The Nationalization Movement in Great Britain

I

DURING the Great War, the force of circumstances led the belligerent states to intervene directly in industry, in order to safeguard the production of essential supplies for war purposes. In some quarters the breakdown of the capitalist system and the need for direct state intervention were used as an argument against private ownership. But it is clear that the capitalist organization of industry was based upon the normal conditions of peace, rather than upon the hypothetical needs of a country in time of war. Nevertheless, the experience which has been gained in war-time has its lessons for the days of peace. This is particularly true in the case of Great Britain, where it seems that the old régime has spent itself.

State intervention in industry during the war took two main forms. In the first place, the enormous and everincreasing orders for munitions of war of all kinds placed by the government, in conjunction with the gradual withdrawal of large numbers of the most efficient workers for service with the colors, led the State to exercise a considerable measure of control over the general conduct of industry, and the management of industrial firms. This control passed into what may almost be regarded as a partnership between the State and private firms. Accusations were made during the war — and in many cases justifiably — that the effect of government interference was to increase inefficiency. On the other hand, there can be little doubt that British industry became much more highly organized. Coördination of effort, greater coöperation between firms in the same trade, and increased specialization were imperative needs during the war. The government brought together for common counsel the various employers’ organizations, trading associations, and individual firms in particular industries. The result of both government action and the pressure of events is seen in the growth of combinations among employers and traders.

In the second place, the State itself assumed industrial responsibilities. It became merchant, manufacturer, and carrier. Through the Ministry of Food it purchased and distributed enormous quantities of food. The Liquor Control Board purchased the licensed houses and breweries in Carlisle and district, and carried on the trade in alcoholic liquors in this area. The War Office became the largest buyer of wool in the world. The transactions of the Ministry of Munitions ran into fabulous figures. At the end of the war, the Disposal Board, on behalf of the government, sold superfluous war-supplies of all kinds. The list of activities of the State could easily be extended, but it is sufficient for our purpose to bear in mind the fact that the State inevitably found itself, during the war, involved in a sum total of direct government effort in the realm of industry and commerce, such as the most visionary collectivist never contemplated as likely within the lifetime of the present generation. Besides all this, the government assumed supreme responsibility for the railway services, without actually becoming the owner of the railroads.

There was, during the war, a considerable amount of criticism of the activities of the State in Great Britain. Charges of incompetence were freely leveled against the government, and business men and others denounced bureaucratic management in angry terms. It would appear, therefore, that while larger-scale production, the consolidation of industrial and financial interests, and the organization of manufacturers and merchants received a powerful impetus as a result of the war, the advocates of collectivism suffered a rebuff. For a while, indeed, this seemed to be the case; but the Labor Party still holds to its policy of nationalization, and is daily adding to its strength.

During the war, the British public made no attempt to distinguish between the various forms of state activity. Direct state action, increased general control over privately owned industry, and the limitations placed by the State upon individual freedom, were not separately analyzed. The State got little credit for its successes, which were smothered under the irritation created by restrictions imposed by war-conditions and by some glaring cases of ineptitude. The British public, indeed, never had an opportunity of appreciating the government’s activities at their true value. Every mistake, every example of inexcusable delay, red tape, and incompetence, was the subject of discussion in all places where men were gathered together. The excellent work carried on, out of the public eye, by the Civil Service and those who came to the aid of the government, had few expositors. It is, therefore, not surprising that with the Armistice there arose a cry for the relaxation of government control in all directions. The government hastened to satisfy the public and the clamorous interests which had the ear of the press, and withdrew many restrictions, against the wish of many of its best advisers. But the conditions which had rendered state intervention necessary persisted, and, in consequence, a popular cry arose again for government action, with the result that in many cases control was reintroduced.

Meanwhile, the government was faced with the problem of its general industrial policy. It lacked the courage to accept the nationalization of the great services. Its main supporters and its majority in the House of Commons were opposed to state ownership as a policy. Yet the government could not readily extricate itself from the position it had occupied in the economic life of the country during the war. Not only was this so, but the transformation of industry during the war rendered a return to the status quo ante out of the question, and the glaring defects and shortcomings of pre-war industry are generally accepted. So that, while the government rejected a limited programme of nationalization, it could not revert to the old order. It therefore took what it regarded as a via media.

