SERVICE IN INDUSTRY:

Auckland Star, Volume LIV, Issue 74, 27 March 1923, Page 13

SERVICE IN INDUSTRY:

PRODUCTION FACTORS. ADDRESS TO ROTARIAXF. BY Mil. If. VALPF.R. \ moH instructive and interesting address «,,s delivered by Mr. H. Valder to members of the Auckland Kotary Club a t their weekly luncheon in the Town Hall yesterday. Mr. Valder spoke on "Service and Industry." and reniarked that he esteemed it a great privilege to have been asked to address tliem pn the industrial problem. Kotary, he said, was undoubtedly a means ot selecting the leader? of tlie business community, an<l :is Mich, they were experts on the subject of the relationship between, capital and labour, that was what service in industry really was THE FUNDAMENTAL PRINCIPLES. "A phase of this subject which is often loet eight of by employers," said Mr. Valder, "to that iuile.su means of expression are given to the potential enorcrjes of the workers there is undoubtedly a danger that these, energies may he excreted in a direction which will tend to wreck the entire industrial structure To enable we to place my ideas before you it is necessary fur mc to refer to some of the fundamental principles on which industry is based. There Ls admittedly a. v;ict latent potential factor in .production which the present industrial system fails to develop—that is The enthusiasm, interest and zeal of the employee, and the scheme which 1 will endeavour to explain to you is designed to give facilities for its expression. TWO FACTOR? OR SERVICES. "There are two factors or services in industry," he went on. "'The active factor of labour and the non-active factor of capital. The main question to decide is whether the service of one is moie important than the other, or whether they aro of equal importance. Before discussing this aspect I will first define •what I mean by the terms—Labour, Capital, Industry. T realise that to make my meaning clear 1 must firot define what I mean to convey in the use of these words, and then *tick to the meaning, as confusion of thought ie bound to arise if I use the words in one sense, and you understand them in another. Labour is every phase of human activity in industry—physical and mental. This, perhaps, is not the sense in which the word labour is used, but I fail to sec how it is possible -with any degree of reason to draw the line between two persona engaged in industry', and say one represents labour and the other does not. Industry is the association of two services—the active service of labour and the non-active service of capital, and the objective of industry is production. I apply the term nonactive to capital because it 13 incapable of the act of production. If all the capital in New Zealand was placed on an uninhabited island, it would not produce one single unit of wealth." DEFINITION OF CAPITAL. Capital is the uneonsumed product of industry, Mr. 'Valder continued. The average man looks upon money as being the principal form of capital—this, of course, is incorrect —money is only a medium of exchange, and the token of the measure of capital. LABOUR MOST IMPORTANT FACTOR IN INDUSTRY. It is, of course, clear that each oi these services is the complement of the other and both of them are essential to attain a reasonable measure of production. The fact, however, still remains that labour can produce without capital whereas capital cannot produce without labour, and if any preference is to be given in the distribution of the profits of industry, it is the active service of labour which is entitled to that preference. NECESSITY FOR CHANGE. The point arises—ls there any necessity for a change in the present industrial system? No one seems to have any doubt 'whatever about this. Labour is convinced that the owners of capital are getting more than their fair share of the profits. The owners of capital are convinced that labour is not contributing its fair measure of service. RESULT OF DISCONTENT. The outcome of the present method is that a large proportion of the time which should be devoted to production is taken up by the conflict between the two parties, resulting in an enormous amount of waste of energy. It is the methods by which the division is arrived at to which Labour objects. "I yield place to no one in my admiration of the principles of Rotarianism, but if industry is to benefit by the Rotary constitution of 'Service, not Self,' Rotarians must put it into practice inside their business as well as outside. It is not possible to do this under the present industrial system as the principles of this system are diametrically opposed to those of both Christianity and Rotarianism. The solution is amazingly simple—the application is enormously difficult. Two fundamentals are:—(l) The payment of a pre-determined rate for the non-active service of capital. (2) The division of the balance of the profits amongst all who render the active service of labour. This would mean that Labour would be paid by results, which is the greatest incentive that it is possible to offer in order to obtain a high measure of production. I would cite the dairying industry. "Most individuals engaged in the dairying industry are small farmers, and many of them are working entirely on borrowed capital. There is no class m the Dominion, who, as a class, work as hard and the incentive for them to do so is that they are paid by results and all they produce after paying interest on capital belongs to them.. It is being recognised gradually that industry, like everything else, is governed by immutable law—cause and effect. Action and reaction are operating all the time, and business can only be permanently successful by the recognition of certain laws. The problem is to discover what those laws are."