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wh^her in America or Europe, there has been a very
contemptible failure. The second effect of compulsory
arbi^tion would be to compel the employer to shut
up hj»- works, and all employees, if they did not like the
decisi©ii, to quit work and leave the country. The
third would be, if the manufacturer saw fit to carry ou
his works under the decision of a court of compulsory
arbitration, to compel him to join a trust immediately,
and I think if the government ever wants to drive every-
body into the trust form of carrying on business, com-
pulsory arbitration would be perfectly satisfactory. It
seems to me it would kill industry. I have no faith
in it either from a moral or an economic point of view.
I have always so expressed myself. It is a doctrine

* The following passage is taken from the evidence given
by Colonel Wright, before the United States Industrial
Oommission and -will be found in the Reports of the Oom-
mission. Vol. VII. pp. 11 and 12,



92 CONCILIATION AND ARBITRATION.

which, so far as I know, finds no approval of organised
labour anywhere. I have never known of any Trade
Unionist or member of a labour organisation of what-
ever character, to approve compulsory arbitration.
There may have been cases. Certainly the employer
would not approve it. While I believe in arbitration
as a help, never as a solution of labour problems, it
seems to me that compulsory arbitration would be a
positive injury."

The reader will probably ask, what answer would
a believer in compulsory arbitration make to the
objections of Colonel Wright ? He would very likely
reply somewhat to this effect : Compulsory arbitra-
tion does not oblige an employer to pay wages above
those he wishes to pay, or to work under conditions
he does not choose to work under. It simply
says, if you wish to continue to work, you raust
pay those wages and work under those condi1i|ins
which the award prescribes. In the same J§ay,
no employee needs to accept any wage unlep he
chooses, only if he wishes to have work, he nijfet be
satisfied with the wage laid down by the award.
Further he would proceed to argue, that trusts have
not been encouraged in New Zealand,* and that if
there was one party in that country which liked
compulsory arbitration it certainly was the trade
unionist. Hence Col. Wright must be mistaken,

* Since writing this passage I have discovered that the
New Zealand Department of Labour has recently issued a
report dealing with trusts and combinations, which seems
to indicate that New Zealand has seen a large growth of this
form of industrial organisation in recent years,



VOLUNTARY v. COMPULSORY STATE. 93

when he says no labour organisation approves
of compulsory arbitration.

Taking the points of this imaginary reply in turn,
the very first thing which strikes one is, that whenever
an employer has invested his capital in buildings and
machinery, he cannot cease to continue his business
at a moment's notice without involving himself in
ruinous loss. This is, however, the only alternative
to accepting a compulsory arbitration award. The
chances are, therefore, that an employer will
continue his business and pay wages which the con-
dition of trade does not justify. This cannot
continue long, and the following alternatives will
present themselves to the employer : either he must
withdraw all the capital possible from the business and
go ^nd set up elsewhere, or he must raise his prices.
It ^this latter alternative, as we shall see in Chapter
VII., which has happened in New Zealand. The posi-
tion of t^Q workman is different from that of the em-
ploye?. There are no ties of capital to retain him
in any given business, so that if adverse awards
were n^de — which so far practically never has been
the ca1^-he might refuse to continue work and try
his luck elsewhere. He would probably find
the same wages and conditions prevailing every-
where in the country, and emigration would appar-
ently be the only remedy, if the employers were not
voluntarily ready to improve the conditions and
raise wages. Compulsory arbitration may not have
directly encouraged trust formation in New Zealand,
but indirectly, at least, it must have fostered



94 CONCILIATION AND ARBITRATION.

understandings among employers, for otherwise
prices could certainly not have risen as they have
done.

