How Industrialized Nations Industrialized
This chapter sketches the stories of industrialization and industrial policies in different countries, giving support to the motto “industrialization was never an accident.” It looks at the USA, Japan, France, Russia, and Germany. In the USA, the rejectio
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How Industrialized Nations Industrialized
It was not by accident that Great Britain experienced the Industrial Revolution. The country employed industrial policies prior to the Industrial Revolution. This chapter looks at the industrialization experience of selected other countries before the twentieth century. The key question is: Did they industrialize by accident? Or, did they employ industrial policies to develop manufacturing?
4.1 Hats, Tea, and Liberty: The American Quest for Manufacturing Following the Industrial Revolution, Britain’s desire to make the most out of its colonies evolved into a policy to keep the colonies as exporters of raw materials to the motherland. As the raw materials produced in the colonies could only be exported to the motherland—or through the motherland—, they would be cheaply priced. Britain would transform low-cost raw materials into high-priced manufactured goods, which then would be exported back to the colonies and elsewhere. That effectively meant that the motherland would remain prosperous and powerful by keeping the manufacturing (and manufacturing ‘value added’) at home and preventing it in the colonies. These policies led to increasing dissent, rebellion, and ultimately freedom in the North American colonies, if not in others such as India.
© The Author(s) 2018 M. A. Yülek, How Nations Succeed, https://doi.org/10.1007/978-981-13-0568-9_4
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What the Colonial Laws Meant for the Colony In the seventeenth century, colonial administrators in British North America made efforts to develop manufacturing, albeit with little success.1 ‘Bounties’ (cash payments by the government to firms based on their production levels) were introduced to promote the production of silk, paper, iron, and firearms, among others.2 For example, in 1640, the Massachusetts government introduced a bounty of 25 cents on cloth production “for the incuragement of the manifocture”3; the colonial governments also levied tariffs to imports or exports of certain items mostly on an ad hoc basis and to raise revenue. Positive results in the form of increased production of manufactured goods started to come in the eighteenth century. So did preventive attempts by the motherland in the form of colonial laws or taxes. By the 1730s New England possessed at least ‘six furnaces and nineteen forges’ and by 1750, four slitting and rolling mills, ten forges, and five steel furnaces. As Bogart (1918: 61) writes with reference to the Iron Act (1750), “the development of the [iron] industry led Parliament to prohibit any slitting or rolling mill plating forge or steel furnace under a penalty of £200, in order to protect home manufacturers.” When, 10,000 hats were reportedly manufactured in 1731 in New England and New York, “in response to a petition by London hatters, the exportation of hats from the colonies was prohibited and their further manufacture limited.”4 Tench Coxe, a political economist and a former Assistant Secretary of the Treasury (when Alexander Hamilton was the Secretary of Treasu
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