I. Enhanced Fighting Power of the Employers.
Indubitably, from the productive and economic outlook, there are many influences which may hinder the advancing concentration of capital. The centralisation of production might reduce to a minimum the economic convulsions that are inseparable from the individualist-anarchist system of production and distribution, and would thus give a certain measure of stability and continuity to economic life as a whole. In this way, much of the uncertainty of employment which now affects the workers would disappear, and the dread of being suddenly thrown on the street would, to a considerable extent, be banished from their minds.
But the advantageous possibilities thus opened up are accompanied by terrible dangers. The control of production is passing into the hands of a smaller and ever smaller circle of entrepreneurs, and the members of this circle acquire terrible power.
The activities of cartels and trusts in the past has not been such as to justify an optimistic view of the economic consequences. These organisations have always taken advantage of the abolition of competition to secure maximum profits for the members of the combine. It is well known that in fixing prices they take the costs of production of the least favourably situated and least tip-to-date enterprise as a basis of calculation.*
There is a manifest endeavour to secure for the entrepreneurs all the advantages of the concentration.
If this was already the case before the war, the tendency is far more conspicuous to day, when the possibilities of expansion at the cost of other industrial States have become slender, and in many cases have been deliberately renounced. At the present stage of development, the employing class of each country can only secure increased profits at the expense of the working class, and the employers are trying of set purpose to use the concentration of their forces for an attack on the workers both as producers and as consumers.
During the post-war period, the workers of all lands have been made to feel by the events of this twofold struggle that concentration is giving enhanced fighting power to the employers. A local or partial strike is promptly countered by a lock-out in a whole branch of industry, so that the workers in this industry are unable to render aid to the small group of the original strikers. Most of the important industrial struggles of recent days have ended in a defeat of the workers, precisely because the employers have closed ranks in this way. On all hands, therefore, the workers have suffered, alike in respect of wages and in respect of working conditions generally.
Every campaign against an individual employer tends immediately to become a struggle between all the workers and all the employers in that particular branch of industry. In like manner, ever attack made by an individual employer upon a particular group of workers, is really aimed at all the workers in this branch of industry.
2. Division of Labour among the Employers.
In the conduct of these struggles, the employers have organised a division of labour. The campaign against the working class as purchaser of the produce of labour is conducted by the cartels and trusts, and the campaign against the working class as the seller of labour power is conducted by the employers’ federations.
In large part, the obvious growth in the power of the employers’ federations is an outcome of the increasing concentration of capital.* The individual employer has lost his former independence. He must combine with those more powerful than himself, and accept a community of interests. Even when the pursuit of personal advantage might lead him to avoid a struggle with his employees, he cannot follow the dictates of private interest, but must accept the directions of the employers’ federation.
To day, the individual employer is, at most, a regimental commander. Above him is a general staff which draws up a plan of campaign and issues orders to the regimental commanders. Some of the members of the general staff make a close study of the labour movement, and follow with keen attention everything that happens in the fighting organisations of the proletariat. It is their business to ascertain when and where an attack on the workers can be made with the greatest likelihood of success. They keep individual employers informed concerning the best way of evading labour-protection laws. They also elaborate legislative proposals. In a word, everything that affects the relationships between the workers and the individual employers comes under the control of the federation.
As an individual, moreover, the employer has no longer anything to do with the general economic problems of his country. For the most part these are considered by a special organisation, to which all employers belong irrespective of the industry in which they are engaged, and which defends their joint interests. Such organisations are in many cases the real governments. They dictate commercial policy and foreign policy, appoint and dismiss ministers of State, and make the actual decisions which are ostensibly ratified by the parliaments.
The material and economic powers of the employers’ federations are multiplied yet further by a concentration of the forces of the intelligence. It is hardly possible to overestimate the advantages that thus accrue to the employing class as compared with any other group of interests. How is it possible to-day, in view of the interlacing in point of knowledge and intelligence against the representatives of industry, whose speeches, suggestions, and legislative proposals have been elaborated by trained experts? I believe that one of the main reasons why, in Germany for instance, the working class cannot make an adequate use of its parliamentary strength, is precisely this systematisation of the division of labour in the employing class.
3. Improvements in Machinery as Weapons Against the Workers.
The concentration of intellectual forces on the part of the employers has additional consequences for the workers. The employers’ federations are paying a great deal of attention to the problems of the technique of production. The introduction of new methods of production is no longer a matter for the individual employer to decide. The risk of such a change is assumed by the combine; and since the amount of production of the individual firms is usually prescribed by the cartels, the stimulus to the installation of new and costly machinery is not very powerful.
