by Norman Stone
But history was conspiring. As with Holland, the initial and enormous success of industry inspired imitation, competition and overtaking; protected markets did not help, as creativity suffered. The trade unions were in part responsible, but so also was a supine and spoiled management that allowed the unions to get away with it. Then the declining industries were taken over by the State, which turned out to be even worse at management — the story of the sixties and seventies. Economic creativity shifted into banking, to lending abroad, and the City of London on the whole attracted the bright and mobile, not British industry. The same had happened with the Dutch two centuries before: the great yards of Rotterdam, where Peter the Great had worked and learned, rotted, and so did the myriad of small and tiny enterprises in the city’s hinterland, where endless wooden and iron parts had been ingeniously turned out in the past. Much the same now happened to Glasgow and its hinterland, which in 1914 had been responsible for fully one third of all ship-launchings; as Germans, Norwegians, Japanese, Koreans turned out mass-produced shipping of low cost and tolerable quality for the growing trade of the fifties and sixties, the Clyde and the Tyne were no longer able to compete, and the little Coatbridges and Bellshills to the east of Glasgow also went down. Liverpool, one of the grandest Victorian cities, was the worst affected, and its middle classes tended to move out, to Cheshire or the Wirral. These flourished. The comparison with Holland and Zeeland is an interesting one. Curiously enough, Catherine the Great started the extraordinary collection of the Hermitage, in the Winter Palace at St Petersburg, when she bought the collection of the long-term and legendary British Prime Minister Sir Robert Walpole, with Dutch money. She then failed to pay the Dutch back, and Holland went down.
The details of the British performance were overall dismal, at least if compared with Germany and France. The figures were endlessly repeated in gloomy articles in this period, as British commentators recognized what was happening (it was obvious enough just from a train window). In Germany and France, in the period 1960-73, management and workers just produced more per hour every year. Their productivity rose at 5.7 and 6.6 per cent respectively, as against a British figure of 4.1, and in the 1970s the gap grew. By then, on the official figures, Britain was even worse off than East Germany, and West Germans — especially a Hamburg Anglophile like Helmut Schmidt — shook their heads. The British share of world exports declined — one quarter in 1950, 14 per cent in 1964, under 10 in 1973. German exports rose from 7 per cent to one fifth, and then, in 1973, over 22 per cent. France stood at 10 per cent throughout. But the French direction of trade shifted away from colonies, which had accounted for nearly half of trade in 1952 but only one tenth by 1977. The Common Market accounted for the difference. The American share fell from over one quarter in 1950 to one fifth in 1964 and then one sixth in 1973, but of course the smaller share was quantitatively far larger. Japanese trade rose from almost nothing to 8.3 per cent in 1962 and 13 per cent in 1973. There was always an argument that the British decline was not really a decline at all, that the country had started from an artificially inflated position, that it was bound to lose ground as other countries learned, and therefore that there was nothing to worry about. But there was, and the collapse of British industry in the period after 1950 is a dismal story, in which areas that had been well and truly on the map of civilization shrunk into its edges. In the nineteenth century intelligent Germans asked why they were not British. A century later it would (or should: there was not much informed interest in Germany, and in 1989, when the Wall in Berlin came down, there were only eighty-nine passes in higher-level German in the entire London school area) have been the other way about.
Geoffrey Owen’s account of this is the most illuminating, as it examines various industries in turn to look at the problem in detail. There are various long-term and short-term questions. The longer-term ones are of considerable historical interest, and the quality of history written in the past generation in Great Britain is head and shoulders above that found elsewhere: the National Archives are the best in the world, though reaching them on the British transport system is itself a considerable test for scholarship. England had somehow modernized without ‘modernizing’: the political system consisted of living fossils, and there was not even a written constitution.
