" ^ 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.
Brady - Business as a System of Power
" Another
52 Le Role exact des dileguds, published by the Comity de Pr^voyance et d'Action Sociale, Paris, 1937. In accounting for the evolution of French monopoly controls, and the attitude in social and political matters of organized French employer groups, 1 have purposely eliminated the Social Catholic Program, which has been briefly summarized in Chapter II. At certain stages this movement played a very important, perhaps even decisive role (as, e. g. , in restraining French aid to the Spanish Loyal- ists--one of the most significant turning points in modern European history). But to go far into these antecedents would lead too far afield. See, however. Moon, The Labor Problem and the Social Catholic Movement in France.
53 Quoted from Syndicats, April 15, 1937.
54 Shop delegates function more or less as shop stewards in American trade unions --they are elected by and represent the men in the shop. But whether or not they were also representatives of the union has been a point of bitter dispute.
? 142 VICHY'S "NEW ORDER"
source was cited as saying that "worker control is the central point in the coming struggle. "
This, the Comite found, came out to "bolshevism. " Worker con- trol in the factory, they said, would only be followed, as Lenin showed in 1917 when he "started the revolution," by "complete expropriation of industry for the profit of the state. " The CGT was "becoming totalitarian under the influence of Communist ele- ments. " ^^ Every single gain made by the CGT would serve only to add fuel to its revolutionary fires. ^^
The CGT, in short, was encroaching upon "liberty" and "free- dom," and a situation had arisen in which "the employer, the ranks of authority, and the independent trade unions " must unite and fight against dictatorship, violence, attacks on the liberty of labor and thought, and injuries to the principle of ownership. " And the first step towards a real "drawing together of employers and work- ers" was the "development and completion of employer organiza- tion. " ^^ The battle cry became, in the words of the new president, M. Gignoux, first, "employers be employers," and then "rally around your professional syndicate . . . there must be no more isolation. " Consider, he argued, the crucial significance of the stakes: "Employers, you are not only responsible for your own concerns but for those of your colleagues and to those to whom you delegate a part of your authority. . . . You are the leaders: you have charge not only of men but of souls. " ^(R)
The new point of departure, in other words, was to emphasize the totalitarian angle of social and economic issues. Fundamental interests were now clearly at stake. The object had now become fully to coordinate the whole of the French business system into a coherent, cohesive, and neatly integrated mechanism which might be centrally directed in defense of the underlying tenets and in protection of the institutional fabric of capitalism per se.
The first step was to expand the membership base so as to include
55 Syndicats, April 15, 1937.
58 La Journ^e Industrielle, April 2, 1937, complained that "Whereas when on June 7, increases of salary from 7 to 15 per cent had been considered, the new sched- ules of minimum salaries entered in the agreements have aggravated costs passing 25 per cent and even in certain cases reaching 50 per cent. "
57 "Independent trade unions" mean both non-CGT and company unions.
58 C. J. Gignoux, Patrons, soyez des patrons! (Paris, 1937).
59 Ibid. The situation, many felt, was practically identical with that which Italian
industry faced in the early twenties at the time of Mussolini's march on Rome.
? VICHY'S "NEW ORDER" 143
all branches and phases of French business, large or small, national or local, domestic or foreign. The new arrangement called for an enlarged series of thirty-five Groups, each in turn subdivided into a series of special industrial and trade categories. The grouping in the main follows vertical lines, that is, each group brings together all stages of production and distribution from raw materials and on through to the ultimate consumer.
Four types of organizations may belong to the Groups: (1) Pro- fessional (Branche professionelle),(R)*^ (2) Interprofessional regional (Branche interprofessionelle regionale), (3) Technical (Organ- ismes techniques), and (4) Miscellaneous (Associations adherentes). The Professional organizations might include (a) "National pro- fessional Confederations which bring together by virtue of their close affinities Federations, Syndicates or Associations," (b) "Na- tional professional Federations which group together Associations or Syndicates, national or local, of a like professional nature," and (c) "National professional or regional syndicates. " The Interpro- fessional regional type may be made up of Interregional Associa- tions or Federations of such associations. It may also include any type of business organization found in any locality or region, and may even include isolated individual firms. The Technical bodies are those which are especially set up for purposes of stud--y or pro- motion of any important topic of special group interest "fiscal, social, economic, tariffs, foreign trade, and other questions. " The Miscellaneous category is a catchall for every conceivable type of employer or business association not falling under any of the previous classifications. ^^
The CGPF was thus to determine the eligibility of each associa- tion to each group, reserving the right on the grant of admission to demand the submission of information, business, economic, or of any other kind, relevant to the purposes of the CGPF, and re- quiring of every single association that it agree "to pursue its activi- ties according to directives laid down by the CGPF. " ^^
60 As previously indicated, the term "professional" means business grouping by industrial, trade, or occupational lines. It does not mean the "professions" in the English and American sense of the term.
