No More Learning

147
--
? 148 VICHY'S "NEW ORDER"
group definitely gained the upper hand, and down to the outbreak of the war appear to have won over the bulk of organized French business to their point of view.
Attitude toward rapprochement with Germany. --Conversely, the interests centered around Duchemin were in favor of close cooperation with Germany. The ramifications of the Credit Lyon- nais were scattered over the entire European continent. " But its most important tie with Germany was through the Kuhlmann and Gillet groups, which were, in turn, closely tied up with the huge German chemical trust, I. G. Farbenindustrie A. G. The Credit Lyonnais was itself closely tied up with Swiss enterprises in turn largely dependent on, if not controlled by, the Deutsche Bank, and A. E. G. (Allgemeine Electrizitats Gesellschaft--German General Electric Co. ). Duchemin himself was a member of the Franco- German Committee--which seems to trace back to Hugo Stinnes and in this capacity worked in close cooperation with Herr von Stauss of the Deutsche Bank. Schneider-Creusot was heavily inter- ested in the Skoda works until shortly before the Munich affair, and as a heavy armament producer, seems to have worked in close cooperation with the Krupp interests.
The De Wendel and Rothschild interests, contrariwise, seem to have been closely tied up with British finance and heavy industry notably Vickers (armaments). With Matignon and the outbreak of war, the De Wendel position seems to have gained ground. But it seems equally clear that with the recent military collapse, De Wen- del interests have gone over wholesale to the Duchemin position. The Rothschild interests, on the other hand, being primarily Jew- ish controlled, have been largely liquidated.
The net result is that the De Wendel position on labor and the Duchemin-Credit lyonnais position on cooperation with Germany have been fused. The final result, still in process of being worked out in detail, appears to be the equivalent of a transformation of the setup of the CGPF into the economic machinery for the French version of the corporate state. ^^ But under the conditions of Ger-
77 See Liefmann, Beteiligunge und Finanzierungs Gesellschaften.
78 With the outbreak of the war M. Gignoux, who appears to have been valuable to De Wendel and the Comit^ des forges primarily as a journalist and promoter, was displaced, de facto, by Baron Petiet, an active member of the CGPF since its formation in 1919. Baron Petiet's principal private connection was with the Union
? VICHY'S "NEW ORDER"
man conquest this means first that German industrial and business interests are to dictate (if not directly to control through stock own- ership) ^^ the terms of economic collaboration to their former French allies, and second, that France as a whole is to become a tributary (primarily agricultural) province in the German-con- trolled "New order in Europe. "
On this showing French employers have cast off French political and French labor controls only to accept the much more rigorous and exacting German imperial domination.
des consommateurs de produits m^tallurgiques, a sort of half-cartel, half holding- company agglomeration of concerns producing airplanes, automobiles, trucks, and other types of machinery. There is some reason for believing that Baron Petiet was acceptable to both groups.
79 It was been rumored that the daily occupation assessment of Fr. 400,000,000 (recently reported to have been reduced to Fr. 300,000,000) is in excess of German occupation requirements by somewhere between Fr. 275,000,000 and Fr. 300,000,000 (presumably reduced by the change referred to above), and that the balance is being invested by German authorities in the purchase of controlling shares in major French industrial, commercial, shipping, railroad and financial enterprises. These are then, apparently, being disposed of through sale to German concerns.
149
? Part II
MANUFACTURING PEAK ASSOCIA TIONS WITHIN THE LIBERAL- CAPITALIST SCHEME
? Chapter V
BRITAIN'S "FEUDALISTIC SYSTEM OF CARTEL CONTROLS"
EVEN IN England the first world war signalized a definite retreat from the theory and practice of classical norms. The peaceful interlude which followed consolidated the changed position. And the Second World War has turned retreat into rout. It is difficult to see in contemporary schemes of British war control--even after making due allowance for emergency factors--more than faint re- semblance to the "simple and obvious system" of past times. But, more significant by far, one will scarcely find anything in develop- ments leading up to the new controls which offer the slightest con- solation to those who might hope for some future return to com- petitive and laissez faire "normalcy. " For Britain, regardless of the outcome of the current struggle, the old order is doomed. As clearly as elsewhere, centralized policy controlling power in business is in
the cards!
