These notes cover the impact of WW1 on Britain and its colonies, the Great Depression, Sterling Area and Imperial Preference in the interwar years and the economic impact of WW2 on Britain with relation to the empire. They are for the new a level specification and are to an A*standard.
A* essay reasons for expansion in Africa - British empire
A* essay on strategic reasons for British empire expansion 1890-1914
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Section 3: Imperialism Challenged Chapter 15: Trade, Commerce and the Economic Impact of War
Chapter 15: Trade, Commerce and the Economic Impact of War
To What Extent did the economic effects of the WW1 damage the British Empire?
Impact on Britain
• Debt – This damaged Britain as it was no longer in a position to invest significantly in its colonies and much
of Britain’s capital investment overseas had been wiped out. The war had cost Britain about £35bn which was
13x the Boer War. Britain had borrowed $4bn from the USA. The enormously expensive war caused the
countries reserves to run dangerously low and the pound had to be removed from the Gold Standard. The war
meant a huge rise in domestic borrowing in Britain: gov debt rose from £700m in 1914 to £7.5 bn in 1919
• Markets and Industrial competition – Production for the war had been prioritised meaning Britain’s
competitors were able to win over markets e.g. Japanese textile production meaning they lost revenue from
exports. The war also affected the banks and financial institutions which generated profit from ending money
overseas. During the war, the American government took on the burden of lending to the Entente powers and
American exports also filled the gap left by the British shortfall however the economic role of the American
government shrank swiftly after the war. In Argentina particularly, British exporters staged a strong recovery
The global economy which had been built on free trade was disrupted by war. British investments overseas
continued to earn a substantial income. The returns for 1920 show overseas investment earning and other
invisible exports at a total of nearly £600m compared with £369m in 1913
• Growing costs of Empire – Britain’s industry had been damaged which the income used to run and defend the
empire. Growing nationalism had made the empire harder to police and control
• Benefits of victory – Extension of formal control in the Middle East gave Britain access to oil which was a
valuable commodity as well as useful for the merchant fleet. Germany had been shattered by defeat and had
been one of Britain’s main economic rivals leaving Britain free to have its dominant position in the world
Impact on the colonies
• India – India contributed about £146m to the to the war effort. India had become less dependent on Britain as
a result of the war as the previous 2/3 of Indian imports from Britain in 1914 fell because of wartime
disruption to trade and the growing strength of foreign competition. Indian manufactures captured more of the
domestic market. Britain paced high taxes on Indian imports after the war which gave Indian industry
protection against competition leading to growth. The tax burden per head of the population rose by 65%
between 1914-15 and 1918-19
• Canada – It emerged from the war as an industrial power meaning British manufactures lost their influence.
Canada increasingly looked to the USA for investment and markets. It had the most industrialised economy of
any empire country, it sent the largest contingent of dominion manpower and it supplied the large fraction of
the munitions Britain needed Bu 1917, between ¼ and 1/3 of Britain’s artillery ammunition was produced in
Canada. Britain also borrowed $1bn from Canada during the war
• Australia and New Zealand – They both relied heavily upon the British market and were hit hard by the
disruption of trade by the war
• The dominions (not India and South African only in part) had paid for the forces they sent to the war effort
• The impact on the colonies was bad for Britain because either they felt as though they no longer needed Britain
or they relied on Britain too much to pay for their needs at a time where Britain itself was suffering
To what extent did the economic effects of WW1 damage the British Empire?
Damaged Did not damage/strengthen
Britain came out of the war in huge amounts of debt – Britain gained access to oil in the Middle East
reducing investment
Britain lost overseas markets in its empire which allowed Britain’s economic rivals e.g. the Germans were
the colonies to become more independent shattered economically
Growing opposition meant that the empire was more Britain managed to maintain most of its overseas trade
costly to control and Britain struggled to pay to maintain
order
Less informal empire with loss of investment New territories in Africa gave access to raw materials
‘They remained the economic superpower with the largest foreign trade, the largest foreign income, the largest share of
international services and the largest merchant fleet. Nevertheless, the war did bring a critical change, though it took
time for the effects to become obvious’
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