economic developments 46-85

mid-victorian boom

period of sustained growth in real output and stable or rising prices in the decades from the late 1840s through to the early 1870s, main growth sectors were manufacturing, mining and building

increase of GNP mid victorian boom

Real Gross National Product grew at an average of 2.1% per annum between 1856 and 1873, growth rates slowed from 2.1 to 1.9% per annum between 73-85

mid victorian boom trade

it is estimated that Britain produced 40% of the total traded manufactured goods in the world, and 25% of the world’s trade passed through British ports.

reasons for mid victorian boom

investment in transport and communications, investment in social overhead capital and housing, expansion of agriculture, technical change and improved efficiency, international trade

investment in transport operational effects

Investment in Transport and Communications accounted for half of all gross capital formation in the 1850s and 1860s, reducing cost of transport they promoted trade, encouraged urban expansion, and cut the costs of raw materials and finished products.

investment in transport construction effects

railway demand continued to boost the production of key products. In the 1850s and 1860s railways absorbed about 9% of the output of pig iron. Railway investment represented about 20-25% of total domestic capital investment in the 1850s and 1860s.

investment in social overhead capital and housing

accounted for between 20 and 25% of investment in the period, includes house building, construction of sanitation systems, public buildings, schools, hospitals etc. Housebuilding in urban areas grew continually through the period and peaked in the 1870s.

In the 1860s and 1870s there was a net increase of 1.3 million in the urban population, requiring more housing.

expansion of agriculture and its golden age

Agriculture still an important sector of the economy – contributing 20% of GNP in 1851. Following repeal of Corn Laws wheat production gradually declined, but it was more than made up for by the growth of livestock and dairy production due to growing demand for these products linked to rising incomes, population, and improved transport taking meat and dairy to urban centres. Investment took place in improved drainage and greater use of fertilisers

limitations of improvement in agriculture

between 1855 and 1874 agricultural output grew at only 0.7% - well below the average of the economy as a whole. So agriculture cannot have been a source of growth.

improved efficiency

From the 1850s the growth of capital inputs was less than the growth in output, which means that each unit of capital was becoming more efficient than before. This also helps explain the rise of labour productivity.

improvement in steam engines (technical change)

The first Newcomen engines in the early 18th century consumed 45 pounds of coal per horse-power of power; by 1852 this was down to about 3 pounds, and by the late 19th century the best engines consumed less than one pound per unit of horse power.

steam engines became much cheaper to run (the real cost of coal per unit of horsepower fell 90% 1720s-1840s), and also that the costs of transporting coal fell, so steam engines could be used more widely across the country.

use of steam engines increase

In 1830 160,000 stationary steam engines were used in Great Britain; by 1870 this figure was 2 million. The Mid Victorian boom was when steam power really took off. Indeed by 1907 the figure was 9.7 million!

Steam engines also boosted transport – railways, but also steam ships led to faster and cheaper sea communications.

international trade

The mid-Victorian years saw strong growth in UK trade. Exports as a share of national income rose to a peak of 22% in the early 1870s. 80% of exports were manufactured goods – textiles alone were 60%.

why international trade grew

Improved communications – railways, shipping, roads etc.

Britain’s technical lead in key industries, especially textiles.

Economic growth in other countries raising demand – France, Germany, Belgium, United States, India, etc.

why international trade grew empire

Britain’s empire provided a favourable environment for exports – colonies had a preference for British goods reflecting the fact that British officials and businessmen were placing the orders. E.g. most railway locomotives for use in India were manufactured in Britain.

why international trade grew free trade policy

in 1840 1100 items paid import duty; by 1860 this was 50. Britain could import cheaper food and raw materials, so reducing the cost of production and raising real incomes, while British import demand in turn generated incomes in overseas countries which fuelled British exports.

important effect of trade

increased food imports and so prevents food prices rising in a way that might have choked off demand within Britain. Between 1829 and 1846 wheat imports made up 7.4% of the British wheat market. Between 1860 and 1868 it was 40%.

