THE RIGHT RELATIONSHIP OF GOVERNMENT TO INDUSTRY
2. The Normal Position of Government in Relation to
Industry—Regulation of Factory Conditions—Conciliation and not
Intervention—Protection of the Community—Wages in Unorganized
Industries—Industrial Research—Need of a Real Ministry of
Labour—Regulation of Combinations and Monopolies.
2. THE NORMAL POSITION OF GOVERNMENT IN RELATION TO INDUSTRY
We must now consider the relationship of Government to industry in normal
times. Whether or not any particular industries should be nationalized
and thereafter conducted as State industries or under some other system
than the present, are constitutional questions to be decided by the
Government in power in accordance with what they believe to be the will
of the people. That the author of this book is strongly opposed to
nationalization as a general principle of industrial organization is
sufficiently apparent from what has already been written and for the
reasons given. Assuming, however, that there is no nationalization of an
industry, but that it continues on a reformed basis of private ownership,
it is important to discuss under what circumstances the Government ought
to intervene in regard to any question affecting the administration and
control of that industry, or, indeed, of all industries in general. Our
recent experience of Government direction of industries, both during
and after the war, assists us in answering that question. If, as during
the war, a large supply of munitions has to be organized at a moment’s
notice, and maintained irrespective of all considerations of economy
and industrial efficiency, probably no other course would remain but
for the Government of the day to control the industries concerned; but,
in normal times, when economy of production is imperative, industrial
efficiency essential, and enterprising and far-sighted administration
of paramount importance, Government direction has shown itself to be
quite hopeless. Employers and Trade Unions are in firm agreement on
this point, that Government control of industry spells ineptitude,
incompetence, extravagance, and confusion all along the line. We may,
therefore, emphasize this as the first cardinal principle regulating the
relationship of Government to industry: that the circumstances are few
and seldom arise which justify intervention by Government in the economic
administration and control of any industry.
Regulation of Factory Conditions
The Government is however bound to assert its right to intervene, in
order to prevent the existence of, and, where they have arisen, to
remove, industrial conditions which are injurious to the health and
welfare of the workers as a whole or any particular section of them. This
is action in respect of which every Government would always have behind
it the full approval of the social conscience. But for the intervention
of the Government in days gone by, the dehumanizing conditions attending
child-labour and the employment of women in workshops would never have
been removed, and English factories would not be to-day as they are, the
first in the world for health, sanitation and good amenities. In the
early days of last century, when factory legislation was first proposed,
the employers of one large Yorkshire woollen town came in formal
deputation to London to protest that, if there were any interference by
Act of Parliament with their liberty to employ as they pleased, in their
woollen manufactories, young children for such hours as they thought fit,
a death-blow would be struck to the trade of England. Those days have
gone, and with them that class of employer.
Under the Factory Acts and the skilled and far-sighted supervision of
the Home Office Factory Inspectors, an immense amount has been done to
promote the health of the workers, the safety of their occupations,
and freedom from preventible dangers. None but the most hardened of
individualistic employers—and few of them now remain—object to sound and
reasonable State regulation in matters such as these. He welcomes it for
his own protection.
Conciliation and not Intervention
It is more in regard to industrial disputes concerning wages and
conditions of employment that the Government is too prone to intervene.
There must always be a Ministry of Labour to keep in close touch with
industrial disputes. Such a Ministry, though it should in the first
instance leave employers and employed to discuss matters through the
conciliation machinery that exists in each particular industry, yet, by
discreet and impartial action, can do most valuable work in smoothing
over ruptures in negotiations when neither side from motives of dignity
or strategy will move. That is a different thing altogether from the
Cabinet rushing in. The public will never know the extent to which
industrial harmony in this country has been preserved on occasions of
stress by the efforts towards conciliation exerted by the Ministry of
Labour and its predecessor, the Conciliation Department of the Board of
Trade, and sometimes under the greatest difficulties. At times when the
Ministry had arranged between employers and Trade Unions a formula for
the solution of a wage dispute or the termination of a strike or other
industrial controversy, the recalcitrant leaders of some Union, entering
into temporary alliance with other turbulent spirits, would speed found
in deputation to the Cabinet at 10, Downing Street, and seldom be denied
admission. Frequently, other terms would be suggested by the Cabinet for
the sake of peace, probably more favourable to the workers than those
arranged by the Ministry of Labour. The results were disastrous, the
prestige of the Ministry suffered a serious relapse, the repute of the
Trade Union leaders who agreed terms with the Ministry was damaged in the
eyes of their members almost irretrievably, the rebellious section of the
Union was given a resounding advertisement at the expense of industrial
constitutional government—no surer way to sow the seeds of disruption and
indiscipline in any Union.
