Economic Developments 1886-1914; (complete) Flashcards
What was the contemporary view of the changes occurring in the economy in the late nineteenth century?
Britain was suffering from a long-term depression, from 1873-96; The Great Depression
In what years did Britain go through marked cyclical downturns in the economy?
1873-79, 1882-86, 1890-96
Not a single downturn lasting 20 years
What events decreased Britain’s economic supremacy, despite its previous domination of export markets?
-Began to face competition from foreign markets
-Fall in demand for British goods in traditional European & American markets
-Prices & profits tumbled in industry + agriculture, continued for 20 years
Why was a Royal Commission set up in 1886 and what did this conclude?
-Salisbury’s gov was anxious about the economy
-Intention was to report on “the extent, nature and probable cause of the depression prevailing in various branches of trade and industry.”
-Concluded agricultural prices had been falling since 1873, downward trend was continuing
-Noted increase in production of most other commodities & supply outstripping demand in many instances—> reduction in profits, fall in prices, lower rates of interest on invested capitals
-Issues related to foreign competition
-Commented that there was encouraging signs for the future
When did unemployment reach a peak and why?
-Businessmen were in the business to make money
-When profit levels were ↓, there was less money available for capital investment
-To offset profit loss, employers had little alternative but to pay off their workforce
-1886; unemployment reach peak of 10%creates much hardship & sense of depression
What was the % drop in price levels of most commodities between 1873-1896?
30-40%
What caused a beneficial shift in terms of trade for Britain?
Price of imports ↓ more than price of exports
By 1900, what percentage of foodstuffs and raw material in industry did Britain report and what did this result in?
-50%
-Benefitted from import prices
Why did the late 1890s see a return to economic prosperity/period of affluence that held until 1914?
-Wages didn’t fall → as long as a man could stay in a job, he benefitted from lower-priced goods & foods
-Resulted in significant ↑ in standard of living in Britain
-Prices picked up in 1890s, as gold-mining boom in S Africa gave boost to economy
What interrupted the 1890s period of affluence?
The Boer War (1899-1902)
What development caused future industry problems for Britain?
-Between 1886-1914, Britain’s traditional industries were expanding
-Technical innovation opened new areas of industry
-There had been a change in emphasis in demand for type of goods Britain exported; w/ coal, shipping & machinery becoming predominant
-This development cause future issues for Britain as these exports comprised basic ‘tools’ for process of industrialisation in other countries that would soon use them to successfully outcompete Britain
Why has Britain’s response to the changes in the economy been criticised for being too complacent?
-British industrialists were perhaps too slow to respond to forge in competition & too set in ways to make necessary changes needed to be more competitive
-As the first industrial nation, Britain’s machinery & production methods were out of date & was reluctance to invest capital in new modern machinery; by then both manufactured & used in USA + Germany
Why was Britain falling behind in steel output and why was this significant?
-Steel became as much a key to industrial progress as coal
-In spite of successful innovations in steel production being British (Bassemer process, Siemens open hearth process, etc), it was Germany & USA who exploited the new techniques & forged ahead in steel output
-Demand for steel at home fell off as railway boom of mid 19th cent slowed & there were little new track built as most key areas had good rail links
-Most manufacturing companies family-owned & handed down to next gen; who may not be as passionate as founding father
Why was Britain being overtaken in industrial production once realising + what specific industries?
-USA & Germany had greater natural resources, had begun to overtake GB in industrial production once realising own industrial potential
-Competition keenly felt in coal, iron, steel industries
-Instead of using capital to develop new machinery & speed up production, GB companies invested money abroad; where profits were quick & easy
-Little input of new ideas/reorganisation of old practices
Why was the cotton export of 1896-1914 significant?
-New factories built in Lancashire
-However, few owners had foresight to invest in automated power looms & instead relied on old technology
What have economic historians suggested about the engagement with the development of new industries + what contrary example exists?
-That there was a lack of engagement w/ future development of new industries like chemicals & electrical engineering
-Contrary eg; the Lever brothers, soap-manufacturing company that sold 40,000 tons/yr & started expanding to Europe + America
What increased Britain’s agricultural problems apart from competition in the 1880s?
