ii*.-;;; OJorttcU Inineraita ffiibrarg at^ata, !Neui lark BOUGHT WITH THE INCOME OF THE SAGE ENDOWMENT FUND THE GIFT OF HENRY W. SAGE 1891 The date shows when this volume was taken. To renew this book copy the call No. and give to the librarian. HOME USE RULES --^1319^ liQy..3..0.3948,.D ...FEB .1.194.9.D FEB rmww ■m2-4r1i ■'"■^^ ' All Books subject to recall All borrowers must regis- ter in the library to borrow books for home use. All books must be re- turned at end of college year for inspection and repairs. Limited books must be returned within the four week limit and not renewed. Students must r6tum all books before leaving town. Officers should arrange for the return of books wanted during their absence from town. Volumes of periodicals and of pamphlets are held in the library as much as possible. 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There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924030105286 COAL NATIONALISATION PRECIS AND EVIDENCE OFFERED TO THE COAL INDUSTRY COMMISSION BY EDWIN CANNAN, M.A., LL^D. Professor of Political Economy in the University of London LONDON P. S. KING & SON, LTD. ORCHARD HOUSE, WESTMINSTER 1919 4 NOTE tions and answers of the examination. The parts of the precis which were omitted appear on p. 5 line 7 to p. 6 line 31 ; p. 8 line 14 to p. 11 line 4 ; p. II line 28 to p. 12 bottom ; p. 14 line 13 to p. 15 line 21 ; p. 15 line 30 to p. 16 line 18 ; p. 17 line 8 to p. 21 line 19; and p. 22 line 26 to p. 24 line 9. E. C. May 14, 1 919. COAL NATIONALISATION PRiCIS OF EVIDENCE OF EDWIN CANNAN, Professor of Political Economy in the University of London {London School of Economics), and author of various Works on Economic Subjects. I HAVE known few miners and fewer coal-owners, and have never lived in a coal district, nor even been down a coal-mine. I have never owned royalties or wayleaves or ungotten minerals, nor held shares in a coUiery undertaking, having, perhaps unfortunately, been brought up to regard such things as unduly risky. And I do not think I have ever written or said any- thing much aboirt nationaUsation of industries, though I have, on occasion, supported some munici- paUsations. I never thought of suggesting myself as a witness before this Commission, though I was follow- ing its proceedings with interest, and cannot, now that I have been called, with a fortnight's notice, do more than offer the kind of suggestion which occurs to a mind which has been occupied for one- third of a century in trying to understand and to teach to many different kinds of people the generalities of economics. In the first place I would point out that mineral property, like all other property, was not created in 5 6 COAL NATIONALISATIOlM any such Six Days as those described in Genesis. Property in the various things in which it has existed grew up because some kind of order in regard to thbse things was desirable, and property gave certain persons the motive of immediate self-interest to maintain that order. Property in different things has been maintained and continually modified for the same reason of expediency, and no doubt will go on being modified in the future. The question whether it should be modified at this present time in relation to coal in this country should therefore be discussed without any of the prejudices which cause some persons to imagine that property is always good and others that it is always bad. The principle that the coal beneath the surface belongs to the owiier of the surface is by no means a necessary corollary of private property in the sur- face. I imagine that in the world at large it has been the exception rather than the rule for surface rights and mineral rights to go together. Even in England some minerals always belong to the Crown, and all over England property in the surface is very frequently found divorced from property in the minerals below it. Where the surface is held in very small parcels by very large numbers of owners deep mining is impracticable if the mineral belongs to the surface owners and any one of them can hold out for better terms than his neighbours. Any one wishing to mine is in the position of a person wishing to make a new railway but unable to persuade the legislature to grant him compulsory powers of purchase for it. I have never seen any statement about the size or shape of mineral properties in this country, and such of the evidence as I have read does not seem very conclusive on the question whether they are such as to cause much obstruction : if they are, I should say expropriate the owners or rearrange the properties ROYALTIES 7 wherever this is the case. If not, it is not worth while, as expropriation itself must cost something. I don't think that more rapid discovery and develop- ment of new sources would be a recommendation if it could be proved probable, as I doubt the desirability of accelerating the exhaustion of the coal. The same considerations apply to way-leaves. The importance of the actual charge imposed as way- leave is often exaggerated, owing to neglect to notice that it is all the same whether payment for mineral ex- tracted is paid to the owner of the surface under which the mineral is found or to the owner of neigh- bouring surface over which the mineral must be carried ; if more is paid as way-leave, there will be less left for royalty. But the more interests there are to be satisfied, the more difficult it is to get on, and in case of any minute sub-division of surface ownership, way-leaves would be likely to stifle mining enterprise altogether if each owner and long lessee could hold out for what he liked. I see no reason why way-leaves should not be obtainable compul- sorily on the same principle as land required for an ordinary authorised railway, but, of course, by some less cumbrous and expensive process. To whom royalties or other payments representing the value of the mineral before it is touched should go, seems to be practically an unimportant question. The amount does not appear to be large to start with. It is reduced by is. in the £ by the nyneral rights duty, and as most of it notoriously belongs to wealthy owners, paying high and continually rising rates of income-tax and super-tax, about half of it is hkely to go the Exchequer now or in the immediate future, and more later on. Of the remainder, doubt- less much more than half will be invested by the owners in providing new capital for industries, the proportion being high, not only because they are 8 COAL NATIONALISATION wealthy, but also because they regard the receipt not as permanent income but as a wasting income, which must terminate in measurable time. As a matter of general principle, however, whatever the sum is, it should be maintained as a surplus over cost of pro- duction, and not frittered away in working mines which are below the level of profitable exploitation. To apply the surplus gained on the fertile mines as a subsidy for working some which it is not reaUy worth the community's while to work would be like appl3dng the rents of lands in Middlesex to growing corn on the top of Ben Nevis or reclaiming the Good- win Sands. Much more important than the question to whom the unworked mineral shall belong is the question who shall .get it out and distribute it to the consumers within the country, on the high seas, and in other parts of the empire and the world. Before the war these consumers got as