We must now take a closer look at the British economy as it is today. This is a big subject, one well worth a long book. It is my purpose in this informal estimate of our ally to sketch the fundamentals of the present economic situation and to deal briefly with some of the factors in it. Earlier we have encountered the Trades Union Congress and the emergence of a new working class. We have seen that Britain is changing behind the mask of tradition. In this chapter we will see that the change in the national economy is progressing perhaps even more rapidly than the change in the structure of society and politics. And, of course, all three changes are closely related and interdependent.

The British Empire, which half a century ago stood at the apex of its economic power, was built on coal. Largely because of the extent of her coal resources, Britain got a head start in the industrial revolution, which originated in England. An organized coal-mining industry has existed in Britain for over three hundred years, or three hundred years longer than in any European country. Not only was there enough coal to make Britain the world's workshop, but until about 1910 British exports dominated the world export market. In the peak production year of 1913 the industry produced 287,000,000 tons, exported 94,000,000 tons, and employed 1,107,000 workers. Contrast these figures with those for 1955: 221,600,000 tons produced, 14,200,000 tons exported, 704,100 workers.

Three centuries of mining means that the majority of the best seams are worked out. Each year coal has to be mined from deeper and thinner seams. Each year the struggle to raise productivity becomes harsher. There are huge workable reserves; one estimate is 43,000,000,000 tons, which, at the present rate of consumption, is more than enough to last another two hundred years. But this coal will be increasingly difficult to mine. Moreover, certain types, such as high-quality coking coal, will be exhausted long before 2157.

In the reign of King Coal all went well. Britain built up a position in the nineteenth century which made her the world's leading manufacturer, carrier, banker, investor, and merchant. By the turn of the century, however, other nations, notably the United States and Germany, were challenging this position. Nevertheless, Britain was able to withstand competition up to the outbreak of World War I through her huge exports of coal and cotton textiles and through her ability to take advantage of the general increase in world trade.

Coal and the industrial revolution, it should be remembered, gave Britain something more than a head start in production: they enabled her to train the first technical labor force in the world. The traveler in Eastern Europe, the Middle East, and Asia will soon realize that the British Empire and British influence of half a century ago were built not on gunboats and redcoats but on the products of British factories and on the bewhiskered expatriates, many of them Scots, who tended locomotives in Burma and sawmills in South America. They, too, as much as the booted and spurred heroes of Kipling, were builders of empire. This advantage, at least, Britain has not lost. Today she still possesses a large force of highly skilled labor.

The economic problems that developed into a whirlwind in the forties of this century first became serious in the years after the close of World War I. British textiles had to compete in Asia with textile products from India and Japan which were produced at a much lower cost because of low wages. Oil and coal from new European mines challenged Britain's lead in coal exports. At the same period there was a fall in the demand for many of the heavy industrial products that British factories had supplied to the rest of the world; locomotives, heavy machinery, cargo ships. The politico-economic dogma of self-sufficiency developed in nations that for long had been British customers. They began to protect their own growing industries with tariffs, quotas, and other restrictions.

But the effect on the British economy of this decline in exports was cushioned by income from investments overseas and by a substantial improvement in the terms of trade. During the twenties and early thirties British industry began to contract for the first time in centuries. Unemployment averaged 14 per cent between 1921 and 1939. By September 1939, however, the economy, stimulated by the armament program, increased production, and greater industrial investment at home, began to improve. Britain faced the Second World War on a secure economic basis. Indeed, there were persuasive gentlemen in the London of that Indian summer of peace who tried to persuade you that economic strength alone could win the war.

When Americans think of the effect of World War II on Britain we are apt to think in terms of bomb damage and ships sunk. Certainly these were important parts of a generally disastrous picture, but the whole is much more impressive than the parts.

The inability to continue industrial maintenance and make replacements under the hammer of war, shipping losses, and bomb damage ran down the British economy by about £3,000,000,000. At the present rate of exchange this amounts to $8,400,000,000. The present cost of rebuilding ships and houses and factories is, of course, infinitely higher due to the upswing in labor costs and material prices since 1945.

This loss was accompanied by a drastic change in Britain's world trading position. To begin with, she lost almost all her overseas assets—those investments which had cushioned the shock of the falling export market and whose income had largely paid for imports. The terrible appetite of war—a ship torpedoed, a division lost, a factory bombed—devoured them. Over £1,000,000,000 worth of overseas investments ($2,800,000,000 at the current rate of exchange) were sold to pay for war supplies. Of this amount, £428,000,000 (about $1,198,400,000) represented investments in the United States and Canada.

Yet even this expenditure of the carefully husbanded investments, the results of thrift and financial foresight, did not suffice to pay for nearly six years of war. Britain also accumulated overseas debts to the amount of £3,000,000,000, or, at current rates of exchange, $8,400,000,000. When the money was borrowed, the pound sterling was pegged at $4.03 and the dollar equivalent of the external debt was closer to $12,000,000,000.

The emphasis on armaments and the priority given arms-producing industries, the arrears of industrial maintenance and replacement, the concentration of manpower in the services and industries of national importance for the winning of the war, and the shortage of shipping all reduced Britain's export trade during the war years. By 1944 exports had fallen to less than one third of their 1938 volume.

This meant that, in some cases, nations whose economy had been less strained by the war were replacing British sellers in these markets. In other instances, nations long dependent on British exports began to make their own products. When the British were prepared to return to normal export trade, the markets were not so extensive as they had been before the war.

