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Nicholas Howard

Steel’s State Cap

(Autumn 1966)

From International Socialism (1st series), No. 26, Autumn 1966, p. 22–23.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

The Steelmasters of Britain have been, throughout the history of the steel industry, quite consistent over three areas of activity, two of which have been marked by success and the third by failure. First, they have always succeeded in dominating the unions, both rank and file and (even more so) the union leaders. Second, they have always been able to determine how the State shall intervene in their operations in a way that has been consistently to their own advantage. Third, they have failed regularly to reinvest in the most modern techniques on a scale sufficient to make their prices competitive on both the home and world markets.

The two volumes under review [1] hardly do justice to these theses, not surprisingly since Ross’s book is in the quite useful but generally a-political school of journalist’s reporting, while Keeling and Wright have written a company history for the British Iron and Steel Federation, the industry’s private management committee. Both provide short but incomplete introductions to a field renowned among socialists as a commanding height, but both are quite barren in terms of socialist theory. This and subsequent articles will attempt to remove the deficiency.

The domination by management of the steel production workers’ unions dates back from their very inception in the 1870’s and 1880’s, and contrasts greatly with the birth struggles of the American and German unions. Early recognition by such prominent managerial industrialists as David Dale, chairman of Consett Iron and Steel Co, enabled the senior skilled workers, highly literate and affluent labour aristocrats, to dominate the union organisation through the constitution and with full-time organisers. The rank and file were a volatile group, many of them only recently farm labourers. These were often the men, who as their skills and experiences increased with the rapidly growing industry, were responsible for the strikes against the arbitration boards which Dale and John Kane, first General Secretary of a successful production workers’ union, pioneered in 1869. ‘Arbitration with John Kane as our advocate is a costly and disagreeable farce,’ wrote one such group in 1874. The strike which they had led resulted in their expulsion from the union by Kane, who ignored the rule in his own Constitution that men could only be expelled with the agreement of two-thirds of the members in a ballot. Other rank-and-file revolts led to attempts to form independent branches based on the works with funds controlled locally. Kane’s response was to set up a tightly controlled central organisation while the men, frequently laid off for long periods in the depression of the 1870’s, drifted away from the union, whose membership declined from 36,000 in the mid-seventies to 2,000 in 1888. Faced with a rank and file which preferred to vote with its feet against a union which urged its members at all costs to avoid strike action and which urged above all the, formation and recognition of Boards of Conciliation and Arbitration (even in the face of the many employers who still refused to recognise the union) the executive carried out a manoeuvre which had a lasting effect on steel production workers. After invoking the new law of 1871 (in ‘protection’ of Trades Unions) against a few recalcitrant officials, they simply convened a conference of favourable officials and formed another union. In so doing they were able to exclude the rank and file from any discussion on the rules and policy of the new union, the Associated Iron and Steel Workers of Great Britain. The old union, the National Amalgamated Association of Iron, Steel, Tin, Blastfurnace and other Workers, had contained several rules, adopted before the capital intensification of the steel industry in the late 70’s which allowed the workers considerable control of workshop practices in those firms from whom they could win recognition. Included among such rules was one which prohibited Sunday working. The resultant rule book after 1888 strengthened the union executive, whose General Secretary, Edward Trow, had been General Secretary of the old union and secretary of the North East Arbitration Board, in a way which continues to the present day. All rules relating to the job were excluded and rules which irrevocably strengthened the executive were added. The new union’s rule book dominated subsequent revisions made by the executive in 1916, when the present Iron and Steel Trades Confederation was formed by legal memorandum, by which a newly formed British Iron, Steel and Kindred Trades Association became the Central Association. Again the executives, this time of three trades unions, found it easier to sidestep the members, two thirds of whom were required constitutionally to vote on the issue of amalgamation.

BISAKTA today has power to make agreements with the employers at executive level without the involvement of a national delegates’ conference since no such conference is provided for in the rule book. Then if individuals or branches disavow such agreements it has power to expel and dissolve them. The enforced merging of branches or their splitting is the tactic more frequently used by the present executive. In 1947 several branches [2] refused to accept the agreement with the employers which made the war-time Sunday working the normal system. They were called to heel by their own union under threat of expulsion. Despite the oligarchical autocracy of their union, many militant members consider that one feature of the union has enabled the rank and file, if so minded, to keep greater control of workshop practices than management and union executive are willing to concede. This is the continuing organisation of the branches on a shop-floor basis. In cases of dispute branch solidarity is almost always very strong and any executive attempt at dissolution can frequently seriously embarrass the executive by making them responsible in the eyes of management for any walkouts; the heavy hand is not always possible, depending upon the militancy of the lay officials involved. However the existence of some thirty branches in the larger steel works has the effect of making disputes extremely sectional and – as in other continual process industries – presents each branch with the almost impossible task of winning the support of branches further down the line whose grievances are unlikely to be identical. It is this, combined with the constant collaboration with management throughout the history of the union, that has made the industry relatively immune from widespread stoppages. The rise of the craftsmen’s unions in recent years (1956 and 1962) in major stoppages due to widening differentials will require a further article.

