SB
C R E T
C.P.(h6)
.30 th. July,
500
C O P Y H O . ^
'\9bfi.
CABINET
IRON AND STEEL:
EST,.3LISHHEUT OP INTERIM COHTROL BOARD
Memorandum b y t h e M i n i s t e r
of
Supply
My c o l l e a g u e s w i l l w i s h t o know t h e p r e s e n t Dosition
c o n c e r n i n g t h e p r o p o s e d e s t a b l i s h m e n t of a C o n t r o l B o a r d t o
s u p e r v i s e the s t e e l i n d u s t r y d u r i n g t h e period, b e f o r e p u b l i c
ownership.
2,
I h a d hoped, t o b e a b l e t o a n n o u n c e t h e m e m b e r s h i p of
t h i s B o a r d i n t h e H o u s e of Commons b e f o r e t h e r e c e s s .
But I
h a v e b e e n b a d l y h e l d up b e c a u s e t h e I r o n a n d S t e e l F e d e r a t i o n ,
a f t e r a n u m b e r o r d i s c u s s i o n s w i t h a e and. my a d v i s e r s , i n t i m a t e d
t h a t , w h i l e t h e y w e r e p r e p a r e d t o c o - o o e r e t c willingly w i t h w h a t e v e r
Government agency was c h a r g e d ! w i t h t h e " c o n t r o l o f " t h e i n d u s t r y ,
t h e y c o u l d not a s s o c i a t e t h e m s e l v e s w i t h membership of t h e
p r o o o c o d C o n t r o l B o a r d , inasmuch as i t would b e p e r t of t h e d u t i e s
of t h e m e m b e r s or t h e B o a r d t o g i v e g u i d a n c e a n d a d v i c e on
t e c h n i c a l unit t o r s e r i s i n g i n r e g a r d "to n . w b i o n s l i o u t i o n . .
1
y
I c o n s i d e r e d , w h e t h e r , i n t h e l i g h t of t h e F e d e r a t i o n s '
a t t i t u d e , I s h o u l d be j u s t i f i e d in a p p o i n t i n g a C o n t r o l Board
c o m p o s e d e n t i r e l y of aien w i t h o u t d i r e c t e x p e r i e n c e o f t h e s t e e l
Industry.
I came t o t h e c o n c l u s i o n , h o w e v e r , ( w i t h t h e
c o n c u r r e n c e o f my c o l l e a g u e s on t h e S o c i a l i s a t i o n of I n d u s t r i e s
C o m m i t t e e ) t h a t b o t h from t h e s t a n d p o i n t of p u b l i c p r e s e n t a t i o n
a n d o f a c t u a l w o r k i n g i t w o u l d b e w r o n g f o r me t o a d o p t s u c h a
c o u r s e , p a r t i c u l a r l y b e c a u s e of t h e i m p o r t a n c e a n d c o m p l e x i t y
of t h e i s s u e s t o b e d e a l t w i t h b y t h e B o a r d .
%
h,
I t h e r e u p o n made some e n q u i r i e s a s t o t h e p o s s i b i l i t y
of o b t a i n i n g o n e o r m o r e men o f f i r s t c l a s s s t a n d i n g f r o m t h e
U n i t e d K i n g d o m s t e e l i n d u s t r y n o t w i t h s t a n d i n g t h e a t t i t u d e of t h e
Federation.
I a s c e r t a i n e d , however, t h a t although, t h e r e i s
r e a s o n t o b e l i e v e t h a t some o f t h e y o u n g e r l e a d e r s of t h e
i n d u s t r y are uneasy at the p o l i c y followed by the F e d e r a t i o n ,
n o o u t s t a n d i n g m e m b e r of t h e i n d u s t r y w o u l d b e p r e p a r e d , i n
v i e w of t h e F e d e r a t i o n ' s a t t i t u d e , t o a c c e p t an i n v i t a t i o n t o
j o i n t h e Board at p r e s e n t .
5.
