Page Paragraph* Line

viii Figure 19, chronologies** 8 3 1 W W Rostow 22 2 ' 7 accounting * 4 5 • which may be** related 26 2 5 where F is the [the] fraction 56 3 7 around 50 years, [wave.] 57 5 11 determining 82 2 10 examplet sJ 85 2 7/9 Bismarck 96 4 1 innovation[s] 99 T8 After Television add Airlines, 1925,50 102 1 22 As a result, [but] these new 3 3 to have [affect] a major 5 after the next wave 6 industrial 107 3 1 One of the railroads' [impacts] 116 5 3 Ve[n]hicle 178 2 1 reason for [of] low 3 2 mines are faced 207 2 2 wave that [somes have] sometimes 209 2 17 £4.24 216 1 4 pur[r]chased 217 5 4 m[o]ajor • 6 4 standard 218 2 6 market says 224 3 3 vanadium 225 1 2 change [on the mineral] specifically 2 11 bureaucratic. 240 4 4 highly 242 Eliminate the top line 248 F45 Years on X-axis begin 1850 not 1845, then 1970 etc, and end 1990 not 1980 250 2 8 Table 32 255 2 3 anti-te[njchnological last Word on page: trans- 256 2 2 methods 2 3 technological 260 2 2 declines* 263 1 [l]X SUMMARY 340 Lynn: add the title " 341 Meadows: add "Limits to Growth"

Paragraphs are counted from top of the page ■ v-c-t*-:-v Mmmmt “Underlined =change to or insert;. [ ] =eliminate . C ■ ' . ■: .. -V.’ THE IMPACT OF TECHNOLOGICAL AND SOCIAL CHANGE ON MINERAL EXPLORATION

Hugh Douglas

Submitted in fulfillment for the degree of MPhil University of

Department of Geology Royal School of Mines Imperial College University of London

November 1985 ABSTRACT This study examines historical social and techological changes and the influence of these changes on the minerals industry and mineral exploration. Since the beginning of the Industrial Revolution the economies of the Western world have expanded and contracted in Long Waves of 40 to 00 years to the ebb and flow of social change and society’s acceptances of new innovations and technologies. Mineral exploration has been a part of these changes. The origins of historical economic expansions appear to lie in social change, that is, during periods in which man's perception of his future becomes more optimistic than the previous period. Concurrently certain key communications, including transport, expand technologies rapidly to create an economic upward wave and business expansion. Long term changes in climate may be a strong factor in altering man’s perceptions of his future. Historically, innovations occur in clusters indicative of a Long Wave of 40 to 00 years. In addition, society is a self­ reinforcing learning system in which ideas and technologies expand logarithmically and rapidly during periods of optimism and economic expansion. The growth of geologic theory and thought has shown a sim ilar development pattern of expansion and contraction in a Long Wave. Discoveries of major base metals in Canada and Australia exhibit this same rise and fall. Examples of social change are discussed in four countries: the United States, the United Kingdom, France, and Japan. Major technologies examined are railways, telegraph, automobility, aviation and integrated circuits and optoelectronics (IC/OE). Four metals, , , gold and vanadium, are studied as examples of the effect of technological and social change. t

The current downturn in the world's economies began in the late 1960s and early 1970s; the mineral industries and explora­ tion have followed the same path. Social change currently underway and key innovations/technologies now in place suggest that the next upward wave and economic expansion will take place in the early 1990s with a resultant increase in mineral and metal demand. New geologic ideas on the formation of ore deposits which orginated from the theories of plate tectonics will create a revolution in mineral exploration and thus expand the mineral and metal resource base.

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TABLE OF CONTENTS

ABSTRACT i i i LIST OF FIGURES v iii LIST OF TABLES x I ACKNOWLEDGEMENTS 1 I INTRODUCTION 3 III ECONOMIC GROWTH 7 The Concept of Economic Growth 7 Climatic Influence on Economic Activity 18 Society as a Learning Curve 25 Invention and Innovation 36 IV THE LONG WAVE 53 Cycles 53 The Long Wave 56 Synthesis of Long Wave Theories 67 The Current Wave 71 V SOCIAL AND CULTURAL CHANGES 75 Technological Conditions and Social Change 75 Social Restraints on New Technology 79 Technology, Social Structure and Culture 83 Some Evidence of Social Change and the Long Wave 87

v 4

TABLE OP CONTENTS(continued)

VI MAJOR TECHNOLOGIES 95 Major Innovations and Technologies 96 Railways, Steel and Telegraph 103 Automobiles 116 Aviation 140 Integrated Circuits and Opto-electronics 156 VII THE MINERAL INDUSTRIES 167 Early Institutional Changes 168 Social Organization in the Mines 169 Labour and Wages 178 Mining Technological Innovation and the Long Wave 180 Industry Concentration 185 VIII METAL CASE HISTORIES 189 Copper 189 Aluminium 196 Gold 207 Vanadium 218 IX MINERAL EXPLORATION 225 Stages in Geologic Theory 226 Geoscience Trends since World War II 235 The Pattern of Mineral Exploration Discoveries 241 The Downturn in Exploration and the Long Wave 247 World Uranium Discoveries and the Long Wave 250 Mineral Exploration and Geologic Models 255 The Next Surge in Mine Finding 258 Mineral Exploration and Organization Structure 259 *

TABLE OF CONTENTS (concluded)

X SUMMARY AND CONCLUSIONS 263 Social Change and Technology 263 Social Change and Climate 265 Inventions/Innovations and Primary Fuels 266 Key Technologies 267 The Mineral Industries 268 Mineral Exploration 269 The Future of Mineral Exploration and the Mineral Industries 272 XI APPENDICES 275 A. Supplementary Tables 277 B. Social Change in Britain, the United States and Japan 301 XII REFERENCES 333

vii LIST OF FIGURES

1 Typical S-Shaped Growth Curves 10 2 Changes in Temperature in the Northern Hemisphere, 553-1980 20 3 Average Temperature Changes in Northern and Other Latitudes 23 4 Evolution of the Vocabulary of a Child 27 5 Efficiency for Electricity Production 28 6 Historical Development of Transmission Systems 29 7 Increase in Thermal Efficiency for Hydro­ carbon Fueled Stationary Steam Power Plants 30 8 Increase of Speed of Transportation with Time 31 9 Improvement in Coldness with Time 33 10 Four Examples from the Guiness Book of World Records 34 11 Historical Variation of Time Constants for Technological Change, 1400-1960 35 12 Swarms of Basic Innovations, according to Mensch 46 13 Survey of Lead Times since the Industrial Revolution 48 14 The Last Three Invention/Innovation Waves 50 15 Return on C apital in the U.S. 58 16 U.S Wholesale Price Index, 1800-1984 59 17 Invention and Innovation Waves: the Secular Set 61 18 Granted, World, USA and Germany, 1883-1982 65 19 Long Wave Chronolgies by Author 69 20 Historical and Projected Long Waves 72 21 Voting Intention in the United Kingdom, 1961-1985 90 22 US Birthrate, 1820-1980 91 23 Market Penetration of Four Processors or Machines in the United States 101 24 U.S. Motor Vehicle Production and Federal Highway Expenditures, 1920-1982 124 25 U.S and World Production of Motor Vehicles, 1900-1982 126 26 Car Registrations in the United States 130 27 Total World Car Registrations and Gasoline Consumption 135 28 US Air Passeanger Miles and International Passengers 151 29 Number of Telephones in the United States, 1875-1984 157 30 Cost of a Three-Minute Phone Call, New York to Chicago, 1902-1984 161 ¥

LIST OF FIGURES (concluded)

31 Cost of Three-Minute Phone Call, New York to London, 1927-1984 162 32 Two Hundred Years of Invent ions/Innovation in Mining, 1780-1980 184 33 World Copper Production, 1840-1980 190 34 U.S Copper Prices 192 35 World Aluminium Production 203 36 U.S. Aluminium Prices, 1895-1983 204 37 World Gold Production 211 38 Gold Prices in London, 1840-1984 215 39 World Production of Vanadium Ores and Concentrates, 1931-1983 221 40 U.S. Vanadium Prices, 1931-1983 222 41 Milestones in Geologic Development and the Long Wave 233 42 Annual and Cumulative Citations in Exploration Geochemistry 238 43 Canada: Number of Discoveries of Economic Mineral Deposits, 1920-1983 244 44 Base Metal Discoveries in Canada, 1846-1978 246 45 Base Metal Discoveries in Australia, 1845-1979 248 46 World Uranium Deposit Discoveries and Tonnes of U3O3 Discovered per Deposit, 1949-1980 254 4

LIST OF TABLES

1 160 Innovations in the 19th and 20th Century 39 2 Lag Time between 20 Inventions and their Innovation in the United States, 1886-1964 49 3 Long Wave Chronologies According to Various Authors 68 4 Average Timing of Long Waves 70 5 Socio-Political Themes in the Speech from Throne, 1790-1983 88 6 Comparison of Social Change in England and the United States 93 7 Mileage of U.S. Canals and Railroads, 1830-1890 97 8 Upward Waves and Major Technologies 99 9 Turning Points in U.S. Railroad History 104 10 Major Innovations in the and Steel Industry 110 11 Production and Consumption of Steel, 1871-1890 112 12 Average Price of Steel Rails 111 13 Major Inventions/Innovations in the Automobile Industry, 1853-1951 118 14 Motor Vehicle Production and the Long Wave 125 15 Annual U.S. Car Registrtions and Total Car Population 129 16 Car Registration Saturation by Selected Countries 129 17 Number of Passengers Flown by Principal Country 146 18 Growth Phases in U.S. and International Passenger Traffic 150 19 Total Telephones in Service at Year-end by Country 158 20 Intelsat Growth by Region, 1983-1987 160 21 Total Optical Fibre Plans in Equivalent Tonnes of Copper 164 22 M iners' Wages by Type of Mine, 1890 179 23 Inventions and Innovations in the Mineral Industries 181 24 World Primary Aluminium Capacity for the Six Major Producers, 1983 198 25 Milestones in Aluminium Technology 200 26 Gold Supply/Demand Balance, 1973-1983 213 27 World Demand for Fabricated Gold in 1973 and 1983 216 28 Milestones in Geologic Development, 1772-1984 228 29 Citations by Year of Publication in Exploration Geochemistry 237

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LIST OF TABLES (concluded)

30 Canada: Discovery of Economic Mineral Deposits, 1920-1983 243 31 Canada: Discovery of Economic Mineral Deposits by Discovery Method, Pre-1920 to 1976 249 32 Changes in Discovery Methods in Canada 251 33 World Uranium Deposit Discoveries, 1949-1983 252 A-l The 1802 Cycle (Inventions and Innovations) 277 A-2 The 1857 Cycle 278 A-3 The 1921 Cycle 280 A-4 World Copper Production, 1840-1982 282 A-5 Copper Prices, 1895-1984 284 A-6 World Production of Aluminium, 1860-1983 287 A-7 Aluminium Prices, 1895-1983 288 A-8 World Gold Production, 1840-1983 290 A-9 Gold Prices in London, 1840-1983 292 A-10 World Production of Vandium Ores, Concentrates and , 1931-1983 295 A-ll U.S. Vanadium Prices, 1931-1983 296 A-12 World Uranium Discoveries by Grade and Reserves, 1949-1980 297

xi I ACKNOWLEDGEMENTS

I should like to acknowledge assistance and encouragement given by my tutor, Dr Martin Hale. At times when the con­ tinuation of the work seemed in doubt Dr Hale gave needed support, much of his time and valuable advice. II INTRODUCTION During the 1970s and currently in the 1980s, the indus­ trial world has been subject to profound social and technologi­ cal change which have had a severe impact on many sectors of the minerals industry. For companies in the minerals industry and governments concerned with maintaining a viable and econo­ mic mining and minerals industrial sector, understanding these changes from an historical perspective will assist in business strategic planning for the remainder of the 1980s, the 1990s, and beyond. During the Autumn of 19 82 I submitted a proposal to the Royal School of Mines, Imperial College, London University, to conduct research leading to an MPhil degree on "The Impact of Technological and Social Change on the Mineral Industries". Following acceptance I enrolled in the Department of Geology. On completion of my progress report two changes in the study were made: (1) the title was changed to The Impact of Technological and Social Change on Mineral Exploration, and (2) the emphasis of research shifted from less futures forecasting to more historical research. This study describes historical technological and social changes beginning in the early 19th century to the present, how these changes affected the major world economies, and in parti­ cular how clusters of inventions/innovations have had a large impact on the direction of society and consequently on econo­ mies. The mineral industries and mineral exploration responded to a changing society, moved in parallel at times, and deve­ loped and adapted technologies from within and outside the mineral sector. The ebb and flow of economic growth and industrial expan­ sion, fueled by major selected technologies and social change, made adaption of these technologies possible. This ebb and flow has been clearly indicated in the past by societal sign posts and changing organizational structures in society as well as economic indicators. Mineral exploration, controlled by mining organizations, has closely followed the technological and social changes in industrial economies. (Similar changes take place in developing countries but have not been studied for this report.) The study has much that is a distillation of my views based on historical evidence and my work in the mineral indus­ tries. There are many "connections," random data and informa­ tion, that form strong linkages. Thus, I have discussed the influence of climate on the affairs of man, and, in turn, evidence that climate is affected by volcanic eruptions which throw into the upper atmosphere large quantities of ash and sulphur dioxide that reflect heat from the sun back into space which triggers climatic cooling. Climate change affects man’s environment, changes his outlook and perception of his future, and thus, market conditions. The link between climate and social change is not certain. It is discussed as one of the pieces of evidence that might account for the long term repeat­ ability of social change and economic expansion accompanied by technological change.

Notes In reporting on historical monetary data, two sets of money figures are given. The first money figure given in the text is current money; the second, in parentheses, is constant 1984 money. Most of the monetary values are in United States dollars. Constant dollars are calculated from the US GNP Implicit Price Deflator and are given in 1984 dollars. Thus, if the copper price in 1931 was 5 cents per pound in then current dollars, this price would be 35 cents per pound in 1984 (constant) dollars. If original data is given in pounds ster­ ling, in some cases these values are converted into dollars at the then prevailing rates of exchange and then deflated. Ex­ change values generally reflect purchasing power of currencies. All units are in metric tonnes unless otherwise stated.

4 British spelling is used throughout this report except where there is a dual preference between British and American spel­ ling. Thus, 'labour' is spelled in this manner since it is the preferred British spelling, but 'organization' is spelled thus as it is given as the first choice; organisation is the second choice. Collins English Dictionary (1979) published in London is the reference. Ill ECONOMIC GROWTH

This chapter reviews the concept of economic growth, its origins, and the current changes in the perception of growth by economists. It then relates how the stage was set for growth in Europe before the Industrial Revolution and the transfer of institutional structures to North America. The concepts of accelerated growth fueled by invention and innovation are then described, and finally the chapter discusses society as a learning system. Mineral exploration has been and is influ­ enced by these forces and changes.

The Concept of Economic growth The word "growth” did not enter the lexicon of economists until the mid-1950s and certainly the idea of compound growth was not applied to the economy or used in economic studies (Rostow 1956). The exception was compound interest rates applied to invested capital. Essentially the use of the word growth, as it is applied today, was rare. Economists, political scientists and businessmen were aware that factors in an economy that were measurable tended to grow, such as population, railroad trackage, and company earn­ ings. Growth in terms of X% per year as now commonly used was not a measurement of current performance nor a forecast for the future. Beginning in the 1950s the concept of growth began to permeate all economic and business thinking. In 1972 the discussion of growth reached an apogee with the Club of Rome report on the "Limits to Growth" (Meadows, 1974). In my opinion, the report did not take fully into account the influ­ ence of technological change and price in mitigating the growth in demand of, for example, petroleum. Extrapolating the past produced a doomsday scenario for mankind on earth. The Roots of Growth Prior to the 1950s most economists viewed the boom-bust cycle as a part of the human condition. In the 1930s J M Keynes and others were studying the causes of these extremes in business cycles and recommended that government control econo­ mic activity through monetary policy. During the 1930s some government schemes were instituted such as greater monetary and fiscal control fciy central banks, unemployment insurance and the like, but at that time there was no systematic effort by wes­ tern governments to manage their economies. As a result of the 1930s depression and the work of J M Keynes, the post World War II economists searched for means of sustaining economic pros­ perity in the face of predictions that the world would be plunged quickly into a post-war depression. The embracing of Keynesian ideas became firmly entrenched in the United States with the passage of the Full Employment Act of 1948 which placed the responsibility of maintaining prosperity squarely on central government. Indeed, until a few years ago, it was an accepted social and economic responsi­ bility of government to manage the economy, law or no law. Gradually various governments applied Keynesian concepts, al­ though arguably not as precisely as Keynes had suggested. Highly controlled socialist economies, of which Russia is the prime example, did not succeed in preventing economic slump and have not succeeded in promoting economic growth on a scale comparable to "the West", considering the size of their human and natural resources. (The degree of government management is different in each country. Currently, some countries are de­ bating whether the role of the State in management of the economy should be reduced.) H H Rostow (1956) was probably the first to grapple with the concept of growth and the "take-off" phase that leads to accelerating growth. Rostow identified this take-off phase as a sudden rise in the rate of savings and net capital formation. Statistically, he expressed this as an expansion in the share of net national product "productively invested" from below 5% to above 10%. Having written this, he was challenged in the

8 *

following years as having overlooked such factors as the rise in the labour force, technological inputs and the degree to which these were absorbed and implemented as products for the market place. Rostow also pointed out that rarely was the high investment ratio achieved by industrial countries over a short time to qualify as, or lead to, a take-off phase. Rather, high investment was mixed and irregular. However, it was evident that high capital formation was a precursor and sustainer of high economic growth. Essentially, what Rostow stated was that growth was shaped like an S-curve with several phases, which, depending on the subject studied, had a different shape based on the time length of the cycle and the growth rate within each phase. Two variants of the S-curve are shown in Figure 1. Rostow thought that several ingredients were necessary to begin the process of growth, and as will be shown later in this chapter, these ingredients were in point of fact prevalent in England and western Europe at the onset of their industrial revolutions. These ingredients are: • A transformation in agriculture which increased its efficiency and yielded surplus labour and capital that could be invested other than in agricultural enterprises • The beginning of capital accumulation in the form of infrastructure, however rudimentary, and its continued expansion to allow the opening of markets and the movement of raw materials into the economy and goods out, both at economic prices (costs) • The development of services--bankers, stockists, traders, insurance • An expansion of the raw material base either indigenous or imported

9 Quantity (log scale) 0 0 0 0 50 40 30 20 10 O B

years; curve B shows a slowa B growthyears. cycleofcurve shows 50 years; NB: Curve A represents a short,rapida growth of cycle 5 represents A Curve NB: TYPICALS-SHAPED GROWTH CURVES GROWTH TYPICALS-SHAPED IUE 1 FIGURE

Years 10

4 Rostow’s ideas had a strong effect on post World War II thinking on the economic development of the non-industrialized countries. The primary thrust of "development economics" was the construction of public works, steel mills and the like. It is now apparent that the one ingredient missing in most of the developing countries was a developed entrepreneurial social system, services and structure of laws and attitudes that are a result of a society’s development rather than a set of rules and laws imposed from without. For these reasons, there has been a change in approach to third world development to one of education and capital investment on the very basics of infra­ structure—water, hygiene, communications—and to bringing agriculture to the stage noted above by Rostow. Rostow also believed that the continuation of growth was a result of changes in capital incomes and labour inputs. One of the early challengers to Rostow was Moses Abramovitz (1956) who set out to determine how much of the rise in capital incomes was attributed to changes in capital and labour inputs between 1869-78 and 1944-53 in the United States. He found that only a small part of the changes in capital and labour inputs can account for the quadrupling of per capita income during these two periods. Capital and labour inputs per capita rose by only 14%. Taking this lead, economists searched for additional causal factors that might explain the phenomena of growth. Nathan Rosenberg (1976) raised the question of "neglected di­ mensions" in economic change by observing that "the economy may be raised not only by increasing the supply of inputs or by technological change, but also by numerous kinds of alterations in the qualities of the inputs of a sort which typically escape the scrutiny of the economic theorist." These improvements embody: • Changes in knowledge • Technical skills • Organisational and managerial abilities • Responsiveness to economic incentives • Adaption of innovation.

11 In these qualitative inputs, the importance of technolo­ gical and social change can be seen. What is currently not well understood is how these mechanisms affect growth and is an area discussed in this study. Rosenberg believes that a feedback loop is at work (see later, Society as a Learning System). He suggests that a major neglected source of these long run improvements has derived from participation in economic activity. This long run aspect of economic growth has been neglected until quite recently because most economic theory is geared to the short term rather than the long run. This short term outlook is most probably a result of legislative economic control by the political sector, because elections are held every 5 years or less in most in­ dustrialized democratic countries; the political world is most interested in the short run response to an economic policy because of a need to be re-elected. Economists respond accord­ ingly. But this short term view is also prevalent in the business community. Punting on stock shares has increasingly been geared to short run profits. Corporations reward their executives for performance by quarter and annually. This writer knows of only one company in the minerals industry, Noranda, that has a reward program for long term achievement (other than cash awards for successful research and applications). Noranda rewards its geologists for finding a mine brought into profitable production. Other economists have dwelled on how an economy reverses itself from backwardness (depending, of course, from which perspective you are attaching the label) to industrial growth and high incomes. Gerschenkron (1962) takes a more relaxed view of the origins of growth; indeed, his central idea is that growth originated from a context of economic deprivation. The principal point of departure between Rostow and Gerschenkron is that the former stated that embryonic capitalists were a re­ quirement whereas Gerschenkron states that in a condition of backwardness capitalists simply do not exist. His requirement is that the State must take the lead. The argument still continues. Trebilcock (1981) believes that backwardness is the main prime mover toward a switch to growth and cites the fol­

12 lowing examples: • France, after destroying the ancient regime, proceeded to build new social and ideological constraints which hobbled manufacturing • Before 1870 Germany was divided into splintered markets and small principalities • Russia before 1861 was a feudal society very resistant to innovation • The Austro-Hungarian empire was economically chroni­ cally divided and had no unifying industrial scheme • Northern, industrial Italy was isolated before 1914 from the "desert" of southern Italy which was essen­ tially a rural peasantry • Spain before had not moved much econo­ mically from its nadir of the 16th century Social economists have also attempted to explain the con­ ditions of growth. The ideas of Talcott Parsons (1951) have become more prevalent today. They are also confirmed by this author’s observations during work in developing countries and in developed countries, especially England. Parson notes that societies have a protective mechanism that sets the rules and the script for social interaction, that is, a "social value system." The system conditions the activities of the members of society and bestows rewards and social approval for behavior that is of value to the social fabric. For economic develop­ ment this would be entrepreneurship, risk-taking, the profit motive. When society withdraws approval from a businessman he becomes ambivalent or even stranded in the context of society. When anti-capitalistic values are shared \yy increasing numbers in society, then entrepreneurial efficiency is reduced and economic prosperity wains. Social attitudes toward entrepre­ neurs are important determinants in creating an environment for economic growth.

13 Based on my observations from working in many countries, in some societies, the social value system embodies security of family, observance of religious rules, and solidarity of the community rather than pursuit of profit or competition. In this case, economic industrialization is extremely difficult if not impossible. Moreover, countries in which social values are changing to those noted above can slip into a state of indus­ trial backwardness. The observation can be made that billions spent on "economic development" on societies with these charac­ teristics have had little success. Only when fundamental soci­ etal change takes place can economic improvement take place, and then it can begin to develop it’s own capital resources; capital investment by outside sources also becomes attractive. A case in point was the industrial development of the United States, which in the 19th century relied heavily on European c a p ita l. In the past two decades economists have studied the prob­ lems of the optimum allocation of a fixed stock of resources. The allocation of scarce resources is a fundamental thread in economic thinking. But very little has been written about the allocation of abundant resources. Among these abundant re­ sources are human ingenuity and knowledge, and one reason that growth is still poorly understood is that such aspects cannot be quantified by the usual equations in today’s economy. For example, when information is sold from a data base, money is exchanged. Yet two people now have the information whereas if an automobile is sold only the buyer has the goods. The sell­ ing of information on a scale unprecedented in history will, in my opinion, greatly alter the economy of the world; it will also result in a doubling of the diffusion of information and an increase in innovation. To be sure, the information must be applied, innovated and used for creating wealth. The chances of this happening are greater today than in the past. It should be emphasized that technology and social inputs are difficult to quantify. Yet technological and social fac­ tors are two of the most important causal factors in sustaining growth, or its obverse, in causing growth to decline. On the positive side, institutions are in place and new ones are

14 created; or on the negative side, institutions are not being used and may be destroyed without setting up new and dynamic alternatives.

The Classical Economists Economists today are becoming increasingly interested in the problem of how human resources affect economic change. The classical economists, such as David Hume and Adam Smith (1937, new edition), wrote extensively on the subject. They were primarily interested in how a predominantly agricultural soci­ ety is transformed into an industrial one. They believed that society was basically indolent and that in an agricultural society in which most of the rents accrue to a landlord, there was little incentive to maximize wealth. What else would one invest in but more land? In Europe, which is where Adam Smith's attention was directed, land was a fixed quantity. And it was for this reason, among others, that the great human migrations to the New World took place. There was no new land in the old world. It was "tied up." With land being a fixed quantity, it was too easy to monopolize and with special privi­ lege high profits were earned. It was only when clearly pro­ fitable alternatives to farm income appeared, such as opening a coal mine on one's property or investing in an overseas trading company, that alternative investment was encouraged. These concepts of Adam Smith have been further developed by recent economists; they are discussed below. Adam Smith was also devoted to the concept of division of labour as being important to economic growth. But he also observed that a progressive division of labour was devastating on the individual and the minds and character of the great mass of the working population. It is this aspect, among others, of industrialization and economic growth that caused enormous upheavals in the social fabric. Smith pointed out that a worker confined to one or two tasks cannot see the whole fabric in which he works. "The man who spends his whole life in the performing of a few simple ope rat ions...has no occasion to exert his understanding or to exercise his invention in finding expedients for removing difficulties which never occur. He naturally loses the habit of such exertion and generally becomes as stupid and ignorant for a human creature to become...His dexterity at his own particular trade seems...to be acquired at the expense of his intellectual, social and marital virtues." Smith argued that public (state supported) mass education was a solution to the problem. Today’s expansion of knowledge accessed by electronic means and self-taught computer learning programmes could further break down this division of labour.

Current Concepts of Economic Growth Rosenburg (1976) has addressed the effect of human quality as an agent. Neoclassic economists have ignored this problem, while largely explaining the reasons for growth in measurable elements—primarily the statistics produced by government on nearly every thing that quantitatively can be measured. It is true that in the United States, as well as some other in­ dustrial countries, the inputs to GNP have shifted from agri­ culture to industry to services. Services can be measured in terms of incomes and expenditures, but very little research has been done on the vital question of what effect the information revolution will have on the economy. This revolution is al­ ready at hand. The fact that GNP continues to rise in the face of massive unemployment suggests that the widening access to information and knowledge, the quality of human input, is now a dynamic force in some industrialized countries. This aberra­ tion might also be caused by an increase in the underground economy—entrepreneurialism, as it were—which is not adequate­ ly measured by government statistics.

16 Some modern economists have grappled with the problem of the human factor in growth. A K Cairncross (1958) quite early observed that measuring only production as an element in growth denied that consumption was as important. It was perhaps more so. What goes on in the household provides a key to the changes in the future of productivity. Regarding the produc­ tion centre as active and the home as inactive may be over­ looking the home as a major source of productivity improvement. Cairncross's concept is even more important today as industria­ lized economies become linked by telecommunications both inter­ nally and externally and the distinction between home and production centres (office, factory) becomes blurred.

Historical Economic Growth in the Western World One of the many questions that has intrigued economists is why the western world, or the North Atlantic nucleus, began to grow, that is, to show real increases in per capita income and wealth in the mid-18th century. While it is true that there were periods of growth prior to this time, it was in the mid- 18th century that the western world entered a long period of sustained growth almost without interruption. An examination of the roots of this growth—the institutional changes against a background of major changes in climate in Europe—will assist in understanding the role that technolgical and social change has had on growth in general and on the mineral industries and exploration in particular. An excellent analysis of the roots of growth was written by North and Thomas (1970). Other particularly good studies of the subject are by Temin (1975) who concentrated solely on the United States, and Trebilcock (1981) who examined industria­ lization in Western Europe. These writers show that changes in relative factor and product prices initially induced by Malthusian population pres­ sure and changes in the size of markets and institutions were the bases for growth. Changes in the quantity of agricultural land also made a profound effect on population size, real incomes, and hence economic activity. In addition, in England 4

there were very fundamental changes in property rights. These changes induced the citizenry to invest in enterprises that raised productivity in industrial and service industries rather than concentrate on land and agriculture.

Climatic Influence on Economic Activity The exact date when sustained economic growth began cannot be pinpointed. It probably started just before the Industrial Revolution. As noted above there were occasional periods prior to the Industrial Revolution when real per capita income ex­ panded. To understand climate’s effect, it is useful to ex­ plore periods before the Industrial Revolution. There is gene­ ral agreement that one of these periods was the 12th century when the population was expanding and settlers were moving into new arable land. The period between 900 and 1300 AD was one of a rising warm trend in climate, one that extended the growing season in northern Europe and England after several centuries of exceedingly cold and wet weather (Lamb 1982). Cultivation was possible farther up the hillsides and as the snow line retreated trees and woods gradually returned to the upper elevations, thereby adding to the stock of natural supplies for heat, housing, ships and wood working. In Norway, through the 13th century farming was extended up valleys and onto higher ground. In England, conflict developed between grazers on high ground and the encroaching cereal growers. As a result of increased agricultural output the level of per capita income began to rise during this period. Kenneth Clark (1969) has noted that this same period was the one of the great awakening, when the great cathedrals were built and Europe was in a frenzy of cultural activity. It was also the period of the . The turning point of this period was 1250 (Trevor-Roper, 1965). By the end of the 13th century, as a result of pressure from rising population and fixed, if not decreasing, arable land supplies, rents increased and real wages per capita fell. Beginning about 1320 all the new arable land was gradually lost. The period began with exceptional wetness and with a long term downward trend in

18 average temperatures (Lamb 1982). At some point after this period, population ceased to increase because of declining living standards. Indeed, living standards and food supplies were at times inadequate and there were in some years mass starvation. Colder and colder weather resulting in a shortening growing season led to insufficient food supplies. The population was open to disease. Most scholars agree that this period was most likely the time for the beginning of the Black Death which swept Europe in 1347 and again in 1351. These plagues reduced the population by one- third and in some urban areas two-thirds of the population died. In England the plague returned in 1360 and 1361, 1369 and again in 1374. The plagues throu^i the 14th century conti­ nuously checked population growth and caused an actual decline in the European population. During this disturbing time land rents were falling. A basic change in climate may have been the most likely reason for the turnaround in economic well being. Some time in the middle of the 15th century, according to Lamb, population growth stagnated or possibly declined and the cooling wet trend was only interrupted from 1500 to 1550 (see Figure 2 which is based on ice core analysis from Greenland by Hansen, 1981). Assuming that climate is a causal factor in these changes, then it is likely that food supplies again in­ creased during this short period, and population would have again begun to increase slightly. But since the overall trend was toward colder weather, the observation by North and Thomas (1970) that a population expansion in mid-16th century was accompanied by diminishing returns on agriculture is probably co rrect. After about 1550 Europe entered 130 years of abnormally cold weather which is now called "the little ice age" which was the coldest continuous weather since the retreat of the last ice age 10,000 years ago (Lamb 1982). In England, the number of burials exceeded births from about the 1660s until 1730. One of the aspects of this cold period was the extreme varia-

19 FIGURE 2 CHANGES IN TEMPERATURE IN THE NORTHERN HEMISPHERE, 553-1980

NB: 1950-1980 temperatures from J. Hansen (see Figure 0000) bility in the weather making for great uncertainty year to year of what the harvests might be like. Storage capacity was limited and not as sophisticated as today’s steel silos. The river Thames froze over 11 times in the 17th century. During this time the growing season was shortened by 5 weeks compared with the early Medieval period and this century. The "bread baskets” of the northern European plains were similarly affect­ ed (Lamb 1982). The economic history of Europe during this period follows closely the long term weather patterns. After the extreme colds, there is evidence that beginning in about 1680 warmer weather ensued and a substantial population growth took place until 1830. Prices were stable and real per capita incomes were rising slowly. There were gains in productivity, par­ ticularly in the area of transportation which experienced fall­ ing real costs allowing agricultural products to move regional­ ly and internationally. The Canal du Midi in France was con­ structed in the middle of the 17th century. The granting of patent monopolies protected by law, the shift to freehold land tenure and property rights, establishment of institutions to effect trade—banks, brokers, joint-stock companies, insurance companies and the many protective guilds—all contributed to greater productivity. During this period, a precursor to the Industrial Revolution, sustained real economic growth commenced in Europe, albeit there have been periods of negative or flat growth. In America during this time, the climate had also under­ gone changes which generally mirrored Europe's climate experi­ ence (Lamb 1982). In the early part of the 1800s eastern North America experienced extreme cold and freezing temperatures for several winters which was an extension of the extreme cold weather of the little ice age. From that time temperatures rose on average until 1950 when they peaked. For the northern hemisphere as a whole, the very cold epoch ended by about 1700. The gradual warming trend lasted until about 1950. Within this trend, there were colder periods and warmer periods. The major turn around in average cool

21 temperatures did not occur until the late 19th and early 20th centuries. The political and economic rise of the western world, centred at first in Europe, was the result of developing new institutions that made it profitable to increase productivity. These institutional innovations were in contrast to previous economic activity which was to merely redistribute wealth. According to North and Thomas (1970), the two major forces accouting for rise in economic activity were 1 () changes in relative product and factor prices, and ( 2) changes in size of markets. By the 18th century these innovative changes in property rights redirected economic incentives. I believe that the beginning of the period of sustained growth, when Europeans began to think about ways to make mar­ kets more efficient, was during a period of profoundly cold weather. Life simply was not easy. One had to be protective and think hard about the future. Having built the institu­ tional structure, the slow warming trend brought out the energy and creativity which used these institutions to improve produc­ tivity and to increase wealth. Gerschenkron (1962) alludes to this in his observations that growth does not occur unless there has been a preceding period of marked deprivation, or "backwardness” as he describes it. The beginning of the Industrial Revolution in England in the middle of the 18th century coincided with these changes. Sustained growth, with occasional interruptions, has been expe­ rienced since that time. A major break in this trend, both economic and social, commenced in the 1960s, which may related to the beginning of a climatic cooling trend. Figure 3 shows average world temperatures from 1880 to 1980. The upper curve for the northern hemisphere is of par­ ticular interest because this hemisphere accounts for most of the world’s industrial output.

22 Temperature change (°C) AVERAGE TEMPERATURE CHANGES IN CHANGES TEMPERATURE AVERAGE NORTHERN AND OTHER LATITUDES OTHER AND NORTHERN IUE 3 FIGURE Source: J. Hansen eta!(1981) 23

Temperature change (°C) *

Volcanic Activity and Climate Volcanic eruptions that throw large quantities of dust and SC>2 into the upper atmosphere and created a dust veil may have a long term influence on climate (Lamb 1982). That change in average temperatures in the northern hemi­ sphere could have affected economic activity is conjecture. However, the rise in wheat prices in 1816-17 in Europe was a result of a dust veil from the eruption of Tambora, Indonesia, which restricted the growing season for several summers. In France, wheat prices were twice as high as the long term ave­ rage. Wheat crops were poor in the United States; exports to Europe could not meet needs and there was famine and rioting. Apart from the effect of the Napoleonic wars, the reduction in cereals supplies, a staple food, had an economic impact. In New England, food crops failed for several seasons during this time and as a result there was increased migration to the Western United States. The explosion of Krakatoa in 1883, preceded by other eruptions, ejected 55 cubic kilometers of rock dust plus SO 2 and had a similar effect on cereal prices (Lamb 1982). Downwaves in economic activity were experienced from 1816 to 1848 and from 1875 to 1892. In this century, beginning in 1917-18, the average tempe­ rature rose dramatically and formed a broad high from 1925 to 1960, when the average temperature declined to a low in 1970. The cooling had reached 0.4° C from the peak of the early 1940’s. Since 1953, however, there have been several major volcanic eruptions which were particularly "dirty," that is had a dense dust veil, and have likely affected the weather by cooling. A down wave commenced in 1968. These volcanic erup­ tions are listed below. 1953 Mt Spur, Alaska 1956 Mt Bezymiannyi, Kamchatka 1963 Mt Agung, Bali 1980 Mt St. Helens, California 1982 Mt El Chichon, Mexico

24 »

The latter eruption had a very intense dust veil. Long term changes in climate do affect food supplies and a cooling period would appear to influence social activity and perceptions of the future, and invention and innovation. How­ ever, the evidence is not complete. It is interesting to note that since the end of World War II the warming trend continued and resulted in unparallel harvests, creativity and economic growth. Society became optimistic and ebullient. And, as discussed in the following chapters, new ideas in the geologic sciences and exploration came rapidly. This warming period topped out in the 1960s and the northern hemisphere entered a cooling trend.

Society as Learning System Linked to historical cycles of economic growth, another key to how technological and social change affected the mineral industries and exploration lies in the understanding of the dynamics of society as a "learning system." By this one means that within society and its subsets, such as professions, there is a point, a critical mass, at which information and knowledge expand logarithmically. The Long Waves of the past have had their lift-off when a large number of inventions become innovations, that is, the inventions were brought to the market place and the process of capital formation and wealth creation begins. At this starting point, new technologies expand expontentially. Society, which had changed some of its structures and attitudes so that take-off is possible, begins also to change and to further create the environment in which the technologies can expand. Whiston (1974) noted that the development of human intel­ lect and inventiveness moves logarithmically. When groups of professions exchange information and work on a single research objective, knowlegdge expands rapidly. Today, when computer networking and data banks tied with inexpensive communcations (in some countries) and easy jet-air travel are commonplace, the ability to exchange ideas and knowledge is increasing. While such exchanges had taken place in the past, the time

25 required to get together was more difficult than today. Since about the middle of the last century the average time between invention and innovation has been shrinking. This lag between invention and innovation will be discussed in a later section of this chapter. Marchetti (1980) describes society as a learning system by saying that "learning is basically a random search with fil­ ters, and random searches are characterized logistic func­ tions." Logistic functions are expressed in the form log (F/l- F) where F is the the fraction of the total number of units achieved. For example, a human’s ability to learn and innovate was studied by Whiston (1974); the results of his work are illustrated in Figure 4. The ability of a child of 20 months to 70 months to learn an intricate structure like a language with a vocabulary of 2,500 words for daily use (about normal for every-day street talk) moves logistically. Marchetti (1980) notes that the efficiency of production of electrical energy follows a similar logistic path (see Figure 5). Other examples can be found. In Figure 6 the increase in the number of words or bits of information that can be transmitted is traced back to 1840 with the advent of the first oscillating needle through to single mode fibre optics systems. Note that with the advent of fibre optics, the curve has steepened. Lienard (1979) has also discussed these phenomena in his paper "The Rate of Technological Improvement before and after the 1830s." Several examples are used to illustrate both the logarithmic increase in man’s ingenuity and the decreased time it required to initiate an improvement in technology. Figure 7 shows the thermal efficiency of a hydrocarbon-fueled steam power plant from Newcomen’s engine to the present. After 1850 the data changed to a new curve because the basic invention was complete. Subsequent development of more efficient engines is limited by available materials. The speed of mechanical transport of humans is shown in F igure 8. Before the 18th century speed was limited by the

26 FIGURE 4 EVOLUTION OF THE VOCABULARY OF A CHILD

Log

Age months

Source: Whiston (1974)

27 *

FIGURE 5 EFFICIENCY FOR ELECTRICITY PRODUCTION (ELECTRICAL ENERGY/FUEL ENERGY =£)

Source: Marchetti (1979)

28 *

FIGURE 6 HISTORICAL DEVELOPMENT OF TRANSMISSION SYSTEMS

(/) > < 2 x u X tn Z o I- < o zD to O CD 0 01 tu_l oX <—» UL o > H o < Q.< CJ 2 0 5 0

SOURCE: Information Gatekeepers Inc. Thermal efficiency (%) STEAM POWER PLANTS POWER STEAM HYDROCARBON FUELED STATIONARY FUELED FOR HYDROCARBON EFFICIENCY THERMAL IN INCREASE 7 FIGURE Source: Lienard (1979) Time, t,(year) 30

FIGURE 8 INCREASE OF SPEED OF TRANSPORTATION WITH TIME

Speed (mph) 5000

1000 -

100 -

10 -

1775 AD 1850 1900 1950 1975

Time, t, (years)

Source: Lienard (1979)

31 horse and the wind; after that time steam engines were used and the internal engine followed when the lim its of steam power for speed were reached. The figure also shows the speed in air beginning with lighter-than-air craft (motorised balloons) to fixed-wing rockets. From 1860 low temperature (refrigeration) technology showed the same remarkable logarithmic progress over time (see Figure 9). Figure 10 gives examples of the depth of wells drilled in the search for oil and gas (an economic incentive), the maximum depth reached by man in the ocean, maximum height reached by man and the maximum height reached by liquid-fueled rockets. The accuracy of mechanical time clocks improved loga­ rithmically from 1400 to 1920 when clock accuracy improved rapidly with introduction of electric clocks. A new technology displaced mechanical clocks for accuracy. In these cases there has been a decrease in the number of years taken for the advent of the next technological improve­ ment within a technology. Lienard points out that the inven­ tors, or technologists, who are a part of society, have a strong bent to improve for economic reasons and because of the expectations that society places on its members, at least in some societies. A generation will accept only a certain degree of improvement once the device has been "implanted" in the social network. Lienard states that the creative period in a person's life is between his/her 20s and 50s, on average, or about 30 years. Using examples other than those illustrated above, for example, lumens per watt, broadcast frequency, par­ ticle energy, bits/add time for computers and the number of components per circuit for printed circuits, there was evident a radical change in technological growth commencing in the early 1830s, as shown in Figure 11. Until this date the time constant for technical improvement remained at about 40 years, but after 1832 the rate of change accelerated to 36 years and the time constant decreased sympathetically thereafter. Cardwell (1972) came to a similar conclusion and observed that the turning point in western technology was the estab­ lishment of industrial research laboratories which he places in

32 *

Temperature difference (T = 298)°K IMPROVEMENT IN COLDNESS WITH TIME WITH COLDNESS IN IMPROVEMENT IUE 9 FIGURE Source: Lienard (1979) Lienard Source: 33 4

FIGURE 10 FOUR EXAMPLES FROM THE GUINNESS BOOK OF WORLD RECORDS

1840 1860 1880 1900 1920 1940 1960 1980 Height of liquid - (ft) liquid rockets of fueled Height

Time, t, (years) Time, t, (years) Source: Lienard (1979)

34 Time - constant for technological change (years) CHANGE, 1400-1960 CHANGE, TECHNOLOGICAL FOR CONSTANTS HISTORICAL VARIATION OF TIME OF VARIATION HISTORICAL 11 FIGURE Source: Lienard (1979) 35

the middle of the 19th century. It should be noted that once the technology was estab­ lished, the rate of improvement did not change. A new tech­ nology was improved more quickly than the older type of techno­ logy. This indicates that society has a low tolerance for change once the technology is established but can accept new technologies fairly comfortably and at a higher rate of change for that new technology, at least in some societies. Rosenburg (1976) touched on this phenomenon but from a different perspec­ tive, that of economic growth, when he observed that the human quality was a missing ingredient in explaining why economic growth in the North Atlantic nucleus began to accelerate in the mid 18th century.

Invention and Innovation Invention and innovation are the prime movers in economic growth and their ebb and flow are tied to the interaction of people in society who create new ideas and new ways of doing things, the society as a learning system described in the previous section. How inventions turn into innovations is not fully understood. (An invention is a new patentable idea; an innovation is the bringing of the invention to the marketplace through the application of capital and labour.) From this writer’s observations, an invention is a unique, creative act. An invention can result from a flash insight by an individual or from painstaking research in a large indus­ trial laboratory. Yet, here too, several individuals can be working on a similar project, but only one (perhaps more) will see a pattern in the research and through personal insight proceed to a phase that will result in an invention. The successful application of an invention, that is, the innova­ tion, is also unpredictable, for it requires not only the idea that the invention might have,a use, but that society must also be at a point where it is ready to accept the new product or technology. This acceptance by society of an innovation and the difficulty in applying the invention to practical use, both in a mechanical sense and with the problems of raising capital

36 t

and labour skills, create a time lag in some cases longer than the life of the inventor. For this discussion, small improve­ ments in a technology are not considered here, only basic new innovations. Schumpeter (1961) first discussed the difference between invention and innovation and stressed their importance in eco­ nomic growth. The inventive part was of no economic con­ sequence to Schumpeter because, in his view, it was only when the invention was brought to the market place that it had an economic impact. This is the "technological change" used and discussed in this report. Yet, without invention there is no innovation. There is evidence to show that it is the economic/ social environment that appears to foster inventiveness. A principal thesis of Schumpeter’s is that entrepreneurs must bring inventions to the market place. Once the risks involved in introducing a new product to the market are over­ come, that is, financial risks, social acceptance, then there follows a rush of imitators, and a series of similar, small innovations begins in that sector which then expands and even­ tually affects the economy. An example of social inhibitions slowing the progress of entrepreneurs can be found in the birth of the microprocessor. The microcomputer, developed against enormous odds in the garages of innovators, was first used by hobbyists and ignored by the mainframe computer makers and by corporate business who might have been early customers. Typi­ cally, the electronic data processing (EDP) departments in large corporations and other institutions had a vested interest in orgaizing computer use from writing programs to the final print out. In addition, there was a social bias by managers and upwardly mobile junior executives against using a terminal and becoming familiar with microcomputers. In 1978 it was rare that a micro was seen in a business office although they were available probably because it was difficult for departments to get budget approval to buy a micro—that was handled by the EDP departments which perceived the micro as a threat to their role and opposed acquistions. Once the market had developed, the major mainframe and electronics firms moved into the market and their major customers became the institutions. Social accep­

37 ♦

tance of microcomputers had arrived. Of particular importance is the parallel development of inexpensive specialized soft­ ware, programs that would previously have been specially writ­ ten for individuals at great expense. Social acceptance is very important to the rapidity with which a new technology can enter the market and affect the economy. Much has been written on the role of innovation in eco­ nomic development and growth. Several authors have compiled historical lists of inventions and innovations. Van Duijn (1983) has compiled a composite list from several writers dating from 1740 to 1971. This list is shown in Table 1. Mensch (1975) in his bock "Stalemate in Technology: Inno­ vations Overcome the Depression" has assembled some of these basic innovations from the beginning of the 19th century (See Appendix Tables A-l through A-3). Mensch derived his tables from several sources and in­ cluded his judgement of when inventions became innovations. He then grouped the data into 10 year periods. The results of this grouping are illustrated in Figure 12. The figure is interesting in that the clusters of innovations occur in dis­ tinct bunches. Certainly over time the degree of innovation has had an effect on economic activity. The reverse is also true; economic activity has affected the degree of innovation. Mensch relied on invention/innovation data gathered by Jewkes, Sawers and Stillerman (1969) and sifted these data by dividing innovations into basic, improvement and pseudo­ innovation. Mensch used "basic" as the primary selection criteria. However, in attempting to determine the interrela­ tionship between innovation and economic activity, using only "basic" innovations may be too large a screen. This screening effect is shown in a study undertaken by the US National Science Foundation which tested the radicalness of 1242 inno­ vations between 1953 and 1973 by grading them as follows:

38 Table 1

160 INNOVATIONS IN THE 19TH AND 20TH CENTURIES

Inven­• Innova­ tion tion Innovator Crucible steel 1740 1811 Krupp (Ger) Street lighting (gas) 1801 1814 Nat. Light & Light Co. (GB) Mechanical printing press 1811 1814 The Times (GB) Sulphuric acid (lead chamber process) 1740 1819 Ringkuhl (Ger) Q uinine 1790 1820 Pelletier-Ceventan (Fr) Portland cement 1756 1824 Great Britain Coke blast furnace 1713 1829 N eilson (GB) Steam locomotive 1769 1830 L’pool & Manch. R'way (GB) Pudding furnace 1784 1832 H all (GB) Electric motor 1821 1837 Davenport (USA) Steamship (Atlantic crossing) 1783 1838 S iriu s (GB) Photography 1727 1839 Giroux (France) Electric telegraph 1793 1839 Paddington-Hanwell (GB) Vulcanised rubber 1839 1840 Goodyear (USA) Arc lamp 1810 1841 Paris, France Rotary press 1790 1846 Hoe Rotary (USA) Anesthetics 1799 1846 Mass. Gen. Hosp. (USA) Steel (pudding process) 1840 1849 Lohage & Bremme (Ger) Sewing machine 1790 1851 Singer (USA) Safety match 1805 1855 Lundstrom (Sweden) Bunsen burner 1780 1855 Bunsen (Ger) Bessemer steel 1855 1856 various countries E levator 1818 1857 O tis E levator (USA) Table 1 (cont'd) Inven­ Innova­ tio n tio n Innovator Lead battery 1780 1859 Plante (France) Drilling for oil 1859 1859 Penn. Rock Oil Co. (USA) Internal combustion engine 1853 1860 Soc des Moteurs Lenoir (Fr) carbonate 1791 1861 Solvay (Belgium) Siemens-Martin steel 1857 1864 various countries Aniline dyes 1771 1865 BASF (Ger) Atlantic telegraph cable 1851 1866 A tlan tic Telg. Co. (USA) Dynamo 1820 1867 Siemens (Ger) Dynamite 1844 1867 Nobel (Sweden) T ypew riter 1714 1870 Jurgens (Denmark) C ellu lo id 1865 1870 Hyatt (USA) Combine harvester 1826 1870 McCormick (USA) o M argarine 1869 1871 Kirgems (Neths) Reinforced concrete 1867 1872 Ward (USA) Sulphuric acid 1819 1875 Winkler (Ger) Four-stroke engine 1862 1876 Gasmotorenfabriekdeutz (Ger) Telephone 1860 1877 Bell Telephone (USA) Thomas oven 1877 1879 various countries Electric railway 1834 1879 Siemens-Halske (Ger) Water turbine 1824 1880 P elton (GB) Incandescent lamp 1854 1880 Edison Lamp Works (USA) Half-tone process 1865 1880 The Daily Graphic (USA) Electric power station 1867 1881 Simens Brothers (Ger) Punched card 1823 1884 Hollerith (USA) Cash register 1879 1884 NCR (USA) Table 1 (cont'd) Inven- Innova- tio n tio n Innovator Fountain pen 1656 1884 Waterman (USA) Steam turbine 1848 1884 Clarke, Chapman & Co. (GB) Transformer 1831 1885 Stanley (GB) B icycle 1839 1885 Starley (GB) Linotype 1884 1886 New York Tribune (USA) Aluminium 1827 1887 various countries Motor car 1883 1888 Benz (Ger) Cylindrical record player 1877 1888 Columbia, Edison (USA) Portable camera 1881 1888 Eastman Kodak (USA) Alternating-current generator 1856 1888 Tesla Electric Co. (USA) Mechanical record player 1887 1889 Kammerer & Rheinhardt (Ger) Pneumatic tyre 1845 1889 Dunlop Pneum. Tyre Co. (GB) Rayon (nitro-cellulose pr.) 1857 1892 De Chardonnet (Fr) Motion picture film 1888 1894 Kinetoscope (USA) Motor cycle 1885 1894 Hildebrand & Wolfmuller (Ger) Monotype 1887 1894 Sellers & Co. (USA) Diesel engine 1892 1895 Akroyd-Hornsby (USA) Electric automobile 1874 1895 Acme & Immisch (GB) X -rays 1895 1896 various countries Rayon (cuprammonium pr.) 1890 1898 France A spirin 1853 1899 Bayer (Ger) Submarine 1624 1900 US Navy Safety razor 1895 1903 G ille tte S afety Razor Co. (USA) Oxy-acetylene welding 1893 1903 Fouch & Picard (France) Table 1 (cont'd) Inven- Innova- tio n tio n Innovator Viscose rayon 1892 1905 C ourtauld & Co. (GB) Vacuum cleaner 1901 1905 Chapman & Skinner (USA) Chemical accelerator for rubber vulcanisation 1906 1906 Diamond Rubber Co. (USA) Electric washing machine 1884 1907 Hurley Machine Corp. (USA) A irplane 1903 1910 Military Airplanes, France B ak elite 1905 1910 Bakelite Corp. (USA) Gyro-compass 1852 1911 GB, Ger, US navies Vacuum tube 1904 1913 AT&T (USA) Assembly line 1913 1913 Ford Motor Co. (USA) Thermal cracking 1909 1913 Stand. Oil of Indiana (USA) Domestic refrigerator 1834 1913 Domelre (USA) Synthetic fertilizer (nitrogen)1908 1913 BASF (Ger) Stainless steel 1911 1914 Th. Firth & Sons (GB) Cellophane 1912 1917 La Cellophane (France) Zip fastener 1891 1918 US Navy Acetate rayon 1902 1920 British Celanese (GB) Continuous thermal cracking 1909 1920 Texas Co. (USA) AM radio 1900 1920 W estinghouse Co. (USA) In su lin 1921 1923 Connaught Labs, Toronto Continuous hot strip rolling 1892 1923 Armco (USA) Dynamic loudspeaker 1906 1924 United States Leica camera 1913 1924 Leitz (Ger) Electric record player 1908 1925 Brunswick Co. (USA) Polystyrene 1925 1930 I.G. Farben (Ger) Rapid freezing 1929 1930 Birdseye (USA) Table 1 (cont.) Inven- Innova- tio n tio n Innovator Synthetic detergents 1886 1930 I.G. Farben (Ger) Freon refrigerants 1930 1931 Kinetic Chemicals (USA) Gas turbine 1900 1932 Brown-Boveri (Switz) Polyvinylchloride 1931 1932 I.G. Farben (Ger) Antimalaria drugs 1932 1932 E li L ily Co. (USA) Sulfa drugs 1917 1932 I.G. Farben (Ger) Synthetic rubber 1882 1932 DuPont (USA) Crease-resisting fabrics 1926 1932 Tootal b'casting Lee (GB) P lex ig las 1912 1935 Rohm & Haas (USA) Magnetic tape recorder 1899 1935 various countries Colour photography 1912 1935 Eastman Kodak (USA) Radar 1887 1935 various countries FM radio 1907 1936 Elect. & Musical Ind. (GB) T elev isio n 1907 1936 Elect. & Musical Ind. (GB) Catalytic cracking 1927 1937 Sun O il Socony-Mobil (USA) Electron microscope 1931 1937 Siemens-Halske (Ger) Metropolitan-Vickers (GB) Nylon 1934 1938 DuPont (USA) I.G. Farben (Germany) Fluorescent lamp 1896 1938 Westinghouse, Gen. Elec. Sulvania Electric (USA) H elico p ter 1907 1938 Focke-Wulf (Ger) Polyethlene 1936 1939 ICI (GB) Jet airplane 1930 1942 Messerschmitt (Ger) P e n ic illin 1929 1942 Kemball, Bishop & Co (GB) Table 1 (continued) Innova- Inven tio n tio n Innovator Continuous catalytic cracking 1942 1942 Standard O il of NJ (USA) DDT 1874 1942 Allied forces Guided missile 1903 1942 V2 (Ger) S ilic o n e s 1904 1943 Dow-Corning (USA) Aerosol spray 1862 1943 United States High-energy accelerators 1929 1943 General Electric (USA) Bail-point pen 1938 1945 Eterpen Co. (Argentina) Streptomycin 1924 1946 Merck & Co. (USA) Phototype 1936 1946 Amer. Intertype Corp. (USA) Orion 1945 1948 DuPont (USA) C ortisone 1931 1948 Merck & Co. (USA) Long-playing record 1948 1948 CBS (USA) Automatic transmission (passenger cars) 1904 1948 Buick (USA) Polaroid land camera 1937 1948 Polaroid (USA) Xerography 1937 1950 Haloid Corp. (USA) Terylene 1941 1950 ICI (GB) Radial tyre 1949 1950 Michelin (Fr) Sulzer loom 1928 1950 Warner & Swasey (USA) T ra n sisto r 1947 1951 Bell Telephone Labs (USA) Electronic computer 1944 1951 Remington Rand (USA) Power steering (passenger cars)1926 1951 Chrysler (USA) Continuous casting of steel 1927 1952 Mannesmann (Ger) Oxygen steel making 1939 1953 Voest (Austria) Colour television 1925 1953 RCA (USA) Gas chromatograph 1905 1954 Perkin-Elmer Corp (USA) Table 1 (concluded) Innova­ Inven­ tio n tio n Innovator Remote control 1898 1954 Argonne National Lab. (USA) Silicon transistor 1947 1954 Texas Instruments (USA) Numerically controlled machine to o ls 1927 1955 United States Nuclear energy 1942 1956 Calder Hall, GB Fuel c e ll 1885 1958 Union Carbide (USA) Polyacetates 1924 1959 DuPont (USA) Float glass 1952 1959 Pilkington Bros. (GB) Polycarbonates 1935 1960 Bayer (Ger) General Electric (USA) Contraceptive pill 1954 1960 Searle Drug (USA) H overcraft 1928 1960 Saunders-Roe (GB) Integrated circuit 1959 1961 Fairchild, Texas Instruments (USA) Communication satellite 1957 1962 USA, USSR Laser 1954 1967 Hughes Aircraft (USA) Wankel-motor 1954 1967 NSU (Ger) Video cassette recorder 1956 1970 Phillips (Neths) Micro-processor 1959 1971 Intel (USA)

Source: Van Duijn (1983) «

FIGURE 12 SWARMS OF BASIC INNOVATIONS, ACCORDING TO MENSCH

Frequency of basic innovations in 22 ten-year periods (1740-1960)

Source: G. Mensch (1979)

46 1 Basic 7 2 Radical 29 3 Very important improvement 62 4 Important improvement 145 5 Minor improvement 239 6 Minor product/process differentiation 760 Total 1242 As can be seen, very few of the 1242 innovations are considered basic over this 20 year period by the National Science Foundation. Mensch listed 113 inventions/innovations (shown in the previous tables). The point he was making is that in this 20- year period compared with other periods in history, there were only 7 basic innovations. He makes this point in his book "Stalemate in Technology"—the reason for stagflation beginning in the 1970s that has afflicted the latter half of this 20-year period was the lack of innovation.

