A country without strikes : a visit to the compulsory arbitration court of New Zealand

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UNITED STATES OF AMERICA.

Introduction

It is very often asserted that those political laboratories, the Colonies of Great Britain, shrink from no experiment the object of which is to regulate and improve the condition of the labourer. This assertion is but partly true. The British colonies, though^ all endowed with complete self-governmentf differ very widely in the temper in which they approach the labour problem. For instance, two of the knottiest questions which humanitarian social reformers have endeavoured in our time to solve, are confessedly the conflict of organised capital with organised labour, and the necessity of securing a minimum of comfort for the humbler class of workers. Among eleven self-governing British colonies two only have made any serious endeavour to cope with the second of these problems, and one only has made any determined effort to grapple with the first. Victoria and New Zealand essay to control by statute wages and the conditions of labour; in New Zealand alone the conflicts of labour and capital are by law and custom submitted to the arbitration of state tribunals. The Victoriviii Introduction

an Factories' Act, to which I have just referred, is an extremely interesting measure under which the wages paid and certain other conditions observed in the clothing, boot and shoe, furniture-making, and one or two other industries are determined from time to time by a state board whose rulings have legal force. The statute deserves careful study and may be regarded as an experiment kindred to, though by no means identical with, the New Zealand Industrial Conciliation and Arbitration Act which is the subject of Mr. Lloyd's book. There are theorists and observers in Great Britain who think that the Victorian law is more likely to be imitated in the large industrial countries of the world than that of New Zealand, and that its narrower scope and more calculable effects render it a less venturesome and hazardous experiment. There is no doubt something to be said for this contention if the object of the reformer be merely to better the conditions of the most helpless class of workers in the worst-sweated industries. But if the object be to find a remedy also for those conflicts of capital with labour which have agitated the industrial world in Europe, America and elsewhere for the past century, which increase in area and bitterness with each decade and which constitute one of the greatest puzzles of social students in the old world and the new, then the Victorian Wages Board law is not what is wanted.

The object of the New Zealand Conciliation and Arbitration Act is not only to stamp out sweating and improve the workers' condition.

Introduction ix

These, indeed, were not its immediate aims though they are consequences — and very valuable consequences — which have flowed from it. Its special and primary object was to bring about industrial peace, and, in so far as it has substituted orderly and methodical hearing and adjudication by impartial state tribunals for the loose, violent and haphazard methods of the strike and the lockout, it has succeeded in bringing about industrial peace.

True it is that an act under which one of the parties to an industrial dispute has the right to bring all other parties before a public tribunal does, in effect, if general use be made of it, involve a great deal of state regulation of labour. That is what has come about in New Zealand, and those who look upon state interference as anathema, and think that any law which increases it is necessarily bad, will regard the arbitration law with abhorrence. So far, however, as New Zealand is concerned, a sufficient answer to this objection is easily found. In the first place, if the parties to labour disputes there wish to settle their own differences in their own way, the state does not meddle with them. In the second place, New Zealand is perhaps the most simple and complete little democracy in the world; legislation is facile, and were any law found tyrannical or intolerable it would have very short shrift indeed. In New Zealand, I may remark, the most powerful class in politics are not the wage-earners but the farmers.

The Arbitration Act has not yet had a very x Introduction

long life. It was passed in 1894 and did not come into active use until more than twelve months afterwards. Its popularity and usefulness have, however, steadily increased, and most of the organised industries of the colony are now being carried on under the conditions laid down by its Conciliation Boards and Arbitration Court. It should be stated frankly that most of the cases brought before these tribunals have been initiated by trade-unions and that most of the decisions have granted concessions of more or less value to the plaintiffs. The explanation of this is found in the prosperity which has marked the last four or five years in New Zealand. The labour market has been a rising market since the Arbitration Act came into use. Under the old conditions the workers whose wages had been cut down in the dull times of the previous decade would have struck on a rising market as they strike elsewhere. Instead of striking on a rising market they have arbitrated on a rising market, and instead of the industries of New Zealand being convulsed and disorganised the factories have not been closed through labour troubles for one single day.

Next to the wide use which has been made of the law in the colony, the most striking feature of its history has been the respect that has been paid to its decisions. Where, as in certain cases, these have been disappointing to the trade-unions they have been loyally obeyed ; and though in a few instances the same cannot be said for the employers, the recalcitrants have not been

Introduction xi

many, they have not been employers of great size or standing, and their attempts at resistance or evasion have been sufficiently dealt with by small fines and very moderate penalties.

