Chapter VIII · THE NEW AGE, 1897–1911

§ 1. Industrial Expansion

—It is impossible in the compass of a brief chapter to deal otherwise than in the barest outline with the industrial developments of the last fourteen years. The period opens with the Diamond Jubilee of Queen Victoria, includes the whole reign of her son, King Edward the Seventh, and closes in the Coronation year of her grandson, George the Fifth. From one point of view the country has during this time made marvellous advances in general prosperity. The population, indeed, which according to the returns of 1911 stands at the figure of 36,075,269 for England and Wales, shows a slower rate of progress than for any other decennial period since the institution of the census in 1801; but in so far as the diminished birth-rate is due to a higher standard of living among the people, such a slackening is itself a token of material well-being. And judging by the ordinarily accepted standards neither the accumulated wealth nor the productivity of our nation has ever before attained so great a height.

The gross amount of income brought under the survey of the Inland Revenue Department in 1907–08 (the last year for which returns are available) amounted for the first time to over £1,000,000,000 sterling, while the net amount available for taxation was over £693,000,000 as against £525,000,000 in 1897–98. The public applications for capital registered in London in the year 1910 reached a total of £267,439,100, a vast sum which exceeds all previous records by more than £75,000,000, and (apart from the large number of unrecorded private investments) {224} shows the prosperity of undertakings at home and the amount of surplus capital available for investment abroad.

Wages also, which declined from 1901 to 1905, yet show a marked increase over the whole period under review, though this increase is unfortunately largely nominal, owing to the contemporaneous rise in prices and house-rent.

Both shipping and railway transport have undergone a vast expansion: the statistics for inland traffic are the chief among our few data regarding the advance of home trade. Foreign trade, which the “man in the street” has been led by recent controversy to take as the main criterion of industrial progress, after breaking all previous records in 1907, again surpassed itself in 1910. Our total imports for that year were £678,440,173, and our exports of British produce amounted to £430,589,811. A comparison with 1897, when the value of our imports was £451,028,960 and of our exports £294,174,118, shows how remarkable has been the increase in the volume of our foreign trade. A noteworthy feature is the growth in the re-export figures, which in 1910 for the first time exceeded £100,000,000, thus testifying to the maintenance of our position as the great carrier and transport agent for the world.

§ 2. Wars, calamities, and the American crisis

—Yet there is another side to this picture of progress and well-being. During the same period the various quarters of the world were visited by a long series of calamities, both natural and artificial, from which our own dominions were not exempt. The Spanish-American War of 1898, the Russo-Japanese War of 1904–05, and the disastrous earthquakes at San Francisco (1906), Jamaica (1907), and Messina (1908) all caused not only loss of life and great physical suffering, but widespread destruction of capital, the effects of which were felt in all industrial countries.

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In the earlier years of the period plague and famine in India and a succession of serious droughts in Australia also checked the productive capacity and purchasing power of these great dependencies, and consequently affected our industries at home.

But the closest and most malign influence was that of the South African War (1899–1903), which, after at first giving an apparent impetus to the trades supplying munitions of war, left behind it a legacy of debt, increased military and naval expenditure, and widespread depression in trade, with consequent unemployment during the “lean years” that followed. The National Debt in 1898–99, before the outbreak of war, stood at £638,000,000, but had risen by 1903–04 to £798,000,000, or to the level of 1870, thus wiping out in four years the laborious debt reductions of more than thirty years.

After some years of depression trade again revived, and throughout the world 1907 was a year of abnormally high prices and widespread speculation, which culminated during the autumn in an acute financial crisis in the United States. There practically all the banks suspended cash payments for some months. The effects of this shock to credit were felt far and wide. Vast quantities of gold were shipped to the United States, and although London at the time stood the strain much better than any other financial centre, the Bank of England was forced to raise its rate of discount to seven per cent. In the following year the United States and Japan still suffered from commercial depression, and in India the harvest proved a failure. Hence, as the consuming power of these great areas was checked, their demand for British goods fell off. Thus the volume of our foreign trade was greatly reduced and the average of the monthly unemployment returns by the Trade Unions {226} for 1908 was far the highest for many years past, being 9·1 per cent., as against 4·3 in the preceding year.