Lag Between Invention and Innovation The lead times between invention and innovation vary wide­ ly, from a few years to over 80 years. Mensch, as has Lienard, has shown that since the beginning of the 19th century, the period between invention and innovation, overall, has been shortening (see Figure 13). I have added the most recent information to Mensch’s curve (open circles) and extended the graph (dashed lines). Since the 1950s the lead times have shrunk to between 2 and 13 years. Another writer, F. Lynn (1966), studied the phenomena of lag times between invention and innovation for the US government. Twenty major innovations were selected and the time (in years) between an invention's technical feasibility and its commercial development were noted. The results are shown in Table 2 below.

47 FIGURE 13 SURVEY OF LEAD TIMES SINCE THE INDUSTRIAL REVOLUTION

NB: Open circles and dashed line added by author.

Source: Mensch (1975) Table 2

LAG TIME BETWEEN 20 INVENTIONS AND THEIR INNOVATION IN THE UNITED STATES, 1886-1964 Invention Innovation Total 1885-1919 30 7 7 1920-1944 24 16 8 1945-1964 14 9 5 Source: Lynn (1966)

Lynn’s study, a confirmation of other studies, shows that the rate of progress in bringing inventions to the market through innovation has accelerated. Most observers agree that in the past 20 years this lag time has quickened. Another writer, Marchetti (1980), has taken the same data as that used by Mensch and treated that data logistically to show how the time between invention and innovation has been shrinking. This is illustrated in Figure 14 for three his­ torical periods of invention/innovation, 1775-1828, 1833-1880 and 1905-1937. Timing of Inventions/Innovations There is and has been disagreement among several eco­ nomists studying invent ion/innovat ion phenomena over Mensch’s selection of inventions and the timing of "basic” innovations. It would appear that what Mensch termed basic is included in the first three categories (table on page 46), but that some of the innovations are also in the latter three categories. Other researchers have also called into question the innovations selected by Mensch. Freeman (1982) also reviewed Mensch’s data and found some of the dates for timing of innovations at variance with what a group of experts from Britain had thought. Differences in the timing of innovations are open to individual judgement. Freeman is not willing to accept some of Mensch’s

49 FIGURE 14 THE LAST THREE INVENTION/INNOVATION WAVES

1 - F 1 - F 1 - F

ui o

1775-1820 1838-1880 1905-1937

Source: Marchetti (1981) innovations that occur in the 1950s and 1960s and has reserva­ tions about the bunching of innovations as postulated by Mensch and amplified by Marchetti. One of the points made by Mensch is that innovations cluster in depressions and as a result form the basis for the next economic recovery. He believed that the next "bunch" of innovations would occur in the 1980s. As discussed earlier in this chapter, there appears to be a causal link between adver­ sity and the creative urge—survival in bad times. For com­ panies, innovation and the development of new processes is a necessity for survival. For mining companies innovative geo­ logic thinking and exploration management are vital to a mining company’s future. Yet many mining organizations react to bad times by reducing, sometimes eliminating, exploration and creating an environment that inhibits creative and innovative mineral exploration (see Chapter IX). On the other hand, even during prosperous periods in competitive market environments, companies must change and innovate or be overcome. It is not, therefore, necessarily true that innovations bunch up in depressions. Although Free­ man accepts that there can be a surge of innovations, rather, he finds that "new technology systems" are responsible for the clustering effect. His idea returns to the concept discussed above—society as a learning system. In essence, these authors are talking about much the same thing and each is grappling with how and why the economy moves forward rapidly for many years and then sinks back exhausted. Invention and innovation hold the key. The next chapter dis­ cusses how invention and innovation has led to long waves in economic history.

51 V

IV THE LONG WAVE IN ECONOMIC HISTORY

The previous chapter discussed economic growth and its relationship to invention and innovation. Climate could have an impact on Man's perception of the future, and thus his actions in the market place. These factors in turn affect the demand for metals and minerals and the pace of mineral ex­ ploration. This chapter discusses cycles and the Long Wave. A distinction is made here between cycles and long waves. A cycle is a time series of statistics that fluctuates with regularity. The ups and downs may be more or less severe, but they appear to be regularly repeatable. There are over 100 cycles noted in various economic statistics for the United States. Long waves, i.e., economic Long Waves, are broad irregular ebbs and flows in human life, of society, the activi­ ty of which is reflected in the marketplace. This marketplace represents prices paid for capital, labour, and raw materials. Into these prices are built expectations of the future which may at any time be more or less optimistic or pessimistic. The wave has as its elements the invention/innovation component and the changing social fabric and organizations, that is to say, technological and social change. Cycles Cycles have been actively studied for over 100 years. This is not to say that cyclical behavior had not been observed in the past, only that it became a subject of intense concern in recent times with the tremendous industrialization and eco­ nomic expansion experienced since about 1870. The origins of the study of cycles can be found in the analysis of stock (share) prices. Before large quantities of economic data were collected by government and trade groups, stock prices were universally available on a daily, hourly, and instant basis. The prices of commonly traded commodities such as grains and metals were universally available. Given this large data bank, theories developed on the cyclical behaviour of stock prices.

53 A strong motive for the study of stock market and individual share prices was that if the "correct" theory were found, then it could become an avenue to wealth by judicious trading in shares. Cycles have been discussed by van Duijn (1983). Some of the more important cycles are the following:

Cycle Type Years Duration Kitchin Inventory 3-5 Juglar Investment 7-11 Benner Trade 16-20 Kuznets Building 15-25 Kondratieff General 45-60

The Kitchin cycle was described by J Kitchin in 1923; it is also called the business cycle. With the ability of governments to control money supply, i.e. bank reserves, this cycle in the United States has assumed a 4 year periodicity— the term of the presidency and elections. The turning point of the investment cycle is found in the level of inventories. When it is considered that inventories must be financed either from working capital, bank loans or credit from suppliers (such as extending the payment of invoices), then inventories are a gauge of expectations of future business and order books, and are an important part of the business cycle. Some economists believe that it represents three-quarters of the fluctuation of the business cycle. The (fixed) investment Juglar cycle, first described by C Juglar in 1862, is believed by some economists to be more important than the inventory cycle. Fixed investments include machinery and equipment but exclude buildings and property which have a life measured in decades. Schumpeter expanded on Juglar's work and constructed econometric equations to explain the phenomenon and recommended how government planning could mitigate the wide fluctuations in economic activity affected by

54 *

fixed investment decision. The problem with this approach to government planning is that if one centralized bureaucracy gets it wrong, or changes in the market place occur that no longer fit the econometric model, then a wrong decision can be made which could be disastrous. Many individual decisions have the opportunity to be self correcting, but there is always the danger of herd instinct or "follow the crowd" (being a con­ trarian is a very lonely occupation). Since the end of World War II, the investment cycle has been of approximately8 years duration and is thought to be part of the long wave. His­ torically, troughs in the Juglar cycle have warned of major downturns in 1871-73, 1927-29 and 1972-73. The Benner cycle was described by Samuel Benner, an Englishman, in 1876. Based on demand and prices for pig iron (he was a metal merchant) he noted that panic years in the trade were about 16 to 20 years apart. In that year he ex­ amined prior panic or bust years and accurately described the future panic year 1891. He also postulated good trade years peaking between 8 and 10 years and poor trade years bottoming between 7 and 11 years. What Benner was describing was a merchant's observation of the economist's investment and in­ ventory cycles. The Kuznets building cycle (ebb and flow of construction spending) was discovered by Kuznets in 1930 and is peculiar to the United States. Since first expounded, recent economists believe that it only had validity for the period prior to 1914. However, Van Duijn (1983) points out that it still has validity although the cycle has been somewhat masked by diversification and expansion of other sectors of the economy since the First World War. The Kondratieff cycle has been written about most exten­ sively. There are "believers" who vigorously defend the Russian economist's theory, propounded in 1926, and those who simply cannot consider that such a long term cycle would be repeatable. It smacks of fatalism and that mankind does not "control" his environment. This in itself is an interesting reaction as three of the cycles described above are more or

55 less accepted by most economists. There is more skepticism about the Kondratieff cycle in America than in Europe. Probab­ ly the most telling reason for skepticism is that most writers refer to the M54-year Kondratieff cycle.” This is not what Kondratieff implied; he stated only that in the western world there appeared to be a surge of economic activity in very broad irregular waves of approximately 54 years.

The Long Wave Since the end of World War II governments have been more concerned with maintaining economic prosperity than prior to the War, and a strong role in economic affairs by governments is now expected by their citizens. Moreover, the huge growth in the field of economics and research into economic history has focused increasing attention on why the world economy, and in particular the industrialized economies, have been subject to stagflation, that is, a stagnant economy accompanied by in­ flation which commenced in the 1970s. The study of the causes of the rise and fall of economic activity is not new. As noted above, the subject has been studied since the middle of the last century, and was made famous by K ondratieff (1935), in the 1920s. Today a vast amount of research has been conducted on the Long Wave, principally in the United States, Europe and Japan. The severe economic downturn which began in the 1970s and the realization that the 1970s might have represented a water­ shed in economic history, increasing interest has been given to a long wave in human history. J W Forrester (1979) of the Massachusetts Institutue of Technology developed a systems dynamics model for the US economy and found a Long Wave of around 50 year wave. This led him to reexamine the Kondratieff cycle and he concluded that there was indeed a broad wave of about 45 to 60 years. The work of MIT’s Systems Dynamics Group has been further amplified by Dr Peter Senge (1982, 1983) and Graham and Senge (1980), who have written extensively on the subject. Other

56 researchers include Amaya (1977), Rostow (1977), Braudel (1979), Marchetti (1981), Freeman (1982), Haustein (1982), Perez (1983), and van Duijn (1983). Dr Peter Senge has applied rigorous economic and statis­ tical analysis to Long Wave theory. His work on the Long Wave is continuing; he has concluded that the last upswell in the long wave ended in 1967, much the same time period set by Braudel. Senge (1982), in his paper "The Economic Long Wave: A Survey of the Evidence," shows several economic statistics that move in roughly 50 year waves. These are the following. For the United States: • Unemployment rate since 1892 • Construction per capita since 1874 • New plant and equipment expenditures as a fraction of GNP since 1949 • Capacity utilization of total manufacturing since 1949 • Employment-capital mix for manufacturing since 1889 • Outstanding debt as a fraction of GNP since 1919 • Return on capital • Wholesale price index since 1800 Some of these data represent only half a wave and other data represent two or more full waves (the timing of historical waves is presented later in this chapter). Examples of the long wave are given in the following two figures for Return on Capital in the US since 1952 and the Wholesale Price Index since 1800. Return on Capital peaked in 1964 and has remained low since that year. Wholesale prices are shown against the Long Wave (see later for derivation of the average for the peak and trough years). These prices have moved in roughly the same pattern as the Long Wave. Again, wholesale prices are one of many inputs in deteriming the approximate top and bottom of the wave. One of the reasons that prices have not turned down in the past downward wave is that heavy monetization of government deficits and rising money velocity have exacerbated inflation (Senge, 1982). The historical pattern of long-wave downturns

57 FIGURE 15 RETURN ON CAPITAL IN US

Source:US Federal Reserve Board

58 F igure 16 U.S. WHOLESALE PRICE INDEX AND THE LONG WAVE, 1800-1984 (1967=100)

Source: US Census Bureau; Hugh Douglas

59 suggests that while wholesale prices are not synchronous with other data that set the Long Wave patter for the past decade, the inflation of the 1960s and 1970s could be a prelude to disinflation or deflation of the 1980s. In my opinion, the forces of deflation are at work in most industrialized and other nations. Forrester (1979) and Graham and Senge (1983) emphasize that the primary aspect of the end of a Long Wave is the over­ expansion in capital-production capacity using increasing debt—an investment overkill in old technologies. The downward slide is exhibited by under-investment and capacity utiliza­ tion, both which predate the early 1970s energy crises which on the evidence had nothing to do with the downward trend in these data. The interaction between invention/innovation and the causes of the Long Wave were discussed in the previous chapter. Mensch (1975) added to the evidence for the concept of the long wave when he observed that innovation came in clusters and these had a periodicity of about 50 years. Marchetti (1980) has taken the analysis one step further by taking Mensch's data and recasting it into the invention/ innovation curves illustrated in the previous chapter. Mar­ chetti (1983) has calculated the mid-points of these invention and innovation waves, the mid-points of market saturation of energy fuels—wood, hay, coal and oil—and found a good corre­ lation of 50 to 54 years for the wave. The composite of Mar- chetti's analysis is shown on Figure 17. Along the top of this Figure is the price for heat and light in the United States (which represented a mixture of wood and coal with coal being a declining percentage of the Btu input from the early 1800s onward) and crude oil in constant dollars. Marchetti makes the following observations: • The markets for coal, hay (power for horse drawn animals in the United States), and oil peaked in the centre of the invention/innovation cycles

60 Legend: 0 o 3 — W ■c ■c Z ■§- o co o tn II c o>x: (0 xg jo o

4 U) ->

OO - H O — " I s>i 30. o o Q Q O) 0) T- g x UJ THE SECULAR SET SECULAR THE INVENTION AND INNOVATION WAVES — WAVES INNOVATION AND INVENTION 17 FIGURE 500 400 300 200 100 Source: Marchetti (1981) US HEAT US LIGHT &

61 & GL OPEC GULF L &H S I OIL OIL US

♦

• The prices for energy "flared” in coincidence with the mid-points of the cycles • The price of oil presumably flared in 1980 and has been and will be headed downwards just as other fuels have done historically Marchetti (1983) has drawn on other less mechanical and economic statistics to find that there is a Long Wave of about 50 years in human behaviour. The data analyzed are suicides and murders (the difference between use of guns vs knives or other instruments, murders by males vs females—all show cycli­ cal phenomena of about 50 years). Marchetti notes that decision making for construction of large infrastructures also would appear to come in "bunches" corresponding to the Long Wave. Announcements of major construction activity of these systems, which include canals, railway networks, metros in cities, road networks and airports, seem to roughly follow a fifty year wave. In 1977 W W Rostow commented on the Long Wave by observing that the post World War II period was fueled by an increase in automobile population and its diffusion into the suburbs, and by production of durable goods. Rostow says this period ex­ hausted itself in the 1960s and there was no new "innovation" to pick up the slack, as it were. Moreover, as is characteris­ tic of the end of an upward wave, over-investment in key capi­ tal goods industries takes place. Top heavy debt as well as management is unsustainable. According to Senge, on a world basis there have been 25 years of relatively high prices for food and raw materials and 25 years of relatively low prices for these commodities. However, in the United States, high prices were experienced on four previous occasions: from 1790 to 1820, 1862 to 1877, 1915 to 1930 and from 1950. In the last 5 years prices of commodities have been relatively cheap. Some downswings were associated with cheap land (agriculture) and raw materials; most recently it was cheap Middle East oil and the diffusion of agricultural technology that brought down the cost of food. Rostow goes on to say that the pattern of an upswing is shown by investment in new technologies and new

62 cheap resources or new technologies that make existing energy fuels cheaper in terms of useful energy produced. According to Rostow, the next investment phase could involve conservation of raw materials and clean air and water. He called for a new revolution in economics; he believes Keynesian formulas are no longer applicable for government economic policies Anthony Harris (1975), writing in the Financial Times, stated that "the present cycle is one of those secular turning points which seem to occur at very long intervals marked by an underlying change in business and personal beliefs and be­ haviour—fundamentally in attitudes toward risk." Henry Kauf­ man, the bond specialist on Wall Street, in the same year observed that the world had entered "a period of economic and financial disillusion and the process was well underway."

Chronic Inflation and the Long Wave The dying trails of the Long Y/ave, at least of the last 4 waves, have been accompanied by high rates of inflation which have afflicted the western world intermittently since 1000 AD, perhaps longer. This current inflationary bout is not unusual, even for its severity. Except for a brief interruption in the 1930s the present inflationary upsurge began in the 1890s. Fischer (1980) has collected a wide variety of prices for commodities for England, Europe and the United States. In England commodity prices have shown roughly 150 years of rising prices beginning in the early 1200s and ending about 1370; then declining prices to about 1500; from 1500 prices rose six-fold until the mid-1600s. Prices stayed flat until 1740 and then surged to 1817. This last climax occurred in extraordinarily unfavorable weather conditions that sent food prices soaring and added fuel to a long inflationary cycle very similar to the rapid increase in oil prices in 1973. After 1817, there fol­ lowed several years of hard times and high prices before prices began falling again. Prices surged again in the 1870s, the 1920s and most recently since 1950. Patents and the Long Wave The World International Patent Office has collected data on patent filings internationally from 1883. These data are illustrated in Figure 18 for two countries, the United States and Germany, and for total world including Soviet Bloc countries. Patents for the United States and Germany are those issued to residents of that country. Total of all patents issued, both resident and non-resident, are used for the world total. Some countries specify the two categories and others do not; for this reason the world total includes all cross filings. Patents issued in Germany were suspended during the Occupation after World War II, and for this reason there was a surge of patent grants in the early 1950s. After World War II only West German patents are used for this analysis. (East German patents issued to residents of that country have been about 10% of West Germany's grants so the long term data for Germany/West Germany is not greatly distorted.) Patent activity fell precipitously during the two World Wars and during the Great Depression. The trend line preceding the wars was broken. Wars consume human and material re­ sources, cause social instability and kill some of the best and brightest individuals—all of which affects the pool of genius and creativity for many years afterwards. However, of note is the steady decline in patent activity in West Germany since the 1950s. High prosperity and resulting change in social values probably have also affected inventiveness. In the United States, patent activity has been declining since the early 1970s; it peaked in 1966 as it did in 1932. German patents also peaked in the early 1930s. World total patents issued have shown a broad topping out beginning in the late 1960s and a decline since 1972. Part of this decline might be attributable to the reluctance of inventors/companies to file for patents because they might be circumvented by others. The best protection, it is thought, is to bring the invention to market without the publicity of filing. However, FIGURE 18 PATENTS GRANTED, WORLD, USA & GERMANY: 1883-1982

WIPO, Geneva (1983) the decline in patents is too great for this to account com­ pletely for the sharp drop in patent grants. This ebb and flow of inventiveness and patent activity follows the fluctutations of the Long Wave. Patents issued generally increase during upswings and decrease during down­ swings of the Long Wave.

The Long Wave in Japan The Long Wave is not confined to Europe and North America. In Japan, Naohiro Amaya (1977) has pointed out that there have been four cyclical 25-year periods in Japan up to the present. He breaks the 50-year cycle into two parts, Yin (passive) and Yan (active). These are classic opposites found in Eastern re­ ligions and philosophy, Yin being female and Yan being male. Amaya divided the years since 1868 into four periods as follows: I Yin 1868-1893 II Yan 1894-1918 III Yin 1919-1945 IV Yan 1946-1971 These periods or waves correspond in general to those experienced in Europe and North America as will be compared later in this chapter. The first Yan, or upward wave, occurred during the period of the Pax Britannica and the growth in industrialism imported from Europe and developed in Japan in its own unique way; the following Yin period represents the decline of that Pax and the stalemate in world power dominance that characterized the world at that time. The last Yan period is the Pax Americana which ended in 1971 with the breaking of the US dollar’s link with gold. Amaya observes that while Japan’s economy and policies have followed a long wave pattern similar to the North Atlantic nations, Japan has had distinct political and social changes which created acceptance or rejection of the West. The first Yin period was one of an inward looking nation sifting various

66 m

value systems and finally reaching a consensus that most could agree on. This unification led the way to joining with Britain in various peace treaties and to beginning the road to indus­ trialization. The second Yin period again was a period of self-examination, of retreating into militarism and the estab­ lishment of the Co-Prosperity Sphere led by Japan. It was also again a period of restructuring priorities. The end of this period followed the country’s defeat in World War II. Very quickly, upon joining with the USA in a Mutual Defence Treaty and becoming part of the Pax Americana, Japan developed a strong national unity and embarked on an unparalleled period of industrialization. Again, Amaya says that Japan has entered a Yin period where the western values so rapidly and unquestioningly em­ braced over the last Yan period are being challenged. Among some minorities there is a revulsion against big business, pollution, nuclear power and a demand for a return to Japanese historical cultural values. At the same time, in the United States and Europe, Japanese and its products are less welcomed and there are increasing trade restrictions placed on imports from Japan. It is no wonder therefore that Japan is calling into question its continuing role in Pax Americana.

Synthesis of Long Wave Theories Invention/innovation surges and economic data suggest that a Long Wave in economic (and social) life has been experienced by nations since the beginning of the Industrial Revolution, perhaps throughout history. However, the timing of the fluc­ tuation of waves differs between countries and between econo­ mists who have studied the phenomenon. A summary of the work of 10 economists is given in Table 3. Some of these writers have already been discussed; references for all of them are found in the bibliography. The timing of the Long Wave as determined by these 10 economists is shown on Figure 19 as well as an average wave for all ten. One can observe that these economists are very close

67 Table 3

LONG WAVE CHRONOLOGIES ACCORDING TO VARIOUS AUTHORS

1st Kondratieff 2nd Kondratieff 3rd Kondratieff 4th Kondratieff lower upper lower upper lower upper lower upper Kondratieff c.1790 1810/17 1844/51 1870/75 1890/96 1914/20 (1926)

De Wolff (1929) - 1825 1849/50 1873/74 1896 1913 Von Ciriacy- Wantrup (1936) 1792 1815 1842 1873 1895 1913 Schumpeter 1787 1813/14 1842/43 1869/70 1897/98 1924/25 (1939)

Clark (1944) - - 1850 1875 1900 1929 Dupriez 1789/92 1808/14 1846/51 1872/73 1895/96 1920 1939/46 1974 (1947;1978) Amaya (1977) 1868 1893/94 1918/19 1945/46 1971 (Japan) Rostow (1978) 1790 1815 1848 1873 1896 1920 1935 1951

Mandel (1980) - 1826 1847 1873 1893 1913 1939/48 1967

VanDuijn (1983) -— 1845 1872 1892 1929 1948 1973 FIGURE 19 LONG WAVE CHRONOLOGIES BY AUTHOR

69 to each other in setting the years for the tops and bottoms of the Long Waves. While many have used more sophisticated sta­ tistics and models using computers, the deviation from the fundamental work of Kondratieff is not too great. The average of all economists shown at the bottom of the figure is close to Kondratieff*s analysis. These average highest and lowest years are summarized on Table 4 below, together with the number of years between highs and lows, highs and highs, and lows and lows.

Table 4 AVERAGE TIMING OF LONG WAVES Lower Upper Lower/Upper Wave Year D iff. Year D iff. D ifferen ce I 1790 - 1816 - 26 II 1848 58 1875 59 27 III 1892 44 1920 45 28 IV 1944 52 1968 48 24 Average 51.3 51.7 26.3 Range 41-58 45-59 24-28

The average number of years between the lows is 51.3 and highs is 51.7. The average between the highs and lows is 26.3 years. There is a symmetry to these averages that harkens back to the work of Kondratieff. However, within these averages are a wide range of years between peaks and troughs—44 to 59 years. Thus, there is no positive way of using these historical waves to suggest when the current wave, which peaked in 1968, will bottom out. The Long Wave is not a regular cycle. Some con­ jectures on the current wave are made in the following section.

70 The current wave The world economy can currently be considered to be in a downward path of the wave, although there have been reactions against the trend. A point should be made here. In this author's judgement, economic data are the reflection of social responses in the market place. There is a reinforcing loop in society. Changes in social attitudes about the present and future are primary forces that propel an economy upward and downward (see next chapter). Trends in unemployment, capital formation, return on in­ vestment, decay of old industries and inflation are the econo­ mic reflection of society. The rate of technological develop­ ment and the willingness of society to accept a technology affect economic prosperity. Increasing protectionism, generally glum outlook about the future expressed by the intelligentsia, and the absence of any strong economic leadership are all symptomatic of the downside of the Long Wave. Once these forces are set in motion, leaders of society seem unable to affect the trend. Indeed, successful leaders perceive what the trend is, and ride the wave. Figure 20 shows the four prior waves beginning at the highs. Using the averages and maximum and minimum turn around periods, the current wave in which the downward drop begins in 1968 is shown as a range of future possibilities. Using the average of the previous waves, the bottom of the current wave could be reached in 1994; the earliest might be 1985 and the latest in 2000. The earlier date would appear to be too soon. However, a world liquidity crisis in 1985-1986, a strong pos­ sibility, would rid the world's economies of exessive debt and, I believe, given the diversity of today's economy, a long term recovery would likely quickly ensue. But first fundamental changes in investment, savings, real returns on capital and long term bonds must take place before an upsurge can occur.

Marchetti (1983) wrote that the world had "10 more years to go." Mass (1983) also believes that recovery is not near at 0

FIGURE 20 HISTORICAL AND PROJECTED LONGWAVES

Years

72 *

hand. He, along with Marchetti, has also studied the repeata­ bility of world liquidity crises and found them occurring in roughly 50 year intervals. Each of the previous upward waves have been very different in their social structures and key technologies. The post World War II economic expansion was unlike the previous upwel- lings for its unprecedented prosperity and in its continuity. In the same way, the next upturn will not be the same as before, for new technologies and social structures are being put in place. This next upturn could be a mixture of the un­ winding of the old and the phasing in of the new, and that, as Marchetti posits, could take another 10 years (as of 1983). Invention/innovation, new technologies and economic expan­ sion and contraction (or stagnation) come in waves of a fairly uniform duration. No one has an adequate explanation for the root causes for this phenomenon. Explanations that are less than scientific, in an age that is fascinated with equations and scientific logic, will not find credence. What this pulse is in human affairs has as yet no satisfactory answer. The French historian Fernand Braudel (1984) discusses in detail the Long Wave in his third and last volume of "Perspec­ tives of the World." Braudel refers to a 50 year wave but also sees a longer wave of three times the length of the Long Wave. From his observations, a Long Wave goes back to the early 14th century; it can be seen, for example, in cereal prices in the Rhineland from 1368 to 1797. The second to last long wave ended about 1896 after peaking in 1817; the last peaked in the early 1970s. Braudel discusses climate as a possible cause for a Long Wave but is hesitant to firmly ascribe climate as a reason. He says the following:

We should bear in mind the congenital frailty of man compared with the colossal forces of nature. Whether it favours him or not, the calendar is man’s master...There are regular

73 #

drum beats (of good and bad harvests) which set in motion enormous fluctuations of prices on which so many other things depended...and who could fail to agree that this insistent background music was in part determined by the changing history of the climate.

74 V SOCIAL AND CULTURAL CHANGES

As discussed in previous chapters, technological and social change work together in a loop reinforcing each other. This chapter focuses on major social changes that have taken place since the early 19th century. These social changes have ebbed and flowed—for example, from optimism to pessimism—to the rhythm of the Long Wave. However, these social changes cannot be separated from the introduction of new technologies (see Chapter VI). Certainly the process of industrialization itself had a profound effect on society and its organizations. The minerals industries and mineral exploration are part of society; individuals in these industries are part of the social change in society and adapt new technologies; they also or­ ganize work to fit the perceptions of society (see Chapter VII).

Technological Conditions and Social Change A new technology will be accepted rapidly if social con­ ditions are such that new inventions/innovations are easily absorbed by society. Several good examples of rapid social acceptance exist. In the early 1850s, Isaac Singer’s sewing machine sold rapidly because he saw its potential in the home rather than in factories. He made his sewing machine available on the in­ stallm ent plan which was ideally suited to women, who accepted the new machine as it released them from the old bondage of hand sewing. It also enabled cheap entry into the clothing business by entrepreneurs which created another kind of bon­ dage—the sweat shops. Over time, the cost of clothing de­ clined because of a large increase in productivity in garment making. And more people could afford clothing. ’’Bespoke" tailoring was left in a class of its own. Sewing machines also spread rapidly into saddlery and shoe making (Cardwell, 1972). 4

Universal radio in the 1920s created common standards of speech and, more importantly, has given the city cultural dominance over rural areas, a dominance accentuated in nations where radio is a government monopoly (Maciver 1962). Radio's social importance is also very political. Often success or failure of a coup d'etat lies in which side captures and con­ trols the broadcasting centre. The advent of television 30 years later has had a similar effect of giving the city cultu­ ral dominance because broadcasting channels are allocated among only a few stations, government or private. All broadcasting groups are based in cities. Yet this dominance will probably change as monopoly-like broadcasting competes with cable trans­ mission and direct broadcast by satellite which will give all segments of society access to multi-source programming. In my opinion, television will be similar to a magazine rack—a wide selection of what interests an individual. Indeed, this com­ ing change is not fully appreciated. The social implications are that the very uniformity of cultural values, including standard speech, that have been prevalent for over 60 years, may well break down as highly diverse sectional broadcasting begins. Cultural hegemony may also begin to decline and nations could become "Ottomanized." * Another example of how a technology affects society is found in automobiles which expanded the range of social relationships, but decreased the communal character of neigh­ bourhoods (Bardon, 1982).

* This expression refers to conditions in the wherein central government gave ethnic groups local autonomy in religion, schools and language but the local governor appointed by central government levied taxes and required military service in the Ottoman armed forces. As a result, there was no hegemony. Loyalty was to local ethnic leaders rather than to the Sultan. At the end of World War I when the Ottoman Empire was faced with crisis and survival the satraps bowed out and fought Turkey for their independence.

76 Other far reaching social changes resulted from industri­ alization (Bardon, 1982): • Domestic systems of production were destroyed and men, women, and children moved into facto ries • The shift of labour into factories extended political and eventually economic controls • Class structures and class standards were transformed • Local folkways were undermined • Industry and labour organized into groups for pro­ tection and opposed each other • Technological conditions in the factory as they de­ veloped in the 19th century and as they continued nearly unchanged until a decade ago, strengthened in­ dustrial unionism. Thompson (1938) conducted an illuminating study of the kind of community transformation brought about by industri­ alization in the fishing industry of Scotland. Before the 1880s fishermen were organized in teams centred on their village. Decisions on when to work, how long and where, were taken on a group basis with a team leader making the ultimate choice. Fishing was a personal commitment to the profession not only because it provided an income, but also because it was a way of life. Women, children, the community, all had a stake in fishing. In the late 1880s, in some of the ports industrial trawlers owned by corporations far outside the community began to take over fishing. These large trawlers were floating factories with labour assigned to specific tasks (division of labour) and managed by foremen. "Labour bashing" became normal. Unions were formed and the result was strikes and industrial problems similar to those found in Midlands fac­ tories. Industrial fishing became overcapitalized, the young were no longer interested in careers in fishing, and many of the thriving ports collapsed. Some fishing villages in Scot­ land escaped the cycle and remained independent. In villages that had collapsed there is today a renascence. Family and community fishing is on the rise and prosperity is returning. Such a change in social organization found in fishing communities is an interesting development. It reverses, in part, some of the tenets held since the middle of the last century that individual decision making on the factory floor is usually best subordinated to the foreman and shift boss. Some organizations do require a line-type hierarchy to operate, but in some companies alternative organizational structure is possible. A similar story is recounted about copper miners in the Upper Peninsula in Michigan (see Chapter VII). Social changes and over-rapid economic change bring stress resulting in subtle transformation of society’s attitudes. While there has been much discussion on this point, these changes are difficult to quantify. Historically, when swift economic and social change takes place, society turns inward, for example, Walt Whitman's communal utopias and currently the desire by some to live a simple, bucolic life in a rural area. Since the end of World War II, more attention has been paid to growth in quantity rather than quality, in my opinion. As western society has concentrated on the measurement of all things, that which cannot be measured quantitatively is fre­ quently discounted. It can be said that life consists of reflection and a slow ripening of judgement, but this ideal has been set aside. However, in the past several years a return to quality and reflection is evident (Yankelovitch, 1981). The ongoing cultural revolution admits to differences in personal values, a view that somehow became partially buried since the end of World War II. The social scientist reflected this mechanistic outlook' and tried to explain life in behavioural terms. %

Social Restraints to New Technology While technology forces society in new and unpredictable directions, society can stalemate technology. The most glaring example of this type of stalemate is found in government reg­ ulations which, over the past 50 years, have spun a web of restrictions, controls and legalized cartels that have dampened technological change and innovation. After the 1930's economic debacle, the preservation of the old industrialism was most important, and to repeat the experience of the Great Depression was to be avoided. Fifty years later these administrative controls are slowly being dismantled in some countries, notably in the United States and to a lesser extent in Britain. There also has been a shift in defining the role of science. Before "science" and the Industrial Revolution it was believed that nature controlled man. During the Revolution a belief that man controlled nature became paramount. Technology was all-important. The belief permeated economic theory. The question raised by Drucker (1961), but not fully answered, is: what happened to bring about such a basic change in beliefs? And the question can be asked today in reverse—what is it that is pushing these beliefs back to the orginal concept that nature controls man? As Drucker observed, in the first instance it was the rise of capitalism and the centralized nation-state with society's mercantilist view coupled with government policies and a bureaucratic obsession with statistics. In my opnion, the 1960s and 1970s were years when reaction set in, resulting in a great surge of social protest. In some instances parts of society ignore an invention or innovation. William Harvey discovered the mechanism of blood circulation in the early 17th century and by 1700 it was taught in every medical school. Yet bleeding was still practised until 1850. Spectacles were invented in 1286 and used in 1290, yet Galileo's theory of vision which ruled out any such mechanical correction was still taught in schools until 1700 (Mumford, 1961).

79 The upward trends in the Long Wave are result of social changes; the period which marked the culmination of the 1945- 1968 upward wave has been repeated in the past. When rifts in society are brought about when technological change occurs, society digs in its heels, and writers, artists and philoso­ phers protest. In the upward wave of 1892 to 1920, the rapid pace of economic change made people feel that society was no longer restraining the individual, indeed, that things were becoming '‘unglued". During the 1920s the suicide rate was high because people's desires were unlimited but for some were unobtainable (Marchetti, 1983). Thwarted ambitions led to frustration. Emile Durkheim's book, "Suicide," was much talked about. In data put together by Marchetti (1983), suicides in the United States increased from 1900 to 1925 and then declined from 1925 to 1950 when suicides again turned up and would appear to have peaked in 1979. Yet in spite of the intellectual ferment in the upward part of the Long Wave that ended in 1920, the bourgeois, or middle class, changed but little in the period (Joll, 1973). In Europe, the railroad, bicycle, beginning of automobiles and radio scarcely affected most of society. Those living in rural areas and city fringes still accepted the basic beliefs of the Church and the stability of the social order. Not so in the last upward wave that began in 1945 and ended in 1968. In the most industrialized countries even the middle class/bourgeois society was affected and attitudes did change. This observa­ tion is less true for society in rural areas, and countries on the industrial fringe such as Spain, Portugal, Turkey, Greece and Mexico, and those in South America, although I suspect con­ tinuous turmoil, political upheavals and violent social dis­ integration are reflections of some in society who feel "unglued." Since the beginning of the down wave in the late 1960s and mid-1970s, politicians who hark back to "the good old days" and old values win votes. A conservative reaction final­ ly takes place and is expressed, at least in democracies, in policies of government. Yet even the Soviet Union is turning "conservative" and is facing change.

80 Although these upward periods ended in social stress, they were also ones of human achievement. 1890 to 1914 was a most creative period for the arts and literature. New forms of painting flowered, albeit they were originally ignored by cri­ tics. Igor Stravinski in 1913 was criticized—it was the end of civilized musical harmony (the Beatles were at first similarly criticized, although not tjy the young, in the 1960s, fifty years later). There was a search for roots (as there was in the 1970s) and music harkened back to folk songs as themes. Leo Tolstoy, who totally rejected modern society of his time, had a wide influence. Ibsen with his insistence on moral reform of bourgeois society was the darling of youth. Fredrich Nietzsche, who first wrote on nihilism, came full force by 1914. He attacked liberal sentimentalism and the belief in progress as hollow; he said that values had to be re-thought by exposing false values in society and that violence should be used without scruple in building a new order. The sim ilarities of the beliefs and actions of some groups over the past 10 years with those of previous waves is strik­ ing. Rainer Welke said "become what you are." In California, Werner Erhard's EST, which began in the late 1960s, is similar to many other groups that flowered in the 1920s and 1930s. EST and other similar groups are now waning as realism returns to the youth of society. Needless to say, these protesting, perhaps lost, elements of society are hardly welcomed by groups with an economic stake in the technological system which created wealth and power during the upward wave.

Change and Counter-change Social change brought about by new technology brings coun­ ter-change and in some cases demand for legal preservation of the old social order (Landes, 1969). Yet technology can bypass these social barriers. Some examples of these phenomena de­ rived from personal observation and research are discussed below.

New agricultural techniques are an area where counter­ change is found. New breeds of cattle, seeds and mechanization

81 increased productivity and food supply. The revolution is probably in its infancy as the impact of biotechnology begins one of the most significant changes in agriculture since nomads settled onto farms, and again when small farming disappeared in the United States as more food was grown with a declining farm labour force. Past agricultural improvements had enormous social con­ sequences—migration into urban areas, slum creation, availa­ bility of cheap and sometimes exploited labour, destruction of communal and village life and parallel social disorientation in the cities. Farm units grew larger and farmers and city dwellers struggled in the political arena and nations battled for international shares of foreign markets. Tariff wars and subsidies to protect local agriculture were the result. The Corn Laws in Britain in the last century and the current farm policies of the EEC are a good examples of government attempts to stem economic and social change created by mechanization and industrialization of agriculture. India, which a decade ago had to import food on credit and was not expected to be self- sufficient with a large and rapidly growing poplulation, is now exporting food. Communications, already touched on above, have had an enormous impact on the structure of society. Railroads, automobiles and airplanes have widened markets and cultural horizons and have created the "global village." New tele­ communications systems will merely accelerate change but in entirely new ways. Whereas the former changes in communication created concentration of information in institutions in urban areas, the current revolution is enabling those who wish it to operate independently of the urban environment. Some spe­ cialists believe that the concentrated activity in the cities, a product of earlier technologies/communications—railways, and radio—will slowly wither away as a result of the current audio-visual and microprocessor-telecommunications revolution.

82 *

Specialization. As technological innovation is imple­ mented, specialization and skills are required. To reduce factory production costs and to create the skills required for design, fabrication, operations and so forth, division of labour is required. While this division increased productivity and created new wealth and rising living standards, it also required more elaborate social organizations. Some of the consequences of specialization are a higher degree of interdependence but also monopoly power of spe­ cialists who can withhold essential services. Again, while there is greater mobility among members with specialized skills and consequently freedom to choose places and conditions of work, there also develops more elaborate systems of laws, social controls, and conditions of work and trade. Although new concentrations of economic power are created—electricity, public transport, telephone (less so in the United States)— developing new technologies and accompanying specialization and social changes create instability in established social order. Today counter-change has some curious ramifications and the outcome is uncertain. An example of this see-saw between a technology and social change is found in telecommunications. While the telecommunications revolution is making information and its flow inexpensive and so enabling a person to work independently, institutions are still required to build the data bases and provide the electronic and telecommunications systems. Air travel and other networks also require large organizations and capital, although increasingly small junior companies are able to survive in industries previously dominated by quasi-monopolies tut which are being deregulated or demonopolized. Some cartel-like arrangements in pro­ fessions, industry and government are breaking up as a result of new technologies—just the opposite of 100 years ago. Technology, Social Structure and Culture New technology brings changing economic relationships and thence changing social structures. To put this another way, only certain social conditions are responsive to new tech­

83 nology. The inherent cultural values in society result in differing social changes for each country, even regions within a country and differing rates at which technologies are accepted. Several examples illustrate these relationships. In the United States the American Frontier shaped basic attitudes toward work and the individual in society which in turn had an impact on the way new technology was adapted in that society. The basic attitudes included: • A rough practical versatility • Buoyancy and ready optimism • Strong sense of self-determination • Belief in progress • Leveling of social distinctions • Admiration for the self-made man During the 19th century as the population moved westward, the country became increasingly American and less European. Nineteenth century American belief was a dichotomy—the old world and the new. The old world of England and Europe was "corrupt, tyrannical, regressive and plagued by wars and ancient hatreds" (Nye 1955). To some extent this feeling is prevalent today for America still believes it is on the side of the angels and has been uniquely blessed. This idea is a remnant of the Puritan Tradition, an oligarchic faith which did not wholly survive the onslaught of mercantilism during the rapid rise in economic growth which followed the Civil War. Cultural values turned to vulgar ostentatiousness. Ambrose Bierce wrote in 1881: "The frosty truth of the situation is that we are a nation of benighted and boasting vulgarians, in whom the moral sense is...dead." Not all agreed with Bierce for there were heroes of industry much admired, and many wished to duplicate their achievements. The debate on whether America has lost its frontier spirit still goes on. The Economist ( 16 October 1983) explored the possible loss of the Frontier spirit. Essentially The Econo­ mist discussed the increasing social fragmentation and with­ drawal into a world of television, commuting by car, insulated communities and shopping centres divorced from the realities of other social classes and the weather. Yet the independence and entrepreneurship are still evident. A survey by Daniel Yanke- lovitch (1981) for the Public Agenda Foundation found American workers still very much steeped in the work ethic compared with their European counterparts. An interesting comment by the surveyors was that an increasing amount of work was being done on a discretionary basis and that American workers are becoming increasingly independent in how a certain job can be accom­ plished. This social value reflects the Frontier ethic and a partial reversal of the major change in the organization of work brought about by the industrial revolution—the division of labour. "Quality centres" in factory and office are a manifestation of this change. In Germany growing industrialism of the mid 19th century created a struggle between the patriarchal imperial attitude of the ruling class still rooted in land ownership and the forces of industrialization (Spencer 1979). After 1870 Germany ex­ perienced a huge increase in population as emigration to America slowed. Social tensions and labour militancy in­ creased. Bismark was basically anti-socialist and the aim of his government was to keep the working class content. As a result, Bismark's Germany adopted social laws—insurance and job protection—sooner than any other industrial country. Strong control by those in public and private institutions which produce tight hierarchical organization is basic to German culture. This organizational efficiency combined with scientific/technical training gave German industry a highly competitive edge. These values have been modified only slight­ ly by strong American influence after World War II and the prosperity of the 1960s and 1970s. In Germany, the social response to technological change was conditioned by culture and was completely different compared with other countries. In Britain, the birthplace of the Industrial Revolution, economic progress in the latter half of the 19th century began to slacken because of a "grouse hunting" cultural affinity of the ruling classes which had a preference for the country life and a wish to leave industry in the hands of traders and prac-

85 tical men. This attitude still persists today. Entre­ preneurial, practical training is deficient, in part due to these attitudes which go back to the last century. Before World War I, the amount of technical training in Britain com­ pared with Germany was dismal and those in Britain who wished to become chemical engineers in that dynamic growth industry went to Germany. Such cultural attitudes have had a profound effect on English society and the way it adapts to technology, and consequently on its economic wealth (Weiner, 1981). An interesting change is taking place in Britain as a result of the computer. Britain has more computers in the home, in schools and in small businesses per capita than any other nation. It also is a leader in computer manufacturing and software. This new industry would appear to be well-suited to the cultural attitudes of the United Kingdom and could again lead to the creation of wealth.

In France culture also affected the way society organized itself for industrial production. Most of France's land own­ ership lay in the hands of independent proprietors and because of the Code Civil, which does not have progenitor line of inheritance but rather partible inheritance, land holdings became smaller and smaller. There was an increasing supply of rural labour which tried to eke out an existence on smaller and smaller land holdings. However, built into the French social consciousness is a strong feeling of responsibility toward the peasant-worker and as a result the use of labour was handled less like a tradable commodity. Industry was therefore less responsive to change, became "dug in" and because of the pattern of land tenure was also more dispersed. It was very hard to buy land for factory development, and factories tended to be located on the owner-developer's land. In addition, during the early stages of the Industrial Revolution, the main power source was water. On these hydraulic owner-sites large factories using steam as power were built (Fourastie, 1960). These cultural and social characteristics still affect the way French business is organized and run today, although the State, with its overridding rights, has taken over more control 4

of large industries. Society supports the State’s patrimony; a large role for the State in industry and economic development merely fits France's historic cultural experience. Even telecommunications is a child of state enterprise under gov­ ernment control. "Le Planning" for the good of the people is paramount.

Some Evidence of Social Change and the Long Wave Evidence for the Long Wave in changing social attitudes is found in the works of Namenwirth (1973) and Weber (1981). Namenwirth analyzed the content of Republican and Democratic political platforms in the United States from 1844 to 1964, and Weber the speeches from the throne by Kings and Queens of England from 1795 to 1972. Namenwirth used a computer to scan value-laden words and found a statistically significant 48-year cycle in political values in the platform "manifestos." (48 years corresponds to the multiplier of 4 years between presidential elections) Namenwirth believes that these changes in themes—parochial, progressive, cosmopolitan and conservative—were related to the Long Wave. He found that in the trough of the wave there was an accumulation of wealth and attitudes were parochial. As expansion begins and the economy turns up, there is a cry for social reform and politics becomes more progressive. At the later stages of the upward movement there is increasing interest in internationalism, the cosmopolitan phase. And as the economy retreats, there is a return to traditional values, or the conservative theme. Weber examined the speeches from the British throne and found similar results. His work ended in 1972. I have brought the analysis to the present—it confirms the previous work of Weber. There is no doubt that social/political content of these public statements follow the Long Wave. The following table summarizes these changes in Britain.

