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Productivity Change in Ocean Shipping after 1870: A Comment

Published online by Cambridge University Press:  03 February 2011

Gary M. Walton
Gary M. Walton
Affiliation:
University of Hawaii
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Extract

The recent contribution by Knauerhase in this Journal raises some important issues regarding productivity change in ocean shipping in the late nineteenth century. The study is limited to the German fleet for the period from 1871 to 1887, but the findings do bear on the decline of freight rates after 1870. The traditional argument, which is now less in vogue, is that steam played the significant role in the last half of the nineteenth century and was the main source of advancing productivity. The novelty and importance of the findings by Knauerhase is that they support this hypothesis. The evidence given by Graham, on the other hand, points to the 1870's as a period when the sailing vessel underwent significant productivity change and experienced revived growth. This position has been buttressed by North, who argues that sail dominated the long-haul routes where most of the goods were carried and where the reduction in freight rates was most dramatic.

Type
Notes
Information
The Journal of Economic History , Volume 30 , Issue 2 , June 1970 , pp. 435 - 441
Copyright
Copyright © The Economic History Association 1970

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References

1 Knauerhase, Ramon, “The Compound Steam Engine and Productivity Changes in the German Merchant Marine Fleet, 1871–1887,” The Journal of Economic History, XXVIII (Sept. 1968), 390–403CrossRefGoogle Scholar.

2 Graham, Gerald S., “The Ascendancy of the Sailing Ship 1850–85,” The Economic History Review, 2d. Ser., IX (Aug. 1956), 74–88CrossRefGoogle Scholar.

3 North, Douglass C., Growth and Welfare in the American Past (Englewood Cliffs, N. J.: Prentice-Hall, 1966), p. 109Google Scholar; and North, Douglass C., “Ocean Freight Rates and Economic Development, 1750–1913,” The Journal of Economic History, XVIII (Dec. 1958), 537–55CrossRefGoogle Scholar.

4 It is obvious from his discussion that he means the period 1873–1887, and 1877 is probably a printing error. See Knauerhase, p. 393.

5 Knauerhase, p. 394.

6 By using net registered tons per crewman, Knauerhase suggests (p. 393) that sail was more capital intensive, or at least had a higher capital-labor ratio than steam. In fact, for any given stock of cargo, the gross tonnage required by steam was nearly twice that required by sail (Graham, p. 79). Thus, by using net registered tons and ignoring output, he has greatly understated the capital-labor ratio per unit of output for steam and exaggerated the capital intensity of sailing vessels. Also overlooked are the greater fuel (capital or resource) costs of steam transport. A complete analysis, of course, would require data on construction costs per ton and rates of depreciation.

7 North, Growth and Welfare, p. 110.

8 Knauerhase, p. 400. Knauerhase gives a percentage distribution between sail and steam of tonnages inward and outward by voyage-type (p. 398). It should be noted that to the extent that sail was engaged predominately on longer routes (even within each classfication or voyage-type given by Knauerhase), the percentage distribution of arrivals and departures is a biased measure against the actual employment of sailing ships and understates their relative importance. This is likely a significant bias on the percentage distribution between German and non-German ports.

9 See North, “Ocean Freight Rates,” p. 540.

10 Fayle (p. 266) recognizes this exaggeration, and Graham states that “not until 1885 with the general acceptance of the high-pressure, triple-expansion engine did the firm of Angier ” (see Graham, p. 86). The importance of the triple-expansion engine was to increase speed and to increase cargo space (by reducing space occupied by machinery and fuel), and before its widespread diffusion conversion rates between sail and steam should be less than three to one.

11 Knauerhase, p. 401.

12 We are interested in the average costs of the most advanced vessel of each type and not the costs of the average vessel. See Salter, W. E. G., Productivity and Technical Change (Cambridge, England: The University Press, 1960)Google Scholar.

13 Knauerhase, p. 401.

14 There was a marked growth in the carriage of such bulk commodities as coal, grain, rice, wool, sugar, and others between 1860 and 1870 as shown in Glover, John, “Tonnage Statistics of the Decade 1860–70,” Journal of the Statistical Society of London, XXXV (1872), 220Google Scholar.

15 It should be noted that evidence on differences in the rates of return to capital in steam and sail would permit a test of this position.