THE GROWTH OF GERMAN TRADE

Dominion, Volume 8, Issue 2420, 27 March 1915, Page 19

THE GROWTH OF GERMAN TRADE

SCIENCE; AIDS INDUSTRY

INCREASED EFFICIENCY BETTER THAN TARIFF WALLS

ONE VIEW OF THE TRADE CAMPAIGN 1

. "To those who are convinced that British prosperity cad: only bo 'made truly and permanently secure by' shoring it . at' ' the ' foundations with brains, -science,*. ; and' education of tho ' best possible quality, .fiscal measures, and protective'and'regulative laws of any kind, whatever their. merits may rank always among~the things which may,- if; necessary, be added to individual and. national efficiency,' yet, which can never'take its place."—With these .words;Mr..?"\Villiam 'Harbutt Dawson concludes, an- informative article which appeared recently' in the ''Fortnightly lioview."' Mr. Dawson has inivdo a close study, of German industrial questions, and what' he says is so well worth bearing in mind at the present moment that we reprint the ar- • tide in • full , Several years ago I found myself in the inner sanctum of one of tho six 'best-known 1 industrial' leaders of Gerr many—nine out of ten Germans would place him Bearer to the top of the list than the bottom —one of the' Kaiser's own men, a genius for organisation, and the head of undertakings, all created by himself, employing before the war - broke out, a' personnel of some 70,C00 all told. He had just finished'an'indictment, for my special benefit,_ of. British industrial enterprise, an indictment very sweeping, very vigorous,, and - for me very depressing to hear, for he had recently returned from on© of his periodical visits to our'industrial centres and he had not been impressed by what "he. had seen. Then he added, in that spirit of assurance and of finality which the masterful German industrialist knows so well how to assume, and which in truth he does his best to. live lip. to: "The fact is that England's days as an industrial country are over. Your, industry will pass more and more into th<» hands of the younger'nations, and you . will become simply a trading country." It is not necessary to reproduce the argument, which was by no means onesided, to which these confident assumptions—more "mistaken calculations,", shall we call them? —but it ended with certain important reservations .'on my interlocutor's part which allowed me .to go my way. comforted, if not quite sat- . isfied. '

. If I recall this incident it is not for . tho purpose of discussing the quite unarguable question whether this country has ever been disposed to cede to Germany the industrial primacy which she has for a long time coveted, but rather of pointing out that the words quoted are indicative of a belief genuinely hold, and hence are in a-way symptomatic of a spirit and an attitude which it would bo unwise; to rate too. lightly. i3Iu.HL and arrogant though, this 1 summary judgment upon ( British enterprise may sound, it undoubtedly' expresses tho thoughts, aims, and hopes which fill the' mirids of German industrialists generally. While, therefore, ' we may smile at the confidence of our rivals, we shall not do wisely to ignore it. For just, as ■•surely_ as the Kaiser believes, or used to believe, that "the trident belongs to his hands," so surely are the German industrial pioneers, of whom the Kaiser

is chief, convinced; that the industrial supremacy of the world ;is destined sooner or later to pass into their keeping..

For years we have been more or less alive to the importance of the issue thus raised—an issue in which not only our national wealth but our labour market, the. future of. our population, and our entire -world position are all involved— and with- increasing vigour we have ■been redeeming the lost time, making surer the ground held,'slowly but surely pushing back our rival's attacks, and entrenching'ourselves«iii new positions. Now, in a.most unexpected way, the chance, of a Century has come to us,-for whatever the political repttfts of the war may be the economic results for ourselves may prove immensely advantageous. For the country which has so, long been menacing our industry and commerce has suddenly become, a country with which for the time being we may not trade, even if 'we would; its industries'are paralysed;, its argosies have been swept from the sieas-; • and most of the markets in which its greatest conquests have beeil achieved., are open to ns as never before.. To improve the opportunities thus offered iB the great task and duty of the hour, and upon the vigour, intelligence, and. foresight shown by our ■ manufacturers and traders at this time of supreme test will the future course of our economic development and prosperity for generations depend. ' - After the War. • But it must not be forgotten that the problem is not merely how to capture positions now either undefended or held by a feeble and weakening hand. For more important is the question how these positions may be retained in future and present successes be turned to permanent advantage. v Hence it is of the utmost moment that the measures adopted shall be such as will stand the' shock of 'a return attack, which will sooner or later be made with redoubled energy. .'

