A history of commerce

315. Statistical survey of development since 1800.—In entering the nineteenth century the student approaches the period in which commerce has achieved the most notable progress. Great as former advances may have seemed to the people in whose time they occurred, these sink almost to insignificance when compared with the growth of commerce since 1800. A recent estimate by a German author pictures the progress of the export and import trade of the commercial countries of the world as follows, in milliards of marks (roughly, units of 250 million dollars): 1700, 0.5; 1750, 1.0; 1800, 6; 1850, 17; 1899, 76. Some of the striking features of recent growth are shown in the following table. It is necessary, however, to warn the student that these figures, especially those for the earlier part of the century, can be regarded only as approximations to the truth. It may not be out of place, further, to advise the student to turn to the end of the chapter for suggestions as to the best way of studying the figures.

316. Great growth of foreign commerce.—Assuming, for purposes of discussion, a fair degree of accuracy in the figures, some conclusions from them may be pointed out. The commerce of the world increased in this century at the astonishing rate of 1,359 per cent. We have before encountered instances of remarkable commercial expansion, in particular countries, but we must bear in mind that the figures here are supposed to include the whole world, the backward as well as the progressive countries, the many millions in the interior of great continents who scarcely trade at all, and the Chinese, perhaps in themselves a quarter of the world’s population, who trade still to but a slight extent. Clearly the growth of commerce in some countries must have been enormous to raise the total figures to the point at which we find them.

Foreign Commerce and Production of the Countries of the World

317. Increase in the relative importance of commerce.—Not less striking than this growth in absolute quantity, as measured in current values, is the growth compared with the estimated increase of the world’s population. The value per capita (“by head”) of a country’s commerce is secured by dividing the total amount of trade by the number of inhabitants; it shows the average share of each person in commerce, and furnishes, therefore, some index of the relative importance of commerce in different times and places. Now, even if this value per capita had remained the same we should regard the absolute increase in commerce as a very important fact. Commerce, however, has actually increased much faster than population; the share of the average human being in the world’s trade has grown over tenfold. Let the student reflect on the difference it would make to him whether he had $2 or $20 for spending money in a given time, and consider the extra articles he could buy with the larger sum; he will then be better able to appreciate the broadening and deepening of the commercial current in recent times.

318. The world now passing through a commercial revolution.—The student is now in a position to understand the significance of the statement of an English writer, that “the commerce of the world may almost be said to be the creation of the past seventy-five years.” We are living in the midst of a vast, though silent, revolution. Reference to the figures will show that the process of change quickened strikingly in the latter half of the century, and at its close we still do not dare to say when the movement will slacken. The change which we find so marked in commerce affects equally other sides of human life. An American author, Adams, writing in 1871, could say with truth that “the discoveries of Guttenberg and Columbus have produced more startling and more clearly defined results upon the destinies of the human race within the last twenty-five years than in any other equal period of time during the four previous centuries.” Have the results been less startling in the quarter-century that followed? Another American economist, Wells, said about 1890, “When the historian of the future writes the history of the nineteenth century he will doubtless assign to the period embraced by the life of the generation terminating in 1885 a place of importance, considered in its relations to the interests of humanity, second to but very few, and perhaps to none, of the many similar epochs in time in any of the centuries that have preceded it.” Is the generation terminated in 1915 willing to admit that it takes a less important place in history than its predecessor?

319. Share of modern countries in the commerce of the world.—It is unnecessary, I hope, to say more to impress upon the student the fact that a period of great change in the world’s history, which began half a century ago, still continues; and that the coming generation will be called upon to carry on this change, and guide it for the welfare of humanity in the future. Leaving, therefore, general discussion and speculation, and returning to the concrete and well-defined facts that form the subject of our study, I insert in this place, as likely to be of use for reference later and of interest now (though not deserving painstaking study as yet), a table showing the share of different countries in commerce about 1900.

Recent Trade of Leading Commercial Countries
(Approximate annual averages in millions of dollars, special trade)

A similar statement, showing the relative rank about 1850, would present only one very striking change; France held at that time the place second to that of the British Empire, and Germany came after the United States.

320. Possible explanations of recent commercial development.—One topic of prime importance demands our attention as we enter on the study in detail of the commerce whose growth has been sketched above. What were the causes of this great commercial development? When we know them we shall truly understand the commercial history of the past century, and shall be prepared to face the problems of the present and the future.

The topic will be discussed under the heads which have been employed previously in similar discussions. The advances have been achieved either by a gain in the power of man to control nature and natural forces (technical progress); or by the more efficient cooperation of men in business (industrial and commercial organization), or in politics (political organization, domestic and foreign policy).

321. Prime importance of technical factors, especially the use of coal.—Hard as it is to disentangle these different factors, all of which have contributed much to the recent progress of the world, there need still be no question which has been of the leading importance during the nineteenth century. This century has been the great era of material invention, of scientific discovery, and of the increase in power of man over nature. Technical progress, therefore, is the first subject to be studied.

Again, there need be no question as to which feature of technical progress holds first place. Electrical appliances? Machinery? The steam-engine? Applied chemistry? All those things, with the vast benefits which they confer on humanity, rest now on practically one basis: coal. Vegetable matter of past geological ages, that has become fossilized, has undergone mysterious chemical changes and has shrunk to one tenth of its former bulk, furnishes now, after hundreds or thousands of centuries, the means by which we maintain and develop our material civilization and our great commerce.

