CHAPTER V

FOREIGN COMPETITION

High wages and high prices not necessarily connected—Effect of increased wages in different groups of trades—Trades in which there is a margin for increase—Varying wages in the same trade—Scottish Wholesale Co-operative Society’s shirt factory—Trades in which higher wages would lead to improved methods—Displacement of workers—Cheapened production—Increased demand and increased employment—Trades in which higher wages would lead to higher prices—Foreign legislation against sweating—Effect of higher wages upon home market—Valuelessness to the country of very ill paid trades—The two lines along which trade may develop—The line of cheap labour—Consequences to the British worker—The line of good work—Summing up.

The foregoing chapters will have been written in vain if they have not succeeded in showing that there is no necessary connection between high wages and high selling prices; but that, on the contrary, high wages, in the great majority of cases, actually conduce to cheap production. Were this invariably the case, it is obvious that a general rise of wages, far from encouraging foreign competition, would rather form a barrier against it. And this, in fact, would be—as it is in some instances already—the case in many trades.

It may be well briefly to consider the various groups of cases that would arise in consequence of a general rise in the remuneration of labour. There exists, in the first place, a considerable group of trades in which, for similar work in respect of goods sold at the same price, different employers pay very different rates of wage. A very remarkable instance is furnished, in one of the worst paid trades, by the shirt factory of the Scottish Wholesale Co-operative Society. In that establishment, turning out goods for working class customers, women have for years received about double the wages of the average home working shirt maker, they not providing, as does she, the sewing cotton used. In October 1906 the average wage paid to workers in this factory was 18s. 3d. per week, and their week was one of 44 hours.[98] Yet the factory pays and has done so for many years.[99]

It is therefore clear that even in the ready made shirt trade it is possible to pay reasonably good wages, to compete with the “sweater,” and yet to make a profit. Thus the enforcement of a minimum weekly wage very near the level of Mr Maxwell’s 18s. 3d. would neither kill the trade nor stimulate the importation of foreign shirts. It would merely impose upon other employers that standard of management and methods which Mr Maxwell has chosen voluntarily to adopt. Those employers who lacked intelligence or flexibility to carry on a factory on these terms would, it is true, be driven out of business; but their customers would not cease to buy nor to be supplied at the old price. The only change would be that none of us would, any longer, be buying shirts at which some woman had sewn, as Hood said,

“with a double thread At once a shirt and a shroud.”

There are other groups of trades in which the history of the cotton trade would be repeated, that is to say, the employer who found himself compelled to pay higher wages would at once introduce better machinery—either in the narrow sense of actual appliances or in the wider sense of improved organisation and management. Such an employer would also, as the cotton masters have done, demand better work from his employees, and would get it. At first there might be a diminution in the number of hands employed; but if, as almost always happens, the improved methods led to a considerable reduction in the cost of production and consequently to a lowered selling price, demand would immediately increase, and more workers would again be wanted. There is no reason in the nature of things why a rise of wages and a powerful labour organisation should not do for the silk trade and the woollen trade of Britain what they have already done for the cotton trade.

In the first group of these trades, then, no workers would be displaced, and the conditions of the market would remain unaltered; in the second, there would, at first, probably be a displacement and afterwards, probably, a renewed, or even an increased demand for workers.

We come next to a group of trades which may exist, but of the existence of which I personally am somewhat sceptical. These are the trades in which there is neither margin of profit nor room for improvements that might make up for the additional outlay upon heightened wages. In these trades—if such there be—it is undeniable that if British wages rose while foreign wages remained stationary the foreigner would be extremely likely to capture the market.

But there are various matters that must be set down upon the other side of the account. To begin with, our foreign competitors are themselves uneasy about the existence of sweating within their borders. It is almost certain that German legislation directed against this evil will precede legislation in this country; while in America, as may indeed be judged by the quotations from recent American books that appear in these pages, there are many persons much concerned with the problem of underpaid labour. If our foreign competitors should keep step with ourselves in the prohibition of extreme underpayment, the balance of international trade would be in no way disturbed. Nay, if only Germany should do so, the disturbance to the English market would not be serious.

