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5 per cent. Again, by Clause 79 of the Articles of
Association it is provided that " the directors shall receive

1 With Scotch caution the directors have, however, made the
proviso thus explained in their prospectus : " To meet any
difficulty, should it arise, in obtaining money at 4 per cent., and
to avoid the stoppage of a good work for want of capital, the
directors have thought it prudent not to make it impossible to
offer 5 per cent., should changes in the value of money or different
circumstances require the payment of this rate. Accordingly, the
Memorandum of Association authorises a maximum of 5 per cent.,
but this power can only be exercised by a majority of three-fourths
of an extraordinary meeting of shareholders."


no remuneration," while in other Trust Companies pro-
vision for their remuneration is usually made. This last
point is perhaps of more importance than may at first
appear. Men are not paid for services upon a town
council, or upon a school board, or upon a board of
guardians. The sacrifice of time and labour involved is
regarded as a public duty. In Norway, with, we believe,
the exception of two companies, the Samlag directors are
not paid. In the long run men of high social ideals are,
we think, more likely to be found upon the directorate
of a controlling company when the office carries no
remuneration than when it does.


The Glasgow Trust " offers to take up and manage new
licences which the authorities may deem it necessary
to grant." To quote again from the prospectus, " the
directors of the Trust say in effect to the authorities, ' If
you grant a licence in this district at all, we ask that it
be granted to us in the public interest, to be managed as
a public trust. 1 We shall hold the profits at the disposal
of the trustees, and we shall be prepared to surrender the
licence at any time if authoritatively required, without a
suggestion of compensation.' " The Trust " may also
acquire existing licences, if obtainable on reasonable
terms." So far as the occupancy by the Trust of new
ground which otherwise would be occupied by the private

1 Referring to the application by the Glasgow Public-House
Trust for a licence for Anniesland, the Rev. D. M. Ross, D.D.,
writing to the Glasgow Herald under date April 9th, 1901, says :
" It seems to me unfair to suggest that Mr. Mann and his directors
are trying to foist a licence upon a protesting community. As
Mr. Mann has explicitly said, ' We do not press for this licence,
but we ask you not to give it to anyone else.' "


trader is concerned, the position of the Company is clear
and strong. But in the Glasgow as in the Hampshire
Trust, dangers gather around the proposals for the pur-
chase of licences. The large sums that may be involved
in such transactions, together with the demand for
capital that would ensue, necessarily lead to the adoption
of Articles for the protection of the creditors identical
with those which appear in the Articles of the Hampshire
Trust, and which have been discussed on a previous page. 1
It is, however, to be noted that in the Glasgow Articles no
restriction is placed upon the number of ordinary directors
who may be appointed.


The scheme for the destination ot surplus profits is
so excellent that with perhaps the omission of a few
words it might well serve as a model for other Associa-
tions. Clause 108 of the Articles of Association provides
in respect of the surplus profits : " (1) that no portion
thereof shall be applied in direct relief of the rates ;

(2) that the trustees, while not disregarding other objects
which they may consider of benefit to the public, shall
have special regard to such means of rational recreation
and entertainment as shall tend to diminish in the com-
munity the undue consumption of alcoholic liquors ; and

(3) that the trustees may pay over part or the whole of
the profits into the national exchequer if they deem it

The Glasgow Company hands over the administration
of the surplus profits to a body of trustees. 2 The Articles

1 See p. 103.

* The duty of the trustees in the Glasgow Trust Company is
confined to the administration of the surplus profits ; they have
not the special voting power of the trustees in the Hampshire and
Northumberland Trust Companies.


provide that the first trustees shall be appointed by the
directors, and shall hold office until the Ordinary General
Meeting of the Company in 1904. Prior to that time the
trustees, together with the directors for the time being,
are to "prepare a scheme containing full provisions as
to the method of election or nomination of a body of
trustees ... it being understood, however, that any such
scheme shall be settled on the basis that at least half of
the trustees acting under it shall be appointed by the
Company or its directors, and that no alteration shall be
made by it in the destination of the surplus profits herein-
before set forth." The names under the first appointment
are as under :


(For administration of surplus profits).

Sir John Stirling-Maxwell, Bart., M.P.

Sir James King, Bart.

Sir John Neil son Cuthbertson.

J. G. A. Baird, Esq., M.P.

Charles Douglas, Esq., M.P.

J. Parker Smith, Esq., M.P.

M. H. Shaw-Stewart, Esq., M.P.

John Inglis, Esq., LL.D.

J. 0. Mitchell, Esq., LL.D.

John Ure, Esq., LL.D.

Hugh Steven, Esq.

Whether it is expedient to withdraw from the directors
the responsible and interesting duty of administering the
surplus profits may be doubted. The best men are
wanted as directors, and such are not likely to look with


favour upon an arrangement under which important
duties are removed from their care and placed in the
hands of an outside body.


