Various - Essays in Liberalism
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Various >> Essays in Liberalism
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THE MORAL OBLIGATION OF INDUSTRIES
I do not underrate the difficulty of applying this principle of
industrial relief over the whole field of industry. There is the great
difficulty of defining an industry, or drawing the lines of demarcation
between one trade and another. I have not time to elaborate those
difficulties, but I consider that they constitute an insuperable
obstacle to anything in the nature of an Act of Parliament, which would
impose forcibly upon each industry the obligation to work out an
unemployment scheme. The initiative must come from within the industry;
the organisations of employers and employed must get together and work
out their own scheme, on their own responsibility and with a free hand.
And, if it happens in this way--one industry taking the lead and others
following--these difficulties of demarcation become comparatively
unimportant. You can let an industry define itself more or less as it
likes, and it does not matter much if its distinctions are somewhat
arbitrary. It is not a fatal drawback if some firms and work-people are
left outside who would like to be brought in. And if there are two
industries which overlap one another, each of which is contemplating a
scheme of the kind, it is a comparatively simple matter for the
responsible bodies in the two industries to agree with one another as to
the lines of demarcation between them, as was actually done during the
war by the Cotton Control Board and the Wool Control Board, with
practically no difficulty whatever. But for such agreements to work
smoothly it is essential that the industries concerned should be anxious
to make their schemes a success; and that is another reason why you
cannot impose this policy by _force majeure_ upon a reluctant trade. It
is in the field of industry that the real move must be made.
But I think that Parliament and the Government might come in to the
picture. In the first place, the ordinary national system of
unemployment relief, which must in any case continue, might be so framed
as to encourage rather than to discourage the institution of industrial
schemes. Under the Insurance Act of 1920 "contracting out" was provided
for, but it was penalised, while at the present moment it is prohibited
altogether. I say that it should rather be encouraged, that everything
should be done, in fact, to suggest that not a legal but a moral
obligation lies upon each industry to do its best to work out a
satisfactory unemployment scheme. And, when an industry has done that, I
think the State should come in again. I think that the representative
joint committee, formed to administer such a scheme, might well be
endowed by statute with a formal status, and certain clearly-defined
powers--such as the Cotton Control Board possessed during the war--of
enforcing its decisions.
But--and, of course, there is a "but"--we cannot expect very much from
this in the near future. We must wait for better trade conditions before
we begin; and, as I have already indicated, the prospects of really good
trade in the next few years are none too well assured. For a long time
to come, it is clear, we must rely upon the ordinary State machinery for
the provision of unemployment relief; and, of course, the machinery of
the State will always be required to cover a large part of the ground.
The liability which an industry assumes must necessarily be strictly
limited in point of time; and there are many occupations in which it
will probably always prove impracticable for the occupation to assume
even a temporary liability. For the meantime, at any rate, we must rely
mainly upon the State machinery. Is it possible to improve upon the
present working of this machinery? I think it is. By the State machinery
I mean not merely the Central Government, but the local authorities and
the local Boards of Guardians.
THE PRESENT MACHINERY OF RELIEF
At present what is the situation? Most unemployed work-people are
entitled to receive certain payments from the Employment Exchanges under
a so-called Insurance scheme, which is administered on a national basis;
some weeks they are entitled to receive those payments, other weeks they
are not; but in any case those payments afford relief which is
admittedly inadequate, and they are supplemented--and very materially
supplemented--by sums varying from one locality to another, but within
each locality on a uniform scale, which are paid by the Boards of
Guardians in the form of outdoor relief. Now that situation is highly
unsatisfactory. The system of outdoor relief and the machinery of the
Guardians are not adapted for work of this kind. They are designed to
meet the problem of individual cases of distress, not necessarily
arising from unemployment, but in any event individual cases to be dealt
with, each on its own merits, after detailed inquiry into the special
circumstances of the case. That is the function which the Guardians are
fitted to perform, and it is a most important function, which will still
have to be discharged by the Guardians, or by similar local bodies,
whatever the national system of unemployment relief may be. But for
dealing with unemployment wholesale, for paying relief in accordance
with a fixed scale and without regard to individual circumstances--for
that work the Guardians are a most inappropriate body. They possess no
qualification for it which the Central Government does not possess,
while they have some special and serious disqualifications.
