Economic History of Britain

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In the nineteenth century, Britain emerged as the wealthiest and most powerful economy on the map of the world. She became the centre of trade and a leader in foreign investments. The average income of an individual was much higher in comparison to other countries. She was the pioneer of industrialization and the introduction of modern transport networks. She was the first nation to build financial infrastructure to control industry and investments. Britain political history has always been of great importance while the trade links contributed a lot to her invasion of foreign countries. The period between1815-1914 is referred to in history as an imperial century. Britain controlled the economies of countries like Latin America, China.

In spite of ruling large nations and being powerful enough to dominate the contemporaries, the British economy proved itself as a failure due to the extent of poverty, high rates of infant mortality and failures in Victorian and Edwardian economies. The reason was probably that Britain was not rich enough since her economy didn’t grow as sharply as the economy of contemporary nations. The marketers and entrepreneurs didn’t look beyond and were unable to grasp the new modern technologies and ideas.

To study the economic history of Britain it is important to signify the economic indicators. The British economy grew one per cent every year from 1860-1914. There was no significant growth from the year 1856-1873 and 1882-1899. Similar diminishing trends have been observed in 1873-1882 and 1899-1913. There are one major factor behinds this decline is the population growth between the census years 1861-1911 which rose from 20.066 million to 30.070 million. The population growth brought with it the extensive labour force from 10.523 million in 1861 to 18.286 million in 1911 which showed an increase of 73.8 per cent. This large population growth isn’t sufficient enough to support the economic growth there are other reasons like land, capital, material resources and an effective workforce. To counter the effect of these indicators in aggregate we need to understand the collective productivity during this period. The capital-output ratio in the nineteenth century was 4.0 which mean the cost of production was four times higher than the output. There are two major factors considered responsible for drastic changes in the British economy the real growth per capita and growth in total factor productivity. The two other factors that participated in the British economy are movements in the average expectancy of life and changes in the income distribution. The life expectancy had been static in 1830 and it started to rise at an increasing rate from the 1860s.

A significant investigator named Seebohm Rowntree said:

Families whose total earnings are insufficient to obtain the minimum necessities for the maintenance of merely physical efficiency. Poverty falling under this head may be described as primary poverty. Families whose total earnings would be sufficient for the maintenance of merely physical efficiency were it not that some portion of it is absorbed by other expenditure; either useful or wasteful. Poverty falling under this head may be described as secondary poverty.

Families living in these economic conditions face physical problems like diseases, incapability to sustained physical activities. This health issue has been there for ages but its effects are evident even in recent ages. The recruitment process in the South African army from1899 depicts the larger number of the working class affected by growth deficiencies. The working class begins to improve in the 1860s, rate of child deprivation remained intense. People having the same occupations had a difference in pay scales even if they belong to different parts of the same country. This discrepancy is evident in the agricultural industry but this is applicable to all other fields of study. The employment opportunities were quite precarious. Even the skilled people were not able enough to secure their jobs. There had been a trend in recruiting masses in armed forces since Britain was engaged largely in wars so a small segment was left to join the business and industrialization. The working-class individual joins the army and gets deprived of the responsibilities of family and children. This matter was taken into consideration by the poor law act of 1834 which replaced community by promoting individual responsibility. It emphasized the importance of the family as the primary social unit and essential for the stability of society. This concept also gave rise to another related issue Liberal Welfare reforms in the Edwardian era which had given fundamental variations and division among individuals and groups and the division was on gender basis the men and women. The nineteenth-century gave a boost to this concept which widened this division in all social classes. There had been a decreasing opportunity of work for married women because of the high birth rate which had intimated the dependency of women over men and had increased sacrifice and sufferings in the social groups. It is also a significant fact that during that time economic stress, economic expenditure of food, cloth and health of women was sacrificed over men’s necessities and physical strength. Till the end of the nineteenth century, Britain proved to be an unequal society in many ways. There was inequality in the distribution of wealth and income. Although the rise in real income till the end of the nineteenth century helped to decrease malnutrition and extreme deprivation. It was unable to control the situation because of the rising needs, standard of living, medical needs. Child labour became an extensive evil in society. The upper class began to enjoy all the luxuries of life while the poor class remained in poverty and suffered from hardships and unending struggles to earn their livelihood.