In brief, its policy is one of private ownership combined with government control. It has established a Ministry of Transport, but it has not nationalized the railways and canals. Its Electricity Bill proposes the institution of statutory companies under a wide measure of government control.¹ If it has any policy with regard to coal-mines, it is one of private trusts under state regulation. Though Mr. Lloyd George’s government would protest if its policy were regarded as bureaucratic, there is no other word which so conveniently describes it. It is more than probable that the wide powers of external control which the government proposes in the case of transport will prove to combine the disadvantages of both private and public ownership, with the advantages of neither. State regulation, to be effective, must run in certain well-defined channels, and it must not cramp the motives which lie behind private ownership, unless it substitutes new motives. The general trend of the policy of the British government seems to be in directions which will stifle the freedom of private enterprise, without ensuring that public responsibility will take its place. During the passage of the Ministry of Transport Bill through Parliament, even stalwart supporters of the government expressed strong disapproval of the powers to be given to the new minister.

To give a minister power to coördinate and develop the transport system of the country, when that system is privately owned, is to reduce private ownership to a farce, without making the minister responsible for the success of the transport services. Because the services are in private hands, his powers of coördination are strictly limited. The result is a division of responsibility which, in time, will prove to be intolerable, both to the State and to the owners of the transport services.

The government is, in fact, trying to do the impossible. There is no halfway house between public ownership and private ownership, and the government is vainly trying to build one, by imposing upon privately owned services, not the general requirements and conditions which these services should fulfil, but government coördination and direction.

II

The policy of the British Labor Movement, on the other hand, is crystallizing in favor of the immediate nationalization of certain services. It is mistrustful of government control divorced from public ownership, and it is in revolt against the motive of private gain in industry. Probably most Labor men would agree that a comprehensive measure of nationalization is not immediately practicable. As regards the fundamental services, however, the organized British Labor Movement is agreed on the policy of public ownership; and with the growing insistence of the workers on this programme, the issue between Labor and the Coalition Government is becoming clearly defined. The latter has behind it the weight of tradition and the vested interests of the country. The former gains its adherents from the great tradeunions and from a growing group of ‘intellectuals.’

The centre of the struggle is the coal industry. The British public is now confronted with a new factor in the controversy regarding nationalization. In the past, the question of public ownership was more or less academic. But among the miners opinion has moved rapidly in favor of the nationalization of mines, and the public has to grasp the fact that no industry can continue for long to be run in face of the strong opposition of the workers employed in it. This is the situation in the coalmining industry, and the problem is to work out a system which will meet with the approval and active support of the mine-workers. So far, nationalization holds the field.

During the war, the Miners’ Federation of Great Britain prepared their plans. Early in 1919, as a result of negotiations with Mr. Lloyd George, the government appointed a Royal Commission to investigate wages and the larger question of nationalization. The Commission consisted, on the one hand, of three mine-owners and three employers connected with other industries, and, on the other hand, of three miners’ representatives and three members of the Labor Party unconnected with the mining industry. The chairman was Mr. Justice Sankey.

The Commission gave its attention in the first place to the question of wages. The Chairman and the three non-mining employers issued a report on this question, which admitted that the present system of mines-management was not utilizing the experience and capacity of the miners. The six Labor representatives, in a separate report, pressed for the full acceptance of the wage-claims made by the Miners’ Federation, and urged that nationalization was essential, if the just demands of the miners were to be met. The three colliery owners on the Commission submitted a separate report on wages.

These interim reports are mentioned to show that there was a distinct divergence of view from the beginning. The real issue was joined when the Commission opened the second stage of its proceedings by taking evidence on nationalization. The witnesses who appeared before it were examined in public. There was considerable interest in the proceedings, and it is certain that the general public became much more favorably disposed toward public ownership of the mines. The owners appeared to disadvantage. Their case was badly fought, and when, eventually, Lord Gainford, on their behalf, put forward a constructive policy, it won little support. On the other hand, the Labor men handled their case extremely well, and, judging by the evidence produced before the Commission, and the results of the examination of witnesses, the honors lay with the miners’ side.