The only serious argument — beyond the theoretical objection to state interference in any form — which has been brought against the law by English writers has been a statement that it has hampered enterprise and checked the growth of manufactures in the colony. New Zealanders know this to be quite baseless, for they know that the manufactures of their colony have fully participated in the prosperity of the last quinquennium. For some years past, labour in almost every trade has been fully employed, the numbers of the workless have fallen progressively, fresh factories have been opened, fresh buildings erected, and the shopkeepers who deal with the working classes admit that business is better and bad debts fewer than at any time in the last twenty years in the colony. The annual reports of the Chambers of Commerce and the periodical reviews of trade and business published by the New Zealand newspapers on both sides in politics tell the same tale. But the briefest and most convincing argument for disabusing the mind of any one who may fancy that the New Zealand Arbitration Act has hampered industry is to be found in the following figures which give the hands employed in the registered factories of the colony for the last five years. It may be explained that "factory" in New Zealand means workshop, small or large, and that registration is universal.

xii Introduction

Year, Hands Employed. Increase.

1895 29,879 4,028

1896 3 2 >387 ^508

1897 36,918 4,531

1898 39,672 2,754

1899 45,305 5,633

It may be, and indeed, has been, stated that the strength of the law cannot be fully tested until some powerful organisation of labour or capital defies the decision of the court and is successfully dealt with. English doctrinaire critics lay great stress on this and are wont to ask triumphantly what could be done with the members of a large trade-union without funds to enable them to pay the court's penalties for disobedience and at the same time stubbornly determined not to go to work under the conditions laid down by the court. The answer to that is surely found in a study of the history of labour disputes. These show that it is not unions destitute of funds which carry on. stubborn and ultimately successful strikes. And if impecunious workers cannot successfully cope with the antagonism of employers whose resources are after all limited, how can they expect to cope with the power of a state tribunal whose will is not to be bent, which has no factory to be closed or business to be injured, and which is backed by the forces of law and public opinion ?

To my mind, however, the best recommendation of the New Zealand law is just that it has not, so far, led to any desperate trial of strength of this kind. By applying the good old motto

Introduction xiii

that prevention is better than cure it has taken labour disputes in hand before they have reached that pitch at which the passions of the disputants on both sides are inflamed and impel them to wild speech and wilder action; it gets at labour and capital before they have come to the unreasonable stage of their quarrel. It frankly accepts their two irresistible tendencies in modern times ; the first of which is that they will differ and the second that they will organise in order to settle their differences. There are philanthropists who think that the remedy for their conflicts is found in urging them not to quarrel and not to organise; there are some who would sternly forbid them to organise. The New Zealand law, on the contrary, frankly encourages their organisation, admits that they are bound to differ, and only insists that if they cannot settle their differences in a friendly and peaceable manner they must go to the state, which will provide them with machinery for doing so.

The state, in New Zealand, is the people, and the people being vitally interested in labour battles, has surely the right to say to the parties that their disputes shall be adjusted in such a manner as not to damage the community of which they are members and for the benefit of which in the end their industry is carried on.

For the rest, the Act's methods are elastic, and the proceedings of its tribunals are open, painstaking and fair.

I am, of course, in no way responsible for the views expressed by Mr. Lloyd in this xiv Introduction

volume. Before Mr. Lloyd went to New Zealand, I had never seen him, and it was not until he had been to the colony and returned from it with his views upon the Arbitration Act fully formed, that I had the pleasure of meeting him. But though his opinions are his own, I may be allowed to say that, as regards his statements on matters of fact, I believe them to be correct throughout. In America and Europe his standing as a writer will, of course, ensure his book a welcome among all social students ; and both in Great Britain and the colonies I feel no doubt that those who are interested in the experiment he here describes will gladly welcome the impartial opinion of an able American observer standing absolutely apart from the political parties of New Zealand.

W. P. Reeves.

London, England, March, 1900.

A COUNTRY WITHOUT STRIKES.

Chapter I. Something New In Strikes And Lockouts

When I landed in New Zealand in February, 1899, I found it, like the rest of the world, in the flooding tide of a new prosperity; the revenue of the government increasing, manufactures extending, new enterprises starting, labour busy.

As always happens in a country so fortunate as to have workingmen intelligent enough to know what is going on, those here knew about this rising market and were striking everywhere for their share of it. They were demanding more wages, shorter hours, better conditions, or at least the restoration of advantages which had been taken from them during the preceding years of "the lean kine."

