We understand that the German Wire Rod Syndicate have withdrawn all quotations for steel wire rods. At the turn of the century the German Union of Sheet Manufacturers was paying an export bounty to customers who incorporated sheets in export products of 15 DM per ton.
The Wire Syndicate's bylaws stipulated that the organization's "main object is to promote export by granting premiums. Consul General in Berlin, commenting on this phenomenon in , observed that through the new selling policy. A number of British manufacturers abandoned intermediate production processes in the face of German dumping, retreating into production activities further "downstream," in many cases becoming dependent on dumped German products as inputs. This was rationalized on the grounds that the downstream product areas were more specialized and remunerative, and that it therefore made sense to allow the Germans to supply the commodity-grade inputs while concentrating on areas requiring the greatest craftsmanship.
But British industrialists soon found that they had not only lost control of the upstream part of the production process, but confronted German dumping in the downstream product lines as well.
One British steelmaker testified in The alternatives we had before us were either to wait in the hope of a change in the conditions of trade or to put down fresh plant and get into a higher class of manufacture. We settled to do the latter, and by large expenditure gradually got into a different trade. Then the proceeding was this. We then went into the tram rails and electric rails, and they are now beginning to dump those articles; finally, we were driven into a general trade in which we also suffered from German competition.
Then again, if we get into a still higher class of trade where wages per ton are greater still, they cannot touch us—at all events at present—but I think they are bound in time to touch us in higher products. We are beginning to feel it already. British imperialists noted that dumping was destroying certain "primary" and "staple" industries and warned that foreign competition could weaken or eliminate industries that were essential to national security.
The Free Traders ques. Commenting on globalization in , one observer noted that there now existed. A few hours later, to the considerable surprise, if not outright disbelief, of most of its citizens, Britain found itself at war with Imperial Germany. Five days later, on August 9, , 80, men of the British Expeditionary Force, representing virtually all of Britain's professional army that could be gathered in the home islands, began embarking for the continent, and within days its "tiny numbers were sucked inexorably into the military planning of the great continental powers.
Brussels fell on August On August 21, German guns, include. Putnam's Sons, , pp. Outnumbered, out of contact with the French, and threatened with envelopment on both flanks, the British began a fighting retreat that did not end until they reached the Aisne River, miles to the south. The stunning events of this fortnight in August , which catapulted Britain into a major war on the continent and saw the unravelling of pre-war allied strategy, brought only the first of a succession of unpleasant surprises to the nation.
The military had expected that if war came, it would be short and sharp, resolved with a few decisive battles, such as the Franco-Prussian contest of British marksmanship, pluck, and military professionalism would carry the day. There was no reserve army to call up, no store of munitions to sustain a long war, and no arrangement for industrial production to support a continental-scale army in the field.
This continued for four weeks. The British held their ground, but by mid-November, , the original British Expeditionary Force had largely ceased to exist; a third. Sir Winston Churchill wrote later of the impact of this event: "Namur fallen! Namur taken in a single day. We were evidently in the presence of new facts and of a new standard of values. If strong fortresses were to melt like wisps of vapour in a morning sun, many judgments would have to be revised. I, pp. The British Expeditionary Force consisted of six regular infantry divisions and a cavalry division, which were augmented later by two divisions withdrawn from India.
Behind these forces stood 14 lightly armed "territorial" divisions and 13 Mounted Brigades with little if any organic artillery.
By way of comparison, the Germans committed 70 combat-ready infantry divisions and 3 cavalry divisions to the invasion of Belgium and France in August Churchill [], op. A British officer on the scene who witnessed the onset of the trench war observed that "[t]he growing resemblance of this battle to siege warfare has already been pointed out.
As, however, we had not got the material means with which to counter this disadvantage, we could only try to mislead the enemy as to the damage he was doing us" Sir Ernest D. The unexpected development of a stalemate on the Western Front brought in its wake other, even more fundamental surprises. One was the extent to which Britain's principal strategic asset, its fleet, was neutralized by German industrial power.
The British blockade against Napoleon had played an important role in bringing him down; but the British blockade against Imperial Germany was countered, to a considerable degree, by German industrial science and technology.
German manufacturing concerns quickly converted to the mass production of munitions, spewing out guns, shells, and bullets at an incredible rate. German railroads shifted huge armies rapidly around the interior of Europe, whereas the British fleet operated more or less ineffectually around the periphery.
Indeed, Britain soon found itself under partial blockade as German U-boats began sinking the merchant ships that constituted the country's lifeline.
But the most appalling surprise—known to Britain's leaders but not the public—was the sheer extent to which the country's industrial base had decayed. In the wars against Napoleon, the "workshop of the world" had outfitted not only the British fleet and army, but also the large armies of its continental allies—Prussia, Russia, Austria, and Spain.
