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2. Economy and Society
Britain’s economic decline. The structure of the economy. The British class system.
The status of women in British society.
Economic history of Britain
Early history
In Britain's earliest history agriculture was overwhelmingly dominant. The most important export was tin, which
gave the country its name.
Middle Ages
Begun initially to support William the Conqueror's (c. 1029-1087) holdings in France, England's policy of active
involvement in continental European affairs endured for several hundred years.
The Black Death or more recently known as the Black Plague, struck England and Europe particularly hard during
the 14th Century and its effects were felt well into the 15th Century. England also suffered from a bullion famine as
the silver mines of Europe either closed or fell to the Ottoman Empire, as in Serbia. By the end of the 14th century,
foreign trade, originally based on wool exports to Europe, had emerged as a cornerstone of national policy.
England conducted extensive trade with the Low Countries and Italy, exporting vast quantities of wool to those
countries' textile industries. For many years England did not have the skilled workforce or the population density to
itself participate in manufacturing, but turmoil on the continent as a result of the end of the Italian Renaissance and
the wars of religion caused by the Protestant Reformation led to an influx of skilled dyers and weavers. By the 17th
century England was a leader in textile production.
In contrast Scotland's main trading partners were France and the Baltic towns of the Hanseatic League.
England had long been a naval power, dependent on a fleet for the defence of the British Isles. The revolution in
ship design of the Age of Navigation aided this immensely. For the first time ships were large and sturdy enough to
safely ply the Atlantic Ocean, and the oceanic trade became the primary one in Europe, replacing the
Mediterranean trade as wealth shifted from southern to western Europe.
Overseas expansion
Defeat of the Spanish Armada in 1588 firmly established England as a major sea power. Thereafter, its interests
outside Europe grew steadily. Attracted by the spice trade, English mercantile interests spread first to the Far East.
In search of an alternate route to the Spice Islands, John Cabot reached the North American continent in 1498. Sir
Walter Raleigh organized the first, short-lived colony in Virginia in 1584, and permanent English settlement began
in 1607 at Jamestown, Virginia. During the next two centuries, England, and, after the 1707 Act of Union, Britain,
extended its influence abroad and consolidated its political development at home.
Great Britain, through the wealth generated by its extensive trade, its cutthroat competition with the Dutch, and its
wealth in natural resources, especially coal was the first nation to experience the Industrial Revolution. The
development of new technologies such as the steam engine, cheap iron and steel production, and later railroads,
transformed British life but also had many negative effects as traditions broke down and workers were placed in
dangerous and harsh work environments.
The wealth from this industrialization greatly strengthened Britain's ability to oppose continental powers,
particularly Napoleon's France. By the end of the Napoleonic Wars in 1815, the United Kingdom was the foremost
European power, and its navy ruled the seas. Peace in Europe allowed the British to focus their interests on more
remote parts of the world, and, during this period, the British Empire reached its zenith. British colonial expansion
reached its height during the reign of Queen Victoria (1837-1901). Victoria's reign witnessed the spread of British
technology, commerce, language, and government throughout the British Empire, which at its greatest extent
encompassed roughly one-fifth to one-quarter of the world's area and population. British colonies contributed to the
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United Kingdom's extraordinary economic growth and strengthened its voice in world affairs. Even as the United
Kingdom extended its imperial reach overseas, it continued to develop and broaden its democratic institutions at
home.
Britain outlawed slavery in 1833 and soon began enforcing this law on other nations. By the end of the 19th
century Britain had eradicated the world slave trade.
The Age of Mercantilism
The British Empire began in the age of Mercantilism, and economic theory stressing competition between nations
for a finite amount of wealth. The modern British Empire first took shape in the early 17th century, with the British
settlement of the eastern colonies of North America, which would later become the original United States, as well
as Canada's Maritime provinces, and the colonisations of the smaller islands of the Caribbean such as Trinidad and
Tobago, the Bahamas, Barbados, and Jamaica.