87 Table 5

SOCIO-POLITICAL THEMES IN THE SPEECH FROM THE THRONE, 1790-1983

Theme Years Years difference P arochial 1790 1842 1894 1946 54 52 52 Progressive 1803 1855 1907 1959 52 52 52 Cosmopolitan 1816 1868 1920 1972 52 52 52 Conservative 1829 1881 1933 1978 52 52 45 The average difference in years is 52.6. The change from progressive to conservative has taken 26, 26, 26 and 19 years. The last year, 1978, is somewhat conjectural because the Speech from the Throne in 1977 under the Labour government was be­ coming slightly conservative. The new Conservative gov­ ernment's Speech from the Throne was conservative in 1978. The reality of curbing government spending and the need to severely reduce wage demands is probably coming in the next few years. If one assumes the cycle of 26/52 years, a very conservative Speech could occur in 1985. Without mentioning the Long Wave, John Stevenson (1984) points out that the period between World War I and II and recent years are remarkably similar in political attitudes toward society and the economy and, particularly, government expenditures.

On 8 May 1984, Professor D Cameron Watt (1984) of London University gave a speech to the Royal Institute of Interna­ tional Affairs entitled "The Decline of Internationalism" which dovetails with the present downturn in the long wave cor­ relative with speeches from the Throne. Watt pointed out that since 1980 the world has entered a period of nationalism—the problem of withdrawal of Russia and other countries from the Olympic Games in 1984 and the United States in 1980 is just one example. The United States and other countries' threat of withdrawal from some United Nations agencies, the polarization of the right and the left in Britain over the visit of Prime

88 Minister Botha of South Africa are examples of internationalism in disarray; we have lost our "sense of interconnectedness." And, as noted above, television and computer/telecommunications are allowing those who wish to do so to withdraw from parts of society. Since 1961, Britain has been turning increasingly conservative, a reflection of the Long Wave. Figure 21 shows the results of quarterly opinion surveys conducted by the National Opinion Polls on voting intentions. Beginning in 1963, intentions to vote Conservative began to increase. If these voting intentions are combined with Liberals' intentions (Liberal voters are more conservative than their leaders), there continues a distinct change in voters sentiments from the early 1960s to the present. Birth rates in the United States show a rough correlation with the Long Wave. Figure 22, shows the percentage change in birth rates over the prior period as indicated. The data is skewed by influxes of immigrants, pariticularly before World War I. The abberation in birth rates and the Long Wave ocurs after World War II. The sharp increase can be explained in part by a reaction to low birth rates of the 1950s and partial­ ly to a rising standard of living in real terms that economi­ cally made having more children possible. This figure is discussed in greater detail in Appendix B. These are a few examples of changing social attitudes and how they echo the Long Wave. It must be emphasized that social change is gradual and does not change precisely at the moment that Long Waves peak and trough. Nor, for that matter, are peak and trough years that precise. Social change comes from grass roots; politicians and generals are sometimes fighting today's battles with philosophies and weapons that are up to 30 years old. Thus, public statements are not necessarily indica­ tive of the general social pattern of people. However, politi­ cians are responsive in democratic countries (even Russian leadership is becoming responsive to the people's desire for change) and must attempt to understand the social attitudes of the electorate, otherwise they will not get elected. It is a Percent support Source: NOP Market Research Ltd VOTING INTENTION IN UNITED KINGDOM: UNITED IN INTENTION VOTING 1961-1985 IUE 21 FIGURE (Quarterly averages of NOPpolls)

# FIGURE 22 CHANGES IN US BIRTHRATE AND LONG WAVES, 1820-1980

1820 1840 1860 1875 1885

SOURCE: US Census NB: Prior to 1900 the change in birth rate is plotted as a change over earlier year as indicated. trend of an upward wave, that, if recognized could place lead ers who organize organize fo r th e Long Wave in hallow ed h a lls. In Appendix B a chronological history of social changes in Britain, the United States and Japan is used to discuss the ebb and flow of cultural and social tides. Table 6 summarizes social changes in Britain and the United States from 1816 to the present for each upward and downward part of the Long Wave.

92 Table 6 COMPARISON OF SOCIAL CHANGE IN GREAT BRITAIN AND THE UNITED STATES BRITAIN UNITED STATES

1816-48 Gradual move to cities; paternal; Consolidation of American nationalism; (Down) conservative; Poor Laws; police force; conservative fiscal policies; conser­ municipal councils; free trade laws; vative Supreme Court. Enclosure Act. 1848-75 1851-Great Exposition; industriousness Differing religious beliefs, unortho­ (Up) moral conduct a virture; state assumes doxy; anti-slavery movement-Civil War; greater social responsibility; growth protest movements; westward expansion; CD of small, skilled labour unions; in­ liberal Homestead Act; liberal mining CO creasingly progressive; destruction of laws; decline in public morality; old landmarks. laissez-faire business attitude. 1875-92 Conservative policies of Disraeli; Continued growth of cities; strong (Down) V ictorian conservatism; s tr ic t mone­ fiscal policies; beginning of govern­ tary policies. ment reg. agencies; negative social thought - doomsayers; nostalgia for country life, return to nature; return to established churches. 1892-1920 Old norms brushed aside; feminist Fascination with spirituality; evan­ (Up) movement; flight from established gelism; socialized Christianity; pro­ churches; expansion of welfare state; gressive movement; brief flirt with wide diversity of opinions; feeling internationalism; women's movement; clock was unwinding. rise in labour movement. Table 6 (Concluded)

COMPARISON OF SOCIAL CHANGE IN GREAT BRITAIN AND THE UNITED STATES

BRITAIN UNITED STATES

1920-45 Aggressive nationalism; return to Isolationist; preserving existing in­ (Down) conservatism; fiscal responsibility; stitutions through orthodoxy of New reaction - General Strike; strong Deal; rise in anti-Semitism; Ku Klux structural resistance to change in Klan; reaction against social business and labour. Christianity. 1945-68 Rapid expansion of welfare state; internationalism; rising progressivism (Up) reduction of Empire but expansion social unrest; civil rights movement; CD of internationalism; increasingly left an t i-n at iona1i sm. of centre views; environmental move­ ment; governmental largess. 1968- Gradual shift to conservative Gradual shift to conservatism; welfare (Down) electorate opinion; late 1970s fiscal state checked; slight retreat from belt tightening; reduction of welfare internationalism; growing patriotism; spending; denationalization; major call for fiscal responsibilty. conservative tilt by 1980s.

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VI MAJOR TECHNOLOGIES

Inventions and innovations were discussed in Chapter III. Each previous expansion in economic activity heralded by social change and certain innovations—surges in creativity—were responsible for business expansion. This chapter focuses on innovations/technologies, either alone or in combination, that were keys to economic growth and parallel social changes, and the pace of mineral exploration and mineral industries supplying raw materials. A key to the adaption of an innovation is whether society is organized to take advantage of the new technology (Marchetti, 1980; Mensch, 1975). In Chapter II it was observed that in the 18th and early 19th century, England had set in place various social changes that allowed the mobilization of capital and created other services necessary for rapid adaption of innovations. Although social organizations set in place by Britain gave that country an early and commanding lead in the Industrial Revolution, social organization is not peculiar to the Industrial Revolution which rapidly replaced human labour with machines. In earlier centuries, the efficient "machine" was a highly organized labour army assembled and deployed by central authority whose means of coercion and control were unlimited. According to Mumford (1961), whenever that authority weakened, the machine fell apart and the state col­ lapsed. is a good example of this type of social organi­ zation. Large dams are built today using some 20,000 labourers rather than massive earth moving machinery. One factor makes today quite different from the past. Mankind has always been innovative. The uniqueness of this present age is that in the past several hundred years we have committed copies of nearly all discoveries to paper or some storage device. In the past, war was total and whole cities and their civilization were wiped out; records and population were totally destroyed. The great library at Alexandria was destroyed by Arab armies in the 7th century. Bishop Landa of

95 0

Spain destroyed all of the Aztec records, the knowledge of a highly developed civilization. Nothing was left to hand down. The process of innovation recommenced from zero. Today the rate of invention and innovation is accel­ erating. This acceleration is only one reason why it is quite likely that mineral exploration will continue to be successful and explorationists will continue to supply metals and minerals to meet future demand. However, whether in mineral exploration or society as a whole, a new idea or innovation must be ac­ cepted and the social organizations must be in place to capi­ talize on the technology. A fin al observation, made by Lewis Mumford (1961) concerns the way society is organized to make innovations successful. An important milestone in civilization prior to the Industrial Revolution was the development of the Benedictine monastery. This organization had strict canonical hours, work was a moral obligation, and this orderly conduct of work created effici­ ency. These monasteries were self supporting and created a favourable medium for capitalism. The ethic was transmitted beyond the monastery walls. Viewing the many problems of economic development currently seeking solutions, it is useful to ask if some industrialized countries have forgotten this lesson, and do some countries who hope to industrialize under­ stand it? The success of mineral exploration in developed and developing countries can be affected by this factor.

Major Innovations and Technologies The year in which an innovations was first marketed does not mark the beginning of an economic expansion in which that particular innovation was a key. Rather, market impact did not come until many years later when the innovation began to be recognized by society as a significant force and the capital accumulated from gradual economic improvement during the upward wave could be mobilized into that innovation. It is interest­ ing to note that the age of canal building, which was one of the "innovations" in the first upward wave in the Industrial Revolution, 1790 to 1816, was still being pursued in England a

96 *

decade after the first successful railroad was carrying pas­ sengers and freight. The same was true in the United States as seen in Table 7 below.

Table 7

MILEAGE OF U.S. CANALS AND RAILROADS, 1830-1890 (Thousands of Miles)

Canals Railroads 1830 1.3 a 1840 3.3 3.3 1850 3.7 8.9 1860 b 30.6 1870 b 52.9 1880 b 93.3 1890 b 166.7 1900 b 240.3 1910 b 243.4 1920 b 252.9 1930 b 249.2 1940 b 234.2 1950 b 224.3 1960 b 217.6 1970 b 209.0

a less than 0. 5 b more or less static Source: US Census Bureau The reason new technologies do not displace old ones is that the latter continue to improve (Cardwell 1972). (Canals were an exception; they did not improve technologically after the advent of railroads.) After railroads had been put in place, there were many small improvements which extended their usefulness, such as safety and speed, but eventually added improvement ceased to have corresponding economic benefits (see

97 below). Automobiles are still being improved; all-ceramic engines may be the next major improvement together with light­ weight fused ceramic-metal composites molded from powder to equal steel. The innovations/technologies discussed in this chapter are: (1) railways/steel, (2) motor cars, (3) aviation, and (4) integrated circuits and opto-electronics (IC/OE). Some obvious technologies not discussed in this report are petrochemicals/plastics and electricity. The chemical industry began in the latter half of the 19th century and has affected every aspect of industrial life, particularly the mineral industries. Not only have petrochemicals (chemicals were first produced from coal tars) themselves aided mining and processing minerals but they have and are offering serious challenges to metals and minerals as replacements for them. The industry is still in transition. (Indeed, research on chemistry and its linkage with biotechnology for producing basic plastics is in its infancy.) The subject is vast. A complete report can be written on petrochemicals and intermaterial competition. Observers of the minerals industry are very much aware of the challenge offered by petrochemicals and their derivative, plastics. One point can be made. A design engineer seeking a material in plastic has an advantage over his metallurgical counterpart—the plas­ tics engineer has over 30,000 plastics and combinations to pick from—heat resistant, fire retarding, high abrasive index, good flexibility, rigid, high impact strength, and so forth. Plas­ tic's challenge to traditional materials is found everywhere. Similarly electricity has been and is an all-pervasive technology and would require a separate study.

Table 8 lists the year of introduction of key innova­ tions/technologies that contributed to upward waves. The years to impact represent the time it took that innovation to reach over 50% of the market.

98 ♦

Table 8 UPWARD WAVES AND MAJOR TECHNOLOGIES Wave Innovation Year Years to impact 1848-1875 Locomotive 1824 50 T elegraph 1833 60 S teel 1849 60 1892-1920 Dynamo 1867> L ight bulb 1879> 70 Electric power > s ta tio n s 1881> 1945-1968 Motor car 1888 60/90 Continuous ca­ talytic cracking 1942 50? Radio 1922 50 T elev isio n 1936 50? ? Integr circuit 1961 > L aser 1967> 50-60? Microprocessor 1971 > Genetic eng 1975

* for the United States Source: van Duijn (1983) for innovation and year introduced; Hugh Douglas Note that years to impact are for the United States. On a world basis the years are difficult to calculate because of a lack of data. The world, however, lags behind the United States by only a few years. An innovation not included for discussion that might have a substantial future impact is the fuel cell developed in 1958. Since energy was relatively cheap until 1973, fuel cell research for commercial use languished.

99 But since that year, much development has taken place and it holds the potential for reducing fuel needs to generate electricity and to obviate the need for large centrally located generating stations. Plant capacity would not have to be built sufficient to meet peak shaving requirements. However, the very real prospect of declining energy costs is likely to delay further rapid development of fuel cells. Also in the table the years for the last wave are not indicated; this omission is discussed below.

Years to Impact Roughly 50 years are required for a new marketable inno­ vation to begin reaching market saturation, that is, 50% of its maximum levelized output Marchetti (1981). Automobiles would appear to be the exception; however, if the beginning of signi­ ficant market penetration is taken with the introduction of the mass-produced Ford after World War I, then automobiles had about 60 years to market saturation. Marchetti (1981) has undertaken work on the 50 year pene­ tration phenomenon. Figure 23 shows the results of some of his research for market penetration of 4 processes in the United States. The average number of years to reach half the market (tQ) is 50 years in all 4 cases. I concur with Marchetti that there would appear to be some type of internal clock operating in society (2 generations?) which may be the deep reason for the stability of the cycles’ length. As has been pointed out before, economics is the result of human behaviour. For some reason, approximately 50 years seems to be a constant factor. Whatever the reason, an innovation/technology nears saturation when the corresponding industry reaches maturity. Management exhausts its potential for change and innovation and so reduces its capacity to cope. #

FIGURE 23 MARKET PENETRATION OF FOUR PROCESSES OR MACHINES IN THE UNITED STATES

Year Source: Marchetti (1981)

101 Implications for the Future The latest upward rise in the fourth wave began around 1945 and peaked about 1968. It was built around the motor car which created enormous materials demand. Radio and television helped to broaden all markets. The next upward wave, which will begin in the next several years, I believe will be keyed to inte-grated circuits and opto-electronics (IC/OE). If these are to be the two key technologies, the chip and laser will form the basis for a revolution in telecommunications and computers. In my opinion telecommunications will expand infor­ mation availability and markets with the use of computer tech­ nology, satellites and fiber optics. Computers will further reduce the cost of manufacture in industry and services. Mine­ ral exploration will be a beneficiary of theses innovations (see Chapter IX). IC/EO will not in themselves create large demands for raw materials which the raining industry tradi­ tionally has supplied. However, these new technologies will be used to stimulate greater efficiencies in older technology systems, in my opinion. Efficiencies mean less energy used per unit of final product, and less raw materials going into the product because these new technologies enable more built-in quality. Design efficiencies will result in less materials per unit output of work. As a result, but these new materials and alloys will place increased demands on minor metals. The mid-point of IC/EO innovations is about 1965. If it takes roughly 25 years for significant economic impact and about 50 to saturation, then the next upward wave built on IC/OE technologies should commence in the early 1990s and top out in about 2015. This is the same timing postulated in Chapter IV. Based on this 25/50 development time, it is interesting to speculate that genetic engineering has some way to go and is too young a technology to have affect a major economic effect in the next upward wave; it will likely begin to have a signi­ ficant economic effect after next wave runs out of steam and will cause indsutrial dislocations similar to those experienced over the past decade. Taking the advent of interferon (1983)

102 as the starting gate, then I believe significant economic impact of genetic engineering will not occur until 2008. On an industrial basis genetic engineering may be the key technology for the wave beyond which would commence after 2035.

Railways, Steel and Telegraph

Railways Steam locomotives, which made possible railways, coupled with the telegraph and the new technology of steel making are examples of how three technologies complemented each other and laid the foundations for the total transformation of society and industry. The railroad was the first important change in overland transportation since the Romans constructed their military roads. It was the pivot for the implantation and expansion of the industrial revolution. The first locomotive built by Stephenson in England ran on wooden rails and was designed to haul coal from the mines to tidewater for further transport along the coasts of England. But the first general passenger and freight railroad was not completed until 1827. Railroads began in the United States at the same time. They started at first as small local lines financed privately (Thompson 1978) During railways' heydays, innovations and improvements came rapidly. Table 11 highlights the turning points of railroad history in the United States. Building railroads was a century-long experience and showed that an ordered, clock-work world could be built. In Europe, railways were a means to travel and extend horizons, at least for the well-to-do, and the techniques of railroad build­ ing were applied to intra-urban transport, thereby increasing the density of cities. In America the wilderness became a building site and furthered the belief in "know-how" and "can- do." After railroads, anything was possible (Mazlish 1965). Table 9

TURNING POINTS IN U.S. RAILROAD HISTORY 1815 First RR chartered in New Jersey 1817 Construction begins on the Erie canal 1828 Begin Chesapeake and Ohio canal 1828 Begin Baltimore & Ohio RR 1830 First steam service from Charleston SC; 23 miles of track in service in US 1831 First steam train from NYC to Albany and Schenectady 1834 Pennsylvania RR completes main line of 395 m iles 1840 3000 miles RR and 3300 miles canals 1850 First RR land grant 1851 Telegraph first used 1853 All rail from NYC to Chicago opened 1856 RR from Chicago to St Louis 1859 First Pullman sleeping car 1863 Begin Central Pacific/Union Pacific 1863 First steel rail imported from England 1865 First US steel rail 1869 Westinghouse airbrake 1871 Last US land grant 1877 First serious labour trouble 1883 Adoption of standard time 1887 First US RR regulation 1916 254,000 miles track: all-time peak 1916 First US grant for highway contruction 1916 RRs carry 98% of intercity passengers, 77% of freight 1920 Peak 2 million employed; trackage drops to 253,000 1926 Airlines carry 5,800 passengers 1957 Number of air passengers exceed RR Source: From Stover (1962)

104 Cultural Impact. The railroad had a dramatic and far reaching influence, even more than the automobile. It was the first "system”; it required entirely new skills and organi­ zational structures to make it work; it shattered the dream of man participating with nature—the railroads conquered nature and created a new man-made environment. Culturally the rail­ road had a unique symbolism (Stilgoe 1984). Before the eco­ nomic take-off sparked by railroads, America and Europe had a pastoral idiom of a harmonious society represented by an image of ordered rural landscapes. Overall quality of life was important, that is to say, peace, harmony and economic suf­ ficiency, NOT productivity, wealth and power. In rural America and Europe this is still true. The fact of the matter is that the pastoral idiom was a contradiction, as it still is, and railways made this contradiction inescapable. One might say that railways generated an economic determinism. It ended for once the division between city and country. It changed man's view of nature, but also partially destroyed that view. The acceptance of the railroad despite the yearning for a naturalistic life is a key to its rapid advance. By the 1830s there was already an awareness that social change was accel­ erating but it had no name and no one was studying the problem as we do today. There was a yearning to express what was happening. The "iron horse" answered the "puzzlement." It had fire, smoke, steam, speed, power and noise. It was an em­ bodiment of all the sensual attributes that ancient Greeks gave to their Gods. A main difference, however, was that for Gods, time was random and infinite; for railroads time was exact, important and precision was needed to make railroads run. US railroads gave us standard time zones. Previously every city and town had its own time set by the rising sun, and if the mountain was to the east, clocks were just a bit later than on the other side of the mountain. Railroads instituted standard time zones in 1883; Congress authorized them in 1918! Hughes (1965) explained the rationale of the railroad thus: *

Land surfaces that undulated, weather condi­ tions that frustrated, distances that consumed inordinate time, must all give way to a fixed, uniform environment conducive to an economic system involving coordination and prediction ...whenever and wherever nature in her nominal manifestations frustrates man in the pursuit of his objectives, there exists a technological frontier. To penetrate the frontier man must develop techniques or a technology to modify, adapt, or obliterate nature.

Social Change. For the United States the appearance of railroads coincided with the close of the country's European phase. From then on the country became more American despite a flood of immigrants. From 1840 to the First World War, 40 million new people came to America. The railroad was thought of as an instrument to penetrate the wilderness and drive out the native Americans. This westward movement was aided by railw ays. From my reading of the literature on railroads, the big impact on society and the fruition of railway technology was about 50 years in the making. And it was about this latter time that the mining industry felt the major impact on demand for raw materials created by the railroads themselves and from the many industries that were created because of railways. Mineral exploration as an organized system had not come into being in mid-19th century. Railways accelerated the process of urbanization in Europe and America and created spatial and social mobility. New areas in the West received relatively large shares of new immigrants, particularly after the government made it a central policy to support railroads with land grants to build a national system with which to open up the West. Without the railroads many areas would not have been agriculturally profitable. Farmers and industrialists could not have expanded their overland mar­ kets without it, although canals and river transport powered with steam engines had begun partially to expand markets.

106 %

Costs, over time, dropped dramatically. For example, by 1880 an Iowa farmer could ship a ton of wheat by train 375 miles for the same cost as hauling the ton by wagon 65 miles (Stover, 1962). With the growth of railroads, and the advent of lobbying, regulation, publicists and so forth, a change began to take place in the relation between citizens and their government. Whereas at the beginning of the 19th century Americans did not fear their government, by the end of the century they were beginning to distrust it. Other social changes were a new consciousness of time; the tempo of life increased. Punctu­ ality was important. Timetables were printed. Small towns became open to cities; before railways, life in small towns during winter almost came to a standstill. One of the railroads' impacts curious social impacts was that it prevented the extended family from developing, except along the eastern seaboard where strong European-like culture was found and in poor rural areas. Education was strongly affected. Building railroads re­ quired a high degree of engineering and design skills which were applied to other industries. But the initial demand for engineers in large numbers grew with railroad's expansion. Young engineers learned railway techniques—bridges, tunnelling and the leveling of land. From the first surge of railway building four civil engineering schools were founded: Rensselaer Polytechnical Institute (1835), Sheffield Science School at Yale (1847), Lawrence Scientific School at Harvard (1847) and the University of Michigan (1849). By 1875, the basic engineering problems had been solved, rationalized and taught. From this pool of skills, great bridges and long tunnels were built, the most important early one being the Mt Cenis tunnel in 1875. It was 7 miles long and was the first con­ struction to use pneumatic drills (10 operating at the working face) with water driven compressors. It was the first project to use dynamite. The fall-out from these innovations spread to

107 mining beginning in the Michigan peninsula copper mines (see Chapter VII).

Social Change and Management. Chandler (1977) observed that railroading, more than any other industry, called forth a new kind of large, impersonal, hierarchical firm run by spe­ cially trained professional managers. No other technology did more to hasten the rationalization and bureaucratization of business, which includes mining, or the overall transition to a highly centralized form of corporate capitalism. The mana­ gerial revolution was unique. A hierarchical organization was created—division managers, line and staff duties for sched­ uling, maintenance, supplies, passenger and freight services, and communications. Early on, many of the top managers were graduates of West Point. Complex accounting systems had to be developed to maintain financial control. Railways were capital hungry and needed armies of accountants and comptrollers to oversee financing bonds and stock flotations, payment of interest and dividends. By contributing to the advancement of securities markets, there developed widespread private owner­ ship of railroads, especially in England and the United States. Managerial requirements meant that in later years top jobs were taken by professional managers and financiers, and because railways were the child of government, the first widespread use of lobbyists were by railway companies. As management became more specialized and more socially distant there developed a widening gap between management and labour. No longer could someone working in the round-house become president. These professional managers were a dis­ tinct social group which lived in suburbs and used their trains to commute to the city. (Atherton, California, an ideal one- acre-only residential area south of San Francisco, has more scheduled stops on the commuter line than any other town be­ tween San Jose and San Francisco, a distance of about 100 miles; it is also where most of the Southern Pacific Railroad executives live who work in San Francisco.) Railroad managerial techniques pervaded all industry in the United States and Europe. Railroads were the organiza­

108 tional model (Marx 1976). Some of the leading financiers in America—J P Morgan and the top management of US Steel—came from railroads. In later years as railroads merged and formed holding companies, this type of organization became the model. It worked for railroads, why not other industries? The mining industry before the First World War followed suit and the large, totally integrated, hierarchical organizations were formed: Phelps Dodge, Kennecott, Anaconda, and ASARCO for example. As railroads reached their economic apogee even before competition from autos and airplanes, they were showing hardening of management arteries. Innovation waned. Wars were fought in the board rooms and with government agencies. Over­ capitalized and top heavy with unimaginative management, rail­ roads slipped into a long decline.

Steel During the last half of the 19th century the steel in­ dustries in the United States and Europe grew in step with the railroads. Iron and steel making had made rapid technological strides before the railroads became a significant user of iron or steel as shown in Table 12. Crucible steel was invented in Germany in 1740 but it was not innovated until 1821, and even then it did not find wide use until the blast furnace was developed in 1829. Finally, the Bessemer process, more than any other innovation, brought down sharply the cost of making steel. There was professional resistance from ironmongers to using steel when it was first introduced. However, when the railway industry first began using steel in large quantities, the impetus, and the cash flow, for improvements in steel manufacture soon developed.

109 4

Table 10

MAJOR INNOVATIONS IN IRON AND STEEL MAKING 1821 Crucible steel Krupp, Germany 1829 Coke blast furnace Neilson, Great Britain 1832 Puddling furnace Hall, Great Britain 1849 Steel (puddling) Lohage & Bremme, Germany 1856 Bessemer steel Various countries 1864 Sieraans-Martin Steel Various countries 1889 Hot metal mixer Carnegie, USA 1952 Continuous casting Mannesraann, Germany 1953 Oxygen steel making Voest, Austria Source: van Duijn (1983) from various other sources Note that the preliminary break-throughs in steel making were occurring during the down wave between 1816 and 1848. As the economic climate improved, extensions of these processes occurred in short order through to the Seimans-Martin steel making process in 1864. For nearly 100 years from 1864 there were no major innovations in steel making. The basic tech­ niques had been set and only small innovations and improvements were made. One such improvement, the hot metal mixer developed by Carnegie Steel in 1889, established bessemer steel on a large scale. As seems to be common in industries that mature, the main battle ground is less on innovating but rather attempting to gain market share, and building financial strength through "empire building” such as mergers and acquisi­ tions. Nonetheless, after World War II several major innova­ tions occurred but these were outside the United States and Europe as the centres for steel making shifted away from North America to new areas in the Far East and rebuilt Western Europe. In the late 19th century, together with railroads, some of the largest and most important firms in Germany, France, England and the United States were founded on steel. It must again be emphasized that the confluence of these two indus­ tries, both filling a market need and each reinforcing the

110 ¥

other, gave both of them an early fast take-off in growth from the 1840s to 1890s, roughly 50 years. As noted earlier, the first rails were made of wood and later iron. However, the weight of locomotives was severely restricted, since iron rails were very brittle. To increase the efficiency of moving freight and passengers by rail at greater speeds and loads, and so to increase the return on investment in land and construction, locomotives had to be both more powerful and hence heavier. Greater weight also helped to maintain locomotive traction. The development of steel rails solved the problem. Steel also made possible the building of better locomotives and the chassis for carriages and freight cars. At th at time carriages were b u ilt of wood. The use of steel rail in the early development of rail­ roads had a major impact on the steel industry. In the United States, from 1870 to 1890, steel for rails accounted for be­ tween 50% and 87% of total steel output. Between 1875 and 1887 rails accounted for over 70%. Table 11 shows total steel production and steel rail consumption in the United States. Between 1871 and 1880 steel output grew at 34% per year. That type of growth is associated with hi-tech industries, such as computers and electronics, today. But steel in those days was a hi-tech industry. The introduction of Bessemer steel plus the rapid expansion of markets in the railroad industry dropped the price of steel rail as the following table shows. Table 12 AVERAGE PRICE OF STEEL RAILS (Dollars per Short Ton) $C urrent $1890 1870 $120 $73 1880 76 62 1890 36 36 Source: US Census of Manufacturers;

111 4

Table 11 US PRODUCTION STEEL AND CONSUMPTION OF RAIL, 1871-1890 (Thousands of Tonnes)

Year Production of Steel Consumed Crude Steel in R a ils 1871 74 40 1872 145 98 1873 202 133 1874 220 151 1875 397 301 1876 542 427 1877 579 448 1878 744 581 1879 951 719 1880 1267 1005 1881 1614 1406 1882 1765 1515 1883 1701 1344 1884 1576 1161 1885 1740 1120 1886 2604 1835 1887 3394 2462 1888 2946 1616 1889 3441 1758 1890 4347 2174

American Iron and Steel A ssociat ion

112 t

By 1896 only one-third of besseraer steel was used for rails. By that time, the huge expansion of railroads was slowing and the rest of the industrial economy was growing. Steel markets expanded into other industries.

Telegraph Not all historians concede that the growth of telegraph was tied to the development of railroads and vice versa. Such was the case in the beginning for steel. Evidence suggests that telegraphy would have grown as it had; it grew faster when utilized by railroads. As with railroads, telegraph in its own right served a unique purpose. Samuel B Morse sent the first telegraphed message in the United States from Washington DC to Baltimore in 1844. Tele­ graphy was invented in 1793 and first innovated in England in 1839. Its commercial practicability was demonstrated in 1845/1846 in America and by 1851 a line stretched to the M ississippi River, and to California by 1861. The Iron Horse tra ile d by 8 years. To understand the social climate which gave telegraph its boost and why it differed from railroads, it is necessary to summarize the period before the 1840s. Some of the discussion on this subject has been touched on in detail in Chapter IV. In the United States, from 1800 to the 1840s, real per capita income had risen by nearly 30%, in spite of an overall downward trend that lasted from 1816 to 1848. During this period urban growth was becoming distinct; the mechanisms for rapid industrial growth came later. One can say that the population was "clustering” around urban centres, primarily ports which opened onto a developing world trade which boomed from 1793 to 1807, the period of the upward wave. The first steamship crossed the Atlantic in 1837; the expansion in the number of these ships contributed to the economic expansion. Service industries were growing: bankers, jobbers, agents, insurance brokers and budding financiers. By the mid-1840s the demand for business services had been mounting for 40 to 50

113 4 years and rising commercial activity was straining the anti­ quated business structure. During this period, business searched for greater profits by widening horizons, but were constrained because of the costs of establishing broader ranges of commercial contact. Remember that the only means of contact was a personal visit, by horse and coach if overland, by sailing ship overseas, or by post, which at the beginning of the century was by private courier. Expanding business was d iffic u lt. Expanding business opportunities is constrained by two factors: (1) the cost of obtaining information, and (2) moving goods. Historically these constraints have been broken by changing technology in communications and transportation. In the last century, the technologies were telegraph and railroads to be followed by telephones, motor highways and aviation. In the latter part of this century it will likely be IC/EO tele- communications. In the early 19th century, major industries were textiles and shipbuilding; the rest were handcraft metal bashing in­ dustries, and other sundry small firms making shot, needles, leathers, and so forth. In northeast United States and in Europe, industrial capital was not the prime mover for metro­ politan growth. Industrialism was unstructured, random, un­ centralized. Land uses had little differentiation between agriculture and industry. The place of residency and work for even the great merchants was the same, and in the absence of generalized wage for labour no industrial class existed. By the 1840s the business revolution had begun. At that time 63% of Americans lived on farms; only 9% were in manu­ facturing. About the same ratios were prevalent in Europe. The telegraph found fertile ground in which to grow. However, the use of telegraph was far different in Europe than in America. European telegraph was controlled by government post offices, the United States by private business. As a result, by 1899 when telegraph was beginning to find competition from telephones, European telegraph was two-thirds social use while in America it was only 8% (Du Boff, 1980). European telegraph

114 was a social system; American telegraph was a business office and railroad system, all private enterprise. From this difference, there are some lessons to be gained in the development of IC/EO telecommunications in the current expansion. In fibre optics and telecommunications the United States is taking the lead while government-run postal systems, over 150 years old, are slow to adapt. The difference between the beginnings of telegraph and railroads lies in what function the telegraph filled compared with railroads. The telegraph from the very beginning was interregional. Railroads began as a local system then expanded into a regional system. Thus, the first requirement of the burgeoning business community was met—communicating far beyond their region and thus expanding trade. Within the region business was already communicating. Bankers were the first to use telegraphy; they came to rely on it and bankers furnished most of the investment funds for telegraph expansion. Funding telegraphy was at a lower level than funding new telecommunications today where entry costs are high, but the unit costs for transmission by consumers are lower than telegraph or telephone (see end of this chapter). Most small firms cannot enter the new telecommunications industry because startup costs are high, although costs are now beginning to fall. Not so with tele­ graph. As Du Boff (1980) points out, the entry costs were low and in the early decades of telegraph’s growth many small businesses and firms had telegraph and a cable address. Combi­ ned with many decentralized users, the costs for long-haul services dropped rapidly by mergers and standardization. These lower information and transaction costs meant that resources could be released for alternative investments and the benefits derived from telegraphy filtered through the economy. The speed and efficiency of the first "electronic” service brought communications to the potential empire builder.

In the beginning there was a profusion of telegraph com­ panies, and as is common (railroads, telephones, electricity, autombiles), the era of competition gave way to an era of consolidations. By 1866 the telegraph industry in the United States had become the first major monopoly (Cochran, 1977). When telegraphy first started in the United States the only users of telegraph were the press, business (excluding railroads) and finance, and finally private citizens. By 1855 only one railroad, the New York and Erie, used telegraph on a regular basis. But at that time the railroads were still largely a regional rather than an interregional system. As railroads expanded and became interregional and frequency of service increased with multiple daily trips and frequent stops, there was no effective way of controlling the operation of the developing system other than by telegraph. Stations along the railway line had to be advised when a train was arriving, signaling had to be effected, and later, a first-class reser­ vation system had to be maintained Du Boff, 1980). Once adopted by railroads, telegraph was used extensively. Railroads were able to move into and use an existing well developed technology which benefited from the long economic boom from 1848 to the 1870s. The importance of telegraphy to railroads cannot be under­ estimated. Telegraphy created an enormous demand for copper, as did telephones and electricty later in the century. By the end of the 19th century demand for raw materials—copper, lead, zinc and iron ore, to name principal metals—created require­ ments for additional supplies. Mineral exploration, the theory of ore deposits and the schooling of mining geologists were an outgrowth of society's needs to meet future material demands. As discussed in Chapter IX, mineral exploration followed the pulse of social and technological activity of the Long Waves. Automobiles Since the end of World War II, automobile, bus and truck registrations worldwide have grown to 427.4m in 1980 from 44.5m in 1946 (Motor Venhicle Manufactureres Association, 1983). Solving the transportation crisis brought about by widesread

116 use of motor vehicles, of which automobiles account for 78%, is a major issue of national and local policies, particularly in urban areas. Motorized road transportation accounts for about 25% of the US Gross National Product and nearly as much in other industrialized countries. In the Los Angeles, California area, over 30% of the usable land (excludes mountainous areas) is devoted to motor vehicles—highways, roads and their verges, driveways and garages, and parking lots (Flink, 1975). Since the 1920s automobility has been affecting the way we live and beginning in the 1960s and 1970s there developed in America a love/hate relationship to the automobile and the first govern­ ment controls and regulations over design and safety. And yet, Americans and people in other nations continue to buy cars, Uit not as many as in the past. This expansion of automobility, which was a unique form of mechanical mobility, was an enormous benefit to the minerals industries, including oil. In the United States 45% of the crude oil barrel is converted into gasoline (petrol). Iron, steel, copper, zinc (now nearly replaced by blow-molded plas­ tics) all found large markets for manufacturing motor vehicles. The subsidiary industries of road building, such as concrete, asphalt, rebar, and the construction machinery, all are tied to autoraobility. The mineral industries have seen this major market "roll over" since the mid-1970s; a strong revival of the automobile industry woudl affect mineral demand positively. But as discussed later, saturation of the automobile market has been reached in most developed countries. A new fttake-off" is possibility for automobile demand there are both technological and social constraints. Mineral exploration would be affected postively if production of automobiles, trucks and busses resumed postwar growth rates.

Inventions/innovations and Automobiles The car that we know today was technologically fixed years ago. Table 13 lists the invent ions/innovat ions pertaining to the automobile.

117 Table 13

MAJOR INVENTIONS/INNOVATIONS IN THE AUTOMOBILE INDUSTRY, 1853-1951 1853/1860 Internal cumbustion engine Societe Moteurs Lenoir (France) 1862/1876 Four-stroke engine Gasmoterenfabriek Deutz, (Germany) 1883/1888 Motor car Benz (Germany) 1845/1889 Pneumatic tire Dunlop (Great Britain) 1913/1913 Assembly line Ford Motor Co. (USA) 1892/1920 Continuous thermal cracking Texas Co. (USA) 1927/1937 Catalytic cracking Sun O il, Socony Vacuum (USA) 1942/1942 Continuous catalytic cracking Esso (USA) 1904/1948 Automatic transmission Buick (USA) 1949/1950 Radial tire Michelin (France) 1926/1951 Power steering C h ry sler (USA) Source: Table 1 What is noteworthy about this table is that the funda­ mental innovations were made before 1937. As will be described below, the world motor vehicle industry, in the beginning led by the United States, reached saturation in the 1920s and was restimulated after World War II by continuous catalytic cracking and special interest legislation.

118 The Early Years The invention of the internal combustion engine cannot be assigned to any one inventor, but "credit" for the first operating model is generally accorded to Etienne Lenoir, a Belgian working in France. The first 4-cycle engine was pro­ duced by Nicolas Otto in 1876 and in 1895 Gottlieb Daimler (both of Germany) built his first motor car. By 1895 the car was a common sight in Paris and London as well as in the major eastern cities in the United States. In that year in the United States there were 500 patents pending relating to the car (Rae, 1965). Once the automobile took hold, it captured society's imagination and world motor vehicle production grew from 9,500 in 1900 to 1,993,000 in 1917—an astounding 37% per year. That kind of growth would attract much venture capital today, and that is exactly what happened during those early years. The Ford Motor Company was founded in 1903. Ransom Olds in that same year made 4,000 Oldsmobiles. But it was Ford who put the automobile on Main Street USA and on Main Streets throughout the world. Thomas Edison said at that time: The horseless vehicle is the coming wonder. It is only a question of tim e when these carriages and trucks in every large city will be run by motors" (FIink 1975). More than any other individual, Ford made Edison's vision happen. Ford paid workers $5 ($52) per day for an 8-hour day (unheard of at that time) and set up a moving belt assembly line (Rae, 1965). These innovations had ramifications far beyond any world revolution, perhaps even the Bolshevik Revolu­ tion in 1918, for it shifted the pace of industrialization beyond motor cars into other industries and created a new labouring class which gave birth to non-craft labour unions. In addition, expansion of automobility radically altered social life, first in American and later in other countries.

119 Automobiles were greeted with enthusiasm by Americans. At first autos were purchased by moneyed businessmen, physicians, engineers and then, with the introduction of the inexpensive Model T, by farmers. It was not a play thing of the rich compared with Europe where only the rich could afford a car (see below). The impact of a low priced mass produced car was to expand the markets to make Model Ts affordable to the middle class. Before introduction of the Model T, average car prices (Flink, 1975) were as follows (amounts in brackets are 1984 d o lla rs): 1903 $1,170 (15,100) 1905 1,784 (22,100) Clearly manufacturers were operating in a sellers market to a limited number of wealthy people. In contrast, Ford's Model T sold for the following prices: 1908 $825 (9,665) 1916 360 (3,414) 1927 290 (2,007) It was Ford's price leadership that expanded markets and all other manufacturers had to follow his example, except for highly specialized custom-built automobiles and the very ex­ pensive upper range models. It is interesting that Ford's prices at the low end of the market are not too different from a stripped down Renault 5 or Fiat Panda today and the expensive autos then are about the same as today's BMW, Audi or Cadillac. In the beginning only those who could afford cars were catered to by specialty clubs. These auto clubs required membership approval from other members. And very exclusive clubs they were. The Automobile Club of America catered to the very wealthy, it had elegant houses and garage facilities. But, with falling car prices and an expanding population of motorists, wider membership in auto clubs was demanded. The American Automobile Association was founded and based on wide open membership. This club and the exclusive clubs formed an alliance which did not last long. The ACA fought for exclu­

120 sivity and controls. The AAA did not and survived (Flink, 1975). Thus, the ACA failed to transplant the European pattern of highly centralized control of the auto movement by elite groups. Developments other than clubs distinguished the auto movement in America from Europe: • There was a lack of government subsidies in the United States. France, Germany and Britain explored auto­ mobiles for their military potential with subsidies and, as a result, cars were big and heavy and better suited for officer staff cars and weapons carriers. Private cars reflected these characteristics in the early years and they were subsequently priced beyond the reach of the middle class • Compared with European cars, US cars were lighter and had higher horse power to weight ratios, larger bore, shorter stroke engines, and required less gear shift­ ing, a boon to the average motorist travelling on poor, ungraded, hilly roads • Early in the auto's development European countries adopted legislation to regulate automobiles. This constrained entrepreneurial activity. Also vehicles and fuel were heavily taxed It is interesting that this pattern of government/social attitudes toward this new technology is similar to the advent of other new technologies—railroads, airplanes, telegraph, telephone, airlines and now telecomputers. The historical European pattern is to mobilize the technology with involvement and control t?y the elite and moneyed classes, who also control the political power structure. The result is a low rate of diffusion of the technology through society, high prices, and a concentration of the technology into few hands.

An example will illustrate the point. Because of lack of competition— no need to lower auto prices and thereby maintain 0 high manufacturing costs—Morris motors in Britain did not establish a moving assembly line until 1934! No other motor car manufacturers in England had one either (Rae, 1965). Yet America had many inherent advantages that favoured the automobile. The nation possessed a unique natural and social environment which enabled automobility to take rapid root and grow. As noted above, the government stayed clear of regu­ lation—that came in the 1960s. Other factors were: • Abundant natural resources • Chronic labour shortages which increased mechanization • Higher per capita income and better distribution of income than other countries • Some standardization On the latter point, the industry, by rejecting all-inclusive standards, kept costs higher to consumers than needed.

Non-standardization and Its Consequences In America the Society of Automotive Engineers failed to persuade the auto industry to adopt standard parts. This failure had a profound effect on the industry (Flink, 1975). Small manufacturers could not obtain cheap parts for volume production. Neither could they afford the capital to invest in parts-making plants. As a result, the industry tilted toward high volume, capital intensive manufacturing. Indeed, by 1911, with introduction of mass-produced Model Ts, the era of free competition among many small producers came to an end. The computer industry is going through the same period—lack of standard operating systems, standard protocols and language, and growing dominance of a few large firms. With parts locked into a specific model, manufacturers concentrated on styling to the detriment of engineering and

122 mechanical improvement. There was no need to do otherwise at the time. Low volume car producers were having an increasingly difficult time surviving annual model changes which favoured the big producers--new stamping machines were costly. In­ vestment in styling diverted money from basic engineering im­ provements which were almost entirely lacking from the 1920s to late 1960s. But this situation brought about the industry’s problems of the 1960s and ushered in government regulations. The Federal government had finally to insist on changes with passage of the National Traffic and Motor Vehicle Safety Act to improve engineering standards and fuel economy. Moreover, the US auto industry suffered from a lack of competition and grew top-heavy in bureaucratic management until Japanese cars in­ vaded American markets. Monopoly labour serving the auto industries suffered from the same problem.

Government Involvement in Automobility In America, Federal and State governments were not always negative toward the automobile industry. The first legislation pertaining to motor vehicles was the Federal Aid Road Act of 1916 which budgeted $75m ($738m) for 5 years for improvement of post roads. Between 1933 and 1942, Federal relief agencies spent $4 billion ($375.6 billion) on road and streets (Flink, 1975). Altogether, from 1917 to 1980, the Federal government alone spent $350.8 trillion (1984 dollars) on roads and highways. This sum does not include state and local expen­ ditures, nor does it include operating and maintenance costs borne by state and local agencies. The expenditures show an interesting pattern in that Federal aid (in constant dollars) peaked in 1966 as did State and local expenditures. Miles of highway designated in the Federal highway system peaked in 1965 at 908,722 miles. That the Federal government subsidized automobility there is no doubt. However, additional monies were collected for the Interstate Highway system in the form of a tax on gasoline specifically allocated for this system. Figure 24 shows MILLIONS OF MOTOR VEHICLES ORE U Hgwy Administration Highway US SOURCE: registrations = 1970-1982 * FIGURE US 24 MOTOR VEHICLE PRODUCTION AND FEDERAL HIGHWAY EXPENDITURES, 1920-1982 (1984 Dollars)

BILLIONS OF 1984 DOLLARS * automobile production/registrations and expenditures on highway construction from 1920 to 1982. From 1946 to 1965 there was a close correlation between these two data sets. After 1965 expenditures declined as the Interstate Highway neared com­ pletion. Automobility was reaching saturation. Automobile Market Saturation and the Long Wave Figure 25 shows World and US motor vehicle production from 1900 to 1982. As can be seen, following the rapid growth in production, output slowed from 1917 to 1929 and averaged 6.3% per year up to the mid 1920s. From the time saturation was reached until before World War II, production never achieved the previous highs. The interesting point is that even during the Depression, vehicle production continued strongly after the initial rapid decline in output. Saturation was not reached again until the mid 1970s. After World War II the industry enjoyed a good growth rate of 5% per year. As can be seen in Figure 25 motor vehicle saturation was also a problem on a world-wide basis. It was the beginning of the 20 plus year slide downwards in the Long Wave. In the United States, automobility has been through two periods of rise and fall: the first lasting from its early introduction in the 1880s to the 1920s and the second from 1945 to the 1970s. As shown in the table below these periods corresponded to the Long Waves. Table 14 WORLD MOTOR VEHICLE PRODUCTION AND THE LONG WAVE Low High Low High Long wave 1892 1920 1944 1968 MV prod. 1892 1926/29 1944 1973/78 THOUSANDS (LOG SCALE) SOURCE: US Motor Vehicle Manufacturers Association Manufacturers Vehicle Motor US SOURCE: IUE 5 SADWRDPOUTO FMTRVHCE, 1900-1982 VEHICLES, MOTOR OF PRODUCTION USWORLD AND 25 FIGURE 126 In the first period, motor vehicles competed with rail­ roads which were topping out in the early part of this century. During the 1920s, the automobile became the backbone of a new consumer goods oriented society; the capital expansion boom was centred on the automobile. Building roads and expanding suburbs with vast capital expenditures had reshaped the American economy and society permanently to fit the automobile. Passenger railroad traffic peaked in the 1920s. Coal con­ sumption, which had a large market in railways, peaked as a percent of total energy consumed in 1920. Coal prices also peaked in that year as coal was displaced by oil as a percent of total energy demand. An added push was given to automobility in the early 1920s when manufacturers widely introduced the closed car—an inno­ vation well received fcy consumers. In 1919 only 3% of the cars were closed; by 1927 the figure was 82.8% (Flink, 1977). This seemingly small change had an enormous impact on demand for plate glass and, by shutting out the weather, auto use expanded with subsequent increased demand for gasoline, lube, tires and tubes, and repairs and maintenance. The social consequences of having a mobile living room were also great. The post World War I economic boom was prim arily fueled by the automobile industry. All through the 1920s the majority of people believed the boom would continue. A few in the auto industry did not. Charles W Nash, of Nash Motors said, "I thought saturation had been reached in 1923." And Walter P Chrysler observed, "Early in 1929 it had seemed to me I could feel the winds of disaster blowing." In 1924 the National Automobile Dealers Association reported that replacement demand accounted for over 70% of the new car market. In the last half of the 1920s US motor vehicle manufacturing capacity was twice demand. With market saturation, dealers in the United States extended payment terms from 12 to 24 months--unheard of in those days. (As saturation was reached the second time in the 1970s, terms were extended from 36 to 48 months!) Credit losses increased. As a result, credit companies stiffened lending terms in 1927 causing a further contraction in auto sales. Some economists believe that the parlous state of the US motor vehicle industry, which accounted for about one quarter of the GNP, was one the leading problems that led to the slump of the 1930s. In the second most recent saturation of world automobile markets, motor vehicles dominated transportation and succeeded in displacing railroads as a major passenger and freight transportation mode. But beginning in the 1960s, as saturation was being reached for the second time, road transport saw competition from airlines for long and short haul travel. It must be recalled that the highs and lows of the Long Wave are averages of several industrialized countries in which the economic status of the US dominates. Is saturation in world markets just a temporary lull? Marchetti (1983) has studied this question by examining the evolution of car populations in nine countries. The analysis of the United States is shown on Figure 26. The perceived maximum registrations are 200m cars (in 1981 regis­ trations totalled 123.5m); car registrations are plotted as fractions of F, the perceived maximum. The time constant to go from 10% to 90% is 57 years. Using this analysis, the satura­ tion point will be reached in about 2014. What is most interesting here is that my estimated top of the next Long Wave is 2019 (see Figure 24 on page 126). From 1981 to 2014 car population would grow at 1.8% per year. There could be 15m new car registrations in 2014 com­ pared with 8.4 in 1981 as shown in Table 15. The same analysis applied to other countries is shown in Table 16. The perceived maximum (i.e., year of 50% penetration or the year of 50% of perceived total and the time to go from 10% to 90%) are shown on the column headings. Canada will reach saturation in about the same time frame as the United States. Most of Europe reached saturation in about the time frame of the top of the last long wave. Table 15

ANNUAL US CAR REGISTRATIONS AND TOTAL CAR POPULATION (Mil lions)

Car Total Percent Regis Registrations Population to Population 1978 10.9 116.6 0.80% 1979 10.4 120.2 0.87 1980 8 .8 121.7 0.72 1981 8.4 123.5 0 .6 8 19 82 7.8 124.Oe 0.63

2014 15.0 200.0 0.75* e=estimate * average Source: Motor Vehicle Manufacturers Assoc (USA); Hugh Douglas

Table 16

CAR REGISTRATION SATURATION BY SELECTED COUNTRIES

Number yrs Max (m) Yr 10% Yr 50% Yr 90% fr 10% to 90%

US 200 1935 1977 2014 79 Canada 20 1950 1979 2008 58 Sweden 4 1945 1965 1992 47 A ustria 3.2 1955 1978 1991 36 UK 17 1949 1965 1979 30 France 20 1953 1967 1983 30 FRG 19 1955 1965 1976 21 Ita ly 20 1960 1970 1982 22 Japan 21 1965 1971 1976 12 Source: Marchetti (1983)

129 FIGURE 26 CAR REGISTRATIONS IN THE UNITED STATES

F

130 Marchetti observes, not surprisingly, that road networks are a key to auto markets, and once these networks are in place, because there is a natural physical limit to the number of roads, saturation is being reached. For France, FRG, Italy and UK this point has been reached and it corresponds roughly to the top of the last Long Wave. Another point which controls this saturation is the amount of mileage a person is willing to travel in a year. The pop­ ulation in each country seems to settle for an average number of miles (kilometers) travelled per year, some 9,500 miles (15,000 km) in the United States. An individual is prepared to spend only so many hours travelling away from home. If one wants to travel farther, then one takes the airplane because of time constraint. This mileage remains constant even with high­ way improvements. Average miles per year in countries other than the United States is slightly less. In these analyses, saturation is the most difficult to predict. If one were to do this analysis for the United States in say 1910, then one might have concluded that saturation would be reached at 25m or so cars. Predictably, this would have occurred in the mid 1920s, which is what happened. But after the Depression and World War II a new set of techno­ logical and social circumstances arose to give automobility a new lease. The rebirth of automobility after World War II, which corresponded to the upward movement in the long wave, was provided by several unique factors: • A large pool of savings from which to draw capital for industrial expansion and consumer durables purchases • Development of continuous catalytic cracking that made gasoline abundant and cheap • Widening of the consumer base through distribution of income—rising productivity and creation of wealth

131 m

• Political commitment to a massive highway building programme Are there a set of factors in the future that could pro­ vide a similar convergence to increase the use and population of automobiles?