In the 1960s, as the country slipped, there was much head-shaking, and a small tidal wave of ink was spilled on reform of this or that part of the historical legacy — especially the matter of class. However, there was one recent inheritance that was hardly challenged at all: that of the Labour government in 1945. It was bathed in a golden glow of togetherness. In 1965 A. J. P. Taylor published his English History 1914-1945, a brilliant book, and he (strongly Labour) ended it with the characteristic line, ‘Men no longer sang England, Arise! But England had arisen, just the same.’ Fifteen years later, as he looked out over rubbish-strewn streets in a not very fortunate part of London, his savings eaten by inflation, he was not so sure. Was there one single piece of legislation in that brave-dawn era which he would not have repealed? There had been widespread nationalization of industry and transport. They had a captured state market, and they provided employment — the National Health Service, providing medical attention cost-free, the largest non-military employer in Europe. But the record as the sixties and seventies went on was dismal. Nearly £100bn had been invested in the nationalized concerns and the annual return was −1 per cent. By 1982 nationalized industries had cost over £40bn in write-offs. The automobile-making British Leyland cost, in a ten-year period covering the seventies and early eighties, £3bn, and most of the once great British automobile industry became an international joke. In other countries, the failure of nationalized industry was not taken as self-evident. In England, it was a sort of non-violent protection racket, and to have a telephone installed or a piece of gas equipment repaired took the sort of little black-humour epic that Communist countries knew so well. However, the nationalized industries had not appeared for no reason: private concerns were not an advertisement for the alternative. In fact they themselves often appealed for state money, and became in effect nationalized.
The great British staples had been coal, shipping, textiles. Grand Victorian cities had been built up on that basis, Glasgow, Birmingham, Liverpool, Manchester especially, which Taylor knew so well, and in their great days they had been as much pioneer cities as had been, say, Boston. Even in the 1950s, the staples were holding up, in part because markets in the Empire had been protected. Cotton textiles still amounted to half of exports in 1950, but India and Hong Kong had been allowed to export with an agreement in 1932, and England became a net importer of cotton goods at the end of the decade, for the first time since 1750. The war had at least got shipping going again. But in the 1950s there was also an absolute decline and later in some cases even a collapse; it affected some of the very industries upon which the thirties recovery had been based.
Shipping was a British disaster area. After 1945 there had been a world boom, as trade grew, and by 1975 world shipping output had risen to 36 million tons, as against the pre-war 2 million (at worst) and 7 million (at best). For a time the British went on as before, with 1,324 launchings in 1950 (almost two fifths of the entire world figure). The chief shipping centres, especially Glasgow, flourished: those ranks and ranks of cranes, stretching all along the Clyde estuary, with an entire culture to match, and, at its educational heart, the Royal Technical College, which trained generations of engineers and maritime specialists from all over. In 1950 the British merchant fleet was a quarter of the world’s. But then came decline — 172 launchings in 1985 — by which time the British fleet was only a small fraction of the world’s. Some of this was ‘unfair’ in the sense that strong competition, and a desire to cut costs and to avoid the detailed regulation that was coming up, meant that there was an enormous growth in foreign registrations (e.g. Panama). Some of it had to do with pride in quality: those Clyde-built steamers sometimes had an extraordinary finish, no longer
in demand. But a great deal had to do with new technology, at which Norway and Germany became more adept, with oil tankers and container ships: these were ugly, sometimes prefabricated and welded together. Japan, as the Korean War went ahead, boomed. By 1956 she had overtaken Britain, where yards were too small and apparently dominated by skilled men defending their position at the expense of technology that might have been used by people with lesser skills — an old, old problem.