The question may be asked : In what way does the
Glasgow Trust Company guard against its capture at
some future time by the Trade? 1 It has none of the
machinery for this end elaborated by Earl Grey of
deferred shares carrying great voting power and held
by occupants for the time being of high official positions
in the district. We should judge that reliance is placed
upon the objects of the Company as clearly set forth
in the Articles of Association, and more particularly
upon Clause 19, which runs: "The directors may, in
their- absolute discretion, without assigning any reason,
decline to register the transfer of any share, whether
wholly or partly paid up, to any person not approved of
by them, and in the event of any such refusal at any
time, the person to whose transfer such refusal relates
shall have no right or cause of action of any kind in
respect thereof."

Experience alone can show whether these safeguards
are sufficient. An additional safeguard might be found
by adding to the list of disqualifications of directors a
rule similar to that of the Northumberland Trust, which
provides that the office of a director shall be vacated if
he acquires a direct interest in the manufacture or sale
of alcoholic drinks.

1 It may be said that the experience of Norway shows the
danger of such capture to be unreal, but in that country all the
licences in a town are given to one company, and if it abused
its trust the licensing authorities would at the next issue transfer
the licences to another company.



An arrangement of practical value remains to be
noticed in the power given to the directors " to appoint
local committees, not necessarily members or directors
of the Company, with such powers and duties as the
directors may think proper." The right conduct of the
counter-attractions will require much time and thought,
and probably many would gladly share in this duty who
would be unwilling to take part in the direct management
of the Company houses.


This Trust Company was incorporated in April, 1901.
Its capital of ^50,000 is divided into 50,000 shares of
1 each. The dividend, which is cumulative, is limited
to 5 per cent, per annum. The Articles of Association
provide that the remuneration of the directors shall
be fixed by the Company in General Meeting. The
" Methods of Management," as set forth in the pro-
spectus, are as follows :

" The methods of management adopted by the Company
must necessarily be subject to such modifications as
experience and a fuller knowledge of the districts in
which its operations are conducted suggest, but the
general objects at which the management will aim will
include the following :

"1. In each house a carefully selected manager will
be placed, and, where considered advisable, local

1 For the relation of this Trust Company to Earl Grey's
Association see p. 102 (footnote).


boards or committees will be appointed to super-
vise the management in different local areas.

" 2. Food and a variety of non-alcoholic beverages will
be provided, and every means will be taken to
encourage their consumption. The greatest
care will be taken that everything supplied is
of the best quality obtainable.

"3. The manager will be paid a fixed salary, with a
commission on all trade in food and non-
alcoholic liquors. No commission will be allowed
on the sale of alcoholic beverages.

"4. In selecting managers, every endeavour will be
used to obtain men who will be in hearty
sympathy with the policy of the Company, and
who will assist in carrying out (in the spirit as
well as in the letter) the licensing laws enacted
by Parliament for the regulation of public-
houses and the promotion of temperance."

As in the case of the Glasgow Trust Company, the
surplus profits of the undertaking, after payment of
dividend and "after making provision for depreciation,
for reserve funds, for loss arising from extinction of
licences and for other contingencies . . . will be paid
over to trustees, to be applied by them to such objects
of public utility and well-being as may be determined,
special regard being had to such means of rational
recreation and entertainment as shall tend to the
diminution of intemperance."

The provision governing the appointment of trustees
is the same as in the Glasgow Trust.

The first trustees for the administration of surplus
profits are :

Sir Ralph Anstruther, Bart., of Balcaskie, Pittenweem.


Sir T. D. Gibson Carmichael, Bart., of Castlecraig,

Professor John Chiene, C.B., F.R.C.S.E., 26, Charlotte

Square, Edinburgh.
T. S. Clouston, M.D., F.R.C.P., Tipperlinn House,

Morningside, Edinburgh.
Sir Mitchell Thomson, Bart., 6, Charlotte Square,


J. P. Wood, W.S., 16, Buckingham Terrace, Edinburgh.
The Articles of Association contain the wholesome
provision, the substance of which is incorporated in the
Articles of other Public-House Trust Companies, that
" The directors may, in their absolute discretion, without
assigning any reason, decline to register the transfer
of any share, whether wholly or partly paid up, to any
person not approved of by them."

The elements of danger in this Trust Company, as in
the others, lurk in the provisions which are designed to
meet contingencies that may arise from the proposed
purchase of licences.

