On The Exportation Of Machinery





437. A few years only have elapsed, since our workmen were

not merely prohibited by Act of Parliament from transporting

themselves to countries in which their industry would produce for

them higher wages, but were forbidden to export the greater part

of the machinery which they were employed to manufacture at home.

The reason assigned for this prohibition was, the apprehension

that foreigners might av ail themselves of our improved

machinery, and thus compete with our manufacturers. It was, in

fact, a sacrifice of the interests of one class of persons, the

makers of machinery, for the imagined benefit of another class,

those who use it. Now, independently of the impolicy of

interfering, without necessity, between these two classes, it may

be observed, that the first class, or the makers of machinery,

are, as a body, far more intelligent than those who only use it;

and though, at present, they are not nearly so numerous, yet,

when the removal of the prohibition which cramps their ingenuity

shall have had time to operate, there appears good reason to

believe, that their number will be greatly increased, and may, in

time, even surpass that of those who use machinery.



438. The advocates of these prohibitions in England seem to

rely greatly upon the possibility of preventing the knowledge of

new contrivances from being conveyed to other countries; and they

take much too limited a view of the possible, and even probable,

improvements in mechanics.



439. For the purpose of examining this question, let us

consider the case of two manufacturers of the same article, one

situated in a country in which labour is very cheap, the

machinery bad, and the modes of transport slow and expensive; the

other engaged in manufacturing in a country in which the price of

labour is very high, the machinery excellent, and the means of

transport expeditious and economical. Let them both send their

produce to the same market, and let each receive such a price as

shall give to him the profit ordinarily produced by capital in

his own country. It is almost certain that in such circumstances

the first improvement in machinery will occur in the country

which is most advanced in civilization; because, even admitting

that the ingenuity to contrive were the same in the two

countries, the means of execution are very different. The effect

of improved machinery in the rich country will be perceived in

the common market, by a small fall in the price of the

manufactured article. This will be the first intimation to the

manufacturer of the poor country, who will endeavour to meet the

diminution in the selling price of his article by increased

industry and economy in his factory, but he will soon find that

this remedy is temporary, and that the market-price continues to

fall. He will thus be induced to examine the rival fabric, in

order to detect, from its structure, any improved mode of making

it. If, as would most usually happen, he should be unsuccessful

in this attempt, he must endeavour to contrive improvements in

his own machinery, or to acquire information respecting those

which have been made in the factories of the richer country.

Perhaps after an ineffectual attempt to obtain by letters the

information he requires, he sets out to visit in person the

factories of his competitors. To a foreigner and rival

manufacturer such establishments are not easily accessible, and

the more recent the improvements, the less likely he will be to

gain access to them. His next step, therefore, will be to obtain

the knowledge he is in search of from the workmen employed in

using or making the machines. Without drawings, or an examination

of the machines themselves, this process will be slow and



tedious; and he will be liable, after all, to be deceived by

artful and designing workmen, and be exposed to many chances of

failure. But suppose he returns to his own country with perfect

drawings and instructions, he must then begin to construct his

improved machines: and these he cannot execute either so cheaply

or so well as his rivals in the richer countries. But after the

lapse of some time, we shall suppose the machines thus

laboriously improved, to be at last completed, and in working

order.



440. Let us now consider what will have occurred to the

manufacturer in the rich country. He will, in the first instance,

have realized a profit by supplying the home market, at the usual

price, with an article which it costs him less to produce; he

will then reduce the price both in the home and foreign market,

in order to produce a more extended sale. It is in this stage

that the manufacturer in the poor country first feels the effect

of the competition; and if we suppose only two or three years to

elapse between the first application of the new improvement in

the rich country, and the commencement of its employment in the

poor country, yet will the manufacturer who contrived the

improvement (even supposing that during the whole of this time he

has made only one step) have realized so large a portion of the

outlay which it required, that he can afford to make a much

greater reduction in the price of his produce, and thus to render

the gains of his rivals quite inferior to his own.



441. It is contended that by admitting the exportation of

machinery, foreign manufacturers will be supplied with machines

equal to our own. The first answer which presents itself to this

argument is supplied by almost the whole of the present volume;

That in order to succeed in a manufacture, it is necessary not

merely to possess good machinery, but that the domestic economy

of the factory should be most carefully regulated.



