Editorial from the January 1929 issue of the Socialist Standard
Socialists do not question the need for organisation in industry. What we do question is that Capitalist argument that industry is, and must be, directed by Capitalists. It is, in the main, already directed by salaried employees, members of the working class. Only in the field of financial operations do we find Capitalists themselves normally engaged and even these operations are more and more being performed by paid employees. The Capitalist class own and control industry. They do not direct it. Recently certain Capitalist politicians and newspapers have disclosed some interesting facts and opinions on the “directive ability” of our masters.
First listen to Mr. Baldwin, speaking at Saint Andrew’s Hall, Glasgow, on November 22nd, 1928 (“Morning Post,” November 23rd) :—
Since the days when private industry gave place to the joint stock company there have battened on the joint stock companies large numbers of men connected with management, and directors, who are parasitical to industry, and nothing but parasitical.
The City Editor of the “Manchester Guardian” (November 26th) commented on Mr. Baldwin’s speech. He wrote:—
It is difficult in public life for a man to continue to hold a post after he has, through age or other cause, become obviously unfit to carry out the duties attaching to it. But in the administration of public companies a far laxer standard prevails. It is almost a matter of tradition that once a man has been elected to a board he shall continue to hold his seat for life, and that, if for any reason his retirement is called for, he is entitled to compensation for loss of an office which, in most cases, is legally terminable by the shareholders without notice.
Then Sir Malcolm Robertson, Ambassador to Argentina, tells us that he knows of —
directors, chairmen, even general managers and passenger traffic managers, of some of the greatest companies connected with Argentina, who have never been in South America. (“Evening Standard,” 11 December.)
Sir Henry Slesser, speaking at Denaby on December 17th, related an incident which recently happened in the House of Commons. He met a man and asked why he was looking so happy. The man replied:—
“Lord X has made me a director in one of his companies.” Sir Henry Slesser asked if the man knew anything about the business of the company, and he replied “ No, but it is worth £500 a year.” (“Daily Express,” 17 Dec.)
It seems, therefore, that directors do not have to know anything about the company, nor do they have to be where the work of the company goes on. If, then, directors do not direct, what do they do?
Mr. E. C. Grenfell, the banker and financier, answers that question. Speaking in the House of Commons, he said (“Hansard,” December 10th, column 1813):—
The conception of a director, merely from his name, is that he directs the company; that he has a large share in appointing people: really, that he knows all about the company. Nothing is more fallacious. A director of most companies is a part-time man who serves the company to the best of his ability by giving advice when asked.
And these "parasites,” these "part-time” gentlemen who “don’t know anything about the company,” but who give advice "to the best of their ability” about companies operating perhaps on the other side of the globe, sometimes get quite well paid. Something like £10,000 a year was paid to the directors of Marconi Company, a company which, according to the Editor of "The Times,” was "scandalously mismanaged.” (“Times,” October 6tb, 1927.)
Eight directors of the Dominion Tar and Chemical Company received £104,000 as “compensation for displacement" when the company was bought up by Canadian interests. ("Daily Express," December 6th.) When the Bodega Company was bought up by Slaters, the directors received £15,000 "compensation.” ("Daily Express," November 30th.)
Two directors of Robert Ingham Clark and Co., paint manufacturers, received no less than £170,000 in similar circumstances, ("Daily Express," December 6th.)
And while we are on the subject of the special ability of our masters, let us turn from industry to the House of Lords, the special preserve of the leisured class. Lord Salisbury, speaking in the House of Lords on November 14th, 1928, said:—
We are called upon to take action because we are conscious that the legislation we are turning out of this House instead of being good is very often bad. It throws an enormous burden upon unfortunate litigants who are the victims of it.
He went on to describe recent legislation as "clumsy, slipshod, incomprehensible and inefficient." ("Daily Mail," November 15th.)
Lord Banbury said that "the greater part of the legislation passed in the last twenty years had better never have been passed."
What would we do without Capitalists to direct industry and hereditary rulers to legislate for us?