What was the importance of trade to the British Empire?
The beginning of Free Trade
In 1846 Peel sacrificed the interests of his party to push through the Repeal of the Corn Laws which opened up the domestic market to cheap corn from the American prairies, the Russian plains and from wherever British merchants could import cheap grain. A stated aim for the repeal was to alleviate the hunger and poverty afflicting Britain at the time by providing cheap corn. A more important consequence of the repeal though was to usher in a period of free trade that was to last until the 1930s by destroying the last vestiges of the old Mercantilist system that had been introduced in the days of Oliver Cromwell in the mid-
The Mercantilist System
The Mercantilist system was a system of protection that was the prevailing economic theory at a time when it was believed that the amount of wealth in the world was finite and a nation could only increase its wealth by increasing its share of global wealth. Laws were introduced to restrict trade and to make Britain as self-sufficient as possible. Colonies were founded to maintain control of the supply of staple commodities and Navigation Acts were passed to ensure that as much trade as possible was carried in British ships.
Within years of the Repeal of the Corn Laws, the last Navigation Acts were repealed in 1849 and the Sugar Acts of 1852 removed the protection that Britain's sugar colonies in the Caribbean received. In Gladstone's 1860 budget the remaining traces of fiscal protection were removed. The ending of Mercantilist was a defeat for the 'landed' interest and a victory for 'steam' and cotton' industrialists whose industries had been at the heart of the Industrial Revolution which had seen the introduction of huge four or five storey factories in the 1830s. These new industrialists had argued that with cheap food there would be a fit and healthy workforce, and with stable wages and food prices there would be a stable social order at a time when there was revolution elsewhere in Europe. Others argued that free trade that came with the ending of the Mercantilist system would bring other freedoms -
namely free and universal political institutions, freedom from hunger, want and unemployment.
The Great Exhibition in Hyde Park was a dispaly of Britian's industrial strength
A new era of global supremacy for Britain and freedom for the world would be the ultimate result of the Repeal of the Corn Laws. Just five years after the repeal of the Corn laws came the Great Exhibition in Hyde Park. This huge glass palace was an advertisement and a display of Britain's global industrial supremacy.
The opening of the Crystal Palace
This economic supremacy, which would last for the remainder of the Victorian period, was taken for granted by the British. It had come as a result of a series of wars in the late c18th and early c19th which had eliminated Britain's rivals in trade and warfare in Europe. During the Seven Years War of 1756-
1763 and the Napoleonic Wars the global military power of France was eliminated through victories in India and Europe.
The workshop of the world
The victories at Waterloo and Trafalgar made Britain the dominant military power in the world and especially of the world's seas and trade routes. By this time Britain was undergoing an industrial revolution, the first European country to do so and with her internal stability of and deep religious commitment towards developing commerce, Christianity and commerce, Britain would maintain her economic dominance until the last quarter of the century.
With economic dominance and having been freed from the shackles of Mercantilism, British businessmen could seek out trade wherever they could find opportunities to do so. Following industrialisation British businessmen could offer cheap and well made industrial goods on a scale never before imagined. As the only industrial power British businessmen were in a good position to operate in every part of the world and they sought out trade opportunities wherever they could find them. Britain's industries relied on importing raw materials like cotton and wool, and staple commodities like tea and coffee were in huge demand and the introduction of free trade enabled businessmen to seek out new markets and sources of such commodities.
By 1851 Britain was the workshop of the world producing two thirds of the world's coal and a half of all cotton cloth and iron produced in the world. The freeing up of trade enabled this dominance to continue and exports around the world to increase. The value of British exports in 1825 had been £38 million, by 1845 it was £60 million and by 1869 it was £190 million. This increase in trade though came from increasing contact with counties outside the Empire, particularly from North America and Latin America. Although the Empire was increasing in size during the Victorian period, it provided few economic opportunities and indeed with the ending of economic preference for the colonies and the abolition of slavery and the slave trade, the Caribbean suffered greatly during this new free trade era.
