The Development of British Industry and Foreign Competition 1875–1914 9781487571900

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THE DEVELO PMENT OF BRITISH INDUST RY AND FOREIG N COMPE TITION 1875-1914

THE DEVELOPMENT OF BRITISH INDUSTRY AND FOREIGN COMPETITION 1875-1914

Studies in Industrial Enterprise

EDITED BY

DEREK H. ALDCROFT University of Glasgow

TORONTO: UNIVERSITY OF TORONTO PRESS

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

PRINTED IN GREAT BRITAIN

in JO on 11 point Times Roman type SIMSON SHAND LTD LONDON, HERTFORD AND HARLOW

PREFACE All the essays in this volume are original in the sense that they have not been published before. I should like to thank all the contributors for their kind co-operation with this project. I would also like to express my gratitude to Professor D. J. Robertson, the General Editor of the series in which this volume appears, for his kind advice and guidance during the course of preparing the book for publication. D.H.A.

CONTENTS page 1

PREFACE

1. Introduction: British Industry and Foreign Competition,

1875-1914

11

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

37

2. The Coal Industry by A. J. Taylor, Professor of History, University ofLeeds

3. Iron and Steel Manufactures

71

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

4. The Cotton Industry

Glasgow

100

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

5. The Woollen and Worsted Industries

128

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

158

by P. Head, Principal Planning Officer, Staffordshire County Council

7. The Engineering Industry

186

by S. B. Saul, Professor ofEconomic History, University ofEdinburgh

238

8. Electrical Products by I. C. R. Byatt, Lecturer in Economics, London School ofEconomic

9. Chemicals

and Political Science

274

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

10. The Glass Industry

Aberdeen

307

by T. C. Barker, Professor ofEconomic History, University ofKent

11. The Mercantile Marine

326

by D. H. Aldcroft BIBLIOGRAPHIES

364

INDEX

373

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 nineteenth 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 competitors, 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 comparable to those which had taken place in manufacturing production during the industrial revolution. See W. Ashworth, An Economic History of England, 1870-'1939 (1960), p. 137. 1 Cf. H. W. Richardson, 'Retardation in Britain's Industrial Growth, 18701913', Scottish Journal of Political Economy, June 1965, p. 128.

12

INTRODUCTION

Average Annual Rates of Growth of Selected Economic Indices (UK) Total Output Real Industrial Per Exports Income Industrial ProducMan-hour Per Head Production tivity 1850-60 5·1 18~70 2·5 2·9 1-1 3·2 1870-80 0·9 0·8 2·3 1·2 2·8 1880-90 3·8 3·5 0·5 2·9 1·6 1890-1900 0·4 1-3 1·2 2·8 0·2 1900-13 0·6 0·4 1·6 0·2 5·4 18~1913 1·5* 1·6 2-1 0·7 2·8 TABLE I:

*1870-1913. Sources: A. Maddison, Economic Growth in the West (1964), p. 232; B. R. Mitchell and P. Deane, Abstract ofBritish 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. HandfieldJones, '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. TABLE II:

Long-term Rates of Growth, 1870/71-1913 (per cent per annum)

Total Output UK

us

Germany

France

2·2 4·3 2·9 1·6

Output Per Industrial Industrial Exports Man-hour Production Productivity (18801913) 2·2 0·6 1·5 2·1 3·2 4·7 1·5 2·3 4·3 2·1 4·1 2·6t 2·6 3·1* n.a. 1·8

• 1880--1913.

t Rough estimate only.

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 Economy, 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 Longterm 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 Handfield-Jones, for example, in their pioneering article in 19521 attributed 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 Manchester School, January 1956. 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, however, 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 contemporary 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 economic 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 forefathers, 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 combine to a curious travesty in which activity and perseverence assume the expression of ease and indolence. The once enterprising manufacturer has grown slack, he has let the business take care of itself, while 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 matching 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 Industrial 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 particular 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 Marshall in his Industry and Trade (1919) expressed disquiet about certain features of British industry and issued judgment against the British businessman. 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 successfully. 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 industrialists' 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 attention 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 necessary 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

Exports from UK and Other Industrial Countries, 1899-1913 (million dollars at 1913 prices) Exports to: Semi-Industrial Industrial Rest of Worldt Countries Countries ManufacAll ManufacAll All ManufacExports tures Exports tures Exports tures

TABLE 111:

Exports from:

1899 1913 Per cent increase

479 624 30·3

912 969 6·3

477 810 69·8

544 927 70·4

371 526 41·8

522 660 26·4

Total t, ManufacAll m Exports < tures m t"1,327 1,978 0 ."ej 2,556 1,970 29·2 a:: 47·7 m

1899 1913 Per cent increase

437 925 111-7

691 1,285 86-0

75 227 202·7

84 238 183·3

270 574 112·6

346 882 154·9

782 1,726 120·7

1,121 2,405 114·5

1899 1913 Per cent increase

272 535 96·7

1,366 1,850 35·4

83 137 65·1

113 246 117·7

68 174 155·9

182 388 113·2

423 846 100·0

1,661 2,484 49·6

1899 1913 Per cent increase

1,923 3,248 68·9

4,660 6,761 45-1

732 1,456 98·9

863 1,723 99·7

1,021 1,793 75·6

1,483 2,746 85·2

3,677 6,497 76·7

7,006 11,230 60·3

UK

00

-,J

:r:m

Germany

United States

Total•

• Includes UK, us, Canada, Japan, India and the major West European countries. Source: A. Maizels, Industrial Growth and World Trade (1963), pp. 428-9, 432-3.

t Includes Russia.

z-,J

0

>!j

= .... :.0:,

....-,J :r: ....

V,

z

t,

c:::

V,

-,J ~

,