12 The Agricultural Economics Society.

The legal minimum wage was introduced because farmers were considered to be unreasonably, and therefore uneconomically, unwilling to experiment in the direction of an increased wage. I met this afternoon an official from the Agricultural Department of Rhodesia, one of whose duties it is to manage an experimental farm. In this connection he employed 2,000 black boys and paid them LI a month with an allowance of mealies. He would prefer to multiply the wages by three,and reduce the number of boys. It was certain that &I a month even in Africa was an uneconomic wage, and when the boys and farmers grew wise enough it would be raised. The minimum wage has been in operation for nearly six years, and there is no doubt it is taking effect. On farms most economically managed the farmers pay more than the minimum.

A criticism has been offered of the comparison in the paper between the Trade Union method and the Wage Tribunal method of determining wages. The latter method, because of the introduction of the judicial principle, seems to be decidedly superior. The one is based on force and strife and the other on reason. Unions may be as necessary as advocates, but they cannot take the place of judges, and judges are as necessary and as useful in economics as in other spheres of life. Where resort is had to strikes and to the rupture and disorganisation of industry an indefinite loss is inflicted on the community.

DISCUSSION ON MR. ORR’S PAPER. President :

paper and his interesting comment on it.

J . A . Venn: There are one or two points in regard to detail which I should like to mention. I

am not quite clear, in the first place, why A4r. Orr has altered his date for the Statute of Labourers, for there was a Statute of Labourers passed in 1388 as well as the familiar one of 1351.*

J . O w :

districts to get evidence on conditions of labour. earlier date, because the statutory principle was introduced then for the first time.

J . A . Venn: There is one reference that Mr. Orr might well introduce into the paper. The first

definite request that was ever put forward for a fixed minimum wage was made to Pitt in 1796, ‘?hen a deputation asked him t o introduce legislation for this purpose. He replied : I will see that none of them shall want.” He passed legislation involving relief measures, and 40 disastrous years followed for the farming industry, during which time the agricultural labourers’ wages were drawn partly from their employers and partly from the rates. .

My next point is a much larger one. On p. 6, 2nd para., line 4. the paper reads : “ In 1860 the average wage over the country was 1116 per week ; in 1892 it was 13/5 ; and in 1910 it was 1513.’’ These are, however, cash wages plus emoluments. There is no reference t; real wages, or spending power. In drawing comparisons it is necessary t o keep these factors in mind. I think it would have been important if that principle could have been adopted throughout the paper. Further on, in the same paragraph, I read “ The free farmer was also justified by the increase of z2,ooo in the number of agricultural labourers between 1901 and 1911.” This large increase is, however, not entirely attributable to the higher wages paid, for the 1911 Census showed that the numerical increase was largely due t o the return of the Yeomanry from the South African War.. So many of these regiments were engaged overseas that their return caused a remarkable increase in the numbers of agricultural labourers. I believe this explanation was adopted by the Census authorities.

Refemng to p. 10, in connection with the Mining industry and Agriculture, I do not understand the average wage being now 35/-. Part 2 of Agricultural Statistics for last year gives the average wage as 3118.

I am sure you will all want me to offer a vote of thanks to Mr. Orr for his interesting The subject is now open for discussion.

The principle of arbitration was more in evidence. Justices were appointed in various Also I think it better to go back to the

I will not do that. I will do something much better.

J. o w : 351- is about the figure which represents the weekly earnings of the average worker.

You can take a figure of 3314 for the average earnings of the a,dcultural worker but that does not include harvest earnings.

~~ ~ ~

* In the paper as circulated the date was given as 1388 (page 3).

Proceedings of Conference. I3 R. E . Stanley :

The accurate comparison is between 471- and 3118.

J. A . Venn: Another point : In comparing the methods employed in dealing with two industries

you must take into consideration as well the pre-war rates of wages, or some other basic period, preferably pre-war, of both. For instance, mining wages are, I think, 40% above pre-war level, agricultural 76%. but the cost of the latter labour is about roo% above pre-war level.

