The Labor Situation in Great Britain

THE editor of the Atlantic has requested me to explain the labor situation in Great Britain to American readers, and has propounded several questions, which I will try to answer in the course of this essay. He asks for an interpretation, rather than a résumé, of the facts, and I will therefore assume that the reader has a certain knowledge of outstanding events. My task is, as I understand it, to explain the broad meaning of what is going on in England without entering into too much detail. This, of course, involves matters of opinion, and a preliminary word on my own standpoint is due. I write as a detached observer, who has for many years studied social conditions and industrial movements from the life in many countries, without any partisan predilections of any kind, political, financial, or theoretical; with friends and acquaintances in every camp, from the Duke of Northumberland to John Maclean, and with no interest to serve but the truth. If I am wrong, it is due to lack of judgment, not to bias, or to want of study.

I

Let me begin with the summary statement that so far we have passed through inevitable troubles and trials better than we had any sound reason to expect. We are by no means through with them yet; but as each successive corner is turned, the prospect improves.

This view may cause some surprise and be set down as ‘optimistic’; but optimism has nothing to do with it, as I shall show. It is based on a reasoned anticipation, formed during the war from past and current conditions, of the industrial situation likely to arise after it, and on a broad survey of the actual course of events since the Armistice.

True, it runs counter to popular opinion; but popular opinion was, and is, ill informed in two ways. The public was first led into false anticipations, and then disillusion was unduly heightened by a one-sided view of the actual facts.

The war was generally expected to lead straight into a sort of Utopia, in which the lion would lie down with the lamb and the prophecy contained in the eleventh chapter of Isaiah would be at least on the way to fulfillment. There was no substance in this sanguine vision; it was simply a nebulous hope, born of war-excitement and fed by platform phrases, such as ‘a land fit for heroes to live in’ and the blessed word ‘reconstruction.'

I can remember no such prolific begetter of nonsense as this idea of reconstruction. All the socialists, visionaries, and reformers saw in it their opportunity, and interpreted it in their own way; politicians hung their promises on it, and simple folk rose to it like trout to a fly in May. It proved an irresistible lure and was in everyone’s mouth. It created a fool’s paradise, in which every wish was to be gratified. Under its influence grandiose schemes were hatched and all sense of proportion was lost. The alluring prospect took a thousand forms, but the general idea was that everyone was going to have a much better time after the war than ever before. In particular, industrial conditions were to be improved out of recognition; the standard of living was to be raised; men were to work less and earn more; strife between employers and employed was to be banished; peace and prosperity were to reign; and all this immediately. The illusion was too popular to be resisted; protest was useless.

The currency obtained by these notions is shown by the frequent references in recent disputes to the falsification of promises and expectations. But good judges were not taken in by the rosy visions of reconstruction. More than five years ago — ten months before the first Russian revolution and eighteen months before the arrival of Bolshevism — I predicted, in the Nineteenth Century and After, great trouble after the war. I said that it would be a severer trial than the war itself; that the prospect was full of menace; and that everyone in a position to judge, with whom I had discussed the question, was of the same opinion. This reading was based on solid facts, which I elaborated a year later in the same review. I gave reasons for anticipating ‘revolutionary changes, not effected without much tribulation and a period of adversity.’

I recall this, not to vaunt my prescience, which was shared by everyone who knew the real conditions and was not blinded by illusions, but to show that there is nothing obscure or mysterious about the present situation. It is due to forces recognized and understood years ago. Those forces have since been stimulated by events at home and abroad. Bolshevism; high prices; the spectacle of war-fortunes attributed to profiteering and held to be the cause of high prices; successive increases of wages extracted by demonstrations of force; the rapid growth of trade-unionism; artificial prosperity created by inflation of currency; war-time restrictions, especially of drink; revolutionary propaganda — all these have had their effect, and superficial observers have freely attributed the present situation to the influence of one or another of them.

That is a mistake. The trouble is more deeply rooted in the past and cannot be rightly understood without a knowledge of the historical evolution of labor movements, which can be indicated here only in brief outline.

