Inter-War Trade & Commerce
History: AQA A Level The British Empire, topic 3.3.2
Inter-War Trade and Commerce
The 1920s were spent reconstructing the economic system which had existed before 1914. The 1930s were spent recovering from the Great Depression.
Trade in the 1920s
- In the 1920s, Britain sought to recreate the economic system which had existed before 1914. This involved fixed exchange rates between countries.
- Britain got back onto the Gold Standard in 1925.
Trade in the 1930s
- Amid the Great Depression at home, Britain tried to increase its exports to the Empire to make up for lower sales in Britain. Britain also began to import more from the Empire.
- Harley (2004) states that imports from the British Empire were treated 'preferentially' by Britain.
- Britain was forced to abandon the gold standard again in 1931. This increased exchange rate volatility and made trade between nations more difficult and more uncertain.
British protectionism during the 1930s
- Britain's ability to trade with the Empire in using the British Pound (sterling) was helpful for trade. Prices could be quoted in pounds and paid in pounds, which lowered the friction to trade.
- The British Empire pursued a policy of imperial preference (a protectionist economic policy).
- This imperial preference was reflected at the Ottawa Conference of 1932. Here, Britain imposed a 10% tariff (tax) on imports, except imports coming from Crown Colonies.
British Rule in India During the Great Depression
Historian Shashi Tharoor has prompted a re-write of British rule in India, advancing the argument that British rule was intensely damaging, destroying pre-existing industry and prestige.
Shashi Tharoor, An Era of Darkness (2016)
- 'The manipulation of currency, throughout a feature of the colonial enterprise, reached its worst during the Great Depression of 1929–30, when Indian farmers (like those in the North American prairies) grew their grain but discovered no one could afford to buy it.'
- 'Agricultural prices collapsed, but British tax demands did not; and cruelly, the British decided to restrict India’s money supply, fearing that the devaluation of Indian currency would cause losses to the British from a corresponding decline in the sterling value of their assets in India.'
Shashi Tharoor, An Era of Darkness (2016) cont.
- 'Britain insisted that the Indian rupee stay fixed at 1 shilling sixpence, and obliged the Indian government to take notes and coins out of circulation to keep the exchange rate high.'
- 'The total amount of cash in circulation in the Indian economy fell from some 5 billion rupees in 1929 to 4 billion in 1930 and as low as 3 billion in 1938. Indians starved but their currency stayed high, and the value of British assets in India was protected.'
Test yourself on Inter-War Trade & Commerce
What were the impacts of Britain abandoning the gold standard in 1931?
What word does Harley (2004) use to show how Britain treated imports from the Empire?
According to Tharoor, how did the British respond to agricultural prices collapsing in India during the Great Depression?