"
45 Another American observer, P.
45 Another American observer, P.
Brady - Business as a System of Power
The Federation of British Industries has stopped in principle at only one point: compulsion.
Every time the issue has come up--and it tends to intrude itself
more frequently and more insistently with the passage of time of compelling all firms to belong to the appropriate subsidiary or- ganization, and of laying out policies with which all members would be compelled to comply, the response has been negative.
The arguments against compulsion are of the usual order: It would tend towards rigidity and bureaucratization; it would curb initiative and slow down progress; it would result in a highly arbi- trary classification of industry and would unduly circumvent the activities of many types of enterprises; it would enhance the power of the state, and thus serve to introduce at once the stultification of entrepreneurial action and the regimentation held characteristic of political administration. All these points are emphasized in the special Report of the Committee on the Organisation of Industry previously quoted, >> where it is held that the "special characteristics of our people and our system of government import a fundamental difference into the conditions which have to be met" from those obtaining in other countries where compulsion has been resorted to in these matters.
With that lack of candor characteristic of British business litera- ture, the Federation of British Industries hesitates even to commit itself to "self-government in business. " Yet the whole of the pro- gram which its deliberations, year after year, lay bare, are identical in tone, emphasis, and direction with what the Germans called Selbstverwaltung (literally "self-management") in business, and the Americans term "self-government" in business. It is even clear that many of its leading figures anticipate utilizing the formal powers of the state to enforce decisions rendered by the majority of an organized industry relative to interests affecting the industry or trade as a whole. To the contention of the committee majority in the Report cited, that "The procedure of putting into force by Order in Council the decisions of the majority of an industry, when
23 Ibid. , pp. 6-7.
? i64 BRITAIN'S "FEUDALISTIC SYSTEM"
approved by an appointed Tribunal and by the President of the Board of Trade, would be an undesirable addition to bureaucratic powers," Lord Melchett, of the gigantic firm of Imperial Chemi- cals, gave the rejoinder that in his "opinion this method is the most convenient and would further protect industries against the danger of their affairs being made the subject of party controversy in Par- liament. "Furthermore, procedure by Order in Council" does not, he said, involve "any extension of bureaucratic powers, since only an individual industry can frame or accept a scheme. " ^^
There can be no doubt that Lord Melchett spoke at that time for large and growing sections of British industry. Subsequent develop- ments have fully backed up the position he took, not by compro- mising the control of private enterprise over its leading policies, but by centralizing its direction. ^^
Before turning to consider somewhat more fully the way in which this has been accomplished, it will be well to obtain a clearer picture of how the FBI is organized to fulfill its stated functions.
ORGANIZATION AND PROCEDURE
By 1920 the organization of the FBI as it now stands was prac- tically complete, only minor alterations having been introduced after that time. Membership may be either on a trade association or individual firm basis. This doubtless means a great deal of dupli- cate membership, inasmuch as the individual firm members are also in nearly all cases members of the constituent trade associa- tions. Since in the main, only the large firms could afford to belong directly to the FBI, such dual membership put them into a position of commanding importance in the manipulation of significant policy issues.
To repeat, membership coverage has long been regarded as in- clusive of practically all British industry. The 1925 "Yearbook and
24 It is interesting to note that Lord Melchett attributes his favorable attitude towards the Order in Council to practices inaugurated under the National Govern- ment: ". . . the extension of procedure by Order in Council on the advice of statu- tory committees, which we have witnessed since the National Government took office, has distinct advantages, both from the point of view of the relief of Parlia- mentary time, and further because, as in the case of the TariflE Advisory Committee, it enables highly specialized industrial and technical problems to be dealt with by impartial and experienced individuals. " Ibid. , p. 15.
25 See pp. 181-88.
? BRITAIN'S"FEUDALISTICSYSTEM" 165
Register of British Manufactures," published by the FBI, pointed with pride to the fact that "In the eight years of its existence the Federation has succeeded in becoming almost completely repre- sentative of the industries of the country. It has enrolled as its mem- bers some 195 Trade Associations and 2,100 individual firms. Taking both classes of membership, it is in touch, directly or in- directly, with at least 20,000 manufacturing firms covering every industry in the country, with a capital of nearly ? 6,000,000,000 (roughly, $30,000,000,000) and giving employment to over 5,000,- 000. " Since that time coverage has been made even more complete for industry, and membership has been constructed so as to draw in allied fields of trade, banking, and insurance. ^^
Members are grouped in two ways, geographically and function- ally (by trade and industry classifications). All the members who wish to do so may affiliate themselves directly with one of the twenty-three district offices. Each district office has a representative in the Grand Council. The districts are as follows (1937): ^^
London Birmingham Coventry Stoke-on-Trent Wolverhampton
and South Staffordshire Worcester
Bradford
Bristol
Hull Leeds Leicester Liverpool
Manchester Northampton Nottingham
Newcastle
Sheffield
Wales (South)
Home Counties (South) Home Counties (North) Scotland:
Glasgow and West of Scotland,
Edinburgh, Forth and Border Ireland: Belfast
Functionally, members are divided into Main Groups, and then into Sub-Groups or Sections (two cases only. Main Groups 5 and 9). There are twenty-four Main Groups, divided as follows:
1. Mining, Quarrying and Allied 2. Mechanical Engineering Trades 3. Shipbuilding, Marine Engi-
26 Examples of the inclusion of nonindustrial interests are provided by the estab- lishment of Main Groups of Agriculture, Banking and Insurance, and Public Utili- ties.
27 Taken chiefly from the 19th (1935) and the 20th (1936) Annual Reports of the FBI,
? i66 BRITAIN'S "FEUDALISTIC SYSTEM"
neering, Constructional Steel-
work and Allied Trades
4. Electrical Engineering
5. Iron, Steel and Allied Trades
6. Chemicals, Fertilisers and Ex-
plosives
7. FoodstuffsandTobacco
8. Agriculture
g. Building Trades
10. RubberandAsbestos 11. Public Utility
12. Miscellaneous
13. Textiles
14. Glass and Clay Products
15. Printing, Printing Ink Manu-
16. Paper Making, Manufactur- ing, Stationery, Envelope Making, Paper Bag Making, Box Making, and Allied Trades
17. BankingandInsurance
1 8. Woodworking
19. Non-Ferrous Metals
20. Oils and Fats (including Soap,
Candles, and Margarine), Oil
Seed Crushing and by-products 21. Cutlery, Jewellery, Electro-
Plate and Allied Trades
22. Brewing, Distilling and Allied
facturers. Type Founders, 23. Process Workers and Allied 24. Trades
Trades
Fisheries
Leather and Allied Trades
According to the by-laws, every member is allowed to join what- ever Main or Sub-Group he chooses, provided his firm or trade association falls into the proper classification. The governing body is the Grand Council. Under grant of Charter, issued 1923, the Grand Council consists of
the President, Past Presidents, Vice Presidents, Chairman and Vice Chairman of the Federation, Representatives of Federation Districts and Representatives of members who shall as far as possible be repre- sentatives of different industries. Until otherwise determined by the Grand Council, such representatives will approximately consist of the following:
(1) ArepresentativeofeachFederationDistrict.
(2) RepresentativesofAssociationMembersonthebasisofonerepre-
sentative for every 20,000 employers or part thereof engaged by
the Association Member of a Main Group or a Sub-Group.
(3) RepresentativesofIndividualMembersonthebasisofonerepre- sentative for every 40,000 employees or part thereof engaged by the individual members in a Sub-Group provided that no repre-
sentative is given if the part of 40,000 falls below 2,000. 2^
The Grand Council, which is the legally responsible governing body of the FBI, is possessed of power "to act in all matters in the name of the Federation," consisted at the beginning of the fiscal
28 Royal Charter of Incorporation and Schedule of By-Laws, p. 16.
? BRITAIN'S"FEUDALISTICSYSTEM" 167
year 1937, of 380 members elected by some 155 ^^ Main and Sub- Groups, 23 District Representatives, and 9 coopted ^? members in addition to the President, Past Presidents and Vice Presidents. Most of its executive and administrative powers, however, are dele- gated to the Executive Committee.
This body is made up of FBI officials, serving ex officio, and elected representatives from the several Main Groups on the prin- ciple of one representative for every 100,000 employees of Associ- ations and Individual Members, subject to the qualification that there should be a minimum of 2 allotted for each Main Group. Special appointments may be made from the districts, and a lim- ited number of cooptations may be added at the discretion of the Grand Council. For the year beginning 1937 the Executive Com- mittee was made up as follows: 5 ex officio; 112 elected; 7 district appointees; 13 coopted--a total of 137 members.
The significance of this arrangement can be appreciated when it is realized that, as the inner controlling group in the Grand Coun- cil, the Executive Committee is in a position not only to control policy, but also to guide the detailed work of the Federation. Most of this latter work "is carried out by standing Sub-Committees, ap- pointed by the Executive Committee. Each Sub-Committee con- sists as a rule of one representative of each Main Group, with the addition of a few specially qualified members. Each Sub-Commit- teecontrolsitsownsphereofactivities, . . . subjecttothegeneral supervision and control of the Executive Committee. " ^^ Special ad hoc Sub-Committees may be appointed by either or both the Executive Committee and the Grand Council to examine into and report on particular problems.
The work of the Federation, detailed through these various com- mittees, deals both "with subjects affecting industry as a whole or which affect more than one trade" and with "particular individual services for members, which are of a more private character. " ^^ How wide this dual coverage may be can be seen from a listing of
29 The listing of Sub-Groups is not altogether consistent from one year to the next, so that it is impossible to determine from the Annual Reports either the precise number or the specific basis of Sub-Group classification.
30 Members may be coopted to a number not to exceed ten.
31 Federation of British Industries, Export Register (London, 1920), p. 10.
32 Letter to the author written, June 11, 1937, by }. Armitage of the Technical
Department, FBL (The list is incomplete. )
? i68 BRITAIN'S "FEUDALISTIC SYSTEM"
the main committees, and a brief resume of the work undertaken in a few selected cases.
