Essays in Liberalism

Foremost among them I place the consideration I have just indicated: that in this way, and in this way alone, it becomes possible for work-people who receive high wages when they are at work, and where habits of expenditure and standards of family living are built up on that basis, to receive when unemployed, adequate relief without that leading to anomalies which in the long run would prove intolerable. But there are many other arguments.

A Model Scheme from Lancashire

About five years ago I had the opportunity of witnessing at very close quarters the working of an unemployment scheme on an industrial basis. The great Lancashire cotton industry was faced during the war with a very serious unemployment problem, owing to the difficulty of transporting sufficient cotton from America. It met that situation with a scheme of unemployment relief, devised and administered by one of those war Control Boards, which in this case was essentially a representative joint committee of employers and employed. The money was raised, every penny of it, from the employers in the industry itself; the Cotton Control Board laid down certain rules and regulations as to the scale of benefits, and the conditions entitling a worker to receive it; and the task of applying those rules and paying the money out was entrusted to the trade unions.

Well, I was in a good position to watch that experiment. I do not think I am a particularly credulous person, or one prone to indulge in easy enthusiasms, and I certainly don’t believe in painting a fairy picture in glowing colours by way of being encouraging. But I say deliberately that there has never been an unemployment scheme in this country or in any other country which has worked with so little abuse, with so few anomalies, with so little demoralisation to any one, and at the same time which has met so adequately the needs of a formidable situation, or given such general satisfaction all round as that Cotton Control Board scheme.

I cannot describe as fully as I should like to do the various features which made that scheme attractive, and made it a success. I will take just one by way of illustration. It is technically possible in the cotton trade to work the mills with relays of workers, so that if a mill has 100 work-people, and can only employ 80 work-people each week, the whole 100 can work each for four weeks out of the five, and “play off,” as it is called, in regular sequence for the fifth week. And that was what was done for a long time. It was called the “rota” system; and the “rota” week of “playing off” became a very popular institution. Under that system, benefits which would have been far from princely as the sole source of income week after week—they never amounted to more than 30/– for a man and 18/– for a woman—assumed a much more liberal aspect. For they came only as the occasional variants of full wages; and they were accompanied not by the depressing circumstances of long-continued unemployment, but by what is psychologically an entirely different and positively exhilarating thing, a full week’s holiday. That meant that the available resources—and one of the difficulties of any scheme of unemployment relief is that the resources available are always limited—did much more to prevent misery and distress, and went much further towards fulfilling all the objects of an unemployment scheme than would have been possible otherwise.

That system was possible in the cotton trade; in other trades it might be impossible for technical reasons, or, where possible, it might in certain circumstances be highly undesirable. The point I wish to stress is that under an industrial scheme you have an immense flexibility, you can adapt all the details to the special conditions of the particular industry, and by that means you can secure results immeasurably superior to anything that is possible under a universal State system. Moreover, if certain features of the scheme should prove in practice unsatisfactory, they can be altered with comparatively little difficulty. You don’t need to be so desperately afraid of the possibility of making a mistake as you must when it is a case of a great national scheme, which can only be altered by Act of Parliament.

The Moral Obligation of Industries

I do not underrate the difficulty of applying this principle of industrial relief over the whole field of industry. There is the great difficulty of defining an industry, or drawing the lines of demarcation between one trade and another. I have not time to elaborate those difficulties, but I consider that they constitute an insuperable obstacle to anything in the nature of an Act of Parliament, which would impose forcibly upon each industry the obligation to work out an unemployment scheme. The initiative must come from within the industry; the organisations of employers and employed must get together and work out their own scheme, on their own responsibility and with a free hand. And, if it happens in this way—one industry taking the lead and others following—these difficulties of demarcation become comparatively unimportant. You can let an industry define itself more or less as it likes, and it does not matter much if its distinctions are somewhat arbitrary. It is not a fatal drawback if some firms and work-people are left outside who would like to be brought in. And if there are two industries which overlap one another, each of which is contemplating a scheme of the kind, it is a comparatively simple matter for the responsible bodies in the two industries to agree with one another as to the lines of demarcation between them, as was actually done during the war by the Cotton Control Board and the Wool Control Board, with practically no difficulty whatever. But for such agreements to work smoothly it is essential that the industries concerned should be anxious to make their schemes a success; and that is another reason why you cannot impose this policy by force majeure upon a reluctant trade. It is in the field of industry that the real move must be made.

