Economic Background and Theoretical Approaches

Abstract

AFTER 1875 the British economy, although growing in absolute terms, was in relative decline compared with other great powers, notably the USA and Germany. Not only had these countries become larger producers of manufactures by 1 goo, but in many important sectors of industry they had taken a significant technological lead over the first industrial nation. Britain’s relative decline was reflected in a more sluggish rate of growth of exports than hitherto and a sharp fall in Britain’s share of world trade. Competition became fiercer not only overseas but even in Britain’s domestic market; at the same time, although Britain retained free trade, the trend towards commercial liberalism in the rest of the world, apparent before the 187os, was arrested. Imports rose faster than exports and the deficit on balance of commodity trade grew considerably. This deficit would have been much greater but for the buoyancy of trade with the empire. While total exports at current prices increased by only 6 per cent between 1871–5 and 1896–1900, exports to the empire rose by 29 per cent and the increase in sales to the white settled areas within the empire was 45 per cent.* These figures must be kept in mind when assessing, first, the significance of the reviving interest in closer economic unity with the empire, especially the white-settled parts, after 1875 and the clamour to abandon free trade; and, secondly, the business agitation for the incorporation of large areas of Africa and Asia into the formal empire in this period.