It is about Colony Government. They cannot have high tarriff from main land and may pay big budget to clear resistance. But even today US Government can be call a "net loss".
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It is about Colony Government. They cannot have high tarriff from main land and may pay big budget to clear resistance. But even today US Government can be call a "net loss".
What? No it wasn't. No-one in Germany believed that Namibia or Papua New Guinea were going to be profitable colonies. Colonisation was about national prestige.
As for Britain, consider how immensely profitable British investments in e.g. South America were compared to direct colonies elsewhere. If anything Britain derived more economic benefit from countries it didn't colonise than those it did.
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Afaik the only profitable German colony was Togo and only in some years.
However lots of delusional politicians in Germany believed they will be profitable.
However lots of delusional politicians in Germany believed they will be profitable.
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Owning the complete Indian market wasn't a boon to the British economy??
How many Indians were buying British manufactured goods? There are actual models that account for this stuff.
Again, nobody is saying there weren't any benefits, only that those benefits were outweighed by the costs. People tend to think about this in a far too simplistic way.
A boon, yes, but how important is questionable. In 1900 India received 11% of all British exports (compare 9% for Germany). Even if that went down to 0 after independence (which it didn't of course, but I can't find a number) it wouldn't be an explanation for relative decline.
"questionable how important India was"
Then you post a statistic saying that India was the largest export destination of British trade, larger than the biggest continental economy?
India was a captive market for Britain. 11% of all exports, that's a huge share.
It's generally a bad idea to make sweeping generalizations on a complex, multi-faceted topic based on a single statistic taken out of context frozen at one point in time. That's all @Eusebio was talking about, the need for context to consider exactly how important the Indian export market was and whether this importance supports the proposition that the Indian colony was a net economic benefit, the loss of which contributed to Britain's economic decline. But you appear to not have understood the purpose of his/her comment.
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I understood his comment quite well. He said that Britain derived more wealth from trade with nations it didn't colonize (like those in Latin America) than from nations it did colonize (like India). Which is okay, you and him both said there's academic analyses of the topic and I'm not doubting any of that.
Nevertheless, it is not a valid extension of that argument to say that trade with the colonies did not form a strong component of Britain's wealth. It comes across as a bit apologetic towards colonialism to downplay the extent to which trade with the colonies (which were captive markets for the colonial overlord, since Indian producers and buyers did not enjoy free trade with the rest of the world) enriched Britain.
I don't understand why Eusebio said that this trade wasn't a big part of it when he himself said that India was a very large trade partner with Britain. Maybe you and he can address that point in a more specific way? Yes the number eusebio cited is just one data point in time, but I'm not aware of uk/indian trade actually going through big up and down trends throughout the period of raj so why wouldn't it be indicative of the share India had within British trade during most of the 19th and early 20th century.
11% of foreign trade, that's big, that's about what US-British trade amounts to within Britain's foreign trade (EU and non EU) today.
Well, it would be helpful to know what "enriched" means here. Of course Britain benefited (and unfairly) from trade with India and other colonial possessions. But based on technological innovation Britain was already the wealthiest country in the world before the conquest of India, e.g. by the 2nd half of the 18th century Indian textiles were already being crushed by competition from Lancashire mills. And the countries which overtook Britain by the end of the 19th century, USA and Germany certainly didn't need captive colonial markets to do so. So as an explanation of relative rise and decline, certainly a middle-term secular relative decline over 30 years 1950-80, I don't think India really works (unless Britain reconquered the subcontinent in 1980?). But at any rate it's not a defence of colonialism to question its economic importance based on factual evidence: colonialism was an evil because it required the brutal military suppression of conquered peoples regardless of the economics involved.
I think you're generally overrating the importance of that % of exports to the overall health of the economy. Especially when those trade links didn't die immediately upon independence (India continued to be part of the Sterling area until the 70s, hell Africa wasn't decolonised until the middle of the period where Britain is falling behind continental Europe). The main factors I gave on the previous page: poor management culture, poor industrial relations, lack of state-led investment affected entire sectors of the economy as opposed to 11% of exports, which would have been something like (back of the envelope calculation, maybe someone can find the actual number) 3% of GDP. Which is a lot, you're right, but wouldn't matter when the general health of the economy is strong any more than the effect of a recession would cause long term relative decline on its own.
I'll leave it to Eusebio to respond to the rest because we are discussing his/her comment, but this part of your post is rather uncalled for. It's entirely possible for colonialism to be bad for both the colonizer and the colonized. It's obviously worse for the colonized in many ways, but it's definitely possible for it to make both parties worse off. That's my position.
Yeah, and don't forget colonies provide nearly a monopoly of raw material too. I once see the tariff system of a colony, its raw material export and goods imports to/from other country will be taxed, but no tax from/to the mother country. Probably there are tariffs from colony to other the colony of the same mother country too. So the colony cannot develop industry for export consumer goods.