Mr. Orr spoke as if there had never been, nor could ever be, a strike in agriculture. As a matter of fact there was a strike in 1872 led by Joseph Arch in Norfolk. There were other farm strikes in the 70’s in the Eastern counties, and there was a threat and partial stoppage in Norfolk 5 or 6 years ago during the time of the Conciliation Boards.

These are the general points which struck me on reading Mr. Orr’s most interesting paper, for which I should like, personally, t o thank him extremely.

J . T. Hinckes : I am sure we are all very grateful to Mr. Orr for tackling a very thorny subject.

I should have expected some reference to the Trade Boards Acts passed to control sweated industries which provided the precedent for the A,@ultural Wages (Regulation) Act. I t is, I think, of great importance in comparing agricultural and industrial wags rates to recognise the essential differences between the two. When we talk of “ weekly rate ” I submit that in agriculture that is in reality an “ annual rate,” the wages, moreover, being for a guaranteed week.

Weather is the controlling factor in farming, and labour must be available when the weather is favourable.

Another point is the cost of living. I think I am right in saying that agriculture is the only industry in which the rent, including rates of the worker’s cottage, is laid down and also where certain emoluments are valued by the State.

This, I have always understood, is because there is in Scotland a very efficient Farm Servants’ Union, headed by Mr. Joseph Duncan, who has successfully opposed any incursion of the State in regulating wages. As a result, the whole wage system in Scotland is more elastic. Thus, the emoluments payable in kind are more numerous than under the Wages Board system in England. I think it is certainly sound that the labourer should get the advantage of goods produced on the farm, a t home prices, rather than be paid higher wages and pay middleman’s profit on those foodstuffs.

The Agricultural Act gives powers to Committees to specify piece-work rates, but I belteve that in no case have piece-work rates been laid down, because it is impossible. Every job differs. That is the difference between Mr. Ford’s factories and agnculture. One is time-work and the other piece-work, and the question of weather rules everything. And I should like t o point out that, especially since the coming into force of Summer Time, the farmer has to pay overtime rates for doing harvesting work and in a bad summer he would have to pay more overtime than in a good harvest when he got in his crops well.

I think it is extremely hard to find a word to describe it, but I submit that “ judicial ” is not quite the word. The Committees are made up of an equal number of farmers’ and workers’ representatives with three independent members.

In effect, therefore, questions are settled by the votes of the independent members after hearing both sides of the case. So perhaps “ arbitration ” would be a more suitable term.

J . S. King: The paper is entitled

” The Economic Basis of the Minimum Wage in Agriculture,” and Mr. Orr has given us a delightful talk on a number of points connected with the question of wages. But I have searched in vain for an approach towards what is really the economic basis of the wage level, viz., what the industry produces and how it is shared between wages, profits and rents. Have we not got to go into that, and then to ask ourselves whether this judicial fixing of wages cuts across a division such as would be determined by the action of economic forces, and if SO, what consequential adjustments are involved, both within the industry and without ?

There is another matter I should like to refer to.

This was a failure.

Mr. Orr refers to the fact that the Wages Act does not apply to Scotland.

There is another essential difference between farm wages and factory wages.

Mr. Orr calls the Wage Board system a ” judicial method.”

I am sure we are all very grateful to Mr. Orr for his paper.

I rise only to make a very brief contribution to the discussion.

I4 The Agricultwral Economics Society.

I seem to want to know, as I look back to pre-war days, and forward again to the present, whether the output per man now is greater or less, and what share is going to the labourer now as compared with then. I will not attempt to suggest what are the facts of the case, but it would seem to be necessary to discuss the question in the light of the value of the output, and of the number of people and the volume of resources seeking to share in that output as earnings.

