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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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* The Raihmys of England, by W. M. Acworth. London : 1889,

P- 59-

" Ibid, p. 416.



THE FABIAN SOCIETY 257

elimination of the independent entrepreneur or contractor is
being rapidly effected. It was impossible that this example,
set by undertakings in many respects analogous to municipal
departments, should have no influence on the business men
who rule our Town Councils.

But although railway directors cannot be supposed to have
been bitten by the tarantula of Collectivism, every one will not
be convinced by their remarkable change of policy. They
resemble the members of a Town Council in not working for
their own personal profit, and may, it is urged, therefore be
indifferent whether their ambitious excursions into manu-
facturing industry actually pay their way. It is, therefore,
interesting to find exactly the same revolution of business
policy in large private undertakings. No better instance
could be adduced than the history of a certain world-renowned
firm of shipbuilders, whose rapid and continued expansion is
one of the marvels of modern industry.

Twenty years ago this firm constructed in their own yard
little more than the hulls of the vessels, contracting for all the
thousand and one articles of equipment with numerous other
manufacturing firms which specialized in these directions.
Nowadays, this same shipbuilding firm manufactures every one
of these articles — from triple-expansion engines down to the
brass handles of the cabin lockers — in its own works ; and
turns out its vessels from keel to topmast entirely of its own
construction. Instead of employing only shipwrights and
platers, that firm now engages men of several hundred
separate trades, who work under the salaried management of
different heads of departments.

The following letter gives some of the dates and particulars
of this industrial evolution : —

Letter from an Eminent Shipbuilding Firm as to Dates
OF Progressive Absorption of Subsidiary Processes.

I have yours of nth inst., and have much pleasure in giving
you the information you ask for respecting certain subsidiary work

s



258 MODERN SOCIALISM

previously done for us by sub-contractors but now carried out
within our own works.

In 1879 ^^^ began to rig the ships built by us.

In the same year we began to build lifeboats.

In 1880 we commenced plumbing work on board our ships, and
to make our own sails.

In 1 88 1 we opened an upholstery department to carry out that
branch of work ourselves.

In 1882 we opened an electric light department.

In was in 1880 that we started our engine works, all the engines
for vessels constructed by us up till then having been made in
outside engine works. And even after we opened the engine works
certain subsidiary machinery was obtained from outside which we
now construct ourselves.

For instance, in 1885, we first built crank shafts for main engines.
In 1887 we began to manufacture manganese bronze propeller
blades. In 1890 we began to make circulating pumps and engines,
duplex pumps, steam steering engines, and brass sidelights for
ships, and in the same year our smith work gradually merged into
general forge work.

The history of great engineering establishments shows the
same tendency. The progress of the largest firm in the
United Kingdom shows how, during the present generation,
business has been added to business, until the firm has become
one of the largest in the world, mining its own ore, making its
own pig-iron, smelting its own steel, building its own ships,
erecting its own engines, constructing its own tools, and
executing innumerable subsidiary works in every direction.

And, turning to quite another industry, we may cite the
experience of a Birmingham manufacturer of metal goods,
whose business has distanced all his rivals, and is now the
largest and most prosperous in the trade. Thirty years ago
he was completely under the dominion of the then prevalent
idea of specialization. Everything required in his business
which did not come strictly within the limited sphere of his
own specialties he obtained by contract from other firms.
Gradually his ideas changed, more and more of the subsidiary
work was done in his own factory. He began to make his own



THE FABIAN SOCIETY z-^i)

tools and machines. He commenced to repair, and then to
construct his own engines. When additions to his works were
required, he picked his own clerk of the works, bought his own
bricks, and engaged his own artisans. Year by year he has
found himself becoming less and less dependent on outside
contractors, until the other day he started making in his own
essentially metal factory even the wooden hogsheads and paper
boxes in which his goods were packed. And he himself
attributes the continued profitableness of his business, and
its very rapid expansion during times when his competitors
have often been working at a loss, mainly to this progressive
elimination of the contractor and subsidiary entreprenew.
The following memorandum describes these changes in his
business.



