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The Pamphlet Collection of Sir Robert Stout: Volume 77

The Trade of the Century: A Retrospect and a Forecast

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The Trade of the Century: A Retrospect and a Forecast.

And yet we are nearing an epoch of no common kind, short indeed in the lives of nations, but longer than the life of man, when we may well pause to take stock. Within six weeks we shall have closed the nineteenth century, and have entered on a new one for better or for worse. It is, of course, only an imaginary division of time, though it seems solemn enough, for we are on a pinnacle of the world's: temple where we can look forward or look back.—Lord Rosebery at Glasgow, November 16th, 1900.

But the question still remained: Are we holding our own? In answering that question we found ourselves confronted by two new factors, the emergency of which was the cardinal point in the history of national trade during the last half century. I refer to the stepping out from the rear to the front ranks of Germany and of the United States of America. So far from enjoying the undisputed hegemony which was so confidently predicted for British trade fifty years ago, there is not now an inch of ground in any one of the international! markets for which we are not fighting with all our available strength.—Mr. Asquith at Leeds, November 23rd, 1900.

I. Introduction.

For the majority of the English-speaking race, midnight on the 31st of December, 1900, marked the close of the nineteenth and the dawn of the twentieth century. The German Emperor, with that true imperial instinct which has ever distinguished him, has decided that the nineteenth century ended on December 31st, 1899. Those who read the heated correspondence in the Times on this subject in December, 1899, will appreciate the significance of this action, and will be ready to agree that it is at times useful to possess an Emperor able and willing to settle off-hand questions so disturbing to the mental balance of the average man and woman. This decision, as a witty German lady pointed out to the writer, has placed Germany page 29 twelve months ahead of all her industrial competitors in the new century, and may be regarded as but another instance of the care and forethought of the Emperor for our Teutonic cousins' welfare.

But whether the twentieth century be held to have commenced upon the 1st of January, 1900, or upon the 1st of January, 1901, the decision is without weight for the purposes of this Chapter. Either date will suit equally well as the standing point from which to review the industrial progress of the century which has just closed, and the industrial prospects of our country in the century upon the threshold of which we stand.

To the future historian the nineteenth century will be known as the century of coal and steam. Steam-power has revolutionised all industrial operations, and has led to the substitution of the factory system of manufacture for home and cottage industries. The possession of extensive and cheaply-worked coal-beds has been the chief factor in this industrial change, and to the early development of her coal resources England owes her present position at the head of the manufacturing nations of the world.

In the year 1801 the total import and export trade of the United Kingdom was valued at £55,000,000. In 1899 this total had grown to £740,000,000, or thirteen-fold; although the population is estimated to have only increased from 16,345,000 to 40,800,000 in the same period of time. No other country in the world can show such a growth in industrial wealth and importance in the nineteenth century.

In the following pages an attempt will be made to trace this growth through its various stages: to analyse some of the causes which have led to severe fluctuations in the value and volume of our trade: and Anally to estimate the extent and strength of the forces which are operating to retard our industrial progress as a nation in the century upon which we have just entered.

For the purposes of this Chapter all the figures have been thrown into diagrammatic form, and the results are page 30 presented in Diagrams I., II., III. and IV. This is the most scientific method of using series of numbers that show marked variations from year to year, and it is the only one which enables the real extent and significance of these variations to be grasped.

II. The Growth of the Trade of the United Kingdom during the First Half of the Century, 1801—1853. (See Diagram I.)

Diagram I. is based upon the official returns for the first half of the century, the figures for population, imports, and exports being shown as three curves, in the one diagram.

It may be explained here that up to the year 1853 the authorities used what were known as "official values" in calculating the totals for the "import" and "export" trade. These "official values" were fixed in 1694, and their relation to the "real" value of the commodities imported or exported of course varied from year to year.

The following table shows the relation between the "real" and "official" values of the exports for the five decennial periods between 1801 and 1850:—
Period. Official Value. Real Value.
1801—1810 100 147.4
1811—1820 100 116.7
1821—1830 100 74.9
1831—1840 100 56.6
1841—1850 100 43.6

On this account the two curves in Diagram I. really represent the progress in the volume of our import and export trade during the first half of the century.

Examining these curves in detail, we see that until 1831 there was little expansion in the external trade of the United Kingdom. The aggregate value of the import and export trade in that year was only £109,000,000, the population at this date being 24,392,000.

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Diagram I.-Showing the Export and Import (Official) Values for each Year of the Period 1801-1853. The Straight Line Shows the Increase of Population During the Same Period. Each Vertical Division Equals Ten Millions Sterling; each Lateral Division One Year.

