The development of british industry and foreign competition, 1875 1914 studies in industrial enterprise (reprint)

THE DEVELOPMENT OF BRITISH INDUSTRY sector, particularly in banking, insurance, shipping and distribution, developments were probably more spectacular than they had ever been.1 On the ot

THE DEVELOPMENT OF BRITISH INDUSTRY AND FOREIGN COMPETITION

1875-1914

THE DEVELOPMENT OF

BRITISH INDUSTRY

AND FOREIGN COMPETITION

Reprinted in 2018 ISBN 978-1-4875-7221-1 (paper)

FIR ST PUBLISHED IN 1968

This book is copyright under the Berne Convention Apart from any fair dealing for the purposes of private study, research, criticism or review, as permitted under the Copyright Act, 1956, no portion may be reproduced

by any process without written permission Enquiries should be addressed to the publisher

© George Allen & Unwin Ltd 1968

First published in Canada 1968 by University of Toronto Press

PRINTED IN GREAT BRITAIN

in JO on 11 point Times Roman type

SIMSON SHAND LTD LONDON, HERTFORD AND HARLOW

D.H.A

CONTENTS

1 Introduction: British Industry and Foreign Competition, 11 1875-1914

by D H Aldcroft, Lecturer in Economic History, University of Glasgow

2 The Coal Industry

by A J Taylor, Professor of History, University of Leeds

3 Iron and Steel Manufactures

by P L Payne, Senior Lecturer in Economic History, University of

Glasgow

37

71

by R E Tyson, Lecturer in Economic History, University of Aberdeen

5 The Woollen and Worsted Industries

by E M Sigsworth, Reader in Economic History, University of York

and J M Blackman, Lecturer in Economic History, University of Hull

6 Boots and Shoes

by P Head, Principal Planning Officer, Staffordshire County Council

7 The Engineering Industry

by S B Saul, Professor of Economic History, University of Edinburgh

8 Electrical Products

by I C R Byatt, Lecturer in Economics, London School of Economic

and Political Science

9 Chemicals

by H W Richardson, Senior Lecturer in Economics, University of

Aberdeen

10 The Glass Industry

by T C Barker, Professor of Economic History, University of Kent

11 The Mercantile Marine

CHAPTER 1 INTRODUCTION:

BRITISH INDUSTRY AND FOREIGN

COMPETITION, 1875-1914

I

IN the last few years the period 1870-1914 has become as popular

as the classical industrial revolution as a field for scholarly study This has resulted in a flood of literature, more especially in article and monograph form, on various aspects of the late nineteenth century economy of Britain Much of the new work is quantitative and analytical rather than descriptive in character and it is devoted largely to examining movements in, and the interaction of, key economic variables In effect it provides a new or more dynamic approach to the study of economic history and to a large extent it has developed logically from the increasing attention devoted to problems of long-term growth in the past few years.1 Yet although

it has provided a much clearer picture, in aggregate terms, of the pattern or course of development of the British economy in these years, the studies themselves have thrown up many new problems

as to the particular causes or factors which determined the pattern

of development which took place

In fact, most scholars would agree that we are now much better acquainted with the dimensions of Britain's growth in the later nineteenth and early twentieth centuries than we are with the factors which determined it 2 There is no question that in absolute terms Britain's economic growth was quite substantial throughout this period Even during the so-called Great Depression most of the major economic indices moved upwards.8 Moreover, in the service

1 The literature is too extensive to list here and in any case many items will

be cited later on in the text

1 Though even in this respect there is still room for disagreement See D J Coppock, 'British Industrial Growth during the "Great Depression" (1873-96):

a Pessimist's View', Economic History Review, December 1964, and • •.• a Balanced View' by A E Musson in the same issue

• A E Musson, 'The Great Depression in Britain, 1873-1896: A Reappraisal',

Journal of Economic History, June 1959, p 199

11

THE DEVELOPMENT OF BRITISH INDUSTRY

sector, particularly in banking, insurance, shipping and distribution, developments were probably more spectacular than they had ever been.1 On the other hand, recent writers have drawn attention to the fact that rates of growth of the major economic variables were declining in this period and that in comparison with those of other industrial countries (more especially Germany and America) our performance appears somewhat unsatisfactory Certainly growth rates were probably lower than in the first half or so of the nine-teenth century but it would be difficult to make out a case for continuous deceleration in economic growth during this period 2 Rates of growth do fall off as Table I shows but the retardation or deceleration is by no means continuous or identical for all the main variables For example, between the 1870s and 1880s rates of growth

of industrial production and productivity turned down whereas total output per man-hour and real income per head rose quite sharply Even in the early twentieth century (1900-13), when most

of the growth rates show a decline compared with the 1890s, exports staged a remarkable recovery It has also been suggested that Britain's rates of growth were lower than those of her chief com-petitors, namely the United States and Germany International comparisons are difficult in this respect because of the obvious limitations of the data, but the evidence available does tend to lend support to this conclusion From Table II it can be seen that in every case Britain's long-term rates of growth were lower than those

of either America or Germany, and in some cases below those of France

It is incorrect therefore to speak of a continuous or steady decline in the rate of economic growth during this period though

it is clear that there was a break in trend or climacteric in Britain's growth rates during the later nineteenth century The exact timing

of the break is somewhat debatable though most commentators would probably agree that it occurred either in the 1870s or in the 1890s This point is, however, the subject of far less dispute than are the actual causes of the climacteric or retardation in growth

In recent explanations of the climacteric considerable attention has been paid to British industry and exports since these appear to have

1 The retail trade in particular was subject to vast changes in this period parable to those which had taken place in manufacturing production during the industrial revolution See W Ashworth, An Economic History of England, 1870-'-

com-1939 (1960), p 137

1 Cf H W Richardson, 'Retardation in Britain's Industrial Growth, 1913', Scottish Journal of Political Economy, June 1965, p 128

1870-12

INTRODUCTION TABLE I: Average Annual Rates of Growth of Selected Economic Indices

(UK)

Total Output Real Industrial Per Income Industrial Produc- Exports Man-hour Per Head Production tivity

Sources: A Maddison, Economic Growth in the West (1964), p 232; B R

Mitchell and P Deane, Abstract of British Historical Statistics (1962), pp 367-8;

K S Lomax, 'Growth and Productivity in the United Kingdom', Productivity Measurement Review, August 1964, p 6; E H Phelps Brown and S J Handfield- Jones, 'The Climacteric of the 1890s: A Study in the Expanding Economy',

Oxford Economic Papers, October 1952, pp 294-5; A H Imlah, Economic Elements in the Pax Britannica (1958), pp 96-8

UK

us

Germany

France

TABLE II: Long-term Rates of Growth, 1870/71-1913

(per cent per annum) Total

Output

2·2 4·3 2·9 1·6

Output Per Industrial Industrial Man-hour Production Productivity

1·5 2·3 2·1 1·8

2·1 4·7 4·1 3·1*

0·6 1·5 2·6t n.a

• 1880 1913 t Rough estimate only

Exports

1913) 2·2 3·2 4·3 2·6

(1880-Sources: Output and export data based on A Maddison, Economic Growth in the West (1964), pp 201, 232, and 'Growth and Fluctuation in the World Eco- nomy, 1870 1960', Banca Nazionale de/ Lavoro, June 1962, p 185 Industrial production and productivity data calculated from: (for UK} K S Lomax, 'Growth and Productivity in the United Kingdom', Productivity Measurement Review, August 1964, p 6, and E H Phelps Brown and S J Handfield-Jones, 'The Climacteric of the 1890s: A Study in the Expanding Economy', Oxford Economic Papers, October 1952, pp 294-5; (for us) J W Kendrick, Productivity Trends in the United States (1961), p 465; (for Germany) P Jostock, 'The Long-

term Growth of National Income in Germany', Income and Wealth, ed S Kuznets, V (1955), p 103, and D J Coppock, 'The Climacteric of the 1890s:

