Changes In The British Economy 1886 - 1901

Question 0

What concerned businessmen about low profits?

Answer 0

1. Low profits = less money available for capital investment

2. To offset profits loss employers have to pay off their workforce - in 1886 unemployment reached a peak of 10%

Question 1

What did the Royal Commission set up in 1885 by Salisbury’s government find?

Answer 1

1. Agricultural prices had been falling since 1873 and continued a downward trend.
2. Increase in production of most other commodities but in many circumstances supply outstripped demand - this led to a reduction in profits, a fall in prices and lower interest rates on invested capital.
3. Issues relating to foreign competition.
4. However - there were encouraging signs for the future.

Question 2

Between 1873 and 1896, what was the % drop in price levels?

Answer 2

30 to 40%

Question 3

Why was the drop in price levels between 1873 and 1896 not all bad?

Answer 3

1. Beneficial shift in terms of trade for Britain because price of imports fell more than the price of exports - so raw materials were cheaper to buy.
2. Wages didn’t fall so as long as a man was in a job he benefited from lower prices of goods.

Question 4

What statistics showed that Britain’s industrial output continued to grow and therefore suggested that this was a period of adjustment rather than decline?

Answer 4

Coal output doubled from 110.4 million tonnes in 1870 to 225.2 million tonnes in 1900.

Question 5

What else showed that Britain’s manufacturing output was increasing?

Answer 5

The appearance of many new small industries such as boot and shoe manufacture, chocolate, tobacco and beer which all developed successfully at this time.

Question 6

How did population growth and immigration succeed in helping Germany and America?

Answer 6

1. Large labour force and a ready home market for manufactured goods.
2. Germany’s population was growing at a faster rate than Britain’s so their labour force was larger.
3. European immigrants flooded into America which resulted in the American population rising 30% in 20 years - again increasing their workforce at the expense of Britain’s.

Question 7

How did vast natural resources help America and Germany at the expense of Britain?

Answer 7

1. Where Britain once produced the most amount of coal and iron America and Germany both had vast quantities allowing them to overtake Britain in manufacture by 1896.
2. America and Germany also competed successfully with Britain in engineering - the railroad building in America enabled them to overtake Britain’s share of world export markets.

Question 8

How has Britain’s response to the competition posed by America and Germany been criticised?

Answer 8

1. Britain’s outdated equipment and processes
2. British government’s lack of investment in technical education
3. Introduction of protective tariffs by overseas competitors
4. Britain’s free trade policy

Question 9

How did Britain’s outdated equipment and processes result in an inability to compete?

Answer 9

Outdated machinery - reluctance to invest in capital in modern machinery which America and Germany were both using.

Question 10

How did the British government’s lack of investment in technical education result in an inability to compete?

Answer 10

Germans invested money in technical colleges but Britain failed to do so, hence Germany had a better educated workforce with arrange of new skill sets.

Question 11

How did the introduction of protective tariffs by overseas competitors result in an inability to compete?

Answer 11

Germany imposed duties of 13% in 1879. By 1900 America raised their tariffs to 57%. This was damaging to Britain’s export trade and industrial production - making Britain’s products more expensive and so less competitive thus Britain’s share of the market fell.

Question 12

How did Britain’s free trade policy result in an inability to compete?

Answer 12

Britain’s reluctance to introduce protectionist tariffs meant that other countries could sell their goods at a competitive price posing a threat to the sale of British goods in the home market.

Question 13

Although evidence suggests there was a depression between 1886 and 1901, how can Britain be said to have survived the challenge of foreign competition to its industry and export trade?

Answer 13

1. In the 1880s Britain was still the biggest exported of industrial products.
2. As the world economy grew the city of London became more important than ever to the world economy because it was the largest exported of capital and invisible trade - so still maintained a surplus trade balance.
3. The British shipping industry was still the largest in the world - the British merchant fleet represented about 1/3 of the total.