A BOOK OF THE MOMENT

LABOUR'S MONEY

[COPYRIGIIT IN TIIE UNITED STATES OF AMERICA BY TIIE

New York Times.] HERE is a book which is, indeed, of the moment. It is a book of reconciliation—of reconciliation between Capital and Labour. By this I do not mean reconciliation in the sentimental sense of talk about the milk of human kindness,

of getting people to understand each other, and to love their neighbours and not think of themselves. I do not want for a moment to sneer at these things. They are all of great importance, and however much the bitter men may sneer or the practical men may smile, they are realities and

cannot be forgotten or ignored without great danger. For the moment, however, the reconciliation that I am dealing with is reconciliation in a wider and more abstract sense. I mean by it the bringing together and the fitting in of ideas which appear to be antagonistic, or, at any rate, irreconcilable. For example, we are being perpetually told that the interests of Capital and Labour are irreconcilable, that they are con- ditions of combat, not of co-operation, and that we must accept this fact of perpetual strife and collision and face it for good or evil as something which cannot be changed.

Now, the claim of this book—and it is a claim which, if established, as I believe it is, makes it of the very greatest importance—is that if you make enquiry and analysis in the proper scientific spirit you will find that the antagonism is superficial, not fundamental. The truth is that Labour can use, and may use, without forfeiture of any of its rights or duties, or aspirations, the mechanism of Capital for the betterment of human society. Labour and Capital are recon- cilable because in a correct analysis Labour is shown not to differ in kind from Capital. To put it in another way, Labour is Capital. The potential wealth which happens to be stored up inside a man, but which is nevertheless exchangeable because in demand, is, or can be, as much the foundation of credit as any other form of wealth, actual or potential. But these arc abstractions, however interesting.

The notable thing about Mr. Boeckel's book, Labour's Money, is that it is not theory, but the story of actual doings. The

theories do not emerge till the facts have been recorded and their consequences noted. The book has on its cover a short summary which cannot be bettered, and therefore shall be quoted :—

"A study of Trade Union activity in the United States, showing how the production of a new social order is being arrived at by the judicious use of Trade Union funds. While the end sought in this movement is as revolutionary as any radical reformer could wish, the means for its achievement hold no threat of indus- trial disruption or public disorder. The movement does not look to the overthrow of Capitalism. On the contrary, it accepts the institutions of a capitalistic society and seeks to work, through capitalistic methods, towards a new social order."

My only criticism of this is that it may seem to the more ardent and uncompromising_ people on the Labour side as if there were too much of the flag of truce about it—too strong a desire to be conciliatory at all costs. In reality there is nothing of the spirit of yielding in it. It contains no sug- gestion of surrender. On the contrary, it is a strong, sensible, well-written plea, designed to show that Labour can get what it wants, or a great deal of what it wants, by a proper and legitimate use of the instrument of Capital. I have one more thing to add by way of introduction. Lord Milner in his excellent preface to the book points out what he has already said in his Questions of the Hour. . It is not only conceivable, but desirable, "that the people engaged in any industry should themselves be its capitalists, or, in so far as they need the assistance of external capital, should pay for the use of it, without becoming subject to the cantrol of its possessors."

That, I may add, is an admirably lucid statement of what I have long desired, namely, that men should "set themselves on work." In other words, recognizing that their power

of- work makes them capitalists in posse, they should obtain credit for their potential wealthust as the Industrialist does for the wealth he hopes to create by his energy and man- agement. They would thus become their own masters. Lord Milner in his statement explores a further development of the process, or rather adjustment, of interests between Capital and Labour. Under such an adjustment a body of associated workers could, as it were, make themselves the intermediaries, or agents, for the obtaining of external capital. By doing so they could prevent the evils which come into being when Production is under the direction of what might be called " naked " Capitalism.

Labour's Money begins with the story of how a Trade Union in America, instead of keeping its money in Government or other securities, used its reserve funds to establish a banking business, but a banking business with a difference. The Labour Bank was established, not to act as a servile imitation of capitalistic banks, but was consciously and distinctly de- signed to finance Labour movements and to act as a conduit pipe, so to speak, by which external Capital might reach and irrigate the fields of Co-operative Labour. The first Labour Bank in the United States which was organized and operated under the direction of a Trade Union was opened at Washington in the summer of 1920. A second Trade Union bank on larger lines was established six months later at Cleveland. They were both established out of money owned by prosperous Unions who already had several million dollars on deposit with outside banking institutions. The idea of using their money, not to support the existing Capital- istic System, but rather to create and maintain a new system of what might be called Labour Finance, originated with the leaders and officials of these Unions. It may have been that the original purpose of the first Labour Banks was to get a larger return for their Trade Union funds ; but they very soon saw that they could use their money in the perfectly legitimate work of preventing what was called in America "the deflation of Labour." The Labour Banks used their money as a brake on this process.

