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Repeal was, accordingly, decided upon, and the section dis- appeared with the Munitions of War Act, 1917. The result, . though not what was expected, was profound. Em- Check on ployers had prognosticated a wholesale shifting of Wages labour from factory to factory. This expectation was not fulfilled, but it only failed of fulfilment by reason of the action of the employers themselves in raising wages often to extravagant heights to retain workpeople. The plain fact was that with a huge shortage of labour there was no longer any economic check on wages. The provisions of Section 4 (2) of the Munitions of War Act, 1915, had in this re- gard been futile, and the real check had been Section 7. Its disappearance restored his bargaining power to the workman with formidable results in the variation of wages.

No subsequent action could hope to arrest the forces let loose by the abolition of the section. But as the difficulties of the position became increasingly apparent, an effort was made to meet the difficulty in 1918 by the introduction of a system of licensing of firms, known popularly as the " embargo " scheme. Under this scheme it was proposed to take advantage of the Defence of the Realm regulation already referred to, which en- abled the Government to direct the methods of employment or engagement in a factory. Firms were instructed that after the receipt of the effective letter no further labour of the types scheduled was to be engaged without the licence of the Ministry of Munitions. In fact, though more than 32,000 firms were known to be engaged on munitions, by Sept. 1918 letters had been issued to only 100 firms. But the proposal was bitterly resented as an attempt to reintroduce Section 7 under a new form. It led on July 23 to a strike at Coventry which seriously threatened the production of munitions. A committee under Mr. Justice McCardie, which was set up to inquire into the circumstances of the strike, reported that the Government's scheme was justified by circumstances, though possibly the method of its introduction might have been more tactful. But the strike struck at the whole basis of the scheme, with the result that it had little effect. The only substantial contribution to the problem of the prevention of wastage had been Section 7. Nothing before or after it took its place.

(3) Removal of Trade-Union Restrictions. The history of the actual introduction of "dilution" which, of course, represented by far the most important removal of trade-union restrictions has already been given. It is only necessary here to give an ac- count of the negotiations which led up to the Treasury agreement of March 21 1915 (later scheduled to the Munitions of War Act, 1915) with some indications of its value.

Already by the end of 1914, both in shipyards and engineering shops, an acute shortage of labour had manifested itself. One of the methods of remedying this shortage generally recommended by employers was the removal of trade-union practices and restrictions. These practices were of four main types:

(a) The practice providing that only a skilled man with certain credentials might do certain classes of work;

(6) the practice which distinguished sharply the allocation of skilled work as between various classes of skilled men;

(c) the practice which defined the hours and output permissible in given classes of work;

(d) the practice requiring the employment only of trade unionists in certain shops or in certain classes of work.

There were, and are, of course many variations and gradations of four main types, but these are probably predominant. There was a long and painful history behind these restrictions. They represented to the workman the entrenchments patiently established through long years of struggle against under-payment and unemployment. They were, in fact, labour's Magna Carlo. War necessity demanded from labour its temporary repeal.

The first attempts to secure this end were made by the em- ployers both by ship-builders and engineers. The ship-builders had their first meeting as early as Nov. 3 1914 at Trade- York. The employers there proposed for the first Practices. ilme the suspension of trade-union practices and customs. The meeting had no result. Local meetings at Glasgow and Newcastle were equally fruitless, and another

general meeting on Dec. 9 carried the matter no further. Later in Dec. the Admiralty intervened but without success, and the matter was reported to the Board of Trade at the end of the year almost at the same time as the equally fruitless result of the series of engineering conferences.

The three main difficulties felt by the trade unions were :

(a) The danger even in war-time of sacrificing the results of years of struggle without the most stringent guarantees that the sacrifice should be purely temporary;

(b) the necessity of confining the sacrifice wholly to war-work;

(c) the importance, even so far as war-work was concerned, of securing that private employers should not reap financial advantage from the sacrifice.

The subsequent negotiations, under the aegis first of the Board of Trade, and later of the Chancellor of the Exchequer and the President of the Board of Trade, were directed to meet these three points. As a first step letters were addressed to the A.S.E. by the War Office and the Admiralty, pointing out in general terms the need for increased labour supply. This was followed on Jan. 13 by a general conference between the Engineering Employers' Federation and the A.S.E. and kindred unions at Sheffield. This conference, like all its predecessors, was a failure.

After this breakdown Sir George (afterwards Lord) Askwith was appointed by the Board of Trade to attempt to reach a settlement. At his suggestion his single-handed efforts were supplemented by the appointment by Committee the Prime Minister on Feb. 12 of the Committee on ^" fl . Production, consisting of Sir G. Askwith (chairman), Sir George Gibb, representing the War Office, and Sir Francis Hopwood (afterwards Lord Southborough), representing the Admiralty. The committee directed their attention in the first instance to the shipbuilding trade, and succeeded in making an agreement on the subject of broken time, which unhapp'ily broke down on May 23.

On the greater issue, though it was ultimately necessary to bring in the Cabinet, the committee were at any rate successful in effectively preparing the ground for a settlement. In their interim report of Feb. 20 they made three principal recom- mendations:

(a) Increased production by removal of restrictions on the manufacture of shells and fuzes with extension of the employment of female labour;

(b) the prevention of stoppages of work by reference of differences to an impartial tribunal to be set up by the Government;

(c) guarantees to be given by contracting firms and held by Government in respect of removal of restrictions.

Simultaneously, on March 5, the Engineering Employers' Federation, with the A.S.E. and kindred unions, had ultimately reached a limited agreement in a memorandum known as the Shells and Fuzes Agreement. This made the following provi- sions:

(i.) It assigned certain processes definitely to skilled men, but allowed interchange of skilled men;

(ii.) it permitted the introduction of semi-skilled or female labour in suitable cases, subject to no reduction of wages;

(iii.) it insisted on restitution of pre-war practices.

A ballot taken on this among the members of the constituent unions in April was favourable, but even before the result was known the agreement had marked a long step forward on the road to the Treasury agreement. In the meantime the committee on production were negotiating further with the unions, and in their third interim report recommended immediate removal of demarcation restrictions in Government establishments, and re- moval in private establishments subject to safeguards akin to those provided in the Shells and Fuzes Agreement.

But in spite of the Shells and Fuzes Agreement, and the efforts of the committee on production, nothing really effective had been accomplished. Men and employers alike were waiting upon the Government. In March 1915 the Government acted. Up to this point two of the principal difficulties of the trade unions in respect to removal of restrictions had been faced i.e. the limitation of removal to war-work, and guarantees for restitu- tion but the aspect of the financial position of the private employer remained to be considered. And its consideration was