Key Information - Trade and Commerce 1857-1947 PDF

Key information – Trade and commerce 1857 – 1947 1857-1890 General expansion of trade and commerce was facilitated by: → The Industrial revolution o Solidified Britain’s position as the world’s foremost trading nation ▪ Urbanisation and mass production and consumption whi...

Key information – Trade and commerce 1857 – 1947 1857-1890 General expansion of trade and commerce was facilitated by: → The Industrial revolution o Solidified Britain’s position as the world’s foremost trading nation ▪ Urbanisation and mass production and consumption which led to Britain seeking new markets through colonialism, becoming reliant on overseas imports by 1857 ▪ Cycle of dependence with empire was created The colonies supplied Britain with raw materials which British industry converted into finished goods- which the colonies were compelled to buy back o This led to de-industrialisation in India due to the restrictions on sales of Indian goods within Britain and the simultaneous flooding of Indian markets with low cost British goods ▪ Britain became responsible for 60% of the world's trade, producing 50% of the world's trade in coal, cotton and iron ▪ The Empire was responsible for a third of these exports ▪ The City of London became the world’s financial capital o Development of the infrastructure for global trade ▪ The development of the compound steam engine in the 1850s ▪ By the 1970s, several British companies were sending steam-trading vessels up the Niger ▪ The Suez Canal Followed the American Civil War (1861-1865) which heightened British interest in Egypt due to cotton shortages Opened in 1869 Reduced the journey from India by 6000 miles By the 1870s 40% of Egypt’s imports were coming from Britain John Darwin argues that British imperialism from the 1880s sought to maintain a strategic ‘pseudo-empire’ primarily protecting British access to the Suez Canal and its routes ▪ ‘Railway imperialism’ British investment, production and control of railways was used to increase colonies’ dependence of Britain, maintaining and expanding its control o In West Africa railways linked the interior areas of production and the sea  Railways provided the largest single investment of the period in the settler colonies o Offered South Africa a chance to expand its territories and commercial interests into the interior eagerly taken up by fervent imperialist Cecil Rhodes Railways themselves were used to generate profit o Indian railway shares offered twice as much as the British government’s own stock o Shares absorbed up to a fifth of British portfolio investment in the twenty years up to 1870 whilst only 1% originated in India Britain’s navy also became the strongest in the world and better weaponry (maxim guns and breech-loading rifles) were developed, allowing imperial conquest → The movement away from mercantilism o Free trade was unilaterally accepted in Britain from the mid 19th century up until the 1920s ▪ Influenced by Adam Smith’s The Wealth of Nations 1776 ▪ Regulations and duties on imports and exports were gradually reduced from the 1820s with remaining tariffs on imports removed by Gladstone in the 1850s o This made British manufactured goods cheaper, encouraging countries into Britain’s economic orbit ▪ New markets were found in Latin and South America, the Middle East and China ▪ In 1867, exports from Britain amounted to £181 million and exports to non- Empire territories amounted to £131 million o Ronald Robinson and John Gallagher argue in the Imperialism of Free Trade that British imperialism was shaped just as much by this ‘informal imperialism’ as formal annexation, which was only used a last resort to protect British commercial interests ▪ The Second Opium War which culminated in the Treaty of Tientsin 1858 forced China to open its markets to British merchants and to legalise the opium trade → Threats to Britain’s economic position, which fueled imperialist sentiment, and led to formal annexation as a means of securing British markets against the threat of other European powers o The threat of Russia from the late 18th century due to the creation of a power vacuum by the decline of the Ottoman Empire ▪ Following the 1878 Congress of Berlin, which alleviated tension within Europe, Alexandar II turned his attention to Central Asia  ▪ Britain feared a Russian invasion of Afghanistan, due to its close proximity to India (known as The Great Game) ▪ Led to the Second Anglo-Afghan War (1878-1880), establishing British influence in the country o The emergence of both France and Germany as industrial superpowers in the 1870s ▪ France’s ambitions were fueled by their loss of Alsace-Lorraine during the Franco-Prussian War (1880-1881) whilst Bismark’s conversion to colonialism led to German expansion into west and southern Africa during the 1880s o The Berlin Conference (1884-85) formalised the ‘scramble for Africa’ ▪ This led to formal British annexation of territories to protect their economic interests against these other powers – e.g. Bechuanaland in 1885 to prevent a German-Boer alliance Southern Africa had been of commercial importance to Britain since a diamond rush at Kimberley in the 1870s ▪ In 1890, under pressure from mining magnate Cecil Rhodes, Salisbury delivered an ultimatum to Portugal, demanding the withdrawal of Portuguese forces from British claimed territory along the Zambezi which threatened Rhodes’ commercial and territorial interests in the region → The role of chartered companies o These were used as a means of organising and consolidating British trade through