Three years after the first Trade Union Bank was founded at Washington a dozen Labour Banks had come into existence, with capital exceeding thirty million dollars (six million pounds sterling). The book before me does not give the very latest figures, but I have little doubt that if they could now be given

it would be seen that the development goes on steadily and prosperously. Mr. Richard Boeckel, a Labour writer, be it said, with a remarkable power of resisting opportunities to make rhetorical scores off his opponents, and with a mind which can be suave in exposition without being unctuous, well sums up the situation as follows : "The labor banking move- ment, with its promise of a revolutionin Trade Union methods, is a movement of the workers to assume control of their own money for use in their own interest." He goes on to tell the story of how in a marine repair workers' strike in Norfolk in 1920 the workers made use of the Labour banking movement and employed the weapon of Capital to fight Capital. In this strike one of the repairing engineering companies did not join the Iron Masters' Association, but stood out. The Masters naturally, and indeed inevitably in such a conflict, tried to get rid of this company, which they regarded from their point of view as a " blackleg " concern. The financial con- dition of the company was not very strong, and it could only continue operation as long as the Bankers' Trust Company furnished it with operating credits. It is alleged that under the influence of the Iron Masters' Associa- tion the company received formal notice from the bank that it could not continue to grant the old credit facilities. To cut a long story short, the company found that the condition under which it could continue to be financed was that it must enter the Iron Masters' Association. The company, though unwilling to accept these terms, was apparently unable to find any other way out. Then an idea occurred to one of the officials of the men's unions. If one bank could force an industrial enterprise to suspend its operations by withholding credit, a Trade Union Bank, by supplying the necessary credit, could enable the enterprise to go on After a little negotiation the solution was found ; but the Trade Union Bank made two conditions. One was that the Company should keep its plant in continuous operation, and the other was that part- time work should be given to all members of the Union at the Union's scale of wages. This arrangement proved a double bles'sing for the Union. If this particular_ strike had continued

the Union would have had to pay out a very large sum in strike pay for its members. The investment of the Union's money in the repair Company, by enabling the company to go on employing Trade Union labour, relieved the Union of a very large liability. It was using its reserves in the most economic way. Largely by these means the contest at Norfolk ended in a victory for the workers. Mr. Boeckel goes on to give other examples of equally judicious uses of Labour's money during strikes.

In this incident it was soon seen that there was a new way of using Capital to advantage in a strike. [An example is given in which during a coal strike the workers purchased a mine and set themselves at work with advantage to them- selves and great advantage to the Labour money which they employed, as the blackleg mine made very large profits.] 'Further, it was seen that Labour money available for schemes of Production also opened the way to that association in the matter of control which has become so important an aspiration in the eyes of Labour.

I wish I had more space to deal with the throng of inter- esting questions and suggestions raised by the book before me. I can, however, do little more now than put up the biggest possible sign-post to induce people interested—and who is not ?—in the reconciliation of Capital and Labour

to read Labour's Money. Mr. Boeckel, in dealing with the conditions under which Labour money may be lent to manu-

facturers, provides several excellent "slogans" for his cause :—

" In the case of a manufacturing enterprise applying for credit, the first condition is that the credit when made available shall be used for productive purposes only,' that is, for the continuous production of essential goods, in the largest possible volume at the least possible cost. . . . One of the really significant discoveries made by the labour banks has been that there are manufacturers in the United States, and quite a few of them, who are more Interested in manufacturing goods than in manufacturing profits, and who are very willing to talk business with labour to this end, when labour is able to speak their language. The profits of enter- prises accepting credit from the labour banks under their con- ditions have not suffered, rather they have gained. In the first place production costs per unit are cut by increasing the output, and in the second place workmen, reasonably assured of steady employment at wages they believe to be fair, are not compelled to soldier on the job. Their interests are better protected in another way. The usual labour troubles tend, therefore, to dis- appear and the efficiency of the whole organization is largely increased in consequence. When extending merchandise credits to wholesalers, jobbers, or retailers, the principal conditions laid down by the workers' banks are (1) that the entire amount of the credit shall be used in the purchase of essential goods and (2) that the goods purchased be so priced for resale as to make for the quickest possible turnover at "the' smallest margin consistent with reasonable profits. Middlemen holding goods off the market for unjustifiable profits receive no credit assistance from the workers'

• banks. No loan is granted for any speculative purpose, whether the speculation be in lands, commodities, or securities. Nor are loans made which are likely to divert energy from the production of essential goods ;to the production of luxuries beyond the reach of working men and women." . .

; The only thing I have to say about the facts here recorded , is that they seem almost too good to be true.

It is in this spirit that Labour could, and I sincerely hope • and believe will, triumph. - The reason why Labour deserves to win on these lines is worth noting. The principles of action will triumph because they are in the interests of the con- sumer. You must live in order to produce, and in order to live you must consume. If, therefore, Labour could and would use its savings, not in strikes, but in the financing of production, we should get that reconciliation of which I wrote at the beginning of this article. We should get it, too, through the recognition of the silent third party in Industry—the Consumer. He would bless the union of Capital and Labour.

I want to end with a practical suggestion. Why should there not be a "Workers' Credit Mobilier " able to finance Labour enterprise and Labour factories ? We shall never really know what Labour can do when put to it, and do without injury to itself till we see in, say, the mining business a body of some five or six hundred miners and mine workers formed into a trade guild, raising money on their potential capacity for work from some Labour Bank or group of Banks, and then hiring a colliery and its plant, lock, stock, and barrel, and putting its coal on the market. I ask all thinking Capitalists to study this book and see how far they can help to get its principles adopted. If they do, they will unquestionably be helping themselves.

J. Sr. LOE STRACHEY.