In any case, it is preposterous that you should have two agencies, each
relieving the same people in the same wholesale way, the Employment
Exchanges with their scale, asking whether a man is unemployed, and how
many children he has to support, and paying him so much, and the
Guardians with their scale, asking only the same questions and paying
him so much more. It would obviously be simpler, more economical, and
more satisfactory in every way, if one or other of those agencies paid
the man the whole sum. And I have no hesitation in saying that that
agency should be the Central Government. Perhaps the strongest argument
in favour of that course is that, when relief is given locally, the
money must be raised by one of the worst taxes in the whole of our
fiscal system, local rates, which are tantamount to a tax, in many
districts exceeding 100 per cent., upon erection of houses and buildings
generally. It is foolish to imagine that any useful end is served by
keeping down taxes at the expense of rates.
Serious as is the problem of national finance, the fiscal resources of
the Central Government are still far more elastic and less objectionable
than those which the local authorities possess. I suggest, accordingly,
as a policy for the immediate future, the raising of the scale of
national relief to a more adequate level, coupled with the abolition of
what I have termed wholesale outdoor relief in the localities. What it
is right to pay on a uniform scale should be paid entirely by the
Central Government, and local outdoor relief should be restricted to its
proper function of the alleviation of cases of exceptional distress
after special inquiries into the individual circumstances of each case.
One final word to prevent misconception. I have said that our present
system of relief is unsatisfactory, and I have indicated certain
respects in which I think it could be improved. But I am far from
complaining that relief is being granted throughout the country as a
whole upon too generous a scale. Anomalies there are which, if they
continued indefinitely, would prove intolerable. But we have been
passing through an unparalleled emergency. Unemployment in the last two
years has been far more widespread and intense than it has ever been
before in modern times, and never was it less true that the men out of
work have mainly themselves to blame. But it has meant far less
distress, far less destruction of human vitality, and I will add far
less demoralisation of human character than many of the bad years we had
before the war. That is due to the system of doles, the national and
local doles; and in the circumstances I prefer that system with all its
anomalies to the alternative of a substantially lower scale of relief.
We are still in the midst of that emergency; and if we are faced, as I
think for this decade we must expect to be faced, with that dilemma
which I indicated earlier, I should prefer, and I hope that every
Liberal will prefer, to err by putting the scale of relief somewhat too
high for prudence and equity rather than obviously too low for humanity
and decency.
THE PROBLEM OF THE MINES
BY ARNOLD D. MCNAIR
M.A., LL.M., C.B.E.; Fellow of Gonville and Caius College, Cambridge;
Secretary of Coal Conservation Committee, 1916-1918; Secretary of
Advisory Board of Coal Controller, 1917-1919; Secretary of Coal Industry
Commission, 1919 (Sankey Commission).
Mr. McNair said:--Need I labour the point that there _is_ a problem of
the Mines? Can any one, looking back on the last ten years, when time
after time a crisis in the mining industry has threatened the internal
peace and equilibrium of the State, deny that there is something
seriously wrong with the present constitution of what our chairman has
described as this great pivotal industry? What is it that is wrong? If I
may take a historical parallel, will you please contrast the political
situation and aspirations of the working-class population at the close
of the Napoleonic wars with their industrial situation and aspirations
now. Politically they were a hundred years ago unenfranchised; more or
less constant political ferment prevailed until the Reform Bill, and
later, extensions of the franchise applied the Liberal solution of
putting it within the power of the people, if they wished it, to take an
effective share in the control of political affairs.