much coal as they cared to buy at prices at which they grumbled much as other buyers grumble, and the miners had wages and con- ditions of labour at which they grumbled much as other classes of workers grumble. I believe that in the course of a generation the price of coal had risen somewhat in relation to other things, and that the extra amount paid by the consumers was not wasted, but went to improve the position of miners relative to other occupations, and that this improve- ment was just what might be reasonably expected from increasing civilisation, and was not really grudged by the remainder of the people who had to pay for it. On the whole, there does not seem to have been very much to complain of, except the general incompetence and stupidity of mankind, which makes all progress seem intolerably slow. But at that time^the various States of Europe were in what was supposed to be a fairly satisfactory EFFECTS OF THE WAR 9 condition. They were wasting a great deal of their resources on armaments, which each claimed to be purely defensive, and several of the more important were gradually increasing their debts in consequence of the reluctance of their people to pay taxes for this purpose, but there was no thought of their bankruptcy. Their currencies were sound. They all appeared immensely strong. One of them had fought and beaten the Church without putting anything much in its place, and another had rnanaged, without quarreUing with its Churches, to carry out a scheme of careful state-education in which children were taught to identify Itself with the Deity. It is no wonder that in such circumstances there should have been movements in some countries for the nationalisa- tion of particular industries, and a considerable amount of support for the idea of an eventual national- isation of all industries in each "country" taken separately, little thought being given to the general question whether territories were hkely to be good industrial units at all, and if so, whether the " coun- tries " handed down to the world as a legacy of the feudal period were the proper territories to be made into industrial units. Now the situation is completely changed. Sud- denly a war broke out between several of the coun- tries, and these gradually induced their friends or compelled their enemies to join in, till nearly the whole world became involved in a gigantic struggle, in which millions of men were killed and disabled for life, hundreds of thousands of women and children were murdered by starvation and exposure, and things worth milliards of pounds at pre-war prices were destroyed by explosives and fire. Each State started paying out money at a rate which could not possibly be continued without an immense increase in the currency and an immense 10 COAL NATIONALISATION diminution of its value. When this became obvious, instead of giving lower prices for what it bought, and further curtailing its subjects' money-means by taxing them, it decided that it would be less unpopular to print additional roubles, marks, francs and pounds in quantities sufficient to enable it to go on borrowing ever-increasing sums of this depreciated currency, and so to go on buying commodities and services at prices three or foiir times as high as before the war. When,.its people grumbled at the high prices they had to pay, it put the blame, not on the war and the infla- tion caused by its operations, but on the wicked profiteer, and resorted to perfectly childish attempts to prevent his imaginary operations. UnabJe to end the war by speedy victory, and unwiUing to end it by negotiation, the States went on in this way until they encumbered themselves with debts, some of which have already been repudiated and others of which are likely to be repudiated soon, and few of which can be regarded as good by any unbiassed observer. Several of the greatest of the belUgerent States made themselves so odious to their subjects that they have fallen to pieces like putrid carcases, and no one knows what further dismemberments and revolutions may take place among the rest. The European Great Powers are all, I think, still carrying on by issuing more and more paper and thus hindering the fall of prices which they'say^they desire ; this country is issuing week by week more than it did in the height of the war. "Jhis moment, when the only half-modernised feudal States of Europe have just thoroughly dis- credited themselves in what every one supposed to be principal parts of their peculiar sphere of duty, and when the territory of several of them is being contended for by rival " nations," seems a singularly inopportune timejor pressing for the nationaUsation THE TAXPAYERS ii of anything anywhere, and I can see no good reason for supposing that the coal trade in the United King- dom (or in Great Britain alone, as may perhaps be intended) is an exception. (i) Would nationalisation benefit the tax- payer ? The answer to this is most obviously in the negative. One of the principal objects of the advo- cates of nationalisation is to get rid of certain profits which, on the average, pay high rates of taxation in income tax, super-tax and death duties. With the disappearance of these profits the taxation levied from them will disappear also. If it be objected that the State will then get, not the percentage now levied in taxation but the whole, the answer is "It will not get a penny." Every one knows how extraordin- arily difficult it is for a State or even a municipal enterprise to get itself allowed to make even that low rate of profit which must be got in good years in order to cover the losses of bad years, to say nothing of anything over and above. As ^on as profit appears the consumers clamour for lower prices, and the pro- ducing employees for higher remuneration ; the advocates of the State or municipal enterprise side with one or the other, and its opponents' are secretly pleased that it should not look prosperous judged by the ordinary standards ; in the end the authority, unless peculiarly strong as that of Prussia used to be, almost invariably gives way. In the years which we have just gone through, when the need of our own State was more urgent than ever, it could, if it had dared, have raised very large sums by selhng the numerous things which it bought abroad to the people at a profit. It did not dare ; in one case, that of bread, it deliberately preferred to sell at a loss of a million a week, although to raise that amount it had to borrow that much more or issue that much 12 COAL NATIONALISATION more paper-money, raising prices of everything else still further. Coal, though much more of a luxury than bread, will be no exception to the rule. , It should have been heavily taxed at the outset of the war to discourage consumption and increase stocks, as well as to bring in money. Instead of that, not only did it go free, but when, towards the end of the war, the Government accidentally raked in a few millions from it, this was popularly regarded as " profiteering " of a very reprehensible kind. I have therefore no expectation of the taxpayers ever getting anything but an average of loss from the coal trade, though I daresay it could, given the will, be worked as a profitable State monopoly, on the same lines as the French tobacco monopoly. Possibly advocates of the proposal will say that they do not care about the taxpayer, since taxes are collected