3 JANUARY 1931, Page 8

The Meaning of Lord Melchett

IN time to come all the books of all the economists who in our day- have tried to harmonize contra- dictory industrial theories-and so to rescue Great Britain from failure may be found to count for less than the practice of a single great employer of labour--Lord Melchett. He became a rich man, but no one who knew him could ever have fairly said that his mind was fixed upon wealth. He had visions of vast extensions of existing industries, of such a co-operation between employer and employee as would sink the ancient enmities, and of such a general rise in the standard of living as would banish poverty.

Hundreds of his speeches on industrial affairs might be quoted to prove that he believed in profits as the only motive force which make the wheels go round and in private enterprise as a method which invariably puts State organized institutions to the blush. These speeches might be quoted accurately and yet might give a wholly inaccurate picture of what Sir Alfred Mond was. He was truly a harmonizer. More the more his schemes tended to reach a point where the aid or sanction of the State could not be left out ; he believed, for example, that prices must be fixed for coal internationally. That in itself would involVe sooner or later—the sooner the better in our view—discussions at Geneva, and from nothing that happens at Geneva can the various Govern- ments remain detached. His thoughts, carried farther than he had time to take them himself, lead to some inevitable but fruitful compromises—the methods of private enterprise and commercial training placing themselves at the dispoSal of the State in regions where the State is bound by circumstances to accept the Supreme responsibility. One could fancy Lord Melchett being an ideal Post- master-General or an ideal controller of the traffic of London. In both eases there has to be control by the GoVernment, as in neither is there room for un- restricted private responsibility nor for a jam of private Competitive interests. Lord Melchett would have been able to show how the Post Office could apply the ordinary ways of commerce. He would soon have had telephones at work in places where they have never been heard of or even thought of. He would have been quick to promote men of merit and to listen to new ideas. He would have been anxious, as he was in every industry with which he was connected, to break down the fatal dividing barrier between the two classes, one of which is supposed to possess brains and the other muscle. He knew from his own experience that the man who starts to earn his living with his • hands may also have the brains for a higher position and may have acquired invaluable information by beginning at the bottom. In the last few years of his life 'his plan of bringing " workers "—meaning hand-workers—into the manage- ment of industries became vital to him.

He began as a barrister, then joined the great chemical works which were founded by' his father, Dr. Ludwig Mond, then became a Liberal Member of Parliament, and finally became a much larger figure in the public eye when he emerged as a conciliator between the great organizations of employers—Tthe British Federation of Industries and the Confederation of Employers' Organ- izations—and the Trade Unions. Both of the employers' groups protested that they had no constitutional powers to embark upon discussions with the General Council of the Trades Union COngresS. Sir Alfred Mond was not the man to be thwarted by an objection of that sort. He got together a few powerful colleagues and he made the unofficial conference which took place between them and the General Council so significant' that it could not be ignored. The employers' groups had to recognise the results.

It must be remembered that these discussions were held in 1927, the year after the General Strike. Labour had received a smashing blow. A weak and shortsighted man might have said, "- The Trade Unions have exhausted their funds and are helpless. If we do not force them now to abandon some of their rigid doctrines and craft regulations we shall never be able to do it." Sir Alfred Mond took quite a different line. He preferred to try to prove to the Trade Unions that employers and employed had a common aim, and that the last thing he wanted to do was to ask the Trade Unions to give up any of their defensive rules which could really be proved advantageous to them. At first he was treated with much suspicion. Some of his fellow employers said that- he had got a bee in his bonnet, and many members of the Labour Party said that he was a cruel capitalistic- spider cleverly coaxing innocent flies into his web. But he won an honourable victory. The members of the General Council under Mr. Ben Turner were not such fools as to be cheated by fair words. They give their confidence to Sir Alfred Mond because he earned it.

He was the first of the great British Rationalizers. Imperial CheMical Industries, which he founded; is a huge merger dealing with all kinds of chemicals, the by-products of the chemical industries, and many manu- factured goods which arc the result of -chemical processes. He believed ardently in great. industrial units, and he was touched largely by the German spirit in his intense belief in the importance of research and by the Amaliean spirit in his schemes for making all his' employees holders in the firms for which they worked and direct gainers from increased profits.

His connexion with chemical industries by no means_ satisfied him. He took in hand a large part of the anthracite coal, fields in South Wales, and there again applied his large-unit principle. His constant aim was not merely to reduec overhead charges by combining independent sections of an industry, but to create groups powerful enough to organize selling all over the world. He once said to the present writer with comical despair that he had become a eoalowner " too late 'to be con- sidered a coalowner." " My felloW-coalowneis," he said, treat me with mistrust. They think that I ()light net, to he in the business because I have not always been in it. All the same, what I have told them' is good' sense." . .

His ideas for achieving the economic unity of the Empire were only an expansion of his ideas for British industi.y. He was first and last k Rationalizer. He thought it absurd to ask the Dominions to Confine them- selves to primary products while Great Britain produced Manufactured goods. IIe saw that all- manufacturing industries in the DominionS which promised to be pro sperous had proved their right 'to continue. They -must be not only recogniZecl btit encouraged. _When that had been admitted there was still plenty of room. for Rationalizing arrarigenientS. between the great producing industries all over the Empire. He, regarded reciprocal Preferences as simply the cement which would hold Imperial Rationalization together. - Like Mr. Henry 'Ford, Lord Melchett became rich incidentally. His object was much less to serve himself than to serve his industrial ideal. Although he. alWays insisted. upon the indispensability of profit as an.incentivey. he showed in practice not only a-strict sense of- responsi- bility but a lavish benevolence. He had no respect for profits for their own sake—for profits run wild: Yet even if his profits had been much greater than they *ere, the amount of employment which he created was bought very cheaply by the men whom he " set on work." • If his employees had paid a levy for the oppor- tunities and advantages which Lord Melchett created for them; the cost -to them would have been far. less than - is always paid for any scheme of work provided by the. State. • In this country there is a certain resentment against rich men which is unknown in the United States. It would be better if wage-earners here would ask them- selves whether men like Lord Melchett and Sir William Morris, however rich they may be, do not, after all, draw a relatively very small " rent " from the many thousands of workers for whom they have invented employment. The 'career of Lord Melchett proves that profits should not be denounced as such, but-should be judged in their context. The happy mean between retaining the incen- tive and restricting the profits has not yet been dis- covered, but it may yet be discovered by a Lord Melchett of the future. We can imagine a man of that type saying that he would have no objection whatever to a maximum legal profit if taxation were so adjusted as to give handsome terms to capital which was extending industry, and was thus continually both creating fresh employment and increasing the sum of money on which dividends were earned.