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R. C. K. (Robert Charles Kirkwood) Ensor.

Modern socialism, as set forth by socialists in their speeches, writings, and programmes; online

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employer to pay wages upon which, as he perfectly well
knows, it is impossible for the worker to maintain himself or
herself in efficiency. But when a Board of Poor Law
Guardians finds itself rescuing from starvation, out of the
poor rate, women actually employed by one of its own
contractors to make up workhouse clothing, at wages in-
sufficient to keep body and soul together, even the most
rigorous economist would admit that something was wrong.^
The London County Council, responsible as it is for the
health of the people of London, declines to use its position as
an employer deliberately to degrade that health by paying
wages obviously and flagrantly insufficient for maintenance,
even if competition drives down wages to that pitch. The
economic heretics, in fact, are not the Council, but those who,
in flat defiance of Adam Smith, McCuUoch, Mill, and Marshall,
alike, persist in assuming that there is some obligatory " law "
that the pressure of competition ought, without interference
from man, to be allowed so to act as to degrade the standard
of life of the whole community.

' The Chelsea Board of Guardians was, in 1894, paying its scrubbers
IS. 6d. a day, without food, which amounts to a weekly wage of 9s. A
day's illness is sufficient to force such a worker to seek relief from the rates^
and the Board then finds itself rescuing from starvation its own underpaid
workpeople.



246 MODERN SOCIALISM

The Moralization of the Contractor.

Some critics, however, who do not object to the Council,
like a prudent housekeeper or an experienced employer, fixing
the wages of its servants at an adequate sum, demur to any
interference with the freedom of contractors, and denounce as
economically heretical the Council's standing order confining
the Council's work to such firms as adopt the standard rate of
wages. It is, say such critics, no concern of the Council how
a contractor manages his business ; and if he can get his
workmen at less than the ordinary price of the best men, so
much the better for him, and, in the long run, for his customers.
The very object of industrial competition, they would add, is to
keep the cost of production down to the lowest possible point,
and any interference with the contractor's freedom to do his
business in his own way tends to increase that cost.

It will, however, be obvious to the economist that these
criticisms confuse cost of production with expenses of produc-
tion. What the community has at heart is a reduction of the
cost of production — that is, of the efforts and sacrifices involved
in getting the object desired. This is of no concern to the
contractor. What he wants is to diminish the expenses of
production to himself — that is, the sum which he has to pay
for materials and labour. This object he may effect in one of
two ways. He may, by skilful management, ingenious inven-
tion, or adroit manipulation of business, get the work accom-
plished with less effort and sacrifice on the part of those
concerned, allowing of a reduction of the out-of-pocket pay-
ments by himself; or he may, on the other hand, without
diminishing the effort and sacrifices, induce those concerned to
accept a smaller remuneration for their labour. Either way
will equally serve his profit, but either way will not equally
serve the community. In the first case, a real economy in the
cost of production has been effected, to the gain of all con-
cerned. In the second case, no economy in the cost of pro-
duction has taken place ; but the pressure of competition has



THE FABIAN SOCIETY 2+7

been used to depress the standard of life of some of the
workers. The one result is a real and permanent advantage
to the community ; the other is a serious economic calamity,
bringing far-reaching secondary evils in its train.

Now, many large fortunes have been made by contractors
pursuing each of these mediods, and the " good business man "
doubtless resorts to both of them as opportunity serves. Un-
fortunately it is much more difficult and toilsome to be per-
petually making new inventions, devising fresh labour-saving
expedients, or discovering unsuspected economies, than to pare
down wages, even at the risk of producing a slight falling-off
in quality, provided that the deterioration is not so gross as to
cause the actual rejection of the work. It is so hard to spend
laborious nights and days in improving processes. It is so
easy to find workmen eager for a job at 10 per cent, below
the standard rate. " Mankind," says Emerson, " is as lazy as
it dares to be," and contractors are no exception. It is safe to
say that the more you leave it open to a contractor to make a
profit, by reducing the expenses of production, the less he will
trouble about lowering the cost. So much is this the case
that, under a prolonged regime of free and unrestricted com-
petition, the very existence of the alternative has often been
forgotten. " Profits," said one capitalist, " are the shavings of
wages."

