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class alone is capable of bringing to the task the
highest qualities of training, impartiality and judg-
ment. Out of the two hundred and forty arbitrations
ranging from 1803 to 1897, which they investigated,
only in one case, in an arbitration for a new agreement
between employers and employed, had a member of
the wage-earning class been chosen as 'umpire.*
* See Webb, Industrial Democracy, p. 231,



CONCILIATION v. AKBITRATION. 31

As to the second point, whether the umpire should
be a permanent officer, or chosen to decide a particular
case, there can be no hesitation in saying that he should
be selected by the board with a tenure of office the same
as the board. If no appointment is made until a dis-
pute has arisen, a spirit of struggle once being in the
air, it is very improbable that the board will be able to
agree in the appointment of an umpire, and it will be
necessary to ask an outside person or body to nominate
one. Generally the appointments made by such out-
side person or body, as for example by the Speaker
of the House of Commons or by the Board of Trade,
are satisfactory, but still it is not surprising
to find that one party sometimes refuses to agree to
arbitration at all, when it does not know who the
arbitrator is to be. On the other hand, if a
board when first elected cannot agree in the
appointment of an umpire, there is not the same
objection to asking an outside person or body to
nominate one, for in this case, when a dispute does
arise, the parties, before accepting arbitration, know
who the umpire will be. In all cases it is best if the
board can agree among themselves in the choice of
an arbitrator, as they will then have more con-
fidence in him and will be less likely to be dissatisfied
with his decisions.

What has been discussed above is a real diffi-
culty of arbitration, but it can at least be satisfactorily
solved. The same, unfortunately, cannot be said of
what is now about to be mentioned. The fundamental
difficulty in disputes arising out of the terms of future



32 CONCILIATION AND ARBITRATION.

contracts is the want of principle by wliicli the arbi-
trator can determine his decision ; it is hardly
possible to find a basis upon which to make awards
and there is also a deficiency of data for the arbitrator
to work upon. The difficulties of the arbitrator were
once well expressed by Judge Ellison, when acting as
umpire in the South Yorkshire Collieries Arbitration,
1879.*

" It is for the one side to put the men's wages as high
as it can. It is for the other side to put them as low
as it can. And when you have done that, it is for me
to deal with the question as well as I can ; but on what
principle I have to deal with it, I have not the slightest
idea. There is no principle of law involved in it. There
is no principle of political economy in it. Both masters
and men are arguing and standing upon what is com-
pletely within their rights. The master is not bound
to employ labour, except at a price he thinks will pay
him. The man is not bound to work for wages which
won't subsist him and his family sufficiently and so forth.
You are both within your rights and that's the diffi-
culty I see in deahng with the question."

Practically the arbitrator is obliged to take a
great many things into consideration : the movements
in demand and supply of labour and product ; the
keenness of competition ; the alterations in the price
of the product ; the living wage required by the
workman ; and the length of training the skilled
mechanic has undergone. Besides the true facts of the
case, or as many of them as have been explained

* The words are taken from the Report of the Arbitration,
p. 49. They are quoted in Webb, Industrial Democracy,
p. 229,



CONCILIATION v. AEBITRATION. 33

to the umpire, some account must also be taken
of the fighting forces of the two sides. A very
common thing for the arbitrator to do, is to " split
the difference," i.e., award a wage which is the mean
between the rate demanded and the old rate, or the
rate demanded by the other party, as the case may
be. It often happens that when the men demand
an increase the masters call for a reduction of wages.
On the face of it this seems ridiculous, because
trade must have become either better or worse, and
although both parties may differ as to the extent
of the alteration, it seems incredible that they
should difier as to its direction. The chances
are a thousand to one that they do not,
but, knowing that the arbitrator will probably
" split the difEerence," it is to the masters'
advantage to make a demand in the other direc-
tion in order to reduce the amount of the rise
awarded to the men. One party is as bad as the
other in demanding extreme rises and reductions, and
the system undoubtedly cultivates a spirit of anta-
gonism between the two parties. " Splitting the
difierence " is in every way a most undesirable
practice, and the sooner the rules of the permanent
boards forbid it, the better, for then alone will each
side act in a spirit of moderation.*