Steel was another sad story. By 1914 the USA had become the largest producer, but two fifths of British steel was made for export, and in 1939 (despite legend) Germany was not ahead. After 1951 a large European market became the main stimulus, but England had not joined the European Coal and Steel Community and therefore missed much. German steel had not been nationalized, because the Allies had shrunk from relaunching it, and this saved Germany from the formula that did such harm to British steel (which was twice nationalized and denationalized). In the fifties there was a seller’s market: even small plants made money, and when a delegation from Port Talbot in Wales went to Chicago as part of a scheme organized by the Anglo-American Council on Productivity it did not even mention trade unions as part of a problem. Governments attempted to plan, as governments tend to plan where steel is concerned, and placed plants for political reasons, at Ravenscraig and Ebbw Vale, respectively in industrial west-central Scotland and Wales. The ECSC on the Continent, by contrast, forced producers to rationalize, rather than to appease local interests, and an integrated market grew up. French strip mills supplied German car factories, and themselves used German coking coal; and there was an American system of pricing that allowed for more competition than in Britain. When Lorraine lost its advantage to Brazil and Australia, and inland steel became less competitive, plants were shifted towards the sea ports (Bremen, for instance, arose because of Dutch-German collaboration, as did, on a greater scale and for other goods, Rotterdam). The French constructed Usinor at Dunkirk. In Germany, Vestag was broken up in just the right way, with successor firms of appropriate size for specialization and competition — hence Krupp, Mannesmann, Thyssen, Hoesch. Germany had had less Marshall aid than other countries, and the financing for this came from a levy of the steel-users in 1952, with consequent closer attention to what was done with the money. Output then trebled in the early fifties. Japan managed a similar feat later on, her exports rising from 6 per cent of all in 1960 to 23 per cent in 1973, by which time British Steel had become almost comic. The labour force, of 340,000 in 1969, was at least one third too large. Nippon Steel produced 520 tons per man per year, Thyssen 370, Bethlehem Steel 180 and British Steel, in 1975, 122. By 1980 British steel cost a third more than German, and subsidies were far larger — in the latter half of the seventies, the equivalent of DM14bn, to the Belgians’ DM3bn and the Germans’ DM1bn.
The most obvious hammering for the country came from the motor car industry. In 1960 BMC had been comparable in size with Volkswagen; in 1975 it folded. By 1990 Rover was a subsidiary of British Aerospace, and was sold in 1994 to BMW (subsequently being resold). High-level craftsmanship had traditionally been rewarded in the British domestic market, whereas the American was able to use flow methods (as in the celebrated Taylorism) for a less variegated product. In the early 1950s the continental Europeans had not properly started again and British output was simply swallowed up in the export market; there was much flair to the MG sports car, for instance. However, after the Treaty of Rome, intra-European trade started up, and boomed: the Volkswagen became the symbol of the German recovery. The British, without much thought, turned it down. But local British occupation officers decided to support the Volkswagen manager’s efforts to restart the factory; the French had greater foresight, and invited the maker and part of his family to Baden-Baden, in their occupation zone, to see what might be done; they then imprisoned him for alleged war crimes. But the British insight was not followed up (and in similar style the British turned down the offer of Danish Lego). Early on, British production ran at half a million cars, 400,000 of them exported (in 1950), whereas the German figures were 219,000 and 69,000. Then, in 1960, there were 1.35 million British to 1.8 million German — not far from half in both cases being exported. France had re-entered the market, with over a million cars (half ex — ported). Part of this reflected tax levels — the Germans’ tariffs being half the British level (30 per cent). The French and German markets were also simpler, such that the famous Beetle and the Renault 4CV could match it easily, whereas British cars — the Jaguar and the Rover — were more imposing (and sold well in the USA). Ford showed what could be done by proper management, and by recruiting of graduates who would learn in the practical American way. But there were still problems of fractured unionization, of small firms not co-operating in the German style, of an overvalued currency that made British products more expensive than German or French ones.
