ABSTRACT
In 1873 a severe depression inaugurated a period of protracted deflation. Additional depressions followed in the 1880s and the early 1890s. Overall, Western economies expanded somewhat less vigorously than they had in the preceding decades. Yet, although it has been labelled a ‘great depression’, it was not really a period of stagnation.1Rather, it was a time of profound structural change. Manufacturers were faced with increased competition, overstocked markets and rising workers’ demands. To defend their profit margins, they embarked on far-reaching reorganizations, experimenting with mergers and cartels to restrict cut-throat competition, thus initiating a long-term movement of centralization. They also introduced serial production techniques that raised labour productivity while enabling them to substitute unskilled workers for demanding craftsmen. These transformations were not as far-reaching in the United Kingdom, which was suffering from the dialectics of progress. Neither had they much impact in the Netherlands, where the international deceleration interrupted the newly begun take-off of modern industry. Conversely, they were very marked in Germany and the United States. In these countries industrial growth remained vigorous, which enabled the United States to overtake the United Kingdom as the leading manufacturing nation by the end of the century, while Germany was poised ready to follow. Nevertheless, the United Kingdom remained the world’s leading banking and commercial nation, as well as its first naval and imperial power.