Automobiles and the Oil Industry Automobiles and the oil industry reinforced each other. Just as railroads gave the steel industry its initial large markets and also contributed to the expansion of the coal industry, so the auto industry initially created large markets for petroleum products. Between 1850 and 1900, exploitation of oil was largely for illuminants (kerosene or parafin oil) which replaced natural oils such as whale oil. Between 1900 and 1918, fuel oil was dominant, and after 1918 gasoline was dominant. As a percent of total product from a barrel of crude oil, gasoline exceeded kerosene in 1915 and fuel oil in 1929. When kerosene dominated petroleum markets, volatiles such as naptha, gasoline and ben­ zene (petroleum spirits, or petrol) were removed to prevent explosions in handling of fuel oil. These petroleum spirits were readily available for engine builders in the early stages of the auto industry. But in a very short time, by 1900, petroleum refining engineers had the new problem of supplying gasoline from a fairly static supply of crude oil. More gaso­ line had to be obtained from each barrel of crude. More gasoline was produced by converting more crude into gasoline at the expense of kerosene. (Natural gas lighting and later electricity eased the problem of kerosene supplies some­ what.) This simple innovation "created" an additional 80m barrels of crude oil in the US. But by 1910, this technique was still inadequate. In 1913, Standard Oil of Indiana built the first pressurized cracking still to squeeze more gasoline from a crude oil barrel. It was successful and gasoline making capacity expanded by 10 times to 1919 and 3 times again to 1922. In the United States, oil production rose from 150m

132 barrels to lb barrels from 1900 to 1930, a growth of 10.3% per year (Flink, 1975). Later developments in refining also had to satisfy re­ quirements for high energy fuels for aircraft particularly. In the 1920s there was a conviction that there would be a shortage of crude within the decade. Research laboratories were estab­ lished by major oil companies to develop better and more effi­ cient refinery technology to yield more higi energy fuels from each oil barrel. Worldwide exploration programmes were launched and these programmes were successful. Catalytic cracking was developed in the 1930s and continuous catalytic cracking during World War II. This technology supplied the Allied war effort with high energy fuels for vehicles and aircraft. After the War gasoline was abundant and cheap in the United States. Europe saw the fuel as a means to increase government revenues and taxed it heavily. In the 1960s and to the early 1970s gasoline product represented about 45% from the crude barrel, the highest profit margin for oil companies. With abundant, cheap gasoline that could be refined from almost any quality of crude oil, and an expanding interstate highway system, the emphasis was placed on large, high horsepower automobiles, the so-called "gas guzzlers." It was the hay-day for the oil industry. World gasoline consumption between 1960 and 1973 grew at 5.8% an­ nually. Gasoline stations were an architectural feature on every crossroad and motorway exit. Since then, the corner station has been in retreat as demand for gasoline has dropped. The two technologies—internal combustion engine and continuous catalytic cracking—reinforced each other and pro­ vided extraordinary growth for the automobile industry and the oil industry. This is illustrated in Figure 27 from 1950 where that year equals 100 for total world car registrations and gasoline consumption. Since 1950 the amount of gasoline con­ sumed in aircraft and small stationary engines has been very small compared with use in cars. However, there has been an increasing use of diesel fuel, particularly outside the United States. In 1982, sales of diesel cars in the 10 top countries

133 FIGURE 27

TOTAL WORLD CAR REGISTRATIONS AND GASOLINE CONSUMPTION (1950=100)

Source: British Petroleum Company; Motor Vehicle Manufacturers Assoc. (USA)

134 %

were 8.9% out of a total car sales of 19.3m. What is interesting to note is that beginning in the late 1950s the two curves begin to diverge, and in 1973 the gasoline trend line was broken because of the escalation in oil prices, and hence product prices, and the conservation that these higher prices brought about. The fact that there was an increasing car population did not result in a one-to-one increase in gasoline consumption. Much has been written about the problems of cars— despoiling the air with exhausts and there being insuffi cient oil in the future to fuel them. Changing technology, as it has in the past, is again, and will in the future, bring the car and the environment into balance. It can be said that without cheap gasoline automobility in the United States would have been restricted. Automobility was restricted in Europe because of high prices of both fuel and cars plus a lack of open markets because of sociological bar­ riers in private and government sectors.

Divergent Technologies Today autoraobility is based on the internal combustion engine—either fueled by gasoline or by diesel. In 1890 when motor cars were first being made in numbers, three power sources were available: steam, electricity and gasoline. At the time, gasoline was not technologically superior and most observers at that time believed that the steam engine would be the power source for cars. As observed at the beginning of this report, society is a learning system, a technology rein­ forces itself as more is understood about it. The research needed for improvement of that technology is handed on. What was it that caused a switch from steam or electricity to gasoline as a primary mover? There were some small events, totally unpredictable, that shifted technological development to the internal combustion engine. In North America in 1895 a horseless carriage compe-

135 0 tit ion was sponsored by the Chicago Times-Herald. It was won by a gasoline powered Duryea, one out of two cars to finish in a field of six. Based in part on this race, R E Olds patented the gasoline engine in 1896 and began mass producing the curved-dash Olds (Rae, 1965). Yet steam continued as a viable alternative until 1914, when, in that year there was an epide­ mic of hoof and mouth disease which led to a temporary with­ drawal of water for horse troughs, the usual place for the Stanley steamer to fill up with water. Only three years later did Stanley develop a condenser and a new boiler system that would enable the steamer to travel more than the previous 40 miles before filling up. The steam engine never recovered from this random event (Arthur, 1983).

The Social Impact Motor vehicles (cars, buses and trucks) have had, and are continuing to have, an impact on society greater than that of any other technology to date. Whereas the railroads provided a new form of social mobility, automobiles permitted mobility to be highly individual and not beholden to time tables and direct organizational systems for their operation. The railroads in the United States closed the last frontier when the east was connected to the Pacific. That set the railroad in place, and America was then ready for a new mode to expand geographical horizons. In 1893, at the Colombian Exposition in Chicago, six motor vehicles were displayed (Rae,1965). Ninety years later approx­ imately 37.5m motor vehicles were produced worldwide (peak year was 42.6m in 1978) and there were operating in the world 332ra passenger cars and 97m buses and trucks of which the United States had roughly 37% in each category (Motor Vehicle Manufac­ turers Association, 1953). To trace the development of the automobile is to chart its history in America. There was, it is true, wide differences in the pursuit of automobility in the United States compared with Europe and elsewhere where the automobile in its early devel­ opment had strong government involvement and was a rich per­

136 sons's fancy, focused around private clubs. At the turn of the century the automobile was greeted with enthusiasm, less so in Europe. The car was technically more impressive than radio or skyscrapers and more tangible than electricity. Today, laser optical discs, moon landings, satel­ lites and atomic bombs dwarf the automobile. So it ranks low in technological sophistication. Also, in America at least, it has become a necessity. Originally, automobility freed rural children from single room school houses for they could be bussed to central schools. This meant that school districts were able to concentrate their funds and provide better education. While this was true in the beginning, there are many that question that premise today. In the southern states (USA), automobility opened up new areas for industry which previously had been highly centralized and concentrated in old urban areas. For urban dwellers, they have been able to travel fairly easily to the country. As with other technologies that expanded markets t}y offering better and cheaper communications, the economy expanded. Certainly, in a narrow sense, the main benefactors of automobility were manu­ facturers, oil companies, contractors, real estate developers and the minerals industries. But as early as 1920, there were critics of automobility’s impact on the social fabric, even on business. However, there has always been a tendency for man to blame his technology rather than himself for whatever evil consequences it might produce. In the early 1920s alarms were sounded over in­ creasing urban congestion (Flink 1975). Forgotten was the problem of overcrowding by the horse population. Before motor vehicles and electric trams, the increasing number of horses was creating serious health and aesthetic problems. Today it is the suburbs that have benefited the most from automobility, leaving the cities to social decay, inhabited primarily by the very rich and very poor. Mobility broke down "community" and the family unit. Before automobility friends and family used to spend more time

137 with each other for "recreation." This is also a criticism of radio and television, even telephones. Automobility diminished the tendency to live and work in the same community. It freed the young and not so young for courtship in a car. But this activity has always been censured by parents and society wherever it took place. For retail business it was difficult even in the 1920s to operate profitably in traditional downtown business centres. But for every trade lost downtown, even more were built in suburbs and "shopping centres." The organizational structure of automobile manufacturers altered, in part, the views of entrepreneurs just as did the railroads. In the 1920s the concept of an ideal executive changed from the traditional risk-taking entrepreneur to the security-oriented technician who worked in the group. A team player is what private bureacracies required. The mineral industries adopted the same mantle. Yet, while this took place in automobile industries and others, there always remained new technologies which brought out born-again risk takers. Today's computer industry and bio-technology are good current examples of this phenomenon. At all levels of society, particularly in North America, the automobile has been totally involved with the individual. As Edward Ayres stated: In the United States, almost anything a person can do can be—and often is—done in a car. People eat, listen to music, watch movies, make love, cash cheques, mail letters, and have babies in cars" (Rae 1965). While the auto is accepted as a necessary accoutrement to living, it is also a villain. More than any other technology it became questioned as part of the American value system. More was not just beautiful. Thus, while autoraobility produced demands for a wide variety and large quantities of raw materials, it also produced a reaction that is changing demand

138 for raw materials. It has also caused more single deaths and serious injuries than any other technology to date including the nuclear bomb. In the United States 313,000 people have been killed and 13,400,000 injured in the last 7 years alone. Although there is an occasional uproar, fatalities and injuries are socially acceptable because automobility is socially acceptable.

The Future of Automobility One can assume that the automobile has reached market saturation in most of the developed countries. And for those developing countries, expansion of the highway system is necessary to increase demand for cars. In addition, a wider distribution of income is needed to narrow the gap between the car’s costs and personal income. Because of the present state of the credit (debt) structure, massive changes in the direc­ tions indicated are not likely. The present automobile manu­ facturers will therefore continue to direct marketing strat­ egies to trying to maintain and/or increase market share by means of styling, model changes and persuading consumers to trade up to more expensive models. This merely allocates production to a set market and increases income for manufac­ turers rather than increases the overall number of vehicles b u iIt. If the Long Wave is any guide, then the world is in the process of working its way out of the present sluggishness and negative thinking. It is getting ready for the next period of expansion. At the present time a sociological problem for cars exists. They are no longer perceived as totally beneficial by the intelligentsia in the industrial countries—it is part of the anti-technological thinking which grew out of the 1960s. If autos burned hydrogen, did not pollute the air and had outstanding fuel economy on the order of 100 miles per gallon, would the car still be socially acceptable? Would they be technically acceptable if they were made of totally recyclable plastics, all had standard parts and low maintenance and repair ♦ costs and could park upended, sitting on a rear bumper/tail board? Would such improvements increase automobility? In my opinion, the answer is probably no in the short term because sociologically the timing is not presently right. In about ten year’s time the period in the Long Wave will have changed. Already, those under 25 years do not think there is anything wrong with technology. Antitechnologists are found mostly among mid-aged people, those in a position of influence and some who are publishing their sentiments. Major improve­ ments of the automobile are forthcoming, such s new materials, ceramic engines that give low fuel consumption, and possibly less polluting fuels such as compressed natural gas. Automobi­ lity is too great a convenience to be constrained or abandoned.

Aviation The aeroplane, like the two other transport modes dis­ cussed in this report—railroads and automobiles—has had and is having an extraordinary impact on the social fabric of the world’s societies. Like the two earlier transport systems, some societies and their governments have used airlines under strong government control, and others have given the aeroplane free rein. And again, as with railroads and automobiles, the difference in government involvement is divided between the United States and the rest of the world. To trace the history and development of aviation illustrates the early slow growth of a technology and how social forces seize the innovation and transform its economic viability. The patterns of growth and change in these major technologies provide clues to the present and future and the direction of mining and mineral exploration. Mineral exploration particularly has benefited from aviation. The Canadian north could not have been opened to prospect ion without the hardy amphibious bush Norseman plane and its equivalents. Aircraft are used extensively in Australia and elsewhere in inaccessible regions. Helicopters in remote areas are particularly important for exploration crews. Geophysical exploration by airplane and helicopter have led to world-class mineral discoveries. While it is true that

140 #

these deposits might possibly have been found using ground surveys, flight surveys enabled more territory to be covered quickly and then followed up on the ground. Nowhere is this illustrated more dramatically than in uranium discoveries in northern Saskatchewan. Technologically, advances made by aircraft builders in the past 60 years have been remarkable and are a result of close cooperation of these builders with the air transport companies. Compared with railroads, ships and cars, this technological cooperation, which resulted in rapid improvements, is unique. Yet in spite of the rapid growth of this industry it has not been a prodigious user of metals and minerals other than aluminium and jet fuel. According to US Bureau of Mines data, nearly 20% of demand for aluminium in the United States is in the transportation sector of which about 2-1/2 percent is in aerospace (excluding military). Airlines consumed in 1983 one million barrels per day of jet fuel including overseas flights, and automobiles and trucks used 6-1/2 million barrels per day of gasoline. However, technologies that improve communications, that increase the range of travel, expand business and hence output of goods and services. So in this sense, aviation has con­ tributed to the post World War II upsurge in raw materials consumption.

The Early Years Aeroplanes came into their own during World War I. The military on both sides of the conflict saw in the aeroplane a tool of war. In Germany, aeronautical engineers proceeded even further and built the first dirigibles and bombed London several times until the fledgling Royal Air Force drove them off (Soberg, 1979). It can be said that this was the first strategic air raid. During this war and for a decade afterwards, France was at the forefront of technological development, as they were at the

141 ♦ beginning of automobile development (carburetor, clutch, etc). Names of aeroplane parts used in English and other languages are French today—hangar, monocoque fuselage, aileron, em- pannage, longeron, nacelle. But as has been a common occur­ rence with new technologies, it was the United States that mass produced the machines and made airlines a growth business. During World War I the United States developed the powerful Liberty engine and manufactured 20,428 of them. However, only 248 ever flew on the front lines. Another engine, the Hispano- Suiza 150 HP was developed by the French and after the War the rights to its manufacture were bought by Wright Aeronautical Manufacturing Company. In 1920 most aeroplane engine designers believed that air-cooled engines, like the Hispano-Suiza, would be the future power plant for aircraft. However, in the United States Fred Renschler, an engine designer and expert machinist, believed that air-cooled engines were the future for the simple reason that the weight of water and radiators was too great a penalty to make an aircraft economic. He made a 500 pound 200 HP air-cooled engined which was the prototype of the one that powered Lindbergh's Spirit of St Louis. The logarithmic learning system appears to be at work in aircraft design. At about this time, the United States Navy was beginning to think about aircraft carriers—flat-tops was the coined word then. Here was that curious confluence of ideas—a floating, powered airfield and Renschler's belief that light weight, air­ cooled aircraft engines could be built. The Pratt & Whitney Tool Company of Hartford, Connecticut funded Renschler to build a 400 HP engine weighing 650 pounds. An airframe designer and builder, Chance Vought, believed he could make a plane using the engine which would interest the Navy. The new engine was completed in 1925 and evolved as the Wasp engine, a work horse of the Navy for years after it launched the first flat-top in 1927. Boeing also built aircraft carrier planes, the F2B for example, with Renschler engines. This proved to be a for­ tuitous marriage for the engine builder and Boeing for they collaborated on many planes, both civilian and military, over the next decade. Not to be outdone, Wright Aeronautical

142 developed a 500 hp engine weighing in at a little over 650 pounds. The United States War Department in the 1920s stated that "the engine is the key to air supremacy." And it should be noted that in the United States every successful aircraft engine was built as a military engine (Solberg 1979). Incidentally, the emergence of Pratt & Whitney as an engine builder has a curious history. At the beginning of the industrial revolution in England, America and elsewhere, machine parts for spinning machines were made by hand and from this grew the tool makers art. When the steam engine developed into the main power house for a growing industry and later with the advent of automobiles, the same tool makers prospered. Pratt & Whitney had the skills to make aircraft engines. In England and the United States, these tool makers took different paths in their development. In England, machinery parts for automobiles and the many other myriad metal bits required for industry, were all carefully tailor made, "one on" parts as it were. This meant that each machine was beautifully crafted, lasted for decades, but was very costly. Readily available replacement parts did not exist. These machines were built to last and, as a result, the amount of technological change for the machine was restricted. On the other hand, in the United States machine parts were mass produced to reason­ able tolerances and quality. The machine would be worn out by the time a better and more economic one came along. Overall, change was expected. Machines were built with this in mind (Weiner, 1951). After World War I, flying was very popular. The heroes of the war were the pilots. Curiously, in America there was no boom in passenger aviation, but in Europe it took off early. This was particularly true in England as passenger flights were one way to circumvent the arduous and time consuming trip by rail and boat to the continent. Flying in Europe was also perceived as an extension of first class travel on ships and rail; early airline companies catered to the wealthy class. Most companies were able to make a profit by charging exceed­ ingly high fares (more on early fare costs below). In America, the airline industry was subsidized by the Post Office which awarded contracts for speeding the mails across continent-wide America. It was this government aid plus engine development by the War Department that kept airlines and manufacturers in business. This state of affairs was of concern to the Coolidge administration and in 1925 he appointed one of his classmates from Amherst College, banker Dwight Morrow of J P Morgan & Company to hold hearings and recommend government policies for future guidance of aviation. Here was a man from industry and banking that one might expect to have produced recommendations for a totally private industry. From his hearings came the Air Commerce Act of 1926 which had three basic policies: (1) Array and Navy procurement was vital to sustain the aeronautical industry in the interests of the United States, (2) private flying served national purposes, and (3) construction of airports was a local government responsi­ b ility . During Morrow’s hearings Professor Jerome Hunsaker of MIT made the following observation: The aeroplane had evolved for 25 years without any startling (technolgocial) breakaways from the basic Wright brothers creation." (Solberg 1979) His comment was essentially true, for by the mid 1920s very little had been added to basic aircraft design. In the United States the industry was struggling despite rapid increases in passengers flown. In Europe airlines were carrying more and more passengers; in America airlines were carrying more and more mail and very few passengers. In 1927 all this changed with the dramatic solo nonstop flight by Lindbergh in his Spirit of St Louis from Long Island, New York to Le Bourget, France. Lindbergh awoke America to flying. Money poured into aviation and before the bubble burst in 1929 billions of dol­ lars had been invested in aviation. So great was the en-

144 thousiasm that within 3 years after Lindbergh’s flight, the United States was flying more passengers than the rest of the world put together. Pan American expanded rapidly into South America with its flying boats beginning with service from Florida to Havana. Flying to South America was a natural for there were no roads or railroads and ships were slow. Pan Am could island hop down the Caribbean to South America where the aeroplane was the only way to reach coastal cities and sparsely populated interior settlements easily. Germans also saw the opportunities and founded several airlines in the late 1920s and through the 1930s. During this period air travel expanded between Europe and Africa, the Near and Far East as governments saw the airline as a means to forge links to and within their overseas Empires. The principal passengers were wealthy busi­ nessmen and civil servants (Hudson, 1979). In Canada the aeroplane opened up the desolate north, for the country was linked only in its southern part by two transcontinental railroads, the Canadian Pacific and the Great Northern Railroad (now government owned Canadian National Railways). Not only were passengers flown but also mining men and prospectors eager to tap the metals of the Canadian Shield. The United States was well supplied with railroads that linked the country north-south and east-west. Table 19 shows the position of Canada in 1929 in the world league of number of passengers flown. Such was the growth of passenger traffic in the United States that only one year earlier it stood third on the list; all other countries had the same ranking. The relationship between government and airlines was strong in Europe. But it would be an understatement to say that the government had nothing to do with development of aviation in the United States. As noted above, mail contracts and military procurement provided large support to the in­ dustry. It is no understatement to say that in the United States the government subsidy was paying for space to carry the mail and thus became economic for airlines to have bigger planes to carry passengers and mail since it was carrying the base load costs. The United States had passed Europe in plane design for this reason, for manufacturers were encouraged to *

Table 17

NUMBER OF PASSENGERS FLOWN BY PRINCIPAL COUNTRY IN 1929 (Thousands) United States 162 Germany 120 Canada 95 United Kingdom 29 France 25 Ita ly 24 Netherlands 15 Poland 10 Source: Hudson (1979) build bigger and better planes. But in the 1920s the Dutch, Germans and French were the main developers of world aviation. In the United States under President Hoover the Postmaster General Walter Folger Brown was a Hamiltonian believer in centrist government. He drew and redrew the air map of the United States with mail contracts domestically and overseas to and from the United States. The airline industry in this regard was different than railroad and electric utility in­ dustries which had already been formed; their structure and mode of operations and style was set before the government stepped in and began regulation and reform. Because huge mail subsidies attracted big business, the aviation industry was vertically organized—engine and frame builders owned most of the airline companies. So with government support the industry prospered. Fernand Braudel (1983) observed: Capitalism triumphs only when it becomes identified with the State.

146 Nowhere was Braudel's observation more true than in Ger­ many between the two world wars. The precursor of Lufthansa moved agressively overseas, supported by the German gov­ ernment's imperial ambitions. They were also masters of the zeppelin. The basic idea for lighter than air transport began in 1890 by Count Zeppelin. German m etallurgy moved aluminium out of the curiosity state to a light metal al loy for the frame and girder work of the zeppelin which supported the fabric bags filled with hydrogen, the gondola and engine nacelles (pods). In the airship von Hindenberg aluminium was used in chairs and table frames and an aluminium grand piano in the lounge. First passenger flights were from Frankfort in the early 1920s and in 1928 the von Hindenberg made the first inaugural flight across the Atlantic. The fare was $3000 ($20,280) one way. Later in 1936, the fare between Frankfort and New Jersey was $450 ($3,600) for a shared cabin and $750 ($6,000) for a single. The trip took 48 hours. Not bad considering the alternative of 10 to 14 days by sea and a rail journey from a continental port. Passengers flew in style in a 750 by 125 foot gondola at 75 miles per hour only several hundred feet above land and sea. The outwardly slanting windows gave panoramic views, service and meals were sumptuous (Hudson, 1979). Flying by zeppelin ended dramatically in 1937 with the explosion of the Hindenberg as it was landing in New Jersey. Yet until that time the ships had made 600 flights carrying more than 13,000 passengers without a single incident. Germany abandoned dirigibles and the von Hindenberg's sister ship was broken up for scrap and the aluminium used for aeroplanes. Although a technical triumph which pointed the way to using light aluminium alloys in aircraft, dirigibles were probably on the way out anyway for during World War II aviation in those 6 years advanced 50 years. After the war, flying concentrated on bulk passenger flying and speed. Before leaving the discussion of this early period of the airline industry, one must recall how very pioneering aviation had to be after World War I. There were no weather forecast­ ers; thus, the pilot only knew of the weather when he got there. There was no radio or directional signals. For pas­

147 sengers there were few comforts or amenities. For example, planes were not heated or pressurized, windows could be opened, the plane scudded close to the ground avoiding bad weather and landing in emergencies in the smallest field or any other reasonably flat area. Planes followed rivers, railroad lines or any other man made structure. They did not fly at night and landed for passengers to sleep in a nearby town or were put on a train to sleep on an over night ride to be met again in the morning by another plane to take them onwards to their destina­ tio n . Travel by rail and ship was quite luxurious; the task of the airlines was to persuade the passenger who could afford it to travel by air instead. The adventurous, the businessman and the wealthy did. Not in those years had the cost of flying been so low as to include passengers of every class. Indeed, in the 1920s the cost of flying coast to coast in the United States on the first flights was $351.41, or $2,534 in 1984 dollars, and the flight made many stops along the way. Before the Crash in 1929, the railroads were beginning to enter the air passenger business, in part because they could see that airlines would begin to take their long haul passenger business away. But the financial problems of the railroads were exacer­ bated by the Depression and they withdrew from aviation. This was not true in Canada, where the Canadian Pacific Railroad entered the airline business and is still in it today.

Before and After World War II Before the World War II, the airline industry was ap­ proaching some of the same problems that existed after the War, that is, rapid pasenger growth required new and larger aircraft with resulting huge financing requirements. The change was heralded with introduction of the DC3 made by the Douglas Aircaft Corporation. Five years after the DC3 was introduced in 1936, the number of passenger planes in the United States fell to 358 (80% were DC3s) from 400 while at the same time the number of passengers increased four times. The DC3 was the fir s t aeroplane that could make money by flying passengers only without a mail subsidy. During World War II it was a work

148 %

horse for ferrying cargo, passengers and military personnel (Solberg, 1979). But after World War II the airline industry had to lit­ erally begin again. In the United States the industry had been broken up and manufacturers and airlines went on their own. The value of mail contracts were sharply reduced in the mid- 1930s to $8m ($64.7m) from $19.4m ($156.9) which pushed the airlines into making up the difference with passenger traffic. In Europe, particularly in Britain, governments had seen the enormous growth in air passenger traffic before the war and had witnessed the air armada constructed by the US Air Force during the war. In no way would these governments approve an open skies policy similar to the law of the sea. The United States wanted every nation to have unrestricted rights to fly over each others' air space. The British were particularly adamant on this point. As a result, the post war international air map and airlines were cartelized and dominated by state owned airlines with airfares designed to keep the most costly and/or smallest state airline profitable. The International Air Transport Association (IATA) policed the world's air fares with approval of governments. The United States went along. From these restrictive policies, combined with fast growth in air traffic, selling more tickets to the lower end of the fare market together with large capacity aircraft to be filled, came discount charter airline companies and clubs which cir­ cumvented the IATA fares by chartering. Large airlines, state and private, that had subsisted well under the fare umbrella and had accordingly built up costly wage structures, top heavy central management and an overall complacency over their costs (IATA could always bail them out by increasing fares), were devastated by these low cost competitors entering the market. This competition came shortly before a rapid rise in fuel costs in 1973 brought about by formation of the OPEC cartel. The new carriers made it difficult for established airline companies to fully recover the added fuel costs with increased fares. Basic to this problem was a sociological change of large proportions. Rising standards of living in industrialized countries had created a market for mass travel and tourism to fly desk-bound

149 hordes away from their cold and grey-skied misery to sunny and warmer places. It did not seem to matter if the holiday place had the same crowd, food, decor, music and even language to make one feel at home; the planes were filled to capacity. The growth in passenger-miles flown in the United States since 1930 can be seen in Figure 28 and Table 19. Also shown are the number of international passengers flown since 1949. The comparable data for all international airlines is not complete. Growth in both sets of data is characteristic of other industries and commodities—fast take-off, slower growth, disruption and finally maturity. Table 18

GROWTH PHASES IN UNITED STATES AND INTERNATIONAL PASSENGER TRAFFIC (Percent per year)

United States International (Passenger-miles) (Passengers) 1931-1950 27.0% 1947-1970 13.0 17.0% 1970-1979 8.1 6.4 1979-1982 0.0 0.0 Source: International Air Transport Association Note that for the United States data is in passenger miles whereas for international flights the data are in passengers. Growth rates for the United States would be higher because mileage is included. Although data for the United States in years prior to 1931 are probably available, one can surmise that during the latter part of the 1920s, that is, from the time that Lindbergh made his historic flight, that growth rate was as high as 27% annually. Thus, the long period of fast growth lasted for about 52 years, quite similar to other in­ dustries studied in this report. MILLIONS US FIGURE PASSENGER 28 MILES AND INTERNATIONAL PASSENGERS ORE: S eea Aito Ascain Itrainl Air International Association; Aviation Federal US SOURCES: (Millions) rnpr Association Transport 151

However, there is one difference between aviation and the other industries—the growth trend was uninterrupted during this whole 52 years. The primary reasons for this are: • Aeroplanes were very much socially acceptable because of the glamour attached to World War I flyers and Lindbergh's flight • There were no physical constraints on airplane flights and flying that were not reasonably and quickly cor­ rected—radio directional signals, radar, computer- assisted air control and reservation systems. In the United States air fields were a local jurisdiction which created competition between cities; the airways were open to all companies to fly—the United States was a big country—but the rest of the world placed restrictions on overflights • The best of engineering technology and electronics has gone into aviation partially because of the "social image" of aviation and partially because of military funds and involvement for research and development The dynamic growth and technological development in avi­ ation came after World War II. During the war the US Air Force had Boeing build the B-17 bomber which carried the air war into Central Europe and dealt Japan the final blow at Hiroshima. This bomber was essentially reconverted to passenger service and was the first high flying, pressurized airliner. Called the Stratocruiser, it could fly above the weather. While it was a very popular plane, with a lower lounge deck, it was not very profitable. New aeroplanes quickly followed--Douglas Aircraft's DC4, DC6 and DC 6C, and DC7; Lockheed's Constella­ tion; and General Dynamics Convair. Across the Atlantic, Britain was building the successful Vickers Viscount (Solberg, 1979). As is so often the case with new technologies, the advent of jet aircraft was looked on with scepticism by most of the leadership of the airline industry. Plans for jet aircraft for

152 passenger flight were designed and looking for customers in 1949. But the perceived large amount of fuel required was the chief reason airlines did not opt quickly for jet aircraft. Even after jets had proved their mettle, airlines continued to order piston aircraft. Who would want to travel that quickly? Yet the piston planes had reached their maximum development in weight to horsepower ratio. Aviation was ready for another leap forward with a new technology. The introduction of jet aircraft was first accomplished in the early 1960s by the British with their Comet and the French with the Caravelle. The former had many problems, principally because the jet engines were enclosed within the forward wing rather than suspended below in nacelles which all future jet aircraft have used save the Concorde. The Caravelle had such a design, with two separated engines in the rear on either side of the tail. The Caravel le was a successful and profitable aircraft. Vickers built the VC10 with 4 engines in nacelles in the rear, and this plane was a commercial success. In the United States, the first jet aircraft was the Boeing 707 and the Douglas DC8, followed by the Convair 880. All had engines in nacelles (Solberg, 1979). Two major changes affected the airlines with the intr­ oduction of large jet aircraft some ten years ago. I can recall that there increasing number of seats available and the need to keep the planes operating continuously because of higfr capital costs, airlines began to cut prices. Also, to attract pas­ sengers to these cheaper seats, the quality of food and ser­ vices was upgraded. The consequence of this was that govern­ ments, followed by business, mandated that most flying be done in tourist class. The age of mass low cost travel was arriving and was in full operation with the introduction in the early 1970s of the wide bodied jets, 747, DC10, Llll and Airbus.

The Developing World More than any other technology, with the possible ex­ ception of the impact of television, aviation has affected the developing world. The interchange of people and ideas, com­ 4 merce and the arts has grafted the dominant western culture onto the cultures of developing countries. As a result, com­ merce has thrived. The results are no different from those flowing from the introduction of railroads, telegraph and telephone, and automobiles. Enter any department store in San Francisco, Madrid, Rio de Janeiro, Bombay, Manila, London and one will find similar merchandise. Indeed, except for the differences in language it is difficult to know which country one is in. These stores have hybrids of the world's goods and are also clones of stores in the northern tier countries. The worldwide availability of merchandise is not confined to department stores. The manufacture of automobiles and aeroplanes and many other articles are a mixture of bits and pieces from many countries. Communications have made this possible. Businessmen have the ability to travel comfortably and securely to all reaches of the world to negotiate person­ ally with their counterparts, always seeking the lowest possi­ ble cost and most economic path to delivering goods and services to consumers. The jet aeroplane’s impact on the major arteries of com­ merce is very evident, but less so for most travellers is the change brought about by small propellor aircraft touching the isolated lives of peoples in the Borneo jungles or the Amazon. For some of these people an aeroplane wheel was the first wheel they had seen.

The Next Phase By the 1970s all the original founders of the world's airline industry had retired or were dead. Some travellers who had flown in the early days dislike the crowded airports and huge aircraft. As Carl Solberg (1979) says:

The novelty of long distance passenger flight ceased to be novel. There was now no other way to go. The miracle of flight, which had always depended on machines, had triumphantly turned

154 *

into a repetitive and unexciting routine. The adventure was over.

While flying might remain an unexiting adventure, two new technologies, propjet engines and aluminium/lithium alloys, are likely to make flying less costly. New engines under develop­ ment use a curved blade harnessed to turbo engines which will be much lighter than a jet engine and push the plane at jet speeds. They will also use nearly 50% less fuel than jet engines. Planes can then fly further on the same amount of fuel or carry more passengers or cargo for the same distances as today. Oil prices and hence jet fuel costs are likely to fall a quarter, further reducing operating costs. Aluminium/ lithium alloys will reduce the weight of aircraft by at least 10 percent with operating results similar to the new engines. However, the use of this new alloy depends on reducing the current costs of lithium metal. Reduction of price (cost) to airframe makers should come about with widening markets and more producers of lithium metal. Currently there are less than 5 lithium metal producers. As a result of these potential improvements, aviation could get its second wind, much as the automobile industry did after World War II. With falling costs of travel and air freight, and improved and more efficient aircraft, aeroplanes will not only continue to be the only way to travel but travel will increase as lower fares encourage more people to fly. Air cargo will also be the principal way of moving an increasing amount of manufactured goods and high value raw and semi- processed raw materials. Business will be stimulated and the result will be rising demands for raw materials. The mineral industries and mineral exploration can only benefit from these future developments in aviat ion.

155 4

IC/EO and Telecommunications The integrated circuit, or chip, and electro-optics (IC/EO) are transforming telecommunications which includes transmission of voice, video and data by wire, wave guide (fibre optics), microwave and satellite. The key to com­ munications is the telephone, or rather the point of entry into a building with an identification number (telephone, telex, etc), or a new mobile cellular radio telephone. As observed in other sections of this study, communications in the broadest sense includes telecommunications as well as telegraph, rail­ roads, motor vehicles, aviation and ships. Communications development has welded society into a learning system and thus is increasing innovation and the information and knowledge required by business to expand. This is the basis for economic growth. Little data is available on modern telecommunications development because it is only some 5 years in the making and government bureaux have not yet figured how to measure telecommunications. Is it to be message units, image units, voice or channels used per rninute/hour, magenetic media sold, or bits and bytes? However, one set of statistics compiled by American Telephone & Telegraph Company lists telephones installed at yearend in the United States and most other major countries. Figure 29 shows installed telephones in the United States from 1876 to 1981. In 1876, 3,000 telephones were installed and in 1981 there were 158ra. Telephones installed declined only once, from 1930 to 1935. The growth rate from 1935 to 1981 for installed telephones was 5% per year which was similar for the period 1910 to 1930. From 1895 to 1910 growth was 23% annually. Since 1970, growth in telephones was 4.3% annually. Table 19 lists other countries. Some nations such as Japan, France and Spain have high growth rates because they were starting from a low base with a low ratio of telephones per capita. This per capita ratio is shown for the United States from 1894 to 1981. Nearly all countries are now in the process of installing modern, digital electronic telephone systems.

156 #>

NUMBER OF TELEPHONES (THOUSANDS) : &T T& E:A C R U O S FIGURE 29 NUMBER OF NUMBER TELEPHONES INFIGURE 29 THE UNITED STATES, 157 1875-1982

4.3$ 7.2 7.6 7.4 7.6 4.4 7.0 6.0 Rate 6.3 4.0 <$/yr) 10.4 11.2 Growth 3,448 4,446 175,505 3,271 3,095 3,244 6,341 6,853 8.1 15,060 15,560 5.3 17,088 18,085 19,870 22,211 10.9 4,292 169,027 24,934 26,651 1977 1978 1979 1,556 1,732 1,913 2,443 2,626 2,813 7.8 2,718 2,935 3,145 2,032 2,127 2,244 5,930 6,160 6,407 9,528 10,311 11,108 14,488 17,519 162,072 1976 1,936 1,431 2,281 2,505 8,605 13,885 155,173 1,834 1,301 41,300 43,232 46,808 51,937 55,422 10.5 1974 1975 1,987 2,133 Table 19 Table 3,790 3,913 4,016 4,145 12,454 13,165 (Thousands) 143,972 149,008 1,004 1,143 2,047 2,164 2,295 12,612 13,695 14,501 15,246 16,125 19,095 20,536 20,340 21,039 22,675 1972 1973 1,918 1,412 1,535 1,679 1,694 1,841 2,324 2,503 2,667 2,798 2,949 3,100 3,404 3,604 10,338 11,337 12,405 13,833 15,554 11,345 17,572 131,108 138,286 1971 1,547 1,290 2,180 3,213 10,322 15,246 16,521 17,803 18,767 19,603 21,162 22,932 24,743 26,632 125,142 736 821 911 1970 TOTAL TELEPHONES IN SERVICE AT YEAR END BY COUNTRY, 1970-1979 1,700 1,798 1,427 1,867 1,971 2,087 2,238 2,399 2,578 2,753 2,925 1,181 2,036 9,751 10,253 10,979 11,665 8,774 9,546 9,369 3,410 3,721 4,003 4,317 4,679 5,047 5,410 5,845 4,307 4,506 4,680 4,829 5,178 5,423 5,673 4,569 5,129 5,713 6,331 7,043 7,836 3,026 13,835 26,317 29,926 34,021 38,698 39,405 14,967 16,143 120,218 Italy Spai n Spai Yugoslavia Finland Austria Belgium France Netherlands Sweden Switzerland United Kingdom Denmark West Germany Poland Japan Europe: United States Canada

158 7.7 7.8 3.9 8.4 5.1 4.1$ 6.0 Rate ($/yr) 10.7 17.4 13.4 Growth 57e 1979 1,780e 1,460e 1,080e 2,440e 2,300e 2,790e 2,500e 6,600e 6,200e 1978 1,715 1,350 6,266 2,191 2,320 2,096 2,200 2,342 2,404 4,836 5,525 1,132 1,251 1,914 2,064 2,302 5,502 5,835 4,036 1975 1976 1977 1,531 1,610 1,674 1,996 5,267 735 752 813 888 993 989 1,034 1974 (Thousands) Table (Cont.) 19 Table 39 40 42 44 47 53 846 1,158,400 1 1,643 1,976 2,387 1973 1,444 1,495 2,065 2,374 1972 1,707 1,816 1,936 2,000 33 36 755 800 692 795 913 1,305 1,358 1,624 1,293 1,396 1,600 1,690,744 1 4,157 4,400 4,659 5,000 29 521 584 620 685 583 659 1970 1971 1,262 1,554 1,175 1,748 1,828 1,952 3,913 2,001 2,145 2,190 2,415 2,652 3,372 TOTAL TELEPHONES IN SERVICE AT YEAR END BY COUNTRY, 1970-1979 Hugh Douglas India 1srael South South Africa New Zealand Korea HongKong Barbados Braz11 Argentina Austral la Austral Source: Source: United Nations Statistical Yearbook; The World's Telephones, AT&T 1980, Long Lines; e = estimate Other:

159 As the base for telecommunications has expanded and new technologies have been applied, the costs of transmission have dropped. New technologies have been the key to this decline in cost to the consumer. Transmission systems have had a long historical development characterized by an increasing amount of messages or circuits that can be carried on a single wire and recently by other media. This rapid and logarithmic improve­ ment is shown on Figure 6 on page 29. As a result of these improvements, a 3 minute person to person operator-assisted telephone call to Chicago from New York dropped from $69.77 in 1902 to $1.42 in 1984 (both costs in 1984 constant dollars). Similarly, a 3 minute call to London from New York has fallen from $512 (!) in 1927 to $9.48 (also in 1984 constant dollars). Figures 30 and 31 illustrate the steady decline in these telephone costs. Increasing competition in the United States, combined with rapid expansion of fibre optic systems, microwave, and satel­ lite, with resulting expansion of telecommunications markets, will continue to drive costs lower. For example the growth in Intelsat by region is projected as follows:

Table 20

INTELSAT GROWTH BY REGION (Telephone Circuits year-end) 1983 1987 %/yr A tlant ic 23,438 40,579 15% Indian 8,895 16,546 17 P a c ific 4,334 8,735 19 O ther 35 100 30 T otal 36,702 65,960 16 Source: Intelsat

160 CONSTANT 1984 DOLLARS ORE: T ;Hg Douglas Hugh T; AT& SOURCES: FIGURE 30 COST OF THREE-MINUTE PHONE CALL, NEW YORK TO NEW YORK PHONECALL, COSTTHREE-MINUTE OF 30 FIGURE CHICAGO, 1902-1984 (Constant Dollars)1902-1984 1984 CHICAGO, 161 FIGURE 31 COST OF THREE-MINUTE, PERSON-TO-PERSON PHONE COSTCALL, THREE-MINUTE, OF 31 FIGURE

CONSTANT 1984 DOLLARS ORE: TT Hg Douglas Hugh AT&T; SOURCES: NEW YORK TO LONDON, 1927-1984 (Constant Dollars)19841927-1984 LONDON, TO NEWYORK 162 These data are for satellites operated only by the Interna­ tional Satellite Consortium. There are a dozen more other satellites in orbit. An immediately applicable technology that will drive costs down for the consumer is faster baud rates for modems connected through microcomputers. Telephone bills are stated in message units (in the United States); thus, a faster transmission rate will lower the bills. Sales of modems, the devices that connect the microcom­ puter to telphone circuits are projected to grow at over 50% per year through 1990. In 1984 about lm modems were shipped in the United States and by 1988 an estimated 8m will be shipped according to Creative Strategies in Cupertino, California. • Prices are expected to fall for a 1200 baud modem to $200 or less from a current $700. And depending on the quality of connection (usually a function of the antiquity of the copper wire), baud transmission rates will increase further, which puts downward pressure on communications costs. The inter­ linkage between telecommunications and microcomputers (micros) is gaining, and it is estimated that eventually the home or business telephone will be linked through a micro with a modem b u ilt in. The rapid installation of fibre optics systems is fueled by explosive growth in telecommunications as a result of falling prices to consumers, particularly in the United States. New fibre optics cable systems are announced weekly. A report I prepared in 1982 listed plans for fibre optic cables ex­ pressed in tonnes of copper equivalent (the amount of wire that might have been used). This analysis is shown on Table 21. It must be noted that these systems have "a life of their own," that is, some fibre optic systems will displace copper use but others are put in because the technology is superior and there is no question of using copper in the first place. The con­ clusions of the report were that fibre optics would make a serious dent in copper demand beginning in the late 1980s and, if scrapped copper cable is included in the supply side, a large drop in copper supply requirements is quite likely.

163 48 624 8,959 7,751 10,546 13,804 17,399 15,329 Wor Id Wor 12,040 22,855 24,720 2 5 2,792 0.3 336 233 421 1,209 Other 2,598 7,037 Undersea 14,075 5.61 1 17 10 35 74 148 103 151 126 354 135 110 167 101 23,387 65 3 65 Europe* EQUIVALENT TONNES OF COPPER I 1 I 1 UK IN 139 103 378 348 742 232 247 506 595 875 1 1 Table Table 23 0.4 7 30 188 172 285 241 618 1 ,455 1 FIBER PLANS 64 87 322 3,909 5,065 6,950 17,6V 12,581 United States Japan OPTICAL 0.1 13 13 9,959 79 16,452 44 66 45 223 461 Canada 1,304 TOTAL 1976 5 1977 1979 1981 430 1,498 1985 1983 1,599 1978 1987 1980 1982 1989 1990 1984 1986 96 1988 •Excludes United Kingdom Source: Source: Hugh Dougins

164 IB

Microwaves and satellites have already eliminated copper wire cable for new long haul transmission communications. Old telecommunications monopolies are breaking up and these new open markets are further lowering prices and in­ creasing telecommunications use. Countries other than the United States, such as Japan and to a lesser degree the United Kingdom, will expand the ability of individuals and business to transmit information and data worldwide. This ability will increase creativity and innovation, and as a result will expand trade and economic growth. For this reason it is one of the major technologies that will shape the future. As other com­ munications technologies have done in the past, the use of minerals will increase and the need for exploration for these metals and minerals will follow.

165 VII THE MINERAL INDUSTRIES

This chapter discusses technological (and certain allied social) changes in the mineral industries and how this industry adapted to them. The mineral industries were part of the industrial revolution and the social systems of the times; it moved with the upward and downward waves of social and techno­ logical acceleration and deceleration. Developing long term data on the mineral industries (excluding coal) for countries other than the United States and Canada is difficult. Many countries have been beset by wars and political upheavals that have broken data continuity. In English speaking countries such as Australia and to a lesser extent South Africa, social and technological change has been very similar to the United States and Canada. For this reason, the US and Canada data on mining, metals and minerals reflect the mining industry in other English speaking countries al­ though in some of the countries changes lagged behind the United States, but they adapted uniquely to their own social structures. Historical data for the United States are available over long periods of time. This country is a particularly opportune country to study because Americans have a fascination with statistics and with ’’measuring all things." Moreover, if cer­ tain data did not exist for a particular period, economists have extrapolated existing data using reports, newspapers and institutional publications of the time to develop statistical time series connected to the present. In addition, there is a large body of literature on the mining industry of the United States, for mining was and is a major industry. From 1860 onwards, when the demand for metals and materials accelerated, the United States was the largest consumer and producer of metals and minerals.

For the above reasons, the bulk of research on changes that occurred in the mineral industries since the early 1900s » is concerned with the United States. Specific examples of changes outside the United States are described to enhance and emphasize sim ilarities to, or differences from, the United S tates.

Early Institutional Changes Prior to 1860, mines in Europe and North America were a small operation which had not changed technically or socially for hundreds of years (Temple, 1972). It is true that steam engines for pumping water had enabled mines in England and later in other countries to mine deeper in the late 1700s, but the social organization had changed little. Small stock compa­ nies were formed in the mid 18th century when laws permitting such companies were passed in England, America and elsewhere. But a "large" raining operation then would have had considerably less than a couple of hundred men. The mine and the village were tied togther. A few owners of stock companies were absen­ tee, but the principal investor was the resident "mining engi­ neer" (mining engineering as a profession did not exist until the end of the century). One exception to this general picture was the growth of tin mines in Cornwall in the early 1800s when England was the major producer of tin. Then, with the help of steam technology, raining towns were created, but they remained essentially small rural operations. Copper and lead/zinc min­ ing in Britain in the mid-18th century was also an exception. One must recall that railways had not begun their rapid expansion until after 1860; large markets for copper and later lead and zinc had not yet developed as the industrial tide swept forward. As noted in earlier chapters, the take-off in industry expansion began in the late 1840s and accelerated in the 1850s and 1860s. The principal point that can be made about the insti­ tutional structure of mining before 1860 was that it was an extension of the small manufacturing firms that dotted England, parts of Europe and the eastern United States. Owners lived close to the working area. There was little separation between a country squire and a small mill or mine owner. In the

168 western United States there were hundreds of small mines re­ ducing ores in isolated mining camps and shipping the reduced metal out by wagon and then by railroad. As the demand for metals exploded, the need grew for larger mines and larger smelters (and refineries) to meet expanding demand. By the early 1890s the mining industry was changing to large firms with headquarters located in urban centres. Smelting, previously done at the site of small mines, shifted to Denver, Omaha, Tacoma and the southwestern centres in Arizona (Eaton 1948). In Britain smelting centred in southern Wales close to coal and good ports. The shift in organiza­ tional structure was dramatic. It paralleled the organization of railroads, steel, oil, and electricity to name a few. Since the capital requirements were large and required financing from capital centres, such as London, Paris and New York, account­ ants and financiers became as important as mining engineers and metallurgists, if not more so. As the industrial revolution began to accelerate and metal demand increased rapidly, three changes affected the mining industry: (1) larger mines required more capital, (2) organi­ zational structure became larger and hierarchical, and (3) in an increasingly interconnected world of communications, outside events controlled the daily operations of the mine. A highly individualistic industry found itself controlled by outside forces over which it had no influence. In this respect, mining seems to have not changed much in nearly 150 years.

