THE SECRET OF HIGH WAGES

Bay of Plenty Times, Volume LIV, Issue 9224, 2 July 1926, Page 4

THE SECRET OF HIGH WAGES

CHEAPER GOODS AND BIGGER OUTPUT. The activities of two young British engineers, Air Bertram, Austin andAlr AY. Francis Lloyd, have recently caused much interest in industrial and diplomatic circles in Great Britain (states a reviewer in the London Observer, commenting on a recently published book, “The Secret of High Wages.’ ) Having had considerable experience over here in our greatest engineering undertak. ings, they determined to make a tour of the big industrial plants of America, with a. view to arriving at a better understanding of the fundamental differences between British and American industrial systems. In the course of this tour, they interviewed the most prominent captains of industry and the most efficient plants in the I nited States.

On their return, they issued a report which had a remarkable reception. Indeed, one might reasonably say with truth, that the basis on which not a. few of the special trade missions are now being sent to America, was suggested by this confidential report. In an interview granted to an Observer representative. Mr Austin and Air Lloyd pointed out that while in Great Britain they still had their mil-

lion workless, exports loss than fourfifths of their pre-war volume, and the taxpayer called on to bear the losses of ony of the oldest and greatest industries, the great American Republic was enjoying a larger measure of prosper, ity than at any other stage in its history.

“Wherever we went in the United States,” said Air Austin, “we were struck by the total absence of the outward and visible signs of poverty such as are only too evident in any English manufacturing town —'beggars, street singers, and ragged children. We were naturally led to inquire into the reasons for this striking contrast, and found that the commonly accepted views entirely failed to meet the facts.

“For instance, it is sometimes stated that America owes her prosperity to the bounty of Nature, who has dower - ered her with nearly half the world’s eeal resources, and more than half of its copper, cotton, steel, and oil. But why, then, ar© we not equally prosperous, seeing that our Empire actually produces nearly two-thirds of the world’s woo] and rubber, nearly threefourths of its tea and gold', and practically all its jute? We cannot shift the blame to Nature. Other apologists have traced America’s prosperity to her control of a vast home market. But Great Britain has the whole world for her market with an unrivalled organisation built up by a century’s trading ex. perience.

“No; our inquiries showed plainly that America’s prosperity was due less to her natural advantages than to the enlightened policy of her citizens in developing them. Elmployevs and employed alike have grasped a simple principle which is in danger of being overlooked in Great Britain —that it is more profitable to sell a large output at a. comparatively low price, than a small output at a high price. “The British employer spends much time considering how hesiT to resist price reductions. Tire British workerlias been taught to regard ea’ canny ; as an article oP faith. In America the principle of small profits and quick returns is almost universal. During the last eighteen years, the Ford MotorCompany, by reducing its prices by two-thirds, has increased its sales 200 times over-. The lowest wage paid to any of its workers, is 29s 2d a day, and the prosperity of its proprietors a matter of legend. “Increased sales mean an enormous saving in overhead costs. They also economise capital, thus enabling a Business to handle a larger volume of' orders with a smaller financial outlay. The resulting benefit ensures to worker and employer alike. Tire secret of high wages is a large output at competitive prices.

“What do you consider the best method- of obtaining such an increased production?” was the next question put.

“First and foremost, the most up-to-date machinery that human invention can provide/’ replied Mr Lloyd. “The American manufacturer never hestitates to scrap expensive machinery whenever he can reduce his costs by sex doing. One concern, with plant valued at 1o3,000,IXM) dels., allowed in 1924, no less than 81,400,000 dls for depreciation Incidentally, it paid a dividend to its shareholders of 80 per cent. “Secondly, an honest effort is required on the part of the workers to get the best out of the improved machinery, in the knowledge that they will obtain a fair share of the resulting benefits. Given such a spirit, there is uo practical limit to the output, and the wage obtainable per worker. “‘Thirdly, promotion must he by merit, and by merit only.

Fourthly, the utmost possible attention must be paid to the welfare of the workers. In many American! establishments, a real- ‘esprit de corps’ obtains based on the very material fact, that productivity per head is so high, that a great loss is suffered by the employ, or. when a man is absent.”

Is it possible to transplant these ideas to British soil” was a question very naturally suggested. “Do they not amount to a veritable involution in our industrial attitude? What do von consider the most effective way of bunging about such a change in a country like Great Britain, where inf‘[?n Ualistic traditions are' all-power-

> >'>gi**e” was the reply. “The difficulties ar© certainly formidable and cannot be overcome in a day. The most essential step i s the breaking down of the traditions of secrecy in business matters which divide employees from workers, and from other employers in the same trade. Only then hi'll workers learn to regard their interests as common with those of their employers. There should l>e no subconscious dread that increased effort will l>e made an excuse for cutting n ages, as has been far too often the case in years gone by. The exchange or trade information, again, even between competitors, is essential if the I harvest of improved technical knowledge .s to be reaped. Such a police IS largely practised in America.

uot for altruistic reasons, but because it has 'been found to pay. The great trade unions enjoy an immense power in our labour world. Any forward movement must begin by enlisting their cordial support. Surely it is uot impossible to convince those at the helm, who are generally able, and far-sighted men, that they are to have a ‘square deal’ It will then be for them to convince their members that the best hope for the, future lies, not along the Hues of a defensive battle, to maintain present standards, but of a co-operativq effort to improve them. With such spirit on both sides, there is no reason why this country should not run the United States very closely in the matter of prosperity.