Hostname: page-component-78c5997874-t5tsf Total loading time: 0 Render date: 2024-11-01T21:07:22.721Z Has data issue: false hasContentIssue false
  • English
  • Français

The American Challenge of the Twenties: Multinationals and the European Motor Industry

Published online by Cambridge University Press:  03 March 2009

James Foreman-Peck
James Foreman-Peck
Affiliation:
Lecturer in Economics at the University of Newcastle upon Tyne, Newcastle upon Tyne, Great Britain NE1-7RU.
Get access Rights & Permissions [Opens in a new window]

Abstract

The different rates of technical progress in Western Europe and the United States, exemplified by the motor industry, created a problem of adjustment in international payments by the 1920s. American direct investment in manufacturing in Europe was a manifestation of technological superiority and a partial solution to the payments problem. The scale of their operations gave the American motor vehicle firms an advantage even in foreign production. An alternative way of closing the technological gap, the transfer of machine tools and trained men from America to Europe, allowed the European motor vehicle producers to compete without becoming entirely American-owned.

Type
Articles
Information
The Journal of Economic History , Volume 42 , Issue 4 , December 1982 , pp. 865 - 881
Copyright
Copyright © The Economic History Association 1982

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1 Svennilson, Ingvar, Growth and Stagnation in the European Economy, United Nations Economic Commission for Europe (Geneva, 1954), pp. 20–23.Google Scholar

2 Vanek, Jaroslav, The Natural Resource Content of the United States Foreign Trade, 1870–1955 (Cambridge, Massachusetts, 1963), pp. 128–30.Google Scholar

3 Falkus, Malcolm E., “United States Economic Policy and the Dollar Gap of the 1920's,” Economic History Review, 2nd ser., 24 (11. 1971), 599–623.CrossRefGoogle Scholar

4 United Nations, International Capital Movements during the Inter-War Period (Lake Success, New York, 1949), pp. 30–32.Google ScholarSvedberg, P., “The Portfolio-Direct Composition of Private Foreign Investment in 1914 Revisited,” Economic Journal, 88 (12. 1978), 763–77, argues, however, that pre-1914 direct investment has been underestimated.CrossRefGoogle Scholar

5 Southard, Frank A. Jr, American Industry in Europe (1931; reprint ed., New York, 1976), p. xiii.Google Scholar

6 See, for example, Rosenberg, Nathan, Perspectives on Technology (Cambridge, 1976), p. 157.CrossRefGoogle ScholarCasson, Mark, Alternatives to the Multinational Enterprise (New York, 1979), chap. 3.CrossRefGoogle Scholar

7 Chandler, Alfred D., “The Growth of the Transnational Industrial Firm in the United States and the United Kingdom: A Comparative Analysis”, Economic History Review, 2nd ser., 33 (08. 1980), 396–410.CrossRefGoogle Scholar

8 Wilkins, Mira, “Modern European Economic History and the Multinationals,” Journal of European Economic History, 6 (Winter 1977), 575–95.Google Scholar

9 An influential view of the danger for Europe of American multinationals in the 1960s was Servan-Schreiber's, Jean Jacques, The American Challenge (New York, 1968).Google ScholarSouthard (American Industry, pp. 184–86) provides a sample of European objections in the 1920s.Google Scholar

10 U.S., Department of Labor, Wages and Hours of Labor in the Motor Vehicle Industry, Bulletin no. 502 (1928);Google ScholarSeltzer, Lawrence H., “The Automobile Industry,” in Encyclopedia of Social Science, ed. Seligman, Edwin R. A. (New York, 1930).Google Scholar

11 The use of the term “revealed comparative advantage,” is due to Balassa, Bela A., “Trade Liberalization and ‘Revealed’ Comparative Advantage,” The Manchester School, 3 (1965), 99–123.CrossRefGoogle Scholar

12 Pound, Arthur, The Turning Wheel. The Story of General Motors through Twenty-five Years: 1908–1933 (New York, 1934), p. 246.Google Scholar

13 Britain, Great, Imperial Economic Committee, A Survey of Trade in Motor Vehicles, H.M.S.O. (1936), p. 45.Google Scholar

14 Seltzer, “Automobile Industry.”Google Scholar

15 U.S., Special Consular Report, Dept. of Commerce and Labor (Manufactures Bureau), Motor Machines (1908).Google Scholar The American tariff was 45 percent compared with a zero rate in Britain, 2–3 percent in Germany, 8–12 percent in France, and 12 percent in Belgium. Laux, James M., In First Gear: The French Automobile Industry to 1914 (Liverpool, 1976), p. 101.CrossRefGoogle Scholar