Two considerations are determinate here. The grouped employers have to guard against the depreciation of the existing plants that might be caused by the introduction of new and cheaper methods of production by individual employers. On the other hand, improvements in technique have to be turned to account in the struggle with the workers. The latter aim secures plain expression in a report recently made by T.A. Stroup to the American Institute of Mining and Metallurgical engineers, of which he is a prominent member. To him, trade unionism is “an unnatural condition”. He examines the causes of the spread of trade unionism among American coal miners, and declares that the most effective way of checking this movement will be to abolish individuality in the coal industry and to turn the worker into an automaton, a dehumanised robot fitting into niches and following routine laid down by his manager.
Strop says (I quote from “The Railroad Worker”):
” The first step in checking the spread of unionism in the coal mines, and in restoring the industry to a sound position on labour at least, will be to abolish the contract system, to mechanise the mines thoroughly, to standardise every operation down to the minutest detail, so that no responsibility of any hind will fall on the worker.”
Were mechanisation and standardisation put into practice, says Stroup, the United Mine Workers of America would decline like the Metal Miners Union, which is now but the shadow of its former self: “In the metal mines, the tradition of the individual miner, capable and responsible, has been abolished; the mines have become thoroughly mechanised; all operations have been standardised… In coal mining, on the other hand, the tradition of the individual worker has been maintained, and even extended; mechanisation has been very slowly and reluctantly brought about… This has caused to exist a group of skilled workers intensely jealous of their special knowledge and easily maintained in compact organisations.
Stroup’s reference to the fate of the American Metal Miners Union shows that his ideas are not original. His peculiar merit is that he has expressed these ideas without any scientific or economic circumlocution. His report lays renewed stress on the power which elaborate modern machinery puts into the hands of the employers as against their employees. For decades past, the general trend has been to replace skilled craftsmanship by elaborate mechanical processes. The aim of the employers is to become independent of skilled labour, and to transform the workers into unthinking parts of the machinery. But the aims to be secured by the mechanisation of the labour process are not restricted to the abolition of highly paid labour, whose improved standard of life tends to increase the general rate of wages. The levelling down and standardisation of labour are also to bring about a levelling down of the workers, are to lower the grade of their intelligence. The struggle of the employers against skill in the labour process is at the same time a struggle against the mental culture of the workers. Their intellectual life is to be crushed by mechanisation; creative joy in labour is to be annulled by a deadly monotony. The industrials do not wish to train a generation of workers to be the “gravediggers of the extant industrial system; they want to kill the mental life of the workers, and to transform them into marionettes pulled by the strings of the productive process”.
Nor is it by chance that such endeavours have reached their climax in the United States, There the concentration of capital and the fusion of large-scale undertakings took its rise, and the fullest standardisation of labour is only possible within the framework of the modern mammoth concern. Thus the amalgamation of industrial enterprises in Europe will give rise there, also, to a vigorous trend towards the standardisation of labour and towards the disappearance of the skilled craftsman.
A passing allusion must be made to another result of industrial concentration. With increasing vigour, the workers are demanding a share in the control of industry; and here and there, though to a very small extent, they have been able to enforce a certain measure of control. But concentration makes this control illusory. What control can the workers really exercise over an undertaking when its own manager has no effective powers of control? How can workers’ council exert a managerial influence over production and distribution when the workers have no voice in the centralised instrument which actually decides these matters? It is not unlikely that an element in the contemporary movement towards the concentration of capital and industry has been a recognition on the employers’ part of the fact that this is one of the most effective ways of removing enterprise from the workers’ control. It is of the utmost importance therefore, that the labour organisations, when formulating demands for workers’ control, should reckon with the change, in type of the employers’ organisations. Where a certain measure of workers’ control has already been conceded, the workers must do their utmost to ensure that this control shall be expanded along the lines indicated by the new developments.
4. International Direct Action.
The dangers that threaten the workers from the concentration of capital within national limits are, however, trifling when compared with the dangers that arise when the concerns and trusts spread beyond national frontiers to assume an international character. This internationality provides the employing class with a coat of darkness, so that its doings are hidden from view and are freed from legislative hindrances. The entrepreneurs are thereby enabled to practise the division of labour on an international scale, and to elaborate a new strategy.