61 Duchemin, op. cit. , p. 297, "Statuts de la Confederation Cen^rale du Patronat Fran^ais," adopted by the General Assembly, at meetings held on March 18 and April 26, 1938.
62 Idem.
? VICHY'S "NEW ORDER"
This latter clause appears only in the 1938 Statuts, and is in sharp contrast with the Statuts of the Confederation Generale de la Pro- duction Fran^aise. While heavy emphasis had been laid on the autonomous nature of each Group's activities, the new Statuts only at one place makes incidental reference to the old principle. With that minor concession,(R)^ the right and power of the central admin- istration over member groups and their subsidiary bodies is em- phasized at every turn and point.
The change represents a definite authoritarian trend, further reinforced by adjustments which must make possible a much greater centralization of power in the hands of organized business associations. Each Group now (prior to Nazi occupation) has its own permanent headquarters in Paris. Some of the Groups are equipped with large and efficient staffs. In a few cases headquarters appear to be identified with the offices of more powerful trade as- sociations--a practice similar to that which became so widespread in America under the NRA Code procedure.
The Central Council under the new arrangement is made up primarily of delegates from the constituent associations,(R)* not of the Groups as previously. The number of delegates each constitu- ent body may designate is, in turn, determined by the Central Council. The Annual Assembly is chosen in the same way, the number of delegates sent by each association being four times the number allowed as members of the Council.
The Annual Assembly appears to be mainly a general forum for discussion, by Group delegates, for the giving of announcements by the CGPF administration, and for the ratification of budgets, policies, and plans laid down in the agenda. Real power resides in the hands of the Central Administration {Bureau) of the CGPF. This body is chosen from the members of the Council shortly after the adjournment of the Annual Assembly, and is made up of the president, one or more vice-presidents, a treasurer, two secretaries, honorary president, and delegates sent by the constituent associa- tions of the several Groups. (R)^
63 "Article 12. Syndical Discipline: The maximum autonomy is to be permitted to each constitutive organization. " Ibid. , p. 302.
6* "Article 11, paragraph 2; Each group of the professional divisions sends to the Central Administration two delegates; whenever the branch of industry or commerce permits, one of the two delegates should be chosen from amongst the small or me- dium sized industrialists or traders. " Ibid. , p. 300.
66 Ibid. , p. 302.
144
.
? VICHY'S "NEW ORDER" 145
While this is a much larger body than under the previous ar-
rangement, an unusual amount of power is vested in the president
and the various special committees which he is authorized to ap-
point at will. In addition he has sole power to act in the name of
the CGPF (except in money matters, where he shares the power
with the treasurer). Upon joining the CGPF, all organizations must
agree "to submit to the President of the CGPF, prior to the making
of any definite decision, all questions which involve a fundamental
principle relating to the economy as a whole. " ^^ The President and
Council are granted authority to determine the terms and condi-
tions under which such disputes or problems should be submitted,
and are authorized to command at any time of any constituent asso-
ciation, or of any company or enterprise belonging to any member
association, "all statistical information of a general nature, and,
more particularly, so far as possible all round figures on invested
capital, the volume of business turnover, and the number of paid
^^
THE LOCATION OF POWER
Like most central organizations of its genre, the CGPF is a tissue of compromises yielded by conflicting groups. It will not do, how- ever, to dismiss its activities as unimportant on that account. For despite the somewhat shadowy character of its substance, and the doubtful quality of its authority, there is clear evidence of growth in power and influence along lines similar to those outlined for like organizations in other major industrial countries.
1 At the bottom there has been steady and cumulative pressure to expand the organizational network so as to include all business interests in the whole of France, regardless of the scale on which the individual enterprise might operate, and irrespective of such things as legal status, trade or occupational lines, nature and loca- tion of markets, and so on. The 1936 reorganization of the CGPF and the outbreak of the Second World War lent increasing em- phasis to this tendency towards universal, all-inclusive organization of French business enterprise.
