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The Pamphlet Collection of Sir Robert Stout: Volume 29

Work and Wages in 1877

Work and Wages in 1877.

At the Trades' Union Congress, held at Leicester in September last, the following address was delivered by Mr. Thomas Brassey, M.P. He said—Before I enter on more important topics, I desire to express my high appreciation of the honour of being invited to address the delegates from the trade unions at then- annual Congress. Connected as I am with employers of labour, you cannot expect me to come here to encourage an aggressive movement against men of my own order. All that you can ask from me is that I shall hold in my hands the equal scales of justice as between capital and labour. page 11 I have before had occasion to vindicate the character of the English workmen from unmerited strictures. I hear the same charges renewed to-day, and again I ask for evidence to prove that the English workman is deteriorating; and, first, let us ask ourselves, "Has the volume of our trade diminished while that of other nations has increased?" This question may be satisfactorily answered by a reference to Mr. Leone Levi's "History of British Commerce." It is here shown that while we export produce and manufactures of the value of £6. 3s. 6d. per head of our population, France exports at the rate of £2. 18s. 8d., and Italy at the rate of £1. 4s. 8d. per head. Our trade doubled itself in the fifteen years 1855-70. The exports and imports in 1870 amounted to £547,000,000, and the progress has been so well sustained through the period of depression, from which we have not yet by any means emerged, that, in 1876, the total amount had grown to £631,000,000. Mr. Levi very truly observes, in commenting on these remarkable figures, that what gives an open market to British merchandise all over the world is its universal adaptation to the wants of the populations of every climate. Luxuries are useless to the masses of mankind, but calico, iron, and hardwares are necessaries even to the least civilised peoples. The demand for these articles of universal necessity would not be supplied almost exclusively from England unless our labourers were, as he says, "really good workers." Wages may be higher here than elsewhere, but the labour performed is cheaper, from its greater effectiveness, and from the saving of unnecessary supervision. Let us now examine the effects of recent treaties of commerce on international European trade. A valuable paper on this subject was read by Mr. Leone Levi, in December last, before the Statistical Society. Let us take the trade between the United Kingdom and France as an illustration. By the treaty of 1860, France engaged to abolish all prohibitions, and to admit certain articles of British manufacture at duties not exceeding 30 per cent, ad valorem, to be further reduced to not exceeding 25 per cent, in October, 1864. Great Britain, on the other hand, consented to abolish duties on French silks and other manufactured goods, and to reduce the duties on French wines. What have been the results of the treaty? It is true that our imports from France have risen from £17,000,000 to £47,000,000; but our exports to France, in spite of the heavy duties to which our goods are subjected, have increased to the extent of 185 per cent. These figures show both the growth of our trade generally, and the ample share of advantage which we have secured under commercial treaties. That success could not have been attained except by the co-operation of skilful labour with well-directed capital. The English workman may therefore claim to share with his employer the merit due to that combination of cheapness of cost with excellence of quality, which has secured for us the pre-eminence we enjoy in the export trade of the world. Grave faults are imputed to our working classes, and their conduct in many instances deserves censure. But when we look abroad we hear exactly the same complaints under the same circumstances. For information on the relations between labour and capital in foreign countries I would refer more especially to the admirable reports of our Secretaries of Legation and Consuls. The relative value of labour in Europe and America has been exhaustively investigated in a recent official publication by Mr. Young, the Chief of the Bureau of Statistics of the United States. It contains abundant quotations from the English bluebooks. Sir Henry Barron's report on Belgium in 1872 describes the condition of that country in a period of unexampled prosperity. A great rise in wages had taken place, but the improvidence of the people became more reckless with their prosperity, and there was an actual decrease in the deposits in the savings banks. Pig iron doubled in value in six months; but the prices of labour and materials rose to such exorbitant rates as to absorb the whole profits of the trade. The zinc, glass, and woollen industries have passed through crises of equal severity. In Germany, during a period of universal inflation between 1871 and 1872, wages were advanced