Monday, 4 August 2014

Seems everyone is going over the top about WW1.
Naval review Spithead 1911.

The media seem to have been going over the top about WW1 today.
Except where I have been in Italy where there seemed to be no real celebrations planned.
Probably because World War One doesn't start for another year for the Italians.

 Awoke this morning back in the UK to hear on the radio that "England is now at war with Germany".
I thought "What? Again?" 

Anyway if everyone else is at it ..C@W should chip in some economics. Media today correctly saying that WW1 marks the beginning of the modern age. WW1 transformed Europe. Ended imperial monarchies and ushered in the beginnings of modern democracy. As well as fascism and communism of course. Every aspect of society was affected. So lots of discussion about this today.

Less seems to be being heard about the British Empire's already declining status. No one would really know this yet. British Empire was still number one in the Great powers Top trumps. 
Except it wasn't.

In 1890 Britain was the number one producer of steel in the world. Germany's steel production was half that of Britain. By 1913 it was double. And Germany wasn't even first. The USA was producing double Germany. Fueled by railroad expansion. city construction. Skyscrapers. Shipbuilding and urban transport. US Steel had 65% of the world steel market by 1918. British steel was inferior too. The armoured belt steel for the Jutland battleships was coming from abroad.

And in other areas Great Britain's pre-WW1 decade of economic performance, at the height of empire, looks poor. Especially compared to the growth achieved by the 'New powers' of America and Germany.

Britain was never going to be able to remain the coal capital of the world as a small island when up against the USA's continent wide resources. The 1914 figure of 292 million tons mined in the UK compared favourably with Imperial Germany's 277 million. except in the previous 10 years Germany had increased annual coal production by 156 million tons to the UK's 40 million. {USA was mining some 500 million tons a year. Tsarist Russia around 36 million.}

In the first decade of the twentieth century Great Britain lost it's number one spot in modern industry. 
Chemicals became the industry of the Germans. Electricity too. German electrical industry was twice the size of Britain's in 1914. When the UK wanted to build a public power station in 1881 it asked Siemens.  Railroads had already been lost to the USA.

France was the largest vehicle exporter in the world until 1904 when the USA got going. The French Citroen and Renault cars were still the most produced vehicles in Europe until the 1920s.
German's made about three times the number of phone calls as Britons, suggesting a larger telecoms industry. Sweden was top for Europe.

But overall the UK still had the largest GDP in Europe. Though increasingly this was away from manufacturing and into the service sector. Britain was still top but the gap had narrowed very rapidly and very significantly. Even in Britain's stronghold of textiles, Britain was finding itself exclude from markets as its cost price was too high.

What occurred was the London Stock exchange and London banking was funding entrepreneurs to set up abroad. Capital and Labour were moving overseas to the colonies of the empire or the USA where, as in textiles for instance,  

 As U.C. David economist Gregory Clark puts it, 
by 1910 you could combine British labor and British capital in the textile city of Fall River,
Massachusetts, and obtain 50 percent more output per worker hour and 20
percent more output per machine hour than back in the textile city of
Manchester, in England.
British investors had a strong dislike of domestic investment and preferred the riskier, but higher yielding colonial  infrastructure opportunities. ironically many of these failed and investors would seem to have done much better if they had bought shares in domestic, especially the new modern, industries.
The modern world needed engineers and technicians and scientists. In 1914, whilst Germany was collecting a third of all the ever awarded Nobel prizes for physics and chemistry, most children in the UK left school at fourteen and those elite that stayed on were taught classics, law or philosophy. The early industrial revolution used unskilled labour from the countryside and rural Ireland on simple machines designed by nontechnical men.

The second industrial revolution was a high tech, high skilled, research and design led revolution. Britain's neglect of education had left the nation poorly placed to ride it. Technical training was the job of private firms. Private firms were reluctant to do so as they feared their workers leaving to work for a rival firm, or trade's union's demanding extra pay for a higher skilled worker.

WW1 cost the British Empire its financial as well as its human resources. 

By 1916, Britain was funding most of the Empire's war expenditures, all of Italy's and two thirds of the war costs of France and Russia, plus smaller nations as well. The gold reserves, overseas investments and private credit then ran out forcing Britain to borrow $4 billion from the U.S. Treasury in 1917–18

In 1932 a Britain, in the grip of a world wide recession, defaulted on those loans to America. They were never repaid. This caused the Johnson Act of 1934 which forbade American citizens to lend money to foreign countries that had not paid their past war debts, and caused the UK all sorts of problems when WW1 kicked off again in 1939.

