On the other hand, it is contended with some force by the Cave Committee that it is improper for appointed members to decide questions of relatively high wages for skilled men or for the law to enforce such wages by criminal proceedings, and the Committee accordingly propose to differentiate between higher and lower minima both as regards the method of determination and of enforcement. I have not time here to discuss the details of their proposal, but I wish to say a word on the retention—if in some altered shape—of the powers given by the Act of 1918. The Trade Board system has been remarkable for the development of understanding and co-operation between representatives of employers and workers. Particularly in the work of the administrative committees, matters of detail which might easily excite controversy and passion are habitually handled with coolness and good sense in the common interest of the trade. A number of the employers have not merely acquiesced in the system, but have become its convinced supporters, and this attitude would be more common if certain irritating causes of friction were removed. The employer who desires to treat his workers well and maintain good conditions is relieved from the competition of rivals who care little for these things, and what he is chiefly concerned about is simplicity of rules and rigid universality of enforcement. It is this section of employers who have prevented the crippling of the Boards in a time of general reaction. It is blindness to refuse to see in such co-operation a possible basis of industrial peace, and those were right who in 1918 saw in the mechanism of the Boards the possibility, not merely of preventing industrial oppression and securing a minimum living wage, but of advancing to a general regulation of industrial relations. At that time it was thought that the whole of industry might be divided between Trade Boards and Whitley Councils, the former for the less, the latter for the more organised trades. In the result the Whitley Councils have proved to be hampered if not paralysed by the lack of an independent element and of compulsory powers.

TRADE BOARDS HOLDING THE FIELD

The Trade Board holds the field as the best machinery for the determination of industrial conditions. It is better than unfettered competition, which leaves the weak at the mercy of the strong. It is better than the contest of armed forces, in which the battle is decided with no reference to equity, to permanent economic conditions, or to the general good, by the main strength of one combination or the other in the circumstances of the moment. It is better than a universal State-determined wages-law which would take no account of fluctuating industrial conditions, and better than official determinations which are exposed to political influences and are apt to ignore the technicalities which only the practical worker or employer understands. It is better than arbitration, which acts intermittently and incalculably from outside, and makes no call on the continuous co-operation of the trade itself.

My hope is that as the true value of the Trade Board comes to be better understood, its powers, far from being jealously curtailed, or confined to the suppression of the worst form of underpayment, will be extended to skilled employments, and organised industries, and be used not merely to fulfil the duty of the community to its humblest members, but to serve its still wider interest in the development of peaceful industrial co-operation.



UNEMPLOYMENT

BY H.D. HENDERSON

M.A.; Fellow of Clare College, Cambridge; Lecturer in Economics; Secretary to the Cotton Control Board from 1917-1919.

Mr. Henderson said:—From one point of view the existence of an unemployment problem is an enigma and a paradox. In a world, where even before the war the standard of living that prevailed among the mass of the people was only what it was, even in those countries which we termed wealthy, it seems at first sight an utterly astonishing anomaly that at frequent intervals large numbers of competent and industrious work-people should find no work to do. The irony of the situation cannot be more tersely expressed than in the words, which a man is supposed to have uttered as he watched a procession of unemployed men: "No work to do. Set them to rebuild their own houses."

But, if we reflect just a shade more deeply, nothing should surprise us less than unemployment. We have more reason for surprise that it is usually upon so small a scale. The economic system under which we live in the modern world is very peculiar and only our familiarity with it keeps us from perceiving how peculiar it is. In one sense it is highly organised; in another sense it is not organised at all. There is an elaborate differentiation of functions—the "division of labour," to give it its time-honoured name, under which innumerable men and women perform each small specialised tasks, which fit into one another with the complexity of a jig-saw puzzle, to form an integral whole. Some men dig coal from the depths of the earth, others move that coal over land by rail and over the seas in ships, others are working in factories, at home and abroad, which consume that coal, or in shipyards which build the ships; and it is obvious, not to multiply examples further, that the numbers of men engaged on those various tasks must somehow be adjusted, in due proportions to one another. It is no use, for instance, building more ships than are required to carry the stuff there is to carry.

Adjustment, co-ordination, must somehow be secured. Well, how is it secured? Who is it that ordains that, say, a million men shall work in the coal-mines, and 600,000 on the railways, and 200,000 in the shipyards, and so on? Who apportions the nation's labour power between the innumerable different occupations, so as to secure that there are not too many and not too few engaged in any one of them relatively to the others? Is it the Prime Minister, or the Cabinet, or Parliament, or the Civil Service? Is it the Trade Union Congress, or the Federation of British Industries, or does any one suppose that it is some hidden cabal of big business interests? No, there is no co-ordinator. There is no human brain or organisation responsible for fitting together this vast jig-saw puzzle; and, that being so, I say that what should really excite our wonder is the fact that that puzzle should somehow get fitted together, usually with so few gaps left unfilled and with so few pieces left unplaced.

It would, indeed, be a miracle, if it were not for the fact that those old economic laws, whose impersonal forces of supply and demand, whose existence some people nowadays are inclined to dispute, or to regard as being in extremely bad taste, really do work in a manner after all. They are our co-ordinators, the only ones we have; and they do their work with much friction and waste, only by correcting a maladjustment after it has taken place, by slow and often cruel devices, of which one of the most cruel is, precisely, unemployment and all the misery it entails.

THE CAUSES OF TRADE DEPRESSIONS

I do not propose to deal with such branches of the problem of unemployment as casual labour or seasonal fluctuations. I confine myself to what we all, I suppose, feel to be the really big problem, to unemployment which is not special to particular industries or districts, but which is common to them all, to a general depression of almost every form of business and industrial activity. General trade depressions are no new phenomenon, though the present depression is, of course, far worse than any we have experienced in modern times. They used to occur so regularly that long before the war people had come to speak of cyclical fluctuations, or to use a phrase which is now common, the trade cycle. That is a useful phrase, and a useful conception. It is well that we should realise, when we speak of those normal pre-war conditions, to which we hope some day to revert, that in a sense trade conditions never were normal; that, at any particular moment you care to take, we were either in full tide of a trade boom, with employment active and prices rising, and order books congested; or else right on the crest of the boom, when prices were no longer rising generally, though they had not yet commenced to fall, when employment was still good, but when new orders were no longer coming in; or else in the early stages of a depression, with prices falling, and every one trying to unload stocks and failing to do so, and works beginning to close down; or else right in the trough of the depression where we are to-day; that we were at one or other of the innumerable stages of the trade cycle, without any prospect of remaining there for very long, but always, as it were, in motion, going round and round and round.

What are the root causes which bring every period of active trade to an inevitable end? There are two which are almost invariably present towards the end of every boom. First, the general level of prices and wages has usually become too high; it is straining against the limits of the available supplies of currency and credit, and, unless inflation is to be permitted, a restriction of credit is inevitable which will bring on a trade depression. In those circumstances, a reduction of the general level of prices and wages is an essential condition of a trade revival. A reduction of prices and wages. That point has a significance to which I will return.

The second cause is the distorted balance which grows up in every boom between different branches of industrial activity. When trade is good, we invariably build ships, produce machinery, erect factories, make every variety of what are termed "constructional goods" upon a scale which is altogether disproportionate to the scale upon which we are making "consumable goods" like food and clothes. And that condition of things could not possibly endure for very long. If it were to continue indefinitely, it would lead in the end to our having, say, half a dozen ships for every ton of wheat or cotton which there was to carry. You have there a maladjustment, which must be corrected somehow; and the longer the readjustment is postponed, the bigger the readjustment that will ultimately be inevitable. Now that means, first on the negative side, that, when you are confronted with a trade depression, it is hopeless to try to cure it by looking for some device by which you can give a general stimulus to all forms of industry. Devices of that nature may be very useful in the later stages of a trade depression, when the necessary readjustments both of the price-level and of the relative outputs of different classes of commodities have already been effected, and when trade remains depressed only because people have not yet plucked up the necessary confidence to start things going again. But in the early stages of a depression, an indiscriminating stimulus to industry in general will serve only to perpetuate the maladjustments which are the root of the trouble. It will only put off the evil day, and make it worse when it comes. The problem is not one of getting everybody back to work on their former jobs. It is one of getting them set to work on the right jobs; and that is a far more difficult matter.