The last point, the attitude of trade unionists
towards compulsory arbitration, is not quite simple.
There is no doubt that some unions and
unionists are in favour of compulsory arbitration,
but it will always be noticed that it is the weakest
unions which are so. The reason of this is not very
difficult to find. Compulsory arbitration and trade
unionism are irreconcilable. They are two things
trying to achieve the same end by different methods.
The one depends upon the power and authority of the
State, the other upon the influence acquired by a
limited number of persons acting together. The
former tends to take away all the liberty of action,
which the latter is ever struggling to gain. It is t)nly
natural that powerful unions of long standing should
be opposed to compulsory arbitration ; the younger
and weaker ones, however, sometimes believe that
they see in it a quick means to acquire the advantages
at present enjoyed by the older ones. As a jtotter of
fact, they would probably lose what posifRi they
have and degenerate and split up into the petty dis-
pute-loving " industrial unions " of Australasia, from
which all the best characteristics of the English trade
unions, the excellent educational work and the in-
surance facilities against accidents, sickness and want
of work, are entirely missing.

The attitude of English trade unions is best shown
by the voting at the 1903 Trades Union Congress



VOLUNTARY v. COMPULSOEY STATE. 95

upon the following compulsory arbitration reso-
lution* : —

" That in the opinion of this Congress courts of com-
pulsory arbitration shall be constituted by equal numbers
of employers' and workmen's representatives, the latter
to be selected by ballot of union members affiliated to
this Congress, each union being entitled to nominate
a candidate for the office of arbitrator. The courts so
constituted to be presided over by a Lord Justice. Such
courts as are necessary to embrace the great trades of
mining, agriculture, textile, transport, engineering,
building and general trades. The decisions of the courts
to be final and to cover a period of at least one year, or
such period as may be agreed upon by mutual consent
of the parties interested. The courts so established
to be movable courts, to take evidence, when advisable,
in any district or centre of industry affected. All docu-
ments necessary, dealing with wages, profits, or manage-
ment, shall be produced under penalty of imprisonment.
Only unions agreeing to come under jurisdiction
of Compulsory Arbitration Court to have the right
of nomination or election of Commissioners for the
several courts."

A vote by card on the above resolution produced
the following result : —

Votes.
For the resolution .... 251,000
Against 899,000



Majority against .... 648,000

The above voting clearly shows that English
unionists are largely opposed to compulsory arbitra-
tion. The American unionists are so to a still greater

* Thirty-sixth Annual Report of the Trades Union Oon»
gress, 1903, p. 84.



96 CONCILIATION AND ARBITRATION.

extent, and the National Civic Federation of
America, representing employers, employees and
the general public, is no less opposed to it.

" The second conference was held at Chicago, Decem-
ber 17th and 18th, 1900, under the auspices of the
National Civic Federation . , . Much interest was
taken in the discussion of compulsory arbitration, and
the conference resulted in practically deciding that,
for the United States at least, the proper line of pro-
gress should be in the direction not of compulsory
arbitration, but of voluntary conciliation."*

The objections of trade unionists to compulsory
arbitration rest chiefly upon the opposition between
it and trade unionism ; there are, however, certain
fundamental objections which the economist and the
politician cannot ignore. In the first place, it is very
probable that the wrong wage will be paid. The reader
may say, this does not matter very much, because
over a long period the arbitrators will be as fre-
quently right as wrong. This is not the
case, because the most important function of the
wage is not so much to form an adequate remunera-
tion for work done, as to determine the scale
of an industry ; compulsory arbitration tends
entirely to destroy the sensitive relation which
should exist between demand and the organisation
of production. This is the great economic objection
to compulsory arbitration. The political one is of a
very difierent character. Boards of arbitration,

* Report of the Proceedings of the Conference held under
the auspices of the National Civic Federation in New York,
December 16 and 17, 1901, pp. iii. and iv.



VOLUNTARY v. COMPULSORY STATE. 97

resort to which and the awards of which are enforced
by law, whose presidents are appointed by the
Government, and whose members are elected
according to law, will soon cause people to regard
wages as a political matter. A strike will become a
mutiny, which is very undesirable, and changes
in government become bread-and-butter questions,
which is hardly less undesirable, and is above all
serious in the case of the rising generation, which,
knowing no other system, will come to look upon the
government as the provider of the weekly wage.
Wages become a political question, and all discontent
is concentrated against the government.

