MacDonald, J. Ramsay. The law and trade union funds, MP-^ THE LIBRARY OF THE NEW YORK STATE SCHOOL OF INDUSTRIAL AND LABOR RELATIONS AT CORNELL UNIVERSITY ONE PENNY. THE LAW AND TRADE UNION FUNDS. A Plea for "Ante-Taff Vale" , BY J. RAMSAY MacDONALD, L.C.C, Labour Candidate for Leicester. r ILonDon : Independent Labour Party, io. Red Lion Court, E.C. ^Leicester : The Co-operative Printing Works, 99, Church Gate. Cornell University Library The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924002401564 l-ir ^ 9 "(b The Law A1^ AND Trade Union Funds. A Plea for "Ante-Taff Vale." "Judg^e-made Law." When the House of Lords, in July, 1901, reversed the- decision of the Court of Appeal and restored the extra- ordinary decision of Justice Farwell — that trade unions- could be sued for the damage done by their agents — trade unionists received the decision with consternation. Some of their leaders told them that they should have expected ■ nothing else — that the House of Lords only declared what was actually the law — that the Ante-Taff Vale position never in reality existed. The contention is absurd. For aver twenty-five years every lawyer of any note, every trade union secretary, every politician interested in labour legisla- tion, assumed that no bench of reputable judges could ever give any other decision than that of the Court of Appeal, when it declared that, unions having no legal personality, their funds could not be attacked by injured employers. And there was good reason for that widespread assump- tion. During the debate on the second reading of the Trade Union Bill of 1871, the Home Secretary of the day explained that the Government regarded trade unions as- clubs, the liabilities of which were " such as courts of law should neither enforce, nor modify, nor annul." Moreover, it was deliberately arranged by the trade union leaders of the time, that the Bill should not make unions legal entities. "The subject," says Mr. Howell,* "was mooted in some quarters, and it was discussed with Mr. Bruce [Home Secretary], but neither he nor any of our friends or supporters, in the House or out of it, favoured the insertion in the Act of 187 1 of any such powers. It was intentionally omitted from the Bill. ... I venture to say that no court, however high — not even the House of Lords — can legiti-j mately read into an Act of Parliament anything that was intentionally left out of it." That that was the case was perfectly well understood, and we find men like Sir Frederick Pollock and Mr. Leonard ■Courtney commenting, in the Labour Commission Report of 1894, on the Temperton v. Russell case as follows: — "This case shows that persons injured by the action of trade unions and their agents can only proceed against their agents personally . . . This difficulty is one which illustrates the inconvenience which may be caused by the existence of associations having, as a matter of fact, very real corporate existence and modes of action, but no legal personality corresponding thereto." Mr. Justice Farwell himself said that "a trade union is neither a corporation, nor an individual, nor a partnership between a number of individuals." In support of Mr. Howell's contention, quoted above, the Court of Appeal held that " it is incorrect to say that such an entity [a trade union] can be sued unless there is found an express enact- ment to the contrary. . In our judgment, for the reasons given above, a trade union cannot be sued, as is now attempted."! When, therefore, the opprobrious description, "judge-made law," is applied to the House of Lords' decision in the TafF Vale case, the description is precisely accurate. By that' decision the Law Lords deliberately set aside what Mr. Bruce declared to be the purpose of the Government which was responsible for the Act of 1871, and what had been ^assumed ever since by the legal and the lay mind alike, to be the law of the land. Leading: up to Taff Vale. It is important to understand under what circumstances the extraordinary decision was given. It is not just to say that the bench is knowingly prejudiced. There are judges, like Mr. Justice Grantham, who are as incapable of judging in labour cases as a brewer is of giving an impartial decisiori if allowed to sit on Brewster Sessions. But the blind prejudices of Mr. Justice Grantham must not be taken to indicate the mind of the English bench. The fact is, that English Society has recently been stirred up in opposition to organised Labour. It has heard of the tyranny of trade unionism ; it has been told that combinations amongst workpeople are driving trade from the country ; it has been tLaw Reports, King's Bench Division, 1901. I, pp. 170-177. taught to regard these combinations as means which lazy and dishonest men have adopted to make their laziness and dishonesty the general rule of work. Unfortunately, our judges live, and move, and have their being in the atmos- phere of that Society. They unconsciously respond to its- prejudices, and their judgments express its apprehensions. They know nothing of trade unionism from the wage-earnerV point of view ; they know nothing of the industrial and economic pressure which