CAPITAL AND LABOUR.

Waikato Times, Volume 97, Issue 15981, 8 May 1924, Page 6

CAPITAL AND LABOUR.

SCHEME OF CO-PARTWERSHIP. HUMAN ELEMENT IN INDUSTRY. COMPANIES EMPOWERING BILL. Industrial unrest the world over is causing 1 the greatest concern ito statesmen and leaders in business, by whom it is generally recognised that the relationship between capital and labour must undergo a drastic change if harmony is to be restored and pre&'erved between them. With a view to solving the industrial problem, Mr 11. Valder, of Hamilton, has deeply interested 'himself in schemes of co-partnership by which the element of labour would be considered in direct relation to capital, and in which the human element would hi; taken into consideration in industry to the ex'cut that it warrants. He, has drtafwn vip a Bill, known as the Companies Empowering Bill, which has alre'ady been introduced into the House ('but has been virtually defeated by amendments), under which 'companies would be enabled to place rtlheir businesses on a co-partnership basis. On Tuesday, in the Y.M.C.A. reading room, Mr Valder explained the effects of the Bill to a 'gathering of Rotarians and others, over which Mr A. E. Manning presided. Evolution or Revolution? The industrial position, said Mr Valder; was a cpjesltion occupying a considerable laimount of public attention, 'because there was a feeling the world over that a change in the industrial system was inevitable. There was, throughout the entire world, a search fori a formula which would alleviate, if not solve, some of the great industrial problems. Statesmen and business leaders were giving a great deal of time and thought .‘to the subject, and while it appeared to be 'generally agreed that some remedy was necessary, there was yet a great hesitancy to act, but unless something was done in .the direction of altering the status of labour in industry, there would be revolution instead of evolution. The speaker quoted such great industrial leaders as Henry Ford and 'Lord Leverliuhne as having recognised that the human element in industry was the great factor to he considered. The existing Companies Act was 'tantamount to a deed of partnership and dealt with capital only. Labour was not given any status under .the present Act, and the speaker would like to see it so amended as to take into account ‘the factor of labour, and he advocated that provision should be made for the issue of labour shares. He considered that after capital had received its own reward, the balance of the profits earned should be divided amongst the persons engaged in the business, according to the status of each individual. This could be done by the issue of labour shares, which would be automatically cancelled when the individual. left the business. The labour shares would carry the same voting power as the capital shares and would render holders eligible for el'totion to the directorate, ft bad been objected that if the scheme became operative, labour would share in the profits, but not in the losses.. There was no greater fallacy than this; assertion, as losses would have a direct, effect' on labour by forcing the reduction of staffs. Labour Must Have Its Share. - The money lost to labour was greater than the loss of capital over any given period. Labour risked and lost as much in industry as capital did. It bad been said that Labour did not possess the necessary knowledge of business to furnish leaders. If such were the case, the remedy was easy, by giving labour the same opportunities capital to achieve such knowledge. They would have to treat the human element on the same plane as capital. He had been asked if it would not be fairer to allocate the profits equally after wages and interest on capital had been paid. He would define labour as every phase of human activity in industry, both menial and physical, and everything else as capital. The purpose of the association of the two wfis production. If they were to assume mat each of these factors yvas equal, then they should have equal Status, yet at the present time labour had practically no say in the control of industry. There need not he any sudd’en reversion to the new condition suggested that would be likely ’to upset business. The change would be evolutionary and would come about by lirrns awarding some of the shares to certain of the principal employees. This would not upset the capital holding, but would only give labour an interest in future profits and a say in the ■future control. By the labourer he did not merely mean the man with pick and shovel, but every class of employee. The speaker proposed at the next session of Parliament to again get the Companies Empowering Bill introduced. When ’the Bill was brought before the Labour Bills Committee of the House last year there was a strong undercurrent of opposition, when two clauses were inserted which absolutely ruined the Bill, and consequently the measure was withdrawn. There had been considerable discussion on 1 it, especially amongst Rotary Clubs, and every Rotary centre in New Zealand had set up a committee to report upon the Bill, ,Hc was looking for criticism of the measure, both constructive and destructive, for he was desirous of seeing it become law in the best possible form. Interest on Capital. Mr A. E. Manning asked how it wns pro.posed to allocate the profits—and what proportion was to he considered as a fair earning power of capital. Mr Valder considered that the payment for the use of capital should be limited, and all profits above this la,mount should he allotted to the .producers of the profits. Mr C. L. Mac Diarmid asked if there would be any provision for setting aside a portion of the profits as a reserve so that a valuable employee who had Served a large number of years in the business would receive at his retirement an accumulation over and above h'is wages. Mr Valder considered this a valuable extension of the Bill. The labour shares could be divided into an A and B issue, one section of which could be allocated out of the reserve, and would be converted into capital shares, Mr E. P. Cowles thought that the profits should only be allocated after wages had been paid and a fair interest paid on capital. Mr Manning: You suggest that capital should have a limited wage and labour an unlimited one. What of a man with, say, £20,000 for investment? Do you not think the limiting of the interest would be likely to stifle enterprise? Mr Valder said that in the majority of eases the chief investors in a company were employed in the company, and in addition to the payment on their invested capital they would also get labour shares. Before a single payment was made on labour shares the whole of the interest on cupital would have to be paid. This would be an incentive for labour to work bard, knowing that unless it did so

and earned \va ges for capital it would get no profits for itself. Capital was therefore rendered safe. Mr J. A. Young, M.P., pictured a business in which the originator paid the highest wages and placed his employees under ideal conditions, and who by his own energy and enterprise vvas responsible for earning very' large profits. Would lie not be entitled to something more than merely a fixed nominal interest on his capital?

Mr Valder said that in such a case the originator would he able to allocate himself the bulk,-of the labour shares.

Mr Young asked what the position would he if the labour reserve fund accumulated to such an extent that when it passed under labour control in the form of capital shares, it acquired a greater voting power than capital? Mr Valder: If the shares allotted to labour represented assets greater than the subscribed capital, then why should they not have a higher voting power? The Workers’ Share. Mr Mac Diarmid: How would the. workers in an individual business, other than a company, acquire a share in the business? How would the individual owner define the amount of control labour was to have In the business?. Mr Valder saild the Bill would relate to companies only, but in the case of an individual business a dee-d of partnership could be entered into between the proprietor and his employees. it would he less cumbersome, however, to come in under the Companies Act. What they required to do was to satisfy labour that it was receiving a fair share of the profits over and above the wages it received. There would be a fluctuating rate of interest on capital accordingly as the value of money fluctuated.

Mr P. Stewart said that there was no objection whatever to the Bill from the labour point of view. It was only an enabling, and not a compulsory, measure, and he thought it would be a fine thing if they could get it embodied in the statutes. There was no doubt that labour was in a great state of unrest the world over, and he throught it would be a fine thing if New Zealand could lead the way by passing such a bill, enabling an experiment of this kind to be made.

Mr J. A. Young said that assuming the Companies Empowering Bill became law, and was generally adopted, did he (Mr Valder) believe it would prove an effective instrument for the perpetuation of the present in_ dustrial system, based upon the principle of the private ownership of wealth and industry? Mr Valder replied that undoubtedly it would. In fact, it would considerably enlarge it by embracing labour as well as capital.

At the close of the address, which was lucid and highly appreciated by those present, Mr C. L. Mac Diarmid moved a vote of thanks to the speaker, and a motion was carried approving of the bill as proposed by Mr Valder. The Hamilton Rotary Club pledged itself to do its utmost to have the Bill placed upon the Statute Book.