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Nationalization of British Industry

Published online by Cambridge University Press:  07 November 2014

Mary E. Murphy
Mary E. Murphy*
Affiliation:
Los Angeles State College
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Extract

No topic has evoked so much discussion in all parts of Great Britain, and indeed in the world outside, as the Labour Party's programme to nationalize 20 per cent of the economy. Nationalization is recognized by all as the most important domestic issue facing the nation because the industries brought under public ownership are vital to Britain's economic recovery at home and a key to her future role in foreign affairs. As the Conservatives will continue the programme as conceived by Labour, except in the case of the iron and steel industry which will probably be returned to private ownership, an analysis of British nationalization is as pertinent today as it was during the Labour Party's tenure in office.

The Labour Party defined its nationalization plan in a 1945 electoral document titled Let Us Face the Future which stated in part:

There are basic industries ripe and over-ripe for public ownership and management in the direct service of the nation. There are many smaller businesses rendering good service which can be left to go on with their useful work.

There are big industries not yet ripe for public ownership which must nevertheless be required by constructive supervision to further the nation's needs and not to prejudice national interests by restrictive anti-social monopoly or cartel agreements, caring for their own capital structures and profits at the cost of a lower standard of living for all.

Type
Research Article
Information
Canadian Journal of Economics and Political Science/Revue canadienne de economiques et science politique , Volume 18 , Issue 2 , May 1952 , pp. 146 - 162
Copyright
Copyright © Canadian Political Science Association 1952

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References

1 For a discussion of die general aspects of nationalization see “Essential Services (Nationalisation Proposals),” statement to the House of Commons by Morrison, Rt. Hon. Herbert, Lord President of the Council, Hansard, 5th series, vol. 416, 11 19, 1945 Google Scholar, col. 34–6, and speeches to the House of Commons by Rt. Hon. Winston S. Churchill and Prime Minister Attlee, ibid., Dec. 6, 1945. Also see Morrison, Herbert, “Public Control of the Socialised Industries,” Public Administration, spring, 1950, 3–9.Google Scholar

2 As for example the Cotton Spinning Act, 1936; the Cotton Industry (Reorganization) Act, 1939; the Coal Mines Acts, 1930 and 1938; the Agricultural Marketing Acts, 1931 and 1933; the Sugar Industry (Reorganisation) Act, 1936, and other similar measures.

3 “Notes and Comments,” Political Quarterly, XXI, no. 2, 04-June, 1950, 110.Google Scholar

4 Bank of England Act, 1946, c. 27. See also Bank of England Charter, Cmd. 6752, 1946; debates on Bank of England Bill, second reading, Hansard, 5th series, vol. 415, 10 29, 1945 Google Scholar, and third reading, ibid., vol. 417, Dec. 19, 1945. Financial reports have been issued by the Bank as follows: for the year ended Feb. 28, 1947, Cmd. 7115; for the year ended Feb. 29, 1948, Cmd. 7441; for the year ended Feb. 28, 1949, Cmd. 7759; and for the year ended Feb. 28, 1950, Cmd. 8002.

5 Lord Catto, the former Governor, continued in this office under nationalization. The Court of Directors consists of the Governor, the Deputy Governor, and sixteen Directors. Those appointed serve for fixed terms and are eligible for reappointment. Members of the House of Commons and ministers of the Crown are disqualified from holding office, as are persons serving in government departments in employment in respect of which remuneration is payable out of funds provided by Parliament.

6 Coal Industry Nationalisation Act, 1946, c. 59. See also Nationalising the Coal Industry: Explanatory Pamphlet on the Setting up of the Compensation Tribunal, Cmd. 6716, 1945; Coal Mining: Report of the Technical Advisory [Reid] Committee, Cmd. 6610, 1945; debates on the Coal Nationalisation Bill, second reading, Hansard, 5th series, vol. 418, 01 29–30, 1946 Google Scholar, and third reading, ibid., vol. 438, June 20, 1946; debate on Lords' amendments, ibid., vol. 425, July 10, 1946; Fuel and Power (London: Fabian Publications, 1945), 17 Google Scholar; Foot, Robert, A Plan for Coal (London, 1945), 66 Google Scholar; Beecham, A., “The Present Position of the Coal Industry in Great Britain,” Economic Journal, 03, 1950, 9–18 CrossRefGoogle Scholar; and Cole, Margaret, Miners and the Board (London: Fabian Publications, 1949), 24.Google Scholar