. It is true that when Germany again enters the field of competition against us she will not begin where she left off, but far behind, with much leeway to make,, up ■ and with obstacles and prejudices of a well nigh insuperable kind to contend against. For that reason, 1 however, she will endeavour to bring into full play all the faculties and resources which have stood her in stich good stead in the past. The way of tho transgressor is hard, and it will probably be a long time before old sores and animosities will be so far healed in this-countiy or the other parts of the Empire that trading with Germany will again become popular. It must not be forgotten; however, that a normal Germany is - a large buyer as well as a large; seller, and that when a country is_ accepted in one capacity it cannot'bd rejected in the other. It is evident, therefore, that the only calculations upon whicli a campaign against German trade can be organised with any hope of abiding success must take account of the conditions which will confront us when tlie war is over and the national activities

now direoted towards purposes of destruction are again concentrated upon peaceful pursuits. And chiefly it- is essential to remember that Germany's rivalry, boti in our ou'n and in foreign markets, has been tho rivalry of a highly educated nation which had systematically trained itself for the task in hand. Germany's past success will' not be understood, and the lesson of that success will not be learned, if wo refuse to grasp the fact that its people have brought to industrial and trading pursuits just the sa.me habits of method, thoroughness, concentration, and seriousness which mark them in other departments of life. Probably the German is 011 the whole less practical and less bold in enterprise than the Englishman, but if he lacks in initiative he excels in diligence and application. Often he is twitted with an excessive love .of system. But excess or deficiency of system must be tried by results, nid the Gorman's fondness for system has certainly produced results in .'various directions which other nations have found inconvenient. His critical spirit encourages this predilection for methodical plans of action. For the German takes little for granted; he has no blind .faith in the experience and methods of others; he will not embark upon a project until he is* sure what lie wants, and has satisfied himself as to the best means of attaining his end; but once clear as to his goal, lie makes for it, and as a rule he gets there.. Very much of- the success' which he has attained in industry is directly; attributable to the fact that excellent systems of primary and secondary education are . supplemented by provision for technical instruction' and special scientific study and research. The German chemical industry, perhaps more than any other, owes _ its importance to scien'ce and scientific methods. It is estimated that in the chemical manufactories of Germany there is on an aver.age one university trained chemist to every forty workpeople—a ratio of science to labour probably equalled-in no other country in the world, A recent German writer. on this industry boasts that "empiricism has absolutely disappeared from present-day methods of production. We see at the head of our works men who would be an ornament to any chair, of chemistry, surrounded by their staffs of. thoroughlytrained chemists. The larger manufactories have well-equipped and often model laboratories for scientific research which it is a- pleasure to work in. Nowhere is the alliance between science and technics so intimate as in Germany, and no one doubts that the pre-eminence of the German chemical industry is due to this fact."- • How Science Ends. The truth is that while in this country . science is still barely tolerated, in Germany it is valued and respected as the -natural ally of industry.. Science — in other words, the' sum of knowledge and, observation co-ordinated and systematised —is to the alert German the dynamo from which issues "the energy which has enabled him to conquer matter, build' up and sustain great industrial enterprises, invade tlie markets of the world, and assert for himself, with an almost dramatic rapidity, an honourable and a leading place 'in the arena of international trade rivalry. In the application of • science to. industry there is' never cessation or slackening. When at the centenary celebration of ;the Berlin University in November, 1910, the Eniperor advocated the establishment of the school of research, half a million pounds were placed at his disposal for the purpose, before the meeting dispersed. Under this scheme a research institute for chemistry,' physical chemistry, and electrochemistry has already, been established, and other institutes are to be estab J lished in different, parts of the country. One of these will be in the centre of tho Rhenish-Westplialian col-1

liery industry, .and it will be devoted exclusively to .research in connection v/ith coal and its derivatives.

