Liberalism and the Social Problem

by Winston Churchill

House of Commons, May 19, 1909

The functions of Government in relation to industrial life may be divided into three categories—discipline, organisation, and relief. The control and regulation of industrial conditions by penal and disciplinary powers belong to the Home Office, the relieving and curative processes are entrusted to the Local Government Board, and the organisation of industry falls to the province of the Board of Trade. The proposals which I now submit to the House are concerned only with organisation; they can be judged only in relation to that section of the subject; they do not pretend to stretch beyond it, or to include other not less important aspects; and I ask that they shall not be impugned, because, in dealing with the evils which properly fall within that sphere, they do not extend to other evils that lie without it.

I ask permission to introduce a Bill for the establishment of a national system of Labour Exchanges. There is high authority for this proposal. The Majority and Minority representatives of the Poor Law Commission, differing in so much else, are agreed unanimously in its support. "In the forefront of our proposals," says the Majority Report, "we place Labour Exchanges." "This National Labour Exchange," says the Minority Report, "though in itself no adequate remedy, is the foundation of all our proposals. It is, in our view, an indispensable condition of any real reform." The National Conference of Trade Union Delegates, convened by the Parliamentary Committee of the Trade Union Congress, of March 19, 1909, resolved unanimously: "That this Conference of Trade Union delegates, representing 1,400,000 members, approves of the establishment of Labour Exchanges on a national basis, under the control of the Board of Trade, provided that the managing board contains at least an equal proportion of employers and representatives of Trade Unions." The Central Unemployed Body for London, by a Resolution in June 1908, declared in favour of a national system of Labour Exchanges. Economists as divergent in opinion as Professor Ashley, of Birmingham, and Professor Chapman, of Manchester, have all approved and urged the project publicly in the strongest terms. Several of the principal members of the late Government have, either in evidence before the Poor Law Commission or in public speeches, expressed themselves in favour of Labour Exchanges, and the Report of the delegates of the Labour Party to Germany strongly approves of the system which they found there, namely: "the co-ordination and systematic management of Public Labour Exchanges."

The British authorities which I have mentioned are reinforced by the example of many foreign countries; and as early as 1904 the Board of Trade, in its reports on agencies and methods of dealing with unemployed in foreign countries, drew attention to the very considerable extension of Labour Exchanges in the last three years in Germany, Austria, Switzerland, France, and Belgium. Since then Norway has been added to the list. Mr. W. Bliss, in the Bulletin of the Washington Bureau of Labour for May, 1908, in the course of a survey of the whole field of unemployment and of possible remedies, says, "The most important agencies for providing work for the unemployed who are employable, but have no prospect of returning to their former positions, are the public employment bureaux. These are largely developed in a number of European countries, and especially in Germany, where they have grown rapidly in the last twenty years, both in numbers and in efficiency." So that the House will see that we have behind us this afternoon not only a practical consensus of opinion among authorities at home in favour of the policy, but the spectacle of its successful practice on an extensive scale, and over a period of years, in the greatest industrial community of the Continent, and its extension in various degrees to many other countries.

I do not, therefore, propose to occupy the time of the House with any elaborate justification of the merits of the Bill. Those we may discuss at our leisure later. I confine myself only to a few general observations. Two main defects in modern industrial conditions which were emphasised by the Royal Commission were the lack of mobility of labour and lack of information. With both of these defects the National System of Labour Exchanges is calculated to deal. Modern industry has become national. Fresh means of transport knit the country into one, as it was never knit before. Labour alone in its search for markets has not profited; the antiquated, wasteful, and demoralising method of personal application—that is to say, the hawking of labour—persists. Labour Exchanges will give labour for the first time a modernised market. Labour Exchanges, in the second place, will increase and will organise the mobility of labour. But let me point out that to increase the mobility of labour is not necessarily to increase the movement of labour. Labour Exchanges will not increase the movement of labour; they will only render that movement, when it has become necessary, more easy, more smooth, more painless, and less wasteful.

Labour Exchanges do not pretend to any large extent to create new employment. Their main function will be to organise the existing employment, and by organising the existing employment to reduce the friction and wastage, resulting from changes in employment and the movement of workers, to a minimum. By so doing they will necessarily raise the general economic standard of our industrial life.

So far as the second defect, "lack of information," is concerned, a system of Labour Exchanges promises to be of the highest value. In proportion as they are used, they will give absolutely contemporary information upon the tendencies of the demand for labour, both in quality and in quantity, as between one trade and another, as between one season and another, as between one cycle and another, and as between one part of the country and another. They will tell the worker where to go for employment. They will tell him, what is scarcely less important, where it is useless to go in search of employment. Properly co-ordinated and connected with the employment bureaux of the various education authorities, which are now coming into existence in Scotland and in England, they will afford an increasing means of guiding the new generation into suitable, promising, and permanent employment, and will divert them from overstocked or declining industries. They will put an end to that portion of unemployment that is merely local or accidental in character. They are the only means of grappling with the evils of casual employment, with all its demoralising consequences. They are capable of aiding the process of dovetailing one seasonal trade into another. A system of Labour Exchanges, dispensing with the need for wandering in search of work, will make it possible, for the first time, to deal stringently with vagrancy. And, lastly, Labour Exchanges are indispensable to any system of Unemployment Insurance, as indeed to any other type of honourable assistance to the unemployed, since they alone can provide an adequate test of the desire for work and of the reality of unemployment. The authority of both Reports of the Poor Law Commission may be cited upon these points; and I shall present this Bill to the House as an important piece of social and industrial machinery, the need for which has long been apparent, and the want of which has been widely and painfully felt.

I said that in the creation of such a system we may profit by the example of Germany; we may do more, we may improve upon the example of Germany. The German Exchanges, though co-ordinated and encouraged to some extent by State and Imperial Governments, are mainly municipal in their scope. Starting here with practically a clear field and with the advantage of the experiment and the experience of other lands to guide us, we may begin upon a higher level and upon a larger scale. There is reason to believe that the utility of a system like Labour Exchanges, like utility of any other market, increases in proportion to its range and scope. We therefore propose, as a first principle, that our system shall be uniform and national in its character; and here, again, we are supported both by the Minority and by the Majority Reports of the Royal Commission.

A Departmental Committee at the Board of Trade has, during the last six months, been working out the scheme in close detail. The whole country will be divided into ten or twelve principal divisions, each with a Divisional Clearing House, and each under a Divisional Chief, all co-ordinated with the National Clearing House in London. Distributed among these 10 Divisions in towns of, let us say, 100,000 or upwards will be between 30 and 40 First-class Labour Exchanges; in towns of 50,000 to 100,000 between 40 and 50 Second-class Exchanges; and about 150 minor offices, consisting of Third-class Exchanges, Sub-Offices, and Waiting-rooms, which last will be specially used in connection with Dock decasualisation.

The control and direction of the whole system will be under the Board of Trade. But in order to secure absolute impartiality as between the interests of capital and labour, Joint Advisory Committees, to contain in equal numbers representatives of employers and work-people, will be established in the principal centres. Thus we shall apply to the local management of Labour Exchanges the same principle of parity of representation between workmen and employers under impartial guidance and chairmanship, that we have adopted in the administration of the Trade Boards Bill, and that, mutatis mutandis, is the governing feature of the Courts of Arbitration which have recently been set up. If this Bill should obtain the assent of Parliament without undue delay, I should hope to bring the system into simultaneous operation over the whole country, so far as practicable, in the early months of next year. Temporary premises will be procured in all cases in the first instance; but a programme of building has been prepared, which in ten years will by a gradual process enable in all the principal centres these temporary premises to be replaced by permanent buildings.