Baldwin's Pennies

Prime Minister Stanley Baldwin betook his homespun, sterling self to Manchester, last week, and spoke words of chastening counsel. Addressing a potent luncheon group of Lancashire cotton tycoons he pointedly intimated that the capital structures of many of their firms are topheavy and must be scaled down. As he often does, Mr. Baldwin took his text from the iron & steel industry which is the basis of his family fortune, and spoke with a certain rugged candor thus: "I am going with my own trade, the steel trade, through deep waters. Most of what I had was in that industry, and for every shilling I had when I took office I have something under a penny today.* . . . There is only one way out. In steel, as in other industries, there will have to be with many firms a radical reconstruction of capital. The capital will have to come down until it represents live assets.

"All parties will have to make sacrifices and maybe the banks also. For a bank it is better to have a live customer on the books than a corpse. Until you get an industry on a sound basis you cannot move forward half an inch and you will never get fresh capital, enthusiasm or anything, and nothing but ruin stares you in the face. No Government can help in this cutting out of deadwood."

Knowing that the cotton executives before him are embroiled in a wage dispute with 400,000 Lancashire mill employes, the Prime Minister concluded warmly: "The record of partnenship in the cotton trade between capital and labor is a very great one. You have stood together. The men who work for you today are the grandsons of the men who tightened their belts and helped to carry Lancashire through the days of the Civil War in America. Think two or three times before you sacrifice a position like that."

* Arithmetically speaking this would mean that within five years the Prime Minister has lost eleven twelfths of his fortune.