In the last chapter we saw that no line could be sharply drawn between municipal and individual enterprise, so that one could definitely say of one or the other, ‘Hitherto shalt thou come, but no further’; and this ever-changing character of the problem can be usefully illustrated in our examination of the industrial life of Garden City by reference to a form of enterprise there carried on which is neither distinctly municipal nor distinctly individualistic, but partaking, as it does, of the character of both, may be termed ‘semi-municipal’.
Among the most reliable sources of revenue possessed by many of our existing municipalities are their so-called ‘public markets’. But it is important to notice that these markets are by no means public in the same full sense as are our public parks, libraries, water undertakings, or those numerous other branches of municipal work which are carried on upon public property, by public officials, at the public expense, and solely with a view to the public advantage. On the contrary, our so-called ‘public markets’ are, for the most part, carried on by private individuals, who pay tolls for the parts of the buildings which they occupy, but who are not, except on a few points, controlled by the municipality, and whose profits are personally enjoyed by the various dealers. Markets may, therefore, be fitly termed semi-municipal enterprises.
It would, however, have been scarcely necessary to touch on this question, but that it naturally leads up to the consideration of a form of semi-municipal enterprise which is one of the characteristic features of Garden City. This is to be found in the Crystal Palace, which, it will be remembered, is a wide arcade, skirting the Central Park, in which the most attractive wares on sale in Garden City are exhibited, and, this being a winter garden as well as the great shopping centre, is one of the most favourite resorts of the townspeople. The business at the shops is carried on, not by the municipality, but by various individuals and societies, the number of traders being, however, limited by the principle of local option.
The considerations which have led to this system arise out of the distinction between the cases on the one hand of the manufacturers, and on the other of the distributive societies and shopkeepers who are invited to the town. Thus, for example, in the case of the manufacturer, say, of boots, though he may be glad of the custom of the people of the town, he is by no means dependent on it; his products go all over the world; and he would scarcely wish that the number of boot manufacturers within the area should be specially limited. He would, in fact, lose more than he would gain by restrictions of this kind. A manufacturer frequently prefers to have others carrying on the same trade in his vicinity; for this gives him a larger choice of skilled workmen or workwomen, who themselves desire it also, because it gives them a larger range of employers.
But in the case of shops and stores the case is entirely different. An individual or a society proposing to open in Garden City, say a drapery store, would be most anxious to know what, if any, arrangements were to be made for limiting the number of his competitors, for he would depend almost entirely on the trade of the town or neighbourhood. Indeed it frequently happens that a private landlord, when laying out a building estate, makes arrangements with his shopkeeping tenants designed to prevent them from being swamped by others in the same trade starting on his estate.
The problem, therefore, seems to be how to make such suitable arrangements as will at once:
(1) Induce tenants of the shopkeeping class to come and start in business, offering to the community adequate rate-rents.
(2) Prevent the absurd and wasteful multiplication of shops referred to in the note at the foot of page * 1
(3) Secure the advantages usually gained (or supposed to be) by competition — such as low prices, wide range of choice, fair dealing, civility, etc.
(4) Avoid the evils attending monopoly.
All these results may be secured by a simple expedient, which will have the effect of converting competition from an active into a latent force to be brought into play or held in reserve. It is, as we have said, an application of the principle of local option. To explain: Garden City is the sole landlord, and it can grant to a proposed tenant — we will suppose a co-operative society or an individual trader in drapery or fancy goods — a long lease of a certain amount of space in the Grand Arcade (Crystal Palace), at a certain annual rate-rent; and it can say, in effect, to its tenant, ‘That site is the only space in that ward which we for the present intend to let to any tenant engaged in your trade. The Arcade is, however, designed to be not only the great shopping centre of the town and district, and the permanent exhibition in which the manufacturers of the town display their wares, but a summer and winter garden. The space this Arcade covers will, therefore, be considerably greater than is actually required for the purposes of shops or stores, if these are kept within reasonable limits. Now, so long as you give satisfaction to the people of the town, none of the space devoted to these recreative purposes will be let to anyone engaged in your calling. It is necessary, however, to guard against monopoly. If, therefore, the people become dissatisfied with your methods of trading, and desire that the force of competition shall be actively brought into play against you, then, on the requisition of a certain number, the necessary space in the Arcade will be allotted by the municipality to some one desirous of starting an opposition store.’
