F.— ECONOMICS. 97 
that the rank and file of labour would refuse to be bound by an 
unfavourable arbitration award, even if their leaders had agreed to 
accept it, is not without foundation. 
A second objection to arbitration that has to be met is that the 
arbitrators must command the confidence of both sides. For arbitra- 
tion, in the sense of an award made by Government nominees, has long 
ago been tried and found wanting. Attempts have been made in times 
past to regulate wages and conditions of work either by Acts of Parlia- 
ment or by particular orders of the justices of the peace, but, on the 
whole, the results have been bad, and the well-known criticisms of 
Adam Smith appear to have been justified. For the laws were made 
and administered by the employing classes and took little account of 
the aims and aspirations of the workers. They were essentially con- 
servative in character and aimed rather at preserving the ancient 
privileges of the ruling classes than at developing the liberties of the 
ruled. Fortunately the growth of the labour movement has now made 
it possible to secure both a fair hearing and adequate representation for 
working-class interests. One result of the development of Trade 
Unionism has been to create a body of highly trained experts who can 
be relied on to do full justice to the cause of those whom they have 
been chosen to represent. The difficulty to-day is that the Trade 
Union leader, whose education and training have given him a wider 
grasp of economic problems than is possessed by his constituents, is 
often not treated with the confidence that he deserves and is not allowed 
that freedom and power to settle which is essential to the success of 
all negotiations. 
A third objection to arbitration, which leads up to the subject with 
which I am to deal more particularly to-day, is that there are at present 
no generally accepted principles governing industrial problems which 
the arbitrator has to interpret, and yet the success or failure of arbitra- 
tion as a method of settling industrial disputes depends ultimately on 
whether there are certain clear principles which the great majority are 
prepared to accept as just and reasonable. The function of an arbitra- 
tor is to interpret and apply accepted principles just as that of a judge 
is to interpret the principles embodied in the laws. It is not his 
business to lay down principles, and if he attempts to do so he will 
probably fail. That is why arbitration has so often miscarried and why 
the Hague tribunal was foredoomed to failure. For the disputes 
between nations are not as a rule differences as to the interpretation of 
a principle; they arise from a conflict of principles. Hence the danger 
that arbitrators will base their verdict on the wording of treaties and 
agreements, on precedent and tradition, and serve merely to protect the 
status quo. This is a very real danger in industrial questions, for the 
industrial machine is extremely sensitive and complex, and needs con- 
tinually to be adjusted to an ever-changing environment. What is 
good for to-day will perhaps be wholly unsuited for to-morrow, and no 
worse fate can befall industry than that it should be fast bound in the 
_tyranny of precedent. Another danger of special application to wages 
disputes is that, in the absence of real principles, an arbitrator may 
simply split the difference between the contentions of the disputants, 