Moreover, the payment of high wages to working people has, in itself, a beneficial effect upon the home market. Some people write and speak as though money when it once passed into the hands of a wage earner passed out of existence. But in fact it almost always returns very quickly into active circulation and thus quickens the national turnover. As a general rule a workman, when his wages rise, spends his extra money upon additional comfort for himself and his family; buys more and better food, more and better clothes, more and better furniture; often he moves to a better dwelling and almost always he extends his recreations. The chances are that he will spend something in belonging to a club or a friendly society. He will not, however, as his enemies are fond of asserting, generally drink more; it is to the man who lives with his family in one room, not to the man who has a comfortable parlour, that the public-house looks so attractive. We may say without much doubt that these will be his modes of expenditure because we have among us plenty of well paid artisans, and observation teaches that these are in fact the ways in which they spend their money. Now, many of these channels of expenditure are practically not open to foreign competition. Bread for English eating must be baked in English bakehouses: milk is not yet imported: the retail shopkeeper, the bricklayer, the omnibus driver and the railway servant must follow their avocations on the hither side of the sea. The better paid worker thus, without any premeditation or patriotic design, tends, by the mere process of buying what he wants, to set his fellow countrymen working. It is quite possible that the increase of demand thus created would more than counterbalance the loss of any trade the retention of which depends upon the continuance of underpayment. Nor is this all. It is a question whether any trade in such a condition is either worth keeping or capable of being kept. An experienced employer who is at the head of a large and successful enterprise writes to me: “Broadly speaking, I am convinced that an occupation which does not admit of a decent living wage is an occupation we are better without and one which in due time will die. I mean that the requirements of the Factories and Workshops Act must kill it. A trade which can only live by means of inadequate wages and cheap squalid unhealthy buildings is doomed.” Such a trade while it still endures is not really a source of national profit. The workers whose lives it drains, not being supported by the price paid for their labour, must come eventually to be partly or wholly supported by other people. They are, in fact, a national burden, whether the charge is nominally borne by the State or by private citizens. Poverty, dirt and disease are very costly to the country in which they prevail; and they are inevitable results of underpayment.

We may seek the development of our trade along either of two lines—we may aim either at underselling our competitors or at surpassing them. If we elect to take the line of cheapness, and also determine to seek that cheapness by paying very low wages, we must confine ourselves to goods that demand neither very high skill nor very elaborate machinery. But these are precisely the sort of goods that can best be produced by nations upon a lower level than ourselves, by peasants and by dwellers in genial climates where comparatively little food and clothing and practically no heating are required. With workers such as these we can never compete on equal terms, and we should be wiser not to try. We can never bring down an Englishman to the standards of the Chinaman or of the Hindoo. But we can, in making the attempt, create among ourselves a class of helots, degraded labour slaves, living on a level that shocks our national conscience. To do this is to keep open a sore in our midst and to run a constant risk of those revolts and disturbances which are the greatest possible danger and interruption to the regular course of trade—a greater danger perhaps than that of being undersold by foreigners. For the long-suffering of the English poor, though amazing, is not probably quite unlimited. No national life can be stable while large numbers of the people live in great misery. The best safeguard of national peace is a general distribution of comfort and independence. And the safest paths towards this state of security are good education and good payment for the workers. Low wages lead by a path of intolerable suffering to an inevitable downfall. On the ascending path too there may be dangers—but they are the less dangers, and they will be faced by citizens fitter to meet them.

After all, even Great Britain cannot expect to hold all the trade of the world. What she may expect, what she can have if she will, is the commercial leadership of the world. She may show in other departments, as she has shown in cotton and in iron, that her race can produce the best workers living, and the best organisers of work; and she can continue the great lesson which others have learned from her history, but which she herself does not always remember, the lesson that, other things being equal, that nation becomes wealthiest which pays its workers best. Health, skill, intelligence: these are the true bulwarks of national prosperity; and the price of these is liberal payment for labour. Nor does the prosperity which rests upon these things injure those neighbouring nations amid which it develops. Rivalry upon the up-grade educates and improves all alike; rivalry upon the down-grade injures and degrades all, but not all alike. In that competition the nation suffers most whose standards are highest.

To sum up in a few words: in many trades, wages could be raised out of profits without change of selling price; in some a rise of wages would lead to improvements of method, to cheapening of production and probably to a fall of selling price; in some, though probably not in many, a rise of wages would necessitate a rise of prices; and of these there may be some (it is not proved that there are) the retention of which absolutely depends upon the payment of excessively low wages.[100]

In regard to the first two groups, which together cover the greater part of the industrial field, improved payment at home would certainly give no advantage to the foreign competitor and might in some cases rather be disadvantageous to him.

In the other group, a rise of wages would probably, wherever the nature of the industry admitted of importation, lead to an increase of importation as against home production.

But in cases where the continuance of a trade actually depends upon aggravated underpayment the trade is shown, by that very fact, to be already in a declining state, and unable to support its own cost; and no trade that is in a declining state and that offers no possibility of bettered conditions can be regarded as a valuable national asset. On the other hand, of every additional shilling paid in wages, at least sixpence is spent in employing British labour, so that if, owing to a general rise of wages, we were to lose entirely the third and lesser group of industries, we should still enjoy a greater volume of trade than before wages were raised.

Thus, when we look it squarely in the face, we perceive that the bogie of foreign competition is a bogie indeed; and that British workers well paid would have less ground than British workers ill paid to fear that their trade would be taken from them.