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Modern History Sourcebook:
G. R. Strauss, Minister of Supply:
Speech Delivered on Nationalising the Iron and Steel Industry, November 15, 1948

[]

It is a platitude, perhaps, to talk of the importance of the steel industry. All parties agree upon that. Without steel the life of Britain would collapse. So far as I can see there is not one trade of importance that could be carried on without it. All our capital equipment depends on steel. Steel, and steel-using industries, account for nearly half the value of our exports. This proportion has grown considerably since the War and may well grow further. Our future dependence on these industries in achieving solvency and prosperity Will then become even greater. Not only our prosperity, but our security and influence on World affairs will depend largely upon our iron and steel industry; on whether it is efficient enough over a long period to produce cheap steel in ample quantities, and responsive enough to national requirements. It is because we believe that it cannot become either of these things as long as it remains in its present private ownership that we have introduced this Bill. We should have been failing in our duty if we had not done so.

There are, as far as I know, only three ways in which this industry can operate, -Its ownership and control can be left in the hands of the steel masters as in the early pre-war years; or ownership can remain with the steel masters subject to a certain amount of State supervision through a body such as the Import Duties Advisory Committee or the Steel Board. Alternatively, and this is the only solution which appears to us satisfactory, ownership and control can be combined in the hands of the State. . . .

In our view it would be madness for a Government determined to build the nation's future prosperity on sound economic foundations to perpetuate in this basic industry a system in which serious clashes on matters of major policy between private and public interests are bound sooner or later to arise, possibly with the gravest consequences. To take such a risk would be to fly in the face of common sense and experience. We are not prepared to endanger the welfare and security of the country in this way. We say in short that the iron and steel industry shall no longer be distracted by two loyalties. Schizophrenia is a malady as dangerous in an industry as in an individual. And if it is said that this malady has not yet reached a harmful stage, I reply that it is far better, and far easier, to cure it before it becomes chronic. . . .

I now want to say a word about efficiency. Some spokesmen of the steel industry claim that it is already efficient, and in support of that they say that British steel prices compare very favourably with those of any other country in the world except Australia. This argument can only be accepted with serious qualifications. It does not take into account the effect of our Government subsidies and price controls. I am not sure if those controls are among those which hon. Gentlemen opposite want to abolish, but I hope they will tell us if that is so during the Debate. The fact is, however, that if we withdrew the subsidies on imported ore and scrap-and I may say in parenthesis that the question of subsidies to this industry is now under review-and if we also withdrew the control price on scrap, and the British steel industry had to buy its material at the same prices as the Americans do, then our steel prices would in the main be above American prices, despite the fact that American wages are much higher. . . .

I come now to the question of the industry's capacity. It is naturally more advantageous for private owners of the steel industry to have a total productive capacity below potential demand. They would rather be reasonably certain of being able to sell limited quantities of products at good prices than risk heavy expenditure on new plants which might from time to time prove redundant. On the other hand, it is in the interests of the country and of consumers of steel that productive capacity should be capable of meeting industrial requirements in peace, and military requirements in war. I am far from saying that the steel industry should be expanded, regardless of economics, to meet the peak demand which the most optimistic can foresee in the next decade or so.

But in estimating the steel demand for which we should cater, we cannot -we dare not-be conservative and cautious as the steel industry has been and is bound to be, as soon as the present boom conditions fall off. Moreover security against possible aggression is, unfortunately, still a problem for us, and iron and steel capacity is still the best single index of the war potential of a modern state. For all these reasons it must be for the nation and not for private owners to decide what the capacity of the British iron and steel industry should be, and this again can only be done effectively if the nation becomes the owner. . . .

We, therefore, propose in the Bill that there shall be an Iron and Steel Corporation of Great Britain owning all the securities of the major concerns at the core of the industry-that is, the sections of the industry responsible for the production of iron ore, pig iron, ingot steel or the hot rolling of steel. These arc the activities defined in the Second Schedule. The Corporation is empowered to enter the business of steel production and its ancillary activities, but it is intended that it shall normally operate through the companies it will own. The Corporation will inherit all the powers the companies possess in their memoranda of association, but none of the companies can alter its own memorandum without the consent of the Minister.

The Minister can give the Corporation directions of a general character which appear to him to affect the national interest. It is, of course, essential that there shall be the closest co-operation between the Minister and the Corporation on all matters of general concern. The Corporation must have the national interests, as seen by the Government of the day, constantly before it. The Minister is able to order that any of the activities of the Corporation or any, of its companies be stopped or restricted. . . .

The Corporation will be the sole shareholder of every company that on the average of the years 1946 and 1947 produced more than 50,000 tons of iron ore, produced More than 20,000 tons of pig iron, or 20,000 tons of ingot steel, including alloy steel, and shaped more than 20,000 tons of steel by hot rolling. . . .

It is also because of our desire to avoid dislocation, and our anxiety to preserve the most valuable fruits of this industry's past activities and successes, that we propose to keep intact the identity of the individual concerns. Their personnel and internal organisations, and such esprit de corps as they may have achieved, will be unaffected. Indeed, on the morning after vesting day the only difference for them will be that the ownership of the securities has changed hands. The companies will continue to win ore, produce iron and steel and sell their products as before. . . .

Let no one suppose because we are here building for the future rather than the present, and proceeding by evolutionary rather than revolutionary steps, that the proposals in this Bill are devoid of historic significance. This great reform removes from the private sector of our economy to the public the industry which is the citadel of British capitalism. It transfers to Parliament and the community that power to dominate the economic life of this country which now resides with the steel-masters in Steel House.

It will enable our steel industry, which through its key position could do so much to lessen the severity of trade depressions, to become an effective national instrument for planning full employment. It will offer greater security to those who work in it. It will enable our home consumers to get the steel they require at low cost. It will enable the Colonies to get the steel called for by their development plans. It will enable us to co-operate the better with the peoples of Europe in the revival of the industrial prosperity of that continent and the strengthening of its democratic foundations. It is for these great ends that we are asking Parliament to Make Britain's iron and steel monopoly the servant rather than the master of the British people.


Source:

Hansard, Parliamentary Debates (House of Commons, Official Report, 5th Series), Vol 458, (London: HMSO, 1948), cols. 53-78


This text is part of the Internet Modern History Sourcebook. The Sourcebook is a collection of public domain and copy-permitted texts for introductory level classes in modern European and World history.
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© Paul Halsall, July 1998
halsall@murray.fordham.edu