326 COMBINATION OF WORKS present interested in the matter are in agreement it cannot be carried through. Under the present system engines and boilers are built by each of the firms to the requirements of the several classifications, and whilst the average result of each firm's productions closely approximates that obtained by the others, yet each builder has some points of excellence, either in design, method of manufacture, arrangement of parts, quality of material or of workmanship, which in combination would yield greater excellence, and being reflected in the higher general efficiency of the entire machinery, would tend to place British construction on a higher plane in the markets of the world. Again, each firm has an expensive staff, producing designs practically identical with those of its competitors, as well as pattern-shops producing equally identical patterns. The useless expenditure under these two heads alone may be estimated from the fact that the designs and patterns for a cargo boat's engines cost about £500 to produce, and for passenger steamers a correspondingly higher figure. It is impossible for me to enumerate within the limits of a speech all the sources of economy that are open to such an amalgamation, but its possibilities are sufficiently indicated if you consider the matter on its broad lines. The adoption of a single scheme of buying under the control of the commercial directors would alone tend to a considerable diminution in first cost. With regard to the works, one system of organisation would be established, all antiquated tools would be replaced, and the latest methods of manufacture adopted. Overtime, which is at all times highly expensive, would be abolished as far as manufacturing conditions permitted, and night-shift at high rates of pay only resorted to when it was warranted by the conditions of trade and obtainable prices-the productive capacity of the whole of the works acting in union would in all ordinary circumstances dispel the conditions which lead the individual to resort to overtime. Broadly, the leading principle would be to limit the working hours to the standard length of the working week and to divide the work amongst the various shops to that end-an arrangement, one would suppose, that would be as satisfactory to the workmen as it would undoubtedly be to the employers. An important advantage to the shipbuilders would result from contract deliveries being strictly maintained, as in the event of local pressure relief could always be given by one or other of the amalgamated works. There would also be no reason why ships should not always be engined in the port in which they are built, as the same standard of workmanship would prevail in each of the amalgamated works. Last year the expenses incurred in this connection alone COMBINATION OF WORKS 327 amounted approximately to £18,000 for insurance, towage, etc., all of which represents unnecessary cost, apart altogether from the loss involved by the delay in completion consequent on the ship's absence in a distant port for approximately a fortnight. It is intended to retain the identity of the several firms as at present, and each firm would therefore trade under the name upon which its business has been built up, and by which its productions are known and celebrated the world over. Moreover, the local boards of management would continue and the executive staffs would be retained, as only by their united efforts could the new scheme of organisation be developed with despatch and success. I would again emphasise the fact that I am simply putting before you the proposition which has been put before your Directors, and before all the firms interested in this matter, and it is only by force of circumstances and not by intention that it falls to my lot to give public expression to the views which prompted any of us to give the scheme our consideration. I am convinced, however, that if we are to advance our industries and protect the capital invested in them we must recognise facts and modernise our methods, and in dealing with this scheme we must also endeavour to sink personal considerations of every kind. We cannot but realise that the industrial world is advancing at a pace unparalleled in its history. To have been told ten years ago, or even five years ago, that Japan would be building, and building with the greatest success, her "Dreadnoughts," her fast torpedo boat destroyers, and her 23-knot passenger liners, would have been regarded as a dream, yet they are accomplished facts. Continental competition is also, as you know, increasing by leaps and bounds, but in spite of all I am convinced that we can hold our own, nay more than hold our own, if we will but shake off the incubus of our stereotyped industrial methods. In Germany, which is in the forefront of industrial progress, there are some hundreds of amalgamations of one kind and another, so there it has been amply demonstrated that the secret of commercial success lies in a policy of combined effort. At this stage I cannot say whether the scheme will mature or not; if it does it will involve an adjustment of our capital to a basis which, it has been decided, shall be the standard basis for every firm, although on that point I am unable, and it is altogether unnecessary that I should say more on the present occasion. Your Board propose to you that this meeting shall stand adjourned until a convenient date, and that in the meantime you will patiently await the maturing of the negotiations that are now afoot, relying upon the ability and zeal of your Directors to safeguard and protect your interests in every possible way, and as soon as the negotiations are sufficiently advanced we will lose no time in putting the matter fully before you for your final decision. APPENDIX III ORGANISATION OF MONOPOLY. THE INDUSTRIAL SPIRIT CARTEL (Ridley's 'Wine and Spirit Trade Circular,' 8th Nov. 1907, pp. 828-9.) THE INDUSTRIAL SPIRIT SUPPLY COMPANY, LIMITED Under the above title a "Trust”—as some people may be inclined to dub such an association nowadays-has been formed, through the hands of which will pass all the spirits sold for methylation or for use for industrial purposes, by the following firms: ENGLAND. London: J. & W. Nicholson & Co., Limited; Hammersmith Liverpool: Preston's Liverpool Distillery Co., Limited ; Bristol Bristol Distilling