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INDUSTRIAL
RECONSTRUCTION



EDITED BY

HUNTLY CARTER





;



L



UNIVERSITY OF CALIFORNIA
AT LOS ANGELES




GIFT OF

Dr . ERNEST C . MOORE



INDUSTRIAL RECONSTRUCTION



INDUSTRIAL
RECONSTRUCTION

A SYMPOSIUM

ON

THE SITUATION AFTER THE WAR

AND

HOW TO MEET IT



Edited by HUNTLY CARTER



NEW YORK
E. P. DUTTON AND COMPANY

68i FIFTH AVENUE
1918



First published in igij



{All rights reserved}



CONTENTS



PAGE

xi



Preface

^ The State View :

\^ (a) National o

^ Hon. Sir John Cockburn, K.C.M.G.

(b) Imperial - - - _ 5
P. H. Kerr.

J (c) International g

i Sir Graham John Bower, K.C.M.G.

^ R. W. Seton-Watson.

^ The Views of Capital :

(a) Engineering ^_

^ Sir Maurice Fitzmaurice, C.M.G M A

^ M.A.I., LL.D. '

Sir Robert Hadfield, F.R.S D Met
D.Sc., M.Inst.C.E. " "'

(6) Shipbuilding

Sir Benjamin Browne, D.L.. D C L
J.P., M.I.C.E. ■ ■ "

Sir Archibald Denny, Bart TP

W. L. Hichens.
H. B. Rowell.

215128



vi CONTENTS

PAGE

(c) Mining 62

Sir Hugh Bell, Bart., D.L., D.C.L.,
LL.D.

{d) Manufacture - - - 70

Edward Cadbury.

{e) Trade - - 73

Ernest J. P. Benn.
Walter Hazell.

(/) Transport 89

F. Dudley Docker, C.B.
(g) Federation - - - 91

R. T. Nugent.
{h) Research - - - 94

John Hilton.

Labour Views c

{a) Organised Trade Unionists, Syndicalists

and Guildsmen _ . . . 103

John F. Armour.
George Barker.
F. S. Button.
W. N. Ewer.
Charles Hobson.
Thomas Johnson.
T. E. Naylor.

{&) Parliamentary Representatives - - I37
James O'Grady, M.P.
F. W. Jowett, M.P.



CONTENTS vii

PAGE

(c) Educationalists - - - - - 138
H. Sanderson Furniss.
J. MacTavish.

Economic Views :

{a) Political : Free Trade - • - - 151
Harold Cox, M.A.

(&) Industrial :

(i) Group ; National Guildsmen - 159
G. D. H. Cole.
W. MeUor.
Maurice B. Reckitt.

(2) Individual - - - 187
Rev. A. J. Carlyle, M.A., D.Litt.

Hilaire Belloc.
C. H. Grinling.
Professor E. Lipson.
Professor T. A. Smiddy.

(c) Social 209

Dr. M. D. Eder.

J. St. George Heath.

G. Bernard Shaw.

[d) Financial » - - - - -214

Emil Da vies.
Raymond Radclyffe.
John Zorn.



vui CONTENTS

PAGE

{e) Statistical - - - 224

Professor A. L, Bowley, Sc.D., F.S.S.,
F.E.S.

F. W. Hirst.

(/) Agricultural - - - - - - 226

Stanley M. Bligh (Brecon).

(g) Geographical - 229

Professor H. J. Fleure.

General Views :

(a) Sociology 233

Sir Edward Brabrook, C.B.
Mrs. Victor V. Branford.
Miss B. L. Hutchins.
H. G. WeUs.

(b) Psychology - 241

Dr. Havelock ElHs.
M. W. Robieson.

(c) Logic 247

W. Anderson, M.A.

{d) Philosophy :

(i) Aesthetic 253

L. March Phillipps

(2) Moral - - - 257

Dr. Bernard Bosanquet, M.A.,
LL.D., D.C.L.



CONTENTS ix



PAGE



(e) Religion 258

Hon. and Rev. James Adderley.

Rev. William Temple.
(/) Art and Craft 263

C. R. Ashbee, F.R.I.B.A.

T. Raffles Davison, A.R.I.B.A.

A. J. Penty.

(g) Law 278

Sir Roland K. Wilson, Bart, M.A.,
LL.M.

{h) Politics :

(i) Democratic . . - - 279

G. K. Chesterton.
Edward Carpenter.

(2) Republican 281

Dr. Arthur Lynch, M.P.

(3) National (Ireland) - - - 284

George Russell (" M.")