It may well be, as a writer in a recent issue of the London Econo-
mist gloomily suggests, that England is "slipping . . . into a feu- dalistic system of cartel control," but it can scarcely be claimed that she is or has been doing so "through inadvertence. " ^ For, as Keynes, Lucas, Levy, the Liberal and Balfour Reports, and mount- ing data from other sources have shown, the controls set up under the cloak of wartime emergencies are built on foundations the genesis of which reaches back over many years. Moreover, from Left to Right, and regardless of the configuration of the issues at stake, there remains only a nostalgic hope for a return to the econ-
1 "The Economic Front," Economist, Dec. 9, 1939. See also "The Cartelisadon of England," Economist, March 18, 1939.
? 154
BRITAIN'S "FEUDALISTIC SYSTEM'*
omy which so warmed the heart of John Stuart Mill. ^ Come what may, the old ideal as well as the actuality is "sick unto death. " ^
At the center of the multifarious control networks through which British economy has muddled so close to the brink of dis- aster, and closely interlinked with a confused jumble of govern- mental and quasi-governmental control boards, stands the Feder- ation of British Industries. Its history is symptomatic of the forces making over the face of this schoolmistress of "free competition" and preceptress of laissez faire.
genesis: the ebbtide of economic orthodoxy
The antecedents of the Federation of British Industries are found in concern over the rising power of the trade unions and over the decline of British dominance in overseas trade. The first of these two stimulants was uppermost when, following an infor- mal meeting in London at the Westminster Palace Hotel, Novem- ber 15, 1898, it was decided to set up the Employers' (or British) Parliamentary Council. The stated objectives were:
To take action with respect to any bills introduced in either house of Parliament, affecting the interests of trade, of free contract and of labor, or with respect to the action of imperial or local authorities affecting in any way the said interests. *
The immediate objectives soon became to defeat at all costs the Mines [eight-hour] Bill, which, it was feared, once passed would establish a precedent for extension of the eight-hour heresy to other trades and industries. Typical of the position of the Parlia- mentary Council for many years was the argument it brought to bear in this crucial struggle. It is noteworthy for its statement of underlying principles:
1. Itisnot,andoughtnottobe,thedutyorbusinessofParliamentto fix the hours during which adults may work.
2. Although the shortest hours of labor possible in each industry
2 "Every restriction [of competition] is an evil, and every extension of it, even if for the time injuriously affecting some class of labourers, is always an ultimate good. " John Stuart Mill, Principles of Political Economy, Ashley ed. , p. 793.
3 See the summary of contemporary British opinion given by A. F. Lucas, in his Industrial Reconstruction and the Control of Competition (London, 1937), in par- ticular pp. 11-19.
* American Industries, Jan. 1, 1903.
? BRITAIN'S"FEUDALISTICSYSTEM" 155
should be sought by and are beneficial to the employed, such hours of daily labor should be the subject of separate negotiation and ar- rangement in each industry in each locality, and such arrangements should be arrived at by mutual discussion and understanding be- tween employers and employed.
3. The system of inspectorship necessary for the enforcement of State regulation of labor would be vexatious and intolerable.
4. The function of the State is to protect, and not to restrain, the lib- erty of the subject, and a legal eight-hour day is an infringement of the liberty of an individual to make his own labor contract.
5. The growing tendency, as evidenced by the divisions on the Mines (eight hour) Bill, to look to the Legislature or Government to supply immediate remedies for all evils, however arising, in the struggle for existence, is of a most dangerous character and destructive of the spirit of sturdy independence which characterises the British nation.
6. FormerActsofParliament,whichwereintendedtoregulatehours of labor, only provoked evasions and resistance on the part of em- ployers and employed.
