THE transition from the nineteenth to the twentieth century -- a feat that had not yet been achieved in 1914 -- is at bottom what has made the post-war crisis so serious in Great Britain. Even today the British economic system still rests upon a nineteenth century conception, though the circumstances and conditions of that epoch have obviously passed. In a world which has altered so radically England's position manifestly cannot be the same as formerly.

Every day we see more clearly all that England has owed to coal during the last hundred years. The Victorian Era, her apogee of prosperity and power, was essentially an era of coal. So long as coal remained practically the only fuel, so long as her mines enjoyed a quasi-monopoly, England's industry remained almost unrivalled. That is how it was possible for her, with only a fairly good base and in a limited territory, to create the paradoxical structure of an overgrown factory system, and to develop an excessive population alarmingly dependent on imports for its food. A map of the coal basins of Great Britain in the nineteenth century is a chart of the national framework. The country's industrial structure, its population, and even the center of gravity of its energy, are concentrated in the Black Country, where the population is composed more largely of workmen and manufacturers, and is more Nonconformist, than in the old Merrie England of the southern counties.

The continuance of this equilibrium -- real, though precarious -- depended on two factors. It was essential first of all that foreign countries, especially those outside of Europe, should continue to be willing to dispose of their materials in raw instead of manufactured form, and to sell their food-stuffs instead of consuming them at home. On the other hand, it was also essential that England should remain the recognized purveyor of manufactured articles, that is to say, that she retain the lowest production costs in the world. Today, however, all countries, rightly or wrongly, want to build up industries; they are discarding the age-old division of labor which has made the two little islands to the northwest of Europe the specialized workshop of the planet. Furthermore, in modern conditions of production, where coal no longer plays its former dominant rôle, England is no longer marked out as the chosen spot of all the world for large manufacturing operations. In a prophetic book written in 1866, "The Coal Question," Stanley Jevons predicted that his country could not maintain its supremacy once its mines were exhausted. They are not exhausted now, but the economic power of coal is partially reduced, and from this point of view the fears of Jevons have already been realized. The whole system was based on coal, and coal is no longer king.

Here is the real British crisis. Amid the tumult of the war it was possible to mistake the causes of the crisis and even its nature. Until quite recently, the British hoped some day to reestablish the conditions of before 1914 -- which is to say the conditions of the nineteenth century. After the passage of twenty-five years of the twentieth century, they were still living in the atmosphere of the century that had vanished. But for about two years, and especially since the coal strike, there have been signs of a very considerable change. England is becoming aware at last that the continuous crisis from which she suffers has causes which lie deeper than the war, and that even the true origin of the war itself must be sought in the general transformation through which the world was passing -- a transformation which the war did, indeed, hasten, but which would have come sooner or later anyhow. She is, in a word, accepting conditions as they exist and adapting herself to them. This significant change in attitude closes the immediate post-war period. It likewise emphasizes, as the decade draws to its close, the end of a century-long period of British hegemony framed in history by two pillars -- the memorable dates 1815 and 1914.

I

The crisis finds expression in the marked and apparently chronic decline in exports. Ten years after the armistice, these still remain (according to the figures of the Board of Trade) lower by a fifth or a quarter than they were before the war: 76 percent of the 1913 exports in 1925; 67.9 percent in 1926; 78.6 percent in 1927. If this ebb-tide is to become the norm, then a complete reorganization of the national equilibrium is evidently necessary.

After eight years of shrinkage, since the boom of 1920 which had no morrow, the causes of the depression are all too clear. First of all is the impoverishment of a whole section of mankind as the result of war; then the general industrialization of the world, with the recrudescence of protectionism which it has provoked; and, finally, Great Britain's high costs of production. The first cause is only temporary, but the second will probably remain permanent and there is nothing that England can do about it. So far as the third is concerned, British industry is certainly not completely helpless, but it is beyond its power to bring future conditions of production back to what they were in 1860. Here we reach the heart of the discussion.

Why are British production costs high? There are certain reasons peculiar to Great Britain, and which in consequence admit the possibility of remedy.