2. Similarly, French business organization has shown a growing tendency to federate, coordinate, unify, simplify, eliminate dupli- cation and overlapping, and to centralize direction in the determi-
66 Idem. ^"f Ibid. , p. 300.
employees. "
? 146 VICHY'S "NEW ORDER"
nation of leading policies in "roof" or "peak" associations or "confederations" of associations. The CGPF represents the most complete expression of this tendency to date. Its evolution has been paralleled by four complementary trends: (a) all local and regional trade or occupational ("professional") associations are brought into national federations; (b) in each locality, municipality, or other regional area, all local associations are brought together into local federations or confederations; (c) national associations or federa- tions are brought together in technologically or organizationally interrelated "Groups"; and (d) each association, or federation, or "Group," or confederation tends to become vertical, that is, to include all associations from the production through the financing and distribution phases.
3. The policies upon which agreement is sought relate increas- ingly to issues having to do with the maintenance and defense of capitalistic institutions per se. In particular this means (a) a com- mon front against organized labor, (b) promotion of a policy of "self-government in industry" ^^ and (c) demands for the right ac- tively to capture the power, to formally manipulate, and to inter- fere directly in the shaping up of governmental policy relating to every single phase of the economic, social, and political interests of organized business.
4. The looser and more "shadowy" associations shade imper- ceptibly into the more powerful, and these in turn into cartel, cartel-like, and quasi-cartel monopoly-oriented groupings. Prac- tically all of the leading French Associations and Federations exer- cise to some extent or other one or all of the usual type of cartel functions. ^^
5. The guiding hands in this proliferating and power-congealing meshwork of French business organization seem to reach out from the heavy industries and finance. In the heavy industries the Comite des forges has played a dominating role, and in finance the giant banking house. Credit Lyonnais. The policies which have in the end won out, and the position which has been finally taken on
68 The spokesmen for the CGPF and similar groups constantly use this expres- sion. See, e. g. , the annual speeches of M. Duchemin, in his Organisation syndicate.
69 See Jacques Lapergue, Les Syndicats de producteurs en France (Paris, 1925), and, especially, Pierre Bezard-Falgas, Les Syndicats patronaux de I'industrie metallurgique en France (Paris, 1922), particularly pp. 176-224 and 386-403.
--
? VICHY'S "NEW ORDER"
the leading issues that have come to the fore with and following the Matigon Agreement, are those which these two groups--after many compromises--have favored.
Beyond this point it is extremely difficult to go, especially in the confused state of affairs one finds in contemporary France. It is, however, perhaps worth pointing out that behind the scenes in the evolution of the CGPF has gone on several long, and at times bitter, struggles, the two most important of which appear at present to have been resolved as follows:
Attitude toward labor. --As pointed out above, M. Duchemin represented interests which had long taken a more or less concilia- tory attitude toward union labor. He appears, in this report, to have followed in the steps of M. Clementel, Minister of Commerce, who called the CGPF into being in 1919. In this attitude he repre- sented a policy for France quite similar to that adopted by Hugo Stinnes and Walther Rathenau in postwar Germany. Behind him one finds a vast and wide-ranging series of industrial, financial, transport, commercial, and miscellaneous enterprises. Most im- portant of these were the Credit Lyonnais,^^ the heavy chemicals Kuhlmann group,^^ the Gillet group,^^ t^g Lyon group,^^ and the Schneider group. ^*
Opposed to this vast assembly of gigantic business interests sometimes referred to collectively as the "Gallican" group--^were arrayed particularly the sprawling economic empires of the De Wendel ^^ and Rothschild groups. ^^ These had long been bitterly antiunion on all labor matters, and had consistently opposed Du- chemin in his policy of reconciliation. Following Matignon, this
70 Paid-in capital, Fr. 400 million; assets (1938) of Fr. 14,480 million; dividends, 1928-38 inclusive, 20 percent per annum.
71 See footnote 34, above.
72 Gillet-Thaon (laundry, dye\yorks, rayon, mechanical construction, etc. ). A hold- ing company of Fr. 250 million capital stock.
73 The Lyon group seems to have been a group of industrialists very closely re- lated to and accepting the leadership of the Credit Lyonnais.
74 Schneider (Creusot), capital stock of Fr. 100 million; produces iron, steel and armaments.
75 The De Wendel group, dominated by one of the oldest families in French in- dustrial history (see Louis Launay, De Wendel, Vaucresson, 1938), is (was? ) probably the most powerful single industrial aggregation in contemporary France. Control has been exercised mostly through two closely held holding companies. The Comite des Forges has been pretty much the mouthpiece of the De Wendel interests since its beginning.
76 See footnote 47.
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.