On the positive side, what this really comes to is, that if you wish to prevent depressions occurring you must prevent booms taking the form they do. You must prevent prices rising so much, and so many constructional goods being made during the period of active trade; and I am not going to pretend that that is an easy thing to do. It's all very well to say that the bankers, through their control of the credit system, might endeavour to guide industry and keep it from straying out of the proper channels. But the bankers would have to know much more than they do about these matters, and, furthermore, the problem is not merely a national one—it is a world-wide problem. It would be of little use to prevent an excess of ships being built here, if that only meant that still more ships were built, say, in the United States.

I do not say that even now the banks might not do something which would help; still less do I wish to convey the impression that mankind must always remain passive and submissive, impotent to control these forces which so vitally affect his welfare. But I say that for any serious attempt to master this problem, the necessary detailed knowledge has still to be acquired, and the rudiments of organisation have still to be built up; and the problem is not one at this stage for policies and programmes. What you can do by means of policies and programmes lies, at present, in the sphere of international politics. In that sphere, though you cannot achieve all, you might achieve much. To reduce the problem to its pre-war dimensions would be no small result; and that represents a big enough objective, for the time being, for the concentration of our hardest thinking and united efforts. But into that sphere I am not going to enter. I pass to the problem of unemployment relief.

THE SCALE OF RELIEF

The fundamental difficulty of the problem of relieving unemployment is a very old one. It turns upon what used to be called, ninety years ago, "the principle of less eligibility," the principle that the position of the man who is unemployed and receiving support from the community should be made upon the whole less eligible, less attractive than that of the man who is working and living upon the wages that he earns. That is a principle which has been exposed to much criticism and denunciation in these modern days. We are told that it is the false and antiquated doctrine of a hard-hearted and coarse-minded age, which thought that unemployment was usually a man's own fault, which saw a malingerer in every recipient of relief, which was obsessed by the bad psychology of pains and penalties and looked instinctively for a deterrent as the cure for every complex evil.

But, however that may be, this principle of less eligibility is one which you cannot ignore. It is not merely or mainly a matter of the effect on the character of the workmen who receive relief. The danger that adequate relief will demoralise the recipient has, I agree, been grossly exaggerated in the past. Prolonged unemployment is always in itself demoralising. But, given that a man is unemployed, it will not demoralise him more that he should receive adequate relief rather than inadequate relief or no relief at all. On the contrary, on balance, it will, I believe, demoralise him less. For nothing so unfits a man for work as that he should go half-starved, or lack the means to maintain the elementary decencies of life.

But there are other considerations which you have to take into account. If you get a situation such that the man who loses his job becomes thereby much better-off than the man who remains at work, I do not say that the former man will necessarily be demoralised, but I do say that the latter man will become disgruntled. I do not want to put that consideration too high. At the present time there are many such anomalies; in a great many occupations, the wages that the men at work are receiving amount to much less than the money they would obtain if they lost their jobs and were labelled unemployed. But they have stuck to their jobs, they are carrying on, with a patience and good humour that are beyond all praise. Yes, but that state of affairs is so anomalous, so contrary to our elementary sense of fairness that, as a permanent proposition it would prove intolerable. We cannot go on for ever with a system under which in many trades men receive much more when they are unemployed than when they are at work. On the other hand, the attempt to avoid such anomalies leads us, so long as we have a uniform scale of relief, against an alternative which is equally intolerable. Wages vary greatly from trade to trade; and, if the scale of relief is not to exceed the wages paid in any occupation it must be very low indeed. That is the root dilemma of the problem of unemployment relief—how if your scale of relief is not to be too high for equity and prudence it is not to be too low for humanity and decency. We have not, as some people imagine, done anything in recent years to escape from it, we have merely exchanged one horn of the dilemma for the other.

In any satisfactory system the scale of relief must vary from occupation to occupation, in accordance with the normal standard of wages ruling in each case. But it is very difficult, in fact I think it would always be impracticable to do that under any system of relief, administered by the State, either the Central Government or the local authorities. It must be done on an industrial basis; each industry settling its own scale, finding its own money, and managing its own scheme. That is an idea which has received much ventilation in the last few years. But the really telling arguments in favour of it do not seem to me to have received sufficient stress.

Foremost among them I place the consideration I have just indicated: that in this way, and in this way alone, it becomes possible for work-people who receive high wages when they are at work, and where habits of expenditure and standards of family living are built up on that basis, to receive when unemployed, adequate relief without that leading to anomalies which in the long run would prove intolerable. But there are many other arguments.

A MODEL SCHEME FROM LANCASHIRE

About five years ago I had the opportunity of witnessing at very close quarters the working of an unemployment scheme on an industrial basis. The great Lancashire cotton industry was faced during the war with a very serious unemployment problem, owing to the difficulty of transporting sufficient cotton from America. It met that situation with a scheme of unemployment relief, devised and administered by one of those war Control Boards, which in this case was essentially a representative joint committee of employers and employed. The money was raised, every penny of it, from the employers in the industry itself; the Cotton Control Board laid down certain rules and regulations as to the scale of benefits, and the conditions entitling a worker to receive it; and the task of applying those rules and paying the money out was entrusted to the trade unions.

Well, I was in a good position to watch that experiment. I do not think I am a particularly credulous person, or one prone to indulge in easy enthusiasms, and I certainly don't believe in painting a fairy picture in glowing colours by way of being encouraging. But I say deliberately that there has never been an unemployment scheme in this country or in any other country which has worked with so little abuse, with so few anomalies, with so little demoralisation to any one, and at the same time which has met so adequately the needs of a formidable situation, or given such general satisfaction all round as that Cotton Control Board scheme.

I cannot describe as fully as I should like to do the various features which made that scheme attractive, and made it a success. I will take just one by way of illustration. It is technically possible in the cotton trade to work the mills with relays of workers, so that if a mill has 100 work-people, and can only employ 80 work-people each week, the whole 100 can work each for four weeks out of the five, and "play off," as it is called, in regular sequence for the fifth week. And that was what was done for a long time. It was called the "rota" system; and the "rota" week of "playing off" became a very popular institution. Under that system, benefits which would have been far from princely as the sole source of income week after week—they never amounted to more than 30/- for a man and 18/- for a woman—assumed a much more liberal aspect. For they came only as the occasional variants of full wages; and they were accompanied not by the depressing circumstances of long-continued unemployment, but by what is psychologically an entirely different and positively exhilarating thing, a full week's holiday. That meant that the available resources—and one of the difficulties of any scheme of unemployment relief is that the resources available are always limited—did much more to prevent misery and distress, and went much further towards fulfilling all the objects of an unemployment scheme than would have been possible otherwise.

That system was possible in the cotton trade; in other trades it might be impossible for technical reasons, or, where possible, it might in certain circumstances be highly undesirable. The point I wish to stress is that under an industrial scheme you have an immense flexibility, you can adapt all the details to the special conditions of the particular industry, and by that means you can secure results immeasurably superior to anything that is possible under a universal State system. Moreover, if certain features of the scheme should prove in practice unsatisfactory, they can be altered with comparatively little difficulty. You don't need to be so desperately afraid of the possibility of making a mistake as you must when it is a case of a great national scheme, which can only be altered by Act of Parliament.

THE MORAL OBLIGATION OF INDUSTRIES

I do not underrate the difficulty of applying this principle of industrial relief over the whole field of industry. There is the great difficulty of defining an industry, or drawing the lines of demarcation between one trade and another. I have not time to elaborate those difficulties, but I consider that they constitute an insuperable obstacle to anything in the nature of an Act of Parliament, which would impose forcibly upon each industry the obligation to work out an unemployment scheme. The initiative must come from within the industry; the organisations of employers and employed must get together and work out their own scheme, on their own responsibility and with a free hand. And, if it happens in this way—one industry taking the lead and others following—these difficulties of demarcation become comparatively unimportant. You can let an industry define itself more or less as it likes, and it does not matter much if its distinctions are somewhat arbitrary. It is not a fatal drawback if some firms and work-people are left outside who would like to be brought in. And if there are two industries which overlap one another, each of which is contemplating a scheme of the kind, it is a comparatively simple matter for the responsible bodies in the two industries to agree with one another as to the lines of demarcation between them, as was actually done during the war by the Cotton Control Board and the Wool Control Board, with practically no difficulty whatever. But for such agreements to work smoothly it is essential that the industries concerned should be anxious to make their schemes a success; and that is another reason why you cannot impose this policy by force majeure upon a reluctant trade. It is in the field of industry that the real move must be made.

