WAGES AND SELLING PRICES
A period of prosperity 

The period with which we have been dealing, and particularly its later years — 1871 and 1872 — had been one of unexampled prosperity in the potting trade. 

The Franco -Prussian war had practically brought the Continental production of pottery to a standstill, and given a corresponding impetus to the manufacture of pottery in England ; but the potting industry only shared with every other trade in the country a period of prosperity never since relatively surpassed. 

The potters sought to take advantage of this flourishing state of affairs, and at the Martinmas of 1871 they appealed to the Board of Arbitration for advances in wages. 

It is important to notice the method of appeal. Each branch selected an individual case by which the whole question, so far as it concerned the workers in that branch, should be decided. 

If it was decreed by the Umpire that the members of the appellant branch employed at the firm selected for the appeal, should receive the advance in wages asked for, it was understood that every employer who acknowledged the Board was bound to concede a similar advance to those members of that branch in his employ, and the obligation was honourably carried out 

The effect of the award was, however, even more widespread, for those employers who had refused to join the Board found it extremely difficult to exempt themselves from a rate of wages which ruled at so many of the largest and most influential manufactories in the district.

THE GOLDEN YEARS
Workmen's wages advanced (1871-2)

The case of each branch was the subject of an entirely distinct and separate arbitration. 

The appeals of the workmen were based upon these general grounds : 

that the main tendency of wages in the potting trade had been of recent years, to decrease, so that for the same amount of labour performed less money was paid, and they sought to have their wages raised to former prices — in some cases going back as far as the rate of wages paid in 1836 to justify their claim. 

The arbitrations were therefore inquiries into the detailed prices of the various articles made by each branch, and the principle which governed the arbitrations — and one accepted by both sides — was that the prices to be given should be decided by precedent in cases where a knowledge of previous prices was available, and in the case of new patterns or new modes of working the prices to be given should bear an actual relation to the work involved. 

It therefore came about that an advance was given upon certain articles, and refused on others, and the general effect of the series of arbitrations was to bring about some approximation to uniformity in the working prices of each branch. 

The workmen did not base their appeals upon any proof of the increased profits of the employers, though, of course, the general prosperity of the trade could not fail to be an underlying thought in the minds of both parties as a circumstance which made the time an opportune one. 

The workmen merely took each article in dispute in each branch upon its own merits, contrasted the price paid then with prices paid in former times, showed in what way altered conditions of working had affected the capacity of an ordinary workman in regard to those articles, and the Umpire gave his decision entirely upon those considerations.

The average advance in wages decreed, taking all the branches together, was about 8⅓ per cent, but the point to be noticed is, that not only was there a disparity between the amount of the advances asked for and granted as between the different branches, but that discriminating and detailed inquiry was made into the various prices of each branch, and the awards varied accordingly. It is certain, however, that after the awards had taken effect the prices paid at most of the manufactories in Staffordshire approached more nearly to uniformity than had ever been the case since 1836.

The wave gradually subsides

The advance given in 1871-2 remained unchallenged by the general body of manufacturers for four years. There can be no doubt that during that period the potting trade, like every other industry in the country, had lost some of the prosperity which it enjoyed in the golden years of 1871-2, and that potting manufacturers were, in 1875-6, selling their goods at prices below those of four years previously. 

The decline had been gradual and fairly general, but not uniform in degree. That is to say, all classes of earthenware, and all articles of the same class, had not suffered a diminution in selling prices to the same extent. Still, the prosperity of the trade had been generally declining from an unwontedly high level. 

In 1875 there was some talk amongst the manufacturers of an appeal to the Board of Arbitration for a general reduction in wages, but the hope that trade would revive prevented any definite movement among the body in that direction.

FIRST GENERAL ARBITRATION
The employers appeal for a reduction in wages 
"Sliding Scale" proposed

At Martinmas 1876, however, forty - eight manufacturers gave notice of appeal to the Board for a general reduction in wages of 10 per cent. The grounds upon which the reduction was asked were: 

"(1) The depressed state of trade ; 
(2) The increasing foreign competition ; 
(3) The generally reduced prices at which goods are now selling ; 
(4) That while from time to time, when trade was good, advances in prices were made, on no occasion has any reduction been made when trade has been depressed ; 
(5) That in numerous other trades in North Staffordshire, and throughout the country, workmen have submitted to reductions in wages, and that the cost of living is considerably lower at the present time than when the various advances were given."