"There will be opened,up to tile institute," so rurfs an official communique, "a sphere of work which not only claims a' high scientific interest, but which will prove of conspicuous, importance for •the districts named and their industries, and in particular for the colliery and smolting industries, and the undertakings allied thereto. From research of the ltiiiif epoch-making results can bo expected only after systematic work carried 011 for some years, and this can bo done only in.a purely scientific institute equipped with all tlie aids of modern technology. An institution of this kind can alone apply itself with any prospect' of success to problems the solution of which would add greatly to the resources of civilisation." Perhaps the most significant part of the official statement is tho intimation that "the. deep interest of industrialists in tho project referred to may be concluded from the fact that a number of the larger works in the col--I'ery,. smelting, and allied industries of Rhineland and Westphalia have guaranteed yearly contributions which will' coyer the cost of carrying on the institute for many years tot come. These works will co-operate in the management of the institute." It may be tj 1 ' l Mul'lieim-on-the-Uri lv^er ° the' institute will be established,- will provide the necessary building's free of cost. '

Protection may have don© its part in assisting some industries in certain s ! R Ses of their development, but many or the leaders of tho industries whose products are best known in foreign markets . would readily endorse the words spoken in July, 1912, by the J. rtissian Minister of _ Commerce at the end of a journey of inspection through industrial Rhineland:— "In the course of my visits to German industrial towns I have ascertained tho wishes of many industrialists, ami m the mam they relate to fiscal matters ; , almost without exception the desire is that the import duties on competitive articles may be kept as high as possible, and the foreign duties on our homo exports , as low as possible I am convinced that if a' Minister of another country which competes with Germany were to visit our industrial districts the same wish would be ex- - pressed, though in the reverse sense, i do not deny the great' influence of protective duties for the .progress and the advancement. of industrial enterprise, but it is my expedience that the efficiency of the men at' the head and capacity to take advantage of the latest scientific and technical discoveries help industry forward, and assure its existence, more than anything else." Open-Handed Spending. . •The Chancellor of the Exchequer has said that finance is destined to play a transcendentally 'important part m tho present war, and in the same way finance will need to be recognised as an indispensable auxiliary in the present raid upon the enemy's trade, though finance alone can no more win commercial campaigns than it can win military. Just.as our Government are spending money on a scale rever known before on the energetic prosecution of the war, so British manufacturing enterprise, if it is to m'ake the headway everyone wishes to see and to reap the rewards which are possible, will have to face an era of free and open-handed spending, Who can doubt that lack of boldness and unwise frugality, combined _ with, though sometimes oaused by, unjustifiable over-capitalisation, are responsible for much of the antiquated plant which to-day handicaps many of our industries ? The tender and pathetic attachment of the old-fashioned manufacturer to his equally old-fashioned machinery must give place to a policy of relentless scrapping if the conditions of; rivalry are to be equalised and the mar-'

Icets won now are to bo retained in . later 'years. The. German's respect for progressive methods is shown in his care to obtain the benefit of all helpful technical improvements. All the resources of invention and capital are Being employed by the powerful companies and combinations which so largely control tlie coal, iron, and steel trades in bringing 1 their . plants into the most perfect •'condition, with a view to producing both-well and , cheaply There aro colleries in Westphalia where steam is a banished force, or at least is :io longer used for any motive purpose whatever; cages, pumps, ventilating shafts, compressors, haulage are all done by electric power, ana even the engines which work the dynamos are fed 1 by coke furnace gas. Uwing to the use of rapid working machine borers, a shaft is now sunk in months where years were necessary under the old methods. Tho coal is also Hewn and got into the trollies by machinery driven. by -electricity. Except w the United States, the waste gases from,the blast-furnaces are nowhere used so systematically as in West- ■ „ ! a ' " le more progressive iron works of Upper Silesia, where as a consequence there has for years been a saving of ss. on every ton of pig-iron pioduced. The Rheinhauser works of li-rupp us e neither coal nor coke: all the driving and heating is done by the utilisation of waste gases. Labour-saving machinery and appliances arel the rule in every industry to winch they are applicable, aad there .are well-known machine works so completely equipped with these devices that 1 tney seem to go almost automatically. as in the large industries, so in the , smaller. In the building trade mechan--1 •{, j ( v v , l ® es ' la ve taken the place of 1 hand labour to an extent which a few years ago would have seemed inconceivable. On large buildings the hodman ii&s given place to the endless chain, which delivers materials wherever •t? needed; scaffolding is run up with hoists and levers, without use of rope, and both plastering and painting are done by ingenious machines., Elec--1 trio power is iised for every practical purpose, and in hundreds of towns and .villages small'industries which were in 1 the past carried on by hand have been saved by the timely'introduction of the electric motor. A German Labour newspaper, with no predilection for capitalists, large or small, wrote quite recently: "In the wood and iron and most other industries there is scarcely a workshop, however small, where an electrical motor is not in regular work." Always New-Methods. incident of my own experience may help to enforco this point. Not long ago the head of one of the foremost and most "up-to-date engineering :works in Germany showed me round his factory, equipped with the most modern plant that money could buy or inquiry all over the world discover, and as _ we were returning to his office he pointed to a large unopened box in the factory yard. "You see that?" he said. "There is a clever piece of . machinery there. It came from tlie States a few ,'weks ago." j ''And why is it not opened?" I asked. "Oh," he replied, "it is out of date. It was_ good when I bought it, but now there is something better." As we parted he remarked that he Svas always glad to show visitors round if tliey were interested in his special work. .' "But do you not fear the spy?" I asked. "Oh, no," he answered with a laugh, "for my works are never the same;• I have always'new things coiring in." : For the benefit of „those concerned, let me .also recall a judgment passed on the Cleveland iron industry by the German industrial magnate already mentioned. "I have just motored round , that district," he said, "and let me tell you that if Cleveland represents