A Critical Note', The Manchester School, January 1956, p 24; (for France) S J

Patel, 'Rates of Industrial Growth in the Last Century, 1860 1958', Economic Development and Cultural Change, April 1961, p 319

13

THE DEVELOPMENT OF BRITISH INDUSTRY

been the weakest components of the economic structure, though it may be that this merely reflects the fact that more is known about these particular sectors of the economy Phelps Brown and Hand-field-Jones, for example, in their pioneering article in 19521 attri-buted the check to real income to the falling off in the rate of growth of industrial productivity, which in tum they argued was due to the ending of the massive application of one or two major innovations, notably steam and steel A similar line has been taken

by Richardson, who argues that a 'discontinuity in the flow of major innovations' was the chief causal factor in the retardation in industrial growth 2 Meyer and Coppock on the other hand focus their attention on the export trade Meyer has argued that the decline in British export growth in the last quarter of the nineteenth century was more than sufficient to account for the slower rate of growth in these years.3 Coppock's argument is basically similar though slightly more complex The sequence runs as follows: if exports are regarded as an autonomous variable then the decline in the rate of growth of exports explains a decline in the rate of production and in the required rate of investment And given a reduction in the rate of investment, a decline in the rate of growth will follow In short he says the decline in productivity in the UK

after the 1870s and its low level compared with the United States and Germany is to be found in the low rate of capital accumulation

in industry brought about by a check to the growth in exports.4

Not all would agree, however, with the causal sequence of this argument Kindleberger, for instance, maintains that the hypothesis

is incorrect since it assumes that the pattern of exports would remain unchanged, and concludes that the line of causation runs from the economy to exports rather than the other way round 6 Yet other writers have stressed the slowing down of technical progress.in industry and the shortcomings of British entrepreneurs}'

1 E H Phelps Brown and S J Handfield-Jones, 'The Climacteric of the 1890's:

A Study in the Expanding Economy', Oxford Economic Papers, October 1952

2 Richardson, foe cit., p 148

1 See 'An Input-Output Approach to Evaluating British Industrial Production

in the Late Nineteenth Century' in A.H Conrad and J R Meyer, Studies in Econometric History (1965)

'D J Coppock, 'The Climacteric of the 1890's: A Critical Note', The chester School, January 1956

Man-5 C P Kindleberger, 'Foreign Trade and Economic Growth: Lessons from Britain and France, 1850-1913', Economic History Review, 1961, pp 293-8

• See D H Aldcroft, 'The Entrepreneur and the British Economy, 1870-1914',

Economic History Review, August 1964, and 'Technical Progress and British Enterprise, 1875-1914', Business History, July 1966 See also D S Landes,

14

INTRODUCTION

The above by no means exhausts the list of possibilities and, of course, the debate still continues.1 It would be inappropriate, how-ever, to try and resolve the arguments here But it is important to draw attention to them since they cover problems or aspects of the British economy which were not unfamiliar to informed contem-porary observers After all, the Victorians themselves began the debate about the late nineteenth century economy; and although contemporary spokesmen were never in a position to make the sophisticated statistical analysis performed by economists and eco-nomic historians of today, they were nevertheless acutely aware of the fact that the British economy was not functioning as smoothly

or dynamically as it had done in earlier decades and that economic progress appeared to be somewhat slower than in either Germany

or America Again, however, it was British industry and the export trade in particular which provided the chief centre of attention

In fact, contemporaries saw the shortcomings of the British economy largely in terms of industry and trade, and as a result British businessmen and traders bore the brunt of the critical attacks made by writers in the national press, in the trade journals and in the flood of books and articles devoted to matters of trade and industry Even industrialists who sat on official government committees or commissions signed reports which made derogatory remarks about their business colleagues The backsliding of the economy, it was argued, could be ascribed largely to the fact that British industrialists lacked the drive and energy of their fore-fathers, and as a result, foreign rivals were stealing a march over them 2 Particular attention was paid to the way in which the Germans and Americans were encroaching upon Britain's overseas markets and even, for that matter, upon the domestic market It was realized, of course, that as new industrial powers matured Britain's former commercial monopoly was bound to come under 'Technological Change and Development in Western Europe, 1750 -1914', esp

p 458 et seq in Vol VI of The Cambridge Economic History of Europe, ed H.J Habakkuk and M M Postan

1 There is a useful summary of the current debate in C Wilson, 'Economy and Society in Late Victorian Britain', Economic History Review, August 1965

1 One example will suffice Shadwell, concluding his two-volume survey on Industrial Efficiency, wrote: 'England is like a composite photograph, in which two likenesses are blurred into one It shows traces of American enterprise and

of German order, but the enterprise is faded and the order muddled They bine to a curious travesty in which activity and perseverence assume the expres- sion of ease and indolence The once enterprising manufacturer has grown slack,

com-he has let tcom-he business take care of itself, while com-he is shooting grouse or yachting

in the Mediterranean.' A Shadwell, Industrial Efficiency, Vol II (1906), p 453

15

THE DEVELOPMENT OF BRITISH INDUSTRY

attack; nor were contemporary observers wholly uncritical of the so-called sharp practices of the foreigner Such captions as the 'German Peril', the 'German Menace' or the 'American Invaders' were hardly meant to be laudatory Yet at the same time there was

in this country a sneaking admiration for the apparent ability and dynamic qualities of the foreign businessman and a general feeling that our industrialists fell short of his standards of performance and achievement.1

If foreign industrialists were admired they were not, however, liked by the British public who sought in an indirect way to avenge their animosity by attacking the British industrialist for not match-ing up to his rivals across the water In other words, the literature which was written was basically self-critical and was meant to act

as a warning to the industrialist that if he did not wake up Britain would soon become a second rate economic power Stinging attacks were launched in books such as E E Williams's Made in Germany

(1896), McKenzie's American Invaders (1902) and Shadwell's trial Efficiency (1906) and in numerous articles in the national press and journals, the most famous of which was the 'Crisis in British Industry' published in The Times in 1902 Even foreign writers joined in the campaign, the most notable being the economist Thorstein Veblen, whose book Imperial Germany and the Industrial Revolution (1915) contained a section devoted to examining the deficiencies of British businessmen Much of the writing was journalistic in style and not without a certain amount of prejudice since many of the authors were bent on pressing home their par-ticular points of view Yet their judgments were by no means entirely inaccurate since even the more scholarly and analytical accounts contained similar conclusions For example, Alfred Mar-shall in his Industry and Trade (1919) expressed disquiet about certain features of British industry and issued judgment against the British businessman

Indus-There could hardly fail to have been an element of truth in what was said at the time since informed opinion was almost unanimous

on the question Wherever one looks-be it in the national press, the trade journals, consular reports or government committee reports-the same comments can be found Industrialists sought to defend themselves from these attacks though not always very suc-cessfully In some respects, however, it was perhaps a little unfair

1 See D E Novak and M Simon, 'Commercial Responses to the American Export Invasion, 1871-1914: An Essay in Attitudinal History', Explorations in Entrepreneurial History, Winter 1966