not less rapidly than in England. It was a period of immense profits all round. The make of iron was increased from 1,500,000 tons in 1871 to 2,250,000 tons in 1872. In the prices of coal and pig iron there was an advance of 100 per cent. The rise of wages in all branches of trade was 37 percent over the average of former years, and the prices of all the raw materials of industry were 50 per cent higher. Unhappily, this great prosperity brought about no permanent improvement in the condition of the industrial classes. High wages and the large profits of manufacturers caused a general rise in prices. The cost of living was increased, and money was more freely expended in intoxicating liquors. I must confine myself to one example in order to show what alternations of misery and want were experienced in Germany. The case is taken from the report of Mr. Saville, chief clerk of the Treasury Department of the United States. page 12 He there describes how, at Chemnitz, a great manufacturing centre, the advance of wages from 1870 to 1872 was accompanied by a still greater advance in the cost of living. "When the commercial reaction ensued, wages fell 25 per cent; but there was no corresponding fall in the price of food, and widespread misery was the inevitable consequence. The meagre dietary of the people did not include meat more than once a week. A few touches will sometimes produce the most striking effect in a picture; and an audience of English workmen will probably appreciate most fully the low standard of living to which the people had been reduced when it is mentioned that Mr. Saville refers in hopeful terms to the establishment of a market at Chemnitz for the sale of horse- meat, which, being comparatively cheap, gave them more for then money, or enabled them to get meat oftener than formerly. In the large towns of Germany there is a widespread though morbid spirit of disaffection to the political and the social organisation under which they live. The socialist agitation is described as a purely negative opposition to the existing order of things, and to every proposal of reform. It opposes popular education, and it is indifferent to political progress. The only exception to this negative policy is the tendency to encourage strikes. It is not necessary to insist at greater length on the existence of troubles elsewhere. After all, the burden we have to bear is not lightened because a heavier load is imposed on others. I shall therefore proceed to examine the statement, which is so often repeated, that labour is dearer in England than on the Continent. It is assumed that, because the scale of wages is higher, there is a corresponding difference in the net cost of production. It is certain, however, that low wages do not necessarily imply cheap production. The melancholy condition of certain branches of trade in Belgium has been already adverted to, and yet in Belgium the wages of the mill operatives had been reduced so low as scarcely to cover the cost of subsistence in cheap seasons and to leave the workman with an inevitable deficit in dear seasons. Not more than 40,000 workmen in the whole country have accounts in the savings banks. Hitherto, I am convinced that, in those trades where we are exposed to foreign competition, the English workman has, in the main, performed an amount of work fully proportionate to the difference of wages in his favour, and the fact that we are running a close race in some branches of trade with a country where higher wages prevail than those earned in England is a proof that the cost of labour is not correlative with the scale of wages. The United States afford very striking evidence of the extent to which the influence of a high rate of wages on the cost of production may be neutralised by superior organisation, by superior industry in the worker, and by the substitution of mechanical for manual labour. The small arms for the Turkish army have been largely supplied from the United States. The ability of the Americans to compete with the makers in this country in the manufacture of an article in which so much labour is employed is a very significant circumstance. In cases where the raw material is the largest factor in the total cost, as for example, the timber in a wooden ship, it might have been readily understood that we, who have no virgin forests, should have been unable to build wooden ships as cheaply as they can be produced in Canada or New England. But in the case of small arms there are no circumstances which are specially favourable to the United States, and Mr. Stanley James, quoted by Mr. Young, calculates the wages of mechanics in the Eastern States and the large cities of America generally as 100 per cent higher than in England. With regard to the comparative rates in the principal trades in the United States, Mr. Lowthian Bell, in his report on the iron exhibits at the Philadelphia Exhibition, gives the following table of daily wages as the result of many inquiries in 1874:—
United States. N. of England.
s. d. s. d. s. d. s. d.
Highest. Lowest. Average. Good Men.
