Electrification and industrialisation: An assessment of the industrial breakthrough in Norway

Abstract

The article relates the ‘industrial breakthrough’ in Norway to the introduction of electricity in manufacturing production. Viewing electricity as a General Purpose Technology (GPT), the new device fostered advances across a broad spectrum of sectors. Several other key technologies (e.g., within chemical industries) also played their part. However, in Norway, electricity took an extraordinarily strong position. By presenting quantitative evidence of the electrification process, and relating it to annual estimates of employment, productivity and value added between 1896 and 1920, it is shown that the manufacturing sector was too small to form a ‘breakthrough’ before the turn of the century. It was not until the widespread introduction of electricity and electric motors gained some momentum in the first decades of the twentieth century that the economy become really industrialised.

Acknowledgements

I am grateful for comments from Bj⊘rn Basberg, Ola H. Grytten, Fritz Hodne, Edgar Hovland, Jan Tore Klovland, Jan-Pieter Smits and two anonymous referees. The article is part of my dissertation submitted for the degree of dr. Oecon, entitled Industrial Development in Norway 1896–1939 – in View of Historical National Accounts, for the Norwegian School of Economics and Business Administration (NHH), Bergen, 2007.

Notes

1. Alexander Gerchenkron, Economic Backwardness in Historical Perspective (Cambridge, MA: Praeger Cambridge, 1962). For an introduction to the Scandinavian debate, see Olle Krantz, ed., Cross-Country Comparisons of Industrialisation in Small Countries, 1870–1940, Umeå University Occasional Papers in Economic History (Umeå: Umeå University, 1995).

2. For a general overview of the GPT literature, see Nathan Rosenberg and Manuel Trajtenberg, ‘A General-Purpose Technology at Work: The Corliss Steam Engine in the Late-Nineteenth-Century United States’, Journal of Economic History 64, no. 1 (2004): 61–99; T. Bresnahan and Manuel Trajtenberg, ‘General Purpose Technologies: Engines of Growth?’, Journal of Econometrics 65, no. 1 (1995): 83–108.

3. For a general overview of these developments, see David S. Landes, The Unbound Prometheus (London/New York: Cambridge University Press, 1970 [1969]), 1–4, 231–5, 284; David S. Landis, The Wealth and Poverty of Nations (New York/London: Norton, 1998), 186–99, 284–5; Walt W. Rostow, The Stages of Economic Growth (London/New York: Cambridge University Press, 1960), 9–10, 59–63. Note also a rising scepticism by N.F.R Crafts and other scholars to view industrialisation in terms of stages/revolutions, rather than continuous evolution. However, I do not enter the debate in this article.

4. Joseph Schumpeter, Capitalism, Socialism and Democracy (London: George Allen & Unwin, 1976 [1943]), 81–86; Joseph Schumpeter, The Theory of Economic Development: An Inquiry into Profits, Capitals, Interest and the Business Cycle (New York: Oxford University Press, 1961 [1934]), 212–55.

5. Francis Sejersted, ‘A Theory of Economic and Technological Development in Norway in the Nineteenth Century’, Scandinavian Economic History Review 40, no. 1 (1992): 1, 40–75; Francis Sejersted, Demokratisk kapitalisme (Oslo: Universitetsforlaget, 1993), 83–105; Even Lange, ‘Industrien bak det moderne Norge’, in Teknologi i virksomhet. Verkstedsindustri i Norge etter 1840, ed. Even Lange (Oslo: Ad Notam forlag, 1989), 24; Even Lange, ‘Samling om felles mål 1935–70’, Aschehougs Norgeshistorie, eds Knut Helle et al. (Oslo: Aschehoug, 1998), 11: 28–29. A range of other authors seem to support this view: Trond Bergh, Tore Hanisch, Even Lange and Helge Pharo, eds, Norge fra U-land til I-land (Oslo: Gyldendal Norsk Forlag, 1988 [1983]), 146, 220, 231; Jostein Nerb⊘vik, Norsk historie 1870–1905 – fra jordbrukssamfunn mot organisasjonssamfunn (Gj⊘vik: Det Norske Samlaget, 1986), 82–8; Gro Hagemann, ‘Det moderne gjennombrudd 1870–1905’, Aschehougs Norgeshistorie, eds Knut Helle et al. (Oslo: Aschehoug, 1997), 9: 142–4.

