BRITAIN'S FUTURE

Evening Post, Volume CIV, Issue 92, 15 October 1927, Page 9

BRITAIN'S FUTURE

INDUSTRY: COMMERCE

EFFICIENCY OR DECAY ?

JJNITED CO-OPERATION

The following striking article written by Sir Lynden Macassey, K.C., and published in "The Sunday Times," has not only a. direct interest to tho people In England but is interesting to all who are concerned in the Empire's industrial and commercial future. The writer is a wellknown authority.. Ho is a Governor of the London School of Economics, and was Pin,*? of the Shipyard Labour Admiralty in 1917-18. He was trained as an engineer, but subsequently entered the legal Profession. He has always taken a keen, practical interest in industrial affairs:—

The noise and tumult that marked the passage of the Trade Disputes Act have died away. To national sanity and wise administration we may safely leave the gathering of its-fruit. One result, unexpected but perhaps inevitable, is now in evidence. By the clash and conflict public attention has been diverted from the critical state of our national industries and commerce.. That is at all times, more particularly just now, a great misfortune.

To develop our national, especially our overseas, trade to the maximum attainable under the ultimate and real, not merely ostensible, rigidity of econmie conditions at home and ■world-wide, is our first national, necessity. That development is to-day frustrated by ignorance—ignorance of how united and unselfish co-operation by all sections of the community could place Great Britain' once more in the very forefront of the greatest trading nations of the world. ■ . EFFECT OF PUBLIC IGNORANCE. ■_• This ignorance feeds and fattens our -industrial depression. The ordinary citizen, if instructed, hai? enormous power to dissipate it, but he is regaled with uninspiring generalitities; he is never confronted full face with the menacing: figures. He is leit to be lulled into false and complacent security by irrational optimists, whose false mirages of good trade coming have slowed down national exertions. Or he has been relegated to the pessimists to repel by their unpatriotic avidity in broadcasting this country's so-called decadence. The cold, eloquent, convincing vital facts are left to waste their educative power in official statistics, Government documents,- publications of employers' federations, trade union journals, and seldom taken out, as, "news," to hit between the eyes those. who form the great dynamic force of public opinion. _A beginner on " industrial form" might woil commence with the engineering industry, in which Great Britain •' one time led the world with' profit and prestige. A preliminary report on the Census of Production for 1924 of the _ general engineering and electrical engineering; trades has been published in. the."Board of Trade Journal" for June. It shows that the nominal increase in output, measured in value, in general engineering in 1924 over 1907 —-the date of the previous effective census— : was only 82 per cent., which, after allowing for increased prices in 1924 over 190-7, means no real increase . in output at all.

LOS 3 OF FOREIGN MARKETS. The discouraging position onwards from 1924 to 1927 appears clearly from the following comparative table compiled frotoi figures collected in the admirable "Bulletin" of the British Engineers' Association for last July. •■■■ A return of the'machinery exported and imported for the six months ending 30th June each year shows the following figures:—

This shows for 1927, as compared with 1924, a substantial increase in tonnage and value of imports of machinery into this country, but a much less proportionate increase in tonnage of exports and a reduction in their value.

What, then, prevents the engineering industry from selling more successfully its products in the homo and foreign markets? One thing mainly—high costs of "production, and therefore high prices. There has just been published by the London, and Cambridge Economic Service an invaluable "Special Memorandum No. 24" by Professor Bowley and Mr. K. C. Smith, compiling for the first, time comparative wholesale price index numbers for eleven principal countries, all based upon one international budget,consisting of sixteen articles of food, constituting 40 per cent., and nineteen materials constituting 60 per cent, of the total index. The results are striking. Taking the year 1913 as a base year at 100, the wholesale price level in the United Kingdom is 145. Only one country, New Zealand, is higher, viz., 154. . All the others are lower: Sweden 141, Canada and Belgium 137,. TJ.S.A. 136, Italy and Holland 129, Germany 124, South Africa 117, France 104. Belgium, France, and Italy, as well as all the others, are goid prices. That shows at once why England is undercut to-day both at home and abroad by foreign manufacturers. - BRITISH HIGH PRICES. For England's high cost and prices there are two chief causes. First and foremost is t,he high wages and salary cost per unit of output. The International Labour Review of Geneva and our Ministry of Labour "Gazette" give approximate index numbers of comparative real wages in London and a number of foreign cities in common typical occupations. The ; index numbers are a comparison of the purchasing power in terms of food of the wage paid for an hour's work at the normal time rates applied to the working class standard of food consumption of the country in which the city is situated. With London as 100, we have Philadelphia 179, Ottawa 154, Copenhagen 104, higher than London; and lower we have Berlin. 61, Brussels 42, Milan 43, Paris 51, Prague 45, Vienna 38. With real wages in Great Britain so much higher than those of so many of her competitors, it is obvious that we must inevitably be' undercut in home and foreign markets until we very substantially reduce our labour costs per unit of output. That does not,' I say it most emphatically, mean reducing wage-rates, but it does mean very substantially increasing output and even increasing wage-rates. The TT.S.A., with real, wages so much higher than those of Great Britain, is competing successfully with the manufacturers of the world because her output per working hour paid for is, on the average, three to four times what it is with us. The second chief cause of our high cost of production is the level of our personal, municipal, and national expenditure.