But I think that Parliament and the Government might come in to the picture. In the first place, the ordinary national system of unemployment relief, which must in any case continue, might be so framed as to encourage rather than to discourage the institution of industrial schemes. Under the Insurance Act of 1920 “contracting out” was provided for, but it was penalised, while at the present moment it is prohibited altogether. I say that it should rather be encouraged, that everything should be done, in fact, to suggest that not a legal but a moral obligation lies upon each industry to do its best to work out a satisfactory unemployment scheme. And, when an industry has done that, I think the State should come in again. I think that the representative joint committee, formed to administer such a scheme, might well be endowed by statute with a formal status, and certain clearly-defined powers—such as the Cotton Control Board possessed during the war—of enforcing its decisions.

But—and, of course, there is a “but”—we cannot expect very much from this in the near future. We must wait for better trade conditions before we begin; and, as I have already indicated, the prospects of really good trade in the next few years are none too well assured. For a long time to come, it is clear, we must rely upon the ordinary State machinery for the provision of unemployment relief; and, of course, the machinery of the State will always be required to cover a large part of the ground. The liability which an industry assumes must necessarily be strictly limited in point of time; and there are many occupations in which it will probably always prove impracticable for the occupation to assume even a temporary liability. For the meantime, at any rate, we must rely mainly upon the State machinery. Is it possible to improve upon the present working of this machinery? I think it is. By the State machinery I mean not merely the Central Government, but the local authorities and the local Boards of Guardians.

The Present Machinery of Relief

At present what is the situation? Most unemployed work-people are entitled to receive certain payments from the Employment Exchanges under a so-called Insurance scheme, which is administered on a national basis; some weeks they are entitled to receive those payments, other weeks they are not; but in any case those payments afford relief which is admittedly inadequate, and they are supplemented—and very materially supplemented—by sums varying from one locality to another, but within each locality on a uniform scale, which are paid by the Boards of Guardians in the form of outdoor relief. Now that situation is highly unsatisfactory. The system of outdoor relief and the machinery of the Guardians are not adapted for work of this kind. They are designed to meet the problem of individual cases of distress, not necessarily arising from unemployment, but in any event individual cases to be dealt with, each on its own merits, after detailed inquiry into the special circumstances of the case. That is the function which the Guardians are fitted to perform, and it is a most important function, which will still have to be discharged by the Guardians, or by similar local bodies, whatever the national system of unemployment relief may be. But for dealing with unemployment wholesale, for paying relief in accordance with a fixed scale and without regard to individual circumstances—for that work the Guardians are a most inappropriate body. They possess no qualification for it which the Central Government does not possess, while they have some special and serious disqualifications.

In any case, it is preposterous that you should have two agencies, each relieving the same people in the same wholesale way, the Employment Exchanges with their scale, asking whether a man is unemployed, and how many children he has to support, and paying him so much, and the Guardians with their scale, asking only the same questions and paying him so much more. It would obviously be simpler, more economical, and more satisfactory in every way, if one or other of those agencies paid the man the whole sum. And I have no hesitation in saying that that agency should be the Central Government. Perhaps the strongest argument in favour of that course is that, when relief is given locally, the money must be raised by one of the worst taxes in the whole of our fiscal system, local rates, which are tantamount to a tax, in many districts exceeding 100 per cent., upon erection of houses and buildings generally. It is foolish to imagine that any useful end is served by keeping down taxes at the expense of rates.

Serious as is the problem of national finance, the fiscal resources of the Central Government are still far more elastic and less objectionable than those which the local authorities possess. I suggest, accordingly, as a policy for the immediate future, the raising of the scale of national relief to a more adequate level, coupled with the abolition of what I have termed wholesale outdoor relief in the localities. What it is right to pay on a uniform scale should be paid entirely by the Central Government, and local outdoor relief should be restricted to its proper function of the alleviation of cases of exceptional distress after special inquiries into the individual circumstances of each case.

One final word to prevent misconception. I have said that our present system of relief is unsatisfactory, and I have indicated certain respects in which I think it could be improved. But I am far from complaining that relief is being granted throughout the country as a whole upon too generous a scale. Anomalies there are which, if they continued indefinitely, would prove intolerable. But we have been passing through an unparalleled emergency. Unemployment in the last two years has been far more widespread and intense than it has ever been before in modern times, and never was it less true that the men out of work have mainly themselves to blame. But it has meant far less distress, far less destruction of human vitality, and I will add far less demoralisation of human character than many of the bad years we had before the war. That is due to the system of doles, the national and local doles; and in the circumstances I prefer that system with all its anomalies to the alternative of a substantially lower scale of relief. We are still in the midst of that emergency; and if we are faced, as I think for this decade we must expect to be faced, with that dilemma which I indicated earlier, I should prefer, and I hope that every Liberal will prefer, to err by putting the scale of relief somewhat too high for prudence and equity rather than obviously too low for humanity and decency.

