Chapter 1 : The Decentralisation of Industries
WHO does not remember the remarkable chapter by which Adam Smith opens his inquiry into the nature and causes of the wealth of nations? Even those of our contemporary economists who seldom revert to the works of the father of political economy, and often forget the ideas which inspired them, know that chapter almost by heart, so often has it been copied and recopied since. It has become an article of faith; and the economical history of the century which has elapsed since Adam Smith wrote has been, so to speak, an actual commentary upon it.
"Division of labor" was its watchword. And the division and subdivision--the permanent subdivision--of functions has been pushed so far as to divide humanity into castes which are almost as firmly established as those of old India. We have, first, the broad division into producers and consumers: little-consuming producers on the one hand, little-producing consumers on the other hand. Then, amid the former, a series of further subdivisions: the manual worker and the intellectual worker, sharply separated from one another to the detriment of both; the agricultural laborers and the workers in the manufacture; and, amid the mass of the latter, numberless subdivisions again--so minute, indeed, that the modern ideal of a workman seems to be a man or a woman, or even a girl or a boy, without the knowledge of any handicraft, without any conception whatever of the industry he or she is employed in, who is only capable of making all day long and for a whole life the same infinitesimal part of something: who from the age of thirteen to that of sixty pushes the coal cart at a given spot of the mine or makes the spring of a penknife, or "the eighteenth part of a pin." Mere servants to some machine of a given description; mere flesh-and-bone parts of some immense machinery; having no idea how and why the machinery performs its rhythmical movements.
Skilled artisanship is being swept away as a survival of a past condemned to disappear. The artist who formerly found esthetic enjoyment in the work of his hands is substituted by the human slave of an iron slave. Nay, even the agricultural laborer, who formerly used to find a relief from the hardships of his life in the home of his ancestors--the future home of his children--in his love of the field and in a keen intercourse with nature, even he has been doomed to disappear for the sake of division of labor. He is an anachronism, we are told; he must be substituted, in a Bonanza farm, by an occasional servant hired for the summer, and discharged as the autumn comes: a tramp who will never again see the field he has harvested once in his life. "An affair of a few years," the economists say, "to reform agriculture in accordance with the true principles of division of labor and modern industrial organization."
Dazzled with the results obtained by a century of marvelous inventions, especially in England, our economists and political men went still farther in their dreams of division of labor. They proclaimed the necessity of dividing the whole of humanity into national workshops having each of them its own specialty. We were taught, for instance, that Hungary and Russia are predestined by nature to grow corn in order to feed the manufacturing countries; that Britain had to provide the worldmarket with cottons, iron goods, and coal; Belgium with woolen cloth; and so on. Nay, within each nation, each region had to have its own specialty. So it has been for some time since; so it ought to remain. Fortunes have been made in this way, and will continue to be made in the same way. It being proclaimed that the wealth of nations is measured by the amount of profits made by the few, and that the largest profits are made by means of a specialization of labor, the question was not conceived to exist as to whether human beings would always submit to such a specialization; whether nations could be specialized like isolated workmen. The theory was good for to-day--why should we care for to-morrow. To-morrow might bring its own theory!
And so it did. The narrow conception of life which consisted in thinking that profits are the only leading motive of human society, and the stubborn view which supposes that what has existed yesterday would last for ever, proved in disaccordance with the tendencies of human life; and life took another direction. Nobody will deny the high pitch of production which may be attained by specialization. But, precisely in proportion as the work required from the individual in modern production becomes simpler and easier to be learned, and, therefore, also more monotonous and wearisome--the requirements of the individual for varying his work,for exercising all his capacities,become more and more prominent. Humanity perceives that there is no advantage for the community in riveting a human being for all his life to a given spot, in a workshop or a mine; no gain in depriving him of such work as would bring him into free intercourse with nature, make of him a conscious part of the grand whole, a partner in the highest enjoyments of science and art, of free work and creation.
