INDUSTRIAL POLICY

Dominion, Volume 11, Issue 284, 20 August 1918, Page 7

INDUSTRIAL POLICY

THE SITUATION AFTER THE WAR

THE GARTON MEMORANDUM

The most urgent question to-day, after the immediate conduct of the war, is liow to produco industrial harmony and efficiency instead of industrial friction and inefficiency in our social system. The 511'oblem can only b« satisfactorily solved by the immediate and sympathetic study of the fundamental facts o£ industrial life, keeping in mind the human as well as the economic side of industry. At the instance of tho Garton Foundation a number of men representing (the capitalist and employing classes, organised economic, and administrative circles, came together and investigated and discussed the industrial situation in England, compiled and circulated a memorandum setting out t.'ieir views, and revised it in the light of the criticisms and suggestions received. This memorandum was recently sent cut bv General Russell to Mr. Wither!)}', the secretary of tho Umpire Service League, mid, as most of it is applicable to New Zealand, it is proposed in this and succeeding it.Tticles to give an abstract of its ooiiteiite. Industrial Situation To-day. Tho prosperity of to-day is artificial and transient, resembling the lavishness ..of tho spendthrift, which leads to banltruptcy. The absence of unemployment is due to the withdrawal of several million men from the labour market, t lie inflation of the currency, and the concentration of purchasing power in the hands of tlio State, which uses ifa purchases .and destroys them as fast as they nro produced. Tho factors that liavo eased tho situation during tho war will become a sourco of weakness .is soon as peace is proclaimed. In some cases, such as tho withdrawal of men from the labour market, {ho operation will 1m exactly reversed. 111 others, such as the deplei. tion of stocks and tho suspension of expenditure on national' plant, immediate relief has been purchased by mortgaging the future. 111 spito of the general cessation during the war of disputes between Capital and Labour, there is ill-feeling, suspicion and recrimination. Employers have pointed to extortionate wage demands, broken time, slackness, insubordination, anil sullen resistance to temporary changes, the necessity for which has been openly acknowledged. The workers liavo pointed to war profits, to tho virtual cnfilavmert of labour by tho inisuso of powers cohferred by the State! to attempt/) to undermine and weaken the unions and so to establish an ascendancy ■which may he maintained after the war. T'liey stress tho increased cost of living attributed to Ihe deliberate action of manufacturers and. traders, moro studious of their own than of the national advantage. 'Ihe closing of tho crdinnry channels for'the ventilation of grievances Intensifies the bitterness of such feelings. Truce for a Specific Purpose, In spite of talk about the brotherhood of the trenches, and the effect of discipline upon the soldiers, tho present industrial peace, is only a truce.' Many of 'the men who return from the trenches to t.'io great munition and shipping centros are amongst thoso who exhibit most actively their discontent with present conditions. The present sacrifices that are being made, tho union of different elates. 111 (he face of a common peril, is for a specific purpose. That achieved, the alliance will break up, unless more permanent ties of sympathy and interest can bo created.

Tlio operations of ; industry must no longer to regarded as something apart from the moral and intellectual life of the nation, not the internal organisation of industry as a purely domestic affaiiv a business bargain to be arrived at by a compromise between competing interests. The industrial problem is inextricably entangled with social and political development. Industry has a human side. Its discontent is based to a large extent upon questions of status and social conditions. The matter, however, must Jiot be considered from a section standpoint. Industrial life is simply one phase of tho national activities, and the responsibility of seeing -that the conditions of industrial life aro such as make for conscious and efficient citizenship rests upon the community as a whole. The spirit in which employers and employed regard their .common work will colour nota only their relations to each other, but their general attitude towards tho corporate life of tho nation, To accomplish the chango from war to peace conditions without undue friction or loss, to accommodate our methods and organisation to the new burdens ijiid altered circumstances is a heavv task. , The Supply of Labour, Even if our standing Army is raised to a Continental standard, there will be about three million men to be reintroduced into civil employment,'and. those diverted from their normal employment to tho manufacture of war material will have to return to civil industry. Tho total number of those who have become workers for the first time during the war, or liavo been transferred i from one form of employment to another as tho result of war conditions (women

workers in munition factories, productive industries, commercial uud institutional occupation, boys, etc.) will prol>nlily amount to a million unci a half, divided fairly equally botveen the sexes. At the oud of the war all these will'be added to the general reservoir from which the supply of labour is drawn.