As of June, 1937, the following 14 standing committees were actively functioning: ^^
Commercial and Company Law Contracts
Coordinating of Statistics Empire
Exhibitions and Fairs Exporters' Shipping Industrial Arts Overseas
Production
Rating and Valuation Riparian Owners
Tariff and Commercial Treaties Taxation
Transport
To select at random, the Overseas Committee established in 1920 an Overseas Department "under the control of two Assistant Directors, who are responsible to the Main Overseas Committee
and its various Sub-Committees. " ^*
The Overseas Department was then divided into nine sections:
General Section American Section Empire Section
South European Section North European Section
Near East Section Far East Section East Indies Section Exhibition Section
The general section acts as a secretariat to the Directors and coordi- nates the works of the various geographical sections.
The geographical sections themselves are organized as intelligence centres for the various territories dealt with. They obtain information from the Commissioners and from other sources on all subjects which may interest Members, such as likely agents or customers, customs in- tricacies, local habits, trade movements, competition, local resources, etc.
The Exhibition Section deals with the technical work in connection with the organization of exhibitions abroad which the Federation of British Industries may desire to organise or participate in, such as the Athens Exhibition.
33 Idem. 3* Federation of British Industries, Export Register, p. 26.
? BRITAIN'S "FEUDALISTIC SYSTEM"
169
A special department of the Federation, acting in conjunction both with the Overseas Department and the Industrial Grouping Depart- ment, carries out the selection and despatch of trade inquiries and simi- lar particulars to those manufacturers likely to be interested. The sys- tem has been carefully evolved to avoid any possible delay, and also to ensure that every Member of the Federation who manufactures the goods referred to in the enquiry shall receive a notice of it. To make absolutely certain of this, details of all enquiries received during each week are printed in a confidential supplement to the official Bulletin of the Federation, which is sent out to Members every Monday. Neither in the circular letters nor in the Bulletin supplement are the names of en- quirers given, and all Members interested communicate immediately with the Head Office. A similar procedure is adopted in cases when overseas firms apply to act as agents for particular classes of British goods. 35
The system of Federation Commissioners, set up under this arrangement is equipped to do everything for the individual mem- ber but actually book orders. Located on the spot, and scattered throughout all the important commercial centers of the world, these Commissioners are required to establish centers for collecting and classifying information on movements and methods of trade, status of traders, local trade requirements, foreign competition; to recommend selling agents on request; to protect interests of Mem- bers and act for them in emergencies; to establish panels of legal advisers and interpreters; to build up libraries ''containing trans- lations of important documents, such as Customs regulations," and the like; assist in deposit and display of samples; cooperate with H. M. Government on behalf of Members; appoint advisory boards of prominent local business men sympathetic with British inter- ests; display and distribute Members' catalogues; provide meeting places and Information Bureau for Members and their Agents; and to keep tab on all trade statistics relevant to Member interests. ^(R)
35 Idem.
^^Idem. See also a little pamphlet called "The Federation of British Industries, the Organization That Every Manufacturer Should Have at His Back," containing a list of "What the FBI Can Do" and a sampling of Members' Appreciations. FBI aid includes everything down to help with passports and rebates "on the charges at over loo Continental hotels. " Members express appreciation for aid on such problems as dealing with "Deduction of Tax at Source," "Difficulties with Foreign Customs Au- thorities," "Difficulties with Overseas Agents" (in this case the FBI representative supplied, it appears, espionage--"confidential information"--service), "Postal Regu- lations," and "Taxation" ("relief to the extent of approximately two-thirds of the amount of tax paid in Australia").
? BRITAIN'S "FEUDALISTIC SYSTEM"
Any recent annual Report of the FBI will show how this type of work has been built up and elaborated over the intervening years. There is practically no phase of British industrial, commercial, and financial interests in any part of the world which is not touched upon by one or more of the services placed at the disposal of mem- bers through the FBI machinery. A special feature is the publica- tion of the FBI Register of British Manufacturers, begun in 1920, and revised annually. Especially close relations are maintained throughout all these overseas activities with the International Chambers of Commerce, local British Chambers of Commerce established in foreign countries, and foreign departments of for- eign chambers of commerce.
All this work overlaps, in many particulars that of other depart- ments, committees, and subcommittees. An interesting example is provided in the 1936 Annual Report in representations made to the Board of Trade of H. M. Government regarding taxes in Ru- mania held to discriminate unduly against foreign concerns. Nego- tiations were in the same year carried on with local tax authorities in Australia, the United State's, and France.
Another interesting example of how the FBI operates is found in the work of its Industrial Arts Committee. By 1935 some thirty industries were represented on this Committee. Activities reported on in 1936, included the following: cooperation with the Board of
*
Education in the writing of a 'Report on State Aided Art Educa-
tion," incorporating the Federation's proposal that "the Royal College of Art should be reconstituted and that its primary purpose should be the study of applied art with particular reference to the requirements of industry and commerce"; participation of the Committee Chairman, Mr. Charles Tennyson on the Board of Trade Council for Art and Industry; ^^ the establishment of a Scot- tish Sub-Committee for "securing and maintaining contacts be- tween designers and industrialists" in that area; preparation of a memorandum on the request of the Board of Trade dealing with
87 "The Council are taking steps to form a Register of qualified Industrial Design- ers, and invited the Federation to nominate three representatives of Industry to the Governing Body, which is to be responsible for the management of the Register. Three representatives from the textile, pottery and printing industries have accord- ingly been appointed, with alternatives to act in cases where the representatives come from the provinces. Mr. Tennyson is Chairman of the Governing Body of the Register. " FBI, 20th Annual Report, p. 17.
170
? BRITAIN'S"FEUDALISTICSYSTEM" 171
training of Managers and other Executives in various manufactur- ing industries in an "understanding of the design of industrial products"; supplying evidence to the Board of Trade on contribu- tions to industrial arts given by Museums; awarding prizes "to students of the Royal College of Art for industrial designers"; securing employment for art students. ^^
It is perhaps unnecessary to trace much further the detailed work of individual committees and their various subcommittees. What has been given is illustrative of the wide-ranging character of the work accomplished, and the totalitarian outlook of its guiding lights. The picture needs, however, to be extended slightly to show that the work of the Federation does not stop with the mere col- lection of information, and the giving of aid and advice to mem- bers. The Federation has, of course, done a great deal by these means to create a "climate of opinion" which is coherent and pro- motional not only of specific interests but also of the general social outlook of organized British industry. But within this atmosphere it has proceeded step by step to manipulate policy with a view to the consolidation of business stakes on issues that reach to the roots of the British political system.
Three examples will suffice to show the character of the objec- tives and the nature of the alignments sought, in carrying out those objectives: the attitude toward organized labor; relations with the government in peace times; and the quality of the "cooperation" with government in times of war emergency.
THE ATTITUDE TOWARD ORGANIZED LABOR
It was hoped by some in the formative days of the FBI that the new association might include "not merely the representatives of capital but those of labour. " Under the stress of war conditions, trade union leaders had shown a conciliatory attitude. Why not hope, then, to bring about "something approaching a partnership between capital and labour in place of the armed neutrality, which is the best that can be hoped for under present circumstances. " ^(R) To this end the FBI gave evidence before the government commit- tee dealing with the Whitely Councils in 1917, and aided in the
38 Idem.
39 "Federation of British Industry," Engineer (London), Aug. 11, 1916.
? 172 BRITAIN'S "FEUDALISTIC SYSTEM"
formation of this wartime compromise with the "company-union" ideal. ^<>
While there was little opposition amongst employer circles to the Whitely Committee idea as such, the trade unions appear to have been entirely too strong and too class conscious, even in war times, for the idea of "labor-capital partnership" to make much headway. At any rate, not much seems to have come out of the National Alliance of Employers and Employed; this was set up in
1917 and designed to have equal representation from both groups, in order to "come together in friendly consultations on labour problems. " *^
Failure to work harder along this line was due, however, to a de- cision to specialize the functions of the FBI on business, legislative, and trade matters, and to leave labor relations to the constituent trade associations and other central organizations which they might devise. In August, 1917, the Executive Council resolved: "In re- gard to labour matters, the FBI will not concern itself or interfere with any questions affecting working conditions or rates of pay, except at the request of the Employers' Associations or Federations established to deal with such questions. Any such request should, however, be addressed to the FBI through the medium of the Em- ployers' Advisory Council, which should be invited to consider and advise the FBI on such matters. " ^^
In 1919, members of the FBI participated in setting up its labor relations alter ego, the National Confederation of Employers' Or- ganizations (subsequently renamed the British Employers' Con- federation). Its purpose was to coordinate the parallel activities of employers' associations (made up of members who were also, for
40 These were set up on a national, a district, and a works basis, with representation drawn equally from trade unions and employer associations. For a summary see Characteristics of Company Unions (Bulletin No. 364, Division of Industrial Rela- tions, U. S. Dept. of Labor, Bureau of Labor Statistics, Washington, D. C. , 1935). See also "Joint Industrial Councils in Great Britain," International Labour Review, Dec, 1921, pp. 563-78.
41 ". . . the Federation has taken practical steps towards bringing about a real co- operation of Capital and Labour by assisting in the formation of the National Al- liance of Employers and Employed. This body consists of representatives of employ- ers' organizations and trade unions, and practically all the employers on the Executive Committee are Members of the Federation. " Federation of British Industries, Export Register, p. 20.
