The Economy Flashcards
Describe the state of Staple industries?
In 1913 industry was focused on the staples. These were the textile industry, steel, coal and shipbuilding. In 1913 these made up 60% of exports. Britain retained its key shipbuilding position - it owned half the worlds shipping in 1914. Output of iron and steel continued to increase. 287 million of tons of coal was mined in 1913. The cotton trade maintained a strong export trade.
Describe the state of New industries?
The three most prominent new industries were electronic engineering, chemicals and motor vehicle production. These were expanding faster than the economy as a whole, with a growth rate of 3.8% a year.
Describe the state of agriculture?
In 1850 the number of people working in agriculture was 2 million. By 1901 this fell to 1.4 million because of mechanisation and more importing from overseas. Farming accounted for about 10% of employment, national income and national investment 1906-1914. There was a long period of agricultural depression from the late 19th century and competition abroad for cheap grain.
Describe the state of Trade and invisible earnings?
Britain was a strong trader. In 1914, 30% of goods and services produced in Britain were sold abroad. Britain had 25% of world trade. Britain was the world leader in banking, investment and insurance and London remained commercial centre of the world. The reliability of Bank of England persuaded investment in British enterprises. Britain’s earnings from these invisible exports maintained a healthy balance of imports when the value of imports was rising and the value of exports declining.
Describe the economic concerns and external competition?
Between 1870-1914 there was the late-Victorian recession. During this time Britain was overtaken in steel and iron output by Germany and USA. It’s rare of industrial growth was less than that of USA. Imports grew faster than exports leading to a trade gap. This caused industrialists and politicians to raise questions about education, free trade and the failures of the industry to adopt to new technology and methods.
What were the key areas of concern?
Lack of research and investment into new technology - compared to USA Britain invested fewer resources into researching new methods to produce iron and coal. The British steel industry was characterised by “pessimism and lack of courage”. Factory and plant equipment was less modern, and changing would be too expensive. Britain’s coal mines were labour intensive - only 360 mechanical conveyers for thousands of mines. In 1900 Britain had fallen behind USA and Germany in steel production and behind USA in coal production. In other manufacturing areas Britain failed to develop the organisational skills and techniques necessary for mass production.
Lack of progress in new industries - the German chemical industry was twice the size of Britain’s in 1913. 90% of artificial dyes used in Britain were imported. Many companies producing electrical equipment were subsidiaries of German or American companies.
A low wage economy - in the USA there was a high wage economy where workers were paid enough to buy the goods they produced. However, in Britain, there was a low wage economy which meant only the rich and middle class could afford to buy the new manufactured goods. This kept the domestic market relatively small.
Issue of free trade - the free trade policy meant that foreign traders had easy access to British markets and Britain could not bargain with other countries to reduce their tariff.
Education and training - concerns that British workers were not learning sufficient skills in school and Britain was not producing enough skilled workers. By 1908 fewer than 300 students were takin applied sciences at uni compared to Germany’s 400 chemistry graduates a year.
Problems in agriculture - steamships and railways meant that grain from North American prairies was sold more cheaply than many British farmers could produce it, and farmers were forced to reduce production. Only 1/4 of the wheat sold in Britain was British.
What were the positive aspects of the economy?
The staple industries were still profitable and in some areas increasing production. World trade was expanding. London remained the commercial centre of the world. It was the worlds largest foreign investor and invisible earnings brought vast profits into the country. Home demand for milk and meat remained strong. Cheaper food available and the value of wages rose in real terms.