The pregnant question is: "Are we to drift on as we are doing?" If so, the end is sure disaster. "We cannot indefinitely, under existing conditions, continue to shoulder our present burden of taxation, social insurance, unemployment, still less maintain each year's quota of workless recruits entering the ranks of industry. How is the problem to bo tackled? Mr. Frank Plaehy

—an acute American observer and a true friend of England—in his book "Britain's Economic Plight," puts it bluntly:— 6

Britain's resources are tremendous and incalculable (he had in mind those of. the British Empire) ; probably far greater than the British people themselves have the slightest Idea. It has the transportation, tho manufacturing, plant, the credit, the raw materials, the reputation, and apparently everything that goes to make a trading and manufacturing nation pre-eminent in its sphere. But as matters stand to-day, it isn't using the kind of economic intelligence necessary to turn these national resources to best account. It is the human element that Is at fault. . . The only way to make things better is to wipe the slate clean, kick out the Labour leaders who look to Russia instead of America for their ideas and inspiration, anfl set about the all-important job of getting down the cost of the goods which England must sell abroad if her people are to keep on eating. WHAT AMERICA HAS DONE. And how to do it we may learn from America without any foolish attempt to copy her slavishly. In American manufacturing industries, by better utilisation of both mechanical power and labour, and through improved methods of management and administration, there was required in 1924 13 per cent, less mechanical power, 25 per cent, fewer wage-earners, and 17 per cent, less management personnel per unit of product than in 1913, combined with a decrease of average hours of work per worker per week of 10 per cent. During the same period the value added by manufacture per wage-earner increased by almost 100 per cent,, and real wages, measured in purchasing power, are today 28- per cent, above pre-war level. With such reduced costs per unit of output, is it surprising that the U.S.A., with real wages, as I have shown, over 80 per cent, in excess of great Britain, can force its way through foreign tariff walls and undercut British manufacturer? '.....■

How has it been done? The conclusive answer is given in an important work just published, "America's Secret -vTh'e Causes of Her Economic Success,'? by Mr. J; Ellis Barker, to which, in introductions, Sir Hugo Hirst, the chairman of the General Electric Company, and Sir Ernest Benn, have given their weighty approval. This searching and convincing book ought to be in the hands of every member of Parliament, every employer, every trade union official, and every Britisher who wants to know the way of salvation. For a lucid compilation of compelling facts, with complete documentation and exhaustive references, many of which I have been in a position to verify, it is unequalled. What the U.S.A. has achieved in reducing cost of output can unquestionably, given co-operation by our manufacturers, our workers, and our Government, be accomplished by Great Britain.

EXAMPLE TO BRITAIN. With Mr. Ellis Barker's brilliant analysis of America's success only a review of his book could adequately deal. The outstanding and dominant fact is America's conspicuous success in extending its home market and acquiring foreign ones by the simple process of cutting down production costs. The benefit to the worker is so prodigious and to the nation so incalculable that it is incomprehensible to American triends why we make no similar effort. Mr. Ellis Barker sums up the position in these warning words: . At present England seems to be drlfttae ri»h? rwP,? rdltl<m ' not because of her war destroyed i?™" °f the evll spWt wWch *" destroyed the unseen foundatlona of r»ce By tnahii n- WIU there be a °f tQ° tide? ?an Si 8 oU*P ut per worker <°no Ameriductlon y rt redUced t0 High proMr. Ellis Barker is right. We alone can retrieve our industrial and commercial fortunes. Nothing but our own efforts can or will do it. The British character will do it, if British qualities can be aroused.

1924. 1925. Fakeri as 100 116 100 115 100 129 100 118. Exports. 1926. 1927. 110 311 105 98 Imports. 140 169 130 158 Tons. Value. Tons. Value.