It was in order to put a stop to the constant tendency of
contractors to nibble at the current standard wages that the
London County Council inserted its celebrated fair wages
clauses. These clauses, it will be observed, leave open to con-
tractors every chance of profit which comes from reduction of
the cost of production. By concentrating the contractor's
energy and attention on this point they presumably increase
the fierceness of that part of the competitive struggle which
promotes the public good. But, just as the Factory Acts,
the Mines Regulation Acts, and the Education Acts, " rule
out " of industrial competition the cheapness brought about by
the overwork of women and children, or the neglect of sanitary



248 MODERN SOCIALISM

precautions, so the London County Council, representing the
people of London, declines to take advantage of any cheapness
that is got by merely beating down the standard of life of
particular sections of the wage-earners. Here, the key-note of
the Council's policy is, not the abolition of competition, but the
shifting of its plane from mere cheapness to that of industrial
efficiency. The speeding up of machinery, the better organi-
zation of labour, the greater competency of manager, clerk, or
craftsman, are all stimulated and encouraged by the deliberate
closing up to the contractor of other means of making profit.^

And just as the Factory Acts have won their way to econo-
mic approval, not merely on humanitarian grounds, but as
positively conducive to industrial efficiency, so, too, it may
confidently be predicted, will the now widely adopted fair
wages clauses.^

Municipal Industry.

We come to an altogether different range of criticism when
we consider the Council's determination to dispense, wherever
possible, with the contractor, and execute its works by engag-
ing a staff of workmen under the supervision of its own salaried
officers. This has been fiercely attacked as being palpably
and obviously opposed to political economy and business
experience. It is worth while to place on record the facts.

Constructive work was not undertaken at first, but labour

• The economist will recall the analogous effect which labour legislation
and strong trade unions have had in increasing the efficiency of the Lan-
cashire cotton industry. Compare, too, Mr. Mather's testimony to the
beneficent effect upon employers of trade union action in the engineering
trade (see Contemporary Revinv, vol. Ixii., 1892, and S. and B. Webb's
IncUistrial Democracy).

■ Many local governing bodies have adopted some kind of fair wages
clause in their contracts. Particulars of regulations in 218 places are given
in Parliamentary Return li. C. 47 of P'eb. II, 1S98, "Urban Sanitary
Districts (Conditions of Contracts)," 2\d. Compare also the House of
Commons' unanimous resolutions of Feb. 13, 1891, and March 6, 1893,
imposing the principle for Government contracts.



I



THE FABIAN SOCIETY 249

was hired to clean the bridges ' and to repair the Council
offices,^ at a considerable saving compared with contract prices.
The first piece of building work was executed by the Main
Drainage Committee at ^^536 below the lowest tender of
^2188. But the case which finally convinced three out of
every four members of the Council of the desirability of execu-
ting their own works was the York Road Sewer. The engineer
estimated the cost at ^'jooo, and tenders were invited in the
usual manner. Only two were sent in, one for ^^i 1,588, and
the other for ;^i 1,608. The Council determined to do the
work itself, with the result that a net saving of ;:^4477 was
made."

This remarkable result naturally created a sensation in the
contracting world, and attempts were made to impugn the
engineer's figures. In his crushing reply he pointed out that
the contractors had reckoned out their tenders at absurdly high
prices in nearly every detail, charging, for instance, 60^. and
"JOS. respectively per cubic yard of brickwork and cement,
whereas the work was done at 395'. It is clear from the other
particulars given, and from facts notorious at the time,
that an agreement had been come to among contractors not to
compete with one another for this job, in order to induce the
Council to abandon its fair wages clause. The Council
preferred to abandon the contractor.^

The outcome was the establishment, in the spring of 1893,
of a Works Department to execute works required by the other
committees in precisely the same manner as a contractor. The
Works Department stands to the other committees of the
Council exactly in the same relation as if it were an indepen-
dent contractor. When a committee has any work to execute,
the Council's architect and engineer prepare the plans and
make an estimate, without any reference to the Works

* Minutes, October l8, 1S92, pp. 900,901,
^ Minutes, June 27, 1893, p. 683.

