It would be a gross error to imagine that the decline of foreign imports is mainly due to high protective duties. The decline of imports is much better explained by the growth of home industries. The protective duties have no doubt contributed (together with other causes) towards attracting German and English manufacturers to Poland and Russia. Lodz—the Manchester of Poland—is quite a German city, and the Russian trade directories are full of English and German names. English and German capitalists, English engineers and foremen, have planted within Russia the improved cotton manufactures of their mother countries; they are busy now in improving the woollen industries and the production of machinery; while Belgians have rapidly created a great iron industry in South Russia. There is now not the slightest doubt—and this opinion is shared, not only by economists, but also by several Russian manufacturers—that a free-trade policy would not check the further growth of industries in Russia. It would only reduce the high profits of those manufacturers who do not improve their factories and chiefly rely upon cheap labour and long hours.
Moreover, as soon as Russia succeeds in obtaining more freedom, a further growth of her industries will immediately follow. Technical education—which, strange to say, was for a long time systematically suppressed by the Government—would rapidly grow and spread; and in a few years, with her natural resources and her laborious youth, which even now tries to combine workmanship with science, Russia would see her industrial powers increase tenfold. She farà da sè in the industrial field. She will manufacture all she needs; and yet she will remain an agricultural nation.
At the present time only a little more than 1,500,000 men and women, out of the 112,000,000 strong population of European Russia, work in manufactures, and 7,500,000 combine agriculture with manufacturing. This figure may treble without Russia ceasing to be an agricultural nation; but if it be trebled, there will be no room for imported manufactured goods, because an agricultural country can produce them cheaper than those countries which live on imported food. Let us not forget that in the United Kingdom 1,087,200 persons, all taken, are employed in all the textile industries of England, Scotland, Ireland and Wales, and that only 300,000 out of them are males above eighteen years of age (311,000 in 1907); that these workpeople keep going 53,000,000 spindles and more than 700,000 looms in the cotton factories only; and that the yearly production of textiles during the last few years was so formidable that it represented a value of £200,000,000, and that the average value of textiles exported every year attained £136,257,500 in 1905-1910—to say nothing of the £163,400,000 reached in the extraordinary year of 1911.[10]
The same is still more true with regard to other European nations, much more advanced in their industrial development, and especially with regard to Germany. So much has been written about the competition which Germany offers to British trade, even in the British markets, and so much can be learned about it from a mere inspection of the London shops, that I need not enter into lengthy details. Several articles in reviews; the correspondence exchanged on the subject in The Daily Telegraph in August, 1886; numerous consular reports, regularly summed up in the leading newspapers, and still more impressive when consulted in originals; and, finally, political speeches, have familiarised the public opinion of this country with the importance and the powers of German competition.[11] Moreover, the forces which German industry borrows from the technical training of her workmen, engineers and numerous scientific men, have been so often discussed by the promoters of technical education in England that the sudden growth of Germany as an industrial power can be denied no more.
Where half a century was required in olden times to develop an industry, a few years are sufficient now. In the year 1864 only 160,000 cwts. of raw cotton were imported into Germany, and only 16,000 cwts. of cotton goods were exported; cotton spinning and weaving were mostly insignificant home industries. Twenty years later the imports of raw cotton were already 3,600,000 cwts., and in another twenty years they rose to 7,400,000 cwts.; while the exports of cottons and yarn, which were valued at £3,600,000 in 1883, and £7,662,000 in 1893, attained £19,000,000 in 1905. A great industry was thus created in less than thirty years, and has been growing since. The necessary technical skill was developed, and at the present time Germany remains tributary to Lancashire for the finest sorts of yarn only. However, it is very probable that even this disadvantage will soon be equalised.[12] Very fine spinning mills have lately been erected, and the emancipation from Liverpool, by means of a cotton exchange established at Bremen, is in fair progress.[13]
In the woollen trade we see the same rapid increase, and in 1910 the value of the exports of woollen goods attained £13,152,500 (against £8,220,300 in 1894), out of which £1,799,000 worth were sent on the average to the United Kingdom during the years 1906-1910.[14] The flax industry has grown at a still speedier rate, and as regards silks Germany is second only to France.
The progress realised in the German chemical trade is well known, and it is only too badly felt in Scotland and Northumberland; while the reports on the German iron and steel industries which one finds in the publications of the Iron and Steel Institute and in the inquiry which was made by the British Iron Trade Association show how formidably the production of pig-iron and of finished iron has grown in Germany since 1871. (See [Appendix D].) No wonder that the imports of iron and steel into Germany were reduced by one-half during the twenty years, 1874-1894, while the exports grew nearly four times. As to the machinery works, if the Germans have committed the error of too slavishly copying English patterns, instead of taking a new departure, and of creating new patterns, as the Americans did, we must still recognise that their copies are good and that they very successfully compete in cheapness with the tools and machinery produced in this country. (See [Appendix E].) I hardly need mention the superior make of German scientific apparatus. It is well known to scientific men, even in France.
In consequence of the above, the imports of manufactured goods into Germany are, as a rule, in decline. The aggregate imports of textiles (inclusive of yarn) stand so low as to be compensated by nearly equal values of exports. And there is no doubt that not only the German markets for textiles will be soon lost for other manufacturing countries, but that German competition will be felt stronger and stronger both in the neutral markets and those of Western Europe. One can easily win applause from uninformed auditories by exclaiming with more or less pathos that German produce can never equal the English! The fact is, that it competes in cheapness, and sometimes also—where it is needed—in an equally good workmanship; and this circumstance is due to many causes.
The “cheap labour” cause, so often alluded to in discussions about “German competition,” which take place in this country and in France, must be dismissed by this time, since it has been well proved by so many recent investigations that low wages and long hours do not necessarily mean cheap produce. Cheap labour and protection simply mean the possibility for a number of employers to continue working with obsolete and bad machinery; but in highly developed staple industries, such as the cotton and the iron industries, the cheapest produce is obtained with high wages, short hours and the best machinery. When the number of operatives which is required for each 1000 spindles can vary from seventeen (in many Russian factories) to three (in England), and when one weaver can look either after twenty Northrop machine-looms, as we see it in the United States, or after two machine-looms only, as it is the case in backward mills, then it is evident that no reduction of wages can compensate for that immense difference. Consequently, in the best German cotton mills and ironworks the wages of the worker (we know it directly for the ironworks from the above-mentioned inquiry of the British Iron Trade Association) are not lower than they are in Great Britain. All that can be said is, that the worker in Germany gets more for his wages than he gets in this country—the paradise of the middleman—a paradise which it will remain so long as it lives chiefly on imported food produce.