§ Order of the Day for the Second Reading read.
§ VISCOUNT CECIL OF CHELWOOD
My Lords, this is a small and, I hope, a non-contentious Bill. Its object is to remove any legal impediments which may hinder the adoption of what is called co-partnership schemes by companies, whether they 365 are formed under the Companies Acts or under some special Act with the company clauses in. It does not go very far, but it is intended to be a small contribution towards the solution of what, after all, is a very grave problem, perhaps the gravest problem with which we are confronted in domestic affairs at the present time—namely, the problem of industrial unrest.
The symptoms of that unrest are well known to your Lordships and to everybody else. We see them, unfortunately, too frequently. They are forced upon our notice too prominently, and they consist of strikes on the one hand and lock-outs on the other. The loss which results is prodigious. The noble Lord, Lord Askwith, in moving another Hill dealing with a different aspect of this subject, indicated the direct loss which resulted from strikes and lock-outs, but there are also the loss of good will, the loss of actual orders and, besides all that, there is that which it is quite impossible to estimate, that which statistics do not touch but which is in all probability a far more serious loss—namely, the indirect loss, the friction in working, the indifference of both parties to the success of their efforts, bad work on one side and a not very sympathetic management on the other, all contributing to an immense loss to this country, moral and material.
I am far from saying that the cause of industrial unrest is simple. It is, no doubt, very complex, and many things contribute to it. I do not doubt that bad housing is one of the causes. A man living under deplorable conditions of great hardship, sometimes, I fear, of great misery, is not likely to come to his work in a condition of mind which contributes to smoothness and to making the best of things. It is probable that in some cases, at any rate, want of leisure is a contributing cause and, without doubt, the uncertainty of employment, the harassing fear of the loss of actual work, has also its effect in contributing to industrial unrest. But when all these things and many others have been allowed for, I "believe that there is no cause more potent, or so potent, as the impaired human relationship in industry which, unfortunately, exists at the present time. That is partly, as the Lord Chancellor pointed out on a previous occasion, one of the consequences of the industrial revolution and all that has followed from 366 the factory system. With great masses of men it is impossible to preserve the direct relationship of employer and employed.
There are undoubtedly cases in which there does not seem to be any desire to preserve that relationship. When I was discussing this question with an employer of labour in Lancashire, he said he thought it quite unnecessary for him to know anything about what was going on in his mill. He, had certain figures sent to him showing the results which were obtained, and so long as those were satisfactory he did not think it was necessary to inquire any further. I hope that is an exceptional state of things, but it indicates one of the great difficulties with which we find ourselves confronted. It is natural, therefore, that this atmosphere of suspicion, which is the immediate cause of the whole of our troubles, should exist, and that we should have the repeated and constant interchange of invective which is so deplorable a symptom of that suspicion.
I will not waste your Lordships' time by further enlarging on what is, after all, common knowledge, but I venture respectfully again to urge upon the Government the necessity for dealing with this state of things in some way or another. On a previous occasion the Lord Chancellor was good enough to explain the attitude of the Government. He then said:—We propose, as soon as we get our heads a little above water and out of many things with which we have to contend at the present moment in the way of arrears of business, to proceed by an investigation of a systematic kind into this very wide question with a view of determining whether, with the co-operation of trade unions or otherwise, it is possible to mitigate the circumstances which lead to industrial unrest.With the greatest respect for the Lord Chancellor, I can scarcely imagine a less hopeful pronouncement than that which he then made. It certainly does not hold out the slightest expectation that in the near future any proposal will be made by the Government.
I do not know whether the Government, as a Government, is in favour of the socialistic solution of these questions, but I venture to say that, whether they are not, for this particular evil Socialism is no remedy. After all, State Socialism means the substitution of an 367 official for a private employer. I do not think that any of your Lordships will be of opinion that the substitution of an official for a private employer is likely to improve the human relationship between employer and employed. I have the greatest respect for officials, but I should say that of all human beings they are the least human. That is not only a matter of theory; we have had experience. When I was first in the other House of Parliament I remember the repeated and vehement protests of the Post Office servants against the conditions of their employment. It was continual, and very serious indeed. Your Lordships are well aware that on more than one occasion that otherwise admirable body the Metropolitan Police have had very grave difficulty in respect of the conditions of their employment, and only the other day there was a tramway strike in which I believe I am right in saying that the employees of the County Council of London were amongst the most prominent of those who were discontented with the conditions under which they worked. I do not think, therefore, that public employment, whether you call it socialistic or not, would be any solution of the difficulty in which we stand, even if it were possible to adopt it, which it clearly is not.
