to political economy and business experience. It is worth while to place on record the facts.

Constructive work was not undertaken at first, but labor was hired to clean the bridges* and to repair the Council offices, † at a considerable saving compared with contract prices. The first piece of building work was executed by the Main Drainage Committee at £536 below the lowest tender of £2,188. But the case which finally convinced three out of every four members of the Council of the desirability of executing their own works was the York Road Sewer. The engineer estimated the cost at £7,000, and tenders were invited in the usual manner. Only two were sent in, one for

11,588, and the other for 11,608. The Council determined to do the work itself, with the result that a net saving of £4,477 was made.t

This remarkable result naturally created a sensation in the contracting world, and attempts were made to impugn the engineer's figures. In his crushing reply he pointed out that the contractors had reckoned out their tenders at absurdly high prices in nearly every detail, charging, for instance, 60s. and 70s. respectively per cubic yard of brickwork and cement, whereas the work was done at 39s. It is clear from the other particulars given, and from facts notorious at the time, that an agreement had been come to among contractors not to compete with one another for this job, in order to induce the Council to abandon its fair wages clause. The Council preferred to abandon the contractor.§

The outcome was the establishment, in the spring of 1893, of a Works Department to execute works required by the other committees in precisely the same manner as a contractor. The Works Department stands to the other committees of the Council exactly in the same relation as if it were an independent contractor. When a committee has any work to execute, the Council's architect and engineer prepare the plans and make an estimate, without any reference to the Works Department. Then the Council decides whether the work shall be done with or without a contractor. Sometimes it decides to put the work up to tender, a course which enables it to see whether the estimates of the architect and engineer are trustworthy guides. The Works Department may say that it is not prepared to do the work, either because it is not satisfied with the specifications and estimates, or because it has no convenience for doing work at that particular site, or of that particular kind. In that case the job is put up to tender and done by a contractor.

The accounts of the Works Department are kept distinct from those of other departments of the Council. The Finance Committee sees that it is debited with the interest and sinking fund on all the capital it uses; that full allowance is made to cover depreciation and renewals; that a complete stocktaking is regularly carried out by independent officers; and that all outgoings and maintenance • Minutes, October 18th, 1892, pp. 900-1. † Minutes, June 27th, 1893, p. 683. Minutes, October 17th, 1893.

See the fuller particulars in Minutes of October 31st, 1893, pp. 1063-5.

charges are properly spread over the various works done. The accounts are elaborately checked by the Council's Controller, as well as by the Local Government Board's Auditor.

The Works Department has now been at work for over six years, during which it has executed over £1,000,000 worth of work of the most varied character-sewer construction, the making of roads, building houses of every kind, erecting bridges, carrying out of every sort of repairing and decorating jobs, and an innumerable array of miscellaneous operations. Whether, and to what extent, this work has been done cheaper than it would have been done by contractors is a matter of hot controversy.* The Progressives assert that, even with all the disadvantages of starting a new business, and struggling with "wreckers" inside the Council, the whole £1,000,000 worth of work has, taken as a whole, and including the "jobbing work," been executed at just about what the contractors would have charged. The Moderates declare that it has cost more; but even they do not put the excess at more than about 5 per cent. on the whole of the architect's estimate-an excess which any one accustomed to builders' bills will think amazingly low. But no sound judgment on the policy of dispensing with the contractor can be formed on statistics of this kind, extending over so brief a period. We must take a wider sweep, and see what inferences can be drawn from other experience.

It is usually assumed by the Council's critics that its policy of eliminating the contractor is an unparalleled innovation, unknown outside London. A little knowledge of the action of local governing bodies elsewhere would prevent this mistake. It is, of course, unnecessary to remind the reader that Birmingham, dominated by the strictest sect of the Individualists, has municipalized its water and its gas, which are in London still left to private enterprise. What is not so well known is that the Town Council dispenses with the contractor whenever it can, each committee getting much of its own work done by its own directly employed staff. The Public Works Committee, which looks after the thoroughfares, and the Health Committee, which is responsible for sanitation, have not only entirely eliminated the contractor from the cleaning and repairing of the streets and the removal of refuse, but even from the laying down of granite paving and flagging, once a most profitable item of his business. The Gas Committee is not content with employing hundreds of men to make gas, but also keeps its own staff of carpenters, bricklayers, blacksmiths, tinmen, painters, fitters, etc., to execute its numerous works. The Improvements Committee, like the Estates Committee, has its own carpenters, fitters, bricklayers, paperhangers, plasterers and zincworkers, whilst the Water Committee, besides a regular staff of mechanics of all kinds, is now actually engaged in