It is impossible to study in detail the proposals of
the promoters of the Public-House Trusts without being
impressed by the careful thought and seriousness of aim
that have been brought to bear upon the schemes. The
criticisms that the present writers have ventured to offer
are necessarily based upon the statement of policy in the
prospectus of each company, and upon the provisions for
giving effect to such policy in the Articles of Association.
Inasmuch as the companies have not yet begun actual
operations there is not, as in the case of the experi-
ments discussed in the earlier chapters of this book, any
experience to which to appeal. It may well be that
when such experience has been acquired it will be found


that we have underestimated the advantages, or over-
estimated the dangers, of certain provisions. But it
needs no experience to show that such a policy as the
purchase upon a large scale of licences will give the
Trust Companies vested interests that must necessarily
conflict with their efficiency as instruments of reform.
Examination appears to show that under the existing law
the serviceable sphere of such companies must be of a
restricted character. Their chief value would appear to
be experimental, and, if carefully conducted, they will be
useful in educating and ripening public opinion for
further legislation. It is therefore of great importance
that nothing shall be done for the sake of extended
operations that will impair the value of the object-lesson.
It is of even greater moment that no policy shall be
entered upon which, owing to insufficient safeguards or
inherent defects, is likely actually to prejudice the principle
of public management by obscuring the possibilities of
the system when wisely conducted and controlled.

There are probably few earnest citizens who will not
sympathise with the eager desire of the promoters to avail
themselves of such opportunity for effecting reform as
exists under the present law; but one fact that stands
out clearly from the foregoing pages is the relatively
small result, in comparison with the problem that claims
attention, that the Trust Companies can hope to achieve.
Even under the dangerous policy of purchase the number
of houses they can hope to acquire will be but a very
small proportion of the total number of licensed premises
in the country. The attempt, therefore, earnest as it is,
only serves to emphasise the urgent need of legislation
which will make substantial results possible.


IN considering some of the preceding schemes, and
especially the Public-House Trusts, it must be frankly
stated that they suggest the idea that the promoters look
to the present normal consumption of alcohol continuing,
though under less dangerous conditions than at present,
rather than to a substantial reduction. If such an idea
really exists in the minds of the promoters, then it marks
at once a fundamental defect in the schemes as instru-
ments of reform. Nothing is clearer than the fact that
the present consumption of intoxicants in this country is
not only excessive, but seriously subversive of the economic
and moral progress of the country, and no scheme of
reform can be regarded as satisfactory that is not solidly
based upon a clear appreciation of this fact and a deter-
mined intention to alter it. In the judgment of the
present writers the most decisive test of any scheme of
temperance reform is its ability to effect a considerable
reduction in the national consumption of alcohol. The
good conduct of the traffic is certainly a consideration of
high importance which no careful reformer will under-
estimate; but no one who studies the public-house
problem in its relation to the economic and moral progress
of the people and the present and ultimate needs of the
State, can fail to see that much more is required than



what is ordinarily understood by the good conduct of the
traffic and the discouragement of flagrant intemperance.
The advancement of civilisation, accompanied as it has
been by an increasing severity of international competi-
tion, has necessitated a stricter inquiry into the conditions
of national success and well-being, with the result that
we now see how seriously the welfare of the State is
threatened by the present excessive expenditure upon

The facts ascertained cannot fail to have far-reaching
effects in modifying the national attitude toward intem-
perance. While there is nowhere a disposition to restrict
the rightful prerogatives and freedom of the individual,
there is a growing appreciation of the power of law
and of social arrangements in educating public opinion
and tastes, and especially in directing thought and
effort towards moral development and self-control. Good
management may make the public-houses respectable,
and it may also diminish flagrant intemperance and dis-
order ; but if it accomplish no more than that it will fail
to make any important contribution to the solution of a
grave and pressing problem. The chief test of any scheme
of temperance reform, let us repeat, is its ability to bring
about a substantial reduction in the national consumption
of alcohol. It is not a small or unimportant fact that if
the consumption of alcohol per head of the population
in this country could be brought down even to the level
of the American consumption, our national drink bill
would at once be reduced by 66,000,000 per annum !


Another essential requirement in any scheme of reform
is that it shall leave localities free to work out their own
salvation from the evils of the drink traffic. It is one of



the condemnations of existing licensing arrangements that
they fetter and retard the progressive instincts of a com-
munity, whereas substantial progress can only be made
under a system which will quickly register such pro-
gressive sentiment and give it full opportunit}' for effecting
reforms. At the same time, security must be taken that
local interests shall not alone determine the policy to be
adopted ; and especially is it necessary that the State, by
explicit legislative provisions, shall make it impossible for
municipal or local cupidity to take the place of private
cupidity. In such a matter as the appropriation of the
profits it would obviously be unsafe to give absolute
freedom of action to the locality. The theory that only
by allowing a wide variety of practice can we hope to
discover the best method of appropriation overlooks the
fact that already a large body of decisive evidence has
been established. Experience shows that, in the absence
of explicit legislative provisions, methods of appropriation
are likely to be adopted that would injuriously affect the
cause of temperance in certain localities by offering induce-
ments for the continuance of the traffic (in the form of
subsidies and other local benefits) which even an advanced
temperance sentiment could hardly hope to withstand.