7. The present eight-hour day laws in thirteen of the United States are a dead letter; not one of them is enforced, or attempted to be enforced.
8. Well-organized workmen have but very rarely lost the gains really acquired by them in the way of reduction of hours of work, and the tendency to the reduction of the normal working day by voluntary effort and negotiations with employers does not appear to have ex- hausted itself.
9.
10.
11.
12.
13.
A distinction must be drawn between an hour of work and an hour of duty.
Many workmen prefer longer hours five days of the week in order to obtain a weekly holiday.
When Parliament interfered to limit the hours of women and chil- dren in factories, both were being taxed beyond their strength, amid surroundings that were not generally as sanitary as they should have been. The hours of labor were much longer than they are now; the education of the children was being neglected; the health and maternity of the women were being injured; and other objectiona- ble features were common. No one, however, can claim that nine or ten hours of work are unhealthful or oppressive.
Reductions of hours of labor bear heaviest, not on the employer, not on the man who has money to spend, but on those who cannot stand the increased speed, and are therefore forced to a choice be- tween a lower standard of comfort or an intensity of strain which they cannot bear.
If the principle of State interference with working hours is con-
--
? 156 BRITAIN'S "FEUDALISTIC SYSTEM"
ceded, the Legislature may also seek to control the use of a man's
leisure.
14. The logical sequence to State regulation of hours is State regulation
of wages. s
Over a billion pounds of invested capital was said to be massed behind this denunciation of state interference in the labor con- tract. But, while it is true that, in the main, efforts of the Parlia- mentary Council did not go beyond organized lobbying to keep the state out of this field of regulation, it does not follow that its members rejected government aid to themselves on other scores. The famous ''Germaniam esse delendam" article of the Saturday Review, written in 1897,^ evoked a diapason of eulogy from organ- ized trade and industrial circles from one end of the United King- dom to the other. Over the intervening years the theme was to return more frequently and more insistently; the methods used by other countries to promote the economic interests of their nationals both at home and abroad--tariffs, subsidies, subventions, active military intervention in the outlying territories (as in Abyssinia) must be copied and surpassed if British industry and trade were to survive.
Despite the fanfare of publicity which accompanied its first few meetings, the Parliamentary Council seems to have enjoyed rela- tively little success. As late as 1915 an American observer found that "A large section of the British industrial world, however, held aloof from the organization of the council and greatly diminished its chances for permanent existence. " ^ A similar fate appears to have befallen a parallel attempt, inaugurated in 1905, "to federate manufacturers' organizations or firms in various industries into one association," ^ known as the Manufacturers' Association of Great Britain and established with the object "to stimulate and expand British trade in colonial and foreign markets. " ^
5 Idem.
6 Hoffman, Great Britain and the German Trade Rivalry, p. 281.
Wolfe, Commercial Organizations in the United Kingdom (Special
9 The opening paragraph in the preliminary circular argued as follows: "By reason of her immense financial resources, her great shipping facilities, her social and po- litical relations with so many British colonies and great barbaric and semi-barbaric states. Great Britain is, of all industrial lands, the best adapted for a world-wide export trade; while her unequalled power of cheap production and her great me-
7 Archibald
Agents Series, No. 102, U. S. Dept. of Commerce, Washington, D. C. , 1915), p. 39.
8 Idem.
J.
? BRITAIN'S"FEUDALISTICSYSTEM" 157
Failure of these early efforts at centralization appear to be due, however, not to the belief that these methods were inappropriate to Britain, but simply to the fact that they were premature. The intervening years greatly expanded the local, national, and im- perial networks of business organization which were so lacking in the late '90s. By the outbreak of the World War there were some
1,200 employers' associations in Great Britain, covering practi- cally every leading district, every important trade and industry in the United Kingdom, and endowed with policies increasingly run- ning the entire gamut of business interests. Together with the rapidly expanding Chambers of Commerce, already banded to- gether in central organizations,^^ they were preparing the way for what must eventually give rise to demands for some degree or other of coordination and centralized direction.