In providing immediate work thero will be reconstruction on>a large scale in tho devastated districts, giving work to foundries and factories, a demand for new tonnage to rcjilacc vessels sunk, for commercial motel's and other material to replace those used for war . purposes, roads cut up to bo mended, plant and machinery adapted to war purposes or left idlo through stagnation of trade tu bo altered and repaired, depleted trading, and domestic stocks to be replenished. There will also in . consequence of economies during the war lie a revival of private demand for such things as clothes, furniture, books, utensils, decorations. A revival of foreign trade is also probable, the IOS 3 of German and "Austrian orders being largely compensated by increased trade with the Dominions and Allies, whilst the chief neutrals will provide unusually good markets. Prospects of Employment, lint in spito of the necessity of reconstructive work, tho revival of private buying, and the revival of foreign trade, there will be a considerable amount of unemployment due to the general dislocation of industry caused by the war and tho difficulties'of readjustment. The problem will be the adjustment rather than the provision of employment. The whole machinery of industry and of ltonio and foreign trade will havo to be readjusted to normal conditions. Production. Wealth cannot be distributed before it is produced; Ihe national income cannot exceed' the aggregate value of goods produced and services rendered within tho country or received from without in payment of goods and services, or as interest on foroign investments. Many causes will tend to reduce production after tho war—men killed, wounded and incapacitated, tho loss of men attracted by and emigrating to the overseas Dominions, the deterioration of tho national plant, tlie strain of overwork in the war industries, tho lessoned efficiency due to the suspension aiot only of direct vocational training, but of the withdrawal of teachers and the interruption of training caused in tho ordinary schools. On the other hand, the following factors tend to increase the national output:—Harder and more efficient work, keenness, alertness, and physical fitness produced by military (raining, a desire to maintain tho stnndard of living, the adaptation to peace industries of special plant erected for war purposes, a keener appreciation of the need of scientific production, standardisation of parts, better management of supply of taw material, and better organisation of business, gaining knowledge of special processes hitherto monopolised by the Huns. But, on the whole, the national production, and therefore the aggregate national income, must for many years be reduced, unless it can be rendered moro efficient by Bclte>r organisation of industry. The decrease will be cloaked to some extent by the inflation, of money values, and whilst real income in terms of goods and services will be diminished, nominal income in terms of money may be tho same or even higher. In the long run, however, income is assessed at: its intrinsic value, and with the smaller total available for distribution, the likelihood of quarrelling over its apportionment will increase. Distribution of Earnings. With a general reduction in the national income—the amount of wealth to be distributed—the question of distribution will becoiuo acutc and intensified by several new factors. Circumstances at'ler tho war will teiid to keep up the high prices that havo ruled during it, or even to forco them still higher, resulting in a demand for increase in nominal wages to enable the previous level of real wages—the standard of living to be maintained. The professional "classes and clerical .workers whoso nominal earnings havo not in general increased during tho war.will be hard hit. The real value of incomes derived from invosiments paying a fixed rate of interest will 'be.appreciably diminished. The. lowering of prices' will depend upon increased industrial output and Ihe extent which the consumption of luxuries, with its consequent employment of workers in the creation of useless commodities i> foregone, enabling ■ labour to be diverted into industries producing the necessaries of )ife. Increased taxation will contribute tn this end.

The increase of war wages lias been exaggerated in the popular mind by confusing weekly earnings with rates per hour. The increased family income has been largely accounted for by-unsparing labour on piece tasks or loin? overtime, anil more members going out. lo work. While wage* rates in the munition industries have substantially increased, tho average advance in all industries has been more than counter-balanced by tho rise in price's. Any serious reduction after the war will leave the generality of workers in a far worse position than before the wur. In many employments wage-earners whose wages have not increased are. suffering from the-increase of prices, and will continue to suffer unless their lot is improved. Many workers in military service have Inade acquaintance with a hitherto unknown standard of maintenance and their dependants have been receiving State allowances. . They will not readily go back to the old-conditions ef employment and life. Large sections of lower-paid wage-

earners will resist any attempt to make good a reduction in Hie national income at their expense. National Debt. The national debt as the result of the war will not bo less than .1:3,000,1)00,IX)0 involving an iiuuuat expenditure beginning at i'-'Dti,ollo,ooo and gradually diminishing! as tho debt is; reduced. This will affect tho distribution of (ho national iueoiuo for, say, i! 200,000,000 yor annum, or one-tenth of the whole national income, will be transferred from the general body of taxpayers to a comparatively small class of investors, il'ow far tiiis will intensify inequalities in distribution will depend upon tho incidence of after-war taxation. -Any drift in tho direction of repudiation, such as may havo to be passed by Germany and Austria in consequence of their inability to pay the interest on their war 'debts," can best be presented—

(n) By encouraging ivago-:arners to savo and invest their savings 111 email Government bonds.