§ 3. The increase of public expenditure

—During the Boer War and since its close there has been an unparalleled growth both in national and municipal expenditure. For every £5 that was required by public departments in 1895 £8 is now expended. The addition to the National Debt, and consequently to the debt charges, has been already noticed, and the following table shows the general figures for the opening and close of the period under review:—

Expenditure 1897–98 Estimated Expenditure 1910–11

Army £19,330,000 £27,760,000

Navy 20,850,000 40,604,000

Civil Service 23,446,000 42,686,000

National Debt and other services 25,000,000 36,945,000

Post Office, Customs and Inland Revenue 14,310,000 23,852,000

Total £102,936,000 £171,847,000

These totals represent an expenditure per head of the total population of £2, 11s. in 1897–98 and of £3, 16s. in 1910–11.

We must remember, however, that the expenses of the Post Office are more than covered by the revenue derived from that institution, and that much of the addition to the Civil Service estimates is due to Old Age Pensions and to the increased provision for education. “The Civil Service charge has risen as the natural result of multiplied and enlarged activities, and advance has been specially heavy in the last two decades, but the Civil Service includes education, poor law, the improvement of roads and health, and many other services which conduce to national well-being. It stands on a very different economic level from armaments, which represent {227} the workings of international discord and jealousy.”64 Yet there is no doubt that in all departments the public money is being expended more freely and extravagantly than was the case some twenty-five years ago.

The portentous increase in naval expenditure must be ascribed partly to the Boer War, but chiefly to our recent rivalry in naval construction with Germany, and our adoption of the Dreadnought type of battleship. Army expenditure increased between 1897 and 1899 through a series of “little wars” in Egypt and India, and since the South African War we have been practically maintaining a war establishment in time of peace.

Thus we see that owing to the growth of armaments and fresh expenditure on social needs the taxpayer has to endure a heavy burden, which threatens to grow as the rate of increase among the population slackens. Any expenditure beyond what is required for military efficiency and social well-being is not only wasteful but actually injurious to our industry and commerce, since it diverts capital from productive channels. There is no justification for maintaining taxation at a war level in time of peace. As Mr Gladstone said, money is best left to fructify in the pockets of the people; or, to quote his great opponent, Lord Beaconsfield, who was always in agreement with him on this point, “the more you reduce the burdens of the people in time of peace, the greater will be your strength when the hour of peril comes.”

§ 4. Free Trade and Protection. The Colonies

—Ever since the repeal of the Corn Laws there had been in England a group of agricultural Protectionists, and some thirty years ago a small number of manufacturers began to advocate retaliation against foreign tariffs under the title of “Fair Trade.” Towards the close of Queen

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Victoria’s reign the growth of Imperial sentiment brought into prominence suggestions for a closer political and commercial union between England and her colonies. In 1903 these various strands of thought were combined by Mr Joseph Chamberlain, then Colonial Secretary, in his campaign on behalf of “Tariff Reform.” This movement (which thus at first contained the inconsistent elements of protection to the British farmer, retaliation against the foreign manufacturer, and colonial preference) met with some acceptance in that year of depressed trade, and has now been adopted as the programme of the Unionist Party, in spite of the opposition of an important minority. In the General Election of 1906 the Protectionists sustained a crushing defeat, and they have not since been able to secure a majority in the House of Commons.

Although the controversy is still unsettled, it is at present, for various reasons, somewhat in abeyance. Old Age Pensions, which were to have been provided out of the revenues of the tariff, have been granted without recourse to protection, and other questions have occupied the political field at home, while the recent great expansion both in home and foreign trade seems, in the eyes of the public, to have falsified the more gloomy predictions of the “Tariff Reformers.”

The supporters of the movement emphasize the growing political and commercial importance of our colonies, and the rapid advances made by Germany and the United States in neutral markets, and they point to the tariff walls which block our trade with foreign nations. Free-traders, in reply, maintain that the progress of Germany and America is due to a combination of many causes apart from their tariffs. They are, for purposes of internal trade, the largest free trade areas in the world. {229} Since the trade of nations is mutually interdependent we cannot suffer from an increase in commercial prosperity elsewhere, and retaliation has never proved a successful method of fighting hostile tariffs. In conclusion, they declare that an impossible task awaits any statesman who undertakes to frame a British tariff satisfactory alike to farmer, manufacturer, the colonies and India, and one which would not involve an increase in the price of food and other necessaries.