chiefly from the rich. They should remember, however, that as the riches of the rich are gradually reduced, the difficulty of drawing taxes from that source is increased, and at last when the rich have been eliminated altogether, the whole of taxation must be borne by the other classes. We fancy that the rich are as rich as before the war because their capital (including their holdings in the National Debt) or their incomes are greater than before the war, when priced in our depreciated money. But when that depreciation and the extra taxation already levied is taken into account, these fancied riches disappear. You have only to look round at the actual property in the country, the houses, ships, railways,- furniture, stocks of all kinds of things to see that the real riches in the country have diminished and to that you must add the fact that most of the property formerly held abroad has been sold to buy munitions and food for the people from Americans- and others. THE CONSUMERS 13 (2) Would nationalisation benefit the con- sumers of coal ? Here again the answer, I think, is an unhesitating negative. I do not profess to know much about the subject, but I cannot believe that the finding of coal deep below the surface, the sinking- of shafts at the right places and driving of galleries in the right directions, and all the other things which are required to initiate a mine are very easy matters to arrange for. Even the subsequent working must often present problems of considerable difficulty. And the distribution of the produce, some of which may be consumed in the miner's house close by and some in a ship or a factory thousands of miles away, seems to be not altogether plain sailing ; "let each coUiery and coalfield supply the places nearest to it " sounds easy till you reflect that it is possible for variations in the supply and demand, both temporary and permanent, to occur,' that different consumers require different sorts of coal, and all kinds of other complications with regard to size, time, and method of delivery. To suppose that all this could be well done by the Government of the United Kingdom because that Government has long managed with some success to collect letters from receptacles in which they are placed by their writers, take them to an office, sort them out, dispatch them to other offices, and thence deliver them to the houses to whith they are addressed, seems to me very absurd. In difficulty the post business is child's play com- pared with the coal trade, and, after all, it is not so very well done. Till lately it was sure, and pro- bably will soon be so again, but it is generally slow, and the charge of a penny for a letter, though it looked cheap in 1840, did not look so in igoo, compared with many charges of a penny for other things. At first, when it took over this coal business, the State would no doubt take into its service a large 14 COAL NATIONALISATION number of those now engaged in it. Probably that number would not include many of the ablest. Some of these, in middle life or beyond, having secured sufficient to live on in comfort or luxury, would retire into private life ; others, young and ambitious, would filter away to more promising fields than Govern- ment employment. Gradually the staff first secured would die out, and the Ministry of Mines with its subordinate district offices would sink into an ordinary bureaucracy with all the usual characteristics, and totally incapable of managing a business like the coal trade with any tolerable satisfaction to the consumers. It is not that Civil Servants are necessarily more incapable than other men. They are not. I am told that coalowners have appeared very stupid when examined before this Committee, and that, therefore I ought to think that the business hitherto carried on by them could be easily managed by a Civil Service of ordinary ability. Incapacity to answer questions about the reconstruction of society does not neces- sarily indicate a low mental ability, but even if it were proved that the coal business was at present- recruited from a lower level of intellect than the Civil Service, I should not take that as proving that the Civil Service would manage the coal trade better than it is managed. A very much higher order of intellect would be required to work the business as a State business than is required to work it as divided out between many hundreds of units, each intent on its own particular sphere. The economy of staff resulting from amalgamation is a thing we often hear of before amalgamations, but little afterwards. I suppose the reason is that when the amalgamation comes, it is found that the joint staff is bigger than the separate staffs were, savings in one direction being counterbalanced by larger necessities produced by the bigger scale of the work in other directions THE MINERS 15 It is very likely that the deterioration in the posi- tion of the home consumers would be somewhat alle- viated for a time by the abandonment of the foreign export trade. When the supply of coal seemed short, the line of least resistance would be to cut down the amount going to the foreign buyers. The expedient would be approved by those who tHink — rightly or wrongly, I see no means of telling which — that we ought to conserve British coal for future generations. It would be in accordance with the common protec- tionist creed, which advocates the import, not the export, of raw materials, and the export of finished manufactures : many British manufacturers would support it on that ground. It would be generally popular, because the populace has always looked ask- ance at the export of necessaries of hfe whenever they have seemed at all scarce. It could be adopted with- out difficulty or discussion simply by the State ceasing to push the export trade to foreign parts, and I have no doubt that the opposition of the miners' repre- sentatives would be ineffective. (3) Would nationalisation benefit the miners ? No one doubts that during the war persons engaged in Government service connected with the war, with the exception of the army and navy, were in clover com- pared to others in all the belligerent countries. But the means to pay them were then provided by borrow- ing, stimtilated and assisted by watering the cur- rencies, a method which cannot endure for any long time. If we resort to experience, we must go back to the pre-war past. I am afraid I have no precise information on the question how well State employ- ment compared with other employment. I know no- thing of the Prussian railway man ; of the French Post Office people, I only remember that they used to look rather starved, and I must admit — perhaps i6 COAL NATIONALISATION it should be with shame— that if a boy had come to me and asked me whether he should try to get into tne Great Western Railway service or into the Post Office I should have had to put him off till I made inquiries. I do not even know whether Vickers or the Royal Arsenal was the more attractive to appli- cants for employment. But I suppose that on the whole there is little reason to question the popular impression that at any rate for the person of mediocre abiUty who forms the great majority, Government service was rather a soft job. The explanation is that the field of State employment was then a small one, and it was consequently easy to favour those employed by the State at the expense of the consumers