    9

    dep ends not just on guns and strategic brilliance, but on industrial innova-

    tion and marketing smarts.

    The next 59 years would be rosy ones for the British.  As they were

    defeating Napoleon at Waterloo, a new set of technologies loomed on the

    horizon.  One was the spread of mechanization beyond mere cotton mills.

    The second was steam.  The  British would be the masters of both.

    English citizens built the most advanced steam-driven ships--and sold

    them everywhere from South America to Russia.5  They virtually invented

    the railroad.  Then they accepted contracts on the construction of millions of

    miles of railroad track in the unreachable wastes of nearly every continent.6

    They did a spectacular business in the sale of railroad engines, railroad cars,

    and even motormen's caps.7

    Back home, the British figured out how to use steam engines to make

    the goods that artisans usually produced painfully by hand.  The result:

    productivity leaped, and costs came tumbling down.  One

    machine-operating British worker could turn out as much cloth as 20 of her

    old-fashioned competitors.  In Queen Victoria's day (1837-1901),

    productivity per person in Britain rose 2.5 times!  The British laborer

    benefitted mightily.  Wages rose an astonishing 80% in real dollars from

    1850 to 1900.

    The world clamored to get its hands on inexpensive, high-tech British

    goods.  China and India actually went through productivity declines as their

    citizens abandoned the expensive hand-made items sold by old-fashioned

    craftsmen at the local bazaar.  Instead, Chinese and Indians bought British

    cloth, pins and other necessities.8  By 1860, the English--with a mere 2% of

    the world's population--were turning out a full quarter of the world's wares,

    and a mind-boggling 40% of the items that came tumbling from modern

    industrial plants.

    The cornucopia of British products traveled across every sea in an

    armada of British ships.  By the mid 1800s, the English controlled fully a

    third of the world's merchant marine.9  Transactions everywhere from

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