EDUCATION AND COMMERCE
AN ADDRESS BY LORD LEVERHULME.
Before the Empire Club of Canada, Toronto,
December 4, 1919.
PRESIDENT STAPELLS : Before the war we frequently heard the old land referred to as "Sleepy old England," as "Decadent England," and the young men referred to as "Muddled Oafs," and "Flannelled Fools." But today the whole world recognizes that it was those "muddled oafs and flannelled fools" who composed the gallant little army of so-called "contemptibles" that stopped the mad onrush of the German hordes when they first attempted to go through Belgium, (Applause.) and that it was sleepy old England who, in the first years of the war, financed the allies so that they were able to get the vast machine of war under way that led to ultimate victory, and that it was the men, women and children of decadent
Lord Leverhulme's activities are altogether too far-reaching to attempt to even touch all the important sides of his work. In business he is a soap manufacturer, and the largest employer of labor in England. His profession if it might be so termed can probably be best expressed as far-reaching, sane social reform. Port Sunlight the "home town" of the Lever soap business, is on the banks of the Mersey near Liverpool. It covers 62 acres, of which 223 acres are devoted to the village, with its model conditions of housing and public services. The economic principle upon which he works is "sweat the machine and not the man." On this basis he hopes to introduce a 36 hour week, for his employees, each shift working six hours a day. His attitude is well expressed in the following: "It is an economic benefit if a machine wears out under extreme production, an economic disadvantage if men and women are worn out by long hours." His visit to America he describes as a Missionary enterprise in the interest of his plan. Lord Leverhulme has recently purchased the islands of Lewis and Harris and he plans to make these the centre of an extensive fish-preserving business.
England who saved and suffered and sacrificed and died in the greatest war effort ever made in the history of the world. (Applause.) And just as old England gave the lead that enabled us to win the war in Europe, so, I am convinced, old England will give us the lead that will enable us to come out of the great conflict that is raging at the present moment throughout the whole world-the conflict between Labor and Capital. (Applause.) During the past few months we had Mr. Tom Moore, president of the Dominion Trades and Labor Council,' suggest as a remedy the 8-hour day. We had Mr. Mackenzie King suggest, as his remedy, the calling together of the four parties to industry, namely, Capital, Management, Labor and the Community, with their feet under a common table, to solve the problem. And then we had the Rev. Dr. Ribourg suggest, as the church's remedy, the teachings of the lowly Nazarene-good-will, comradeship, and the brotherhood of man. Gentlemen, we have a great English leader with us here today-Lord Leverhulme, (Hear, hear and applause.) and he has already practised what these men have been preaching. He has incorporated them all in his plans, and we welcome him here today, and are grateful to him for coming to tell us the result of his wonderful experiment. (Applause.) Gentlemen, I have the honor of introducing to you Lord Leverhulme.
LORD LEVERHULME was received with loud applause, the audience rising. He said: Mr. Chairman and Gentlemen, I feelhonored by your very generous introduction of me. It is a great source of pleasure to me to have this opportunity of meeting so many of the prominent business men in this great city of Toronto. I have been coming to Toronto for over thirtyone years. One of your citizens, after seeing me married in the year 1874, left what you called the "decadent" country, and came to Canada, with all its young and budding life. We have always been friends as far back as memory goes, we are friends today, and I am very glad to see he is one of the company at this luncheon--Mr. Alfred Robinson. (Applause.)
But I assure you, Mr. Chairman, I have not come under the impression that I can tell you anything that would be of very much use. I remember a tale that has been going around London. A member of one of the clubs there came in with one or two Canadian friends. A little group were sitting at the table, and they invited this member and his Canadian friends to come and have a cup of coffee and cigar with them, which they had, and after they had left, one of the Londoners remarked, "You can always tell a Canadian, can't you?" "Yes," said another, "but you can't tell him much." (Great laughter.) I feel very conscious of that.