52 Le Role exact des dileguds, published by the Comity de Pr^voyance et d'Action Sociale, Paris, 1937. In accounting for the evolution of French monopoly controls, and the attitude in social and political matters of organized French employer groups, 1 have purposely eliminated the Social Catholic Program, which has been briefly summarized in Chapter II. At certain stages this movement played a very important, perhaps even decisive role (as, e. g. , in restraining French aid to the Spanish Loyal- ists--one of the most significant turning points in modern European history). But to go far into these antecedents would lead too far afield. See, however. Moon, The Labor Problem and the Social Catholic Movement in France.
53 Quoted from Syndicats, April 15, 1937.
54 Shop delegates function more or less as shop stewards in American trade unions --they are elected by and represent the men in the shop. But whether or not they were also representatives of the union has been a point of bitter dispute.
? 142 VICHY'S "NEW ORDER"
source was cited as saying that "worker control is the central point in the coming struggle. "
This, the Comite found, came out to "bolshevism. " Worker con- trol in the factory, they said, would only be followed, as Lenin showed in 1917 when he "started the revolution," by "complete expropriation of industry for the profit of the state. " The CGT was "becoming totalitarian under the influence of Communist ele- ments. " ^^ Every single gain made by the CGT would serve only to add fuel to its revolutionary fires. ^^
The CGT, in short, was encroaching upon "liberty" and "free- dom," and a situation had arisen in which "the employer, the ranks of authority, and the independent trade unions " must unite and fight against dictatorship, violence, attacks on the liberty of labor and thought, and injuries to the principle of ownership. " And the first step towards a real "drawing together of employers and work- ers" was the "development and completion of employer organiza- tion. " ^^ The battle cry became, in the words of the new president, M. Gignoux, first, "employers be employers," and then "rally around your professional syndicate . . . there must be no more isolation. " Consider, he argued, the crucial significance of the stakes: "Employers, you are not only responsible for your own concerns but for those of your colleagues and to those to whom you delegate a part of your authority. . . . You are the leaders: you have charge not only of men but of souls. " ^(R)
The new point of departure, in other words, was to emphasize the totalitarian angle of social and economic issues. Fundamental interests were now clearly at stake. The object had now become fully to coordinate the whole of the French business system into a coherent, cohesive, and neatly integrated mechanism which might be centrally directed in defense of the underlying tenets and in protection of the institutional fabric of capitalism per se.
The first step was to expand the membership base so as to include
55 Syndicats, April 15, 1937.
58 La Journ^e Industrielle, April 2, 1937, complained that "Whereas when on June 7, increases of salary from 7 to 15 per cent had been considered, the new sched- ules of minimum salaries entered in the agreements have aggravated costs passing 25 per cent and even in certain cases reaching 50 per cent. "
57 "Independent trade unions" mean both non-CGT and company unions.
58 C. J. Gignoux, Patrons, soyez des patrons! (Paris, 1937).
59 Ibid. The situation, many felt, was practically identical with that which Italian
industry faced in the early twenties at the time of Mussolini's march on Rome.
? VICHY'S "NEW ORDER" 143
all branches and phases of French business, large or small, national or local, domestic or foreign. The new arrangement called for an enlarged series of thirty-five Groups, each in turn subdivided into a series of special industrial and trade categories. The grouping in the main follows vertical lines, that is, each group brings together all stages of production and distribution from raw materials and on through to the ultimate consumer.
Four types of organizations may belong to the Groups: (1) Pro- fessional (Branche professionelle),(R)*^ (2) Interprofessional regional (Branche interprofessionelle regionale), (3) Technical (Organ- ismes techniques), and (4) Miscellaneous (Associations adherentes). The Professional organizations might include (a) "National pro- fessional Confederations which bring together by virtue of their close affinities Federations, Syndicates or Associations," (b) "Na- tional professional Federations which group together Associations or Syndicates, national or local, of a like professional nature," and (c) "National professional or regional syndicates. " The Interpro- fessional regional type may be made up of Interregional Associa- tions or Federations of such associations. It may also include any type of business organization found in any locality or region, and may even include isolated individual firms. The Technical bodies are those which are especially set up for purposes of stud--y or pro- motion of any important topic of special group interest "fiscal, social, economic, tariffs, foreign trade, and other questions. " The Miscellaneous category is a catchall for every conceivable type of employer or business association not falling under any of the previous classifications. ^^
The CGPF was thus to determine the eligibility of each associa- tion to each group, reserving the right on the grant of admission to demand the submission of information, business, economic, or of any other kind, relevant to the purposes of the CGPF, and re- quiring of every single association that it agree "to pursue its activi- ties according to directives laid down by the CGPF. " ^^
60 As previously indicated, the term "professional" means business grouping by industrial, trade, or occupational lines. It does not mean the "professions" in the English and American sense of the term.