But, by , so many industries had disappeared or fallen behind technologically that Britain could not sustain her own army and navy, much less those of her allies:. An early and continuing manifestation of British industrial weakness was the ammunition shortage, a scandal that erupted several months after the outbreak of the war.
In the midst of the Ypres battle, the British commander on the scene warned London that unless he received large quantities of ammunition, he would. When the German army began its assault on Verdun in February , it began with a hour barrage of , shells per hour fired from 1, guns. By the third year of the war the Krupp works at Essen was turning out 9 million shells and 3, artillery pieces a month William Manchester, Arms of Krupp.
Bantam Books, New York, , p. He was told to economize. I went out to Hazebrouck about am and saw Sir John French. He approved my plan of operations but there was no ammunition. This lack of ammunition seems serious. It effectually prevents us from profiting by our recent success and pressing the enemy before he can reorganize and strengthen his position [original emphasis] The British army lacked, in particular, large numbers of high-explosive artillery shells of the type needed to make an impression on the Germans' well-engineered and deeply dug trench systems; for the most part, the British possessed only airburst shrapnel shells that made little impression on an entrenched foe.
Over the next four years, the British army paid dearly for this deficiency, which was never wholly made good; the shell shortage limited the army's ability to sustain offensive action, or, if an attack was made, greatly increased the cost to the attackers, since the German trench systems were seldom adequately softened up by preliminary artillery fire. For an eyewitness account of a disastrous, and all too typical, British assault on German trenches, supported only by shrapnel, in May , see Swinton , op.
As they clambered up, the Germans in their dug-outs, unhurt and hardly shaken by our shrapnel, swarmed up and manned their parapets. Some of our men got as far as the German wire; but in most cases our assault was stopped dead on the top of our parapets or a few yards in front, where the ground was strewn with bodies.
Later in , the British command decided against further offensive action in Flanders for the remainder of the year because British forces were "gravely short of the war's most important implements, heavy artillery and shells"; the most they could do was offer to take over portions of the French defensive lines to free up French troops for the offensive Haig, Diary entries and editors' notes for May 9, [], op.
Much of the British-made ammunition that was produced was "of such poor quality that it might have been saved the trip to the battlefield. The ammunition shortage was, in part, a function of poor planning and bureaucratic bungling, but it was much more fundamentally a reflection of the fact that Britain's industrial base could not meet the demands that were being placed on it.
It was evident in that the British steel industry could not even begin to produce enough shell-quality steel; the three firms that could make such steel had a combined output of 5, tons per week, while the government was asking for 35, tons per week.
It was only the ability of the Allies to import shell and shell steel from America and iron ore from neutral Spain that averted the decisive victory of the enemy.
The ammunition shortage was only one symptom of a broader problem, the inability of the nation's steel industry to produce the quantity and quality of steel needed by the nation's armed forces to fight the war. Steel was needed, most critically, to produce the merchant ships that constituted Britain's supply lifeline; after that, steel was needed for naval vessels, shells, artillery pieces, rails, construction of fortifications, and later, for tanks.
The demand could not be met. Britain's commander-in-chief, Lord Kitchener, blamed the army in Flanders for its profligate expenditure of bullets and shells. The War Office was faulted for not paying earlier attention to munitions production. Many in the government blamed the work force for its sluggish response to exhortations to produce more guns, bullets and shells see Churchill [], Vol.
II, pp. History of the Ministry of Munitions, Vol. Shell steel required precise percentages of sulphur and phosphorus in the metal to prevent it from becoming brittle in extremes of temperature. History of Ministry of Munitions, Vol. X , op. IV , op. Layton undated memorandum, late reproduced in The World Crisis, Vol. The Germans identified Britain's steel dependency as one of its greatest strategic vulnerabilities and made the overseas steel lifeline the primary target of its policy of unrestricted submarine warfare.
Germany, the principal source of imported semifinished steel, was now the enemy; Belgium, another source of steel, was occupied, as were most of the iron ore fields of France. Sweden, a primary source of iron ore, was an unfriendly neutral.
The United States proved to be an important, but erratic source of supply. These problems were never overcome. The shortage of steel meant that it had to be rationed between competing demands; Churchill identified steel as one of the four limiting factors of production the others being labor, shipping, and money confronting the Ministry of Munitions. In , Churchill wrote to Haig and observed that. When Chancellor Dr. Bethmann-Hollweg announced the policy of unlimited submarine warfare on January 31, , he gave "as his first object the cutting off of British ore imports, putting this on the same level of importance as his other object, namely, depriving the country of food imports" History of the Ministry of Munitions, Vol.
II [], op. Italy, with practically no natural resources of iron ore or fuel, had maintained military forces beyond her financial powers, depending on her Allies of the Triple Alliance for steel and coal" History of the Ministry of Munitions, Vol.
