The Online Library of Liberty

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• United States Prefatory Note
• Chapter XXXVIII: The Beginnings of Democracy In North America
• Chapter XXXIX: The Frame of Government : State, Local, and Federal Constitutions
• Chapter Xl: the Party System
• Chapter Xli: the Actual Working of the National and State Governments
• Chapter Xlii: the State Governments In Their Working
• Chapter Xliii: the Judiciary and Civil Order
• Chapter Xliv: Public Opinion
• Chapter Xlv: Recent Reforming Movements
• Australia
• Chapter Xlvi: Australian History and Frame of Government
• Chapter Xlvii: Australian Legislatures and Executives
• Chapter Xlviii: the Executive and the Civil Service
• Chapter Xlix: Australian Parties and Policies
• Chapter L: Questions Now Before the Australian People
• Chapter Li: Labour Policies and Proposals
• Chapter Lii: Characteristics of Australian Democracy
• New Zealand
• Chaptee Liii: the Country and Its First Half Century of History
• Chapter Liv: Richard Seddon and His Policies
• Chapter Lv: Compuisoby Aebiteation In Tbade Disputes
• Chapter Lvi: the Working of the Government
• Chapter Lvii: Results of Democratic Government
• Part Iii
• Chapter Lviii: the Decline of Legislatures
• Chapter Lix: the Pathology of Legislatures
• Chapter Lx: the Executive In a Democracy
• Chapter Lxi: Democracy and Foreign Policy 1
• Chapter Lxii: the Judiciary
• Chapter Lxiii: Checks and Balances
• Chapter Lxiv: Second Chambers
• Chapter Lxv: Direct Legislation By the People
• Chapter Lxvi: the Relation of Central to Local Government
• Chapter Lxvii: Comparison of the Six Democratic Governments Examined
• Chapter Lxviii: Types of Democratic Government
• Chapter Lxix: the Money Power In Politics
• Chapter Lxx: Responsibility
• Chapter Lxxi: Democracy and the Backward Races
• Chapter Lxxii: the Relation of Democracy to Letters and Arts
• Chapter Lxxiii: the Results Democratic Government Has Given
• Chapter Lxxiv: Democracy Compared With Other Forms of Government
• Chapter Lxxv: Oligarchies Within Democracies
• Chapter Lxxvi: Leadership In a Democracy
• Chapter Lxxvii: the Later Phases of Democracy
• Chapter Lxxviii: Present Tendencies In Democracies
• Chapter Lxxix: Democracy and the Communist State
• Chapter Lxxx: the Future of Democracy

CHAPTER LV

compuisoby aebiteation in tbade disputes

None of the legislative experiments tried in New Zealand has excited so much attention in other countries as the application of compulsion to the settlement of disputes between employers and workmen, for no other economic question has caused and is causing so much friction all over the civilized world. I will here sketch first the provisions of the New Zealand law, then its working in practice, and lastly its general results, so far as yet estimable.

The wage-earners, having failed in the great strike of 1890, desired to find some better means of improving the conditions of labour, and the colony as a whole, alarmed by the strike, -was in a mood to consider remedies. The first Act on the subject was introduced in 1891 in the Ballance Government and passed in 1894 by the Seddon Government. The drafting of the measure had been wisely left to the Minister of Labour (Mr. W. Pember Reeves), who was not only the most highly educated member of the Government, but did a great deal of its thinking down till 1896, when he left New Zealand. He stated its aims to be three: (a) To prevent strikes, (b) to strengthen Trade Unions, (c) to improve the conditions of labour generally.1 Without describing the many subsequent amendments made in it, I give the principal provisions of the law, as it now stands, beginning with those which relate to Conciliation.

