A Manufacturing War Between the UK and Germany in the 19th Century Set the Stage For Today's Trade Crisis
A Manufacturing War Between the UK and Germany in the 19th Century Set the Stage For Today’s Trade Crisis

A Manufacturing War Between the UK and Germany in the 19th Century Set the Stage For Today’s Trade Crisis

Dariusz Stusowski - June 5, 2017

But there was an even greater, more long-term problem that the British faced when it came to German products. While some German products were poorly-made, or fraudulent, other products were steadily growing in quality. As time went on, many were often as good as or even better than the domestic items that Britons were used to buying.

A Manufacturing War Between the UK and Germany in the 19th Century Set the Stage For Today’s Trade Crisis
Even the simplest items like this cake knife were coveted by foreign consumers, due to the high quality of German manufacture. Interestingly, this example possesses a star of David trade stamp. 19th century antique German cake knife from Mann and Federlein , Solingen Company. i offer

The paradoxical combination of good, high-quality German imports as well as mislabeled foreign fakes of German origin prompted British politicians to take action. By 1887 the worry was so great that British lawmakers passed the “Merchandise Marks Act”, which forced manufactured goods to state the country of origin. Clearly, this law was passed in order to protect domestic manufacturers. However, there was an unintended consequence to this action.

Though the bill was supposed to protect against cheap knock-offs, something surprising happened. British consumers already developed a taste for German goods. Once the act was passed, even more Britons than before were aware of the amount of German goods they were actually buying. Even the patriotic impulse to buy domestic goods could not stop the desire to buy increasingly excellent German products. Instead of slowing down the consumption of German products, German exports continued to increase. Slowly but continuously, the manufacturer’s mark “Made in Germany” developed into a mark of quality.

By the early 20th Century, the “Made in Germany” mark was already seen as a powerful and recognizable marketing tool. A newspaper article from the Spectator (of British origin) published a conversation occurring in 1907, in which a British man traveling in Germany had a discussion with a German merchant about trade between their two countries. The German exclaimed:

“Now look at your Merchandise Marks Act! It didn’t do what was meant… You passed it to protect your industries, but in fact it has protected ours, for …it showed the traders of the world where the goods were really made”. The same merchant went on to claim that international trade was making Germany so strong that soon there would be a military showdown between to two countries for dominance of the seas, and that the completion may even result in a general war. His remarks are now chilling as war between Britain and Germany as well as many others, broke out just seven years later, with the beginning of WWI.

A Manufacturing War Between the UK and Germany in the 19th Century Set the Stage For Today’s Trade Crisis
Germans goods were known for their unrivaled quality and intricacy, as seen with the knife – featuring more than 100 tools including a gun. Daily Mail

130 years ago, the British demanded a labeling campaign in an attempt to dissuade domestic consumers from buying foreign goods, out of fear that Germans were selling too many products. Similarly, just a generation ago many Americans were terrified of the Japanese and their auto and audio-visual industries. It did not help that by the 1980’s the Japanese were using their profits to invest in U.S. real estate.

Today, trade with places like China is a big source of concern and stress. Just like early German products, Chinese goods are considered cheaper and of lower-quality. And yet, Americans buy these items with a voracious and unyielding appetite. The Chinese are even known for stealing American intellectual property, much in the same way Germans copied and mislabeled their products so long ago.

As a result, some loudly call for restrictions on trade in a variety of ways. But will changes in trade policy stop inappropriate Chinese practices? Perhaps they may. However, the Chinese may shift their focus to higher-quality products, making them irresistible to Americans markets no matter what our policies may be, thusly transforming the Chinese economy into an even more powerful force, as did the Germans.

Just like the government action that led to labeling demands in Britain, artificial trade barriers have an odd way of causing all sorts of unintended consequences. Material desire is far more powerful than the fanciful aspirations of politicians. Perhaps excitable politicians should be careful for what they wish…

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