CREDIT, INDUSTRY,
AND
THE WAR
EDITED BY
A. W. KIRKALDY, M.A., B.Litt., M.Com.
2/6
NET
CREDIT, INDUSTRY,
AND THE WAR
BEING REPORTS AND OTHER MATTER
PRESENTED TO THE SECTION OF
ECONOMIC SCIENCE AND STATISTICS OF
THE BRITISH ASSOCIATION FOR THE
ADVANCEMENT OF SCIENCE. MANCHESTER,
1915
EDITED BY
ADAM W. KIRKALDY, M.A.,
B.LITT., OXFORD, M.COM. BIRMINGHAM,
PROFESSOR OF FINANCE IN THE UNIVERSITY OF BIRMINGHAM,
RECORDER OF THE SECTION
WITH A PREFACE BY
WILLIAM ROBERT SCOTT, M.A.,
D.PHIL., LITT.D., F.B.A.
ADAM SMITH PROFESSOR OF POLITICAL ECONOMY IN THE
UNIVERSITY OF GLASGOW, PRESIDENT OF THE SECTION
Published by Authority of the Council
LONDON
SIR ISAAC PITMAN & SONS, LTD., 1 AMEN CORNER, E.G.
AND AT BATH, NEW YORK AND MELBOURNE
PRINTED BY SIR ISAAC PITMAN
& SONS, LTD., LONDON, BATH,
NEW YORK AND MELBOURNE
EDITOR'S NOTE
IT is hoped that this book may prove to be the foreword to an effort
to help in the solution of some of the economic problems which
either are, or soon will be, pressing upon the attention of this
country.
The discussions arranged by the Economics Section of the
British Association at Manchester aroused considerable interest,
and there was a widespread demand that they should be available
to a more extensive public than could attend the meetings. Under
the circumstances immediate publication was deemed to be essen-
tial. Thus, although the Reports were interim, and the discussion
on Industrial Harmony, not only as incomplete as such discussions
must necessarily be, but also somewhat inconclusive, being pre-
liminary, and the views expressed being by no means identical, it
was decided to publish with as little delay as possible.
My work as Editor has been considerably lessened owing to the
invariable helpfulness and promptitude of the several contributors.
Especially am I indebted to Professor Scott and Mr. Egbert Jackson
for assistance in preparing the matter for press. I would take
this opportunity to thank very sincerely the permanent officials
of the Association for their exceeding kindness in assisting, not
only in the publication of this book, but on many occasions in my
work as Recorder during the present year.
Each contributor is solely responsible for his own facts.
A. W. KIRKALDY.
THE UNIVERSITY,
BIRMINGHAM.
November, 1915.
334420
PREFACE
BY PROFESSOR W. R. SCOTT, M.A., D.Phil., Litt.D., F.B.A.
Adam Smith Professor of Political Economy in the University of Glasgow ;
President of the Section of Economic Science and Statistics,
British Association for the Advancement of Science.
ECONOMIC questions have assumed increasing importance during
the course of the present struggle, and in all probability their
importance will continue to increase for some years after it is ended.
The meeting of the Economics and Statistics section of the British
Association afforded an opportunity of collecting and discussing
the opinions of a large number of persons whose views were
of interest or carried weight. Accordingly, the Organising
Committee decided to concentrate discussion upon those
problems which were of immediate and pressing importance.
It appeared that there were three groups of these, namely
the prevalence of industrial unrest, the manner in which
the labour absorbed by the war was replaced, and the state of
credit, currency and finance as affected by the war. The Committee
recognised that these problems could not be dealt with adequately
by the method usually adopted by the section by means of separate
papers. After a considerable amount of discussion it was decided
that the best way of treating the problem of the minimising of
industrial friction was, in the first instance by assigning one day
for a full discussion of this subject. A report of the speeches will
be found in the following pages. As a result of that discussion a
research committee has been formed which will report to the next
meeting.
The remaining subjects presented considerable difficulties. It
soon appeared that the problem of outlets for labour after the war
was vast and that it introduced many elements which were at present
hypothetical. Therefore, for the present, attention was concentrated
on one aspect of this problem, namely the extent to which there had
been a replacement of the labour of men by that of women since the
war. The position during the summer was one of change ; and in
order to present some definite picture of the situation to the meeting,
it was necessary to organise a very extended investigation no less
VI PREFACE
than eighteen investigators having contributed to the inquiry.
The Conference which initiated and directed the research consisted
partly of members of the Organising Committee, partly of experts
who had special knowledge regarding some branch of the inquiry.
Prof. Kirkaldy, the Recorder of the Section, acted as Secretary of
the Conference. The inquiry was prosecuted actively in the London,
Birmingham, Leeds, and Manchester districts. In London, a sub-
committee was formed with Professor L. T. Hobhouse as Chairman,
Mr. J. St. G. Heath as Hon. Secretary, and Mr. E. F. Hitchcock as
Secretary. Professor Kirkaldy organised the investigation in the
Birmingham district with the co-operation of Miss Anne Ashley.
The interim report which will be found in this volume is necessarily
tentative in character, and is limited to the places in which investi-
gations could be made. The phenomena investigated are in a state
of transition, and it is hoped that at the next meeting of the
Association a further report will be presented.
A second Conference, also composed of members of the Organising
Committee, together with experts, was constituted, with Mr. J. E.
Allen as Secretary, to report on the effects of the war upon credit,
currency and finance. The inquiries involved were long and detailed,
and information of great value was placed at the disposal of the
Conference by its members and by others who were consulted upon
a number of special points. In this case, also, the Report contained
in the present volume is an interim one. It was presented to the
section over a fortnight before the introduction of the recent
Budget, in view of which its discussion of taxation will be found of
considerable interest. It is expected that at next year's meeting
further information upon several subjects discussed in it will be
available.
If the address for which I am responsible be added it will be seen
that, as far as the time at our disposal allowed, a serious attempt
has been made by co-operative effort to focus and direct economic
opinion upon the outstanding economic problems of this stage of the
war. It is the earnest hope of those who took part in the work that
their efforts may be of some service to the nation at this juncture.
It is the practical needs of the situation that have made it seem
desirable to issue these results in a form which is necessarily incom-
plete. Those concerned in the preparation of them would have pre-
ferred to have waited for more complete details and for a more
PREFACE Vli
matured judgment upon the facts already collected. By sharing
the observations which have been made so far, it is to be hoped
that these will be amplified or corrected by others and thus progress
may be made as rapidly as possible.
It is my privilege, as President of the Economic Section and as
Chairman of the two Conferences, to thank most warmly those who
have contributed to the production of this volume. The Council of
the British Association was good enough to make a special grant
to us under the exceptional circumstances. Without it the Confer-
ence on Outlets for Labour could not have proceeded. Professor
Kirkaldy, as Recorder of the Section and as Secretary of the Confer-
ence already mentioned, has been invaluable. Mr. Allen, the
Secretary of the other Conference, was most thorough in his work
upon the various stages between the inception and the completion
of the Report. To Miss Anne Ashley, Mr. St. G. Heath, Mr. Hitch-
cock, and Prof. Hobhouse we are very greatly indebted, as well
as to the investigators who worked with them. It is most remark-
able how men engaged in great affairs responded to the invitation
of the Credit Conference. We owe more than I can express to the
alacrity with which they placed the stores of their experience at the
disposal of this body.
W. R. S.
UNIVERSITY, GLASGOW.
September, 1915.
CONTENTS
PAGE
EDITOR'S NOTE iii
PREFACE BY PROFESSOR W. R. SCOTT, F.B.A. . . v
I. ECONOMICS OF PEACE IN TIME OF WAR
BEING THE OPENING ADDRESS BY PROFESSOR W. R.
SCOTT, PRESIDENT OF THE SECTION OF ECONOMIC
SCIENCE AND STATISTICS, BRITISH ASSOCIATION FOR
THE ADVANCEMENT OF SCIENCE .... 1
II. THE PROMOTION OF INDUSTRIAL HARMONY
PROFESSOR A. W. KIRKALDY . . . .17
SIR C. W. MACARA, BART 22
MR. WILL THORNE, M.P 33
SIR HUGH BELL, BART 36
PROF. L. T. HOBHOUSE 40
COUNCILLOR JAMES JOHNSTON, J.P. ... 43
MR. G. PICKUP-HOLDEN ..... 50
MR. ALFRED EVANS, J.P., GENERAL SECRETARY OF
THE NATIONAL UNION OF PAPER WORKERS . . 58
REV. P. H. WICKSTEED, M.A 60
MR. ALFRED SMALLEY, J.P 63
PROFESSOR W. R. SCOTT 65
III. OUTLETS FOR LABOUR AFTER THE WAR
REPLACEMENT OF MEN BY WOMEN IN INDUSTRIES 68
IV. THE EFFECTS OF THE WAR ON CREDIT, CURRENCY
AND FINANCE 193
V. ECONOMIC PROBLEMS AFTER THE WAR.
BY THE VEN. ARCHDEACON WILLIAM CUNNINGHAM,
D.D., F.B.A 254
INDEX 267
CREDIT, INDUSTRY, AND
THE WAR
CHAPTER I
ECONOMICS OF PEACE IN TIME OF WAR,
being the Opening Address to the Section of Economic
Science and Statistics of the British Association
BY PROFESSOR W. R. SCOTT, M.A., D.PHIL., Lnr.D., F.B.A.,
President of the Section.
THE economists of great distinction who have presided over this
Section of the Association in past years have usually addressed
themselves to the discussion of the progress of Economic Science
in relation to some problem which had become striking or significant
at the time when each meeting was held. It has fallen to my lot
to prepare an address at a period when the Empire is involved in a
war of tremendous moment both to our country and to the world.
Not the least dominant phase of this epoch-making struggle is the
economic one ; and it is inevitable that, on this occasion, considera-
tion should be given to some of the reactions of this great war upon
industry, credit, and finance.
It is both remarkable and significant how silent British economic
theory has been upon what may be described as " the economics of
war." No doubt there are volumes, treatises, and isolated passages
which record the effect of some specific war upon prices, or upon
credit, or upon the national finances. Or, again, other works may
deal with some practical inconvenience which the writer experi-
enced ; but, when the total result is estimated, it will be found
that by far the larger part of the scanty discussions of this subject
is either purely historical or else purely practical. In the vast
majority of cases our writers have confined themselves to an analysis
of the effects of some specific war on finance and commerce with a
view to suggesting measures towards counteracting the inevitable
1
2 CREDIT, INDUSTRY, AND THE WAR
losses, instead of studying the principles of war in general with a
view to strengthening the national resources in preparation for
future hostilities. Thus, while British economists have said
something about former wars, they are almost wholly silent concern-
ing wars to come. This is a fact of immense significance. It demon-
strates beyond the possibility of doubt or cavil that in this country
there has been no such thing as a mobilisation of economic opinion.
On the contrary, our economists can claim with justice that they
have been ever on the side of the world's peacemakers, not with
false lip-service but through serious and sustained reasoning.
Once Mercantilism began to decline, it is astonishing how little
one finds in British economic literature relating to causal relations
between war and industry. What there is usually appears as a side
issue in some other investigation. For instance, at the end of the
seventeenth century, during the eighteenth century, and in the early
years of the nineteenth, there was a long controversy over the nature
of credit, with frequent digressions upon the character of public
debts, which was in effect the consideration of the financing of past
wars. In its extremest form one theory represented public borrow-
ings as " a mine of gold " a statement which influenced both
theory and practice during the eighteenth century. The exaggera-
tion of " the fund of credit " no doubt seems strange and almost
laughable to us now, but it does not differ greatly in principle from
the vague popular opinion that a nation can become richer by
increasing its taxes. A public debt as the Midas of the eighteenth
century is as much a fairy tale as the modern conception of taxation
as a species of " manna falling on the country in a fertilising
shower." Naturally there was a reaction from the magic claimed
for a state-debt, and the opposed type of thought urged that sup-
plies, even for war, should be raised during the period in which the
expense was incurred. The citation by John Stuart Mill of a passage
from Chalmers, in which the latter view is expressed, is almost the
only echo of this controversy in more recent times. During the
last fifty years, if a few occasional writings, such as those of the late
Sir R. Giffen " On Consols in a Great War," 1 be except ed, our
standard economic works have scarcely anything to say on war,
1 Works, II, pp. 189-203. The calculation was that Consols would fall
15 per cent, at the opening of hostilities. The fixing of a minimum price
during the first months of the war has made it impossible to confirm or refuse
Giffen's forecast.
ECONOMICS OF PEACE IN TIME OF WAR 3
and there is nothing which can be construed into a preparation for
hostilities.
But the cultivation of peace by British economists in avoiding the
study of the mobilisation of national resources for war has not
merely been negative ; it was also positive in proving the advantages
of peace and the tendency of enlightened economic views to promote
it. More than two hundred years ago Sir Dudley North wrote that
" the whole world as to trade is but as one nation or people, and
therein nations are as persons. The loss of trade with one nation
is not that only, separately considered, but so much of the trade
of the world rescinded and lost, for all is combined together/' 1
In the same spirit David Hume urged that " our domestic industry
cannot be hurt by the greatest prosperity of our neighbours." 2
Before the end of the eighteenth century men of open mind not
only recognised that war was a great evil, but also that there was
nothing in international commercial relations to cause it or justify it.
And so Burke spoke of the condemnation of war as a commonplace
and " the easiest of all topics." Even victory accompanied by
substantial material gains is described by Hamilton as but " a
temporary and illusive benefit." In one passage he writes : " The
emphatic epithet of ' The Scourge of God ' has been aptly bestowed
upon the extensive warrior. . . . Riches, thus collected, no more
resemble riches acquired by industry in advancing the happiness of
the nation than the mirth of intoxication is worthy of being com-
pared to the permanent flow of spirits which health and activity
confer." 3 The undercurrent of the work of all the great British
economists has been ever on the side of peace. Adam Smith
suggested measures to prevent wars being undertaken wantonly. 4
Ricardo shows how free commerce " diffuses general benefit and
binds together by one common tie of interest and intercourse the
universal society of nations throughout the civilised world." 5
It would be wearisome to multiply quotations from the long line
of great writers, for already enough has been said to prove that the
encouragement of the best possible relations with other countries
has always been a prominent feature of their teaching.
1 Discourses upon Trade (1691), p. viii.
8 Essays, I, p. 347.
3 Progress of Society (1830), p, 411.
4 Wealth of Nations (ed. Cannan), II, p. 411,
Works, pp. 76, 160.
4 CREDIT, INDUSTRY, AND THE WAR
This conclusion leads on to the discussion of a new problem.
May it not be urged that British economists have been either too
selfish or too idealistic too selfish in inculcating material welfare
as an end, to the neglect of those national interests which are now
seen to be vital, or too idealistic in seeking a cosmopolitan golden
age which has proved to be but a dream ? That is in fact, have not
our economists in their devotion to peace neglected the economic
preparation for war ? While it is true that the essential teaching
of the master minds has been thoroughly pacific, at the same time
they recognised that, while war was an evil, both to the world and to
us, it was one that might be forced upon the nation. But it would
be a dangerous error to conclude from the rare mention of warfare
in our economic literature, that economists had no ideas upon the
subject. Adam Smith has shown with considerable detail that the
sinews of war consist of consumable goods. 1 Therefore, since his
time it was recognised that, if war should come, the strength of
the nation on the economic side was to be found in the efficiency
of its productive system, in the soundness of its credit and finance,
and in the success of its schemes of social betterment which provided
a vigorous and patriotic population. To have contributed some-
thing towards the making of free men in a free land is an achieve-
ment of which the economists of this country have no reason to be
ashamed. Moreover, with freedom there is the power of initiative
and organising ability. And if more than twelve months of war
have taught us anything, it is how much modern warfare involves
just those qualities of initiative and organising ability which are
required for the successful prosecution of industry and commerce.
To the economist it must be a matter of profound regret that cir-
cumstances have made it necessary to divert these powers from the
arts which sustain and brighten life towards causing the evils of
death and destruction. Still it is the hard and grievous fact with
which we have to reckon ; and, to make the reckoning complete,
account has to be taken of the genius of our people in which the
work of British economists may claim to have some share. We
should not be misled by that curious national trait which no foreigner
ever completely understands namely, our inveterate habit of
praising the methods of our rivals as if they were unapproachable
in their excellence. In the seventeenth century it was the Dutch
1 Wealth of Nations, I, p. 407.
ECONOMICS OF PEACE IN TIME OF WAR 5
who were said to be our commercial masters, and very similar things
were written later about the French. Therefore, to everyone who
is patient enough to look beneath the surface, there is no reason
to be perturbed by the commonplaces that are to be found in every
newspaper concerning " the triumphs of German organisation/'
No doubt there is very much we can learn from them in systematic
arrangement, but what is of first-rate importance is the different
spirit that informs the two methods. German organisation involves
a mechanical rigidity, and its initiative is severely limited. Ours,
on the other hand, is spontaneous and free. No doubt it is slower
in starting often it may seem to us to be painfully slow but what
it can achieve in the end is something greater, for it is the expression
of the free soul of a free people. Therefore, for this reason alone,
there can be no doubt as to the successful result, for, whether the
time required be long or short, the goal of victory must be reached
by that nation which can bring initiative to bear upon the economic
side of war. And, however much we in our part of the contest
may have suffered at the beginning from the peaceful habit of mind
that limited our preparations to a bare minimum, we have in our
industrial organisation, however much at times we may depreciate
it ourselves, a wonderfully developed instrument, which only needs
to be made available for supplying the almost innumerable needs
of modern armies. That there has been delay in making some parts
of it available as quickly as was desirable and seemed possible, arose
in part from the conditions under which our system has grown up
and under which it works. Freedom of enterprise depends to a very
large extent on the circulation of rapid and reliable information.
British initiative has been accustomed to base its judgments upon
data collected from various sources. Modern warfare has intro-
duced secrecy and the suppression of news. This, it appears to me,
has been one cause, and perhaps the main one, for the slowness of
the adjustment of our organisation to war conditions. Initiative
has been deprived of one of the important aids upon which it was
accustomed to rely. Therefore the problem, which it is to be
hoped is at present in process of solution, is how to avoid the
disclosure of information which might be of value to an enemy
and at the same time to supply our productive workers with sufficient
data to enable them to form accurate opinions as to how their
efforts can best help the national cause.
6 CREDIT, INDUSTRY, AND THE WAR
In a country in which the ideal of peace has flourished there must
always be a considerable dislocation of industry when it diverts
its peace-organisation to the purposes of war. As regards Great
Britain that dislocation has exerted its force in two distinct waves.
First there was the mobilisation and then the recruiting for the new
army, concurrently with which there was the diversion of demand
caused by the provision of the manifold needs of the forces. At
the beginning of the present year this first change might be described
as having approached completion, though necessarily the mainte-
nance of reinforcements involved a steady drain on the number of
workers. But in the early summer the campaign for increase of
munitions brought about a further dislocation. This was a minor
one in point of numbers involved, but it has to be noted that it was
likely to produce a disproportionate effect upon industry owing to
the normal floating supply of labour having already been used up.
When the latter change is completed it is to be hoped that, apart
from minor adjustments, the transition will be accomplished and
the national industry will be established on a war-basis. The two
most critical periods occasioned by war are, first, the change from
peace organisation to war organisation, and secondly, the converse
change after the conclusion of hostilities on a large scale. Ricardo
pointed out long ago that the outbreak of war after a long peace
was likely to cause distress and a commercial crisis. The great
expansion of credit since the last great war introduced an added
difficulty. The improvement of transport and communication has
linked the whole world together by tenuous filaments of credit.
These had proved sufficient to bear a normal strain, but one must
experience a certain amount of apprehension when these delicate
threads were rudely hacked and hewn by the sword. The financial
interests of the country, like the class of entrepreneurs, were con-
fronted suddenly with totally new conditions. The old landmarks
were gone, and at first a certain amount of blind groping was
inevitable. The leaders in finance and industry were suddenly
involved in the fog of war, and the compass by which they were
wont to steer proved unreliable. Moreover, the situation was such
that quick decisions were called for, just when rapidity of correct
judgment was peculiarly difficult. The most urgent problem was
the maintaining of the credit of the banks amongst their depositors.
Here the essential soundness of the credit-system in July of last
ECONOMICS OF PEACE IN TIME OF WAR 7
year was of paramount importance. Credit resembles a highly
elastic body : if it is greatly expanded a comparatively slight
pressure may cause a rupture ; if, on the other hand, it is not unduly
distended, it will bear a shock, though with some quaking, which
would shatter a more solid substance into fragments. The com-
parative equanimity of depositors, added to the inherent soundness
of the banking system, was a feature of great strength in times
which were in the highest degree .anxious. The closing of the
Stock Exchange and the temporary breakdown of the foreign
exchanges made some measure of external assistance from the
State essential, though in the future there will no doubt be consi-
derable discussion amongst economists as to the precise form which
it should have assumed.
An unexpected outbreak of hostilities disorganises first the
domain of credit, but the disorganisation soon manifests itself
throughout the whole range of productive processes. In the general
upheaval the normal course of demand is shifted to an unusual
extent . That for all kinds of supplies for the forces at once increases,
while the consumption of other kinds of goods is subj ect to consider-
able fluctuations. Some raw materials are no longer obtainable,
having been wholly produced in countries with which communica-
tion has ceased, others are procurable only in reduced quantities,
while the supply of others is at first uncertain. Again, the state
of credit reacts on foreign trade, rendering exporting difficult
and in some cases impossible for a time. All this meant that a
large diversion of labour and capital became necessary in the first
months of the war ; and again in the spring of this year the insistent
demand for more and more munitions added to the dislocation.
With the progress of specialisation in industry there was the apparent
risk that such diversion of productive power could only be accom-
plished at great sacrifice. It would seem that the greater and
greater use of specialised machinery with the corresponding special-
isation of skill would make the change very difficult, and one which
would involve great loss of capital and unemployment. After a
year of war we see that the latter problem has dropped below the
horizon, though it is likely to emerge again on the return of peace
when the converse change from war conditions to peace conditions
takes place. As regards capital, manufacturers have developed
the adaptation of men and machines to certain special purposes,
2 ( 14 08)
8 CREDIT, INDUSTRY AND THE WAR
In many cases the demand for the products of these industries has
diminished very greatly, and it would seem that the fixed capital
must remain either partly or wholly unemployed during the war.
Recent economic investigation has shown that industry not only
proceeds by separating processes of production, but also in sur-
mounting the lines of division formerly regarded as distinct. Thus
Dr. Marshall has shown that the operatives in a watch-making fac-
tory could work the machines used in gun-making or in sewing-
machine-making, or in the making of textile machinery. 1 The
experience of the early months of the war has fully confirmed the
anticipations of economic theory as to the power of transference
of specialised capital and labour from one process (for which the
demand has temporarily declined) to another in which it has
increased. It is not remarkable that cotton operatives should
migrate to woollen mills to make khaki, but it might at first occasion
surprise to hear that many makers of brass door-handles were soon
at work helping to produce shrapnel-shells their contribution
consisting of the brass driving-rings and copper bands. At the
beginning of the winter, machines that formerly made spokes for
cycle wheels produced knitting needles. Plant normally used to
make gear-cases turned out hollow-ware tins and basins for the
troops. Pen-making factories found new employment in manufac-
turing military buttons. The list of war uses for plant during the
first months of hostilities could be very greatly extended, and the
establishment of the Ministry of Munitions has added immensely
to the employment of plant for war purposes ; but enough has been
said to show that economic theory has been proved right in antici-
pating a large measure of recuperative power in productive processes
enabling them to re-employ under the new conditions, capital and
labour which were temporarily idle. All this is satisfactory for the
war period ; it must be remembered that on the return of peace
the reverse change will have to be made. There may be a short
trade boom (arising out of the attempt to restore some of the
material ravages of war), but the joint demand from it and from the
trades re-opened is likely to be considerably less than the huge
present expenditure on manufactures for war. Thus the unemploy-
ment occasioned by dislocation of industry through hostilities is
likely to be carried forward as a species of suspense account which
1 Principles, p. 339.
ECONOMICS OF PEACE IN TIME OF WAR 9
must be liquidated not very long after peace. Moreover, inter-
national credit is likely to re-act on the situation in a prejudicial
manner. Even already the financial system of Germany is more
strained than appears on the surface. This fact is advantageous
to us as belligerents, but it will probably be prejudicial to us not
long after the re-establishment of peace. At present much of the
inconvertible paper circulating on the Continent does not affect us
here. When the inflation has to be squeezed out after the war,
a disturbance of credit is not unlikely.
Important as the flexibility of capital and labour has been, the
striking success of maintaining our communications within the
Empire and with neutrals has been even more remarkable. Steam
and wireless telegraphy have had the effect, when supported by
adequate naval strength and preparation, of simplifying the protec-
tion of maritime trade routes. The events of the early months
of the war afford a brilliant justification of the views of many
economists of the advantages of diversified sources of supply of
food and raw materials from the colonies and foreign countries.
The later operations of German submarines against our commerce
and even against passenger ships can bring no real advantage to the
enemy, and one cannot find words to describe adequately the infamy
of the sinking of the Lusitania. The destruction of cargo boats
and trawlers is at the worst an inconvenience, but in material loss
it is incomparably less than the damage of property which is
happening every day on the Western battle front when villages and
towns are destroyed by artillery fire.
The inestimable services of the Navy in the general protection of
sea-borne commerce may be illustrated to a partial extent by refer-
ence to the last occasion on which our maritime trade was subject
to serious interruption, namely, during the years of hostilities
between 1793 and 1815. At that period Great Britain possessed
an overwhelming naval superiority, yet freights and marine insur-
ance were often extraordinarily high. For instance, these charges
on hemp and tallow from Petrograd to London were ten times the
normal rate. Insurance on hemp was 20 per cent, to 40 per cent,
of the value. In some cases the freight and insurance of flax were
more than the prime cost. These were moderate rates for that war
period. Take the case of silk. It cost 100 to bring a bale of 240 Ib.
from Italy, instead of the previous rate of 6. These figures seem
10 CREDIT, INDUSTRY, AND THE WAR
almost incredible, but they are vouched for by Tooke. 1 Further,
they were only a part of the increased difficulty in transport. The
delay was remarkable. It is recorded that on one occasion it took
a year on another, two years to send a parcel of silk from Italy to
England. Interest on capital and disarrangement of manufacture
during the extra period of transit might be estimated to add another
30 to the cost of conveying a bale of silk that is, 130 against 6 ;
so that altogether the cost of transport and allied charges increased
by more than twenty times the amount paid in times of peace.
Such, in bald numerical terms, is the debt we owe to the silent watch
and ward of the Navy, which is of equal benefit to our Allies also.
So far I have discussed questions which relate mainly to organisa-
tion and transport ; but, in summing up our economic position in
the present war, the provision of resources by the various combat-
ants will become increasingly important. When Germany cast
the sword of Brennus into the scales of international justice she
must surely have forgotten the ultimate influence of the wealth
and resources of the British Empire. " To face the world in arms
in shining armour " may seem heroic to the Teutonic mind, but
it is futile provided that the resources of the world are rightly used
against her. This it appears to me is at once our opportunity and
our responsibility. War has become so complex that to conduct
it upon a great scale demands large capital resources. Our past
savings, supplemented by those made during the war, constitute
the reserve of the credit of the Allies. No doubt, as in the case of
organisation, time will be required to make the full extent of the
pressure felt, but it is pressing slowly but inexorably upon the
enemy, and as the struggle develops it will press with increasing
power. Given the necessary fighting strength of good quality, its
efficiency depends upon the extent and adequacy of its supplies.
If the struggle be protracted, then victory will rest with the side
which can best maintain its supplies, and it is here that our wealth
is likely to be a decisive factor. But it must be brought to bear in
the right way, and in this respect important functions devolve upon
the non-combatant. For many years public and private economy
have been forgotten virtues too often they came near to being
regarded as akin to a vice. Now our leaders of public opinion are
1 History of Prices, I, p. 309 ; Thoughts and Details of High and Low Prices,
pp. 129,211.
ECONOMICS OF PEACE IN TIME OF WAR 11
preaching economy almost as if they had discovered a new religion.
Such missionary zeal, even though belated, is advantageous. War
makes great changes in Distribution ; and changes in Distribution,
when the general standard of living has been rising rapidly, are
likely to lead to extravagance, more especially in war-time when
all conditions favour waste. But economy, necessary as it is, can
be no more than a step. What is required is the maximum supply
of goods, in excess of the needs of the civilian population, which will
maintain and even increase the efficiency of the fighting forces. In
the summer attention was concentrated on munitions, and this is
an instance of our national habit of concentrating on the more press-
ing aspect of some highly complex problem. The effectiveness of
the gunner on a war-ship or of the soldier in the firing line requires
the product of the labours of many workers : without the full supply
his value as a fighting unit deteriorates. Therefore it devolves upon
us to supply such goods both for our own forces, and to a certain
extent, for some of our Allies also. The effect of public and private
economy is to leave more wealth in the hands of the taxpayers,
but much of that wealth does not consist of commodities which
avail for augmenting the power of the forces. To effect the neces-
sary transformation, such wealth must be transferred from the owner
of it, either in the form of taxation to the State or in a subscription
to a public loan. The Government then arranges for the acquisition
of the commodities it requires by either making them itself here or
purchasing them, whether in this country or abroad. In some
cases it may be more advantageous to acquire the goods we need
from foreign countries by exchanging our own products for them.
Now, we already import considerable quantities of food and other
necessaries, and therefore our purchases outside this country for
war purposes constitute an addition to these imports. Against this
we have the profits of our shipping and the income on capital inves-
ted abroad and in the colonies. The aggregate of the former is
likely to be reduced through the war, and there may be a temporary
reduction in the latter through the same cause. Also there are,
of course, our visible exports and some minor items. Thus it
follows that the situation demands as large as possible a production
of goods consisting first of supplies for the forces, produced at home,
secondly, the home supply of the necessaries and simpler comforts
of life, and thirdly, goods to export to pay for our imports of military
12 CREDIT, INDUSTRY, AND THE WAR
supplies and of food from the colonies and abroad. And this leads
to an important conclusion namely, that, after the maximum de-
mands for men for both the naval and the military forces have been
met, there is a plain duty before those who are left. The exigencies
of the times demand that there should be no idle class, whether
of rich or poor. We have called out some of our reserves of
fighting men, and we must draw also upon our reserves of workers.
In the expressive language of our brothers from the Dominions
overseas, " it is up to the non-combatant at home not to let the
fighting forces down," but by his or her steady and sustained indus-
try to help in providing, directly or indirectly, all the supplies which
are required, either in helping to produce these or in making those
goods which are exchanged for them. Thus there is a definite
duty for every one of us, according to our varied capacities, to take
part in a great national endeavour. This is plain common sense.
From the specially economic point of view, war is waste and loss.
Therefore it is obvious that we cannot work too earnestly or too
unsparingly to bring about as soon as possible the cessation of that
loss and a return to normal conditions. No doubt, here again
organisation is required. The people are not in a position to judge
as to the balancing of the needs for reinforcement, for labour for
military supplies produced in this country and for labour to produce
goods to be exchanged for supplies or food imported. All the
more it becomes necessary for the authorities to strike a balance and
to issue clear and unmistakable directions.
All this must seem far removed from the principle of laissez-faire,
the operation of which has become more and more restricted by
the mass of governmental regulations and emergency measures.
But the people assent to the restriction of their liberty of action
under an imperious necessity. Because sacrifices are made in a
national emergency, without complaint or murmuring, it by no
means follows that the public is learning to love its chains. Unless
the war makes a radical change in the national temperament, it
would be a political mistake of the greatest magnitude to retain
restrictions upon commerce even a week longer than these are
unavoidable. In the confused issues of warfare we have the unshak-
able conviction that we are staking the lives of our soldiers and the
whole resources of the British Empire in defence of liberty. It
would be a tragedy if, in the defence of liberty, freedom of enterprise
ECONOMICS OF PEACE IN TIME OF WAR 13
and labour were sacrificed, for in that case victory in war would be
tantamount to the defeat of our national ideals.
In all the long history of this Association, it has never before
fallen to the one who presided in this Section to survey such a scene
of ruin and devastation. To the economist war must ever be the
pre-eminent instance of wicked waste. One is almost tempted to
discuss again that old problem, debated by Bishop Butler namely,
whether whole nations may become temporarily mad. Yet out
of all the suffering and all the loss, something that is necessary to the
progress of the world must emerge something that, as things are,
can only be won by sacrifice and sorrow. It has happened before
in the history of civilisation, and it has now unfortunately occurred
again, that it is needful to defend existing institutions from attacks
which menace not only these but the possibility of future develop-
ment. The sanctity of a nation's plighted word must be maintained
as a basis for the stability of international relations. One issue which
is involved in the present war is the whole basis of international
contract. Without being unduly optimistic one may hope that
some compensation for the vast destruction it has caused may be
found first in the establishing of treaty rights on a secure foundation,
and then that a way will be opened for international agreements
which will lessen the risk of future wars. Moreover, the inviolability
of public faith is not only of supreme importance in the political
sphere ; it lies at the root of the whole mechanism of foreign trade
and the international money-market. The new " scrap of paper "
theory constitutes a bankruptcy of external credit. It recoils
with crushing force on the nation whose good faith has become
suspect, and it produces a feeling of doubt and insecurity throughout
the money-markets of the world. When one remembers Belgium,
it is not a little remarkable that one of the best analyses of the
causes which determine foreign estimation of a nation's credit has
been written by a German. I quote the concluding summary :
" These causes are to be found in the opinion which the world holds
of a nation's political standards, of the soundness of her institutions,
the inviolability of her pledged word, in the last resort of the moral
principles which inspire and the intellectual faculties which direct
her people's activities." x
1 On Some Unsettled Questions of Public Credit, by Prof. G. Cohn, in Econ.
Journal, xxi, p. 217.
14 CREDIT, INDUSTRY, AND THE WAR
Further, from the economic standpoint this war is one which,
provided it ends decisively in favour of ourselves and our Allies,
should free us from a menace which has faced this country for a
generation. At each great epoch in our history, it has been our
duty to prevent the wreck of civilisation through the appearance
of a new Iron Age with its doctrine that wealth is the prey of the
stronger. And so England resisted Spain, Great Britain Napoleon,
and now the British Empire confronts Germany in defence of the
principle that force must not triumph over law. Indeed, the present
strife is perhaps the only issue from a situation in Europe that was
becoming intolerable. Year after year the nations on the Continent
were proving their devotion to peace by arming to excess, as they
said, to defend peace. The burden grew heavier and heavier, divert-
ing national resources from the improvement of the condition of the
people and the growth of commerce. Before the war the annual
expenditure of the Powers of Europe on their armies alone had
increased to about 290,000,000. There can be little doubt that
much of this outlay, as well as that on navies, could be saved. It
is to be hoped that, when a durable peace has been signed, a very
large saving in this type of expenditure will be effected. Moreover,
an abatement of military preparations should have another effect
in diminishing the drain on productive processes through compulsory
military service. Thus, on the whole, while the losses of the war
will be enormous, there are some gains, largely of an immaterial
kind, to be placed on the other side of the account namely, security
and the re-establishing of international contract, and, of a material
kind, in a possible diminution of the burden of armaments both
direct and indirect.
A special aspect of the problems under discussion is the provision
of capital for the re-starting of trades contracted by the war and
for the restoration of Belgium and other regions desolated during
the progress of hostilities. Chalmers, writing a hundred years ago,
supposed that in cases of this kind " in a very few years the recovery
both of population and labour would be completed." 1 The
explanation he gave was far from satisfactory even for the time at
which it was written, and it is still more deficient as applied to the
present circumstances, when in industrial countries fixed capital
is much more important than in Chalmers's day. In the last quarter
1 Works, xix, p. 141.
ECONOMICS OF PEACE IN TIME OF WAR 15
of a. century any great catastrophe, such for instance as the partial
destruction of San Francisco by earthquake and fire, has been
repaired with comparative ease by bringing capital from outside.
But the waste of war renders capital exceedingly scarce ; in fact,
a famine of capital after the war has been predicted. Such an
anticipation is over-pessimistic, but capital is likely to be obtainable
for a time only with some difficulty. It is to be feared that after
the war Europe will experience very Considerable straits for several
years to come. Not only must the waste of war be made good,
but its evil legacy in inflated funded and floating debts must be
gradually dealt with, lessening by reason of increased taxation the
normal margin for new savings. Increased work and greater
economy are the only remedies, aided by improved methods of
production.
It is to be hoped that some of the inevitable loss will be repaired
in time by better methods of organisation and by an accelerated
rate of invention. The waging of a just war results in a quickening
of the national spirit. It forces a nation out of the easy and well-
worn paths of custom and convention. Thus, out of all the suffering
and all the loss, some good will come. The large proportion of our
young manhood which has gone to serve the country on the seas
or in the field, and which returns having looked death in the face
without being afraid, will not take up life where it was left. The
noble qualities that have been evoked by the stress of battle will
remain and will influence civil life during the next generation. The
outlook will be both broader and also more simple. Methods of
social legislation and administration will become more direct and
less timorous. The men who have dared greatly and who have
endured will chafe against the rules that have been formed during
easier times. Great wars tear away the veils which hide the
essential needs of living, and reveal what is fundamental. The
directness of vision that has faced danger is not likely to be alarmed
in facing the difficulties of our social and industrial problems. And
so we may expect with confidence that our legislation will be bolder
and also more sane than it has been in the past. The sacrifices of
so many cannot pass, when the war is over, and leave no trace.
The nation has been re-vitalised in the course of the struggle and the
influence of this movement will persist.
In many respects the economic problems that will confront us
16 CREDIT, INDUSTRY, AND THE WAR
after the war will be even more serious, and certainly not less
difficult, than those of the present time. Still there can be no doubt
that these will be faced with courage and patience. The period of
stress through which we are passing has shown the unity of thought
and purpose throughout the whole Empire. And this, in spite of
many appearances to the contrary, will be a great asset in the future.
The great national emergency has caused a closing of the nation's
ranks, and it rests with us to keep them firm and steadfast when
peace returns. There are plain signs that it may not always be
easy, since so many industrial and other difficulties have been carried
forward as a suspense account which is to be dealt with when the
war is over. National unity is enabling us to progress towards
victory, and the same unity will be required to enable us to reap the
full fruits of that victory at home. It would be a mad waste not to
employ the qualities of heart and mind which have been aroused
in this great struggle in the service of peace and social progress.
The future may be difficult for some years to come, but difficulties
are the opportunities of the strong and courageous. It has fallen
to us to live in an heroic age ; and, if we remain true to ourselves
and to our high destiny, we shall have the strength and the fixity
of purpose to achieve greatly in peace as well as in war.
CHAPTER II
THE PROMOTION OF INDUSTRIAL HARMONY
THIS chapter summarises a discussion on the means for promoting
industrial harmony. It was opened by Professor A. W. Kirkaldy
and continued by the gentlemen whose names appear at the
commencement of the various sections of the chapter.
PROFESSOR A. W. KIRKALDY
We have here to-day a representative gathering of many sections
of the business and industrial world, together with some professional
economists. We are away from the heated atmosphere of party
controversy. We are, as it were, basking in the cool pleasaunce
of the British Association. We want to get at facts, lay bare the
truth, and find out how trouble arises. Possibly as a result of what
is said here to-day, we may be able to bring into existence a small
but competent representative committee, whose object it will be
to study calmly and dispassionately the whole industrial situation
and endeavour to agree the broad lines of a policy which may
secure the harmonious co-operation of all sections of the industrial
army. Surely the last twelve months have cast a lurid light over
what friction-gone-mad can accomplish, and we need to realise
very clearly that friction-gone-mad in the industrial world may well
produce greater calamities and sufferings than have resulted in the
international sphere, from the tearing up of a " scrap of paper/'
I am convinced, from what I have seen during many years spent in
close touch with industrial England, that this country is threatened
by a danger far greater than can come from the German or any
other external enemy. Friction has existed in many different
spheres, but in its most acute and dangerous form it has manifested
itself in the industrial sphere.
The war broke out, and in a marvellous way brought about a
national harmony for which few had dared hope. After a year of war,
while the great mass of the nation is sound, while the Empire as a
whole presents an unbroken front to the enemy, in a way which wins
17
18 CREDIT, INDUSTRY, AND THE WAR
the admiration of the world, and is the despair of the Germano-
Austro-Turkish Alliance, there are signs that when once the com-
pelling hand of war is relaxed and this may come sooner than some
think friction in an intensified form may break out in the industrial
sphere.
It is this possibility of friction and its causes that are our concern
here to-day. Can we lay aside prejudices, and dispassionately and
calmly estimate the evil, and help to realise its causes ? If we can
see our way to this, we may be able to suggest measures that may
minimise resulting harm, and even point the way to harmony
instead of friction. This would enable this country to take full
advantage of what promises to be a most remarkable economic
situation, and thus repair in a comparatively short time the loss and
ravages incidental to this war. In the short time at my disposal I
shall only attempt to draw attention to two points which I believe
to be of considerable importance.
1. Is class war a necessity?
2. What is the truth about wages, profits and dividends ?
At the Trade Union Congress held in this city two years ago (1913)
two foreign delegates were present. The French delegate in the
course of his address 1 said : " Between the employers' class and the
State, on the one hand, and the wage-earners on the other, there is
a state of war of perpetual skirmishes and guerilla engagements,
and on every occasion of conflict the stronger for the time being
is the victor, while the weaker is overborne in the struggle."
He spoke as though such a state of affairs is necessary and can
only end when labour becomes so strong that neither the State nor
the employer, nor both together can hope to impose their will upon
the proletariat. To me this teaching appears to be fundamentally
wrong. Unfortunately class warfare has now been taught for so
many years, that it is in danger of being accepted as an eternal
and immutable truth. If this be so, we are faced with a very
serious situation. But is it true is it necessary ? These are
questions we must not answer without pausing to consider the issues
entailed. Is it not that the strife is really due to ignorance an
ignorance as profound amongst some employers as amongst some
labour men ? We have given ourselves up as a nation too much to
1 This address is printed in full in Economics and Syndicalism, by A. W.
Kirkaldy, pp. 115-125.
THE PROMOTION OF INDUSTRIAL HARMONY 19
the worship of what Aristotle called Chrematistics i.e., the love
of gain and accumulation rather than to the study and practice
of economics, which means the using of the material world in such
wise that every member of the community shall be able to develop
his or her capacities naturally and healthily. The rush to be rich
a mistaken synonym for happiness and well-being is a will-o'-the-
wisp, which has been luring us on to national decadence. The
word Economics does not command the attention and respect of
some people because it has come to connote to them things that
are repugnant to common sense and to our highest interests.
But please note carefully that this is not the fault of Economics.
It is due to the fact that ignorance exists as to Economics and
what it teaches. I know only too well with what contempt some
employers and workers are wont to view the teachings and theories
of the Economist. Consider some elementary points : surely what
is taught on the subject of Production should commend itself to
the common sense of every thinking man. In order that the pro-
ducer of wealth may obtain the best results, one of the first requisites
is the harmonious co-operation of the factors of production. Friction
or suspicion amongst these inevitably lessens the amount produced,
for as we shall see, when we consider salaries and wages, whatever
tends to decrease production must decrease the real amounts re-
ceived as salary or wages. Now it is true that the earlier Economists
concentrated their attention to too great an extent upon Production
the amount produced being their main consideration. Unfortu-
nately, with the swing of the pendulum, men in touch with practical
life have erred almost equally in concentrating their attention on
what the Economist calls Distribution. Demands are made for a
higher standard of living, for an increased share to each claimant
of what is produced ; and the older teachings on Production are in
danger of being left severely alone.
What seems to me to be required at the present moment, is a
sane outlook over the industrial sphere as a whole ; for what
concerns the well-being of the nation is not only that production
shall be carried on on right lines and to the fullest extent, but that
what is produced shall be equitably distributed amongst those
responsible for its production. Nor do these two cover the ground
adequately ; for not only must commodities or wealth be rightly
produced and equitably distributed, but they must be wisely
20 CREDIT, INDUSTRY, AND THE WAR
consumed. Thus every section of our industrial army should have
correct knowledge on the production, the distribution, and con-
sumption of the results of its labour. If you concentrate your
attention on either one or two of these, the greatest satisfaction
cannot be obtained by the community, because our economic posi-
tion can only approach perfection when our wealth is rightly produced,
equitably distributed, and wisely consumed.
There is, unfortunately, among both employers and employed,
a great lack of knowledge on these somewhat elementary subjects.
Broadly speaking, among employers there is too great a desire to
gain wealth for wealth's sake ; and amongst workers to increase
wages, without stopping to consider adequately how the fund is
produced from which profits, dividends, and wages are drawn. And
when wealth or high wages are obtained there is amongst all ranks
of the community too great a tendency towards waste and extra-
vagance, without a thought as to one's responsibility to the nation
for a right use of one's resources. In this connection then, there
are two thoughts I should like to see this section of the British
Association consider carefully :
1 . Does class warfare lead to a serious diminution in production ?
2. Do we take a broad enough view of our Economic position ?
It is estimated that during the first decade of this century, trade
disputes led to 120,000 years of lost hours ; some or all of this
loss may have been justifiable, and this brings me to the second
point which I wish to see discussed here. What is the truth
about wages and profits ? Both these are difficult problems, and
require careful study. Half a century or so ago Economists earned
for their subject the name of the Dismal Science, mainly because
of their theories on wages. The Iron Law taught that wages are
paid out of an existing wages fund. If this were true, one section
of labour could obtain higher wages only at the expense of the mass
of labour. An American Economist cleared up this mistaken
opinion, and pointed out that it is superficially true that wages
are paid out of existing wealth, but this is only for convenience sake.
Really wages are limited by the amount of wealth produced, i.e.,
the more that is produced the greater may be the wages fund ; thus
with decreased production, in the long run, there must be a decrease
in real wages. Nor are profits, whether high or low, necessarily
made at the expense of the workman. So far as all the great staple
THE PROMOTION OF INDUSTRIAL HARMONY 21
commodities are concerned, there can be only one price for articles
of the same quality in the same market. There will be many
manufacturers producing the same goods for the market, and no
two of them may produce at the same cost, although where organised
labour is employed the rate of wages will be the same. The varia-
tions in cost of production are due not to the workmen, but to the
varieties of organising skill among the different employers. The
employer producing at the greatest cost is indirectly the determiner
of price, for he cannot for long sell at a loss. It is, in fact, the
demand for the goods made by the least competent employer that
enables the more skilful employers to make profits, and the most
highly skilled employer, i.e., the best business organiser, makes the
greatest profits.
One would like to have the time to go fully into the economics
of wages and profits but the above short sketch may perhaps
be sufficient for our immediate purpose. It will serve anyway to
draw attention to the necessity for obtaining real knowledge before
dogmatising.
If we could research on these lines it might help to suggest a
system by means of which the labour force of a country, which in its
essence is one and indivisible, and includes all those engaged in the
work of production, from the man whose brain organises, to the boy
whose hand fetches and carries, might be graded in such wise that
the real value of each member of it could be determined and his
rate of remuneration fixed. With full knowledge as to the fair share
of production that is due to each grade of labour there would be
equitable distribution, and when men were convinced that they
were obtaining their fair reward, production would be stimulated,
for with increased production, each man's share may be greater.
Can a representative committee be appointed to work at this
subject until it has suggestions to make that may be offered for the
acceptance of the industrial community ?
In conclusion, I earnestly beg that in what we say and do here
to-day, we shall try to forget old prejudices, cast away all thought
of making a personal score over those who think and act differently
from ourselves, so that together we may try to find that path which
may lead to national harmony. If this be attained there can be
no doubt as to the future of our Empire. Can the capitalist, the
organiser, and the worker lay aside those feelings of animosity that
22 CREDIT, INDUSTRY, AND THE WAR
have almost become the rule, and in a quiet atmosphere, work
together for the common good ? I am convinced that by doing so,
each one would find greater happiness, and a reward higher than
can be obtained from the accumulation of millions on the one hand,
or on the other the successful organising of the forces of either capital
or labour, with the object of winning what will probably end in an
empty victory. You may defeat what you consider to be the
enemy in the industrial sphere, but in doing so will you not inevitably
bring loss on the whole community ? Here and now it seems to
me we have a golden opportunity to break away from an evil past,
and enter upon a future whose possibilities for the good of mankind
are limitless.
ADDENDUM
Mr. Wm. Thorne, M.P., in his interesting speech, gives a short
account of the conciliation system employed by the Blast Furnace
Workers. Wages are governed by the selling price of pig iron,
and an audit is held every quarter by an accountant in whom both
masters and men have confidence. This system has resulted in
practically eliminating friction. The reason for this is quite clear.
The rate of wages for normal times and prices are agreed, any devia-
tions on either side of the normal, automatically affect wages. The
men know the facts and are content. Why should not some such
arrangement obtain in every industry ? It does in some, e.g., in the
cotton industry, as is shown by Sir Charles Macara. x When
bankers conducted their business secretly, there were constantly
recurring commercial crises. The panic element has been elimi-
nated from banking and finance because the commercial world
has now greater opportunities for gauging the facts about financial
conditions. May it not be that the same (mutatis mutandis)
might be found true of the industrial world ? Let both masters
and men share their confidences. Perhaps the employers might
lead the way in this, and if they did, the men would follow and
when once causes for suspicion were removed a long step would
have been taken in the direction of industrial harmony.
SIR CHARLES W. MACARA, BART.
The subject we have to-day met to discuss, viz., the relationship
between capital and labour is one of supreme importance at any
1 Cf. page 25.
THE PROMOTION OF INDUSTRIAL HARMONY 23
time, but more especially so at a time of national crisis such as that
through which we are at present passing.
In the early days of the war, I was one of those approached by
representatives of the Government regarding the effect the war
would have upon industry, and what could be done to minimise
the dislocation that was certain to ensue and to keep the workpeople
employed as much as possible.
Recognising the colossal task with. which the Government was
confronted, and that it was essential that the assistance of the most
experienced practical men should be taken advantage of, I strongly
advocated that all existing organisations of capital and labour,
and indeed of every kind, should be at once brought into requisition
in preference to forming new ones to deal with the crisis. There is
ample correspondence to prove, and resolutions have been passed
and published showing, that this supremely important matter has
been urged on the Government without avail. Everyone who has
had experience of such work will realise that creating new organisa-
tions cannot be efficiently carried out without expenditure of much
time and labour, whereas it is comparatively easy to adapt existing
organisations to deal with great and sudden emergencies and time
is an all-important factor.
Having visited many of the principal countries of the world,
and having studied their methods of working, I am convinced that,
upon the whole, this country is as well organised as any, but the
Government has not understood how to utilise existing organisa-
tions as they should have done, and in this respect we have been
placed at a disadvantage with enemy countries whose Governments,
on the outbreak of war, at once utilised all their existing organisa-
tions, and deputed to their most experienced industrial and com-
mercial organisers, definite and important duties in connection with
the carrying on of the war. Had this been done in England, instead
of Ministers keeping matters in their own hands, it is my opinion
that we could have faced this great upheaval much more effectively
than has been the case.
Efficient co-operation of the industrial, commercial, financial,
scientific, transport, and labour interests with the Government
would have enabled our enormous resources to have been brought
into requisition from the very commencement of the war.
As it is, after twelve months of war we are only now realising
3 (1408)
24 CREDIT, INDUSTRY, AND THE WAR
what proper co-ordination of all our vast resources might have
accomplished indeed, so far as practical results are concerned,
the difference between thorough organisation and the reverse can
scarcely be comprehended. It is unfortunate that the services of
men who have led the great organisations of capital and labour
have not been taken advantage of to anything like the extent they
should have been.
Had this co-operation between the various organisations existed,
it might have been possible to have dealt more effectively with the
problems connected with the supply of the necessaries of life, which,
I pointed out to the Government, would not only constitute the
chief difficulty in carrying on the war, but would be the main factor
in terminating the struggle. Certainly, so far as this country is
concerned, much might have been done to prevent the undue rise
in prices which has inflicted hardships upon all, and especially on
the working people, and has been the main cause of the industrial
unrest that exists. On the other hand, nothing could have been
more splendid than the response of the nation to the call to arms,
and the magnificent and unprecedented heroism and self-sacrifice
which have been displayed but, again, the failing has been the
want of co-ordination of the resources in men with the resources
for the production of the munitions of war, which I believe the
National Register will speedily remedy.
It is useless, however, dwelling upon the errors of the past which
cannot now be altered, and the only object in referring to them
is that in the future full advantage may be taken of the experience
gained, so that the vast resources of the nation may be utilised to
the fullest extent.
My long connection with the cotton industry, one of the greatest
and most complex of our national interests, has compelled my giving
a large amount of attention to the relationship between capital
and labour, not in this industry alone, but it has brought me into
close personal touch with many of the leaders of capital and labour
in other staple industries, all of which are interdependent.
It has been my endeavour over a long term of years to impart
to those who were selected by the working people to safeguard their
interests, as much information as possible regarding what might
be considered the employers' view of the carrying on of the industries.
By so doing I felt that the realisation of the employers' and
THE PROMOTION OF INDUSTRIAL HARMONY 25
workpeople's interests being identical, would go a long way to smooth-
ing over the differences which from time to time arise, and would help
to prevent disputes regarding the division of the profits of industry,
and also to promote mutual respect for the rights of both.
I attribute the comparative freedom from general stoppages
in the cotton industry during the past twenty years an immense
change from the conditions that obtained in the previous twenty
years to the operation of the famous Charter which terminated
the twenty weeks' struggle in 1892-93, and which declares in its
preamble that " the representatives of the employers and the
representatives of the employed hereby admit that disputes and
differences between them are inimical to the interests of both parties,
and that it is expedient and desirable that some means should be
adopted for the future whereby such disputes and differences may be
expeditiously and amicably settled and strikes and lock-outs
avoided." Other important factors are the educational work that
has been extensively carried on, and the co-operation of the repre-
sentatives of the operatives with the representatives of the employers
in the promotion of public-spirited movements for the maintenance
and extension of an industry which plays such a prominent part
in our national welfare. I have endeavoured to carry this educa-
tional work still further, and, after numerous conferences, a plan
was devised and has now been in operation for a number of years,
whereby outside experts, who are independent of both workpeople
and employers, and each independent of the other, are brought in,
and by the aid of a tabulation of thoroughly reliable statistics it is
possible to show accurately the profits of the industry at any given
time or over a period of years. This scheme provides automatic
arbitration without an arbitrator.
Another great factor in preventing wages disputes in the cotton
trade during the past twenty years has been the limiting of the per-
centage of the rise and fall of wages, and also that when any change
has taken place a certain time must elapse before any further change
can occur. It is much to be desired that this condition shall be
agreed upon in all industries. When fully explained, the simplicity
of the scheme for ascertaining profits and its fairness are at once
apparent, and I believe it is capable of being adapted to almost any
industry. Disputes very often arise from an exaggerated view of
the return on capital invested in industry generally, and if some
26 CREDIT, INDUSTRY, AND THE WAR
means can be devised by which this can be fairly accurately gauged,
it would often prevent unreasonable demands being made by work-
people or the refusals on the part of employers to share their
prosperity with the employee.
When industries are well organised on both sides, and vicissitudes
arise which may render it necessary temporarily to curtail produc-
tion, co-operation between the organisations of employers and
workpeople might be requisitioned with most beneficial effect.
Feeling strongly that many disputes might be avoided by tho-
rough investigation by practical men when a deadlock arises, I
conceived the idea of the Government appointing a body consisting
of an equal number of thoroughly experienced representatives of
capital and labour connected with the staple industries of the coun-
try, which, as I have already said, are interdependent. After secur-
ing the approval of many of the most prominent leaders of capital
and labour, the Industrial Council was appointed by the Government
in October, 1911, and high hopes were entertained as to the services
this body would render in the cause of industrial peace. But for
some reason which it is difficult to understand, and which has never
been explained, this body was utilised only to a very limited extent
before the war, and, notwithstanding the very considerable industrial
unrest that has occurred since the war, it has not been utilised at all.
Another matter which is equally inexplicable is, that the result
of an extensive inquiry into industrial agreements and their observ-
ance which was deputed by the Government to the Industrial
Council, and which occupied thirty-eight long sittings in 1912-13,
has never been utilised.
A perusal of the report that was issued proves conclusively not
only the desirability of, but the absolute necessity for, the thorough
organisation of both capital and labour, and that where this obtains
disputes are usually settled between the parties themselves. The
main obstacle to the perfecting of these organisations is the selfish-
ness of a small minority of both employers and workpeople, who
remain outside the various organisations, but who do not hesitate
to take full advantage of the public-spirited and self-sacrificing
work of the majority.
A good deal has been said about Trade Union limitation of output.
I venture to express the opinion that this is against the true interests
of labour indeed, it would be on a par with the persecution of the
THE PROMOTION OF INDUSTRIAL HARMONY 27
great inventors who have done more than any other men to improve
the position of labour, and to place England in the proud position
of being the greatest industrial and commercial nation of the world.
I am personally acquainted with many of the official repre-
sentatives of labour in the staple industries, and upon the whole
I have formed a high opinion of their capacity and fairness, and it
is only by the rank and file following their leaders that they can
hope to be successful in securing their legitimate rights an army
without leaders can accomplish nothing.
The inquiry by the Industrial Council, already referred to, also
demonstrated that compulsory arbitration for large bodies of men
by legal enactment is impossible, and therefore it should never have
been included in the " Munitions Act."
I hold strongly that the interference of politicians with industrial
disputes is calculated to generate bitterness between capital and
labour, and often leads to inconclusive settlements which are
against the best interests of the industries. It is not to be expected
that it is possible for those who devote their whole energies to politics
to have the necessary knowledge of the intricacies of the numerous
industries or the varying conditions under which they are carried on.
The employers have the idea that this interference places them
at a disadvantage, and that such a feeling should exist, although the
workpeople may gain an immediate apparent advantage, is ulti-
mately prejudicial to the real interests of industrial peace and the
national welfare. In this connection I should like to emphasise
that a large proportion of the gross earnings of industry goes in the
payment of labour and of the expenses necessary to the running
of the industries, and even under normal conditions it is only a small
margin that is left to remunerate those who have invested their
capital. In a crisis such as the present, this margin may not
only vanish but there may be a diminution of capital, and it must
be borne in mind that the employers' resources are not unlimited.
The effect of the war on industry has been most varied. Certain
industries have been exceptionally profitable ; others have suffered
severely, notably the cotton industry, which is dependent for over
three-quarters of its employment upon export trade in competition
with many other countries. To deal with the wages question
without taking into consideration the varying conditions is obviously
unfair. A late President of the Board of Trade made a statement
28 CREDIT, INDUSTRY, AND THE WAR
a year or two ago that a sum of no less than 2,400,000,000 is invested
in joint-stock companies alone in the United Kingdom. This vast
capital belongs to millions of people and is the accumulated savings
of brain and muscle, many small investors depending upon it for
their living. There may be, therefore, quite as much suffering among
them from the effects of the war as among the workpeople for whom
this capital finds employment. A thorough investigation into all
the circumstances is absolutely necessary before giving any award
in a wages dispute, instead of, as is too frequently done, ignoring
these considerations or splitting the difference. If it is proved
that an industry is making exceptional profits it is only fair that
the workpeople, who may be involved in extra strain, should share
in this prosperity, but in the event of an industry being adversely
affected, this policy might, in the long run, result in the workpeople
being thrown out of work altogether.
It would be difficult to conceive* any better medium for preventing
or settling disputes than such a body as the Industrial Council.
To this Council the Government should refer all disputes that the
parties themselves fail to settle, and the decision should be published.
In any dispute in a staple industry which results in a strike or
a lock-out, it is not only the combatants who suffer, but enormous
numbers of people who have no direct interest in the dispute are
deprived of their means of livelihood ; indeed, it must never be
overlooked that the whole trade of the country is one vast organism,
and it is essential that the national welfare must have the primary
consideration in any dispute that may arise.
Any refusal of either of the parties to a dispute to submit their
case to a tribunal composed of an equal number of experienced
representatives of capital and labour with a non-political chairman
appointed by the Government, would be strong presumptive evi-
dence against the fairness of their demands, and the impression
made on those whose interests are seriously prejudiced by the
dispute, and on the public generally, is the only compulsion possible,
and it would usually be effective.
SUMMARY. In this paper I have endeavoured to show :
1. That harmonious relationship between capital and labour is
always of the utmost importance, and that at a time of great national
crisis it is supremely so.
2. That in order to cope with such a colossal task as that by
THE PROMOTION OF INDUSTRIAL HARMONY 29
which the Government was confronted, the task would have been
lightened and much would have been gained, had they at once
enlisted the assistance of experienced industrial organisers, and
co-ordinated all existing organisations.
3. That the United Kingdom is as well organised as any other
nation, and had there been effective co-operation of the industrial,
commercial, financial, scientific, transport, and labour interests
with the Government from the commencement of the war, the posi-
tion in every respect to-day would have been vastly better than
it is.
4. That by the co-ordination of these interests, the problems
connected with the supply of the necessaries of life, and with the
undue raising of prices of commodities, might have been coped
with much more successfully than they have been.
5. That the rise in the prices of commodities has undoubtedly
been the main factor in creating industrial unrest.
6. That the only object in calling attention to the errors of the
past is that we might profit by the experience gained, and so utilise
to the utmost the vast resources at our disposal.
7. That the interference by politicians in industrial disputes
is to be strongly deprecated, on the ground that it often leads to
inconclusive settlements, it being impossible for politicians to have
the necessary knowledge of the intricacies of the different industries
or their varied conditions of working ; that such interference only
engenders bitterness and does ultimate harm.
8. That thorough organisation of both capital and labour is
essential to the smooth working of the industries, and that where
this is the case, disputes are generally settled by negotiations
between the parties themselves.
9. That disputes frequently arise from an exaggerated estimate
of the return on capital, and that schemes for ascertaining this
return should be promoted, as exaggerated views often lead to
unreasonable demands.
10. That the Industrial Council, which was appointed by the
Government in 1911, and which is composed of an equal represen-
tation of capital and labour, with a non-political chairman, has not
been utilised since the outbreak of war, that no adequate explana-
tion of this has been offered, and that the valuable report of its
inquiry into industrial agreements has not been made use of.
30 CREDIT, INDUSTRY, AND THE WAR
1 1 . That the enforcement of compulsory arbitration where large
bodies of men are concerned is an impossibility, and that an inquiry
into the merits of a dispute by experienced men representing capital
and labour, and the publicity given to its findings, would, together
with public opinion generally, supply the only effective compulsion.
12. That Trade Union limitation of output is against the best
interests of labour.
13. That official representatives of labour are generally men of
capacity and fairness, deserving of the confidence of the rank and file.
14. That the effect of the war upon industries has been varied,
and that any war bonus or wages advance should be granted only
after full investigation by leaders of capital and labour.