Appendices :

(a) Results of the " 48-hours week " System

as worked by Hadfields, Ltd., Sheffield 289

(b) Suggestions for a Land Policy - - 291

Outhned by Mr. Stanley Bligh (Brecon).



PREFACE

This book contains the results of an inquiry recently
undertaken to ascertain the opinions held by a large
number of distinguished public persons on one of the
greatest, if not the greatest, of the problems this
country must face after the War. I refer to the
problem of the industrial situation.
The questions were as follows ;

(i) What in your opinion will be the
industrial situation after the War as regards
[a) Labour ; (6) Capital ; (c) the Nation as a
single commercial entity ?

(2) What in your view is the best policy
to be pursued by {a) Labour ; {b) Capital ;
(c) the State ?

The contributions appeared during the six months
beginning November, 1916, and ending April, 1917,
serially in the New Age, with the exception of some
that arrived when this book was going to press, and
additions with which certain contributors increased

xi



xii PREFACE

their replies. This matter is now pubUshed for the
first time.

Let me at the outset say that I owe sincere thanks
for the contributions, and for the courtesy and con-
sideration I received from every quarter from which I
invited contributions. As will be seen in a glance at
the Hst of contributors to the present symposium, the
contributions have come from distinguished men and
women all of whom have turned from very pressing
work of national, and other immediate importance,
to honour me by acceding to my request for their
views.

I may say it is not a part of the purpose of this pre-
face to attempt to summarise the contributions, even
though it were possible to do so in a short space. And
I do not think I need say more about their arrange-
ment than no strict rule has been observed. There was
bound to be a difficulty in classifying the contributors,
seeing that many of them might very easily be placed
in several classes. Thus, a certain national guildsman
might also be considered as an art and craft guilds-
man and a Labour guildsman. So, for the sake of
clearness and ready reference, I have pursued the
general plan of the inquiry, and have placed contri-
butors in the order of their special interests.
I cannot, of course, claim for myself any special



PREFACE xiii

merit in conducting the symposium, although it is
certainly not the first by many, that I have had the
good fortune to conduct in significant London journals.
But if a comprehension of the profound nature of the
problem to be solved, an appreciation of the value of
the contributions sought for, and the expenditure of
time and thought in obtaining them, and the posses-
sion of tact and patience at a moment when such
qualities are most desirable, are qualifications for
success, I greatly claim them. On the other hand,
with all the pertinacity in the world, nobody would
ehcit the variety, sincerity, ability and authority of
the following contributions without the existence and
active assistance of something more compelHng than
himself, at this moment. I refer to the national
interest. Undoubtedly the minds of men in this
country are intensely moved by this interest. They
are indeed seriously and deeply moved in the direction
of uneasy yet hopeful speculation concerning the
problems of the future, and the industrial problem
more than all. Is it peace that the War will bring, or
is it a worse war than that in which we are engaged ?
And if peace, how shall we find it ? What new feeUng
and thought, what new energy, what taste and refine-
ment, aided by extended knowledge, will announce
the appearance of this healthy movement ? What



xiv PREFACE

changes effected in the minds of industriaHsts will
enable them to understand each other, and leave them
to fehcitate themselves on the discovery of the noble
uses of harmony ? And equally, undoubtedly, all men
of good-will — employer and employed, professor and
student of economics — have been anxious to contri-
bute their quota of suggestion, criticism or specula-
tion, as becomes the good citizen on an occasion such
as the War presents. It is to this, in short, that I
owe the existence of the opinions here offered to the
public in a permanent form.

I should like to close this note of appreciation
without a discordant word ; but my readers may wish
for an explanation of an omission from my contri-
butors of all but a very few of our prominent Labour
M.P.'s, and official representatives of trade unions,
especially Women's Liberal, Social and Industrial
organisations. May I say that it is not for want of
effort and invitation on my part ; nor, I am sure, for
lack of courtesy on theirs. The fact remains with all
its significance that the leading members of the Labour
and SociaHst movement have as a body decHned, as
they say, to " commit themselves " to the expression
of an opinion upon a problem that as closely concerns
them as anybody in the world ; is, indeed, actually
their own. I cannot beUeve that this intellectual



PREFACE x\r

timidity is of good augury for their share in a practical
problem which seeks solution through eloquent out-
spokenness, and gains nothing from paths that are
dumb. But having done my best I shall continue to
hope for the best.

HuNTLY Carter.



THE STATE VIEW



{a) NATIONAL

Hon. Sir John Cockburn, K.C.M.G.

