PART IV.—RECENT COMMERCE
CHAPTER XXVIII
COMMERCE AND COAL
315. Statistical survey of development since 1800.—In entering the nineteenth century the student approaches the period in which commerce has achieved the most notable progress. Great as former advances may have seemed to the people in whose time they occurred, these sink almost to insignificance when compared with the growth of commerce since 1800. A recent estimate by a German author pictures the progress of the export and import trade of the commercial countries of the world as follows, in milliards of marks (roughly, units of 250 million dollars): 1700, 0.5; 1750, 1.0; 1800, 6; 1850, 17; 1899, 76. Some of the striking features of recent growth are shown in the following table. It is necessary, however, to warn the student that these figures, especially those for the earlier part of the century, can be regarded only as approximations to the truth. It may not be out of place, further, to advise the student to turn to the end of the chapter for suggestions as to the best way of studying the figures.
316. Great growth of foreign commerce.—Assuming, for purposes of discussion, a fair degree of accuracy in the figures, some conclusions from them may be pointed out. The commerce of the world increased in this century at the astonishing rate of 1,359 per cent. We have before encountered instances of remarkable commercial expansion, in particular countries, but we must bear in mind that the figures here are supposed to include the whole world, the backward as well as the progressive countries, the many millions in the interior of great continents who scarcely trade at all, and the Chinese, perhaps in themselves a quarter of the world’s population, who trade still to but a slight extent. Clearly the growth of commerce in some countries must have been enormous to raise the total figures to the point at which we find them.
Foreign Commerce and Production of the Countries of the World
| Year | Aggregate Commerce Thousand Million Dollars | Per Capita Commerce Dollars | Coal Production Million Tons | Pig Iron Production Million Tons |
|---|---|---|---|---|
| 1800 | 1.4 | 2.31 | 11.6 | 0.8 |
| 1820 | 1.6 | 2.13 | 17.2 | 1.0 |
| 1830 | 1.9 | 2.34 | 25.1 | 1.8 |
| 1840 | 2.7 | 2.93 | 44.8 | 2.7 |
| 1850 | 4.0 | 3.76 | 81.4 | 4.7 |
| 1860 | 7.2 | 6.01 | 142.3 | 7.2 |
| 1870 | 10.6 | 8.14 | 213.4 | 11.9 |
| 1880 | 14.7 | 10.26 | 340 | 18.0 |
| 1890 | 17.5 | 11.80 | 466 | 27.2 |
| 1900 | 20.1 | 13.02 | 800 | 40.4 |
| 1910 | 33.6 | 20.81 | 1,141 | 65.8 |
| 1913 | 40.4 | 24.47 | 1,443 | 77.4 |
317. Increase in the relative importance of commerce.—Not less striking than this growth in absolute quantity, as measured in current values, is the growth compared with the estimated increase of the world’s population. The value per capita (“by head”) of a country’s commerce is secured by dividing the total amount of trade by the number of inhabitants; it shows the average share of each person in commerce, and furnishes, therefore, some index of the relative importance of commerce in different times and places. Now, even if this value per capita had remained the same we should regard the absolute increase in commerce as a very important fact. Commerce, however, has actually increased much faster than population; the share of the average human being in the world’s trade has grown over tenfold. Let the student reflect on the difference it would make to him whether he had $2 or $20 for spending money in a given time, and consider the extra articles he could buy with the larger sum; he will then be better able to appreciate the broadening and deepening of the commercial current in recent times.
318. The world now passing through a commercial revolution.—The student is now in a position to understand the significance of the statement of an English writer, that “the commerce of the world may almost be said to be the creation of the past seventy-five years.” We are living in the midst of a vast, though silent, revolution. Reference to the figures will show that the process of change quickened strikingly in the latter half of the century, and at its close we still do not dare to say when the movement will slacken. The change which we find so marked in commerce affects equally other sides of human life. An American author, Adams, writing in 1871, could say with truth that “the discoveries of Guttenberg and Columbus have produced more startling and more clearly defined results upon the destinies of the human race within the last twenty-five years than in any other equal period of time during the four previous centuries.” Have the results been less startling in the quarter-century that followed? Another American economist, Wells, said about 1890, “When the historian of the future writes the history of the nineteenth century he will doubtless assign to the period embraced by the life of the generation terminating in 1885 a place of importance, considered in its relations to the interests of humanity, second to but very few, and perhaps to none, of the many similar epochs in time in any of the centuries that have preceded it.” Is the generation terminated in 1915 willing to admit that it takes a less important place in history than its predecessor?
319. Share of modern countries in the commerce of the world.—It is unnecessary, I hope, to say more to impress upon the student the fact that a period of great change in the world’s history, which began half a century ago, still continues; and that the coming generation will be called upon to carry on this change, and guide it for the welfare of humanity in the future. Leaving, therefore, general discussion and speculation, and returning to the concrete and well-defined facts that form the subject of our study, I insert in this place, as likely to be of use for reference later and of interest now (though not deserving painstaking study as yet), a table showing the share of different countries in commerce about 1900.
Recent Trade of Leading Commercial Countries
(Approximate annual averages in millions of dollars, special trade)
| nbsp; | 1891-1900 | 1901-1910 | 1912 | ||
|---|---|---|---|---|---|
| Imports | Exports | Imports | Exports | Percentage of total general trade of world | |
| United Kingdom | 1725 | 1190 | 2525 | 1700 | 16.6 |
| Germany | 1140 | 880 | 1800 | 1470 | 12.9 |
| United States | 780 | 1050 | 1185 | 1655 | 9.9 |
| France | 835 | 710 | 1065 | 995 | 9.0 |
| Holland[1] | 660 | 550 | 1020 | 835 | 6.9 |
| Belgium[1] | 362 | 309 | 578 | 453 | 4.2 |
| Austria-Hungary | 302 | 337 | 464 | 459 | 3.3 |
| Russia[1] | 276 | 339 | 386 | 503 | 3.5 |
| Spain[1] | 177 | 172 | 201 | 185 | 1.1 |
| Italy | 255 | 219 | 480 | 343 | 3.1 |
A similar statement, showing the relative rank about 1850, would present only one very striking change; France held at that time the place second to that of the British Empire, and Germany came after the United States.
320. Possible explanations of recent commercial development.—One topic of prime importance demands our attention as we enter on the study in detail of the commerce whose growth has been sketched above. What were the causes of this great commercial development? When we know them we shall truly understand the commercial history of the past century, and shall be prepared to face the problems of the present and the future.
The topic will be discussed under the heads which have been employed previously in similar discussions. The advances have been achieved either by a gain in the power of man to control nature and natural forces (technical progress); or by the more efficient cooperation of men in business (industrial and commercial organization), or in politics (political organization, domestic and foreign policy).
321. Prime importance of technical factors, especially the use of coal.—Hard as it is to disentangle these different factors, all of which have contributed much to the recent progress of the world, there need still be no question which has been of the leading importance during the nineteenth century. This century has been the great era of material invention, of scientific discovery, and of the increase in power of man over nature. Technical progress, therefore, is the first subject to be studied.
Again, there need be no question as to which feature of technical progress holds first place. Electrical appliances? Machinery? The steam-engine? Applied chemistry? All those things, with the vast benefits which they confer on humanity, rest now on practically one basis: coal. Vegetable matter of past geological ages, that has become fossilized, has undergone mysterious chemical changes and has shrunk to one tenth of its former bulk, furnishes now, after hundreds or thousands of centuries, the means by which we maintain and develop our material civilization and our great commerce.
322. Power in coal.—Coal offers men what all men seek, power. There is “spring” enough in it, when properly applied, to raise a million times its own weight a foot high. A man who sends a horse and cart to fetch a ton of coal, occupying four hours on the way, secures a power in the coal theoretically 2,800 times that expended in bringing it; and can probably get from it an amount of useful force exceeding by 100 times or more that of the horse employed in carting. A few decades ago (1865), when the output of coal was far less than it is now, an English economist calculated that forests of an area two and a half times as large as that of the United Kingdom would be required to furnish even a theoretical equivalent of the annual coal produce; practically, of course, the use of wood for an equivalent is out of the question. It was estimated, somewhat later (before 1880), that if the whole area of England were good land, devoted solely to raising forage, it would not support a horse-power equal to that obtained from the English coal mines; and that an area perhaps ten times as large would be required for the mere food supply of human beings of equivalent force.
323. Dependence of modern industry on coal.—It would be a great mistake to consider coal necessary now only in its most common application, that of generating steam for engines. The chemical industry depends largely, though not entirely, on the heat obtained from coal, to break down its raw materials and build up its finished products. Metallurgical industries would shrink almost to infinitesimal proportions if they were denied the use of coal. It has been estimated that the manufacture of a ton of pig iron requires the use of two tons of coal or more; while an equal quantity of steel requires six to eight tons. Still, the use of coal for the steam-engine is undoubtedly its most important application; and we can gain some conception of the place that coal has taken in the world’s economy by considering the growth of steam power.
324. Importance of coal, estimated in steam horse-power.—A horse-power, the technical unit adopted for measuring the working capacity of an engine, is for practical purposes equal to the force that can be got from several (perhaps three) horses, or from a number of men variously estimated at ten to twenty-four. Now in round numbers the steam horse-power of the world was a million and a half in 1840, and had increased, at the end of the century, to fifty times that amount. A simple operation in arithmetic will show the amount of work, in human equivalent, now done by steam. Taking, for example, a modern country, Germany, we find engaged in industry and transportation slightly over ten million people, while we find engaged beside them another population of mechanical iron slaves (steam-engines), variously estimated as equivalent to one hundred to two hundred and fifty million people. These slaves cost for food (coal), attendance, doctor’s bills (repairs), and burial expenses (including the cost of replacing them once in twenty-five years), only about $2.50 a year apiece. Admit some exaggeration in the figures, and still the contrast with the cost of human labor is most striking.
325. Technical history of the steam-engine.—The steam-engine has been in practical use in Europe since about 1700. The earliest engines, however, seem ludicrously crude now, and could be used only for pumping water. Progress was slow until the last part of the eighteenth century, when James Watt introduced improvements (separate condenser, double-acting piston, use of cut-off, etc.), which greatly increased the efficiency of the engine, and caused a gradual extension of its use from mining to manufactures. The introduction of the non-condensing, high-pressure engine about 1800 prepared the way for the use of steam on railroads. The compound engine, in which the steam passes through two or more cylinders before it is allowed to escape, was invented about the same time, though it was not brought into general use until about 1850. Since then improvements in details of the engine and in the form of boilers have enhanced still further the efficiency of steam power, until it now produces about two thirds of the work possible under ideal conditions. Practical engineers expect now no rapid progress or startling changes. Some measure of the progress achieved is furnished by the fact that Watt’s engines required ten pounds of coal an hour for each horse-power, the engines of the next generation required five, while the best modern engines require but one and a half, or, in rare cases, one.
The previous paragraph referred to the reciprocating engine in which the piston moves constantly forward and back. Since rotary motion is the form in which the power is commonly transmitted and applied, it would be desirable to get the motion in this form originally, and many attempts have been made to make rotary engines. Success has been attained in the case of the steam turbine, in which jets of steam strike against the blades of a turbine wheel, and cause it to revolve. Originally applied by Dr. De Laval of Sweden to operate the centrifugal cream separator which he had devised, it has come into common use for the generation of electricity and for the propulsion of ships. While the steam turbine has proved its efficiency for special purposes it is less adaptable than the old form of reciprocating engine, and still leaves to that the larger part of the field.
326. The internal combustion engine.—In the ordinary power plant there are two units, the boiler in which steam is generated, and the engine in which the steam is put to work. An internal combustion engine is designed to burn the fuel in the engine itself. This is practicable when the fuel is a gas or a liquid whose vapor will unite with the oxygen of the air to form an explosive mixture. The internal combustion engine offers several advantages over the steam power plant: it uses more effectively the heat that is generated, it is less bulky, it is more easily tended. In spite of characteristic disadvantages, particularly the need of an auxiliary starter, and restricted flexibility as regards speed and power, the internal combustion engine has proved indispensable. In large units it serves the steel mills, which put the waste gases from their blast furnaces to work, and in its application to the automobile it has effected a revolution in transportation and travel. Although in the manufactures of the United States in 1914 the internal combustion engine still accounted for less than 5% of the total horsepower, the aggregate horsepower of the gasoline engines of automobiles has since that time considerably exceeded the total horsepower from all sources employed in manufacturing industry.
QUESTIONS AND TOPICS
1. Do not attempt to remember any of the figures in sect. 316, unless possibly the first two of the last line.
Prepare a graphic chart in the following way. Lay off the time periods on the horizontal line at the bottom of your paper, and on the perpendicular, near the right-hand margin, lay off the figures of the last line of the table. This will insure space in the chart for all the lines. Divide the perpendicular into, say, forty units. Each unit may then be made to represent: 1,000 million dollars of value; $1 per capita; 40 million tons of coal; 2 million tons of iron. Indicate the figures for 1913 on the perpendicular (commerce 40, per capita commerce 24, coal 36, iron 39); and perform the same operation for the figures on perpendiculars above each of the other dates. Use for each item a characteristic mark, (cross, circle, triangle, square), which will enable you to distinguish it from the others. Then unite the marks of each kind by a curved or crooked line. Choose a characteristic form of line (dotted, wavy, or colored) for each item. If the chart be made on a large scale and with sufficient neatness, later tables of statistics (development of railroads, trade of particular countries, etc.), can be entered upon it.
With regard to each one of the items: when was the increase (measured by the slope of the line) greatest? When least? What relation is apparent in the increase of different items? Many of the questions suggested by a study of the figures will be treated in later sections.
2. Prepare a small chart of the figures, giving the estimated value of commerce 1700-1899; note the enormous gains made in the nineteenth century.
3. Development of printing, especially of periodical publications, in recent years. [Encyc., preferably the new International or Supplement to the Britannica, under Printing, Newspaper, etc. Cf. Scribner’s Magazine, 1897, vol. 22, p. 447 ff., on the modern newspaper business; Taylor in Depew, One hundred years, chap. 25, Williams in same, chap. 26.]
4. Divide the perpendicular on the right-hand side of your chart into spaces, indicating the shares of the chief countries in commerce.
5. Make out a list of three changes coming under each one of the three heads discussed. Example: technical progress, wireless telegraphy; business organization, trusts; political, international arbitration, reciprocity.
6. Early history of the coal trade. [R. L. Galloway, The rise of the coal trade, Contemporary Review, 1892, 62: 569-578.]
7. Industrial and commercial importance of coal. [Edward Atkinson, Coal is king, Century Magazine, 1897-98, 55: 828-830.]
8. Effect of a stoppage of the coal supply. [Stephen Jeans, The coal crisis and the paralysis of British industry, Nineteenth Century, 1893, 34: 791-801.]
9. How does the increase in steam horse-power compare with the increase in the output of coal? With the growth of commerce?
10. Earliest history of the steam-engine (to about 1700). [Thurston, chap. 1, sect. 1.]
11. Earliest applications of the steam-engine. [Thurston, chap. 1, sect. 2.]
12. Development of the engine before Watt. [Thurston, chap. 2.]
13. Development by Watt and his contemporaries. [Thurston, chap. 3.]
14. Recent improvements. [Thurston, chap. 6; Iles, chap. 5.]
BIBLIOGRAPHY
Bibliographical aids become broader in the recent period. The great literature scattered through periodicals, in which articles of lasting value are often to be found, is made accessible by Poole’s Index and its continuations; books in print, if not too technical for the general public, will be found in the A. L. A. (American Library Association) Catalogue, which supplies full titles and prices.
Various cyclopedias and dictionaries of commerce have been published in the nineteenth century; they are useful repositories of information, especially of statistics. Among them the following, in English, may be mentioned: McCulloch, **Dictionary, various editions; Waterston, Cyclopædia, 1847; Macgregor, *Commercial statistics, 1850; Homans, Cyclopædia, 1858. Statistics are brought up to date in various year-books and periodicals; the **Statesman’s Year-Book is an indispensable annual, and will meet all ordinary demands of teacher and class.
The student of the history of commerce is often forced to turn to narrative political histories for information. Among the general histories of Europe in the nineteenth century may be mentioned Charles D. Hazen, *Modern Europe, N. Y., Holt, 1920; C. M. Andrews, *Modern Europe; N. Y., Putnam, 1899; Seignobos, **Pol. hist.
Much has been written, of course, on the progress of the century in various technical lines. Ure’s Dictionary, various editions, describes the advances of the first part of the century; and the student will probably find one of the modern encyclopedias (Britannica, with Supplement; International) the most satisfactory source of information on recent progress. No attempt can be made in this or the following chapters to cover the great field of technical literature. Jevons’ **Coal question should, however, be mentioned as still of great interest and value. Nicolls, * Story; Edward A. Martin, *Story of a piece of coal, N. Y., Appleton 1896; or R. Meldola, *Coal and what we get from it, N. Y., Young, 1897 can be assigned for reading by the class. Edwin C. Eckel, Coal, iron and war, N. Y., Holt, 1920, is an interesting and suggestive study in the physical bases of national industry. On the steam-engine, Robert H. Thurston’s History, N. Y., Appleton, 1902 will probably be found most useful. The biographies by Samuel Smiles are a valuable history of technical progress, interesting and trustworthy. Of more recent books, designed for popular reading, George Iles, Flame, electricity and the camera, N. Y., Doubleday, 1900 contains attractive accounts of many features of technical progress.
CHAPTER XXIX
MACHINERY AND MANUFACTURES
327. Development of agriculture.—Pursuing now our survey of the technical advances of the century, we must notice first the oldest and perhaps the most important branch of production, agriculture. An American reader does not need to be told that farm work has been greatly changed by the introduction of improved tools and machinery. Even an implement so old and apparently so simple as the plow will do now better work with half the force formerly required. Cultivating and harvesting machines of various kinds spare land and labor. The introduction of artificial fertilizers has given new freedom and efficiency to the agriculturist.
328. Progress less in agriculture than in other branches of production.—Still, when all is said, agriculture is the branch of production which has been affected least by the changes of the century. The farmer is still bound to the soil and subject to the weather. Steam power has not made for itself the place which sanguine men once thought it would win. In Europe reforms have been effected in sweeping away antiquated institutions affecting the personal liberty and property rights of cultivators, who now, in free association, can work far more efficiently than before. In other continents the extension of the modern transportation system has effected a revolution in the choice of crops and the means of marketing them. Neither transportation, steam power, nor machinery, however, has vitally affected the methods by which crops are grown; and when the first fertility of new land has been exhausted and a growing population clamors for a cheap food supply, the world will find that one of its great problems is still unsolved.
329. Function of machinery.—For the great changes effected by the use of steam we look, of course, not to agriculture but to manufactures and transportation. These changes have been wrought through the medium of machinery, and the reader is asked to give particular attention now to the part which machinery plays in modern life. I spoke above of coal as offering power to men. How can you apply this power to a useful purpose? First, you must burn the coal under a boiler to produce steam; second, you must translate the expansive power of steam into regular forceful motion in an engine; finally, you must apply the force and the motion in just the way that is wanted by means of a machine. Evidently machinery does not depend altogether upon steam. Rude machines, mills for grinding grain, for example, were run by wind or water power long before the steam-engine was invented; water power is being transmitted by electricity in increasing quantities at present; and men hope that we shall be able to use the heat of the sun or the force of the tides to run machinery in the future.
330. Advantages of machines.—Practically, however, the great extension in the use of machinery has depended on the power obtained from coal through steam. Only in the period since the adoption of improved forms of steam-engine have we realized the possibilities of machines. They can be applied only to certain classes of work, especially that involving the constant repetition of an operation which can be easily regulated either by the machine itself or by a laborer supervising it. We can use machines, for instance, to make cloth and even to make clothes, but we do not use them in the operations of dressing and undressing. In their proper field, however, they are indispensable. They will accomplish tasks which are too great or too small for human hands. They repeat a process or copy a model with absolute fidelity. They never grow tired and they have no human failings; they often economize time and materials. Finally, and this is the point of decisive importance, in many lines of work they, furnish the product at a cost far below that of hand labor.
331. Revolution in old industries effected by machinery.—To describe the manifold applications of machinery in the nineteenth century, within the limits of this manual, is impossible. Let the reader glance from the book to the objects surrounding him, and make a list of the ten objects which first attract his attention. If he will trace their history he will find, in all probability, that they are all the products of complicated machinery, which has been developed from the simplest beginnings in the course of the century. He will probably experience difficulty in finding a familiar object which has not been subjected to machine processes unknown in 1800. Machinery has heightened human productivity in certain lines a hundred or even a thousand fold. At the Atlanta Cotton Exposition of 1881, two carders, two spinners, and one weaver, from the mountain region of Georgia, could produce eight yards of coarse cotton cloth in a day of ten hours. The same number of persons in a modern cotton factory could produce 800 yards by machinery. The cotton goods produced for home consumption in the United States by 160,000 laborers at that time, would have required the services of 16,000,000 laborers without machinery. Again, a skilful woman can knit 80 stitches a minute by hand; a machine enables her to make 480,000.
332. Introduction of new industries.—Machinery has not only revolutionized old industries; it has created many new ones. A distinguished American economist expressed the opinion, about 1890, that half of all those who were then earning their living by industrial pursuits did so in occupations that not only had no existence, but which had not even been conceived of, a hundred years before. I may write with a steel pen, with a fountain pen, or with a typewriter; whichever choice I make I am giving employment to a group of mechanical laborers who did not exist in 1800. Taking a particular city as an example, the industrial specialities of Leipzig are said to have increased from 118 in 1751 to 557 in 1890, a growth of 372 per cent. Nor must we limit our view of the effects of machinery to the mechanical pursuits which are carried on about us. Increased efficiency due to the use of machinery has set men free from other pursuits to engage in commerce, education, domestic service, etc.
333. Importance of iron in the age of machinery.—One particular industry deserves special consideration here, by reason of the quality of its product rather than of the quantity of laborers employed or the mere exchange value of the output. Without iron the modern age of machinery would be, at best, of stunted growth. Jevons characterized admirably the modern industrial system when he said that steam is its motive power and iron is the fulcrum and the lever. It is safe, I think, to challenge the ordinary reader of the present day to name a machine which is not composed largely or almost wholly of iron. The whole structure of our modern industry depends on the means of getting cheap iron. “Without it the engine, the spinning-jenny, the power-loom, the gas- and water-pipe, the iron vessel, the bridge, the railway—in fact, each one of our most important works—would be impracticable from the want and cost of material.”
334. Scarcity of iron before the nineteenth century.—Returning to the period about 1800 we find ourselves in a different world. I have described in a previous chapter the improvements effected in the manufacture of iron in the eighteenth century. Great as was the promise of these improvements, it waited long for full realization; well into the nineteenth century iron remained relatively scarce and dear and was spared in every possible way. A youth destined to play a leading part in the iron age (Joseph Nasmyth) visited the Carron Iron Works in 1823, and here is the description which he gives of a celebrated foundry and machine shop, associated with the construction of the first working steam-engine by Watt. “Much of the machinery continued to be of wood. Although effective in a general way it was monstrously cumbrous. It gave the idea of vast power and capability of resistance, while it was far from being so in reality.” If this was the condition at the Carron Iron Works, what must it have been in ordinary factories?
335. Development of machine tools for working iron.—Iron was little used, partly because it was hard to get and partly because it was hard to work. There were in England about 1800 only three good machine shops, where small steam-engines were built. The equipment of even the best machine shop would seem now wretchedly inadequate, and Stephenson was greatly hampered, in building his first locomotive, by the lack of good machine tools, for working metals. William Fairbairn said in his presidential address before the British Association at Manchester, “When I first entered this city [about 1813] the whole of the machinery was executed by hand. There were neither planing, slotting, nor shaping machines; and, with the exception of very imperfect lathes, and a few drills, the preparatory operations of construction were effected entirely by the hands of the workmen.” About 1825 to 1830, however, with the growth in demand for iron-working apparatus, there began a rapid development of this branch of manufacture, one step in advance leading rapidly to another. We may trace the process in the description that Nasmyth gives us of his first machine shop, a shed measuring 24 by 16 feet. “I removed thither my father’s foot-lathe, to which I had previously added an excellent slide-rest of my own making. I also added a ‘slow motion,’ which enabled me to turn cast-iron and cast-steel portions of my great Mandsley lathe. I soon had the latter complete and in action. Its first child was a planing machine capable of executing surfaces in the most perfect style; it was 3 feet long by 1 foot 8 inches wide. Armed with these two most important and generally useful tools, and by some special additions, such as boring machines and drilling machines, I soon had a progeny of legitimate descendants crowded about my little workshop, so that I often did not know which way to turn.” Nasmyth himself made one specially important contribution to iron-working machinery, by the invention of the steam hammer in 1839; the old “bit by bit” system of welding became henceforth unnecessary.
336. Steel, character and utility.—While the limits of our space will not permit us to trace further the development of machine tools, which have been made marvelously efficient in recent years, and while we must also forego a study of the details of iron production, the topic of steel manufacture certainly deserves some consideration. Ordinary cast iron, while strong and hard enough for many purposes, still is brittle by reason of the large proportion of carbon and other impurities which it contains. These impurities may be burned out in the puddling process, and the nearly pure iron thus obtained, called malleable or wrought iron, has a toughness enabling it to resist far greater strains than cast iron can stand. Intermediate between the two irons, and containing one per cent of carbon, more or less, is still another product, steel, which may be made even more tenacious than wrought iron, or even harder than cast iron. Its peculiar property of “taking a temper” is probably known to most readers. The valuable properties of steel have been known and prized for ages, but till well into the nineteenth century it could be used only sparingly; it was commonly manufactured by first making wrought iron, by the tedious process of puddling, and then heating the iron bars in contact with charcoal until they had absorbed the proper amount of carbon. The expense of this process prohibited the use of steel for most purposes; the wrought iron cost $75 a ton and the finished steel $250 or more; and the output would seem to-day inconsiderable.
337. Recent improvements in the manufacture of steel; the Bessemer process.—Many men have contributed to bring the manufacture of steel to its present efficiency, and we may notice only the names associated with the greatest improvements. An Englishman, Bessemer, patented in 1855 the idea, as simple as it is ingenious, of turning cast iron directly into steel by blowing air through it when melted, and so consuming the excess of carbon. It has not proved possible to make good steel according to Bessemer’s original idea, but with a slight modification his process has been wonderfully successful; in present practice all the carbon is burned out by the air current, and then the requisite amount is added before the metal is poured out. Ore containing a large amount of phosphorus is treated by melting it in a converter lined with lime, which removes this dangerous impurity (“basic process”).
338. The open-hearth (Siemens-Martin) process.—Still another contribution to modern methods of steel manufacture, known as the “open-hearth,” or, from the names of its introducers, the Siemens-Martin process, has been of great importance since about 1870. The steel is made from ore or from a combination of different kinds of iron, and, by peculiar devices for economizing the heat of the furnace, the process may be continued so long and regulated so carefully that a product of high quality may be turned out at a moderate cost. The result of all these processes has been to change steel from a luxury to a necessity of modern life. Modern mild steel is 40 per cent stronger than iron, and is tough enough to be tied in a knot or punched in the shape of a bowl when cold. The increase in efficiency due to its substitution for iron in machinery, railroads, ships, and structural work is simply incalculable.
339. Development of the modern chemical industry.—In detailing at such length as I have done the exploits of machinists in the past century, I may tempt the reader to undervalue the contributions of scientists. To guard against that error let us consider briefly the development of the chemical industry, which, like the iron industry, renders a service to modern civilization beyond any measure of dollars and cents. The Frenchman, Lavoisier, had established chemistry on a scientific basis before 1800, but industrial chemistry used still the primitive methods which had been employed for ages. Let us take, for instance, the single substance, carbonate of soda, of prime importance in industrial chemistry, for on it depend the various industries of glass, pottery, soap, photography, paper, etc. This substance was still obtained in the eighteenth century, by burning seaweed and seashore plants and treating their ashes; Spain had a considerable export of barilla, and owed to this product whatever success she attained in the soap manufacture. Leblanc emancipated the soda industry from kelp and barilla, by introducing the process based on sulphuric acid and salt; step by step improvements have been made since then. Sulphuric acid, discarded in the soda industry, has grown in importance notwithstanding; it is the controlling element in the manufacture of other acids, commercial fertilizers, alum, ether, glucose, etc., and in oil refining; and it is produced at a price and of a quality formerly unknown. The discovery of the anilin colors, in 1859, has revolutionized the art of dyeing. The chemist will make you, from coal tar, almost any color or shade desired. He will make you perfumes or flavors; and, if he has failed to construct quinine artificially, he has at least learned, in his attempts, to make substances such as antipyrin and phenacetin, of equal value for other purposes.
340. Influences determining the local distribution of manufactures.—A review of the contents of this chapter, with its discussion of the factors which have built up modern industry, should suggest to the reader the countries which have enjoyed exceptional advantages in the modern manufacturing period. Resources of coal and iron, clearly, are of great importance. That they are not decisive, however, is proved by the absence of modern manufactures in China, where there are abundant supplies of coal and iron, and their presence in districts like the North of Ireland, where, for instance, a great ship-building industry is fed with imported iron and coal. Factories can exist at a considerable distance from their source of supply if they are served by a transportation system which will fetch raw materials and carry finished products cheaply; efficient transportation is essential. Many other elements might be suggested as going to form the basis of national success in manufactures, but of them all I desire here to emphasize only two: good government and intelligent men. Manufactures cannot thrive in a country where unwise or corrupt methods of taxation rob the investor of his gains. Nor can they prosper, whatever other advantages a country may have, if it lacks intelligent and steady laborers, or clear-sighted and energetic leaders. The reader will have an opportunity, in later chapters, to test the truth of these statements; meanwhile, in anticipation, attention may be directed to the United States, England, and Germany, as those countries which have most signally proved their fitness for manufacturing.
QUESTIONS AND TOPICS
1. Development of the science and art of agriculture in the nineteenth century. [Encyclopedia.]
2. Artificial fertilizers. [Peacock, in Cosmopolitan Magazine, Nov., 1895.]
3. A modern wheat farm. [Scribner’s Magazine, 1897, vol. 22, p. 531 ff.; Edgar, Story of a grain of wheat. Note that “bonanza” farms are not typical of modern agriculture in general.]
4. What use is coal without a steam-engine? What use is machinery without a steam-engine? What use is a steam-engine without coal or machinery? Which would the world give up most readily, coal, steam-engine, or machinery?
5. Character and advantages of machinery. [Hobson, Mod. cap., chap. 3, sects. 1-3.]
6. How much have women gained by being relieved of the necessity of making cloth for family use? [Read description of the labor of spinning, weaving, etc., in colonial times; see Alice M. Earle, Colonial dames and goodwives, Boston, 1895, or Syndey G. Fisher, Men, women and manners in colonial times. Philadelphia, 1898.]
7. Effect of the introduction of machinery on the demand for labor in different occupations. [Hobson, Mod. cap., chap. 8.]
8. The growth of factories. [Bourne, Romance, chap. 9.]
9. Organization of a modern factory. [P. G. Hubert, The business of a factory, Scribner’s Magazine, 1897, vol. 21, p. 306 ff.; Fred J. Miller, The machinist, same, 1893, vol. 14, p. 314 ff.]
10. Progress in the iron manufacture. [Iles, chap. 4; R. R. Bowker, A bar of iron, Harper’s Magazine, 1893-4, 88: 408-424, F. W. Taussig, The iron industry in the U. S., Quarterly Journal of Economics. Feb., 1900, reprinted in Bullock’s Selected Readings in Economics.]
11. Development of machine tools for iron working. [Sellers, in Depew, One hund. years, chap. 49.]
12. Progress in the steel manufacture. [R. R. Bowker, A steel tool, Harper’s Magazine, 1893-4, 88: 587-602; Waldon Fawcett, The center of the world of steel, Century Magazine, 1901, 62: 189-203.]
13. Write a biographical sketch of one of the following: Bessemer, Siemens, Whitworth, Brown, Thomas, Snelus. [W. T. Jeans, The creators of the age of steel, N. Y., 1884.]
14. Write a report on advances in the manufacture of one of the articles named. [Encyclopedias; on coal tar products see Meldola.]
15. What conditions have led to the rise of the characteristic manufactures of your own vicinity? In what regions are their chief competitors? What are the relative advantages of different places with respect to some particular manufacture?
BIBLIOGRAPHY
See the previous chapter for books of general reference. The modern manufacturing organization and the influence of machinery have been treated, from the economic standpoint, by Hobson, Modern capitalism, and Schulze-Gaevernitz, The cotton trade, Manchester, 1895. A history and analysis of the factory system by C. D. Wright was published in the Tenth U. S. Census, 1880, vol. 2; further references to U. S. public documents will be given below, in the chapters on the United States. The English parliamentary papers and accounts contain an immense amount of material on this subject; the last volume of Cunningham, Growth, has useful references to them. The technical history of manufacturers defies compression. Much interesting material may be found in the reports of the U. S. Commissioners to various world expositions.
A good account of the history of machine making is provided by Joseph W. Roe, **English and American tool builders, New Haven. Yale Univer. Press, 1916.
CHAPTER XXX
ROADS AND RAILROADS
341. Commercial importance of the subjects of the chapter.—“Of all inventions, the alphabet and the printing-press alone excepted, those inventions which abridge distance have done most for the civilization of our species.” Macaulay’s celebrated sentence applies to civilization in general. With regard to the material civilization depending upon commerce, certainly no factor has been of greater importance than improvement in the means of transportation and communication. An improvement in these means has been effected during the past century, without a parallel in the world’s history; and a description of the changes deserves the most careful attention of the student in the short space which can be allowed the subject.
342. Statistical survey of development.—For a convenient means of reference I introduce, in this place, a statistical table (on opposite page) showing the development of the most important modern instruments of transportation and communication.
343. Improvement in the condition of roads.—Aside from the stretches of canal which had been brought into operation, the universal means of inland transportation about 1800 was the road. Some reference has been made in an earlier chapter to the condition of English highways in the eighteenth century, and to the improvements which marked that period. Conditions on the Continent were worse than those in England. French roads were mere tracks in the first part of the eighteenth century, and for the most part were still hopelessly bad at its close, when the system of maintaining the roads by forced labor was abolished.
From near the close of the eighteenth century, however, we may date the beginning of a period of rapid improvement in the roads of western Europe. The turnpike system, which allowed tolls to be charged for the use of improved highways, encouraged the investment of capital in these undertakings. The teachings of Telford and Macadam, two great road-engineers who emphasized the necessity of using good materials and securing proper drainage, were generally applied. In the period from 1800 to 1850 the roads of Europe were reformed to meet the demands which commerce made upon them, before the introduction of the railroad, and were put in the excellent condition which attracts the attention of American travelers to-day. The cost of freight transportation was reduced to half or less of what it had been, and the speed of passenger service increased correspondingly. An Englishman, Porter, notes that in 1798 he occupied nineteen hours in traveling eighty miles by what was considered a “fast coach”; when he wrote, in 1838, the trip was made in eight hours.
| Shipping Million Tons | Railways Telegraphs Cables | |||||
|---|---|---|---|---|---|---|
| Sail | Steam | Carrying Power | Thousand Miles | |||
| 1800 | 4.0 | 4.0 | ||||
| 1820 | 5.8 | .02 | 5.8 | |||
| 1830 | 7.1 | .1 | 7.5 | .2 | ||
| 1840 | 9.0 | .3 | 10.4 | 5.4 | ||
| 1850 | 11.4 | .8 | 14.9 | 23.9 | 5. | .02 |
| 1860 | 14.8 | 1.7 | 21.7 | 67.3 | 100. | 1.5 |
| 1870 | 12.9 | 3.0 | 25.1 | 139.8 | 281. | 15. |
| 1880 | 14.4 | 5.8 | 37.9 | 224.9 | 440. | 49. |
| 1890 | 9.1 | 8.2 | 42.3 | 390.0 | 768. | 132. |
| 1900 | 6.6 | 13.8 | 62.1 | 500.0 | 1,180 | 200. |
| 1910 | 4.6 | 22.0 | 92.8 | 637.0 | 1,307 | 291. |
| 1913 | 3.8 | 26.5 | 109.9 | 690.0 | 1,462 | 330. |
344. Importance of roads in the present transportation system.—A word of warning may be advisable before we leave this subject to study more recent means of transportation. Not many years ago a French economist estimated that not one twentieth of the settlements of the inhabited world were within less than a day’s distance from a railroad. Even in the most advanced countries the extent of roads far exceeds that of railroads, and only in the rarest cases do products reach the consumer without having traversed a stretch of common road. The road, therefore, takes a place in our modern economy more important than, in our carelessness, we generally admit.
The unit for measuring the expense of transportation is the cost of moving a ton one mile; on a modern American railroad the average cost of a ton-mile is less than one cent. Even on the excellent roads of Europe the cost is ten cents or more; while it has been estimated that the average cost of moving farm produce to market over the common roads of the United States is twenty-five cents per ton-mile. Assuming that the average haul is twelve miles, and that three hundred million tons are carried in a year, the expense reaches the total of nine hundred million dollars, a sum greater than the operating expenses of all the railroads of the United States before 1900.
It has been proved by actual test that the same force which draws one ton on a muddy earth road will draw four tons on a hard macadam road. One of the greatest improvements in transportation is still, in large part, neglected by the American people; and intelligent energy will find in no field richer results than in the reform of our common roads. Such a reform would economize time and force, would reduce wear and tear, and would greatly better the business position of the farmer by enabling him to choose his own time for marketing his goods and making his purchases.
345. Advantage of transportation by water; canals.—The student may, perhaps, remember that in the Middle Ages the expense of transportation by road led people to choose rivers for conveying their goods, whenever this was practicable. It has been estimated that a horse which could carry on its back two or three centner (a centner is about 110 lbs.) could with equal exertion drag twenty centner on a highway, or 1,200 through dead-water. This enormous gain in efficiency, resulting from the avoidance of the slightest difference in level and from the reduction of force wasted in friction, suggested to people in early times the idea of establishing channels for water where none had previously existed, that is, of building canals. Locks, for controlling the flow and level of the water, were invented toward the end of the Middle Ages, and a considerable extent of canals had been constructed on the Continent before the Bridgewater canal, described above, was opened in England. The real era of the canal, however, was in the period which may be limited roughly by the dates 1750 and 1850.
