735. Effects on industrial organization.—In the more important field of manufacturing industry the changes were likewise sweeping and the permanence of their effect appears to be more certain. Government control was general and despotic. It was heavy-handed, and was often ineffective. It was attended by much friction and waste. It did at least accumulate and disseminate the best technical information and it was ruthless in scrapping antiquated equipment. It stimulated original and constructive thought, if only by reaction against its own arbitrary rules. When manufacturers escaped from it at the close of the war they had already learned much about their business that was new and valuable to them, and were in the way of learning more by their own initiative.
The English, like other peoples, had depended very largely on Germany for synthetic dyes; that is, those dyes which are manufactured in the laboratory by chemical processes, and which have driven most of the natural coloring matters from the field of industry. After the outbreak of the war they suffered for this dependence on two accounts; first in their textile industry by the lack of dyes of good quality and of the requisite variety, second in the field of military operations by the superiority of the Germans in the manufacture of explosives, to which the plant of dye factories is well adapted. Early in the war, therefore, in 1915, “British Dyes, Limited” was formed with the encouragement and financial support of the government. This was a combination of manufacturers using dyes, designed to organize the production of synthetic dye-stuffs by the most advanced methods and with a liberal provision for scientific research. This company did not drive from the field individual producers, who actually made great progress during the war. It is significant, however, of a tendency toward combination, which had been less marked in England than in Germany or in the United States, and which had hampered the English in competition with their rivals. Government control during the war greatly facilitated the movement, which appeared in other industries and promised to break down the separatism of the old-fashioned English manufacturers.
736. Effects on mercantile and financial organization.—In the broader fields of marketing and finance the English took stock of their deficiencies and set to work to remedy them. There was a noteworthy movement toward amalgamation in the banking business, reducing the number of competing units and making more effective the resulting institutions. Particularly significant was the organization under royal charter of the British Trade Corporation, with an authorized capital of £10 million. This company was actually a bank, much like the great German banks of the period before the war, but it was not officially so styled, because it was meant to offer services which had not been characteristic of conservative English banking.
“It will not endeavour to compete with the business of existing British banks and merchants, and it will not accept deposits at call or short notice, except from parties who are proposing to make use of its overseas facilities. Its aim will be to assist with the co-operation of banks and other institutions the inception of new undertakings, and for this purpose it will promote the formation of syndicates and the placing of issues. When British capital is raised by its means for overseas enterprises, it will seek to secure that orders in connection with new undertakings are placed in this country. It will pay special attention to the study of new schemes, and for this purpose it will develop an Information Bureau with representatives abroad which will keep in touch with the Department of Commercial Intelligence of the Board of Trade. It will also be ready to give financial assistance to arrangements for promoting the better organisation of British industries.”
737. Effects on labor.—In the world of labor, as in the sphere of leaders, the war wrought far-reaching changes. The sudden demand for men in the field necessitated the withdrawal of laborers from industry at the very time when the demand for service at home to support the military establishment was most urgent. There followed a strain on the forces of labor which in some cases was allowed to over-tax the capacity of the worker, not only to his own personal injury but also to the disadvantage of the public; while in some cases the laborer, not properly educated in patriotism and thrift, exploited the situation to extort high wages which he spent extravagantly. In the course of time these extremes were evened out, but they illustrate the stresses which permeated the whole industrial structure and which persisted in one form or another until the end of the war. There was necessarily a great “dilution” of skilled labor, with the labor of women and of unskilled men and youths. Trade unions for a time renounced the strict application of their rules, while at the same time they extended greatly their membership. Conflict with employers was postponed, in general, during the course of the war. But the feeling grew strong in the ranks of labor that an undue share of the burden was thrown upon the worker, and that the capitalist-employer had an undue share of the returns and too nearly absolute control. The Russian revolution appears to have had only a very slight influence on the spread of these doctrines, which can fairly be considered the natural product of war conditions in an industrial democracy. With the close of the war a number of labor conflicts came to a head, and one in coal-mining which was long continued, had a particularly serious effect upon industry in general.
738. Control of commerce and commercial policy.—Early in the war the trade of the United Kingdom was placed by the government under strict control. In the emergency of the war it was obviously proper to assure the priority of national over private interests, and the shortage of ships made regulation doubly important. The importation of some wares was prohibited outright, of some wares was restricted to a definite quantity, of some wares was allowed under government license. Similarly exports were placed under control, to keep the needed stocks at home, and to make sure that enemy powers did not profit by British trade. All these measures had a military object, and had no significance with regard to the traditional policy of free trade. In the second war budget, however, taking effect in 1915, the list of dutiable imports was extended to include some manufactured wares (cinema films, clocks and watches, motor cars, and musical instruments), which were subjected in general to an import duty of 331⁄3%. The measure was designed to give revenue, not protection, and it had little practical importance; the importation of most of these articles was soon absolutely prohibited. As a departure from the principles that had been followed in the preceding half century it had considerable significance. Significance attached also to the arrangement in a later budget by which preferential rates, usually two-thirds or five-sixths of the full rate, were established on most of the articles subject to duty, and an opportunity was thus afforded to make some return to the British dominions for the preferences which they had long allowed.
739. Report of the Committee on Commercial Policy.—An Economic Conference of the Allies was held at Paris in 1916, at which was discussed the commercial policy to be pursued by the allied powers at the close of the war. The conference was probably designed to frighten the Germans into making peace, and had no practical results of importance. It did, however, bring to the attention of the English the questions of policy which they must face, and occasioned the appointment of a Committee on Commercial and Industrial Policy after the War, including a number of prominent and influential members, which made its final report in 1918. The substance of the report was as follows.
The committee condemned the plan of establishing a comprehensive tariff to be used in bargaining with other countries, to force concessions in rates from them; and also the plan to impose duties on manufactured imports as a source of revenue. On the other hand it favored duties in specific instances to prevent “dumping,” the sale of goods in a foreign market at prices lower than in the country of manufacture; and it urged, in the light of experience of the war that protection should be afforded, “at all hazards and at any expense,” to industries which it described as “key” or “pivotal.” Such were the industries providing synthetic dyes, zinc, tungsten (for high-speed steel), magnetos, optical and chemical glass, hosiery needles, precision gages, and certain drugs and chemicals. The United Kingdom had depended on other countries, particularly Germany, for the supply of these products, and had then paid dearly for the lack of them. Finally, the Committee approved the principle of imperial preference, and advised that preferential treatment be accorded to the British Possessions in the case of all customs duties established.
740. Safeguarding of Industries Act, 1921.—By an act of Parliament which went into effect in 1921 the most important recommendations of the committee were given the force of law. The act imposed an import duty of 331⁄3% ad valorem on a long list of articles, perhaps 3,000 altogether, defined in detail by the government Board of Trade. The general character of these articles has been already indicated in the preceding section; they were the products of “key industries,” without which other and larger branches of industry would be lamed in operation. Another section of the act was designed to prevent “dumping.” It empowered the Board of Trade to protect industries in the United Kingdom by a duty of 331⁄3% from the competition of articles offered for sale there at prices below the cost of production in the country of origin, or at prices abnormally low by reason of the depreciation of the currency in that country.
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