"BRITAIN TODAY AND TOMORROW"
An Address by THE VISCOUNT KNOLLYS, G.C.M.G., M.B.E., D.F.C. Chairman of Vickers Limited
Thursday, October 16, 1958
CHAIRMAN: The President, Lt.-Col. Bruce Legge.
LT.-COL. LEGGE: Distinguished guests and members of The Empire Club of Canada. If the question were asked, 'What do you associate with the name of Vickers?' the probabilities are that most of us would immediately answer 'machine guns'. But Vickers Limited does much more than fashion swords and spears and armaments. I am not certain whether or not it creates plowshares and pruning hooks, but through its associated companies it makes almost every type of complicated machinery from nuclear engineering equipment to earth-moving machines; from accounting calculators to scientific instruments; from ships to aircraft, and from steel to plastics.
As members of The Empire Club we are pleased that Vickers operates in the Commonwealth tradition, and has companies in India, Pakistan, South Africa, Canada and in the United Kingdom. Over this rich coterie of corporations presides the Second Viscount Knollys. Lord Knollys is also among many other things a director of Barclays Bank, and the chairman of the Employers Liability Assurance Corporation Limited.
Lord Knollys was born in 1895 and was educated at Harrow and New College, Oxford. He received further training in the grim school of the First World War, serving in the 16th London Regiment and in the Royal Flying Corps, for which service he was made a member of the Order of the British Empire and was awarded both the Croix de Guerre and the Distinguished Flying Cross. Lord Knollys still retains an affection for the men and women of the forces as he is the chairman of the Royal Air Force Benevolent Fund.
In the Second World War Lord Knollys was a civil defence official in the vital South Eastern Region of Britain and then for two years was the Governor and Commander-in-Chief of Bermuda. He then devoted himself to civil aviation and from 1943 to 1947 he was the chairman of the British Overseas Airways Corporation. In the hectic years of the Korean War he returned again to government duty and was the United Kingdom Minister in Washington, exercising responsibility for precious raw materials.
Our speaker comes to The Empire Club of Canada, as a leader of commerce and industry in the Commonwealth and with a rare experience of service to his government and for a famous Crown Corporation. Gentlemen, I am privileged to introduce Lord Knollys who will speak to us now on the intriguing subject, 'Britain Today and Tomorrow'.
VISCOUNT KNOLLYS: It is just 25 years ago that I began a very good habit in my life and that was of coming to Canada at least once a year and I have fortunately been able to keep it up ever since. Whatever jobs I have had to do, in business or Government, have happily made it essential for me to be in Canada. Now with my connection with Canadian engineering and shipbuilding I feel myself to be a Canadian industrialist as well as a British one. This long connection with Canada is one of the reasons why I appreciated so much the invitation to address your Club today--and I feel very honoured to be doing so.
You in Canada are, I think, always anxious to know the latest up-to-date position of the British economy. Today I am pleased to be able to give you a good account of the patient, who has so often been written off as failing, or unlikely to survive another crisis. I have been over here more than once when we have been undergoing a serious crisis, whether in war or peace, in politics or in business, but fortunately the drastic measures which we have never been afraid to apply in such cases have once again done their job.
Now our economy is sound again, thanks largely to the painful but effective medicine which Dr. Macmillan and his colleagues applied over a year ago. Some were old fashioned, like purges, but none the worse for that, as indeed we find when remedies we knew in our nurseries prove as useful as the modern antibiotics and sulpha drugs. Our bank rate was jumped unprecedently from 5 % to 7%; bank credit drastically curtailed and controlled by the joint stock banks themselves under the general direction of the Treasury and Bank of England; hire purchase was tightened up; new issues of capital had to pass through a tight sieve. Exchange control was not relaxed, though our Treasury viewed sympathetically investment in certain places, notably in Canada. Any inflationary trend was resisted, though wage claims could not be completely disregarded. The treatment worked. And now, in the fall of 1958, we find the patient responded to the remedies, and the doses have been gradually reduced. Bank rate has been decreased in steps to 41/2 %. Good borrowers can now get their loans at 51/2 % instead of 8%. The ban on certain bank lendings has been removed. Hire purchase has not only been made easier again, but the big banks have allied themselves with finance companies. Small personal loans from the banks have been made easier. At the recent Commonwealth Conference at Montreal relaxations in the control of dollar purchases in Canada were announced. Our gold and dollar reserves rise steadily. The pound is strong.