A . W . Ashby .' I would like to add a few words, especially at this stage, and say-as Mr. Stanley

and our President could say better-that you have in the basis of the minimum wages a shifting over from one basis t o another from time to time. I remember in the old days the employers wanted to argue that the proper basis was the cost of living, and the employees insisted on what the industry could bear. There came a time when i t was the worker who wanted to argue that the cost of living was the proper basis, and not what figure the industry could bear. Society may a t a given moment say that i t does not want to waste labour in an industry which cannot pay a wage above a certain level, and it may throw people out of the industry to maintain that wage level and ensure that labour is employed in ways in which it will be more productive. At this moment of course nobody would suggest that that is a principle which would be applied in agriculture. The tendency at the present time is to suggest that the wage level is too high, that it precludes the employment of men who could be employed a t a lower wage : and that it might be better economy perhaps that the wage level should be lower.

In taking Dr. King's measure of what were pre-war wages and pre-war output of the labourer as compared with wages and output to-day one would be bound to assume there was a fair relationship a t one point or other, an assumption which cannot possibly be made. The general position in 1913 was that the industry was not paying the wages it could bear. It was not paying such wages as were sufficient to maintain a large class of the nation either in a state of physical efficiency in some cases or a state of social decency in other cases, and certainly not in a state of both physical efficiency and social decency. Everbody, I think, who went into the question of wages, both from the point of view of what the industry could bear and what was necessary to provide the labourer with a living wage, would agree that this was so. It was, therefore, inevitable that the relation between output and wages should change.

Dr. Venn has made a statement that few people would disagree that the cost of labour has risen 100%. If you take pre-war wages and what is known of pre-war hours and take a figure for the pre-war hours to amve a t the pre-war rates of wages, and if you then say that the standard hours paid a t flat time rates are reduced and Sunday and other overtime has now to be paid for, by doing a little arithmetical calculation you can make the increase work out at over I O O ~ ~ . But if you get the actual records for farms in 1913 and to-day I think you would have to reduce that figure considerably.

J . A . V e n n : I have seen figures for many farms

in the East of England. Some showed an increase of 120%-a figure which I have not accepted. But one particular farm I have in mind, a farm of 3,000 acres in Essex, showed an increase of well over 100%. The farm was the same size as before the war, there were the same crops and there was no intensifying of labour.

A . W . Ashby: There is another calculation that may very well be made, and that is to take the total

number of workers and multiply by the rates of wages. You will not then get your 100% increase if the figures that the Ministry of Agriculture give us each June are to be relied on. I t seems t o me that if you were to take the actual earnings as your cost of labour against a given amount of output, you might begin t o get the figure. That is Dr. King's method. That would, however, not necessarily tell you the economic wage. It might give you more nearly a measure of what was the increase in the cost of labour.

J . S. Xing:

bringing this into account.

A . W. Ashby: The paper has a suggestion that the Trade Union method is a method of conflict.

That is too common a misrepresentation of trade unionism. The collective agreements between workers' associations and employers' associations concluded by negotiation vastly

There is another factor of equal importance.

-

Well here a t any rate is one of them.

I have based the figure on actual farm records.

My point was that you could not determine if the judicial wage is economic without I did not suggest that it would tell you the economic wage.

Proceedings of Conference. I5

outnumber those reached after conflict. And as regards the question we are considering to-day, the “ judicial method,” the trade unions play a part there too. The Farmers trade unions bind their representatives on the Committees, and the Workers’ trade unions bind their representatives. A pity it is, I think. that the agricultural workers’ trade unions are not so strong in organisation as they might be. There is a suggestion in one of Mr. Orr’s pages that the workers in one county do begin to question the expediency of organisation. Lest it be considered that only the workers have been guilty of sabotage, let me remind you that several District Committees have had the experience of employers refusing to sit on the committee. No doubt this system is an effective method of arriving a t a just settlement of difficulties. It is not really a judicial method. It is rather a method composed of collective agreements and of arbitration. In many cases the awards are based on a collective agreement already reached. Sometimes, however, one side or other represented on the Committee will not settle the matter by agreement, and then the ‘’ umpires ” (the appointed members) go in and arbitrate. Essentially it is a matter of a combination of collective agreements and arbitration.