The subordination of the supposedly neutral British State machinery to the skilled manipulation of steel employers has been accomplished, regardless of the government in power, by conceding State control bodies to the high ranking personnel of the industry itself. Failing this, such bodies faced with the non-cooperation of the industry have invariably had to comply with the major decisions of either the individual firms or of their representative body, the BISF. One such example is the 1930s Import Duties Advisory Committee, which in return for a ten per cent tariff imposed against the imports of European steel attempted to enforce the rationalisation and relocation of individual firms. It failed to get the industry to develop an integrated mill in the depressed town of Jarrow, and though it gained acceptance of some price controls, the purpose of these was vitiated by the setting up within the industry of a system of Spread-over-Funds, Scrap Levies and Ingot Levies. Through controlling the price structure IDAC had hoped to force the inefficient firms into modernisation plans, or out of business. The levy system promulgated by the BISF under Sir Andrew Duncan enabled the high cost firms to stay in business by spreading their costs among the efficient low cost producers. IDAC’s feeble response was to allow the levy charges to be passed on to the consumers as part of increased prices. Other examples of the way State control bodies became used to protect the industry can be cited in the way the Ministry of Supply’s Iron and Steel Control Department was manned during the war. Of the 46 posts in the Control, all but one, the Director of Transport, were held by personnel seconded from private firms or associations of firms. [3] Deficiencies in crude steels during the war were made up from US imports amounting to between 15 and 25 per cent of requirements while home producers concentrated on the more remunerative production of high quality steels. The government invested £60 millions in the development of these products during the war while supplementing the industry’s capital with subsidies. Rates of profit ran at a steady 11 per cent during the war, maintaining the pre-war levels despite the drastic increases in ore costs, freight and labour and the re-employment of obsolete plant.

Ross details the post-war obstructions placed by the industry in the path of Labour’s half-hearted attempt at nationalisation. The bosses’ strike against the nationalised Iron and Steel Corporation, in which they were joined by Sir Lincoln Evans, General Secretary of BISAKTA, enabled the real authority in the industry, the BISF, to continue developing its control in accordance with the firms’ wishes by raising funds to cover the costs of continuing inefficiencies. One such fund remunerates firms who have to transport pig-iron, ores and ingots over uneconomic distances due to the haphazard location of their plant. The Steel Company of Wales has only just announced a scheme to redevelop Port Talbot where ore freighters of a mere 10,000 tons can just squeeze in on exceptionally high tides. Only one British port can handle ore cargoes in excess of 25,000 tons. In Europe it is rare to find an ore berth developed to handle less than 35,000 ton cargoes. The list of inefficiencies in British Steel production can be extended indefinitely. The ‘Continuous Casting’ method of forming finished and semi-finished steel products straight from the smelting process, thus eliminating costly stages of storage, transport and reheating was developed in 1947. 20 years later only one twenty-fifth of production is handled by this method.

The indictment of the present industry for its failures is enabling the Left wing of the Labour Party to build up a case for nationalisation. BISAKTA, whose lukewarm attitude at the top contrasts with the growing enthusiasm for nationalisation among the rank and file, can point to its 1931 memorandum declaring in favour of such a policy. However since the wages system in steel production was then geared to a sliding scale based on the selling price, a scheme introduced in 1879, what BISAKTA really sought was increased protection and raised prices as a collaborationist method of raising wages while unemployment in the industry exceeded 30 per cent. Workers’ control did not enter into the memorandum. It was further rejected when advocated by the union’s Scottish Divisional Conference after the last war. It will almost certainly be rejected by Sir Harry Douglass, the present General Secretary and by J.H. Davies, his expected successor in 1967. Under the initiative of Ian Mikardo pressure is being brought to bear on the government to form a Steel Industry Investment Board to achieve rationalisation and prevent private obstructionism before the State takes over.

On the form described in this article it is more likely that the industry will don the State cap, make it fit, and wear it as the steelmasters have always done. The union will be left to discipline the workers, as they have always done, while the rationalisation needed under the pressures of world competition is put in hand. This time voting with their feet will be made impossible by the intervention of the State through the machinery of the law. The rank and file, permanently militant, will have to seek other methods and goals.


1. George W. Ross, The Nationalization of Steel, Macgibbon and Kee, 30s.; B.S. Keeling and A.E.G. Wright, The Development of the Modern British Steel Industry, Longmans, 25s.

2. Keeling and Wright, op. cit., p.124, and Men of Steel by One of Them (Sir Arthur Pugh), p.581.

3. Keeling and Wright, op. cit., p.34.

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