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THE year 1927 began in an atmosphere of industrial calm such as England had not known for several years. For the nonce there was no talk either of strikes on the part of the workers or of wage reductions on the part of the employers. An equilibrium had been established which both sides were unwilling to disturb, though neither was satisfied with conditions as they were. Both sides recognised that the immediate task before them was to repair the economic ravages caused by the great industrial upheavals of the previous year. Merchants had to recover lost markets and the working classes had to replenish their trade union funds. Neither side could afford the luxury of quarrelling.

The overseas trade returns published early in the year showed the precise extent to which British commerce had suffered during 1926. Imports for the year had been 77,852,000l. less than in 1925, and exports about 150,000,000l. less. The adverse trade balance was 465,406,000l.-the largest since 1919. During the seven months June-December inclusive, the value of coal imported amounted to 43,010,000l. against 11,000l. in the same period in 1925 (20,032,000 tons against 6,000 tons). The exports of coal in 1926 fell from 50,817,118 tons, valued at 50,477,2111., to 20,596,571 tons, valued at 19,137,9017. Heavy decreases were also shown in the exports of cotton yarns and manufactures and of iron and steel and woollen and worsted goods.

A lurid light on the position to which the events of 1926 had reduced the working classes was thrown by a message issued at the end of the year by Mr. J. H. Thomas to his fellow-members


of the National Railway Union. The year, said Mr. Thomas, was one to which all of them would gladly bid adieu, and would long live in history for its disasters rather than its triumphs. He confessed himself "almost overwhelmed with pessimism" when he attempted to review the events of the year and their consequences. Even the N.U.R., which he had been accustomed to regard with pride as almost unbreakable, had only emerged from the ordeal "badly battered." He saw the best hope for the future in a spirit of loyal co-operation, to promote which he urged both the railway companies and the men to banish all vindictiveness.

It did not take long after the termination of the coal stoppage for the economic life of the country to return to a relatively normal condition. After being for several months a coal-importing country, England already by the end of 1926 had resumed her old position of a country exporting coal on a large scale. The revival of the coal industry brought with it a corresponding revival in those industries which had suffered with it. Before 1927 was far advanced, the number of unemployed had sunk once more to the neighbourhood of a million, in spite of the fact that there were still over a hundred thousand miners whom the industry had not been able to reabsorb.

The peace which reigned in industry was largely a peace of exhaustion, based on the fear of disturbing the existing equilibrium. That it should and could be placed on a more secure basis was an idea which could not fail to strike all who had the welfare of their country at heart. Two years previously Mr. Baldwin, almost alone, had preached the need of goodwill in industry in order to avoid an economic catastrophe. His warning had been unheeded and the catastrophe had occurred. Now voices were raised on all sides proclaiming the need of goodwill between employers and employed as an indispensable condition for restoring British trade to its former pre-eminence and bringing back prosperity to the country. In the early days of the year, while there was a lull in the political arena, this was the main topic of public discussion, both on the platform and in the press. The note was first struck in the New Year's message sent by the Mayor of London to the King and in His Majesty's reply, which expressed the hope that "with united efforts and a spirit of mutual confidence and goodwill in our widespread industries we shall see a gradual but sure restoration of the trade of the country.' Speaking on January 6 at Burnley, Mr. A. Henderson could say with much truth that the most important question of the moment was how all this talk about a new spirit in industry could be translated into concrete proposals such as would command the favour and confidence of men and women of the highest type in all classes. The movement culminated in a demonstration to foster the will to peace in industry held on January 16 at Derby,

at which Lord Burnham, the proprietor of the Daily Telegraph, and Mr. Pugh, the late President of the Trade Union Council, were the principal speakers.

