INDUSTRIAL COUNCILS
_To secure industrial peace on terms just and honourable
to both sides would be to double the national strength
whether in industry or citizenship._--MEMORANDUM OF THE
GARTON FOUNDATION.
Under this head it will be convenient to treat not only of the steps to
be taken to prevent disputes or secure their settlement by peaceful
means, and to promote a more hearty co-operation of employer and
employed, but also of various other questions affecting industry, such,
for example, as increased production and increased saving. Without
industrial peace there will be no industrial or commercial prosperity,
and without a fair amount of prosperity it will be very difficult if not
impossible to preserve industrial peace. As the War proceeds these
questions become more and more urgent; after it, they will be more
serious and more pressing than ever. Already the need for taking certain
steps at once and for preparing a future policy is recognised. Anyone
who wishes to have before him a clear statement of the industrial
situation and of the effects of the War upon it, cannot do better than
read, and read with care, the revised memorandum prepared under the
auspices of the Garton Foundation and published in October, 1916.
Singularly impartial and judicious, it does not gloss over the
difficulties and perils which must be faced, but throughout there is a
note of hopefulness--an anticipation of a better state of things--if
while "the forces of change are visibly at work we do not allow them to
hurry us blindly with them," but "direct them along the path of ordered
progress." Some of the specific remedies suggested, of the proposals
adumbrated, may be open to criticism--criticism is, indeed, invited--but
it is evident that nothing is suggested that has not been the subject of
careful consideration of the facts. Some of the proposals have already
been put into fairly definite form in the Whitley Report, and have
received the approval of the Government. Industrial Councils are to be
established. The object of them will be to consider "constructive
measures for the improvement of industrial conditions and the increase
of efficiency." They will not be confined to specific points of dispute.
They are to be established in industries which are "highly organised,"
where the employer and employed already possess some definite
association or union which represents them respectively. There are to be
national, district, and workshop councils set up. Their object differs
from that of the Conciliation Boards for Arbitration or the Trade Boards
established to settle some specific question such as a minimum wage to
be paid, or some question that has given rise to a dispute between
employers and employed. Such a mode of settlement is a great advance on
leaving differences to be settled by an industrial war--a strike or
lock-out. The Boards will still be needed, just as arbitration tribunals
will be required to settle specific disputes between nations. The aim in
both cases is to substitute arbitration for war (or its equivalent) or
threats of war. Something more is aimed at in the establishment of
Industrial Councils. They contemplate a "continuous and constructive
co-operation of Capital and Management on the one hand and Labour on the
other." They are not tribunals for the settlement of disputes which have
arisen, but joint committees which can discuss and propose methods of
dealing with any question affecting working-conditions generally, e.g.,
the introduction of new machinery and its effect on employment and the
status as well as the wages of the workpeople, and even its economic
effect generally. Suggestions can be made as to changes which may
"increase output or economise effort" and eliminate waste. The effect of
any alterations on the health of those engaged in any industry would be
within their purview. The idea is to promote co-operation, to make all
recognise certain common interests, not merely to adjust competing
claims. In international affairs the nearest analogy would be a League
of Nations for promoting the common interest of all. While, of course,
the main object of such a league is common action to prevent breaches of
the international peace by restraining wrong-doers, it should not be the
sole object. In the case of Industrial Councils the object is to promote
the general welfare of all engaged in the trade and to increase
productive efficiency, as well as to secure fair terms between the
parties and prevent disputes. If such a Council has been established for
any industry Government Departments will consult it, and not the Trade
Board, on any questions affecting that industry; but the constitution of
the Council should make provision by which Trade Boards can be
consulted. Roughly speaking, "the functions of the Trade Board will be
called into operation mainly in the case of the less organised trades,
and the highly organised trades will be the sphere of the Industrial
Councils." These, in their most developed form, will be national,
district, and local.
A memorandum which has official sanction states that the chief duty of
the Trade Boards, on the other hand, is to fix minimum rates of wages
which can be imposed by law. They are needed primarily to insure that in
trades where the workers have no official organisation to guard their
interest a living wage shall be secured for all. They are statutory
bodies set up under an Act of Parliament just passed, and will be
connected with the Ministry of Labour, by which their members are
largely nominated. The work of such Boards is being extended.