CONCLUSION. In conclusion, I have endeavoured to deal with
a complex problem from the standpoint of one who, during the
past twenty years, has been frequently placed in the difficult position
of having to preside over conferences of masters and men in con-
nection with disputes, while occupying the position of President
of the Masters' Federation during that period. Whatever success
may have attended this work is mainly attributable to being able
to eliminate personal interests, and to view matters solely from the
standpoint of endeavouring to act fairly between man and man.
From a wide experience I have come to the conclusion that nothing
is gained from strikes and lock-outs ; that the leaders of capital
and labour have exceptionally heavy responsibilities ; and that
industrial peace, especially at present, is absolutely essential.
Mistakes and the difficulties they cause frequently prove to be
blessings in disguise. So far as the British nation I might say
Empire is concerned the greater the difficulties to be faced, the
greater is the energy and determination to overcome them. It is
fervently to be hoped that such an arousing is now taking place,
and that everyone is being made to feel the seriousness of the situa-
tion, and that all classes will be prepared to make any sacrifices
that may be necessary to ensure the speedy and victorious termina-
tion of the unprecedented struggle in which we and our Allies are
engaged in defence of freedom and civilisation.
ADDENDUM
The following statement, dated the 10th of October, 1911, was
issued by the Board of Trade :
THE PROMOTION OF INDUSTRIAL HARMONY 31
Ms Majesty's Government have recently had under consideration
the btst means of strengthening and improving the existing official
machiLery for settling and for shortening industrial disputes by
which the general public are adversely affected. With this end in
view, consultations have recently taken place between the Prime
Minister and the President of the Board of Trade, and a number of
representative employers and workmen specially conversant with
the principal staple industries of the -country, and with the various
methods adopted in those industries for the preservation of peaceful
relations between employers and employed.
Following on these consultations, and after consideration of the
whole question, the President of the Board of Trade, on behalf of
His Majesty's Government, has established an Industrial Council
representative of employers and workmen. The Council has been
established for the purpose of considering and of inquiring into
matters referred to them affecting trade disputes ; and especially
of taking suitable action in regard to any dispute referred to them
affecting the principal trades of the country, or likely to cause
disagreements involving the ancillary trades, or which the parties
before or after the breaking out of a dispute are themselves unable
to settle.
In taking this course the Government do not desire to interfere
with but rather to encourage and to foster such voluntary methods
or agreements as are now in force, or are likely to be adopted for
the prevention of stoppage of work or for the settlement of disputes.
But it is thought desirable that the operations of the Board of Trade
in the discharge of their duties under the Conciliation Act, 1896,
should be supplemented and strengthened, and that effective means
should be available for referring such difficulties as may arise in a
trade to investigation, conciliation, or arbitration, as the case
may be.
The Council will not have any compulsory powers.
The following gentlemen, in their individual capacity, have
accepted Mr. Sydney Buxton's invitation to serve on the Council :
EMPLOYERS' REPRESENTATIVES
MR. GEORGE AINSWORTH, Chairman of the Steel Ingot Makers' Association.
SIR HUGH BELL, Bt, J.P., President of the Iron, Steel, and Allied Trades'
Federation and Chairman of the Cleveland Mine Owners' Association.
SIR G. H. CLAUGHTON, Bt., J.P., Chairman of the London and North-
Western Railway Company.
32 CREDIT, INDUSTRY, AND THE WAR
MR. W. A. CLOWES, Chairman of the London Master Printers' Association.
MR. J. H. C. CROCKETT, President of the Incorporated Federated issocia-
tions of Boot and Shoe Manufacturers of Great Britain and Ireland
MR. F. L. DAVIS, J.P., Chairman of the South Wales Coal Conciliation
Board.
MR. T. L. DEVITT, Chairman of the Shipping Federation, Limited.
SIR THOMAS R. RATCLIFFE ELLIS, Secretary of the Lancashire and Cheshire
Coal Owners' Association and Joint Secretary of the Board oc Conciliation
of the Coal Trade of the Federated Districts, etc.
MR. F. W. GIBBINS, Chairman of the Welsh Plate and Sheet Manufacturers'
Association.
SIR CHARLES W. MACARA, Bt, J.P., President of the Federation of Master
Cotton Spinners' Associations.
MR. ALEXANDER SIEMENS, Chairman of the Executive Board of the
Engineering Employers' Federation.
MR. ROBERT THOMPSON, J.P., M.P., Past President of the Ulster Flax
Spinners' Association.
MR. J. W. WHITE, President of the National Building Trades Employers'
Federation.
WORKMEN'S REPRESENTATIVES
i
RIGHT HON. THOMAS BURT, M.P., General Secretary of the Northumberland
Miners' Mutual Confident Association.
MR. T. ASHTON, J.P., Secretary of the Miners' Federation of Great Britain
and General Secretary of the Lancashire and Cheshire Miners' Federation.
MR. C. W. BOWERMAN, M.P., Secretary of the Parliamentary Committee
of the Trades Union Congress and President of the Printing and Kindred
Trades Federation of the United Kingdom.
MR. F. CHANDLER, J.P., General Secretary of the Amalgamated Society of
Carpenters and Joiners.
MR. J. R. CLYNES, J.P., M.P., Organising Secretary of the National Union
of Gasworkers and General Labourers of Great Britain and Ireland.
MR. H. GOSLING, President of the National Transport Workers' Federation
and General Secretary of the Amalgamated Society of Watermen, Lightermen,
and Watchmen of River Thames.
RIGHT HON. ARTHUR HENDERSON, M.P., Friendly Society of Ironfounders.
MR. JOHN HODGE, M.P., General Secretary of the British Steel Smelters,
Mill, Iron, and Tinplate Workers' Amalgamated Association.
MR. W. MOSSES, General Secretary of the Federation of Engineering and
Shipbuilding Trades and of the United Patternmakers' Association.
MR. W. MULLIN, J.P., President of the United Textile Factory Workers'
Association and General Secretary of the Amalgamated Association of Card
and Blowing Room Operatives.
MR. E. L. POULTON, General Secretary of the National Union of Boot and
Shoe Operatives.
MR. ALEXANDER WILKIE, J.P., M.P., Secretary of the Shipyard Standing
Committee under the National Agreement of 1909 and General Secretary of
the Shipconstructive and Shipwrights' Society.
MR. J. E. WILLIAMS, General Secretary of the Amalgamated Society of
Railway Servants.
Additions may be made to the above list.
The Members of the Council will, in the first instance, hold office for
one year.
SIR GEORGE ASKWITH, K.C.B., K.C., the present Comptroller-General of
the Labour Department of the Board of Trade, has been appointed to be
Chairman of the Industrial Council, with the title of Chief Industrial Com-
missioner ; and MR. H. J. WILSON, of the Board of Trade, to be Registrar
of the Council,
THE PROMOTION OF INDUSTRIAL HARMONY 33
MR. WILL THORNE, M.P.
Mr. Will Thorne, M.P., speaking as a representative of the Trade
Union Congress, said he approved of many of the principles involved
in Sir Charles Macara's paper. He was in entire agreement with
that part which referred to the Industrial Committee appointed by
the Government two or three years ago. Upon that Committee
there were representatives of organised labour and of employers,
and evidence was submitted to the Committee from all quarters.
Sir Charles had suggested that in future this Committee should
have all industrial disputes relegated to it for consideration and
decision, but he took it that Sir Charles did not mean the whole
of the Committee, which would be rather unwieldy. He should
have no objection to a number of gentlemen being selected from the
Committee to consider these questions. The gentlemen who
adjudicated at the present time upon questions of work and wages
Sir George Askwith, Sir George Gibb, and Sir Francis Hopwood
had not been selected from the class to which the speaker belonged,
and he did not think it was possible for them to give fair and impar-
tial decisions. They were not in a position to have consultations
with delegates of organised labour, and in consequence of the
tremendous number of questions submitted to them, it was almost
impossible for them to deal with them as speedily as the urgency
of workmen's claims required.
He thought he was justified in saying that during this war the
Trade Unions had behaved with patriotism. In the early stages
of the struggle, the larger and more responsible of them decided to
stop all strikes. The leaders were severely criticised by the mem-
bers of the Unions, because it was thought there was a good chance
at that time of winning all they were striving for. But the Unions
realised that it was essential that the organised workers should
close their ranks in order to prosecute the war to a successful issue.
Organised labour had always been opposed to compulsory arbitra-
tion. To begin with, it must be enforced by penalties. Another
reason for opposing it was that if a decision was given in favour of
the workmen and against the employer, there was nothing to
prevent the employer from closing down his factory and throwing
his workpeople on the street. That was a lop-sided bargain. But
he had always been in favour of what might paradoxically be called
34 CREDIT, INDUSTRY, AND THE WAR
" compulsory conciliation " the compelling of workmen and
employers to meet together round a common table to discuss pros
and cons, with power, if the discussion failed to reach a settlement,
of resorting to a strike or a lock-out. Since 1889 there had undoub-
tedly been a better understanding between employers and workmen.
We had had since that time Conciliation Boards established, we
had had Co-partnership, what was known as the Premium Bonus
System, and what was called Co-operative Production. The Union
he represented was connected with several Conciliation Boards,
but he wished to refer specially to that for the blast-furnace workers.
In that case there was now no need to discuss wages and hours.
The wages were governed by the selling price of pig iron, and every
quarter an audit was held in which both sides had perfect con-
fidence. If either side was not satisfied with the decision given
by the chartered accountant, it had the right to have an inquiry,
but during the last ten years it had been necessary to have only one
such inquiry. If the Conciliation Boards were more numerous it
would be a/ good thing. Where the Boards had been in operation
there had been no strikes, although the workmen had not always
been satisfied. Under the Boards a minimum and a maximum wage
had been fixed, but the maximum had never yet been reached,
though the minimum had ! Even if wages were to rise to the
maximum of 30 per cent, over the basis rate, that would be inad-
equate to meet the present situation. The rapid increase in the
cost of living was the chief cause of the present troubles. In some
cases there had been absolutely no economic necessity for the
increase of prices. Take coal as an instance. In the early part of
the war, when the miners had not received a single extra farthing
of wages, for some reason best known to the colliery owners and
merchants, consumers were called upon to pay enormously excessive
prices for coal. In London the price was advanced in some cases
by as much as 1 a ton, because the shipowners took advantage
of the shortage of ships and put up the freights by from 15s. to \
a ton, though the sailors and firemen never had the slightest advance
in wages. During the past twelve months London alone had been
exploited on its coal consumption to the extent of 8,000,000.
If the coal consumption of London were taken as one-eighth of the
consumption of the country as a whole, it was easy to calculate what
coal consumers had been called upon to pay since the war began.
THE PROMOTION OF INDUSTRIAL HARMONY 35
The public had to pay in another way, because the municipalities
and the private gas companies had been compelled, so they said,
to raise the price of gas. If the Government had done with the
collieries and the munition and armament factories what they
had done with the railways and worked them on the same basis of
guaranteed profits, we should have had no trouble at all in the
coal-fields.
He was one of those who believed- that it would be a long time
before we had industrial harmony under our present system of pro-
duction. He could not see how it was possible to harmonise the
opposing forces of the employers on the one side and the employees
on the other. Friction might be minimised where employers were
reasonable and were anxious to advance wages and reduce hours
so far as the profits allowed he quite recognised that you could
get only so much juice out of an orange. It seemed to him that the
great fight to come was on the question of the distribution of wealth.
That was the cause of the whole question. He was perfectly
certain that under our present methods the wage-earners were not
getting what they were entitled to. If we referred back fifty years,
we should find that out of the total wealth produced in a year, 800
millions, the wage-earners received 400 millions. To-day we were
told that the wealth produced in a year was 2,400 millions. If the
wage-earners had a half of that to-day, the present labour unrest
would be largely diminished because it would mean an increase of
15s. a week in wages all round. Time would not permit him to say
how this better distribution of wealth might be brought about, but
there were one or two ways by which the workers could get a greater
share of it, notably by fairer methods of taxation, namely, an equi-
tably graduated system of income tax and super-tax, and an
increase in death duties. Revenue thus obtained would render
unnecessary taxes taken from the pockets of the wage-earners, on
tea, sugar, and other household necessities.
In conclusion, he desired to return to his remarks on Conciliation
Boards, and advocated their formation as a means of minimising
disputes between employers and workpeople in all industries where
it was possible to arrange for wages to rise and fall according to the
selling price of the products, but it was necessary for a minimum
wage to be fixed sufficiently high to support an ordinary family
household. Although Conciliation Boards would not solve all
36 CREDIT, INDUSTRY, AND THE WAR
labour problems they were, in his opinion, of benefit to both
employers and workmen.
SIR HUGH BELL, BART.
The subject we are discussing does not owe its existence to the
war it existed long before. I have come before you to make
some suggestions in consequence of the paper by Professor Kirkaldy.
I am an ironmaster engaged in the working of minerals required for
the production of iron and steel [and I make not an inconsiderable
quantity of that commodity, but when I come to compare myself
with an American firm I don't begin to exist]. I have this advan-
tage, that I am able to deal with the whole process, for I begin with
the raw materials coal, ironstone, and limestone which my firm
produces from its own mine and quarries, and deal with the finished
product ; so that any analysis which I make deals with the whole
of the commodity, and not only with some part of it. In some
industries like, for example, the textiles, the raw material cotton
or wool or silk comes from abroad, and thus escapes analysis.
Its cost is included in payments to others. I am going to tell you
what is the result of making steel under the conditions I have
described. The figures are simple, and I must ask you to accept
them from me. If you form your committee, I shall be glad to
substantiate them. In every ton of steel I make, from 70 to 75
per cent, of the cost is labour. There remains between 25 and 30
per cent, to pay all other outgoings, including that which I regard
as a very essential part, namely my profit. If, after I have com-
pleted my transaction and paid everything that is due from me,
there remains in my possession 10 per cent. I am a very fortunate
man. There is 70 per cent, labour and 10 per cent, which I hope
to keep for myself. There remains between 15 and 20 per cent,
for all other outgoings. No doubt in an ultimate analysis a great
deal of that, too, will fall under the head of labour. In 15 to 20
per cent, there is an item to which I must draw attention even in
my case, when I do so much with my own workmen and machines.
Some part, as for example, all the railway carriage, is done by others.
These unreasonable persons will not do services without getting
some profit for themselves, and thus out of that 15 to 20 per cent,
comes the interest or profit paid to others. Some portion of it
THE PROMOTION OF INDUSTRIAL HARMONY 37
goes in rates and taxes ; and fully one-half of the taxation we pay
goes for the remuneration of labour. But I should explain that
in my analysis I have endeavoured to separate the portion of rates
and taxes which goes in payment of wages. There remains, as I
have said, 10 per cent, for me. If any one will take the trouble to
get the balance sheet of any industrial enterprise I do not care
what it is, whether cotton, iron, or anything else he will find
that, of the total amount of profit -the concern earns, it never
dares to distribute more than between one-half and two-thirds.
That is to say, supposing out of the gross revenue, after you have
paid all your outgoings, there remains something like 10 per cent.,
if of that you divide among your shareholders more than between
5 per cent, and 7 per cent., you will speedily be in the bankruptcy
court. The reason of that is obvious. Apart from all other con-
siderations, the Income Tax Commissioners will not let you put
aside anything like the amount for repairs you think justifiable,
and accordingly you have to take out of your surplus revenue a
certain proportion of your profits in order to maintain your works.
No doubt, if you are wise, the money thus taken is expended in a
way to increase profits in the future. When I explain all this to
my workmen they say to me, " Yes, but you have got very much
richer " a fact which I regret to say I cannot deny. (In these
times one would be glad to be called poor.) " It is perfectly true/'
I say, " but whose advantage is that ? If I did not get richer,
I should not have money to invest ; if I did not have money to
invest, I could not improve my works ; if I did not improve my
works, I could not give you employment." For every thousand
men anyone has in his employment there are about ten men every
year coming to maturity and wanting a job. They always want
a job at the works to which they belong. Unless, therefore, for
every thousand men, you have laid aside the capital necessary to
employ these ten men, they will have to find employment elsewhere,
and if either you or some other persons have not laid aside capital,
these young men will not find employment at all.
But to return to the question of my profit. Out of what fund
am I going to pay a 10 per cent, increase in wages ? If I pay 10
per cent, more on my wage-bill of 70, that is 1, I should have no
profit at all, for since out of 10 I have only kept say 5, and have
reinvested the other 5, 1 have only 5 to pay the 7 required to pay
38 CREDIT, INDUSTRY, AND THE WAR
10 per cent, more wages. That would seem to be a hopeless out-
look, because it would appear quite impossible ever in the future to
improve the position of labour. If that were the conclusion to
which I had come, I would not venture to stand up before any
audience to present so black an outlook. But fortunately that is
not the only answer. The real answer is that an improvement in
the position of the workman must come, not from without, but from
within. It cannot be accomplished without the co-operation of the
workman himself. I am sorry to have to assert that, so far as
Great Britain is concerned, I believe that, on the whole, the workmen
have resolutely opposed themselves to any such improvement. But
my sympathies are entirely with them, as they are in so many
cases where their interests and mine appear to be opposed. Every
improvement in a process means a reduction of the amount of labour
employed. It is obvious that the employer would much rather
attack the labour bill than anything else, for it is much the largest
of his outgoings. To do this he seeks to put into the hands of his
men a better tool. What does that mean ? I have ten men getting
30s. a week in doing a particular job. I come down to them one
day and say, " I have found a way of doing this a good deal cheaper.
Only five men will be required. I am perfectly ready to pay rather
more than 30s. a week and do away with five of you." I am not
at all surprised with the men who say, " We would much rather that
ten of us should have 30s. than that five should have 2, and the
other five nothing at all." I have always found it difficult to find
an answer to that proposition, which would satisfy those to whom
the proposal is addressed, because the question requires the element
of time. It is true the operation I am going to perform is a good
economic one. But for a short period it will or may produce unfor-
tunate results for the men employed, though in the long run every-
body concerned is bettered by it. Let me take an example from
my own experience. When I began to make pig iron, the labour at
the blast furnace was about 6s. a ton. The labour is now about
3s. a ton, yet every man working at the furnace gets well on to twice
as much as he got 60 years ago, and I have got ten times as many
men working, because I am making much more iron. That is the
net result of the improvement of a process, and in that way alone
can improvement be justified.
I have been speaking of the iron trade, and I have given you the
THE PROMOTION OF INDUSTRIAL HARMONY 39
figures with regard to it. I want to give you another group of
figures, those relating to the railways of this country. In round
figures, every year we ironmasters turn over our capital once.
I was speaking in New York some time ago, and I surprised members
of the trade then by telling them that. They told me that in the
steel industry in America, they turned their capital over about
once in three years. My gross income, therefore, is equal to my
capital. Of every 100, 10 is profit, of which about 7 I keep,
and I put back 3. Of the remainder I pay 70 for labour. It is
obvious, therefore, from the figures I have given, that the margin
out of which to pay additional wages is very small.
The railways of Great Britain turn their capital over about once
in eleven years. Their gross proceeds are divided in round figures
as follows : two-thirds for working expenses, and one-third for
interest on capital, including debenture, preference, and ordinary
stock of all kinds. That is to say, out of each 100, 66 goes to pay
prime charges, and 33 to pay interest on capital. Of the 66,
in round figures, the railway company pays to persons in its own
employment about 33, and indirectly it pays to workers employed
by other parties about 16 more. Probably about 50 per cent, of its
total outgoings goes in wages. About 16 per cent, goes to pay fixed
charges, i.e., debenture interest and preference dividend, which
though dependent on the profits earned each year, does not vary
with the profits. Thus, there remains 16 per cent, in the hands of
the ordinary shareholders. If you work these figures out you will
find that for every 10 per cent, you add to wages you must take
off about 20 per cent, from the dividend of the ordinary shareholders.
The railway companies have for the last 20 years or so had great
difficulty in raising additional capital. What is going to happen
if you compel the companies to pay higher wages ? You will
simply not succeed in obtaining capital. I was much struck by a
remark which fell from Mr. Thorne, namely, that we could not
expect an employer to carry on his business for nothing. Many of
those who speak on his side grudge all return on capital. I am
glad to note he does not take that view, which would militate so
greatly against those for whom he speaks. It would suit nobody
that the railways should carry on their business for nothing, because
they would not be able to raise the capital to give the increased
facilities which the growth of the country demands from the railway,
40 CREDIT, INDUSTRY, AND THE WAR
and deprived of these the industries of the country would cease to
progress.
The distribution of wealth is much too large a subject to enter
into now. Whether it is possible to divide the gross income of the
country between the various participators in the work of production
is a problem that has occupied the attention of economists for years.
But Mr. Thome has quite underestimated the share of the working
classes in the national income. He said they did not get half of the
gross revenue. So far as my knowledge goes, I agree with him that the
total revenue of Great Britain maybe said to be about 2,400,000,000
a year. But, unless I am very much mistaken, persons who are
earning daily wages, including all who are employed in superintend-
ence, but not those earning the higher salaries paid for management,
get very nearly, if not quite, one-half of that amount. If that is
so, then his needs are satisfied. But I hope he is not satisfied ;
because he and I, though we sit at opposite sides of the table, do not
really differ. We are at one on this point, that we both desire to
see labour get its full stint of remuneration, provided that in return
it gives its full stint of effort. That is all we are asking on the one
side or the other. If we can get that from one another, if we can
be persuaded that each of us only desires that, then I do not doubt
that these meetings of employers and employed for the purpose of
compulsory conciliation (and I accept the expressive bull involved
in the phrase) will have the desired result, if not in altogether
allaying, at all events in reducing to reasonable proportions, the
unrest which we are here to discuss.
PROFESSOR L. T. HOBHOUSE
The field to be covered by the proposed committee is clearly a
very wide one. The study of industrial harmony seems to involve
the whole of economics and indeed something more. For by econo-
mic harmony we must understand a system under which each
individual, by putting forth his best energies, serves the com-
mon life, and in so doing, and only in so doing, obtains the stimulus
to continue his energies and the means of maintaining them. To
establish harmony in any such sense as this is to deal with the whole
question of economic justice. To investigate the subject is to deal
not with facts alone but with a sphere in which facts and ideals come
THE PROMOTION OF INDUSTRIAL HARMONY 41
into contact. The inquiry would be full of fruitful possibilities,
but its fruitfulness depends upon a clear recognition of the two
sides of the problem, that is to say, on keeping the questions of fact
and the questions of right distinct. It is quite possible for people
to reach agreement as to the actual result of given causes and yet
to put a very different value on these results, so that some would
see harmony and justice where others saw disharmony and inequa-
lity. So much depends on the ideal which operates, perhaps con-
sciously, perhaps rather at the back of the mind, in passing judgment
on all social arrangements.
I am moved to make these rather abstract remarks largely by
things which have been said earlier in the course of the discussion.
There has been a tendency, I think, to insist upon the actual har-
monies to be found in the economic world as it works at the present
time. Without denying that some elements of harmony are dis-
coverable in any system that succeeds in operating, my feeling is
that this is a case in which the good is the worst enemy of the better.
At any rate, the most insidious obstacle to the establishment of a
more harmonious system is an over-insistence upon such elements
of harmony as have been actually realised. It may be granted that
in some respects the interests of all parties in the industrial bargain
coincide for example, it is ui the ultimate interest of both employers
and employed that production should be increased and that improved
processes should be adopted but we must beware of generalisa-
tions which would lead us to take too smooth a view of a tangled
situation and to infer an ultimate identity of interests in every case.
I confess it appeared to me that Sir Hugh Bell, in one or two pas-
sages of his exceedingly able and interesting speech, leant towards
what I would call too easy a view. When, for example, he suggested
that the increased wealth of the employer was ultimately for the
good of the workman, he seemed to be reverting to a rather old-
fashioned type of argument which I had supposed to have dis-
appeared from the arena of economic debate. If, as seemed to
be tacitly admitted, we have in our industrial production a system
in which, where a business succeeds, one man becomes rich while
all the rest remain poor, it is difficult to think that the harmony
of that system will commend itself quite as forcibly to the many as
to the one. Sir Hugh Bell found a justification in the fact that the
rich man can save and by saving develop his business and add to
42 CREDIT, INDUSTRY, AND THE WAR
the numbers in his employment ; but would anyone contend that
saving, to be effective, must pass through the bottle-neck of the
rich man's possession ? A socialist might reply that the com-
munity was no less capable of saving than the individual ; or a
Trade Unionist might urge that if wages rose above the minimum
necessary for the standard of life, the workpeople themselves might
contribute more to the accumulation of capital. In point of fact,
in proportion to income, it is probably the man of moderate means
who saves most . And whatever else may be said for great inequality
in the distribution of wealth, the argument, from the necessity of
accumulation, seems a most doubtful one.
Again, when Sir Hugh Bell gave figures to show the large propor
tion of the cost of production which already goes to labour, and drew
the conclusion that the margin available for any increase must be
small, was he not, for the moment, disregarding the time factor,
to which, at other points of his argument, he invited our special
attention ? The workman would be inclined to say that if you
increase wages you might thereby in time operate upon prices.
The particular price of steel holding at any given moment is not a
sum fixed by immutable decree, but is subject to increase or dimi-
nution in accordance with the movement of all the conditions acting
in the market. One of these conditions is the cost of labour, and
one of the forces affecting the cost of labour is the demand of the
workpeople themselves. Thus, if prices limit wages, it is no less
true that wages react on prices. No doubt the question whether
a rise of prices would be possible, depends at any given time on
complex conditions involving the whole position of the market
both at home and abroad. Owing to this complexity and to the
vast area over which economic forces interact, it is always easy
to argue against the possibility of large changes at any given point.
If you take any industry by itself and regard the price of its product
as a fixed quantity, you can always show that the margin for a
possible increase of wages is very small. But this is no valid
argument against the possibility of a general increase in the share
falling to the manual workers in industry, since such advance, if
continuously pressed, must effect a gradual re-arrangement of the
scheme of distribution, and therewith of the rates at which commo-
dities are exchanged for one another. The argument from the
impossible has been used against every improvement of the
THE PROMOTION OF INDUSTRIAL HARMONY 43
workman's position in the past, and has been constantly disproved
by the event.
I find myself, therefore, in agreement with Mr. Thome that,
in any systematic examination of this subject, we are brought up
against far-reaching questions of the distribution of wealth and the
organisation of industry. The ultimate subject of the inquiry is
the nature of economic justice the possibility of an economic ideal
which can be consistently applied, and of machinery to organise its
application. The inquiry is one in which the investigator will court
failure if he sets out merely to discover how existing disagreements
may be smoothed over. Its true object is to form a reasoned ideal
of justice in economic distribution, applied through the ascertained
operation of economic cause and effect, to the concrete facts of our
industrial life.
COUNCILLOR JAMES JOHNSTON, J.P.
Discontent is rife amongst the workers : of this we have had many
illustrations during the last twelve months, a period in which it was
more necessary than at any previous time that industrial harmony
should have prevailed, in order that the whole of the community
could have worked together to defeat the common enemy. Great
changes are imminent in the industrial world ; the war has empha-
sised this, and therefore it is a common and universal duty to help
to avoid a disastrous upheaval. Labour unrest is due almost
entirely to the great contrast in the position of the wealthy and the
poor. In ten years there has been an increase in the wealth of the
income-tax paying class of 190,504,000. 11,800 persons are
returned as receiving 149,000,000 in 1912-13. Out of our total
population of about 46,000,000 people ^9,000,000 are not liable to
income tax, that is, they receive less than 160 a year each. Thirty-
two per cent, of adult wage-earners are in receipt of less than
25s. a week, and a large number of general labourers have less than
1 a week. Throughout the United Kingdom there are about
one million agricultural labourers whose wages average 17s. 6d. a
week. The increase in the cost of living has brought these men
nearer to the margin of destitution than they were ten years ago,
and low wages, bad conditions, especially bad housing, undermine
their personality, independence of mind, and freedom of will.
The work of Trade Unions has helped enormously in bettering
1 This figure includes married women and children. Ed.
44 CREDIT, INDUSTRY, AND THE WAR
the conditions of the skilled workers, and, in more recent years, the
condition of the unskilled, but they would add enormously to their
value and power by using their surplus capital and skill in estab-
lishing co-operative workshops for the employment of their
members, thus reconciling the conflicting interests of capital and
labour in industry, and enabling their members to realise, and
practise, that "It is only by creating wealth that we create the
means to pay for work. The more wealth we create the more we
can pay for." The establishment of old age pensions and of Wages
Boards and National Insurance has materially improved the con-
ditions of the aged poor, unemployed and poorly paid workers, but,
after all, these useful and beneficent measures are only palliatives,
and we must dig deeper to secure equity and justice for all. Pallia-
tives are no cure. Destitution should be stamped out. There
should be a national minimum of wages, housing, leisure, and
education. The establishment of a Co-operative Commonwealth
in which every one shall take his share in the work of the com-
munity, and the wealth produced shall be distributed " to every one
according to his need " must be our ultimate object.
The late Bishop Westcott, in an address at the Middlesbrough
Co-operative Congress in 1901, clearly expressed in a few words the
necessity for better conditions in industry. He said : " While we
rejoice in the various advances towards our goal, we cannot acquiesce
in anything short of the ideal of production itself, that all who
combine in a business should be partners in it, partners in the con-
tribution of capital, partners in profit and loss, partners in control
and development, partners in responsibility and honourable pride ;
a position which must tend to bring out unfailing support to vigorous
labour and untiring thought and glad devotion to social service,
or, in other words, a man's full reward in elevation of character,
apart from any financial advantage, for a man's full work. . . .
We believe in advocating these principles, we are pleading for the
just rights of workmen, rights which will make nobler citizens,
clearer brains, and an intelligent community, making men more
independent and far more equal."
Co-operation is a principle essential to the maintenance and
development of civilisation, and its underlying principle is that
the individual, in promoting the well-being of the community,
will, with greater certainty, promote his own. This differs essentially
THE PROMOTION OF INDUSTRIAL HARMONY 45
from the doctrine of the individualist, namely, that by leaving
each individual free to pursue his own advantage there will result
the greatest good to the greatest number. Co-operation seeks not
the elimination of property, but its extension to all by collective
ownership, thus giving to every citizen the ethical value of a man
of property. It is an economic movement founded on a moral basis,
aiming at the substitution of the destructive system of unlimited
competition by the life-giving method of co-operation.
The beginning of the Co-operative Movement was largely due
to the teaching of Robert Owen, who spent some of the early years
of his young manhood in Manchester at the end of the eighteenth
century. He married the daughter of a wealthy millowner, Mr.
Dale, and was sent to New Lanark to manage the cotton mills there
in 1799. He was a partner, and took charge on the condition that
he should be allowed to make changes in the social and industrial
conditions of the workers, undertaking to make sufficient profit to
pay interest on the capital held by the other partners. From the
date of his appointment until he resigned in 1825 he was able to
fulfil his undertaking, at the same time greatly improving the con-
dition of the workers by the payment of better wages, reducing the
hours of labour, providing rooms for cooking meals, establishing
schools for the children of the workers " the downtrodden, dirty,
half-civilised beings whom he found employed at New Lanark in
1799, so that the most hopeless persons became under encouragement
moral, intelligent, and happy." He advocated the provision of
good housing conditions, the limitation of working hours to eight
per day, and a fixed rate of interest on capital, not exceeding 5
per cent. He established the first co-operative store, to supply his
workers with pure food and other necessaries of life at the lowest
possible cost, and this led to the establishment of similar stores
in various other places in the United Kingdom ; but the great
development of distributive co-operation did not begin until 1844,
when some weavers (students of Owen's teaching) at Rochdale
established the store that has developed into the great system of
co-operative distribution we have with us to-day. They adopted
Owen's principle of limiting the interest on capital to 5 per cent.,
but sold their goods at the same prices as the ordinary shopkeeper,
distributing the surplus left, after paying all expenses in carrying
on the business, to the members in proportion to the amount of each
46 CREDIT, INDUSTRY, AND THE WAR
person's purchases. They also instituted a system of cash trading
as a system of credit was rife which placed the worker in the power
of the shopkeeper. This important change made co-operative
distribution a great success, and the system spread over the greater
part of the country. In adopting this plan the Rochdale Pioneers
had in view not only the supply of pure goods to themselves at a
reasonable price, but the accumulation of capital to be used for self-
employment, the purchase of land on which their members could
be employed to produce food, the provision of temperance hotels
and clubs for social and educational purposes, and, eventually, a
complete reform of the then existing bad industrial and social
conditions, by the establishment of a Co-operative Commonwealth,
in which monopolists, combines, and trusts, with their power to
exploit the community by cornering raw material, regulating
production, holding up supplies, and so being able to charge
exorbitant prices, would be abolished.
Owing to the threat of a boycott by wholesale provision mer-
chants at the instigation of private traders, it was found necessary
to establish a Co-operative Wholesale Society, with its headquarters
in Manchester, in 1863. This was formed by each existing society
contributing towards the capital of the Wholesale Society in pro-
portion to the number of its members, and their votes in the
election of a committee to manage the Wholesale Society were also
in proportion to the number of members. The Wholesale Society
confined its attention in the first instance to placing buyers in
producing centres, where the needs of the distributive societies
could be best provided for, but in a comparatively short period
productive workshops were established to supply other goods to
the distributive societies, and the figures on page 47 show the
enormous development of the Co-operative Wholesale Society since
its foundation in 1863.
There is also a Wholesale Society with its chief offices and works
in Glasgow for supplying the societies in Scotland.
The co-operative movement has 84,989 workers engaged in
distribution, and 63,275 in production. It contributes out of
its surplus 113,226 for co-operative educational purposes, and
129,175 for charitable purposes.
The general progress of the co-operative movement is shown by
the annual returns of the Co-operative Union for 1914. Number
THE PROMOTION OF INDUSTRIAL HARMONY
47
of societies in United Kingdom, 1,510 ; members, 3,188,140 ; share
and loan capital, 58,704,695; trade, 138,472,025; surplus,
15,204,098.
CO-OPERATIVE WHOLESALE SOCIETY, LIMITED
No. of C.W.S. Productive Works ....
,, Employees in Productive Works .
Working Hours per week ....
Minimum Wage of Unskilled Workers >
(a) Females The following minimum scale rate is
in operation, viz.
Age . 14 15 16 17 18 19 20
Wages 5s. 7s. 9s. 11s. 13s. 15s. 17s.
(fc) Males A minimum wage of 24s. per week is
paid to all adult employees of 21 years of
age and over. In the majority of cases,
however, this rate is exceeded.
Skilled Workers and Trade Union minimum.
50
over 18,400
various, 43 to 53J
NOTE. In addition
a War Bonus is
now paid on the
following basis,
viz., 15 per cent,
on Wages up to
and including 2
per week, and
lOpercent.above
2 per week up to
^200 per annum.
The rule laid down by the C.W.S. Committee and
strictly adhered to is, that wherever Trade
Union Rates of Wages are in operation such
rates shall be recognised as a minimum, and
in all Trades where no Trade Union Rate is
in operation, a generous standard is fixed on
the basis of the conditions obtaining in the
district. S
Free Holidays allowed annually . Staff Hands, two weeks with pay.
Broughton Shirt Factory . {$ ^"wage^ ofFe m ale
Workers (women and girls),
18s. per week.
In addition to the productive works of the two Wholesale
Societies with an output of 11,916,365, there are 108 independent
productive societies with an output of 3,800,627 for the year
1914, employing 10,726 workers. The total productive work of
the Co-operative movement in the United Kingdom includes 110
societies employing 36,850 persons ; share and loan capital,
5,483,140; trade, 17,642,590, and in addition to this amount
Distributive Co-operative Societies produce goods flour, bread,
boots, clothing, and so forth for their members, of a total annual
value of 14,550,000, bringing the total to 32,198,589.
Co-operative farming is carried on by the cultivation of about
16,000 acres of land, of which over one-half is owned by the societies.
Besides this there are 478 farming societies in England and Wales
48 CREDIT, INDUSTRY, AND THE WAR
affiliated to the Agricultural Organisation Society, with a turnover
of upwards of 2,000,000, and work of a similar kind is carried on
by agricultural organisation societies in Scotland and Ireland.
About 10,000,000 has been advanced to members of co-operative
societies to enable them to build or purchase their own houses, but
as practically no control has been exercised, so far as the grouping
of the houses is concerned, the result has not been as good as it
ought to have been from a social and hygienic point of view. The
Co-partnership Tenants have built houses of a total value of over
3,000,000, and have done their building work on Garden City lines,
laying out complete co-operative villages with all the amenities for
social life, and the rearing of an energetic and healthy population,
and on similar lines it is hoped the future housing work of the
co-operative movement will be carried on.
There are two systems of co-operative production in operation
co-partnership and federal. The co-partnership system is the out-
come of the teaching of the Christian Socialists 1848 to 1857 a
small body of men brought together by the Rev. F. D. Maurice
to deal with the Chartist agitation for political reform, which
seemed likely to result in riots and bloodshed, and to take steps to
deal with the sweated conditions that prevailed in the tailoring and
other trades. Associated with Maurice were Chas. Kingsley,
Thos. Hughes, E. Vansittart Neale, J. M. Ludlow, and others. Thos.
Hughes, who was in Parliament at that time, was able to get the
Industrial and Provident Societies Act passed (the Magna Charta
of the co-operative movement), which gave co-operative and other
working-class organisations a legal standing, and it has been of
enormous value to the working classes. Mainly through the efforts
of Mr. Neale, workshops were established in London on the lines
of co-operative workshops established in France at that period, but
here they failed owing to the lack of business organisation and
honesty on the part of the managers. From this seed, however,
there sprang numerous co-partnership works, most of which are
now firmly established in this country. They are formed by a
number of workers joining together to produce articles under co-
operative methods in a registered society, in which the workers are
actual partners in the business. Usually a fixed percentage is paid
to capital, and the balance of surplus to the workers in proportion
to their wages, and in many societies a dividend on purchases is
THE PROMOTION OF INDUSTRIAL HARMONY 49
given to the customers who buy the society's productions. The
composition of the committee of management varies, being in some
cases composed entirely of workers, and in others partly of workers
and representatives from outside bodies who have invested capital
in the business.
The federal system is represented by the Wholesale Societies,
the capital being supplied by the Distributive Co-operative Societies
who are members of that body. After payment of interest on capital
and all other working expenses in connection with the federal
workshops, the net surplus is returned to the shareholding societies
in the form of dividends on the amount of purchases from the
Wholesale Society. No part of the surplus is given to the worker ;
it goes to the consumer, who furnishes the capital, through the
distributive society of which he is a member, for carrying on pro-
ductive and other works. In both types of workshops Trade Union
rates of wages at the least are paid, and the best conditions for the
comfort and health of the workers are provided.
The hours in co-operative productive works are generally shorter
than in the ordinary workshop, the majority of them being only
48 per week a great advantage to the workers in giving them
opportunity for recreation and so forth.
The shirt factory run by the Wholesale Society is a splendid
example of how a sweated industry can be run on co-operative lines
and give proper wages and more satisfactory conditions to the
workers, whilst competing successfully in both quality and price
with the private manufacturer. This business was started a little
over 20 years ago with about twenty workers, and from the figures
already given it will be seen that the number employed is now 740.
The average wage of 18s. per week for 44 hours includes those of
girls of 14 who are learning the business. During the first month
these girls are not paid but are put under one of the expert workers,
who instructs them and gets the value of the learner's work during
the month. A girl then starts on her own account, but it takes
some time before she is able to earn any considerable sum in wages,
thus keeping down the average wage. The expert workers can earn
25s., and even more, per week. No deductions are made from wages
for hire of machine, thread, and so forth, as is the case in many
private works. Wages and conditions in most of the ordinary
shirt -making works fall much below the above.
50 CREDIT, INDUSTRY, AND THE WAR
The federal system of production has the great advantage of a
practically unlimited supply of capital, and an assured market for
its products through its society members, whereas the co-partner-
ship system is dependent on the capital subscribed by the workers
themselves or their friends or societies, who are in sympathy with
their methods, and as, in many cases, they have to dispose of their
products almost entirely in the open market, their rate of progress
is necessarily slower than that of federal production.
The results shown by co-partnership productive workshops prove
that the workers are able to organise themselves not only in profit-
able but in poorly-paid industries, and to compete in the open market .
It only needs a fuller realisation by the public of the necessity of
placing the relationship of labour and capital on such a basis that
they may cease to be antagonistic to each other, to bring about a
system of industry in which strife will be abolished and peace
reign. Under a system in which profits are equitably distributed,
and the worker has a large share of the responsibility of control
and management, greater economy in production will result. The
worker will give of his best, he will endeavour to raise the poorly
paid worker to a higher level, and will help to increase co-operative
progress in order that it may obtain the means to own the land,
the minerals, and the means of transport, so that it may have direct
access to the raw material, control prices, and govern output in the
interests of the whole community.
MR. G. PlCKUP-HOLDEN
It is with diffidence that I have accepted your invitation to speak
at this important meeting, and I consider it necessary clearly to
state my position. I am not entitled to speak as the representative
of any Organisation or Association, and am only expressing my
individual opinions as an employer engaged in the cotton trade.
I propose to prove that efficient buying and selling have resulted
in efficient production, ensuring industrial harmony and national
profit ; that inefficient buying and selling have resulted in inefficient
production, ensuring industrial discord and national loss.
The national profit and loss in the cotton and building industries
are the result of their methods of buying and selling (wages). These
are based on mutual arrangement (co-operation) between employers
THE PROMOTION OF INDUSTRIAL HARMONY 51
and employed. Cotton operatives are paid for production (output),
not for consumption (time occupied). Building workmen are paid
for consumption (time occupied), not for production (output).
The cotton trade is efficient and expanding ; the building trade is
inefficient and contracting.
The cotton industry is the greatest export trade in the Empire.
In 1912 its exports amounted to 120,830,000. The factors of
production ability, capital and labour are available in pre-
ponderating quantities in Lancashire. Success has been achieved
by the adoption of methods directly opposed to those supported by
Lancashire's practical men (employers and employed), and its
theorists (the Manchester School of Political Economy).
The employers strongly supported the laisser-faire policy ; they
opposed interference by legislation, Trade Unions, and standard
rates of wages. Their united action was based on a fallacy that
reduction of wages reduced losses. The workpeople showed equal
opposition to the ultimate causes of their prosperity. They strongly
supported the fallacy that reduction of output increases employment.
Holding this view, they opposed the introduction of labour-saving
machinery.
The policy of the employers in reducing wages to the level of
subsistence would not have given increased profits, and it has been
abandoned. The policy of the employees in reducing output (by
the non-use of machinery) would not have lessened unemployment
or increased wages. It, too, has been abandoned in the cotton
industry. The theories taught by the Manchester School of Political
Economy have also been abandoned.
In 1853, after repeated struggles and disputes between employers
and workpeople, the Blackburn list of weaving prices was by mutual
arrangement adopted as a standard rate of wages. It was merged,
with modifications, into the Lancashire uniform list in 1892. The
result of this method of fixing prices has been that in the Lancashire
cotton industry there has only been (in 1878, on a reduction of 10
per cent.) one general strike in sixty-two years 1853-1915.
The basis having been fixed it became immediately the joint
interest of employers and employed to stimulate production, hence
there resulted increased output and higher wages.
The result of this unity of action has been that the cotton trade
has gradually gravitated to the centre of high wages. Its supremacy
52 CREDIT, INDUSTRY, AND THE WAR
is the result of well-paid, continuous, and, therefore, efficient labour.
This uniform list has one idealistic feature which is unique. Men,
women, and " young persons," trade unionists and non-trade
unionists, are all paid alike.
The adoption of this method of fixing prices, directly opposed
to the teachings of the " Manchester School," has proved one of the
chief factors in developing the Lancashire cotton industry. It is
the permanent basis of our efficiency and industrial harmony.
It may be considered that undue preponderance has been given
to the view that development has been effected through the rejection
of the Manchester School's theories. But an examination of the
condition of the cotton industry in America, where the policy of the
Manchester School has been adopted, will tend to prove the truth
of this statement. As a member of the North-East Lancashire
Employers' Association Commission, to investigate possible danger
from American competition, I visited the cotton manufacturing
States in 1901. We found splendidly equipped mills, the latest
machinery, automatic looms in advance of Lancashire, a home
market rigidly protected ; large units of production (the Amoskeag
Mill, at Manchester, New Hampshire, contained over 11,000 looms,
with 350,000 spindles) all the essentials for efficient production,
and to Lancashire, dangerous competition. We decided, however,
after consideration, that, with the exception of coarse goods, in
which cotton is the predominant factor, and labour of relatively
less importance, Lancashire was not endangered by American
competition. The factor which prevents Americans from success-
fully competing with Lancashire is that they have adopted the
Manchester School's economic doctrines. They purchase their
labour on the basis of supply and demand, fixed by competition.
In times of trade depression the remedy, reduction of wages, is
readily enforced. Reductions of 20 to 30 per cent, in weaving
prices have been effected. The conditions of labour predicted by
the Manchester Economists we found in fullest operation in the
Southern States, the former home of slavery. The " law," reducing
wages to the bare level of subsistence, was in full force. We found
weavers running ten automatic looms for less than 10s. per week.
They were paid 6Jd. per piece for weaving on automatic looms,
whilst Lancashire was paying 2s. 4Jd. for exactly the same
production.
THE PROMOTION OF INDUSTRIAL HARMONY 53
In this district the manager said : " There are no labour laws,
no school laws ; but most of the mills in North Carolina, by common
consent, observe a sixty-six hour week, and they would rather not
employ children under 12 years old."
Day and night work was arranged as follows : The day shift
worked from 6 a.m. to 6.40 p.m., with forty-five minutes' interval
for dinner, except on Saturday, when the hours were 6 a.m. to 12
noon. The night shift worked from 6.40 p.m. to 6 a.m., with only
fifteen minutes about midnight for refreshments. The manager
said that if a longer rest were given, the hands would fall asleep.
One set of men, women, and children always worked by day, and
the other set always by night. In Augusta between 500 and 600
children, from 5 to 10 years of age, were employed in the cotton
mills. We were back in the " good old times " of Manchester, in
1820-1840.
These mills, in some cases splendidly equipped, were paying,
if any, very small dividends. One magnificent new mill we visited,
with a capital of 500,000, was shortly after our visit in the hands
of the liquidator. America will only become a dangerous com-
petitor when she drops completely practising the theories of the
Manchester School.
The Manchester School poured ridicule and contempt upon an
idealist who attempted, in 1860, to state his opinions on economic
truth. John Ruskin, in Unto this Last (p. 19), wrote
" In this ultimate sense the price of labour is indeed always
regulated by the demand for it ; but, so far as the practical and
immediate administration is regarded, the best labour always has
been, and is, as all labour ought to be, paid by an invariable stand-
ard. ' What ' ! the reader perhaps answers amazedly : ' pay good
and bad workmen alike ? ' Certainly ! "
My own principles of Political Economy were all involved in a
single phrase spoken three years ago in Manchester, and are all
summed up in one sentence in the last volume of Modern Painters
"Government and Co-operation are in all things the laws of life ;
Anarchy and Competition the laws of death."
Ruskin's theory of a standard rate was denounced as impracticable
by theorists. It had already been put into successful operation by
practical men, and has been the great factor in producing efficiency
and national profit.
54 CREDIT, INDUSTRY, AND THE WAR
The great success of the cotton industry has been due to the fact
that it has adopted the whole of the law of life taught by Ruskin.
There is government and co-operation. Strong united associations
of employers meet equally strong united associations of operatives.
The operatives, many of whom hold shares in their mills, recognise
the force of government by ability, and knowing that their wages
are increased by increased output, they support new methods, new
machinery. The result is : increased production, greater efficiency,
industrial harmony.
The building trade's inefficient buying and selling, producing
inefficient production, results in industrial discord and national loss.
The workmen in this industry are paid on a fixed basis a standard
rate of wages. This rate has been fixed by co-operation between
masters and men. Wages are paid for time consumed, not for
output. The workmen still retain the fallacy that reduction of
output increases employment. They refuse to accept the condi-
tions which have made Lancashire successful. A brief examination
of the costs of production will prove the inefficiency and show the
resulting national loss. Statistics giving cost of production for the
past thirty years in the building trade are as follow :
The number of bricks laid per day in plain walling in 1885 was
1,200 to 1,500; the number laid in 1912 was 550 to 650. The
number laid in 1914-15 has been as low as 450. Two employers
informed me that they have repeatedly, for days together, working
on their own account, each laid 2,500 bricks daily.
The cost of this policy of decreased output is as follows :
A block of cottages erected in 1885 cost for nine-inch brickwork
(labour only) 8Jd. per square yard : bricklayer, 9d. per hour ;
labourer, 6d.
In 1912 exactly the same labour cost Is. 9d. per square yard of
nine-inch brickwork : bricklayer, lOd. per hour ; labourer, 7d. per
hour.
5. d.
Based on 20,000 sq. yards (8$d.)
Cost of labour was in 1885 708 6 8
Based on 20,000 sq. yards (Is. 9d.)
Cost of labour in 1912 1,750
Increase in wages amounted to 98 3
National Loss due to restricted output .... 943 10 4
THE PROMOTION OF INDUSTRIAL HARMONY
55
. yarc
3,920
7,841
s. d.
16
12
ortctrj
j- \
2,111
4
ortar)
3,619
1,809
4,222
263
2,149
4
12
8
8
8
A weaving-shed built in 1882
(a) Stone cost per cub. yard 6s. 6d. ;
12,064 cub. yards at 6s. 6d. .
(b) An identical shed built in 1912 cost 13s. per cub. yard
(a) The material in 1882 cost (stone) 3s. per yard, (mortar)
6d. total 3s. 6d
(b) The material in 1912 cost (stone) 5s. per yard, (mortar)
Is. total, 6s.
The cost of labour in 1882 .
The cost of labour in 1912 .
Advance of Id. per hour amounted to
National Loss due to restricted output
The consequence is that operatives throughout Lancashire before
the war, in 1914, were waiting for cottages. Bricklayers and stone-
masons were in large numbers unemployed. Some large firms
have only been regularly employing one-quarter the number of their
former workmen, and these men are paid also upon a fixed basis
of prices not affected by competition a standard rate of wages
fixed by co-operation between masters and men. Apparently,
Ruskin's theory of co-operation is as great a fallacy as are those
taught by the " Manchester School." A close examination of
Ruskin's statement proves its absolute accuracy. Ruskin does not
state co-operation is the law of life. His statement is " Govern-
ment and Co-operation are the laws of life."
Dealing with the last great building strike in London (May- June,
1914), the Building News states :
" The men know that out of the 5,000 Master Builders in London
only 3 per cent, belong to any Masters' Association."
Its workmen will not recognise the force of governing ability,
and refuse to have any effective government. Their foreman must
be a member of their Trade Union. Any attempt by him to increase
the production is strongly opposed. If he persists in attempting to
increase production he is brought before the local Lodge and warned.
If he continues his exertions he is brought before the local Lodge and
fined, until his efforts for efficiency are broken. The use of machinery
and machine-dressed stone is restricted by absurd regulations. The
only united effort of the employers appears to be to pay the same
rate, and to resist advances, of wages. The one ideal of the work-
men appears to be to receive the highest wages, but to give in return
the least production. The result is that the production in brick-
laying has decreased from 17 yards in 1885 to 7} in 1912 ; from
5 (1408)
56 CREDIT, INDUSTRY, AND THE WAR
7 cubic yards in stone-walling in 1882 to 3| yards in 1912. To
leadership, conciliation, and arbitration the building trades have
shown equal opposition. As a consequence, the building industry
is inefficient and contracting, and the result is national loss.
REDUCTION OF WAGES IN THE COTTON INDUSTRY
In 1878, after a bitter struggle, in which, in my opinion, the defeat
of the workpeople was caused by anarchy the burning of the house
of the Chairman of the Employers, near Blackburn the operatives
accepted 10 per cent, reduction.
Really a reduction of wages produces further depression. Reduc-
tion of wages reduces consumption, because the operatives, receiving
less wages, have a reduced purchasing power, and Lancashire's
home trades suffer. Reduction of wages tends to increase produc-
tion, because operatives attempt to earn the same amount of wages
by increasing their output. If reduction of wages is necessary on
account of either diminished demands, or increased stocks, increased
production will still further glut the market, producing a further
depression in prices.
An examination of the result of the 10 per cent, reduction in 1878
proves that reduction of wages is no remedy.
A manufacturer with 1,000 looms pays weekly, on 6s. per loom
basis, 300 ; annually, 15,000. On this a 10 per cent, reduction
is 1,500. The cotton business is transacted in many cases with
a floating capital not exceeding 10,000. If the manufacturer
secured this reduction his gain is 1,500 annually on 10,000, or
15 per cent, per annum. From 1878 to 1883, five years at 1,500,
equals 7,500 in addition to any ordinary profits earned. In
reality in 1883 the losses had been such that the employer was
compelled to secure a further reduction of 5 per cent. If he had
secured a reduction of 50 per cent, he might have been ruined. The
mill in the Southern States, working at a reduction of 75 per cent, on
Lancashire's price, went into liquidation !
The cotton industry, with efficient buying and just selling, whereby
full value is produced for wages received, has expanded, and has
provided additional employment for both capital and labour. Its
efficiency produces national profit.
In the building industry, inefficient buying and unjust selling,
whereby half value is produced for full wages received, have pro-
duced unemployment for both capital and labour. Inefficiency
produces national loss
THE PROMOTION OF INDUSTRIAL HARMONY 57
In 1897, when a depression in trade caused the employers to
suggest a reduction in wages, an attempt was made to prove that
the low wages on the Continent, the lower wages in the East, India
and China, could not compete with Lancashire : India and China
are still our greatest customers.
Really the only competition was amongst ourselves, and it was
proving disastrous. It is this competition which should be reduced,
not wages.
The first proposal made to diminish competition was to issue an
official market report similar to that published at Liverpool. This
would be composed from daily returns of total sales in sterling,
giving daily sales. The second was that these daily returns, ampli-
fied, would each contain all the details and prices of every trans-
action. From these prices received, the Central Association would
fix a minimum rate, which manufacturers would agree to maintain.
Other proposals were as follows :
That every manufacturer should permit his books to be
examined, to prove any breach of this agreement.
That in case of breach of agreement, by accepting lower prices
than the officially fixed minimum, the offender should pay the
difference to the Central Association, or pay a fine or be expelled.
That there should be government by a Central Association, and
not anarchy, existing by unrestricted individualism.
That co-operation with all Manchester merchants should be
attempted in fixing prices, as in labour.
That as we, as employers, buying a commodity, had found it
ultimately to our interests to keep it at a non-competitive price,
they would find, ultimately, the same result : steady prices, lessening
risk on stocks and shipments, also lessening competition.
That co-operation should be further extended to our workpeople :
federated employers to employ only federated workmen ; federated
workpeople to work only for federated employers.
That on the improvement of trade the ten per cent, deducted
would be given to the operatives.
That out of this advance 2} per cent, on every 10 per cent, paid
would be deducted.
This would be paid to the Central Employers' Association.
Had this been adopted, the income from the 450,000 looms in
the North-East Lancashire Association would to-day be on
58 CREDIT, INDUSTRY, AND THE WAR
advances already paid, 15 per cent. 210,000 per annum. This
sum would be absolutely the employers' property; it would be
available as a defence fund, to resist unjust demands by either
workpeople or customers ; it would enable them to return, if desired,
to every member remaining faithful to the Association, 450 per
annum for every 1,000 looms.
One Central Sales Association in cotton (Coats') is an undoubted
success. Their profits are published and have amounted in one year
to over 3,000,000. This is more than Lancashire's 750,000 looms
have realised in either 1911, 1912, 1913, 1914 ; to-day (1915) there
is an absolute loss.
An estimate of the increased prices secured by Central Sales
Associations is not possible. Economists are not able to calculate
the increased prices secured for labour by Trade Unions. Their
minimum gain may be safely estimated at 3 per cent. Three per
cent, on 120,000,000 would realise 3,600,000. This would
afford for Lancashire manufacturers a just profit on 750,000 looms,
and I am confident would give general satisfaction.
MR. ALFRED EVANS
Mr. Alfred Evans, the General Secretary of the National Union
of Printing and Paper Workers, said that at the bottom of the
existing unrest was the deep impression that prevailed among the
workers that when the war was over the employing class would take
advantage of the chaos in nearly every industry to filch away from
the workers the benefits they had been able to win for organised
labour during half a century. That was one of the root causes of
the present unrest. The workers of the country were anxious to
do everything they could to help the Government to bring the
war to a successful issue. Labour had done its full share and was
prepared to do its full share of the work that remained to be done.
Upwards of two and a half millions of workers had answered
the call to the colours. But Trade Unionists were anxious that
when the war was over and when the men came back, they should
not return to find their positions taken up by underpaid labour ;
that they should not have been worsened in their circumstances for
having given their services voluntarily and freely for the benefit
of their country. In the railway and tramway industries and in the
THE PROMOTION OF INDUSTRIAL HARMONY 59
workshops, women were being daily employed to do men's work.
There was justification for that. He was not opposed to the
employment of women merely on the ground that they were women.
In the organisation which he represented there were nearly 14,000
women. They were out to uplift working women throughout the
country. What they did object to was women being employed to
do the same work at lower wages than men. If the woman was able
to do work which a man had been doing, she should not be used to
reduce the standard of living or to break down the standard prices
in any industry. He hoped the members of the British Association
would use their influence to prevent women from being made
economic slaves and from being used to reduce the price of labour.
In many towns in the United Kingdom the average wage of women
workers was not more than 9s. a week. Although the men through
their trade organisations had been able to get war bonuses, a surplus
of woman labour had prevented the women from getting any
increase of wages and many of them had been thrown out of work.
The position of the woman worker was a scandal. Some people
said we wanted more Trade Boards ; but he thought these Boards
had been a ghastly failure. The Board for the box-making industry
had fixed 3d. per hour as a living wage for girls. It was not even
quite as good as that : most of the workers were on piece-work, and
under the regulations of the Board, if an employer could show that
85 per cent, of his workers could earn 3d. per hour on the rate paid
it was considered to be satisfactory. There were many women,
therefore, who did not earn the 3d. per hour through the week.
He had a strong impression that the end of the war would not mean
a big influx of labour back from the battlefield into the workshops.
He did not think we were going to achieve such a victory as would
enable us to do without a large standing army. We might have to
be in a position to put three million men in the field at any time.
That would mean that the women workers who had been introduced
into various trades would stay in them. It was, therefore, a duty
to see that these women were not exploited, and the best way of
ensuring that they were not, was to organise them in Trade Unions.
There was one bright spot in connection with the employment of
women, and that was Lancashire, where, in the textile industry, they
were paid equal wages with men for equal work. That was due to
the fact that they were organised in the same Unions with the men,
60 CREDIT, INDUSTRY, AND THE WAR
and unless the Trade Unions realised their duty and undertook to
protect and safeguard the interests of the women workers, who had,
for the first time been introduced into so many trades, the end of
the war might see us faced with an industrial problem that would
be as serious as the war itself, and have far-reaching effects upon
the whole community.
THE REV. P. H. WICKSTEED, M.A.
I cannot take a very cheerful view as to the likelihood of unstrained
relations between employers and employed in the near future, for
beneath the many encouraging indications there lie stubborn forces
that make for conflict, though we may hope, not for bitter hostility.
To begin with, the tone of personal respect which the leaders of
both sides who have met each other face to face in industrial disputes
invariably adopt (so far as my observation has gone) in speaking
to and of each other, and which we have seen exemplified in our
debate to-day, is of happy augury ; but at the same time it is easy
to see that there is beneath it all the exertion of a strong mutual
pressure in which each side is endeavouring to convince the other
of something it is unwilling to see, and failing that to push it some-
where where it is unwilling to go. And the real trouble is that
there is a deep and perfectly genuine intellectual cleavage as to the
meaning and concatenation of the main factors of industry, let alone
the difficulty of ascertaining the specific facts or estimating the
probabilities in any special case. In other words, there are no clearly
defined and generally accepted elementary principles of economic
and industrial science ; and therefore no one can speak with
authority on the controlling forces which underlie any given situation.
For the conditions under which an expert opinion can acquire
compelling force are broadly these : There must be a general
acceptance of the first principles upon which the expert works, and
there must be an assured faith that he has the power and the training
which enable him to pursue those principles in their applications
and implications further than the rest of us can do, that he exercises
that power in perfect sincerity and honestly gives us the results of
his investigations.
Now in the case we are considering none of these conditions is
fulfilled. Whenever a speaker touches incidentally upon questions
of economic theory in this room that is to say, be it understood,
THE PROMOTION OF INDUSTRIAL HARMONY 61
reveals his conception of the fundamental facts with which he is
dealing he is sure to fall into what half his audience regards as an
economic fallacy ; and perhaps any two of us would agree that this
morning's discussion has bristled with economic fallacies ; only
when either of the two went on to specify which they were, the
harmony would at once be broken ! It would be an enormous
gain if this chaos of honest opinion could be in any degree reduced
to order ; and much may be hoped from such agencies as the Tutorial
Classes in which men accustomed to disinterested intellectual inves-
tigation meet men in daily contact with hard facts, and both are
actuated alike by the sincere desire to understand.
But we must not expect too much from such investigations. The
problems themselves are in the highest degree complex, and it is
almost impossible to prevent men's wishes from warping their
judgments when they are engaged in investigating them, or in
applying the principles they accept. Take an instance from the
field of sociology rather than economics proper. It is possible that
most of us in this room might acknowledge the profound significance
of Auguste Comte's remark that the twofold use of the word
" People " in all the Western languages to signify indifferently the
whole nation or the proletariat, is an instinctive recognition of the
fact that the unprivileged masses are the real body politic, and that
the privileged classes must be either their organs or their parasites.
If we accepted this principle we should agree that the very existence
of the capitalist or the employer must look for its social justification,
if it is to have any, in its utility as an organ of the proletariat, for
whose weal it exists. And this apparently was the line that Sir
Hugh Bell took in his delightful paper. But this helps us only a
very little way. For suppose we all of us entered upon an investiga-
tion in perfect agreement as to the principle, would not some of us
wish (or what is almost equally bad, be suspected of wishing) to find
out at the end of our inquiry that the capitalist and directing organs
were of extreme importance and should be cherished, encouraged,
and developed always in the interests of the proletariat with
the utmost care and generosity ; and would not others of us wish
that they should turn out to be of quite subordinate importance,
owing whatever significance they may have to faulty organisation,
and marked out for speedy elimination ? Now where there are, or
are supposed to be, such marked differences in desires it is very
62 CREDIT, INDUSTRY, AND THE WAR
difficult not to believe that they influence opinions. We have had
some very frank speaking to-day on the subject of the value of the
defence of the present distribution of industrial revenue, on the
plea that it accords with the true interests of the workers ; and it
is no secret that the leaders and representatives of the working
classes, who have been directly and expressly evolved as organs and
nothing more, of the rank and file of their unprivileged associates,
are hardly at liberty to be convinced on any point of fundamental
importance that runs counter to the wishes of their clients, and are
under constant danger of the suspicion of conscious or unconscious
desertion of their true organic functions, and of slowly transforming
themselves from organs into parasites of the body to which they are
attached.
