eBusiness Weekly
Alfred M. Mthimkhulu
History suggests that leaders tend to read a lot hence the much-cited quote from the thirty-third President of the United States, Harry Truman, that “not all readers are leaders, but all leaders are readers”. Usually, they are writers too.
“We Rothschilds are inveterate scribblers and cannot live without letter writing and letter receiving,” wrote matriarch Charlotte to her children in 1874.
This article is not about leadership or the revered banking dynasty. Rather, it draws from the life of a short white-bearded American of Scottish origin.
He was laid to rest in 1919 but, as Dr Solomon Guramatunhu once shocked his audience in reference to another leader and tycoon, Cecil J. Rhodes, the white-bearded man is, like Rhodes, still alive.
He too was a scribbler, verbose and with a high sense of self.
He was probably the richest man in the world then and rubbed shoulders with the who’s and who’s on both sides of the Atlantic.
Royalty hosted him: Kaiser Wilhelm II in Germany, King Edward VII in England and King Victor Emmanuel in Italy.
In Washington, he would pass by the Whitehouse uninvited because he felt like saying hello to the President.
He boasted friendships with all US Presidents from General Ulysses Grant to Dr Woodrow Wilson (though some didn’t consider him a friend but an unavoidable irritant, especially Presidents Taft and Roosevelt). But he was sincere. For instance, he left pensions to some former US Presidents, UK Prime Ministers, cabinet ministers and some of their spouses in an era where such public servants were likely to be almost destitute soon after leaving office.
A good man: Andrew Carnegie, the US steel mogul.
At the turn of the century as the Anglo-Boer war raged in our backyard, he had already appointed himself adviser to world leaders on ‘fighting’ to banish wars forever. Few leaders took his end-of-wars mission seriously but couldn’t tell him to his face – after all, how many can openly dismiss a rich person’s project.
They mocked him behind his back and returned his flatteries in hope for cheques they desperately needed.
Anyway, it is not his life as a peace activist or philanthropist I would like us to reflect on but his three decades as a full-time for-profit entrepreneur.
How did a poor immigrant get to eventually command, at a personal level, budgets larger than so many nations combined and thereby earn immortality?
Let me use a newspaper article, he published in 1908 as a starting point to discuss the commercial undertakings that underpinned his fortune and hence his fame and philanthropic ventures.
My core reference in this discussion is a biography by David Nasaw published in 2006.
Here is a quote from the article wherein he refers to himself in third person: “The writer has cooperated in making several reductions as steel manufacturers became able to bear reductions.
Today they need no protection, unless perhaps in some new specialities unknown to the writer, because steel is now produced cheaper here than anywhere else . . . the Republic has become the home of steel, and this is the age of steel.”
In 1870, the Republican government (Carnegie was a Republican too) had imposed a $28-a-tonne tariff on imported steel.
Thanks to this tariff, as David Nasaw writes “the door was opened wide for American steel manufacturers. At a stroke of the pen, the British steel mills lost their competitive advantage”.
Does this tariff explain the rise of Andrew Carnegie? It does but, there was something else that contributed perhaps in equal measure, perhaps even more, to his rise than the tariff.
That something was the insatiable demand for steel within the US and elsewhere, but especially within the US.
This was only five years after the Civil War. Reconstruction was in full swing, especially repair of railroads and construction of new ones to link the west and the devastated south to the ports in the eastern coast.
Primary products such as cotton which had been key economic drivers before the Civil War were giving way to a manufacturing sector thanks in part to the discovery of oil in 1858 and rapid experimentation and adoption of technologies to distil it to kerosene and other petrochemical products we know so well today.
This further accelerated demand for rail cars, more rail roads and more investments in communication and other modes of transport.
Agriculture was getting more mechanised with more combine-harvesters slaving than humans.
The defence sector was starting afresh set on being a global force and who else to supply steel than Andrew Carnegie’s firm. In short, the local economy was expanding, absorbing manufacturing output being churned by the sprawling factories.
Manufacturing out itself kept rising seeking to capture foreign markets.
It was a volumes game either way, local sales and exports.
Now, let us compare this state of the economy within which the tariff was introduced in 1870, right there at the dawn of England-Germany arms race wherein steel was one of the most sought-after raw materials in the production of battleships and other military artillery.
Let us compare that industrialising US to our country today and ask if protective tariffs could work as they did for Andrew Carnegie.
In answering this question, we must consider the impact of the Africa Continental Free Trade Area on each of the local industrial sub-sector.
AfCFTA redefines local and potentially expands ‘local’ market but also opens up this new local to more competitive neighbours.
Whether protective tariffs will promote our industrialisation drive is thus a complex question which requires methodical scrutiny.
It is also important to note that other than the protective tariff working to his advantage, there was his tenacity in acquiring new technologies and human capital from other parts of the world to improve efficiency.
Clearly, a lot goes into industrial development.
“The passage of the 1870 tariff was, Carnegie later claimed, the single most important event in prompting him to enter the steel business,” writes his biographer. Thirty-eight years later in 1908, he was subpoenaed to a Senate hearing after his controversial article we discussed above. In the hearing, he was unwavering in his call for a complete repeal of the tariffs that had underpinned his commercial success. His view was that the tariff had outlived its usefulness.
There are three questions SADC frontier economies need to address head-on in their quest to industrialise or in the very least, improve their economic output: the first is on sectors to be prioritised; the second is on the duration of protection; the last is on resources necessary to ensure that set time-frames will be met – resources being technology, financial capital and human capital. Ambiguity in any or all of the three renders any industrial development policy mediocre.
There will be no better time than this in our backyards to study and crunch number so as to determine the most reasonable and feasible industrialisation trajectories. From such analyses and resultant policies, who knows, maybe a beardless somebody may, in 38 years’ time, be lobbying for the repeal of a tariffs that catapulted the region to higher levels of economic productivity. So much good would then accrue to society as we learn from the lives of industrialists of yesteryear in those distant lands we call developed.
Email: [email protected]
Twitter: @mthimz.