MeiMorandum by a Hardware Manufacturer, describing
THE Subsidiary Operations now undertaken by his
Firm.

I find that some time at the latter end of 1870 we first began to
manufacture goods that we had previously bought from other
manufacturers. These goods were chiefly unfinished work that
was required to complete the various articles that we sold. In
some cases I made the change because I thought I could make a
better article, and possibly a cheaper one. But the important
advantage was in obtaining quick deUveries, and, therefore, prompt
execution of orders. Since that date we have bought less and less
outside, and at the present time we make almost everything that we
require.

About 1868 we began to do all our own repairs to machinery,
plant, and buildings, and employed carpenters, fitters, machinemen,
bricklayers, slaters, and painters.

In 1879 w^s began to make and design machinery that we
required, and to erect new buildings. For some eight years earlier
than this I had designed all machinery, and had it made either in
Birmingham or Manchester. This alteration was made chiefly
because the machines were special, and I did not want them used
by competitors in my trade.

In 1884 we built large carpenters' fitting and erecting shops, to



26o MODERN SOCIALISM

enable us to equip ourselves a large factory we were then putting
up. These shops employed some loo hands, who for the last ten
years have been fully employed.

In 1886 we began to make all the hogsheads (used for packing),
packing cases, paper boxes, and everything that is required for the
delivery of goods to our customers. We even make what is called
wood wool, a substitute for straw. This department is a very large
one, and uses up small forests of timber. This development has
greatly facilitated the quick delivery of our goods, and has prevented
a great waste caused by breakage in transit.

Space forbids any further multiplication of instances, or we
might recount how one of the leading London publishers has
lately become his own bookbinder, whilst another well-known
firm combines in a single undertaking every stage of book-
production, from the hiring of the author at fixed wages down
to the sale of the volume by travelling pedlars. Or we might
cite the colossal manufacturer of boots, buying his own hides
in America, or his own gutta-percha in Borneo, and vending
his wares, on the other hand, in his own retail shops all over
the kingdom.

Economic criticism of the London County Council has
perhaps suffered by the fact that this integration of processes, or
union, under a single management, of many separate businesses,
has hitherto scarcely attracted economic attention. It is, of
course, by no means the same as the oft-described elimination
of the small business in competition with the large. The
tendency, in fact, is frequently the other way — a large spe-
cialized business becomes superseded because its customers
begin to do the work for themselves, each of them in a much
smaller way than the single separate factory. Thus an old-
established firm of "finishers" of certain textile manufactures
have described how, during the past thirty years, they have
one by one lost their best customers, not to any rivals in the
" finishing" trade, but because the manufacturers were steadily
tending to do their own " finishing." The essential feature of
the change is the substitution of salaried work and management



THE FABIAN SOCIETY 261

for the cnfrcpreucur labouring for his own profit. Business
men have apparently discovered, contrary to ordinary economic
opinion, that the economically most advantageous form of
industrial organization is that in which the stimulus and temp-
tation of profit is confined to as few of the actual workers as
possible. So far is it, indeed, from being true that the hope
of profit-making is the best or the cliief stimulus to industrial
efficiency that, from the mediaeval master craftsman down
to the modern captain of industry, the proportion of the
population who work for profit has been steadily diminish-
ing. The remarkable growth in the numbers of men
directly employed by municipalities and other public bodies
is, in fact, paralleled by an exactly similar growth in the
numbers of men directly employed at salaries and wages by
private establishments. The elimination of the contractor
or subsidiary oitreprenenr is the dominant fact in modern
industry.