Equally I feel that it is impossible to remain quiescent in the face of this difficulty. I know that there are some people who think that it is unnecessary to do anything at all, and that all we have to do is to proceed in existing conditions and, it may be, to be more determined and less conciliating than at present. That is a counsel of despair. I do not think that any procedure of that kind would diminish the evils with which we have to deal. I fear that it would inflict upon the country immense loss and leave us with the problem still unsolved. It is right to add—though I am very far from being an alarmist, and have no belief whatever in the near approach of a revolution, or anything of that kind, in this country—that, so far as I am able to judge, the political dangers arising from industrial unrest are on the increase, and it seems to me that it would be foolish for us to ignore those dangers, quite apart from what is, to me at any rate, the more urgent claim for dealing with the matter - namely, the very unsatisfactory condi- 368 tions which exist in industry at the present time.
I have no doubt that there is a growing impatience with the existing system, a growing discontent with the system as a system, very often rather ill-defined and rather ill-expressed, but none the less very powerful and very widespread. It may be that this is the immediate and inevitable result of the industrial revolution. I think it is partly that, but partly also it is due to the fact that the mental point of view has changed. We are all glad to know that education has greatly advanced. I sincerely rejoice at that, but we ought also to recognise that arrangements and organisation which might be suitable and which might be accepted under conditions where education was much less advanced than it is at present, are not likely to be accepted at the present time, when education has made such progress. This is all the more the case because—if I may venture in a very few words to touch upon another point—it appears to me that the whole practical theory of wages (if I may use such an expression) is in confusion. I do not know upon what principle it is thought that wages ought to be paid at the present time. I suppose the old theory was that labour was like any other commodity; you got it as cheaply as you could and you paid what was necessary in order to get it. It is a good many years since that theory has been abandoned in practice. Indeed, it is obvious that it must be limited by the necessity of paying a sufficient wage to keep the worker in a sound physical and mental condition. That used to be described as a subsistence wage, and more recently it has been described as a living wage. By a living wage, I understand, is meant, not only a sufficient wage to enable the worker to keep body and soul together, but enough to enable him to live a life which will develop and satisfy the other requirements of his nature.
All this is exceedingly vague to me, and very difficult to apply, particularly as I observe that it is admitted in practice that you have, in addition, to consider to some extent the profits that are being made in the industry. When times are good and profits are rising, then it is thought—and, as it seems to me, quite reasonably—that the worker ought to 369 have a share in the good things that are going. A demand for an increase of wages results, which may or may not be granted. If it is not granted, it can be enforced only by industrial coercion. Similarly, if the profits go down and times are bad, there comes a demand for a diminution of wages, and that, in the same way, can be enforced only by some rough-and-ready system of industrial coercion. This appears to me to be a most unsatisfactory state of things. You have an admission, which seems to me quite reasonable, that profits should be considered in relation to wages, but you have no machinery for adjusting wages to profits, except this very rough system of strikes and lock-outs, which cause infinite misery and do not always accomplish their object. It is, in my opinion, that state of things more than anything else, combined with the commercial secrecy with which these operations are carried on, which has produced, or at least has been largely responsible for, the general suspicion which exists to-day and which is at the bottom of our troubles.
These are not merely the speculations of an onlooker. These considerations have forced themselves upon the notice of a great many employers. As your Lordships are aware, a great many of them have adopted some system to meet the position—whether by a direct share in the profits for the wage-earner, a direct addition to his wages, depending upon the profits, either by a percentage on the wages or by a bonus, or in some other way; or by inducing and encouraging the workers to invest their capital in the undertaking, and so to become direct participators in the fortunes of the business—and whether one system or the other is adopted, one condition becomes necessary, and that is that a full disclosure of the profits of the business has to be made in order to satisfy those who are sharing in its profits that the shares are reasonably and fairly paid. As your Lordships are probably aware, in some companies and businesses a considerable step even in advance of that has been taken, and a method has been adopted by which the wage-earners are empowered to elect one or more representatives to the board of directors, or other governing body that directs the fortunes of the enterprise.
