WAGES AND PRICES.
THE new demand of the railway-men for an addition of 10s. a week to their wages brings up again in an acute form the question of the relationship between wages and prices. The question is complicated as regards the railway-men by the proceedings of last October. After much negotiation the railway companies then conceded to all their men a 5s. bonus on condition that no further increment should be asked for during the continuance of the war. Consequently the present demand for a further increase of 10s. a week is a clear breach of the bargain then made. That is a very serious matter indeed, for unless bargains are observed honest commerce becomes impossible. Mr. J. H. Thomas, the very able representative of the railway- men, recognises this side of the case frankly, and is evidently perturbed at being put in a position where he must, on behalf of his clients, break a formal bargain made as recently as October last.
It must, however, with equal frankness be admitted that the case for a revision of last year's agreement is very strong. According to Mr. Thomas, when the bargain was made, the representatives of the railway companies assured him that they would, construe it in a reasonable manner; and if the war was prolonged indefinitely, or if circumstances were to arise that would necessitate the reopening of the whole question, then they, as practical men, would take the changed circumstances into account. What has happened is that prices have risen very greatly as compared with October • last, so that if 5s. a week was a fair compensation to the • railway workers for the increase of prices in October, 1915, some further compensation is certainly required now. That is Mr. Thomas's case, and it is certainly a strong one. Probably it was a mistake on both sides to make a bargain of indefinite duration when no one could clearly foresee the contingencies which might arise. It has, moreover, always to be remembered that, though few things are more important in commerce than a strict observance of bargains, yet in practice the most successful commercial men are willing to revise the bargains they have made when they find that the person with whom they contracted would suffer -a substantial injustice if the bargain were rigidly enforced.
In any event the railway dispute is only part of a larger problem, and that larger problem is not complicated by the question of specific bargains. The problem, briefly stated, is this : That, mainly in consequence of the war, the prices of the principal necessaries of life have risen to such an extent that the poorer classes are unable to maintain them- selves at the same standard of comfort as before. If everyone in the community received an income which permitted of a moderate standard of comfort with a margin over, then there would be no case for a revision of wages because of a rise in prices. Indeed, working-class leaders who demand a rise of wages because prices have risen put themselves in the logical difficulty that they ought to be willing to accept a reduction of wages when prices fall. They would, quite properly, resist any such proposal, arguing that it implied that working men ought always to be kept close to the bare minimum of existence. From this point of view it is clear that, as a permanent policy, all those who wish to improve - the condition of the mass of the population ought to reject the idea of the regulation of wages by the movement of prices. The private citizen, whatever be his occupation, ought to be in a position in which he can himself face—out of his own means—fluctuations in the prices of the necessaries of life. But we are dealing, at the moment, with things as they are, and not as they ought to be, and it must be admitted that, where wages arc low, there is an unanswerable case " for some revision to meet such an abnormal fact as the present sudden uprush of prices. It must be added, however, that no revision of wages can completely solve the whole problem created by rising prices. There' are many clas.ses of persons who feel the rise of prices quite as much as wage-earners, but who have no source from which they can increase their incomes. On the other hand, when wages are raised by a weekly bonus, as were the railway-men's last October, that bonus is given not only to the poorest-paid workmen—to whom it may be a necessity—but also to men in the upper ranks of wage-earners who are in a position to bear the increased cost themselves. It is absurd that a man earning £3 a week should receive a 5s. weekly bonus at the expense of the rest of the community, while persons whose whole income may be under 10s. a week receive nothing.
There is a further defect in this method of dealing with the problem which is perhaps even more fundamental. It is this : that it starts a vicious circle, or, shall we say, a vicious spiral, which leads progressively upwards to an ever-increasing aggravation of the difficulty which the original step was intended to cure. If railway-men's wages are raised, the railway companies must raise rates for goods and passengers. That means an increase of the cost of commodities and an increase in the cost of living for all persons who have to travel backwards and forwards to their work. The same consideration applies, of course, to aockers' wages and to the wages of carters. It applies also to the wages of agricultural labourers and milkmen, and the outcry which is now being raised against the high price of milk ought to be directed partly, at any rate, against the persons employed in the milk trade who are now drawing higher wages and thus adding to the cost of providing and distributing milk. On the other hand, it must be admitted that certain classes of capitalists—and notably shipowners—are making very large profits out of the present economic situation, and this gives point to the Socialist outcry against the people whom they call "profiteers." The answer is that in these cases the Government has already taken steps to intercept the greater part of the accruing profits by means of the Excess Profits Tax, the Income Tax, and the Super Tax. In other words, the profiteer has to pass over to the Government by far the larger portion of the extra profits which he makes out of the high prices which present conditions enable him to charge. The Socialists welcomed this new tax when it was first imposed, but they are apparently now arguing that they would prefer the Government to intervene and fix prices so as to wipe out the employer's profits altogether ; and, of course, to wipe out also the Government revenue derived from the Excess Profits Tax. This demand, that prices should be fixed by authority, has cropped up in all economio crises in all ages, and no amount of past experience seems to convince the multitude that the fixing of prices by the Govern- ment is practically impossible. Both in Germany and in Austria the attempt has probably resulted in far more suffering to the poor than if the State had stood aside. All sorts of unforeseen difficulties arise the moment the State interferes. For example, if the price of wheat is fixed relatively low, as compared, say, with the price of oats, farmers will find it profitable to feed. their stock on wheat instead of oats. This has actually happened in parts of France. Or, again, if insufficient account is taken of the cost of conveyance to different towns the price may be fixed too high in one town and too low in another, with the result that one town will be flooded with wheat and the other will be starved. It is conceivable that, by means of carefully worked out plans, the State in a self-supporting country could build up a system for supplying the necessaries of life in fixed quantities at fixed prices to the whole population of the country. But in the emergency of a war it is quite impossible for any Govern- ment to build up any such complicated system, and in time • of peace the whole country would resist the degradation which the establishment of such a system would involve. The root facts of the situation are that, while we are pro- ducing fewer of the necessaries and comforts of life in this country than in time of peace, we are consuming more, because the great mass of the population, owing to war expenditure, is better off than before. Under these conditions a rise in prices is inevitable, and the only way in which those prices can be checked is by reversing the process which has produced it. In other words, we get back to the simple proposition that what the country needs is greater economy in consumption and greater effiCiency in production.
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