These sugar plantation islands, where slavery became the basis of the economy, were at first Britain's most
important and successful colonies. The American colonies providing tobacco, cotton, and rice in the south and
naval material and furs in the north were less financially successful, but had large areas of good agricultural land
and attracted far larger numbers of British immigrants.
Britain's American empire was slowly expanded by war and colonization. The ever growing American colonies
pressed westward in search of new agricultural lands. Conflict arose with the Dutch over trade and empire; First
Anglo-Dutch War (1652 - 1654); Second Anglo-Dutch War (1665 - 1667); Third Anglo-Dutch War (1672 - 1674);
Britain gained control of New Amsterdam, which was renamed New York, but ceded Suriname. They defeated the
French, first expanding their hold over the maritime provinces. Then during the Seven Years War the British
defeated the French at the Plains of Abraham and captured all of New France in 1760. This gave Britain control
over almost all of North America. Fourth Anglo-Dutch War (1780 - 1784); Anglo-Dutch Treaty of 1814; AngloDutch Treaty of 1824.
The Industrial Revolution
In the late eighteenth and early nineteenth century a series of technological advances led to the Industrial
Revolution. Britain's position as the world's pre-eminent trader helped fund research and experimentation. The
nation was also gifted by some of the world's greatest reserves of coal, the main fuel of the new revolution.
It was also fueled by a rejection of mercantilism in favour of The predominance of Adam Smith's laissez-faire
capitalism. The fight against Mercantilism was led by a number of liberal thinkers, such as Richard Cobden, Joseph
Hume, Francis Place and John Roebuck.
The Industrial Revolution saw a rapid transformation in the British economy and society. Previously large
industries had to be near forests or rivers for power. The use of coal-fuelled engines allowed them to be placed in
large urban centres. These new factories proved far more efficient at producing goods than the cottage industry of a
previous era. These manufactured goods were sold around the world, and raw materials and luxury goods were
imported to Britain.
During the Industrial Revolution the empire became less important and less well-regarded. The British defeat in the
American War of Independence (1775-1783) deprived it of its most populous colonies. This loss of the southern
American colonies was coupled with a realisation that colonies were not particularly economically beneficial. It
was realised that the costs of occupation of colonies often exceeded the financial return to the taxpayer. In other
words, formal empire afforded no great economic benefit when trade would continue whether the overseas political
entities were nominally sovereign or not. The American Revolution helped demonstrate this by showing that
Britain could still control trade with the colonies without having to pay for their defence and governance.
Capitalism encouraged the British to grant their colonies self-government. The end of the old colonial system was
most evident in the repeal of the Corn Laws, the agricultural subsidies on colonial grain. The end of these laws
opened the British market to unfettered competition, grain prices fell, and food became more plentiful. The repeal
greatly injured Canada, however, whose grain exports lost a great deal of their profitability.
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Some argue that this push for free trade was merely because of Britain economic position and was unconnected
with any true philosophic dedication to free trade. Roughly between the Congress of Vienna and the FrancoPrussian War, Britain reaped the benefits of being the world's sole modern, industrial nation. Following the defeat
of Napoleon, Britain was the 'workshop of the world', meaning that its finished goods were produced so efficiently
and cheaply that they could often undersell comparable, locally manufactured goods in almost any other market. If
political conditions in a particular overseas markets were stable enough, Britain could dominate its economy
through free trade alone without having to resort to formal rule or mercantilism. Britain was even supplying half
the needs in manufactured goods of such nations as Germany, France, Belgium, and the United States.
Britain, in this sense, continued to adhere to the Cobdenite notion that informal colonialism was preferable — the
established consensus among industrial capitalists during the age of Pax Britannica between the downfall of
Napoleon and the Franco-Prussian War.
Sovereign areas already hospitable to informal empire largely avoided formal rule, even often during the shift to
New Imperialism. China, for instance, was not a backward country unable to secure the prerequisite stability and
security for western-style commerce, but a highly advanced empire unwilling to admit western (often drugpushing) commerce, which may explain the West's contentment with informal 'Spheres of Influence'. China, unlike
tropical Africa, was a securable market without formal control.