But I think that Parliament and the Government might come in to the picture. In the first place, the ordinary national system of unemployment relief, which must in any case continue, might be so framed as to encourage rather than to discourage the institution of industrial schemes. Under the Insurance Act of 1920 "contracting out" was provided for, but it was penalised, while at the present moment it is prohibited altogether. I say that it should rather be encouraged, that everything should be done, in fact, to suggest that not a legal but a moral obligation lies upon each industry to do its best to work out a satisfactory unemployment scheme. And, when an industry has done that, I think the State should come in again. I think that the representative joint committee, formed to administer such a scheme, might well be endowed by statute with a formal status, and certain clearly-defined powers—such as the Cotton Control Board possessed during the war—of enforcing its decisions.

But—and, of course, there is a "but"—we cannot expect very much from this in the near future. We must wait for better trade conditions before we begin; and, as I have already indicated, the prospects of really good trade in the next few years are none too well assured. For a long time to come, it is clear, we must rely upon the ordinary State machinery for the provision of unemployment relief; and, of course, the machinery of the State will always be required to cover a large part of the ground. The liability which an industry assumes must necessarily be strictly limited in point of time; and there are many occupations in which it will probably always prove impracticable for the occupation to assume even a temporary liability. For the meantime, at any rate, we must rely mainly upon the State machinery. Is it possible to improve upon the present working of this machinery? I think it is. By the State machinery I mean not merely the Central Government, but the local authorities and the local Boards of Guardians.

THE PRESENT MACHINERY OF RELIEF

At present what is the situation? Most unemployed work-people are entitled to receive certain payments from the Employment Exchanges under a so-called Insurance scheme, which is administered on a national basis; some weeks they are entitled to receive those payments, other weeks they are not; but in any case those payments afford relief which is admittedly inadequate, and they are supplemented—and very materially supplemented—by sums varying from one locality to another, but within each locality on a uniform scale, which are paid by the Boards of Guardians in the form of outdoor relief. Now that situation is highly unsatisfactory. The system of outdoor relief and the machinery of the Guardians are not adapted for work of this kind. They are designed to meet the problem of individual cases of distress, not necessarily arising from unemployment, but in any event individual cases to be dealt with, each on its own merits, after detailed inquiry into the special circumstances of the case. That is the function which the Guardians are fitted to perform, and it is a most important function, which will still have to be discharged by the Guardians, or by similar local bodies, whatever the national system of unemployment relief may be. But for dealing with unemployment wholesale, for paying relief in accordance with a fixed scale and without regard to individual circumstances—for that work the Guardians are a most inappropriate body. They possess no qualification for it which the Central Government does not possess, while they have some special and serious disqualifications.

In any case, it is preposterous that you should have two agencies, each relieving the same people in the same wholesale way, the Employment Exchanges with their scale, asking whether a man is unemployed, and how many children he has to support, and paying him so much, and the Guardians with their scale, asking only the same questions and paying him so much more. It would obviously be simpler, more economical, and more satisfactory in every way, if one or other of those agencies paid the man the whole sum. And I have no hesitation in saying that that agency should be the Central Government. Perhaps the strongest argument in favour of that course is that, when relief is given locally, the money must be raised by one of the worst taxes in the whole of our fiscal system, local rates, which are tantamount to a tax, in many districts exceeding 100 per cent., upon erection of houses and buildings generally. It is foolish to imagine that any useful end is served by keeping down taxes at the expense of rates.

Serious as is the problem of national finance, the fiscal resources of the Central Government are still far more elastic and less objectionable than those which the local authorities possess. I suggest, accordingly, as a policy for the immediate future, the raising of the scale of national relief to a more adequate level, coupled with the abolition of what I have termed wholesale outdoor relief in the localities. What it is right to pay on a uniform scale should be paid entirely by the Central Government, and local outdoor relief should be restricted to its proper function of the alleviation of cases of exceptional distress after special inquiries into the individual circumstances of each case.

One final word to prevent misconception. I have said that our present system of relief is unsatisfactory, and I have indicated certain respects in which I think it could be improved. But I am far from complaining that relief is being granted throughout the country as a whole upon too generous a scale. Anomalies there are which, if they continued indefinitely, would prove intolerable. But we have been passing through an unparalleled emergency. Unemployment in the last two years has been far more widespread and intense than it has ever been before in modern times, and never was it less true that the men out of work have mainly themselves to blame. But it has meant far less distress, far less destruction of human vitality, and I will add far less demoralisation of human character than many of the bad years we had before the war. That is due to the system of doles, the national and local doles; and in the circumstances I prefer that system with all its anomalies to the alternative of a substantially lower scale of relief. We are still in the midst of that emergency; and if we are faced, as I think for this decade we must expect to be faced, with that dilemma which I indicated earlier, I should prefer, and I hope that every Liberal will prefer, to err by putting the scale of relief somewhat too high for prudence and equity rather than obviously too low for humanity and decency.



THE PROBLEM OF THE MINES

BY ARNOLD D. MCNAIR

M.A., LL.M., C.B.E.; Fellow of Gonville and Caius College, Cambridge; Secretary of Coal Conservation Committee, 1916-1918; Secretary of Advisory Board of Coal Controller, 1917-1919; Secretary of Coal Industry Commission, 1919 (Sankey Commission).

Mr. McNair said:—Need I labour the point that there is a problem of the Mines? Can any one, looking back on the last ten years, when time after time a crisis in the mining industry has threatened the internal peace and equilibrium of the State, deny that there is something seriously wrong with the present constitution of what our chairman has described as this great pivotal industry? What is it that is wrong? If I may take a historical parallel, will you please contrast the political situation and aspirations of the working-class population at the close of the Napoleonic wars with their industrial situation and aspirations now. Politically they were a hundred years ago unenfranchised; more or less constant political ferment prevailed until the Reform Bill, and later, extensions of the franchise applied the Liberal solution of putting it within the power of the people, if they wished it, to take an effective share in the control of political affairs.

Industrially, their situation to-day is not unlike their political situation a hundred years ago. Such influence as they have got is exerted almost entirely outside the constitution of industry, and very often in opposition to it. Their trade unions, workers' committees, councils of action, triple alliances, and so forth, are not part of the regular industrial machine, and too often are found athwart its path. They are members of an industry with substantially no constitutional control over it, just as a hundred years ago they were members of a State whose destinies they had no constitutional power to direct.

This does not mean that a hundred years ago every working man wanted the political vote, nor that now he wants to sit on a committee and control his industry. It meant that a substantial number of the more enlightened and ambitious did—a large enough number to be a source of permanent discontent until they got it. The same is true to-day in the case of many industries. Many men in all classes of society are content to do their job, take their money, go home and work in their gardens, or course dogs or fly pigeons. They are very good citizens. Many others, equally good citizens, take a more mental and active interest in their job, and want to have some share in the direction of it. This class is increasing and should not be discouraged. They constitute our problem. The Liberal solution of a gradually extended franchise has cured the political ferment. Political controversy is still acute, and long may it remain so, as it is the sign of a healthy political society. But the ugly, ominous, revolutionary features of a hundred years ago in the sphere of politics have substantially gone or been transferred to the industrial sphere.