It is also to be noticed that the tendency is to shift the
direction of industry from the producer to the consumer. The
manufacturer whose business requires a steady supply of raw
material, particular kinds of tools, engines and buildings
adapted to his'processes, or packages ready at the very moment
his wares are finished,! finds that it is more convenient,, less
liable to mistake or delay, and, in the truest sense, more
economical for him, as the consumer, to obtain all these
things by his own directly employed staff, than to rely upon
the competition of producing entrepreneurs of specialized firms.
And thus, as the manufacturer absorbs the separate producers
of the wares he consumes, he must not be surprised when the
public, the ultimate consumers of the wares he produces,
themselves apply the lesson, and, through their elected repre-
sentatives, finally absorb him.^

' Compare llic steady expansion of co-operation by associations of con-
sumers — see The Co-operative Movement in Great Britain. By Beatrice
Potter (London, 1891). The substitution, as the director of industry, of



262 MODERN SOCIALISM

Why is the elimination of the subsidiary entrepreneur more
practical now than it was in the last generation ? It would
take too long to examine the fundamental causes and con-
ditions of this change in industrial organization. Most changes
in social structure depend, in the long run, upon individual
character ; possibly there has been a growth in the number of
men who can be trusted to work efficiently and honestly as
salaried managers instead of for their own personal profit.
Possibly, too, as industrial organization becomes more complex,
the advantage to the consumer in directly controlling the pro-
duction of every article he requires, becomes more apparent.
All improvements in social organization, too — steam, telegraph,
the free use of the printing-press, and now the telephone —
facilitate the massing of workmen under single generals of
industry, able efficiently to control larger and more heteroge-
neous and more complex industrial armies than could be
managed by the captains of the past generation. Finally, as
regards the substitution of the collective for the individual
management of industry, it is evident that this will have been
rendered increasingly practicable by the perfecting of demo-
cratic organization.

All these and other influences are but fragmentary sugges-
tions towards the explanation of a change in industry of which
the policy of public authorities in getting rid of the contractor
is but one out of many manifestations. Formerly the best
business management was that which itself managed least.
Nowadays the best business management is that which can

the consumer for the producer usually implies a clear economic gain in
saving one of the processes of checking or examining. Mr. Herbert
Spencer has himself described how the Admiralty was driven to set up its
own flour-mills, because it cost too much to maintain the necessary scrutiny
of every sack of flour delivered by the contractors. The London County
Council found that it involved no more of the time and attention of their
architect and engineer actually to supervise work done by the Council's
own foreman and mechanics than to keep the necessary close watch upon
the contractor and his manager, who were anxious, not to make their men
build well, but only quickly.



THE FABIAN SOCIETY 263

safely and efficiently administer most. The integration of
productive processes under direct control of the consumers
may or may not be economic heresy ; the business history of
England for the past thirty years indicates that it is industrial
orthodoxy.



XIX

MUNICIPAL SOCIALISM

By John Burns, M.P., L.C.C.

The following letter was written for the purposes of an ephemeral
controversy ; but beyond its ephemeral references thereto, it contains
a singularly strong presentation of the Socialistic view of citizenship,
which seems the vitally Socialistic element in the new phases of
English municipal life.

John Burns (born 1858) worked as a boy in a candle factory, then
as a rivet-boy, and finally was apprenticed as an engineer. He
worked twelve months on the Niger, and in 1878 toured Europe ;
about 1880 the centre of his political work became Battersea. He
was early a member of the Social Democratic Federation ; in 1885 he
contested West Nottingham for it ; and in 1886 was twice prosecuted
—for the " West End Riot " and for the "Bloody Sunday " episode
in Trafalgar Square. He left the Social Democratic Federation ; but
in 1889 conducted a great agitation in connection with the London
Dock strike. Battersea returned him in 1888 to the London County
Council, and in 1892 to the House of Commons ; he has kept both
seats ever since.

To THE Editor of " The Times."

Sir, — When a great newspaper arraigns the best, the most
ancient, and the most remunerative form of British institutions,
it should at least undertake that task with a sense of fitness,
accuracy, fairness, and proportion.

