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In the First World War and the immediate postwar boom the capacity of British shipyards expanded and employment in the industry rose to 300,000 workers. Yet this was also the time that foreign rivals began to make significant progress. The difficult trading conditions of the interwar period reduced the demand for new ships and this slump in demand hit all shipbuilding nations, but especially Britain. The British government first came to the aid of the shipbuilders during the 1920s when financial guarantees under the Trade Facilities Acts encouraged construction in British yards.
As depression deepened in the early 1930s the government assisted tramp shipowners in obtaining new tonnage through a scrap and build scheme. The shipbuilders also tried to help themselves. Sir James Lithgow approached Montagu Norman (Governor of the Bank of England) to set up the National Shipbuilders’ Security Ltd (NSS) in 1930 with the intention of reducing capacity by closing redundant yards. NSS secured a core price for the building rights of any yard going into liquidation.
1930 The efforts of both government and industry did no more than see the shipyards through bad times. There was little hope of modernisation. Indeed William Beardmore and Co's Dalmuir yard, perhaps the most modern shipyard in Britain when opened in 1906, was one of the first to be closed by NSS in 1930.
1931-37 Lithgows had controlling interests in nine Clyde yards with the Lithgow Brothers themselves maintaining interests in five of these. In effect, the Lithgow Brothers used NSS to carry out their own process of business rationalisation at Port Glasgow. Consequently, they received a substantial amount of compensation when the Lithgow-owned Inch yard was sold to NSS in 1933 and the site was then closed for forty years.
1935 The Lithgow brothers purchased the Govan Fairfield yard using the compensation money, preventing it from closing.
1935 Workman, Clark and Co went into receivership. The North yard was purchased by National Shipbuilders Security and dismantled during World War II by the Lagan Construction Company. The South Yard started shipbuilding again at the beginning of the war under Harland and Wolff.
1938 National Shipbuilders Security Ltd bought the Irvine's Ship-building and Dry Docks Company (1930) Ltd, dismantled the berths but left the dry-dock and fitting-out quay which was then used extensively during World War II.