Detailed discussion of the character of the work which may be expected
to be done by the councils and of its probable effects would be beyond
the scope of this volume, and would require special knowledge of the
industries concerned. It will vary in different industries and in
different places. In some, success may be confidently expected, in
others there will probably be failures. The aim of the proposal is
certainly one to be desired, and the method for attaining it promises
many beneficial results. There appear to be some dangers involved which
it may be well to consider. Useful work may be hindered owing to, first,
the time and attention required for the meetings and discussions of the
various councils, and the risk that clever and fluent talkers may
prolong debate and generate friction and may perhaps exercise an undue
influence. Probably this will not be found a serious danger. Experience
over a considerable district shows that those who are chosen by the
Trade Unions to represent them are usually clear-headed and businesslike
men, who grasp a point quickly and, while carefully guarding the
interests of those whom they represent, are fair-minded and ready to do
all they can to promote the national interest also. Secondly, there may
be a tendency to interfere too much in questions of management, even
where full and detailed knowledge of trade conditions of the moment and
of possible appliances that may be used is required, and prompt action
may be necessary. A man steering a boat in a storm would hardly succeed
if he had to consult a committee before moving the helm. The object of
the councils would not be to undertake the general management of the
business, but should be directed to the relation of workers and
management, to secure efficiency and greater production, a fair
participation in and distribution of the benefits derived from success,
and wholesome conditions for those engaged in the work, and to avoid
dispute by agreeing action beforehand wherever possible. Thirdly, in
this as in most other cases where power is given to representatives of
organised bodies, there is a risk of undue interference with the
liberty of those who do not belong to them or who are in a minority. A
dead level of uniformity may be secured, experiments and new lines of
action by enterprising and original minds may be interfered with. The
old problem of reconciling high organisation and corporate action with
individual liberty may present itself in an acute form.
Already before the War the tendency to crush out individuality was
becoming stronger and stronger, the private firms of manufacturers were
being squeezed out by highly organised combines, or tempted by high
prices offered to hand over their businesses to them. In banking,
similarly, the absorption and amalgamation of smaller banks has been
going on with startling rapidity. The personal relationship between the
customer and the banker, who would grant loans and overdrafts because he
knew the character and position of the borrower in each case, will no
longer exist. The business was safe enough when the manager of a country
bank probably knew whether a customer's butcher's bills were becoming
excessive. Now everything must be referred to London for decision
according to some fixed general rule. The convenience and the
accommodation of the man with a small account count for very little. A
more serious question is the effect which these amalgamations may have
on the relations between bankers and those who are engaged in
manufacturing business.
The old personal relationship between the mill-owner and his employees,
when his garden adjoined the mill yard, when they spoke of him by his
Christian name, and he knew their family affairs and was ready to help
in time of difficulty and distress and to take a lead in any local
effort or support any local charity, has been rapidly disappearing.
There still are, however, many employers to whom the happiness and
welfare of their workpeople is a matter of deepest concern. They have a
human interest in them, and take a pride in improving the conditions of
their life. They have other aims than simply securing as big a dividend
as possible for the eager shareholders of a huge combine. It is, no
doubt, usually large employers of labour who are thus able and willing
to make provision for the welfare of the people in their employ. Some
have established libraries and reading-rooms, and have provided classes
for giving instruction likely to be useful to the boys and young men
engaged in their works. Conditions of labour would be greatly improved
if the example of the best firms in such matters were generally
followed.
The more complete organisation of trades under powerful councils may
tend to a virtual monopoly being obtained by a limited number of large
and influential firms, and the result may be prejudicial to the consumer
by limiting competition. That is not certainly the object, but it may be
an incidental effect of the organisation which is needed for full
development of the system of councils. In some cases State support and
control acting in conjunction with private firms of great influence is
to be introduced to unify an industry under one management. Support and
control may possibly be necessary in some cases, but the extension of
such methods should be jealously watched. In the manufacture of dyes,
for example, it seems that the Government and a very powerful
manufacturing firm or combination are arranging to act together. Those
outside this combination will have no chance of competing. In this
particular case the scheme may be useful, but careful provision is
necessary to protect customers for the commodities produced. It may
become a very serious thing for manufacturers of piece goods when
struggling to maintain their position in the world markets, and the
slightest addition to cost of production may close a market to them, if
they find that they cannot purchase the dyes they require in the
cheapest market, or those who dye goods for them must increase their
charges, because one organisation can fix prices, and import from abroad
is prohibited in order to protect a special home industry.