Carpenters 12 3 5 7 9 0 5 0
Smiths 13 2 6 2 9 5 6 0
Bricklayers 18 10 7 6 12 3 5 6
Machinists 11 3 7 6 8 3 5 10
Enginemen 6 6 5 6

In America, as in England, it will be observed that the building trades are disproportionately paid. The reason is the same in both cases. The demand is essentially local, and wages are given which could not be sustained if the price could be determined upon a balance of demand and supply distributed over a wider area. In all trades, which are subject in any degree to the influence of foreign competition, the American workmen are conscious of the necessity of working hard page 13 and well in order to keep up the high wages which they are at present earning. I do not shrink from telling the representatives of English labour whom I see before me, that any rules and regulations whereby the native vigour of the British workman is restrained must in the end prove fatal in their consequences. No doubt the effects are less baneful, in a commercial point of view, in the building and other trades, which are not brought face to face with foreign competitors. But, considering that improved dwellings are so urgently needed for the working classes, the unwisdom of imposing rules and restrictions tending to augment the cost of building must be patent to all. These remarks may be enforced by a reference to Mr. Lowthian Bell's comparison, made in 1874, of the net cost of labour in the coal mines in the United States and England. The American miners earned on the average 9s. a day. They worked for ten hours, and extracted six tons of coal. The average earnings of the English miners were 5s. 2d. a day, spending about seven hours in the pit and six in actual work. This was equal to 1s. 2d. per hour, for which the quantity worked was about 11cwt. Miners in the United States got about 13cwt., and were paid Is. Id. an hour. It it admitted that this comparison is not complete unless the relative facility of extraction is taken into consideration; and the work is generally easier in America than in England. Still, the fact remains that, while the daily earnings in America were greater, the hours were longer, and more work was done for a given sum of money. Provided the necessity of keeping down the cost so as to be able to compete with other producers is duly recognised, and the cost of living is not raised to such a point that the workmen are actually poorer than before, as in the case already quoted of the manufacturing population of Chemnitz, the working classes are clearly justified in seeking to better their condition. If they prefer to avail themselves of the advantages derived from an increased demand for their labour by shortening the hours of work, with a view to secure a little more leisure—leisure, which, wisely used, will tend to raise their intellectual and moral condition, they are not more deserving of reproach than the successful employer, who wisely prefers to give less time to business and more to nobler things. In either case it is a question of fitness of opportunity. Most certain it is that a state of apathetic resignation is a condition very detrimental to the interests of capital and truly melancholy to the labourer. In Mr. Young's volume the manufacturing population of Silesia is described as destitute of any aspiration to better their condition in life, while the monotony of their daily toil produces an inordinate longing for enjoyment. The United States Consul thus describes the people of Chemnitz:—"A stupid nature and dull ambition, with the inborn idea that they will labour all their lives, as their fathers did before them, make the working classes of some portions of Germany perpetual slaves to poverty; and the day is very far off when they shall be emancipated from thraldom." It is because it is so important to inspire workmen with the hope of bettering their condition that I have always advocated the principle of payment by results. My father entertained the firmest convictions on this point. I know that many trade unions object to it, on the ground that payment by the piece leads to overwork and bad workmanship. The answer to this is, that whatever may be the particular form of payment, whether it be by piece-work, contract, gratuity for extra diligence, or percentage upon profits, it is essentially necessary to give to the workman a personal motive for exertion. This must come from the prospect of participation in the profits which have been earned by his labour. His share in those profits should, of course, be proportionate to the amount of labour which he has contributed. 1 need not refer to the practices of intimidation and picketing. These are offences which concern chiefly the man of law, and I propose to confine myself to the labour question in its commercial aspects. Have you ever considered how extremely moderate are the rates of interest on English investments? You cannot have a more conclusive proof of this assertion than that which is afforded by an analysis of the dividends paid on railways. The share and loan capital of the United Kingdom forms an enormous total of £630,000,000. The average amount of dividend or interest returned for 1875 is represented by the modest figure of 4 54 per cent. The rates of interest on preferential capital being more uniform than the dividends on ordinary shares, afford the most accurate gauge of the ordinary returns on English investment, which present no speculative features. The most secure form of preference is that known as debentures or debenture stock. The process of converting terminable loans into debenture stock has of late been going forward with rapid strides. The amount increased from £67,000,000 in 1871 to £123,000,000 in 1875. In the same period the rate of interest on these investments was reduced from 4-25 to 4 18 per cent. The fact that debenture stocks bearing only 4 per cent interest can be issued by our page 14 railway companies at the rate of £16,000,000 a year, must be a positive proof to the working classes that they are not overcharged for the use of capital. This fact might be established upon evidence of a still wider and more conclusive kind than that afforded by the prices of railway securities. We might refer, for example, to the average bank rate of discount. The rates for each year, since 1867, have been as follows:—2¼, 3¼, 31/8, 27/8, 47/8, 4¾, 3¾, 3¼, and 2½ per cent. If the secure profits of business had been greatly in excess of the bank rate, there would have been less money on deposit, and higher rates would