There is another story I must have you bear in mind. It is of a young man who opened a fish shop, and he fixed it up with plate glass and marble slabs, and then he put his sign over the door-his name, and the words "Fresh Fish Sold Here." Then he went across the road and admired it. A friend came, and he showed him over the shop, and the friend admired the marble slabs and the plate glass, and then he took him across the road. The friend said, "Yes, but look at your sign." "Why, there is nothing the matter with the sign." "But you say 'Fresh Fish Sold Here.' Surely you don't need to say "Fresh"; everybody will know your fish is fresh. I should think that is rather begging the question. I should leave the 'Fresh' out." The shop-keeper saw there was something in it, and he called the painter and ordered the word to be painted out. Another friend came in, admired the marble slabs and plate glass, then went across the road, and looked at the sign, and said, 'Fish Sold Here'? surely you don't need to say 'Sold Here'; nobody will think you have opened your shop to sell the fish down the street." So the shopman sent for the painter and painted out the word "Here." Still another man came, admired the marble slabs and plate glass, and when he got across the street he said, "Look here." The shopman said, "Why, is there something the matter with the sign yet"? "Well," he said, "You say 'Fish Sold'; surely everybody will know you don't keep a shop to give fish away." (Laughter.) So the shop-keeper sent for the painter again, and he painted out the word "Sold." Now, he thought it was perfect-"Fish"-and his name only, and these told the whole tale. But another friend came, and he admired the marble slabs and the plate glass, but when he got across the street he objected to the sign. The shop-keeper said, "Why, what's the matter with the sign"? "Well," he said, "you say 'Fish'; my God, I could smell them as soon as I turned the corner." (Great laughter.) So I am afraid that the good old systems and customs that prevailed in commerce are subject to such criticism. First one comes and makes a suggestion, and then another, until the old methods would be in danger of sharing the fate of that sign over the fish shop. I feel confident you will agree with me that systems that have survived through the ages, while they may want a little modification here and there, cannot have very much wrong with them in the aggregate. But sometimes we are apt to get into ruts, and the tendency has been for the employer on one hand and the employees on the other to rather regard themselves as in opposite camps more or less opposed to each other. As a matter of fact, here in Canada especially, and in the United Kingdom and the United States as well, the employee of yesterday is the employer of tomorrow. We are all made of the same flesh and blood; we have the same ambitions, the same aspirations; and I for one rejoice that the workman today is desiring to rise and better himself, to be enabled to place his wife and family in better social conditions, and even if possible to own his own motor car and take them for joy-rides on a Saturday afternoon. Why not? Men who work, whether they work with their hands or their brains, and whatever they work at, are the men into whose lap all the modern additions, even luxuries that add to the comfort of life, ought to be pouted; they have won them by their labor. But there are various stages in the process of evolution, and your problem and my problem today is that the workman, seeing the employer dash past in a motor car, and perhaps unhappily splash some of the mud upon the working man crossing the road, is apt to see only the motor car. He did not see the young employer begin, as you know he began, as we all know; he began as a young man who was always rendering service greater than he was being paid for; and that rule has carried him into the motor car. It was because of that kind of work when he began that he is now among what they call "the multimillionaires" of today; I understand you have them unusually thick in Canada, (Laughter) and I am glad of it, for every country is the better for the man who works and develops the resources of the country, who spends less on himself in luxuries and over-eating and over-drinking, and more upon the developing and extending of the interests he is engaged in; and it is only in that way that these fortunes are built up. Sometimes there may seem to be short-cuts, but if you will follow, as you know you can do, every man, the men who have attempted to take the short-cuts find that they do not land them in increased welfare, but the reverse.
Now, the workman sees this prosperity, and he thinks it is some capitalistic dodge, some way in which, by the capitalistic system, as he calls it, the game has been unfairly played for himself; that all the benefits have gone one way, and all the toil has gone the other way. When he hears of Harry Ford and his millions he does not think of Harry Ford working and toiling on the farm, as we know he did from the life that has been published, and taking the clocks of the neighbors and of his father to pieces, and studying their mechanism, and fitting them up again. He does not think of Harry Ford, when he was 17, running away from the farm with three dollars or four dollars in his pocket, that he had saved, and going to Detroit, engaging himself at $2.50 a week, and having to make another couple of dollars a week by using this experience of clocks, by repairing clocks for some clockmaker in the town after he had finished a ten-hour working day; and then with the $2.50 he received for his full week's work, and the $2.00 he received for the evening's work, he was just able to support himself and pay for his board and lodging, because he was determined to be no burden on his father and mother. That is not seen. And, then, from that, they do not see that after he had got experience he had to decide whether he would accept a rise in wages that the firm offered him, which would have enabled him to dispense with his evening work and keep himself by working ten hours a day, or take that as a hint that he had become accomplished in all that that firm could teach him, and go to some other firm and start again at $2.50. Harry chose the latter, and continued with his evening work. Then you remember, when he was just about to further his experience of mechanics, his father became ill, and the sickness resulted later in his death; his mother called him home, and he cheerfully went back to the farm and worked along there. Later he met the girl who became the present Mrs. Ford; that joined him to the farm a bit longer; then you remember he went and gave up the farm and accepted again a position in engineering shops, and worked laboriously for a tenth of the money he had been making on the farm. That is all missed; that is not seen; and the workman therefore considers that by some way other than by a better equipment of himself and better service to the great public he will achieve success and get a share of that motor car and other luxuries and comforts which, I agree, he is fully entitled to if he will go the right way about it.