16

INTRODUCTION

that the burden of responsibility for the apparent shortcomings of the British economy should have been placed entirely on the indus-trialists' shoulders since it was not always clear exactly what they were being blamed for Critics confined their attention largely to trade issues since they were alarmed at the way in which Britain appeared to be losing customers and markets to foreign rivals But

at the same time no one could say precisely what our overall losses were in relation to the gains of other countries Nor was it possible

to state in aggregate quantitative terms how the British economy was making out in comparison with the performance of other industrial economies Even contemporary economists, whose atten-tion was focused on marginal analysis and value theory, which, with its assumptions of static technology, tastes and resources, did not depend on economic time series for its content, found, as Kendrick has observed, that they were sometimes handicapped or misled by the lack of precise quantitative data in an aggregative form.1 Yet though much of the raw material for making the neces-sary calculations was available, economists made little attempt to fill the statistical gap It is not surprising, therefore, that in the absence of such numerical data judgments made about the working

of the economy tended very often to be impressionistic rather than analytical, and statistical data, what there was of it, was smothered

by a welter of literary verbiage

II

Was foreign competition in industrial and manufactured products

as severe or as extensive as contemporaries often alleged? It is difficult to obtain a balanced view of the situation from the rather impressionistic accounts of the Victorians, though in some respects their assessment of the position was not very wide of the mark They were correct, for example, in assuming that competition prevailed in most markets, including the domestic market, and that America and Germany were Britain's most powerful and successful rivals in the commercial field The following comments are intended

to give some idea of the dimensions involved

As far as British exports were concerned there was little ground for undue complacency Although the export component of the British economy still remained substantial in these years, the growth

of manufactured exports was less rapid than that of either Germany

or America or the average for the world as a whole These two

1 J W Kendrick, Productivity Trends in the United States (1961), p 4

17

TABLE 111: Exports from UK and Other Industrial Countries, 1899-1913

(million dollars at 1913 prices)

tures Exports tures Exports tures Exports tures Exports m <

INTRODUCTION

countries accounted for a large proportion of the increase in world trade in manufactured products Between 1899 and 1913, for example, America and Germany accounted for nearly one-half of the increase in exports of manufactured products from the major industrial countries (see Table III) It is true that the absolute increase in the volume of British exports of manufactured goods was quite substantial, but as Table III shows, the percentage increase in Britain's exports to the three main groups of markets was far less than either the American or German Britain's per-formance in the markets of industrial countries was particularly disappointing, especially in comparison with Germany The latter more than doubled her exports of manufactured products to this group of countries (as against an increase of less than one-third for Britain) and by 1913 her total exports to these markets exceeded those of Britain by nearly one-third The comparison is even more invidious to Britain if all exports are taken as the basis of measure-ment

Clearly Britain was finding it difficult to penetrate the rich and rapidly expanding markets of industrial Europe and America In part this could be explained by the spread of tariff protection in these countries, but the chief factor was undoubtedly the increasing competition British goods faced from both domestic and foreign producers In the American market, for example, Britain's com-petitive losses were substantial especially between the 1870s and 1890s when exports in almost every major category of manufac-tured goods fell substantially Only part of this loss can be attri-buted to competition from American producers since over the period 1872-74 to 1911-14 exports from industrial Europe to America rose by over 80 per cent.1 Moreover, the fact that other industrial countries were able to increase their share of the American market suggests that it was competition rather than tariff protection that was the major cause of Britain's trade losses

in these markets

Britain's trade setbacks were by no means confined to the richer markets In the more underdeveloped areas of the world Britain's export performance was weakening under the impact of foreign competition Some of Britain's traditional customers were beginning

to produce the goods they had once bought from Britain; the most notable example was the growth of cotton textile mills in many primary producing countries But to a large extent it was the sale

1 S B Saul, 'The Export Economy, 1870 1914', Yorkshire Bulletin of mic and Social Research, May 1965, p 6

Econo-19

THE DEVELOPMENT OF BRITISH INDUSTRY

of German and American products rather than the growth of domestic production which presented the major competitive chal-lenge in these markets Germany, in particular, was extremely successful and by 1913 she was exporting more than Britain to the primary producing countries (Rest of World, see Table III) Only

in the markets of the semi-industrial countries did Britain continue

to maintain a substantial lead and even this was being challenged

by the early twentieth century The Germans and to a lesser extent the Americans were, it would appear, just as adept at gaining entry

to the more underdeveloped countries where traditional goods were most in demand as they were in exploiting the protected markets

of Industrial Europe and America.1 Thus in a group of fifteen manufactures, British exports to protected foreign markets in-creased by 44 per cent between 1895 and 1907 whilst those of Germany and America rose by 125 and 500 per cent respectively The same exports to identical markets in the British Empire regis-tered an increase of 91 per cent for Britain as against 129 and 359 per cent for Germany and the United States During this period American manufactured exports secured a firm foothold in some

of the Empire countries, and by 1913 America was slightly ahead

of Britain in the West Indian market whilst her exports to British North America were nearly three times greater than those of this country.2 Similarly, whilst German exports to Europe rose faster than those of Britain from the early 1890s onwards, and by 1913 Germany was selling more to nearly every European country and

to America than Britain, she was also expanding her trade more rapidly with many underdeveloped countries, e.g Russia, Rou-mania, Serbia, Greece, Spain, Portugal, Turkey and Latin America.3 Here Britain found it increasingly difficult to compete not only with Germany's liberal credit-loan arrangements but also with the latter's ability to introduce inexpensive merchandise to meet local demands

The penetration of foreign competitors into the markets of the British colonies or Empire countries is significant since it was here that British goods were accorded some degree of preference The extent of foreign competition should not be exaggerated, however

1 A pioneering work by Hoffman in the early 1930s showed how extensive German competition was in some of the underdeveloped countries See R J S Hoffman, Great Britain and the German Trade Rivalry, 1875-1914 (1933)

• R H Heindel, The American Impact on Great Britain (1940), pp 143, 164,

167

1 Hoffman, op cit., p 130 et seq

20

INTRODUCTION

True, the colonial territories were steadily increasing the proportion

of their imports which came strictly from foreign markets during this period Even as early as 1894 one-third of the total colonial imports were said to be of non-British origin as against one-quarter ten years earlier Moreover, by the end of the nineteenth century

38 per cent of all colonial imports were affected by foreign petition to some degree.1 But in actual fact, apart from one or two exceptions such as America's domination of the Canadian market, the share of colonial imports derived from any one of Britain's chief commercial rivals was generally fairly small Even Germany, reckoned to be the most serious rival in these markets, contributed only a very modest proportion, the value of her export trade to the British Colonial and Dominion countries being less than 5 per cent

com-of the UK's at the end com-of the nineteenth century In many colonial areas German competition was very slight indeed, and even in those areas where it was important, such as Australia and the Cape Colony, the volume of trade was still well below that of the British

Of course, foreign participation was increasing all the time, but even by 1914 it could hardly be said that Britain had lost a great deal of her Empire trade to foreign competitors

It is clear then that British exporters found trade conditions much less favourable in the later nineteenth and early twentieth century than they had been earlier The degree of competition in manufactured exports varied a great deal between products and regions but the overall effect was to reduce Britain's share of world trade substantially By 1913 her share of world exports in manu-factured goods had fallen to 29·9 per cent as against 41 ·4 per cent

in 1880 Over the same period the German share had risen from 19·3 to 26·5 per cent and the American from 2·8 to 12·6 per cent Moreover, in nearly every major commodity group except drink and tobacco and other :finished goods Britain's share of exports fell,

in some cases substantially, over the period 1880-1913.2 One should be careful not to exaggerate the position, however In 1913 Britain was still the largest exporter in the world, though only by

a small margin, whilst her share of total world exports fell much less dramatically in this period than that for manufactured com-modities 3