Social Organization in the Mines For centuries mining, that is, breaking rock underground or in open pit (cast) mines, had been organized around a team, of which one of the members was a leader accepted b y the others as their peer. This type of social organization was described in Chapter V. Drilling in the mines was done by hand using a hammer and moil. Sometimes two men would work together but only a foot or so of drill hole was completed in a day and not many holes were the result of much labour (Simonin 1869). Under these labour intensive conditions only very rich mines could be exploited and usually the geology of such deposits made mining difficult because of irregular veins, faults, and pockety mineralization. Standard underground conditions such as found in block-caved underground copper mines, underground mines in the Missouri lead/zinc belt or the massive sulphide deposits of northern Ontario, had not been exploited save for the exceptional mas­ sive sulphide mines in Cyprus and the kupferschieffer copper deposits in Germany. In the 19th century the miner faced a challenge in determining where the next ore-shoot lay. Pro­ gress in mining and extending drifts was also slow. Mech­ anization in these irregular and uncertain geological environ­ ments was not to be undertaken enthusiastically. It must be remembered that raining engineering and geology were not yet organized professions with degree graduates. These profes­ sionals came from engineering schools first set up to serve the civil engineering requirements of railroads (Graton 1948). Such were conditions in underground mines in the early and middle 1800s. Mechanization was little understood and few machines had been been built to be used by miners. However, there were innovations, such as skips and cages instead of buckets, black powder instead of heating rock by fire. Mining then, even today, is removed from the ferment of urban culture with its swift social change, expanding population and demands for immediate solutions. Today in urban areas most change is fairly readily accepted and adapted to. But one hundred years ago mine managers had little idea how a mechanized drill would work in not only the geological environment but more important­ ly the social environment. Thus, when the pneumatic drill was first introduced in the 1870sit was a threat to established work patterns in many mines (Lankton, 1983). The Burleigh drill, successfully used in the Centis Tunnel project, was tried in underground copper mines in Upper Michigan for a few years in the early 1870s, but was abandoned and hand drilling returned. The problem with the drill was that in small drifts this large machine was not maneuverable. Drilling for tunnels required a working face of at least ten

170 feet, whereas underground drifts were five by six feet. As a result, Burleigh drills in northern Michigan failed to to be used extensively in these copper mines. Then came "the little giant" d rill b u ilt by Rand D rill Company (Lankton 1983). Lankton notes that in the beginning miners who used Rand drills perceived them as a benefit because although they worked well, they did not work too well. Hand drilling still conti­ nued. The limitations of the machine kept it from destroying the social and economic fabric. The gradual installation of Rand drills in the Quincy mine in northern Michigan illustrates what happened to this social fabric as drills were finally fully used. The underground characteristics of the Quincy mine, and many other mines in northern Michigan, were hardly amenable to mechanization by the crude drills first introduced. The ore body dipped 54°, it had spotty mineralization and wide open discontinuities between stopes and haulage ways. All work underground was done by contract: a lead miner selected his own team and co-workers (the so-called "buddy system"). The lead miner had a great deal of experience and in common parlance he "had a nose for ore" and knew well where to put the next round and begin a new drift or raise for stoping. All work was by hand drill; the miner worked close to the ore and could see the rock and mineralization. Skill and pride in good hand drilling was a tradition and each year annual contests were held at nearly all mines in the United States for the fastest single and double hand drilling. With the advent of air drills, a miner was distanced from the working face, and the clouds of dust not only covered the exposed mineralization but also unfortunately caused silicosis which afflicted thousands and thousands of miners until water with drilling was finally introduced. In 1879, the Quincy mine acquired its first Rand drill and by 1882 it had 22 of these machines. The productivity results were impressive: 2.2 times faster than by hand drilling. Another mine, Calumet and Hecla, used 20% fewer miners over a period of 5 years. Costs per cubic yard of rock broken dropped ♦

40%. The Quincy adopted Rand drills slowly so that ten years after the first introduction hand drilling was still being done. Moreover, on Rand drills the buddy system was still employed because two men worked on each drill. At this point, the miner was not too unhappy. As a hand driller he earned an average of $48 for 26 days work ($672 in 1983 dollars or $3.23 per hour). On the Rand drill, the miner earned an average of $57 for 26 days ($798 or $3.84 and hour). Thus, with two men working and higher pay, the social system was preserved. With introduction of a single operator drill, the social system was threatened and finally destroyed. Parallel to this development was a decline in ore grades. A direct result of this change was that large capital expenditures were made for equipment which enabled miners to mine to a lower grade of ore. With mine planning and geology becoming increasingly important, decisions on where to mine and mine planning were gradually being taken away from the individual miner. Foremen and managers were answerable to custodians of capital invested in the mine, and the amount of capital was increasing per annual ton of copper and other metals produced. The gulf between capital and labour was beginning to widen. Introducing the single operator drill brought on a crisis. The violent strike in the upper Michigan mines in 1912-13 was the result of this slow process of change in the social structure of the raining work force and the community. The miner’s self esteem and position in the work force were changed. He lashed out against the system that was being created and over which he seemed to have no control. Forming a union was one way he thought the problems could be resolved. What was transpiring in the copper mines in Upper Michigan was also happening throughout mining in America and in the rest of the world (Graton, 1948), save for the very small mines in the non-industrialized countries. As the demand for metals accelerated and high grade ore became depleted, higher produc­ tivity was required which could only be accomplished with machinery. These new tools themselves created new demands for metals. In addition, a different type of organization was

172 required for operating a more mechanized mine. Before this change took place miners found more social interaction between the work place and life outside the mine. As a result, work stoppages were less of problem than today. With the development of big mines and introduction of machinery came a division of labour, a sharp separation between work in the mine and life outside the mine began to take place. One of the exceptions to this change was placer mining. By the 1890s mills and smelters had been added to the mining centre and these too operated with labour assigned to specific tasks. The division of labour has increased to this day with only a few exceptions. One interesting departure was at the Douglas, Wyoming, uranium mine owned and operated by Exxon. Here man­ agement shifted labour on a bi-weekly basis from the pit, to m ill, to warehouse, to some office clerical work. To make th is change required stiff negotiations and agreement with unions. But having made the change, Exxon found greater productivity, less absenteeism and sick calls, and fewer work stoppages than before the change (personal visit). Another factor altered the organization of mining com­ panies’ management. More machinery required more capital and large mines required large investments in plant and equipment. Financing mines, mills and smelters became the work for financiers and lawyers and over time these professions dom­ inated the boards and top management of mining companies (King, 1977). It became difficult for a young mining engineer or geologist to become president of the company. This change became more apparent in the 1960s and 1970s. The shift had occurred earlier in Europe where mining finance houses were common. While the concentration of mine management moved to urban centres, the operating mine had less and less influence over its future. All major world centres had been connected by telegraph by 1890. Events far outside the control of man­ agement, although located in urban centres, were unpredictable and could affect the operations of the company (Parsons, 1977). One of the reasons for moving headquarters to urban centres such as New York and London was to be "on top of the situation" and to have access to bankers and capital. One must ask if

173 rapid inexpensive telecommunications providing vast amounts of news and information makes being in urban centres no longer viable if the smallest community can receive the same infor­ mation by satellite. Many large mining companies have already moved to suburbs peripheral to large cities. The centre of gravity for financing mines in the United States moved east after 1863 when most of the available capital for mine financing for booming mines in the western states had been exhausted in San Francisco (Fell, 1978). And, by 1887, the financial centres in Chicago, Boston or New York could no longer provide all the capital for rapidly growing copper and precious metals mines in the western United States. The com­ pletion of the Atlantic cable in 1867 helped to bring in fresh capital from Europe. Before the cable it took a minimum of 20 days to send data from the Comstock mine in Colorado to London. All of these changes, the need for capital, mechanization and shift of decision making to urban centres, altered the character of mining from what it had been since mining first started. Perhaps the biggest impact was on the working miner; the changes wrought on him are still being felt in labour/ management relations. Wyman (1979) observed that Elaborate organization and capital investment reduced the labourer to a cog in a large machine dependent for his income, security and safety on actions of others far distant from him. An additional observation can be made on the structure and organization of the mining industry as it developed in dif­ ferent countries. The single common thread in organization in all countries was the growth of large hierarchical mining companies. This tendency seemed to mirror that of the rail­ roads which required an intricate and structured organization to operate a far flung transportation system with many indi­ vidual tasks to make it operate smoothly. Whether the same was

174 required for mining is debatable. But the mining industry operated in a business society in which such organization was the norm, and if a business leader aspired to a rank in that social environment, then this would be the organization adapted. It was also an organization with which bankers were comfortable. Yet in the United States the vertical organization in the mining industry, first established by the Guggenheims in con­ trolling smelter output, led to a curious point of view that total control of mining properties by a mining company was necessary. In the Canadian mining industry, which also had and still has large vertically organized mining companies, the opposite point of view on control of mining properties is prevalent. Canadians are more prone than Americans to allow the finder-prospector or syndicate to retain an equity owner­ ship in the developed property. Moreover, these new mines are frequently established as separate entities with shares traded on exchanges. This type of organization is very uncommon in the United States. It is common in countries other than Canada, however. The development of mining holding companies in the United States was a result of the very weak state of the mining in­ dustry in the 1890s. The economy had topped out in 1892 and metal prices had fallen. In 1894 a Smelters Association was established in Denver as a clearing house to boost smelting fees and apportion ores from key mining districts. Although it collapsed a year later the idea did not die (Fell 1979). By 1897 the state of the industry was such that mergers of major mining enterprises into a single holding company was possible. In the winter of 1897, after a meeting in the Brown Palace in Denver, a group of smeltermen met to consider the organization of a holding company. In 1899 they had an agreement to form the American Smelting and Refining Company, now called Asarco. It was capitalized at $65m ($880) and the first year's profits were $3.5m ($48m) or 5.4% of capital, all of which were paid out to preferred shareholders. But Asarco failed to gather in the Tacoma smelter and the Guggenheim empire. That was to come later, but in reverse. Asarco needed more capital and searched

175 for a cash rich company, which it found in Cia. Metallurgica Mexicana. Even this acquisition was inadequate for cash flow requirements; Asarco was eventually acquired by Guggenheim & Sons in 1901. This group then controlled 80% of the US and Mexico lead and zinc production. By 1903 the only rival smelt­ ing companies were Boston & Company and Ohio & Company. Another group also attempting to form mining trusts was the Almagamated Copper Company controlled by Rockefeller of Standard Oil. Amalgamated also owned United Metals, a selling organization based in New York. The mining organizations were essentially following the "in thing," that is, to form giant holding companies. However, Rockefeller was never comfortable in the mining business and had lost considerable money in mining investments. Asarco continued to solidify its control of lead and zinc production and smelter outlets and, when the company offered to acquire Rockefeller’s mining interest in 1905, he sold out his Federal Smelting & Refining Company. In that same year Asarco bought the Tacoma Smelter and Western Mining Company. Smelters in the western states found a ready ally in maintaining high profit margins by collusion with railroads, which were the only link between mines and smelters no longer located close to the mines (Fell, 1948). This situation did not hold true for copper mines, only lead, zinc and precious metal mines. Thus, there was a running battle between miners and smelters/railroads. It was this way not only at the turn of the century, even after World War II miners in the western states felt they were being underpaid by toll smelters. This attempt to consolidate and control the lead and zinc industry, and part of the copper industry, is typical at the end of a period of rapid growth. The time of "take-off" for the lead/zinc industry was 1872. In that year lead demand began to double every 4 years as did zinc. Some 25 years later, about 1897, the industry started to consolidate. By 1925 peak production for lead was reached and for zinc the year was 1926, about 50 years after take off.

176 By 1907-08 a recession had brought declining prices, and this, accompanied by declining ore grades which created excess smelting capacity, had a disastrous impact on net smelter returns (Parsons, 1948). Wage cuts were the result and this was followed by rampant unionism. The movement by investment capital into base metals was a result of several changes in the mining industry in the western United States. The rich gold and silver mines were being depleted and were not that amenable to heavy mechanization. Besides, the Witwatersrand mines were coming on stream and costs were below those of the now lower grade gold mines in the western states (Peterson, 1977). With stiffer competition for investment together with the changing character of the mining industry, for example, use of specialist engineers and need for heavy investment in plant and equipment, capital went into low grade base metal mines. Moreover, with the accelerating indus­ trialization in the latter part of the 19th century, the demand for base metals was climbing rapidly. As is now very evident, the demand for base metals became the mainstay for the raining business. This is not to ignore the enormous iron ore mines developed in the Mesabi of Michi­ gan, Labrador, Australia, and Brazil, to name a few examples. The metals industries dominated mining for the first 80 years of this century. Some of the metals topped out in the 1920s; all the base metals in the United States and tin in the world as a whole. Then, beginning in the 1970s, the demand for all metals on a world basis topped out. In the first instance, during the 1920s metal demand was tied in part to automobile production and when that industry topped out, combined with a shift in transportation from rail­ roads to autos, the mining industry felt the drop in metals demand. In the second instance, during the 1970s the auto industry again reached saturation together with other capital goods industries. This time, the effect on mining has been very severe.

177 In the United States and Canada, and to a lesser extent in other countries, the mining industry had over-invested with high leverage in low grade mines. Decisions made at that time were based on an expectation of continued inflation (leverage was justifiable) and continued growth in metals demand. None of these two surmises has come to pass, for in the past few years inflation has been low, and demand for metals has turned negative. In addition, most metal prices are the lowest in 50 years and major mining camps, in the North America copper industry particularly, are under threat of permanent closure. Part of the reason for of low metal prices, particularly copper prices, lies with over-production from countries outside of North America despite falling demand. These mines also have higher grade ores and lower mining costs per ton of ore. The combination gives these mines much lower costs per pound of metal. North American mines have high overhead costs, a poor productivity record both on the part of labour and management, and an almost static input of new, radical technologies to drop the cost of mining. (Unless patentable, any new techniques can also be used by others.) Using larger and larger equipment has its limits. However, recent cost-cutting programmes are im­ proving productivity and lower unit raining costs. Much has been written about problems and solutions. In essence many of these North American mines faced with lower grade ores and higher wage and salary costs compared with competition outside North America. Even rigourous cost cutting has social limitations. The future for these mining camps is uncertain.

Labour and Vages At the beginning of this chapter the roots of labour discontent with changing organization of the mining industry were discussed. What had been occurring in the United States was found in other countries as well. In the United States, there was another aspect to the miner’s condition. Miners in the western camps were very well paid compared with underground

178 miners in the eastern coal fields or mines. Table 22 compares some of these wages. Table 22 MINERS' WAGES BY TYPE OF MINE, 1890 (Annual Average) $C urrent $Constant Index Western mines $729 $9615 100 Eastern coal 474 6252 65 Eastern granite q u a rrie s 431 5685 59 Source: Wyman (1979) (As a side observation, in 1942 I worked underground as an apprentice miner at Sudbury, Canada for 42 cents an hour for a 48 hour week, 40 on straight time, 8 hours on time and a half (rotating 3 shifts per day basis) and double time if the shift fell on a holiday. Average weekly earnings were $21.84 per week or $1136 per year ($6754) including two weeks paid vacation. This wage was not as much as the western miner was making in constant dollars. But I was paid an apprentice's wage. The miner I worked with was paid 57 cents an hour, 36% more than me. Thus, his annual wage was $9185 in today's money, not much less than the western miner in 1890! And there were no income taxes then. I also paid for my work clothes but the company private room was only $1 ($5.90) per day and meals were 10 cents (59 cents) per day. Room and board were 35% of earnings. Not bad.) Miners in the western states experienced boom conditions, particularly in gold and silver mines, and as a result got high wages. While miners paid for their underground work clothing, many, if not most, made extra money by stealing high grade ore from the mines in their boots and lunch pails. The ore was exceedingly high-grade! At Goldfield, Nevada, the 8-inch vein was worth $260,000 per tonne ($3.3m) in some places and on average was $20,000 to $80,000 per tonne ($0.3m to $l.lm).

179 That is an average of $200 troy ounces per tonne. No wonder that one of the big problems for the mine owners was miners taking high-grade ore. In one raid, operators found $14,000 ($185,000) worth of high-grade ore in a miner's cabin.

Mining Technological Innovation and the Long Wave Chapter IV discussed the Long Wave and identified 4 upward expansions in technological invention/innovation activity and social change:

UPWARD LONG WAVES I 1790 - 1816 II 1848 - 1875 III 1892 - 1920 IV 1944 - 1966 It must be noted again that these dates are approximate and differ from country to country and from industry to industry. The mining industry experienced some highly innovative periods that corresponded to the upward waves. That this should be so is not surprising because mining was part of the social system and "society as a learning system" did not ex­ clude the mining industry. An exception to this observation is that the industry did operate in isolated areas, and it still does, where the interaction with new ideas and techniques are limited. Engineers who attend a mining/metallurgical con­ vention once a year are provided with a minimal exposure to technical/social interaction. The second wave (1848-1875) was particularly dynamic for the mining and minerals industries. From 1840 to 1880, 22, or nearly half, of the total 49 inventions/innovations occurred. During the period spanning the second and third waves fully 33 inventions/innovations were made. Table 23 lists the major inventions/innovations in mining and mineral processing since 1784. The list has been compiled from many different sources and is believed to be comprehensive.

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Table 23

INVENTIONS AND INNOVATIONS IN THE MINERAL INDUSTRIES

1784 Steam hoisting engine (Cornish) GB 1784 Steam pumps (Cornish) GB 1790? Man engine (Cornish) 1796 Steam excavator (Cornish) GB 1806 Roller crusher GB 1813 Rotary drills GB 1820 Top slicing for underground mining GB 1824 Steam locomotives GB 1831 Mine transit GB 1833 Lead/silver separation from melt GB 1834 Stranded wire rope GR 1835 Exhaust fans GB 1845 First recovery of aluminium GR 1846 TNT SW 1849 Steam percussion drill US 1850 Square set timbering 1852 Hydraulic placer mining US 1854 Continuous high tensile steel GR 1855 Compressed air US 1858 Jaw crusher GB 1864 First passenger/freight railroad GB 1864 Diamond drill (Rudolf Leschot) FR 1865 Pneumatic drills US 1865 Electrolytic refining of copper GB 1867 Fulminite detonator SW 1867 Ammonium n itr a te b la stin g mix US 1871 Piston drill US 1875 Burleigh drill US 1875 Blasting gelatinite SW 1876 Ball mill GR 1877 Flotation of graphite GR 1877 Steam powered shovel GB 1880 Side-blown copper converter US 1883 Underground electric locomotives GR 1884 Universal mill for steel plate GB 1885 Sulphide flotation AU 1887 Cyanide process for gold recovery US 1895 Carbonyl process: nickel separation GR 1895 Wilfley Table US

181 Table 23 (concluded)

1897 Hammer d r i l l US 1903 Porphyry copper raining US 1905 Electrostatic separation US 1909 Calyx rotary drills US 1910 Electricity used underground GR 1913 Self rotating drills US 1916 Electric detonators US 1922 Differential sulphide flotation US 1927 First diff sulph flot plant US 1935 Cans for ammonium nitrate US 1931 Detachable drill bits 1946 Tungsten carbide drill bits 1950 Imperial smelting furnace UK 1953 Flash smelting—Cu/Ni/Pb FN 1955 Ammonium nitrate w/carbon or fuel oil US 1960 Ammonium n itr a te s lu rrie s US AU= Australia FN= Finland FR= France GR= Germany SW= Sweden US- United States Source: Gregory (1980); Gousseland (1974); Eaton (1948); Annual Mining Journal Review

182 *

Several comments are noteworthy about the timing and character of these inventions/innovations. In general, most of these inventions/innovations were developed by others and ap­ plied by the mining industry. However, one of the most far- reaching inventions/innovations, flotation, was developed l?y the mining industry in Germany (1877) for the separation of graphite and was used for sulphide ores (1885) 8 years later. Differential sulphide flotation (1922) came 45 years later. Another major innovation was cyanide processing (1887) for gold ores which developed about the time of the discoveries of Witwatersrand gold. The combination of these rich deposits, low cost labour and the new cyanide technique was responsible for a large increase in gold output at that time. Improvements in explosives were another innovation that pushed mining costs down; however, the research and development was undertaken by chemical companies, not mining companies. The rise in gold production because of these innovations was a factor in the expansion of world business in the early 1890s (Vickers 1975). From 1905 to 1920 gold production topped out and monetary gold supplies could not support increasing credit requirements for the industrial world. Similarly, rising gold supplies in the 1840s and 1850s aided the credit base for the expansion of business in that upward wave. The business expansions slowed when these new gold supplies peaked and production no longer increased rapidly. For a detailed discusssion of gold, see Gold: Case History (Chapter VIII). Each invention/innovation provided a new opportunity to reduce costs and enabled miners to mine deeper and process lower grade ores. The cumulative inventions and innovations from 1780 to 1980 are shown on Figure 32. There does not appear to be any direct correlation with these inventions/ innovations and long waves except to note that the rapid application of inventions/innovationsb y the mining industry occurred over the period of the second and third waves. As one can note from the cumulative curve, the rate of applications was most rapid between 1830 and 1910 and thereafter slowed. During the fourth wave there was little invention/innovation. The last, and not listed or plotted, is the use of microproces-

183 *

1780-1980 IN THE MINERAL INDUSTRY, INDUSTRY, MINERAL THE IN FIGURE 32 TWO HUNDRED YEARS OF INVENTIONS/INNOVATIONS 32 OF YEARS FIGURE HUNDRED TWO SOURCE: Hugh Douglas

184 ♦

sors for mine development and production which occurred in the 1970s and would appear to be penetrating the industry at a rate similar to inventions/innovations in the past. The reason for slow penetration in use of micros by the mining industry is sociological. Young engineers recently graduating will be the first to use micros actively on a wide ranging basis. They will be reaching decision making positions in about ten years time. The old school of engineers is not familiar with microcomputers and, therefore, it will not be until the 1990s that intense use of computer is expected. The new uses of micros will be in the creative sector, not number crunching, which is already well in hand. These developments are expected to lower mining costs. Industry Concentration As each Long Wave peaked and began a long decline, there was increasing concentration and control of mineral supplies and in some mineral industries a virtual monopoly existed. It is interesting to note those mineral industries which were under strong oligopolic or monopolistic control during the close of the wave in the 1920s (Wave III) and compare them with those at the close of the last wave at the end of the 1960s (Wave IV) and early 1970s: Wave I I I Wave IV Aluminium Less so Asbestos Same B a rite Same Bismuth Less so B orate Same Copper Same Diamonds Same Gold Less so Iron ore Less so Lead Same Manganese Same Mercury Same

185 Wave I I I Wave IV Nat. nitrates Same N ickel Less so O il Less so Sulfur Lessso Tin Same Vanadium Same Zinc Same The downturn in the fourth Long Wave has changed some of these mineral industries further. Aluminium in the past ten years has undergone changes in resource availability so that new refineries are being built by both old and new players in the industry. Australia and Brazil are examples of this, and the entry of Japanese companies into the international alumi­ nium industry is another. It is possible that when the fifth wave expands (and aluminium is likely to benefit because of expansion in aircraft and other uses), this industry could be less concentrated as new entrants are attracted by growing demand. The copper industry on the other hand is undergoing con­ traction. As a result, fewer companies which control the best deposits will dominate the industry. On the other hand new technologies such as in situ leaching which requires less capital investment per tonne of copper produced could open copper raining to small companies. The continuing success of diamond exploration and the well publicized difficulties of DeBeers in controlling prices and supplies as well as the increasing production of synthetic bort, is likely to erode the monopolistic structure of this industry during the next upward wave. The process of decen­ tralization has already started. Gold was 70% controlled by British interests during the Third Wave. Since that time, South Africa has become totally independent, although much of the gold production in that coun­ try is still controlled in London. The situation remained

186 essentially the same in the fourth wave. However, the industry is currently undergoing rapid change. New sources of gold production in Canada, Australia and Brazil, and to a lesser extent small producers in the United States are now coming on stream as the current gold price continues to attract explora­ tion and development. In my opinion, the industry in the future will become less oligopolistic. The asbestos industry is in decline and undergoing up­ heaval as a result of environmental problems. Vanadium has remained unchanged. The oil industry is in the process of further concentration of production in a few hands, charac­ teristic of an industry that has matured and topped out. During the upward phase of the past Long Wave and the down trend since 1968 the mineral industries have changed markedly. • A shift in production of key metals such as copper and uranium from the United States to other countries • A rise in base metal production in developing countries such as copper and a shift to nearly 40% of copper production to state control • Intense intermaterial competition to the detriment of traditional metals and minerals The next upward wave will accelerate these changes as­ sisted by the universality of information. However, there are two divergent trends. The first is that resource production will shift to countries with very cheap labour costs and the ability to mobilize labour under strong social contracts, such as China. And the second is a revolution in earth sciences regarding the formation of mineral deposits (see Chapter IX on Mineral Exloration) could result in major new metal and mineral discoveries in countries that have recently lost production to lower cost producers. In sum, in my opinion the next Long Wave will likely bring additional changes in the structure of each mineral industry. Intermaterial competition and technological change is accelerating and patterns of business organization will most likely change with universality of information. These changes will upset today’s conventional view of the future of mineral industries. VIII METAL CASE HISTORIES

This chapter reviews four metals, copper, aluminium, gold and vanadium, in light of the technological and social changes discussed in the previous chapters. The purpose of these case histories is to show how these four metals responded in the past and how that particular industry developed as a result of selected technologies which were welcomed by society and which, in turn, were affected by the technology. Studying the pattern of historical development of these four metals will assist in examining critically other metals and give some insights into the future for the mineral in­ dustries and mineral exploration.

Copper In Chapter VII on the mineral industries, it was noted that the mining industry did not "take off" until after the 1850s when material demands from railroad building, telegraphy, and rising industrialism required increasing amounts of metals and minerals in the United States and the rest of the world. Copper was a key metal. Until recently, demand for copper closely followed indices of industrial production in the industrialized countries. At one time one could forecast the demand for copper by forecasting the industrial production index. Or the other way around! In the economic expansion that began in 1848 and lasted until 1875, world copper production increased at a modest 3.8% per year and reached just over 100,000 tonnes from 40,000 tonnes in 1840 (see Figure 33 and Appendix Table A-4). These quantities are small compared with total world production in the past few years of just under 8ra tonnes. During the be­ ginning of this wave (the second), mining practice was much the same as it was in Agricola’s time. But to meet the rising demand for copper, in the United States the rich upper Michigan copper mines were opened. The large copper mines in the wes-

189 TONNES FIGURE 33 WORLD COPPER PRODUCTION, 1840-1980 COPPER WORLD PRODUCTION, 33 FIGURE ORE: Various SOURCES: 190 tern United States had not been discovered. During this second wave copper mining in Cornwall and Wales enjoyed boom years as did copper mining in Silesia and the old Roman mines in Spain. With the opening of the Michigan mines, the price of copper in the United States dropped from the range of 250 cents per pound (in 1984 cents) to a low of 158 cents (see Figure 34 and Appendix Table A-5). The US Civil War stimulated demand for copper, much of which was imported at that time, and the price reacted accordingly. It was also during this period that the first transAtlantic telegraph cable was laid in 1855, and by 1869 the United States’ east and west coasts were linked by rail as well as by telegraph. The close of the period saw copper production dip slightly and prices in a general down trend from 1872 to 1895 in harmony with the Long Wave. Technological development in copper mining during this period was also rapid, for example, pneumatic drilling, better dynamite, blasting techniques and the rise of trained mining engineers and geologists. The stimulation of copper demand from new consuming industries also brought about technological improvement in mining. At the same time the need for addi­ tional copper supplies stimulated exploration. From the end of the last century until recently exploration for copper was a major budget item in raining companies’ exploration programmes. During the next wave, the third, the price of copper traded in a range of 210 cents per pound to 135 cents per pound. At the same time, world copper production was expanding at 5.8% per year until 1918 when it peaked out. Prices peaked in 1916 and fell 139 cents or 64% to 1921, which was the end of the third upward wave. It was also during this period that the large, rich mines opened in the western United States which were later transformed into large scale open pit or block cave mining of disseminated copper ores, the so-called porphyrys. The development of the flotation system and bulk mining equip­ ment were two technologies that made these large low grade copper mines economic. The opening of these mines, which put the United States as the leading world copper producer by 1888, kept the price of copper in the trading range mentioned above while production expanded to meet rising demand. Falling

191 1984 CENTS 260 240 200 220 180 160 120 140 100 80 40 60 0 80 0 0 90 0 0 0 80 60 40 20 1900 80 60 1840 IUE 4 US(ConstantCOPPER 1850-1984 PRICES,US 1984Cents) 34 FIGURE ORE Mtlgslshf;Hg Douglas Hugh Metallgesellschaft; SOURCE: 192 copper prices from the 240 cent range in the 1840s and 1850s led to the demise of such small, labour intensive mines as found in Cornwall. And in the latter part of the 19th century, the western copper mines in the United States priced all but a few of the Michigan mines out of business. At the close of the third wave, the even richer mines of the Copper Belt in Africa and those in Chile were both adding to the copper supply. These new supplies, against a general slowing down of indus­ trial output after World War I, put pressure on prices as the expansion period ended and demand for copper became soft. In 1921, many mines in the United States closed temporarily, some ten years before the depression. Production picked up again through the remainder of the 1920s but again fell from 1929 to 1931. From the peak in copper output in 1918, just before the broad top of the third wave in 1920, to the copper production peak in 1943, copper production averaged 2.4% growth per year. During the 90 years from 1840 to 1930, new technologies all favoured copper—telegraph and telephone, then electricity. Copper consumed in these three technologies amounted to two- thirds of copper demand. They continued to favour copper from the 1930s until the early 1980s. The three technologies that accounted for a large amount of copper consumption of about two-thirds were readily and eagerly accepted by society, particularly in the United States. Before the advent of fibre optics, microwave and satellites, copper demand in communications represented between 15 and 20% of copper consumption in the United States, less in other countries. In communications, the ready acceptance of tele­ graphy and telephony and the way these industries were struc­ tured in the private sector in the United States, led not only to wide installation of the technology by both individuals and business, but also led to widespread use of the communications systems. Because of competition prices were kept reasonably low. Thus, in the United States especially, the new communica­ tions technologies were adopted quickly and readily. This adaption is in contrast with other industrialized countries

193 with the exception of Japan and Canada. Electricity also developed rapidly in the United States and the open structure of the industry and its regulation by public utilities commissions which struck balances between the interests of electrical power companies and consumers, aided in this rapid growth. Very early there was standardization in voltage, alternating current and such mundane factors as stan­ dard size plugs and bulbs. Not so in Britian, which until the 1950s had a plethora of voltages, currents and plugs. In Europe as a whole there are no universal wall sockets and voltage still varies between eastern and western Europe after over 100 years of electricity’s use.

Recent Developments Beginning in the late 1970s and 1980s the world copper industry began to be affected by major structural changes in both production and consumption. For North America the produc­ tion of copper became threatened by new low cost mines outside North America. The change has not yet run full course. Con­ sumption also began to change as intensity of use changed with greater conservation brought about by high energy prices— energy conservation spilled over into materials conservation. Intermaterial competition affected all segments of copper's end uses. The following were and are ongoing major substitutions for copper: • Aluminium for copper cables in long distance electri­ city transmission • Satellites, microwave and fibre optics for communica­ tions wire • Plastic pipe for copper pipe • Aluminium radiators for brass • Brass plated plastics for solid brass

194 • Less copper wire winding in electrical motors and generators The change in copper consumption in the past few years was also in part a reaction against over-stimulation of the world economy as a result of monetizing public finance deficits since the 1950s. At first this deficit financing increased economic activity, but in the latter stages, as inflation increases, private investments go less into productive enterprise and more into inflation hedges, such as gold, fine arts, antiques, comic books and beer cans, agricultural land and prime real estate. From the 1950s to 1978 world copper production rose at an average of 4.7% per year. Prices also rose steadily in con­ stant dollars. In 1973, copper prices peaked and in 1978 production also peaked. Since then copper production has been in a range of 7.8 to 7.9m tonnes and prices have declined, falling to 54 cents a pound in 1984, the lowest since the Depression when the price in the United States fell to 52 cents in 1984 US cents.

Future Responses Technological change is rapidly altering copper markets. The Long Waves and the copper industry have moved in consort, but the peak in copper prices has fluctutated about 55 years.

Number Peak Year of Years 1864/1916 55 1916/1972 56 As is common with nearly all price movements, such as stock and bonds, the fall is quicker than the rise. Thus, from the high in copper prices in 1864, it took 22 years for copper prices to reach their lowest point and from the high in 1916 to the low in 1931 the number of years was 15. Both 22 and 15 years are less than half the periods for the Long Waves.

195 In each case, copper prices were affected by major structural changes in copper production and copper markets. The price rise and drop that ended in 1931 saw the copper industry consolidate into large integrated companies. The current drop has seen some of these same companies shrink or disappear altogether and the rise of state-controlled copper mining companies that produce copper for social and foreign exchange reasons rather than traditional market reasons. Also during the last wave, not only were copper companies acquired by the state, but they were also acquired by international oil combines. In the latter case, these acquired copper companies are being liquidated. It is possible that continued weak copper prices and demand could result in partial dismantling or privatization of large state copper companies of which Chile might be the exception. Thus, in the current period, falling copper prices and reorganization in the copper industry appears to be no dif­ ferent from those changes in the past, just different players and different markets.

Aluminium Aluminium is unique among the four metals here discussed because it is neither recovered by traditional "mining" methods nor is exploration conducted as in metal mining explora-tion. The characteristics of aluminium which make it different in ex­ ploration, production and processing from other metals are: • Exploration is not a high risk endeavour requiring finesse in geology and geophysics. Rather, major potential lateritic areas are identified for their potential, drilled and sampled, and production feasibility studies proceed if bauxite quality is adequate • Producing aluminium is a hydro-chemical process. Alumina and aluminium plants are capital intensive and can only be added in large incremental units because of economies of scale of smelter pot lines

196 %

• Plant facilities are dependent on low cost hydro­ electric power • Because each unit of added production capacity is large, control of markets is important • The start-up of several aluminium companies was assisted by state capital during war-time when alu­ minium was required for aircraft. • Control of cheap hydropower, usually a state resource that could only be negotiated for by large, well- financed groups further concentrated the industry in a few hands. • Finally, the early patents for production of aluminium were closely guarded and licensed, giving rise to large aluminium companies with geographic and market control. The aluminium industry is very different from the copper industry, and the key to entry is market control and access to large amounts of capital. easily enter. As a result of these characteristics, the aluminium in­ dustry is dominated by six fully integrated companies (see Table 24 on the next page), which control the following esti­ mated aluminium capacity either in their own right or through joint ventures with other non-aluminium companies or state governments and enterprises. Another 40 or so aluminium compa­ nies control 25% of the capacity, frequently in association with the above 6 firms. Governments control the remaining 25% of capacity. Despite this control of half the world market, soft demand in recent years has opened pricing to free markets, trading on metal exchanges and options. It is unlikely that aluminium prices will be set by the major producers in the future. While not unique to the aluminium industry, the major consumption areas of the metal are in the industrialized northern hemisphere countries, but the bauxite raw material

197 Table 24

WORLD PRIMARY ALUMINIUM CAPACITY OF THE SIX MAJOR PRODUCERS IN 1983

Capacity Percent Company (OCX)) MT of T otal 2160 16 1630 12 Reynolds 950 7 K aiser 940 7 Alusuisse 770 6 550 4 T otal 7000 51

World total 13610 100 supplies are primarily in nonindustrialized countries. Aluminium has become the most important industrial metal after iron and steel and exceeds copper, for example, by a factor of 4 in total demand. It’s importance in aerospace and military applications is such that there are practically no substitutes for the metal. The geopolitics of aluminium dominates the industry. Con­ trol of bauxite supplies are critical and it is no accident that the United States has been able to control supplies by benefiting from low interest loans made by the World Bank for aluminium plants constructed in developing countries, some of which are owned in part by one of the four dominant American companies. In the past 20 years multiple sources of bauxite and ingot for industrialized countries have increased, but to a large extent control of the industry still resides among the major aluminium companies, which now include Japanese groups. For these reasons attempts to form a bauxite producers’ cartel have not been successful. And even if a cartel were formed

198 %

and operated, the history of cartels shows that they last only a few years would elapse before it would collapse. High capital costs and control of end-use markets effec­ tively make it difficult for new entrants in this industry. For example, approximate cost per annual tonne of aluminium equivalent capacity are as follows: Bauxite $ 310 Alumina 1250 Aluminium 2300 Subtotal 3860 Hydropower 1440 Total 5300

Over the past 20 years plants constructed with multiple sources of bauxite and alumina have cost on the order of $500m to $800m in 1984 dollars. Only large enterprises can finance such ventures or governments backed by their taxing authority, although this latter type of collateral has recently been subject to uncertainties.

Early History The first droplets of aluminium were made by H Davy in 1808; it was a metal that fascinated its discoverers and those who attempted to find economic methods of producing the metal. Table 25 lists major milestones in aluminium technology. Although aluminium was first isolated in 1808, it was not until nearly 80 years later, that Hferoult of France and Hall of the United States simultaneously announced discovery of a viable process for producing aluminium through -- essentially the basic process invented by Davy. Even this process would not have been economic without the invention by Bayer of making alumina inexpensively. Moreover, the elec­ trolysis process would not have been viable had it not been for

199 Table 25

MILESTONES IN ALUMINIUM TECHNOLOGY Date Event Effect on Price 1808 H Davy isolates Al-Fe by electro- thermic-electrochmical method 1825 H C 0rsted obtains purer A1 using 1827 F Wohler makes A1 globules using metallic potassium and AlClg 1854 H Sainte-Clair Deville uses cheap­ Cost of 3000 Fr er sodium instead of potassium per kg ($3000/ to make first 92% pure A1 pound 1855 A1 objects exhibited at Paris E xposition 1856 NaAlCl^ replaces AlClg; French Price drops to plant produces 2 kg per day $1 0 0/lb 0 1857 French process uses CaFl, pro­ duces 50 kg/day of 96-97% pure A1 1859 First use of bauxite Price drops to $400/lb 1867 Invention of dynamo makes Hall process (1886) economically possible 1872 Production at Salindres, France Price $200/lb reaches 1800 kg/day 1880- 1890 Further improvements Price $160/lb 1885 Percy and Dick in England propose using 1886 Hk*oult and Hall perfect electro­ lysis method 1888 for inexpensive Price falls production of alumina steadily to 1946 then fluc­ No further basic changes tuates between 50-70 cents/lb

200 the invention of the dynamo in 1867 which enabled low cost electricity to be generated from hydropower. The success of the Heioult/Hall process was more dependent on low cost elec­ tricity than on its chemistry (Hall, 1976). As each technological breakthrough developed after 1808, the aluminium price dropped. In 1827 the Wohler process used metallic sodium; 27 years later, Deville used much cheaper sodium which had recently been produced by a new method. The cost at that time was 3000 francs per kilogram, or about $3000 per pound in 1984 dollars. A year later with further im­ provements, price of aluminium fell by a third. In 1859, bauxite was used as feed and the price fell about $250 per pound. Each subsequent improvement dropped the price and slow­ ly expanded markets until the major technological breakthrough arrived with the discovery of the Hferoult/Hall processes in 1886 and the Bayer process in 1888. Up to this time aluminium was a curiosity metal. In the 1850s no one had any idea of what its real potential might be. In 1855 at the Paris Exposition, Scientific American wrote of the "maturity of the industry" based on the following end uses shown at the expo: • Armour for ceremonial use • Table ware • Jewelery • Tags to compensate for a clock pendulum's weight • Opera glasses At this time total production was only a few thousand pounds of aluminium. Until 1888, fortunes had been lost in constructing plants and investing in research and development without any real expansion of markets (Hall 1976). Not until 1926 did the Encyclopaedia Britannica show any enthusiasm for aluminium. It took 50 years after the Hferoult/Hall process for aluminium to become a significant metal. It was technical difficulties and high prices that thwarted its development. This may have been because producing ♦ aluminium was an electrochemical process that required com­ pletely different research and development than that usually associated with mining and metallurgy. The metal was, after all, in competition with other metals mined and processed in traditional ways. Aluminium was a stepchild of the metals industry. Another sociological factor that hampered its de­ velopment may have been that search and discovery of raw materials lacked the "pizzazz" of mining. Promoters and speculators so prominent in exploration and mining were not a feature of the aluminium industry, although in its early days the fascination of the new metal did require promotion of new plants. Still it lacked the "bonanza" appeal that other metals have. Even after the aluminium industry finally began to expand in the early part of this century, it was not in control of miners. Early on it was bankers, marketers and chemists who were its leaders. This difference is what has made aluminium unique from the rest of the mining/metals industry. And is probably why mining companies such as Amax, Anaconda and Phelps Dodge have not had much success with their entries into the aluminium industry. The price history of aluminium in the United States from 1895 is shown on Figure 35 and Appendix Table A-5. The first decline in price from nearly $800 per pound (1984 dollars) to $400 per pound was a result of introduction of the new Hferoult/Hall process. Prices dropped in half again by 1910 as markets expanded and capacity increased (see Figure 36 and Appendix Table A-7). Between 1890 and 1900, a period of a down wave, production increased at 42% annually, albeit from a small base. From 1900 to 1919 (the top of the upward wave) produc­ tion increased at 18% annually and prices fell below $2 per pound (1984 dollars). From 1920 to 1940 price fluctuated around 150 cents per pound, and with two fall offs in produc­ tion in the early 1920s and early 1930s, and demand grew at 16% per year. Only in the first three years of the 1930s Depres­ sion did demand fall. Production fell toward the end of World War II as war time demand declined. But beginning in 1946

202 1984 CENTS PER POUND 500 400 200 300 600 100 800 700 0 80 90 0 0 0 0 0 0 0 0 90 80 70 60 50 40 30 20 10 1900 1890 OUCE Au nm Association inum E: URC SO IUE3 USFIGURE ALUMINIUM 35 PRICES, j ___ I ___ i ___ I ___ . ___ I ___ . ___ I ___ I I I 1 . 1 ■ I , I . I . 203 1895-1983 ___ | ___ . THOUSANDS OF TONNES FIGURE 36 WORLD ALUMINUM PRODUCTION, 1885-1983 PRODUCTION, ALUMINUM WORLD 36 FIGURE ORE: Various. SOURCES: 204 #

demand began rising at 16% per year and the price fell again to fluctuate between 50 and 75 cents a pound for the next 30 years. During the post war period, production capacity was added rapidly and prices remained stable in a narrow range in constant dollars. Production from 1955 to 1974 grew at 8. 6% per year, but slowed to 2.9% per year until 1981 when pro­ duction turned down. Also during this latter period the price in real terms steadily increased from a low in 1972. The aluminium industry has been a star performer and it is now the second largest metal in terms of weight sold, after s te e l. Future Trends While aluminium has made inroads into traditional markets of copper and steel, and into many parts of the automobile, the penetration is likely to slow for several reasons. The slowdown assumes that present aluminium production technology will remain essentially unchanged. • Examination of the curve on Figure 36 suggests a classic maturing of an industry. • Other new materials are moving to the fore that did not compete with aluminium in the past--al 1-c e ra m ic engines, reinforced plastics, and lithium-aluminium alloys which will use slightly less aluminium in air­ craft frames • The next wave which would appear to be based on tele­ communications combined with microprocessors, will create new efficiencies in the use of all materials. Aluminium will not be an exception. • The rate of patented inventions has been declining—the rate of new inventions was highest from 1920 to 1929; it then slowed to the present. Accompanying this de­ cline was a sh ift in inventions made by small companies or groups from 75% of patented inventions in 1900-1909

205 to 17% in 1950-1958 (OECD 1968). However, other recent studies demonstrate that most invention/innovation today comes from small firms rather than large ones. The number of patents increase in a upward wave and this increased activity should benefit aluminium pro­ duction techniques as well as new uses for the metal One way of increasing the rate of consumption of aluminium is by means of lower prices. This occurred in the past when a new producing technology lowered costs and hence prices, there­ by stimulating new uses and demand. Aluminium companies have been conducting research and development on less costly produc­ tion methods because current methods of producing aluminium have disadvantages. These disadvantages are: • High use of costly electrical energy • Expensive production of alumina • High investment costs in new plants because production units must be limited to large size due to technical and operational losses Three avenues of research have been undertaken in develop­ ing cheaper production processes. These are: • Thermal reduction of alumina • Thermal reduction of aluminous ores followed by refin­ ing of the alloy • Non-classical electrolysis (Grjotheim, 1980) None of these methods is competitive with the process now used ,which, nonetheless, is being improved steadily to reduce the amount of electricity and labour. Improvements include microprocessor controls, new electrode materials and cell de­ sign. Yet these improvements are not radical departure from the past. It is only by a radical new process that could make aluminium the very cheap and abundant metal it could be. Alu­

206 minium constitutes the most abundant metal in the earth's cru st. In the past aluminium as been immune to the major social and technological changes of the last Long Wave that somes have sometimes have been detrimental to other metals, particularly in the last decade. Aluminium demand now for the first time shows signs of fundamental slowing unlike the reversals of the past. And as noted above, a radical technology in production methods to lower costs would appear to be one factor that could accelerate demand. Technological changes in the past have had this effect.

Gold Gold is also unique among the four metals considered in these case histories for several reasons: • The primary use of gold over the time period of 1840 to 1984 considered in this study 1840 to 1984 has been for jewelry and ornamental purposes. This had not changed for thousands of years. The secondary use of gold has been for monetary purposes until the post World War II period when the second major use shifted to industrial applications and hoarding in industrialized countries • Another major use of gold has been for private hoarding, and, in times of economic uncertainty and high inflation or debasement of currencies, for asset protection On balance, therefore, gold demand and prices have been more influenced by sociological forces than by technological forces.

Sociological Influences Sociological forces are expressed in economic activity, fiscal policies and government actions. As has been demon­ strated in the past, once a basic sociological trend is set,

207 governments find difficulty reversing these forces by edict or laws. Apparently, trends must run their course. For example, since the end of World War II, 1945 to be precise, the dominant cultural and sociological trend in western industrial countries has been toward increased govern­ ment involvement in economic and social affairs of the co­ mmunity. At society’s request governments created the commissions and bureaucracies to carry out the policies, and by public acceptance of deficit financing, paid for these pro­ grammes through monetizing the debt created. The result in all industrialized countries was rising inflation. As pros- perity/inflation grew, so did a constituency that could ra­ tionalize the growing problem. Economists, political scientists, journalists, all discussed and concluded that a country could live with inflation without destroying itself. Any politician that advocated balanced budgets was listened to, some agreed, but such was the size of vested interests in the new economic order, that no balanced budget initiatives could be passed by a legislature. All this began very slowly to change a few years ago, apparently first in the United States. The landmark legislation that signalled the change was passage of Proposition 13 in California. This referendum put con­ straints on (’’capped") local government spending by limiting the increase in property taxes (rates) to 2% per year and rolled back the assessed value of property to 1975 from 1978. Local governments did not cut back spending immediately because Governor Jerry Brown transfered State surplus funds to local governments to cover their deficits and so maintain expendi­ tures. Local government also attempted to establish local taxing districts to increase revenues. These ploys are now being challenged in the courts. The latest strategy of local governments has been to support a State Lottery from which most funds would go to local governments and a few winners. The Lottery Bill passed. The present government in the United Kingdom is attempting to cap rates to control expenditures by local governing coun­ cils. The purposes are very similar to that of Proposition 13. However, central government expenditures were still rising in

208 1985 although rhetoric is for reducing them. Thus, a trend that has dominated industrialized government for over 50 years, rising government spending increasing faster than the rate of inflation and financed by monetized debt, appears to be waning. The United States currently is an exception, though inflation rates are falling. There is now the beginning of a sociologi­ cal change that could influence the role of gold as a monetary instrument in the future. Until this change took place and inflation controlled, gold was increasingly being bought in industrialized countries and some OPEC producers as a hedge against inflation and capital protection. A sociological basis can be argued for the maintenance of a gold standard. Historically under a gold standard commodity prices fluctuated around the fixed price of gold (Jastram 1977) which was vigourously defended by governments. Adhering to a gold standard provided discipline for governments to maintain balanced budgets and if the trade accounts were out of balance for those countries whose money was not a reserve currency, the exchange rates between that currency and the reserve currency would change accordingly. After World War II, the United States had such a reserve currency backed b y gold, but domestic monetary policies did not provide fiscal discipline that would have maintained that gold standard. In Britain, which had stable government and economic policies for nearly 200 years up to 1930, the gold standard (fixed price) was abandoned only once, during the Napoleonic Wars from 1797 to 1821 when com­ modity prices rose and the gold price was forced upwards. The old price level of 4.24 per troy ounce broke because the war was being paid for by printed specie. After the war, paper specie was withdrawn, deflation occurred and Britain went back to the standard value of 4.24 per ounce. A similar situation occurred in 1971 when the United States stopped redeeming foreign owned dollars for gold at $35 per ounce (Cass 1982). Many observers argue that a gold standard will keep gov­ ernment fiscal policy disciplined. It can also be argued that governments have always found political and economic expedi­ encies that would allow them to rationalize the abandonment of a gold standard. Thus, a crucial point in understanding the

209 monetary role of gold is that the gold standard was a witness to social attitudes. In the last century men and women were more prudent than in recent times. They saved, were cautious, were mostly conservative in personal and public finance, al­ though rascals did frequently appear. During some periods in history society was in a different mood and events of society’s own making resulted in less than prudent fiscal policies be­ cause they could be rationalized. In these times the role of gold was questioned and/or abandoned. If society is desirous of having a balanced budget, then the force of many influences, decisions, learned writers, all the elements that convert pub­ lic opinion into laws, will bring about a balanced budget. Only then, when the electors and elected abide by a rule of law that mandates balanced budgets will a gold standard work. And if this is the situation, it can be further argued that the standard is unnecessary. However, a gold standard would bear witness to that rule of law. Indeed, no law can be enforced (except brutally), unless a majority of the citizens find the law reasonable and workable. Figure 37 shows the price of gold traded in the London Exchange from 1840 to 1984 in current and constant dollars (see also Appendix Table A-8). Exchange rates between the pound and dollar are taken from Federal Reserve Board data, and the dollar is deflated using the GNP Implicit Price Deflator. Several points about this figure bear comment. • The price of gold was fixed from 1840 to 1934 with one change—during the Civil War in the United States. After the second fixing by the United States and Britain at $35 per troy ounce, the price remained at that level until the United States cut the link between the dollar and gold in 1971. From then, the price moved upwards in response to rapid inflation. • In constant dollars the price of gold had not risen above $300 per ounce from 1840 to 1976. In fact it showed a gradual decline; tops and bottoms were lower. Shown on the top of the figure is the long wave which correspond in general to the bottoms and tops of gold

210 DOLLARS PER TROY OUNCE ORE: eea RsreBad ako England of Bank ReserveBoard; Federal SOURCES: IUE ODPIE I LNO, 1840-1984 LONDON, IN PRICES GOLD 7 3 FIGURE CretadCntn 18 olr e ry Ounce) Troy per Dollars 1984 Constant and (Current 211 prices in constant dollars. But this is a reflection of the rise and fall of inflation and deflation against fixed prices for gold which is unlike other commodities The surge in prices of gold in 1980 was similar to the ,rblow off" phase in stock markets and inflation bubbles such as tulip bulb craze, the Louisiana Land Scheme, Florida real estate and for various commodities, the prices of which peaked in the 1970s. The increase in gold prices was further propel­ led by speculation in silver led by the Hunt group and by rapidly escalating price of crude oil and the perception that the world was running out of inexpensive energy. With a return to more prudent fiscal policies, deregulation of oil and petro­ leum product prices in the United States, a decline in the rate of inflation (albeit there might well be temporary rever­ sals against the trend), and increasing conservatism among persons under 30 years old, the prospects for rapidly rising gold prices in constant dollars are quite marginal. Table 26 shows changes in monetary stocks and investment and hoarding from 1973 to 1984.

Technological Forces Changes in supply and demand of gold are affected by technological forces. On the supply side, the major change in the supply of gold has been discoveries, bit that has been due to serendipity rather than technology except in most recent years when new theories concerning the origins of metal min­ eralization have changed drastically and are leading to re- evaluation of both old mining districts and new areas. This new theory is the hydrocarbon origins of metals, that is, metals are carried to the surface host rocks by hydrocarbon gases (see Chapter IX). However, large discoveries in the past have been more by pure chance rather than by a geological theory. The major discoveries in the past century were the Witwatersrand in 1886 and northern Ontario and Quebec in the 1920s. Recent discoveries in Hemlo, Ontario, were also by chance. However, specular gold discovered in the western United States was based on theory.

