FINANCING EMPIRE INDUSTRIES

Hokitika Guardian, 12 June 1928, Page 4

FINANCING EMPIRE INDUSTRIES

NEW TRADE FpRCES AND THEORIES. (By A. E. Tomlinson). Three of tlie most enduring lessons of the war were science, organisation and co-operation, pin industry these three forces of science, organisation and co-operation spell wliat is now known as rationalisation. Many progressive thinkers look forward to, the day when the whole of-the industries of the Empire will; be rationalised, and when, it will ho possible to operate. the whole Empire as a single oconomic unit. Thinkers of tlio “NoComplex,” however, see insurmountable difficulties in the way of this programme, and laugh away the whole conception as absurd and impossible. Difficulties there obviously arc and one of the greatest ,of those is the question of credits and finance, l'or any, new Empire industry to he started and organised or for any already existing one to bo reorganised and set on a rational basis requires capital and long-term credits till such time as the. new concerns aro on a satisfactory paying basis. At present owing to heavy taxation and to the conscientious payment of war debts, such capital is not readily available within - the Empire itself. Therefore the missionary work necessary for the creation of new Empire industries and markets and :i new demand for our good is held up undelinitely. This ir spite of the fact that example afte‘ example shows that where firms have had the necessary finance available and have not, had need of immediat.returns, they have in tlie course o time been able to set themselves on : paying basis and to reap a rich re ward from Empire trade. ft. is tlie rise of tin's new lore a o

rafi-eirivlisatioii in 'Empire Irtuic tha makes tlie formation of the new Ei nance Company of Great Britain am America so important. Indeed, a we will endeavour to show, it is practically impossible to over-estimate thr importance., of this new world-finance machine. It has been described a' the most momentous international event since the Treaty of Versailles. ' That may sound like exaggeration, but not when we consider facts and figures. The new company is in slidrl an alliance of the biggest single pro dm-tive unit in Britain with the big gost financing unit in the IJnitei States. Such an alliance on such i magnitude is something entirely unprecedented ill world affairs. Equally remarkable is the list o' industrial and financial brains behind the project and the amount of ered l ' and capital it commands. The nomi mil capital of tlie new company i 1 £2.049,900, which will not he issuer to the public, but this sum is all soliitelv no index to the gigunth potentialities of the alliance. (It Ini' been estimated that through its assor ie.Lions on either side of the Atlantic the new finance machine can command something like £500,990,030 of credit and capital.

Moreover, the main object of this vast alliance is the development of British and Imperial industries with the help of an unrivalled staff of financial and scientific technical experts. Jn other words, it represents the forging of a new titanic instrument of Imperial rationalisation. The British side of the alliance is represented by Imperial Chemical Industries Limited, with its £05,000,000 of capital and its Board of .some of the finest business brains in Britain. The United States side Is represented by the Chase Securities Corporation of New York, and its associated hotly the Chase National Bank with its 4,000 brunches ail’d its assets of £200,000.000. No less imposing than these gigantic: figures are the lists of names on the British Board and on the American Committee (i.e. Board) of the now Company. Tlie British Board consists of:—Sir Alfred Mond, Af.l’., Sir Harry McGowan,-. Air Albert' Henry Wiggin, Tlie Marquess of .Reading, Lord Colwvii,' Mr Harold John -Mitchell, Air Henry Aloud, Air Clarence Graff, Air ■James Henry Gannon. Sir Alfred Mond will he the Chairman and Sir Harry McGowan the Deputy-Chairman t>T the new corporation, while Air Clarence Graff and AirJames Henry Gannon will be joint managing directors. The American committee lias been formed under the chairmanship of Mr Albert AViggin, to act in close cpiisultntion and co-operation with the British directors. The committee is as follows:

Mr Albert H. Wiggin, Gliairnian, Chase National Bank of Now York. Sir Alfred Aloud, Sir Harry AreCowa», K.8.E., Air Robert l’ .Clarkson, President Chase National Bank, Air Halstead G. Freeman, President Chase Securities Corporation, Air Alfred IV Sloan, Junr., President .General Arot-, ors Corporation, Arr John Rascob, Chairman finance Committee and Vice-President General Afotors Corporation, Arr Matthew C. Brush, President American .International,

Corporation, Mr A. R. Gra'ustein, President. International Paper Co., Air "AY. H. AYoodin, President American Car and Foundry .Co., and American Locomotive Co., Air J. Horace Harding, Chairman American Railway Express Co., Mr Frederick H. ' Er-ker, Vice-President Metropolitan Life Insurance Co., Mr Charles AI. Schwab, Chairman Bethlehem Steel Co. Sir Alfred Aloud and Sir Harry AloGowan, as members- of the American Committee, provide a liaison between the Board of Directors and the American Committee. The list of names on the American Committee is unique. They arc practically the leaders of industry in the United States, with inside knowledgeof the industrial developments of their country. Nevertheless it must.

be specially insisted on that the using of American credit does most certainly not mean American control of such Empire industries as will be helped or promoted. Control is in the hands of the British Board, and as everyone knows there is no greater worker for and advocate of Empire unity and devleripnient- than the Chairman of that Board, Sir Alfred Aland.