The war affected Britain's financial position in two other respects. At its end the real value of the gold and dollar reserves of the nation had been reduced to about one half of the pre-war level. But the physical destruction of the war had increased Britain's dependence, and that of other sterling-area nations and other countries, upon supplies of all kinds from the United States. Yet the dollar earnings by these countries were not enough to pay for their supplies.

Finally, and perhaps most important from the standpoint of a country that must live by trade, the terms of trade changed. The price of raw materials imported into Britain rose sharply after the war. By 1948 about 20 per cent more goods had to be exported than in 1938 to pay for the same amount of imports.

As a result of these changes in her position, Britain emerged from the war as an empty-handed victor. The banker of the world was deeply in debt. The market places of the world were crowded with other nations, and her own goods were few in number and out of date. Shabby, tired, undernourished, the island people, not for the first time, began the long road back.

The road chosen was longer and more arduous than it might have been because the British, government and people, Socialist and Tory, did not wish to abandon their position as a world leader. War might have impoverished them, circumstances might have made them dismiss the maid and do their own washing up, but to an incurious world they turned a brisk and confident face. For years the world had recognized that the British never knew when they were licked. Now, it seemed, they did not know when they were broke.

They knew, all right. On visits to London during the years I spent chiefly in Russia and Germany I would meet friends in the services or the ministries. "We're in a hell of a mess, old chap," they said, "but we'll work out of it somehow." No one seemed to know just how; but no one doubted it would be done.

The first problem then—and it is the first problem today—was the balance of payments. Exports had to be increased quickly, for the terms of trade continued to be against the United Kingdom. It was in the years 1946-51 that American aid counted most. Loans from the United States and Canada, it is estimated, paid for about 20 per cent of the imports of the United Kingdom between 1946 and 1950.

Simultaneously, the drive to increase exports made headway. The country, and especially the industrial worker, was, in the modern jargon, made "export-conscious."

"Export or die"—the slogan may have seemed exaggerated to some, but it was, and is, an accurate statement of Britain's position. British exports had recovered their pre-war volume by 1947, only two years after the end of the war. Three years later they were two-thirds higher than in 1947. Thereafter, as Germany and Japan began their remarkable economic recovery, exports rose more slowly. But they did rise, and by 1954 they were 80 per cent higher than in 1938.

The upswing in exports was accompanied by two other processes. The pattern of industrial production for exports began to change. Textiles were no longer a dominant export product. Instead, emphasis shifted to the engineering industries: electric motors, factory machinery, electronic equipment, precision instruments, chemicals, and shipbuilding. At the same time, imports—including importation of some raw materials essential to the export trades—were severely restricted, and consumer rationing at home directed British production to foreign markets.

Five years after the war Britain had made great strides toward recovery. There was in that year a surplus of £300,000,000, or $840,000,000, on the balance of payments. But the Korean War, which began in June 1950, was a serious setback for Britain's economy. The country, resolved to play its part, began to rearm. At the same time there was a world-wide rush to stock raw materials, and this forced up the prices of the imports Britain needed for her export trade. The satisfactory balance of payments in 1950 became a deficit of £403,000,000 by 1951.

Import prices began to fall after 1951, and in the next three years there was a balance-of-payments surplus. This recovery was accompanied by a steady rise both in industrial production and in the real national product.

The average rate of increase in industrial production from 1946 to 1954 was 5 per cent, while the real national product increased by 3 per cent. The nation used this increased output, first, for exports; second, to make good the capital losses of the war years by new investment; and, finally, for rearmament. Those who wonder at the rocketing German economic recovery after 1949 and the relative slowness of British economic advance should ponder the fact that in 1950-3 defense expenditure gobbled up approximately half of the British total output.

The rationing and other restrictions held over from the war held personal consumption at bay until 1954. Wages rose, but these were offset by a sharp increase in prices, which by 1952 were about 50 per cent above those of 1945. After that year, however, earnings rose more rapidly than prices. With the end of wartime controls after 1952 the standard of living, especially that of the industrial working class, rose perhaps more rapidly than it had ever done before.

The increase in production, the end of rationing, the rises in wages and prices, and the boost in internal consumption all took place against a background of full employment. In the United Kingdom unemployment averaged less than 2 per cent of the working population in 1946-54.

This, then, is the short story of British recovery since the war. By the summer of 1956 the Central Statistical Office could announce that from the beginning of 1946 through the end of 1955 the national output of goods and services had increased in volume by one third. Reckoned in monetary value, the increase was even greater: the figure for 1946 was £8,843,000,000 ($24,480,400,000), while for 1956 it was £16,639,000,000 ($46,589,200,000). The difference between the increase in value and the increase in production is due to the continuous rise in prices since 1946.

These are impressive figures. But no one in authority in Britain believes that the nation can rest on them. The double problem of maintaining exports abroad and defeating inflation at home remains.

The two are closely related. In 1950 Britain had grabbed 26 per cent of the world market for manufactured goods. German, Japanese, and other competition has now reduced the British share to about 20 per cent, the pre-war figure. To maintain it, Britain must continue the export drive, and this, in turn, involves the attack on inflation.

Inflation began at the time when the British people were emerging from years of war and post-war austerity. There was more money, and suddenly there was plenty to buy as one by one the controls on raw materials, building licenses, food, and clothing disappeared. By 1955 cars and other products that should have gone for export were being sold in bulk in Britain, and gasoline was being imported for them. Industries that should have been almost totally devoted to export trades were producing for a lucrative home market.