New Zealand is divided into eight industrial districts, for each of which there exists a Council of Conciliation. The four Conciliation Commissioners who administer the Act set up a local Council on the application of a Union, or Association of Unions or Employers, or an individual employer, concerned. Assessors are nominated by the complainants and respondents. The Council hears the parties and endeavours to settle the dispute. If it succeeds, the settlement reached is filed as an industrial agreement, and becomes binding. If it fails, it refers the matter to the Court of Arbitration, since it does not itself possess compulsory powers.1

The Court of Arbitration, appointed for the whole country, consists of one of the Judges of the Supreme Court, detailed for that purpose, and of two assessors, one nominated by the association of employers throughout the country, and the other by the trade unions or associations of unions. These assessors hold office for three years. The Court hears the parties to each case referred to it by the Councils, and, if it has not effected an agreement by persuasion, issues its award, which binds not only the parties, but individuals (whether or not members of Unions) who are working for the employer to whom the award applies. Every kind of question relating to labour falls within the jurisdiction of the Councils and the Court, and can be determined by awards, covering not only the minimum wage and the hours of labour, but also piecework, the distribution of work, permits to pay lower wages to less competent workmen, apprenticeship and the employment of boys, notices of dismissal, holidays, meal hours, modes of payment, provision of tools, the interpretation, scope, and duration of awards, and the power of extending them and imposing fines for their breach,— in fact every kind of condition affecting labour and in particular that most controversial of questions, the giving of preference in employment to members of trade unions. The Court exercises what is virtually a continuous power of legislation in everything that belongs to the relation of employer and employed. The right of applying to Council and Court is given to every union of workers with at least fifteen members, and to any union of employers with at least three. An award may cover the whole country, and employers on whom it is being imposed sometimes ask for its extension in order to prevent unfair competition. Every Union must be registered, in order to obtain the right of application to the Court, and if it withdraws from the register, or allows the registration to lapse, it is no longer within the operation of the law. An employer, however, cannot similarly exempt himself. A strike, when entered on in breach of an award or industrial agreement, is punishable by a fine up to £200 for a trade union, and up to £10 for an individual worker, and similarly a fine up to £500 may be imposed on an employer who offends by declaring a lock-out. Note also that a strike and a lock-out in certain industries affecting the necessaries of life or a public utility are made statutory offences, even when the party in fault is not bound by any award, unless fourteen days' notice of either has been given.

Working of the Law.—It has been often remarked that whereas more was expected from the action of the Councils (at first called Boards) of Conciliation than from the Court, the reverse has turned out to be the fact. The Boards were found tedious and cumbrous, and fell into comparative neglect, nearly all the cases brought before them being carried by appeal to the Court. In their latest form, however, as altered by the Act of 1908, they have succeeded in settling a number of minor disputes. The Court, on the other hand, had been incessantly resorted to in cases of every description, and almost always by the workers. Between 1894 and 1907 the binding agreements and awards imposed reached the number of 535, and affected 78 industries. In 1920 the number of existing awards and agreements was 530, and in all but two of these preference for employment had been directed to be given to members of Labour Unions. The decisions given have as a rule granted a rise in wages or otherwise complied with the wishes of the workers, but in one case the existing wage was reduced, and in a certain number of cases no increase has been made or some other demand of the Unions has been refused. Preference to Unions was usually given in the form of a direction that Union men rather than others shall be employed, provided that members of the Union, equally qualified with non-members for the particular work, stand ready and willing to undertake it. When granted, conditions were, where it seemed needful, imposed on the Unions, requiring them to admit to membership any applicant. To these the Unions have not generally objected, but they still demand an unconditional preference for their members in employment.1 Trouble has also arisen over the employment of boys and the question of apprentices, whom the Unions seek as much as possible to exclude, in order thereby to increase the quantity of work available for adults enjoying the full minimum wage. In order to meet the case of the less efficient workers, such as elder men whom it would be wrong to throw out of employment, the law allows the granting of permits to such persons to work at less than the normal wage prescribed by the award. Such exceptions, however, are disliked, and as far as possible resisted by the Unions.2 The awards are often extremely minute, going into numerous details. Their enforcement by proceedings against those who break an award is in the hands of the Labour Department, but either of the parties to an award can also sue a transgressor. It ought to be added that the Court has done useful work for improving the conditions of labour generally.

