REPORT.

The Rt. Hon. Sir ARTHUR STEEL-MAITLAND, Bart., M.P., Minister of Labour.

SIR,

We have the honour to submit the accompanying report on our visit to Canada and the United States to study industrial conditions, with special reference to the relations between employers and employed, in their bearing upon industrial conditions in Great Britain.

Each industrial country has difficulties, as well as opportunities for advancement, peculiar to itself, and no one will assume that methods which are practicable in one country are necessarily suited to another. The problems of industry, and particularly the problem of changing methods to meet changed economic conditions, can best be solved by those immediately engaged in industry. Experiments that are being made in Canada, the United States, and other industrial countries can teach valuable lessons in the solution of problems which are common to all phases of industry, and in our view the frequent interchange of visits by representatives of both management and labour is to be encouraged. Such visits lead to a wider outlook and give encouragement in the continued application to our own problems.

Neither the United States nor Canada claims to have solved the industrial problems which press in increasing volume as industry becomes more extended and more intricate; but, as in this country, earnest men are experimenting and endeavouring to find a solution. Out of the many points we deal with, we wish here to draw attention to the following elements in American industrial conditions and industrial relations which seem to us to be of more special interest.

1.-Industrial combination.

The formation of large groups in industry is very marked, and they are almost entirely of the type generally referred to as "Horizontal Trusts." Where well organised, their success is undeniable. They have caused cheaper production and lower selling prices, and this has resulted in widened markets, greater employment, and higher wages.

Large amalgamations of similar industries are no more difficult to control than small units, and the advantages are that overhead charges are lessened, selling expenses are reduced, and individual factories can be specialised on the production of fewer varieties of articles, again causing cheaper production.

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II.-Standardisation and simplification.

The effect of intelligent standardisation is to reduce the cost of manufacture, to reduce stocks which have to be carried. both by a manufacturer and a dealer, and to make the financing of stocks easier by reducing the risk of depreciation due to changing fashion or type. This process has undoubtedly been made easier in the United States, than is at present possible in Great Britain, by the lack of conservatism and by the power of the large combinations of industry.

In addition to standardisation, simplification of design so that parts of any commodity can be more cheaply and easily manufactured is the subject of continual study. If reference is made to Appendix No. 3, it will be noticed what has already been accomplished in this direction.

III.-Instalment buying.

The estimated total value of goods sold at retail in the United States in 1926 under this system exceeded £1,200,000,000. (This sum is considerably more than the value of the total British export trade in a normal year.) The estimated instalment debt at a given time is about £550,000,000. It is true that the greatest caution is necessary in approaching this matter, but the system of instalment buying must have been a great factor in increasing the internal trade of the country and consequently the prosperity of industry.

IV.-Management.

Management is receiving clearer recognition as the executive arm of industry, distinct from ownership, not only in large corporations where ownership is widely distributed but also in small undertakings. The technique of management has greatly advanced. Managers pool among themselves, even in competitive industries, the benefits of their experience in production, organisation, marketing and industrial relations, and full publicity is given to statistical and other data on all business

matters.

V.-Labour.

The workpeople accept experiments towards reduced cost of production, as they have always found that the result of lower costs has been increased consumption and consequently more employment.

Various forms of incentive are arranged to maintain a high standard of output.

Management are ready to recognise the ability of individual workers by paying higher wages for higher output, and in many cases by grading them according to their skill.

The sole qualification for employment is ability to do the work, and little regard is paid to training and past experience if adaptability is shown.

Appointments to executive and administrative posts are determined by ability, and this position arouses keen individual effort and has a marked effect on the morale of the workshop.

The adaptability shown by all engaged in industry to promote efficiency and productivity and to eliminate waste, in order to secure the greatest benefits which industry can afford, is particularly noticeable.

VI. Industrial Relations.

During recent years there has been a greater realisation of the importance of industrial relations.

Organised labour is adapting its organisation to meet changed conditions. In those industries in which the majority of the workers are members of unions, the unions have made arrangements for general questions affecting the members of several unions to be discussed between the management and representatives of a federated system of all the unions concerned.

The movement towards closer contact in the workshop between management and workpeople, the enlistment of trade unions and individual workers in the problems of organisation and production, and the exchange of information regarding costs. of production and the state of business are important contributions to the association of management and labour.

It is the spirit that animates the workshop that matters. As in this country there are many systems of machinery for negotiation between management and labour in operation. The outstanding feature which distinguishes the most successful schemes from similar schemes in this country is the greater provision made for management and workpeople at individual plants jointly to deal with their own individual difficulties, while providing for the common rules of each industry to be settled by other means.

NOTE BY MR. I. HAIG MITCHELL.

While I am in general agreement with the Report, and with IV, V, and VI of the covering letter, I do not wish my signature to the letter to apply to the commercial and business items. I would have preferred that the letter should have drawn more particular attention to the movement, in the two North American countries, which is making for industrial peace. The principles of an important phase of that movement are to be found in the quotation given in paragraph 49, and the movement is generally described in other paragraphs.

The basis of the phase referred to, as indeed of the whole movement, is the recognition of the fact that industrial peace must have its foundation in confidence and goodwill in the workshop. The readiness with which workers have responded to practical overtures towards this aim, made to them by their employers, leads to the conclusion that they are naturally disposed to co-operate.

I. HAIG MITCHELL

INTRODUCTION.

1. We reached Ottawa on 13th September, and left New York for home on 11th December, 1926. In Canada we called upon the Governor-General, Lord Byng, and subsequently upon his successor, Lord Willingdon. We also met the LieutenantGovernors of the Provinces of Ontario and Quebec. We were given the greatest possible assistance by the Minister of Labour for the Dominion of Canada, the Deputy Minister and the Assistant Deputy, by the Deputy Ministers of Labour for the Provinces of Ontario and Quebec, and by members of the staff of the Federal Department of Labour.

2. In Washington we were received by the President of the United States, who expressed interest in our work and intimated that we were at liberty to make use of any of the Departments of State. The Secretary of State for Labour rendered us valuable services personally and we had the assistance of his Department

3. We give in Appendix I a list of towns visited in the course of our investigation, and a list of the industries studied. Our aim was to see establishments which were truly representative of Canadian and American industrial conditions, and for that reason we did not confine our attention to large concerns. In making our selection and pursuing the subject of our mission we were guided by the invaluable advice and assistance in Canada of the British Senior Trade Commissioner, who accompanied us personally during the major part of the Canadian visit, the Federal Department of Labour, Ottawa, the Canadian Association of Manufacturers, and the Trades and Labour Congress of Canada; in the United States, of the Commercial Counsellor and the Commercial Secretary to the British Embassy, Washington, the British Consul-General and the Consul, New York, British Consular Officers in the cities visited, the Federal Department of Labour, the Chamber of Commerce of the United States, the National Association of Manufacturers, the American Federation of Labour, the Taylor Society, the National Industrial Conference Board, the Industrial Relations Counsellors, Incorporated, the Russell Sage Foundation, the American Management Association, and the National Civic Federation; and in both countries, of Federal and State Departments, organisations of employers and workpeople, Chambers of Commerce, Employment Exchanges, independent organisations interested in industrial problems and research, University professors, Civic dignatories, and other persons, too numerable to name, whom we met. Sir Henry Thornton, the President of the Canadian National Railways, kindly provided for special travelling facilities in Canada, and we are greatly indebted to him, and to the officers who accompanied us, for the arrangements made.