Those are, roughly speaking, the broad lines on which these experiments have 370 proceeded which we know as experiments in co-partnership. That they have always succeeded I would not say for a moment, but I believe, from such inquiries as I have been able to make, that in every case where they have been fairly, honestly and straightforwardly tried, they have achieved a very large measure of success. All my Bill does is to empower companies formed under Statute to carry out schemes of this kind, if they desire to do so. As your Lordships are aware, all companies which are formed under Statutes can only do that which they are specifically allowed to do under those Statutes, and it is at any rate doubtful whether they are entitled to carry out schemes of this kind under the law as it at present stands. I do not think it is necessary for me to trouble your Lordships with details of the clauses. That is the whole subject and purpose of the Bill. I am quite aware that it is not a far-reaching measure. It is a modest proposal—a first step in the direction of a reform that seems to me to be the only hope of achieving the pacification of industry on a satisfactory basis.
I remember discussing this question some years ago with what was then the Labour Department of the Board of Trade. A very experienced official, who is, I am afraid, not now in the service of the Government, said to me at the end of the discussion: "I do not know whether co-partnership will succeed, but I do believe that, unless a solution of our industrial difficulties can be found in that way, no solution at all is possible." I confess that that is also, for what it is worth, my own opinion. I do not believe that there is any other solution. I do not believe that in any other way there is any hope of ultimately restoring a reasonable condition to our industry, of putting an end to that senseless state of things which was the other day denounced by the present Prime Minister in far stronger language than, any I have used this afternoon. I feel, also, that unless by some moderate and reasonable, and in the best, sense conservative, proposal some solution of this difficulty is arrived at, there is only too much reason to fear that drastic and dangerous experiments will be tried, which can scarcely have any other result except to destroy that, elaborate and nicely balanced machinery upon which the 371 commerce and the prosperity of this country depend. It is for those reasons that I ask your Lordships to read this Bill a second time.
§ Moved, That the Bill be now read 2a—(Viscount Cecil of Chelwood.)
§ LORD WRENBURY
My Lords, sixty-two years have passed since the Companies Act, 1862, gave a great stimulus to the enormous development of joint stock enterprise which has taken place since. Before the Act of 1862 there were, of course, large companies carrying on large industries, but they were all, or almost all, either companies incorporated by Act of Parliament or companies incorporated by charter. The Act of 1862 provided means for forming a joint stock company by registration under that Act. The facilities thus given were eagerly seized upon, and, of course, the development of joint stock enterprise has been enormous since that date. The result has been, I think, to a large extent very satisfactory. It was a system under which persons with capital which they were desirous of employing in industries, whether large or small, were put in a position in which they could add their sums together and thus form a large capital, which could be invested in large industries. The small man who had £100 or £500 to invest was enabled to invest it upon the same terms as the man with £10,000 or £100,000, and he was enabled to earn a profit by it.
I think that industry in this country has been very largely encouraged and helped by joint stock enterprise, but there has arisen an evil in another direction, and it is this. The joint stock company is a legal fiction—an abstraction. There is no human sympathy between the legal conception, the joint stock company, and the man employed, and that is the point to which the noble Viscount has addressed himself in the speech which we have just heard. You no longer have that relation between employer and employed which was often very close and very often one of great sympathy and encouragement one to the other, under which the employee looked to the employer as a friend, and the employer looked to the employee as a man willing to render good service. The railway man now, when he strikes, thinks nothing of the small investor—the shareholder whose dividend he is destroy- 372 ing. He thinks only of the great corporation having millions of capital from which he wants to take a larger sum. He does not feel a sympathy with those who are supplying the money for the enterprise. I think it is an urgent need that we should get back, if possible, to more human sympathy between employer and employed. You want to have relations between them under which employers wish to do the very best they can for the men, and the men wish to render the very best service they can to their employers.
Now this Bill, if I rightly understand it, is addressed to facilitating that state of things, and in that sense I welcome it. I think, however, that it is desirable to point out that this Bill will not do anything which cannot be done under the existing law. A company, it is true, is confined to the objects contained in its memorandum of association, but there is no law which prevents it from introducing into its memorandum of association a clause under which it may enter into a co-partnership arrangement with anybody, including its servants. There are many companies which have not got such a provision in their memorandums of association, and it is desirable that they should have such power, but they can obtain it under the existing law, because by using the proper machinery they can introduce such a power in their memorandums of association. In fact, the Bill is only a means of doing in a more ready and certain way that which it is already open to do under the existing law.