It is true, furthermore, that relatively few observers saw in these types of business organization--rapid as their growth became dur- ing and following the decade of the '90s--serious compromise with the principles of free private enterprise. They were viewed in the main, by participants and observers alike, as primarily promo- tional, loosely "cooperative," or at best as defensive and temporary associations called into being to meet specific situations of mutual business interest. Only an occasional few saw in them the begin- nings of politically potent and monopoly-oriented methods for
chanical ability mark her out as the world's workshop. All that is needed to extend her export trade, perhaps to double its present figures, is the co-ordination of her industrial forces, and the cooperation of her manufacturers, merchants, and trad- ers. " American Industries, Aug. i, 1905, p. 12.
10 The Association of Chambers of Commerce of the United Kingdom was formed in i860; incorporated in 1875; by 1915 it was made up of 109 British Chambers of Commerce, having aggregate memberships of 28,000 concerns. Also important were The Chamber of Shipping of the United Kingdom, organized in 1887 and made up "of shipowners' associations of all the principal ports," and the British Imperial Council of Commerce. Inaugurated in 1911, the latter was designed to bring together "(a) The members of the Congress Organizing Committee of the London Chamber of Commerce as constituted on the date of the inauguration of the council; (b) repre- sentatives officially nominated by British chambers of commerce, boards of trade, or associations thereof throughout the world; (c) such members nominated by British chambers of commerce, boards of trade, or associations thereof from overseas as may be authorized to represent those bodies during a temporary residence in London;
(d) such members, including those who have occupied distinguished positions in the British Imperial Service, whether associated with chambers of commerce, boards of trade, or associations thereof, or not, as the council may consider it desirable from time to time to choose. " Wolfe, Commercial Organizations in the United Kingdom, p. 25.
? 158 BRITAIN^S "FEUDALISTIC SYSTEM"
the centralized manipulation of the business system as a whole. This was partly true because a good many of the local and more loosely organized associations and chambers first appeared as coun- terweights to large concerns or cartels already exercising some de- gree or other of monopoly power. And of these latter there was a steady--in some cases spectacular--growth in the pre-war decades. Particularly noteworthy in this respect were the iron, steel, build- ing materials, and engineering industries, certain of the light manufacturing industries (bedding, cotton textiles, boot and shoe, whisky, salt, thread, soap), and shipping and finance. ^^ Relatively few fields of business were wholly untouched by some form of com- bination, though the peculiar nature of British economic organiza- tion made it difficult in many cases to recognize in these concre- tions significant foci for the exercise of nascent monopoly powers. It required the experiences of wartime to bring these two trends in business organization to focus, and to show how far both the reality and belief in the principles of the classical order had been undermined within the nerve centers of the British business system.
BIRTH OF THE FBI: "LARGE, POWERFUL, WEALTHY"
In his speech as President of the first General Meeting of the Federation of British Industries (March 1917), Mr. Dudley Docker explained the aims which led him to take the initiative in forming the Federation.
We wanted [he said] to form an association sufficiently large, powerful and wealthy,
to command the attention of the Government of this country when framing industrial legislation;
to create an organization big enough to make terms with labour, terms by which we might succeed in bringing about understanding and cooperation;
to bring about an organized effort for the furtherance of British trade interests generally. ^^
11 See, in particular, Hermann Levy, Monopolies, Cartels and Trusts in British Industry (London, 1927), Parts II and III.