346. Development of canals, 1750-1850.—Immense amounts of capital were invested in canals in this period of their great importance; and the European and American systems of barge canals were constructed substantially on the lines which they have since retained. A traveler could then, as now, voyage through most parts of central and eastern Europe without leaving a canal-boat. Of a country like England, endowed by nature with advantages for water communication, it could be said in 1838 that no spot south of the county of Durham was more than fifteen miles from the means of water conveyance. Factories were established along the canals, as now along the railroads. Canals relieved the highways of a large part of the growing traffic, carried many raw materials which could not have borne the expense of transportation by road, and enjoyed even a considerable share of passenger traffic.
347. Relative decline in importance of canals.—Of canals as of roads it may be said that their days of usefulness are far from past. One class, indeed, that of the great ship canals, has grown rapidly in importance in recent years. Many economists believe that even the barge canals should be maintained and improved. There is still an active canal traffic in Europe, especially in Germany, and in the last-named country a notable project for extending the canal system is under consideration. The future of canals seems to depend largely on the introduction of improved forms of motor (electricity, gasoline).
Bormay Eng. Co., N. Y.
The canal has certainly yielded the place of first importance in internal transportation to the railroad. Its great merit, cheapness, has declined in importance with the reduction of railroad rates, while its drawbacks are felt more and more under the conditions of modern business. The canal is not only much slower and more uncertain than the railroad; its vital weakness is the fact that in temperate climates its usefulness is destroyed during at least a part of the winter. Since 1850 canal systems have grown slowly, if at all, and in some countries they have declined greatly. Nearly half of the English canals are now controlled by the railroads; some are closed and out of repair, and traffic is diverted from others by heavy tolls.
348. Origin of the steam railroad.—Soon after 1800 the American inventor, Evans, asserted more than once that he could manage to drive wagons on railways by steam. He expressed an idea that was by no means new, and that was then floating in the minds of many men. He said truly, however, that one step in a generation is enough, and that the monstrous leap from bad roads to steam railways could not be taken at once. Roads were improved, canals were extended, and still there was a demand for better means of transportation. Rails, first of wood and then of iron, had long been laid to enable horses to draw heavier loads at mines and quarries. George Stephenson, among others, conceived the idea of applying steam as the motive power on these railways, and distinguished himself above all predecessors by constructing, in 1814, a locomotive, Puffing Billy, which proved capable of hauling coal over a stretch of nine miles, from the mine to tide-water. Stephenson improved his original model, especially by the introduction of the steam blast to help the draft and so increase the power of the boiler; and in 1825 secured the adoption of the locomotive on the Stockton and Darlington Railway in Yorkshire. The call for this improvement had now become pressing. The port of Liverpool and the important manufacturing center, Manchester, distant only about thirty miles, were now connected by three canals, yet these were so crowded with traffic that it took sometimes a month for cotton to reach the factories from the sea. The opening of the Liverpool and Manchester Railway in 1830, with a locomotive, the Rocket, which made twenty-nine miles an hour, may be taken as the completion of the period of experiment, and the beginning of the railroad era.
349. Early period of the railroad.—Though steam locomotion after 1830 was a proved success, and though railroads were rapidly extended, and 1,600 miles had been brought into operation in 1835, the men of the time had still much to learn concerning their new instrument of transportation. Some men expected from it a speed of 75 or 100 miles an hour, while the State Engineer of Virginia took it as an admitted fact “that a rate of speed of more than six miles an hour would exceed the bounds set by prudence, though some of the sanguine advocates of railways extend this limit to nine miles an hour.” In certain localities the steam railroad, from the start, performed great service in freight carriage. At the Pennsylvania coal mines, for instance, it reduced the cost of hauling a ton nine miles to the river from $4.00 to $.25. Still the cost in general was high; a charge of ten cents per ton-mile was authorized in some early charters; and few people believed that the railroad could compete successfully with the canal in the transportation of ordinary freight.
350. Improvements in locomotives.—The technical improvements which have extended the usefulness of the railroad far beyond the dreams of its earlier promoters have been comparatively simple. Mere increase in size of locomotives and cars has been the greatest factor in increased efficiency. The engine which Peter Cooper constructed for experiment on the Baltimore and Ohio, about 1830, had a boiler the size of a flour barrel, weighed less than a ton, and was about the size of a modern hand-car. It was of little practical use. The development from early engines of the class of the Rocket, to those of modern American practice, is shown in the following figures:
| Weight | Hauling Power on Level | ||
|---|---|---|---|
| Early | 5 to 6 tons | 40 | tons |
| Improved | 25 | 1,200 | |
| Modern | 50 | 2,400 | |
In 1914 the average weight of the simple locomotive in the United States was 82 tons. Not only does a large locomotive put to more economical use the heat applied; the large train, also, costs far less in proportion for the services of men employed in running it.
351. Importance of steel in railroad construction.—To many readers practical devices like the air-brake, further reducing the cost and increasing the efficiency of operation, will be familiar. One factor in improvement, however, is not so apparent, and deserves special attention by reason of its commanding importance. The railroad in its modern form would be impossible if Bessemer and others had not taught the world to make steel cheaply. Iron rails, even under comparatively light loads, wore out and had to be replaced constantly. Steel rails, introduced gradually after 1860, could bear double the load on each wheel, and still outlive many iron rails. The modern rail, simple as it appears, is both in material and in proportions a great feat of engineering, “a beam whose every dimension and curve and angle are exactly suited to the tremendous work it has to do.” Steel rails and steel bridges have made possible the economy of the colossal locomotives of modern times. Steel has enabled men, instead of building 10-ton cars to carry 10 tons of cargo, to build 12-ton cars to carry 20, or 14-ton to carry 30; each improvement of this kind represents a saving in the dead weight of the train, and a consequent reduction in cost. Steel has furnished a material for the bridges over which the cars are carried, enabling a span of 500 feet to be constructed as readily as a span of 250 feet, with the iron formerly employed.
The size of the small circles indicates the railroad mileage of each country at ten year intervals. To facilitate comparison, the circles for 1850 are printed black, and those for 1890 are shaded. Note the disproportion of mileage and area.
352. Development of the railroad system after 1850.—Improvements in the construction, the equipment, and the operation of railroads, for the mere suggestion of which there is scarcely space here, explain the rapid growth of the railroad system shown in the figures at the opening of the chapter. It will be noted that over 99 per cent of mileage has been constructed since 1840, and that even in 1850 the world had made but a mere beginning in railroad construction. About the middle of the century began a movement toward the consolidation of existing lines, which had formerly been operated in short stretches by independent companies. The student should note that this consolidation proceeded largely along the length of railroads, not in the modern fashion by the union of parallel and competing lines; and it is almost impossible to exaggerate the benefits that resulted, in increased efficiency of management, improved service, and lower rates. About this time (1854) the first railroad was built across the Alps; the Union and Central Pacific route was opened in 1869, beginning the era of the transcontinental roads; and investors and engineers, who found the older and more advanced sections adequately supplied with railroads, began now to build lines far out into new territory, to open up fresh land and develop new trade.
353. Importance of railroads at present.—Some attention will be paid hereafter to the decisive influence which the railroad has exercised on recent commercial development; and in the history of commerce in particular countries the thoughtful student will not fail to recognize this influence even when it is not specifically pointed out. In leaving the subject at this point, however, the student may be grateful for a summary estimate of the relative importance of railroads and other instruments of production in our modern life. A good authority has estimated that one quarter or even one third of the total invested capital of civilized nations has taken the form of railroads. It is doubtful whether the manufacturing establishments of the world are equal in value to its railroads; while the world’s whole stock of money would buy but a fraction of them. The railroads of the United States carried in 1900 a thousand million tons of freight at a cost of a thousand million dollars, and at the rate of less than three quarters of a cent per ton-mile. The student may, from these figures, estimate the service of railroads to the average individual in the country, and may rest assured that the work they do could not be accomplished by the means in use a century ago, even if the whole annual product of the country were squandered in the attempt to carry it on.
QUESTIONS AND TOPICS
1. See the suggestion on the treatment of the statistics in sect. 315. Combine the statistics of the sections 315 and 342 in one chart, if practicable. See below, sect. 354, for the explanation of carrying power; a steamer is estimated to have four times the efficiency of a sailing vessel, in this table.
2. What is the cost of transportation over roads in your vicinity? What system of construction and maintenance is pursued?
3. Write an essay on one of the following topics, from the circulars of the Office of Road Inquiry, U. S. Department of Agriculture. (Copies may probably be secured gratis on application.)
(a) The proper method of constructing and repairing earth roads. [Circular no. 8.]
(b) Methods of constructing macadamized roads. [No. 21.]
(c) Repair of macadamized roads. [No. 30.]
(d) The best system of maintaining roads. [No. 24.]
(e) Systems of State aid. [No. 32, Minn.; No. 35, N. Y.]
4. Effect on the agriculture of the U. S. of the present roads. [Report of the U. S. Industrial Commission, 1900, vol. 10, pp. ccix-ccxvi.]
5. The place of canals in the transportation system of a modern European state. [O. Eltzbacher, The lesson of the German waterways, Contemporary Review, Dec., 1904, 86: 778-797.]
6. Early history of the railroad. [See a biography of Stephenson, by Smiles, or in one of the encyclopedias or biographical dictionaries.]
7. Early locomotives. [Thurston, Hist., chap. 4.]
8. American improvements in locomotives and cars. [Amer. Railway, p. 100 ff.]
9. Improvements in railroad construction. [Same, p. 1 ff.]
10. Feats of railroad construction. [Same, p. 47 ff.; Vernon-Harcourt, chap. 2.]
11. Modern bridges. [Vernon-Harcourt, chaps. 6, 7.]
12. Modern railroad management in the United States. [Amer. Railway, 149 ff.]
13. Development of railroad organization and its effects. [Same, pp. 344-359.]
BIBLIOGRAPHY
A good article on the history of highways will be found in the Edinburgh Review, 1864, vol. 119, p. 340 ff. See also Smiles’ Lives of the engineers, and, for conditions in England before the railroad, Stanley Harris, Old coaching days, London, 1882, or W. O. Tristram’s book on the same subject, London, 1893.
For the bibliography of canals and railroads see Bowker and Iles, and Palgrave’s Dictionary. Among the many books the following will probably be most serviceable: E. J. James, Canal and railway; J. S. Jeans, Water-ways; E. R. Johnson, *Railways; A. T. Hadley, *Railroad transportation. All of these include historical and descriptive matter, along with economic criticism. **The American Railway, made up of articles contributed by various authors to Scribner’s Magazine, has much matter of value and interest to the student of the history of commerce.
CHAPTER XXXI
MEANS OF NAVIGATION AND COMMUNICATION
354. Transportation by sailing vessels and steamers.—Steam has won for itself, in the course of the century, the commanding place in sea transportation as well as in land transportation. The struggle with competitors has lasted longer and the victory has been less complete. Steam navigation, however, offers such advantages in sureness, safety, speed, and cost, that sailing vessels have been forced out of some of the most important branches of commerce, and must content themselves with what the steamers leave them. Reference to the table at the opening of the preceding chapter will enable the student to follow the development of the means of transportation by sea in the course of the century, and to observe the growth in importance of the steamer. In explanation of the figures of carrying-power it should be said that a steamer is regarded as having three or four times the efficiency of a sailing vessel of equal tonnage; such an estimate is, of course, a mere approximation, and, indeed, the figures of tonnage, especially in the earlier part of the century, are themselves very uncertain.
355. Development of sailing vessels.—European sailing vessels at the opening of the century followed substantially the clumsy lines of the old East Indiamen. The chief credit for the improvement of wooden vessels is due to the Americans, whose clipper ships, marvels of grace and speed, were without rivals in their day. The clipper Dreadnought made the passage from New York to Queenstown in less than ten days, and in 1846 the American Tornado, starting from England with an early steamer of the Cunard line, reached America before her. The Great Republic, an American four-masted clipper, was of 3,400 tons and was the largest sailing vessel in the world; British ships of this period rarely exceeded a thousand tons in register.
The suggestion of iron for building ships was met at first with ridicule; some people, of course, thought that an iron ship would surely sink, and more serious objections were found in the cost, the derangement of the compass, and the fouling of the ship’s bottom. Iron, however, came gradually into use for steamers, and, after 1850, was applied more and more generally to the constructions of sailing vessels. Iron vessels were actually superior in buoyancy to wooden, drawing less water and carrying more cargo with a given tonnage; they were cheaper in the long run, because they are stronger, more durable, and less exposed to destruction by fire. Furthermore, iron was absolutely essential if the size of ships was to be increased. Builders of wooden ships were limited by the average height of trees, and, in spite of all devices, could not construct a frame sufficiently strong for a vessel exceeding about 300 feet in length. The size of an iron or steel ship is practically unlimited. The cost of ships constructed of metal has decreased with advances in the manufacture of iron and steel; remedies, fairly satisfactory, have been found for the derangement of the compass; and though it has been found impracticable to apply copper sheathing to steel ships, the fouling of the bottom is an evil of minor importance.
356. Relative decline of sailing vessels, notwithstanding improvements.—During the second half of the nineteenth century the wooden ship gradually disappeared from the seas, giving place to vessels constructed first of iron and then of steel. The country which suffered most from the change, as will appear later, was the United States; the country best prepared to profit by it was England. The English now rapidly enlarged the dimensions of their ships, and improved their rig and model. Some of the modern steel ships carry 5,000 tons of cargo, or even more. A study of winds prevailing on the ocean, to which an American officer, Maury, made important contributions, enabled sailing vessels to choose a course which, on many routes, shortened the duration of the voyage a third or more. Steam has been applied for handling the cargo, and for managing the rudder and sails.
In spite of all improvements the sailing vessel has not been able to keep its share of sea-borne commerce. So much depends on certainty in modern business that the merchant will gladly pay a higher freight rate to be relieved of the element of uncertainty which is bound to attend navigation by sails. Steamers now exceed the sailing vessels of the world not only in tonnage, and still more in effective carrying capacity, but even in number also, if only vessels of 100 tons and above are counted.
357. Steamers used at first chiefly for internal navigation.—American inventors made a practical success of steam navigation soon after 1800; a brief notice of their work will be given later. The steamer was used at first, however, chiefly for internal navigation and for short coasting voyages. It was of immense importance in furthering the development of the Mississippi Valley in America; and it soon made a place for itself on the European rivers. About 1840 there was a rapid development of steam transportation on the German rivers, and this has not ceased to grow in volume and efficiency. Chains have been laid along some of the river beds; on the Elbe, for instance, a chain extends all the way across Germany and even into Bohemia; and by this means steamboats are enabled to haul their barges up-stream against a strong current. The application of steam to ocean navigation did not become of great importance until about the middle of the century. At that time only one fifth of the steam tonnage entering British ports came from foreign ports; the rest was employed still in the coasting trade.
358. Beginnings of steam navigation of the Atlantic.—The credit for the first passage across the Atlantic by steam has often been ascribed to the American ship Savannah, which arrived at Liverpool in 1819 after a voyage of twenty-nine days. This boat, however, should be classed as a sailing ship with auxiliary engine, rather than as a steamer; the paddle-wheels were arranged to be removed and hoisted on deck when the wind was fair. It made most of the distance by sailing, and the scanty supply of coal gave out before it reached its port, so that, as the log reads, there was “no cole to git up steam.” A Canadian boat, the Royal William, actually did make the whole passage under steam in 1833, but stopped at Pictou for coal on the way; while the first regular steamship to cross without recoaling was the Great Western in 1838. The considerable intervals between these trips show that navigation of the ocean by steam was still in its experimental stage. Indeed, in the very year 1838, in which the Great Western and the Sirius began the period of practical application, a leading English scientist set out to prove by arguments and statistics that the project of connecting Liverpool and New York by direct steamer trips was “perfectly chimerical.” The Cunard Company was founded the next year; and some measure of the appreciation of the American people is given by the fact that when Mr. Cunard arrived at Boston in 1840, on the first trip of the new line, he received (it is said) no less than 1,873 invitations to dinner within twenty-four hours!
359. Improvement of the means of steam navigation.—The early steamers were moved by paddle-wheels, which offer special advantages for use in shallow water, but which are not so efficient as the screw propeller in the open sea. They require heavier and bulkier engines which must be placed in the best part of the ship, they waste power, and they show the effects of wear and tear more quickly. The Great Britain, which made its first voyage in 1845, was noteworthy on two accounts: it was the first large steamer (over 3,000 tons) to be built of iron, and it was the first to introduce the screw in ocean navigation. These two improvements were adopted by the Inman line (1850) and were gradually accepted by other builders.
In the second half of the century various improvements have added still more to the efficiency of the ocean steamer. Early steamers ran under such a low steam pressure that we find recorded in the log-book of one, “Broke the larboard steam-pipe, lapped it with canvas and rope-yarn and proceeded”! Higher pressures were introduced, and after about 1870 the steam was more fully utilized by compound engines, of which some have three or even four sets of cylinders. The introduction of twin screws, first applied to the City of New York (1889), has added rather to the safety than the speed of a passage, by permitting further development of the system of water-tight compartments.
360. Gains resulting from increase in size.—Another most important factor in the development of efficient steamers has been mere growth in size. A ship’s carrying power varies as the cube of her dimensions, while the resistance offered by the water increases only a little faster than the square of her dimensions. Large ships, therefore, consume less coal per ton of cargo, and as large boilers and engines consume coal more efficiently than small ones, there is a double gain. Here again, as in the case of railroads, the introduction of cheap steel has been of immense importance, and may fairly be said to have revolutionized the art of ship-building since 1875. While in 1880 nine tenths of British steamers were still constructed of iron, the proportion had sunk in 1890 to less than one twentieth, and the employment of steel is now almost universal. From steel are constructed the great cargo-carriers and the fast express steamers of the modern oceanic service. Some conception of the progress that has been made can be got by a comparison with earlier conditions. In 1841 the total steam tonnage of the British Empire was 188,000; nowadays a single steamer (Leviathan, Majestic) has a tonnage in excess of 50,000. The horse-power of British steamers in 1841 was estimated at 75,000; nowadays a single steamer, has an indicated horse-power almost equal to that total. The boilers of a modern express steamer (Teutonic) were required to evaporate 120 tons of water every hour, yet so thoroughly is the heat utilized that it was said of a steamer some years ago that the burning of a sheet of paper would move a ton a mile.
361. Resulting decline in freight rates.—Even in 1884 a competent writer could make this interesting statement: twenty years before, a steamer of 3,000 tons had to allow for coal and machinery on a given voyage 2,200 tons, and must confine the cargo to the remaining space; at the date when he wrote the great improvements had reversed the proportions, so that only 800 tons were needed for motive power and 2,200 were devoted to cargo. Manifestly steamship owners would be enabled by a change of this character to lower greatly the charges for transportation, and freight rates have, in fact, declined steadily in the course of the century. Lancashire spinners could transport their raw cotton from the source of supply in America at one sixteenth the cost which they had to bear sixty years before. Even in the last quarter of the century ocean freight rates dropped to one half, one third, or even one fourth, of the figures prevailing in 1874.
Conditions such as have been thus briefly suggested explain the immense increase in sea-borne traffic during the century. For the carriage of that traffic the merchant has now at his disposal not only the sailing ship and the “tramp,” the general-utility steamer, but also a multitude of special boats for special services: the tank-steamer for transporting liquids cheaply, the cattle steamer for live stock, and the steamer with refrigerators for dead meat, the fruit steamer, etc. The use of oil as fuel and the introduction of explosion motors of the Diesel type promise to raise still higher the efficiency of transportation.
362. Modern ship canals.—This survey of the development of the means of navigation may fitly be closed by a brief consideration of the modern ship canals and their contribution to the growth of trade. There were, in 1900, a round dozen of these canals, capable of receiving sea-going ships. Some, serving special ports (Amsterdam, Manchester, etc.) were of purely local importance. Others have disappointed the expectations of their promoters. The canal across the isthmus of Corinth has been a distinct failure, and the Kaiser Wilhelm Canal, between the North and Baltic seas, has not yet acquired the share of commerce which its projectors promised for it. Leaving aside the St. Mary’s canal in America there was up to 1914 but one ship canal which had proved its commanding importance, namely the Suez Canal.
A map of the world shows two narrow strips of land left by nature almost as though with the design of stimulating men to pierce them, the isthmus of Suez and the isthmus of Panama. A canal at either point unites not countries or small seas, but continents and great oceans, and saves thousands of miles in the routes of trade. The American isthmus presents great difficulties to the construction of a canal, but the Suez route runs through a district composed almost entirely of sand, with no elevation above 50 or 60 feet and with considerable parts actually below the level of the sea.
363. The Suez Canal, and its services to commerce.—The scheme of reopening the route across the isthmus of Suez, which, as said in the first chapter, had been made practicable for small vessels before the time of Christ, and had been rendered useless in the Middle Ages, was certain to rise as commerce between Europe and the East increased in volume. It is said to have been entertained by Napoleon I among others, but the credit for its accomplishment belongs to a French engineer and promoter, Ferdinand Lesseps. After more than ten years spent in preparation, work was finally begun in 1860, and the canal was ready for use in 1869.
The success of the Suez Canal may be gaged, from the investor’s standpoint, by the fact that dividends have risen to 20 per cent, from the public standpoint by the fact that the tonnage accommodated by the canal in 1891 exceeded ten million, in 1907 exceeded twenty million, and in general has been roughly equal to the tonnage entering and leaving any one of the great seaports of the world. The duration of the voyage to India has been shortened by a third, and more than half of the voyages to the East are now made through the canal rather than around the Cape of Good Hope. The canal has been an important influence in furthering the growth of the world’s steam tonnage, for it is practically barred to sailing vessels by the difficulties of navigation in the Red Sea; no sea-going sailing vessel has passed through it for years. It has made possible the movement of bulky wares formerly excluded from the trade with the East by the expense of transportation: rice, wheat, petroleum, and coal. It has not, however, produced one result which was expected, the diversion of trade to the countries of southern Europe, as in the time before the passage around the Cape had been discovered. Three quarters, in tonnage, of the ships using the canal have been British, and ships from the countries of northern Europe make up most of the remainder.
364. The Panama Canal.—Lesseps could not match in America the success which he had attained at Suez. A French company promoted by him started work at Panama in 1881, but became bankrupt before it had made much progress. Mismanagement at home, disease on the isthmus, above all the tremendous difficulties which nature has placed in the way of a canal at sea level, contributed to this result. The United States took up as a national enterprise a work which now offered but little attraction to private capital, bought out the French company, and in 1904 made arrangements to begin operations. Taught by the experience of the past the government decided on a canal with locks, reaching an altitude of 85 feet above sea level, and took the precautions suggested by sanitary science to protect the laborers against the menaces of plague, yellow fever and malaria. Under army engineers the work was carried on to a successful conclusion, and the canal was opened to traffic in August, 1914. The cost of construction was about $350,000,000.
In the first year of its operation the Panama Canal accommodated about five million tons of shipping; in the year ending in 1920 the figure had risen to about ten. The dislocation of traffic caused by the European War, and interruptions occasioned by earthslides in the Gaillard cut, made the growth of traffic slow and somewhat irregular. Figures for the traffic of the Suez Canal given in the preceding section show that the canal across the American isthmus could not rival in its early years the position of its older competitor for the world’s trade. Even more impressive is a comparison with the figures of traffic through the Sault Ste. Marie canals, on the northern border of the United States. The cargo tonnage by the lake route in 1920 was over eight-fold that carried through the isthmus. The Panama Canal, to 1920, had just about paid the expense of operation and maintenance. There seems no question, however, that apart from important military considerations, the construction of the canal will be justified by the contribution that it will make to the commercial development of the Pacific.
365. The postal service about 1800.—Increased facility in sending communications to a distance has attended the improvement of the means of transportation by land and sea. During the early part of the century the postal service was still cramped by old methods and high charges. In England, for instance, in the period after 1827 and before the reform, postage of fourpence (eight cents) was charged for the carriage of a letter any distance not exceeding 15 miles, and the postage increased with the distance: 8 pence for 80 miles, 12 pence for 300, 15 pence for 600, etc. The government charged, in some cases, nearly five hundred times the actual cost. Under these conditions little use, naturally, was made of the post, and it carried, on an annual average, only three letters for each member of the population. Many letters were sent illicitly by private means of conveyance, and the postal revenue remained nearly stationary for many years before 1839, in spite of the growth of the country in population and business activity. Conditions were better in some states of the Continent, notably Germany, but would still be regarded everywhere as backward.
366. Postal reforms and their results.—A new era in the English postal system dates from the introduction by Rowland Hill of the penny post; after 1840 a letter weighing not over half an ounce could be sent to any place in the United Kingdom if prepaid by a stamp costing one penny. Similar reductions were adopted in other countries; and new facilities were extended for the mailing of cards, printed matter, and periodicals, samples of merchandise, etc. An international Postal Union was established in 1874 among the chief countries of the world, which agreed on common rates of foreign postage, and arranged to cooperate in carrying on the postal service. This Union has improved greatly the means of distant postal communication, and has grown to include practically the whole civilized world, with the exception of China.
It is easy to follow the effects of the various reforms and improvements in the increased use of the mails. In the United Kingdom, for instance, the number of letters sent per head of the population has increased as follows: 1839, 3; 1840, 7; 1872, 28; 1882, 35. The post has developed from a luxury into a social and industrial necessity, and the extent to which it is used in any country furnishes a fair index by which to judge of the country’s advancement. The following countries may be taken as examples, the figures showing the number of pieces of mail sent annually about 1900, per head of the population: United States, 100; United Kingdom, 85; Germany, 81; France, 55; Italy, 17; Japan, 13; Spain, 12; Russian Empire, 5.
367. The telegraph before the application of electricity.—In passing to another subject, electricity, we may still consider ourselves as continuing the discussion of the applications of steam, so dependent are we still on coal and steam for the means of producing and using this new force. Among the manifold applications of electricity in modern life we must here confine ourselves to its use as a means of communication.
The telegraph, a word meaning “far-writing,” existed long before men thought of applying electricity to its operation. The need of sending messages quickly to distant places had led in many countries, before 1800, to a system of signaling by means of instruments much like the semaphores of the modern railroad. The crudeness of such a system is apparent. Communication depended entirely on clear weather and careful observers. Under favorable conditions the speed of signaling was really surprising; a despatch could be sent, for instance, from Paris to Strassburg, by 45 stations, in 61⁄2 minutes. It was estimated, however, that of the messages received only a quarter reached their destination promptly, another quarter were from six to twenty-four hours late, while half had to be forwarded by the ordinary post. Aerial telegraphy, therefore, never attained to great importance, and was restricted largely to government business.
368. The electric telegraph.—Practical telegraphy dates from about 1840, when the inventions of the American Morse, and the Englishman Wheatstone, made the use of electricity possible wherever an insulated conductor could be laid. Imperfect as were the early instruments they accomplished their purpose with remarkable success. The telegraph, indeed, has probably undergone less change in the course of its extension and practical development than any other invention of equal importance. We must look, therefore, to explain the great extension of its use, as shown in the statistics at the opening of the chapter, not so much for technical improvements as for a recognition of the value of the telegraph on the part of the public. It found an immediate application on the railroads, and provided them with a means of intelligence and control almost as important as is the nervous system to a human being. It was used at once, moreover, by governments. Little by little it made its way into business life, where it has found its chief field of usefulness, and where it has effected some most important changes, to be noted later.
Since about 1880 the telephone has made a place for itself beside the telegraph, serving the convenience of individual consumers as the telegraph serves the needs of the great captains of industry and commerce, and constantly strengthening its position also as an instrument for the transaction of business.
369. Submarine telegraph lines.—The telegraph, which soon became of national and international importance, was still of restricted influence so long as it was confined to the land lines. Experiments on a modest scale, about the middle of the century, had shown the possibility of conducting the electric current through an insulated cable under water, and the world waited only for men of faith and energy to connect continents by submarine lines. A group of prominent Americans, of whom Cyrus W. Field was the leader, took up the project of an Atlantic cable, failed twice in their attempts to lay it, and succeeded in 1858 only to find, after a few days of successful operation, that the cable had ceased to work. The project rested during the Civil War, but in 1866 was finally accomplished. The extension of submarine cables since that time may be followed in the statistics of the preceding chapter. Cables now unite the peoples of all civilized nations, and form an indispensable part of the modern world of thought, politics, and commerce.
370. Wireless telegraphy.—To the men who were struggling to unite continents by electrical conductors the idea that connection for the purposes of communication could be established without any conductors whatever would have seemed an idle dream. Yet this result has been attained by wireless telegraphy. Electrical waves sent broadcast from a transmitting station affect delicate instruments “tuned” to receive them at a distance of thousands of miles, and enable messages to be sent across unsounded seas or untraversed deserts with equal facility. Wireless telegraphy has not displaced the older form, which still is and probably always will be more reliable in operation. For many purposes, however, it is a useful supplement, and for one important use it is an indispensable substitute. Wireless instruments can be established as readily on board ship as on land, and so permit ships to communicate with each other and with the shore. Ships can summon aid in time of emergency, and can regularly keep in touch with their agents so that their movements can be directed to suit the need of markets. In 1914 over 500 wireless stations had been established on land, and nearly ten-fold that number on board ship.
QUESTIONS AND TOPICS
1. American clippers. [Marvin, Amer. merchant marine, chap. 12; Clark, in Harper’s Magazine, 1908, vol. 117, p. 92 ff.]
2. Is it probable that steamers will drive sailing vessels entirely from the seas? People once thought that railroads would cause a decline in the demand for draft-horses; has that been the case?
3. The life of the merchant sailor. [W. Clark Russell, Scribner’s Magazine, July, 1893, 14: 3-19.]
4. Early voyages by steam across the Atlantic. [Fry, 33-42.]
5. Improvement of marine engines. [Thurston, chap. 5: Maginnis, chap. 11 (technical, good plates and pictures); Chadwick in Ocean steamships, pp. 1-56.]
6. The building of an ocean steamer. [Rideing, in Ocean steamships, pp. 91-111.]
7. Freight traffic by ocean steamers. [Gould, Scribner’s Magazine, Nov., 1891, or in Ocean steamships, p. 217 ff.]
8. Passenger travel. [Same, Magazine, April, 1891, Steamships, p. 112 ff.]
9. Steamship lines of the world. [Hunt, Scribner’s Magazine, Sept., 1891, Ocean steamships, p. 253 ff.; Encyc. Brit.]
10. Write the history of one of the great steamship companies: Cunard, Inman, White Star, North German Lloyd, Hamburg American, etc. [Fry, Maginnis.]
11. Engineering achievements in modern ports. [Vernon-Harcourt, chaps. 9, 10.]
12. The Manchester ship canal. [Vernon-Harcourt, chap. 13; Porritt in Yale Review, vol. 3, 295-310.]
13. The Corinth Canal. [Vernon-Harcourt, chap. 14; U. S. Monthly Summary, Dec., 1901.]
14. Construction of the Suez Canal. [Vernon-Harcourt, chap. 14; Encyc.]
15. Effects of the Suez Canal. [Fairlie; U. S. Monthly Summary, Dec., 1901.]
16. Effect of the Panama Canal on routes and traffic. [Hutchinson gives a study of results as anticipated; see U. S. Statistical Abstract and periodical literature for actual results.]
17. Development of the English postal system in the nineteenth century. [Social England, 6: 237-246; Ward, Reign of Queen Victoria, 2: 118 ff.]
18. The railroad mail service. [Amer. railway, p. 312 ff.]
19. From the figures of trade given in sect. 319 and from the figures of population in the Statesman’s Year-Book a table can be constructed giving the commerce per head of the people of different states, for comparison with the postal statistics in the text. Note, however, that these statistics include domestic mail, while figures of internal commerce are lacking. The U. S., for instance, would seem to have but slight commerce per capita, in spite of the active use of the mails, because the bulk of our trade is internal and does not appear in statistics.
20. Development of the telegraph. [Iles, chap. 13.]
21. Extension of the telegraph system in the United States. [Eckert in Depew, One hund. years, chap. 19.]
22. History of the submarine telegraph. [Iles, chap. 14; Charles Bright, The story of the Atlantic cable, N. Y., Appleton, 1903, $1; U. S. Monthly Summary, Commerce and Finance, Jan., 1899, pp. 1653-1675.]
23. Development of the telephone. [Hudson in Depew, One hundred years, chap. 20.]
24. Distribution of wireless stations. [Map in Statesman’s Year Book, 1914, plate 4.]
BIBLIOGRAPHY
For carefully studied accounts of ocean transportation in its different aspects see Joseph R. Smith, *Organization of ocean commerce, Boston, 1905, The ocean carrier, by the same author, N. Y., 1908, and Emory R. Johnson and G. G. Huebner, *Principles of ocean transportation, N. Y., 1919. These books offer bibliographies which may be used to supplement references here given. On the development of sailing ships, beside the older books by Lindsay and Cornewall-Jones, see Adam W. Kirkaldy, British shipping, London, 1914, A. H. Clark, The clipper ship era, 1911, books by Basil Lubbock on ships of the clipper period, and references given later for American shipping; on steamships there are satisfactory accounts in Fry and Maginnis and in the collection entitled Ocean steamships. Excellent chapters on the different ship canals, with further references, are given in Johnson and Huebner. See also Lincoln Hutchinson, The Panama Canal, N. Y., 1915.
Summary accounts of the development of the postal service, satisfactory for the purposes of most readers of this book, will be found in the encyclopedias. A scholarly study of the development, particularly in the first half of the nineteenth century, is provided by J. C. Hemmeon, History of the British post office, Cambridge, Harvard University, 1912. The various applications of electricity are fully treated by Iles. Other books aiming to describe electrical applications for the general public are by Tunzelmann in the Contemporary Science Series, Park Benjamin, and Philip Atkinson. Consult the A. L. A. Catalogue for further references.
CHAPTER XXXII
THE WARES OF COMMERCE
371. Effect on commerce of technical progress.—It is now time to discuss the effects on commerce of the technical changes which have been described in preceding chapters. Following back the substance of those chapters, the effects may be briefly summarized as follows. First, an improvement in the means of communication and transportation which has brought men and goods of different regions vastly nearer to each other than they have ever been before in the world’s history. Second, a control over the forces and materials of nature which has enabled men to manufacture old wares more cheaply and new wares which were before unknown. Third, as a result of the development of the transportation system, the settlement of new countries with virgin soil and rich mineral resources, and the connection of these countries with each other and with the countries of the Old World.
Of these three factors any one alone would be a powerful stimulus to trade; the three working together account for the astounding growth of commerce during the nineteenth century. Comparing the present and earlier periods we may characterize the advance by saying that in the Middle Ages commerce concerned itself almost entirely with the luxuries of life; that in the modern period (1500-1800) it served mainly men’s comfort; while in the recent period, since 1800, it has become necessary to the very existence of a considerable part of mankind.
372. Growth of the sphere of commerce and resulting specialization of production.—The world has gone far toward realizing the ideal of the early free trader, that wherever a man might be, he should share in the productive advantages of all other men, wherever they might be. Customs tariffs have been able to check the movement of commerce; they have been powerless to stop it. The sphere of ordinary trade, which was once the manor, a mere hamlet or village; which grew in time to be the town with its surrounding country; then included the whole nation; and became in the modern period international,—this sphere of regular and ordinary trade is now the world. Whole countries now specialize in the production of different articles, as individuals or small districts once did.
Northwestern Europe has become a great factory, drawing its food supplies and raw materials from distant parts of the world, and exporting manufactured products in exchange. Beside Europe stands the continent of North America, supplying in large part the needs of its own people for manufactures, and producing a surplus for export. North America, indeed, stands in one aspect above Europe, for it has unexhausted stores of natural resources which it lavishes on other parts of the world less richly endowed. The other continents take subordinate positions. They are enabled by commerce to procure from Europe and North America the manufactured goods which they require, and specialize in the production of various food supplies and raw materials for the means of purchasing these goods.
373. Abolition of the slave trade.—The description of the present world-organization of production, and of the exchange of wares to which it gives rise, belongs to the department of commercial geography. It is proper here, however, to call attention to some of the marked changes in the wares of trade which have taken place since 1800.
One ware which was, before 1800, of great commercial importance, and which yielded immense profits to those who dealt in it, has disappeared with the abolition of the slave trade by all civilized nations. Long before the abolition of slavery itself, humanity revolted against the horrors of the “middle passage,” and the protests took effective form about 1800; the states of Europe and America agreed, one after another, that the slave-trade under their flags, and for the supply of their territories, should cease.
374. The great wares of commerce. Coal.—For the purpose of a summary survey the most important wares of commerce before 1800 can be designated as belonging to the two classes, colonial products and textiles. We shall have to note, in ensuing sections, striking changes affecting both of these classes, and the addition to the important wares of commerce of two new classes, mineral products and foodstuffs.
Taking first the mineral products, and including coal with them, as common usage justifies us in doing, we find, at first sight, that this article takes a far lower rank among the modern wares than we should expect from its commanding importance in industrial life. There has been, it is true, a great growth in the coal trade, and considerable quantities are exported from England, Belgium, Germany, on occasion the United States, etc., for use in countries lacking coal mines, or at sea. There is an immense internal commerce in coal. In 1900 more than half of the tonnage carried on the railroads of the United States consisted of mining products; and of these coal certainly formed a very considerable, perhaps the major, part. Still coal does not rank among the chief wares of foreign trade.
375. Metals and Manufactures.—An explanation of the comparative insignificance of coal in foreign trade is found in its bulk. An active industrial people can compress the value of coal, as it were, by using it near the mines for the production and transformation of other materials. Coal is transmuted into iron and manufactures, and so loses its identity, though it remains still the real power behind the exports of that character.
Commerce in iron and steel, and the manufactures depending on them, has increased enormously in the course of the century, as the reader may readily suppose. Supplies of iron and machinery flow from the centers of production to the less advanced countries, and the simpler tools penetrate every nook and corner of the earth. Copper has grown greatly in importance, as its use for electrical appliances has extended, and now forms a considerable item in exchanges of countries like the United States and Germany.