The victory of forces of the British East India Company at Plassey (1757) opened the great Indian province of
Bengal to British rule, though later (1770) famine exacerbated by massive expropriation of provincial government
revenues aroused controversy at home. The nineteenth century saw Company rule extended across India after
expelling the Dutch, French and Portuguese. Following the Indian Mutiny of 1858 India became a crown colony.
The territory continued to expand as Ceylon (now Sri Lanka) and Burma were added to Britain's Asian territories,
which extended further east to Malaya and (1841) to Hong Kong following a successful war in defence of the
Company's opium exports to China.
The Second Industrial Revolution
During the First Industrial Revolution, the industrialist replaced the merchant as the dominant figure in the
capitalist system. In the last decades of the nineteenth century, when the ultimate control and direction of large
areas of industry came into the hands of financiers, industrial capitalism gave way to finance capitalism. The
establishment of mammoth industrial empires and the ownership and management of their assets by men divorced
from production were the dominant features of this third phase.
New products were also introduced, steel became far cheaper leading to the end to commercial wooden sailing
ships which were largely replaced with faster steel ships that greatly increased international trade. The electricity
and chemical industries also moved to the forefront. In many of these sectors Britain had far less of an edge than
other powers as Germany and the United States both rose to equal, and even surpass, Britain in economic heft.
Amalgamation of industrial cartels in the era of finance capitalism, in the forms of larger corporations and mergers
and alliances of separate firms, and technological advancement during the Second Industrial Revolution,
particularly the increased utilization of electric power and internal combustion engines fuelled by coal and
petroleum, were mixed blessings for British business during the late Victorian era. The ensuing development of
more intricate and efficient machines along with monopolistic mass-production greatly expanded output and
lowered production costs. As a result, production often exceeded domestic demand. Among the new conditions,
more markedly evident in Britain, the forerunner of Europe's industrial states, were the long-term effects of the
severe 'Long Depression' of 1873-1896, which had followed fifteen years of great economic instability. Businesses
in practically every industry suffered from lengthy periods of low — and falling — profit rates and price deflation
after 1873.
Long-term economic trends led Britain, and to a lesser extent other industrializing nations following a similar
course of development such as the United States and Germany, to be more receptive to the desires of prospective
overseas investment. This is the case even in Britain with an industrial sector arguably declining due to the rise of
finance. Amalgamation of industry and banks, through their connection with industry, enabled finance to exert a
great deal of control over the British economy and politics. During the period of cut-throat competition of the midVictorian era, producers became aware of the advantages of consolidation, in the forms of larger corporations, but
also of mergers and alliances of separate firms, such as mass-production, lobbying power, and efficient union-
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busting. To create and operate such industrial cartels required larger sums than the manufacturer could ordinarily
provide, resulting in a new capitalist stage of development.
By the 1870s, London financial houses thus achieved an unprecedented control of industry, contributing to
increasing concerns among elite policymakers regarding British 'protection' of overseas investments — particularly
those in the securities of foreign governments and in foreign-government-backed development activities such as
railroads. Although it had been official British policy for years to support such investments, with the large
expansion of these investments after about 1860 and with the economic and political instability of many areas of
high investment (such as Egypt), calls upon the government for methodical protection became increasingly
pronounced in the years leading up to the Crystal Palace Speech. After the more 'gentlemanly' service sector of the
economy (banking, insurance, shipping) became more prominent — possibly at the expense of manufacturing —
the influence of London's financial interest began rising precipitously.
