In the decade to 1939, the NSS purchased and closed around a third of British 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 favourable terms, taking control of their iron and steel assets. It was at Beardmores that James spotted young engineering manager Ian MacGregor who broke a strike by driving a crane himself for two weeks. James accelerated his career and MacGregor went on himself to be a major industrial figure. James now focussed his rationalising zeal on the steel industry. The Lithgows owned James Dunlop & Co. and they opened talks with John Craig to merge their business with his Colville Group. The merger was finalised in 1931. In 1934 the Bank of England helped the Lithgows to buy the Steel Company of Scotland for £672,975 (£30.46 million at 2003 prices)). In 1936 the brothers sold the company to Colville for £951,750 {42.54 million at 2003 prices), the profit being donated to the Church of Scotland. Again, contacts with Norman and Duncan in 1935 allowed the Lithgows to purchase the Fairfield Shipbuilding and Engineering Company which was entangled with the insolvency of the Anchor Line. James and his brother believed in their responsibility to invest in Scotland and James was active in attracting industry and fostering development within the region. Henry's focus on the day-to-day business enabled James to take a more public role (he retained his TA commission until retirement in 1938). In 1940, just after the outbreak of World War II, Sir Winston Churchill called James to London, again as Controller of Merchant Shipbuilding and Repair and as a Lord Commissioner of the Admiralty. He also had a brief responsibility for tank production and worked with Harold Macmillan on the industrial capacity committee of the production council. He served as President of The Institution of Engineers and Shipbuilders in Scotland from 1929 to 1931. From 1943 to 1945 he was president of the Iron and Steel Federation, while still remaining active in Beardmores and Fairfields. In 1943 he became Vice Lieutenant of Renfrewshire. In the 1945 New Year Honours he was appointed a Knight Grand Cross of the Order of the British Empire (GBE), and in the 1947 King's Birthday Honours he was made a Companion of the Order of the Bath (CB).