Introduction

The period between 1914 and 1951 was highly disturbed, with only a short interlude between World War I and the Great Depression, and an even shorter interlude before World War II. Nevertheless, it is possible to identify trends in the comparative performance of the major market service sectors. Although productivity growth was faster in the United States than in Britain, the British market service sectors kept pace with their German counterparts. Since the United States had largely caught up with Britain by World War I in services, faster US productivity growth in these sectors after 1914 led to the United States forging ahead, although it was only in parts of the transport and communications sector that the US productivity lead became large, as can be seen from the benchmark estimates in table 9.1. Although Germany also had a substantial labour productivity lead over Britain on the railways in 1935, Britain had substantially higher labour productivity in communications and also in distribution and finance.

The US forging ahead in transport and communications, together with the absence of large Anglo-American productivity gaps in distribution and finance, is most easily explained by the increasing ‘industrialisation’ of much of the transport and communications sector in the United States, together with the continued suitability of large parts of the distribution and finance sectors for organisation on the basis of flexible networks, a traditional British strength.