SECRET OF GERMAN IRON TRADE VICTORIES.

Otago Witness, Issue 3195, 9 June 1915, Page 73

SECRET OF GERMAN IRON TRADE VICTORIES.

What is the secret of Germany’s astonishing progress in trades which at one time were peculiarly our own? asks the Daily Express. As recently as 1900 Great Britain exported 3,300,000 tons of iron and steel against Germany’s 800,000 tons. In 1913

Germany exported 6,000.000 tons against Britain’s 5,000,000 tons. ' In the first half of 1914 Germany beat Britain by very nearly 1,000,000 tons in exports, and was producing iron at the rate of '20,000.000 tons a year against our 10,000,000 tons, and steel at the rate of 17,000,000 tons against our 7,000.000.

In the metal group of trades—iron, steel, engineering, and shipbuilding—Germany was employing more than workers against our 1,500,000, yet less than 30 years ago we were producing iron goods, including steel, ships, and machinery, at three times the rate the Germans were.

How came Germany so rapidly to overtake and outdistance us in these lines of business ? And how in the future are we to regain and retain a supreme position? Germany’s remarkable progress in the iron trades has often been attributed to a combination of science and cheap labour. It is quite true that our German rivals, by utilising the, invention of two English-men—-Gilchrist and Thomas—were enabled to exploit their low-grade phosphoric ores; but it is not true that cheap labour has been any material factor in the growth of the German steel industry, while far too much importance has been attached to the scientific factor. The real secret kes ehewhere.

Export Bounties.— About 18S7, when we were exporting nearly five times as much iron and steer as the Germans, our rivals adopted what has been called an export bounty -policy. It is this system, plus our own Free era die policy, which has enabled Germany to dump her steel at the very gates of our own works, while our own furnaces .have been damped down and our skilled steel smelters have emigrated or starved. To understand how this has been done necessary to note that the cast-iron drciphhe that has characterised the German army has been an equally marked feature of German industry. Industrial syndication has been more complete in the German steel group of trades than in any great industry anywhere. There has been a syndicate for every important material and article of steel production, from iron ore and coal to sewing machines and wire nails.

Unlike the trust system of America, the German works have not been units ot a single company or corporation. The German syndicate system means the control of articles, not works, as such. For example a German factory producing half a dozen different articles would be a'member of as many separate syndicates. The syndicates receive orders, fix prices arrange shipments, and attend to a variety ot commercial matters with an economy and an efficiency that the individual manufacturer could not hope to attain.

Trading Zones.— These syndicates have been manufacturers co-operative associations and trade Unions combined, purchasino' raw ■Aerials and disposing of finished pro. ..cts on highly organised lines, the various syndicates being linked up and working together through joint clearing-house* the country has been mapped out into zones, with a view to economising cost of transit, and thus, other things being equal, a Russian or Turkish order would pass through the syndicates to a Snesian firm, while a French or British one would go to a Westphalian shop.,.--About 17 years ago the German syndicates started their export bounty policy. Under this system, briefly, there would be a standard home price for an article—say, steel rails,—and for every material used in the production of the' rails—the coal, the ore, the lime, the pig iron, and the steel ingots; but on every ton of rails exported the manufacturer would have a rebate in respect of all the materials consumed.

These rebates or bounties have sometimes been as much as Is 6d per ton of coal, 4s 6d per ton of iron, and 15s per ton of steel. By these means steel rails have been sold abroad 30s per ton below home prices, and well below actual cost of production.

It has been this subsidisation, and not cheap production or superior scientific methods, that has been the predominant factor in German competitions. Britain, of course, has been the chief sufferer by the system, because she has not only had to meet German subsidised competition in neutral markets, but, owing to her free import system, has been an open dumping ground for German goods. '

Britain has been beaten, not by cheap production, but by close organisation among Germari manufacturers, the granting of bonuses-on exports by the syndicates, lavish credits given by bankers to traders and their associations, and special fiscal favours accorded the industries by the State.