3: Trade and Commerce

Trade

The buying and selling of goods

Commerce

Activities that help facilitate the exchange of goods from products or manufacture to markets. It included transport, banking, insurance and warehousing

Mercantilism

A system of regulations governing trade whereby colonies had been obliged to send most of their produce to Britain, to buy British manufactured foods and use British ships for imports/exports

Free Trade

Trade without tariffs, quotas or other restrictions. It was advocated by Adam Smith in 'The Wealth of Nations'. it argued that wealth was indefinitely expandable and freedom from commercial restrictions was the only way to maximise prosperity. Britain was the world's foremost trading nation so it benefitted from free trade and created free trade agreements around the word, sometimes through force. It was closely linked to other ideas of free labour and the attack in the slave trade/slavery. It encouraged Britain to see themselves as liberators

Consequences of Free Trade

Many colonies continued trading with Britain, partly out of loyalty, partly out of ease. Trading patterns were already well established and there was a common language, currency and commercial law. It was easier/cheaper for British possessions to borrow in London because they were trusted. London became the world's financial capital and sterling the main currency of international trade. Approx. 20% of British imports and 1/3 of exports came from/went to the colonies. Technological improvements improved communication and trade e.g. improvements in ship building, telegraph lines and underwater cables, railways, improved refrigeration and new armaments. The economic benefit of enforcing free trade could have been 6.5% of GNP

Ships and Shipping

Sailing ships reached the highest state of efficiency in the 1860s. Clipper ships were fast and ideally suited to low-volume, high profit goods such as tea, opium and spices. Their times were recorded and the competition was fierce. They usually had to be broken up after 20 years. Steamships were used to carry bulky, heavy goods. They became more efficient with the new compound steam engine which enabled them to trade economically with distant possessions. They were more effective because they didn't rely on wind/currents and they could reach up rivers in to previously inaccessible countries

Railways

They brought new areas into Britain's reach and under British control. They provided the largest single investment in Canada, Australia, New Zealand and South Africa. In India, railways (built for strategic purposes) linked the cotton and jute growing areas of the north with the mills of Bombay and Calcutta and enabled rice to reach ports for exports. They created a huge market for Britain since most of the engineers and parts were from Britain. Investments in railways provided 'invisible' trade and the spread of railways facilitated commercial enterprise. Around 70% of British investment was in transport infrastructure, especially railways

Canals and Rivers

Provided an important means of transport for trading purposes and were often the focus of explores' quests. Canals were built to avoid hazardous stretches of water, or they provided waterways when there were none. Sometimes rivers had to be straightened, directed or depend. They were developed an a huge scale in India from 1857. In Canada, after 1867, canals were deepened around St Lawrence/Great Lakes Seaway system and the Welland Canal was built to overcome height differences between lake Eyrie and Ontario

Agricultural Goods

Canada, Australia and New Zealand had vast tracks of land permitting the production of cheap foodstuffs and raw materials that were available in Europe but at a lower price e.g. wool. Tropical colonies produced goods not available in Britain e.g. sugar, coffee, cocoa, groundnuts, copra and palm oil. The production in these places were small and native farmers were generally willing to see at whatever price. Britain ran its own plantations. Indian coolies were transported to work in the West Indies for fixed periods to work in exchange for their transport, they were paid low wages for hard, unpleasant work. There were plantations for sisal in Kenya and Tanganyika, coffee and tea in Ceylon and Kenya, tea in India, sugar in Mauritius, Fiji, Queensland and Natal, rubber and palm oil in Malaya and North Borneo. Imports from India increased between 1854-1876: cotton 1.6m-5.9m; jute 0.5m-2.8m; tea 0.02m-2.4m; wheat 0-1.6m

Mineral Goods

Tin in Nigeria, gold in the Gold Coast, diamonds in Sierra Leone helped develop these countries. Copper was found in what would be Northern Rhodesia and coal and gold was found in Southern Rhodesia. In 1886, gold was found in South Africa prompting a gold rush to the previously poor Dutch-Boer republic in the Transvaal. Over 30 000 British skilled miners went to work in the gold mines which increased British ambitions in the region. Diamonds were later discovered in the area - leading to the Kimberly Diamond Syndicate in 1890. God was discovered in New South Wales in 1851 and by 1866 Victoria was producing £124m worth of gold (1/3 of world's production). This began to run dry but more gold was found in New Zealand in 1860s and in Western Australia in the 1880s

Trade and Commerce with Empire Important

British financers made investments in the colonies. Between 1850-75 20% of all imports came from colonies. The Empire provided raw materials and foodstuffs needed by British industries. Between 1850-75, 1/3 of all exports went to the colonies - it provided markets for British industries. India was essential to Britain's economy. Tropical African colonies provided valuable agricultural materials foodstuffs and minerals. Mining of precious material brought in wealth

Trade and Commerce with Empire less Important

British financers invested heavily in other countries considered part of the 'informal empire' which was cheaper than formal annexation. Trade outside the Empire was greater than inside it. Some of the African colonies had very little economic value. Several self-governing colonies introduced tariffs to protect their industry against British manufactures e.g. Canada in 1859. The merchant fleet carried goods from all over the world, not just the empire