monopolising commerce in a region, exercising military power and assuming administrative functions when necessary to maintain this ▪ East India Company rule of India from the mid 1700s established full jurisdiction over India, which was easily translated into direct crown rule in the Government of India Act 1858 o Chartered Companies resurfaced during the Long Depression in the 1870s which created a desire for new overseas markets for British goods, compounded by the rise of the other European powers ▪ ‘Merchant imperialists’ such as George Goldie, Cecil Rhodes and William Mackinnon were given formal British sanction to establish political and legal control of African territories to protect their economic interests Mackinnon’s Imperial British East Africa Company (chartered in 1888) administrated most of present-day Kenya, Uganda and Somalia to protect access to trade o When the company collapsed, the territory was divided to form the Uganda Protectorate in 1894 and East Africa Protectorate in 1895 Goldie’s Royal Niger Company took control of the Lower Niger River, in 1884, establishing 30 trading post and securing Britain first access to the palm oil trade  o Political and legal control was then built up – for instance through treaties with indigenous chiefs - in order to protect Nigeria as a British commercial stronghold o It was made into two protectorates in 1900 1890-1914 Benefits of empire to trade and commerce → The empire guaranteed Britain access to overseas markets o Britain was able to control colonial industry, providing cheap access to raw materials, and guaranteeing import markets for British manufactured goods ▪ Britain was able to import vast quantities of wheat from Canada and lamb and dairy products from New Zealand ▪ Colonial governments bought imports (including expensive railway ▪ equipment) from Britain ▪ India alone took 20% of Britain's total exports, worth £150 million to British business by 1914 o The export and import prices moved about 10% in Britain's favour between 1870- 1914 o However, the colonies were not the main source of Britain’s trade ▪ In 1913, empire made up just 37% of British exports and 25% of British imports ▪ Trade with the empire remained fairly static in these years, whilst British trade with the non-imperial world, notably the US, increased substantially Britain imported 17 million hundredweight per year of wheat from Russia and 31 million from the USA (almost 10 times that of Canada) ▪ Only in cheese, apples, potatoes and fresh mutton was empire Britain's main food supplier This made up less than 10% of food imports ▪ Furthermore, the colonies bought increasing amounts from foreign nations in these years ▪ The Imperial Federation League (established 1884) was disbanded in 1893 reflecting waning interests in the Empire’s commercial importance ▪ The rejection of the imperial preference promoted by high imperialists such as Joseph Chamberlain in favour of free trade reflects the decreased relevance of empire to British trade o The magnitude of primary sector imports prevented Britain from developing these sectors itself, which proved damaging in the long run ▪ For instance, whilst the French, Russians and Germans developed synthetic alternatives to rubber, Britain continued to rely on its supplies from Africa and Asia  o Furthermore, growing nationalism in the empire threatened British commercial interests ▪ For instance, the swadeshi movement in India was launched in 1905 and promoted Indian self-sufficiency through boycotts of British goods This led to a 20% fall in British product sales ▪ This indicates the increasingly volatile status of trade that was considered safe → Fixed exchange rates ensured commercial stability creating profit opportunities for British investors o Rapid Growth of invisible trade until 1914 ▪ The Colonial Loans and Colonial Stocks Acts of 1899 and 1900 facilitated British investment into a number of infrastructure projects including rail links into the African interior from Lagos and Mombasa ▪ 40% of British investment overseas was in the empire ▪ By 1914 British overseas investment was double that of France and 3 times larger than Germany, maintaining the informal empire in Latin America, Turkey, Morocco, Siam and Japan → The benefits of this investment were not felt by the majority of people o Conversely, the costs of the empire were felt through taxation as well as the failures of British industry to modernise and depleted wages for British workers ▪ In 1901, the annual military expenditure was £91.5 million → Furthermore, there was an expansion of overseas investment in non-colonial countries as well, which provided bigger returns o Besides India, far more capital was invested in the US that any other country between 1900 and 1913 1914-1947 → In general, WW1 led to a decrease in economic ties with the empire o Britain was increasingly unable to counter rising competition from emerging industrial powers over imperial export markets ▪ For instance, British textiles, a traditionally valuable British export to Malaya, Burma and India, were undercut by Japan ▪ Britain was unable to respond to this due to the economic cost of WW1, in which all industry was direct towards the war effort → Financial cost of the war was over 3 billion → This left Britain in severe debt with most capital investment wiped out → British industries, including textiles, shipbuilding, coal, iron and steel, never regained their pre-war standing  → British exports in general remained at half of their pre-war levels during the post-war depression of 1920-1922, falling from 