"

* See The Truth about the Works Department of the London County Council. (London Reform Union.) The year ended 30th September, 1899, shows a "profit of 10,365 on completed works estimated at £79,270 ̊ (Minutes, November 1899).

Return of Hours of Labor, Wages, etc. (Appendix to Birmingham General Purposes Committee's Report, July 25th, 1893). See Appendix II., p. 18.

constructing several huge dams and reservoirs near Rhayader, two tunnels and various water towers and syphons, together with workmen's dwellings to accommodate a thousand people, stables, stores, workshops, a public hall and recreation room, a school, two hospitals, and a public-house-all without the intervention of a contractor. The construction of all the buildings on the works is being carried out by the workmen of the Corporation, under the superintendence of the resident engineer and his assistant. The timber and other material is being purchased by tender. "This method," reports the Water Committee, "of using material supplied by contract, and constructing by the direct employees of the Corporation, the Committee consider, under the circumstances of the case, to be the most economical, as well as calculated to secure the best results." But this is not all. The Water Committee, finding that the village would have beer, has decided also in this matter to dispense with any entrepreneur, and has "resolved that a canteen shall be established in the village,' out of the capital of the Birmingham citizens, and "that the person managing it shall have no interest whatever in the quantity sold."

And if we turn to Liverpool we learn that "almost all the city engineer's work is done by men directly employed by the Corporation. . . . The construction of sewers is now done entirely by the Corporation themselves. . . . They had such a cruel experience of doing the work of sewering by contractors that they have given it up." It appears that in the old days, when the contractors agreed and charged for two courses of brickwork, no amount of inspection sufficed to prevent them putting in one only. "What happened was this: that whenever the Inspector came round, or the Clerk of Works, to watch the contractors, they found the two rings of brickwork going on very well; as soon as the Inspector went away. . . the second ring of brickwork was left out . . . and so the sewer got weak. .. You could trace the visits of the Inspector by the double rings" which were found here and there at intervals when the sewers were subsequently uncovered for repairs. ‡

This evidence from Liverpool is especially interesting in connection with what has recently been discovered at Manchester. The Auditor's report, published in 1896, exposes a precisely similar fraud in connection with the thirty-five miles of new sewers now under construction. This work was let to thirty-four different contractors, who had already received over £600,000 for their work. The new city surveyor, finding that the work had been scamped, had "street after street taken up at great expense, and such an exposure was made of fraud and deceit as I," writes the auditor, "have never before seen. The men who built these sewers in a tunnel never dreamed that their rascality would be discovered." The chief method adopted, was, as at Liverpool, leaving out one ring of brickwork, except when the Corporation Inspector was signalled as being about to descend the shaft. Then the workmen hastily put on a second row of bricks * Report of the Birmingham Water Committee, presented February 6th, 1894. Evidence of the Deputy Town Clerk of Liverpool before the Unification of London Commission, p. 328 of C-7493-I. Ibid, p. 328.

at that spot. The frequency of the Inspector's visits to each bit of work were found marked by this extra ring of bricks, here and there, instead of along the whole length of the sewer.*

Nor are these Councils in any way exceptional in their steady progress towards the elimination of the contractor. In the early days of municipal activity practically everything was let out to a contractor. Nowadays every large municipality, even if it does not possess any separate Works Department, has a staff of mechanics and artizans in regular municipal employment, and every day executes many important works and services by its own workmen, which were formerly let by tender to the lowest bidder.