THE LIBERALISATION OF INDUSTRY

The same solution must be applied to that sphere. This does not mean transferring the machinery of votes and elections to industry. It means finding channels in industry whereby every person may exercise his legitimate aspiration, if he should feel one, of being more than a mere routine worker while still perhaps doing routine work, and of contributing in an effective manner his ideas, thoughts, suggestions, experience, to the direction and improvement of the industry. We have satisfied the desire for self-expression as citizens, and we have now to find some means of satisfying a similar desire for self-expression as workers in industry. That is all very vague. Does it mean co-partnership, profit-sharing, co-operative societies, joint committees, national wages boards, guild socialism, nationalisation? It may mean any or all of these things—one in one industry, one in another, or several different forms in the same industry—whatever experiment may prove to be best suited to each industry. But it must mean opportunity of experiment, and experiment by all concerned. It must mean greater recognition by employers of their trusteeship on behalf of their work-people as well as their shareholders; greater recognition of the public as opposed to the purely proprietary view of industry; and recognition that the man who contributes his manual skill and labour and risks his life and limb is as much a part of the industry as a man who contributes skill in finance, management, or salesmanship, or the man who risks his capital.

Coming to the mines, that is, the coal mining industry (with a few incidental mines such as stratified ironstone, fireclay, etc., which need not complicate our argument), the first step to the solution of the problem of the mines, i.e. the collieries, the mining industry, is the solution of the problem of the minerals. This distinction is not at first sight obvious to all, but it is fundamental. The ownership and leasing of the coal is one thing, the business or industry of mining it is quite another. State ownership of the former does not involve State ownership of the latter. That is elementary and fundamental. It lies at the root of what is to follow.

Will you picture to yourself a section of the coal-mining industry in the common form of the pictures one sees of an Atlantic liner cut neatly in two so as to expose to view what is taking place on each deck. On top you have the landowner, under the surface of whose land coal, whether suspected or not, has been discovered. He may decide to mine the coal himself, but more frequently—indeed, usually—he grants to some persons or company a lease to mine that coal on payment of what is called a royalty of so much for every ton extracted. Thereupon he is called the mineral-owner or royalty-owner, and the persons or company who actually engage in the business or industry of coal mining and pay him the royalties we shall call the colliery-owners. Do not be misled by the confusing term "coal-owners." Very frequently the colliery-owners are called the "coal-owners," and their associations "coal-owners' associations." That is quite a misnomer. The real coal-owner is the landowner, the royalty-owner, though it may well happen that the two functions of owning the minerals and mining them may be combined in the same person. Below the colliery-owners we find the managerial staff; below them what may be called the non-commissioned officers of the mine, such as firemen or deputies, who have most important duties as to safety, and below them the miners as a whole, that is, both the actual coal-getters or hewers or colliers and all the other grades of labour who are essential to this the primary operation.

THE QUESTION OF ROYALTIES

Coming back to the royalty-owner, you will see his functions are not very onerous. He signs receipts for his royalties and occasionally negotiates the terms of a lease. But as regards the coal-mining industry, he "toils not, neither does he spin." I do not say that reproachfully, for he (and his number has been estimated at 4000) is doubtless a good husband, a kind father, a busy man, and a good citizen. But as regards this industry he performs no essential function beyond allowing the colliery-owners to mine his coal.

What is the total amount annually paid in coal royalties? We can arrive at an approximate estimate in this way: Average output of coal for five years before the war, roughly, 270,000,000 tons; average royalty, 51/2d. per ton, which means, after deducting coal for colliery consumption and the mineral rights duty paid to the State by the royalty-owner, roughly L5,500,000 per annum paid in coal royalties. Regarding this as an annuity, the capital value is 70 millions sterling if we allow a purchaser 8 per cent. on his money (12.5 years' purchase), or 551/2 millions sterling if we allow him 10 per cent. (10 years' purchase). For all practical purposes the annuity may be regarded as perpetual.

Now the State must acquire these royalties. That is the only practicable solution, and a condition precedent to any modification in the structure of the coal-mining industry so long as the participants in that industry continue unwilling or unable to agree upon those modifications themselves. Why and how? (1) First and foremost because until then the State is not master in its own house, and cannot make those experiments in modifying conditions in the industry which I believe to be essential to bring it into a healthy condition instead of being a standing menace to the equilibrium of the State—as it was before the war, and during the war, and has been since the war; (2) the technical difficulties and obstacles resulting from the ownership of the minerals being in the hands of several thousand private landowners and preventing the economic working of coal are enormous. You will find abundant evidence of this second statement in the testimony given by Sir Richard Redmayne and the late Mr. James Gemmell and others before the Sankey Commission in 1919.

How is the State to acquire them? Not piece-meal, but once and for all in one final settlement, by an Act of Parliament providing adequate compensation in the form of State securities. The assessment of the compensation is largely a technical problem, and there is nothing insuperable about it. It is being done every day for the purpose of death duties, transfer on sale, etc. Supposing, for the sake of argument, 551/2 millions sterling is the total capital value of the royalties, an ingenious method which has been recommended is to set aside that sum not in cash but in bonds and appoint a tribunal to divide it equitably amongst all the mineral-owners. That is called "throwing the bun to the bears." The State then knows its total commitments, is not involved in interminable arbitrations, and can get on with what lies ahead at once, leaving the claimants to fight out the compensation amongst themselves. This does not mean that the State will have to find 551/2 millions sterling in cash. It means this, in the words of Sir Richard Redmayne: "The State would in effect say to each owner of a mineral tract: The value of your property to a purchaser is in present money Lx, and you are required to lend to the State the amount of this purchase price at, say, 5 per cent. per annum, in exchange for which you will receive bonds bearing interest at that rate in perpetuity, which bonds you can sell whenever you like."

The minerals or royalties being acquired by the State, what then? For the first time the State would be placed in a strategic position for the control and development of this great national asset. Having acquired the minerals and issued bonds to compensate the former owners, the State enters into the receipt of the royalty payments, and these payments will be kept alive. We must now decide between at least two courses: (a) Is the State to do nothing more and merely wait for existing leases to expire and fall in, and then attach any new conditions it may consider necessary upon receiving applications for renewals? Or (b) is the State to be empowered by Parliament to determine the existing leases at any time and so accelerate the time when it can attach new conditions, make certain re-grouping of mines, etc.? My answer is that the latter course (b) must be adopted. The same Act of Parliament which vests the coal and the royalties in the State, or another Act passed at the same time, should give the State power to determine the then existing leases if and when it chooses, subject to just compensation for disturbance in the event of the existing lessees refusing to take a fresh lease.

Why is course (b) recommended? (i) Most leases are granted for terms varying from thirty to sixty years. They are falling in year by year, but we cannot afford to wait until they have all fallen in if we are effectively to deal with a pressing problem. (ii) The second objection to merely waiting is that some colliery-owners (not many) might make up their minds not to apply for a renewal of their leases, and might consequently be tempted to neglect the necessary development and maintenance work, over-concentrating on output, and thus allowing the colliery to get into a backward state from which it would cost much time and money to recover it—a state of affairs which could and would be provided against in future leases, but which the framers of existing leases may not have visualised. I do not suggest that upon the acquisition by the State of the minerals all the existing leases should automatically determine. But the State should have power to determine them on payment of compensation for disturbance.

A NATIONAL MINING BOARD

At the same time a National Mining Board consisting of representatives of all the interested elements, colliery-owners, managerial and technical staffs, miners, and other grades of workers, and coal consumers would be formed (the Mines Department already has a National Advisory Committee); the mining engineering element must be strongly represented, and provision must be made for first-class technical advice being always available. It would then be the business of the National Mining Board to work out its policy and decide upon the broad principles which it wishes to weave into the existing structure of the coal-mining industry by means of its power of granting leases. The following principles will readily occur to most people, and are supported by evidence which is, in my humble judgment, convincing, given before the various commissions and committees which have inquired into this industry during recent years.

Firstly, More Amalgamation or Unification of Collieries. At present there are about 3000 pits owned by about 1500 companies or individuals, and producing an aggregate output of about 250 million tons per annum. Already there have been many large amalgamations. (i) Many fortunately situated small pits making a good profit will be found, but on the whole small collieries are economically unsound. In many cases at present the units are too small, having regard to the class of work being done, to the cost of up-to-date machinery and upkeep and to the variableness of the trade. Broadly I believe it to be true that the larger collieries are as a general rule more efficient than the smaller ones. (ii) In respect of co-operation in pumping, larger units would frequently make for efficiency and reduced cost; Sir Richard Redmayne, speaking of South Staffordshire before the Sankey Commission, said that we had already lost a large part of that coalfield through disagreement between neighbouring owners as to pumping. (iii) The advantages of larger units in facilitating the advantageous buying of timber, ponies, rails, machinery and the vast amount of other materials required in a colliery will be obvious to most business men.