(b) By avoiding the raising of revenue by the taxation of nccessavias and drawing the revenue necessary to pay tho interest mainly from tho creditor classes.

Capital available for investment will be scarce and dear, and credit'facilities <ire likely to be limited. Tho volume of credit is dependent upon tho actual output of actual wealth. Tho amount of paper in circulation will not swell the volume of credit as a whole. jS'eir capital is likely to command a hirhcr return after the war and to absorb a correspondingly large share of tho national income in proportion to the amount of capital provided. . High prices and dear capital, which aro luirdly susceptible of concerted or legislative modification, will reaclyinfavourably to Labour. High prices fnr.y make for'higher profits and thus enable higher wages to be paid; lint unlsss the national finances are handled with great discretion, heavy taxation will operate against both the making of profits anil the enjoying of wages received. Unions evory 'effort is mado lo expand tho national output, it is difficult to see low conllicts between employers and employed can l)f avoided.

When the emergency legislation affectin;,' bills of exchange, debts mid mortgages expires it may be necessary for tho State even to ask for new powers in order In stave off a partial collapse of credit. Tli,'. solution of I lie problem.? presented by llie industrial situation may be rendered more difficult by the existence on nil rides by an ugl.v temper, which may be summarised under the heads of economic, discontent, elass suspicion, psychological reactions. Economic Qiscontoit. Discontent is likely lo be caused by the fact that even it nominal wages be high, real wages will be low (.wing to Llie increased prices and that there will bo a certain amount of unemployment duo to tho dificaiiics of readjustment. The kiim o£ hardship will be aggravated by '.iv.< cessation of separation allowance'), which represented a substantial increase in spending power. At the same time the demand for reasonable remuneration and decent conditions will be stronger than ever. Tho workers have bccome iniDressed with perhaps an exaggerated notion of the power ol the State and the extent of tho national resources. The contention that social reforms cannot be afforded will be met by the argument that a nation which has been able to find several millions a day for war purposes cannot plead poverty as an excuse lor neglecting tho improvement of social or industrial conditions. We are faced with the danger that (.he ljeal earnings of Labour will bo reduced, the real profits of Capital and management amy suffer a similar diminution duo to restricted output, increased cost; of production and heavy 'iixation, whereupon the three great partners in industry will be threatened simultaneously, and the competition between them for its proceeds will bo intensified and embittered. Class Suspicion, The trade unions have yielded up their most prized safeguards during tho war, consenting to the removal of restrictions in output and hours of work and tho dilution of skilled union labour by partly skilled or non-skilled non-union labour. Pledges have, been given for the restoration of the status rjuo which the new developments of industry, tho springing up of a great army of now workers, and the difficulties of readjustment will make it difficult to fulfil literally. Unless some new equivalent can be found .which will convince the members of the unions themselves tlmt l.iie.v have gained more t.han they have lost, there will naturally bo a strong feeling of resentment. There is already only too prevalent a belief that advantage is being taken of tho war to prejudice the position of Labour, wliieli fairs that returned soldiers may be used us "blackleg" labour, and that compulsory military service may bo introduced as a means of strike-breaking and neutralising the power of organised Lahour. Psychological Reactions. The stupendous effort mado by all classes during the war is likely to be fallowed by a reaction. Unless the energy ami self-sacrifice displayed during the war receives a fresh impetus not Itas potent than that of war, the removal of the stimulus will he followed ov a. dangerous slump. Those crushed or hampered by the burdens arising from the war are apt to throw the blame on those responsible for the (jovermnent during the war. However tho burdens may be distributed, "equality of sacrifice" is in point of fact impossible, The obligation to serve implies in some cases- temporary embarrassment and a reduced income; in other cases selling up the home and business ruin.

The working of the Munition and Military Service Acts, the abolition of trade union restrictions, the enormous profits mado in certain trades, t'he rise in prices, have sowji t.he seeds of bitterness. Much of it may be .unreasonable, much of it bused upon demonstrably false assumption and fanned by unscrupulous controversialists on both sides, but the facts have to bo faced. On the one hand we have the danger of the Labour extremists and incendiaries persuading n large following, habituated to the idea of conflict, to try the chanco of industrial war. It is easy to persuade bitterly discontented men that if 'society is thrown into the melting pot, their condition cannot be rendered worse, and may lie rendered better.

On the other hand, the danger arising from a reactionary section among employers, who also believe in the inevitability of class warfare, and who may seel: lo ndont to some extent the German view of Labour as a force which needs to be 'controlled and disciplined from above,, and iiiny regard the war as an opportunity to accomplish this end. Only by uniting the elforts of all classes towards common ends, on the lines of a broad national policy, can the catastrophe of a bitter conflict between Capital and Labour be averted.