The principles on which the Court has proceeded in determining the fair wage are substantially those already set forth as followed by the Commonwealth Arbitration Court in Australia.3 It has sought to find on the one side what is the minimum wage on which a worker — and presumably a married worker — can live in decent comfort, the New Zealand scale of comfort being higher than the average scale in Western Europe, and the price of most necessaries of life being higher. On the other hand, it has had to regard — and this consideration has sometimes received more weight than in Australia — what wages each given industry will bear, i.e. what an employer can afford to pay while continuing to make a profit on his business. The best proof of the fairness which the judges successively charged with this difficult duty have brought to it is to be found in the fact that while complaints against their decisions have come equally from both sides, scarcely any one has questioned their uprightness and their desire to hold the scales of equity even, and to do the best that circumstances may from time to time admit. To satisfy everybody is an impossible task, so most of the judges have accepted those functions reluctantly, and been glad to return from them to their ordinary duties. The work is not truly judicial, except as regards the spirit of impartiality it requires, but rather administration, and administration of a singularly difficult kind; but since there exists in the country no other class of persons so generally trusted as the judges, it was perforce imposed upon them.

The result of a twenty years' working of the system has been to raise wages in practically every industry. The rise had been steady and large even before 1914, but within the same period the rise in the prices of articles had been nearly as great, so it may be argued that the worker is not substantially better off, and that in the natural course of things wages would have followed the upward course of prices. To have secured that rise might, however, have needed the rude expedient of strikes, with their attendant losses, so that by gaining the increase without these losses, both worker and employer have benefited materially and morally.

Sweating, which existed in some few trades so late as 1894, has been extinguished, but this would doubtless have happened in any case through factory legislation simultaneously passed, as well as by the sympathetic action of public opinion. The same may be said of workmen's housing and other improvements in the conditions of the working-class which statutes have dealt with. It is hard to assign these improvements to any one cause when several have been at work. Nevertheless, some credit is due to the Seddon policies.

The employer does not seem to have suffered seriously, if at all. Manufacturers say they have been worried by frequent appearances before the Boards and the Court, and that the conduct of their business has been interfered with, but they have continued to make reasonable profits, and have the advantage not only of a diminution in the number of strikes, but of feeling less anxious lest a sudden strike should prevent them from fulfilling a contract. Neither does it appear that there has been any unwillingness to start new industrial establishments and expand those that already existed. To all this some employers reply that the times have been good in New Zealand, so good as to enable them to support the Court's action, and to this, again, it may be answered that the Court felt it could safely raise wages with rising markets.

When the Bill of 1894 was introduced, the encouragement of Unions was announced as one of its objects. This has been largely attained, the awards of preference having strengthened their position and stamped with legal approval the plan of collective bargaining. Nevertheless, a large part, possibly a majority of the whole wage-earning class, still remains outside. The part which the protective tariff plays in this matter must not be forgotten. Were the manufacturers exposed to the competition of other countries, they could not afford to pay the minimum wage fixed by the Courts, so the compulsion imposed by the Court provides a ground for demanding that import duties be not only maintained but in some instances raised further. This gives the workmen also a motive for supporting a protective policy. Under free foreign competition the whole fabric would topple to the ground. Many New Zealanders who perceive this recognize that the experience of isles far off in the Pacific is too exceptional to set an example to European or American countries.

The third chief aim of the Act of 1894 was the prevention of industrial conflicts. During the first few years it seemed that this had been attained, for nearly all the Unions were on the register, and scarcely a strike or a lock-out occurred. Throughout those years the Court almost always granted an increase of wages, so the workers were pleased. But when, after the expiry of the first set of three-year awards, the Unions went again to the Courts to demand a second increase, they did not always succeed. Disappointment followed, signs of which appeared as early as 1901. In 1906 and the two subsequent years several strikes occurred, though none on a very large scale. Of those whose views I enquired, some blamed the Government, believing they showed weakness, while others thought that Seddon's death had made a difference, his strong personality having exerted a restraining influence on the working class. The passing of the Act of 1908 somewhat eased the situation, but there have been subsequently serious and prolonged strikes. One of these, at the Waihi gold mines, was in progress when I visited New Zealand in 1912, and could not be dealt with under the Arbitration Act because the Miners' Union had, by omitting to register, taken itself out of the Court's jurisdiction.1 Not a few Unions have allowed their registration to lapse in order to obtain this result. Another serious strike took place in Auckland and Wellington in 1913, and failed, because the Government brought in a strong body of special constables from the rural districts, who repressed attempts at violence, while other farming volunteers loaded and unloaded the ships in the harbour. A recent Labour Disputes Investigation Act forbids a strike or lock-out, in cases where the trade is not subject to an industrial award, till the Labour Disputes Committee has publicly investigated the controversy and announced its opinion, and also requires that before any strike or lock-out takes place there must first be taken a secret ballot of the workmen and employers concerned, whether or no the Union is registered. Where an industrial award or (agreement) exists, strikes are absolutely illegal under the Act already mentioned.