England as a whole you will bo beaten off the ground unless you modornise your plant and methods. 111 any case, you will have many a hard knock 011 the knuckles before you learn better." Something lias been done to improve matters since then but a capable authority assured me recently that on tho whole the words quoted still only too aptly apply. There are in most industries in this country works second to none in the world in efficiency, and theso will bo able at all times to take occasion by tho hand and make the best of their opportunities. The present time, however, offers to tlio most backward the chance of their lives, and it will be their own fault if they refuse to turn it to good -use. It is noteworthy tliat in their efforts to save labour and economise in production German employers have never had to encounter systematic 'opposuum on the part of tlie workers, as has so often been the case in-this country. The German workman'is too intelligent to wish to turn back the clock, and his ability to take a long view of , questions of industrial economics has facilitated the introduction of maay modern inir provements of the utmost value. Is it too much to hope that our working classes will cultivate a similar view, and will, even at some sacrifice of preconceived theories, second the efforts of industry to "make good" at a conjuncture so unforeseen and so opportune? Capital and labour may never succecd in understanding each other completely, yet at 6uch a time of reconstruction and of new departures there should be compromise on both sides! In view of its powerful organisation, labour would lose iittle in the present and 'would gain enormously in the .future. Legions of Travellers. Nor is the German less methodical and enterprising in the devices to which he resorts for distributing his goods. Instead of waiting for orders' to turn up, he literally sends his travellers out into all the earth to seek them. Here is a significant fact. Foreign commercial travellers' visiting Switzerland on business need to take out licenses, and the Swiss Government issued such licenses to eighty Germans where ,it Issues one to ail Englishman. Such'alert-ness-must> and does tell. Switzerland buys six times more goods from Germany than from the United Kingdom. Not only do. German commercial travellers flood the Continent of Europe, 'however, the scour tho awakoniug States of South America, and even in the British colonies they far outnumber the agents sent out from the Homo country. Together with a speaking acquaintance with the languages of' intercourse, the German commercial traveller takes with him a bulky sample bag, and he seldom makes_ difficulties about credit. As to conditions of payment, .indeed, his employer is often accommodating to a degree which might seem to spell ruin if there were not a well-thouglit-out system behind it; but even a German manufacturer cannot live, by giv-. iiig unlimited credit, and his success proves that all works well in the end.