If I am not taking too much time, I would just Like to set out what was the economic basis of the minimum wage as it was worked out in the period 1910-13 in this country :-

( I ) Wages were lower than the rates the industry could bear. (2) Earnings were lower than the sum necessary to maintain physical efficiency and

social decency according to contemporary standards. (3) A rise in wages would lead to higher efficiency and lowe; cost of labour per unit

of production. (4) A rise in wages would lead to a better selective retention of workers, giving the

industry a supply of labour well balanced from young to old. Selection improves as wages tend to rise and agricultural employment thereby becomes more attractive. Then a rise in wages would stimulate the greater use of capital equipment on farms, as the farmer would naturally want to get the best return from his higher expenditure on labour.

This more effective capitalisation would lead t o more desirable economic conditions in agriculture and more desirable social conditions in rural life. And finally, it was because it was evident that the workers themselves were incapable of obtaining the economic wage that the industry could bear, and that is necessary to maintain physical efficiency and social decency, that the public has interfered to establish a minimurn wage.

R. R. Enfield : I think that the

ultimate basis of the minimum wage is moral rather than economic, that is to say, such legislation has its roots primarily in a sense of social justice. The economic basis is something different. In practice the minimum wage in most industries has been fixed somewhere between the best and the worst. The economic basis of this seems to me to be the tacit assumption that the industry has an inherent capacity for adjustment by which it can adapt itself to the new wage without material loss to the prosperity of the industry as a whole. This power of adjustment seems to me the most interesting aspect of the economic problem of minimum wages, and yet, paradoxical though it may be, these are often the very things which are regarded as of negligible importance. Our halting progress towards social betterment will begin to move a little more quickly when we boldly face the need for progressive adjustments in order that this type of social legislation may be fully effective.

A . G. Ruston: I have just been engaged in summarising the results of the farm records of the last

eight or ten years. I t is rather interesting tracing the position of labour during those times. From the point of view, first of all, that Dr. King raised : the relative claims on production of the farmer, the labourer and landlord. In 1922 our records show that of the social output or fund left available for meeting the claims of landlord, workman and farmer, 115 per cent. was absorbed in meeting the wages bill, and last year 66 per cent., as compared with our pre-war figures of 44 per cent.

Again. when wages do tend t o rise, and keep a t a higher level, one effect undoubtedly is to increase the managerial efficiency of the fanner himself. Our own records afford convincing evidence of increasing efficiency in the organisation and utilisation of labour, for while in 1921-22 no less than 38 per cent. of the production from the farm was required t o meet the wage bill in 1929-30 less than 26 per cent. of the year’s production sufficed to meet the same charge, although agricultural prices as a whole have dropFed during that

The workers have never done that.

It has not the elements of a judicial system.

(5)

I should like to add a word to what Professor Ashby has said.

16 The Agricultural Economics Society.

period relatively twice as fast as have the average weekly wages of the farm lahourer. We have found that as wage rates tend to increase the farming community looks round to see in what direction better use can be made of the labour employed and the alterations and modifications made in the type of output on the Yorkshire farms during this period have been a striking testimony to the adaptability of the men concerned.

I had this point brought to my notice in a very striking way when in South Africa two years ago, where I found men receiving even lower wages than those mentioned- IS/- a month. On one of these farms a boy came in and simply made the announcement, ” Boss, the wagon’s dead.” Something had gone wrong with the wagon, and he had simply left it and come back. One can quite understand with those low wages, the men had little or no interest in their work, or in really keeping things going. I came back from South Africa firmly convinced that the so-called cheap labour was really dear, and a handi- cap rather than a help to the industry.

