Economics of Empire, 1914-39

Question 1

1914-18 - trade with empire valuable

Answer 1

o From 1915-1919, Britain imports £1161m worth of goods from the Empire (shows continued, and maybe even strengthened trade by WWI – empire working together as one economically united unit)

Question 2

1914-18 - empire valuable in terms of supplying the war effort (3x)

Answer 2

o India contributed £146m to the war effort – economic support from colonies indicates strong relationship
o Canada supplied Britain with 1/3 of the munitions they used in France from 1917-18
o The West Indian colonies contributed nearly £2m from tax revenue and voluntary donations

Question 3

1914-18 - empire not valuable because of disruption to trade with India

Answer 3

o The disruption to international trade equally disrupted trade within the Empire (not just trade from non-Empire countries to Empire countries). A clear example is the growth of Indian domestic industry; profits from national domestic manufacturing go up from 6% in 1914 to 30% in 1917
o Also, Britain takes 2/3 of Indian imports in 1914, but because of wartime disruption this figure starts to fall

Question 4

1914-18 - empire not valuable (economic instability of Britain and impacts)

Answer 4

o The gold standard is removed in 1914 due to gold reserves running low and the economic pressures of WWI – the gold standard had supported stable exchange rates and predictable trade conditions, meaning that its removal helped encourage some empire countries to look elsewhere for more reliable trade…
o Canada becomes an industrial power during WWI and increasingly looks to its Southern neighbour, the USA, for investment and markets (can be linked to the gold standard argument)

Question 5

1918-29 - Empire valuable as a source of raw materials

Answer 5

o Empire as a course of raw materials: from 1909-13 to 1925-29, % imports from the dominions increase from 14.3 to 16.9, and from the colonies (excluding India and Burma) increase from 5.3 to 9.9

Question 6

1918-29 - Empire valuable as a market

Answer 6

o Empire as a market for British goods: % exports to the dominions increase from 17.5 to 20.6 during the same years

Question 7

1918-29 - Britain taking more economic interest in Empire

Answer 7

o The Colonial Development Act in 1929 authorised the making of advances for developing industry and agriculture in certain colonies

Question 8

1918-29 - Britain taking less economic interest in Empire

Answer 8

o WWI cost Britain £35,000m (13 x the Boer War), leaving the government very heavily indebted, especially to the USA – this economic damage meant that Britain was prioritising recovering internal financial stability over imperial economic expansion (and this can be explained by the return to free trade)
o A free trading system like the pre-1914 one was recreated, and meant that there wasn’t any preference for Empire

Question 9

1918-29 - commercial independence and trade with empire decreasing

Answer 9

o The dominions showed increasing commercial independence from Britain – Canada negotiated and signed the Halibut Fisheries Treaty in 1923 with the USA independent of Britain
o Additionally, % imports from India and Burma during this years decreased from 7.3 to 6.1
o This decrease in trade is evident in the fact that from 1909-13 to 1925-29, % exports to India and Burma decreased from 11.9 to 11.6, and to the other colonies decreased from 5.6 to 5.0

Question 10

1918-29 - counter to Colonial Development point

Answer 10

o The Colonial Development Act in 1929 authorised the making of advances for developing industry and agriculture in certain colonies, but was hugely limited in scope and didn’t signify a genuine commitment to strengthening economic ties – only £1m was given to the cause over the first 3 years, and this money mostly went towards communications and research rather than any active development

Question 11

1929-39 - causes of strengthened trade

Answer 11

o After the Wall Street Crash of 1929, Britain tries to recover her economy through imperial preference rather than free trade.
o The Ottawa System is introduced in 1932 and puts a 10% tariff on all imported goods except from crown colonies.
o Additionally, the sterling area helped to promote trade within the empire; 3 out of 6 of the dominions (Australia, New Zealand and South Africa) either adopted the sterling pound as their currency or pegged their currency to its value (making currency conversions easier and thus facilitating trade)

Question 12

1929-39 - Empire as a key source of raw materials

Answer 12

o Total imports increase from 32.9% (1925-29) to 41.2% (1934-8)
o Imports from the dominions increase especially, from 14.3% (1909-13) to 16.9% (1925-9) to 24.3% (1924-38)

Question 13

1929-39 - Empire as a key market

Answer 13

total exports to the empire increase from 37.2% (1925-29) to 41.3 (1934-38)

Question 14

1929-39 - Empire not that good as a supplier of raw materials

Answer 14

o Imports from South Africa fall from 48.4% in 1929 to 28.8% in 1938 (Sterling Area evidently not working well enough

