THE RATIONALISATION OF INDUSTRY

Hokitika Guardian, 22 March 1928, Page 4

THE RATIONALISATION OF INDUSTRY

WHAT IT WILL MEAN TO THE EMPIRE. i lly A. E. TOMLINSON.) The future of Empire is a future of Empire trade. That is a truism which many far-sighted men have striven to carry into practice in the past and which all equally far-sighted men realise to-day. Trade is the backbone of Empire and it is essential that every thinking person in tin 1 British Commonwealth of Nations should understand the transitional period through which industry is passing to-day. Only through such understanding can we hope to progress to the ultimate ideal of tho Empire as the greatest single economic unit the world has ever seen or traded with. British industry to-day is in a state of transition—transition from the old. played-out theories of cut-throat competition and the so-called free play ol economic laws to the new era of cooperation. regulation of output to consumption, and unification on a national and Imperial basis; transition from the methods of rule-of-thumb and muddle throughout, to tho new' era ol science and scientific organisation—and the outstanding lecture of this process of transition is what is called " rationalisation.” Many people may confuse rationalisation with nationalisation, which is about as near the mark as contusing efficiency with deficiency. As a matter of fact, it is very difficult to give an exact definition of rationalisation, because it is so many-sided and manilests itself in so many different forms and processes. A fairly comprehensive definition is;—”The full application of science and scientific method to industry secured by unification of all the processes ot production and distribution.” In short, rationalisation is simply the best use of brains and co-operation. It is the very latest phase in the natural evolution of industry. (’ut-throai competition amongst all the warring tribes of commerce is as dead as the feudal system. The oi l order of things when every mnnulacl nrcr was out to heat his neighbour, and hustle him into liquidation il possible. when your neighbour’s profits were supposed to he your losses, has gone the way ot the Saxon Heptarchy. " Lunatics never combine.” said Mr Keynes, the famous economist, and he further pointed out that the old beggar-, my-ueiglibour policy was so devastating that every go-ahead and prosperous industry spent hall its time trying to got rid of it. combines and amalgamations, which wo see sprouting up vigorously in the fields of industry, are hut one step, a very important, step, in the process of rationalisation. Combines by bringing the whole of an industry in all its brunches, raw material, manulacturo, research, sales and distribution, finance, under central control facilitate the full use of scientific method which is the essence of rationalisation. The old trusts aimed at profits and liigli prices; the'modern combine aims at service and efficiency. Ft is simply the logical result of the scientific outlook in business, and as such it is its own justification and defence. It is the last word in scientific method and organisation and it is tin* finest instrument which the best business brains of the Empire can use for furthering the interests of the Empire’s industries. What are the solid benefits of tbe combine as a step in rationalisation ? First we have finance: a large-scale company, with a large reserve and vast resources can obtain its capital for extension and development at a much cheaper rate and with much greater facility than the smaller concern. Then we have the question ot raw materials; the big combine is in a much better position to secure cheaper markets and to guard against: exploitation ; often il is the actual producer of its own raw materials, as when steel firms own eolleries, iron-ore mines and limestone quarries. All this makes for economy and efficiency. Coming to actual production, we find that modern plant and equipment often demand the expenditure of millions of capital, and is constantly being superseded and calling for replacement. Only a big combine fitted for large-scale production can afford to lay down such plant and to keep it up-to-date at the lowest possible cost. Then again, the combine can attract the finest technical and administrative brains to its staff and afford them ample scope and opportunity. In modern industry the part played by research and new inventions is overincreasing, and this is one of the very strongest arguments in favour of the combine. By a pooling of brains, by an adequate financing of research and the results of research, the combine can advance whole decades ahead of its smaller competitors. It can test and utilise all the latest processes and derices. ami in its own great research * aboratories lias a most powerful instrulicnt of enterprise and progress. The last link in the chain is distrinition, and here the combine lias a •cry obvious pull. Indeed many moduli fusions are formed simply for the narkeling and selling side of the inlustry. A large scale business is in eady touch with all the available mar:ets; its sources of information are resli and up-to-date; its agencies cover vorld markets, and it is able to throw ait its huge, efficient tentacles in any Erection. In all markets it commands espeet, and secures all the economies f central control. Such are hut a few of the benefits of malgamations, but there are patent conomies and advantages in a thousand 1 ireetions. On the Labour side a lug onipany can afford to give its workieople better conditions, more security, nd a generous provision of welfare and ecreative activities. Indeed, many re- 1 ponsible Labour leaders have already 1 ;iven the combine its blessing. * Combines are but one step in rationlisation. Another aspect is the control f world markets and the stabilisation * f prices. Stabilisation is one of tlr rying needs of industry to-day, and is I instantly called for by leading econ- ' mists. Unrestricted production with- ; at reference to the needs of consump- •

tion is archaic. It results simply in violent hoonis and slumps with industry tossed on the gigantic waves of alternate prosperity and distress. It is the aim of rationalisation to oil over and smooth down these waves and to provide industry with a level fairway for its advance. This brings us :o the question of the Imperial cartel is a final step in the evolution of British industry. In the transition stage of the new jrgnnisation of industry into rational inits the first essential is the unifiea:ion of industries on a national basis, nit this should be but a step towards ationalisation on an Imperial basis.