42 Correspondent.
? BRITAIN'S'FEUDALISTICSYSTEM" 173
the most part, members o? the FBI) specifically concerned with negotiations with Trade Unions, and to treat "questions of wages and conditions of employment as settled through collective bar- gaining betwen employers and employed. " ^^ According to its 4th Annual Report (June, 1920), the FBI had established a working liaison with the NCEO concerned primarily with exchange of in- formation. "A Joint Committee has been established and meets for regular discussions. "
With the great general strike of 1926, and the formation of the National Government under the direction of Ramsay MacDonald, the British Employers' Confederation began to take on a more menacing tone. Much of the subsequent antilabor legislation was inspired directly by outstanding figures in the FBI machinery. Attempts at partial conciliation, such as those involved in the famous Mond-Turner Conversations on Industrial Relations run- ning over 1928-29, had given way increasingly to attitudes border- ing on open hostility. ^*
Members of the FBI have not relaxed their efforts with a mere negative attitude towards labor. Many of them feel called upon to take measures insuring an entirely different attitude in the future through apprenticeship training programs, a special propaganda funneled through the public school system,*^ and the use of various media for public-relations work. It is very difficult, in the face of typical British secretiveness, to learn much about these plans. But from such indications as can be gleaned here and there, the trend of thought and effort seems to be along the line of specialized train-
43 Idem.
44 Reporting to the 32d Annual Convention of the NAM, meeting at Chattanooga, Tenn. , in 1927, the Secretary, George S. Boudinot, stated, "Your counsel observed a revolutionary change in the control of labor and employer combinations in England and Italy. A striking change, not confined to non-members of labor organizations, has taken place in British public opinion respecting trade union regulations. After delib- erate consideration, powerful trade union organizations have abandoned the Labor Party because of the reaction within to the left wing of radicalism and the Soviet drive to capture the British trade union movement. Furthermore, the British Parlia- ment, by its enactment of July 27, last, has severely limited the political and economic activities of trade unions.
"
45 Another American observer, P. Harvey Middleton, writing in American Indus- tries, Nov. , 1924, on "Great Britain's Loud Speaker" (the FBI), listed among the FBI activities of merit, "meetings between the FBI Education Committee and the As- sociation of Headmasters of Public and Secondary Schools to discuss suggestions for bringing the schools of the country into closer relation with industry. "
? 174
BRITAIN'S "FEUDALISTIC SYSTEM"
ing of the young that they may in the future follow the business men as "their natural leaders," instead of their own Trade Union representatives. *(R)
It is significant that this trend comes at a time when class- conscious employer organizations have been established with cen- tral headquarters, capable of both creating a climate of opinion amongst employers and of exercising some degree of united action in matters bearing on the combined interests of British employers as a whole. But it is of far greater import that these developments occur simultaneously with the cumulative dovetailing of organized business and the formal political machinery of the British imperial system.
RELATIONS WITH THE GOVERNMENT: IN TIMES OF PEACE
This is not the place to discuss in detail the extent to which Tory domination in England has woven the political and economic ap- paratus of class interests into a unified system of social control. The details are too numerous, in part too well concealed, and in part too difficult to trace for elaboration here. Moreover, portions of the story have been told adequately in a series of recent books. *^
It will suffice here to summarize a few of the obvious trends in the British concentration movement, and to point out the role the FBI comes to assume as the political implications of these trends come ever more clearly to the fore.
1. The dominating concerns in the inner councils of the FBI are those organized on a monopoly or quasi-monopoly footing, or occupying leading positions in the rapidly spreading networks of cartel and cartel-like controls. This process was particularly rapid in the postwar years. 'Tor the first time since the earlier days of capitalism," wrote Professor Levy in 1927, a "large section of Eng- lish trade has become overrun with monopolist organisations. . . . The World War, its aftermath, and the world-wide economic crisis, lasting now for more than six years, have strengthened these tend-
46 "For my part I cannot look upon the evil or foolish faces of some of the leaders of labour without a sense of deep humility. How greatly must we capitalist employers have neglected our duty, if the workers choose to follow, not us their natural lead- ers, but such men as these. " Austin Hopkinson, Religio Militis (London, 1927), p. 113.
47 See, in particular, Simon Haxey, Tory M. P. (London, 1939), and Ernest Davies, National Capitalism (London, 1939).
? BRITAIN'S"FEUDALISTICSYSTEM" 175
encies. " *^ And since Levy wrote, as Lucas *(R) and others have shown, these tendencies have been doubly accelerated by the events of the great depression and the outbreak of the Second World War.
Typical of the combines which operate monopolistically are such concerns as Imperial Chemicals (capitalized around ? 75,000,- 000), Vickers in the iron and steel industry, Lever Brothers in the soap industry, J. and P. Coats in the thread industry, and the great banking systems with headquarters in London.
2. As Lucas has shown in his illuminating study, the trade asso- ciation "is without question the most common medium of control in the present time" ^? in Great Britain. This is to say, the British trade association typically begins its existence by exercising the powers and seeking to gain the restrictive objectives which the American trade association was able to achieve only after NRA. Hence for all practical purposes, these price-fixing, output- restricting, market-area allocating bodies, operating with the use of such familiar devices as resale price maintenance, tying contracts, rebate systems, trade boycotts, and the like, are cartel-like bodies. Nothing basic in principle separates their forms of organization nor the methods of operation from the cartel. It is highly significant that the two terms, trade associations and cartels, are used more or less interchangeably in the general British literature devoted to discussing these trends.
3. The trade association device has been growing in Britain, as indicated above (p. 157) by leaps and bounds. Growth here, as else- where, is along three principal lines. Every industry and trade, both locally and nationally, acquires its appropriate association; the pressure on "outsiders" to join tends increasingly to expand the coverage of each appropriate association so as to include every single business concern falling in each separate classification or cate- gory; these tend increasingly to band together first locally or region- ally, then nationally by industries, trades, and (cross-sectional) regions, in peak or central bodies, such as the FBI. Scattered, overlapping, confused as the organizational network is in many respects, still one finds in the literature clear indications that these
three trends are everywhere convergent and unidirectional.
4. Itisequallyclearthatthebulkofthelargerandmorepower-
48 Levy, Monopolies, Cartels, and Trusts, pp. 325-26.
49 Industrial Reconstruction. so ibid. , p. 203.
? 176 BRITAIN'S "FEUDALISTIC SYSTEM"
ful trade associations are dominated as a rule by a few large inside concerns. The examples offered by Lucas of the methods by which Lever Brothers dominates the soap industry through the United Kingdom Soap Manufacturers' Association, the Salt Union its in- dustry through the Salt Manufacturers' Association, and Imperial Chemicals the ammonia industry through the Sulphate of Am- monia Federation, Ltd. , are merely spectacular instances of tech- niques which have become extremely widespread throughout the British Isles. So far as this is true--and the general trends seem to be in this direction--the trade association becomes in effect a cartel instrument to promote the monopoly policies of a single or a small group of giant concerns.
5. Somewhatthesamethingcanbesaidofthecentralandpeak associations, such as the FBI. The large concern has an opportunity to make its weight felt first through a sort of triple membership: as individual corporate member, as member of constituent trade associations, and through membership in the regional bodies. Vot- ing power, in the second place, for both the Grand Council and the Executive Committee, is on a basis proportional to number of workmen employed, a practice which inevitably throws the center of gravity in the hands of the large concerns. Further, analysis will show that the work undertaken by the various subcommittees has to do in large part with matters which can only be of advantage to the large concern equipped with great resources. Finally, the con- stitution and by-laws of the FBI are subject to change by the inside groups of the Grand Council and the Executive Committee, in- cluding extension of powers of appointment and (in particular) cooptation of members to key positions.
6. The influence of the FBI in governmental circles appears to have become exceedingly great. It is expressed directly via two routes. First, in the number of positions its members hold on gov- ernmental committees and the extent to which its representations before governmental bodies result in decisions and pursuit of poli- cies favorable to its members and its general program; and second, the power possessed by its own officers, members of the Grand Council, Executive Committees, and various Subcommittees, on the one hand, and representatives of its leading companies and
trade associations on the other, to influence governmental policies as Members of Parliament.
? BRITAIN'S"FEUDALISTICSYSTEM" 177 As for the first line of cross-fertilization, the FBI claims to be
represented directly on the following governmental bodies:
Board of Trade: Board of Trade Advisory Council Board of Trade Council for Art and Industry
^'^
War Office: Technical co-ordinating Committee on General Stores Motor Transport Co-ordinating Committee
Ministry of Health: Joint Advisory Committee on River Pollution Town and Country Planning Advisory Committee
Mniistry of Agriculture: Standing Committee on River Pollution
Apparently representation is much wider than such a listing would appear to show. References are found scattered all through the literature, showing membership on ad hoc and smaller stand- ing committees established not only by the national, but also by numerous county, municipal, and other local governing bodies. But of equal importance would appear to be the effect of its insti- tutionalized pressure and lobby activities. A few examples taken from a single publication will suffice to show the general picture: "
Fiscal Policy: In 1930 the FBI secured an overwhelming mandate from its members to demand a change in our National Fiscal Policy. The publication early in 1931 of its proposals in "Industry and the Nation" was followed by an intensive campaign in Parliament and the Press, and in the Industrial districts. A special pamphlet 'The Passing of Free Trade" was prepared to assist speakers on the subject.
The National Government, returned to power in 1931, adopted the FBI's main recommendations, and Industry is now reaping substan- tial benefits from the protection of the Home market.
Imports: On the passing of the Import Duties Act 1932, the FBI set up a special department to assist members in preparing applications to the Import Duties Advisory Committee. . . . Concessions to the Dominions and foreign countries facilitating imports into Home markets are closely watched. The FBI has generally been successful in convincing the Government that no such agreement should be concluded before the industries affected have had an opportunity of producing information as to the effect of such imports upon British industry.
Foreign Countries: The FBI is the main channel of consultation with the Government in Commercial Treaty negotiations, and it also pro- vides special facilities for international arrangements within particu- lar industries.
51 "Industry and Action," pamphlet of the FBI (undated), p. 11. 52 Ibid. , pp. 4-5.
? 178 BRITAIN'S 'TEUDALISTIC SYSTEM"
De-Rating of Machinery: The Rating and Valuation Act of 1925 records a notable achievement for Industry. The Bill introduced, after prolonged negotiations, by the Government contained a defini- tion of the machinery to be included for Rating by the Local Author- ities, which embodied the essentials of the FBI proposals.