1 Ibid., p 198

2 For details see Saul, Toe cit., pp 12-13

• From 16.7 to 13.9 per cent, 1885-1913 See A Maddison, 'Growth and Fluctuation in the World Economy, 1870 1960', Banca Nazionale de! Lavoro Quarterly Review, June 1962, p 161

21

THE DEVELOPMENT OF BRITISH INDUSTRY

The evidence suggests that Britain's relative trade losses were largely due to competitive factors rather than to shifts in the com-modity and area composition of trade According to Maizels's calculations Britain lost $380 million worth of trade in manufac-tures between 1899 and 1913 nearly all of which could be attributed

to changes in market shares On the other hand, most other trial countries increased their market shares in this period Germany

indus-in particular gaindus-ined $330 million of trade through an improvement

in her competitive position.1 Given the industrialization of new nations and strengthening of tariff barriers especially in the richest markets, it was partly inevitable that Britain should lose the pre-dominant position she had held as a trader in the 1860s and 1870s But the inevitability argument can be stretched too far It is highly improbable, for example, that tariffs were a major factor in Britain's trade losses Certainly they created less favourable trading oppor-tunities and at times, as with the McKinley tariff in America in the early 1890s, they caused a sharp drop in the exports of certain commodities But overall tariffs had only a marginal effect on the volume of British trade since they were rarely raised to prohibitive levels In any case the restrictive effect of tariffs was considerably modified by virtue of the fact that Britain concluded a whole series

of trade agreements with foreign countries, nearly all of which contain the most favoured nation clause 2 Moreover, the fact that other industrial nations, particularly Germany and America, were able to cope more successfully with tariff barriers suggests that there is more to the argument than this It is true, of course, that tariff protection provided some countries with a useful bargaining weapon and allowed them to discriminate in their pricing policies

in favour of exports But the evidence on this matter is far too slight and fragmentary for it to have been anything other than a minor factor in Britain's trade losses 8

On the other hand, ignoring the question of tariffs for the moment, it might be questioned whether all Britain's trade losses can be attributed simply to the emergence of new industrial com-petitors Obviously this was a powerful factor, but this is no reason

1 A Maizels, Industrial Growth and World Trade (1963), p 200, Table 8.5

1 By 1914 eighty British trade treaties were in force, all of which contained an unconditional most favoured nation clause F Benham, Great Britain under Pro- tection (1941), p 5

1 Price discrimination between products sold in the home and export markets was used most extensively in Germany but even here the proportion of exports affected was quite small, and only in a few cases were high tariffs necessary to prevent reimportation of very low-priced exports

22

INTRODUCTION

to ignore completely any possible alternative explanations There is much to commend the suggestion that in part Britain's trade diffi-culties were self-generated, that is they stemmed from internal deficiencies within her own industrial structure A country whose industrial structure is narrowly based on a few traditional industries

is obviously going to be more restricted as regards trading tunities, especially if the pattern of demand changes, than a country whose structure is diversified over a wide range of industries There

oppor-is no question that Britain falls into the first category In 1907 three industries, coal mining, iron and steel and textiles, accounted for 46 per cent of the net industrial output and supplied 70 per cent of all exports Moreover, initially at least the exports of these industries had accounted for a very high proportion of the world market in these products Given such conditions, Britain's rate of export growth was almost bound to decline, for as Kindleberger has pointed out 'an exporter with 75 per cent of the world market

in a commodity, as the British had at various times in cotton tiles, iron rails, galvanized iron, tinplate, locomotives, ships, coal, can have no expectation of maintaining it'.1 Even within individual industries the export base was sometimes extremely narrow In the iron and steel industry, for example, galvanized and tinplate sheets accounted for 40 per cent of the growth of iron and steel exports

tex-in the decade prior to the first world war.2 This structural commitment might not have been so bad had it not been centred

over-on industries whose export growth potentialities were beginning to wane or had there been a more vigorous growth of newer industries with promising export prospects The result was that in comparison with Germany and the United States, a higher proportion of Britain's trade in manufactures was concentrated in declining export sectors with a correspondingly lower proportion in the most rapidly expanding groups 3 This imbalance was paralleled in the market structure of Britain's exports In 1913 roughly two-thirds of Britain's total exports went to what were essential primary producing countries This market concentrrtion might, of course,

be attributed to the fact that Britain was seeking salvation in Empire countries where tariffs favoured British goods But the fact that the share of Britain's exports to Empire countries remained

1 Kindleberger, loc cit., p 295

• Saul, foe cit., p 15

• I Svennilson, Growth and Stagnation in the European Economy (1954), pp 294-5 Also H Tyszynski, 'World Trade in Manufactured Commodities, 1899- 1950', The Manchester School, September 1951

23

THE DEVELOPMENT OF BRITISH INDUSTRY

fairly stable in this period, apart from the 1870s, and was the same

in 1913 as it had been in the 1850s when foreign competition was far less acute, would seem to negate this hypothesis

Nor were structural defects the only internal factor affecting Britain's weakening export situation It can be argued that the export position could have been strengthened had some of the traditional export-orientated industries improved their efficiency This is not to suggest that the latter industries could in any way have compensated fully for the lack of a more diversified industrial structure for, as we have already pointed out, there was clearly a limit to the volume of exports which could be squeezed out of any one industry Nevertheless, there were cases where an improve-ment in efficiency and a concomitant reduction in costs might well have brought about an expansion of the market The steel industry provides a good illustration of this point Temin has argued that had costs of production in the British steel industry been lower (that is lower than the German)-and this is certainly a feasible proposition given the technical backwardness of the steel industry

at this time1-it would probably have increased the production of steel in Britain by roughly 20 per cent of the world trade in steel,

or about 2·4 million tons One half of this amount would have been derived from an increase in Britain's share in exports to markets in which Britain and Germany competed and the remainder from a reduction in British imports 2 This, of course, makes no allowance for that part of the American steel trade Britain might have cap-tured had costs been lower Even with this improvement the steel industry's growth would have been less rapid than that of the German and American; nevertheless it does suggest that export growth was not conditioned solely by external factors Whether there was the same scope for other industries to raise their exports

by lowering costs is difficult to say, but the example of steel does lead one to suspect that there were possibilities for improvement in this direction 3

Whilst not wishing to deny that the growth of foreign competition

1 A useful international comparison of costs, prices and techniques in steel is given in T Orsagh, 'Progress in Iron and Steel, 1870-1913', Comparative Studies

in Society and History, January 1961

1 P Temin, 'The Relative Decline of the British Steel Industry, 1880-1913',

p 148, in H Rosovsky, Industrialization in Two Systems (1966, New York)

1 Or alternatively export selling methods could possibly have been improved There is certainly much contemporary evidence to suggest that British indus- trialists and traders were deficient in this respect, though exactly what effect this had on our ability to compete is anybody's guess

24

INTRODUCTION

was the chief factor responsible for Britain's trading difficulties it would be pointless to ignore the fact that internal weaknesses in the industrial structure were also partly to blame Whatever their relative importance there is no doubt structural overcommitment together with a delay in some cases in introducing cost reducing innovations were factors which affected British industry's ability to compete There is a third relevant possibility, namely the slow growth of the domestic market Saul has recently questioned the independent role often ascribed to exports and suggests that more emphasis ought to be placed on the impact of growth upon exports

on the grounds that a buoyant home market provides the basis for

a flourishing export trade.1 Not all theorists will agree with this line of reasoning and in practice conditions do vary a great deal