On the other hand, the masters--every one of us in the room--know that if we would increase our incomes next year we have to plan to increase our business; we have not to plan how we can get a higher price for a smaller quantity, but how, by doubling the quantity, we may be even able to lower our price and still make more money in the year. That is the lesson that the workman is apt to overlook. Wherever he has grasped it he has never remained a workman long; he has been it? a little while a little higher and better, until he has finally become a master.
Now, I am an optimist on the workmen of both Canada and the United Kingdom, and the United States. I believe that in this country and the other countries, I have mentioned we have the finest material in the workman that there is in the whole world; (Hear, hear.) and if we can only show the lines on which we can jointly work together, then surely such abounding prosperity will come to this great country, such development of great wealth that nature, with generous hand, has poured lavishly into your lap, as will make you the envy of all other and less happy nations.
But it does appear to the workman something like this. In the Old Country they very often have what they call "draws" at Christmas. You put in a shilling, and a number of other shillings are put in just before Christmas, and there will be a goose and a turkey and a chicken and other good things drawn for. The lucky drawer gets one or other of the items. One Christmas, just before that event, a countryman came into a village inn where a draw was being arranged, and the landlady says, "Tammas, have you put into our draw"? "Naw, Ah bean't heerd aboot t' draw." "Yes, we're havin' a draw; we're havin' a turkey, and a goose, and a duck, and a chicken, and a pair o' gloves, a' to be drawn for; tickets are only a shillin'; will you have a part?" "Oh, but Ah bean't got a shillin'." "Never mind, Tammas, you've lived in this village, man and boy, all your life, and I'll trust you for the shillin'." "Well, Ah'll tak a ticket." So he took a ticket. When it got to Christmas time he went in and asked how the draw had gone on, "Did you have t' draw"? "Yes, Tammas, we have had the draw, and, d'ye know, my' husband, he won the turkey; weren't he lucky"? "He wor lucky." "And d'ye know, Tammas, my daughter won the goose; weren't she lucky?" "She wor lucky." "And my married brother, he won the duck; weren't he lucky"? "He wor lucky." "And our married son, he won the chicken; weren't he lucky?" "He wor lucky." "And our little lass, Tammas, won the pair o' -gloves; weren't she lucky"? "Yes, she wor lucky." "Oh, but, Tammas, I guess you have never paid your shillin'." "Naw; weren't I lucky?" (Great laughter.) Gentlemen, I am afraid it often appears like that to the workman.
Now, profits are not made entirely by capital, and not entirely by labor, but by a combination of capital and labor with good management. If it was only capital and labor you would merely need to buy a man a spade and let him dig a hole today and fill it up tomorrow, and he would get rich each day with his labor-plenty of work, the capital being the spade, and so on. But you know that there are undertakings in Canada that have not lacked for capital, which has been lavishly subscribed by the public, and labor has been ample in the undertaking, yet somehow there has been no earning capacity, and we have found too late-perhaps not always too late to rectify-that the management has not been good. We must have good management as well as the capital and labor. And whilst you will be able to find machines that will dispense with labor in some cases entirely, and in other cases reduce labor, the wit of man has yet failed to invent a machine that will do without either capital or management, and least of all, good management. (Hear, hear.)
