England & Germany

But in terms of the trading relationship between England and Sweden little has changed for the past two hundred years. At the end of the 18th century, Sweden and England were trading extensively with each other. By the middle of the 19th century the Swedish forests were provisioning the English fleet and iron from Swedish mines was feeding the export frenzy of the Lancashire textile magnates and the shipbuilders on the Clyde. Remarkable that all this was possible without a European Union to harmonise and regulate matters...and before income tax or value added taxes had been invented.

Sweden started investing in industry fairly late. It put its faith in canals up until 1840 but then went for the classic railway-led economic development that has served so many countries well and did wonders for the British companies who put up the money to build half of the world's railway mileage in the 19th century...and then spent much of the 20th century using what they had built to transport armies and prisoners of war to and fro across the world.

The Swedes are one of the few countries who got their railways virtually scot-free...which makes you wonder why the fares are so high. Another was the Russians who borrowed their money from the French and then unilaterally cancelled the debt after the revolution of 1917. The Swedes have President Woodrow Wilson and the Treaty of Versailles to thank for their good fortune. Their French bankers raised the money for the Swedish railways in Hamburg and President Wilson followed Lenin's example by canceling everybody's Germans loans.

After that who can blame the German government for ordering their industrial workers in the Ruhr to go on strike when the French marched in a to collect their unpaid war debts by seizing the collateral. That was the real root cause of the German hyperinflation of 1923. There was no strike fund so the government printing new money. Yeltsin has had much the same problem in Moscow in recent years and has solved it in much the same way...by hyperinflation.

But this railway-led wave of industrial capitalism was really what launched Sweden into the 20th century. It led to a period of innovation-led industrial growth and was all the time supported by a surprisingly dynamic rural economy.

Nonetheless by 1900 Sweden's productivity was still only 40% that of England. So Sweden did her real star turn in the 20th century, riding out the two world wars well and far outstripping Britain in productivity growth. By 1970 it was England's productivity that was 40% of Sweden's. The Swedish Model had a lot to do with it.