Unquestionably all these recommendations to cultivate a "better spirit" were taken to heart by large numbers both of employers and workpeople who might otherwise have given the rein to class antipathies. But if they sufficed to set bounds to the spread of class warfare, they could not exorcise it altogether from British industrial relations. If one section of the industrial world emphasised the importance of goodwill, there was another section, equally influential, which recked little of the idea. Mr. A. J. Cook, fresh from a visit to Moscow, resumed his preaching of the class war with all his old violence, and his appeals fell on not unwilling ears, for he was still persona grata with the miners. On the other side, the Federation of British Industries showed how little it cared for the friendship of the working class by petitioning the Government not to proceed with its Factory Inspection Bill, for which the workers were anxiously waiting. And the Trade Union Council, in spite of its breach with Mr. Tomsky, was still coquetting with the Russian trade unions, and attempting to obtain their affiliation to the Second International.



The cleft between the advocates and the opponents of goodwill in the industrial world had its political counterpart in a cleft between the moderate and the extremist sections in both the Conservative and the Labour Parties. The moderate elements -the New Conservatives on the one side and the Right Wing" on the other-while they may not have been enamoured of the equilibrium which had been established in industry, were anxious not to disturb it by any political move until the country should have recovered from the exhausting conflicts of the previous year. But the more extreme elements on both sides paid no heed to such considerations. Those on the Conservative side, flushed with the Government's victory over the trade unions in the previous year, wished to follow it up by introducing legislation which would effectually cripple the power of those bodies to organise resistance, whether political or industrial, against the employing class; and those on the Labour side, weary of a policy of "gradualness" as a method of achieving Socialist ideals, were eager to resort to more drastic and less Parliamentary methods for securing their ends.

The leaders of the two parties, in deciding where to throw their weight among the conflicting sections of their followers, made their choice somewhat differently. Mr. MacDonald remained true to his principles, and in his public speeches at this juncture strongly upheld the policy of the "Right Wing " of the Labour Party, at the imminent risk of alienating the more advanced section. How restive these had become in the face of his attitude was shown by the fact that at its Conference in

January the Scottish Independent Labour Party-the very body which had originally secured the election of Mr. MacDonald to the leadership of the Labour Party—rejected a motion expressing disapproval of his recent utterances on the political and industrial situation only by a very narrow majority-61 votes to 57. Mr. Baldwin, on his side, made no attempt to revert to his standpoint of an earlier period, when he was still professing to model himself on Disraeli. It was significant that in a speech delivered at Bewdley on January 8, in which he reviewed the whole political situation, he had nothing to say on the subject of goodwill in industry of which he had been the apostle among the employing class two years previously. Apparently he had ceased to offer effective resistance to the extremer section in the party, and tended to place the Government more and more at their disposal. The New Conservatives" watched this process with alarm, and at first made some timid protests; but, abandoned by their whilom leader, they soon relapsed into silence, and meekly submitted to the requirements of party discipline.

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Party feeling at this juncture, having no bone of contention at home, found a somewhat curious battleground in the question of British relations with China. At the beginning of the year events took place in that country which completely undid the good work effected by Sir Miles Lampson during his stay in Hankow in December. Soon after his departure from that city the anti-British feeling flamed up again there. On January 4 a Chinese mob stormed the British and other foreign Concessions, and the bulk of the British residents found it advisable to retire with all speed to Shanghai, as did also those in all the other settlements in the Yangzte valley. The Government was at first of the opinion that the outbreak was a mere incident, and that the Nationalist authorities in Hankow would be able to restore and keep order, and to guarantee the security of the British residents. Before long, however, it came to the conclusion that the affair was serious and, in fact, symptomatic of anti-British feeling all over China, and that even in Shanghai the British residents would not be safe without additional protection. On January 16 the First Cruiser Squadron in the Mediterranean was ordered to stand by in readiness to proceed to China if required; and at a Cabinet meeting on January 21 it was decided to send there a Royal Marine battalion from Portsmouth along with a number of naval ratings and a contingent of the Royal Air Force. In making public these dispositions the Foreign Secretary stated that their sole object was to afford protection to British subjects who were in danger, and that there had been no modification in the conciliatory attitude of the Government towards Chinese Nationalism laid down in the Memorandum of December 18 (vide ANNUAL REGISTER, 1926, p. 136); on the contrary, conversations for placing British relations with China

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