No More Learning

On nearly all matters where the government has sought author- itative employer representation on governmental committees, the CGPF was designated as the proper agency. Examples are found in its participation in the work of such governmentally sponsored bodies as the following:
The National Economic Council
The National Council of Handicrafts
The Higher Council on Educational Methods
The Higher Commission on Occupational Diseases The Industrial Hygienic Commission
The Commission on Engineering Awards.
In addition to these and other direct participation in govern- mental activities, the CGPF was the French employer representa- tive at the International Labor Office, and it was spokesman for French industry at the International Economic Conference in
1927, the International Committee of Economic Experts in 1931, and the Lausanne Conference in 1932, and on other similar occa- sions. At all the meetings of the various national and regional Chambers of Commerce, the meetings of the International Cham- ber of Commerce, and meetings or conferences held by other col- lusively organized business groups the CGPF, its special delegates, or leading figures in its various Groups have actively participated.
Leading industrial personages, accustomed to thinking in terms of the power and achievements of the vast industrial properties at their immediate command, have spoken in glowing terms of these activities and of achievements wrought through them. Thus M. Duchemin, summarizing the evolution of the CGPF to its com- manding position in 1936, quotes, in eulogy to his organization, the authoritative writer on French business and industrial life, M. de Lavergne:
In the strength of its 4000 syndicates, brought together in 27 Groups,*^ and spread over the whole of France, it coordinates and multiplies their efforts and can undertake, whenever it raises its voice, to formulate the viewpoint of the whole of the economic forces of the country. Confident
41 Since 1929 one Group had, apparently, either been dropped or merged with some other Group.
? VICHY'S "NEW ORDER'*
in the energy of which the employers have always given proof and in the good sense of the workers of all classes and ranks, it throws its power, efficaciously, behind the individual efforts of all who are concerned to see France maintain the eminent place in the commercial and industrial activities which assures its position in the markets of the world. To the extent that it expands its efforts, in the measure that it promotes the material unity essential to its aims, it will render the greatest service to the industry and commerce of France and at the same time to the entire nation. *^
But in the same year in which these expansive words were spoken, there occurred the threat of a general strike sweeping over the entire country, and the Popular Front, temporarily com- manded by the poetic Premier Blum,^^ was enabled to inflict on the Confederation Generale de la Production Fran^aise its first serious setback, the famous Matignon Agreement--a setback so serious that it brought about the downfall of M. Duchemin, forced a complete reorganization of the Confederation, and realigned the configuration of inner command as it was to remain until inter- nally disunited, republican France collapsed under the thunderous assault of the Nazi legions in the spring of 1940.
THE MATIGNON AGREEMENT AND ITS AFTERMATH
The Matignon Agreement was signed on June 7, 1936, between representatives of the Confederation Generale de la Production Fran^aise and the Confederation Generale du Travail (General Confederation of Labor--CGT). ** Premier Leon Blum, as spokes- man for the government and prime mover in the accord, added his signature to those affixed by the two parties to the compact.
There was nothing particularly striking in the specific provisions of the new agreement. These underwrote for "some millions of French workers the 40-hour working week, increases in pay ranging from 7 to 15 percent, the recognition of the trade unions, collec- tive agreements, holidays with pay, and other social advantages. " *^ While such gains were important, the principles underlying them
42 Duchemin, op. cit. , p. ii.
43 Of course we do not mean to say that Blum's economic, political, and legal out- put are of no consequence.
44 The CGT occupied in that year a position roughly analogous to the A. F. of L. in the United States, the General Federation of British Trade Unions in England, and the ADGB (Allgemeine Deutsche Gewerkschafts-Bund) in pre-Nazi Germany.
45 International Labour Office, Yearbook, 1936-37, p. 11.
139
? 140 VICHY'S "NEW ORDER"
had long been accepted in many countries abroad, and in several French industries the specific changes involved but relatively slight departures from previous practices.
Of much greater importance is the fact that it was among the first ^^ compacts signed in any major capitalistic (non-Fascist) coun- try between representatives of employers and labor empowered to speak for their respective interests on a nation-wide basis. In con- cluding the agreement M. Duchemin and his associates *^ acted on behalf of French employers as a whole, and M. Jouhaux and his co-signers ^^ served as de facto representatives of practically all French organized labor. No better demonstration than this could be given of the extent to which the CGPF had come to serve as supreme coordinator, synthesizer, and organizer of French business interests--a level fully equal to that of the Confederation Generale du Travail in the labor field.
But of principal importance in the present connection, is the fact that the Agreement, coming as it did in the heyday of the Popular Front movement and in the face of an unusually critical situation abroad, brought as an aftermath a complete shake-up in the CGPF. Forces, apparently led by the De Wendel *^ and Roth- schild ^? interests, and long opposed to the policies of M. Duchemin in the labor relations fields, definitely gained the upper hand. ^^ At an Extraordinary General Assembly, called on an emergency basis to meet in August, 1936, the association's name was changed from Confederation Generale de la Production Fran^aise to Con- federation Generale du Patronat Fran^ais (General Confederation
46 It was preceded in Germany by the Stinnes-Legier agreement (Zentralarbeitsge- meinschaft) of Nov. 15, 1918. The Confederation of Catholic Labor Unions endorsed the agreement enthusiastically.
47 See pp. 145-49-
48 While Jouhaux signed for the CGT, his signature was held by the Blum gov- ernment generally valid for all French employees.
49 See note 34 above.
50 Railroads, insurance, and mining constituted the principal Rothschild holdings. Seven members of the family were on the board of directors of the Chemin de Fer du Nord (capital stock of Fr. 231,875,000; assets of Fr. 18,230,692,000) in 1937. Di- rectorships in five other railroads, four insurance companies, and two mining con- cerns (one of the latter being the famous Spanish Peiiarroya Company, in which the De Wendel, the CrMit Lyonnais, and the Kuhlmann interests were likewise repre- sented) were also held within the family.
51 It has been said that the shake-up in the CGPF was the consequence of the organization's failure to exert pressure on the Blum government in order to prevent the Matignon agreement and to achieve prosecution of the sit-down strikers.
? VICHY'S "NEW ORDER" 141
of French Employers). A new constitution was drawn up, a new president elected, and a greatly increased range of influence made possible through extension of membership to include all fields of employer interests in trade, commerce, finance, and transport, as well as those of industry and manufacturing.
Various articles, discussions, resolutions, memorials, and books have fully set forth the position taken by the De Wendel-led groups. The demands of the CGT, they held, were clearly revolu- tionary and communistic. The concessions granted under the agreement were only taken by labor as evidence of employer weak- ness, and would necessarily give rise to even greater and more "exaggerated demands" on the part of the CGT. A militant em- ployer body, the Committee of Foresight and Social Action (Comite de Pr^voyance et d'Action Sociale), cited CGT sources of informa- tion as proof that the real objectives had not been stated in the Matignon Agreement at all. ^^
Marcel Roy was quoted from an article in Syndicats, the weekly publication of the CGT (edited by M. Belin, Secretary of the CGT and one of the CGT signers of the Matignon pact and subsequently Vichy minister of labor), as saying that since employer interests called for preservation of "the most despotic management of pro- duction" then "our interest demands that more and more the worker be called to take his place, which consists in guiding, and organizing production. . . . All good militant reasons favor worker control. " ^^ From the CGT "Guide for the Shop Dele- gate," ^* it was found that the delegate had been advised "more and more to know the conditions of work and output so that work- ers' control in production might be really effective. " 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 .