F o l l o w i n g upon c o n s u l t a t i o n s w h i c h I had w i t h t h e L o r d
P r e s i d e n t of t h e C o u n c i l and. t h e C h a n c e l l o r of t h e E x c h e q u e r ,
t h e P r i m e M i n i s t e r a p p r o v e d t h e i s s u e of on i n v i t a t i o n t o
D r . Van d e r B i j l , t h e ' h e a d of I . S . C . O . R . , t o b e c o m e C h a i r m a n
of t h e B o a r d .
F i e l d M a r s h a l Smuts was good enough t o say t h a t
he w o u l d b e p r e p a r e d t o s n a r e D r . Van d e r B i j l f o r s e r v i c e .
D r . Van d e r B i j l o f f e r e d t o come t o E n g l a n d i m m e d i a t e l y f o r
c o n s u l t a t i o n , w h i l e n o t c o m m i t t i n g h i m s e l f a s t o a c c e p t a n c e of
t h e p o s i t i o n of C h a i r m a n .
6.
D r . Von d e r B i j l h a s now a r r i v e d a n d h a s h a d a n u m b e r
d i s c u s s i o n s w i t h me a n d my a d v i s e r s .
He h a s a l s o s e e n t h e
P r i m e M i n i s t e r , t h e L o r d P r e s i d e n t , of t h e C o u n c i l a n d t h e
C h a n c e l l o r of t h e E x c h e q u e r .
7.
W h i l e n o t g i v i n g a n y f i n a l a n s w e r , D r . Van d e r B i j l
I n t i m a t e d t h a t he would be most r e l u c t a n t to a c c e p t t h e
C h a i r m a n s h i p of t h e B o a r d e x c e p t p e r h a p s f o r a v e r y l i m i t e d
of
has
period
o f two o r t h r e e m o n t h s .
He a g r e e s w i t h my v i e w t h a t t h e
B o a r d s h o u l d c o m p r i s e o n e o r m o r e p e r s o n s of f i r s t r a t e s t a n d i n g
w i t h d i r e c t e x p e r i e n c e of t h e U n i t e d Kingdom s t e e l i n d u s t r y
i f i t i s to f u n c t i o n e f f e c t i v e l y .
He h a s , t h e r e f o r e ,
s u g g e s t e d t h a t he s h o u l u he empowered t o d i s c u s s w i t h t h e
l e a d e r s of t h e i r o n a n d s t e e l i n d u s t r y h e r e c e r t a i n p r o p o s a l s
which, in h i s view, might induce them to a l t e r t h e i r p r e s e n t
a t t i t u d e , o f n o n - c o - o p e r a t i o n i n t h e m a t t e r of m e m b e r s h i p of .
the Board.
.
*
8.
D r . Van d e r B i j l i s s t i l l p r e p a r i n g d e t a i l s of t h e
p r o p o s a l s w h i c h h e t h i n k s m i g h t he a c c e p t a b l e t o t h e F e d e r a t i o n .
I c a n n o t t h e r e f o r e s a y more a t p r e s e n t t h a n t h a t D r . Van d e r
B i j l f e e l s t h a t t h e a t t i t u d e of t h e l e a d e r s o f . t h e i n d u s t r y
m i g h t be m o d i f i e d i f t h e y c o u l d be a s s u r e d t h a t t h e G o v e r n m e n t
p l a n s , while p r o v i d i n g f o r complete Government c o n t r o l i n t h e
l a s t a n a l y s i s , w o u l d a l l o w t h e r e t e n t i o n of a m e a s u r e of
private ownership.
Such a p r o c e d u r e would be b r o a d l y
s i m i l a r to t h a t followed in South A f r i c a .
9.
C l e a r l y i t w i l l be n e c e s s a r y f o r D r . Van d e r B i j l ' s
p r o p o s a l s , when f o r m u l a t e d , t o b e c l o s e l y s c r u t i n i s e d .