However, on the bright side, between 1914 and 1919 the UK economy (in terms of GDP) grew about 14%; by contrast the German economy shrank 27%... and then collapsed completely with the hyperinflation.

So, WW1, despite the enormous cost, may in  fact have prolonged the place of the British Empire as the number {2} power in the world.


Nick Drew said...

and - we still had the Empire

recall that even in WW2, the usual (if fallacious) metric in these matters was numbers

(how many divisions has the Pope etc)

there is a famous cartoon that I can't find on google just now, after France had just surrendered, showing two Tommies at ease with their rifles atop a cliff overlooking the Channel: one says to the other (sucking a straw)

so, looks like it's just us now?

the other replies: yes, just the 600 million of us

Umbongo said...

You really ought to read - or perhaps you already have - Corelli Barnett's "Pride & Fall" series, which detail the history of the UK's economic decline through the 20th century.
For once Wikipedia provides a fairly reliable outline of this great historian's career.

hovis said...

WW1 also marks the end of a globalised system of trade networks shashed buy the war.

The empire reached its territorial peak post WW1 with the League of nations Mandaes but was effectively a busted flush. you could argue that it peaked in power around the 1870's - 1880's. This was incedentally the time that concerens were raised with the growing threat from the now unified Germany.

hovis said...

Shashed? I mean shattered

MyMeh!Name said...

Not sure what point the article is making but there is that maddening hoorahh! near the end that 'At least GDP was up'.

Not to put too fine a point on it but GDP is the greatest load of intellectual bollox ever foisted on a government or populace.
It is little more than a hangover from of the fuckwittery perpetuated by the Fabian society/eugenicists/hermetic golden dawn.
Its a 19th century construct from when trying to rationalise everything from goblins to human behaviour was in vogue.
That it still survives today is a searing indictment of the intellectual capacity of the ruling classes.
But, again, it was these type of middle-class, london-centric assholes who dreamt it all up in the first place.

We need scientists and engineers running the country - like Germany - not security men and effette PPE grads.

The unquestioning credulity toward this pseudo-science has allowed fart-addled notions like GDP to calcify into pillars of policy and direct a country down the wrong path for almost a century. The evidence is there for all to see. It is dogmatic and judgemental
People, the fabric of - indeed the reason for the state - are reduced to economic units whos lives are of no value beyond their capacity to earn and spend.

It is another sign of what Will Self called 'our deep, deep spiritual decline'.

Nick Drew said...

BTW there is an interesting obit here of Hans-Ulrich Wehler, "the most influential German historian of the post-second-world-war era"

"he argued forcefully that Germany's path to modernity deviated from the western norm with the failure of the 1848 revolutions, allowing the continued domination of an anti-democratic, anti-modern aristocratic elite while elsewhere the bourgeoisie seized control of events and drove on the modernisation of the rest of western Europe to its full conclusion.

The result in Germany was a modern industrial economy that failed to bring with it the normal accompaniments of social mobility and political democratisation

Bill Quango MP said...

ND: Had the empire. Quite so. And after 1918 it was only getting bigger. But we hadn't really been able to police the empire properly since 1901. Hence the alliances that dragged us into the Great War.

Umbongo. Haven't read that one. Have read a lot of Barnett though. And he was being quoted a lot in the books of my holiday reading. Particularly on German/ Austro-Hungarian industrial expansion. Austro-hungry was doing well on agriculture. New methods and such.
Russia was a basket case. The Africa of Europe.

ho is. What I found interesting, and had not really grasped before, was that the UK was already doing a modern day globalisation as long ago as 1900.

Not just using the colonies as a source of captive markets but actually outsourcing our skills and cash to the colonies to export back to us at a cheaper price. Inflated wages had already set in. Not because a textile worker in Manchester was well paid, but because a coolie in Hong Kong was paid worse.
I don't think it was because the UK was expensive to produce things, as such, but that mostly everywhere else was cheaper, making us expensive ( if that makes sense?)

MMN : the only point is do far the "war" talk has centred on who was aligned with whom and how war occurred. Balkans, franz Ferdinand, Russia etc.

The strengths of the great powers is important. Even a declining British empire could fund its war, that of its colonies and dominions and of its allies. The central powers had no chance. The strength of empire and he power of the pound sterling kept inflation at bay, whilst imperial Germany's rose.

It's just a comment.

What you may have missed as it is the flip side to the piece is that although manufacturing, engineering etc was declining, the service industry, that is our modern foundation, was blooming.