Seeing that the decision is not a question of right
and wrong, but one of opinion based upon the facts

* One of the rules of the Board of Concihation of the
Federated Districts in the Coal Industry forbids the
" sphtting of differences." Though I know of no other
rules doing so, it is very probable that some exist.-

D



34 CONCILIATION AND ARBITRATION.

laid before the arbitrator, it is not surprising that
it does not always give satisfaction to both parties.
In fact one can almost say, that it is hardly ever
satisfactory to both parties, which is easily under-
stood when one remembers that arbitrations usually
occur in connection with wages problems. An
arbitration may be said to be successful when the
decision is accepted, and, generally speaking, awards
are very seldom repudiated in this country. The
acceptance of an award is often facilitated if it
stipulates a minimum wage and possibly also a
maximum wage.*

An advantage of conciliation is, that there is not
the same likelihood of a decision being rejected, seeing
that both parties have participated in drawing up the
agreement. The question of the repudiation of
an arbitration decision is closely connected with that
of its enforcement, but the discussion of this point
will be deferred till Chapter V.

It may be asked whether the difficulties of arbitra-
tion are not so great as to be insuperable. This is
certainly not so, for arbitrations are often successful,
largely, perhaps, because all the difficulties do not
arise simultaneously. But even if arbitration
is successful, conciliation is still preferable by a
long way, though it is necessary to have some

* Mr. Thomas Ashton, secretary of the Miners' Federa-
tion, is of the opinion that if a minimum wage had not
been granted by the owners in 1893, the majority of the
men would not have agreed to the terms of the settlement.
See M'Pherson, Voluntary Conciliation and Arbitration in
Great Britain, p. 482. _



CONCILIATION v. ARBITRATION. 35

provision to resort to arbitration in those extreme
cases where a deadlock may otherwise arise. Em-
ployers, employed and the general public are almost
unanimous in preferring conciliation to arbitration,
but want of space forbids me to quote more than two
or three of the most authoritative opinions. R. Spence
Watson, the well-known arbitrator, expressed himself
as follows : — *

" Arbitration is better than striking or locking out,
but inferior to conciliation. Industrial peace in any
form is better than industrial war."

The next opinion I quote is that of the Indiana

Labour Commission. f

" The experience of the Commission proves that con-
ciliation rather than arbitration is the more effective and
satisfactory method of settling disputes between capital
and labour. . . . Men are adverse to leaving questions
involving the correctness of their methods and the well-
fare of their business to the judgment of others and
especially when the latter may have only a rudimentary
knowledge of the intricate matters which labour contro-
versies usually involve. The results are very different
where successful efforts at conciliation are exerted.
The contestants meet, talk over grievances, discuss
the interests of the business involved, come to a better
knowledge of each other's wishes and needs, reconcile
their conflicting opinions, and thus pave the way to
mutual concessions and satisfactory agreements."

My last quotation is from the Report of the New York

State Board of Mediation and Arbitration for 1899.

* Ironworkers' Journal, June, 1895. Quoted in Webb, In-
dustrial Democracy, p. 241 n.

f Report of the Indiana Labour Commission 1897-8, quoted
in the Reports of the American Industrial Commission,
Vol. XVII., p. 435.

d2



36 CONCILIATION AND AKBITRATION.

" More is accomplislied by mediation than by arbitra-
tion. The board frequently finds one party or the
other to a controversy, and sometimes both, disinclined
to submit the matter in dispute to arbitration, though
often in such cases conferences have been arranged
through mediation, at which mutual concessions were
made and agreements reached."

