British economic development between 1870 and 1914

In the late eighteenth century, Britain became the first country to endure the industrial revolution, which broadened to Europe, and then to the United States. i The new technology created, lead to a diverse range of resources, and an expanding market. Britain could not sustain the leadership it had established though, and in 1870-1914 there was an inescapable decline. In comparison to other countries Britain’s GNP was not particularly quick, over the entire duration of the nineteenth century, and significantly between 1870 and 1913.

i Even though international evaluations in this area present a variety of complications and uncertainties, Angus Maddisons quotes and figures can be used as a method of analysis. iii Concerning growth of total output, Great Britain was in 8th position, joint equal with the Netherlands, and Norway. Just France and Italy came lower than her. For per-capita output, Britain’s rank was 9th on the list, and regarding productivity England was tenth. iv The tables used only list twelve countries, which definitely suggest that Britain had not maintained its high economic growth, which it retained in the 1830’s period, or even in the 1860’s.

This economical decline was due to a range of factors affecting not just one industry but also most industries. The Agricultural sector of the economy suffered noticeably, at the end of the 1870’s. Agriculture was regarded as being a major victim of the Great Depression. External pressures within the industry lead to a decrease in agricultural prices. The average price of wheat fell from 55 shillings in 1870 to 30 shillings in 1890. v In two decades, foreign competition became such a threat that Britain’s farming infrastructure was slow to adapt to more efficient methods of extensive mechanical farming, to lower production costs.

In the period between 1870-1913 world industrial production quadrupled, while Great Britain’s production merely doubled. vi Britain was no longer the workshop of the world, in the gist of boasting a near monopoly of modern industry. The American, and German competition came from mainly large firms, which were often prearranged into cartels with federalised marketing. To contend with these two countries, Britain had to restructure its infrastructure into larger components. Most firms however, remained small, refusing to integrate.

Britain’s old-fashioned irregular structure of industry, would inevitably encounter difficulties. She was inhibited by a small number of sizeable industries, which produced a restricted range of products, for which there had been a great demand, in the decades earlier than the 1870’s. vii However, the increase of industrialization to foreign countries, frequently depending on the renewal of protectionism, the grand English industries were in threat to losing parts of their foreign markets. These grand industries included textiles, iron, and steel. Britain could not retaliate to this fact.

In addition, if world industrialisation needed the UK to adapt, for the reason that she could not sustain growth by manufacturing the same products, there was nothing impossible about these inconveniences. The solution could be found in creating new industries, and new products to generate a demand in the world economy for goods specific for the UK. To which challenging competition would not be active until short-term. Additionally newfound skills could be used to substitute for those, which were afflicted from foreign competition, to reorganize resources and pioneering.

British export trade was critically affected by foreign tariffs, in certain industries. In the case of the tinplate trade in South Wales, the industry was knocked hard in the 1890’s by American import duties. viii As Britain had absolutely no influence over transformations to the world economy, her loss of status as a manufacturing authority was unavoidable. In this situation it is fair to say that Britain was unquestionably going to face a slow-down in growth, but to what extent is considered to be normal?

Many theories imply that although Britain had no power over external variations, there were also internal faults for which Britain was responsible. A lacking of innovation, meant that Britain lost her technological leadership, coupled with the fact that she had not improved her productivity adequately, her competitiveness had been drastically reduced. ix Compared to the United States, Britain added i?? 100 per worker, contrasted to i?? 500 per worker in America. x However, this particular information does seem predominantly biased and resiliently pessimistic.

Even though Britain had lost its technological advances, it had not necessarily succumbed to the force of international competition and let her economy suffer. As T. C. Barker presents a more reasonable argument, which suggests that Britain was backwards in some respect, but he contends that Britain was by and large narrowing the gap between the United States, by using new techniques, and designing new products with good sales prospects in the long term. xi On the other hand if Britain had narrowed the gap fairly quickly, then the economy would not be in the sluggish phase it encountered.

If Britain successfully adapted then surely during the first decade of the 1900’s it should have been in a more influential position in the economic community. For example there was an extreme slow down after 1900, and up until 1910 growth was negative at 0. 4%. xii The role of entrepreneurs in the demise of the economy is vital. Business’s that had been found in the late eighteenth century, and beginning of the nineteenth century were strictly family owned firms. By the end of the nineteenth century, third generation men ran businesses.

