The Benefits of Trade

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Arguments that Suggest the Empire Made Britain Wealthier

The economic impact of the British Empire has been hotly contested for years amongst historians.

The scale of trade in the Empire

Britain traded more with the Empire than any other part of the world.
10% of all of Britain's beef imports and 15% of all of Britain's wheat imports came from Canada.
Britain dominated exports in manufactured goods. In 1913, 32% of all manufactured goods bought in the world came from Britain.
Britain's main exports in 1913 were insurance, shipping, steel, cotton, machinery, and coal.
Jaffe (1988) highlights that selling products into a large market can give economies of scale and allow innovation to happen. Britain was a small nation, so selling British products in the Empire was advantageous.

Trade with India

India exported huge amounts of commodities like cotton and tea to Britain.
These benefitted British consumers by giving them low prices, but Britain also re-exported these goods to other countries.
In 1913, India had a zero percent tariff on goods produced in the UK vs a 40% tariff on goods produced in the USA in 1913. This made British goods relatively cheaper to Indian consumers and businesses than American goods.

Trade with Australia and New Zealand

Australia exported wool and sugar to Britain.
Refrigerated rail wagons and improvements in international transport allowed frozen lamb to be transported to Britain from Australia, New Zealand, and Argentina.

Historical views of the benefits of Britain's Empire

Edelstein (2004) argues that "the empire meant much more for economic wellbeing in 1913 than in 1870 due to increased proportion of British commodities & services marketed in the Empire".
But Edelstein quantifies the gain at only 1% of GDP.
A lot of the benefit came from having additional troops and a larger tax base during World War 1. 225,000 troops from the Empire died relative to 744,000 British troops.
But using this tax base led to anti-British sentiment after the war. In countries like Egypt, people faced deprivation and hardship because of the war.

Arguments Against the Importance of Trade with the Empire

The economic impact of the British Empire has been hotly contested for years amongst historians. Many argue that the importance of trade has been exaggerated.

Waning interest in the Empire

The Imperial Federation League was set up in 1884 to promote closer colonial ties, but this organisation was disbanded forever in 1893.
Edelstein (2004) argues the benefit of the Empire was only 1% of GDP.
Harley (2004) highlights that in 1913, 30% of all British goods and services were exported to other countries. After World War One, this had fallen to 15%. World War One harmed European producers and led to the rise of American and Japanese producers.
After World War One, protectionism and tariffs became more common, undermining the importance of the British Empire to Britain economically.

Limits of the Empire's exports

The Empire was only Britain’s main food supplier in cheese, apples, potatoes, and fresh mutton.
- The Empire provided less than 10% of other foodstuffs to Britain.
The British turned to alternative exporters.
Edelstein (2004) argues that the formal gains from Empire in tax revenue and trade were limited. More important, Edelstein argues, were the indirect subsidies and manipulation of trade, encouraging the purchase of British goods.

Trade with the non-imperial world

Britain’s trade with the states outside of its empire (especially the USA) was growing in the late 19th century.
In 1896, the Empire’s total trade was £745 million.

Benefits to the Empire

Arguably, Britain helped to develop very poor nations.
Iran's oil industry benefitted from British expertise in the city of Abadan. However, lots of Iranian workers lived in poverty and most profits went to Britain.
In 1913, 43% of foreign British investment went to the Empire. So the Empire led to increased capital to allow economic development to happen. 40% of this capital was spent on railways.

Borrowing from the City of London

Countries in the British Empire could also borrow money in the City of London at lower interest rates than nations that were not in the British Empire.
However, the cost to the local population from increased taxes, loss of civil liberties, and lack of self-determination may well outweigh some of the developmental benefits.

Benefits to private companies and individuals

It is possible that the chartered companies made huge profits for their owners and shareholders, but that little value accrued to Britain as a niche outside military strategic importance.
This could explain the transition from privately-owned companies, to British protectorates, and then to independence over time.

