family. Great Britain must cease the ruinous habit of keeping open house for enemies. It was the granting of our vast markets to Germany on more favourable terms than to our own people that enriched our foes and placed them in a position to challenge the world. Universal experience has proved that the only effective way to encourage industry is by means of a tariff. It is regarded in the Dominions as a fallacy to suppose that it was Free Trade that made England great. Her industrial supremacy was built up by a rigid system of Protection, and it is under Free Trade that the lead in many of the greatest industries was lost. The tariff will have to be in several gradespreference within the Empire, most-favoured treatment for Allies, a special tariff for neutrals, with additional duties for enemy countries. A mark of origin to distinguish goods made within the Empire is also a common-sense and necessary step to which the most rigid Free Trader can take no exception. Courts of industrial conciliation and arbitration should be established. These should be easy of access, impartial in constitution, and speedy in decision. The industrial peace must be kept inviolate. Any infraction should be regarded as an offence at least equal to personal injury. Many of our forefathers thought it absurd that the State should interfere to prevent duelling. Industrial strife is a much greater menace to the welfare of a country than private quarrelling. The barbarous methods of strikes and lock-outs should be superseded by more civilised procedure. It is to the permanent interest of both Labour and Capital to institute laws to this end, and to visit any violation of them with condign and impartial punishment.

(b) IMPERIAL

MR. P. H. KERR

(Editor, The Round Table)

In regard to the first of your questions, I should say that we should go through a considerable period of unrest after the War. This unrest, however, I think, will arise, not from any revolutionary movement, but from the inevitable readjustment in the points of view and programmes of all concerned in industry, owing to the experience gained in the War. Hitherto a great part of the energy and organisation which ought to have been spent in productive enterprise has been spent in the struggle between employer and employed about the division of the product of their joint labours, while the public looked the other way, and only paid attention when the row threatened to endanger the public peace or their own supplies. We have all learnt in the War how fatal this attitude of mind must be for everybody, because we now see that industry is in essence national service-a service which must be conducted for the public benefit, and in which everybody must give a normal day of his best work in return for a fair day's pay. The readjustment of programmes and policies to this new idea will cause unrest; but if the motive of public service really overrules that of private interest among both employer and employed, I do not believe that it will produce serious trouble.

As to the practical measures of reform. I don't believe in universal nationalisation. I have served on a

State railway, and lost faith in public management as a universal panacea. There must be public supervision under certain conditions, and in the case of certain monopolies, public ownership, perhaps; but that is as far, I think, as it is worth while to go, as a general rule. For the rest, I believe that the problem resolves itself down to finding the organisations best suited to give effect to the principle that industry must be conducted as a public service. The purpose of industry ought to be, I suggest, to provide :

(1) Adequate and ever-improving conditions of life for all its employees.

(2) Reasonable remuneration for capital.

(3) Improving products at reducing prices for the

consumer.

That is conducting industry as a public service, and in industries conducted from this point of view you can also expect all employees to work their best during normal hours, and to surrender regulations and practices which restrict output.

The question is, how are you to get all industries conducted on these lines? In great measure it can only come from a great change in public opinion, from a greatly increased sense of social responsibility and social service among all citizens. But it will also mean, I think, an alteration in the present system of appointing the boards of management. The responsibility now rests with Capital alone. That responsibility will gradually, I think, have to be shared with Labour and the community. But it is difficult to see exactly how this is to be done, especially in small scale industries. In any case, no good can come from placing difficulties in the way of the board

of management doing its own work. That board must always be composed mainly of persons expert in management, and, provided they have the public welfare in view, they must have full powers of control, and their instructions must be loyally carried out. Otherwise, industry will fail, and there will neither be high wages, fair dividends, nor reasonable prices for anybody. But the first thing is to get recognition for the general principle that industry must be conducted as a public service for the benefit of all concerned, and that all engaged in it must give the best work of which they are capable. Once this spirit prevails in industry, it will not be difficult to find the form of organisation necessary to give permanent effect to it.

(c) INTERNATIONAL

SIR GRAHAM JOHN BOWER, K.C.M.G.

I must begin by assuming certain axioms which are capable of proof, but the space available does not permit me to give as full and complete proof as I would wish. They are:

(1) That wages are dependent on production. A man who sits idle in his garden does not produce anything for himself, nor does he earn wages.

(2) That the amount and value of the products of labour are enormously increased by capital. A man digging with a pointed stick does not cultivate as much land as a man digging with a spade. The spade is a form of capital.

(3) That all wages are paid from capital. If a man

puts a thousand young cabbages into the ground, he is no richer. Whilst they are growing and until they are marketed he has to live. During the interval he lives on savings, either his own or, if he is paid wages, somebody else's savings.

(4) That Bastiat's Law is true. That law will be found at page 183 of his " Harmonies,” and is as follows:

"In proportion to the increase of capital, the absolute share of the total product falling to the capitalist is augmented, and his relative share is diminished; while, on the contrary, the labourer's share is increased, both absolutely and relatively.” The following figures taken from Atkinson's "Distribution of Products" illustrate this law:

Wages in New England Cotton Factories

Wages per operative per year: 1830, $164 gold; 1884, $290 gold.

Profit per yard necessary to be set aside in order to pay 10 per cent. on capital used: 1830, $2.400 gold; 1884, $0.408 gold.

Yards per operative per year: 1830, 4,321; 1884, 28,032.

Cost of labour per yard: 1830, $1.900 gold; 1884, $1.070 gold.

That is to say, the increased capital invested in the factory in the shape of labour-saving machinery permitted the payment of higher wages.

This law must, however, be read in connection with the law of diminishing returns. For, though the law of diminishing returns has a more frequent application