THE PROBLEM OF THE MINES

By Arnold D. McNair

M.A., LL.M., C.B.E.; Fellow of Gonville and Caius College, Cambridge; Secretary of Coal Conservation Committee, 1916-1918; Secretary of Advisory Board of Coal Controller, 1917-1919; Secretary of Coal Industry Commission, 1919 (Sankey Commission).

Mr. McNair said:—Need I labour the point that there is a problem of the Mines? Can any one, looking back on the last ten years, when time after time a crisis in the mining industry has threatened the internal peace and equilibrium of the State, deny that there is something seriously wrong with the present constitution of what our chairman has described as this great pivotal industry? What is it that is wrong? If I may take a historical parallel, will you please contrast the political situation and aspirations of the working-class population at the close of the Napoleonic wars with their industrial situation and aspirations now. Politically they were a hundred years ago unenfranchised; more or less constant political ferment prevailed until the Reform Bill, and later, extensions of the franchise applied the Liberal solution of putting it within the power of the people, if they wished it, to take an effective share in the control of political affairs.

Industrially, their situation to-day is not unlike their political situation a hundred years ago. Such influence as they have got is exerted almost entirely outside the constitution of industry, and very often in opposition to it. Their trade unions, workers’ committees, councils of action, triple alliances, and so forth, are not part of the regular industrial machine, and too often are found athwart its path. They are members of an industry with substantially no constitutional control over it, just as a hundred years ago they were members of a State whose destinies they had no constitutional power to direct.

This does not mean that a hundred years ago every working man wanted the political vote, nor that now he wants to sit on a committee and control his industry. It meant that a substantial number of the more enlightened and ambitious did—a large enough number to be a source of permanent discontent until they got it. The same is true to-day in the case of many industries. Many men in all classes of society are content to do their job, take their money, go home and work in their gardens, or course dogs or fly pigeons. They are very good citizens. Many others, equally good citizens, take a more mental and active interest in their job, and want to have some share in the direction of it. This class is increasing and should not be discouraged. They constitute our problem. The Liberal solution of a gradually extended franchise has cured the political ferment. Political controversy is still acute, and long may it remain so, as it is the sign of a healthy political society. But the ugly, ominous, revolutionary features of a hundred years ago in the sphere of politics have substantially gone or been transferred to the industrial sphere.

The Liberalisation of Industry

The same solution must be applied to that sphere. This does not mean transferring the machinery of votes and elections to industry. It means finding channels in industry whereby every person may exercise his legitimate aspiration, if he should feel one, of being more than a mere routine worker while still perhaps doing routine work, and of contributing in an effective manner his ideas, thoughts, suggestions, experience, to the direction and improvement of the industry. We have satisfied the desire for self-expression as citizens, and we have now to find some means of satisfying a similar desire for self-expression as workers in industry. That is all very vague. Does it mean co-partnership, profit-sharing, co-operative societies, joint committees, national wages boards, guild socialism, nationalisation? It may mean any or all of these things—one in one industry, one in another, or several different forms in the same industry—whatever experiment may prove to be best suited to each industry. But it must mean opportunity of experiment, and experiment by all concerned. It must mean greater recognition by employers of their trusteeship on behalf of their work-people as well as their shareholders; greater recognition of the public as opposed to the purely proprietary view of industry; and recognition that the man who contributes his manual skill and labour and risks his life and limb is as much a part of the industry as a man who contributes skill in finance, management, or salesmanship, or the man who risks his capital.

Coming to the mines, that is, the coal mining industry (with a few incidental mines such as stratified ironstone, fireclay, etc., which need not complicate our argument), the first step to the solution of the problem of the mines, i.e. the collieries, the mining industry, is the solution of the problem of the minerals. This distinction is not at first sight obvious to all, but it is fundamental. The ownership and leasing of the coal is one thing, the business or industry of mining it is quite another. State ownership of the former does not involve State ownership of the latter. That is elementary and fundamental. It lies at the root of what is to follow.

Will you picture to yourself a section of the coal-mining industry in the common form of the pictures one sees of an Atlantic liner cut neatly in two so as to expose to view what is taking place on each deck. On top you have the landowner, under the surface of whose land coal, whether suspected or not, has been discovered. He may decide to mine the coal himself, but more frequently—indeed, usually—he grants to some persons or company a lease to mine that coal on payment of what is called a royalty of so much for every ton extracted. Thereupon he is called the mineral-owner or royalty-owner, and the persons or company who actually engage in the business or industry of coal mining and pay him the royalties we shall call the colliery-owners. Do not be misled by the confusing term “coal-owners.” Very frequently the colliery-owners are called the “coal-owners,” and their associations “coal-owners’ associations.” That is quite a misnomer. The real coal-owner is the landowner, the royalty-owner, though it may well happen that the two functions of owning the minerals and mining them may be combined in the same person. Below the colliery-owners we find the managerial staff; below them what may be called the non-commissioned officers of the mine, such as firemen or deputies, who have most important duties as to safety, and below them the miners as a whole, that is, both the actual coal-getters or hewers or colliers and all the other grades of labour who are essential to this the primary operation.