The usual procedure is that the enterprises selected as arenas of struggle are given no work to do, the shortage of production that thus arises being compensated by the combine’s enterprises in other lands. For example, when the German concerns were making their onslaught on the German workers, they transferred the work of production to Czecho-Slovakia or to Austria – and reversed the manoeuvre when the time came for an attack on the Czecho-Slovakian or Austrian workers.
The advantages of such strategy are overwhelming. From moment to moment, the entrepreneurs can choose the weakest point in the international fighting front of the working class, and can concentrate their attack on this. Moreover, when, in any country, foreign capital has become predominant, the capitalists are unhampered by many considerations that cannot be ignored when they are fighting the workers of their own land. In such circumstances, the struggle is apt to assume an exceptionally harsh form. As an example, I may adduce the campaign opened by the Viennese banks against their employees in February 1924. On March 6, 1924, the Wiener Arbeiterzeitung described the incident in the following terms:
“For fifteen years the Austrian banks have peacefully accommodated all their differences with their employees, but now the banking business has become the arena of a struggle which in respect of duration and fierceness greatly transcends all the other social struggles that have occurred in Austria since the war. This development is no chance matter. The true reason for the amazing intensification of the fight in the banking industry is obvious. As far as the Austrian bankers are concerned, their main interest must in the long run be that Austrian economic life should develop peacefully. But the control of the banking combine has passed out of Austrian hands, and our banks are to-day completely in the power of British and French capital.”
Having hammered wages and working conditions in one country, the employing class then turns its energies to another country, and sets up a howl there about “foreign competition”. The workers are told that the ruin of “national industry” is inevitable unless they are willing to accept a like lowering of the standard of life. In reality, the concerns that are described as “rivals” are parts of the same combine. A remarkable illustration of this occurred recently in Holland. A Dutch shipbuilding firm asked the municipality to provide a bonus of 12 1/2 percent upon the low wage, which was all that the firm could “afford” to pay. The reason given was that this would enable the shipbuilders to secure an order for two ships destined for the Rhine traffic, and thus provide work at a living wage. The municipality agreed, the bonus being voted as a “productive dole”. It subsequently transpired that this “Dutch” shipyard was a branch of Maths Stinnes, Ltd., of Mülheim-on-the-Ruhr!
The proceedings at one of the sittings of the governing body of the International Labour Office in the end of January 1924, show plainly enough that the employers’ complaints about foreign competition are a mere pretext for beating down the workers’ standard of life. At the sitting in question M. Pinot, who is secretary of the Comité des Forges, and at the International Labour Office represents the interests of the French employers, uttered an impassioned plea for the lengthening of the hours of labour in Germany. He made himself counsel on behalf of the German employers, who take advantage of the peculiar situation of Germany (for which German heavy industry is mainly responsible) to exploit the German workers relentlessly. M. Pinot was careful to ignore the fact that to lengthen the working day in Germany would greatly intensify German competition as far as French industry is concerned. What really interested him was the conviction that the abolition of the eight-hour day in the most important industrial area of Europe would make it easier for the French industrials to attack the same institution in their own land. Such, indeed, was the sequence of events.
Already on March I, 1924, “L’Usine,” the organ of French heavy industry, was demanding legislative measures for the prolongation of the working day: “The German workers have shown their good sense. In the general interests of the Reich they have agreed to work nine and even ten hours a day.
Can we suppose that French workers will refuse to follow this excellent example?”
But the “entente cordiale” between French and German industrials against the working class came into being before January 1924. As early as November 1922, Hugo Stinnes had demanded in the Economic Council of the Reich the abolition of the eight-hour day “for the next ten or fifteen years.” The plea was promptly echoed by the French heavy industrials. On November 21st “Le Temps,” one of the leading French newspapers, approved Stinnes’ arguments point by point, and concluded its comments with the notable words: “That is Hugo Stinnes’ gospel, and it is the only gospel which is genuinely international.”
In view of this general consensus of opinion it was natural that the first great campaign against the eight-hour day should be opened by the employers in a region where the German capitalists could count on the support of French bayonets. There can be no doubt that one of the most important terms of the treaty of peace between the French and the German industrials in the autumn of 1923 was the proviso that the French troops were to stay in the Ruhr. It is true that there is no such clause in the published Micum understandings, but everyone knows that during the negotiations in October 1923, between the German industrialists and the Ruhr occupation authorities, the question of a prolongation of the working day played a leading part. The same question was prominent in the articles on the Ruhr dispute which the then chancellor Stresemann published in the Kölnische Zeitung.