Besides these fundamental objections to compul-
sory arbitration, there are others, such as the question
of the enforcement of decisions, which cannot be
entered into without drawing freely upon the results
of the working of compulsory arbitration in New
Zealand and New South Wales, and consequently
the remainder of the discussion will be left over till
Chapter VIL Before considering the subject of
practical legislation, I should like to remind the
reader of two important maxims : —

" The first essential to success in constructing or
developing any system of laws, is that such system
shall be in conformity with the conditions, ideals and
traditions of the community for which it is designed.
A system of legislation designed to regulate the
relations of labour and capital may work well in
Australasia, but it by no means follows that a similar

H



98 CONCILIATION AND ARBITRATION.

system would work well in England or the United

States."*

The second maxim is also embodied in the words
of a well-known economist f : —

" When we wish to judge the success of any piece of
industrial legislation, we must not only take into con-
sideration the degree of the achievement of the object,
which the legislator had in view, when the Act was passed,
but also any subtle and unforeseen effects, which the
Act may have had on industry and society in general ;
and before we are able finally to decide whether any
piece of legislation is good and desirable, the evil effects
must be set off against the good effects, and it must be
found out on which side the balance lies."

If the reader bears these two maxims in mind,
when reading the next two chapters, he may save
himself from making false deductions as might
otherwise easily happen.

* G. F. Adams, in a paper read before the Oonference held
under the auspices of the National Givic Federation, at New
York, 8, 9 and 10 December, 1902.

I W. S. Jevons, State in Relation to Labour.



VOLUNTARY STATE. 99



CHAPTER VI.

VOLUNTARY STATE CONCILIATION AND
ARBITRATION.

English Legislation. — The earliest English Act con-
cerning arbitration was passed in 1603, but the first
statute referring especially to the arbitration of labour
disputes is 1 Aime c. 22, passed in 1701.* During
the course of the 18th century two further statutes
were passed, both giving summary jurisdiction to
justices of the peace to determine disputes between
masters and servants in certain circumstances. 20
Geo. II. c. 19 did so, when the term of the hiring was
one year or longer, even though no rate of wages had
been fixed that year by the justices of the peace of the
shire. By 31 Geo. II. c. 11 the powers of the justices of
the peace were extended to agricultural labourers, but
they might interfere only in disputes arising during
the currency of the hiring, and had no power to bind
servants beyond that term. Besides these[two princi-
pal enactments of the 18th century, other less import-
ant ones provided for the settlement of disputes in the

* These two acts are referred to in the Reports of the
American Industrial Gommission, Vol. XVI., p. 172, but
Jevons in his " State in Relation to Labour " does not men-
tion themj Numerous details of early legislation previous to
1824 are given in G. Howell, " Labour Legislation, Labour
Movements, and Labour Leaders," pp. 433-6-. See also Ohap'
taan, Lancashire Cotton Industry, p. 185.

H 2



100 CONCILIATION AND AEBITRATION.

cotton trade. The first arbitration Act of the 19th
century, 43 Geo. III. c. 151, also dealt with disputes
in the cotton industry. The most interesting thing
about all this early legislation for the settlement of
disputes by arbitration between masters and work-
men is, that it was attended with good effect, so that
the committee, which sat in 1824, to inquire into the
state of English labour legislation, thought it desir-
able that the laws which regulated and directed
arbitration should be consolidated, amended and
made applicable to all trades.*

In consequence of the recommendations of this
committee, an Act was passed in 1824, 5 Geo. IV. c.
96, based upon the French law for the establishment
of the Councils of Prud'hommes. No permanent
boards were established, but a justice of the peace
was to act as referee or appoint someone else to do so.
The operation of the Act was restricted to certain
trades and certain subjects.f By this Act no referee

* See Leoni Levi, History of British Commerce, London,
1880, pp. 176-7-

f The following disputes might be settled and adjusted
under the Act of 1824 : —

" Disagreements respecting the price to be paid for work
done or in the course of being done, whether such disputes
shall happen and arise between them respecting the pay-
ment of wages as agreed upon, or the hours of work as agreed
upon, or any injury or damages done or alleged to have been
done to the work, or respecting any delay or supposed delay
in finishing the work or not finishing the work in a good
and workman-Uke manner, or according to any contract or
to bad materials ; cases where workmen are to be employed
to work any new pattern which shall require them to purchase
any new implements of manufacture or to make any altera-
tion upon the oli implements for the working thereof, and



