Efficiency versus Safeguarding
IT was not by accident that the most alert and most highly skilled workmen in the world grew up under Free Trade. The call to constant watchfulness for the winning of new markets, the adaptation of methods which required the keenest foresight, was inherent in the system of Free Trade. It is true that the conditions which explained the meteoric rise of Great Britain as a manufac- turing country cannot exactly be repeated. We can no longer profitably ballast our ships with coal when they go overseas in order to bring back food and the raw materials of our industries. Other countries have found substitutes for British coal. Nevertheless, coal remains cheap for our manufacturers, and though conditions generally have changed they are not, on the whole, adverse.
What we fear now is that the demand for Protective duties, indeed the mere hope of obtaining them, may undermine the resourcefulness which has hitherto dis- tinguished the British manufacturer and workman. It was on this theme that Mr. A. J. T. Taylor, a Director of Messrs. Armstrong and Whitworth and Chairman of Messrs. Craven Brothers, delivered a stimulating address lately before the Institution of Engineers and Shipbuilders in Scotland.
Mr. Taylor pointed out first of all that as new sources of power are not likely to be immediately revealed we must fall back on the exploitation of the existing sources. As compared with America the application of power generally in Great Britain is still backward. We have, however, made longer strides forward than most people know. The first Census of Production Report was issued in 1907. Between that date and 1924 the increase in prime movers (other than locomotives) was 58 per cent. In electrical generators the increase was no less than 280 per cent. The fourth volume of the Report of the Balfour Committee states that power capacity between 1907 and 1924 in- creased from " something under eight million to some- thing more than 131 million horse-power, i.e., by about three-fourths." It is obvious that power is becoming of greater importance than ever before, and it is a fair deduction that those who understand it—who can apply it and guide it—will have the governing hand in industry.
Mr. Taylor took the broad and humane view—which some reactionaries regard as dangerous but which is economically sound—that the purely personal aspect of ownership is too narrow for modern conditions. The health and happiness of men and women employed in an industry forbid the purely narrow calculation. Manu- facturers and owners who fail to return a fair percentage of the profits into the industry in the form of improve- ments in plant are doing themselves and their industry and the people dependent upon them a wrong and an injury, even though bad results may not be immediately apparent. In America the idea of " plant improvement " has taken hold so firmly that the scrapping of plant seems to many observers in this country ruthless and even arbitrary. If it is a defect, however, it is a defect of a great progressive quality.
Mr. Taylor is convinced that the annual financial provision for plant improvement in this country is so inadequate as to endanger efficient production. He regards a distribution of one half of the profits to share- holders and the other half to plant improvement, exten- sions, and research work, as fair and normal. He declares that in some factories the needs of the industry itself are entirely overlooked. " Profits are distributed amongst the shareholders to the last penny."
The proprietors of such plants persuade themselves that they are the victims, not of a lack of foresight, but of unfairness and misfortune. They turn to the Government to save them by means of safeguarding duties. Mr. Taylor comments on this :- "Industrial groups have no moral or other right to appeal to Government for protection until those concerned have fully tested out their own ability to meet outside competition. This can only be done by putting all plant equipment and factories in as up-to-date a condition as possible. The workpeople also must be acquainted with the position, and asked to do everything they can to make their work effective. New methods and markets should be carefully studied, and full advantage taken of any favourable conditions. Then, and not till then, should the comparison with outside compe- tition be made, and if it can be shown—honestly shown—that without protection the position is hopeless from a competitive point of view, then an appeal for Government help would be justified. At the present time, Government assistance to some plants in this country only moans prolonging their life until their death and disappearance become inevitable.
Alertness is, in fine, the price of commercial safety just as in politics vigilance is the price of freedom. We said that even now the conditions are not adverse, and Mr. Taylor sums these up. We have what he calls the raw materials of prosperity—cheap coal, cheap transportation, cheap finance, a homogeneous population and the best all-the-year working climate in the world."
Mr. Taylor ends with a very interesting excursus on the exact relation between profit and production. If only the average trade unionist knew how much trade depends for its profits upon increased production, his traditional prejudices would be stifled. In many trades the profits, when the stage where the value of the output balances the cost of production, has been passed, are much higher than is generally supposed. In the mechanical pulp industry 60 per cent. of the value of production above the balance is clear profit ; in the cellulose industry 45 per cent. ; in the textile industry 43 per cent. ; in the chemical industry 42 per cent. ; and in the fine paper industry 40 per cent. These, he says, are " truly astonishing figures," indicating that increased production is the only rational method of improving industrial conditions. Reduction in the costs of labour is relatively unimportant.
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