Trading with non colony is only very profitable if you have the monopoly of industrial might like the old British or US after WW2. Otherwise you will have to compete with other trading nations.
And with almost no industry, no tariff (the foreign cannot compete with the mother country and will not pay the tariff) it is not surprise that a colony don't have "profit" for government. Hey, even the US Government have a big loss on the US states.
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That's not how trade works unless you're a mercantilist, but that type of thinking has been disproven since the 1700s.
If this is true, consider the case of cotton in this instance: during the first half of the 19th century the United States is the major supplier of cotton to the British textile industry. During the 'cotton famine' caused by the American Civil War, India takes over. When the ACW ends Britain rapidly returns to American cotton and India is relegated to a secondary supplier! Indian cotton switches to export markets in Japan, Germany and the rest of continental Europe which are beginning to rapidly industrialise. Where does Britain's "colonial advantage of a monopoly of raw material" apply to this story?
I found that in the wiki. Quick answer is India cotton don't have the quality, quantity and cheap of slave cotton so they could not sell to the British that is too far and double the cost of import. At that time the British still have the power of buyer thanks to textile industry so they can choose to buy American cotton so cheap. If there were another big enough cotton buyers, textile competitors like Japan or Germany, the British may turn to India cotton again.
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By the 1840s, India was no longer capable of supplying the vast quantities of cotton fibers needed by mechanized British factories, while shipping bulky, low-price cotton from India to Britain was time-consuming and expensive. This, coupled with the emergence of American cotton as a superior type (due to the longer, stronger fibers of the two domesticated Native American species, Gossypium hirsutum and Gossypium barbadense), encouraged British traders to purchase cotton from plantations in the United States and plantations in the Caribbean. By the mid-19th century, "King Cotton" had become the backbone of the southern American economy. In the United States, cultivating and harvesting cotton became the leading occupation of slaves.
During the American Civil War, American cotton exports slumped due to a Union blockade on Southern ports, and also because of a strategic decision by the Confederate government to cut exports, hoping to force Britain to recognize the Confederacy or enter the war. This prompted the main purchasers of cotton, Britain and France, to turn to Egyptian cotton. British and French traders invested heavily in cotton plantations. The Egyptian government of Viceroy Isma'il took out substantial loans from European bankers and stock exchanges. After the American Civil War ended in 1865, British and French traders abandoned Egyptian cotton and returned to cheap American exports,[citation needed] sending Egypt into a deficit spiral that led to the country declaring bankruptcy in 1876, a key factor behind Egypt's occupation by the British Empire in 1882.
During this time, cotton cultivation in the British Empire, especially Australia and India, greatly increased to replace the lost production of the American South. Through tariffs and other restrictions, the British government discouraged the production of cotton cloth in India; rather, the raw fiber was sent to England for processing. The Indian Mahatma Gandhi described the process:
- English people buy Indian cotton in the field, picked by Indian labor at seven cents a day, through an optional monopoly.
- This cotton is shipped on British ships, a three-week journey across the Indian Ocean, down the Red Sea, across the Mediterranean, through Gibraltar, across the Bay of Biscay and the Atlantic Ocean to London. One hundred per cent profit on this freight is regarded as small.
- The cotton is turned into cloth in Lancashire. You pay shilling wages instead of Indian pennies to your workers. The English worker not only has the advantage of better wages, but the steel companies of England get the profit of building the factories and machines. Wages; profits; all these are spent in England.
- The finished product is sent back to India at European shipping rates, once again on British ships. The captains, officers, sailors of these ships, whose wages must be paid, are English. The only Indians who profit are a few lascars who do the dirty work on the boats for a few cents a day.
- The cloth is finally sold back to the kings and landlords of India who got the money to buy this expensive cloth out of the poor peasants of India who worked at seven cents a day.[43]
Cotton - Wikipedia
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Thank you for the badly formatted wiki dump. Unfortunately it fails to explain where the "colonial advantage of a monopoly of raw material" is if Germany and Japan were among the biggest export markets for Indian cotton while Britain preferred to source its raw materials from outside of the Empire!
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From what I understand, India is usually considered an exception to the colonies were generally net economic expenses on colonizers argument. There’s a reason it was considered the “Crown Jewel” of the Empire. Many Italians and Germans were bitter they only got the “leftover” colonies, with few resources, population, or strategic location that were largely expensive prestige projects. Regardless, its massive market and raw material production certainly did help British industry even if it ultimately was a negative for the bottom line of the British Exchequer.
Regardless, I think a lot of the UK’s decline can be traced to other nations industrializing. Since they couldn’t really compete with established British factories, this often meant these countries turned to protectionism and state-sponsored capitalism, reducing markets for British goods.