But yet after all, however much we may desire that this or that
should be the fact, or however much we may be convinced that it is
so, we have no wish to break our heads against the facts because
we don't like them ; or to nurse delusions because it would be nice
if they were true. We all really want to know the facts if we can,
for we are always dealing with them and nothing else ; for, whatever
we may think, we see nothing, but the facts are there, and it stands
to reason that we can better deal with them if we see them than if
we see something else instead of them. Strikes and lock-outs are
a desperate attempt to get at the facts, when argument and negotia-
tion have failed to bring about a sufficient approximation of opinion
as to what they are ; and it has been brought out again and again
to-day that in the cotton trade where for a variety of reasons the
facts are more widely and precisely known than in any other great
industry, though there are constant rumours of war it has come to
be an almost fixed belief that there will never be war d outrance,
because each side knows that the debatable margin, though worth
getting, is not worth fighting for.
For what then may we hope ? I think for this : That while
discussion and investigation go on on every side, and unremitting
attempts are made to establish at least some elementary principles
of economics that may win or command universal assent, while
personal respect may be increased by personal relations on boards
of conciliation, and even in conferences between avowed opponents,
while legislative and industrial experiments are being made and
publicity of relevant facts sought rather than shunned on all sides,
THE PROMOTION OF INDUSTRIAL HARMONY 63
there may arise a strengthened feeling that behind the struggle of
wills and the diversity of desires, there are certain controlling facts
and principles which are imperfectly understood and which it is of
supreme importance to understand better. That will not prevent
strikes and lock-outs, but may it not lead to the perception that
in their essence they are really only one, and that the least desirable
of a number of methods of investigation, in which there may be
something for the two sides to contend for against each other, but
in which there most certainly is something and that something of
supreme importance for them to find out together ? That would
be no small gain in itself, and it would hold in itself the seeds of
yet far greater gains.
MR. ALFRED SMALLEY, J.P. (BOLTON)
In the consideration of Industrial Unrest he was in an exceptional
position, as at ten years of age he was working as a half-timer,
had been Secretary for ten years of a Trade Union with nearly
20,000 members, and was now head of a Labour Department of one
of the largest syndicates in the City of Manchester.
Whilst he agreed that Co-operation had many good features,
he did not consider it would create industrial harmony, and pointed
out that the Co-operative Employees' Trade Union was one of the
strongest in the country, a fact which indicated that such employees
considered it necessary to organise in their own interests on the
same basis as those employed by private firms, whilst strikes
frequently occurred in co-operative workshops.
He was of opinion that one of the most important causes of labour
unrest was the increased knowledge of the workers arising from the
facilities of the Education Act of 1870, and the subsequent Free
Education Act, etc., but as the education of the masses of the
workers was imperfect they took narrow views of their position, and
until the mental development which was now in progress had been
further advanced, he was afraid there would continue to be unrest.
He recognised that much of the unrest was justifiable, and we need
not be afraid of it, if only it could be directed into the right channel.
It was an admitted fact, that where labour was unorganised, wages
were low, and generally the conditions of employment bad. In
this connection, too, it should be remembered that the membership
of Trade Unions, as shown by the Trades Congress Reports, and
64 CREDIT, INDUSTRY, AND THE WAR
the Board of Trade Returns, had during the past few years in-
creased by 200 to 300 per cent. A large number of the added
members were working under adverse conditions, and what to
the general public had appeared an industrial upheaval had been the
attempt to bring about uniform wages and conditions, which was a
very desirable and urgent project.
Much of the agitation, however, which brought about recent
troubles had been caused and fostered by irresponsible men who,
with revolutionary views, formed the extreme, and aggressive
section of the Unions, and as the policy of most Unions was decided
by not more than 5 per cent, of its membership, it would be seen
that the more reasonable men were too apathetic, and had allowed
themselves to become involved in labour troubles against their
better judgment. Much misguided unrest would be avoided if such
men took a keener, and more active interest in deciding their own
policy.
He would like to see set up to deal with disputes some machinery
which would obviate strikes and lock-outs. But he was certain that
the mass of the workers were not prepared to accept compulsory
arbitration, which they viewed with suspicion, because compulsory
arbitration also meant to some extent compulsory labour if effect
was given to the awards of arbitrators.
In the mind of the average working-man it was not possible to
secure an arbitrator with the necessary knowledge of a particular
trade to approach a question without bias, and it was owing to this
and other causes that the Industrial Council so ably supported by
Sir Charles Macara, had not fulfilled the hopes which many people
anticipated when it was inaugurated.
He believed much might be effected by Boards of Conciliation,
and did not consider that any difficulty had arisen or was likely to
arise which was incapable of settlement if both sides approached
the matter in a fair and reasonable spirit. By constantly meeting
together in this way would be gained confidence which would
tend towards industrial harmony.
He would like to see the decisions arrived at between Federations
of Employers and Workmen enforced upon unfederated firms and
workmen, and thought that agreements mutually entered into
should, during their currency, be made legally binding upon the
contracting parties.
THE PROMOTION OF INDUSTRIAL HARMONY 65
There was no cause for undue pessimisni, for he believed that with
a broader outlook which was being gradually developed in the minds
of all concerned, many of the recent upheavals would not be repeated.
PROFESSOR W. R. SCOTT
The President of the Section (Professor Scott), summing up the
discussion, said that the different speakers were to be congratulated
upon the manner in which they had stated their views, and what was
very satisfactory and to a large extent justified the holding of that
long conference, was the approximation to a common point of view.
In summing up and commenting on the discussion, he proposed first
to consider why at the present time there were signs of an acute
position in the labour world. Why had this question of economic
friction become pressing ? War involved a great deal of disloca-
tion. Many people who had got into the habit of working in a
recognised way were subject to a certain amount of upheaval,
and were thrown out of their normal method of working. That
struck one at first with regard to production. Thus, the dislocation
of industry reacted upon employers and employed. Both employer
and worker were anxious to see that they were not damnified, and
so the changes introduced by war tended directly to increase
industrial friction. Moreover, the dislocation of war produced
certain temporary monopolies, which raised the question of war
profits and the taxation of war profits. There was also a monopoly
of skill, because when the number of skilled workers in a particular
industry became greatly reduced, there was created an element of
monopoly. In the third place, there was a scarcity of some goods,
which tended towards a rise of prices, and that, of course, increased
the cost of living. The rise in prices, unless counteracted by an
increase in nominal wages, diminished the value of real wages, and
that was another element causing friction. As a partial corrective
of that friction arose the question of war bonuses. Here, he
thought, we had the main causes of the industrial friction of the
present time. We might bear these inconveniences better if we
were sure that they were temporary, lasting only for the war period.
But the war had lasted sufficiently long to place many of our
industries upon a war basis, and when we went back to a peace
basis, a converse change would have to be made, and the probability
was that the friction would be intensified.
66 CREDIT, INDUSTRY, AND THE WAR
But when we put on one side the special and temporary causes
which were making for economic friction, there remained other and
purely general questions. Before the war began there were causes
that, on the one hand, were making the labour question increasingly
difficult : there were others, upon the other hand, tending to bring
about an easier and speedier settlement of labour disputes. Upon
these general questions it was necessary to take a wide and compre-
hensive view. What had interested him personally, and what he
thought was very fruitful in the course of the debate, was that there
had been speakers who described themselves, on the one side, as
employers, and, on the other side, as representatives of organised
labour, and a tendency appeared on both sides towards a large
measure of recognition of identity of interests. That was exceed-
ingly hopeful and satisfactory, so far as it went. But there was to
be found among the rank and file of the employers and among the
rank and file of employed quite a different point of view. There was
the employer who thought that cheap labour was the best labour for
him. On the other side, there was the workman who believed that
as a good trade unionist he should endeavour to get as much out
of the employer as he could, and give as little as possible in return.
The difficulty was that in both cases the question of efficiency
earnings, which he suggested were the ultimate and real earnings of
labour, had been thrown over altogether. How was the gap between
the two sides to be bridged ? Unfortunately one could not produce
any single formula. The best one could do was to suggest lines of
action which might conduce towards a broader outlook by both
sides. It might do no harm, to begin with, if both interests had a
little more acquaintance with economic principles. And as a
deduction from this, a widespread realisation of the necessity of
lessening industrial friction was required. Just as in mechanics,
valuable services had been rendered to engineering in reducing
friction, so, in industrial organisation, one form of progress would
consist in the lessening of that great source of social waste through
economic friction, to an excessive extent in the adjustment of wages
when it involve an interruption of the process of production.
Secondly, one could not help being impressed by the avoidance
of disputes in the great cotton trade, and the reasons assigned
for it. It would be an immense advantage if other trades
would take as a model the methods of the cotton trade in the
THE PROMOTION OF INDUSTRIAL HARMONY 67
adjustment of wages, and so promote the same mutual knowledge
ol the conditions of the trade. Such knowledge would enable
each side to realise more fully the difficulties of the other. His
third point was that it would be well if both employers and
employed took more pride in the work done. The spirit of
co-operation in that sense the mutual facing of difficulties and
the overcoming of those difficulties, and the recognition that
everyone who contributed to the work had a share in the result
achieved would conduce to the avoidance of friction. There was
a fourth and minor point. That was the extension of co-operative
principles and profit-sharing. These had a value up to a certain
point. But if we depended upon them alone, the difficulty was that
a very long time must elapse before a sufficient amount of industry
had been transformed to either of these methods of organisation.
In the fifth place, and finally, he believed we were only just begin-
ning to see the benefit of conciliation, and this was a point upon
which there was a considerable amount of agreement between
employers and employed. A really more serious danger than the
conflict between labour and capital, was conflict between different
kinds of labour taking labour to embrace every kind of worker
who produced anything or rendered any economic service. Diffi-
culties of this kind might introduce very serious defects into our
social structure. He urged both upon employers and upon employed
that there could be no such thing as any one interest holding up the
nation. The nation as a whole had always sufficient resources to
deal with any attempt of that kind. It was almost impossible
for any strike or lock-out to succeed when public opinion was
definitely against it. But public opinion had seldom had the
chance of making its influence fully felt. Public opinion must
have knowledge to exert itself with effect. It was by the formation
of a well-informed public opinion that a very powerful moderating
influence could gradually be brought to bear. By adequate know-
ledge and full discussion of the points at issue, the great body of the
British public, which had a considerable amount of common sense,
might become the ultimate court of appeal in a dispute. If it
decided definitely in favour of one side, it would not avail for the
other to continue a strike or lock-out.
CHAPTER III
OUTLETS FOR LABOUR AFTER THE WAR
Conference Committee
THE Membership of the Conference on Outlets for Labour after the War
was as follows : Archdeacon Cunningham, D.D., F.B.A. ; Messrs. C. W.
Bowerman, M.P., W. J. Davis, J.P., J. St. G. Heath, J. A. Seddon, E. D.
Simon ; Sir H. Rider Haggard, Sir C. P. Lucas, K.C.B., Sir C. W. Macara,
Bart, Sir Sydney Olivier, K.C.M.G., Sir E. im Thurn, K.C.M.G. ; Professor
E. C. K. Conner, and Mr. Egbert Jackson. Chairman : Professor W. R.
Scott, F.B.A. Secretary : Professor A. W. Kirkaldy.
I. INTRODUCTION
TERMS OF REFERENCE. The terms of reference were to
investigate into
1. The replacement of men by women in industries during the
war.
2. The permanent effects of this after the war.
3. The character of re-employment with respect to changes of
tastes and physique amongst those who have served with the Forces
and are disbanded.
4. The means by which consequent unemployment may be
counteracted or minimised.
5. The possibility of employing disbanded men on the land.
It was decided that the best method of dealing with the first
two terms of this reference would be to investigate those industries
in which the extra employment of women since the war has been
most marked, as well as those industries in which there were
possibilities of an extension of women's work, with special reference
to those trades localised in the London, Manchester, Leeds, and
Birmingham districts. The inquiry was commenced in the beginning
of June, 1915.
For the work, other than in the Birmingham district, through
Mr. J. St. G. Heath, who acted as Hon. Secretary, the co-operation
of a Sub-Committee under the chairmanship of Professor L. T.
Hobhouse, working at the London School of Economics and Toynbee
Hall, was secured. This Sub-Committee appointed Mr. E. F.
Hitchcock as secretary, and they wish here to express the debt
which they owe to him for his labours ; not only was he responsible
68
OUTLETS FOR LABOUR AFTER THE WAR 69
for the work of organising this part of the inquiry, but in addition
he prepared the first draft of their Report. The investigators and
members of the Sub-Committee were
Sub-Committee.
Professor L. T. Hobhouse
*Miss E. B. Ashford
*Miss D. Austin
*Miss M. E Bulkley
*Miss M. Cross
*Mrs. B. Drake
*Miss E. Dunlop
*Miss A. C. Franklin
*Mr. F. H. Hamnett
Mr. J. St. G. Heath
*Mr. E. F. Hitchcock
Miss B. L. Hutchins
*Miss B. Keen
*Professor A. W. Kirkaldy
Mr. J. J. Mallon
*Miss Moses
Mrs. Pember Reeves
*Mr. A. Robinson
*Miss M. Stettauer
Miss L. Wyatt Papworth
*Miss N. Young
Miss D. Zimmern
*Mrs. F. W. Hubback
* Investigators.
Professor Kirkaldy undertook to organise the investigation in
the Birmingham district, especially with reference to munitions and
the metal trades. The Central Care Committee of the Birmingham
Education Committee, whose Chairman, Councillor Lord, was
keenly interested, made it possible for Miss Anne Ashley to under-
take the direction of the investigation. Miss Lee of the Birming-
ham Women's Settlement was appointed investigator.
With remarkably few exceptions, and in spite of the pressure of
war work in some of the industries investigated, employers, mana-
gers of companies, Trade Union officials and individual working men
and women showed great willingness to help on the work of the
Conference. Very valuable assistance was also obtained from
various women's organisations throughout the country. Thus a con-
siderable amount of useful information was collected, and although
owing to the still undeveloped state of a unique economic situation,
statistical data were not fully available, it has been found possible
to compile a Report which, on its descriptive side, refers to new and
interesting phenomena which have entered into English industrial
and commercial life.
It was decided that the last three terms of the reference could at
the moment be more suitably dealt with by papers and discussion.
To this end Mr. Christopher Turnor was asked to read a paper on
Land Settlement for ex-service men, and Major Tudor-Craig
undertook to give the Section the benefit of his experience on the
employment of disbanded soldiers and sailors. 1
1 Mr. Turnor is publishing a book which will contain the substance of his
address at Manchester. Major Tudor Craig was, unfortunately owing to
illness, unable to attend the meeting as had been arranged.
70 CREDIT, INDUSTRY, AND THE WAR
This Report is, therefore, confined to the replacement of men by
women in industries as a result of the war, and the possible
permanent effects of this replacement. After the discussion at
Manchester it was finally revised by the Officers of the Section,
who are greatly indebted to the above Sub-Committee, and more
especially to Miss Ashley and Mr. Hitchcock. The other members
of the Conference are not responsible for the details given nor for
the views expressed.
II. WOMEN'S EMPLOYMENT DURING THE YEAR AUGUST, 1914,
TO AUGUST, 1915
After a year of war we are able to regard with some knowledge
the course which women's employment has taken during that
period, and the nature if not the extent of the entry of women
into trades and occupations hitherto reserved wholly or partially
to men. Broadly speaking, that movement has only just (August,
1915) begun to assume any appreciable magnitude. In few indus-
tries has the position yet shaped itself. We are, therefore, at
present able to do little else than to indicate the course which
industry has taken and roughly to sketch the events which have
led during the past year to the present position.
Employment in Early Months of War. It was clear to the least
observant that during the first two or three months of the war a
considerable depression had been caused throughout industry,
especially among the following trades : dressmaking, millinery,
women's fancy and children's boot and shoe making, silk and linen,
cigar and cigarette making, the umbrella trade, confectionery and
preserve making, cycle and carriage making, jewellery, furniture
making and French polishing, the china and glass trades, stationery,
and printing. In some trades a shortage of raw material or the loss
of enemy markets caused a more or less lengthy period of depression.
Thus the shortage of sugar caused very considerable unemployment
in what was almost entirely a woman's trade jam-preserving and
confectionery. The chemical trade was also affected by the com-
plete cessation of the import of certain commodities from Germany.
The practical closing of the North Sea to fishers brought to a stand-
still the occupation of those women who are to be found every
OUTLETS FOR LABOUR AFTER THE WAR 71
season in thousands on the English coasts following the herring
round. 1 The closing of the Baltic cut off the supplies of flax from
Russia upon which our linen trade largely depends, and women's
employment in a whole trade was again considerably decreased
owing to the lack of raw material. In almost every trade unem-
ployment figures rose to a point only equalled in times of very severe
trade depression. The cotton trade was especially hit. Before the
war a period of decline had set in, and Lancashire suffered in
addition from all the disadvantages incidental to a time of naval
warfare. Casual houseworkers such as charwomen and office
cleaners, and even skilled domestic servants such as cooks, found
themselves out of employment owing to the economies which the
public were making. The unemployment of good cooks, however,
did not last many weeks.
Distress amongst Women. The distress caused by unemployment
is generally felt more by men than by women, but in the early days
of the war the effect of trade dislocation upon women was out of all
proportion to its effects upon men. For the women there were few
counterbalancing forces such as recruiting ; indeed the full economic
effect of the immediate trade depression fell upon them, and the
irregular payment of separation allowances at the beginning of the
war considerably added to the prevailing distress.
Revival of Trade. Happily this state of affairs did not last long.
Very soon the Government came into the market as chief buyer, and
found industry very willing to concentrate both its labour and
machinery upon the production of goods to clothe, feed, and equip
armies. The collapse of those trades connected with the normal
demands of peace had released thousands of women for other
industries, while the contraction of men's employment had been
almost wholly counterbalanced by recruiting. In September just
under a quarter of a million women, apart from those in non-indus-
trial occupations such as clerical work and retail distribution, were
unemployed as compared with the numbers in industry at the
outbreak of war. The men were fighting and the women had to
take their places. From September onwards women unskilled
and industrially ill-equipped as the great majority of them were
poured into the leather, tailoring, metal trades, chemicals and
explosives, food trades, hosiery, and the wool and worsted industry,
1 See Englishwoman, December, 1914, article by J. Haslam.
6 (1408)
72 CREDIT, INDUSTRY, AND THE WAR
which had been suddenly revived by the placing of large orders
by the Allied Governments. Between September and December
over 130,000 women were drawn into the ranks of industry proper,
but still 80,000 unemployed women remained in spite of the net
shortage of men, which amounted to about a quarter of a million.
Fortunately the new demand was to a large extent for that class of goods
in the production of which female labour normally predominates.' 1
An extension of women's normal employment rather than a
displacement of men's by women's labour was what occurred.
Lack of Skilled Labour. Unfortunately recruiting was carried out
without discrimination, and by December the outstanding feature
of the labour market was the enormous shortage of skilled men in
all industries, a shortage which led to the contraction of women's
employment. In some instances employers attempted to train
women, but in most cases time was too short, the experiment too
risky, and the pressure of business too great, for employers to
become enthusiastic over such schemes. Where it was possible
to transfer women from one branch of a trade that was slack to an
allied branch in which the work was brisk this was done, but there
were limitations to such transference. Women were untrained
industrially, and, as week by week went by, the lack of skilled men
became more and more marked. Through the National Labour
Exchanges a Register of Women was compiled and about 86,000
names were enrolled, but only a small minority 4,750 were
able to undertake the skilled jobs awaiting them. It must be
remembered, however, that a large number of these women were
skilled in occupations and professions other than industrial.
By February some of the Government contracts, e.g., clothing,
had been reduced, but overdue private home and shipping orders
were sufficient to keep the industries affected in a prosperous and
busy condition.
Munitions. The group of trades which showed the most phe-
nomenal increase in spite of the huge Government contracts which
had been already placed, was the munitions group. The story of
Neuve Chapelle, the creation of a Minister of Munitions, and the
increasing needs of ourselves and our Allies for munitions of war
caused an unprecedented demand in this group. Into the armament
branches, therefore, of the metal and engineering trades many
1 See separate Reports on Tailoring, Leather, and Food Trades.
OUTLETS FOR LABOUR AFTER THE WAR 73
thousands of women have been pouring since February. It is as
yet early to draw deductions from this further entry of women into
munition work, 1 though it is as well to bear in mind that much of
the work, e.g., shell making, is exceptional work and will diminish
when peace is declared.
Present Effects of War on Industry. The women who have entered
industry since the war seem for the most part comparatively young.
Billeting money and fairly liberal separation allowances have
been sufficient to prevent any large number of unskilled married
women from returning to work in factories.
One of the tendencies of the war is clearly to transfer a more than
normal proportion of the nation's business to large concerns. Though
this has its drawbacks the balance on account is probably to the
advantage of the women who have entered, as far as the safeguarding
of their standard of life is concerned, and consequently of that of the
men who will return.
It is clear that the year has seen an enormous upheaval in industry ;
factories have been adapted to meet new demands and to facilitate
women's employment ; Trade Union and Home Office restrictions
have been relaxed ; women are replacing men ; experiments
are being made and knowledge gained which may well revolutionise
many branches of industry. The dominating demand upon industry
is that made by the volume of Government contracts. At the end
of the war these will substantially decline and industry will begin to
resume its normal course. But every transference of labour, every
youth put into a man's place, every woman who has received
training because of the war, adds something to the bewildering
chaos of those industrial problems which will have to be grappled
with when peace is declared.
III. THE GENERAL POSITION
In the earlier months of the war, industry, following the lead of
public opinion, organised itself on the assumption of a war of short
duration, and a considerable period elapsed before it was generally
realised that experiments in the employment of women might have
to be made on a considerable and unprecedented scale. The
necessity of immediate action in utilising the potential resources of
1 See Report on Metal Trades (p. 133 and on).
74 CREDIT, INDUSTRY, AND THE WAR
female labour was not understood, and it is now possible only par-
tially to remedy this past error of judgment. Necessity, however,
is proving the spur to effort, and experiments and trials are now
being made in this direction. Of the results of these interesting
developments it is, however, as yet too early to judge. We can
only indicate what appear to be the main features arising out of the
new conditions of women's employment during the past year.
After twelve months of war three features of the labour market
stand out in special prominence
(1) The serious shortage of skilled workpeople ;
(2) The considerable extension of women's employment;
(3) The limited extent to which women have replaced men, in the
sense that women are now doing work previously done by men.
(1) Serious Shortage of Skilled Labour. With few exceptions the
reports during the last eight months from industries engaged on
war contracts eloquently repeat the serious nature of the situation
caused by the shortage of skilled workers, due to the number of
skilled men who have enlisted, and to the changes in industrial
methods which demand a small number of highly skilled mechanics
working in conjunction with a comparatively large number of less
skilled operatives. Men who in the earlier months of the war
joined the Forces have in many cases actually been withdrawn
from the fighting front to assist in filling the gaps caused by this
deficiency in the ranks of industry. There is no lack of unskilled
workers, but the extent to which semi- or unskilled labour can be
employed depends not only upon the amount of that labour avail-
able, but upon the extent to which skilled labour can be obtained.
In the case of the men who remain the lack of training and experience
is all too general ; amongst women it is, with rare exceptions, the
universal rule. Apart from other disabilities this factor alone
has been sufficient seriously to limit the entry of women into those
industries in which there are enormous demands for materials of
war. Not only have the majority of women, owing to their lack
of training, found it impossible to take up skilled work in these
trades, but, as stated generally above, the absence of skilled workers
amongst them has in its turn proved an almost insuperable obstacle
to the employment of any but a small proportion of the great
waiting army of willing but unskilled female labour. This shortage
of skilled labour is the cardinal feature of the industrial position with
OUTLETS FOR LABOUR AFTER THE WAR 75
which the nation is now faced. It is true that by minor adjustments
in the organisation of the trades concerned the entry of a few extra
women can be facilitated, but the situation in its broad aspects
seems almost insoluble during the present time of war. Certainly
in a great many industries women are working on processes pre-
viously wholly or partially done by men, but the extent to which
this is the case is inconsiderable. The margin of difference, however,
between actual fact and possibility is yet to be discovered.
(2) Extension of Women's Employment. It is impossible with
any accuracy to give figures indicating the extension of women's
work since the war. The trades in industry proper in which the
extension of women's employment has been most marked are
engineering, chemical trades (explosives), leather work, tailoring,
meat preserving and grain milling, shell basket making, elastic
webbing, scientific instrument making, brush making, electrical
engineering, canvas sack and net making, leather tanning, rubber
work, hosiery, hardware, wire-drawing, tobacco, boot and shoe
trade, shirt making, wool and worsted, silk and jute trade. Exclud-
ing the munitions branch of engineering, the extra employment of
women in these trades probably does not exceed 100,000, and four
months ago was little more than half that number, compared with
the same month in the previous year. A small proportion of the
extra women employed in these trades is, however, doing men's
work, the probable reasons for which are discussed later. Gener-
ally speaking, the extra employment of women in any branch
of industry proper has been effected by transference from trades
that are depressed or from branches of the same trade which are
slack to those that are brisk.
A marked acceleration in women's employment has also taken place
in non-industrial occupations such as shop assistants, bank clerks,
and in other forms of clerical work, waitresses in hotels and else-
where, and certain classes of railway work. In these occupations
women have probably replaced men, in the sense of doing men's
work, to a greater extent than in industry proper. The supposed
social status of an occupation rather than its pecuniary gain appeals
more generally to some women than to most men, and many women
who find their home surroundings somewhat dull, and a shop counter
or an office stool comparatively attractive, would never consider
entering a factory or a workshop. Consequently we find that for
76 CREDIT, INDUSTRY, AND THE WAR
the most part women who have entered industry proper since the
war have had previous industrial experience in other trades, and
that where they have not been wage-earners previously they have
been attracted in a great many cases to the more " lady-like "
occupations. Patriotic motives have, however, supplied a stimulus
to a number of women to enter industry. Those branches concerned
with the production of munitions and direct war supplies have
proved especially attractive in this respect.
The relaxation of Trade Union and Home Office restrictions has
also had the effect of extending women's employment. Where a
shortage of male labour has been apparent the Trade Unions have
in many cases, e.g., in the leather, engineering, and metal trades,
wool and worsted trades, etc., agreed with employers that, for the
period of the war only, women may work on processes which were
previously done wholly or partially by men, on the condition that
the wage rates paid to the women shall be the same as those paid to
the men. The relaxation 1 of Home Office regulations has only been
made on application in particular cases, and is mostly connected
with the extension of overtime. Many of the trades in which the
war demands have been extensive, normally employ a larger num-
ber of women than men, and in these the extension of women's
employment has been considerably accelerated by the war.
(3) Replacement. From the fact that fewer men and many more
women are now in industry there is a primd facie case for supposing
that women have replaced men in the sense that they are now doing
processes which before the war were done by men. Our information,
however, shows that it is not the case, save in special instances and to a
limited degree.
The one important factor upon which the prosperity of industry
depends to-day is the virtual monopolising of the market by our
own and the Allied Governments. It will be interesting to consider
whether the war demand is not on the whole a demand for a class
of goods in the production of which a greater proportion of women
rather than men can be more usefully and economically employed
than under normal peace conditions. The nature of the demands
arising out of the war must have an important bearing upon the
kind of labour required. A large part of the Government demand
for goods is in those branches of trades in which a larger proportion
1 Cf. Board of Trade Journal, 8th July, 1915,
OUTLETS FOR LABOUR AFTER THE WAR 77
of women is employed than in the trade as a whole. A good
example of this is the tailoring trade, which normally employs
something like 130,000 women, together with a large casual fringe
of women who come into the trade in times of seasonal pressure.
This trade illustrates the point at issue, though it will not, of course,
be taken as typical of all industry. The retail bespoke branch,
in which high-class tailoring work is done, employs men almost
entirely, and owing to the war it has been very depressed, for the
demand for " high-class " work has been much reduced. The cloth-
ing of a soldier is good but not " high class " in the sense in which
a Bond Street retail bespoke tailor might use that term ; it is tailor-
ing done in the medium branches of the trade in which female labour
normally predominates. This part of the trade has drawn women
and girls from its other branches and from its fringe of casual
labour as well as from other trades in which there was a surplus of
female labour. It thus shows a great increase of female labour
owing to the war, which has been drawn in, not to undertake work
previously done by men, but merely to cope with a huge increase of
orders in that branch of the trade in which a larger proportion of
women than men is normally employed. Again, the cloth from
which the uniform is made is not the very finest suiting, and the
huge demands upon the wool and worsted trade for it have resulted,
as in the tailoring trade, in a larger demand for female labour
compared with the demand for male labour than the trade as a
whole would normally employ. The great increase of women's
employment in the leather trade owing to the war has, to a certain
extent, been in the lighter accoutrement branches on processes
normally done by women ; while in the boot and shoe branch
there has actually been a replacement of women by men owing
to the heavier nature of the work required in the military than
in the civilian boot.
A considerable part of the Government demand is also in trades,
e.g., the munition branches of the engineering and metal trades, in
which a large proportion of semi-skilled or unskilled female labour
can be absorbed especially in such exceptional processes as the filling
of shells, and in which after the war the demand will decline.
From the above considerations it will be seen that much of the
extension of women's employment during the war in industry proper
is in work which is normally done by women and in which the necessities
78 CREDIT, INDUSTRY, AND THE WAR
of war have created an unprecedented demand. Other work now done
by women is exceptional work which will decline with the advent of
peace. But a survey of the whole field suggests that owing to the
installation of special plant the proportion of woman labour may be
affected.
But though women are not as yet to any considerable extent
doing the work of men or undertaking highly skilled jobs, they are
undoubtedly slowly undertaking processes in many trades which
were previously thought just above the line of their strength and
skill. This is seen particularly in leather, engineering, and the
wool and worsted trade, and also in trades which, though depressed
since the war, have yet experienced a shortage of certain forms of
labour, e.g., pottery, cotton, and the printing trade. This shifting
of the line of demarcation between men's and women's jobs has
in many cases received Trade Union opposition, though in most
cases agreements have been made for the duration of the war only
and without prejudice to the consideration of the question after
the war. In this connection it would be interesting to consider in
how far Trade Union restrictions, especially those concerning the
entry to the trade and the period of training required, are based
upon the conditions which prevailed in the past or upon the realities
of the present. Employers are, however, reluctant to express
opinions until more experience under the new conditions has been
gained.
In non-industrial occupations, such as clerical work, in certain
forms of railway and vehicle work, such as ticket collecting, carriage
cleaning, and tram and 'bus conducting, in various forms of retail
distributive work inside retail shops as well as outside work like
van driving and delivery, and in warehouse work such as packing
and dispatching, women have, however, replaced men, in the sense
of doing work previously done by men, to a much larger extent
than has occurred in industry proper. The majority of firms,
when faced with a shortage of male labour, have first commenced
to replace men by women in their office and warehouse staffs.
Clerical work is obviously suitable for women, and employers have
had far less hesitation in introducing a greater proportion of female
labour into this side of their business than into the industrial side
proper. The conditions of the clerical labour market, including
as it does a great majority of clerical workers who belong to no trade
OUTLETS FOR LABOUR AFTER THE WAR 79
organisation, have made it easier to introduce female labour without
encountering serious opposition from the Trade Unions concerned,
than in those trades where the group of workers is smaller and the
workers are more highly organised. Enlistment has also been
exceptionally heavy, in some cases over 30 per cent., among men
such as clerks, whose occupation is sedentary, and, in spite of the
restriction of business, the net shortage of men was soon apparent,
and women, mostly young girls from school or middle-aged women
from professions which have been hit by the war, were rapidly
drawn in to make up the shortage. In Government departments,
local authorities, banks, insurance and other offices, as well as
ordinary business houses, women are being utilised in increasing
numbers to do work previously done by men.
Into most of these occupations women have entered to do work
either slightly more difficult than that done by women before, or else
work entirely new to them, such as railway work, and clerical work
in banks. In few cases, however, is the work now done by women
exactly similar to that previously done by men. Obviously, the
lack of training and experience, together with natural disabilities
of physique, make certain forms of work and conditions of labour
impossible for women which are possible for men. Thus, in the
case of ticket collecting, in which at first sight men's and women's
employment appears equal, it is found on inquiry that the women
work shorter hours, requiring three shifts to do what men do in two,
and their shifts are arranged when traffic is less heavy, thus leaving
the more arduous work to the men. In many of the large stores
three women are required to do the work formerly done by two
men. It is as yet too early to form final judgments until women have
had time to adapt themselves. Until 16th August, 1915, the extra
women employed on railway work owing to the war had been paid
less and given lighter and shorter work than the men. Since that
date, however, the railway companies have agreed that women
shall be paid the same rates as the men, and, in consequence, given
similar work. It will be interesting to discover how far women
will successfully compete with men in this work now that the
conditions are approximately equal.
Both in industry proper and in non-industrial occupations women
have often been introduced to do the work, not of the men who
have enlisted, but of boys and youths who have been promoted
80 CREDIT, INDUSTRY, AND THE WAR
to do the work formerly done by men. This work was either of an
arduous nature or required special knowledge which in part the
youths had already picked up. Young girls have replaced boys
as messengers, etc., and young women have taken the places of
youths. It was often remarked by employers that girls are found
generally more efficient, careful, and conscientious than boys, and
apart from work entailing physical strain, such as the carrying
of heavy parcels, are much to be preferred to them ; on the other
hand, the majority of employers considered that adult women are
less efficient than men.
Readjustments in Industry. Considerable attention has been
devoted by some employers to the further subdivision of processes
and to the grading of labour, as well as the introduction of
mechanical and other readjustments, in order to facilitate the
employment of women. 1 Men's work has generally been that
requiring more strength and more skill than women's work. Thus
a greater differentiation of process as between skilled and less
skilled, lighter and heavier work, has made possible the further
employment of women in processes in which their economic value
is equal to that of an average man. In some cases, this specialisa-
tion of function is opposed by organised labour, as in the case of
the cotton trade and railways, 2 on the ground, among other
reasons, that the readjustments result in the wage rates of men
remaining the same, while the arduous nature of the work they
have to do is increased.
In this connection one point has come out somewhat forcibly.
Throughout most trades the extent to which up-to-date machinery
and efficient organisation have been introduced differs to an extra-
ordinary degree as between different firms. One firm will have
introduced methods and machinery which in another firm have not
even been considered. To this lack of knowledge and initiative
is due several of the difficulties experienced by some employers in
extending women's employment with the object of releasing men.
In normal times practical opinion suggests that extreme special-
isation may be a questionable advantage, as possibly sacrificing
quality to output. Skilled labour is so scarce owing to the war
that employers have necessarily to economise it. The present
1 See Distributive Trades (p. 100).
See p. 114.
OUTLETS FOR LABOUR AFTER THE WAR 81
demand is abnormal, but it shows the necessity for giving serious
attention to the training of skilled mechanics.
The Training of Skilled Labour. A time of war is the time
especially when the preparedness and fitness of a nation is tested,
and this applies to industry as much as to other more militant activ-
ities of national life. The dangers of an insufficient supply of skilled
labour revealed by the present crisis have opened our eyes, as
probably nothing else could have done, to the importance of
industrial training in both its immediate and its permanent aspects.
Experiments in the training of women for industry and business
are now being increasingly made to meet present demands. 1 In
spite of the special circumstances these developments have as much
a permanent as a temporary significance, and some examination
of the more permanent aspects of the problem may therefore be
of value.
It is obvious that the training of women as skilled workers depends
upon
(1) Circumstances, common to both men and women, relating to
the organisation of industrial training.
(2) Psychological, physical, and other conditions in which men
and women differ. These are discussed in Section IV.
(1) The fact that many industries of a nature which can be
learned in a few weeks' time at present offer employment to large
numbers of unskilled workers, has not been altogether favourable to
the training of the skilled worker. If a boy or girl can become a
productive worker almost at once, it requires special knowledge
and self-control on his or her part to remain in the position of a
learner with a learner's wage for years, in order to become a skilled
artisan. Nor are the steps by which young workers may climb to
this position made clear to them or to their parents. It is of great
1 The Interim Report of the Central Committee on Women's Employment
(Cd. 7848) contains some interesting suggestions on the promotion of new
openings for the permanent employment of women. Little of a practical
nature has, however, yet been done, although the suggestions made extend
to the following trades : Toy-making, artificial flower making, and the
making of baskets, bonbon bags, hair nets, memorial wreaths, nets, polished
wood fancy articles, potash (from seaweed), rugs (of a kind previously made
in Austria) , slippers, stockinette knickerbockers, surgical bandages, tapestry,
and tinsel scourers, and also gold beating, the weaving of willow and rush
for mats, chairs, and baskets, and the cottage weaving industry. In these
occupations little opportunity occurs for displacing men by women ; they
are mostly small industries in some of which it was suggested that advantage
might be taken of the cessation of enemy competition.
82 CREDIT, INDUSTRY, AND THE WAR
importance that they should be shown clearly that training is for
their own advantage, and that it is on training that the ultimate
scale of their pay and the security of their work depends. This may
be effected to a great extent by the juvenile branches of the Labour
Exchanges co-operating with the Care Committees of Education
Authorities.
Employers could assist by making clear to every beginner the
possibilities for advancement, and by doing so would probably
build up a more stable working force.
The decay of the apprenticeship system which has proceeded with
especial thoroughness during the last thirty years, and the recent
changes in methods of production and especially the increasing
introduction of machinery have, it may be feared, given rise to the
impression among many parents that it is useless for their children
to be trained as skilled workers. Skill is needed now, as it has ever
been, but the type of skill required changes so rapidly as to make
industrial foresight very difficult, especially to the young workers
and in a lesser degree to the firms which employ them. Even where
there is formal apprenticeship, or the definite status of learner, a
good deal of time is apparently wasted during the first few years of
training, not only in promiscuous fetching and carrying, but in
processes which become obsolete during or soon after the period of
training. According to the opinion of some credible witnesses,
systematisation alone would shorten by some 30 per cent, the long
term of apprenticeship demanded in certain trades.
The relative functions of the technical school and the workshop
in the training of the artisan must vary according to the trade, but
there are three main directions in which development is desirable
(a) The further establishment of full-time Technical and Trade
Schools, working in close co-operation with the trades concerned,
and making a special study of the most recent developments in
technique and the future prospects of the several trade processes.
(b) The development of part-time Continuation Schools, and
of the practice of permitting young employees to attend during
working hours, in view of the generally admitted failure of evening
instruction at the end of a day's work.
(c) A workshop training systematised and reduced to the short-
est period compatible with efficiency. In some trades this might
take the form of a modified apprenticeship adapted to the needs
OUTLETS FOR LABOUR AFTER THE WAR 83
of the time. This should be subject to frequent modification
with the alteration of processes, so as to ensure that the apprentice
is not required to make sacrifices more than commensurate with
his or her gains. In some trades, however, a systematic promo-
tion from one department to another would probably be possible
without formal apprenticeship.
(2) In the metal-working trades, especially, and this is also true
of some others, all the highly skilled workers are men. The women
employed in these trades are either semi-skilled or unskilled. The
question arises whether women are capable of becoming highly
skilled workers, and if so, whether they would in normal times be
preferred to men. This depends on a variety of circumstances,
physical, psychological, economic, and social. Some employers
in the more skilled trades, e.g., engineering, express a doubt as to
whether women could be trained to the same degree of skill as has
been attained by highly skilled men, maintaining that women lack
as a rule the necessary qualities of judgment and initiative, and
dislike shouldering responsibility. This point of view was often
expressed in less skilled trades. Other employers expressed
different views on these points, being convinced that in time women
would be able to attain the skill and initiative of the best men work-
ers, provided the work which they were expected to do did not entail
too great a physical strain or was not in other ways harmful or
objectionable to them. The majority of employers, however, seem
to be agreed that women generally prefer mechanical and routine
employment.
In spite, however, of the view which we have found to be prevalent
among the majority of employers, experience is teaching that given
the opportunity, women can produce work which, in spite of their
lack of industrial experience, compares favourably with similar
work done by men. In some engineering shops where every facility
has been given to women to undertake new work involving some
judgment and skill, their work has reached a high pitch of excellence,
and has been little inferior in output to that of men. Hitherto in
engineering, women have been employed almost entirely on " repe-
tition " work. During the past few months, however, considerable
and far-reaching changes have been effected which are likely to have
a very marked effect after the war. In a factory which is engaged
in the production of projectiles up to 4*5 in. a new department
84 CREDIT, INDUSTRY, AND THE WAR
was started a short time ago, the workpeople being women,
under the direction and supervision of a few expert men. Though
the majority of the women were raw hands totally unaccustomed
to tools it was found that within a few days their work attained
the necessary accuracy. Much of the work demanded intelligence
of a high degree. The women have shown initiative as well as
manipulative dexterity e.g., in a certain screwing operation it was
customary, before the employment of women, to rough the thread
out with the tool and then to finish it off with taps. Some trouble
having arisen owing to the wearing of the taps, the women of their
own initiative did away with the second operation, and are now
accurately chasing the threads to gauge with the tool alone. x This
is work of which any mechanic might feel proud. Within the past
few months women have also undertaken heavier work than was
previously thought possible. They are turning out 18-lb. high-
explosive shells and Russian 3-in. shrapnel, work involving twenty-
one operations, all of which are now done by women. On the
delicate work necessary for time fuses they are found particularly
suitable. Women need encouragement and sympathy in their new
surroundings, and the ordinary male workshop attitude is not one
in which their best powers and abilities are encouraged. The
standards of the past are too apt still to bar the way to the encourage-
ment of women's employment in other than mere mechanical work.
Skilled workmen are sometimes selfish and employers prejudiced,
and this attitude may postpone the replacement of men by women
in some cases. Examples such as those given above are not fre-
quent, but they indicate something of the possibilities of the
replacement of men by women, especially in munitions, where
women are increasingly needed.
IV. POSSIBLE LIMITATIONS TO THE INDUSTRIAL
EMPLOYABILITY OF WOMEN
From what has been said before it will be obvious that, the
customary barriers to the employment of women having broken
down, the chief factors remaining are the fitness and willingness of
women to undertake industrial work. In the past the obstacles to
women's employment have been
1 Quoted from The Engineer, 20th August, 1915.
OUTLETS FOR LABOUR AFTER THE WAR 85
1. Women's lack of physical strength and staying power as com-
pared with men's. Lack of physical strength effectually bars them
from undertaking work entailing any considerable physical strain.
In some cases the work has proved injurious to them, e.g., the
carrying of heavy weights in warehouses. In the printing trade
it has been suggested that women should do " laying on." As
this often involves the handling of heavy rolls of paper the process
is really prohibitive to women unless it can be subdivided and the
heavier work given to the men.
It is stated that women are less reliable than men owing to more
frequent absences on account of illness. Figures supplied by cer-
tain insurance companies show that between the ages of 21 and 40
women's absences are 15 per cent, as against men's 5| per cent.,
though below 21 years of age there is hardly any difference. In this
connection it should, however, be remembered that the lower
wages of women and the double strain imposed by their home
duties often react upon their health and increase the natural sex
disparity.
2. Certain forms of work are believed to be bad for a woman's
character or debasing to her taste, making her less fit to care for and
train the next generation. Here the problem is more difficult,
and where these difficulties are real improvements could probably
be made in conditions and hours of work. It may be suspected
that in many cases conditions which are morally or intellectually
bad for women are not altogether beneficial for men !
3. The comparative shortness of women's industrial career has
led employers to regard time given to the acquisition of technical
knowledge by women as wasted. The young girls employed make
up so large a proportion of the total amount of female labour that
it is customary to treat them as if industrially they never grow up.
In most trades there is a certain amount of work requiring more
experience, which absorbs the comparatively small proportion of
women who do not marry, or who remain permanently in industry
after marriage.
Since, unfortunately, for some time to come it seems probable
that the female population will be more in excess of the male even
than in the past, the number of women who remain on the labour
market all their lives is likely to be increased. Already it is stated
in some works that during the last year promotion has been very
86 CREDIT, INDUSTRY, AND THE WAR
slow because of the comparatively small number of marriages.
Industrial ambition among girls is, therefore, becoming very
desirable, and experiments in their industrial education are likely
to become increasingly necessary.
4. Women in the main do not regard their occupation as their
life's work. The industrial value of a woman is minimised by the
probability of her marrying, and in the majority of cases her con-
sequent withdrawal from the trade. In any case, it is stated that
her attitude to marriage causes her attitude to her work to be less
stable than that of men. In many trades it is said that women
require more supervision than men, owing to what appears to be
their lack of initiative and timidity with regard to responsible work.
They are less ambitious and more content to remain in positions
which make comparatively little demand upon them.
In less skilled work, however, women are often in many respects
superior to men. A woman is generally a more cheerful worker,
and does not feel to the same extent as a man the monotony of
performing some small operation during long hours at a stretch
and week after week. Women are also traditionally more sober
and patient than men. Both employers and workpeople speak
with admiration of the patience of women. This patience is no
doubt partly due to the fact that most women do not expect to be
employed industrially over a period of many years.
It is difficult to dogmatise upon the attitude of woman to industry,
and still more to prophesy as to her attitude in the future, but,
speaking generally, it is not incorrect to say that heavy work and
work requiring great physical strain are debarred to woman because
of her lesser physical strength and stamina. Secondly, her attitude
towards marriage is essentially one of the realities to be faced.
Whether woman comes into industry on greater terms of equality
with man, as far as training and continuity of employment are
concerned, depends largely upon her own inclination in the matter,
though changed economic and social circumstances may force a
still larger proportion of women into the labour market. How far
she will be able to compete then with men will be determined by
her attitude and the natural disabilities which press all too unfairly
upon her in competing with men in industrial life.
The above conclusions, which are based upon the opinion of
employers and others whose past experience enables them to judge
OUTLETS FOR LABOUR AFTER THE WAR 87
of the suitability of women for industrial employment are not
intended to be in the nature of any final statement of the limitations
to women's employment. They attempt to indicate the difficulties
which have beset women's employment in the past, and though
many of them will obviously remain, some will no doubt be consider-
ably modified, especially if the women concerned are sufficiently
anxious to overcome them and to enter and remain in industry on
more equal terms with men. Already, within certain spheres,
some of the possibilities of women as organisers and skilled workers
have been demonstrated by numbers of trained and educated
women ; with further education and training and a greater freedom
to work out their own economic destiny it does not require a vivid
imagination to picture a state of things differing in many essentials
from some of the realities recorded above.
V._ WAGES
The question of wages is at once the most controversial as well
as the most complicated question of women's employment.
Roughly, women receive 50 per cent, to 75 per cent, of the wages
paid to men in similar occupations. This at first sight would
appear an injustice. But the conditions must be thoroughly under-
stood before it is possible to dogmatise. A mere statement of the
comparative wages of men and women without mention of the
attendant circumstances is useless. As far as this Report is con-
cerned it has been difficult in the time at our disposal to collect
all the facts necessary for a thorough consideration of the question.
We can, however, indicate some of the chief factors from the point
of view of both employers and workpeople.
Reasons given for Low Wages of Women. Employers are apt to
regard the question of wages from one aspect only that of paying
to the individual worker what in the employer's opinion he or
she is " worth." Men's Trade Unions and many of the women's
organisations, on the other hand, object to the payment to women
of lower rates than those paid to men for similar work. In some
cases the policy of the men on this point is opposed to that of the
women in the same industry the men asking for equal rates
for men and women, and the women objecting on the
ground that this would lead to their effectual exclusion from the
trade.
7-(i4o8)
88 CREDIT, INDUSTRY, AND THE WAR
The limitations to women's employability stated in the preceding
section must be borne in mind in a consideration of the question of
wages, as they have a direct bearing upon the question of women's
output as compared with men's.
Though women are often paid the same piece rates as men when
the work is similar, they are very rarely paid the same time rates
owing to their lesser output. In addressing a deputation of women
on the subject on 13th April, 1915, Mr. Runciman stated that in this
matter the Government intended to follow the practice usual in
private industry " in replacing men by women we have provided
that under Government contracts the same piece rates are to be
paid for women as for men, and in regard to time rates no special
conditions have been laid down."
The reasons given by employers why the wages of women are lower
than those of men may be divided into two groups. The first
group depends upon those causes stated in Section IV and resolve
themselves briefly into
1. Women can perform only the lighter processes.
2. The output of women is less than that of men.
3. Women are less skilled and experienced than men and are
rarely willing to devote much time to training even if employers
thought (as they rarely do) that the short duration of their industrial
life justified a long training.
4. Some conditions, such as night work, are more objectionable
in the case of women than of men.
It should be remembered, however, that a man's wage in the
earlier stages of his industrial career is reckoned in two dimensions
the size of the wage and the prospects of promotion and higher pay
after a period of training or experience. A youth often starts at
a nominal wage and gives a part of his services for a period of years
on a tacit understanding that later he will be able to obtain a rapid
and substantial increment of wages. In the case of a woman,
however, assuming that her industrial career is shorter than the
average man's and that in the majority of cases she has fewer pros-
pects and is only employed for her intrinsic output, it would seem
only equitable that, other things being equal, a woman's wage in the
earlier stages, instead of being lower than that of a youth doing the
same work, should be on a higher scale.
In comparing men's and women's wages it is further necessary to
OUTLETS FOR LABOUR AFTER THE WAR 89
discover how far the work done by each is substantially the same.
Even during the present time of stress, when women are to a certain
extent doing work which would normally be done by men, the work,
as shown in the detailed portion of this Report dealing with separate
trades, is very rarely similar as regards either process or conditions.
With the introduction of women the work has often to be subdivided,
and the men generally have at least the arduousness of their work
increased with oft-times the addition of overtime and night work
and a larger amount of work entailing a greater strain. Where
workshops have been recently built for women workers they have
been equipped with machinery of a very different type from what
would have been installed had the management been able to procure
skilled men. Whilst women can readily be trained to work such
tools as capstan lathes without any great difficulty, a long training
is necessary in operating other tools for producing the same fittings.
In many of the textile trades it is found that where men and women
work the same machine the work is unequal, as only in rare instances
can the women " tune " or " set " their machines. The assistance
of a male " tackier " is required, and time is lost as well as extra
expense incurred. The apparent simplicity of the " equal pay for
equal work " test is in practice found to be extremely complicated
and difficult to apply.
Social Custom. The second group of reasons advanced by employ-
ers for paying women at a lower scale of wages depends more upon
custom and social outlook. Thus many employers excuse the lower
wages of women on the ground that the needs of women are smaller
than those of men. It is argued that a man's wages have normally
to be used for the support of a household, while a large proportion
of working women have only themselves to support. Some employ-
ers also state that as women ask for less wages than men, they are
paid less in consequence. Others follow social custom in regarding
women workers as of a lower status than men.
These reasons are apparently regarded as adequate and conclusive
by many employers, but they are looked upon by representative
working-class opinion with great suspicion. Our evidence goes to
show that the difference between the wages of men and women
is often more than can be justified by any difference in efficiency,
and that this has the result of making it profitable for a firm to
introduce the largest possible amount of female labour. For the
90 CREDIT, INDUSTRY, AND THE WAR
most part Trade Union (male) opinion agrees that on the basis of
" to everyone according to his needs," the lower wages of women
might be justified, although they believe that the low demands of
women workers are partly the result of lack of organisation and of
industrial ambition among them. Whether, however, payment
of a lower wage to a woman be unjust to her or not, the Trade Unions
maintain that it is unjust to the man whom she is thus able to
underbid.
In this connection it is only fair, however, to state that the
evidence of some employers goes to show that where they have
replaced men by women their wages bills for the same output have
been greater than when they employed men only. Often two
women have had to be employed instead of one man, and three
women instead of two men is a fairly common occurrence. This,
of course, only illustrates the familiar contention for which in recent
years the Trade Boards Act has supplied additional proof, that low-
paid inefficient labour is by no means " cheap " labour. Many of
the best employers recognise this, and for this reason are not always
anxious to replace trained men by untrained women.
But when a greater subdivision of processes is introduced, the
employment of women at lower wages is frequently found to reduce
the cost of production. Some employers, e.g., in the leather and
small metal trades, state that they have been able to introduce female
and other unskilled labour by means of modifications in their
methods. Skilled workmen are thus in some cases undercut in
the labour market as effectively as though women offered to do
equal work for a smaller wage.
Fair Wages. It is too generally assumed that the Fair Wages
Clause included in all Government contract agreements sufficiently
safeguards the standard of wages paid to women on Government
work and secures to them a fair wage. This, however, is not neces-
sarily the case. The Fair Wages Clause is framed apparently on the
assumption that in the trades to which it applies, standard recognised
rates of pay can readily be ascertained. In the same trade, however,
very considerable diversities in methods of work and division of
processes often exist which render the fixing of rates an extremely
technical and complicated matter, necessitating the existence of
highly organised machinery representative of both employers and
workpeople. These necessary conditions are to be found least of
OUTLETS FOR LABOUR AFTER THE WAR 91
all in those trades which employ large numbers of comparatively
unskilled women workers, and in such trades the Fair Wages Clause,
save in most flagrant cases, is in consequence practically inoperative.
Certain of the worst -paid women's trades in which very large
contracts have been placed during the war, e.g., tailoring, shirt-
making, and food trades, are scheduled under the Trade Boards
Act, and though the results of this Act have been very considerable
in raising the standard of piece-work rates in those trades, the secur-
ing of " fair " wages to all workers concerned is outside the powers
of the Act. The Act can only secure that the piece-work rates paid
are such as yield to an " average " worker not less than a certain
fixed time rate. Adult women who since the war have transferred
temporarily from depressed trades to those which are booming are
often for the purposes of the Act classed as " learners " and
employers need only pay them according to the learners' scale
of wages, e.g., a woman over 21 years of age who before the war
earned 15s. per week as a bookbinder, transferred in December last
from her own trade which was slack, to tailoring, in which there was
a great demand for women's labour. She was engaged in a process
of " finishing," known as " cleaning " an unskilled process in which
the necessary rapidity could be attained in about two days. For
this an ordinary worker should have been paid for a fifty-five hour
week at least 14s. lOfd. Her employer, however, obtained a
learner's certificate in respect of her from the Office of Trade Boards,
and after paying her on the learner's scale, i.e., 7s. 5d. per week, for
eleven weeks, dismissed her as the volume of Government orders
had decreased, and she was no longer needed. In another case a
Government contractor sub-contracted a large proportion of his
contracts to small workshops at a rate which made it impossible for
the sub-contractors to pay fair rates to their workpeople. Under
the Trade Boards Act it was impossible to prosecute the contractor.
These two cases are typical of many.
VI. THE WOMAN WORKER AFTER THE WAR
Forecasting is usually most unsatisfactory, and in the present
stage of transition would largely resolve itself into guesswork.
Extremely interesting developments of women's employment are
likely to occur within the next few months, but as yet they are
92 CREDIT, INDUSTRY, AND THE WAR
little more than in their incipient stages and it is not the business
of this Report to anticipate their results.
Attitude of Employers to Men Returning after the War. It has
been, however, interesting to gather from employers their ideas as
to the policy they intend to pursue after the war with regard to the
men who will return. Much will depend upon the industrial and
economic position and the rate of discharge from the Army. We
have found that employers almost unanimously state that it is their
intention to take back those of their former employees who return,
not necessarily in their former positions, but at any rate in positions
not inferior to those which they left, and in many cases definite
promises have been given. In some cases e.g., the railways
the men have been promised to be taken back not only in their
former positions, but in those to which they would in the natural
course of things have been promoted. The change of taste and
outlook will be a factor which after the war is likely to discourage
some men from returning to their old positions. One large retail
drapery store from which many men went during the South African
war states that of those who returned to England only 6 per cent,
wished to return to their former occupations. The problem then
was, of course, insignificant compared with the present, and the
instance given merely illustrates a factor which many employers
feel will prevent a considerable number of men from returning to the
workshop and bench and especially to the office.
In some cases, of course, the experience gained during the war
has shown that certain jobs, e.g., lift attendants, can be as efficiently
done by women as by men. In such cases employers intend
either to take back the men who return, and as they are promoted
or fall out of industrial life, to substitute women in their places,
or else to offer better jobs to the men and keep on the women.
It is probable that when girls have replaced boys in blind-alley
occupations they are likely permanently to remain, as they have
proved in most cases more efficient and reliable and are likely
to remain longer.
Attitude to Employment of Women after the War. With regard to
the women the problem appears to have been very little considered,
most employers treating the extra employment of women as a purely
temporary measure to be dropped on the conclusion of war. When
friction has occurred with the Trade Unions with regard to the
OUTLETS FOR LABOUR AFTER THE WAR 93
replacement of men by women, an agreement has generally been
arrived at in which the employer has promised to take on women
for the duration of the war only. The general attitude to the
women, therefore, is that at the end of the war they will be
dispensed with.
It has before been noted in this Report that, so far as the present
position is concerned, women in industry proper have for the most
part had previous industrial experience. They have either come
from trades which are depressed owing to the war, or from other
branches of the same trade in which work was slack, or they are in
a few cases married women who have returned to the trade, or
else belong to the fringe of casual labour with which too many
industries are badly embroidered in times of peace. Those who
have been drawn from other industries will no doubt return as
their trades revive, and the others will return to their normal
occupations. In non-industrial occupations, with the exception
of railways, a large number of the women are likely to continue
working after the war.
Permanent Increase of Women's Labour after the War. The great
increase of women's employment can hardly fail to have permanent
results, especially in non-industrial occupations such as clerical
work and the retail distributive trades, where for many years a
considerable increase of women's employment has occurred, these
trades being peculiarly suitable for the further employment of
women. It will probably persist in those manufactures where the
processes are minutely subdivided and repetition work predominates.
The newly built munition factories which are staffed by women
may continue to be so staffed, if it is possible after the war to
manufacture in these factories some product other than munitions.
Where female labour is either underpaid or is obviously superior
to male labour, a special inducement offers itself to employers to
retain the women, and no doubt this will result in a number of
the women remaining in industries after the war.
We may, therefore, anticipate that after the war the proportion
of women in industry will be greater than before and the competition
between men and women will increase. In order to minimise
the bad effects which may result, the following measures suggest
themselves
1. The extensive emigration of women. At the close of the war
94 CREDIT, INDUSTRY, AND THE WAR
a considerable proportion of the men discharged from the Army
will have acquired a taste for an open-air life, and may prefer the
prospects offered by land settlement schemes. Unless, therefore,
the respective sexes are to be distributed over the Empire even
more unevenly than at present, steps should be taken to ensure
the emigration of women in something like the same proportion
as that of men.
2. The better technical training of both boys and girls. There
seems little danger of a superabundance of highly skilled labour.
It is the experience of all trades that, except in processes which have
been superseded, the supply of highly skilled workers is usually
less than the demand. If the material wastage of the war is to be
repaired, the need of the country for skilled workers will be even
greater in the future than in the past. There are signs that the
Trade Unions are entering upon a policy of preventing the under-
cutting of men by women rather by regulating women's wages than
by excluding them entirely from the more skilled processes. The
highly paid skilled workers as a class are not likely to be detriment-
ally affected by the augmentation of their numbers, whether the
recruits come from one sex or both. It is the almost inexhaustible
reserve of cheap unskilled or semi-skilled labour which is their real
danger.
3. An extension of the policy of equal pay for equal work, and, as
a corollary, a minimum wage for unskilled labour both male and
female. This policy (which could be most effectively enforced by
organised labour itself) should be so framed as to prevent the
employment of unskilled labour from being more profitable than
skilled labour in those forms of production in which they can be
alternatively employed, e.g., engineering. It may be desirable also
to give further powers under the Trade Boards Act, and to extend it.
4. A careful reconsideration of the half-time system.
5. The withdrawal of widows with young children from the
labour market by the institution of an adequate pension scheme,
at the same time introducing further restrictions with regard to
home work.
STATISTICS
Appended are three tables. Tables I and II show the state of
employment for industry as a whole at various dates from July to
OUTLETS FOR LABOUR AFTER THE WAR
95
February compared with employment in July, 1914. Table III
shows the state of employment for those industries most affecting
women's labour. The tables are prepared from three Reports on
the State of Employment in the United Kingdom issued by the
Board of Trade, 1 which form the best available records of the
economic effects of the war on employment. The first (Cd. 7703)
deals with the situation up to mid-October, 1914 ; the second
(Cd. 7755) states the facts for December ; and the third (Cd. 7850)
is based upon an inquiry in the middle of February, 1915. There
all information, as far as the public is concerned, stops short, though
comprehensive inquiries are still taking place. In these official
Reports little information is given with regard to non-industrial
occupations such as railways, docks, shipping, the carrying trade,
agriculture, clerks, and distributive trades ; nor is information
included with reference to Government employment in Woolwich
Arsenal or elsewhere, which has expanded considerably during the
TABLE I
State of Employment at various dates since the Outbreak of War compared with
State of Employment in July, 1914.
((Numbers employed in July = 100.]
MALES.
FEMALES.
Sept.
1914.
Oct.
1914.
Dec.
1914.
Feb.
1915.
Sept.
1914.
Oct.
1914.
Dec.
1914.
Feb.
1915.
Normal time ....
Overtime
Short time ....
60-2
3-6
26-0
66-8
5-2
17-3
65-8
12-8
10-5
68-4
13-8
6-0
53-5
2-1
36-0
61-9
5-9
26-0
66-6
10-8
19-4
75-0
10-9
12-6
Total numbers employed .
Contraction of employment
Known by employers to
have joined the Forces.
Net displacement ( - ) )
or replacement ( + ) J
89-8
89-3
89-1
88-2
91-6
93-8
96-8
98-5
10-2
10-7
10-9
11-8
8-4
6-2
3-2
1-5
8-8
-1-4
10-6
-0-1
13-3
+ 2-4
15-4
+ 3-6
-8-4
-6-2
-3-2
-1-5
1 See article " The Effect of the War on Industry," by W. T. Layton, in
Quarterly Review, No. 442. Three articles on " The Influence of the War on
Employment," by H. D. Henderson, in Economic Journal, December, 1914,
and March and June, 1915, are also interesting contributions to the subject.
8 A + (here and in Table II) indicates the extent to which any industry
has been compelled to draw in new employees.
96
CREDIT, INDUSTRY, AND THE WAR
war. The October return covered 66 per cent, of the workpeople
employed in large firms in industrial occupations and 10 per cent,
of those in small firms. The December Report was based upon
returns received from 23,000 industrial firms employing about
4,000,000 workpeople, or 43 per cent, of the industrial population,
and the February return was even more comprehensive. The
quality of the material thus provided is much superior to that upon
which official unemployment returns are generally based, and it is
to be regretted that no Reports have been published since last
February, but it is to be hoped that later, the full Reports will be
made available to those who wish to have access to these invaluable
records of the economic state of the country during the war.