Now, I want to impress upon you all this fact: that the writings of many in the last century and the latter part of the 18th century, were always in the direction of saying that labor was the source of all wealth. We know what was meant by the term; not exactly labor as we mean it today, but that root idea has got imbedded in the workman's mind, and he is apt to think that if you will only appropriate to the municipalities the utilities and public services, such as tram cars, railways, and other public undertakings, you will then have secured for the public benefit the profits that at present accrue to private ownership. But are you certain that under those conditions you will get the management? Is it possible in politics, political ownership, to combine the management under, a political system of selection? That problem has never yet in the whole history of the world been solved successfully. (Applause.) It is only by private ownership that the best results are obtained. But this is no new doctrine; why, Aristotle declared two thousand years ago that whilst the state must own public buildings and public open spaces, it was private ownership that developed the finest type of men and women. It is therefore the task and the duty of you and me, every employer of labor, to concentrate our minds not solely on the item of dividends, important as those are, and as indexing the measure of success of the undertaking, all-important, but in producing the finest type of men and women. Now, it is not public ownership that can replace private ownership. We are not in opposition in any way to public ownership of those utilities, but Aristotle told us two thousand years ago that they would not produce the finest type of men and women; it is private ownership that does that.
Now, how can we have private ownership in those huge aggregates of capital and labor comprising tens of thousands of workmen, thousands and millions of dollars of capital-the employer rarely seen, rarely recognized? How are you going to give to each unit there a sense of ownership-just as keen a sense of ownership as that of the president of the company? There may be many methods of achieving this. It may be that many may consider it is not worth achieving; it is not worth trying for. It may be that others think that if, by some method of co-partnership or profit-sharing the dividends can be increased, it would be worth thinking about. You know the story of the Scotchman who was working at the circular saw, and his hand slipped, and before he knew where he was the saw had taken off three of his fingers. He stooped and saw one down amongst the sawdust, and he said, "But I must find those fingers, I can get them stuck on again." Then he put down his other hand and tried to find the fingers, but failed. Then he laid a three-penny bit on the top of the sawdust, and the fingers came up at once. (Great laughter and applause.) Well, Mr. Chairman, there is no element of that sort to commend co-partnership to any of us. I believe that the man who thinks co-partnership is an item to be added, as it were, to the bill-of-fare of a business, that will increase some of the side-dishes, especially the dividends, and make them more palatable and richer, is going to be grievously disappointed. He will never get further than the soup stage--and he will find himself in it. (Laughter.) It is not with that motive. But I can say this: if the motive is to arrive at a proper relationship so that the profits made in the business, which at present go in one huge volume to the shareholders only, can be fairly and justly diverted, as to a portion of them, to the workers-if that commends itself to a man as equitable and just, as recognizing universal brotherhood amongst us all, and that the workman has the same aspirations to private ownership as the president of the company;-if he believes that, and endeavors faithfully to put it in practice, then I believe, as confidently as I believe that we are all here in this room, that the profits will not fail him, but that they will be more assured. Whether they are less in volume or more, does not matter, but that there will be happier and more contented relationships; that the burden of the business will be carried by a greater number of brains and shoulders, and a greater number of hands, and especially of hearts, will be devoted to the success of the business than under any other system.
That is simply the proposition that I have endeavored to put into practice now for many years; and I can say this, that whilst it is impossible under a co-partnership system to say that you can trace here and there definite effects from definite co-partnership allotments, yet I can say that each year the business that has adopted this plan -whether it has been my own or others that I have read of-and adopted it from a right motive, will bring the results I have stated.
Many co-partnership schemes cannot have been adopted for the right motive, because the returns issued by the British Parliament some years ago showed that the average life of co-partnership schemes and profit-sharing schemes in the United Kingdom had been five years. They had been tried undoubtedly with the idea that they would stop strikes, that they would make workmen contented, and so on. Why should they? Why should not the workman have his right to strike, whether he is a partner or not? Surely we do not give up our right to bargain because we are conducting our business on the basis of individualism, and confidence, and so on. We are not asked to give up anything. All I say is this: that the workman under the co-partnership system is far less likely to strike than to desire to talk the dispute over. He is far more anxious to meet his employer and discuss the matter of difference fairly and squarely than he is to rush out in a hot moment and "down tools." And equally, the employer feels the bond between himself and his workmen which sweetens his life, which gives him confidence in those who are working with him, and that brings content in the only way that is really certain, that is, invisible content, not in any open, blatant, noisy manner, but binding all the forces together, just because it is a silent, quiet influence, because in the days of prosperity the workman feels that he is sharing in it, and in the days of adversity he feels that his employer has a heavier load to carry and a greater burden, and less profits to accrue there-from. This binds us all together.