I do not know that that is any reason why this Bill should not be readily accepted, because the entering into relations of co-partnership will no doubt be assisted by a measure such as this, if it is passed. It would then be unnecessary to go to the Court to obtain authority to alter the memorandum of association in the direction desired. I therefore welcome the Bill as a step to assist in that which I think is good. I do not know whether it is of purpose or by accident that the Bill is not extended to companies incorporated by charter. If it is to be entertained, I do not know why it should not be extended to those companies. It is confined, I think, to companies incorporated by Parliament and companies incorporated by registration under the Companies Acts, and I 373 would suggest to the noble and learned Viscount that he should extend his measure to companies incorporated by charter.
Another point which has caught my attention, and which I deprecate, is this. I have always thought it very important that the capital of a company, say £1,000,000, should be represented by £1,000,000, to be found somewhere or other— not necessarily in cash, but in cash or in kind; that the £1,000,000 should not be a mere figure not represented by assets standing behind it. That is a principle which is infringed by one provision of this measure, because it is a measure which allows shares, fully or in part paid up, to be issued to the employee although he has not paid for them. I should wish to find that expressed in some other form. Somehow or other there should be value given for the shares to be issued. If the man has money and is going to invest it, by all means let him invest it in the company and become interested in the profits of the concern, but I deprecate an arrangement by which capital in a company is not to be represented by any value brought into the company. As a whole, however, I should certainly support this measure as tending in a useful direction, while, at the same time, I have endeavoured to point out that, it does not really extend the law, but only facilitates the enabling of companies to introduce into their scheme of administration co-partnership with their employees.
§ THE LORD PRESIDENT OR THE COUNCIL (LORD PARMOOR)
My Lords, before I come to the more general matters which were dealt with by the noble Viscount in his speech. I should like to add a word or two to what the noble and learned Lord, Lord Wrenbury, has said about the structure of the Bill. The Rill, as it stands, introduces no new principle. All it does is to suggest a mode of procedure which may be more convenient and less costly than the mode of procedure which would have to be followed at the present time. In that respect, so far as I am concerned, I should not raise any objection to the Bill as a procedure Bill, and for a purpose of that kind. But I want to make one point quite clear. Apart from companies constituted by charter, there are two classes of com- 374 panies with which this Bill deals. One is the class of companies incorporated by Act of Parliament, and the other that of companies registered under the Companies Acts, 1908 to 1917.
So far as concerns the companies incorporated under Act of Parliament, some of them have this power at the present time, and have utilised it, and some, no doubt, would have to come for special power unless such a general provision was passed as is included in Clause 1 of this Bill. Let me give an illustration. I had this morning to go down to Greenwich, In order to see to certain matters in connection with a scientific inquiry into the carbonisation of coal at low temperatures. This work has, in part, been carried out under the South Metropolitan Gas Company. The noble Viscount knows perfectly well that about thirty years ago, under the direction of Sir George Livesey——
§ LORD PARMOOR
—forty is it? —the very principle which he is suggesting was adopted by the South Metropolitan Gas Company. Before coming to the House I looked at the form in which it had, been done in their case. I could not get back to the earliest stage, but I should like to quote from the Act of the South Metropolitan Gas Company, passed in 1896, and slightly amended in 1897, in order to show how far that great company has gone in the direction indicated by the noble and learned Viscount. I say this by way of caution: co-partnership is not a new thing at all. Though it has been introduced and developed, up to the present time unfortunately it has not been found a cure for all the evils and difficulties to which the noble and learned Viscount referred. I take the case of the South Metropolitan Gas Company as a type, though I have had supplied to me also a Gas Act of Bridlington, under a Gas Order of 1922, which has, in substance, precisely the same conditions. And, although it is impossible for any individual to go through all these numerous Acts and Orders, I am informed by the Board of Trade that provisions of this kind, or similar provisions, have been introduced into a large number of companies' Acts both by Statute and by Order.
375 This is the provision in the South Metropolitan Gas Company's Act:Whereas, by reason of the system of the company under which persons in their employ receive, by way of bonus, a share in the profits of the company, many of such persons hold ordinary shares in the capital of the company, and it is expedient to make provision for the election by such persons of a director, or directors, to take part in the management of the affairs of the company …There you have two provisions, one of which had been, introduced previously, and one which is indicated in the Act of 1896. Under the first provision, in the form of bonus profits, the employees of the company were encouraged to become shareholders, and then there is a provision that those employee-shareholders shall have representation on the directorate. I do not know what the conditions are at the present time, but about that time, as I well remember, the conditions were that two directors were appointed as representatives of the workers, or, at least, of those workers who, by their profit-bonus share's, had become shareholders of the company. I have always understood that that scheme, at any rate, worked admirably. Various similar schemes have been put into operation. But what I want to emphasise is that what the noble and learned Viscount is suggesting as a remedy for all our industrial evils (for I think that is almost the way he put it) is a remedy which not only has been open for forty years, but has been tried in a large number of cases, and, after all, has not been found to be a solution for all our labour troubles.