Much stress has been laid upon the difierence
between conciliation and arbitration throughout this
chapter. It will, however, no longer be feasible to
follow up this distinction carefully. The machinery,
by which conciliation and arbitration are effected, is
very often the same, and it is not always easy to say
when one has been used and when the other. Again
the informality of conciliation often leads to no account
of it being kept, and almost all the reports of proceed-
ings, which we have, refer to arbitrations. In fact,
so little evidence is forthcoming as to what is done
in the direction of conciliation, that it would be
almost impossible to fill a chapter with it. Whilst
not following the distinction between conciliation
and arbitration systematically during the rest of this
essay, frequent occasions will be found where it may
be emphasised, and the fact that I am acting in
accordance with the views of Professor Marshall *
confirms me in my opinion, that I am justified in
not maintaining a clear line of demarcation between
the two throughout the essay.

* In the preface to Price's Industrial Peace, Professor
Marshall expresses the opinion that one is right in treating
conciliation and arbitration together, although it may be con-
venient sometimes to contrast the two methods sharply^



PRIVATE V. GOVERNMENT. 37



CHAPTER III.

PRIVATE V. GOVERNMENT CONCILIATION
AND ARBITRATION.

Having discussed at some length in the last chapter
the relative merits of conciliation and arbitration,
we must now turn our attention to the bodies or
persons who exercise the functions of conciliators
or arbitrators. The most natural persons to do
this are those concerned in the dispute, for it is
primarily to their interest to settle it. The form,
which their intervention may take, varies. The
workmen in a body may interview the masters
personally. This is only possible when the
number of workmen is not very great ; otherwise
it becomes necessary to conduct the negotiations
through representatives, who may be appointed either
when a particular occasion arises, or for a certain
period. The employers also, if they are numerous,
are often represented by delegates ; and when, in
any given industry, an equal number of delegates
from each side meet together periodically and act
according to written rules, there is constituted what
is known as a ' trade board.' The chief occupation
of these boards is to settle the level of wages, but
they also decide all questions dealing with the con-
ditions of labour. The work of these boards is gener-
ally efiected by conciliation, but some of the most

412720



38 CONCILIATION AND ARBITRATION.

important ones, especially in those trades where
fluctuations in prosperity are very considerable,
have independent chairmen, who are given a casting
vote, and in those cases where it is used, arbitration
is practically substituted for conciliation. ' Trade
boards ' are not only the most natural method of
settling industrial disputes, but they are also the
most satisfactory. All that was said in the pre-
ceding chapter concerning the advantages of boards
of conciliation, applies fully to ' trade boards,' which
are permanent bodies, whose primary object is to
settle disputes by conciliation. But these are not
the only advantages enjoyed by ' trade boards ; '
no other body or person is in an equally good posi-
tion to learn of coming subjects of dispute in their
very earliest stages ; again, the fact that all the
members of the board are well acquainted with the
trade in which a dispute has arisen, tends to facili-
tate a settlement being arrived at. No other
system of conciliation and arbitration appears to
equal that of ' trade boards, ' and in support of
this view the very authoritative words of Colonel
Carroll D. Wright, United States Commissioner of
Labour, may be quoted.*

" I do not hesitate to declare that the real results
to be reached by arbitration and conciliation can be
secured far more effectively and in a far more acceptable

* The words are taken from a paper read before the
National Civic Federation Conference at Chicago, Dec. 1900,
and pubUshed in the second part of the report of the proceed-
ings of the Conference held under the auspices of the National
Civic Federation at New York, 1901;



PKIVATE V. GOVERNMENT. 39

manner through the trade board as it exists to-day in
nearly all the industries in England, than by any other
means."

Another organised body undertaking the func-
tions of conciliator and arbitrator is the ' district
board.' These boards are usually established by local
chambers of commerce and enjoy hardly any of the
advantages of the ' trade boards. ' Although they
generally consist of employers and employed in equal
numbers, their educational value is almost reduced
to nil, by the members belonging to difierent trades,
in consequence of which employers and employees
in the same industry do not meet, and by the rarity
of the meetings. These boards are also at a dis-
advantage with regard to obtaining early informa-
tion of coming disputes, and probably two of their
members at the most have any knowledge of the trade
in which disputes occur. A ' general board,' which
is practically a ' district board ' willing to act all over
the country, is in a still less favourable position to
learn when its services are needed.

