Deceleration of British Industry (1870-1914)

In the last twenty or thirty years a number of authors have focused on the period 1870-1914. Reliably several of the literature accessible seems to approve previous doubts, that even though the British economy had increased drastically in entire terms. The relative growth is higher compared to that of other nation economies. During this time, the Britain industrial and commercial performance left many yearning for more than it was delivering. The rate of Britain economic growth as witnessed through the growth of production, productivity and exports was slower during this time vis-à-vis that in the early Victorian years. Compared to that of other major economies such as United States and America, the Britain Economy showed significant decline. The period 1870-1914, can be considered to be the time the world was going through a transition as a result of the industrial revolution, however, it is the same period that the British industry decelerated. Therefore, this paper will evaluate whether indeed this was the time that Britain industry declined. The paper will also evaluate some the factors that might have contributed to the decline. Britain industrial decline or the poor performance of the economy can be attributed to a number of reasons with failing British Enterprise which failed to respond to the challenge of changed conditions in the economy (Nardo, 2009). 

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In spite of a sustained growth of production and wealth, the economy of the “the first nation to undergo industrial revolution” started to decelerate after 1870 in contrast to other nations considered close competitors. The so call “deceleration” was caused by several reasons, but majorly contributed by the entrepreneurs in the economy. In his article titled “The Entrepreneur and the British Economy, 1870-1914, Derek Aldcroft examines the role entrepreneurs in the Britain decline in the said time. In a nutshell Britain 1870-1914 decline was caused by;

  • Failure of entrepreneurs to adapt the best available technology or production techniques that ranged from ring-spinning and Automated weaving cotton machines to the mechanical cutters and electrification in the coal mines.
  • The entrepreneurs underestimated the increasing importance of science. They failed to invest in labs and empower personnel to conduct research. As a result, full exploitation of foreign research failed.
  • Over-investing in outdated staple export industries such as iron, and cotton; they failed to see the importance of investing in future industries such as electrical engineering, chemicals and automobiles-Britain competitors were doing undertaking such project.
  • Being poor or bad sales people especially in foreign markets
  • Failed to aggressively form strong cartels that would exploit profits from the world at large 

Britain also declined between 1870-1914 because of other factors such as ineffective education system, poor labor relations and the class system that was very rampant. All these factors contributed to the deceleration of Britain after the Victorian Economic climate that has shown huge potential (In Taylor, 1958). According to some experts, 1870-1914 was marked by a technological retardation in Britain especially in the cotton sector. According to these observers, this was highly contributed by increasing completion from America. The managers lacked good judgment in coming up with counter measures. The rate of uptake of the ring spindle in sinning cotton and the adoption of the automated loom seriously hampered industrialization in Britain leading to its decline. The ring spindle was a cheap processing method because it required unskilled female workers who were not expensive to hire. In the traditional mule spinning, men were required and this was costly. The major disadvantage of the ring was that it required more expensive cotton to make a fine product. Considering this, replacement of old technology should only be embark on if the entire cost of the new machinery or technology is not more than the viable cost of the old methods or techniques. In this case, taking into account the costs involved in replacing the mules with rings in the existing processing units, it appears that the decisions made by the British cotton managers were vindicated. Similarly, regarding the weaving industry, the invention of the automated loom helped in reducing labor costa, however installing the new invention was very expensive consequently raising the capital cost per unit of production (Wyatt, L. T. (2009).

In comparison, the saving in labor cost resulted in benefiting Britain competitors such as United States. The adoption of the new automated looms would have exacerbated the losses suffered by the declining British textile industry-again vindicating the British entrepreneur’s Judgment (The industrial revolution in Britain: 2 3, 1994). Britain’s pre-eminence in fabrication and utilization of steel and iron ended by the year 1880 after production was surpassed by USA and Germany. With regard to the decline of the Britain economy, the slow adaption of technical invention or innovation contributed to the economy’s deterioration. Gilchrist Thomas invented the process of getting or extracting phosphorous from pig iron. This ought to have been a new dawn for Britain because rich ores were abundant in the North-Eastern part of England. if the new invention by Thomas was utilized, this would have been a cheap source of iron ore foe steel production not only in Britain, but also in the rest of the world. Many of the steel makers in Europe embraced the new innovation in 1880s, but Britain was not quick in taking up invention. Instead Britain continued to use the traditional acid steel extraction method until the 1930s. In the new innovation, furnace operations improved the efficiency of pig iron production. As a result, Britain competitors in steel production modernized their blast furnaces while Britain continued with its acid steel making technology.

The table above illustrates that despite the fact that Britain was overtaken by her close competitors, she was increasing her steel production. However, as it can be seen from the table the demand for steel grew slowly than in Germany but an increase of approximately 3.4% (between 1890-1913) was a significant change that Britain should have identified and embark on huge investment. Britain main competitor-Germany was able to identify the emerging demand and came up with large scale plants to produce steel and iron. This was in spite of Germany importing its ore from Sweden. In addition to the new investment by German, it is noted that German employees or workers were by far more productive than Britain workers by 1914. As a result, Britain continued to rely on acid steel production which was very puzzling. Nevertheless, allowing for the new innovation by Gilchrist Thomas, countries like USA still had great potential to surpass Britain. However, Britain would have had a competitive edge in that it had established exports, modern facilities and huge sources of cheap ores.

