Industrial peace, its advantages, methods, and difficulties; a report of an inquiry made for the Toynbee Trustees

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Preface

The following Report by Mr. Price is the first publication issued by the Toynbee Trustees. The reasons which led to the establishment of that Trust are described better than I could do it myself in the following extracts from a letter by Mr. Alfred Milner, one of those who knew Arnold Toynbee best, and in whose life he is still living : —

"Among his old friends no circumstance added a more " poignant sorrow to the great grief of his loss than the " feeling that, except as far as the ineffaceable impression " on a few minds went, he had left nothing behind him that " would perpetuate his influence, or even give those who " had not known him the faintest conception of the great " character so early lost to the world. Under these circum- " stances the desire to create some sort of memorial was " even stronger than it is in the ordinary case of the death " of a great man, who leaves some visible record of his own " behind him in the shape of accomplished work. All sorts " of things were proposed — a studentship of Political " Economy at Oxford, a piize, a workman's hall, or some '• such institution as has actually grown up, with his name " attached to it, at the East End. What finally decided us " to choose the present form of the Trust was the desire to " connect the memorial both wdth the study of Political " Economy in its social aspects, to which he devoted the " scholar-half of himself, and with his work among the " artisan population of oui* great cities to which he gave the " other, the missionary- half. These two characters, so " inextricably blended in his disposition, his scheme of life, " and his actual performance, and at the same time so

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" characteristic of wliat is best in the social movement of " our time among the educated classes, we hoped to com- " memorate by a series of lectures, to be delivered not at " one place, but alternately at different great industrial " centres, wherever there might seem to be a real demand " for them — lectures dealing with political economy on its " social side, at once instructive and inspiring. They were " to be, if I might use the phrase, pio7ieer lectures, breaking " open the road in different places, along which others, if " there was interest shown and zeal to turn that interest to " good account, might subsequently march. The lecturers " were to be the forerunners of the university extension " movement in political economy, teaching it, always, in " Toynbee's spirit ; and in sending them out we hoped to " benefit both the industrial centres, which they were to visit " and to enrich with the learning of the university, and the " university itself, to which they would return strengthened " by that experience and touch with actual life, the flesh and " blood of economics, which could be gained nowhere else so " well as in the industrial centres. The lecturer was thus to " be both a teacher and a learner, bringing back fresh " knowledge of a new kind to the seat of learning, in " exchange for that which he had taken with him, or rather " bringing back his old knowledge mellowed by experience. " Hence the provision, which is an essential part of our " scheme, that the lecturer shall not be overwhelmed with " teaching and class-work, but shall be so amply supplied *' with means and with leisure as to be able to make a fresh " contribution to economic science in the shape of a special " study of some point illustrated by the industrial life of the " particular community in which he teaches."

I knew Arnold Toynbee first when he had just begun to lecture at Oxford on Economics. He was full of enthusiasm for his work, but also he was a little anxious about it ; as all earnest people are when the responsibility first presses on them of giving opinions that may influence the actions of others on a subject wiiich is so subtle and intricate, and yet

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for which academic training by itself is so inadequate a preparation. He had indeed been brought at an early age into contact with tlie realities of life, and had been impelled in the first instance to economic studies by seeing with his own eyes, and hearing with his own ears, the results of that physical and moral degradation and suffering which are caused by poverty. He was struck by the fact that the sources of evil have their roots very far below the surface, and that what at first sight appears to be the best remedy for them, scarcely ever turns out to be the best, and in fact often aggravates them.

But he was impatient with the attitude of passionless observation, which he thought many of the older economists took. Some of their studies of the way in which competition works itself out, seemed to him like the exercises of a chess player, delighting in brilliant combinations, and without a sigh for the knights or the pawns who may be sacrificed on the way. Economic problems were to him pregnant with the fates of the suffering toilers whom he knew so well, and he could not bear to have them treated as mere exercises of analytical reasoning.

But as time went on he somewhat changed his attitude towards the earlier economists. He learned to understand their difficulties better, to see what led them at times to make assumptions which at first sight appear perversely unreal ; and he got to distinguish their own opinions from those which are attributed to them by people who want to quote economic authority for partisan purjDoses. Gradually he settled himself down to work very much on the old fashioned lines, but giving prominence to historical studies, and never for a moment losing sight of the question whether it may not be possible to prevent any class from being so poor as to be debarred from a healthy, happy, and cultured life.