16 Laux, In First Gear, p. 124.Google Scholar

17 For example, Temin, Peter, “Labor Scarcity and the Problem of American Industrial Efficiency in the 1850s,” in this JOURNAL, 26 (09 1966), 277–98.Google ScholarMusson, Albert E., “The engineering Industry,” in The Dynamics of Victorian Business, ed. Church, Roy A. (Boston, 1980). Musson argues that Whitworth overstated American machine-tool superiority for his own ends.Google Scholar

18 Epstein, Ralph C., The Automobile Industry: Its Economic and Commercial Development (1928; reprint ed. New York, 1972), p. 44.Google Scholar

19 Woodbury, Robert S., “Machine Tools,” in A History of Technology: The Twentieth Century, ed. Williams, Trevor I. (New York, 1978).Google Scholar

20 Koenigsberg, Frank, “Production Engineering”, Hiostory of Technology.Google Scholar

21 Sorensen asserts that no one at Ford Knew about Taylor's theories. Sorensen, Charles E., My Forty Years with Ford (New York, 1956), p. 41.Google Scholar

22 Taylor' recommendation of time study and rule of thumb personnel measures were most popular in American industry. His innovation in production management were less widely used. Nelson, Daniel, Frederick W. Taylor and the Rise of Scientific Management (Madison, Wisconsin, 1980), pp. 199–200.Google Scholar

23 Taylor, Frederick W., Principles of Scientific Management (New York, 1967).Google Scholar

24 Great Britain, Department of Overseas Trade, Cahill, J. R., Report on Industrial Conditions in France, H.M.S.O. (July 1925), appendix.Google Scholar

25 Hicks, Carl, “Report of the Automobile Situation in the World and Europe in 1927”, bound typescript, Detroit Public Library, p. 10.Google Scholar

26 Park, William M., The Automotive Industry and Trade of Great Britain and Northern Ireland (Washington, D. C., 1928).Google Scholar

27 “The AMO Automobile Factory”, The Automobile Engineer (July 1931), 245–50; “The Krasny Putilovetz Tractor Works”, The Automobile Engineer (09 1930), 314–21.Google Scholar

28 Wilkins, Mira and Hill, Frank Ernest, American Business Abroad: Ford on Six Continents (Detroit, 1964), p. 240.Google Scholar

29 Hicks, “Report of the Automobile Situation”, p. 24.Google Scholar Frank Woollard, Morris's production engineer, had been proud of his unusual machines and new methods, which achieved a degree of mechanization not attained in the United States. “Some Notes on British Methods of Continuous Production”, Proceedings of the Institution of Automobile Engineers, 03 1925 (London, 1925), pp. 85–93.Google Scholar

30 “Machine Tool Obsolescence”, The Automobile Engineer (March 1931), p. 115.Google Scholar

31 Rolt, Lionel T. C., Tools for the Job: A Short History of Machine Tools (London, 1965), p. 215.Google Scholar

32 Woollard, Frank, “Automobile Plant Depreciation and Replacement Problems”, Proceedings of the Institution of Automobile Engineers, 01 1931 (London, 1931), p. 258.Google Scholar

33 Hicks, “Report of the Automobile Situation”, p. 11.Google Scholar

34 On Czech steel, see Hicks, “Report of the Automobile Situation.” On British steel, see Sorensen to Perry, 20 August. 1934, Acc. 572, Box 18, #11.15, Ford Archives, Dearborn, Michigan.Google Scholar

35 Great Britain, PRO, BT 64/3187. A Board of Trade investigation, in the same file, broadly confirmed the S.M.M.T.'s costings.Google Scholar

36 Platet, Jean L., L's industrie Automobile depuis la Guerre (Paris, 1934), p. 142.Google Scholar

37 For the attitude of General Motors, see Sloan, Alfred Pritchard, My Years with General Motors, ed. McDonald, John (New York, 1964), p. 316.Google Scholar

38 “Percentage of Cost per Tudor Represented by American and Local Expenditure”, 28 June 1932, Acc. 572, Box 18, #11.15, Ford Archives.Google Scholar

39 Hicks, “Report of the Automobile Situation”, pp. 3, 9.Google Scholar

40 Wilkins, American Business Abroad, pp. 238–41.Google Scholar

41 Nevins, Allan and Hill, Frank Ernest, Ford: Decline and Rebirth, 1933–62 (New York, 1963), p. 81.Google Scholar

42 Pound, The Turning Wheel, p. 248.Google Scholar

43 Swayne, A., “Report of European and South American Trip, fall 1927 to the Executive Committee”, Vice President, 12 Jan. 1928, 3, 5, in C. S. Mott Papers, General Motors Institute Alumni Foundation's Collection of Industrial History, General Motors Institute, Flint, Michigan.Google Scholar