1High Water Mark of the British Empire, 1857-1914

1.1Development of Imperialism, 1857-1890

1.1.1Empires over Time

1.1.2Key Questions About Empires

1.1.3Expansion into Africa

1.1.4History of Egypt

1.1.5Control of Egypt

1.1.6Control of Sudan

1.2Imperial & Colonial Policy, 1857-1890

1.2.1The British Empire & India

1.2.2The British Raj

1.2.3International Relations with other Powers

1.2.4Scramble for Africa

1.2.5The Informal Empire

1.3Trade & Commerce, 1857-1890

1.3.1Trade & Commerce in the Empire

1.3.2Infrastructure of Trade & Commerce

1.3.3Products of Trade & Commerce

1.4Attitudes Towards the Empire, 1857-1890

1.4.1Explorers

1.4.2Missionaries

1.4.3Traders & Colonial Administrators

1.4.4Government Attitudes Towards Imperialism

1.5Relations with Indigenous Peoples, 1857-1890

1.5.1Relations with India

1.5.2Relations with South Africa

1.5.3British-Boer Relations

2Imperial Consolidation & Liberal Rule, 1890-1914

2.1Consolidation & Expansion in Africa, 1890-1914

2.1.1Consolidation & Expansion into Africa

2.1.2Consolidation & Expansion in South Africa

2.1.3Historical Interpretations: Expansion into Africa

2.2Imperial & Colonial Policy, 1890-1914

2.2.1Policy in India

2.2.2Policy in Egypt

2.2.3Native Policy in Colonies

2.2.4International Relations with Other Powers

2.3Trade & Commerce, 1890-1914

2.3.1The Benefits of Trade

2.3.2Costs of the Empire

2.3.3Debates Over Trade

2.4Attitudes Towards the Empire, 1890-1914

2.4.1Key Administrators - Chamberlain & Rhodes

2.4.2Key Administrators - Baring & Milner

2.4.3Key Administrators - Curzon

2.4.4Government Attitudes to the Empire

2.4.5National Efficiency & the Boer War

2.4.6Popular Attitudes Towards Imperialism

2.5Relations with Indigenous Peoples, 1890-1914

2.5.1Challenges in India

2.5.2Challenges in Africa

2.5.3Challenges in South Africa

2.5.4Historical Interpretations of the Boer War

2.5.5Relations & Business with Iran

3Imperialism Challenged, 1914-1967

3.1Expansion & Contraction of Empire, 1914-1947

3.1.1Impact of WW1

3.1.2Palestine

3.1.3Ireland & WW1

3.1.4Impact of WW2 on the British Empire

3.2Colonial Policy & Administration, 1914-1947

3.2.1Administration in India & Palestine

3.2.2Administration in Iraq & the Dominions

3.2.3Imperial Defence

3.3Trade, Commerce & Economic Impact of War

3.3.1Economic Impact of WW1

3.3.2Inter-War Trade & Commerce

3.3.3Economic Impact of WW2

3.4Attitudes Towards the Empire, 1890-1914

3.4.1Colonial Administrators

3.4.2Trusteeship

3.4.3Gandhi

3.4.4Montagu, Haig & Linlithgow

3.4.5Cameron, Mitchell, Cohen & Furse - African Admins

3.4.6Imperialist Ideals

3.5Relations with Indigenous Peoples, 1914-1947

3.5.1Ireland & India 1914-1947

3.5.2The Middle East and Africa

4The Wind of Change, 1947-1967

4.1Decolonisation in Africa & Asia, 1947-1967

4.1.1Reasons for Decolonisation

4.1.2Decolonisation in East & West Africa

4.1.3Decolonisation in Central & South Africa

4.1.4Decolonisation in Asia

4.2Colonial Policy & Administration, 1947-1967

4.2.1Relations & Business with Iran after WW2

4.2.2The 'Winds of Change'

4.2.3The Suez Canal Crisis - 1956

4.2.4International Relations 1947-1967

4.3Trade & Commerce, 1947-1967

4.3.1The Economic Impact of WW2

4.4Attitudes Towards the Empire, 1947-1967

4.4.1Colonial Administrators: Cohen & Arden-Clarke

4.4.2Local Leaders in the Independence Movement

4.4.3Pan-Africanism in Nationalism

4.5Post-Colonial Ties, 1947-1967

4.5.1Windrush & Immigration

4.5.2Commonwealth Immigrants Act

4.5.3Residual Impact of the Empire

4.6Relations with Indigenous Peoples, 1947-1967

4.6.1Challenges to Colonial Rule Post 1947

4.6.2Kenya & the Mau Mau Uprising

4.6.3Nigeria & Rhodesia

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