In its articles on Municipal Socialism the Times has dis-
played none of the qualities which, properly applied, would have
checked occasional abuse in local life, restrained raw haste in

264



JOHN BURNS 265

municipal experiment, stimulated the best men of all classes
to give increasingly their unpaid services to improve their
towns, beautify their cities, and ameliorate by civic means the
communal lot of their poorer neighbours. On the contrary,
out of the welter of irrelevancy, pettiness, and prejudiced
support of vested interests which these articles disclose,
there is nothing to elevate an indispensable phase of public
life, reform its minority of erring councillors, instruct the rate-
payers, or inspire its capable municipal civil service. If the
allegations made in " Municipal Socialism " were a true reflex
of civic life in Britain, if "this is the government of Britain's
Isle," then Britain is undone. If popular representation,
Labour, Socialism, and municipal workmen were not capable
of better conduct than the Times imputes. Democracy is a
stilted make-believe, popular administration a sham, and
municipal service is but a pretext for patronage, corruption,
gluttony, and vanity. Fortunately for all, these allegations
are generally untrue ; municipal life in Britain is much purer
than the Times alleges, and if its efficiency is not yet ideal it
still is better than private enterprise and the contract system,
which it is rapidly supplanting by its innate superiority, and is
still the constant envy of all the foreign countries who sedu-
lously copy what the Times so much condemns.

That there are a few failures, that some experiments have
not achieved financial success — not always the best criterion
in human affairs — may be true ; that here and there the
transient blunders of undisciplined zealots are caused by lack
of business capacity, only proves that the sphere of municipal
activity is no more infallible than is that of Parliament itself,
and every human institution, especially criticism, and even
the Times. As for personal corruption, there is little, if any,
alleged, and less is proved. That there is too much feasting
and journeying for insufficient reason by some councillors at
the public expense but in the public interest is true, but not
new ; but this is confined to a few men in few places, and this
folly is, fortunately, diminishing. Curiously, there is less of



266 MODERN SOCIALISM

this vulgar conduct amongst Labour councillors than other
classes.

But even in this respect the most flagrant sinner is the
City of London Corporation, against which, so far, the Times
has failed to say a single word, notwithstanding that its official,
i.e. public, gluttony is as notorious as it is costly, and if the
character of the person?iel of Labour councillors is to be con-
sidered, and where defective properly condemned, it must not
be forgotten that several of the Corporation members and some
of its Lord Mayors have been censured by the Judiciary for
private trafficking and public nepotism, a vice relatively un-
known amongst the Municipal Socialists.

The authors of the articles are directing almost solely their
attacks on poor men, on Labour parties, and attribute to new
views and popular principles errors and mistakes that 20 years
ago would have been unnoticed under the old regime of Tory
aldermen, jerry-building domination, company wire-pulling, and
reactionary rule.

The fierce light of criticism is to beat only upon the West
Ham labourer, the Battersea bricklayer, and the Wolverhampton
engineer, whose entry into public office is due too often to
the abdication of municipal service by men of " superior " (?)^
classes and greater business knowledge for the leisure that rusts,
the pleasures that defile, the search for money that rarely exalts.

Worse even than that, the Times practically lays it down
that richness of personal character and wealth of public spirit
are incompatible with slender means — a fallacy that is refuted
by the degradations of public life in South Africa and America
almost exclusively by rich men.

And because some poor Labour councillors have attempted
too much in a short time, and in the face of unscrupulous
opposition, often by officials, always by the publicans, house
agents, slum owners, food adulterators, and others, who make
up the ratepayers' alliances and are the nucleus of anti-progres-
sive municipal life — then they are to be pilloried on small
errors for great crimes.



JOHN BURNS 267

The authors of the articles seek, as in tlieir Crisis in.
British Industry less to reform what exists, than to destroy
popular effort either in industrial organization or municipal
life, and in this they will inevitably fail. I suspect that their
real and greater object is to divert public attention from the
blunders of the governing caste at home and abroad, and to
divert criticism and punishment from their political allies, so
that the South African blunder can be covered up by the
"horrible doings of the West Ham Socialists" or "the awful
crimes of the Battersea Labour League " in starting a self-
supporting club and gymnasium for the diversion of potential
hooligans into comely youths and decent citizens.

