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Monday, 22 April 2013

George Livesey and profit sharing - Introduction

George Livesey and Profit Sharing - Introduction

"One Wednesday morning in October 1889, Charles Tanner the head foreman ... said to me 'the stokers are all in the Union and we have lost all authority in the retort houses .... unless you do something to attach them to the Company we shall be completely in the power of the Union' .... in a quarter of an hour the scheme was set out ... and the same afternoon it was offered to the workmen. The Union men refused it ... and on December 4th demanded that ... it be abolished ... then the memorable strike began; thus was our Co-partnership born".

Thus George Livesey, at that time Chairman of the South Metropolitan Gas Company, described events surrounding the gas workers' strike of 1889 and his Company's inauguration of a profit sharing scheme - subsequently known as 'co-partnership'.
South Met. was one of the three private gas companies operating in London in 1889. It had been set up in the late 1820s with an area serving Peckham and Camberwell. By the 1880s it had spread into areas once part of Kent and Surrey. South Met. was innovative, ambitious and influenced by the personality of George Livesey.

The famous strike of 1889 followed a series of industrial incidents, including the 'Great Dock Strike'. There were a number of major disputes in provincial gas works following the inauguration of the Gas Workers Union under the leadership of Will Thorne with country-wide demands for a system of eight hour shifts. By the use of a massive number of replacement workers South Met. defeated the union and the profit sharing bonus scheme, against which the men had struck, continued. The scheme flourished throught the following years and in due course participating workers were allowed to buy shares in the Company and to take part in elections for directors chosen from amongst themselves. A consultative committee between management' and workforce was set up and welfare benefits extended to provide comprehensive care. The scheme ended only with nationalization in 1947.

The quotation with which this chapter begins comes from an address by Livesey, written in the year before his death, and published in South Met's the house journal - Co-partnership Journal – and addressed to all co-partners. It was called 'The Way of Peace'  and it related labour unrest to the Christian Christmas message which Livesey was writing to the workforce and it thus described the success of South Met's solution to that unrest: 'for the evils of the industrial world - everybody is convinced that there must be a remedy - it has been found in the great principle of co-partnership – the 'co' means equal or full and complete partnership. '

'Partnership' was something which George Livesey talked about a lot both before and after 1889. Once he had taken over management of the Company in 1871 he talked freely and publicly about his ideas for management in the gas industry. In 1872 he publicly advocated a system of pricing gas in relation to company profits which became known as 'the sliding scale'. This system, he said, could be further applied to the workforce and gas consumers as a means of promoting partnership between all parties with an interest in gas.
During the following seventeen years, in lectures, letters to the press, and so on, he continued to put forward ideas which related to 'partnership'. This, he said, would combat the increasing problems in society resulting from growing industrialisation.
Because of the profit sharing scheme, and also because of his identification with the anti-trade union movement, historians have taken an increasing interest in Livesey and the 1889 Gas Workers strike. Interest has, however, usually been focused on either the strike or the scheme with little or no investigation into either Livesey's past involvement in theideas associated with his scheme or of its detailed workings - plus taking on its success and longevity.
Robert Perks, wrote an article on the Huddersfield woollen manufacturer, Thompson's, profit sharing scheme of the 1880s, He has suggested that profit sharing schemes were more successful than has commonly been supposed. Nevertheless many had remarkably short lives. Successive Board of Trade Reports on Profit Sharing, published from 1891 onwards, gave figures, which appear to demonstrate this.
The South Met. profit sharing scheme lasted until it was abolished by an Act of Parliament in 1947 (against the wishes of its participants). By that time it had been copied in numerous other gas works - and the majority of these schemes were also successful. The success rate of these profit sharing schemes in the gas industry was higher than such schemes in general. Breakdown, as Perks says, was not usually directly attributable to breakdown of profit sharing per se.

The industrial action of 1889 in South Met's works was directly related to the profit sharing scheme. The company had already granted the eight-hour day to its retort house workers and was resisting demands for overtime payments in respect of Sunday working. The profit sharing scheme was introduced with the condition that participants must sign an agreement which would have the effect of making strike action more difficult. The dispute was called because the company would not withdraw this condition. It was essentially a dispute about union recognition and about the Union's right to organise within the workplace. The Gas Workers' Union saw the scheme as a direct challenge but were unable to argue effectively that their right to organise was more important than the rights of individual workers to determine their own contracts.