Similar to these are the claim of successful cooperation with the government in matters dealing with exports, Empire problems, taxation, commercial law. Various annual reports elaborate and detail the picture at length. One writer summarizes FBI activities in a typical case as follows:
In the determination of the scope and nature of that policy [protection] the FBI has played a triumphant part. It has not hesitated to boast of its successful influence upon the Government. . . . By creation of the Tariff Advisory Committee with power to alter tariffs without reference to Parliament, the Government has in fact handed over to a body in close association with the owners of industry an important legislative function. ^*
The other side of this picture is the influence of organized busi- ness circles in the formation of governmental policy through mem- bership in Parliament. A recent compilation from the Directory of Directors, the Stock Exchange Year-Book, and other sources shows that of 415 Parliamentary supporters of the National Government, some 181 possessed 775 corporate directorships. ^* These ranged over the entire business field, but appear to be largely concentrated in the big, national and Empire-wide trading, shipping, manufac- turing, and financial enterprises. Through family and almost in- definitely ramifying intercorporate connections, corporate influ- ence of these business M. P. 's likewise extends to the outer reaches of the entire British economic system. Thus in large--perhaps in decisive--part the influences, personalities, interests, and powers that go to shape up policies of individual business firms, the trade associations to which they belong, and the central policy- coordinating bodies, such as the FBI which they direct, go also to determine the objectives of governmental policies, and to guide and control the execution of those policies through the complex
machinery of government administration and regulation.
7. Someconceptionofthelong-runimplicationsofthisfusionof
53 H. R. Greaves, Reactionary England (London, 1936), p. 146. 64 Haxey, op. cit. , p. 37.
? BRITAIN'S"FEUDALISTICSYSTEM" 179
business and government may be had by looking over the various schemes for industrial reorganization that have come to the fore with increasing frequency in recent years. Such plans as embodied in the Coal Mines Acts, the Iron and Steel Reorganization Scheme, the "Reconstruction Levy" and various schemes proposed for re- organizing different industries by PEP (Political and Economic Planning) call for no less than extension of the principle of cor- porate organization to entire industries. It is worth while pointing out the following as typical of all such plans:
They are initially advocated, promoted, and lobbied for primarily (in some cases exclusively) by the larger, better organized and more powerful business interests. "Liberal" and labor groups have assented to such plans only tardily, only with many stipulated conditions (mostly ignored) or not at all.
They all visualize the establishment of a central governing body, capable in whole or in part of restricting competition, controlling ca- pacity, regulating markets, prices and production.
They all wish for governmental sanctions in enforcing compliance with decisions arrived at, but wish freedom from "government coer- cion" in the process of exercising the decisions.
The central governing authorities projected are made up exclusively of business men, who govern the industry or trade as a unit. (The Board of Trade, or similar bodies are only to "regulate" in a general sense of the term. )
Central peak associations, such as the FBI and those with which it is affiliated, have not opposed any of these schemes on principle. On the contrary, except for specific features of specific programs, they have uniformly favored such plans, the moving figures in these schemes being simultaneously the leading lights in the central associations.
They do not, as a rule, oppose very considerable extension of govern- mental influence (so long as the government is "sympathetic") along what might be called "auxiliary lines. " For example, they did not oppose:
a) The establishment of governmentally owned, or "mixed" (owned partly by government and partly by private interests) enterprises, such as The London Passenger Transport Board, The Central Electricity Board and The London Port Authority (mixed enter- prises). The Post Office (which includes the telephone and tele- graph systems of Great Britain. (Government ownership. )
b) Government aid in establishing monopolies in the home market (autarchy), and protection in Empire and foreign markets.
c) Provision of authority and machinery for punishment of "out-
--
? i8o BRITAIN'S "FEUDALISTIC SYSTEM**
siders" through regular legal channels, or provision by govern- ment with powers for eliminating the problem of the "outsider" entirely.
Somewhat different in origin were the Agricultural Marketing Acts ^^ tracing back to 1931. Yet under the National Government, these Acts, which were intended to make possible organization of farmer-producers into cooperative or semicooperative bodies, had come largely under the influence of packing houses, agricultural processors and distributors, and other allied interests. ^^ Hence, even this application of the new type of ''corporative" organization has come under the domination of groups whose first allegiance is to the interests and outlook represented by the Federation of British Industries.
8. There remains the fact to be mentioned, alluded to above, that opposition to this cumulative fusion of governmental and highly organized business systems seems almost completely to have dwindled away. Conservative and Tory elements want the new forms of corporate organization, and they desire the cooperation of the government in effecting the necessary changes against recal- citrant minority interests. And labor and liberal circles have ap- parently concurred in the movement, having asked--in the main only for minor safeguards for their interests. The famous Liberal Report of 1926 recommended autonomous and "self-governing" bodies as one of the leading ways of solving Britain's industrial dilemma. ^^ The first comprehensive plans for industrial reorgan- ization along lines slowly evolved by monopoly-oriented business organization were laid down by the British Labour Party in 1931.
In a speech delivered, significantly enough, at the University of Berlin in 1926, the great British liberal and iconoclast J. M. Keynes held "that in many cases the ideal size for the unit of control
55 Different only in the sense that the Agricultural Marketing Acts were promoted primarily by farming interests, while the industrial reorganization schemes were originally the Labour Government's answer to the various proposals which had been advanced by private industry. Needless to say, the form in which the Labour Govern- ment proposed industrial reorganization was not far removed from that proposed by a private enterprise, as may be shown by the nature and quality of the remarks and criticisms made at the time in business circles.
56 See pp. 183-86.
57 Britain's Industrial Future (London, 1938), the Report of the Liberal Industrial Inquiry; see in particular Books II and III. In its conclusions it refers to "the growth of cooperative self-government, which is the true aim of industrial policy" (p. 466).
? BRITAIN'S"FEUDALISTICSYSTEM" 181
and organisation lies somewhere between the individual and the modern State. I suggest, therefore, that progress lies in the growth and the recognition of semi-autonomous bodies within the State . . . a return, it may be said, towards medieval conceptions of separate autonomies. " ^^ Later he was to become even more ex- plicit when, on the eve of the outbreak of the Second World War which he had forecast so many years before, he declared that an "amalgam of private capitalism and State Socialism . . . is the
^^
only practicable recipe for present conditions. "
Just how far State control was to reach in this British version of
National Socialism it is hard to gather from the writings of Mr. Keynes or his contemporaries, but clearly self-government in busi- ness under the auspices of a regime determined "to make the pri- vate property system work better" ^? (italics in original) is en route to the goal. All of which does not prove, of course, that all British business is in favor either of the abandonment of "free competi- tion" and "laissez faire" on the one hand, nor of the particular forms under which they cede control to central policy-controlling bodies on the other. An examination of any of the numerous pro- posals for control in any given industry will put the reader's mind at rest on that score. ^^ But what is clear, is that the center of gravity has shifted in this direction, and that on the present showing there will shortly be no alternative to the British business man except to make the most of it.
RELATIONS TO THE GOVERNMENT: WAR TIMES
British war organization rests squarely on the associational ma- chinery evolved over the peacetime interlude. A recent issue of the
58 True, the "criterion of action" of each "is solely the public good as they under- stand it" but what public-relations counselor would oflEer any other explanation of any given act of any represented business? See J. M. Keynes, The End of Laissez- Faire (London, 1926), pp. 41-42.
59 Debate between J. M. Keynes and Mr. Kingsley-Martin on "Democracy and Efficiency," New Statesman and Nation, Jan. 28, 1939. Mr Keynes hopes that this amalgam in defense of "private property and capitalism" will be "liberal," so that he may refer to it as "liberal socialism," and by "liberal" he means nonmonopolisti- cally organized capitalism. Mr. Keynes has not been called a "semanticist. "
60 Idem.
61 See discussions relating to the establishment of the Petroleum, Cotton, and Ship- ping Control Boards in recent issues of The Economist, and New Statesman and Na- tion, and similar sources.
? i82 BRITAIN'S 'FEUDALISTIC SYSTEM**
Economist refers to this as the Conservative program which comes to rest in a
set of notions that sees its ideal of an economic system in an orderly organisation of industries, each ruled feudally from above by the busi- ness firms already established in it, linked in associations and confedera- tions and, at the top, meeting on terms of sovereign equality such other Estates of the Realm as the Bank of England and the Government. Each British industry, faithful to the prescription, has spent the past decade in delimiting its fief, in organising its baronial courts, in secur- ing and entrenching its holdings and in administering the legal powers of self-government conferred on it by a tolerant State. This is the order of ideas that has transformed the trade association from a body of doubt- ful legality, a conspiracy in restraint of trade, into a favoured instru- mentality of the State, until membership in such a body has become as necessary to the business man who wishes to be successful as an old school tie has been to the ambitious Conservative politicians. It is the order of ideas that led to the Import Duties Act being drafted in such a way as to put a premium on self-seeking monopolies and a discount on the public interest; that turned "high profits and low turn-over" into the dominant slogan of British business; that raised the level of British costs to the highest in the world. It is a set of ideas that is ad- mirable for obtaining security, "orderly development" and remunera- tive profits for those already established in the industry--at the cost of an irreducible body of general unemployment. It is emphatically not a set of ideas that can be expected to yield the maximum of production, or to give the country wealth in peace and strength in war. ^^
In an earlier issue ^^ the Economist pointed out that this comes out simply to mean that
under the cover of wartime needs, the principle of Self-government of Industry has been given an official blessing. This is, in effect, merely the expansion and continuation of the Industrial policy that has been pur- sued by the Conservative Government for the past eight years, for in their hands control has nearly always meant the conferment of legal privileges on the organized producers already established in the indus- try . . . industries are being encouraged to control themselves. ^*
62 "A Check on Production," Economist, June 15, 1940.
63 "The Economic Front," Economist, Dec. 9, 1939.
S64 While government officials are thinking of post war planning, comments ISlew
Statesman and Nation (March 8, 1941), "the hard-faced men from the Midlands quietly get on with their job, Mr. Bevin and the other Socialist leaders utter blood- curdling threats, but the monopoly interests (just as in America under the NRA) are taking steps to safeguard their interests. We are to have planning--that is the present so-called controls, which are merely a glorified form of private monopolies
? BRITAIN'S "FEUDALISTIC SYSTEM' 83
In contrast to the last war, when "the controllers were selected in the main from outside the industry to be controlled," in "this war industry is controlling itself.
more frequently and more insistently with the passage of time of compelling all firms to belong to the appropriate subsidiary or- ganization, and of laying out policies with which all members would be compelled to comply, the response has been negative.
