From that date the production grew up regularly. From 6,435,000 lb. in 1886 it reached 91,950,000 lb. in 1893, and 153,444,000 lb. in 1895. In nine years it had thus increased twenty-four times. Since then it rose to 413,800,000 lb. in 1909; and we learn from the Financial Economical Annual for the years 1910 and 1911, published at Tokio, that there were in Japan, in 1909, no less than 3,756 textile factories, with 1,785,700 spindles and 51,185 power-looms, to which 783,155 hand-looms must be added. Japan is thus already a serious competitor of the great industrial nations for tissues altogether, and especially for cottons, in the markets of Eastern Asia; and it took it only five-and-twenty years to attain this position. The total production of tissues, valued at £1,200,000 in the year 1887, rapidly rose to £14,270,000 in 1895 and to £22,500,000 in 1909—cottons entering into this amount to the extent of nearly two-fifths. Consequently, the imports of foreign cotton goods from Europe fell from £1,640,000 in 1884 to £849,600 in 1895, and to £411,600 in 1910, while the exports of silk goods rose to nearly £3,000,000.[24]
As to the coal and iron industries, I ventured in the first edition of this book to predict that the Japanese would not long remain a tributary to Europe for iron goods—that their ambition was also to have their own shipbuilding yards, and that the previous year 300 engineers left the Elswick works of Mr. Armstrong in order to start shipbuilding in Japan. They were engaged for five years only—the Japanese expecting to have learned enough in five years to be their own shipbuilders. This prediction has been entirely fulfilled. Japan has now 1,030 iron and machine works, and she now builds her own warships. During the last war, the progress realised in all industries connected with war was rendered fully evident.[25]
All this shows that the much-dreaded invasion of the East upon European markets is in rapid progress. The Chinese slumber still; but I am firmly persuaded from what I saw of China that the moment they will begin to manufacture with the aid of European machinery—and the first steps have already been made—they will do it with more success, and necessarily on a far greater scale, than even the Japanese.
But what about the United States, which cannot be accused of employing cheap labour or of sending to Europe “cheap and nasty” produce? Their great industry is of yesterday’s date; and yet the States already send to old Europe constantly increasing quantities of machinery. In 1890 they began even to export iron, which they obtain at a very low cost, owing to admirable new methods which they have introduced in metallurgy.
In the course of twenty years (1870-1890) the number of persons employed in the American manufactures was more than doubled, and the value of their produce was nearly trebled; and in the course of the next fifteen years, the number of persons employed increased again by nearly fifty per cent., while the value of the produce was nearly doubled.[26] The cotton industry, supplied with excellent home-made machinery, has been rapidly developing, so that the yearly production of textiles attained in 1905 a value of 2,147,441,400 dollars, thus being twice as large as the yearly production of the United Kingdom in the same branch (which was valued at about £200,000,000); and the exports of cottons of domestic manufacture attained in 1910 the respectable figure of £8,600,000.[27] As to the yearly output of pig-iron and steel, it is already in excess of the yearly output in Britain;[28] and the organisation of that industry is also superior, as Mr. Berkley pointed out, already in 1891, in his address to the Institute of Civil Engineers.[29]
But all this has grown almost entirely within the last thirty or forty years—whole industries having been created entirely since 1860.[30] What will, then, American industry be twenty years, hence, aided as it is by a wonderful development of technical skill, by excellent schools, a scientific education which goes hand in hand with technical education, and a spirit of enterprise which is unrivalled in Europe?
Volumes have been written about the crisis of 1886-1887, a crisis which, to use the words of the Parliamentary Commission, lasted since 1875, with but “a short period of prosperity enjoyed by certain branches of trade in the years 1880 to 1883,” and a crisis, I shall add, which extended over all the chief manufacturing countries of the world. All possible causes of the crisis have been examined; but, whatever the cacophony of conclusions arrived at, all unanimously agreed upon one, namely, that of the Parliamentary Commission, which could be summed up as follows: “The manufacturing countries do not find such customers as would enable them to realise high profits.” Profits being the basis of capitalist industry, low profits explain all ulterior consequences.
Low profits induce the employers to reduce the wages, or the number of workers, or the number of days of employment during the week, or eventually compel them to resort to the manufacture of lower kinds of goods, which, as a rule, are paid worse than the higher sorts. As Adam Smith said, low profits ultimately mean a reduction of wages, and low wages mean a reduced consumption by the worker. Low profits mean also a somewhat reduced consumption by the employer; and both together mean lower profits and reduced consumption with that immense class of middlemen which has grown up in manufacturing countries, and that, again, means a further reduction of profits for the employers.