30% to 15% ▪ This was further exacerbated by the impact of the British introduction of taxes on Indian imports in the immediate aftermath of the war, which sowed the seeds for greater economic independence in the inter war years → This was compounded by growing nationalism as a result of the war o Battles such as Gallipoli and Vimy Ridge led to the development of distinct national identities in the Dominions, leading to increased demands for self-reliancy, including over economic affairs o This was especially pronounced in Canada, which developed strong trade relations with the US, with whom trade agreements were signed in the early 1920s without British consultation ▪ The governments of William LM King further focused on creating economic independence from Britain o By contrast, Australia and New Zealand, despite nationalist developments, remained economically dependent on British imports o In India, many of the 1.3 million men who had volunteered to fight in the war expected to receive greater independence in return ▪ When the Government of India Act of 1919 failed to satisfy these demands for self-rule, Indian nationalists such as Jawaharlal Nehru and Mahatma Gandhi pushed for boycotts of British goods and promoted Indian self- reliancy, threatening British trade and commerce → The Depression created a much greater emphasis on empire due to the implementation of imperial preference o This was encouraged by imperialists such as Lord Beaverbrook, Canadian newspaper magnate and politician who owned the Daily Express and the Evening Standard and had close ties with the Conservative government of Andrew Bonar Law o The adoption of the Sterling Area in 1931 ensured a profitable outlet for British overseas investment ▪ This allowed colonies to peg their currencies to the pound, or even adopt it themselves establishing greater economic dependency o Allowed Britain to respond to the dramatic reduction in demand for its exports by preserving British control of colonial markets ▪ The Import Duties Act of 1932 exempted much of the empire from a 10% tariff on most imports ▪ The Ottawa Agreements with the Dominions established imperial preference on the principle ‘home producers first, empire producers second, and foreign producers last’  o The total value of British imports remained relatively stable in these years, however the share from empire increased ▪ The percent of cocoa imported from the empire rose by 40% o Although total exports to empire fell between 1913 and 1934, the percentage as a total of British exports also rose ▪ Railway carriage exports increased from 58% to 68% ▪ As a whole the percent of British exports going to the empire increased from 37% to 44% o However, this was not uniform ▪ The share of the Dominions as a percent of trade to the empire increased; whilst the share of India and Burma fell ▪ India remained an important supplier of tea and jute but absorbed fewer exports as key markets such as cotton were won by the Japanese and subsequently by emergent Indian cotton textile providers o The Depression also highlighted the financial dependence of certain colonies on Britain ▪ Burma and Malaya relied on British markets to buy their exports of tin, rubber and rice ▪ African colonies saw tumbling prices of their food and raw materials exports ▪ Incomes fell bringing greater poverty and starvation – hence more dissatisfaction with colonial rule → In May 1935, a major strike broke out among African workers in the Copperbelt Region of Northern Rhodesia following the doubling of urban taxes under the Native Tax Amendment Ordinance in response to falling copper prices due to the depression, threatening the copper requirements of British industry, nearly 70% of which came from Northern Rhodesia ▪ Australia and New Zealand became increasingly indebted to Britain → They were forced to run trade deficits as the price of their exports fell faster than their imports → New Zealand suffered less than Australia as it was developing less slowly and so racked up less debt → These debts were viewed by the British as evidence of Australian mismanagement of their financial affairs → However, in Australia they were viewed as evidence of colonial exploitation by financiers in London, giving rise to the desire for independence in the Australian Labour Party → WW2 critically weakened economic ties with empire o Before 1939, Britain’s economic strength had helped bind the colonies to it – however the weakened state of the economy in 1945 rendered Britain unable to buy  what the colonies produced, provide the manufactured goods they needed and invest in their development ▪ Britain lost a quarter of its wealth from the destruction of houses, factories and shipping ▪ In 1945, British exports totalled 350 million (40% of the prewar figure) whilst exports reached 2000 million ▪ Britain was around 3500 million in debt (2500 million to its colonies) ▪ Repayment seemed impossible and by 1945 it seemed likely Britain would run out of hard currency and be unable to important any raw materials o This was a huge factor in the post-war contraction of empire as Britain could no longer afford to maintain it ▪ This was exacerbated by the beginning of the Cold War, which required Britain to maintain a greater military presence in Europe ▪ Furthermore, the worsening economic situation in Britain in 1946-7 bred little support for the maintenance of empire as focus was on domestic issues, reflected by the priorities of the Attlee government ▪ India was no longer profitable for Britain as it no longer provided a market for British cotton exports