topic 9 trade+commerce

• The years 1890 to 1914 saw a shift in Britain's economic relationship with its empire
• Imperial commerce sheltered Britain during the Great Depression, but also lulled the British into a sense of false security as other countries caught up in industry and science
• Investment in colonial projects made a powerful contribution to British wealth, although the costs of empire continued to grow
• The First World War led to a further examination of the costs of empire
• Lord Salisbury in 1895 emphasized the importance of opening new markets among half-civilized or uncivilized nations to protect Britain's commerce
• By 1900, Britain's imports were greater in value than its exports, leading to a trade deficit, highlighting the need to expand overseas and find new markets
• Historian's interpretation: The union of commercial and imperial muscle formed the foundation of the British world system, supporting Britain's defense, imperial prestige, and sense of unity
• Benefits of trade with the Empire:

  • Export and import prices moved about 10% in Britain's favor between 1870-1914
  • British exports to the Empire increased significantly
  • Britain sourced raw materials from the Empire to support its industries and control colonial industries to reduce competition
• Trade with the Empire was beneficial as it provided stable trading supplies, supported British industries, and allowed for the expansion of transport companies and railway projects
• British breweries and investments overseas in the Empire were considered safe and profitable, contributing significantly to Britain's economic growth
• Limited economic benefits of empire:

  • The Empire was not the main source of Britain's trade, with other trade growing faster
  • Cheap colonial food reduced the profitability of British farm produce
  • Some growth of the Empire was expensive and offered little return in terms of trade
• The availability of cheap imperial products prevented Britain from developing its scientific enterprises, and overseas investments were not felt by the majority of people
• Growing nationalism in the Empire sometimes damaged trade, showing the volatility of what was considered 'safe' trade
• Britain continued to invest vast sums overseas, doubling from £2 billion to £4 billion from 1900 to 1913, with more capital going to the USA and India than elsewhere
• Investment in the Empire influenced Britain's economic power, with investments in Latin America, Turkey, Morocco, and other regions contributing to Britain's economic strength
• The Gold Standard, adopted by the Bank of England in 1821, linked currencies to the value of gold, providing stability and symbolizing Britain's economic strength
• Overall judgment on the benefits of trade with the Empire:

  • Completely beneficial: 10/10
  • Very few benefits: 1/10
• Debates over trade and commerce within the Empire in the early 20th century involved those who viewed colonies as an expensive burden (e.g., Hobson) and those who saw them as valuable assets that should be further utilized (e.g., Joseph Chamberlain)
• Anti-imperialists believed that the drawbacks of the Empire for the British economy included blunting commercial enterprise, undermining domestic food production with colonial imports, depressing wages in Britain with cheap foreign labor in colonies, and the costs of maintaining the empire such as the navy
• Cain and Hopkins highlighted the relative decline of the British economy in the later years of the nineteenth century, with slow growth of manufacturing output, a decrease in Britain's share of world visible trade, and limited influence of industry on central government and economic policy due to lack of access to power and influence
• Joseph Chamberlain proposed the 'imperial preference programme' to strengthen ties within the Empire and keep British trade in British hands, arguing that cutting ties with the colonies would lead to economic disaster and starvation for half of the British population
• Chamberlain's 'imperial preference programme' aimed to keep British trade within British hands, strengthen ties within the Empire, and combat the challenges posed by large trusts and new methods of competition
• Cost vs Benefit


  In 1890 there was a general assumption that the Empire made Britain wealthy. Cost of Empire was something Gladstone's Liberals were concerned about and there were some radical critics who argued that the Empire was not as beneficial as most people believed. By 1914, a few more people began to question whether the cost of Empire were entirely justified
• Benefit of Empire 


  Empire allowed Britain to prevent/control colonial industries - reducing international competition. The use of a common language and the fixed exchange rates to the sterling facilitated trade with Britain and its colonies because it was simpler. Many parts of the Empire e.g. White Dominions and India were self-financing, being run by taxation
• Evidence of Benefit - Imports

