British and American Opinion

FUNDAMENTAL ELEMENTS THAT MIGHT BECOME A HEAD-ON CLASH

By WILLIAM L. BATT, Vice Chairman of the War Production Board and United States member and representative on the Combined Production and Resources Board

Delivered before the Engineering Society of Cincinnati, Ohio, January 18, 1945

Vital Speeches of the Day, Vol. XI, pp. 286-288.

THE point that so many of us forget is that this war actually began many years before the outbreak of the present fighting. The fighting is, of course, the most unhappy phase of total war, but it is only one phase. There are some, of whom perhaps Lord Keynes is the outstanding example, who insist that this war began with the signing of the Treaty of Paris. It was his contention, in his extremely prophetic book, "The Economic Consequences of the Peace," that the unrealistic attitude taken toward the European economy by the peacemakers made another outbreak of fighting inevitable. Hitler harped on the theme that the hunger and the barbarities of inflation and the lack of economic opportunity were the genesis of the Nazi party.

There are others who insist that it was the withdrawal of the United States, the principal creditor nation, from wholehearted participation in world affairs, especially in world trade, that generated the world crisis.

Whatever the actualities are, the fact remains that Germany was actively preparing for war from 1932 on, and that economic war with its blocked currencies, barter, certain types of cartels, and other restrictions designed to limit the world's living standards rather than raise them, was rampant long before 1939.

We had the war of nerves, we had the "phony" war, all before we had the all-out fighting war and I doubt whether there is anybody here today who supposes that the total war will end when the fighting stops. It will not be that easy.

From the mistakes of the Peace of Paris, from the mistakes of American isolationism, from all the miserable mistakes the Allied nations made in the years between the two wars, we must learn some lessons. I believe there is in the United States today a very substantial majority opinion supporting the ideas that we must participate fully in building a better world. Partly this is selfish; we see in the task of sending our good products to improve the living conditions of the world, a chance to export our unemployment. But, in addition to this, we are beginning to recognize that a narrow nationalism and all its concomitants of thrusting the economy of various countries awry in the name of self-sufficiency, is a harbinger of war. If you accept that, you must then agree that mechanisms of trade obstruction are not the tools of peace.

Nevertheless, a realist will insist that the trend of several decades cannot be reversed overnight. Indeed, we see the world emerging from this war with less really free trading than ever before in history. That has been an inevitable byproduct of the war, but we need to identify it as such, and clearly place the responsibility. The essential thing is to get the world back on the right track. If we see the ends andobjectives clearly enough we can hope to find the ways andmeans.

In this undertaking we need all the partners we can get. I have spoken at other times about the necessity for a sound understanding between us and the U. S. S. R. Tonight, I want to talk about some of Britain's economic problems and the interest we have in them, because I feel keenly that we in the United States need a healthy Britain.

I believe it is a fair statement to say that the United States will need the economic cooperation of Britain in winning the peace every bit as much as it requires the military cooperation of Britain in winning the war.

This makes it vividly essential realistically to look at her position today. Now, I am going to say some things that may sound sharp, but my motive is to heal, not to hurt. Moreover, I am convinced that, unless Americans are told the true situation in, Britain today, so they can direct their energies toward helping Britain rather than wasting them in futile criticism, we shall lose a shining opportunity to enjoy together an adventure in both good will and prosperity.

Let me sketch lightly a little of the present British economic background, although it may be rudimentary to you. Since Elizabeth's day the British have been making overseas investments. Their capital helped push many of our great railroads westward. They built some of our bigger and better industries here in America and this was true in larger measure elsewhere in the world. These investments paid interest, this interest was transmitted to England and was one of the means by which many Britons lived in comfort, spending their money for the goods and services that contributed in some degree to Britain's living standards.

Those investments have now, in very large measure, been liquidated. Many of us recall, in the early days of the war, the newspaper stories of how the British Government compelled the sale of such British-owned properties as American Viscose. That was only one example. It is true that all such investments were not so liquidated, but a large part of them were. The stocks and bonds were sold, the money was spent for shells, aircraft and other implements of war that have long since been hurled at the enemy and are gone.