The arguments against compulsion are of the usual order: It would tend towards rigidity and bureaucratization; it would curb initiative and slow down progress; it would result in a highly arbi- trary classification of industry and would unduly circumvent the activities of many types of enterprises; it would enhance the power of the state, and thus serve to introduce at once the stultification of entrepreneurial action and the regimentation held characteristic of political administration. All these points are emphasized in the special Report of the Committee on the Organisation of Industry previously quoted, >> where it is held that the "special characteristics of our people and our system of government import a fundamental difference into the conditions which have to be met" from those obtaining in other countries where compulsion has been resorted to in these matters.
With that lack of candor characteristic of British business litera- ture, the Federation of British Industries hesitates even to commit itself to "self-government in business. " Yet the whole of the pro- gram which its deliberations, year after year, lay bare, are identical in tone, emphasis, and direction with what the Germans called Selbstverwaltung (literally "self-management") in business, and the Americans term "self-government" in business. It is even clear that many of its leading figures anticipate utilizing the formal powers of the state to enforce decisions rendered by the majority of an organized industry relative to interests affecting the industry or trade as a whole. To the contention of the committee majority in the Report cited, that "The procedure of putting into force by Order in Council the decisions of the majority of an industry, when
23 Ibid. , pp. 6-7.
? i64 BRITAIN'S "FEUDALISTIC SYSTEM"
approved by an appointed Tribunal and by the President of the Board of Trade, would be an undesirable addition to bureaucratic powers," Lord Melchett, of the gigantic firm of Imperial Chemi- cals, gave the rejoinder that in his "opinion this method is the most convenient and would further protect industries against the danger of their affairs being made the subject of party controversy in Par- liament. "Furthermore, procedure by Order in Council" does not, he said, involve "any extension of bureaucratic powers, since only an individual industry can frame or accept a scheme. " ^^
There can be no doubt that Lord Melchett spoke at that time for large and growing sections of British industry. Subsequent develop- ments have fully backed up the position he took, not by compro- mising the control of private enterprise over its leading policies, but by centralizing its direction. ^^
Before turning to consider somewhat more fully the way in which this has been accomplished, it will be well to obtain a clearer picture of how the FBI is organized to fulfill its stated functions.
ORGANIZATION AND PROCEDURE
By 1920 the organization of the FBI as it now stands was prac- tically complete, only minor alterations having been introduced after that time. Membership may be either on a trade association or individual firm basis. This doubtless means a great deal of dupli- cate membership, inasmuch as the individual firm members are also in nearly all cases members of the constituent trade associa- tions. Since in the main, only the large firms could afford to belong directly to the FBI, such dual membership put them into a position of commanding importance in the manipulation of significant policy issues.
To repeat, membership coverage has long been regarded as in- clusive of practically all British industry. The 1925 "Yearbook and
24 It is interesting to note that Lord Melchett attributes his favorable attitude towards the Order in Council to practices inaugurated under the National Govern- ment: ". . . the extension of procedure by Order in Council on the advice of statu- tory committees, which we have witnessed since the National Government took office, has distinct advantages, both from the point of view of the relief of Parlia- mentary time, and further because, as in the case of the TariflE Advisory Committee, it enables highly specialized industrial and technical problems to be dealt with by impartial and experienced individuals. " Ibid. , p. 15.
25 See pp. 181-88.
? BRITAIN'S"FEUDALISTICSYSTEM" 165
Register of British Manufactures," published by the FBI, pointed with pride to the fact that "In the eight years of its existence the Federation has succeeded in becoming almost completely repre- sentative of the industries of the country. It has enrolled as its mem- bers some 195 Trade Associations and 2,100 individual firms. Taking both classes of membership, it is in touch, directly or in- directly, with at least 20,000 manufacturing firms covering every industry in the country, with a capital of nearly ? 6,000,000,000 (roughly, $30,000,000,000) and giving employment to over 5,000,- 000. " Since that time coverage has been made even more complete for industry, and membership has been constructed so as to draw in allied fields of trade, banking, and insurance. ^^
Members are grouped in two ways, geographically and function- ally (by trade and industry classifications). All the members who wish to do so may affiliate themselves directly with one of the twenty-three district offices. Each district office has a representative in the Grand Council. The districts are as follows (1937): ^^
London Birmingham Coventry Stoke-on-Trent Wolverhampton
and South Staffordshire Worcester
Bradford
Bristol
Hull Leeds Leicester Liverpool
Manchester Northampton Nottingham
Newcastle
Sheffield
Wales (South)
Home Counties (South) Home Counties (North) Scotland:
Glasgow and West of Scotland,
Edinburgh, Forth and Border Ireland: Belfast
Functionally, members are divided into Main Groups, and then into Sub-Groups or Sections (two cases only. Main Groups 5 and 9). There are twenty-four Main Groups, divided as follows:
1. Mining, Quarrying and Allied 2. Mechanical Engineering Trades 3. Shipbuilding, Marine Engi-
26 Examples of the inclusion of nonindustrial interests are provided by the estab- lishment of Main Groups of Agriculture, Banking and Insurance, and Public Utili- ties.
27 Taken chiefly from the 19th (1935) and the 20th (1936) Annual Reports of the FBI,
? i66 BRITAIN'S "FEUDALISTIC SYSTEM"
neering, Constructional Steel-
work and Allied Trades
4. Electrical Engineering
5. Iron, Steel and Allied Trades
6. Chemicals, Fertilisers and Ex-
plosives
7. FoodstuffsandTobacco
8. Agriculture
g. Building Trades
10. RubberandAsbestos 11. Public Utility
12. Miscellaneous
13. Textiles
14. Glass and Clay Products
15. Printing, Printing Ink Manu-
16. Paper Making, Manufactur- ing, Stationery, Envelope Making, Paper Bag Making, Box Making, and Allied Trades
17. BankingandInsurance
1 8. Woodworking
19. Non-Ferrous Metals
20. Oils and Fats (including Soap,
Candles, and Margarine), Oil
Seed Crushing and by-products 21. Cutlery, Jewellery, Electro-
Plate and Allied Trades
22. Brewing, Distilling and Allied
facturers. Type Founders, 23. Process Workers and Allied 24. Trades
Trades
Fisheries
Leather and Allied Trades
According to the by-laws, every member is allowed to join what- ever Main or Sub-Group he chooses, provided his firm or trade association falls into the proper classification. The governing body is the Grand Council. Under grant of Charter, issued 1923, the Grand Council consists of
the President, Past Presidents, Vice Presidents, Chairman and Vice Chairman of the Federation, Representatives of Federation Districts and Representatives of members who shall as far as possible be repre- sentatives of different industries. Until otherwise determined by the Grand Council, such representatives will approximately consist of the following:
(1) ArepresentativeofeachFederationDistrict.
(2) RepresentativesofAssociationMembersonthebasisofonerepre-
sentative for every 20,000 employers or part thereof engaged by
the Association Member of a Main Group or a Sub-Group.
(3) RepresentativesofIndividualMembersonthebasisofonerepre- sentative for every 40,000 employees or part thereof engaged by the individual members in a Sub-Group provided that no repre-
sentative is given if the part of 40,000 falls below 2,000. 2^
The Grand Council, which is the legally responsible governing body of the FBI, is possessed of power "to act in all matters in the name of the Federation," consisted at the beginning of the fiscal
28 Royal Charter of Incorporation and Schedule of By-Laws, p. 16.
? BRITAIN'S"FEUDALISTICSYSTEM" 167
year 1937, of 380 members elected by some 155 ^^ Main and Sub- Groups, 23 District Representatives, and 9 coopted ^? members in addition to the President, Past Presidents and Vice Presidents. Most of its executive and administrative powers, however, are dele- gated to the Executive Committee.
This body is made up of FBI officials, serving ex officio, and elected representatives from the several Main Groups on the prin- ciple of one representative for every 100,000 employees of Associ- ations and Individual Members, subject to the qualification that there should be a minimum of 2 allotted for each Main Group. Special appointments may be made from the districts, and a lim- ited number of cooptations may be added at the discretion of the Grand Council. For the year beginning 1937 the Executive Com- mittee was made up as follows: 5 ex officio; 112 elected; 7 district appointees; 13 coopted--a total of 137 members.
The significance of this arrangement can be appreciated when it is realized that, as the inner controlling group in the Grand Coun- cil, the Executive Committee is in a position not only to control policy, but also to guide the detailed work of the Federation. Most of this latter work "is carried out by standing Sub-Committees, ap- pointed by the Executive Committee. Each Sub-Committee con- sists as a rule of one representative of each Main Group, with the addition of a few specially qualified members. Each Sub-Commit- teecontrolsitsownsphereofactivities, . . . subjecttothegeneral supervision and control of the Executive Committee. " ^^ Special ad hoc Sub-Committees may be appointed by either or both the Executive Committee and the Grand Council to examine into and report on particular problems.
The work of the Federation, detailed through these various com- mittees, deals both "with subjects affecting industry as a whole or which affect more than one trade" and with "particular individual services for members, which are of a more private character. " ^^ How wide this dual coverage may be can be seen from a listing of
29 The listing of Sub-Groups is not altogether consistent from one year to the next, so that it is impossible to determine from the Annual Reports either the precise number or the specific basis of Sub-Group classification.
30 Members may be coopted to a number not to exceed ten.
31 Federation of British Industries, Export Register (London, 1920), p. 10.
32 Letter to the author written, June 11, 1937, by }. Armitage of the Technical
Department, FBL (The list is incomplete. )
? i68 BRITAIN'S "FEUDALISTIC SYSTEM"
the main committees, and a brief resume of the work undertaken in a few selected cases.
