1.3.1
Trade & Commerce in the Empire
Interpretations about the British Empire's Economy
Interpretations about the British Empire's Economy
Historians have presented different interpretations about the importance of economic factors in driving the British Empire's expansion.
Marxist interpretation
Marxist interpretation
- The Marxist interpretation of the British Empire focuses heavily on trade, seeing expansion as being driven by the ‘haves’ against the ‘have-nots’.
J.A Hobson
J.A Hobson
- A contemporary critic of the empire, J.A. Hobson, saw imperialism as an economic, political, and cultural practice common to nations with a capitalist economic system.
- Hobson Imperialism (1902):
- "They [British capitalists] need Imperialism because they desire to use the public resources of their country to find profitable employment for the capital which otherwise would be superfluous".
Jan Morris (1968)
Jan Morris (1968)
- Exploring Britain’s trade and commerce seems to confirm Jan Morris’ belief that ‘the deepest impulse of empire was the impulse to be rich’.
Martin Kitchen (1996)
Martin Kitchen (1996)
- Before 1800, Kitchen says ‘the Empire has largely been left to exploitation by individual adventurers and commercial companies’.
- Kitchen says ‘by the mid 19th Century, the driving force behind this type of imperialism was a curious mixture of nationalism, Christian missionary zeal, the search for profit and the career objectives of Britain’s civil and military officials’.
- Unlike today, private companies rather than governments enforced rule.
Cecil Rhodes & Indian sepoys
Cecil Rhodes & Indian sepoys
- In 1889, Cecil Rhodes (pictured) led soldiers employed by the British South Africa Company to the Limpopo river to create the colony of Rhodesia.
- In India, sepoys were local Indian soldiers, employed by the East India Company. The East India Company was often able to pay soldiers on time and more reliably than local political or military leaders.
Parliamentary and noble interests
Parliamentary and noble interests
- Between 1719 and 1721, the Duke of Buckingham, a former member of the royal Privy Council, was one of the most active traders in East India Company shares. In the late 1600s, the East India Company paid a 22% dividend each year.
Adam Smith and the Free Trade Concept
Adam Smith and the Free Trade Concept
Expanding trade and commerce was a defining feature of the British Empire.
Adam Smith and Free Trade
Adam Smith and Free Trade
- The 18th-century focus on mercantilism and protectionism was dismantled in the first half of the 19th century by Adam Smith’s Wealth of Nations concept of ‘free trade’.
- Mercantilism is the economic policy of a state that seeks to maximise the exports of the state while minimising the reliance on imports.
- Protectionism is the restriction of foreign imports through measures like taxation.
Adam Smith: Wealth of Nations (1776)
Adam Smith: Wealth of Nations (1776)
- Smith argued that wealth could be infinite and that governments should not intervene in markets. Smith argued that individuals pursuing their selfish goals would lead to the optimal outcome because of the 'invisible hand' of the market.
- This free-market doctrine became a dogma in the UK.
Handling of the Irish Potato Famine
Handling of the Irish Potato Famine
- During the Irish Potato Famine, Parliament was reluctant to intervene because of its belief in free markets. It thought that if it helped Ireland, it would create a 'moral hazard' and make them reliant on UK money. Sir Robert Peel managed to send the Irish £100,000 worth of Maize, but his government collapsed and support stopped. The Economist condemned this failure in 1845.
The British Empire and Trade and Commerce
The British Empire and Trade and Commerce
Expanding trade and commerce was a defining feature of the British Empire.
Britain and free trade in India
Britain and free trade in India
- The British Empire's growth was supported by free trade.
- Free trade is based on the idea that competition between businesses leads to the best outcomes for consumers.
- However, in India, the East India Company tried to create a monopoly and raise taxes as high as they could to maximise their profits. The East India Company had a monopoly granted by the Queen and tried to seize all control from local politicians, like the Mughal Emperor.
Britain and free trade in China
Britain and free trade in China
- The East India Company had been selling opium made in India (used to make heroin) to China. The Qing Dynasty decided to ban opium in China. During the Opium Wars with China between 1839 and 1860, the British navy fought against the Qing Dynasty (Chinese government) in order to allow Britain to keep selling the now-illegal opium in China.
- Britain gained Hong Kong as a colony from China in 1842 as part of the Treaty of Nanjing.
- In China, the East India Company's commercial interests were supported by the British military and British navy.
Britain trading with colonies
Britain trading with colonies
- It was easy for colonies to trade with Britain because of the power of the Pound Sterling as a currency, the use of English law, the use of English as a language, and the capital provided by the City of London's financial markets.
- Between 1875 and 1900, 20% of Britain's imports were from colonies and 33% of Britain's exports went to colonies.
- There was also a system of 'imperial preference' that the USA would dismantle after World War 2. Imperial preference meant that tariffs (taxes) on goods between two nations were lower if they were both parts of the British Empire.
1High Water Mark of the British Empire, 1857-1914
1.1Development of Imperialism, 1857-1890
1.2Imperial & Colonial Policy, 1857-1890
1.3Trade & Commerce, 1857-1890
1.4Attitudes Towards the Empire, 1857-1890
1.5Relations with Indigenous Peoples, 1857-1890
2Imperial Consolidation & Liberal Rule, 1890-1914
2.1Consolidation & Expansion in Africa, 1890-1914
2.2Imperial & Colonial Policy, 1890-1914
2.3Trade & Commerce, 1890-1914
2.4Attitudes Towards the Empire, 1890-1914
2.5Relations with Indigenous Peoples, 1890-1914
3Imperialism Challenged, 1914-1967
3.1Expansion & Contraction of Empire, 1914-1947
3.2Colonial Policy & Administration, 1914-1947
3.3Trade, Commerce & Economic Impact of War
3.4Attitudes Towards the Empire, 1890-1914
3.5Relations with Indigenous Peoples, 1914-1947
4The Wind of Change, 1947-1967
4.1Decolonisation in Africa & Asia, 1947-1967
4.2Colonial Policy & Administration, 1947-1967
4.3Trade & Commerce, 1947-1967
4.4Attitudes Towards the Empire, 1947-1967
4.5Post-Colonial Ties, 1947-1967
4.6Relations with Indigenous Peoples, 1947-1967
Jump to other topics
1High Water Mark of the British Empire, 1857-1914
1.1Development of Imperialism, 1857-1890
1.2Imperial & Colonial Policy, 1857-1890
1.3Trade & Commerce, 1857-1890
1.4Attitudes Towards the Empire, 1857-1890
1.5Relations with Indigenous Peoples, 1857-1890
2Imperial Consolidation & Liberal Rule, 1890-1914
2.1Consolidation & Expansion in Africa, 1890-1914
2.2Imperial & Colonial Policy, 1890-1914
2.3Trade & Commerce, 1890-1914
2.4Attitudes Towards the Empire, 1890-1914
2.5Relations with Indigenous Peoples, 1890-1914
3Imperialism Challenged, 1914-1967
3.1Expansion & Contraction of Empire, 1914-1947
3.2Colonial Policy & Administration, 1914-1947
3.3Trade, Commerce & Economic Impact of War
3.4Attitudes Towards the Empire, 1890-1914
3.5Relations with Indigenous Peoples, 1914-1947
4The Wind of Change, 1947-1967
4.1Decolonisation in Africa & Asia, 1947-1967
4.2Colonial Policy & Administration, 1947-1967
4.3Trade & Commerce, 1947-1967
4.4Attitudes Towards the Empire, 1947-1967
4.5Post-Colonial Ties, 1947-1967
4.6Relations with Indigenous Peoples, 1947-1967
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