The Gas Workers Union was unable to get support from other trade unionists in terms of practical and financial help thus forcing them to abandon the dispute. Because of this close relationship between the strike and the scheme, historians have generally assumed that the scheme was introduced either to forestall the strike or as a reaction to it.
Although the South Met's long history of welfare provision is sometimes mentioned, Livesey's own involvement in finding solutions to this industrial problem is not. Discussion has not included the possibility that the Union's existence gave Livesey a chance to introduce a scheme which he had previously been prevented from pursuing through the opposition of Board members.
By highlighting both Livesey's past ideas and the means through which the scheme was implemented, shows it as an attempt - if not to change society – to demonstrate possibilities through which it could be changed.
Gareth Stedman Jones has outlined the debate on the perceived need for change with reference to the problems of the urban casually employed poor in London. Gas workers are one of the occupational groups which have been thought to come from this part of society. However workers from one gas works were not necessarily the same as those at another. Beckton is not necessarily the same as the Old Kent Road.
Stedman-Jones quotes J.S.Mill: "thus the whole question of the prospects of the working class came. to revolve round the degree in which they can be made rational beings", Such matters concerned employers and other 'middle class’ people anxious to 'improve' those whose prospects they saw as poor.
Employer's welfare schemes before 1900 have been largely undocumented - except in the case of a few outstanding philanthropists. Motivations for employers' welfare work remain unclear and are often described, vaguely, as 'paternalistic' without a definition of what that is thought to mean, South Met, had a background of welfare provision before 1889 and knowing this is crucial to an understanding of the 1889 scheme.
Livesey, like others, had come to a conclusion that the circumstances of working people must be improved.  By 1889 other organisations - trade unions, socialist societies - were there to claim the workers' allegiance for their own.
Better paid workers in occupations with status and independence were able to form their own organisations - Friendly Societies, Building Societies. This process had been outlined by Geoffrey Crossick in his work on the artisan elite in what he describes as 'Kentish London' - an area from which many of South Met's workforce would have been drawn. Crossick describes how: "middle class reformers, and liberal politicians pressed upon the working class a particular set of values that we recognise today as peculiarly Victorian - domesticity, industry, thrift and respectability ".
Livesey, living and working in South London, could not fail to be aware of aspirations towards security, material comfort, status - as achieved by men like Crossick's artisans, many of whom were worked as tradesmen in the gas industry - as distinct from the labourers who have been the focus of most studies.
In the past, South Met. and other gas companies, had attempted to help their workers to set up these institutions of mutual benefit - pension funds, sick funds, etc. It can be argued that the profit sharing scheme is in itself merely a more ambitious variety of these but that it consciously became a method of manipulating the workforce into that Victorian mould of 'Christian observance, sobriety, thrift, orderliness and cleanliness'. We must not assume that they were unwilling to be so moulded.
Eric Hobsbawm in his article British Gasworkers comments that co-partnership schemes were in reality 'outbidding the unions'. This auction was not only in terms of financial gain but in terms of philosophy. South Met's scheme could offer, for those willing to agree to its terms, material gains beyond anything the Union could match.
The Union could offer the possibility of higher wages after a fight but with the promise that no strings would be attached in terms of way of life. The 1889 strike was essentially about that freedom -  'freedom' was the term used by both sides.
The proft sharing scheme of 1889 was relatively simple in comparison to what it later became. By the standards of other schemes it was immensely complex. It was remarkable for the amount of participation which it involved. Worker directors, consultative committees - although trifling against the measure of a true co-operative - were still an enormous advance on such institutions elsewhere.
Energy is crucial in an industrial nation and those who supply it control society to some measure. Gas had been the supreme method of lighting for the past eighty years. In the late 1880s, through competition from electricity, diversifying into an energy supply for heating and the powering of machinery.
Throughout the eighty years of its existence the industry had been involved in a dispute with local and central government which concerned control. This took the form of increased legislation to control activities in private companies and at the same time involved a discussion on ownership of public utilities which resulted in various forms of alternative ownership. By the 1880s that had resulted in a move to increasing numbers of municipal works outside of London.

Livesey's continued - talk of 'partnership' and the drift of the whole scheme towards participation must be seen in the light of these events. London was almost the last major city where municipal control of the gas industry had not been seriously attempted - in 1889 the formation of the London County Council, with many members calling for municpal ownership, posed an immediate threat. 'Socialism' for the gas industry in 1889 was an immediate danger threatening the very ownership and control of the industry. This threat came from two sources - local government and the newly formed union. The two united could easily prevail. The battle then for workers' hearts and minds was even more urgent.
Helen Lynd has described in England in the 1880s as: 'a period ... when changes in thought and social attitudes become suddenly apparent' and that: 'an ideology half a century old yielded to a new phrasing of social problems and an effort to find new paths to their solutions'.

Such an effort was made in South Met.
Problems apparent throughout the 1880s had come to a head in 1889 - with the formation of the London County Council, and the the Gas Workers Union. At the same ' time profit sharing schemes had become newly fashionable - it was in 1889 that an International Congress defined the features of a scheme.
This movement and George Livesey must be seen together -  Livesey dominated not only South Met, but the whole industry for forty years. He was a professional gas engineer and an administrator and not a politician or a financier. His background was relatively unpretentious and what he was interested in was making the gas industry more efficient. The result was that his solution to the problems of society as he perceived them was individualistic and idiosyncratic.

He was not the only person to find his solution in profit sharing and indeed many such solutions were those of likewise highly eccentric individuals. Pollard, in his article on the scheme set up by Taylor of Batley, comments: 'among the many generalisations perhaps the only one that can be made safely is that virtually every scheme that saw the light of day had very marked special features and/or depended on the: convictions of one very strong personality'.
Livesey's influence, as we shall see, spread beyond South Met. to inspire schemes in other gas companies. None were so successful or as far reaching as South Met's own scheme.

It is important to say here that this was written in the late 1970s - before the publication of a considerable body of work by Derek Matthews - his PhD thesis on the early gas industry which highlighted some of this material, and a series of articles including an extremely important one on profit sharing issues.  I am grateful to Derek for subsequent discussions - and sorry that I haven't heard from him for many years.
Co-partnership Journal, South Met. Gas Co.
'A Century of Gas in South London". South Met. Gas Co. 1922
Joseph Melling. 'Industrial Strife and Business Welfare Philosophy; the case of the South Metropolitan Gas Company from the 1880s to the War. Business History XXI No.2 July 1979
R. Perks Real Profit Sharing: William Thompson of Huddersfield, 1886-1925. Business History, XXIV July 1982.
Gareth Stedman Jones. Outcast London Oxford 1971
Raymond Williams in the Foreword to Charles Booth's London London 1969.
Geoffrey Crossick. An Artisan Elite in Victorian Society Croom Helm. London 1978.
Eric Hobsbawm. Essays in Labour History Wiedenfield and Nicholson. London 1964.
Helen Lynd. England in the Eighteen-Eighties Oxford University Press 1945.
S. Pollard and R. Turner Profit Sharing and Autocracy: J.T. & J.Taylor of Batley 1892 - 1966. Business History XVIII 1 1976

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