VOLUNTARY STATE. 101

could establisli a rate of wages or price of labour at
which a workman should in future be paid, unless
with the mutual consent of both masters and work-
men. In these cases, however, the agreement was to
be valid, and the award final and conclusive between
the parties. Such awards, as in cases of awards deal-
ing with disputes within the jurisdiction of the referee,
might be enforced by sale, distress or imprisonment.*
During the twenty years immediately following the
passing of the Act, three small Amendment Acts were
passed.f None of these appears to have been of much

the masters and workmen cannot agree upon the compen-
Bation to be made to such workmen for or in respect there-
of ; disputes respecting the length, breadth or quality of
pieces of goods, or in the case of cotton manufacture, the
yarn thereof or the quantity or the quality of the wool there-
of ; disputes respecting the wages or the compensation to
be paid for pieces of goods that are made of any great or
extraordinary length ; disputes in the cotton manufacture
respecting the manufacture of cravats, shawls, policat,
romal and other handkerchiefs ; disputes arising out of,
for or touching the particular trade or manufacture, or con-
tracts relative thereto, which cannot be otherwise mutually
adjusted or settled ; disputes between masters and persons
engaged in sizing or ornamenting goods ; provided always
that all complaints by any workman as to bad materials
shall be made within three weeks of his receiving the same,
and all complaints arising from any other cause shall be made
within six days after such cause of complaint shall arise."

* This point has been dealt with more fully above. See
p. 48 n.

t The three Statutes referred to were : 7 Will. IV. and I
Vict. c. 67, 8 and 9 Vict. c. 77, and 8 and 9 Vict. c. 128. The
first of these extended the time for complaints by workmen,
other tlian as to bad materials, from six to fourteen days ;
the second made further regulations as to the tickets of work to
be delivered to persons employed in the manufacture of hosiery,
and the third, similar regulations with regard to silk weavers.



102 CONCILIATION AND ARBITRATION.

avail, for a romniittce appointed by the House of
Commona in 1850* found that the Act of 1824 waa
entirely ignored by the people. The rcaaons to which
they attributed this failure were, firstly, the objection
people had to appear before magistrates ; secondly,
the fact that the Justices of the Peace appointed the
referee only when the dispute was submitted to him,
and people objected to submitting to the decision of
an unknown man; and lastly, the workmen often had
no confidence in the choice of arbitrators made by
magistrates, whom they suspected of not being im-
partial. The Committee proposed that a modification
of the existing law should be made, and that Courts
should be set up, capable of dealing only with disputes
arising out of existing contracts.

It was more than ten years before anything came
of these proposals, for it was not until 1867 that what
is known as Lord St. Leonard's Act was passed. This
was "an Act to establish equitable councils of con-
ciliation to adjust differences between masters and
men." Councils were to be formed under licence of
the Home Secretary, granted upon the petition of
masters and men in any particular trade or place.
The Councils were not to consist of fewer than two
masters and two workmen, and of not more than ten
of each. The Act provided for the appointment of a
chairman, who was unconnected with the trade. The
chairman, one master, and one workman were to form
a quorum and be able to make awards. The Council
was to appoint a Committee of Conciliation consisting

* See De la Oonciliation et de l' Arbitrage, etc,, p. Ji.



VOLUNTARY STATE. 103

of one workman and one master, and only if these were
unsuccessful was a dispute to be remitted to the
Council, which might settle any dispute set forth in the
Act of 1824,* submitted to them by either party, or
any dispute whatever submitted to them by mutual
consent. No lawyer was to attend any sitting of the
Committee or Council unless agreed to by both sides.
Awards were to be enforced according to the provisions
of 5 Geo. IV. c. 96t

In 1872 the Masters and Workmen (Arbitration)
Act was passed to make further provision for arbitra-
tion between employers and employees. By the Act,
an agreement might be entered into between masters
and workmen, undertaking to submit all disputes to
arbitration concerning rates of wages to be paid, hours
or qualities of work to be performed, or the conditions
and regulations under which the work was to be done.
Penalties might also be specified to be incurred upon
the breach of any award, and these might be enforced
by distress or imprisonment. Under the Act an agree-
ment was to be made, when a workman accepted a
copy of an agreement from a master, provided he did
not give notice within 48 hours that he refused to be
bound by it. The binding nature of the awards was
almost removed by a clause providing that the agree-
ment might not require more than six days' notice to
be given by master or workman before such ceased to
employ or be employed. To insure awards being
made quickly, it was provided that the arbitrators were

