THE PROPOSED " INDUSTRIAL DEVELOPMENT COUNCIL " [The National Fuel and
Power Committee recommended by the Coal Commission is analogous to the sub-committees suggested in the following article.—En. Spectator.] * See Uttemigoyment, a Suggested Policy. (A. and C. Black. 4 Soho 8quare. Is. net.) demonstrated in the United States, where the co-operation of the Department of Commerce with industry in the pursuit of greater efficiency has resulted in enormous material benefits. The intense individualism of the United States does not reject State assistance when it can be of advantage.
The exceptional economic conditions of the post-War period have created problems which cannot be solved by individual efforts alone. National efforts are necessary. Just as the housing problem has proved too much for individual efforts, so have other problems arisen which require the application of national efforts, often delayed through lack of courage on the part of a Government to face the criticism of prejudice and dogma. Probably the most urgent and difficult of such problems is that of un- employment. So far the efforts of successive Govern- ments have been directed towards assisting the unem- ployed and little has been done to assist the employer. By State assistance to the employer is not necessarily meant any objectionable system of subsidies. Rather should it be directed to the removal of such obstacles as at present hinder the expansion of industry and the exercise of that individual initiative which alone prevents stagnation. To find a method by which the conditions favourable to industrial expansion can be created requires an examination of some of the factors which stand in the way of this expansion.
High costs of production are an important cause of un- employment by their effect in preventing orders from being secured in face of foreign competition. These exces- sive costs are largely due to the low standard of industrial ffieiency in this country in comparison with its most serious competitors, Germany and the United States. This position is not entirely due to the conservative atti- tude of the average British manufacturer towards new (even though they be more efficient) methods in industry— though this factor is not of negligible import. General economic conditions at home and abroad have been chiefly responsible. The unprecedented depression of the last five years has prevented most manufacturers from undertaking the capital expenditure necessary to keep their factories up to date. The scrapping of obsolete machinery and the installation of new and more efficient machinery are not easily undertaken when a factory is run at a negligible profit or even at a loss. If those indus- trial nations which are our greatest competitors had been equally affected the handicap would not be so serious. Unfortunately this has not been so. The continued prosperity of the United States has been most favourable to the exercise of the natural American progressiveness and pursuit of efficiency.
In Germany conditions have been very different, but there also has grown up an industrial organization of high efficiency. The lengthy period of inflation and the falling value of the mark compelled the investment of all profits and surplus capital in material assets. In the case of in- dustrial undertakings these assets naturally took the form of new machinery and buildings. As a result of her economic tribulations Germany has provided itself with an industrial equipment of modernity and efficiency that mould not have been possible in normal circumstances. The total result of this change has so far not been felt, as the tremendous competitive power of German industry has not yet been fully exerted, owing to the acute shortage of liquid capital resulting from the inflation. This shortage is gradually being remedied, as may be observed from the _large foreign investments recently made in such varied branches of German industry as potash, zinc, textiles, paper, films and banking. German competition in the world's markets is thus bound to increase in the near future, and unless British industry is organized to meet it on a basis of equal efficiency there appears to be little hope for improvement in British trade.
The reorganization of British industry on this basis requires the application of two factors, capital and technical skill. Both of these are essential. The supply of capital may set a premium on inefficiency unless its expenditure is wisely directed. A means of providing both these essential factors has been suggested in a novel proposal by Messrs. A. J. V. Underwood and C. S. Garland, which is now receiving consideration by the Committee on Industry and Trade. According to this proposal the necessary capital would be provided by loans furnished or guaranteed by the Government. The Trade Facilities Act might have served as a starting-point if its scope had been widened, but the Chancellor of the Exchequer is putting an end to the scheme. Is it un- reasonable to expect that the national credit should be utilized for this purpose? The return to the gold standard, even though necessary, inflicted great hardship on industry in order to restore British credit to a higher level. Would it not be justice to utilize this credit for assisting :those who suffered during the process of restoring it ?
To ensure that the capital provided is used to the best advantage the Underwood-Garland scheme contemplates the setting up of an " Industrial Development Council." This body would consist of technical and financial experts with representatives of employers and labour and would operate through similarly organized sub-committees in each industry. These sub-committees would provide the necessary technical assistance (chiefly by using outside consultants in order to reduce to a minimum the number of officials) for achieving the desirable standard of efficiency in a firm or industry. In other words, this Council would assist in the achievement of industrial efficiency exactly as the Department of Scientific and Industrial Research now assists in the prosecution of industrial research. Whereas research aims at finding new methods for use in industry, efficiency implies the application of the best existing methods to industry. The value of research must not be underrated, but it can only help industry in the future. The present crying needs of industry can only be met by more immediate methods of enlisting science in its service. X.
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