Finance and Industry: The Misleading Mortgage

A lot of fuss has been generated about the LCC’s proposal to grant 100 per cent, mortgages. We really don’t know why. The people who could hardly wait to join the queues outside London’s County Hall are likely to find they are possessed of more hope than hard cash—and it is hard cash that will still be needed under this new scheme.

In the first place, the 100 per cent, mortgage is not to be related to the asking prices of enthusiastic estate agents, but to the LCC’s own, more realistic, valuations. This will mean in many cases that the prospective buyer will still need to find a fair amount of ready cash to bridge the gap. And he will still have to find the wherewithal to pay his legal expenses and other costs.

So far the LCC have allocated about £2¾ million to meet the cost of the scheme. This is sufficient to satisfy only a thousand applicants for houses costing about £2,750, and nobody can say he is going to get anything wonderful for this sum these days. The Council may increase the allocation in due course, but it is already obvious that whatever sum is finally allowed it will be no more than a drop in the bucket in the present housing situation.

There has been talk that pressure may additionally be brought to bear on the building societies to follow the LCC lead. If so, this is hardly likely to get very far. Building societies are of all capitalist financial institutions probably the most reluctant to stray from the safe and steady road of profitable investment. Not too much profit—but not too much worry—is their policy.

In short, we have an idea that the overwhelming majority of house-hungry members of the working class are going to find the LCC scheme yet another of capitalism’s disappointments, all the harder to bear because of the high hopes it has raised.

The recent outbreak of typhoid fever in Zermatt has caused the deaths of several innocent tourists and the illness of many others. It has given the Swiss tourist industry a severe knock, and Zermatt itself will take years to recover as a popular holiday resort. In the meantime, its hoteliers and shopkeepers are going to have a very hard time of it financially and there are not many outsiders, judging the facts of the case, who would not say that it serves them damned well right.

Zermatt was an expanding resort, a boom town of the Swiss tourist industry. Every year the influx of tourists grew bigger, the hotels more plentiful, the profits more encouraging, and the water supplies more precarious. But the water supplies could wait; in any case they were expensive and expense was begrudged. The main thing was to build, build, build; attract more and more visitors; make more and more profit. Even when the dreadful fact became known that the water was contaminated with one of the most dangerous diseases known to man, nothing was done about it. Tourists still continued to be attracted to the town. The germs continued to spread until one day Zermatt woke to find it had encouraged an epidemic.

This sort of thing happens all the time under capitalism, but only now and again do events really catch up with the perpetrators—a cable break, an aeroplane with a defect, an over-congested aerodrome, a collapse of a jerry-built house, an accumulation of a lethal pesticide, a “wonder drug” that does not cure but kills, the drinking water of a boom town that contains typhoid.

Only when these dreadful events occur do we realise just how revolting, how utterly pernicious in its effects upon human beings, is the capitalist profit motive. The Zermatt case reveals this in all its baseness. It was the sordid lust for profit, and nothing else, that caused the deaths and illness of those trusting but unfortunate tourists.

When the Allies got to work on German industry after the war, they made a brave show of doing something about the Krupps, the Thyssens, and the other steel barons. Their huge empires were broken up as “politically dangerous concentrations of economic power”; never again were they to come together to help threaten the peace of Europe.

Alas, as usual, capitalism quickly disposes of such naive intentions. The news is announced that Thyssens and Phoenix Rheinrohr are to come together again, just as they did in 1926 when they formed themselves into Vereinigte Stahlwerke.

The new merger will result in a firm employing 80,000 workers and selling £400 million of steel and steel products a year, the biggest turnover of all West German industry except Volkswagen. It will become the biggest single steel producer in Europe and a formidable competitor for the others.

Yet another example of the intrinsic drive for capitalism’s units to get bigger and bigger—and in spite of difficulties deliberately put in the way.

As firms get bigger and bigger, so do the smaller ones go to the wall. This also applies to movements within the firm itself.

The new assembly plant being rapidly developed at Liverpool, plus the existing factory at Dagenham, gives Ford’s two modern large-scale car-producing units. They also have a plant at Doncaster, which they got when they acquired Briggs Motor Bodies.

This factory has been quite happy to produce about 75,000 cars a year. But 75,000 is nothing in the car industry nowadays and so Doncaster will have to go. About 2,600 workers will be affected and will either have to take work at Liverpool or Dagenham, or take a chance at getting a job locally. This won’t be easy because Doncaster is also a rail town and is already beginning to feel the edge of the Beeching axe.

That’s another thing that happens in these mergers and “rationalisations.” They bring economies in workers as well. It’s an essential part of the whole idea, of course.