justifies its action j they know- nothing of the internal government which has a very important bearing upon its legal relations. Not half-a-dozeni of them know enough about trade unionism to enable them to answer the absurdities of the Times' attacks. Thirty years ago, that was not the case. The Parliament of the time was bombarded by trade union demands. Liberals and Tories alike resisted these demands, and alike showed some willingness to accept them. Outside, a strong Labour movement was gathering like a threatening storm. A Commission had been appointed to enquire into the- grievances of the unions, and the result was that the whole country was in possession of a great amount of accurate- information regarding the theory and the practice of trade- unionism. The Act of 1871, deliberately declining to- make trade union funds liable for attachment in consequence of the acts of agents, was passed. The bench and the bar were in touch with the prevailing spirit, and the protection^ of the funds was accepted as being not only equitable but legal. The Labour movement quietened down, split over Liberalism and Toryism, and then ceased to be an indepen- dent and active factor in politics. Within the space of six years three Labour members had been elected to Parliament, the Labour Representation League ceased to exist, trade union officials began to associate themselves with ordinary capitalist parties, they fought a man all day over a trade dispute and spoke for him all evening in a political contest. Meanwhile, trade unionism failed to keep in touch with public opinion. Capital seized opportunity after opportunity to gain fresh ground. The bench gradually drifted away from its knowledge of, and sympathy with, the spirit of 1870, and a series of decisions hampering to trade unionism and subversive to the intention of the earlier law- makers began to be deHvered. Peaceful picketing was declared to be legal only under such conditions as made it impossible ; conspiracy became such a dangerous factor in trade union action that the planning of a concerted movement against employers was beset by a maze of pitfalls; finally, to cap all the other judgments, the Law Lords decided -that a union could be sued with its agents, and its funds made liable for damages. What is the real explanation of these decisions ? They ; are the reading by Society-minded men of laws passed when the democratic spirit was prevalent. They indicate that the source from which public opinion springs has changed since 1870. The wage-earners made the laws; the capitalists are administering them. The present condition of the Trade Union Law shows the practical impotence of Trade Unionism iij the public mind at the present moment. It is not enough for the people to make laws, they must continue to make the public opinion which controls administration. What Must We Do Now? The decisions, as has been pointed out, have endangered the liberty of workmen in respect of picketing and con- spiracy, and have laid the funds of unions open to the attacks of employers. Everyone recognises that the last change is the most serious, and I propose only to deal with it in this pamphlet. Trade Unionists have been rather '- slow in moving in the matter, and now that they have moved they do not seem to be quite .certain as to their ground. They are beset with two difficulties. They have not ■only to protect their union funds, but they have to do it in such a way as will be considered fair and reasonable by Parliament. Let us see what they have proposed hitherto. Up to the present they have decided to accept the law as interpreted by the Law Lords, and they have not attempted to disclaim trade union liability. They believe that it is now necessary to accept that responsibility, and they are attempting to justify their action on the ground that the interpretation of the law by Mr. Justice Farwell was right, or, at any rate, that the House of Commons will not now Agree to anything else. But whilst accepting liability they Are anxious to limit it, and after having considered the matter exhaustively, they have discovered that they can limit liability only in one of two ways. In the first place, they may decide that no act done by an agent, except by the precise sanction and authority of the rules of a union, can be made the subject to an action against the union ; in the second place, they may decide that only for the acts of the executive can union funds be made responsible. Before discussing whether union funds should be liable or not, I propose to examine those alternative methods of limiting liability within reasonable bounds. Liability Limited by Rules. The draft Bill submitted to the Conference of Trade Unionists, which met at the Holborn Town Hall on the nth March last, was drafted so that the rules of a union were to be the only sanction for acts which might involve trade union funds. The more this method is examined, the more objectionable it is seen to be. According to this proposal, unions profess to accept liability, but then they say — " We ourselves, rrieeting in our own assemblies, shall have the right to say for what acts we shall be responsible." No