(21) Trade and Commerce Flashcards
Post-War Priorities
After the War, the Empire was vitally important for Britain’s imports and as a market for British produce.
The Empire and Commonwealth provided essential imports of food and raw materials at a time when Britain’s reserves of foreign exchange were too limited to source imports from many other parts of the world.
Britain therefore invested heavily in the Empire to secure this trade in the future.
In 1958, approximately 58% of all overseas investments in the UK in shares and securities were in Empire companies and governments.
Change after 1960
Britain started to see the value of trade within Western Europe: British imports - 1948: 44.9% C vs. 20.5% WE British imports - 1965: 29.8% C vs. 30.6% WE British exports - 1948: 46.1% C vs. 24.8% WE British exports - 1965: 27.9% C vs. 32.5% WE
Post-War Europe
• The European economy recovered from the war quickly and impressively
• Due to US Marshall Aid ($13.5 billion), US nuclear protection and the climate of liberal democracy which favoured private enterprise
• In the mid-50s there was full employment in Europe, high growth rates and living standards; in the West at least.
1960 - ‘the six’ in the EEC accounted for 1/4 of the worlds industrial production - 2/5 aggregate international trade
The EEC
Britain continued to trust in their Empire, and did not join the EEC in 1957 and setup the European Free Trade Association (EFTA) for non-EEC members.
The EEC was very successful
The British indecision between focusing on trade with the Commonwealth and forming closer links with Europe meant that the EFTA could not take-off.
When British exports to Europe in the 1960s became greater than that to the Empire, Britain decided to apply for EEC membership, once in 1963 and again in 1967. Both times Britain they were rejected membership because they insisted on special concessions being allowed for British commerce with the Commonwealth and because of France under De Gaulle vetoing the application.
Sterling Devaluation
In 1967, Harold Wilson’s Labour government announced that it was lowering the exchange rate so that the pound became worth $2.40 (was originally $2.80) a cut of about 14%
Designed to cut British deficit by making British exports cheaper and therefore more attractive.
It did mean however that imports to Britain were more expensive.
The Sterling devaluation of 1967 destroyed the ‘Sterling Area’ in the Empire and international faith in the currency was weakened.
It made British Imperialism look weak around the globe.
Post War Reconstruction
After the war, the USA became the leading global supplier and so Britain desperately needed to earn dollars to build a foreign exchange reserve to buy their imports
Rationing was continued after the Second World War to cut food imports and British industrial production was focused on exports rather than for within Britain.
There was also a large investment in kick-starting exporting industry in colonies, mainly Africa, where natural resources were abundant. The aim was to increase dollar reserves from colonial sales and a supply of goods from within the Sterling Area to save on using their dollar or other foreign currencies.
Colonial Development and Welfare Acts of 1940 and 1945 were used to expand agricultural production and promote new technology in the colonies (Green Revolution).
1948 Colonial Development Corporation was setup to coordinate major projects and develop self-sustaining agriculture, industry and trade.
In 1963 it was renamed the Commonwealth Development Corporation
Not all schemes were successful, such as the Tanganyika Groundnuts Scheme of 1948.
Malay rubber was however a great dollar earner and a major contributor to the Hard Currency Pool (Collective pool of dollars earned by the Sterling Area) as the US faced rubber shortages during and after the war. Explains why Britain did not allow immediate independence for Malay and responded fiercely to the 1948 communist terror attacks.