Latin America was also an important area for British businessmen. By 1824 there were nearly a hundred British commercial houses in South American cities and there were over 3,000 British people just in Buenos Aires. The demand for textile goods in particular was important for the Lancashire textile factories and as trade with South America increased consuls were appointed to all the commercial bases to facilitate trade and deal with any grievances that the British had. Until the 1860's Brazil was the main trading partner for Britain (providing 50% of Brazil's imports) but after 1860 Argentina became more important so that by 1914 Britain had four times as much investment in Latin America as the USA . In the period 1865 -
India became Britain's most important trading colony
The Abolition of Slavery and also the abolition of sugar duties on competition from outside the Caribbean hit the West Indies colonies badly. Many plantations, already suffering from competition from South America, closed down. labour became increasingly difficult to come by. Freed slaves often did not want to return to the sugar plantations and instead indentured labour had to be brought in. 36,000 liberated Africans from St Helena and Sierra Leone were brought to the West Indies as were 100,000 Asians. Alternative sources for sugar were sought in Natal, Mauritius, Fiji and Queensland with varying degrees of success.
India, Britain's most important colony, had developed in terms of territorial acquisitions during the early 19th century but most acquisitions were for strategic advantage or to increase the status of the commander concerned. In the 1840s Sind and the Punjab were acquired, but neither provided new trading opportunities until later in the century. Sind was annexed by General Napier against the wishes of the metropolitan government whilst Punjab was annexed to control India's north western border. Likewise the annexations that took place in Burma throughout the century were to protect India's hinterland in the east. In many ways India was a liability for Britain. Over two million British people died in India during the 19th century, mainly from disease, and whilst the contribution of the Indian army was substantial, the cost of maintaining large numbers of British soldiers in India was huge. In the early 19th century India was not an important destination for British exports or investment. Most of the tea drunk by the British came from China and it was only after the opening of the Suez Canal that India became more important for the British economy.
With better transport links to India, investment in the country began to increase with investment in bridges, railways, irrigation and new methods of transport. the relationship with India though was one that benefited the metropolitan power and did little for most Indians. India's textile industry was virtually de-
industrialised to benefit the textile factories in Lancashire. New crops were introduced to India but most financial benefits went to the British investors. Assam was developed for tea and replaced China as Britain's source for tea. By 1900 Britain was importing 137 million pounds weight of tea annually compared to just 24 million pounds from China. Indian jute and cotton also became important sources for Britain. India also became an important source of labour for Britain after the abolition of slavery providing over 25,000 Indians as indenture labour by 1838 and providing 18,000 labourers to the sugar industry in Mauritius. The peak of this overseas settlement of migrant Indian labour came in 1858/9 when 53,000 Indians went overseas, 45,000 of whom went to Mauritius. Despite the investment in India's infrastructure in the last quarter of the century, the British failed to make India a real economic asset and its people continued to suffer from periodic famines.
Refridgerated ships changed the nature of trade
Of Britain's remaining colonies, their interests were ignored when Peel decided to repeal the Corn Laws and move towards free trade. Cheap food and the Atlantic trade were far more important. Apart from India, the colonies that had been part of the 18th century British Empire no longer existed as colonies or were of minimal economic importance. There was a risk that the self governing colonies might seek greater economic independence from Britain but the security interests and the importance of currency, banking, insurance and shipping links ensured that links with the colonies remained. Canada developed closer ties with the USA as the century went on and imposed a number of tariffs against British goods but trade with Canada still remained relatively high. Australia managed to develop her woollen industry so that Australia became the main supplier of wool to Britain exporting £39 million worth of wool to Britain by 1851 and £400 million (60% of her exports of wool) in 1886. With the development of refrigerated ships the importance of New Zealand and Australia grew as they could now export meat but it was always economic interest that dominated trade relations.
As British trade dominated the global economy, developing generating huge wealth for British industry, much of the profits from British trade were invested in capital projects around the world. Britain became in the second half of the 19th century not just the workshop of the world but the world's banker. London was the financial centre of the world with huge amounts of money being invested in railways, mining, ranching and all kinds of industrial and commercial development.
Over half of the money invested went to areas outside the empire as investors sought new sources of raw materials and markets for Britain's industrial goods and the returns from these investments ensured that Britain's balance of payments remained in surplus throughout the century. Throughout this global expansion of industry and business, the British government played a supportive role.
Palmerston claimed that a good deal of Foreign Office time was spent in dealing with the complaints of merchants abroad and he was quite willing to intervene abroad using force to enforce free trade. The three wars fought to enforce the opium trade on China between 1839 and 1860 were typical of the attitude taken by British governments throughout the century. The Boer War at the end of the century (1899-1902) was fought partly to improve the position of the gold companies in the Transvaal at a time when the industry was being taxed heavily and having to pay excessive amounts for items such as dynamite.