How Britain Might Prosper
Ms. QUIGLEY writes with profound knowledge of his subject and his conclusions coincide with those I set out in my book, Germany's Industrial Revival, and show us that this country is c,ur greatest rival in the markets of the world.
After the War, it was assumed that British industry would adapt itself to. the changed economic conditions and that finance would actively assist in the reorganization of industry ; unfortunately it was overwhelmed in a flood of speculation of a peculiarly unhealthy, type ; immense fortunes were made through the buying and selling of shares of industrial concerns without reference to their productive capacity or market conditions. The management of industry, in short, fell from the hands of those most experienced in its control and was surrendered to financiers with no practical knowledge.
The experience of other countries, notably Germany, W:13 practically ignored as regards bringing finance into line with industrial and national policy. In Germany the State, owing to the uncertainty of reparations, the loss of Alsace- Lorraine and the Saar, and the disorders in Bavaria and Saxony, had little Power to embark on a national policy, hut the industrial organizations had emerged unshaken from the War and had evolved a policy for the future.
The basic principle lay in the scientific concentration of all firms within one industry for the execution of common functions by means of a central independent executive. They realized the advantage to be gained by standardization and concentration of works and by the linking up of firms through the various stages of production, and the benefits to be gained - through the elimination of intermediate profits and by the creation of a sure supply of raw materials within the organization itself. Instead of finance dominating the State and determining its policy as in Great Britain, industry assumed the attributes of a national organization governed by a few men. The occupation of the Ruhr educated the industrialists and the politicians, it enhanced the authority of the State and brought about the close co-operation between industry and the national executive, and a strong spirit of determination in industry itself to reach higher levels of technical and administrative efficiency. The liquidation of the Ruhr adventure was a defeat of the " Machtpolitik " of the French front-nesters, but it rendered possible a more effective economic co-operation between Germany and France. The German State had come through the ordeal of fire and stood firm in the knowledge of its supremacy in the future.
The Dawes Plan has theoretically brought Germany back Iii an economic position better even than that of 1913. It has supplied the means for improving industrial equipment and transport and has ensured a sound financial basis for trade operations. Mr. Quigley arrives at the conclusion, shared by many who have devoted much time and attention to German industrial conditions, that the Dawes Plan will reduce the standard of living in Germany, force deflation to a lower level than even now to encourage a surplus of exports, encourage a dumping policy on the part of German houses, and cause a serious and permanent depression in the basic industries of Britain.
Undue stimulation of production has already begun in - Germany and is bound to result in serious consequences for Great Britain. Thus, the number of employees in blast - furnaces, iron foundries, rolling mills and steel works fell from 356,000 in 1923 to 290,000 in 1924, while the output of pig-iron rose from 4,936,000 tons in 1923 to 7,812,000 tons in 1925. Steel ingots rose from 6,305,000 to 9,836,000 tons, and finished steel products from 5,486,000 tons to 8,174,000 tons. Wages remained practically stationary, bringing about a serious reduction in the cost of production. In coal-mining Germany has now exceeded the production of 1913 with a record export of over 29,000,000 tons in 1926.
Germany has abandoned the policy of laisser faire and set out on a vast scheme of regulation of industrial production, chiefly from within but at times with the encouragement of the State. Under the compulsion of the Dawes Plan the whole industrial organism is being surveyed, and a definite principle incorporated in organization for production.
Transport facilities have been enormously improved and German railways are definitely more efficient than British, while rates are being adjusted to meet the requirements of the great exporting industries. Continuous research into methods of combustion and exploitation of by-products, a close study of fuel economy and the scientific utilization of coal are contributing to the greater production of wealth from national resources.
Against the systematic preparations that are going on in Germany since the conclusion of the War, Britain has apparently little to show. Technically we still occupy a a high place, if not the highest place, administratively we can still show leaders of the greatest activity, but in spite of this we have lost ground. There is no reason, however, why Britain should not maintain and even strengthen her position in international trade, provided we realize our position and take the proper steps to deal with it. Mr. Quigley deals exhaustively with the main problems which confront industry and shows the methods adopted by other industrial nations to cope with them. He shows where we have failed and indicates the methods we should adopt to secure success. This book comes at an opportune time and is a most valuable pointer on the road to increased prosperity.
PII /LIP DAwsosr.
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