3.2 Competition from Calcutta
Now click on Plate 1 below, which charts imports of jute and other fibres. How much does this graph tell us about the development of the Dundee textile industry?
Click to view Plate 1: ‘Jute and other fibres, in tons, retained for consumption in the United Kingdom, 1855–1915’. Based on Figure 20 in Oliver Graham, The Dundee Jute Industry, 1828–1928, no date, unpublished typescript in the possession of Dundee University Archive (PDF, 1 page, 0.1 MB)
We need to be cautious in using this data. The graph charts how much raw jute, flax and two other commodities was ‘retained for consumption’; not what industry used.
The graph reveals a dramatic increase in net jute imports from the 1850s on. In 1855, it stood at around 30,000 tons; 60 years later, in 1915, it peaked at just short of 300,000 tons. Two phases in this process can be identified. From the 1850s until around 1883, the curve is mostly upward, although there were two dips in the late 1860s and the mid-1870s. After 1883, there is more fluctuation and some of the ups and downs are quite dramatic. Between 1903 and 1904, for instance, net imports almost halved. Overall, however, there is little increase: imports in 1883 were not much below those for 1915.
The graph also shows that jute imports came increasingly to Dundee only. In the 1870s, up to 20 per cent was used elsewhere; later the gap between national consumption and Dundee’s narrowed. When Dundee (and the surrounding towns that used Dundee as a port, such as Forfar and Blairgowrie) was described as having a monopoly of the British jute industry, this was almost literally the case.
Finally, the graph shows that Dundee continued to use around 25,000 tons a year of flax and other fibres throughout the period until 1914. Jute may have been the growth industry, but it did not drive out flax.
If you noted that the table shows imports and not production, well done. The figures are derived from import and export data collected by customs officials. Production figures were not recorded so carefully. Historians must use what quantitative data is available even if it does not precisely match their interests.
It is worth pausing to consider if there are reasons why import figures might not equal use in industry. Some jute imported to Britain was immediately re-exported for processing elsewhere, but this has been excluded from this table. A little was used for purposes other than textile manufacturing. More important was buying ahead. If prices fluctuated – and jute prices did – it might make sense to buy when it was cheap and store it for later. Such speculative buying was frequently condemned, which rather suggests it was common. However, although speculation might accentuate the peaks and troughs, it should not affect long-term trends: speculation only made sense if there were reasonable prospects that stocks would sell. Most raw jute imported to the UK was processed in Dundee, but despite dramatic fluctuations, imports ceased to grow after the mid-1880s.
Activity 6 (optional)
In view of these trends, it is perhaps not surprising that the heady optimism we encountered in the passage from Warden did not last. By the 1900s, the mood had changed, as ‘Summary of evidence presented to the Tariff Commission, 1905’ (from the Rachel Gibbons book referred to in the Introduction to this course) reveals. Read it now and think about the problems faced by Dundee.
Spend just a few minutes on this exercise.
Dundee essentially faced two problems. First, as the passage describes, competitors, often using Dundee know-how, arose in other European countries and also in the United States. High tariffs, which pushed up the price of British goods, were often used to protect these industries. Dundee manufacturers also claimed that foreign manufacturers resorted to ‘dumping’, by which they meant selling in third countries at below the cost of production. They claimed that foreign manufacturers were able to do this because, behind their tariff barriers, they agreed on high fixed prices in their own countries (hence the reference to ‘Kartells’) and used the profits to subsidise sales elsewhere so as to capture the market.
The second problem is only hinted at in the text. Perhaps you noted the references to Calcutta. From the 1860s on, jute mills and factories were built on the Hooghly (Hughli) River, near Calcutta. Again, the machines and the men who set them up often came from Dundee. Once the industry was established in Calcutta, it enjoyed enormous advantages. Transport costs were cut – not only for the raw materials, which no longer needed to be shipped to Scotland, but Bengal was also closer to key markets such as the East Indies, Australia and Pacific North America. And labour was also much cheaper in Bengal. During the 1890s, Calcutta overtook Dundee; by 1914 it produced perhaps four times as much sacking (Stewart, 1998, pp. 2–3).
How could Dundee meet this threat? Throughout the late nineteenth century, Britain had resolutely stuck with its policy of free trade, but in 1903, Joseph Chamberlain raised the issue of tariff reform. He proposed that a system of imperial preference be introduced which would favour trade within the empire by imposing a tariff on imports from other countries. Ties between Britain and the colonies would be strengthened, revenue raised for spending on defence and social reform, and British markets protected for British manufacturers. Chamberlain’s speech launched a national debate: rarely has an imperial issue played such a prominent role in British politics. For Cain and Hopkins, the defeat of tariff reform is one of the key victories of the City over industry (Cain and Hopkins, 1993, vol. 1, pp. 202–24).
Activity 7 (optional)
In Dundee, the national debate was contested in local terms. ‘The protectionist revival: letters by Dundee merchants’ (from the Rachel Gibbons book referred to in the Introduction to this course) includes three extracts from correspondence in the local newspaper and one from a debate in the chamber of commerce. Read them now and consider the following questions:
- What answers to overseas competition do the four writers see?
- What comments do they have on the proposals made by others?
- How do they view the relationship between ‘home’ and colony?
I have given you a fuller specimen answer than I would expect you to provide, but do go back to the documents as you read my answers to see for yourself how I have arrived at them.