The grandfather was long dead, it was he who produced the business, driven by a hard upbringing, and determined to succeed. The son, habitually respected his father deeply, and practised the same methods, had handed the rights to the third generation. These men of immense wealth had not been brought up the hard way like their father, and grandfather. They had been educated in a public school, where they were not taught adequately enough to prepare to manage an industrial taking.

In a nutshell, they paid little attention to the amendments taking place in the world economy, or to the development made by their competitors. xiii This lead to an ignorance among manufacturers that was destructive. Instead of endeavouring new machines and new systems, they distinctively made constant repairs, or at best substituted old machinery, for new similar equipment. This regard for tradition stunted potential growth of the economy, by ignoring technical and management matters where the new American methods rising at the end of the nineteenth century would have benefited Britain.

The surroundings for innovation were becoming more and more diverse, than to those imposed at the start of the nineteenth century. From the times where the main inventions came about with men of little education, who were either clever craftsmen or amateurs addicted to tinkering, inventions now incorporated scientific knowledge. In particular the occurrence in both chemical and electrical industries, that relied on solely on applied science. The relationship between industry and science seems to have been the secret weapon in Germanys economy.

Britain on the other hand, failed to achieve this union between science and industry. Compared with Germany the level of students Britain retained was appallingly low, with a mere 9000 contrasting with Germany’s 60 000 students in 1913xiv. In general the economic activity in the United States and Canada, varies inversely with swings in British building and domestic investment. xv Domestic savings grew in the 1870’s, 1890’s, and the early 1900’s. Overseas investment on the contrary, moved in the opposing route, declining in the 1870’s, and 1890’s.

Departures of population from Britain move comparatively to the outflow of capital. In the Northern American economy domestic investment, and economic activity were running at high levels in the 1880’s, and 1900’s. This was due to the upsurge of capital, and population from Britain, and other European Countries. In phases where domestic investment, and business activity were depressed in Britain, the American and Canadian economies rose rapidly, and this economic growth was sustained by the injections and capital from Britain to these countries.

Conversely, in periods in which the British economy grew hastily, the outflow of capital and population decelerated, and the Northern American economy was respectively reduced. Protection in Europe was brought about after 1880, due to a number of political and economic developments. xvi The revival of nationalism in the late nineteenth century linked with the surfacing of new nation states, such as Germany and Italy, assisted the economic case for protectionism. However, the major two factors that accounted for the swing into protectionism were two particular economic developments of the 1870’s.

The first was the enormous inflow of low-priced grain into Europe, from the United States and Russia, and the second the depression of 1873-9. The latter was the longest duration of dormant trade, the international economy had yet experienced. Over the 1880-1913, only Britain, Denmark, and Holland persistently remained to free trade. As France, Germany, and Italy imposed tariffs on wheat in a bid to protect grain producers, Denmark, and Britain did not. Denmark however, did adapt by converting from the growing of grain, to specialization in dairy production, and animal husbandry.

Britain on the other hand, failed to adjust promptly, with the letdown of the British farmer to the opposed market situation, contrasts harshly with the success of the Danish. International cartels, started to fill the international economy in the nineteenth century. xvii They covered industries such as shipping, tobacco, glass, aluminium, enamelware, and bottles. The fact that Britain was not a member of most international cartels, greatly limited the international economic power, as the application of their monopoly powers, was always under the threat of competition from Britain.

The magnitude, and capability of Britain’s Labour force, did not generate any conspicuous obstruction to her economic growth. xviii There was not a scarcity of labour, or at the other extreme, an oversupply of labour, to depress industrial investment. The primary resources were more than sufficient to enable a spirited expansion, which included coal, iron, and other minerals. It was how these resources were utilized, coupled with labour, and capital, that was decisive.

The notion of ‘decline’ would be absolutely accurate to describe the economic development, for the period of 1870-1913, if the term was used to compare it with its previous rate of growth. As the term denotes a smaller expansion in the economy, and not necessarily a recession, it is clear that Britain had lost its first class rank in the world economy. She did this by failing to mechanize to keep up with the technology bestowed on the rest of the world, who consequently carried on escalating and succeeded in driving Britain into a decline.

However, the fact that the economy was on the rise, but at a less significant rate, could just be a cyclical pattern of fluctuations, which any economy would encounter. If this was the case though, then why did Germany who not only caught up with Britain but also overtook Britain in the world market. The decline was however constrained to industrial production and productivity, united with a regressive disposition in technology. xix Great Britain had a superior position in the field of services. However a combination of factors including, lack of innovation, education, investment, ambition, meant that Britain was in decline in 1870-1913.