Then the noble and learned Lord, Lord Wrenbury, pointed out (what is, of course, absolutely true) that, as regards the companies which are registered under the Companies Acts, 1908 to 1917, they could obtain, by application to the Court, and with the assent of their shareholders, all the conditions which are provided for under this Bill, though the noble and learned Viscount would no doubt provide an easier method of procedure. There is therefore nothing new in it. Upon this point my attention has been called to what was said by a lawyer of great authority on these company matters, the late Sir Francis Palmer, who referred to this point not in regard to the statutory companies but to companies registered under the Companies Acts. He not only pointed out that this could be done, but 376 he gave three or four specific ways in which it could be carried forward, and also stated that in a large number of eases, although application to the Court was necessary, a provision such as that referred to by the noble Viscount had in fact been brought into operation.
This is what Sir Francis Palmer said before setting out the four different ways in which, with his great knowledge of company law, he stated that the matter could be practically dealt with. I do not think I need deal with this in detail, because no one will question that it can be done. He said:—Where companies employ much labour it is often found expedient to provide for the employees certain benefits and advantages beyond their ordinary wages so that by being interested in the fortunes of the company they may hare special inducements to use their best energies and abilities in its service.Then, as I say, he stated the manner in which that, can be brought about under the existing law. I think, certainly in most of the statutory regulations I have seen—I cannot speak about companies under the Companies Acts—there is also introduced a provision that whatever arrangement is made the result to the employee shall not be less than he would have got under the ordinary rate of wages, having regard to the conditions of the time.
A more novel proposal is that which is contained in Clause 2 of the noble Viscount's Bill. He did not refer to it, but he referred to matters of principle which were closely connected with it. This is not the case of a company being carried on for profit. It is the case either of a company which is not carried on for profit or where the employer is a municipal corporation, a county council, or some body of that kind, and he suggests a test by which, even in that case, some advantage could be given under certain conditions to the employees of the concern. I do not know whether the noble Viscount has really considered how that is likely to work out; but it might work out in this way—that there would be an encouragement to over-estimate the cost for the purpose of obtaining the bonus which is suggested in Clause 2. I do not want to give any final opinion upon a complicated matter of this sort, but I think it would be found far more difficult to bring the noble Viscount's principle into operation under Clause 2 of his Bill in connec- 377 tion with those companies than with profit-earning companies in the ordinary sense, whether statutory or otherwise. Regarding this Bill merely as a form of procedure, though it is utterly impossible, of course, in any of these cases that any facility should be given by the Government, so far as the Second Reading is concerned I do not think any opposition need be offered to the Bill.
In bringing the Bill forward the noble Viscount went into certain matters of rather wider interest than are concerned in the Bill itself and of which I made a note. I know from experience and from knowledge of what the noble Viscount has done that for some time he has taken a great interest in the attempt to find some method of improving the relationship existing between employer and employed under modern conditions. That, of course, is a matter of notoriety to everyone who has taken an interest in questions of this kind. So far as the Government are concerned they are entirely in accord with the statement which the noble Viscount has made. How far it carries us is another matter. The noble Viscount says that to persist in the existing state of things means disturbance and probably anarchical revolution, and all the dangers which would be avoided if a proper system was introduced. I took down his words, and I do not think I am exaggerating what he said. That is a very notable statement on the part of one holding the general opinions in political life which are held by the noble Viscount opposite.
§ VISCOUNT CECIL OF CHELWOOD
I must apologise to my noble friend for interrupting him, but I very carefully said that I was one of those who did not fear, revolution in this country under any circumstances.
§ LORD PARMOOR
I am much obliged for what the noble Viscount has said upon that point; but I think I am quite accurate—I would not misrepresent him, as he knows, for a moment—that he criticised the existing state of things with regard to the relations between employer and employee as being such as, if left alone, were only likely to lead in the direction of disaster; I will not use the word "revolution." Let me take another expression which I noted that he used—that he was entirely discontented with the 378 existing system. That is a very notable statement on the part of the noble Viscount and coming from that side of the House. It is unnecessary for me to say that we entirely agree with it. The question between us is not one of satisfaction or dissatisfaction with the existing state of things. It is how to find an appropriate remedy for it. I do not think I am in any way misinterpreting what the noble Viscount said when I make that statement.
