'Silent Forms of Coercion': Welfare Capitalism, State Labour Regulation and Collective Action at the Yarraville Sugar Refinery, 1890-1925

Article excerpt

Under the leadership of Edward W. Knox, the Colonial Sugar Refining Company (CSR) operated an elaborate welfare program. Knox was a free trader vehemently opposed to government interference in commerce and industry. In the 30 years from 1890, E.W. Knox attempted to isolate his workers from both unions and the state, by means of welfare provisions: retirement pensions, sickness benefits, and housing loans. He also maintained that his employees were provided with regular and long-term employment. This paper examines labour relations at the CSR Yarraville refinery, and asks how successful Knox's initiatives were in avoiding both the state interference and union demands. The refinery was located in one of the more heavily industrialised suburbs of Melbourne and the paper examines whether welfare measures could isolate CSR workers from their working class neighbours and the ideas of the emerging labour movement.

In May 1911, Knox, then general manager of CSR, was asked by the barrister representing his firm in the Commonwealth Arbitration Court to set out his opinions on three important subjects: the part played by unions in industrial life, the desirability of dealing with employees through union secretaries and the giving of preference to unions. Although he professed limited experience with trade unions, Knox had no doubt that the 'advantage claimed for them [unions] in the betterment of the conditions of employment is largely offset by other considerations'. Unions, he asserted, were run by the 'talkers for the gain of the men of inferior capacity'. The good man did not 'want their aid for he was always sure of permanent work and would as a rule prefer to make his own bargain'. Moreover, the 'good worker knew that an increase in wages of the poor worker was paid out of his pockets, for a high minimum will always carry with it a low maximum'. (1)

As to union officials, Knox had little doubt that it was the 'greatest mistake to have a go-between at all'. The only two people who knew what could and should be paid for work were 'the one who carries out the job, and the other who finds the money'. Judges and barristers, whose training shut them off from industrial life and forbade 'them even understanding the relative positions of employer and employed', were unsuitable to decide the 'intricate questions in connection with manual work and the pay therefor (sic) in a just and reasonable way'. The arbitration system 'could not increase the sum available to pay wages, it looked only at nominal wages and not earnings, it weakened the [position of the] good man, improved that of the lazy and the weakling and sapped the independence of all, left the employer under a continuous and rankling sense of injustice'. Arbitration had failed altogether to stop strikes, but had led instead to 'the greater subjection of the wage earning classes ... weaken[ed] their characters and ... check[ed] the thrift which is really the source of the individual independence that is the strength of a people'. (2)

Among Australian businessmen, Knox was not alone in his opposition to unions, wages boards and arbitration courts. David Plowman has pointed out how the peak bodies of employers in the first decade of the twentieth century waged a protracted legal battle against state intervention, and only learnt to accommodate these changes when they suffered legal setbacks after 1910. Yet Knox was more determined than most to avoid trade unions and labour market regulation. Like many firms, CSR took punitive steps against trade union organisation, isolating unions and unionists, and favouring non-unionists. More importantly the firm adopted positive inducements to win employee loyalty to the company, and CSR embraced a program remarkably similar to what was known in the United States as welfare capitalism. (3)

Sanford Jacoby argues that huge corporations at the beginning of the twentieth century dotted America and, inside these corporations, workers laboured under a drive system. …