legislature — even if it had a majority of Labour members — could honestly accept such a claim. The rules might be so drafted that no responsibility would really be assumed, and, at any rate, the amount and nature of responsibility would vary between union and union. An engineer would obey one set of rules, a boot and shoe operative another. Judges would not then have to administer the law of the land only, but also rules of unions passed at meetings of the unions themselves. Should such a measure be passed, unions would soon have to submit to the Chief Registrar interfering in the conduct of trade disputes, and determining the conditions under which agents, officers, and executives are appointed; or perhaps they would have to allow the legislature to decide the general provisions of their rules. But such a measure can never pass. It violates the most fundamental principle of sound government, inasmuch as it allows a section of the community to lay down, on its own account, how far it is to obey the law of the land. It is just as though the employers asked that the Factory Acts should declare in general terms the responsibility of the masters to their workpeople, but allow masters' associations to decide how far in each factory that responsibility should be recog- nised. Legal responsibility, limited by rules voluntarily made by those upon whom the responsibility rests, is a departure which, it is to be hoped, will never be made by the British House of Commons. Liability for Executive Acts. When this proposal is abandoned, we have to consider the other of accepting responsibility for all executive acts. This, from a constitutional point of view, is not so objection- able as the former, though it still might mean that the executive would allow agents to act without proper sanction so that the funds might escape liability. Such neglect of 8 duty would, however, soon be the subject of legal decisions, and executives would find that a deliberate inactivity, when activity was their duty, would not in law protect them. This, then, is the more honourable and satisfactory expedient, from the point of view of the House of Commons. It is quite reasonable that liability should be imposed on trade unions only for the acts of duly accredited agents and responsible officials, and if liability had to be accepted, it ought to be on condition that the executive has sanctioned the act or acts for which damages are claimed. As a matter of fact, however, as soon as this liability is imposed upon trade unions, they have no protection for their funds at all. The subtle law of agency then comes in, and no man can say beforehand who is an agent and who is not, what body — e.g., local strike com- mittee — is in the eyes of the law (or the judges) in the position of an executive, or what may be legally construed in executive orders to be " sanction." So soon as responsibility for executive acts is admitted, the unions will have to go time after time to the Law Courts for definitions as to what an executive act is, and judges whose minds are warped by the common Society thoughts and opinions of the time, will be asked to decide in relation to specific point after specific point what is the scope and nature of trade union responsibility. Instead of putting an end to litigation, the acceptance of responsibility on the part of unions for the acts of their executives will only begin a long chapter of appeals to the Courts to settle questions of agency, and that will happen however clear to the lay mind may be the wording of the Act of Parliament. This is the dilemma in which the trade union movement finds itself to-day. It desires to accept responsibility, but every attempt to define that responsibility fails to secure the funds against unreasonable encroachments. The unions must, therefore, consider whether they ought to accept responsibility at all. Society v. Trade Unionism. Trade Unionists have mistaken the problems ahead of them. The attack from which they are suffering has not arisen from any special blunder they have made or injustice they have done, but from a general opposition to, and suspicion of, Labour organised so as to control the condi- tions of work. Such conduct as was revealed by evidence given in the Quinn v. Leathern case was not creditable to the men concerned, but had there been no Quinn v. Leathern, trade unionww would at this stage have been suspected and distrusted. Capital is demanding more free- dom to treat labour as it chooses ; the man in high places,. troubled by the pressing problems of national industry, and. having no intelligent appreciation of their nature, takes the superficial view that trade unionism is an anti-social move- ment, that combinations of workmen are legal entities, and that their funds should be made responsible for acts done as part of the operations of these combinations. Any Bill promoted by trade unionists must face this opposition. And it must not be forgotten that that opposition is con- centrated in the social stratum from which the majority on both sides of the House of Commons is drawn. The consequence of this is, that the House of Commons- will allow the unions