6.3) the british economy Flashcards
1
Q
how did rich people in britain accumulate their wealth between 1688-c18th?
A
- creating the national debt
- setting up a new banking system
- taxation
- controlling the trade of a colonial empire through a monopoly
2
Q
how did the accumulation of wealth lead to capitalism and what did this mean for the nation?
A
- capitalism became firmly established this meant that trade and industry was controlled by private owners whose main interest was profit
- monarchs and aristocrats tried to keep hold on the wealth that was gained through trade
- but many merchants believed they had a right to pursue profit for themselves
3
Q
how did the government achieve wealth accumulation?
A
- they wanted access to gold and silver bullion, raw materials (like sugar and tobacco) and cheap or enslaved labour
- to do this, they gained colonies overseas
4
Q
how did the gaining of british colonies overseas lead to conflict between nations?
A
- there was constant war between european nations because everyone wanted a trade advantage -> both land and naval battles
5
Q
what are some examples of colonial wars?
A
- nine years war (1688-1697) against france
- spanish war of succession (1701-1713)
- france, netherlands, britain and spain fought for the islands of the caribbean
at this point france was the greatest threat as spain was in decline
6
Q
which war declared the rise of britain?
A
- the spanish war of succession marked the decline of spain and the rise of britain as a major european power
- after the 1713 treaty of utrecht, britain gained north american territory, gibraltar (and therefore access to the passage between the mediterranean and atlantic) so the royal navy could dominate the north atlantic
7
Q
when and why was the bank of england created?
A
- 1690s - william needed money to spend on troops, weapons and military tech to win his wars so he needed to borrow money
- also a group of dutch bankers wanted to promote the growth of private business
- the bank of england was created in 1694
8
Q
how was the bank of england structured?
A
- 1694 - in order to raise 1.2 million, the gov gave lenders a right to form the BoE with a monopoly on the issue of bank notes
- this meant the creation of national debt owed by the government (by the taxpayers instead of the monarch)
- the BoE could also lend to the public and smaller banks, and receive deposits
9
Q
how has national debt changed over time?
A
- the BoE and national debt were necessary for carrying out the wars of c18th
- 1717: 54mil, 1782: 230 mil
- the national debt has grown and is paid for by taxpayers
10
Q
how did the bank of england impact business?
A
- as a result of the money it lent, england won wars
- so plantations were safe to produce the goods and the royal navy could protect ships
- so england made more money to be able to build stronger ships to fight with
- this helped them seize more colonies
- provided more business opportunities
11
Q
how did the contributions of rich investors help speed up industrial progress in britain?
A
- those who made profit lent some money to the gov, which was used to expand british colonies by war
- the banking system made it possible to borrow money on credit so companies could plan long term projects
- rebuilding the military stimulated a growth in manufacturing of weapons, ships etc
- accumulated wealth was invested into businesses by bankers and merchants kickstarting the industrial revolution (1750-1900)
12
Q
how did the credit system change the way people regarded money?
A
- credit was available to many people and they used this to invest in new businesses
- ## speculation: people bought shares in a company and hoped that it would do well enough to raise their share value which could then be sold for a profit (risking money in the hope of a larger return)
13
Q
what was the south sea bubble?
A
- company formed in 1711
- after the 1713 treaty of utrecht it was given the right to asiento (selling enslaved africans to the spanish colonies in the americas)
- joint stock company in which people bought shares in its ownership -> shared profits when the company did well
- many people bought the company’s shares
14
Q
why did people buy shares in the south sea company?
A
- the gov approved the company’s scheme to minimise and manage national debt by issuing shares in the south sea company
- people were encouraged by the success of the company
- the company made itself seem very profitableby advertising reserves of gold and silver + artificially increased its share price to £1000 per share
15
Q
how did the ‘bubble’ burst?
A
- the company lent large amounts of money to people so they could buy shares
- some shareholders realised that the share prices was too high for the company to support so they started selling their shares
- as more people sold their shares, the share price decreased and everyone started rushing to sell their shares
- the company didn’t have the money to pay people back; most shareholders lost all their money and the company collapsed (1720)
