally with some measure of control on the part of
the workers. For this latter development the teaching
of the National Guildsmen may be held responsible.4
§ 13. COAL INDUSTRY
In the case of the coal mines of Great Britain there
was considerable opposition to nationalization. This
was based on the following grounds:
(a) Government control would be more costly and in-
efficient. Though profits were large during the war the
normal margin is too small to allow for much inefficiency.
(b) The present system, though not without faults, has a
past record of business-like development. Its faults can be
cured by economies and the fuller use of machinery.
(c) The alarming reduction in output is not to be cured by
government ownership. It is doubtful if the economies and
machinery referred to could, under private ownership, offset
the reduction in output manifest during recent years and
resulting from the installation of shorter hours.
¹ Cf. Chapter XVIII, pp. 272-292.
2 Cf. Chapter XIX, pp. 293-307.
³ Cf. Chapter XX, pp. 308-327.
• Cf. Chapter XXI, pp. 328-342.
402
(d) Nationalization seems directed less to secure the
national welfare than to give the miners a larger share in the
control of the industry. The latter aim can be secured with-
out nationalization.¹
§ 14. KEY INDUSTRIES
The bitter experience of Great Britain during the war
when she found herself cut short of a supply of essential
materials for food, clothing, and munitions, started a
general movement for national control of "key" or
pivotal industries. The principle back of this movement
and announced at the Paris Conference of 1916, is to
make the nation independent in the matter of materials
needed for its defense and well-being.2
§ 15. PROPERTY RIGHTS
The rights of private property have been undergoing
a modification within recent years. Extension, during the
war, of government control, the widespread use of the
power to commandeer, has quickened these changes.
Legislation on income taxes, on inheritance taxes, on
excess profits taxes, the requisition of securities, the
demands for a levy on capital, for an increased share in
management, for nationalization, for "land reform,” in
Great Britain, are manifestations of these changes. The
most significant element in these changes is the demand
of labor for a new social order, and by the labor group,
called Guildsmen, who preach the doctrine of a demo-
cratic industrial state.3
§ 16. POINTS TO BE EMPHASIZED
Your Commission calls especial attention to the follow-
ing significant facts:
(a) Many phrases used in the discussion of industrial
problems abroad had acquired radical meanings.
Furthermore, the old terminology of labor discussion
has likewise taken on new and radical meanings which
have a dangerous portent for orderly and peaceful
industrial development. Many of these phrases were
being used for propaganda purposes.
1 Cf. Chapter XXII, pp. 343-372.
2 Cf. Chapter XXIII, pp. 373-381.
3 Cf. Chapter XXIV, pp. 382-394.
403
(b) In the political activities of organized labor there
was developing a strong radical force under the control
of ambitious and irresponsible leaders which seemed
likely to prove a great menace to property and industry.
(c) The preaching of socialistic doctrines, persistent,
aggressive, irresponsible, for selfish purposes, is having
its effect upon the organized workers. The forces
which, undirected or wrongly directed, have brought
the industries of Great Britain to such a critical con-
dition, should not, by our careless passiveness, be
permitted to produce the same effects upon our own.
(d) It is not this or that kind of machinery for bringing
employers and workmen together, but the true spirit of
fair, frank co-operation, that will resolve the industrial
problems of today.
(e) American employers should become aware of the
fact that many of the immigrants to this country
from Europe have had experience in unionism and
training in socialistic or more radical doctrines, in
sabotage or "ca'canny" methods.
(ƒ) American manufacturers should not err in under-
estimating the industrial awakening in Great Britain,
France, and Italy, due to the demand for high speed
production during the war. New methods, new
machinery, greater energy and intelligence will un-
doubtedly characterize the after-war competition in
foreign markets.
(g) All the influences that have been making difficult
the readjustment to peace conditions abroad are work-
ing into our own industrial system. The outcome of the
wrong point of view in Europe should serve as a warning
to keep industry in the United States from drifting into
the same difficulties.
(h) New forces have been let loose upon the political,
social, and industrial world. Industrial changes are
inevitable and are desirable or undesirable according to
whether they make for orderly progress, better well-
being for all, or whether they become disruptive,
revolutionary, obstructive, and perverted to selfish
ends. The danger of this latter outcome does not lie
wholly within any one group, neither wholly among
workpeople nor wholly among employers.
404
(i) There was much being said in Great Britain about
the importance of certain essential industries, called the
key, or pivotal, industries. Organized labor, likewise,
was coming to look upon itself as being in a strategic
position to control industry, and certain workmen
were coming to look upon themselves as key men whose
activities were essential to industrial activity. An
illustration of this can be found in the expressions of the
leaders of the Triple Alliance. It is true that in our
interlocking industry certain men are essential to con-
tinuous activity. It is likewise true that certain
material may be pivotal, or a certain industry, or a
certain machine. All talk about the essential character
of the workman is both unfortunate and unwise. In
a great co-operative industry like ours, almost any
element may become pivotal. Successful development
can be achieved only by a recognition of this fact and
by a harmonious co-operation on the part of all those
engaged in it.
() Without doubt the main recommendation of your
Commission to American industrialists, after its examina-
tion of conditions abroad, is that each employer should
regard it as his personal duty to establish direct and
cordial relations with his workers. It will not do to
drift into a policy of neglect, as have some British
employers in the past, which has borne such bitter
fruit in the dissatisfaction of the present day. The
employer must see to it that no charge can be brought
against him of not intelligently looking out for the
interests of the rank and file in his establishment.
Everything depends upon the spirit of humanity and
sympathy which animates both parties to the wages
contract. First of all, more is expected of the fortunate
and successful, because of noblesse oblige, than of
those who have had less opportunity and success.
The employer must take the lead; much in the way of
leadership is expected of him. He must generally
plan to prevent grievances from rising by showing a
genuine interest in a fair system of remuneration, in
healthful shop conditions, the proper and sanitary
housing of his workers, and the welfare of the commun-
ity in which his plant is located. If he is really at heart
trying to raise the standard of living, as he ought, of his
employees, he should, moreover, be occupied not only
with questions of wages or material rewards, but
405
with matters which will cultivate the intelligence,
morals, and character of men. Granting this attitude
of mind, then, there must be a corresponding point of
view on the part of labor if any permanent and peaceful
adjustment is to be accomplished.
(k) It is to be kept in mind that there seems to be no
organized effort to combat the effects of the long-
continued teaching of socialism which, as we have seen,
now colors the opinion of the more extreme labor
leaders. More elementary teaching is needed to show
that capital is as essential to industry as labor, and that
capital is the one factor of production which assumes
practically all the risks of uncertainty and loss. Nor is
it realized how moderate are the actual returns to
capital itself, and how large a part of what is loosely
termed "profits" is a return to services of management
which is open to any laborer having executive ability.
In the careless thinking of the day certain groups of
men have just discovered that they are essential to
the employment of other men in industry, wholly
oblivious that, as distinguishing modern from primitive
production, co-operation between all kinds of workers
is essential to obtaining our daily satisfactions. Due
to this very characteristic of interwoven co-operation,
with its complex of division of labor, only are men able
to wring products from nature which enables us to
maintain our present standards of living. In short, on
these and many other economic questions, your Com-
mission wishes to emphasize the need of education on a
scale and of a quality not hitherto understood. It would
be impossible to exaggerate the magnitude of the educa-
tional problem facing our whole social and industrial
future. It is impossible for our proper safety to accept
supinely the tendency which introduces a policy of
force into the relations of employer and worker, and
of political action on economic matters, which, if
allowed, are fated not only to corrupt our politics but
also to destroy our industrial prosperity.
406
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