to accept responsibility, but will not allow them to limit it. It will argue that it is the business. of the unions to elect responsible men for agents, and that if other kinds of men are elected the unions ought properly to bear the responsibility. No other course is open to a^ legislature which is determined to mete out even-handed justice to all classes. So that, whether the unions propose such a Bill as was submitted at the Holborn Town Hall making liability depend on the rules, or such an one as is- now drafted making liability depend on the sanction of executives, the House of Commons — and certainly the House of Lords — will dech"ne to assent to the proposal. A, Liberal majority might accept either of these Bills for the sake of votes, but the House of Lords would reject either- measure — unless it saw that the latter made the position of the unions hopeless by exposing their funds to every attack. Should Funds be Liable? The question therefore arises : Can the unions convince public opinion that their nature is such that their funds- should not bear liability? Can they, in other words, restore public opinion to the position it occupied in 1870? Is Ante-Taff Vale possible ? I answer all these questions- in the affirmative. We must begin by defining once more the nature ot trade unions. They are voluntary organisations, their executives are purely administrative bodies, their secretaries- are routine officers, they do not constitute a legal personality. Their members are but individuals who have combined to advance their personal interests primarily. They can enforce no contract and no obligation by law, and the property which they can hold legally as a body is the very minimum necessary to enable them to own their own offices. They correspond precisely to the description given them by the- Commission of 1867. "Trade unions are essentially clubs, and not trading companies .... The objects at •which they aim, the rights which they claim, and the liabilities which they incur, are, for the most part, it seems to us, such as courts of law should neither enforce nor modify, nor annul. They shotild rest entirely on consent." Since that time, trade unions have increased in member- ship, but an increase in size has no effect at all on the nature of their organisation. They are like a heap of sand — consisting of separate particles — not like a human being, consisting of dependent functions. They have none of the organic characteristics of a State. Therefore, the individual member acts as an individual, not as an agent. He may be endowed with plenipotentiary powers for a given purpose and as the result of a given decision, and whilst acting under these powers, the men who endowed him with them may be responsible for his ■ conduct, but nobody else except those men can be respon- sible for him. So soon as the specified act has been done, he lapses back again to the position of an individual member of his club. The Individual and the Law. It has been argued against this point of view that it is really a justification for lawlessness on the part of trade : unions. Such a conclusion is groundless. The individual is subject to the common law and to the criminal law, and the proper punishment of the individual is a sufficient deterrent from unsocial and illegal conduct. It may be held that membership of a trade union lays one specially open to breaches of the common law during trade disputes, and that therefore trade unions, as clubs, should be placed under special disabilities. One might as well argue that because members of political clubs may be considered more liable to plot and engage in treason, the law of sedition should be . applied to such clubs with special^ severity. The law which the individual, as an ordinary individual, has to obey, is : sufficient to control and punish the individual as a member • of a club or a trade union. Moreover, as a matter of com- mon knowledge, the conduct of trade unions during the thirty years from 1870 to 1901, when they were supposed to be exempt from corporate liability, was more honour- . able and more praiseworthy than the actions of Limited Liability Companies and Boards of Directors which were not exempt from such liability. If Society desires to impose the responsibilities of a corporation upon trade unions in ■ order that the action of their members may be more social, Society is making a mistake in its methods. This point was well made by that eminent jurist, Sir Frederick Pollock, A when he wrote in his valuable memorandum on " The Law of Trade Combinations," published in the Labour Com- mission's Report :—" Ultimately, the rights of minorities can be secured only by securing general respect for every citizen's lawful freedom of action and discussion, and this must be the work of enlightened public opinion, and not of legal definitions."