Thus there can be absolutely no doubt that the industrials of all lands are united in their attack upon the gains recently won by the workers, and that they are all playing into one another’s hands. It is equally clear that in this campaign reparations are a mere pretext, and that in reality, both in France and in Belgium, the employers have long since come to realise that the greater part of the “indemnities” must be levied from the working class of their respective lands. I have already given proof of this in my extract from the annual report of the Société Générale de Belgique. Nor do I need to underline the statement that the same view prevails in French industrial circles. This is an old story. Still it seems worth while quoting, as an interesting historical document, part of a speech made by M. Camille Cavallier, the French heavy industrialist, in November 1922. The occasion was the opening of a new smelting furnace at Pont-à-Mousson. According to the report in Le Temps of November 21, 1922, M. Cavallier delivered himself as follows:
“The economic crisis is due to the slackening of production. Too little, far too little, is being produced. The cost of production has increased, and for a few years, at least, labour must be freed from the reduction of the working day. What does a reduction of the working day mean ? It means increased cost of living, the impossibility of reconstruction, a fall in the birth rate. In a word, it means poverty…. When we have broken things we must mend them. The war has swallowed up an incalculable amount of wealth. The only way of avoiding general impoverishment is to work twice as hard as before, for several years to come. But we have taken the opposite course, and future historians will rightly stigmatise the reduction of working hours immediately after the war as sheer lunacy. Well, we have made a mistake, and we must retrace our steps if we are to avert disaster. Let us put our backs into our work ! Let us cut off all expenditure, that is not productive! Work, hard work! That is the only way of overcoming the present crisis.”
These remarks are almost identical with those made by Stinnes, shortly before, in his speech to the Economic Council of the Reich. We have the impression that the two orators must have put their heads together – unless we are to suppose that M. Cavallier is a plagiarist, and has “lifted” his German fellow-industrial’s ideas without acknowledgement. Even more remarkable than the obvious resemblance between the two speeches is the fact that a month after Cavallier’s utterance, the Deutsche Allgemeine Zeitung (the newspaper is one of Stinnes’ organs) reprinted the French echo of the German magnate’s words, and added the following comment:
“We do not quote the foregoing speech because we need foreign testimony on behalf of a truth with which we have long been familiar. But M. Cavallier’s words serve to show that, even in one of the “victorious” lands, people recognise the necessity of working harder in order to avert imminent catastrophe. How much more, then, is it incumbent on the German nation to strain its forces to the uttermost, for we Germans need, not merely to keep ourselves alive, but to regain our lost freedom.”
Manifestly, the French and the German iron magnates were agreed even before the Ruhr struggle that the working class must accept lower wages and a longer working day in order that the workers might replace the sums which the jugglery of war finance and the conduct of munitions enterprises had enabled the entrepreneurs to transfer from the State treasuries to their own banking accounts. The workers are, in the long run, to provide the funds which the capitalists are using for the establishment or purchase of smelting works in Borneo, glass works in Sumatra, oil wells in Texas, and so on – the funds they are using to secure a monopoly of the mineral treasures and industrial enterprises in eastern and southern Europe.
Since the understanding was first entered into, the French occupation of the Ruhr has brought the industrials a long step nearer their goal. If the Micum understandings are not free from stipulations which may seem to bear hardly on the German industriel magnates, this is only because the French capitalists want to ensure that the German workers’ skin shall not be inequitably divided.
5. War on the Workers as Consumers.
We have seen that the employers are united for direct action against the workers. They are no less united for indirect means of carrying on the struggle. The most important form of the indirect attack on the working class is that which concerns the workers as consumers. In this field, capital dictates prices. The matter has already been alluded to, but a more detailed consideration of the effects of capitalise monopoly has now become expedient.
Within national limits, competition is already, for practical purposes, a thing of the past. As far as the main necessaries of life are concerned, prices are, in every country, fixed by syndicates and cartels. The only limits to the exactions of the profiteers are imposed by foreign competition. In the countries with a depreciated currency, the disturbance of the foreign exchanges has interfered with the working of this automatic check on exorbitant profiteering. The consumers have been restricted to the use of the productions of their own country, and although the cost of production of these was considerably lower than in lands with a high exchange, the average prices were little less than the prices of the same articles in the world market. On the other hand, almost all the countries with a high exchange had recourse to a protective tariff to meet the competition of the countries with a low exchange. In both cases the entrepreneurs had almost unrestricted power to dictate terms to consumers and to keep up prices.
