Chapter 15 - Trade, Commerce And The Economic Impact Of War Flashcards
Did B win ww1 + ww2?
Yes
What did the wars do?
Weakened B economy
Reduced ability to pay for the empire
How much did the war cost?
35 billion
How much had to be borrowed from the USA?
4 billion
What were the effects of the war on the economy?
Britain was in debt
Much of capital overseas investment wiped out
Pound sterling removed from gold standard as gold reserves ran low
What was the gold standard?
Where notes of money were backed up by reserves of gold
The notes could be exchanged back with gold
What effect did the war have on export industries?
Production for war was prioritised
Meant B competitors won markets usually dominated by B exports
What markets were difficult to win back?
Textiles
Shipbuilding
Coal
Iron
Steel
What was an example of this competition?
The Japanese textile production
What was the effect on the financial sector?
Less ability to borrow from banks
Economic burden of Empire grew
What was the problem intensified by?
Great Depression - collapse of international trade + markets
When was the Great Depression?
1930’s
What happened in 1931?
A financial crisis forced the country off the gold standard
This reduced earnings from oversea investment
How did the war effect India?
They contributed £146 million
Had inflation + shortages
Imports from B fell
Indian manufacturers had more of the domestic market
What did B impose on India for higher revenue?
Increased taxes
1917 - 11%
1931 - 25%
What was the effect of war in Canada?
They benefitted
Became industrial power
Looked more to USA for investment + markets
What was the effect of war in Australia + New Zealand?
Relied on B market as exporters of food
Hit hard by disruption of trade
What was B policy towards imperial trade in 1920s?
Wanted to recreate system before 1914
Returned to gold standard 1925 to stabilise international trade
Colonial Development Act of 1929 - gave treasury funds to support colonial development projects
What was the policy after the Great Depression?
More importance on Empire for commerce
Imports from Empire increased
Abandoned gold standard 1931
What did most countries in the empire fix the value of their currencies to?
Sterling
What did this create and give B access to?
The Sterling Area
What was the empire used for?
To soften the impact of the international economy + great depression
What was the total value of exports to the empire?
1913 - £195 million
1934 - £166 million
What was the biggest export going to the empire?
Motor vehicle exports
1913 - 67.4%
1934 - 71.7%
What were other big exports to the empire?
Cotton
Locomotive
Railway carriage
Motor vehicles
Electrical engineering
Why was exports of the prominent textiles industry decreasing?
Competition from Japan
What was suggested for a return of by imperialists like Lord Beaverbrook?
Return of ‘imperial preference’
What did this end?
Free trade
Who opposed this?
Dominions
They wanted to protect their own growing industries
Where was a compromise reached?
Ottawa Conference 1932
What was said in the Ottawa Conference 1932?
B introduced 10% tax on all imports but Crown Colonies exempt
B + Dominions gave each others exports preferential treatment
What did this reinforce?
Importance of empire supplying foodstuffs + raw materials
What was the total value of B imports from the empire?
1913 - £191 million
1934 - £257 million
What was the biggest percentage Britain had of imports coming from the empire?
Jute imports
1913 - 99.4%
1934 - 98.8%
Who became more important for B exports + supplier of imports?
Dominions
Who reduced the amount of B exports they sent?
India
Still exported tea + jute
What were the total imports and exports from and to the British?
Exports:
1909 - 35%
1938 - 41.3%
Imports:
1909 - 26.9%
1938 - 41.2%
Who experienced serious economic problems in the inter-war period?
Australia
New Zealand
Why were they struggling?
Cost of imports outstripped income from exports
They ran up debts with B
Meant imperial preference was more important
What did the debt to B increase in Australia?
Support for independence in the Australian Labour Party
How did Burma suffer in the collapse of the world trade in 1930s?
Relied on exports of rice
How did Malaya suffer in the collapse of the world trade in 1930s?
Relied on exports of tin and rubber
How did other African colonies also suffer?
Prices reduced for the food + raw materials they were producing
Incomes fell = poverty + starvation
Fuelled dissatisfaction with colonial rule
Which war impacted B more?
WW2
Why was B economy weaker for WW2?
Entered war in a far weaker condition
Defeats in West + Far East were expensive
What impact did attacks with German U-boats have?
Lost 11.7 million tons of shipping
54% of merchant fleet strength lost in beginning of the war
What event cut off supplies of vital raw materials?
Loss of major colonies in South East Asia to the Japanese
Cut off supply of rubber from Malaya
Why was B balance of trade in heavy deficit?
Diversion to producing weapons
Less produced for export
B tried to reduce imports - campaigns to support home production + rationing
How many of B oversea businesses were sold to pay for the war?
1/3
Borrowed from USA 1941 in for of Lend-Lease
Came out with massive debt
What is a Lend-Lease?
Arrangement in WW2 where USA supplied B with weapons, food + other necessities
Who did B depend on more for imports?
The Empire
There was big investment from colonial govts to help food + raw materials
What helped B pay for the war effort?
Colonial reserves (‘sterling balances’)
When did the USA end the Lend-Lease?
Aug 1945
They didn’t want to support a revived BE
Who negotiated a new deal for a US loan?
John Maynard Keynes
Got £900 million
What were the conditions for the loan?
The pound sterling had to be made freely accessible to dollars by Spring 1947
Who was John Maynard Keynes?
Economist
Argued govt should play active role in managing economy
Major advisor to the wartime coalition + post war Labour govts
What was the Sterling Crisis of spring 1947?
US loan was meant to help free convertibility from £ to $ at a fixed rate
B nearly ran out of $ reserves within 6 weeks - had to suspend convertibility
What approach did B take to re-establishing it’s world power?
Dual approach
If the cost of controlling a colony outweighed its value - control abandoned
If colonies had economic benefit - more colonial economic development
Where did they want to develop economically?
Malaya
For tin + rubber industry
What Act formed the foundation for this approach?
The Colonial Development and Welfare Act 1940
What did this Act do?
Wrote off some colonial debts
Provided grants up to £5 million/year
What did the further CDWA 1945 do?
Increase aid to colonies to £120 million over 10 years
Each colony had to product 10 year plan on how it would use the funds