The reader must refer to larger treatises for details of the controversy, which has been much embittered by party spirit. But it seems at least that the war of statistics and arguments has not proved that the position of the working classes in regard to real wages, continuity of employment, and conditions of labour is better in protected countries than among our own people: indeed, as skilled economists constantly remind us, so many other factors are involved and so many qualifications must be made that it is almost impossible to draw trustworthy comparisons of this nature. Nor has the response of the colonies to the suggestions of the Preferentialists been encouraging. They have shown without ambiguity that highly as they value their connexion with the mother-country, they value equally highly their own political and commercial independence. In 1901 the various States of Australia united in a Federal Commonwealth whose tariff is highly protective, and in 1911 Canada began to negotiate mutual tariff concessions with the United States, her nearest and most important market. Our colonies are thus rapidly developing into practically independent States, bound to us, indeed, by ties of filial affection and interest, but determined to shape their own careers. South Africa has just entered upon the most hopeful chapter of her chequered history {230} by the federation of the four colonies in the Union of South Africa. The original settlements of Cape Colony and Natal and the two Boer States conquered in the late war form now a self-governing whole—a happy reconciliation, hardly to have been anticipated at the end of the war, which is a high tribute to the wisdom of statesmen at home and to the healing effects of time in South Africa.

§ 5. The position of the workers. Social legislation

—Returns recently published by the Local Government Board and other official statistics show that in the last half-century there has been a very marked improvement in regard to public health and social conditions. The rate of infantile mortality (among children less than one year old) is still sadly high in many town areas, yet, though it stood in 1907 at 118 per thousand for the whole of England and Wales, this figure is lower than that for any Continental country except Holland, and the death-rates from many diseases have also fallen rapidly in recent years. Housing accommodation has improved, statistics of overcrowding in 1901 showing a considerable reduction upon those of the previous census, and pauperism has on the average steadily declined. Wage statistics are inadequate and very difficult of interpretation, but they seem to indicate a marked rise during the last forty years, while the level of prices has fallen 24 per cent. during the same period. A detailed consideration of the last five years, however, reveals a less cheerful picture. The depression of trade resulting from the expenditure of capital during the South African War led to a fall in wages and a serious increase in unemployment. The hardships of the workers were aggravated by a period of rising prices and by the reflex effects of the American crisis. The statistics of pauperism in 1907 and

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1908 showed a proportion of 24 per thousand inhabitants against an average of 22 per thousand for the preceding decade. In October and November 1908 the Trade Unions returned 9 per cent. of their members as unemployed, whilst amongst unorganized and casual workers the proportion was no doubt higher.

Yet at the same time there is a greatly increased sensitiveness of the public conscience regarding the condition of the vast majority of the population, as has been shown both in Parliamentary legislation and in unofficial movements for social betterment. Among the latter, garden villages and schemes for housing and town-planning bear witness to a recognition by employers and municipalities of a duty to provide workers and their families with some of the necessities for “good life.”65

Such questions have become all the more urgent with the recent rapid growth of great suburban districts on the borders of our cities. This phenomenon—due to the eagerness of workers to escape into regions of somewhat purer air and lower rates outside the municipal areas—is emphasized in the latest census returns. According to these the boroughs are actually increasing in population less rapidly than their neighbouring counties, and in London itself the overflow is shown by decreases in many of the boroughs and an increase of 33 per cent. in the “Outer Ring.”

In another direction the success of the Workers’ Educational Association and kindred efforts proves that many among the working classes are eager to grasp opportunities for intellectual growth. But it is in recent legislation that we find the most remarkable testimony both to the power of the labour movement and the awakened {232} national conscience to which allusion has just been made.

There was an attempt in 1907 to check the drift townwards by offering the labourer an inducement to remain in the country. The aim of the Small Holdings and Allotments Act of that year was to provide him with a few acres of land at a reasonable rate with security of tenure, and so to re-establish the small cultivator. The Budgets from 1906 to 1908 not only relieved the general taxpayer by debt reduction and the middle classes by a differentiation of the income-tax in favour of earned incomes, but also reduced the tea and sugar duties, which fall most heavily on the working classes. But the Budget of 1908 will be remembered chiefly for the step then taken towards the relief of the aged poor. The institution of Old Age Pensions (already in force for some years in our Australasian colonies) was hotly decried as a Socialistic measure debasing to the recipients. So far, however, the test of experience seems to show none but good results, and since the recent removal of the poor relief disqualification there has been a marked fall in the statistics of pauperism. In 1909 the new Chancellor of the Exchequer, Mr Lloyd-George, introduced his first Budget. Its rejection by the House of Lords, which marked the crisis of the long struggle between the two Houses, has made it famous in constitutional history. But, avoiding its controversial clauses, we may note that this Budget also provided a small sum for the establishment of Labour Exchanges, on the Continental model, throughout the country. These exchanges, which are now working, aim at rendering labour more mobile, at bringing employers requiring workers and workers needing employment into touch with one another, and at publishing reliable information as to the condition of the labour {233} market. The Workmen’s Compensation Act of 1897, which placed the liability for industrial accidents on the shoulders of employers, was extended in 1906 to all workers (including domestic servants) whose annual earnings are under £250. Lastly, in 1911, a far-reaching scheme was introduced by which, with State assistance, all wage-earners (under a maximum of £160 per annum) are to be insured against sickness (including for women a maternity benefit) and the experiment of an insurance against unemployment is to be tried in the case of building, shipbuilding, and engineering—the trades which suffer most acutely from periodical lack of work.