As was expected, there was not a unanimous report. The Chairman drafted a report of his own, which recommended nationalization. The six Labor members in a separate document, signified their approval of the general conclusions contained in the Chairman’s report. The mine-owners’ side, with the exception of one member, produced a report which ran along the lines of Lord Gainford’s evidence in favor of a sort of glorified system of profit-sharing and copartnership. Sir Arthur Duckham drafted a report of his own, suggesting the establishment of district monopolies, with limited profits.

Public discussion centred upon the Chairman’s report and the recommendations of Sir Arthur Duckham. Shortly after the publication of the report, it was thought for a time that the government would pronounce in favor of the Duckham plan; but since then it has given the impression that it has no policy. It has introduced a bill to limit coal-owners’ profits temporarily which, owing to opposition, it seems to have dropped; but it does not appear to have in mind any general plan for dealing with the coal industry. It has, however, through Mr. Lloyd George, declared that it does not accept nationalization. The speech in which he made his announcement was hardly worthy of the seriousness of the subject, and avoided a discussion of the main problems involved.

It was a surprise to the general public when Sir John Sankey, the independent Chairman of the Commission, unhesitatingly recommended the nationalization of the coal-mines. As the miners’ side gave adhesion to his recommendations, the Chairman’s report is, in fact, a majority report. But while, as a result of the evidence given before the Commission, the public was prepared to deal more sympathetically with the claims of the miners for better wages and improved conditions, it was not convinced as to the wisdom of nationalization. Nevertheless, opposition to nationalization has diminished in many quarters, and more people are favorable to it than before the sittings of the Coal Commission.

III

The Miners’ Federation of Great Britain brought the question of nationalization before the Trade-Union Congress in September last, and won the support of the whole Trade-Union movement. It was arranged that a deputation should interview the Prime Minister on the subject, and, in the event of an unsatisfactory reply, that a special Trade-Union Congress should be called. The deputation duly met Mr Lloyd George; but, as was foreseen, the result was that the special Congress was convened in London on December 9 and 10, to consider this and other pressing matters. The Trade-Union Congress stood by its previous decision, to support the miners. A propaganda campaign has been arranged by the Miners’ Federation, the Trade-Union Congress, and the Labor Party, and a congress is to be called in February, to consider further action. In the meantime, every effort will be made to popularize the mines-nationalization proposals, in the hope of obtaining a wide measure of support from the electorate.

It is too early yet to prophesy the probable future developments. Mr. Robert Smillie, the President of the Miners’ Federation, stated — at the December Congress — that the miners would persevere in their efforts to eliminate the private owners of the coalmines, and hinted at the possibility of industrial action. The British Labor Movement is essentially moderate and constitutional; but the miners are becoming more and more restive, and it would not be surprising if, after next February, they refused to work under private ownership any longer.

It is possible, of course, that Mr. Lloyd George might decide on a general election. But it is extremely doubtful whether such an expedient would not create an even more difficult situation. For we may be sure that the Prime Minister, who is an astute electioneerer, would not keep the issue clear. The election appeal would be on several issues; an attempt will certainly be made, whenever the next election comes, to throw upon the Labor Party the odium of ‘Bolshevism,’ and a cry will be raised against trade-union tyranny and government by trade-union domination. What would happen after an election on these lines, it is impossible to say. It is not likely that there would be a parliamentary majority pledged to the nationalization of the mines. On the other hand, the trade-union movement, and particularly the Miners’ Federation, will not allow the matter to drop. There can be no doubt that, sooner or later, the policy of minesnationalization will be realized. The firm attitude of the miners’ unions — which are extremely powerful and representative — and the gradually increasing number of adherents to the Labor Party, make this inevitable.

The case of the opponents of minesnationalization is not very strong. They fasten upon two main arguments. In the first place, it is argued that state enterprise is inefficient. Every example of government ineptitude during the war is dragged forth in illustration of this thesis. But the revelations before the Coal Commission show clearly enough that the present system of ownership and management is also inefficient. The searchlight of the Commission penetrated many dark places. The Labor campaign, which has just opened, may be relied upon to expose the waste and inefficiency of private ownership in the mining industry. Not least among the truths which will be brought home, is the fact that the price of coal is not based on the average cost of production, but on the cost of raising coal in the poorest and worst managed mines. For the existence of these the public is penalized, and pays a fine on every ton of coal raised, which passes into the pockets of the owners of the better mines. In view of the need for cheap coal, this argument will appeal with considerable force.