376. Petroleum.—Nor is the new commercial significance of mineral products confined to the metals. In the last half century the trade in mineral oil (petroleum, “kerosene”) has become a necessary part of the world’s economy. One result of the great improvements in manufactures and transportation was a demand, from all sides, for more light. Artificial illumination was needed for the full utilization of machinery and means of transportation; and to provide light for the newspaper reading, study, and recreation to which people gave themselves in increasing numbers. The first half of the century witnessed many improvements: the invention of matches, the introduction of glass lamp-chimneys, the spread of gas lighting, and the use of new oils for illumination. No previous advance, however, compares in importance with the discovery that crude petroleum could be made the source of a cheap and efficient means of illumination. The development of the petroleum trade in the space of little more than a generation is a matter of common knowledge, and is readily explained by the importance of the service which it performs.
377. The grain trade; slight development before 1800.—Important and characteristic as the trade in mineral products has grown to be in the nineteenth century, it is still far from first place among the branches of the world’s commerce. The primacy belongs, without question, to the trade in foodstuffs, especially grain.
Before the development of the modern system of transportation commerce in foodstuffs concerned itself largely with the condiments rather than the aliments, with spices and seasoning rather than the substantial food staples. Even at a freight rate of 15 cents per ton-mile (and the expense of transportation on European roads before 1800 was certainly far above that), wheat at $1.50 a bushel would be limited to a trade-radius of 330 miles; the whole value of the wheat would be consumed in transporting it that distance. Transportation by sea was, of course, much less costly, and enabled limited amounts of food to be imported under favorable conditions. Still, food has to be grown on land, and often on land distant from any means of water carriage; and the countries of Europe were forced in general to a policy of self-sufficiency, raising the requisite supplies of food at home under conditions however unfavorable. We may appreciate the short space of time separating us from this state of affairs by noting that in France, even in 1817, people were dying of famine in Lorraine, while wheat was abundant in Brittany; the carriage of provisions from one province to the other quadrupled prices. In Russia, even later (Pskov, 1845), the same conditions prevailed.
378. Extent and importance of the grain trade at present.—Grain formed, therefore, one of the least considerable of the wares of foreign commerce before 1800. A French economist estimated the international trade in grain at 30 million bushels at most. From that figure, comparatively insignificant, the grain trade of the world had risen, even in 1887, to over 1,500 million bushels; grain formed then, in value, almost one tenth of the total of the wares of trade, and in importance far exceeded any other ware. The expense of transportation had undergone such a vast diminution that one day’s wages of a common laborer would pay for the carriage over a thousand miles of all the grain and meat which he needed for a year’s subsistence.
It would be interesting, if time permitted, to note the far-reaching social and political effects of this revolution. We must, however, confine ourselves to its economic aspect. The English people, to take the most striking example, depend for more than half of their food supply, perhaps two thirds of their wheat supply, on imports from abroad. It is said that in every month in the year wheat is harvested in some country, of the northern or of the southern hemisphere, for the English market; a Floating Cargoes List reported 163 vessels bound for England with cereals, at sea at one time. As formerly the citizens of London depended on the farmer of a nearby county for the supply of his daily bread, so now the inhabitants of England in general depend upon people in the Dakotas, in California, in the Argentine Republic, in Egypt, in India, or in Australia. The Englishman is enabled, by commerce, to share in the agricultural advantages of any and all those countries; he applies himself to his specialty and exchanges the product for his food.
379. Commerce in other foodstuffs.—In some respects even more striking, though on the whole of far less importance, has been the growth of foreign commerce in stock and meat. About 1800 the common way of marketing meat was to drive it to market on the hoof; the trip might consume a number of days, and the animal would arrive in poor condition and with weight diminished. For transportation to distant countries meat had to be preserved by pickling in brine. Fresh meat of good quality was a luxury, and the average consumption of meat was small. Modern progress has solved the problem of using the great grazing spaces of North and South America and Australia for the supply of distant peoples, in two ways. Improvements in transportation by land and sea have allowed the carriage of live-stock for thousands of miles, in good condition. The use of refrigerating appliances, especially artificial refrigeration by means of steam power, has permitted the carriage of dead meat the same distance without deterioration. Furthermore, the application of scientific principles to the preservation of meat has enabled supplies of that article to be utilized which would otherwise be wasted, and has contributed a new form of ware to modern trade. Other foodstuffs (fruit and fresh vegetables) have profited by similar advances in the means of transportation and preservation.
380. The textiles; changes in relative importance.—In this brief survey only two more classes of wares may be noted, the textiles, and colonial products. Trade in wares of both these classes has undergone a great development and important transformation in the course of the century, though it presents no such revolutionary changes as in the case of wares described above.
The textiles have continued to be among the most important wares of commerce. A population, advancing rapidly not only in numbers but in average purchasing power, has demanded constantly increasing supplies of clothing material. There has been, however, a noteworthy change in the kind of fabric demanded. Measuring by the weight of the raw material consumed, the English textiles about 1800 were composed as follows: over two fifths woolen, over two fifths linen, considerably less than one fifth cotton. Note now the change as shown by conditions about 1880: wool made up one fifth of the total, linen little more than one tenth, while cotton had risen to two thirds. For some purposes cotton fabrics are better than those of any other material, for other purposes they present a cheap and satisfactory substitute; and consequently they have been able to displace other textiles to a large extent.
381. Commerce in raw materials for the textile manufacture.—The rise in importance of cotton is partly, not entirely, responsible for a great change in the character of the textile trade. With the exception of silk, which has always, because of its high price, been of restricted use, the raw materials for the textiles had formerly been produced in the country of manufacture. England and the Netherlands, it is true, had begun before 1800 to import wool from Spain, but wool was then an object of internal rather than foreign trade, in general, and flax was raised for home consumption in practically all the European countries. The introduction of the cotton manufacture in Europe introduced a change, for in the case of this textile the raw material as well as the finished product was necessarily a ware of foreign trade. The past century has witnessed a vast increase in the commerce in raw cotton, and, moreover, the establishment of an important trade in raw wool. In 1850 Europe still supplied four fifths of the wool consumed, and has continued since that date to produce about the same quantity as then. The proportion which it contributes to the total supply has, however, declined to less than one third. There has been an immense increase in the production of wool in South America and Australia, and a less notable advance in the amounts furnished by Africa and Asia. At the present time, therefore, raw wool flows to Europe from all the other continents, and returns to them in the form of finished goods.
382. Colonial products.—The last class of wares to engage our attention will be that of the so-called colonial products, of which tea, coffee, and sugar are familiar examples. The wares received their name because, before 1800, Europe depended entirely on distant parts of the world for their supply. The reader will remember what an important part they played in the commerce of countries like England and France, in the modern period.
At least one ware of considerable commercial importance has been added to the list of colonial products in the course of the century. Rubber (using that word to cover also gutta-percha, an article with somewhat different qualities), counted for little in commerce before 1830. Soon after that time, however, it was regarded as “promising,” and the discovery of the vulcanizing process by Goodyear enabled manufacturers to gain the full benefit of its valuable qualities, elasticity, impermeability, etc. It is now an indispensable article in many applications, and though the production has risen to a hundred million pounds a year the demand for it has increased still more rapidly, and the price has risen.
The old wares have not only retained but also increased their importance as elements in human consumption. The people of Germany consumed, on an individual average, about 2 pounds of coffee in 1840, 6 pounds in 1900; 4 pounds of sugar in 1840, 30 pounds in 1900. Figures from other countries present, with some variations, the same growth in demand. The people of the United States now demand over 10 pounds of coffee per capita, and over 70 pounds of sugar.
383. Rise of beet sugar, and effect on commerce.—One of the colonial wares, sugar, demands special attention. The methods of production have undergone a complete change in the course of the century, and the former currents of trade in sugar have, in some cases, actually been reversed. Before 1800 people relied entirely for their sugar supply on the cane plantations of the colonies. It was known already, however, that beets contained a large percentage of sugar, and during the Napoleonic wars, when the Continent was closed in large part to colonial imports, an attempt was made to secure sugar from this native source of supply. The attempt was sufficiently successful to stimulate further efforts. With the aid of liberal protection from the governments a beet sugar industry was established on the Continent in the first half of the century. That industry supplied in 1860 one quarter of the total amount of the sugar of the world, in 1882 one half, in 1900 nearly two thirds.
The change in the method of manufacturing sugar has had far-reaching effects on commerce. Countries with cane plantations have seen the price of sugar fall under the increased output of European factories, equipped and operated with scientific accuracy; they have lost a large part of their former market; some of them have been almost ruined. England, which once made great profit by importing cane sugar and distributing it among the other European countries, now, on the contrary, goes to the Continent for the larger part of its sugar supply; and continental states like Germany and France export sugar instead of importing it.
384. The European sugar bounty system.—The reader should, however, note carefully that these changes were due in large part to a system of protection which had grown to formidable proportions. European governments have found in sugar a convenient object of taxation, but have desired at the same time to further the growth of the home sugar industry, and to secure for it a market in foreign countries. They have sought to combine the two objects by taxing the home consumer, and by remitting the tax and giving special premiums to the exporter. A pound of sugar cost far more in a country of Europe where it was manufactured, than in the country to which it was exported; every pound sold at home had to bear a tax, and every pound sent abroad received a premium which enabled it to be sold more cheaply. The orange marmalade industry, for which the town of Dundee is famous, could flourish in spite of the expense of transporting the fruit from Spain to Scotland, because sugar was artificially cheap in the English market. Such a condition of affairs was admitted to be unwholesome; in some aspects it became absurd. The burden of the bounty system became intolerable and the governments of the Continent agreed upon measures of reform, which went into effect in 1903.
QUESTIONS AND TOPICS
1. Make a brief written summary of the contents of preceding chapters under the heads of section 371.
2. On an outline map of Europe indicate areas corresponding to the sphere of commerce in different periods, with approximate dates.
3. Suppression of the slave trade. [Schuyler, Amer. diplomacy, N.Y., 1886, chap. 5.]
4. Recent slave trade in Africa. [Biography of a modern missionary or explorer.]
5. The coal trade at the close of the century. [Special Consular Report, No. 21, 1900, part 1, Foreign markets for American coal; U. S. Monthly Summary of Commerce and Finance, April, 1900, vol. 7, no. 10, pp. 2815-2927, or Sept., 1902, vol. 10, no. 3, pp. 663-757.]
6. On the wares of 375 and the following sections prepare reports, indicating, where it is possible, the following points: total amount of the world’s product; the leading countries (perhaps six), the share of each, and their relative advantages; the chief importing countries; peculiar characteristics of the trade. [Commercial geographies, encyclopedias.]
7. Report on one of the following topics:
(a) Development of the uses of petroleum.
(b) History of the production and transportation of petroleum.
(c) The Standard Oil Company.
[Martin, Coal; encyclopedias; Gilbert H. Montague, The rise and progress of the Standard Oil Company, N. Y., Harper, 1903, $1; Ida M. Tarbell, The History of the Standard Oil Company, N. Y., 1904.]
8. Indicate on an outline map the distance from your home to which wheat could profitably be carried by different means of transportation. [See below, sect. 387, for convenient statistics.]
9. Character and value of wheat. [Edgar, Story, chaps. 1, 2.]
10. Explain the great fluctuations in the export of wheat from the U. S. in the nineteenth century. [See statistics in U. S. Statistical Abstract.]
11. Wheat in modern commerce. [Edgar, Story, chap. 4.]
12. Provision trade of the world. [U. S. Monthly Summary, Feb., 1900, vol. 7, no. 8, pp. 2297-2347.]
13. American canning interests. [Judge in Depew, One hundred years, chap. 57.]
14. What amount does an American household, your own for instance, spend in a year for each of the chief textiles: cotton, wool, linen, silk?
15. The cotton trade of the United States and of the world. [See above, sect. 378, for suggestion of a simple mode of treating a large subject; the topic may be amplified as time permits. F. Wilkinson, Story of cotton, N. Y., Appleton, $1; S. J. Chapman, The cotton industry, London, 1905; George Bigwood, Cotton, London, 1918; statistics in U. S. Monthly Summary, vol. 7, no. 9, pp. 2543-2635.]
16. The wool trade. [John H. Clapham, The woolen industries, London, 1907; Frank Ormerod, Wool, London, 1918.]
17. Write a history of one of the following, as a ware of commerce in the nineteenth century: rubber, tea, coffee.
18. History of sugar as a commodity. [See the doctor’s dissertation by Ellen D. Ellis, Philadelphia, 1905.]
19. What amount of tea, coffee, and sugar does your household consume in a year? (Note that sugar is frequently purchased in preserves, cake, etc.)
20. History of beet sugar. [Encyclopedias; index to periodical literature; U. S. Monthly Summary, Jan., 1902, vol. 9, no. 7, pp. 2585-2763.]
21. Some effects of the system of sugar bounties. [Charles S. Parker, Free trade and cheap sugar, Fortnightly Review, 1898, 70: 44-53.]
22. The Brussels sugar conference. [Economic Journal, June, 1902, 12: 217 ff.; same, March, 1904, 14: 34 ff.; Quarterly Journal of Economics, Nov., 1902, 17: 1 ff., Contemporary Review, Jan., 1903, 83: 75.]
BIBLIOGRAPHY
As this chapter touches the field of commercial geography I refer, for bibliography and general reading, to the current manuals on that subject: C. C. Adams, Text-book, N. Y., Appleton; G. S. Chisholm, Handbook, N. Y., Longmans; Joseph Russell Smith, Industrial and commercial geography, N. Y., Holt.
References in quantity sufficient for ordinary students are given in the Questions and Topics above; further references will be given when the history of the commerce of specific countries is considered.
CHAPTER XXXIII
THE MODERN ORGANIZATION
385. Qualities of modern commerce. Certainty.—The changes in the instruments and objects of commerce, described in preceding chapters, have had far-reaching effects on commercial methods and organization, to which the reader is now asked to give his attention. As a partial summary of what has gone before, and a preparation for what is to follow, modern commerce may be said to have made great gains in four important qualities: certainty, regularity, economy, sensitiveness.
In former times a merchant who gave an order involving the transportation of goods over considerable distances took a leap in the dark. He was fortunate if he could estimate with some accuracy the expense of transportation; he was almost helpless in estimating the time that would be consumed. So dependent were men on wind and weather, heat and cold, war and peace, and all the manifold conditions of nature and man, that loss was frequent and delay was constant. The element of chance, great by nature, was heightened by man; carriers were emboldened to make the most of their opportunities and to extort from the merchant all that the difficulties of his position might force him to pay.
Contrast these conditions, as they existed in the period before 1800, with conditions at the present time. The modern system of transportation has been likened to clockwork. The modern merchant feels aggrieved if a telegram is delayed a few minutes, a train a few hours, a steamer a few days. His expectations, indeed, are seldom disappointed, and even then he is often informed of the probable duration of the delay, and is enabled to prepare for it. The rates of transportation now are relatively stable, and, for the most part, are a matter of public knowledge. We have not yet reached perfection in this respect, as is shown by the wide-spread complaints against American railroad managers, but we have approached nearer to it than would have been imagined possible a century ago.
386. Regularity.—Certainty brings with it regularity. Steamers which are sure to arrive within a certain period can be advertised to leave on certain days. Merchants and producers are encouraged to make their preparations, and the whole body of people is stimulated to new activity and efficiency. Consider the following example, which, however trivial in itself, is typical of the course of development in the nineteenth century. “Before the establishment of steam-vessels, the market at Cork was most irregularly supplied with eggs from the surrounding district; at certain seasons they were exceedingly abundant and cheap, but these seasons were sure to be followed by periods of scarcity and high prices, and at times it is said to have been difficult to purchase eggs at any price in the market. At the first opening of the improved channel of conveyance to England (the steamer), the residents of Cork had to complain of the constant high price of this and other articles of farm produce; but as a more extensive market was now permanently open to them, the farmers gave their attention to the rearing and keeping of poultry, and, at the present time (1838), eggs are procurable at all seasons in the market at Cork, not, it is true, at the extremely low rate at which they could formerly be sometimes bought, but still at much less than the average price of the year. A like result has followed the introduction of this great improvement in regard to the supply and cost of various other articles of produce.”
387. Economy.—As to the economy in the carriage of wares resulting from recent improvements much has already been said in other chapters, but the student may find in the following estimate, by a German author, a helpful summary. For $3 a hundred kilograms of wheat (220 pounds, a little less than 4 bushels) could be carried the following distances in kilometers (about five eights of a mile): on a common road 100, on a good road 400, on an early railroad 1,500, on a modern railroad 4,500, on an ocean steamer 25,000. There is little danger that the student will underestimate the advantage to commerce of this reduction in the cost of carriage, but he should note also the economy resulting from the speed and certainty of modern instruments of transportation. A considerable part of the world’s capital, a century ago, was locked up in goods in transit or in warehouse. These goods were of no use to anybody. Nowadays not only are goods put where they are wanted, they are put there with such speed and certainty that merchants do not need to keep a large stock on hand, and the stock in transit is relatively small. In the India trade, for instance, when a voyage around the Cape of Good Hope took a good part of a year, and the time of arrival could not be calculated within a month or two, India merchants had to keep great stocks to meet the varying demand. Now that steamers make the trip by the Suez Canal in a month, and the time of their arrival is exact to a day, dealers order goods as they are needed, and the great India warehouses have been rendered in large part useless for their original purpose.
388. Sensitiveness.—The modern commercial organization has been likened to clock work, because of its regularity. Carrying further this comparison, it may be said that it is like a delicate chronometer, in which every movement is attended with the minimum of friction. The power of modern commerce appears in the vast quantities of wares which are exchanged through its agency; its sensitiveness is shown by the readiness with which the currents of trade are turned or even reversed to suit the occasion. It has been said that commerce turns from one side of the globe to the other on a difference of a cent on a bushel of grain, a dollar on a ton of metal, a quarter of a cent a yard on a textile fabric, or a sixteenth of a cent on a pound of sugar. So sensitive has the commercial world become to every stimulus that it feels also every shock. When the McKinley tariff bill was passed in the United States, it is said that the next day several thousand workmen, employed in the manufacture of pearl buttons in a city of far-off Austria, were thrown out of work. Brief interruptions of commerce, by the outbreak of epidemic diseases, by storms or other natural phenomena, or by strikes of workers engaged in transportation, rouse serious anxiety. The sensitiveness of modern commerce may be shown, further, by the refinements to which the principle of the division of labor has been carried. It is said that in the leather manufacture skins are sometimes sent across the ocean four times, to effect economies in subordinate treatments.
389. Importance of the telegraph, illustrated by conditions preceding its introduction.—While the various changes in commerce indicated above can be ascribed largely to the use of steam in transportation, they would be inconceivable, in their present form, if the electric telegraph had not been extended over all lands and under all seas.
The importance of the telegraph in commerce can be illustrated by conditions in Shanghai about 1870, before the cable reached that port. The rate of foreign exchange, a decisive factor in all commercial calculations, was at that time determined by European advices brought by post steamers. The news brought by one steamer would make the Chinese tael equivalent to 7.25 francs; on the arrival of another steamer the rate would rise to 8.10. As merchants bought in taels and sold in francs or other European currency, their profits and losses were largely dependent on variations in the rate. Two mercantile houses of Shanghai had found it worth their while to invest a large sum in the construction of special vessels, which could be made like modern torpedo boats, practically all machinery and hence very fast, as the only cargo they had to carry was a single letter, bringing from Singapore or Hong-Kong the European news affecting the rate of exchange, many hours in advance of the regular steamer. The few merchants who enjoyed the benefit of this news service had, of course, a great advantage over their competitors, buying and selling with full knowledge of what the rate would be. With the introduction of the cable, however, all merchants shared alike in such information, and, furthermore, by the continuous communication thus established, the former violent fluctations in rates became a thing of the past.
390. Services of the telegraph to the modern organization.—Newspapers spread broadcast the market quotations which are carried by the telegraph to all parts of the world, and the farmer in the American West, the cotton grower in the South, or the sheep raiser in Australia, can learn with ease what prices his staple brings in the great markets and what price he can ask for it. At the centers of business the great merchants, in touch, by the post and telegraph, with both consumers and producers, study to apportion the supply so that it will reach those who stand most in need of it, and seek to regulate future production so that there may be neither waste nor want when the product is brought to market. The remarkable progress of Brazil in coffee production has been explained by a student of the subject as due in large part to the spread of the telegraph in South America and the laying of a cable to Pernambuco in 1874, bringing the country into communication with the world’s coffee markets.
The telegraph has, moreover, enabled commerce to dispense with a whole army of middlemen, commission merchants, and brokers, who were necessary under the old system, but who have now been released to find more useful employments. Merchants in the wool trade, for example, send their buyers to the countries of production on fast steamers, transmit their instructions by telegraph, and bring the wool directly to the country of consumption, cutting out entirely the middlemen of London, Antwerp, and Havre, who once controlled the trade. Before the first Atlantic cable was laid it cost about 3 per cent to get cotton through the hands of the commission merchant and broker; the cable did away with the old consignment system, and in a dozen years the charge was reduced to about 1 per cent.
391. Functions of the merchant.—I spoke above of the elimination of unnecessary middlemen. To many people all middlemen seem unnecessary, and fit only for elimination. These people regard as worthless drones all who are not engaged in the work of raising raw materials, of manufactures, or of transportation; they see no reason why a man who merely sits in an office, receives reports and writes letters, who perhaps rarely sees the wares he “handles,” should grow rich off society.
The defence of the middleman may be given in the words of an English writer, describing the important part which merchants play in marketing the great output of the British iron industry. “The merchant usually has a better knowledge of the conditions affecting different markets than the producer. He comes more directly in contact with the buyer; he knows better to whom credit can safely be given, and is prepared to risk credits that the manufacturer would often refuse; he is well posted in railway and shipping rates and conditions, understands the peculiarities, practices, and requirements of particular markets, and has all other necessary commercial information, including freights and tariff duties, at his fingers’ ends.” Surely the functions thus suggested are sufficiently important to keep specialists employed, with profit to society as well as to the individuals engaged.
392. Growth in number and variety of the mercantile class.—In fact, the class of middlemen, those who are occupied merely in the exchange of wares, has increased greatly in the course of the century. The great commercial machine runs now with such power and smoothness, only by the help of myriads of men who get their livelihood by tending it. In Prussia, for example, the number of wholesale merchants or firms increased twenty-fold in sixty years.
The change would lack a large part of its present significance if it affected only the number of middlemen. It has been a change in quality as well as quantity. The increase in business has furnished the opportunity for a redistribution of tasks, and has led to a specialization which was before impracticable. To be a jack of all trades nowadays one must be a man of supreme genius; to be master of one branch of trade is sufficient for the energy and the ambitions of the ordinary man. It pays a few men to take the position of Charles Broadway Rouse, to offer to buy anything and to sell everything. Most wholesale merchants are content to confine themselves to one branch of trade: lumber, iron, wool, leather, grain, etc. Most of these merchants, moreover, rely further on specialists to help them with certain parts of their business. They depend constantly on the banker, the speculator, the broker, the forwarder, the warehouseman, the commission merchant, and agents of many different kinds. It is impossible, in this book, to do more than suggest the complex commercial organization which has grown up in the course of the century. Only a few of the most prominent features can be treated in the following sections.
393. Insurance and speculation.—The practice of insurance has made us familiar with the means by which producers secure themselves against some of the risks of their business. A farmer can insure his growing crop against hail, a merchant can insure his stock against loss by fire, a shipowner can insure his vessel against loss at sea. For a small annual payment, which the producer can well spare, he secures himself against a loss which might prove ruinous, if it chanced to come to him. He gains relief from anxiety, strengthens his credit (he could not borrow on the security of uninsured goods), and secures that regularity of operation which is essential to the greatest efficiency.
So obvious are the advantages of insurance that every one accepts it as a benefit. We have now to see how the same service which is performed for the producer by the insurance company is performed for the merchant by the speculator. Among the greatest risks in commerce is that of price changes due to great events (wet seasons or dry seasons, war or peace, etc.) which the merchant can neither control nor foresee. A grain merchant, for instance, who has bought some excellent wheat in Dakota, has made advantageous arrangements for its transportation, and is confident of finding a ready sale to an English miller, may find the whole transaction results not in profit but in loss, if the level of wheat prices falls before his sale is accomplished, by reason, perhaps, of the unexpected yield of wheat in a distant country, or by the conclusion of a great war. Why does he not sell the wheat in advance to the miller, and so protect himself from this danger? He would simply be shifting the burden to shoulders still less able to bear it. The miller is a manufacturer, who needs to give all his thought to the technical details of his business, and who can ill afford to buy wheat when it is high, only to find when he comes to market the flour that it has dropped in price, in sympathy with a decline in wheat.
394. Services of the speculator to commerce.—The class of speculators has grown up in the course of the century, to assume such risks. It can do great harm to business by creating risks where none naturally existed, producing artificial scarcity by “corners,” etc.; this danger should not blind us to the benefits it confers when it confines itself to its legitimate business. Let us see how, in practice, this business of speculation serves commerce.
A merchant who has bought wheat or cotton in America, for sale in the Liverpool market, sells immediately an equal quantity for future delivery, at a time when he expects to have his ware ready for sale in England. It makes no difference to him then whether the general price of his ware goes up or down. If prices go up he will have to pay more to “cover” his sale of futures, but he will also get more for his real ware. If prices go down he may not be able to get as much for his real wheat or cotton as he expected, possibly not as much as he paid for it; but he will make up just the difference, by the low price at which he can cover. He renounces all chance at great gains, but also secures himself against great loss, and is glad to pay the speculator’s commission to attain this result. He makes his profit by the differences in the price of wheat or cotton not at different times, but in different places; reference to the section above, in which the description of the modern merchant was quoted, will suggest how he earns his living. In a manner similar to this many manufacturers (millers or cotton manufacturers) protect themselves against variations in the price of their raw material.
395. Decline of the market and fair, and rise of the produce exchange.—I spoke above of the regularity of modern commerce as one of its distinctive features. The gain in regularity shows itself notably in institutions like the market, the fair, and the exchange. The old system of market-days, under which country people came to town on stated days to display their wares and enable housewives to lay in a supply of provisions, has given place to a steady flow of products through city shops and market halls to the consumers. Fairs have lost their significance in modern countries, because the volume of trade is now so great, and the instruments of trade are so highly developed, that commerce has developed into one permanent fair. The great expositions, which began toward the close of the eighteenth century, but of which the London Exposition of 1851 (Crystal Palace) was the first of world-wide significance, seem to have continued to the present time the principle of periodical recurrence, but a tendency to permanence is to be noted even with respect to them. Many of these expositions have led to the establishment of museums of industry, art, and commerce, and the use of permanent expositions of models and samples has come to be a recognized means of furthering industry and commerce. Finally, the nineteenth century has witnessed the foundation of most of the modern produce exchanges, which have proved indispensable to the rapid development of commerce in the great staples. The experience of Hamburg is significant in this respect. The coffee trade of that port declined after 1882, when Havre adopted the system of dealings in futures, and did not recover until 1887, when Hamburg adopted the system also, and then enjoyed a rapid growth of the trade. These produce exchanges are to be found, with variations in the wares handled and in the system pursued, in all advanced countries. Germany, for instance, offers facilities for the characteristic trade of a produce exchange (including dealings in futures), in the following articles: wheat, rye, maize, oats, rye flour, crude alcohol, rape-seed oil, kerosene, cotton, coffee, raw sugar, granulated sugar, and carded wool.
396. Contrast of the character of association in commerce and in manufactures or transportation.—A previous section, describing the specialization of merchants in the nineteenth century, suggests the gain which commerce has made in the way of cooperation. The tendency, however, has been to split tasks up into small pieces, and to distribute these among individuals or small groups, rather than to associate great numbers of men under one management. We do not find in strictly commercial undertakings the tremendous aggregations of men and capital which have become characteristic of modern transportation and manufactures. Modern trusts, it is true, have invaded the field of commerce to a certain extent, and have effected some of their chief economies in improved methods of marketing their products. What the development may be along the line thus indicated is an interesting subject for speculation, but a subject which cannot be allowed to detain us here. Mercantile enterprises are still, for the most part, carried on by individuals, by partnerships, or by corporations in which the personal and local element is predominant.
397. More efficient utilization of capital in modern trade.—The middleman, therefore, cannot as a rule secure the capital which he needs for carrying on his business by offering securities for public subscription through the stock exchange. He seems, in this respect, at a disadvantage in comparison with the manufacturer, the railroad, or the steamship operator. He is, however, better off in at least two respects than his predecessors of an earlier time. First, he can do much more business with the same amount of capital than was possible under the old conditions. The great technical improvements have resulted in a much more rapid “turn-over” of capital, and a merchant now sells out and replenishes his stock far more rapidly than he could formerly do. The instance of the India trade, given in a section above, illustrates this fact. The “merchant princes” who once ruled this trade by their great capital have given place to many smaller merchants, who can make less capital suffice by its rapid turn-over.
398. Benefit of banks to trade.—Second, the deserving merchant can manage with a smaller capital than formerly, because he can borrow more easily and to much better advantage. The reader must be content with a summary of the results of the development of banking in the course of the century, for there is no space in which to treat the details of its history. Banks have followed business throughout the world. They have attracted the unused capital of the community until they control now a fund of enormous dimensions, available for mercantile loans. On the security of business paper (bills of exchange, bills of lading, drafts, notes, etc.), merchants secure the use of this capital, and find their means limited now only by the extent of their business. It is the function of the banker to judge of the soundness of this business, and to accord or withhold the use of the bank’s money according to the promise of the enterprise. Mistakes are made, of course, but they are comparatively rare because a mistake in either direction compromises the bank’s success. Special institutions, the commercial and credit agencies, have grown up since 1841, to aid bankers and merchants in this delicate task of judging the credit of individuals.
399. Criticism of the present organization; crises.—Of the general power and efficiency of the present organization there can be no question. It meets the supreme test of maintaining a population greater than in any previous period of the world’s history, on a scale of comfort formerly unknown. That it is perfect, however, no sensible man believes. We cannot discuss the many criticisms directed against it from various points of view, but must not omit the consideration of one confessed weakness. The organization is wonderfully efficient in normal times, but it is unsteady. It passes, at intervals, through periods of feverish activity, culminating in a crisis and followed by dull stagnation. A curve showing the course of the world’s trade during the century would not present a steady rise, but a series of waves, with distinctly marked crest and trough. There is a waste of labor and capital in all periods of a crisis. In the good times men strain themselves to build railroads where they are not needed, or to make machines for which there is no profitable use. Sooner or later they come to their senses with a shock, and realize that they have been wasting their time; then they are as depressed as they formerly were sanguine, and are too timid for a time to make good use of the capital which the crisis has left on their hands.
400. Crises before 1850.—The tendency of the commercial organization to these interruptions in its regularity of operation, which was apparent in advanced countries before 1800, has grown more marked in the nineteenth century; and, with the spread of the modern organization, crises now affect the whole world. Crises have occurred at intervals of about eleven years since 1800. A crisis marked the end of the Napoleonic wars in 1815. Another followed in 1825, occasioned, in England, by speculation in banks, turnpikes, and canals, and by unwise investments in South America. Commerce recovered from its depression only to decline again after the crisis of 1836-39, which was felt with particular severity in the United States in 1837. The last of the crises in the first half of the century, and the first crisis for which railroad speculation can be held largely responsible, followed in 1847, and was the more severe on the Continent because it coincided with a period of political revolution.
401. Crises since 1850.—Toward the middle of the century the new instruments of steam transportation began to work their great changes. At just this time, moreover, the discovery of gold in California (1848) and in Australia (1851) led to an immense increase in the world’s stock of gold, which is said to have doubled in little more than ten years. The results, inflation and speculation, were as marked as though the new money had been of paper, and a period of over-trading ceased only with the outbreak of the crisis of 1857, which spread quickly from the United States to England and thence to the Continent.
A longer period than usual intervened, broken only by local disturbances (failure of a great English banking firm in 1866, “Black Friday” in the United States, 1869). The crisis of 1873 was, perhaps, on this account, more serious; it led to a depression of many years, affecting all branches of trade, and even distant countries like Australia and South America. Beginning, this time, on the Continent, where the outcome of the Franco-Prussian war and the payment of the great war indemnity had led to unprecedented speculation, it found a ready field in the United States, where there had been an active speculation in land and stocks, and proved to be the greatest international crisis which the world has known. As though the air had been cleared by this great storm, succeeding disturbances have been far more restricted in their action. A banking crisis in France in 1882 and a railroad crisis in the United States in 1884 were the chief events of the next period of danger; and in more recent times have followed the American currency crisis of 1893, and the German industrial crisis of 1901.
402. Rise in the price level since 1896.—Toward the close of the nineteenth century a change became apparent in the very basis of business, namely in the world’s money in which prices are expressed. The prices of different commodities never rise or fall exactly in unison, but it is possible by statistics to show the change in the average of prices or the price level, as it is called; and a study of recent statistics shows a rise in prices so extensive and so rapid as to make it clearly a topic deserving serious attention from the student of commercial development.
Taking for the basis of comparison the average of prices in the decade 1890-1899, the price of staple raw commodities in the United States had risen in 1910 by almost 40%; or, comparing 1910 with 1896, when prices were lowest, by 66.3%, almost two-thirds. The change has been less marked in manufactured wares, for it has been offset to a certain extent by improvements in methods of production, but still it is very great: nearly 30% compared with the decade before 1900, and over 40% compared with 1896.
403. Effects of increase in the world’s gold production.—Countless factors have contributed to this result, in one way or another, but economists are generally agreed that the one cause overshadowing all others is the increase in the world’s output of gold. The metal which is the basis of the world’s currency system has become so plentiful that it has cheapened; and the purchaser of wares has now to give more gold for them, that is, prices have risen.
From the time of the Californian and the Australian gold discoveries, for almost half a century, the world’s annual gold output was curiously constant, at a figure somewhat over one hundred million dollars. The discovery of new gold fields and the perfection of new processes effected a revolution. The output of 1896 first exceeded the figure of two hundred million, in 1899 it passed the mark of three hundred, in 1906 and in succeeding years past 1910 it never fell below four hundred million.
While some classes in the community lose in a period of rising prices, particularly wage-earners and bond-holders whose income rises slowly in comparison with the increase in the cost of living, the speculators, merchants and manufacturers find in such a period a great opportunity to make money and business rapidly expands. The following pages will describe a noteworthy development of industry and trade in the period immediately preceding the World War; and the reader will realize, even when no reference is made to it, that the change in the price level has been an important factor in the development. One caution, however, seems at this point particularly advisable. Many of the statistics following, in which the development is pictured, are given in terms of money values. These figures grow with the rise in prices, even when there is no change in the physical amount of business transacted, and are an accurate index of the volume of trade only when they are reduced to an extent corresponding with the rise of prices.
QUESTIONS AND TOPICS
1. In the example given, sect. 386, distinguish the producer, the transporter, and the consumer. Show how each one of these gained by the advance in organization. Did any one lose by it?
2. Of what wares are large amounts still kept in storehouses, and why? [Cf. U. S. Monthly Summary, Oct., 1903, vol. 11. no. 4, pp. 1033-1095, Warehousing industry in U. S.]
3. Study, from newspaper accounts, the effect of an interruption of commerce by one of the causes suggested in the text.
4. Distinguishing producer, middleman, and consumer, show what has been the effect on each of the introduction of the telegraph.
5. Service of the postal system to commerce. [James in Depew, One hund. years, chap. 5.]
6. Development of the modern system of advertising. [Ayer in Depew, One hund. years, chap. 13.]
7. Nobody complains because the farmer who grows wheat or wool does not also make flour or cloth. Is there any good reason why the man who makes the flour or cloth should also market it?
8. Study the biography of some great merchant, and find out whether he made money out of people, or made money for people and kept only a share for himself. [James Burnley, Millionaires and kings of enterprise, Lond. and Phila., 1901; Fortunes made in business, London, 1884, 2 vols.]
9. Make a genealogical chart, showing how, from a single ancestor (the medieval artisan) the many specialists in modern manufactures and trade have proceeded. [Small and Vincent, Introduction to Study of society, contains a chart of this character, which may be used for guidance. See the U. S. Census or a business directory for suggestions of the present organization.]
10. If you have personal knowledge of some trade or manufacture, write a report on the development of its organization and the resulting specialization.
11. Write a report on the advantages to society of (a) fire insurance, or (b) speculation. [Hadley, Economics, chap. 4, or other manual of economics; H. C. Emery, Speculation on the stock and produce exchanges of the United States, N. Y., 1896, Columbia Studies, 7: 283-512.]
12. Write the history of any institution for periodical trade, like a market or fair, which has ever existed in your neighborhood. Has it any commercial importance at present? [Residents of the original thirteen colonies and of the older States will find in local histories and early legislation much information on this subject.]
13. The London exposition of 1851. [McCarthy, Hist., vol. 1, chap. 21.]
14. Write the history of some produce exchange. [Emery, Speculation; local history and biography, reports of the exchange.]
15. Note, in connection with sect. 394, that the industrial organization has become so complex in recent times that this book cannot follow out topics which were treated in earlier periods. For the importance of capital and of large scale enterprise at present see the books on economics, on railroads, trusts, etc.
16. Advantages of the modern department store. [Scribner’s Magazine, 1897, vol. 21, p. 4 ff.; restrictions of space forbid the treatment of the organization of retail trade in the text, but many interesting and fruitful topics may be found in studying it.]
17. The business of a modern bank. [Scribner’s Magazine, 1897, vol. 21, p. 575 ff.; manuals on economics and banking.]
18. The benefits of commercial and credit agencies. [Question bankers and business men; I find no historical treatment of the topic available in English.]
19. Character and course of a commercial crisis. [Manuals of economics.]
20. Write the history of some particular crisis. [Bibliography in Jones, Bowker and Iles, and Palgrave; consult narrative histories of the period, and periodical articles.]
21. Effect of the gold discoveries about 1850. [Rand, Ec. hist., chap. 10, from Cairnes.]
BIBLIOGRAPHY
This chapter touches so closely the field of economics that it seems unnecessary to duplicate the references which are supplied in abundance by the manuals on that subject. See for bibliography Bowker and Iles, and Bullock’s Introduction to the Study of Economics, N. Y., 1897. A full classified bibliography of commercial crises will be found in Edward D. Jones, Economic crises, N. Y., Macmillan, 1900, pp. 225-245. The book which covers most fully the topics treated here is Wells, **Recent econ. changes. References on special topics are given above.