Now I would like to say a few words about the length of hours. You made a reference, Mr. Chairman, to the eight-hour day. I want to put this point to you in as few words as possible. Before the war, in the United States and in Canada generally, the workman had a ten-hour working day. Since the war I think it is generally, though not universally, an eight-hour working day. We had an eight-hour working day for many years before the war in the United Kingdom generally, not universally. When you read paragraphs in the papers and magazines of the decreased production following on the eight-hour day, remember this, that you have had your machinery standing idle so many hours per week when formerly it was working; and while automatic machinery by increased care and vigilance on the part of the operator, and quicker changes when change has to be made, will produce more per hour under an eight-hour day than per hour under a ten-hour day, owing to the less fatigue of the operator, that increase per hour is limited, and in no case, as far as my knowledge goes, can automatic machinery equal the output of ten hours. The ten-hour working day, following upon the previous twelve-hour working day of about a century ago, was practical with machinery; but as soon as you come to an eight-hour day you have got all your charges for interest, depreciation, repairs and renewals in all those industries. Where those amount to the equal of the weekly wage bill you are proving that the eight-hour day is impracticable; and if you will change to a six-hour work day, with two shifts, so that you are working the machine twelve hours and the human being six hours, I say, in all those cases where the upstanding charges-I don't know what name you have for them, but I mean all those expenses-interest, depreciation, repairs, renewals, salaries, rates and taxes and rent, which are fixed and not affected by whether you work eight hours a day or ten hours a day,-equal the wage bill, then the proper solution is at once to come to a six-hour day of two sifts, work the machinery twelve hours, by which you ca get at least a fifty percent increase from your plant in the twelve-hour day of two shifts as compared with the eight-hour day of one shift.
Now, that is the whole problem. This solution is not universally applicable. It is not applicable to any industry where so little machinery is employed, so few factory buildings are required, that those charges are less than the weekly wages. A notable example that will occur to all of us is that of a farmer. If a farmer reduces his hours on his farm it will be from other reasons than to reduce the cost of production and increase his output; but a manufacturer, where those conditions prevail, if he has two factory buildings today, instead of building a third to take care of his increased demand--which third building will cost him more today than the pre-war cost of the other two--instead of doing that, if he will, at that psychological moment, adopt the six-hour working day of two shifts, he will have increased his output as if he had put up a third factory, but he will enormously reduce the cost of production. He will be able to pay the same wages for a six-hour day as for an eight-hour day-because that is an essential, otherwise we are only asking the workmen to work short time.
The problem with us in the Old Country is that the unions won't agree to work in two shifts. In the spring of this year I proposed to put into operation the six-hour working day in the company with which I am connected. The trades unions at once declared themselves in opposition; and with a country like England, where eighty-five percent of the labor is organized in trades unions, however excellent their policy may be, it is not an easy matter to force a change before the workmen are ripe to receive it. Therefore I have not been able to press this matter forward, and we are waiting until the trades unionists can see that anything that increases the output will increase the wage fund, and thus enable us to pay greater wages to the workmen. As soon as the workingman sees this, I am certain the opposition to the two shifts will disappear-and without two shifts this scheme is impossible. We are hard business men; we have to be; we are in competition with the whole world, every one of us in this room. The world is shrinking. Here in Toronto you may be competing with a man in the same industry thousands of miles away in the United States or across the ocean, in the United Kingdom or on the continent of Europe; and you will only hold the position-any of us will only hold our position, and keep Canada to the front, and the United Kingdom to the front, to the extent that we can produce a greater volume at lower cost. (Hear, hear.) Anything that would increase the cost of production is a matter so hazardous to enter upon, so full of danger to the workman himself, that the best friend of the workman will not be a man full of tender sympathy, full of generous ideals for the betterment of the workmen, but even the hardest skin-flint of an employer, who believed in paying the lowest rate of pay for the maximum amount of work,-even that man, bad as he is, would be a better friend of the workman than a sentimental philanthropist, so-called, who thought he could play ducks and drakes with the great industries by starting out on lines that were uneconomic and that would prevent him and his country from competing with the whole world. Business conducted on such impractical lines could only reach disaster.