I don't need to elaborate very much on what has happened to British overseas export during the war. It has fallen to less than 1/3 of its pre-war figure. We know how vital it was for that island of some 40,000,000 people to import their food and to export coal and manufactured goods that paid for their food. When their back was to the wall, the United States stepped in with lend-lease so that they could go on with an all-out effort for war. We have supplied the munitions for which Britain could no longer pay, and the food that they no longer could obtain in the normal pattern of foreign trade, through the lend-lease program. That has been to our direct interest. But, with the close of the fighting, the British people clearly foresee the day in which they must, for very reasons of survival, rebuild their foreign trade. Moreover, they see they must even enlargethat trade to make up what they have lost in the war in liquidation of their foreign assets, and to meet the 12 billions in debts they have incurred around the globe. They have a goal in Britain of increasing their foreign trade 50 percent above what it was in 1939 to offset these losses and so that they may enjoy, or even improve, their pre-war living standards.

That is a great target to aim at and, like the Americans, the British love to think of moving onward and upward and, therefore, it has been with sharp pain that they have lately discovered they are going to be tremendously handicapped in achieving any such goal.

If you pick up a responsible British newspaper today you are liable to see something about British efficiency. If you examine this subject a little you will discover a disturbing situation. I want to picture it to you a little bit because I believe it is something in which we Americans particularly can help the British.

About nine months ago the British became perturbed about their textile production. Some Americans had pointed out that British production methods were not of the best, so the British sent a mission of textile people over here under Sir Frank Piatt and they toured some of our leading mills and talked to our technical people. They went home and made a report—a report which has fairly staggered Britain. The Piatt report showed that, in spinning, British output per man-hour was 18 to 40 per cent less than American; in weaving, 56 to 67 per cent. We have upward of 600,000 automatic looms here. In Britain they have about 14,000. The Piatt report bluntly says that Britain is 25 to 30 years behind in its textile methods.

I want to add that this lack of efficiency in British textile production is not just a product of the war. When Sir Frank Piatt says Britain is 25 to 30 years behind in its methods he actually means that Britain failed to keep in stride throughout most of this generation. This story is sadly portrayed in the fact that in 1913, the year just before the start of the first World War, Britain produced 7,000,-000,000 yards of cotton textiles. By 1939, the year the present war started, this production had fallen to 1,400,000,000 yards—just one-fifth as much! This was during a period of time when the general world consumption of textiles rose about 35 per cent.

This means one thing: That between 1913 and 1939 Britain lost its ability to compete in the world markets with the lower-cost mass production of cotton textiles. True, Britain retained fine spinning and high-count fabric lines, but these are not the lines of big profits. They are not the lines in which exports can be increased 50 per cent.

Next, I would like to talk a little bit about coal. While coal is singularly lacking in glamour, it is really one of the most vital things in the world and especially so to Britain. In pre-war years, coal accounted for about 70 per cent of British exports in volume and about 12 per cent in value. It was a fine material to load into boats that brought food and other supplies to the "tight little Isle." If postwar exports are to be greatly expanded, the pattern of the peace would suggest that coal must be a substantial consideration. Moreover, Britain's dependence upon coal at home is even more vital than its place as an export. Britain has very little hydro-electric power and no oil. It is dependent upon coal for warmth, for transportation, and for industrial power. Yet, if the picture with textiles is grim, the picture with coal is stark.

The Combined Production and Resources Board—which is the Anglo-American economic coordinating agency of which I am the American deputy member—recently sponsored sending a mission of American coal experts to Britain to see what could be done toward increasing efficiency of British coal mining. The British welcomed the visit because they were keenly alive to the need for increased coal production as a vital war need. Their report is still secret although parts of it have been made public. Moreover, we have a great deal of public knowledge of Britain's coal mining methods in this country—knowledge which is not always accurate, for all the methods are not quite the same as described in "How Green Was My Valley.^, And it may be unfair to say that where we use a power cutter, an automatic loader, and an electric train to bring the coal out of the ground, they use a pick and shovel and a donkey cart. But that exaggeration will serve to give you a general idea.