* On the other hand, the history of Labour combinations amply shows that when the members of unions feel themselves to be unfairly treated by the law, they begin to pursue underhand methods of action, their moral sense of citizenship becomes blunted, and anti-social and illegal conduct is the consequence. When the trade unionist tries to amend the laws of picketing and conspiracy, he does so because he claims an individual right to do certain things. The first two clauses cf the Trade Union Bill are simply claims of individual right, not claims of corporate liberty, and they carry with them only an individual, not a corporate responsibility. So, strictly speaking, the description " Trade Union B'ill " is a mistake. It ought to be "Trade Unionists' Bill." It is necessary to make this point, because it is well to emphasise the fact that what alterations in the law the trade unionists demand, are all of the nature of individual right and are based on the assumption that trade unions are simply combinations of individual persons, who claim no special exemptions because they belong to such combinations, and who consequently may justly object to these combinations being regarded as anything more than loose unions of individuals, the claims and liabilities of which are voluntary in their nature, and such as no court of law should enforce, modify, or annul. Whilst considering this, we must not forget that the funds of trade unions have not been accumulated for ifighting purposes only. Trade unions are benefit societies, and though their industrial aspect is the most important, their expenditure in relief to the unemployed and in subsidising the aged, is one of the most striking features of the industrial history of the last half century. And yet the effect of an acceptance of corporate liability must be to jeopardise the friendly society funds of the unions. Trade Unions in industry. Something remains to be said on the industrial functions of the unions. They have been created so as to make •effective the desire of the workers to protect themselves against capital, and secure some proportion of the advan- *Page IS9- tages of increased efficiency in wealth producing. They embody the claims of labour to share with capital the function of determining under what conditions wealth is to be produced and distributed in society. The claim com- monly made to-day by capital that it; and it alone, has to determine how labour is to be employed, is nothing but impertinent arrogance. The smooth working of industry must always depend upon the mutual goodwill of capital and labour, and between these, the State must endeavour to hold an even balance whilst existing conditions remain. Capital, in pursuit of its own interests, has been held to have the right to ruin people if the ruin be carried on on the Hnes of proper competition and trade rivalry ; and, in a similar way, labour should claim the right to bring what pressure it can to bear upon its rival capital, provided it exercises that right in such a way as to make it clear that it is legitimately pursuing general and not personal ends. The -distinction between the case of Allen, who asked for the discharge of Flood because Flood's employment was a menace to the working class, and that of Quinn, who persecuted Leathem vindictively,after Leathern had promised to observe the conditions which the Butchers' Union asked for, is real. Trade unionists have a right to demand full legal liberty to damage employers with whom they cannot agree, provided their disagreement is legitimately on points of industrial interest ; and they can justify that claim on the ground that the condition of tr.iding prosperity is a joint agreement, not a one-sided edict. Every day it becomes more and more a question of practical importance, how far the community should step in and create a proper tribunal for adjusting disputes between employers and employed, or decree minimum conditions for labour. But whilst the State hesitates to assume responsibiHty for this, trade unionists must be exceedingly careful lest the occasional serious disputes which arise owing to the negligence- of the State, are settled by crippling the power of labour to offer a serious resistance to the encroachments of capital. If Corporations, then— If, however. Parliament insists upon unions being liable as if they were corporations, it must give them the full rights of corporations. They do not want special privileges, and they ought not to accept special disabilities. Those who are so anxious to force a corporate existence- upon unions only desire such privileges as are necessary to enable employers to dip their hands into trade union exchequers. The unions, however, have a right to de- mand that Parliament shall accept the logical results of 13 the Taff Vale decision; and to understand what these results are, one has only to turn to the position of trade unions in New Zealand in the eye of the law. There, the corporate unions are recognised as the only organisations of workpeople, and a workman is practically forced by law to belong to these organisations. There, a court fixes the mini- mum wages paid in trades. There, the State decides how disputes are to be settled, and enforces its decisions by penalties. I am not sure that it is advisable for us to copy too closely the New Zealand line of evolution, but it will be well for employers to understand what movement they are starting if they insist upon perpetuating the injustice of