‘The problems of the British economy in the years 1851-1885 were primarily due to Free Trade.’ Assess the validity of this view.

Introduction

• In the mid-19th century, GB was world’s leading industrial economy.

• However, the British economy suffered from a number of problems after 1870s depression, such as foreign competition and problems in agriculture.

• This led to a ‘retardation of growth’ where the economy was not growing at the same rate that it had in the past.

• The most significant factor was the issue regarding Free Trade. British policy increased foreign competition and led to a weaker economy.

P1 - Free Trade

• Relying on cheap foreign imports to make up for shortages. —> Caused lasting effects on rural population by increasing urban migration as people sought work in industrial cities as their wages fell

• Failure of Disraeli govt (1874-80) to introduce protection despite pressure contributed to economic stagnation

• In 1879, Germany adopted a policy of imposing tariffs, France – 1882 and USA – 1883.

• Led to Fair Trade League in 1881 erupting advocating for protectionism

• BUT FREE TRADE EFFECTIVE? - As first nation to industrialise, other countries lagging eg. US having difficulty to supply own rapidly increasing population & held back by Civil War (1861-65) with Germany not unified by 1871 hence both countries were important buyers of British manufactures eg. world’s traded goods manufactured in GB was 40%, Peel argued it would stimulate the economy, leading to bigger profits and higher wages

P2 - Indutrialisation of other countries & GB’s lack of adaption

• Advantages turned into disadvantages of being 1st nation to industrialise eg. machinery & equipment became old/obsolete → Germany & US adapted to newer technology eg. Germany used Siemens Furnaces to make steel Britain had become complacent – they stuck to old, trusted techniques and failed to adapt so investment was relatively low

• Unlike Germany, Britain had little time for scientific/engineering education → experienced a loss at market opportunities such as canning and refrigeration to help push forward Britain’s economy.

• Businesses sought an enquiry, 1886 Royal Commission – showed severe slumps in economy eg. unemployment, difficulties of staple industries

• Businesses cut costs and therefore wages, unemployment increased. 1886- employment over 10%

• HOWEVER: Other countries also implemented tariffs as solution to protect their goods as well whilst GB still remained in what worked in past as effective solution, FT hindered further economic stsbility

P3 - Agriculture

• As bad weather hit 1873 with now wet summers causing poor harvests, this also helped spread pneumonia & foot and mouth disease among livestock causing great losses for farmers

• HOWEVER; People began to buy cheap foreign meat because of refrigerated shipping from Australia, Canada and Argentina as a result —> Previously 90% of meat created in GB in 1851

• Led to relying on cheap foreign imports to make up for shortages

• 2/3 of home consumed wheat in GB imported by 1886 where as around 1850s 50% of wheat consumed was by GB

Conclusion

• Overall, many factors but most important was issue regarding Free Trade.

• All other countries adopted Protectionism, but Britain’s lack of adaptation meant falling prices, increased unemployment and increased strength of foreign competition.