In
g e n e r a l I c o u l d n o t r e c o m m e n d t h e a c c e p t a n c e of a n y p r o p o s a l s
which would i n any s e n s e be a s u r r e n d e r t o t h e F e d e r a t i o n , o r
c o u l d b e so r e g a r d e d , o r w h i c h w o u l d b e a c o m p l e t e d e p a r t u r e
from t h e p r i n c i p l e of " t r a n s f e r t o t h e o w n e r s h i p of t h e
n a t i o n o f a p p r o p r i a t e s e c t i o n s of t h e i r o n e n d s t e e l i n d u s t r y "
( t o q u o t e t h e t e r m s of t h e r e s o l u t i o n a d o p t e d by t h e H o u s e o f
Commons o n t h e 2 8 t h M a y ) .
But I have always thought t h a t
p r o v i d e d the Government p o s s e s s e d a b s o l u t e f i n a l v o t i n g
c o n t r o l ( e . g . t h r o u g h a h o l d i n g company) t h e r e w o u l d be much
t o b e s a i d f o r r e t a i n i n g t h e s t r u c t u r e a n d i d e n t i t y of a t
l e a s t the leading companies in the i n d u s t r y , with t h e i r
e x i s t i n g t e c h n i c a l s t a f f s , g o o d w i l l , s e r v i c e c o n t r a c t s and
t h e l i k e , and f o r p e r m i t t i n g a m e a s u r e of c o n t i n u e d p r i v a t e
investment.
I n any such a r r a n g e m e n t s s p e c i a l a t t e n t i o n would
h a v e t o be g i v e n t o s u c h m a t t e r s a s ( a ) t h e r i g h t o f s h a r e ­
h o l d e r s t o d i s p o s e of t h e i r s t o c k i f t h e y d i d n o t w i s h t o
r e t a i n i t under t h e r e v i s e d c o n d i t i o n s which would t h e n o b t a i n
a n d ( b ) t h e s u p e r v i s i o n of t h e d i v i d e n d p o l i c y o f t h e
companies.
10.
W h i l e I c a n n o t y e t s u b m i t a n y d e t a i l e d p r o p o s a l s t o my
c o l l e a g u e s , i t s e e m s t o me t h a t n o t h i n g w o u l d b e l o s t o f
D r . Van d e r B i j l w e r e a u t h o r i s e d t o d r a w u p p r o p o s a l s o n t h e
l i n e s w h i c h h e h a s i n m i n d , on t h e u n d e r s t a n d i n g t h a t
( a ) i n s o f a r a s he h a s any p r e l i m i n a r y d i s c u s s i o n s w i t h t h e
I r o n a n d S t e e l F e d e r a t i o n t h e s e m u s t b e on t h e b a s i s t h a t
he h a s no a u t h o r i t y from t h e Government t o n e g o t i a t e any
p r o p o s a l s and (b) t h e Government w i l l r e s e r v e t h e f u l l r i g h t
t o r e j e c t h i s p r o p o s a l s i f t h e y a r e c o n s i d e r e d to be
i n c o m p a t i b l e w i t h t h e b r o a d l i n e s of p o l i c y a p p r o v e d b y
P a r l i a m e n t i n May.
11.
I t h e r e f o r e a s k my c o l l e a g u e s t o a g r e e t h a t I s h o u l d
a u t h o r i s e D r . Van d e r B i j l t o p r o c e e d a s r a p i d l y a s p o s s i b l e
to formulate h i s proposals for the Government's consideration.
In o r d e r to save time I s u g g e s t t h a t a u t h o r i t y s h o u l d be g i v e n
t o t h e L o r d P r e s i d e n t o f t h e C o u n c i l , t h e C h a n c e l l o r of t h e
E x c h e q u e r a n d m y s e l f t o e x a m i n e D r . Van d e r B i j l ' s p r o p o s a l s
when p r e s e n t e d a n d , i f we r e g a r d t h e m a s g e n e r a l l y a c c e p t a b l e ,
t o a u t h o r i s e him to d i s c u s s them f u r t h e r w i t h t h e F e d e r a t i o n
a s a p o s s i b l e modus v i v e n d i w h i c h , w i t h o u t c o m p r o m i s i n g any
e s s e n t i a l p r i n c i p l e , w i l l s e c u r e t h e i r c o - o p e r a t i o n on t h e
proposed Control Board.
J.
M i n i s t r y of S u p p l y ,
30th J u l y , 1946.
S.W.1.,
W.