The 'cleaner' financial sector probably had an effect on the decisions taken by Britain's disproportionately
aristocratic bureaucrats and parliamentarians. Late-Victorian political leaders, most of whom were stockholders,
"shared a common culture with the financial class." This prompted imperial critic J. A. Hobson to conclude that
finance was manipulating events to its own profit. Modern historians, such as Bernard Porter, P.J. Cain and A.G
Hopkins do not downplay the influence of the City's' financial interests either, but contest Hobson's conspiratorial
overtones and 'reductionisms'. Nevertheless, they often acted as repositories of the surplus capital accumulated by a
monopolistic system and they were therefore the prime movers in the drive for imperial expansion, their problem
being to find fields for the investment of capital.
Foreign investment
Foreign trade thus tripled in volume between 1870 and 1914, although (again) most of the activity occurred among
the industrialized countries, or between them and their suppliers of primary goods or their new markets. In 1913,
only 11 percent of the world's trade took place between primary producers themselves. Britain ranked as the
world's largest trading nation in 1860, but by 1913 it had lost ground to both the United States and Germany:
British and German exports in that year each totalled $2.3 bullion, and those of the United States exceeded $2.4
billion. More significant was the emigration of their goods and capital.
As foreign trade increased, so in proportion did the amount of it going outside the Continent. In 1840, 7.7 million
pounds of her export and 9.2 million pounds of her import trade was done outside Europe; in 1880 the figures were
38.4 million and 73 million. Europe's economic contacts with the wider world were multiplying, much as Britain's
had been doing for years. In these non-industrial regions (such as the Russian and Ottoman empires), which were
the principal sources of surplus French capital, and other overseas territories that lacked both the knowledge and
the power to direct the capital flow, served to colonize rather than develop them, destroying native industries and
creating dangerous political and economic pressures which would, in time, produce the so-called 'north/south
divide'. The contemporary Dependency Theory, devised largely by Latin American academics, draws on this
inference.
Breakdown of Pax Britannica and New Imperialism
In a scramble for overseas markets between the Franco-Prussian War and World War, Europe added almost 9
million square miles (23,000,000 km²) — one-fifth of the land area of the globe — to its overseas colonial
possessions. Ushering out the cavalier colonialism of the mid-Victorian era, the age of Pax Britannica, the late
nineteenth century Romantic Age was an era of "empire for empire's sake". But scholars debate the causes and
ramifications of this period of colonialism, dubbed "The New Imperialism" to distinguish it from earlier eras of
overseas expansion, such as the mercantilism of the sixteenth to eighteenth centuries or the liberal age of 'free trade'
colonialism of the mid-nineteenth century.
Continental political developments in the late 19th century, relating to the overall breakdown of the Concert of
Europe, also rendered this imperial competition feasible, in spite of Britain's centuries of long-established naval and
maritime superiority. As unification of Germany by the Prussian 'Garrison State' went forward, contending
capitalist powers were thus ready to compete with Britain over stakes in overseas markets. The aggressive
nationalism of Napoleon III and the relative political stability of France under the liberal Third Republic also
rendered France more capable of challenging Britain's global preeminence. Germany, Italy, and France were
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simply no longer as embroiled in continental concerns and domestic disputes as they were before the FrancoPrussian War.
Contemporary world-systems theorist Immanuel Wallerstein perhaps better addresses the counter-arguments to
Hobson without degrading his underlying inferences. Wallerstein's conception of imperialism as a part of a general,
gradual extension of capital investment from the "center" of the industrial countries to an overseas "periphery" thus
coincides with Hobson's. According to Wallerstein, "Mercantilism... became the major tool of [newly
industrializing, increasingly competitive] semi-peripheral countries [Germany, France, Italy, Belgium, etc.] seeking
to become core countries." Wallerstein hence perceives formal empire as performing a function "analogous to that
of the mercantilist drives of the late seventeenth and eighteenth centuries in England and France."
The expansion of the Industrial Revolution hence contributed to the emergence of an era of aggressive national
rivalry, leading to the late nineteenth century 'scramble for Africa' and formal empire. Hobson's theory is thus
useful in explaining the role of over-accumulation in overseas economic and colonial expansionism while
Wallerstein perhaps better explains the dynamic of inter-capitalist geopolitical competition.
