AHC: Avoid British Comparative Decline of 1870's

[John Fredrick Parker]

During the Panic of 1873, Germany overcame Britain's as the top economy in Europe, while the latter stagnated until 1897.

What PoD in the 1870's (the closer to 1874, the better) helps Britain avoid this fate? Ideally, keep them as the top economy in Europe until at least the dawn of the 20th Century. What are the effects of this (geopolitically, etc)? What other effects could come about from the given PoD?

(Preemptive quibble: I prefer a non political PoD, and if it is political, a non American one -- this means no stopping the Panic by vetoing the Coinage Act of 1873, as tempting as that may be...)

 

[Faeelin]

I sometimes wonder if Britains' comparative decline is overstated. As late as the 1930s, while Germany's ecnonomy was roughly as big as Britain's, its per capita income was far less than the United Kingdom's.

 

[Monty Burns]

The main points for Germany's rise were its higher population, science (Germany at the time was leading in high-tech such as chemicals and electronics), the basic need to overcome certain natural obstacles (worse transportation, in particular industrialization in Germany required railways, whereas channels and coastal trade were sufficient for Britain). Finally, there had been a unification-boom.

IF the unification does not hapen, this could be an obstacle for trade and economy. Considering technology, the British could come up with more state-sponsored engineering schools and state-sponsored research.

 

[Nugax]

1873...what? Germany surpassed Britain economically and industrally in the 1895-1910 period not earlier than that. The Long Depression was a slump yes, but Britain was still far ahead of Germany.

As to slowing British relative decline; better and more comprehensive technical education, improving social mobility, better focusing of investment to long term British interests rather than the highest rates of return, removal and replacement of old infrastructure.

Alternatively have the other industrialised countries be less protectionist.

 

[67th Tigers]

I sometimes wonder if Britains' comparative decline is overstated. As late as the 1930s, while Germany's ecnonomy was roughly as big as Britain's, its per capita income was far less than the United Kingdom's.

It is. Britain was the largest European economy well into the 1960's, when several factors conspired (most notably successive Tory governments being actively hostile to industry and trying to "kill to cure") to completely destroy the UK's economic base.

 

[John Fredrick Parker]

Good points; this is what I was thinking of when I started the thread (from Wikipedia):

During the depression of 1873-96, most European countries experienced a drastic fall in prices. Still, many corporations were able to reduce production costs and achieve better productivity rates, and, as a result, industrial production increased by 40% in Britain and by over 100% in Germany. A comparison of capital formation rates in the two countries helps to account for the different industrial growth rates. During the depression the British ratio of net national capital formation to net national product fell from 11.5% to 6.0% while Germany's rose from 10.6% to 15.9%. In essence, during the course of the depression, Britain took the course of static supply adjustment while Germany stimulated effective demand and expanded industrial supply capacity by increasing and adjusting capital formation. For example, Germany dramatically increased investment with regard to social overhead capital, such as in the management of electric power transmission lines, roads, and railroads, while this input stagnated or decreased in Britain and the investment helped to stimulate industrial demand in Germany. The resulting difference in capital formation accounts for the divergent levels of industrial production in the two countries and the different growth rates during and after the depression.

 

[Admiral Brown]

I read somewhere that one of the reasons for Britain's (relative) decline (decline = not growing as fast as others) after 1870 was that British industial machines were old, and industries were family-owned. It was a natural consequence of being the first country to industrialize.

Since in those days machines lasted much more than nowadays, there were little incentive to renew machinery and to increase productivity, as each factory already had their machines, which gave their owners an advantage over countries which were just beginig to industrtialize (a short-term advantage, though). They could produce goods and sell them at the same price se as these countries, but with older machines, as they didn't need to include the prize of new machinery in the prize of the goods they produced and sold. Buying new machines would be a waste of money.

But countries like Germany, if they wanted to compete with Britain, were obliged to buy/built the newests models, use the newest/more efficient techniques, and to group themselves in bigger firms, with the support of banks and the government. British industrials distrusted the government, and weren't willing to transform their family companies into joint stock companies.

All these led to German factories buing more efficient in the long run.

Another factor was that British politicians were extremely orthodox in their economic views. They were more concerned with monetary stability than with industrial expansion. After the first world war they prefered a stronger currency than a weaker one that might have favoured exports.

 

[John Fredrick Parker]

Another factor was that British politician were extremely orthodox in their economic views. They were more concerned with monetary stability than with industrial expansion.. After first word one they prefered a stronger currency than a weaker one that might have favoured exports.

Now this could be an interesting PoD -- is there any good candidate in Britain to implement wiser responses to the Panic? (Again, PoD no earlier than 1870)

 

[Susano]

well as the totle says its a comparative decline. The only way to stop it would be to kill off development in other countries, most noteable Germany. In any case it has IMO few to do with the UK itself.

 

[John Fredrick Parker]

well as the totle says its a comparative decline. The only way to stop it would be to kill off development in other countries, most noteable Germany.

That would be another way to do it Any PoD ideas there?

 

[Riain]

I'll go with those who've said better technical education and the like and newer plant, equipment and processes. Hard to find a PoD for that though.