Protection of the Community
But it will be asked what is to happen when the employers and Unions
concerned in our great national industries decline to come together. In
that event, the Government, through the Ministry of Labour, must, as
the latter has so frequently done with tact and efficiency, endeavour
to bring the two sides to a conference. That can usually be done. The
Ministry has power under the Industrial Courts Act, 1919, to appoint a
Court of Inquiry, but this power in practice is of little use unless
both sides agree. Public opinion, however, can always be relied on
strongly to resent employers and unions standing at arm’s length; but
before it can, or will, operate, a definite open effort must be made
to put them into touch with one another. Negotiations once instituted
may culminate in an agreement, or end in a rupture, so that a strike or
lock-out appears inevitable. Then there is generally but one sound course
for the Government to pursue: at once to refer the dispute through the
appropriate Government Department to the Industrial Court, and obtain
its impartial and experienced decision upon the issue. Whether either
or both parties will submit to the arbitrament of the Court is purely
voluntary—we have not compulsory industrial arbitration in this country.
It has failed in Canada and Australia; it failed here disastrously during
the war. If men are to be compelled to accept an award, employers must be
compelled, if the Court so decide, to carry on their works at a loss. But
the public has no patience with any party to a wages dispute who will not
agree to the reference of his claim to an independent tribunal, or who,
having agreed to the submission, refuses to accept the award. One of the
most important present-day functions of such a tribunal is to analyse the
claim and see to what extent the claim is a genuine industrial demand,
or part of the revolutionary programme of extremists for squeezing all
private profit out of industry so as to force “nationalization and
democratic control” or some other favourite socialistic scheme. The one
fatal course is for the Cabinet to attempt itself to handle industrial
disputes.
Still, after or without an inquiry by the Industrial Court, a strike or
lock-out may occur. Then the primary duty of the Government is to stand
firm, refuse all concessions, and protect the community; nothing less is
adequate for the maintenance of social order. Too often employers and
Unions complacently think that the Government should stand aside and
let them fight it out over the prostrate public. In saying that they
forget the paramount interests of the community. Every principle of
democratic government negatives the right of a section of the community
so to attempt to enforce its arbitrary will, and where, by refusing an
independent arbitration and then calling a strike or lock-out, it does
so, it is the plain duty of the Government to provide for the continuance
of public services and to maintain a skeleton organization in being for
that purpose. This is not acting as strike-breaker between employer and
employed. But let not the measures for the protection of the community
be taken in stealth. Why should there be any secrecy about the matter?
The obligation and intention of the Government always so to act should be
openly affirmed. As Labour has officially adopted the anti-social policy
of “direct action,” the Trade Disputes Act of 1906 should be repealed.
Whatever reason of political expediency—there was none in law or in
logic—justified the application of the Act to cases of economic strikes
between employers and employed, no pretext remains for its retention in
cases of strikes against the community, especially where an independent
inquiry has been refused. The Government can successfully measure its
strength against any such strike, if only it will give the fullest
possible publicity to the issues, for public opinion will always split
like a steel wedge the solidarity of such anti-social action.
Wages in Unorganized Industries
One particular class of wages questions does demand intervention by
the Government. In well-ordered industries, where organizations exist
effectively representing the employers and employed engaged in the
industry, wages and conditions ought to be left as matters for collective
bargaining. There are, however, many industries which are so scattered
through the country or so subject to conditions incompatible with good
organization as to make collective bargaining impossible. In them
reasonable minimum wages and conditions must be secured, and it is the
duty of the Government to see that such provision is made, unless it is
prepared to acquiesce in “sweated labour trades.” Hitherto, the provision
has taken the form of a Trade Board for the industry under the Trade
Boards Act, and there is no doubt that type of organization must continue
in appropriate cases. Much criticism has been levelled against the Trade
Boards, on which Lord Cave’s Committee[20] has now reported fully. From
their inception up to the war, Trade Boards on the whole were successful.
The defects that subsequently developed in the system were due to the
fact that the far-flung series of Trade Boards, constituted immediately
after the war, had none of the experience nor traditions of the old
Boards; their chairmen and independent members were very largely persons
without practical experience of industrial problems, and necessarily of
that category, because of the large number of such appointments to be
filled. They did not confine themselves to prescribing minimum wages and
conditions—their proper function—so as to avoid sweated conditions, but
they attempted to regulate actual wages and conditions, a very different
matter. They also applied war-time standards to peace-time circumstances,
and that naturally plunged a nascent and struggling industry into great
difficulty.
Industrial Research
Industrial research becomes daily more essential for industrial progress.