He had many sides, as the readers of the memoir of him by the Master of Balliol will know. But on the few occasions which I met him, the talk ran chiefly on social and economic questions. He was always brilliant in thought, eager in

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speculation ; but liis intellect, fresh and vigorous as it was, was not the chief part of him : the leading controlling strain of his character was emotional. He was thus the ideal modern representative of the media3val saint : strong every way, but with all other parts of his nature merged and contained in an earnest and tender love towards God and man.

I knew this in a way when talking to him ; but I did not realise it fully till he had left us ; not until 1 had heen invited to Oxford to lecture in his place, and had got to see there how his life had influenced many of the best of those around him. As time goes on this influence spreads : in London and Cambridge no less than in Oxford his name is familiar as the watchword of a great movement. The media3val saint of whom he was the modern representative was St. Francis, the founder of a new order, the leader of a new and more direct attack on the evils of the age. In this modern age, as in earlier times, it is through his personal influence that the leader has made himself felt ; and the new impulse that Toynbee gave was towards a more intimate personal contact of those who are well nurtured, well cultured and strong, with those who are ill nourished and ignorant and weak.

Such he waSj, and such his portrait would tell him to be if it could speak clearly. The frontispiece of the present volume is reproduced from the best likeness of him that there is; but it is not quite satisfactory, it does not adequately represent the beauty and strength of his character. It will however help those v^ho knew him to freshen their own memories of him, and it will enable others to form some imperfect notion of what he was.

In complying with the request of the Trustees of the Toynbee fund to write a preface to Mr. Price's admirable Report, my chief thought has been how it would have given joy to Toynbee. It is work after his own heart on subjects in which he was deeply interested. He held that the organised warfare of strikes and lock-outs on a modern pattern was In some respects less evil than the old fashioned

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guerilla warfare, which attracted less public attention ; but which was really more bitter, and had more mean and cruel incidents in it. He welcomed the growing power of trades unions, because they brought generally the best men to the front, and clothed them with a grave responsibility, which was itself an education and fitted them to educate others by their leadership ; and he welcomed the effect of public criticism which was brought to bear on boili the belligerents when the war was carried on opeidy in the full hght of the day. But he yearned for a time of Industrial Peace; and his praise of trades unions was never warmer than Avhen he was speaking of the way in which they had promoted the growth of arbitration and conciliation. The chief purpose of this essay is to inquire how, without recourse to industrial war, wages may be adjusted to the varymg circumstances of trade in such a way as will bo held by both sides to be relatively fair.

An absolutely fair rate of wages belongs to Utopia. There is much to be learnt from trying with the Socialists to ascertain how far it is thinkable, and how far it is attainable. But these are not the questions which we are asked to consider by Mr. Price. It is sufficient to say that all socialistic schemes which have any claims to be practical avowedly involve a compromise; they do not venture to dispense entirely with material reward as an incentive to industrial energy, though they rely less on it and more on the sense of duty than our present sj^stem does. But this compromise prevents them from claiming to be logically thought out schemes of absolute fairness. Fairness then cannot be absolute, but must be a matter of degree. Even for the purpose of day-dreams we must deliberately fi-ame our notions of equity in the distribution of wealth, with reference to the methods of industry, the habits of life, and the character of the people for whom we are trying to discover a realisable ideal. And much more must we do

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tliis when we are trying to construct a working plan, which will so accommodate itself to tlie actual conditions of business as to be accepted in preference to the excitement of conflict by people as they are, with all their hot impulses, their combative instincts, and their inherited selfishness.

There may indeed be a question whether there is room within these narrow limits for any useful definition of " a " fair rate of wages." But the phrase is constantly used in the market place ; it is frequent in the mouths both of employers and of employed ; and almost every phrase in common use has a real meaning, though it may be difficult to get at. Those who use the phrase, when pressed to explain it, often give an account that will not bear examination ; but after the matter has been discussed for a time, the meaning that is latent in their minds works itself to the surface. This process seems to be going on with regard to the phrase " a fair rate of wages." in spite of the hasty contempt that has been poured on it by some economists ; and Mr. Price's essay will help the process forward.

