‘Economically, Britain was a Great Power in decline in the period 1880-1914.’ Assess the validity of this view.

P1 - Problems in agriculture

• Economic problems were more severe in agriculture than industry

• Lower and under-employment in rural areas - people moved to urban areas

• Cheap imports of cereals reduced Britain’s farmers profits and thus production

• Cheap foreign meat because of refrigerated shipping from Australia, Canada and Argentina

• Rise in ‘market gardening’ – allotments in suburbs increased competition for fruit and veg

HOWEVER - Cheap foodstuff for farmers

• Some parts of UK farm rents rose as profits soared

• Cheaper food means a real wage rise

• Imported fertilisers from Peru eg. Guano

• Development of Steam powered ploughs

P2 - Threat to previous industrial dominance

• Britain did not expand as rapidly as USA or Germany in new industries e.g. electrical engineering or chemical production → 1870 GB produced 1/3 of world manufactured goods which dropped to 14% by 1913 (US 35% & Germany 16%)

• 1885-86 Salisbury ordered Royal Commission report on Depression– showed there were severe effects in some areas, esp in staple industries- relied on export

• By 1913 - US produced 13M tons, Germany 7M tons and GB 5M tons in steel production

• Between 1871-1896 price of coal and textiles dropped by over 30%.

HOWEVER - Soap – Britain led the world in 1914

• Food – chocolate, beer, tobacco – 50% of food was imported

• Electricity – We didn’t keep pace with US (gas cheaper here) – by 1914 electricity powered ¼ of mines/ factories and 2000 miles of tramways

• Growth of companies instead of private individuals or partners

• The decline in the staple industries was somewhat offset by the growth in these ‘new industries’ → Staples still sold strongly abroad amounting to 66% of GB exports

• Shipbuilding; GB still built about 60% of world’s merchant ship 1900-14

• By 1910 these activities accounted for 44% of the workforce

P3 - Invisible earnings developed

• Invisible earnings - The sale abroad of services (usually in the financial sector) rather than tangible goods e.g. banking, insurance, transport, overseas assets)

• As the century wore on, these earnings were to become increasingly important to the British economy – it remained the largest exporter of capital and invisible trade, so still maintained a surplus trade balance.

• It was the profits from the sale of Britain’s financial and insurance services, and the tax revenue that came from them, that helped to keep Britain solvent at critical times.

• HOWEVER, balance of trade was still negative with imports growing apace & exceeding exports by £1,500M a year, BUT massive profits earned by City of London boosted balance well into profit

Conclusion

• Wasn’t a complete decline of the whole economy, fears were exaggerated. Instead, it’s described as a ‘retardation of growth’, leading to more sustainable economic strength.

• Economic growth sustained as by 1900-13, GDP rose by about 1.7% a year