By the early sixties there was uneasiness about all of this, and it was translated into politics. Fifties England had been run, as far as finance was concerned, in budget-balancing style: the overseas position was too fragile for anything else. The rules were slightly bent in 1958, as the reigning Conservative Prime Minister, Harold Macmillan, bid for popularity in a pre-election year. His three Treasury ministers resigned, but the protest was waved aside, and an election in 1959 was triumphantly won, with the victory slogan (not quite accurately quoted) ‘You’ve never had it so good’. This was true enough, and the wartime generation remembered the vegetable mess of ‘Woolton pie’ and taxation that, from quite a low level, took half of an income. Now, the working classes were earning good money, and often lived in subsidized (‘council’) housing; they were beginning to take holidays abroad, as the pound stood relatively high. Astute middle-class people acquired property, with generous tax relief, for small sums of money, which could be borrowed cheaply. The truly astute ones invested in equities, the rise in the values of which was again not taxed, and if a bank gave you an overdraft, you could be well-rewarded for doing nothing at all. Fifties England was the last gasp of the Victorian era, but acid was running through the system.
There followed almost two decades of self-consciously big government, in the spirit of H. G. Wells. In the Edwardian period he had been the very archangel of Progress — a career of extraordinary diligence and doggedness, triumphing over illness, divorce, lowly social origins to become a major novelist and a commentator with a deep knowledge of the natural sciences. He spoke for a world of classless technicians, by preference scientists, and condemned the older world of monarchs, horses, Latin and peasants. From 1964 to 1979 there was a dismal descant on H. G. Wells and even, in the form of C. P. (Lord) Snow, a caricature of him. This was the era of Wilson (Labour) and Heath (Conservative), which for historical purposes can be regarded as a seamless web. The initial Labour government in 1964 was led by Harold Wilson, a scholarship boy from Leeds (itself one of the grand Victorian cities, but the southernmost of them) who had taught Economics at Oxford. He recruited a team that was the brightest, in terms of education, that the country had ever produced, except perhaps for the Liberal Cabinet of 1914. One or two of their autobiographies were of very high quality, Denis Healey’s especially (he was an excellent German-speaker and knew music properly). They also instinctively believed for the most part in the virtues of planning, in Snow’s case making silly remarks about the Soviet Union; they greatly expanded education, putting up new universities and expanding old ones in a manner that now looks foolish.
However, they fell foul of twin problems: the balance of payments and the trade unions. In England inflation stood generally somewhat higher than elsewhere, and the trade unions were blamed for being greedy. In Germany the unions were ‘responsible’ and had their own stake in the system. The British ones were much less controlled and there were vastly more of them, competing with each other as much as with the alleged bosses. Wages rose, without much reference to productivity, and since the pound was overvalued, exports suffered because they were too expensive �
�� quite apart from the problems of quality and delivery that were coming up. The French had had a great problem with large Communist-controlled unions, but they ruthlessly devalued to keep down export costs and to deter importers. But the Wilson government opposed devaluation, partly because London was reconstituting foreign investment quite cheaply, partly because they had foreign debts to pay, and partly because the overvaluing of the pound meant that running military enterprises, whether ‘east of Suez’ or in Germany, was cheaper; besides, a third of world trade was conducted in pounds sterling, which meant a great deal of money for the City of London. The Americans, with a very large stake in the system, would give support. However, trade was more or less free, foreign goods were cheap and of decent quality, and there were constant alarms as to the British balance of trade. Governments were reluctant to cut spending (and in any case the deficit of the balance of payments came about through military expenditure abroad). They were severely criticized for not spending more, and foreigners speculated again and again against sterling. In November 1967 it was devalued (from $2.80 to $2.40) but the pressure did not really go away, because the British problem was too great: attempts to play a world role and at the same time to spend money on various domestic temptations. An attempt in that direction even cost Labour an election. In 1971 a new Conservative government came in, under Edward Heath. He was a hapless and virginal figure, who to begin with talked the language of private business, and soon ended up adopting the same policies as Wilson: big government, the saving of industries such as shipping that were in trouble. A National Enterprise Board, an Industrial Reorganization Corporation, ruled the roost: meetings of these included civil servants and trade union officials, as well as businessmen to whom titles were awarded (the businessman’s definition of a knight was ‘a man who failed to say no when he should have done’). There had even been an absurd parody of a National Plan, the offices of which contained a lavatory without a lock or paper, and its head, deliberately put there by Wilson so that he would discredit himself, drank too much.