The truth, as well as the importance of this principle, is so

well established in the Report of a Committee of the House of

Commons 'On the Export of Tools and Machinery', that I shall

avail myself of the opinions and evidence there stated, before I

offer any observations of my own:



Supposing, indeed, that the same machinery which is used in

England could be obtained on the Continent, it is the opinion of

some of the most intelligent of the witnesses that a want of

arrangement in foreign manufactories, of division of labour in

their work, of skill and perseverance in their workmen, and of

enterprise in the masters, together with the comparatively low

estimation in which the master manufacturers are held on the

Continent, and with the comparative want of capital, and of many

other advantageous circumstances detailed in the evidence, would

prevent foreigners from interfering in any great degree by

competition with our principal manufacturers; on which subject

the Committee submit the following evidence as worthy the

attention of the House:



I would ask whether, upon the whole, you consider any danger

likely to arise to our manufactures from competition, even if the

French were supplied with machinery equally good and cheap as our

own? They will always be behind us until their general habits

approximate to ours; and they must be behind us for many reasons

that I have before given.



Why must they be behind us? One other reason is, that a

cotton manufacturer who left Manchester seven years ago, would be

driven out of the market by the men who are now living in it,

provided his knowledge had not kept pace with those who have been

during that time constantly profiting by the progressive

improvements that have taken place in that period: this

progressive knowledge and experience is our great power and

advantage.



It should also be observed, that the constant, nay, almost

daily, improvements which take place in our machinery itself, as

well as in the mode of its application, require that all those

means and advantages alluded to above should be in constant

operation: and that, in the opinion of several of the witnesses,

although Europe were possessed of every tool now used in the

United Kingdom, along with the assistance of English artisans,

which she may have in any number, yet, from the natural and

acquired advantages possessed by this country, the manufacturers

of the United Kingdom would for ages continue to retain the

superiority they now enjoy. It is indeed the opinion of many,

that if the exportation of machinery were permitted, the

exportation would often consist of those tools and machines,

which, although already superseded by new inventions, still

continue to be employed, from want of opportunity to get rid of

them: to the detriment, in many instances, of the trade and

manufactures of the country: and it is matter worthy of

consideration, and fully borne out by the evidence, that by such

increased foreign demand for machinery, the ingenuity and skill

of our workmen would have greater scope; and that, important as

the improvements in machinery have lately been, they might, under

such circumstances, be fairly expected to increase to a degree

beyond all precedent.



The many important facilities for the construction of

machines and the manufacturing of commodities which we possess,

are enjoyed by no other country; nor is it likely that any

country can enjoy them to an equal extent for an indefinite

period. It is admitted by everyone, that our skill is unrivalled;

the industry and power of our people unequalled; their

ingenuity, as displayed in the continuol improvement in

machinery, and production of commodities, without parallel; and

apparently, without limit. The freedom which, under our

government, every man has, to use his capital, his labour, and

his talents, in the manner most conducive to his interests, is an

inestimable advantage; canals are cut, and railroads constructed,

by the voluntary association of persons whose local knowledge

enables them to place them in the most desirable situations; and

these great advantages cannot exist under less free governments.

These circumstances, when taken together, give such a decided

superiority to our people, that no injurious rivalry, either in

the construction of machinery or the manufacture of commodities,

can reasonably be anticipated.



442. But, even if it were desirable to prevent the

exportation of a certain class of machinery, it is abdundantly

evident, that, whilst the exportation of other classes is

allowed, it is impossible to prevent the forbidden one from being

smuggled out; and that, in point of fact, the additional risk has

been well calculated by the smuggler.



443. It would appear, also, from various circumstances, that

the immediate exportation of improved machinery is not quite so

certain as has been assumed; and that the powerful principle of

self-interest will urge the makers of it, rather to push the sale

in a different direction. When a great maker of machinery has

contrived a new machine for any particular process, or has made

some great improvement upon those in common use, to whom will he

naturally apply for the purpose of selling his new machines?

Undoubtedly, in by far the majority of cases, to his nearest and

best customers, those to whom he has immediate and personal

access, and whose capability to fulfil any contract is best known

to him. With these, he will communicate and offer to take their

orders for the new machine; nor will he think of writing to

foreign customers, so long as he finds the home demand sufficient

to employ the whole force of his establishment. Thus, therefore,

the machine-maker is himself interested in giving the first

advantage of any new improvement to his own countrymen.