The pitiably sordid defence of the railway companies
against paying their proper share of local burdens discloses
the class bias of the attack on Municipal Socialism. These V
increased rates in nearly every case have been caused through
the lack of foresight by the companies themselves, whose
blunders in approaches, railway arches, and other conveniences
have been a curse to many localities, some of which in London,
particularly Battersea, have been heavily burdened in con-
sequence.

The gross misrepresentation of municipal electric lighting,
gas, water, and tramway ownership, when one year's figures
are taken as a sample, stamps the authors as mere fuglemen of
monopoly, the mouthpiece of trust and company rule. What
is more, it proves their ignorance of the subjects of which they
try to treat. A casual reading only of the technical papers
like the Electrical Times or Ahinicipal Journal would demon-
strate that the municipalities generally, as compared with
companies, sell cheaper, generate cheaper, for kilowatt of plant
have less capital, serve the public better, and all the time are
piling up a public asset which is not only good Socialism, but
first-rate business for the ratepayers, and ultimate wealth for
the community.

The answer to all their charges against municipal trading,
its costs and results, is best given in the words of Mr. Maltbie,



268 MODERN SOCIALISM

in 1 900, after an inquiry of great care and exhaustiveness into
municipal gasworks, as compared with company exploitation : —

"Summarizing the results of municipal ownership as com-
pared with private operation under public control, it is to be
said that under the former system, prices for gas, meters, and
fittings are lower ; that the quality of gas is better, that it is
much more extensively used, that wages are higher, that the
treatment of labourers is better, that profits are nearly as large,
that works are not as highly capitalized, that sinking funds are
adequate, that productivity per unit of raw material is almost
as great, and that the management is fully as progressive ; all
in all, municipal operation has been more successful than
private operation."

Practically the same, or better, can be said of the 930
authorities who supply water, the 240 owning gasworks, the
ICO owning tramways, and the 180 supplying electricity. Cer-
tainly tramways more than justify expectations from all points
of view, especially that of housing.

Electric light, measured by the standard of cost, service,
price, and regularity, tells the same tale, as a perusal of the
electric manuals will prove. Markets do the same ; and
measured by quality of work, at less or the same price as
contract, direct employment in public building operations
comes out well. The financial aspect and monetary success
of the whole ramifications of municipal trading is proved con-
clusively by Sir Henry Fowler's return made in 1899. This
ofiicial report proved that of ;^88, 37 9,931 of capital invested
in waterworks, gasworks, tramways, electric lighting, markets,
baths, cemeteries, dwellings, piers, and miscellaneous, there
was a net profit of ;;^3,6i3,668. This business-like result
could not be secured if labour-loafing and municipal malinger-
ing prevailed to the extent alleged by the Times articles.

Similar results are shown in Reports 343 and 347, 1901,
and 1899 for Scotland. Apart from these satisfactory results,
the capacity and adaptability of municipalities to manage well
is undoubted. The Cilasgow tramways have run oft' a rival



JOHN BURNS 269

parallel steamboat service, and actually caused a great Scotch
railway to abandon its dearer and slower suburban services
because the directors thereof liave given to political lobbying
and extraneous work what should have been devoted to better
management for the public, and dividends for their share-
holders.

Truly the directors, when they see with envious eyes tlie
superiority and greater cheapness of municipal traction, can
say, " Not in our (municipal) stars, but in ourselves, that we
are underlings."

I venture to predict something similar in London for omni-
buses, railways, and even tubes, when London owns a complete
electrical surface tramway service with a universal penny fare,
but which is at present being obstructed and crippled in its
development by a small knot of Parliamentary capitalists who
find mischievous allies in the House of Lords.

What the Times really fears is not municipal mismanage-
ment, because that does not prevail. In the interest of private
enterprise it really dreads State and municipal absorption, and
more efficient working thereby, of monopolies that in service
have become intolerable, and in slowness and cost unendurable,
either for civic expansion, social needs, or commercial develop-
ment.

The Times apprehends, without cause shown, that muni-



Online LibraryR. C. K. (Robert Charles Kirkwood) EnsorModern socialism, as set forth by socialists in their speeches, writings, and programmes; → online text (page 25 of 35)