FINANCE—PUBLIC AND PRIVATE.
THE CITY AND THE STRIKE.
tTo sax EDITOR or TEE " sracraroa."] Sri,—The City has taken the materialization of the long- threatened coal strike with a good deal of philosophy. This cannot be attributed to the fact that the strike had been expected at the present moment, because it had not, the postponement of the trouble some three weeks ago having been followed by a fairly general belief that the miners had adopted a more reasonable attitude. But while the City had not expected the coal strike at the present moment, it had long been felt that a point would come when the unreasonable demands of Labour must necessarily produce a situation something akin to that which has now arisen.
Now that we are actually " up against " this great strike it may be well that I should give you the views of responsible bankers and business men in the City with regard to it, because it is often in times such as these that the public is prepared to give heed to such views which at other times, and wider ordinary conditions, pass un- heeded.
In the first place, then, it may be said that, assuming for the moment that the coal strike were of long duration, it is the view of the •City that even the more sensational organs of the Press have probably on this occasion under rather than over-stated the magnitude of the financial disaster involved. Every section of the community would in time be involved in direct financial losses, while the chaos occasioned by such a vast area of unemployment must inevitably produce social and political complications into which I need not enter. Already the first effect of the strike upon our national credit has been seen in a heavy fall in the Foreign Exchanges, so that during the past week the value of the British pound as measured in American currency has fallen to under 14s. The Con- tinental Exchanges have also moved against us, and in the event of any prolonged industrial crisis and stoppage of production it follows that not only shall we have to pay heavily in terms of prices for necessaries imported from abroad, but we shall pay a further heavy toll by reason of the adverse exchanges resulting from impaired credit and reduced exports. Moreover, and looking further ahead, the National Revenue would be so seriously affected by any prolonged coal strike that in the next Budget we should see some further drastic demands upon the tax- payer. Not only however, is there little to be gained at the present juncture by anticipating horrors which we must all trust may not materialize, but at the time of writing the opinion, rightly or wrongly, prevails in City quarters that a settlement of the strike will be reached very shortly, and some journals, it will be noted, have even gone out of the way to recommend a settlement on lines which would virtually mean a surrendering by the Government to the demands of the miners. It is on this particular point, therefore, rather than on the effects of a prolonged strike itself, that I desire to give you the current views of the City.
In no quarter more than Lombard Street are the probable effects of a prolonged strike more clearly recognized ; equally in no part of the country is a compromise with the miners more gravely apprehended. What does this mean 1 Does it mean that, irritated by the frequency of industrial disputes, the financial world is crying out for some " fight to a finish " between Capital and Labour I Not at all I Men with vast business interests at stake cannot afford the luxury of heroics of that character. When, therefore, the City is gravely apprehensive that the strike may be immediately curtailed by anything approaching to surrender on the part of the Government, it is clear that the apprehensions must be based upon strong practical grounds of business. The City, in short, believes that while a great strike would mean an appalling financial lose at a moment when we could ill stand such affliction, the continuance of increased consumption and diminished production which hitherto have been the outcome of every surrender to the demands of Labour must lead us sooner or later direct to insolvency. Many of the ills from which we are now suffering are the inevitable result of the war, but there are two cardinal offenders whose actions are largely responsible for the full extent of our troubles. One offender is the Govern- ment, which by its reluctance to reduce expenditure, or to relax its control of private enterprise, is doing much to minister to continued inflation, high prices, and diminished output. The other offender is that section of the wage-earners which by its demands for higher wages and shorter hours at the moment when increased pro- duction at lower cost is urgently called for is preventing all possible chance of improvement in the situation. Con- cerning this section, however, there is one mitigating circumstance which cannot be urged in the case of the Government—namely, ignorance. In the recent dispute the miners have shown that the lineation of increased production moved them not a jot, and they no doubt really imagine that if they can secure the increased wage they would be advantaged to a corresponding extent. Those who are not ignorant, however, know that unless production were enormously increased, the time would soon arrive when the increased wage would carry the wage-earners no further in purchasing power than the lower wage, and fresh demands would again arise. In other words, nothing but attacking the causes of the present economic troubles and social unrest can possibly bring about real improvement, and it is just here that the crux of the whole difficulty becomes apparent. Bankers and men of business are well aware, and have intimated to the Government publicly and privately, times without number, that there can be no improvement in the situation without economy on the part of the consumer and greater industry on the part of the producer ; but the lead has yet to be given by the Government in reducing its national expenditure, because it is the magnitude of that expendi- ture, and especially the excess of outlays over tax revenue, that are largely responsible for the inflation which produces the high prices. To the warnings of the business world has now been added the report of the Brussels Committee on Currency and Exchange, endorsed by no fewer than forty different delegates, pointing out to their respective Governments the imperative need for economy in the national expenditure.
So long, however, as the general public itself fails to perceive the necessity for this particular reform, it is to be feared that it will not be forthcoming. The wage-earners Tailing to comprehend the position imagine that all will be well if wages are advanced; and hitherto the Govern- ment, not merely pursuing the line of least resistance, but seeking popularity, has practically endorsed that view by its readiness in acceding to demands for higher wages and shorter hours, knowing all the time that those demands were inconsistent with the real requirements of the situa- tion. What is the result ? Misled by this easy. com- pliance into the belief that the country is over-weighted by prosperity, instead of being afflicted with financial adversity, not only do the demands of Labour become increasingly insistent, but at the first sign of distress in the shape of unemployment we get outbursts such as that experienced in Whitehall on Monday last. Nor is the actuation improved, but worsened, by the Government's Rend-control of some of our greatest industries, because Ministers are no longer able to adopt with effect that rdle
of complete impartiality which in former times they were able to adopt when disputes arose between employers and employed in purely private enterprises.
It is scarcely surprising, therefore, that, anxious as the City may be that the coal strike should be of the briefest duration, it is even more anxious that the lesson which it brings should be gripped by Government and people, for only so can there possibly be hope of a settlement which will make for the prosperity, happiness and safety of the entire community. I am painfully aware that the per- sistence with which I have had to deal with these questions affecting Labour and Output throughout the country must be wearisome to many of your readers, but in my first letter, which appeared in your issue of the 6th March, I expressed the opinion that for some time to come all ordinary questions pertaining to Stock Exchange and Money Market affairs would be submerged in the great social and economic problems arising out of the war, and, unfortunately, those expectations have been amply ful- filled. Nevertheless, patience and perseverance will see us through these troubles, as they did through the still greater troubles and difficulties of the war. But if it was necessary then for the nation to pull together when confronted with a common danger, there is even greater need for such co-operation to-day, when the issues ut stake are more subtle and more complicated than those which were involved in the straightforward task of repelling the attacks of a foreign foe.—I am, Sir, yours
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