The Question of Royalties

Coming back to the royalty-owner, you will see his functions are not very onerous. He signs receipts for his royalties and occasionally negotiates the terms of a lease. But as regards the coal-mining industry, he “toils not, neither does he spin.” I do not say that reproachfully, for he (and his number has been estimated at 4000) is doubtless a good husband, a kind father, a busy man, and a good citizen. But as regards this industry he performs no essential function beyond allowing the colliery-owners to mine his coal.

What is the total amount annually paid in coal royalties? We can arrive at an approximate estimate in this way: Average output of coal for five years before the war, roughly, 270,000,000 tons; average royalty, 5½d. per ton, which means, after deducting coal for colliery consumption and the mineral rights duty paid to the State by the royalty-owner, roughly £5,500,000 per annum paid in coal royalties. Regarding this as an annuity, the capital value is 70 millions sterling if we allow a purchaser 8 per cent. on his money (12.5 years’ purchase), or 55½ millions sterling if we allow him 10 per cent. (10 years’ purchase). For all practical purposes the annuity may be regarded as perpetual.

Now the State must acquire these royalties. That is the only practicable solution, and a condition precedent to any modification in the structure of the coal-mining industry so long as the participants in that industry continue unwilling or unable to agree upon those modifications themselves. Why and how? (1) First and foremost because until then the State is not master in its own house, and cannot make those experiments in modifying conditions in the industry which I believe to be essential to bring it into a healthy condition instead of being a standing menace to the equilibrium of the State—as it was before the war, and during the war, and has been since the war; (2) the technical difficulties and obstacles resulting from the ownership of the minerals being in the hands of several thousand private landowners and preventing the economic working of coal are enormous. You will find abundant evidence of this second statement in the testimony given by Sir Richard Redmayne and the late Mr. James Gemmell and others before the Sankey Commission in 1919.

How is the State to acquire them? Not piece-meal, but once and for all in one final settlement, by an Act of Parliament providing adequate compensation in the form of State securities. The assessment of the compensation is largely a technical problem, and there is nothing insuperable about it. It is being done every day for the purpose of death duties, transfer on sale, etc. Supposing, for the sake of argument, 55½ millions sterling is the total capital value of the royalties, an ingenious method which has been recommended is to set aside that sum not in cash but in bonds and appoint a tribunal to divide it equitably amongst all the mineral-owners. That is called “throwing the bun to the bears.” The State then knows its total commitments, is not involved in interminable arbitrations, and can get on with what lies ahead at once, leaving the claimants to fight out the compensation amongst themselves. This does not mean that the State will have to find 55½ millions sterling in cash. It means this, in the words of Sir Richard Redmayne: “The State would in effect say to each owner of a mineral tract: The value of your property to a purchaser is in present money £x, and you are required to lend to the State the amount of this purchase price at, say, 5 per cent. per annum, in exchange for which you will receive bonds bearing interest at that rate in perpetuity, which bonds you can sell whenever you like.”

The minerals or royalties being acquired by the State, what then? For the first time the State would be placed in a strategic position for the control and development of this great national asset. Having acquired the minerals and issued bonds to compensate the former owners, the State enters into the receipt of the royalty payments, and these payments will be kept alive. We must now decide between at least two courses: (a) Is the State to do nothing more and merely wait for existing leases to expire and fall in, and then attach any new conditions it may consider necessary upon receiving applications for renewals? Or (b) is the State to be empowered by Parliament to determine the existing leases at any time and so accelerate the time when it can attach new conditions, make certain re-grouping of mines, etc.? My answer is that the latter course (b) must be adopted. The same Act of Parliament which vests the coal and the royalties in the State, or another Act passed at the same time, should give the State power to determine the then existing leases if and when it chooses, subject to just compensation for disturbance in the event of the existing lessees refusing to take a fresh lease.

Why is course (b) recommended? (i) Most leases are granted for terms varying from thirty to sixty years. They are falling in year by year, but we cannot afford to wait until they have all fallen in if we are effectively to deal with a pressing problem. (ii) The second objection to merely waiting is that some colliery-owners (not many) might make up their minds not to apply for a renewal of their leases, and might consequently be tempted to neglect the necessary development and maintenance work, over-concentrating on output, and thus allowing the colliery to get into a backward state from which it would cost much time and money to recover it—a state of affairs which could and would be provided against in future leases, but which the framers of existing leases may not have visualised. I do not suggest that upon the acquisition by the State of the minerals all the existing leases should automatically determine. But the State should have power to determine them on payment of compensation for disturbance.