Question 15

1929-39 - Empire not a great market fro British goods

Answer 15

o The actual value of British exports to the Empire is much lower than pre-WWI - £195 in 1913 but only £166m in 1934
o % exports to India and Burma from 1925-9 to 1934-38 decrease from 11.6 to 8.0
o India is somewhat lost as a market, especially for Lancashire cotton, causing the proportion of global cotton exports held by Britain to drop from 2/3 in 1914 to ¼ in 1938

Question 16

Financial relationships: change (Empire less important initially)

Answer 16

1. Fluctuations in system of trade – Britain attempted to recreate the pre-WW1 free trading system which did not give Empire countries preference
2. Gold standard collapsed under pressure of WW1 in 1914 but was then reintroduced in 1925 by Churchill and very controversial - made the currency more stable as pegged to gold but makes British exports more expensive so decreases imperial trade as empire countries dont have an incentive to choose Britain

Question 17

Financial relationships: change (imperial preference later in the period)

Answer 17

The gold standard was then abandoned in 1931 again with Britain instead shifting to the Sterling Area and a policy of protectionism (after the 1929 Wall Street Crash).

Three out of the six white dominions (Australia, New Zealand and South Africa) were pegged to sterling, creating financial stability within Empire and promoting internal trade through easier exchange rates (as the value of their currencies were pegged to each other).

Additionally, the Ottawa system of 1932 placed a 10% tariff on all imports from non-crown colonies.

Question 18

Financial relationships: change (colonial development)

Answer 18

4. The 1929 Colonial Development Act authorised the making of advances for aiding and developing agriculture and industries in certain colonies and territories – indicates that Britain desired to strengthen their financial relationships with Empire countries going into the 30s – so there was a change because Britain’s financial relationship with her empire countries strengthened from 1929 after the Wall Street Crash with a new protectionist policy

Question 19

Financial relationships: continuity (Britain consistently dominating trade with empire countries)

Answer 19

1. Despite transitions regarding imperial preference and the sterling area, Britain stayed in control of mechanics of imperial trade. Britain consistently used Empire as a source of raw materials; Empire took 87.3% of British tea imports in 1913 and 88.9% in 1934. This exemplifies the continuity of Britain’s relationship to Empire – consistently being a crucial supply of resources.

Question 20

Financial relationships: continuity (limitations to Colonial Development argument, and then double counter)

Answer 20

2. The scope of attempts to promote colonial development was very limited – only £1 million was given to the cause in the first 3 years, and mostly just to communications and research – so the act didn’t really mark any substantial change in terms of the British prioritising its financial relationships with Empire countries – BUT then counter with the fact that the Colonial Development Act was still progress and signified an increased desire to consolidate economic relationships with colonies even if there wasn’t huge amounts of commitment – the point is that it was something, and it was something unseen before

Question 21

Trading relationships with Dominions: change (initially less economically dependent)

Answer 21

1. Canada emerged as an industrial power during WW1 (by the end of 20s, more than ¼ million vehicles were being produced annually) and increasingly looked to its neighbour, the USA, for investment and markets – so, dominions such as Canada became less economically dependent on Britain during the early interwar period, thus marking a significant change
2. The Dominions became more commercially independent during the 1920s – eg Canada signed the Halibut Fisheries Treaty in 1923 independent of Britain – signified the financial relationship between dominions and Britain becoming less strong as the interwar period progressed

Question 22

Trading relationships with Dominions: change (closer ties with Empire after Ottawa)

Answer 22

3. Change back to financial relationship being very strong: the Ottawa System (10% tariff on all imports from non-Crown colonies) increased trade with Dominions significantly. From 1909-13 to 1934-38: imports from the dominions increase from 14.3% to 24.3%

Question 23

Trading relationships with Dominions: continuity (commercial independence evident before WWI)

Answer 23

1. Growing assertiveness/commercial independence of the Dominions was a trend already apparent by 1914 – Canada’s Conservative government imposed a new ‘National Policy’ 1876 which dramatically increased the price on imported manufactured goods, aiming to encourage the growth of domestic industries. – the average tariff rates on manufactured goods rose to around 25-35% after the National Policy.
2. By 1913, Canada was the world’s 3rd largest wheat exporter, with around 50% of its wheat exports going to non-empire countries (especially the USA) – demonstrates that financial independence from Britain was already a trend apparent from before WWI

