The Changing Nature and Extent of Trade Revision Notes
ADDITIONAL COMPULSARY CONTENT – REVISE
Reasons for, and changing nature of…
Trade in coal and textiles
New trading patterns with the Americas, India and the Far East
Impact of industrialisation on trade
Coal and Textiles
Britain’s economic dominance was freed by the move to free trade (away from
mercantilism)
British businessmen could seek out trade wherever they could find opportunities.
Following industrialisation, they could produce industrial goods on a huge scale.
As the only industrial power, British businessmen were in a good position to operate in every
part of the world.
Britain’s industries relied heavily on raw materials like cotton and wool, and staple
commodities like tea and coffee. With a free market, they could seek out new markets and
sources.
By 1851 Britain was producing two thirds of the world’s coal and half of all cotton and cloth
produced in the world.
The freeing up of trade enabled dominance to continue and exports around the world to
increase.
The value of British exports in 1825 had been £38 million, by 1845 it was £60 million and by
1869 it was £190 million.
Why? Increase in trade came from increasing contact with countries outside of the Empire,
such as North America and Latin America. Industrialisation meant they could produce on a
large scale. Free trade opened up new markets.
Before the Industrial Revolution, Britain had produced coal but only a limited quantity, the
market was just in the local area.
Demand for coal soared during the Industrial Revolution due to iron and steam.
Steam engines needed coal and Darby was one of the first people to use a form of processed
coal to smelt iron. As the prices of iron fell, iron became the major coal user increasing
demand vastly. The two industries – coal and steam – grew symbiotically.
The Americas
America
Despite the loss of American colonies (1776), America was the chief market for Britain and
America was dependant on Britain for textiles and most manufactured goods (until after the
American Civil War, 1861-65).
, It can be argued that the Repeal of the Corn Laws was done primarily to enable British
industrialists to develop the American market.
Britain imported 90% of its tobacco from America and lots of cotton.
During the American Civil War, Britain took a neutral stance. The Confederates believed that
an embargo on cotton would lead to Great Britain informally recognising the Confederacy in
order to overcome the restrictions.
However, Britain had a surplus of cotton and so the effects were delayed. Britain turned to
other countries for cotton.
Latin America
1824 there were nearly 100 British commercial houses in South American cities. Over 3000
British people were in Buenos Aires.
Demand for textile goods was important for the Lancashire textile factories.
1791 and 1801 Brazilian cotton represented 40% of raw cotton imports in Liverpool. Until
1860s, Brazil was the main trading partner for Britain (British textiles made up 50% of Brazil’s
imports).
After 1860, Argentina became more important so that by 1914, Britain had four times as
much investment in Latin American, than it did in America.
In the period 1865-1914, 51% of Britain’s overseas investment went to the Americas; it was
clearly the most important area for British trade, particularly for sugar and coffee.
Why? As Britain moved towards free trade, the cost of production in Britain decreased. This
meant that Britain could make manufactured goods quickly and cheaply. Fewer import
duties in Latin America meant that it was cheap to import.
North America
Colonies in North America promised future wealth and were strategically important to the
sugar, tobacco and coffee islands of the Caribbean.
From fish and furs to tobacco and timber, it seemed great wealth could be made from
securing exclusive mercantile access to these lands.
Competition for these resources intensified the conflict between Britain, France and Spain.
South America
Argentina became a valuable trading partner for Britain.
In exchange for British textiles and manufactured goods, Argentina provided cheap salt
meat, wool, cow hides from its limitless expanse of good grazing land.
In the context of its emerging trade, Britain occupied the Falkland Islands to ensure a naval
presence in the South Atlantic.
The islands were in a strategic location of supplying and refitting whalers, sealers and ships.
Argentina and other South American economies were heavily dependent on British trade.
Britain had achieved an ‘informal empire’ in this region. It heavily influenced foreign and
trade policy in these countries.
The success of trade with South America and the entrepot of Singapore showed it was not
necessary to rule a territory in order to profit from it.
, India
Most acquisitions in India had been for strategic advantage or to increase the status of the
commander concerned. In the 1840s, Sind and Punjab were acquired but neither provided
new trading opportunities until later in the century.
In the early 19th century, India was not an important destination for British exports or
investment.
It was only after the opening of the Suez Canal (1869) that India became more important for
the British economy. Investment in the country began to increase with bridges, railways and
new methods of transport.
India’s textile industry was virtually de-industrialised to benefit textile factories in
Lancashire.
New crops were introduced but most financial benefit went to British investors.
Assam was developed for tea and replaced China as Britain’s source for tea.
By 1900, Britain was importing 137 million pounds (weight) of tea annually compared to 24
million pounds (weight) from China.
India jute (fibre that can be spun) and cotton also became also became important sources
for Britain. The British East India Company was the first trader of jute. In 1793, the Company
exported 100 tons. Calcutta was the hub for raw material as there was an abundant supply
of labour and ample coal for power. It was also conveniently located for shipping.
Opium could be grown cheaply in India and so the British traded opium in China, in exchange
for Chinese goods.
Despite investment in India, in the last quarter of the century, the British failed to make
India a real economic asset.
Why? Suez Canal meant that transport to India was easier, shift in tea trade, demand for
alternatives to cotton as a result of industrialisation.
Far East
The Dutch were a major threat to Britain’s trade in the Far East. This threat was minimalised
after the Battle of Trafalgar. The East India Company reaped the benefits of its privileged
position.
As the EIC became wealthier it sought to expand and encourage trade with China.
It established a base in Singapore to help coordinate the trade.
The EIC were interested in the tea and silk from China but the Chinese were only interested
in receiving payments in silver from the British.
The EIC did not produce products of interest to the Chinese authorities and so an exchange
of Indian cotton was often made for Chinese goods.
Opium was one product that some in Chinese society were interested in, resulting in the
Opium Wars of the 1840s and late 1850s.
By this time Britain was an industrial power and had cutting edge military technology.
The Opium Wars were fought for ‘Free Trade’ principles but really it was to allow Britain to
continue exploiting their trade relationship over China.