of the products sold (if the products were sold, as by railways and post offices), or at the expense of the taxpayers, whether the products were sold or given to the public without further payment. But as the field of employment by the State enlarges, this policy becomes more and more difficult, and at last impossible. Industries cannot all be favoured by subsidising each other. A subsidised telegraph system can be supported with ease, but it does not follow that a subsidised railway and canal system, a subsidised mining system, and so on, can be added without ever- increasing difficulty. And the project of making every one well-off by the process of writing up the value of the services rendered by every one to every one else is just as illusory as the project of making every one the recipient of the proceeds of the taxation of every one. So, and especially if the railways are nationalised, as seem likely, the nationalised miners are not well- advised if they expect to enjoy a specially- favoured position such as State employees are supposed to have enjoyed in pre-war days. They are likely to retain almost their present place in the scale of occupations. STRIKES 17 They will not be much pushed down, because if in wages, hours and disagreeable incidents, taken toge- ther, mining came to compare much worse with other industries than it does, it would become impossible to get recruits for the work, even if men already engaged to the work did not abandon it either singly or in combination. " In combination," I say, because I do not suppose for a moment that the concerted abandonment of work, which is called striking, would be eUminated by Government employment. No one supposes that except the simple persons who used to go about plain- tively asking workmen on strike, " What would hap- pen if the army and navy struck ? " Of course, armies and navies have struck in all ages and places, but when they do, the strike is called mutiny. Innumerable minor military and naval strikes have taken place in the recent war, which was prolonged by the great strike of the Russian army, and brought to an end by the threatened strike of the German army, which sent the Kaiser to Holland. The State will not put even policemen, and still less postmen, railwaymen, and miners against' a wall with a firing party in front. But it is, and will be, more difficult to strike successfully when the State is the employer than when persons and companies are. The State is much more apt to enjoy the sympathy of the public, which is always inchned to say that its employees ought to have taken constitutional means of ventilat- ing their grievances, and to have acquiesced in some authoritative decision. The Government employer, too, will always have better means than private employers of pubHshing the arguments against the strike.^ In the recent dispute, Mr. Straker regards the action of the Government in trying to dissuade the miners from voting a strike as an attempt to exercise undue influence ; if the State were actually i8 COAL NATIONALISATION the employer, he could not possible complain of its making its side of the case known. Moreover, in the last resort a refusal of some class of specialised workers to supply a necessary of life might have to be countered by boycotting them — refusing to supply them with other and, perhaps, more urgent necessaries. This could be organised much easier by the State than by spontaneous action of individual citizens. Is not food even now being refused to districts on strike in Germany ? The miners' position would be slightly damaged by the hindrance to the continued expansion of the industry which would be imposed by State manage- ment, and especially by the abandonment of the for- eign export trade, which I have suggested as probable. When a trade is rapidly expanding, the condition of workers in that trade is better than when it is station- ary, and still more than when it is rapidly contracting, and it does not seem either possible or desirable to abolish this. If more workers are wanted in a trade, by far the most effectual and satisfactory way of securing the increase is for somewhat greater advan- tages to be offered to induce people to enter into and remain in that trade. I know of no other way except " industrial conscription." Even if miners did not benefit in a material sense by being employed by the State, it is said that they would be happier, because they would then feel that they would be " producing coal for the use of the community instead of profit for a few people." (Straker, top of p. 333, col. 2.) There seems to be some misapprehension here. When the miner pro- duces coal he cannot help producing it for the use of the consumers : the consumers pay for the coal, and what they pay is divided between the various persons"concerned in giving it to them. The miners and a great many other workers receive their share PROFITS 19 by way of wages, sums agreed on at certain rates before the work is actually performed, though not actually paid till afterwards : colliery owners, whether individuals or companies, receive as their share what is left after these wages, and a large number of other payments, have been defrayed out of what is paid by the consumers. The miner's and other wage-earners or salary-earners need no more complain that they are not producing coal for the consumers, but profits ► for the colliery- owners, than the colliery- owners need complain that they are not producing coal for the consumers but wages for the miners. If the miners hired the colliery and its equipment at an agreed rate, and worked it on their own account, dividing among themselves what was left after they had paid their expenses, their share, the remuneration for their labour, would then be the profits, because that is what profits means, the income left over after expenses have been paid. If the Government takes and works the mines, paying wages to the miners and hire or interest to those who have provided the equipment, it will have a profit in a favourable year and a loss in an un- favourable one : if owing to very exceptional circum- stances, involving great strain on the national finances, it makes an enormous profit for a time, it will, apparently, be accused of " profiteering," even if that is defined as exploiting the circumstances for its own benefit while the rest of the nation is sacrificing (Straker, 8766-7). I doubt whether the objection to working for an agreed sum in conjunction with persons whose remuneration fluctuates with the ups and downs of the business and their own good or bad management is really widespread. As a teacher I have sometimes been paid directly by the consumer and received wildly-fluctuating profits from that source, but generally I have been employed by endowed or subsidised institutions which sell not 20 COAL NATIONALISATION at a profit but at a loss. I cannot believe that I should be less happy than I am if students were all so well-off, and commercial people so convinced of the advantage of trained intelligence, that education be- came a paying business, and the School of Economics began to make a profit. We should at least get a comfortable building instfead of the wretched erection supplemented by shanties in which we teach at present. But as author I have worked in conjunction with publishers who have made (I hope and believe) quite handsome profits from their business, while