A Manufacturing War Between the UK and Germany in the 19th Century Set the Stage For Today’s Trade Crisis

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Today, the word “globalism” is on everyone’s’ mind. Some fear a world increasingly dependent on foreign trade. Others worry about domestic industries dying due to over-seas competition. Many are anxious about what a changing economy will mean for their material prospects. Do we allow free trade to flourish despite possible negative consequences for some of our industries at home in the hopes that other domestic business will change and grow as the world becomes more interdependent?

Do we tax imports in order to make our own goods and services more competitive? Or perhaps should we retreat, at least a little bit from global trade in order to reverse the trend of interdependence and globalism?

These questions and concerns seem so modern; so current. And indeed they are. However, they are not as modern as they seem. For centuries, politicians, economists and everyday citizens have been asking the same basic questions. Even more importantly, they have been coming up with many of the same solutions, often with disastrous results.

German became known for their engineering and technological breakthroughs as is exemplified by creation of the first automobile. Benz Patent Motor Car – The first automobile (1885–1886). daimler.com

One such misadventure took place in Great Britain, home of the industrial revolution and birthplace of the modern economic world. In the 19th Century, the British were known for their quality manufactured goods. In fact, as far back as the late 1700’s Great Britain was known as the “workshop of the world”. Revolutions in transportation, plentiful human labor, easy access to key raw materials, rapid advancements in technology and engineering combined with a sympathetic government made a perfect recipe for the creation of the first modern economy.

Finished goods from Britain were the best in the world, known for their quality and value. Everything from large items like railroad parts and locomotives to a multitude of smaller items like furniture, mirrors, silverware and linen were sold throughout the world. Even trivial items such as belt buckles, buttons and little ribbons flooded domestic and international markets. This dominance lasted decade after decade. The British were so used to their business superiority that many began to panic when a new competitor began to challenge the dominance of the British economic colossus. What was the name of this culprit? Germany.

Germans were experiencing massive changes as well. For most of history, a unified German state like the one that we know today did not exist. Instead, a series of smaller, regional states collectively made up a German cultural and language area in the middle of Europe. These smaller German countries were usually unable to threaten lager countries like Great Britain or France due to high taxation and general lack of coordination between states.

All this changed radically in 1871. That year, a powerful politician by the name of Otto Von Bismarck succeeded in a final push to unify Germany, creating a massive and powerful new state right in the center of Europe. It was not long before a greater Germany began to flex its business muscle.

Steel manufacturing was just one area in which Germans excelled by the late 19th Century. Essen Krupp Bessemer , circa 1880. University of Oregon

In the beginning, even before German unification, many of their items were either of poor quality or directly copied by secretly replicating successful British business practices. German industrial spies were cunning and ruthless.  Famous businessmen such as steel magnate Alfred Krupp, entered Britain under a false name and immediately began taking notes.  He used flattery and behaved as nicely and kindly as possible, winning the trust of his British hosts who happily and proudly showed this kind German man all of their successes.

Krupp himself wrote: “the proprietor was flattered that two such smart friends should deign to visit his works.” Germans like Krupp came back from their “study tours” flush stolen information, eager to start competing with their foreign rivals.

The British soon saw German goods flooding markets all around the world, including their own. Many of these items were not just cheaply made, but were mislabeled as well. Some German factories were creating products falsely labeled as made in Great Britain. When it was discovered that Germans were marking scissors, knives and other cutlery as “Sheffield Made”, British businessmen were outraged. Dining ware made in Sheffield was the pride of British manufacturing. A movement began to punish Germans for their shameful theft of industrial ideas and iconic brands.

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