Moreover, tjie German never, forgetsi .that lie exists for his customers, and ' that it is his'duty and interest to con-, sider their wishes in all points. Hence he aslcs always: "Can I make for you the goods you want?" where some of his rivals say too often: "Will you take my goods or leave them?"—only to liave them left. To take a- single instance, the cutlery firms of the. German Sheffield, as Solingen is often called, set themselves to mcjet every single peculiarity of custom and taste, and one of these firms claims that it has on its books more than 9000 patterns, and at times is'engaged in supplying orders for 3000 different patterns at the same time. No attempt is made to standardise products of the kind and press them iipoh customers _ whether they want them or' not. As an illustration of "the opposite method of trading, an incident of quite recent date may he

named. The head of an English, firm | of ironmongers,' travelling in Germany, came across some scissors of a special and very convenient pattern, and on returning home approached a firm ol manufacturers and offered ail order for a quantity. The merits of the scissors were frankly acknowledged; there was no patent difficulty; but the pattern was not a usual one and tlio firm did not feel disposed to vary- its practice, so the order was politely refused. The incident may not be typical of the industry concerned, but its occurrence shows that belated ideas are still prevalent, oven in presence of keen commercialrivalry. Whore business has to be done on an extensive scale there is no sparing o! expense. The largo firms in the iron and steel, armament, shipbuilding, electrical, and engineering industries have boards of directors composed of experts whose salaries ofton run. into thousands of pounds, but they are not figureheads. To these men - fall the more delicate negotiations and tho gentler touting which, have to be undertaken when large State and other contracts loom ahead. Suoli a director will often spend months in a foreign capital watching day by day and hour by hour for opportunities of serving the interests of his firm. I have known of such a highly salaried director returning empty-handed after months of far from sweet doing nothing in an oriental capital. But he might have come home with an ; order for a million pound ship, and in any event the effort and expense were a legitimate business speculation. Oftener reward is reaped, though perhaps only after the same patient and costly waiting. Many of tho'large firms have permanent houses in the principal capitals all over the world, aiid find that even at great cost it pays them well to be thus always on tho spot. Easy credit Terms, The plan of accepting payment for plant in the form of shares or debentures is very common in tho-electrical and machine industries, and the assets of many large firms in these industries comprise considerable holdings in undertakings which they have helped to equip and in some cases to float. Tho knitted goods industry, as carried on so largely in parts of Saxony, is an interesting illustration of. how. . the machine manufacturer has in this way cooperated in building Up an important rural industry. Eecognising in 'tho extension of the trade from the towns to the villages a new outlet for his machines, the Chemnitz manufacturer set about finding reliable rural workmen acquainted with the technical and other conditions of production, and induced them to take machines on loan, under an agreement to pay off' the price by instalments. Often they assisted these small manufacturers to equip workshops and obtain the necessary raw material. In this way a host of undertakings of small and medium size have sprung up, in rural Saxony, and their-output of hosiery goods forms a'considerable production of -the kingdom! The influence of the great banks in. promoting foreign trade has also been of great value. Often business which begins with finance pure and simple brings substantial advantages in other directions. _ The German railway projects in Asia Minor are an instructive illustration. The well-known "German Bank" entered into financial 1 relationships with the Turkish Government in 1888, taking up a 5 per cent. loan, of one and a half million pounds sterling. In tho following year the same bank, in conjunction with other banks, began the construction of the Anatolian railway, the first portion of which, from Ismid on the Sea of Marmora to Angora, was completed in 1892. Tho immediate.result was a marked development of German industrial enterprises in Turkey, which for a time almost came to be regarded as a special sphere of German influence. Other lines were

built by tho aid of German capital, anis after the Emperor's visit to Constantinople concessions were obtained for the construction of a harbour at Haidar l'ascha, on the Bosphorus, and of the Bagdad railway. Incidentally, _ German trade with tho Turkish territories in Asia and Africa was further stimulated by tho institution of regular shipping lines from Hamburg, loyally supported by tho State railway administrations, whioh granted preferential rates, for .goods intended for those regions. Whatever direct gain the "banking corporations may have secured for them-' : selves,- there can,be no doubt of the : great strides made by German trade in the Ottoman Empire since German capitalists, taking their - courage iii both> hands, made a bold bid for Turkish sympathy and orders. , In all parts of' tho world German; banks and the industrial firms under their patronage are busy seeking recognition. and a standing. Witness thef German enterprises and settlements inPalestine and tho Levant, in Brazil. Argentina, Venezuela, and other South! American States, the industrial inter- k ests created in Morocoo and China;, and the German shipping-lines which, operating either from home or foreign ports, now well nigh encircle tho globe., Much has also been done to swell the export trade by institutions like tha "Central 'Association for Promoting German Interests Abroad," the Stuttgart Export Sample Warehouse, .tlia Export for the Kingdom of Saxony, tho linions of Exporters ;of Hamburg, Berlin, and other- large- towns, and tlie various colonial- associations'. While .sending much of_. its capital abroad, however, Germany", takes care to keep tho major part at home. Itiis estimated'that of the new issues which fell to tho years of 1901 to 1910 only, 16 per cent, in valuo" were foreign, while 84 per cent, related to homo un.-' dertakings of various kinds. The Geri man goes further, however, for he persuades other countries to sink money, freely in his own industrial enterprises. Some of the German mining and iron companies of Lorraine have ; only been dccorated. witlr French names in orderto reconcile French investors to the fact that their money is being used to develop German resources. V

