Cyclopædia of Political Science, Political Economy, and the Political History of the United States

Edited by: Lalor, John J.
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New York: Maynard, Merrill, and Co.
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Includes articles by Frédéric Bastiat, Gustave de Molinari, Henry George, J. B. Say, Francis A. Walker, and more.
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INDUSTRIAL ARBITRATION AND CONCILIATION is the name given to certain methods of preventing labor disputes or settling them when they arise, by their submission to the decision of umpires or judges, or by conferences between the parties to the dispute or their authorized representatives.


—Though the terms arbitration and conciliation are jointly used to name this system, and though in many instances, in recent years, the best results came from their joint operation, yet they are by no means the same, though having the same object in view. Arbitration implies a more or less formal hearing of the matter in dispute before an umpire or umpires, with a formal decision or award which the parties are legally or morally bound to accept. Under conciliation there is no umpire, nor any power lodged with any one or more persons to make a binding award. Any decision arrived at is the result of conferences, and is of the nature of an agreement. As in arbitration, there are a hearing and discussion of the questions at issue, but usually very informal. The result of arbitration partakes of the nature of a binding judgment; of conciliation, of a mutual agreement.


—In their origin and modes of working, arbitration and conciliation are either, 1, Legal, that is, established and operated under statute law with its sanctions and power for enforcing awards; or, 2, Voluntary, that is, established and operated by mutual agreement. The submission of disputes under legal arbitration and conciliation is either, 1, Compulsory, that is, the question must be submitted for decision upon the application of either party; or, 2, Voluntary, that is, it can be submitted by mutual agreement. In either case, while there may be a choice as to the submission of the dispute, yet when so submitted the decision is binding upon both parties, and can, so far as its character permits, be legally enforced. Of course, the submission of questions to voluntary arbitration and conciliation is always voluntary, and the awards are only morally binding and can not be legally enforced.


—The method of compulsory arbitration and conciliation, under the forms and sanctions of law, which has existed in France and Belgium since early in the present century, and which in the former country succeeded to some of the powers of determining trade and labor disputes possessed by the ancient trade guilds until they were abolished in 1791, is treated of under the title CONSEILS DES PRUD'HOMMES, which see. The only other country in which arbitration and conciliation has been employed to any considerable extent is England, though the forms and methods used differ materially from the French and Belgian. In treating of English arbitration and conciliation it will be most convenient to consider its history and methods under two heads, Legal and Voluntary,—I. Legal Arbitration and Conciliation in England. Under the Elizabethan statutes concerning labor which codified many of the rules and regulations existing for centuries among the English craft-guilds, the assessment of wages and settlement of disputes between masters and apprentices, as well as the protection of the latter, were placed entirely in the hands of magistrates. Under the decisions of the courts these statutes were only applicable to the trades existing at the time of their passage, and to these only in certain localities. During succeeding reigns these statutes were modified and enlarged. New industries were included in their scope and additional provisions and statutes enacted providing various means for the settlement of labor disputes, gradually taking from the magistrates their arbitrating power and developing the idea of arbitration by chosen or appointed referees. In 1824 all these acts were consolidated and replaced by that of the 5 Geo. IV., cap. 96, entitled "An act to consolidate and amend the laws relative to the arbitration of disputes between masters and workmen." This act, which was one of the outcomes of the investigation of the operation of the labor laws by a committee of the house of commons, was evidently modeled after the French law establishing conseils des prud'hommes, but adapted to the different character of English industry and institutions. In it provision is made for the compulsory submission to arbitration, upon the request of either party to the same, of disputes arising between employer and employed in certain specified trades and upon certain subjects, which are also specified in the act. The justice of the peace, before whom the case is brought, or arbitrators elected by a board, composed equally of employers and employed, nominated by the justice, hear and determine the dispute; or any other method that may be mutually agreed upon by the disputants can be adopted; but it is carefully provided that "nothing in this act contained shall authorize any justice or justices acting as hereinafter mentioned to establish a rate of wages or prices of labor or workmanship at which the workman shall in future be paid, unless with the mutual consent of both masters and workmen." The awards under this act could be enforced by legal processes. Though this act is still in full force in England, it has rarely, if ever, been used.


—Shortly after the passage of this act voluntary boards of arbitration and conciliation were introduced into some of the industries of England. In addition to the formal arbitration of existing disputes contemplated in the act of 1824, these boards considered and fixed future rates of wages, and also provided for conciliation committees, whose province was to adjust differences between employers and employed by mutual good offices without a formal hearing and award. In 1867 these boards had become so numerous and successful that an attempt was made to give them a legal basis, if they so chose, by the passage of the 30 and 31 Vict., cap 105, commonly called Lord St. Leonards' Act. This act is entitled "An act to establish equitable councils of conciliation to adjust differences between masters and workmen." It provides for the formation of a council of conciliation under authority of the home secretary, upon the joint petition of the masters and workmen of any particular trade working in the same locality. It also specifies the method of election of this council, the qualifications of electors, and other matters necessary to its proceedings. The council is to hear all differences between masters and workmen, as set forth in the act of 1824, that may be submitted to them by both parties. The award is to be final and conclusive, and may be enforced by proceedings of distress, sale or imprisonment, as provided in the recited acts. It is, however, specially provided that "nothing in this act contained shall authorize the said council to establish a rate of wages, or price of labor, or workmanship, at which the workman shall in future be paid." The quorum of the council is to consist of three members, but a committee called the committee of conciliation, appointed by the council, and consisting of one master and one workman, shall endeavor to reconcile all differences in the first instance. The chairman is to be unconnected with trade, and has a casting voice. No counsel, solicitors or attorneys are to be heard before the council or committee without the consent of both parties—In both of these acts especial care is taken to provide against the fixing of future rates of wages—one of the most prolific sources of dispute. This was a serious defect. Accordingly, in 1872 an act was passed, the uses of which, briefly stated, are three, viz.: 1. To provide the most simple machinery for a binding submission to arbitration, and for the proceedings therein. 2. To extend facilities of arbitration to questions of wages, hours, and other conditions of labor, and also to all the numerous and important matters which may otherwise have to be determined by justices under the provisions of the master and servant act, 1867. 3. To provide for submission to arbitration of future disputes by anticipation, without waiting until the time when a dispute has actually arisen, and the parties are too much excited to agree upon arbitrators. These acts have been of but little practical value. In their best features the recent ones have followed, not preceded, the voluntary practice of arbitration and conciliation, and they have only sought to give the forms and sanctions of law to a practice that was successfully in force without such forms and sanctions. If the same (if not better) results can be attained without an appeal to law, the English character is such that it will always prefer the non-legal to the legal.