What, it will be asked, is the present attitude of New Zealand opinion as to the practical value of the system? As already observed, the working-class is by no means so enamoured of it as in the first years, for wage-raising has not gone on latterly at the same pace. Since the Unions exist largely for the sake of securing better wages, the officials of these bodies, especially the younger among them, are tempted to justify their existence by constant activity, and contrive frequent appeals to the Court. When these have only a slender success, disappointment follows, and the impartiality, though not the honest purpose, of the Court may be arraigned. Nevertheless, the workers as a whole desire to retain the Acts. It is only the more extreme and Communistic section, influenced by the body called Syndicalists, or “Industrial Workers of the World,” that denounces the whole system as a part of “wage slavery,” and seeks to obtain its ends by a succession of general strikes, which would “bring capital to its knees.” Australian and European emissaries come to New Zealand on this mission, while the bulk of the native New Zealanders, led by the older and more experienced men, prefer to bear what evils they have and to keep the goods the Courts provide them. These uphold the Act, pointing to the sufferings which the strikes of former days entailed.

The views of the employers have undergone a sort of converse change. What depressed the spirits of the Unions cheered theirs. Though still grumbling at the interference of a Court with their private affairs, they found that their losses had been less than they feared, and the wiser among them, like the wiser among the working-class leaders, recognized that the prospect of peace, even for the three years an award runs, was no contemptible asset. Accordingly, though most of them still disapprove of the Acts in principle and often complain of them in practice, insisting, like Australian employers, that no effective compulsion is or can be applied to the workmen, they do not demand the abolition of the system.

Rising above these two classes, there is such a thing as the opinion of the country as a whole. This opinion seemed to me to be in favour of maintaining the Acts. It is not so proud of them as in the first few years of their working. It admits that they have not solved the industrial problem as a whole, that they are used by the Labour leaders to gain something by way of compromise, and soon after to reopen the dispute, and that a still longer experience than twenty-five years have supplied is needed to test them, but it conceives that, by invoking a trusted authority, they have enabled the public to hold the balance fairly between the parties, and have brought its judgment to bear on each dispute. Thus the Acts have made for peace, one of the highest interests both employers and employed can have. Things would be worse without them, because no means at all of settlement would be left; and the disposition to uphold them is all the stronger because they are denounced by the revolutionary Communist party. I saw no likelihood of their being repealed in the near future.

Into the general arguments for and against the plan of the State regulation of wages and other labour conditions and the elimination of freedom of contract1 I do not enter. These considerations belong to the realm of legal and economic theory, little regarded in New Zealand.

The broad result of this remarkable experiment may be summed up in a few sentences.

It has had little success in the line of mere conciliation, and has perhaps done something to discredit that method of settling disputes, which, to be sure, was effecting but little in New Zealand when compulsion was introduced.

It began by strengthening the Labour Unions, but has latterly tended to create a division between them, some, under the influence of extremists, repudiating any pacific methods of settling industrial disputes.

It has raised wages, yet perhaps no more than they would have risen, ultimately, if not so quickly, by the action of economic causes.

It has not, to any appreciable extent, injured business or retarded the progress of the country.

If it has not extinguished strikes, it has reduced their frequency and their severity.

It has been a mitigation not a panacea. But, I must again repeat, the results have been attained during a period which has been, as a whole, a period of prosperity and expansion. The real test will come with hard times. Two dangers must not be ignored. One is the growth of a party among the workers which avows its wish to have done with peaceful methods. The other is the possibility that a government might some day, yielding to the pressure of the Labour vote, appoint judges virtually pledged to decide according to its wishes. In the present healthy condition of public opinion, such a danger seems remote.2

Two other pieces of legislation which belong to the Seddon period deserve a brief mention.

