CHAPTER   III
Was Britain at a Natural Disadvantage as
Regards Raw Materials?
(a) introduction
A relative advantage in production costs may accrue to a country
either from a difference in industrial phase or a difference in avail-
ability of natural resources. In 1870 the British iron and steel
industry was advanced in phase compared with its competitors,
but during the period under review it lost this advantage and began
to lag in some respects. It is now necessary to investigate whether
any change also occurred in the economic availability of raw
materials acting to the relative disadvantage of the British iron and
steel industry.
i. the importance of raw materials
The importance of this enquiry lies in the fact that raw materials
constitute from 75 to 85 per cent of the cost of pig iron production.
Labour cost is a relatively small proportion of the total—less than
10 per cent (for example, 6 to 9 per cent in this country and 5 to
6 per cent in the U.S.A.), Maintenance, renewals and other furnace
costs make up the balance exclusive of administrative and selling
costs.
It is not possible to assess the relative importance of ore and coke
as constituents of the raw-materials cost without specifying the
grade of ore and the type of iron produced. Sometimes the cost of
ore per ton of pig iron is more than that of the coke and sometimes
the reverse. In Britain, for example, when making pig iron from
native ores the coke costs about twice as much as the ore, but when
using imported ore the latter costs nearly 50 per cent more than
the coke. Moreover, the ratio of ore cost to coke cost may change
for a given iron over a period. In the case of Bessemer iron, for
ocampfe, the ore to coke ratio fell between pre-igi4 and post-igi8.
The ore cost par ton of pig iron is, on the average, more in UJS A
and in Germany thaii the coke cost, but less in Bel-