^ Minutes, October 17, 1893.

* See the fuller particulars in Minutes of October 31, 1893, PP- 1063-5.



250 MODERN SOCIALISM

Department. Then the Council decides whether the work shall
be done with or without a contractor. Sometimes it decides to
put the work up to tender, a course which enables it to see
whether the estimates of the architect and engineer are trust-
worthy guides. The Works Department may say that it is
not prepared to do the work, either because it is not satisfied
with the specifications and estimates, or because it has no con-
venience for doing work at that particular site, or of that
particular kind. In that case the job is put up to tender and
done by a contractor.

The accounts of the Works Department are kept distinct
from those of other departments of the Council. The Finance
Committee sees that it is debited with the interest and sinking
fund on all the capital it uses ; that full allowance is made to
cover depreciation and renewals ; that a complete stocktaking
is regularly carried out by independent officers ; and that all
outgoings and maintenance charges are properly spread over
the various works done. The accounts are elaborately checked
by the Council's Controller, as well as by the Local Govern-
ment Board's Auditor.

The Works Department has now been at work for over six
years, during which it has executed over ^1,000,000 worth of
work of the most varied character — sewer construction, the
making of roads, building houses of every kind, erecting
bridges, carrying out of every sort of repairing and decorating
jobs, and an innumerable array of miscellaneous operations.
Whether, and to what extent, this work has been done cheaper
than it would have been done by contractors is a matter of hot
controversy.^ The Progressives assert that, even with all the
disadvantages of starting a new business, and struggling with
** wreckers " inside the Council, the whole ^1,000,000 worth
of work has, taken as a whole, and including the "jobbing

* See The Truth about the IVofhs Department 0/ the London County
Council. (London Reform Union.) The year ended September 30, 1899,
shows a "profit " of ;i^io,365 on completed works estimated at £j9,2'jo
(Minutes, Nov, 1899) .



THE FABIAN SOCIETY 251

work," been executed at just about what the contractors would
have charged. The Moderates declare that it has cost more ;
but even they do not put the excess at more than about 5 per
cent, on the whole of the architect's estimate — an excess which
any one accustomed to builders' bills will think amazingly low.
But no sound judgment on the policy of dispensing with the
contractor can be formed on statistics of this kind, extending
over so brief a period. We must take a wider sweep, and see
what inferences can be drawn from other experience.

It is usually assumed by the Council's critics, that its policy
of eliminating the contractor is an unparalleled innovation,
unknown outside London. A little knowledge of the action of
local governing bodies elsewhere would prevent this mistake.
It is, of course, unnecessary to remind the reader that
Birmingham,^ dominated by the strictest sect of the Individua-
lists, has municipalized its water and its gas, which are in
London still left to private enterprise. What is not so well
known is that the Town Council dispenses with the contractor
whenever it can, each committee getting much of its own work
done by its own directly employed staff. The Public Works
Committee, which looks after the thoroughfares, and the
Health Committee, which is responsible for sanitation, have
not only entirely eliminated the contractor from the cleaning
and repairing of the streets and the removal of refuse, but even
from the laying down of granite paving and flagging, once a
most profitable item of his business. The Gas Committee is
not content with employing hundreds of men to make gas, but
also keeps its own staff of carpenters, bricklayers, blacksmiths,
tinmen, painters, fitters, etc., to execute its numerous works.
The Improvements Committee, hke the Estates Committee, has
its own carpenters, fitters, bricklayers, paperhangers, plasterers,
and zincworkers, whilst the Water Committee, besides a
regular staff of mechanics of all kinds, is now actually engaged

* Return of Hours of Labour, Wages, etc. (Appendix to Birmingham
General Purposes Committee's Report, July 25, 1893). See Appendix
IL, p. 18.