"We would suggest that the true lines of policy to be
adopted in proposals for the public management of the
liquor traffic are suggested by the principles followed in
much of the best modern social legislation, and especially
in such cases as the Poor Law, Public Health legislation,
and the Education Act. All of these Acts have one
feature, or, more strictly, one general principle in
common. In each case the broad lines of policy are
explicitly defined and are subject to central supervision
and control, but the details of the policy and the actual
administration of the Acts are reserved as matters of local


arrangement. In this way local initiative and energy have
been powerfully called out, and release has been given
to the progressive sentiment in a community. In the
judgment of the present writers the promoters of public
management will move upon the lines of safety by
observing the general principles of the Acts named above.
If supervision and control by the Central Government are
needed in regard to the matters covered by those Acts,
still more must they be needed in connection with the
control of a monopoly so dangerous as that of the drink
traffic a traffic which, while it enriches private persons,
throws heavy burdens upon the State.

The first step is clearly to ascertain in the light of
available experience the limits within which localities
should be free to undertake experiments, and then, when
the necessary limitations and safeguards have been im-
posed by law, localities should be left free to work out
their own salvation in their own way.


But there is another point that must be considered.
The facts of intemperance are eloquent of moral enfeeble-
ment and economic waste. Do they not also testify to
a deep-lying moral and intellectual need ? In our
estimate of the problem hitherto, have we sufficiently
allowed for the fundamental needs of human nature, and
for the compelling force of those social and recreative
instincts whose legitimate gratification is a part of the
scheme of progress ? It is the conviction of the present
writers that no scheme of temperance reform can be
satisfactory that does not include a full recognition of
these social and recreative instincts. The attractiveness
of the public-house for the average man ov woman has


results that are often disastrous; but any one who has
knowledge of city and even of village life knows that
at bottom the public-house problem is largely (by no
means wholly) a question of forgotten needs the revolt
of certain neglected qualities in men which, when allowed
favourably to expand, become the instruments of progress.
It may be well to abolish the public-house, but it is ill if
our effort end there. But can it end there ? What is to
take the place of the public-house ? This is a question
which is by no means premature, and which cannot afford
to wait. The social instincts of the people will not be
denied, and we shall be wise as a community to recognise
this and to give them their legitimate place in the
scheme of human progress.

It is for this reason that the present writers attach
so much importance to the provision, in any scheme of
temperance reform, of adequate and efficient counter-
attractions to the public-house. Their criticism of the
arrangements made in some of the foregoing schemes for
the appropriation of surplus profits is not merely based
upon the fact that such appropriations are in themselves
inexpedient or calculated to hinder progressive temper-
ance reforms, but that they overlook or give inadequate
attention to one of the fundamental facts in the problem
of intemperance. So long as no really effective challenge
is given to the public-house as the working-man's club
and meeting-place, so long will it be comparatively useless
to expect an improvement in popular tastes and an
appreciable diminution of intemperance.

But here again it is necessary to observe that any
attempt to meet this need by associating recreations and
amusements with the sale of liquor must certainly fail
of its object. Such an arrangement might conceivably
lead to reduced drinking in the case of a few regular


frequenters of the public-house, but any good that it might
accomplish in this direction would be far outweighed
by the temptations and inducements it would offer to
multitudes of youths and girls who have not yet learned
to frequent the public-house. If the problem of reform
be really to break a tyrannous national habit which has
grown to disastrous proportions, it would seem self-evident
that nothing must be done that would make the attrac-
tions of the public-house more seductive. The aim and
effect of temperance reforms should be to draw men away
from, rather than attract them to, the public-house.


Further, in the working of the Company system it is
essential to its full success that a Company should take
over the whole of the retail licences in a town. A partial
experiment covering the operation of a few licences only
will necessarily be hampered by competitive conditions.
Even if no actual disaster arises, an experiment working
under such conditions can give no sufficient demonstration
of the possibilities of public management. In such a
matter as the retail sale of liquor, competition does not
make for betterment, but, on the contrary, is calculated
almost in the nature of things to lower the standard
of management. " The chief test of competition,"
according to Mr. Sidney Webb, " is success in attracting
the consumer." Gresham's law of currency namely, that
bad money drives out good is, in Mr. Webb's opinion,
" equally applicable to all forms of competition. In the
matter of municipal competition in the drink trade
the private drink-seller would drive out the municipal
one." A company or municipality could easily enforce
stringent regulations if it had a monopoly of the local


traffic i.e. when the choice open to the customer lay
between stringent regulations or no liquor. But when it is

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Online LibraryJoseph RowntreeBritish 'Gothenburg' experiments and public-house trusts → online text (page 9 of 13)