Co., Limited. SCOTLAND. Bo'ness: Jas. Calder & Co., Limited. Edinburgh: The Distillers' Company, Limited. IRELAND. Belfast: United Distilleries, Limited. The only firm manufacturing spirits for industrial purposes which is absent from the above Combine as shareholders is that of Messrs. King, Howman & Co., Limited, Derby; but an arrangement has been made under which all their output, which is not very considerable, will pass through the hands of the new distributing centre. The secretary is Mr. C. Honeywill, and his firm, Messrs. Honeywill Brothers, of Mark Lane, London, E.C., will act as agents for the Company. This Combine is perhaps in some ways the most important movement which has ever taken place in the spirit trade, and viewed in con ORGANISATION OF MONOPOLY 329 junction with the drift in Scotland and Ireland towards a "Trust" of all the manufacture for beverage purposes of spirits by the patent still process, must be accepted, for good or evil, as another step towards a gigantic spirit trust, embracing the manufacture of patent still spirits in the three kingdoms. The Combine may partly have originated in the competition, which from time to time has existed, of the methylators among themselves, which competition was accentuated and aggravated by the fact that every now and then, when a surplus of grain spirit had to be got rid of in Belfast and in Scotland, not to speak of Liverpool and Bristol, and the surplus was generally placed by a cut under the figure at which the regular makers would quote. The whole difficulty, competition, or whatever it may be called, has now been accommodated by those who caused the trouble having been admitted into the Combine, and receiving shares in it, their fraction having, of course, to come out of the share of the regular makers of the old informal association. In its immediate effects upon trade profits in the methylated business the new move is to be commended in the interest of all concerned. The methylator will have to compete as usual, but he will not have to compete with a rival who has bought his spirit at less money. The Company is not a Company for profit; profit must be made or not made at the distillery. It is purely a distributing concern at a price to be fixed, from which there is to be no departure to any individual buyer, no matter how large the purchases of that individual methylator or manufacturer may be. The advantages of such a combination are obvious. In the first place, as just mentioned, a uniform price is ensured; secondly, a great saving of carriage is made. It will be at once seen, that to have the nearest outlet for the spirit appropriated to the particular distillery which can with least carriage serve the customer must mean a great saving on the whole to the Combine. It will be none of the members' interest to increase, at the expense of another member of the Company, their output; that is defined by the proportion of orders to which the member is entitled to by his share in the Company. It will at once be asked by those who know anything of the methylating trade, what provision has been made for dealing with those distillers who themselves methylate the spirits they make? Such distillers would obviously have a small pull over those who had to pay a commission to the agents on sales to the methylators or manufacturers. This has been met by providing in the Articles of Association for the payment into the Company's funds, by the distillers who methylate, of a sum per gallon equal to the selling commission payable by the Combine to the agents. The point just mentioned is the only resemblance to the well-known 330 ORGANISATION OF MONOPOLY "pooling" process, by which those who sold more, paid into, and those who sold less than their proportion received, out of the "pool," so much per gallon. That the Industrial Spirit Supply Company is in itself apparently not a formidable engine of capitalism would seem to be shown by its registered capital being £1000 in twenty shares of £50 each. fact, as at present constituted, it is merely an invoicing office, through which all the output of spirits sold by the above-named distillers for methylating or manufacturing purposes must pass. We share then the declared opinion of the promoters that it is at present a most innocent association of manufacturers formed to prevent undercutting of prices, and to afford buyers of spirits for industrial purposes a guarantee that there is no lower price than the one at which they are buying. It will be able to regulate the inflow and outflow of spirits, with Messrs. Honeywill's hands, as it were, on the tap, so that the possible inroad of the German Centrale may be controlled, by a fall in the price on the one hand, if that Spirit Ring wants to send in spirits here, or be provided with spirits from this side, if the surplus here, and the price over there, warrant the shipment to the Continent of British spirits. While we indicate above that apparently the general effect, at present, of the new Supply Combine will be of benefit to the traders concerned, we cannot conceal the view which must present itself to the mind of those who have studied the question of monopolies, that they always begin by disclaiming any intention of, at any time, bearing hardly on those whom they supply, and thereby bearing hardly on the dependent industries, and finally on the public. We know of a certain place the way to which is paved with good intentions, and we cannot but foresee that this monopoly within another nearly organised monopoly, may turn out ultimately of anything but advantage to the industries which may be concerned in the production and distribution of industrial and methylated spirits. Fortunately, perhaps, for those branches of our national commerce which have to look to supplies of cheap alcohol in competition with Germany in particular, where the alcohol used for purposes other than drinking is subsidised and thus rendered artificially cheap for the industries using it, and for consumption for motive power, lighting and heating purposes, we, in order to enable our manufacturers to compete, have lately granted the same drawback to spirits industrially used as to those exported. As the new Combine heralds an approaching rise in the price of industrial spirits, we see foreshadowed in this a movement which might become dangerous, if the distillers should become too desirous |