In the short term at least it is more than probable that a vigorous demand at home will retard the growth of exports But it is cer-tainly feasible to suggest that in some cases, particularly where the development of new products is concerned, a slowly growing home market may retard the development of the export sector It is quite possible, for example, that the domestic market for electrical pro-ducts was insufficient to provide the industry with an adequate basis for exports in this period A much more debatable proposi-tion is the question whether the home market as a whole was in any way responsible for the slow export growth In effect this brings

us back to the causal relationship between growth and exports discussed earlier and we make no claim to be in a position to provide a definite answer to this problem

A brief glance at the growth of foreign competition in the home market does, however, provide some clues as to the relative strength

or weakness of British industry as a whole Between 1870-74 and the early years of the twentieth century the share of imports of :finished consumer goods in the total consumption of finished goods rose from 9·5 to 20 per cent whilst manufactured imports accounted for an increasing proportion of the total import bill.2 The most intense phase of competition occurred in the 1890s and early 1900s during which time Britain probably received a greater increase in foreign manufactures than any other industrial nation To contem-poraries these were the years of the real American and German commercial invasions when increasing quantities of iron and steel

1 Saul, Joe cit., pp 11-12

1 Based on data in J.B Jefferys and D Walters, 'National Income and diture of the UK, 1870-1952', in Income and Wealth edited by S Kuznets, Vol

Expen-V (1955), p 27

25

THE DEVELOPMENT OF BRITISH INDUSTRY

goods, sugar, chemicals, textiles, paper, shoes, glass, china and earthenware and cereals to name only a few, flooded into the British market If contemporary emotions led to an exaggerated view of the extent of foreign competition, there was no question as

an advanced economy such as Britain's they served little useful purpose except that of satisfying consumer demand and in essence they merely reflected the weakening position of home producers vis a vis their foreign rivals

It does not follow, of course, from what has just been said that Britain's trade losses can be attributed simply to the deficiencies of British businessmen This may well have been an additional factor aggravating the situation, but undoubtedly the major cause was the emergence of new and powerful industrial nations with an increasing propensity to export In addition, many smaller less industrialized countries, e.g Japan, were becoming self-sufficient in certain fields of economic activity and thereby ousting British goods from their markets But it is important to realize there is more than one side to the problem and that undue reliance on the forces of inevitability may be at times somewhat misleading

III

The above comments have only provided a very general picture of the main economic trends in the period from the early 1870s to the outbreak of the First World War and to a large extent attention has been focused on the question of competition Naturally any

26

INTRODUCTION

overall view of this nature is bound, at times, to be somewhat leading or unrepresentative in terms of particular industries, pro-ducts and regions, but its chief purpose has been to provide a brief sketch of the economic framework within which industrialists operated and to outline some of the issues which have been the subject of debate both among contemporaries and later observers

mis-If we have raised certain questions without always providing the final answers, this is not altogether unintentional since it would be improper to prejudice the reader's mind before he has had a chance

to consider carefully the individual studies in this volume The remainder of this Introduction, therefore, will be devoted to making some general observations based on the findings of the contributors

No attempt will be made, however, to summarize the developments

in each industry separately

First, however, it would seem to be appropriate to say a few words about the scope and aims of the project as a whole The range of industries covered in this volume is a fairly wide one and collectively the studies may be regarded as a reasonably representa-tive sample of British industry as a whole Obviously many indus-tries have been excluded from the survey, not necessarily because they were of no importance but largely because it would have been impracticable to include every industry within one single volume whilst at the same time allowing contributors to discuss their par-ticular subjects in any reasonable depth The basis of selection was not entirely arbitrary however Clearly the most obvious starters were the basic industries such as coal, cotton and iron and steel, together with the more important of the newer, potential growth industries as, for example, chemicals and electrical manufactures Ultimately, however, it was the general theme of the volume which tended to determine which industries should be included Thus it was those industries which were affected in some way by foreign competition or industrial developments abroad in the period 1875

to 1914 that provided the chief criterion for selection Hence on these grounds alone such industries as building and the railways could easily be excluded whilst for the same reason the engineering, footwear, glass, woollen and shipping industries secured representa-tion The most significant omissions are the paper industry, timber products (especially furniture) and agriculture

Each contributor has surveyed the main developments in his particular industry within the context of the general theme of foreign competition In most cases reference has been made to a number of key issues; these include (a) the extent of foreign com-

27

THE DEVELOPMENT OF BRITISH INDUSTRY

petition in both home and overseas markets, (b) the effect of this competition on the industries in question and the reactions of British industrialists and (c) the wider question as to whether foreign competition revealed any weaknesses in the competitive ability of British industry, or in short whether British industrialists were as efficient as their foreign counterparts Obviously it was impossible for all contributors to adhere rigidly to these particular aspects since in the first instance it was the particular characteristics of the industries and the availability of material relating to them which usually determined the way in which the subject matter was treated Nevertheless, there is sufficient common ground in the way in which each industry has been approached to enable some general conclusions to be drawn on the issues listed above

Generally speaking, foreign competition increased throughout this period in most industries, though it was probably most intense between the early 1890s and the turn of the century, whilst in the years prior to War I it tended to slacken off They were, however, considerable variations in the degree to which each industry was affected For the boot and shoe industry foreign competition was predominantly, though not entirely, a domestic problem associated with the American invasion of the home market in the late nine-teenth and early twentieth centuries On the other hand, as far as the coal, cotton and shipping industries were concerned, the domestic market was hardly affected by foreign competition and even abroad it was rarely very serious except in one or two mar-kets In contrast the iron and steel, glass and woollen industries faced severe competition from foreign producers both at home and abroad Britain lost her former pre-eminence in iron and steel during this period Her share of the world's output and trade in iron and steel manufactures declined sharply and by 1913 Britain had become the world's largest importer of these products At that date imports of iron and steel were equivalent to 45 per cent of her exports compared with 8 per cent in 1875 Yet in comparison with the glass industry the iron and steel manufactures probably did not fare too badly Even as early as the 1870s imports of glass exceeded exports by a substantial margin and by the early twentieth century the unfavourable balance had increased to over £1 million The value of exports in 1907 amounted to roughly one half the works value of glass produced whilst the value of net imports was equivalent to nearly two-thirds of the home production

Industry-wide generalizations are apt to be somewhat misleading however, since the impact of foreign competition often varied con-

28

INTRODUCTION

siderably between different sectors of the same industry The flint branch of the glass industry, for example, was affected much more severely than either the fiat or bottle glass sections Similarly in the woollen and worsted industry it was the latter sector which was particularly vulnerable to foreign competition both in the home and overseas markets In fact, Britain's overall export performance

in woollen products was better than that of her closest rivals and,

to a large extent, this was because the setback in worsted exports was compensated for by an improvement in the woollen branch especially in the latter half of the period

