In the late nineteenth century an embryonic system of industrial relations had developed in Britain based primarily on employer recognition of trade unions through employers' associations, which negotiated and administered agreements covering procedures and wages and conditions. The procedural arrangements for handling disputes and negotiating agreements had become national in scope, while agreements on wages and conditions were less well developed and primarily covered only a district or region. This system of multi-employer bargaining was another aspect of the externalisation of labour management by British employers. The system suited employers in that it allowed them to maximise their collective strength through their associations, to counter the pressure for job control from skilled workers, and to reduce some of the uncertainty surrounding the fixing of wages and conditions. It also economised on the costs of investing in strong internal structures and hierarchies. It was argued in Chapter 2 that the main initiative for these arrangements came from the employers. However, the trade unions also obtained some real benefits - in particular formal recognition and a growing standardisation of pay and conditions. Union members also gained some benefits, but they often felt constrained by the system as the events of the years before the First World War showed. This chapter argues that in the first half of the twentieth century employers maintained and extended this externalised system of industrial relations, though towards the end of the period it was beginning to exhibit contradictions and weaknesses. For the most part, British employers failed to develop domestic arrangements internally within their firms.