444. In point of fact, the machine-makers in London greatly

prefer home orders, and do usually charge an additional price to

their foreign customers. Even the measure of this preference may

be found in the evidence before the Committee on the Export of

Machinery. It is differently estimated by various engineers; but

appears to vary from five up to twenty-five per cent on the

amount of the order. The reasons are: 1. If the machinery be

complicated, one of the best workmen, well accustomed to the mode

of work in the factory, must be sent out to put it up; and there

is always a considerable chance of his having offers that will

induce him to remain abroad. 2. If the work be of a more simple

kind, and can be put up without the help of an English workman,

yet for the credit of the house which supplies it, and to prevent

the accidents likely to occur from the want of sufficient

instruction in those who use it, the parts are frequently made

stronger, and examined more attentively, than they would be for

an English purchaser. Any defect or accident also would be

attended with more expense to repair, if it occurred abroad, than

in England.



445. The class of workmen who make machinery, possess much

more skill, and are paid much more highly than that class who

merely use it; and, if a free exportation were allowed, the more

valuable class would, undoubtedly, be greatly increased; for,

notwithstanding the high rate of wages, there is no country in

whichit can at this moment be made, either so well or so cheaply

as in England. We might, therefore, supply the whole world with

machinery, at an evident advantage, both to ourselves and our

customers. In Manchester, and the surrounding district, many

thousand men are wholly occupied in making the machinery, which

gives employment to many hundred thousands who use it; but the

period is not very remote, when the whole number of those who

used machines, was not greater than the number of those who at

present manufacture them. Hence, then, if England should ever

become a great exporter of machinery, she would necessarily

contain a large class of workmen, to whom skill would be

indispensable, and, consequently, to whom high wages would be

paid; and although her manufacturers might probably be

comparatively fewer in number, yet they would undoubtedly have

the advantage of being the first to derive profit from

improvement. Under such circumstances, any diminution in the

demand for machinery, would, in the first instance, be felt by a

class much better able to meet it, than that which now suffers

upon every check in the consumption of manufactured goods; and

the resulting misery would therefore assume a mitigated

character.



446. It has been feared, that when other countries have

purchased our machines, they will cease to demand new ones: but

the statement which has been given of the usual progress in the

improvement of the machinery employed in any manufacture, and of

the average time which elapses before it is superseded by such

improvements, is a complete reply to this objection. If our

customers abroad did not adopt the new machinery contrived by us

as soon as they could procure it, then our manufacturers would

extend their establishments, and undersell their rivals in their

own markets.



447. It may also be urged, that in each kind of machinery a

maximum of perfection may be imagined, beyond which it is

impossible to advance; and certainly the last advances are

usually the smallest when compared with those which precede them:

but it should be observed, that these advances are generally made

when the number of machines in employment is already large; and

when, consequently, their effects on the power of producing are

very considerable. But though it should be admitted that any one

species of machinery may, after a long period, arrive at a degree

of perfection which would render further improvement nearly

hopeless, yet it is impossible to suppose that this can be the

case with respect to all kinds of mechanism. In fact the limit of

improvement is rarely approached, except in extensive branches of

national manufactures; and the number of such branches is, even

at present, very small.



448. Another argument in favour of the exportation of

machinery, is, that it would facilitate the transfer of capital

to any more advantageous mode of employment which might present

itself. If the exportation of machinery were permitted, there

would doubtless arise a new and increased demand; and, supposing

any particular branch of our manufactures to cease to produce the

average rate of profit, the loss to the capitalist would be much

less, if a market were open for the sale of his machinery to

customers more favourably circumstanced for its employment. If,

on the other hand, new improvements in machinery should be

imagined, the manufacturer would be more readily enabled to carry

them into effect, by having the foreign market opened where he

could sell his old machines. The fact, that England can,

notwithstanding her taxation and her high rate of wages, actually

undersell other nations, seems to be well established: and it

appears to depend on the superior goodness and cheapness of those

raw materials of machinery the metals--on the excellence of the

tools--and on the admirable arrangements of the domestic economy

of our factories.



449. The different degrees of facility with which capital can

be transferred from one mode of employment to another, has an

important effect on the rate of profits in different trades and

in different countries. Supposing all the other causes which

influence the rate of profit at any period, to act equally on

capital employed in different occupations, yet the real rates of

profit would soon alter, on account of the different degrees of

loss incurred by removing the capital from one mode of investment

to another, or of any variation in the action of those causes.