As of June, 1937, the following 14 standing committees were actively functioning: ^^
Commercial and Company Law Contracts
Coordinating of Statistics Empire
Exhibitions and Fairs Exporters' Shipping Industrial Arts Overseas
Production
Rating and Valuation Riparian Owners
Tariff and Commercial Treaties Taxation
Transport
To select at random, the Overseas Committee established in 1920 an Overseas Department "under the control of two Assistant Directors, who are responsible to the Main Overseas Committee
and its various Sub-Committees. " ^*
The Overseas Department was then divided into nine sections:
General Section American Section Empire Section
South European Section North European Section
Near East Section Far East Section East Indies Section Exhibition Section
The general section acts as a secretariat to the Directors and coordi- nates the works of the various geographical sections.
The geographical sections themselves are organized as intelligence centres for the various territories dealt with. They obtain information from the Commissioners and from other sources on all subjects which may interest Members, such as likely agents or customers, customs in- tricacies, local habits, trade movements, competition, local resources, etc.
The Exhibition Section deals with the technical work in connection with the organization of exhibitions abroad which the Federation of British Industries may desire to organise or participate in, such as the Athens Exhibition.
33 Idem. 3* Federation of British Industries, Export Register, p. 26.
? BRITAIN'S "FEUDALISTIC SYSTEM"
169
A special department of the Federation, acting in conjunction both with the Overseas Department and the Industrial Grouping Depart- ment, carries out the selection and despatch of trade inquiries and simi- lar particulars to those manufacturers likely to be interested. The sys- tem has been carefully evolved to avoid any possible delay, and also to ensure that every Member of the Federation who manufactures the goods referred to in the enquiry shall receive a notice of it. To make absolutely certain of this, details of all enquiries received during each week are printed in a confidential supplement to the official Bulletin of the Federation, which is sent out to Members every Monday. Neither in the circular letters nor in the Bulletin supplement are the names of en- quirers given, and all Members interested communicate immediately with the Head Office. A similar procedure is adopted in cases when overseas firms apply to act as agents for particular classes of British goods. 35
The system of Federation Commissioners, set up under this arrangement is equipped to do everything for the individual mem- ber but actually book orders. Located on the spot, and scattered throughout all the important commercial centers of the world, these Commissioners are required to establish centers for collecting and classifying information on movements and methods of trade, status of traders, local trade requirements, foreign competition; to recommend selling agents on request; to protect interests of Mem- bers and act for them in emergencies; to establish panels of legal advisers and interpreters; to build up libraries ''containing trans- lations of important documents, such as Customs regulations," and the like; assist in deposit and display of samples; cooperate with H. M. Government on behalf of Members; appoint advisory boards of prominent local business men sympathetic with British inter- ests; display and distribute Members' catalogues; provide meeting places and Information Bureau for Members and their Agents; and to keep tab on all trade statistics relevant to Member interests. ^(R)
35 Idem.
^^Idem. See also a little pamphlet called "The Federation of British Industries, the Organization That Every Manufacturer Should Have at His Back," containing a list of "What the FBI Can Do" and a sampling of Members' Appreciations. FBI aid includes everything down to help with passports and rebates "on the charges at over loo Continental hotels. " Members express appreciation for aid on such problems as dealing with "Deduction of Tax at Source," "Difficulties with Foreign Customs Au- thorities," "Difficulties with Overseas Agents" (in this case the FBI representative supplied, it appears, espionage--"confidential information"--service), "Postal Regu- lations," and "Taxation" ("relief to the extent of approximately two-thirds of the amount of tax paid in Australia").
? BRITAIN'S "FEUDALISTIC SYSTEM"
Any recent annual Report of the FBI will show how this type of work has been built up and elaborated over the intervening years. There is practically no phase of British industrial, commercial, and financial interests in any part of the world which is not touched upon by one or more of the services placed at the disposal of mem- bers through the FBI machinery. A special feature is the publica- tion of the FBI Register of British Manufacturers, begun in 1920, and revised annually. Especially close relations are maintained throughout all these overseas activities with the International Chambers of Commerce, local British Chambers of Commerce established in foreign countries, and foreign departments of for- eign chambers of commerce.
All this work overlaps, in many particulars that of other depart- ments, committees, and subcommittees. An interesting example is provided in the 1936 Annual Report in representations made to the Board of Trade of H. M. Government regarding taxes in Ru- mania held to discriminate unduly against foreign concerns. Nego- tiations were in the same year carried on with local tax authorities in Australia, the United State's, and France.
Another interesting example of how the FBI operates is found in the work of its Industrial Arts Committee. By 1935 some thirty industries were represented on this Committee. Activities reported on in 1936, included the following: cooperation with the Board of
*
Education in the writing of a 'Report on State Aided Art Educa-
tion," incorporating the Federation's proposal that "the Royal College of Art should be reconstituted and that its primary purpose should be the study of applied art with particular reference to the requirements of industry and commerce"; participation of the Committee Chairman, Mr. Charles Tennyson on the Board of Trade Council for Art and Industry; ^^ the establishment of a Scot- tish Sub-Committee for "securing and maintaining contacts be- tween designers and industrialists" in that area; preparation of a memorandum on the request of the Board of Trade dealing with
87 "The Council are taking steps to form a Register of qualified Industrial Design- ers, and invited the Federation to nominate three representatives of Industry to the Governing Body, which is to be responsible for the management of the Register. Three representatives from the textile, pottery and printing industries have accord- ingly been appointed, with alternatives to act in cases where the representatives come from the provinces. Mr. Tennyson is Chairman of the Governing Body of the Register. " FBI, 20th Annual Report, p. 17.
170
? BRITAIN'S"FEUDALISTICSYSTEM" 171
training of Managers and other Executives in various manufactur- ing industries in an "understanding of the design of industrial products"; supplying evidence to the Board of Trade on contribu- tions to industrial arts given by Museums; awarding prizes "to students of the Royal College of Art for industrial designers"; securing employment for art students. ^^
It is perhaps unnecessary to trace much further the detailed work of individual committees and their various subcommittees. What has been given is illustrative of the wide-ranging character of the work accomplished, and the totalitarian outlook of its guiding lights. The picture needs, however, to be extended slightly to show that the work of the Federation does not stop with the mere col- lection of information, and the giving of aid and advice to mem- bers. The Federation has, of course, done a great deal by these means to create a "climate of opinion" which is coherent and pro- motional not only of specific interests but also of the general social outlook of organized British industry. But within this atmosphere it has proceeded step by step to manipulate policy with a view to the consolidation of business stakes on issues that reach to the roots of the British political system.
Three examples will suffice to show the character of the objec- tives and the nature of the alignments sought, in carrying out those objectives: the attitude toward organized labor; relations with the government in peace times; and the quality of the "cooperation" with government in times of war emergency.
THE ATTITUDE TOWARD ORGANIZED LABOR
It was hoped by some in the formative days of the FBI that the new association might include "not merely the representatives of capital but those of labour. " Under the stress of war conditions, trade union leaders had shown a conciliatory attitude. Why not hope, then, to bring about "something approaching a partnership between capital and labour in place of the armed neutrality, which is the best that can be hoped for under present circumstances. " ^(R) To this end the FBI gave evidence before the government commit- tee dealing with the Whitely Councils in 1917, and aided in the
38 Idem.
39 "Federation of British Industry," Engineer (London), Aug. 11, 1916.
? 172 BRITAIN'S "FEUDALISTIC SYSTEM"
formation of this wartime compromise with the "company-union" ideal. ^<>
While there was little opposition amongst employer circles to the Whitely Committee idea as such, the trade unions appear to have been entirely too strong and too class conscious, even in war times, for the idea of "labor-capital partnership" to make much headway. At any rate, not much seems to have come out of the National Alliance of Employers and Employed; this was set up in
1917 and designed to have equal representation from both groups, in order to "come together in friendly consultations on labour problems. " *^
Failure to work harder along this line was due, however, to a de- cision to specialize the functions of the FBI on business, legislative, and trade matters, and to leave labor relations to the constituent trade associations and other central organizations which they might devise. In August, 1917, the Executive Council resolved: "In re- gard to labour matters, the FBI will not concern itself or interfere with any questions affecting working conditions or rates of pay, except at the request of the Employers' Associations or Federations established to deal with such questions. Any such request should, however, be addressed to the FBI through the medium of the Em- ployers' Advisory Council, which should be invited to consider and advise the FBI on such matters. " ^^
In 1919, members of the FBI participated in setting up its labor relations alter ego, the National Confederation of Employers' Or- ganizations (subsequently renamed the British Employers' Con- federation). Its purpose was to coordinate the parallel activities of employers' associations (made up of members who were also, for
40 These were set up on a national, a district, and a works basis, with representation drawn equally from trade unions and employer associations. For a summary see Characteristics of Company Unions (Bulletin No. 364, Division of Industrial Rela- tions, U. S. Dept. of Labor, Bureau of Labor Statistics, Washington, D. C. , 1935). See also "Joint Industrial Councils in Great Britain," International Labour Review, Dec, 1921, pp. 563-78.
41 ". . . the Federation has taken practical steps towards bringing about a real co- operation of Capital and Labour by assisting in the formation of the National Al- liance of Employers and Employed. This body consists of representatives of employ- ers' organizations and trade unions, and practically all the employers on the Executive Committee are Members of the Federation. " Federation of British Industries, Export Register, p. 20.