The common belief is that the financial policy of the Government has helped make the position of industry more difficult. The revalorization of the pound has indeed lowered wholesale prices (index 141 in December, 1927), but retail prices and wages have remained at another level (169 and 181 respectively). This difference in the sensitiveness of reaction of different categories of prices -- which strings them out along the road after the fashion of Horatius in dealing with the Curiatii -- creates a somewhat unsound dual régime, with a buying power higher abroad than at home. This situation stimulates imports but makes exports more difficult, and hence there is nothing remarkable about the tremendous upset in the commercial balance: Britain has saved its money by energetic budgetary and fiscal action, but this in turn has disrupted production costs. Encumbered with too heavy a debt, the country is in financial but not in economic equilibrium. To sum up, it was able to emerge from the war and the post-war liquidation without a surgical operation, by falling back on the classical procedure. In such exceptional circumstances this might, perhaps be regarded as a display of excessive pride. The fact must be faced that it is industry which in the long run is paying for the salvation of the pound, which deep-seated instinct has led the government to regard as a matter of the gravest national importance.

Another cause of high production costs is the relatively old-fashioned state of certain industries. Since the war, Germany and France have been forced to remodel a large part of their equipment. Inflation and the reconstruction of the devastated regions have more or less compelled them to this course; and without this powerful motive they doubtless would have done nothing of the kind. England, however, boasts an unbroken industrial tradition -- wrongly, perhaps, for there are circumstances in which it is better to rebuild entirely from the bottom up. But this is far from being the attitude of a land where conservatism colors all aspects of life and is the basis for the education of youth, where rule of thumb is still almost universally preferred to technique, and where the upper class until recently paid no attention to industrial matters. I know that all this is changing now, and that Cambridge picks out its best students for industrial careers, but England lagged far behind Germany and France in this respect. When our French engineers and manufacturers cross the Channel they are astonished to find themselves dealing with colleagues who often lack all general ideas, who are shut up narrowly within their special occupations, and who in their conversation ignore the larger problems. Moreover, Germans and French agree that when it is a question of discussing matters from the international standpoint, British industry does not possess the group spirit which would permit it to become organized. In this British industrial production is not only behind that of Germany but behind that of France.

Finally, the decadence -- in part moral -- observable in British labor, has played a substantial rôle in the present crisis. During the war the workmen received high wages and improved their standard of living substantially. This movement had begun even before 1914, and if one considers it in comparison with the earliest years of the century the progress is considerable. But when the crisis came in 1920, labor clung obstinately to the standard which it had won, and the politicians did all they could to encourage it in that attitude. The Frenchman of modest income does not feel that there is anything disgraceful in economizing, but the Anglo-Saxon regards it as a kind of humiliation. By virtue of a tacit understanding England is today living at least as comfortably as in 1914 and far more comfortably than she did in 1900. But the greater part of the workers refuse to recognize that there is an inevitable connection between what they get and what they give. They claim the right to live at the expense of industry and even at the expense of the nation. When owners and workmen meet to talk things over, they discuss which of them is to throw upon the other the costs of industrial reorganization. A lazy solution on the part of the employer! On the other hand, a state of mind has grown up among the workers which I should not quite dare to call mendicancy, but which is curiously different from the attitude of professional self-respect which we are told was characteristic of the old-time English laborer. This is the note of disillusionment which Mr. W. A. Appleton, Secretary of the General Federation of Trade Unions, sounds in one of his quarterly reports when he declares frankly that the workers now dream only of new appeals to personal, local, national, or international charity; and that they do not hesitate to make new demands upon capital though the latter already is insufficient for the needs of a progressive industry.

It would be difficult to exaggerate the deleterious influence exercised by the constant presence of a great army of unemployed, whose number for eight years has never fallen below a million. They tend, morally even more than materially, to jeopardize the health of the nation. In the beginning the government thought that this unemployment was temporary and in consequence started a system of generous doles. Now it is impossible to abandon the established tradition. Only in the long run is the unsoundness of such a policy revealed. An increasing number of the unemployed, seeing no sign of a revival of employment, have given up the hunt for it, especially as the State supports them. They know that they will not be abandoned: in the form of unemployment insurance they are receiving substantial indemnities, and the municipalities also distribute aid. Often an unemployed man ends by receiving more money than he would ordinarily get by working. Quoting a report of the inspector general of the Ministry of Health, the Times of November 26, 1927, mentions, among many others, certain symptomatic cases:

A man, aged 36, with wife and five children, has been relieved almost continuously since 1925 at 43s. a week. He is an engineer's laborer or fitter, whose wages would be 42s. for a 48-hour week. He stated that he could not keep his family on those wages. His last three children were born while he was in receipt of relief, and in September, on the birth of the fifth child, the relief was raised to 47s. a week.