It will at once be observed that the grounds of the appeal introduced a new element into the consideration of what circumstances should govern and decide appeals to the Board for any alteration in wages. 

The employers based their appeal, in short, upon circumstances and conditions with which their workmen had nothing to do, and which excluded from consideration altogether any question of the value of the work performed as judged by the labour necessary to perform it. 

They introduced the principle that the wages of their workpeople must fall with a fall in selling prices. Now, this principle — called the "sliding scale" — has been adopted in several trades, particularly in the coal trade, but its operation has generally been accompanied by a minimum below which the wages of the men should not fall. 

Moreover, it has only been applied to trades that are governed by a market price, such as the iron and coal trades, which are concerned with articles having a definite and standard value. 

The difference between such trades and that of potting is obvious. The potting trade is concerned with a multifarious number of articles, and its selling prices are largely determined — unlike the prices in the coal and iron trades — by the competition of the manufacturers themselves, and are not affected by any of those special circumstances which result in fixing a definite market price in the other trades mentioned. 

Moreover, in the iron and coal trades — which best serve as an example of contrast — the selling prices are matters of common knowledge upon the various exchanges connected with those trades. The prices of coal and iron are as easily ascertained as that of wheat, and are all affected by special and universal conditions from the operation of which the potting trade is excluded, for it fluctuates only in general sympathy with all commerce.

WAGES AND SELLING PRICES
The "selling-price" doctrine examined

Again, the relation of wages to the value of the article produced and procured, in the case of iron or coal, may be easily ascertained or established on account of the directness and simplicity of the operation by which labour, at the furnace or in the mine, gives effect to capital, and completes the commodity for the market ; and the determinable character of the connection between wages and selling prices in this respect, together with the circumstance that the markets furnish standard prices of standard goods, renders the principle of a sliding scale in such trades a comprehensible and convenient method for the control of wages. 

But in the potting trade, the operations and processes by which the ware is produced are complex and numerous, the number of articles concerned is enormous, and their qualities are of immense variation, and the prices of those articles being finally determined by the individual circumstances of each manufacturer, are not regulated by any conditions which could fix a standard of such precision and reliability as to decide what share of the selling price of each article should fall to each workman for the particular process performed by him upon it. 

Its injustice to the workmen

There are therefore practical difficulties to any satisfactory application of a sliding scale to wages in the potting trade ; but even if it were possible for some system to be devised by which the principle could be adopted, there would be still objections to the fairness of any such method so long as the workmen were left without a guarantee that the manufacturers would collectively endeavour to keep up selling prices, and not reduce them by their own competition. 

Without such a guarantee, the principle of a sliding scale practically converts the workmen's wages into an insurance fund, sheltering the manufacturer against loss ; and throws upon labour the burden of providing, at its own cost, the profit of capital. 

Its injustice to the workman is that it singles out the commodity of his labour, from all other commodities— (such as materials and rent) — the price of which may be altered and adjusted by the employer to meet conditions of trade which may be entirely brought about through the action of the employer himself, but in which, in any case, the workman can take no possible part. 

It makes of his wages a margin and a reserve within the limits of which the employer may speculate, helps to relieve the employers of the primary obligation of basing the selling prices upon the rate of wages and general cost of production, and subjects him to the temptation of reversing the sound and natural principle upon which all trade should be based, by causing him to speculate upon the possibility of, and ultimately to rely upon, being able to suit his wages to the selling prices which in active competition he himself chooses to fix. 