Sectoral differences were equally sharp in the chemical and engineering industries Although for most of the period chemical exports grew more slowly than total exports and national income whilst chemical imports rose faster than total imports and national income, the chemical industry had its dynamic sectors and on balance it remained a net exporter Britain's main strength lay in fertilizers, soap and heavy inorganic chemicals in which she was often an equal match for her main competitor Germany But in most organic chemicals such as dyes, perfumes and photographic chemicals British producers were easily outclassed by German com-petition The position is somewhat more complex with regard to the engineering industry on account of the fact that it consists of

so many virtually independent branches Electrical engineering was probably the weakest and most vulnerable sector though even here some branches, such as cable making, were fairly competitive For most of the period Britain maintained a favourable balance of trade in electrical products though it should be emphasized that this was thanks largely to the efforts of the foreign firms located in Britain Essentially the British electrical industry was an offshoot

of the American and German industries with an important fringe

of domestic manufacturers producing the less sophisticated types of equipment for the home market and for export to the under-

developed countries It is much more hazardous to generalize about

non-electrical engineering Most sectors of engineering were tainly affected to some degree by foreign competition both at home and abroad though Britain continued to remain fairly competitive

cer-in the older branches such as textile machcer-inery, railway locomotives and rolling stock The main source of weakness lay in the newer branches of engineering though the dramatic success of Britain's bicycle industry again emphasizes how careful one must be when drawing general conclusions

A discussion of the engineering trades raises in an acute form

29

THE DEVELOPMENT OF BRITISH INDUSTRY

not only the question of differentiating between particular branches

of an industry but also the need to distinguish the forces of petition in particular markets Britain's hold over Empire markets remained fairly strong in most engineering products except machine tools and sewing machines But in certain European and South American markets her superiority was less marked owing to fierce competition from American and Germany though again there were particular fields, notably agricultural machinery, railway rolling stock (South America), textile machinery, boilers and bicycles in which British manufacturers continued to do well For most of the other industries covered in this survey the strength of foreign com-petition varied a great deal from one market to another The boot and shoe manufacturers, for example, faced their biggest challenge

com-in the domestic market whilst com-in cotton, coal and shippcom-ing foreign competition occurred mainly abroad In the latter cases serious competition was often confined to specific areas : in cotton mainly

to the Far East, in coal to the markets of Belgium, the Netherlands and Austro-Hungaria and in shipping to North Atlantic and African waters Finally the iron and steel and chemical industries faced acute competition in both home and overseas markets though

in both cases competition tended to be more severe in the advanced industrial countries than in the markets of the Empire and under-developed territories

The chief source of foreign competition undoubtedly came from America and Germany It was these two countries which presented the biggest threat to the iron and steel, boot and shoe, engineering and chemical industries Even in shipping and coal, where com-petition was much less serious, Germany was the chief potential threat But Germany and America were by no means the only competitors French competition was the main problem in the woollen industry whilst the glass manufacturers had Belgian pro-ducers to contend with in addition to competition from other continental countries In the case of the cotton industry Japan and India were the major competitors Most industrialists were, of course, faced with the growth of competition from domestic pro-ducers in their export markets though probably the Lancashire cotton industry was most seriously affected in this respect on account of the relative ease with which the industry's technology could be absorbed by the less developed countries

The rise of tariff barriers especially in the major industrial countries certainly made trading conditions more difficult for many British industrialists The German tariff of 1879 and the American

30

INTRODUCTION

McKinley and Dingley tariffs of the 1890s hit British exports fairly hard, especially those of the iron and steel, engineering, woollen and chemical industries Moreover, the tendency for many manu-facturers to turn their attention to Empire markets suggests that tariffs were becoming restrictive Yet there is little evidence to suggest that tariff barriers were the major factor responsible for Britain's long-term trade losses Probably a more important reason for the slowing down of Britain's export growth was, as in the case

of the chemical industry, the growth and improvement in efficiency

of industrial production abroad which enabled foreign turers to compete more effectively Occasionally tariffs actually assisted British exports The 1890 McKinley duty, for example, encouraged American manufacturers to import British fine yarns which were then made up into finished goods

manufac-Although most industries were affected in some way by foreign competition, it is clear that its impact varied a great deal from one industry to another and between branches of the same industry Likewise the response of industrialists to the new challenge was by

no means uniform There were, of course, a number of possible alternatives A common approach, though a purely negative one which produced few positive results, was either to demand tariff retaliation or adopt some form of restrictive practice A second alternative was to move out of those markets where competition and tariffs were making things difficult and concentrate on the Empire markets where Britain's competitive advantage was greatest Essentially, however, this was only a short-term solution of the problem since it was really a way of avoiding rather than solving the issue In any case the Empire markets were by no means free

of foreign competition, and as time went on the threat of foreign intervention became more real in these areas Thus the only really effective long-term solution was to take some positive action which would enable British manufacturers to compete more effectively with their foreign rivals This line of approach generally involved the adoption of new techniques or improved methods of produc-tion and marketing, the development of new products and an appreciation of the benefits to be derived from scientific research Many manufacturers were, of course, concerned about short-term considerations and often they failed to grasp the significance

of finding a long-term solution to the problem of foreign petition But this was not universally true since some were clearly prepared to extend their time horizons into the future The detailed studies suggest, moreover, that those industries or sectors which

com-31

THE DEVELOPMENT OF BRITISH INDUSTRY

were prepared to innovate and improve their performance stood a

better chance of withstanding foreign competition than those which did not The boot and shoe industry, for example, had by 1913 successfully met the American challenge largely because of its willingness to shift to factory production with powered machinery

In many respects, however, the industry was fortunate in that its mechanical revolution occurred just at the time when foreign com-petition became really severe Similarly the massive application of new techniques in shipping and shipbuilding enabled the industry

to remain highly competitive down to 1914 The history of the glass and woollen industries illustrates the way reactions varied between different sectors The glass industry was vulnerable to the com-petition of cheap skilled continental labour and it could only hope

to compete providing it reduced its costs of production by technical innovation The two branches of the industry-bottle and flat glass -in which major technical developments were possible can claim

a fairly creditable record Unfortunately it was the flint glass section which was most prone to competition and here technical advances were very limited indeed The woollen industry staged a remarkable revival in the early twentieth century by developing a cheaper product through the use of 'adulterated' raw materials (that is blending re-manufactured wool with the virgin material)

On the other hand, the worsted sector, faced with a change in women's fashions favouring all wool worsteds in place of mixed fabrics, was unable to find a suitable technical solution to combat French superiority

Technical backwardness was perhaps most noticeable in the iron and steel and chemical industries, both of which were subject to severe competition A formidable list of technical deficiencies can

be assembled for the steel industry including a lag in scientific research and a failure to employ enough technically trained man-power It is clear that this industry could have reduced costs and become more competitive had technical progress been more rapid, though it would be a mistake to attribute the relative decline of the industry to technical factors alone The main problem in chemicals was the lag in structural diversification The strength of the industry was based on a very narrow range of chemicals and little concerted effort was made to diversify into newer products the market for which was expanding rapidly In 1901 five product groups accounted for no less than two-thirds of Britain's chemical exports

A similar overcommitant is evident in engineering Britain remained strongest in the older established heavy engineering

32

INTRODUCTION

sector and was slower than her main competitors in moving into new areas or branches of manufacture based on mass production techniques There are, of course, as in the case of chemicals, some notable exceptions to the general rule With the electrical manu-facturers it was not so much a question of overcommitment as a failure to retain their position in the heavy engineering field which had been established in the 1890s, together with the neglect in developing either traction or power equipment The result was that the market for the more advanced type of electrical equipment was captured by the American and German firms and domestic producers were left to produce the less sophisticated products The most obvious question is whether the reaction of indus-trialists was commensurate with the severity of foreign competition