In letter (a), Victor Fraenkl focuses on foreign competition. His solution is an ingenious one: an export tax on all raw jute exported from the British empire. He argues that jute was effectively an imperial monopoly and Britain should exploit it. An export duty would force up the price of jute products made elsewhere thus making them less competitive (he in fact hoped that the threat of such a tax would force competitors to negotiate tariff reductions).
George Thom (letter b) is more concerned by the Calcutta industry and, in particular, by what he sees as the ‘unfair’ advantage of the lower standards required by the Indian Factory Acts.
If (a) and (b) suggest legislative changes, letter (c) argues that Dundee’s salvation lies in concentrating on those areas where it still possesses competitive advantage. In his final paragraph, the writer points to a number of ways in which Dundee was still more competitive than Calcutta.
The final passage (d) is from a speech by John Leng, MP for Dundee (and also the editor of the Advertiser). Surely, rather a brave speech for the local MP to make! Leng’s vision is an austere one and pure free-trade economics. Dundee once led in jute, but had now lost its advantage to Calcutta. There is no point in regrets – Dundee should move on. ‘One trade rises and another decays.’
Two proposals for reform are made: an export tax on raw jute and reform of Indian factory legislation. Both draw comment – the writers did not mince their words! Thom (b) argues that an export tax will not help against Dundee’s biggest competitor, Calcutta. Furthermore, both (b) and (c) highlight the risk of retaliation. Jute manufacturers in both Dundee and Calcutta wanted to export jute, not protect their home markets. They had a lot to lose in a tariff war; furthermore, Calcutta had nothing to gain. Jute manufacture in Calcutta was so cheap that it was competitive in most markets, even some of those with tariffs. At this stage in their history, they were as confident of their ability to compete as Dundee had been 40 years before. ‘A Calcutta Dundonian’ (c) has a cutting phrase about ‘50 or 60 manufacturers in a Scotch town’.
The idea that a tougher Factory Act in India would benefit Dundee is also dismissed in (c). It argues that conditions for ‘women and children’ are better in Calcutta anyway (this is a clever debating point, as we shall see later in the course). Furthermore, if factory hours were equalised, it would do little to diminish the difference in production costs. (Leng would probably have agreed. He wrote a report on a visit to Calcutta, which was very complimentary about factory conditions.)
So far, we have focused on their arguments. The last question asks about the underlying assumptions. Phrases in (a) and (d) suggest rather different ideas of the relationship. Fraenkl’s position is perhaps the most straightforward. India is a British colony – it should be used to benefit Britain (and, in this case, Dundee). Leng takes almost the opposite position; ‘the Mother Country’ has duties towards its dependencies. His language suggests a parental relationship, but one which involves duties on the part of the parent. What of the other two? Thom also uses family images (‘the children of our own household’), but India here is not a dutiful child worthy of protection but a cuckoo in the nest. In this text, India is a threat – a surprising way of looking at a colony! Finally, our ‘Calcutta Dundonian’ – can he be read as a champion of India? The title he has chosen makes clear that he is a Scot. If India deserves fair treatment, the equality he seeks is for expatriate businessmen. This is the empire not as a market for British goods but as a field in which Britons (or Scots) might make good.
The advocates of protection won the debate in the Dundee chamber of commerce by 92 votes to 45. But in the nation as a whole, tariff reform was less successful. In the 1906 election, the Liberal party made great play of the cost of tariffs (‘a tax on bread’) and won by a landslide.
In fact, there was never much chance that tariffs would be manipulated to benefit Dundee. Some of the weaknesses of the case for protection have already been identified. Tariffs may help to protect a home market, but jute, like many British industries, was export oriented. Imposing British tariffs risked retaliation, which would harm Britain – the world’s greatest exporter. Moreover, Dundee’s main competitor was inside the British empire. Chamberlain’s proposals were supposed to bring the empire together, but many in the dominions were anxious to protect their fledgling industries. The leaders of the tariff reform movement could not afford to be associated with proposals, such as those emanating from Dundee, where imperial rule was to be exploited for Britain’s benefit. Furthermore, in contrast, say, to the Lancashire cotton industry, Dundee was just too small to count on the national stage. Whereas Lancashire had 60 MPs in the House of Commons, Dundee had just two. Moreover, their rivals in Calcutta were closer to power. The Bombay cotton manufacturers who challenged Lancashire were mostly Indian; all the jute mills on the Hooghly were still owned and managed by British expatriate firms and the jute ‘wallahs’ of Calcutta had far better connections in London and New Delhi than Dundee did (Stewart, 1998, pp. 10–12).
There is another reason why the British government was unlikely to do anything that would limit the Calcutta jute industry. By the end of the nineteenth century, with the rise of the American and German economies, Britain’s trade deficit was growing rapidly. The deficit was a trade deficit only: Britain imported more goods than it exported. However, Britain also earned money abroad on ‘invisible exports’ (such as insurance) and enjoyed considerable revenues from investments overseas. Added together, these sources of revenue left Britain with a healthy surplus overall, but the trade deficit was a source of concern in a country that had long prided itself on being ‘the workshop of the world’. As rising tariffs excluded British goods from foreign markets, imperial markets became more important and, among these, India was one of the largest. India, in turn, had a trade surplus with the USA, and raw and manufactured jute were important exports. There was thus a trade triangle between the three countries that helped maintain Britain’s trading position and so made Britain, as London was well aware, dependant on Calcutta’s export performance (Sethia, 1996, pp. 94–8).