A carman, aged 32, employed in 1921 at 45s. has received relief almost continuously since at rates up to 45s. a week. In September, 1926, the relieving officer reported the wife's statement that the man had been offered three days' work a week, but did not accept it, as "they would have been out of pocket."

Examples of this kind, even if exceptional, are nevertheless frequent. Inspectors report that usually they find the habitually unemployed in bed, even in broad daylight. Many lazy people are getting used to this way of living at the expense of the nation, and no longer feel any shame about it. On the other hand, the government of the day, no matter what its composition, feels a kind of terror of this immense army of unemployed: they must be supported at any price! And who, indeed, would seriously propose leaving them to their fate? They must also be amused, and moving picture shows, sports, greyhound races (which have been all the rage for some time) are equally popular diversions. In England the love of sport is a factor in the maintenance of order, a kind of opium for the people. A union sacrée exists between a trade unionist and a lord when they discuss the races or football.

The result produced by this "chloroform policy" is that the revolutionary consequences of unemployment are sterilized; but the dead tissue, which stays inside instead of being eliminated, poisons the body of society in spite of everything and shows that "something is rotten in the state of Denmark."

The various causes of industrial decadence which we have just been enumerating can all be corrected. In the long run, the upsetting effects of the financial policy will cease to make themselves felt, and the various price categories will be leveled out. Equipment can and will be renewed. Industry will organize itself -- it is already setting out on the right road. The working class, which has learned something about the excesses of costly strikes which produce no results, will undergo a fresh education. Unemployment will in the end eliminate itself by emigration, by the reduction of the birth rate, by a spontaneous and inevitable adaptation to new conditions. But for all that the problem of the relatively high cost of production in industry will not be solved, for beneath the surface one can discern general causes which are independent of anything that Great Britain can do, and with regard to which all intervention seems to be doomed in advance to failure.

The most serious aspect of the matter is not even the springing up of rivals all over the world, but the profound transformation of conditions in large-scale industrial production. Once upon a time, coal sufficed to establish manufacturing power. Though it still remains the essential fuel which nobody can do without, "white coal" and oil nevertheless provide new sources of energy that grant a certain degree of liberation from coal's former yoke. Now be it noted that England is badly off for water-power and is compelled to import oil. In these days, moreover, the basic factor in low prices is less the possession of motive power than the capacity for mass production and an immense internal market for standardized products. If Ford can produce at better prices than his European competitors, it is primarily because he knows where to find a hundred and twenty million buyers almost as standardized as the machines he has for sale. In this respect the United States is actually the one country in the world where standardized production finds the most favorable conditions. England, which under nineteenth century conditions benefited from a similar primacy, is not today in an especially favorable position. If the conditions which now prevail had prevailed as early as 1830, it is probable that the most powerful industrial concentration in the world would not have been localized in the little British Isles; and we may begin to ask whether the mad industrialization of nineteenth century England, which seemed normal and final, may not have been merely a transitory phase of British evolution.

If industry cannot maintain itself at the level which it has achieved, the state obviously must seek a different equilibrium. British opinion seems to be recognizing the fact, and already the national organism, spontaneously reacting, seems to have begun to adapt itself to the needs of the new day.

II

Among the phenomena which decisively affect British post-war economics, we must assign first rank to the chronic and increasing deficit in the commercial balance. It always did show a deficit, even before 1914, but the proportion in which imports have been paid for by exports has for some years been constantly diminishing: 82.6 percent in 1913, 75 percent in 1924, 70 percent in 1925, 62.6 percent in 1926, 68.2 percent in 1927. The volume of exports (on a 1913 scale of values) has decreased by a quarter or a fifth, although the English people, who have not reduced their standard of living, are actually importing more than before: 108.3 in 1925, 111.5 in 1966, 114.4 in 1927, in relation to an index number of 100 for 1913. It has long been supposed that this represented a temporary upset; but since it is persisting people begin to ask whether it may not become permanent. It is therefore necessary for England to plan how to live with a reduced level of exports.