—II. Voluntary Arbitration and Conciliation in England. Prior to 1860 there had been in England frequent settlements of labor disputes by their voluntary submission to boards of arbitration and conciliation. These had attracted but little attention, however, and the system was making little or no progress. In this year, through the efforts of Mr. A. J. Mundella, the first permanent or continuous board of arbitration and conciliation in England was established in the hosiery and glove trade at Nottingham. This was soon followed, though without any knowledge of the existence of the Nottingham board, by the establishment of a board in the Wolverhampton building trades through the efforts of Mr. Rupert Kettle, who has since been knighted for his services in behalf of this system. Boards were soon formed in the manufactured iron trade, and in the coal and other trades, and for nearly twenty years many labor disputes and the rates of wages for many thousands of workmen have been settled by these boards without strikes or lockouts. These boards are purely voluntary. They have no sanction of law—no legal existence. There is no forced submission of disputes, nor is there any power except a man's sense of honor, public opinion, and the aggregate honor of the trades unions or the employers' associations to enforce the acceptance of the awards; and to the honor of the parties involved be it said, that except in a very few isolated and unimportant cases, these have been found sufficient.


—The boards are made up of an equal number of employers and employed, each class electing its own representatives. In some boards each establishment has a representative of each class, as in the north of England iron trade. In other cases groups of establishments elect the members, as in the lace trade of Nottingham. The officers of the boards are generally a president and a vice-president, one an employer and the other an employé, and two secretaries, one for each class. The two classes have equal influence and an equal vote on all questions. Meetings are held monthly, quarterly or less frequently, at which all subjects at issue are discussed and settled, if possible. In all of these boards there is a provision for settling minor disputes by conciliation without convening the entire board. Failing a settlement in this way, however, the dispute is referred to the board, when it is generally adjusted, unless it is a subject of some moment. Broader questions, those that affect the trade of an entire district, or of a class, are in the first instance generally referred to the board, and, in case the board can not agree, to an umpire. In the Nottingham board there is no umpire, the board deciding all questions. This referee or umpire is in some cases a regularly elected officer of the board—a standing umpire or referee, as he is often termed—or he may be chosen for the decision of a particular question. His decision is final. The members of the board are clothed by their constituents with plenary powers. The expenses are met equally by each class. The course of proceedings before the board is very simple. In case of a claim for an advance in wages, for example, the employés' representatives submit, through their secretary, a formal statement setting forth the reasons for the demand, such as an increase in the demand for the goods manufactured and in the selling price for the same, increased demand for labor, or higher prices paid in other districts manufacturing similar goods. The representatives of the employers submit a formal statement in reply, stating their reasons for refusing the demand. With these statements before them the justice and advisability of the demand are discussed by the members. The proceedings are without ceremony. No valuable time is wasted discussing parliamentary rules. Statements are made, and questioned or impeached. Proofs are demanded and furnished. The circumstances surrounding the market and the trade are canvassed, estimates compared, statistics set forth, and the strength of competition measured. As the outcome of all this, a result is generally reached that, if not entirely satisfactory to one or the other party, is accepted as preferable to a strike or lockout.


—Arbitration and conciliation has not been generally adopted in England as a means of settling labor disputes. In many trades it has prevailed through a series of years and then been abandoned and the method of strikes and lockouts substituted; but in those trades in which it has been most thoroughly and systematically used during the time it prevailed, strikes and lockouts were almost unknown. One great advantage of these boards is, that they form a market where labor and capital can come together and in a friendly spirit fix what is "a fair price for a fair day's work." Judge Kettle admirably expresses this when he says, "I verify believe that, without limiting the influence of fair competition, boards of arbitration, properly worked, afford the best means of fixing the market price of a fair day's work." They also have served to bring employer and employé into closer relations. Under their action a most friendly feeling has taken the place of hostility, and confidence and mutual respect have been inspired where formerly all was suspicion and hatred. The changed relations of employer and employed have been recognized. They have met around the same table as equals, and out of all this have come juster and truer views of their mutual rights and duties.


—For further and more detailed information on this subject consult Industrial Conciliation, by Henry Crompton, London, 1876; Strikes and Arbitration, by Rupert Kettle, London, 1867; Masters and Men, by Rupert Kettle, London, 1871; Report of the Trades Union Committee of the British Social Science Association, London, 1860; Report on the Practical Operations of Arbitration and Conciliation in the Settlement of Difficulties between Employers and Employés in England. by Jos. D. Weeks, Harrisburg, Pa., 1879; Industrial Arbitration and Conciliation in New York, Ohio and Pennsylvania, by Jos. D. Weeks, Boston, 1881.

Jos. D. WEEKS.

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