The "squeeze" applied by the Conservative government early in 1956 to halt the buying boom is not, as so many Britons hope, a temporary affair. Until British industry can increase its production and adjust itself to the demands of world-wide competition, the country will have to restrain its home purchases in the interests of overseas sales. The preservation of the present standard of living depends directly on exports. If this hard fact is rejected by the British people, then the economy will deteriorate rapidly.

Those interested in the future of Britain, both Americans and British, have been looking at the nation's industry for a decade and sadly shaking their heads. It is too traditional, it is unenterprising, its workers don't work as hard as the Germans or the Japanese, it is restricted by the trade unions or the employers, monopolies and trade rings stifle it. There is a little truth in each of these accusations. But if all were true or even one completely true, how is the sharp increase in volume of production and the general economic recovery to be explained?

Early in 1956, about eleven years after the last Allied bomber flew over the Ruhr, German steel production outstripped British steel production. This caused a good deal of "viewing with alarm" in Britain, much of it by people who failed to realize that before the war Germany yearly produced about five million more tons of steel than Britain. The health of the British economy today does not rely primarily on its output of basic products such as steel or coal but on the nation's ability to sell its manufactured products.

If the number of employees is taken as a criterion, the most important of these manufacturing industries are: (1) engineering, shipbuilding, and electrical goods, with 1,695,000 employees; (2) motor and other vehicles, 934,000; (3) textiles, 898,000; (4) food, drink, and tobacco, 654,000; (5) precision instruments and other metal goods, 531,000; (6) clothing, 524,000; (7) metal manufactures, 519,000; (8) manufacture of wood and cork and miscellaneous manufacturing industries, 472,000; (9) paper and printing, 445,000; (10) chemicals and allied industries, 402,000.

All of these industries contribute to the export drive, including food, drink, and tobacco. There has been no overwhelming demand for such Northern delicacies as toad-in-the-hole or Lancashire hot pot from British markets, but the demand for Scotch whisky seems to be holding up reasonably well.

These industries are the meat and potatoes of the British economy. Since the war there has been a steady increase both in production and productivity (output per man in industry) in these industries. Fortunately for Britain, the greatest rises in over-all production have taken place in the engineering-shipbuilding-electrical-goods group, the vehicles group, and the chemicals group.

Productivity was a more serious problem. Lack of maintenance and capital investment during the war, antiquated machinery, the understandable physical weariness of a labor force that had been working at top speed since 1939 all contributed to a relatively low rate of output per man year in industry compared with the United States.

In 1948 the Labor government took an important step to meet the problem when it formed the Anglo-American Productivity Council. Its goal was to increase productivity in Britain through study of manufacturing methods in the United States. Teams representing management, technicians, and shop workers went to the United States to study American methods. They returned to boost British productivity.

The effort did not stop there. An independent body, the British Productivity Council, was established in 1952 to continue the work. Represented on it are the British Employers' Confederation, the Federation of British Industries, the Trades Union Congress, the Association of British Chambers of Commerce, the National Union of Manufacturers, and the nationalized industries. Under the aegis of the Council, Local Productivity Committees have been formed and the exchange of information and visits between groups from industrial firms have been encouraged.

The Council is a good example of the British approach to a national problem in modern times. The nation's difficulties have gradually, but not entirely, eased the old enmities between some employers and workers. Aware of the extreme seriousness of the situation, they are working together to boost productivity, and they are making headway. Employer-worker consultation is becoming the rule. When the rule is broken by either side there is trouble.

The increase in productivity has been steady. Taking 1948 as the base year with a figure of 100, output per man year in industry rose to 105 in 1949. Save for 1952, when there was a slight relapse, the figure has improved steadily ever since.

Production has shown a corresponding rise. The general index of industrial production, using 1948 as the base year of 100, rose from 114 in 1952 to 121 in 1953 and then jumped to 136 for 1955. But production leveled off in 1956. As that year ended, the expectation was that 1957 would see a new rise in production as the capital investment of the previous five years began to show results.

These figures are one answer to questions often asked abroad: "Why don't the British boost production? Why don't they work?" The answer is that they have boosted production and they are working. Early in 1957 the factory where Jaguar cars are made was almost entirely destroyed by fire. Great efforts by both management and labor put the factory back into production two weeks later. Production and productivity are rising fastest, of course, in the new industries such as electronics. But the economy is burdened by elderly industries such as coal-mining, where extra effort by labor and management cannot, because of existing equipment and conditions, produce dividends in production as they would elsewhere.

Britain's long predominance in both industry and commerce, especially during the last half of the nineteenth century, fostered a lack of enterprise and lethargy in management that is highly unsuitable to the nation's present economic situation. This attitude lingered until the period after the last war when the situation became plainly desperate. Changes of styling and packaging abroad failed to impress British business. "We make a much better product than some of this flashy foreign stuff," one was told loftily. "Let them have their fancy wrappings."

Memories of the golden days of the last century also encouraged a conservative attitude toward change in business methods or the routine of production. Some of the larger industries, however, emerged from the war intent on drastic changes, and others, less progressive, were forced to change by the increased competition for export markets and by the new necessity of using the restricted quantities of raw materials to greatest advantage.

Industrial engineering, including work study, work simplification, plant layout, and planned maintenance, has become a primary concern of industrial management. Many of the managers—the managerial class is about half a million strong—are much more interested in new methods of industry than are the workers. Any innovation that seems to disturb the happy condition of full employment and high wages can provoke discontent among the workers. The more progressive unions are doing their best to explain and advocate change. It is in the middle ranks of labor's officer class, the ranks most interested in the emotional support of "the lads," that the strongest resistance to change is located.

