Trade and Commerce - 1947-1967 Flashcards
What were attitudes to Empire and the economy after WW2? What regions did Britain want to maintain imperial control? Why?
Far from being abandoned after 1947, the Empire was repositioned in Africa, Malaya, and informally, in the Middle East - the areas over which the British most wanted to maintain imperial control in the post-war period were the regions of the greatest economic value.
-These regions were sources of vital supplies for Britain’s economic needs in the period of post-war reconstruction - all about Empire providing economic assistance.
-Britain hoped to promote the production of food and other raw materials urgently needed at home and for the earning of dollars on the world market - hence the Colonial Development Corporation was set up in 1947 to coordinate major projects and extensive development initiatives for agriculture, industry and trade.
How did the importance of Empire as a supplier and a market change between 1947-67?
Between 1947-67 there was a dramatic change in the importance of Empire as a supplier of British imports and a market for British produce.
Up to 1960’s:
-From the late 1940’s to the 1960’s, Empire and the Commonwealth were extremely important for Britain’s international trading position - Britain heavily reliant on trade with Empire and the Commonwealth.
-They provided essential imports at a time when Britain’s reserves of foreign exchange were too limited to source imports from many other parts of the world (didn’t have dollars which they needed to purchase American goods needed for post-war reconstruction) - 48% of British imports in 1954 from the Commonwealth.
-A great deal of British investment also went to the Empire - 58% of all overseas investment in 1956 went to Empire companies and governments.
After 1960’s:
-From the 1960’s, other parts of the world, and especially Western Europe, became more important to Britain.
-1965 - 31% of British imports were from Western Europe compared to 30% from the Commonwealth.
-1965 - 33% of British exports were to Western Europe compared to 28% from the Commonwealth.
Why did Britain’s trade with its empire decline from the mid-1950’s to mid-1960’s? How and why did Britain edge closer to Europe and North America in terms of trade? How did Britain’s attitude to EEC membership change?
From the mid 1950’s to mid 1960’s, Britain reduced its trading ties with its colonies and edged closer to Western Europe and North America.
Reasons for decline in trade with colonies:
-International trade in manufactured goods and services became more valuable than that of raw materials and food.
-Therefore, the colonies became less attractive to British exporters looking for higher income markets.
-There was also more competition for Britain from other industrial nations who were supplying goods to Britain’s colonies and ex-colonies by the 1960’s.
Reasons for increased trade with Europe:
-The European economy recovered from the war much more quickly and impressively - partly thanks to US Marshall Aid (Cold War context) which favoured private enterprise.
-Advances in science and technology, as well as changes in industrial relations, also played their part.
-Consequently, by the mid-1950’s there was full employment throughout Europe with high growth and rapidly rising living standards.
EEC:
-Britain had originally trusted their traditional reliance on Empire by choosing not the join the EEC in 1957.
-They had even set up a rival trading bloc of European non-EEC members - the European Free Trade Association (EFTA).
-However, the EEC flourished and Britain were increasingly torn between a future based on a Commonwealth of global trade links, versus a future based on trade and economic relations with Europe.
-Britain’s decision to apply for membership of the EEC reflected its rapidly expanding trade with nearby Europe.
-With exports to Europe outstripping those to Empire in the early 1960’s, Britain applied for EEC membership in 1963 and again in 1967 - rejected as their entry was vetoed twice by France (under President de Gaulle). Britain had insisted on special concessions being allowed for British commerce with the Commonwealth.
-Britain eventually joined the EEC in 1973 (after de Gaulle’s ten year presidency had ended) - had to accept many of the elements that were controversial with British voters - supranationalism, common agricultural policy, and budget.
-This reinforced its declining commerce with its far flung imperial trading partners.
What was the sterling devaluation of 1967? What was its impact?
In 1967, in response to a balance of payments crisis (spending more in imports than earning from exports), Harold Wilson’s Labour government reluctantly announced that it was lowering the exchange rate - the pound dropped down to $2.40 from $2.80 (a cut of just over 14%).
-This was designed to cut Britain’s deficit by making exports cheaper.
-However, the devaluation of the currency destroyed the old ‘Sterling Area’ by weakening international faith in the value of sterling.
Why was Britain’s post-war reconstruction so reliant on America? How prepared was Britain to purchase American goods? How did Britain address this challenge at home?
The USA’s economic predominance after WW2 made the country the main supplier of commodities to the wider world.
-However, in order to buy vitally needed goods, Britain needed to earn dollars and build up foreign exchange reserves with which to pay for imports.
Coping with their inability to pay for imports:
-Britain initially met this challenge by continuing rationing at home to cut the cost of food imports, as well as prioritising British industrial production for export over the domestic market.
How did Britain address the challenge of paying for imports through development projects in the colonies? What acts did Britain use? What organisation did Britain set up?
The British also tried to develop the productive and export capacities of the colonies, particularly in Africa where the relative under-development of local resources offered huge opportunities for growth.
-This was to increase dollar reserves from colonial sales, and to ensure a steady supply of goods to Britain from within the sterling area, thus saving precious reserves of dollars and other scarce foreign currencies.
Acts and organisations:
-Used the Colonial Development and Welfare Acts of 1940 and 1945 to expand agricultural production and promote new technology.
-1947 - Colonial Development Corporation set up to coordinate major projects and develop self-sustaining agriculture, industry and trade.
-1963 - Colonial Development Corporation renamed the Commonwealth Development Corporation (CDC).
How successful were Britain’s colonial development schemes?
Successful:
-The value of exports from the British colonies was still important up to the mid-1950’s - e.g in 1956, the value of exports from Asia was £815.1 million, and from West Africa £228.5 million.
-Malay rubber proved a crucial dollar earner, and as a member of the Sterling Area, Malaya became a major contributor to the Hard Currency Pool (the collective pool of dollars earned by the Sterling Area) - this explains why Britain did not immediate grant Malaya independence and why they responded so fiercely to the communist attacks against economic targets in 1948 by imposing a State of Emergency.
Less successful:
-The Tanganyika Groundut Scheme 1946 was an abject failure.
-These colonial development projects became less common as Britain’s trade with Europe and the USA grew strongly by the 1960’s. By 1967, a clear change of direction away from Empire had already taken place.
What was the impact of Britain’s policies of post-war reconstruction?
-Britain’s reconstruction policies remained ‘Empire-centred’ until the mid-late 1950’s and 1960’s.
-This sustained the established pattern of economic activity from the late 19th century into the post-war era.
-Consequently, many Commonwealth countries still relied on a narrow range of primary produce for most (two-thirds to three-quarters) of their commodity exports - even in the mid-1960’s - a limitation of British colonial economic policies. E.g meat and dairy produce exported from New Zealand to Britain was one of the most intense imperial trade relationships.