Recent developments made it easier and more appealing for "semi-peripheral" newly industrialized states to
challenge Pax Britannica overseas. With the expansion of the Industrial Revolution, Britain could no longer reap
the benefits of being the sole modern, industrial nation. Britain by the outbreak of the Franco-Prussian War was no
longer the 'workshop of the world', meaning that its finished goods were no longer produced so efficiently and
cheaply that they could often undersell comparable, locally manufactured goods in almost any other market.
As these other newly industrial powers, the United States, and Japan after the Meiji Restoration began
industrializing at a rapid rate, Britain's comparative advantage in trade of any finished good began diminishing. Just
as the power of German and North American capitalisms increased, the relative decline of the British capitalist
economy began in the last third of the nineteenth century, contributing to a breakdown of Britain's natural
superiority in industry and commerce. Britain's share of world trade fell from one-fourth in 1880, one-sixth in
1913, and one-eighth in 1948. Britain was no longer supplying half the needs in manufactured goods of such
nations as Germany, France, Belgium, and the United States. Britain was even growing incapable of dominating the
markets of India — a crown colony by 1858 that Disraeli would later deem "the brightest jewel of the crown" —,
Manchu China, the coasts of Africa, and Latin America.
To make matters worse, British manufactures in the staple industries of the Industrial Revolution were beginning to
experience real competition abroad. The German textiles and metal industries, for example, had by the beginning of
the Franco-Prussian War surpassed those of Britain in organization and technical efficiency and usurped British
manufacturers in the domestic market. By the turn of the century, the German metals and engineering industries
would be producing heavily for the free trade market of what was once "workshop of the world" as well. In midst
of Britain's relative industrial decline, the fact that invisible financial exports actually kept Britain "out of the red"
is somewhat indicative of both Britain's pressure to secure overseas markets in both nominally independent states
and colonies and its newly precarious hegemony over overseas markets.
For the most part, formal empire has its roots in the breakdown of Pax Britannica. With the rise of industrial
capitalism in Germany, North America, and Japan, its finished goods no longer had a comparative or absolute
advantage in any other market. Industrialization progressed dynamically in Germany and the United States
especially, allowing them to clearly prevail over the "old" French and English capitalisms. The "neo-mercantilist"
practices of newly industrializing states such as Germany, the United States, and Japan cut Britain off from outlets
and even created competition for Britain in sales to these 'peripheral' areas.
With contending, emerging 'semi-peripheral' capitalist powers once dependent on British industry ready to vie for
competing stakes in overseas markets, inter-capitalist competition also took form of protectionism through higher
tariffs, further aggravating the push toward overseas markets: in Germany in 1879, and again following 1902: in
the United States in 1890; in France in 1892, 1907, and 1910. The only country to escape this trend was Britain,
whose essential strength lay precisely in its preeminence on the world market. German, American, and French
imperialists, as mentioned, argued that Britain's world power position gave the British unfair advantages on
international markets, thus limiting their economic growth.
This affected Britain in two ways. First, of course, new interest of the emergent industrial powers in colonial
expansion brought them into direct competition with Britain. The expansion of the Second Industrial Revolution
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and the rise of similar economic practices (such as amalgamation of industry) in Germany and the United States
intensified the competition for overseas markets and hence formal colonialism.
New Imperialism, as one means of facilitating the inexorable movement of capital from domestic markets to
overseas areas, was thus enabled by recent changes in the North Atlantic balance of power, such as the unification
of Germany under Prussia and relative political stability under France's Third Republic, but driven by changing
economic realities and the spread of industrial capitalism beyond Britain.
By the time Disraeli ushered in the age of New Imperialism with his watershed Crystal Palace Speech, which was
delivered by no mere coincidence after the Franco-Prussian War and during the Long Depression, Britain was no
longer the world's sole modern, industrial nation. Pessimists thus inferred that unless Britain acquired secure
colonial markets for its industrial products and secure sources of raw materials, the other industrial states would
seize them themselves and would precipitate a more rapid decline of British business, power, and standards of
living. The prospect of having to compete to remain the forerunner of the world's economies and empires due to
recent changes in the global economy and continental balance of power thus left it ripe for Disraeli's Conservative
rule in the 1870s, which would usher in an era of extreme national rivalry that would one day culminate in the
Great War.
