The Journal of Economic History


International Competition in Iron and Steel, 1850–1913

Robert C. Allen

In the middle of the nineteenth century Britain was the major supplier of iron and steel to the world market, while Germany and the United States were substantial importers. But by 1913 German exports had exceeded British exports—with American exports not far behind—and Britain had become a major importer of steel. The goal of this paper is to explain this change in the pattern of trade. Its method is, first, to establish that the pattern of trade reflected the pattern of iron and steel prices prevailing in the three countries, and, second, to account for the pricing pattern in terms of international differences in input prices, technical efficiency, and deviations between price and unit production costs. I shall demonstrate that Britain's mid-century export success was due to its superior technical efficiency and lower raw material prices, and to the enormous excess profits earned by the German iron industry during its mid-century period of rapid economic growth. Britain's decline as an exporter was due to a reversal of this favorable situation: after 1900 the British industry was considerably less efficient than the German and American industries, and it labored under the burden of higher raw material prices. I shall argue, however, that vigorous entrepreneurs could have overcome both of these disadvantages.