212 88 194 529 banks -135 -332 18 250 42 81 216 185 103 444 118 31 191 - 17 by c e n tra l holdings change 67 302 -235 149 Net Invest Total total supply and s e llin g 724 512 974 130 544 268 1317 385 1033 - 56 276 1073 1002 297 1384 50 between production Demand Change and (+) (Tonnes) Table 26 812 977 1744 1595 1104 1299 1702 1434 1392 845 547 1140 T otal = = communist gold shipments to the West -communist buying (-) +362 tra d e +119 + + 6 +544 -230 -276 +269 1632 1426 206 68 138 trad e O f f ic ia l GOLD SUPPLY/DEMAND BALANCE 1973-1983 BALANCE GOLD SUPPLY/DEMAND 92 90 149 + 9 275 401 202 - 85 410 Comm change is the difference fabricated demand Invest(ment) holdings are private investment/hoarding 946 Total change is overall non-Communist world change in stocks 962 959 199 973 280 972 952 Prod(uction) = non Net 964 412 + 58 996 220 + 20 1236 Comm(unist) Official trade is 1111 1023 Prod tra d e 1978 1982 1976 1974 1983 1088 1975 1980 1977 1981 1973 1979 Source: Consolidated Goldfields Notes:

213 The Witwatersrand has been and continues to be the most prolific producing area in world history, but only because of a new metallurgical technology, the cyanide process. Discovered by two Scotsmen, John S MacArthur and William Forrest in 1887 (Vickers, 1975), it was this process that made the Witwaters­ rand reefs economic. In the beginning the area produced little gold, but with the application of the cyanide process, South Africa produced 15% of world gold by 1892 and 25% by 1898. Some 15 years ago the percentage was over 70% and in 1984 it was 63%. Probably more than any other metal in southern Africa, gold placed South Africa as a major industrial power and changed the politics of that region. From these gold mines flowed enormous wealth back to Britain. Figure 38 (see also Appendix Table A-9) shows gold pro­ duction from 1840 to 1984. One can speculate that the large increase of 370% in the world’s gold supply provided the mone­ tary base for expansion of industry from 1892 to 1920 and that the world economies faltered because of drying up of credit that new gold supplies had provided. But increasing gold supplies did nothing for the world economy from 1920 to 1940, yet they did again from 1945 to the late 1960s and early 1970s. These were periods when gold was a standard which backed paper currency and credit. The correlations are intriguing and re­ cently some economists have postulated that there is corre­ lation between increasing gold supply, either in real terms or in an upward change in the price of gold, and increasing econo­ mic activity. If so, the present price of gold which is en­ couraging exploration and new production, might provide the stimulus for business expansion if the world returned to a gold standard. However, the standard value of anything is what one can buy and sell a commodity for at any instant, at any place. On the demand side, several changes have taken place that have recently affected the consumption of gold. The changes from 1973 to 1983 are shown in Table 27 below. ♦

TONNES ORE: aiu; uh Douglas Hugh Various; SOURCES: FIGURE 38 WORLD FIGURE WORLD GOLD 38 PRODUCTION, 215 1840-1983 I #

Table 27

WORLD* DEMAND FOR FABRICATED GOLD IN 1973 AND 1983 (Tonnes)

1973 1984 Jew elry 508 59% 819 68% D en tistry 67 8 51 4 Electronics 124 23 122 10 Other industrial 72 9 53 4 Coins, medallions and medals 74 9 174 14

T otal 845 100 1219 * Excludes Soviet Bloc and China Source: Consolidated Gold Fields Several comments can be made regarding gold demand: • As noted above, the demand for gold for ’’investment" has shifted in the past few years as the perception grows that inflation is receding. "Investment" gold was essentially purrchased by new-found oil wealth and wealth from industrialized countries seeking a safe haven against inflation. In 1981 and 1982, investment holdings for purchase totalled 276 and 302 tonnes of gold respectively. In 1983, these holdings fell to 81 tonnes and Consolidated Gold Fields estimates these holdings fell further in 1984. Hoarding by those living in traditionally insecure societies has and always will be a factor in gold demand. • Gold used for jewelry and ornamental purposes has been in a declining trend since 1968 (this is not apparent from the above table). Two reasons for this decline are ( 1) the price of gold has been high and rising artisan costs have increased the price of gold jewelry as well as other ornamental works, and (2) the broad

216 ♦

consumer market for gold jewelry has experienced reduced purchasing power due to rising inflation and tax bracket creep. However, these factors are now moderating so that demand for gold jewelry increased in 1984 over 1983 and has reached its former levels of demand in this sector • Gold used for electronics and other industrial appli­ cations began to increase in the 1960s. This end use has not increased since 1974 and has fluctuated annually between 97 and 65 tonnes. The electronics industry continues to experience rapid growth and could use increasing amounts of the metal but also increase scrap recovery • Consumption of gold in medals, medallions, and fake coins has fluctuated between 7 and 55 tonnnes over the past 10 years. There are no sociological or techno­ logical reasons why this pattern should change. • Official coin sales rose from 54 tonnes in 1973 to a peak of 291 tonnes in 1979. Many of these coins were bought by small holders as "investment” gold during the period of rapid inflation. For similar reasons, sales of official coins are likely to decline over the next 10 to 20 years The primary impression obtained from reviewing gold for this case study is that fundamental forces of sociological change have affected the role of gold and that fundamental technological change has not had a moajor impact on demand. Sociological factors are likely to continue to affect the demand for gold in the future. First, society’s desire to mortgage the future for the present and a "mandarin" belief of deficit financing to cure social and industrial ills destroyed gold as a monetary stndard. Perhaps it might be argued this change would have taken place any way as the size of the world economy grew. Second, social change is turning against these past beliefs,

217 and, as a result, it might be argued that a propitious time to return to gold is at hand. Instant telecommunications, which places a value on gold in nano-seconds 365 days a year, everywhere, which can be compared, scaled, and measured in a similarly rapid way with everything that is of value and bought and sold, will make a gold standard redundant. What is anything worth? A commodity is worth what the market s ys it is at an instant in relation to a host of factors. It seems to me that the more information is available on a commodity, the more "value" it has. Another result of this value change is that the price will fluctuate less widely. Lack of information and guessing cause sudden wide price fluctuations. Thus, in the age of telecommunica­ tions, gold will seek a level of universally declared value, not an arbitrary official price (like IATA air fares and tin prices). And an ever widening pool of facts and information will keep prices from gyrating widely. It this future takes place, gold will finally be what it has been for centuries, a useful store of value.

Vanadium Vanadium, like aluminium, has had a short industrial his­ tory. Identified by Sefstrom in Sweden in 1830, Berzelius, also from Sweden, confirmed Sef strom's vanadium discovery in 1831. Early uses of vanadium were for its salts in chemical applications such as catalysts, oxidation, hydrogenation and dehydration. Today vanadium’s principal U 9 e is as an alloy in steel (Sage. 1982). In 1902, Professor Arnold of Sheffield, England, dis­ covered that vanadium would increase steel’s strength. First used by Sheffield Steel Makers for high speed tool steel, it was quickly adopted by Crucible Steel in the United States. About 1903, also in England, the first vanadium alloy engineer­ ing steel was produced for locomotives. During these years vanadium was also used in specialty steels in France and Germany.

218 In the United States, vanadium in engineering steels was first used by Henry Ford after he examined a French racing car that had crashed at Palm Beach, Florida. He noted that like other foreign cars it had lighter and stronger parts. Ford's laboratories examined the metal and noted that it contained vanadium. Ford manufactured the alloy and in 1907 he ad­ vertised that Fords had "half the weight, twice the strength" (Sage 1982). From the first decade of this century the primary end use for vanadium has been as an alloy in steel. In the United States, the steel industry consumes nearly 90% of total vana­ dium demand and the country accounts for one-quarter of world consumption. Of this nearly 90% vanadium is used in the fol­ lowing specialty steels: Carbon high strength 54% Fully alloyed heat treatable 23 Tool steel grades 12 Heat resistant and other 11 The intensity of use of vanadium is highly influenced by advanced degree of industrialism in each country as the follow­ ing summary shows (Korchinsky 1982):

Tonnes Va per m tonnes steel Highly industrialized 50-60 Eastern Europe 40 Less industrialized 20-30 Japan does not fit into these categories because its steel industry has developed highly sophisticated hot rolled process for steel making and also the industry has been concentrating on plain carbon ship plate. As a result, vanadium use per million tonnes of steel is lower in Japan than the highly industrialized category (the United States and Western Europe).

219 The growth of the automobile industry from the turn of the century to the 1920s contributed greatly to demand for vana­ dium. The renewed demand for automobiles since the end of World War II further increased demand (see Figure 39 and Table A-8 in the Appendix). Not only was vanadium used in automo­ biles but also in bridges required for highways and in oil pipelines to carry crude to refineries and petroleum products to markets. Between 1946 and 1981, world production of vana­ dium grew at an average annual rate of 10.5%. (World consump­ tion is close to world production.) In 1981, production of vanadium contained in ores, concentrates and slags reached an historical high of 35,103 tonnes; in 1983 total production had dropped to 29,719 tonnes (US Bureau of Mines estimate). Reacting to increasing oversupply conditions since 1978, the price of vanadium dropped below its long term range of $5.00 to $9.00 per pound in constant dollars (see Figure 40 and Table A-9 in the Appendix). New supplies from low cost pro­ ducers in Giina and increasing recovery from refining of Vene­ zuelan oils have squeezed out marginal producers. In addition, burning metaliferous fuel oils has created another source of vanadium from petroleum ash residues. Nearly one quarter of US vanadium requirements now come from petroleum. However, South Africa continues to produce about one-third the world's vanadium. It is apparent that vanadium demand is closely tied to the automobile industry (including trucks and buses) and its ancil­ lary industries. This technology influences the demand and supply of vanadium in several subtle ways. o Vanadium is used directly in automobile (including trucks and busses) steel and in the cutting tools to machine the many parts. o The metal is a requirement for steel used in natural gas, oil and petroleum product pipelines (in the United States 45% of the crude oil barrel yields gasoline); the Alaska pipeline accounted for 750 tonnes of vanadium

220 METRIC TONNES FIGURE 3 9 WORLD PRODUCTION OF VANADIUM ORES AND CONCENTRATES, ORES AND VANADIUM OF PRODUCTION WORLD 9 3 FIGURE ORE U ueu f Mines of Bureau US SOURCE: 1931-1983 (Tonnes 1931-1983 Contained of Vanadium) 221 CENTS PER POUND VANADIUM FIGURE 4 0 US VANADIUM PRICES, 1931-1983 (Cents PRICES,1931-1983 per Pound USVanadium)VANADIUM 0 4 FIGURE ORE U Bra o Mines of Bureau US SOURCE: 222 o Oil drilling bits, casing and the drilling pipe contain vanadium o The formation of OPEC has led refiners to use heavier crudes containing sulphur, nickel and vanadium. Refin­ ing technology has been able to increase the amount of gasolines from these crudes as well as the metals. Indirectly, therefore, these supplies are tied to fuel demand by automobiles and other highway transport as well as aviation fuels For these end uses there is little opportunity for substi­ tution other than from molybdenum which does not impart similar properties to steel. It would appear, therefore, that the automobile and oil and natural gas industries are an important factor in the supply and demand for vanadium. The growth of future automobility has been discussed in Chapter IV and therein lies clues to the future of vanadium. One area of intermaterial competition that could affect future demand for vanadium bears monitoring. In tool cutting steel, drilling bits, and some automobile engine parts, high technology ceramics have the potential of substituting for vanadium steels. Development of these ceramics is currently under way, but widespread use is not likely until the last half of the 1990s. Also affecting vanadium use in automobiles is the increasing use of plastics. In addition, most recently, pressed parts made of silica and additive minor and rare metals have tested well against steel for automobile chassis. Another change in vanadium supply and demand is the pos­ sibility of increasing use of natural gas and other hydrocarbon gases as fuel for motor vehicles. Consumption of compressed natural gas is increasing in the United States. Should these fuels begin to make inroads into gasoline and refining of heavy crudes, some vanadium supplies from this source might be re­ duced. However, increased use of natural gas by motor vehicles and for other end uses as a whole, as postulated in the natural gas economy in Chapter IV, would require more pipeline con­ struction and so create additional markets for vanadium parti­

223 cularly if much of the new supply is located in arctic regions. Vandium steels are less brittle in extreme cold conditions. Prior to the turn down in aircraft construction in the late 1970s, the aerospace industry in the United States ac­ counted for 10% of that country's vanadium demand. Aviation is likely to become a major transportation mode over the next 25 years (see Chapter V: Aviation) and as a result, a resurgence in civilian and military aircraft construction could increase demand for vanadium in this industrial sector in the United States and in other countries. On balance it would appear that the technological changes that commenced some ten years ago and that are gathering momen­ tum will have a major impact on vandium demand. Because the vanadium industry has been an oligopoly, the price in constant dollars has not declined as has other major metals, until in most recent years. Perhaps an erosion in price will expand markets and encourage new producers with new innovative pro­ cessing technologies to further lower prices. The present industry structure and historical prices seem to be locking the industry to the past. In 1985, there do not appear to be changes that indicate a dynamic future for vanadium.

224 IX MINERAL EXPLORATION

This final chapter discusses the influence of techno­ logical and social change on the mineral specifically on mineral exploration. While the previous chapters have dealt with these influences on industry and mineral and metal mining, they have addressed mineral exploration only in con­ text with these changes. Mineral exploration has been in­ fluenced by the geologic sciences including the sciences of geophysics and geochemistry, and, to a lesser extent by dril­ ling improvements. It is also influenced by mineral econo­ mics, that is price, supply/demand, technology, and political/ social environment, which dictate what metals and minerals explorationists are looking for and where, and what type of ore deposit "model’' is sought. As new scientific discoveries are made in geologic sciences, ore deposit models change. As used today, mineral exploration implies a systematic search for minerals. Prospecting is different. It usually involves non-professional individuals looking for mineralized outcrops that might indicate a potential ore body. Equipment used by a prospector is rudimentary. However, today some prospecting has become more sophisticated with the use of air transport, light weight geophysical instruments, and portable drills. It has become more systematic but is distinguished principally by the absence of central control and large back­ up staffs. Also, as corporate exploration has become more ex­ pensive, bureacratic and "systematized", the need for using more intuition and creativity, rather akin to prospecting, is required. This need is found in other disciplines. For example, some business schools have added courses on harness­ ing intuition, following many years of an overly mechanistic approach to business administration studies. Mine finding, arguably, is an art. Changes in geologic theories concerning formation of the earth, mountain building, sedimentation and the formation of ore deposits are developed more by "art" than by science and affect how an explorationist

225 views the data accumulated. Each new theory was the result of a creative, intuitive sense, an insight, by an individual who quite suddenly saw a new pattern out of separate parts; the new idea altered the pattern. Thus, new concepts of ore formation are surfacing today, some are rejected, but from the flurry of these new theories will come re-examination of old metallogenic provinces and the discovery of new ones. This chapter, then, will trace the ebb and flow of tech­ nological and social change, the Long Wave, and how mineral exploration was, and will be, a part of these changes.

Stages in Geologic Theories Major papers have been written on the earth sciences since Thales of Miletus (640 to 546 BC) who taught that water is the primaeval form of matter and wrote the first geological ob­ servation on the work of streams (La Rocque 1974). From this early beginning of geologic sciences there have been many contributions to geologic literature. But the emergence of geology as a scientific discipline did not occur until the middle of the 18th century (Hallam 1983, Faul 1983). Mineral exploration as we know it today began about100 years later. This present analysis of geologic theories is concerned with events beginning in late 18th and early 19th centuries. La Rocque (1974) compiled for the American Geologic Institute a list of milestones in the history of geology through 1963. His 234 milestones go back to the Stone Age. Many references include such entries as the formation of the first geological society and the discovery of X-rays. Mile­ stones they may be, but for the purposes of determining patterns to geologic thinking and progress as applied to mineral exploration, I have reduced his list of 109 milestones between 1772 and 1963 and added 7 to bring milestones to the present, although the last citation is 1977. This literature search did not reveal a major geological concept after 1977. Sixty milestones are noted.

226 In reviewing La Rocque’s 234 citations through 1963, it is remarkable how often old theories of earth’s creation, dy­ namics, and ore deposits are picked up and reinterpreted in a new guise of scientific credibility. A recent example of this phenomenon is that the theory of ore deposits prior to James Hutton’s theory of uniformitarianism in 1788 considered that metals were carried by ground waters to great depths. The idea was influenced by the Book of Genesis and the great flood—one of the major geologic controversies of that time (Hallam 1983). Then came theories of upward percolating hot solutions from deep seated magmas carrying metals deposited in suitable host rocks. Now a writer has come full circle, but with a vari­ ance—ore deposits are believed to be deposited by downward circulating and percolating hot brines carrying metals from ocean floor fumeroles to as much as 3 to 5 kilometers deep. Table 28 lists the 60 major milestones since 1772. Reading the background of these events one is struck by the great rigidities that have periodically gripped geologic sci­ entists. Not that geologists are unique in having intellectual rigidities. Three years ago an American geologist postulated that there were very large quantities of natural gas deep in the earth’s crust in all types of rocks including igneous. This year (1985) solid natural gas hydrates have been discovered in sediments on the ocean floor; the only source for this gas is deep in the earth’s mantle. Gas hydrate is formed under high pressure and low temperature of about 3°C. Most geologists were then sceptical but less so now. Similarly, a new geo­ chemistry technique based on the theory that ore deposits are carried by escaping hydrocarbons from deep in the crust (see Krantz 1969 in Table 30) measures the carbon metallic ratios on the ground surface. This new theory and exploration method is meeting some resistance by mining exploration groups. Figure 41, a graphical representation of Table 30, shows the cumulative geologic milestones since 1772 and the pattern of the Long Wave. The quickening and slackening of the number of milestones are shown by thin diagonal lines on the cumu­ lative stepladder. A good correlation exists between the acceleration of geologic milestones and the Long Wave.

227 #

Table 28 MILESTONES IN GEOLOGIC DEVELOPMENT, 1772-1984

Date Geologist Event

1772 Jean-Baptiste Laws of crystalization in Essai de de Louis Rose d'Isle Crystallographie

1774 Nicolas Desmarest Foundations of volcanic geology and volcanic origin of basalt

1778 Peter Simon Pallas Initiation of study of structural geology and mountain building

1784 Rene Oust Hauy D e m o n s t r a t i o n of consistency of crystal forms and development of system of crystallography

1786 A G Werner First classification of rocks

1788 James Hutton Principle of uniformitarianism-- foundations of the Plutonist school

1798 James Hall Proved experimentally that melted basalt when cooled slowly congeals to crystalline rock thus disposing of one of the criticisms of Huttonian Theory of the Earth

1799 William Smith Strata Identified by Organized Fossils (Bath, England) which formed basis of palaeontological stratigraphy

1804 Baron von Schloteim Postulated that Carboniferous plant remains in Thuringia represented a totally extinct plant world

1805 James Hall Proved experimentally that limestone does not decompose when heated under compression, disposing of one of the criticisms of Huttonian Theory

228 Table 28 (continued)

1809 William Martin Published principles of palaeontolgy

1809 Etienne Louis Malus Discovered polarization of light by reflection leading to advances in microscopic techniques

1809 William H Wallaston Invented the refracting goniometer for crystallographic investigations

1812 Cuvier First statement of catastrophic theo­ ries

1812 Cuvier Established vertebrate palaeontolgy as a science

1822 Adolphe Brongniart Established the study of fossil plants on a firm basis

1832 Reinhard Bernhardi First to propose idea of glacial period on the history of the earth

1837 lames Dwight Dana Systea of Mineralogy, most important treatise written up to this time

1837 John Herschell Postulated subsidence caused by ac­ cumulating sediments followed by meta­ morphism at depth

1838 Amanz Gressly Proposed the concept of facies applied to sedimentary rocks

1842 Henry Darwin Rogers Enquired into causes of mountain building and origin of Appalachian coal beds

1845 Charles Lyell New facts on orogeny, glaciation, and coal beds

1843 lames Hall Attempted correlation of Palaeozioc rocks of New York state with those of Europe

1846 Robert Mallet Observed dynamics of earthquakes and attempted to reduce to laws of wave motion

229 *

Table 28 (continued)

1849 James Dwight Dana Nature of volcanic eruptions and ori­ gins of valleys in Pacific islands

1851 Heinrich G Bronn Fossils considered in chronological order in first comprehensive work

1851 Henry Clifton Sorby Examined thin sections under polarized light with crossed nicols

1855 John Henry Pratts Beginning of isostasy and crustal balance

1859 Charles Darwin The Origin of Species

1859 James Hall Recognized development of folded moun­ tains from "geosynclines"

1870 Richard A Proctor Described meteoric systems and earth's origins (growth of planets by accre­ tion)

1873 James Dwight Dana Introduced "geosyncline" in connexion with earth's cooling, origin of moun­ tains and nature of earth's interior

1877 Grove Karl Gilbert Proposed lacolith theory

1878 Albert Heim Diastrophism, metamorphic rocks and mountain building

1884 Karl August Lossen Distinguished between contact and re­ gional metamorphism

1885 Israel C White Proposed anticlinal theory of gas accumulation

1889 Clarence Dutton Proposed theory of isostasy

1893 Ferencz Posepny Described relationship between mineral composition and mode of occurrence of igneous rocks

1898 Marie S Curie Discovery of radium led to more accu- rate dating of rocks

230 Table 28 (continued)

1905 Ernest Rutherford First clear suggestion that radioacti­ vity would provide estimation of earth's age

1907 John Joly Demonstrated that pleochroic haloes in crystalline rocks resulted from ra­ dioactivity

1909 Thomas Chamberlain Described diastrophism as the ultimate basis of correlation

1909 Frederic E Wright, Showed quartz could be used as geolo­ Esper S Larsen Jr gic thermometer

1913 William H Bragg Developed X-ray spectrometer and made first crystal structure determination

1915 Alfred Wegener Proposed his theory of continental drift

1932 Pentti Eelis Eskola Described principles of metamorphic differentiation and origins of grani­ tic magmas

1940 Walter H Bucher Described mountain building cycle

1947 Felix A Theorized on convection currents in Vening-Meinesz the earth

1949 John Warren Graham Pointed out stability of magnetism in sedimentry rocks and its significance

1950 John Tuzo Wilson Described pattern and possible cause of young mountain ranges and island arcs

1952 Willard Frank Libby Established method of radioactive car­ bon dating

1956 S W Carey Advanced a new notion of continental motion and expansion

231 Table 28 (concluded)

1962 Harry Hammond Hess Brought together theory of continental drift, convection currents and mid­ ocean ridges to found the study of plate tectonics

1963 Fred 3 Vine and Correlated magnetic patterns over both D H Matthews sides of ocean ridges thus confirming continuous creation of ocean floors

1963 McCartney and Potter Mineralization is related to structu­ ral deformation, igneous activity and sedimentation infolded geosynclines

1965 John Tuzo Wilson Published A new class of faults and continental drift

1966 Petrascheck Close relationship between tectonic events, igneous rock types and types of ores

1969 Krantz Organic compounds are keys to the transportation of ore metals in hydro- thermal solutions

1976 Menaker Crustal maturity is an important cri­ terion in tectonic development and thus is largely relevant to ore gene­ sis

1977 Andrews and Fife Generation of massive sulphides caused by downward convection of percolating seawater through highly permeable ig­ neous rocks and is a fundamental pro­ cess in the submarine environment of spreading ridges

Source: LaRocque (1974); Faul (1983); Hugh Douglas Figure 41

MILESTONES IN GEOLOGIC DEVELOPMENT AND THE LONG WAVE, 1772-1980

Source: La Rocque (1974); Faul (1983); Hugh Douglas Acceleration appears to occur as the Long Wave approaches the bottom and begins to move upwards. The slowdown in milestones is evident in recent years, so much so that R D Ellett in the American Mining Congress Journal, March 1982, remarked that "the degree of progress in mineral exploration has slowed over the past 10 years." Ellett has been an exploration geologist for over 40 years. A feature of geologic milestones not evident on the figure nor clear from the table is that a spurt in geologic contri­ butions came much later after a single breakthrough in geologic thought. I have already noted that new ideas meet resistance; old concepts persist until eventually overwhelming evidence shifts opinion. Then comes a rush of papers which innovate on the new basic theory. The initial idea appears near the top of a Long Wave. Plate tectonics is a good example of this for it was first expounded by an Australian, T S Carey, in a paper given at a conference in Tasmania. The paper was at first ignored. Presumably as the wave exhausts itself, social per­ ceptions about a less benign future intrude to make the geo­ logic profession conservative and unwilling to risk many years of hard-won reputations by expounding on new theories. Only after some 20 years or more of backing and filling and unre­ warding economic times perceptions do change and there is again a rush of innovative geologic thinking. In the scenario I have been constructing, it would appear that a resurgence of new geologic thinking will begin in the early 1990s and this decade will likely bring forth new concepts that will aid in the exploration, discovery and development of mineral wealth. I should also note that the period from 1840 to 1915 was remarkable in that there was only a partial slackening of milestones during the down wave from 1875 to 1892 compared with prior and subsequent down waves. Over these 78 years, which is 38 percent of the years surveyed, 29 milestones out of a total of 59 occurred, or 49%. The period was certainly a dynamic one for geologic progress.

234 Geoscience Trends Since World War II

Developments in Geochemistry Geochemical measurents had been made as early as 1894. As a result of key developments in analysis, by the mid 1950s geochemistry was the new infant in the tool kit of explora­ tionists. By 1963 Hawkes and Webb had published the first comprehensive text on the theory and application of geo­ chemistry. The Canadian government, which had been a strong supporter of raining, was the first government to build up an active geochemistry section located within the Canadian Geo­ logical Survey. This programme was started in 1958 and was internationally known for its work in geochemical reconnais­ sance surveys. As with other disciplines in the geosciences, geochemistry rode the upward wave through the 1950s and 1960s. Beginning in the 1970s the Canadian government support and emphasis on mining subsided and with the change in social mood was more anti-mining than pro-mining. The growth and development of geochemistry for mineral exploration was rapid during the expansion period (Marchand 1978). Major contributions were made to the field such as a volume edited in 1968 by H L Barnes entitled 'The Geochemistry of Hydrothermal Ore Deposits." This work was the first of a new branch of the earth sciences to bring together scattered works relating to the discipline. It was probably a result of general dissatisfaction with the old hydrothermal thesis for ore deposition (ore deposits in association with brines and connate waters was being increasingly discussed by 1967). The upward development of innovation in exploration geo­ chemistry appears to have crested in 1973 (see further below) with a major publication on the Proceedings of the 4th Geo­ chemistry Symposium held in London in 1972. By then geochem­ ical prospecting had progressed to airborne sampling of aerosols. However, the use of computers for processing and interpreting data increased through the 1970s and 1980s. Currently the ideas of a hydrocarbon transport system for ores has led to a new geochemical prospecting tool that measures the

235 ratio between hydrocarbons and metals. It is currently under testing and development. The growth of exploration geochemistry is illustrated in Table 29 and Figure 42 which show the annual number of cita­ tions each year since 1894. The figure begins in 1934 when significant numbers of citations began to appear annually. It can be seen that the take off period for number of citations began in the 1950s and topped out in 1973. The Long Wave topped out in 1968.

Developments in Geology A review of the geologic literature shows that geologists and those in the earth sciences and mineral economics (only identified as a discipline since about 1970) clearly reflected the general attitudes of society. Starting in the early 1950s writers in geology and mining affairs felt no limits existed to the growth potential of the industrial system and the main job for geologists was to find mineral deposits to keep the abundant future well supplied with raw materials. Editorials spoke of economic abundance. This period also saw breakthroughs and improvements in a new geophysical tools--induced potential, resistivity, con­ tinuous airborne magnetometer surveys and especially electro­ magnetic (EM) surveys for identifying massive sulphide ores. The early EM instruments, first developed by a Newmont Mining/Texasgulf consortium under Dr Arthur Brant, a geo­ physicist from the University of Toronto, were crude but they worked. By 1957 EM was airborne (personal experience). At the same time geochemistry was an infant prospecting tool (see below). Both geophysics and geochemistry evolved rapidly and resulted in the discovery of major ore bodies—Kidd Creek in Ontario being a good example of combined use of imaginative geology, EM and geochemistry. Governments were also active in supporting exploration reconnaissance. The Canadian govern­ ment had a wide ranging programme of air reconnaissance using surplus RCAF aircraft fitted with combined magnetic and radio-

236 Table 29

CITATIONS BY YEAR OF PUBLICATION IN EXPLORATION GEOCHEMISTRY

1894 1 1950 27 1975 492 1951 32 1976 545 1897 1 1952 21 1977 483 1953 20 1978 393 1922 1 1954 26 1979 542 1923 1 1955 47 1980 517 1927 4 1956 58 1981 393 1957 76 1982 414 1929 2 1958 104 1983 416 1959 93 1935 3 1960 38 1936 6 1961 84 1937 5 1962 86 1938 7 1963 106 1939 10 1964 88 1940 5 1965 119 1941 10 1966 143 1942 5 1967 205 1943 5 1968 179 1944 2 1969 263 1945 4 1970 247 1946 7 1971 359 1947 8 1972 407 1948 13 1973 514 1949 18 1974 415

S ource: D H Hawkes (1985)

237 Figure 42 Figure ANNUAL AND CUMULATIVE CITATIONS IN EXPLORATION GEOCHEMISTRY Table 32 Table

1 J 1 « ■

Source: — 1934 . . - - 1 3 - 3 7 - 7 4 - 4 8 * * - 6 2

238 magnetic instruments. Under generous subsidies for uranium oxide given by the US Atomic Energy Commission, radiometric prospecting and imaginative geology resulted in the successful discovery of adequate uranium for the world’s armaments and the nuclear power/electric utility industries. As can be seen in Figure 41 the rate of development of major contributions to geology was accelerating during this post-war period. One thing did not change. This is the mis­ understanding between those who search for mineral deposits and those who produce the ores and metals. In the 1954 Annual Review (Mining Journal) an American mining executive was quoted as follows: The problem with American mining companies is their vertical organization with control in the hands of smeltermen and raining engineers who have no appreciation of mining’s future which lies in exploration. They don’t want to spend money on th is m ildly speculative business. Beginning in 1970 near the top of the long wave, the excitement, new geologic theories and the belief in the future slowed, as they had in previous periods which signal the end of the upward leg of the Long Wave. Geologists and writers in earth sciences became gloomy about future prospects reflecting, or going along with, writers and thinkers of the time. Edi­ torials in the Annual Review published by the Mining Journal, for example, spoke of shortages, of the impossibility of con­ tinuing economic growth at such a heady pace, of a dwindling resource pool, of the economics of scarcity rather than the economics of abundance and the need to do with less. By 1972 the sociological debate about the mining industry came to the fore and had begun to attract public interest. Topics such as limits to the earth’s resources (hardly worth discussing by knowledgeable geologists) and pollution of the environment were beginning to attract public interest. In 1972 there were major addresses on the subjects at annual meetings of the American Institute of Mining Engineers, the Institution of Mining and Metallurgy and the Institute of Chemistry. The Club of Rome’s

239 "Limits to Growth" (Meadows, 1974) was symptomatic of thinking of that time. Geologic thinking followed the pattern and was reflecting the topping of the long wave. Dr Charles F Park Jr (1962) of Stanford University published a book entitled "Affluence in Jeopardy." At the same time some outstanding new techniques were being used to assist in reconnaissance geology: remote sensing and radam (side scanning radar) for mapping cloud covered terrain. And a heated controversy raged in the mid 1970s about strata bound ore deposits. An outstanding contribution to geologic thought during the upward period of the wave was continental drift and plate tectonics, which has been labeled by Cohen (1985) as a scienti­ fic revolution akin to the ideas of Copernicus, Darwin and Einstein. This new geologic development has sparked new con­ cepts on the formation of ore deposits and will eventually change exploration strategies and what "models" to look for. However, the theory of plate tectonics could not have developed on geologic evidence alone. It took a combination of ideas and research from geophysics, in the broadest sense, and its evi­ dence on the structure of the earth, astrophysics, and oceanog­ raphy (Hall 1975). The latter advanced rapidly beginning in the 1950s at the new Lamont Observatory of Columbia University under Dr Maurice Ewing, at Woods Hole in Massachusetts, Scripps in California, and at other institutues. Coring, geophysical surveying and remarkable underwater photography all enhanced the concept of plate tectonics and the origins of some metallic sulphides. From the concept of plate tectonics have come two major geologic contributions to ore genesis as listed in Table 30: (1) Menaker who posited that crustal maturity was an important criterion in tectonic development and consequently is highy relevant to ore genesis, and (2) Andrews and Fife who believe that massive sulphides are generated by downward convection and upward percolation of seawater through highly permeable igneous rocks which is a fundamental process in the submarine environ­ ment of spreading ridges; penetration occurs between 3 and 5

240 *

kilometers and the leaching of metals by this process leads to deposition of massive sulphides on the floors of the ocean as a result of the reduction of ocean sulphates in the vicinity of hydrothermal discharge. Other recent papers have further developed these ideas. For example Stanton (1982) believes that, based on examination of some stratiform ores, the effects of metamorphism can be found only at very small distances from the main ore body and thus the observed metamorphic minerals are probably derived directly from precursor minerals of sedimentary or diagenetic origin. Reed (Economic Geology No. 78) in 1983 stated that it was seawater/basalt reaction that gave rise to greenstones (one of the key rock types in metal logenic provinces in Precambrian areas). And Mottle (Geologic Society of America Bulletin No. 94) in the same year said outright that some ore deposit occurences have their origins at mid-ocean spreading sites. However, none of these papers are breakthroughs as such.

The Pattern of Mineral Exploration Discoveries The discovery of an economic mineral deposit is the result of creative geologic thinking (the type of changes in percep­ tion of host environments for economic minerals as discussed above) and the latest in available technologies such as geo­ physics, remote sensing, geochemistry, and the best in drilling techniques. What type of mineral deposit to look for (the model) also changes with the type of mining and processing techniques are most economic (see Changes in Ore Deposit Models below). In this section, the ebb and flow of mineral and metal discoveries are discussed and analyzed in context with the Long Wave. The best data available on discovery rates of economic mineral deposits are from Canada and Australia. In other coun­ tries such data are not available, and there are no historical compilations on mineral and metal discoveries on a worldwide basis other than for uranium. I have compiled data on world wide uranium discoveries commencing in 1949 (Douglas 1981) and these uranium discoveries are discussed below.

241 these uranium discoveries are discussed below.

Canadian Economic Mineral Deposit Discoveries Derry (1970) and Derry and Booth (1977) have compiled data on metallic mineral discoveries in Canada from before 1920, and Mackenzie (1984) has published data through 1978. The Derry studies also note by what method the discoveries were made— prospecting, geology, geophysics, geochemistry, and radiometry. Derry’s metallic minerals include uranium and asbestos because they are found in similar geologic host environments and re­ quire "hard rock" geologic exploration techniques for their discovery. Derry’s data are found in Table 30 and illustrated on Figure 43. Discoveries are not broken down by year prior to 1950. Nonetheless, the figure shows that cumulative rates of discovery were low until the early 1950s when discovery rates accelerated dramatically; they peaked in 1956 and again in 1971. The immediate post-World War II surge in exploration is understandable for three reasons: • After the War demand for metals exploded because of expanding industrial output which was further acce­ lerated by demand brought about by the Korean War in the early 1950s. • The average price of metals was well above average mining and processing costs so that historically high profitability was a major incentive to exploration. An examination of Figure 34 in Chapter VIII shows that long term copper prices in constant dollars which gene­ rally mirror the other base metals. After declining steadily from 1919 to 1931, the constant copper price recovered in the 1930s and then fell again until WW II's end. From 1945 to 1976 the price rose steadily. Other metals behaved similarly until the mid-1970s when they began topping out. This period from 1945 to 1976-

242 %

Table 30

CANADA: NUMBER OF DISCOVERIES OF ECONOMIC MINERAL DEPOSITS, 1920-1983

Year Annual Cumulative 1920 (pre) 28 28 1920-29 15 43 1930-29 15 58 1940-44 2 60 1945-50 15 75 1951 5 80 1952 7 87 1953 9 96 1954 9 105 1955 5 110 1956 14 124 1957 6 130 1958 3 133 1959 1 134 1960 0 134 1961 1 135 1962 4 139 1963 4 143 1964 3 146 1965 3 149 1966 5 154 1967 2 156 1968 5 161 1969 4 165 1970 4 169 1971 7 176 1972 5 181 1973 6 187 1974 5 192 1975 3 195 1976 3 198

Source: Derry (1970); Derry and Booth (1977)

243 CUMULATIVE DISCOVERIES AAA NME FDSOEISO CNMCMNRLDPST, 1920-1983 DEPOSITS, MINERAL ECONOMIC OF DISCOVERIES OF NUMBER CANADA: (pre) ore Tbe 33 Table Source:

Figure43 mJUSC IVllNNV SmiJAUJSlCJ 4

1978 was a profitable one for the metal mining indus­ try; it also provided the incentive for exploration. That is, overall high prices for metals yielded high investment returns, which is quite typically found at the beginning of an upward wave. An indication of an approaching peak in a Long Wave is a decline in the rates of return on investment. • A major development in exploration geophysics—electro­ magnetic (EM) prospecting—first on the ground and then in the air—was a major factor in accelerating dis­ covery rates after WW II. Other geophysical prospect­ ing tools were improved. But it was the surge of the EM breakthrough that led to increasing discoveries. Fresh geologic thinking also played a part. Mackenzie (1984) has also compiled a list of exploration discoveries in Canada from 1845 to 1979 but only of base metals which include the search for copper, lead, zinc and molybdenum deposits. Mackenzie considers a discovery to be made when the deposit is found by drilling which ultimately proceeds to mine development. The deposits are considered individually if their discovery required essentially independent primary exploration programmes. There are 290 discoveries listed by Mackenzie over the time period; these are shown in Figure 44. The pattern of discoveries follows the upward wave lasting from 1892 to 1920 (as previously noted, some researchers place the date later in the 1920s) and again from 1944 to 1968 (again some writers place the top of this last wave early in the 1970s). During the third wave (the first mentioned above), exploration gathered momentum in the 1890s and there was an­ other cluster beginning in the 1920s and peaking in 1928. A surge in exploration discoveries began again in 1947 and reach­ ed a broad top in 1968, although subsequently there were annual highs in number of discoveries. Graphically it can be seen that discoveries were on the wane after 1968. The plot of the data differs somewhat from Derry’s which includes precious metals, nickel, asbestos and uranium. Both

245 (ANNUAL) Figure 44 Figure BASE METAL DISCOVERIES IN CANADA, 1846-1978 Source: Mackenzie (1984); Hugh Douglas

246 ♦

sets of data show a fall off in discoveries around the end of the 1960s decade.

Exploration Discoveries in Australia Mackenzie and Bildeau (1984) have also developed data for Australia from 1845 to 1979 and these are shown in Figure 45. In this country there are two clusters of exploration, one from 1870 to 1885, and another from 1942 to 1979, thus coinciding with the upward waves of those periods. The upward wave from 1892 to 1920 is represented by 7 discoveries between 1895 and 1915. The realization that Australia was a storehouse of metals did not become solidly realized until well after World War II. The search for metals using the best in geophysics and geochemistry techniques had a similar result on the discovery rate in Australia as they did in Canada. Another factor that hindered exploration development in Australia is that the mining industry there became highly institutionalized. The country opened up after World War II and adopted many of the characteristics of the open, highly competitive mining industry of Canada.

The Downturn in Exploration and the Long Wave The data on these Canadian and Australian discoveries suggest the fall-off in discovery rates in the mid 1970s is consistent with the downturn in the Long Wave. It should be pointed out that the downturn was a result of sociological factors acting on the economy and the use of innovations, both geological and technical. Mineral exploration was part of the system. The increasing use of technology in mine finding, other than simple prospecting and geological intuition, is shown in the data gathered by Derry. Table 31 shows these data. The following points can be made: • Until 1950 all discoveries were made by either pros­ pecting or geological application; gradually prospect­ ing gave way to geological methods

247 (ANNUAL) Figure 45 Figure BASE METAL DISCOVERIES IN AUSTRALIA, 1845-1979

248 Table 31

CANADA: DISCOVERY OF ECONOMIC MINERAL DEPOSITS BY DISCOVERY METHOD, PRE-1920 TO 1976 (P ercen t) Year Disco­ Prospect Geo- Geo- Geo- Radio­ v e rie s ing logy physics chemistry metry P re- 1920 28% 93% 7% 1920-29 15 80 20 1930-39 17 87 13 1940-44 2 50 50 1945-50 15 80 20 1951 5 20 60 20% 1952 7 57 43 1953 9 44 44 12 1954 9 80 20 1955 5 40 60 1956 14 21 21 58 1957 6 17 17 66 1958 3 33 67 1959 1 100 1960 0 1961 1 100 1962 4 50 25 25% 1963 4 50 50 1964 3 33 66 1965 3 33 33 33 1966 5 20 40 40 1967 2 50 50 1968 5 60 20 20% 1969 4 25 75 1970 4 50 50 1971 7 40 40 20 1972 5 40 1973 6 1711 6860 17 1974 5 40^ 60 1975 3 172 33 172 1976 3 172 33 172 l=Method of discovery unknown—assigned to geology 2=Combined geology and radiometry Source: Derry (1970); Derry and Booth (1977)

249 • In 1950, geophysics became a new force in mine finding and was equal to geology which continued to challenge traditional prospecting. However, prospectors were becoming increasingly well-versed in geologic prin­ ciples and the fact that some prospectors did not have university degrees did not detract from their ability to use geologic knowledge to discover mines. The prin­ cipal difference between a prospector and a geologist is that the former is alone in reconnaissance work, perhaps with a colleague, and is "grubstaked" by an individual or partnership, whereas the latter is usual­ ly part of an organized system such as a major or junior mining company or a syndicate established for a specific exploration venture. • By 1962 geochemistry had become an established explora­ tion tool and by 1968 (according to Derry’s analysis) radio-metry for uranium. In the 1960s and 1970s the full use of all technologies was being applied so that none in any year had more than 50% of the discoveries. However, by grouping discoveries made from 1951 to 1976 into two groups, a dominant role was played by geo­ physics, as shown in Table 34 on the next page, in which radiometry is excluded because its principal use is for uranium exploration. Certainly by 1967, geophysics, particularly airborne, had made inroads into traditional prospecting and geology as a reconnaissance tool. However, it should be emphasized that an expensive airborne geophysical programme is usually preceded by regional geologic studies to define the best areas to be flown.

World Uranium Discoveries and the Long Wave A study of world uranium discoveries shows that the long wave is evident, although not as pronounced as other explora­ tion data presented above. Uranium is a unique metal because it has only two markets—atomic weapons and nuclear reactors, both government dominated. Uranium prices have fluctuated wildly and widely as a result of US government subsidized Table 32

CHANGES IN DISCOVERY METHODS IN CANADA (P ercent) 1951 -1964 1965-1976 No. % No. %

Prospecting 9 31% 5 10% Geology 4 14 11 23 Geophysics 15 52 26 55 Geochemistry 1 — 5 11

T otal 29 100* 47 100*

Discoveries/year 2. 1 3. 9 * Totals do not add due to rounding Source: Derry and Booth (1970, 1977) purchasing programmes, then by stop and go policies of govern­ ment curtailment of uranium buying programmes and enrichment contract provisions. These changing policies masked the under­ lying longterm upward and downward waves that might have been evident in uranium discoveries. However, there is some evi­ dence that the Long Wave is seen in uranium exploration successes. Table 33 shows uranium deposit discoveries and the esti­ mated reserves for each discovery (Douglas 1981). Discoveries include all countries in the non-Soviet bloc countries. Re­ serves estimates are based on later development drilling and the then prevailing spot market price for uranium. Since the late 1970s, the price of uranium has fallen steadily so that many uranium discoveries, particularly those in the United States made at the end of that decade, are no longer econom­ ically viable at today’s spot price of $15 per pound. In the late 1970s the price was close to $60 per pound in 1984 con-

251 Table 33

WORLD URANIUM DEPOSIT DISCOVERIES, 1949-1983

Tonnes UgOg/ Annual Cumulative Discovery 1949 3 3 2.5 1950 9 12 22.6 1951 3 15 13.9 1952 3 18 3.1 1953 6 24 6.7 1954 7 31 3.1 1955 11 42 21.7 1956 2 44 5.3 1957 1 43 5.0 1958 2 45 17.5 1959 0 45 1960 1 46 10.0 1961 46 1962 46 1963 1 47 10.5 1964 47 1965 1 48 13.0 1966 1 49 52.0 1967 2 51 29.5 1968 5 56 51.6 1969 2 58 11.9 1970 6 64 21.6 1971 1 65 207.4 1972 3 68 20.4 1973 1 69 2 .0 1974 4 73 6.5 1975 17 90 15.6 1976 16 106 2 1.0 1977 8 114 8.3 1978 12 126 8 .0 1979 9 135 6.2 1980 2 137 7.3 1982 1 138 13.6 1983 1 139 48.0 T otal 139 111.3 Source: Douglas (1981)

252 stant dollars. Figure 46 shows these data from 1949 to 1980. From 1949 to 1960 the US government purchased uranium from any source for $8 per pound plus bonuses for road construction, low interest loans for mills and so forth. This programme was highly suc­ cessful, so much so that in the 1960s the contracts were re­ negotiated for gradual phaseout. Free market prices collapsed as there was no other buyer for uranium. By 1966 a private commercial market was developing for nuclear reactors, and by 1973 prices were again on the upswing. Then the US government, fearful that not enough enrichment capacity would be available in the late 1970s, insisted that those who wanted to have uranium enriched had to spread deliveries through the early 1970s and into the 1980s. This action created a severe supply/demand imbalance. U tilities scrambled to buy uranium early even though they had no immediate need for it thus putting pressure on supply. At the same time Westinghouse Electric had sold some 80 million pounds short at low prices. The supply squeeze had driven the price beyond which Westinghouse could afford to deliver to its power reactor customers. The result was an additional supply shortfall as utilities rushed to cover their requirements un­ fulfilled by Westinghouse. The uranium price rose to $43 per pound UgOg or nearly $60 per pound in constant 1984 dollars. This high price stimulated feverish exploration activity in the United States and worldwide leading to bonanza discove­ ries in northern Saskatchewan. However, in the past 3 to 4 years uranium prices have fallen to historic lows, and in the United States and elsewhere, some of the discoveries made during this period of high prices have not been developed. The previous figure shows the increase in discovery rates during the US government’s first contract bonus programme through the early 1950s, and the second discovery boom in the late 1970s. It also shows the number of tonnes UgOg developed per discovery. The tonnes per discovery increased from 1966 to 1971 at the top of the Long Wave. The number of discoveries

253 Figure 46

WORLD URANIUM DEPOSIT DISCOVERIES AND TONNES U DISCOVERED PER DEPOSIT, 1949-1980

Source: Hugh Oouglas increased over the same period when the price was not the primary incentive for active exploration. However, during this period, optimism by utilities and government about the future for nuclear power was high. There was already then an under­ lying public scepticism about nuclear power but it was not until the mid 1970s and 1980s that the effect on nuclear power by antinuclear pressure groups was felt. Although this change was seen primarily in the United States, in some other countries anti-technological groups also thwarted nuclear power development. Although public sentiment was against nuclear power, utilities scaled back nuclear power requirements in the face of high construction costs, in part in part due to public opposition creating delays in construction, and declining demand for electricity. The linkage between the Long Wave and uranium discoveries is not as clear cut as for metallic mineral deposits because of unusual circumstances, especially government involvement in the unramium market. One point is very significant. Nuclear power was launched at a time when the Long Wave was peaking and society heading downwards into a typical anti-tenchological, fear-of-the- future, and pessimistic frame of mind. Had nuclear power’s advent been pushed 10 to 15 years ahead, it might well not had had so many problems. In my view, it probably has lost the battle as a major energy source, for as indicated earlier in this study, the next upward wave will likely be increasingly based on natural gas.

Mineral Exploration and Geologic Models Modeling ore deposits as an exploration tool has become increasingly popular with geologists over the past 15 years. The word "model” as used today is new to geologic lexicon and is borrowed from the cumputer and futures planning disciplines. A model is a simplified representation of a complex entity or factors that facilitates calculation and predictions. Mineral explorationists ask many questions in planning an exploration programme. What to lode for? Where? What are the transpora

255 portation and infrastructure requirements, should an economic mineral deposit be found? And given these and other para­ meters, what grade and size of deposit would be economic given available raining and processing technologies? What are the probabilities that a certain favourable metallogenic province could hold such a deposit? These are the types of questions asked in creating the "model" mineral deposit that is being sought. Using computers speeds the task of assessing all the variables. Two of the most important independent variables are the type of mining and beneficiation method used and the nature of the deposit. The former is influenced by technologocial change and the latter by current geologic ideas about the formation of ore deposits. This study has emphasized that society is a learning system and during certain historical periods ideas and technologies accelerate and propel industrial society to higher levels of economic prosperity. Thus, while today conventional wisdom may state that to satisfy demand for a certain metal will be impossible, because the economic lim its of known de­ posits have been reached (the non-renewable resources syn­ drome), one can also state that we do not know what the future geologic model will be which will unfold vast new mineral supplies nor does one know for certain what type of processing technologies will be on hand to mine these new deposits. For example, at the turn of this century, copper deposits mined in the western United States had an average grade of copper mined over 4%. Today it is less than 0.5%. Copper demand was growing rapidly as a result of electric and com­ munications industries requirements. A combination of bulk mining technology and flotation enabled much lower grade de­ posits to be mined. Daniel C Jackling first applied the con­ cepts of large scale mining and improved processing at the Bingham Canyon pit of Utah Copper Company in 1907. By 1929, ore was being mined at just under 1% copper at a cost of 6.65 cents per pound, including depreciation and overhead but ex­ cluding Federal taxes (Eaton, 1948), equivalent to 48 cents per pound in 1984 constant dollars. Today copper is mined in Chile for about the same cost, 48 cents per pound of copper, which

256 indicates the severe competition faced by American copper miners. These "porphyry" copper deposits were the geologic model in the 1920s and fitted the best economic mining and processing technology for the next 50 years. It applied also to under­ ground bulk mining methods which require a slightly higher grade to be competitive with open pit mining. For the United States and the Cordillera porphyry copper mines in Canada, it appears that these porphyry mines are increasingly uneconomic and the talk is now moving toward small scale mining by which a higher grade copper deposit can be mined. To a certain extent, therefore, the best economic model of a copper deposit is gradually shifting to a different type of ore deposit that can be mined on a small scale. Yet the same basic technology of mining and processing is still being used. At this point in the shift, so far as copper mining is concerned, new technologies in mining and processing must be forthcoming. And when they arrive, the model will change as a result of new geologic concepts on ore deposits. The process of that change, I believe, is already under way. Several straws in the wind suggest that changes in geo­ logic models (what to look for) will be forthcoming: • As described above, the concept of plate tectonics and discovery of metallic sulphide fumeroles at crustal breaks in the ocean floors is altering theories of ore deposits • Some of these concepts involve bacteria and hydro­ carbons as carriers • Genetic engineers are seeking new ways of processing ores using designed bacteria

257 • Some venture capital groups are testing in situ leaching of copper and gold deposits by creating artificial barriers around a deposit to contain the leaching fluids • Slow progress is underway in using laser energy as a cutting tool and to pulverize rock, although at present the amount of energy required to break and cut rock is too great for lasers to be an economic method The new technologies noted above could possibly revo­ lutionize the copper mining industry, or all the mining in­ dustry for that matter. As this study has shown, which tech­ nologies create a vast and enormous change are difficult if not impossible to forecast. It would seem that genetic engineering may hold the key. If it does, the pattern of development of past technologies suggests that it will begin to have an impact only some 20 to 25 years from now. In the meantime, the geo­ logic sciences and exploration technologies will slowly change and adapt to these new concepts.

The Next Surge in Mine Finding As has been pointed out in previous chapters, there is a lag from an "invention” to "innovation." Society as a learning system, that is, the accumulation of knowledge to the point that a critical mass is reached, also applies to the geologic sciences. It is the innovative period that brings forth out­ standing developments in the field of mineral exploration. If one applies the lag, evident in other technological develop­ ments from innovation to invention, to the geologic sciences, then the next major impact on mineral exploration and discovery of economic mineral deposits will occur some20 years or so after the first geologic invention or breakthrough. This period of "invention" would be, arguably, the 1976/1977 geo­ logic development of the idea of crustal maturity relevant to ore deposits (Menaker) and the formation of sulphides asso­ ciated with metallic sulphide fumeroles located at crustal breaks in the ocean floor (Andrews and Fife 1977—see Table 30). Using these dates, the period of major discoveries as a

258 result of innovation or innovative exploration will occur from the mid to late 1990s. This is the same time period when I postulate that the next major upward wave will begin to be evident and will be marked by rising economic prosperity and increasing demand for metals and minerals.