Hie way has already been shown by the creation of the huge Empire chemical ’ombine. Imperial Chemical Industries, Ltd., which has been formed with the ivowed and definite intention of con'entrating on Imperial trade in its own >ranch of industry. It is a big venture ind an entirely novel ofie, but the Bri;ish race has a genius for doing things ' m the big scale and Britons have never hied from the word “ impossible ” in Hiilding their heritage up. The chemical industry* 'has given a end to 'the Empire and when other inluctrioc tnlloTv suit thpv nssnredlv

must, we will lie moving perceptibly nearer tho ideal of a single Imperial economic unit. There are many difficulties and dangers in the way. The dangers are, first the habitual apathy of flic Briton on questions of the first importance like this, and, secondly, the risk that Britain or other components of the Empire may he tempted by immediate economic benefits or by geograpical contiguity into other economic units than the great Imperial one. This second danger cannot lie regarded lightly. Looking at the world today we find a new re-grouping and reorientation of forces taking place. On one side of the Atlantic is a rich and enterprising country with immense natural resources, no lack of brains and vitality, intensely materialistic and highly efficient. Though almost the size of a continent it has free trading within its borders and has the whole of a vast home market sheltered behind mountainous tariffs. Already one ol the Dominions, Canada, does a greater volume of trade with that country than with Britain, and there will always he a force of trade gravity drawing them to a closer rapproachment.

The United States is one great economic group. On the other side of the Atlantic we have gradually forming another economic group, the projected European Customs l iiion. I'aeed b_\ severe competition from the 1 nited States, the various countries and nations are being driven to sink their prejudices and animosities and merge their interests in an economic alliance. This second world grouping, the European Customs Union, has become almost a fetish with business men on the Continent.

Amid all these -contending forces, what is to he the position ot Britain.'' On the- one hand she is being urged and cajoled to join the Europetn complex; on the other is the possible policy of isolation. -Either of those alteinatives would mean sacrificing all that we gamed and all that we hied for in the Great War.

There is onlv one policy for Britain and that is the policy of Empire. Standing alone she would he swamped by the other world groups. Joining any one .of them she would fatally weaken the ties of Empire aiul throw awav the trump card in her band. As a component part of the British Commonwealth of Nations, however, she could fare world competition without a q mi Im. A iVw figures strikingly illustrate tho position. The United States has an area of 3.000.000 square miles, with a population of over 100,000,0Q0 ; Europe an area of less than -1.000.000 square, miles, and a population of 420,000,000; Britain an area of SB.OOO square miles and a population of less than 00.000.000.

l ake the Empire as a whole, however, and we find that it has an area twice that of Europe and the United States put together, and a population greater than Europe! In raw materials and nntui.d lesources the Empire is equally predominant. oil being practically the only one in which she is at present at a disadvantage. The Empire has a huge preponderance in rubber, nickel and jute ; she leads in gold and tin. and lias ample supplies ol other materials. Hei coal resources are enormous; in toodstulfs she produces 2i per cent of the world's supplies ol wheat, in rice Co per cent, in (attic oil per cent and in sheep hi per tent. An equally encouraging tale is told with other commodities of all kinds.

The Empire then is easily the world's greatest economic group. Nor is she Behind in brains, vigour, push and technical ability to develop her resources. She has an undisputed reputation for justice, sporting spirit, and administrative ability. All that is needed is full economic co-operation. How that can be secured is for the business men and industrialists of the Empire to work out. Me taunoi expect those countries, like Canada and Australia, which have fostered young industries behind tariff walls to sacrifice them and he content with farming in all its branches. All those problems would have to he solved hy means of quotas of production and allocated markets together with an Imperial compensating pool for such industries as suffer under the new arrangement.

All these devices are familiar to anyone versed in the direction of great industries and could easily lie put into operation. Einallv "tho whole Empiie economic unit would have to he protected hy tariffs, but with complete freedom of trading within its own borders.

To achieve this we must proceed by the modern road of rationalisation. From rationalisation on a national scale we will the more easily step to rationalisation of all the industries of the Empire. This is looking ahead and to many it may seem a vision of impossibility. One thing is certain : to the ties already existing of race and sentiment must be added the solder of trade and the cement of economic advantage. Without them the whole structure of the British Commonwealth of Nations is imperilled; with them we can build an edifice which will stand the shock and strain of centuries and ever grow stronger and more sublime.