It is interesting to check the results in Table I with those obtained
by Mr. Martin Holland in a unique return 1 from the whole of the
Banks of England and Wales which throws considerable light on the
movement of employment and wages during the first eight months
of the war. Each bank computed the total of the cheques drawn
for payment of wages in selected weeks. The following are the
results
Week ending
Total of Wage
Cheques in England
and Wales.
The same expressed as
percentages of the
amount on July 27-
Aug. 1, 1914.
August 1, 1914
9,358,204
ioo
August 29, 1914
7,516,139
80-3
October 3, 1914
8,139,789
87-0
October 31, 1914
8,468,875
90-2
November 28, 1914
8,346,633
89-1
December 19, 1914
8,484,123
90-2
January 30, 1915
8,931,468
95-4
February 27, 1915
9,054,251
96-8
March 27, 1915.
9,071,721
97-0
When allowance is made for the excess of short time in September
and October and of overtime in December and February and for
a slight rise in wages early in 1915, it is seen that the employment
and the banking statistics are quite consistent with each other.
1 Royal Statistical Society Journal, July, 1915.
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TABLE IV
The following table shows the number of males and females in England and
Wales engaged in non-industrial occupations in 1911
Mpn
w omen .
1YJ.CIJU
General or Local Government
50,975
248,624
National .......
31,538
140,814
Local .......
19,437
107,810
Professions
347,048
355,307
Clerical (Religious) . . .
14,215
52,358
Legal
2,159
55,486
Medical
87,699
38,313
Teaching .......
187,283
76,428
Literary, Scientific, and Political .
5,689
25,499
49,998
107,223
Domestic and Institutional Service .
1,734,040
387,677
Domestic Indoor Service in Hotels, Lodging
and Eating Houses ....
63,368
12,226
Other Domestic Indoor Servants
1,271,990
42,034
Domestic Outdoor Service
104
226,266
Other Service
Hospital, Institution, and Benevolent Society
41,639
17,394
Day Girls, Day Servants ....
24,001
Charwomen ......
126,061
Laundry Workers .....
167,052
12,464
Others
39,825
77,293
Commercial Occupations ....
126,847
663,316
Merchants, Agents, Accountants .
4,301
164,450
Commercial or Business Clerks
117,057
360,478
Dealers in Money : Insurance
5,489
138,388
Transport
24,474
1,399,394
On Railways ......
2,636
397,990
On Roads
2,821
471,994
On Seas, Rivers, and Canals
1,038
132,195
In Docks, Harbours, etc. ....
23
123,022
In Storage, Porterage, and Messages
17,956
274,193
Agriculture .......
94,722
1,140,515
Farmers, Graziers, Farm Workers
90,128
971,708
Gardeners .......
4,594
168,807
Totals ......
? 378 101
4,194,833
Without Specified Occupations or Unoccupied .
10,026,379
2,208,535
Retired (not Army or Navy) Pensioners
87,894
422,213
Private Means
295,712
52,432
Others aged 10 years and upwards (including
Scholars and Students) ....
9,642,773
1,733,890
Totals
12,404,480
6,403,368
100 CREDIT, INDUSTRY, AND THE WAR
DETAILED REPORTS ON TRADES
In the following Reports on separate trades no attempt is made to
be exhaustive, since in any case that is not possible under present
conditions, and the amount of information that we have been able
to obtain differs considerably as between different trades. Some
details are, however, given in each case of the position of each
trade owing to the war, and of the nature of the increased employ-
ment of women, especially with reference to those processes in
which they have replaced or are likely to replace men.
The Report on the Metals and Engineering group was mainly
drawn up from information received from the Birmingham district.
The Leather and Tailoring Reports will be found interesting from
the fact that they are trades into which women have been drawn
in large numbers, but in which there does not appear to have been
any considerable displacement of men by women. A Report on
the Cotton trade is included mainly to show the effect of this
trade upon the general figures for women's employment.
Reports on the possibilities of replacing men by women would
not be complete without some mention of trades which, though
depressed since the outbreak of war, offer scope for the further
employment of women. Accounts of the Printing and Pottery
trades are therefore given. Reports on non-industrial occupations
distributive trades, clerical work in banks and other offices,
railway work and transport, and Government employment are
also included. Owing to the complicated nature of the question
it has been thought inadvisable in the few weeks at our disposal
to attempt any inquiry into Agriculture, although this occupation
offers a number of interesting examples of replacement.
DISTRIBUTIVE TRADES
The retail distributive trades offer peculiar scope for the further
employment of women, and since the outbreak of war the increase
of women's employment has been more general in these than in most
other trades and occupations. In the majority of firms this increase
would have been larger but for the fact that there has been a diminu-
tion of trade, especially in those shops dealing in better-class goods ;
shops catering for a lower grade of goods have been comparatively
OUTLETS FOR LABOUR AFTER THE WAR' lOl
busy. The replacement of male by female labour in these trades
is no new phenomenon, as is shown by the following table, but the
shortage of male labour owing to the war has accelerated the process
to a considerable degree.
At present the majority of employers consider their data and
experience too inadequate to express final opinions as to the effects
of the introduction or increase of women's labour.
Nature of Increase of Women's Work. Since the war, women have
replaced men and youths as saleswomen in all those lines where it
has been customary for women as well as men to be employed,
e.g., stationery, toilet requisites, and prepared drugs. They have
also entered, both as saleswomen and as shopwalkers, and in
isolated cases as buyers, into those branches which have in the past
been regarded for the most part, and especially in larger shops, as
men's monopoly, such as grocery, provisions, fruit and greengrocery,
chintz, etc., heavy fabrics, men's hosiery, and hardware (light
articles only) . Women are now employed in practically every type
of shop and warehouse except where the work is too heavy, e.g.,
ironmongery and Manchester departments of drapery stores ; or
highly technical, e.g., scientific instrument shops. Women have
made their first appearance as commissionaires and time-keepers,
as lift-girls, and in the packing departments in sorting, checking,
packing, and putting up orders, as well as in the dispatch depart-
ments. Some firms have appointed women on their administrative
staffs, but rarely are women given positions of responsibility over
men. Women are appearing for the first time on delivery vans,
both horse and motor, as cycle-carriers, and as milk-vendors.
Girls and young women have been employed in hundreds in place
of boys for newspaper delivery and at railway bookstalls. In those
branches of these trades in which the work is rough, such as dairy
work and heavy van driving, the extra women who have been
drawn in since the war have come from factories, domestic service,
laundries, and other occupations where the work is heavy or
unpopular or wages comparatively low. For the lighter work the
women who have come in have either been in business before,
generally in occupations in which there has been a contraction in
employment owing to the war, e.g., dressmakers and milliners and
light luxury trades generally ; or they are women from compara-
tively well-to-do families hit by the war ; or girls of 15 to 18 years
T.
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OUTLETS FOR LABOUR AFTER THE WAR 103
of age mostly from secondary schools. In comparatively few cases
are married women quoted as returning.
Various estimates ranging from 50 to 100 per cent, are given as to
the amount of increase of women's labour in these trades. The
Trade Unions concerned anticipate a continued increase in women's
employment, and point to the grocery trade, where already the
numbers have doubled. It has been found impossible to obtain
sufficient information in statistical form to be able to quote figures.
Amongst a number of employers there is still a considerable
reluctance to engage women on work previously done by men. Some
of them prefer to run their businesses with insufficient staff rather
than take on women. The reasons stated for this reluctance are :
(a) Women are untrained. The male employees lost were to a
large extent skilled men, and their places cannot be taken by men
or women without the necessary technical experience. This was
stated to be the case by certain firms dealing in jewellery, iron-
mongery, furniture, books, and drugs. The normal recruiting to the
trade in the case of male labour is by boys and youths who are
promoted as they prove efficient.
(6) It is not worth training women, as many of them are not likely
to remain in the trade. It is stated that the possibility of marriage
causes her attitude to her work to be less stable than the attitude
of the men. Uncertainty as to the duration of the war also
influences employers in this respect.
(c) The work is too heavy or dirty, e.g., in furniture and piano
shops and the meat and fishmongery departments of general stores.
In the heavy departments of drapery firms employers are appor-
tioning the heavier work to the men and the lighter to the women.
A firm employing women in its dispatch and packing departments
has arranged that only men shall transfer cases to the warehouse.
Some dairies with many branches have had to reduce the number of
calls for women on milk rounds, giving a few extra to each man.
A firm employing women at the fish and meat counters does not ask
them to prepare and clean the fish.
(d) As staying power is essential even when actual physical
strength is not, women are not found capable of so large an output
as men. This was the view expressed by 85 per cent, of the
employers visited, some quoting comparative figures. Thus, a
large provision merchant uses three women for two men's work,
(14*8)
104 CREDIT, INDUSTRY, AND THE WAR
a dairy has had to put in two women where one man sufficed, and
has had to reduce the number of calls in the women's rounds ; a
general store and a hardware firm put the value of a trained woman
at 75 per cent, of that of a man. Many employers allow that
output is, to a large extent, a matter of training and practice, but
in spite of this they consider women of less efficiency than men
when tested by output or staying power, the cause being partly
physical and partly psychological. Men generally enter these
trades as boys, and the trades are " picked up." Definite schemes
of training are almost non-existent save in very large stores, where
lectures are sometimes given. The London County Council Higher
Education Committee has started a scheme for training women in
the grocery trade, but it is premature to attempt an analysis of the
results. Employers prefer " experience " to " lectures." Men
acquire experience and knowledge over a period of years, and it is
obvious that adult men or women from other trades find it extremely
difficult to compete with, or to do the work of, those having years'
experience of the trade. Men enter the grocery trade as boys of
fourteen, in circulating libraries they enter at the same age, and
" it takes years to produce a good salesman of fabrics." Obviously
adult women are heavily handicapped under such conditions.
(e) Though painstaking, women do not possess initiative in the
same degree as men, and often they lack interest in their work.
A few employers absolutely deny this.
In spite of these objections women have for some years past been
entering these trades in increased numbers, as shown in Table A,
and while a majority of employers maintain reasoned objections
to women's employment, such as physical disabilities and the
probability of their withdrawal from the trade on marriage, a minor-
ity are no doubt largely influenced by the custom of the trade in
regard to their employment. When asked : " If you could get men
would you employ them in preference to the extra women that you
have taken on ? " 50 per cent, of employers stated " No " ; 28
per cent, said " Yes " ; and 22 per cent, were doubtful. Patriotic
as well as economic motives, however, largely influenced these
replies. Employers are generally very cautious in taking on
women for new work, and in few cases, so far as could be discovered,
had experiments proved failures. Trade Union opinion agrees that
women's efficiency is lessened by (1) physical strength, (2) marriage,
OUTLETS FOR LABOUR AFTER THE WAR 105
though obviously the former depends very much upon the kind of
work done.
One particular job in a shop generally consists of several processes,
some light and some heavy, some skilled and some less skilled.
Obviously there is difficulty in introducing untrained men or women
into such a system unless reorganisation and subdivision of work
are effected. This apparently has been very rarely done.
From the report of one large firm, where great and marked success
and enterprise render the opinion of its manager valuable, it appears
that such reorganisation and subdivision of labour are advantageous.
He says that, thanks to careful subdivision prior to the war, he
has not found it necessary to put on more women to do the work
of men ; that the majority of the women with some experience
are capable of the same work, and can, therefore, earn the same pay.
For example, the women commissionaires and lift attendants were
not expected to put up shutters and scrub out lifts ; the delivery
men had no cleaning or repairing of their vans to do ; and in the
provision department the salesmen whom the women replaced were
doing no heavier work than a woman is capable of doing. A con-
siderable subdivision of work is, however, less possible in small
shops than in large stores. One employer, who was typical of many,
when questioned on this point, replied that " Such subdivision is
more arduous than manipulating the pieces at a game of chess/'
The reluctance of some employers to reorganise their businesses on
these methods has made the task of taking on women and releasing
men more difficult.
Wages. The question of wages is a difficult one. Only in very
exceptional cases can piece rates be paid. Throughout these
trades time rates are the rule, though commissions are often earned
in addition to fixed wages. It is obvious from all reports that, with
very few exceptions, women's wages are less than the wages of men.
This is due to :
(a) A difference in the work done by men and women. Very
few women are said to be doing exactly the same work as that
previously done by the men replaced.
(b) The smaller output of the women who have replaced men
and the probable lack of continuity of their work.
(c) Social and personal factors. Women ask and are paid less
wages. Custom also plays a considerable part.
106 CREDIT, INDUSTRY, AND THE WAR
As women are for the most part untrained and are often doing the
work of boys and youths, and rarely the full work of men, it is
difficult to prepare any comparative table of wages. One can
give only a few examples.
One chemist employing dispensers states that women get the
same wages as men, or even more if they are more skilled. The
question is entirely one of skill.
A firm employing women instead of boys and youths as messengers
and lift attendants pays them 10s. to 15s., where youths, after some
experience, got 12s. 6d. to 18s. and two meals.
A jeweller employing casual labour to clean silver paid a woman
15s. where a man would have got 30s., though she was acknowledged
to be as good.
A dairy is paying women on milk rounds 19s. 9d. where men got
25s. The number of calls is, however, reduced. Another dairy
is paying a woman 16s. a week for washing cans where a man got
26s. In this case, however, two women are employed to do the
work of one man. In the majority of cases three women seem to
do the work of two men.
In the grocery trade three-quarters of the men's wages is felt
to be as much as can be asked for by a section of those interested
in the question of women's wages.
Many of the wages at present fixed are to a large extent experi-
mental, and they differ very much between different firms and
districts. The Trade Union concerned, though in theory in favour
of equal pay for equal work, does not endeavour to secure equal
pay. It tries to secure three-quarters of the men's pay for women
everywhere except in London, where the demand is four-fifths.
It is stated that the best shops pay men more than the minimum
demanded, while few pay the women as much. In the second grade
shops men are, for the most part, paid the minimum, but very few
women attain it . Still a large number of shops do not pay to women
one-third of the minimum demanded for them by the Union. The
majority of employers state that untrained women's labour is not
cheap labour and that women require more supervision than men.
Since the war their wages bills for the same output have been
heavier than before. One provision firm, having many branches
throughout London and the country, stated that the value of male
labour over female is approximately 30 per cent, on the same wages.
OUTLETS FOR LABOUR AFTER THE WAR 107
Some firms stated that the difference in the wages of trained men
and women is greater than is the difference in their efficiency. They
generally referred to social custom as explaining this discrepancy.
For the most part women shop assistants are unorganised, though
a considerable number have joined a Union since the war.
33' 3 per cent, of employers expressed a belief in equal pay for
equal work, 27' 7 per cent, stating that they were paying it. As
the character of most of the work prevents the fixing of piece-rates,
the employers' opinion alone can fix the question of equal work.
One states that he pays " according to the man's or woman's
capacity," another that he believes in equal pay " where the
women do the same work and the same amount without
supervision."
Of those who do not believe in equal pay for equal work 50 per
cent, say women ask for less and get less, and 50 per cent, that "being
women " or " having only themselves to support," they get less.
All employers visited say they are ready to take back their men
when and if they return. They do not, however, expect this
problem to be a serious one. Youths in many cases are now doing
the work previously done by men, and women have taken the
boys' places. Where women have taken the place of boys and
youths, e.g., on lifts, they are likely to remain. The opinion is
often expressed that many of the men who return will not wish
to return to a sedentary life. One large drapery firm instanced that
after the South African War only 6 per cent, of their men wished to
return. Many employers think that women will not wish to remain
at rough, outdoor work such as milk delivery and van-driving,
especially during the winter months. Many of the women them-
selves, and especially those from better class families, regard their
entry into the trade as a temporary one, though, on the other hand,
women from occupations such as domestic service and factory
workers intend if possible to remain. Many of the women intro-
duced are young and are now learning the trade and are not likely
to wish to leave it. The majority of employers seem, even reluc-
tantly, to have accepted the fact of the further entry of women into
these trades and they are now experimenting and testing. They
are unwilling yet to give final opinions, and the above inadequate
statement of the problem reflects generally the views of the trade.
It is difficult to draw definite conclusions from information which
108 CREDIT, INDUSTRY, AND THE WAR
cannot fully be produced in statistical form, but the following
general remarks are suggested by the foregoing evidence :
(1) The replacement of men by women has occurred to a larger
extent in the distributive trades, and especially in grocery, than in
most other trades and occupations. Practically the only limitations
to women's employability in these trades have been in work
requiring physical strength or technical knowledge.
(2) The movement of labour into these trades has been from
trades which are depressed owing to the war, such as millinery,
dressmaking, and luxury trades generally. Girls from 15 to 18
years of age, mostly from secondary schools, and women from com-
paratively well-to-do families hit by the war, have also been
absorbed to a considerable extent. The movement into the heavier
branches of the trades has been largely from lower-paid or less
attractive occupations, such as some kind of factory-work, domestic
service, and laundry work. In few cases have married women
returned.
(3) In the opinion of the majority of employers, the actual value
of a woman as a worker is about 30 per cent, below that of an average
man employed in the same capacity, the difference being due partly
to physical strength and partly to incapacity of continued employ-
ment because of marriage.
(4) A minority of employers, however, finds that, with improved
organisation and greater subdivision of processes, many places can
be found for women in which their economic value is equal to that
of an average man.
(5) The actual wages of women tend to be lower in proportion to
those of men employed in similar capacities than would be justified
even by a less favourable estimate of their economic value. This
discrepancy appears to be due to custom and to the inferior economic
status of women as workers.
RAILWAYS
1901 Board of Trade Returns Total (Men and Women) = 575,834
1913 Total =643,135
= 11*6 increase per cent.
1901 Census, Women = 1,411. 1911 Census, Women = 2,636
= 86*8 increase per cent.
Prefatory Note. Since this Report was written an agreement
has been reached between the railway companies of Great Britain
OUTLETS FOR LABOUR AFTER THE WAR 109
and the National Union of Railwaymen, to take effect as from
16th August, 1915, in regard to the rates of wages paid to men.
This agreement is as follows :
" An assurance was asked for and given that the employment of
women in capacities in which they had not formerly been employed
was an emergency provision arising out of the circumstances created
by the war and would not prejudice in any way any undertaking
given by the companies as to the employment of men, who had joined
the colours, on the conclusion of the war.
" It was agreed that the employment of women during the war
in capacities in which they had not been previously employed is an
emergency arising entirely out of the war, and is without prejudice
to the general question of the employment of women.
" The pay of women employed in grades in which they were
not employed prior to August, 1914, shall, for the duration of the
war, be the minimum pay of the grade."
Its application, therefore, is to women employees on the operative
staff only (and not the clerical staff) and includes :
Ticket collectors and examiners, messengers, halt and platform
attendants, office porters, pneumatic tube attendants, checkers,
shippers, weighbridge clerks, time-keepers and carriage cleaners.
In respect of carriage cleaners, as in the case of one or two other
occupations, e.g., ticket collectors and halt attendants, women were
employed in these capacities in small numbers, and on certain
railways prior to the war, but their employment was so excep-
tional, that for the purposes of this agreement it was decided to
regard them as occupations new to women. It follows from this
arrangement that women are henceforth liable to the same hours of
work as the men and the same conditions of service, so that if, for
instance, it seems convenient and desirable to put women carriage
cleaners on the outside work, there is no technical reason which can
be urged against their being so employed.
Many of the remarks made in this Report on the question of
women's wages and hours of work are consequently rendered inap-
plicable at the present moment. It has not, however, been thought
desirable to exclude or modify these remarks, and for this reason.
The agreement with regard to women's rates, just as the employment
of women in capacities new to them, is clearly understood to be an
emergency provision, arising out of the circumstances of the war,
110 CREDIT, INDUSTRY, AND THE WAR
and forms no precedent whatever. This understanding applies
equally to their hours of work.
The position, therefore, is this : if women prove themselves
capable of performing equal service with men under equal conditions
of work, then the case against their employment on the railways
falls to the ground and they cannot be excluded. Further, instead
of remaining content with the present agreement to pay the mini-
mum rate of the grade occupied, they will be justified in demanding
the increases customary in the men's scale. If, on the other hand
and this seems to be the more likely event they prove unequal
to the demands made on their physical powers and general ability
to cope with the work, then the question of their partial employment,
with shorter hours and lighter work, may come up for reconsidera-
tion. In the former case no argument is possible, but in the latter
there are advantages and disadvantages to be weighed, and it is
because some attempt has been made to review these that this
Report is left in its present form. The experiment that is now to
be tried of giving women equal work and equal wages is one of
great interest. It remains for experience to throw light upon
various important questions, as, for instance, whether the wages
bill will increase, whether women possess unsuspected abilities for
this kind of work and will justify the consideration of their perma-
nent employment in the new posts. But, it is necessary to repeat, if
it should happen that women do not realise the highest expectations,
that will not in itself justify the total exclusion of them from these
branches of the service. If we should be faced with a shortage of
men after the war, a subdivision of labour, by which women do
some of the easier work, with shorter hours and lighter responsi-
bilities, may well prove to be a desirable and necessary step. And
in that case it seems worth while to state the conclusions reached
in this Report with regard to wages and hours, even though not
applicable in the present conditions, because at first sight the appa-
rent injustice of a lower scale of pay for women is likely to be
misleading, unless the actual character and value of the services
which women can perform in these new branches are carefully
weighed.
For these reasons the Report is left in its present form, with the
understanding that the new agreement temporarily suspends the
conditions as to wages and hours here represented, and with the
OUTLETS FOR LABOUR AFTER THE WAR 111
hope that the agreement, when put into practice, will shed some
light on the always difficult question as to how far women are
capable of giving service of precisely equal value with men.
Outdoor Staff. It seems to be not generally understood that the
increase in the employment of women on the railways has arisen
entirely out of the emergency created by the war. The companies
have encouraged enlistment among their employees, provided due
notice of their intention is given, and in consequence a steady flow
of recruits has been maintained, the total enlisted from the railways
up to the present time being estimated at 89,000 to 90,000, or about
14 per cent., at which point it is thought the margin of possibility
has nearly been reached. Enlistment among those engaged in the
manipulation of traffic, though less than in other branches, has been
sufficient to demand the introduction of women into new branches.
The demand up till now has varied considerably with the different
railways ; in one company 263 extra women have been taken on, in
another 170, but in others much smaller numbers.
The grades chiefly affected are those of carriage cleaners, ticket
collectors, and checkers. On 31st December, 1913, there were
305,000 men engaged in the manipulation of traffic, of whom carriage
cleaners = 6,531 ; ticket-collectors = 3,741. The number of
women on the railways is returned in the 1911 census as 2,636,
of whom 1,120 were clerks, etc., and 1,156 were " other railway
servants." Women are also being employed experimentally in
smaller numbers as messengers, weighbridge clerks, timekeepers,
invoice checkers, office porters, and hall attendants, and by one
company at least as dining car attendants. The increased employ-
ment of women in the offices is considered separately. The employ-
ment of women as carriage cleaners dates from some two years back,
but though their work as such compares very favourably with that
of men in quality, it appears still to be an open question whether
this will be a permanent occupation for women. Hitherto they
have worked an 8-hour day, against the men's day of 10 hours.
The quality of their work is in some respects superior to that of
men, but in quantity it is relatively less. Some companies state
that they have to employ a proportion of three women to two men,
or of six to five, to get the same amount of work. Piecework
records show that women will generally earn 10 per cent, less than
men on the same work. There are the further objections that women
112 CREDIT, INDUSTRY, AND THE WAR
are not so well fitted to do the outside, but only the inside cleaning ;
that it is generally necessary to have platform or siding accommoda-
tion for the cleaning of carriages, as it is regarded as undesirable
and dangerous to have women cleaning carriages on the permanent
way. Nevertheless the war has given a considerable impulse to the
employment of women as carriage cleaners one company has taken
on 140 additional women, which is one-sixth of its total of male
carriage cleaners employed before the war, and they are likely to
continue this occupation for some time to come. The effect of the
new agreement in regard to hours, introducing a 60-hour week for
women (as compared with 47 hours in 1913, increased more recently
to 48), must remain as yet uncertain, but it is likely that, though
their work may continue to be satisfactory, the women themselves
may at the end of the war demand a return to the status quo.
The introduction of women ticket collectors and checkers, on the
other hand, is almost entirely a new departure, their total in the
census of 1911 being returned as 19. Now one company alone has
78, which is just under one-sixth of the total of men so employed
before the war. Three companies had recently a total of 169 women
ticket collectors. One fact which has facilitated the introduction
of women with little or no previous training, is the suspension of
cheap bookings and excursion tickets, simplifying the work as
compared with a normal summer season to a very appreciable
extent.
It is still early to form a judgment as to the suitability of ticket
collecting as a permanent occupation for women, and it is made
more difficult by the fact that existing conditions are not normal.
Thus doubt is generally expressed whether in normal times an equal
number of women ticket collectors would be sufficient to cope with
the work formerly done by men. One railway company at least,
it is true, has followed the policy of substituting one woman for
each man gone, and finds the work is satisfactorily performed
women working one hour less at main stations. Another company,
on the other hand, has substituted three shifts of women for two of
men, and proposes to continue this arrangement for the present.
Prior to the new agreement, women were working shorter hours
than men at main stations at Paddington, for instance, they
worked one hour per day less and it remains to be proved whether,
as a permanent arrangement, three shifts of women will not be
OUTLETS FOR LABOUR AFTER THE WAR 113
necessary, or at least desirable, to do the work of two shifts of men.
In the first instance they were not employed, generally speaking,
before 7 a.m. or after 9 p.m., whereas men are liable to duty between
the hours of 5 a.m. and 1 a.m., but it was soon recognised as impro-
bable, if not impossible, that this distinction could be permanently
maintained. Even when the system of three shifts of women for
two shifts of men is accepted, it still remains doubtful whether
equal efficiency is obtained, and it is clear that, apart from the
demand for men for war service, the companies are not yet converted
to any change of policy and, for the present at any rate,
generally prefer men ticket collectors to women.
The chief objections to the employment of women ticket collectors
are:
1. The limitations to their sphere of activity.
2. Their comparative inability to deal with extra or sudden
pressure or with the rougher classes of passenger traffic.
These two disabilities, in combination, constitute a serious
obstacle ; thus at main stations and junctions, while specialisation
and subdivision of functions render the first objection inoperative,
the second objection is strongly accentuated. At provincial
stations the position reverses itself and it is the first objection
which is operative, while the latter is absent. The provincial
ticket collector often discharges a variety of duties involving con-
siderable training, endurance, and initiative, so that the introduction
of women is regarded as undesirable except where the sphere of
activity is limited to the issuing and collecting of tickets, and such
other light duties as checking, invoicing, and the telegraph.
There are further obstacles in the isolation of outlying offices,
which could not be put in the sole charge of women, as they are
in the case of men, and in the mobile character of the work, which
frequently involves the transferring of workers in the lower grades
from one district to another. It is generally admitted that even
if it were desirable on other grounds, women show themselves less
adaptable than men to such change of surroundings and of routine.
Finally the shorter hours, and the exemption of women from early
and late turns, which the subdivision of work makes possible in the
case of main stations, are obviously impossible in the case of small
provincial stations where a single booking clerk is employed.
Within limits, therefore, the employment of women as ticket
114 CREDIT, INDUSTRY, AND THE WAR
collectors both in main and in provincial stations appears to be prac-
ticable, but it is not capable of indefinite extension and is further
complicated by the question of early training, which would have to
be much more seriously considered if the employment of women
were regarded in the light of a permanent change instead of, as now,
a purely emergency measure. Because it is an emergency measure
and because of the abnormal condition of traffic, the unusual pro-
cedure of introducing women without training can be justified.
Normally, the ticket collectors are recruited from the porters, and
the direct introduction of men or youths from outside the railway
service for such duties is a quite exceptional occurrence, though one
railway company apparently follows this method and recruits only
a very small percentage of its ticket collectors from among its
porters. In consequence a newly-appointed collector has, as a
general rule, three or four years' varied experience behind him, which
has a considerable practical application to his new routine. But
in view of the strong expression of opinion against the permanent
employment of women as porters, it is difficult to see how women
can receive any such practical training for the duties of ticket
collecting. In any case the balance of advantage must always rest
with the men, because it would be unsuitable for women to enter
the railway service on the operative side (as contrasted with the
clerical) at as early an age as men.
Of the men's attitude towards the question, different accounts are
given. The position of the ticket collector is a popular one, being
regarded on the one hand as a " soft "job and on the other as the
stepping-stone to the position of guard, inspector, and other res-
ponsible posts. Therefore, in the case of the more unambitious
and conservative men, their attitude is not unlikely to be, and in
some instances is reported to have been, unfavourable. The entry
of women, as one railwayman expressed it, is " forcing " the men to
accept promotion. It is natural to find this opinion reversed in the
case of the more ambitious men, because the employment of women
in the less responsible posts and without any expectation or desire
of promotion, must tend to accelerate the promotion of the men.
The Railwaymen's Union has opposed this division of the work into
skilled and unskilled labour, but so far as the employment of women
is concerned it is difficult to see how this can be otherwise, in view
of the special disabilities of women, the difficulty of training them
OUTLETS FOR LABOUR AFTER THE WAR 115
for posts of responsibility, and the comparative shortness of their
careers in the service.
A second objection raised by the men is that women monopolise
the middle or favourite turns, and the more mechanical part of the
work, while the rougher, harder, and more responsible duties, with
the late evening and early morning turns, are laid on the shoulders
of the men. This objection is not universally applicable, however,
even now, and in any case it is admitted that this distinction could
not be permanently maintained, and it is probable that ultimately
the arrangement would be to employ women during the working
hours of 5 a.m. 1 a.m. in three shifts.
Against the view, freely expressed, in some quarters, that the
entry of women to this branch is a menace to the men's position,
this much may be said, that from the employers' point of view, it
is of vital interest that they should maintain the efficiency of the
men ticket collectors, as being a considerable recruiting ground for
the higher branches of the service, and that the employment of
women in the more mechanical duties of the service can only have
the effect of equipping the men all the better for higher responsi-
bilities. This need of a permanent source of supply of efficient men
renders unlikely any attempt to lower the standard.
In conclusion, it may be mentioned that the great flood of appli-
cations received by the railway companies proves the great
attraction which this new occupation possesses for girls. A large
number, but not all, are daughters or relatives of companies'
servants ; others are stated to have come from restaurant work and
other depressed occupations.
Of the minor experiments, that of the dining car service is the
most important. The G.W.R. is already employing women in this
branch, and no reason is found against extending their employment
to cover the whole service. On the other hand, an unsuccessful
experiment is reported from one of the Northern railways, whose
experience on a trial trip was that women lacked the nerve for
carrying dishes on a moving train. In regard to women platform
porters the experiment is being tried, but not on a large or systematic
scale, and their permanent employment is unlikely ; the objections
which are raised in regard to other branches apply with increased
force to this service. Porters have in some instances been recruited
from among the women carriage cleaners.
116 CREDIT, INDUSTRY, AND THE WAR
Clerical Staff. A considerable extension in the employment of
women has occurred in recent years, and the results have surpassed
expectations. As telegraph clerks and telephonists they have been
employed for years with satisfactory results. As correspondence
clerks their claims have been long established. A more recent
step has been the employment of women in goods and parcels offices,
in the work of invoicing and checking, and in particular as booking
clerks. The establishment of a training school by the L.B. & S.C.R. ,
where girls of 15-16 are given three to four months' training in
these duties, is evidence of the considerable impulse given to the
employment of women in these branches since the war.
Conditions in the railway service are said by Trade Unionists to
have become increasingly favourable to the employment of women
in recent years, since the reduced competition between different
systems has had the effect of making the standard of efficiency re-
quired from the railway clerk less exacting. The objections to their
employment in certain branches, the goods department, parcels
office, weigh office, invoicing, checking, etc., are substantially the
same as in the case of ticket collectors, and in some instances apply
with greater force :
(1) Limitations to women's sphere of activity.
(2) Isolation of railway clerks in outlying offices.
(3) Mobile character of the work, frequently involving transfer-
ence from one district to another.
(4) The difficulty of a practical early training.
(5) Women have the easier work, while men take the night work
and late evening and -early morning turns.
In regard to the limited sphere of women's activity, a point of
special importance is the variety of functions demanded from clerks,
more particularly in smaller stations. They issue tickets, dispatch
luggage and parcels, manage the telegraph, make inquiries for miss-
ing or injured packages, and, most important of all, discharge
certain directive functions in giving orders in the case of trains
delayed, which involve visits to the signal box, goods shed or
shunting yard. Their position being in many instances almost the
equivalent of under station-master, it is obvious that women are
handicapped by their shorter and less thorough experience.
In the case of booking clerks, the great increase in the employment
of women since the war has been greatly facilitated by the suspension
OUTLETS FOR LABOUR AFTER THE WAR
117
of cheap bookings and excursion tickets and the consequent
simplification of the work. It is generally believed that in a normal
season and in a large station, where the system of classifying tickets
is very complicated, women would be unequal to the strain and
difficulty of the work. In small provincial stations the variety of
functions discharged is an obstacle to their employment as booking
clerks ; consequently the permanent employment of women in this
capacity is limited to the easier posts in large stations and wherever
specialisation and subdivision are such that the booking clerk's
work is, in fact, restricted to booking.
Wages. It is a very difficult matter to compare rates of pay
received by men and women in the railway service. Where it is
a clear case of equal work, as in the case of carriage cleaners, the
principle of equal pay has come to be generally accepted by the
companies. The wage paid to carriage cleaners in one company
employing 140 women has taken the following course
MEN.
WOMEN.
Wage.
Hours.
Hourly
Rate.
Wage.
Hours.
Hourly
Rate.
1913 . .
1915 . .
s.
21
21
60
60
d.
4-2
4-2
s.
15
16
47
48
d.
3-98
4-0
War Bonus granted
Men, 3s. Women, 2s.
Piece rate records show that women will generally earn 10 per
cent, less than men on the same work, but having regard to the
shorter hours worked by women and the good quality of their work
in this service, it seems probable that their net efficiency is little if
any less than that of men. Another company pays its women
carriage cleaners 18s. a week, where men formerly received 1.
See appended Table of particular instances of comparative rates
paid to men and women :
Carriage Cleaning
Men. Women.
(1) 30s. compared with . . . 21s.
(2) 21s. for 47 hour week plus piece- 16s. plus War Bonus of 2s. for the
rates, yielding in total up to normal 47-hour week, no over-
about 32s. for a 60-hour week. time allowed.
118 CREDIT, INDUSTRY, AND THE WAR
Men Women.
(3) 21s. 6d. plus War Bonus 3s. = 18s. plus War Bonus 2s. = 20s.
24s. 6d.
(4) 20s. 6d. plus War Bonus 3s. = 18s. plus War Bonus 2s. = 20s. for
23s. 6d. for 1st six months. 60-hour week.
By agreement 21s. 6d. and War
Bonus for 2nd six months =
24s. 6d.
(5) 18s. for 10-hour day plus over- 16s. per 9-hour day with no night
time (at rate of time and a work and less hours on Sunday,
quarter) plus night work. No overtime.
1915. August 23. Agreement reached in all Companies that for the
duration of the War, women cleaners should receive the same wage as men
and work the same hours. [Prefatory Note.]
Traffic Department. The basis generally adopted in the case of
women ticket collectors has been to pay them 3s. a week less than
the scheduled rate for the position. Thus on one system women
are receiving 24s. instead of the men's rate of 27s. ; on another,
20s. instead of 23s. Seeing that women are appointed direct to the
post without previous training, whereas men graduate from lower
grades, this was regarded as a fair and liberal arrangement, and the
experience has been that women are only too ready to come in on
these terms.
From what has already been said on the subdivision of labour
among women and men ticket collectors, it is clear that the value
of women's work is less than that of men and that this difference
in the rate of wage no more than expresses the superior training of
the men, and the more arduous, difficult, and responsible nature of
the men collectors' work.
The danger of undercutting, which is being urged in some
quarters, does not appear to be very serious in view of the importance
to the companies, fully recognised, of the efficiency of the men
ticket collectors, as being the chief source of supply for the more
responsible posts of the service, in consequence of which any attempt
to level down this branch of service to the plane of semi-skilled or
lower grade labour would be suicidal.
Ticket Collecting-
Men.
(\\ 23s
Women.
20s.
(T\ 27s
24s.
(3) 23s
18s. plus 2s. War Bonus.
(4) 25s. minimum \ phls War B omis 3s.
28s. maximum f F
(5) 23s. plus War Bonus 3s. .
(6) 25s. plus War Bonus 3s. .
22s. no Bonus.
20s. plus 2s. War Bonus.
20s.
OUTLETS FOR LABOUR AFTER THE WAR 119
The fact that a woman will remain a comparatively short time
in the service makes the woman a bad investment to the employer,
in compensation for which he keeps her rate of pay, generally
speaking, practically unchanged during the last five or six years of
service ; the woman, on the other hand, is sometimes compensated
for the lack of prospects and less training than men, by a relatively
higher wage in the earlier stages of her career. In some instances
(see appended tables) she is paid actually a higher wage between
the ages of 16-19 than the youth of corresponding age on the same
work. With a man the position is reversed, since in the earlier
stages he accepts a relatively low rate of wage, regarding the
remuneration of his services as being in part paid in training (which
in itself implies prospects) and part, as it were, held in trust, to be
paid in after years by a series of promotions and a rate of pay
relatively much higher.
With these considerations in view, that a woman's inferior train-
ing and prospects handicap her somewhat unfairly in competing
with men on the operative side of the railway staff, there seems to
be good ground for pressing the extension of the policy of paying
women a proportionately higher rate during the early years of
service. As regards the future of the railway clerk, the Unions
view it with some misgiving ; the increased employment of women
on the clerical side of the service is, in fact, much more likely
to be permanent than on the operative side, and in certain branches
it may be even further extended. Decreasing competition between
the different systems during recent years, it is argued, must end in
lowering the standard of efficiency demanded from railway clerks
and is likely to lead to a further increase in the employment of
women, and this, it is feared, will have a depressing effect upon the
men's wages. The disabilities of women as compared with men in
several branches of the clerical service, and the fact that the harder
and less pleasant work and the early and late turns must continue
to be performed by men, constitute a strong argument in the men's
favour, and the right policy seems to be to insist on the higher
value of the men's service and to demand the maintenance of their
present rates of pay, rather than to demand what is less justified
by the facts, the raising of women's rates to an equality with those
paid to men.
9 (140!)
120
CREDIT, INDUSTRY, AND THE WAR
SCALES OF PAY FOR WOMEN CLERKS IN RAILWAY OFFICES.
Railway A. Railway B.
Age.
Women's
Rates
per week.
Men's
Rates
per week.
Differ-
ence
per week.
Age.
Women's
Rates
per week.
Men's
Rates
per week.
Differ-
ence
per week.
s. d.
s. d.
s. d.
s. d.
5. d.
s. d.
16
6 11
11 6
4 7
15
5
17
9 2
15 4
6 2
16
10
10
18
11 6
19 2
7 8
17
12
12
19
13 10
23
9 2
18
14
14
20
16 1
24 11
8 10
19
17
17
21
18 5
26 10
8 5
20
20
20
22
20 9
28 9
8
21
20
22
2
23
23
30 8
7 8
22
20
24
4
24
25 4
32 7
7 3
24
20
26
6
25
25 4
34 6
9 2
25
20
28
8
26
25 4
36 5
11 1
26
20
30
10
27
25 4
38 4
13
Railway C.
Women's Rates per week.
Differences.
Men's Rates
Age.
per week,
Managerial
Others,
Col. 3.
Cols. 1 and 3.
Cols. 2 and 3.
Staff, Col. 1.
Col. 2.
s. d.
s. d.
s. d.
s. d.
s. d.
16
12
10
11 6
6*
1 6
17
14
12
15 4
1 4
3 4
18
16
14
19 2
3 2
5 2
19
18
16
23
5
7
20
20
18
26 10
6 10
8 10
21
22
20
30 8
8 8
10 8
22
24
20
30 8
6 8
10 8
23
26
20
34 6
8 6
14 6
24
28
20
34 6
6 6
14 6
25
30
20
38 4
8 4
18 4
* Increase.
NOTE. The scale for men quoted above is that applicable to London.
For the Provinces it does not go beyond 30s. 8d., and in calculating for
Provincial Towns this must be adjusted.
OUTLETS FOR LABOUR AFTER THE WAR
Railway D.
121
London Stations.
Provincial Stations.
Age.
Women's
Rates.
Men's
Rates.
Difference.
Women's
Rates.
Men's
Rates.
Difference.
s. d.
5. d.
s. d.
s. d.
s. d.
s. d.
16
10
11 6
1 6
10
11 6
6
17
12
13 5
1 5
12
13 5
5
18
14
15 4
1 4
14
15 4
4
19
16
17 3
1 3
16
17 3
3
20
18
19 2
1 2
18
19 2
2
21
20
23
3
20
23
3
22
22
26 10
4 10
22
24 11
2 11
23
24
28 9
4 9
24
26 10
2 10
24
26
30 8
4 8
26
28 9
2 9
25
28
32 7
4 7
26
30 8
4 8
26
28
34 6
6 6
26
32 7
6 7
27
28
36 6
8 6
26
34 6
8 6
28
28
38 4
10 4
26
34 6
8 6
29
28
42 2
14 2
26
34 6
8 6
The Provincial Rates for men quoted above are for small stations, so that
the difference will be for small stations only. The rate at large stations for
men is the same as in London, except that it stops short at 38s. 4d. To find
the difference at large Provincial Stations add after age 23, 2s. to the London
difference, and at the age 29, 5s. lOd.
Railway E.
London Stations.
Provincial Stations.
Age.
Women's
Rates.
Men's
Rates.
Difference.
Women's
Rates.
Men's
Rates.
Difference.
s. d.
s. d.
s. d.
s. d.
s. d.
S. d.
16
10
10
10
8
2 0*
17
13
13
13
11
2 0*
18
16
16
16
14
2 0*
19
18
19
1
18
17
1 0*
20
20
22
2
20
20
21
22
25
3
22
23
1
22
22
28 6
6
22
26
4
23
22
30
8
22
28
6
24
22
30
8
22
28
6
25 & 26
22
32
10
22
30
8
27&28
22
34 6
12 6
22
32
10
29 & 30
22
36 5
14 5
22
34 6
12 6
31
22
38 4
16 4
22
34 6
12 6
* The difference is to women's advantage.
122
CREDIT, INDUSTRY, AND THE WAR
Railway F.
Clerical Staff.
Clerical Staff.
Age.
Women's
Men's
Age.
Women's
Men's
Rates.
Rates.
Rates.
Rates.
s.
5.
5.
5.
16
12
12
22 24
30
17
14
16
23 26
32
18
16
20
24
28
34
19
18
24
25
30
36
20
20
26
26
30
38
21
22
28
Clerical Staff Women.
A Clerks, Typists, and Tracers.
B. Telegraph Clerks and Statistical
Staff.
Principal
Stations.
Other
Stations.
Principal
Stations.
Other
Stations.
Age 16 .
17
, 18 .
19 .
20 .
s.
12
14
16
18
20
5.
10
12
14
16
18
Learners .
Age 16 ! !
17 .
5.
6
8
12
14
s.
6
8
10
12
Maximum
Supervisory posts
30
40
28
35
Maximum
Supervisory posts
30
40
28
35
Men's Rates.
Ticket
Collectors.
Parcel Porters
and Cloak Room
Porters.
Receiving Office
Porters.
Class.
1st
2nd
3rd
1st
2nd
3rd
1st
2nd
3rd
4th
5.
s.
s.
s.
s.
s.
5.
s.
s.
s.
1st year .
25
23
21
26
22
20
21
20
19
18
2nd . .
26
24
22
27
23
21
22
21
20
19
3rd . .
27
25
23
28
24
23
22
21
20
4th . .
28
26
24
25
24
23
22
21
5th . .
25
24
6th . .
26
Maximum
28
26
24
28
25
21
26
24
22
21
OUTLETS FOR LABOUR AFTER THE WAR
123
OTHER TRANSPORT*
Since the war, women have been increasingly employed as con-
ductors on trams and motor buses in order to replace men who have
enlisted. In the majority of cases the women are taken on at the
same wage rates per hour as the men, though they work in shorter
shifts generally six hours instead of eight. They are found to be
more satisfactory on " single deckers " where the work is less ardu-
ous. The work seems to be popular with the women and also with
the public. Women are not employed as drivers. In some towns
they are employed in washing the cars.
Where women have been employed to drive heavy motor or horse
vans they have not proved so successful as on lighter cars, and
employers are averse to keeping them. They rarely have the
necessary mechanical knowledge to attend to slight readjustments
in the van, and the work is generally too heavy. As drivers of
lighter cars, however, they have proved very successful and their
employment as chauffeuses is likely to increase. Many doctors
have taken women to drive their cars. As drivers of taxis on the
streets, however, their employment has many objectionable
features.
Commercial Clerks.*
CLERICAL WORK
-Summary of Distribution by Industry or Service,
Census 1911.
Industry or Service.
Males.
Females.
Professional Occupations
3,521
1,319
Domestic Offices or Services
471
2,013
Commercial Occupations .
56,150
7,584
Conveyance of Men, Goods, and Mess
ages
14,223
865
Fishing ...
244
10
Mines and Quarries
17,793
1,167
Metals, Machines .
52,564
12,436
Precious Metals, Jewellery
4,449
4,215
Building, etc.
9,764
1,408
Wood, Furniture, etc.
9,456
2,617
Brick, Cement, Pottery, and Glass
4,712
876
Chemicals, Oil, Grease, etc.
17,242
5,116
Skins, Leather, Hair, etc.
3,101
1,163
Paper, Prints, Books, etc.
18,467
8,652
Textile Fabrics
30,406
11,708
Dress
9,864
6,928
Food, Tobacco, Drink
48,387
21,052
Gas, Water, and Electrical Supply
6,312
166
Other General and Undefined .
12,145
5,383
Industry or Service not stated .
40,458
22,197
Totals
359,729
116,875
Including various other commercial occupations.
124 CREDIT, INDUSTRY, AND THE WAR
In this group the Census figures for 1901 and 1911 show a total
increase of 31*3 per cent. 17* 1 per cent, increase of males and 109' 8
per cent, increase of females. Clerical work is, indeed, one of those
occupations which offer a considerable and widening sphere for the
employment of women, and since the war there has been a very
large addition to women clerical workers, many of whom will
undoubtedly be retained. In industry proper, the first displace-
ment of men by women has taken place almost without exception
in the office staffs. In the past there has been a distinct tendency
to give women the less responsible work, but more experience has
shown employers that, with training, the peculiar qualities which
women possess make them in many cases equal to or superior to
men. In spite of this, in those occupations where the war has
been the occasion for the first entry of women, some adjustment has
been made in the work in order to reduce the responsibilities of the
women to a minimum ; this is notably the case in banks. Where
women have been taken on as book-keepers the handling of heavy
ledgers has sometimes proved a bar to their further employment.
Large numbers of women have been taken on since the war in
Government departments, and by municipal and other local author-
ities. Generally speaking, women are given little opportunity of
advancement or training, and in many businesses their employment
is limited to shorthand and typewriting. For various reasons, and
largely because of the inferior status of women as workers, they are
paid less wages than the men. The Clerks' Union demands the
same wages (35s.) for men and women, though it is found in practice
impossible to enforce it. Many employers state that women are
often paid less wages than the men because they ask for less. A
woman who asks for 25s. weekly may be very good or very inefficient.
Those, however, who ask for 35s. are in almost every case extremely
good workers and well trained, whereas men who ask for 35s. are
often indifferent workers.
Evidence with regard to displacement (which is taking place to
a considerable extent) is very difficult to collect, save in a very
general way, and no attempt can yet be made to systematise it.
BANKING
Women were employed in banks in only exceedingly small
numbers before the war. As 20 per cent, of the men in the London
OUTLETS FOR LABOUR AFTER THE WAR 125
banks enlisted during the first three months of the war, it is to be
expected that by now large numbers of women will have invaded
this hitherto almost preserved field of employment.
In one bank the proportion of women has advanced from 4 per
cent, to 20 per cent, of the whole staff, and taking thirteen repre-
sentative banks it was found that 336 women had been supplied
to them by one agency alone by the beginning of May, and that
number has since been greatly increased.
But the vacancies caused by enlistment have not been by any
means entirely filled by women ; in the case quoted above from 5
per cent, to 10 per cent, of such vacancies were filled by men. In
another, where 600 men enlisted, only 100 women have been
substituted.
The women drawn into the banks have been mainly young (from
18 to 25) and of the secondary-school standard of education. At
first only the quite young were accepted, but so great was the
unemployment among middle-aged (35 years) professional women
that an attempt was made to persuade those responsible for the
choice of women employees to try them. Where this counsel
prevailed better results on the whole were obtained than in the case
of the young girls, who frequently failed, perhaps through lack of
confidence, in the test set, viz., the balancing of a page of a pass-
book. The personnel, therefore, of this new army of bank clerks
is very varied from the girl fresh from home or school, through
numbers with differing degrees of office experience, to women of
training and experience, but in some totally different sphere of work,
such as private teaching.
Opinions differ somewhat widely as to the value and efficiency
of the work done by women. By one manager the statement was
made that as a whole women are more satisfactory than the men
they have replaced, it being understood that they replace men
only in the more mechanical and routine classes of work ; another
held them to be always inferior to men even after considerable
training. It would seem to be agreed that generally women are
most satisfactory in the simpler branches, doing such things as
pass-book calculations, abstracting, and, of course, typing. Here
they appear to compare favourably with men, and are often superior
to youths. In a few instances more responsible positions have been
given them, and with success, but this is not at all general.
126 CREDIT, INDUSTRY, AND THE WAR
Difficulties in employing women in banks have arisen mainly on
account of accommodation, but a little arrangement has generally
overcome these. Other obj ections have been put forward with more
or less reason, as that women are less reliable owing to more frequent
absences on account of illness. There would seem to be some
j ustification for this. Insurance company figures show that between
the ages of 21 and 40 women's absences are 15 per cent, as against
men's 5| per cent., though below 21 years there is hardly any
difference. Less credible would seem to be the theory that women
may not be trusted with confidential matters.
The remuneration for women in banks is generally lower than for
men. This seems to be chiefly a matter of custom, but it is also
advanced that woman's more frequent illness is in part a reason,
also that the supposition that a man has more dependent on his
salary, influences the rate of his pay as compared with a woman's.
So low have been the salaries offered to women by two well-known
banks that employment bureaus have in some cases refused to send
them applicants. This is, however, exceptional, and banks have
been drawing women from insurance offices by offers of higher wages.
Girls of 17 mostly begin at 17s. 6d. a week, rising to 20s. ; more
experienced women may begin at 25s. or even 35s., but one investi-
gator failed to find one woman earning more than 175 per annum.
Men or women replacing Army recruits are taken on on a tem-
porary basis, the places of men going to the Front being always
kept open ; but it is expected that a considerable number will not
return to their old posts and that women taken on now are likely to
remain.
INSURANCE
Women had already been employed in insurance offices to a con-
siderable extent before the war, and were easily substituted for
men in many cases of enlistment. One firm's percentage of women
rose from 8 per cent, to 10 per cent, of the staff and a further increase
is anticipated. Where a permanent staff (pensionable) and a
supernumerary staff have existed, women seem only to have
belonged to the latter, and the work of men enlisting from the
former has been distributed among the men on the latter. Women
do mainly routine work, such as typing, shorthand, and simple
clerical work ; they have been considered less reliable than men
OUTLETS FOR LABOUR AFTER THE WAR
127
and not able to deal satisfactorily with an influx of heavy work,
and so are not found in the more important positions or on the
permanent staff. They are mostly of ages ranging from 17 to 40,
and of the ordinary standard of school education. They pick up
the work as they go along, or are taught by the older workers,
and in what they do are found as quick and competent as men.
Women do not seem to have been tried as agents. Where
20,000 agents represent one company there are no women, and
it is not intended to try them. But in the district offices of the
same company seventy-seven more women have been employed
since the beginning of the war.
The payment is on a lower scale for women than for men ; it is
estimated at about 15 per cent, less than that of the average man
doing similar work. It is contended that women are less keen, and
do not increase in value as do the men, also that they are much
more uncertain in their attendance owing to inferior health.
Large numbers of women have been added to insurance staffs
for National Insurance work. One staff alone includes 2,100
women, as compared with 1,700 men. Difficulty in accommodating
women in old offices has been found, but large new buildings have
in many cases been put up, and meet this obstacle.
No great eviction of women taken on now is expected after the
war.
LOCAL AUTHORITIES
Replacement on a small scale has taken place under local author-
ities. The following show the figures in the month of February,
1915, compared with July in the previous year :
-
Clerica
I Staff.
Males.
Females.
Employed in July, 1914 .
25,652
15,549
February, 1915
24,286
16,144
Increase or Decrease
- 1,366
+ 595
Known to have joined Forces
3,620
Net replacement . . .
+ 2,254
The extra women taken on have been almost entirely auxiliary
clerks. Their employment is considered as temporary only, and the
128 CREDIT, INDUSTRY, AND THE WAR
scale of pay is sometimes the same, though generally slightly below
that of the men displaced. In some cases local authorities are
paying to the enlisted men their ordinary pay less Army allowance.
In a few towns women are engaged as head office clerks, and in others
they are employed as library assistants, in one case as the chief
assistant (permanent). One town has employed a woman as a
police inspector and another as a sanitary inspector in place of
a man.
Women are also employed in some towns as street cleaners ; they
work 8 hours instead of 9 hours, and are paid 4 Jd. per hour instead
of 6d.
CIVIL SERVICE
The work of the Civil Service is best considered as clerical
work, as, save in the Post Office, the extra women who have been
employed since the outbreak of war have in almost all cases been
taken on for work of a clerical nature.
It has been impossible to obtain information for all Government
Departments, especially those such as the War Office and the
Admiralty, in which the work of the war presses most heavily.
Since the war women have replaced men in several Government
Departments, but precise information is very difficult to state, for
in many of the offices duties have been so re-arranged that the
responsible work has been divided amongst the senior members of
the permanent staff or by promotion and women have been
taken on only in the lower grades of the work. The proportion
of enlistments, especially amongst the lower grades and in the Post
Office, has been heavy 20 per cent, up to the middle of February
and places had up to February been filled by men and women up to
four-fifths of those who had left. Much of the work of the higher
branches is very technical and requires considerable experience
as well as judgment, and it has been difficult in these branches to
discover substitutes, with the result that enlistment in them has
been discouraged from the beginning. Women are taken on in
various ways ; since 9th May the Civil Service Commission has sent
women to various Departments ; many Government offices have
engaged women privately, from applications received by the
Department officials or Ministers concerned or by personal recom-
mendation others have been engaged through the Labour
OUTLETS FOR LABOUR AFTER THE WAR 129
Exchanges ; some were women who had qualified by examination ;
others have had no experience. It was hoped that sufficient women
could be obtained at the Treasury scale, but this has not proved to
be the case, and there has been a distinct shortage of capable women
willing to enter Government rather than private employment at the
rates laid down.
Women clerks have been engaged in practically all Departments.
The scale of wages laid down by the Treasury is as follows
For typing, operating duplicating machines and ordinary sorting
or routine work, 18s. to 20s. a week, with overtime at the rate of
6d. an hour.
For ordinary clerical work, 21s. to 25s. a week, with overtime at
the rate of 7d. an hour.
For shorthand-typing, 26s. a week, with overtime at the rate of
9d. an hour.
For higher clerical and supervising work, 30s. a week, with over-
time at the rate of 9d. an hour. In normal circumstances clerical
posts at this rate are only sanctioned in a proportion not exceeding
one to five of those at the lower rate. The normal hours of attend-
ance are determined by the Heads of Departments at their discretion,
and are not less than 42 hours a week. Overtime of less than half
an hour on any one day is not counted for the purpose of overtime
payment. Ordinary leave on full pay may be allowed (subject to
the exigencies of the Service) at the rate of one day for each month
of service, as well as on the usual public holidays. Sick leave on
full pay may be allowed up to a maximum of six weeks in the year,
insurance contributions being payable at the reduced rates prescribed
by Section 47 of the National Insurance Act, 1911.
In answer to a question asking for details as to the number,
conditions of service, age, etc., of the women employed in Govern-
ment Departments under this scale, the Secretary to the Treasury
replied on 27th July, 1915, as follows
Appointments to temporary clerkships are usually made by
heads of Departments at their discretion, and it would not be
possible to ascertain the total number of women so appointed with-
out making detailed inquiries which would take a considerable
time, and in view of the constant fluctuation of work would not,
I think, be of much value. In view, however, of the large number
of temporary appointments authorised to replace junior members
130 CREDIT, INDUSTRY, AND THE WAR
of the public service who were given permission to enlist, a special
arrangement was recently made with the Civil Service Commissioners
by which they keep a list of suitable candidates and assign them to
Departments if requested. This arrangement has been largely
(but not exclusively) used by Departments, and the number of
appointments so made is as follows :
(1) Typing, duplicating, sorting, and routine work at 18s. to
20s. per week 74
(2) Ordinary clerical work at 21s. to 25s. per week . . 604
(3) Shorthand typist duties at 26s. per week . . . .43
(4) Higher clerical and supervising work at 30s. per week . 56
The average age of persons assigned for routine work on the
18s. to 20s. per week scale is between 17 and 19. Some older can-
didates with limited qualifications have also been assigned to this
grade. No limits have been definitely fixed for this or for any of
the other grades.
The duties of the routine grade (1) are those commonly performed
by boy clerks, female sorters, and female typists. " Ordinary
clerical work " (2) is such as is given to assistant clerks (abstractors)
and junior Second Division clerks. The higher grade covers duties
of a like character but involving some element of responsibility,
e.g., the supervision of work, etc. Besides these grades a few
appointments have been made at higher rates for work requiring
special qualifications and experience.
All these clerks are informed on assignment that the employment
is strictly temporary and liable to termination at any time.
The Board of Agriculture especially has had considerable difficulty
in obtaining the required number of women at the wage offered.
The India Office has found it necessary to replace four men by five
women. Since the beginning of the war the Labour Exchanges
have taken on between 800 and 900 extra women in clerical capa-
cities. The War Office has engaged a number of women on new
work as " language " experts at 30s. to 3 a week.
An exact comparison of men's and women's wages is difficult, as
the men are all on a scale, and it is impossible to assess in real
wages such assets as sick leave on full pay, free medical attendance
(in the Post Office), pensions, etc., to which Civil Servants are
entitled. The duties are often re-arranged, and it must be remem-
bered that, with the exception of doctors, all women in the service
are paid at a lower rate than the men.
OUTLETS FOR LABOUR AFTER THE WAR 131
All the Civil Service Unions urge that temporary work should be
paid at a higher rate than permanent, as a safeguard, and that
women should receive equal pay for equal work, but the men's
Unions wish it to be certain that the work is really equal, otherwise
deductions must be made for favourable duties and hours, etc.
The Postal National Joint Committee asked that women sub-
stitutes should be paid the average salary of the man replaced.
With regard to postmen, in actual fact women are paid less ; if men
are not obtainable at the lowest rate, a higher rate can be paid,
but women, if taken on, are only paid at the lowest rate. It is very
difficult to calculate exactly what the women should be paid as,
e.g., twenty women recently replaced twelve postmen. On the
average 10 per cent, less appears to be paid to temporary women
clerks than to temporary male clerks. The view of the Service is
that women should be paid less. The whole question will, however,
come up for discussion when the Report of the Civil Service
Commission is published.
Departments which have been set up since the commencement
of the war, e.g., the Ministry of Munitions, are employing a large
number of women clerks, but these are not replacing men, though
the proportion of women employed in such Departments is higher
than in ordinary Government Departments, as they are organised
on more modern lines than the older Departments.
The work of women clerks has been very satisfactory except in
so far as the Treasury scale tends to attract inferior rather than
superior workers. It is stated that the women engaged since the
commencement of the war have on the whole been superior to the
men engaged in lower grades during that period.
Extra women are also employed as Post Office sorters, tele-
graphists, telephonists, and in London to a limited extent as
post women.
Where women are now doing the work previously done by men,
e.g., sorting in the Post Office, the work has been so arranged that
women do no night work, no heavy work, and they finish their work
in time to reach their homes by public conveyance ; where this has
not been possible they have been sent home in taxis. Women
telephonists employed on night duty are given beds in their rest
room so that they can sleep three hours during their night's shift.
The lack of adequate accommodation has been to a certain extent
132 CREDIT, INDUSTRY, AND THE WAR
a deterrent to employing women, but such difficulties are not serious
and have been gradually overcome. The identity of men's and
women's work is often difficult to establish and the information at
present at our disposal is not sufficient to allow of our doing this
with any adequacy.
Married women have been taken back, particularly in the Post
Office, as telegraphists. There is a grievance that these married
women are paid only the same as the temporary women and have
not gone back to the salary they were receiving before they married,
even if they are as efficient as before.
With regard to the higher branches of the Civil Service, as has
already been noted, the experience and technical knowledge neces-
sary have not encouraged Departments already understaffed and
overworked to attempt experiments in the replacement of men
by women save in the lower grades, though in this respect especially
the traditions of the Service are wholly against the inclusion of
women in such work, and the mere prejudice against the employment
of women in the higher posts often biases and distorts judgment.
Since the beginning of the war one woman has been taken on in the
Civil Service Commission in place of a First Division clerk, and is
paid 2 10s. a week. At the Home Office an additional female
factory inspector has also been appointed.
In reply to a question asking for information as to how far the
places of male inspectors, who had enlisted or been transferred in
the Service, had been filled by women, the Home Secretary stated
on 28th July, 1915, that " Twenty-four inspectors and six assistants
in all have been called up or have joined His Majesty's forces ;
22 inspectors and 11 assistants have been lent for war service in
other departments, 16 of whom are engaged in special work requir-
ing technical qualifications under the Admiralty and Ministry of
Munitions. The present strength is 157, as compared with 219
a year ago. I am considering the question of appointing temporary
women inspectors for the period of the war, and one such has
already been appointed, but temporary assistance can only be
utilised to a limited extent, as a careful training is required before
an inspector is able to undertake the full duties of the post, and the
work of training and supervision of any considerable number would
throw a heavy additional burden on the experienced inspectors and
seriously interfere with their own work."
OUTLETS FOR LABOUR AFTER THE WAR
133
In some places vacant inspectorate places have not been filled
either by women or by promotion from the Lower Division. Either
course seems equally against Civil Service traditions. All places
of men enlisted are to be kept open for them, and as pensions, etc.,
are owing to them, they will be more likely to return to their posts
than other men in private employment. If men are not able to
return, quite possibly women will in future be employed to do the
work, especially in the lower grades, "but the question is bound up
with the reorganisation that may come when the Civil Service
Commission Report is considered. The Post Office intends to take
on wounded soldiers to do messenger and other work, instead of
women.