12 From notes supplied by a prominent and authoritative business correspondent in London, who, on account of the contemporary posture of affairs, prefers to remain incognito. This authority, hereafter referred to as Correspondent, somewhat whimsi- cally refers to the FBI as the "Federation for Burying Initiative," and its early parallel employers' organization. The National Confederation of Employers' Organizations, as the "Confederation of Embittered Obstructionists. "
? BRITAIN'S"FEUDALISTICSYSTEM" 159
To this end he had arranged a preliminary meeting in January, 1916, at which the proposal was made that 100 firms be found will- ing to subscribe ? 1,000, each, to found such an association. On July 20, at a second preliminary meeting held at the Grand Hotel in London, firms representing an estimated ? 500,000,000 capital "de- cided to form the Federation of British Industries, with the object of promoting the cooperation of manufacturers with labor, with the government, and with each other in support of their common interests and for the general good of the country," as an enthusiastic reporter summarized the matter for the London Times Trade Supplement. ^^ One hundred and twenty-four firms were found willing to guarantee ? 1,000 each to the needs of the new organi-
zation.
Sixty-two trade associations and 350 firms were thus banded to-
gether at the end of the first financial year (June 30, 1917). The blessing of the government was demonstrated when the Foreign Office "was kind enough to allow Mr. Roland Nugent ^* to come to us as Director and Secretary. " ^^ The Employers' Parliamentary Association was absorbed in the new Federation, and its branches became the District Branches of the FBI. The British Manufac- turers' Association became a member, and took a place on the Executive Council. The British Empire Producers' Associations, another national, policy-forming body, cooperated in the establish- ment of a Joint Committee for Empire questions. Contacts were made with the British Commonwealth Union.
The National Association of Manufacturers in the United States had looked upon the FBI as a conversion to its objectives and or- ganization principles. More important, particularly for Mr. Dud- ley Docker,^^ however, seems to have been the experience of the Swedish Federation of Industries, founded in 1910. But whatever the source or sources of inspiration, growth was rapid. At the end of the second financial year, June, 1918, membership had increased to include 129 trade associations, and 704 firms representative of
13 August, 1916.
14 Later Sir Roland Nugent: he was in the diplomatic service 1910-13; was trans- ferred to the Foreign Office, 1913-17; and served FBI, 1916-17 and 1918-32.
15 Correspondent.
16 F. Dudley Docker of the Metropolitan Carriage, Wagon and Finance Company, now a Director of the Midland Bank and the Electric and Railway Finance Com- pany. (Refused reelection for a second term. )
? i6o BRITAIN'S "FEUDALISTIC SYSTEM"
practically every trade and industrial interest within the United Kingdom. By the middle thirties the Federation was proud to pro- claim itself "the largest association of manufacturers in the world . . . accepted by Government, Press and Public as the authorita-
^" tive voice of British Industry. "
activities and policies of the industrial "general staff" ^^
Viewing its task as that of coordinating the whole of the British industrial system before the public, labor, and (especially) the government, the FBI moved into the picture with dispatch and determination. Some idea of the scope and range of its activities at the outset can be given by listing the matters covered in its first annual report: ^^
Overseas Trade Committee set up to study the development of the Government service for the promotion of British trade in foreign coun- tries.
Establishment of an Anglo-French Committee on Industry and Eco- nomics for joint discussion and solution of problems.
Framing of a Memorandum and Questionnaire to members in regard to the possible problems and developments in the industry of Great Britain after the war.
Supply of Federation representatives to the Departmental Com- mittees
a) Colonial Office Committee on Blue Books
b) Foreign Office Committee on Commercial Attaches
c) Priority Advisory Committee.
Formal evidence submitted to Lord Balfour's Committee on indus-
trial and commercial policy.
Joint deputation with the British Manufacturers Association (later
National Union of Manufacturers) and the Association of Controlled Firms to the Ministry of Munitions and other Ministries drawing atten- tion to the confusion and irritation caused in industry by Government orders and Departmental activities.
Establishment of a Committee on Patent Law on behalf of the Board of Trade.
Education Committee.
The President's address spoke of education as a "problem which lies
17 Brochure of the FBI, entitled "Industry in Action. "
18 As characterized by The Spectator, Dec. 28, 1918, p. 754.
19 Verbatim from Correspondent,
? BRITAIN'S'FEUDALISTICSYSTEM" 161
at the root of many of our difficulties" and "has particular relevance to the problem of industrial unrest. " The Education Committee was very active for some four or five years and was particularly concerned with a) The Fisher Act of 1918 and the implications of compulsory continued education from an industrial standpoint; b) The proposal to raise the school-leaving age to fifteen.