Under this arrangement it will be seen the trader will depend upon the good-will of his customers. If he charges prices which are too high; if he misrepresents the quality of his goods; if he does not treat his employees with proper consideration in regard to hours of labour, wages, or other matters, he will run a great risk of losing the good-will of his customers, and the people of the town will have a method of expressing their sentiments regarding him which will be extremely powerful; they will simply invite a new competitor to enter the field. But, on the other hand, as long as he perform his functions wisely and well, his good-will resting on the solid basis of the good-will of his customers, he will be protected. His advantages are, therefore, enormous. In other towns a competitor might enter the field against him at any moment without warning, perhaps at the very time when he had purchased some expensive goods, which, unless sold during the season, could only be realized at an enormous sacrifice. In Garden City, on the other hand, he has full notice of his danger — time to prepare for it and even to avert it. Besides, the members of the community, except for the purpose of bringing a trader to reason, will not only have no interest in bringing a competitor into the field, but their interests will be best served by keeping competition in the background as long as possible. If the fire of competition is brought to bear upon a trader, they must suffer with him. They will lose space they would far rather see devoted to some other purpose — they will be bound to pay higher prices than those at which the first trader could supply them if he would, and they will have to render municipal services to two traders instead of to one, while the two competitors could not afford to pay so large a sum in rate-rent as could the original trader. For in many cases the effect of competition is to make a rise in price absolutely necessary. Thus, A. has a trade of 100 gallons of milk a day, and can, we will suppose, pay his expenses, earn a bare living, and supply his customers with milk, say, at 4d. a quart. But if a competitor enters the field, then A. can only sell milk and water at 4d. a quart if he is to continue to pay his way. Thus the competition of shopkeepers absolutely tends not only to ruin the competitors, but to maintain and even to raise prices, and so to lower real wages.1
Under this system of local option it will be seen that the tradesmen of the town — be they co-operative societies or individuals — would become, if not strictly or technically so, yet in a very real sense, municipal servants. But they would not be bound up in the red-tape of officialism, and would have the fullest rights and powers of initiation. It would not be by any literal conformity to cast-iron and inflexible rules, but by their skill and judgment in forecasting the wishes and in anticipating the tastes of their constituents, as well as by their integrity and courtesy as business men and women, that they would win and maintain their good-will. They would run certain risks, as all tradesmen must, and in return they would be paid, not of course in the form of salary, but in profits. But the risks they would run would be far less than they must be where competition is unchecked and uncontrolled, while their annual profits in proportion to capital invested might also be greater. They might even sell considerably below the ordinary rate prevailing elsewhere, but yet, having an assured trade and being able very accurately to gauge demand, they might turn their money over with remarkable frequency. Their working expenses, too, would be absurdly small. They would not have to advertise for customers, though they would doubtless make announcements to them of any novelties; but all that waste of effort and of money which is so frequently expended by tradesmen in order to secure customers or to prevent their going elsewhere, would be quite unnecessary.
And not only would each trader be in a sense a municipal servant, but those in his employ would be also. It is true such a trader would have the fullest right to engage and dismiss his servants; but if he acted arbitrarily or harshly, if he paid insufficient wages, or treated his employees inconsiderately, he would certainly run the risk of losing the good-will of the majority of his customers, even although in other respects he might prove himself an admirable public servant. On the other hand, if the example were set of profit-sharing, this might grow into a custom, and the distinction between master and servant would be gradually lost in the simple process of all becoming co-operators. 2
This system of local option as applied to shopkeeping is not only business-like, but it affords an opportunity for the expression of that public conscience against the sweater which is now being stirred, but which scarcely knows how to effectually respond to the new impulse. Thus there was established in London some years ago the Consumers’ League, the object of which was not, as its name might lead one to suspect, to protect the consuming public against the unscrupulous producer, but it was to protect the sweated, over-driven producer against a consuming public over-clamorous for cheapness. Its aim was to assist such of the public as hate and detest the sweating system to avail themselves of the League’s carefully compiled information, so that they might be able to studiously avoid the products which had passed through sweaters’ hands. But such a movement as the Consumers’ League advocated could make but little headway without the support of the shopkeeper. That consumer must be an uncommonly earnest opponent of sweating who insists upon knowing the source whence every article he purchases has come, and a shopkeeper under ordinary circumstances would scarcely be disposed either to give such information or to guarantee that the goods he sold were produced under ‘fair’ conditions; while to establish shops in large cities, which are already overcrowded with distributive agencies, and to do this with the special object of putting down sweating, is to court failure. Here in Garden City, however, there will be a splendid opportunity for the public conscience to express itself in this regard, and no shopkeeper will, I hope, venture to sell ‘sweated goods’.