It therefore acts, by providing a last resort against loss, as a direct incentive to ruthless and reckless competition which, up to a point below which manufacturers would compete and speculate at the risk of loss only to themselves, would be checked by a stable rate of wages. [footnote 1]

A NEW PRINCIPLE

We have, of course, touched upon a question of wider interest and application than its effect upon the relations of the workmen and employers engaged in the potting trade, but it is a question which was now introduced in the first general arbitration that had ever taken place in the trade ; which ran as a " motive " through all succeeding arbitrations ; round which has centred nearly all the subsequent controversy between master and man in the potting trade, and upon the satisfactory adjustment of which, it is not too much to say, depends the stability of the wages of the working potter, and the prosperity of his employer.

The difference between the principle now invoked by the manufacturers, and that which governed the arbitrations of 1871-2, will be clearly seen. 

The workmen, in the earlier period, had taken stock of the decline in wages which had been going on for a number of years, and had asked the Board of Arbitration to declare that the prices then paid were not equivalent to the work done. 

They had not, as we have said, relied upon the prosperity of the trade for the success of their claim ; they had asked the Board to grant them what in later days has been called a "living wage," and they got it. 

But in 1876, the employers based their appeal for a reduction upon the assumption that the advances given in 1872 were given as only fairly applicable to the prosperous conditions of trade then prevailing, and as being intended for revision when trade, in the course of its constant fluctuations, showed less flourishing circumstances.

The Arbitration of 1877 

Accepting these premisses, the manufacturers certainly proved their case before the Umpire. [footnote 2] The arbitration took place in January 1877, and lasted two days. The manufacturers confined their case mainly to the broad issue that trade had declined, and that selling prices and profits had been lowered. 

The first statement was capable of proof from official figures, available to the workmen. 

The second statement was one proof of which was entirely in the hands of the manufacturers, and the accuracy of which the men had no means of disproving. The manufacturers showed that the American trade — with which the forty-eight manufacturers appealing were mainly concerned — had steadily declined since 1871.

FOREIGN COMPETITION

They made a great point of the American tariff being accountable for the decrease in exports to America, and asserted that a reduction in the cost of production was necessary in order that they might hold their own in the American market. 

But they told a tale of widespread diminution of trade as a result of increasing foreign competition. 

They alleged that in consequence of the advances in wages in 1872 they had been compelled to raise their selling prices, and evidence was given on their behalf 

"that it was under cover of these advances in selling prices that foreign competition has been developed, which has since resulted in replacing our goods to a very great extent in foreign markets with the productions of Germany, France, Belgium, Denmark, and Holland — countries which, up to that time, we had only known as producing for home consumption and not for exportation." 

It is an indisputable fact that during the arbitration of 1871-2 the manufacturers never urged that they would be compelled to raise their selling prices if the advances asked for were conceded, and there is no evidence to show that the rise in selling prices was to be traced to any cause more remote than that trade was exceptionally good. 

We may anticipate a remark made by the Umpire, in giving his award, which dealt with this issue : 

" The manufacturers alleged that the last advance was forced on the trade by their being compelled by their workmen to make a considerable advance in wages in consequence of the activity of trade and the demand for labour in 1872. 

If that were so, and the state of trade was not sufficiently remunerative, although undoubtedly brisk, in 1872, to warrant a rise in wages without a corresponding rise in prices, it is manifest, judging after the event, from the rapid decline after 1872, and the continued depression to the present time, that the advance ought neither to have been asked for, nor conceded." 

We have already said that that plea was never urged by the manufacturers in 1872, and this fact is only consistent with the statement that the workmen did not base their claim upon the prosperity of the trade at that period. 

The Umpire then proceeded : 

"It was suggested on the part of the workman that the rise of selling prices subsequent to the rise in wages of 1872, was 10 per cent. I can only say that if the manufacturers put on so much as that, or any greater increase than 4 per cent, (which would have been rather in excess of the increased cost to the manufacturer occasioned by the increase in wages, taking the latter at 10 per cent.) the alleged consequent falling off of trade cannot properly be attributed to the upward movement in wages."

The manufacturers, however, proved their statement of the reduction in selling prices beyond a doubt. The workmen attempted to meet the evidence given upon that point, but failed. They had, indeed, no material at their command by which they could test the statements of the manufacturers in regard to selling prices and diminished trade, and they frankly admitted the weight of evidence upon those particulars to be against them.