2s2



MODERN SOCIALISM



in constructing several huge dams and reservoirs near Rhayader,
two tunnels and various water towers and syphons, together
with workmen's dwellings to accommodate a thousand people,
stables, stores, workshops, a public hall and recreation room, a
school, two hospitals, and a public-house — all without the
intervention of a contractor. The construction of all the build-
ings on the works is being carried out by the workmen of
the Corporation, under the superintendence of the resident
engineer and his assistant. The timber and other material is
being purchased by tender. " This method," reports the
Water Committee, " of using material supplied by contract, and
constructing by the direct employees of the Corporation, the
Committee consider, under the circumstances of the case, to be
the most economical, as well as calculated to secure the best
results." But this is not all. The Water Committee, finding
that the village would have beer, has decided also in this
matter to dispense with any entrepreneur, and has " resolved
that a canteen shall be established in the village," out of the
capital of the Birmingham citizens, and " that the person
managing it shall have no interest whatever in the quantity
sold." 1

And if we turn to Liverpool we learn that '* almost all the
city engineer's work is done by men directly employed by the
Corporation. . . . The construction of sewers is now done
entirely by the Corporation themselves. . . . They had such a
cruel experience of doing the work of sewering by contractors
that they have given it up." ^ It appears that in the old days,
when the contractors agreed and charged for two courses of
brickwork, no amount of inspection sufficed to prevent them
putting in one only. " What happened was this : that whenever
the Inspector came round, or the Clerk of Works, to watch
the contractors, they found the two rings of brickwork going

' Report of the Birmingham Water Committee, presented February
6, 1894.

^ Evidence of the Deputy Town Clerk of Liverpool before the Unifi-
cation of London Commission, p. 328 of C — 7493-I



I



THE FABIAN SOCIETY 253

on very well ; as soon as the Inspector went away . . . the
second ring of brickwork was left out . . . and so the sewer
got weak, . . . You could trace the visits of the Inspector by
the double rings " which were found here and there at intervals
when the sewers were subsequently uncovered for repairs,^

This evidence from Liverpool is especially interesting in
connection with what has recently been discovered at Man-
chester. The Auditor's report, published in 1896, exposes
a precisely similar fraud in connection with the thirty-five miles
of new sewers now under construction. This work was let to
thirty-four different contractors, who had already received
over ;3^ 600,000 for their work. The new city surveyor,
finding that the work had been scamped, had " street after
street taken up at great expense, and such an exposure was
made of fraud and deceit as I," writes the auditor, " have
never before seen. The men who built these sewers in
a tunnel never dreamed that their rascality would be dis-
covered." The chief method adopted was, as at Liverpool,
leaving out one ring of brickwork, except when the Corporation
Inspector was signalled as being about to descend the shaft.
Then the workmen hastily put on a second row of bricks at
that spot. The frequency of the Inspector's visits to each bit
of work were found marked by this extra ring of bricks, here
and there, instead of along the whole length of the sewer.^

Nor are these Councils in any way exceptional in their
steady progress towards the elimination of the contractor. In
the early days of municipal activity practically everything was
let out to a contractor. Nowadays every large municipality,
even if it does not possess any separate Works Department,
has a staff of mechanics and artisans in regular municipal
employment, and every day executes many important works
and services by its own workmen, which were formerly let by
tender to the lowest bidder.

' Evidence of the Deputy Town Clerk of Liverpool before the Unifi-
cation of London Commission, p. 328.

- Report of the Citizens' Auditor of the City of Manchester for 1895.



254 MODERN SOCIALISM

Nor is it in municipal boroughs alone that we see the
change in policy. Nothing was more common a few years
ago than for highway authorities to get their roads kept in
order by contractors. An interesting return obtained in 1892
by the County Surveyors' Society shows that this practice has
been almost entirely abandoned in favour of direct employment
of labour by the county surveyor. Only in one or two
counties out of thirty-five furnishing particulars does the old
custom linger. The county surveyor for Gloucestershire
indignantly denied an allegation that he favoured the contract
system, " It does not commend itself to me in any way," he
writes, " and encourages a low form of sweating. My own
experience of road-contracting is that it does very well for five
years, then the roads go to pieces, and you have to spend all
your previous savings to put them to rights." ^

When we thus find even the County Councils in rural districts
giving up the contractor, it ceases to be surprising that the
Town Council of Manchester, in the city of Cobden and Bright,
now manufactures its own bass-brooms, or even that the ultra-
conservative Commissioners of Sewers of the City of London,
actually set the County Council an example by manufacturing
their own carts.^ The superiority of direct municipal employ-
ment, under salaried supervision, to the system of letting out
works to contractors has, in fact, been slowly borne in on the
best municipal authorities all over the country by their own
administrative experience, quite irrespective of social or
political theories.