Preliminary Committee set up to consider legislation affecting indus- trialists and manufacturers and to make such recommendations as ap- peared necessary from the point of view of the interests of industry.
Special Committee set up in connection with Excess Profits Duty.
Special Committee set up to examine the proposals and implications of the Reports of the Whitley Committee. ^^
Appointment of Legal Advisers, principally for the service of mem- bers conducting import and export trade.
But this was only the beginning. With each succeeding year the interests of the FBI have widened, and the range of its influence has spread, until today, "It is impossible to cover the whole range of the Federation's work . . . for practically no question which seems likely to affect the interests of its members is left untouched by its organization. " ^i Since practically everything which goes on in the British Empire affects at some point the "interests of its mem- bers," the FBI is officially committed to a totalitarian coverage.
This point is borne out not only by many official declarations to such effect, but also by the manner in which problems put before the Federation have been shaped up for consideration. A single example will suffice. When in 1918 the Federation examined the question, "Is the existing organization of industry satisfactory for meeting present-day problems? " its Commercial Efficiency Com- mittee indicated the following range of subjects "as a field for cooperation in the commercial and economic sphere through vol- untary association: 22
The avoidance of undue competition.
The regulation of prices--from the point of view of an economic price based on efficiency, and not from that of a monopoly price de- signed to exploit the consumer.
The general improvement and development of an industry by such means as:
20 See pp. 171-72, following.
21 Labour Research Department, The Federation of British Industries (Studies in Labour and Capital, No. 5, London, 1923), p. 6.
22 FBI, Committee on the Organisation of Industry, Report Qune, 1935), pp. 4-5.
? i62 BRITAIN'S 'TEUDALISTIC SYSTEM"
a) interchange of statistics;
b) standardisation of methods and details of costings and interchange
of costings;
c) interchangeofmethodsofworking;
d) centralisation of research and experiment;
e) technical education and commercial training;
f) standardisations of plant, machinery and product; g) specialisation;
h) joint publicity and propaganda;
i) regulation of the conditions and usages of training and their ap-
plication to the various industries;
j) centralisation and control of sales;
k) demarcation of territory, to allow orders to be allotted to the
works geographically best fitted to carry them out.
THE CONTROL OF SOURCES OF SUPPLY OF NECESSARY RAW MATERIALS
Readers familiar with the literature will recognize in the above the entire range of German and continental cartel controls, as well as an underwriting of a good many of those newer controls for- mally recognized only in overtly Fascist countries. "There is need," continues the above cited Report, "for the individual to subordi- nate his views to those of Industry for the achievement of a common policy, and for cooperation between Industries on a scale that pre- war conditions did not so insistently demand. Public considera- tions today place upon each industry a collective responsibility for efficient and economic production. " (Italics mine. )
These "public considerations" and this "collective responsibil- ity" justified, the FBI felt, extending the sphere of "cooperation" until the following could be achieved: (i) elimination of excess plant capacity, bringing about "coordination between supply and demand" and promotion of greater "concentration of output in efficient and up-to-date plants"; (2) limitation of "new entrants to an industry" in order better to relate productive capacity to mar- ket demands; (3) prevention of certain firms in some trades from gaining an "unfair advantage" without bearing their due propor- tion of development expenditure, such as centralised propaganda and research; (4) promotion of greater unity amongst British in- dustries in negotiations with foreign competitors, and increased stability in world trade conditions; (5) expulsion from the conduct
--
? BRITAIN'S"FEUDALISTICSYSTEM" 163
of business of firms "which can never hope to become profitable. " ^^ It would be difficult to imagine a more comprehensive plan for the coordination of industry, which could still hope to stay within the framework of capitalistic institutions. 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.