In the second place, those who oppose the nationalization of the coalmines urge that state ownership spells bureaucracy. This argument assumes that organized Labor has a liking for bureaucracy. It fails to realize that officialism is hated as much by the workers as by employers and upholders of private ownership. The Miners’ Federation has made it clear that by nationalization it means state ownership and democratic management, with the maximum amount of devolution. Mr. Justice Sankey, in his report, was at pains to work out a scheme of administration which would avert the bureaucratic tendencies of centralization and put the actual management in the hands of district councils, each operating over a coal-field.²

The growing demand among the miners for nationalization is based on two grounds. First, they object to working for the profit of individuals; and, secondly, they desire a system which will enable them to exercise real responsibility. Industrial democracy, as now conceived, means not only the elimination of private capitalism, but the inauguration of a scheme of working which will place the government of an industry in the hands of those employed in it. What the miners aim at establishing is an experiment in guild socialism. Now, whatever arguments may be leveled against guild socialism, it cannot justly be urged that it will be bureaucratic. The charge could well be brought against collectivism. But British Labor opinion is rapidly moving away from collectivism, and embracing the ideas of guild socialism. This method of enlisting the active coöperation of the various grades of workers in an industry in its conduct and management, it is said by many people, contains no safeguard for the consumer. But at the present time, with the gradual elimination of competition, and the growth of trusts, combinations, rings, and understandings, the consumer enjoys little protection. The advantage of free competition was that it tended to keep prices down. But it has gradually destroyed itself. At any rate, it will be agreed that it is a diminishing force. It will probably prove easier to protect the interests of consumers in a publicly owned service than under a system of private ownership. Those who support the nationalization of the coal-mines have endeavored to meet the need for adequate safeguards so far as consumers are concerned.³

It cannot be denied, however, that nationalization will bring its own difficulties and its own problems. It would be sheer folly to pretend that, with the acceptance of public ownership, all will be well, and that troubles will vanish into thin air. The propaganda campaign now taking place will need to satisfy the public that there are reasonable prospects of overcoming the difficulties.

IV

Another industry in which public ownership has become a practical question is the liquor trade. During the war, the government found it necessary to impose drastic restrictions and regulations upon this trade. In and around Carlisle, it was driven, owing to a large influx of munition-workers, to take the bold course of buying out the liquor interests in that area, and conducting the trade itself. Licensed houses and hotels and breweries were bought, lock, stock, and barrel. The Liquor Control Board then had a perfectly free hand. Redundant licenses were extinguished; many public houses were rebuilt; others were improved structurally so far as circumstances allowed; the sale of food became an important feature in many public houses; the managers were given no inducements to push the sale of intoxicants, though, on the other hand, they were given a liberal commission on the sale of food and nonalcoholic beverages. The general manager of the scheme, Sir Edgar Sanders, has the assistance of a local Advisory Committee, of representatives of various local interests and organizations.

This experiment has been a remarkable success, and has encouraged believers in state purchase to press for an extension of the scheme. Legislation is inevitable, as the war-time regulations will automatically lapse within six months after the termination of the war. It is generally recognized that a reversion to the status quo ante is impossible. Even the vested interests in the drink trade admit so much; and it is significant that the various organizations of brewers and licensed victuallers have prepared a draft bill on the question. But as this measure has been framed by the drink trade, it is not likely to obtain much public support; and, indeed, it may be regarded as dead.

On the other hand, the prohibitionist school of temperance reformers, assisted by Mr. ‘Pussyfoot’ Johnson, and other American supporters of prohibition, is being used to bring home to the public the advantages of ‘ going dry. ’ There is not the slightest doubt, however, that their activities will end in failure. Whether England and Wales will ever be won round to prohibition, none can say; but what can be said without hesitation is that there is not the remotest possibility of the public accepting this policy in the near future. So far, the prohibitionist campaign has probably succeeded in heartening the extreme temperance reformers; but it is extremely doubtful whether it has gained many new adherents.