In the nineteenth century Davidoff said:

Below a certain level, working-class people bodies, clothes and surroundings were not only shabby but smelled of grease, dust and grime ‘. Inequality in income and wealth could be heard, smelled and seen; the average working-class male, child or adult, was several inches shorter than someone of the same age from the middle of the upper class.

Now the question arises that what was the actual or factual performance of the British economy? The need is to choose appropriate standards to measure economic well being. The standard should be realistic and achievable keeping other things favourable. The only thing to be considered is the economy should have utilized the resources in all possible ways. The per capita growth of Britain was faster between the years 1880-1914 in comparison to the classical period of British industrialization earlier than the 1860s. This pattern of growth is slower than other competitive countries but it is still applicable today. Capitalism promoted industrialism which had replaces merchants with industrialists. In times of the first industrial revolution, the large control and stronghold were shifted to the financiers who promoted corporations and financial capitalism. Industrial empires were in a boom with the help of the people who left production.

The advent of new products and services also increased international trade. There were improvements in the design of the steam engine and steal was available on large scale at cheap prices. The electricity and chemical industry also started to expand. Britain left behind in many aspects from Germany and United States. The introduction of industrial cartels into corporations, alliances and mergers and technical advancements like the use of internal combustion engines and electricity was beneficial for British business in the Victorian era. The use of modern techniques and monopolistic mass production methods increased output and lowered the cost of production. This resulted in an exceeded production than demand. The long depression of 1873-1896 was marked by fifteen years of economic instability and affected largely the profit rates and price deflation.

During this time of great economic depression, Britain lost its leadership on large scale over other economies of continental Europe. The major reason for this great depression was the shortage of money in order to support trade. There was a collapse of the Vienna stock exchange on May 09, 1873. The price of silver fall and caused losses to the value of the assets. Due to the depression of 1873 government de-pegged their currencies to save money. It is also believed that the 1873 depression was also caused by the shortage of gold which had undermined the gold standard. The 1886 Witwatersrand Gold Rush in South Africa and the 1898 Klondike Gold Rush contributed a lot to the causes of depression Second Industrial Revolution caused shifts in the economies and had imposed transition costs which played an important role in causing depression.

We must also consider the argument of the various economic swings of activity which is used to characterize industrial economies. S B Saul argues that the pattern of swings ‘is a difficult one, for cycles of different lengths have been identified and they overlap to a considerable extent. There is the four-year cycle most prominent in the U.S.A, the eight to ten-year trade cycle’ ruling in Britain. Others have seen the British economy from 1870 to 1914 as dominated by twenty-year swings…The concept of The Great Depression emerges from the analyses made in terms of even longer swings of fifty years’ duration….We must say right away that there are grave doubts as to the validity of placing the British economy within the straitjacket of such time periods.

During this economic depression, the German free trade policy was abandoned in 1879, France also abandoned the free trade policy during the second empire (1852-1870) only the united kingdom retained the low tariff laws in 1846. The long depression was also the cause of the revival of colonialism and later supported New Imperialism. The United States was also affected by the collapse of Britain’s economy. Five to six years down the line there was an improvement in refinancing, rebuilding modes of communication, natural resources, business which supported the expansion of markets, trade and industrialization. After a few years, there was another huge market crash in 1893.

There is no question that in absolute terms Britain’s economic growth was quite substantial throughout this period. Even during the so-called Great Depression most of the major economic indices moved upwards.

In 1873 the financial houses in London took control over the industry. This has created awareness among the policymakers to protect the British investments policies particularly in investment security markets in a foreign government. The service industries including banking, shipping, insurance gained popularity during the end of the Victorian era. Between 1870-1914 foreign trade got triple in volume. The foreign trade figures in 1880 were from euro 38.4 million to 73 million. Europe was highly engaged in extending maintaining trade relations among different nations.

At the start of the twentieth century, Britain was losing its glory as a strong nation During that time Germany and the United States of America emerged as strong domestic economics with huge industries and large superior resources and became a great danger to Britain. Germany developed its own imperialism and became a threat to other imperial powers of Europe. The First World War was extremely destructive and an absolute loss for Britain’s economy. It was an idea that Britain lost a quarter of its total wealth during the war. Since Britain was unable to cope up with this massive destruction and troubling economy she had to adopt traditional liberal economic policies which created slow economic growth and a high rate of unemployment. A general strike was called by trade unions which unfortunately failed and the participants were blacklisted and stopped working for many years afterwards.