II

During the nineteenth century the growth of industrialism was accompanied by the periodical appearance of an active ferment among the wageearners, at regular intervals of about twenty years. The outstanding dates, marking the rise of active movement, are 1831, 1851, 1871, 1889, and 1911. It will be observed that but for 1889, which a little antedated the lapse of twenty years, the succession has been remarkably symmetrical. To enumerate the signs of this ferment at each appearance would occupy too much space. I can say only that it took both political and industrial forms, sometimes one and sometimes the other predominating, with a sort of oscillating movement. It issued broadly in legislation and in the advance of trade-unionism in numbers, organization, legal status, and privileges. There were collateral and associated movements, both practical and theoretical; but I am concentrating attention on the points of greatest activity.

What is the explanation of this periodicity? The state of trade has something to do with it. Each successive time of ferment was associated with an upward movement of trade, following a depression; but this alone will not account for the phenomenon. For in each period of twenty years there have been intermediate terms of rising trade, during which no corresponding advance in the labor movement has occurred. in some of them a certain amount of response was perceptible; but it was very small compared with the activity of the fermentative years enumerated. These were followed in each case by a period of apparent exhaustion, during which strength was gathered for a fresh advance.

The chief explanation of this, in my opinion, is to be found in the natural procession of the generations, by which the old gradually give place to the young. The latter know nothing of the struggles and exhaustion of the past; they are fresh, full of energy and fight. More than that, their standpoint is different, their outlook wider, their aspirations higher — or, if not higher, more purposeful, because nearer to practical attainment. They start where the previous generation left off. This development has been particularly noticeable in recent years. It is the result of the many educative influences that have been brought to bear, and of the whole process of social change that has permeated the population.

The notion that class-differences have widened is quite erroneous. In Great Britain, whatever may be the case in other countries, there has been a great and multiform approximation of classes. I have witnessed it going on all my life and at an increasing pace. Those who do not know it are either bad observers or too young to be able to compare the present with the past. The contemplation of figures showing the extremes of nominal wealth and poverty is misleading. It hides the approximation in real conditions. To take the most visible thing, no one even thinks of building either the palaces or the hovels that once regularly represented the extremes. The hovels are abolished, the palaces are being abandoned, the extremes have come much nearer together, and the same process is going on in all the things that matter. There has been a great diffusion of real wealth in comforts and conveniences, a great diffusion of knowledge and the means of self-improvement, a great diffusion of political power and administrative functions. Men of all classes meet on level terms in the council chamber and on the magisterial bench; all classes mingle on the railway platform, where millionaires not infrequently betake themselves to a third-class, labor leaders to a first-class, compartment.

Everyday life teems with such visible signs of the tendency toward the obliteration of former distinctions; anyone who looks can see it. Indeed, it is so obvious that those who maintain the obsolete theory of a widening gulf have to close their eyes to avoid seeing patent facts.

But the appetite grows with what it feeds on. Each rise in the standard of living and social status becomes a starting-point for a further advance, which is actively entered upon when a new generation, with fresh aspirations, has gained sufficient strength, by the cumulative effect of growing up while the old dies off, to make the essay. This is, I believe, the chief explanation of the periodical ferment.

The last manifestation began in 1911, and several circumstances combined to give it a special character. Trade was rapidly improving, and wage-earners, more strongly organized than ever before, and more conscious of strength, had an unanswerable case for a larger share in the rising prosperity; for prices had been going up, while wages were stationary. By the formation of the political Labor Party, ten years before, the Socialist element had joined hands with some of the large trade-unions and had exercised increasing influence in the joint councils of the party. The remarkable successes of labor candidates in the general election of 1906, consolidated in those of 1910, had given a great stimulus to the movement on the political side and inspired it with confidence.

But still more conducive to a state of active ferment was the spread of organized revolutionary propaganda, and the introduction of new ideas, about this time or shortly before, — industrial unionism, syndicalism, and a little later, guild-socialism, — which differed from the old by making trade-unionism the source, and not merely the instrument, of revolution.