There are, of course, some weak points still. Serious ' illnesses are apt to leave some chronic sores. One of ours is a certain amount of inflationary trend. Wage claims have been granted to many millions of workers. The pattern this year has been generally about a 4% increase, less than in some recent years, but still not fully matched by increased productivity. Though industrial profits in the first half of 1958 were in most cases as good or better than in the previous years, current profits, particularly in heavy industry are lower and order books are lighter. Unemployment is rather higher and may increase during the winter, though at present it is only 2.2%. Stock markets have been rising sharply and seem to foresee some early increased business prosperity which is not apparent at the moment to most industrialists.
But the mass of people generally are better off than they ever have been, and that typically has helped to improve the popularity of the Government in office, who have to face an election soon, probably in the Spring or Autumn of next year. Generally, it is a picture of considerable prosperity and of sound consolidation of our gains which I can present to you today. Only this week some rather astonishing figures of our overseas trade for the first 6 months of this year have been announced. For the first time in this century we have had a surplus in our visible trade balances. When the important invisible items, shipping, banking, insurance and tourists, are included, the balance in our favour was 334 million pounds, and for the 12 months to June 1958, 448 million pounds, a record figure. As our overseas trade balance is always the most vital for our state of health, these figures reflect a normal temperature, a sound pulse and a satisfactory increase in weight.
Now I should like to deal with a subject which affects both of our countries.
One of the outstanding factors in the economic and political world today is the growth of Canadian influence, and the certainty that this will continue in the future; and also that while that is happening the ancient bonds between Canada and Britain remain as close and as strong as ever. To ensure they remain so, constant and up-to-date knowledge of each other, of what each is doing and thinking, and why, is essential. In each country there are an ever-increasing number of people who have or are acquiring this knowledge, but there are still too many whose knowledge is either sketchy or out of date. This was one of the reasons why the visit of the Canadian Trade Mission to Britain last year was so valuable, as I know you have heard already from a great citizen of Toronto, my friend James Duncan, who did so much towards making the mission the success it was. It appeared, I believe, that quite a number of people were surprised at how up-to-date, alert and efficient modern British industry is. It was believed in some quarters that we have been backward in new ideas and unwilling to modernize our industrial plant and equipment, in other words, complacent and even in a decline. I am sure most of you realize that is far from being the case, but that it is a picture which does exist in the minds of some people is partly due to our inherent unwillingness to blow our own trumpet. This, if overdone, causes misunderstanding. In the words of our Prime Minister the other day, a little tooting is a good thing. I propose to give you a gentle toot today. If I appear at all boastful, you must excuse it as an effort to avoid misunderstanding.
First let me speak of Britain today and particularly industrial, technical and scientific Britain, for it is on these factors that so much of the strength and influence of any country must depend nowadays. Here I think we can claim that we have led, rather than followed, as we hope and intend we shall always do. Let me quote some outstanding examples where the origin of some technical or scientific advance has sometimes been forgotten once it has been adopted generally throughout the world. They are varied: radar, penicillin, jet engines, fibres such as Terylene, the discovery of the atomic nucleus, leading to the inauguration of the first operating atomic power station--Calder Hall. Here are British inventions or developments which have entered into and benefited the daily lives of all of us, in the fields of medicine, transportation, clothing, power, entertainment and information.
In aviation we have a very topical illustration. You have experience of our turbo-prop aircraft which Trans-Canada Air Lines pioneered on this continent. Now B.O.A.C. has led in operating Comet 4 pure jet aircraft across the Atlantic. I hope in three days time to fly in one from New York, 6-1/2 hours non-stop, to London. I have rather a personal interest in them, for it was during the time when I was Chairman of B.O.A.C. that the original Comets were ordered. This form of airliner development is not such an innovation as is sometimes suggested, for these British pure jet aircraft were operating on Commonwealth routes as long ago as 1952, and some types of them have been operating practically ever since with R.A.F. Transport Command.