In some cases it clearly was not Where competition was severe as

in iron and steel, worsted goods, flint glass and certain sections of the chemical and engineering industries, the manufacturers were never able to mount a successful counter-attack The main excep-tion is the boot and shoe industry since it was fairly successful in dealing with the American challenge On the other hand, in those fields in which foreign competition was less severe, e.g cotton, shipping, heavy engineering, woollen goods and plate and bottle glass, British industrialists appear to have been able to hold their own reasonably well Of course, there is no way of telling whether these latter industries would have shown up so well had they been faced by a more violent challenge from abroad It should be noted moreover that the coal industry has not been placed in this second category since throughout this period its efficiency and competitive capacity in relation to its nearest rivals was tending to decline It could be argued that this industry lacked the invigorating influence

of really effective competition

How efficient was British industry in this period? This is obviously

a very difficult question to answer since the lack of quantitative data on industrial productivity makes proper inter-country com-parisons impossible But the absence of quantitative information should not be used as an excuse for evading the question At times like these the economist and economic historian are forced to adopt

a more subjective approach and make the best use of whatever information is available.1

Although foreign competition exposed certain weaknesses in British industry it would certainly be wrong to conclude that British industrialists as a whole were less efficient or less enterprising than

1 CT E Penrose, Theory of the Growth of the Firm (1963), p 185, note 1

THE DEVELOPMENT OF BRITISH INDUSTRY

their foreign counterparts Some industrial sectors, notably ping and boots and shoes and certain branches of the glass and woollen industries, showed remarkable powers of resiliency in this period Likewise certain branches of the iron and steel, chemical and engineering industries were prepared to adapt to changed con-ditions Some of the developments in the heavy engineering sector, especially in ring spinning machinery, steam engines and heavy machine tools hardly convey the impression that manufacturers were unwilling to accept changes Moreover, the fact that some industrialists were slow to adopt new techniques does not neces-sarily mean that they were inefficient or lacked enterprise One might, for example, criticize cotton manufacturers on the grounds that they ignored the ring spindle and automatic loom But this was not due to conservatism on their part but rather to the fact that the new machinery was not really suitable to English conditions

ship-of manufacture

On the other hand neither must one adopt an unduly complacent attitude when discussing the performance of British business in this period As we have already seen there was considerable room for improvement in many branches of British industry Thus in both the chemical and engineering industries manufacturers were slow to diversify their range of products and in some cases new processes were neglected, e.g the Solvay process for soda produc-tion A number of new technical opportunities were missed by the iron and steel and coal industries Moreover, the ease with which the flint glass and worsted manufacturers succumbed to foreign competition suggests that there might have been some scope for improvement

The comparative backwardness of certain sectors of British industry cannot be attributed to any one single factor That new products were neglected in the chemical industry can be explained largely by the fact that the industry failed to appreciate the long-run benefits of research and development expenditure But this factor is much less important in explaining the deficiencies in iron and steel and engineering Here adverse market conditions were partly to blame The domestic market was far less buoyant than that of the United States and after the 1870s the rate of growth of the economy was slowing down Hence the incentive to invest heavily in new techniques was reduced It has been argued in the case of steel that the technical lag was the result of the relatively slow rate of growth in demand for the industry's products The engineering industry was also affected adversely by unpromising

34

INTRODUCTION

market conditions though one must be careful not to stress this point too much since it could also be argued that the relatively profitable nature of the market (particularly the export side) for heavy engineering products was one reason why the industry was fairly slow in shifting into newer lines of production Furthermore, the overattachment to outdated methods of recruiting and training labour and the dominance of the consulting engineer (particularly

in electrical engineering) which tended to inhibit product dardization and limit the market power of individual firms, were additional factors in the situation

stan-This by no means exhausts the list of possibilities Several reasons can be put forward to explain the delay in using mechanized techniques in coal mining These include unfavourable geological conditions, the relatively high costs of reorganization involved and the existence of a fairly plentiful supply of cheap labour which made the cost advantage of machinery far from clear-cut But the problem was not always simply one of a failure to innovate on the part of industrialists; in some cases new technical opportunities were not readily available when they were most needed The flint glass manufacturers, for example, were short of a large-scale cost-reducing technique which would have enabled them to compete with the cheap skilled labour of the continental glass producers Worsted manufacturers faced a somewhat similar problem when fashions changed in favour of the French It is true that a number

of measures were taken to try and combat competition but most of them proved unsuccessful In the absence of any revolutionary new technique probably the only solution was to compete with the French on their own ground by adopting the mule (in place of the frame) for yarn spinning But this would have necessitated heavy reinvestment, a policy which might well have proved disastrous had fashions changed suddenly again

This brief commentary has shown clearly that any sweeping generalizations regarding the experience and performance of British industry in this period are bound to be somewhat misleading since the impact of foreign competition and the subsequent reactions to

it varied considerably from one branch of industry to another In fact, probably the most significant feature was the wide diversity of experience between industries or sectors though there were of course

a number of common characteristics, notably the apparent strength

of many of the older established branches of industrial activity and the tendency towards concentration on Imperial markets It would

be inaccurate moreover to argue that British industry as a whole

35

THE DEVELOPMENT OF BRITISH INDUSTRY

was uncompetitive and inefficient since there were some impressive achievements in these years of increasing international competition The comments presented here, however, do no more than raise some of the more general points made by the contributors in their essays The individual studies cover a wide range of territory and deal with many developments in Britain's industries which it would

be impossible to summarize in the space of a few pages Thus, rather than attempting to provide an extensive resume of all the changes and developments which took place, the Introduction has been designed as an opening move in the debate on British industry which follows in the subsequent chapters

36

£136,000,000 From these mines more than 1,118,000 men were deriving a livelihood From these same mines, too, 3,800 royalty owners were securing an annual income of approximately

£6,000,000, and some 130,000 investors were receiving a profit of

£13,000,000 An industry with wages substantially higher than in most others in Great Britain; with unemployment almost negligible; with conditions constantly improving and an accident rate con-tinually decreasing-an industry which, for almost three-quarters

of a century, had been enjoying the fruits of uninterrupted growth and progress-such, in short, was the picture of British coal mining

in the year preceding the outbreak of the World War '2

It is both pertinent and salutary to preface an appraisal of the development of the British coal industry in the forty years before the First World War with these eulogistic observations of two American economists Already in the 1920s when Lubin and Everett were making their study of British coal mining, it was becoming common to view the pre-war industry wholly in terms

of bitter post-war experience Such an approach, though it had undoubted value in revealing the insecure foundations of the industry's earlier prosperity, often tended to minimize that pros-perity's real substance Lubin and Everett, themselves, were not unaware of the pre-war industry's weaknesses, made evident in declining labour productivity, increasing costs and troubled labour relations, but they saw these against a background of expansion

1 This essay incorporates material from an earlier article on 'Labour tivity and Technological Innovation in the British Coal Industry, 1850-1914',

Produc-Econ Hist Rev., 2nd ser., XIV (August 1961), pp 48-70 (hereinafter referred to

as 'Labour Productivity and Technological Innovation')

• I Lubin and Helen Everett, The British Coal Dilemma (New York, 1927),

p 29

37

THE DEVELOPMENT OF BRITISH INDUSTRY

and progress; and it is against such a background of achievement that any critical appraisal of the industry must be set

Between 1875 and 1913 the output of coal from British mines rose from 133 to 287 million tons This increase was achieved without any major interruption Temporary recessions, most notably in the years of general depression in industry and trade between 1884 and