These ideas made little visible impression at the time, and were ridiculed by the advocates of State Socialism, to whom they were obnoxious; but they struck root and began to grow, chiefly in Scotland and South Wales. They were a leaven, and their influence is seen in the marked prominence of those areas in the turmoil during and since the war. In 1911, however, the movement was still confined to the old tradeunion line of demanding advances of wages and allied changes, and enforcing their concession by strikes. Employers, blind to the new strength and vigor of the unions, adopted the fatal policy of refusing legitimate demands, which they could well afford to concede, until a strike took place, and then promptly giving way. The result was a series of strikes, unprecedented in number and magnitude, and for the most part successful, which had the effect of still further increasing the strength and self-confidence of the unions, enhancing the prestige of an active policy, and embittering the relations of employers and employer.

There is always a see-saw going on between industrial and political action, each having the ascendancy in turn. In the years preceding 1911, political action was in the ascendant, but it had apparently exhausted its potency, and a reaction had set in, which prepared the way for another turn with the industrial weapon. The striking success of the latter in 1911-12 led, as usual, to overuse and reaction. Strikes were still very numerous in 1913, — indeed, they were more numerous, — but they were on a smaller scale and did not last so long.

Then, in 1914, the character of the conflict, began to change. There were indications of declining trade, many employers were awaiting an opportunity to retaliate for the squeezing they had undergone, and what would have followed in the ordinary course was a period of renewed strife on the opposite line of employers’ demands and workmens’ resistance.

This is the background to the present situation. The prospect immediately preceding the war was one of declining trade and industrial conflict, waged with stronger forces and more embittered feelings than before. At the same time, it is to be noted that the period of prosperity-strife had produced other and contrary effects. It had led to a better appreciation of the principle of conciliation and to the development of conciliation machinery. In some quarters the relations between employers and employed had improved, and this element must not be overlooked; for it, too, plays no small part in the present situation. Still, the outstanding features of the industrial position before the war were a spirit of acute antagonism and the prospect of a determined conflict, in which the trade-unions would probably have had the worst of the encounter, with the result of reaction against the industrial weapon and recourse once more to the political.

III

Now the broad effect of the war has been to reproduce all these conditions on a higher scale, or in a more acute form, together with the complications introduced by government control, the break-up of international economy, the general impoverishment, and other aggravating circumstances. The economic process just outlined was short-circuited, so to speak; and a state of prosperity was restored by the war-demands on industry. It was artificial, of course, paid for by realizing capital assets and mortgaging the future; and it was conditioned by war-psychology. But the usual influence of prosperity on the labor market was rather heightened than modified by the special circumstances, as the country settled down to the business of carrying on war with all its strength. The demand for labor revived, unemployment diminished, wages rose, and strikes reappeared after some months of abeyance.

This movement went on at an increasing pace during the early part of 1915; but it was not until July of that year that organized labor began to realize the immense strength conferred on it by the emergency of war in indispensable industries.

The occasion was a dispute in the South Wales coal-mining district, where feeling between employers and employed was already much strained, and revolutionary theories had for some years been actively propagated among miners, chiefly by the agency of the Labor College. Originally they were in the right. The standing agreement was about to lapse, and they asked for a new one, with certain advances. The owners boggled and put them off, until the general mass of the miners, convinced that they were being tricked, became exasperated and ripe for revolt, regardless of the war.

And here I may say that British workmen never did believe that the Germans had any chance whatever of winning, until their complacency was somewhat shaken by the advance in the spring of 1918. This accounts for their apparent indifference to the effect of strikes upon the war: it was not due to lack of patriotism, but to complacency. I found it out by going among them in many districts, including South Wales. A young miner there, whom I knew personally, told me that they would have stopped out for six months rather than submit to injustice.

‘But what about the war, then?’ ‘Oh, if I wasn’t at work, I should join the army and fight.’

They never thought that there was any real danger of defeat, and consequently were ready to accept the arguments pressed on them by revolutionaries, pacifists, and pro-Germans, that every compulsory war-measure was really unnecessary, and that the war was merely an excuse for the subjection of Labor by ‘Capitalism.’ This belief was fostered by the ultra-patriotic, bombastic prophets, who told them week by week that the Germans were practically beaten and that wonderful events would shortly happen. They readily believed this nonsense because it was just what they wanted to hear; and it played into the hands of those engaged in promoting trouble for their own ends.