Possibly it may be necessary for a time to give such protection to
certain industries, involving a preliminary expenditure of a large
capital; but the fact that the dye industry had gone from England to
Germany was, in the opinion of many, due not so much to free and open
competition as to the circumstances that (1) the German producers paid
more attention to systematic chemical research bearing on the industry,
and (2) that our absurd patent law operated to throttle English
production. The founder of the successful firm of Levinstein, Limited,
Mr. Ivan Levinstein, seeing by his own experience how our patent laws
prevented the development of the dye industry in England, devoted years
of work to obtain an alteration of these laws, but with only partial
success. The Government, after very long delays, attempted to deal with
the matter, but it is not yet satisfactorily settled. A Bill on the
subject is now before Parliament. A list can be given of more than a
dozen cases--there may have been many others--in which the
Badische-Anilin Fabrik was plaintiff against firms in this country. The
result was to aid the rapid development of the huge works near Mannheim
now used to manufacture poisonous gases, while the works in this country
were crippled. Strangely enough, it was an English chemist (Sir W.
Perkin) who made the discoveries which led to the development of this
industry; but it is generally possible where competition is keen to take
out subsidiary patents for small improvements which really enable the
subsequent patentee to command the market. Sometimes the root invention
for some reason cannot be made the subject of a valid patent, or the
patent for it expires before its full commercial value has been
realised, and the minor improvements give the holder of patents for them
a virtual monopoly.
All along the line, too, the big firm is favoured at the expense of the
smaller. The position of the small tradesman is often a very hard one.
The shopkeeper in a village or small town near the metropolis pays heavy
rates for the upkeep of roads which are torn to pieces by the heavy
motors of the great distributing firms delivering goods to those who
would otherwise be his customers, perhaps with petrol specially exempted
from taxation. The firm which by widespread advertisements can induce
people to buy an article with some familiar name attached, reaps a
gigantic fortune, while the man who makes the same article and cannot
spend money on advertisement gains a mere pittance. The advertisements
which disfigure the country are not taxed, as in other countries, and
the issue of advertising circulars has been subsidised by the Post
Office, which delivered them at a rate lower than that charged for
delivery of the letters, or even the postcards, of the poorest, though
the trouble involved is the same. The patent laws, again, have been
exploited to protect the large manufacturer, who fences some form of
production by taking out a string of patents often where there is no
meritorious invention at all. The rubbishy specifications are flourished
in the face of a poor competitor, and form a basis for threats which a
man who is not wealthy dare not resist, knowing the heavy cost of
fighting any patent action whether successful or not. "To him that hath
shall be given" ought not to be a maxim to guide legislators or any
department of Government.
To return from this digression. One great advantage of the councils
would be that those who represent the workmen upon them will probably be
men who are actually engaged in manual work in the trades concerned, or
have been so engaged, and who will look at each question practically.
The agitator who lives on grievances and disputes, the politician "on
the make," or the well-meaning and half-informed enthusiast from
outside, is not likely to find a place on councils whose object it is to
see how interests which investors, managers, and workmen have in common
can best be promoted, and how the share of each in the work and its
profits can be more fairly assigned and distributed instead of attention
being concentrated on matters in which their interests seem to be in
conflict.
Another difficulty of more direct importance with regard to the
proposed councils is already arising. The relative powers and position
of the shop stewards chosen by the men in each works and of the unions
representing industry as a whole in any district have to be settled.
There are also overlapping unions competing for influence and support,
and sometimes doing so by making excessive demands. The events of the
next few months may lead either to an accentuation or to a partial
solution of these questions which are perhaps the most serious at
present affecting industrial peace. It is better not to anticipate.
Prophecy might be falsified too soon and too palpably, and the position,
which changes from week to week, is too critical for anyone to discuss
unless he has full and exact knowledge of the facts and clear
understanding of the way in which undercurrents are setting.