This is not an occasion. I think, on which one has to discuss, in reference to a Bill of this sort, the whole outlook in regard to what is called socialistic legislation; but I was struck by one statement which the noble Viscount made. I recollect that just before the present Government came into power a very strong anti-Socialist statement' was made in this House by my noble friend Lord Daryngton, who had been closely connected for some time with the Post Office administration. It is competent for any one to say that he docs not, like, the Post Office administration; but what has been its history? There you have an administration which is purely socialistic from every standpoint. To the collection and distribution of mails it has added to the ambit of its authority in comparatively recent years, first of all, the telegraphs, and then the telephones. Not only is it socialistic by every test, but it is an absolutely socialistic monopoly. How can any one say that a complete individualistic system, as it is called, covering all our industries, our public works, and matters of that kind can be supported in face of an example of that character? The fact is that you cannot support it. The fact is that the cry about individualism as against Socialism would only really be adaptable to a single individual upon a desert island, and every one knows it. The question is, and I hope the noble Viscount will approach it, how you can best solve these complicated matters. Have you not to solve them in many cases by direct progress in what is called a socialistic direction? I do not think there is any answer to that. The more complex society becomes the more impossible is the position of pure individualism; in other words, the greater are the socialist claims as against the individual. You cannot help it.
379 I should like to refer to a very well-known statement made by Sir William Harcourt on behalf of the Liberal Party, not of the Labour Party. He said: "We are all Socialists now." So we are in one sense. No one can blind his eyes to the fact that we are living under complex social conditions. No one can blind his eyes to the facts, which the noble Viscount really made the background of his address to-day, that conditions have changed, that the old personal relationship is no longer possible, and that you must have regard to this new outlook and these new conditions if you are to solve the difficulties to which he referred. He asked a very pertinent question, and a very difficult one. I do not think he purported to answer it himself. That question was, how you can ensure what has been called a living wage. That is an extraordinarily complicated and difficult matter, and it is one of the greatest questions which have to be approached and, if possible, solved.
I only want to make this statement in regard to it. I think that economics represent only one department of social science—a most important department certainly—and are not the only part of social science to which we must pay regard. The noble Lord himself said—and I entirely agree with him—that you have to look to the moral or ethical side, which he expressed in the word "human." That seems to me to be, if one looks beneath the surface, the contest which is going on. Are we to have these matters decided on the pure economic basis—that is, to buy labour in the cheapest market—or are we to consider that there is an overriding human, ethical, moral element which makes us conclude that at any rate the first matter to safeguard is that the employee is in every way properly treated, has what is called a "living wage," and, if possible, is given the maximum of interest in his work? I do not believe that there is any mathematical rule by which you can come to a decision. It is an extremely complicated and difficult problem. What you come up against is this. I have always been desirous to pay every one with whom I have been connected the maximum possible, but after a time you are faced by the difficulty of unemployment, for it is quite obvious that if you put economics altogether on one side the result will be that the industry is liable to suffer, and, 380 therefore, there is great difficulty in finding any employment at all. Here again there is no certain principle. Ever since Ricardo's doctrine of wages, which he called the "starvation level," was discarded—I was glad to hear the noble Viscount himself discard that doctrine—there has been no scientific line on the basis of pure economics on which you could act, and, therefore, you have to consider whether you are to subordinate economics altogether, or to what extent you will subordinate them.
You cannot put outside of consideration altogether the moral and ethical principles. I do not believe there is any solution of these difficulties except on moral and ethical lines. If they are to be solved at all, they will be solved by the consideration of the two parties one for the other. But in this mutual consideration you have to see that the person with whom you are bargaining, or the person with whom you have to do business, is fairly treated. You have to approach these things from the moral and ethical side in order to find the solution. I agree with the noble Viscount that you would have to go so far as that in order to get the solution which he desires. You can get partial solutions here and there, but if you want to get a real solution you must go farther than that. Whatever term you use, whether it is called a principle of the Labour Party or of the Socialist Party—I do not think the term matters—I am firmly convinced that, so far as possible, we must ensure in all our industries that the employee is properly housed and properly fed, and lives under those decent conditions to which every human being is entitled on the broad ground of general humanity. I had not intended to go into these matters so far, because I did not know that the noble Viscount was going into them. I regard the Bill, as I have said, as merely a procedure Bill, and one which does not introduce any new principle at all.