6. Lennart Schön, ‘Total Factor Productivity in Swedish Manufacturing in the Period 1870–2000’, in Heikkinen, S. and van Zanden, J.L., (eds), Exploring Economic Growth. Essays in measurement and analysis. A Festschrift for Ritta Hjerppe on her 60th Birthday, 2004, 273–97, 278; Olle Krantz, ‘Swedish Historical National Accounts – The State of the Art: Notes on Output Levels and Industrialisation in Denmark, Finland and Sweden, 1870–1940, in Krantz, Cross-Country Comparisons, 1–15, 84–113.

7. Official Statistics of Norway (NOS), Fjerde Række 99. – NOS VII. 5, Industristatistikk, 1895/96–1918, annual publications (Kristiania/Oslo: Aschehoug, 1904–1921). I have complemented the series with estimates for two years where there is missing data: 1919 and 1920 (Christian Venneslan, Industrial Development in Norway (Bergen: NHH, 2007), Statistical Appendix, series 1, table 1.

8. Gunnar Nerheim, ‘Fra Laugstol Bruk til Alta – Norge under elektrisiteten’, Samtiden (1980): 6, 14-20, 17–18. For other studies of the impact of electrification at micro-level, see Astrid Wale, Nyhet, nytte, framskritt. Introdukson av lokale elektrisitetssystem 1877-1900. Trondheimi et nasjonal og internasjonal perspektiv (Trondheim: NTNU, 2004); Finn E. Johannessen, I st⊘tet. Oslo Energi gjennom 100 år 1892–1992 (Oslo: Gyldendal, 1992).

9. The first one to use the concept ‘industrial breakthrough’ in this manner is, as far I have recognised, Per Fuglum, ‘Norge i st⊘peskjeen 1884–1919’, in Norges Historie, ed. Knut Mykland (Oslo: Cappelen, 1978), 12: 275. Many authors also use the terms ‘industrial breakthrough’ and ‘industrial revolution’ in concurrent sentences (see, e.g., Lange, ‘Industrien bak det moderne Norge’, 24).

10. A (balanced) presentation of these events, emphasising continuity and not breakthroughs, is given in A.J. Svendsen, W. Holst and G.C. Wasberg, ‘Industrialiseringens gjennombrudd’, in Dette er Norge 1814–1964, eds. Johan T. Ruud et al. (Oslo: Gyldendal Norsk Forlag, 1963), 363–414; G.C. Wasberg and A.S. Svendsen, Industriens historie i Norge (Oslo: Norges Industriforbund, 1969), 57–163.

11. Francis Sejersted, ‘En teori om den ⊘konomiske utviklingen i Norge i det 19. århundre’ (unpublished paper, Department of History, University of Oslo, 1973), later version presented in Sejersted, Demokratisk kapitalisme, 47–105.

12. Sejersted, ‘Economic and Technological Development in Norway’, 73.

13. Sejersted, ‘Economic and Technological Development’, 67–71; Francis Sejersted, ‘Teknisk utvikling i sagbruks- og treforedlingsindustrien under krisen i 1880-årene’, in Fra Linderud til Eidsvold Værk, ed. Francis Sejersted (Oslo: Pax, 1979), 3; Even Lange, ‘To Take Great Pains’: Norwegian Wood Pulp on the British Market in the 1870s’, in Technology Transfer and Scandinavian Industrialisation, ed. Kristine Bruland (New York/Oxford: Berg, 1991), 387–403.

14. Lange, 'Industrien bak det moderne Norge’, 20.

15. Kristine Bruland, 'Norsk mekanisk verkstedsindustri og teknologioverf⊘ring’, in Lange, Teknologi i virksomhet, 33–73; Kristine Bruland, ‘The Norwegian Mechanical Engineering Industry and the Transfer of Technology’, in Technology Transfer and Scandinavian Industrialisation, ed. Kristine Bruland (New York/Oxford: Berg, 1991), 238–40.