National Ardour for Trade. 'Any consideration of the psychology, of trading enterprise must likewise -recognise the -undoubted fact that modern. Germany on the whole .is proudor of it» industrial and commercial triumph* than of any other contemporary achievements. The old attitude of superiority- to trade still clings to' the military, and, in a minor and diminishing degree, to the high bureaucratic caste, though even in these quarters there is no unwillingness, other considerations being satisfactory, ito contract domestic alliances with the conquering estate. Germans in general, however, regard industry and trade to-day as the most serious of national interests, and for aaiy u English parallel to their material /ardour it is necessary to go. back to the middle of last century, when most of, the great industrial fortunes were being made. One may differ as to the posi-' tion that should be accorded to trade • amongst national pursuits, but if it:is followed at all it must be followed witlv enthusiasm if great resylts are to follow. The German has taken this \ob«' vious lesson to heart, and he makes no secret of the pride he feels in belonging to a nation which has staked its future on its merchandise and ships. , There ia' no false pride about the German business man, no_ desire to conceal his calling and election, and no disposition; .to allow others to do so. Consult the visitors' book in any Contintental place, of resort, and it will be seen that while owing to modesty, reserve, or other 'reasons, the. commercial representatives.of certain, equally commercial nations seldom indicate their presence, the German -"Kaufmanix" -is invariahljr^.eveii'osteufetiously^bn-'.

spicuous, and it never occurs to him to suppress the revealing word. Formerly it was the ambition of the heads of private industrial and financial undertakings to bo admitted to the charmed ctfcle of State service. Today the tendency is the other way: the path to worldly success and fame is to leave the service of the Stato for that of one or other of the great industrial syndicates or companies or banks. In Quite recent years an officer in high rank became the head of a great Berlin arms manufactory; naval officers have, with the Emperor's permission, joined the directorates of . shipbuilding, and snipping companies;, and in the directorates of iron and steel, works syndicates, electrical works, and even tramway companies may be found' exwl-, se r vail V<>f tho highest rank. \>hile these men have changed their spheres for perfectly legitimate material reasons, the arrangement has been one of mutual benefit, for German industrial companies do not pay for guinea-pig directors. Effects of Tariffs. Germany has of late years been overrun by travelling parties of observers, conducted and otherwise, concerned to gather evidences that might serve to substantiate special fiscal principles, of whose truth they were probablv as a rule quite convinced beforehand. It would be absurd to deny that many of Germany's industries, in certain stages of their development, have been'helped by tie reservation to them of the home market. the fiscal .reform traveller errs is in assuming that Germany's economic progress and prosperity are due solely to the operation of a tariff law. France, Italy, Austria, have also protection —have had it longer than Germany, and in some cases nave carried it further; yet they are not held to threaten our trade; they have not progressed as Germany has progressed; they have not Germany's wealth'; arid they are not held up as our .exemplars. Hence there must be some fundamental difference between these countries and Germany. t J-0 attribute Germany's progress summarily to a certain fiscal policy is' to ignore altogether the intellectual and moral qualities of tho'German nation. To those who are convinced that British prosperity can only he .niade truly and permanently secure bj; shoring it at. tho foundations with brains, science, and education of the best possible quality, fiscal measures and protective and regulative laws of any kind, whatever their merits may be, must rank always among the things which may, if necessary, be added to individual and National efficiency, yet which can never take its place.