42 Correspondent.
? BRITAIN'S'FEUDALISTICSYSTEM" 173
the most part, members o? the FBI) specifically concerned with negotiations with Trade Unions, and to treat "questions of wages and conditions of employment as settled through collective bar- gaining betwen employers and employed. " ^^ According to its 4th Annual Report (June, 1920), the FBI had established a working liaison with the NCEO concerned primarily with exchange of in- formation. "A Joint Committee has been established and meets for regular discussions. "
With the great general strike of 1926, and the formation of the National Government under the direction of Ramsay MacDonald, the British Employers' Confederation began to take on a more menacing tone. Much of the subsequent antilabor legislation was inspired directly by outstanding figures in the FBI machinery. Attempts at partial conciliation, such as those involved in the famous Mond-Turner Conversations on Industrial Relations run- ning over 1928-29, had given way increasingly to attitudes border- ing on open hostility. ^*
Members of the FBI have not relaxed their efforts with a mere negative attitude towards labor. Many of them feel called upon to take measures insuring an entirely different attitude in the future through apprenticeship training programs, a special propaganda funneled through the public school system,*^ and the use of various media for public-relations work. It is very difficult, in the face of typical British secretiveness, to learn much about these plans. But from such indications as can be gleaned here and there, the trend of thought and effort seems to be along the line of specialized train-
43 Idem.
44 Reporting to the 32d Annual Convention of the NAM, meeting at Chattanooga, Tenn. , in 1927, the Secretary, George S. Boudinot, stated, "Your counsel observed a revolutionary change in the control of labor and employer combinations in England and Italy. A striking change, not confined to non-members of labor organizations, has taken place in British public opinion respecting trade union regulations. After delib- erate consideration, powerful trade union organizations have abandoned the Labor Party because of the reaction within to the left wing of radicalism and the Soviet drive to capture the British trade union movement. Furthermore, the British Parlia- ment, by its enactment of July 27, last, has severely limited the political and economic activities of trade unions.
"
45 Another American observer, P. Harvey Middleton, writing in American Indus- tries, Nov. , 1924, on "Great Britain's Loud Speaker" (the FBI), listed among the FBI activities of merit, "meetings between the FBI Education Committee and the As- sociation of Headmasters of Public and Secondary Schools to discuss suggestions for bringing the schools of the country into closer relation with industry. "
? 174
BRITAIN'S "FEUDALISTIC SYSTEM"
ing of the young that they may in the future follow the business men as "their natural leaders," instead of their own Trade Union representatives. *(R)
It is significant that this trend comes at a time when class- conscious employer organizations have been established with cen- tral headquarters, capable of both creating a climate of opinion amongst employers and of exercising some degree of united action in matters bearing on the combined interests of British employers as a whole. But it is of far greater import that these developments occur simultaneously with the cumulative dovetailing of organized business and the formal political machinery of the British imperial system.
RELATIONS WITH THE GOVERNMENT: IN TIMES OF PEACE
This is not the place to discuss in detail the extent to which Tory domination in England has woven the political and economic ap- paratus of class interests into a unified system of social control. The details are too numerous, in part too well concealed, and in part too difficult to trace for elaboration here. Moreover, portions of the story have been told adequately in a series of recent books. *^
It will suffice here to summarize a few of the obvious trends in the British concentration movement, and to point out the role the FBI comes to assume as the political implications of these trends come ever more clearly to the fore.
1. The dominating concerns in the inner councils of the FBI are those organized on a monopoly or quasi-monopoly footing, or occupying leading positions in the rapidly spreading networks of cartel and cartel-like controls. This process was particularly rapid in the postwar years. 'Tor the first time since the earlier days of capitalism," wrote Professor Levy in 1927, a "large section of Eng- lish trade has become overrun with monopolist organisations. . . . The World War, its aftermath, and the world-wide economic crisis, lasting now for more than six years, have strengthened these tend-
46 "For my part I cannot look upon the evil or foolish faces of some of the leaders of labour without a sense of deep humility. How greatly must we capitalist employers have neglected our duty, if the workers choose to follow, not us their natural lead- ers, but such men as these. " Austin Hopkinson, Religio Militis (London, 1927), p. 113.
47 See, in particular, Simon Haxey, Tory M. P. (London, 1939), and Ernest Davies, National Capitalism (London, 1939).
? BRITAIN'S"FEUDALISTICSYSTEM" 175
encies. " *^ And since Levy wrote, as Lucas *(R) and others have shown, these tendencies have been doubly accelerated by the events of the great depression and the outbreak of the Second World War.
Typical of the combines which operate monopolistically are such concerns as Imperial Chemicals (capitalized around ? 75,000,- 000), Vickers in the iron and steel industry, Lever Brothers in the soap industry, J. and P. Coats in the thread industry, and the great banking systems with headquarters in London.
2. As Lucas has shown in his illuminating study, the trade asso- ciation "is without question the most common medium of control in the present time" ^? in Great Britain. This is to say, the British trade association typically begins its existence by exercising the powers and seeking to gain the restrictive objectives which the American trade association was able to achieve only after NRA. Hence for all practical purposes, these price-fixing, output- restricting, market-area allocating bodies, operating with the use of such familiar devices as resale price maintenance, tying contracts, rebate systems, trade boycotts, and the like, are cartel-like bodies. Nothing basic in principle separates their forms of organization nor the methods of operation from the cartel. It is highly significant that the two terms, trade associations and cartels, are used more or less interchangeably in the general British literature devoted to discussing these trends.
3. The trade association device has been growing in Britain, as indicated above (p. 157) by leaps and bounds. Growth here, as else- where, is along three principal lines. Every industry and trade, both locally and nationally, acquires its appropriate association; the pressure on "outsiders" to join tends increasingly to expand the coverage of each appropriate association so as to include every single business concern falling in each separate classification or cate- gory; these tend increasingly to band together first locally or region- ally, then nationally by industries, trades, and (cross-sectional) regions, in peak or central bodies, such as the FBI. Scattered, overlapping, confused as the organizational network is in many respects, still one finds in the literature clear indications that these
three trends are everywhere convergent and unidirectional.
4. Itisequallyclearthatthebulkofthelargerandmorepower-
48 Levy, Monopolies, Cartels, and Trusts, pp. 325-26.
49 Industrial Reconstruction. so ibid. , p. 203.
? 176 BRITAIN'S "FEUDALISTIC SYSTEM"
ful trade associations are dominated as a rule by a few large inside concerns. The examples offered by Lucas of the methods by which Lever Brothers dominates the soap industry through the United Kingdom Soap Manufacturers' Association, the Salt Union its in- dustry through the Salt Manufacturers' Association, and Imperial Chemicals the ammonia industry through the Sulphate of Am- monia Federation, Ltd. , are merely spectacular instances of tech- niques which have become extremely widespread throughout the British Isles. So far as this is true--and the general trends seem to be in this direction--the trade association becomes in effect a cartel instrument to promote the monopoly policies of a single or a small group of giant concerns.
5. Somewhatthesamethingcanbesaidofthecentralandpeak associations, such as the FBI. The large concern has an opportunity to make its weight felt first through a sort of triple membership: as individual corporate member, as member of constituent trade associations, and through membership in the regional bodies. Vot- ing power, in the second place, for both the Grand Council and the Executive Committee, is on a basis proportional to number of workmen employed, a practice which inevitably throws the center of gravity in the hands of the large concerns. Further, analysis will show that the work undertaken by the various subcommittees has to do in large part with matters which can only be of advantage to the large concern equipped with great resources. Finally, the con- stitution and by-laws of the FBI are subject to change by the inside groups of the Grand Council and the Executive Committee, in- cluding extension of powers of appointment and (in particular) cooptation of members to key positions.
6. The influence of the FBI in governmental circles appears to have become exceedingly great. It is expressed directly via two routes. First, in the number of positions its members hold on gov- ernmental committees and the extent to which its representations before governmental bodies result in decisions and pursuit of poli- cies favorable to its members and its general program; and second, the power possessed by its own officers, members of the Grand Council, Executive Committees, and various Subcommittees, on the one hand, and representatives of its leading companies and
trade associations on the other, to influence governmental policies as Members of Parliament.
? BRITAIN'S"FEUDALISTICSYSTEM" 177 As for the first line of cross-fertilization, the FBI claims to be
represented directly on the following governmental bodies:
Board of Trade: Board of Trade Advisory Council Board of Trade Council for Art and Industry
^'^
War Office: Technical co-ordinating Committee on General Stores Motor Transport Co-ordinating Committee
Ministry of Health: Joint Advisory Committee on River Pollution Town and Country Planning Advisory Committee
Mniistry of Agriculture: Standing Committee on River Pollution
Apparently representation is much wider than such a listing would appear to show. References are found scattered all through the literature, showing membership on ad hoc and smaller stand- ing committees established not only by the national, but also by numerous county, municipal, and other local governing bodies. But of equal importance would appear to be the effect of its insti- tutionalized pressure and lobby activities. A few examples taken from a single publication will suffice to show the general picture: "
Fiscal Policy: In 1930 the FBI secured an overwhelming mandate from its members to demand a change in our National Fiscal Policy. The publication early in 1931 of its proposals in "Industry and the Nation" was followed by an intensive campaign in Parliament and the Press, and in the Industrial districts. A special pamphlet 'The Passing of Free Trade" was prepared to assist speakers on the subject.
The National Government, returned to power in 1931, adopted the FBI's main recommendations, and Industry is now reaping substan- tial benefits from the protection of the Home market.
Imports: On the passing of the Import Duties Act 1932, the FBI set up a special department to assist members in preparing applications to the Import Duties Advisory Committee. . . . Concessions to the Dominions and foreign countries facilitating imports into Home markets are closely watched. The FBI has generally been successful in convincing the Government that no such agreement should be concluded before the industries affected have had an opportunity of producing information as to the effect of such imports upon British industry.
Foreign Countries: The FBI is the main channel of consultation with the Government in Commercial Treaty negotiations, and it also pro- vides special facilities for international arrangements within particu- lar industries.
51 "Industry and Action," pamphlet of the FBI (undated), p. 11. 52 Ibid. , pp. 4-5.
? 178 BRITAIN'S 'TEUDALISTIC SYSTEM"
De-Rating of Machinery: The Rating and Valuation Act of 1925 records a notable achievement for Industry. The Bill introduced, after prolonged negotiations, by the Government contained a defini- tion of the machinery to be included for Rating by the Local Author- ities, which embodied the essentials of the FBI proposals.