ENGINEERING AND THE METAL TRADES
The metal trades apart from engineering do not appear in Table
III owing to the lack of available statistics. The following show,
however, the state of employment in this group in February, 1915,
compared with July, 1914
Net contraction or
Approx. Indus. Pop.
expansion (per cent.)
Census, 1911.
in Feb., 1915, on nos.
Trade.
employed in July, 1914
Males.
Females.
Males.
Females.
Small arms
6,000
i
- 6-6
+ 4-4
Scientific instruments
27,000
000
+ 1-2
+ 8-5
Wire drawing, chain, etc.
45,000
15,000
- 6-6
+ 4-4
Hardware .
103,000
23,000
- 14-1
+ 2-7
Musical instruments
28,000
6,000
- 17-6
+ 2-5
Tinplate
23,000
3,000
- 14-2
+ 1-4
Iron and steel
311,000
2,000
- 5-7
-1- 0-2
Cutlery, tools, etc.
54,000
17,000
- 9-1
- 5-4
Other metals
104,000
20,000
- 8-8
- 6-5
Jewellery, watch and clock
making ....
44,000
12,000
- 27-9
- 12-8
The most sweeping changes caused by the war demand, have
taken place in the various metal industries. It is these trades
which have been able to adapt both their plant and their labour
to the production of munitions of war. As this adaptation has been
going on in very many firms, whose normal products are of the most
1 The 1911 census shows only 300 women in this trade, but employers'
returns showed 1,200 occupied in July, 1914.
134 CREDIT, INDUSTRY, AND THE WAR
varied nature, it is hardly possible to treat the industries in this
group separately. Those firms which quickly adapted their pro-
ducts to the needs of the time, soon employed largely increased
numbers of both men and women, paying them abnormally high
wages, both in the form of increased piece rates and as payment for
overtime. Any metal firms, therefore, which were slow in adapting
their output to. the needs of the country, began in the winter and
the early spring to find themselves short of labour, female as well
as male. The position then is that a single group of industries,
the manufacture of guns and ammunition of various types, has
monopolised to an ever-increasing extent the premises, plant, and
workpeople previously devoted to all the many metal trades.
Since a large proportion of the munitions now being made does
not involve such heavy work as the products of the same factories
in time of peace, the proportion of women employed has almost
inevitably greatly increased. Many of the processes are such
as women have commonly performed in recent years. In some
works, moreover, such new plant as has been installed, has been
consciously chosen with a view to the employment of women on
account of the scarcity of male labour. Most of the newly employed
women, therefore, are not engaged upon processes previously
performed only by men. The line of division, however, between
male and female labour is always variable ; and in many works it
has moved so as to allow the employment of women on work pre-
viously thought to be just beyond their strength or skill. Instances
of women being employed in work widely different from any under-
taken by them in time of peace, are comparatively rare though they
seem likely to multiply rapidly.
It is possible to group the metal trades roughly according to the
proportion of female labour employed in time of peace, and to
differentiate between the recent developments in each group.
1. Trades which Deal with Metal in its Rough and Heavier Stages,
viz., Iron Castings, Metal Rolling, Sheet Iron Work, etc. In these
trades women are not employed and the war has not altered the
position. The processes in many cases are identical with those in
time of peace, since the product is turned out in a comparatively
early stage, and the fact that it is subsequently used for the manu-
facture of munitions, only affects these firms by increasing the
demand upon them.
OUTLETS FOR LABOUR AFTER THE WAR 135
2. Trades requiring considerable Strength and a High Level of
Skill, viz., Engineering and Motor Building. In these trades the
number of women employed in times of peace was very small and
some firms are even now not admitting them. The product has,
however, largely changed and very many shells are being made in
workshops which have been adapted to this form of production, and
in departments recently built. Many firms which employed
no women before, are now taking them on for the manufacture
of shells, and are employing them especially in their new workshops,
in some of which the staff is entirely female, with the exception of
a few skilled tool-setters.
3. Trades requiring somewhat Lower but more Varied degrees of
Skill and Strength, viz., the manufacture of Cycles, Bedsteads,
Lamps, Brass Goods, etc. In these trades both men and women were
employed before the war, the men usually performing the more
skilled and heavier parts of the work. There has, however, been
some considerable conflict over some processes, and policy has
differed in different works. The line between men's and women's
work is perhaps most variable in the cycle trade, on account of the
comparatively recent invention of cycles and the rapid development
in the methods of their production, making the trade largely inde-
pendent of tradition. These firms are now adapting their machinery
to the manufacture of shells and fuses, and, on account of the short-
age of men, the new hands taken on are mainly women. The
processes formerly worked alternatively by men and women are
being increasingly undertaken by women, who are making their
way into many processes previously just beyond the line separating
their work from that of the men.
4. The Production of Small Metal Goods, viz., Pens, Buttons,
Military Ornaments, etc. These have for many years been
trades in which the greater number of the employees were women.
A small number of men are employed as tool-setters, but the
actual working of the machines or presses is left to women and girls.
Therefore, though the output has been altered to meet the war
demand for parts of cartridges and military buttons and ornaments,
there has been very little alteration in the staff.
Such replacement of men, therefore, as has taken place, has been
in firms devoted in time of peace to the industries which are grouped
under the headings 2 and 3, though even here women are for the
io (1408)
136 CREDIT, INDUSTRY, AND THE WAR
most part engaged on repetition work and automatic machinery
involving little or no departure from the work to which they are
ordinarily accustomed. They are employed in rilling, capping and
cleaning shells, boring and drilling bombs, and making cartridge
cases and fuses of all kinds, English and French. For certain of these
processes, such as the fine work required in the making of fuses,
women are particularly suitable and would probably have been
employed even if male labour had been abundant. Where, however,
as is the case in several factories, women are executing the entire
process of shell-making from start to finish, involving (in the case of
8-inch high explosive shells, and Russian 3-inch shrapnel) twenty-
one operations, they are doing work for much of which men would
have been employed had they been obtainable. Also, in a few
exceptional cases, women are acting as fitters.
The following quotations from the Engineer of 20th August show
that in some works bold experiments in the wider employment of
women have been tried. " During the past few months," says the
writer, " a great and far-reaching change has been effected. . . .
In a certain factory which is engaged in the production of projectiles
in sizes up to those required for 4'5-in. guns, a new department was
started some time ago, the workpeople being women, with a few
expert men as overseers and teachers. ... By no means has all of
the work been of the repetition type, demanding little or no mani-
pulative ability, but much of it has been of a character which taxed
the intelligence of the operators in a high degree. Yet the work
turned out has reached a high pitch of excellence. ... It may
safely be said that women can satisfactorily handle very much hea-
vier pieces of metal than had previously been dreamt of. Moreover,
they have shown themselves capable of successfully carrying out
arduous processes, such as forging, etc., which hitherto have only
been performed by men, and of managing machine tools of a very
different nature and requiring a very much higher standard of intel-
lect than do automatic and semi-automatic tools. In fact, it can
be stated with absolute truth that with the possible exception of
the heaviest tools and their inability to work even these has yet
to be established women have shown themselves perfectly capable
of performing operations which hitherto have been exclusively
carried out by men."
Besides the replacement of men, there has also been a considerable
OUTLETS FOR LABOUR AFTER THE WAR 137
replacement of boys by women in some processes. Many compara-
tively young lads are now engaged upon work of a kind which
would certainly, in normal times, be entrusted to adult workmen.
Such a process, therefore, as engraving, which would otherwise
have been done by boys, is now undertaken by women, who are
engraving dials on maxims, numbers on gun parts, and shells, etc.
Where a very high degree of accuracy is demanded which can be
tested by a purely mechanical operation, girls are often found to
work better than boys or men, for the very reason which is thought
to make them less valuable in processes requiring judgment.
It is clear that an extension of employment of women in munition
work is still possible, since in July last the number employed in this
country, much as it had increased, was only between a fifth and a
tenth of the number employed in France. The number in England
was then, according to Mr. Lloyd George, 50,000 and though it
has grown very considerably since, there is still room for expansion.
There are in France some women of really high skill in the engineer-
ing trade capable of looking after as many as three machines at once.
At the same time, the main obstacles to the further employment
of women are stated to be very much the same in France as in
England. The number employed as fitters is small, and on lathes
and automatic machinery they require the supervision of a skilled
mechanic to set up the work and prepare the tools. Their dis-
abilities are doubtless due mainly to lack of training, but the proper
training of a skilled mechanic is a slow process.
No comprehensive consideration of the question of wages is yet
possible in these trades owing to the differences between localities
and firms and the rapidly altering situation. It is clear, however,
that in many cases the wages of women are decidedly lower than
would have been paid to men doing similar work, though usually
the work of men and women is not easily comparable.
Girls under 18 years of age are said in some instances to be
receiving as little as 9s. per week and those over 21 years 15s. per
week for work on which men have formerly received a minimum
of 26s. In many places the prevailing rates are 10s. to 15s. for a
48-hour week. In almost all these instances, however, the women
are learners and the wage they receive is a learner's wage, whilst
the men were skilled workers whose output was considerable.
Women are often working overtime, sometimes up to 73 hours per
138 CREDIT, INDUSTRY, AND THE WAR
week, for which they are generally paid at time and a fifth, compared
with the men's time and a half, or even double time. In the districts
where female labour is becoming scarce, however, a large proportion
of the women munition workers are earning 30s. per week and
upwards.
There are some firms in which the time rates paid to women,
though very much less than those paid to men, compare not unfa-
vourably with them when considered in terms of piece rates. Until
women have had a somewhat longer experience even in compara-
tively unskilled work, they are not likely to be able to work with the
rapidity of practised workmen. Nevertheless the rates paid to
women are certainly inferior in the majority of cases to those paid
to men. The poor pay of women in most occupations in normal
times has given them a low standard, and makes them consider
the wages which they are now receiving in many munition works
as phenomenally large, however unfavourably they may compare
with the wages of the men in the same place.
The attention of Mr. Lloyd George has already been called to
what is often a glaring disproportion between the wages of men and
women in munition works, and he has made certain promises after
stating the necessary conditions to be considered in equating men's
and women's wages. He insists first of all upon the need for instruc-
tion and training. He draws the necessary distinction between piece
work and time work rates, though he agrees that during training the
women in munition factories under Government control should be
guaranteed a living minimum wage. He also states that it has been
agreed that as far as the work is concerned, women shall be paid
exactly the same price as a man for any piece of work she turns out.
" The Government will see that there is no sweated labour." " We
cannot give the same time rate, but the piece rate we can give as
well as a fixed minimum which will guarantee that we shall not
utilise the services of women merely to get cheap labour."
The permanent effects of the war on the main metal trades
will not, it is feared, be beneficial. Till recent years the develop-
ment of machinery and the subdivision of processes which accom-
panied it have led to the employment of an increasingly large pro-
portion of unskilled and semi-skilled labour. Just before the war,
however, there were signs that this process was being reversed,
new developments in automatic machinery leading to the unskilled
OUTLETS FOR LABOUR AFTER THE WAR
139
worker being displaced, while the skilled tool-setter was retained.
That is to say, subdivision was still going on, but it was beginning
to be subdivision between machines, not between human agents.
This recent tendency towards the supervision by one worker of
several automatic machines has been checked by shortage of skilled
labour since the beginning of the war. In some of the newly built
workshops, therefore, instead of the most modern automatic
machinery, plant of a type requiring only an inferior degree of skill
has been installed.
Appended is a separate Report on the manufacture of Electrical
Apparatus and others on certain metal trades less immediately
affected by the demand for munitions.
ELECTRICAL APPARATUS
1901.
1911.
Total.
Men.
Women.
Total.
Men.
Women.
Elect, cable manuf .
lamps
Other electric
apparatus and
electric fitters .
49,518
47,028
2,490
5,813
5.627
54,746
4,858
1,425
50,558
955
4,202
4,118
66,186
56,841
9,275
i
(The men's figures for 1901 include also electricians (undefined) who in 191 1
= 27,905.)
Women are to some slight extent doing work which before the
war was done by men, in certain departments such as :
Small lathe work.
Screw machine.
Cable making.
Winching of transformers for armatures.
This last may be regarded as an extension of work previously
done by women rather than as an entirely new process ; for example,
where they previously wound one coil on to a transformer they
now wind two.
Before the outbreak of war, women were employed in all branches
of light electrical apparatus work, but not at all in the electrical
supply trade. Although the above displacement is classed as owing
140 CREDIT, INDUSTRY, AND THE WAR
to the war, there is evidence that before August, 1914, the policy
of many firms had been to extend the employment of women into
new branches. That women have to some extent been replacing
men, or at any rate entering new branches, may also be inferred
from the fact that, though the electric lamp branch of the trade
has been depressed owing to the war, there has been a total increase
of nearly 18 per cent, in the employment of women in the electri-
cal trade. Part of this increase is due to a temporary increase of
production in branches of the trade in which women were previously
employed, but as the enlistment of men from this trade has been on
a considerable scale, it is reasonably clear that women are to some
extent taking their place during the emergency. In most cases
readjustment to meet the introduction of women has been simple,
or no alterations at all have been necessary, as they have only
been put on to the lighter machine work. One firm has actually
made the machines more mechanical and employs an extra
mechanic as supervisor.
The introduction of women into new processes often necessitates
the provision of another workshop, as in the majority of cases it is
not considered desirable for men and women to work together.
The main objections to the employment of women are :
1. Want of technical skill and general experience.
2. Want of physical strength, making it impossible to employ
women on the heavier processes.
3. The strong objection on the part of many employers to have
men and women working side by side in this trade.
4. In some cases the men's objection to the introduction of women.
In regard to the question of physical strength, one firm employing
women in lathe-making, found the women's output slightly less than
that of men, owing mainly to exhaustion during the last hour of
work. Nevertheless it is clear that as a general rule women's
output is considerably less than that of men, since on both time
and piece rates their wages are generally 50 per cent, below those
of men.
The main advantages are :
1. Their greater dexterity in certain processes where small fingers
are an advantage. This has been a considerable factor in the
employment of women in such processes as assembly work in the
electric lamp trade.
OUTLETS FOR LABOUR AFTER THE WAR 141
2. The cheapness of their labour.
3. The larger supply of unskilled workers to draw upon.
The Future of the Trade. In those processes which are suitable
to women, the possibilities of extending their employment are great.
In the more skilled processes, however, where a longer training
is necessary, it depends how far women choose to utilise the present
opportunity of becoming highly efficient workers. Hitherto women
have been employed almost entirely in unskilled processes, and the
trade has been essentially one for young persons, the majority of the
girls leaving the trade soon after the age of 19. It is difficult to
foretell the state of trade after the war, but in view of the accu-
mulation of private work which cannot be done at present, employ-
ers rely on its being good for at least a year or two, and they therefore
expect to absorb the men returning from the Front as well as the
new women who have been taken on. Two firms stated that after
the war it was much more likely to be a case of taking on new men
in addition, than of dismissing the new women.
On the whole, there is little definite evidence up to the present
of the actual displacement of men by women owing to the war,
and the increase in the number of women is mainly due to a
temporary increase of production. The Trade Unions, however,
state that of recent years there has been an increasing tendency to
bring women into the trade, and in view of the fact that the women
are unorganised, they are pessimistic with regard to the future,
fearing that the increase of female labour will lead to a fall in the
standard of wages, and to male unemployment after the war.
Much will depend upon the attitude of the women themselves.
THE METAL TRADES LESS IMMEDIATELY AFFECTED BY THE
DEMAND FOR MUNITIONS
Although those firms which are still mainly engaged in the manu-
facture of metal goods other than munitions, are for the most part
employing a smaller number of workpeople than before the war,
they are only in a few exceptional instances suffering from a restric-
ted demand. For the most part the main difficulty is the shortage
of labour, and this is greatly aggravated in those trades which
suffered seriously in the first few months of the war, as the work-
people who left them then can frequently not be persuaded to
142 CREDIT, INDUSTRY, AND THE WAR
return. In the trades that are not working on Government orders,
many of the employees left to enter munitions and similar work
from motives of patriotism, and were in some cases encouraged
to do so by patriotic employers. There are several industries
working on necessaries for the Army, which are nevertheless short-
handed, partly because the produce is not quite so urgently required,
and therefore the workers are not quite so highly paid as for
munitions, and partly because patriotic workpeople feel more
satisfied when employed upon " something which explodes."
In those areas where the production of munitions is being
actively carried on, there is a decided shortage of women in other
trades, which, though less pronounced than the shortage of men, is
nevertheless sufficient to prevent much of the substitution of women
for men which might otherwise have taken place.
SCIENTIFIC AND OPTICAL INSTRUMENT MAKING
In scientific and optical instrument making, enlistment since
February caused a net contraction of employment in the trade,
and a demand arose for the labour of both men and women. The
percentage increase of women has probably trebled since February.
The women have been drawn largely from such trades as jewellery,
clock and barometer making, silversmiths, and a variety of less
relevant trades such as dressmaking. It is ascertained that in some
instances women are actually doing work previously done by men,
e.g., the polishing of lenses. The present increase in the employ-
ment of women, or more precisely of girls, in the trade, however,
is due mainly to the temporary boom, as for instance, in clinical
thermometers, test tubes, etc., and to the shortage of boy labour
for these trades, and consequently may have little permanent
significance. There are further opportunities in certain operations
other than repetitive, as, for instance, light mounting of microscopes,
etc., in the optical trade. Any considerable revival of the optical
trade in England would open up a very large field for the employ-
ment of women, who do almost the whole work of this trade in the
large American factories. Opinions differ in regard to the employ-
ability of women in the various branches, mathematical, scientific,
surgical, and optical, of the instrument trade. Much of this work
is very highly skilled, and requires a long training, such as women
in the past have not usually been prepared to undergo.
OUTLETS FOR LABOUR AFTER THE WAR 143
JEWELLERY 1
During the first six months of the war there was more unemploy-
ment in the more highly skilled branches of the jewellery trade than
in any other Birmingham industry. The cheaper branches of the
trade, however, in which women were most largely employed, were
never as seriously depressed. In September the production of
patriotic badges was being carried on more actively than most
industries of the town. During the winter there was great improve-
ment in the trade as a whole, but more especially in the less costly
and less skilled branches. The demand for inexpensive brooches,
bracelets, and other ornaments soon became good, and that for
badges worn by men employed on Government work has been for
some months very brisk. With the approach of autumn, in which
season the trade is normally at its busiest, the demand in most
departments has revived very greatly.
There has now been for some months a very decided shortage of
both male and female labour. The supply of women is less scanty
than that of men, since the men have not only been drawn off to the
Army, and other occupations, but were definitely dismissed from
jewellery firms through shortness of work in the autumn to a much
greater extent than the women. The proportion of women and girls
employed is probably higher than it has ever been. We find, indeed,
that although the processes which were already performed by women
are the most active and are employing large numbers, there are also
a good many women doing work of a kind done previously almost
entirely by men. They are now, in a considerable number of firms,
" making up " the jewellery, that is to say, fitting together the
parts, which work was formerly considered for the most part too
intricate for them.
It is impossible to forecast the future of a trade which depends
upon a luxury demand. If the industry continues to be carried on
in Birmingham as extensively as before, there is little doubt that
women will retain much of the ground they have gained. Men who
desire to return will be reinstated if they have not so hardened their
hands by other work as to unfit them for the delicate processes of
the jewellery trade, but it is expected that many will be perma-
nently lost to the industry. Since, moreover, the average working
1 This and the two following Reports relate mainly to conditions in
Birmingham and the Midlands,
144 CREDIT, INDUSTRY, AND THE WAR
years of a woman are much longer in this than in most other local
industries, a training of some length should be possible for the girls
where necessary. On the other hand, the difference of class which
made the jewellery trade more attractive than the other metal
industries, has largely broken down as a result of the war, and it is
believed that many girls as well as men have lost their taste for this
occupation. This is, perhaps, not to be regretted until the future
prospects of the trade are somewhat more assured.
ELECTRO-PLATE
The electro-plate trade suffered severely from lack of demand in
the early months of the war, but now suffers mainly from lack of
labour, both male and female.
There are certain processes (soldering, shaping, and polishing)
in which women are being employed to a greater extent than before.
There would probably, however, have been much more replacement
if female labour were more abundant.
HOLLOW WARE
The hollow ware trade is suffering from lack of labour, both male
and female. The shortage of men is greater than that of women,
and considerably more overtime is being put in by the men, especially
by those most highly skilled. Certain processes are now being done
by women on machines, which were formerly done by men by hand.
The total number of women is, however, decidedly less than before
the war, so that if the trade is anywhere near normal when the war
is over there should be no unemployment. If there is difficulty in
reinstating the men who return, it will be the result of the falling
off of Government orders rather than the competition of women.
LEATHER
The Table on the next page shows the distribution of the numbers
of men and women employed in the leather trades 1901 to 1911.
The following notes on the trade, which were for the most part
drawn up by Miss M. Stettauer, give some picture of the trade and
indicate those processes in the different branches in which women
were employed (a) before the war, (b) since.
OUTLETS FOR LABOUR AFTER THE WAR
145
Census 1901.
Census 1911.
Per Cent.
Increase or Decrease
(/>
I
S
Females.
in
1
1
P.
M.
F.
Total . .
Furriers and
Skinners
Tanners .
Curriers and
Leather
goods
manufrs. .
Saddlers . .
79,386
9,731
9,608
29,363
30,684
64,987
5,876
9,537
23,620
25,954
14,399
3,855
5,743
4,730
83,729
14,199
10,606
f 16,321
118,215
65,891
8,526
10,569
15,256
10,629
17,838
5,673
37
1,065
7,586
+ 5-5
+ 45-9
+ 10-4
+ 17-6
- 20-5
+ 1-3
+ 45-1
+ 10-7
+ 9-5
- 19-4
+ 23-9
+ 45-9
-47
+ 50-8
- 26-5
34,536
24,388
25,885
20,911
8,651
3,477
Boot and Shoe
Slippers . .
218,581
4,348
174,806
2,999
43,775
1,349
202,510
5,260
160,087
3,279
42,423
1,981
- 7-4
+ 21-0
- 8-4
+ 9-3
- 3-1
+ 46-8
A. TANNING AND DRESSING OF LEATHERS
Women are very little employed.
Tanners' and curriers' work is much too heavy and entirely
unsuitable for women.
In light leather dressing and finishing, some processes are quite
suitable, but it has been mainly a question of prejudice, and if only
employers get sufficiently pushed for labour they will resort to female
labour. This has already become fairly common in the large pro-
vincial towns before the war even but in London the factor
appears to be almost negligible.
Processes. Before the war women were to a small extent
employed in Dyeing and Blacking.
Since the beginning of the war they have been introduced into
Seasoning
Embossing (Skilled)
Sorting (Only just starting)
Measuring
Women would be suitable also for such processes as washing,
oiling, and tacking up. This last process is fairly widely done by
women in Nottingham, who are paid l|d. per dozen for tacking up.
(Men in London receive about three times this wage for tacking up.)
Efficiency. Women's work is said to be satisfactory, slower, but
Mainly on fancy
leathers and
small skins
146 CREDIT, INDUSTRY, AND THE WAR
perhaps on the whole more reliable and regular than that of men.
In this branch of the trade, where it is physically possible to intro-
duce women, there is no reason why the efficiency should not become
as great, after a fairly short training. (In sorting a good deal of
practice and judgment are required.)
Extent of Extra Employment. In a firm where substitution has
taken place to a certain extent
In June, 1914, 4*86 per cent, of the employees were women.
In June, 1915, 10*68 per cent, of the employees were women.
Or put in a different form
In June, 1915, there were twice as many women in the firm as
in June, 1914.
In June, 1915, there were, of the men, 81.8 per cent, of the
number employed in June, 1914.
The total number of employees in this firm at present is 206.
N.B. All the women introduced into this firm since the com-
mencement of the war are working on leather finishing and dressing,
which were previously done entirely by men, but there appear to be
few London firms where substitution has taken place to anything
like this extent.
Wages. The introduction of women is not very general, and
seems to be confined to comparatively few firms. Where it has
occurred, as a rule a lower rate is paid. The following reasons are
given
(a) Women have their limitations, i.e., in the employment of male
labour men can be selected for more valuable positions and for
duties which women could not perform, i.e., men are regarded as a
more permanent asset to the firm.
(b) They do less work. (Even the piece rate appears to be lower,
however.)
(c) They do not require, expect, or ask for so much money.
Objections put forward by Employers. (1) A large proportion of
leather tanning and dressing is unsuitable work for women.
(2) Difficulty in finding town girls who have the physique for the
rougher kind of work which (even in the lighter branches) requires
a certain amount of hard manual labour.
(3) Lack of accommodation.
(4) Difficulties in working overtime, permission being granted only
when working on war contracts.
OUTLETS FOR LABOUR AFTER THE WAR 147
Objections from the Men. The objection of men seems to be a
serious point, and various opinions are put forward :
(a) Some employers say they cannot risk friction with the men
now owing to the impossibility of replacing them.
(b) Others say that the present would be a good time for intro-
ducing women, as there is likely to be less objection than in normal
times. Once women were admitted the difficulties after the war
would not be so great.
(c) The opinion is also expressed that there is not yet sufficient
shortage of male labour, employers put off the introduction of women
as long as possible, and the men will keep up the objections until the
time comes when one process is actually held up for want of labour
in the preceding process.
(d) Objection to mixing male and female labour in the same
factory.
Previous Employment. So far, of the women introduced most
were not in the leather trade before, about half were from various
trades, some were not previously in industry, a few were from domes-
tic service. The majority of the women were aged from 18 to 30.
Question of Permanence. In this branch of the leather trade
those few firms that have introduced female labour since the
commencement of the war are inclined to think that the employment
will be permanent.
The following opinions are given :
(1) Although the men who have joined the Forces will be re-
engaged after the war, it does not follow that they will in every case
be employed on the same work, i.e., the women may not be pushed
out of their present jobs, and possibly the present indifferent
workers, both male and female, will be dismissed, and thus room
made for both the good female workers at present employed and the
men returning.
(2) If women once get installed in this branch of the trade it may
be an economy to keep them after the war (even if it is not now,
owing to the comparatively high wages they can at present
command).
(3) The percentage of men returning will, in all probability, be
small.
(4) The slump in the trade may not be as great as is generally
expected, especially not in this branch, on which the boot trade
148 CREDIT, INDUSTRY, AND THE WAR
depends. As many firms are exclusively working for the Govern-
ment, the reserve stock of boots and shoes is gradually being depleted,
and will be very low at the end of the war, and will need replenishing
as soon as possible, i.e., there may be more work available than is
expected, and therefore perhaps no real reason why there should not
be some permanent scope for women, once they get into the trade.
(5) There should be plenty of work available for men and women,
too, after the war, if only cheap German goods were excluded by tariff.
Some firms in the heavy branches are experiencing a severe
shortage of labour, and would be only too glad if women were physi-
cally capable of doing the work, e.g., one firm has lost 30 per cent,
of its men. Tanning and currying are heavy, dirty work, and the
men have gone, not only owing to enlistment, but also owing to the
increased volume of employment available, which tempts them to
leave dirty work if they can find clean. An isolated firm or two
in the provinces have put women into the tanneries, but it is only
a particularly rough class of women who would do this work, and
it is quite impracticable on a large scale.
B. BOOT AND SHOE TRADE
Women have been largely employed for years, in certain parts of
the work, but there has been very little substitution owing to the
war. Women labour for the most part, both now and before the
war, is to be found in London.
Processes Before the War. The main province for women's
work is the entire making of the upper after it has been cut out, i.e.,
machining, skiving, fitting, closing, lining, eyelet machining, etc.
Also inking and colouring. In one firm women have done machine
clicking for years, but this is very exceptional.
Processes Since the War. In some firms women have for the
first time been put on to such processes as
Cutting heels,
1 Cutting out and sorting socks,
1 Putting in lasts,
Sand-papering soles,
1 Lacing uppers with string,
Clamping on heels,
Riveting the in-soles,
1 These jobs were in some cases formerly done by boys
OUTLETS FOR LABOUR AFTER THE WAR 149
but these are mainly preparatory or subsidiary processes, and the
main processes in the making of the shoe (excepting the uppers, see
above), namely clicking, making the soles, lasting, and finishing
remain exclusively the work of men, and there is no immediate
prospect of any change.
There is some scope for women in a few processes, which are new
and only in demand for the period of the war, i.e., making, nailing,
and quilting half -soles ready to be sent to the Front, special repairs
to heels, etc. Here, women were put on to the work as soon as the
machines were installed, and there was no question of men being
put on to the work, which is very easily and quickly learnt.
Efficiency. In the few processes where women have replaced men
or boys, in some cases the efficiency appeared to be as great, and
in fact women were found to be earning more on the same piece rate
than men on the same job, as they " stuck to it more." On the
other hand, in some cases they were said to be slower, though
steadier and more regular.
N.B. The slowness was most complained of where the experi-
ment of girls' work was newest. The woman could fully hold her
own in the work, where she had been in the trade before the war on a
different process, so that the probability is that increased experience
would approximately equalise the efficiency, but of course none of
the processes enumerated above are at all highly skilled.
Extent of Extra Employment. On the whole the extent of sub-
stitution is probably very small in one large firm the substitution
amounted approximately to 3 per cent., although about 10 to 12
per cent, of the staff consisted of women doing new and temporary
processes. Many firms have had no change at all.
Wages. The whole thing is on so small a scale that it is difficult
to get much definite information. In one case the women were
being paid at the same rate as the men, in another it was said that
the women were still " being trained " and no definite rate had
been fixed.
Previous Employment. The majority of women who have come
into the trade (either to new processes, or to processes formerly per-
formed by men) were not previously in the trade, but were engaged in
serving in shops, domestic service, tea-packing, and one was from
an asbestos factory. This last was put to cutting heels, as her
former experience in cutting up material was found to be helpful
150 CREDIT, INDUSTRY, AND THE WAR
for the new work. In one firm the small number of women who
were to take on men's jobs were selected from women already in the
firm working on " uppers " before the war. In some cases girls
have been taken straight from school to replace boys who have
either left or been put on to more skilled work.
Training. The new processes have been taught to the women in
the factory, but they are simple, and in general an average girl can
reach her maximum in one to two weeks, e.g., one girl nailing
half-soles came into the trade, having formerly served in a sweet
shop (and earned 12s. weekly) and at the end of one week was
earning {2. She has been earning at this rate for several months.
This girl was not exceptional.
Where women have been actually substituted for men or boys
the work is in no case highly skilled, and is such that it can be
learned in the factory without detriment to material.
Question of Permanence. As far as the replacement of men by
women is concerned, the question of the men returning is hardly
a practical one as the percentage replaced is so small. Women
who have been introduced for new " war " processes, will, of course,
have to go, but as a whole their " market value " will probably be
considerably increased and therefore their ability to " hold their
own," as they will have learnt to work to time and to " speed up,"
which, coming from purely time work jobs, such as domestic
service, and shop service, they would not have been able to do
before.
Reasons why there has been little Substitution and comparatively
little Alteration in the Demand for Female Labour in the Boot and
Shoe Trade. (1) The increased demand for boots since the outbreak
of war has been for heavy army boots, and these are almost entirely
made by men.
(a) Because the machining on Army boots is heavy, and is not
generally done by women, though except for the actual weight
of the work, there is no real reason why it should not be done by
them.
(b) Because even where it is, or if it were done by women, the
actual amount of machining to be done on the boot is very much
less than on the ordinary light boot, as there are fewer seams,
i.e., the scope for what is normally the women's branch of the
work is smaller.
'
OUTLETS FOR LABOUR AFTER THE WAR 151
(2) In the light boot trade, there has been practically no entry
of women into men's work for two main reasons
(a) The organised and very emphatic resistance of the
men.
(b) The work is very skilled and requires long training. Parts
of it, notably lasting and finishing, are much too heavy and
laborious.
War Emergency Conditions of Employment of Female Labour in
Substitution of Male Labour. At a Conference of Representatives
of the Manufacturers' Federation and the Operatives' Union, held
at the invitation and under the Presidency of Sir G. R. Askwith,
K.C.B., K.C., Chief Industrial Commissioner of the Board of Trade,
on 3rd June, 1915, to consider the situation that had arisen in the
boot and shoe manufacturing industry consequent upon the serious
depletion of male labour through enlistment, it was mutually agreed
as follows
1. That females may reasonably be employed upon certain
operations hitherto ordinarily restricted to male labour.
2. That the employment of females shall be limited to such
operations as they are physically fit to perform.
3. That females so employed shall be paid the same rates of wages
as are now paid to males for an equivalent quantity of work.
4. That due regard shall be paid to the desirability, where possible,
of separate working conditions where male and female operatives
are employed in the same department.
5. That no female shall be employed in substitution of male
labour without previous consultation with the local Trade Union
officials, and in the event of disagreement the question shall be
referred to the Standing Committee of the National Conference for
settlement.
6. It is understood that female operatives shall only be engaged
in substitution of male labour where and for so long as it is not found
possible to obtain male operatives.
7. That this agreement is an emergency provision and shall have
effect only during the continuance of the present war.
It has been difficult to obtain adequate information with regard
to wages, the Trade Unions themselves furnishing little besides
general complaints, which though perhaps capable of substantiation
yet lack so far the necessary definite evidence.
n (1408)
\
152 CREDIT, INDUSTRY, AND THE WAR
LEATHER GOODS MANUFACTURE
Trunks, bags, and general leather goods, including (now) military
equipment, harness, etc.
(i) LONDON
It is in this branch of the leather trade that the great increase
in the employment of women is to be found, mainly in the military
work, but here again, the actual substitution that has taken
place is practically nil. The increase is due simply to the enormous
increase in the amount of work to be done and consequently in the
demand for labour.
Processes. Before the war women were employed on the follow-
ing processes : machining and stitching, (i.e., including welting on
bags) ; lining, stiffening (on bags) ; some strapping (i.e., stitching
in buckles and inserting locks) ; closing (i.e., on attache" cases).
Since the war, women have to a small extent been introduced
into riveting, and are doing a few subsidiary processes such as were
done by men before the war, e.g., punching holes in haversacks,
also riveting bandoliers, but on too small a scale to have any
practical effect on the trade.
The main feature of women's work in the trade is, however, the
huge influx of women into it on processes which have for years been
largely regarded as " women's " branch of the work. Thus on the
present work there is no question of substitution or replacement
though there may be indirect effects afterwards.
Efficiency. As far as substitution is concerned the efficiency of
women seems lower, e.g., riveting is probably the lightest of the
processes hitherto regarded as men's work, but even here, women
do not seem to have the same grip over the tools ; in one large firm it
is reckoned that a man will probably make almost twice as much
as a woman, on the same piece rate at this work, and it is unlikely
that experience will remove the inferiority to any great extent. In
another case an experiment in teaching riveting to women was
being made, but the work was found a little hard physically, though
not impossible.
It seems clear that the extension of women's work has been in
those processes which were women's before, i.e., machining and
hand stitching, and here in the case of women entering the trade
since the commencement of the war it is found that in the average
OUTLETS FOR LABOUR AFTER THE WAR 153
woman or girl the efficiency becomes moderately good after four to
five weeks' training. (See note on training.)
Extent of Extra Employment. The " substitution " numbers
are exceedingly small in one large firm employed on Government
work, the percentage of women employed on men's work is about
2J per cent., but there are five times as many women employed in
women's " normal " processes as last year, and about 4*5 per cent,
as many men. Total number of employees in this firm is now 2,800.
In another firm (total number of employees now 620) also engaged
on military work, the number of employees is nearly double what it
was last year. The increase is made up in about the following
rates: 92 per cent, of the increase is in women and the rest men.
Here, however, there is a serious shortage of male labour, and an
attempt is being made to train women in riveting. In yet another
firm the increase in labour since last year (owing to military work)
is 30 per cent, more men, 200 per cent, more women.
On the whole, numbers are misleading in this branch, as in hardly
any case have firms been able to keep their civil and military work
separate, i.e., in some large firms all the private work has ceased,
and therefore not only are the new " entries " into the trade engaged
on military work, but those who were already in the firm before
have been turned on to it as well. On the other hand, some are
doing contracts for the Government intermittently, e.g., one firm
(not one of those quoted above) reckons that on its normal work
(trunks) 15 per cent, of the staff consists of women, working mainly
on lining. When the war contracts come in, these women are not
disturbed or displaced, but a large extra staff of women stitchers
and machinists is engaged for the period of the contract. How the
women are employed between the contracts, the firm cannot say ;
they probably drift into other temporary work.
Previous Employment. A large proportion of the girls who have
entered the trade are from other industries, e.g., jam and biscuit
factories, having no previous experience of leather work, but some
firms have selected the girls with reference to their previous
employment i.e., showing preference to those who could machine
well before. There have been very good results, however, in the
case of those who had no previous experience of a similar trade.
Training. Where women are being introduced into stitching and
machining, it is, as a rule, necessary to teach them in a separate
154 CREDIT, INDUSTRY, AND THE WAR
department in order that they may practise on cheap material.
This is done in some of the large firms both for stitching and, to a
small extent, for riveting. The women become proficient in stitch-
ing in about five weeks. One firm has trained nearly 1,000 women
in stitching since the commencement of the war, paying them 2d.
an hour while they learn.
There is very little unskilled work to be done, though the training
schemes are quite a temporary measure during the war.
Question of Permanence. Here again the substitution is on so
small a scale that it will not affect the men returning. The work
is, for the present, regarded as of a more or less temporary nature,
perhaps because (e.g., in riveting) women have not yet had much
experience, or it is too early for employers to say whether they
consider the work so inferior as to be merely a " make-shift "
during the present shortage, or whether there is any permanent
scope for it.
The question of the women stitchers, etc., who have been attracted
into the trade since the war is, of course, much more serious, and
there is a serious possibility of there being no scope for them when
the Government contracts are over and many will have to leave the
trade. Some employers regard the whole thing as a purely tem-
porary inflation of the demand for women in the trade, and consider
that after the war, not only will the war entrants into the trade
have to go, but a considerable time will elapse before private
connections are re-established. In the meantime there may be
a slump which will involve even a dismissal of a proportion of the
pre-war staff. However this view is not universal, and it is possible
that other counteracting factors may enter into consideration,
tending to increase the scope for women's work in this branch
after the war. It would depend on the state of foreign trade, and
on many other far-reaching considerations which it is impossible
to foresee.
Reasons for very Limited Substitution. (1) Most articles require
stitching or machining, and this has been for some years past
women's work, i.e., in a large proportion of the firms here dealt with,
women had been introduced long before the war. The initial
prejudice having therefore been overcome employment of women
had in most cases been " pushed " up to the limit, that limit depend-
ing largely only on physical ability where women had never been
OUTLETS FOR LABOUR AFTER THE WAR 155
before employed, it was as a rule because the whole article was too
heavy.
(2) There would be considerable scope for the employment of
women in the trunk trade, but there is great resistance to this from
the men, who are independent at present, as they know they cannot
be replaced. If there were a still greater shortage of labour than
there now is they might consent to it, as they might be " held up "
in some processes through lack of labour in others.
(3) Most of the men's work, especially in bags and portmanteaux,
is highly skilled, and mainly constructive, i.e., can be handled only
after long experience. If girls were apprenticed to the trade in the
same way as boys there is a possibility that they might ultimately
become skilled workers in the men's jobs, though they would have
to be carefully selected for strength and physique, as the majority
of the work is undoubtedly too heavy for the average woman.
However, as long experience and training would be required there
could be no question of substitution in connection with a " war "
scarcity of labour. Employers state that from a business point of
view it would pay them better to refuse orders than to undertake
such training schemes for a temporary purpose.
Variation and Shifting of the Demand for Labour in Different
Branches of the Leather Trade. The increased demand for labour
in the leather trade since the war has, of course, been in those
branches that are working on war contracts, i.e., initially there
would be an increase of labour required in the tanning and dressing
of heavy leather. Here (as already stated), there is no scope for
women at all, and it is fair to say that, however great the shortage
of labour might become, the place of men could never be filled by
women in this branch.
In the boot trade, the great increase in the demand has been
for heavy Army boots, and here, again, the demand can only be
supplied by women's work to a very small extent. On the other
hand, in those firms where the bulk of the work is at present Army
orders, the amount of work available for women would tend to
decrease (owing to the large extent to which the Army boot is
made by men). In any case, there has been a very considerable
tendency for women to leave the light boot trade and to go into
the military equipment work. Women's wages in the boot trade
tare not particularly good, and the present high wages to be obtained
156 CREDIT, INDUSTRY, AND THE WAR
at equipment work are a great attraction. Skilled women from the
boot trade would, of course, be more readily taken on for military
work than women coming into the trade for the first time. This
tendency has been much greater than the possible temporary
decrease of employment available for women in certain firms would
account for. In fact, there is considered to be scope for introducing
fresh women to the boot upper trade, and at least one scheme
is working at the Cordwainers' College, London, for training women
in fitting and closing, etc. These women are taken mainly from
the bookbinding trade, in which there is at present a certain
lack of employment, and the scheme is found to be very successful,
the women being easily placed when trained.
In the general manufacture of leather goods, there has been a
tendency for women to shift from those firms where work was slack
to those engaged on Army work, i.e., at the present time this would
mean roughly a shifting from small to large firms, as there do not
appear to be many large firms not engaged on Army orders.
To sum up, the greatest demand for women's work in the leather
trade is in the military equipment branch. It is supplied :
(a) To a certain extent from other firms that are slack, in the trade.
(b) To a certain extent from the light boot trade.
(c) Largely from outside.
(ll) BIRMINGHAM
Apart from the actual production of munitions, the leather goods
trade has benefited from the war to a much greater extent than any
other. There is some increase even in the male labour employed.
The number leaving to enlist has been small, largely because the
proportion of men of military age employed in this trade has for
long been less than in most others. This is due to the fact that the
output of saddles and other heavier goods, the only branch of the
industry in which men are largely employed, has been small since
the close of the South African War, and, therefore, very few young
men have entered the trade.
The employment of women in the leather trade has increased to
a very much greater extent than that of men. The large proportion
of women, however, is not mainly the result of the substitution of
female for male labour in definite processes. For years, with the
OUTLETS FOR LABOUR AFTER THE WAR 157
introduction of lighter machinery and greater division of labour,
an increasing proportion of leather work has been performed by
women. This movement has been accelerated by the war, and
especially by the introduction of new machines, worked by women,
to perform processes which men previously did by hand. Even
now, however, the proportion of work done by men is considerably
larger than the respective numbers of men and women employed
would suggest, as, owing to the shortage of skilled labour, more
overtime is being worked by the men than by the women. Although
the processes performed by women in the leather trade are not of
the highest order of skill, judged by the standards of male labour,
yet they take some time to learn. The learning period is decidedly
costly to the firm on account of the material damaged by inex-
perienced hands. Early in the autumn one large firm showed
considerable foresight in transferring a hundred girls from the manu-
facture of golf balls to the leather-stitching department ; the
immediate loss to the firm was about 100, but the advantage since
has been great. During the course of the winter an increasing
number of girls has been drawn from other work to the leather
trade, and though it is estimated to take about a year for girls to
become fully proficient, many of them are already earning
comparatively high wages.
As a precautionary measure one firm is training a few girls in the
heavier cutting processes, so that they may be able to take the places
of men, if more of these leave the trade. Training schools have also
been established in London and elsewhere.
There is unfortunately little doubt that there will be a great deal
of unemployment in this trade at the close of the war ; this will be
due, not mainly to competition between men and women, but to
the great diminution in the demand for leather goods. Such a
period of slackness of trade and considerable unemployment in the
leather industry followed the South African War. It is to be
feared that the greater output during this war may make the
subsequent restriction of business even more serious.
TAILORING TRADE
The following shows the increase of employment in the tailoring
trade over the ten years, 1901 to 1911 :
158
CREDIT, INDUSTRY, AND THE WAR
Census 1901.
Census 1911.
Increase or decrease %.
Females.
Males.
Total.
Females.
Males.
Total.
Females.
Males.
Total.
117,640
119,545
237,185
127,115
122,352
249,467
+ 8-1
+ 2-3
+ 5-2
Tailoring is a term applied to the making up of various qualities
and kinds of outer garments male and female ranging from best
bespoke work, e.g., men's Court and dress suits, to Kaffir clothing
which is shipped mainly to South Africa, and cheap dungarees
such as workmen's overalls. The trade now employs about 143,000
women, and since the war this number has been increased by about
20,000, while the total number of men employed has decreased
by almost 10 per cent. In no other trade save munitions has the
increased employment of women been more marked since the war.
It is impossible, however, to speak in terms of the trade as a whole,
and it is necessary to distinguish its various branches in order to
appreciate the nature of the increase of women's employment. The
trade may perhaps be conveniently classified into the following
branches :
Men's Retail Bespoke ranges from Court and dress suits to high-
class suits made to measure. This part of the trade employs almost
entirely skilled male labour. In the very best work the suit is made
practically throughout, mostly by hand, by one person the indi-
vidual system. Most of the work is, however, done on the sectional
system (subdivision of labour cutting, basting, machining, pressing,
and finishing). The war affected this part of the trade first, and it
has never recovered from the depression, save temporarily for a few
weeks during the height of the Spring season, whilst orders for
officers' uniforms have partially counterbalanced the loss of civilian
trade. The men who have left the tailoring trade almost all
belonged to this branch.
Ladies' Bespoke. Much of what applies to men's bespoke work
applies also to this branch, though generally speaking the work
is lighter. It is for the most part a man's trade and like men's
retail bespoke work needs considerable experience and skill. The
war has caused considerable depression.
Ready Made and Wholesale Bespoke. Ready-made work is cheap
OUTLETS FOR LABOUR AFTER THE WAR 159
work done to stock sizes and supplied to retail shops or to merchants
abroad. Wholesale bespoke consists of either " ready-made altered
to fit " or of orders for a comparatively cheap class of work, for which
individual measurements are taken and passed on to the factory
or workshop by retail shops or " tally-men " who obtain orders from
door to door in working-class neighbourhoods. In this work the
cost of production is very much lower than in the retail bespoke
branch of the trade, and depends to a -large extent upon the use of
machinery and power, and a highly evolved sub-divisional system.
The work employs, at any rate in the factories, a large proportion
of female labour (about 85 per cent.). The work is done either
in factories or in small workshops (mostly Jewish), working almost
always as sub-contractors to factories or wholesale agents. The
chief centres of this branch of the trade are London, Leeds, Norwich,
Manchester, and Bristol. There is a larger proportion of small
workshops in London than in the North of England, and provincial
centres of the trade, such as Norwich, employ a greater proportion
of female labour. This is owing probably to the fewer alternative
avenues for women's employment to be found in these districts.
London is the centre in which the small master or sub-contractor
with his workshop flourishes, and he has played a large part in the
making up of khaki clothing. He is generally a Jew, and normally
does the lower class of retail bespoke and the better class of whole-
sale bespoke work, and though he employs in proportion less female
labour than the factories, he is able, owing to the skill and speed of
his workmen and the way in which he organises and subdivides
his work, to compete successfully with the factory except in the
cheaper grades of work.
Medium and Juvenile Tailoring. This branch of the trade con-
sists of the making of cheap grades of trousers and waistcoats, which
comprise almost a separate branch of the trade, and boys' and
children's outer garments. It is a slightly lower grade of work
than the wholesale bespoke and employs almost entirely women and
girls.
Export Work or Shipping or Slop Trade. This branch of the trade
consists of exceedingly cheap ready-made garments exported to be
sold to natives in South Africa and elsewhere. It also includes
dungarees, such as workmen's overalls, and drills such as surgeons'
coats, and cheap cotton clothing, most of which is exported. It
160 CREDIT, INDUSTRY, AND THE WAR
is mainly women who are employed in the making of these
goods.
The above divisions are not clear-cut, and the lower the grade in
the trade, the more difficult does it become to differentiate labour or
process. It will be noticed that, generally speaking, the higher-grade
work employs a greater proportion of men than the lower grade and
depends less upon machinery and more upon skill and experience.
During August, 1914, a general depression set in throughout the
tailoring trade, which showed itself most in those parts of the trade
dependent upon private orders, e.g., the retail bespoke and to a
certain extent the wholesale bespoke trades. Shipping orders (the
lower-class trade) also began to fall off, not only because of a
slackening in demand and temporary difficulties common to export-
ers with regard to credit, but because of the shortage of shipping.
Owing to Government measures the balance of trade soon readjusted
itself and the demand for clothing from merchants abroad increased.
This was due to good prospects of the harvest in South Africa, and
to the cessation of Austrian and German competition, but the
shortage of shipping nevertheless remained a factor which prevented
the export of goods in their normal quantities.
The wholesale bespoke ready-made and medium branches of the
trade were probably less affected by the depression than the other
branches, though even here a considerable contraction of trade
occurred. During September and October, however, War Office
and Territorial orders had the effect of more than restoring this part
of the trade to its normal proportions. Khaki became the decisive
factor affecting not only the large factories but also the sub-contract-
ing workshops, for with the enormous increase of Government orders
restrictions, such as those affecting sub-contracting, were relaxed.
In normal times the military tunic and great-coat can be made up
only by experienced and special labour. Owing to a certain extent
to the dislocation of the trade and the shortage of cloth, but in a
greater measure to the fact that few manufacturers were sufficiently
experienced to make up military clothing, khaki uniforms during
the first months of the war were not being turned out in the quan-
tities required by the War Office. The design of the military uniform
was therefore simplified. This at once (October) made it possible
for many firms whose experience was limited to civilian work to
undertake the new military pattern, and within a few weeks
OUTLETS FOR LABOUR AFTER THE WAR 161
the orders for khaki clothing were spread throughout the
trade.
Those branches which were best equipped, by reason of the
nature of their previous civilian work, their machinery and the
division of their labour, to manufacture khaki clothing for the new
armies were the wholesale bespoke, ready-made, and medium
branches. To a certain extent the slop and shipping branches of
the trade were pressed into making the new clothing, though they
were better fitted for, and chiefly engaged in making up lighter
goods : belts, shirts, kit-bags, mess-tin covers, canvas bandoliers,
haversacks, nosebags, bedding, etc., for Army requirements.
The retail bespoke branch was unable economically to produce
the new Government clothing even at the comparatively high
flat rates which were given. Consequently men from the retail
bespoke trade entered the wholesale bespoke and ready-made
trades as skilled hands, e.g., viewers and foremen, and in those parts
of the work requiring physical strength, such as pressing.
The military demand was for clothing that could most economic-
ally be made up by power machinery in the factories, and in small
workshops where a highly evolved sub-divisional system made it
possible to compete with the factories. The great revival in the
trade was only a revival in that part which normally employs,
outside the cutting rooms, a preponderance of female labour.
The great increase in women's employment in this trade and the
considerable decrease of men's employment which accompanied it,
should not be interpreted as showing that women have displaced
men in the sense that women are now doing processes previously
done by men. Men's employment has been naturally res-
tricted, owing to a diminution of orders in that part of the
trade in which men's labour predominated, i.e., the retail
bespoke trade. Women's employment has enormously increased
owing to an unprecedented demand on that part of the trade in
which women normally predominate, i.e., the wholesale bespoke
and ready-made branches. The nature of the problem may perhaps
be made clearer by a reference to the actual processes involved in
making up military uniforms.
The cloth is obtained in rolls, and has first to be cut into pattern.
This is done by men working a band-knife machine. The pieces of
cloth are laid one upon another, 24 to 30 deep, and are then cut by
162 CREDIT, INDUSTRY, AND THE WAR
the machine. The work is heavy, entails much stretching and
strain, and requires considerable skill. A false movement
of the cloth may " spoil " dozens of suits and mean consider-
able financial loss. Various rumours and a few instances of
women employed as band-knife cutters have occurred, but
so far women have displaced men only in the operation of the
" laying out " and " rolling up " of the cloth. An exceptionally
strong woman might undertake band-knife cutting, but in almost
every case the work is unsuitable for women. Women, however,
do cutting on lighter cloths and in smaller quantities in the
ladies' tailoring part of the trade, though even here it is excep-
tional. The Trade Unions concerned strongly oppose the intro-
duction of women into the cutting-rooms, even where laying out
and rolling up, normally done by boys, are the only processes done
by them. They have agreed, however, that women shall be engaged
on these processes, for the duration of the war. Women
themselves do not seem desirous of undertaking the work.
Fixing and Basting, i.e., placing the pieces in their places ready
for the machinist. This is skilled work, and though it is usually
done by men, there seems no reason why it should not be undertaken
by trained women. Basting is often done by women.
Machining, by power or treadle machines, employs more workers
than any other process. Save on very heavy work, e.g., overcoats,
the process is done by women. In small workshops, more women
machinists have been employed since the commencement of the
war.
Finishing, i.e., cleaning or taking out cotton tacks and cutting off
cotton ends ; button-holing by machine, buttoning by machine
or hand, and " felling in " pockets, linings, etc., is entirely
women's work, and is worse paid than any other process. There is
a felling machine on the market, and though it is likely to have an
enormous influence later on this branch of women's work, which is
partly done by home workers, it has apparently not yet been
brought sufficiently to the notice of the trade. The machine costs
about 70, but owing to the present low rates paid to women
finishers, the incentive to install this machine does not appear to
be strong.
Pressing consists of the under pressing of seams, and pressing-off
the whole garment. The seam pressing, which is lighter work than
OUTLETS FOR LABOUR AFTER THE WAR 163
the pressing-off, is done by women. On cheap goods a machine
press the Hoffman is used by a few firms. This press was
recently introduced from America, and is worked by women. It has
probably displaced some men, but is not used to any great extent.
Other mechanical presses are also used, but none to any appreciable
degree.
To meet the seasonal fluctuations of demand in the tailoring trade,
the factories depend upon the smaller employers or sub-contractors,
and these sub-contractors depend upon other sub-contractors and
home workers to assist them in time of excessive activity. There are
always a considerable number of small employers and home workers
on the fringe of the trade with whom work is placed to be made up
during periods when trade is exceptionally brisk. It is difficult
to say how large this reserve of labour is, but in London it is a very
elastic factor. It consists of people employed in various allied
dress trades such as shirt- and dress-making ; of married women
who wish to supplement the casual earnings of their husbands, and
casual home workers ; and of small " slop " tailors who undertake
better-class work when they can get it. As army clothing orders
filtered through the tailoring trade, this reserve of labour was
quickly absorbed. Employment amongst unskilled workers was
exceptionally good, and few women were drawn from this source.
But many ladies' tailors, dress- and blouse-makers, as well as
charwomen, cigar and cigarette makers, box-makers, shorthand
typists and foreign correspondents, book and envelope folders,
babies' and women's boot and shoe makers, umbrella makers, and
workers in luxury trades generally, were attracted to the trade.
Any woman who was able to manage a machine could obtain
employment. The output was increased by extra overtime, the Home
Office allowing the relaxation of factory legislation on application
by particular firms. To meet the demand, new factories and work-
shops for the manufacture of khaki clothing were started, and
other workshops were converted for the purpose of making the
necessary clothing for the Army. Premises engaged in making
underclothing, ladies' mantles and costumes, as well as ordinary
tailoring workshops, were immediately adapted for the purpose.
In one instance, a walking-stick manufacturer suddenly gave up his
trade, and a week afterwards was employing a dozen people in
making khaki clothing. In another case, a refreshment contractor
164 CREDIT, INDUSTRY, AND THE WAR
for weddings gave up his ordinary business and converted his
premises into a khaki clothing factory.
By the middle of February the New Armies had been clothed, and
contracts were cut down by about 50 per cent. The clause pro-
hibiting sub-contracting was reinserted into War Office (but not
Territorial) agreements, and those small sub-contracting workshops
which were not taken over by the contractors, were soon busy on
overdue civilian and shipping orders.
The War Office has decided shortly to return to the original
pattern of Army clothing and this will mean a reduction in the
number of those firms able to undertake the work. Merchants'
stocks of civilian work are, however, depleted, and the shipping
trade is brisk, so that the diminution of Government orders or
their concentration in fewer firms will probably not cause for some
months any appreciable increase of unemployment in the trade.
Workers in dress who were absorbed by the tailoring trade will
probably still find a demand for their labour in other branches of
the clothing trade.
To sum up :
(1) Compared with other trades, the tailoring trade shows a very
considerable increase of women's employment, probably an increase
of 20,000 or 14 per cent., owing to the placing of Government orders
for military clothing.
(2) This increase has occurred in the ready-made, wholesale,
bespoke and medium branches of the trade in processes such as
machining and finishing, which are normally women's work. There
has been no appreciable displacement of men by women save
in minor operations, e.g., " laying out " and " rolling up " in the
cutting rooms.
(3) Before the war the limit to which women could be employed
in tailoring was practically reached. Men's processes are either too
heavy or require more training than the majority of women are
prepared to give.
(4) Military tailoring is normally a special branch of the trade.
The simplification of the design of military clothing made it possible,
however, for firms normally doing only civilian work to undertake
the manufacture of khaki clothing. Further facilities were afforded
by the relaxation of the clause in agreements prohibiting
sub-contracting.
OUTLETS FOR LABOUR AFTER THE WAR
165
(5) The War Office clothing requirements have now been met, and
clothing contracts have been considerably reduced in consequence.
Sub-contracting has been prohibited and it is stated that the original
design of the clothing will shortly be revived. This will result in
a decrease in the volume of women's employment.
(6) The future of women's employment in the tailoring trade will
be affected by the further introduction of machinery. Since the
outbreak of war, small workshops have introduced machinery and
power to an unprecedented degree. The use of the Hoffman press,
which is worked by women, has displaced men hand-pressers to a
limited extent. A felling machine, which would displace women
finishers, is on the market, but it has not yet been taken up to any
extent by the trade.
CHEMICALS
1901 Census.
1911 Census.
% Increase or
Decrease.
Per-
sons.
Males.
Fe-
males.
Per-
sons.
Males.
Fe-
males.
Per-
sons.
Males.
Fe-
males.
Total Workers
88,635
66,068
22,567
131,844
98,598
33,246
+ 48-7
+ 49-2
+ 47-3
Explosives and
Cartridges
10,969
6,697
4,272
9,279
5,256
4,023
Chemicals and
Alkali . .
27,220
23,293
3,927
40,562
33,473
7,089
+ 49-1
+ 43-7
+ 80-5
Oil, Grease,
Soap, Colours,
Dyes, etc.
26,516
21,662
4,854
43,465
35,737
7,728
+ 34-7
+ 60-5
+ 59-3
Lucifer
Matches
2,406
541
1,865
2,700
743
1,957
+ 12-2
+37-0
+ 5-0
The following figures show the increase or decrease of employment
in the trade from the outbreak of war to the middle of February :
Chemical Trades.
Net expansion or contraction
% in Feb., 1915, of numbers
employed in July, 1914.
Males.
Females.
Heavy Chemicals ...
Chemicals for Textile Trades, etc.
Drugs and Fine Chemicals
Soap, Colours, Varnish, etc.
Explosives ....
+ 11-0
+ 14-1
+ 12-6
+ 16-7
+ 69-0
+ 5-2
+ 18-6
- 1-5
- 0-9
- 38-1
166
CREDIT, INDUSTRY, AND THE WAR
There has been a steady increase in employment in the chemical
trade from the outbreak of war. The number of women engaged
on explosives which in July, 1914, was about 8,000, has considerably
increased, workers having been attracted from the photographic
and manufacturing branches, where work was comparatively
slack, owing to lack of materials. Women have also been attracted
from depressed trades such as printing, furniture, cycle and hard-
ware. The division of male and female labour in the trade seems
clearly defined, and there is practically no question of women
working on processes previously done by men. In some cases women
are being employed in the making of photographic plates.
COTTON
The following table shows the relative numbers of men and women
employed in different processes in the cotton industry:
Census 1911.
Per-
Per-
% In-
% In-
centage
centage
crease
crease
Cotton.
Total No. of
Total No. of
of
of
of
of
Females of
Males of
Women
Men
Women
Men
J10 years and
upwards.
10 years and
upwards.
occu-
pied.
occu-
pied.
in 1901
Census.
in 1901
Census.
Card and blowing
room processes
55,488
14,695
79-1
20-9
Spinning p r o -
(.
cesses .
55,488
84,079
39-8
60-2
Winding and
Warping
59,171
20,486
74-3
25-7
Weaving
190,922
82,341
69-9
30-1
Other processes .
10,768
31,779
25-3
74-7
Cotton all pro-
cesses .
371,837
233,380
61-4
38-6
+ 11-9
+ 18-5
During the first four months of the war, this industry was the
most depressed of all trades, and in considering unemployment
figures as a whole this fact should be noted. Before the war, produc-
tion had over-reached demand, and in addition, at the outbreak of
war, the trade suffered from other attendant disadvantages, viz.,
high rates for freight and insurance, the prohibition of code tele-
grams, and, during August, the dislocation of the machinery of bills
of exchange, as well as the loss of German markets. x
1 For further information on the War and the Cotton Trade see article
by Prof. S. J. Chapman and D. Kemp in Economic Journal, March, 1915.
OUTLETS FOR LABOUR AFTER THE WAR
167
The seriousness of unemployment in the cotton trade is not
merely to be seen in the figures of unemployment, for in textile
industries as in mining, a contraction in the demand for labour is
usually met by a reduction in the time worked rather than by the
discharge of a small number of workpeople. The following table
traces the changes in the cotton trade from the outbreak of war
to the middle of February :
(Number employed in July = 100.)
Males.
Month.
On Short
Time.
On
Overtime.
Contrac-
tion of
Employ-
ment
Known to
have joined
the Forces.
Net
Displace-
ment ( - )
or Replace-
ment (+ ).
September, 1914 .
43-5
o/
/o
0-1
172
&
- l2-9
October .
40-5
0-4
17-1
6-8
- 10-3
November ,,
42-1
0-9
14-8
8-3
- 6-5
December ,,
30-4
1-6
13-3
9-6
- 3-7
February, 1915 .
11-2
2-2
11-1
11-6
+ 0-5
Females.
Month.
On Short Time.
On Overtime.
Contraction of
Employment.
September, 1914
44%
0*2
14%
October,
44-2
0-5
14-0
November,
46-2
0-9
11*5
December,
34-0
0-8
9-3
February, 1915
15-5
0-9
3-0
The general improvement in December was due partly to recovery
of trade with the East, but in the main to the increase in the number
of Government orders placed in Lancashire. To a very large extent
these orders involved the substitution of coarser for finer yarn, a
change which involved some adjustment in wages and working
conditions.
From many cotton towns a shortage of male labour was reported,
especially of piecers and of various classes of labour in the winding
rooms. Spinners manipulate a pair of machines and require the
aid of two operators big piecers (men earning up to 26s. per week)
and little piecers (boys). Before the war a serious shortage of
little piecers was being felt, as boys now take less kindly to mill life.