CHAPTER XXXIV
COMMERCIAL POLICY
404. War and peace in the nineteenth century.—Although, for the convenience of a round number, the date 1800 has been chosen in this book to fix the beginning of the recent period, the great changes which marked the passing of previous conditions began with the French Revolution of 1789. The effects of the revolution were soon felt outside the country in which it started. In a few years the powers of Europe were engaged in a war which, with slight intermission, endured for almost the period of a generation, and ceased finally only with the defeat of Napoleon at Waterloo. Since 1815 commerce has enjoyed singular freedom from the vexation of war, and our attention will be occupied in this chapter mainly with the commercial policy of states at peace. The convulsive struggle, however, in which the century began, has such importance, commercial as well as political, that it demands more than passing comment.
405. French privateers and English commerce.—The commercial interest of the revolutionary and Napoleonic wars centers in the contest between France and England. These two powers were the greatest commercial states of Europe, and France still retained important colonial possessions. England, however, had specialized in the development of sea power, while France now followed the course to which she had long been tending and sought to win the victory by the development of her power on land. After 1795 France abandoned the policy of maintaining great fleets to oppose the British, sacrificed the merchant vessels flying the French flag, and sought to destroy the commerce on which the life of England depended by sending out innumerable privateers to prey upon it. France enjoyed, apparently, an extraordinarily favorable position for making this policy effective. The port of London carried on more than half of British foreign trade; of the ships which contributed to its annual record of thirteen or fourteen thousand entries and departures, two thirds had to pass through the English Channel; and French privateers, sailing at sundown from a home port, could reach their cruising ground before it was light again. Some of the French privateers inflicted very serious loss on the British. A large one, captured in 1799, is said to have taken 160 prizes in four years, and to have cleared for her owners in Bordeaux five million dollars. English ships were forced to gather in convoys, sailing under the protection of ships of war. Fleets of 200 or 300 vessels were not unusual, and sometimes 500 or 1,000 were seen together, in dangerous places like the Chops of the Channel or the entrance to the Baltic. This system consumed the time and money of English merchants, and did not entirely prevent losses, which amounted perhaps to 2 per cent or more of the total volume of British trade. Still, the effort of France to crush her enemy by this means was clearly futile. France, on the other hand, saw her commerce decline until, as a literal fact, not a single merchant vessel flying the French flag was on the seas. In 1800 France received directly from Asia, Africa, and America less than $300,000 worth of goods altogether, and exported to those continents only $56,000.
406. Napoleon and the Continental System.—A new period in the war against commerce can be dated from the reopening of hostilities, after a brief interval of peace, in 1803. Napoleon, now the ruling spirit in France, found that a direct contest with the English on their own element, the sea, was hopeless. His schemes for the conquest of his great enemies may be summarized as follows: first, direct invasion, from which he was always deterred by the English sea power; second, a blow at England through her eastern empire, to which the Egyptian expedition was preparatory; and finally, the “commercial strangulation” of England by the exclusion of her goods from Europe. This last scheme, to which his efforts finally narrowed themselves, simply continued a policy which had already been applied in France, of excluding the wares and ships of British commerce. Napoleon was able, however, by his extraordinary successes on land, to extend the system of prohibition far beyond the bounds of France, and make it truly deserving of its name of Continental System. By 1809 he had closed to English trade all Europe except Turkey, Sicily, and Portugal. Decrees named from the place at which they were issued (Berlin, Milan), sought with savage thoroughness to stop all openings through which the English might carry on their trade and recruit their resources for the war against him. Commerce with Europe, according to Napoleon’s plan, was to be carried on exclusively by his allies or by neutrals like the Americans; and the English, by being totally excluded, were to be starved into submission.
407. English reprisals; the position of neutrals.—To these measures England replied with various Orders in Council which matched in spirit Napoleon’s decrees. As Napoleon sought to exclude England from European commerce, so England sought to drive the commerce of Napoleon’s allies from the sea, and, furthermore, to make neutral commerce aid her in her measures against him. An order of 1807 required any neutral trading with the Continent to stop at a British station both going and coming, to land and reship the cargo, and to pay certain duties. Its purpose was to make England the center and warehouse of the world’s commerce. Neutrals were placed between the upper and the nether millstone. In obeying the orders of either belligerent they exposed themselves to the punishment of the other. The merchants of the United States, who had profited by the early stages of the war to extend their commerce greatly, were forced into the seclusion of the embargo (to be described later), and were led in 1812 to the declaration of open war with England.
408. Failure of the Continental System.—England scarcely needed political allies in a contest in which the material interests of most of the people of Europe were allied with her own. The obstacles to commerce with the Continent caused the prices of articles like the colonial wares to rise to double, triple, even tenfold, what they were in England. The reader will remember that the practical beginnings of beet sugar manufacture can be dated from this period of dearth. Commercial forces were too strong for any political restrictions, and smugglers brought goods to the people who wanted and would pay for them, despite all penalties. At a time (1809-10) when all the great ports from Riga to Triest were closed, goods reached the interior still, through the Greek islands, Malta, parts of Spain, the Channel Islands, and Heligoland. Napoleon himself had to recognize the impossibility of making the Continental System effective. He clad his own armies in English cloth, sold constantly licenses to evade his own decrees, and sought to win the profits away from smugglers by allowing the introduction of colonial products on payment of duties equivalent to the smugglers’ gain. Certain branches of production and manufacture were furthered on the Continent by the restrictions on trade, but the Continental System, on the whole, resulted only in loss to the people and in the defeat of Napoleon’s own plans. It furnishes a signal example of the futility of attempting to crush a sea power like England, without meeting it on its own element.
409. Effect of the war on England and France.—The effect of the war and the prohibitive system was necessarily injurious to British commerce, and showed itself in a decline of British exports. The injury, however, far from being mortal, was extremely slight. Smuggling was incessant, and if one opening to British trade was closed another was quickly found. When Holland became allied to France and hence closed to England, British exports to Germany increased rapidly; the German people were not consuming more British goods, but acted merely as distributing agents, through whom the goods reached their old markets. Napoleon could not forever coerce a whole continent, and his blockade was generally evaded in northern Europe, with the connivance of the governments, before 1810. On the last day of that year the Czar of Russia bade open defiance to the Continental System; and it crumbled beyond hope of repair after the failure of the Moscow campaign. Even the losses which England suffered were made up, in considerable part, by the profits which she secured from the expansion of neutral trade. England gained valuable additions to her maritime empire (Malta, Heligoland, Cape Colony, Ceylon, etc.), and entered the nineteenth century with her commercial primacy established beyond dispute. France, on the other hand, emerged from the struggle weakened at home and shorn still further of possessions abroad. Hayti (or San Domingo) had been lost by a native revolt; the Louisiana territory had been ceded to the United States; and some of her small islands had passed into the hands of England.
410. Other wars of the nineteenth century.—After the conclusion of this great war the world enjoyed a long interval of peace. The nineteenth century has been marked by internal political development, rather than by international strife. The growth of the spirit of nationality, the idea that people conscious of likeness in language, religion, etc., should be grouped under the same government, has led to several sharp struggles between states; but these have, in general, been short and of no great commercial significance. More important, from the commercial standpoint, has been the revolution in South America, which has enabled the people, formerly bound by the restrictions of the colonial system, to establish independent trade relations. Commerce was seriously affected, moreover, by the Civil War in the United States, which closed to the world for a few years its great source of supply of cotton. Other countries proved incapable of supplying the lack; a considerable portion of the English people (one fifth, it was said then), supported by the cotton manufacture, suffered from the stoppage of work; and consumers were forced to adopt other clothing materials, and did not, for many years, use cotton as freely as before. Of the other wars preceding 1914 the only one that had great economic significance was the war between Japan and Russia in 1905, which brought into the rank of the great powers an Asiatic country with far-reaching commercial ambitions.
411. Removal of old obstacles to commerce.—The greatest benefit which Europe enjoyed from the French Revolution and the ensuing wars was the removal of many remnants of feudal institutions which had persisted, petrified as it were, to this late period of history. Of these remnants none was more harmful to commerce than the feudal institution of the staple. This flourished especially in the German states, and resulted in depriving of a large part of their commercial value the German rivers, which were by nature the cheapest and best means of transportation. It was impossible to travel far on any German river without reaching a staple, where the boatman was subject to delay, inconvenience, and considerable expense. On the Rhine, for instance, there were thirty-two stations of this character where dues were still levied in 1800. As far as regarded the effect on commerce the flow of the rivers might as well have been interrupted by cataracts. It was a great step in progress, therefore, when these interruptions were removed, as little by little they were in the first half of the nineteenth century. The principle of free navigation was extended gradually to include important international rivers like the Scheldt and the Danube. The reader will remember that in the Middle Ages various countries tried to monopolize parts of the sea itself. Denmark had kept its hold on the straits leading into the Baltic Sea, and required ships to stop at Elsinore and pay toll, until 1857, when it sold out its right to levy toll on the payment of a lump sum by the countries interested in free navigation.
412. Customs tariffs; the prohibitive system.—The most important topic which remains to be considered in this chapter is that of commercial policy as shown in the customs tariffs. The details of tariff policy must be left to later chapters, in which the different states will be considered separately; place can be found here only for a brief review of the general course of development, and for a consideration of some of the factors which explain the great changes.
Only a few years before the outbreak of the French Revolution France and England had agreed to a commercial treaty, which marked a great departure from the restrictive principles of the old mercantilist policy, and seemed to promise a new era of freedom in trade. The outbreak of war destroyed the new system almost as soon as it had been carried into effect, and changed the relations between the two states into that attitude of fierce antagonism which has been described above. The return of peace found the tariff systems of both France and England set in the old lines. The tariffs included a vast number of duties, both on imports and on exports; the rates were high and often prohibitive; the protection of national shipping by navigation acts was maintained. Similar characteristics marked the tariffs of other European states, and this period may fitly be termed the era of prohibition in recent commercial policy.
413. The period of free trade, 1860-1880.—The prohibitive system held its ground, however, only by force of custom and by the active support of small groups whom it favored. The writings of French and English economists, of whom Adam Smith was the great representative, had convinced thinking men that the people and countries of Europe would benefit by greater freedom of trade, and governments waited only for favorable conditions, political and economic, to lower their customs duties. The movement toward reform was at first local, finding place especially in England and Germany. Soon after the middle of the century, however, it became general in Europe, and led to such sweeping changes that the period extending, roughly, from 1860 to 1880 has often been called the free-trade period in commercial history. This was the time when the technical inventions, especially the application of steam on a large scale to manufactures and transportation, were first showing their full power in increasing productiveness. At this time a state which secluded itself commercially seemed to be renouncing the chance to share in the great movement of progress. Industrial states sought markets for their manufactures and sources of supply for their food and raw materials. Agricultural states found the offers for their surplus products too tempting to be refused. So many profitable openings appeared everywhere that there was little dread of competition and little call for protection.
414. Reduction of customs duties.—In this period, therefore, there was a general overhauling of the old tariffs. Export duties disappeared. Prohibitions were dropped, and import duties were reduced. Narrow restrictions, designed to favor merchant shipping, were reformed. Liberal commercial treaties became the fashion, and Europe was soon covered with a network of them after England and France had set the example in 1860. These treaties became of especial importance because they now included generally the clause of “the most favored nation,” by which a participant in the treaty was assured that it should share, without delay and without need of recompense, in any favors that might be granted to other states. The slightest concession, therefore, effected a general reduction of duties in Europe. An English author, writing in 1882, found that in the period from 1860 to 1880 tariffs had been raised in only two of the sixteen European states. Apart from these two exceptions, which were not important, tariffs had undergone substantial reductions; of 2,140 items existing in 1860 only 136 had been raised, while 900 had remained the same and no less than 1,104 had either been lowered or removed altogether from the list. These reforms were undoubtedly responsible in part for the remarkable growth of the world’s commerce in the period which they covered.
415. The return to protection.—The free-trade movement has been followed, in the last quarter of the century, by a decided reaction to protection. Since about 1880 increase in the customs duties has been the rule in Europe, and reductions have been exceptional. No single cause can be held responsible for this change. The growth of national feeling and of international tension in Europe since 1870 has undoubtedly disposed governments to listen more readily to the complaints of citizens who suffer from competition, and ask for protection against foreigners. Competition, moreover, has widened its range of action and become more keen. The countries which gained new markets for their agricultural products, and flourished during the period of development of steam transportation in Europe, have lost their foreign markets and find their home markets menaced, as the transportation system has grown to embrace other continents and now brings cheap products from across the seas to the door of the European consumer. Countries which willingly accepted the manufactures of advanced industrial states when their own industries were in a primitive stage of development have since aspired to establish modern factories of their own at home.
In spite of the return to higher duties the present protectionist policy has retained many of the changes of the period of free trade. The statesmen who guide the commercial policy of European countries have discarded prohibitions, and use duties discriminating against particular countries only exceptionally. Down to the close of the century they have continued to grant to nations in general the treatment accorded to the most favored nation, and in some ways have extended the scope of this practice. The general level of duties, moreover, though it may seem high in comparison even with the general average of the period of prohibitions, offers a much less effective bar to trade, because of the reduction of the expense of transportation. It is impossible to state accurately the relative height of various tariffs. The following table gives an estimate of the tariffs on some important manufactures towards the close of the century: Russia 130 per cent, United States 72 per cent, France 30 per cent, Germany 25 per cent, Belgium 13 per cent, New Zealand 9 per cent, etc.
416. Colonial policy.—Colonial policy, a topic which has had for some years a leading place in public discussion, can receive only brief consideration in this history. The colonial ventures of the recent period may in time bring forth the commercial results which their projectors promise; up to the present the results have been small. Until far into the century European governments showed little interest in the expansion of their people or the extension of their power in distant parts of the world. Their attention was absorbed by the problems of domestic and foreign policy in Europe. The colonial question, however, like every other political and economic question, assumed a new aspect under the changes wrought by steam and the telegraph. Distant continents were, by those changes, brought nearer to European capitals than parts of the home territory had been before. The immense increase of transmarine commerce which marked the latter part of the century was carried on largely by English-speaking people, and seemed to promise to states of the Continent similar results if they could spread broadcast their people and power as England had done. The best parts of the world had already been occupied, it is true, but great stretches of territory were still free from claimants of European descent. France began to raise her flag over new territory in Africa, Asia, and Oceanica; the Belgian king established his authority in the region of the Congo; the movement quickened to a scramble in the ‘80’s; and soon all parts of the habitable world except certain countries in Asia and Africa had been brought under the sovereignty of European powers. The colonial question—what to do with these possessions now that they have been secured, how to govern them—has not yet become a part of history; it is still a question of the day.
QUESTIONS AND TOPICS
1. Prepare a chronological table of the wars of the nineteenth century, from a manual of recent history.
2. The English navy during the Napoleonic wars. [Social England, vol. 5, pp. 391-401, 541-544; the sea stories of Captain Marryat.]
3. The Continental System and its effects. [Levi, Hist. Brit. commerce, part 2, chap. 4, reprinted in Rand, Ec. hist., chap. 5; Rose in Kirkpatrick, Lectures on hist. of nineteenth century, Cambridge, 1902, 59-78.]
4. Effect of Napoleon’s commercial measures on British finances. [Audrey Cunningham, British credit in the last Napoleonic war, Cambridge, 1910.]
5. The question of neutral rights. [Schuyler, Amer. diplomacy, chap. 7; Reeves, Two conceptions of the freedom of the seas, in Amer. Hist. Rev., April, 1917, 22: 535-543.]
6. The movement for independence in South America, and its commercial results. [Helmolt, Hist. of the world, vol. 1; History of South America, transl. by Adnah D. Jones, London (N. Y., Macmillan), 1899.]
7. Free navigation of European rivers. [Schuyler, Amer. diplomacy, chap. 6, p. 345 ff.]
8. The Sound Dues. [Same, p. 306 ff.].
9. Divide your graphic chart of commercial statistics into blocks, to correspond with periods of commercial policy; dates may be chosen as follows, 1800, 1860, 1880, 1900. Be cautious, however, about any conclusions that may suggest themselves.
10. Relative share of different factors in recent commercial progress. [Cf. W. E. Gladstone, Free trade, railways, and the growth of commerce, Nineteenth Century (Magazine), Feb., 1880, 7: 367-378; but do not regard this article as settling a problem still unsolved.]
11. Significance of the “most favored nation” clause in tariff history. [Reciprocity and commercial treaties, 389-416.]
12. Various systems of tariff policy. [Reciprocity and commercial treaties, 461-467.]
BIBLIOGRAPHY
The best single reference on the commercial conditions and policy of the Napoleonic period is Lingelbach, *Historical investigation and the commercial history of the Napoleonic era, in Amer. Hist. Rev., Jan., 1914, 19: 257-281; this provides a scholarly survey of the whole literature of the subject and can be used as a guide to further study. Of later works should be noted Frank E. Melvin, Napoleon’s navigation system, Univ. of Penn. thesis, 1919, N. Y., Appleton.
On commercial policy in general the best reference is Bastable’s ** Commerce of nations, which treats international trade, the theory and the history of commercial policy briefly but with admirable clearness. The history of the commercial policy of particular countries will be covered in following chapters. A survey of modern tariff systems is provided in * Reciprocity and commercial treaties, published by the U. S. Tariff Commission, Washington, 1919; J. W. Root, Tariff and trade, Liverpool, 1898, combines a general discussion of the tariff question with a review of the tariff policy of important commercial countries.
Colonial policy can receive but scant treatment in this book. The student is referred to the bibliography by A. P. C. Griffin, List of books relating to colonization, Washington, second ed., 1900, and to the references there given.
CHAPTER XXXV
ENGLAND: COMMERCIAL DEVELOPMENT, 1800-1850
417. Importance of the commerce of England.—In returning to the study of the development of commerce in different countries we shall take up first the country which at the beginning of the nineteenth century, and at its end as well, held the leading position, England. An English author has made the statement that “in the eighteenth century foreign trade was of so little importance to the majority of the inhabitants of England, that with one important exception (wheat) the whole of it might have been destroyed without making any appreciable change in the habits or wealth of the people.” This statement is an exaggeration which can hardly be supported, but yet it suggests a truth of great importance; English commerce in 1800 was merely an aid to the development and welfare of the country, while it had become in 1900 absolutely necessary to the mere existence of the people.
418. Statistics of the growth of commerce, 1800-1850.—The period of most rapid growth was the second half of the nineteenth century, and this period will be reserved for special consideration a little later. The development in the first half of the century is set forth in the accompanying table, which gives the figures for imports retained in the country, and for the exports of home produce, according to the system of valuation in use in this period, with the sum of these items.
As the population doubled in this period it is apparent that foreign commerce, which more than doubled in value, was taking a more important place in the national economy than before. In the first quarter of the century, when England was passing through the struggle of the Napoleonic wars and was recovering from their effects, trade was nearly stagnant, but it made up in the twenty-five years that followed for the time that had been lost before. If we measure commerce not by the value of the wares, but by their physical quantity, the increase was far more striking; prices of many articles, especially of the manufactures exported, fell during this period, and consequently the same bulk of trade would be represented by much smaller figures in pounds sterling. If we returned to the old method of measuring trade, which retained “official” values that did not change with the movement of market prices, and which therefore affords a means of measuring an increase in the bulk of trade, we should find, comparing the two years, 1800 and 1849, that exports grew from 24 million to 190 million pounds sterling, giving the enormous increase of 682 per cent.
| Annual Average Trade of the United Kingdom. (Millions of Pounds and Dollars) | ||||||
|---|---|---|---|---|---|---|
| Imports | Exports | Total | ||||
| 1801-05 | £28 | $140 | £33 | $165 | £61 | $305 |
| 1806-10 | 30 | 150 | 37 | 185 | 67 | 335 |
| 1811-15 | 29 | 145 | 45 | 225 | 74 | 370 |
| 1816-20 | 20 | 100 | 40 | 200 | 60 | 300 |
| 1821-25 | 26 | 130 | 37 | 185 | 63 | 315 |
| 1826-30 | 33 | 165 | 35 | 175 | 69 | 345 |
| 1831-35 | 36 | 180 | 40 | 200 | 76 | 380 |
| 1836-40 | 47 | 235 | 50 | 250 | 97 | 485 |
| 1841-45 | 57 | 285 | 54 | 270 | 111 | 555 |
| 1846-50 | 72 | 360 | 60 | 300 | 133 | 665 |
419. Change in the relative importance of different exports.—We can expect, by studying the details of exports in this period, to find the branches of production in which the English were strong enough to enable them to supply other people and to extend their commerce. Taking the figures for 1850, we find the evidence of some important changes. The old staple of the English export trade, woolen manufactures and yarn, had increased since 1800 in value, and still more in quantity. It had ceased, however, to be the standby of the English exporter; this item formed now less than one seventh of the exports instead of over one fourth. It had been thrust into the second place by the rival textile cotton, which had become, as it was destined to remain throughout the century, the leading item among English exports. Cotton yarn and manufactures made up 28 out of a total of 71 million pounds sterling. Among other changes in the list we note the growth of the iron and steel, the hardware and the coal exports. Some items are interesting because they are still so small; among those which remained below the million-pound mark were steam-engines and machinery, pottery, and tin plate.
420. Development of English manufactures.—It is apparent that this period was marked by a rapid development of English manufactures. Taking two manufactures, typical of an advanced industrial state, iron and cotton, we find that the increase in production is estimated at over tenfold or more than 1000 per cent; as the quantity of population had merely doubled it is apparent that its quality, or the character of its occupations, underwent a revolutionary change. It is, in fact, in this first half of the nineteenth century that the enormous possibilities latent in the inventions of the eighteenth century became apparent and were realized. The great inventions were not enough, in themselves, to transform industry. They needed to be developed by practical business men, who could secure the necessary capital to utilize them to the best advantage, who had the talent for organization enabling them to build up an efficient force of laborers, who could stimulate further technical improvements necessary to supplement the great inventions, and who could develop a mercantile system enabling them to buy and sell large quantities to good advantage. Some English manufactures remained “domestic” industries carried on in the home of the workman, but the most important advanced to the factory system, and were thus enabled to get the full advantage from technical improvements.
421. Introduction of machinery.—It is in this period that the knowledge and experience necessary to the proper handling of machinery spread from narrow circles to broad groups of men. The market for machinery was thus established, and the manufacture of tools and machines underwent a corresponding development; in 1836 it was “difficult to point out any leading mechanical process, the details of which have not been, by this means, simplified, and the article produced brought nearer to perfection.” Inventors from other countries sought British shops to perfect their devices, and British factories in which to introduce them. Some of the best textile machinery of this period was invented in the United States and other countries, but was first put to practical use in England.
422. Steam power and railroad transportation.—It is in this period, also, that the steam-engine became a practical force in English manufactures. The steam-engine had been introduced in Birmingham in 1780, but the number of engines in that rising center of manufactures was in 1815 only 42 and in 1830 still only 120, while in the nine years following the number rose to 240, or doubled. In 1835 the textile factories of England employed only a little over 50,000 mechanical horse-power, and of this total nearly a quarter was still obtained from water-wheels. The beginnings of transportation by steam railroads can be dated, as said before, from about 1830.
423. Gradual development of the cotton manufacture.—The statement in a previous paragraph, that time was needed to develop the inventions before they could be made to serve the interests of manufacturers and merchants, is borne out by the history of the most important manufacture, that of cotton. Most of the basic inventions in cotton machinery were made in the last quarter of the eighteenth century. As early as 1812 a man, using the improved appliances, could produce 200 times as much as could be got from the old spinning-wheel. Yet it was not until 1820 or 1830 that cotton-spinning machinery had been practically developed and introduced on such a scale that the yarn exports began to show the full strength of this new force; while power weaving came even later, and the exports of cloth increased most rapidly in the second quarter of the century. Other processes connected with the textile manufacture present the same history. Cotton printing, for instance, had been practised in the eighteenth century, but in 1800 only 32 million yards a year were printed, while in 1830 the figure had risen to 347. The growth of the cotton manufacture was reflected in the development of towns like Manchester, Bolton, and Liverpool, which increased immensely in population.
424. Character of the import trade.—It will be instructive to glance now at the other side of England’s commercial balance sheet, and observe the wares imported about the middle of the century. In 1854 the values were as follows, in round millions of pounds sterling: total 152.3, of which the chief items were grain 21.7, raw cotton 20.1, timber 10, sugar 9.6, raw wool 6.4, tea 5.5, raw silk 5.3. While it is not safe to make a direct comparison between these values and those given previously to show conditions about 1800, a striking change is apparent in the relative rank of the items. A great growth in the importance of the imports of breadstuffs is noticeable. We shall see a little later that the English in this period gave up the attempt to produce their food at home, and resigned themselves to depending on foreign countries for supplies which they could purchase with their manufactures. Wares like sugar, tea, coffee, and tobacco had declined in relative importance. The actual amount of these commodities imported for consumption at home had increased much more than would appear from a comparison of the figures, and their use was constantly extending among the common people; but they were now overshadowed in trade by other items. The chief group of imports was formed of raw materials for the English textile manufacture. The cotton imports, had, of course, grown immensely; the home supply of wool, which had been almost sufficient for manufactures in 1800, needed now to be supplemented by large imports from abroad; silk had taken the third place on the list of textiles away from flax and hemp.
425. Increase in importance of trade with distant continents.—If we attempt to trace the changes in the direction of English trade in the first half of the nineteenth century, we find, in the maze of figures presented for study, some facts standing out as evident and important. The trade with other countries in Europe grew steadily, but grew slowly as a rule, and did not keep pace with the progress which English trade was making in other parts of the world. Most of the continental states looked with jealousy on England’s industrial development, and checked the free exchange of commodities by severe restrictions. We must look outside of Europe for the field of expansion of English trade. Africa still remained unimportant from the commercial standpoint, but America, Asia, and Australia dealt in increasing measure with the British merchant.
426. Great importance of the trade with the United States.—The United States was, far and away, England’s best customer, taking, near the beginning of the century, when the ports of the continent were closed by Napoleon, as much as one third of the total English exports, and at the middle (1849) nearly one fifth. “It affords strong evidence of the unsatisfactory footing upon which our trading relations with Europe are established,” wrote an English author in 1838, “that our exports to the United States of America, which with their population of only twelve millions are removed to a distance from us of 3,000 miles across the Atlantic, have amounted to more than one half of the value of our shipments to the whole of Europe, with a population fifteen times as great as that of the United States of America, and with an abundance of productions suited to our wants, which they are naturally desirous of exchanging for the products of our mines and looms.” The United States paid for the wares by an export mainly of raw materials, and especially of cotton.
Longmans, Green & Co., New York
During most of this period England drew three fourths of her supply of raw cotton from the southern States.
427. Trade with other distant countries.—Other American countries were good customers of the British manufacturer; Brazil, for instance, bought more from England in 1849 than did England’s nearest neighbor, France. Among other independent states China deserves mention. Trade with that country had been included in the monopoly of the East India Company until 1834, when it was thrown open to British merchants in general; the trade grew rapidly thereafter, but suffered from the restrictions imposed by the Chinese until, as a result of the so-called Opium War of 1842, the English secured the cession of Hong-Kong and the opening of a number of ports.
428. Trade with British dependencies: India.—In 1850 between one fourth and one third of the exports of the mother country were sent to British dependencies. Among these British India, almost a continent itself if we consider its area, its population almost equal to that of Europe, and the complexity of its peoples, took the leading place. British India alone took about one tenth of the English exports. So long as the trade with this country was controlled by the East India Company it remained small; and the company declared that because of the backwardness and peculiar customs of the natives it could not be increased. The privilege of trading with India was granted to individual merchants in 1793, but under such burdensome restrictions that it led to slight results; and the nineteenth century opened with the Indian trade still but a small item in England’s total. In 1813, however, the trade was at last thrown open, and the effect was immediately manifest; in the first year of the new policy private merchants exported more than did the company, and soon they had developed the trade to an extent undreamed of by the monopolists. India proved to be just the country which English merchants were seeking as a market for the expanding cotton manufacture. In the eighteenth century protection was demanded in England against the competition of Indian textiles, but soon the tables were turned, and manufacturers in India complained that they were being ruined by the importation of English cotton goods; about 1850 British India took more cotton manufactures than any other country, and nearly one sixth of the total exports of this most important commodity of England.
429. Colonies in North America and Australasia.—Next in importance to British India came the two groups of the North American and the Australian colonies. The colonies on the continent of North America were, in spite of their political allegiance, a far less important market than the republic on their southern border which had declared its independence in 1776. They supplied, however, a fairly steady and a growing demand for English products which put them in sharp contrast with the West Indian colonies. These island colonies had been, in the early part of the century, the field of rich returns in trade, but their productiveness depended on a system of slave plantations, and when slavery was abolished in them in 1833 their commerce declined rapidly.
Thanks to the wide extent of her colonial dominions, England could hope to gain in one part of the world if she lost in another, and the development of the Australian colonies in this period promised to atone for any decline in the West. The British flag was first raised in Australia in 1788. The young colonies were out of the track of the trade of the time, and seemed of such small importance that one was made a penal settlement, but the natural resources, especially the fitness for sheep-raising, induced a steady growth of population, and a considerable trade, even before the gold discoveries in the middle of the century.
QUESTIONS AND TOPICS
1. What do we mean when we speak of the “importance” of a country’s commerce? The reader who reflects upon this question will find that at least three different standards are taken to measure importance. (1) Mere bulk or value. The commerce of the British Empire would be called the most important in the world, because it is larger than that of any other state. (2) The needs of the people of the country. A considerable number of Englishmen would starve without commerce. In this sense commerce is even more important to the miners of Alaska, for they would practically all starve without it. (3) The needs of other countries for the exports of a given country. In this sense the United States has perhaps the most important commerce in the world, because it supplies so much of the world’s need for cotton, copper, foodstuffs, etc.
Endeavor to find examples, in this book or in others, of the different uses of the word; apply it in different uses to different countries.
2. Treat the statistics in sect. 418 as suggested previously, by graphic representation. How did British commerce compare in growth with world commerce? Did England keep her share in the world’s trade? Try to find in English history reasons for the ups and downs of trade, and for its gains and losses in comparison with the world’s trade. Beware, however, of hasty conclusions; many pitfalls are concealed in commercial statistics. In the table in the text, for example, the early figures are those of total exports and imports of merchandise, including wares simply passing through English hands to foreign customers; the figures for 1816 and the following years show only exports of British produce and manufacture, and imports retained in the country. This change in the method of measurement, rather than the crisis following the Napoleonic wars, explains the drop in the figures. This last method of measurement will be followed in later tables.
3. The following list gives the value, in millions of pounds, of all items over 1.0, in total exports of 71.3. Coal, etc., 1.2, cotton yarn, 6.3, cotton manufactures 21.8, haberdashery and millinery 1.4, hardware and cutlery 2.6, linen manufactures 3.9, iron and steel 5.3, woolen yarn 1.4, woolen manufactures 8.5. (If various other items were grouped we could add: copper about 2., silk about 1.)
Arrange these items and represent them by spaces on a line, for help in realizing their relative importance, and for comparison with earlier and later conditions. [See Statesman’s Year-Book for present trade. Note that these items include only home produce and manufactures, so foreign produce, such as colonial wares, should be excluded in making the comparison with another period. Statistics of this period give only quantities, not values, of foreign and colonial merchandise exported. Values of foreign and colonial merchandise exported are available for 1854 and the following years. In 1854 the items over one million pounds were: cotton 2.3, indigo 1.2, wool 1.4. Among the items under one million were: coffee .7, wine .7, raw silk .7, tea .5, rice .5, guano .5, raw sugar .3, unstemmed tobacco .3. What changes are suggested by these figures, in comparison with those of about 1800?]
4. Review the substance of sections 245 ff., or read the account of the great inventions and their effects in Rand, Ec. hist., chap. 2.
5. Mining and metal production up to 1846. [Traill, Soc. England, 6: 194-199.]
6. Coal mining. [Same, 6: 367-379.]
7. Development of the English transportation system. [Same, 6: 199-211; McCarthy, Hist. vol. 1, chap. 4; Ward, Reign, 2: 83-111.]
8. Development of the textile manufactures. [Soc. England, 6: 69-75.]
9. Study the items in sect. 424 in the way suggested for sect. 419.
10. Review sect. 412, on the tariff policy of the period in Europe; note that the United States had a low tariff, and that trade in the other continents was practically free.
11. The Opium War. [McCarthy, Hist., vol. 1 chap. 8; Robert K. Douglas, China, N. Y., Putnam, $1.50, 1899, chap. 8.]
12. East India Company in the nineteenth century. [Willson, Ledger and Sword, vol. 2, chaps. 12, 13.]
13. Commerce of British India. [William W. Hunter, The Indian Empire, third ed., London, 1893, chap. 19; same author, The Marquess of Dalhousie, Oxford, 1890, chap. 10.]
14. The Hudson’s Bay Company in the nineteenth century. [George Bryce, Remarkable history of the Hudson’s Bay Company, N. Y., Scribner’s, 1900; Willson, The great company, London (N. Y., Dodd), 1900, vol. 2, chap. 36; G. R. Parkin, The great Dominion, London, Macmillan, 1895, chap. 8.]
15. Slave plantations in the British West Indies. [A. K. Fiske, The West Indies, N. Y., 1899, chap. 10; James Rodway, The West Indies, London (N. Y., Putnam), chaps. 7, 10; F. W. Pitman, Development of the British West Indies, New Haven, 1917, chap. 1.]
16. Emancipation of the slaves and its results. [Rodway, chaps. 14, 15.]
17. Development of Australia. [Encyclopedia; Helmolt, Hist. of World, vol. 2, p. 252 ff.]
BIBLIOGRAPHY
Useful references can be obtained on England, as on other countries to be considered later, by consulting the Subject Index of the British Museum Library for books published since 1881, and the A. L. A. Catalogue for books in print, of a popular character.
Of the general histories of England in the nineteenth century, that by *Spencer Walpole, 5 vols., London, Longmans, 1878-86, devotes considerable attention to economic developments, and is worth the teacher’s attention. Justin McCarthy, *History of our own times, is better suited to attract the student; it is divided into short topical chapters, and written in an interesting style. A shorter history has been published by McCarthy in the Story of the Nations Series, 2 vols., N. Y., 1899. The last volume of Traill’s Social England pays but scant attention to commerce.
Of smaller books that which deserves most cordial commendation to students who desire a description of economic progress in its relation to political changes is Gilbert Slater, **Making of modern England, London, 1913, revised edition Houghton, Mifflin Co., undated.
The best history of English commerce is that of **Leone Levi, extending from 1763 to 1878; it is unfortunately, out of print. Cunningham notices some of the important commercial changes in the first half of the century, but devotes most of his last volume to other topics; and the smaller manuals of English economic history pay comparatively little attention to commercial development. *Bowley’s small volume is a useful contribution, noteworthy for a number of graphic charts; it is, however, too statistical in treatment to serve the needs of the ordinary reader. Chapman’s book, like Bowley’s an outgrowth of a successful essay written for a Cobden prize, is confined to a special aspect of the trade with a particular country.
William Smart, *Economic annals of the nineteenth century, London, 1910-17, covering the years 1801-1830, treats commercial policy at length and the history of commerce proper briefly. The same tendency marks Commerce and industry, A historical review, 1815-1914, ed., W. Page, London, 1919, 2 volumes, of which the second, **Tables of statistics, is a very useful compilation. Other statistical sources, of importance to a student making a careful study of the subject, are Porter, **Progress of the nation and M’Culloch, **Commercial dictionary, of which various editions have been published. A revision of Porter by F. W. Hirst, London, 1912, aims to bring his statistics down to date.
CHAPTER XXXVI
ENGLAND: REFORM OF COMMERCIAL POLICY
430. Burden of tariff on trade and manufactures.—After this survey of the development of English trade in the first half of the century we must attend to a most important change in English commercial policy, which lies mainly in this period. We shall consider three groups of topics: the reform of the general tariff; the repeal of the corn laws, protecting agricultural products, especially wheat; and the repeal of the navigation laws, protecting shipping.
England entered the nineteenth century with a cumbrous mass of tariff regulations inherited from the past, from which only the worst excesses had been pruned by statesmen like Walpole and Pitt. Customs laws had accumulated for 500 years to the amount of 1,500 statutes, “often confused, often contradictory, sometimes unintelligible.” Hardly any ware which was obtainable abroad, whether it was a raw material or a manufactured product, escaped the duties levied under one or another of these laws. The duties were heavy and were enforced with unreasoning severity; a man who imported a mummy from Egypt was told that it was a non-enumerated manufacture, dutiable at nearly $1,000. Internal taxes reached articles which escaped the customs tariff. The taxes on the publication of books were so heavy that they amounted on an ordinary edition to one seventh of the whole cost, and exceeded the remuneration of the author. The cotton manufacturer had to pay not only an import duty on his raw cotton (higher when it was brought in a foreign ship); he had to pay an excise or internal tax on calico which he printed; and he had to pay taxes, in one form or another, on all the important materials he used in manufacture,—flour, starch, leather, soap, dyestuffs, paper, timber, brick, tiles. A man could not build a factory, or run it, or feed and clothe his workmen, without paying taxes at every step.
431. Prevalence of smuggling.—A partial relief from the burden of the customs was obtained by smuggling. Tariffs could hinder but could not absolutely stop the natural movement of commodities. Smuggling was a regular profession, with a tariff modeled on the regular tariff, but enough lower to invite business; the smuggler’s charge varied ordinarily from 15 to 40 per cent ad valorem. Large numbers of the common people were leagued with the smugglers to defy the law, and the upper classes, even the legislators themselves, accepted smuggling as a matter of course. A member of the House of Commons once flourished his silk bandanna handkerchief before the House, saying: “Here is a foreign ware that is totally prohibited. Nearly every one of you has a similar illicit article in his pocket. So much for your prohibition.” The government framed its duties with an eye to the ease of evading them; it laid a higher duty on fancy silks than on plain, because the smugglers were at a disadvantage in handling the former, which had to be brought in at once, before the fashions changed, while plain goods could wait the smuggler’s convenience.
