HERBERT N. CASSON October 15 1934


HERBERT N. CASSON October 15 1934



THERE HAS been for nearly half a century a belief in Canada that the United States is the land of progress, and that Great Britain is the land of tradition. The United States is generally supposed to be up-to-date, while Britain is old-fashioned.

The people in the old homeland are regarded as slow and somewhat behind the times. If a young Canadian businessman wanted to learn the new ideas and methods in business, for instance, it is quite probable that he would go to New York, not to London.

This belief is only partly true. If a man wants to know only what is new, certainly he should go to New York, but if he wants to know what is sound and profitable he should go to London. If he wants to study successes, not experiments, he should go to Britain and study its five-generation companies.

Having lived the first twenty-four years of my life in Canada, the next twenty-one years of my life in the United States and the last twenty years in England, it is possible for me to compare the three countries from the facts of my own experience. Also, as I have dealt with about 500 businesses in these three countries, I have had a rare opportunity to compare their business methods and ideas.

It is quite true that before the war Britain had been steadily losing the position that she held until 1885 as the foremost industrial nation in the world. There was much talk about her “beaten trades.” Between 1885 and 1914 Britain was undoubtedly in the hands of a slow and complacent generation.

During the war and for six years afterward, the bureaucracy and the politicians were in control. British business lay prostrate, tied hand and foot by red tape, until 1920. Britain, too, had six years of a “New Deal.” It had state control. And the experiment was a total failure.

Then, in 1920, there came a revival of private enterprise. The control of the bureaucracy relaxed. The “reconstruction department” was quietly abolished. New men sprang up in the business world. There was a twelve-year period of slow and unsteady recovery. And in the beginning of 1933 a strong upward movement began.

This movement has continued without a break and there can be no doubt that business conditions are better at present in Britain than in any other country in the world. No other country, with the possible exception of Switzerland, is being less held back by politicalism, and no othei country, without any exception, has been showing more satisfactory balance sheets.

463 New Factories

MORE NEW factories were built in Britain in 1933 than in any other country. Not only were 463 new factories built,-but ninety-five old factories were extended. About half of the new factories were built in or near London. And ten per cent of them were branch factories, built by foreign companies because of the new British policy of protection.

There was only one automobile manufacturing company in the world that paid a hundred per cent dividend this year. It was an English company—Austin’s. At the head of it is Sir Herbert Austin. It employs in its English factory alone 16,000 people. It is not the largest automobile company, but it is the most efficient.

Since 1926, in three good years and five bad ones, it has increased its output and exports 500 per cent and its wages 145 per cent. It has lowered its prices sixty-five per cent

and paid the highest dividends in Great Britain. It has received no state help of any kind. Neither has it had any special monopoly nor advantages. It is at the moment the most outstanding instance of English efficiency.

England has captured the clock-making business from Germany. One company in London, founded in 1931, is now making clocks at the rate of 500,000 a year. Most of them are electric clocks. Also, England is now running neck and neck with Germany in the making of toys. For the first time, English toys are being sold in Berlin and even in Nuremberg—the centre of the German toy industry.

For the last three years, Great Britain has been leading the world in the matter of housebuilding. More than 2,250,000 houses have been built since the war. At present they are being built at the rate of a thousand houses a day.

Only fifteen per cent of these houses are being built with taxpayers' money. The others are being built by private enterprise. Britain has now solved the problem of house-owning by the co-operation of speculative builders and the building societies. Fully half the British people are now living in their own homes.

Since 1929 only one department store in Britain has closed its doors, and not one of the other department stores has failed, even for a single year, to make a profit. Not one railroad system has made a loss. One large hotel has been torn down to make way for an office building, but not one large hotel has gone into bankruptcy. And not one bank has failed.

Towns Are Growing Fast

ONE FACT which will, I am sure, seem incredible in Canada and the United States, is this: the fastest-growing towns in the world are now in England. The town of Wembley, for instance, had 20,000 people in 1924. Today it has

60,000. Hayes had 11,000 people in 1928 and now has

35,000. Luton had 50,000 people in 1924 and now has

80,000. Coventry had 70,000 people in 1901 and now has

190,000. No other country can show such figures as these.

There are at least a score of these quick-growing towns. They owe their booms, not to advertising, but to the creation of new businesses. Most of them are on the outskirts of London. There is, in fact, a “prosperity belt” around London. Not only is London the largest city in the world. It is the fastest-growing large city as well. It now covers eight hundred square miles. It is spreading out and swallowing up farms and villages and towns. There seems to be no limit to its growth.

Where there are such results as these, produced by private enterprise, there must be efficiency. “A tree is judged by its fruits.” There have been no new discoveries of natural resources. There have been few Government subsidies. The Government has hindered rather than helped, except in its

continued and extended policy of home trades protection.

The prosperity that is now being created and distributed in Britain is not based upon debt. Britons are not buying a temporary prosperity and passing on the bill to their grandchildren. They are extending their trade by making profits. There has been no artificial inflation of values.

The fact is that British businessmen and financiers have a unique efficiency of their own. It is an efficiency that does not claim to be scientific. It is not based on statistics and standardized operations and organization charts. It is not at all a scientific or mechanical or logical efficiency.

The Taylor System of scientific management has never been adopted in Britain. The first company that adopted it completely fell into financial trouble. The British executives have slowly worked out an efficiency of their own, to which they have given no name. As it is not in any way spectacular, it has not attracted as much attention in Canada as it deserves.

The British have less initiative than Americans. They

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British Efficiency

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are suspicious of schemes and new propositions. Many a British invention has been neglected in Britain and developed in the United States. The whole world owes a debt to the United States for its initiative; but initiative is only one of the qualities necessary for business building. To be a good starter in a race is well enough, but the prize goes to the one who is first at the finish.