How is British industry working to take advantage of this progress, to remain in the van, to take the initiative in the even more exciting developments which lie ahead? First of all, contrary to what many people believe, we are working quite hard. The average weekly hours worked in manufacturing industry last April were: in Canada 40.4, in the U.S.A. 38.3 and the U.K. 45.5. That shows, at any rate, that we are trying. I will give you now some statements as to the position of British industry in other directions. Since 1948 there has been a high rate of investment in industry and a great improvement in technical methods and the efficiency of management. Industrial production increased in volume between 1946 and 1955 by 60%. Steel prices are lower than in any steel producing country except Australia. British farming is more highly mechanized than that of any nation in the world. In turbo jet engines one half of the world's outstanding orders had recently been placed with one firm, Rolls-Royce. One paper mill possesses the world's largest paper machine. The Admiralty, the British Shipbuilders Research Association and the Atomic Energy Authority and shipbuilding firms are working on nuclear reactors for marine propulsion; (and as you may know, my own Company is currently building our first atomic submarine.) In almost every industry you can find outstanding examples of advanced research.
Now before you begin thinking: "Here is a prejudiced reporter, picking out a lot of good sales points", let me tell you that all these statements have been taken almost verbatim from the official report of the Canadian Trade Mission to Britain at the end of last year. But let me also say that the criticisms and recommendations of that same Mission regarding our shortcomings in marketing in Canada have been carefully noted and taken much to heart.
That is Britain today. What about Britain tomorrow? How are we equipping ourselves to be amongst the leaders in the scientific and technological advances and developments on which depends our capacity to compete industrially and to be strong in defence? A few months ago Sir Winston Churchill, that far-seeing prophet of our country's destiny, wrote this:
"The future of Britain depends on the skill and craftsmanship with which we can meet the challenge of the new industrial age.... We are still a great trading nation and still a great power, but it is only by leading mankind in the discovery of new worlds of science and engineering that we shall hold our position and continue to earn our livelihood.
Technological progress is also of vast significance to our Commonwealth and Empire and to the United States. It is a theme on which the English speaking peoples can and must work in concert."
Leaders in Government and Industry have realized the vital truth of this theme, and have spoken and acted on it. In technological education we ourselves have lagged behind, not only your continent, but also the tremendous output of technicians which Russia has achieved. We mean to make up for lost time, and are doing so. Government is playing its part in support and encouragement. Industry is spending very large sums in scholarships, contributions to new buildings, company training schools, education of apprentices research facilities. The Universities and schools are increasing the proportion of science students compared with those in the Arts and Humanities without, let us hope, losing the qualities which a fully rounded education gives to future industrial leaders.
I should like to give you one rather striking up-to-the-minute example of what one university is doing and that is perhaps because I happen to be personally connected with this project. Cambridge University has always encouraged scientific and technical education and has an outstanding School of Engineering. It is now founding a completely new college of 500 resident students, in which there will be a strong bias towards science and technology, for never less than 70% of the membership will be studying these subjects. With great imagination they are naming it "Churchill College" and it will serve as a memorial to the man who has shown such vision in his appreciation of the importance of technology to his country and to the world. Sir Winston is the Chairman of the Trustees of this new college--and a very active and interested one too, as I have been enabled to realize at first hand. The target set for the funds needed to build and endow this fine concept was E31/2 million, say $10 million. Sir Winston entrusted me last April with the task of appealing to British industry, commerce and finance, though not to the public at large. As an illustration of what our industry is prepared to do, I can tell you that at this moment over $8 million has already been received and promised, and some more is in sight. This is not an isolated case. Oxford University is also founding a new college of this type, financed largely by industry. A few years ago industrial companies provided over £ 3 million (nearly $9 million) to improve the scientific facilities and equipment in independent and grant-aided schools. I think you will agree that there is no complacency nor falling behind in this important field.
I have tried to give you a picture of what we have been doing, and are continuing to do, to keep ourselves in the forefront of the New World we live in, in inventiveness and initiative, and in providing the background and education which is needed if we are to do so. I hope you do not feel that I have been bragging unduly, but that you too feel that these things should be brought out publicly in order that everyone may be well informed, and to avoid misconceptions.
You in Canada are doing these very things already. What a magnificent example there is in the recent munificent gift to one of your universities. You have great natural resources, progressive industries, fine educational facilities, if I may say so, a magnificent people.
Canada and Britain--what a tremendous combination it is, as we continue to work and think together in the fields of moral influence as well as of material achievement. In both, we contribute much for the benefit of the whole world.
THANKS OF THE MEETING were expressed by Lt. Col. W. H. Montague, Past President of the Club.