I have been receiving sums agreed on, a lump sum or a sum per copy sold to the consumer, and I have not been unhappy about it ; in fact, the two publishers which made me most unhappy, one by promising a share in the profits which never emerged, in spite of a large sale, and the other by not fulfilling an agreement, were not private persons working for individual profit but institutions not dividing profits among individuals at all. The secret o'f all the mystery is suggested, I think, by the words which I have used " working in conjunc- tion with." A person may be happy enough to work with a person even if that person gets a fluctuating return and he himself gets a fixed payment. It is all right to work with any one : what is disagree- able is to feel too distinctly that you are working under some one. You suffer from that feeling when you are told to do what you know, or think you know, to be the wrong thing, and also when you are told to do the right thing in a disagreeable manner. Every one in his dispassionate moments admits that order is necessary and that orders must be given, but there are few men with so little spirit or so little experience of life that they have never felt irritation at what they call " being ordered about." The per- fect employer would never order his employees to PUBLICITY 21 do what they beheve to be the wrong thing because he would convince them that it was the right thing or fill them with such confidence in his judgment that they would think it must be right, in spite of their own opinion, and, of course, he would never give his orders or allow his subordinates to give orders in a disagreeable fashion. The fact that employers are so far from perfect in this matter has nothing to do with their being remunerated by profit wliile the employed are remunerated by wages. Neither the War Office nor Army Headquarters are paid by profits, but so far as I have heard it, the testimony of privates is very unfavourable to their military employer. The failure of employers, both public and private, in the respects indicated is due partly to the ordinary imperfection of human nature and partly to the survival of tradi- tions derived from the time when physical compulsion and not the desire to exchange services was the motive for industry. If nationalisation is to be rejected, what then ? It is not I, but the Commission and the Government which has apparently decided that " something must be done " before finding out whether they knew of any remedy better than the disease. But if I am told that it is certainly determined to do something, and that though I khow almost nothing about the coal trade and have not had time to get it up, I may just as well give any suggestion that occurs to me for what it is worth, leaving the Commission to do what they can with it, and remembering that even ridiculous pro- posals sometimes lead to something better by bringing out some unthought of aspect of the case, I venture the following : In the first place satisfy, as far as may be, the desire, so ably expressed by Mr. Straker, of the miners for knowledge of the manner in which the industry 22 COAL NATIONALISATION is conducted. It is high time we dropped the notion that trade is a kind of war in which everything must be kept secret for fear of information being conveyed to the enemy : it ought to be regarded as co-operation between friends, none the less friendly because they bargain or even haggle. Most certainly provide for the periodical ^ubUcation of the accounts of all colliery-owners, properly audited, and in such form as will satisfy the miners' representatives that they are getting a true account. As soon as this has got into sufficiently good order to enable the profits of each company or individual to be ascertained shortly after the termination of the year or half-year, let some definite percentage be paid from these profits into a common fund, which shall forthwith be divided among the miners who have been employed during the year or half-year in proportion to the amount of wages earned by each of them in that period. It will be said that the benefit derived from the " miners' dividend," as it might be called, would be very like that derived from the working of the sliding scale — the miners would get more in good years and less in bad ones. The intention is the same, but the proposed method seems to carry it out better. If the price of pit props or other material required becomes high, mining becomes less profitable and is somewhat contracted in consequence, with the effect of raising the price of coal to contract the consumption correspondingly. This is quite right, because if pit props are dearer, that means it is more difficult for the community as a whole to raise coal, and so its consumption ought to be rather more economised. At this point the sliding-scale proceeds to act quite wrongly : it puts wages up, and so tends to retain miners on the verge of going out and to attract more recruits to come in just when, in fact, fewer miners A MINERS' DIVIDEND 23 are needed. In similar circumstances the proposed miners' dividend would quite rightly be smaller. If it is suggested that the miners' dividend would represent the past rather than the future, I think the answer is that the amount of it would come to be foreseen by miners and others in the same way that the amount of shareholders' dividends are fore- seen at present. Another advantage of the dividend over the sUding-scale would be that there could be no suspicion of prices being lowered simply because the lowered prices would diminish wages and so make themselves possible. Next it will be objected that the proposed miners' dividend " is only profit-sharing." In one sense this is true : it is only profit-sharing with the trade at large. But profit-sharing as hitherto understood has meant giving each workman a share in the profits not of the trade at large but of the particular firm by which he happens to be employed, and the trade union objection to this is perfectly sound. At first sight it does look reasonable that a successful firm should give its employees a bonus, and the proposal obviously has attractions for the employees of that firm. But the trade union, which has to think of the interests of all its members, sees the other side of the picture, which is that employees of the less success- ful and the unsuccessful firms will be getting less than those of the most successful, though they have worked in the same way and just as well as those of the firm which, owing to luck or excellent management, is pre- eminently successful. Now it is contrary to the permanent interest of all classes that the unlucky and ill-managed firms should get their labour cheaper than the lucky and well-managed (even if it were possible in the long run, which is probably not the case) , and one of the best of the public services per- formed by trade unions is their insistence on equality 24 COAL NATIONALISATION of pay (and other advantages) for the same work. The proposed miners' dividend, on the other hand, would tie no man to the particular fortunes of a single firm. It would only give him a well-defined and obvious interest in the fortune of the whole coal trade of the country, a thing for which he is even now, through his national organisation, the Miners' Federation, in a quite important and probably increasing measure, partially responsible. Lastly, it