I knew, of course, by my reading, something about the new way these things were managed here, and almost my first request was to be taken to see a New Zealand strike. My friend smiled and led the way. We were driven to a charming spot in Christchurch, bordering on "The Domain," or public park on the banks of the Avon where English willows turn their hoar leaves to a stream as beautiful as its namesake. We approached an interesting Gothic building which did not look like a factory or trades-union hall, and passed into a long, open room, with vaulted ceilings, galleries, stained glass windows, all familiar to any one who has been in the Parliament buildings at Westminster. It was a New Zealand miniature of the House of Commons — the Hall of the Provincial Assembly of Canterbury.

A table ran along the centre of the hall; on each side of it three or four men, the brighter toilets and the better grooming of those on one side showing them to belong to a different class from those on the other, whose plain clothing and furrowed faces bespoke them to be workingmen. They were busy in controversy, and between them, at the head of the table in the white wig of an English chief- justice, was a judge of the Supreme Court of New Zealand. On benches under the windows were newspaper reporters, and a number of spectators belonging evidently to the same classes of society as the men sitting beside each other at the table.

In the Court Room 3

I know a strike when I see it, for I have witnessed a good many, including the Pullman strike at Chicago, but this looked like no meeting of strikers I had ever known. It looked like a court, though, again, not like any I had ever seen before.

But it was both. "For five years," said my New Zealand friend, "there has not been a strike or a lockout in New Zealand that has not been held in a court-room."

This was my introduction to the Compulsory Arbitration law of New Zealand.

"But compulsory arbitration, you know," said a young Englishman who was with us, fresh from Oxford and post-graduate courses of political economy from John Stuart Mill to Boehm-Bawerk, "is an impossibility; it is a contradiction in terms. You cannot make men work whether they want to or not, you cannot compel men to arbitrate nor fix prices by law. You cannot get practical decisions in business matters from judges who 'know nothing of business/ you cannot settle wages and conditions of labour by laws of the legislature instead of the laws of supply and demand."

"That 's what all 'the authorities' of the business world and political economy say," our New Zealander replied, "but what they say we can't do, we are doing. Under this law, when without it they would have stopped, for five years not a workingman nor capitalist has stopped giving or taking work on account of any difference as to wages, or any other matter at issue between them, and yet during all that time they have been in sharp and frequent disputes on many questions/'

"The New Zealanders must be a nation of visionaries," the Oxford man insisted, "to be willing to venture on such a Utopian experiment.' '

"On the contrary, 'the experiment/ instead of being a scheme of visionaries, or Utopians, or theorists, was forced upon us by the hard pressure of actual facts and by intolerable evils, in the paralysis of industry and the disturbance of peace, for which all other remedies have failed. The experiment was entered upon with the consent substantially of all parties in Parliament, including some of the most successful business men in the colony. It is an experiment, we admit, and a bold one, without parallel anywhere else in the world, but it is a successful experiment, and so far has done lots of good and hurt nobody." The traveller is not in New Zealand very long before he finds out that its people are a little proud of their "experiments," and it takes him only a little while longer to make up his mind that they have good reason to be proud of them.

Civil War 5

"With your Conciliation and Arbitration Boards, public and private, and your Conseils des Prud'hommes and the like/' continued our friend, "you are all saying to the warring forces of labour and capital, 'you ought to arbitrate.' New Zealand is the first to say, If you ought to arbitrate, you shall arbitrate.' "

The newly arrived traveller hardly knows which way to turn, there are so many novelties to see in a country like New Zealand. Its whole career has been a continuous experiment, from zoological to sociological, and it has been specially experimenting in business and politics for thirty years, ever since Sir Julius Vogel, in 1869, established the government in life insurance, which it has made a great success against the competition of the principal private companies of Australia, Europe and America. But the statements my New Zealand friend whispered to me, as we stood under the gallery of the Arbitration Court, decided me that, compulsory arbitration had the first claim on my curiosity.