Diagram I.-Showing the Export and Import (Official) Values for each Year of the Period 1801-1853. The Straight Line Shows the Increase of Population During the Same Period. Each Vertical Division Equals Ten Millions Sterling; each Lateral Division One Year.

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From 1831 onwards both imports and exports show considerable increase; but the latter grow the more rapidly, and from 1842 onwards show a most striking upward movement. This is the period of our real rise as an industrial nation; and this expansion of our export trade marks the improvement of the steam-engine as a power generator, and the dawn of the factory system of manufacture.

It is true that the steam-engine had been greatly improved by James Watt between 1769 and 1782, and had at the latter date been successfully employed for pumping purposes. In 1800, also, a further step in advance was made by the application of steam-power for driving the looms in the textile industries of the North. But it was not until the middle years of the century that the steam-engine had been generally adopted for generating the power required in our staple industries, and that the great expansion of our foreign trade commenced.

It was perhaps natural and inevitable that those who had been foremost in their efforts to remove all Protectionist duties from food-stuffs and raw materials entering the United Kingdom, should have regarded this wonderfully rapid growth as the direct consequence of these changes in our fiscal system, or that they should have prophesied uninterrupted prosperity for our country so long as these principles were upheld. The enthusiasm with which Free Trade principles and the doctrines of the Manchester school of political economists were regarded in the fifties and sixties, is, however, now extinct, and most of the younger students of this question are pre-pared to admit that our Free Trade policy was only one amongst many causes which operated to give British manufacturers the leading place in the world of industry in the years of which we are speaking.

In 1853, the last year of the period covered by Diagram I, the aggregate (official) value of our external trade had page 33 grown to £337,000,000, of which nearly two-thirds (£214,000,000) was accounted for by our exports, and only slightly over one-third by our imports.

One of the chief features of Diagram I. is the position of the curve showing the volume of the imports. From 1814 onwards this curve is below that representing the volume of our exports, and the gap between the two increases as we approach the closing year of the period.

The volume of our export trade was, in fact, growing much more rapidly than that of our import trade, and it is only in the second half of the century that this has been changed, and that our imports have increased more rapidly than our exports. The check in the increase of population between 1841 and 1851 is noticeable, and was due to the potato famine in Ireland, and to the consequent decrease in the population of that division of the United Kingdom. There were also great losses from a cholera epidemic in 1848—1849 which helped to check the increase of population.

III. The Growth in the Trade of the United Kingdom during the Second Half of the Century, 1852—1899. (See Diagram II.)

The figures upon which the curves in Diagram II. are based, represent "real" values, and comparisons between the two diagrams, or between specific years before and after the year 1853, are therefore impossible. Further changes were introduced by the authorities into the method of estimating the values of export and import commodities in 1870, and comparisons before and after this latter date are also untrustworthy. Studying Diagram II. with these two cautions in one's mind, we see that its chief feature is the gap between the export and import curves. The aggregate value of the imports has shown a more steady expansion than that of the exports; and for the whole period covered by the diagram the growth of our import trade has shown a page 34 tendency to keep pace with the increase of population, while that of our export trade has not been so satisfactory.

Up to 1872 the value of our export trade showed steady progress. Since that year the value of this trade has fluctuated about one level, viz., £230,000,000, and not until 1899—1900 has any marked progress been manifested. If expansion similar to that evident in the value of our import trade had taken place, the value of our export trade in 1900 would have been nearly £400,000,000.

The chief causes of this non-expansion in the value of our export trade during the closing quarter of the century are, a great fall in values of manufactured goods, and increased foreign competition. The latter will be discussed more fully in the last section of this article.

IV. The Fluctuations in the Value and Volume of our Export Trade during the Latter Half of the Century. (See Diagrams II. and III.)

A closer study of the export curve in Diagram II. reveals several periods of depression, the two most marked of these occurring in 1872—1879 and in 1891—1894. Taking the whole curve and examining it in detail, one finds similar depressions of shorter duration in 1858, 1861—1862, 1867—1868, 1883—1886, and in 1897—1898.

Many ingenious theories have been elaborated in order to account for the regularity with which these periods of trade depression recur, but none of these has yet received general acceptance. It is not possible to discuss within the limits of a short chapter these theories at any length, and a mere enumeration of the causes advanced will have to suffice.

The currency, the money market, sun spots, famines, Protection, Free Trade, bad harvests, trades unions, wars, and Radical Governments, have all been put forward at one time or another as chief causes of these unwelcome fluctuations in our trade. Those interested in the subject will find each of these exhaustively dealt with in past page break
Diagram II.—Showing Exports and Imports (Real) Values for each Year of the Period 1854—1899. The Straight Line Shows the Increase of Population During the Same Period. Each Vertical Division is Equal to Twenty Millions Sterling; each Lateral Division One Year.