In this mood the Welsh miners successfully defied the government and the law, and their success opened the door to all the trouble that followed. The trade-unions learned that they would get nothing unless they asserted themselves boldly, but that, if they did, they were irresistible and could coerce the government. Gradually the lesson sank in by repeated experience in the three great indispensable industries — coal, railways, and engineering. Employers fell into the background through government control, and the hostility of labor was transferred from them to the government, which inspired distrust and lost authority by conceding to force what it refused to argument.

This policy discredited the moderate trade-union leaders who were unwilling to go to extremes from patriotic motives, and at the same time exalted the temper of the militant wing. The trade-unions waxed mightily in strength and self-confidence; unemployment fell to zero, while wages rose continually. It has very often been asserted that the rise of wages only followed, without overtaking, the rise in the cost of living. That is doubtful, but, even if it is statistically correct, it does not apply to earnings, which increased far more through overtime; and it takes no account of family incomes, which swelled out of all proportion through the unlimited demand for boys and girls at very high wages.

The effect of all this was a general state of prosperity never dreamed of before. I witnessed it myself repeatedly in all the large centres; and the unanimous testimony of health-visitors, district nurses, midwives, and other persons whose duties take them constantly into the poorest homes, confirmed this impression with a cumulative mass of detailed evidence, to which the decline of pauperism gave statistical support. The standard of living was visibly and generally raised to an artificial height, which made reversal proportionately difficult when the economics of war, carried on by an inflated currency and State loans, came to an end. The people were the less prepared for reversal because they were given very freely to understand that the conditions of life were to be changed all round for the better after the war. The nonsense about ‘reconstruction,’ ‘a land fit for heroes to live in,’ and similar visionary promises was taken seriously.

Prosperity did not produce contentment, because popular indignation was continually aroused by the denunciation of ‘profiteering,’ which was held up to the ignorant by the ignorant as the sole cause of high prices. This put a powerful weapon in the hands of social-revolutionary agitators, who made the most of it. The same tendency was promoted within the trade-unions by the success of militant tactics, while the self-importance of labor leaders was fostered by incessant appeals, consultations, flattery, offers of ministerial jobs, and other marks of distinction. The theory that Labor produces everything and ought to have everything seemed to be convincingly demonstrated.

The ferment was further increased by the new theories superimposed on the old ones, and actively spread by young intellectuals, drawn both from the trade-unions, through the Labor College, and from the old universities. Both have exercised a marked influence: the former by educating young workmen in revolutionary theory and tactics, the latter by taking up the mantle of Fabianism, permeating the Labor movement with new ideas, supplying it with arguments, and guiding its action.

It is not surprising that in the excited state of mind caused by the topsy-turvydom of war, the feeling that society was ripe for a radical transformation was already gaining ground in 1917, when the Russian Revolution occurred, and seemed to realize in a concrete form the half-conscious aspirations formed out of the elements I have indicated. A miscellaneous gathering of excited persons was hastily arranged in the name of Labor, and it was resolved to establish soviets in Great Britain. Nothing came of it, but this incident is significant of the state of mind then prevailing. Things had got out of focus. A good many labor men had lost their heads, and others, who never had heads to lose, thought their time had come.

The Bolshevist Revolution followed and increased the confusion; it sobered some, but deepened the intoxication of others. The general stir going on in 1917 was further marked by the increase of strikes, journalistically labeled ’labor unrest,’ by the rise of the Syndicalist shop-steward movement, and by an ambitious reconstruction of the Labor Party which was widened to include individual members, with special facilities for the admission of women. The intellectual element was formally recognized by the phrase ’producers by hand or by brain,’ whom the party claimed to represent ‘without distinction of class or occupation.’

IV

My excuse for recounting all this ancient history is that it is indispensable to a clear understanding and a balanced judgment of subsequent events. I have cut it down to a minimum, but have said enough, I hope, to show that trouble was inevitable after the war, and that there were ample grounds for expecting more trouble than has actually occurred. Any reader who puts together the several factors I have enumerated can see how greatly the prospect of strife impending before the war had been enhanced. The tradeunions had been schooled in it, and Mr. Lloyd George himself had, in 1917, advised them to be ‘audacious in demanding an after-war settlement.

