CONTROLLED ESTABLISHMENTS. Controlled es tablishments (1915-1918) were factories mobilized in Great Britain under the Munitions of War Act, passed in July 1915, shortly after the Ministry of Munitions was set up. Under this act, and the amending statute passed in Jan. 1916, the minister of munitions had power to make an order declaring any establish ment to be controlled if munitions work were carried on in it, and if he judged such control to be expedient.
The term munitions work, in its extended use, embraced not only the manufacture of arms, ammunition and explosives, ships, vessels, vehicles and aircraft, but also the production of metals, machinery and tools, and the carrying out of other ancillary processes and services involved in munitions production, such as works of construction for naval or military purposes, the pro vision of houses for munition workers, work on docks and har bours, the supply of light, heat, water, power or tramways, and the repair of fire engines. The minister of munitions was thus given a wide discretion in selecting factories to be controlled as essential munition works.
Within a month of the passing of the act, 345 establishments were declared controlled, including the great armament and ship building firms and firms making aircraft. To these the machine tool makers were added and the list was gradually extended to include all the principal firms in the engineering, iron and steel and chemical trades, together with makers of mechanical vehicles, rubber goods and optical instruments, as well as certain miscel laneous establishments engaged on textile and printing work. By Oct. 1915 the number had reached I,000. It was 2,000 by December; 3,500 by May 1916; 4,600 by the end of that year. It reached 5,000 in July 1917, and the extension of control to certain smaller factories brought the final total up to 5,600 at the time of the Armistice. In Jan. 1918 more than 1,600,000 men and 600,000 women were employed in controlled establish ments, including the 16o Government factories. While employ ment in controlled establishments accounted for only a portion of the 2,500,000 men and I,000,000 women war workers in 1918, the importance of whose work was recognized by its inclusion in the "schedule of protected occupations," its true significance is shown by the fact that the controlled establishments included practically all the 1,2oo,000 workpeople estimated to have been employed at the date of the Armistice on the production of destructive munitions proper. These establishments thus con stituted the central and essential nucleus of war-time factories, and their work was properly regarded as of the same order of importance as that of the national factories established during the World War and administered directly by the Government.
The Underlying Bargain.—The form of regulation to which an establishment was subjected by an order declaring it to be controlled was concerned primarily with : (a) the suspension of trade union rules and practices tending to restrict output, and the avoidance of strikes, (b) the limitation of the owners' profits to a reasonable level. The restriction of trade union activities on the one side, and of profiteering on the other, might appear at first sight to be less essential than the control of industrial and manufacturing activities proper. The explanation of this anomaly is historical, for the genesis of the controlled establish ment lies in the vain efforts made during the first eight months of the war to secure sufficient labour for armament manufacture, and to mitigate disputes in the engineering and shipbuilding trades by negotiation. The culminating point in this process was reached at a conference with trade union leaders held on March 17–ig, and March 25, 1915, at which the full forces of the Gov ernment were brought into play to secure a voluntary agreement ensuring industrial peace f or the duration of the war. The out come of the conference was a declaration, known as the Treasury Agreement, by which some 35 trade unions declared their willing ness to recommend to their members that each union should take into favourable consideration such changes in working conditions and trade customs as might be necessary to accelerate output, and that during the war period there should in no case be any stoppage of work upon munitions.
In view of this declaration it was announced by the chancellor of the Exchequer (Mr. Lloyd George) that "it is the intention of the Government to conclude arrangements with all the important firms engaged wholly or mainly upon engineering or shipbuilding work for war purposes, under which their profits will be limited, with a view to securing that benefit resulting from the relaxation of trade restrictions or practices accrue to the State." It was further laid down that the contemplated relaxation of trade practices should apply solely to war work, for war purposes and during the war period. The pledge was thus limited on either side to a statement of intentions, and the trade unions looked to the Government to take the first step, believing that, so long as contractors' profits were unregulated, any sacrifice of rules and restrictions would directly enhance the profits of private persons. Thus three months went by. Then the Munitions of War Act was passed, containing among its leading provisions the necessary sanctions for the carrying out of the bargain.
Implications of Control.—The act prescribed that in a con trolled establishment any rule, practice or custom tending to restrict production or employment should be suspended, and that the workpeople should be bound under penalties to observe rules, approved by the minister of munitions, affecting workshop dis cipline and efficiency. On the other hand the profits of the estab lishment were to be regulated, and any excess over a standard amount was to be paid into the Exchequer.
The broad principle under which limitation of profits was im posed was subject to important adjustments and qualifications necessitated by the increase of capital expenditure or the adoption of costly methods of speeding up output. To secure the maximum scale of production it was in fact as necessary to guarantee an equitable return as to confiscate the proportion of profit which might be held to be excessive. Clearly, as a mode of war-time taxation the munitions levy, with its narrowly restricted area of application, was something of an anomaly, and in any case this aspect of the controlled establishment lost its importance after Dec. 31, 1916, from which time the levy was merged in the provisions of the general excess profits tax instituted by the Finance Act of '9'7.
