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.
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.
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.
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.
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.
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 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.
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.
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.