In this sense, historian Bernard Porter argues that formal imperialism for Britain was a symptom and an effect of its
relative decline in the world, and not of strength. Symbolic overtures, in fact, such as Queen Victoria's grandiose
title of "Empress of India", celebrated during Disraeli's second premiership in the 1870s, helped to obscure this
fact. Joseph Chamberlain thus argued that formal imperialism was necessary for Britain because of the relative
decline of the British share of the world's export trade and the rise of German, American, and French economic
competition.
As mentioned, the 'Scramble for Africa', rationalized by Rudyard Kipling-style racism and Social Darwinism in
predominately Protestant empires and the paternalistic (but republican and progressive) French-style "mission of
civilization", was attractive to many European statesmen and industrialists who wanted to accelerate the process of
securing colonies upon anticipating the prospective need to do so. Their reasoning was that markets might soon
become glutted, and that a nation's economic survival depend on its being able to offload its surplus products
elsewhere.
At a time when the abandonment of free trade limited the European market, some business and government leaders,
such as Leopold II and Jules Ferry, concluded that sheltered overseas markets would solve the problems of low
prices and over-accumulation of surplus capital caused by shrinking continental markets. Among the new
conditions were the short-term effects of the severe economic depression of 1873, which had followed fifteen years
of great economic instability. Business after 1873 in practically every industry suffered from lengthy periods of low
profit rates and deflation; profits were falling because too much capital were chasing too few markets, especially
after the rise of newly industrializing states in export trade with its traditional markets in continental Europe, China,
and Latin America.
In addition, such surplus capital was often more profitably invested overseas, where cheap labor, limited
competition, and abundant raw materials made a greater premium possible. Another inducement to imperialism, of
course, arose from the demand for raw materials unavailable in Europe, especially copper, cotton, rubber, tea, and
tin, to which European consumers had grown accustomed and European industry had grown dependent.
Following the lead of Britain under Disraeli, even the once hesitantly imperialistic Bismarck was eventually
brought to realize the value of colonies for securing (in his words) "new markets for German industry, the
expansion of trade, and a new field for German, activity, civilization, and capital". Examples of strategic
competition following the passing of the scene of Bismarck, the era's premier diplomat, that would intensify the
drive to consolidate existing spheres of influence and grab new colonies, include the Moroccan Crisis of 1905, the
Tangier Crisis resulting from Kaiser Wilhelm's recognition of Moroccan independence, and the second Moroccan
Crisis, in which Germany sent its navy to Morocco, thereby testing the precarious Anglo-French Entente. The
Entente Cordiale, in fact, was a gentlemen's agreement between Britain and France to curtail further German
expansion. The Entente Cordiale and the Franco-Russian alliances were also made because of a common interest.
The absolutist Central Powers, led by a newly unified, dynamically industrializing Germany, with its expanding
navy — doubling in size between the Franco-Prussian War and the Great War — were a strategic threat to the
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markets of these relatively declining empires that would one day consist of the Great War Allies. British
policymakers feared the prospect of another German military victory over France, which could have reasonably
resulted in a German take-over of France's formal colonies, a sort of reversal of the actual outcome of the Great
War, after which Britain occupied the vast majority of German and Ottoman colonies as "protectorates". This
prospect was especially frightening considering that French colonies tended to be closely situated to Britain's;
Nigeria, for instance, was surrounded by French territory, India was near French Indochina, and so forth.