432. Beginning of the reform movement, 1820.—More and more as time went on, and England’s commercial capacity increased, were the evils and abuses of the system appreciated. By 1820 the times were ripe for a change, and the movement to reform was initiated in that year by a petition from a group of London merchants. The petition urged the principle of free trade which the economist Adam Smith had supported in his “Wealth of Nations” (published in 1776), and prayed that all restrictive regulations, not imposed on account of the revenue, including all duties of a protective character, might be repealed at once.
433. Reform of the tariff under Huskisson.—The early stages of tariff reform, effected under the leadership of Huskisson about 1825, included the following: (1) The simplification and condensation into manageable form of the customs laws. (2) Reduction or removal of the duties on raw materials. (3) Reduction of the duties on manufactures, generally to 30 per cent or less, on the principle that such a duty was ample for protection, if a ware could be made at home to advantage. (4) The removal of most of the restrictions on export. These restrictions had affected raw materials, partly manufactured goods, and even artisans themselves. The government had tried to keep skilled workmen at home, but found that it merely made them discontented, forced them to evasions, and kept them from coming back when they had once left the country: it left them henceforth free to emigrate. It was still unwilling to allow machinery to be exported freely, for fear that other countries would build up a competition in manufactures, but it recognized the difficulty of making its restrictions effective, and relaxed them greatly.
434. Results and later completion of the reform.—The results of the reform exceeded anticipations. Not only did those industries benefit which (like cotton, for instance) had previously been taxed for the support of others, but the protected industries themselves gained by the revision of the laws. The export of woolen stuffs increased rapidly after the removal of the prohibition on the export of raw wool. The silk manufacture, which had made slow progress and secured only a small market under the system of high duties and prohibitions, advanced more rapidly now in a decade than it had done before in a century.
The work of reform was, however, still far from complete; the tariff retained many incongruities and was felt still to be oppressive by the business interests of the country. The second stage in the advance to free trade was effected under Sir Robert Peel, who in 1842 secured the reduction of duties on 750 articles, and in 1845 abolished 430 out of a total of 813 import duties. Peel’s reforms left still a considerable element of protection in the tariff, and the final acceptance of free trade waited till Gladstone’s laws of 1853 and 1860, which lowered and then swept away import duties by the hundred, and left the English tariff substantially in its present shape. The system of “free trade” which England has since maintained does not imply a complete lack of import duties; more than one fifth of the total revenue from taxes is now yielded by the customs. Import duties, however, have been restricted to a very few commodities, and are “revenue,” not “protective” duties, in the sense that they do not encourage the production in England of anything which can be produced more cheaply abroad.
435. The corn laws and their effects.—Previous to the great changes which turned England into a manufacturing country, the agricultural interests which controlled Parliament had assured themselves a good measure of protection in framing the tariff laws. The importation of grain was prevented by high duties; and the export was favored by bounties when the supply was relatively plentiful and the price fell below about $1.50 a bushel. Export became more and more rare as the home demand for foodstuffs grew with the increase in the industrial population; and toward the close of the eighteenth century it became ever a more serious question whether England could produce at home sufficient food for her growing people. An attempt was made to arrange the laws so as to keep the price of wheat steady at about 48s. a quarter ($1.50 a bushel), but the laws did not succeed in preventing violent fluctuations in the price. At the close of the great wars, in 1815, English agriculturists demanded a continuance of the protection which the stoppage of commerce had afforded them and the import of foreign wheat was prohibited so long as the price at home did not rise above 80s. (about $2.50 a bushel, or about $.30 for the quartern loaf of bread). Landlords got high rents as a result, but farmers who leased their land suffered when prices fell to a reasonable level, and consumers were forced to pay extortionate prices for a prime necessity. Hundreds of thousands of the working classes were brought to the verge of starvation in 1817 by the price of wheat rising to 112s. (about $3.50 a bushel).
436. Movement of English manufacturers for a repeal of the corn laws.—The House of Commons, even after the electoral reform of 1832, afforded but little representation to the manufacturing and mercantile classes; four fifths of its members belonged to the landed interests, and though they made some slight concessions they refused to grant adequate relief. It was necessary for the opposition, which organized under the name of the Anti-Corn-Law League, to carry on its campaign outside of Parliament; it could report, at the annual meeting of 1843, that nine million tracts had been distributed, and meetings had been held in 140 towns. Inside of Parliament the movement engaged the energies of orators like Cobden and Bright, who saw in it a question of life and death for English manufactures. How was the manufacturer to pay the wages which such a costly food supply required? To whom was he to sell his goods when so large a proportion of English incomes had to be expended for bare necessaries, and when England refused to take from foreign countries the commodities which they offered in exchange? Even among the agricultural classes the landlords were the sole gainers. The agricultural laborers were wretchedly poor; Cobden asserted that none of them spent more than about $7.50 a year in manufactured articles, if shoes were excepted, and that they bought a smaller amount of English manufactures than the people of Brazil.
437. Repeal of the corn laws and its significance.—With the passage of time and with the growth of the industrial population conditions changed from bad to worse. The combination of a bad harvest and bad times in business in 1841 forced thousands of the manufacturing population to seek poor relief, while other thousands were estimated to be earning on the average less than a shilling a week. It needed only a shock like that given by the crop failure in the first year of the Irish famine, 1845, to force the change which had come gradually to be recognized as inevitable. Peel’s act of 1846 left a slight protection for a few years; but after 1849 only a nominal duty was to remain, and even this was abolished later.
The repeal of the corn laws was a momentous act in English history. It marks the formal and final recognition that England had grown from an agricultural to an industrial and commercial state. It threw England, as an English economist said, from corn to coal as the staple product of the country. Manufactures and trade thenceforth developed freely. Even the agricultural interest gained in ways which it had not foreseen: the consuming population increased rapidly both in numbers and in purchasing power, and demanded increasing quantities of meat, dairy produce, vegetables, and fruit. The full effect of the change on commerce will be apparent when we review the history of the last half of the century.
438. Reform of the navigation acts.—This survey of the course of English policy in the first half of the nineteenth century will be closed by the consideration of a third topic, the laws protecting shipping. Reference to a previous chapter will show how severe were the restrictions meant to prevent the competition of foreign shipping, in the seventeenth and eighteenth centuries. The period now under consideration was marked by the removal of all these restrictions, and by a great growth, notwithstanding, in the English merchant marine.
The establishment of the independence of the United States, and later of the Spanish American republics, overthrew the colonial theory on which many of the navigation acts were based, and forced numerous revisions. The long wars of the Napoleonic period, also, led England to grant privileges to neutral powers in the carrying trade. Important breaches, therefore, had been made in the old system before the century was far advanced, and it was in no condition to withstand the assaults directed against it by people both abroad and at home whose interests it injured. The United States adopted a policy of reprisal which forced England to admit American ships freely to English ports, and threats of similar action by European countries led in 1824 and the years immediately following to a series of treaties putting foreign ships on an equality with English.
439. Final repeal of the navigation acts.—The navigation acts had grown into a most complicated system, and it is impossible to describe in detail their gradual relaxation. By 1830 English ships had lost all their privileges except in the coasting trade, and in the trade with and between the colonies. Even this amount of protection came to be regarded as a burden not only on commerce but on shipping itself, and was abolished in 1849 and 1854. Every step in the reform of the navigation acts was bitterly fought by adherents of the old system, who prophesied ruin to English shipping if it were denied protection and left to make its own way. How groundless were the fears of those who opposed reform can be seen in the following table, giving in millions the tonnage of English ships in the period 1800-1850: 1800, 1.6; 1810, 2.2; 1820, 2.4; 1830, 2.2; 1840, 2.5; 1850, 3.5.
QUESTIONS AND TOPICS
1. Are all taxes of equal amount equally burdensome? Would a country fare as well if it raised its revenue by taxing saws and chisels instead of cigarettes and playing cards?
2. What are the effects of smuggling on (a) the public revenue, (b) honest merchants, (c) consumers?
3. How do the rates of the English tariff, as established at this time, compare with the rates of the present tariff of the United States?
4. On what articles are import duties still levied in Great Britain? [See Statesman’s Year-Book, index, Great Britain, customs.]
5. The corn laws and their effects. [Morley, Cobden, chap. 7; Rand. Ec. hist., chap. 9.]
6. English agriculture under the corn laws. [Traill, Soc. England, 6: 75-84, 211-217.]
7. The agitation for repeal of the corn laws. [McCarthy, vol. 1, chap. 14; Morley, Cobden, chap. 6.]
8. The repeal of the corn laws. [McCarthy, vol. 1, chap. 15.]
9. English agriculture after the repeal. [Traill, Soc. England, 6: 404-421, 599-607.]
10. What were the main features of the navigation acts? [See above, sect. 358, or study the main provisions in Rand, Ec. hist., appendix 1.]
11. Conditions at the time when the Acts were repealed. [Lindsay, vol. 3, chap. 6.]
12. Development of the merchant marine. [Traill, Soc. England, 6: 392-404; Ward, Reign, 2: 111-118.]
BIBLIOGRAPHY
The best single source on the topics of this chapter is Bernard Holland, **The fall of protection, 1840-1850, London, 1913. Of more comprehensive and more elementary books may be mentioned Mongredien, *History of the free-trade movement, and Armitage-Smith, **Free-trade movement, which is well suited to topical assignment. Similar in scope is W. Cunningham, **Free-trade movement, with concluding chapters on recently projected changes.
The best account of the corn laws is to be found in Morley’s **Life of Cobden, and George Macaulay Trevelyan’s **Life of John Bright, London, 1913. Graphic pictures of conditions of life under the corn laws are provided by The hungry forties: life under the bread tax, London, 1904; and J. K. Snowden’s Corn law memories, in Contemp. Review, 1905, 88: 64-71. J. S. Nicholson, *History of the English corn laws, London, 1904, is a thoughtful study in brief compass, but is not suited to topical reading.
The navigation acts are treated by Holland, and at considerable length in the third volume of Lindsay. The best recent contributions on the subject are in periodical literature: John Rae, **English shipping under protection, in Contemporary Review, 1905, 87: 666-675; J. H. Clapham, ** The last years of the navigation acts, English Hist. Rev., 1910, 25: 480-501, 687-707.
CHAPTER XXXVII
ENGLAND: COMMERCIAL DEVELOPMENT, 1850-1914
440. Development of English commerce since 1850.—An accompanying table sets forth the course of English trade down to the outbreak of the World War. The figures refer, as in the previous table, to imports for consumption in the country, and to exports of British and Irish produce. To indicate, however, the share of commerce which the English enjoyed merely as middlemen I add a column of re-exports, foreign and colonial wares imported but shipped away again. If the amount of these wares be doubled (since they figure both as imports and exports), and added to the other items, the sum gives the gross foreign trade (excluding that in precious metals). The system of valuation of imports changed in 1854; under the old system of “official” values the imports of that year would have been entered at twenty-eight million pounds less than under the new system of giving the “real” values. This table, therefore, is not directly comparable with the table of the preceding chapter; and to remind the student of this I have left a few years vacant, making a gap between the two tables.
441. Importance of England and of British Empire in trade of the world.—A mere glance at this table will be sufficient to show the progress that has been made since 1850. Some idea of the importance of this trade, not only to England but to the world at large, can be gathered from the fact that it amounted, about the middle of the period, to nearly one-fourth (23 per cent) of the estimated total foreign trade of the world, and at the close of the period, (1912), in spite of the commercial progress of other countries, it was still one-sixth. If we extend our view to embrace not only the little islands in the North Sea, but all the countries depending on them and forming the British Empire, we find the trade of this group over one-fourth of the trade of the world.
| Annual Average Trade of the United Kingdom, in Millions, Sterling,with Rough Equivalents in Millions of Dollars | |||||
|---|---|---|---|---|---|
| Imports | Exports | Re-exports | |||
| 1855-59 | £146 | $730 | £116 | $580 | £23 |
| 1860-64 | 193 | 965 | 138 | 690 | 42 |
| 1865-69 | 237 | 1185 | 181 | 905 | 49 |
| 1870-74 | 291 | 1455 | 235 | 1175 | 55 |
| 1875-79 | 320 | 1600 | 202 | 1010 | 55 |
| 1880-84 | 344 | 1720 | 234 | 1170 | 64 |
| 1885-89 | 318 | 1590 | 226 | 1130 | 61 |
| 1890-94 | 357 | 1785 | 234 | 1170 | 62 |
| 1895-99 | 393 | 1965 | 238 | 1190 | 60 |
| 1900-04 | 466 | 2330 | 289 | 1445 | 67 |
| 1905-09 | 522 | 2610 | 377 | 1885 | 85 |
| 1910-13 | 611 | 3055 | 474 | 2370 | 107 |
A survey which omits from consideration trade across land-frontiers, and considers only sea-borne trade, is even more impressive. Of the total sea-borne trade of the world in 1912 it is estimated that 15% (in value) was between countries within the British Empire, and 39% was between the Empire and foreign countries. Thus the trade of which one or both terminals lay within the Empire was over half of the maritime trade of the world. The trade of which one terminal was in the United Kingdom amounted by itself to about 40% of the world’s total sea-borne trade.
442. Chief causes of the rapid development of English commerce.—The causes of this development may be summarized briefly as follows: (1) The English people were the most advanced, in industrial and mercantile ability, of any people in the world. They had the start on others in manufactures and trade, and reaped the benefits of their early training in this period. (2) The geographical situation of England, and the physical resources of the country, especially its coal, made the English superior to most peoples and equal to any, in this age of transportation and manufacture by steam. (3) The commercial policy of the government allowed the people to make the most of their advantages. Toward the close of the eighteenth century an English statesman had told Benjamin Franklin of his idea “to make England a free port, for which he said the English were especially fitted by nature, capital, love of enterprise, maritime connections, and position between the old and new world, and the north and south of Europe, and that those who were best circumstanced for trade could not but be gainers by having trade open.” This idea waited long for its realization, but on that account led to the more rapid progress when it was carried into effect. Within five years of the repeal of the corn laws exports rose fifty to one hundred million pounds sterling per annum; manufactures and trade developed by leaps and bounds. Free trade alone cannot be credited with all the progress that England made in this period. It was, perhaps, the least of the three factors enumerated, but still it was of such importance that the other two factors would have been of much less effect without it.
443. Character of English exports.—This trade had now in a more pronounced form, the characteristics which it had been gradually assuming and which make it one of the most remarkable examples of advanced commerce in the world. Considering first the exports, we find that over three-fourths of them (in value) have consisted of wares wholly or mainly manufactured. Only one raw material has gone out in great quantity; this is coal, which has contributed about one-tenth of the total value of exports. Aside from coal few wares, and those of relatively slight importance, have left the islands in their crude form.
444. Leading items among the exports.—Cotton manufactures kept their place at the head of the list of exports, comprising about one quarter of the total. England in 1913 exported the enormous sum of over seven thousand million yards of cotton cloth a year. The exports of iron and steel and their products rose in this period to the second place; England was now purveying to other nations the means of raising the structure on which modern manufactures and transportation are based. The growth in the exports of machinery is especially striking; this item increased over fivefold within the fifty years to 1900, and doubled again in the short period before the outbreak of the war. Below these leading items come others with which we are already familiar (woolen and linen manufactures) and some which had gained promotion on the list of exports; leather goods, chemicals, jute manufactures, pottery, etc.
445. Imports; prominence of foodstuffs.—The fact suggested by the list of exports, that England has specialized more and more in manufactures, is borne out by the list of imports during the past half century. Since the adoption of the free-trade policy the English people has been freed from dependence on the home supply of food and has supplied its necessities by purchases abroad. Among the imports, therefore, we find that the largest item is that of foodstuffs, which has grown rapidly both in its absolute value and in its proportion of the total imports. In contrast with the medieval period, when only luxuries like wines and spices could pay for their transportation, we find now the great food staples flowing to England from countries thousands of miles distant. Improvements in transportation, due especially to the use of steam, have enabled bulky cargoes to pay for their passage, and the weight of the imports in tons has increased much more rapidly than their value. Improved means of transportation and preservation have moreover enabled the English to import perishable articles like meat, fruits, and vegetables, and dairy products; and the imports of these wares have increased from ten to twentyfold in weight.
446. Imports of raw materials and manufactures.—The same conditions have affected the imports of raw materials. A century ago the manufacture of iron from imported ore would have been thought an absurdity, but it has become a regular practice now that freights are so low; and the import of minerals is a respectable item in a list in which the raw materials for the textile industry are still, of course, most important. Free trade encouraged also a great increase in the imports of manufactures, which grew nearly tenfold in the fifty years to 1900, though they still were less important than foodstuffs and raw materials. The largest item among them after the crude metals, was silk, for the manufacture of which other nations have always shown more aptitude; but the list included woolens, hardware, leather (boots and shoes), paper, and many other items.
447. Explanation of the excess of imports over exports.—A feature of England’s foreign trade deserving comment and explanation is the great excess of imports over exports. It is natural to expect that these two items, which seem to represent the two sides of a balance sheet, should be nearly equal to each other; but in fact the value of exports has for many years been far below that of imports, and the difference in the years toward 1900 amounted to the enormous total of $700,000,000 to $900,000,000 a year.
England did not receive this surplus of goods as a gift, but earned it by services in the past and in the present which put other countries under obligations to her. The English had invested enormous sums abroad, and had the right therefore to interest and dividends; their merchant marine did a large part of the carrying trade of the world, and naturally had a large bill for freight to render to other people; London was the financial center of the world, and made the foreigner pay tribute for the services and commissions executed for him. There were some items on the other side of the account, but on the whole England had the right every year to take from other countries in the form of goods vastly more than she exported to them.
448. Detailed items in England’s international balance.—The items which go to make up the credits and debits of England in relation to other countries may be set forth in the form of a balance sheet, as in the table below, which gives the estimate of these items for the year 1910. Figures are given in round millions of pounds sterling.
| Credits | Debits | ||
|---|---|---|---|
| Exports of merchandise | 430 | Imports of merchandise | 678 |
| Re-exports (foreign mdse.) | 103 | Imports of bullion | 71 |
| Exports of bullion | 64 | ||
| Income from investments | 178 | Capital invested abroad | 170 |
| Earnings of shipping | 100 | ||
| Banking and business earnings | 55 | Earnings due foreigners | 15 |
| 931 | 934 | ||
The students should note several characteristic features of this balance sheet. (1) Only the items at the head of the columns are measured accurately: the others are “invisible” items, represented only by pieces of paper passing through the mail, but these are, pound for pound, of equal importance. (2) The inflow and outflow of bullion are large items, but nearly balance; England has acted as a clearing house for the payments of the world’s debts, and the distribution of the world’s gold. (3) In this period England re-invested in other countries most of the great sum due in interest and dividends. The English investor may be pictured as receiving a dividend check from the United States or South America, and as mailing it back instead of cashing it, asking that it be added to the capital sum of his investment.
449. Growth of the merchant marine.—England was the leader among nations in the carrying trade in 1850, and retained her position still unchallenged at the close of the century. At the outbreak of the war in 1914 nearly half of the world’s steam tonnage was under the British flag; the tonnage of Germany, which came second on the list of countries, was not one-fourth of the British. The number of ships in the English merchant marine has actually decreased in this period of progress, but the carrying capacity has grown immensely by the increase in size of the ships and by the substitution of steam for sailing vessels. It will be remembered that the protection afforded by the navigation acts was removed before the beginning of this period. The government has made generous payments for the carriage of mails, but still has refused to pay regular subsidies or bounties for the encouragement of shipping. English shipping, nevertheless, has held its own. Of the steam shipping built in the twenty years preceding the war, two-thirds were built in the United Kingdom, and over one-half was built to sail under the British flag. While soon after 1850 the English merchant marine carried not much more than half of the foreign commerce of the country, the proportion grew in later years to two-thirds and nearly three-quarters. This proportion declined somewhat in more recent years, under the competition of Continental steamers, but it is estimated that in 1913 British shipping carried over one-half of the total sea-borne trade of the world, including nine-tenths of the trade inside the Empire, nearly two-thirds of the trade between the Empire and foreign countries, and nearly one-third (30%) of the trade between foreign countries.
450. Relative rank of English ports.—The great commerce of the United Kingdom was very unequally distributed among its parts, nine-tenths of it going to England and Wales and most of the remainder to the lowlands of Scotland. London still kept its place as the chief port not only in the United Kingdom but in the world, mainly by reason of its import trade; it was exceeded in the amount of exports by the second port, Liverpool, which distanced all rivals in the important trade with the United States. An immense gap separated these two leading ports from the others, Hull, Manchester, Glasgow, Southampton, etc. Ports whose names were famous in the Middle Ages and even in later times have dropped into obscurity, with fortunate exceptions like Harwich and Grimsby, which have recovered their positions in recent times. Their places were taken by ports from which cotton and coal products are shipped: Manchester, once an inland village but now united with the sea by a ship canal and standing (1913) fourth on the list, the Tyne ports, Cardiff, etc.
The importance of ports was measured in the preceding paragraph by the value of the cargoes imported and exported through them. While this appears to be the best standard by which to determine commercial ranking it is proper also to consider not the value of cargoes, but the volume of shipping entering and clearing from a given port. Measured by the tonnage of vessels London was but little superior to Liverpool before the World War, was inferior to New York and to Hamburg, and about even with Rotterdam and Antwerp.
451. Relative share of different countries in England’s commerce.—Taking up now the direction of England’s trade abroad and the changes in its course during the last half of the century, we find ourselves approaching questions which have roused acute political controversy. Reserving for future consideration changes which have shown themselves in the most recent period we may note conditions as they were about 1900. England still found the trade with her European neighbors the most important part of her commerce, making up about two-fifths of the whole; this trade had increased by over one-half during the last forty years of the century. Next in importance to it was the trade with the British dependencies, a little less than one-quarter of the whole, which had increased somewhat more slowly. In the third place we may put, not a continent or group of countries, but one country, the United States, between which and England the trade was greater than between any other two countries on earth. England bought from the United States in 1901 more than twice as much as she bought from the next largest seller (France); and she sold the United States in that year more than she sold to all the countries embraced in her great Empire. This part of English trade, moreover, had grown more rapidly than any other, increasing by once and a half in the period. Grouping together all countries beside those enumerated, we find that the trade with them had remained nearly stationary, and amounted only to about one-eighth of the total.
QUESTIONS AND TOPICS
1. Treat the statistics, sect. 440, by graphic representation, in the manner that has already been suggested.
2. Compare the reasons given for the increase of British commerce with reasons that may suggest themselves to you for the growth of the commerce of the United States. [See sect. 320 for a reference to Gladstone’s views.]
3. The following list gives, in million pounds, the value of the chief exports of home produce in 1900: cotton manufactures 62.0, do. yarn 7.7, woolen manufactures 15.6, do. yarn 6.1, linens and yarn 7.1, jute and yarn 2.4, apparel and haberdashery 6.8, ships 8.6, iron and steel 32.0, hardware and cutlery 2.1, copper 2.9, machinery 19.6, coal, etc., 38.6, chemicals 9.2. Total exports of home produce 291.4, exports of foreign and colonial produce 63.0, grand total 354.5. Treat the figures as suggested under sect. 419. [The figures are from the preliminary report for 1900, Statesman’s Year-Book, 1901, pp. 85, 87; details of iron and steel exports will be found p. 88.]
4. Development of the iron industry. [Jeans, The iron trade of Great Britain, London, 1906, or in Ashley, Brit. Industries, 2-37; Bell in Ward Reign, 2: 196-237; Lady Bell, At the works, London, 1907.]
5. Development of the textile industry. [Soc. England, 6: 589-599.]
6. The cotton industry. [Slagg in Ward, Reign, 2: 153-195; Helm in Ashley, 68-92; S. J. Chapman, The cotton industry and trade, London, 1905.]
7. The woolen and worsted industries. [Hooper in Ashley, 93-119; Graham in Lectures, chap, 10; J. H. Clapham, The woollen and worsted industries, London, 1907.]
8. Linen and flax. [Patterson in Ashley, 120-150.]
9. Pottery. [Soc. England, 6: 379-392.]
10. England as a wheat market. [Edgar, Story, chap. 5.]
11. The food supply of London. [Quarterly Review, Oct., 1899, 190: 467-486; Jan., 1900, 191: 117-137.]
12. England’s food supply in time of war; need of the navy. [H. Seton-Karr in North Amer. Rev., 1897, 164: 651-663; W. E. Bear in National Rev., 1896, 27: 133-144; Quarterly Review, 1905, 203-572-598.]
13. Project of national granaries for storing a supply of food. [R. B. Marston in Nineteenth Century, 1898, 43: 879-889; Yerburgh in Nat. Rev., 1896; 27: 197-207.]
14. British capital abroad and the balance of trade. [Mulhall in No. Amer. Rev., 1899, 168: 499-505; Crammond in Quarterly Rev., 1911; 215: 43-67; C. K. Hobson, The export of capital, London, 1914.]
15. Development of the merchant marine. [Ginsburg in Ashley, 173-195; Taylor in Forum, 1900-01, 30: 463-477.]
16. British shipping subsidies. [Root in Atlantic, 1900, 85: 387-394.]
17. Growth of British ports. [Ackland in Nineteenth Century, 1897, 42: 411 ff.; Browne in Contemp. Rev., Feb. 1918, 113: 190-199.]
18. The port of London and improvements. [Owen in Lectures, chap. 4; Quarterly Rev., 1903, 197: 252-269; Marchant in National Rev., 1902-3, 40: 715-737, with map; Miller in Fortnightly Rev., 1902, 78: 796-805.]
19. The supply of British seamen. [Cowie in Contemp. Rev., 1898, 73: 855-865; Tomlinson in English Rev., 1911, 9: 114-121; Longford in Nineteenth Cent., 1912, 72: 1114-1130.]
BIBLIOGRAPHY
The course of English commerce has attracted interest in increasing measure, and publications upon it multiply, as we approach the end of the century. Only a few books can be noticed here; the reader is referred to the topics for references to other books and periodical articles.
Ward, *Reign of Queen Victoria, contains good chapters on the industrial development of the reign. Stephen Bourne, *Trade, population, and food, London, 1880, is a careful analysis of the decade 1870-80, and furnishes a good starting-point from which to survey the course of recent trade. J. W. Root, Trade relations of the British Empire, Liverpool, 1903, provides a survey of English commerce at the close of the period, with special reference to the pending question of tariff changes. Similar books have been written by Edward Pulsford and L. G. Chiozza Money. A useful statistical survey is provided by John H. Schooling, *The British trade book, fourth issue, London, 1911. Lectures on British commerce, with preface by W. P. Reeves, is mainly a description of the present organization. A. J. Sargent, *Seaways of the Empire, London, 1918, is a good survey of the geography of British trade; and Adam W. Kirkaldy, **British shipping, London, 1914, includes both history and recent organization. **British industries, edited by W. J. Ashley, is, however, the book deserving of the warmest recommendation; nowhere else will the reader find such good descriptions of the leading industries of Great Britain. Each industry is described by a specialist of recognized authority, and though the book does not go far into history it gives indispensable information on the recent results of historical development. More popular and less valuable is Great industries of Great Britain, London, Cassell, no date (about 1880?), 3 vols.
CHAPTER XXXVIII
ENGLAND: PRE-WAR PROBLEMS
452. Relative decline in value and quality of English exports.—The questions agitating the minds of English business men and statesmen at the opening of the twentieth century rose from a consideration of the immediate past and of the future of English commerce. While the country had enjoyed a full measure of prosperity in recent years, and had witnessed a considerable increase in the quantity of its foreign trade, the quality of this trade awakened forebodings. The increase had been almost entirely confined to imports. Since 1872 the exports, though they had increased in bulk, had remained almost stationary in value; they had kept pace neither with the growth of population in England, nor with the growth in value of the exports of other countries. In the twenty years, 1881-1900, foreign countries enlarged their purchases (imports) by 11 per cent, while England augmented her sales to them (exports) by only 4 per cent; the British possessions enlarged their purchases by 17 per cent, while English sales to these dependencies showed an actual decrease of 1 per cent. The exports of which England has been most proud, as indicating her superior industrial strength—the textiles, and iron and steel—had either increased slowly or shown an actual decline. On the other hand, the exports which had increased in value were of a kind which the English viewed with disfavor. Many of them (apparel and slops, preserves, soap, furniture, etc.) were the product of cheap and unskilled workers and seemed to show a degradation of English labor. Others of them, potter’s clay and especially coal, were raw materials which the English would have preferred to use in their own industry at home.
453. Growth in exports but decline in relative share of trade.—The table of trade of the United Kingdom in the preceding chapter shows that the period of stagnation in the English export trade ended about 1900, and that there was a marked recovery between that date and 1914, even after allowance is made, as it should be, for the rise in the general level of prices, which magnifies the actual growth. Studying the course of trade during the generation comprised between the dates 1880-1909, the United Kingdom maintained or increased the value of its sales in all but two of the more important markets of the world; and the two countries to which British exports have declined, Russia and Roumania, would not by themselves form very serious exceptions. If, however, we select for study not the bare figures of export values, but the figures showing the percentage which British sales to any country form of that country’s total imports, the result is very different; for we are then measuring British progress not by the home standard but by the standard set by commercial competitors.
454. Illustration by the recent commerce of Japan.—The distinction is so important that it deserves illustration by a particular example, and we may choose for the purpose a country which during the recent period has furnished a rapidly growing market to the merchants of the world, namely, Japan.
| Annual Average Imports of Japan in Recent Decades (Values in millions of yen) | |||||
|---|---|---|---|---|---|
| From United Kingdom | From Germany | From U.S. | From other countries | From all countries | |
| 1881-1890 | 19.6 | 3.4 | 4.2 | 19.3 | 46.5 |
| 1891-1900 | 46.6 | 14.8 | 22.8 | 87.0 | 171.2 |
| 1900-1909 | 84.3 | 36.1 | 65.8 | 199.8 | 386.0 |
The Japanese monetary unit, the yen, has declined considerably in value in the course of the period, and therefore no exact equivalent for it can be given; but even allowing for this decline the growth of British export trade to Japan appears satisfactory if the student regards merely the figures in the first column. If we apply, however, the comparative standard, and measure the British exports to Japan alongside those from other countries, the result is not the same.
| Percentage of Japan’s Imports from Each Country | |||||
|---|---|---|---|---|---|
| From United Kingdom | From Germany | From U.S. | From other countries | From all countries | |
| 1881-1890 | 42.2 | 7.2 | 8.9 | 41.7 | 100 |
| 1891-1900 | 27.3 | 8.6 | 13.3 | 50.8 | 100 |
| 1900-1909 | 21.80 | 9.3 | 17.0 | 51.9 | 100 |
455. Relative decline of the United Kingdom in the world’s markets.—Pursuing the comparative method, illustrated by the last preceding table, we find that the United Kingdom during the generation 1880-1909 showed an increased share of sales in only three of the minor markets of the world: Spain, Argentine Republic, Sweden. It almost held its own in France, Switzerland and Norway; but in most of the important markets of the world it lost ground seriously.
Even in its trade with the British dependencies the United Kingdom did not hold its own. Comparing the percentage of British exports to a dependency with its total imports, we find that the United Kingdom kept its place in only one of its colonial markets, Mauritius, a purchaser of relative insignificance, while foreign countries gained ground from it in British India, Australia, Canada and all the other important colonial markets.
456. Significance of the decline, and three possible explanations of it.—The relative decline in English exports did not imply that the country was approaching industrial bankruptcy, but it did mean, if long continued, the loss of industrial leadership; and the causes of this decline and remedies proposed to meet it are worthy of careful attention. The decline in exports may be attributed to one of three factors: (1) weakness in manufacturing the wares which form the staple of the export trade; (2) weakness in marketing these wares, when they have been made; (3) the adverse influence of protective tariffs in other countries.
457. (1) Competition in manufactures by low-grade labor.—Considering the first of these factors, we find English manufactures menaced by competition from two different directions: from the East (countries like India and Japan), and from the West (countries like Germany and the United States). Eastern competition threatened especially England’s staple manufacture, cotton. The English laborer was superior in every point to his Asiatic competitor, but not enough better to earn his higher wages when employed in the manufacture of coarse goods. England had built up a serious and growing competition by exporting machinery and sending out skilled managers and foremen to superintend it. During the past generation there had been an immense development in the textile manufactures of India and Japan, and these countries were able now not only to supply a large proportion of their own demand, but also to reach out into neutral markets like China.
458. Competition in manufactures of high-grade labor.—More serious, because capable of far greater extension, was the competition which the Englishman had begun to experience from advanced western peoples. This confined itself to no one branch of production, but spread over the whole broad field of manufactures. Americans and Germans had begun to supply not only the British dependencies but England herself with manufactured wares, in increasing measure. Some of the reasons suggested to explain their superiority were as follows: (1) Elementary education had been developed only recently in England, and had been hampered by sectarian questions; the average laborer in Germany and the United States was better equipped for modern methods of manufacture than was the Englishman. (2) It was asserted that trade unions had seriously detracted from the productiveness of English manufactures, by preventing the introduction of improved machinery and by limiting output. (3) Technical education was even more backward than general education; improved processes were introduced earlier and developed further in other countries, for lack of a class of trained manufacturers in England. (4) Finally, and probably the most important point of all, English manufactures appeared to suffer from the very fact that they had been long established. An industry was divided among many independent firms, each clinging resolutely to the plant, the processes and the methods which had won for it success in the past. Foreign countries learned all that the English had to teach, and applied the lessons in a new field in which they could build up great manufacturing units, with fresh machinery adapted to production on a large scale, and with a more flexible and more efficient organization. It was charged that the directing class in England had lost its original energy, and did not realize its serious responsibilities. An English expert who investigated the American cotton industry reported that there was a great difference in the energy, intelligence, and adventurousness of the managing class in the two countries, all to the advantage of the United States.
459. (2) Alleged weakness of the English mercantile organization.—In the preceding paragraph we have suggested various elements of weakness in English manufactures, which in greater or less degree were bound to affect the power lying behind the English export trade. We have now to consider another set of conditions, which are easily confused with the foregoing, but which are better kept separate. English manufacturers might be strong, and still they would have but a small export trade if they were not informed as to the wants of their customers, and did not study their customers’ tastes in supplying goods. This set of conditions, which may be termed mercantile, the business of the merchant rather than of the manufacturer, we may study under two heads: (a) finding out what is wanted; (b) selling a suitable ware when it has been made.
460. Insufficient knowledge of the needs of foreigners.—(a) The complaint was general that the scouts of British commerce, the commercial travelers, were too few in number and that they were ill prepared, especially in their knowledge of foreign languages. The English exporter shipped goods which he thought were suitable, without knowledge or regard of the desires of his customers. A business man who had had seven years’ experience with trade in the Empire said, “There is a universal complaint: ‘You English will not make your goods to suit our markets. You send your samples and tell us to take them or leave them—you don’t care which. If we ask you to alter things you either refuse to do it or else you demand prohibitive prices.’” In countries where English is not spoken (Persia, Sumatra, South America, etc.) the conditions were still worse. The Merchandise Marks Act, the origin of the familiar “Made in Germany,” was designed to protect the British colonist from having foreign-made goods palmed off on him as English, and thus help the English manufacturer; but it served only to advertise foreign manufactures, and led the colonists to import goods directly from foreign countries, instead of taking them through English hands.
461. Unwillingness to adopt foreign trade customs.—(b) Finally, when wares suited to sale in any market have been manufactured, they need to be sold, to maintain trade. English exporters were criticised for allowing their wares to be driven out of foreign markets by other wares, no better in themselves but for some reason more attractive to the customer. Here again the commercial traveler was at fault, but part of the blame lay on the exporter. Sales must be made in small lots and on long credit in some countries, if they are to be made at all; and the English had shown a disinclination to adapt themselves to such conditions which had enabled others (especially Germans) to take trade from them. When other things are nearly equal slight differences in packing and shipping may turn the scale. The English lost trade in Australia because they sent tacks in paper packages instead of in cardboard boxes, because they sent cartridges in lots of one hundred instead of lots of twenty-five. An interesting example of an opportunity well met occurs in the career of an Englishman who left the field of manufacture to become a leading statesman—Joseph Chamberlain. He found that the trade with France in his product, wood-screws, was small; he introduced the metric system of measurement, put up the screws in packages of the size usual in France and wrapped in blue paper familiar to the French customer, and developed a large export trade. If there had been more men like Chamberlain in manufactures in England there would have been less need of the protective policy which he advocated as a remedy for the troubles of English business.
462. Tendency to remedy these faults.—There is no doubt that there was a good basis for these charges against the British manufacturer and merchant, though some of them doubtless were exaggerated, and it is impossible to apportion exactly the weight that should be allowed to any one of them. The crisis of the World War was needed to sweep away the customs and traditions of a long past. The stimulus of a struggle for national existence, with the insistent demand for the highest attainable efficiency, effected reforms reaching deeper and further than those of a whole previous generation. Even before 1914, however, many men in responsible positions in English politics and business recognized the need of mending the pace if England was to keep abreast of competitors in industry and commerce. Interest in elementary and technical education quickened; inquiry was directed to the means by which foreign rivals were getting ahead; the government, associations and individuals worked together or independently to further efficiency.
A parliamentary committee which in the course of the World War made a careful study of the prospects of British industry and trade reached the following conclusions as regards conditions in the previous decade. England had taken but a small part in the development of some modern industries, particularly the chemical and electrical; the country had made comparatively little progress in the iron and steel industry, in which it was entirely overshadowed by Germany and the United States; but it had shown wholesome vigor and capacity for growth in some great manufactures, such as the textiles, ship-building and some branches of machine-making. British trade abroad was found to suffer from the competition of foreigners who were found, in some cases at least, to be following methods of organization and marketing that were distinctly more efficient than those which the British pursued.
463. (3) Adverse influence of foreign tariffs; proposals to revise the English policy of free trade.—Under conditions of adversity there is always an inclination to lay the blame, rightly or wrongly, on others. A considerable party in England asserted that the reasons for the recent decline were political rather than economic, resulting from the protective tariffs of other states; and this party asserted that a change in the tariff policy of England and of the colonies was needed to rescue British commerce.