Question 24

Trading relationships with Dominions: counter to continuity

Answer 24

50% still pretty high, showing that Canada was definitely pretty economically dependent on Britain before WWI (also, in 1897, the National Policy came to incorporate imperial preference, reducing tariffs from Britain by one eighth)

Question 25

Other trading relationships: change (India)

Answer 25

o India becomes less important as a market for British goods across entire interwar period. This is partly because domestic industry (especially textiles) thrives during WWI because of the disruption to international trade; Indian profits from domestic manufacturing increase from 6% in 1914 to 30% in 1917. o India and Burma absorb far less exports: from 1909-13 to 1934-8, the % value of exports to these colonies from Britain drop from 11.9% to 8.0% o This has a knock-on effect on Britain’s use of India as a market for Lancashire cotton; Britain’s share of cotton supply drops from 2/3 in 1914 to ¼ in 1938 precisely due to this loss of such a valuable market (India’s population was 250-300m during this period, so consumption was very high)

Question 26

Other trading relationships: change (increased trade with other colonies into the 1930s)

Answer 26

o Due to the Ottawa System and Sterling Area, trade with many crown colonies increased proportionally during 1930s. Imperial imports as a proportion of total British imports increased from 32.9% (1925-9) to 41.2% (1934-8), and exports to the colonies from 37.2% to 41.3%

Question 27

Other trading relationships: continuity (raw value of trade)

Answer 27

o However, this increase in trade because of the Great Depression and imperial preference is arguably balanced out by the decreasing actual value of trade (rather than proportional value) – the value of British exports to Empire rests at £195 in 1913 but only £166m in 1934 – so arguably balances out the proportional increase in imperial exports

Question 28

Other trading relationships: continuity (India)

Answer 28

o Additionally, whilst India falls off as a market, this change is balanced out by India becoming a more useful supplied of raw materials (meaning that whilst the specific economic purpose has changed, the overall value of India in terms of trade is pretty equal) – this is shown in that the % of raw cotton imports coming from Empire to Britain increases from 3% in 1913 to 17.1% in 1934

Question 29

Weakening economic ties during WWII (economic damage and selling of assets)

Answer 29

o German U Boat attacks on British sea traffic caused Britain to lose 11.7 million tons of shipping during the war, or about 54% of the country’s merchant fleet strength at the beginning of the war – disruption of trade, including to Empire countries (i.e., to Asia) o One third of British overseas assets (investments in business), were sold to pay for the war (including ones in Canada, which was a British dominion) – in order to pay for armaments and war supplies, Churchill stripped Britain of her overseas assets, including investments in empire countries, showing how winning the war/retaining economic stability took priority over strengthening imperial links

Question 30

Weakening economic ties during WWII (loss of territory and Lend-Lease)

Answer 30

o In 1942, Britain lost Singapore, Malaya and Burma to the Japanese, disrupting imperial trade with Southeast Asia. Malaya was the world’s largest provider of rubber (taking around 40% of global supply), and was also very valuable in providing tin, meaning that the loss of the colony was particularly significant in disrupting and weakening imperial trade. o Britain borrowed from the USA from 1941 in the form of Lend-Lease, in order to fund the war, and thus emerged from the war heavily indebted to America and economically instable (especially when Lend-Lease was ended in 1945) – shows how Britain became increasingly economically dependent on the US, rather than on its empire (though counter with the fact that Britain’s need to ‘earn dollars’ to pay the US back then drove her to strengthen economic ties with Malaya (for rubber and tin)

Question 31

Evidence of strong economic ties during WWII (assets and donations)

Answer 31

o Most of the overseas assets sold were in the USA or Latin America, not empire countries o Canada made significant donations to help the British war effort: the Billion Dollar Gift was given to the UK in 1942, and then it was supplemented with Mutual Aid in 1943. The two grants totalled over C$3 billion. (economic assistance from colonies was perhaps even greater than in WWI)

Question 32

Evidence of strong economic ties during WWII (manpower and colonial development)

Answer 32

o The Empire, consisting of nearly ¼ of the world’s population, was a valuable source of manpower during WWII; Britain mobilised nearly 6m servicemen and woman, with 2.5m from India alone o The Colonial Development and Welfare Act of 1940 signalled a new commitment to making the colonies economically profitable (to help Britain recover her economic strength after the war, too) – it provided colonial grants of up to £5m per year. Then the 1945 Act extended the aid available to £120m over 10 years, as well as requiring that each colony produce a ten-year development plan showing how it would use such funds.