44 Phillips, Palmer to Perry, 5 Aug. 1931, Acc. 572, Box 18, #11.15, Ford Archives.Google Scholar

45 Sloan, My Years with General Motors, pp. 316–20; Pound, The Turning Wheel, pp. 248, 250, 258.Google Scholar

46 The Export Organisation of General Motors (1929), p. 18, Eleutherian Mills Historical Library, Wilmington, Delaware.Google Scholar

47 Sloan, My Years with General Motors, pp. 325–28.Google Scholar

48 Sedgwick, Michael, Cars of the Nineteen Thirties (London, 1970), pp. 176–286.Google Scholar

49 The Export Organisation of General Motors, p. 127.Google Scholar

50 Wilkins, “Modern European Economic History”, pp. 238–42.Google Scholar

51 Ibid.; Nevins, Allan and Hill, Frank Ernest, Ford: Expansion and Challenge, 1915–1933 (New York, 1957), chaps. 14, 21.Google Scholar

52 Maxcy, George and Silberston, Aubrey, The Motor Industry (London, 1959), p. 107.Google Scholar

53 Jacobson, D., “The Political Economy of Industrial Location: The Ford Motor Company at Cork 1912–1926”, Irish Economic and Social History, 4 (1977), 36–55.CrossRefGoogle Scholar

54 Wilkins, American Business Abroad, pp. 237–40.Google Scholar

55 Casson, Alternatives to Multinational Enterprise, p. 45.Google Scholar

56 For some instances of the transfer of American methods in the motor industry to Britain after the First World War, see Foreman-Peck, James, “The Effect of Market Failure on the British Motor Industry before 1939”, Explorations in Economic History, 18 (07 1981), 271.CrossRefGoogle Scholar

57 On the checkered history of the Rover Company in the 1920s and 1930s, see Foreman-Peck, James, “Exit, Voice and Loyalty as Responses to Decline: The Rover Company in the Inter-war Period”, Business History, 23 (07 1981), pp. 191–207.CrossRefGoogle Scholar

58 PRO, DSIR 16/93.Google Scholar

59 PRO, DSIR 16/32, DSIR 16/94.Google Scholar

60 “Report on Time and Motion Study and Fieldwork”, 6 Feb 1933, Acc. 572, Box 18, #11.15, Ford Archives.Google Scholar

61 Cowling to Perry, 17 Feb 1932, Acc. 572, Box 18, #11.15, Ford Archives.Google Scholar

62 Regional Director's Office, July 1927, C. S. Mott Papers, General Motors Institute.Google Scholar

63 “Comparison of Dearborn and Dagenham Estimated Cost of Model Y Tudor”, Acc. 572, Box 18, #11.15, Ford Archives.Google Scholar

64 Sarensen to Perry, 20 Aug. 1934.Google Scholaribid.

65 Sloan, My Years with General Motors, pp. 316, 318–19. GM did not regard all European management as inferior. They thought Mathis would make a good GM division head. Report on Mathis Co., 15, C. S. Mott Papers, General Motors Institute.Google Scholar

66 Perry to Sorensen, 19 Oct. 1929, sheet 3, Acc. 572, Box 18, #11.15, Ford Archives.Google Scholar

67 Klann and Kanzler, 15 Dec. 1923, 31 Dec. 1923, 7 Feb. 1924, 3 March 1924, Acc. 38, Box 12, Ford Archives.Google Scholar

68 Shimokawa, Koichi, “Marketing History in the Automobile Industry: The United States and Japan”, pp. 18–19; and Church, Roy, “The Marketing of Automobiles in Britain and the United States before 1939,” pp. 70–71,Google Scholar both in Development of Mass Marketing: The Automobile and Retailing Industries, eds. Okochi, Akio and Shimokawa, Koichi (Tokyo, 1981).Google Scholar

69 Quoted in Great Britain, Imperial Economic Committee, Survey of Trade, p. 44.Google Scholar

70 Ibid., pp. 13–14.

71 Nevins and Hill, Expansion and Challenge, appendix I.Google Scholar

72 Rhys, D. G., “Concentration in the Interwar Motor Industry”, Journal of Transport History, n.s., 3 (09. 1976), 241–64.CrossRefGoogle Scholar

73 Robert Rowthorn shows that European multinationals were investing in the United States in the 1960s at a rate comparable to American investment in Europe. International Big Business 1957–1967: A Study of Comparative Growth (Cambridge, 1971), pp. 62–65.Google Scholar