With the above circumstances, it is very easy to blame the entrepreneurs and probably the government for decline in the rate of industrialization. At the same time, there is a massive loss of competitiveness of the Britain’s industry compared to her competitors. These competitors seem to be very different in approach and execution of various methods of production (Hudson, 1989). What made the British entrepreneurs and by extension the Britain’s society behave the way it did. And since globalization had begun in earnest and hence fostering the movement of factors of production say entrepreneurship, why aren’t there entrepreneurs from America, Germany and France moving to invest in Britain to invest in Britain which had a well laid out market infrastructure as well as cheaply available raw materials well within her boarders?

One analyst named Dintenfass has a new perspective all together. All the failures of the entrepreneurs of this generation are directly attributable to the British attitude of complacency experienced in this time. Most of them feel like they already have enough and the issue of competitiveness of this generation compared with other nations does not arise. Britain as a country had a wide range of comparative advantage over all its competitors but ignored it due to the complacency of the generation then leading to decline in the rate of industrialization.

A group of analysts also attribute the slow rate of development in industrialization to the area of specialization adopted by Britain. The US for instance focused in electro chemicals while Germany specialized in photochemical products, dyes and drugs. On the other hand, Britain is seen to take a rather conservative stance in its area of specialization. Explosives, paints, soaps and coal tar were not very attractive and futuristic options for investors. This made the would-be investors to lag behind which in turn reduced the internal competition. This lead to general laxity where no entrepreneur so any need to compete for survival. It is very important to note that industry such as explosive would not have any use except in times of war. This also made such investors to invest in the other countries that were seen as more futuristic which served to widen the gap, meanwhile Britain slowed down.

The general lack of competition seen above is the main reason why Britain does not adopt innovations. A good example is the continued use Le Blanc procedure in alkali production at the expense of much simpler and cheaper Solvay method. Another example is the use of Lead Chambers at the expense of cheap and convenient contact method in the production of sulphuric acid. At the same time, Germany for instance adopted the latest technology in production of drugs, dyes and other products.

One of the greatest charges leveled against Britain’s entrepreneurs, Business leaders as well as the entire British generation is their education system which is seen to have been overtaken by events. The system is seen to have been outdated or irresponsive to the needs of the population and especially for that time. The education system in Britain was very disorganized and inadequate for the population (Corrick,1998). Germany state had invested in free and compulsory primary education for the population.

Additionally, the state had ensured there were high articulation levels for this education. This means that the education system had been designed and implemented for the Germany’s present and future times. The German government went ahead to work on high transitional level between the primary secondary and tertiary levels of education. This was coupled with specialized and high quality research to cater for the needs of the states.

At the same time, the British government is not seen to be serious in education and contributed sparingly in education. The British education system was very formal and restrictive in addition to being poorly funded. On the other hand, the German education system was highly funded and designed to be formal and inclusive which boosted its malleability and aptitude for expansion. At the same time, British students ignored professional training and most went for academic pursuits. This brought a generation that had very few science and technology students. Additionally, business and economic students were also very few which contributed greatly to the declining entrepreneurial culture.

This worrying trend was never responded to until in the twentieth century. In the year 1902, the British government saw a need to overhaul the educational system in order to serve the needs of the population. The reason for this overhaul was that there had been a persistent failure of the British educational system to provide adequately trained people and in the right numbers at each level. This lead to a ferocious cycle of low quality products that were not competitive. The prices of these products were also not competitive and therefore would not have been bought preferentially further slowing down Britain’s rate of industrialization.

To make the matters worse, this group of people would neither generate nor adopt better means of production which made the chances of the situation improving to be even more farfetched. The skills transfer was mainly through apprenticeship while the management felt content with the internal method of generating new personnel. The management, the product as well as production lines had been inherited and the whole system was particularly tedious to change (Hoppit et al, 1994).

Another analyst called Eric Hobsbawm also faulted the education system used in Britain over this time. In his view, this system was grossly inadequate and could not compete in any way with the system used in Germany. He adds that this system had been inadequate since 1869. This was the year in which the system had been liberalized to integrate peasant. People were seen to get back at the middle class and as a result, the number of the middle class learners in the schools reduces while the society adopted anti-intellectual and anti-scientific lifestyle. The schools also followed this trend from the society and anti-intellectualism was the more acceptable trend. Even after the review of the year 1902, the aim of the reviewers was seen to have been to exclude the children and the ideologies on the working class.

In other words, a period between 1869 and 1914 in Britain was characterized by an education system that was not responsive to the country’s needs. This system was underfunded and did not seem to have focus in training the labor force. Additionally, the peasants were more focused in trivializing all the ways and skills of working class in the society. This is described to have been the major reason for decline in the industrial spirit. Entrepreneurial spirit also declined when the skill sets that became popular at this time were military and government workers

Another analyst names Lundgreen states that the industrial dominance of Germany cannot be directly attributed to Germany’s investment in research, science and technology. However, he admits that this was an important contributing factor.

Entrepreneurship spirit is the one that he notes that was crucial to Germany’s dominance. He admits that this spirit and skill works well when it is supported with adequate scientific and technological skills. It is noted that during this period in Britain, more youths in the university and public schools trained to become military officers and civil servants, skills that could not fuel entrepreneurship and industrialization. These skills replaced the previous industrialists’ views and endeavors and this is one of the reasons why Britain’s rate of industrialization declined at a time when it should have been increasing.

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