Cotton and Chaos
WHEN we wrote last week it appeared that Lancashire might still remain true to tradition, and even at this late hour patch up the differences within her cotton industry by independent negotiation. The position -was then that the employers in all sections of the industry stood firm on the necessity for a reduction of wages, without, however, adhering to the actual figures of 2s. 64d. in the £, which brought about the present stoppage. The representatives of the weavers—probably that section of the industry which has been hardest hit of recent years—were adamant from the first in their resistance to any wage-cut, before the newly appointed Government Committee of Inquiry should have examined the whole question of the organization of the industry. It was thought that the operative spinners and cardroom workers might, on the other hand, in desperation, authorize their representatives, as advocated half-heartedly by the Union leaders, to negotiate with the Federation "the best terms possible "—in other words, once more to make the best of a bad job for the sake of the industry's glorious principle of self-determination. The announce- ment on Tuesday that the delegate meeting of the Operative Cotton Spinners Amalgamation had rejected by a substantial majority the recommendation of its Execu- tive placed an entirely new complexion on the present dispute. It makes the deadlock, indeed, complete and sounds the knell of the employers' hopes of evading the major issue of rationalization. For that very reason we are not disposed to shed tears over the decision of the operative spinners to present a united front with the weavers.
The Spectator, in common with almost every other journal representing informed public opinion, has con- demned the financial " ramp " of the cotton boom period, which, with its shocking waste of capital, must be con- sidered a primary cause of the present financial straits. We recognize, however, that force majeure—or conscience— has induced owners and managers in the spinning section of the industry to initiate the work of reorganization and reconstruction. The establishment of the Lancashire Cotton Corporation some five months ago, and the evi- dence of other moves towards amalgamation, deserve to be placed to the credit of the Master Cotton Spinners, and are worth recording as an earnest of good intentions. It remains true, nevertheless, that (since most of the new capital subscribed after the War consisted of interest- bearing loans instead of shares) the workers have a justi- fiable grievance in that many of them have been put on short time—and some dismissed—while outsiders who lent money to the industry continue to draw their earnings.
The plight of the manufacturing and weaving branches of the industry is almost entirely due to the continuance of obsolete business technique, and it is on this score that the organized employers are being justly blamed. The people of this country are patient and reasonable, and there is a very healthy disinclination to call in the powers of the State to enforce a solution of an industrial dispute. It should be recognized moreover that the present impasse, though, indeed, doing untold damage to British trade, since cotton is the largest export industry of the country, cannot be said to be affecting those public interests which are provided for in the Emergency Powers Act—although we are not surprised to see that Mr. James Maxton expresses a different view. But though the service of the Ministry of Labour be limited to further instalments of that conciliation and advice which Sir Horace Wilson has already proffered, the Government might at least -state clearly and unambi- guously their determination in the last resort to ask for statutory powers for compulsory reorganization, as it has done already in the similar case of the coal industry: Otherwise, these same employers, deaf alike to the criticism at home and the ehortlings abroad, will continue, ostrich-like, to bury their heads in the sands of tradition; Like most of our other problems to-day, the problem of the cotton industry is mainly one of intellectual reorientation. In the immediate post-War years this country did not, like so many others, succumb to the temptations of monetary inflation. In view of the importance of British credit the game was not worth the candle. But it has to be confessed that our business community, as a whole, is still suffering from the effects of a no less perilous psychological inflation. With the removal of war-time restraint, the cotton merchants (using the word of all engaged in the multiple processes of the trade), in particular, fell sick of a fever and ignored the substantial permanent change that had come over the industry. Here was a case, as Professor Gilbert Murray has tellingly demonstrated on a wider scale,* of a cosmos which was in process of rapid dissolution. The result, as far as we are concerned, was—and is—chaos, but not until quite recently did our cotton magnates appa- rently even realize the necessity for creating out of the new facts of the world situation a new cosmos. Let us con- sider a few bare facts, taken from the recent Report on Un- employment by the International Labour Office. The yarns and piece goods of which Great Britain formerly had the virtual monopoly are being produced to an ever- increasing extent in those which rank as consuming coun- tries. Since 1913 the output of Indian mills has nearly doubled. British imports into Egypt have decreased, whereas Egypt has taken more of the Czech and Italian products. Italy, too, has shown herself a strong compe- titor in the Near East and South America, while the United States holds the field throughout the rest of the American continent. There is, finally, the enormous expansion of the cotton industry in Japan. Before the War Japan supplied less than one four-hundredth of piece goods imported into India, whereas now she claims one fifth ! Such an increase is not to be explained away by any argument about the very low wage-rates in the East, for they are, in any case, set off by an inferior skill and productivity. Moreover, now that Great Britain has agreed to sign the Eight Hours Convention, it should be possible to apply pressure so as to bring even the Far East into line. Nor is it any longer true to say that Japan only produces the coarser cotton goods. The report which we have quoted gives figures which suggest that Japan is likely to make a strong bid in the future for a corresponding position in the trade in high-grade goods. The explanation of such phenomenal