Rationalization in, the Cotton Industry TT is excellent news that
the first step towards rational- -1- izing the • cotton industry has been taken. There were many prophets of woe who said that this could never be done, and they certainly had grounds for their pessi- mism. For the Lancashire cotton industry must be about the most unpromising organization in the world when the demand is for a surrender of individuality.
The very merits of Lancashire in the past, her renowned independence, and her wonderful adaptability in making ancient, and perhaps half-obsolete, expedients work with the help of unrivalled good sense in negotiation on the part of both masters and men—these merits became impediments when the issue was the acceptance and the ordering of an entirely new way of life.
Ten months ago the Cotton Yarn Association set to work to cut the dead wood, in Mr. Baldwin's phrase, out of its own section of the industry. On Wednesday, January 23rd, a successful conclusion was announced, and the Lancashire Cotton Corporation—such is the name of the new merger which will effect the indispensable amalgamation—was duly registered. The • road which the pioneers travelled had been difficult and dangerous. They had to perform the odious task of getting the leading men in numerous companies to admit that all the expectations which arose out of the reflotations and the over-capitalization of companies after the War were the baseless fabric of a dream. It was the simple truth that if the industry drifted on under the existing conditions of foreign competition the end would be bankruptcy, but a hard truth is not at all palatable to a Lancashireman who has a very proper pride in the adequacy of his own efforts, a pride which has been built up, and hitherto thoroughly justified, by genera- tions of success.
Only rigorous concentration, with the consequent reduction in the costs of production, can save the industry. It is as though several families who have in vain been trying to make both ends meet in separate houses at last yield to necessity and, by living in a single large house, discover that, by a common expenditure in rent, rates, lighting, heating, servants and food, they can not only manage to live, but have a comfortable margin in hand. We take this simple analogy of family expenses, which may at first sight seem absurdly irrelevant to industrial life, because we imagine that the sturdy prejudices of Lancashire business men have been really comparable in intensity with the feelings of an ordinary English family who might be forced to take the very disagreeable step of entering into a common life with other families.
It is said that the scheme of the new merger, or com- bine, is in all essentials the same that was originally conceived by the Cotton Yarn Association ten months ago. That fact does homage to some very careful and wise thinking. The object has been to relieve those Mills spinning American cotton from the crushing burden of the interest charges, which have afflicted the industry ever since the reflotations of 1919 and 1920. To those interest charges has been added a constant drain of losses owing to the depression of trade. Mr. G. W. Armitage, who has written a valuable series of articles on the crisis in the Manchester Guardian, points out that Lanca- shire was attacked by cheap labour and mass methods abroad at the very moment when the internal costs of the cotton industry had become extraordinarily high. He adds that in spite of this malign conjunction of cir- cumstances Lancashire still does half the world's trade in exported Cottofis;• and hi justifiably asks whether this does not prove with what force the heart of Lancailire still beats.
It is well known that the finest' qualities of stuffs produced by the Lancashire mills.still hold their markets. The trouble is that the rougher qualities have been beaten off the field. It is in the region of the " staples " that the difference between profit and loss may depend upon a fractional saving in the costs of production spread over a large area. Skilled labour has been challenged by cheap labour, and it is " up to " skilled labour to show that it is so skilled that it can still win: We trust that Lancashire will not again be lured on by the deceptive marsh lights of 1919. The best way is to assume that the bog reaches everywhere, and that the only firm ground that can be used will be of Lancashire's own making. The Corporation is now beginning to build a causeway. , The labour of all Lancashire will be wanted for the work, although it must be acknowledged that the principals of the merger are receiving considerable help from the Bank of England, the Board of Trade 'and several private banks. Without the 6-operation of the Bank of England the merger would probably have been impossible, and we hope that this will be remembered at a time when the Bank is a target of a good deal of much too easy 'criticism.
• The aim of the new financial arrangement has been to preserve for the shareholders and unsecured creditors some stake in the COrporation. The 'capital which has not yet been called up is to be paid by the shareholders at the rate of 2s. a year on each £1 share, so that there may be a chance for the small investor to meet his obligations out of income. Half of the' 'money thus received is to be paid to the creditors of the mills. The local banks have played an extremely important part. in these arrangements, by promising; for the first time; to accept income debentures instead of ordinary deben- tures. In this way the Corporation will be freed entirely frOm all fixed interest charges in respect of the indebted- ness of the companies which it has absorbed.
Ten months ago optimists spoke of the Corporation acquiring control of two million spindles, but now even those who 'are riot optimists talk of seven -million or eight million spindles, and it may be that the Corpora- tion will ultimately control as many as ten millions.. This is indeed the coming of rationalization in that section of the cotton industry where it will be most effective, and where it was most difficult to obtain. What the spinning section is doing to-day the other sections may do to-morrow.
It is to be noted that the former talk of the masters about cutting wages has died away. We may be thankful for that, for it was not the path to peace. It is not by wage-cutting but by economic concentration that Lancashire will become herself .again. In spite of her disillusionments she has great facts on her side, which Mr. Armitage has cheerfully summarized :-
1. The best workpeople in the world.
2. The assembly in one area and on a grand scale of all the parts of industry—mines, forges, engineering works, machine shops, mills, finishing works.
3. A prodigal variety and variation of yarns, cloths, processes, all available to all at instant notice.
4. An ancient skill in every part of the trade, and a quick fertility in invention.
5. Good water to bleach, good water to dye, and men who can . . u.qe - • 6. An immense experience of affairs in every market. at .home and abroad.
7. The best name in the world for Straight dealing.
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