Management in industry, therefore, is beginning to assume some of the importance and standing that it attained long ago in the United States. Facilities for training in management are increasing, although the majority of today's managers never received any special training. Trade unions, employers' associations, and individual concerns are pressing forward with training schemes.

There is a relationship between this development and the arrival in British society of the new middle class. Many of the leaders of this class are in management work in industry and commerce. As their position is solidified by Britain's increasing reliance on the export industries they serve, their social and economic importance is bound to increase. In the past their social position has been well below that of the lawyers, doctors, soldiers, and civil servants who were the elite of the old middle class. That, too, is changing.

Gross fixed capital formation recently has been at about 14 per cent of gross national expenditure. By 1954 its volume was 17 per cent above that of 1938 and about 30 per cent greater than in 1948.

In 1951 and 1952 the government responded to the pressing needs of defense and exports by taking measures to curtail certain kinds of investment. In 1953 and 1954 the policy was reversed, and incentives for investment were written into the Budget. But the wave of home buying in 1955 made it necessary for the government again to impose restraints on investment. In particular it sought moderation in capital outlay for municipal and local building and improvements and a deceleration of investment programs in private industry.

These and other actions taken at that time were the result of the Conservative government's preoccupation with the balance of payments, the nation's gold and dollar reserves, the inflationary trend in the national economy, and the need for investment and expansion in the export industries. These objectives will dominate the economic approach of any government, Socialist or Tory, that achieves power in Britain in the foreseeable future.

British industry has many problems of finance, of production and productivity, of management. But to an outsider it appears that the gravest problem of all is the indulgence by the two main partners in industry, labor and management, in restrictive practices. By preventing the most effective use of labor, technical ability, or materials, or by reducing the incentive for such use, these practices gravely damage the industrial efficiency of the country. Restrictive practices seem to many competent observers a far greater danger to the British economy than strikes.

It is important to understand that such practices are almost as prevalent among management as among labor. Each group has the same basic motivation. They seek a reasonably stable economic life free from the strains and stresses of competition. The psychological explanation may be unspoken desire to return to the old easy days of Britain's unquestioned economic supremacy.

The employers' restrictive practices are less widely advertised than those of the workers. Their classic form is the price-fixing agreement which insures that even the least efficient manufacturing firms will have a profit margin. To maintain the price-fixing system, employers maintain private investigators and courts of inquiry; they can and do discipline the maverick who breaks out of the herd.

One expression of the employers' approach is the tender of contracts identical to the last farthing. Britain in 1955 lost the contract for the Snowy River hydroelectric plant in Australia largely because the eight British firms among the twenty that submitted tenders all submitted exactly the same amount. In New Zealand nineteen out of twenty-six companies bidding for an electric-cable contract submitted identical figures.

The practice is embedded in British industry. Legislation to combat it was introduced into the House of Commons in 1956, but objective experts on the subject believed the legislation fell far short of the drastic action necessary.

Restrictive practices are only too evident in the larger field of relations between the worker and the boss. The importance of problems in this area of conflict is multiplied by their political implications and by the fact that Britain, like other countries, is entering a new period of industrial development. The industrial use of nuclear energy for power and the advent of automation can produce a new industrial revolution in the homeland of the first industrial revolution. But this cannot improve the British economy—indeed, the revolution cannot really get under way as a national effort—without greater co-operation between organized labor and employers and managers.

Throughout this book there have been references to organized labor and to the Trades Union Congress. Now we encounter them in the special field of industrial relations.

Organized labor in Britain is big. There are 23,000,000 people in civil employment, and of these over 9,000,000, nearly the whole of the industrial labor force, are union members. They have an enormous influence on the economic policy of any British government; they are, according to Sir Winston Churchill, "the fourth arm of the Estate"; in the view of Mr. Sam Watson, the tough, capable leader of the Durham miners, they are "the largest single organism in our society."

But organized labor is not a single force, an orderly coalition of unions. It is an extraordinary mixture. Politically some of its leaders are well to the right of the left-wing Tories although they vote Labor. One important union and a number of smaller ones are dominated by Communists. The Transport and General Workers Union has 1,300,000 members; the National Amalgamated Association of Nut and Bolt Makers has 30. Some unions are extremely democratic in composition. Others are petty dictatorships. Many are not unions in name. If you are civil-service clerk, for instance, or even a member in good standing of the Leeds and District Warp Dressers, Twisters and Kindred Trades, you join an association.

The Trades Union Congress is the most powerful voice in British labor. Only 186 of about 400 unions are affiliated with it, but as these 186 include almost all the larger ones, the TUC represents nearly 8,000,000, a majority of the country's union members.

The outsider's idea of the typical trade-unionist is a horny-handed individual in a cloth cap and a shabby "mac." But there are 1,500,000 white-collar workers, including 500,000 civil servants, among the unionists affiliated with the TUC.

The tendency of the white-collar workers to affiliate with the TUC probably will continue. In March of 1956 the London County Council Staff Association decided to apply for affiliation. We can expect that the clerical workers in this type of union will exert increasing influence within the TUC and upon its Council. The TUC's claim to represent the industrial working class thus is being watered down by the admission of the white-collar workers' unions. As this class of worker generally believes that the industrial workers' pay has risen disproportionately and that inflation has hurt the office worker more than it has the industrial worker, the new composition of the TUC may produce sharp internal differences. At any rate, the old position of the TUC as the spokesman only for the industrial worker is a thing of the past.