We may also notice here the publication in 1909 of the exhaustive Report of the Poor Law Commission appointed in 1905. This is noteworthy both for its wholesale condemnation of the existing poor law system and its drastic proposals for a new method of dealing with the problem of poverty and unemployment. Four Commissioners, led by Mrs Sidney Webb, the well-known social writer, published their own “Minority” report, which contains a still more far-reaching scheme of State control. Both reports have aroused keen interest, they have influenced some of the legislation just described, and one of the schemes or a compromise between them will no doubt form the basis for the expected reform of the Poor Law.

§ 6. Trade Unionism and the Labour Movement

—It was remarked in the last paragraph that the social legislation recorded was due in part to the pressure of the organized forces of labour upon politicians. The membership of Trade Unions has risen from 1,688,531 in 1898 to 2,426,592 in 1910; while in Parliament the Labour Party consisted in 1911 of about forty members, the majority of whom were nominated by Trade Unions and

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maintained out of Trade Union funds. Through these representatives Trade Unionists have been able to exert a considerable influence upon legislation. By the decision, on appeal, of the House of Lords, in the Taff Vale Case (1901), the Trade Unions Act of 1871 was so interpreted as to make it possible for a Trade Union to be sued in tort for the acts of its members, and for Trade Union funds to become liable for any damages that might be awarded. Trade Unionists protested against the decision as contrary to the spirit of the legislation of 1871, and sufficient pressure was exerted by the Labour members to ensure the passage of the Trade Disputes Act in 1906. This restored Trade Unions to their original position under the law of 1871.

But in 1909 the “Osborne Judgment” struck a blow at the existence of the Labour Party itself. Osborne, a member of the Amalgamated Society of Railway Servants, sued the officials of that union on the ground that the enforced levy from members for the maintenance of Parliamentary representatives was ultra vires and accordingly void. After prolonged litigation the House of Lords gave its final judgment in favour of the plaintiff. The Labour Party in Parliament began to press for the reversal of this decision, and at the same time tried to conciliate opposition by abolishing the “pledge” to which all its members had been forced to subscribe. But the obvious difficulties which handicapped men of moderate means, of whatever party, in their attempts to enter Parliament, led to another movement amongst Liberals, Labour Members, and some Conservatives for the payment of all Members of Parliament out of State funds, and provision for this step was made in the Budget of 1911.

Of recent years there has been considerable unrest in {235} the labour world and much loss of time and money has accrued to both employers and employed through industrial disputes. The most important stoppages were those in the coal trade (in South Wales in 1898 and 1910 and in the North in 1910), in the Lancashire cotton industry in 1908 and 1910, in the engineering centres on the north-east coast in 1908, and in the shipbuilding trade in 1910. In August 1911 the country had to face stoppages at the London and Liverpool docks, and, closely following, a general railway strike, which occurred at twenty-four hours’ notice. The dockers gained their demands; the railway strike, through the efforts of the Government, only lasted two days, as a small and impartial Commission was immediately appointed to inquire into the working of the Railway Conciliation Boards, the inefficiency of which to remedy grievances was put forward by the railway unions as the cause of the strike. These recent transport difficulties occasioned very serious trade losses and much inconvenience to the general public, and in certain parts of the country were attended by grave rioting and disorder. All the disputes have taxed the powers of skilled arbitrators (Board of Trade officials or distinguished private individuals), but their most disquieting feature has been, in several cases, the tendency of the workers not to comply with the terms of settlement, and the apparent inability of Trade Union officials to enforce such compliance. Action of this kind can only have the effect of alienating popular sympathy even in the case of genuine grievances. However, it is admitted by most observers that the recent increase in the prices of important commodities and the general rise in the standard of life amongst the working classes make the claim for higher wages and shorter hours of work a well-founded one.

§ 7. Recent inventions and industrial developments

—With regard to industrial machinery recent years have shown rather a greater perfection and rapidity of working than any actually new invention. Perhaps the greatest technical improvements have been made in engineering and steel production, but in many branches of industry the part of the machine constantly increases in importance and that of the individual worker diminishes.