Americans, so think the British, are all for hothouse methods in business. They want to have a five-year result in one year. They use every possible method of stimulation. They invented “high pressure” salesmanship. They invented mass production and overcapitalization and artificial booms and Stock Exchange manipulation. They have shown other peoples what may be done, but they have not shown what may be done safely. This is, at least, the prevalent British opinion.

Suppose, for instance, that there was a world-wide contest to see which nation could grow the strongest oak tree. The British would plant a healthy young tree on a high spot in a field and let it alone. The Americans, on the other hand, would put ingenious chemicals into the soil and plant the biggest acorn they could find.

They would run a steady trickle of water over the roots. When the tree grew large, they would enclose it in glass. They would give it air conditioning. They would coddle and stimulate the tree until they produced a a giant tree without strength; and in a storm the tree and its glass house would crash to the ground. They would produce a big tree, but it would not be an oak. It would be only a gigantic plant.

The British Never Quit

AN AMERICAN is either an optimist or ■ a pessimist. He is an optimist during a boom and a pessimist during a depression. A Briton, on the contrary, is neither. He is less influenced than any other man by


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the ups and downs of business. He has learned that both booms and depressions are temporary. He never thinks that he has the world by the tail and he never thinks that all is lost. He is a stolid man. Whatever happens, he keeps on.

The central principle of British efficiency, I would say, is common sense, which is a rarer quality than most of us realize. The British are a mature people. When they change, they change cautiously. Most of their experiments are called temporary. The Bank of England was a temporary expedient that proved successful.

The British dislike anything that is entirely new. They accept only what they can fit in. They believe that Andrew Carnegie was right when he said that “pioneering doesn’t pay.” They are not deceived by the phrase “estimated profits.” Unless a new scheme is generally regarded as sensible, it has not a gliost of a chance in Britain.

Another principle of British efficiency is tolerance. There has been since the war a remarkable wiping out of class distinctions and prejudices. There are no feuds and no hatreds. There is very little difference today between the political parties. The present Prime Minister is a Socialist, placed in |X>wer by the Conservatives. Such a thing would lx* imjx)ssible in any other country. In the Cabinet, a Ix>rd sits beside a locomotive driver. Half the members of the House of Lords were born in cottages. In such a country, as you can see, there can be no class revolutions.

Britain is a land of compromise, not ultimatums. A Briton has learned the childishness of saying: “That is my last word—take it or leave it.” He is a “give and take” man. He is not keen to get the last cent. He blends new and old, science and tradition. As a result of his reasonableness, there is less friction, there are fewer deadlocks than there are in any other country. And to reduce friction is wonderfully effective in reducing costs.

No Five-Year Plans

THE KEYWORD in the British business world is improvement-—slow, steady improvement. The British are more intent on holding what they have than on leaping for what they want. They think of past and present much more than they think of the future. They do not make “Five-Year Plans.” They dislike drastic changes. They add a bit here and lop off a bit there, following the line of profit. They move forward warily and with a good deal of grumbling, as an elephant does when he crosses a bridge.

In his heart a Briton dislikes change almost as much as a Chinese mandarin does, but the compulsions of competition push him forward.

A British businessman seldom uses graphic charts. He does not think of his business as a wavy line. This is partly because he has little imagination and partly because he has all the details and all the people of his organization in his mind. He thinks always of the human element.

Whenever he makes a plan, he adapts it to fit his executives and his customers and his traditions. He never breaks with the past if he can help it. According to the technique of efficiency, this is a makeshift policy, but the point to notice is that it has proved to be wise and practical. It has been for over a century the most successful of all business policies.

Nowhere else in the world, as far as I have seen, is there such a factory as Cadbury’s, for instance, which is at the head of the cocoa and chocolate business of Britain. In this factory there is practically no rank and file. Anyone may speak to anyone. More than 40,000 suggestions have been received from the workers.

In the Cadbury factory, the directors work as well as think and the workers think as well as work. The mental conditions are perfect. When the girl workers sit at luncheon in the huge dining hall, they listen to music from a pipe organ and sing songs from their own song book. This old Quaker firm has found a way to make its 8,000 people act and feel like partners. Surely, the sort of efficiency that has produced this result is worth studying.

Honesty the Best Policy

X/TOST BRITISH companies place a value upon their good name. For that reason there is very little trickiness in the British business world. There is a high degree of honesty. Last July, for instance, I received a cheque for S480 from my London printer. “I find,” he said, “that I have been overcharging you. I’m glad that I noticed it before you did.” Also, several months before, I received a cheque for eighty-five dollars from the electric light company that serves my house. “As we have decided to reduce our rates,” it said, “wre are giving you a rebate on your last payment.” Such incidents as these happen every now and then in Great Britain.

British businessmen have a way of their own, too, to prevent bankruptcies. Any firm that is making a well-known product is not allowed to crash. When its reserves are exhausted and it has reached the limit of its borrowing, it is quietly taken over by a successful competitor at the suggestion of its bank. New men are placed in charge of it and it is given a restart. The British dislike a crash. If a business structure is shaky, they do not push it down and sell it to the junkman. They call in builders and strengthen it.

To a large extent, the British consider the business structure as a whole. They believe in team play. That is why there are practically no hungry or homeless people in Britain. Many things may be said against “dole,” but it has wholly abolished the fear of homelessness and starvation. The British unemployed are not forced to become beggars or gangsters. The army of unemployed is still large, but for more than a year excepting in the textile and some of the heavy industries, it has been decreasing.

So, as we may have seen, many of the problems with which other nations are still grappling, have been solved in Great Britain. The old homeland has its own type of efficiency. In the matter of profit-making and solid and safe business building it stands first today among the nations of the world.