1887 and in the strike years of 1893 and 1912, were overcome and each decade saw a substantial advance in the industry's productive achievement Moreover, the rate of growth tended to accelerate as the following output statistics indicate:

1·95

1·95

2·42 2·70 (8 years) Not every coalfield contributed equally to this notable record of expansion The older, longer-worked coalfields of the North-East, Lancashire and the Black Country increased their output less rapidly than the more recently developed areas of South Yorkshire, the East Midlands and South Wales Thus, while in the Lancashire district output in 1913 was no higher than it had been fifteen years earlier, South Wales and Yorkshire showed increases of 50 and

70 per cent respectively over the same period This contrast between areas of stagnation or contraction on the one hand and areas of growth and development on the other is of considerable significance

in any final assessment of the industry's achievement

The expansion of the coal industry was a reflection of the more general growth of British and European industry In the half cen-tury before 1914 coal had not only enjoyed a position of virtual monopoly in supplying the fuel requirements of Britain but had also played a major role in meeting the needs of Western Europe The

1 Output statistics in R.C on Coal Industry (Sankey Commission), P.P 1919,

XI-XIII, Vol III (Cmd 361), p 29 See also B R Mitchell and Phyllis Deane,

Abstract of British Historical Statistics (1962), pp 115-16

38

THE COAL INDUSTRY

age of the water wheel was past, that of the petrol engine still lay largely in the future Demands on the coal industry, therefore, came from all sides: from the domestic consumer and from general manufacturing industry; from iron and steel producers; from rail-ways and coasting-steamers; and from gas and electricity under-takings From each of these the demand was increasing rapidly as the following table makes strikingly clear:

TABLE 11: Quantity of British Coal Consumed Domestically

(million tons) 1 Consumer

Gas Works

Electricity Works

Railways

Coasting Steamers

Coal Mines (Engine Fuel)

Iron and Steel Works

Domestic Households

General Manufacturing

1869

6·3 2·8 1·2 6·7 14·0 18·5 44·9

1887

9·5

? 6-2 1·5 10·9 15·3 28·3 58·7

1913

18·0 5·0

Great and continuous as was the growth in domestic tion, however, it was eclipsed by the demand from overseas Down

consump-to the third quarter of the nineteenth century the export trade had only been of limited importance to the coal industry and the share

of coal in the value of Britain's total exports had been negligible

As late as 1860 exports, including bunker-coal, represented little more than one-tenth of Britain's coal output and little more than one-fortieth of the value of her total exports 2 From this point, however, advance was not only continuous and rapid, but the tendency to accelerated growth observable in the industry at large was here most marked In 1869 British coal exports amounted to

13 million tons; by 1887 this figure had risen to 31 ·7 millions; and twenty-six years later in 1913 exports, including bunkers, amounted

to 98·3 million tons and accounted for more than one-third of the annual output of coal By this time coal was responsible for more than one-tenth in value of Britain's export trade 3

The greater part of these shipments went to continental Europe

In 1875 Britain's best customers had been France and each taking more than two million tons of coal annually-and,

Germany-1 Colliery Year Book and Coal Trades Directory, 1962, p 462

2 Mitchell and Deane, op cit., pp 121, 283, 303

a Colliery Year Book, 1962, p 462 Mitchell and Deane, op cit., pp

39

THE DEVELOPMENT OF BRITISH INDUSTRY

following them, Italy, the Scandinavian countries, Russia and Spain, each consuming upwards of half a million tons.1 Outside Europe demand was smaller but there were important growth points in Egypt-largely for bunkering purposes-the British East Indies, the Caribbean and Latin America By 1913 the pattern had changed little, though in almost every direction growth had been prodigious 2 France now took 13 million, and Germany 9 million tons Italy had overhauled Germany as Britain's second best customer with an import of 10 million tons Russia consumed 6 million, the Scan-dinavian countries collectively 10 million and Spain 2½ million tons Outside Europe there were major consumers in Egypt (3 million), Argentina (2½ million) and Brazil (2 million) Only in the Carib-bean and eastern Asia had small markets shrivelled in face of the pressure of more advantageously placed competitors Moreover, much of this growth was recent The fifteen years from 1898 to

1913 had seen a trebling of British coal exports to Russia and a doubling of those to France and Italy Even Germany, Britain's greatest European rival in the export of coal, was in 1913 importing almost twice as much British coal as she had done fifteen years earlier It was inevitable that with the development of the great mineral resources of Germany and the United States, Britain's share

in the world export trade in coal would diminish, but, so long as the overall demand for coal retained its early twentieth century buoyancy and Britain was able to maintain a strong hold on mar-kets so strategic and rewarding as those of Italy and Latin America, there was justification for satisfaction and optimism even if hardly for complacency about the future of the export trade

The growing strength of the German coal industry was made evident both in its rapidly growing output and its mounting export achievement By 1913 Germany had become the major exporter of coal to the Netherlands, Belgium and Austro-Hungary But France and Russia each took three times as much coal from Britain as from Germany British ascendency, and corresponding German inferiority, was even more marked in Scandinavia, where Germany had established no more than a precarious foothold, and in Italy where every ton of coal coming from Germany was met by ten exported from Britain The shape of wartime political alliances was already foreshadowed in the international economy of coal Outside Europe Britain's only significant rival was the United States, but

1 R.C on Coal Supplies, P.P 1905, XVI (Cd 2363), pp 90-2

• R.C on Coal Industry (Samuel Commission), P.P 1926, XIV (Cmd 2600), Vol III, pp 94-6

40

THE COAL INDUSTRY

as yet the threat had little substance To the important markets of Latin America Britain sent fifteen times as much coal as did the United States in 1913

Britain's dominance of the world's export trade in coal had its basis in the facts of commercial geography Although the cost of mining coal was increasing more rapidly in Britain in the quarter-century before 1914 than in Germany or the United States-or indeed than in any other country-British coalowners were able to maintain their firm grip on European and South American markets because of the enormous advantage which easy sea communication gave to the coal of South Wales and North-east England This blessing conferred upon Britain's coal industry by a seemingly beneficent providence had been reinforced by the skill of her inven-tors and ship builders Over the half-century before 1914 the development of the steamship had produced a substantial decrease

in freighting charges Rates from Cardiff to Bordeaux, Lisbon, Genoa and Kronstadt had been more than halved, while to more distant ports, among them Port Said, Singapore and Buenos Aires the reduction was even greater.1 The German and still more the American coal producer, dependent to a large extent on railway haulage to reach his foreign customers, was thus placed in a position

of often insuperable disadvantage It was only in those markets in immediately adjacent territories where the possibilities of sea com-munication could not be exploited that Germany was able to com-pete with Britain on terms of advantage or equality; and coal could

be carried more cheaply over the long sea-haul from Cardiff to Buenos Aires than by rail and sea from the nearer inland coalfields

of the United States

With demand growing and competition thus contained, Britain's export trade in coal prospered in the years before 1914 as never before in the industry's history This achievement, moreover, not only benefited those in the industry-royalty owners, shareholders and miners alike-but contributed substantially to the country's favourable balance of payments Unlike the textile industries, also considerable earners of foreign exchange, coal was not dependent

on an imported raw material and the income which it brought from overseas was almost all pure gain As if this were not enough, the export of coal also provided outgoing bulk cargoes which helped

to reduce significantly the freighting cost of the nation's essential imports 2 If there were some, like Alfred Marshall, who argued that

1 H S Jevons, The British Coal Trade (1916), pp 692-3

• See Lubin and Everett, op cit., pp 359-61

41