My comment at the time was that the advice was quite superfluous, and that there would be more audacity than he would like. The Left Wing felt that revolution was in the air, that the trade-unions were attuned to their purpose and that the end of the war would leave the field open to them and to class-war. They yearned to exchange external for internal war, and the Armistice was no sooner concluded than they raised the cry — ‘Get on with the only war that really matters — the class-war!’ Employers, on their side, chafing under bureaucratic control and the excess-profits duty, resentful at their treatment by the Government, which had never consulted and flattered them as it had the Labor side, were preparing to get their own back.

The campaign was not long delayed: January, 1919, saw it opened by the engineers and the ‘Triple Alliance,’ a combination of miners, railwayman, and transport-workers, which had been set on foot in 1912, after the general coal strike, and fully established at the end of 1915. All came forward with large demands, behind which the militant revolutionaries were busy stirring up violence whereby they hoped to usher in the revolution they believed to be imminent. Every pretext was seized upon, and every sort of provocation brought into play, to Stimulate the class-war. The editor has relieved me of the task of recounting events in detail, and it will be enough to summarize them.

The year 1919 was marked by a series of attempts by the Left Wing to bring matters to a head, and they met with a certain measure of success. On several occasions public order was threatened, and some collisions actually occurred; but they never got very far. The revolutionary gun went off at half-cock, or misfired, every time. The public remained calm, though by no means indifferent, while the tradeunions refused to go beyond a certain point and showed a general disposition to abide by constitutional methods.

The views held at this time by advanced, but not the most extreme, men in the trade-union movement were well expressed by Mr. Cramp, of the Railwaymen’s Union, at the annual meeting of the society at Plymouth in June, 1919. ‘The centre of gravity,’ he said,

‘ is passing from the House of Commons to the headquarters of the great tradeunions. . . . While social in outlook, our ultimate aim is the control of industry.’ But he did not advocate the forcible seizure of control; they must first fit themselves for it by proper training. I do not think the ideas of what may be called the rational revolutionary section can be better put.

Commenting on Mr. Cramp’s statement, the moderate Socialist paper, the Clarion, contrasted his view with that of the ‘hot-heads,’ who ‘believe that they are fully qualified now, immediately, to take control of the mines, the railways, the shipyards, the factories, the government of the country and the management of our international affairs. In this conceit of ignorance lies the danger of the troubled time. The wild men are using all devices of incitement — not excepting a plentiful supply of lying — to prompt them to instant revolt.'

They tried it, as I have said, on several occasions, but always failed. Success depended on the amount of support they could command from the general body of men concerned, and in every case the test of actual experiment proved that, though they had enough influence to start trouble, they had not enough to carry it through. And each successive failure weakened such influence as they had and strengthened the forces of sobriety.

This is what I mean by saying that the prospect has improved as each corner has been turned. To observers at a distance, it may appear that the state of things here has progressively worsened. On the surface, it has perhaps done so. The last three months have been economically the worst we have experienced. They have been a climax, the severest crisis we have yet gone through; but the more decisive by reason of its severity. And the issue confirms what I wish to assert with all the emphasis at my command, namely, that superficial appearances are deceptive, and that under the surface things have steadily improved.

The set-back of the revolutionary Left Wing is only part of the story; but before going on to other considerations, I will finish what I have to say on that head.

The organizations and agencies representing the Left Wing are many in number and varied in complexion, but only two exercise any serious influence on workmen, and both of them have arisen within the trade-unions. They are the Labor College, at which young trade-unionists are schooled in Marxian economics and sent out to spread those doctrines among their fellows, and the Shop-Stewards’ Movement. The former is an active and vigorous institution, started in 1909, and it has produced a number of young trade-union leaders, who have become prominent in recent years. It operates chiefly among miners in South Wales and Scotland, where the gospel according to Saint Marx is taking the place of the old teaching among a temperamentally religious people. Its influence has been conspicuous in the incessant turmoil in the mining industry, culminating in the great dispute of this year; but the termination of the conflict marked the limits of its sway, previously weakened by the breakdown of the Triple Alliance. In both of these crucial cases the plain sense of English workmen asserted itself against the adventurous policy of the Left Wing; and that fact is symptomatic of the present general trend of events.

