Essays in Liberalism Part 10

THE PRESENT MACHINERY OF RELIEF

At present what is the situation? Most unemployed work-people are ent.i.tled 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 ent.i.tled 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 circ.u.mstances 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 circ.u.mstances--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 circ.u.mstances 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 pa.s.sing 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 circ.u.mstances 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 const.i.tution 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-cla.s.s 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 const.i.tution 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 const.i.tutional control over it, just as a hundred years ago they were members of a State whose destinies they had no const.i.tutional 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 cla.s.ses 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 cla.s.s is increasing and should not be discouraged. They const.i.tute 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-partners.h.i.+p, 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 trustees.h.i.+p 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 salesmans.h.i.+p, 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 owners.h.i.+p and leasing of the coal is one thing, the business or industry of mining it is quite another. State owners.h.i.+p of the former does not involve State owners.h.i.+p 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 a.s.sociations "coal-owners'

a.s.sociations." 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, 51/2d.

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 551/2 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 partic.i.p.ants 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 owners.h.i.+p 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 a.s.sessment 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, 551/2 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 551/2 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 a.s.set. 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 pa.s.sed 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.

A NATIONAL MINING BOARD

At the same time a National Mining Board consisting of representatives of all the interested elements, colliery-owners, managerial and technical staffs, miners, and other grades of workers, and coal consumers would be formed (the Mines Department already has a National Advisory Committee); the mining engineering element must be strongly represented, and provision must be made for first-cla.s.s technical advice being always available. It would then be the business of the National Mining Board to work out its policy and decide upon the broad principles which it wishes to weave into the existing structure of the coal-mining industry by means of its power of granting leases. The following principles will readily occur to most people, and are supported by evidence which is, in my humble judgment, convincing, given before the various commissions and committees which have inquired into this industry during recent years.

Firstly, More Amalgamation or Unification of Collieries. At present there are about 3000 pits owned by about 1500 companies or individuals, and producing an aggregate output of about 250 million tons per annum.

Already there have been many large amalgamations. (i) Many fortunately situated small pits making a good profit will be found, but on the whole small collieries are economically unsound. In many cases at present the units are too small, having regard to the cla.s.s of work being done, to the cost of up-to-date machinery and upkeep and to the variableness of the trade. Broadly I believe it to be true that the larger collieries are as a general rule more efficient than the smaller ones. (ii) In respect of co-operation in pumping, larger units would frequently make for efficiency and reduced cost; Sir Richard Redmayne, speaking of South Staffords.h.i.+re before the Sankey Commission, said that we had already lost a large part of that coalfield through disagreement between neighbouring owners as to pumping. (iii) The advantages of larger units in facilitating the advantageous buying of timber, ponies, rails, machinery and the vast amount of other materials required in a colliery will be obvious to most business men.

I do not propose to chop up the coalfields into mathematical sections and compulsorily unify the collieries in those sections. I am merely laying down the broad principle that to get the best out of our national a.s.set the National Mining Board must bring about through its power of granting leases the formation of larger working units than at present usually exist. The geological and other conditions in the different coalfields vary enormously, and these form a very relevant factor in deciding upon the ideal unit of size. It is conceivable that in certain districts all the colliery-owners in the district, with the aid of the National Mining Board, would form a statutory company on the lines of the District Coal Board, described in the Report made by Sir Arthur Duckham as a member of the Sankey Commission. One advantage accruing from unification (to which recent events have given more prominence) is that it mitigates the tendency for the wages of the district to be just those which the worst situated and the worst managed colliery can pay and yet keep going, and no more. This tendency seems to be recognised and mitigated in the Agreement of June, 1921, on which the mines are now being worked. Secondly, Provision for Progressive Joint Control, that is, for enabling all the persons engaged in the mining industry either in money, in brains, or in manual labour, or a combination of those interests, gradually to exercise an effective voice in the direction of their industry.

Some of the arguments for this principle appear to me to be (i) that, as indicated in my opening remarks, a sufficiently large number of the manual or mainly manual workers in the industry ardently desire a progressively effective share in the control of the industry; (ii) that this desire is natural and legitimate, having regard to the great increase in the education of the workers and the improvement in their status as citizens, and that so far from being repressed it should be encouraged; (iii) that it is the natural development of the system of Conciliation Boards and (occasionally) Pit Committees which has prevailed in the industry for many years, though more highly developed in some parts of the country than others. So far, these organs have been mainly used for purposes of consultation and negotiation; the time has come when with a more representative personnel, while not usurping the functions of a mine manager or, on a larger scale, the managing director, they must be developed so as to exercise some effective share in controlling the industry. (iv) While working conditions are not so dangerous and unpleasant as the public are sometimes asked to believe, the workers in this industry are exposed to an unusually high risk of injury and loss of life, and thus have a very direct interest in devising and adopting measures for increased safety. These measures nearly always mean expenditure, and thus an increased cost of working, and so long as their adoption (except in so far as made compulsory by the Mines Department) rests solely with bodies on which capital alone is represented and labour not at all, there will be fruitful cause for suspicion and discontent. The miners are apt to argue that dividends and safety precautions are mutually antipathetic, and will continue to do so as long as they have no part or lot in the reconciliation of these competing obligations. The question is not whether this argument of the miners is well-founded or not: the point is that their suspicion is natural, and any excuse for it should be removed. (v) The exceptionally large items which wages form in the total cost of coal production indicates the important contribution made by the miners to the welfare of the industry and justifies some share in the direction of that industry.