The basis of the popular notion that there should be given "a fair day's wage for a fair day's work,"^ is that every workman Avho is up to the usual standard of efficiency of his trade in his own neighbourhood, and exerts himself honestly, ought to be paid for his work at the usual rate for that trade and neighbourhood; so that he may be able to live in that way to which he and his neighbours in his rank of life have been accustomed. But further, the popular notion of fairness demands that he should be paid this rate ungrudgingly, that his time should not be taken up in fighting for it, that he should not be worried by constant attempts to screw his pay down by indirect means. This doctrine is modified by the admission that changes of circumstances may require changes of wages in one direction or the other : and again, the rule might not be held to apply to cases such

• See an instructive lecture with tins title by Mr. Leonard Courtney, given at Plymouth in 1879, and published in the twenty-fifth volume of the " Fortnightly Eeview."

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as that of needlewomen, where the customary Avages are too low to support a healthy life. But substantially it is accepted and acted on in ordinary life : and it is so far justified by economic analysis that it may be accepted as the starting point of our present inquiry. Let us look at it a little more closely.

If a carpenter has made a box, or a surveyor has made a map of some land for us, we consider that he acts fairly by us if he does not attempt to take advantage of our not having made a bargain beforehand, or of our ignorance, or of any special hold he may have over us; but charges us the price of his services at the rate at which he would expect to be able to dispose of them regularly to those who understand his trade. In this we are not trying to settle according to any absolute standard of justness how much of a carpenter's labour ought to be paid as highly as an hour's work of the surveyor. We are not inquiring whether the social system which permits great inequalities in their usual rates of remuneration is the best possible : but taking the present social system as it is, we want to know whether those with whom we are dealing are doing their part to make it work smoothly.

The average rate of earnings of a surveyor is limited on the one hand by the demand for a surveyor's work : but it is determined chiefly by the difficulty and expense of acquiring the knowledge and skill required for his work. The rate of earnings which are required to induce a sufficient number of people to become surveyors is, in economic phrase, the " normal " rate of surveyors' earnings. This normal rate has no claim to be an absolutely just rate ; it is relative to the existing state of things here and now. It might be altered without any fundamental change in the rights of private property ; the normal earnings of a carpenter and a surveyor might be brought much nearer together than they are, by even so slight and easy an improvement on our present social aiTangements as the extending to all persons of adequate natural ability the opportunity of receiving the training required for the higher ranks of

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iudnstiy. But we have to take things as they are ; and as things are, the price at which a man in any trade can expect to get steady emph^yment, from those who are good judges of the value of his work, is a tolerably well known normal rate. The surveyor or the carpenter who always charges about this rate to any customers, however ignorant, and without putting them to the trouble of beating him down, is said to do his business fairly.

Similarly a fair employer when arranging for the pay of a carpenter, does not try to beat him down, or take any indirect advantage of him; but, at all events under ordinarycircumstances, offers at once whatever he knows to be the " normal " rate of pay for that man's work : that is the pay which he would expect to have to give in the long run for an equal amount of equally good work if that man refused to work for him. On the other hand he acts unfairly if he endeavours to make his profits not so much by able and energetic management of his business, as by paying for labour at a lower rate than his competitors ; if he takes advantage of the necessities of individual workmen, and perhaps of their ignorance of what is going on elsewhere ; if he screws a little here and a little there; and perhaps in the course of doing this, makes it more difficult for other employers in the same trade to go on paying straightforwardly the full rates. It is this unfairness of bad masters which makes trades unions necessary and gives them their chief force : were there no bad masters, many of the ablest members of trades unions Avould be glad, not indeed entirely to forego their organisation, but to dispense with those parts of it which are most combative in spirit. As it is, though at great expense to themselves and others, they succeed tolerably Avell on the whole in preventing individual masters from taking unfair advantages of individual men.