Nations, too, refuse to be specialized. Each nation is a compound aggregate of tastes and inclinations, of wants and resources, of capacities and inventive powers. The territory occupied by each nation is in its turn a most varied texture of soils and climates, of hills and valleys, of slopes leading to a still greater variety of territories and races. Variety is the distinctive feature, both of the territory and its inhabitants; and that variety implies a variety of occupations. Agriculture calls manufactures into existence, and manufactures support agriculture. Both are inseparable: and the combination, the integration of both brings about the grandest results. In proportion as technical knowledge becomes everybody's virtual domain, in proportion as it becomes international, and can be concealed no longer, each nation acquires the possibility of applying the whole variety of her energies to the whole variety of industrial and agricultural pursuits. Knowledge ignores artificial political boundaries. So also do the industries; and the present tendency of humanity is to have the greatest possible variety of industries gathered in each country, in each separate region, side by side with agriculture. The needs of human agglomerations correspond thus to the needs of the individual; and while a temporary division of functions remains the surest guarantee of success in each separate undertaking, the permanent division is doomed to disappear, and to be substituted by a variety of pursuits-- intellectual, industrial, and agricultural--corresponding to the different capacities of the individual, as well as to the variety of capacities within every human aggregate.
When we thus revert from the scholastics of our text-books, and examine human life as a whole, we soon discover that, while all the benefits of a temporary division of labor must be maintained, it is high time to claim those of the integration of labor. Political economy has hitherto insisted chiefly upon division. We proclaim integration; and we maintain that the ideal of society--that is, the state towards which society is already marching--is a society of integrated, combined labor. A society where each individual is a producer of both manual and intellectual work; where each able-bodied human being is a worker, and where each worker works both in the field and the industrial workshop; where every aggregation of individuals, large enough to dispose of a certain variety of natural resources--it may be a nation, or rather a region--produces and itself consumes most of its own agricultural and manufactured produce.
Of course, as long as society remains organized so as to permit the owners of the land and capital to appropriate for themselves, under the protection of the State and historical rights, the yearly surplus of human production, no such change can be thoroughly accomplished. But the present industrial system, based upon a permanent specialization of functions, already bears in itself the germs of its proper ruin. The industrial crises, which grow more acute and protracted, and are rendered still worse and still more acute by the armaments and wars implied by the present system, are rendering its maintenance more and more difficult. Moreover, the workers plainly manifest their intention to support no longer patiently the misery occasioned by each crisis. And each crisis accelerates the day when the present institutions of individual property and production will be shaken to their foundations with such internal struggles as will depend upon the more or less good sense of the now privileged classes.
But we maintain also that any socialist attempt at remodeling the present relations between Capital and Labor will be a failure, if it does not take into account the above tendencies towards integration. These tendencies have not yet received, in our opinion, due attention from the different socialist schools--but they must. A reorganized society will have to abandon the fallacy of nations specialized for the production of either agricultural or manufactured produce. It will have to rely on itself for the production of food and many, if not most, of the raw materials; it must find the best means of combining agriculture with manufacture--the work in the field with a decentralized industry; and it will have to provide for "integrated education," which education alone, by teaching both science and handicraft from earliest childhood, can give to society the men and women it really needs.
Each nation--her own agriculturist and manufacturer; each individual working in the field and in some industrial art; each individual combining scientific knowledge with the knowledge of a handicraft--such is, we affirm, the present tendency of civilized nations.
