'The liberal crisis' 1906-1914, The state of the economy

Question 1

6 Positive areas of the British Economy 1906-14

Answer 1

• Staple industries were still profitable and in some areas were increasing in production
• Although Britain’s share of world trade was diminishing, world trade was expanding rapidly, and so in absolute terms British goods were selling in greater quantities than before.
• London remained the commercial centre of the world and its dominance was unchallenged
• World’s largest by far foreign investor and the value of invisible earnings brought increasingly vast profits to Britain; invisible earnings helped to compensate for the growing trade gap between visible exports and imports.
• Cheaper imports of cereals meant cheaper foodstuffs for livestock farmers
• Home demand for fresh milk and high-quality meat remained strong, and the census of 1911 showed an increase in the number of farm labourers
• The availability of cheaper food meant that the value of wages was consistently rising in real terms

Question 2

Areas of concern in the economy

Answer 2

• Lack of research and investment into new technologies
• Lack of progress in ‘new industries’
• A ‘low-wage economy’
• The issue of free trade
• Shortcomings in education and training
• Problems in agriculture

Question 3

Which industries were Britain’s industrial lead based on?

Answer 3

Britain’s industrial lead was based on cheap textiles such as cotton, iron and steel.

Compared to America, Britain did not invest into researching new production methods for these goods.

Within iron Britain’s rivals America and Germany pioneered more efficient and effective ways of making iron whilst Britain refused to adopt these new methods.

These industries (iron, cotton and steel) were so established in Britain that plant and factory equipment was less modern than the rivals and changing would be expensive.

Question 4

Lack of progress in new industries

Answer 4

German chemical industry was twice the size of the British one by 1913

1913 90% of artificial dyes were imported (British army used German dyes for their uniform)

Question 5

Low wage economy

Answer 5

Americans introduced a ‘high wage economy’ in which they were paid enough to buy the goods they produced. This ensured a high demand and encouraged production.

‘low wage economy’ meant only the rich and middle classes could afford the new manufactured goods

Question 6

Issue of free trade

Answer 6

Whilst Germany and the US had tariffs, Britain had a policy of free trade which meant that foreign traders had easy access to British markets but Britain could not bargain with other countries to reduce their tariffs

Question 7

Shortcomings in education

Answer 7

Workers were not learning sufficient skills in schools and that Britain was not producing enough qualified inventors and designers and technicians.

An average 1000 graduate engineers in Germany compared with around 400 in Britain.

Question 8

Problems in agriculture

Answer 8

Late 19th century British farmers suffered the shock of foreign competition.

Only around 1/4 of wheat sold in Britian came from British farms just before WW1

Question 9

Lack of technological advancement (stats):

Answer 9

An example of their lack of technological advancement was:
- Only 8% of coal was mechanically cut in 1914 in B
Compared to 25% in America in 1900.

• Only 360 mechanical conveyors for thousands of mines.
  This meant that Britain’s coal mines were labour intensive.
• Productivity in the mines fell by around 20% between 1880-1914.

Thus, by 1900 Britain had fallen behind America and Germany in Steel production and behind America in coal production.