Reduction in Costs

WE mentioned earlier Professor Landes’s view that the whole of nineteenth-century price history can be seen in terms of large and continuous cost-reducing innovations. It is not difficult to point to individual examples of striking reductions in prices resulting from cost-saving innovations. New developments in transport both on land and sea come immediately to mind. The extension and refinement of the Bessemer and Siemens processes for making steel helped to bring the price of rails down from £15 10s in 1873 (or £9 17s 6d in 1874 after the end of the boom) to around £4 in the early 1890s; other technological changes reduced the price of tinplate from 30s in 1874 to under 10s in the mid-1890s, falls which clearly reflected more than the general price decline. But before we get too excited by this approach we must ask one or two questions. First, one we have already mentioned; over the last half-century there have been technological advances of similar magnitude, but on the whole prices have risen.