The prodigious growth of industries in Great Britain, and the simultaneous development of the international traffic which now permits the transport of raw materials and articles of food on a gigantic scale, have created the impression that a few nations of West Europe were destined to become the manufacturers of the world. They need only--it was argued--to supply the market with manufactured goods, and they will draw from all over the surface of the earth the food they cannot grow themselves, as well as the raw materials they need for their manufactures. The steadily increasing speed of trans-oceanic communications and the steadily increasing facilities of shipping have contributed to enforce the above impression. If we take the enthusiastic pictures of international traffic, drawn in such a masterly way by Neumann Spallart-- the statistician and almost the poet of the world-trade--we are inclined indeed to fall into ecstasy before the results achieved. "Why shall we grow corn, rear oxen and sheep, and cultivate orchards, go through the painful work of the laborer and the farmer, and anxiously watch the sky in fear of a bad crop, when we can get, with much less pain, mountains of corn from India, America, Hungary, or Russia, meat from New Zealand, vegetables from the Azores, apples from Canada, grapes from Malaga, and so on?" exclaim the West Europeans."Already now," they say, "our food consists, even in modest households, of produce gathered from all over the globe. Our cloth is made out of fibers grown and wool sheared in all parts of the world. The prairies of America and Australia; the mountains and steppes of Asia; the frozen wildernesses of the Arctic regions; the deserts of Africa and the depths of the oceans; the tropics and the lands of the midnight sun are our tributaries. All races of men contribute their share in supplying us with our staple food and luxuries, with plain clothing and fancy dress, while we are sending them in exchange the produce of our higher intelligence, our technical knowledge, our powerful industrial and commercial organizing capacities! Is it not a grand sight, this busy and intricate exchange of produce all over the earth which has suddenly grown up within a few years?"
Grand it may be, but is it not a mere nightmare? Is it necessary? At what cost has it been obtained, and how long will it last?
Let us turn a hundred years back. France lay bleeding at the end of the Napoleonic wars. Her young industry, which had begun to grow by the end of the 18th century, was crushed down. Germany, Italy were powerless in the industrial field. The armies of the great Republic had struck a mortal blow to serfdom on the Continent; but with the return of reaction efforts were made to revive the decaying institution, and serfdom meant no industry worth speaking of. The terrible wars between France and England, which wars are often explained by merely political causes, had a much deeper meaning--an economical meaning. They were wars for the supremacy on the world market, wars against French industry and commerce, supported by a strong navy which France had begun to build--and Britain won the battle. She became supreme on the seas. Bordeaux was no more a rival to London; as to the French industries, they seemed to be killed in the bud. And, aided by the powerful impulse given to natural sciences and technology by a great era of inventions, finding no serious competitors in Europe, Britain began to develop her manufactures. To produce on a large scale in immense quantities became the watchword. The necessary human forces were at hand in the peasantry, partly driven by force from the land, partly attracted to the cities by high wages. The necessary machinery was created, and the British production of manufactured goods went on at a gigantic pace. In the course of less than seventy years--from 1810 to 1878--the output of coal grew from 10 to 133,000,000 tons; the imports of raw materials rose from 30 to 380,000,000 tons; and the exports of manufactured goods from 46 to 200,000,000 pounds. The tonnage of the commercial fleet was nearly trebled. Fifteen thousand miles of railways were built.