It has been developed to a greater extent in Germany and the United
States of America than with us. Much of the industrial prosperity
in those two countries is due to the establishment of associations,
and, indeed, of highly developed departments by individual firms for
industrial research. Much is being done, and still more remains to be
done, by individual firms and by trade associations in this country
in that direction. There is no doubt that this kind of work can more
effectively be conducted in that way than by any Government Department,
but, at the same time, a Government Department is required to co-ordinate
and stimulate rather than to control such private efforts. In this way,
most valuable work is being done by the Department of Scientific and
Industrial Research. This will always remain an important sphere for
Government industrial activity.
Need of a Real Ministry of Labour
If we are to have anything like effective and efficient labour
administration, a Ministry of Labour is essential. Those who call
for abolition of the Ministry are truly neophytes in the art of
industrial government. Convinced believers, let us assume them to be,
in the principle of _laissez-aller_, they actually think that if the
Ministry disappeared there would be an end of all intervention by
Government between employers and employed. What uninformed criticism!
They forget that the Home Office has control of the administration of
the Factory Acts—a matter embracing working conditions and welfare of
workers which goes right to the root of the Labour problem. They omit
to notice that the Mines Department of the Board of Trade exercises
supervision over the conditions of employment and wages of miners; that
the Ministry of Agriculture is responsible for the Joint Conciliation
Committees which deal with exactly similar questions in agriculture;
that the Ministry of Transport does the same in the railway service,
and that the Ministry of Health has jurisdiction over health insurance
so largely handled by the Approved-Societies-sections of the Trade
Unions, and over the administration of the Poor Law relief which so
nearly touches the unemployment problem. These various jurisdictions
are admittedly to stand—it could not be, and indeed is not contended
otherwise. The Ministry of Labour is, however, to disappear, and its
responsibilities—unemployment insurance, trade boards, labour exchanges,
conciliation of trade disputes, co-ordination of Labour administration
in this country in conformity with the International Labour Organization
created by the Peace Treaty—are to be extinguished or tacked on as
appendages to other departments. The resulting position is too ridiculous
to contemplate. Under such circumstances the Government could never
be advised on any basis of consistent administration and policy in
regard to any labour question; continuous touch would be lost with the
representative Trade Union federations; there would be as many opinions
as there were departments implicated. Whenever a national strike was
imminent in any great industry, the Government would have to organize an
improvised committee of the Departments concerned in labour—probably few
of them even remotely connected with the particular industry affected—and
try to evolve an _ad hoc_ policy. We are suffering still from the
effects of opportunist action of that kind and want no repetition. And
when Government intervention in a national strike becomes inevitable
for the protection of the community, he would be a bold man who would
prefer negotiations by the Cabinet conducted on no set principle and
founded on no experience of industrial conditions, to negotiations by the
Ministry of Labour, which does conduct such business on a settled basis
of principle, knowing the interconnection of trade with trade and the
effect which a concession like the 12½ per cent. bonus to one section of
industry produces upon all other sections, and appreciates the danger
of settling strikes in the way the South Wales Coal Strike of 1915 was
settled.
It has been amply proved by bitter experience that no branch of human
activity stands in more urgent need of even administration on uniform
and consistent lines than does labour. Granted that employers and
employed should settle between themselves so far as possible their own
disputes, there comes inevitably a stage when a settlement or failure
to settle intimately affects the community. It is then that the offices
of a properly constituted Ministry of Labour come into play. If it is
desired to leave the public merely as a football between employers and
employed then abolish the Ministry. Far from abolishing it, in my view
it ought to be consolidated and vested with extended powers. It ought to
be made in fact, not merely in name, a real Ministry of Labour. All the
powers of the other Government Departments which relate to labour should
be transferred to it, so that there would be one central department
charged with and responsible for the administration of all labour in this
country. A great part of the labour disorganization during the war which
has been used as an argument for abolition of the Ministry of Labour,
and in derogation of the great national services performed by it, was
entirely due to this clash between different departments in regard to
labour administration: the Admiralty bidding against the Ministry of
Munitions by paying higher wages to the same class of men and settling
strikes on more advantageous terms to the workers; the Agricultural
Wages Board of the Ministry of Agriculture putting up wages of
agricultural labourers to a height that upset the country railway porters
who were drawn from them. Innumerable other instances could be given, all
directly due to the sub-division of labour administration among a number
of different and hostile Government departments. It is not unimportant
in this connection to remember that when, in the beginning of 1917, the
Ministry of Labour, which was originally a conception of the Trades Union
Congress, was formed by Mr. Lloyd George’s first Coalition Government,
it was intended to transfer to it all the labour powers of the other
Government departments. This was fiercely resisted by every department
which it was proposed to denude of any powers, and in great measure
successfully. As a result of that internecine warfare, the present
Ministry of Labour is unhappily but an emasculated edition of the fully
endowed central department that Mr. Lloyd George wisely had in mind. The
wonder is that it has done as well as it has with such a disappointing
limitation of powers. But apart from home labour administration, we
shall get into most serious international complications, and very great
domestic difficulty, if proper touch is not maintained with, and the
interests of the country properly voiced in, the International Labour
Organization which exercises now very considerable influence over labour
legislation and administration in every country, party to the League
of Nations. That cannot possibly be managed if the responsibility is
to be scattered over half a dozen partially interested and wholly
unco-ordinated Government departments.