Again. when in America last year-going from a country of low to one of high wages- it was self-evident that the efficiency of production not only per man but per LIOO spent in labour rose proportionately.

In my own country, on the holdings with which I have been personally in touch, during the recent period of depression, when prices of agricultural products have been f&ng rapidly, the actual monetary value on the acreage basis of the products produced for sale has tended to rise rather than to fall and was actually higher per 100 acres in 1929-30 than in 1922-23. This is striking, and in my opinion due to the fact that farmers are modernising their equipment and utilising their labour to better advantage.

R. R. Enfield:

strength of labour ?

A . G. Ruston: I am finding that there is no reduction in the output, and therefore the output per

man is increasing, and the output per LIOO spent in labour is increasing, with the result that, whereas in 1921-22 i t was taking 38% of the entire output of the farm to pay for the labour, in spite of the fact that agricultural products have fallen in value, the figure last year was only 26%.

J . A . Venn :

receiving their IS/- or LI a month-housed and fed on the farms. consideration the amenities supplied and the native level of life generally.

A . G. Buston : That is so.

ground on which to put up a h u t - o f wattles and mud.

M . A . Abvams: May it not be that this decreased proportion of the total costs spent on labour was

due not so much to a change in the quality of the labour performed, but merely to an increased expenditure by the farmer on the other factors of production ?

I should like to suggest that we drop the terms “ economic wage ” and ’‘ economic price.” After all, every price is an economic price and every wage an economic wage. I would prefer to use an expression such as “equilibrium wage.” Then it would be possible to work with some definition common to economists. The “ equilibrium wage ” might be one at which it would be possible t o employ all men anxious t o work in a given occupation ; or the equilibrium wage might be defined as one which would leave employets in the occupation under consideration with a remuneration similar to the earnings of entrepreneurs and capitalists in other industries. The two definitions are not, of course, identical ; but in any case, the idea of an equilibrium helps, I think, to bring out the fact that the worker’s wage is not primarily an indication of his contribution in terms of effort to industry, but of the efficiency with which the entrepreneur’s job is carried out. The value and efficiency of the labourer may vary from day to day solely as the result of changes in the efficiency of the farmer. A clear understanding of this might help to open the farmer’s mind t o remedies other than wage reductions as a cure for his present lack of profits. Most British industries to-day besides agriculture have to operate with “ sticky ” wage-rates, and the entrepreneur’s job is t o take these more or less for granted, and. by a process of substitution and more intensive use of non-labour factors of production, to reduce his total costs.

Are you taking into account in considering the output of a farm any reduction in the

May I make a point in regard to South Africa ? ‘These natives are fed as well as You must take into

The amenities consist of two pounds of mealies per day and gift of a little

Proceedings of Conference. I 7

There is one other point I should like to refer to. Mr. Orr contrasted the " combative " system with the " judicial " system of wage settlement, and '' planked " for the latter on the ground that i t reduced industrial strife. But the whole history of Australian industry since the introduction of the " judicial " principal has been one of strife, and people who are anxious to see some degree of prosperity restored to Australian industry are turning towards the application of traditional trade union methods for dealing with disputes.

G. Dallas : Mr. Om, in his paper, gives an illustration of the action of Trade Unions in trying t o

force the issue. This occurred in Lincolnshire. I should like to point out that this attempt was preceded by a similar attempt a year earlier in Yorkshire, where the employers' side went on strike. The impartial or appointed members raised the weekly wage I/-. and the employers' members left and refused t o serve again on the Committee until the impartial were replaced.

Reverting to 1917 and the system of free bargaining which at that time existed in Scotland, may I remind you that Scotland from 1917 to 1921 had a Wages Board system, though not so good a system as the English one. When comparisons are made-even in Mr. Orr's paper where we have a wage of 37/6 compared with the average wage of 31/4 for England-ne thing that is always left out of the comparison is the hours worked. In Scotland when you talk of a go-hours' week, you have to add the time for " feeding and cleaning." The men go into the stables in the morning and feed and clean the animals before they start their day's work. So that you have to add a considerable number of hours to the Scotsman's working week, in comparison with the Englishman's, and when that is done I should say that the average wage in Scotland is not much, if any, higher than in England.