It is useless to repeat now at what a cost the above results were achieved. The terrible revelations of the parliamentary commissions of 1840-1842 as to the atrocious condition of the manufacturing classes, the tales of "cleared estates," and kidnapped children are still fresh in the memory. They will remain standing monuments for showing by what means the great industry was implanted in this country. But the accumulation of wealth in the hands of the privileged classes was going on at a speed never dreamed of before. The incredible riches which now astonish the foreigner in the private houses of England were accumulated during that period; the exceedingly expensive standard of life which makes a person considered rich on the Continent appear as only of modest means in Britain was introduced during that time. The taxed property alone doubled during the last thirty years of the above period, while, during the same years (1810 to 1878) no less than £1,112,000,000--nearly £2,000,000,000 by this time--was invested by English capitalists either in foreign industries or in foreign loans.1
But the monopoly of industrial production could not remain with England for ever. Neither industrial knowledge nor enterprise could be kept for ever as a privilege of these islands. Necessarily, fatally, they began to cross the Channel and spread over the Continent. The Great Revolution had created in France a numerous class of peasant proprietors, who enjoyed nearly half a century of a comparative well-being, or, at least, of a guaranteed labor. The ranks of homeless town workers increased slowly. But the middle-class revolution of 1789-1793 had already made a distinction between the peasant householders and the village proletaires, and, by favoring the former to the detriment of the latter, it compelled the laborers who had no household nor land to abandon their villages, and thus to form the first nucleus of working classes given up to the mercy of manufacturers. Moreover, the peasant-proprietors themselves, after having enjoyed a period of undeniable prosperity, began in their turn to feel the pressure of bad times, and their children were compelled to look for employment in manufactures. Wars and revolution had checked the growth of industry; but it began to grow again during the second half of our century; it developed, it improved; and now, notwithstanding the loss of Alsace, France is no longer the tributary to England for manufactured produce which she was sixty years ago. To-day her exports of manufactured goods are valued at nearly one-half of those of Great Britain, and two-thirds of them are textiles; while her imports of the same consist chiefly of the finer sorts of cotton and woolen yarn--partly reexported as stuffs--and a small quantity of woolen goods. For her own consumption France shows a decided tendency towards becoming entirely a self-supporting country, and for the sale of her manufactured goods she is tending to rely, not on her colonies, but especially on her own wealthy home market.2
Germany follows the same lines. During the last fifty years, and especially since the last war, her industry has undergone a thorough reorganization. Her population having rapidly increased from forty to sixty millions, this increment went entirely to increase the urban population--without taking hands from agriculture--and in the cities it went to increase the population engaged in industry. Her industrial machinery has been thoroughly improved, and her new-born manufactures are supplied now with a machinery which mostly represents the last word of technical progress. She has plenty of workmen and technologists endowed with a superior technical and scientific education; and in an army of learned chemists, physicists and engineers her industry has a most powerful and intelligent aid, both for directly improving it and for spreading in the country serious scientific and technical knowledge. As a whole, Germany offers now the spectacle of a nation in a period of Aufschwung, of a sudden development, with all the forces of a new start in every domain of life. Fifty years ago she was a customer to England. Now she is already a competitor in the European and Asiatic markets, and at the present speedy rate of growth of her industries, her competition will soon be felt even more acutely than it is already felt.
At the same time the wave of industrial production, after having had its origin in the north-west of Europe, spreads towards the east and, south-east, always covering a wider circle. And, in proportion as it advances east, and penetrates into younger countries, it implants there all the improvements due to a century of mechanical and chemical inventions; it borrows from science all the help that science can give to industry; and it finds populations eager to grasp the last results of modern knowledge. The new manufactures of Germany begin where Manchester arrived after a century of experiments and gropings; and Russia begins where Manchester and Saxony have now reached. Russia, in her turn, tries to emancipate herself from her dependency upon Western Europe, and rapidly begins to manufacture all those goods she formerly used to import, either from Britain or from Germany.
Protective duties may, perhaps, sometimes help the birth of new industries: always at the expense of some other growing industries, and always checking the improvement of those which already exist; but the decentralization of manufactures goes on with or without protective duties--I should even say, notwithstanding the protective duties. Austria, Hungary and Italy follow the same lines--they develop their home industries--and even Spain and Servia are going to join the family of manufacturing nations. Nay, even India, even Brazil and Mexico, supported by English, French, and German capital and knowledge, begin to start home industries on their respective soils. Finally, a terrible competitor to all European manufacturing countries has grown up of late in the United States. In proportion as technical education spreads more and more widely, manufactures grow in the States; and they do grow at such a speed--an American speed--that in a very few years the now neutral markets will be invaded by American goods.
The monopoly of the first comers on the industrial field has ceased to exist. And it will exist no more, whatever may be the spasmodic efforts made to return to a state of things already belonging to the domain of history. New ways, new issues must be looked for: the past has lived, and it will live no more.