16. Edgar Hovland and Helge W. Nordvik, ‘Det industrielle gjennombrudd i Norge 1840–1914 med samtidens og ettertidens ⊘yne’, in I det lange l⊘p. Essays i ⊘konomisk historie tilegnet Fritz Hodne, eds Bj⊘rn L. Basberg et al. (Bergen: Fagbokforlaget, 1997), 61–85, 77–80. In their historiographical overview, Hovland and Nordvik operate with a third school of though with regard to the timing of the industrial breakthrough. Bruland has allegedly argued for a breakthrough before 1875. In my view, this is a misunderstanding of her work. She is more concerned with explaining the first wave of industrialisation (in textile and metal industries), rather than describing an industrial breakthrough in the way Hovland and Nordvik defines it.

17. Lange, ‘Industrien bak det moderne Norge’, 13, 20; Bergh et al., Norge fra U-land til I-land, 146.

18. Fuglum, ‘Norge i st⊘peskjeen’, 286, 289–90; Håkon W. Andersen, ‘Norsk skipsbyggingsindustri gjennom 100 år’, in Lange, Teknologi i virksomhet, 80–1.

19. Fuglum, ‘Norge i st⊘peskjeen’, 302 (authors translation).

20. Fritz Hodne, Norges ⊘konomiske historie 1815–1970 (Oslo: Cappelens Forlag, 1985 [1981]), 87; Fritz Hodne and Ola H. Grytten, Norsk ⊘konomi i det 19. århundre (Bergen: Fagbokforlaget, 2000), 273–4. Also in Fuglum, ‘Norge i St⊘peskjeen’, 280. Other supporter of this view are: Per R. Mikkelsen, ‘Tremasseindustri 1863–1895. En studie i industrielt gjennombrudd’ (Cand. Philol. Diss., University of Oslo, 1975); Odd Halvorsen, ‘Tremasseeksporten 1870–95’, Historisk Tidsskrift 69, no. 1 (1990): 36–54.

21. Hodne, Norges ⊘konomiske historie, 334.

22. Hans Try, ‘To kulturer – en stat 1850–1884’, in Mykland, Norges Historie, 11: 216. If regarding manufacturing in a broader context, one has to add some fabricants of cod liver oil, mining and a simple, factory of canned food in Hasvik, located farthest north.

23. Fritz Hodne and Ola H. Grytten, Norsk ⊘konomi i det 20. århundre (Bergen: Fagbokforlaget, 2002), 44–6; Fritz Hodne, ‘Growth in a Dual Economy’, in The Industrial Revolution in Europe, ed. P.K. O'Brien (Cambridge, MA: Basil Blackwell, 1994), 2: 409; Fuglum, ‘Norge i st⊘peskjeen’, 296–7; Hodne, Norsk ⊘konomisk historie, 360–2. The view that the industrial-manufacturing bourgeoisie held a weak position in Norway has been questioned by Knut Sogner, ‘Det norske næringsborgerskapet under den andre industrielle revolusjon’, Historisk tidsskrift 81 (2002): 231–51.

24. Hodne, Norsk ⊘konomisk historie, 371 (my translation).

25. Landes, The Unbound Prometheus, 284, 287–8.

26. A general overview of electricity in the Norwegian economy during the period can be found in Lars Thue, Statens kraft 1890–1947 (Oslo: Cappelen Forlag, 1994), 20–94; J. Sanberg, Trekk fra elektrisitetsforsyningens utvikling, book 1 (Oslo: NEVE, 1951). For other Nordic countries, see, e.g., Timo Myllyntaus, Electrifying Finland: The Transfer of a New Technology into a Late Industrialising Economy (London: Macmillan, 1991). None of these authors, however, explicitly regard the influence of electric power and motors for smaller and medium-sized firms.

27. R. Sch⊘yen, ‘Kristiania by's forsyning med elektricitet’, Teknisk Ugeblad 45 (1904): 482–5; Warren D. Devine, ‘From Shafts to Wires: Historical Perspectives on Electrification’, Journal of Economic History 43 (1983): 359–60.

28. Richard B. Du Boff, ‘The Introduction of Electric Power in American Manufacturing’, Economic History Review (1967): 20:3; David E. Nye, Electrifying America: Social Meaning of a New Technology, 1880–1940 (Cambridge, MA: MIT Press, 1990).

29. Hodne, Norges ⊘konomiske historie, 352.

30. R. Sch⊘yen, ‘Om anvendelse af elektricitet som kraftfordelingsmiddel i mekaniske verksteder’, Teknisk Ugeblad 45 (1904): 324–5, 335–8, 345–6 (authors translation).