The Shop-Stewards’ Movement operates chiefly among engineers and ship-yard workers. Led by revolutionaries, it is an attempt to turn an old trade-union institution to revolutionary purposes. The Clyde is its home and headquarters, but it has been carried by traveling agents to many centres. Its constructive aim is not clearly defined, but it is rather Syndicalist or Guildist than Socialist, especially among electrical engineers, though some prominent leaders profess Communism. But here too the revolutionary influence has been waning, through the failure of several abortive demonstrations, the general economic situation, and the leaden weight of unemployment.

As for the political organizations, those that have drawn their inspiration from Moscow and pinned their faith to Bolshevism are sinking, with its failure, into insignificance. They never had any hold over the general body of workmen, who have no use for revolution or the ‘dictatorship of the proletariat’; and since the visit of members of the Labor Party to Russia in 1920, Bolshevism has gradually, but steadily and perceptibly, dropped into general disfavor in official trade-union circles, which once coquetted with it. The decisive refusal of the Labor Party to admit Communists, in June last, put the seal on a long series of rebuffs; for the Labor Party is more revolutionary in complexion than the trade-unions, which furnish the most solid and sober part of it.

The same tendency is seen in the gradual dropping of ‘direct action,’ or the attempt to dictate the public policy by such labor-organizations as the Triple Alliance and the Trade-Union Congress, which was much in evidence in 1919 and 1920, when it was believed that the ‘centre of gravity was passing from the House of Commons to the headquarters of the great trade-unions.’ The ‘Council of Action,’ a self-constituted and irresponsible junta of persons overconscious of their own importance and wire-pulled from Moscow, never did anything but talk, and has quietly faded into oblivion. All that Bolshevism has achieved here is discussion among Socialists.

In short, the traditional sobriety of British workmen has been steadily vindicating itself, all through the alarums and excursions of this trying time. In the end, it has always carried the day. The great coal dispute is the culminating demonstration of its slow-working but massive influence. I do not mean merely the termination, in which the moderate element signally defeated the extreme, but in the very demands of the Federation, and still more in the conduct of the dispute. The demands, and the tone in which they were made, present a striking contrast to those employed on previous occasions. Instead of claims for ever more pay, less work, and revolutionary changes, put forward in imperative language, the Federation presented a reasoned case for modifying the proposed reduction of wages universally admitted to be excessive and inequitable. The policy of ruining the pits, advocated by the Welsh and Scottish Left Wing, was defeated, and the whole three months of idleness and privation passed without the slightest disorder, save for two or three trifling incidents. Could that have happened anywhere else?

V

But there is another and a positive side to the story. It would be a great mistake to infer from the failure of revolutionary plans and the subsidence into a calmer atmosphere that the Labor movement is falling back into the old rut and yielding to reactionary influences. Not at all. It is moving forward steadily and massively, after its wont. On the side of employers and capitalists there has been a corresponding struggle between the Right and Left wings; the Right Wing of moderation and acceptance of change, the Left Wing of dogged resistance and pugnacity; and in this case, too, the Left Wing is being defeated. The revolutionary press talks much of a grand conspiracy against Labor and a plot to smash trade-unionism, just as the reactionary press talks of Bolshevist plots and a conspiracy to overthrow society and smash the British Empire. There is as much, and as little, in the one cry as in the other. There are reactionary employers who would like to smash trade-unionism and reduce workmen to a state of subjection; and Bolshevist aims, which have never been concealed, have been furthered by much underground intriguing. But neither are succeeding. These fears are out of date on both sides. There is no substance in them, and the campaign is kept up only by the ammunition which each supplies to the other.

The truth is that the relations of employers and employed are undergoing a radical transformation, which amounts to a revolution, peacefully and gradually accomplished. Once more the British—or perhaps I should say the English—people are displaying that genius for stability in change, for movement without losing balance, which has carried them safely through so many revolutionary periods in the past. I confess that I hardly expected it, so great was the turmoil and excitement at one time; but now I plainly see it going on. A test of extreme severity has been imposed by the artificial prosperity and demoralization due to warconditions and government control, followed by the difficult process of unwinding the chain, and, finally, by the unprecedented depression of trade, entailing unemployment on a scale never heard of before and reductions of wages all round.