(&) IMPERIAL

P. H. Kerr

(c) INTERNATIONAL

Sir Graham John Bower, K.C.M.G.
R. W. Seton-Watson



INDUSTRIAL
RECONSTRUCTION

{a) NATIONAL

Hon. Sir John Cockburn, K.C.M.G.

There is every probability tliat the enmity which
so often exists between Capital and Labour will be
lessened by the War. The vast majority of men and
women in all classes are right-minded and well-disposed.
They readily arrive at a mutual understanding when
brought into contact with one another. It is ignor-
ance of the conditions under which our fellow-mortals
live which is the most frequent cause of estrangement,
for, as the French proverb puts it, " To know all is to
pardon everything." The sympathy engendered by a
collective effort against a common foe has made the
whole nation, and, indeed, the Empire, kin. Young
bloods from Eton are working in munition factories
alongside of artisans. Ladies of high rank deem it an
honour to perform duties, however humble, in the
service of the State. The lady of the manor in our
neighbourhood takes her share of what would other-
wise be regarded as menial tasks at the local military
hospital, and sometimes acts as kitchen-maid to her



4 INDUSTRIAL RECONSTRUCTION

own cook. There is no cement like that of kindred
blood poured out in common cause. The trenches and
the battlefield are wonderful assimilators. It is but
reasonable to suppose that the camaraderie of mutual
sacrifices and dangers will yield a harvest of kindliness
which will not be without influence in reconciling
Capital and Labour. When, after the War, inter-
national rivalry again takes the normal form of com-
petition in trade and industry, it will be recognised as
never before that internecine strife in the industrial
world is equivalent to a subsidy to the enemy. The
natural law of a successful social organism demands
co-operation within as a means towards effective
competition with outside bodies.

Two problems in particular confront the nation as
an industrial unit. When the anticipated peace
arrives : — (i) The absorption in industry and com-
merce of our returning heroes ; (2) the permanent
employment of the women whom the War has called
to active service. To these ends every industry which
can be profitably carried on in this country must be
encouraged. The old problem in the industrial world
used to be ; What is to be done with our boys ? It
will then be : What is to be done with our men and
our women ? Agriculture, the foundation industry,
must at last receive fair play. Small holdings should
be everywhere available, under the stimulus of a free-
hold. Deer forests on agricultural land will be un-
thinkable. The ancient prophetic denunciation of
those who join house to house and land to land, till
they dwell alone in the midst of the land, must be
rescued from oblivion and given a practical appHca-
tion. Trade must, whenever possible, be kept in the



THE STATE VIEW 5

family. Great Britain must cease the ruinous habit of
keeping open house for enemies. It was the granting
of our vast markets to Germany on more favourable
terms than to our own people that enriched our
foes and placed them in a position to challenge the
world. Universal experience has proved that the
only effective way to encourage industry is by means
of a tariff. It is regarded in the Dominions as a fallacy
to suppose that it was Free Trade that made England
great. Her industrial supremacy was built up by a
rigid system of Protection, and it is under Free Trade
that the lead in many of the greatest industries was
lost. The tariff will have to be in several grades —
preference within the Empire, most-favoured treat-
ment for Allies, a special tariff for neutrals, with addi-
tional duties for enemy countries. A mark of origin
to distinguish goods made within the Empire is also
a common-sense and necessary step to which the most
rigid Free Trader can take no exception. Courts of
industrial conciliation and arbitration should be
established. These should be easy of access, impartial j
in constitution, and speedy in decision. The in-
dustrial peace must be kept inviolate. Any infraction
should be regarded as an offence at least equal to
personal injury. Many of our forefathers thought it
absurd that the State should interfere to prevent
duelling. Industrial strife is a much greater menace
to the welfare of a country than private quarrelling.
The barbarous methods of strikes and lock-outs should
be superseded by more civilised procedure. It is to
the permanent interest of both Labour and Capital
to institute laws to this end, and to visit any violation
of them with condign and impartial punishment.