The most striking developments of the last fifteen years have been in connection with transport and communication. The telephone has become a business necessity, and now wireless telegraphy (associated with the name of M. Marconi) has extended our power of rapid intercourse even to mid-ocean. There has been an enormous increase in the size and speed of merchant vessels, the most sensational evidence of which is seen in the vast ocean liners of German and Anglo-American companies plying between Europe and the United States.66 Not only have these ships reduced the passage between New York and Liverpool to a length of about five days, but they are able to carry much larger cargoes than their predecessors, and thus doubly tend to swell the volume of international trade. On land there has been an extraordinary increase in the use of motor transport both for goods and passenger traffic, and the recent successes of aviation seem to foretell that at no distant time the air will form another highway for human intercourse.

Glancing at the changes in the industrial world we may note the tendency (due to resultant economies of marketing and management) towards an increase in the {237} size of a single business and in the amount of capital invested in it. This tendency is seen in many of the great staple manufactures, such as the textile trades and milling, but also in banking and finance generally, where the huge joint-stock concerns with many branches have swallowed up the old-fashioned private bank with its local connexion. In retail trading, too, the great stores, providing many classes of goods under one roof, prove formidable rivals to the small shopkeepers. These stores are generally run as joint-stock companies and often have branches throughout the country. Nevertheless, thanks mainly to the absence of a protective tariff, which shelters the growth of monopoly, England is comparatively free from the dominance of great Trusts. Some partial or local monopolies exist, of which railways, newspaper combines, and the “tied” public-houses attached to some brewing companies form the most obvious examples. But in the opinion of those qualified to judge, the small trader or manufacturer is holding his own in many branches of industry.

The census returns, which show the shifting of employment in various groups of industry, form a good criterion of their relative importance. Those for 1901 have been analysed as follows by a recent writer:—

“The orders which show the greatest decline are textiles and dress. While metal, ships, pottery, wood, food, etc., show a moderate advance, precious metals and instruments, vehicles, chemicals, printing, show a great increase. A still closer examination into the sub-orders of the census returns shows that the foundational and the staple processes of manufacture are stagnant or declining in importance, while those concerned with the finishing processes of manufacture, especially those {238} concerned with the manufacture of more highly specialized articles, are increasing.”67

Mr Hobson adds that the most noteworthy advance is shown in two special groups, the trades concerned with the building and furnishing of houses and those which manufacture vehicles for land and water carriage. The growth in the first of these groups tends to corroborate the statistics of improved housing accommodation already mentioned, while that in the second introduces us to the most significant movement of all, the enormous increase in all occupations connected with land and water transport. This again may be correlated with the figures for our re-export trade already given, since both show England’s marvellous position as the great market and carrier for the world.

§ 8.‡ The necessity of studying economic factors in history

—Hitherto our prosperity, great as it is, has frequently had its drawbacks, and has passed through many vicissitudes. Our ancestors and ourselves have made many mistakes, and till recently, as we have seen, the growth of our national wealth has been slow. But a study of industrial history is not without its uses, if it helps us to-day to understand how we have come into our present position, and what faults and follies we must avoid in order to retain it. Unfortunately, few historians have thought it worth their while to study seriously the economic factors in the history of nations. They have contented themselves with the intrigues and amusements of courtiers and kings, the actions of individual statesmen, or the destructive feats of military heroes. They have often failed to explain properly the great causes which necessitated the results they claim

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to investigate. But just as it is impossible to understand the growth of England without a proper appreciation of the social and industrial events which rendered that growth possible, and which provided the expenses which that growth entailed, so it will be impossible to proceed in the future without a systematic study of economic and industrial affairs. Many of the great political questions of our day derive most of their difficulty from economic causes; while international politics tend more and more to centre round matters of commercial and industrial importance. After all, the means by which we gain our daily bread form for the majority of mankind the most pressing of problems; and what is true of the individual is true on a larger scale of the nation also. Man is by no means a purely economic animal, but the material wants of human life must be satisfied, and much of human activity must be directed toward their fulfilment. The history of mankind is the history of man’s activity, and so long as human nature and men’s material conditions are what they are, so long must economic and industrial factors have a potent influence in the course of political and social life. We have seen in these pages how such factors have influenced the growth of our own nation and contributed towards bringing us into our present position; and it is only reasonable to believe that commercial and industrial considerations must weigh more and more heavily with us if that position is to be secured and maintained. And those of us who wish to help in maintaining and advancing our national progress must seek carefully to answer the economic questions that are forcing themselves continually upon us, by looking at them in the light afforded by the industrial history of a great industrial nation.