Ways trade with Britain was good for indigenous people

It provided benefits which no other power could match. Britain was the leading source of technology and capital and the most important trading centre. It could provide every economic service that the colonies might need. It was key to establish profitable export stables with provided resources that could be used to create effective infrastructure. Trade created jobs on plantations and mines. Railways and canals were developed

Ways trade with Britain was bad for indigenous people

Individuals did not live by the free market or in the long run so they did not see the benefits. The immediate impact of free-trade was often the collapse of local indigenous manufacturing industries which were in no position to compete with consequently led to the destruction of livelihoods. Under developed areas were propelled to modernise but their development was cured by the way it was controlled and exploited by Britain who wanted to limit competition. They were paid low wages for long hours and poor working conditions

Naval Power

It was, by far, the biggest in the world which gave Britain maritime supremacy. Thy had a growing number of smaller ships which were able to penetrate coastal areas which were previously inaccessible. It allowed Britain to use military force where necessary to gain benefits for Britain or to protect British influence. They were often used to prevent the slave trade and eradicate piracy. They helped to protect trading routes. In the 1880s there was a growing concern about naval weakness, which was worrying because it was seen as key to the empire. This led to a re-ordering of naval priorities and a large shipbuilding programme was begun in 1889. The big gun battlefleet now superseded the gunboat navy, making Britain look powerful.

Chartered Companies

Were commercial organisations that were granted privileges, status and legal rights by the government, usually summarised in a royal charter. Among its privileges were monopolies which would prevent any competition. They were created by influential merchants who would join together to exploit financial and business opportunities in a particular area of the world. In many ways these companies shaped imperial policy more than the politicians in London by negotiating treaties with native peoples, annexing land and securing resources

Chartered Companies pre 1857

There were many chartered companies e.g. EIC. With the advent of free trade and the Indian Mutiny the chartered companies declined

Chartered Companies from 1870s

Britain's economic supremacy faced challenges from European and American industrialisation and the onset of the economic depression. Chartered companies were revived as a way of extending Britain's trade/control

Imperial Federation League

Founded in 1884 to promote colonial unity and support for Chartered Companies. It rapidly established branched throughout the country to try to attract support from the business community

North Borneo Trading Company

Gained a charter in 1881. North Borneo benefitted from deposits of coal, iron and copper and had coffee and tobacco plantations. It represented key strategic site for Britain in the South China Sea and as a mid-point between India and Hong Kong. Alfred (and Edward) Dent, used Sikh soldiers to establish control in the area. Slavery was removed and railways were built to support trade

Royal Niger Company

Founded by George Goldie. Granted a charter in 1886 to protect British trade from the growing German and French influence in the wake of the Berlin Conference. It was a cheap way for Britain to show 'effective occupation'. The Company traded in the Niger River basin, it had over 30 trading posts along the river. They mainly traded for palm oil and cocoa. The Company secured its interests by making treaties with local chiefs which gave the company access to trade in return for offering protection to the local rules. They made over 400 treaties. They introduced large tariffs and licencing fees to eliminate competing firms. They were prepared to use military force and would abduct local rulers who disrupted their trade but they tried to make deals instead of fight where possible. They seized land in order to control all aspects of the production and trade of palm oil, cocoa and coffee by establishing their own plantations. The charter was revoked in 1900 but by this point Goldie had established British control in what became the colony of Nigeria

Imperial British East Africa Company

Founded by William Mackinnon who wanted to spread Christianity and 'civilisation'. Granted charter 1888 to counter growing German interest in East Africa. Its area of interest was what was to become the British colonies of Uganda, Kenya and Zanzibar. They tried to build trade with East African chiefs by making treaties to open up new markets in the interior of Africa. They hoped to facilitate the introduction of tea and coffee plantations in the region. Dependent on the Navy's support especially in asserting their will over the Sultan of Zanzibar. They established trading forts and were prepared to kill local rulers if they did not comply with the Company's demands

Made plans to build a railway to improve trade with the interior of East Africa which would eventually connect Lake Victoria with Mombasa on the coast. The Company ultimately failed in its financial aim to develop British trading and commercial interests in the area and its charter was revoked in 1894. However, it had established control in Kenya and Uganda

British South Africa Company

Founded by Cecil Rhodes who wanted power to bring 'uncivilised' cultures together under the Union Jack. Granted charter in 1889 because of the desire to secure access to mineral wealth in after the discovery of diamond (1867) and gold (1886). Its main area of interest was lands north of the Cape Colony and the Boer republic of the Transvaal

They mined for gold, diamonds, coal, copper and iron ore hoping that the wealth from these minerals could be reinvested to pay for new infrastructure to aid British settlement in the region. Treaties were signed with local rulers to gain access to the mineral wealth. It used force to secure its interests - a 'Pioneer Column' of soldiers marched into native lands and demanded the right to mine in the area. They established Fort Salisbury to protect its interests. In 1888, Rhodes pushed north of the Limpopo River and made a deal with King Lobengula for mining rights in the region. The king realised he'd been tricked and fought back. At the Battle of Shangani River 1893, the Chartered Company forced defeated the Matabele forces, establishing British dominance. The areas of land they seized would eventually become the colony of Rhodesia