One is the extension of the electoral franchise to women, enacted in 1893. This measure, carried through the House of Representatives by Ballance, but rejected by the Council, had no great attraction for Seddon, whether he feared, as did some Australian statesmen, that it might help the conservative party, or whether it seemed to him likely to strengthen the Prohibitionist vote.1 But, though he cared little for it, he chose, as was his wont, the line of least resistance, and let it pass the House, hoping (so I was told) that the Legislative Council would, as on previous occasions, reject it. The Council, however, not wishing to be always expected to do this kind of work, allowed it to become law. Such demand for it as there was in New Zealand had come chiefly from the Prohibitionists, but if there was little positive desire for it, neither was there any strong feeling against it, this easy-going democracy being always disposed to say Yes rather than No. Even among the women the demand for it was confined to comparatively few. Having got it, however, the women have come to the polls in almost as large numbers as the men. They usually vote with their fathers, brothers, or husbands, except to some extent upon liquor questions, when their tendency to cast a vote for the anti-liquor candidate, irrespective of his party affiliations, disturbs the calculations of politicians. Apart from these drink questions, and only slightly even as regards them, woman suffrage has — so I was everywhere told — made no practical difference to politics, and has not led to the introduction of legislation intended specially to benefit women.2

On the subject of immigration, Seddon held more decided views. In the years following the great borrowings of 1870, when money was being lavishly spent in building railways and otherwise developing the country, immigrants were invited from England and continental Europe, and aided by subsidies to come. Not a few Norwegians and Danes arrived, and made excellent colonists, but not all could obtain farms, and when an industrial depression succeeded the boom, many town workers could find no work. Suffering followed, and instead of emigration, men began, after 1880, to leave New Zealand for Australia or Europe. By 1890 the working class had become disposed to shut the door in the face of newcomers, who were now deemed intruders, because possible competitors for wages. Under the influence of the Unions the Ballance-Seddon Government dropped the subsidies theretofore given to attract immigrants. This might have seemed enough, for the cost of a passage from Europe to New Zealand was virtually prohibitive to the poorer class of labourers. But the Ministry went further, and brought in a Bill — the Undesirable Immigrants Bill of 1891 — which passed through the Legislature, but never became law, because the British Government at home objected to provisions it contained affecting the rights of British subjects. The Labour men have, however, maintained their hostility to immigration, although they have received the help of the Arbitration Court in keeping up wages. In 1898 it was found that some Austrian subjects, Slavs from Southeastern Europe, were working as gum-diggers in the kauri forests north of Auckland, and prospering so well that others of the same race were coming out. Nothing was alleged against them, for they were hard-working and frugal, except that they were lowering, or would lower, the rate of wages. The members for the district, however, complained to Government, urging that “the Colony could not be allowed to become a prey to the paupers of the Old World,” so an Act was passed (1898, amended 1899) which stopped the immigration. The law now in force (Immigration Kestriction Act of 1908) prohibits, inter alia, the landing of any person of other than British birth who fails to write out and sign in any European language a prescribed form of application. Trade Unions have, moreover, exerted themselves to dissuade emigration to New Zealand.1 Nevertheless, there is a flow of immigrants, steady if not large, and Government, obliged to recognize the needs of agriculture and of domestic service, provides passages at reduced rates to bona fide farmers and agricultural labourers, under conditions as to their possessing some pecuniary means, and also to domestic servants. A Report of the Minister for Labour called attention to the dearth of boys and girls, stating that there was in many trades too little labour to cope with the work offered, but this did not prevent the Unions from reiterating their protests. Their attitude, if not the result of, is in harmony with, the fiscal policy of the Dominion, for while the employer is protected by a high tariff against foreign competition, the workman has his wages raised by law, and could not have them raised but for the protection which the tariff gives to employers. As the products of his labour are protected, he thinks himself entitled to have his labour itself protected from any competition by newcomers, and defends his case by the argument that a State which does so much for the existing inhabitants cannot be expected to burden itself with any new citizens, and that it is better to have a small population raised to a high level of comfort than a larger one on a level not so high. But M. Siegfried seems to hit the nail on the head when he sums up the situation by remarking: “‘There is a cake to be divided,’ think the workmen, ‘ let us be as few as possible when the division comes.’”1