This lack of equilibrium, which frankly is appalling, has not failed to impress opinion on the Continent. The Continental interpretation is perhaps over-pessimistic. For though it is true that the commercial balance shows a deficit, it by no means is evident that the country is going to ruin. According to Board of Trade figures (never considered over-optimistic) invisible exports easily meet the visible excess of imports.

For the last three years, for example, the balance sheet stands as follows:

TABLE I
(in millions of pounds sterling)
1925 1926 1927
Deficit of commercial balance -- 395 -- 477 -- 392
Invisible exports:
  Merchant marine profits 124 120 140
  Commissions, discounts, other services 75 75 78
  Revenues from abroad 250 270 270
----- ----- -----
449 465 488
Balance 54 -- 12 96

It follows from this estimate -- and of course it is nothing more than an estimate -- that England must regulate the imports on which she lives, less and less by exportations of manufactured products and more and more by "services" and the revenue from her foreign investments. The tendency is significant, in the sense that national profits come less than formerly from industry and more from the merchant marine, trade, insurance, finance -- in short, from abroad. There is no denying that a certain degree of prosperity does exist, but the situation is not what it was; and this accounts for the fact that the country has been able to take care of a million unemployed for eight years without ruining itself. Whether this represents a wholesome evolution is another question, but the nation has to accommodate itself to it. A speaker at the Royal Statistical Society showed he understood the situation when he said:

"The 'invisible' people are getting the business. We may feel that it would be better for twelve men to be engaged in making boots for export rather than that one insurance broker should be making commissions of £5,000 per year on foreign business; but the fact seems to be that those from whom we buy prefer the invisible to the visible method of payment for their food and raw materials, and we shall have to recognize the fact."[i]

In England, then, we are seeing a new division of profit-making activity. We are also seeing a new division of purchasing power among the different classes of the population. On one side, the money which (we must not forget) is being made in great quantities in business, finance, or foreign investment, makes itself felt in the national market, whose power of absorption it increases. On the other hand -- a less known but no less important phenomenon -- the social policy of the last few years has created a considerable purchasing power. Unemployment insurance, all kinds of pensions, relief funds, often poured out prodigally, place in the hands of the poor a spending power they never before have imagined. Thus an internal popular market is built up, capable of serving as a basis for new industries, at the very moment when exports, the traditional factor in British prosperity, are seriously declining. If one adds that the "old rich" and even the people who live on a fixed income, in certain respects worse hit than any other class, have none the less managed by reducing their savings to preserve in large measure their standard of living, then the conclusions of the Committee on National Debt and Taxation (the Colwyn Report), published in February, 1927, become comprehensible.

According to this report, made after a thorough study, real wages are on an average as high as before the war, the real value of the imports has increased, and when due account is taken of unemployment the general standard of living of the population as a whole has improved in comparison with 1914; but this relative progress is attained only at the expense of the national savings. This general view of British equilibrium does not contradict that of the Board of Trade. England benefits from a favorable balance of accounts; but the excess credit of this balance is reduced in such a way that the sum total available for foreign investment is in spite of everything less than hitherto. England is still getting rich. But the moment she attempts to maintain a certain mode of life she may not become rich enough to play, out of her savings, the rôle of the world's broker which was hers in the nineteenth century.

Here we touch the most sensitive point, the very key of the British system. England has never regarded foreign investments as a simple excess of her riches extending abroad, but as a mechanism designed to prepare a harvest of new customers for the future benefit of her industry. A loan to the Argentine or to Brazil, for example, was always considered as implying, sooner or later, an order for rails or locomotives for the British steel industry. In the minds of those who paused to reflect, an exporting England was inconceivable without a counterpart in an England that loaned its capital abroad. It is comprehensible, therefore, that informed opinion should observe a reduction in the amounts available for foreign loans with some uneasiness. The United States is assuming definitely the rôle of broker and lender on a world-wide scale, and sooner or later markets which have hitherto been subject to Great Britain's attraction will tend to escape from her orbit. Canada is today a striking example.

