Chapter 19 - Rationalization of Industry

A proper reminder by Mr Fadden this week that while rationalization of civil industry during war was essential, there was and is no popular mandate for socialization, has elicited from the Prime Minister the comment that he sees no justification in time of war for having forty brands of tooth paste. How far this comment is an answer to the criticism you will no doubt decide for yourself. Meanwhile, it might be useful to consider the whole problem of wartime rationalization - quite briefly, of course - in order to see whether there are any principles which ought to govern it.

At a time like this a mere battle of long words will not do very much good to anybody. It will certainly not solve any difficulties. Nor will the business notions of people whose only claim to being unprejudiced is that they know nothing of business aid us very much.

The whole question goes far deeper than words, and not one of us can hope to solve it by rhetoric - a commodity, by the way, as yet unrationalized, although responsible for an almost alarming consumption of man power.

You will of course realize that it is quite impossible to make any sort of adequate or scientific analysis of our subject in the space of a few minutes. But at the same time we may get an approximate picture if I endeavour to state, quite shortly, a few principles to which I believe the great majority of reasonable people will subscribe:

1. No Government in time of war, whatever its political colour, ought to be politically embarrassed simply because it is compelled, for the winning of that war, to do some damaging or unpopular things. Just as we all naturally would like to receive a share of the credit for good things done which are popular, so we ought all to be prepared to accept our share of the responsibility for good things done which are unpopular.
2. On the other hand - and this is my second principle - no Government in time of war can or should escape criticism or, if necessary, attack, if it does damaging things which are in fact unrelated to the successful conduct of the war, or are done only to further some partisan political end such as socialization. The current answer to most criticism - "There is a war on!" - cannot possibly justify a suspension of the sober critical faculty or the supine acceptance of industrial and political ideas which most people have been resisting for a lifetime and which they believe do not represent the objects for which the war is being fought.
3. The rationalization of civil industry, that is, the reorganising of that industry so as to avoid waste and damage to the war cause, is a process which can and should at this time be legitimately carried on for two main purposes. One is the curtailment of civil expenditure; the other the release of man power, including woman power, for war work.
4. Civil expenditure must be reduced simply because military expenditure must be increased, and we cannot simultaneously spend our money on both. The most direct means of achieving this reduction is by taxation - and, as I think, though Parliament has not yet agreed, on all incomes. Another means is by loans, which take up the savings of the people and, if patriotically understood, encourage them to make further savings. Another means is by rationing goods and rationalizing industry. As we reduce civil demands for goods and services, so we reduce the supply, and workers at the supply end are set free for war work. So also are other workers engaged normally in the distribution of those goods or the organising of those services.

That is the simple theory of rationalization.

If the Department of War Organisation of Industry, which was set up in my own time and, in fact, by me, for the very purpose of rationalization, and to which as a department I take no exception whatever, seeks to curtail or alter any industry for purposes other than those already mentioned, it cannot object if people begin to wonder whether some doctrinaire political and social ideas are not being experimented with by means of purely wartime powers which were designed for war purposes, and without a popular mandate at a general election.

Great principles may occasionally be tested by small examples. Let us therefore take the otherwise soothing and refreshing subject of toothpaste. Let us assume that there are forty brands. If there are, it proves that there is a market for forty brands, each of us buying his special choice. Now, along comes the Government, represented by the Department of War Organization of Industry, and says, "In future you shall have the choice of, say, three brands only."

Will the result of such an order be that the public will, in total, spend less money on toothpaste? I think not - and indeed, in a sense, I hope not. I, for one, shall use as much as in the past. So will you. We don't really believe that the price will fall, and so we shall, as a nation, spend as much on toothpaste as before. There is therefore, no curtailment of civil expenditure on this item.

But is there a saving of man power? Well, there may be. I do not know, and we have not been given the facts to enable any of us to know. If the department could tell us that reducing toothpastes to three would release so many score or hundreds or thousands of men and women for essential war work, or even as many as the average number on strike during the past three months, there would be a good case to consider. But what are the facts? Unless they are given to us, we have no means of judgement, and those engaged in the toothpaste business will feel all the inconvenience and loss produced by the new rule without the compensation which would arise from knowing the measure of benefit conferred upon the national war effort by their own sacrifice.

All that we can say is that, unless it is clear that there will be a real release of man power, any government should move warily. For, wiping out thirty-seven brands of toothpaste would not merely reduce the variety of flavours and colours we can squeeze on to our toothbrushes: it would wipe out for the war thirty seven good wills and trade names or marks, laboriously and expensively built up in time of peace. In the case of all goods sold under special trade names the asset of goodwill is of immense importance. It is just as important to its owner as the asset you have in the savings bank or a house or an insurance policy is to you. To destroy it may be necessary in war, just as we should destroy a building impeding the field of fire of a battery of defensive artillery. But, unless it is necessary, it is wanton.

You will see that I offer no opinion on this aspect of the toothpaste case. I use it merely to illustrate and give point to the questions which good wartime administration should constantly put to itself.

Take another example on which some of us may have definite opinions of our own - the rationalization of banking. If the requirements of man power really necessitate the closing of some branch banks in centres where other branch banks can do the business with a reduced staff, well and good. There is no sanctity about a bank. But when the Minister for War Organization of Industry says, in one breath, "the trading banks such as the Bank of NSW, the National, the Commercial and so on, must be curtailed and many of their branches must be closed to release man power" and, in the next breath says, "But this is to have no application to the Commonwealth Bank," he must not be surprised if people conclude either that he thinks that Commonwealth Bank employees have some special defect which disqualifies them for war production, which is absurd, or that the cutting down of the trading banks, which today do the overwhelming bulk of the banking business transacted by ordinary citizens, will build up the Commonwealth Bank - which is rank socialization and undisguised party politics.

To sum up: I should think that most people in Australia, whatever the inconvenience to themselves, will face up loyally to a rationalization of industry in the sense and for the purposes I have tried to indicate tonight, because they will feel that the one thing that counts is that we should win the war, and that to win it there must be no waste of man power and no distraction of effort. But I am equally confident that most people will resent any intrusion at this time of purely partisan conceptions which can do nothing except divide us at a time when we shall most readily find our truest strength in real unity.

24 April, 1942