There can be no question of the main fact, that protective tariffs had increased considerably during the last quarter of the century. It is estimated that the principal English exports were burdened with duties equivalent to 10 to 30 per cent ad valorem in most states, but amounting to far more than that in some cases (72 per cent in United States, 130 per cent in Russia). There can be no question that England suffered from these restrictions; every commercial state suffers from them. It is, however, open to grave doubt whether England could help herself by a change in policy; and the question of what change, if any, ought to be made, remained unsettled.
464. Demand for customs duties as a means of defense and retaliation.—One group of “tariff reformers” clung to the ideal of free trade, and favored its maintenance as the policy of the country in general. It would, however, permit deviations from it in particular cases. The adherents of this view asserted that England stripped herself of the armor and the weapons of commercial war when she adopted complete free trade. She could make no effective protest when other nations raised tariffs against her, marked perhaps by offensive discriminations; she must suffer everything because she was forbidden to retaliate. The adherents of this view laid particular stress on the practice of “dumping,” as it is called. The manufacturers of protected nations, themselves, secure from England’s competition, market their surplus output in England at prices which may not cover the costs, much less the profits, of production. It is cheaper to do this than to break prices in the protected market at home; it kills the English industries and enables foreign manufacturers in the long run to raise prices to a profitable level in the English market. For retaliation against protective countries, and for defense against “dumping,” this school demanded that the English government be armed with the power to impose heavy duties, to be temporary in character and to be removed as soon as their immediate object has been accomplished. Such a policy has been adopted in Canada.
465. Proposal of an imperial customs union.—Another school of tariff reformers, led by Joseph Chamberlain, accepted in general the views just indicated, but laid particular stress on another possibility in shaping English commercial policy. It would make the whole great group of English dependencies not only a political unit but a commercial unit as well, bound together in an imperial customs union (Zollverein), so that trade would flow from place to place within the Empire instead of crossing its frontier. It is not possible here to discuss the various aspects of this proposal, of which some of the most important are political rather than commercial in character. The attractiveness of the plan is at once apparent; it promises to assure to England a market for her manufactures in the colonies, and to the colonies a protected market for their raw materials in England. The practical weakness of the plan is, however, equally apparent; no law would be necessary to secure this result if the various parts of the Empire found it advantageous to trade with each other, and the mere suggestion that a law is necessary shows that trade would be cramped and the interests of individuals hurt by such an arrangement.
466. Obstacles to a customs union.—The course of trade has, in fact, taken lines more and more opposed to the scheme of a customs union. During the first part of the century, when England was still protectionist, and when the mother country made the laws for its dependencies, the plan could be carried out with comparatively little friction; the colonies were engaged chiefly in the production of raw materials, and were glad to exchange these for English manufactures. Since about 1850, however, both the political and the economic organization of the Empire have changed. The self-governing colonies have received the right to make their own laws, and have used it to raise protective tariffs, against England as well as against other countries. Behind the barriers of the tariff they have developed a considerable manufacturing industry. They were now unwilling, therefore, to open wide their markets to English manufacturers; and showed an increasing tendency to buy what manufactures they did import from other countries than England. They were unable, on the other hand, to supply in full the English demand for raw materials; and any measure designed to restrict supplies of raw materials to some source inside the British Empire threatened injury to producer and consumer at home. The self-governing colonies gave evidence of the strength of their political affection by enacting differential tariffs favoring the British producer. Canada began the practice in 1894, and later enlarged the concession until it amounted to a remission of one-third of the regular customs duty. New Zealand, South Africa and Australia adopted after 1900 the same principle, making their concessions less extensive. The differential advantage thus offered the English exporter must evidently have had an effect on the course of trade. The new policy was keenly resented in Germany, where it was pictured as an abuse by England of her political ascendancy to deprive other countries of the benefit that should go to superior economic efficiency. On the other hand the policy seems to have been less important than ordinary economic factors in determining the flow of goods, and certainly had no decisive influence in changing the customary channels of trade.
467. Relative progress of England and other countries just before the World War.—Just before the outbreak of the World War England appeared to have made a new start in the efforts to keep her place among commercial countries. It is interesting to compare the advance that she had made with the progress of Germany and of the United States.
| Absolute Increase in Trade of the Annual Average 1910-13Over Average 1895-99. | ||||||
|---|---|---|---|---|---|---|
| (Figures in millions of £ sterling, with rough equivalent in $) | ||||||
| United Kingdom | Germany | United States | ||||
Net imports for consumption. | £218 | $1090 | £260 | $1300 | £188 | $940 |
Imports of manufactures. | 72 | 360 | 48 | 240 | 81 | 405 |
Exports of domestic products. | 230 | 1150 | 244 | 1220 | 221 | 1105 |
Exports of manufactures. | 177 | 885 | 170 | 850 | 140 | 700 |
The figures, it should be noted, give not the total commerce of any country, but the gain which each country had made in the period in question. The figures do not take account of the difference in population in the three countries; they treat the three different countries as units. The reader in studying them cannot fail to be impressed by the closeness in the struggle for commercial leadership, and will be better prepared to understand how precarious was the situation if in one of the countries the view was dominant that commercial interests were group interests, to be furthered by any assistance which the state could render, if necessary by the sword.
QUESTIONS AND TOPICS
1. Note the different senses in which the commerce of a country may be described as “declining.” (1) Other things remaining the same, there may be an absolute decrease in the quantity and value of both exports and imports. (2) The decrease may affect only one side of the balance, while the total figures may remain the same. Why is the decrease viewed with especial apprehension if it affects exports? (3) Other things remaining the same, including the quantity of wares, there may be a decrease in the value of a country’s commerce, due to a change in the level of prices. (4) The quantity and value of a country’s commerce may remain the same, and yet be regarded as “declining” if the population of the country increases; the share of each person in commerce would be diminishing. (5) Similarly, a country’s commerce may keep pace with its population, and yet be termed “declining” if the commerce of other countries increased more rapidly, so that the given country conducted a diminishing share of the world’s trade. (6) Previous standards of “decline” have been based on quantity, measured either in bulk or value, but there may also be a decline in quality. A scientist might gain more income if he adopted the trade of an artisan, but he would be thought, nevertheless, to lose in rank. Endeavor to make clear to yourself the significance of each one of these various changes, and be prepared to distinguish them as you study the commercial tendency of different countries. Find examples of as many of them as you can.
2. Pick from following sections a concrete example to illustrate each of the three heads suggested in sect. 452.
3. English industry and Eastern competition. [R. S. Gundry, in Fortnightly Review, 1895, 64: 609-620.]
4. Recent history of elementary education. [Mathew Arnold in Ward, Reign, 2: 238 ff.; F. E. Smith in Fortnightly Rev., 1912, vol. 97, p. 400 ff.]
5. How trade unionism affects British industries. [E. A. Pratt, Trade unionism; B. Taylor in North Amer. Review, 1901, 173: 190-207; in defense of trade unions cf. Edwards in Contemporary Review, 1902, 81: 113-128, and writings of Sidney and Beatrice Webb.]
6. Technical education in England. [Rawson in Contemp. Rev., 1901, 80: 584-598.]
7. Reasons for decline of the English silk trade. [Parker in National Review, 1895, 26: 212-225.]
8. Relative strength of modern countries in manufactures. [Schoenhof in Forum, 1901, 31: 89-104 (statistical); Browne in National Review, 1899, 33: 568-580 (espec. U. S.).]
9. Faults of English mercantile organization. [Lambert in Nineteenth Century, 1898, 44: 940-956; Greenwood in same, 1899, 45: 538-547.]
10. Meaning of “dumping”; effects; means of prevention. [Ashley, Tariff problem; Marshall, Industry and Trade.]
11. Balfour’s view of the commercial situation. [A. J. Balfour, Economic notes on insular free trade, N. Y., Longmans, 1903, $.30; Tariff reform, $.10.]
12. Criticism of Balfour’s proposals. [Quarterly Review, 1903, 198: 613-648.]
13. Chamberlain’s view of the commercial situation. [Chamberlain, The policy of imperial preference, National Review, 1903-4, 42: 351-370.]
14. Discussion of Chamberlain’s proposals. [Nelson in North Amer. Review, 1903, 177: 183-191; Goschen in Monthly Review, 1903, 12: July, 38 ff.; Quarterly Review, 1903, 198: 246-278; Edinburgh Review, 1904, 200: 449-476.]
15. The project of an imperial customs union. [Mahan in National Review, 1902, 39: 390-408; Colquhoun in North Amer. Review, 1903, 177: 172-182; Giffen, in Nineteenth Century, 1902, 51: 693-705; Bastable in Econ. Journal, 1902, 12: 507-513.]
BIBLIOGRAPHY
I cannot attempt a survey of the vast literature which has sprung in recent years from the discussion of the proposal to change the commercial policy of England.
A bibliography of 38 pages compiled under the supervision of A. P. C. Griffin, Select list of references on the British tariff movement (Chamberlain’s plan), was published at Washington, 1904. For a defense of the protective policy the reader may see Ashley, Tariff problem; for representative statements of the free trade views see William Smart, The return to protection, London, Macmillan, 1904; and L. G. C. Money, Elements of the fiscal problem, London, King, 1903. Considerable historical importance attaches to the books by Gastrell and Williams, which did much to arouse interest in the great commercial question of the day. Useful surveys are provided in translations of two foreign works, Carl J. Fuchs, The trade policy of Great Britain, London, 1905, and Victor Berard, British imperialism and commercial supremacy, London, 1906.
Reading of a more substantial character is offered in books which analyze the organization of industry and discuss the merits and defects of the English. For a survey from the standpoint of theory see Alfred Marshall, Industry and Trade, London, 1919, which is adapted only to advanced students, and for more concrete discussions, suited to topical reading, Arthur Shadwell, **Industrial efficiency, London, 1906, two volumes, reprinted later in one; Sydney J. Chapman, **Work and wages, 3 vol., 1904-14. Interesting comparisons of methods and results in England and in the U. S. will be found in Report of the Moseley Industrial Commission, London, 1903, American engineering competition, N. Y., 1901, and Causes of decay of a British industry, (gun-making), by “Artifex” and “Opifex,” London, 1907.
The analysis of commercial statistics in Schooling and Fuchs is supplemented by later studies to be found in the Journal of the Royal Statistical Society.
CHAPTER XXXIX
THE GERMAN STATES
468. Connection of the commercial and the political development of Germany.—Standing next to England in the extent of its commerce about 1900 is a country which at the beginning of the century, if not among the last, was certainly far below the leaders. This country is Germany. We shall have to note, in this sketch of commercial development in the nineteenth century, two remarkable examples of commercial expansion. One of them, furnished by the United States, was due to the spread of a people, originally small, over a great area rich in resources. The other, furnished by Germany, was due to different causes. The Germans of 1800 occupied a territory not greatly different from that which composed the Germany of 1900, and to which nature has given but a moderate endowment of resources. There was no Germany at the earlier date, however; the people were divided up among a great number of petty states, and their economic forces were cramped thereby so as to hinder their development. The commercial progress of the century has depended largely on the reform of these political conditions.
469. Summary of the political development.—It will be necessary, therefore, in the following pages, to refer frequently to the events of political history, and for the convenience of the reader a brief summary is here given of the course of that history. The Napoleonic wars wiped out the smallest and most backward of the German states, reducing the number from over three hundred to about forty. Then, until near the middle of the century, progress depended on negotiations between these states by which the worst effects of their separation were removed. In 1848 a liberal movement reformed the government of some of the important states on modern lines, and strengthened the demand for a unified Germany, leaving still undecided, however, the question whether Prussia or Austria was to be the leading state. The war of 1866 between the two states gave the leadership to Prussia; and the war of 1870 with France led finally to the foundation of the modern German Empire, under which at last the people found room for commercial expansion and advanced with astonishing rapidity.
470. Conditions of Germany about 1815.—In spite of the service which Napoleon did Germany by abolishing the smallest states, the country was still splintered into pieces in 1815. A network of tariff frontiers covered the land, cutting the great rivers and the natural high-roads of commerce, and preventing the movement of wares. Not only did each state have its own tariff; some had internal tariffs in addition. The single state of Prussia had altogether some sixty tariffs. Some of the states were made of scattered pieces, interspersed among the territories of their neighbors; even a small state might consist of eight or ten fragments. A merchant, to reach the center of the country from the national frontier, crossed about sixteen tariff boundaries.
Not only the customs tariffs consumed time and money. The separatism which they represented spread into all parts of the organization; there were seventeen different postal systems in the country; nearly threescore different laws on bills of exchange; hundreds of different coins.
471. Backwardness of commerce and manufactures.—The difficulties of internal commerce were so great that the life of the people was arranged in large part to enable them to exist without trade. Most of the people were engaged in agriculture and supplied themselves with nearly all the necessaries of life. Manufactures were still carried on almost exclusively by scattered artisans. The German governments still clung to the old ideas of the gild system and public regulation. Little by little these ideas fell into the background in the first half of the nineteenth century, but it is important to note that they were still a living force in Germany when England had discarded them and was in the full rush of the developing factory system.
472. Factories dependent on antiquated sources of power.—Hindered in development by the persistence of old institutions, and by the lack of any considerable market for the product, German manufactures remained on the same stage on which they had been for centuries previously. Even the textile and mining industries were conducted according to the time-honored methods of the past; little progress had been made in the application of machinery, and the steam-engine was practically unknown. In Electoral Saxony, the seat now of a great cotton and woolen manufacture, all spinning was done by hand up to 1786, and in 1812 the small factories were still dependent on this source of power. The factories of medium size got their power from oxen and horses; only the large factories were run by water; and no spinning was as yet done entirely by steam.
473. Commerce small, and marked by the export of raw materials.—No statistics exist which would give an accurate picture of the development of German commerce in the early part of the nineteenth century, but we can gain some idea of its backwardness from an estimate made for so late a date as 1842. At this time German foreign trade was little over one-tenth of what it was in 1900, and it must have been considerably less in earlier years, before the reforms which will be described immediately. The fact that the country was predominantly agricultural is shown in the fact that the most important items in export were raw materials and foodstuffs, especially grain. The industrial population had not advanced far enough to work up even the raw wool produced in the country, of which considerable quantities were exported to England. Germany did export, it is true, a number of manufactured wares, but they were in general those which could be made from raw materials produced at home, and in the manufacture of which cheap hand labor was still the important factor. In the products, however, affected by the improvements which had been introduced in English factories, Germany confessed her weakness, and purchased large quantities of yarn and iron of English manufacturers for use inside the country.
474. Formation of the Zollverein (customs union).—Such conditions called forth, naturally, remonstrances from the mercantile classes. Business men and manufacturers in all parts of Germany began soon after 1815 to agitate for a reform. We must content ourselves with noting only the main steps. Tariffs inside the separate states were reformed, and the navigation of the great rivers was made easier. Finally, and most important, the separate states began to draw together in groups, forming a customs-union (Zollverein), with a common tariff on the frontier and with free trade inside. The movement, slow at first, culminated rapidly in 1828, when three such groups were formed, one in the North (Prussia and others), one in the South (Bavaria and Würtemberg), and a third including states from central Germany to the coast. No state liked to remain isolated when consolidation had once begun. Out of this transition stage there had developed by 1834 one great union, embracing about two-thirds of the area and population out of which the German Empire was later to be formed. From this time the union grew more slowly, but the people within it could now afford to wait, utilizing its new commercial opportunities, and confident that the other Germans could not long resist its attractions.
475. Development following the formation of the Zollverein.—The introduction of free trade inside of Germany was opposed then, as the establishment of free trade in the world at large would be now, by producers who feared the competition of others in the same line of business. Some producers lost by the change, and were compelled to seek other lines of work. Many manufacturers, however, who opposed the change because they feared it would hurt them, found that it led actually to a great increase in prosperity; it extended their market and gave a rich reward to those who best served their customers. German manufactures developed and began to supply a demand which before had been met by purchases abroad. The importation of foreign manufactures was checked, while there was an increase in the imports of raw and half manufactured materials (dyes, coal, iron) and of colonial products (sugar, coffee), indicating a growth in industrial power and in welfare. The non-industrial population gained both as consumers, by the better supply of manufactured wares, and as producers, selling products to the developing industrial class.
476. Protection and the free-trade movement.—The tariff of the Zollverein of 1834, based on the liberal Prussian tariff of 1818, was less restrictive and less complicated than that of most of the European states of the time. Duties which had been moderate, however, at the time when they were framed, became protective or prohibitory as prices fell; and some changes toward protection were made consciously to stimulate manufactures or to retaliate against other countries. About the middle of the century the current set in the other direction. Germany was still an agricultural country, exporting grain, and the agricultural classes secured the aid of merchants and of political liberals in a contest for lower duties.
477. Political factors in the tariff question.—The free-trade movement was curiously intermixed with matters of national politics, especially the question which was acute from 1848 to 1866, whether Prussia or Austria was to lead in the unification of Germany. Austria had not entered the Zollverein, partly because the Austrian government had retained the protective or prohibitive duties of the previous century, and was unwilling to reduce them by entering the German customs union. It was the policy of Prussia, therefore, to keep the duties low and to make them even lower, that Austria might be excluded from influence on the other German states. Neglecting the details, which are extremely complicated, we may note only the result, which was a victory for Prussian statesmanship and for the free-trade party. Treaties with France and with many other states reduced the duties far in the direction of free trade.
478. Reaction in customs policy after the founding of the German Empire.—At the time of the foundation of the German Empire, therefore, the tariff was low and the free trade movement was in the ascendant. The free traders gained one more victory, in 1873, by securing the abolition of the duties on iron; and in 1877 about 95 per cent of all imports entered duty free. This victory of the free traders was their last. The founding of the empire stimulated the growth of national feeling, and “Germany for the Germans” was a rallying cry of which the protectionist made good use. A great commercial crisis, following the war and the expenditure of the huge indemnity received from France, caused urgent demands for relief from the manufacturers who had greatly extended their works and found now that they could not market the product at profitable prices. Of the iron producers it was said that one-third could continue under the existing tariff, that one-third could continue only with the aid of protection, and that one-third were bound to be ruined whether they received protection or not.
479. Return to protection in 1879.—Even the agricultural classes now joined the protectionists; they found their foreign market appropriated and their home market threatened by grain imports from Russia, America, and India; they were largely in debt and were paying the heavier taxes of the empire. Finally, political factors united with the economic to induce a change. Bismarck found it politic to reverse his position and to advocate protection instead of low duties or free trade; with remarkable adroitness he engineered the change which was realized in the tariff of 1879. The existing duties on manufactures were raised; old duties which had been abolished were restored; and duties protecting agricultural products were introduced. This tariff, with changes which we shall notice later, has formed the basis of the existing tariff.
QUESTIONS AND TOPICS
1. Review in one of the smaller manuals of European history the course of political development in Germany during the century.
2. Political condition of the German states at the beginning of the century. [Seignobos, first parts of chaps. 12, 14; Henderson, vol. 2, chaps. 6, 7; Bigelow, vol. 3, chap. 1.]
3. The Zollverein. [Rand, Ec. hist., chap. 8; Bigelow, vol. 3, chap. 4; Seignobos, end of chap. 14.]
4. The Prussian tariff of 1818. [Bigelow, vol. 3, chap. 17.]
5. The conflict between Prussia and Austria. [Henderson, vol. 2, chap. 9; Seignobos, chap. 15.]
6. The return to protection. [“Veritas,” chap. 5.]
BIBLIOGRAPHY
The best single reference is J. H. Clapham, **The economic development of France and Germany, 1815-1914, Cambridge, 1921. Ogg, ** Econ. development, chap. 10, industry, and chap. 14, commerce, is brief on the earlier part of the century but gives notably full bibliographies.
A bibliography of Germany, including references to a number of articles in English will be found in Homans, Cyclopedia of commerce, N. Y., 1858, p. 814. The student who is confined to reading in English must seek in Homans, M’Culloch and similar books, or in the general encyclopedias published before 1870, the descriptions there given of German commerce in the earlier parts of the century. Most of the English reading which is readily available takes up economic development only in connection with political history. Topical references have been given above to the general narrative histories: **Seignobos; Ernest F. Henderson, A short history of Germany, 2 vols., N. Y., Macmillan, 1902; Poultney Bigelow, History of the German struggle for liberty, 3 vols., N. Y., Harper, 1896-1903. An anonymous book, by “Veritas”, The German Empire of to-day, London, Longmans, 1902, includes chapters on the history of German commercial policy which make it a convenient source of information to readers of English. The best book in English, however, on German commercial policy is W. H. Dawson, **Protection in Germany, London, King, 1904, which covers the whole century; it is a book to be studied, not merely read. A valuable summary of the history of German American commercial relations throughout the nineteenth century is given by G. M. Fiske in Review of Reviews, N. Y., March, 1902, 25: 323-328.
CHAPTER XL
GERMANY UNDER THE EMPIRE
480. Effect on economic development of the establishment of the Empire.—Leaving now the topic of commercial policy until we return to it in a concluding paragraph, we must attend to the material development of Germany. Down to the foundation of the Empire in 1871, progress, if steady, still was slow. The best energies of the people were absorbed in the great political conflicts out of which united Germany was to emerge; delicate questions of the relations between the German states had to be settled, and much needed still to be accomplished in the reform of industrial legislation inside the states. As late as 1862 it was estimated that five-eights of the people were still engaged in agriculture or in other extractive industries. In comparison with this period of preparation the progress which Germany has made since 1871 is startling. The direct gains which Germany made in the war with France, the acquisition of the rich provinces of Alsace and Lorraine, and the receipt of about $1,000,000,000, as a war indemnity, were large, but still they were less than the indirect results: the establishment of national unity on a lasting basis, freeing the people from political anxieties, and encouraging them to face their economic problems with a new energy and pride in their strength, and with a new hope in the future. This political factor, vague and intangible as it may be, is still most important; without it the recent economic development of Germany could be regarded only as a miracle.
481. Development of commerce, 1870-1913.—In the period between the founding of the Empire and the outbreak of the World War the population of Germany increased from 41 to 67 million, about 63%, while the foreign trade increased almost exactly 250%, four-fold as fast. Comparing the figures in the accompanying table with those given for the United Kingdom in a preceding chapter we see that in 1872 the Germans were much behind the English, separated roughly by an interval of ten years of development, but that they were closing the gap as time passed, and at the end of the period had passed the English in the value of their export trade.
| Special Commerce of Germany, Selected Years in Milliardsof Marks and of Dollars. | ||||
|---|---|---|---|---|
| Imports | Exports | |||
| Marks | Dollars | Marks | Dollars | |
| 1872 | 3.5 | .9 | 2.5 | .6 |
| 1875 | 3.6 | .9 | 2.6 | .6 |
| 1880 | 2.8 | .7 | 3.0 | .7 |
| 1885 | 3.0 | .7 | 2.9 | .7 |
| 1890 | 4.3 | 1.1 | 3.4 | .8 |
| 1895 | 4.2 | 1.1 | 3.4 | .9 |
| 1900 | 6.0 | 1.5 | 4.8 | 1.2 |
| 1905 | 7.4 | 1.9 | 5.8 | 1.5 |
| 1910 | 8.9 | 2.2 | 7.5 | 1.9 |
| 1913 | 10.8 | 2.7 | 10.1 | 2.5 |
While in 1871 60 men out of 100 were engaged in agriculture, the proportion had fallen in 1907 to 27. The change was brought about not by an absolute decline of the number in agriculture, though sometimes that was observable, but by the young men leaving the country for the mines, factories, and commercial centers. Germany had in 1840 only 12 cities of over 100,000 inhabitants, while at the end of the century it had 28, of which the chief, Berlin, was growing more rapidly than Chicago; and in 1910 it had 48. The industrial development during the generation ending in 1900 may be inferred from the following: coal production increased over 250 per cent, pig iron production nearly 400 per cent, and shipping 500 per cent.
482. Character of recent German commerce.—England was characterized in a preceding paragraph as “offering one of the most remarkable examples of advanced commerce in the world.” In an earlier period England stood alone; it offered the most remarkable example. In 1913 Germany stood alongside England, not merely as regards the quantity but also as regards the quality of her trade. In Germany as in England manufactures formed the major part of the exports; their proportion of the total value approached if it did not reach the English. Exports of raw materials and crude food stuffs had declined to less than one-quarter of the total, and among exports of this character coal, as in England, took the dominant place. On the other hand the imports of raw material and food stuffs had grown until they amounted to about three-quarters of the total imports. Of the total value of imports finished manufactures formed only 13 per cent, a proportion actually less than that of the English, whose policy of free trade permitted wares to be brought in which were excluded from Germany by the customs tariff. If we arrange the wares imported in 1913 in the order of their value we do not find a single finished manufacture among the first 26 items, which include all those exceeding 100 million marks in value; crude copper was fifth on the list, but we find no product of factory industry until we reach the twenty-second item, woolen yarn, which itself was destined to feed the German factories and in large part to be exported in a finished form. To understand recent German commerce we need first of all, evidently, to study the development of Germany’s manufactures.
483. Rapid development of factory industry.—Before the founding of the Empire most of the people engaged in manufactures in Germany still worked at home, with simple machinery and no steam power. In Saxony, for instance, now one of the industrial centers of the country, the manufactures of cloth, stockings, lace, etc., were still carried on outside of factories in 1868. The proportion of people working in this simple way is still large in Germany, but the number has declined in many lines of work (weaving, milling, shoemaking, etc.), and the great growth of the recent period has been in the modern factory industry. Since 1882 the rate of growth of the factory population has been about fourfold that of the general population. The results of this development have been indicated in the previous paragraph, and they furnish a striking contrast to conditions as they were at the time of the Centennial Exposition of 1876, when the German representative reported that in the industrial field Germany had received a defeat equal to two Sedans, that German industry produced only articles of poor quality and of slight value (“schlecht und billig”), and that Krupp guns were the only product of which the Germans could be proud.
484. Resources of coal and iron.—Germany was favored by some important physical resources in building up its modern industry. The country had a rich supply of coal, the great source of modern power, and took in Europe a place barely second to England in coal production, far ahead of any other country. Germany was well supplied also with the raw materials for the staple products, iron and steel. The ore supplies in the province of Lorraine, taken from France in 1871, are the most extensive in Europe. At the time when they were acquired they were thought to be of poor quality, because of the phosphorus contained in them, but under the basic process they were made to yield metal of excellent grade, and in addition a valuable fertilizer, obtained from the phosphate slag. Germany has developed its iron resources with a rapidity exceeded only in the United States. It contributed only one-twenty-seventh of the world’s iron supply in 1866, but had raised its share to one-sixth at the end of the century, and to about one-fourth before 1914. It passed England in steel production shortly after 1890, and in iron production about ten years later; it raised constantly the figure of its output while that of England remained relatively stationary, and in the decade before the war it was advancing at a rate seven-fold that of England.
485. Quality of the people.—The richest resource of Germany, however, was its people. The past poverty of the country and the trials through which it had gone nurtured a steadiness and thriftiness among the working classes which made them admirable members of the modern productive organization. An effective system of elementary education was established in parts of Germany long before a similar step had been taken in most other countries; and practically all the people had not only the rudiments of education, but also, what is perhaps more important, a respect for knowledge, a desire to learn and to make the best use of their learning, which were in striking contrast with the careless spirit of other peoples. It has been said that it was the primary school-teacher who won for the Germans the victories of 1866 and 1870; and the Germans could hope now to beat their industrial rivals as they beat their military opponents, by method and steady application rather than by brilliancy and dash.
486. Superiority in technical training.—The effects of careful training were as evident in the class of the responsible managers of Germany’s industries as in the laboring class. Nowhere in Europe had technical education reached so high a development. Not only were the appliances, methods, and system of organization superior to those of other states; the technical schools reached a larger part of the population, training them not only in the fundamental subjects of science, but also in the special branches of production (mining, weaving, dyeing, etc.).
The results were everywhere apparent in German industry; to instance chemicals, sugar, glass, and electrical appliances is to pick only a few examples from a list which could be greatly extended. Especially noteworthy was the readiness of the Germans to adopt a new process or machine which was first brought out in some other country. Englishmen invented processes to make a fast black aniline dye, to manufacture potassium cyanide for the reduction of gold, to make steel by the basic process; all these inventions were developed first into commercial successes in Germany. The Germans imported, if necessary, foreign machinery and foreign foremen to superintend its action, until they had mastered the principles of operation and had firmly established the industry in its new home.
487. Efficiency of the mercantile organization.—Similar considerations account for the success of the Germans in commerce, and explain the rapid development of their export trade. They took pains to find out what wares their customers wanted, and to sell them when they had been made. The report of a consul of the United States in Chile suggests the methods which led to their success. “Thirty years ago,” he wrote in 1902, “the trade coming to the Pacific ports was monopolized by the British and a few American houses. The Germans were represented only by jobbers and shopkeepers in the coast towns. The Germans, appreciating the importance of this trade, made well-conceived plans to gain it. They carefully trained a number of able young men. When these were versed in commercial affairs and in the language of the people among whom they were to live, considerable shipments of goods were made to the British and American houses, and the young men found places as clerks and were given special charge of these consignments. They remained there till they acquired a complete knowledge of the coast trade; then they were provided with ample funds and stocks and opened German houses, with brilliant success. In many branches they now have a monopoly, and the British and American houses no longer attempt competition.”
488. Commercial travelers and trade papers.—No country in the world had commercial travelers so well trained, especially in the command of languages, as Germany. The Germans were said to be the only foreign people who had a thorough knowledge of Russia in a business way; they were able to meet the demand for long credits in that and other eastern countries, and so build up their trade and still avoid serious losses. The exporters were not content with sending abroad their ordinary trade catalogues, as were the English, Americans, and others; they sent personal representatives speaking the language of the country, or at least reached a prospective customer by some communication in his own language. Trade papers for foreign circulation were printed in Germany in the following languages: English, French, Russian, Spanish, Portuguese, Turkish, Japanese, and Chinese.
489. Other factors in commercial development.—The rapidity of their industrial and commercial development forced a departure from the methods of the past, and stimulated new forms of co-operation in business. The same period which was marked in the United States by the rise of the great aggregations of capital known generally as “trusts” produced in Germany the “cartel” of a somewhat similar nature, which had its shady sides but which made some very important contributions to efficiency in the making and marketing of goods. German banks followed a course which in contrast to the conservative methods of the old established banks of England and the United States appeared speculative, but which in this period when so many conditions were favorable proved immensely profitable and effective. The great German banks promoted and financed to a successful conclusion many new enterprises in industry and trade. The government played an active part, not merely by such services as were expected of the State in other countries, but also by more positive contributions. Its control of internal transportation, by the system of state-owned railways and canals, gave it great power in directing and assisting economic development; and it supported most generously the development of shipbuilding, and the extension of German lines of shipping, for the benefit of the exporter.
490. Deductions to be made in estimating German progress.—We must note some factors which help to account for the great development of German commerce, but which should be offset by other considerations, and which therefore do not represent net contributions to the world’s welfare. The Germans themselves were being taxed for the particular benefit of the export trade. The government so far as possible freed the export industries from the burden of the tariff, which weighed heavily on some classes in the country, and beyond that, gave actual bounties to stimulate exports. These were commonly concealed, for instance in the form of special rates in transportation, but had nevertheless to be paid out of the pockets of the German taxpayer and business man. Furthermore, private organizations followed substantially the same practice. The great “cartels,” kept prices high at home to gain resources with which they might finance their fight against competitors in foreign markets. They won much trade, but they won it at costs, borne sometimes by Germans and sometimes by outsiders, which need to be taken into account if a fair balance is to be struck. Finally, there must be put on the debit side of the account some gains which the Germans made in commerce, not by greater efficiency but by less honesty: by the imitation of trade marks, by the bribery of agents, etc. In this regard they were not the only offenders. They did not win the bulk of their trade in this way. Their departures from accepted standards of commercial morality were, at least, sufficient to establish for German trade methods an unenviable reputation.
491. Examples of German success in trade.—If we add all these influences helping Germans to market their goods, to those which enable them to manufacture to advantage, we can understand the development of the German export trade, and can see why German wares, even when they were no better than the wares of other countries, won foreign markets. A French brewery got the first prize at Baden Baden, but German beer was sold all along the Parisian boulevards. German brewers sent an increasing amount of their beer to the British colonies and India, because they had learned not only all that English brewers can teach them, but they had learned, too, the tastes of their customers in distant countries, and had adapted their product to suit these tastes, while English brewers clung fast to the old methods. They had greatly extended their trade in textiles, carpets, etc., “not so much because they are cheaper, as because they are quicker and more dexterous in fitting their supply to the changing demands of the market.” They had taken away a large part of the French export trade in dolls, by taking pains to fit the doll for the country to which it is going, getting English cloths in which to dress a doll for England, reproducing exactly national types of furniture, etc. German wares, wrote the British consul at Paramaribo, displaced Sheffield wares in his district, not because they were more serviceable, but because they were cheaper, were polished and painted, and arranged for display in shop windows, while the English wares were laid away in brown paper on a shelf. Measuring German commerce as we have measured that of England, by noting the percentage which German sales to any country formed of the country’s total imports, we find that in the period from 1881 to 1909 Germany’s share of sales fell off in only one foreign market of importance, the Netherlands, and, on the other hand, its share grew, and in some cases grew greatly, in nine of the ten great markets of the world.
492. The German tariff and the agrarian party.—It is impossible to say just how far the progress of Germany in this period was furthered by the government’s commercial policy, for, as will appear, this policy retarded development in some lines to favor it in others. This, at least, may be said with assurance, that the policy was strikingly characteristic of the attitude of the German state, and throws much light on the conditions preceding the outbreak of the World War. The recent history of commercial policy in Germany may be discussed under two aspects: its relation to domestic politics and its relation to foreign politics.
The protective tariff of 1879 was designed particularly to favor the growing manufactures of the country. Agriculture had been in the past an export industry, and the agrarian representatives had favored free trade. Already, however, there were signs of that far-reaching change by which cheap food stuffs from distant parts of the world were enabled to under-sell the domestic product; and a moderate protective duty on the cereals was granted in the tariff of 1879. The German producers of bread stuffs and meat found, however, that they had underestimated the danger to which they were exposed, and that they could keep their home market only by sacrifices which appeared to them desperate. They obtained additions to the duties; they managed, under the guise of sanitary precautions, to subject the importation of certain foods to expense and delay, even when it was not altogether prohibited; and in the general revision of the tariff, in 1902, they obtained not only a general increase in the agrarian duties but also a specific provision which prevented the government from reducing these duties below a certain point, in treaties which it might make with other powers. These favors to the agrarian interest were accompanied by the revision of rates in the interest of manufacturers, but the government was evidently taking with one hand from the producer what it appeared to offer him with the other hand. There is unmistakable evidence that the higher duties on food stuffs restricted consumption and checked the rise in the standard of living. The policy threatened to impair the ability of the industrial and mercantile classes to compete with foreign rivals who were not thus burdened in getting the necessaries of life. On the other hand, it offered but slight advantage to the major part of the German agriculturists, who carried on mixed farming on a small scale; its benefits were mostly restricted to the owners of large estates, east of the Elbe river, who specialized in the production of grain and meat with hired labor. What, then, is the explanation of the policy? It was, to use the German phrase, a Machtfrage, a question of power. The characteristic agrarian was a Junker, a Prussian squire, devoted to the military ambitions of the Hohenzollerns, endowed by custom and indeed by law with superior political influence. In spite of its industrial development, and in spite of some democratic features of its constitution, Germany was still at heart a military monarchy. The course of policy was determined by reference not to the general economic welfare, but to the interests of those special groups which shared the political and military traditions of the Prussian monarchy.
493. International aspects of German tariff policy.—Likewise in foreign relations German tariff policy was colored by the traditional Prussian view that commercial competition was not merely the struggle of individual producers and merchants, but was a group conflict, in which the state should take an active part, making the most of the particular weaknesses of states opposed to it. In 1871 Germany had forced France to subscribe to the principle that each country would grant the other all commercial favors accorded another power. Being a part of the treaty of peace this provision was interminable; it could be amended only by formal treaty. Germany at the time appeared to get more than she gave. As she realized her industrial and commercial strength, however, she became dissatisfied with a position of mere equality. About 1890, under Chancellor von Caprivi, Germany began the policy of making special bargains with individual states by treaties fixing the tariff rates. In the negotiations with Russia each party stood out obstinately for certain favors, and since agreement appeared impossible each party sought to punish the other by imposing punitive rates, amounting to prohibitions. This war of tariffs lasted less than a year, for it affected so disastrously the commerce between the two countries, that each was glad to reach an agreement by mutual concession. The same spirit, however, which marked this contest, appeared in the commercial relations of Germany with other states; she conducted similar tariff wars against Spain and against Canada, and seems to have meditated like action against the United States but prudently refrained from a breach with a country which was approaching industrial independence and which was the source of indispensable raw materials.
494. The tariff of 1902; Central Europe.—Before the treaties framed under Count Caprivi were due to expire Germany prepared for another commercial campaign. A new tariff was passed in 1902, but was held in suspense until treaties could be negotiated under it, and was not put into effect until 1906. The new tariff was ingeniously devised to enable Germany to offer special favors to individual countries, in spite of nominal adherence to the principle of granting to every country with which a treaty was made the concessions granted to the most favored nation; and gave to the government, on the other hand, if occasion demanded, the power to wage commercial war by the imposition of triple duties. Germany is commonly supposed to have driven some hard bargains in the treaties that were framed under this act, but did not have recourse, as in the preceding period, to tariff wars as a means of opening foreign markets. Still, the practice of bargaining for commercial advantage by treaty, which Germany had so vigorously developed, introduced a tension in international economic relations that caused the states of Europe to look forward with apprehension to the years 1917-1918 when the important German treaties expired. The project of a customs union of Central Europe, which had long been discussed in an academic way, and which appeared to many Germans in the early years of the World War as a practicable plan, shortly to be realized, did not propose to introduce free trade immediately among its member states, but it did promise to assure Germany such dominance over the others that she could use not only their economic but their military resources as well, to further her plans for commercial expansion. The plan was characteristic of German ambitions, a summary of the tendencies that had long been manifesting themselves in German policy, and a significant index of results that would have followed if Germany had won the war.