Another way in which the level of prices can be artificially kept up is by a systematic curtailment of production. A report issued by the International Labour Office in the autumn of 1923, dealing with production throughout the world, shows how unscrupulously this insidious method has been put into practice by the entrepreneurs.* The enquiry into production was set afoot by the entrepreneurs’ group on the governing body of the International Labour Office, in the expectation that scientific arguments against the eight-hour day would be forthcoming. The upshot of what was to have been an appeal for more production can, in all events and with sobriety, be described as a serious attack on the employing class. At the very time when the appeal for more production was being instigated, a fundamental change had taken place in the world market. Down to the close of 1920, there had been a rise of prices in progress in almost every country of the world. Then, owing to the decline in purchasing power among at least two-thirds of the inhabitants of Europe, there ensued throughout 1921 a general fall in prices.
No other happening of the post-war epoch had proved so disconcerting to the capitalise class. A decline in prices signifies depreciation of stocks and invested capital, with a consequent fall in the rate of profit. This became a much more serious consideration than the reconstruction of Europe and the mending of broken crockery. It was more important even than the fall in the birth rate and the condition of the public health. The entrepreneurs, therefore, whose unceasing plea (both as men of business and as humanitarians) had been for more production, now suddenly and in cold blood devoted their energies to the arrest of production.
A few data culled from the before-mentioned International Labour Office report will suffice to show the success of this manoeuvre.
Between January 1920 and August 1921, the monthly output of pig iron in the United States fell from 3,015,181 tons to 954,193 tons. It declined, therefore, by more than two-thirds.
In Britain, the monthly production of pig iron, which had been 665,000 tons in January 1920, rose during the middle of that year to 752,400 tons, but in March 1921 sank to 386,000 tons.
In Sweden, the monthly production of pig iron was 35,000 tons in January I920. In the autumn of the same year it had risen to 44,200 tons. By July 1921 it had fallen to 19,400 tons.
In France, the rnonthly production of pig iron was 195,116 tons in January 1920. In the autumn of 1920 it had increased to 37I, 000 tons. By August 1921 it had fallen to 254,740 tons.
In Belgium, the monthly production of pig iron, which had been 40,820 tons in January 1920, rose during that year to I26, 000 tons, but by August 1921 it had fallen to 44,510 tons.
The curve of production ran a similar course in other branches of industry. A notable instance is that of cotton.
In the United States, the amount of cotton produced in the year 1914/ 1915 had been 3,498,326 tons. In the year 1920/1921 it had been 2,914,007 tons. But in the year 1921/1922 it fell to 1,724,554 tons.
The falling off in the cotton production of Egypt was, proportionally, even greater. The figures for the corresponding years in that country are 3,149,302 tons; 2,711,854 tons. and 1,483,022 tons.
The suddenness of the decline in these cases shows that the restriction of production was something more than the expression of a normal reaction to the inadequacy of demand. It was a deliberate manoeuvre to counteract the natural tendency to a fall in prices following on war-time inflation. A superabundance of plain proofs could be adduced, but it will be enough to cite some additional facts which are quoted in the International Labour Office report.
Reviewing the cotton trade for 1920, The Cotton Year Book for 1921 writes (p. 5): “The rapid and enormous fall in prime has scared the growers and engendered a disposition to curtail future crops in order to get prices back to higher figures than they were in the middle of December”.
The Times Trade Supplement of December II, 1920, writing of Japan, says: “Cotton… production has been reduced 40 per cent, and a further reduction is being discussed.”
Concerning Egypt, the Board of Trade Journal of June 6, 1921, reported that the cotton growers of that country had formed a syndicate for mutual defence and for the protection of their interests.
Their primary aim was to warehouse 2,000,000 tons of cotton until the price reached $60. One of the items in the syndicate’s general program was “restriction of the areas planted with cotton”.
The previously quoted issue of The Times Trade Supplement contains the following item of Egyptian news:
“Restriction of Cotton Area. Cairo, December 7. The provincial Councils having unanimously decided in favour of the principle of restricting the area to be planted with cotton in 1921, Sultan Fuad to-day signed a decree limiting the area to one-third of every holding, and prohibiting the cultivation of cotton in the basins of Upper Egypt, except where irrigated by Nile water.”
In the United States, the American Cotton Association likewise aimed at the systematic restriction of the production of cotton. The “Cotton News” of June 1921, reported that attempts in this direction had been successful. The area of cotton plantations had been reduced by 30.73 per cent. For the year 1921; the amount of artificial fertiliser used had been reduced by 51.17 per cent; on 4.95 per cent. of the planted area, the cultivation had subsequently been abandoned.
In other branches of production, a similar attack was made upon nature, which is so unaccommodating to the laws of capitalist production.
