Great Britain—Progress and Prospects

LIEUT.-COLONEL GEORGE A. DREW, the President introduced the speaker.

SIR WILLIAM CLARK: A holiday is a very enjoyable affair, but it is also a real pleasure to be back in Canada once again and once again in Toronto, and I greatly appreciate the honour my friends of the Empire Club have done me in inviting me so promptly after my return to come and talk to them about the impressions I have collected at home. I must not sail under false colours, so I will confess at once, much as it may surprise you, that I did not in fact devote the whole of my four months in England to a searching and systematic study of their economic conditions. Interesting as these things are, a holiday is a holiday, and I dedicated the first few weeks of mine, and I am sure as right-minded men you will approve, to the noble game of golf and to visiting friends. But afterwards in London T had the opportunity of meeting many people with large experience in business and finance and of talking things over with them and with friends in the various Government departments.

I should like, if time availed, to dilate upon the charm of England for the holiday-maker; to celebrate her beauty in the lovely autumn weather which was our general lot; and I will, at any rate, permit myself a brief boast on the memorable fact that during six weeks in London in November and December there was scarcely a day when the sun did not shine, and I only remembered to make a long overdue purchase of a new umbrella on the morning of the day on which we were sailing for Canada. I know no thrill quite like that of returning to England after a long absence overseas, seeing once again the familiar features of her countryside, noting once again her characteristic blending of the present with the past. Where we stayed in Yorkshire, we were near those lovely valleys in which the ruins still stand of the great abbeys built by the Cistercian monks, according to the requirements of their rule, in what were then places desolate and remote from the haunts of man; and yet, when I went over to the Cutlers' Feast, the annual celebration held by the steel-masters, cutlers and other industrialists of Sheffield, an almost infantile institution in comparison, dating back something under 200 years, I only had to travel some forty miles to find myself in the very heart of one of England's greatest industrial areas. One could not but reflect on the changes which are wrought by time and by the irresistible operation of economic forces. In the heyday of their glory five centuries ago those great religious houses were the centre, the focal point of the industry and agriculture of their countryside. Sheffield in those times was only a village like the rest, and the iron-masters of England still smelted their ores with their wood fires in the forests, of the Sussex weald. Then coal drew England's major industries to the north between Trent and Tyne, but I now once more we are in an era of change. Coal is no a longer paramount; there is a southward trend again out of the areas of the industrial north which have felt the brunt of the depression. As you motor along the bypass which takes you out of London into the Great West Road, a by-pass which did not exist ten years ago, you see on either side rows of new factories, mostly belonging to the newer industries, either working or in process; of construction; tempted there by juxtaposition to London and by the transport facilities afforded by these new magnificent highways. This turning to newer industries; this development of new industrial areas; these are signs of some of the changes wrought by the dislocation of trade and industry during the war. Let me first say a word about this dislocation though it may sound rather a hackneyed subject, for it is not only fundamental to understanding the position in England and its relationship to that in other countries, but I think people are perhaps inclined to under-estimate the extent of its bearing on the larger question of the world situation as a whole.

The historian, looking back over the ten years between the boom of 1920 and the onset of the great slump, will be intrigued first and foremost by the phenomenon, unparalleled in the past, that while other countries, including the defeated Germany, enjoyed varying measures of prosperity, Great Britain alone, one of the principal victors, was plunged in a continuous depression whose intensity varied only in degree from time to time. The explanation, I think, was this: The industries which suffered the greatest derangement as the result of the war, not only in Britain but in all the major industrial Countries, were iron and steel, shipping and shipbuilding, textiles and coal. In most of these there had been an expansion out of all proportion to peace-time needs; the coal position was further complicated by the technical development of substitutes; and in the case of textiles, high tariffs had come to protect the nascent industries in what had formerly been market countries. No industrial country could escape the effect of these circumstances and the reason why Great Britain suffered so much more acutely than the rest was simply that the industries in question played an exceptionally predominant part in her economic system and especially in her port trade. None the less, for other countries the trouble was still there, even though its existence was concealed by the superficial trade boom. In the United States, for example, if the textile, bituminous coal, shipbuilding arid shipping industries had been concentrated in a single State as in Great Britain they are concentrated in the valley of the Clyde or in Lancashire, that State would have presented a spectacle of depression even greater than that of the British areas named. In most countries for most of the time since 1920 coal-mining has been depressed, shipbuilding has been underemployed, the cotton industry has been working short time, and iron and steel have only been intermittently prosperous under the stimulus of a demand deriving from such extraneous circumstances as large scale public and private borrowing, or the precarious and" as it proved, short lived expansion of the motor car and other steel-using industries. In fact, as an English economist rather unkindly pointed out the other day, foreign observers, instead of looking down on British industry, might with' advantage have looked into it to see what were the forces accounting for this decline. If they had done so, they perhaps would not have been taken so completely by; surprise when the depression fell upon their own countries in 1930. As things are, the equilibrium of these; great industries, so profoundly disturbed by the war remains unrestored and those other countries are now feeling the full effects of the maladjustment.