1846 repeal of corn laws fear

fear in the farming community that the price of home-grown wheat would collapse against competition from foreign imports, didnt happen

golden age of agriculture

from 1853, harvests produced successive high yields, prices were steady, farmers’ incomes increased, there were scientific innovations and improvements carried out

high farming methods

were introduced which increased productivity. For example moving from purely arable to mixed farming so grew wheat and root crops as well as keeping cattle. This meant that they would be protected from a sudden downturn in price of crops or livestock. The surplus crops also fed the animals and the animals manure fed the crops.

new farming industries

• Artificial fertilisers were introduced, and guano was imported in large quantities from Peru. The industry was worth £8 million a year by 1870.

• Growing industry in animal feedstuffs made from linseed and cotton seed which was worth £5 million a year by 1870.

new technology farming

• Clay pipes were manufactured to stop poor drainage. The government introduced loan schemes for farmers to invest in drainage systems. This improved crop yield.

• Widespread use of the horse-drawn reaper, better ploughs, seed drills and steam-driven threshing machines which improved efficiency in corn production.

increase in demand for food

• Increase in demand from food because of increasing population, rising prosperity and increase in wages.

• By the early 1870s, British farmers were producing about 50% of home consumption of wheat and 90% of meat.

limitations of agriculture golden age

not all farming areas benefited from this prosperity. In the remote north and west of Scotland, farming was under-resourced and ploughing and harvesting was still carried out by hand.

result of golden age

for most of the country access to cheap, home-produced food helped to improve general health and raise the standard of living in Britain.

reason for britain industrial development natural

• Was the first industrial nation and had out-striped other countries in establishing markets at home and abroad in a vast range of goods.

• Plentiful supply of natural resources such as coal and iron, with the technology necessary to exploit.

• Large work force and expanding home market with population increasing from 27 million to 35 million between 1851 and 1881.

reason for british industrial development transport

Extensive railway network connected every major town and sea port by 1875 and made mobility of workforce and carriage of goods possible.

Controlled vital sea routes to and from its colonies and other overseas markets.

reason for britain industrial development attitudes

Laissez faire gave entrepreneurs and innovators freedom to develop their ideas.

Move towards free trade encouraged overseas trading and stimulated British industry.

growth of cotton exports

• Growth of exports grew between 1840-9 at £24.6 million to £71.5 million between 1870-9 in cotton.

growth in coal output

• Between 1850 and 1875 output of coal grew from 50 million tons to 130 million. Was caused by drop in price of coal and increase in demand which stimulated increased production.

use of coal

• By 1870, the iron industry was buying one third of the coal produced in Britain since the manufacture of iron depended on coal.

• Coal was required to power steam engines, after 1850 steam power was used in most major industries.

impact of coal industry developing

Increasing demand for coal effected organisation and running of coal mines. The absence of mechanical progress could be blamed on the lack of a national plan, and the continuation of private ownership of coal mines. There was one serious attempt to develop a coal-cutting machine at Gartsherrie in Scotland in the 1860s but it failed.

development of iron industry

• Development of Neilson’s hot blast in 1827 and Nasmyth’s steam hammer in 1844 increased iron output from 1850 onwards.

• Railways, bridges iron steam ships, textile machinery and tools were all dependent on iron. Iron ore production increased from 9 million tons in 1855 to over 15 million by 1875.

first london underground line

metropolitan line, opened in 1863 and carried 10 million passengers in its first year. However the smoke and fumes from the steam locomotive and sickly smell of oil lamps in carriages made it an unpleasant ride.

use of steel

• Bessemer steel rails cut production costs, increased profits and produced more capital for further investment. The profits were often invested in railway building overseas in India, Canada and the USA.

impact of railway development

• Companies were set up to produce more modern rolling stock and locomotives. This led to the development of prosperous railway towns such as Crewe, Doncaster and Derby.

growth of railways

• In 1860, 9069 miles of railway track carried 153 million passengers and 88 million tons of freight, earning £12.2 million from ticket sales and £14.2 million from freight charges.

• In 1875, 14510 miles of railway track carried 490 million passengers and 196 million tons of freight, earning £24.3 million from ticket sales and £32.1 million from freight charges.

textile industry

• Textile industry centred around production of cotton and wool and accounted for almost two thirds of Britain’s exports in 1851. However its share of the export market began to fall in the 1860s as the exports of other commodities such as coal, machinery, iron and steel goods rose.

growth in world trade

• Growth in world trade stimulated an increase in ship building after 1850. The Suez Canal was opened in 1869 and cut journey time from the West to India, China, and Australia. It was too narrow to allow a large sailing ship so boosted the British steam ship. Between 1850 and 1880 tonnage of steam ships registered in Britain rose from 319,000 tons to over 3 million.