Intercontinental trade among northern and southern regions contributed the highest portion in global trade during this era. The period of the twentieth century was later termed as the period of globalization.

During the time of Queen Victoria’s death in 1901 nations like the United States of America and Germany developed their own industries and showed a great deal of success in global business. The advantage of the United Kingdom weakened because of significant competitors in the industry. The destructions and losses in world war one and the consequences of the great economic depression affected the British economy greatly.

After world war two Britain also suffered from hard times, it had tremendously affected Britain’s infrastructure and economy. With the dissolution of the empire, the remaining colonies were collapsed. The labour party was elected in the elections of 1945 which introduced new reforms like increased taxes, nationalized industries and ultimately a welfare state.

During 1914 there was a prominent need of building up a stable and effective economic system. The creation of the Ministry of Munitions in May 1915 was the first step in this regard. The department was successful enough to increase the working class by 1916. The control was future expanded to the other areas in order to control price fixings and food controls by imports, the basic aim was to provide food to the nation which was suffering from war ad crisis. This period is classified as the post-war period. All the consumption constraints were removed, demand increased drastically but the output wasn’t sufficient enough to cater for the masses. Inflation became the second big issue for which the government started to again shift to the standard gold policy. The interest rates rose and state spending was reduced. The tax policies by the government boosted the economic boom in the nineteenth century.

Britain’s history is full of rising and fall in politics and even in the economy. With the collapse of British rules and war periods, the nation has suffered a lot in the name of barbarism, hunger, strikes, unemployment and wars. Despite facing tough times the nation strived hard and worked towards the betterment of the kingdom. The economy was hardly hit by losses and failures because of wars and competitions but it managed to survive and worked hard at all times to gain the lost fortunes and maintain the glory of Britain.

The average Briton of 1870 was almost certainly wealthier than the ordinary citizen of every other country at that moment in history. (Michael Dintenfass, 1992).

With the advancement in technology and opportunities, the orthodox approach of people towards women has changed. They equally participated in the industrial revolution and worked hard to provide sustainable growth to the economy. Education also played an important role in creating awareness among people to fight for their rights and achieve social status. The entire nation benefited from education and its application in all fields of life. The conventional policies were abandoned and new modern policies were implemented to maximize the resources and achieve high outputs from different industries. The nineteenth century is full of struggles and wars. The twentieth century is marked as the revolutionary stage which has promoted globalization and communication throughout the world. The entire world has come together on one plate form to work collectively to make the world a global village. There is an active pool of resources everywhere on earth, trade and business have expanded and are available to people on a simple phone call. Britain has contributed equally in all such significant advancements and she is pretty ahead in modern technology. Most of the businesses are now automated and people can easily be mobilized to get benefits of these comforts.

During the nineteenth century, British manufactured goods widely needed by the entire world. She took over the major commodities of the markets and produced them on a massive scale efficiently. She also became powerful enough politically, economically and financially to compete with contemporary economies domestically and internationally. The massive advancement took place in the textile industry due to the introduction of modern methods in production which had greatly affected the economic growth and price competition in the respective industry. Specialization, cheap labour and organizational improvements occurred in some other sectors of the economy. In spite of all this, the growth of national income was quite slow. Britain industrial progress involved division and specialization of labour with large firms employing thousands of employees working at the same place. Mass marketing expanded throughout the world. Small businesses started working in partnerships and shareholdings. In totality, Britain dominated the entire world with her political, monarchy and rich social status. She is the exemplification of modern, literate and adaptable nations of the world. She has proved her supremacy over the world through her rule and glory. The significant reasons for Britain’s economic downfall were her long involvement in world wars and major manpower utilized in war fronts than in industrial progress. The changes in the world economic markets and economic strength of France, Germany and the United States of America.

References

Floud Roderick, Mc Closkey.N.Deirdre (1994) the economic History of Britain Since 1700.

Knol (2008) The changing role of the state in the British Economy between 1914 to 1921. Web.

Powells book (2008) the decline of industrial Britain 1870-1980 by Michael Dintenfass. Web.

Saul, S.B, The myth of the great depression 1873-1896.

Tawney, R.H. (1943) The Abolition of Economic Controls, 1918-1921.

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Economic History of Britain

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