I do not propose to chop up the coalfields into mathematical sections and compulsorily unify the collieries in those sections. I am merely laying down the broad principle that to get the best out of our national asset the National Mining Board must bring about through its power of granting leases the formation of larger working units than at present usually exist. The geological and other conditions in the different coalfields vary enormously, and these form a very relevant factor in deciding upon the ideal unit of size. It is conceivable that in certain districts all the colliery-owners in the district, with the aid of the National Mining Board, would form a statutory company on the lines of the District Coal Board, described in the Report made by Sir Arthur Duckham as a member of the Sankey Commission. One advantage accruing from unification (to which recent events have given more prominence) is that it mitigates the tendency for the wages of the district to be just those which the worst situated and the worst managed colliery can pay and yet keep going, and no more. This tendency seems to be recognised and mitigated in the Agreement of June, 1921, on which the mines are now being worked. Secondly, Provision for Progressive Joint Control, that is, for enabling all the persons engaged in the mining industry either in money, in brains, or in manual labour, or a combination of those interests, gradually to exercise an effective voice in the direction of their industry.

Some of the arguments for this principle appear to me to be (i) that, as indicated in my opening remarks, a sufficiently large number of the manual or mainly manual workers in the industry ardently desire a progressively effective share in the control of the industry; (ii) that this desire is natural and legitimate, having regard to the great increase in the education of the workers and the improvement in their status as citizens, and that so far from being repressed it should be encouraged; (iii) that it is the natural development of the system of Conciliation Boards and (occasionally) Pit Committees which has prevailed in the industry for many years, though more highly developed in some parts of the country than others. So far, these organs have been mainly used for purposes of consultation and negotiation; the time has come when with a more representative personnel, while not usurping the functions of a mine manager or, on a larger scale, the managing director, they must be developed so as to exercise some effective share in controlling the industry. (iv) While working conditions are not so dangerous and unpleasant as the public are sometimes asked to believe, the workers in this industry are exposed to an unusually high risk of injury and loss of life, and thus have a very direct interest in devising and adopting measures for increased safety. These measures nearly always mean expenditure, and thus an increased cost of working, and so long as their adoption (except in so far as made compulsory by the Mines Department) rests solely with bodies on which capital alone is represented and labour not at all, there will be fruitful cause for suspicion and discontent. The miners are apt to argue that dividends and safety precautions are mutually antipathetic, and will continue to do so as long as they have no part or lot in the reconciliation of these competing obligations. The question is not whether this argument of the miners is well-founded or not: the point is that their suspicion is natural, and any excuse for it should be removed. (v) The exceptionally large items which wages form in the total cost of coal production indicates the important contribution made by the miners to the welfare of the industry and justifies some share in the direction of that industry.

Upon the basis of typical pre-war years, the value of the labour put into the coal mining industry is 70 per cent. of the capital employed, and 70 per cent. of the annual saleable value of the coal, and yet this large labour interest has no share in the management of the industry.

THE MYSTERY AS TO PROFITS

Thirdly, More Financial Publicity. Secrecy as to profits, which always suggests that they are as large as to make one ashamed of them, has been the bane of the coal-mining industry. For nearly half a century wages have borne some relation to selling prices, and there have been quarterly audits of typical selected mines in each district by joint auditors appointed by the owners and the miners. But over profits a curtain was drawn, except in so far as the compulsory filing at Somerset House by public companies of a document called a Statement in the form of a balance sheet, enabled the curious to draw not very accurate conclusions. It is not easy for the plain man to read a balance sheet or estimate profits, especially when shares are being subdivided, or when bonus shares are being issued, or large sums carried to reserve. The result has been continual and natural suspicion on the part of the miners, who doubtless imagined the colliery-owners' profits to be much larger than they were. The miners knew that whenever they asked for an increase in their wages they were liable to be told that such an increase would turn a moderate profit into a substantial loss, but the amount of the profit they had to take on trust. Selling prices, yes, but profits, no.

The war and coal control partly killed that, and it must not return. By the settlement of June, 1921, for the first time the miners have established the principle of the adjustment of their wages in accordance with the proceeds of the industry "as ascertained by returns to be made by the owners, checked by a joint test audit of the owners' books carried out by independent accountants appointed by each side." That is an important step, but does not go anything like far enough.

At least two good results would accrue if colliery-owners conducted their business more in public: (i) a great deal of the suspicion and mistrust of the miners would be removed, and they would realise why and when their wages must undergo fluctuations, and the value of the many other factors besides wages which went to make up the pit-head cost of coal; (ii) publicity coupled with costing returns would make it possible to draw comparative conclusions as to the cost of production in different mines and districts, which would be a fruitful source of experiment and improvement. Publicity does not involve publication of lists of customers, British or foreign.

THE LESSEES OF THE FUTURE

How far will the lessees to whom the National Mining Board will grant leases to work the coal be the same persons and companies as the present lessees? In this matter it is desirable to maintain the maximum amount of flexibility and variety. I do not think we have yet discovered the ideal unit, the ideal organisation for the development of our principal national asset. So much do our coalfields differ in geological formation, in tradition, in the subdivision and classification of labour, in outlet for trade, that it is unlikely that any single unit or organisation will be the ideal one for every coalfield. So we must resist any attempt, especially an early attempt, at stereotyping or standardising the type of lessee. By trial and error we shall learn much.

All the following types of lessee seem likely, sooner or later, to demand the attention of the National Mining Board. (I shall not touch on the question of distribution, inland and export. That is another and quite separate question):—

(i) The Present Lessees.—I see no reason to doubt that in the vast majority of cases the present lessees would be prepared to continue to operate their mines, paying royalties to the State instead of to the present royalty-owner. Where the unit is sufficiently large and the management efficient, the National Mining Board would probably grant a fresh lease, incorporating such conditions as to unification, joint control, and publicity as they might consider necessary. If the present lessees do not want the lease, there are others who will.

(ii) Larger Groups.—In a great many cases, however, the Board would decline to grant separate leases in respect of each of a number of small collieries, and would indicate that they were only prepared to receive applications for leases by groups of persons or companies prepared to amalgamate themselves into a corporation representing an output of x tons per annum. This figure would vary in each coalfield. In South Staffordshire, in particular, divided ownership has had most prejudicial effects in the matter of pumping.

(iii) District Coal Boards.—Sir Arthur Duckham's scheme of statutory companies known as District Coal Boards requires consideration. Without necessarily adopting his districts or his uniformity of type throughout the country, there are many areas where it might be found that voluntary amalgamation was impracticable, and that the desired result could only be attained by an Act of Parliament providing for the compulsory amalgamation of persons and companies working a specified area and the issue of shares in the new corporation in exchange for the previous holdings.

(iv) Public Authorities.—I should very much like to see, sooner or later, in some area, a lessee in the form of an organisation which, though not national—not the State—should be at any rate public—something on the lines of the Port of London Authority.

It may well be that in one or more of our coalfields a public authority of this type, though with larger labour representation upon it and with a large measure of joint control from top to bottom, would be a suitable lessee of the minerals in that area. The important point is that public management need not mean bureaucratic State-management with the disadvantages popularly associated with it.

(v) I have mentioned several types of possible lessees, but it will be noticed that there is nothing in these suggestions which would prevent the National Mining Board from making the experiment of working a few mines themselves.

To sum up. There is a problem of the Mines. No sensible person should be deceived by the quiescence of the last twelve abnormal months. Without using extravagant language, the coal-mining industry is a volcano liable at any moment to erupt and involve the whole community in loss and suffering. Therefore, as a body of citizens, we are under a duty to seek a solution which can be effected between the occurrence of the recurring crises. As a body of Liberal citizens we shall naturally seek a Liberal solution, and the foregoing suggestions (for which no originality is claimed) are inspired by the Liberal point of view. They apply to the industrial sphere principles which have been tried and proved in the political sphere, both in the central and the local government. Apart from State acquisition of the minerals, about which there can surely be no question, these suggestions merely develop tendencies and organisations already existing within the industry. They involve no leap in the dark, such as has been attributed by some to nationalisation of the whole industry, and they provide for great flexibility and experimentation. The fact that the official spokesmen of neither miners nor colliery-owners may like them need not deter us. They have had numerous opportunities of settling the problem amongst themselves, but the "die-hards" in both camps have always prevented it. It is time that the general public outside the industry took the matter in hand and propounded a solution likely to be acceptable to the vast body of sensible and central feeling within the industry.