12 (1408)
168 CREDIT, INDUSTRY, AND THE WAR
Now the problem is complicated by the dearth of " big piecers "
who have enlisted. The employment of women as piecers is a most
controversial topic. A certain number of women is normally
employed in some districts, generally in colliery districts when
youths are not available, or in rural districts. Attempts have been
made since the war to introduce young women and girls to assist
in creeling, but there is a strong feeling on the part of the men against
their employment mainly on the ground that women, not being
so physically strong as men, cannot do much of the work performed
by a male piecer, and they tend to undercut men's wages. Substitu-
tion has, however, taken place, e.g., in Bolton alone the number of
women piecers has risen since the war from about 20 to 300. All
are members of the Spinners' Union. The number of piecers has
also risen in Manchester.
The point of view of the woman is not necessarily that of the
man, and a prominent woman Trade Union organiser in Lan-
cashire who is secretary to a Lancashire Trade and Labour Council
sees no objection to women being employed as piecers, save the
artificial restriction which prohibits a woman from becoming a
spinner. A few women have, however, for years been employed
as " spinners " at Lostock Junction, Lanes., at lower rates than the
men. Efforts are being made by both the Board of Trade and the
Local Government Board to induce the Operative Spinners' Union
to consent to the employment of women in spinning mills. The
membership of the Spinners' Amalgamation includes 1,500 women
as partial members. The objections of the men to the introduction
of women as spinners are stated to be :
(a) The probable undercutting of the wage rates paid to men
spinners.
(b) The conditions when men and women work together are
objectionable morally.
(c) Women's dress is unsuitable among swiftly moving machinery
One Trade Union official was of opinion that " the stoppage of
the mills would be preferable to going back to the system of fifty
years ago when women's labour was not at all uncommon in the
spinning rooms. The work is no more suitable for women than
coal-mining."
Weaving is done both by men and women, who are paid the same
piece-rates, and do the same work, except that :
OUTLETS FOR LABOUR AFTER THE WAR 169
(a) Men work the wider machines (quilts, etc.).
(b) Men more often work six than four looms.
(c) Men are able to set their own machines, hence they lose less
time than the women.
(d) Women do not rise to be overlookers.
The tendency is for the number of men weavers to decrease.
Men prefer spinning and other better-paid trades. As trade has
been very slack since the beginning of the war, the need for
introducing more women in weaving has not arisen.
Women and men warpers are paid at the same piece-work rates,
but men generally work two machines, while women work 1 or 1|,
i.e., two women to three machines.
Both men and women are employed as twisters and drawers,
and they work on the same piece rates. The women earn from
45s. to 60s., out of which they pay the wages of a reacher, about 10s.
Women also pay the men to lift heavy beams, although the men
sometimes help the women for nothing. Women are never employed
as beamers ; the work is too heavy, and the men would object. The
number of women twisters and drawers is being slightly increased
as the result of the war.
Women are normally employed in the warehouse section of dyeing
and bleaching, in cutting up lengths, silking, ribboning, and folding
light materials. Men normally fold the heavier materials and work
the lapping machines. The rates of pay vary between time rates
good 16s. to 17s., low 12s. to 13s. and piece rates 20s. to 25s. The
Union tries to enforce a minimum of 18s. for women, but this is no
more than an aspiration, the agreed scale of wages in 1912 for girls
of 14 to 18 years of age being 5s. to 12s. ; in other cases 10s. as a
maximum.
Women have also taken men's places in dyeing-machine minding.
Women are not normally engaged at all in the dyeing or bleaching
departments, as the work is said by the men to be too dirty for
women. The Trade Union rule with regard to women's employment
in this process is being relaxed, conditional on women being paid the
same rate as the men.
Since the war, women have been introduced in some cases as
lapping machine minders, work which is normally done by men.
Though stated by the men to be work too heavy for women, it could
probably be done quite well by them. The men's Trade Union,
170
CREDIT, INDUSTRY, AND THE WAR
however, will probably allow the employment of women on this
process, provided that they are paid at the same rates as the men.
During the last forty years there has been a tendency for the
number of men among card-room operators to decrease in proportion
to the women, the number of males in the trade being practically
reduced to a minimum. The men's work, however, has not been
taken by women, but a woman's process has displaced a man's
process.
Ring-spinners are mainly women, though a few male ring-spinners
are employed to do night work. Competition is increasing between
female ring-spinners and male mule-spinners. The women earn from
15s. to 32s. per week, and the men from 30s. to 70s.
Since the war, a proposal was made by a certain employer to
the Trade Union that three women each earning 15s. a week should
be allowed to take the place of two men each earning 32s. a week
who had enlisted for service, the women to do the lighter part of the
work only, while the heavier part was to be transferred to the men.
The proposal was unanimously rejected by the Union according to
its usual practice of resisting strongly the employment of women
on the lighter parts of men's work at lower rates, while the men are
left with the heavier parts and no increase of pay.
In the cotton dyeing and finishing branch of the trade women are
excluded normally from all wet processes, and there has been no
relaxation of Trade Union rules since the war. In the calico print-
ing trade, women have replaced men, but in no other process. There
is some evidence of male and female competition in cotton polishing.
WOOL AND WORSTED
The following are the numbers employed in the trade according
to the Census of 1911 :
Wool and Worsted.
Males.
Females.
Increase
on 1901.
Increase
on 1901.
Spinning processes
Weaving processes
Other processes .
Total .
Wool-sorting, cording, comb-
ing ....
25,391
24,419
29,854
45,310
67,499
8,101
Males.
Females.
79,664
120,910
9-0 % 4-2 %
15,867
6,238
OUTLETS FOR LABOUR AFTER THE WAR 171
The trade has been considerably affected since the war by large
Government orders for khaki and other cloth. The war boom is
now, however, less than it was in the winter and spring, but an
accumulation of overdue orders for civilian purposes has kept the
trade brisk in spite of the reduction in the Government demand.
The number of women employed has increased since the war, and
especially during the month of December, when the Government
demand was at its zenith, but the extra women employed have
come into the trade rather to take up new work than to replace
men. A shortage of dyes has from time to time hindered production
in the trade.
Employers are now (August) finding increasing difficulty in obtain-
ing both male and female labour, and in a number of cases are train-
ing and bringing new women into the trade. They complain of the
difficulty, owing to separation allowances and billeting, of persuading
married and other women to return.
The distinction between " woollen " and " worsted " is of primary
importance in this trade. Broadly, the difference is one of locality
as well as of quality of wool. The worsted trade is practically confined
to the west of the West Riding of Yorkshire, where, by processes
including " combing," which are carried on generally in separate
mills, the long wool is spun and woven into fine cloth. Bradford,
Huddersfield, and Halifax are the chief centres of this trade. The
woollen trade is carried on in the eastern part of the West Riding,
with Leeds as the chief centre. Here the short wool undergoes
several processes, including carding, in the same mill. The dis-
tinctions between the long and the short wool, however, are breaking
down with the introduction of improved machinery, which enables
short wool to be combed as well as the long wool. The fundamental
distinction is that in the worsted the wool is combed so that the
fibres lie in horizontal lines, while in the woollen it is carded to
present a felted appearance.
Men and women weavers are normally employed on the same
processes save that :
(a) Men do night work ;
(b) Men are able to " tune " their own machines and do small
repairs, and so save time and the expense of a mechanic ;
(c) Men are generally employed on the better-class and better-paid
work.
172 CREDIT, INDUSTRY, AND THE WAR
Men weavers are confined mainly to the Huddersfield district,
where fine " suitings " are made, as against " dress materials " in
Bradford, and " tweeds " in the Leeds or " heavy woollens "
district. Outside the Huddersfield district, weaving, save in plush
weaving and certain better class branches, is a woman's trade.
In slack times the men on night work are the first to suffer from
unemployment, and are not infrequently supported by their wives
on day work.
Both females and males are normally employed in the Hudders-
field district as winders, warpers, and condenser minders. Boys
as well as women are employed as winders. In Scotland (Tweed
district) boys are sometimes employed as condenser minders, but
in Yorkshire this work is generally done by men or women.
There are two separate piece-work rates for men and women
weavers in Huddersfield the men earning an average wage of
27s., the women 18s. In Bradford and Leeds men and women are
generally employed at the same piece-work rates, but no wages
scale has been fixed as in Huddersfield, while the average is lower
than in Huddersfield. On " khaki " work women may earn up
to 27s. a week or as much as an average man. A number of married
women have since the war returned to weaving, but, as the practice
is for women to return to the trade under their maiden names, no
exact information on this point is available. There is always a
reserve of married women " jobbers " or " casuals " in the trade
who come in at times of pressure.
Where men and women are employed as machine woolcombers
on the same processes, either :
(a) Men do night work and the women day work, as in the case of
"comb minders," ' 'strong boxminders," or "furnishing boxminders'' ;
or (b) the women work lighter machines, as in the case of
" breakers off " women 2 laps, men 4 laps ;
or (c) the process itself is somewhat different, as in the carding
department, where men or youths feed the machines on the
" hopper " principle (bowl feeders), while women feed the machines
on the easier " feed board " system. There is little doubt that
women could, and would, long ago have been employed as " bowl
feeders " on the " hopper " principle, were it not for the opposition,
or as some would have it " the chivalry/' of the men on the ground
of the unsuitability of the work for women.
OUTLETS FOR LABOUR AFTER THE WAR 173
Where men and women do exactly the same work, day work and
night work, a capable woman will sometimes turn out more than
a man, but the men have, as a rule, the larger output. There is no
doubt, however, that the lower wages of the women are out of
proportion to their lesser output. In this branch of the trade
there appear to be no cases of women taking men's work since the
war.
Some women weavers have come in, attracted by the higher wages
in wool-combing. Attempts were made in the early months of the
war to put women on night work, but the men then successfully
resisted this on the ground that there were sufficient semi- or
unskilled men who could be drawn from other trades or be promoted
in the woollen trade to meet this temporary demand. The men say
they do not object to the introduction of women labour, provided
that there is a shortage of male labour and that the women are paid
the same rates as the men displaced. By this time, however, the
shortage of both male and female labour is very obvious.
HOSIERY
Since the war the hosiery trade has been steadily and more than
usually busy, and the employment of women has considerably
increased. For some years the number of women drawn into the
trade has been proportionately larger than that of the men, whose
numbers have slightly decreased, as the following figures show :
Males.
Females.
1881 .
1891 .
1901 .
1911 .
18,862
18,200 ( - 3-5)
13,893 ( - 23-7)
14,957 (+ 7-5)
21,510
30,887 (+ 43-6)
34,481 (+ 11-6)
41,431 (+ 20-2)
The men in the trade are mostly elderly, and there has been no
displacement of men by women. Considerable efforts are being
made to capture German trade, and employers are laying down
more plant :
(a) Small machines of the Griswold type on which women are
employed.
(b) Large machines of the Cotton's type on which men are
employed.
174
CREDIT, INDUSTRY, AND THE WAR
Trade is very brisk, large Government orders having been placed
for pants and vests, which are being made on Cotton's machines
(men's process) ; and for socks, which are being made in huge
quantities by women on seamless machines. There is a shortage
of women in the trade, especially in the rural districts, although
they have been drawn in in large numbers, particularly in the East
Midlands, from the lace trade. Belgian refugees have also found
employment in this trade. Old men are being employed as winders.
In London, women from depressed trades such as Court dressmaking,
have been successfully employed in making socks by the Central
Committee for Women's Employment.
SILK TRADE
The following figures show the percentage decrease of male and
female labour in this trade over the ten years 1901 to 1911 :
Census 1901.
Census 1911.
Increase or Decrease
per cent.
Persons.
Males.
Females.
Persons.
Males.
Females.
Persons.
Males.
Females.
34,847
10,380
24,467
29,643
9,087
20,556
- 14-9
- 12-5
- 16-0
It will be seen that of recent years the silk trade has been a
declining one.
At the end of the first six months of war the contraction of the
number of women employed was 3' 4 per cent, of the number
employed in the previous July. The number of men recruited was
13'7 per cent., and the contraction in male employment was 8 per
cent., leaving places to be filled to the extent of 5' 7 per cent, of the
total number of men employed in July.
Women are normally employed as Winders, Coppers, Denters,
and Spoolers. They are employed in Weaving in places outside
Leek, and the employment of women weavers is increasing in towns
like Cheadle, Derby, Prestwich, Macclesfield, Manchester, and
Nuneaton. The men's Union in Leek has made it impossible to
employ women in that town, with the consequence that the silk
weaving industry, save the very high-class trade which employs
OUTLETS FOR LABOUR AFTER THE WAR 175
only about 120 men, has almost entirely disappeared from Leek.
Since the war the Leek men's Union has financed the organisation
of the women weavers outside Leek into a Trade Union.
The women weavers' piece rates are generally about one-half
that of the men's, and they earn from 12s. to 14s. a week, as
compared with the men's 30s. It is stated that :
(a) The women need more supervision than the men.
(b) They require the assistance of a'loom " tackier." One tackier
generally attends 30 to 40 women, and his wages are 30s. per week.
In Cheadle four tacklers are employed to 300 women.
Since the war the employment of women has largely increased
in the net silk, spooling, and the artificial silk fabric branches of the
trade, where women normally predominate. There has been a
certain acceleration of displacement of men weavers by women.
When this has taken place the men have asked that the women
shall receive the same wage rates as the men. At present no
women have been introduced to processes which have been hitherto
performed by men only. Since the war the men but not the women
weavers have received a war bonus of 1\ per cent.
Braiding, Tie and Scarf Knitting. Both men and women are
employed as Braid Tenters. They do the same work save that :
1. Women mind 1 to 5 large machines and they are also assisted
by a " tackier."
2. Men mind 30 to 60 small machines and sometimes 2 or 3 larger
machines as well.
The men are paid piece-work rates and the women time
rates, the men earning 30s. to 32s. a week, and the women about
16s. a week (Trade Union rate). It is said that the men prefer to
keep the women on time work as they fear to be ousted by women
on piece work ! Since the war a number of women braid tenters
have displaced men, but they still receive the women's rates of pay
and not the men's, with Is. extra as war bonus.
On scarf and tie knitting men and women are employed at the
same piece-work rates, but the men have the larger output . Women
mind 2 to 4 machines, and also require the assistance of a " tackier."
Men mind 6 to 8 machines unassisted. Men are also employed on
night work, for which they are paid at a rate and a half. Women,
however, are increasingly employed on these processes. Since the
war women have also been employed as overlookers.
176
CREDIT, INDUSTRY, AND THE WAR
FOOD TRADES
The following table shows the increase per cent, from 1901 to
1911 of men and women employed in branches of the food trades
most affecting women's labour :
Census 1901.
Census 1911.
Increase per cent.
Food Trades.
Males.
Females.
Males.
Females.
Males.
Females.
Jam, Preserve, Sweet
Makers . . .
6,232
15,899
9,332
20,058
49-7
26-1
Chocolate, Cocoa
Makers ....
2,381
5,220
5,368
12,508
125-5
140-0
Mustard,' Vinegar,
Pickle Makers . .
2,006
2,184
3,659
3,522
82-4
61-2
Bread and Biscuit
Makers
71,775
4,974
78,730
9,887
9-6
100-0
Grain Millers .
22,830
775
23,739
1,742
4-0
124-7
Fish Curers . . .
2,255
608
3,051
1,451
35-3
138-6
Provision Curers .
364
561
54-1
From these figures it is evident that of recent years the proportion
of women employed in grain milling, chocolate making, bread and
biscuit making, and fish curing has increased relatively to the
number of men employed. Since the war the grain milling and
meat-preserving sections of the trade have been especially bus}^
though in the earlier weeks of the war there was a general depression
throughout the trade. The preparation and making up of rations
for the troops have led to a considerable increase of female labour in
the preserving section of the trade, which normally employs a
considerable proportion of women. It is a common practice in the
trade, for the factories to include tin making and paper-bag making
departments. The above figures, however, do not include such
extra workers, who really belong to another craft, though the state
of their employment naturally depends upon the state of this
particular trade. The amount of displacement of men by women
throughout the industry has been very limited, though it has
occurred in certain processes where men were unobtainable, but
much of the work is heavy work and it is doubtful whether it is work
in which women can be permanently retained.
Sugar Confectionery, Fruit Preserving, Chocolate Making, Pickling,
etc. This trade was subject, in the early months of the war, to a very
considerable shortage in raw material sugar. The Government,
OUTLETS FOR LABOUR AFTER THE WAR 177
however, came to its rescue, and bought up large supplies, and the
trade began to revive in spite of the prohibition of the export of
certain of its products. The trade employs a great number of
women, who are normally engaged in such processes as picking,
cutting, and preparing fruit and pickles. They also handle the
machines for weighing and packing tea, coffee, cocoa, confectionery
and corn-flour, besides attending the stamping and cutting machines
in the tin-making department.
The trade employs a large proportion of a strong and somewhat
rough type of women, and though the men's work is heavy a few
of the women have, since the war, been employed on men's work,
e.g., in boiling sugar and peel, making sweets, loading and unloading
the goods-lifts with tins, and carrying cardboard for packing.
Boiling sugar and peel is a very arduous task and the heat is
excessive so much so that the women are frequently known to
faint. Only the strongest women undertake this work. The wages
are low, and the women receive on this process 13s. to 13s. 9d.
per week, with sometimes a bonus of Is. or 2s. For the same work
the men receive up to 26s. Their output is considerably more
than the women's, though probably not as much as the disparity
in the wages. There is a shortage of skilled male labour, especially
in the chocolate branches of the trade. The demand for articles
requiring a good deal of women's labour in preparing and packing,
has been largely displaced by a demand for bulk goods for the
Front, in the preparation of which a larger number of men are
employed than in the ordinary trade. Where men are unavailable
women have been employed, but although in at least one large fac-
tory the results are said to be satisfactory, employers as a whole
do not favour this course, as the work is heavy and unsuitable
for the majority of women. Women and strong girls have, however,
largely taken the place of boys and youths, and they are generally
employed at the same wage rates as the youths they have displaced,
in the following process :
Feeding machinesvwith slabs of sugar.
Shaking down sugar.
Papering cans.
It has been found, however, that more girls and young women are
required than youths sometimes three women to two boys, and
sometimes two women to one boy.
178
CREDIT, INDUSTRY, AND THE WAR
In this trade wages are low, and though the work is heavy it is
not very skilled, and depends very largely upon a fringe of casual
male workers from other trades. There is, therefore, little likelihood
of the women being retained after the war.
Bread and Biscuit Making. For some months there has been a
shortage of skilled men in bread making, and the scarcity of male
labour has made it impossible to employ some women who would
otherwise have been employed. A few women from laundries and
the dressmaking trades have, however, been drawn into the trade
as bakers. In this work two women are generally required to do the
work of one man, and the women receive in some cases three-quarters
of a man's wages. The women find the heat excessive, and require
more time off than the men in consequence generally half an hour
in every four hours. Women are, however, being increasingly
employed in " fancy " baking cakes and pastry.
In flour mills a few women have been employed instead of boys
as attendants to power machines, and women have replaced men
to a certain extent in breweries in bottling and labelling, and in
aerated-water factories.
TOBACCO
The following show the increase or decrease of employment in the
tobacco trade between the years 1901 and 1911 :
1901.
1911.
Increase or Decrease
per cent.
Males.
Females.
Males.
Females.
Males.
Females.
7,524
19,972
7,886
19,312
+ 4-8
- 3-3
At the beginning of the war the tobacco trade was not appreciably
affected, but by October considerable unemployment occurred,
especially in the cigar trade. By the month of February there was
an increase in the number of women employed over those employed
in July of the previous year of 5*2 per cent., and from that time
onwards the trade has been extremely busy. Before the war the
trade was subject to considerable fluctuations, and there was a
large surplus of male labour, chiefly foreign, which has been absorbed
since. Replacement of men by women has taken place to a very
slight extent, though women and girls in many firms have taken the
OUTLETS FOR LABOUR AFTER THE WAR 179
place of boys, mostly in blind-alley occupations, and will probably
be retained.
Just before Christmas, owing to the large consignments of
cigarettes and tobacco sent to the troops, a considerable boom took
place mainly in the cigarette branch of the trade, and this part of
the trade has been increasingly busy since, owing to large War Office
and private orders.
Besides cigarette-making proper, a considerable part of the cigar-
ette trade consists of box making, soldering, labelling, packing, and
dispatching, in which a large amount of female and boy labour is
employed. Since the war, boys have almost entirely been replaced
by girls. In the actual processes of making cigarettes, the line
between men's and women's work is clearly denned. The men are
engaged on the heavier work, such as handling the hogsheads of
leaves, unpacking and cutting the leaves, and on work requiring
skill, such as pan-work. Male mechanics also attend to the cigarette
machines. Girls and women are employed in stripping the leaves
and in feeding the cigarette machines and catching and examining
the finished cigarettes. They solder tins and do every process save
the handling of heavy cases in packing, wrapping, and dispatching.
Women also make cigarettes by hand, though men make the better
class " flat " cigarettes. Since the war, however, the great increase
in demand has been for machine-made cigarettes.
BRUSH MAKING
According to the 1911 Census there are 9,813 males and 7,702
females employed in this trade. Since 1901 the increase in the
numbers of women in the trade was 10 per cent, and of men 6 per
cent. Since the war, employment in the trade has been fluctuating
but on the whole good. Before the war, a German Kartel had
succeeded in substantially monopolising the source of the bass
supply and the trade in England was declining, but since the war
the supply has again been secured. Health Insurance records
show that married women and others who had ceased to be employed
before the war have returned to the trade. The industry has been
seriously handicapped since the war by the shortage of skilled men
the women in the trade being for the most part unskilled.
In Trade Union shops women are employed only on brush drawing,
the Trade Union objecting to their employment on other processes
180 CREDIT, INDUSTRY, AND THE WAR
on the ground that it would tend to lower wages. None of the
Unions appears to admit women to membership.
In the process known as pan-work, i.e., the fastening of the hair
and fibre into the stock of the brush by means of a mixture consisting
largely of pitch, women previously worked fibre only, but since the
war they have worked in both fibre and hair. In some cases
women now do this pan-work on Army hair-brooms. The women
cannot, however, finish the process entirely. The work is " trimmed
off " by men, women boring the holes and " knotting " and " fixing "
in the bristles. Some instances have occurred where women do the
" knotting " and " trimming " themselves.
PRINTING AND BOOKBINDING
The table on page 183 shows the increase or decrease of persons
engaged in the printing and bookbinding trades in England and
Wales during the period 1901 to 1911.
It will be seen from this table that the entry of women into
the printing trade has for some years been a normal feature,
and that their numbers have rapidly increased in a much greater
proportion than those of the men. In the bookbinding trade,
on the other hand, there has been a diminution of women's
employment and an increase of the employment of men.
The absence of particulars in the 1901 Census makes it
impossible to estimate correctly where the increase of women's
labour has taken place. The small number of women, however,
in all grades of printers except " others " makes it extremely probable
that the increase is not in the processes usually done by men, but
among " folders," etc., who are usually women, and would be inclu-
ded under " others." The large increase in lithographers is pro-
portional rather than numerical, and would refer chiefly to the
" feeders."
Although all branches of the trade have not been equally affected
by the war, this industry, as a whole, has suffered as severely as
any. In view of the fact that the work is in no sense war work,
some branches may for the duration of the war be classed practically
among the " luxury " trades. A general depression was felt almost
immediately on the outbreak of war and short time became general,
but especially in the bookbinding trade. This depression lasted
through August and September, the exports for these months
OUTLETS FOR LABOUR AFTER THE WAR 181
being only 76 and 79 per cent, of those for the corresponding
months in 1913. Government orders, however, for the printing
of banknotes, mobilisation orders, and various handbills and instruc-
tions to troops, did something to relieve the depression in the first
months. From this point an improvement set in, the shortage of
paper, which at first was stated to be an important factor in the
trade depression, and especially in newspaper printing, was being
readjusted, and at Christmas something like the usual seasonal
revival took place. Compositors, however, continued throughout
to suffer severely, and there is no doubt that unemployment, or
short-time employment, has been responsible for much of the
enlistment from the printing trade. That, and the transference of
workers, especially bookbinders, to other industries, appear to have
balanced almost exactly the contraction of employment in the
trade, and the month of July has been the best month since the
outbreak of war. Unless, however, the drain of enlistment upon
the supply of labour becomes excessive, there can be no question
of the importation of women into the trade in large numbers, as
there is no prospect of any considerable revival during the war.
There is, therefore, a twofold reason why no change in the position
of women in the printing trade is likely at the present time :
(1) The heavy, difficult, and unhealthy character of much of the
work, and the complicated nature of the machinery, make the
employment of women impracticable, except in the capacity of
subordinate workers.
(2) The supply of labour is at present adequate to the demand,
and likely to remain so for some time to come.
That women are useful mainly in subordinate capacities may be
inferred from the information supplied by the Census figures. The
printing trade, so far as women are concerned, is shown to be
essentially a young person's trade. Thus the number employed
between the ages of 15 and 25 years is not far short of four times
the number employed between the ages of 25 and 35, while the
number of girls of 13 and 14 years employed alone exceeds by nearly
1,000 the total of women employed between the ages of 35 and 45.
The greatest number is employed between the ages of 15 and 18
years, from which point a fairly rapid decline begins, those employed
at 19 and 20 years being respectively 8' 4 and 9*0 per cent, less than
those of the preceding year. And the total employed between the
182 CREDIT, INDUSTRY, AND THE WAR
ages of 20 to 25 is only 28,935, as compared with 41,653 between
15 and 20 years.
These figures indicate that up to the present the printing trades
have little prospects for women, and that they are, in fact, most
employable as adolescents, and, as stated above, in subordinate
capacities. At present the employment of women in the trade
is in a transitional and uncertain state. As compositors, for
instance, their position in the Edinburgh printing trade is to be
considered anew in 1916. The employers' view, speaking generally,
is that men are on the whole to be preferred to women in nearly
every branch of the trade, and the employment of women is favoured
only on account of their lower rates of pay, or, as one Trade Unionist
expresses it, " their greater docility/'
One of the chief objections urged by the Trade Unions who,
on the whole, would like to see women out of the trade alto-
gether, is that the lower scale of women's pay tends to depress
the standard of wages in the whole trade. Their other objections
are :
(I) The strenuous and unsuitable character of much of the work,
from which follows as an almost inevitable consequence :
(II) The clear-cut division of labour into unskilled, done by
women, and skilled, done by men, which, they fear, may lead
ultimately to an overcrowding of the trade with skilled journeymen.
As already indicated, the effect of the war on the trade is mainly
one of depression, and only in isolated instances are women doing
work new to them or being employed in larger numbers in their own
processes.
PROCESSES WHERE WOMEN ARE DOING WORK WHICH
BEFORE THE WAR WAS DONE BY MEN
(1) Feeding (Cylinder or Rotary Machines). To a limited extent
women are taking the place of men as layers-on on cylinder or
rotary machines. The unsuitable conditions in which the work is
done and its strenuous character have hitherto prevented the employ-
ment of women. The process is easily learnt, however, and women
are being employed in increasing numbers. Employers state that
their work is, on the whole, as good as men's, but more labour is
thrown upon the minder, who has to carry the heavy weights for the
women. Sometimes a labourer is employed, one to three or four
women, to do the heavy work. An arrangement has been made by
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184 CREDIT, INDUSTRY, AND THE WAR
which the women are to do the work for the duration of the war for
23s. per week instead of the men's wage of 25s., in view of the
labourer's services being required.
Non-union women are being employed at 16s. a week.
(2) Folding and Inserting (heavier work) . A few women are being
employed in the heavier part of the work, normally done by men,
especially for the feeding of the smaller folding machines. This
is piece-work, and a woman with experience will earn up to 25s.
Overtime rates differ from those paid to men, women receiving 6d.
an hour instead of lOd.
(3) Unpacking, Sorting, and Returning Newspapers. Women are
being supplied by the Unions for this work, at 20s. instead of the
men's rate of 25s., as a man must be engaged to lift heavy parcels
for them.
(4) Bookbinding. Women are at present doing work which is
usually done by men, mainly in pasting the joints and in flush
binding generally ; also in some of the easier parts of vellum
binding, which, as a process, is highly skilled and has hitherto been
entirely in men's hands.
PROCESSES IN WHICH WOMEN ARE NORMALLY EMPLOYED
(I) Feeding. The employment of women has been increasing
for a considerable time. The work is unskilled and the reason
sometimes given for employing girls instead of boys is that if boys
are employed, too many are brought into the trade. A considerable
number of boys, it is true, enter the trade as feeders and have to
leave it at the age of eighteen. The work is low-paid, as a rule,
starting at 5s. and rising to 10s. or 12s., but in a good firm, after four
or five years' experience, a girl will get as much as 15s. or 16s. The
low rate of pay prevailing, is due to the fact that girls cannot set on
the machines themselves, as boys do, but require a boy, or, more
usually, a man supervisor. Before the war, self-feeding machines
were coming into use, and their introduction would ultimately do
away with girl labour ; but the difficulty of getting the machines
has temporarily checked this movement.
In lithography feeding there is a tendency just now to employ
women in increased numbers, and to take on girls where men were
employed previously. The work needs little training and is poorly
paid (5s. rising to 10s. or 12s.), but is done generally in more healthy
surroundings than other processes of the trade.
OUTLETS FOR LABOUR AFTER THE WAR 185
(II) Folding and Inserting (lighter work). This has always been
women's work, and the number employed is still increasing. The
wage is about 17s., as compared with 30s. and upwards paid to men,
who do the heavier work of gathering and sorting, and night work
as well.
(III) Machine-ruling. The number of women is increasing,
largely because the setting of the pens, which hitherto has been the
chief obstacle, has become a comparatively simple process since
the introduction of the latest machine. Men and women do the
same work as minders, but the employment of women is opposed,
and they are not admitted to the Machine Rulers' Union. The
Machine Rulers' Union in Manchester prohibits the employment of
women both in machine-minding and in ruling. The National Opera-
tive Printers' Union, however, accepts them as minders, fixing their
minimum rate at 15s., men's 36s. Women earn 15s. to 18s. The
war has had no marked effect on employment in this process.
(IV) Reading. For some time past there has been a tendency
to substitute girls for boys and it is likely to continue. The change
is desirable, as the work is to some extent a blind-alley occupation
for quick boys, who can earn up to 18s. but get no further unless
they get into the newspaper trade, where, however, they cannot
rise beyond 32s. 6d. In view of the fact that women are for the
most part employed only for a period of years in the printing trade,
this substitution of girls for boys is in accordance with the general
attitude towards the employment of women in the trade.
Wages for girls and boys are the same.
(V) Composing. There is a strong inclination on the part of
Trade Unions and of some employers to keep women out of this
branch altogether. The work is highly skilled, and the apprentice-
ship a long one, except in the case of hand composing in book print-
ing, which requires less judgment and experience. It is in this
branch of the trade that women are chiefly employed, to a small
extent in London, and in larger numbers in the Provinces. The
work is strenuous and carried on in a close atmosphere, and involves
the lifting of heavy weights. For this reason it is generally neces-
sary to have one man overlooking and lifting for two or three women.
Women can, however, be advantageously employed in the first
process of monotyping, which is done seated and is altogether
less tiring. At present, however, monotyping machines are not
186 CREDIT, INDUSTRY, AND THE WAR
extensively used, being estimated at about 3 per cent, only of the
whole trade. The output of wojmen on monotypes is often as much
as men's, and women joining the Union in London must receive
a minimum of 45s. a week. Outside the Union the average is 32s. 6d.
The employment of women as compositors varies in different parts
of the country. In many places the opposition of the men is strong
enough to keep them out of the process. In Edinburgh, where a
number of women are employed on monotyping machines, the whole
question is to be reconsidered in 1916.
(VI) Bookbinding. Certain branches of the trade have been
considerably depressed through the war. There has, however,
been some increase in the employment of women. Certain processes
are prohibited to women in some districts, but conditions vary, and
the restrictions are, generally speaking, purely arbitrary. The
disputed processes are :
(i) Drawing on and gluing cloth covers (paper covers allowed).
(ii) Quarter-binding where the edges are turned in (flush edges
allowed).
(iii) Pasting on end papers.
All are very simple processes.
Trade Union minimum for women, 15s. ; men, 36s. Men generally
take on other work as well as quarter-binding, whereas women are
employed on quarter-binding alone, earning 15s. to 18s.
THE FUTURE
Reports all agree that the condition of trade after the war will
determine this. Men will be reinstated in their old positions, as
far as possible, but employers seem, on the whole, inclined to keep
on "the women introduced since the war, if the condition of trade
allows. Had the trade remained very prosperous during the
war, it is more than probable that temporary concessions would
have been made by the Unions other than those already mentioned
in respect of the employment of women. But the Unions, generally
speaking, are strong enough to be able to enforce a return to the
status quo after the war, and, whatever changes may take place
in the demand and supply of labour in the next twelve months, it is
certain that no important changes would be countenanced as a
permanent feature, without the fullest consideration on the part
OUTLETS FOR LABOUR AFTER THE WAR 187
of the Unions. Important changes, however, as already stated, are
rendered improbable by the very nature of the printing-trade,
where a great deal of the work is beyond the physical powers of
women, and generally the readjustments which have been made to
facilitate the employment of women in the heavier branches of the
trade, are to be regarded as a temporary expedient.
At present the great majority of the 12,380 women described in
the Census as " others in the printing trade," of whom no less
than 10,600 are between the ages of 14 and 19, is employed in
purely subordinate occupations as feeders, folders, messengers, etc.,
and the length of apprenticeship required, in order to qualify women
for the more technical and skilled work, which is fixed at a minimum
of four years, generally bars the way to any attempt at entering the
more skilled branches. In certain directions, however, women may
in the near future be more advantageously employed as letterpress
feeders, as monotype workers, and in certain of the bookbinding
processes hitherto reserved to men.
There has been some attempt to investigate the conditions of
German work to discover whether the inclusion of more women would
enable printers in England to take some of the work formerly done
in Germany. There appears to be the greatest possibility of this
in processes connected with lithography. The point is discussed in
a paper on " British Lithography in 1915," read before the Royal
Society of Arts on 18th Feb., 1915, by Mr. F. Vincent Brooks. The
following is a quotation from the paper :
" The second point of vantage that the foreigner possesses is
the much less cost, and, I must confess, the much better character
of his transferring, and this transferring is a very important item
in the total cost. The total volume of this work done in a German
factory is very large, so that it is much cheapened by subdivision ;
a workman is constantly employed filling the barest possible transfers,
so bare that the solids generally have to be filled in on the stone or
plate ; the work is carried out by quite an army of girls, other girls
having previously cut up the transfers on the backing, that is the full
size of the sheet to be printed. This is work for which women are
exceptionally well suited, but such employment would be contrary
to general usage in this country, and, I imagine, would meet with
sturdy opposition from the Trade Unions ; and, unless working
arrangements as to cost can be made, the British printer will be
188
CREDIT, INDUSTRY, AMD THE WAR
hopelessly out of it, both with regard to the cost and general
efficiency."
Some comment has been made on the fact that most German
factories have been built lately, with a maximum of light and air,
and are therefore suitable for the employment of women, while
those in England are often very old and unsuitable.
Board of Trade, Earnings and Hours Inquiry, 1906.
Based on returns from 110,129 employees.
Men (over 20) ... ... 45-6 per cent.
Lads and Boys and Apprentices (under 20) . .17-4 ,,
Women 24-2
Girls (under 18) 12-8
Average Earnings of Above.
Trade.
Men.
Lads and
Boys.
|
Women. Girls.
i
s. d.
s. d.
s. d.
5. d.
Paper ....
29
10 8
11 11
7 Q
Printing
36 10
8 7
12 3
6 4
Bookbinding
34 1
8 8
12 10
6 6
Paper stationery .
Cardboard and boxes JJ .
31 4
28 10
8 6
10 3
11 11
12 3
6 6
6 1
Wall paper .
32 11
19 2
13 2
7 9
Process block making
45 9
9 7
18 9
9 5
Percentage of Wages. Working full time.
Men.
Under 12s. Od. .
1 per cent.
s. d. s. d.
s. d. s. d.
40 to 45
97 per cent.
12 to 15 .
. -5
45 to 50
. 5
15 to 20 .
. 6-2
50 to 55 .
. 3
20 to 25 .
. 15-2
55 to 60 .
. 1-6
25 to 30 .
. 14-5
60 to 65 .
. 1-8
30 to 35 .
. 20-9
Over 655. . .
. 3-6
35 to 40 .
. 17-9
Percentage of Wages. Working full time continued.
Boys.
Women.
Girls.
s. d. s.
d.
Per cent.
Per cent.
Per cent.
Under 3
5
1-3
3 to 5
8-4
7
24-4
5 to 10
54-9
25-8
64-0
10 to 15
26-0
52-2
8-6
15 to 20
8-9
16-5
6
20 to 25
1-2
3-7
1
25 to 30
1
8
Above 30
.3
OUTLETS FOR LABOUR AFTER THE WAR
189
POTTERY TRADES
The pottery trades are a group closely allied by reason of locality,
process, and conditions, and include the making of general earthen-
ware, china, sanitary tiles, and Rockingham and jet and brown ware.
Women are employed direct or as attendants on others.
The numbers employed in 1901 and 1911 were :
Census 1901.
Census 1911.
% Increase or Decrease.
Females.
Males.
Total.
Females.
Males.
Total.
Females.
Males.
Total.
Earthenware,
China, Porce-
lain, etc. .
24,477
37,998
62,475
29,439
40,424
69,863
+ 20.3
+ 6.4
+ 11. 8
During the last ten years great changes in methods of production,
mechanical and otherwise, have been introduced, and women have
in consequence been drawn into the trade in increasing numbers.
A notable example is the development of casting. The caster, who
is generally a woman, has almost entirely displaced the hollow-ware
presser, who was generally a man. In the words of a working
potter : " Before the war, it was pitiable to see the number of
hollow-ware pressers, skilled handicraftsmen, begging for labourers'
jobs." Men casters receive piece rates about one-third higher than
the women. In casting, as in pressing, the process is complicated by
the introduction of the team system, by which a skilled man or
woman presses or casts the article, while an unskilled woman, who
is paid 12s. per week, finishes it.
Since the war, the pottery trade has been one of the depressed,
but its workers have transferred to other industries, e.g., silk, and
many of the men have enlisted, which has in certain cases resulted
in a shortage of male labour, and especially of youths, who have
been attracted by the good money to be earned in the coal pits.
The skilled males employed in the trade are mainly elderly men.
Before the war women were employed as :
Decorators and Transferers. Average wages lls. to 12s., save
in the case of ground-layers, who receive about 20s. on piece-work
rates.
Clay-workers "pressers" or "jolliers." Women receive about
20s. per week on piece-work rates.
Pressers' attendants " finishers," " spongers," " towers," and
190 CREDIT, INDUSTRY, AND THE WAR
" mould-runners/' in which boys are sometimes employed. The
wages earned by women on these processes are from 10s. to 14s.
per week, and the rates are piece-work rates if paid direct by the
employer, and time-work rates if paid by the presser.
Warehouse women " sorters " are paid a time rate of about
9s. per week.
Decorating. (a) " Ground-laying." This process is held by the
Trade Union to be a man's process, although women have come in
at lower rates of pay during recent years. The process itself is,
however, being displaced by " aero-graphing," which is a woman's
process.
(b) " Painting," done by men, has been almost entirely displaced
by lithography, which has been done by women since 1900.
Flat-ware Pressing. Women entered the trade 30-35 years ago
on the smaller articles, e.g., cups and saucers, and 4 inch and 6 inch
plates. They were, however, refused admission to the Union or
recognition of any kind until about 1903. The first women were
admitted at the time of the amalgamation of the Union in 1906.
The women are paid at piece-work rates about one-third less than
the rates of the men. Men earn 30s. to 32s. and women 20s. per
week.
Since the war, women have been employed on the pressing of
10 inch and 12 inch plates, and they are paid piece-work rates one-
third lower than the men. The men claim that the women should
be paid at the same piece-work rates. To this the women
appear to object, urging that the effect of the men's wage-rate policy
will be to exclude women from the process since :
(a) Women require more supervision than men.
(b) Women cannot set their own machines, and require the
assistance of a mechanic.
By an agreement between the Unions and the employers the men
who have enlisted are to be reinstated at the end of the war ; women
who have taken their places are to receive the same wage-rate
as the men displaced, and a number of women are now receiving
men's rate of pay in consequence, but it is stated that in some cases
this condition is infringed. It is also stated that children above
the school-leaving age, especially girls, are being employed in con-
siderable numbers as apprentices on time rates girls at 2s., boys
at 5s. per week. It is feared by the Union that the abnormal
OUTLETS FOR LABOUR AFTER THE WAR 191
number of apprentices thus introduced into the trade will undercut
other classes of labour, especially women's labour, and consequently
the labour of men.
A war bonus of 1\ per cent, is being paid to all workers who are
employed direct, and the Trade Union expects its members who
employ " finishers " or others, on the " tally " system, to pass on
the bonus.
In the early part of the war, the Pottery trade was very depressed,
and the majority of its workpeople left for more remunerative
employment, the men going largely to the collieries and to armament
factories, and a few of the women to artificial silk-weaving in Leek.
Since December the trade has shown greater activity, and there has
been a shortage of labour, not among the more skilled workers, but
among those less skilled. This is a notable exception to the general
experience, and the reason appears to be that unskilled labour has
found at the moment more remunerative employment elsewhere.
The shortage of unskilled labour, rather than lack of orders, is the
cause of some of the short time in the trade. Generally, owing to
the stoppage of German and Austrian, and to some extent French
pottery exports to the Colonies, U.S.A., and the United Kingdom,
there is a big demand at the present time for all the cheaper grades
of English pottery, whilst there is a slump in the richly decorated
and high-priced goods. Probably owing to financial and shipping
difficulties the bulk trade to U.S.A. and to South America is very
quiet, so that many of the workers must be gradually diverted from
the two classes of manufacturers of expensive pottery, and of bulk
pottery for U.S.A. and South America, to the cheaper houses who
are very busy.
FURNITURE
Furniture, being largely a luxury trade, has been considerably
depressed since the outbreak of war, and is likely to remain so.
The cheaper branches of the trade have been less slack than the
other parts, and certain firms have replaced men polishers by women,
but as this is a woman's trade as much as a man's, especially since
the last strike, the replacement is no new feature due to the war.
In some cases, on the other hand, women French polishers have
been unemployed owing to the shortage of skilled bench men.
Large furniture firms have taken contracts for tents, kit-bags,
192 CREDIT, INDUSTRY, AND THE WAR
mosquito-nets, etc., and have taken on extra women to cope with
the work, in some cases opening new factories for the purpose.
Women upholsterers and women drawn from the lower branches
of the tailoring trade have mainly come in to do this work.
Aeroplane contracts have also been placed with furniture firms,
but up to the present women have only made covers for the wings
and " doped " them, i.e., varnished, which again is normally women's
work.
In some factories and workshops women are gluing ammunition
boxes, but here the line of demarcation between furniture and
packing-case making is an elusive one ; it is not possible to state
whether they are displacing men or not.
There appears to be no feeling among the furniture Trade Unions
against the further employment of women so long as they are paid
the same piece-work rates as the men. The view, however, taken
by most Trade Unions and employers is :
(a) Much of the work is impossible without long training, which
the women are rarely prepared to give.
(6) Much of it is too heavy for women.
CHAPTER IV
THE EFFECTS OF THE WAR ON CREDIT,
CURRENCY, AND FINANCE
THE following is the Report of a Conference called by the Organising
Committee of Section F, consisting of Professor W. R. Scott (Chair-
man), Mr. J. E. Allen (Secretary), Sir Edward Brabrook, C.B.,
Professor C. F. Bastable, Dr. A. L. Bowley, Mr. Austen Chamberlain,
M.P., Archdeacon Cunningham, Professor L. R. Dicksee, Professor
E. C. K. Conner, Mr. Francis W. Hirst, Professor A. W. Kirkaldjr,
Mr. D. M. Mason, M.P., Professor J. Shield Nicholson, Mr. E. Sykes.
The Organising Committee of Section F decided that a Report
on the Effects of the War on Credit, Currency, and Finance should
be submitted at the Annual Meeting. In order that this Report
should be as full as possible it was considered essential to invite
the co-operation of a number of experts from the City, and accord-
ingly it was decided to proceed by means of a Conference rather
than by the usual Research Committee. Of the original members,
Mr. Austen Chamberlain took part in the early deliberations, and
gave most valuable help. He retired on his appointment as Secre-
tary of State for India. Professor Bowley resigned ori under-
taking work for the Ministry of Munitions. 1 The Organising
Committee desires to thank those who devoted themselves to the
making of the specialised investigations, many of which involved
great labour and the placing of valuable personal and business
experience at the disposal of the Conference.
The method of investigation adopted was to divide the whole
inquiry into five heads, namely : (1) The Direct Effect of the
War on Credit. (2) Public Borrowing as Affecting Credit. (3) War
Measures and Currency. (4) War Taxation. (5) War and the
Mechanism of Foreign Exchanges. Memoranda on these and
related subjects were invited from the members of the Conference
and from others. These Memoranda were circulated amongst the
1 Mr. Chamberlain and Dr. Bowley resigned before the Report was drafted,
and therefore have no responsibility for it.
193
194 CREDIT, INDUSTRY, AND THE WAR
members, with the request that they would return them, with
comments, to the Secretary.
Memoranda were contributed by the following
Professor Bastable Mr. Joseph Kitchin
Sir Edward Brabrook, C.B. Mr. Robert Lumsden
Mr. E. J. Davies Mr. D. M. Mason, M.P.
Professor Dicksee Mr. S. Metz
Mr. E. L. Franklin Professor J. S. Nicholson
Mr. Drummond Fraser Sir R. H. Inglis Palgrave, F.R.S.
Mr. A. H. Gibson Professor Scott
Dr. C. K. Hobson Mr. W. F. Spalding
Further, the main headings were divided into nineteen sub-heads.
I. DIRECT EFFECT OF THE WAR ON CREDIT IN
GREAT BRITAIN
How has the money market been affected by : 1. Hoarding ?
2. Changes in demand for commercial purposes ? 3. Government
demands ? 4. Foreign demands ? 5. Stock Exchange demands ?
II. PUBLIC BORROWING AS AFFECTING CREDIT
(1) Effects of the regulations as to the issue of new Capital.
(2) Effects as judged by public and other deposits at the Bank
of England and by the Bank Rate.
(3) Extent to which Capital is withdrawn from enterprise.
(4) Effect of borrowing in Great Britain by Allied Governments.
(5) What proportion should be maintained between the amount
borrowed for the War and the amount raised by taxation ?
III. WAR MEASURES AND CURRENCY
(1) The Effect of Government Assistance to the Banks and
Financial Houses in August, 1914.
(2) Was there hoarding owing to the War by (a) Banks ? (b) the
public ? What was the effect on the stock of Gold ?
(3) Emergency Measures :
(a) Treasury Notes.
(b) Provision for the Suspension of the Bank Act (4 & 5 Geo. 5,
c. 14, sec. 3).
(c) The Moratorium.
(d) Postal Notes made legal tender.
EFFECTS OF WAR ON CREDIT, ETC. 195
(4) How far were these measures (a) Necessary ? (b) Effective ?
(c) Desirable ? What provision, if any, should be made for the
withdrawal of Treasury Notes ?
(5) What was the effect on prices of the increased paper currency ?
IV. WAR TAXATION
V. WAR AND THE MECHANISM OF THE
FOREIGN EXCHANGES
(1) What was the effect of the outbreak of war on the rate of
Exchange ?
(2) What have been the principal fluctuations since and their
causes ?
(3) How far were these fluctuations due to causes inseparable
from the war, and how far were they preventable ?
(4) How far are the reasons generally assigned the true reasons ?
These questions were circulated amongst those who were judged
to be able to supply first-hand information upon special points,
and replies have been received from the following :
Professor W. Boyd Dawkins, F.R.S. Professor Oldham
Mr. Barnard Ellinger Sir George Paish
Lord Eversley Mr. W. Favill Tuke
Mr. J. A. Hobson Mr. Sidney Webb
Mr. A. W. Kiddy
Several meetings of the Conference were held in order to define
the scope and character of the inquiry and to determine the best
methods of procedure ; also to discuss the Memoranda, replies to
questions, and the comments upon these. The members feel
strongly that the time is not ripe for the presentation of a final
Report, and that which follows is to be regarded as an interim one.
Though necessarily incomplete, it has the advantage of attempting
to present a picture of momentous events while most of them were
fresh in the minds of those who had special opportunities for
observation. Thus, while the present Report is wanting in finality,
it will aim at focussing a body of reasoned opinion upon the causes
and proximate effects of credit movements during the first year of
the war. However much present judgments may be shown by
subsequent events to have been in error, in the opinion of the
Conference it was essential that they should be recorded.
196 CREDIT, INDUSTRY, AND THE WAR
SUMMARY OF THE MORE IMPORTANT EMERGENCY
MEASURES DURING THE YEAR 1914
Events have moved so rapidly within the last twelve months
that even comparatively recent occurrences seem to have become
remote. The rush and pressure of the times have been such
that one is liable to forget matters which happened only a few
months ago and would, in other circumstances, have been regarded
as of the highest importance. Accordingly, for the sake of what
follows, the following brief record of dates and facts may be pardoned
in order to prevent digression in the later parts of the report.
In the early summer of 1914, credit in Great Britain and on
the Continent was normal, with perhaps a tendency towards
uneasiness. There is an almost inevitable disposition for people
to claim wisdom and foresight after the event, but, judging from
the quotation of Consols, there was small anxiety. The fluctua-
tions in 1913 had been 75f-71, and the closing price on 25th June,
1914, was 74f-75, a price well over the average of the previous
year. Early in July there were signs of caution in the chief money
markets, following the assassination of the Archduke Francis
Ferdinand at Sarajevo, on 28th June. The progress of negotiations
between Austria and Serbia seems to have produced little effect,
and even the presentation of Austria's ultimatum to Serbia on
24th July did not cause any marked uneasiness in London, as it
was the general impression that the war would be localised, On
the 25th there was a panic on the Vienna Bourse, while in London
Consols fell to 72J. Between that day and the following Tuesday
(28th), when Austria declared war against Serbia, was a time of
growing anxiety. In the week ending on 29th, Wednesday, Consols
had fallen 4 J, Belgian 3 per Cents, 4|, French 3 per Cents. 6, Russian
3J per cent, bonds 5, Russian 5 per Cents. (1908) 8J, Austrian
4 per Cents. 8. By this time all the Stock Exchanges had closed
except London and the provincial Exchanges, New York, and the
official (parquet) Paris Exchange. The Bank Rate was raised
from 3 per cent, to 4 per cent, on Thursday, the 30th. Remittances,
both in payment of Stock Exchange accounts due by foreigners
as well as the calling in of credits due from abroad, ceased except
from America, while the closing of all the Continental Stock
Exchanges except the official Paris market caused large quantities
EFFECTS OF WAR ON CREDIT, ETC. 197
of International stocks to be offered for sale in London. It so
happened that this period of extreme tension coincided with
the date fixed for the settlement, which had been arranged for
27-29th July. The failure of foreign clients of brokers to remit
the sums due in London for the settlement made the position of
these brokers precarious, and one important firm with foreign
connections failed, while it was currently reported that many firms
were prepared to hammer themselves. The failure of foreign
remittances to the Stock Exchange affected transactions made
before the crisis ; but, after the outbreak of hostilities with Serbia,
there was a steady pressure of sales from the Continent. The
effect of these was a reduction in the prices of securities, and this at
once reacted on those stocks held on margin. Loans on Stock
Exchange securities at this period amounted to about 80,000,000,
of which 60,000,000 was lent by the Joint Stock Banks and the
remainder by other bodies. A continued fall in quotations would
cause the margin to disappear, and, therefore, the lenders would
call for additional security, or they might call for repayment of
the loan when due through anticipation of having to meet pressing
demands themselves. The latter course was adopted by some,
which threatened a further fall in the prices of stocks, and this
again, if allowed to continue, would have depreciated the stocks
held by banks, which would again have been serious if necessity
arose for the liquidation of a part of these holdings. If demoralisa-
tion in the Stock Exchange was to be avoided, some action had to
be taken upon Thursday (the 30th), and it was decided to close
the Exchange.
The closing of the London Stock Exchange was the first of the
series of Emergency Measures ; and, to some extent, it influenced
those that followed. Prompt and decisive action was absolutely
necessary ; but, had time for reflection been available, it is possible
that less drastic measures would have sufficed. The closing of
the Exchange was not the only event of first-class importance on
that memorable Friday. Bill-brokers were in the habit of borrow-
ing largely from the Joint Stock Banks upon the security of the
foreign bills they held. During this week some of the banks called
in their loans from the bill-brokers, who were forced to have recourse
to the Bank of England either to borrow there or to discount their
bills. * The sums involved were large. In normal times it is
198 CREDIT, INDUSTRY, AND THE WAR
supposed that the Joint Stock Banks lend about 100,000,000 to
bill-brokers in the form of credit at call or short notice. In the
ten days ending 1st August, the Bank of England's holding of "other
securities " increased by 31,700,000, the greater part of which is
understood to have represented loans to the bill-brokers to meet
the calls on them by the Joint Stock Banks. These large demands
on the Bank of England were one cause of the rapid rise in the
Bank Rate, which, after being 4 per cent, for one day (Thursday,
30th July), was doubled on Friday, and was increased to 10 per
cent, on Saturday, 1st August. Concurrently with the difficulties
of the bill-brokers, there were the even greater ones of the accepting
houses. These institutions in effect guarantee that a foreign bill
(arising out of a trade transaction either between this country and
a foreign country or between two foreign countries) will be met at
maturity. It is largely by this device that London is the financial
centre of the world, and it is estimated that one-half of the world's
foreign trade is financed by British credit. The acceptances
of the accepting houses and foreign banks current at this time in
London amounted to between 300,000,000 and 350,000,000,
while those of the Joint Stock Banks are known to have been
about 70,000,000. But, just as in the case of the stockbrokers,
remittances were not forthcoming, or were delayed, or could only
be made with great difficulty. London, early in the crisis, began
to call in credit. All the available bills on London were quickly
purchased by foreign debtors for transmission to London. New
bills were not forthcoming, and there were great difficulties in
procuring gold for shipment ; in some cases it was impossible.
In these circumstances, the position of the accepting houses was
one of extreme hazard, and, as Mr. Franklin says, " the immediate
effect of the outbreak of hostilities was to break down the whole
fabric of foreign exchange throughout the world." On Sunday,
2nd August, a proclamation was issued which postponed payment
of bills of exchange (other than a cheque or bill on demand) if
accepted before the 4 August for a period of one calendar month
from the date of its original maturity. On Monday, 3rd August, an
Act, known as the Postponement of Payments Act (4 & 5 Geo. 5,
c. 11) was passed, which authorised the King to suspend temporarily
by proclamation other payments besides bills of exchange.
So far, the dramatic events of Friday, 31st July, and Saturday,
EFFECTS OF WAR ON CREDIT, ETC. 199
1st August, have been considered from the point of view of the
reaction of the crisis on credit as regards foreign remittances.
There remains the position in relation to internal credit. It
appears that the Joint Stock Banks, or some of them, expected
and prepared for considerable internal demands from their deposi-
tors. Mr. A. H. Gibson says that " the direct effects of the war
on credit, as measured by the attitude of the British public during
the early stages of the crisis, show that the loss of confidence was
extremely slight. There was no run on the Joint Stock Banks or
on the Savings Banks, and what degree of hoarding of gold took
place at the commencement of the crisis was probably due to the
lead given by some of the Joint Stock Banks paying out Bank of
England notes instead of gold. This action caused a large number
of people to whom notes had been paid, to take them to the Bank
of England to change them into gold, which was required for
holiday purposes. Almost without exception the reports of the
Savings Banks for the year 1914 prove how trivial had been the
influence of the crisis on their accumulated funds, the main influence
having been a slight check to new business/' There was a some-
what general apprehension prior to the issue of new Treasury
Notes that, where a creditor insisted on payment in the form of
legal tender, there might not be sufficient legal tender to meet
all demands. The figures giving the loss of gold from London to
the Provinces show that there were considerable internal demands
for gold, the gold lost by the Bank of England from this cause
having been 1,213,000 during the week ending 29th July, and as
much as 8,211, 000 l in the next week, which included the days
during which mobilisation took place. When it is remembered
that Great Britain was not as yet at war, the financial situation
was evidently serious. On 1st August, Germany declared war upon
Russia, and the next day a state of war existed between Germany
and France. War between Great Britain and Germany was declared
on Tuesday, 4th August. Prior to the latter declaration, which
might be expected to have affected our money market most, there
had been the breakdown of the foreign exchanges and the closing
of the Stock Exchange. It had been necessary to support the
accepting houses by the Moratorium in their favour of 2nd August.
1 A large part of this sum would be held by banks in anticipation of heavy
withdrawals by their depositors.
14 (1408)
200 CREDIT, INDUSTRY, AND THE WAR
Scarcity of legal tender was felt, and there was an apprehension
in many quarters that war between this country and Germany
would result in further grave disorders of credit. This was the situa-
tion which had to be faced on Sunday, 2nd August, and Monday,
3rd August. Fortunately, the Monday was a Bank Holiday, and
by proclamation the Tuesday, Wednesday, and Thursday were
appointed as special Bank Holidays, thus providing five days (if
the Sunday be included) for the preparation of further emergency
measures. An Act, known as the Currency and Bank Notes Act
(4 & 5 Geo. 5, c. 14), was passed on 6th August, authorising the
Treasury to issue Currency Notes for f\ and 10s. as legal tender
for any amount. The holder of a Currency Note is entitled to
obtain on demand during office hours at the Bank of England
payment for the note at its face value in legal tender gold coin.
Postal Orders were to be temporarily legal tender for the payment
of any amount. This provision was revoked as from 3rd February,
1915, by proclamation. Under Clause 3 of this Act, the Bank of
England and any Scottish or Irish Banks of Issue may issue notes
in excess of the limit fixed by law so far as temporarily authorised
by the Treasury, and subject to any conditions attached to that
authority. Banks of Issue were indemnified against any liability on
the ground of excess of issue after 1st August in pursuance of any
authority from the Treasury. The former provision may, perhaps,
be termed a suspension of the Bank Act ; but, unless the legal
limit has been exceeded, no formal suspension has actually taken
place. Under these circumstances it is more correct to describe
the arrangement as providing the machinery by which the Act
may be suspended should the need arise. Further Treasury Notes
were issuable to bankers through the Bank of England up to
20 per cent, of their liabilities on deposit and current accounts.
Closely connected with these measures was the proclamation of
6th August, under the Act 4 & 5 Geo. 5, c. 11, postponing other
payments besides bills of exchange till 3rd September (subsequently
extended till 3rd November), with certain exceptions, the chief of
which were payments of wages or salary, sums not exceeding 5,
dividends on trustee stocks, cashing of bank notes by the issuing
banks, payments by Government Departments (including Old Age
Pensions and liabilities under the National Insurance Act). These
measures provided for the re-opening of the banks on Friday,
EFFECTS OF WAR ON CREDIT, ETC. 201
7th August, upon a basis which, if artificial, was believed to have
protected the banks. But that protection was founded on the
Moratorium, which was so strange to English practice that a few
years ago it was described as " a strange beast inhabiting the
Balkans." In making the first steps towards more normal con-
ditions, it was necessary that foreign exchange should be restored
and the Stock Exchange re-opened. As regards the former, ex-
change transactions in the early days of August were remarkable.
The value of the sovereign rose as much as 30 per cent, in a single
day in New York. On the other hand, owing to a temporary
adverse balance due to France, the sovereign depreciated in Paris
by 4 per cent. Between 12th August and 5th September, a scheme
had been formulated which provided that the Bank of England
would provide acceptors with funds to pay all approved pre-
Moratorium bills at maturity. The Bank was entitled to interest
on these advances at 2 per cent, above bank rate, and undertook
not to claim repayment of any sums not recovered by acceptors
from their clients till one year after the end of the war. The
Joint Stock Banks undertook, with the assistance of the Bank of
England and the Government, to finance new bills upon similar
terms. The Government guaranteed the Bank of England against
any loss which it might sustain in carrying out this scheme. This
guarantee received statutory sanction by^the Government War
Obligations Act, 1914 (5 Geo. 5, c. 11). Loans to the Stock
Exchange were next taken in hand. Under a scheme for Govern-
ment assistance, dated 31st October, as regards Account to Account
Loans which had been made on the security of stocks by lenders,
other than banks " to whom currency facilities were open/' or
members of the Stock Exchange, the Government arranged with
the Bank of England to advance 60 per cent, of the sums out-
standing on 29th July, securities being valued for purposes of such
advance at the making-up prices of 29th July. The Bank undertook
not to press for repayment until twelve months after the con-
clusion of peace, the rate of interest being 1 per cent, above Bank
Rate, with a minimum of 5 per cent. The banks to whom currency
facilities were open, undertook not to press for repayment of Account
to Account Loans, nor to require further margin until twelve
months after the conclusion of peace. The total advances on
foreign bills under the Government Guarantee were 120,000,000.
202 CREDIT, INDUSTRY, AND THE WAR
The sum advanced on pre-Moratorium bills to enable acceptors to
meet their engagements at maturity was 60,386,000, and it was
estimated that at the end of the war, bills aggregating 50,000,000
would remain in " cold storage." l The advances by the Bank of
England to the Stock Exchange under the Treasury scheme of 31st
October were returned at 520,059. 2 The way was now prepared
for completing the July settlement on the Stock Exchange, and a
patched-up settlement was effected on 18th November. Meanwhile,
though the Exchange remained closed, dealings in stocks had been
effected by negotiation, and a scale of minimum prices had been
drawn up by the Committee. The general Moratorium having
come to an end on 3rd November, there was no reason to delay the
opening of the Exchange, and this event took place on 4th January,
1915, under somewhat drastic regulations imposed by the Treasury.
I. THE DIRECT EFFECTS OF THE WAR
UPON CREDIT
Having traced, descriptively, the external results of the earlier
months of the war on credit, we propose in the present section to
inquire into some general questions relating to the effect of a state
of war of the magnitude of the present struggle upon credit, con-
sidered as far as possible in isolation from emergency measures.
From the point of view both of practical finance and of economic
theory, the consequences of a remarkable and sudden strain upon
credit are of surpassing interest. While the outbreak of previous
great wars has occasioned somewhat similar disturbances, the long
period of cessation from contests between great Powers, as well
as the more highly developed organisation of modern credit, render
it advisable to consider the position at the present time de novo.
From the standpoint of the Economist it is unfortunate while
from that of the citizen it may have been fortunate that complete
materials for the observation of the unmitigated effects of the
present war upon credit have been largely modified by counter-
acting influences, many of which were deliberately designed to
counteract the direct consequences of hostilities as affecting the
credit system in this country. In particular, as already shown
1 Hansard, Commons, Ixviii, p. 1545.
Ibid., bud, p. 853.