-The development of the canning process
-Meant that beef from large cattle ranches in Argentina & Uruguay could be put into tins, preserved and exported to GB
-Methods of refrigeration developed at this time meant previously perishable goods (mainly lamb) could be transported from as far afield as Australia & New Zealand, could compete w/ GB goods in terms of price, if not quality
By 1899, what % of meat consumed in Britain came from abroad?
40%
What were the results of the innovations and advances from foreign competitors on British farmers?
-Fierce competition for the GB farmer
-Prices fell heavily
-Wheat & cereal counties of S & E were hardest hit areas
-Farmers went bankrupt; many out of work agricultural labourers deserted countryside, settled in towns, where life wasn’t much easier as depression in industry made finding regular work difficult
-Thus, they sought a better life by emigrating to the USA/Canada
How did the numbers of agricultural workers fall from 1871 to 1901?
1871 - 1 million
1901 - 600,000
Why and how did British farmers have to adapt as a result of the depression?
-Pattern of GB agriculture changed; no part of country was unaffected
-To survive, farmers had to diversify
-Farmers in S of Scotland, Warwickshire, Lancashire= less badly affected as areas were already conc on mixed farming
-Many farmers moved into dairy farming as milk couldn’t be easily imported, yet could be quickly transported some distance across GB by rail
-Poultry farming became popular
-Development of market gardening as alt to farming met w/ great success, esp in area like Vale of Evesham where fruit, flowers, veggies grew well
-GB as whole; area under cultivation ↓, area turned over to pasture ↑
How were the staple industries of Britain doing at the time?
-GB still relied heavily on staple industries, had developed in earlier industrial revolution; coal, iron, steel textiles, shipbuilding
-Industrial output continued to ↑ but rate of growth ↓
-Export figures in all these industries continued to show good returns & brought prosperity to districts like Lancashire (centre of textile industry)
-Trade & transportation brought wealth to shipbuilding areas of Tyneside, Clydeside, Belfast
What new industries emerged and what idea did these oppose?
-Tech innovation opened new industry like electrical engineering, motor industry, bicycles, aluminium, rubber, artificial tile
-Electricity, a new source of power, was being harnessed to industry
-↑ manufacturing output shown by appearance of smaller industries like boot/shoe manufacture, chocolate, soap, tobacco, beer; all successful
-William Lever started up a soap-manufacturing business, 1886 LPool, one of first to manufacture soap from vegetable oil. Had innovative approach & marketing practices
-These opposed idea of depression through late 1880/90s
What was needed for these new businesses to grow, how was this done + the impact?
-Capital needed for new businesses to grow
-Men like Lever ↑ capital by offering limited liability (share restricting liability of shareholder to amount they originally subscribed) shares in their companies
-Led to ↑ in # of large joint-stock companies (commercial enterprise w/varying # of stock supplied by shareholders), whose main loyalty was to their shareholders not workers
-Companies operating in same line of business amalgamated to form giant corporations like Imperial Tobacco Armstrong & Vickers-Armstrong; biggest producers of armaments in GB
-Developments led to change in market for consumer goods. ↑ pop, urbanisation, ↑value of real wages gave ↑ to mass-market in consumer goods
How and why did Britain come to have foreign competition?
-Dependent on export trade to maintain position of econ supremacy in world markets
-Most of 19th cent—> enjoyed almost monopoly of production & export of coal, iron, steel; key industrial commodities
-Most crucial change in economy= global econ expansion
-By 1880s, world economy involved growing # of countries, both in terms of industrialising nations & those trading in primary products
-1886 Royal Commission of Industry & Trade report noted GB manufacturing supremacy was being challenged by foreigners. The fact that Britain was no longer the only industrial economy couldn’t be ignored
-For first time, GB was facing stiff competition from other industrialising nations, 2 most formidable opponents= USA & Germany
How did political stability explain the rapid industrial development of USA & Germany towards end of 19th century?
-Germany had become one nation in 1871, instead of many small, economically isolated states. By 1886 it was pursuing expansionist policies in industry & empire
-USA had recovered from worst effects of Civil War, 1861-65
How did population expansion explain the rapid industrial development of USA & Germany towards end of 19th century?
Gave both countries large (& often highly motivated) labour force & ready home market for manufactured goods
How did an abundance of natural resources explain the rapid industrial development of USA & Germany towards end of 19th century?