450. This principle will appear more clearly by taking an

example. Let two capitalists have embarked L10,000 each, in two

trades: A in supplying a district with water, by means of a

steam-engine and iron pipes; B in manufacturing bobbin net. The

capital of A will be expended in building a house and erecting a

steam-engine, which costs, we shall suppose, L3000; and in laying

down iron pipes to supply his customers, costing L7000. The

greatest part of this latter expense is payment for labour, and

if the pipes were to be taken up, the damage arising from that

operation would render them of little value, except as old metal;

whilst the expense of their removal would be considerable. Let

us, therefore, suppose, that if A were obliged to give up his

trade, he could realize only L4000 by the sale of his stock. Let

us suppose again that B, by the sale of his bobbin net factory

and machinery, could realize L8000 and let the usual profit on

the capital employed by each party be the same, say 20 per cent:

then we have



Capital invested; Money which would arise from sale of machinery;

Annual rate of profit per cent; Income



L L L L

Water works 10,000 4000 20 2000

Bobbin net Factory 10,000 8000 20 2000





Now, if, from competition, or any other cause, the rate of

profit arising from water-works should fall to 20 per cent, that

circumstance would not cause a transfer of capital from the

water-works to bobbin net making; because the reduced income from

the water-works, L1000 per annum, would still be greater than

that produced by investing L4000, (the whole sum arising from the

sale of the materials of the water-works), in a bobbin net

factory, which sum, at 20 per cent, would yield only L800 per

annum. In fact, the rate of profit, arising from the water-works,

must fall to less than 8 per cent before the proprietor could

increase his income by removing his capital into the bobbin net

trade.



451. In any enquiry into the probability of the injury

arising to our manufacturers from the competition of foreign

countries, particular regard should be had to the facilities of

transport, and to the existence in our own country of a mass of

capital in roads, canals, machinery, etc., the greater portion of

which may fairly be considered as having repaid the expense of

its outlay, and also to the cheap rate at which the abundance of

our fuel enables us to produce iron, the basis of almost all

machinery. It has been justly remarked by M. de Villefosse, in

the memoir before alluded to, that Ce que l'on nomme en France,

la question du prix des fers, est, a proprement parler, la

question du prix des bois, et la question, des moyens de

communications interieures par les routes, fleuves, rivieres et

canaux.



The price of iron in various countries in Europe has been

stated in section 215 of the present volume; and it appears, that

in England it is produced at the least expense, and in France at

the greatest. The length of the roads which cover England and

Wales may be estimated roughly at twenty thousand miles of

turnpike, and one hundred thousand miles of road not turnpike.

The internal water communication of England and France, as far as

I have been able to collect information on the subject, may be

stated as follows:



In France



Miles in length



Navigable rivers 4668

Navigable canals 915.5

Navigable canals in progress of execution (1824) 1388



6971.5 (1*)



But, if we reduce these numbers in the proportion of 3.7 to 1,

which is the relative area of France as compared with England and

Wales, then we shall have the following comparison:



Portion of France equal in size to England and Wales



England(2*)

Miles Miles



Navigable rivers 1275.5 1261.6

Tidal navigation(3*) 545.9

Canals, direct 2023.5

Canals, branch 150.6



2174.1 2174.1 247.4

Canals commenced --- 375.1



Total 3995.5 1884.1



Population in 1831 13,894,500 8,608,500





This comparison, between the internal communications of the

two countries, is not offered as complete; nor is it a fair view,

to contrast the wealthiest portion of one country with the whole

of the other: but it is inserted with the hope of inducing those

who possess more extensive information on the subject, to supply

the facts on which a better comparison may be instituted. The

information to be added, would consist of the number of miles in

each country, of seacoast, of public roads, of railroads, of

railroads on which locomotive engines are used.



452. One point of view, in which rapid modes of conveyance

increase the power of a country, deserves attention. On the

Manchester Railroad, for example, above half a million of persons

travel annually; and supposing each person to save only one hour

in the time of transit, between Manchester and Liverpool, a

saving of five hundred thousand hours, or of fifty thousand

working days, of ten hours each, is effected. Now this is

equivalent to an addition to the actual power of the country of

one hundred and sixty-seven men, without increasing the quantity

of food consumed; and it should also be remarked, that the time

of the class of men thus supplied, is far more valuable than that

of mere labourers.



NOTES:



1. This table is extracted and reduced from one of Ravinet,

Dictionnaire Hydrographique. 2 vols. 8vo. Paris. 1824.



2. I am indebted to F. Page. Esq. of Speen, for that portion of

this table which relates to the internal navigation of England.

Those only who have themselves collected statistical details can

be aware of the expense of time and labour, of which the few

lines it contains are the result.



3. The tidal navigation includes: the Thames, from the mouth of

the Medway; the Severn, from the Holmes: the Trent, from Trent

Falls in the Humber; the Mersey from Runcorn Gap.





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