Trade Flashcards
1
Q
What was trade like before the 18th century?
A
- Prior to the 18th century, the British believed that in order to make a profit they had to ensure they were selling more than they were buying, called a positive balance of trade
- Prior to industrialisation, Britain was a competing world power and sought to maintain its positive trade balance
- To achieve this balance it was necessary to implement tariffs and taxes on exported goods from the colonies and foreign competition
- The system of protecting a positive balance of trade is known as mercantilism
- One of the major changes to the pattern of trade was the move away from a mercantile system into a system of free trade which removed tariffs
- Slavery was a major aspect of trade, dominated by the British
- The ending of the slave trade forced a reorientation of the trading patterns and marked a change in the nature of trade
- From the late 18th century Britain was able to establish trading bases all around the world and use its naval hegemony to influence other countries
2
Q
How did slavery affect the pattern of trade?
A
- The Transatlantic slave triangle involved ships sailing between the West Coast of Africa, the West Indies, then back to Europe
- Supported the trade of rum, weaponry and manufactured goods in Africa
- Sold to the Americas to live on plantations
- The slave trade had potential to be incredibly lucrative, drawing attention from private investors
- The abolition of the slave trade in 1807 had significant impacts on trading ports such as Liverpool, Bristol and Glasgow
- The abolition of the slave trade reduced the available workforce on the Caribbean sugar plantations, reducing its levels of production and contribution to trade
- Ended the East African slave market, opened the way for new agreements
3
Q
How did Adam Smith influence the move towards free trade?
A
- The Americans had declared rebellion in 1776
- This naturally led to people questioning the role of taxation
- Adam Smith created an intellectual and moral argument for free trade that began to convince many of the benefits of a free trading policy
- In 1777, Adam Smith published “The Wealth of Nations”, in which he criticised the mercantile system and said that free trade would benefit all parties involved in buying and selling
- This book provided the intellectual foundations for the move to free trade
4
Q
How did the protests in Ireland influence the move towards free trade?
A
- Adam Smith may have started the debate but it was slow to filter through government
- Most members of parliament were wealthy landowners and benefited from having tariffs that made their produce cheaper than foreign rivals
- Ireland was subject to “Corn Laws”, a number of tariffs placed on farm produce
- These laws were in place because the Irish produced similar crops to British landowners who feared that Ireland would compete and undercut prices
- Regardless of the Corn Laws, Ireland was incredibly prosperous and Dublin was the second most prosperous city in the Empire after London
- At the same time as the Irish exports being heavily taxed, there was a bigger crisis due to the question of Home Rule, declaring that the Irish should rule themselves
- The demand for free trade became entwined with the issue of home rule (similar to the demand for “no taxation without representation” in America)
- In 1778 protests in Dublin broke out, Brandishing a cannon with a banner reading “free trade or this”
- Fearing a large scale response, the government introduced free trade rights in Ireland
- Ireland served as a prototype testing if it would undercut British prices, and if it would subdue political tensions
5
Q
How did the reform acts influence the move towards free trade?
A
- Despite Ireland serving as a prototype for free trade, there was no major push to completely abandon the mercantile policy
- The obstacle of stubborn landowners was removed in 1832 with the Great Reform Acts
- After the Whigs won the election on a promise of parliamentary reform, they extended the franchise to 250000 more men
- Most of these men came from the middle class and had a vested interest in the ending of restrictive trade
- Unlike landowners, industrialists could produce goods faster and cheaper than anyone in the world
6
Q
What solidified the shift towards free trade?
A
- Between 1842 -1849 a series of acts were repealed that removed some of the laws that stifled trade in the Empire
- These included the Navigation Acts composed of hundreds of tariffs
- The Navigation Acts meant that goods had to travel through English ports or colonial goods had to be carried on English built ships
- These acts were designed to ensure Britain was always exporting more than it was importing
- After the potato crop failed in Ireland, Peel argued to remove the Corn and Sugar Laws, this however was not enough to save the Irish from the great famine in which a million died
7
Q
Why was trade with China so difficult?
A
- The acquisition of Singapore should be viewed in context to the EIC’s interests in the region
- Although the monopoly in India ended in 1813, it was still active in the rest of Asia and the company was keen to utilise its remaining years of the Royal Charter
- The issue was that the Chinese Emperor severely restricted trade access to European powers (similar to the Navigation Acts)
- Europeans were not permitted to trade outside of their base at Canton, this prevented them from penetrating the vastness of mainland China
- Europeans were only allowed to trade with a select group of guilds known as Hongs
- Europeans were subject to heavy tax
- The only way to reach Canton was to pass through the Straits of Malacca that was controlled by the Dutch who often refused the British entry or imposed heavy tariffs
- The Straits of Malacca were also notorious for high level of piracy
8
Q
How was the issue of trade with China solved?
A
- Sir Stamford Raffles sought permission to establish a trading post in the region
- He settled on the sparsely inhabited region of Singapore
- The Dutch were furious with the British encroachment on their sphere of influence and demanded that they withdraw
- The growth of Singapore was so rapid that the British stayed
- 11 million Spanish dollars in trade over 5 years, 2700% growth
9
Q
Why did Singapore grow so rapidly?
A
- Due to its status as an entrepot
- This meant that it was a tax free port available for traders of all nationality
- The prospect of tariff free trade meant that traders from all over the region flooded there
- Chinese traders could exchange goods in Singapore instead of travelling all the way to Europe, the Europeans were able to deal with traders directly rather than working through the Hong guilds
- The increase of traders in the Straits of Malacca made it harder for pirates to operate
- Provided further evidence that free trade was superior to the mercantile model
10
Q
What was the issue with trade with China after the acquisition of Singapore?