These are the lines on which I think we must progress -the sharing of profits on some agreed basis with copartners, so that they have a sense of ownership in the business, but not advancing them to the position of directors until they have learned all that has to enter into the cost of production, and all the other machinery of commerce upon which our industries are founded and built up. The premature putting of a man on the dock-side, say, to sit on the board of the Cunard Company, for example, might result in the loss of prestige to that company as far as the running of their ships was concerned, as that man's vision might not have extended so widely as to enable him to fill the position.
Gentlemen, the cry for admission of the worker to our boards of directors is a necessary and inspiring ambition on the part of the workman; but he will have to learn the whole machinery of commerce, he will have to re-learn his lesson, and know that only by service to the public and cheaper cost of production can his position as a director be of value to the company on which he wants to serve as such. Until he learns that-never mind Whitley reports, never mind all the ideals-we should only be like some man who wanted to climb one of your beautiful mountains, and who discovered that there were rivers to be crossed, chasms to be spanned with bridges, and so on, and who yet was going to go blindly ahead. He could only perish in the very first river he had to cross.
This is the problem we have got. It has to be educational; it has to be inspiring; it must give us a feeling that we are dealing with men of equal flesh and blood with ourselves, inspired with the same ideals, and equally with ourselves having to learn our lesson of life as every one of us in this room has learned it by the hard facts of experience.
I thank you, Mr. Chairman and gentlemen, for the patient hearing you have given me. (Loud applause.)
Horn. DR. CODY, at the request of the President; conveyed the thanks of the Club to Lord Leverhulme for his magnificent address. The Club had had the great opportunity of listening to a world figure in the realm of commerce and economics, and achievement, whose whole career has been singularly romantic, but it has been a romance based upon sterling achievement. He began by toiling, by practising industry, thrift and integrity, and as one who knows him well had said, his word was even better than a bond. By turning back into his business almost all the profit that could be spared he had built up one of the greatest businesses in the world, with a capital of probably half a billion dollars. His plan of -o-partnership had been wonderfully successful because founded on the right motives, recognizing that the man who works is first and foremost a man, and more than a tool. Lord Leverhulme had always counted those who worked with him as real co-partners. His great experiment had created world-wide interest, also his model housing plan at Port Sunlight, and his great artistic collection. Latterly he has been known as the Laird of Lewis, where he is exercising his power for the welfare of the people on that island. He had also great interests in the Congo, and his frequent visits to that country had brought on attacks of malaria which resulted in the loss of his hearing through the use of quinine as a medicine. The address of Lord Leverhulme had been a propaganda of sound economic education which was so much needed in this country in view of industrial conflicts that may be approaching. .
The speaker had shown the value of leisure time for improvement, and had pointed the way for working men to benefit by the shortening of hours. On behalf of the Club he desired to thank Lord Leverhulme for his forceful and illuminating discussion of the burning problems of the day. (Loud applause.)
PRESIDENT STAPELLS expressed the delight of the audience in having two outstanding representatives of the Old Land, and had much pleasure in introducing the great English actor, Mr. E. H. Sothern, whose name was a household word throughout this continent.
MR. E. H. SOTHERN was received by the audience rising and cheering, and he made a neat speech in which he expressed the hope that attention would be given not only to the industries but to the diversions and entertainments of the people. If the six-hour day were introduced the working men would have eighteen hours daily in which to consider what he would do with himself, and under those conditions the higher and nobler drama should be popularized, and he was sure they would appeal to working men as they had done to an audience of children in Chicago. He told a delightful story of a special performance given to school children in that city, the play chosen by the children being "The Merchant of Venice." The children had walked in procession to the theatre, costumed to represent the various characters in the play, and they had shown the keenest appreciation of every turn of the dialogue and in every scene presented. During one of the intermissions a school-boy jumped on his chair and shouted, "Gee, this beats the nickel show!" (Laughter.) The speaker pleaded for greater attention to the drama, and an educational campaign that would popularize the classic works of Shakespeare and other great writers, as an antidote to the cheap and sometimes degrading scenes and dialogue of popular entertainment, or the more degrading movie pictures.