Other organised bodies undertake to act as con-
ciliators and arbitrators, and in these the general
public, besides employers and employed, take part.
Such bodies, however, practically amount to ' general
boards ' equipped with independent chairmen. The
chief advantage they appear to enjoy over ordin-
ary district and general boards, is that they are
more likely to be supported by public opinion,
which should tend to oblige people, in the first
place, to submit their disputes to conciliation, or



40 CONCILIATION AND ARBITRATION.

arbitration if conciliation fails, and in the second
place, to abide by decisions. Even if this tendency
were strong, which, is much to be doubted, the value
of these bodies would fall short of that of ' trade
boards,' which enjoy numerous advantages, that
the others entirely lack.

Lastly it may be mentioned, that single individuals
are often successful as conciliators and arbitrators
in industrial disputes. When a dispute arises in a
trade, which possesses no organised board of con-
ciliation and arbitration, both parties sometimes
agree to try to obtain the services of a gentleman
to act as umpire. Even if they cannot agree as to
the appointment of such a gentleman, they may be
able to settle upon some outside person or body*
whose nomination of an umpire they declare
themselves willing to accept. Permanent boards
also sometimes obtain the services of an arbitra-
tor in a similar way. At the present time in
England the body, which is generally requested to
make the appointment, is the Board of Trade, and
this leads us to the fundamental question of this
chapter : should the State undertake the office of
conciliator and arbitrator, or not ?

Chapter V. will be devoted to the discussion of the
different kinds of government conciliation and arbitra-
tion and here we have to consider the question only
of the contrast between government and private
conciliation and arbitration. In reply to the
question, is State interference in this direction
justifiable ? the answer can be given that it



PRIVATE V. GOVERNMENT. 41

most certainly is, provided it is considered as
complementary to private conciliation and arbi-
tration and not as sufficient in itself. It is the duty
of the State to do all it can to render easy the action
of economic forces, and governments should provide
all reasonable facilities for employers and workmen
to bargain with one another. In so far as the State
system should be complementary only to a private
system, the exact form which the facilities provided by
the government should take, must depend upon the
private facilities for conciliation and arbitration.
Although in the United Kingdom, with its splendidly
developed private system, a Board of Trade appoint-
ing umpires when needed may be quite sufficient, in
other countries State boards may be necessary. This
point will be fully discussed below, and we must now
consider, why government and private conciliation
and arbitration are only complementary to one
another, and not complete in themselves.

The great advantages of trade boards have been
fully emphasised. District and general boards offer
facilities for conciliation and arbitration, where
trade boards are wanting. It is very possible that
the facilities offered by the various boards are so
complete that no State board is necessary. But
there is one thing which no private body or person
can do as well as the State, that is, undertake to
appoint umpires, where employers and workmen
cannot agree. Every one, remembering that he
himself is a member of the State, and that it can
have no object in wishing to injure him, is far more



42 CONCILIATION AND ARBITRATION.

likely to be satisfied with an appointment made by
it, than with one made by any private person or
body of individuals, to whom selfish motives may
always be attributed. It is clear that a private
system can never be so complete as to be able to
stand alone and be perfect, and the less complete it
is, the more will be required of the government system.
But however valuable as a complement to the private
system the State system may be, it is far less capable
of standing alone. No board organised by a govern-
ment could be nearly so satisfactory as a trade board.
All the educational advantages would be entirely
missing. The State board could have nothing like the
same facilities as the trade board for obtaining early
information of coming disputes, and again, it could
have no special knowledge of the various trades in
which disputes might occur. As long as trade boards
act as boards of conciliation, there cannot be the
slightest fear of decisions being repudiated and the
danger is exceedingly small, even when they act as
boards of arbitration. But where employers and em-
ployed are brought together by State boards, they can
never be entirely free from the impression that they
are litigants. Not only is friendly feeling between
masters and workmen not cultivated, but dissatisfac-
tion is far more likely to occur concerning decisions.
The position of Governments with regard to con-
ciliation and arbitration has been well expressed as
follows : *