-Both possessed vast amount of coal & iron ore, enabled them to forge ahead of GB in steel manufacture
-1890; America’s steel production exceeded that of GB
-1896; Germany achieved the same
-1900; USA had overtaken GB in coal output
-Coal, iron ore & steel were most important elements in industrial production
-Also competed successfully w/ Britain in engineering & production of machinery + armaments
How did railways explain the rapid industrial development of USA towards end of 19th century?
These carried raw materials to factories & finished products to towns for home consumption, & to seaports for export, thus diminishing Britain’s share of the world export markets
How did improved education explain the rapid industrial development of Germany towards end of 19th century?
-The new united Germany, formed in 1871, had invested money in education, especially technical colleges
-The result = better educated workforce w/ range of new skill sets
-They undertook vital research in new fields of electrical engineering, motor manufacturing and chemicals during the 1880s
Why can it be argued that Britain survived the challenge of foreign competition to its industry & export trade, 1886-1914?
-In spite of overseas competition in shipbuilding, GB shipping industry was still largest in the world; merchant fleet represented about 1/3 of total, GB ships still dominated world’s shipping lanes
-Was largest outlet for primary products eg tea, cane sugar & wheat
-Bought 50% of world’s meat exports
-Bonus for GB—> overseas producers, eg Argentina & Uruguay were happy to take GB manufactured goods in exchange for primary produce
-Was able to maintain dominant position in world’s economy by finding new outlets for industrial goods, principally in extensive empire although could no longer claim to supreme power
How did Britain’s balance of payments remain in surplus during the Great Depression years, 1873 and 1896 + what was this in spite of?
-In spite of negative balance of trade produced by fall in visible exports & increase in visible imports
-This was due partly to its continuing dominance in world shipping; business this generated contributed to London’s position as world’s main centre of internat banking, commerce & insurance
-Plus, capital investments abroad, eg railways across America, produced healthy income in interest payments; also helped offset deficit in balance of trade
-Econ was being cushioned from failure of exports to pay for imports
-Was able to survive challenge of foreign competition to industry & export trade as was largest exporter of capital & invisible trade; accounts for continuing surplus in its trade balance.
Why was Britain free trade, laissez faire policy damaging economically?
-Since 1860s, GB had been a free trading nation, operating under principles of lassez faire
-Its free trade policy worked well a long as there was no foreign competition, but other industrialising nations weren’t following GB’s free trade position
-Germany introduced trade tariffs in 1879 & USA followed in 1890; damaging to GB export trade & industrial production
-1870; GB goods had made up nearly 1/3 of world’s manufacturing output, but tariffs imposed by other emerging industrial nations made GB products more expensive so less competitive & GB share of market fell
What were the reactions to Britain’s continuing free trade principles?
-Voices beginning to be raised against it
-Pressure group Fair Trade League, formed 1881, put forward moderate demands for restructuring of trade policy along more protectionist lines; argued that manufacturers were increasingly excluded from markets of civilised world, not by fair competition, but oppressive tariffs
-League was influential in late 1880s, but neither Gladstone/Salisbury would be moved on issue of protective tariffs
How did tariff reform emerge in the political agenda and what was the impact of this?
-Early 1900s; Joseph Chamberlain, Secretary for Colonies, long felt that imperial tariff should be established, encompassing British Empire, w/ wider aim of establishing imperial federation
-Raising of issue of tariff reform by Chamberlain in 1903 became major cause of Balfour’s resignation & defeat; 1902 budget introduced duty of 1 shilling (i.e. five pence) on imported wheat, to help cover cost of Boer War. Chamberlain suggested there could be reciprocal arrangement betw GB & Empire (imperial preference), would lift duty on wheat from colonies
-Would mean return to system of protected trade, the colonies excepted, for first time in 50yrs; proposal divided Conservative Cabinet
How did Chamberlain believe Britain could face foreign competition with trade reform + what was the impact of this?
-Although GB was no longer in depths of depression, its global, economic & industrial power was contracting
-Chamberlain believed if it consolidated its political, economic & military ties w/ empire, country would be able to face any threat from increasing influences of other countries, mostly Germany & US
-But, Chamberlains schemes for tariff reform split Balfour’s Con gov
-He resigned from office in Sep 1903, set up Tariff Reform League to finance campaign
-He moved away from OG argument of imperial preference to out-and-out protectionism, continue to imply criticism of Balfour for evading debate on free trade