On September 24, 1920, the Rubber Growers’ Association circularised its members asking for a 25 per cent. restriction of production. On November 22, 1921, the Association reported that, as a result of the advised restriction, or by spontaneous action, the yield of rubber had been reduced by fully one-third.
Passing next to the Japanese silk industry, we learn from various Japanese newspapers of dates ranging from November I0 to I4, 1920, that on November 10 and 11 a meeting of seven hundred silk exporters and manufacturers was held in Tokyo, and that the following decisions were arrived at:
1. All the silk-spinning mills of Japan are to cease working from November 30, 192O, until February 15, 1921.
2. During this suspension of activity, the employers will provide out-of-work pay for their hands, the amount varying in accordance with local conditions.
3. During the suspension, the spinning mills will make no attempt to enlist one another’s workers for future operations.
“The silk-spinning mills affected by this undertaking number 3,047, and employ 304,021 workers, mostly women. The larger mills intend to pay the out-of-work allowances, but many of the factories will not be able to bear this financial burden. In view of the large number of mills and workers affected by the measure, there will be a considerable spread of unemployment. Should the enterprises be unable to carry out their undertakings as far as the provision of out-of-work pay is concerned, the State will intervene.
In Sweden, the Federation of Wood Exporters, at a meeting held on March 12, 1921, unanimously agreed to restrict production by fifty per cent. for the remaining nine months of that year.
The foregoing documents furnish irrefutable proof that the restriction of production was systematically organised. It is, therefore, not surprising that the entrepreneurs’ group on the governing body of the International Labour Office protested against their publication, and did its utmost to prevent their being included in the report. The employers have no use for knowledge unless it serves their own interests.
In actual fact, the International Labour Office was extremely circumspect in the use of the information it had collected. The report comprises five bulky tomes, and in these only a few pages are devoted to a demonstration of the systematic restriction of production. In reality, the employers were far more unscrupulous than the report of the International Labour Office would lead us to suspect. It seems to me expedient to supplement the information; and, more especially, to throw some light on the methods employed by the capitalists.
For instance, the foregoing quotations relate with one exception to non-European countries and this insight lead the reader to infer that the deliberate restriction of production was comparatively rare in Europe. The inference would be erroneous. The only difference was that the European capitalists set to work more cautiously. They did not pass resolutions at congresses or indulge in press propaganda. There was no need of such measures, for their organisations are more closely knit, and their attacks on the consumer can be prepared without any trumpeting. Moreover, the general conditions are different in Europe. Cotton producers and rubber producers have to deal with nature, and nature is apt to be a refractory agent. The European industrialists are more advantageously situated in this respect. If they wish to paralyse production, simple methods are available. They need merely inform their workers that a reduction of wages or an increase in the hours of labour has become necessary. If the workers retort by a strike, the employers can then throw upon them the blame for the falling off in production.
The figures already given concerning the production of pig-iron show that European industrial production was no less systematically restricted than the natural production of cotton, rubber, etc., in other parts of the world. In the British textile industry we shall find another example of general and systematic restriction. In the larger British concerns such restriction has been going on for years, and, nevertheless, these concerns made enormous profits during the year 1923. Commenting on this matter the “Manchester Guardian Commercial” (though closely connected with the cotton trade) felt constrained to write editorially on February 21, 1924: “The combines in the finishing industries cannot be working at full capacity, but the profits earned seem to justify the allegation that their present policy is one of increasing their earnings while reducing their output.” To take another instance, we cannot doubt that the desire to keep prices at an artificially high level was the main cause of the restriction of production in the western German iron industry during the winter of I923/1924.
It is, of course, exceedingly difficult to ascertain how far international agreements have been at work in such cases. Still, agreements of this kind certainly exist, and they are likely to become commoner in the future. One instance, at least, can be quoted from the Revue du Travail, a periodical issued by the Belgian Ministry for Industry, Labour, and Food Supply. The issue for December, 1920, contains the following item:
“An International Federation of Flax Producers has been formed, to defend the interests of flax producers and to promote [!] the cultivation of flax. On November 18 the delegates of producers’ groups in France, Britain, Holland, Belgium, Ireland, and Denmark, assembled in Brussels to discuss the best way of averting a crisis. The delegates were of opinion that the first aim must be to restrict production and stabilise prices”.