THE LAND QUESTION

BY A.S. COMYNS CARR

Member of Acquisition of Land Committee, 1918.

Mr. Comyns Carr said:—The Land Question I believe to be the most important subject in purely domestic politics to-day, as it was in 1914. At that date we were embarking, under the especial leadership of one who has now deserted us, upon a comprehensive campaign dealing with that question in all its aspects. The present Government has filled a large portion of the Statute Book with legislation bearing on the land; it is not the quantity we have to complain of, but the quality. In 1914 we had already achieved one signal victory in carrying against the House of Lords the Land Clauses of the Budget of 1909-10, and although many of us were never satisfied with the form which those clauses took, they were valuable both as a step in the direction of land taxation and for the machinery of valuation which they established. Mr. Lloyd George in his present alliance with the Tories has sunk so low as not only to repeal those clauses, but actually to refund to the landlords every penny which they have paid in taxation under them.

The campaign which was inaugurated in 1913 did not deal with the question of taxation only, and for my part, although I am an enthusiast on this branch of the subject, I have never thought that other aspects should be neglected. We put forward proposals for dealing with leases both in town and country. The present Government has carried and repealed again a series of statutes dealing with agriculture. Their original policy was to offer to the farmer guaranteed prices for his produce, if necessary at the expense of the tax-payer, and to the labourer guaranteed wages, to be fixed and enforced by Wages Boards. Before this policy was fully in operation it was repealed. The farmer got some cash compensation for his losses; the labourer has got nothing but voluntary Conciliation Boards, with no power to do more than pass pious resolutions. There has, however, survived this welter of contradictory legislation, a series of clauses which do confer upon the tenant farmer a substantial part of the rights in his dealings with his landlord for which we were agitating in 1914. The town lease-holder, on the other hand, has got nothing, and it is one of the first duties of the Liberal Party to provide him with security against the confiscation of his improvements and goodwill, to give him reasonable security of tenure, and to put an end once for all to the pestilent system of building leases which extends all over London and to about half the other towns of England. The evils of this system are especially to be found in those older parts of our great cities where the original leases are drawing to a close. In such cases a kind of blight appears to settle on whole neighbourhoods, and no improvements can be carried out by either party because the landlord cannot obtain possession, and the tenant has not, and is unable to obtain, a sufficient length of term to make it worth his while to risk his capital upon them.

HOUSING

The branch of the land question to which the Government called the greatest attention in their election promises was Housing. On this subject the Government have placed many pages of legislation on the Statute Book. One can only wish that the houses occupied as much space. They began by informing us, probably accurately, that up to the time of the Armistice there was an accumulated shortage of 500,000 houses; in pre-war days new working-class houses were required, and to a certain extent provided, although the shortage had then already begun, to an average number of 90,000 a year. According to the official figures in July last, 123,000 houses had been completed by Local Authorities and Public Utility Societies; 37,000 by private builders with Government subsidies; 36,000 were under construction, and as the Government have now limited the total scheme (thereby causing the resignation of Dr. Addison, its sponsor) there remain 17,000 to be built. This is the record of four years, so clearly the Government have not even succeeded in keeping pace with the normal annual demand, and the shortage has not been attacked, but actually accentuated.

The cause of the failure was mainly financial. Without attacking the roots of the evil in our land and rating system, and without attempting to control the output and supply of materials and building in the way in which munitions were controlled during the war, the Government brought forward gigantic schemes to be financed from the supposedly bottomless purse of the tax-payer. At the same time the demand for building materials and labour in every direction was at its maximum, and unfortunately both employers and employed in the building and allied industries took the fullest advantage of the position to force up prices without regard to the unfortunate people who wanted houses. The Trade Unions concerned seem to have overlooked the fact that if wages were raised and output reduced houses would become so dear that their fellow-workmen who needed them could not attempt to pay the rents required, and the tax-payer would revolt against the burdens imposed upon him; thus the golden era for their own trade was bound to come to a rapid end, and, so far from employment being increased and prolonged, unemployment on a large scale was bound to result. With the Anti-Waste panic and the Geddes Axe, social reform was cut first, and, in their hurry to stop the provision of homes for heroes, the Government is indulging in such false economies as leaving derelict land acquired and laid out at enormous cost, even covering over excavations already made, and paying out to members of the building trade large sums in unemployment benefit, while the demand for the houses on which they might be employed is left wholly unsatisfied.

LAND FOR PUBLIC PURPOSES

The Acquisition and Valuation of Land for the purpose of public improvements is a branch of the question to which a great deal of attention was drawn during and immediately after the war. The Government appointed a Committee, of which the present Solicitor-General was chairman, and which, in spite of a marked scarcity of advanced land reformers amongst its members, produced a series of remarkably unanimous and far-reaching recommendations. These recommendations dealt with four main topics:—

(a) Improvements in the machinery by which powers may be obtained by public and private bodies for the acquisition of land for improvements of a public character;

(b) Valuation of land which it is proposed to acquire;

(c) Fair adjustment as between these bodies and the owners of other land, both of claims by owners for damage done by the undertaking to other lands, and of claims by the promoting bodies for increased value given by their undertaking to other lands; and

(d) The application of these principles to the special subject of mining.

The Government in the Acquisition of Land Act, 1919, has adopted a great part of the Committee's recommendations under the second head, and this Act has undoubtedly effected an enormous improvement in the prices paid by public bodies for land which they require, although, most unfortunately, the same immunity from the extortion of the land-owner and the land speculator has not been extended to private bodies such as railway companies who need land for the improvement of public services. Moreover, it has not attempted to bring the purchase price of land into any relation with its taxing valuation.

The whole of the rest of the Committee's recommendations dealing with the other three points which I have mentioned, the Government has wholly ignored. Powers for public development can still only be obtained by the slow, costly and antiquated processes in vogue before the war; private owners of lands adjoining works of a public character are still in a position to put into their own pockets large increases in value due to public improvements to which they have contributed nothing, and which they may even have impeded; the development of minerals is still hampered by the veto of unreasonable owners, by the necessity of leaving unnecessary barriers between different properties, and by other obstacles which were dealt with in detail in the Committee's report. An illustration of the importance of this aspect of the question was put before the Committee and has been emphasised by recent events. It was stated on behalf of the railway companies that they were prepared with schemes for the extension of their systems in various parts of the country, which would not only provide temporary employment for a large number of men on construction, and permanent employment to a smaller number on the working of the lines, but would also open up new residential and industrial districts, but that it was impossible for them to find the necessary funds unless they could have some guarantee that at least any loss upon the cost of construction would be charged upon the increased value of land in the new districts which would be created by the railway extensions. Remarkable instances were given of the way in which the value of land had been multiplied many-fold by the promotion of new railways, which, nevertheless, had never succeeded in paying a dividend to their shareholders, and the capital cost of which had been practically lost.

On the other hand, the Committee were assured that, given a charge on the increased value of land likely to be created, there would be no difficulty in obtaining the necessary funds without Government assistance. When the pressure of the unemployment problem became acute, and not before—and then it was, of course, too late—the Government turned their attention to this problem, and have guaranteed the interest upon new capital to be expended on a few of these railway extensions, but instead of charging the guarantee upon the increased value of land, they have charged it upon the pocket of the tax-payer. The most striking instance is that of the tube railway from Charing Cross to Golders Green, now being extended under Government guarantee to Edgware. Those who provided the original capital have never received any return upon their money, yet millions have been put into the pockets of the owners of what was undeveloped land now served by the line, and now that the extension is being carried out with the tax-payers' guarantee, the land-owners will again reap the benefit untaxed.