In addition to the control of profits, the owner of a controlled establishment was in a special sense subjected to the oversight of the minister of munitions as regards wages and employment, these questions being inevitably involved in the endeavour to enforce the fulfilment of the terms of the Treasury Agreement, now enshrined in a schedule to the act. In carrying out this policy the owner received the fullest measure of official direction and assistance, and had substantial inducements to apply for control. In particular, submission to control earned the right to apply for skilled workmen enrolled as war munition volunteers, who could be assigned only to a controlled establishment.
A controlled establishment was thus an industrial concern in which the State held a partnership, sharing both in the manage ment and in the profits. The extent of this participation was, however, strictly limited. The Government did not, as has of ten been supposed, take over the management of the establishment, nor did it accept financial responsibility for its operation or lia bilities. There was no transfer of ownership, nor did the owner become an agent of the Government. The situation of a controlled establishment remained, indeed, throughout its history in sharp contrast to that of the new national factories built or established on Government account and occupied and operated by the State. These were in a different category, though by the powers of the Munitions of War (Amendment) Act, 1916, they were definitely classified among controlled establishments for purposes of labour regulation.
War-Time Control.—It is well to emphasize the fact that the forms of control specifically applicable to this special class of establishment constituted only a minor part of the general system of industrial control exercised by the minister of munitions, to say nothing of those parts of the industrial field which fell to the War Office, Admiralty and Air Ministry, the Board of Trade, the Ministry of Food, and other departments. The minister of munitions was armed with wider powers than those relating ex clusively to controlled establishments not only by the Munitions of War Acts but also, and in particular, by the Defence of the Realm Acts. Thus the Defence of the Realm (Amendment) No. 2 Act, 1915, gave powers to take possession of and use any factory or workshop of whatever sort, or the plant of any factory. Authority was also given to require any work done in any factory or workshop to be carried on in accordance with directions given for the purpose of making the factory or workshop, or the plant or labour engaged in it, as useful as possible for the production of war material. This control included the right to restrict and regulate the kind of work done, the employment of labour, the supply of metals or materials, the transfer of plant to other establishments. One particularly important application of these powers was the imposition on industry generally of a system of priority control, devised to ensure that war work should receive preference over other work.
The official control of munitions industries could never have been effective had these regulative provisions been confined to controlled establishments, unless the latter category, as was never contemplated, had been made co-extensive with munitions manu facture. In point of fact the number of firms which executed con tracts for the minister of munitions was three or four times as great as the number of controlled establishments. In such circum stances the regulations affecting labour inside controlled establish ments clearly had to be applicable to similar labour elsewhere. So, again, the control over certain categories of wages in con trolled establishments, set up by the Munitions of War (Amend ment) act, 1916, inevitably spread over the whole sphere of industrial employment. Similarly the efforts to apply the policy of labour dilution by forcing the infiltration of women and semi skilled workers, so as to make up for the ever growing scarcity of fully trained operatives, obviously implied the restriction of employment outside, as well as its encouragement inside, the sacred circle of essential occupations. Since the f ulfilment of all the more urgent tasks of the Ministry of Munitions was condi tional on the removal of these stumbling blocks, it was inevitable that the controlled establishment as such, had less and less ad ministrative significance as the months grew into years and the mobilization of the whole of the national resources became more and more comprehensive.
Restoration of pre-war Practices.—The obligation to restore the practices and customs abandoned for war purposes was not likely to be overlooked by the trade unions concerned, and was, in fact, the subject of continuous and jealous watchfulness. Thus, when the amendment of the Munitions of War Act was under consideration in the summer of 1917, the inclusion of a clause providing guarantees and sanctions for fulfilment of the pledge was pressed upon the Government, but was postponed. A further bill was drafted and considered in the early months of 1918 in which this question was prominently dealt with, but action was again suspended, until the trade union protests became clamorous. It was feared that rigid insistence on immediate fulfilment might result in chaos, since it would involve the wholesale dismissal of dilutees and gravely accentuate the inevitable displacement of labour due to the cessation of the war demands. Finally, on Nov. 13, 1918, the prime minister (Mr. Lloyd George) and other ministers met representatives of employers and trade unions and asked for an advisory committee to consider and agree upon the form to be taken by the bill. It was not, however, until the spring of 1919 that agreement could be reached, and the Restora tion of Pre-War Practices Act, 1919, was not actually passed until Aug. 15. Though admittedly incomplete, the records of departures from pre-war customs then numbered between 30,000 and 40,000. The act made it obligatory, subject only to mutual agreement, that these practices should be restored within two months and be maintained in force for one year thereafter. Thus was the Treasury Agreement finally implemented. (G. I. H. L.)