And for this to occur during our empires strength was a good time for transition. If we had not tried to recapture our industrialised past in the 1950s-1970s we might well have done a lot better with what was making us wealthy.

The talk of following Germany seems hollow. By the 1940s Germany was way ahead.

The spitfire, symbol of British pride, was made with ( a chronic shortage) American manufactured machine tools. Using American guns and American ammunition, and American and Swedish instruments, and so on.

It took longer to make, cost twice as much, and was harder to maintain than its German equivalent. Only doubling our capacity allowed the numbers to be built. And could only double capacity because even a weak 1940s empire had the financial muscle to do so.

Anyway! GDP was up in 1918. Though to purpose, you are quite correct. what were we were going to do with 18,000 fighter planes in 1919 ?

Burn them mostly

Steven_L said...

British investors had a strong dislike of domestic investment and preferred the riskier, but higher yielding colonial infrastructure opportunities

Swap 'infrstructure' for 'natural resource' and that pretty much sums up CU's approach to the stock market!

Bill Quango MP said...

S_L : with similar disappointing returns ?

CityUnslicker said...

spot on SL and BQ, sadly!

Timbo614 said...

If I understand the middle 1800s correctly then the manufacturers the "bourgeoisie" were to blame for the lack of education. It was difficult, to say the least, for men, women and children to work 10,12,14 hours a day and get educated even if suitable education had been provided by the state.

They were downtrodden, half starved and exploited and the great British(English) industrial revolution was built on their and the imported Irish backs. Altho' improved by the 1900s (I think) I would not be surprised if they thought that the army life, trenches mud etc was not so bad, at least they did get paid. Of course it had its big downside.

Timbo614 said...

Having re-read that..

"They" of course in para 2 are the working class, the "Tommies".

Bill Quango MP said...

Hard to judge Timbo. Church was as much to blame for poor education as anyone else. Most people were taught by their parents. How to read or write. And a trade. Then there were apprenticeships from a young age.

Not sure if anyone was deliberately keeping the masses down. Its just that education wasn't very important. or very necessary except for those in skilled trades.
Which is much as now.

I think our Uk modern education stems from only around the 1870s.

Many historians argue UK made a mistake in not copying the German education system. And say its held us back ever since.

What is clear is that in both WW1 and WW2 the fitness, intelligence, education and leadership and training of the average stormtrooper was well in advance of the average Tommy.
Especially WW1.

*When the Germans occupied the Channel Islands in 1940 the islanders almost unanimously agreed that infantry battalion chosen to occupy them were a special handpicked propaganda unit. Men individually selected for their height, fitness, language skills, politeness and drill.

In fact the soldiers were from a run of the mill infantry division and just happened to be the nearest unit available.

hovis said...

Timbo - a little O/T your comments about the industrial revolution are true. I would also mention that in the quasi agricultural economy of the turn of the C19th there was little regard for those working. Personally I find the road the 1832 reform act both intersting and instructive politcally and economically - Radicalism, Corn Laws, Cobbett, Captain Swing riots, Peterloo Massacre etc show the contempt peple were held in by TPTB. Many may have been 'illiterate' but to suggest that people were stupid is not borne by the facts. Btw the Luddites were actually correct, to suggest they were is simply post fact revisionism.

BQ: State education started with Board Schools under Gladstone if I remember rightly.

Ok I shall get my coat ...

Electro-Kevin said...

Excellent post and comments.

Thank you all very much.

Anonymous said...

The Luddites were not correct, for God's sake. Utter tripe.

There are plenty of anecdotes about puny German soldiers for that matter. It would certainly be a mistake to think that the vast majority of German men who grew up in the 20s and 30s were blond supermen.

hovis said...

Anon: You have fallen into the post hoc revisionist trap or is that tripe? :-)

The Luddites feared that mechanisation would reduce their earning power and social status. It did both.

If you are arguing in the long run we are all better off, then you have simply bought unthinkingly into a modern narrative which misses the point. In the long run conditions improved, but for them in their lifetimes it did not.

Anonymous said...

Your argument is specious inasmuch as it relies on a narrow definition of "right". The statement "the Luddites were right about the effect mechanisation would have on their own prospects" is not the same as "we should have listened to the Luddites and given them their head".

The Luddites were not "right" to engage in machine-breaking because (had they succeeded) the overall damage to everyone else would have been significant. Utilitarian, sure, and I'm not at all denying sympathy for them.

This is not to mention the fact that a non-mechanised world is counter-factual - we can't know whether economic stagnation would have set in, itself dampening demand and worsening conditions.

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