Sabotage at Ebbw Va!e?

Laborite Herbert Morrison, since last week Britain's Minister of Supply, is the most bristling of Prime Minister Winston Churchill's new brooms (with the possible exception of Lord Beaverbrook). He earned his job, the crucial one of gearing Britain's industries to war production, partly by lambasting his predecessor for inefficiency and corruption. Britain's steel industry is run by the Steel Control Committee, a semi-Governmental carbon copy of the British Iron & Steel Federation. It allocates production quotas among mills in Britain, most of which are old and technologically out of date. In sheet and tin-plate capacity, there is only one modern, high-speed, continuous mill installed in all Britain. But that mill is reported to be operating at only two-thirds of capacity, while its rivals are busy as can be. Since the cartel is identified with the oldfashioned, high-cost mills, the question before Mr. Morrison was: is the Steel Federation sabotaging the one modern mill for fear of what its efficient methods may do to the price structure of the cartel?

U. S. steelmen have rolled their flat steel in continuous strip mills for 17 years. So much cheaper is this method that U. S. exporters began taking British business right under the cartel's nose, in spite of the tariff of the Ottawa agreements. So a few years ago -L-20,000,000 Richard Thomas & Co., Ltd., the No. 1 British iron, sheet and tin-plate producer, decided to modernize. Its chairman, a forthright, anti-banker industrialist named Sir William John Firth, went to Pittsburgh and hired the experts of United Engineering & Foundry Co. to build him a continuous mill. They signed a contract for a giant (-L-8,500,000, 650,000 ton) rolling mill to be built in Lincolnshire, where Richard Thomas has steelworks.

By that time, however, the British Government was beginning to take a hand in British industry with a view to its social and military uses. Sir William was asked to locate his mill at Ebbw Vale in South Wales, a derelict steel'district where new jobs were acutely needed. Partly because of the higher cost of building at Ebbw Vale, and partly because of the 1938 recession, Richard Thomas & Co.'s funds ran out two years ago, before the mill was ready. Sir William accepted a -L-6,000,000 loan from the Bank of England. In return for this loan, Bank Governor Montagu Norman got: 1) a first mortgage on company receipts; 2) operating control. No longer boss of Richard Thomas, Sir William began taking orders from Governor Norman's new board, on which were the president of the cartel Viscount Greenwood, other old-line steel bigwigs, some of Richard Thomas' own competitors. Some of these were induced to resign last summer in favor of a "more representative" board, and the flush business of building Sir John Anderson's air-raid shelters postponed further disagreement until last month. Then Sir William Firth was fired.

Competitive-minded Sir William did not take this lying down. Said he, for U. S. consumption, in a cable to William H. Davey, Cleveland steel man and a director of the largest subsidiary of Richard Thomas: "So far as I am concerned everything is 1,000,000% above board. The new plant is a great success. . . . Cash position is splendid. . . . Objecting to my criticism . . . they [the board] have tried to persuade me to resign. I flatly refused in order to force them to accept the responsibility for my dismissal. . . . Like our Armies, I am fighting . . . for justice."

Neville Chamberlain refused to discuss the Firth affair. But shortly before his Cabinet fell, one of his most influential critics, London's famed Economist, did. Calling the Richard Thomas board "trustees for the cartel," the Economist asked: "Can a centralized, cartel-like organization of industry, in which the interests of an individual firm are subordinated to those of the industry as a whole, be reconciled with the community's interest in the utmost speed of technical progress?" This question acquired a new urgency last week. For Britain has been importing 200,000 tons of steel a month from Belgium and Luxembourg; and last week, with Luxembourg gone and Belgium going, England (and France) began rushing tonnage orders to the U. S. for steel products. If Britain is using precious foreign exchange while disemploying her own most efficient mill in order to protect the cartel's price structure, Herbert Morrison will have something to say to Montagu Norman.

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