New Zealand had a terrible strike nine years ago, known as the Maritime Strike. It devastated the whole of Australasia. It was a war between classes, the only two classes practically which remain to be amalgamated in modern society. It spread from the shipping world, where it began, into a great circle of related industries. Merchants and their clerks drove drays and loaded and unloaded merchandise; shipowners and their sons and friends took the place of sailors and stokers; the country went to the edge of civil war. The New Zealand Minister of Labour, the Honourable William Pember Reeves, set himself, in the following year, to find a remedy to prevent the recurrence of struggles not less terrible in the sum-total of losses than war itself. There had been no compulsory arbitration anywhere to serve as a guide; there had been no public conciliation or arbitration in New Zealand itself to supply any precedent. "But New Zealand," the New Zealander who was •giving me these points continued, with pardonable pride, "did not waste any time in beginning w T here others had begun. It took up the evolution where the others had dropped it, and carried it forward. It was characteristic of the country that the new opportunity found the new men fit for it."

The Maritime Strike was over, but other coming labour troubles clouded on the horizon, and, most threatening of these, a possible strike of the government employes on the railroads. This, as the Minister of Labour said to Parliament, all must admit, would be the greatest possible calamity that could befall.

With the memory of the Maritime Strike before him and these other dangers threatening,

No Precedents 7

the Minister of Labour set himself to study the most difficult of labour problems. He investigated all that has been done in other countries — in England, France, Germany, the Australian Colonies and the United States. The speeches in which he reported the results of his studies to Parliament in introducing the bill which he framed, stand to-day as the best study which has been made of arbitration and conciliation. He found, as he said in offering his bill, that the experience of other countries, confined as it had been to voluntary conciliation and arbitration, was a record of failure wherever it was most important that it should succeed, and of success only when success was comparatively of little consequence. Almost never was any great strike settled or prevented by voluntary conciliation and arbitration ; only the little ones.

He read all that has been written by the authorities on conciliation and arbitration, and found nothing new in them. They all seemed, he said, to have copied from each other.

He reviewed for Parliament and the New Zealand public the three laws of Great Britain, passed in 1824, 1867, and 1872, all three dead letters on the statute book.

The Conseils des Prud'hommes of France, which have had eighty years of practical working, are a valuable example of what may be done by state intervention in industrial matters, but they have not put an end to strikes.

"There are many and grievous strikes in France, because these Conseils des Prud'hommes are not allowed to deal with strikes or wages and have no power to enforce their decisions. ,,

He found the Massachusetts Board of Conciliation and Arbitration one of the most successful and practical tribunals in the world. It was in fact almost "an ideal tribunal, its one fault being that it is voluntary. It does a great deal of good, but if you look through the record of its cases, you will find a doleful and depressing list of failures as well. In small cases the intervention of the board had been successful, that is, if passion has not been roused. In larger cases, or where one side has had its passion roused, the board has not been so successful, and the strikes have had to go on." But he found it "the one voluntary state tribunal that seems to do good work."

Mr. Reeves studied his subject for years. He told the Parliament there was not an industrial conciliation and arbitration tribunal in any part of the world, the working of which he had not examined. His conclusion was, "that in England, throughout Europe, in America, and in Australia, voluntary arbitration has failed for generations. It is necessary to try something

Conciliation does not Conciliate 9

else, and I ask you to try compulsory arbitration."

A very striking instance of the failure of voluntary arbitration was furnished by the recent experience of the neighbouring colony of New South Wales. That colony had, the year before New Zealand acted, passed an act which seemed to be, Mr. Reeves said, "a very nice act." Immediately thereafter New South Wales saw the three most disastrous and ruinous strikes the colony had had since its foundation. These strikes took place as soon as the act was passed, and it proved a dead letter. If the act had not been passed, these strikes would have compelled the Legislature of New South Wales to legislate in an effectual way, but, as it was, the leaders had a reason in the existence of the law for doing nothing. As a result of these three strikes, the CoaL Miners' Strike, the Broken Hill Strike, and the Shearers' Strike, homes had been broken up, employers ruined, the town of Broken Hill made bankrupt, men had lost their homes and their work, their families had been disrupted, labour leaders had been thrown in jail, to be kept there for years, and a very bitter class feeling excited which still rages throughout New South Wales.

"That," said Mr. Reeves, "has been the result of trusting to voluntary tribunals."

io A Country Without Strikes

He showed that, at the time he was speaking, there had been in Europe in the preceding five years nearly two thousand strikes, and throughout the world at large many thousands of strikes involving the loss of hundreds of millions of dollars, besides other things not to be counted in money. In proposing compulsory arbitration, he said :

"I could not bring in a bill of a weaker character than this without knowing that it would be a hollow sham. I have studied the history of conciliation and arbitration in the various countries of the world, both old and new, and I have been forced to this conclusion that, if you pass a merely optional measure, you will put a thing on the statute book that will have no effect whatever in assuaging the evils arising through industrial contests. Only too thankful should I be to pass an optional measure now, and thus save myself all the friction attending this fight, and also save myself the great responsibility of passing a measure with a compulsory clause, but I cannot pass a useless bill."