But the country is standing the test with increasing sureness. This has not been visible on the surface, because only one side of the account is presented to the public. Newspapers devote their space to the exciting, not the humdrum events, and foreign correspondents are particularly bound by this law. They report strikes, disagreements, and disturbances, but say nothing — indeed, know nothing — of the peaceful proceedings and the far greater mass of disputes avoided.

To deal adequately with this side of the case would take a whole article; I can treat it only summarily here. During the present year reductions of wages affecting some five million wageearners, distributed over nearly all the chief industries, have been arranged in the great majority of cases without any rupture. They have been effected by three different methods: (1) sliding scales in accordance with cost of living; (2) sliding scales in accordance with selling price; (3) negotiations between employers and trade-unions.

1. The Labor Gazette (official) for December last gave a list of twenty-four industries having a cost-of-living sliding scale, and I have a further list of sixteen. The most important groups are railwaymen, textile workers of many kinds, dyers and cleaners, police, government and municipal services, civil engineering.

2. The most important industry applying the selling-price method of adjustment is iron and steel, in which reductions ranging from 7 1/2 to 20 per cent have taken place, affecting about 125,000 persons.

3. Arrangement by negotiation has been effected in ship-building, building, mercantile marine, cotton, engineering, coal, and many other smaller groups.

Several principles of the first importance have emerged from this time of stress, greatly strengthened and extended. I place conciliation by joint committees of employers and employed in the forefront. Long established and well tried in a purely voluntary form, it was advancing in favor and usefulness before the war; but the Whitley Inquiry of 1919 resulted in a great extension of this principle. Under the Industrial Court Act, 70 joint councils have been set up, and 140 district councils, where single boards existed before.

Most of them have been active and efficient. The same act conferred powers of intervention on the Ministry of Labor by three methods: (1) Conciliation; (2) Arbitration; (3) Investigation.

During 1920 the Ministry settled 904 cases: 265 by negotiation, 633 by arbitration and six by inquiry. This work proceeds almost unnoticed.

I must be content to mention two other highly important principles — a minimum statutory wage, and insurance against unemployment. Both have been greatly extended. But of greater significance than any of these more or less mechanical institutions is a change of attitude which has set in among employers. They have begun to take a new view of the wage-earners and to accord them a different position. The idea has dawned that they are really partners in a coöperative enterprise. It is not profit-sharing, or even copartnership in the old sense, but a new conception of the true relationship. It has not got very far and is not yet clearly perceived, but I see it emerging. Employers are beginning to take their men systematically into consultation, and to give them an interest in the common enterprise. It takes different forms in different conditions, but the spirit is the main thing.

The scheme proposed by coal-owners, which was accepted before the stoppage and is the basis of the new agreement, illustrates the spirit. Mr. Hodges, the miners’ secretary, has called it the most far-reaching proposal made in modern industry. It provides for a standard minimum wage, as the first charge on the industry; then for a standard profit bearing a fixed relation to the aggregate of wages, and after that, for the division of further profits in fixed proportions. It is not so much profit-sharing as product-sharing, which has always seemed to me the true idea; and the ascertainment of the amounts by a joint audit of the books is a recognition of partnership rights.

It is in this direction that the solution of our most difficult industrial problem is to be found — the problem of output or working efficiency. The worst effect of war-conditions and government control has been to foster and fix the habit of restricted output and slack work. The blame for it rests primarily on employers, and it was bad enough before the war; but it is far worse now, and more responsible for the excessive cost of production, which has ruined our market, than high wagerates. It is up to employers to cure it by a large-minded — in effect a revolutionary — change of attitude, which will give wage-earners a new status, a new interest, and a new responsibility.

There are serious obstacles. The first is the old evil tradition. A typical discontented but not revolutionary workman said to me lately: ‘The employers are changing their attitude, but it is too late.’ No, it is not too late, if the old tradition is sincerely, consciously, and purposefully abandoned. Here lies the danger of reactionary employers, who are the second obstacle. They will play into the hands of the theoretical systemmongers, who will seek to undermine and break up good relations and promote strife by every means in their power. These are the third obstacle. But they will have little power, if the enlightened employers are sincere and steadfast, and if they deal firmly with their reactionary colleagues.

This is the way things are moving and will move, because they must. A revolution is in progress, but a peaceful and practical one.