7 National Coal Board, Annual Report and Statement of Accounts for 1947, H.C.R. 175/1947–1948 Google Scholar; Annual Report and Statement of Accounts for 1948, H.C.R. 187/1948–9; and Annual Report and Statement of Accounts for 1949, H.C.R. 82/1949–50. These reports showed a wide fluctuation in earning capacity, ranging from a loss of £23.5 million in 1947, the first year oi public ownership, to a small profit of £1.5 million in 1948 and a profit of about £10 million in 1949. The output per man-shift average varied from 1.65 tons in the East Midlands to 0.87 tons in South Wales.

8 Civil Aviation Act, 1946, c. 70. See also British Air Services, Cmd. 6712, 1945; debates on the Civil Aviation Bill, Hansard, 5th series, vol. 418, 01 24, 1946 Google Scholar, second reading, ibid., vol. 422, May 6, 1946, and third reading, ibid., vol. 425, July 11, 1946; debate on Lords' amendments, ibid., vol. 426, July 29, 1946.

9 British Overseas Airways Corporation, Annual Report and Statement of Accounts for the Period August 1, 1946 to March 31, 1947, H.C.R. 15/1947–1948 Google Scholar; for the year ended March 31, 1948, H.C.R. 9/1948–9; and for the year ended March 31, 1949, H.C.R. 242/1948–9. Reports for the British European Airways Corporation at the same dates are found in H.C.R. 15, H.C.R. 8, and H.C.R. 243, respectively, while reports for the British South American Airways Corporation are found in H.C.R. 26, 10, and 244.

10 Cable and Wireless Act, 1946, c. 82. See also Cable and Wireless, Limited: Proposed Transfer to Public Ownership, Cmd. 6805, 1946; debates on the Cable and Wireless Bill, second reading, Hansard, 5th series, vol. 423, 05 21, 1946 Google Scholar, and third reading, ibid., vol. 425, July 11, 1946; Cable and Wireless, Limited, Accounts for the Year Ended Dec. 31, 1947, Cmd. 7467.

11 The Tribunal consisted of three members, the chairman to be appointed being either a Lord of Appeal in Ordinary or a judge of the Supreme Court nominated by the Lord Chancellor. The other two members of the Tribunal were to be an accountant, nominated by the Institute of Chartered Accountants in England and Wales, and a financial expert, nominated by the Governor of the Bank of England.

12 Electricity Act, 1947, c. 54. See also debates on the Electricity Bill, second reading, Hansard, 5th series, vol. 432, Feb. 4, 1947, and third reading, ibid., vol. 439, June 30, 1947; British Electricity: Its Organisation under Public Ownership (London: British Electricity Authority, 1949), 20 Google Scholar; Fabian Society, Fuel and Power, 17 Google Scholar; Davis, F. Hamly, Electricity (London, 1946), 166 Google Scholar; British Electricity Authority, First Report and Statement of Accounts for the Period August 13, 1947 to March 31, 1949, H.C.R. 336/1948–1949.Google Scholar

13 The Gas Industry: Report of the Committee of Enquiry, Cmd. 6699, 1945. Gas Act, 1948, c. 67. The British Fuel and Power Industries: Report prepared by Political and Economic Phnning 1947, 40.

14 Grove, J. W., “The Consumer Councils for Gas,” Public Administration, autumn, 1950, 221–30.Google Scholar

15 The electricity generated in Britain increased from a monthly average of 2.0 billion kilowatt hours in 1938 to 5.3 billion hours in January, 1950. Investment totalling £104 million was carried out in 1949 and a similar amount in 1950. In addition, the cost of the North of Scotland Hydro-Electric Scheme rose from £11 million in 1948 to £16 million in 1950. Large-scale construction is in progress on fifty-seven generating stations, including Battersea, London, North Birmingham, and North Glasgow.

16 Transport Act, 1947, c. 49. See also debates on the Transport Bill, second reading, Hansard, 5th series, vol. 431, 12 17–18, 1946 Google Scholar, and third reading, ibid., vol. 437, May 5, 1947; debate on Lords' amendments, ibid., vol. 440, July 23, 1947; SirHurcomb, Cyril, The Organisation of British Transport (London: British Transport Commission, 1948), 25 Google Scholar; Walker, Gilbert, “The Transport Act, 1947,” Economic Journal, 03, 1948, 101–5Google Scholar; Davies, Ernest, British Transport: A Study in Industrial Organisation and Control (London: Fabian Publications, 1945), 25 Google Scholar; and British Transport Commission, Report and Accounts for 1948, H.C.R. 235/1948–9.