The TUC is a powerful voice. But it is only a voice. It has great responsibilities and little formal power. It can, for instance, attempt to moderate demands for higher wages and urge restraint, but it cannot prevent any union from pressing such demands. The TUC can advise and conciliate when a strike begins, but it cannot arbitrarily halt one. When two member unions are in a dispute—and such disputes can seriously damage both the national economy and labor's position in British society—the TUC can intervene, but too often its intervention is futile. Each union is self-governing. The TUC's influence, nonetheless, is enormous. The restraint shown by the major unions after the war and during the war on the question of wage increases was largely due to the influence of the TUC. The general growth of responsibility on the part of many unions can also be attributed, to a great extent, to the missionary work of the TUC.

In recent years the General Council of the TUC has moved toward assuming a stronger position in the field of industrial strikes. It has tried to show the workers that the strike is a two-edged sword that wounds both worker and employer. The TUC maintains that the strike, the workers' great weapon, should not be used indiscriminately because of the damage a strike by one union can do to other unions and to the national economy.

At the 1955 TUC conference the General Council won acceptance of a proposal that it intervene in any case of a threatened strike when negotiations between the employers and the unions seem likely to break down, throwing the members of other unions out of work or endangering their wages, hours, and conditions. This is a significant step forward. Formerly the TUC could move only after negotiations had broken down and a deadlock had been reached. In other words, the TUC acted only at the moment when both sides were firmly entrenched.

But this advance does not improve organized labor's position in regard to the problem of restrictive practices, a problem that is as serious as strikes or threats of strikes.

The Daily Mirror of London, that brash, vigorous tabloid which is the favorite newspaper of the industrial working class, published an inquiry into the trade unions in 1956. Its authors, Sydney Jacobson and William Connor, who conducts the column signed "Cassandra," traced the origin of restrictive practices back to 1811, when bands of workers known as the Luddites broke into lace and stocking factories and smashed the machinery. "The suspicion toward new methods has never entirely died out in this country," they wrote, "and although sabotage of machinery is rare (but not unknown) the protests have taken a new direction—the slowing down of output by the men themselves and the development of a whole series of practices that cut down the production of goods and services."

Any reader of the British press can recall dozens of instances of restrictive practices by labor. One famous one concerned the floating grain elevator at Hull, an east-coast seaport. This elevator, which cost £200,000 ($560,000), was kept idle for two months because the Transport and General Workers Union insisted that it should be worked by twice as many men as the Transport Commission thought necessary. The Transport Commission, incidentally, represented a nationalized industry.

And there was the union that fined a milkman £2 for delivering milk before 7:30 a.m.

The unions are quick and brutal in their punishment of those who break their rules. Indeed, today, when there is full employment and the unions generally enjoy a prosperity and power undreamed of by their founders, they are more malicious than in the old days when they were fighting for their rights. The principal weapon against an offending worker is to "send him to Coventry." No one speaks to him; he eats and walks home alone. Ronald Hewitt, a crane-driver, endured this for a year. He had remained at work, obeying his union's rules, when his fellow workers, who belonged to another union, went out on strike. Hewitt was a person of unusual mental toughness. Another worker sent to Coventry committed suicide.

Many of these punishments are the outcome of situations in which unofficial strikes send out the workers. Those who remain and who are punished are accused of being "scabs" because they obey the union's rules.

All union leaders publicly acknowledge the great importance of increased productivity in British industry. But the methods of boosting productivity often seem to some union leaders to strike at the principles for which they have fought so long. For instance, an increase in output is regarded by the veterans solely as a traditional means of increasing the profits of the employers. Moreover, increases in productivity often involve the introduction of new machines and layoffs for some workers. To the short-sighted, appeals for greater productivity thus seem calls to smash the job security that is the fetish of the industrial working class. This sort of union leader just does not seem to grasp, or to want to grasp, the principle that increased productivity is a general good benefiting workers, employers, and unions.

Efficiency is not the sole god of British industry, as is evident when one studies the weird system known as "demarcation" in the shipbuilding industry. To install a port light under this system requires the labor of a shipwright to mark the position of the light, a caulker to indicate and make the hole for the light, another driller to make the surrounding holes, and another caulker to fix the bolts and chain. In addition, a foreman for each of the trades supervises the operation. Interunion disputes arising out of such unnecessarily complicated operations frequently result in a stoppage of work and a delay in the filling of export contracts.

The most alarming example occurred at Cammell Laird's, a shipbuilding company, in 1955 and lasted until well into 1956. New ships were being built—for dollars—and the strike began over a difference between woodworkers and sheet-metal workers. The new vessels were to have aluminum facing in the insulation. Formerly the woodworkers had done this sort of work, and they claimed rights over the new job. But the sheet-metal workers said that, as aluminum was metal, the job was theirs. The two groups and management finally reached an agreement. Then the drillers of the Shipwrights' Union entered the affair and a new strike developed.

The construction of the ships was delayed for six months and more. The ability of Cammell Laird's or other British shipyards to offer foreign buyers a firm date for completion of ships became a matter of doubt. About 400 workers were dismissed as redundant. About 200 strikers found work elsewhere. Thousands of other jobs were jeopardized. There was not the slightest indication that those who inspired the strike took much account of its effects on their country's future.

As a result of the application of the demarcation principle in shipyards—you drill holes in wood, we drill holes in aluminum—wage costs are often as much as 6 per cent higher than normal.

The innate conservatism of union leaders and the rank and file in shipyards, industrial plants, and factories has been proof against the missionary work of critics extolling the far different approach of American labor. The leaders are often unmoved by figures which show that increased productivity by the American labor force has resulted in a far greater national consumption. In many cases neither the union leader nor the union member will accept the idea that new machines and new methods mean more efficient production, lower costs, and higher wages.