61 Duchemin, op. cit. , p. 297, "Statuts de la Confederation Cen^rale du Patronat Fran^ais," adopted by the General Assembly, at meetings held on March 18 and April 26, 1938.
62 Idem.
? VICHY'S "NEW ORDER"
This latter clause appears only in the 1938 Statuts, and is in sharp contrast with the Statuts of the Confederation Generale de la Pro- duction Fran^aise. While heavy emphasis had been laid on the autonomous nature of each Group's activities, the new Statuts only at one place makes incidental reference to the old principle. With that minor concession,(R)^ the right and power of the central admin- istration over member groups and their subsidiary bodies is em- phasized at every turn and point.
The change represents a definite authoritarian trend, further reinforced by adjustments which must make possible a much greater centralization of power in the hands of organized business associations. Each Group now (prior to Nazi occupation) has its own permanent headquarters in Paris. Some of the Groups are equipped with large and efficient staffs. In a few cases headquarters appear to be identified with the offices of more powerful trade as- sociations--a practice similar to that which became so widespread in America under the NRA Code procedure.
The Central Council under the new arrangement is made up primarily of delegates from the constituent associations,(R)* not of the Groups as previously. The number of delegates each constitu- ent body may designate is, in turn, determined by the Central Council. The Annual Assembly is chosen in the same way, the number of delegates sent by each association being four times the number allowed as members of the Council.
The Annual Assembly appears to be mainly a general forum for discussion, by Group delegates, for the giving of announcements by the CGPF administration, and for the ratification of budgets, policies, and plans laid down in the agenda. Real power resides in the hands of the Central Administration {Bureau) of the CGPF. This body is chosen from the members of the Council shortly after the adjournment of the Annual Assembly, and is made up of the president, one or more vice-presidents, a treasurer, two secretaries, honorary president, and delegates sent by the constituent associa- tions of the several Groups. (R)^
63 "Article 12. Syndical Discipline: The maximum autonomy is to be permitted to each constitutive organization. " Ibid. , p. 302.
6* "Article 11, paragraph 2; Each group of the professional divisions sends to the Central Administration two delegates; whenever the branch of industry or commerce permits, one of the two delegates should be chosen from amongst the small or me- dium sized industrialists or traders. " Ibid. , p. 300.
66 Ibid. , p. 302.
144
.
? VICHY'S "NEW ORDER" 145
While this is a much larger body than under the previous ar-
rangement, an unusual amount of power is vested in the president
and the various special committees which he is authorized to ap-
point at will. In addition he has sole power to act in the name of
the CGPF (except in money matters, where he shares the power
with the treasurer). Upon joining the CGPF, all organizations must
agree "to submit to the President of the CGPF, prior to the making
of any definite decision, all questions which involve a fundamental
principle relating to the economy as a whole. " ^^ The President and
Council are granted authority to determine the terms and condi-
tions under which such disputes or problems should be submitted,
and are authorized to command at any time of any constituent asso-
ciation, or of any company or enterprise belonging to any member
association, "all statistical information of a general nature, and,
more particularly, so far as possible all round figures on invested
capital, the volume of business turnover, and the number of paid
^^
THE LOCATION OF POWER
Like most central organizations of its genre, the CGPF is a tissue of compromises yielded by conflicting groups. It will not do, how- ever, to dismiss its activities as unimportant on that account. For despite the somewhat shadowy character of its substance, and the doubtful quality of its authority, there is clear evidence of growth in power and influence along lines similar to those outlined for like organizations in other major industrial countries.
1 At the bottom there has been steady and cumulative pressure to expand the organizational network so as to include all business interests in the whole of France, regardless of the scale on which the individual enterprise might operate, and irrespective of such things as legal status, trade or occupational lines, nature and loca- tion of markets, and so on. The 1936 reorganization of the CGPF and the outbreak of the Second World War lent increasing em- phasis to this tendency towards universal, all-inclusive organization of French business enterprise.