In Great Britain some at least of the necessary adjustments had been made during the past ten years of depression, a fact which goes some way towards explaining why the shock of the slump has fallen on her with a less severe impact than on some of her industrial rivals. Especially, there had been a considerable shifting of labour into the newer expanding industries, and it is noticeable that as a result of this the intensification of the slump has not swollen the numbers of the unemployed as seriously as in other countries. You may say that this is a natural consequence of our already having, unemployment on so large a scale. That is true as far: as it goes" but in the case of Germany and the United? States, at any rate, the comparison is really favourable; for in those countries not only is the absolute volume of unemployment today greater, but it also bears a much higher proportion to the industrial population than in Great Britain. Our trade, too, has received a further stimulus from two other sources: in September, 1931, Britain was forced off the gold standard, and about a year ago she adopted a tariff. The Ottawa agreements, which followed on the tariff, were only put into force, as you know, after the autumn sessions of the various parliaments of the Empire, and the reaping of their benefits therefore will come in 1933 rather than in the year which is just over.

Whatever the explanation, there can be no doubt at any rate about the facts. During 1932 Great Britain largely maintained the value of her export trade at a time when the foreign trade of the United States, Germany and France was collapsing. The figures for the year, which have just been published, show that the exports of the United Kingdom decreased by less than 7 per cent as compared with 1931, while those of the United States fell by 33% and in Germany and France the decline for the first ten months of the year was 41 per cent and 37 per cent respectively. Similarly, the indices of industrial production show that the situation is relatively worse in France, Germany and the United States than it is in the United Kingdom: indeed, while the position in those countries has been getting progressively worse, ours has steadied and in the last year slightly improved. Here are a few striking figures. Taking the years 1927-1929 as the base, the index figures for the second quarter of 1931 and the second quarter of 1932 were as follows: -

In France the index fell from 103 to 75; in Germany from 75 to 58; in the United States from 77 to 54; whereas in the United Kingdom there was an actual rise from 75 to 78. More recent figures show that the decline in manufactured production in the third quarter of 1932 as compared with the same period in 1931 was only .6 per cent for the United Kingdom, but in Germany and the United States the decrease in. each case was over 22 per cent.

As I said just now, the depreciation of sterling and the change of our fiscal policy have acted as a useful stimulus to our commerce, the one to our export, the other to our domestic trade. The exports of the cotton industry, for example, during last year were larger than those of 19.31 by 50 per cent in the case of yarns and 28 per cent in the case of piece goods, thanks to greatly improved demand in Asia, especially in British India, and in Africa. Our production of artificial silk increased from 37 million lbs. in the first nine months of 1931 to 54 million lbs. in 1932 although in other countries, such as the United States, Italy, Germany and Holland there has been a heavy reduction. Last year's exports of anthracite coal, thanks especially to Canada, whose generous buying I gratefully acknowledge, show a substantial increase of 15 per cent. In these times you would hardly expect to see an improvement in the export of motor cars, but in fact the number shipped from the United Kingdom in 1932 (32,000 units) exceeded the shipments of 1931 by 68 per cent. Much of this new business is with European countries other than those which manufacture themselves. This is not merely the outcome of our exchange advantage; it is a tribute also to the type of car England has made specially her own--the light car which has a small gas consumption and gets off with a low rate of tax, an important consideration now that most countries are raising the level of their licensing duties on automobiles. The home trade has also been reasonably prosperous. Other trades which are doing well, at least by the modest standards which are all we can allow ourselves in these times, are hosiery, heavy chemicals and tin-plates. The tariff, too, has brought us a number of new industrial undertakings which are making rapid progress and are quickly increasing their labour force.