322. Power in coal.—Coal offers men what all men seek, power. There is “spring” enough in it, when properly applied, to raise a million times its own weight a foot high. A man who sends a horse and cart to fetch a ton of coal, occupying four hours on the way, secures a power in the coal theoretically 2,800 times that expended in bringing it; and can probably get from it an amount of useful force exceeding by 100 times or more that of the horse employed in carting. A few decades ago (1865), when the output of coal was far less than it is now, an English economist calculated that forests of an area two and a half times as large as that of the United Kingdom would be required to furnish even a theoretical equivalent of the annual coal produce; practically, of course, the use of wood for an equivalent is out of the question. It was estimated, somewhat later (before 1880), that if the whole area of England were good land, devoted solely to raising forage, it would not support a horse-power equal to that obtained from the English coal mines; and that an area perhaps ten times as large would be required for the mere food supply of human beings of equivalent force.

323. Dependence of modern industry on coal.—It would be a great mistake to consider coal necessary now only in its most common application, that of generating steam for engines. The chemical industry depends largely, though not entirely, on the heat obtained from coal, to break down its raw materials and build up its finished products. Metallurgical industries would shrink almost to infinitesimal proportions if they were denied the use of coal. It has been estimated that the manufacture of a ton of pig iron requires the use of two tons of coal or more; while an equal quantity of steel requires six to eight tons. Still, the use of coal for the steam-engine is undoubtedly its most important application; and we can gain some conception of the place that coal has taken in the world’s economy by considering the growth of steam power.

324. Importance of coal, estimated in steam horse-power.—A horse-power, the technical unit adopted for measuring the working capacity of an engine, is for practical purposes equal to the force that can be got from several (perhaps three) horses, or from a number of men variously estimated at ten to twenty-four. Now in round numbers the steam horse-power of the world was a million and a half in 1840, and had increased, at the end of the century, to fifty times that amount. A simple operation in arithmetic will show the amount of work, in human equivalent, now done by steam. Taking, for example, a modern country, Germany, we find engaged in industry and transportation slightly over ten million people, while we find engaged beside them another population of mechanical iron slaves (steam-engines), variously estimated as equivalent to one hundred to two hundred and fifty million people. These slaves cost for food (coal), attendance, doctor’s bills (repairs), and burial expenses (including the cost of replacing them once in twenty-five years), only about $2.50 a year apiece. Admit some exaggeration in the figures, and still the contrast with the cost of human labor is most striking.

325. Technical history of the steam-engine.—The steam-engine has been in practical use in Europe since about 1700. The earliest engines, however, seem ludicrously crude now, and could be used only for pumping water. Progress was slow until the last part of the eighteenth century, when James Watt introduced improvements (separate condenser, double-acting piston, use of cut-off, etc.), which greatly increased the efficiency of the engine, and caused a gradual extension of its use from mining to manufactures. The introduction of the non-condensing, high-pressure engine about 1800 prepared the way for the use of steam on railroads. The compound engine, in which the steam passes through two or more cylinders before it is allowed to escape, was invented about the same time, though it was not brought into general use until about 1850. Since then improvements in details of the engine and in the form of boilers have enhanced still further the efficiency of steam power, until it now produces about two thirds of the work possible under ideal conditions. Practical engineers expect now no rapid progress or startling changes. Some measure of the progress achieved is furnished by the fact that Watt’s engines required ten pounds of coal an hour for each horse-power, the engines of the next generation required five, while the best modern engines require but one and a half, or, in rare cases, one.

The previous paragraph referred to the reciprocating engine in which the piston moves constantly forward and back. Since rotary motion is the form in which the power is commonly transmitted and applied, it would be desirable to get the motion in this form originally, and many attempts have been made to make rotary engines. Success has been attained in the case of the steam turbine, in which jets of steam strike against the blades of a turbine wheel, and cause it to revolve. Originally applied by Dr. De Laval of Sweden to operate the centrifugal cream separator which he had devised, it has come into common use for the generation of electricity and for the propulsion of ships. While the steam turbine has proved its efficiency for special purposes it is less adaptable than the old form of reciprocating engine, and still leaves to that the larger part of the field.

326. The internal combustion engine.—In the ordinary power plant there are two units, the boiler in which steam is generated, and the engine in which the steam is put to work. An internal combustion engine is designed to burn the fuel in the engine itself. This is practicable when the fuel is a gas or a liquid whose vapor will unite with the oxygen of the air to form an explosive mixture. The internal combustion engine offers several advantages over the steam power plant: it uses more effectively the heat that is generated, it is less bulky, it is more easily tended. In spite of characteristic disadvantages, particularly the need of an auxiliary starter, and restricted flexibility as regards speed and power, the internal combustion engine has proved indispensable. In large units it serves the steel mills, which put the waste gases from their blast furnaces to work, and in its application to the automobile it has effected a revolution in transportation and travel. Although in the manufactures of the United States in 1914 the internal combustion engine still accounted for less than 5% of the total horsepower, the aggregate horsepower of the gasoline engines of automobiles has since that time considerably exceeded the total horsepower from all sources employed in manufacturing industry.

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