will be objected — by some, and perhaps observed with pleasure by others — that the proposal is the thin end of syndicalism. It may be said that the publicity of accounts and the necessary participa- tion of the miners in order to ensure their correctness wiU lead to the miners' organisation in a very few years getting to know a great deal more about the trade than it does at present : that, no matter if the dividend starts at quite a low percentage, more will soon be demanded and have to be granted : that as the miners' organisation acquires more knowledge and the proportion of the miners' dividend to the whole increases, the miners will get more and more into the saddle, until at last capitaUst management is altogether pushed out, existing capital rented, and future necessary capital provided out of profits or borrowed by the Syndicate at a fixed rate of interest ; and finally, that the organisation, not being in any way a State organization, might spread and take in the Belgian, the French,^ or even the Westphalian miners. Something of that kind might well be the course of events. It does not seem to me very alarming, " bourgeois economist " though I am. It involves no sudden revolution such as is invariably followed by reaction ; its difficulties would be met one by one, not in overwhelming battalions. Details we cannot expect to foresee, but of one thing we may be per- SYNDICALISM 25 fectly sure, and that is that the economic organisa- tion of the nineteenth and early twentieth century will not endure for ever, but will gradually be replaced by something else more suitable, not for the nineteenth century but for its own day and generation. Some such arrangement as I have suggested in which free associations of free men, able to go out and come in as each pleased, would voluntarily give service for service, irrespective of domicile and nationality, seems to me far more probable and far more desirable than any restoration of the feudal system basing economic organisation on the territory of the lord, even if the personal lord of the Middle Ages is replaced by a parUament elected by universal suffrage and pro- portional representation. Monopoly such a Miners' Syndicate would certainly have — as indeed the Miners' Federation has at the present time — but I do not think it would be, or appear to be, the interest of the members to make coal scarce and dear, iior that the Syndicate would be half as likely to make it so by mere blundering as a Ministry of Mines, even if that Ministry took in and assimilated (as it would) representatives of every side of the industry as now constituted. Cross- Examination 10.582. Mr. Sidney Webb : I have only a very few questions to ask you, because time is so scarce. I see that you do not in your suggestions make any reference to the more economical use otthe national resources, especially coal ? — No, I do not think they would be more economically used. 10.583. At the present time the private interests of the mineowners are to work the coal in the way which will yield the largest profit for the moment, or at any rate for the period of their lease, irrespective 26 COAL NATIONALISATION of the future. Is that not a defect ?— Well, I think the proprietors of the minerals can enforce control, and they ought to protect themselves against that in their leases. 10.584. Do you think they do ? — I expect they do. 10.585. We have had evidence that the mines are being worked in the interests of the largest profits and not in the interests of the wisest disposal of the mass of the coal ? — I have not seen the evidence. 10.586. Turning to another point, you speak all through your proof, so to speak, in terms of money profits. Have you considered what influence that may have upon the occurrence of accidents ? — I do not see why it should cause accidents to occur. I should have thought accidents were expensive. 10.587. Supposing it were found by experience that it costs less to provide workmen's compensation for accidents, or the insurance premiums covering it, than to prevent the accidents, and accepting that hypothesis for the moment, you might have the inter- ests of the coalowners in conflict with the interests of the workmen ? — Well, I should ask the Miners' Federation to look after that. 10.588. It may be the Miners' Federation are trpng to look after that by asking for a change in the management ? — Possibly. 10.589. There is nothing at any rate in your state- ment which bears on that possibiUty ?r— I do not see any difficulty about preventing accidents being profit- able, if they are profitable, which I very much doubt — but I am not a coalowner. 10.590. With regard to profit-sharing, you point out that one of the good effects of trade unionism is to provide that workmen should get equaUty of pay and other advantages for the same work ? — Yes. 10.591. Is not profit-sharing for the whole trade rather inconsistent with that : I mean, though the EVIDENCE 27 workmen in one particular year may be on a l^vel, you would be making a great difference between the return to the workmen in different years ? — I do not see how that can be avoided. The return to the labour of the community is different in different years. The labourer has to share in the general ups- and- downs somehow ; he cannot contract out of it. 10.592. Do you think it is an advantage that he should share in the ups- and- down to that extent ? — He must ; he cannot help it. 10.593. It is conceivable, is it not, that the capi- taUsts may, in consideration of their profits, them- selves bear the ups-and-downs and act as a sort of buffer, for instance ? — ^They do to some extent, but they cannot possibly do thewhole thing. That is the mistake made at present, that every one thinks some- one else is to bear the loss at the present time. 10.594. Can you not imagine that by a system o'f insurance it might be done ? — No, I cannot. I think when the product varies downward people will have to suffer from the product being lowered. 10.595. At any rate, you do not regard it as a drawback, that you vS'Duld introduce the workman to this, so to speak, gambling element ? — I do not think it is a gambling element, but a matter of Nature. I think it is very desirable that the workman should be introduced to it, and that he should take some interest in the ups-and-downs of things. 10.596. I do not understand quite what you mean by " Nature " in that connection" The profits of the coal mines from year to year do not vary because of the difference in the harvest in agriculture, for instance, but the profits vary perhaps by some effect upon price, which in a sense is not natural ? — But, surely, it is the harvest and other things which affect the price and cause the profits from coal to vary. 10.597. May not the prices vary because, let us 28 COAL NATIONALISATION say, of the superior bargaining of one party as com- pared with another, or the exigencies of Italy and the neutral States at this moment ? — I do not think the powers of bargaining vary very much from year to year. 10.598. But the exigencies of other countries vary from year to year ?— That depends upon natural causes, when it does not depend upon something worse, Uke war. 10.599. That is to say, it depends upon natural causes. To come back to the profit-sharing, you do not see any disadvantage in the workman's hvehhood going up and down in the way that has been sug- gested ?