Before going farther, let me illustrate the march of industries towards the east by a few figures. And, to begin with, let me take the example of Russia. Not because I know it better, but because Russia is one of the latest comers on the industrial field. Fifty years ago she was considered as the ideal of an agricultural nation, doomed by nature itself to supply other nations with food, and to draw her manufactured goods from the west. So it was, indeed--but it is so no more.
In 1861--the year of the emancipation of the serfs--Russia and Poland had only 14,060 manufactories, which produced every year the value of 296,000,000 rubles (about £36,000,000). Twenty years later the number of establishments rose to 35,160, and their yearly production became nearly four times the above, i.e., 1,305,000,000 rubles (about £131,000,000); and in 1894, although the census left the smaller manufactures and all the industries which pay excise duties (sugar, spirits, matches) out of account, the aggregate production in the Empire reached already 1,759,000,000 rubles, i.e., £180,000,000. The most noteworthy feature of this increase is, that while the number of workmen employed in the manufactures has not even doubled since 1861 (it attained 1,555,000 in 1894, and 1,902,750 in 1910), the production per workman has more than trebled in the leading industries. The average was less than £70 per annum in 1861; it reaches now £219. The increase of production is thus chiefly due to the improvement of machinery.3
If we take, however, separate branches, and especially the textile industries and the machinery works, the progress appears still more striking. Thus, if we consider the eighteen years which preceded 1879 (when the import duties were increased by nearly 30 per cent. and a protective policy was definitely adopted), we find that even without protective duties the bulk of production in cottons increased three times, while the number of workers employed in that industry rose by only 26 per cent. The yearly production of each worker had thus grown from £45 to £117. During the next nine years (1880-1889) the yearly returns were more than doubled, attaining the respectable figure of £49,000,000 in money and 3,200,000 cwts. in bulk. Since that time, from 1890 to 1900, it has doubled once more, the quantity of raw cotton worked in the Russian factories having increased from 255,000 to 520,700 cwts., and the number of spindles having grown from 3,457,000 to 6,646,000 in 1900, and to 8,306,000 in 1910. It must also be remarked that, with a population of 165,000,000 inhabitants, the home market for Russian cottons is almost unlimited; while some cottons are also exported to Persia and Central Asia.4
True, that the finest sorts of yarn, as well as sewing cotton, have still to be imported. But Lancashire manufacturers will soon see to that; they now plant their mills in Russia. Two large mills for spinning the finest sorts of cotton yarn were opened in Russia in 1897, with the aid of English capital and English engineers, and a factory for making thin wire for cotton-carding has lately been opened at Moscow by a well-known Manchester manufacturer. Several more have followed since. Capital is international and, protection or no protection, it crosses the frontiers.
The same is true of woolens. In this branch Russia was for a certain time relatively backward. However, wool-combing, spinning and weaving mills, provided with the best modern plant, were built every year in Russia and Poland by English, German and Belgian millowners; so that now four-fifths of the ordinary wool, and as much of the finer sorts obtainable in Russia, are combed and spun at home--one fifth part only of each being sent abroad. The times when Russia was known as an exporter of raw wool are thus irretrievably gone.5
In machinery works no comparison can even be made between nowadays and 1861, or even 1870. Thanks to English and French engineers to begin with, and afterwards to technical progress within the country itself, Russia needs no longer to import any part of her railway plant. And as to agricultural machinery, we know, from several British Consular reports, that Russian reapers and plows successfully compete with the same implements of both American and English make. During the years 1880 to 1890, this branch of manufactures has largely developed in the Southern Urals (as a village industry, brought into existence by the Krasnoufimsk Technical School of the local District Council, or zemstvo), and especially on the plains sloping towards the Sea of Azov. About this last region Vise-Consul Green reported, in 1894, as follows: "Besides some eight or ten factories of importance," he wrote, "the whole of the consular district is now studded with small engineering works, engaged chiefly in the manufacture of agricultural machines and implements, most of them having their own foundries.... The town of Berdyansk," he added, "can now boast of the largest reaper manufactory in Europe, capable of turning out three thousand machines annually."6
Let me add that the above-mentioned figures, including only those manufactures which show a yearly return of more than £200, do not include the immense variety of domestic trades which also have considerably grown of late, side by side with the manufactures. The domestic industries--so characteristic of Russia, and so necessary under her climate--occupy now more than 7,500,000 peasants, and their aggregate production was estimated a few years ago at more than the aggregate production of all the manufactures. It exceeded £180,000,000 per annum. I shall have an occasion to return later on to this subject, so that I shall be sober of figures, and merely say that even in the chief manufacturing provinces of Russia round about Moscow domestic weaving--for the trade-- shows a yearly return of £4,500,000; and that even in Northern Caucasia, where the petty trades are of a recent origin, there are, in the peasants' houses, 45,000 looms showing a yearly production of £200,000.