6 INDUSTRIAL RECONSTRUCTION

(b) IMPERIAL

Mr. p. H. Kerr

(Editor, The Round Table)

In regard to the first of your questions, I should say
that we should go through a considerable period of
unrest after the War. This unrest, however, I think,
will arise, not from any revolutionary movement, but
from the inevitable readjustment in the points of view
and programmes of all concerned in industry, owing
to the experience gained in the War. Hitherto a great
part of the energy and organisation which ought to
have been spent in productive enterprise has been
spent in the struggle between employer and employed
about the division of the product of their joint labours,
while the public looked the other way, and only paid
attention when the row threatened to endanger the
public peace or their own supplies. We have all learnt
in the War how fatal this attitude of mind must be for
everybody, because we now see that industry is in
essence national service— a service which must be
conducted for the public benefit, and in which every-
body must give a normal day of his best work in
return for a fair day's pay. The readjustment of
programmes and policies to this new idea will cause
unrest ; but if the motive of public service really
overrules that of private interest among both employer
and employed, I do not believe that it will produce
serious trouble.

As to the practical measures of reform. I don't
believe in universal nationalisation. I have served on a



THE STATE VIEW 7

State railway, and lost faith in public management as
a universal panacea. There must be public super-
vision under certain conditions, and in the case of
certain monopolies, public ownership, perhaps ; but
that is as far, I think, as it is worth while to go, as a
general rule. For the rest, I believe that the problem
resolves itself down to finding the organisations best
suited to give effect to the principle that industry must
be conducted as a public service. The purpose of
industry ought to be, I suggest, to provide :

(i) Adequate and ever-improving conditions of life
for all its employees.

(2) Reasonable remuneration for capital.

(3) Improving products at reducing prices for the
consumer.

That is conducting industry as a public service, and
in industries conducted from this point of view you
can also expect all employees to work their best during
normal hours, and to surrender regulations and prac-
tices which restrict output.

The question is, how are you to get all industries
conducted on these lines ? In great measure it can
only come from a great change in public opinion, from
a greatly increased sense of social responsibility and
social service among all citizens. But it will also
mean, I think, an alteration in the present system of
appointing the boards of management. The re-
sponsibility now rests with Capital alone. That
responsibility will gradually, I think, have to be
shared with Labour and the community. But it is
difficult to see exactly how this is to be done, especially
in small scale industries. In any case, no good can
come from placing difficulties in the way of the board



8 INDUSTRIAL RECONSTRUCTION

of management doing its own work. That board must
always be composed mainly of persons expert in
management, and, provided they have the public
welfare in view, they must have full powers of control,
and their instructions must be loyally carried out.
Otherwise, industry will fail, and there will neither
be high wages, fair dividends, nor reasonable prices
for anybody. But the first thing is to get recognition
for the general principle that industry must be con-
ducted as a public service for the benefit of all con-
cerned, and that all engaged in it must give the best
work of which they are capable. Once this spirit
prevails in industry, it will not be difficult to find the
form of organisation necessary to give permanent
effect to it.



(c) INTERNATIONAL
Sir Graham John Bower, K.C.M.G.

I must begin by assuming certain axioms which are
capable of proof, but the space available does not
permit me to give as full and complete proof as I
would wish. They are :

(i) That wages are dependent on production. A
man who sits idle in his garden does not produce
anything for himself, nor does he earn wages.

(2) That the amount and value of the products of
labour are enormously increased by capital. A man
digging with a pointed stick does not cultivate as
much land as a man digging with a spade. The spade
is a form of capital.

(3) That all wages are paid from capital. If a man



THE STATE VIEW 9

puts a thousand young cabbages into the ground,
he is no richer. Whilst they are growing and until
they are marketed he has to live. During the interval
he lives on savings, either his own or, if he is paid
wages, somebody else's savings.

(4) That Bastiat's Law is true. That law will be
found at page 183 of his " Harmonies," and is as
follows :

" In proportion to the increase of capital, the
absolute share of the total product faUing to the
capitahst is augmented, and his relative share is
diminished ; while, on the contrary, the labourer's
share is increased, both absolutely and relatively."

The following figures taken from Atkinson's " Dis-
tribution of Products " illustrate this law :

Wages in New England Cotton Factories

Wages per operative per year : 1830, $164 gold ;
1884, $290 gold.

Profit per yard necessary to be set aside in order
to pay 10 per cent, on capital used : 1830, $2-400 gold ;
1884, $0-408 gold.

Yards per operative per year : 1830, 4,321 ; 1884,
28,032.

Cost of labour per yard : 1830, $1-900 gold ; 1884,
$1-070 gold.

That is to say, the increased capital invested in the
factory in the shape of labour-saving machinery per-
mitted the payment of higher wages.

This law must, however, be read in connection with
the law of diminishing returns. For, though the law
of diminishing returns has a more frequent application



10 INDUSTRIAL RECONSTRUCTION

to agriculture than to manufactures, it is extended to
manufactures under certain conditions.