The steel industry cannot hope for a real revival until shipbuilding starts up again, but some of our large concerns are planning well ahead. You may have seen accounts in the press of the launching of an enterprise for the construction of a new steel plant at Corby in Northamptonshire. The object is to manufacture basic Bessemer steel, a type of steel for which Great Britain has hitherto been dependent on foreign sources; and the steel will be used in tube-making works to be erected alongside of the steel plant, the whole being designed to form a complete unit. The cost will be high; something over £3,000,000, but we have the advantage today of cheap money, and the finance is being provided through the Bankers Industrial Development Company, an institution formed under the auspices of the Bank of England especially to help in financing schemes for advancing rationalisation in the basic industries. An important scheme of rationalisation, involving considerable capital outlay, has also been put through for the Lancashire steel industry. Even our railways, battered as they are by the depression and by the competition of the motor car" are refusing to take their troubles lying down. The Southern Railway has just completed a scheme of electrification on one of their main lines which will add Brighton, though more than fifty miles distant from London, to the growing number of suburban dwelling places for the daily worker in the city. The Company is continuing its electrification policy and has raised the necessary capital. In England, of course, as elsewhere there is a plethora of money lying idle, but industrial issues are beginning to be made again and are rapidly absorbed, as they appear, by an investing public which is recovering its confidence.

Now all this shows that there are plenty of bright spots in our situation, but while I would be the last to minimize their very real significance, please believe me when I say that I am not here to boost Britain but to give you, so far as in me lies, a true picture of her progress. The mere fact that we are doing better than other countries though gratifying as far as it goes, at any rate to our national pride, is not enough. We have to face the fact that in the absence of world recovery the long hoped-for general improvement in our industrial situation is still to seek. We are still carrying a burden of 2,800,000 unemployed of whom close on 2,300,000 are wholly unemployed, the balance consisting of those temporarily stopped or persons normally in casual employment. The severity of our direct taxes handicaps the expansion of the newer industries, since the taxes are a large deduction from the profits which they would ordinarily plough back into the business. We have to recognize too that the improvement of our export trade may be resting on a somewhat precarious foundation. We are keeping foreign goods out of our market and exchange depreciation has stimulated the sales of our own, so that Britain has obtained a larger percentage of the world's trade and a more favourable balance in her own, but unhappily the volume of the world's commerce continues to decline, and other countries have had to take further measures to protect their currencies by imposing restrictions on the payment of debts abroad. Thirty-five countries have row imposed such restrictions, with the result that British exporters, who could sell at a profit at the prices they can now secure, are often unable to undertake business offered them because they will be unable to collect payment. We come back as always to the international issue; to the a urgent need, urgent in 1931, urgent in 1932, trebly urgent in 1933--the urgent need for a new policy among the nations by which the barriers shall be broken down and the tides of trade permitted to flow untrammelled once j again and free. Britain, least of all countries, can detach herself from the rest of the world. In the meantime, however, let us gratefully acknowledge what has been achieved. Britain faces the New Year with a reasonable confidence. The financial crisis can safely be considered to have passed. The reception of the conversion schemes exceeded all expectation. Thanks to their success, one at least of the burdens on the national exchequer has been appreciably lightened. Thanks to their success again, cheap money has returned, ready for our industries to draw upon when the moment for expansion comes. Already, as we have seen, advantage is being taken of it for the great steel enterprise of which I spoke a moment ago, and for railway expansion. Provided always that there is no serious setback elsewhere, the omens are good.

I have spoken of the things which are measurable as concrete statistical facts. Let me conclude very briefly with some impression less easy of definition or proof. A Canadian friend of mine, who lectures at Cambridge on psychopathology, a rather formidable sounding subject, has recently published a book on the world crisis examined from the stand-point of the psychologist. For his chapter on Great Britain he takes as his text a talk he had after the war with an eminent American financier who told him that, if facts and figures proved anything, England was too crippled to survive, her trade was gone and her financial supremacy a thing of the past. But, he added, England had been in like straits before and ignoring the logic of facts, had calmly restored her wealth and prestige; he and his firm were going to assume that history would repeat itself and would regard the British character as an asset to be written into the balance sheet over against the obvious liabilities.