The development of the natural resources of our country was one of the promises held out by Mr. Lloyd George to the electors in 1918. Schemes were ready, and are still in the official pigeon-holes, for the production of electricity on a very large scale both from water power and from coal, which would not only provide employment, but cheapen the cost of production in all our industries. France, Italy, and other countries are at this moment carrying out similar schemes whereby they will relieve themselves to a large extent from dependence on British coal. But here, four years of Coalition Government have left us practically where we were. In France, although in many respects her social system seems to me less enlightened than our own, the power of the land-owner to obstruct enterprise and development is by no means so great. Land Reform in this country is a necessary preliminary to the fulfilment of Mr. Lloyd George's promises. Development at the public expense without such reforms will result chiefly in further burdens upon the tax-payer and further enrichment of the landowner.

RATING RELIEF FOR IMPROVEMENTS

This brings me to the last, and in my opinion the most important branch of the Land Question, that relating to the reform of our system of rating and taxation. I am myself an ardent supporter of the policy which I think has been rather unfortunately named the Taxation of Land Values. The vital point about this policy is not so much that we should tax land values, as that we should leave off taxing buildings and other improvements of land. The policy would be better described as the Relief of Improvements from Taxation. Its economic merits seem to me so obvious as hardly to require examination. It is only because the present system has been in force for over 300 years that it can find any supporters. If any one were to propose as a useful means of encouraging the steel trade or the boot trade, or as a desirable method of taxation, that a tax of, say, 50 per cent. should be imposed upon the value of every ton of steel or every pair of boots turned out in our factories, he would be rightly and universally denounced as a lunatic. Yet this is the system which ever since the days of Queen Elizabeth has been in force with regard to the building trade and all other industries which result in the production of improvements upon land.

As long as land remains unused it pays no rates or taxes, whatever its immediate potential value. But the moment it is brought into use, as soon as a house, a factory, or a railway is built upon it, or it is drained or planted—rates and taxes, which in these days often exceed 50 per cent. of its improved value, have to be paid, without regard even to the question whether its use is successful in yielding profits or not. Familiarity with this system, instead of breeding the contempt which it deserves, has bred a kind of passive acquiescence which is exceedingly difficult to shake. Even such a champion of our land system as the Duke of Bedford years ago in his book, The Story of a Great Agricultural Estate, perceived the absurdity, although he was apparently blind to the remedy and to the application of it to some of his estates which are not agricultural. He converted an ordinary arable field into a fruit garden, and discovered that his rates were promptly trebled by reason of his expenditure. Striking, but, nevertheless, everyday examples may be found if we see how the system works out in urban districts. If a new factory is built, rates and taxes are immediately levied on the full annual value of the building, which is a direct charge upon production, and has to be paid before a single person can be employed in the factory. It therefore not only restricts the possibilities of employment, but has to be added to the price at which the goods can be sold.

THE LESSON OF THE SLUMS

Or take the illustration of a slum area. Each tumble-down tenement is rated and taxed on the assessment based upon its annual rental value. In many places in the central parts of towns the total of these assessments is less than the sum for which the whole site could be sold as a building area, nevertheless if all the tenements fall or are pulled down the site may remain vacant for years and no rates or taxes are paid. But if substantial and decent buildings are erected on the site, immediately the assessment is raised to their full annual value. The individual or public body that has cleared away the slum and erected something decent in its place is thus immediately punished for doing so, with the result that such a thing is seldom done except at the public expense. The remedy for all these absurdities is quite a simple one. No one disputes that the sums necessary for municipal and imperial taxation have got to be provided. The question is, in so far as they are to be raised from lands and buildings, how can they be assessed most fairly and with the least injury to trade and commerce? They should be assessed upon the value of land which is not due to any effort of the owner or occupier; they should not be assessed upon nor increased because of any buildings which he may have erected or any improvements which he may have carried out.

This question was closely investigated by the Land Enquiry Committee appointed by Mr. Lloyd George in 1913. They were unanimous in condemning the existing system and in regarding the one which I have just described as the ideal. They were, however, met by great difficulties in its immediate practical application, because, owing to the long prevalence of the wrong system, an immediate and total change would bring about rather startling alterations in the value of existing properties. The Committee closely considered these objections, and a number of alternative methods of bringing the change into operation gradually and without these drastic changes in value were put forward. The one which immediately suggested itself as the simplest, and from many points of view the most desirable, was to leave the rates and taxes of existing properties on their present basis, to impose them at their present rate on the annual value of all unoccupied land, but to exempt from rates and taxes all future buildings and improvements of every kind.

To illustrate the way in which this would work, let us revert to the case of a block of slum property. As long as it remained in its present condition the existing valuation based upon the annual rent obtainable for it would apply, but any parts of it which now are or may hereafter become unoccupied, would, instead of escaping as they do now from all rates and taxes, contribute on the basis of the value of their sites, which would be assessed at an annual rent for the purpose of comparison with the existing valuations, at least until the capital values of the whole rating area could be ascertained. If any improvements were carried out the assessments would not be raised on that account, as they would be under present conditions, and if a whole area were pulled down, replanned and rebuilt, the assessment instead of being based, as it would be to-day, on the annual value of the reconstructed property, would be based upon the site value alone. Gradually in this way site value would become the prevalent basis of assessment. "It is obvious," as the Committee said in 1913, "that unrating of future improvements is from the economic point of view of far more importance than the unrating of existing improvements; if we want to encourage new buildings and new improvements, what is really important is to ensure that new improvements (not old ones) shall be exempt from the burden of rates." The Committee were, however, compelled to reject this suggestion at that time on the ground that "it would cause an unfair differentiation between the man who had already put up buildings or improvements, and the man who put up buildings or improvements after the passing of the Act." But as between buildings and improvements which existed before the war and those which come into existence under post-war conditions no such unfairness could operate, because the increase in the cost of building even to-day is greater than the benefit which would accrue from the unrating of improvements. The present is therefore the unique opportunity for bringing into force this much-needed reform in the most effective way, free from the difficulties which had to be met in 1913. If it had been carried out immediately after the Armistice it would, in my opinion, have done more than anything else to solve the housing problem, and even now it is not too late. In fact, in view of the present unemployment it would be most opportune. Incidentally it would soon render unnecessary the renewal of the Rent Restriction Act. I understand that something on these lines has been introduced in New York to meet a similar problem.

A RATE AND A TAX UPON SITE VALUES

The Committee of 1913 were obliged to turn their attention to other suggestions. They proposed:

(a) That all future increases in the expenditure of each Local Authority which had to be met out of rates should be met by a rate upon site values instead of upon the existing assessments; and

(b) That existing expenditure should be met to a small extent compulsorily, and to a larger extent at the option of the Local Authority, in the same manner.

There is no reason why these proposals should not be brought into force simultaneously with that relating to new buildings and improvements. They made these proposals conditional upon a substantial increase in the grants in aid to Local Authorities, especially in necessitous areas, from the Imperial Exchequer; and they suggested, although they did not definitely recommend, that a part at least of this increased grant might be raised by means of an additional tax upon site values. This, I think, should certainly be done, and such a tax might be wholly or partially substituted for the present Land Tax and Income-Tax Schedule A, which are assessed on the wrong basis.

These proposals would, of course, involve the revival and revision of the National Land Valuation established by the Finance Act, 1909-10, which should be made the basis of all taxation and rating relating to real property. This would be both a reform and an economy, because there are at present several overlapping systems of valuation by Central and Local Authorities, none of which are really satisfactory even on the present unsatisfactory basis of assessment. The existence of such a valuation frequently revised and kept up to date, and independent of local influences, would be invaluable not only for purposes of rating and taxation, but also in arriving at a fair price for the acquisition of land for public purposes, and for the levying of special charges upon the increased value due to particular public improvements, such as railway extensions, with which I have already dealt.

I am not one of those who claim for these reforms that they would cure all the evils from which the community is at present suffering, but I do believe that there is no other and no better way of removing the unfairness and the restrictions of our present methods of rating and taxation or of setting free and stimulating the energies of our people in the development of the resources of our country.



AGRICULTURAL QUESTIONS

BY RT. HON. F.D. ACLAND

P.C.; M.P. (L.) North-West Cornwall; Financial Secretary, War Office, 1908-10; Under-Secretary of State for Foreign Affairs, 1911-15; Financial Secretary to Treasury, Feb.-June, 1915; Secretary to the Board of Agriculture, 1915-16; a Forestry Commissioner. Chairman of the Agricultural Organisation Society.