Upon the basis of typical pre-war years, the value of the labour put into the coal mining industry is 70 per cent. of the capital employed, and 70 per cent. of the annual saleable value of the coal, and yet this large labour interest has no share in the management of the industry.

THE MYSTERY AS TO PROFITS

Thirdly, More Financial Publicity. Secrecy as to profits, which always suggests that they are as large as to make one ashamed of them, has been the bane of the coal-mining industry. For nearly half a century wages have borne some relation to _selling prices_, and there have been quarterly audits of typical selected mines in each district by joint auditors appointed by the owners and the miners. But over _profits_ a curtain was drawn, except in so far as the compulsory filing at Somerset House by public companies of a doc.u.ment called a Statement in the form of a balance sheet, enabled the curious to draw not very accurate conclusions. It is not easy for the plain man to read a balance sheet or estimate profits, especially when shares are being subdivided, or when bonus shares are being issued, or large sums carried to reserve. The result has been continual and natural suspicion on the part of the miners, who doubtless imagined the colliery-owners' profits to be much larger than they were. The miners knew that whenever they asked for an increase in their wages they were liable to be told that such an increase would turn a moderate profit into a substantial loss, but the amount of the profit they had to take on trust. Selling prices, yes, but profits, no.

The war and coal control partly killed that, and it must not return. By the settlement of June, 1921, for the first time the miners have established the principle of the adjustment of their wages in accordance with the proceeds of the industry "as ascertained by returns to be made by the owners, checked by a joint test audit of the owners' books carried out by independent accountants appointed by each side." That is an important step, but does not go anything like far enough.

At least two good results would accrue if colliery-owners conducted their business more in public: (i) a great deal of the suspicion and mistrust of the miners would be removed, and they would realise why and when their wages must undergo fluctuations, and the value of the many other factors besides wages which went to make up the pit-head cost of coal; (ii) publicity coupled with _costing returns_ would make it possible to draw comparative conclusions as to the cost of production in different mines and districts, which would be a fruitful source of experiment and improvement. Publicity does not involve publication of lists of customers, British or foreign.

THE LESSEES OF THE FUTURE

How far will the lessees to whom the National Mining Board will grant leases to work the coal be the same persons and companies as the present lessees? In this matter it is desirable to maintain the maximum amount of flexibility and variety. I do not think we have yet discovered the ideal unit, the ideal organisation for the development of our princ.i.p.al national a.s.set. So much do our coalfields differ in geological formation, in tradition, in the subdivision and cla.s.sification of labour, in outlet for trade, that it is unlikely that any single unit or organisation will be the ideal one for every coalfield. So we must resist any attempt, especially an early attempt, at stereotyping or standardising the type of lessee. By trial and error we shall learn much.

All the following types of lessee seem likely, sooner or later, to demand the attention of the National Mining Board. (I shall not touch on the question of distribution, inland and export. That is another and quite separate question):--

(i) _The Present Lessees._--I see no reason to doubt that in the vast majority of cases the present lessees would be prepared to continue to operate their mines, paying royalties to the State instead of to the present royalty-owner. Where the unit is sufficiently large and the management efficient, the National Mining Board would probably grant a fresh lease, incorporating such conditions as to unification, joint control, and publicity as they might consider necessary. If the present lessees do not want the lease, there are others who will.

(ii) _Larger Groups._--In a great many cases, however, the Board would decline to grant separate leases in respect of each of a number of small collieries, and would indicate that they were only prepared to receive applications for leases by groups of persons or companies prepared to amalgamate themselves into a corporation representing an output of x tons _per annum_. This figure would vary in each coalfield. In South Staffords.h.i.+re, in particular, divided owners.h.i.+p has had most prejudicial effects in the matter of pumping.

(iii) _District Coal Boards._--Sir Arthur Duckham's scheme of statutory companies known as District Coal Boards requires consideration. Without necessarily adopting his districts or his uniformity of type throughout the country, there are many areas where it might be found that voluntary amalgamation was impracticable, and that the desired result could only be attained by an Act of Parliament providing for the compulsory amalgamation of persons and companies working a specified area and the issue of shares in the new corporation in exchange for the previous holdings.

(iv) _Public Authorities._--I should very much like to see, sooner or later, in some area, a lessee in the form of an organisation which, though not national--not the State--should be at any rate public--something on the lines of the Port of London Authority.

It may well be that in one or more of our coalfields a public authority of this type, though with larger labour representation upon it and with a large measure of joint control from top to bottom, would be a suitable lessee of the minerals in that area. The important point is that public management need not mean bureaucratic State-management with the disadvantages popularly a.s.sociated with it.

(v) I have mentioned several types of possible lessees, but it will be noticed that there is nothing in these suggestions which would prevent the National Mining Board from making the experiment of working a few mines themselves.

To sum up. There _is_ a problem of the Mines. No sensible person should be deceived by the quiescence of the last twelve abnormal months.