■ — It would not depend entirely upon it, of course. 10.600. Then, I see, that you quite contemplate that mining will almost certainly eventuate into some sort of a monopoly in one way or another, but you con- template if it is in the hands of the workmen them- selves there would not be the same disadvantage as if it is in the hands of the Government. Is not that the meaning of your last paragraph ? — Yes. I think there is not so much danger in monopoly in the hands" of the people who provide the work as there is in a monopoly in other hands. 10.601. You think the consumer would be safer if all the coal were in the hands of the Miners' Federa- tion than in the hands of an elected Government ? — Yes, provided the Miners' Federation had an interest in the long-run yield of the whole business. 10.602. Is it not rather difficult to give any voting generation of men an interest in the long-run yield ? — What I thought about it was this — that the people employed have an interest in providing employment for themselves and possibly also for their children, and, consequently, they are not very Ukely to adopt a restrictive policy of trying to keep down the output, EVIDENCE 29 because keeping down the output by a restrictive policy means restriction of employment. I think that is universal experience. If you have an inde- pendent producer you do not often find him holding up his product and find him refusing to work a reasonable number of hours a day or only two hours a day so as to raise the price of his product. He hkes to give himself full emplojmient, and finds that pays best. 10.603. I have heard it suggested that such com- binations in the past have tended to restrict numbers with a view to securing that employment and, con- sequently, to reduce the quantity ? — ^My recollection of what is contained in " Industrial Democracy," or other works by the same authors, is that that was rather shown to be not a very considerable danger. 10.604. It was shown to be a tendency which was passing away, because it wels not, suggested that the miners or any one else should be put into possession of the mines, but supposing the miners were put into possession of the mines, is there any Treason to sup- pose they might find an interest in making coal dear ? — I do not think they would, as a matter of fact. I came to the conclusion, after considering this matter for some time — and I am inclined to stick to it — ^that it is not very hkely. My scheme, of course, is a gradual scheme, and, if you saw that danger approach- ing, some method might be taken to meet it. 10.605. You count on a gradual increase of econo- mic knowledge amongst the miners while it is going on ? — I think that is probable, and I think the fact of receiving income from the profits of the mines would be educative in itself. 10.606. Mr. R. H. Tawney : I have only a very few questions to ask you. I notice you say you think nationalisation would not benefit the consumers of coal. Have you considered the distributive side of 30 COAL NATIONALISATION the coal industry ? — Yes, I have considered the distributive side, and we all have lately. 10.607. You know the price of coal is fixed ? — I do not find my price of coal is fixed. 10.608. But you know it is fixed by a Public Authority ? — ^At present ? 10.609. Yes ? — Yes. I know it is fixed at present. 10.610. Are you aware that that price is sufficient to enable the co-operative societies to distribute to their members something between 2s. and 4s. per ton of coal (I mean societies engaged in coal distribution), whUe it is alleged only to leave merchants and factors a living profit ? — 1 really do not know about that. All I know is that I used to deal with the co-operative society and I gave it up because the private merchant served me so much better. 10.611. Assuming that is the case, and that we have had evidence to that effect, does not that suggest that a co-operative method of distribution is respon- sible for certain economic advantages, even although you may not like your particular society ?— I should doubt if it was the case. 10,612; You would doubt if what was the case ? — What you say has been shown in evidence. 10.613. Have you read the evidence ? — ^I have not had the opportunity. 10.614. You say you doubt if it is the case. Have you any reason for doubting it ? — ^Well, I do not accept everything that Commissioners suggest in leading questions. 10.615. I wiU not make the obvious retort.^ — Oh, please do. 10.616. You may take it from me it has been given in evidence, and I understand the evidence, such as it was, was hot disputed. I ask you only the hypothetical question : Supposing it to have been the case, do you not think it suggests certain financial EVIDENCE 31 « economies ? — It does not prove that the State will do it better; 10.617. No, it does not ? — Of course, you can say any system is wasteful. 10.618. It suggests one system is more wasteful and another is less wasteful ? — ^All it suggests is that the co-operative system is less wasteful. That system is open to every one, I submit, and they may well continue in it, unless they have the same experience as I have had. 10.619. Now may I take you to the end of your proof ? You make certain attractive suggestions, and I understand the first of them to be publicity. Could you develop that a little more ? Do you mean pubhcity with regard to profit ? — Yes, certainly, I meant pubhcity with regard to the whole of the accounts : that you shoidd publish the, accounts in a way that the accounts are quite open, just as those of many statutory companies a^e pubUc, and make them available to any one and give the miners the power of seeing that they are all right. 10.620. You think in fact it is of great importance that there should be complete pubhcity in industry ? — Yes. 10.621. Would you add to that pubhcity with regard to costs when that is possible ? — Certainly. 10.622. That is to say, there would be publicity with regard to costs and profits. Have you any suggestion to make as to how that may be brought about ? Would the publication of a balance sheet by a limited company quite realize the thing you have in view ? — No,' there would have to be, of course, auditors, as I suggest, appointed by the miners' representatives and, possibly, by some representative of the consumers or the Government. 10.623. That is to say, it really involves a pubhc audit, does it not ? — Yes. 32 COAL NATIONALISATION 10.624. And you think one of the first conditions of importance which you give is that there should be a public audit which would estabUsh complete publicity with regard to costs and profits. That is the case, is it not ? — Yes. I think, whatever you do, that is desirable. 10.625. I was very much interested in the last paragraph of your proof. Am I right in thinking that you are in favour of syndicalism ? — Do you mean as a general proposition ? 10.626. No, as a proposition relating to the coal industry in the connection in which you deal with it ? —I certainly should not be in favour of a sudden revolution introducing syndicalism the day after to- morrow, or even on June 20th, but I am not at all afraid of it as something which may be led 'up to by a gradual process. 10.627. You are in favour of a gradual introduction ? — Yes. People wUl make a great mess of things if they are put in charge of new systems all at once. If you' give them time and an educative process it can be done, and in a shorter time than some people imagine. 