That confession of faith will serve me also as a text for what I want to say. It is not going to be a wholehearted paean in praise of Britain, for indeed there have been periods in the last ten years when the generous confidence of Mr. MacCurdy's American friend may well have been shaken, and I only hope he did not extract himself prematurely from his British commitments. There have been times when all who cared for England's' future may well have felt that she was pursuing policies at variance with the ideals which we associate with the" British people, policies apt to impair the ancient fibre the independent spirit of the race. I thought it evident f when I first came here that that opinion was pretty widely held in Canada. And, again, when I went home for the first time two and a half years ago, I seemed to observe a spirit of irresolution, of uncertainty and drift, which was paralysing action. Happily in the last eighteen months there has been abundant evidence that just as drift and irresolution had precipitated the crisis so the crisis itself had brought out all that is best in the ?r British character. I need not rehearse the familiar sequence of events--the formation of the National Government, the triumphant general election, the eager sacrifices which were made to restore the national finances. I am concerned rather with the spirit in which now, after", a year of retrenchment, of putting her house in order, r Britain is settling down to the further task of economic F and social reintegration.

First and foremost there is a new spirit of confidence abroad. My psycho-pathological friend among other pregnant sayings about our people, remarks that they never permit themselves to be optimists, and you certainly will not find in British business circles today any evident signs of exhilaration; but you would find, after listening to the customary grumbles, a good deal of quiet assurance that, in the sanctified English phrase, "we are worrying through". Next, the period of drift, of waiting for--things to improve, is over, and planned concerted action has been and is being taken towards reconstruction. It uses the term reconstruction advisedly, because it is now apparent, as I endeavoured to indicate at the beginning of this address, that we are as much in the period of reconstruction today as in the early days after the war when Whitehall rejoiced in a quite unique, and short-lived, government department bearing that high-sounding name. The financial issue has been dealt with and Britain's credit re-established. We have set up our tariff on the basis of reasonable protection for our own industries and preference for the products of the Empire. The trade returns show that the latter has been effective the more fruitful proportion of our total import trade derived from Empire countries rose from 29 per cent in the first nine months of 1931 to 35 per cent last year. In conference at Ottawa with the other governments of the Empire we have taken our part in establishing a yet more fruitful economic relationship between the mother country and the Dominions, India and the Colonies, and we shall hope for even better results this year. This relationship does not preclude arrangements with foreign countries, and these are now being discussed with the representatives of a number of countries with whom we have business ties. A systematized endeavour is being made to retrieve the fortunes of British agriculture, a problem which has been discussed with varying degrees of vigour at any time during the last fifty years but without anything very definite now in the middle of the greatest economic crisis of modern times. The plan of a quota for domestic wheat has achieved success beyond expectations; and by a voluntary scheme of restrictions on imports better prices have been secured for meat, better prices from which our overseas suppliers are benefiting as well as the British farmer. In this agricultural policy you have an encouraging example of co-operation between the State and private interests, but there has also been something else, something which to my mind is even more significant. For a time the British people seemed to be drifting into a most un-English dependence on the State: now they are returning to the healthier impulse of individual, or what is better still, community enterprise. I will give you two examples in very different spheres and then I shall have done. We have in Britain, as indeed every country has today, an acute problem arising from the competition of the motor car with the railways, but perhaps it is more intense in England than in most other countries owing to the small size of the country and the very large amounts, some £60 millions annually, which have recently been spent on the improvement of the roads and their adaptation to modern motor traffic. Something clearly had to be done, the question was what. The Minister of Transport had an inspiration. He invited the Chairman of the four great railway companies to sit in conference with four representatives of the road-using interests, with an independent chairman, Sir Arthur Salter, who was until recently head of the Economic Section of the League of Nations. He asked them to investigate the whole question of transport of goods by road and rail, and make recommendations. Now manifestly it would have been fatally easy, indeed only human, for the representatives of these wholly divergent interests each to insist on their respective standpoints and to pass the buck back to the Government. But the actual report is a model of cooperation. It contains a wealth of information scientifically analysed and coordinated with the expert knowledge of either side. It shows clearly that both parties were ready to make concessions in order to secure agreement in questions of principle; and it concludes with a proposed schedule of licence duties on motor vehicles showing a conspicuous increase over existing rates; indeed as regards the heavier vehicles, the increases are very large indeed. When one reflects that in these times the profits of the road using companies are probably already not what they were, I think you will agree that the whole transaction is a notable example of the community spirit, both sides recognising that here is a problem which in the public interest ought to be solved, and each ready to meet the other halfway.