Mineral Exploration and Organizational Structure I have noted in this study that beginning in the late 19th century industrial and government organizations became larger and increasingly bureaucratic. The raining industry, particu­ larly in the United States, established highly vertically or­ ganized industrial structures which increased rigidities, slowed decision making, and throttled innovation. During the closing phases of the last Long Wave (late 1960s through the 1970s), the mining industry followed the path, as did many other industries, of increasing capital investment, primarily debt rather than equity, in old technologies and social struc­ tures (organized labour for example). The result has been a near collapse of the US copper mining industry and other metal mining such as molybdenum. The mining industry followed, or perhaps accompanied, many industries which followed a similar course. It was a common social response reinforced by what was considered success and by management theories in business schools and elsewhere. Social perceptions about organizational structures, their size, management/employee relations, role of women and minori­ ties have undergone profound change beginning in the 1960s and these changes accelerated during the 1970s and early 1980s. For the worker and middle manager, "meaningful” work was re­ quired. Business schools began looking at the role of intu­ ition and creativity in management and harnessing these attri­ butes in employees. One of the results of these changes was a recognition that "small was beautiful," a concept ridiculed ten years earlier. The group in mining organizations that has been affected most by hierarchical organization has been exploration. In no other group in a mining company is individuality and creativity

259 more important. And in no other group is "style," perception of the future, and thinking processes so different than those found in the accounting/engineering groups that generally run mining companies and on whom the exploration group and its budget are dependent. Even more severe, is that at the bottom of a down wave, the phase of the world economy and society is now in, raining companies reduce exploration budgets. Reduction of mineral exploration activity is a normal res­ ponse to severe decline in income and cash flow which the mining industry has undergone over the past several years. On the other hand, more than 5 years on average are required to discover a potential economic mineral deposit and another 3 to 5 years to put the deposit in production. Thus, 10 years can elapse from the time a specifically budgeted exploration pro­ gramme begins to first production. Since the discovery time is an average, there is a chance of zero success. Six to seven years are the minimum. To reduce or even eliminate mineral exploration is to forego the future of the mining company. At this time in the Long Wave, that is, when it appears that in some 10 years time the beginning of new prosperity will be apparent and mineral and metal demands will increase in a rising world economy, the continuance of mineral exploration is both prudent and wise. Moreover, maintaining an exploration group's cohesion will insure that new ideas will be used in furtherance of mineral exploration targets. The evidence of research for this study suggests that in the next few years there will again be a renascance of new concepts (not all of which will necessarily be viable) that will lead to discovery of new mineral wealth, some of which might prove to be bonanzas. Past changes in the geologic sciences have coincided with the Long Wave and these new concepts are thus likely to be forthcoming toward the end of this decade. Mining companies need to be ready for innovative applications of new geologic thinking. How the exploration group is structured is critical to harnessing creativity and new conepts. A mineral exploration programme's chance of success could be improved by organizing

260 ♦

along the following lines: • Positions such as District Geolgist can be eliminated and replaced by a manager to provide logistic field support and administrative services for the mine finder • Exploration groups should consist of no more than 10 to 12 professionals • Head of an exploration group should be an experienced "mine finder", completely responsible for success or failure of the group, and make all decisions on where and when to drill, joint exploration, property options and so forth • Since the exploration group has very wide responsi­ bilities and needs to plan ahead, the exploration bud­ get should be for a minimum of 5 years; only a semi­ annual report to mining management on the stewardship of the money budgeted is necessary • The group should be rewarded if mine finding is suc­ cessful with a percentage in the equity of the new mine; the mine finders should be compensated for their success in mine finding, rather than for their success in escaping from the field to organizational ladder climbing in the home office of the mining company These suggested changes are profound and cut across the grain of established mining company organization. Yet it is believed to be the best way to harness the creativity and innovation required for mine finding. The strongest argument to be made for this organizational concept is that all the evidence of social changes in the current Long Wave suggest that organized society is moving in the direction of smaller operating units. The era of highly concentrated central orga­ nizations has most probably peaked. Even Russia is rethinking its present industrial structures. A combination of social change and advent of computer based technology in all aspects of industrial processes, particularly in the field of com­

261 munications, is also pushing organizations to restructuring into smaller units than were required in the past to accomplish goals and tasks.

262 IX SUMMARY AND CONCLUSIONS

Social Change and Technology Since the end of the 18th century the economies of the industrial nations have expanded and contracted in irregular Long Waves of 40 to 60 years. Economic data, such as gross national product, prices, capital investment and other economic indicators, have been intensely studied by economists such as Rostow, Schumpeter and Forrester. The first to note the long wave phenomenon in the 1920s was a Russian economist, Kondra- tieff. He postulated regular cycles of 54 years. However, a close examination of the work of ten economists shows that the Long Wave is not regularly cyclical. Beginning in 1790 there have been 4 waves; the average timing of these Long Waves based on the work of these 10 economists is shown in the table below.

AVERAGE TIMING OF LONG WAVES Low High High/Low Wave Year Diff. Year Diff. Difference

I 1790 — 1816 — 26 II 1848 58 1875 59 27 III 1895 44 1920 45 28 IV 1944 52 1968 48 24 Average 51.3 50.7 26.3 Range 44-58 45-59 24-28 Thus, the timing of the Long Wave is not exact and cannot be predicted precisely.

A principle that has developed from this work is that interactions within society— perceptions of persons individ- ually and collectively about their future and consequent actions and reactions in the market place which which result in economic activity and, hence, such data as prices and output. Moreover, a second, if not more important factor working within society is a "learning system." This learning system is illus­ trated by the way technologies are continuously developed and improved logarithmically over time. Examples are: • The ability of a child to learn some 2500 words in its first 60 months • Accuracy of mechanical clocks over a period of 400 years • Height of flight above the earth • Depth of holes drilled in the earth’s crust • Improvement of the heat rate in thermal stations The same phenomenon exists in the geological sciences. How­ ever, although progress is logarithmic, it can sputter out either because of technological limits/replacement (mechanical clocks by electronic clocks) or by a slowing down in the pace of development which is related to the Long Wave. Improvements continue once society has changed its perceptions of the future. The ebb and flow of social change can be seen in a change in society’s majority views from conservative to progressive. These changes, which follow the Long Wave, are found in socio­ political themes in the Speeches from the Throne in Britain dating from 1790.

264 *

SOCIO-POLITICAL THEMES IN SPEECHES FROM THE THRONE 1790-1983

Theme Years Years difference P aro ch ial 1790 1842 1894 1946 54 52 52 Progressive 1803 1855 1907 1959 52 52 52 Cosmopolitan 1816 1868 1920 1972 52 52 52 Conservative 1829 1881 1933 1978? 52 52 45? Source: Weber (1981); Hugh Douglas The last change to a conservative theme apparently began in 1978, but this may not represent the year of change. It might occur in 1985 or beyond if the past years’ differences of about 52 or 54 years are a guide. Similarly, since the American Civil War, socio-political themes in the platform (manifestos) of the two major political parties in the United Sta'tes show a conservative/progressive change coincident with the Long Wave. Social change from generally conservative to generally progressive (these are value judgements and are used for lack of better labels) have been evident in four countries studied in this report are the United States, the United Kingdom, France and Japan. A similar phenomenon is found in Germany. It would follow, therefore, that similar changes have occurred in other countries.

Social Change and Climate Reasons for these social changes are speculative. One factor studied is the influence of changing climate on man's activities. Fernand Braudel and other historians have noted that the rise and fall of societies, periods in which there have been a flurry of artistic achievement or aggressive empire-like expansion, coincide with long term climatic changes. It would appear that there is a causal link. Since the Industrial Revolution, the climate has fluctuated from warmer to cooler in the northern hemispheres where western culture and industrialism has been centred. A warming climatic

265 w

change over a long period is accompanied by longer growing seasons—bumper cereal crops—and a greater sense of well-being compared with a preceding cool period. An examination of historical temperatures shows an ebb and flow that is coin­ cident with the Long Wave. Since the 1960s the northern hemisphere has been cooling and long term forecasts indicate a further cooling which is coincident with a fundamental social change that commenced, very slowly at first, in the late 1960s. As social perceptions changed, the market place was affected and the world's economies began their downward tilt. At the same time, society entered a negative, doomsday and anti- technological phase which now, nearly20 years on, is beginning to moderate. A long term increase in economic activity begins with a fundamental social change. However, a long term rise in the world's economies does not occur without the advent of inno­ vation of an invention, that is, a new technology, which is accepted by society. Inventions/Innovations and Primary Fuels Inventions/innovations also come in clusters and are a further confirmation of the Long Wave. Moreover, the predom­ inate fuel consumed in each upward wave also follows a pattern coincident with social change and the adaptation of tech­ nologies. The table below summarizes the historical use of major fuels. YEAR OF MAXIMUM MARKET PENTRATION BY FUEL Y ears Year Fuel Peak price for- d iffe re n c e 1802 Wood US heat & light 1857 Hay * US heat & light 55 1920 Coal US Gulf oil 63 1980 O il Saudi marker crude 60 2035? Natural Gas ? 55? * For drawn animals in the United States only Source: Marchetti (1981)

266 »

A peak in fuel prices occurred in the same year as maximum market penetration of a primary fuel.

Key Technologies Accompanying the major fuel used were key innovations/ technologies that were part of the Long Wave. These techno­ logies, discussed in this study, were

• Locomotives/telegraph/telephone • Automobiles • Aviation • Integrated circuits/electro-optics (telecommunicat ions) These innovations were basically "communications tech­ nologies" that enabled business to expand rapidly. They enabled businessmen to send information and data, and goods and services, more rapidly and farther. The last innovation listed, combined with revitalization of aviation through applications of new technologies, is likely to provide the basis for the next upward wave. In addition, use of integrated circuits (computers, telephone equipment) will greatly improve efficiences of the existing industrial base. A characteristic of each innovation/technology is that it goes through a typical life-cycle of maturation, from startup, then fast growth, to topping out or saturation, of 50 to 60 years. At the final stage, industries experience the following: • Increasing use of debt and overcapitalization • Excessive replacement of labour by capital equipment • Rising labour costs and declining productivity in spite of investment in machinery and equipment

267 • Increasing bureacratio control and overhead costs per unit of production • Mergers and concentration of the industry • Top management controlled by financiers and solicitors (lawyers) and not easily accessible by line profes­ sionals (eg, geologists and mining engineers) The mining industry underwent a similar pattern at the turn of the last century.

The Mineral Industries The minerals industries have responded to the ebb and flow of technological and social change over time. From the early 19th century to the present—the period of study for this report--the minerals industries adopted and adapted new in- ventions/innovations to their use. The rate of innovation in mining slowed toward the end of the last century. In general, the mineral industries have not been an originator of inven­ tions. The major exception to this observation was the deve­ lopment of the flotation process, first demonstrated for graphite in 1877 in Germany, then for sulphides in 1885 in Australia, and finally, differential flotation was developed for lead and zinc ores in 1922 in the United States. This technology had the single greatest impact on the economics of processing ores, thus keeping metal prices relatively low on average and was a factor in expanding markets for metals and minerals. The flash furnace developed in the 1960s greatly reduced processing costs but it did not have the same impact on exploration as did flotation. Mining reached its most dynamic innovative period toward the end of the last century. Prior to 1850, mining had not changed for hundreds of years. Beginning in about 1850 industry as a whole began to expand with the extension of railroads. The demand for metals and minerals grew enormously with increasing use of machinery and new inventions and inno-

268 vations in industry as a whole. The minerals industries ex­ panded at double digit annual compound growth rates. During the last fifty years of the 19th century the industry attracted talent and risk capital (as opposed to debt capital). Since 1790, 50 major inventions/innovations have improved the productivity of the minerals industries; half of these had been put in place by 1870. By the end of the 19th century, the structure of the mining industry was developing along lines similar to other industrial enterprises of the period, as noted above, and the rate of innovation and technological change in the minerals industries slowed toward the end of the 19th century. The industry has contributed little to its revitalization. As noted, the world’s societies and industry experienced periods of change and economic expansion. The mining industry and mineral exploration benefitted from these historical periods of intense creativity and rapid business expansion by providing raw materials at reasonable prices without inter­ ruptions, save for times of political blockades and war. But it is also apparent that mining in the last 90 years has been an observer rather than an innovator. The industry has used new technologies developed by others, and then not extensively because of innate conservatism of the industry, rather than developing new technologies internally. In this writer’s opinion the reason for this is that the active part of mining operations are located in isolated areas far from the ferment of society. Ideas are slow to develop and, if they do, bur­ eaucratic constraints often deter further advancement. Head­ quarters' personnel are exposed to new ideas and change, but headquarters are not the heart of the mining business. Moreover, because of organizational structures, innovation at the mines is lessened because the reward of advancement to chief executive officer can be lacking.

Mineral Exploration In contrast to the experience of the mining/minerals in­ dustry, advances in geologic theory and mineral exploration

269 have continued from the end of the last century when geology as applied to ore deposits and exploration began to develop. This study shows that major contributions to geologic theory have expanded and contracted in rhythm to the Long Wave. Similarly, major citations in exploration geochemistry literature have followed the pattern of the Long Wave. The discovery of economic mineral deposits is the result of creative geologic thinking and the application of new inno­ vative tools, for example, geochemistry, geophysics, and remote sensing. Mineral exploration and successful discoveries have ebbed and flowed with the Long Wave. Here too, a learning system was at work. Stimulus was also given exploration by raw materials demands from expanding economic activity. Data gathered on discoveries for metals in Canada and Australia show this pattern. Discoveries of uranium deposits also show a rise and fall in success rates that follows the long wave in part. The reason that coincidence of success rates and the Long Wave is lacking is that the uranium industry is unique. It began actively with a single market, atomic weapons, and then shifted into a second single market, nuclear power. In both markets government interest and market control were and are strong. Since 1951, economic mineral deposit discoveries have been made with increasing use of technology. Geophysics began to play a dominant role as shown in the table below.

270 Table 32 CHANGES IN DISCOVERY METHODS IN CANADA (P ercent) 1951-1964 1965 -1976 No. % No. %

Prospecting 9 31% 5 10% Geology 4 14 11 23 G eophysics 15 52 26 55 Geochemistry 1 — 5 11

T otal 29 100* 47 100*

Discoveries/yr 2. 1 3. 9 ♦ Totals do not add due to rounding Source: Derry and Booth (1970,1977) By 1967, geophysics, particularly airborne geophysics, had made inroads into traditional prospecting, and also geology, as a reconnaisance tool. The type of mineral deposit, or model, being explored for has changed over time. For example, at the turn of this cen­ tury bulk mining and processing techniques made possible economic mining of low grade copper ores. The theory of formation of porphyry copper deposits held the attention of explorationists for nearly 80 years. New technologies such as in situ leaching and bacterial leaching could change the economics of mining by reducing costs and hence the type of deposits searched for. At the same time, geologic thinking is undergoing major scientific revolution as a result of the theory of plate tec­ tonics. From this theory has evolved new concepts of the formation of ore deposits. Underwater observations of sulphide fumeroles are causing a major re-evaluation of old theories.

271 The Future of Mineral Exploration and the Mineral Industries The world's economies turned down in about 1968 as a result of social change, which was characteristic of previous waves—anti-technology, anti-business and generally negative. Political responses to the economic downturn have, until recently, tried to prop up old industries and increase gov­ ernment involvement in social programmes. Business response has been largely to continue to invest in the old technologies. Mining is no exception. However, society is currently changing and the basis for the next upward wave in economic activity is being formed. But social and political attitudes are not yet set for this next expansion. If a study of the previous waves' social, technological and economic changes can be used as an indicator, the beginning of an upward trend should be evident in the late 1980s to early 1990s. But the turn will not be dramatic. It will be subtle. The period of rapid expansion will likely commence in the late 1990s. Between now and the next 15 years most of the basic innovations will have been introduced that will be responsible for the upward Long Wave. What the innovations might be and how many of them there will be is difficult to guess. However, some innovations that will be responsible for the next upward wave and economic expansion are identified in this study. In my view, the innovations that will be the basis for the next expansion are the chip and opto-electronics (for industrial efficiency and telecommunications), and a new generation of aircraft. In addition, one can expect sub­ stantial improvements in automobiles that will lower their cost to consumers together with declining costs of fuels. These innovations, and others not now known, will be the dynamos for broadening markets. Again, they will be "communications" technologies. The impact on society and on some of the world's economies will be enormous and positive. The mineral in­ dustries and mineral exploration will participate in the resulting economic expansion.

272 The expansion will not be a repeat of the last expansion, that is, it will not be principally based on the same techno­ logies as the last upward wave. But, as in the past upward waves, some of the former technologies will not completely disappear any more than did railroads when automobiles appeared, and automobiles when aircraft appeared. The old telecommunications technologies will still be around but in d rastically new format. As a result, neither the minerals industry nor mineral exploration will disappear. On the contrary, they will con­ tinue to supply old technologies with raw materials. The difference will be that new technologies will begin to dominate the economies in some 10 to 15 years hence and will not require the same raw materials or the former raw materials in the same quantities. These new industries will also stimulate demand for traditional metals and minerals. And just as new com­ munications media changed the structure of society and organi­ zations in the past, so will telecommunications, micro­ computers, and air transport change the way society lives and conducts its business in the future. Mineral exploration is likely to undergo fundamental changes. First, a major scientific revolution, plate tec­ tonics, is changing concepts of ore deposition, and the ideas and tools used by explorationists will also change. Second, use of computers and graphics for modelling will extend the creativity and orginality of the mine finder. The pattern of past upward Long Waves suggests that next Long Wave will be an exciting time for mineral exploration. XI APPENDICES

A. SUPPLEMENTARY TABLES B. SOCIAL CHANGE IN BRITAIN, THE UNITED STATES AND JAPAN

275 ♦

Table A-l THE 1802 CYCLE Innovation Invention Power generator 1849 1820 Electromedical stimulator 1846 1831 Deep sea cable 1866 1847 Electricity production 1800 1708 Insulated conductors 1820 1744 Arc lig h ts 1844 1810 Pedal bicycle 1839 1818 Rolled rails 1835 1773 Rolled wires 1820 1773 Puddling furnace 1824 1783 Blast furnace with coke 1796 1713 Crucible steel 1811 1740 Locomotives 1824 1769 Telegraph 1833 1793 Lead chamber process 1819 1740 Pharraeutical industries 1827 1771 Quinine industries 1820 1790 Hard rubber 1852 1832 Portland cement 1824 1756 Potassium chloride 1831 1777 Photography 1838 1727 Source: Mensch (1979)

277 ♦

Table A-2 THE 1857 CYCLE Innovation In v en tio n Thomas steel 1878 1855 Safety matches 1866 1805 Aniline dyes 1860 1771 Cooking fat 1882 1811 Indigo synthesis 1897 1880 Sodium carbonate 1861 1791 Aluminium 1887 1827 Refigeration 1895 1873 Rayon 1890 1857 Gas heating 1875 1780 Oxyacetylene welding 1892 1862 Dynamite 1867 1844 Chemical fertilizer 1885 1840 Preservatives 1873 1839 Electrolysis 1887 1789 A ntito x in 1894 1877 Chloroform 1884 1831 Idioform (antiseptics) 1880 1822 Veronal (barbiturate) 1882 1862 A spirin 1898 1853 Phenazone (synthetic pain­ killer) 1883 1828 Baking powder 1856 1764 Plaster cast 1852 1750 Mass production of sulphuric acid 1875 1819 Synthetic alkaloid (cocaine) 1885 1844 Synthetic alkaloid (chinoline)1880 1834 High-grade steel 1856 1771 Electrodynamic measurement 1846 1745 Lead battery 1859 1780 Double armature dynamo 1867 1820 Commutator 1869 1833 Cylinder arraatured motor 1872 1785 Arc lamp 1873 1802 Incandescent light bulb 1879 1800 Electric locomotive 1879 1841 Electric heating 1882 1859 Cable construction 1882 1820 Telephone 1881 1854

278 Table A-2 (concluded)

Innovation Invention

Steam turbine 1884 1842 Water turbine 1880 1824 Transformer 1885 1831 Resistance welding 1886 1841 Arc welding 1898 1849 Induction smelting 1891 1860 M eters 1888 1844 Electric railroad 1895 1879 Long-distance telephoning 1910 1893 High tension insulation 1910 1897 Gasoline motor 1886 1860 Source: Mensch (1979) Table A-3 THE 1921 CYCLE Invention Innovation Nylon, perlon 1927 1938 P e n ic illin 1922 1941 Polyethylene 1933 1953 Power steering 1900 1930 Radar 1887 1934 Radio 1887 1922 Rockets 1903 1935 S ilic o n e s 1904 1946 Streptomycin 1921 1944 Sulzer loom 1928 1945 Synthetic degergents 1886 1928 Cyrocompass 1827 1909 Synthetic light polariser 1857 1932 T elev isio n 1907 1936 "Terylene” polyster fibre 1941 1955 No-knock gasoline 1912 1935 Titanium 1885 1937 Transistor 1940 1950 Tungsten carbide 1900 1926 Xerography 1934 1950 Zipper 1891 1923 Automatic drive 1904 1939 Hydraulic clutch 1904 1937 Rollpoint pen 1888 1938 Catalytic cracking of petroleum 1915 1935 Watertight cellophane 1900 1926 Cinerama 1937 1953 Continuous steelcasting 1927 1948 Continuous hot strip rolling 1892 1923 Cotton picker (Campbell) 1920 1942 Cotton picker (Rust) 1924 1941 Wrinkle-free fabrics 1906 1932 Diesel locomotive 1894 1934 Fluorescent lighting 1852 1934 H elico p ter 1904 1936 Insulin 1889 1922 Jet engine 1928 1941 Kodachrome 1910 1935

280 Table A-3 (concluded)

Invention Innovation

Magnetic tape recording 1898 1937 Plexiglas 1877 1935 Neoprene 1906 1932 Source: Mensch (1979) Table A-4

WORLD COPPER PRODUCTION, 1840-1982 (Thousands of Tonnes)

1840 37.9 1875 122.4 1910 1841 41.1 1876 133.7 1911 1842 41.6 1877 143.3 1912 1843 42.9 1878 145.6 1913 1844 43.6 1879 151.9 1914 1845 45.9 1880 153.9 1915 1846 46.7 1881 163.4 1916 1847 45.5 1882 181.6 1917 1848 49.3 1883 203.0 1918 1849 47.7 1884 220.2 1919 1850 53.1 1885 229.6 1920 1851 47.8 1886 219.2 1921 1852 55.1 1887 227.2 1922 1853 50.3 1888 267.4 1923 1854 62.5 1889 264.0 1924 1855 68.8 1890 276.9 1925 1856 76.1 1891 287.2 1926 1857 74.5 1892 319.5 1927 1858 72.3 1893 303.8 1928 1859 73.6 1894 320.6 1929 1860 84.8 1895 334.6 1930 1861 85.4 1896 383.5 1931 1862 92.5 1897 412.3 1932 1863 87.0 1898 436.2 1933 1864 97.1 1899 471.0 1934 1865 95.5 1900 494.7 1935 1866 91.2 1901 526.1 1936 1867 103.8 1902 557.9 1937 1868 106.5 1903 595.4 1938 1869 116.6 1904 659.4 1939 1870 104.8 1905 706.4 1940 1871 101.8 1906 723.6 1941 1872 112.4 1907 720.8 1942 1873 103.2 1908 743.8 1943 1874 115.4 1909 827.4 1944

282 Table A-4 (Cont.)

WORLD COPPBR PRODUCTION, 1840-1982 (Thousands of Tonnes) 1945 2132 1965 5100 1946 1832 1966 5350 1947 2192 1967 5050 1948 2293 1968 5620 1949 2060 1969 6060 1950 2448 1970 6460 1951 2624 1971 6640 1952 2715 1972 6970 1953 2770 1973 7370 1954 2860 1974 7630 1955 3130 1975 7296 1956 3440 1976 7857 1957 3630 1977 7992 1958 3521 1978 7814 1959 3802 1979 7958 1960 4418 1980 7874 1961 4578 1962 4780 1963 4870 1964 5042

Source: Metallgesellschaft

283 Table A - 5 COPPER PRICES, 1854-1984 (US Cents per Pound)

C urrent 1984 C urrent 1984 cents/lb. cents/lb. c e n ts /lb c e n ts /lb .

1854 22.0 215.2 1885 11.1 138.6 1855 27.0 259.8 1886 11.0 142.5 1856 27.0 271.5 1887 11.2 139.9 1857 25.0 237.9 1888 16.7 205.6 1858 23.2 261.3 1889 13.7 178.7 1859 22.0 245.2 1890 15.7 203.8 1860 22.2 251.1 1891 12.6 163.2 1861 19.1 227.2 1892 11.5 154.7 1862 25.7 261.6 1893 10.7 141.6 1863 32.9 254.0 1894 9.6 136.2 1864 46.6 255.6 1895 10.8 154.4 1865 36.2 206.9 1896 10.9 159.9 1866 31.7 192.5 1897 11.3 164.5 1867 25.1 163.7 1898 12.0 169.0 1868 23.6 158.0 1899 17.6 242.1 1869 23.6 164.1 1900 16.2 212.9 1870 20.6 161.2 1901 16.1 210.7 1871 22.6 184.2 1902 11.6 148.1 1872 33.0 257.1 1903 13.2 167.1 1873 29.0 231.1 1904 12.8 159.8 1874 23.2 194.5 1905 15.6 189.5 1875 22.5 202.2 1906 19.3 229.6 1876 21.0 202.2 1907 20.0 228.5 1877 18.6 186.2 1908 13.2 152.0 1878 16.5 192.5 1909 13.0 145.4 1879 17.1 200.8 1910 12.7 137.2 1880 20.1 213.2 1911 12.4 134.7 1881 18.1 186.3 1912 16.3 138.3 1882 18.5 182.0 1913 15.3 158.4 1883 15.9 166.5 1914 13.6 139.2 1884 13.9 158.9 1915 17.3 170.3

284 Table A-5 (Cont.)

COPPER PRICES. 1854-1984 (US Cents per Pound)

C urrent 1984 C urrent c e n ts/lb . c e n ts /lb . c e n ts /lb 1916 27.2 253.3 1946 13.8 1917 27.2 205.0 1947 21.0 1918 24.6 159.6 1948 22.0 1919 18.7 117.9 1949 19.2 1920 17.5 97.3 1950 21.2 1921 12.5 81.3 1951 24.2 1922 13.4 94.5 1952 24.2 1923 14.4 96.6 1953 28.8 1924 13.0 88.2 1954 29.7 1925 14.0 93.5 1955 37.5 1926 13.8 91.6 1956 41.8 1927 12.9 87.8 1957 29.6 1928 14.6 98.4 1958 25.8 1929 18.1 121.8 1959 31.2 1930 13.0 89.7 1960 32.0 1931 8.1 61.6 1961 29.9 1932 5.6 47.4 1962 30.6 1933 7.0 60.6 1963 30.6 1934 8.4 67.7 1964 32.0 1935 8.6 68.7 1965 35.0 1936 9.5 75.7 1966 36.2 1937 13.2 101.0 1967 38.2 1938 10.0 77.5 1968 41.8 1939 8.4 66.2 1969 47.5 1940 11.3 87.5 1970 57.7 1941 11.8 85.1 1971 51.4 1942 11.8 75.8 1972 50.6 1943 11.8 70.7 1973 58.9 1944 11.8 69.0 1974 76.6 1945 11.8 67.3 1975 63.5

285 Table A-5 (Concluded) COPPER PRICES, 1854-1984 (US Cents per Pound)

C urrent 1984 Current 1984 c e n ts/lb . c e n ts/lb . c e n ts /lb . c e n ts /lb

1976 69.6 117.7 1981 84.2 96.4 1977 65.8 105.2 1982 72.8 78.6 1978 65.5 97.5 1983 76.5 79.6 1979 92.3 126.4 1984 66.9 66.9 1980 101.4 127.0

286 *

Table A-6

WORLD PRODUCTION OF ALUMINIUM, 1860-1983 (Thousands* of Tonnes) 1860-1884 0.5-2.3 t 1915 78 1950 1507 1916 104 1951 1808 1885 13.3 1917 124 1952 2032 1886 16.4 1918 131 1953 2545 1887 26.1 1919 133 1954 2820 1888 39.3 1889 70.9 1920 126 1955 3105 1921 78 1956 3333 1890 175 1922 92 1957 3389 1891 333 1923 138 1958 3547 1892 487 1924 169 1959 4086 1893 716 1894 1240 1925 181 1960 4543 1926 195 1961 4557 1895 1427 1927 220 1962 4960 1896 1790 1928 256 1963 5401 1897 3394 1929 282 1964 6055 1898 4034 1899 5898 1930 269 1965 6586 1931 219 1966 7209 1900 7.3 (000 t) 1932 154 1967 7933 1901 7.5 1933 142 1968 8515 1902 7.8 1934 171 1969 9459 1903 8.2 1904 9.7 1935 258 1970 10257 1936 366 1971 10936 1905 12.8 1937 493 1972 11649 1906 19.2 1938 589 1973 12707 1907 21.6 1939 687 1974 13825 1908 14.1 1909 31.6 1940 783 1975 12705 1941 1037 1976 13083 1910 44.4 1942 1394 1977 14760 1911 48 1943 1949 1978 14767 1912 58 1944 1710 1979 15175 1913 66 1914 69 1945 870 1980 16050 1946 774 1981 17697 1947 1051 1982 13691 1948 1225 1983 13521 1949 1257 * Tonnes used from 1860-1899; thousand tonnes after 1899. Source: Aluminum Association

287 Table A-7 ALUMINIUM PRICES , 1895-:1983 (US Cents per Pound)

irre n t 1984 C urrent 1984 its/lb. cents/lb. cents/lb. c e n ts /lb 1895 58.6 839.4 1925 27.2 181.5 1896 50.7 744.0 1926 22.4 148.8 1897 38.8 564.7 1927 25.4 173.0 1898 30.6 430.9 1928 23.9 160.9 1899 32.7 449.9 1929 23.9 160.8 1900 32.7 429.8 1930 23.8 164.2 1901 33.0 433.7 1931 23.3 176.9 1902 33.0 512.6 1932 23.3 197.2 1903 33.0 417.9 1933 23.3 201.6 1904 35.0 437.1 1934 21.6 173.9 1905 35.0 425.2 1935 20.5 163.5 1906 35.8 425.3 1936 20.5 163.1 1907 45.0 514.4 1937 20.1 153.4 1908 28.7 330.4 1938 20.0 154.8 1909 22.0 245.3 1939 20.0 157.2 1910 22.2 240.1 1940 18.7 144.8 1911 20.1 217.9 1941 16.5 105.7 1912 22.0 230.5 1942 15.0 89.6 1913 23.6 247.7 1943 15.0 89.6 1914 18.6 190.4 1944 15.0 87.7 1915 34.1 335.9 1945 15.0 85.5 1916 60.7 565.2 1946 14.0 71.3 1917 51.2 386.1 1947 14.0 63.1 1918 33.6 217.9 1948 14.7 61.9 1919 32.1 202.5 1949 16.0 67.9 1920 30.6 170.1 1950 16.7 69.7 1921 21.2 137.8 1951 18.0 70.3 1922 18.6 131.5 1952 18.4 71.0 1923 25.4 170.4 1953 19.7 74.8 1924 27.0 183.3 1954 20.2 75.1

288 Table A-7 (Cont.) ALUMINIUM PRICES , 1895- 1983 (US Cents per Pound)

C urrent 1984 C urrent 1984 c e n ts /lb . c e n ts /lb . c e n ts /lb . e e n ts /1 1955 21.9 80.2 1970 28.7 69.2 1956 24.0 85.1 1971 29.0 67.6 1957 25.4 86.1 1972 26.4 60.4 1958 24.8 83.9 1973 25.0 52.9 1959 20.6 68.3 1974 34.0 66.4 1960 26.0 84.8 1975 39.8 70.8 1961 25.5 82.2 1976 47.8 80.9 1962 23.9 83.1 1977 51.3 82.0 1963 22.6 70.6 1978 53.1 79.1 1964 23.7 72.9 1979 59.4 81.3 1965 24.5 73.8 1980 69.6 86.6 1966 24.5 71.4 1981 76.0 87.0 1967 25.0 70.6 1982 76.0 82.1 1968 25.6 69.3 1983 78.0 84.2 1969 27.2 70.3

Source: Alumi num Association Table A-8

WORLD GOLD PRODUCTION, 1840-1983 (Tonnes)

1840 8.2 1875 146.7 1910 685.0 1841 8.4 1876 166.0 1911 695.0 1842 8.8 1877 171.5 1912 701.4 1843 9.3 1878 179.2 1913 692.0 1844 9.2 1879 163.7 1914 660.7 1845 22.5 1880 160.2 1915 705.2 1846 22.7 1881 155.0 1916 683.4 1847 22.3 1882 148.9 1917 631.1 1848 36.4 1883 141.7 1918 573.2 1849 81.5 1884 143.4 1919 550.4 1850 94.8 1885 155.2 1920 507.1 1851 107.2 1886 149.3 1921 496.4 1852 198.3 1887 159.1 1922 480.0 1853 234.0 1888 165.8 1923 553.0 1854 191.8 1889 182.2 1924 586.0 1855 203.3 1890 181.2 1925 592.0 1856 222.2 1891 188.5 1926 600 1857 200.6 1892 204.8 1927 604 1858 187.6 1893 235.7 1928 578 1859 187.9 1894 271.8 1929 581 1860 164.5 1895 305.4 1930 604 1861 171.2 1896 302.7 1931 645 1862 162.2 1897 357.4 1932 697 1863 161.0 1898 431.7 1933 707 1864 170.0 1899 461.5 1934 724 1865 180.9 1900 383.0 1935 775 1866 182.2 1901 392.7 1936 861 1867 156.5 1902 445.5 1937 932 1868 165.1 1903 489.8 1938 1006 1869 159.8 1904 522.7 1939 1071 1870 160.8 1905 568.2 1940 1236 1871 161.0 1906 602.4 1941 1122 1872 149.8 1907 621.4 1942 986 1873 144.5 1908 666.6 1943 774 1874 136.1 1909 683.2 1944 687

290 Table A-8 (Cont.)

WORLD GOLD PRODUCTION, 1840-1983 (Tonnes)

1945 657 1965 1282 1946 670 1966 1284 1947 688 1967 1243 1948 701 1968 1257 1949 731 1969 1260 1950 751 1970 1288 1951 735 1971 1250 1952 757 1972 1188 1953 755 1973 1138 1954 797 1974 1027 1955 840 1975 1198 1956 871 1976 1212 1957 905 1977 1208 1958 934 1978 1242 1959 1002 1979 1243 1960 1047 1980 1255 1961 1080 1981 1278 1962 1155 1982 1328 1963 1205 1983 1337 1964 1250

Source: US Bureau of Mines #

Table A-9

GOLD PRICES IN LONDON, 1840-1984 (US Dollars per Ounce)

Current 1984 Current 1984 $/oz. Dollars'2 $/oz. Dollars 1840 20.67 231.02 1870 23.75 186.39 1841 20.67 238.40 1871 23.09 188.73 1842 20.67 268.41 1872 23.23 181.52 1843 20.67 291.86 1873 23.52 187.99 1844 20.67 285.17 1874 22.99 193.31 1845 20.67 264.61 1875 23.75 213.99 1846 20.67 264.61 1876 23.05 222.49 1847 20.67 243.32 1877 21.66 217.40 1848 20.67 268.41 1878 20.84 243.73 1849 20.67 268.41 1879 20.67 243.32 1850 20.67 260.60 1880 20.67 219.90 1851 20.67 264.61 1881 20.67 213.40 1852 20.67 249.84 1882 20.67 203.88 1853 20.67 226.58 1883 20.67 217.13 1854 20.67 202.77 1884 20.67 236.88 1855 20.67 199.52 1885 20.67 258.79 1856 20.67 208.43 1886 20.67 268.41 1857 20.67 197.23 1887 20.67 258.79 1858 20.67 235.39 1888 20.67 255.25 1859 20.67 231.10 1889 20.67 270.36 1860 20.67 235.39 1890 20.67 268.41 1861 20.67 246.54 1891 20.67 268.41 1862 23.42 239.06 1892 20.67 278.77 1863 30.01 239.86 1893 20.67 274.33 1864 41.96 231.14 1894 20.67 294.16 1865 32.45 186.84 1895 20.67 296.89 1866 29.12 177.27 1896 20.67 304.15 1867 28.57 186.84 1897 20.67 301.69 1868 28.88 193.91 1898 20.67 291.86 1869 27.49 193.32 1899 20.67 285.17

292 ♦

Table A-9 (Cont.) GOLD PRICES IN LONDON, 1840-1984 (US Dollars per Ounce)

Current 1984 „ C urrent 1984 $/oz. D ollars^ $/oz. D o llars 1900 20.67 272.33 1930 20.56 142.37 1901 20.67 272.33 1931 20.93 159.52 1902 20.67 264.61 1932 20.67 175.57 1903 20.67 262.43 1933 26.42 229.45 1904 20.67 258.79 1934 34.62 280.01 1905 20.67 251.81 1935 34.79 278.68 1906 20.67 246.54 1936 34.79 278.06 1907 20.67 236.88 1937 34.73 266.38 1908 20.67 238.40 1938 34.82 270.71 1909 20.67 231.02 1939 34.23 270.39 1910 20.67 223.86 1940 32.13 249.62 1911 20.67 225.21 1941 34.00 248.98 1912 20.67 217.13 1942 34.00 218.53 1913 20.67 214.63 1943 34.00 204.23 1914 20.86 214.14 1944 34.00 199.36 1915 20.18 199.22 1945 34.74 198.54 1916 20.18 188.40 1946 34.74 192.47 1917 20.18 152.33 1947 34.74 156.89 1918 20.18 131.34 1948 34.74 146.74 1919 19.85 125.57 1949 45.56 194.41 1920 20.67 115.21 1950 34.66 145.04 1921 20.51 133.73 1951 34.66 135.81 1922 20.60 145.72 1952 34.66 134.11 1923 20.57 138.37 1953 34.66 132.13 1924 20.59 140.25 1954 34.98 131.54 1925 20.53 137.50 1955 34.96 128.65 1926 20.56 136.86 1956 34.97 124.79 1927 20.56 140.39 1957 34.88 120.38 1928 20.56 138.99 1958 35.04 119.03 1929 20.56 138.73 1959 35.04 116.48

293 Table A-9 (Concluded)

GOLD PRICES IN LONDON, 1840-1984 (US Dollars per Ounce)

Current 1984 „ Current 1984 $/oz. Dollars^ $/oz.1 Dollars 1960 35.24 115.16 1975 159.44 284.47 1961 35.24 114.16 1976 124.84 211.72 1962 34.94 111.16 1977 148.11 237.35 1963 35.03 109.80 1978 193.36 288.48 1964 35.01 108.05 1979 307.82 422.74 1965 35.07 105.91 1980 613.37 771.00 1966 35.07 102.54 1981 459.72 527.75 1967 35.20 99.98 1982 375.79 406.98 1968 38.72 105.26 1983 424.18 459.39 1969 41.01 106.13 1984 300.00 300.00 1970 35.83 87.93 1971 40.63 94.48 1972 58.35 133.71 1973 106.38 225.77 1974 150.51 293.54

Notes: 1. Converted from to $ at average exchange rates for th e y ea r. 2. Mid-1984 US Implicit Price Deflator. Table A-10

WORLD PRODUCTION OF VANADIUM ORES, CONCENTRATES AND SLAGS, 1931-1983 (Tonnes of Contained Vandium) 1931 862 1960 6434 1932 666 1961 8050 1933 54 1962 7520 1934 154 1963 7184 1964 8403 1935 554 1965 9970 1936 975 1966 10308 1937 1893 1967 10484 1938 2590 1968 14776 1939 2909 1969 17509 1940 3024 1970 18803 1941 2774 1971 18604 1942 3865 1972 18366 1943 4384 1973 19649 1944 2753 1974 18840 1945 2947 1975 25836 1646 1289 1976 28377 1947 1526 1977 29813 1948 1486 1978 30598 1949 1858 1979 33858 1950 2189 1980 34738 1951 3002 1981 35103 1952 3445 1982 33122 1953 3639 1983 29719 1954 3510 1955 3626 1956 3838 1957 3897 1958 3839 1959 4828

Source: US Bureau of Mines Table A-10 US VANADIUM PRICES , 1931 -1983 (Cents per Pound Vanadium)

Current 1984 Current 1984 c e n ts /lb . cen ts c e n ts /lb . cen ts 1931 35 267 1960 246 804 1932 35 297 1961 246 797 1933 35 304 1962 246 783 1934 35 283 1963 246 771 1964 214 660 1935 35 280 1936 57 456 1965 196 592 1937 109 836 1966 217 634 1938 109 847 1967 241 685 1939 109 861 1968 170 462 1969 268 694 1940 109 788 1941 109 702 1970 437 1072 1942 140 841 1971 300 701 1943 140 821 1972 270 619 1944 140 800 1973 270 573 1974 378 740 1945 140 716 1946 153 691 1975 389 694 1947 153 646 1976 389 659 1948 153 646 1977 426 630 1949 153 653 1978 514 766 1979 339 466 1950 153 640 1951 163 639 1980 354 445 1952 169 654 1981 352 404 1953 176 671 1982 350 379 1954 238 895 1983 350 364 1955 238 712 1956 238 821 1957 246 849 1958 246 836 1959 246 818

Source: US Bureau of Mines 2.2 3.0 0.1 4.1 0.1 0.7 0.1 1.6 2.1 2.2 0.1 6.2 0.1 0.9 0.3 40.0 36.8 25.0 15.0 156.0 Reserves o.oe 0.04 0.40 45.0 0.32 0.15 0.12 3.9 0.32 0.17 0.25 0.1 0.30 0.17 0.8 0.19 0.20 0.09 0.20 0.11 0.30 0.10 1U308 t (000) - - 1949 1949 1950 0.11 1.8 1950 0.05 1949 1950 1950 1950 1950 1950 1952 0.15 1950 o.os 0.4 1951 Disc. 19521953 0.51 0.22 8.2 0.2 1953 0.30 0.8 1953 1952 1953 1953 0.10 1954 Date 1954 0.09 5.8 1954 0.30 0.1 1955 1953 0.11 1954 0.09 7.0 France Austral la Austral USA Niger Canada Canada Canada USA Canada 1951 0.09 Canada 1951 Canada Austra1ia Canada Canada Canada Canada Canada Canada USA CanadaCanada 1954 1954 0.18 0.10 0.1 8.4 Canada Australia 1954 0.12 0.1 Canada Canada Sask State/ HA Australia NM USA Sask Canada NWT Sask Ont NM NM USA Sask Sask Sask Sask Os lnd Os UT NT Ont Ont Canada Ont Canada NWT Ont Provlnce Country Table A-12 Location Beaverlodge Bancroft Akouta Velleret Beaverlodge Sask Kamloops BC Celler France 1950 0.15 Elliot Elliot Lake Beaverlodqe Beaverlodge Beaverlodge Beaverlodge Elliot Lake Elliot Golden CO Beaverlodge Elliot Lake Elliot Moab Burbrldge Burbrldge Lake Great Great Slave Lk NWT LISTED CHRONOLOGICALLY Pierre-Plantees France Radium Hill Radium Rum JungleRum NT Ace Group.Ace Beaverlodge Deerhorn Lake NordicLake Lake Elliot Ont Panel Ambrosia Hidden Hidden Slendown Muddy River UT USA Uranium City Uranium Beaverlodge Sask Span. Span. American Snowdrift Alco Jackpile Mine Name Gretta Beaverlodge Sask WORLD URANIUM DISCOVERIES URANIUM BY RESERVES AND WORLD GRADE Reserve Oil Oil MineralsReserve 6 Canyon Poison Eldorado ML Eldorado Rexspar UML Rexspar Australian Australian ACC Radior UML Radior Rix Athabasca Rix ML Black Bay Company Company Name Black Black ML Bay Lake Lake Cinch ML Ridley Ridley UML Stanleigh Stanleigh UML Nesbitt Nesbitt ML LaBine Cenex Cenex Ltd. AACC Utex Utex Exploration Canadian Dyno ML Big Wsh Indian UT USA Eldorado UML Eldorado Ranchers Ranchers Exploration 2 Small Pry CCA CCA 4 RTZ RTZ 1 Mary Kathleen Comi nak Comi Consol-Zinc Consol-Zinc Pty Cotter Schwartzwalder CCA 3 Homestake-UNC Mineral Mineral Resources Corp. Dolores Dolores Bench Northspan UML Northspan UML 1 Amalgamated Rare Barth Anaconda Northspan UML 3 CCA 2 BancroC t BancroC Bancroft Cayzor Cayzor Athabasca ML Northspan Northspan UML 2 Gunnar Gold Gunnar Gold ML

297 3.0 3.8 7.5 2.9 8.0 7.1 5.0 7.0 4.0 9.1 10.0 10.5 20.0 13.0 52.0 17.0 20.0 15.8 50.0 70.0 (000) t (000) 190.0 100.0 Reserves 0.11 0.07 0.15 5.0 0.12 0.6 0.11 0.10 0.25 0.14 0.07 0.12 4.2 0.25 0.35 2.10 0.25 0.11 0.10 4.4 0.08 0.5 0.50 0.18 10.0 0.40 0.85 85.0 0.60 21.0 0.003 0.18 8.0 0.28 %U308 Disc. Date 1955 0.11 8.0 1955 1956 1956 0.60 1958 0.20 15.0 1955 1957 1960 1955 1958 1965 0.30 1971 0.39 207.4 1963 1966 0.30 1969 1970 1970 0.25.0 71 1968 1969 0.24 1972 1968 1968 0.25 1968 1972 1967 1968 Country Canada 1955 Canada 1955 Canada Canada USA USA USA Austra11a 1970 0.33 25.0 Canada 1955 Gabon C.A.R. Niger USA Australia 1970 Austral la Austral Gabon Niger Gabon USA Namibia Austra1 la Austra1 1970 0.05 0.1 Austral la Austral 1970 0.25 USA Gabon USA Australia State/ Bask Canada Ont Canada 1955 NWT Canada Ont Canada 1955 Ont Ont Canada Ont NT NT SA Austra1ia NT NM NT NT Sa9k Canada 1972 WA WY WY NT Australia 1967 WY USA WY USA TX WY Location Provlnce Table A-12 (Cont.) Elliot LakeElliot Ont Elliot Lake Elliot Blind RiverBlind Ont Canada 1955 Elliot LakeElliot Ont Elliot Lake Elliot Aquarius Ont Bancrof t Bancrof Elliot Lake Elliot Elliot LakeElliot Ont Canada Shirley Shirley Basin Fremont CityFremont WY Lake Lake Frome Spokane Shirley Shirley Basin Douglas Mt. Mt. Taylor Roxby Roxby Downs SA Rabbit Lake Rabbit Nabarlek Yeellrrle WA Australia 1972 0.15 50.6 Gas Gas Hills Wyoming Mine Mine Name Petrotomlcs Lucky MC Lucky Lake Marian Lake Shirley Shirley Basin Bakouma Arl it Arl Rabbit LakeRabbit Lake Rabbit Ross ing Ross Stancan Mounana Miloulonngon Midni te Midni Highland Big Eagle Big Koongarra Raven Boy indz 1* indz Boy Akouta Beverly Oklo Morton Morton Ranch O' Hearn O' Jabiluka-2 Company Company Name Faraday Pronto UHL Pronto Rio Algom Nordic Algom Nordic Rio ML French Consortium French RT7. 2 RT7. Exxon Exxon 2 Petromln NL Petromln Peko-Wallsend Pathfinder MC Pathfinder 1 Buckles Buckles UHL Hllllken Hllllken HL 2 Rayrock Rayrock ML CEA CEA 9 Gulf Gulf Minerals 1 Noranda Can Met Can Met ML/Denison Hill Iken HL 1 Iken Hill Pathfinder MC Pathfinder MC 3 CEA 12 Hanger Uranium M. Hanger Pathfinder Pathfinder MC 2 CEA CEA 6 CEA CEA 5 Gulf Gulf 8 Minerals Queensland Mines Queensland 1 Rio Algom Quirke Rio ML Dawn Dawn Mining CEA Queensland Queensland Mines 2 Ranger Mobil Oil Oil Mobil 3 Stanrock Stanrock UHL Aqnew Aqnew UHL Lake CEA CEA / Getty/Skelly UNC Western Mining Western Mining 1 Western Mining Western Mining 2 Getty-Pan Continental Gulf Gulf Minerals 3

298 3.0 1.0 1.0 4.6 2.5 1.2 3.5 3.0 0.5 3.0 3.0 6.5 2.3 9.7 0.6 0.6 0.8 20.0 12.5 34.0 50.0 13.5 (000) t (000) 0.12 0.07 0.10 0.08 3.2 0.35 0.07 0.08 0.08 0.08 2.90 60.4 0.08 1.0 0.12 0.30 0.20 0.12 5.0 0.70 0.08 2.0 0.50 0.07 0.08 13.2 0.15 0.40 70.0 0.08 0.8 0.06 7.2 0.08 0.30 IU308 1975 0.31 1975 1975 1975 1975 1975 0.15 9.0 1975 1975 1975 1975 1975 1974 15.5 1975 1975 1976 0.11 1976 0.30 0.1 1976 0.25 1974 0.50 5.0 1974 1975 1976 1976 1976 0.18 1976 1976 1976 1976 0.15 1976 1976 1976 1976 Disc. Reserves Date Braz1l USA USA USA USA USA USA Niger Canada Canada USA Canada USA 1975 Gabon Canada USA 1974 0.08 1.0 USA Greenland Niger 1975 USA Labr Labr Canada BC NM USA CO Sask Sask NWT Canada 1974 0.11 0.05 NM USA Sask Canada 1975 TX USA TX TX USA TX WY WY TX USA NV TX TX USA 1973 TX State/ 111lnaussaq Four Corners Four Duvall CntyDuvall TX Rabbit Rabbit Lake Duddrldge Lk Duddrldge Falls City Falls Key Key Lake Goosebay Goosebay Talahasse Talahasse Cr. Wind R. Wind R. Basin Mariano Mariano Lake NM Wlckenberg AZ USA Grants Wyoming McDermitt Location Province Country Table A-12 (Cont.) Imouraren Zamzow Panna Panna Marla Karnes Co. AmorInopolIs Golas Brazil Campos Campos Belos Golas Burns TX Sonarem Algeria Nose Nose Rock Pa langana Pa TX USA Longoria Michel In Michel Horseshoe Lake Rabbit Collins Collins Bay Afosto-Est Nlqer 1975 HoiIday Brun 1 Brun J.J. J.J. No. 1 NM USA Johnny M NM USA Mine Name l l Hope Intercont. Energy 2 Intercont. Intercont. Energy Intercont. 1 Pawnee Key Key Lake Ranchers Ranchers Exploration Rocky Mt Rocky Mt Energy/Mono Pow Creek Bear WY USA Chevron Chevron Resources Brinex Brinex 2 CEA 1 CEA 1 (France) Consolidated Rexspar Birch Island Lake Blizzard Placer Amex Placer Minerals Minerals Exploration 2 Mobil Oil Oil Mobil 1 Brinex Brinex 1 Kitts Cyprus Cyprus Mines HNG HNG Oi1/Rancher's CEA 1 1 CEA 1 Mobil Oil Mobil 2 Phillips Phillips Pet Am Am Nucl/TVA Peach Gulf Gulf Minerals 5 CEA CEA 10 CEA 1 l CEA 1 Akouta Getty Greenland Geol. Surv. Maureen Georgetown Oslnd Australia Nuclebras Nuclebras 1 Nuclebras Nuclebras 2 Gulf Gulf Minerals 2 Creek Deer Gulf Gulf Minerals 7 CEA 8 Okelobondo Thor Thor Exploration US Steel US Steel 1 Uranium Resources Wyoming Mineral Conoco/Pioneer Conqulsta Gulf Gulf Minerals 4 Soh io/Reserve Soh Union Carbide US Steel US Steel 2 Claywest Company Company Name

299 1.0 1.0 1.0 1.5 2.7 5.0 7.0 0.9 7.8 7.7 2.0 9.0 6.5 7.5 10.04 20.0 23.7 25.0 13.6 19.0 20.0 20.0 12.5 Reserves 1.04 1.80 0.09 7.1 20.0 48.0 0.20 6.0 0.23 0.75 0.15 0.08 3.4 0.07 0.1 0.90 0.1 0.003 0.10 6.0 0.05 7.8 0.06 0.35 0.3 0.15 0.85 0.02 0.10 1983 1982 1976 1977 1.06 1976 1978 0.40 1978 1978 0.21 1978 1970 1979 1979 1979 0.10 0.5 1977 1977 1977 1979 1977 1977 19781978 8.00 1979 1979 0.12 1980 1980 1979 0.10 0.8 1978 0.11 10.0 1978 0.19 1979 0.11 1980 1978 Disc. Date IU308 t (000) Canada USA Namibia USA USA USA USA USA Canada Canada USA 1978 0.12 USA Canada Canada Canada Canada 1978+ 2.0 USA Country USA W. W. Germany 1977 0.20 0.01 W. W. Germany 1977 USA Canada P.Q. Sask Canada Sask Canada 1979 Sask NWT Canada Sask Canada AZ Sask Sask BC State/ VA USA WA USA NM WY TX USA WY WY WY OR WY USA WY USA WY Province Penn Cnty Penn Cigar Lake Cigar Rawlins Lisbon ValleyLisbon UT USA Rabbit LakeRabbit Sask Red Desert Red SE Oregon SE Pumpkin Buttes Pumpkin Red Desert Red Hydraulic Hydraulic Lk BC Baden-Baden Menzenschwand Maurice Maurice Bay Cluff Cluff Lake Sask Canada Baker Lake Baker Stevens Stevens Cnty Jeffrey Jeffrey City Ray Ray Pt. Hack's Hack's Canyon Crow Crow Butte NB USA Carbon Carbon Cnty Cluff Cluff Lake Cluff Cluff Lake Sask Canada Colorado CO Beaverlodge Blizzard Wellpinit McLean McLean Lake Bakersfleld CA USA Gayot Gayot Lake Crown Crown Pt. Juab Co.Juab UT Table A-12 (Concluded) Eagle Point Eagle Lone Gull Lone Felder Langer Heinrich Langer Pitch Big Big Indian Claude N Dawn LakeDawn Lake Keefe Sask Miracle Gills Gills Lease Topaz Cinch Cinch Lake Mine Mine Name Location 3 2 SERU Marline Oil Marline Portland GE Portland Energy Energy Fuels Home itake Home Fremont Fremont Energy Corp. Placer Amex Amex Placer 2 Asamera Oil Oil Corp. Asamera Commonwealth Commonwealth Ed. Conoco Nt-*» Joburke Expl. Nt-*» Esso MineralsEsso Midwest Lake Wyoming Wyoming Fuel Gulf Gulf 6 Minerals Amok Ltd. Amok Ltd. 1 Urangesellschaft Anaconda Anaconda 2 Exxon Exxon 1 Uranerz Expl. Uranerz Min. & Expl. 1 Tyee Tyee Resources Lake Western Western Nuclear 1 Minerals Minerals Engineering Baggs Minerals Minerals Exploration Amok Ltd. Amok Ltd. 2 Amok Ltd. 3 D Norcen US En«*ray Coro. US En«*ray Kaycee River Powder WY Atlas Minerals Minerals Exploration 1 Uranerz Expl. fc Min. Uranerz Expl. fc Canadian Occidental Canadian Company Company Name Germany Germany 1 Western Western Nuclear 2 Geo Surveys General General Mining Germany Germany 2

300 B: SOCIAL CHANGE IN BRITAIN, THE UNITED STATES AND JAPAN The following section describes historical social changes in Britain, the United States and Japan from 1848 to the present, which covers the period of Long Waves II, III, and IV; it is an historical review of social changes discussed in Chapter V. B ritain 1816 to 1848. At the beginning of this declining or stagnant period which coincided with the end of the Napoleonic wars, more than half the population of the United Kingdom was living on farms or in small villages; 15 years later the re­ verse was true. Still, those living in cities were "country bred." There were only a few cities—London, such Bristol, Liverpool, that had slums. By 1830 the first of a network of railroads was being built. The country already had a network of canals that was completed before the Napoleonic Wars (Floud, 1981). Probably the largest social impact was that those born between 1816 and 1848 suffered from the aftermath of two social and political revolutions—the French and American. For Englishmen separated from the continent, this created uncer­ tainty but also a sense of unreality. The ferment was seen from afar, yet it still affected them. During this period the average Englishman was concerned about law and order and he believed there was a crime wave and insisted that the government do something about it. He was somewhat paternal and had a strong interest in self-help (Robert Owen was a leader in this movement). The great problem was human adjustment to an accelerating phase of the Industrial Revolution. This more conservative period, while not denying help of the community to the truly unfortunate, saw the enact­ ment in 1834 of the new Poor Law which set the tone for the next 50 years which was to abolish extravagant relief to the able bodied. The other major social laws enacted in this period were the establishment of the police force and the law creating new municipal councils which was a recognition of the new urban centres created by ongoing industrialism. Yet in

301 spite of new industry and commerce, England was still a country ruled by agricultural interests, of squires, parsons and wealthy landowners. Some laws were passed in this period which did not reflect an expected conservatism—there still remained a spirit of liberalism. Free trade laws were passed between 1820 and 1848 with the purpose of creating national wealth by untramelled free enterprise, but the effect of these laws were not felt until after 1848. Slavery was abolished. And the even handed treatment displayed in the British North America Act set the foundations for the British Commonwealth a century later. On the other hand, the Royal Navy adhered to very conservative policies in ship design and did not authorize the first iron­ clad ship until 1860. 1848 to 1875. In 1851 the Great Exhibition opened. Thus began a period of unrivaled prosperity for England. In agri­ culture, the foundations for prosperity were laid with the Enclosure Act of 1845. For some 25 years to the end of this period, industriousness, business efficiency, private enter­ prise and moral conduct were rated as virtues. There was a certain smugness and complacency about the nation's accom­ plishments. Toward the end of this boom period as real wages increased and wealth was created, the country turned to liberalism, and criticism of the "amoral" doctrines of laissez faire were found in the writing of and Matthew Arnold. As a result of these and other authors' ideas—a growing realization by the public that all was not well amongst the very poor—the state assumed increasing social responsibility. The two parties, Liberals and Conservatives, won votes by making con­ cessions to the more progressive elements in society. Small skilled labour unions grew in power. On the material side, houses once built of local materials were constructed of mass-produced red brick, Welsh slate and cheap cement. Writers exclaimed that beauty was being killed in village after village. The period harkens to the 1950s and

302 1960s when a similar surge in building took place with very similar criticism of the square tower blocks that punctuate the urban skylines. 1875 to 1892. In the 1870s the economy was running out of steam. There was in England a feeling of diminished prestige as Germany and France increased their internation-al influence. By 1870, exports of men, money and goods were large compared with 1850—£700,000 vs £200,000 (20 times these sums in today's money). By 1870 the net export of capital surpluses was over and the stage was set for the problems of the 20th century. Henceforth, dividends and interest earned overseas were either repatriated or reinvested. During the period 1874 to 1880 the conservative mood was reflected in Conservative party philosophy and policies that were laid down by Disraeli. These policies also formed the basis for the next wave of economic expansion, although England fell behind the continental powers and the United States. The period ended with the financial crises that gripped the in­ dustrialized countries in Europe and North America. The slate was again wiped clean.