British union leaders often counter that the American worker has no memory of unemployment and depression. This is, of course, untrue. Indeed, in many instances political and economic it seems that British labor has made too much of its experiences, admittedly terrible, in the depression of two decades ago. American labor, by eagerly accepting new processes and machines, has attempted to insure itself against the recurrence of a depression. British labor has not.

Industrial disputes affect the British economy's ability to meet the challenge of the new industrial revolution. Disputes between union and union are especially important. In 1955 there were three national strikes. All were complicated by interunion friction.

Another complicating factor in industrial relations is the slow disappearance, under the pressure of increased mechanization, of the system of wage differentials in British industry. These differentials represented a reasonable difference between the wages of skilled and unskilled workers. With their disappearance, skilled workers in one industry have found themselves earning less money than unskilled workers in another. One cause is the ability of the big "general" unions to win wage increases. Another is the practice of demanding wage increases solely on the basis of the rising cost of living.

Naturally the disappearance of differentials has led to hot disputes among workers and unions. In this atmosphere it is difficult for either the union leaders or the employers to urge increased productivity and harder work. "Everyone is furious with everyone else," an industrialist in the Midlands said. "They start with me, but they are pretty mad at each other, too."

In this interminable war between labor and management, the former wields a weapon of enormous potency—the strike. Labor acknowledges its disadvantages, but the right to strike is fiercely guarded. The whispered suggestion that strikes might be made illegal unites the labor movement as does nothing else. Labor needs the strike as its ultimate weapon: the hydrogen bomb of British industrial relations. And because of the peculiar economic conditions in Britain, the employer finds himself almost weaponless. He can still dismiss an unsatisfactory employee, if he has a good reason and can convince the employee's union that it is a good reason. But dismissal does not mean much in an era of full employment.

Right-wing critics on both sides of the Atlantic have contended for a decade that British economic difficulties are rooted in strikes and other industrial disturbances. There is something in this, but, as H.L. Mencken would have said, not much.

From 1946 through 1954 the days lost through strikes in Britain ranged from a low of 1,389,000 in 1950 to a high of 2,457,000 in 1954. Due to strikes in the newspaper and railroad industries and on the docks, 1955 was an exceptionally bad year: 3,794,000 working days were lost. The figures look big, and of course it would have been much better for Britain if they were half as large. But let's put them into perspective. The figure for 1955, admittedly high, represents a loss of less than one day's work per man in every five years' employment. The loss to production through industrial accidents is eight times as high.

Both sides know that a strike is a costly business: costly to labor, to management, to the union, to the nation. In many cases the threat of a strike has been enough to force the employers to give way. Inevitably, the higher cost of production resulting from the new wage rates is passed on to the consumer. The merry-go-round of rising prices, rising wages, and rising costs spins dizzily onward. Overseas the buyer who is choosing between a Jaguar or a Mercedes finds that the price of the former has suddenly risen, so he buys the German car rather than the British one. This is what the economists mean when they warn British labor and industry about pricing themselves out of the export market.

As we have seen, the industrial worker is doing pretty well in Britain, even if the rise in prices is taken into consideration. The average weekly earnings for all male adult workers, according to the records kept by the Ministry of Labor, show a rise from £3 9s. 0d. in 1938 to £10 17s. 5d. in 1955—an increase of 215 per cent. The coal-miners who were earning £3 2s. 10d. in 1938 are now earning a weekly wage of £13 18s. 6d. The figure does not represent wealth by American standards, for it amounts to approximately $38.99. But it is high pay by British standards, and when the low cost of subsidized housing and the comparatively low cost of food are taken into account it will be seen that the British miner is living very well.

The miner's view is that he does a dirty, dangerous job, that he has never been well paid before, and that if a union does not exist to win pay rises for its members, what good is it? The miners and the union members in the engineering industry belong to strong unions able to win wage increases by threats of a strike. Once these increases are granted, other smaller unions clamor for their share of wage rises. The merry-go-round takes another turn.

Government attempts to urge restraint, through the TUC, upon the unions customarily fall afoul of the snag that each union believes that it is a special case and that although other unions can postpone their demands for higher wages until next year, it cannot. So one union makes a move and the whole business begins again. If the increase is not granted, there is a strike or a threat of a strike. The national economy suffers, class antagonism increases, and export production is delayed. For such is the interdependence of the British industrial machine and so great is the drive for exports that any industrial dispute that reaches the strike stage inevitably affects exports.

A modern strike is like a modern war. No one wins and everyone loses. A classic case is the Rolls-Royce strike of 1955, which involved not only employers and union labor but, eventually, the Roman Catholic Church and the Communist Party. The cause of the strike was a conflict between restrictive practices and a stubborn workman named Joseph McLernon, who worked at the Rolls-Royce factory at Blantyre in Scotland as a polisher of connecting rods.

The workers in Joe's shop feared that, in view of reduced work, some of their number might be let out. So they agreed to share their work by limiting bonus earnings to 127 per cent of the basic rate. McLernon, however, refused to limit his overtime. He polished as long and as hard as ever and refused the assistance of another worker. For this, McLernon was reprimanded by his union, the General Iron Fitter's Association.

Joe had been working for Rolls-Royce for twelve years. The firm is considered a good employer. But its managers were men of conviction. They objected to the union picking on Joe and said so. Three months later the union expelled McLernon.

Enter the Communists with many an agonizing cry about the solidarity of labor. They demanded that Rolls-Royce fire McLernon on the grounds that he no longer belonged to the union. The employers refused, and immediately all the other polishers stopped work. Joe kept right on. By the end of the day the entire factory labor force of 600 men was out on strike.