§ THE LORD CHANCELLOR (VISCOUNT HALDANE)
My Lords, before you part with this Bill there is another aspect of it to which I should like to draw attention. The Bill is brought forward from motives with which we all agree. It is in regard to the means which the noble Viscount adopts for carrying out his intentions that the question arises. As to the means there are objections of more 381 than one kind. To begin with a minor one, the Bill cuts across the very fundamental principle which is embodied in the law that regulates joint stock companies. Speaking for myself, I re-echo what my noble and learned friend, Lord Wrenbury, said. I have never known a case in which, without this Bill, it would not have been possible for a joint stock company to enter into the sort of arrangement which the noble Viscount desiderates. The objects of a company are contained in its memorandum, which describes the business to be carried on, while the power of the management is defined in the articles of association, which you can vary as much as you please. Therefore, for myself, I cannot find any necessity for this Bill.
The purpose expressed on the face of the Bill is to introduce co-partnership between the company and its employees, but in reality the Bill does nothing of the kind. It establishes a relation of shareholders, and the position of a shareholder is very far removed from the position of a partner. The ordinary shareholder is about as helpless as any one you can imagine. Yet that is all that the Bill of the noble Viscount will make the employee. It is certainly not that kind of thing for which the workmen of this country are asking. They have many complaints, and they centre in this, that they wish to be put in a position in which they will have a chance of exercising some control over the conditions of employment affecting their own lives. It is that for which they are asking, and it is reform in that direction that they have got to some extent in the various Factory and Mines Acts, which have been passed from time to time, and in which provision is made for their safety and comfort. But they will not get that under this Bill. There is one way in which they can get it, and that is by constituting companies in such a form that the workman has a real voice in the conditions under which he labours That can be done if you re-incorporate your company under the Industrial and Provident Society Act.
I know of a case at this present moment of a slate quarry in the north which has been rendered more insolvent than it was by a succession of strikes arising through had management. The solicitor for the mortgagees, who were naturally anxious 382 about their money, went to the workmen and said: "Why should we not turn this into a company in which you will have a real voice and controlling influence?" This was done under the Industrial and Provident Society Act, with the result that the slate quarry company is now prospering on a large production The men have a direct interest in the shares, and the company is carefully managed, because the men are dealing with what has become their own property That is a case in which the men have got what they want—some control over the conditions under which they have to live. It is to a solution of that kind that we shall have to come—a provision of control and remuneration according to service, instead of control and remuneration being placed in the exclusive dominion of the capitalist. I know it is difficult and the process can only be gradual, but it is going on.
If you wish to see what profit-sharing apart from control is, your Lordships will do well to look at any of the text books which have been written on the subject lately. If you will read Professor Bowie's book on profit-sharing you will find enumerated the attempts which have been made. It is a dismal list of failure; and profit-sharing apart from control almost invariably fails. If you consult the trade unions they will tell you that profit-sharing apart from control is the last thing they want. They do not want management, but they do say that the conditions under which they have to work and live are matters on which they should be consulted and in which they should have some voice, and that they cannot get it by the present system without control being added. It is true that this Bill introduces confusion, but that is a minor matter. My main objection to the Bill is that if we pass it we shall not do any good. It will not touch the real grievance. It is for your Lordships to say what you will do with it, but if you decide to go on no doubt at a later stage you will hear what the trade unions say about it.
§ VISCOUNT CECIL OF CHELWOOD
My Lords, I have to thank the House for the reception it has given to these proposals, and I am grateful indeed to the noble and learned Lord, Lord Wrenbury, 383 for what he bus said. I recognise that so far as companies under the Companies Acts are concerned an alteration of the memorandum of association would enable you to do everything you can do under this Bill. All that the Bill does is to cheapen and simplify the procedure. With regard to statutory companies it is a little more. You cannot change them without promoting a Bill in Parliament, which is a serious financial matter. With regard to his suggestion that companies under charter ought to be included I respectfully agree and shall be very glad, with his assistance, to see that this is put right in Committee. With regard to the matter, raised by the Lord President of the Council I agree that it is much more difficult and I shall be very glad to receive any suggestions from him, or any of your Lordships, as to improving the machinery; but if something of the kind could be done if would be a great advantage. I will not say more than that at the present time because any discussion of details should be reserved for another occasion.