An examination of the comparative figures for 1913 and 1927 shows that though England is still capable of investing capital abroad, she is no longer able to do so on the old scale.

TABLE II
(in millions of pounds sterling)
1913 1927
Total loans on the London market 196 314
Destined for England 35 (18 percent) 176 (56 percent)
Destined for the Empire and abroad 161 (82 percent) 139 (44 percent)

From this table it follows that (taking proper account of the diminished purchasing power of the pound) the total volume of issues is kept up, but that the issues destined for abroad are markedly less, whether relatively or absolutely considered. Thanks to her credit balance, the financial influence of England still extends beyond her boundaries; but the margin is narrow. If it should one day happen that the excess of imports was not compensated by invisible exports, it would become necessary to sacrifice the policy of foreign investments, with an obvious risk for future exports. Hence the distress with which informed thinkers regard the precarious equilibrium between credits and foreign debts. Hence the absolutely capital importance that they attach to the existence of a normal surplus of exportable capital. It is no exaggeration to say that in their minds this is the cornerstone of the whole edifice.

It is comprehensible, therefore, why a rebirth of the spirit of thrift is declared vital for the nation, for only so can there be reëstablished the capital which made it possible to subscribe to substantial foreign loans. Now England is still saving, and on a large scale: 450 to 500 million pounds today, according to the Colwyn Committee, instead of 350 to 400 millions in 1914. But progress is only apparent, for if we take into account the decreased purchasing power of the pound we see that there has really been a marked decline. We may ask whether, by the combination of its fiscal policy and its often extravagant policy of social aid, Great Britain has not in some degree decreased its capital on hand or in process of acquisition. The purchasing power of the masses, which permits them large expenditures which in turn increase importations, is derived in part from sums distributed under the budget. The money which thus passes through the people's hands goes almost wholly for current consumption expenses; it is not in these ranks that one will find the spirit of thrift or the capacity for it. The resources thus provided, however, come in part from taxes which are levied, not on the nation's income, but on its capital -- the inheritance taxes, for example. Here undeniably is a current which diverts a fraction of the national wealth from classes which might save it to other classes which consume it. Instead of being devoted to the creation of foreign business, to the establishment of foreign investments, begetters of future exports, this money is spent on better food, on more comfortable houses, on pleasure, on sport, on travel. The country is living better, but it is weakening its reserves for the future. Even if it is not growing poorer, it is diminishing its margin of security. Above all, it is accepting the idea of a new equilibrium in which exports will no longer play the same rôle as hitherto. To tell the truth, this equilibrium is in process of establishment, and the British organism has already begun to adapt itself.

III

The crisis which has affected the exporting industries for the last eight years presents an impressive characteristic of persistence, of permanence. The phenomenon has often been remarked that unemployment has struck the various branches of production more or less severely according to the degree that these depend on exporting; metallurgy, textiles, coal, suffer far more than those with a national market. Moreover, it seems that wherever coal is dominant the crisis has reached an especial intensity. The regions which set the pace in the industrial transformation of the nineteenth century -- Lancashire, Yorkshire, Northumberland, the lowlands of Scotland, northeast Ireland, and Wales -- are the hardest hit. This has gone to such a point that some of them have begun to be -- I will not say depopulated, but at least less congested. Certain Welsh districts furnish an example. A migration from the north of England to the south is also certainly observable; the government encourages it because it corresponds to the needs of the situation. No doubt this is no more than an indication, a forerunner of an eventual change in the division of the population; but it is significant. Given the relative decline of coal as a factor in industrial production, given also the new methods of using it, one may ask whether this migration is not the first visible consequence. In the nineteenth century the British organism had its centre of gravity in the coal of the north. Perhaps the twentieth century will see a different equilibrium, a less exclusive dependence upon the coal regions.