This, combined with losing a lot of its geostrategic position, investments, and global reach to America in and shortly after the World Wars. The decline of coal (one of Brotain’s few natural resources) and the deindustrialization that was common in the West in the later 20th century did the rest. More broadly, the decline of a multipolar world hurt Britain since it could no longer play other powers off against each other to maintain its position, but instead had to adapt itself to a world dominated by the Americans and Soviets, who were both all too happy to take advantage of its decline.
Regardless, I think a lot of the UK’s decline can be traced to other nations industrializing. Since they couldn’t really compete with established British factories, this often meant these countries turned to protectionism and state-sponsored capitalism, reducing markets for British goods.
This, combined with losing a lot of its geostrategic position, investments, and global reach to America in and shortly after the World Wars. The decline of coal (one of Brotain’s few natural resources) and the deindustrialization that was common in the West in the later 20th century did the rest. More broadly, the decline of a multipolar world hurt Britain since it could no longer play other powers off against each other to maintain its position, but instead had to adapt itself to a world dominated by the Americans and Soviets, who were both all too happy to take advantage of its decline.
During my very brief reading of the thread, I haven´t noticed anyone acknowledging the Long recession (1870´s), which did hit the UK harder than the rest of the world. In my only partially educated understanding it basically demoted the UK from an economic juggernaut to simply being first. So while the USA and Germany were rising very fast, the UK had problems.
EDIT: Apparently the first source I went to check with (wikipedia) proves me wrong. Can anyone fact-check me?
EDIT: Apparently the first source I went to check with (wikipedia) proves me wrong. Can anyone fact-check me?
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Britain was an industrialized country, but industrial exports were not the main export of the British economy. Before 1939, the largest export product was coal. And Britain ran regularly a trade deficit for decades, which was covered by exports (both industrial and non-industrial) only by one third of the total. The other two thirds were covered by the profits of its large shipping industry and the returns on foreign investments, both in colonies like Burma or India and in countries that were not colonies like Argentina or Iran.
But when studying the dynamics of British economics in the colonial era we shouldn't be too naïve either. Once Britain controlled India, it was used as a platform to control the whole Indian Ocean and to intervene in other countries. The explotaitive agreement with Persia that led to the establishment of the (very lucrative) Anglo-Persian Oil Company in the early XX c. was backed in the end by the might of the British Indian Army. And Burma or Malaysia fell in British hands thanks to the employment of Indian troops too. Both colonies were "profitable" in an economic sense: Burmah Oil was the first large British oil company that started British investment in this important sector, and by the late 1940s and early 1950s the exports of Malaysian rubber to the USA amounted to more than the sum of all British industrial exports to the USa, and were thus of vital importance for Britain to obtain US dollars (hence their lack of enthusiasm to abandon it). As for administrative costs: all the British administration in India (and the cost of the Indian Army too) were paid by the Indian taxpayers, included the (very generous) pensions that retired functionaries and (white) officers were entitled to receive once they retired back to Britain. And if that wasn't enough, before 1914 the sterling adopted the gold standard while the Indian rupee was kept on the silver standard, while silver devaluated steadily with respect to gold, but said payments in the form of salaries and pensions to British particulars and companies had to be liquidated in pounds sterling, with the result that the drain of money from India increased steadily while the size of the British administration (or the number of British officers in its army) did not increase at the same rate.
But when studying the dynamics of British economics in the colonial era we shouldn't be too naïve either. Once Britain controlled India, it was used as a platform to control the whole Indian Ocean and to intervene in other countries. The explotaitive agreement with Persia that led to the establishment of the (very lucrative) Anglo-Persian Oil Company in the early XX c. was backed in the end by the might of the British Indian Army. And Burma or Malaysia fell in British hands thanks to the employment of Indian troops too. Both colonies were "profitable" in an economic sense: Burmah Oil was the first large British oil company that started British investment in this important sector, and by the late 1940s and early 1950s the exports of Malaysian rubber to the USA amounted to more than the sum of all British industrial exports to the USa, and were thus of vital importance for Britain to obtain US dollars (hence their lack of enthusiasm to abandon it). As for administrative costs: all the British administration in India (and the cost of the Indian Army too) were paid by the Indian taxpayers, included the (very generous) pensions that retired functionaries and (white) officers were entitled to receive once they retired back to Britain. And if that wasn't enough, before 1914 the sterling adopted the gold standard while the Indian rupee was kept on the silver standard, while silver devaluated steadily with respect to gold, but said payments in the form of salaries and pensions to British particulars and companies had to be liquidated in pounds sterling, with the result that the drain of money from India increased steadily while the size of the British administration (or the number of British officers in its army) did not increase at the same rate.
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Fwiw, my post addresses the problem of British investments in the US and the punishments the UK took from leading the field in technologies that were obsoleted during the second Industrial Revolution's shift to, eg, increased use of electric power. The UK's recession in the 1870s was worse because of those, on top of the business cycle and the various problems caused by the US Civil War and the European wars around the time.
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