QUESTIONS AND TOPICS
1. What other examples can you find of countries apparently invigorated by a war for independence or national unity?
2. Recent political development of Germany. [Seignobos, chap. 16; Dawson, chap. 11; Schierbrand, chap. 6.]
3. Development of commerce under the Empire. [Whitman, chap. 12; Dawson, Evolution, chap. 4.]
4. Prepare, in the manner suggested in the chapter on England, graphic representations of the chief imports and exports. [Statistics in Statesman’s Year-Book.]
5. Recent commerce of Germany. [Schierbrand, chap. 13; Arndt, Germany in international commerce, International Monthly, 1902, 5: 526-546; Bernstein, Growth of German exports, Contemporary Review, 1903, 84: 775-787; Williams, Made in Germany—five years after, National Review, 1901-2, 38: 130-144; Gastrell, chap. 8 (statistical).]
6. Development of factory industry and condition of factory labor. [Dawson, chap. 3.]
7. The Krupp iron works. [Schierbrand, chap. 14.]
8. Methods and results of education. [Dawson, chap. 6; Schierbrand, chap. 18.]
9. Various reasons alleged to explain German superiority in manufactures and commerce. [Williams, Made in Germany, chap. 7.]
10. The German chemical industry, [O. Eltzbacher, in Contemporary Review, 1904, 85: 627-639; or Barker, Mod. Germany, chap. 25.]
11. Effect of education on the mercantile organization. [Findlay, Genesis of the German clerk, Fortnightly Review, 1899, 72: 533-536; Bashford in Fortnightly Rev., 1905, 84: 692-707.]
12. The German colonial movement. [“Veritas,” chap. 7; Schierbrand, chap. 20; Birchenough in Nineteenth Century, 1898, 43: 182-191; Keller, Colonization, chap. 14; Dawson, Evolution, ch. 18, 19.]
13. Development of German shipping. [Bashford in Fortnightly Review, 1903, 79: 287-302; Schierbrand, chap. 15; Barker, chap. 24.]
14. German transportation system and policy. [“Veritas,” chap. 6; Dawson, Evolution chap. 11; Barker, chap. 22, 23.]
15. German tariff policy to about 1890. [Villard in Yale Review, 1892-3, 1: 10-20.]
16. Commercial treaties about 1890. [Farnam in same, 1: 20-34.]
17. The agrarian movement. [Schierbrand, chap. 9.]
18. Tariff policy about 1900. [Schierbrand, chap. 12; Schoenhof in Forum, 1901-2, 32: 105-115; Eltzbacher in Nineteenth Century, 1903, 54: 181-196; H. Dietzel in Quarterly Jour. of Econ., 1902-3, 17: 365-416; W. H. Dawson in Econ. Jour., 1902, 12: 15-23.]
19. Effects of German tariff policy. [Lotz in Econ. Journal, 1904, 14: 515-526; Mann in Contemp. Rev., 1905, 87: 347-358.]
20. German methods in the commercial penetration of a particular country. [See articles in the Quarterly Rev., as follows: U. S., July, 1919, 232: 16-37; France, 1916, 225: 383-399; Italy, 1915, 224: 136-149; Turkey, Oct. 1917, 228: 296-314.]
21. German banks and “peaceful penetration.” [McLaren in Quart. Rev., Jan. 1919, 231: 76-96.]
BIBLIOGRAPHY
Readers of English will find the recent commercial history of Germany treated more fully than that of any other country of the Continent. Besides the books by Clapham and “Veritas” named in the preceding chapter, may be mentioned: S. Whitman, Imperial Germany, 1901; W. H. Dawson, German life, N. Y., 1901, and **Evolution of modern Germany, revised edition, 1918; W. von Schierbrand, *Germany, N. Y., 1902 (better than the later editions); J. Ellis Barker, Modern Germany, various editions of which the fourth, N. Y., 1912, is to be preferred. Dawson, Protection, and Ogg will continue to be of service in this period; and reference may also be made to report of the U. S. Tariff Commission, 1919, on Reciprocity and Commercial Treaties, 467-487.
G. A. Pogson, Germany and its trade, London, 1903, is a compilation of statistics for the period preceding 1900, and a convenient statistical survey for the period since that date is given by Helfferich, Germany’s economic progress, Berlin, 1913.
Arraignments of German business methods will be found in A. D. McLaren, Peaceful penetration, London, 1916; H. Hauser, Germany’s commercial grip on the world, London, 1917; Millioud, The ruling caste and frenzied trade in Germany, London, 1916; Claes, The German mole, London, 1915, (for Belgium).
CHAPTER XLI
FRANCE
495. Condition of France before the Revolution.—France was considered, as the reader will recall, the richest and most powerful state of Europe till near the end of the eighteenth century. The population of the country was more than double that of Great Britain, the resources were envied by all other nations, the commerce was exceeded only by English commerce and surpassed that in some respects. The French sugar colonies were considered the most valuable colonial possession in the world, and France surpassed England in trade with her direct neighbors (some of the German states, Italy, Spain). Under the political and economic system, however, which had fastened itself on the country in the course of time, growth was hampered; and opposition rose until it burst out finally in the Revolution of 1789. Then followed a period of twenty-five years of rapid political change and of bitter war, ending finally with the defeat of Napoleon in 1815.
496. Effect of the Revolution.—The losses of France during this period in men, money, and colonial territory need only to be suggested; the effect of the wars on French commerce has already been described. It is proper here to emphasize the good of the Revolution. In appearance, at least, it swept away all the old institutions, and liberated the people from burdens which they had been bearing for centuries. It abolished the former class divisions and inequalities in taxation; it freed the agricultural classes, and extended the ownership of land; it amended the former restrictions on the pursuit of manufactures and handicrafts; and it established perfect freedom of trade inside the country.
497. Backward features of industry and commerce.—No country can make an entire breach with its past, and France after 1815 was more like France before 1789 than the reader may suppose. The people had not acquired the skill and boldness in industry and commerce which the English had won by generations of experience. The government after 1815 was still highly centralized, with strong absolutist tendencies, and moved more by personal influences than by far-sighted views of the welfare of the whole people. These facts appear in the course of commercial policy followed after the Restoration. France had made only the barest beginnings in the modern industries depending on coal and iron, and on the application of machinery, at the time of the Revolution, and though industries developed when commerce was interrupted by war, they were weak in organization and technique, and loudly demanded protection when peace returned, and opportunities for commerce developed.
498. The French tariff in the first part of the century.—The result was a tariff system which goes far to explain the sluggish development of French commerce in the first part of the nineteenth century. It gave protection to shipping, to agricultural products, from wheat to sumac and garden roses, to the raw materials as well as the finished products of industry. Colbert’ s tariff of 1664 and 1667 has often been cited as an example of high protection, but the French tariffs of the period before 1850 imposed still higher duties on some of the most important raw materials of industry (wool, cotton, flax, pig and bar iron, steel, alum); many duties had risen to a prohibitive height, and there were many actual prohibitions.
499. Sluggishness of industrial development.—At the time when England was building up her system of manufactures, when every decade was marked by some important step in industrial progress, France resolutely excluded herself from the influences which would have stimulated progress at home. While England was endeavoring to keep her improved machinery in the country, by forbidding export, France aided her by imposing on machinery duties running up to 100 per cent. Means to spin linen by machinery were invented by a Frenchman, Girard, in 1810, but were first utilized in England; and England could show nearly a million and a half spindles in 1849, against a quarter of a million in France. A Frenchman estimated in 1827 that the steam-engines in Great Britain amounted to a force of 6,400,000 laborers, while they amounted in France to but 480,000. About 1840 there were still less than 2,000 steam-engines in France. The French iron industry was far behind the English in efficiency and in output, but was secured the home market by protective duties, and built up large fortunes for the iron producers at a direct loss to the country estimated to be $10,000,000 a year, and an indirect loss far larger.
500. Effect of the tariff on commerce.—The effect of the tariff in checking commerce between the two great states in this period can be seen in the fact that in 1829 less than one seventieth of British exports were declared for France; England found better customers in Spain, in Turkey, or in Chile. The amount of trade was in fact somewhat larger, for smugglers evaded the restrictions of the tariff, and by a number of ingenious devices (including the use of trained dogs), succeeded in bringing wares to the people who wanted them.
This one example indicates how the French were losing the opportunities for commercial expansion which this period offered to them as to other peoples. No more striking commentary on the history of the commerce of France at this time can be furnished than the following fact: nearly sixty years after the French Revolution the special commerce of the country was only just beginning to exceed the figures which it had attained at the earlier date.
501. Reform of the tariff by Napoleon III.—The astonishing increase of French commerce in the decade 1850-1860 (from less than two to over five milliards of francs) was due chiefly to the reform of the tariff by Napoleon III. Attempts before this time to lower duties had failed because of the determined resistance and the strong political organization of the protectionists, but the new Emperor enjoyed a position of exceptional strength, and was not fettered by the dependence on the manufacturing class which had stopped action by the previous government. By his mere decrees he lowered or suspended duties on agricultural products and on important raw material (coal, iron, steel, wool, etc.).
502. Effect of the reform on commerce.—French industry and commerce, checked so long in their development, responded with surprising quickness. In a period of little over ten years (1847-1859) the steam power of France increased over threefold. The commerce with England, which in the previous period of twenty years had merely doubled, now quintupled in ten years. With Portugal and Greece commerce quadrupled; with Germany, Switzerland, Brazil, etc., it tripled; with Belgium, the Netherlands, Spain, Italy, the United States, etc., it doubled. French commerce recovered its lost ground so quickly that, according to a French estimate, it amounted to more than three-fifths of English commerce about 1860, and the country took easily second place among the trading countries of Europe.
503. The free-trade treaty of 1860.—At the end of the decade which we have been studying, in 1860, the movement toward greater freedom of trade progressed still another stage by the ratification of a treaty of commerce between France and England. Free traders, of whom Richard Cobden was the chief, convinced the Emperor that France would benefit by a further reduction of duties. Cobden asserted that French operatives worked 20 per cent more time for 20 per cent less wages, and paid upwards of 10 per cent more for their clothing than the same class in England; and promised the Emperor that the French would share in the advantages of the English if they would only adopt a similar commercial policy. The Emperor, moreover, was desirous of winning the good-will and support of the English to strengthen his international position; and agreed to the proposals partly on this account. England abolished the duties on a number of articles of French origin, and reduced the duties on wine and spirits; while France removed all prohibitions on trade, and scaled duties down to about half their former amount in commerce between the two countries. This treaty, which was to last ten years from its ratification in 1860, is one of the turning-points in European commercial policy; it marked the extension of the free-trade movement from England to the other states of Europe; and it inaugurated a succession of similar treaties on the part of France and other states on the Continent.
504. Results of the treaty of 1860.—There had, of course, been opposition in France to the further reduction of duties; and many people prophesied that the movement to free trade would entail the industrial ruin of the country. The results did not justify these predictions. Commerce expanded greatly, as was to be expected; it grew in the period 1859-1869 from 5.4 to 8 or from 3.9 to 6 milliards of francs, according as the general or special trade of the country is taken as the standard of measurement. This commerce, however, was serving French industry and agriculture, and not destroying them. There was a marked increase in the importation of the raw materials of industry; the amount of wool and silk brought into the country for manufacture more than doubled in ten years, and in spite of the disastrous effects of the American Civil War there was a considerable increase in the importation of cotton. The use of coal and iron, both important indexes of industrial development, extended largely; and the population engaged in industry and commerce grew by nearly a million workers in the period 1861-1866. The increase in the products of French industry found a market both abroad and at home. The exports of manufactures increased, it is true, but slowly except in the case of special products; but the consumption of manufactures within the country extended greatly, as new purchasers appeared for wares which formerly had been beyond their means.
505. Return to protection after the war with Germany.—It has long been the misfortune of France to have her commercial and industrial interests at the mercy of politics; and at this point in her growth her progress was stayed by the outbreak of the great war with Germany. From the direct losses of the war the country recovered with a quickness surprising to those who did not realize the thrift and saving power of the French people. The war led, however, to the overthrow of the government of Napoleon III, and in time to the overthrow also of the liberal commercial system which he had established. Though the commercial treaties were allowed to continue for a few years, the tendency was strongly toward protection. It was a period of bad times in business, and French agriculture was beginning to feel the competition of countries outside of Europe; the new French republic, with all its merits, lent itself too easily to the representation of class and sectional interests.
506. Growth of protective duties.—In 1881, therefore, a new tariff was established, which raised many duties about one quarter, though it allowed many of the higher rates to be abated by treaties with other states. Proposals to increase duties now multiplied. Not only manufacturing industry but also agriculture became clamorous for protection. The duty on a quintal (about 220 pounds) of wheat, which had been 60 centimes since 1861, was raised to 3 francs in 1884, to 5 in 1887, to 7 in 1894. While in the past the agriculturists had been free traders they had become by 1890 almost a unit for protection, whether they raised wheat or cattle, grapes or sugar-beets, hemp or flax. In 1892 an entirely new tariff was adopted, considerably higher than that of 1881, affecting some important raw materials, and not affording the same freedom in the negotiation of commercial treaties.
507. Attitude of the French toward commerce.—A writer who published a study of the French tariff system in 1892 thought that public opinion would force a revision of the recent tariff if it checked the country’s commerce. Such was actually its result. Exports and imports did not reach again the figures of 1892 for five and six years respectively. Nevertheless the protective duties were raised again in 1910 to a level far above that which prevailed in the neighboring states of northwestern Europe. The French had to choose between a career in commerce and the maintenance of the traditional organization. They could not extend their trade without lowering the barriers of their tariff. This step they were unwilling to take, apparently because it would have entailed efforts and sacrifices in the readjustment of their industries. The caution and disinclination to change, which mark the great peasant population of the country, appear to have determined the course of commercial policy, and to have decided the French to hold fast to what they had, rather than to take the chances involved in a struggle for a higher place in the open market of the world. In such a struggle they were at a disadvantage, because of the scarcity of their mineral resources and still more because of the many backward features in their industrial organization. On the other hand they could comfort themselves with the reflection that few if any of the neighboring states were qualified as were they to renounce the possible benefits of trade. The great agricultural resources of the country make possible an approach to self-sufficiency which elsewhere could not be considered.
508. Statistics of French commerce in the recent period.—The table on page 429, presenting the course of French commerce in the period immediately preceding the outbreak of the World War, illustrates what has been said regarding the checks imposed on commercial expansion; and provides the means of comparison with the commercial development of other countries.
509. Position of France in recent commerce.—In matters of taste and of artistic finish, in which personal aptitude and training are the important factors, the French remained unrivaled; in production on a large scale, in which elaborate organization and the extensive use of machinery determine success, the French did not compare with English, Germans, or Americans. Thus the French, though always assured a respectable position in the commerce of the world, could not hope to share the progress which other nations attained by the export of cheap manufactures in great quantities. An Englishman said of the trade between his country and France in 1878, “Broadly it may be said France supplies us with our luxuries, and we minister to the necessities”; even at the close of the century this held true, in general, of the relations between France and the other great countries. France supplied objects of art, luxury, and fashion, delicacies and wines, and took from others in exchange the articles of solid utility, the product of mines and of power machinery.
| Special Commerce of France, Selected Years in Milliardsof Francs and of Dollars. | ||||
|---|---|---|---|---|
| Imports | Exports | |||
| Francs | Dollars | Francs | Dollars | |
| 1870 | 2.9 | .6 | 2.8 | .5 |
| 1880 | 5.0 | 1.0 | 3.5 | .7 |
| 1890 | 4.4 | .9 | 3.8 | .7 |
| 1900 | 4.7 | .9 | 4.1 | .8 |
| 1910 | 7.2 | 1.4 | 6.3 | 1.2 |
| 1913 | 8.4 | 1.6 | 6.9 | 1.3 |
510. Failure of the government in its attempts to stimulate commerce.—Attempts of the French government to stimulate commercial expansion have not met the expectations of their promoters. The government has built up a colonial empire about sixteen times as large as France, but most of the dependencies are in a backward condition, and their total commerce (including that of Algiers) was before 1914 only about one-quarter of that of France. So far France has lost money on her colonial enterprises, and there seems no likelihood, in view of the extremely small emigration from the home country, that she will recover it. Nor can the results of attempts to build up the merchant marine be regarded as satisfactory. Measures to protect French shipping, which disappeared to a large extent during the period of the movement to free trade, have been resorted to again since 1880, and have led to the payment of two to four million dollars a year to aid the building and renewing of French ships. They have done no more than keep the French fleet stationary while other merchant marines were rapidly advancing, and seem to have hurt rather than helped the interests of French commerce. It is noteworthy that of the total output of merchant ships in France in 1901, 70 per cent of the tonnage was in the form of sailing vessels, a means of transportation now out of date for most purposes of foreign commerce; and that two-fifths of the total tonnage under the French flag in 1912 were in the form of sailing ships.
QUESTIONS AND TOPICS
1. Burdens from which French commerce and industry were freed by the Revolution. [Review chap. 25, above; Rand, Ec. hist., chap. 3; Adams, Growth, chap. 15.]
2. Hayti as a French colony and as an independent state. [A. K. Fiske chap. 20 ff.; Spenser St. John, Hayti, Lond., 1884, chaps. 2, 3, 10.]
3. Backward political condition of France after 1815. [Adams, Growth, chap. 18; Seignobos, chap. 5.]
4. Write a report on one of the following topics in French commerce, about 1850: import and export trade, manufactures, customs tariff, colonial system. [Homans, Cyclopedia, p. 710 ff.].
5. France under Napoleon III. [Seignobos, chap. 6.]
6. The commercial treaty of 1860. [McCarthy, Hist., vol. 2, chap. 41; Morley, Cobden, chap. 32.]
7. What is the difference between “general” and “special” commerce? [Statesman’s Year-Book, France, Commerce.]
8. France under the third republic. [Seignobos, chap. 7.]
9. The protectionist reaction. [Herbert A. L. Fisher, in Econ. Journal, 1896, 6: 341-355.]
10. The situation of France in international commerce. [Lebon, in International Monthly, 1901, 3: 252-273.]
CHAPTER XLII
MINOR STATES OF CENTRAL AND NORTHERN EUROPE
511. States of minor commercial importance.—In the year 1912 four great states carried on nearly one-half of the foreign commerce of the world, considerably more than one-half if their dependencies be counted with them. Three of these, England (including the British Empire), Germany, and France, have already formed the subject of study, and the fourth, the United States, will be considered at length in a later section. We must now attend to the commercial development in other countries, reviewing their history more briefly as accords with their minor importance. We shall take up first two countries, the Netherlands and Belgium, which stand not far below the leaders, and which would even rank high among them but for their small size. It may not be unnecessary to remind the reader that Belgium is a creation of the nineteenth century; the country had formed a province subject to Spain or Austria until the period of the French Revolution when it was for a time incorporated in France, then (1815) joined to the Netherlands in a single kingdom, and finally, in 1830, established as an independent state.
512. Commerce of the Netherlands to 1830.—Dutch commerce had long passed its best days when, toward the close of the eighteenth century, it received what seemed to be its death blow in the war with England, growing out of the American war of independence. Before the Netherlands had begun to recover from its reverses it was engulfed in the movements of the French Revolution; was conquered and heavily taxed by the French; suffered under the ban of Napoleon’s continental system; and lost for a time its most valuable colonial possessions. At the close of the wars, in 1815, it recovered its colonies, except Ceylon, the Cape of Good Hope, and parts of Guiana, which remained in the possession of the English, but it could not recover its former commercial position. Other peoples had learned to do for themselves what the Netherlands had once done for them as a merchant and carrier; and Amsterdam and Rotterdam saw their commerce pass to London, Hamburg, and other ports. In striking contrast with the earlier period the Netherlands had in 1824-5 only 7 large ships under construction while England had about 800. The union with the Belgian provinces, lasting from 1815 to 1830, increased the area and the internal trade of the country, but was a hindrance rather than a help to the development of foreign commerce. The Belgian industries required protection, and the tariff, framed to meet both their demands and a protectionist sentiment in the Netherlands which had grown up in the period of decline, hampered free commercial relations with other states.
513. Dutch commerce since 1830.—The Netherlands, even after the separation of Belgium in 1830, clung to the protective tariff, and remained outside the great current of commerce. A colonial policy known as the culture-system, adopted in their East Indian possessions, especially Java, returned a large revenue to the government, but prevented commercial development there, while the West Indian possessions suffered severely from the lack of labor following the abolition of slavery. Meanwhile, however, a movement for free trade had grown up which resulted, after 1850, in a lowering of tariff rates until they were little more than nominal in amount. The growth of the European railway system gave to the Netherlands a new importance as a place of import for wares destined for central Europe; and the country profited largely by the growth, on either side, of the two great industrial powers, England and Germany. In the last half of the century the growth of the Dutch commerce has been rapid and nearly constant. The annual value of the total special trade (exports plus imports, in this case including the precious metals) was as follows at ten-year intervals from 1850 to 1910, in milliards of dollars: .1, .2, .2, .6, 1.0, 1.5, 2.4. Figures for the general trade of the country, including goods imported and then re-exported, would be considerably larger.
514. Position of the Dutch in recent commerce.—The Netherlands suffers from a lack of mineral resources, as the country is largely “made” land, composed of sand and silt which the great rivers have deposited at their entrance to the sea. The Dutch, therefore, have been handicapped in their attempts to share in the development of modern industry, and find in agriculture rather than in manufacturing their chief occupation. They have succeeded in certain special manufactures (diamond-cutting, chocolate, oleomargarine), in gaining a leading place, but cannot compete with other nations in the staple machine industries. They produce a surplus of dairy products for export, and import raw materials and manufactures which cannot be produced in sufficient quantity at home; but the striking feature of their trade is the fact that in general the same products appear among both the imports and the exports. The Dutch, favored by their national training and geographical position, and diverted from other means of livelihood by lack of resources, are the middlemen of Europe, arranging exchanges between other countries.
515. Belgium: early industrial development.—Belgium is far more richly endowed with mineral resources; in spite of its small area it produced in 1912 more than half as much coal as France, and has also rich supplies of ore of iron, and other metals. Even before the full value of these resources was realized Belgium was a distinctly industrial state, and for many centuries Flanders and other districts have been noted for their manufactures. Belgium did not suffer, therefore, as did the Netherlands, from the period of French occupation; it was freed by the French from many trammels on industry dating from the gild period, and it found in France a market for its manufactures which enabled it to endure the restrictions of the Continental System. During the period of union with the Netherlands (1815-1830) Belgian industries continued to develop, with the aid of Dutch capital, commerce, and colonies; the districts represented by Ghent, Brussels, Charleroy, and Liege became widely known for the manufacture of textiles, iron wares, etc. Progress was checked for a time by the breach with the Netherlands (1830), but this was just the period when steam began to be applied to manufactures and to railroads, and with the aid of this new force Belgium quickly recovered her former position. The prosperity of Antwerp, the one important port of modern Belgium, was seriously threatened by the act of the Dutch in closing the Scheldt to navigation; but the Belgians were willing to pay for this means of access to the sea, and finally bought outright the privilege of using it.
516. Belgian commercial policy.—During the first decades of Belgian independence the tariff which had been inherited from the period of Dutch rule was made more strict, and before the middle of the century it had been changed so as to grant considerable protection to agriculture, industry, and the carrying trade. Belgium, however, like the Netherlands, is too small a country to be able to afford high protection. After 1850 a free-trade movement led to lower duties and to liberal commercial treaties, the policy which has since been followed in the main. Many influences were at work in this period to further commerce, chief among them the technical improvements in manufactures and transportation; so it is dangerous to argue that the prosperity of Belgium in the following period was due to the policy of greater freedom of trade. It is certain, however, that Belgian commerce could not have attained the development it did without this policy.
517. Survey of the recent development of Belgian commerce.—Giving figures roughly in millions of dollars, the total commerce rose in the protectionist period, 1840 to 1850, from 70 to 80. In the following ten years of transition it rose to 190; in 1880, after twenty years of nearly free trade, it had risen to 560, and in the decades since then the figures have been 600, 856 and 1480. To this commercial expansion the port of Antwerp owed its position as second only to Hamburg among the ports of the Continent. An analysis of the different items of which the recent trade of the Belgians was composed shows that their strong exporting industries were manufactures (yarns and textiles, iron, glass, etc.), while they were obliged to import a large part of their food supply, and of the raw materials for their industries.
518. Switzerland: obstacles to industrial development.—Another country, small in area but with a commerce exceeding that of many greater states, is Switzerland. With its agricultural capabilities restricted by the area covered by mountains, and with no important mineral resources, Switzerland has to depend upon the character of its people as its chief industrial asset. In the early part of the nineteenth century it suffered not only from the restrictive tariffs of the states surrounding it, but also from the fact that it had itself not become a political unit, and was cut into small pieces by dues and tolls on trade. The hindrances to internal trade were finally swept away in 1848, when Switzerland became a federal republic; and the people made use of their greater freedom at home and of the lowering of tariff rates abroad to extend their commerce rapidly.
519. Position of the Swiss in recent commerce.—Switzerland has developed almost entirely along the line of manufactures. The agricultural population has actually decreased since 1870, as it has become easier to purchase food products from abroad by the export of manufactured products: silk and cotton textiles, clocks and watches, etc. Swiss industries have not reached the development of those in more advanced countries, and much of the work is still done outside of factories, and with simple home machinery. These conditions imply hard work and low returns, but the Swiss must choose between securing in this way some share in the world’s commerce, or starving in the vain attempt to support themselves by the scanty resources of their own country.
520. Austria-Hungary: survey of commercial development.—The state of Austria-Hungary, though it was in size the third in Europe, ranked only seventh in commerce in 1912, taking place after the Netherlands, Belgium, and Russia. Reference to an earlier chapter, describing conditions before 1800, will suggest that Austria-Hungary entered the nineteenth century handicapped by its economic and political conditions. It required roughly a full half of the century to remove the more serious obstacles to progress, and the latter half of the century has not given time enough to enable the people to win a place with their more advanced neighbors of the West of Europe.
521. Obstacles to the growth of commerce and industry.—Of the difficulties under which commerce labored the following are among the most important: (a) the character of the government, which was a personal absolutism like that in France before the French Revolution, absorbed by the family interests of the ruling house and by questions of foreign policy, and attending but slightly to the interests of the people as a whole; (b) the system of prohibitive tariffs, which was maintained more strictly than in any other state of central Europe; (c) the separation of different parts of Austria-Hungary by tolls and tariffs; (d) the slight development of manufacturing industry, due not to the lack of natural resources but to the backwardness of the people and to the persistence of restrictions dating from the period of the gilds.
522. Gradual removal of these obstacles.—(a) The revolution of 1848 began a movement for constitutional government, which led in time to the fall of absolutism and the introduction of modern representative assemblies. At the same time, however the spirit of nationalism was awakened among the various peoples, and their conflicting claims (especially in Hungary and in Bohemia) have seriously affected the working of the parliamentary system. (b) The prohibitive system, which had absolutely excluded the most important manufactures or had allowed them to be imported only as a special favor and by payment of high duties, was abandoned after 1848 for a more moderate system of protection, and commercial treaties with various states were made to facilitate the movement of wares. (c) The freedom of internal trade was secured for the Austrian half of the monarchy in 1826, and for the whole state (with slight exceptions) in 1851. (d) The restrictions on industry continued even after 1850. A man could not exercise any trade requiring the use of a machine, or any but the simplest household employments, without securing a public license; a man might exercise only one trade, and a cabinet-maker might not upholster the furniture he made, nor might a baker make confectionery. Most of these restrictions were abolished in 1860.
523. Growth of commerce since 1850.—Commerce and industry, which had developed with exceeding slowness before 1850, were quick to respond to the change in conditions, aided by the extension of the railroad system which marked this period. In spite of heavy taxes and a depreciated paper currency there was an extraordinary increase of energy and growth of business. Foreign trade more than doubled in twenty years, and each part of the monarchy developed along the line of its strongest resources; the Austrian lands, especially Bohemia, extended their mines and built up their backward manufactures, while the Hungarian lands exported increasing quantities of agricultural products (wheat, flour, stock, etc.). A reaction toward protection, felt since the ‘70’s, did not check the growth of commerce; a more serious danger appeared to be the possibility that a tariff barrier would again be established between the two parts of the monarchy as the result of the national aspirations of the Hungarians.
524. Position of Austria-Hungary in recent commerce.—Austria-Hungary carried on by far the largest part of its commerce with its neighbor, Germany, and found the greatest hope of the future in building up the trade with the Balkan states, and along the route to Salonika and Constantinople. Hampered by its position, it has not succeeded, in spite of generous bounties, in developing its shipping trade to important proportions. The first ships to pass through the Suez canal in 1869 were three steamers of the Austrian Lloyd, but in 1913 less than one twentieth of the tonnage using the canal was Austrian. The two ports that served the monarchy, Trieste for the Austrian part and Fiume for the Hungarian, were favored by every sort of assistance that the government could render, but remained still ports of the second class, surpassed in importance by a score of other ports in Europe.
525. The Scandinavian states; their position in recent commerce.—The Scandinavian states (Sweden, Norway, Denmark) held a lower rank among commercial countries than others which will be mentioned later, but in a geographical grouping they may be properly considered here; and their commerce was important, at least, in proportion to the irrelatively small population. These states were characterized, in general, by a lack of coal and by the slight development of manufactures; and by a soil and climate which are disadvantageous to the ordinary operations of agriculture. The difficulties of life have forced many inhabitants to emigrate, and forced those who stayed at home to make the most of their extractive industries (forestry, mining, dairying), the products of which they could exchange for the wares of more favored nations. The time when the Baltic trade was one of the great branches of world commerce was long past. The rest of Europe would have been but slightly affected if it had been separated from the Scandinavian countries, while such a separation would have entailed ruin on them.
526. Denmark.—The little state of Denmark, with a population of but slightly over two million, had taken advantage of modern commercial facilities to specialize in the dairy industry, in which it has been a leader and teacher of Europe. When we add to butter the pork products raised in connection with the dairies, and the eggs from Danish poultry yards, we have the articles which made up more than two thirds of the total value of the country’s exports.
527. Norway; Norwegian shipping.—In Norway, also, a country so barren that far less than 1 per cent of its area is suited to cultivation by the plough, dairying has been an important industry; and the dairy and forest industries supplied most of the exports. The difficulties of life on land were so great that the people were forced to take to the sea; they gained one tenth of the national income from the fisheries, and had, in proportion to their numbers, more merchant shipping than any other people. In 1913 Norway ranked second in tonnage of sailing ships (after the United States), fourth in total tonnage (after Germany), and fourth in tonnage of steamers. The position of Norwegian shipping was even higher before the use of iron ships had become general, and when Norway could utilize its forest products in shipbuilding. Norway enjoyed the most brilliant period of its shipping in the generation following 1850, when it took the place of the United States as one of the great carrying nations of the world.
528. Sweden.—Sweden was somewhat more fortunate than the other Scandinavian countries in its agricultural resources, and during part of the century has been able to export a surplus of grain. It has been recently, like the others, reduced to importing the cereals, and found its chief strength in products of the forest, the pasture and the mine. From its rich iron deposits it contributed raw materials for maintaining the iron industry in other countries, especially England.
QUESTIONS AND TOPICS
A profitable exercise on each of the minor countries treated in this and in the following chapters is a study of the statistics of present-day commerce, and a reduction of these statistics to the form of a graphic chart. [Statesman’s Year-Book.]
1. Experience of the chief Dutch colony during the Napoleonic wars. [Day, Dutch in Java, chap. 5.]
2. The culture system. [Same, chaps. 7, 8.]
3. Political and social conditions in the Netherlands. [Hough, Dutch life, N. Y., 1901; Campen in Westminster Review, 1890, 134: 479-492; National Review, 1890, 15: 748-763.]
4. Recent political history of Belgium. [Seignobos, chap. 8.]
5. Recent history of the Swiss. [Seignobos, chap. 9.]
6. Labor conditions in Switzerland. [Scaife in Forum, 1901, 31: 30-46.]
7. Conditions in Austria-Hungary in the period of the absolute monarchy. [Seignobos, chap. 13.]
8. Political development of Austria-Hungary in the last half of the century. [Same, chap. 17.]
9. Austria-Hungary’s colonial experiment. (Bosnia-Herzegovina.) [Monthly Review, 1902, 8: 72 ff.]
10. Recent commercial policy. [Philippovich in Economic Journal, 1902, 12: 177-181.]
11. The conflict of nationalities. [Edinburgh Review, 1898, 188; 1-36; Quarterly Review, 1901, 194: 372-395, with map; Coubertin in Fortnightly Review, 1901, 76: 605-614.]
12. Recent history of the Scandinavian states. [Seignobos, chap. 18.]
13. Danish agriculture. [Westenholz in Monthly Review, 1904, 14: Feb., 69-77; Givskor in Economic Rev., 1902, 12: 410-419.]
14. Modern Iceland. [Quarterly Review, 1894, 179: 58-82; Statesman’s Year Book.]
15. The Danish West Indies. [Waldemar Westergaard, The Danish West Indies, N. Y., 1917.]
BIBLIOGRAPHY
The narrative history of the minor states is well treated in Seignobos; present conditions are described in volumes of the series Our European Neighbors, N. Y., Putnam.
On Belgium, see Belgium, its institutions, industries, and commerce, Brussels, 1904, a handbook published by the government for the Louisiana Purchase Exposition. Similar handbooks have been published for the Scandinavian peninsula; they include much historical material and are valuable sources for our purposes. See Norway, edited by Sten Konow and Karl Fischer, Kristiania, 1900; Sweden, its people and its industry, edited by Gustav Sundbärg, Stockholm, 1904. Drachmann, Industrial development and commercial policies of the three Scandinavian countries, published for the Carnegie Peace Endowment in 1915, is the best survey of commercial development, but is not an easy book for the elementary student to use. Kiaer has published a valuable historical sketch of the development of Scandinavian shipping in Journal of Polit. Econ., 1891-2, 1: 329-364.
On Switzerland see The Swiss Confederation, by Francis O. Adams and C. D. Cunningham, London, 1889, and W. H. Dawson, Social Switzerland, London, 1897. On Austria-Hungary see S. Whitman, The realm of the Habsburgs, N. Y., Lovell 1893, and the volume by F. H. E. Palmer in the series of Our European Neighbors, N. Y., Putnam.
CHAPTER XLIII
STATES OF SOUTHERN EUROPE
529. Condition of Italy in the first half of the century.—Of the countries of southern Europe none has gained so rapidly as Italy in the latter part of the nineteenth century. The explanation, however, must be sought largely in the fact that none was sunk so low as Italy in the first part of the century. Conditions of an earlier period, described in the previous chapter on Italy, lasted far into recent times. Here is the description given by an English author, writing in 1878: “Before 1848, Italy, all except Piedmont, seemed hopelessly crushed. Austria, the Pope, and the Bourbons held her in their grasp. Even the comparatively native sovereigns of Tuscany had turned oppressor, and all Italy groaned like a man in the grasp of the torturer. Commerce languished, divergent fiscal laws and arbitrary raids on private wealth choked up the channels of intercourse between one part of the kingdom and another; without shipping, without manufactures or foreign trade of a solid kind, possessed of no political security, Italy was, thirty years ago, more insignificant in the eyes of neighboring nations than Greece or Spain is now.” In southern Italy the government was incompetent to perform the first of its public duties, the protection of its citizens. It could not withstand even the half-civilized corsairs of Tripoli, who pillaged the Neapolitan ships, and finally, long after the United States had shown the proper way to deal with such pirates, bought from them a disgraceful peace.
530. Lack of political and commercial union.—The peninsula was divided among seven independent states, so stratified as to cut the natural lines of trade, and to prevent effectually the development of any national commercial life. Of these states six had the protective tariffs characteristic of the prohibitive period, and toll stations existed even inside the frontiers. A Milan manufacturer, shipping silks to Florence (about 1840), had to pass eight customs stations in 150 miles; a merchant on his way from Bologna to Lucca was stopped at seven stations in the stretch of about 125 miles. Commerce would have been in desperate straits except that all but two of the states touched the sea, and hence could find some opening for trade. It is noteworthy, however, that the leading commercial city of Italy in this period was one which many people now would be puzzled to place on the map, Leghorn. It owed its commercial importance, not to the advantages of situation or to the productive resources of surrounding territory; it stood, about 1900, sixth in the list of Italian ports, and had but a fraction of the trade going to Naples or Genoa. It gained its prosperity at this time simply by “the comparative security and freedom” which foreigners found there, and which they were denied in other parts of Italy.
531. Establishment of Italian unity.—The example of Germany, in extricating herself from a somewhat similar situation by the formation of customs unions, made, naturally, an impression in Italy, and led in 1847 to an attempt there to form a similar union. The attempt was paralyzed by the opposition of Austria, who saw in it a blow aimed at her political influence in the peninsula. The Italian states, unlike the German, could secure commercial union only as a result of national unity, not as a means of preparation for it. National unity was in preparation, nevertheless, in the brain of a great statesman, Cavour, and was obtained through his far-sighted plans and the cooperation of the king whom he served, Victor Emanuel, ruler of Piedmont. In the few years following 1859 a real kingdom of Italy was established, and the country, which for nearly fifteen hundred years had formed the prey of rival powers, became at last a power herself, worthy to rank with the other great states of Europe. The old barriers to internal trade disappeared, and the whole country accepted the customs tariff of Piedmont, which was extremely liberal. Rarely, if ever, in the history of commerce, have changes of such sweeping importance taken place so quickly. The tariff of the Kingdom of the Two Sicilies, to choose an extreme example, which levied a duty of over $2,500 on a centner of silk goods, gave place to a tariff of United Italy, in which the corresponding duty reached a minimum of $10.
532. Survey of Italian commerce since 1860.—The effect on commerce of this great political upheaval was instantaneous. Contrasting the two years, 1859 and 1861, we find that in this brief interval the value of imports into Italy more than doubled. It will be convenient to insert here figures giving the total value (exports plus imports) of the special trade of Italy, at ten year intervals from 1860 to 1910. Reduced to dollars and given in round figures of millions they are as follows: 130, 320, 440, 440, 590, 1,020. The reader will note that trade grew at a rapid rate from 1860 to 1870, and more slowly to 1880. Then came a stoppage; in some years there was an actual decline, and the value of exports was considerably less at the end of the decade than at its beginning. There was a recovery in the ten years closing in 1900, and a rapid advance thereafter. The figures show, however, that Italian commerce advanced but slowly in the latter part of the century, and a study of conditions at its close would show that Italy had a commerce then far from commensurate with the country’s large population. The average share of each Italian in the annual movement of commerce was much less than that falling to the inhabitants of most of the other states of Europe. Among the great states only Spain and Russia ranked lower, in this respect.