As to the way in which such decisions are carried out in practice, the proceedings of the American cotton growers furnish a classical example. The International Labour Office report has only a brief extract from the Cotton News article of June I, I92I, but this extract contains some remarkably candid admissions. We are told that the American Cotton Association is satisfied with the success of its vigorous campaign on behalf of a restriction of production. Not a single country has failed to respond to the appeal; and, thanks to united endeavours, a great reduction in the crop can be anticipated. In view of the accumulated stores of cotton and the falling off in consumption, any other policy would have been suicidal (!).
When abstract persuasion was not enough, material means were employed. The American Cotton Association did not shrink from what was tantamount to blackmail.
Let me make a direct quotation from the Cotton News: #
“The resolute and vigorous attitude of the local banks throughout the cotton-growing area constituted one of the decisive factors in promoting the success of the campaign. It was impossible for the farmers to secure from the dealers advances and credits enabling them to plant as much land as usual. They had to restrict the areas under cultivation, and to bow to the imperious necessity of a radical diminution of production, as preached with so much energy and impressiveness by the American Cotton Association.
“Worthy of special attention is the fact that in a very large number of fields cultivation was abandoned after the fields had been sown. This, too, was due to the failure of the farmers to secure the loans and credits needed by them for the continuance of the work of cultivation. The farmers had spent all their ready cash in preparing the ground and sowing the cotton. When the banks tightened the strings of credit, the cultivators had no option. The prospect of a crop had to be sacrificed in a large proportion of the sown fields.”
Another way in which the production of cotton was restricted was by reducing the amount of artificial manure used in cultivation, especially on the eastern bank of the Mississippi. According to the report of the American Cotton Association, the amount of artificial manure used in 1921 was less than half the amount used in I920.
In view of all these facts, the Cotton News, though it is the organ of the American cotton producers, could not refrain from the comment: “The cotton industry of the world, especially outside the southern States, will be amazed when it Iearns the whole truth concerning the radical restriction of the cotton-growing area.
It must not be supposed that this is a new phenomenon. The cotton growers think only of profits, and are quite unconcerned as to other consequences of the deliberated sabotage of production. Similar methods were used twenty years ago. But at that time the restriction was only about I4 percent, whereas the restriction of the year I921 amounted to 50 per cent. or more.
Additional details may be given anent rubber production as well. The methods used in this case deserve close attention, not only because they have been continued up to a very recent date, but because they are such as might readily lead to international conflicts.
The dominant organisation in the rubber industry is the Rubber Growers’ Association. The circular issued by this body on September 24, 1920, has already been mentioned. Addressing itself to all similar combines of producers, the Rubber Growers’ Association asks them to take note that a continuance of production at the extant rate would produce an excess of supply over anticipated demand ranging from 35,000 to 40,000 tons. There was already an excess of supply over demand, and this further excess would drive profits down to the vanishing point. If rubber production could be concentrated in the hands of a few persons, it would be easy to adapt the supply to changes in demand. The difficulty was that the 3,000,000 acres planted with rubber were owned by so many different persons. But if the producers would take joint action “on behalf of the general interest” in order to tide over the difficult period, no permanent loss of the invested capital need be anticipated.
The Association therefore recommended a 25 per cent. restriction of production until the economic situation should improve. The fall in prices was a potent argument in favour of decisive action.
This appeal was well received by the rubber producers combines all over the world. They pledged themselves to restrict production to the requisite degree. An international of rubber producers had come into being. But the expected advantages were not secured, prices did not rise to the desired level, and the dread of dwindling profits persisted. The result was that in the late autumn of 1923 a conflict ensued between the two leading rubber interests of the world, that of the British producers in the Federated Malay States and that of the Dutch producers in the Dutch Indies.
According to the Deli Courant ~ of November 16, I923, the Straits Times (one of the leading Singapore newspapers) regarded a restriction of rubber production as essential, and went so far as to utter threats against the Dutch rubber producers. “The English journal,” wrote the Dutch periodical, “foresees a new crisis in the rubber market, and addresses our Dutch rubber producers in plain terms. If the Dutch Indies continue to produce to their utmost capacity, so that the British undertakings must restrict the crops to a ruinous extent, the moment will soon come, says our Singapore contemporary, in which it will feel constrained to declare: ‘Stop restriction; first of all, put the Dutch Indies out of action, and then resume the restriction policy if necessary.’ Malacca, says the Straits Times can produce cheaper than Java and Sumatra, and in a fight to a finish Malacca will win. Our British contemporary then goes on to suggest that the export of rubber from the Dutch Indies should, with governmental assistance, be reduced from I30,000 to I00,000 tons, and believes that in this event the Dutch producers can be guaranteed a price of 1/6 per pound. With a production 100,000 tons, this price would pay the Dutch Indies a great deal better than unrestricted crops at competitive prices.”