VII [], op. British attempts to buy American shell steel drove up the price of that commodity, and the quality of American steel did not satisfy British requirements.
French and Italian efforts to buy their own shell steel in America resulted in "the steel works VII [], op cit. IV, p. Churchill to Haig, July 26, , reproduced in Churchill , op. Britain, which a few years earlier had debated whether it should worry at all about the erosion of its steel industry, now frantically attempted to expand that industry and make good the many deficiencies that the war had revealed. They expressed concern about the international competitive environment they would face after the war.
The government advanced much of the capital required, but the expansions of existing mills proceeded much more slowly than hoped, due to the recalcitrance of the steelmakers to expand and shortages of supplies and labor, which were "urgently needed for war purposes. Because the steel shortage touched every aspect of Britain's war effort, major and minor, it is impossible to assess its full effect.
In a myriad of specific cases, the shortage meant that there was not enough merchant tonnage, not enough shells, or not enough artillery pieces to perform the task at hand. The idea of armored caterpillar-tracked vehicles as a way out of the trench stalemate was conceived at the very beginning of the trench deadlock in late and early During this interval, from early to late , the British army launched repeated mass infantry offensives against the German trenches at the Somme and Passchendaele , suffering truly horrific losses without achieving any significant result.
Aircraft production was hampered by the inability to produce sufficient quantities of alloy steel. The British fleet's narrow and costly victory at Jutland may have been attributable, in part, to the fact British battleships were shielded by superior-quality German plate procured from Krupp before the war Manchester [], op.
Colonel Maurice Hankey and Lieutenant Colonel Henry Swinton advanced proposals to the government during this period for the development of armored vehicles to assault enemy trenches. The idea was seized on by Winston Churchill, then First Lord of the Admiralty, who played a key role in advancing it through the bureaucracy see, generally, Swinton [], op. All told, Britain suffered 2. The Admiralty engaged in a continuous struggle with the tank program over the supply of steel plates, and the Admiralty usually came out on top.
Until mid British steel manufacturers could not make adequate numbers of track links at the tensile strength required.
As a result,. What might have been achieved, and the losses that could have been avoided, had tanks been employed en masse at an earlier date, was revealed when the first mass tank assault was undertaken by the British at Cambrai on November 20, , in the last year of the war. Four hundred seventy-six tanks, backed by infantry, broke a six-mile wide hole through the vaunted German Hindenberg Line, penetrating four and one-half miles through the German positions in a single day.
Winston Churchill commented as follows:. Accusing as I do without exception all the great ally offensives of , and , as needless and wrongly conceived operations of infinite cost, I am bound to reply to the question, What else could be done?
And I answer it, pointing to the Battle of Cambrai, 'This could have been done. A later author points out that Churchill was wrong insofar as he implied British leaders were at fault for the delay; the real problem was with the production base:. This matter of numbers, depending on the painful development of a productive capacity, needs to be stressed.
See, generally, Swinton , op. The problem was "blowholes and segregation of sulphur and phosphorus at the parts of the link where soundness was particularly essential" History of the Ministry of Munitions [], op.
XII, p. Although the problems of the steel industry posed the greatest difficulties for Britain in World War I, the nation's industrial shortcomings went far beyond this industry or any of the industries normally associated with munitions production. The domestic industrial base producing consumer goods had also eroded, and therefore could not be converted to war production on the scale required.
Before the war, Britain's clockmaking and mechanical toy industries had been displaced by imported clocks and toys; when war came there was no precision clock or toymaking industry that could be converted to the production of accurate shell fuses. Britain had to create a light engineering industry to fill this gap, but the effort to do so revealed another hole in the nation's industrial fabric: the lack of a modern machine-tool industry that could make the machines needed to run the production lines.
The nation had become dependent on imported machines, and only the importation of machine tools from America, Switzerland, and Sweden "prevented a total breakdown of the British effort to create new industries between and Britain had become dependent on Germany, now her enemy, for many of the industrial products needed to wage a modern war. At the outbreak of the war, Britain looked to Germany for 90 percent of the optical glass used for precision instruments, for 75 percent of its glass for electric lights, and even most of the laboratory instruments used by British scientists.
Britain was dependent on Germany for chemicals needed for explosives and even drugs such as aspirin; during the war it "had no alternative but to continue importing German drugs via neutral countries. Britain tried, but never succeeded, in making up for this shortcoming by imports from Sweden and Switzerland; in fact, Britain was never able to produce the number of engines needed to fight the war and had to rely on its allies to make good at least part of the difference.
