V. Delays and Restrictions

CHAPTER V DELAYS AND RESTRICTIONS BUSINESS men whose experience goes back into the last century will remember a phrase which formed part of almost every business arrangement, and which read: " Time is the essence of the contract." The phrase has fallen out of common use, and in its place there now appears quite a number of elaborate sentences and safeguards setting out the circumstances that may delay the delivery of the goods or the completion of the contract and provid ing that the supplier is immune from damages on that account. Strikes, lock-outs, fires, wars, riots, civil com motions, the act of God, and, literally, "all cir cumstances beyond the control of the contractor," are printed large over estimate forms and business stationery, and, in entering upon a contract of any kind, both parties quite understand beforehand that very wide margins must be allowed, both in price and in time, to cover all the other extraneous con siderations which theorists and politici~ns have in the last twenty-five years imposed upon the old fashioned simplicity of business.

If for any reason the time occupied to complete a piece of business is extended, expense and loss are incurred, not only on that piece of business, but by all parties associated with it, in respect of the next piece of business that they would normally under take. If we consider only the question of capital, the damage of delay becomes very evident. It is obviously to the advantage of the worker, the em56 Delays and Restrictions 57 player, the ·consumer and every party to a business transaction, that as little capital as possible should be used to carry it through and further that the capital should be used for as short a time as possible. Even Communists can agree about that. It does not matter to whom the capital belongs, or where it comes from, it is obvious that there must at any time be a limit to the amount of capital available for particular purposes, and that there must also be ex pense involved in the use of that capital: so that economy in employment of capital or the time in volved must bring advantage to all parties.

Consider the case of a builder with a capital of £500. If the cost of a cottage is £500, the builder's capital is just sufficient to put up one cottage. If a cottage takes six months to build the capacity of this particular builder is two cottages a year. If a cottage takes four months to build, the capacity of the builder is three cottages a year. In the first case, each cottage involved the exclusive use of £500 of capital for six months, and in the second case the same amount of capital for four months only. So that, in restriction of output by labour, in delay to output by official regulation or inspection, in the holding up of the building for any reason whatever, there is also involved a restriction of output by capital. It will be obvious in the simple case of this little builder that, having expended £500, completed his cottage and passed it over to the purchaser or the local authority or the occupier or whoever ordered 58 The Return to Laisser Faire it, he must immediately proceed to reinvest the £500 in another cottage or in another piece of build ing of the same value. This is what happens in the normal process of trade. The moment that a mer chant or a tradesman sells anything a new purchase is at once made. If the sale is delayed the purchase is likewise delayed. The old theory of small profits and quick returns is still true.

Consider another elementary case from common experience, this time showing how the delay in a piece of work destroys other work. A few years ago the Sunday morning delivery of letters by the Post Office was discontinued. There are many grounds on which it is wise and desirable to do without the Sunday post, and it may well be that on the whole the reasons in favour of the six-day post outweigh the reasons against it. That does not, however, vitiate our economic argument. The abolition of the Sunday post, however good it may be for other reasons, leads directly to unemploy ment and loss of trade. First of all, there are large numbers of persons who write to one another every day when there is a post. It would not surprise me to know that there are a million such persons. Mothers with daughters at school and sweethearts between them may well account for a million daily letters. If that be so, there have been six million such letters a week instead of seven million since the Sunday post was abolished. The railways have a million fewer letters to carry; stationers have .a million sheets of paper and a million envelopes Delays and Restrictions 59' fewer to handle; paper makers and gum makers suffer; and all these persons in their turn are forced to stop the trade ·in which they had previously expended the money they received for the materials and services associated with these million discontinued letters.

