100 .SECTIONAL ADDRESSES. 



is as much distrusted now by prevalent opinion as the Trust Movement 

 used to be, but no more. It is well to keep this in mind in dealing with 

 the recent evolution of opinion. 



The change is due to a few separate causes. The war enforced a good 

 deal of co-operation, since the Government had to deal with producers 

 as a group in their industries. In some industries it led to constructions 

 which the market could not afterwards carry at their capacity, and 

 combination is a method of regulating excess of capacity. In some 

 cases Governments have, because of special national interests, been a 

 party to the formation of large combines. All this influences opinion. 

 But most important of all, as the Geneva documents show, has been the 

 reaction upon national ideas of the international industrial proposals. 

 The formation of the International Steel Agreement was a powerful 

 influence in this direction. There were two special reasons for this — its 

 semi-official support by the political governments involved, and, above all, 

 the fact that it could be presented as a form of pacification between 

 Germany and some of her former enemies, especially France. If this 

 could be done once, it could be done again. There had formerly been 

 international agreements, it is true, but they were not so sure of their 

 welcome as they might be after all that was written of the Steel Cartel. 

 Their claims became more confident, and this meant that combines within 

 each country were also placed in a more favourable position than before. 



The leadership came from Germany, and for that reason we have now 

 the ponderous name of ' rationalisation ' to describe methods which 

 depend upon this 'policy. This word may be used of such results of large- 

 scale production as standardisation, and it is also used of the more broadly 

 applied system of scientific management. This paper is not concerned 

 with these aspects of the idea. It is obvious that internal business 

 administration should be scientific, and it is entirely for the heads of 

 businesses to discover the right technical methods ; the ' planning ' of 

 work seems to an outsider to be something which ought always to happen, 

 and it is remarkable that this general conception should still be taken as 

 noteworthy. Standardisation of final products seems, from the public 

 point of view, less completely rational than simplification of processes. 

 But, from such bases, ' rationalisation ' has been built up so as to imply 

 the right organisation of an industry considered as a type of government, 

 the producers being so related as to enable such policies to be applied as 

 works specialisation, non-destructive elimination of the weak, and the 

 control over the entrance of new establishments. Now this in turn 

 implies some degree of monopolistic control. And it appears to be 

 historically the case that, when the leaders of German industry found 

 themselves after the war and the Treaty of Versailles in conditions con- 

 fused by inflation and the loss of the sources of supply in the Rhine 

 Provinces, they sought to justify the great combines which were formed 

 by a title which would give them the strongest commendation. Pre-war 

 Germany did not like Trusts or Concerns. For a time at least, strong 

 personal leadership seemed necessary after the war. And the conception 

 of ' rationalisation ' which was adopted and urged, as the highest form of 

 what was scientific in business management, had a successful flotation, 

 and has crept into the terminology of organisation of industries. 