The starting point then in our search for the fair rate of payment for any task, in the limited sense of the word " fair " with which alone we are here concerned, may be found in the average rate that has been paid for it during

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living- memorv ; or (luring a shorter period, if the trade has changed its form within recent years. But this average rate is often very difficult to determine ; and therefore for practical purposes it is generally best to take in lieu of it the rate actually paid in some year when according to general agi'eement the trade was in a normal condition.- This gives very nearly the same result, and is more definite and less open to disjjute. It is then assumed as a starting point that the rate at that time was a fair rate, or in economic phrase that it was the normal rate ; that is, that it was about on a level with the average pa3anent for tasks in other trades which are of equal difficulty and disagreeableness, which require equally rare natui-al al)ilities and an equally expensive training. And accepting this year as a normal year for the trade implies an admission that the current rate of profits in the trade was also normal. Differences in ability or in good fortune may have been causing some employers to make very liigh profits while others were losing their capital ; but taking one with another it is supposed that at this standard time thei]' net receipts gave them interest on their capital, and earnings for their own work in managing the business, at the same rate as wf)rk in other trades which was equally difficult and disagreeable, and which required equally rare natural abilities and an equally expensive training.

But changes in the course of trade may require a considerable departure from this starting point. These changes are of many different kinds. Some are gradual in action, and work slowly for a long time in one direction. For instance a new trade has at first normal wages higher than other trades of equal intrinsic difficulty ; it is difficult because it is unfamiliar. Gradually it becomes familiar, a great many people have been brought up to it, and its wages slowly sink to a lower level. Or, again, improvements in machinery, which cause it to work more smoothly and with less care, may lower the strain required for performing the same nominal task, and thus lower the nominal rate of wage,

'^ See pp. 01, G9, 73, and 96 of Mr. Price's essay.

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even though the payment for work involving a given strain, is stationary or rising. Or again, the mean level of the general purchasing power of money may ])e moving slowly upwards or downwards, in consequence of changes in the supply of the precious metals, or of gradual changes in the volume and character of banking and general business. All these are slow changes ; there may be disputes as to the facts of the case : but when once they are clearly ascertained, the course is generally cl«ar. Setting aside all questions as to the right of some to be rich while others are poor, it is " fair " that full effect should be given to these changes. For they have on their side natural forces so powerful that opposition to them cannot be snc^cessful for long : and it cannot as a rule be maintained even for a short time w^ithout recourse to the harsher measures of trade combinations — measures that involve war open or concealed between employers and employed, or between both and the purchasers of their wares. Industrial wars like other Avars involve so much waste, that the net gain which they bring to the winners, if any, is much less than the net loss to the losers. And therefore the side which adopts measures of warfare in opposition to changes that are irresistible, is generally acting not only unwisely, but also unfairly.

It is, however, often difficult to know how lar any set of tendencies is irresistible ; how f;ir the causes now acting in one direction are likely to be overborne before long by others acting in the opposite. The presumption that it is part of the employer's business to undertake the risks of the trade, makes it very difficult to know how soon and how far he ought in fairness to concede to his men the full advantage of any improvement in the condition of trade, which may after all last but a short time ; and how soon and how far he may require of them a fall in wages to meet a drooping condition of trade which may l:>e Init temporary.

In the ordinary course of things the first benefit of an improvement in the demand for their wares goes to the employers; but they are likely to want to increase their

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(Hitput while prices are liigli, and make lii^h profits wliile tliey can. So they soon begin to bid against one another for extra labour ; and tliis tends to raise wages and hand over some of the benefit to the employed. This transfer may be retarded, though seldom entirely stopped, by a combination among employers, or it may be hastened on by the combined action of the employed. As a general rule employers will be bound in fairness to yield at once in such a case a considerable part of their new profits in higher wages, without waiting till their men force it from them by warlike measures, which necessarily involve waste. Even if they succeed temporarily they will set going a spirit of contentiousness, and check the inflow of additional supplies of labour into their trade ; the net gain which they get from refusing to yield will probably be small, while the net loss to the employed will be great ; their action will be unfair. Fairness requires a similar moderation on tlie part of the employed. If they try to force wages so high as to leave a very scanty profit for their employers just at the time when they might expect to make their best harvest, capital will be discouraged from entering the trade ; probably even many of those in it wall leave it Avhen work gets slack, even if they do not fail when the first touch of depression comes. The men will then find it difficult to get employment, and will probably thus lose more than all they have gained by their extreme demands, even if they should be successful in the first instance ; the net gain to themselves will be little if any, the net loss to their employers will be very great; their claims will be unfair.

