FOREIGN TRADE

By 1900, the United States had become the leading manufacturing country in the world in terms of total production. Great Britain (the world’s first industrial nation) was second, and Germany was third. By 1913, the U. S. lead had increased, and Britain had fallen to third. The United States forged to the front in iron and steel production, and Germany and the United States became leaders in the electrical, chemical, and machine tool industries. This does not mean that output had declined in Britain. To the contrary, British output continued to increase. In terms of industrial output per capita, Britain was still the leader in 1900 and was only slightly below the United States in 1913 when the United States took the lead. Although many people in Britain were concerned about a failure of British entrepreneurship, what had happened to Britain was mainly that two large nations, well endowed with natural resources and possessing economic systems conducive to growth, had expanded their output more rapidly. During this period, the network of international trade assumed a form that would continue for decades. The industrial coun-tries—the United States, Germany, Great Britain, and later several others—exported manufactured and semimanufactured products. In exchange, the less-industrial nations sent an ever-swelling flow of foodstuffs and raw materials to support the growing industrial populations and feed the furnaces and fabricating plants of industry.

Rapid improvement in methods of communication and transportation was the key to this system. The first successful transatlantic cable, for example, began operations in 1866, a railroad line spanned the American continent in 1869, the Suez Canal was opened in the same year, and dramatic productivity gains in ocean transportation occurred over the last half of the nineteenth century. An extremely important improvement was the development of railroads in various parts of the world, making possible a flood of cheap grain from Canada, Australia, Argentina, Russia, and the Danube valley, as well as from the midlands of the United States. In the late 1870s and early 1880s, refrigeration on vessels made possible the shipments of meats, then dairy products, and finally fruits. To these were added the products of the tropics: rice, coffee, cocoa, vegetable oils, and tapioca.