the TafF Vale decision. If, for the purposes of employers, trade unions are to be considered as though they were cor- porate bodies, they will have to insist upon corporation being carried so far that they themselves may reap some advantage from it. The True Policy. The true trade union policy, however, is to demand a restitution of the conditions accepted in practice before the Taff Vale decision. Whatever concessions are got will only be by instructing public opinion, and public opinion will not regard with favour any proposals for a limited respon- sibility, whilst, on the other hand, an unlimited responsibility would ruin Labour combinations in a decade. An intelli- gent defence of the ante-Taff Vale position will lead to a clearer understanding of the nature of trade unionism, and a better appreciation of the civil rights of the trade unionist. It will, moreover, help to restore a healthy and intelligent public opinion on civil and industrial matters, and enlighten the State on its responsibilities as the great arbiter in all disputes between Capital and Labour. The working classes must boldly face the elements with which they have now to deal. They have sunk themselves socially and politically for the last thirty years. Instead of settling their own policy in the State, instead of taking an independent stand on the great interests of the time, instead of steadily moulding public opinion in accordance with the needs and outlook of an intelligent and self- respecting labouring community, they have been content to allow men of no special knowledge and no close connection with Labour and its problems, to lead them and voice their opinions. The result is that Labour, even when armed with the vote, is in many respects less powerful now than it was before the creation of a democratic franchise. This funda- mental fact lies at the root of all these unfortunate decisions which, though not in accordance with law, are in keeping with social prejudice. 14 The trade unions are now beginning to admit this, and the million workers who have become affiliated to the Labour Representation Committee mark not only a new and powerful political movement, but also a new and powerful intellectual influence upon national opinion. The Labour Representation movement is now the one hope ot the country. It will not only lead to the passing of bene- ficial laws, but will so tone national opinion that judges, when administering the laws, will have no temptation to set aside the intention of Parliament in making them. The Independent Labour movement is the only adequate reply to the challenge thrown down by recent legal decisions. 15 APPENDIX. The Bill as drafted by the Joint Cammittees (the Parlia- - mentary Committee of the Trade Union Congress, the Federation of Trade Unions, and the Labour Representa- tion Committee) and amended after the Holborn Town Hall Conference. The clauses in italics are the text of the Bill as introduced by Mr. Shackleton ; the other two clauses have been disallowed by the Speaker as not coming within the scope of the title of the Bill ; if the Bill secured the ante-Taff Vale position the part of Clause 3 and the whole of Clause 4 within brackets would be omitted. i6 A BILL TO LEGALISE THE PEACEFUL CONDUCT OF TRADE DISPUTES, 1903. IDE it enacted by the King's most Excellent Majesty, by and with the awice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament . assembled, and by the authority of the same, as follows : — PEACEFUL PICKETING. I. — // shall be lawful for any person or persons, acting either on their own behalf or o?i behalf of a trade union or other association of individuals registered or unregistered, in contemplation of, or during the continuance of any trade dispute, to attend for any of the following purposes at or near a house or place where a person resides or works or carries on his business or happens to be — (1) For the purpose of peacefully obtaining or cotn^ municating information ; (2) F'jr th ■ purpose of peacefully persuading any person to work or abstain from zvorking. LAW OF CONSPIRACY. 2. — An agreement or combination by two or more persons to do or procure to be done any act in cofttemplation or furtherance of a trade dispute shall not be ground for an action if such act when committed by one person would not be grotcnd for an action. ACTIONS AGAINST TRADE UNIONS. 3. — An action shall not be maintainable against a trade union or other association aforesaid for any injunction or for the recovery of damages sustained by any person by reason of the conduct of a member or members of such! trade union or association [unless it be proved that suchj member or members in their said conduct acted with the direct sanction of the governing body of such trade union or association. INTERPRETATION CLAUSE 4. — "Governing body" means the executive committee or council to whom the trade union or association have entrusted the management of their affairs.] SHORT TITLE. 5. — This Act may be cited as the Trade Disputes Act, igoj. DATE DUE Jjg^^ BJD7 . IWI CAYLORD PRINTED IN U.S. A CorneJI University Library HD 6495.G8M2 The law and trade union funds.A plea for 3 1924 002 401 564