trade and commerce Flashcards
why did free trade become important after 19th century?
In the first half of the 19th century, the highly regulated protectionist system of mercantilism had been
dismantled, under the influence of new theories of ‘free trade’ advocated in Adam Smith’s book, The Wealth of
Nations. It was arguing that wealth was indefinitely expandable and freedom from commercial restrictions was
the only way to maximise prosperity. It was regarded as the vital ingredient for British prosperity. Britain was the worlds foremost trading nation and so it benefited from free trade and was active in supporting
free trade agreements around the world, even ready to resort to threats to achieve them. The idea of free trade was also linked to other humanistic ideas so it encouraged the British to view themselves as “Liberators”
Consequences of free trade
Borrowing in London capital markets was also cheaper because British possessions were trusted
-Free trade saw imperial trade and investment grow enormously creating an ‘industrial empire’. Britain
imported foodstuffs and raw materials (approx. 20% came from British colonies), and manufactured goods
were exported back out (approx. 1/3 of British exports went to its Empire)
* London became the world’s financial capital and sterling became the main currency of international trade
* Technological improvements supported the growth in trade: there was innovation in banking and company
organisation; improvements in shipbuilding made it quicker to sail; telegraph lines and underwater cables
improved communications; railways allowed for the quick transportation of goods
* The economic benefit of Britain enforcing free trade could have been as high as 6.5% of gross national product
examples of trade and commerce being important to Britain
Between 1850-75 20% of all imports came from colonies. The Empire provided raw materials and foodstuffs
needed by British industries
* Between 1850-75 1/3 of all exports went to the colonies. Empire provided markets for British industries
* India was essential to Britain’s economy
* Tropical African colonies provided valuable agricultural materials, foodstuffs and minerals
* Tropical colonies produced goods not available in Britain that had high profit e.g. cocoa and coffee
* The value of British imports of raw cotton from India increased from £1.6 m in 1854 to £5.8 m in 1876
examples of trade and commerce being less important to Britain
-The British heavily invested in the informal empire eg USA
-Trade outside the Empire was far greater than trade inside it
- Some of the new African colonies had very little economic value
-In 1887 Britain rejected its free trading empire with trading preference for ins colonies at the 1887 Colonial
Conference
- Several self-governing colonies introduced tariffs to protect their industry against British manufactures e.g.
Canada in 1859
Ways in which trade and commerce positively impacted indigenous peoples?
It provided benefits which no other power could match and to which colonies would not have had the same
access to if they weren’t in the Empire
* Britain was the worlds leading source of technology and capital and the most important trading centre
* Britain could provide every economic service that the colonies might need
* Britain was the key to establish profitable export staples which provided the resources that could be used to
create an effective infrastructure
* Trade created jobs
* Railways in India were developed at 2 miles per day.
Ways in which trade negatively impacted Indigenous peoples?
Individual human beings do not live by the free market or in the long run so they did not see the benefits
- The immediate impact of imperial free-trade was often the collapse of local indigenous manufacturing
industries (e.g. Indian cotton mills) which were in no position to compete which led to the consequent
destruction of livelihoods and commodities
- Britain did not invest in other manufacturing industries because they wanted to limit competition.
-They were paid low wages for long hours (however, so were people in Britain at the time
India and British exports statistics
India alone took 20% of all British exports totalling to £150 million
How much investment took place in the empire?
40% of all British investment took place in the empire as it was considered safe.
When did British investment double in the empire?
British investment doubled from $2 billion to $4 billion between 1900-1913