Nor, and this again must bo insisted on, does the new alliance mean that Imperial Chemical Industries will be influenced in the least by other than British and Imperial capital and direction. Its well-known Imperial policy, the policy of yvekling , t;he Empire into a single economic unit and of helping to operate its chemical industries as such, will re-: main absolutely unchanged. It is interesting to note that Sir Harry McGowan, President of Imperial Chemical Industries, and Dep-uty-Chairman of the new is one of the “Big Four” of British' business men who are to visit A us-

tralin in the autumn to study and advise and report on the development - of the industries in that Dominion. He is also, of course, very intimately' concerned arid acquainted with business affairs in the United States. Looking at the new corporation’ from the widest viewpoint, it means a new re-orientation of world affairs and a new forward step towards world peace. The United States, the world’schief reservoir of loanable Capital, ’is ; co-operating in a nfa 'with the 014 World=»t!9t pwt&ure of p&H«- ’

ties. or., ppli.ticjans. but. through its business men and- financial . .experts, Tlie new company then meets a need which has . been felt lor some time: It meets it not by visionary ideals but on a practical economic basis.

From a slightly narrower viewpoint 1 we have, as has been said, a new instrument for the rationalisation of Empire industries. It is a businesslike instrument which will enable the capital now for the first time available, to bo directed to the most useful and most profitable ends. Assisting in .determining the direction of the capital will lie the finest bodies . of technical experts and advisers on either side of the Atlantic. In this respect the new. company is in a unique position of , being able to lay its hands on exactly the right type of efficient personnel—a problem which is becoming increasingly difficult with the growth of larger and. over larger units in industry demanding higher and ever ' higher capacity for leadership. In Sir Alfred \ Mond, tlie foremost exponent of amalgamation, rationalisation and co-operation in industry, we have bipj business at its best, proprogressive, liberal minded and wide of vision. In the new corporation we have the finest possible machine for financing the- future of Empire industries. That future will he wider and more spacious than tlie past, with localisms, prejudices and parochialisms tending to be absorbed in the grander conception of Empire cooperation and unity. This article, then, may fittingly dose w-itli a resume of some of Sir Alfred’s opinions on the new company. He says: “AVo.are entering into it with all hopes of' being able, to render very considerable and useful service. “It is for. the benefit of the world lhat the ■ English-speaking peoples should remain together, carrying, ' as they do, the heritages of similar traditions, language, common origin, and a common ideal of how society should he governed.” Sir Alfred explains that the United States has a large and growing body of capital either already invested abroad or available for investment abroad. The -new company will be able to operate some of this capital at lower rates of interest than would he payable for similar amounts outside the United States. There has been for some time a relationship between the great- industries of Britain and of the United States, and the formation of the new company will bring the leaders of industry in,.both countries into very much closer an A more intimate coroperation.

The purpose of. the company, adds Sir Alfred, is to provide additional credit and capital for the development of British and Imperial industries. At this moment it is dearly premature to specify any particular industry or any process that the company might take an interest in. The .functions of the company are not those, Sir Alfred explains, of the usual investment trust. They will he directed to tlie development of new processes anil the increase of production. In other words, tlie new company is not a finance house in tho ordinary way, hut a part of machinery for stimulating and developing productive industries. As to the need that exists Tor an enterprise on these lines, and the scope for its activities, Sir Alfred remarks that in countries such as Germany the banks: have always been more closely associated with the direction of industry than in -this country, and they: have always had available technical experts to advise them upon any particular process or proposition put to them. One of the main advantages of, the new company will he that it will have at its disposal the best technical experts over a very wide range of industries both in Great Britain, the Empire and America.

■The, development of large scale industry in the Empire lias not taken place to the extent it has in such countries as the United ■ States and Germany. The same facilities have not been provided. By creating tlie new company those facilities which were lacking before are now to he

provided. Such are a few of the reasons • for regarding the creation of this nee finance machine as a great Imperial event, and for locking forward to a new era of the rationalisation and unification of Empire'industries.