2. Similarly, French business organization has shown a growing tendency to federate, coordinate, unify, simplify, eliminate dupli- cation and overlapping, and to centralize direction in the determi-
66 Idem. ^"f Ibid. , p. 300.
employees. "
? 146 VICHY'S "NEW ORDER"
nation of leading policies in "roof" or "peak" associations or "confederations" of associations. The CGPF represents the most complete expression of this tendency to date. Its evolution has been paralleled by four complementary trends: (a) all local and regional trade or occupational ("professional") associations are brought into national federations; (b) in each locality, municipality, or other regional area, all local associations are brought together into local federations or confederations; (c) national associations or federa- tions are brought together in technologically or organizationally interrelated "Groups"; and (d) each association, or federation, or "Group," or confederation tends to become vertical, that is, to include all associations from the production through the financing and distribution phases.
3. The policies upon which agreement is sought relate increas- ingly to issues having to do with the maintenance and defense of capitalistic institutions per se. In particular this means (a) a com- mon front against organized labor, (b) promotion of a policy of "self-government in industry" ^^ and (c) demands for the right ac- tively to capture the power, to formally manipulate, and to inter- fere directly in the shaping up of governmental policy relating to every single phase of the economic, social, and political interests of organized business.
4. The looser and more "shadowy" associations shade imper- ceptibly into the more powerful, and these in turn into cartel, cartel-like, and quasi-cartel monopoly-oriented groupings. Prac- tically all of the leading French Associations and Federations exer- cise to some extent or other one or all of the usual type of cartel functions. ^^
5. The guiding hands in this proliferating and power-congealing meshwork of French business organization seem to reach out from the heavy industries and finance. In the heavy industries the Comite des forges has played a dominating role, and in finance the giant banking house. Credit Lyonnais. The policies which have in the end won out, and the position which has been finally taken on
68 The spokesmen for the CGPF and similar groups constantly use this expres- sion. See, e. g. , the annual speeches of M. Duchemin, in his Organisation syndicate.
69 See Jacques Lapergue, Les Syndicats de producteurs en France (Paris, 1925), and, especially, Pierre Bezard-Falgas, Les Syndicats patronaux de I'industrie metallurgique en France (Paris, 1922), particularly pp. 176-224 and 386-403.
--
? VICHY'S "NEW ORDER"
the leading issues that have come to the fore with and following the Matigon Agreement, are those which these two groups--after many compromises--have favored.
Beyond this point it is extremely difficult to go, especially in the confused state of affairs one finds in contemporary France. It is, however, perhaps worth pointing out that behind the scenes in the evolution of the CGPF has gone on several long, and at times bitter, struggles, the two most important of which appear at present to have been resolved as follows:
Attitude toward labor. --As pointed out above, M. Duchemin represented interests which had long taken a more or less concilia- tory attitude toward union labor. He appears, in this report, to have followed in the steps of M. Clementel, Minister of Commerce, who called the CGPF into being in 1919. In this attitude he repre- sented a policy for France quite similar to that adopted by Hugo Stinnes and Walther Rathenau in postwar Germany. Behind him one finds a vast and wide-ranging series of industrial, financial, transport, commercial, and miscellaneous enterprises. Most im- portant of these were the Credit Lyonnais,^^ the heavy chemicals Kuhlmann group,^^ the Gillet group,^^ t^g Lyon group,^^ and the Schneider group. ^*
Opposed to this vast assembly of gigantic business interests sometimes referred to collectively as the "Gallican" group--^were arrayed particularly the sprawling economic empires of the De Wendel ^^ and Rothschild groups. ^^ These had long been bitterly antiunion on all labor matters, and had consistently opposed Du- chemin in his policy of reconciliation. Following Matignon, this
70 Paid-in capital, Fr. 400 million; assets (1938) of Fr. 14,480 million; dividends, 1928-38 inclusive, 20 percent per annum.
71 See footnote 34, above.
72 Gillet-Thaon (laundry, dye\yorks, rayon, mechanical construction, etc. ). A hold- ing company of Fr. 250 million capital stock.
73 The Lyon group seems to have been a group of industrialists very closely re- lated to and accepting the leadership of the Credit Lyonnais.
74 Schneider (Creusot), capital stock of Fr. 100 million; produces iron, steel and armaments.
75 The De Wendel group, dominated by one of the oldest families in French in- dustrial history (see Louis Launay, De Wendel, Vaucresson, 1938), is (was? ) probably the most powerful single industrial aggregation in contemporary France. Control has been exercised mostly through two closely held holding companies. The Comite des Forges has been pretty much the mouthpiece of the De Wendel interests since its beginning.
76 See footnote 47.
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.
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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-
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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
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? 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.