Industrially, their situation to-day is not unlike their political
situation a hundred years ago. Such influence as they have got is
exerted almost entirely outside the constitution of industry, and very
often in opposition to it. Their trade unions, workers' committees,
councils of action, triple alliances, and so forth, are not part of the
regular industrial machine, and too often are found athwart its path.
They are members of an industry with substantially no constitutional
control over it, just as a hundred years ago they were members of a
State whose destinies they had no constitutional power to direct.
This does not mean that a hundred years ago every working man wanted the
political vote, nor that now he wants to sit on a committee and control
his industry. It meant that a substantial number of the more enlightened
and ambitious did--a large enough number to be a source of permanent
discontent until they got it. The same is true to-day in the case of
many industries. Many men in all classes of society are content to do
their job, take their money, go home and work in their gardens, or
course dogs or fly pigeons. They are very good citizens. Many others,
equally good citizens, take a more mental and active interest in their
job, and want to have some share in the direction of it. This class is
increasing and should not be discouraged. They constitute our problem.
The Liberal solution of a gradually extended franchise has cured the
political ferment. Political controversy is still acute, and long may it
remain so, as it is the sign of a healthy political society. But the
ugly, ominous, revolutionary features of a hundred years ago in the
sphere of politics have substantially gone or been transferred to the
industrial sphere.
THE LIBERALISATION OF INDUSTRY
The same solution must be applied to that sphere. This does not mean
transferring the machinery of votes and elections to industry. It means
finding channels in industry whereby every person may exercise his
legitimate aspiration, if he should feel one, of being more than a mere
routine worker while still perhaps doing routine work, and of
contributing in an effective manner his ideas, thoughts, suggestions,
experience, to the direction and improvement of the industry. We have
satisfied the desire for self-expression as citizens, and we have now to
find some means of satisfying a similar desire for self-expression as
workers in industry. That is all very vague. Does it mean
co-partnership, profit-sharing, co-operative societies, joint
committees, national wages boards, guild socialism, nationalisation? It
may mean any or all of these things--one in one industry, one in
another, or several different forms in the same industry--whatever
experiment may prove to be best suited to each industry. But it must
mean opportunity of experiment, and experiment by all concerned. It must
mean greater recognition by employers of their trusteeship on behalf of
their work-people as well as their shareholders; greater recognition of
the public as opposed to the purely proprietary view of industry; and
recognition that the man who contributes his manual skill and labour
and risks his life and limb is as much a part of the industry as a man
who contributes skill in finance, management, or salesmanship, or the
man who risks his capital.
Coming to the mines, that is, the coal mining industry (with a few
incidental mines such as stratified ironstone, fireclay, etc., which
need not complicate our argument), the first step to the solution of the
problem of the mines, _i.e._ the collieries, the mining industry, is the
solution of the problem of the minerals. This distinction is not at
first sight obvious to all, but it is fundamental. The ownership and
leasing of the coal is one thing, the business or industry of mining it
is quite another. State ownership of the former does not involve State
ownership of the latter. That is elementary and fundamental. It lies at
the root of what is to follow.
Will you picture to yourself a section of the coal-mining industry in
the common form of the pictures one sees of an Atlantic liner cut neatly
in two so as to expose to view what is taking place on each deck. On top
you have the landowner, under the surface of whose land coal, whether
suspected or not, has been discovered. He may decide to mine the coal
himself, but more frequently--indeed, usually--he grants to some persons
or company a lease to mine that coal on payment of what is called a
royalty of so much for every ton extracted. Thereupon he is called the
mineral-owner or royalty-owner, and the persons or company who actually
engage in the business or industry of coal mining and pay him the
royalties we shall call the colliery-owners. Do not be misled by the
confusing term "coal-owners." Very frequently the colliery-owners are
called the "coal-owners," and their associations "coal-owners'
associations." That is quite a misnomer. The real _coal_-owner is the
landowner, the royalty-owner, though it may well happen that the two
functions of owning the minerals and mining them may be combined in the
same person. Below the colliery-owners we find the managerial staff;
below them what may be called the non-commissioned officers of the mine,
such as firemen or deputies, who have most important duties as to
safety, and below them the miners as a whole, that is, both the actual
coal-getters or hewers or colliers and all the other grades of labour
who are essential to this the primary operation.