31. Sch⊘yen, ‘Om anvendelse af electiricitet’, 324–5, 336.

32. Devine, ‘From Shafts to Wires’, 364. Also in Du Boff, ‘Introduction of Electric Power’, 512.

33. Sch⊘yen, ‘Kristiania by's forsyning med electricitet’, 484. Sch⊘yen states: ‘With regard to small-scale manufacturing, electric drive is undoubtedly … the best of all power means, whether the alternatives are gas or steam’ (authors translation).

34. Ryoshin Minami, ‘The Introduction of Electric Power and Its Impact on the Manufacturing Industries: With Special Reference to Smaller Scale Plants’, Japanese Industrialization and Its Social Consequences, ed. Patrick, H. Berkeley (Berkeley, CA: University of California Press, 1976), 299–325 (table 2, 304, table 3, 306).

35. One can easily imagine how the introduction of electric-driven machine tools in metal industries (but also in wood product industries, etc.) transformed production in fundamental ways. An example is the electrical-driven lathe. As an electric unit drive system, this machine was produced by Br⊘drene Sundt in Norway by 1907, and soon obtained a dominant position among Norwegian manufactures. Other important electric unit drive machines widely adapted at the time were: plane-machines, drilling machines, cutting machines, pump machines and milling machines. For a closer examination, see ‘Elektrisk dreven dreiebænk for hurtigdreiestaal’, Teknisk Ugeblad (1907): 233–4; Sch⊘yen, ‘Om anvendelse af electricitet’, 337.

36. NOS VI. 50, Fabriktællingen i Norge 1909, Fjerde hefte, NOS VII. 49., Produksjonsstatistikk for industrien 1916 (Kristiania: Aschehoug, 1922); Venneslan, Industrial Development in Norway, Statistical Appendix, series 2: table 2, series 3: table 3.

37. Venneslan, Industrial Development in Norway, Statistical Appendix, series 1: table 1, series 2: table 2, series 3: table 3.

38. Hagemann, ‘Det moderne gjennombrudd’, 151.

39. Venneslan, Industrial Development in Norway, Statistical Appendix, series 2: table 2, series 3: table 3.

40. Venneslan, Industrial Development in Norway, Statistical Appendix, series 1: table 1, series 2: table 2, series 3: table 3.

41. For a more comprehensive definition of the productivity concept, see, e.g., Palgrave Economic Dictionary, 1010–1013; Robert M. Solow, Capital Theory and the Rate of Return (Amsterdam: North Holland, 1971 [1963]), 41–52; Robert M. Solow, Growth Theory: An Exposition (London: Oxford University Press, 1970), 33–8.

42. For a similar approach, see Sidney Sonenblum, ‘Electrification and Productivity Growth in Manufacturing’, in Electricity in the American Economy: Agent of Technological Progress, eds Sam H. Schurr et al. (New York: Greenwood Press, 1990), 277–324.

43. A good introduction to the relationship between energy and productivity is found in Sidney Sonenblum, ‘Overview and Commentary’, in Energy, Productivity and Economic Growth, eds Sam H. Schurr et al. (Oslo: Aschehoug, 1965), 3–43.

44. NOS XI. 143, National Accounts 1900–1929 (Oslo: Aschehoug, 1953); NOS XII.163, National Accounts 1865–1960 (Oslo: Aschehoug, 1965).

45. Statistics Norway published some indexes of manufacturing production in the 1950s. However, for the period 1900–1910, the basic statistics underlying these estimates were mainly registered man-hours worked in industries subordinated to the law of accident insurance. Though these employment statistics may suit to calculate labour inputs in manufacturing, they are not very fitting as the only basis for real product estimates. For a detailed overview of the calculations, see Gerhard Stoltz, Økonomisk Utsyn 1900–1950, Samfunns⊘konomiske studier 3 (Oslo: Statistisk sentralbyrå, 1955), table 3, 195.

46. Venneslan, Industrial Development in Norway, Statistical Appendix.

47. Landes, The Unbound Prometheus, 293. For a closer examination of the relationship between power capacity and capital growth in the United States, see Devine, ‘From Shafts to Wires’, 349. For Sweden, see Magnus Lindmark, ‘Technical Change and the Pattern of Industrialization in Sweden, 1880–1990: TFP Calculations Based on New Estimates of Capital Stocks’, in Nordic Historical National Accounts, ed. G. Jonsson (Reykjavik: University of Iceland, 2003), 212.