Our Combined Coal Committee has done some dramatic things. By sending over large amounts of excavating equipment—a quantity which one of our statisticians estimated was about equal to that used in digging the Panama Canal—they have been able, in some parts of Britain, to dig the coal from surface outcroppings.

In other words, they are using what we call our strip-mining methods, which means, to put it crudely, turning some of those green valleys into a gravel pit.

This has helped, incidentally, to add 12,000,000 tons of coal to the British supply that otherwise would not have been mined, but it is not a cheap method and I don't know whether it will be continued after the war or not.

This sentence from the "New Statesman and Nation" of London, October 21, 1944, may give you the idea in a nutshell: "The American miner produced, before the war, nearly four times as much coal per day as the British miner."

The central fact in the whole coal picture is that the price of British coal has doubled since the start of the war.

Now, remember that it takes two tons of coal to make a ton of steel, which partly accounts for the fact that the price of steel has risen 50 per cent since the start of the war. Remember, that coal is transportation and electric power as I have said. What this all adds up to is that Britain is emerging from the war far less able to compete than she was even in 1939. That is what she finds when she realistically faces her problem of increasing exports 50 per cent. That is not a pretty picture. That is a tough picture.

I think you will begin to see why Britain is not today as anxious as we are to have wide open and free markets throughout the world.

I made this comment to a well-informed British friend of mine, and you might be interested in his reply. He said, "Britain is anxious to have open and free markets throughout the world, but this is an ideal towards which we must work gradually. In the position she sees herself immediately after the war, she will be in such a tight spot for a time until she can rebuild her housing, her industry and her export trade, and thereby be assured of the wherewithal to exist, that various restrictive measures must be enforced, controls of some materials must continue, the import of luxury goods cut down and every effort made to force industry to produce goods most wanted for the country's life. The more help we can get in this connection from the U. S. A. and elsewhere, the sooner we will be able to reach the ideal of free markets throughout the world which we would equally, I think, like to see."

I believe that in Greece, Italy, India and elsewhere in the world where we criticize British political actions, we are seeing effects and not causes. The fundamental cause is Britain's great need of favorable markets from which she cannot be excluded. She has held a historic grasp on Greece, partly through the Royal family, partly through investment, partly through trade, and feels she must retain her grasp. Of course, too, the desire for a pro-British Greece on the lifeline to India through the Suez is from a military viewpoint, highly understandable.

Britain supplied Italy with about one-half its coal before the war and was active in an economic way there; obviously she is desirous of protecting those economic interests and, as is common in the history of mankind, is not unwilling to use (strong methods) to effect that end.

At the recent air conference in Chicago, we were seeking free access to any country, the right to pick up and put down passengers wherever we please; in other words, to operate air lines almost as freely as if this were one world in heart and mind as well as in physical fact. The British, and we can understand their feeling, looked upon us as having already established air routes, partly by grace of our military activities; as already having the planes and trained personnel; as having the bulk of the air-minded passengers who would probably use such lines, and as having the world's richest domestic market, which market, I suspect, will be our primary interest for many years to come. Again, the British were uncomfortable in their competitive position, and so naturally did not see eye to eye with us.

The motive behind their position, unquestionably, is one of feeling that British lines cannot immediately enter any free for all competition with American lines. This is a feeling which I believe has, for the time being, considerable foundation in fact. But, in saying this, we still must recognize that the British position is not immediately compatible with the present sentiment of the American people.

The people of the United States will emerge from the war feeling quite strongly that if you split up a world, and if you have high protective tariffs, cartels, state trading and all the other implementia of the totalitarians, you really begin to subjugate peoples, to limit living standards, and thus to breed wars. So we are interested in a freer flow of trade not only as an opportunity to add 10 to 15 billion to our national income but also as a means of striking a blow for peace. Therefore, this thing has some of the qualities of a crusade, and is not to be taken lightly.