THE QUESTION OF ROYALTIES
Coming back to the royalty-owner, you will see his functions are not
very onerous. He signs receipts for his royalties and occasionally
negotiates the terms of a lease. But as regards the coal-mining
industry, he "toils not, neither does he spin." I do not say that
reproachfully, for he (and his number has been estimated at 4000) is
doubtless a good husband, a kind father, a busy man, and a good citizen.
But as regards this industry he performs no essential function beyond
allowing the colliery-owners to mine his coal.
What is the total amount annually paid in coal royalties? We can arrive
at an approximate estimate in this way: Average output of coal for five
years before the war, roughly, 270,000,000 tons; average royalty, 51/2d.
per ton, which means, after deducting coal for colliery consumption and
the mineral rights duty paid to the State by the royalty-owner, roughly
L5,500,000 per annum paid in coal royalties. Regarding this as an
annuity, the capital value is 70 millions sterling if we allow a
purchaser 8 per cent. on his money (12.5 years' purchase), or 551/2
millions sterling if we allow him 10 per cent. (10 years' purchase). For
all practical purposes the annuity may be regarded as perpetual.
Now the State must acquire these royalties. That is the only practicable
solution, and a condition precedent to any modification in the structure
of the coal-mining industry so long as the participants in that industry
continue unwilling or unable to agree upon those modifications
themselves. _Why and how?_ (1) First and foremost because until then the
State is not master in its own house, and cannot make those experiments
in modifying conditions in the industry which I believe to be essential
to bring it into a healthy condition instead of being a standing menace
to the equilibrium of the State--as it was before the war, and during
the war, and has been since the war; (2) the technical difficulties and
obstacles resulting from the ownership of the minerals being in the
hands of several thousand private landowners and preventing the economic
working of coal are enormous. You will find abundant evidence of this
second statement in the testimony given by Sir Richard Redmayne and the
late Mr. James Gemmell and others before the Sankey Commission in 1919.
How is the State to acquire them? Not piece-meal, but once and for all
in one final settlement, by an Act of Parliament providing adequate
compensation in the form of State securities. The assessment of the
compensation is largely a technical problem, and there is nothing
insuperable about it. It is being done every day for the purpose of
death duties, transfer on sale, etc. Supposing, for the sake of
argument, 551/2 millions sterling is the total capital value of the
royalties, an ingenious method which has been recommended is to set
aside that sum not in cash but in bonds and appoint a tribunal to divide
it equitably amongst all the mineral-owners. That is called "throwing
the bun to the bears." The State then knows its total commitments, is
not involved in interminable arbitrations, and can get on with what lies
ahead at once, leaving the claimants to fight out the compensation
amongst themselves. This does not mean that the State will have to find
551/2 millions sterling in cash. It means this, in the words of Sir
Richard Redmayne: "The State would in effect say to each owner of a
mineral tract: The value of your property to a purchaser is in present
money Lx, and you are required to lend to the State the amount of this
purchase price at, say, 5 per cent. per annum, in exchange for which you
will receive bonds bearing interest at that rate in perpetuity, which
bonds you can sell whenever you like."
The minerals or royalties being acquired by the State, what then? For
the first time the State would be placed in a strategic position for
the control and development of this great national asset. Having
acquired the minerals and issued bonds to compensate the former owners,
the State enters into the receipt of the royalty payments, and these
payments will be kept alive. We must now decide between at least two
courses: (_a_) Is the State to do nothing more and merely wait for
existing leases to expire and fall in, and then attach any new
conditions it may consider necessary upon receiving applications for
renewals? Or (_b_) is the State to be empowered by Parliament to
determine the existing leases at any time and so accelerate the time
when it can attach new conditions, make certain re-grouping of mines,
etc.? My answer is that the latter course (_b_) must be adopted. The
same Act of Parliament which vests the coal and the royalties in the
State, or another Act passed at the same time, should give the State
power to determine the then existing leases if and when it chooses,
subject to just compensation for disturbance in the event of the
existing lessees refusing to take a fresh lease.