48. Fabricant Solomon, ‘The Productivity-Growth Slowdown: A Review of the Facts’, in Schurr et al., Energy, Productivity and Economic Growth, 47–70. Another effect of this process is the retardation of the growth in capital productivity (i.e., in output per unit of capital input). An increase in the rate of capital to labour implies that capital input grows relatively faster than input of labour. Output per unit of capital will accordingly slow down, while labour productivity rises because of relatively higher rates of output per unit of labour.

49. Christian Venneslan, ‘National Accounts in Norway 1896–1939: New Figures for Manufacturing Industry’ (Dr. Oecon., diss., Norwegian School of Economics and Business Administration, 2007).

50. John W. Kendrick, ‘International Comparisons of Recent Productivity Trends’, in Schurr et al., Energy, Productivity and Economic Growth, 71–120. Growth accounting, as ordinarily applied, deals with the overall economy rather than specific production sectors. This means that the structure of production (only relating all inputs to gross outputs) is not explicit and the intermediate inputs (such as energy and materials) are netted out. This is important with regard to estimates of productivity growth at disaggregated level – for instance, in efforts to calculate productivity for each, single product group in manufacturing. Traditional growth accounting procedures are rather unsuitable to such a task, and are an argument in favour of more direct/empirical methods of estimation.

51. We are not able to measure the impact of electricity on labour productivity ‘directly’ by assessment of the manufacturing censuses. Such estimates are in many ways connected with great uncertainty. The broad adoption of the new technology should, however, imply a general rise in the productive efficiency of labour. For suggestions of methods to do ‘direct’ estimates, see Jeremy Atack, Fred Baterman and Robert Margo, Steam Power, Establishment Size and Labour Productivity Growth in Nineteenth Century American Manufacturing, NBER Working Paper 11931 (Cambridge, MA: National Bureau of Economic Research, 2006), 15–22.

52. NOS V. 97, Industristatistikk for året 1905 (Kristiania; Aschehough, 1909), 28–9 (authors translation).

53. C. Goldin and L. Katz, ‘The Origins of Technology-Skill Complementary’, NBER Working Papers (1996): 7752.

54. Fuglum, ‘Norge i st⊘peskjeen’, 179

55. Tore J. Hanisch and Even Lange, Vitenskap for industrien: NTH-en h⊘yskole i utvikling gjennom 75 år (Oslo: Universitesforlaget, 1985).

56. Hagemann, ‘Det moderne gjennombrudd’, 39–43.

57. Fritz Hodne, ‘Growth in a Dual Economy’, in O'Brien, Industrial Revolution in Europe II, 407. For discussions about productivity growth in Norway, see Fritz Hodne and Ola H. Grytten, Norsk ⊘konomi (Bergen: Fagbokforlaget, 2002), 1: 209, 2: 18–20, 25.

58. Hagemann, ‘Det moderne gjennombrudd’, 79, 82.

59. Be aware that these numbers of manufacturing employment includes independent workers and employees in adjacent craft industries (from the population censuses). This explains the difference in magnitudes in relation to comments on Figure 5 above, where only employees in factories and smaller scale manufacturing were included.

60. This was a general trend during the Second Industrial Revolution (see, e.g., Sonenblum, ‘Overview and Commentary’, 5). Be aware also that a shift of resources from agriculture to manufacturing did not increase productivity in manufacturing by itself; it only released more labour and efforts to work in manufacturing production, thus rising output growth.

61. Sonenblum, ‘Overview and Commentary’, 12; Kendrick, ‘International Comparisons’, 107.

62. Try, ‘To kulturer – en stat 1850–1884’, 11: 223–6.

63. Berg et al., Norge fra U-land til I-land, 146 (authors translation), Similar arguments are found in Lange, ‘Industrien bak det moderne Norge’, 20; Lange, ‘Samling om felles mål’, 28–9.

64. NOS XI.143, National Accounts 1900–1929 (Oslo: Aschehoug, 1953), table 18, 134.

65. In this way the NIA statistics defines the chronological limitation of this article. Entering the period before 1896, one will meet severe difficulties in constructing annual series of manufacturing development.

66. Alfred Chandler, The Visible Hand (Cambridge, MA: Harvard University Press, 1977), 346–7.