(5) That taxation and the rate of interest on capital
enter into the cost of production. In this connection
the word " capital " includes " credit." That is to
say, I am treating debentures and shares as the same
thing and classing both as capital. The costs of
production, let us say, of a pair of boots may be thus
stated :

Cost of production : (a) Interest on capital ; (6)
self-insurance, being an addition to the market rate to
cover risk of undertaking, which risk may be poUtical,
or may be inherent in the undertaking ; (c) cost of
raw or semi-manufactured material ; {d) taxation ;
(e) labour.

Sale price : The sale price therefore must he a + b +
c + d -\- e, and this price in the case of an exporting
industry cannot be influenced by domestic legislation.

With these premises or postulates I consider the
" after the war " conditions.

The debt of the United Kingdom after the war will
probably aggregate 4,000 millions, or something
approaching that figure. In addition there will be a
heavy annual charge for pensions. The debt and
pensions will probably involve a charge of about
220 millions annually. Assuming that the peace
Budget, exclusive of debt and pensions, can be reduced
to 130 millions, we get a Budget of 350 millions which
will be a first charge on production and on all industry.

Nor is this all. In all the belligerent States there
will be a similar charge on production. Austria-
Hungary is practically bankrupt now, and in Germany,
owing to the German system of finance, the State is



THE STATE VIEW ii

practically the mortgage creditor of the population.
That is to say, by a roundabout process, the State has
issued paper money and contracted paper debt on
the security of private capital.

The consequence of this general indebtedness will
be:

(a) A heavy tax on production in the United King-
dom, and

(&) A diminished purchasing power in all the belli-
gerent nations.

Repudiation, though it would give temporary relief
to the Governments, would aggravate the impoverish-
ment of the people. For it would destroy both credit
and capital. The wages fund, either in the shape
of credit or capital, would vanish.

This diminution of trade is no new feature. The
effect of the Peace of 1815 was to reduce our import
trade by 20 per cent, and our export trade by 16 per
cent. The shipping industry will certainly be affected
if the same or greater reductions take place after the
future peace. But that is only one item. Every
industry must feel the weight of taxation and the
scarcity of capital.

Nor is this all. It is bad enough that the purchasing
power of Europe should be destroyed by the impover-
ishment of the belligerent nations ; but if I understand
the present political tendency, there will be a move-
ment artificially to restrict what commerce there will
be left. When it is remembered that the only potash
mine in Europe is to be found in Saxony, and that
potash is necessary to agriculture, the effect of pro-
hibition or of import duties on potash and on agri-
cultural production becomes apparent. But this is



12 INDUSTRIAL RECONSTRUCTION

only one item in the difficult problem of agricultural
development.

The most serious problem is that of employment and
wages. Now I have stated, and I think there is no
need to support the statement by proof, that all wages
are paid from capital. If a man is riveting the plates of
an Atlantic steamer, his wages are paid from capital.
For the ship cannot earn anything until launched and
equipped for sea. And it is the same with a bricklayer
or any other workman. The return does not reach
the capitalist until the job has been finished. It
follows, therefore, that capital should be attracted
to England, not frightened out of England.

Moreover, the interest on capital and the self-
insurance of the capitahst all enter into the cost of
production, so everything should be done to keep
interest down. This can only be done by granting
security and inspiring confidence. Taxation must be
heavy, but, if borrowing ceases, then credit and con-
fidence will be restored. Similarly, the cost of material
should not be artificially increased by import duties.
For import duties are paid for from the wages bill.

The selling price of any given article on the world's
market may be taken as a constant. At all events, it
cannot be influenced by domestic legislation. That
being so, the cost of production is represented by (a)
interest on capital, including self-insurance ; {b) cost of
material ; (c) labour. If {a) or (b) be artificially in-
creased, then (c) labour must be decreased. For no
man can produce at 21s. and sell at 20s.

I consider it vital, therefore, to maintain our Free
Trade policy, to stop borrowing, and restore credit as
soon as possible.



THE STATE VIEW 13

But there are, of course, many Utopian schemes in
the field.

The Socialists believe in collectivist Socialism, and
hope that the State control necessitated by war con-
ditions will continue in peace. I believe that they
are profoundly mistaken, and that to continue State
control would be disastrous to all, but especially to the
working man. No one who has had experience as I
have had of Government management can doubt this.
It has been proved over and over again by the test


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Online LibraryHuntly CarterIndustrial reconstruction; a symposium on the situation after the war and how to meet it → online text (page 1 of 20)