EFFECTS OF WAR ON CREDIT, ETC. 203
(page 199), the closing of the Stock Exchange took place before
Great Britain was involved in war. Accordingly, direct observation
of the exact effects of war on credit cannot be made with com-
pleteness, though we consider it advisable to record such results
as we have been able to obtain.
Credit is an organic growth. The normal condition assumes a
certain degree of stability in the environment in which it works.
In the usual credit cycle, though conditions vary as between the
maximum and minimum points of expansion, in both, a great
number of the factors which affect the calculations of business
men remain the same or are altered only to a very slight extent.
War on a large scale either changes all conditions or (what is tem-
porarily of equal importance concerning credit) it gives rise to the
fear that all conditions may be altered. On the material side,
war makes great inroads into the store of commodities and many
calls on services, while it deflects a large amount of labour from
productive to destructive purposes. " Credit/' as Mr. A. H.
Gibson puts it, " assumes that goods will be brought to market,
or be produced in due time, and sold, and that securities, which in
reality have their capital value based on future productive power,
will not materially fall in current market values through lack of
confidence in future production. War materially weakens both
these assumptions. When war shakes the foundations of confidence,
it is obvious that it must immediately cause a serious restriction
in the mobility or transfer of credit, and consequently reduce, for
the time being, the rate of current and future production, for
production cannot, obviously, be carried on without the transfer
of credit ; and the community suffers through the restriction of
credit."
Allusion has already been made to the difficulties of the accepting
houses, the bill-brokers, and the Stock Exchange. These reacted
on the resources of the Joint Stock Banks, for the effect of the
war had been to solidify assets hitherto regarded as liquid. The
financial life of the City appeared in danger of being frozen at or
near its source. This was not so in reality, for the ultimate basis
of credit is the future goods and services which can be relied upon
to come to market later. Not only does war make it uncertain
that some of the anticipated future production will reach the
market ; but also it makes a violent alteration in the relative
204 CREDIT, INDUSTRY, AND THE WAR
values of capita! goods and consumable goods. " For the purposes
of war only the right to goods, consumable now or soon, is useful." l
Thus, there is inevitably a double revolution in credit occasioned
by war, first in the widespread falsification of anticipations, and
secondly in the valuation of immediate consumable commodities.
Both tendencies arrest the mobility of credit instruments, and
some of the credit instruments become temporarily immobile ; and,
to the extent to which this phenomenon exists, credit temporarily
ceases. It is estimated that the assets which the Joint Stock Banks
had available in a comparatively mobile form consisting of the
gold and Bank of England notes which they held in their strong-
rooms and tills and balances at the Bank of England did not
exceed 15 per cent, of the liabilities to depositors. Loans at call
or short notice were largely uncallable. Stock Exchange Securities
held either as investments or collateral security were to a consider-
able extent unsaleable, during the first week they were altogether
unsaleable except at a dangerous sacrifice. Bills of exchange in
the banks' own portfolios might or might not be met at maturity,
and bills which the banks had themselves accepted might have to be
met out of the banks' own resources. Thus, a large part of bankers'
resources were in danger of becoming immobile and solidified.
There were four main causes which combined to " immobilise
credit " at the outbreak of war :
(1) The fear by borrowers that they might have to repay imme-
diately large amounts of credit which the lenders had transferred
to them previously on condition that it was withdrawable on
demand. A considerable part of this borrowed credit had been
re-transferred to others who desired to anticipate the proceeds of
future sales or services, and it was not callable immediately.
(2) The actual calling in of, or attempt to call in, by certain
banks, financial houses, and other institutions, large amounts of
credit lent on demand.
(3) The general fear (until Treasury Notes were issued) that, if
the lender insisted on the borrower repaying credit in the form of
legal-tender currency, there might not be sufficient legal tender to
meet all demands.
(4) The inability of foreign correspondents, owing to the collapse
1 Economic Journal, xxiv, p. 486,
EFFECTS OF WAR ON CREDIT, ETC. 205
of the exchanges and for other reasons, to remit credit to this
country to meet maturing liabilities and other demand calls.
Elsewhere we discuss the effect of the emergency measures.
These have aimed at re-establishing confidence, and they have
succeeded in restoring the mobility of many forms of credit immobi-
lised at the outbreak of war. But this is not a complete restoration
of credit. As long as any emergency measures remain, to that
extent there will be a failure to reach the standard of normal
credit. Its main characteristic in this country was its spontaneous
character, and necessarily as long as artificial and extraneous
devices are required, the position will be something intermediate
between confidence and credit in the fullest sense of the word.
In fact, the progress towards a normal return to credit will be
marked by the gradual recall of successive emergency measures.
When credit is sound, just as in the case of a healthy man, it does
not need tonics, nor is it conscious of its own state. It works
largely intuitively. All questioning, even a demonstration of
" its inherent soundness/' is an evidence that there is some danger
of a failure of complete confidence at one or more points. The
sound state of credit is that which needs no external help.
II. PUBLIC BORROWING FOR THE WAR AS
AFFECTING CREDIT
(i) General Effects of Public Borrowing on Credit. Public borrow-
ing may be regarded from two points of view. From the first
or abstract point of view, credit is based on claims to goods and
services ; from the second or concrete point of view, credit is meas-
ured by prices on the Stock Exchange or by the rates of interest
current in the Money Market.
Loans imply interest, and interest implies taxation in future
years. The actual subscription of War Loans involves the handing
over to the Government of claims to consumable goods and services
for the destructive purposes of war, in return for which the Govern-
ment gives the subscribers a transferable lien on future goods
and services.
Extensive borrowing by Governments reduces the mobility of
existing credit ; because the payment of calls, as well as the expec-
tation of further loans, reacts on the previous state of credit.
206 CREDIT, INDUSTRY, AND THE WAR
As already shown, the outbreak of hostilities tends to contract
credit not only within the area directly affected but in adjoining
areas. In a great war the uncertainty extends to almost every
market for capital. Thus, war results in a general rise of interest.
That rise is accentuated in a belligerent country both by the risks
of war to it and by the contraction of its usual production through
the calls on its productive power and also by the necessity for
public borrowing. The State now exerts an urgent demand for
capital in competition with, or even to the exclusion of, the remain-
ing demands for industry. That demand is supplied from various
sources. First, most of the floating supply of capital (namely,
that capital which has not as yet been definitely committed to
specific production) is subscribed, then circulating capital which
has been diverted from its usual uses owing to the industries
employing it having ceased or being contracted through the exis-
tence of hostilities. Further, sums are found by the postponement
of repairs and renewals which were required to maintain the full
efficiency of production. Foreign investments are sold to a greater
or less extent. The latter source of supply can be tapped only
by an increase in the rate of interest on Government loans lessening
the disparity between the yields on home and foreign investments.
The increase in the rate of interest offered by the Government has
the further effect of being a direct incentive to new savings. It is
to be remembered that the Government not only borrows but it
also disburses the capital it raises. Many of these disbursements
are made within the country, and a high rate of interest acts as a
direct incentive to the saving of a considerable part of these, as
well as to increased economy amongst the remainder of the com-
munity. In the first War Loan of a series, the larger proportion
of the subscriptions will be drawn from floating capital, but later
issues depend for their success to an increased degree on new
savings ; and, in the present instance, these must be in excess of
those made in time of peace. Hence, the rate of interest offered
in order to induce such additional savings will be high and will
tend to increase. Thus, the most evident effect of extensive
Government borrowing, as has been shown by the two War Loans,
is the tendency towards a rise in the price to be paid for each
successive loan (i.e., the rate of interest will rise, not only for
Government loans, but for all borrowing). This is no new fact
EFFECTS OF WAR ON CREDIT, ETC.
207
in English history, and this tendency may be illustrated by a
table giving the average price of Government Stock before, during,
and after the Napoleonic Wars :
Consolidated Three Per Cents.
Period.
Ave
rage '
Price.
Period.
Ave
rage Price.
1792 .
84^
1810-14
62|
1793 .
75
1815-19
69-2-
1794 .
67
1820-24
78
1795-99
58
1825-29
84fk
1800-04
63
1830-34
85*
1805-09
63
1835-44
92
The quick rise in Government credit after Waterloo explains the
success of the great conversion schemes of 1822, 1824, and 1830,
all of which involved a material reduction in the rate of interest.
One inference to be drawn from the above table is that all loans
issued during the present war should bear early dates of redemption,
so that the Government may convert them into loans bearing a
lower rate of interest if the conditions of the Money Market ten
or fifteen years hence permit such an operation. Pitt floated
some of his war loans at an enormous discount, yet they were being
redeemed, before the Boer War sent down the price of Consols,
at a considerable premium.
Let us see how the rise in the rate of interest is demonstrated
by the terms on which the two War Loans have been issued. The
first loan was 350,000,000 of 3J per cents, at 95 : the loan being
redeemable in thirteen years (or in ten years at the option of the
Government). The yield was thus 3| per cent, plus a bonus of
5 per cent, on redemption at par in 1928, or three years earlier
if the Government should so choose. At the time when this
first loan appeared, therefore, the credit of the British Government
stood at something between 3J and 4 per cent.
The second War Loan, which appeared at the end of June, 1915,
was made on a very different basis. This time it was a 4J per
cent, loan, at par, and redeemable in 1945, or at any date after 1st
December, 1925, at the option of the Government. The terms, more-
over, were really more favourable to the investor than appears at first
sight, for (1) a full half-year's interest is payable on 1st December,
although the instalments will not be completed until 26th October,
208 CREDIT, INDUSTRY, AND THE WAR
and (2) it is provided that for every 100 held by a subscriber to
the new War Loan he may obtain another 100 in exchange for the
same amount in the old War Loan on payment of the difference
of 5 in the respective prices of issue. For 100 held in the new
War Loan, the subscriber may obtain another 50 in exchange
for 75 Consols which bear interest at 2| per cent., or another
50 in exchange for 67 of 2 15s. per cent, annuities, or another
50 in exchange for 78 of 2 10s. per cent, annuities.
It is a condition of all these exchanges that new capital shall
be raised to the extent of 105 for every 100 old War Loan, 100
for every 75 Consols, 67 annuities at 2} per cent., or 78 annuities
at 2J. The market for these various securities has been affected
by the regulation of the Stock Exchange, approved by the Govern-
ment, fixing a minimum price for them, which has greatly restricted
dealings in them. That minimum price is subject to variation,
and has already been diminished in consequence of the issue of
the prospectus of the new War Loan. The market price would
probably be much lower if the market were free. As persons
desirous of subscribing for the new War Loan either with or without
the purpose of exercising the option of exchange will in many cases
have to realise other investments, the Stock Markets generally might
be expected to fall. Much will depend on the extent to which Consols
and the annuities are offered for conversion. It is to be borne in
mind that Consols are only an annuity, the capital value of which
depends on the price current in the Stock Market. It has been
necessary, whenever the Government has desired to lower the
rate of interest upon Consols, to give the holders an option of
being paid out at par, that is, at the nominal capital value corre-
sponding to the annuity at the current rate of interest. Upon that,
Consols now stand to produce interest at 2 10s. on a nominal
100. By the proposals for conversion of 75 Consols into 50
War Loan that rate of interest is raised to 3 per cent., but the
nominal capital which the investment represents is reduced.
A further point has been well made by Mr. A. H. Gibson : " When
considering the matter of the effect on credit of great public borrow-
ing for the purpose of war it has always to be borne in mind that
the total amount expended is not altogether lost to the nation.
Part of it is transferred in the form of profit to manufacturers
and others engaged on war materials, and part of it is represented
EFFECTS OF WAR ON CREDIT, ETC. 209
by ammunition and other Government stores, which the com-
munity has produced by working more strenuously (e.g., by over-
time) and with more energy than it would have expended in peace
times. But that part which is represented by ammunition and
other Government stores, the energy to produce which has been
diverted from productive industry, is, of course, irretrievably lost
to the nation, as is likewise that part expended on the purchase
of ammunition and other stores required for the prosecution
of war."
(ii) Effect of the Regulations as to the Issue of New Capital. In
times of prosperity, applications for new capital are freely made
and freely responded to, in general, with the effect of somewhat
depreciating the existing capital. Probably with a view to con-
serving the lending power of the country in the national interest,
a temporary regulation has been made by which the Treasury is
responsible for the sanctioning of any application for new capital
before it can be made on the market. The grounds upon which
the Treasury will base their action in this matter have not, so far
as we know, been made public, but it is presumed that they imply
some inquiry as to whether the public advantage would be served
by the proposed issue. The Treasury may and do repudiate the
idea that their permission means approval, but the public will
certainly infer that it does, and will give credit to the issue
accordingly.
(iii) Extent to which Capital is Withdrawn from Enterprise. The
free supply of capital towards industrial and other enterprises is
interfered with by the condition of war and the public borrowing
which is the necessary consequence, in the following ways ;
(1) The withdrawal from the resources of capitalists of the
sums they subscribe to the public loans.
(2) In the depreciation of securities, which renders realisation
difficult without loss.
(3) In the withdrawal from the labour market of workmen of
military age.
(4) In the contraction of the opportunities for investment with
neutral countries.
(5) In the impossibility of investment with enemy countries.
(6) In the lack of enterprise and the feeling of uncertainty which
prevail during warfare.
210 CREDIT, INDUSTRY, AND THE WAR
(7) In the anticipation of difficult times to come when the
war is over.
Dr. C. K. Hobson has traced the effect of Government borrowing
upon our investments in foreign countries. It is no longer possible,
he says, to furnish the large streams of capital which normally
flow into industries at home and abroad. It is more than doubtful
whether Great Britain is maintaining its accumulated capital
intact, and whether the wear and tear of plant, buildings, etc.,
in this country are being fully replaced. It is unfortunately clear
that British holdings of foreign securities are being reduced. The
appearance of the second War Loan was the signal for an outburst
of selling, mainly of American securities. Hitherto the United
States has owed us money. At the outbreak of war, according to
the Secretary ot the Treasury, American business men and
bankers were indebted to London in the sum ot approximately
90,000,000, maturing by 1st January, 1915. A large part of
this amount was undoubtedly repaid in the form of gold placed
to the credit of the Bank of England in Ottawa, and in the
form of food-stuffs, merchandise, and war equipment sent to
Great Britain.
(iv) Effect of Borrowing in Great Britain by Allied Governments.
This takes two forms : (1) a direct subsidy by the British Govern-
ment to its Allies ; (2) the subscription in London of a loan to an
Ally. We do not know to what extent assistance of the first class
has been rendered, or whether it has been mainly in money or in
kind ; but it is obvious that our Allies have had to depend largely
upon the aid of our Government in providing material aid for
carrying on the war in various ways. Two illustrations, however,
may be given from official sources of our financial arrangements
with France and Russia.
On 15th February, 1915, Mr. Lloyd George, as Chancellor of the
Exchequer, explained the arrangements made by him with the
French and Russian Finance Ministers. The three Ministers
decided that each country should raise money for its own needs
within its own markets, except in the case of borrowing by the
small States.
" We decided that each of the great allied countries should
contribute a portion of every loan made to the small States who
were either in with us now, or prepared to come in later on, that
EFFECTS OF WAR ON CREDIT, ETC. 211
the responsibility should be divided between the three countries,
and that at an opportune moment a joint loan should be floated
to cover the advances either already made, or to be made, to these
countries outside the^three great allied countries."
32,000,000 had been advanced to Russia, and Russia had
shipped eight millions in gold to England. In order to meet the
difficulties of exchange which prevented Russian merchants dis-
charging their liabilities in this country, Mr. Lloyd George had
arranged to accept Russian Treasury bills against the bills due
from Russian merchants, Russia collecting the debts in roubles
in her own country.
The second illustration is taken from a speech made by the French
Minister of Finance on 3rd June, describing the arrangement made
by his Government with the British Government. M. Ribot
reckoned that France would be spending almost 2J millions sterling
a day during the next three months, and he admitted candidly
the great difficulty of finding that enormous sum, since both
revenue and subscriptions to Treasury or National Defence bonds
were coming in badly. M. Ribot estimated that the French
Government would have to pay some sixty millions sterling to the
United States, Canada, and England during the next six months.
He proposed to pay this sum by a plan which the Statist considers
excellent. The British Government has agreed to take 60,000,000
of French Treasury Bonds, repayable one year after peace, at a
rate of discount equal to that which our own Government pays
upon its own Treasury bonds, which is a very moderate one. In
return, the French Government agrees to advance to our Govern-
ment twenty millions sterling in gold. By taking payment in this
way the Statist says, somewhat optimistically, that our Government
assures the exchange with the United States.
It is also to be noted that much money has been raised
and expended for the benefit of refugees from the Allied
nations and in other ways for the relief of those affected by
the war.
The actual closing of the Stock Exchange and the subsequent
great restrictions of its operations have prevented any direct
subscriptions in the English market to loans to friendly foreign
countries, and for some time to come such loans could be floated
successfully only under exceptional conditions.
212 CREDIT, INDUSTRY, AND THE WAR
III. WAR MEASURES AND CURRENCY
(i) Effect of Assistance by the Government to Banks and Financial
Houses in August, 1914. With the effect of Government assistance
to Banks and Financial Houses we have already dealt in our
" Summary of Emergency Measures." The main purpose of these
measures was to prevent a serious derangement of credit and to
impart a momentum to its machinery which would enable it to
resume its operations. The banks were largely dependent on the
accepting houses and the bill-brokers, the bill-brokers were depen-
dent on the accepting houses, and the accepting houses were
dependent on their foreign correspondents, who were, owing to
the breakdown of the exchanges, unable to send the expected
remittances.
The first measure put into force was the Bill Moratorium pro-
claimed on Sunday, 2nd August, and subsequently extended. The
proclamation enabled acceptors to postpone for a month payment
of any bill accepted before 4th August, on reacceptance for the
amount plus interest to the new date of payment at the Bank
Rate current on the date of reacceptance. This proclamation
gave breathing time to acceptors who were unable, for various
reasons, to take up their maturing acceptances, and consequently
prevented a long chain of bankruptcies.
The next steps taken were designed to restore confidence among
the banks, who have always on deposit with them large sums of
credit withdrawable at call or short notice. The Government
protected them by three important measures, which were very
effectual in giving new confidence to the banks and the public
(A) The General Moratorium proclaimed on 6th August, and
subsequently extended, gave the banks and other debtors (with
certain exceptions) power to suspend payment for one month, of
debts payable before the date of the proclamation. But Bank
Notes and Treasury Notes were specially excluded, being convertible
into gold during the Moratorium.
(B) The Currency and Bank Notes Act of 6th August, 1914,
authorised the Treasury to suspend the Bank Act if necessary.
An unlimited amount of Bank Notes would then have been available
if required. The power to suspend the Bank Act was not used.
(C) The same Act also empowered the Treasury to issue 1 and
EFFECTS OF WAR ON CREDIT, ETC. 213
10s. currency notes, which were to be legal tender in the United
Kingdom. In a memorandum issued by the Treasury, it was
announced that currency notes would be issued through the Bank
of England to bankers as and when required up to a maximum
limit, not exceeding, in the case of any bank, 20 per cent, of its
liabilities on deposit and current accounts, in the form of an advance
by the Treasury, the security being a floating charge on the bank's
assets in priority to all other charges, bearing interest from day to
day at the current Bank Rate. By this measure the banks were
placed in the position of being able to obtain, if required, an advance
of 225 millions of legal tender currency. In the initial stages of
the crisis, the banks took nearly 13 millions. The advances out-
standing on 9th June, 1915, amounted to only 139,000. To give
time for the Treasury Notes to be printed, August Bank Holiday
was extended for the four days, Monday, 3rd August, to Thursday,
6th August, inclusive.
With the object of placing the bill market again in a position to
entertain new business, and thus provide international currency,
the Government, on 12th August, 1914, announced that the Bank
of England, under Government guarantee against loss, would
discount at Bank Rate, without recourse to the holders, all approved
bills accepted before 4th August. It was also announced that the
acceptors of such bills discounted at the Bank of England might
postpone payment at maturity by paying interest at 2 per cent,
above Bank Rate. The effect of this measure did much to restore
British credit abroad. The banks immediately sent large parcels
of bills for discount to the Bank of England. New bills accepted
after the Moratorium, however, came forward slowly. Acceptors
were not very willing to be drawn on, except when the bills were
drawn against goods consigned to England, because, so long as
the exchanges were not working freely, there was still the danger
of non-receipt of foreign remittance at date of maturity. The
banks also showed disinclination to buy new bills from the brokers.
The Chancellor of the Exchequer, in his speech on 27th November,
stated that the total amount of bills discounted on the Government
guarantee had been 120,000,000. (This proved that of the
350,000,000 to 500,000,000 amount of bills which were outstanding
at the outbreak of war, most had been disposed of in the ordinary
course.)
214 CREDIT, INDUSTRY, AND THE WAR
On 5th September, 1914, the Government announced that the
following important arrangements had been made with the Bank
of England :
(A) The Bank of England will provide (where required) acceptors
with the funds necessary to pay all approved pre-Moratorium bills
at maturity. This course will release the drawers and endorsers
of such bills from their liabilities as parties to these billsfbut their
liability under any agreement with^the acceptors for payment or
cover will be retained.
(B) The acceptors will be under obligation to collect from their
clients all the funds due to them as soon as possible, and to apply
those funds to repayment of the advances made by the Bank of
England. Interest will be charged upon these advances at 2 per
cent, above the ruling Bank Rate.
(C) The Bank of England undertakes not to claim repayment
of any amounts not recovered by the acceptors from their clients
for a period of one year after the close of the war. Until the end
of this period the Bank of England's claim will rank after claims in
respect of post-Moratorium transactions.
(D) In order to facilitate fresh business and the movement of
produce and merchandise from and to all parts of the world, the
Joint Stock Banks have arranged, with the co-operation, if neces-
sary, of the Bank of England and the Government, to advance
to clients the amounts necessary to pay their acceptances at maturity
where the funds have not been provided in due time by the clients
of the acceptors.
The arrangements announced on 5th September, 1914, have since
had a most important influence in rehabilitating the bill market
and the exchanges.
(ii) Was there Hoarding owing to War?
(A) By Banks. In the initial stages of the crisis some of the Joint
Stock Banks unfortunately attempted to hoard their gold stocks at a
time when the public wanted gold for holiday requirements. They
paid out Bank of England notes instead of gold. This action caused
a large number of people to whom notes had been paid to take them
to the Bank of England to change them into gold which was required
for holiday purposes. According to Sir R. H. Inglis Palgrave,
this encashment of bank notes and so-called " run on the Bank,"
EFFECTS OF WAR ON CREDIT, ETC. 215
would have passed unnoticed " had not the access to the Bank
been rendered difficult by the fact that since they were strengthening
the ceiling of their vaults, what would have been a throng was
magnified into a crowd. Some people to enjoy the entertainment
went to cash 5 notes." Mr. Gibson observes that the other
banks during the week ending 5th August withdrew large amounts
of gold and notes from the Bank of England, where the Reserve
fell during this week from 26,875,194 to 9,966,649 a difference
of nearly 17,000,000.
(B) By the Public. It is pleasing to record that, with a few
ignominious exceptions, there was practically no hoarding of gold
by the public. Since the outbreak of the war, however, there has
been a gradual internal absorption of gold, the Bank of England
having lost to provincial circulation the very large amount of
21,936,000 in gold between 29th July, 1914, and 28th July, 1915.
This absorption of gold must be considered as serious in view of
the fact that the Treasury Notes outstanding on 28th July amounted
to 45,387,000. These notes have been absorbed by home
circulation since the outbreak of war, and should have displaced
approximately their equivalent in gold. The Bank of England
notes in circulation have also increased since 29th July, 1914, by
3,825,000. Therefore, the total absorption of additional currency by
the country since 29th July, 1914, has been 71,148,000. Doubtless
the holding of additional currency stores by the banks, accounts
for a large part of the absorption, but it is impossible to say how
much, and some of the outflow is undoubtedly due to the increased
currency requirements consequent on the extensive military
mobilisation and the increased prices of commodities. Against the
Treasury Notes outstanding on 28th July, 1915, the Government held
28,500,000 in gold coin and bullion, which amount, however, has
been accumulated out of gold received from abroad since the
commencement of the crisis, and has not been displaced from home
circulation.
If the public were hoarding gold to anything like the extent of
50,000,000 to 60,000,000, one would naturally expect the Savings
Banks to have experienced an abnormal amount of withdrawals
since the commencement of the crisis. The reports, however, of
the Savings Banks for the year 1914 proved, almost without
exception, how trivial had been the influence of the crisis on their
15 (1408)
216 CREDIT, INDUSTRY, AND THE WAR
accumulated funds, the main influence exerted having been a
slight check to new business.
There is evidence that the Joint Stock Banks have increased
their reserves of currency since the commencement of the war,
because their cash reserves have considerably increased. They
have not necessarily done so, however, for the purposes of hoarding.
They require additional currency to support their vastly increased
deposit liabilities. By their subscriptions of 100,000,000 to the
first War Loan they indirectly created credits to a similar amount,
and their subscriptions of about 200,000,000 to the second Loan
will also reflect itself in a further addition of about 200,000,000
to their credit balances by the end of the year, provided in the
meantime they do not sell any of their investments to the public.
Sir R. H. Inglis Palgrave writes : " There has been, in fact, very
little hoarding on the part of the public recently, far less than I
remember took place during the panic of 1866. That some hoarding
had taken place is clear from amounts in gold which have been
produced in connection with payments for the new 4J per cent.
War Loan, but there is no evidence as to the date when these
hoards were made. There are always people who will hoard."
Another correspondent suggests a reason for the absence of hoarding
by the public the " war measures " were put into operation
before the banks were reopened after this country entered the
fray. He continues : " Had not special measures been taken to
prevent hoarding such as the Moratorium and the special appeal
to the patriotism of the public I feel sure that hoarding would
have taken place on a scale hitherto unknown. What produces
hoarding is panic ; and if the Government had not prolonged the
August Bank Holiday as they did, the panic that set in on the
outbreak of hostilities between Germany and France and Russia
would have become so violent that the whole of commercial England
would have become bankrupt. The fact is the Government did
not give ' hoarding ' a real chance."
(iii) Emergency Measures to Meet the Need for Currency. With
regard to the Emergency Measures taken to meet the immediate
need for currency, the most important step taken by the Govern-
ment was the issue of Currency or Treasury Notes. The reason
for this Note issue was that on the outbreak of war the banks
feared a run on their deposits, and knew that they had not sufficient
EFFECTS OF WAR ON CREDIT, ETC. 21?
legal tender to meet possible demands. Their other resources were
also solidified, and they felt that if they parted with considerable
sums in gold the public might hoard it until after the war.
There was also some apprehension that the supply of the circulating
medium for ordinary business purposes might be insufficient.
It was therefore resolved that small notes of 1 and 10s. each
should be issued by the Treasury. These notes were made legal
tender that is to say, they might be employed in paying a debt
exactly in the same way as gold and silver coin or Bank of England
notes can be used for that purpose. Arrangements were made
for cashing the Treasury Notes in specie on demand at the Bank
of England, and we learn from the Bank that the exchange of
Currency Notes for gold is a matter of daily occurrence there, and,
in fact, has been so since the notes were first issued. No mention,
however, of the fact that Currency Notes are payable in gold at
the Bank of England has appeared on any of the notes which
have so far been issued.
The issue of these notes was a bold experiment ; some difference
of opinion prevails as to the wisdom of the step, and there is more
doubt as to the advisability of continuing, and possibly of increasing,
the amount of Government notes in circulation. Some of the
objections were referred to by Mr. Huth Jackson in his presidential
address to the Institute of Bankers, in November, 1910, and are
now endorsed by Sir Inglis Palgrave. l Mr. Huth Jackson quoted
on this occasion from the works of Mr. Conant, who is a recognised
authority on Banking and was the United States Delegate at The
Hague Conference, and who wrote in his History of Modern Banks,
as follows:
" A Government paper currency has rarely been issued to promote
the convenience of commerce, and has seldom contributed to that
end. Experience, as well as theory, has proved that Government
paper money is essentially different in character from banking
paper, and opens a Pandora's box of evil for every nation which
uses it. The difference between a Government paper currency
and bank notes is not one of experience or accident merely ; it is
a difference which is fundamental. Banking paper is based on
1 Part of the statements made here were given by Sir Inglis Palgrave in an
article on the " Government Note-Issue " in the Bankers' Magazine for April,
1915, and are repeated with the permission of the Editor.
218 CREDIT, INDUSTRY, AND THE WAR
business transactions, and is limited by their demands ; Govern-
ment paper is based upon the will of the State, and is limited only
by its necessities. The almost invariable rule of Government
paper issues is that one begets another, until the entire volume
exceeds the legitimate demands of business, upsets values, and
goes beyond the reach of restriction of the metallic standard. . . .
Even a limited issue of paper is maintained at par by a Government
with much greater difficulty than by a well regulated bank. The
reason is fundamental. The Government has no quick assets.
It is not wealth in the abstract that currency must represent,
but quickly negotiable wealth. The Government has only two
resources (beyond the cash in hand) the pledge of public property
and the power of taxation. The peculiar strength of a banking
currency lies in the enormous mass of quick assets behind its
demand liabilities/'
The objection made by Mr. Huth Jackson is so strong that it
ought really to be decisive as to the continuance of the Currency
Notes. Should there be any doubt on the subject, there are
several practical objections which ought to be remembered. One
of these is the great risk of forgery. Another is the question
whether they may not be a heavy expense to the State. A third
objection is that a very large issue of them would have an effect
upon prices. The amount of these notes issued is not, like the notes
of a bank, payable in specie on demand, dependent upon the
requirements of business, but it depends on the wants of the Govern-
ment, which are completely different. The Currency Notes are
made payable at the Bank, and, of course, they will be paid by the
Government eventually but, as mentioned before, the fact that
they are payable at the Bank is not stated on them. There is,
hence as the Currency Notes are not practically subject to the
constant inspection at the issuing bank which ordinary notes
payable in specie on demand are a much greater risk of forgery.
(We may add that a constant system of " exchange " for the
small notes of the issuing banks in Scotland and Ireland assists in
obtaining the same results in their case.)
Again, small notes, as those for 20s. and 10s., circulate among
a much less educated class than the larger notes of the Bank of
England do, and they thus rapidly become soiled, in which state
it is almost impossible for any person to decide whether they are
EFFECTS OF WAR ON CREDIT, ETC. 219
genuine or not. The first notes were very poorly executed. To
render them safer from forgery, a better design for the notes has
since been employed, but the facilities for copying and reproducing
any design by various processes are very considerable and no
great dependence can be placed on the goodness of the design
for preventing forgery. Sir Inglis Palgrave says : " Ready
payment in coin on demand gives the best security against this.
In the United Kingdom during the period of the suspension
of specie payments at the beginning of the last century, 1 the
1 notes of the Bank of England were largely forged, while
forgeries were far less frequent among the bank notes of the
higher denominations."
Sir Inglis here quotes a table showing the actual numbers of the
forgeries in each denomination of notes over a series of years :
" After the war between France and Germany in 1870, notes as
small as five francs were issued by the Bank of France. These
were frequently forged. The Bank of France thought it desirable
to pay all their notes, whether genuine or otherwise, in order to
avoid the inconvenience which refusal to pay any of their notes
might have produced. This I remembered hearing at the time.
To be quite sure, I inquired at the Bank of France last year, while
the business of the bank was being carried on at Bordeaux, whether
I was correct, and the Secretary of the bank assured me that the
facts were as I have stated. He added that great precautions were
taken and that the eventual loss was but small."
There is hardly any need to enlarge on the great disadvantages
which arise from forgery in the notes which form part of the general
circulation of a country. Whether extensive forgeries of the
notes are in fact taking place we do not know, and one of our
correspondents says that " all known coiners not in prison are
now engaged in the manufacture of munitions." Besides these
difficulties, which are inseparable from an issue of small notes,
there is also the practical question whether there may not be
an expense to the State from the issue of the Currency Notes.
The figures on 26th August, 1915, are as shown on the next
page.
1 The suspension of specie payments lasted from the year 1797 to 1821.
See article on " Suspension of Specie Payments," Palgrave's Dictionary of
Political Economy, Vol. Ill, p. 501.
220 CREDIT, INDUSTRY, AND THE WAR
Currency Note Issue.
Statement of 26th August, 1915.
4
Scottish and Irish Banks of Issue
Other Bankers 1,204,000
Trustee Savings Banks 469,000
Currency Note Redemption Account
Gold Coin and Bullion .... 28,500,000
Government Securities .... 9,586,000
Balance at the Bank of England . . 14,750,000
54,509,000
Proportion of gold to notes outstanding, 52 -6 per cent.
This statement shows that at the end of August/- 1915, about
54,500,000 of Currency Notes were in circulation, that there was
held against them 28,500,000 in gold, with about 9,600,000
Government securities, and that there was further a balance of
14,750,000 at the Bank of England.
The Currency Notes issue is thus amply secured, but can any
profit arise to the Treasury from the issue ? We must first estimate
the expenses. The best basis that we can find for estimating the
cost at which the Treasury Note issue is being worked is found in
the Report of the Postmaster-General. In his Report for 1903,
the net expenditure of the Post Office Savings Bank Department is
stated as " representing an average cost per transaction of 5*93d."
Professor Dicksee maintains that there is nothing in common
between transactions of this description and transactions in the
Savings Bank Department. " If there were," he adds, " it would
be a simple matter for any competent person with up-to-date
ideas to reduce the costs of the Post Office Savings Bank to a
maximum of 2d. per transaction." At present there are no statistics
available to show whether the cost of Treasury Notes equals or
approaches the cost of transactions in the Post Office Savings
Bank. But there is a statement in the evidence taken before the
Select Committee of the House of Commons on Banks of Issue in
1875, which shows that the cost of a 1 note circulation, kept in a
reasonable condition, could not be much less than IJd. per annum
for every note issued. This would be a much smaller expense
than that shown in the estimate based on the expenditure at the
Post Office, but, as more than 93,000,000 of Currency Notes had
been cancelled up to August, 1915, the expense of working the
EFFECTS OF WAR ON CREDIT, ETC. 221
issue must be very large, and a profit can hardly be looked for.
Nor is the amount of gold acquired for the Bank of England by
the Currency Note issue really important considering the large
reserves which must always be held against it.
On the other hand, the experiences of the Scottish and Irish
Banks of Issue shows that an issue of 1 notes can be maintained
at comparatively small cost, and that in these countries notes of
1 circulate with great freedom, even in some cases being preferred
to gold. In foreign countries, too, Governments have thought it
worth while to issue notes of far lower value than 10s. For years
Italy issued notes of one lira (9Jd.), and France is now issuing
one-franc notes, and even 50-centime notes are not unknown.
Further, an allowance must be made for the fact that gold coin
withdrawn from active circulation is, for the time being, protected
from wear. Hitherto, the Government has accepted responsibility
for the loss in weight of gold coinage, and the stoppage of this loss
should far outbalance the cost of printing notes.
(iv) The Extent to which these Measures were Effective, Necessary,
or Desirable. Our fourth question clearly invites a difference of
opinion. We have already explained the various Emergency
Measures, and in the process we have criticised them where criticism
seemed to be required. Consequently, we say nothing further
about them here, but in order to place on record the objections
which may possibly be urged against them, we print Mr. A. H.
Gibson's summary.
. The measures enumerated above restored confidence among the
banks, who had standing over them the possibility of a general
run from their depositors at a time when they were unable to
convert any large part of their resources into legal tender currency.
For the rapid restoration of confidence among the banks the
Government measures must be considered as having been very
effective.
In the absence of legislation providing that banking deposits
over a certain amount should not be withdrawable without a certain
notice first being given by the depositor, some measures of protection
to banks were necessary in order to restore confidence among the
banks. So far as the public were concerned, the experience of the
banks has since shown that the protective measures enumerated
were unnecessary. If there had been no extension of the Bank
222 CREDIT, INDUSTRY, AND THE WAR
Holiday, and the banks had not refused to pay out gold to their
depositors in the ordinary course of business, there is no reason
to think that gold withdrawals from the banks would have been
on a very abnormal scale. There would possibly have been a
few extra millions paid out during August, but the drain could
easily have been met without much effect on current stocks.
The measures enumerated were not desirable for many reasons :
(1) They tended to destroy confidence among the public, whilst
admittedly creating confidence amongst the banks.
(2) The old proved banking maxims that " the best way to
restore confidence among depositors is to pay out smilingly in full
the demands of any uneasy depositors," and " every restriction
on gold going out acts as a restriction on its coming in," were
evidently early forgotten by the Government and the banks.
(3) The measures caused a loss of confidence in the banks by
certain people who can never be expected to understand the
machinery of finance. It will be many years before confidence
in the banks is fully restored.
(4) There is reason to believe that the more or less forcible issue
of Treasury Notes on the public by the banks is one cause of the
continuous absorption of gold by the provinces, the public, on
account of their preference for gold, showing a tendency to hoard
any gold that is paid out to them. The available evidence is that
the issue of Treasury Notes has not conserved gold stocks, which
was one of the objects of such issue, though in future there should
be less public hoarding of gold if the Press makes widespread
appeals to patriotism.
(5) The Treasury Notes and Postal Orders have given con-
siderable labour to the banks and the public, not being so easily
handled and counted as gold.
(6) Obviously, if it were necessary to use Treasury Notes, they
should also have been issued in larger denominations than 1
and 10s., say, for 5, 10, 20, 50, 100, 500, and 1,000. In
the event of a run on the banks, it would have been easier for the
cashiers to pay out the larger denominations than a greater number
of the smaller denominations.
(7) The position of the banks and the fears it engendered during
the early days of the crisis have proved that in future there must
always be available large stocks of paper emergency currency for
EFFECTS OF WAR ON CREDIT, ETC. 223
times of crisis, and the banks and other people must be in a position
to obtain supplies on pledge of Government securities.
Some criticism has been directed against the closing of the
Stock Exchange and the action of some of the Joint Stock Banks
in the first days of the crisis. In two respects only had anticipation
underestimated the magnitude of the effects of the war on the
Money Markets. " The first was the scale on which foreign credi-
tors became unable to meet their obligations to us and the strangling
effect of this on our own Money Market ; and the second was a
lack of courage in the early days of the crisis on the part of
our joint stock bankers/' 1 The Stock Exchange was closed on
Friday, 31st July, and remained closed for the rest of the year.
Was this drastic step necessary ? Why was it taken ? One
authority believes it was not necessary, and he throws the blame
for it on the banks. He reasons thus : " Immense sums were
lent by the banks on security of shares. The amount of the loan
for which this security is good is ordinarily calculated by reference
to the price at which the shares are quoted in the Official List.
If the quotation falls, the bank may require their customer either
to reduce the amount he is borrowing from them or to put up
additional security." If he does not, they may sell his stocks.
If the Stock Exchange had remained open, there would have been
a great fall in prices and the banks would have seen their securities
dwindling. " There was no guarantee that they would not have
taken it into their heads to ruin a number of their customers.
The ruin of these would have brought with it the ruin of brokers
who had trusted them ; and so the trouble would have spread
from one class to another."
On the question of Provision for the Suspension of the Bank
Act, we may again quote the opinion of Sir Inglis Palgrave : " The
experience of the only occasion on which the suspension of the
Bank Act has occurred shows that it was fortunate for the trade
and credit of the country that this suggestion was not carried
out in 1915. During three crises which have occurred since the
Bank Act was passed in 1847, 1857, and 1866, permission was
given each time to suspend the Act. On one occasion only, in
1857, did the suspension actually take place. The strict limits
of the Act of 1844 were only exceeded in the returns of 18 and 25
1 Economic Journal, September, 1914.
224 CREDIT, INDUSTRY, AND THE WAR
November, 1857. 1 But the impression abroad was very injurious
to this country. It was considered that the United Kingdom had
become bankrupt. It is quite true that internal anxiety was
quieted, but the effect on our foreign trade was very different.
As one of the few persons now living who can remember all the
crises which have occurred in this country since 1845, I still bear
in mind the distress which followed. The crisis of 1866 was,
indeed, more terrible in England, but the effect on the Continent
in 1857 was very serious. The crisis of 1847 was severe, but the
resulting troubles were far less than those of the two later crises.
The main reason for this was that in 1847 the difficulties were
caused by the too rapid extension of our Railway System, and
through speculations that resulted. Great distress was caused at
the moment, but the railways remained and were of such service
to the trade, industry, and the economic conditions of the country
that the troubles were soon overgot."
The power of suspending the Bank Acts of 1844-45 is given in
Sections 3 and 4 of the Currency and Bank Notes Act, 1914. The
terms are more sweeping than any alteration of the legislation
established by Peel that has yet been suggested. Section 3 enacts
that not only the Bank of England, but any Scottish or Irish Bank
of Issue " may, so far as temporarily authorised by the Treasury,
and subject to any conditions attached to that authority, issue
notes in excess of any limit fixed by law." Section 4 enacts that
" any bank notes issued by a bank of issue in Scotland or Ireland
shall be legal tender for a payment of any amount in Scotland or
Ireland respectively, and any such bank of issue shall not be under
any obligation to pay its notes on demand except at the head
office of the bank, and may pay its notes, if thought fit, in currency
notes issued under this Act." The power thus given to suspend
the Bank Act of 1844 and the Bank Acts of 1845 has not at present
been exercised.
The use of postal orders as legal tender was very small. By
most people it seems to have been welcomed as an opportunity of
securing these convenient means of remittance for small amounts
without paying the usual poundage. The facilities may have
been useful, and no objection can be taken to the measure. After
1 Palgrave's Dictionary of Political Economy, Vol. I, p. 463, article on
" Crises."
EFFECTS OF WAR ON CREDIT, ETC. 225
a time these facilities were withdrawn, and no one complained.
The Moratorium, however, was a very serious innovation in British
financial policy, and can be justified only by the great seriousness
of the crisis which it was designed to meet. Undoubtedly it was
useful in giving people time to think, and to gather together their
resources. But as actually constructed by successive Proclama-
tions under the Postponement of Payments Act it showed certain
defects, which are well set out by Professor Dicksee. He admits
that both the four days' Bank Holiday and the Moratorium were
probably necessary in order to give time for reflection and recovery.
" But," he continues, " while they may have served to allay panic,
and perhaps even to restore confidence, in the nature of things
they could not re-establish credit, for credit is a matter of trust,
rather than of calculation."
The Moratorium was somewhat unsatisfactory in several ways.
It extended the time for the execution of contracts involving the
paj'ment of certain kinds of debts, but not the time for the execu-
tion of contracts involving the delivery of goods or the rendering
of services. But many business houses that were under contract
to deliver goods at stated intervals against payment on specified
dates, broke their contracts and refused to continue delivery,
unless they could be assured that punctual payment would follow
in due course. Thus, a want of confidence, which in the first
instance was confined to monetary transactions, was extended to
dealings in goods. The same difficulty did not arise to any serious
extent with regard to the rendering of services, because payments
in the nature of wages or salaries were exempted from the pro-
visions of the Moratorium ; but those who were under liability to
pay out large sums in wages were gravely inconvenienced, and
sometimes obliged to suspend operations altogether.
(v) Effect of Increased Paper Currency on Prices. We now come
to what is, perhaps, the most controversial of all our questions,
that of the effect of Treasury Notes upon prices.
Several distinguished correspondents sent us memoranda which
are very hostile to the continuance of these notes. Sir Inglis
Palgrave expresses the view which is taken by most economists.
He writes thus : " The effect of an increase of the paper currency
upon prices, if sufficiently large, is invariably to raise prices, in
the same way as any other increase of the circulating medium,
226 CREDIT, INDUSTRY, AND THE WAR
when this is not called for by an increase in the business done.
The general increase in prices since the issue of the Treasury Notes
may possibly be connected with that issue in some degree. Few
things are more difficult to trace than the alteration in prices
caused by the issue of a Government paper issue at its first incep-
tion. To employ a simile, if I may venture to do so, it is like
watching the rise of the tide on a wide beach. Sometimes the
waves appear to beat stronger, sometimes they retreat, and it is
not till some considerable interval has occurred that the spectator
can be certain that the water at his feet is really deeper. Those
who will refer to what occurred when the payment of the notes
of the Bank of France in specie was suspended after the year
1870, when a vast paper issue was made, and what is taking place
now on the Continent from similar causes, will understand this.
The effect on prices in this country during the suspension of specie
payments early in the last century is another and a good example.
The House of Commons even, by passing a Resolution moved by
Mr. Vansittart, at that time Chancellor of the Exchequer, denied
that the high price of bullion then existing was due to the over-
issue of paper, but the effects which followed the resumption of
specie payment showed conclusively that prices had been raised
very considerably by the great increase of the currency."
The most emphatic condemnation of Treasury Notes is that of
Professor Shield Nicholson, who has denounced them in the columns
of the Scotsman 1 and in the pages of the Quarterly Review. 2
So far as gold is concerned, he argues, we might have expected to
see a general fall in prices, since " all the great foreign banks have
taken to hoarding their gold, as if that were the height of financial
wisdom/' Moreover, as the Economist index numbers show, the
rise in prices since the war " is the more remarkable as it set in
in face of a continuous fall for the year preceding the outbreak."
The Money Market, he continues, has been " in a state of otiose
repletion, and the channels of circulation have been filled to the
brim with emergency currency." As a result, the value of our
imports has risen, while that of our exports has fallen sharply.
" Inflated prices encourage imports and discourage exports."
Then there are difficulties at home (e.g., the readjustment of wages
1 17th February and 17th March, 1915.
" The Abandonment of the Gold Standard," April, 1915.
EFFECTS OF WAR ON CREDIT, ETC. 227
to meet the general rise in prices). " It cannot be denied that
there has been a general rise in prices, which is exactly the same
thing as a general depreciation of the currency, but many people
object to the use of this latter phrase. They prefer to indicate
their confusion of thought by saying that the rise in prices is the
' natural ' result of the war. On this view, prices in war-time
simply rise because ' it is their nature to/ like the dogs that delight
to bark and bite, and the opium that has the virtus dormitiva,
whose nature it is to dull the senses." One object of the note
issue was the preservation of our stock of gold, and this policy is
attacked by Professor Nicholson : " The maxim that a reserve of
gold ought to be accumulated in ordinary times for use in an
emergency has been strangely perverted into the maxim that in
times of stress gold ought to be hoarded for liberation when the
stress has passed."
As we have said, opinion on the merits of the Currency Note
issue differ. Mr. Barnard Ellinger welcomes the issue. " I think,"
he writes, " if the banks made a great effort to pay out Treasury
Notes and the public were made to understand that it is desirable
that they should use them instead of carrying about gold, not only
would more gold flow into the Central Institution but an oppor-
tunity would not be lost of accustoming the public to the use of f\
notes, should it be found desirable after the war to retain them
as a permanent part of our currency, in order to strengthen our
gold reserves. If the notes were withdrawn and instead of them
f\ Bank of England notes issued, so made as to be easier to count
and handle than the present notes, I think the public would take
them willingly, and the tellers at the bank would be equally willing
to pass them out, as they would not experience the present difficulty
of counting them."
Mr. Gibson denies flatly that Treasury Notes have had any
measurable effect in raising prices. He argues that as the home
circulation has absorbed over seventy millions of additional cur-
rency since the war began, the twenty-six millions of notes not
backed by gold have simply helped to fill up the additional require-
ments. He holds that in this country cheques are so much more
used than coin or notes that we have practically lived on a paper
currency for some time past. " A far more interesting and impor-
tant problem," he adds, " is the effect of the 400 millions or so of
228 CREDIT, INDUSTRY, AND THE WAR
additional credit created by the banks themselves subscribing to
the two last War Loans and to Treasury Bills. Mr. E. L. Franklin
also believes that the issue of Treasury Notes, up to the present,
has had no effect in raising prices. The total increase in the
circulating currency is not, he thinks, greater than the amount
of gold now hoarded by the public.
Mr. D. M. Mason, M.P., on the other hand, holds strongly that
the notes ought to be withdrawn as soon as possible. He maintains
that the effect of "an abnormal issue of paper currency," whether
in bank notes or in Government notes, is to raise prices. With
this view, if stress be laid on the word " abnormal," we are inclined
to agree. An over-issue, he continues, is less probable in the case
of bank notes, as they would be difficult to get into circulation.
He sees no objection, however, " to properly qualified banks
having the right to issue notes, and provided the notes are made
payable in gold on demand, there need be no limit placed upon
the issue, as the notes in the event of an excessive issue would
probably be at once presented for payment."
Each country is only capable of using a certain amount of cur-
rency for its daily and yearly requirements. This currency expands
and contracts with the demands made upon it. If there is a surplus
of currency and loanable credit in a country, the rate for money
falls, and like every other commodity, seeks a better market.
The exchanges turn against the country in such a case, and gold
flows out until the value of money rises and checks the outflow,
and, in turn, tends to attract capital back to this country again.
Mr. Mason quotes a letter from the Economist which compares
the note circulation of the principal banks of Europe in March,
1914, with the circulation a year later. (See next page.)
The table, we may observe, makes no allowance for the large
increase in the gold stocks of all the banks mentioned. So far as
the Bank of England is concerned, Mr. Franklin, writing on 13th
August, says : " Comparing the gold position to-day with that of
13th August, 1914, 1 notice that the entire note circulation could be
redeemed in gold, and the Bank would still have the same amount
of gold in its vaults as this time last year, namely, 32 millions."
Coming to the second part of the question as to " what provision,
if any, should be made for the withdrawal of Treasury Notes,"
we find it more easy to agree upon a recommendation, and this is
EFFECTS OF WAR ON CREDIT, ETC.
229
Note Circulation
in March, 1914.
Note Circulation
in March, 1915.
Increase
in 1915.
Bank of England .
Treasury Notes
Total
i
28,500,000
34,01)0,000
38000,000
5,500,000
38,000,000
28,500,000
72,000,000
43,500,000
Bank of France
Imperial Bank of
Germany .
Imperial Bank of
Russia
Austro-Hungarian Bank
Grand Total
232,000,000
90,000,000
162,000,000
89,000,000
444,000,000
247,000,000
312,000,000
(estimated)
178,000,000
212,000,000
157,000,000
150,000,000
89,000,000
601,500,000
1,253,000,000
651,500,000
that the Treasury Notes should be gradually withdrawn. If paper
money for sovereigns and half-sovereigns is still required, this
should be provided by Bank of England notes of these denomina-
tions. 1 From this recommendation Mr. Franklin dissents,
suggesting as an alternative that the issue should be adjusted until
each note is balanced by its equivalent in " ear-marked " gold.
" By this method the amount of circulating currency would not
be increased, while the Government would have control of a large
stock of gold." We are by no means sure, however, that it is
wise to leave a large stock of gold in the hands of a Government
Department. A Chancellor of the Exchequer in difficulties might
be tempted to raid it.
1 Sir Inglis Palgrave makes an interesting, if somewhat revolutionary,
suggestion in this connection, namely, that the Bank should be allowed to
issue its notes against suitable business securities. " These might be first-
rate mercantile bills and floating securities of that class, the requirements of
the Bank Act as to the holding of gold coin and bullion against the notes
issued beyond the fixed limit of ^18,450,000, being suspended for the time
while the Bank was directed to pay its notes in specie. If the Bank of
England were left to its own judgment in the matter, as it was before the
Act of 1844 was passed, there ought to be no anxiety that it would fail to
provide for cashing its notes and meeting the demands on it in specie. The
rate of discount might at times have to be raised to a high point if the foreign
exchanges were much against this country, but this, as well as the arrange-
ments needed for the maintenance of payments in specie, might safely be
left to the management of the Bank of England." As an alternative Sir
Inglis suggests that the other banks in England and Wales, whose rights of
issuing notes have been gradually cut down since 1844, should be allowed,
under proper safeguards, to make a new issue of small notes.
230 CREDIT, INDUSTRY, AND THE WAR
IV. WAR TAXATION.
What Proportion should be Maintained between the Amount
Borrowed for the War and the Amount Raised by Taxation. On this
question it was not probable that the Conference would come to
a unanimous conclusion. The general opinion is that no fixed
proportion can be maintained in the case of a war which is not yet
within sight of its end and has already cost a sum surpassing that
spent in any previous war. 1 At the same time, the Conference
has no hesitation in agreeing with Professor Bastable's opinion
that " the need for immediate taxation is great."
While it is difficult, and perhaps ultimately impossible, to dis-
cover any principle upon which the cost of a war should be divided
between money raised by borrowing and money raised by taxation,
nevertheless, since all loans, even when raised by national Govern-
ments, should be regarded as being repayable at some time in the
future, the real choice is between paying by present taxation and
paying by future taxation. By a curious irony, the Imperial
Government has found itself forced, by stress of circumstances, to
adopt the rule, which it has imposed, amidst so many protests,
on our local governing bodies that loans shall be repaid at a fixed
and early date. It is probable, no doubt, that the Government
would have preferred the unilateral option of Consols (i.e., of
repayment at its option only). But the disastrous experience of
Pitt, who issued his loans at a ruinous discount, and the risk of a
refusal on the part of investors to subscribe to an irredeemable
loan, have led to the adoption of a sounder policy. It is no doubt
true, as Mr. Gibson suggests, that one reason for the early date
of redemption, at the Government's option, is to secure the possi-
bility of conversion to a lower rate of interest if the War Loan
stands above par.
In the case of a local authority, Parliament permits borrowing
only for purposes which have a permanent value, such as the pur-
chase of property or the building of a Town Hall, and it insists, in
every instance, that a sinking fund shall wipe out the whole loan
before, say, the Town Hall will need rebuilding. Thus, at the end
1 Mr. Sidney Webb protests strongly against the attempt to assign any
ratio between loans and taxes. " No such ratio," he writes, " can have any
relation to the amount which it is economically desirable and practicable to,
raise by taxation."
EFFECTS OF WAR ON CREDIT, ETC. 231
of the period the town possesses its Hall free of debt. Consequently,
the local sinking fund need be fixed at only the small percentage
required to wipe out the debt within the forty or fifty years specified
by Parliament. But in the case of money borrowed by a Govern-
ment for a war, the conditions are very different. The money
has been spent, and there is no property or work of permanent
value to show for it ; it has gone like the money which a man
borrows to keep his home going during an illness, not like the
money which he sinks in building himself a house. Consequently,
a greater effort must be made to pay for it out of income rather
than by borrowing. No doubt, when a successful belligerent gets
an indemnity or an increase of territory, this is an asset to be
reckoned against the new debt of the war ; or, to continue our
analogy, it is like a firm borrowing to buy the site for a new building.
Clearly the smaller the war expenditure the larger the proportion
which should be raised by immediate taxation. Mr. Gladstone
added very little to the National Debt as a result of the Crimean
War, though he increased taxation immediately. During the
Boer War, laxer principles prevailed.
Now, however, with the rate of expenditure so enormously
increased beyond anything known or thought of even fifteen years
ago, precedents give little help, for the proportion raised under
Mr. Gladstone is clearly out of the question. Nevertheless, some
principle or proportion should be found. Interest on the War
Loan must be met out of taxation : there can be no two opinions
here. Two further annual charges must be faced, though both
should gradually decrease, viz., Sinking Fund and Pensions for the
disabled and for widows and dependents of the slain. Those
charges, like that for the interest on the War Loans, naturally depend
upon the length of the war itself, but all three charges will grow
with each month that the war lasts. Another thing grows, and
that is, the rate of interest which has to be paid for each successive
loan. The earliest batch of Treasury Bills was subscribed three
times over at an average rate of discount of 3f per cent. ; the first
War Loan, issued on a basis of between 3| and 4 per cent., was
subscribed with difficulty ; and the second Loan required much
advertising and appeals to patriotism before it could be floated
at 4J. And now, from Mr. McKenna's promise to accept 4J per
cent. War Loan stock as payment for a third War Loan, if it should
16 (1408)
232 CREDIT, INDUSTRY, AND THE WAR
have to be issued, we must face the possibility of a debt at over
4| per cent., running far beyond a thousand millions.
Then it is a well-known fact that borrowed money is spent more
extravagantly than income, whether by Governments or by indi-
viduals. Finally, during a war, money is inevitably spent lavishly
and everyone connected with war industries earns higher wages
than in times of peace. Consequently, the nation as a whole can
bear more taxation now than it will be able to bear when peace
comes and the war industries become slack again. Yet no fresh
taxation was imposed by the 1915-16 Budget, and even the Interim
Budget of November, 1914, had only doubled the income tax and
increased the beer and tea duties ; a rough-and-ready plan which
was excusable at the moment, but is indefensible as a permanent
method of raising money for the war.
Detailed proposals for raising further revenue might lead the
Conference into controversial topics, and have accordingly been
excluded from its " Reference." Therefore, we cannot endorse
the fiscal proposals made by the Bankers' deputation to the Prime
Minister and the Chancellor of the Exchequer, which are now
supported by Mr. Barnard Ellinger. His argument runs thus :
" If the amount of indirect taxation raised through existing
Customs duties were very considerably increased, so long as the
Exchequer were receiving the same total amount of revenue, any
diminution of import due to the increased rate of taxation would,
at the present time, be of great advantage to the nation, in so far
as it would diminish the total sum of our imports. If the excessive
taxation did not seriously diminish the imports, the Exchequer
would, of course, gain in revenue. An increase of indirect taxation
in the shape of Excise duties is also desirable, and no great harm
could be done at the present time by driving this taxation up to
or near a point at which it ceased to be productive. The Exchequer
would get at least the same revenue as hitherto, and there would
be a growth of saving available for loans, or, alternatively, the
Government would get increased revenue."
Direct taxation raises less controversy, and we think that the
income tax might be raised beyond its nominal rate of 2s. 6d.,
especially if its graduation were improved and if it were extended,
necessarily at a lower rate of charge, to a much greater number of
taxpayers. Two considerations, however, must be borne in mind :
EFFECTS OF WAR ON CREDIT, ETC.
233
a greatly increased tax (1) adds to the risk of false declarations
or concealments of income, and (2) may deprive the Government
of subscriptions to its loans. In order to obtain some definite
estimate of the total cost of the war, it is necessary to assume
that it will end on a certain date. Mr. Joseph Kitchin, who has
furnished the Conference with a very valuable and exhaustive
memorandum, assumes merely for purposes of calculation that
hostilities will continue until the end of November next, and that
a further three or four months will be taken up by negotiations
and the final ratification, during which expenditure will be on a
heavy, though on a reduced, scale. On this assumption he works
out the cost of the war as follows : " Exclusive of (1) some
200,000,000 lent to the Dominions and our Allies, which will in
due course be repayable ; (2) some 30,000,000 spent in the purchase
of wheat, meat, sugar, and other commodities, which may be
re-sold at cost ; and (3) 80,000,000 per annum representing the
normal cost (1914-15 Budget) of our Army and Navy under peace
conditions, the direct cost of the war to the United Kingdom
may be put as follows :
Direct Cost of War.
Extra Revenue Raised.
Income and
Super-tax.
Excise and
Customs.
Total.
4 months to
end Novem-
ber, 1914
do. March 1915
do. July, 1915
do. Nov., 1915
do. Mar., 1916
(armistice
period)
Interest on
War Debt to
31st March,
1916.
100,000,000
180,000,000
i
280,000,000
670,000,000
50,000,000
12,800,000
46,400,000
I
6,000,000
20,200,000
i
18,200,000
61,800,000
240,000,000
280,000,000
150,000,000
1,000,000,000
59,200,000
26,200,000
80,000,000
" The extra revenue raised is judged by comparing the actual
revenue of 1914-15 and the Budget for 1915-16 with the first
Budget (prepared under peace conditions) for 1914-15. The
234
CREDIT, INDUSTRY, AND THE WAR
figures of the Budget for 1915-16 are taken notwithstanding the
dropping of the increased beer, spirit, and wine duties included
in it, since the revenue from these sources is not likely to be affected ;
indeed, Lord Lansdowne gave figures in the House of Lords on
6th July indicating that a higher revenue than that assumed in
the Budget will be received. The total of extra revenue shown
(which includes non-tax revenue) is lower than the sum of the
two previous columns because of loss of other revenue, particularly
from stamps. The foregoing table shows that, on the assumptions
made, only some 8 per cent, of the direct cost of the war will
have been raised by increased revenue during the sixteen months
from 1st December, 1914, to 31st March next, and, indeed, only
6| per cent, if the cost of after-war pensions and allowances is
also taken into account.
" Apart from Treasury Bills and the meagre amount of increased
taxation, the cost of the war is being raised on two War Loans.
The 3J per cent. War Loan realised 331,000,000. The new 4J
per cent. War Loan has realised a little over 600,000,000. Pending
definite figures as to conversions of old loans (which cannot be
known till November), a forecast of the Treasury of 21st June may
be adopted. According to this forecast, 250,000,000 of Consols
and 200,000,000 of the War Loan 1925-28 may be converted,
leading, with the 600,000,000 of new money, to the following result :
New Stock
received on
conversion.
New
Subscrip-
tions.
Total of
New Stock
issued.
To holders of Consols.
To holders of War Loan, 1925-28
Subscriptions apart from conver-
sions .....
167,000,000
200,000,000
333,000,000
210,000,000
57,000,000
500,000,000
400,000,000
57,000,000
367,000,000
600,000,000
957,000,000
" This would mean that the assumed cost of the war will (with
the exceptions already given) have been raised as follows :
Proceeds of 350,000,000 War Loan, 1925-28 . . 331,000,000
War Loan, 1925-45 ... . 600,000,000
Raised out of revenue in the fiscal years 1914-15 and
1915-16 . . . 80,000,000
1,011,000,000
EFFECTS OF WAR ON CREDIT, ETC.
235
" Assuming for the moment that no further increased taxation
comes into force before April next, the picture of the National
Debt would be about as follows :
Nominal
Amount.
Interest per
Annum.
4* per cent. War Loan, 1925-45 .
3| per cent. War Loan, 1925-28 .
Old National Debt (mainly 1\ per cent.
Consols)
Total
957,000,000
150,000,000
390,000,000
43,000,000
5,000,000
12,000,000
^1,497,000,000
60,000,000
' This means an increase of 860,000,000 in the National Debt.
Of the 1,497,000,000 rather over 1,100,000,000 will be redeem-
able, while practically all of the old National Debt of 640,000,000
was irredeemable and subject only to purchase in the market,
though there was also the alternative of redemption in each con-
version scheme. The higher rates of interest on the War Loans
will continue until at least 1925, when the 4| per cent. Loan may
be converted at a lower rate of interest. Assuming that the
1,100,000,000 of redeemable debt is redeemed by a Sinking Fund
of a fixed annual amount for interest and redemption combined,
the annual service would be raised from 48,000,000 to 55,000,000,
if the period of redemption is spread over fifty years. This means
a total service, including interest and Sinking Fund of the old debt,
of, say 70,000,000, or, better, 75,000,000 per annum, which com-
pares with 25,000,000 to 30,000,000 in the few years preceding
1914-15. To this must be added the cost of after- war pensions
and allowances, say 15,000,000 per annum.