THE EMPLOYERS LOSE
Award against the employers 

The Umpire held that the manufacturers had proved the first three grounds of their claim — 

the depressed state of trade, the increasing foreign competition, and the generally reduced prices at which goods were then selling. 

The fourth point of their claim was, however, fiercely contested by the men, as being untrue. They alleged that after the general advances given in 1872, their wages had been subjected to individual modification, and that, with the advancing wave of depression, breaches had been gradually made in the comparative uniformity attained in 1872, so that reductions had been as frequent as advances. 

This view seems to have been accepted by the Umpire, who held that " the fourth ground had not been fully sustained by the manufacturers."

The Umpire's reasons 

The Umpire, admitting the weight of evidence given by the manufacturers in regard to the depression in trade and the reduction in prices, nevertheless held that it was "inexpedient" to make any alteration in prices. The strongest part of the workmen's case had appeared to him to be that in which they had contrasted "the inevitable vicissitudes of selling prices and of seller's profits, with the permanent character of wages." 

He apparently foresaw the disadvantage which would have arisen from making wages march part passu with selling prices and profits, for he recalled the contention of the workmen that 

"they had not sought for an advance on the ground of temporary prosperity, and so rejected the claim for a reduction to meet a time of temporary depression," 

and refused to adopt the plea urged by the manufacturers that "the advances of 1872 were to be looked at as having been unduly forced upon the employers." 

The Umpire, therefore, seems to have taken the same view of the matter that has been urged above — that the advances of 1872 were regarded by both sides as merely fixing, as far as possible, standard and uniform prices, and that there was no thought on the part of either masters or men at the time they were given that when, in the ordinary course of its fluctuations, trade declined, those prices should be altered to meet those altered conditions.

But the Umpire, though thus indicating his views upon the broader question of how far altered conditions of trade should modify wages, declined to interfere with the prices then paid on other grounds. 

He called attention to the fact that the appellant manufacturers had exempted certain branches from the notice of reduction. 

The explanation of this fact by the manufacturers was that those branches against which they had not appealed for a reduction were those which, in 1872, had not received an advance, but the Umpire said that he regarded the adjustment of prices in 1872 " as operating fairly for all branches, and putting them, as far as was possible, on an equality with one another," and he regarded one condition of the success of the appeal as a sine qua non : that the reduction asked for must be proved to have the effect, if granted, of leaving all the branches in the same relative wage-earning capacity as they occupied in 1872; and he held that the distinction made between the different branches would destroy the equality which had been brought about in 1872. 

Upon that ground, he decreed that the contracts for the then current year should remain as if no notice of reduction had been given ; and his award, therefore, by being based upon the unforeseen weakness in the case of the employers, did not involve any decision upon the general issue raised by the manufacturers : that the wages of their workmen should fluctuate with the prices at which their employers sold their goods.

AN UNEXPECTED RESULT

The employers were keenly disappointed at the result of their appeal, and the workmen correspondingly elated, and both were equally surprised. The employers looked at the broad fact that they had based their claim for a reduction upon certain definite grounds, that the facts given by them in support of those grounds were practically indisputable, and had been accepted, but that, notwithstanding their proof, the case had gone against them ; and they were disposed to regard as mere casuistry the reasons given by the Umpire for not giving effect to the burden of evidence admitted by him as being in their favour. The workmen, on the other hand, found to their astonishment that, though they had been unable to make much headway against the claim advanced by the manufacturers, they had secured a verdict upon grounds which they had not urged upon the consideration of the Umpire. Still, the employers faithfully observed the award, and looked forward to the time when they could renew their appeal with greater chance of success.

MACHINERY AND WAGES
The effect of the award : Increase of machinery  

One immediate effect of the award of 1877 was an increase in the application of machinery to the trade, and it will be appropriate here to say a few words in continuation of the general subject of machinery from the point at which it was last mentioned — the agitation of 1844 and the few subsequent years. 

It was not until more than twenty years later that machinery became, not general, but in any sense a serious factor in the trade. But, by that time, there existed a Board of Arbitration, and the workmen availed themselves of its machinery for a wise purpose. They did not endeavour, as their fathers had done, to resist the introduction of machinery, but accepted it as the inevitable development of a scientific age, and took pains to secure that what would benefit their employers should not injure themselves.

