British Economic History

To what extend did the growth of overseas trade led to Britain’s Industrial revolution? ” Introduction The development of Britain as a modern industrial economy, happened simultaneously with the expansion of foreign trade and that led many scholars to stress on the significance of exports. Some went even further to express the idea, that the growth during the industrial revolution depended on the overseas trade. During the industrial revolution,some of the major developing industries ,like textiles and coal,grew even more by selling their products abroad.

The technological innovations of the late 18th century made the British goods cheaper,”attracting” export markets,and soon Britain became the new commercial capital and the ”international industry” of Europe because of its exports. However, it seems that this flourishing of trade did not contribute substantially to the industrial revolution since the benefits of trade in the economy are much higher after the classical years of industrial revolution,although the trade’s importance should not be neglected or even worse be underestimated.

For example,in 18th century, the proportion of national income derived from exports and then spent on imports doubled in comparison to the national income. However, in 19th century although the ratio of trade to national income continued to grow,paradoxically this ratio did not increase during the industrial revolution itself. Undoubtedly trade contributed to the industrialisation of Britain but it is more difficult to find causal connections between trade and economic growth[1] .

General evaluation of trade during Industrial Revolution 1760-1850 During the classical years of industrial revolution,we can distinguish two different periods of changes in the trend of trade growth. 1760-1781 This period follows a recovery period for the growth of exports that it was attributed to the end of the Seven Years War and its special circumstances. Thus in 1764, exports reached 11. 5 million pounds which was a record figure up to then. However, after 1764 there was a downward trend for the exports.

More specifically,exports declined after 1764 up to 1770-1 when there was an imperceptible recovery . After 1771 there was an uninterrupted fall in the amount of exports that ended in 1781,reaching the lowest since 1945 of 7 million pounds. Furthermore the growth of exports during the whole period of 1760-1781 was negative. The above is an argument for the scholars that stress the importance of the home market and its contribution to the early years of the industrial revolution.

The causes of this fall in the number of exports , is justified initially by the difficulties in the European markets and then by the conflict of Britain with the 13 colonies and their boycott to the British products. 1781-1856 This period is very significant for Britain,since during these years the momentum of exports that had been defined from the previous period,changes. In fact,exports in 1780s entered in a completely new age and during this period it was observed the most ”rapid and sustained upsurge of exports than in any other previous period’.

Exports increased dramatically from 7. 6 to 18. 3 million pounds from1781 to 1792. However,many scholars are of the idea, that the reason for this upsurge lies in a combination of factors like the artificially forced low level of exports set by the War Of American Independence,the cessation of hostilities,the backlog of export orders that had been accumulated when Britain was in War and finally the fact that the starting point of 1781 was very low and thus any growth in exports would be exaggerated. 3] In addition, it seems that the losses of the previous period were not canceled by the post-1781 gains. During 1799-1802 there is positive growth of exports but afterward there is the period of 1803-1808 in which the volume of exports declines again.

In the next few years from 1809 to 1814 the figures of exports peak again but their value is much lower during the period 1802-1814 than the respective of 1800. It seems that during the Napoleonic war and the post-war wars,the growth of exports is generally much slower ,something which continued until 1826 when both volume and value f the exports went to nadir levels. Finally after 1826 the volume of exports progressively recover and reach a peak in 1856. From the above, it is obvious that trade overseas did not contribute to such a great extend to the economy during the years of the industrial revolution. The wars played an important role on this weakness of Britain to take advantage of the technology that had been developed during the industrial revolution.

On one hand ,whatever Britain won after the wars from the opening in new markets like the Latin America was just offsetting the losses of the European market and on the other hand the embargo of Britain towards the other European countries weakened more their purchasing power since they could not export and at the same time were financially declined. Evaluation of trade in specific categories during the Industrial Revolution The development of technology made the agriculture more efficient and as a result, even in 1851, its production played an important role to the increase of the national income.

This development in agriculture was a coin with two sides for England. On the one side of the coin, this development made the demand for some scarce imported products less and thus prevented higher demand which would mean higher prices which in turn would mean higher profits. On the other side of the coin,the significance of this development was defining for the industrial revolution itself. In 1973 the government was in panic (some of the reasons are explained above) and made the decision to permit the unconditional import of grain.

So,when 40 years later were imposed again severe restrictions on imports,the agricultural production was ample though the population was now the double. During this period ,when there were no imports and the trade did not work properly,the development in agriculture ensured the industrial revolution since the increased population could not be fed otherwise. Furthermore,industries that were making small medal goods or others like pottery and cotton manufacture were expanded and by 1977 many of them depended on export markets. However,these exports did not contribute to the beginning of the industrial revolution.

Cotton and textile industries had been developed in the 1970s and changed little over the next 80 years. Thus they had no comparative advantages over similar industries in Saxony ,in France and in America and therefore their trades did not influence industrial revolution. Also, other industries exported cotton textiles and the exchange that they earned, they were using it to buy raw materials and foodstuffs. After the Napoleonic war,the development of technology in combination with the increased competition,reduced the prices of the exported goods like for example the prices of cotton cloths.

Therefore,at the same time the benefits of technology was transferred to foreigners via exports and the prices reduced. Thus,aggregation of national income overstates benefits of such trade transactions or it is even better to say that the growth of exports increased the industry’s size but had not so impressive results on national income. [4] Conclusion The development of Britain into an industrialised economy happened together with the growth in overseas trade.

Private merchant firms and corporations exploited the opportunities for new markets and established trading relationships with the Orient and the America. During the industrial revolution ,great industries like metal working and textiles through overseas trade, grew even more and they exported large proportions of their output. However,during industrial revolution it seems that the increase in demand for British products did not occur because of the already existing prices but because technology caused a fall in prices and these products became more ”attractive”.

As a consequence this fall in prices reduced the value of exports which they grew slower than national output. Concluding I would say that industrial revolution encouraged overseas trade and not the opposite.