As to the mining industries, notwithstanding over-protection, and notwithstanding the competition of fuelwood and naphtha,7 the output of the coal mines of Russia has doubled during the years 1896-1904, and in Poland it has increased fourfold.8 Nearly all steel, three-quarters of the iron, and two-thirds of the pig-iron used in Russia are home produce, and the eight Russian works for the manufacture of steel rails are strong enough to throw on the market over 10,000,000 cwts. of rails every year (10,068,000 cwts. in 1910).9
It is no wonder, therefore, that the imports of manufactured goods into Russia are so insignificant, and that since 1870--that is, nine years before the general increase of duties--the proportion of manufactured goods to the aggregate imports has been on a steady decrease. Manufactured goods make now only one-fifth of the imports, and only occasionally rise to one-third, as was the case in 1910, year of maximal imports. Besides, while the imports of Britain into Russia were valued at £16,300,000 in 1872, they were only £6,884,500 to £11,320,000 in the years 1894 to 1909. Out of them, manufactured goods were valued at a little more than £2,000,000 --the remainder being either articles of food or raw and half-manufactured goods (metals, yarn, and so on). They reached £15,300,000 in 1910-- a year of maximum, and consisted chiefly of machinery and coal. In fact, the imports of British home produce have declined in the course of ten years from £8,800,000 to £5,000,000, so as to reduce in 1910 the value of British manufactured goods imported into Russia to the following trifling items: machinery, £1,320,000; cottons and cotton yarn, £360,000; woolens and woolen yarn, £480,000; chemical produce, £476,000; and so on. But the depreciation of British goods imported into Russia is still more striking. Thus, in 1876 Russia imported 8,000,000 cwts. of British metals, and they were paid £6,000,000; but in 1884, although the same quantity was imported, the amount paid was only £3,400,000.And the same depreciation is seen for all imported goods, although not always in the same proportion.
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 woolen 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 labor 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 resource and her laborious youth, which even now tries to combine workmanship with science, Russia would see her industrial powers increase tenfold. She fara da se 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 familiarized 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 equalized.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 woolen trade we see the same rapid increase, and in 1910 the value of the exports of woolen goods attained £13,152,500 (against £8,220,300 in1894), 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 realized 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 recognize 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 labor" 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 labor 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.
The chief reason for the successes of Germany in the industrial field is the same as it is for the United States. Both countries have only lately entered the industrial phase of their development, and they have entered it with all the energy of youth. Both countries enjoy a widely spread scientifically-technical--or, at least, concrete scientific--education. In both countries manufactories are built according to the newest and best models which have been worked out elsewhere; and both countries are in a period of awakening in all branches of activity-- literature and science, industry and commerce. They enter now on the same phase in which Great Britain was in the first half of the nineteenth century, when British workers took such a large part in the invention of the wonderful modern machinery.
We have simply before us a fact of the consecutive development of nations. And instead of decrying or opposing it, it would be much better to see whether the two pioneers of the great industry--Britain and France--cannot take a new initiative and do something new again; whether an issue for the creative genius of these two nations must not be sought for in a new direction--namely, the utilization of both the land and the industrial powers of man for securing well-being to the whole nation instead of to the few.
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