When trade declines, the loss in the first instance falls on employers ; as prices generally rise before w^ages rise, so they fall before wages fall. The duties of the two sides are now reversed. The men ought in fairness to yield something without compelling their employers to figlit for it ; and nothing short of absolute necessity will make it fair for the employers to demand a reduction of wages so great as to cause much suffering to the employed, and drive many of

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tliem out of the trade. For such extreme demands will bring them, even if temporarily successful, a very small net gain in proportion to the net injury done to the employed.

Sometimes indeed, for tactical reasons, either side will demand at first more than it expects to get ; but though this may be inevitable in a state of suppressed industrial warfare, it is injurious to the common interests ; it is fair only in the sense in which eveiything is fair in war ; it is unfair from the point of view of industrial peace.

From that point of view again it is unfair for the men to spring claims for an advance on an employer suddenly, when he has just taken important term contracts under heavy penalties ; it is unfair for the employer to take advantage of the fact that the men have had irregular employment and are short of money, and to use this as a lever for compelling them to Avork at a lower rate than the necessities of the case demand.

These are typical instances of what is unfair ; there are many other classes of action which are ungenerous, and others again which would be avoided by an employer who acted up to the highest. standard of unselfishness. But with these we are not directly concerned just at present. We have before us now only the narrow and limited inquiry, how far it is possible for frank dealing in a friendly spirit between employers and employed to remove those unfair dealings, and suspicions of unfair dealings, which are the chief causes of industrial war. The facts and the arguments Avhich are brought before us in the following pages give reasons for thinking that it may go very far.

The best method is that of Conciliation.^ This will always be associated with the name of Mr. Mundella, who has done more than anyone else to develop its strength and overcome its difficulties. In the ideal form of this plan, delegates of employers and employed meet from time to time with the intention of speaking Avith perfect openness, avoiding everything like special j^leading ; each side trying to ^ See Y>ix 71 and 72, also pp. 37, &c.

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put itself into the point of view of the other side, and resolving to demand nothing that does not appear reasonable when looked at from that other side.

They have two kinds of inquiry before them. In the one they move, so to speak, horizontally : they bring under comparison ditFerent kinds of work at the same time. Thus in mining, different rates have to be made for different kinds of coal, and even for different seams of the same coal.** While in some trades, as for iuvstance, the hosiery trade, prices for many thousand different kinds of work have to be agreed on. And, the most intricate matter of all, allowance has sometimes to be made for differences in the condition of the plant of different manufacturers ; a rate which is fair in a factory which has all the latest improvements, is bound to be unfair in a badly organised factory -svath antiquated machinery. But, complex as these details are, this horizontal levelling of prices is comparatively easy; an agreement is often obtained with surprising quickness where there is a frank and genial disposition on both sides. The difficulty is much greater when the exigencies of the time require the price of the standard task — whether paid by the day or by the piece — to move above or below its standard level, and the calculations have to be maxle vertically instead of horizontally.

It is clear that since working men get much less good from a temporary rise of their wages above their usual level, than they do hami fi-om an equal fall below it, therefore the fluctuations of wages should be less in proportion than those of the profits of the employers as a body. But here it may be right to make some difference between specialised and non- specialised workmen : skilled miners cannot turn to other work when mining is depressed ^\dthout great loss, and their numbers cannot be quickly increased when there is a great demand for their work : their fortunes are more intimately bound up with mining than those of the labourers and others who work on the surface of the nn'nes. It is

* See pjx 38 aiid 76.

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therefore in accordance with sound principle that the wages of underground men should follow the fluctuations of the trade more closely than those of " surface men."^ Next it is not fair that the workmen should share in the good or ill fortunes of the particular firm by which they are employed, unless they have made a special agreement to do so. Profit sharing arrangements when well managed are a gain to all concerned : but it is difficult to make them, and more difficult to keep them up. They require a good deal of mutual knowledge and confidence on the part of employers and employed ; they are essentially matters for individual dealing, and not as a rule suitable for management by boards of concihation, which often have to deal with very wide areas.