The Amalgamated Engineering Union's local branch then entered the picture. After a few days another 7,500 workers at the Hillington and East Kilbride factories had struck.

Was it a strike? Certainly, said the General Iron Fitter's Association. The Electrical Trades Union, dominated by Communists, recognized the strike as official in accordance with its rule of recognizing all strikes involving electricians as official until they are declared otherwise. The Amalgamated Engineering Union, after much soul-searching, decided to back the strike and approved strike pay for its members. Negotiations between the Employers' Federation and a committee representing the various unions got nowhere.

The Roman Catholic Archbishop of Glasgow then issued a pastoral letter warning the workers against Communism. McLernon is a Catholic. But so were many of the workers who wanted him fired.

The strike dragged on for seven weeks. The strikers lost over £700,000 ($1,960,000) in wages. By the time the strike was over, no one on the strikers' side could disentangle the objectives of the various groups that had called it. Rolls-Royce export contracts were delayed. The Royal Air Force failed to get delivery on time of some important machines. Other industries also involved in the export trade and in national defense were slowed down. The unions had maintained solidarity at a tremendous cost. But when the strike collapsed, Joe McLernon was still at his job, polishing away. He alone could be termed a winner. Rolls-Royce, the unions, industry, and the nations were losers.

The Communist intervention in the Rolls-Royce strike symbolized its current role in Britain. This is to win control of key positions in the British unions so that the Communist Party will be able to paralyze British industry in the event of an international crisis or a war. To achieve this ultimate objective, the Communists obviously intend to establish a stranglehold on the communications and defense industries.

This is the real Communist danger in Britain. Active political campaigning by the Communist Party has been fumbling, misdirected, and notably unsuccessful. Neither the old colonel from Cheltenham who classes the sprightly dons of the Labor Party with "those damned Bolshies" nor the Bible Belt Congressman who confuses British Socialist politicians with Russian Communists is on the right track. The danger of Communism in Britain lies in the unions. So does the defense against the danger.

The pattern of Communist success is uneven. Communists lead the Electrical Trades Union, ninth-largest in the country, with a membership of about 215,000. Because electricity is everywhere in modern industry the union's members are everywhere. And although probably not more than one in every sixty members of the ETU is a member of the Communist Party, the party completely runs the union.

Here is a curious sidelight on Communist methods. The ETU is weak financially, perhaps the poorest of the ten largest unions. But it spends money freely on "education." The ETU has its own Training College at Esher, where its more ambitious members can be trained to further the interests of the Communist Party and to silence the voices of critics and doubters. Although the non-Communist members of the ETU consider the college as a valuable device for the advancement of the worker, the institution plainly is a training school for Communists and their creatures in their prolonged war against the British economy.

One of the basic concepts of British Socialism is the solidarity of the working class. Acceptance of this concept makes it difficult for the industrial worker to think of the Communist, who comes from the same town, speaks with the same accent, wears the same clothes, as an enemy. There is a pathetic ingenuousness about workers who try to tell the visitor that the Communists "are just the same sort of blokes as us except they've got a different political idea."

The Daily Mirror team in its portrayal of the trade unions devoted a chapter to "The Communist Challenge." Significantly, a large part of the chapter provided an incisive and illuminating illustration of just how the Communists move to gain control of a union.

Where else are the Communists strong? They are in control in some areas of the National Union of Mineworkers. Arthur Horner, the Secretary of the Union, is a Communist. But they are being fought hard in the NUM by men like Sam Watson, who heads its Durham region.

The connection in the Communist mind between the control of the NUM and the ETU is obvious. Control of these two unions would enable Communists to halt the flow of coal and electric power to Britain's factories. Not much more is needed to cripple a nation's economy.

But the Communists press on. They establish cells in the aircraft industry. They work industriously at fomenting trouble on the docks, especially in the ports—such as London, Liverpool, and Glasgow—through which most of the exports pass. Already the threat to block coal and power can be augmented with a threat to halt defense production and exports. It is improbable that the Communists are now powerful enough to carry their program to a triumphant conclusion. But they are on their way.

How do they work? Very much as they do elsewhere in Europe. In Britain, as in Germany or Italy or France, the Communists care very little about better pay or better working conditions for union members. Their objective is power, power that will enable them to push the interests of the Union of Soviet Socialist Republics. And, to repeat, they have learned that for them power in Britain is obtainable only through control of the unions and not through Parliament.

The Communists try to establish cells in every important factory in Britain. These cells maintain contact with the district secretary of the Communist Party, who knows from the cell exactly what sort of work the factory is doing. Little wonder that Soviet visitors are incurious about the details of British production when they are shown British factories. The information obviously is safely filed in Moscow.

When an industrial dispute develops in a factory, the Communists seek to widen the area of dispute and to involve as many unions as possible. They also do their best to bring the recognized non-Communist leaders of organized labor into disrepute. One method is to organize support for demands that the Communists know the management cannot accept. When a strike organized on this basis fails, the Communists point out to the union members that the leadership is weak and hint that a more "dynamic"—i.e., Communist—direction would benefit the union.

The Communist drive to break the power of the unions and thus to spread industrial discontent is assisted by the character of some union leaders. In many instances leaders are elected to hold their jobs for life, and after years of power they become dictatorial. It is a favorite Communist charge that the union bosses are "in" with the employers, and that as long as their jobs are safe they will do nothing to upset the present situation.

