Capacitación – formación

At the same time as the 1926 strikes failed to damage the gold standard strategy in terms of depoliticisation and the displacement of pressure over economic conditions however, they also compounded Britain’s lack of economic adjustment. Though Britain enjoyed a period of relative prosperity from 1927 to 1929, unemployment remained chronically high and the old export industries continued to languish. Moreover, despite also leading to a numerical weakening of organised labour, with a fall in trade union membership of more than 10% between 1926-28, the unrest was not followed by any great moves by employers towards cutting wages or lengthening hours, and only a minority such as Sir Alfred Mond and Sir Hugo Hirst (establishing ICI and General Electric respectively in 1926) engaged in any serious industrial restructuring. As a whole, Britain’s economy thus experienced no significant modernisation or adjustment, and its relative international decline continued unabated as competitor nations continued to press ahead with improvements in productive methods and technology. The growth of newer and more advanced industries also remained insufficient to offset the stagnation of the staple trades, and though import prices fell, production costs remained comparatively high due to the

145 _{MRC:MSS.200/F/3/S1/14/1, 3, & 6. Sir Max Muspratt to Neville Chamberlain 13/10/26; Memo. to the}

Prime Minister 30/11/26; ‘Industry’s Burden’ (FBI), December 1926; MRC:MSS.200/B/3/2/C531 Pt.1. Secretary of the ABCC to the secretary of the NCEO, 11/2/26; MRC:MSS.200/B/3/2/C625 Pt.7. Report on

persistence of inefficient practices and pre-1926 wage levels. In addition, with Britain’s wholesale and retail prices both gradually continuing to fall, real wages for those in employment (though 16% below their 1920 peak) also continued to rise. While the authorities had therefore survived the strikes, as Norman was keen to point out, there remained ‘so much to be done.’146

The reasons for this lack of adjustment were varied. British labour for example was relatively immobile, with slow migration from areas of mass unemployment (such as the North and in South Wales) to areas of expansion (such as the Midlands and the South East), while many of Britain’s old industries were still able to make sufficient profits despite their economic problems, and thus lacked the incentive to embark on an expensive switch to new lines of production. The structure of Britain’s old industries was also still essentially the same as it had been during the nineteenth century, comprised mainly of family firms strongly resistant to improving productivity through mergers, while those amalgamations which did take place were also frequently designed as a defensive move pursued in a bid to evade the need for adjustment.147 _{Industrial change was also hampered}

by a lack of access to capital, with many firms unable to accumulate sufficient investment funds out of their own profits due to the burden of high tax and debt servicing, and with Britain’s banks still heavily extended to British industry, many remained unwilling to make any significant new advances for the purposes of reconstruction or to endanger their

146 _{BE:ADM34/15. Norman Diaries 20/5/26: Figures calculated from Board of Trade (1930); Report of the}

Committee on Finance and Industry. Cmd 3897 (1931). Table 3, Appendices IV and VI; Dowie (1968), pp.68-71; Moggridge (1969), pp.83-4; Feinstein (1972) Tables 2, 37, 51, 52, 57, 65; Clegg (1985), p.421; Alford (1986), pp.20-1; Gazeley and Rice (1992), pp.326-31; Butler and Butler (1994), ps.373-5, 383-5; Feinstein et al (1997), Tables 1.6, 4.4, 4.3.

147 _{PRO:T160/463. ‘The Gold Standard’ (Churchill); Cole (1948), pp.376-9; Morgan (1952), pp.298-9;}

Branson (1977), pp.140-2; Best and Humphries (1987), pp.231-2; Heim (1987), pp.240-56; Tolliday (1987), p.86.

existing investments by forcing adjustment through the pressure of bankruptcy.148

These factors alone however cannot fully account for the continuation of Britain’s faltering economic performance. There is no evidence to suggest for example that Britain’s employers would have been more willing to engage in significant restructuring even had conditions for such an undertaking been more favourable, and labour immobility did not impede the growth of Britain’s new industries, which were not short of manpower. The key causes behind Britain’s economic failings instead lay primarily in the retrogressive attitudes of employers (especially in the old export trades), who remained wedded to outmoded technology and production methods, and in the resistance of labour to any further compression of living standards, especially reductions in wages.