Diagram II.—Showing Exports and Imports (Real) Values for each Year of the Period 1854—1899. The Straight Line Shows the Increase of Population During the Same Period. Each Vertical Division is Equal to Twenty Millions Sterling; each Lateral Division One Year.

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Diagram III.—Showing the Values of the Exports of the United Kingdom for Forty-Three Years (1856—1898) in Millions of Pounds Sterling, at the Prices of 1881. The Totals Thus Obtained Therefore Represent the Fluctuations of the Volume Ok Our Export Trade.

Diagram III.—Showing the Values of the Exports of the United Kingdom for Forty-Three Years (1856—1898) in Millions of Pounds Sterling, at the Prices of 1881. The Totals Thus Obtained Therefore Represent the Fluctuations of the Volume Ok Our Export Trade.

page 37 volumes of the Proceedings of the Royal Statistical Society, and of the British Association. It may, however, be remarked that if the curve showing the fluctuations in our export trade during the second half of the century be based upon figures representing its volume, many of these depressions disappear, and checks in progress are only to be found in the years 1860—1862, 1885, 1891—1893, and in 1897—1898. Diagram III. has been based upon such a series of figures; index numbers having been used to reduce the total exports value in each year of the period, to the prices ruling in 1881. The severe depression of 1873—1879, when allowance is made for the fall in values, is seen to have been only a period of non-expansion in the volume of our trade; and it is curious to note that the depressions of 1860—1863 and of 1891—1893 were really the more important when the volume of our export trade is considered.

Taking the volume of our export trade for the whole century, we find the following periods of depression—1811, 1816—1819, 1826, 1837, 1841—1842, 1846—1847, 1860—1862, 1885, 1891—1893, and 1897—1898.

In an article published in 19001 the writer submitted the theory (first advanced by Sir William Herschell), that there is a connection between these periodic trade depressions and bad harvests, to a detailed examination, and stated his belief that there is some degree of truth underlying this theory.

It is probably true that many causes combine to produce these periodic fluctuations in our external trade, and no one theory of their origin can be accepted as a full explanation of their recurrence. Of these causes, bad harvests, weakened credit, and foreign tariff changes, are the more important. As the vagaries of the weather, and the mental mood of bankers and capitalists, are both beyond Government control, the prospects of our ever being able to prevent the occurrence of trade depressions are remote. page 38 However, if prevention is an impossible policy, prevision is not; and the writer believes that much more might be accomplished by the Board of Trade than at present, in warning and preparing the trading and manufacturing public for these periods of bad trade.

1 "Journal of the British Economic Association," December, 1900.

V. The Future of our Country as a Manufacturing Nation.

An impartial review of the figures presented in diagrammatic form in this Chapter shows that the wonderful expansion and progress which characterised the middle portion of the century have not been continued to its closing years. The writer has already alluded to the practically stationary position of our export trade during the last twenty-five years. The following table, showing the annual values of the imports and exports per head of the population, in the successive years of census, is worthy of careful study.

Year. Population. Quinquennial Averages. Value in £ sterling per head.
Imports. Exports. Imports. Exports.
1811 18.547,0001 £30,100,000 £28,900,000 1.62 1.56
1821 21,272,000 32,060,000 40,160,000 1.51 1.89
1831 24,392,000 46,080,000 62.600,000 1.89 2.56
1841 27,036,000 65,800,000 104,080,000 2.43 3.85
1851 27,724,000 109,840,000 188,420,000 3.96 6.80
1861 29,321,000 216,360,000 132,400,000 7.38 4.52
1871 31,845,000 331,140,000 224,800,000 10.41 7.07
1881 35,241,000 402,200,000 226,000,000 11.42 6.42
1891 38,104,000 422,600,000 240,800,000 11.09 6.32
1899 41,100,000 492,000,000 255,400,000 11.96 6.21
The values per head before and after 1853 (above and below the line) cannot be directly compared for the reason given on page 30; but otherwise the figures

1 Estimated; no census in 1811.

page 39 show the relative annual values of our imports and exports per head at the various decennial periods. Up to 1851 our exports grew much more rapidly than our population, and the values of the exports per head increased fourfold between 1811 and 1851. In the second half of the century it is the imports which show the greater expansion, the values of imports per head of the population having advanced from £7.38 in 1861 to £11.96 in 1899. The exports show no such satisfactory increase. They advanced, it is true, from £4.52 to £7.07 per head between 1861 and 1871; but since the latter year there has been a steady fall, and in 1881, and again in 1891, the value of the exports per head of the population shows a marked decline.