This survey suggests the topics which demand discussion in the following sections. We must know the reasons for the rapid development of Italian commerce till about 1880, and for the check to progress after that date; we want an explanation of the comparatively slight share which the average Italian has had in the world’s commerce.
533. Development of agriculture and commerce after 1860.—When Italy secured national unity, about 1860, the country was almost purely agricultural. The ordinary trades, of course, were exercised to satisfy local needs, and the silk manufacture had not altogether perished, but, to use the phrase of a modern writer, though there were industries in Italy there was no Italian industry. Restrictive taxes and tariffs had prevented the development of any considerable manufacture. When, therefore, comparative freedom of trade was introduced, the people made full use of the opportunity to purchase the cheap wares of the factory industry of other countries; they imported manufactures in increasing amount, and paid for them by exporting their surplus agricultural products. The railroad system, which grew from 800 to 5,000 miles in the period 1860-1880, gave greatly improved facilities for the marketing of wares, and affected distinctly the course of foreign trade; the proportion of commerce carried on across the land frontier rose in this period from a third to nearly a half of the total.
534. Increase of customs duties; protection; tariff war.—The Italians realized at once the benefits of the movement which led to national unity, but ever since they have been carrying its burdens. The expense of the national movement was enormous, especially in view of the poverty of the country; it weighted the government with debt, and required a constant increase in taxes. The treasury, reaching out in every direction for money, and forced to some fiscal devices which seem now positively iniquitous, did not spare commerce. Duties were raised from time to time, and a general revision of the tariff in 1878, while it reformed some old abuses, tended still to raise the general level of duties, and introduced a distinct element of protection. The revised tariff, however, did not go far enough to satisfy the demands either of the treasury or of the protectionists, and was altered again in 1887. Commerce labored henceforth under high revenue duties, under increased duties designed to protect Italian manufactures, and, furthermore, under new or increased duties on agricultural products.
One disastrous result of the new tariff appeared quickly in the outbreak of a tariff war between Italy and France. France had been Italy’s best customer, taking at one time nearly half of her total exports and furnishing about a quarter of her imports. Trouble between the two countries had, however, been brewing for years; they were following different lines in foreign politics, and the protectionists on both sides of the frontier viewed with jealousy a commerce which stimulated the development of international rather than national industries. The tariff of 1887 called forth a reply in kind from France; this was met by a rejoinder from Italy; and so the duties grew rapidly on either side, and had soon reduced the commerce between the countries to a small part of its former dimensions. The most important export industries of Italy (wine, raw silk, fruits, live stock, eggs) suffered severely, and many producers were absolutely ruined.
535. Italian agriculture; poverty of the people.—The course of tariff policy explains, in large part, the check which Italian commerce had experienced in the last decades of the century. Reasons why this commerce was so small in proportion to the population will appear as we review now some features of the Italian productive organization.
Few of the large states of Europe showed so large a proportion of the people engaged in agriculture, so small a proportion in manufactures, as were found in modern Italy. Considerably more than half the people lived directly from the land. Not only did Italy show backwardness in this respect; the character of Italian agriculture was itself backward. The land was worked largely “on shares,” a system which does not encourage improvement or stimulate efficiency. A government commission reported in 1881 that production depended almost entirely on mere labor, and that capital and intelligence contributed only a minimum. Antiquated implements and wasteful and careless methods of treating the crop, went far to nullify the natural advantages of soil and climate. When we consider that, of the small surplus which the agriculturist obtained, the government demanded a good share for taxes, we can understand why the mass of the people were wretchedly poor, and must content themselves with a bare living. It is worth noting that about 1900 the consumption of sugar in Italy was only about six pounds per head, less, even, than in Turkey, while in most European countries people consumed from 20 to 50 pounds or even more. Salt itself was a luxury, which was heavily taxed. The protective tariff appeared to extend favors to farmers as well as to manufacturers, but the people who gained by it were chiefly the great landlords, while the mass of the people simply paid more for bread because of it.
536. Manufactures.—As agriculture was the strongest branch of production in Italy, it was bound to suffer more than any other from the protective tariff. Italian agriculturists did not need protection for most of their products, and they did need the chance to market their products in free exchange for industrial wares imported from abroad. We have now to see what success the Italian tariff had in building up the native industry on which the people were forced, in large part, to rely.
Italian manufactures, in 1880, had scarcely advanced beyond the meager beginnings which we found in 1860. Nearly all conditions were adverse. Capital was scanty. Of important raw materials the country lacked all but silk and hemp. Coal, the mainstay of modern manufacturing, had to be imported at an expense which nearly doubled its price. Most serious, perhaps, of all difficulties was the lack of a class of industrial leaders, men of technical knowledge and business energy. We may take as typical the case of a macaroni manufacturer in Naples, who declined some important foreign orders, for no other reason than that he had, as it was, enough business to make both ends meet, and saw no reason for adding a new worry to life. The single important advantage which Italian manufacturers enjoyed was that of cheap labor. The government was lax in its factory legislation, and allowed employers to secure their labor supply from women and children, at an extremely low rate.
The great development, therefore, which Italian manufacturers have shown in the last decades of the century has been due not to any natural fitness of the country, but solely to the tariff, which has raised prices paid by consumers enough to counterbalance natural disadvantages, and to attract men into manufacturing industry. The artificial character of Italian manufactures is shown strikingly by the fact that at the very close of the century not one of the protected manufactures was strong enough to contribute in any considerable degree to the exports of the country.
537. Shipping; colonies.—Some of the most unfortunate features of Italian policy seem to have been the result of national vanity, of the desire on the part of Italians, now that they had made for themselves a great state, to make their state resemble the other great powers in all respects. This feeling was certainly responsible in part for their determination to build up a system of national manufactures, regardless of expense. It led them to profuse expenditures for the encouragement of shipping, which resulted, indeed, in a growth of the merchant marine, but created in it merely a costly luxury. The Italian navigation companies charged high freight rates, and included in their fleets many antiquated vessels.
The instinct of imitation, finally, led the Italians to follow the lead of other powers in colonial expansion. They did not escape the colonial fever prevalent in the eighties, and spent money and lives lavishly, in the attempt to build up a dominion on the African side of the Red Sea. Their attempt ended in disastrous failure (Adowa, 1896), and popular opposition to such enterprises grew so strong that the government did not dare to carry out a later project for the establishment of an Italian station on the coast of China (San Mun, 1899).
538. Recent progress of Italy.—The preceding sections have been avowedly critical in tone, and are designed to make clear the great gap which separates Italy from the leaders in the world’s industry and commerce. It is important, however, that the reader should distinguish Italy, on the other side, from such backward countries as Spain and Portugal. Though Italy was poor it was not so poor as they, and it offered vastly richer promises for the future. In the closing years of the century it showed marked advances in many lines. Italian agriculturists awakened to the possibilities of their profession; they showed an eagerness to improve their methods, and by various forms of association and cooperation they scored great advances. The exports of dairy and poultry products doubled in about ten years, and became more important than the export of wine. Italian manufacturers secured now from natives the technical assistance for which they formerly depended entirely on foreigners. They emancipated themselves, in part, from coal, by their skilful management of water power, and have come to enjoy a high reputation for electrical appliances for the transmission of power and other purposes. The tariff has been made more liberal by treaties with other states and by a reconciliation with France; and commerce in the period before 1914 gave evidence of the capacity for healthy growth.
539. Spain.—Spain, with an area much larger than that of Italy, and with a population more than half as large, had in 1912 a commerce less than half that of the Italian. The fault lay not with the country, which in mineral resources is perhaps the richest in Europe, and which under the skilful agriculture of the Moors was made to bloom like a garden, but with the people who have neglected or misused their opportunities. Spain furnishes a striking example of the evil that bad politics can work in economic development. The personal absolutism of the period before 1800 has been shaken off in the nineteenth century, but experiments in constitutional government under monarchs of various families and even under a republic, have not succeeded in bettering conditions greatly. The mass of the people remained ignorant, and most of their leaders were inefficient and corrupt. There can be no wholesome economic life under these conditions. Shrewd politicians used economic enterprises merely as a means to draw money from the public treasury or from the pockets of consumers, while the investor or worker without political influence was deterred from enterprise by the heavy taxes which were heaped upon him.
540. Spanish commerce in the first half of the century.—A partial reform of the Spanish colonial system toward the close of the eighteenth century led to a growth of trade with the colonies, so that it formed, if the figures can be trusted, a considerable part of the total Spanish commerce, which was small at best. The promise of commercial development inside the Spanish Empire was of short duration. While Spain was still harassed by the Napoleonic wars, revolutions began among the Spanish colonies on the American continent; and as soon as they had achieved their independence they used it to trade with states like England rather than with the country which had asked so much of them and could offer them so little. The commerce of Spain with other countries was hampered by the Spanish commercial policy, which an Englishman of the time called “one of the most pernicious and restrictive of all the systems of trading exclusion.” Duties were levied both on imports and on exports, and included not only rates of 50 to 100 per cent but also many absolute prohibitions. Spanish commerce would have been starved out of existence if the government which set these rules had not, by its inefficiency and corruption, furnished the means of evading them. A veritable army, including, it is said, 300,000 persons, of whom one third were armed, found its chief occupation in smuggling; Spanish manufacturers maintained factories only to mask the sale of contraband goods, and even members of the government engaged in the contraband trade.
541. Recent commerce of Spain.—The turning-point in the recent history of Spanish commerce came about the middle of the century, when the worst abuses of the old tariff were shorn off. The reform was followed by a rapid increase in the country’s trade, which grew to more than fourfold in the forty years following. Especially noteworthy was the increase in this period of the importation of the implements and raw materials of industry (coal, machinery, textile fibers, etc.), showing that Spain was at last beginning to seek a place for herself among modern commercial nations. Such indications of progress must not, however, blind our eyes to the fact that it was attained by a colonial and commercial policy which retained many of the old restrictive features. The loss of the remaining important colonies to the United States in the war of 1898 was a severe blow to Spanish industries, and they have been supported since then by a protective tariff which bore heavily on many producers as well as on all the consumers in Spain. The considerable development in mining (iron, copper, quicksilver, etc.) has been due to foreign energy and capital, and the native Spaniards offered as exports to other countries little more than dessert for their dinner tables: wine, fruit, nuts, and raisins. It is noteworthy and significant that Spain suffered seriously from the competition of California in the sale of fruit in Europe; this most perishable of wares, in which a nearby country ought to control the market without effort, was packed and transported in such a slovenly fashion by the Spaniards that a people 6,000 miles distant could excel them in the quality they offered to the consumer in Paris or London. In the period from 1890 to 1910 the figures showing the value of Spanish commerce remained almost stationary.
542. Portugal.—In all the respects which concern a student of recent commerce Portugal is but a miniature of Spain, with the faults of Spain exaggerated rather than lessened by the weakness and smaller size of the country. “It is scarcely credible, but it is nevertheless a fact, that agriculture is nearly in the same condition as it was some hundreds of years since”; these words of an English author would apply now nearly as well as when they were written in 1843. Few of the inhabitants were engaged in occupations other than agriculture; rich mines remained unworked, and manufacturing has remained insignificant throughout the century. After 1850 it could still be said of the Portuguese that “their entire faith is reposed in protectionism, monopolies, restrictions, and high duties.” Portuguese trade, nearly ruined already, received a further blow by the separation of Brazil about 1820; and though considerable colonial possessions in Africa and the East were retained, the Portuguese have shown no capacity to base on them commerce of any importance. By exports, of which wine and cork were the most important, the Portuguese were able to satisfy their most pressing necessities; but the backwardness of commerce can be seen when it is realized that the trade of this country, approximately equal in population to the Netherlands, was in 1911 less than one twentieth of Dutch trade.
QUESTIONS AND TOPICS
1. Social and economic conditions in Italy after 1800. [King, Hist., vol. 1, chaps. 3-5.]
2. Formation of United Italy. [Seignobos, chap. 11, middle part.]
3. Commerce of Italy about 1850. [Homans, Cyclopedia, p. 1114 ff.]
4. Burden of debt and taxes. [King and Okey, p. 270 ff., chap. 15; Villari, chap. 4; W. Calkins, Taxation and business in Italy, Forum, 1902, 33: 333-345.]
5. Italian agriculture. [King and Okey, chap. 8; Villari, chap. 11.]
6. Life of the agricultural classes. [Phillipps, Peasants of Romagna, Fortnightly Review, 1897, 68: 407-417.]
7. Poverty of the people. [King and Okey, chap. 6; Villari, chap. 4; Strutt, Monthly Review, 1901, 4: August, 62 ff.]
8. Emigration. [King and Okey, chap. 17; Schuyler, Italian immigration into the United States, Polit. Science Quarterly, 1889, 4: 480-495.]
9. Italian manufactures. [King and Okey, chap. 7: Villari, chap. 12.]
10. The Italian colonial venture. [Edwards in Westminster Review, 1897, 148: 477-489; Keller, 517-531.]
11. Recent commerce of Italy. [Statesman’s Year-Book; treat exports, imports, countries traded with, etc., as has been already suggested.]
12. Commerce of Italy with the United States. [Luzzatti, in North Amer. Review, 1903, 177: 247-259.]
13. Recent development of agriculture. [King and Okey, chap. 9.]
14. Political conditions in Spain. [Dillon in Contemporary Review, 1898, 73: 876-907, 74: 305-334; Foreman in National Review, 1897, 29: 721-734, 30: 547-560.]
15. Commerce of Spain about 1850. [Homans, Cyclopedia, p. 1739 ff.]
16. The recent commerce of Spain. [Statesman’s Year-Book.]
17. Resources and industries of Spain. [E. D. Jones in North Amer. Review, 1898, 167: 39-47.]
18. Recent commerce of Portugal. [Statesman’s Year-Book; see Homans, Cyclopedia, for conditions about 1850.]
BIBLIOGRAPHY
For the general history of Italy, see besides Seignobos, Bolton King, History of Italian unity, N. Y., Scribner, 1899, 2 vols., with bibliography. The book by the same author in collaboration with Thomas Okey, **Italy to-day, London (N. Y., Scribner), 1901, is excellent for recent conditions, and has a full classified bibliography. Villari, *Italian life, N. Y., Putnam, 1902, is more popular and depends in part on King and Okey, but still is good. Orsi’s book in Story of the Nations Series is mainly political.
On Spain good reading in English is as scarce as on Italy it is plentiful. Seignobos is dull, and Hume’s histories are almost entirely political. There is, however, a good book in the series of British Colonies and Foreign Countries, W. Webster, *Spain, London, 1882; and Higgin, Spanish life, N. Y., Putnam, 1902, has some material of value. The U. S. Monthly Summary, Commerce and Finance, published several reviews of Spanish commerce at the time of the Spanish war (March, June, 1898, April, 1899), and a considerable amount of material on various aspects of Spain appeared about that time in the periodicals.
The close commercial relations between Portugal and England have given rise to two excellent books on the condition of Portugal in the nineteenth century, J. J. Forrester, *Portugal and its capabilities, third ed., London, 1856; Oswald Crawfurd, *Portugal, old and new, London, 1880.
CHAPTER XLIV
EASTERN EUROPE
543. Great size and small commerce of the Russian Empire.—The attention and imagination of men have long been impressed by the size of the Russian empire, which included an area greater than that presented by the moon at the full. Combining the characteristics both of Europe and of Asia, Russia was almost a world in herself, and, indeed, was called by one of her rulers “a sixth part of the world,” worthy to rank as a continent. Yet this great state took a place in modern commerce below petty countries like the Netherlands and Belgium. A country of such vast size might, of course, secure by internal trade many of the advantages which smaller countries must seek in international exchange. The United States presents an example of a territory so large and so richly endowed that it can afford, in considerable degree, to renounce commerce with the rest of the world, and can still maintain from its own resources a high industrial civilization. Russia has not enjoyed a similar success. It had a comparatively sluggish internal trade; and it lacked industrial civilization. We must seek in the history of commerce an explanation of these facts.
544. Historical reasons for backward development.—The few paragraphs devoted to Russia in a previous chapter suggested the main reason for the country’s backwardness. During many centuries, while the peoples of the West were advancing in civilization, the people of Russia were facing away from Europe, occupied in defending themselves against Asiatic princes. Russia shared in none of the great movements of early European history: feudalism, chivalry, crusades, rise of towns, Reformation, Renaissance. It was devoted entirely to the struggle for self-preservation. When it became part of the European world, therefore, about 1700, it brought with it into modern times many characteristics of an unformed, half-developed organization; and since that date it has been trying, and it is now still trying, to catch up with the rest of Europe.
545. Russian commerce about 1800.—The movement toward progress, initiated by Peter the Great about 1700, continued, with various fluctuations, during the century. In so far as it found expression in commerce we can regard the last fifty years before 1800 as a time of rapid advance; commerce grew to nine fold the volume which it showed in 1750. So slight, however, had been the beginnings of Russian trade, that it amounted in 1802 only to about fifty million dollars.
Russia was still practically in the position which it had occupied in the time of the Hansa, dependent on the West for all its finer manufactures, and supplying raw materials in exchange. Hemp and flax, crops which rapidly exhaust the soil, and for the cultivation of which the great tracts of fresh land in Russia offered an advantage, were the chief exports. Among others on the list were wood, grain, tallow, hides, furs, feathers, etc. The Russian nobles exported a certain amount of linen, which they forced their serfs to make for them that they might have the means of purchasing foreign luxuries, and manufactured also iron for sale abroad. The appearance among the exports of this metal, which we are used to associate with advanced industrial countries, is explained by the fact that charcoal was still an important source of fuel for the iron manufacture, and of this the boundless Russian forests offered an abundant supply.
546. Means of transportation.—Almost nothing had been done as yet to unite by means of transportation the vast stretches of territory in Russia. Roads were practically non-existent, and goods were transported by land only in winter, when they could be sledged over the rough ground on the snow. The waterways, with which the country is so abundantly provided, had been connected by a few important canals, and were the chief means of transportation. Goods were brought to them on sledges in winter, to await the high water of the spring freshets. They were laden on flat-boats, holding sometimes several hundred tons, but built to draw only two or three feet of water, and were floated down with the current when the ice melted. The boats were rudely constructed, and were broken up for timber or fire-wood at the end of the trip. The inconvenience and uncertainty of such a system of transportation are obvious, but it was, nevertheless, remarkably cheap; rates on some water routes were only one or two cents per ton-mile.
547. Chief ports.—The conditions of transportation confined almost all the foreign trade of Russia to the sea, and the commerce across the western frontier was insignificant. Archangel, situated on the river Dwina, a few miles from the coast of the White Sea, and the leading port of Russia before the time of Peter the Great, still retained a respectable share of commerce, and was visited every year by ships from England and the Netherlands. In relative importance, however, it had declined greatly after the foundation of St. Petersburg, which soon became the most important outlet for the country’s trade. A rival was at this time, however, growing up in the South, where Russia had only recently secured the territory on the shore of the Black Sea. Odessa, which was founded in 1793, rose rapidly in commercial importance, especially during the Napoleonic wars, when the Baltic trade suffered a severe check.
548. Development up to the Crimean War (1854-1856).—During the first half of the nineteenth century Russian commerce grew steadily but slowly; the rate of increase was much behind that of the preceding fifty years. A partial explanation of this check to progress can be found in the adoption, in 1822, of a prohibitive tariff; the importation of many foreign manufactures (clocks, textiles, porcelain, glassware, etc.), was absolutely forbidden. Shortly after the middle of the century, however, came a turning-point. The Crimean War, in which England and other states were engaged with Russia, is generally admitted to have yielded to neither of the chief combatants advantages proportional to the costs which it involved. It was in one way, however, of immense benefit to Russia. It awakened the country to a realization of its backwardness. It raised a demand for reform of antiquated conditions in economic and political life, which the Czar himself was the first to heed.
549. Reforms; growth of the railroad system.—The reform movement bore fruit in many lines to which we can pay but scant attention. It led to the emancipation of the serfs in 1861, by which a considerable part of the Russian people were liberated from a condition resembling medieval bondage, and became free land-holders. It secured at least a partial improvement in the system of government. It was, finally, to name the result of the greatest influence on commerce, the occasion for the introduction of the modern railroad system in Russia. The government had found itself so hampered in carrying on the war by the lack of transportation facilities, that it now bent every energy to remedying the defects. The railroads of Russia measured at the outbreak of the war only about 600 miles. In the ten years following the railroad system grew to over 2,000 miles, and in the next decade to about 10,000. Though the first lines were built mainly to serve military purposes, those constructed later were designed to develop the economic resources of the country; and it is hard to overestimate the importance of this development of the means of modern transportation, to a country which stood in such sore need of it as Russia.
550. Development of commerce.—The results of the reforms can be followed in the growth of Russian commerce after the middle of the century. In the decade 1860-1870 the foreign commerce of the country increased to more than double what it had been, and was growing at this time faster than the commerce of any other country in Europe, except that of a neighboring state, Austria-Hungary. Some significant changes, moreover, appeared in the direction and character of Russian trade. The great gains of the period were made by southern Russia, where the wheat fields of the rich “black-earth” district were brought within reach of a market. It was about this time that wheat won the first place among the exports away from flax and its products. Commerce by way of the Black Sea increased very rapidly, while the Baltic did not keep its proportional share in the commerce of the country, and the proportion of trade finding its outlet by the Arctic Ocean had sunk to insignificance. Commerce with the west of Europe across the land frontier, which formerly had been restricted by the difficulty of transportation, grew even faster than the Black Sea commerce, and gave an entirely new importance to trade relations with neighboring states. England had enjoyed the largest share of Russia’s commerce during the first part of the century, but could not hold her own henceforth in competition with Germany. This last-named country, then in course of rapid industrial development, was enabled by the railroads to win her way rapidly in Russian commerce, and soon was the largest sharer in it.
551. Character of industries and commerce.—Russia, like many other of the European states, enjoyed the greatest freedom of trade in the period following closely after the middle of the century. The customs duties levied in Russia at this time would have been considered high in western Europe, but they were much lower than the rates ruling in the first half of the century, and much lower than the rates in force at the century’s close.
Russia at this time was still almost exclusively agricultural. The serfs had learned to supply their simple needs for clothing and implements by domestic industries, but nothing like the western factory organization, with its extensive use of power machinery, had as yet appeared. Attempts to stimulate such an organization, by privileges and protection, had resulted in failure. The Russians are not a people with a gift for mechanism. It has been said of them that their only invention is the samovar, their apparatus for making tea. The world exposition of 1867 displayed samples of Russian industry, but most of these were the products of village craftsmen, and the few samples of modern manufacture came from factories owned for the most part by Germans. The exports of the country were still almost entirely raw products, and the manufactured wares which the country contributed to the commerce of the world were of the most simple description: yarn of flax and hemp, cordage, string, and sacking.
552. Recent history of the tariff.—In spite of these conditions the government pursued since about 1870 a policy of protection, which grew constantly more strict with the passage of time, and which furnished at the end of the century the most extreme example of protection to be found among civilized states. Comparing the tariff of 1868, which was comparatively liberal, with the tariff of 1891, we find that duties on some important manufactures rose in the following measure: on cotton goods and glassware, to double; on rails and locomotives to quadruple or more. Even more striking and more serious was the increase on partly manufactured wares. Duties rose on leather and yarns to twofold or more; on petroleum and wrought iron to threefold; on sulphuric acid to four or seven fold; on cast iron to tenfold. This is the period in which Germany was seeking commercial advantage by bargaining in tariff rates with other countries, and in which occurred the tariff war with Germany that has been noted above. At this time and again later Germany was able to bring her eastern neighbor to terms by financial pressure; Russia was a great borrower and needed the support of the Berlin money market. Russia raised still more, however, the rates of the tariff in a revision in 1903, and even after these had been reduced by treaty bargains they left the general level higher than before.
553. Development and cost of manufactures.—The protectionist policy in Russia gained its object, an increase in the manufacturing industry of the country. The product of home manufactures rose greatly in value, and the importation of foreign manufactures declined in proportion. This object, however, was attained at a great cost. Russia was even less suited to the modern system of manufactures than Italy or other states which we have considered. It lacked capital, technical knowledge, leaders, laborers of steadiness and intelligence—practically everything except raw materials, which were present in abundance. Manufactures, therefore, were conducted at an expense far above that common in other countries, and could be maintained only by forcing the people to pay far higher prices for their wares. A person could not get so much as a sewing needle without contributing an extra sum to the support of the home manufactures. The policy was the more questionable, as the profits of these manufactures went in large part to foreign stock holders, who utilized an opportunity for which the native Russians were still unprepared. Even from the political standpoint the policy of protection in Russia was attended with danger; many events indicated that the factory laborers would be the first to turn against the autocracy which had brought them into being.
554. Effect of the tariff on agriculture.—The most serious aspect, however, of the Russian tariff was its effect upon agriculture. The great plains of the country were peculiarly adapted to the use of modern cultivating and harvesting machinery, such as contributed so much to the progress of agriculture in America. The tariff made such machinery so costly, whether it were imported or manufactured in Russia, that it was introduced to only a slight extent. A Russian estimated that the farmers of the United States found it profitable to spend nearly twenty times as much for agricultural implements and machinery as the Russians. The peasants could not afford even plows, harrows, or scythes of a modern type, and still used antiquated makeshifts. The mass of the people, at best, were ignorant and bound by custom, showing still the bad effects of the servile condition from which they had so recently emerged; and needed every encouragement to be induced to advance to better methods of cultivation. Even artificial fertilizers, however (superphosphates, etc.), were burdened with a duty, because there seemed a chance to manufacture them in the country; the result, naturally, was an increase in price, and a restriction in the use of this important aid to production.
555. Effect on railroads.—We must note further the effect of the tariff on the railroad system. Russia has never gone through the period of transportation by highroads. It passed from conditions described above as existing during the first part of the century, to the use of the railroad, without the transition such as was marked by the use of turnpikes in England. Even in 1914 the highroads of the country were of the crudest character, and internal trade depended mainly upon the waterways and railroads, contributing nearly the same tonnage to each. The railroads, therefore, had peculiarly important functions to perform in Russia. They served agriculture, moreover, to an unusual degree; the cereals supplied in 1897 more tonnage than any other ware carried on Russian railroads. Yet if we measure the development of railroads by comparing their length with the area or population of the country, we find that even at the close of the century the Russians had made but a beginning, and took the lowest rank among all important peoples. Taking merely Russia in Europe, and contrasting it with the United States, a country which also has a vast area and great vacant spaces, the Russian railway system in 1913 had not reached one ninth the development of the American in comparison with population, not one tenth in comparison with area. An important reason for this backwardness was the increased expense of the construction, equipment, and operation of railroads due to the high tariff on railroad supplies. Iron may be said, roughly, to cost double or more of what it cost in other countries. The government has not always been blind to these facts, and has made concessions from time to time, but the general tendency of its policy has been made only more glaring by these occasional exceptions.
556. Commercial reasons for Russia’s eastern movement.—Preceding sections have sketched some of the historical influences which prevented Russia from taking a part in world commerce commensurate with the space she covered on the map. This great state, which in the sixties took only sixth place in commerce among European countries, rose above Belgium and the Netherlands in the early part of the seventies, and secured fourth place, only to be passed again by these little states and for a time even by Austria-Hungary. In 1912 Russia still ranked sixth among European countries, eighth among all countries of the world, in the value of foreign trade.
This decline in commercial importance was due largely to the conscious and voluntary action of the government, which restricted commerce between its people and the people of the West. No government, however, regards all commerce as injurious, and the Russian government endeavored to atone for losses in the West by expansion in the East. In that direction Russia met people who were her industrial inferiors. By trade with them she hoped to secure imports which would not compete with her own products, and sought to win a market for her newly founded factories. The manufactured products which were too high in price to compete in European markets could be sold in the East so long as the cheaper wares of western Europe did not reach the field. As commerce extended, however, in the last decades of the century, Russia saw that her eastern markets were threatened unless she could apply to them the same policy of protection which she had established in the West; and the government was forced into the policy of military and political expansion, designed to close the doors of eastern markets to other powers, which received its check in the the war with Japan.
557. Course of the Asiatic trade.—In no period of the nineteenth century has Russian commerce across her Asiatic frontier formed any important fraction of her total foreign trade. At the beginning and end of the century it was about one tenth of the total; in the intervening time it was rather less. The difficulty of transportation over the great stretches of almost trackless territory confined the trade with the Far East to objects comprising great value in small bulk (tea, cloth, etc.), and directed Russian commerce rather to the Asiatic countries on her southeastern frontier (Persia, etc.). In the second half of the century, for reasons noted above, the government showed an increased interest in this branch of trade, and lent liberal aid in furthering Russian interests in the East. The most striking evidence of the determination of the Russian government to extend its influence toward the Pacific Ocean was the construction of the Siberian Railway (1891). This was rather a political than an economic undertaking; it was enormously expensive, and failed to develop sufficient traffic to pay its way as a commercial enterprise. Its failure also in the field of international politics was signalized by the victory of Japan in the war with Russia in 1905, which checked definitely Russia’s ambitions to play a dominant part in the Far East and put in her place an Asiatic power.
558. States of the Balkan Peninsula.—If the reader will examine a map of Europe about 1800 he will find that at that date the state of Turkey occupied the whole of the Balkan Peninsula, and included considerable territories even to the north of the Danube. The nineteenth century has witnessed the liberation of most of this land from Turkish rule; and some half dozen independent states have emerged and taken their place in the European system. These states, however, have neither in their political nor in their economic organization reached maturity. Like the Russians, the peoples of southeastern Europe belonged for centuries to Asia rather than to Europe, and the period of Turkish misrule, lasting down into very recent times, has effectually checked their development. Their states were still in the making, constantly disturbed by racial, religious, and dynastic quarrels. Their economic organization was still, in large part, medieval. Roads were scarce, and good roads were almost unknown. The implements and methods of agriculture were of the most primitive description. Some cultivators still used for a plow a crooked piece of wood with a single handle, and threshed their grain on the open ground by driving horses over it. Manufactures were still in the stage of the handicrafts, and were, in some cases, exercised by gilds like those of the Middle Ages.
559. Commerce of the Balkan States.—Conditions have been rapidly changing, as railroads and steamers have reached the peoples of the Balkans, and have brought them in touch with the advanced civilization of the West. The commerce of the Balkans, however, has been as yet important rather by its promise than by its performance. The total commerce between the contiguous states Servia and Bulgaria amounted in 1882 to less than a million dollars. The aggregate commerce of the four Balkan countries, Roumania, Bulgaria, Servia and Greece, in 1910-11, amounted to considerably less than one per cent of the total trade of the world, and was exceeded by the commerce of Sweden or Spain or even of the little country Denmark. The foreign commerce of the kingdom of Greece depended almost entirely on one product, the so-called Zante currant, a seedless raisin which got the name of currant from Corinth, whence it was carried to the island of Zante. The pig took in Servia a position almost equal in importance to that of the currant in Greece; great herds of swine were kept in the oak forests, and contributed largely to the chief export, that of animal products. On the plains of Roumania wheat was grown for export by a wretched population of tenants and laborers, who were still serfs until 1864. The governments of some of the states have endeavored by protective tariffs and various privileges to stimulate the growth of a mining and manufacturing industry; but the countries of the Balkan Peninsula will find in agriculture their chief resource for a long time to come, and will develop their commerce most rapidly by exchanging their surplus of raw products for the manufactures of central and western Europe.
QUESTIONS AND TOPICS
1. Character of internal trade in Russia. [Wallace, chap. 12; Palmer, chaps. 10-12; Schierbrand, chap. 9.]
2. The period of Mongol rule and its effects. [Wallace, chap. 14; Rambaud, History of Russia, N. Y., Burt, $2, vol. 1, chap. 10; Thompson, chap. 2; Noble, chap. 3.]
3. Condition of people and production in the time of serfdom. [Wallace, chap. 28; Palmer, chap. 5.]
4. Traveling by roads and rivers in modern Russia [Wallace, chap. 1.]
5. The Crimean War. [Seignobos, chap. 27, first part.]
6. The period of reforms. [Wallace, chap. 27.]
7. Faults of the Russian administration. [Wallace, chap. 24, Schierbrand, chap. 11; Thompson.]
8. Emancipation of the serfs. [Wallace, chap. 29; Thompson, chap. 4; Noble, chap. 7.]
9. What were the chief exports and imports of Russia; with what countries was the most important commerce of Russia conducted? [Statesman’s Year-Book.]
10. Character and significance of the foreign trade of modern Russia. [Hourwich in Journal of Polit. Econ., 1892-3, 2: 284-290.]
11. Domestic manufactures. [Palmer, chap. 20.]
12. Recent fiscal policy and protection. [Wallace, chap. 36; Schierbrand, chap. 3.]
13. Manufactures in modern Russia. [Palmer, chap. 19; Schierbrand, chap. 4; Oseroff, The industrial development of Russia, Forum, 1899, 27: 129-144.]
14. Condition of the agricultural population after emancipation. [Wallace, chap. 31; Palmer, chap. 8; Schierbrand, chaps. 5, 6; Thompson, chap. 4; Noble, chap. 7.]
15. Political, social, and economic life of the rural population. [Palmer, chap. 4; Wallace, chaps. 6-9.]
16. Famines in modern Russia. [Articles by various authors in Fortnightly Review, 1891, 56: 636-652; Forum, 1892, 13: 575-582: Nineteenth Century, 1892, 31: 1-6; Century, 1893, 46: 560 ff., etc.]
17. Faults of the modern system of agriculture. [Hourwich in Yale Review, 1892-3, 1: 411-433; in greater detail, in Columbia Studies, vol. 2, N. Y., 1892.]
18. Russian trade in China. [Calderon in Contemporary Review, 1900, 78: 389-396.]
19. Russia’s hold on Persia. [Forum, 1900, 29: 147-153.]
20. Russian railway policy in Asia. [Long in Fortnightly Review, 1899, 72: 914-925, with map.]
21. Territorial expansion in the East. [Wallace, chap. 38; Noble, chap. 10; Schierbrand, chap. 1.]
22. The Siberian railroad. [See A. L. A. Catalogue, or use one of the following periodical articles: Norman in Scribner’s, 1900, 28: 515-541; Davidson in Century, 1904, 67: 940 ff.; Kinloch in Monthly Review, 1901, 2: 60-71, with map, and with special reference to trade possibilities; Mikhailoff, in North Amer. Rev., 1900, 170: 593-608; Colquhoun in Monthly Review, 1900, 1: Nov., 40-55, with two maps.]
23. Choose one of the more important states (Turkey, Roumania, Bulgaria, Servia, Greece) and
(a) Trace its political history during the century. [Seignobos, chaps. 20, 21.]
(b) Study its recent commerce. [Statesman’s Year-Book.]
BIBLIOGRAPHY
Though no history of Russian commerce has appeared in English, there are many good books on the history and conditions of the Russian Empire; and a considerable number have been published within a few years. For bibliography see the A. L. A. Catalogue and recent issues of the American Historical Review; a more complete bibliography, with chronological classification, will be found in Skrine, pp. 347-358. Compare, also, A. L. Morse, Reading list on Russia, Univ. of State of N. Y., State Library Bulletin, Jan., 1899, Bibliography, nos. 15-17. References to articles on Russian commerce in the first half of the century, in English and American periodicals, will be found in Homans, Cyclopedia, p. 1659.
Mavor, *Economic History of Russia, London, 1914, 2 vol., is a monumental work, particularly valuable for its study of institutional development. The history of Russia in the nineteenth century is treated by Seignobos, adequately for most purposes; more fully by Skrine, Expansion of Russia, London, 1900 (N. Y., Macmillan), in the Cambridge Historical Series.
The most useful books for our purposes are the descriptive works, most of which contain considerable historical material. First of these should be mentioned D. M. Wallace, **Russia, N. Y., Holt, 1877, 1905; references in the topics are to the revised edition, 1905. Anatole Leroy-Beaulieu, ** The empire of the tsars, N. Y., Putnam, 1893, has the rank of a classic, but a large part of its three volumes treats topics removed from our direct interest. Among the smaller books the most useful are the following: Francis H. E. Palmer, *Russian life, N. Y., Putnam, 1901, W. von Schierbrand, *Russia, N. Y., Putnam, 1904, Edmund Noble, Russia, Boston, Houghton, 1900, H. M. Thompson, Russian politics, N. Y., Holt, 1896.
A work deserving special mention is **Industries of Russia, published for the World’s Columbian Exposition at Chicago, and edited in the English translation by John M. Crawford, St. Petersburg, 1893, 5 vols. with maps and charts. Volumes 1 and 2, paged continuously, cover Manufactures (with historical surveys) and Trade (brief on foreign commerce); volume 3 covers Agriculture and Forestry; 4, Mining; 5, Siberia and the Trans-Siberian Railroad. I cannot cover here the mass of literature on Russia’s eastern policy, and refer for that to the bibliographical aids mentioned above. The U. S. Monthly Summary, Commerce and Finance, April, 1899, contained a compilation of various material on the Russian Empire and the Trans-Siberian railroad, with a map; another monograph, on European Russia, appeared in this series in 1904.
On Finland, a distinct part of Russia for the treatment of which the text offers no space, see N. C. Frederiksen, **Finland, London, 1902, with bibliography; this is an excellent book, especially full on economic matters.
The Balkan States have attracted more attention from writers than accords with their recent commercial importance; for a general survey see Laveleye, *The Balkan Peninsula, N. Y., Putnam, 1887. On the conditions of commerce in the peninsula just before the World War see Day, The pre-war commerce and the commercial approaches of the Balkan Peninsula, Geographical Rev., N. Y., May, 1920, 9: 277-298.
TOPICS FOR REVIEW
Among topics suitable for general review of the recent period, (1800-1900), the following may be suggested: (a) shipping; (b) transportation by canals; (c) transportation by railroads; (d) production and exchange of raw textiles; (e) finished textiles; (f) coal; (g) iron and steel; (h) introduction of steam and power machinery in manufactures; (i) commercial policy.