Mothers and sweethearts, however, are the most elementary part of the story. When the Sunday post was working, the London stores would receive a consignment of goods on a Friday, include them in their catalogues, publish and post on Saturday. The .customers would settle their requirements on Sunday; the orders would be back at the stores on Monday, and clerks, packers, carters, railwaymen, to say nothing of packing-case makers, string manu facturers, brown paper mills and hundreds of other suppliers of sundries would be busy on Monday working to complete their orders. Now, in the absence of the Sunday post, a cata ... logue is received by the customer on the Monday, the orders reach the store on the Tuesday, and all the many people associated with the execution of the order are out of work on the Monday. It is true that by various rearrangements, by the spread ing over of work, by the general acquiescence in delay now common among us, the clerks at the stores do not appear to be out of work on a Monday, but the most perfunctory examination of the case must bring us to the conclusion that the day lost by the absence of the Sunday post is one of the causes of the unemployment about which we are all so deeply concerned.

60' The Return to Laisser Faire I am not asking for the reintroduction of the Sunday post. My personal convenience may have some influence on my views in this connection, for I receive quite enough correspondence on six morn ings in the week to make me welcome the Sunday gap. There can be no question as to the advantage to Post Office workers of one day's rest in seven, and I am not inclined to disagree with those who think that the whole community is better for a full twenty-four hours' relief from the activities of the Post Office. That is not my point. I want it to be understood that the relief from these activities costs more than appears upon the surface and in volves relief also from all the other activities that would follow from the work and trade involved in the Sunday post. Exactly the same sort of thing happens when a German carpera is unloaded and put into the Custom house at the London docks. When that camera is delivered to the purchaser in England the £5 note, or whatever its value may be, goes at once to Germany and is used at once by the Germans to buy Lancashire cotton goods or some other com modity. I leave out of account all complications.

It is true, of course, that the German may use the £5 note to buy French champagne, that the French man may send it to Turkey for figs, and that the (furk may be the medium through which it comes to Lancashire for cotton goods. If the camera is de tained by the Custom officials in the London docks for a week, or a day, or even an hour, the capital represented by the camera is kept employed in conDelays and Restrictions 61 nection with that particular camera for another week or a day or an hour and is prevented from proceed ing with its next mission, the purchase of cham pagne or figs, and eventually Lancashire cotton goods. It is easy to pile up illustrations in support of this very simple argument. Consider a piece of paper destined to form part of a book. When this piece of paper is once made quite a number of other transactions become possible in both directions. Any delay in making the piece of paper causes double delay in all those other transactions.

The paper worker, who gets his money for the paper, proceeds at once to spend it on socks and cigarettes or perambulators, spreading employment all around him. The mill-owner, so soon as the piece of paper is made and delivered, gets his capital back and proceeds at once to start his machinery on the making of more paper. The printer to whom the paper goes is thus enabled to make a book. The author who has written the book can get his money for it and can set off on a much-needed holi day, thus employing railwaymen, hotel-keepers, cinema attendants at the seaside, and so on. All these processes in all directions are quite certainly delayed if there is any delay in the production of the original piece of paper, and many of them are rendered impossible if there is any extravagance or waste in connection with the making of the paper. There is another sort of delay that is very com mon amongst us-· the delay imposed by trade union rule and regulation. The theory is that if two men 62 The Return to LaisserFaire can be forced into a j~b instead of one, or if one man can be forced to spread a single day's work over two days, then more wages are secured to the members of the trade unions. This is, of course, a wholly false idea, and its widespread acceptance does little credit to our economic intelligence.

If two men are standing on the pavement waiting for a day's work and only one job offers, it does seem natural that the two men should join forces in a union and say they will do the job together and thus help one another, but that is not the real situa tion. It is the veriest surface of the truth. By joining together and insisting that two men must do the work of one, the trade unions close up the market, and work that would otherwise be required is murdered at its source. All these restrictive arrangements do, indeed, make things a little better for an ever-diminishing privileged few who can keep inside the union or the ring. For example, the 17,420 gentlemen who now monopolise the art of plastering are able to demand terms in money, though not in real values, which they might not secure in a free m.arket. These 17,420 plasterers are able to say to the rest of us: "We are ordained to plaster; we will do nothing but plaster; we will plaster just as much as we decide and on the terms that we arrange, and no body shall plaster but us." It is impossible to blame the plasterers, who are allowed by stupid public opinion to adopt and maintain such an atti tude, but it is also impossible to deny that when plasterers , bricklayers, masons, carpenters and all Delays and Restrictions the other tradesmen that go to make up the building industry adopt with success the same attitude, the effect of their arrangements is to limit the building market so seriously· as to keep us all in discomfort in the matter of houses, and to keep all the in numerable trades that follow the builder in a state of unemployment.