These figures can only be understood by a study of the industrial progress of Germany and the United States, for it is chiefly due to the competition of these two countries that our progress has suffered such a severe check in the closing years of the century.

In 1898, for the first time in her industrial history, the United Kingdom had to relinquish the first place to the United States as regards the value of the export trade, and the figures for 1902 repeat this phenomenon. For the purpose of showing the relative changes in the position of the six chief exporting countries during the last quarter of the century, Diagram IV. has been prepared. A study of this diagram is recommended to those whose faith in worn-out dogmas has led them to the comforting belief that our position as a manufacturing nation was permanently secured.

In 1875 the value of the export trade of the United Kingdom was double that of its chief rivals, Germany and the United States; and France stood second in the list of exporting countries. In 1899 the United States heads the list, with the United Kingdom second, and Germany closely in her rear. In the intervening years what do we see? The export trade of three countries increasing by page 40 irregular movements—namely, that of Holland, Germany, and the United States: and the export trade of Belgium. France, and the United Kingdom practically stationary or declining.

It is therefore certain that it was to a combination of causes, of which the adoption of a Free Trade policy was only one, that we owed the wonderful expansion and

Diagram IV.—Showing Export Values for the Chief European Exporting Countries and for the United States During the Last Quarter of the Century. Each Vertical Division Equals Ten Millions Sterling; each Lateral Division One Year.

Diagram IV.—Showing Export Values for the Chief European Exporting Countries and for the United States During the Last Quarter of the Century. Each Vertical Division Equals Ten Millions Sterling; each Lateral Division One Year.

progress of the middle years of the last century; and now that some of these causes have ceased to operate, our industrial supremacy is being successfully assailed. The opinion frequently expressed by leading political economists twenty or thirty years ago, that no Protectionist country could hope to compete with us in the open markets of the world, is proving fallacious. Opinions founded on insufficient page 41 data usually are fallacious. Our most dreaded and successful rivals are both Protectionist countries. That the competition which we now have to meet in all the markets of the world will increase in severity is also certain. In a Report prepared by Sir Courtenay Boyle in 1896,1 it was shown that the manufacturing populations of Germany and of the United States were growing more rapidly than our own. As a natural consequence of this it follows that the supplies of manufactured goods to be disposed of in the outside markets of the world must increase. We have already lost the first place to the United States, and many believe that it will not be long before we have to relinquish the place which we now occupy in the ranks of the exporting countries, to Germany. But while admitting that this change of position is a result of natural law, and is therefore inevitable, we must guard against taking a too gloomy view of our country's position. While our coal lasts and can be worked at a reasonable cost, we possess an asset of inestimable value. The fear that the waterfalls of France, Switzerland, and Norway will render this asset of little value is due to lack of knowledge. The nineteenth century has been the century of steam-power. Electricity, not steam, will be the universal power-agent of the century just born. But electricity can be generated from coal—with modern plant and machinery—almost as cheaply as from any of the larger waterfalls in Europe and America. In Norway, it is true, electrical power can be generated at a very low cost. But the economic advantages of a waterfall in Norway, as compared with a coal-pit in South Lancashire, are largely discounted by its distance from the markets of the world for the raw materials and for the manufactured products.

The possibilities of utilising the energy stored up in coal in new ways are also great. The problem of power

1 "Memorandum upon the Export Trade of the United Kingdom, United States, France, and Germany."—Board of Trade Papers. 1896.

page 42 generation from the waste gases of blast furnaces has been solved in a practical manner in Germany and in Belgium; and a new form of gas producer in Germany has nearly doubled the thermal energy which can be extracted from 1 lb. of coal.

If our manufacturers will but make use of every advantage that applied science can offer to them for increasing the efficiency of their works or factories; and if our workers will second these efforts of their employers by doing all in their power to obtain the maximum of output at the minimum of cost, we may hope to maintain, so long as our coal lasts, our position as one of the leading manufacturing nations of the world. And before our coalfields are exhausted we may have realised the dream of a federated Empire. The waterfalls of Canada and the coalfields of South Africa and of Australasia, developed by British capital and by British labour, may then win for the Empire in the present century a place equal to that held by the Mother Country in the century which has just closed.

Should our prosperity be further checked, and this natural development of the resources of the Empire be hindered, by a fiscal policy adopted half a century ago, under circumstances widely different from those of the present time, it will be necessary to reconsider that policy, and to inform each of our chief competitors in trade, that we can no longer grant to them the privilege of free entry to all our markets, except as a return for similar privileges in all countries under their flag.