These factors were clearly evidenced during the events of 1925-26. Provoked by the insistence of employers in the export trades that improvements in competitiveness were to come through wage cuts and longer hours rather than industrial re-organisation, the unrest served notice as to labour’s willingness to resist any diminishing of their living standards and of the high costs that would be incurred in trying to force the issue. In recognition of the fact that overt class struggle was now at a stalemate, the strikes were followed by an ‘industrial truce’, with employers keen to return to orderly business, and with labour now demoralised and weakened by the failure of direct action.149 _{As a result,}

industrial unrest declined markedly during 1927-28. The average number of working days lost was now nearly 90% lower, and the average number of new disputes over 50% lower than the annual average for 1922-25 (a period in which labour unrest was itself starting to subside from its postwar heights).150

148 _{Clay (1957), ps.231, 332-42; Heim (1987), pp.240-55; Eichengreen (1993), pp.144-5.} 149 _{Cole (1948), p.428.}

The industrial truce was formalised in September 1926 with the establishment of talks between representatives of the TUC (led by the TUCGC chairman, Ben Turner) and a group of employers headed by Sir Alfred Mond.151 _{Though the FBI and the NCEO initially}

refused to participate in the talks, by 1927 a separate series of tripartite discussions had also been established with the TUC. With employers keen not to antagonise labour for fear of a future backlash, it was now deemed expedient to engage in a dialogue while the terms were still favourable.152

Though ensuring industrial stability, the class stalemate now further impeded the process of economic adjustment insofar as it entailed the forcing down of British prices via the compression of working class living standards. Despite this however, state officials remained unwilling to become more directly and visibly involved in order to force an adjustment and continued to insist on the need for increased economic efficiency and adaptation.153 _{Direct state intervention remained limited to measures designed to encourage}

private enterprise (such as the establishment of the National Grid in 1926, set up in part to facilitate the adoption of mass production techniques), and to curtail the disruptive ability of labour, such as the Trade Unions and Trade Disputes Act of 1927 which introduced severe restrictions on industrial action.154 _{Nevertheless, though keen to minimise their}

responsibility and involvement, Ministers were also aware of the political dangers posed by continued economic atrophy. As such, the government turned to the Bank of England, (already now tentatively involved with industrial restructuring in the armaments industry), whom it was felt could encourage economic adjustment through the provision of fresh

151 _{TUC Annual Report 1928., pp.407-12; Cole (1948), pp.427-8; Citrine (1964), pp.246-9.} 152 _{Various in MRC:MSS.200/F/3/S1/14/6; MRC:MSS.200/F/3/E1/3/11.}

153 _{Labour Party Annual Report 1927, p.97; PRO:BT55/49. ‘The Economic Situation in the United Kingdom}

1922-7’ (Cunliffe-Lister); PRO:CAB24/184. ‘Trade Union and Trade Disputes Bill’ (Steel-Maitland), 23/3/27.

capital and the application of financial pressure without the attendant political risks. For the Bank’s part, though also reluctant to accept any greater responsibility for economic conditions, officials were concerned that the government might be compelled to extend its involvement if they did not, and that this might lead to the possible nationalisation of the Bank itself. Moreover, Bank officials also felt that it would be impossible to confine state assistance to selected industries, and that this would merely widen the clamour ‘to get some of the Government dope’ and delay the ‘more radical cure’ of industrial restructuring and amalgamation. As such, although the Bank now succumbed to government pressure and became increasingly involved with those parts of British industry in most difficulty, they also remained emphatic that their assistance would be strictly limited, and that the provision of new capital would have to be preceded by industrial restructuring.155