COMPENSATION FOR DISTURBANCE

In 1872, two cases, dealing with the effect that the introduction of machinery had had upon wages, came before the first Umpire of the Board (Mr Davenport, M.P.). 

The hollow-ware pressers of a certain firm appealed for an advance on certain articles on the ground that through other articles being made by a machine — called "the jigger" — only the heavier work, and that which was the least remunerative, was left to be made by the manual labour of the hollow - ware presser. 

The case was argued before the Umpire, who gave his verdict in favour of the men, at the same time laying down this principle — and asking that the Board should accept it : — 

" That the removal of the hollow- ware presser's good work to the 'jigger' justifies the workmen in asking for compensation in the shape of an advance in prices on those articles not removed to the 'jigger.'" 

It would be impossible to imagine any principle more simple or equitable. 

There was yet another case, in which the action of the Umpire was even more decisive. A hollow-ware presser in the employ of another firm, appealed for an advance upon certain articles upon the same grounds. Obviously, the same principle governed it. The workman pleaded that he had lost by the change caused by the introduction of machinery, and the employer denied that he had seriously suffered. 

The Umpire ordered the wage-books of the firm to be shown to him, and he took an average of the workman's earnings for twenty weeks before, and twenty weeks after the transference of certain articles to the machine. The result of the investigation showed an average decrease in the workman's wages of seven shillings per week since the introduction of the machine. 

" These figures," said the Umpire, " cannot be contravened. They show very clearly that the workman has suffered loss " — 

and the effect of his award was that the workman should be restored to a position of the same wage-earning capacity as that which he had enjoyed before part of the work which he used to do was made by machinery. 

The verdict of the Umpire was, however, merely the formal expression of the unanimous opinion of the Board itself, for, on the motion of an operative member of the Board, seconded by a manufacturer, a resolution was passed, without dissent, affirming " That the Board considered the case came under the principle laid down by the Umpire in the previous case, affirming that compensation should be allowed to workmen when good work is taken to the 'jigger.'"

Importance of "Compensation for disturbance " to the workmen

Nothing could exaggerate the importance of these two cases, for they gave to the trade a precedent from which it would have been difficult to have departed in later times, and settled a principle, accepted by both parties as eminently fair, and one which should have secured, for all time, the recognition by the employers that where a workman suffered in earning power through the introduction of machinery — cheapening production to the employer— he should be compensated for the loss. 

Strange to say, however, not once in the subsequent proceedings of the trade — until the arbitration of 1891, when the Arbitrator (who was, curiously enough, the same Arbitrator as in the case referred to in 1872), practically brushed it aside as occurring " nineteen years ago " — was this principle and the authoritative pronouncement of it recalled by the workmen. 

In after years the question of the introduction of machinery, and of the loss which the workmen had suffered by it, became a matter of vital importance to the case of the operatives, and, though they had had bequeathed to them this priceless precedent, they had either completely forgotten it, or were guilty of an extraordinary injustice to their own cause by not urging that it should be acted upon. 

If they had recalled it, one fails to see how it could have been argued away by their employers, and, certainly, succeeding Umpires could not have failed to have paid regard to a principle so far-reaching, which had been accepted by both sides on the very first occasion when the effect of machinery upon wages had received dispassionate consideration. 

The principle then laid down was, in later years, notoriously departed from, but no blame can be attached to the manufacturers — except it is assumed that they should have shown a degree of magnanimity uncommon in mundane and controversial matters — for not having themselves recalled, and acted upon, a decision of such vital importance to their workpeople, who themselves had forgotten it.

The increase in machinery since 1872 had been fairly gradual, but after the award of 1877 it became increasingly general, for the employers, prevented by that award from decreasing the cost of production by a direct reduction of the workmen's wages, sought for other means, and determined to achieve their object by increasing the use of machinery ; and the workmen saw it increase, and their wages suffer in consequence, but did not challenge its extension and effect by insisting upon the adoption of the principle laid down for their benefit in 1872.

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