17 Chester, D. N., “Organisation of the Nationalised Industries,” Political Quarterly, XII, no. 2, 04-June, 1950, 124–5.Google Scholar

18 British railways are engaged on an extensive programme of maintenance and replacement, including electrification of certain lines in Essex, totalling £13.9 million; eastern and western extensions of the Central line (London Transport), costing £8.1 million; electrification of the .Manchester-Sheffield line costing £6.2 million; and improvement of colour signals on many lines.

19 The Times, Oct. 25, 1948.

20 Iron and Steel: Report for the Industry, Cmd. 6811, 1946. The Federation's plan was to increase total capacity from 14 to 16 million tons, involving wide scrapping of old plants and the building of 4¾ million tons of blast furnace and 6 million tons of steel ingot capacity. Construction, beginning in 1946, would be under way by 1950 and completed by mid-1953. The total cost of re-equipment was set at £ 168 million, half of which would be met from the industry's own resources.

21 The Government would own 97.5 per cent of firms producing ore, 97.6 per cent of those engaged in smelting, 99.3 per cent of those dealing in ingots, and 93.6 per cent of those working on hot rolling. Associated processes brought under national ownership included 45.5 per cent of heavy forgings, 15.8 per cent of drop forgings, 23 per cent of steel castings, 94.3 per cent of wheels and axles, 67.2 per cent of tubes, piles, and fittings, 60 per cent of hard and mild steel, 72.4 per cent of cold rolled strip, and 40.7 per cent of bright steel bars.

22 Iron and Steel Act, 1949, c. 72. See also debates on the Iron and Steel Bill, second reading, Hansard, 5th series, vol. 458, 11 15–17, 1948 Google Scholar, and third reading, ibid., vol. 464, May 9, 1949; ibid. (House of Lords), vol. 162, May 25, 1949, and vol. 163, June 23, June 11, and July 4, 1949; debate on Lords' amendments, ibid. (House of Commons), 5th series, vol. 467, July 25–6, 1949; ibid. (H.L.), vol. 164, July 28, 1949; Cole, G.D.H., Why Nationalise Steel? (London: New Statesman and Nation, 1948), 49 Google Scholar; Iron and Steel Bill: Some Arguments For and Against (London: British Iron and Steel Federation, 1949), 62 Google Scholar; Langley, S. J., “The Iron and Steel Act, 1949,” Economic Journal, 06, 1950, 311–22.CrossRefGoogle Scholar

23 Economist, 03 18, 1950, 572.Google Scholar

24 Ibid., Feb. 4, 1950, 244.

25 For a discussion of accounting problems see Latham, J., “Financial and Accounting Problems of Nationalised Industries,” Accountancy, 10, 1950, 357–61 and Nov., 1950. 384–90.Google Scholar

26 Financial News, March 31, 1950, 4.

27 Lewis, W. Arthur, “The Price Policy of Public Corporations,” Political Quarterly, XXI, no. 2, 04-June, 1950, 196.Google Scholar

28 Hansard (H.C.), 5th series, vol. 478, 10 25, 1950, col. 2795.Google Scholar

29 Ibid., cols. 2820–1.

30 The 1947 Annual Report of the National Coal Board referred to this problem by saying: “There are difficulties inherent in any amalgamation of business concerns, but that nationalisation of the coal industry brought special difficulties because of the formidable change of scale. Even those who had previously worked in the largest private companies in the coal industry find it necessary to adapt themselves to new methods and modes of thought.” Quoted by Chester, , “Organisation of the Nationalised Industries,” 129.Google Scholar

31 Cole, G. D. H., “Labour and Staff Problems under Nationalisation,” Political Quarterly, XXI, no. 2, 04-June, 1950, 161.Google Scholar

32 Ibid., 169.

33 Chester, , “Organisation of the Nationalised Industries,” 131.Google Scholar

34 Davies, Ernest, “Ministerial Control and Parliamentary Responsibility of Nationalised Industries,” Political Quarterly, XII, no. 2, 04-June, 1950, 158–9.Google Scholar