* See footnote on p. 100.
f See footnote on p. 48^



101 CONCILIATION AND ARBITRATION.

to lose their jurisdiction over any particular case
unless they heard and determined it within twenty-one
days of the event from which the dispute arose.
Under this Act the arbitrators were to have certain
powers of summoning witnesses before them and of
calling for the production of books, etc.

To show clearly what the intention of the Legislature
was w.th regard to this Act, a memorandum im-
mediately follows it in the book of Statutes and
explains that its uses are briefly three ; namely,
(1) To provide the most simple machinery for a
binding 8ubmis.sion to arbitration and for the pro-
ceedings therein ; (2) To extend facilities of arbitra-
tion to questions of wages, hours and other conditions
of labour and ; (3) To provide for the submission to
arbitration of future disputes by anticipation, without
waiting till the time when a dispute has actually
arisen and the parties are too much excited to agree
upon arbitrators.

The success of the Acts of 1867 and 1872
was no greater than that of the original Act of
1824, or in the words of the Final Report of the Royal
Commission of Labour* : "The Acts of 1824 and
1867, together with the .Arbitration (Masters and
Workmen) Act, 1872, appear to have been complete
failures." Mr. S. B. Boulton, Chairman of the
London Labour Conciliation and Ajbitration Board, in
his evidence before the Royal Commission on Labour,
expressed the opinion that the Act of 1867 had failed,

* § 155.



VOLUNTARY STATE, 105

because it attempted to lay down restrictive regula-
tions as to the constitution of the proposed industrial
tribunals, and that the Act oi 1872 had failed, because
it was too vague, and did not contemplate existing
concrete bodies.* In the second annual report of
the said Board, we read, that " if these Acts have been
almost or entirely inoperative it is probably in a
great measure because the regulations respecting the
formation of the councils have not been sufficiently
elastic to meet the many and varied requirements of
different districts and industries." To these causes
of the failure of the Acts, we may undoubtedly add
the strong objection of both masters and men to the
legal character of proceedings under the Acts and
above all, to the possibility of awards being enforced
by sale, distress or imprisonment.

Ever since 1860 joint boards had been springing
up in various industries throughout the country, but
the Government, with the exception of the completely
unsuccessful enactments mentioned above, had done
nothing to assist industrial arbitration and concilia-
tion. Early in the " nineties" a • movement
began, which emphasised the importance of boards of
conciliation and called for legislation on the subject.
In 1891 the Associated Chambers of Commerce
and the Trades Union Congress passed resolutions in
favour of conciliation boards. In 1892 the Congress
of the Chambers of Commerce of the whole Empire
passed a resolution recommending the formation of

* Royal Commission on Labour, Fifth and Final Report,
Part I. §15G.



10f> CONCILIATION AND ARBITRATION.

properly constituted boards of labour, conciliation
and arbitration in all important centres of industry
and commerce throughout the Empire. The London
Labour Conciliation and /Vrbitration Board was
particularly active in demanding legislation. In
1893 a Bill was introduced into Parliament by Sir
John Lubbock representing its views. The Bill
provided for the registration of boards of conciliation
and arbitration, consisting of equal numbers of repre-
sentatives of employers and employed. Registered
boards were to have the power to examine witnesses
on oath, and to require all documents to be brought
before them, except such as a witness could not be
compelled to produce on a trial of an action, and the
books and accounts of any Trade Union. The Bill
was also practically to endow registered boards with
powers very similar to those of the French Councils
of Prud'hommes.*

It was in 1893 also, that Mr. A. J. Mundella,
President of the Board of Trade, introduced his Bill
for the promotion of voluntary boards of conciliation
and arbitration, and other intervention by the Board
of Trade. Neither of these Bills was passed in 1893,


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Online LibraryDouglas KnoopIndustrial conciliation and arbitration → online text (page 8 of 18)