* The passage is quoted from the Edinburgh Review, Jan.,
1900.-



PRIVATE V. GOVERNMENT. 43

" In such a matter [as conciliation] tlie State may
facilitate, persuade and encourage ; but it cannot
attempt to dictate. It may establish means of concilia-
tion, but cannot order that they shall be used. Efforts
to interfere with individual or corporate liberty of action
or that freedom of contract, which is essential to sound
commerce, have failed in the past and must inevitably
fail in the future. Attempts have been made to fix the
price of labour or the condition of work by direct or-
dinance. They have never succeeded and never will
succeed. Freedom of contract is as much a condition
of liberty as freedom of speech ; on the other hand, the
State would fail in its duty if it did nothing to facilitate
methods of settlement of labour disputes, either by the
establishment of accessible tribunals, or by the encourage-
ment of voluntary boards of conciliation. It may pro-
perly do much to perfect the machinery of settlement,
though its power to insist on the use thereof is limited."

The Royal Commission on Labour, whilst recom-
mending that the Board of Trade should be given
the powers it afterwards obtained by the Concilia-
tion Act 1896,* expressed itself as follows, as far as
the United Kingdom is concerned, with regard to
private and State conciliation and arbitration : f

" We hope and believe that the present rapid exten-
sion of voluntary boards will continue, until they cover
a much larger part of the whole field of industry than
they do at present. This development seems to us at
present the chief matter of importance, and it has the
advantage over any systematic establishment of local
boards, of greater freedom of experiment and adaptation
to special and varying circumstances. At the present

* For details erf the provisions of this Act see page 108.
t Fifth and Final Report of the Royal Commission on
Labour, Part I., § 302.



44 CONCILIATION AND ARBITRATION.

stage of progress we are of the opinion, that it would do
more harm than good, either to invest voluntary boards
with legal powers, or to establish rivals to them in the
shape of other boards, founded on a statutory basis and
having a more or less public and official character."

This short chapter, comparing and contrasting
private and State conciliation and arbitration, must
not be considered alone, but in conjunction with
Chapters IV. and VI., where examples of the various
kinds of private, and voluntary State, conciliation
and arbitration are given. It is only after figures
showing the work of trade boards have been
contrasted and compared with those showing
the work of State boards, that the great
value of the work of the former will be fully under-
stood. But in passing on to the next chapter, where
private conciliation and arbitration are dealt with,
one word of warning is necessary : it must not be
forgotten, that a most valuable side of the work of
these boards, the encouragement of good feeling
between employers and employed by discussion round
a common table, cannot be conveyed by jfigures.



PRIVATE. 45



CHAPTER IV.

PRIVATE CONCILIATION AND
ARBITRATION.

The United Kingdom. — The first attempt to
organise some permanent means of arranging future
contracts peaceably, was made in 1836, when the
Glasgow potters, after a strike, arranged to hold an
annual convention to fix wages, and agreed that if
any dispute should arise about the price to be paid
in virtue of the convention, it should be submitted
to a court of arbitration comprised of three masters
and three workmen. In 1839 a movement started
in the carpet weaving industry, to establish joint
boards to examine the situation of trade and to fix
wages. In 1857 some thirty of such boards existed
and more than 2,000 workmen were controlled by
them. After a strike in 1849 a joint board was
established in the Macclesfield silk industry, con-
sisting of twelve employers and twelve weavers, a
president and a secretary, the two latter having
no vote. The board existed for four years, and
during this time the industry was quite free from
important strikes. The immediate cause of the
breakdown, was the refusal of a large manufacturer
to submit to the system of fines and restraints



46 CONCILIATION AND ARBITRATION.

imposed by tlie rules, but the real cause of the failure
was the insufficient organisation of the workmen.
Till 1860 there was no further permanent board,
but individual arbitrations in different industries
were not infrequent.*

It is customary to overlook the early attempts
at conciliation and arbitration mentioned above
and to say that the first Trade Board was
established in England in 18G0. Although this
is not quite accurate, one is justified in saying
that it was not till the beginning of the
*' sixties," that conciliation and arbitration, as we


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Online LibraryDouglas KnoopIndustrial conciliation and arbitration → online text (page 4 of 18)