My other example concerns the problem of unemployment. Here the first requirement is to provide for the physical needs of the men and their families; to safeguard the genuine unemployed from the extremes of poverty, from lack of food and shelter. For that essential requirement the State has assumed the prime responsibility, but there remains the risk of moral deterioration during Tong enforced idleness" a very real risk for men of all ages but especially for the young. This question is now being taken up by local community enterprise, guided and stimulated when required by an organisation called the National Council of Social Service which has recently come very much to the fore. The Council have enlisted the ready sympathy of the Prince of Wales, who has closely studied their work and is giving enthusiastic aid to the promotion of their aims. What can be done varies with the circumstances of each locality, but the purpose of the movement can be summed up in two words--"help and self-help". In Sheffield for example, where for some time garden allotments have been provided for the unemployed with marked success, a scheme has now been launched for carrying the same spirit into the provision of centres for handicrafts such as woodwork, cobbling and toy-making; for indoor recreation; and for organised sports and physical training. Some of these have already been opened. The British workman is a handy man and he helps by making benches and other rough furniture and equipment. In other cases manufacturers have lent unused buildings in their works and have give the men the material if they do the work of painting and fitting up, or have provided pieces of waste ground which the men can level for football or other games. The Society of Friends have placed, I understand, some 50,000 to 100,000 men on allotment gardens and are also forming boot-repairing centres and so on. The output of such centres is not sold; the men simply learn to repair their own and their families' boots and shoes, etc. You will see that in all this the principle is self help and the maximum of result for the minimum of cost. The Government have given a contribution for the expenses of the National Council's propaganda work and of course are deeply sympathetic to they movement, but in every other respect, in its initiation, in such success as it may achieve, it looks to local enterprise. Success in any centre depends far less on the amount of money which can be put up than on the willingness of the right people to give service. The movement is new as yet, but I am told by friends in touch with it that it is spreading vigorously. Yet again, in a number of our cities organised propaganda is being set in motion to induce people to embark on reasonable expenditure which will have a direct and immediate effect on local employment. The Rotary Clubs are playing an important part in this movement. This may sound something of a paradox at the end of a year devoted to national economy, but like other things; in this difficult time, economy can be carried too far and it is a mistake to regard it as an end in itself. The building, painting and decorating trade has especially suffered, and very little expenditure undertaken at the right time by individual householders can make a great deal of difference to local employment, especially in the smaller country towns where unemployment is comparatively a new thing. Anyhow I am not at the moment concerned with the economics of the movement but rather with its social and ethical aspect. It is another example of this awakened spirit of citizenship--the recognition that the community should get busy over its own problems; should try to make things easier and happier for the unemployed within its borders instead of handing the f, whole business over to the already overburdened State. And is it fanciful to suggest that in these movements there may be the genesis of a better understanding between capital and labour, an understanding which may help to relax and soften the rigidity of temper which has sometimes in Great Britain impeded the adoption of new methods and hampered her in competition with her industrial rivals?

I am afraid I have kept you a long time, but I can sum up and conclude in a very few sentences. Though actual conditions and the state of trade measured in the cold hard light of statistics are of course worse than when I was last in England in the summer of 1930, though the heavier burden of taxation is an inevitably depressing factor, the spirit of the people to my mind and observation is far more confident, far healthier than it was then. The natural self-reliance of the British character is beginning to reassert itself. I have put before you as fairly as I can the indications of improvement which justify a revival of confidence and the qualifications which have to be borne in mind. The most vital of these is the fateful question of the world conditions which still hangs in the balance, and as to that one can only say that great indeed are the responsibilities of those who will represent the leading nations at the Conference which is to assemble a few weeks hence. (Applause).