Why is course (_b_) recommended? (i) Most leases are granted for terms
varying from thirty to sixty years. They are falling in year by year,
but we cannot afford to wait until they have all fallen in if we are
effectively to deal with a pressing problem. (ii) The second objection
to merely waiting is that some colliery-owners (not many) might make up
their minds not to apply for a renewal of their leases, and might
consequently be tempted to neglect the necessary development and
maintenance work, over-concentrating on output, and thus allowing the
colliery to get into a backward state from which it would cost much time
and money to recover it--a state of affairs which could and would be
provided against in future leases, but which the framers of existing
leases may not have visualised. I do not suggest that upon the
acquisition by the State of the minerals all the existing leases should
automatically determine. But the State should have power to determine
them on payment of compensation for disturbance.
A NATIONAL MINING BOARD
At the same time a National Mining Board consisting of representatives
of all the interested elements, colliery-owners, managerial and
technical staffs, miners, and other grades of workers, and coal
consumers would be formed (the Mines Department already has a National
Advisory Committee); the mining engineering element must be strongly
represented, and provision must be made for first-class technical advice
being always available. It would then be the business of the National
Mining Board to work out its policy and decide upon the broad principles
which it wishes to weave into the existing structure of the coal-mining
industry by means of its power of granting leases. The following
principles will readily occur to most people, and are supported by
evidence which is, in my humble judgment, convincing, given before the
various commissions and committees which have inquired into this
industry during recent years.
Firstly, More Amalgamation or Unification of Collieries. At present
there are about 3000 pits owned by about 1500 companies or individuals,
and producing an aggregate output of about 250 million tons per annum.
Already there have been many large amalgamations. (i) Many fortunately
situated small pits making a good profit will be found, but on the whole
small collieries are economically unsound. In many cases at present the
units are too small, having regard to the class of work being done, to
the cost of up-to-date machinery and upkeep and to the variableness of
the trade. Broadly I believe it to be true that the larger collieries
are as a general rule more efficient than the smaller ones. (ii) In
respect of co-operation in pumping, larger units would frequently make
for efficiency and reduced cost; Sir Richard Redmayne, speaking of South
Staffordshire before the Sankey Commission, said that we had already
lost a large part of that coalfield through disagreement between
neighbouring owners as to pumping. (iii) The advantages of larger units
in facilitating the advantageous buying of timber, ponies, rails,
machinery and the vast amount of other materials required in a colliery
will be obvious to most business men.
I do not propose to chop up the coalfields into mathematical sections
and compulsorily unify the collieries in those sections. I am merely
laying down the broad principle that to get the best out of our national
asset the National Mining Board must bring about through its power of
granting leases the formation of larger working units than at present
usually exist. The geological and other conditions in the different
coalfields vary enormously, and these form a very relevant factor in
deciding upon the ideal unit of size. It is conceivable that in certain
districts all the colliery-owners in the district, with the aid of the
National Mining Board, would form a statutory company on the lines of
the District Coal Board, described in the Report made by Sir Arthur
Duckham as a member of the Sankey Commission. One advantage accruing
from unification (to which recent events have given more prominence) is
that it mitigates the tendency for the wages of the district to be just
those which the worst situated and the worst managed colliery can pay
and yet keep going, and no more. This tendency seems to be recognised
and mitigated in the Agreement of June, 1921, on which the mines are now
being worked. Secondly, Provision for Progressive Joint Control, that
is, for enabling all the persons engaged in the mining industry either
in money, in brains, or in manual labour, or a combination of those
interests, gradually to exercise an effective voice in the direction of
their industry.
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