• International trade cemented Britain’s relationships with foreign countries, increasing its influence abroad and dependence of nation upon nation promoted peace.

free trade policy impact on trade

• Free trade policy ie reduction of taxation allowed individual entrepreneurs and businessmen to build up their private fortunes as well as the wealth of the nation by investing the large sums of available capital in industrial enterprises at home and abroad.

• Wealth creation was not universal, and wealth was not distributed evenly so was still unemployment and poverty.

impact of iron industry on trade

• Increase in production of cheap iron and later steel made it possible for Britain to forge ahead in the development of steam ships and monopolise shipping routes.

depression

after 1873 Britain began to face competition from newly industrialising nations such as Germany and the USA, and Britian’s economy was increasing at a slower place with imports increasing against outputs. For example, the growth rates of total factory productivity between 1873-1913 was 0.4% in the UK but 0.9% in Germany and 1.2% in USA.

characteristics of depression

• Falling prices

• Slowing rate of growth

• Rise in foreign competition

impact of depression

Industry was still expanding but at a slower rate, supply was overtaking demand in both home and overseas markets which led to a fall in prices and a reduction in profit margins.

Workers were laid off more frequently and there were periods of unemployment, although these were not sustained.

Many manufacturing firms failed to see the necessity for change, and the British workforce was falling behind that in countries such as the newly united Germany where the system of education focused on industrial training for some of its youngsters. Most British working class children left school at 12 without receiving any training that would encourage innovation.

competition from america railways

• In 1862 the United States Congress passed the Homestead Act which led to the settlement of a large part of the Midwest.

• Witnessed a great increase in railways, mainly across the prairies. In 1860 America possessed about 30,800 miles of railways; by 1880 this had increased to about 94,200 miles.

• The railway companies encouraged farmer-settlers by promising to transport their crops for less than cost for a number of years.

competition from america shipping

Due to the technological progress of shipping, there was for the first time plenty of cheap steam ships to transport their crops across the seas. This drove down transport costs: in 1873 the cost of transporting a ton of grain from Chicago to Liverpool was £3 7s., in 1880 it was £2 1s. and in 1884 £1 4s.

competition from america inventions

New inventions in agricultural machinery also aided the American prairie farmer. Due to the scarcity of hired farm labourers, prairie farmers had to collect their own harvest and the limit of their expansion was set by what one pair of hands could do. The advent of the reaper-binder in 1873 revolutionised harvesting because it meant the doubling of every farmer's crop as it enabled the reaping to be worked by one man instead of two.

impact of american competition

cheap imports of vast amounts of American prairie wheat were able to flood the market and undercut and overwhelm British wheat farmers.

Every wheat-growing country imposed tariffs in the wake of the explosion of American prairie wheat except Britain and Belgium. Subsequently, Britain became the most industrialised major country with the smallest proportion of its resources devoted to agriculture.

agricultural depression

A wet summer and poor harvest in 1873 signalled the sudden end of the golden age of agriculture and the start of a severe depression in farming.

The bad harvests of 1875, 1877, 1878 and particularly the wet summer of 1879 disguised the cause of the depression. In previous seasons of bad harvests, farmers were compensated by high prices caused by the scarcity. However British farmers could no longer rely on high prices due to the cheap American imports

impact of agricutural depression wheat prices

price of wheat in Britain declined from 56s a quarter in 1867-1871 to 27s in 1894-1898

impact of agricultural depression imports

By 1900 wheat-growing land was only a little over 50% of the total of 1872

Britain's dependence on imported grain during the 1830s was 2%; during the 1860s it was 24%; during the 1880s it was 45%, for corn it was 65%. By 1914 Britain was dependent on imports for four-fifths of her wheat and 40% of her meat

impact of depression rural depopulation

The 1881 census showed a decline of 92,250 in agricultural labourers since 1871, with an increase of approx 53,500 urban labourers. Many of these had previously been farm workers who migrated to the cities to find employment.

Between 1871 and 1901 the population of England and Wales increased by 43% but the proportion of male agricultural labourers decreased by over one-third.  

unemployment increasing

Between 1874 and 1885 unemployment averaged around 6%.