 

[Van555]

hmmm

Perhaps you get someone in the UK to realize that they have a relative decline?

not sure who though

 

[Nugax]

Another thing to note is that it was also quite uneven relative decline, as in several fields Britain kept on dominating the world - it produced 60% of the merchent shipping built in 1914 and a huge fraction of textiles products and some machine markets as well as massive coal exports.

Keeping Britain abreast of some more fields would go a long way, even if they are inevitably going to lose out bulk steel production and the like.

 

[Nugax]

Perhaps you get someone in the UK to realize that they have a relative decline?

not sure who though

It was a massive deal in the 1880s onward and really dominated political and economic discussion. The problem is that the solutions, especially the education ones needed to have been in place from the 1860s onwards to have effect.

 

[Tyr]

As others have said decline is a bit of a bad word. Its not so much that Britain declined but that others caught up and entered the first world.
On one level it seems elementary that a bigger nation with more people given the same level of development would be richer.

Also...its true as said by tigers that Germany didn't take over Britain in the 1870s.
Prior to the 1870s Britain was all dominating. Everything was British. All industries were dominated by the UK. From the 1870s on though the Germans and Americans began to take over Britain in certain industries. Overall though Britain remained on top for some time. With Germany....yeah, I'd agree with the 1960s figure. With the USA....the aftermath of WW1 I would reason.

I don't think you're ever going to get Britain continuing to dominate in everything. If Germany decides to put everything into its chemical industry then British companies are just going to fall behind. The best you can hope for is for it to overall keep a bigger leader.

Consider too that though the gap in gross numbers between the British economy and that of its competitors declined in the end of the 19th century for common people in Britain the end of the 19th century was being a rather good time. All kinds of working and educational reforms were being implimented. It was the progressive age, Britain was striding ever forward towards the welfare state. This kind of thinking of Britain 'declining' always gets to me. Its mainly with regards to post-ww2 you seem to see it though. What is best for shallow national prestige and a strategy gamer's view of history is not best for the people.

Keeping Britain as the top economy in Europe makes things a lot easier. There's no way they will stay ahead of the US for too long. But there...yeah.
I'll go with Tigers. Down with the post war tories.

 

[John Fredrick Parker]

Keeping Britain abreast of some more fields would go a long way, even if they are inevitably going to lose out bulk steel production and the like.

What might be some good examples?

 

[Abdul Hadi Pasha]

1873...what? Germany surpassed Britain economically and industrally in the 1895-1910 period not earlier than that. The Long Depression was a slump yes, but Britain was still far ahead of Germany.

As to slowing British relative decline; better and more comprehensive technical education, improving social mobility, better focusing of investment to long term British interests rather than the highest rates of return, removal and replacement of old infrastructure.

Alternatively have the other industrialised countries be less protectionist.

There's a certain degree of relative decline relative to Germany and the USA that is more or less inevitable, given the benefits of Unification and room for population growth.

Britain gained from having surplus population go to the settler colonies, which was a very real benefit. The things you suggest will help somewhat, but I think the OP ignores a lot of Britain's "invisible" growth in this period, like it's control over communications, huge merchant fleet, and massive foreign investments.

Finally, the long depression affected everyone, not just Britain.

 

[John Fredrick Parker]

There's a certain degree of relative decline relative to Germany and the USA that is more or less inevitable, given the benefits of Unification and room for population growth...

Finally, the long depression affected everyone, not just Britain.

Well yes, but I thought that it affected Britain inordinately, allowing nations to gain an edge.

The things you suggest will help somewhat, but I think the OP ignores a lot of Britain's "invisible" growth in this period, like it's control over communications, huge merchant fleet, and massive foreign investments.

Could have a point there; when would you say Britain's "full" economic growth fell behind other nations then?

 

[Abdul Hadi Pasha]

Well yes, but I thought that it affected Britain inordinately, allowing nations to gain an edge.



Could have a point there; when would you say Britain's "full" economic growth fell behind other nations then?

I'm not sure that it so much did. Germany was bound to gain from unification, and a lot of its economic gain was due to rapid population growth. That was not really a possibility for Britain, but as I mentioned, surplus population not lost to the USA went to the settler colonies, which were of direct benefit to the British system.

There was no question of Britain developing with the speed of the USA, with it's massive territories and resources, and huge influx of immigrants.

Russia was experiencing faster industrial development, but starting from a much, much, lower level - not really a threat to Britain at this point nor likely to be for some time.

But Britain had already begun to transition to services to some extent. There was a huge advantage in being in control over almost all the world's telegraph lines; Britain had a massive advantage in shipping because due to coal exports it could always carry outbound cargo, and as the undisputed financial capital, it was the world's clearinghouse.

I don't think British power really declined until WWI, which savaged the shipping and consumed a lot of Britain's foreign investment empire, which left the USA in a much stronger position, plus the taking on of Middle Eastern responsibilities profoundly shook Dominion commitment to the imperial system.

 

[John Fredrick Parker]

Certainly points to consider, but I still have doubts.

For example, is there any way Britain could have responded to the Panic by stimulating demand as opposed to supply readjustment?

And I'm still curious, of the industries where Britain did lose an edge, could they have plausibly kept?