Opinion -- at least that of the ruling classes -- now accepts that tendency, together with the grave consequences which it implies. Responsible circles admit that the old export level can no longer be maintained for several essential industries, which means that production itself must be permanently reduced. As another aspect of the general reorganization, and with a view to more effective rationalization, it seems necessary to envisage a permanent reduction of the labor available in certain of the most vital branches of production; textiles, metallurgy, coal -- the glories of industrial England in the last century -- can recover a durable equilibrium only at the cost of such a sacrifice. It is a question, unless I am badly mistaken, of letting go a large volume of laborers -- one to two hundred thousand in the coal industry, for example. They must be taken care of elsewhere, perhaps maintained at the expense of the nation, as the government is prepared to do. What we may especially conclude from this new attitude, which dates only from the last two years, is that England accepts the inevitable facts. She recognizes that the nineteenth century, with its leadership in coal, with the magnificent export industries of the Black Country, represents an "economy" which is henceforward out of date. She is no longer trying -- as was the watchword on the eve of the war -- to revive the old order of things in its entirety. Let us unreservedly admire this realism, this suppleness, this moral courage.

There is another side to it all, and pessimism is not everywhere the dominant note. While the north is declining, life in the old regions of the south and center of England seems to be taking on once more an activity which was diverted from it about a century ago. The movement is quite recent, indeed barely perceptible, yet it is unmistakable. The centre of gravity is moving. Let us not exaggerate: it is always based on coal, and the coal country remains essential. Nevertheless the present trend is toward the Midlands and the London basin. People are turning away from the old mines of the Tyne, Scotland, Wales, toward new shafts in Yorkshire, the Midlands, even in Kent. At the same time we observe that though the northern industries are slumping, those of the south are prosperous. London and the little cities around it, Coventry and Leicester, are working at full blast. Whereas heavy industry, coal, and textiles fight off an endless crisis, the furniture trade, building, automobiles, artificial silk, electric fixtures -- not to mention the theatre, moving pictures, brewing and distilling -- show obvious signs of prosperity. We almost get the impression that there is a sort of boom, an idea already prevalent in 1926, the very year of the general strike. The inspectors of labor in their reports speak with satisfaction of the region around London, which is developing in the most remarkable way, and emphasize the exceptional prosperity of the Coventry district. Since the manufacture of Morris automobiles began, Oxford is on the way to become a manufacturing city.

The topography of unemployment corresponds strikingly with this distinction between north and south. If you draw a diagonal line across England, linking the mouth of the Severn to Scarborough by way of Staffordshire, you cut the country into two parts of roughly equal economic importance but presenting an extraordinary contrast. To the northwest unemployment is almost double what it is in the southeast. In the latter district activity prevails and -- it is no exaggeration to say -- prosperity.

TABLE III
PERCENTAGE OF UNEMPLOYMENT BY REGIONS
(To November 21, 1927. Based on reports of number of workers insured against unemployment.)
London  5.9 percent
Southeast  5.9
Southwest  8.4
Midlands  8.2
Northeast 12.9
Northwest 12
Scotland  9.9
Wales 21.5
North Ireland 11.1
-----
Average 10 percent

If one considers the respective yield of various industries the contrast is no less marked:

TABLE IV*
PROFITS IN VARIOUS INDUSTRIES IN PERCENTAGES OF INVESTED CAPITAL
Very Prosperous Industries Reports Published Reports Published
in 1926 in 1927
  Tea 42.1 percent 34.8 percent
  Rubber 30.1 25.2
  Oil 15.2 15.7
  Brewing 17.2 16.5
  Electrical: Light and Power 11.2  7.7
Prosperous Industries
  Chemical  8.8  8.3
  Soap  9.7  8.7
  Electrical: Manufacturing 10.3  8.5
Doubtfully Prosperous Industries
  Shipping  5.7  5.2
  Cotton Textile  5.9  4.2
  Woolen and other Textiles  2.7  5.6
  Engineering  6.6  4.7
Losing Industries
  Coal, Iron and Steel  2.2  2.6
  * Times Annual Financial and Commercial Review, February 7, 1928.