We are very prone to consider only the circum stances of the moment and the considerations which lie upon the surface of a particular business trans action in which we happen to be engaged. Thus we forget that when a worker declines a shilling and strikes or waits for IS. 2d., not only is the important work which is the subject of the discussion lost to the consumer and the shilling to the worker ,but all the work and trade that follow in both directions the moment that the shilling or the IS. 2d. change hands are also lost. Exactly the same argument applies when a business man, to the order of a price " ring, " declines some piece of business until he can impose the terms of the ring. This is not an argument against the strike for a proper wage or a hold-up for a proper price. There may well be full justification for either action. I am merely concerned to· show that when that strike or that hold-up takes place, very much more is in volved in it than the mere question of 2d. an hour or the fixed price for the article.

It is far too generally assumed that the 2d. an hour and the fixed price can only be secured through. the method of the strike or the price ring. This I believe to be one of the greatest of our modern mis64 The Return to Laisser /"aire conceptions. In my view, if every worker would acceptthe first job offered at the best price obtain able, and if every business man would apply the same principle to the purchase and the sale of pro ducts, wages and prices in real values would rise much more quickly, but fronl natural causes. The workers and the price-ring mongers would not only achieve their respective objects much more rapidly, but while doing so they would confer inestimable benefits on all the rest of us as well. Whichever way we look at it, this proposition that every piece of work leads directly to another cannot, I think, be controverted. The proposition is, however, worthy of the most serious study be cause of its depth and because of its unending rami fications. The connection between one piece of work and another is so difficult to trace.

The absence of work in the coalfields from May to November, 1926, put the railways in difficulties, closed down the blast furnaces and pottery kilns and made the production of gas expensive. Those simple results, only once removed from the coal fields themselves, are obvious to everybody, but what most people forget is that the railway share holders and the railway workers, all the people interested in or associated with steel, and the pottery makers of all classes, were all prevented during those seven months from proceeding with the next pieces of work connected with their multifarious requirements. The absence of work in the coal mines led to the stoppage of work in every other trade and industry.

Delays and Restrictions There may be very good reasons for delaying trade and work in various ways. It is bad for people to overwork; undue pressure is highly un desirable; some work may need inspection by officials or others; there may be good political reasons for excluding. work from Russia or the pro ducts of slave labour; medical considerations may necessitate the prohibition of some sorts of work or trade. A hundred considerations may properly apply to this problem, but nothing can alter the economic fact-and this should be more widely·and generally understood-that every restraint and every delay, however good and however necessary, does involve the loss of· all the business all round which would follow if the delay or restraint were removed. Every bit of work or trade may be likened to a pebble dropped into a pool, which causes an unend ing series of ripples. There may be good reasons why the pebble should not be thrown into the pool, but it should never be forgotten that absence of the pebble involves also the absence of the ripples.

5 CHAPTER VI ETHICS AND ECONOMICS IT is generally very hard, especially in political dis cussion, to get a clear issue. If cause and effect are not hopelessly confused, the objective is so many-sided as to make simplicity of argument generally very difficult. Blatchford, although in his "Merrie England" he does not succeed in maintaining the distinction, starts out by dividing very clearly and definitely the things which are needful for the body and those which are good for the mind. He says that "the bodily needs are two-health and sustenance. The mental needs are three-knowledge, pleasure, and intercourse." We shall find ourselves hopelessly entangled in the work of making the world worth while unless we draw a definite, logical, and obvious distinction between the ethical and material. The Universities do not teach chemistry in the schools of philosophy, or philosophy or divinity as a part of mathematics. It is true, of course, that a chemist is a better man if he is also a philosopher, and that the mathematician will get more enjoyment out of life if he knows something about theology, but to succeed in any of the many departments of thought and action it is essential to concentrate, to specialise and to separate. The muddle of present day politics is due, perhaps more than to anything' else, to' the way in which we confuse and try to intermix the ethical and material.