Nor is it in municipal boroughs alone that we see the change in policy. Nothing was more common a few years ago than for highway authorities to get their roads kept in order by contractors An interesting return obtained in 1892 by the County Surveyors' Society shows that this practice has been almost entirely abandoned in favor of direct employment of labor by the county surveyor. Only in one or two counties out of thirty-five furnishing particulars does the old custom linger. The county surveyor for Gloucestershire indignantly denied an allegation that he favored the contract system. "It does not commend itself to me in any way," he writes, "and encourages a low form of sweating. My own experience of road-contracting is that it does very well for five years, then the roads go to pieces, and you have to spend all your previous savings to put them to rights."t

When we thus find even the County Councils in rural districts giving up the contractor, it ceases to be surprising that the Town Council of Manchester, in the city of Cobden and Bright, now manufactures its own bass-brooms, or even that the ultra-conservative Commissioners of Sewers of the City of London, actually set the County Council an example by manufacturing their own carts. The superiority of direct municipal employment, under salaried supervision, to the system of letting out works to contractors has, in fact, been slowly borne in on the best municipal authorities all over the country by their own administrative experience, quite irrespective of social or political theories.

Integration of Processes.

Business men, not so very long ago, would have argued that this policy of including all kinds of industrial processes under one administration was contrary to the lessons of business experience. The last generation of captains of industry believed in each undertaking sticking closely to its own special trade, and contracting with similarly specialized undertakings for all subsidiary parts of the business. "Never make anything yourself that you can buy elsewhere" was a common industrial maxim. The last thirty years

* Report of the Citizens' Auditor of the City of Manchester for 1895.

+ Particulars of Management of Main Roads in England and Wales, a report compiled for the County Surveyors' Society, by Mr. Heslop, County Surveyor for Norfolk. See Builder, March 19th and 26th, 1892.

Statement of the Commissioners of Sewers, presented to the Royal Commission London Unification.

have changed it to "Never buy from anyone else what you can manufacture for yourself."

The most familiar instance of this revolution of policy is seen in the English railway companies. Once a railway company was an association for getting a railway made, and running trains on it. An able essay written by Mr. Herbert Spencer forty years ago, protested strongly against any extension of a railway company's scope. Nowadays an up-to-date railway company runs docks, canals, ferries, steamships and hotels of its own, and carries on, besides, innumerable subsidiary businesses, and manufactures every conceivable kind of article, entirely by its own operatives, working under its own salaried staff. The directors of the London and North-Western Railway Company, for instance, with a comprehensiveness that would have staggered George Stephenson, lay it down as an axiom that the company "should be dependent on the outside world for as few as possible of the necessaries of life." The manager at the company's great workshop-town of Crewe, "can think of nothing of importance that is imported in a manufactured state, except copper tubes for locomotive boilers." "As we pass from shop to shop, here may be seen a steel canal boat in process of construction (for the company, it must be remembered, is a great canal proprietor); there, a lattice-work bridge is being fitted together. Further on, hydraulic pumps, cranes, and capstans crowd a huge shed. In another place, chains of all sorts and sizes, from cables to harness traces, are being forged by the ton; close by, coal-scuttles and lamps are being turned out by the hundred. In all the works there is no stranger sight than a corner in the carpenters' shop, where two men are constantly employed making artificial limbs. Some two years back (that is, about 1885) the company embarked on this branch of manufacture, and undertook to supply legs and arms of the most finished workmanship to any man who lost his own in their service."*

Nothing indeed is too small or too great for the North-Western to manufacture for itself. Crewe turns out a new locomotive engine every five days, and you may watch the company's own rails being rolled in its own steel works. At Wolverton, Mr. Acworth recounts how he came upon a man engaged in etching designs upon the plates of ground glass that were to form the windows of lavatory compartments, and was told that the company had recently found that it could do this work for itself at half the price it had formerly paid " (pp. 60-1). Since 1881 the North-Western has been steadily eliminating the privately owned waggon. For over twenty years the companies have managed their own collection and delivery business. Nearly every company, too, now builds its own carriages. The Midland Railway prints its own tickets; whilst the Great Eastern goes a step further, and executes in its Stratford works nearly the whole of its own printing, including its gorgeous colored posters and pictorial advertisements. "In the printing works the

* The Railways of England, by W. M. Acworth. London: 1889, p. 59.