The British, by contrast, will emerge from the war badly wounded and feeling they must have protection for their markets, at least for some time, even if it means using some of these unhappy devices, and there, I think, you have the fundamental elements of what might easily become a head-on clash between British and American opinion.

I believe this clash can be averted, first, by promoting understanding in the two countries of what the problems are, and secondly, by our realizing that if we want the help of Britain in building a better world, we must take energetic steps toward helping Britain regain economic health.

I want to digress for a moment now and bring out a few reasons why I believe that the United States will require Britain's help in winning the peace just as much as it requires Britain's help in winning the war. The Economic Intelligence Section of the League of Nations made a comprehensive study of world trade, a study which was published by Princeton University in 1942. This study showed that the Anglo-American group of nations, which included the United States, the Philippines, Latin America and the British Commonwealth of Nations, control more than one-half the world's raw materials and more than one-half its mercantile trade. In other words, the volume of the combined Anglo-American group was so great that it could influence the entire world's pattern of trade, but it could do so, naturally, only if it enjoyed the closest collaboration. If they were resolutely aiming toward the objective of freer and freer trade throughout the world, and in the building of normal and natural alignments of materials and production, they could, I believe, remove most of the economic frictions that generate wars.

The only serious troubles we would have, I should imagine, would come in those places in the world where reactionary elements tried to keep down the living standards of the peoples. You can imagine, for example, the results of attempting suddenly to raise the living standards in Spain. But I believe such chemicalizations will be for the ultimate good, and that we must work toward them courageously.

This is the grand objective which I believe all people of enlightened and liberal intelligence throughout the world hold in their hearts. That some in Britain are momentarily fearful of it, I think, is only a temporary condition. I believe their long-range view is not too far from ours and that their present political and economic gyrations—some of them unpleasant for us to watch—are in fact only attempts to win a little time for convalescence. We ought never to forget that they are in their sixth year of very real sacrifice and that, while they still fight vigorously, they are a tired and worn people.

This brings me to the point of asking what we can do to get Britain back on its economic feet and standing by our side as a healthy partner. A great danger in a discussion of this kind is the danger of oversimplification.

You could say that Britain needs machines and that we could send machines. That is true. But it is only part of the story.

Even more than machines, Britain needs a certain amount of technological help. They have wonderful universities in Britain, but in a general way they do not have the kind of technological training that we give so many of our young men. By that, I mean men capable of setting up the engineered production lines that we have, the experts in incentives, and men with our type of managerial skill. I do not mean they are totally lacking in those things, but in general that is certainly one of their serious problems. We should be able to help them along that line. It is, indeed, the point I wish to emphasize most here today, for it is groups such as this that can take the initiative in opening channels for sending some of our talent abroad, and for finding the right men to do the most useful job in Britain.

Another thing, for the last five or six years British industry, indeed the industry of most of the world, has been in large measure cut off from observing the tremendous strides we have taken in this period in production methods and efficiency. The fact that British textile men could observe such things as they did indicates the utility of inviting missions from other British industries over to study our methods.

That, again, is something that doesn't cost us much, but which might be of incalculable value to the British. As to some of Britain's other problems, such as the handing down of plants from one generation to another, with the gradual building of an aura of conservatism that prefers machine tools installed by grandfather to those available today, there is probably not much we can do. However, few Americans realize what a jolt that system has been given by the war. I believe we can safely leave that problem in the hands of the generation now coming along in Britain.

The fact that large segments of British opinion were aroused and irked by the disclosures of inefficiency is, I should think, an extremely hopeful sign.

If I seem not too exact and precise in prescribing remedies please remember that the trouble is not subject to easy diagnosis nor is it likely to respond to any one simple treatment. I am only trying to get the big picture into some sort of focus so that we can look at it intelligently, understand it sympathetically and act on it realistically.

If you agree with my general thesis that the world needs a healthy Britain, and if I have made some of the difficulties a little more real, then as thoughtful American citizens, you will want to do whatever you can to help her, whenever you can.