  Britain was a predominantly industrial society so it expected the colonies to supply food for a population which was outgrowing the capacity of domestic agriculture. e.g. imported vast quantities of wheat/beef from Canada and lamb/dairy products from New Zealand. This trading supply was considered safe and stable. Britain's manufacturing industries sourced raw materials from Empire e.g. cotton, wool, timber, cocoa, tea and palm oil which supported home industries and meant that manufactured goods could be sold on for profit
• Evidence of Benefit – Exports

  the relationship between export and import prices moved about 10% in Britain's favour between 1870-1914. exports to Empire increased from 21.2% in 1871-75 to 37.2% in 1913. India alone took 20% of Britain's total exports by 1914. British breweries gained from colonial trade and some beers were specifically developed for colonial conditions e.g. India Pale Ale. Colonial governments bought imports (including expensive railway equipment) from Britain because it was simpler and because they felt it was their duty
• Evidence of Benefit – Commerce

  Transport companies gained because steamships were the main carriers of goods and people across the empire. Orders from British shipbuilders expanded and railway companies gained huge profits from the growth of Empire e.g. the Ugandan Railway, and the maintenance of Empire as the railways in India continued to expand.
• Evidence of Benefit – Investment

  40% of British investment overseas took place in Empire because they were considered safe. By 1914 Britain had invested twice the amount of the French and 3 times that of Germany overseas. This invisible trade grew rapidly until 1914.
• Lack of Benefit


  Empire was not the main source of Britain's trade, only 24.9% of British imports came from the colonies and 37.2% of exports went to the colonies by 1913. Trade with the Empire remained static but other trade was growing and manufacturing exports, in particular, grew much more slowly after 1870. Growing nationalism in the Empire sometimes led to that trade being damaged e.g. in India, which took 20% of British exports, there were strikes and boycotts of British goods in 1905, showing how this trade which was considered 'safe' was in fact becoming volatile
• Evidence against Benefit - Imports

  Foodstuffs mostly came from non-colonial countries cheap colonial food helped to reduce the profitability of British farm produce. Some cheap imperial products prevented the British from developing its scientific enterprises which proved damaging, in the long run, e.g. while the French, Russians and Germans developed synthetic alternatives to rubber, Britain simply relied on its supplies from Africa and Asia
• Evidence against Benefit – Expense

  Some growth of the Empire in this period was expensive to secure but offered little return in terms of trade e.g. The Boer War on 1899-1902 cost £250 million, some believed mine owners had tricked Britain into fighting the Boers to preserve their own profits. the middle classes faced an increased tax burden, due to maintenance and defence of the empire. Some argued that if the middle classes had less tax to pay, then they would've modernised their equipment better and perhaps paid their workers more
• Evidence against Benefit - Investment 


  British investment overseas was expanding in non-colonial areas as well e.g. in the USA. This was considered riskier but could be much more profitable. The benefits of overseas investment were not felt by the majority of people.
• Investment in Empire

  British investment doubled from £2 bn to £4bn between 1900 and 1913, not all of this was in Empire. Far more British capital went to the USA and India, and the disparity increased. Investment in Empire was regarded as safe, but loans to foreign nations might provide bigger returns. Investment in Empire was also considered dangerous as it might be used to develop rival manufactures e.g. Indian cotton mills.
• Colonial Stocks Act 


  1899 and 1900 facilitates a number of infrastructure projects e.g. rail links into the African interior from the ports of Lagos and Mombasa
• Invisibles


  Refers to any export that provides income but does not have a physical presence e.g. insurance, banking services and return on overseas investments. With huge earnings from these invisibles, Britain could afford to import vastly more than it exported. By 1914, Britain had invested 2x the amount of the French and 3x that of Germany oversea
• Gold Standard 


  Britain set the standard for the international monetary system, forcing other nations to adopt the gold standard. By 1908, only China, Persia and a handful of Central American countries still used a silver standard. The gold standard became the basis for a global monetary system and was effectively a Stirling standard