Mr. Acland said:—I begin by laying down in a didactic form five points which one would like to see firmly established in our rural life: (i) intensive production; (ii) plenty of employment at good wages; (iii) easy access to land, and a good chance of rising upon the land; (iv) real independence in rural life; (v) co-operative association for many purposes.

Intensive production is most important. It is so easy to say the farmer can get more out of the land, and the farmer should get more out of the land, that we are tempted to continue and say that the farmer must be made to get more out of the land. But it isn't so easy. It has been tried and failed, and when any subject in our British political life has been brought up to the boiling-point, and yet nothing effective has been done, it is extremely difficult to bring it to the boil a second time.

It is worth while tracing out what has actually happened. The Government's Agriculture Act of 1921 contained four great principles:—(i) that we must have more food produced in this country (a) as an insurance against risk of war, (b) so as to meet our post-war conditions as a debtor nation by importing less of our food supplies; (ii) that as the most productive farming is arable farming, and as by maintaining a proper proportion of arable we can on emergency make ourselves independent for our food supplies for an indefinite time, farmers should be guaranteed against loss on their arable rotations; (iii) that if farmers are to be required to produce more they must have clear legal rights to farm their land in the most productive way, a greater compensation for disturbance; (iv) that as the first three principles give security to the nation and to the farmer, it is desirable also to give security to the worker by permanently continuing the war-time system of Agricultural Wages Boards.

These principles were duly embodied in the Bill as it left the House of Commons:—

(i) The Ministry of Agriculture, acting through the County Agricultural Committees, was given powers to insist on a certain standard of arable cultivation, as well as in minor matters, such as control of weeds and of rabbits;

(ii) The difference between the ascertained market price and the estimated cost of production on his wheat and oat acreage was guaranteed to the farmer, the guarantee not to be altered except after four years' notice;

(iii) The landlord had to forfeit a year's rent if a tenant was disturbed except for bad farming, or four years' rent if the disturbance was capricious;

(iv) The existing Wages Board system was continued.

THE DESTRUCTION OF A POLICY

The gradual destruction of this policy began in the House of Lords. They allowed themselves to be swept away by the popular cry against Government interference with industry, and cut out the power of control of cultivation. The Prime Minister had said that this was an absolutely essential part of the Bill, and of the Government's policy, but the Government quietly and characteristically accepted the Lords' amendment and the Bill was passed.

Then troubles began. Other industries began to ask why the Government satisfied agriculture and not them, and as the Government could not plead their control of agriculture in justification, no real reply was possible. Also the cold fit came on as regards national expenditure. The Bill for the corn subsidies threatened to be very high. Though Europe was starving, it could not buy, so cheap American grain flooded our markets; but cost of production here was still at its peak, and, for oats especially, the amount to be paid to the farmer threatened to be large. It was realised that it might cost 25-30 millions to implement the guarantees for the first year, and perhaps 10-12 millions a year later. In short, the guarantees had to go. Instead of four years' notice of any change, a Bill to repeal the great Act was introduced five months after it had been passed. And it was unfortunately part of the bargain with the farmers who received for the single season perhaps six or eight millions less than they might have been entitled to under the Act, that the Wages Boards should be abolished—and they were. There remained of the original structure only the depreciation of the value of all agricultural landowners' property by about one-twentieth, owing to the extra compensation for disturbance.

Every one felt that they had been had, and they had been. The industry which had lately been talked up and made much of was dumped into the dustbin. The farmers had lost their guarantees on the strength of which, in many cases, they had bought their farms dear or planned their rotations. The labourers, who particularly needed the protection of Wages Boards during a time of fall in cost of living and unemployment, had lost all legal protection. The landlords, willing enough to give what was asked of them if any national purpose was to be served, found that their loss brought no corresponding national gain. Agriculture retired as far as it could from any contact with perfidious Governments, to lick its wounds.

That is not a good basis upon which to build intensive cultivation or any other active policy. There being now no legal or patriotic call to intensive production, we are driven back to ask, "Does intensive production pay?" and the broad answer is that at a time of low prices it does not. There is no doubt that slowly and steadily education will gradually improve farming, and that farmers will learn to find out what parts of their business pay best and to concentrate upon them. There is also no doubt that even at low prices there is plenty of scope for better farming, and that better manuring, particularly of grass land, will pay. But the farmer is faced with an economic principle—the law of diminishing returns. It may be stated thus: beyond a certain point which rises and falls directly with the value of the product, extra doses of labour and manure do not give a corresponding return. It is this principle which accounts for what we see everywhere—that farmers are tending to economise as much as they can on their labour and to let arable land go back to grass.

And if this is clear to farmers who are thinking of intensive arable farming, still more is it true in comparing arable with grass. If you take the same sort of quantity of arable and grass farms, farmed by men of the same skill and diligence, over a range of seasons under low world prices for farm produce, you will, I believe, find something like this: grass land needs half the capital and one-third of the labour of arable; it produces three-quarters the receipts with half the payments, and yields double the profit per acre and four times the profit on capital. The moral of all this is clear. Unless the nation is willing to go back to protection for agriculture, which I am glad to believe in the general interest unthinkable, and unless it is willing to guarantee the farmer against loss from that method of agriculture which means most production and most employment, we must let the farmer set the tune and farm in the way it best suits him to farm. We must try, in fact, not to talk too much nonsense about intensive production as the cure for agricultural depression. It is useful to remember that all countries overseas which combine high wages with agricultural prosperity have a very low output per acre judged by our standards.

EMPLOYMENT AND WAGES

It follows directly from what I have just said that a time of high costs and low prices like the present, like the time of lower costs but still lower prices of the late '80's and early '90's, is not a favourable time for expecting employment to be brisk or wages high. And reasons other than those which we have yet considered make the farmer feel his labour to be specially burdensome at present. He finds that the prices he gets on the average are one and one-third times what they were before the war: what he has to buy costing from one and a half to one and two-thirds what it cost before the war; and he is expected in very many counties in England and Wales to pay his workers about double what he paid before the war. This is a strong point for him. But the labourers' position is just as strong. "I was not sufficiently well paid before the war. If this is to be recognised in any way at all, I must at the present cost of living (185) have double my pre-war wages." It is certainly beyond all question that 30/- a week, which is the present wage over a large part of England, is not, even with only 3/- a week rent for house and garden, enough to keep a man and his wife and family in a state of real efficiency. Yet I know from personal experience that this fact is not properly recognised in practice. If one tries to pay more one is regarded as a very rich man, and an extremely stupid one—an idea erroneous as to one's wealth and possibly exaggerated as to one's mentality.

How have the two conflicting views of farmer and labourer been reconciled in practice. I can only say that so far as my own knowledge extends—bearing in mind that the farmer has not the business man's habit of cheerfully setting off a bad year against a good (for the business man knows that trade must improve some time, and then he will make profits, while the farmer has no certainty that things will improve)—things might well have been worse. There has been a good deal of mutual consideration and desire to make the best of difficult circumstances. I have, however, little doubt that it would have been better had the Wages Boards, which had controlled the rise in wages during the rise in the cost of living, regulated the fall in wages during its fall—relaxing control perhaps later when things became more stable.

The reason why I think that things might have been worse is that the District Wages Committee left a good legacy to the voluntary Conciliation Committees which followed them—the men serving on the latter were those who under the Wages Board system had learned to negotiate with and to know and respect the workers—generally some of the best farmers in their districts—and they genuinely tried not to let the workers down with too much of a bump; on the other hand, they knew that the only value their recommendations could have was that they should be voluntarily observed, and therefore they took care not to recommend rates higher than those which the least favourably situated farmers in the district could manage to pay—which meant rates lower than many might have been willing to give. This means that any general rate agreed to voluntarily will be rather on the low side. But I would rather have a rate which is generally observed, even if it is rather low, than that every farmer should be a law unto himself. If there is no recognised standard, and one man with impunity pays a lower rate than his neighbours, other rates also tend to come down, and then the process begins over again.