Similar to these are the claim of successful cooperation with the government in matters dealing with exports, Empire problems, taxation, commercial law. Various annual reports elaborate and detail the picture at length. One writer summarizes FBI activities in a typical case as follows:
In the determination of the scope and nature of that policy [protection] the FBI has played a triumphant part. It has not hesitated to boast of its successful influence upon the Government. . . . By creation of the Tariff Advisory Committee with power to alter tariffs without reference to Parliament, the Government has in fact handed over to a body in close association with the owners of industry an important legislative function. ^*
The other side of this picture is the influence of organized busi- ness circles in the formation of governmental policy through mem- bership in Parliament. A recent compilation from the Directory of Directors, the Stock Exchange Year-Book, and other sources shows that of 415 Parliamentary supporters of the National Government, some 181 possessed 775 corporate directorships. ^* These ranged over the entire business field, but appear to be largely concentrated in the big, national and Empire-wide trading, shipping, manufac- turing, and financial enterprises. Through family and almost in- definitely ramifying intercorporate connections, corporate influ- ence of these business M. P. 's likewise extends to the outer reaches of the entire British economic system. Thus in large--perhaps in decisive--part the influences, personalities, interests, and powers that go to shape up policies of individual business firms, the trade associations to which they belong, and the central policy- coordinating bodies, such as the FBI which they direct, go also to determine the objectives of governmental policies, and to guide and control the execution of those policies through the complex
machinery of government administration and regulation.
7. Someconceptionofthelong-runimplicationsofthisfusionof
53 H. R. Greaves, Reactionary England (London, 1936), p. 146. 64 Haxey, op. cit. , p. 37.
? BRITAIN'S"FEUDALISTICSYSTEM" 179
business and government may be had by looking over the various schemes for industrial reorganization that have come to the fore with increasing frequency in recent years. Such plans as embodied in the Coal Mines Acts, the Iron and Steel Reorganization Scheme, the "Reconstruction Levy" and various schemes proposed for re- organizing different industries by PEP (Political and Economic Planning) call for no less than extension of the principle of cor- porate organization to entire industries. It is worth while pointing out the following as typical of all such plans:
They are initially advocated, promoted, and lobbied for primarily (in some cases exclusively) by the larger, better organized and more powerful business interests. "Liberal" and labor groups have assented to such plans only tardily, only with many stipulated conditions (mostly ignored) or not at all.
They all visualize the establishment of a central governing body, capable in whole or in part of restricting competition, controlling ca- pacity, regulating markets, prices and production.
They all wish for governmental sanctions in enforcing compliance with decisions arrived at, but wish freedom from "government coer- cion" in the process of exercising the decisions.
The central governing authorities projected are made up exclusively of business men, who govern the industry or trade as a unit. (The Board of Trade, or similar bodies are only to "regulate" in a general sense of the term. )
Central peak associations, such as the FBI and those with which it is affiliated, have not opposed any of these schemes on principle. On the contrary, except for specific features of specific programs, they have uniformly favored such plans, the moving figures in these schemes being simultaneously the leading lights in the central associations.
They do not, as a rule, oppose very considerable extension of govern- mental influence (so long as the government is "sympathetic") along what might be called "auxiliary lines. " For example, they did not oppose:
a) The establishment of governmentally owned, or "mixed" (owned partly by government and partly by private interests) enterprises, such as The London Passenger Transport Board, The Central Electricity Board and The London Port Authority (mixed enter- prises). The Post Office (which includes the telephone and tele- graph systems of Great Britain. (Government ownership. )
b) Government aid in establishing monopolies in the home market (autarchy), and protection in Empire and foreign markets.
c) Provision of authority and machinery for punishment of "out-
--
? i8o BRITAIN'S "FEUDALISTIC SYSTEM**
siders" through regular legal channels, or provision by govern- ment with powers for eliminating the problem of the "outsider" entirely.
Somewhat different in origin were the Agricultural Marketing Acts ^^ tracing back to 1931. Yet under the National Government, these Acts, which were intended to make possible organization of farmer-producers into cooperative or semicooperative bodies, had come largely under the influence of packing houses, agricultural processors and distributors, and other allied interests. ^^ Hence, even this application of the new type of ''corporative" organization has come under the domination of groups whose first allegiance is to the interests and outlook represented by the Federation of British Industries.
8. There remains the fact to be mentioned, alluded to above, that opposition to this cumulative fusion of governmental and highly organized business systems seems almost completely to have dwindled away. Conservative and Tory elements want the new forms of corporate organization, and they desire the cooperation of the government in effecting the necessary changes against recal- citrant minority interests. And labor and liberal circles have ap- parently concurred in the movement, having asked--in the main only for minor safeguards for their interests. The famous Liberal Report of 1926 recommended autonomous and "self-governing" bodies as one of the leading ways of solving Britain's industrial dilemma. ^^ The first comprehensive plans for industrial reorgan- ization along lines slowly evolved by monopoly-oriented business organization were laid down by the British Labour Party in 1931.
In a speech delivered, significantly enough, at the University of Berlin in 1926, the great British liberal and iconoclast J. M. Keynes held "that in many cases the ideal size for the unit of control
55 Different only in the sense that the Agricultural Marketing Acts were promoted primarily by farming interests, while the industrial reorganization schemes were originally the Labour Government's answer to the various proposals which had been advanced by private industry. Needless to say, the form in which the Labour Govern- ment proposed industrial reorganization was not far removed from that proposed by a private enterprise, as may be shown by the nature and quality of the remarks and criticisms made at the time in business circles.
56 See pp. 183-86.
57 Britain's Industrial Future (London, 1938), the Report of the Liberal Industrial Inquiry; see in particular Books II and III. In its conclusions it refers to "the growth of cooperative self-government, which is the true aim of industrial policy" (p. 466).
? BRITAIN'S"FEUDALISTICSYSTEM" 181
and organisation lies somewhere between the individual and the modern State. I suggest, therefore, that progress lies in the growth and the recognition of semi-autonomous bodies within the State . . . a return, it may be said, towards medieval conceptions of separate autonomies. " ^^ Later he was to become even more ex- plicit when, on the eve of the outbreak of the Second World War which he had forecast so many years before, he declared that an "amalgam of private capitalism and State Socialism . . . is the
^^
only practicable recipe for present conditions. "
Just how far State control was to reach in this British version of
National Socialism it is hard to gather from the writings of Mr. Keynes or his contemporaries, but clearly self-government in busi- ness under the auspices of a regime determined "to make the pri- vate property system work better" ^? (italics in original) is en route to the goal. All of which does not prove, of course, that all British business is in favor either of the abandonment of "free competi- tion" and "laissez faire" on the one hand, nor of the particular forms under which they cede control to central policy-controlling bodies on the other. An examination of any of the numerous pro- posals for control in any given industry will put the reader's mind at rest on that score. ^^ But what is clear, is that the center of gravity has shifted in this direction, and that on the present showing there will shortly be no alternative to the British business man except to make the most of it.
RELATIONS TO THE GOVERNMENT: WAR TIMES
British war organization rests squarely on the associational ma- chinery evolved over the peacetime interlude. A recent issue of the
58 True, the "criterion of action" of each "is solely the public good as they under- stand it" but what public-relations counselor would oflEer any other explanation of any given act of any represented business? See J. M. Keynes, The End of Laissez- Faire (London, 1926), pp. 41-42.
59 Debate between J. M. Keynes and Mr. Kingsley-Martin on "Democracy and Efficiency," New Statesman and Nation, Jan. 28, 1939. Mr Keynes hopes that this amalgam in defense of "private property and capitalism" will be "liberal," so that he may refer to it as "liberal socialism," and by "liberal" he means nonmonopolisti- cally organized capitalism. Mr. Keynes has not been called a "semanticist. "
60 Idem.
61 See discussions relating to the establishment of the Petroleum, Cotton, and Ship- ping Control Boards in recent issues of The Economist, and New Statesman and Na- tion, and similar sources.
? i82 BRITAIN'S 'FEUDALISTIC SYSTEM**
Economist refers to this as the Conservative program which comes to rest in a
set of notions that sees its ideal of an economic system in an orderly organisation of industries, each ruled feudally from above by the busi- ness firms already established in it, linked in associations and confedera- tions and, at the top, meeting on terms of sovereign equality such other Estates of the Realm as the Bank of England and the Government. Each British industry, faithful to the prescription, has spent the past decade in delimiting its fief, in organising its baronial courts, in secur- ing and entrenching its holdings and in administering the legal powers of self-government conferred on it by a tolerant State. This is the order of ideas that has transformed the trade association from a body of doubt- ful legality, a conspiracy in restraint of trade, into a favoured instru- mentality of the State, until membership in such a body has become as necessary to the business man who wishes to be successful as an old school tie has been to the ambitious Conservative politicians. It is the order of ideas that led to the Import Duties Act being drafted in such a way as to put a premium on self-seeking monopolies and a discount on the public interest; that turned "high profits and low turn-over" into the dominant slogan of British business; that raised the level of British costs to the highest in the world. It is a set of ideas that is ad- mirable for obtaining security, "orderly development" and remunera- tive profits for those already established in the industry--at the cost of an irreducible body of general unemployment. It is emphatically not a set of ideas that can be expected to yield the maximum of production, or to give the country wealth in peace and strength in war. ^^
In an earlier issue ^^ the Economist pointed out that this comes out simply to mean that
under the cover of wartime needs, the principle of Self-government of Industry has been given an official blessing. This is, in effect, merely the expansion and continuation of the Industrial policy that has been pur- sued by the Conservative Government for the past eight years, for in their hands control has nearly always meant the conferment of legal privileges on the organized producers already established in the indus- try . . . industries are being encouraged to control themselves. ^*
62 "A Check on Production," Economist, June 15, 1940.
63 "The Economic Front," Economist, Dec. 9, 1939.
S64 While government officials are thinking of post war planning, comments ISlew
Statesman and Nation (March 8, 1941), "the hard-faced men from the Midlands quietly get on with their job, Mr. Bevin and the other Socialist leaders utter blood- curdling threats, but the monopoly interests (just as in America under the NRA) are taking steps to safeguard their interests. We are to have planning--that is the present so-called controls, which are merely a glorified form of private monopolies
? BRITAIN'S "FEUDALISTIC SYSTEM' 83
In contrast to the last war, when "the controllers were selected in the main from outside the industry to be controlled," in "this war industry is controlling itself.