10.628. By " Syndicalism " I understand you mean the government of an industry by the workers in it ? — By every one engaged in it. 10.629. By workers, I mean that. In the last paragraph of your proof you say that a monopoly of that kind would not be open totertain criticisms which are sometimes brought against it. For example, I understand you think it would be less dangerous than a monopoly estabhshed by a combination of capitalists. Is that correct ? — Yes, I think there is a difference. Where the capitalist has some particular interest, either philanthropic or possibly in a long distance view of his own profit which causes him to desire to keep a large number of persons in constant employ- EVIDENCE 33 ment and not reduce his number, in that case you constantly^find that acts as a protection to the con- sumer and causes prices to be lower than otherwise they would be, because he wants to go on giving this amount of employment. If you put men in the posi- tion of emplo37ing themselves, they feel the same thing|only much more strongly. 10.630. If^you had to choose between a monopoly of the workmen engaged in the industry and a^monopoly of capitaUsts engaged in the industry, you would choose the former ? — If you had to make a sudden choice between the two it would be such a bad thing that it would be difficult to say which would be worse. 10.631. I do not say a sudden choice but the only choice, which is the suggestion I |put before you ? — The future is all with the workmen's side. 10.632. Sir L. Chiozza Money : I think in your precis (page II above) you rather express the opinion that nationalisation or pubUc ownership almost necessarily leads to subsidies to be paid by the public ? — Yes. 10.633. Is that opinion of yours based upon an examination of the facts ? — I think there are a great many facts to support it. 10.634. May I ask you, have you examined the facts relating to the Commonwealth of Australia, for example ? — ^There may be some profitable things in Australia. 10.635. I asked you if you based your "opinion on an examination of facts. Have you examined the facts with regard to Australia ? — No, I cannot say that I know much about AustraUa. I know more about this country. 10.636. You are not aware then that the railways in Australia are based on very low fares and very low freights for merchandise and yet make a profit ? — The only thing I remember about the State Railways 34 COAL NATIONALISATION of Australia was a very serious strike there, which the Government suppressed. _ 10.637. I asked you, with regard to the points you make in your paper, whether or not they need a sub- sidy, is it within your knowledge that the Australian State Railways need a subsidy ? — I do not know. 10.638. Then so far as Australia is concerned your opinion was not based on facts ? — ^There may be one or two instances. 10.639. Ms-y I ask you to pass from a very demo- cratic position of affairs to the — much as we deplore it — ^bureaucratic position of affairs in Germany. Is it within your knowledge whether subsidies were required in Germany ? — I mentioned something about Prussia. You will see there is a suggestion which covers the profits made by the Prussian Railways (page II above). 10.640. Are you aware that a very handsome profit was made by the Prussian State Railways ? — Yes, but I beheve now they are making a great loss. 10.641. I am speaking of peace conditions ? — I am aware that the Prussian Railways used to make a profit. 10.642. So that both under the democratic Condi- tions prevailing in Australia and the bureaucratic conditions of Prussia — which, as I say, we deplore — a profit was made and not a loss ? — ^Yes, I suggested that it was possible in Prussia. The Authority in AustraUa seemed to be strong — at any rate it was able to defeat a strike. 10.643. At any rate, Australia is a very democratic country ? — I believe so. 10.644. Now, to go to our own country, and taking the electric Ught and power undertakings of this country, do they require a subsidy ?■ — Some of them. 10.645. Do they as a whole ? Let us come nearer home and take the London Companies : do the electric EVIDENCE 35 municipal enterprises of London, for example, require a subsidy ? — I am not able to say about the London ones for the moment. 10.646. I am asking about the London ones. Can you give me an answer ? — I do not know. 10.647. I take it that your opinion expressed on page II was not expressed with a considerable know- ledge of the facts ? — ^Yes, I have considerable know- ledge about municipaUties altogether. 10.648. May I ask you, have you seen the return with regard to the municipal undertakings of this coimtry ? Does that allege that a subsidy is re- quired ? — It shows that subsidies are required in many cases. 10.649. Did you see the return which I made when I was a Member of ParUament ? — I have seen a return, but I do not know whether it was yours. 10.650. Are you aware that it showed that a sub- sidy was not required on account of public owner- ship ? However, I will not press that any further ? — I may say that you will observe that I do say " State or municipal enterprises." 10.651. At any rate, there are a number of cases which do not bear out the opinion you have expressed to me ? — ^There are cases on both sides. 10.652. Is it not the fact that the majority of cases do not bear out the opinion you have expressed ? — I doubt that. 10.653. Mr. Evan Williams : In youir projected scheme of evolution you advocate giving fuller know- ledge to the men of the facts of the industry ? — ^Yes. 10.654. Do you regard it as essential that those facts should be given by individual pits, or would the facts given by districts be sufficient in your view ? I think that is rather too technical a matter to ask me about. 10.655. I 3-1" asking you because you say that if the 36 COAL NATIONALISATION colliers at an individual pit were to benefit by the results of that pit it would not be quite the best thing ? — Yes. 10,656. Does it not follow from that that district returns and district information would be more use- ful and better for the industry than individual returns ? — I should have thought that district returns would have to be made up from the individual returns. It might be necessary to have a good deal of the individual returns public to make the district returns reUable. 107657. The district returns have, of course, to be ascertained by the investigation of individual figures ? — Yes. 10.658. If that is done by a reliable means, say affidavits on both sides, to ascertain the district returns, would that be the sort of thing you have in your mind ? — I would rather not express an opinion about that. I really do not know about the way in which pits are divided between companies, and so on, so as to be able to express a useful opl^jion. 10.659. ^^- Arthur Balfour : You say (pages 25 and 24 above) that one of the best public services performed by the trade unions is the insisting on equality of pay and other advantages for the same work ? — Yes. 10.660. Do you know whether the miners, the hewers, who employ boys underground, pay them on that basis ? — I have no technical knowledge of the industry at all. I was speaking of trade unions generally. 10.661. You do not know ? — ^No, Dr. Cannan then withdrew. P. S. King & Son, Ltd.. 2 and 4 Great Smith Street, Westminster 14