The Shipbuilding Plunderer of Scotland & England : Sir James Lithgow With the help of Montagu Norman, 1st Baron Norman, and the Bank of England, Sir James Lithgow was allowed to buy and close a third of the British Shipbuilding industry with disastrous future consequences. In 1930 National Shipbuilders Securities (NSS – actually NS Security) was created with James as chairman and architect of a scheme to reduce shipbuilding capacity.
William Beardmore and Company owed considerable debt to the Bank of England and its Dalmuir yard was the first to close under the scheme, the proceeds of its liquidation paying off the debt.
Lithgow was the architect of the liquidation and was rewarded in 1934 by being allowed to purchase Beardmore debentures from the Bank of England on favorable terms, taking control of their iron and steel assets.
J.B. Priestley visited the town of Jarrow in 1933 and described the miseries of unemployment –
“Wherever we went there were men hanging about, not scores of them but hundreds and thousands of them.
As the years passed, the unemployed man turned gray. Everyone commented on the grayness of the hard-core unemployed – gray hair, gray stubble, even gray skin. He wore incongruous clothes, perhaps pin-striped trousers cast off and given to charity by a bank manager. He felt he had no dignity. He knew he had no hope.”
Despite this just after the outbreak of World War II, Sir Winston Churchill called James to London, as Controller of Merchant Shipbuilding and Repair and as a Lord Commissioner of the Admiralty.
Churchill spouted some arrant nonsense on his behalf –
I invited Sir James Lithgow to undertake the task of securing us the maximum output of merchant shipbuilding, which is clearly a matter affecting our life and success in war. I am sure that this is the best arrangement that could be made, as in addition to his far-reaching connections with every aspect of merchant shipbuilding, he filled a place in this same Department during the late war with conspicuous success. I proposed that he should receive a salary equal to that of the Controller of the Navy, but he wished to give his services without remuneration. He has also resigned his position upon the Board of National Shipbuilders’ Security, Limited, and has obtained leave of absence, with two exceptions, from the boards of all other companies of which he is either chairman or director.
Sir James is retaining the chairmanship of William Beardmore and Company, Limited, without remuneration. It was thought desirable, in the national interest, that he should do so in view of the importance of this firm to the defense programme. Sir James is also retaining, without remuneration, a directorship of Richard Thomas, on the board of which it is desirable that he should continue to represent the steel industry. In case in his official capacity he should have to place orders with firms in which he has been interested or with which he is still connected, he has requested that the contracts concerned shall be dealt with by another member of the Board of Admiralty. I think we owe a debt to him for coming forward to shoulder this most difficult and anxious task, and we shall owe him a very much greater debt when we get the ships, as I am pretty sure we shall.
That statement may well have read –
“Sir James Lithgow has destroyed one third of our industrial ship building capacity for personal gain. He formed a cabal with the help of the Bank of England to close many famous yards. He enforced the provision that no further shipbuilding could be performed on that site for 40 years, thus removing all hope for the former workers. He also stripped the assets of the former yards on favorable terms for himself.”
Sir James also pounced on another Glasgow yard, The Fairfield Shipbuilding and Engineering Company when it became entangled in the insolvency of the Anchor line in 1935. Using his connections Sir James was able to form with John Brown, Cammell Laird and Coventry Ordnance Works, the Coventry Syndicate. The Syndicate established an almost monopoly on naval work.
Their prime target was foreign orders and they listed ‘warships of all kinds completed.
Parts of warships and their equipment; naval and military armaments and ammunition’ and added, as something of an afterthought ‘merchant vessels, yachts and private vessels of all kinds for foreign ownership to fly a foreign flag”
The damage Sir James was able to inflict on the ailing shipbuilding industry with the connivance of the establishment. He closed a third of the yards, that is fact. He stripped the yards he closed with Beardmore being well documented. This is certainly not conjecture. His ‘sterilization’ of the yards he closed was not economic practice rather more elimination of the competition.
While he was allowed to do this to yards on the Clyde and the North East the usual double standards and machinations by the British establishment were in place.
Harland & Wolff was the biggest basket case at the time and most mismanaged yard with liabilities of £30 million but the Government was not about to allow the biggest employer in Northern Ireland to fail.
Harland and Wolff tottered from crisis to crisis.
At one point they had no cash, a £250,000 wage bill and a £45,000 overdraft allowance. In their desperation to get orders they offered cheap loans to owners, even though they had no cash to lend. It could not last.
Any hopes there might have been of recovery crumbled as Wall Street crashed in 1929. The entire edifice of world trade was shaken and tottered. In December 1931 work stopped almost completely – and from then until May 1934 not a single ship went down the Belfast slipway.
Like others with a religious zeal Sir James donated money to the Church of Scotland, seemingly not finding this at odds with removing mens livelihood for personal gain.