I myself stand by the principle of the paper. I think the principle is a very sound one. And, speaking as one who has been associated with the working of the '' judicial method " since 1917, I do not think there is anything comparable in English industrial history with the revolution worked by the Agricultural Wages Board. At the beginning the usual hours worked were 60, 70, or even So hours a week, in some districts. The men's wages were made up by doles of wood in some cases, cider, beer, milk or potatoes in others, or they were given a piece of land which they were allowed to cultivate. When i t was first suggested that the agricultural labourer should have a half-holiday, the farmers said : " You really do not know what you are talking about. Who would feed the horses or milk the cows ? " So as i t was impossible, they expressed themselves in unbridled terms of sympathy and said they would be only too glad to give the labourer a half-holiday if they could. After it was decided it could not possibly be done, it was agreed that the labourer should be paid a little extra on the day when he should have got a half-holiday. Then a curious thing happened, when it came to a question of extra wages, the farmer found that very often it was possible to give the labourer his half-holiday. In this way the half- holiday in England became universal. Dealing with cottages the Wages Board made it illegal to deduct more than a maximum of 3/- in lieu of rent. Thus, in reducing the normal working week, and raising wages at the same time, and abolishing payments in kind, there is nothing in industrial history which could be compared to the three or four years' work done by the original Agricultural Wages Board.

The contention was made : you cannot farm from Whitehall, and therefore you cannot fix wages from Whitehall. When the new Act was brought in, the counties were given the right to fix the wages. That, in my opinion, was a wrong step. The original idea was to render conditions uniform as far as possible. If you fix a maximum deduction for cottage rent that puts everybody on the same level. And when you come t o think of it, the spending power of the labourer's wage is fixed by a general standard. Wherever he lives he pays the same price for his cocoa or his sugar and tea. The whole modern tendency is toward standard current prices. Under the general minimum wage there was a very great advantage, in that it forced the farmer in low-paid, bad districts up to a higher level of efficiency. The Agricultural Wages Board meets regularly still. Representatives come from all parts of the country-from Yorkshire. Devon, Wales, and I have known occasions when some of the members turned up five. minutes late to find all the work transacted. The functions of the Board have been so limited that now one might almost say a rubber stamp could do the work.

J . O w : Dr. King remarked that there is no definition of the substantially correct and solid

basis for an economic wage. The solid bases for the returns to the workers, the farmers and landlords are the contributions each make to the total production for which they are jointly responsible. The assessment of the share of each section is always the subject

The present-day Board is different.

This was an amendment forced on the Government.

Now the whole power rests in the county.

18 The Agricultural Economics Society.

of negotiation and pressure, and the shares might be said to be economic when they are consistent with the most efficient running of the industry. The minimum wage which was the subject of the paper was the result of legislative intervention due to the feeling that workers were unable otherwise to obtain their fair share. I t was a different subject altogether from the economic wage.

I think with regard to Dr. Venn’s criticisms I can accept all his suggestions with gratitude.

Captain Hinckes raised the important question of elasticity. I fully appreciate his view. The absence, or apparent absence, of elasticity in wages fixed by a tribunal prejudiced me against the system until I considered i t more carefully. There should be some measure of elasticity in the returns t o workers, but owing to their proximity to the border of minimum efficiency this cannot be great. Elasticity most properly is a feature of the returns t o the farmer. He is in a position to receive the shocks and consolations of,fortune and set the one against the other. The worker has been, and s t i l l is, the most helpless partner in the whole business. In the course of history his position has improved, and the improvement has been to the advantage of everyone.

The comments of other speakers and the reception you have given to the paper call only for an expression of my appreciation and thanks.

And it need not be great.