If the labour sections of other Government departments were united with
the Ministry of Labour, very great economies could be effected: factory
and trade board inspectorates could be combined; health and unemployment
inspectorates could also be amalgamated; in fact, one central
inspectorate could well perform all the four kinds of inspection duties.
These are but a few illustrations. The various labour duties performed
by the different Government departments are so obviously one and the
same that it is inconceivable why the overlapping which exists should be
tolerated any longer. It is the one thing in our labour administration
that passes the comprehension of foreign critics.
Some of those who suggest the abolition of the Ministry of Labour propose
to constitute in its place a National Industrial Council, consisting of
an equal number of representatives of Employers’ Associations and Trade
Unions with a chairman nominated by the Government, as recommended by
the Report of the Provisional Joint Committee of Employers and Trade
Unions to the Industrial Conference, convened by the Government on
February 27, 1919, when the miners’ strike was threatening. The duty
of the National Industrial Council would be to make recommendations in
regard to controversial industrial matters. If the Unions _bona fide_
will undertake to use such a Council, or Parliament of Industry as it is
sometimes called, for the purpose of promoting good relations between
employers and employed, its creation would be of value. That implies
the continuance in industry of the private employer. But, on the other
hand, if the Unions intend to work for the elimination of the private
employer from industry, as they declared their intention to do in the
Memorandum (_see_ p. 59) annexed by the Right Hon. Arthur Henderson to
the Report of the Provisional Joint Committee, then the creation of a
Parliament of Industry would be a farce, and merely degenerate into an
organized means to the Unions’ real end. In any event, the scope of
a National Joint Council is limited. No Union will acquiesce in the
judgment of other Unions on its domestic affairs—imagine boilermakers
accepting the decision of plumbers, electricians and fitters on a
question concerning the demarcation of boilermakers’ work. As it was,
miners, railwaymen and transport workers absented themselves from the
Industrial Conference in 1919. Moreover, employers and Trade Unions will
always agree, to the serious discomfiture of Government, on reforms of
which the expenses are to fall not on industry but on national funds, but
the question of such expenditure is surely one to be reserved exclusively
for Parliament. The Ministry of Labour has always the General Council to
consult, which represents the whole of organized labour, and the National
Confederation of Employers’ Organizations, reinforced for consultation
with any employers’ organizations outside that Confederation. If a joint
conference with employers and Trade Unions is desired by Government such
can always now be easily arranged.
Regulation of Combinations and Monopolies
Combination is inherent in industrial progress; this is fully recognized
by Labour. The addendum to the Report of the Committee on Trusts
(_Parliamentary Paper_, 1919, Cd. 9236) signed (amongst others) by
such stalwart members of the Labour Party as Messrs. Bevan and Sidney
Webb, stated: “We have to recognize that association and combination in
production and distribution are steps to the greater efficiency, the
increased economy and the better organization of industry; we regard this
evolution as inevitable and desirable.”
This fact compels the Government to protect the consuming public against
exploitation by combinations and monopolies. The principles along which
such protective action should proceed are indicated in the Report of this
Committee, which has received the official approval of the Federation
of British Industries. Shortly put, they throw on the Board of Trade
the duty of inquiring into any reasonable complaints, of referring
any questions arising out of their inquiry to a special tribunal for
investigation and report, and of recommending to the Government action
for the remedying of any grievances found to exist by the tribunal.
The Federation properly insists upon two safeguards: first, avoidance
of any restriction prejudicing the position of British industry in
the export trade, and, secondly, caution against any communication to
foreign competitors of information regarding British trade associations
or combines. There have been suggestions made by some public men that
statutory limits should be placed upon dividends of industrial concerns.
Such restrictions have in the past been imposed upon the payment of
dividends by companies supplying, under powers of statutory monopoly,
public necessities like gas and water, but economic history shows
conclusively that anything in the nature of a statutory limitation of
dividends for concerns not supplying a monopoly but marketing its product
in a competitive market is seriously destructive of efficiency and
enterprise.