The Lord Chancellor has a legal difficulty which, I admit, is a little obscure to me. He thinks there is something almost immoral in trying to enlarge the powers of a company without altering its memorandum of association. I never practised in the Chancery Court and it may be that my morality is not sufficiently developed, but it docs not appeal' to me to be a very formidable objection. As to his other criticism, that the Bill will not do much good, I said at the outset that it was a very small measure and merely facilitated the adoption of co-partnership. The Lord Chancellor is wrong in thinking that this Bill only provides for profit-sharing. He cannot have read paragraph (b) of Clause 1, the whole purpose of which is to give to the workmen the power to elect directors who would have a good deal more to say in the management of the company than merely allotting shares on wages or remuneration.
The Lord President of the Council referred to the case of the South Metropolitan Gas Company. That is a case with which I am extremely familiar, and, indeed, it was because I became professionally familiar with the operations of that company that my attention was first directed to this subject. There, after a very stormy history, Sir George Livesey established a system of co-partnership on a system of profit-sharing. The addition 384 of the right to elect directors was made ten or fifteen years later, in 1896, I think. Up to that moment the company had had an intensely stormy career. Strikes and disputes were constant, but from that day there has never been a serious dispute in the whole company. The Lord President will forgive me if I seem emphatic on this point, but it is the strongest case you can have in favour of co-partnership. I know it is said that it is only successful when you can divide profits, but during the war no profits were made and yet the system flourished throughout. Not only is that true, but the example of the South Metropolitan Gas Company has been followed to the extent of embracing companies with more than half the whole capital involved in gas undertakings. All the large London companies and the suburban companies have some system of co-partnership, and when the noble and learned Lord suggests that it is no solution of the difficulty I say very deliberately and with great conviction that so far as gas undertakings are concerned it has been a very complete solution of the whole difficulty.
I confess that the attitude of the Government on this and other Bills of the same kind is a little disappointing. I do not quite know what the Lord President's suggested solution can mean. If I understood the Lord Chancellor he is more concerned to keep his head above water. The Lord President has a slightly higher ambition than that. He wants to establish a moral and ethical solution. Exactly what that means I do not know. He said it was wrong to try to settle this question of wages on purely economic grounds; you must introduce human grounds. I agree, but we have never got a solution of disputes by using vague expressions of that kind. We must translate them into some practical form. We must provide some answer to this demand, which shows itself in industrial unrest and discontent. In spite of what the Lord President has said, I cannot see that Socialism, or an approach to Socialism, is going to help us in the least degree.
The noble Lord said that we had adopted Socialism for the Post Office. I agree that that is so, in the sense that we have State employment, as we have in the Army and in the Navy and in other interests and Services which concern the whole community, and which it is impossible to 385 carry out adequately by private enterprise. But whether that was desirable or undesirable in a particular case, it is quite certain that it has not solved the industrial difficulty. The Lord President did not really deal with that point. I myself cited the case of the Post Office, showing that public employment is, not an answer to discontent in the Post Office, which is just as great as it is in any private undertaking; and the same is true of other public undertakings. Socialism may be right or wrong—for the purposes of this discussion I do not desire to enter into that point—but whether it is right or wrong on other grounds, it is not right, it is clearly wrong, as a solution of the industrial difficulty.
I found myself much more in agreement with the Lord Chancellor, who, apparently, took an entirely different view when he said that what the workmen wanted was some share in the direction of the business. I forget the exact phrase which my noble and learned friend used, but it was to the effect that the worker wanted some share in providing for the conditions under which he worked. I think there was an element of truth in that, and, if it can be done consistently with justice to all persons concerned, those seem to me to be the lines upon which we should advance. That is the reason why I have recommended the method which this Bill is designed to promote, and which, where it has been fairly tried, has satisfied the precise demand which is made. It has worked with practical success, and, after all, it is practical success which we have to consider rather than vague phrases in dealing with a subject of this kind. So far as I am concerned, I feel that: a mere resort to Socialism will not help us, and a mere resort to vague phrases will not help us. I believe that what we want is a solution based on the principle that all who are engaged in industry have a common interest, that they have all a right to consideration, that they have all a right to an interest in the way in which the concerns in which they are engaged are carried on. The solution, in other words, should be founded, not on the principle of setting class against class, or of elevating one class above another, but on the broad principle of national unity and a combining of classes in the common interest.
§ On Question. Bill read 2a, and committed to a Committee of the Whole House.