The Times. SATURDAY, MARCH 12, 1938. A Steel Trust

Manawatu Times, Volume 63, Issue 60, 12 March 1938, Page 4

The Times. SATURDAY, MARCH 12, 1938. A Steel Trust

I'or a number of reasons tlie Iron and Steel Industry Bill debated in the House this week, is a noteworthy one. The capital sum named, £5,000,000, is a huge one for our modest population. The industry is a new venture for New Zealand and there is a tradition of business romance attaching to iron and steel, the foundation of this our “iron age.” but overshadowing these features even, is the nature of the proposed development. Plainly stated, this is industry on the Russian plan. The introduction of the Bill, whether by intention or by mere drift, is a step towards the Sovietisation of New Zealand.

In simple language, the proposals of the Bill are—to grant the State a complete monopoly of iron and steel manufacture m the Dominion; to provide £5,000,000 for the development of works and plant, the State to be the operator thereof and the vendor, if desired, of the products. Additional powers of a contributory nature are also afforded. The sum total of these powers is to create a ‘vertical Steel Trust’ in this Dominion and either one of two results may be anticipated. Steel will either cost our citizens around 50 per cent, above imported cost or else the public will be additionally taxed to make good the heavy losses incurred on the venture.

The sponsors of this Bill are men who, however they may be versed in the art of politics, debate, oratory, economic theories and social theories, have no solid practical experience of business affairs and the management of productive enterprises. If an ounce of practice be worth a ton of theory, then the judgment of the sponsors of our Iron and Steel Bill, cannot lie accepted as that of experts upbn this subject.

Docs the Government truly believe that it can make an economic success of this industry? The administration of our railways, by this same Government, does not augur well for the success of iron and steel. Despite this being a period of high prosperty, our railways earned little more than threequarters of one per cent, on' a capital reduced by some £20,000,000 from original investment cost. To provide a modest 4 per cent, return upon the capital employed, our railways should show a surplus of £3,000,000, but this they fail to do by over £2,500,000.

A wide variety of pleas are made by supporters of the Bill. Some speak as though it would provide an economic industry. Others, apparently doubtful on this point, claim that early development of such an industry is essential to New Zealand’s industrial structure. No single convincing argument can be advanced in Support of either contention. There are several forms of industrial development that might be undertaken in this Dominion that would provide more valuable service to the nation than will this iron and steel proposal. Above all, the establishment far from the coastline, of a small arms and ammunition plant could be undertaken. And coincident with this, substantial stocks of essential supplies should he built up.

As the Bill proposes to establish an industry on the Russian model, it is of interest to note how such State-managed enterprises compare with those of private enterprise. Russian industrial output compared with American, is given for 1935 by M. Mezhlauk, Chairman of the State Planning Commission of Russia, and no higher authority could be quoted. For iron, the Russian output per man was 420 tons and for Amerieca 1734 tons. Coal compared 240 to 979 tons; cement, 140 to 834 tons; paper, 13 to 57.8 tons; shoes, 420 to 1737 pairs. Such is Russian production despite the intense speeding-up of stakanovism, or in our language, piece-work. Speeding-up cannot overeon*o the weakness inherent in State management.

Yet, this ‘Steel Trust-’ Bill, now before our Legislature proposes to foist this tragically unproductive system upon New Zealand. To fasten a discredited Communist Plan upon a British democracy. The record of State-managed industry throughout the whole world is so bad as to discredit in advance any legislation wherein this form of production is proposed. A knowledge of Australian experiences these past 25 years provides near at hand, convincing evidence of its consistent failure.

Our Government by introducing this Iron and Steel Bill, has succumbed to either an attack of Socialism, which is the drawing-room term for Communism, or else is suffering from inflated ego and so imagines that it can successfully manage an iron and steel industry, one of the most highly competitive industries in the world. Unfortunately, the Government ealls tho tune whilst the public must pay the piper.