Integration of Processes.

Business men, not so very long ago, would have argued
that this policy of including all kinds of industrial processes

^ Particulars of Ma?iagement of Main Roads iji England and Wales^ a
report compiled for the County Surveyors' Society, by Mr. Heslop, County
Surveyor for Norfolk. See Builder, March 19 and 26, 1892.

- Statement of the Commissioners of Sewers, presented to the Royal
Commission on London Unification.



THE FABIAN SOCIETY 255

under one administration was contrary to the lessons of
business experience. The last generation of captains of
industry believed in each undertaking sticking closely to its
own special trade, and contracting with similarly specialized
undertakings for all subsidiary parts of the business. " Never
make anything yourself that you can buy elsewhere " was a
common industrial maxim. The last thirty years have changed
it to " Never buy from any one else what you can manufacture
for yourself."

The most familiar instance of this revolution of policy is
seen in the English railway companies. Once a railway com-
pany was an association for getting a railway made, and running
trains on it. An able essay written by Mr. Herbert Spencer
forty years ago, protested strongly against any extension of
a railway company's scope. Nowadays an up-to-date railway
company runs docks, canals, ferries, steamships, and hotels
of its own, and carries on, besides, innumerable subsidiary
businesses, and manufactures every conceivable kind of article,
entirely by its own operatives, working under its own salaried
staff. The directors of the London and North-Western Railway
Company, for instance, with a comprehensiveness that would
have staggered George Stephenson, lay it down as an axiom
that the company " should be dependent on the outside world
for as few as possible of the necessaries of life." The manager
at the company's great workshop-town of Crewe, *' can think of
nothing of importance that is imported in a manufactured state,
except copper tubes for locomotive boilers." " As we pass from
shop to shop, here may be seen a steel canal boat in process of
construction (for the company, it must be remembered, is a
great canal proprietor) ; there, a lattice-work bridge is being
fitted together. Further on, hydraulic pumps, cranes, and
capstans crowd a huge shed. In another place, chains of all
sorts and sizes, from cables to harness traces, are being forged
by the ton ; close by, coal-scuttles and lamps are being turned
out by the hundred. In all the works there is no stranger sight
than a corner in the carpenters' shop, where two men are



256 MODERN SOCIALISM

constantly employed making artificial limbs. Some two years
back (that is, about 1885) the company embarked on this
branch of manufacture, and undertook to supply legs and
arms of the most finished workmanship to any man who lost
his own in their service." ^

Nothing indeed is too small or too great for the North-
Western to manufacture for itself. Crewe turns out a new loco-
motive engine every five days, and you may watch the company's
own rails being rolled in its own steel works. At Wolverton,
Mr. Acworth recounts how he *' came upon a man engaged in
etching designs upon the plates of ground glass that were to
form the windows of lavatory compartments, and was told that
the company had recently found that it could do this work for
itself at half the price it had formerly paid " (pp. 60, 61). Since
1 88 1 the North- Western has been steadily eliminating the
privately owned waggon. For over twenty years the companies
have managed their own collection and delivery business.
Nearly every company, too, now builds its own carriages. The
Midland Railway prints its own tickets ; whilst the Great
Eastern goes a step further, and executes in its Stratford works
nearly the whole of its own printing, including its gorgeous
coloured posters and pictorial advertisements. " In the
printing works the company keeps about no persons con-
stantly employed, and is understood to save a good deal of
money by doing so." ^

But the Midland has tried another experiment. At the
great Trent stores are between three and four hundred thou-
sand empty corn sacks, which the company furnishes for the
conveyance of the corn from the farmer to the miller. Here,
too, the contractor formerly existed and made a profit, until, a
few years ago, the business was undertaken by the Company
itself.

In every branch of railway management, in short, the



Online LibraryR. C. K. (Robert Charles Kirkwood) EnsorModern socialism, as set forth by socialists in their speeches, writings, and programmes; → online text (page 24 of 35)