A
- Direct trade with China was still limited to working through Canton with the Hong guilds
- China was a huge potential market if Britain could access the mainland, Britain sent ambassadors but the emperor was not interested in manufactured goods
- The emperor had not grasped the importance of Britain as a growing power and still viewed China as superior
- The greatest issue was that there was not high demand for British goods, whereas British demand for Chinese goods was insatiable
- The one commodity in high demand - opium, was grown cheaply in India and was sold easily in China
- However, the emperor had forbidden the sale of opium
11
Q
What was the Chinese blockade?
A
- Sale of opium in Singapore increased from 75 to 2553 tones with an estimated 12 million Chinese people becoming addicted
- The Chinese government decided to act against the movement of opium by establishing a naval blockade
- The traders in Canton were trapped and any opium found was seized, any boats on international waters were boarded and any opium was destroyed
- The British government heard about this and decided to act without debate, Lord Palmerston dispatched the Royal Navy
- The Navy had been an ongoing investment in British hegemony and had the world’s first fully steam powered ship (HMS Nemesis)
- The Chinese fleet were easily destroyed in an afternoon and Hong Kong was seized in 1841
12
Q
What was the outcome of the first opium war?
A
- Britain could now dictate terms, solidified in the Treaty of Nanking which the Chinese viewed as highly unequal
- Chinese were required to pay 6 million silver dollars in compensation for the destroyed opium, 3 million to merchants in Canton and 12 million in war reparations
- Chinese had to cede the Island of Hong Kong in perpetuity
- Open ports to foreign traders and remove trading restrictions in Canton
- Acquisition of Hong Kong opened up trade to deeper in China due to access to rivers
13
Q
What was the significance of the acquisition of Shanghai?
A
- One of the ports opened up in the Treaty of Nanking, removing the Hong monopoly and opened up the interior of China
- Shanghai situated at the mouth of the river Yangtze, a 1000 mile long river
- Importance of Shanghai led to foreign power taking increased interest, the Shanghai Municiple Council was an Anglo - French - American venture in which the city was run by foreign businessmen
- With foreign businessmen operating the city, the trade of opium boomed and in 1880, opium trades had increased to 6500 tonnes per year
- The British control of the region coincided with the Taiping rebellions, were well timed to provide the emperor with resources and outsource his administrative business, further stimulating trade
14
Q
What was the significance of the purchase of Suez?
A
- 1875
- Significant connections from Mediterranean to the Red Sea and down into the Indian Ocean
- Allowed easy access from Europe to increasingly important EIC investments
- Considered a risky investment due to the fact that only steam powered ships could access the canal as sail ships would not have a prevailing wind
- Proved to be a lucrative investment to the British
- Provided dominance for the British due to their advancements in production of steam ships
- 80% of the traffic in Suez was British
- British purchased 44% of the Canal which stimulated British trade in the area
- Control of Suez provided a much shorter trade route to India and the far East
- After c1900 it provided access to oil reserves in the east
- Disraeli’s decision to purchase shares in Suez led to greater investment in the East
15
Q
Why was Zanzibar an important trading post?
A
- Zanzibar was an important entrepot, goods from deep into the interior of Africa were sailed over to Zanzibar and these could then be sent to the Middle East and India
- Key commodities included slaves and ivory
- Britain’s involvement in the region was of diplomatic nature, Britain wanted to secure the trade route around the Cape of Africa and to prevent the trading of slaves after its abolition in 1807
- The ending of the salve trade decreased Zanzibar’s importance of a slave trading post but increased its importance as an entrepot
- The Sultan was friendly to Europeans and fixed import duties to 5%
16
Q
Why did the British control in Zanzibar develop into a Quasi-colonial status?
A
- Interest in Zanzibar were initially commercial but had become more geopolitical by 1890
- Growing German interest in the region was a main concern
- Karl Peters’ establishment of an German East Indian Company was backed personally by the Kaiser who invested £25000
- This forced Britain to react fearing that the Germans could gain influence in the region and undermine British power in Egypt (part of the wider issue of the Scramble for Africa)
- In response to the German expansion William Mackinnon established the British East African Association with £250000 worth of backing
- The company failed to make money but continued due to geopolitical motivations, the government issued a series of East African Protectorates and began to finance the building of infrastructure with railroads to Uganda
- The East African region was cut up between British and German influence with Britain officially absorbing Zanzibar as a protectorate
- The new Sultan was more hostile towards the British, the British bombarded Zanzibar killing 500 men until they reversed the appointment
- Lasted 38 minutes and declared the shortest war in history
17
Q
What was the importance of the British presence in Weihaiwei?
A
- The British lease of Weihaiwei was not a stimulus and had no economic value, it is useful in demonstrating that Britain became increasingly motivated by geopolitical factors
- Decision to acquire Weihaiwei was a result of European powers fighting for control
- Part of the “Great Game” in which the world was treated like a giant chess board
- Russia was seeking to establish a port in China to exploit the opium trade
- The Chinese were purchasing a large amount of weapons from the Germans
- The Japanese seized port Arthur in China
- The Russians used this to advance it causes, persuading the French and Germans to support the Russian claim to port Arthur, forcing the Japanese to withdraw
- British decision to lease Weihaiwei as a means of increasing its dominance in China
- Britain established a new port in China to prevent the development of other powers, no stimulus to trade or economy