The government has already announced its intention of passing legislation on the subject, but the introduction of its bill has been postponed. So far as can be gathered, it means to supersede the present Liquor Control Board (which has regulated the drink trade during the war) by liquor commissions, which will exercise at least some of the powers of regulation at present enjoyed by the Control Board. But this solution, while it meets the need for early legislation, will satisfy nobody. It will subject the brewers and publicans to restrictions imposed by the statutory Liquor Commissions, and the trade interests will, therefore, not welcome it. On the other hand, it will receive no welcome at the hands of any school of temperance reformers. The government’s measure indicates that Mr. Lloyd George’s administration has no policy on the question. As in the case of other controversial subjects, the heterogeneous character of the Coalition majority in the House of Commons robs it of real unity.

It is agreed that the drink question is one of the thorniest of political problems, and only the Conservative Party (to which practically all the trade interests are allied) has a policy upon it. The Liberal Party is torn on the subject. The Labor Movement is predominantly in favor of state purchase, though a number of its supporters are convinced prohibitionists. Recently, however, a committee of tradeunionists and members of the Labor Party has been formed for the purpose of focusing Labor opinion in support of the policy of public ownership and control. It is now actively pursuing its propaganda toward this end. The campaign was formally inaugurated at Carlisle in November, when a conference was held of representatives of trade-union and labor organizations in the area covered by the experiment referred to above. It is significant that, though there were criticisms on the details of local administration, there was no desire to sweep away the principle of public ownership. Over 220 representatives attended the Conference, and resolutions were passed (with only one dissentient) urging the continuance of the Carlisle experiment, and the extension of public ownership of the liquor trade to the whole country.

Already a considerable number of Labor bodies have adopted resolutions in harmony with the programme of the Labor campaign. Labor conferences are being held, up and down the country, and the opinion of organized Labor is being steadily consolidated in favor of public ownership and control. The interests in the liquor trade, while they treated the prohibitionist crusade with a certain contempt, are expressing alarm at the propaganda which is being conducted under Labor auspices; and it would appear to be probable that the attitude of the Labor Movement will finally determine the policy of the State on the drink question.

It is interesting to observe that the policy of state purchase and public control commends itself to many temperance reformers unconnected with the Labor Party. Prominent publicists and journalists, and many ecclesiastics, have proclaimed their sympathy with this programme, and here and there persons interested in the liquor trade have admitted its soundness. Mr. Waters Butler, a member of one of the largest brewing firms in England, is an avowed supporter of the policy.

In 1915 proposals were made for the purchase of the liquor trade, and the present Prime Minister was then one of the strongest supporters of this policy. At that time the drink interests were in the slough of despondency, and would gladly have relinquished their property rights to the State. Subsequently, however, the financial position of the trade improved, and it enjoyed high profits and the spectacle of an unprecedented rise in brewery and similar shares. In consequence, the brewers and their agents recanted from the earlier position which misfortune had forced upon them, and they have declared their intention of fighting against their expropriation. But as public opinion seems to be crystallizing round the policy of eliminating private gain, as the great step in the interest of national sobriety, the prospect of nationalization and public control is by no means remote.

V

Coal and drink are the two industries in which a vigorous campaign is being undertaken in favor of nationalization; but they are by no means the only ones in which there is a demand for it. It is well known that the National Union of Railwaymen has in view the nationalization of the railway system, though it has not, as yet, formulated a demand to this end. They have been occupied with the satisfaction of their claims regarding wages, hours of labor, and working conditions. The terms they have so far succeeded in obtaining have imposed a new burden on the companies, and it is not improbable that private enterprise will be unable to bear the burden.

There is in all quarters of the community considerable support for railway nationalization, and there is a Railway Nationalization Society to forward it. It is generally felt that the Ministry of Transport will be driven to assume, on behalf of the State, the ownership and control of the railway service. In any legislation for this purpose, the canals also would be bought out, as well as certain shipping services. This would be inevitable, as a considerable number of canals are owned by the railway companies, — which have allowed many of them to fall into disuse, — while some companies own lines of steamboats.

