Relative prices of industrial products US, Germany and UK

Discussions on the economic history of the nations taking part in WW2, from the recovery after the depression until the economy at war.
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Guaporense
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Relative prices of industrial products US, Germany and UK

Post by Guaporense » 29 May 2017 21:54

When talking about war-making potential one should acknowledge that at the time of WW2 the relative prices of manufactured products varied a lot between different countries which meant that each country's capacity to produce different types of equipment varied quite a lot. Let's take a look at the ratios of prices between Germany 1936 and the US 1935 from their industrial censuses, that is how many marks to equal a dollar in quantities of the following goods:

Ships (motor) ----- 1.41
Locomotives ------ 1.64
Vacuum cleaner --- 1.96
Steel ingots ------- 2.16
Ships (steam) ----- 2.25
Firearms ----------- 2.54
Aero-engines ------ 3.00
Radios -------------- 3.56
Trucks -------------- 4.29
Cars ---------------- 4.59

And regarding the UK/US comparing (dollars per pound) 1935 industrial prices (using data from the 1935 UK manufacturing census):

Ships (motor) ----- 10.33
Locomotives ------ 9.47
Ships (steam) ----- 9.15
Steel plates ------- 6.02 (*med. thickness)
Generators --------- 5.88 (*over 2,000 KW/H)
Aircraft ------------ 5.00
Trucks -------------- 4.05
Radios -------------- 3.82
Cars ---------------- 3.69

Notice how similar the UK's pattern of relative prices relative to the US are to Germany's prices: both were European countries with very similar manufacturing technology. While the US had developed newer industries like motor vehicles and electronics that were less developed in the European countries.

In 1937, net per capita products at factor cost in 1935-1936 prices for the three countries were:

US ---------- 552.6 dollars (1935 prices)
Germany --- 1,293 RM (1936 prices)
UK ---------- 92.3 pounds (1935 prices)

(US and UK data comes from Friedman & Schwartz, Monetary Trends, data for Germany comes from University of California Davis database on nominal GDPs http://gpih.ucdavis.edu/GDP.htm (there they don't have data for net per capita products at factor cost for US and UK)

So, in terms of cars, for example, the net per capita incomes were:

US ---------- 552.6 dollars
Germany --- 282.0 dollars
UK ---------- 340.6 dollars

But in terms of locomotives, the net per capita incomes were:

US ---------- 552.6 dollars
Germany --- 790.0 dollars
UK ---------- 874.2 dollars

In terms of aircraft/aircraft engines:

US ---------- 552.6 dollars
Germany --- 431.5 dollars
UK ---------- 461.6 dollars

In terms of ships (using a weighted average of steam and motor ships):

US ----------- 552.6
Germany ---- 711.9
UK ------------ 886.9

In terms of radios:

US ----------- 552.6
Germany ---- 363.6
UK ------------ 352.6

And in terms of firearms:

US ----------- 552.6
Germany ---- 509.4

It's easy to understand why the US armed forces used motor vehicles to a much higher extent than European countries as their motor vehicle industry was vastly more developed than in European countries and so their motor vehicles were much cheaper if compared to per capita income.

While shipbuilding and production of locomotives were both traditional industries in European countries and so their per capita purchasing power of these two types of goods were higher than in the US. While younger industries (electronics, motor vehicles, aircraft) were relatively more developed in the US than in Europe, one of the reason was that WW1 happened and that had a severe impact on European economic development, which fell behind the US in these younger industries that emerged after WW1.

In Germany vacuum cleaners were also relatively cheap if compared to the prices in the US, the reason was the scale of production: German output in 1936 was 3/4 of US output in 1935 (651,304 for Germany compared to 871,934 for US) while in terms of motor vehicles (cars and trucks), German output in 1936 was about 7% of US output in 1935 (236,452 for Germany compared to 3,247,649 for the US). That doesn't apply to the UK, whose vacuum cleaners were very expensive relative to their per capita income.
"In tactics, as in strategy, superiority in numbers is the most common element of victory." - Carl von Clausewitz

Stiltzkin
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Re: Relative prices of industrial products US, Germany and UK

Post by Stiltzkin » 30 May 2017 08:46

t's easy to understand why the US armed forces used motor vehicles to a much higher extent than European countries as their motor vehicle industry was vastly more developed
Because they had oil, no sense in developing an industry without sufficient resources.
Necessity dictates development (in the sense of industry, not necessarily quality, Europe was the pioneer in car development). The US is a vast country which has to rely on aircraft. They have the most airports. Central Europe uses railways.

Do you think it would be possible to construct a PPP for tank cost comparison?

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Guaporense
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Re: Relative prices of industrial products US, Germany and UK

Post by Guaporense » 30 May 2017 22:51

I don't have the data for that.

Also notice that despite not having the geography for motor vehicles by mid 1970's Western Europe was producing substantially more vehicles than North America.
"In tactics, as in strategy, superiority in numbers is the most common element of victory." - Carl von Clausewitz

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