There is another question with which the term ‘local option’ is most closely associated which may be dealt with here. I refer to the temperance question. Now it will be noticed that the municipality, in its position of sole landlord, has the power of dealing in the most drastic manner possible with the liquor traffic. There are, as is well known, many landlords who will not permit a public-house to be opened on their estate, and the landlord of Garden City — the people themselves — could adopt this course. But would this be wise? I think not. First, such a restriction would keep away the very large and increasing class of moderate drinkers, and would also keep away many of those who are scarcely moderate in their use of alcohol, but as to whom reformers would be most anxious that they should be brought under the healthful influences which would surround them in Garden City. The public-house, or its equivalent, would, in such a community, have many competitors for the favour of the people; while, in large cities, with few opportunities of cheap and rational enjoyment, it has its own way. The experiment, as one in the direction of temperance reform, would, therefore, be more valuable if the traffic were permitted under reasonable regulations than if it were stopped; because, while, in the former case, the effects in the direction of temperance would be clearly traceable to the more natural and healthy form of life, if the latter course were adopted it could only prove, what no one now denies, that it may be possible, by restrictive measures, to entirely keep away the traffic from one small area while intensifying the evils elsewhere.
But the community would certainly take care to prevent the undue multiplication of licensed houses, and it would be free to adopt any one of the various methods which the more moderate of temperance reformers suggest. The municipal authorities might conduct the liquor traffic themselves, and employ the profits in relief of rates. There is, however, much force in the objection that it is not desirable that the revenue of a community should be so derived, and, therefore, it might be better that the profits should be entirely applied to purposes which would compete with the traffic, or in minimizing its evil effects by establishing asylums for those affected with alcoholism. 3 On this subject, as on all points involved, I earnestly invite correspondence from those who have practical suggestions to offer; and, although the town is but a small one, it would perhaps not be impracticable to test various promising suggestions in the different wards.
1 ‘It has been calculated by Mr. Neale’ (Economics of Co-operation) ‘that there are 41,735 separate establishments for twenty-two of the principal retail trades in London. If for each of these trades there were 648 shops — that is nine to the square mile, no one would have to go more than a quarter of a mile to the nearest shop. There would be 14,256 shops in all. Assuming that this supply would be sufficient, there are in London 251 shops for every hundred that are really wanted. The general prosperity of the country will be much increased when the capital and labour that are now wastefully employed in the retail trade are set free for other work.’ A. and M. P. Marshall, Economics of Industry, Chap. ix, sec. 10.
2 This principle of local option, which is chiefly applicable to distributive callings, is perhaps applicable to production in some of its branches. Thus bakeries and laundries, which would largely depend upon the trade of the locality, seem to present instances where it might with some caution be applied. Few businesses seem to require more thorough supervision and control than these, and few have a more direct relation to health. Indeed, a very strong case might be made out for municipal bakeries and municipal laundries, and it is evident that the control of an industry by the community is a halfway house to its assumption of it, should this prove desirable and practicable.
3 Since To-morrow was published, various companies have been formed with the object of carrying on the trade on principles advocated by the Bishop of Chester. A limited dividend is fixed; all profits beyond are expended in useful public enterprises, and the Managers have no interest whatever in pushing the trade in intoxicating liquors. It may be interesting also to observe that Mr. George Cadbury, in the Deed of Foundation of the Bournville Trust, provided for the complete restriction of the traffic at the outset. But as a practical man he saw that as the Trust grows (and its power of growth is among its most admirable features) it may be necessary to remove such complete restrictions. And he provided that in that event ‘all the net profits arising from the sale and co-operative distribution of intoxicating liquors shall be devoted to securing recreation and counter attractions to the liquor trade as ordinarily conducted’.
Last updated Tuesday, August 25, 2015 at 14:09