Without requiring lengthy commentary, this table throws light upon the amazing diversity of the fates that have overtaken the various branches of British business. Coal and iron, formerly the fundamental basis of British power, show serious deficits. Last year thirty metallurgical companies, chosen by the Times as typical, showed a net loss of more than 2½ percent of their capital. The textiles (wool and cotton) and engineering are certainly not in so distressing a situation, but their profits are either medium or very small, inadequate in the long run to sustain a genuinely sound development. So far as textiles are concerned, the situation is even graver than the figures indicate, for they represent merely an average; and side by side with businesses that are showing a profit, a great number of others in their present state are probably scarcely able to survive.

On the other hand, success falls to the lot of enterprises of a quite different sort, such as brewing and distilling, which are closely linked with national and popular consumption capacity. Others, such as chemical products, electrical equipment, automobiles and furniture, represent lines of production which formerly were negligible or secondary but which have enjoyed a kind of rebirth. Finally, others are colonial enterprises which after having sometimes been sterile for several years are now yielding fabulous profits. To the question whether the country is prosperous or in a state of crisis, one hardly knows what to reply. The table shows that it certainly is impossible to answer with a simple yes or no.

One thing that it is especially interesting to emphasize is that the industries which are successful in the south -- automobiles, furniture, electric equipment -- are of very different character from those that flourish in the north. These last are in general the heavy industries, or at least industries with mass production, based on coal and relying on exportation. The first group, on the contrary, are industries where raw materials are of secondary importance in comparison with labor and the value of the finished article, and they are operated primarily, if not entirely, for the domestic market. It is readily understood, therefore, that they are not, like the others, directly dependent on coal. They can move to a distance, the more readily since conditions of transport and motive power, now changed, no longer compel them to cling closely to the pitheads of the mines. They prefer, too, to be at a distance from the regions where the trade unions have long been organized and where their power has become tyrannical. Furthermore, since they look to a national clientele, they like to be near the capital, an enormous distributing center. Without question we see here one of the results of the decline in the ancient hegemony of coal. Certain sleepy little villages of the south that were manufacturing centers before the nineteenth century, but which have been neglected for a hundred years, unexpectedly find a current of life flowing their way once more.

This disequilibrium and the reorganization which it implies reveal a thorough-going transformation in British economy which has out-stripped the prophecies of observers and the decisions of directors. At the very moment when the export industry, old and broken in every part, was able to offer only imperfect support, England, in order to live, turns to her carrying trade, which has always been prosperous, to her international finance, which has always been strong, to her investments in foreign countries and especially in the colonies, which provide her with a first rate reserve. I am not sure that she will get very rich in the long run, but I do not believe that she will go to smash. In any case it must be admitted that she is changing. More and more -- and the movement began long ago -- she is tending to concentrate on her rôle as the world's broker, in defense of the interests which she has been able to secure everywhere outside her own little European boundaries. She recalls those great industrial families, old and powerful, whose factories fail, but whose immense capital has been invested elsewhere. One must not judge them solely by the original instrument, which is no longer the essential factor in their fortunes.

The fortune of Great Britain is not, in fact, shut up within the restricted metropolitan area of the Empire. It is today -- as it was yesterday, and perhaps even a little more so -- in the tea of India, the rubber of Malaysia, the oil of several continents. It is also, no doubt, at Manchester, Leeds, Birmingham, or Glasgow; but still more, perhaps, in that city of London which is not industrial but essentially commercial and financial in spirit, tradition, and genius. Nevertheless the sums gained in these international operations, which are certainly enormous, will in the end, flow back toward the British Isles. Together with the wages, which have stayed high, and the subventions of various sorts, which have remained systematically generous, they will stimulate an industrial production which has no longer the need, as formerly, to run through five parts of the world for customers. In this sense, England is less an exporter today than formerly. Perhaps she is relatively more a nation living on an income. Hence, in the economic attitude of that illogical land, certain contradictory tendencies contrive to coexist far better than they could anywhere else.

[i] Dr. E. C. Snow: "Some Observations on Trade Forecasting and Prices," Journal of the Royal Statistical Society, July, 1926, p. 641.

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  • ANDRÉ SIEGFRIED, Professor at the Ecole Libre des Sciences Politiques, Paris; author of "America Comes of Age," "Post-War Britain," and other works
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