Fifty or sixty years ago, democracy was supposed to be above all things humanitarian. The sentiment of the masses, themselves lately admitted (in the Old World) to full civic rights, went out to all their brethren of every race and country. All were equal, all equally entitled to the pursuit of happiness, all interested in one another's welfare. The growth of Socialism accentuated this feeling among the wage-earners, and it was even believed to constitute a powerful guarantee for international peace, illusory as that hope proved in 1914. To-day, however, neither in Australia nor in New Zealand do the workers generally or the Socialistic sections among them show any willingness to share with the workers of Europe the benefits they have secured for themselves. No more cosmopolitan humanitarianism, not even for white men seeking to better their lot. The same tendency is visible in the United States and in Canada, countries far more exposed to a large influx from the Old World. But there the law excludes only immigrants really undesirable in respect of character or health, or likely to become a public charge, together with those who, being personally unexceptionable, are brought over under a contract of labour, and therefore presumably intended to replace striking workmen. Few things in Australian and New Zealand policy seem to have so much surprised and grieved European observers as this apparently anti-social attitude of the working-class leaders, who, while striving for economic equality not only between the handworkers and other classes but also among all the handworkers themselves, yet seek to prevent European handworkers from coming to share in their own prosperity lest that should possibly affect questions of employment in Australia and New Zealand. The “class solidarity” for which they plead does not extend its sympathy to members of the same class in other countries. Whether immigration would in fact have the effect New Zealand wage-earners apprehend is a further question too intricate to be here discussed.

Asiatics also are excluded, as they are from Australia, and to some extent from Canada also. There is a strong dislike to them and a jealousy of their competition, which has gone so far as to forbid by law the owner of a laundry to work for longer hours than the statutes in force permit his employees to do, laundrying being a distinctively Chinese trade. A New Zealand law, passed in 1896, imposes a tax of £100 on every Chinese entering the country, and limits the number any vessel may bring to one Chinese for each 200 tons burthen. But as already observed1 there are ethnological and social reasons, not necessarily disparaging to the races of Eastern and Southern Asia, which make it prudent to keep those races from flooding regions already peopled by whites. Though the working men of New Zealand are not interested in the ethnological aspect of the matter, their attitude is intelligible, and they have the whole opinion of the country with them. In 1911 there were 2630 Chinese in the islands, only 88 of whom were females; in 1916 they had fallen to 2147. The Japanese are extremely few, and so are the Polynesians, other than the native Maoris. Feeling being what it is, it may be safer to restrict the number of Chinese, for if they grew to be a considerable body collisions might arise similar to those of San Francisco forty years ago; and it is perhaps too much to expect of any nation that when it has a disagreeable thing to do it should take pains to do it in a courteous way.

[1]W. Pember Reeves, State Experiments in Australia and New Zealand (published in 1902).

[1]See as to this subject Siegfried, pp. 109–43 (English translation, pp. 128–61); Drummond, Life of Riohard John Seddon, pp. 238–68; Scholefield, pp. 212–43; and Rossignol and btewart, pp. 216–68.

[1]As to preference, see Rossignol and Stewart, pp. 235–6. See Scholefield, p. 220.

[2]Rossignol and Stewart, p. 232.

[3]See ante, p. 248.

[1]The case wag a singular one. A section of the miners desired to form a new union of their own, register it so as to bring it within the Arbitration Acts, and then apply to the Court. The New Zealand Federation of Labour, a body largely Socialist, desired to prevent this, because any award obtained by the new union (if registered) would have bound all the miners, and therefore they organized the strike to arrest the attempt to have the proposed new union registered. The strike failed after six months.

[1]The Chief Justice of New Zealand in 1900 (in delivering judgment in a ease relating to the Arbitration Acts) observed: “All contracts regarding labour are controlled and may be modified or abrogated. The Court can make the agreement between the workman and the employer. It abrogates the right of workmen to make their own contracts.”

[2]The only country (besides Australia) which has followed New Zealand by establishing compulsory arbitration seems to be Norway, by a law passed in 1916.

[1]Mr. Seddon said, some years later, “By granting the franchise to women, Parliament plunged into an abyss of unknown depth.”

[2]Women are now eligible to sit in the House of Representatives. Two were (unsuccessful) candidates at the general election of 1919.

[1]Rossignol and Stewart, p. 282.

[1]Siegfried, p. 121 (English translation).

[1]See p. 236, ante.