The British did not find it necessary to put their threat into execution. The Dutch planters gave way, not so much from fear of the threat as from fear of the consequences of a market crisis.§ For the colonies, too, are learning that, in the long run, an understanding among the leading rivals is preferable to competition in the world market. Let me quote from the Nieuwe Rotterdamsche Courant of January 17, I924, the remarks made by the chairman of a meeting of the Rubberplantersvereeniging in Bandung, Java. He spoke feelingly as follows: “We, too, are well aware that in this matter, as in all others, the fine saying, ‘Union is Strength’ holds good, and that rubber production as a whole will thrive more effectually if we can collaborate with British producers. It is necessary to look ahead in these matters, and to think of dangers that may arise in the future even though they are not obvious to-day. There is good reason to hope that such foresight will become general, and that in the Dutch Indies we shall hear more about a voluntary restriction of the crops. I have already heard rumours of contemplated restrictions, though to an extent of only ten or twenty per cent. Some of our Dutch firms are trying to secure a general understanding upon this matter of restriction”.
Ample evidence has been given to show that the entrepreneurs sabotage production. To multiply instances would be superfluous, for (as the Cotton News justly remarks in its article of June I, I92I) in all countries the combined producers will take the same course. What does it matter to the entrepreneurs whether their products supply an urgent public need? All is grist which comes to their mill, be it rubber, cotton, rice, or wheat. The only thing that matters to the capitalists is a certainty of large profits. When profits are threatened, the entrepreneurs take the necessary measures with an easy conscience. In case of need, they artificially limit the creative activities of nature, and deprive the workers of the possibility of production. Simultaneously, they do not hesitate to clamour for a longer working day, and to declare that the workers are responsible for dwindling production and rising prices.
The dangers by which the workers are beset owing to this attack on two fronts are so obvious that no further elaboration is needed. An immense task is now incumbent on the working class. Whether headway can be made against capitalism in its latest and highest phase of development, will depend upon our capacity for promptly organising an effective defence and a vigorous counter-attack. The ways and means of achieving these ends will be the subject of the ensuing chapter.
I. Enhanced Fighting Power of the Employers.
* In the United States the coalition of progressive congressmen explains as follows the drift of the farmers to the towns (retranslated from a Swiss newspaper): The reason is to be found in the atrocious system of distribution which has grown up before our eyes. In virtue of this system of distribution, the farmer gets only 37 cents out of every dollar paid by the urban worker for agricultural produce; whereas the urban worker gets only 30 cents out of every dollar extorted from the farmer for the products of urban industry. Substantially, therefore, the urban operative and the farmer have a common enemy. The enemy is The monopolist group to which this abominable system of distribution belongs, which controls and guides the system.
2. Division of Labour among the Employers.
* The development of the Federation of British Industries (F.B.I.) has been amazing. It was founded in the year 1916 by 53 firms and combines. The growth of its membership is shown in the following table: Year. Firms Combines Totals.
1917 494… 73. 567
1918 793.. 152… 960
1919 946.. 174 1135
1920 1222 166 1401
1921 1567. 168 1735
1922 1729. 166 1895
1923 (June) 1798.. 167 1695
The firms that have joined as individual members represent only a small fraction of the individual membership. We learn from an official report that already in 1919, the third year of its existence, the F.B.I. represented 18,000 firms, with a total capital of £5,000,000,000, and thus comprised the massed forces of about one-third of all the British industrials.
5. War on the Workers as Consumers.
* Enquête sur la production, Rapport général, Bureau International du Travail.
# Retranslated from the German.
~ Deli is in Sumatra, Dutch Indies.
§ During the last financial year, the rubber planters of the Dutch Indies made large profits. According to the Economist of March 15, 1924, the net profits of one of the Sumatra companies, the United Serdang Rubber Plantation, increased from £42,776 to £67,812, so that the dividend paid rose from 5 per cent. to 10 per cent. The Indische Rubber Co., another Dutch firm, did even better. During the year 1923, it earned 43 Dutch cents on every pound of rubber, making a profit of 400,000 guilder upon a share capital of 1,000,000 guilder. Seeing that, according to the “Straits Times”, the Federated Malay States can grow rubber cheaper than Sumatra and Java, we may presume that the British producers who advocated such drastic action in favour of a general restriction of production, must have feathered their nests at least as well as their Dutch cousin.