have been charged for banking accommodation. Do not forget the elementary truth in political economy, that it is when capital is relatively abundant, and labour relatively scarce, that wages tend to rise. Reduce the supply of capital, and the reward of labour must inevitably fall. Capital, except where it is invested in the permanent form of land, or the plant and appliances of a manufacturing establishment, is absolutely free to flow into any channel which the investor may select. It will flow abundantly into those countries where, under equal conditions as regards security, the highest rates of interest are obtainable. There is an international competition for the use of capital. The new world, which offers to the working man an El Dorado of high wages, is bidding high for the use of the capital accumulated in the older countries of Europe. No less than 75,000 miles of railway have been constructed in the United States. A very large proportion of that enormous capital required has been raised in Germany and the United Kingdom upon terms much more favourable to the capitalist than are obtainable here. Setting aside the speculative stocks, the rates of interest obtainable in the United States, as compared with the United Kingdom, on a first-rate security, may be taken to be as six to four. Fortunately for the English workman, there are some considerations apart from the rate of interest which make in his favour. If these did not exist the depletion of capital in this country would become a very serious question. I have spoken of the faults of the workmen. But in fairness I am bound to say that the present depression of trade cannot be laid wholly or indeed mainly to their charge. It we examine the recent labour movement historically, it will be seen that in order of time the inflation of trade preceded the inflation of wages. The demand upon the labour market became in consequence more and more urgent, and when, by the natural operation of supply and demand, the labourer had gained the command of the situation, he, in many instances, assumed a dictatoral tone, and gave a smaller return both in quantity and quality of work for the increased wages that were earned. But the capitalist must bear his share of responsibility. In the discussions on the state of trade and the causes of the prolonged depression throughout the commercial world, the exorbitant price of labour is continually referred to. We hear but little, however, of the larger share of blame which rests upon the capitalists, the employers of labour, and the investors and lenders of money, who overstock the markets and cause goods to be sold at ruinous prices, who, by encouraging speculative building, have raised the wages of tradesmen to their present level. For the sake of brevity, it will be necessary to confine ourselves almost exclusively to an examination of the recent history of the iron trade. In America the panic in the iron trade began to manifest its approach in 1873. Mr. Lowthian Bell tells us that the ironmasters complain that the construction of railways had been encouraged in the period more immediately preceding the panic by the action of Congress. Millions of acres of the public lands had been given to the companies as an inducement to make railroads which were not needed. Upon this there supervened a disastrous crisis. The unduly rapid extension of railways caused an excessive demand for rails. The supply not being equal to the demand, and a heavy protective tariff being imposed on imported rails, the American ironmasters realised immense profits, and they rapidly increased the rolling capacity of then- mills to an extent not warranted by the permanent prospects of trade. The consumption of rails in 1872 was 1,530,000 tons, of which 1,000,000 tons were made in America. In 1875 the capacity of the rail mills had been augmented to 1,940,000 tons. In the interval, however, there has been a panic in railways, and the consumption of railways had been reduced to 810,000 tons. The capacity of the mills, therefore, had been increased to two-and-a-half times the requirements, and a collapse ensued in the iron trade, from which there is no immediate prospect of recovery. The experiences of the American ironmasters were repeated in the contemporary history of the British iron trade, but the fluctuations were less violent. The course of events is succintly narrated in Mr. Lowthian Bell's report. The increased demand for coal and iron commenced in 1871. The increase amounted to 6½ per cent for coal, and 22 per cent for iron. In pig-iron there was an increased production of 664,000 tons in 1871, and 110,000 tons in 1872; the page 15 totals being for 1870—coals, 117,000,000 tons, and pig-iron, 6,627,000 tons. The supply was still deficient, and the price of pig-iron rose to 122s. 6d. in August, 1872. In 1873 the average price of 115s. was maintained throughout the year; yet the production, in spite of the inducement to make the utmost possible quantity, fell off to the extent of 175,000 tons. The difficulty of obtaining fuel, was the cause of the diminution. So brisk was the demand that coke, which could be had for 12s. in 1870, rose to 42s. a ton in 1873. British consumers had to outbid the foreign consumers. Meanwhile labour rose at the blast furnaces 50 per cent, and the cost of production was increased fully one-third. In 1874, the reaction set in rapidly, and Cleveland pig-iron receded from 115s. to 67s. 6d. In 1875 the price fell to 54s., the average for the year being 60s., but by this time a considerable economy had been effected in the cost of the manufacture, and there was a small margin of profit. In 1876 there was a further reduction of wages, and if the trade was, nevertheless, profitable, it was due to causes independent of the cost of labour. To an unbiassed mind, this brief retrospective narrative will scarcely support the assumption that the violent dislocations which have occurred were attributable to the action of the workmen. In every country, and in every line of business, the same tendency to overtrading has been manifested. There is a striking instance in the case of the steam communication between Liverpool and New York. New companies have been established, and the fleets of the older firms have been enlarged. The construction of numerous costly vessels on the banks of the Clyde—vessels which experience has shown to have been superfluous—had more effect in making labour scarce, and therefore dear, than all the machinations of the local trade