The Labor Party is inclined to regard transport, or, at any rate, the main forms of transport, as a single service. It is urged that, in the event of railway nationalization, the fleets of railway companies’ boats running to Continental ports and to various parts of the British Isles should pass under state ownership. The political Labor Movement would go further, and embark upon a scheme of state purchase of the chief shipping lines. But while the nationalization of the railways would meet with little opposition, any proposal for the nationalization of shipping would not command general approval at present.

At the special Trade-Union Congress held in December, 1919, it was recommended that ' the work of reorganizing and developing the railways should be put immediately in hand, and that the same energy should be applied to the reorganization of the railway and allied transport services, including motor transport, as was put into the task of organizing the nation for war purposes. . . . Such organization can only be effected on a basis of public ownership and democratic control.’

The nationalization of the land is an old cry, and there is an old-established Land-Nationalization Society which seeks to popularize this proposal. Nevertheless, at the moment, land-nationalization is an academic question. There is no really vigorous and effective agitation being carried on, though the British Labor Movement subscribes to the principle and there is a number of people who, while unfavorable, or even actively opposed to the application of public ownership in other directions, indorse the plea for the nationalization of land. Moreover, it is interesting to note that the two chief trade-unions organizing agricultural workers — the Workers’ Union in June, and the Agricultural Laborers and Rural Workers’ Union in April, 1919 — have declared clearly during the past few months in favor of land reform.

It may be that the nationalization of coal-mines will lead to a demand for the nationalization of other mines and minerals, in which case it will be impossible to ignore the claims of land-nationalization, as many questions of land-ownership and tenure are involved. With the improved organization of the agricultural workers, the demand for nationalization will grow. It is not without significance that a considerable number of Labor candidates contested rural constituencies at the last General Election; and, in spite of the handicaps under which the Labor Party suffered, made remarkably good polls. This is the result of trade-unionism in rural areas. In view of the new political and industrial activity of the agricultural workers, it is certain that more will be heard in the future about the nationalization of land.

The nationalization of the banking services is now a definite part of the programme of the organized Labor Movement, and at the recent TradeUnion Congress an explicit resolution was passed, asking for the immediate nationalization of the banking system. So far, however, there is not any strong pressure behind this demand.

It will be observed that in the services mentioned above there are no manufacturing industries. It is true that the Labor Party contemplates an ultimate extension of the policy of nationalization to the field of manufacture; but the immediate demand is for the establishment of public ownership in a limited range of economic services. In the first place, there is a public opinion desirous of nationalizing certain natural resources, such as land and mines. Secondly, there is the demand for the public ownership of the main transport services. Thirdly, comes the formulation of the policy of a nationalized banking system. Lastly, there is a considerable body of opinion favorable to State purchase and public control of the liquor trade.

The only political force which subscribes to the nationalization of all the foregoing services is the Labor Movement. But while there is nothing approaching unanimity of opinion in Britain on the advisability of introducing the principle of public ownership into coal-mines, land, transport, banking, and the drink trade, there are, nevertheless, groups of people, by no means negligible, who support the policy in one or other of these services and trades. This is especially so in the case of land, railways, and the liquor trade. There is therefore a considerable amount of backing for these various nationalization proposals. On the other hand, there is a strong body of interested opposition, which will rally behind any private interest which is assailed by a nationalization programme. It would seem, however, that, in spite of the misrepresentation from which those who advocate public ownership suffer, and of the strength of old traditions in industry and commerce based upon competition and self-interest, there is an ever-increasing volume of support for this national programme. The trade-union movement now numbers about six million members; and though it would create a false impression if one were to say that these millions of workers were unanimously behind the general policy of the Labor Movement, it is certain that a considerable, and steadily growing, proportion of these organized workers subscribe to at least a restricted measure of nationalization. Further, with the reconstitution of the Labor Party, it has been reinforced by people drawn from other classes than that of the manual workers. Again, it is not without significance that very large numbers of the younger men and women, who have held aloof from political parties, are now profoundly dissatisfied with the existing order, and more and more inclined to look for guidance to the Labor Party.

How rapidly opinion will mature in favor of the nationalization of specific industries and services cannot be foreseen. At the present time, the old system is generally recognized as bankrupt, and no broadly conceived alternative policy has been propounded. Nationalization, consequently, must be regarded as the only alternative programme to the existing chaos at present confronting the British public.