Although the decline of Britain's strategic industrial base that had occurred by had multiple causes, dumping was an important contributing factor. The stagnation of investment by the British steelmakers in the years prior to the war, and indeed, through the war years themselves, reflected the demoralization that had set in as the British confronted a competitive dilemma for which they had no solution. While it is impossible to state with certainty that the qualitative problems revealed by the war, such as the difficulties in making track links for tanks, could have been resolved more readily by a larger and more robust steel industry, it is reasonable to assume that a bigger and a more vibrant industry would have grappled with such challenges more successfully.
History of Ministry of Munitions, op. Britain's experience allowing unrestricted dumping a century ago is obviously subject to varying interpretations, but on balance its experience can hardly be held up as a ringing testimonial to the wholly passive policy that was actually followed.
Dumping in the markets of the British Empire by cartels operating behind high tariff walls placed a number of key British industrial sectors at a permanent competitive disadvantage.
Over time, this led to declining relative competitiveness and, ultimately, disinvestment. This erosion of the British industry left the Empire dangerously vulnerable when it was unexpectedly plunged into a major war in Although it was argued contemporaneously that dumping of industrial inputs such as steel enhanced the competitiveness of downstream industries that consumed these inputs, it was also noted at the time that the downstream industries themselves suffered from the erratic availability of dumped inputs, the growing dependency on their direct competitors for key inputs, and ultimately by dumping in their own downstream markets—and it was not merely the steel industry, but British industry as a whole that had declined dramatically by Finally, unrestricted dumping surely gave rise to short-run benefits to consumers of dumped products, a fact that was recognized and played a major role in the electoral victory of the Free Traders in However, seven hundred thousand of those same British "consumers" were killed several years later in the war, and millions more wounded, a toll far higher than it would have been but for the erosion of Britain's industrial base.
In the decades following World War I, many countries enacted antidumping rules that provided for the imposition of duties at the border on imports that were being sold at "less than fair value" and injured a domestic industry.
When the GATT was negotiated in , Article VI provided that contracting parties could use antidumping duties to offset dumping that caused material injury. In subsequent rounds of multilateral trade negotiations, the contracting parties have adopted and refined a succession of antidumping codes that prescribe detailed procedural and methodological rules for the application of antidumping duties.
These measures defined dumping by reference to the domestic price in the market of the dumper and calculated the margin of dumping as the difference between the home market price and the export price.
If goods were not sold in the home market, or if too few were sold to use as the basis of a valid home market price, the rules required reference to other measures of "normal value," such as export prices in third country markets or a "constructed" price based on an evaluation of cost plus a reasonable profit. Under some systems, home market prices that did not represent full recovery of cost plus a reasonable profit were excluded from the calculation of home market average prices.
Notwithstanding the proliferation and refinement of antidumping rules, antidumping measures remain controversial. As a leading GATT scholar observes, "central to the whole subject is the perplexing question whether antidumping law and policy, as related to international trade, makes any real policy sense today at all.
The British experience at the turn of the century would suggest that unrestricted dumping, at least in that era, was harmful. The question remains whether the events of that earlier era have any relevance today.
It might well be argued that the widespread adoption of liberal trade and competition policies worldwide has changed the international commercial environment so profoundly that the dilemma which Britain once confronted does not and could not exist today. In addition, it may be that technological change has rendered obsolete the competitive dynamics that existed at the turn of the century.
In fact however, while the world has undergone revolutionary political and technological change since that time, the factors that made dumping harmful remain with us today. Superficially little remains of the international trading order that existed in the early twentieth century. The world is no longer clearly bifurcated between a single, major free-trading empire and a group of protectionist states and empires. Since the inception of the GATT in the late s, quantitative import restraints have been phased out and tariff walls have been progressively dismantled.
In the United States, an antitrust movement fostered enactment of strong antitrust laws and the breakup of many American business trusts. National competition authorities were established, under U. This is potentially the most damaging, yet least likely form of dumping to occur. In addition to being very costly to maintain, the resultant domination of the market would be exceedingly difficult to exploit.
Any attempts to raise the price of the good above the competitive price would encourage other firms to come into the market and force the price down again. In the meantime, how should we respond to the dumping? For an answer, we need look no further than the example set by Jim Fisk: If foreign firms are prepared to sell us their goods below costs, we should let them.
We can improve our standard of living and economic power by consuming their finished goods, and use their intermediate goods to cut our own production costs. Acts of predation can become opportunities for subsidy, if we are wise enough to take advantage of them. Many people feel that we risk losing a great deal more than markets to foreign competition.
It has been argued that we may lose our culture, our national security or even our power over our own government! Any careful consideration of these issues will lead us to reject these fears as groundless. What have we gained by criticizing international dumping?
The only recent prosecution of a dumping case in our country has resulted in a trade agreement with Japan on the quantity and price of semiconductors the Japanese may sell us. While U. Protection from dumped and subsidised imports November At a glance: protection from dumped and subsidised imports November Product information.
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