unions. Again, the manufacturing industry of the country, especially in coal and iron, has been injured by the abuse of the facilities afforded by the Joint Stock Companies Act, for the conversion of private into corporate enterprises. Mr. Gladstone has denounced, in telling language, the folly of investors, who deluded themselves with the belief that they could expect, as shareholders in a company, to reap all the profits which had before been earned by trained and experienced manufacturers, who had spent their early lives in learning, and their maturer years in the administration of a complicated industry. In most cases the companies, on taking over the business from the vendors, expended large sums in additional plant and buildings. In order to find employment for their enlarged establishments, contracts were taken with no regard to price. In most cases the directors were without technical or practical knowledge, and could not know whether the tenders they were submitting were based on sound calculations. The total loss on joint stock concerns of the character described has been computed at many millions. The same rashness has been displayed in the management of railways both in America and England. You will have observed the recent remarks of Mr. Sherman. It was to meet the loss consequent upon an imprudent lowering of rates that the men employed were asked to submit to a reduction of wages, which led to the recent strikes and the conflicts of lamentable violence which have taken place. In England, as it was pointed out by Mr. Moon at the last half-yearly meeting, the accounts of the Northwestern Company show a lower rate of profit per train-mile than in any year since 1861. What is the cause? Is the working man responsible? No. The cost of coal has been reduced by 1s. 9d. per ton. In the locomotive establishment there has been a saving of £50,000; and it is only through the reduced prices of labour and materials that the effects of over-competition, for which the capitalists were responsible, have been neutralised. This discussion of the labour problem must be brought to a close with a few general remarks on trade unions. It has been recently said by Sir Edmund Beckett, who gives expression to views very widely entertained (1) that trade unions are a combination to do less work for a given wages; (2) that they teach the fatal doctrine that it is the business of working men to do no more than the least they can be paid for. These grave charges may be true in a measure, but they are not the whole truth. With regard to the second charge, if it be true that bad workmanship is advocated by trade unions, it must at least be admitted that the national reputation is still high for the production of many important articles of a quality far superior to that obtained abroad. In textile industry the quality of our woollens, prices being taken into consideration, is unrivalled. In ship-building, machinery, and hardware we have an admitted superiority. We are practically monopolists of the Suez Canal. The existence of trade unions must be accepted as a necessary consequence of the new phases into which the productive industry has entered; and the only practical question is how to direct this important and extensive organisation into a useful channel. The working page 16 classes must always be more or less in a state of uncertainty as to the profits which, their employers may from time to time be realising. This must, however, be known in order to decide whether they have a right to demand an advance of wages, or, what is the same thing, a reduction in the hours of labour. It is evident that the problem cannot be solved without an intimate knowledge of the state and prospects of trade. Highly qualified commercial advisers are needed to guide the deliberations of trade unions on these matters. It is not enough to understand the conditions of the labour market in this country. An international knowledge of the situation is essential. The organisation of the trade unions may be usefully employed for the purpose of obtaining reliable information from independent sources, both at home and abroad. As a practical suggestion, I venture to add, do not grudge an ample salary to a competent adviser. But the utility of the trade unions need not be confined to the single question of wages. They may be employed to organise mutual efforts for improving the social condition of the working class. By their agency building societies may be established, co-operative distribution extended, and, what is far more difficult, co-operative production may be organised. You may help to provide rational amusement for the masses, you may facilitate technical education. You have shown in the present Congress that you appreciate your responsibilities in the watchful observation of legislative measures affecting the welfare of the people. You may act as peacemakers in the negotiation of terms of agreement between masters and men, may use your influence in securing the observance of the conditions of a treaty, or acquiescence in the decrees of courts of arbitration. As a member of Parliament, I may claim that the course of recent legislation, so far as it affects the working men, has been marked by a generous spirit. I should like to see imprisonment for debts to the amount of less than £50 abolished, as recommended by Mr. Lowe. I approve of the extension to seamen of the Employers and Workmen Act. When the Bill for regulating the liability of employers for injuries to their servants is again brought forward, I am sure that Parliament will be considerate towards the workman. I am glad to learn that the Factories and Workshops Bill, which will be a prominent feature in the next Session, commands your hearty approval. Let me conclude by expressing once more gratitude for your kind invitation to be present at this Congress. To possess your confidence is an honour of which I am very sensible. It is one of the most regrettable incidents of the organisation of industry on a large scale, that the personal relations between employers and their workmen have become less intimate than before. In ray own case, the discontinuance of my father's business has deprived me of opportunities which I should have greatly prized of associating with the working class. How many prejudices are removed, how much personal regard is stimulated by an honest interchange of ideas, face to face, in a spirit of conciliation, and with a mutual and sincere desire to reach the truth, and to maintain justice!