" Some idea of what this means can be gathered by comparing
the actual figures for the national revenue and expenditure of
1907-08 (i.e., before the Super-tax, Old Age Pensions, and National
Insurance were introduced, and when income tax was Is. in the ),
the first Budget of 1914-15 (representing normal peace figures and
including a proposed income tax rate of Is. 4d. in the ), and a
year after the war, the last-mentioned reckoned on normal taxation
only. (See next page.)
236
CREDIT, INDUSTRY, AND THE WAR
1907-08
Actual.
1914-15
Budget.
A year in the
near future. 1
Expenditure.
Army and Navy
National Debt Service
War Pensions and Allowances
Social Programme (Old -Age Pen-
sions and National Insurance) .
Education and other Civil Services
Post Office, etc.
Total Expenditure
Revenue.
Income (and Super) Tax
Estate Duties . ' .
Stamps, Land Tax, House Duty,
etc
Total Direct Taxation .
Customs and Excise .
Total Taxation
Post Office and other non-tax
Revenue ....
Total Revenue
58,200,000
29,500,000
35,400,000
28,700,000
80,400,000
23,500,000
21,000,000
42,500,000
37,600,000
100,000,000
75,000,000
15,000,000
25,000,000
50,000,000
40,000,000
151,800,000
205,000,000
305,000,000
32,400,000
19,100,000
10,600,000
56,600,000
28,800,000
13,300,000
40,000,000
25,000,000
10,000,000
62,100,000
68,200,000
98,700,000
75,000,000
75,000,000
75,000,000
130,300,000
26,200,000
173,700,000
34,800,000
150,000,000
30,000,000
156,500,000
208,500,000
180,000,000
" The figures in the last column are set down to give a picture
of what in all probability will have to be faced. They are based
on a normal peace basis a few years hence. Neither a reduction
of armaments nor the adoption of Universal Military Service is
assumed, but just the normal increase of 4,000,000 per annum
for the Army and Navy to which we became accustomed before
the war. The principal income tax rate is taken at Is. 2d. in the ,
being the general rate ruling for some years before the war, and
the other revenue items are based on present taxation and on the
assumption that the reduction caused by the after-effects of the
war will be moderate. Thus, on figures which are moderately
estimated, and which may easily prove too favourable, there
will on the basis of normal taxation and a normal income tax
ol Is. 2d. be an annual deficit of 125,000,000 on an expenditure
of 305,000,000, and half of this deficit will be due to the increased
1 For these figures Mr. Kitchin accepts sole responsibility.
EFFECTS OF WAR ON CREDIT, ETC.
237
debt service plus pensions and allowances. A deficit of 125,000,000
would mean that taxation would have to be increased to 275,000,000
(i.e. by 58 per cent., over the 173,700,000 of the 1914-15 Budget).
This result, it may be well to reiterate, is based on the assumption
that hostilities will come to an end after sixteen months of war,
and the 200,000,000 or so to be lent to our Allies and the Dominions
is also ignored. If the war lasts beyond November and any
Chancellor of the Exchequer must budget for its doing so the
burden to be faced will be still higher.
" The following figures, which can only pretend to be very
rough, contrast the assumed financial result to the United Kingdom
of the present war with that of earlier wars:
Napoleonic
Wars,
1793-1815.1
Crimean
War,
1854-1856.
Boer
War,
1899-1902.
Present War,
1914- ?
(Estimated).
Direct cost of war to
831,000,000
67,500,000
211,000,000
1,000,000,000
United Kingdom .
Raised by National
Debt . . . .
440,000,000
32,000,000
143,000,000
920,000,000
Proportion
53%
47%
68%
92%
Proportion raised out
of revenue during
war
47%
CO 1 O/
32%
8%
Portion of cost raised
~ * /O
.
** /O
/O
annually out of
revenue during war
19,500,000
13,500,000
25,000,000
48,000,000
Annual Debt service
per head per annum
before and after war
13/0-35/0
22/0-23/0
11/6-13/6
10/6-31/9
Annual taxation per
head per annum
before and after war
20/0-70/0
42/0-48/0
44/3-55/6
75/6-1 16/-
National income per
annum before and
250-350
500-550
1,600-1,800
2,250
after war
millions
millions
millions
millions
Proportion of National
income paid in taxes
before and after war
6%-20%
H%-12%
5i%-6|%
7|%-12i%
" The proportion at present raised out of taxation (most of it
merely covering current interest on War Loans) is far lower than
in previous wars, but this is perhaps not a fair way of looking at
the matter, as the amount it is possible to raise out of revenue
must be proportioned, not to the cost of the war so much as to
national income. The last line in the foregoing table is, therefore,
1 Professor Bastable does not accept these figures for the Napoleonic
Wars, see p. 242.
238 CREDIT, INDUSTRY, AND THE WAR
the one of most significance. Obviously, we should be able to pay
in taxes a higher proportion in respect of present income of
2,250,000,000 per annum (49 a head) than could our forefathers
in respect of their income of a hundred and twenty and a hundred
years ago of 250,000,000 to 350,000,000 per annum (17 or 18
a head).
"It is not feasible to fix a definite proportion between the
amount which should be borrowed for the war and the amount
which should be raised by taxation, and it is probably more a
matter of first incurring debt and then paying it off rapidly than
of meeting a substantial portion of the cost of the war otherwise
than by loan. The extra revenue now being raised (61,800,000
per annum) is insufficient even to meet the estimated increased
cost in future of the National Debt plus pensions and allowances
(68,500,000 per annum), and thus in effect we are momentarily
raising nothing to meet the direct cost of the war. Though we cannot
hope, unless the war lasts an appreciable time longer, to meet any
great proportion of the cost of the war while it continues, that is
no reason for not raising all that the position permits, and that at
once. To borrow instead of taxing now does not pay for the cost
of the war, but means that the payment is left to be made with
usury for many long years after the war is over. The more that is
borrowed, and the longer the borrowing lasts, the heavier the
taxation to be faced in the future. The taxation of 275,000,000
per annum (suggested as necessary a few years after the war if
the present method of borrowing practically all the cost is continued)
will be much heavier if hostilities last beyond November. In any
case the present taxation of 235,700,000 (Budget figure for 1915-16)
is much below that figure, when beyond question it should already
be much above it. Twenty per cent, of our normal national
income would be 450,000,000, but there are obviously considerable
difficulties in raising such a sum while war goes on, for, in practice,
it involves devising new means of taxation, a further increase in
the income tax (if its basis is not considerably broadened) being
quite insufficient to provide the amount.
" For a time after the war there is likely to be a period of
abnormal prosperity, and after that a time of depression is to be
anticipated. The first period is put by Mr. Lloyd George at four
or five years, but there is too much reason to fear it may be much
EFFECTS OF WAR ON CREDIT, ETC. 239
shorter say two or three years. Thus, the greatest chance of
lessening the burden which the war will leave behind it, is to be
found in the two or three years after peace is declared. It stands
to reason that the time to tax heavily and to relieve posterity is
much more the time when savings are high by reason of private
economies and special war income than when the inevitable period
of depression has come ; hence taxation should be increased at once
and maintained at as great a height as the position will stand, so
that some relief may come when it is needed. We have in the
United States a good example to follow. After the costly Civil
War of 1861-65, the war taxation was unflinchingly kept up until
the National Debt was sensibly reduced. Between 1865 and
1880, the Federal Debt fell from 570,000,000 to 400,000,000,
in 1881 the Government was able to re-borrow at 3J per cent.,
and by 1887 the debt was reduced to one-half of its maximum
figure. The adoption of this policy did much to assist in the
remarkable recovery of that great country. If we can follow
that example and reduce our War Debt to one-half in twenty-two
years, we should certainly do so.
" The United Kingdom will probably emerge from this war
in a better position than any of the other belligerent countries,
none of which seems to be meeting any part of the cost of the
war or interest on War Loans out of current revenue. Germany
had a pre-war debt of 1,040,000,000, but it was not an almost
entirely unproductive debt like ours, for it is fully represented
by the value of its State railways, mines, lands, and forests. It is
likely to have in addition a War Debt of 1,500,000,000, the annual
service of which should approximate to 85,000,000. We have
the advantage of the other belligerents, because we are the richest
of the countries at war, are more free from disturbance to trade,
and have suffered no devastation ; but the war will certainly
put us in a disadvantageous position as compared with the United
States, which will, therefore, have the after-war cream, while we
shall have to be content with milk, and the other belligerents
with skim-milk."
Professor Dicksee and Mr. F. W. Hirst believe that the nation
is better able to bear heavy taxation during a war than during
the years immediately following the conclusion of peace, although
the Professor assumes that the taxation is " intelligently applied,
240 CREDIT, INDUSTRY, AND THE WAR
so as to hit those who are benefiting financially from the war."
Professor Boyd Dawkins also writes in support of immediate
taxation, and urges that special imposts should be levied upon
war profits. Sir Edward Brabrook is inclined to recommend further
taxation, but regards the question as one of the greatest difficulty :
" The test of the propriety of taxation is the ability of the com-
munity to bear it, i.e., to bear it without sacrificing all that makes
life endurable."
The views of Mr. D. M. Mason coincide in the main with those
which we quote later from Professor Bastable. While saying that
no fixed proportion can be laid down, he would raise as much as
possible by taxation. " The advantages of taxation," he writes,
" as compared with borrowing consist in this, that taxation comes
home more directly to all sections of the community. This fact
tends to direct men's minds to the necessity of bringing the war
to a close as soon as possible. Loans, on the other hand, deceive
the general community by creating for the time being apparently
great prosperity with comparatively small hardship. This is
brought about by the expenditure of the proceeds of the loans
without corresponding high taxation. Another great evil resulting
from large loan expenditure is that the added stimulus due to
the expenditure creates an abnormal demand for labour. After
the war there is a great influx of labour seeking employment and
a diminished supply of capital. The result is a great deal of
unemployment and misery for the working classes. While loans
are, no doubt, necessary for the carrying on of a great war, regard
should be given to the state of the money market at home and
abroad both before and during the continuance of the war. It is
also imperative in time of peace, particularly if there is any proba-
bility of war, to practise economy and keep down taxation with
a view to a financial reserve for war when it comes."
Mr. Gibson agrees with Mr. Kitchin's view that the best time for
materially increased taxation is in the few years immediately
after the declaration of peace, but not with the view that a period
of depression is a bad time for it. " Trade depression," Mr. Gibson
continues, " is just the time when people have large liquid resources,
savings are high owing to the reduced cost of living, and investment
prices rise through the increased demand for investment. Manufac-
turers require their liquid capital in times of trade booms, but not
EFFECTS OF WAR ON CREDIT, ETC. 241
so much in times of depression. Increased taxation from a national
standpoint can be better borne in a time of trade depression than
in a time of activity and rising prices." From the banker's point
of view this is so, for depression always liberates a part of the
working capital of many firms which goes temporarily to swell
bankers' balances. But such moneys are not easily reached by
taxation, and, if they were, the burden would be felt when trade
revived through an added scarcity of capital
Professor Dicksee agrees with other correspondents in holding
that " public economy in time of peace is the best possible way
of providing a financial reserve against time of war." He con-
tinues : "At the risk of embarking upon political rather than
economic issues, I should like to put forward the view that we are
now being called upon to pay for the experiments of politicians in
social reform during the past ten years. The need for both public
and private economy is fairly obvious ; but public economy has
been rendered difficult by the enormous increase in the number of
officials employed by Government Departments and local authori-
ties, while private economy is rendered difficult by the heavy
taxation even on a peace footing of the well-to-do classes, and
by the general trend of legislation which seems to have been specially
designed to discourage thrift." Referring to Mr. Ellinger's sugges-
tion, Professor Dicksee continues : " I agree that, whatever opinions
may be held on the subject of so-called tariff reform, the taxation
of imports seems desirable under present conditions, and that,
while it may be impossible to foretell whether the effect would be
to discourage imports or to produce a revenue, the consequences
would be equally desirable in either event. There seems, however,
some confusion of thought about the suggestion that an excessive
income tax would be undesirable as reducing the amount available
for subscription to Government Loans. From the Government
point of view, the revenue derived from taxation (of whatsoever
kind) is clear gain ; whereas Loans call for ultimate repayment,
and in the meantime have to carry interest. Accordingly, even
supposing the effect anticipated by Mr. Ellinger were in fact pro-
duced, the result would not be disadvantageous to the Government,
however inconvenient it might be to individuals."
Here we cannot agree entirely with Professor Dicksee's views.
If income tax or Estate Duties or, indeed, direct taxation generally
242 CREDIT, INDUSTRY, AND THE WAR
is made too heavy, the yield declines proportionately and might
even decline absolutely. It cannot be said in advance when an
increase in direct taxation would cease to be productive beyond
the general caveat that there is such a point. Allowance must be
made for psychological conditions. At the moment, patriotism
would make that limit recede, but as the dangers of war become
more remote this influence grows less effective ; thus the
psychological influence is an argument for early taxation.
Professor Bastable, who has composed his memorandum after
reading those written by the other contributors, thinks that the
proportion of the tax contribution to the wars of 1793-1815 has
been over-estimated. " Instead/' he writes, " of one-half of the
cost having been met by taxation, the fact seems to be that little
more than one-fourth of the war expenditure was so provided.
If the total cost of the war be taken as 830,000,000, the contribution
from loans was 600,000,000, and that from taxation 230,000,000.
It must, however, be said that the borrowing took place chiefly
in the period from 1793 to 1800, and that much greater efforts were
made to secure an adequate tax revenue in the later years of the
war. There can be no doubt that Pitt's policy in respect to war
finance was affected by two influences, viz., (1) the fear of popular
hostility to heavy taxation, and (2) the belief in the magical opera-
tion of the Sinking Fund scheme. We have to recognise that
earlier use of the income tax would have greatly lightened the
financial strain and the accumulation of debt. The financial
management of the Crimean War (which was more in the hands
of Cornewall Lewis than in those of Gladstone) was more satis-
factory. More than half of the cost was met out of tax revenue
(38,000,000 out of the total of 70,000,000), which showed a
marked contrast with the French policy in the same war."
The consideration of the above facts has more than a mere
historical interest, and we wish to call special attention to the
grave warning of Professor Bastable in the following paragraphs!
It is obvious, as he justly says, that " the great lesson to be derived
from them is the need of immediate adjustment of the financial
system on the outbreak of war. The easy course of borrowing is
open to the conclusive objection that it mortgages resources that
will soon be needed, while it induces the ordinary citizen to think
that he is not called on for any additional effort. But in no previous
EFFECTS OF WAR ON CREDIT, ETC. 243
case has the necessity for this adjustment been so great as in the
present war. Though Pitt bequeathed a heavy burden to the
British taxpayer of the nineteenth century, the immense develop-
ment of British industry as the result of the manufacturing system
and Colonial expansion furnished a counterbalancing force. It is
not within the range of reasonable probability to hope for anything
similar in the twentieth century. Moreover, the call on the
" national dividend " is proportionally greater. At no time in
the course of the Napoleonic Wars did the borrowings of the State
absorb the whole savings ot the country. The present rate of
war expenditure exceeds threefold the annual savings of the United
Kingdom in peace time. The necessary consequence is that there
must be either a great growth of " net," as distinguished from
" gross " income or that assistance must be obtained from the dis-
posable funds of other countries. To secure the former there will
have to be effective inducements to saving in the form of high
interest, or compulsory additions to the net revenue forced by the
pressure (what Mill somewhere calls " the whip and spur ") of
taxation.
" On these plain and simple grounds rests the general rule that
a great war calls for (1) a large development of existing forms of
taxation, and (2) the adoption of any new and feasible forms.
Whatever may be said in respect to times of peace, it is certain
that productiveness is the one great criterion of war taxes. The
nice distinctions of charges on income, on property, on commodities,
or on expenditure in general, as well as the problems of just distri-
bution, have to yield to the fundamental consideration of the best
way to obtain the maximum return. The only other element of
importance is the effect of the tax methods on the productive
power of the country, which is itself a branch of future fiscal pro-
ductiveness. Controversy as to the respective merits of different
forms of taxation is really excluded by the urgent necessity of
employing every effective method. It follows, therefore, that
heavily increased taxation of income, especially unearned income
(for this is, in fact, a property tax), much higher rates of duties on
fiscally productive commodities, and the increase of any minor
duties that are likely to prove fruitful should be speedily brought
into operation. Nothing but actual trial can show the limit to
this use of taxation. We may, however, get some clue by
244 CREDIT, INDUSTRY, AND THE WAR
considering the amount of the national income and the proportion
that can be appropriated by the State in case of urgent need.
" If 2,000,000,000 be taken as an under-estimate of the national
income, and if we take the view of those financial writers who
hold that under emergency pressure 25 per cent, of this income
could be secured for the State, it follows that for a limited period
of strain 500,000,000 would be the available tax revenue. Bearing
in mind the possibility of very large economies on the normal
peace outlay, it seems as if vigorous financial administration,
sparing no special interests or classes, would supply over
300,000,000 for each year of a limited war period. The tax
revenue, just indicated as possible, has evidently to be supple-
mented by the use of loans. It is, or ought to be, recognised
that there are large funds which cannot be brought in by the
pressure of the tax-collector, but which will flow in to the Exchequer
if the inducement of adequate interest is afforded. We may,
perhaps, assume that by this means an amount equal to that
gained from taxation is obtainable, year by year, for a war period
of several years. The compulsory contribution of the taxpayer
is balanced by the voluntary payments of the saving class.
" The general result of the foregoing estimate shows an annual
fund of over 700,000,000 available for the cost of war. Taking
the total of this cost as approximating towards 1,000,000,000,
there remains a sum of over 250,000,000 to be supplied, and here
the use of an external loan is manifestly prescribed. By adopting
the sound policy of exempting the interest on such a loan from
British taxation the raising of the required amount would be
facilitated. In addition to the immediate financial relief there
would be the important effect on the Foreign Exchanges (it need
hardly be said that the United States would be the chief field of
contribution) and the beneficial political bearing through the
financial interests becoming attached to the side of the borrowing
country. As the struggle proceeds, the need of some such arrange-
ment will, I believe, become plainer ; but delay will mean heavy
financial loss and a greater difficulty in bringing about the needed
adjustments."
We are inclined to think that with taxation of over 300,000,000,
more than 350,000,000 could be raised by loan, even without
trenching (as was done in the Napoleonic Wars with the result
EFFECTS OF WAR ON CREDIT, ETC. 245
of a suspension of cash payments) upon those bankers' funds
which should be kept liquid. But to do that we must call upon
our reserve supply of labour and produce more goods, particularly
for export. Therefore, the nexus of ideas is public and private
economy together with increased production ; unless we accom-
plish the last, we are not making the most of our command of the
sea. Probably if war expenditure does not exceed 1,000,000,000
per annum, this country could finance this almost altogether, if
not altogether, by taxation and loan, but the national income
would need not to fall below 2,000,000,000; we should have
to take over 20 per cent, of that, and under the conditions indi-
cated we could lend, say, 450,000,000 per annum, possibly more.
But the sacrifice involved in the marginal taxation would be
extremely great and the marginal borrowings would be raised
at a high cost, thus it would probably be cheaper on the whole
to float external loans of moderate amounts. The problem is, in
fact, whether there is a balance of advantage in obtaining the
marginal 150,000,000 or 200,000,000 of annual war expenditure
(in the event of a long war) from British or from external sources.
V. THE WAR AND THE FOREIGN EXCHANGES
The inquiry into the effect of the war upon the foreign exchanges
may conveniently be divided into two periods. The first of these
covers the few weeks immediately succeeding the outbreak of
war, when the exchanges throughout the world, with hardly an
exception, suffered complete disorganisation, from which they
gradually recovered as the first shock spent itself and emergency
measures were taken to ameliorate the existing financial stress.
The second period displays the gradual cumulative effect of war
conditions and war expenditure upon the financial relations of
each of the combatant nations with its Allies and with the principal
neutral countries, an effect which, in the case of this country, has
only now begun to attract serious attention.
With regard to the first period, it is beyond doubt that if every-
one had kept his head and had correctly gauged the future, the
collapse of the exchange machinery could have been avoided.
When we remember, however, that the outbreak of war took
the financial world by surprise and that there were few precedents
246 CREDIT, INDUSTRY, AND THE WAR
to guide men in such an emergency, it is not surprising that mistakes
were made.
Two circumstances have contributed to make London the
financial centre of the world : (1) It has been for generations
the one absolutely free gold market ; and (2) the Bank of England
has always been willing to cash its notes in gold to any extent,
both for internal use and for export. Thus, the " exchange "
of the whole world has centred round the sterling bill, which had
come to be regarded, in Mr. Franklin's phrase, as actual " interest-
bearing gold." Nearly every foreign State Bank was in the habit
of keeping a certain portion of its reserve in sterling bills, which
were renewed from time to time as they became due, and only
" melted " when and as these banks desired to replenish their
stocks of gold. In practically every foreign country, the rate of
exchange on London is not reckoned by the value of the unit of
currency of that country in pounds, shillings, and pence, but by
the number of francs, marks, dollars, etc., necessary to purchase
the pound sterling.
The outbreak of war found London the creditor of the world
as regards short-dated obligations, and the hurried calling in of
such obligations caused a stampede for sterling remittances, which
rose to extraordinary prices. The normal rate in New York for
London cable transfers is 4.86J dollars the pound sterling, but in
August last year, rates of 6J dollars were dealt in. In other centres
it was impossible for a time to obtain sterling remittances at any
price. Many countries forbade the export of gold ; arbitrage
operations, which in more normal times are used as a lever to
redress variations from normal exchange rates, ceased altogether ;
the creation of finance bills stopped abruptly ; the Stock Exchanges
of the world were closed. Gradually, however, as men began to
view the situation more calmly, the confusion was allayed. Credits
which had been abruptly recalled were in many cases renewed.
Emergency measures, which are described elsewhere, helped to
restore confidence. During the prolonged Bank Holiday, one of
the most important problems before the Treasury was the re-estab-
lishment of foreign exchange, as it was recognised that, until this
was accomplished, it would be quite impossible to carry on the
foreign trade of this country. In order to do this, it was necessary
in the first instance to re-establish the position of the sterling bill.
EFFECTS OF WAR ON CREDIT, ETC.
247
For this, two things were necessary the first to induce accepting
houses to continue and to grant legitimate trade credits, and the
second to induce banks and discount houses to discount these
acceptances when created. For the accepting houses realised
that a large and unknown proportion of their acceptances would
not be provided for by the drawers at due date, and the discount
houses believed that many of the bills bearing their endorsements
might not be met by the acceptors. Neither acceptors nor
endorsers, therefore, felt themselves justified in adding to their
liabilities. " These two apparently insuperable difficulties," Mr.
Franklin writes, " were overcome by the Treasury, with the assis-
tance of the Bank of England, in a manner that will always be
recognised as masterly."
One of these measures had a curious and unexpected effect.
The Moratorium enabled foreign customers to postpone the transfer
of the sterling to London. " There is no doubt/' Mr. E. F. Davies
writes, " that the Moratorium saved enormous sums to foreign
countries which were indebted to London, and it also arrested
the tremendous rise that was taking place in the foreign exchanges
in favour of this country." The following table shows the rates
of exchange current immediately prior to the war and the highest
and lowest quotations since:
First year of War.
Rate just
before War.
Lowest.
Highest.
Paris
25-18
24-00
27-60
Amsterdam
12-14
11-70
12-60
Switzerland
25-18
24-00
26-40
Italy .
25-30
24-00
29-45
Madrid .
26-15
23-85
26-60
Petrograd
96-10
105-00
160-00
Scandinavia
18-25
18-02
19-70
New York
4-88|
4-76
6-50
Rio Janeiro 90 d/s
I6d.
l\ld.
nom. 14 T 7 ff
Buenos Aires 90 d/s
47frf.
46frf.
49d.
The remarkable jump in the American exchange was due
firstly to the general causes already mentioned, and, secondly,
as Mr. Davies points out, to the fact that the city of New York
found itself obliged to pay off 13,500,000 sterling short notes
17 (1408)
248 CREDIT, INDUSTRY, AND THE WAR
maturing in this country at that time. There is no doubt that
it would have been a very profitable transaction for English bankers
to have renewed those notes, and to have thus kept a certain
control over the exchange, but, owing to the manner in which the
renewal at that time was proposed, the operation did not meet
with general approbation. It would have relieved the situation
if the notes had been renewed here, and it would have been a very
remunerative investment for anyone f oresighted enough to purchase
the issue of yearly dollar bills with the exchange round about $6
to $6| and the return that the interest gave them in New York.
The action of the Government in stepping in and adjusting the
rate of exchange was no doubt good at the time, because it had
the effect of restoring normality, although everyone should have
known that this country and her Allies would have to buy enor-
mously in the United States of America, which would quickly
reduce the exchange rate to its normal level.
Before turning to the second of the periods into which our
subject is divided, a few words of explanation are needed. Mr.
Metz l divides the influences which determine the level of exchange
rates into four heads, as follows
(a) Trade balance, including trade in securities.
(b) Service balance, including interest as remuneration for the
service of lending money ; in other words, interest on foreign
debt held.
(c) Gold shipments.
(d) Credits abroad.
A fifth may be added in some cases, viz., the depreciation of
the internal currency of a country, which is reflected in exchange
rates between that country and others ; and (b) should be inter-
preted to include the services of our shipping, in which the rise
of freights balances, to some extent, the diversion of merchant
ships to war purposes.
In normal times (a) and (b) are of primary importance, and (c)
and (d) are chiefly used to redress temporary fluctuations in the
volume of (a) and (b). In time of peace (a) and (b) tend to an
equilibrium or are brought to an equilibrium by the operation of
1 Mr. S. Metz, who writes from Amsterdam, the chief neutral financial
centre, has furnished the Conference with most useful information on the
exchanges.
EFFECTS OF WAR ON CREDIT, ETC. 249
a steady accumulation of foreign investments or foreign indebted-
ness, according as the nation is an investing country such as the
United Kingdom, or a spending country such as our Dominions
and Colonies, which are yet in process of development.
The effect of a war such as the present is, however, to disorganise
the normal balance of trade and service. Every combatant is
compelled to import enormous quantities of war material and
food, whilst its own power of production is necessarily seriously
impaired by the withdrawal of masses of men from productive
enterprise for military purposes. This process is in operation in
the case of all the nations now at war, though in the case of some
of them it is modified or complicated by the military and naval
operations of their opponents, which have restricted foreign trade
to its narrowest limits. The result is that the belligerents' imports
overshadow their exports, and the rate of exchange tends more
and more against such countries and in favour of the principal
neutral nations.
Thus, in Germany the premium on dollars had risen in July,
1915, to about 17 J per cent., the Amsterdam rate showing a similar
percentage against Germany. In England, exchange rates with
neutral countries were irregular, but in no case was the premium
more than 3 per cent. In France, at the same date, Dutch currency
stood at about 8J per cent, premium. In Russia, sterling exchange
had reached a premium of 54 J per cent., and the Dutch exchange
a premium of 58| per cent. In Amsterdam, the Austrian currency
stood at a depreciation of 25 per cent., and the Italian of nearly
18 per cent.
What is the significance of these figures ? To what extent
do they denote merely a hitch in the machinery of remitting
money, and how far, if at all, are they evidence of a depreciation
in the value of each country's currency ?
None of the belligerents will admit such a depreciation, though
few impartial observers, if such can be found, will deny its existence.
As regards the English currency, the argument will probably be
used that, unlike all the other belligerents, gold is in free circulation,
and that its export is not prohibited. But, as Mr. E. L. Franklin
points out, " at the present time, notwithstanding that there is no
prohibition placed on the export of gold to neutral countries, no bank
or banker can be found who will avail himself of the benefits
250 CREDIT, INDUSTRY, AND THE WAR
accruing from such transactions, because it is the general opinion,
whether justified or not I will not say, that it is against the interests
of this country for gold to leave England so long as other
Governments do not allow gold exports from their countries."
The creation of credit has been necessarily profuse, one might
almost say necessarily reckless, in this country during the war ;
wages and prices are on a war basis which can admittedly be
only temporary. The result is inflation, which, in the opinion of
many, is reflected in an unfavourable rate of exchange. What is to
be the remedy ? Let us turn back to our summary of the factors
which determine the level of exchange rates. From these we
may dismiss (b) as a potential lever for influencing the rates between
this country and others. The interest on debts due from abroad
will certainly decline rather than increase during the war, and
the withdrawal of men from industry for military purposes prevents
any increase in the volume of our services to other nations. The
shipment of gold provides a possible palliative for an unfavourable
rate, and the criticism is often heard that gold reserves are valueless
unless use is made of them. In the present case, however, we are
confronted with the difficulty that our stock of gold is wholly
inadequate to maintain exchange rates, and that America, to
which country most of the gold exported would find its way, has
ample supplies of the metal. Mr. Metz, indeed, argues that the
export of gold, the sale of securities, and the creation of credits
all " suffer from the same evil, that they can be applied only once,
and that, once availed of, they weaken rather than strengthen
the situation." Mr. Davies, on the other hand, can see only one
practical way in which this exchange can be rectified, and that is
by " the issue in the States of a large loan, free of income tax, for
account of Great Britain. There is not the slightest doubt, in
view of American public opinion on Germany's submarine warfare,
and the extremely favourable rate of exchange for American
investors, that the United States would have subscribed largely
to the recent British War Loan, had it not been for one factor,
viz., that no provision was made in the terms of the issue to exempt
foreign subscribers from the British income tax."
Gold exports, therefore, cannot be relied upon as a permanent
way out of our difficulty, and the loss of our small stock might
have serious results in weakening confidence both here and abroad.
EFFECTS OF WAR ON CREDIT, ETC. 251
There remain to us (a) and (d). The trade balance may be per-
manently affected by the discouragement of imports into this
country, by the encouragement of exports, by increased economy
of consumption, and by taxation. In speaking of imports and
exports, it may be noted that we are not speaking merely of the
trade with the United States of America. Our trade is not, and
cannot be, divided into compartments, and, though the present
difficulty is the exchange rate with America, this rate can be
directly influenced by trade transactions with other countries.
In all these directions something has been done by exhortation
in the speeches of Cabinet Ministers and from the pulpit, but it
may be doubted whether such exhortations have had any but
the most superficial effect, nor are they likely to touch more than
the fringe of the question. Action of a more direct kind is needed,
and such action is not likely to meet with insuperable obstacles.
Economy should be enforced as well as preached, and the lesson
should be the easier in that Germany has already set an example
to the whole world. But when all these palliatives and remedies
have been adopted, there is little doubt that there will remain a
great deal to be done, and our weapon for this purpose must be
the raising of credits abroad. Here, again, the difficulties are
merely difficulties of detail and procedure, for no one doubts that
the British Government could raise money in the United States
on favourable terms.
APPENDIX
THE THIRD WAR LOAN
By D. Drummond Fraser, M.Com.
Is another War Loan necessary ? In the event of the continu-
ance of the war till the end of the current financial year, our
expenditure will exceed our revenue by not less than 1,000,000,000.
Towards this, the second War Loan is raising 600,000,000. To be
able to borrow on such a colossal scale, the Government must
dominate and attract the savings of the people. The bulk of
the proceeds of this borrowing four-fifths is expended in this
country. Such a vast expenditure stimulates trade. This enlarges
the national income and increases the savings of the people.
252 CREDIT, INDUSTRY, AND THE WAR
A Government compulsory loan would intensify the savings by
a forced reduction of expenditure, especially with regard to some
of our imports. It must be remembered that it is as vital a
necessity to reduce our imports as it is to increase our exports.
I suggest that the Government should adopt the banking prin-
ciple of borrowing day by day directly from the people, in a simple
and popular form. I propose the issue of Treasury War Bonds
in three forms : repayable in three, five, seven, or ten years, at
a fixed rate of interest payable half-yearly ; the interest for the
first half-year to be calculated from the date of investment to the
end of the first half-year ; a provision to be made on the back
of the bonds for a transfer, and a new bond to be issued when the
transfer is completed.
1. A Treasury War Bond for 1,000 or any multiple thereof.
2. A Treasury War Bond for 100 or any multiple thereof
payable in ten monthly instalments.
3. A Treasury War Bond for 5 or any multiple thereof scrip
vouchers of 5s., 10s., and 1 to the amount of 5 or any multiple
of 5, to be accepted as well as cash ; holders of bonds not exceeding
100 to receive their interest each half-year without deduction
of tax.
In the national interest it is of the utmost importance that the
Treasury War Bonds should be taken up by the people direct.
It is notorious that the antiquated system of the other two loans,
with their " short-time " limit for application and payment, has
not attracted the bulk of the people ; and, in consequence, the
banks have subscribed for a considerable portion of the two War
Loans. That, after all, is the money of the people once removed.
The bankers' real function is to be the custodian of the people's
cash resources deposits, 60 per cent, of which is employed to
liquefy the people's " quick assets " bills and advances, which
fructify wealth. The bankers should finance the Government
only temporarily through Treasury Bills over the counter, maturing
three, six, nine, or twelve months after date. 1
To the timid banker who sees a dangerous competitor in the
Government, I would say that, in spite of the fact that
during the first ten months of the war the Government raised
1 Mr. A. H. Gibson supports this proposal.
EFFECTS OF WAR ON CREDIT, ETC. 253
600,000,000 from the first War Loan, Exchequer Bonds, and
Treasury Bills, the deposits of the banks actually increased in
the same period 200,000,000. I would remind him that since
the banks have taken their branches to the homes of the people,
the deposits during the present generation have increased 200 per
cent. I would further remind him that the business of the country
is conducted with an incredible smoothness through the bankers'
clearing houses by means of the crossed cheques, the daily average
number of which exceeds one million. It was Gladstone who
first freed the cheque from its legal disabilities. He was warned
by the timid banker of his day that he was placing a very dangerous
weapon in the hands of the people. The municipal corporations,
the Lancashire cotton mills, etc., have already educated the people
with undoubted success in the banking principle of borrowing
money day by day direct from the people, for short periods, at a
fixed rate of interest. If the bankers, brokers, and financial
houses act for the Bank of England, on behalf of the Government,
in receiving applications for the Treasury War Bonds, and also in
repaying or renewing them, then the Government could obtain
the necessary money, when needed, by recurrent popular
advertisements in the daily press.
CHAPTER V
ECONOMIC PROBLEMS AFTER THE WAR
BY W. CUNNINGHAM, D.D., F.B.A.,
Archdeacon of Ely
THERE can be no well-grounded forecast of the economic condition
of this country after the present war ; it is unprecedented, both
from the scale and conditions in which it is waged, and from the
manner in which it has been financed. No one can attempt a
prediction, save that, whatever the result of the present struggle
may be, war is unproductive expenditure. Since we have borrowed
largely in order to use that money unproductively, there will be a
heavy burden to be borne somewhere ; but where it will press, or
on whom it will fall, we cannot estimate with any accuracy. Those
who were in the best position to judge in August, 1914, have
proved to be quite mistaken in their expectation as to the rate at
which German economic resources would be exhausted. All that
can be now done is to indicate hopes as to the possibilities of the
future.
We have seen an immense outburst of the sense of national
duty ; whatever the respective merits of conscription and of
voluntary service may be, voluntary service has given a startling
proof of the readiness, which exists in all quarters, to undertake
a public duty at a great cost in self-sacrifice. We may trust that
this spirit will not evaporate when the war is over, but that men
will continue to view the affairs of the country in a public spirit,
and not with mere reference to their personal interests. Neither in
political nor in economic matters is it wise that men should think
of nothing but their own interests; and the laissez-faire school,
it may be hoped, is dead.
The war has brought the activity of the Government into
fresh play ; internal affairs have been administered, or interfered
with, in the interest of Government, as was never the case before.
There have been experiments in nationalisation of railways, and
in the fixing of prices, profits, and wages by the State ; and there
254
ECONOMIC PROBLEMS AFTER THE WAR 255
has been a considerable movement towards something of the nature
of State-socialism, and national control over the instruments of
production. That this increasing activity may be exercised with
an increased sense of responsibility, on the part both of officials
and of those from whom they derive their power, is profoundly
to be hoped ; but in any case it must give rise to an increased
sense of the nation as a unit, controlled and administered by itself,
and apart from other nationalities. The tendency to cosmo-
politanism, which has shown itself in many quarters for some
years past, has been rudely checked ; and the recognition of the
nation, as a persisting element in human organisation, 1 is much
more general than was the case a couple of years ago. It is now
recognised that the great issues of the world depend on inter-
national agreements, and on the honour of a nation in abiding by
agreements, far more than on cosmopolitan sentiments about the
brotherhood of humanity.
There is a probability that as a result of this revival of national
consciousness, each nation will be more on the guard against the
economic danger of being exploited by its neighbours. This is
an age of material progress, and there is always a danger that
the country, which is economically more advanced, should use its
economic strength to push its own advantage, and thus hamper
the material development of the more backward countries. This
was a policy which Great Britain was able to pursue for a time,
in consequence of the extraordinary development of productive
power which marked the industrial revolution ; and foreign opinion
was not conciliated by the assurance that we were thereby pro-
moting the good of others as well as of our own country. During
the last forty years, the success of Germany, in consciously applying
science to industrial life, has brought about an extraordinary
rapidity of industrial progress ; and she has aimed at using this
industrial superiority so as to control the resources of the whole
world to her own economic and political advantage. Russia has
had a long experience of German encroachment, and there is a
widespread suspicion of Germany, which is not wholly racial,
but is partly economic. 2 Expression was given to a similar feeling
1 The Hon. B. Russell, Suffrage Summer School, Cambridge Daily News,
23rd August, 1915.
2 B. Ischchanian, Die ausldnd. Elements in dev russischen Volkswirthschaft, 23.
256 CREDIT, INDUSTRY, AND THE WAR
on the part of Italians, by Sig. Barzilai in a recent speech at Naples. l
There is likely to be a demand on the part of every nation, weak
or strong, to lead its own economic life, as it deems best, and not
to be reduced to a state of economic dependence such as Great
Britain formerly imposed upon her Colonies.
As the war has been financed so largely by borrowing, there
will be a greatly increased burden of interest to be borne annually,
and the revenue of the State will need, in consequence, to be
greatly increased in the future. It is not clear that there are any
directions in which the public would willingly consent to have
expenditure cut down, and the only alternative to annual deficits
lies in the increase of revenue. Whether this is done by direct
taxation or by indirect taxation and it is probable that both
expedients may have to be adopted the burden of taxation must
affect the industry of the country and raise fundamental problems
as to the manner in which national prosperity is to be maintained.
I. It appears to be of the highest importance that these pro-
blems should be clearly stated, and should be set in the fullest
light ; and I have some misgivings lest the habit of mind, which has
been cultivated by English Economists during the last generation,
while it serves admirably for inquiries as to isolated questions, is
the best for considering broad issues. Production and consumption
are both part of the process of economic life, and we may either
concentrate attention on production, leaving consumption in the
background, or we can put consumption in the forefront, 2 leaving
production in the background. During the last generation, which
has been a time of peace, it has seemed sufficient to analyse the
whole matter from the point of view of the consumer cheapness
to the consumer, the standard of comfort of various classes of
consumers, and so forth ; it has apparently been assumed that
production was sure to go on, and that there was certain to be a
response to every increase of consumption, as demand would call
out supply. But in the stress of war, there has been a new recog-
nition of the importance of production : it has been seen that
success depends on the production of munitions, and that it is of
importance to organise employment, so that the skill and energy
1 Globe, 27 September, 1915.
2 Marshall (1890) Principles of Economics, I. 148.
ECONOMIC PROBLEMS AFTER THE WAR 257
of every individual shall be devoted to the production of what is
necessary for the maintenance of economic life. The action of
any wage-earners, who have continued to be mainly concerned
about their own standard of life and opportunities for consumption,
has not met with public approval ; there seems to be a general
opinion that in time of war, the conditions of national production
should have primary consideration. There is a tendency in some
quarters to regard economic science as formulated for times of
peace, and to treat war as an abnormal condition 1 in which economic
principles are temporarily suspended ; but, after all, economic
doctrine is more reliable if it is based on national experience, both
in time of peace and in time of war. It will be well if we approach
the problems of national reconstruction after the war, from the
point of view of production, and of the manner in which it can be
best directed to the national welfare.
The three elements of production are labour, capital, and
land. There has been a most gratifying increase of energy in
many departments of labour, and there has been a certain trans-
ference of employment, so that women have had opportunities
opened up which are new to them. The question as to the means
of keeping up the vigorous labour, which has characterised war-
time, and checking the revival of the easy-going methods of peace,
is one on which the continued prosperity of the country depends.
The war has also seen a new opportunity for investment by small
capitalists ; in so far as this continues, the question, between
individual capitalists and Socialism of any kind, is likely to be set
in a new light, as the importance of the individual in connection
with the formation of capital, which the State controls and utilises,
is likely to be recognised. We shall certainly need, too, to consider
more carefully how we are to make the most of the land ; it is
here that there is a terrible national waste. The largest portion
of the wealth of the country is fixed in the land, but the business
of production from the soil has not attracted sufficient circulating
capital to allow of cultivation being carried on energetically and
efficiently. In all directions I hear of agriculture being defective,
because the land is starved for want of capital. The problem as
to the best means of attracting capital to the land, and thereby
1 Compare the speech of Mr. McKenna in reply to Sir A. Mond, House of
Commons, 23rd September, 1915.
258 CREDIT, INDUSTRY, AND THE WAR
improving the conditions for the employment of the rural popula-
tion, ought not to be insuperable, if it is taken in hand with a
sense of public spirit.
The strain of life after the war will be greater for each of the
elements of production ; there will be more taxation on capital,
less easy conditions for labour, and less slackness in the cultivation
of land. And here it is needful to pass from economic to political
considerations : each of the factors of production may be tempted
to evade its share of the burden, and to try to leave it to be borne
by others. Capital may seek for investment abroad where it is
less burdened by public obligations ; and each of the other factors
may be tempted to use its political power in a selfish interest.
According to the popular view, landlords have done so in the
past with great success ; they controlled a great economic factor,
and they possessed exceptional political privilege. Though I
believe this charge to be grossly exaggerated, it seems unnecessary
to go into the past, and to whitewash either persons or classes,
or, rather, to remove the dirt that has stuck to them. But there
must be grave anxiety for the future, whether certain classes of
working men, whose particular employment gives them a position
of great economic strength, will use their political privileges with
a view to the advantage of their own class in the present, or whether
they are duly mindful of the community in the present, and,
therefore, of the future of their own class.
The war may at least make us feel the necessity of pursuing
study, so as to cultivate the judgment in matters economic, in
order that well-considered opinion may be brought to bear on
public affairs. Every one has, of course, a right to his own opinion ;
but the controversialist, who does not take the trouble to under-
stand his opponents' views, 1 is not likely to state his own case
effectively ; and the man who is so sure he is right, that he really
believes those who differ from him are necessarily influenced by
dishonest motives, is silly as well as tiresome. 2 Opinions are not
entirely a private concern, since they influence public action in a
democratic country, and mistaken opinions may be mischievous.
On 5th August, 1914, the Daily News and Leader contained the last
appeal of those who thought that this nation might be rightly
1 Compare my Case against Free Trade, 139.
2 Guardian, 23rd November, 1904.
ECONOMIC PROBLEMS AFTER THE WAR 259
guided in the crisis by a consideration of immediate commercial
interests ; but this opinion had been advocated by many leading
newspapers within the preceding week, and many eminent persons
at Cambridge 1 had pronounced in its favour. Those who are
anxious to insist on their intellectual kinship with Germany 2 seem
to take little heed of national security in the long run. It is generally
agreed now that this judgment as to the economic interests of this
country has been shortsighted ; but the vehemence of its advocates,
who denounced Sir E. Grey as " not well- versed in economics,"
helped to create an impression in Germany which Sir E. Grey was
unable to dispel that the Central Powers ran no risk of British
interference by invading Belgium. Short-sighted opinion as to
British interests seems to have played into the hands of the mili-
tants in Germany, and to have helped to bring about the outbreak
of war.
There is also some reason for believing that the leading school
of economists in England has, by its exaggerations, exerted an
influence in preventing the war from being prosecuted effectively.
Consumption is an important aspect of economic life ; but it is
only one aspect. Cheapness to the consumer is not absolutely
essential to national prosperity, though it is one of several factors
which must be taken into due account. Exaggerated opinions in
regard to the command of commodities have appeared to give a
scientific basis to the action of Welsh miners in treating their
standard of comfort as of supreme importance, and in regarding
the supply of coal to the Navy as a subsidiary matter. It has
added economic support to the view of those who thought
that, apart from naval and military considerations, it would be
a useful political stroke to divert our energies to the Dardanelles,
so that a supply of wheat might be secured from the Black Sea.
The operations have been long and costly, in lives at all events ;
and they have raised the question whether the conditions which
make for cheap food may not involve too high a cost, and force
us to have recourse to measures which are not the best possible
for the welfare of the community. Whatever opinions we may
hold on these points, it is surely obvious that study is to be pur-
sued, not only with the object of analysing economic data, but
1 Daily Chronicle, 3rd August, 1914.
2 J. M. Keynes in Economic Journal, September, 1915 ; p. 452.
260 CREDIT, INDUSTRY, AND THE WAR
with the view of cultivating the power of judging soundly upon
these data. The modern school of English Economists, unlike
the Economists of Germany, has done little to prepare the minds
of the people for being ready to take a part in the struggle in
which we are now engaged.
II. Though 1 the Economists of the modern school have won
the approval of Lord Haldane, 2 it is noticeable that they have
entirely deserted the standpoint of Adam Smith. 3 The wide views
which he entertained, and the complete harmony between the
Wealth of Nations and the Theory of Moral Sentiments, have been
recently examined with great acumen by Professor Nicholson ; 4
and it is easy to show that he took account of forces which the
modern school is tempted to ignore as not falling within the scope
of the science. Adam Smith had no confidence in the " man of
system," who imagines that Society is a mere mechanism, and
forgets that on "the great chess board of human society 5 every
single piece has a principle of motion of its own." So far from
regarding the conscious interest and advantage of individuals as
the only thing to be considered, he warned us against overesti-
mating " the trinkets of frivolous utility." 6 He finds in the
conduct of a soldier an illustration of the difference in the light
in which an object appears naturally to the man himself, and
that in which it appears " to the nation he fights for." 7 To the
man himself, his life is of infinite importance ; but to the nation,
" the life of a private person is scarcely of any consequence."
It is by looking at himself from the point of view of the nation,
and thus acting, not merely from personal interest, but in a public
spirit, that a man shows he is a good citizen. 8 During the last few
months the motive of the love of country has shown itself as a
force which has enabled us to stand the enormous strain which
the war has put on the resources of the nation. The strength of
1 This and the following paragraphs were not read at the meeting of the
Section.
8 Economic Journal, XV, p. 501. See also my Wisdom of the Wise, pp.
10-20.
3 For a fuller criticism see my Free Trade Movement, p. 202.
4 A Project of Empire.
6 Moral Sentiments, VI, ii, Vol. II, p. 104.
6 Moral Sentiments, IV, i, Vol. I, p. 436. See also p. 433.
7 Ib. IV, ii, Vol. I, p. 462.
8 Moral Sentiments, VI, ii, Vol. II, p. 98.
ECONOMIC PROBLEMS AFTER THE WAR 261
the desire to serve the country is shown not only in the number
of recruits who have submitted to discipline and proved their
readiness to lay down their lives, but in the eagerness of men
and women to find out what they can do, and to do it with their
might. Patriotism has been a motive to diligence among all
classes such as we never knew before ; but the modern school
cannot attempt to take it into account, because it " evades the
economic calculus." x Adam Smith was at pains to distinguish
qualitatively between different kinds of motive ; but he does not
appear to have busied himself about the quantitative measurement
of the motives which appeal to an individual ; 2 at all events he
did not make this the basis of his inquiry into the nature and
causes of the wealth of nations.
III. From the humanitarian point of view, war is a ghastly
crime, and it is most important that we should examine the motives
economic or other which have contributed to induce a highly
civilised people to commit this crime. There are economic causes
of crime both within a country and in international relations ;
and war may, besides, be regarded from an economic standpoint
as a terrible waste. We may beware of lecturers who prophesy
smooth things and assure us that " there ought to be rather a good
time after the war." 3 The whole world will not come right of
itself, out of mere revulsion from the horrors of war, unless we are
at pains to do our best to set it right. There are Economists who
are anxious that Germany should not be so badly beaten as to
be a less valuable market for our exports in the future ; 4 but to
continue to give Germany scope to build up her industrial resources,
at the expense of other peoples, is to play into the hands of those
who cherish an overweening Teutonic ambition. Some Economists
believe that the waste caused by war will bring about an enormously
increased demand for goods, and thus be a stimulus to industry
of every kind, without apparently taking account of the unfavour-
able conditions which will burden labour and capital in the future.
There is also a widely diffused feeling among the general public
that war has exorcised the spirit of class jealousy, and that in time
1 Marshall, Principles of Economics, I, p. 81.
2 Compare Ib., I, pp. 57, 75.
3 A. Greenwood at Suffrage Summer School. Cambridge Daily News,
26th August, 1915.
4 Sir Hugh Bell, Section F, Manchester meeting.
262 CREDIT, INDUSTRY, AND THE WAR
to come it will be easy to persuade each individual that his personal
interest lies in co-operating with others for the good of the public.
It is a mistake, however, to suppose that a remedy which works
well under special conditions is a panacea, or to imagine, because
we have got hold of a partial truth, that we have found a complete
solution of the problem. Co-operation and co-partnership have
been wonderfully successful in doing away with friction, and
promoting diligence in many departments of business, such as
the South London Gas Company ; and we are apt to suppose that
what has been successful occasionally can be introduced generally,
so that the labourer and the capitalist shall each see that it is
his interest to work with the other to meet the requirements of
the public. It seems as if self-interest, fully informed and rightly
understood, will solve all difficulties in the industrial world, and
serve as a substitute for public spirit and a sense of duty. But the
difficulties between labour and capital do not rest on mere mis-
understandings, which can be easily cleared up, but on fundamental
differences as to the standpoint from which national activity is
viewed. In all the material progress of the community, there is
loss which falls upon individuals, and which may be irreparable
so far as they are concerned. An improvement in machinery is
good for the public in the long run as, for example, the intro-
duction of railways. The public can travel more comfortably and
far more cheaply, and the transport of goods of every kind is
enormously facilitated, but the stage-coachman, with all his skill
and dignity, is gone for ever. In every material improvement
it is the same ; there has been a continuous improvement in the
agriculture of the country during the last four or five centuries :
land yields 30 or 35 bushels an acre, where men were formerly well
content if they got 8 or 10 ; but the yeoman farmer has disappeared
with the traditional husbandry he practised. In a progressive
community we may look at any change, and change is a matter of
daily occurrence, from the point of view of its effect upon the public
in the future, or we may look upon it from the point of view of the
individual workman in the present. Labour looks at the matter
from the latter standpoint, and no re-adjustment will bring these
two interests into complete harmony. The problem before all
classes is a practical one as to the manner in which the interests
of the public in the long run can be attained with the least sacrifice
ECONOMIC PROBLEMS AFTER THE WAR 263
of the individual workman in the present, and that problem cannot
be solved in general terms.
Economists have been mistaken in pretending to solve the
question generally. They assumed that the aggregate of indi-
viduals is identical with the State ; and in an unprogressive com-
munity this is approximately true ; but in a progressive community
the difference of time must not be ignored. A change which will
be beneficial to all the public in the next generation is sure to be
injurious to some individuals in the present generation ; though
some of them may live to share in the ultimate gain. The classical
economists and the laissez-faire school concentrated attention on
the good of the public in the future ; they believed that the real
suffering which they saw around them was merely temporary,
and that economic conditions would right themselves if only they
were left alone. It is very instructive to read how a benevolent
man like Dr. Chalmers 1 viewed the horrors of the Industrial
Revolution ; he noted with interest : " How roughly a population
can bear to be handled, both by adverse seasons, and by the vicis-
situdes of trade and how, after all, there is a stability about a
people's means which will keep its ground against many shocks,
and amidst many fluctuations. It is a mystery and a marvel to
many an observer, how the seemingly frail and precarious interest
of the labouring classes should, after all, have the stamina of such
endurance, as to weather the most fearful reverses both of com-
merce and of the seasons ; and that, somehow or other, you find,
after an interval of gloomy suffering and still gloomier fears, that
the families do emerge again into the same state of sufficiency as
before. We know not a fitter study for the philanthropist, than
the workings of that mechanism by which a process so gratifying
is caused, or in which he will find greater reason to admire the
exquisite skill of those various adaptations, that must be referred
to the providence of Him who framed society, and suited so wisely
to each other the elements whereof it is composed." But we are
all agreed now that, in the interests of national life, it is important
to take account of the conditions of individual work and the
standard of comfort of the labourers, and that cheapness to the
public in the long run is not the only thing to be considered.
The modern school of Political Economy has gone to the opposite
1 Christian and Civic Economy of Large Towns III, 36.
18 (1408)
264 CREDIT, INDUSTRY, AND THE WAR
extreme, and has seemed to give countenance to the view that
whatever promotes the comfort of the individual must be beneficial
to the society of which he forms a part. When measured by
money standards, and exchange in the markets, it may be so ;
but, when the element of time is taken into account, the question
arises what contribution the individual is making to the welfare
of the public in the future. We may at least learn from the war
that it is possible for industry to flourish now, at the expense of
the future, and for us to live at ease while we throw a heavy burden
on posterity. Professor Pigou x and the school of Economists, who
look primarily at individual comfort in the present, and seem to
think the welfare of the public in the long run may be trusted to
take care of itself, are as one-sided and mistaken as the classical
economists of a hundred years ago. The principle which both of
these schools assume as axiomatic, that the aggregate of individuals
may be identified with the community, is, in a progressive society,
obviously untrue. The interest of which the aggregate of indi-
viduals at the present time is conscious may easily conflict with,
or at any rate be inconsistent with, the aggregate interests of the
people who will form the community in the future.
If we neither evade the difficulties nor attempt to minimise
them, but face them fairly, we need not give way to pessimistic
apprehensions about the future of the country. At least we may
remember that after the war we shall have one great advantage
for dealing with social problems of every kind that has been lacking
in the last generation. The war has re-invigorated the national
consciousness in the Mother Country, and has thus given us a
foundation on which we may hope to rear a national organisation.
The attempts at planting small holders on the land, and at dealing
with the housing problem, have been sadly futile, because they
were isolated and with no foundation ; they did not rest on a
clear conception of national welfare, and, therefore, they made
no appeal to the sense of public duty. But besides this change
in the Mother Country there has been also, in consequence of
the war, an increased sense of the solidarity of the Empire through-
out the Overseas Dominions ; people are more ready to welcome
1 Wealth and Welfare, pp. 24, 401 ; see also my Christianity and Economic
Science, 91.
ECONOMIC PROBLEMS AFTER THE WAR 265
Imperialism as the beginning of an international system, when they
see that it really points towards internationalism. l These new poli-
tical convictions need not remain in the air, as personal ideals, for
they influence the direction of practical efforts of every kind. Eco-
nomic Science has its limitations, and cannot lay down the course we
ought to pursue, but it points out the means by which a national
aim may be realised and national duties discharged easily and
effectively.
During the past year there has been an immense increase of
industrial activity on the part of the State ; there has been a
nationalisation of some departments of industry, a nationalisation
of transport, an increased movement in favour of the nationalisation
of mining operations ; this change has not been really Socialist,
since it has taken place with the consent and assistance of the
private capitalist. That it will be maintained to a great extent
after the war can scarcely be doubted ; and there are other direc-
tions in which the activity of the State may be expected. Hitherto
agriculture in England has been organised on an individualistic
basis ; it has depended for progress on the enterprise of individual
capitalists, either landlords or farmers, and the diligence of indi-
vidual small holders or labourers ; enormous progress has taken
place under this system, in past centuries ; but it has recently
proved defective under the strain of foreign competition ; and
land, especially the land in small holdings, is being starved for
want of capital. A very great impetus would be given if the
State were more ready to lend capital for agricultural purposes ;
and, as a lender, the State would be able to impose conditions, as
to housing and the like, which would render the social improvement
of the rural population more possible.
There is much that the State may do for the promotion of the
welfare of the public in the long run, but we can see that there is
also a great need for cultivating a higher sense of duty in the
individual. Economic experts have been ready to assure us that
the mere consideration of interests will prove a sufficient substitute
for the sense of duty ; and that in the new era the work of the
world may go on without conscious reference to duty to either
God or man. But it is not true : in the march of progress there
1 E. A. Benians, Suffrage Summer School, Cambridge Daily News, 20th
August, 1915.
266 CREDIT, INDUSTRY, AND THE WAR
are duties of humanity towards those who are compelled to fall
out : we are all bound by human ties to see that the material
prosperity of the public shall be so pursued as to involve the
minimum of incidental loss to individuals ; and Christians believe
that it is by awakening a sense of duty to God that they can best
foster a deeper sense of duty to man.
INDEX
ADVANCES by Banks, 214
American Cotton Mills, 52
Apprenticeship, 82
Army Clothing, 163
BANKING, Women's Employment
in, 124
Bastable, Professor, 230, 237, 242
Bell, Sir Hugh, 36, 41, 42
Bill Moratorium, 212
Boards of Conciliation, 64
Bonuses, 65
Bookbinding, 180
Booking Clerks, Women as, 116
Boot and Shoe Trade, 148
Borrowing by Allied Governments,
210
Box Making Industry, 59
Bradbrook, Sir Edward, 240
Brush Making, 179
Building Trade, 54
CAPITAL, Issue of New, 209
withdrawn from Enterprise,
209
Chemical Trades, 165
Christian Socialists, 48
Civil Service, 129
Clerical Staffs of Railway Com-
panies, Employment of Women
on, 116
Work, 78
Clerks' Union, 124
Coal Trade, 34
Conciliation Boards, 34, 35
Consumption, 256
Co-operation, 44
Co-operative Commonwealth, 44
Congress, 44
Employees' Trade Union, 63
Farming, 47
Wholesale Society, 46
Cotton Trade, 25, 50, 71, 166
, Reduction of Wages in,
56
Credit, Direct Effects of War on,
202
, Effects of War on, 193
Cunningham, Ven. Archdeacon, 254
Currency, 212
-, Measures to meet need for,
216
Notes, 200, 216
DAVIES, Mr. E. R, 247, 250
Dawkins, Professor Boyd, 240
Dicksee, Professor, 220, 225, 239,
241
Distress amongst Women, 71
Distributive Co-operative Societies,
49
Trades, 100
ECONOMIC Problems after the War,
254
Economics of War, 1
Economy, 1 1
Electrical Apparatus Manufacture,
139
Electro-Plate Trades, 144
Ellinger, Mr. Barnard, 227, 232
Emergency Legislation, 196
Measures to meet need for
Currency, 216
Emigration of Women, 93
Engineering Trades, 133
Equal Pay for Equal Work, 94, 107
Evans, Mr. Alfred, 58
FAIR Wages Clause, 90
Food Trades, 176
Foreign Exchanges, 245
Franklin, Mr. E. L., 228, 229, 249
Fraser, Mr. D. Drummond, 251
Furniture Trade, 191
GIBSON, Mr. A. H., 208, 215, 221,
227, 240, 252
HIRST, Mr. F. W., 239
Hoarding of Gold by Banks, 214
by the Public, 215
Hobhouse, Professor L. T., 40
Hobson, Dr. C. K., 210
Hollow Ware Trade, 144
Hosiery Trade, 173
INCOME Tax, 232
Individualist, 45
Industrial and Provident Societies
Act, 48
Council, 26, 31, 64
Insurance Offices, Women employed
by, 126
Iron Trade, 36
JACKSON, Mr. Huth, 217, 218
267
268
INDEX
Jewellery Trade, 143
Johnston, Councillor James, J.P.,
43
KIRKALDY, Professor A. W., 17
Kitchin, Mr. Joseph, 233
LABOUR, 257
Lack of Skilled Labour, 72, 74
Leather Goods Manufacture, 152,
156
Trades, 144
Loans, 206
Local Authorities, Women em-
ployed by, 127
MACARA, Sir Charles, 22
Manchester School of Political
Economy, 51
Market Price of Securities, 208
Mason, Mr. D. M., M.P., 228, 240
Metal- working Trades, 83, 133, 141
Metz, Mr. S., 248, 250
Ministry of Munitions, 8
Moratorium, 199, 212, 225, 247
Munitions, 72, 83, 133
Act, 27
NATIONALISATION of Industry, 265
Navy, 9
New Issues of Capital, 209
Nicholson, Professor Shield, 226
OPTICAL Instrument Making, 142
Outdoor Staff of Railways, Women
on, 111
Outlets for Labour after the War, 68
PALGRAVE, Sir R. H. Inglis, 214,
216, 217, 219, 223, 225, 229
Paper Currency, Effect on Prices,
225
Pickup-Holden, Mr. G., 50
Piece Work Wages, 91, 105
Postal Orders as Legal Tender, 224
Pottery Trades, 189
Printing Trades, 180
Production, 256
Promotion of Industrial Harmony,
17
Public Borrowing as Affecting
Credit, 205
RAILWAYS, 39, 108
Rates of Exchange, 247
Replacement of Men by Women, 76
Reports (Detailed) on Trades, 100
Return of Men after the War, 92,
107
Revival of Trade, 71
Rochdale Pioneers, 45
SCIENTIFIC Instrument Making, 142
Scott, Professor W. R., 1, 65
Silk Trade, 174
Skilled Labour, Lack of, 72, 74
, Training of, 81
Smalley, Mr. Alfred, J.P., 63
Statistics on Employment, 94
Steel Trade, 36, 42
Stock Exchange Closing, 197, 223
Markets, 208
Suspension of Bank Act, 223
TAILORING Trade, 77, 91, 157
Taxation, 230
Technical Training, 94
Thome, Mr. W., M.P., 22, 33
Ticket Collecting, 112, 118
Tobacco Trade, 178
Trade Boards, 59
Tram Conductors, Women as, 123
Treasury Notes, 200, 212, 216
, Cost of, 220
-, Effect on Prices, 225
-, Withdrawal of, 228
War Bonds, 252
Tutorial Classes, 61
WAGES Cheques drawn, Table of,
96
of Women, 87, 105
in Government Depart-
ments, 128
in Railway Service, 1 17
War and Foreign Exchanges, 245
Bonuses, 65
Loans, 206, 251
Measures and Currency, 212
Taxation, 230
Webb, Mr. Sidney, 230
Wicksteed, Rev. P. H., M.A., 60
Women as Tram Conductors, 123
Clerks in Railway Offices, 120
, Distress amongst, 7 1
, Employment of, 59, 70, etc.
Railway Workers, 111
Workers after the War, 91
Women's Employment, Extension
of, 75
from August, 1914, to
August, 1915, 70
Wool and Worsted Trades, 170
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