success—i.e., of cheaper cost of production—is that Japanese mills are syndicated for purposes of export, and that they have their own marketing organization in Indian and Chinese ports. Compare this with the traditional chain of dis- tribution in the Lancashire cotton industry—from manufacturer to consumer through the various links of the Manchester shipper, English merchanting house in Bom- bay, Indian (or Chinese) merchant, up-country broker, up-country bazaar dealer and the retailer or pedlar, and one has some idea of the sums that go to make this snowball of costs. Like most of our other problems to-day, the problem of the cotton industry is mainly one of intellectual reorientation. In the immediate post-War years this country did not, like so many others, succumb to the temptations of monetary inflation. In view of the importance of British credit the game was not worth the candle. But it has to be confessed that our business community, as a whole, is still suffering from the effects of a no less perilous psychological inflation. With the removal of war-time restraint, the cotton merchants (using the word of all engaged in the multiple processes of the trade), in particular, fell sick of a fever and ignored the substantial permanent change that had come over the industry. Here was a case, as Professor Gilbert Murray has tellingly demonstrated on a wider scale,* of a cosmos which was in process of rapid dissolution. The result, as far as we are concerned, was—and is—chaos, but not until quite recently did our cotton magnates appa- rently even realize the necessity for creating out of the new facts of the world situation a new cosmos. Let us con- sider a few bare facts, taken from the recent Report on Un- employment by the International Labour Office. The yarns and piece goods of which Great Britain formerly had the virtual monopoly are being produced to an ever- increasing extent in those which rank as consuming coun- tries. Since 1913 the output of Indian mills has nearly doubled. British imports into Egypt have decreased, whereas Egypt has taken more of the Czech and Italian products. Italy, too, has shown herself a strong compe- titor in the Near East and South America, while the United States holds the field throughout the rest of the American continent. There is, finally, the enormous expansion of the cotton industry in Japan. Before the War Japan supplied less than one four-hundredth of piece goods imported into India, whereas now she claims one fifth ! Such an increase is not to be explained away by any argument about the very low wage-rates in the East, for they are, in any case, set off by an inferior skill and productivity. Moreover, now that Great Britain has agreed to sign the Eight Hours Convention, it should be possible to apply pressure so as to bring even the Far East into line. Nor is it any longer true to say that Japan only produces the coarser cotton goods. The report which we have quoted gives figures which suggest that Japan is likely to make a strong bid in the future for a corresponding position in the trade in high-grade goods. The explanation of such phenomenal success—i.e., of cheaper cost of production—is that Japanese mills are syndicated for purposes of export, and that they have their own marketing organization in Indian and Chinese ports. Compare this with the traditional chain of dis- tribution in the Lancashire cotton industry—from manufacturer to consumer through the various links of the Manchester shipper, English merchanting house in Bom- bay, Indian (or Chinese) merchant, up-country broker, up-country bazaar dealer and the retailer or pedlar, and one has some idea of the sums that go to make this snowball of costs.
The net result of our stereotyped methods of distri- bution—proper to the leisured Victorian Age, as they • The Ordeal of this Generation: The War, the League and the Future. By Prof. Gilbert Murray. (Allen & Unwin. 4s. 6d.) may have been—is that Lancashire has lost about a quarter of her original trade, and that production in this country has had to be reduced by some thirty per cent. The real trouble is that there has not been a correspond- ing decline either in mechanical equipment of the British cotton industry, or in the number of workers attached to it. For the last five and a half years an average of 12.8 per cent, of the workers have been unemployed, besides those who are on short time or in some way under-employed, and yet hardly anything has been done towards facilitating the transfer of unemployed textile workers to other spheres of employment. In the case of the coal industry, of whose analogous situation we wrote three months ago, it was always possible for Governments to suggest that the new carbonization process might compensate to some extent for the per- manent decline in our coal trade. In the case of cotton the decline—so fax as anything is certain—is really permanent, and that, we suppose, is the most important element in the problem which the Government's Com- mittee of Inquiry has it in its power to make manifest.
Because our cotton industry is so largely an export industry it is exposed—more than almost any other manufacturing industry—to the fell clutch of circum- stance. Let us face up to this grim fact, and its corollary of the greater need for efficiency. It is common know- ledge that reduction of wages, such as the cotton employers are now pressing for, would make less than three per cent, difference to the cost of goods. Not that way lies the road to the new cosmos. At present we can only hope for an interim agreement on the basis of mediation by the Ministry of Labour, or some other outside body. That will give time for the Government's Ccomittee to report, and for the employers to give substantial evidence of their understanding of the real situation—and still more their ability to overrule the vested interests of merchants and middlemen which form the principal obstacle to the imperative marketing reforms and reorganization of productive processes. Now that the old-time indivi- dualism has been tried in the balance of up-to-date busi- ness conditions and found wanting, we look for a national cotton export corporation, which would naturally avail itself of the brains and experience to be found in the—at present—offending firms of merchants. If we in this country could once get the habit of seeing our- selves as others see us, we should be ashamed of a state of affairs which allows foreigners to speak derisively of the Workshop of the World degenerating into an Ostrich Farm !
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