1892 to 1920. The decades of growth before the first World War were ones of pent up passions. People were impatient, old norms were brushed aside, the rallying words were emancipation and freedom. The economy grew only slowly—at 2% annually compared with more than 5% in the middle decades of the pre­ vious century (Joll 1973). The feminist movement grew and by 1918 women finally had a right to vote but women had to be over 30 years old and either householders or wives of householders. In the period before the War, large scale industrial unrest was prevalent and new workers' movements were formed. Churches failed to hold the young and the right and left became in­ creasingly polarized. While social change was characteristic of the upward wave as economic well being increased, albeit slowly, economic conditions between 1900 and 1910 allowed opening of new uni­ versities at Birmingham, Bristol, Leeds, Liverpool and Sheffield. Social change created diversity of opinion with prosperity, and, as a result, governments were formed by co­ alition beginning in 1919. By the end of this period (1920) the philosophy was "business is business;" there was minimum political direction in the economy and freer competitive enter­ prise. However, the welfare state expanded, as expected, during this "up" phase. The changes taking place in society before World War I were put on ice during the war. After the War social changes accelerated in part due to dislocation of people during the war and their attempt to escape from the horror of the enormous destruction of life. The "roaring twenties" we all know well. Although economic indicators as a whole topped out just after the war, the lag effect of social change and particularly the interruption that the war imposed both pushed change into the 1920s and probably accentuated this change. Although the economy grew between 1892 and 1920 and exports increased—coal exports masked the decline in textiles and iron and steel—there was a feeling before the War that the clock was unwinding, that British predominance was fading and the belief that problems had been solved or could be solved began to evaporate. Many decisions were decidedly short sighted—investment in coal was excessive in the face of the fact that there were new fuels to invest in. These feelings of uncertainty, of revaluing tenets and assumptions, were similar to those of the 1960s. 1920 to 1944. Liberalism of the previous period and advances in science had undermined the Victorian virtues. Free thinkers still flowered but so also did aggressive nationalism. A return to conservatism was apparent as the economy softened and turned into a rout by the early 1930s. Ultimately as the decline accelerated the unity of the country was undermined as reflected in calls for autonomy from the Celtic fringe in Wales and Scotland. In the 1920s inflation was a problem and there were calls for fiscal responsibility. A Conservative gov­ ernment was elected in 1922. Bonar Law appealed for "tran- quality and freedom from adventurous commitments both at home

3 0 4 and abroad." Although much of the 1920s was one of casting aside moral restraints, as the decline in real wages set in, conservative thinking crept into society that was somewhat masked by the excitement of radio, cinema, autos and the air­ plane. The general strike in 1926 was symptomatic of in­ creasing uncertainties and economic decline. After 1930 society developed a strong structural resis­ tance to change and although England and most of Europe re­ covered from the massive deflation of the early 1930s, quite different from the United States experience, the strong con­ servative bias in industry and labour set the scene for the disastrous collapse of industry competitiveness after World War II. But this was also a period of high scientific achievements in atomic science, genetics and astronomy and the number of universities expanded (Thompson 1978). In general however, the period before the second War was one of retrogression and deceleration. 1945 to 1968. The war was won and the industrial world led by the United States began an unparalleled period of eco­ nomic expansion. The previous social patterns and responses of upward waves repeated themselves, not exactly the same, but similar in their broad outlines. After World War II, England was less affected by the unbridled optimism found in North America and in some countries in Europe. The country was exhausted from 6 years of war. Yet the post-war development in England was very different from that on the continent although US aid was given generously to all of Europe after the war through the Marshall Plan. None­ theless, as in the aftermath of wars, there was an upheaval in traditional values, sexual ethics, and public decency. Such a change would likely have taken place anyway as the economy expanded through continuous inflationary policies resulting from runaway budgets and huge increases in social spending, particularly in 1964 to 1966. Stop and go budgets and attempts to restructure the economy were all to no avail. Government spending was running amok. These fiscal responses to solve

305 *

problems with profligacy were characteristic of the ending of an upward wave. Toward the end of the period, as the crime rate increased there was a call for law and order. As the economic system fell into disarray, a return to human relationships and values increased. A fascination with mystical eastern religions and theories held traditional churches at bay. A desire to return to simpler living mani­ fested by the environmental movement and increasing interest in self-help programmes—yoga, physical fitness, consciousness raising. These social responses to the ending of an upward wave and the beginning of the next downward wave are charac­ teristic of the Long Waves. Each political party in England had a "quick fix" or "neat" solution for the country's ills and until 1978 there was little difference between the parties' solutions—only that the outs could do a better job of the same thing than the ins. And there were numerous changes in governments. This yo-yoing reflected the enormity of the social changes during the 1950s and 1960s and which continued to spill over into the 1970s. Institutions changed—New Pence, metrication, the education system. But, despite all these efforts, toward the end of the period England fell into the bottom rank of European countries, just slightly ahead of Italy, in purchasing power standard of its workers. Through all the turmoil and social change, culture remained much as it had in the past 100 years--a squire men­ tality, a feeling that industry is a grubby occupation. Among the working population and some intellectuals, the idea per­ sists that to pay a worker more for his increased productivity to enable that worker to buy consumer durables advertised by the very same employers is a conspiracy to enslave labour (Weiner 1981). From 1968. Here it should again be emphasized that the years marking the beginning and end of the periods covering the long waves are averages based on the research of several econ­ omists. Their work in turn is based on averages of the several

306 industrialized countries studied. Thus, the year 1968, which on average represents the beginning of a downward leg in the Long Wave in industrializd countries, may not be precisely the year in which Britain experienced the beginning of a down wave. It can be said that by 1972 Britain was becoming cosmo­ politan in outlook, a social change that marked the end of the progressive period and a bridge to a conservative period which commenced with the election of the Conservative party in 1978. And yet as pointed out earlier, while there was a shift in government to more conservative policies, the populace as a whole was ahead of elected governments, the new government in 1978 was the beginning of a fundamental shift to conservatism after progressive years which ended in economic and social turmoil. At this writing, the clash of basic philosophies and turmoil lingers on even within the Conservative party. This analysis is bora out by the results of the quarterly survey by The National Opinion Polls which show an interesting shift in voting intentions, although the resulting government did not necessarily reflect these intentions (see Figure 21 in Chapter V). Beginning in 1963 intentions to vote conservative increased and by 1968 hit over 50%. If these results are combined with the Liberal vote (Liberal voters are more conser­ vative than their leaders), there was a distinct change in the conservativeness of the electorate from 1968 to the present. Thus, 1968 would appear to be the turning point. The past 5 years have seen restructuring of industry and some institutions which increasingly are being opened to compe­ tition, for example, medical groups, solicitors, City brokerage and banks, and nationalized industries. I would suggest that all indicators point quite likely to stringent, belt-tightening years ahead and possibly a major turn to out-and-out conserva­ tism in the years in the late 1980s. As in previous periods social attitudes are shifting as evidenced by a recent poll. In late 1982 readership of the New Society, a left of centre magazine, were surveyed (NS 25 Novem­ ber 1982). What surprised the editors was that the under 25s

307 were considerably more conservative than the immediate older age groups. The generation of 1958 which is left of centre is being squeezed between an alliance of the middle-aged and these newly conservative young. The conservatism in this young age group increases with their youth. This survey suggests that a rising conservative trend is evident in England. As in pre­ vious down waves, once the "house is in order"—usually accom­ plished by means of conservative policies and action, British society will be ready for an expansionary phase. The institu­ tional framework will have been modified, as it has been in the past, to enable the expansion to move forward. The United States The social changes in the United States have been dif­ ferent than those in the United Kingdom. The continuous opening of new lands to the west and mass emigrations in the 19th century all made for social changes peculiar to the United States. Nonetheless, as the following chronology demonstrates, the upward and downward movements in the economy as a whole were a reflection of social changes which had parallels in Great Britain, as well as in other industrialized countries. 1816 to 1848. This period followed the ending of the War of 1812—its conclusion was favourable to America—and in a sense separated "colonial" America of the past from future America. Thus, until the middle of the century, the period was one of consolidation and writers and artists were establishing a purely American form. It was a blending of nationalism and cosmopolitism and one of "hard-headedness" and conservatism, all typical social trends in a downward wave. In 1816 James Munroe was elected President, a middle of the roader, solid, respectable, not particularly brilliant. The next 8 years were called "the era of good feelings." Munroe asked for policies all of which were characteristic of a downward cycle: • A stronger military • A solid uniform national currency • A protective tariff • A system of roads and canals to connect seaports

308 Congress adopted the programme almost without argument. During this period there was a slow development of a national consciousness although regionalism persisted be cause of great distances with little communication between regions. It took days by horse and/or wagon to travel from New York to Washington DC. Regionalism broke down with the advent of railroads in the last half of the 1800s (see Chapter VI). Chief Justice John Marshall was a conservative federalist and lost no time in establishing the supremacy of federal authority. Economic problems and control of currency surfaced early in this period and from 1819 to 1821 collapsing land values and mortgage foreclosures created a depression. Many banks failed. The tariff was a second economic problem (Poul- son 1981). (These types of policies were to reappear about 55 and again 110 and 165 years later.) John Quincy Adams was elected President in 1824 and his long list of federal pro­ grammes were opposed by the Andrew Jackson supporters as spend­ th r if t. Andrew Jackson’s election to the Presidency in 1828 was a break with the past. The period from his election to the 1840s was a dynamic one; there was much discussion and writing about new forms for society, new ways of perceiving man. However, the overriding point of contention that clouded all else was the question of slavery. Generally the first part of this period was one of expanding agrarianism—a democracry of inde­ pendent property owners. This idea is not dissimilar to the policies of the current government in the UK which favours independent entrepreneurialism. Jackson and his followers believed deeply in laissez faire and the implementation of these ideas set the stage for the economic expansion that commenced in the late 1840s. Essentially national minded, Jacksonian thought was also pro-federalist, and although he and Marshall disagreed, it was not on the issue of preventing encroachment by the states on Federal rights. After 8 years, Jackson withdrew as a presidential can­ didate, and in 1836 Van Buren, who was his Vice President, was elected. He was immediately faced with a banking crisis and economic collapse in 1837. It is estimated that in two years half the property in the United States changed hands, nine- tenths of all factories were closed, and 33,000 businesses collapsed. Van Buren followed his predecessor’s laissez faire policies believing the storm would blow itself out. Such a hands-off attitude led to his defeat for re-election by General Harrison in 1840. 1848 to 1875. The economic disaster of 1837 "cleared the decks" for a revival of the economy which got under way several years later. During this period to 1875, the country experi­ enced steady expansion as railroads linked the country and brought the farthest settler into the consumer market. Fac­ tories expanded as the market base expanded. The period also includes the Civil War, a painful and draining experince that was paid for after the war with brief deflation. Despite the war, the period overall was one of rising prosperity and de­ clining commodity prices. Differing religious beliefs flowered in prosperity. Transcendentalism, whose principal spokesman was Ralph Waldo Emerson, challenged the traditional Calvinist doctrine. But it was also a time in which unorthodox sects, Shakers, Mormons, seemed to multiply quickly. The religions were referred to at the time as "come-outism," that is, showing one's religious independence by "coming out" of the established churches. It was a period quite sim ilar to the 1960s and 1970s in America and Europe. Some groups could be described as being on the "loony fringe" and their followers withdrew from the world to communal settlements. Too much change and material gains seem to affect societies in this way. Other social protest groups formed—the Temperance move­ ment, the beginning of the suffragettes and the anti-slavery movement. These reformers, although all very different, were aiming at one objective—to make America perfect. The wish for reform began early in the century in the 1820s and 1830s, but the movements gained momentum in the middle of the century as the economy expanded, and again, as will be seen, in the begin­ ning of the 19th century and the 1950s and 1960s. The Civil War was devastating and interrupted the social and economic life of the country. However, the War was fought over an extension of the very principles that citizenry of the northern states avowed—that one could not have democracy with slavery and without democracy there was no Union. The single person that believed this devoutly was Abraham Lincoln, although he had neither full support for going to war nor during the War. Despite the tragedy, the War settled a basic argument about the future of the nation and set America toward a strong federal government. Slavery was abolished; but the black did not have full civil rights. In the future those rights were to be fought for in the courts and on the streets in other periods of upward waves. Once the War was over in 1865, the business of developing the nation moved forward rapidly until the peak of activity was reached early in the 1890s. This was fine for the North. For the South, the entire structure of society was destroyed and together with the enormous loss of life it took nearly 100 years for the South to recover. Indeed, it is still rebuilding its social structure. With the completion of the transcontinental railway in 1869, the character of frontier life was changed. Most of those who had settled in the west, who had sailed or trudged to the west coast, were no longer isolated. And with the rail­ roads came the telegraph which further broke the isolation. Despite this, the values of the frontier ethic were still very much a part of American culture then as they are now. One aspect of the post Civil War era has had a lasting impact on American society—the cattle boom. Lasting about 20 years from the close of the War, special cattle were bred from Spanish and European stock called long horns. The lack of railroads into western Texas and the plains States required that cattle be driven to the rail heads at Dodge City or Abilene, Kansas, or Cheyenne, Wyoming. In 1872, up to half a million cattle were driven over such well-known trails as the

311 ♦

Chisholm, the Western and the Sedalia. With the coming of the railroads and fenced lands (barbed wire was invented in 1873), the beef boom collapsed. "The legend remains in American mythology. . .the old romantic West of tumbleweed and cow towns, hard shooting punchers and rascally rustlers, chuck- wagon campfires and sad songs of the cowboys' lonely lot." (Nye 1955). To understand this aspect of American society is im­ portant in assessing how America responds to technological change in this and the next decade. This western way--rowdy politics, individualistic turn of mind—has been the source of every radical movement in the US until 1924 at the ending of an upward wave. Two additional events changed the character of the west: (1) the federal government threw open the western lands to homesteading, and (2) the mining boom in the Rocky Mountain states that began with the discovery of gold and silver in Colorado. For example the Comstock Lode discovered in 1859 produced by 1890 $4.5 billion in gold and silver (1984 dol­ lars). This mine, together with other western mining boom towns, created another legend of such characters as Calamity Jane and Wild Bill Hickok--stil 1 a feature of American folk­ lore. With the growth in the economy after the War, and as a result of the War itself, public morality declined. Carpet­ baggers and corruption by Northerners in the South is well known. But knavery and corruption in politics and business was rampant and set the stage for the reform years after the 1890s. The Tweed ring in New York City stole $80 million (1984 dol­ lars) from the city treasury in six years. Although there were very conservative aspects in society, it was one that became increasingly radical, at least in terms of those times. Al­ though the Reconstruction period in the South was tainted, it was established by idealists with the best of motives--the civil enfranchisement of blacks. The Republican-dominated legislature warped these ideals to political and economic ad­ vantage. Moreover, their total control of the executive (President Grant was in office for two terms) and both houses of Congress led to a period of graft and corruption not since

312 duplicated. It became worse as the economy peaked and with the subsequent collapse in 1893 and six years of depression; the stage was set for a major change in government. Public opinion had been in the process of changing but control over votes, particularly the black, Republican-controlled vote in the South, made it difficult to oust incumbents. The rise in the economy also gave rise to groups that asked government to protect their hard earned gains. So it was during this time, despite the laissez faire policies, that new organizations were formed to protect agriculture, for example, the Grange and the establishment of the Department of Agricul­ ture. The first unions were formed during this period (see below). 1875 to 1892. The decades 1870 to 1900 were turbulent, restless years marked by violent conflict between business and labour. Between 1870 and 1882 real income per capita was rising, but there followed until 1899 almost 20 years of stagnant real income per capita. However, in terms of real average wages in the industrial sector, workers were actually better off between 1870 and 1895 (except for a slump between 1875 and 1880) as shown on the table below.

AVERAGE WAGES IN THE US, 1870-1890 (Cents per Hour) C urrent 1870 cen ts cen ts 1870 15.2 15.2 1875 14.3 16.4 1880 11.7 15.8 1885 13.6 21.6 1890 14.0 23.3 1895 13.9 25.3 Source: US Census Labour antagonism arose for several reasons. The di­ sparity between wage earners and conspicuous wealth was very wide and prosperity of the middle professional classes was also rising quickly. But more particularly, the creation of wealth was being accomplished primarily by increases in productivity on the factory floor. The division of labour, which has been discussed earlier, began to alienate craftsman and semi-skilled worker alike. The first unions were organized by skilled workers—the National Trade Union later to become the American Federation of Labor. Not until much later did unskilled work­ ers organize the Congress of Industrial Organizations. As a result of union organization and increasing strikes, the National Association of Manufacturers was formed in 1895 with an avowed purpose of containing labour unions which were re­ garded as a foreign idea and anti-American. The unions found difficulty in obtaining greater economic benefits for members because, between 1870 and 1900, 20 million immigrants came to America, thus providing a continuous pool of unskilled labour and some skilled labour, many of whom were German immigrants. Although growing industrialization brought millions to the cities in Europe, the growth of American cities was spectacular in comparison. The technological boom in railways, communi­ cations, and machinery affected not only industry but also agriculture which during this period took second place in producing wealth. The flight from the farms plus new immi­ grants and an increasing birth rate until 1890 (see Figure 22) further swelled urban population. In 1840, 11% of Americans lived in urban centres; by 1890 the percentage had risen to 35. (Today about three-quarters of the population live in urban centres.) As a result, the social problems of cities in this period were great. The change in birth rate from the prior period (see Figure 22, Chapter V), warrants additional comments. On the same figure the Long Wave has been plotted (no scale). One would expect a correlation between good times and the birth rate, that is, as average incomes rise and standards of living in­ crease, then birthrates decline. This would seem to be the case from 1860 to 1880 which generally corresponds to the

314 upward wave, and again from 1905 to 1925. But in 1950, the opposite occurred. These data are for all the population including immigrants which usually enter the labour force at the bottom of the economic scale. And it has been charac­ teristic of America to have accepted immigrants, although in some periods there have been restrictions. If one looks only at the white population, birth rates showed a steady decline without any significant reversal against the trend from 1800 to 1930. During World War II births rose rapidly from the low of the Depression. A combination of full employment and a "social response" to impending death and/or deprivation would appear to be the reason for the extraordinary increase in birth rates. Why the population counterreacted as it did after 1950 is difficult to answer. One of the principal reasons for the decline is that the cost of raising children was rising faster than real income for families, as it did beginning in the 1950s. In the latter part of the 19th century the climate was becoming cooler as it did starting in the 1950s; the climate change may be an additional factor that precipitated a change in attitudes about the size of family. There are other possibilities. It has been said the period beginning in the 1950s was one of unprecedented growth in which nearly all the population participated in higher standards of living. Thus, all the population to a lesser or greater degree, depending on the socio-racial group, had fewer children. As inflation increased and ability to increase real standards diminished, additional income was obtained by wives working and previously the introduction of labour saving domestic appliances. Moreover, increasing opportunities for women caused postponement of child bearing years assisted by "the Pill." In the past few years the birth rate has risen modestly. Another reason for the change in birth rate in the 1950s may be that a great fundamental social change, percep­ tions about the future in light of rapid technological ad­ vances, affected the population negatively. Certainly the 1950s to 1970s produced much negative social sentiment— doomsday mentality, anti-establishment, "nostalgie de la boue" or the desire to return to peasant life and so forth.

315 1892-1920. Again as the economy entered another expan­ sionary phase sparked by the growth in electricity, telephones, and the beginning of the automobile (railroad building peaked before World War I, the coal industry in 1923), the long shifts in social patterns that came about with urbanization and the mixture of races and religions in the large cities increasingly hammered at the moral virtues and values of the 19th century. Uncertainty, the contest between science and religion, rapid change in industry and agriculture, all seemed to have knocked out the props from under society. People searched for a pillar of spirituality, the me­ mbership of churches increased, although mostly in the evan­ gelical branches. The older established sects seemed more like social clubs that did not have answers for contemporary life (a familiar complaint heard over the last decade). Spiritualism and supranatural phenomena were also in large supply during this period. An important outgrowth of these challenges to established churches was the development of "Socialized Christianity" which was an effective counterpoise against the "Gospel of Wealth." Socialized Christianity put many churches into the forefront of support for minimum wages, nursery schools, gymnasiums, group discussions and even vocational classes. The change in the mission of the church was per­ manent; the battle still rages today between those wanting a church for worship (stick to basics) and those who see a wider role for the church (evangelical mission). In some respects, the new Socialized Christianity was an outgrowth of missionary work and support. The important consideration in what this period contributed to a change in American social attitudes, is that this change in the mission of many churches eventually affected thinking of American policy makers after the two World Wars, but particularly after the second World War. The out­ growth of this social change was the foreign aid programme of which America was the prime mover. Currently, America has been turning conservative, foreign aid is under attack and some churches are returning to basics. An interesting reaction in popular literature could be seen. As industrialism and materialism swamped society,

316 writers found themes in how brute nature overwhelmed man in a deterministic, fatalistic and pessimistic world. Frank Norris wrote about wheat and its interrelations with the railroads, and his novels The Pit and The Octopus had strong naturalist themes. Steven Crane and Theodore Dreisser wrote on similar naturalist subjects. On the political front, progressivism and reaction were the bywords, not unexpectedly during a period of increasing prosperity. It would appear that society can ’’afford" to change and experiment, but, more importantly, vast techno­ logical change, economic expansion and accompanying social change create new tensions, new power groups that demand to be recognized. In the early stages of economic expansion one has neither the time nor the energy to worry about taking positions or even changing the status quo. But after several decades, two groups, one which did not participate in the expansion and one which did, have opposing views. The first group wants in and the second wants to keep the first out. Moreover, the sheer weight of change demands new forms and organization for society to cope. The progressive movement, which surfaced in 1900 and ran to 1920, was an important element in American society. The leaders felt that government had been run for the privileged few—manufacturers, banks, railroads and mining companies. Some religious groups, principally Social Gospellers joined in attacking the old power groups. Leadership believed that society’s problems could be solved by returning problem solving and some governance back to the people. Progressivism then meant government regulation and control and agency sponsored programmes. A form of progressivism that surfaced in the early 1970s advocated just the opposite. Rising prosperity and the expansion of new industries— telephone and automobiles in particular—and the increased urbanization created opportunities for women. After 1900 this was the most obvious shift in social patterns. Women’s clubs multiplied in profusion and, with new-found areas to put their energies outside the home, the sale of such items as home

317 appliances soared. The outstanding achievement of women’s organizations during this period was the ratification of the 19th Amendment in 1920 giving women the vote. Such social reform might only have been possible in an upward wave of economic prosperity. It is interesting to note that the Equal Rights Amendment has not been passed in the current downward wave—the nation has been turning conservative since 1968. In addition to the 19th Amendment, the trend toward libe­ ralism and reform was apparent during this period. The Social Christians eventually won over practically all the pro-testant churches and all were favourably inclined toward useful activity on progressive and liberal lines. But new and pro­ gressive laws clashed with the conservative nature of the courts which interpreted the Constitution in strict terms. There grew, therefore, a new body of jurists. Roscoe Pound, Dean of the Harvard Law School, for example, expounded the idea of "social jurisprudence." His students became key figures in the New Deal of the 1930s. Teddy Roosevelt appointed Oliver Wendel Holmes to the Supreme Court in 1902 and Wilson appointed Louis Brandeis in 1912. These two justices were leaders in the idea that interpretation of the law must take a strong signal from contemporary mores, social customs and ideals of society. By the 1920s most of the Supreme Court had surrendered to the concept of "social jurisprudence." Music and art underwent a highly creative phase with new forms and styles. Modern dance and the "musical" were new stage forms that flowered during this period. The movies, or cinema, formed the basis of a major industry and became the single most important cultural influence on America. It also influenced culture throughout the world. While Hollywood set the tone for new styles, both life and dress, the medium pri­ marily reinforced existing middle class cultural values. Movies were successful not only because of its technological fascination, but because it played to its audiences. The American theatre also was dynamic with some of the "greats" (producers and players) of the stage performing after the turn of the century. Radio also expanded during this period and, like movies, was a major cultural influence in making America

318 more homogeneous and extending the urban values of those that controlled the media to the rest of the country. Yet, at the time, politicians did not fully appreciate radio’s impact. The first politician that did was Franklin Roosevelt. Woodrow Wilson, elected President in 1912 on the Democrat ticket, instituted many liberal reforms and in 1916 Wilson ran on the Party slogan "The New Freedom." Wilson campaigned during a major debate of America's involvement in World War I. There was still a large isolationist sentiment, but the basic element in American culture, a mission to improve the world, swung the progressive vote to Wilson's camp and he won by a veiy slim margin. The electoral votes from California put him over the top 277 to 254 electoral votes. The effect of the War on American life was felt by its citizens in one main area, the force of Federal power. With 24 million men at its command, control over industry and a life regimented by decree through boards and bureaux, the War years, however brief, were a prelude to the government controls set up during the New Deal in the 1930s. America never recovered from WWI in this respect. By putting Samuel Gompers, head of the AFL, on the Council of National Defense, the labour movement had the recognition and status it had been seeking for years. Mandatory settlements of disputes through a mediation board established the concept of collective bargaining between in­ dustry and labour. For blacks, there was increasing upward mobility as war industries created full employment. But civil liberties suffered drastically. Hughes and Brandeis on the Supreme Court warned about stifling democracy. German baiting was notorious; German names of towns were changed; German degrees revoked; sauerkraut was called Liberty cabbage. Once instituted, such laws and attitudes became em­ bedded in the culture and society and surface later as accepted attitudes to some degree. The failure of the United States Senate to ratify a Bill for the US participation in the League of Nations placed the US back into a period of quasi isolation. The Bill was defeated

319 in 1920. This withdrawal from internationalism and cosmo­ politanism signalled the beginning of a conservative period and increasing isolationism in the 1930s, and, as will be explained below, ushered in the New Deal. 1920 to 1945. American public opinion from 1920 to 1932 was equally divided between internationalism and isolationism. Although the Presidency of Hoover was Republican, the man was an internationalist and during his enlightened leadership the United States entered many areas of international cooperation. On the other hand, strong sentiment over foreign entanglements, protection of American industry through tariffs, and an un­ willingness to bind itself strongly to international agreements and agencies was prevalent. It was not the first time that a President was at odds with large sections of his constituency. On balance, however, America became more conservative through the 1920s as well as the 1930s as the down wave took full measure of society. The Courts followed a uniformly conservative interpre­ tation of constitutional cases. To the discredit of the country, an anti-foreign and anti-liberal/communist phobia gripped the country. Anti-Semitism and the Ku Klux Klan, mostly dormant since 1900, again became active. But the over­ whelming impression of the 1920s was that the nation was rol­ ling in money, except for mining, agriculture and textiles. While basic economic indicators turned down after 1920 (the table below is an example which shows hourly wages de­ clining in real terms beginning in 1920), thus reflecting the down wave period, the effect of the War and a lag factor made the 1920s a period in which social change continued—high divorce rates, loosening of sexual mores, ,rboop-boop-de-boop" music and so forth. A hiccup in stock markets and business in 1926, which was a forewarning of 1929, did nothing to slow the social splurge that was the 1920s. Prohibition was an excuse to break the law. It must be remembered, however, that in politics and in the political leadership, and in "Peoria", the basic trend was to increasing conservatism. Herbert Hoover was the embodiment of this conservatism and he signed rather than

320 V

vetoed the Smoot-Hawley Bill which increased tariffs 7% over the already high tariff Bill passed in 1922. The 1929 Bill was to have disastrous consequences on world trade, for other coun­ tries had no recourse but to increase their tariffs. Most observers agree that while this Bill did not cause the .cw 12

U .S. URBAN UNSKILLED HOURLY WAGE, 1918-1932 (Cents per Hour) C urrent 1918 C ents C ents 1918 42.6 42.6 1919 51.3 52.8 1920 52.9 61.8 1921 43.7 43.6 1922 40.2 40.1 1923 44.3 40.8 1924 45.8 44.3 1925 45.5 43.5 1926 46.1 45.1 1927 47.1 44.9 1928 47.4 45.6 1929 48.6 46.9 1930 47.8 44.9 1931 46.0 39.3 1932 40.0 30.6 Source: Lindert (1976)

Depression, it was a major contributor to it and prolonged the agony of the economic fall-out. The 1920s were thus a curious mix between the social and underlying economic forces. The slow rise in real wages, overproduction, and fall in commodity prices were omens that most ignored but about which some economists were concerned. By the time Wall Street stocks had skidded in 1929, world trade

321 4 was out of balance, artificial price levels, maintained by monopolistic and cartel-like arrangements, had distorted mar­ kets and credit, and instalment buying had weakened the finan­ cial structure. The single statistic that spelled the .pa economic collapse was that, by 1932, in only 4 years, the value of money had been cut in half. Roosevelt’s programmes to attempt to revive the US economy were, in fact, a rehash of much legislation that had been attempted in the past. Herbert Hoover had much of the New Deal programmes before Congress in 1930 to 1932 but by then his party had lost control of both the House and Senate. Moreover, the basic aim of the New Deal was to preserve the industrial/ capitalist system. Modifications to ameliorate inequities there were, but it certainly was not a radical revolution. In some respects, the regulatory systems of agencies and bureaux, reminiscent of World War I, set industrialism in concrete for the next 50 years; it legalized oligopolies and quasi cartels. The aim was to protect the consumer and to bolster industry by reducing some of the worst aspects of competition. This was fine at the time and the problems of the system were masked during the years of high prosperity after World War II. As economic hardening of the arteries set in during the 1970s which was a period of yo-yo growth and stagflation, the problems of regulation became apparent. The current conserva­ tive move to deregulate what was a "conservative" action to preserve industry is ironic. The advantage for Roosevelt was that he enjoyed a full majority in both Houses and had the support of the intelli­ gentsia, the so-called liberal establishment, and he built a coalition of the South (conservative), labour and blacks, a coalition that 50 years later is showing signs of breaking down. It should be remembered that on a popular vote basis, Roosevelt won all subsequent elections after 1932 by very small margins. Those who voted against him did not have the politi­ cal clout to put block votes together. Attempting to discern whether the 1930s under the upward and downward scenarios of the Long Wave was following a con­

322 servative or liberal course is uncertain. Was it preserving the values of individualistic capitalism or was it the opening wedge of the welfare state and state capitalism? Probably a little bit of both. In the intellectual area there were some unmistakable trends toward conservative thought, but it was not found in the popular press or journals. Some of the leading educators at American universities said that the "service station" approach to education was insufficient and that a return to the specu­ lative spirit of the medieval university was required to solve the problems of America. In some Protestant and Catholic circles a reaction set in against the concept of Social Christianity, that "socialized" religion was a confusion be­ tween the secular and the divine. Other theologians enveighed against the new theology and asked for a return in new terms to Calvinist doctrine of original sin, which was a return to 20th century orthodoxy. Despite this the mass of protestant churches stayed with Social Christianity. On the political theory front, the 1930s spewed out many converts of Karl Marx with a demand for greater state control, and some writers and political scientists returning from Europe extolled the virtues of Fascism because of the advantages society gained from state control. Either way, in this writer’s view, this is a markedly conservative point of view, certainly not liberal in the original meaning of the term. As war clouds loomed, expatriates from the Left Bank and Spain and Fabian intellectuals returned to the United States. They shed much of their ideas and became nationalistic. Macleish, Faulkner, Benet, Sandburg, and Dos Passos, to name a few, found new strength in writing about American subjects and virtues (and some sins). Roosevelt and his Secretary of State (foreign affairs) were far ahead of the general public and the Senate in their view of the international role that America had to play. Roosevelt spent much time in attempting to change the views of the country but the Senate continued to tie his hands. Fifty years later, the President is having the same problem. The nation was essentially turned inward, deeply conservative in the small cities and farms, and the feeling prevailed that the events in Europe had no influence on their lives. The thinking of these men and others in government and industry reflected the ending of the down wave and the beginning of an upward wave in which society turns increasingly international and munificent. The war in Europe sharpened the differences between inter­ nationalists and isolationists, between those that believed America had to come to the aid of England and France and those that felt that even if the Axis Powers won, the US could live with them. Europe had its own mess to clean up. In the elec­ tion of 1940, the issue of going to war still had not been settled; Wendell Wilkie, the Republican candidate, supported Roosevelt's foreign policy and polled the largest number of Republican votes since 1928. The country was slowly turning toward a cosmopolitan and internationalist mood. Still, there was major opposition to America's involvement from many quar­ ters and powerful leaders, such as Senators Taft and Wheeler, Charles Lindbergh, and Robert McCormick of the Chicago Tribune. But in the last half of 1941 America was doing very un-neutral acts, the primary example was the signing of the Atlantic Charter which promised the defeat of the Axis powers and re­ turning the fire of German submarines by both Navy vessels and merchant ships. It was actually an undeclared war on Germany. Pearl Harbor brought the US into the war. The Japanese strike effectively quelled the question of staying neutral. This war, like World War I, brought the full power and authority of the federal government to bear on the economy and society. Vestiges of this remain today. US industrial power with its resources and technology and its ability to produce the tools of war rapidly and in large quantities as well as government's ability to muster large numbers of troops in a patriotic country was the key to the winning of the war. The largest industrialized nation had its productive resources available. The social changes which the War brought about were enor­ mous, such as a greater role for women, immigration of black and white workers from the rural south to northern factories, the regimentation of society for the war effort, although not nearly so severe as that found in Europe. The war was fi­ nanced in part by War Savings Bonds and by "printing money" the effects of which were to be felt years later in inflation further exacerbated by additional deficit financing. Inflation is probably a primary cause of social change; but that was society's wish at the time. 1945 to 1968. With the war won, the US tried to return to normal. Harry S Truman inherited the Presidency at War's end. The post war became the Cold War and the US, after having almost totally dismantled its military machine, began putting it back in place. In 1948, running on a Fair Deal plank, Truman defeated Thomas Dewey, the conservative Republican. The Fair Deal was a hold over from the pre-war policies of Roosevelt. With the country's internationalism and concern about Communist expansion it was not surprising that the country went to war against North Korea and China under United Nations auspices. The Korean War was essentially a stalemate. Eisenhower, who was elected in 1952, promised to negotiate a peace. The basic thrust of leadership after World War II was toward internationalism, but there remained in many parts of the country strong isolationist feelings, particularly in the Republican Party. However, in the post-war era, these sen­ timents became less of a political force. Foreign aid and increasing commitments of the United States in mutual security pacts throughout the world were the hallmark of the Eisenhower presidency and his Secretary of State, Dulles. Yet, there was a lingering conservatism in domestic affairs to reduce the role of government. Internationalism continued with the Presidencies of Kennedy and Johnson. Republican Nixon also was interna­ tionalist. Being an internationalist then became a Republican virtue. Today it is Democatrats who are isolationist.

325 *

The Kennedy presidency, which was followed by Johnson’s, was very liberal, expansionist and activist which was charac­ teristic of the latter part of an upward wave. The Great Society theme of expanding social welfare is even more charac­ teristic of the ending phase of the upward wave. The country felt it could afford it. From the end of World War II to the end of the 1960s, the US enjoyed strong, nearly non-inflatioary growth such that many economists believed, with "fine tuning" and use of large econometric models, that steady economic growth without inflation could be continued forever. This same euphoria was present at the end of every other past upward wave.

From 1968. With prosperity came social change, the like of which the country seemed not to have experienced before. It had gone through upheavals in the past, but this change appeared much more fundamental and far-reaching. The first signs of change appeared in the 1960s among youth, those that were part of the post war baby boom. Later the Vietnam war polarized that conflict and youth found a cause around which to unite and protest. It was a revolt aginst the "establishment." This has been a characteristic of America since the beginning of the Industrial Revolution. The US is a mass society but it also extols the individual; therein lies a conflict—to conform, to go with the judgement of the crowd, and still be independent. This dichotomy has created a deep insecurity and inner conflict apparent in the major areas of social and in­ tellectual endeavour. It is apparent, for example, in pub­ lishing which has generally been conservative on domestic issues and less so on foreign. What also must be remembered is that the country is large and diverse. While a consensus can be found on some national issues, there is no such thing as a typical American. The diversity is enormous. The advent of television in the 1950s, like radio, led to some uniformity in values largely promulgated by a few major networks that controlled most programming. However, with the advent of direct broadcasting by satellite, cable TV and a "magazine rack" selection of programming, the individual and sectional interests can now be catered to. The growth of video

326 casettes also has allowed a wide choice in viewing controlled only by the purchaser and renter. The addition of micropro­ cessors, data banks and individual work stations has further assisted in breaking down the hegemony of US culture and soci­ ety. The social thrust of the 1960s and 1970s was an emphasis on the individual, "only you can control your destiny," the emphasis on ’me', in large letters, and the self-actualization movement of prominent psychologists such as Abraham Maslow. This essentially stated that the individual should "look after Number One" and take what he could from society which was supplying, in those days, every material item in abundance. Physical fitness, good health, being responsible for your body and mind are still prevalent. Thus, the strong individual frontier ethic, always present in US culture and society, has found and is finding new avenues for expression. Telecommunications, new social organizations that emphasize individual decision making, and a call for a lower profile of large institutions has found fertile ground to grow. The country readily accepts these technologies and changes. It is no accident that "targeted" advertising and video and radio programming that focus on special interest groups and individuals have found a ready market. The social reaction that began in the 1960s has also been anti-technological and, in part, is an historical aversion to standardization. And as in previous upward waves and their aftermath, the desire to return to nature and the belief that nature controls man rather than the other way around has re­ asserted itself as a mainstream in intellectual thought. The environmental movement, mystical religions, communes, EST, all these and more, characterized the 1960s and 1970s and still ex ist, but in a down wave are now declining. Through the 1970s the principal theme in most of American society, that of seeking "natural" solutions affected the nuc­ lear power industry and the way large industrial enterprises have conducted their affairs. The environmental movement has

327 had a large impact on the mining and metals processing in­ dustry. Some mining companies foresaw early that a major shift in public attitudes had taken place and adapted and adopted. Other mining groups fought the change bitterly. In this re­ spect it was a cultural conflict, not a technological one. This back to nature movement, is it radical or conserv­ ative? According to the typical scenario, the period we are now in should be an increasingly conservative one. As with all movements for change, change is upsetting and for those quite happy with the status quo, any change is radical and to be feared and stamped out. Time brings acceptance and the middle class adopts new values which become conservative. The fight has been won. The environmental groups now have difficulty in commanding attention. Beginning in the 1980s some social researchers, including Yankelovich (1981), detected a change in Americans' social attitudes. This change was away from the self-fulfillment, me- first approach, to one of social commitment. By social com­ mitment Americans mean that one cannot survive wholly alone and that deeper commitments on a one-to-one basis and among groups and family are essential to advance the well being of society as well as their own. An increasing majority of Americans now feel this way. However, for the feeling to coalesce, clear signals will have to come from leadership, which apparently has noted the change. Currently the "old" values are being em­ phasized, for example, home, family and patriotism. This change in attitude is interesting because it is an unmistakable sign of growing conservatism. The self-fulfillment ethic was in response to clear social signals that government and society could supply all needs and meet all demands. It was an expression of the euphoria en­ gendered by the upward wave. Now there are "limits," "belt tightening," and "hard times" all of which are to a degree true. On the the other hand, there is a counter argument that there are no limits that cannot be solved by market mechanisms and the ingenuity of men and women. These are conflicting times. Yet underlying these conflicts, which represent a tansition period is the growing social commitment ethic. Leadership to harness this new ethic is showing signs of emerging among the under 30s. This group is rolling up its sleeves and getting on with life. But they want to make indus­ trial society a fit place to live in. Thus, America is "hunkering down." These signals are being sent to research sociologists who say that the change will not become evident and affect the working of society for at least another decade or so. Then the next upward wave will have begun, and, if the present suggestions are correct, social commitment on a personal and community basis will be the dom­ inating ethic. Neither Herman Kahn’s continuum of the 1960s, nor the work ethic of prior generations would appear to be the dominant culture in future America. I believe society does not repeat itself completely; it is a learning system; some of the past will be blended with the present to form the future. The United States in the late 1980s and 1990s will be one not fearful of the future, as it is now becoming. And this will mark the beginning of the next upward wave. Japan A discussion of Japan’s political and economic changes as delineated by Amaya (1977) has been outlined (see Chapter III). This section discusses social changes during the past upward wave beginning in 1945 and the current, down wave, and possible implications for the future. As noted, Japan’s post World War II economic growth was spectacular. It is now one of the largest industrialized countries in the world and is challenging Europe and the US with its technology and productivity, and the quality of its products. The effect of such enormous economic growth on a society that had more vestiges of the past than any other industrialized country was as great as the growth in GNP. Japan is now an economic power and a highly technically ad­ vanced country.

329 The social changes which began in 1945 through the 1960s were beginning to be felt in Japan in the 1970s and are ongoing into the 1980s. In some respects, Japan has had a delayed reaction compared with the United States and Europe. Over the past 30 years Japan has obtained one of the highest literacy rates (99%) of any country and provided an educated and highly disciplined work force which was the envy of other indus­ trialized countries. However, the system stifles creativity and does not provide equal opportunity. Prosperity’s impact on a "catholic" society has been in three areas: (1) increased leisure and expenditures on leisure, (2) an alienation of youth from traditional society, and (3) pressure by women for greater participation in work outside the home. Increasing leisure time has meant that Japanese now spend more of disposable income on nonessentials than in the United States and Europe. Japanese markets are saturated with auto­ mobiles (in the cities living rooms are converted to garages— automobile permits are not issued until proof of off-street parking is provided) colour television and video tape re­ corders, tennis, jogging and golf. Japanese have been turning to travel. Whatever the Japanese do, they do with great energy and planning. Where else can one see a multi-story golf driving range? The net result is a decline in off working time spent in the home and a further westernization of Japanese culture. Youth have become alienated from traditional values and opt for western style artifacts and clothing (in the cities all Japanese dress in western-style clothing, but not necessarily in the home) in part because of traditional social regimen­ tation (Binstock 1984). In prosperous times one can afford to break away. Being well off, they are less indulgent toward regimentation and standardization which was the hallmark of Japanese success during the up wave. But they are pragmatic and will stay with the system as long as it offers something with which they can buy the "goodies." As with youth in Wes­ tern countries, frustrating work to climb one step up the

330 social ladder is simply not worth it. Yet this protest is also conservative, for a large element wishes Japan to return to some degree to its traditional values and culture while not giving up the benefits of being westernized, and is alarmed at Japan’s increasing internationalism. In this respect the country is following a classic social pattern in a down wave. A woman’s role in Japan remains traditional with most women (83%) believing that their principal role is in the home (Martin 1983). It is difficult for women to get into male dominated professions although today one-third have college degrees compared with 7% 20 years ago. Yet 50% of women have some kind of employment. It has been stated that if Japan is to concentrate on brain intensive industries the country will need more quick witted workers. The largest group of untapped, intelligent workers are women. Despite barriers, social change for women has been dramatic since the end of World War II which mirrors changes in other industrialized countries. In a study undertaken by Ishikawa (1980) to estimate social conditions in Japan over the next 20 years by taking into account current thinking, the following major attitudinal changes are currently affecting society in Japan: • A present-oriented norm that stresses enjoyment of daily life; an increase in individualism • Work will be a means to an end—personal development and obtaining income. Work will have to be humanized, with more flexible working hours and increased adult education • Decentralization of culture now dominated by large cities; local culture will flourish • Social discrimination will decline creating better opportunities for women • Fall off in traditional morals; increasing divorce; family life disrupted because of career conflicts • Despite an increase in individualism, kinship, communal relationships and networks will exist and perhaps be strengthened because they are freely developed asso­ ciations rather than inherited traditional groups, although these may be part of the community. These conclusions are the result of study but perhaps reflect the views of senior researchers; they are based on current thinking. If the down wave now underway is to be reflected by changed social values then one might expect that increased conservatism and return to traditional values would be evident. This is the course now taken by Japan if surveys in the Financial Times and Economist are accurate. It is also the sense of the future I obtained during my visit to that country. As a result of social change and advances in robotics and computerization, Japan's structure of industry is being changed dramatically. According to Dr Yoichi Kaya (1984) of Tokyo University (personal interview), small industry will prosper because small plants will be able to increase output without investment in new production site s. The scale of industry w ill be reduced and there will be more suppliers. Decentralization of industry is inevitable. Much the same change will be taking place in other in­ dustrialized countries, but probably more quickly in Japan because of its mono-culture and discipline. Otherwise, these changes in Japan are not different from those that are taking place in Europe and America. The linkages between cultures are evident. XII REFERENCES REFERENCES

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