In the trade unions, as elsewhere in British society, the war alliance with the Soviet Union inspired sympathy with the people of Russia and admiration for their resistance to the Nazis. These sentiments altered under the impact of the cold war, and they altered faster at the top levels of the labor movement than anywhere else. The Trades Union Congress in 1948 attacked Communist activities in the unions in a pamphlet called Defend Democracy and followed this with another pamphlet, Tactics of Disruption. In 1949 the TUC quitted the World Federation of Trade Unions, which is dominated by the Communists, and helped establish the International Confederation of Free Trade Unions. A year later the TUC barred Communists and fascists as delegates to the annual conference of Trades Councils.

Meanwhile, the leaders of the TUC strove to explain the true nature of the Communist challenge to free unions, and to emphasize the refusal of the Communists to accept democratic principles in the unions or anywhere else.

All this has had some effect, but not enough. The TUC has thus far failed to shake the average industrial worker out of his lethargy. Safe in the security arising from full employment and high wages, he does not take the Communist challenge seriously. And now that many of the basic objectives of the labor movement have been won, he does not work so hard to protect them as he did to win them.

In this atmosphere Communist successes are inevitable. For it is the members of a Communist cell in a union or a factory who are prepared to talk all night at a meeting, to vote solidly as a bloc in support of one Communist candidate while the non-Communists divide their votes among three or four candidates. In many cases the non-Communists will not even turn out to vote—it is too much trouble, especially when they can watch the "telly" or go to the dog races.

The official leadership of the unions faces a formidable task. It must first educate the rank and file on the true nature of Communism. After that, it must organize anti-Communist action in the unions. Here they encounter a real obstacle in the minds of the rank and file. In the past, reaction in Britain and elsewhere has lumped Communists, Socialists, and trade-unionists together. To many a unionist, anti-Communism seems, at first inspection, to be an employers' trick to break the solidarity of the working classes. Of course the Communists do all they can to popularize and spread this erroneous idea.

The Communists in Britain seem to have been moderately successful in establishing themselves as a national rather than an international force. When Frank Foulkes, the General President of the Electrical Trades Union and a member of the Communist Party, asserted: "This country means more to me than Russia and all the rest of the world put together," few challenged this obvious insincerity.

We must accept, then, that Communism within the trade unions is a far more serious threat to the welfare of Britain than Communism as a political party. It is on hand to exacerbate all the difficulties in the field of industrial relations which have arisen and will arise during a change from obsolete economic patterns to the new patterns by which Britain must live.

The introduction of automation—the use of machines to superintend the work of other machines—and of nuclear energy for industrial power are two of the principal adjustments that British industry must make. Each will involve labor layoffs and shifts in working population. These are important and difficult processes, and with the Communists on hand to paint them in the darkest colors there will have to be common sense, tolerance, and good will on the part of both management and labor. In particular, the rank and file of British industry must be made aware how important the changes are to the average worker and his family. There is little use in publishing pamphlets, however admirable, if the man for whom they are intended will not stir from in front of the television set.

A comparison of some of the long-range economic plans laid down by successive governments, Socialist and Tory, with the general attitude of the man in the street leads to the conclusion that, whereas government has been "thinking big," the governed have, in the main, been "thinking small." There is in Britain little recognition of or admiration for the truly impressive program for industrial use of nuclear energy. By 1965 Britain expects to have nineteen nuclear power stations in operation. These will be capable of generating between 5,000 and 6,000 megawatts, or about a third of the annual requirement for generating capacity. It is estimated that the operation of these nineteen stations can save the country eighteen million tons of coal each year.

In addition to this basic program, the Atomic Energy Authority will build six more reactors to produce plutonium for military purposes and power for civil purposes. The total cost of the basic program alone will be about £400,000,000 ($1,120,000,000) a year in the early 1960's.

The leaders of both Conservative and Labor parties believe that the program is vital to Britain. Indeed, the foresight, imagination, and ambition of the men at the top on both sides is one of the reasons why the British economy, despite all its present weaknesses and future difficulties, is a good bet to pull through. What is lacking is the ability of any leader or party to evoke from the country the energetic response necessary to meet and defeat the weaknesses and difficulties.

One instance of this lethargy on the part of either employers or the industrial working class is their failure to respond to wider educational advantages, especially in the field of technical knowledge. Recognizing the necessity for greater technical education, the government intends to spend £100,000,000 ($280,000,000) on technical education from 1956 to 1961. Will the government and the people get their money's worth in the present atmosphere?

Industrial research is on a much smaller scale in Britain than in the United States. For years British industries thought it was cheaper to buy patents abroad than to do their own research. As a result, British technicians were lured abroad. Even today many industries are indifferent if not openly hostile to the idea of "expensive" industrial research.

The attitude of the new working class to education, technical or otherwise, has been described earlier in this book. The boys, in the eyes of their parents, need no more schooling than that given them before they can leave school and go to work in the factory. The girls need a little more if they are to graduate into the ranks of clerical workers, but many girls, attracted by the independence offered by jobs in mill or factory, leave school with their brothers.

Let me sum up some conclusions about the British economy:

The drive for exports is not a passing economic phase but a permanent condition. If wages and prices cannot be held down, Britain will be priced out of her markets, and the standard of living of the working class and of all other classes will fall.

The ability of the country to meet the adjustments made necessary by the revolution in the sources of industrial power and by the introduction of new industrial techniques is gravely endangered by the restrictive practices of both employers and labor, by interunion bickering often arising from these practices, and by the prolonged and vicious Communist attack on the trade-union structure.

Neither among the middle class nor among the working class is there sufficient awareness of the critical situation in which Britain finds herself.