"Strikes," he said again, "have done a great deal of good, but strikes are war. War is a clumsy and barbarous way of settling differences between nationalities, and strikes are the most clumsy and barbarous way I know of settling industrial difficulties."

Labour Asks for Compulsion 1 1

"Victory by either side is not a proof that the side which lost was wrong, or that that which won was right."

The trade-unions of New Zealand, during the discussion of this matter which was before Parliament for years, held up the hands of the Minister of Labour by passing resolutions demanding compulsion, and many of the leading capitalists and employers of the colony gave him^their support.

He quoted to Parliament a telling remark made to him by a Manchester merchant, a man who had had great experience in connection with unions.

"If you are to have arbitration at all, it would fi be of no use, if you do not make the awards I compulsory. Every man who thinks he is going 1 to lose a strike is ready to go to arbitration, while the man who thinks he is going to win will not J have it"

Conciliation boards are virtuallv useless unless there is in the background an arbitration court, and this court must have compulsory/ powers.

That the bill which he drafted was an experiment, "an absolute experiment," Mr. Reeves admitted. He claimed only, he said, that "It was an honest attempt to solve the most difficult of labour problems. It is an experiment that is worth trying. Whatever it does,. it cannot do a vast amount of harm to the colony."

The opponents of the bill had said that such a question must not be dealt with in an experimental way.

"In Heaven's name," replied Mr. Reeves, "if we are not to deal with it in an experimental way, how are we to deal with it at all?"

"Every good and great change in the world has been an experiment. The man who discovered America made an experiment. Every great scientific invention has been arrived at by experiment, and, in the same way, in legislation we have to make experiments."

The Minister of Labour admitted the imperfections of this bill. "It is ridiculous," he said, "to suppose that at one bound this Parliament can solve a problem that has puzzled the most earnest thinkers for generations." But he believed that, if the experiment had a fair trial, it would succeed, and that "New Zealand will have set an example to the civilised world which will be widely followed in days to come."

Mr. Reeves submitted his first bill to Parliament in 1892. It was offered again in 1893 and in 1894. Three times it passed the lower house before the upper house would allow it to become a law. So convincingly had the Minister of Labour marshalled the results of his studies of

Parliament Almost Unanimous 13

conciliation and arbitration in other countries, and defended his main point that compulsion was indispensable, that the bill at last, in 1894, passed without change in its fundamental principles, and with the concurrence of the leader of the opposition and several of its most important members — a most unusual circumstance in a country where party spirit runs as high as it does in New Zealand.

"I believe," the leader of the opposition said, "that we have to a great extent the very best bill that can be devised in the interest of the colony."

The act has now been in operation five years, and with such general approval that recent amending acts have been passed almost without dissent. The law was proposed as an experiment — it is still regarded as an experiment by its author, and even by the judges of the Arbitration Court and by the country — but so far it has

proved a workable experiment.

There has not been a strike by organised labour, with one insignificant exception, since its passage. It has harmonised all the labour troubles brought under its cognisance. The courts have been constantly strengthening themselves and the acts by their administration of it. Capital has not fled, but, on the contrary, industries of all kinds have been flourishing as never before. There have been a few attempts to evade or disregard the decisions of the courts; these the judges have proved themselves fully able to control and punish. Although the decisions have almost all been in favor of the men, because it is a time of prosperity and their demands have been made on a rising market, the employers have found no serious embarrassment in complying with them, and some of the employers are the strongest supporters of the measure.

To declare a new social right and to create a new court to enforce it in a field where there w r as nothing to guide and nothing to be copied, and where, still worse, all the authorities deny the right and predict complete failure for the enforcement, was certainly as bold a venture as reformer entrusted with power ever attempted. Merely to draft so unprecedented a law with such skill that it could go into practical operation as this has done, is a legislative feat of the highest order.

Speaking of the pains he had taken, Mr. Reeves told Parliament, "I have had this bill drafted, and in some cases re-drafted, and drafted and drafted again and again/'

A law essaying compulsory arbitration in South Australia has been on the books about the same time as the New Zealand law and remains

Failure in South Australia 1 5

a dead letter, not a single case when I was there having been tried under it.