Britain and the Colonization of Africa, Imperialism in Asia
Until the dismissal of the aging Chancellor Bismarck by the belligerent Kaiser Wilhelm II, the expropriation of
vast, unexplored areas of Asia and Africa by emerging imperial powers such as Italy and Germany and moreestablished empires such as Britain and France was nevertheless relatively orderly. The 1885 Congress of Berlin,
initiated by Bismarck to establish international guidelines for the acquisition of African territory, formalized this
new phase in the history of Western imperialism. Between the Franco-Prussian War and the Great War (the age of
New Imperialism), Europe added almost 9 million square miles (23,000,000 km²) — one-fifth of the land area of
the globe — to its overseas colonial possessions.
Since the "Scramble for Africa" was the predominate feature of New Imperialism and formal empire, opponents of
Hobson's accumulation theory often point to frequent cases when military and bureaucratic costs of occupation
exceeded financial returns. In Africa (exclusive of South Africa) the amount of capital investment by Europeans
was relatively small before and after the 1885 Congress of Berlin, and the companies involved in tropical African
commerce were small and politically insignificant, exerting only a tiny influence on domestic politics. First, this
observation might detract from the pro-imperialist arguments of Leopold II, Francesco Crispi, and Jules Ferry, but
Hobson argued against imperialism from a slightly different standpoint. He concluded that finance was
manipulating events to its own profit, but often against broader national interests.
Second, any such statistics only obscure the fact that African formal control of tropical Africa had strategic
implications in an era of feasible inter-capitalist competition, particularly for Britain, which was under intense
economic and thus political pressure to secure lucrative markets such as India, China, and Latin America. In
Britain's case this process of capitalist diffusion had in many regions led it to acquire colonies in the interests of
commercial security; France and Germany would later follow suit. For example, although the then inconspicuously
moribund Czarist Empire proved to be little treat to Great Britain following its stunning defeat in the 1905 RussoJapanese War, British Conservatives in particular feared that Russia would continue to usurp Ottoman territory and
acquire a port on the Mediterranean or even Constantinople — a long touted goal of Orthodoxy.
These fears became especially pronounced following the 1869 completion of the near-by Suez Canal, prompting
the official rationale behind Disraeli's purchase of the waterway. The close proximity of the Czar's (territorially)
expanding empire in Central Asia to India also terrified Lord Curzon, thus triggering the Afghan Wars. Rhodes and
Milner also advocated the prospect of a "Cape to Cairo" empire, which would link by rail the extrinsically
important canal to the intrinsically mineral and diamond rich South, from a strategic standpoint. Though hampered
by German conquest of Tanganyika until the end of the Great War, Rhodes successfully lobbied on behalf of such a
sprawling East African empire.
Formal colonies were often, in hindsight, strategic outposts to protect large zones of 'investment', such as India,
Latin America, and China. Britain, in as sense, continued to adhere to the Cobdenite notion that informal
colonialism was preferable — the established consensus among industrial capitalists during the age of Pax
Britannica between the downfall of Napoleon and the Franco-Prussian War. What changed since the Disraeli's
Crystal Palace Speech was not necessarily a preference for colonialism over informal empire, but the attitude
toward formal rule in largely tropical areas once considered too 'backward' for trade. Sovereign areas already
hospitable to informal empire largely avoided formal rule during the shift to New Imperialism. China, for instance,
was not a backward country unable to secure the prerequisite stability and security for western-style commerce, but
a highly advanced empire unwilling to admit western (often drug-pushing) commerce, which may explain the
West's contentment with informal 'Spheres of Influences'. China, unlike tropical Africa, was a securable market
without formal control.
Following the First Opium War, British commerce, and later capital invested by other newly industrializing
powers, was securable with a smaller degree of formal control than in Southeast Asia, West Africa, and the Pacific.
But in many respects, China was a colony and a large-scale receptacle of Western capital investments. Western
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powers did intervene military there to quell domestic chaos, such as the horrific Taiping Rebellion and the antiimperialist Boxer Rebellion. For example, General Gordon, later the imperialist 'martyr' in the Sudan, is often
accredited as having saved the Manchu dynasty from the Taiping insurrection.
Colonialism in India, however, should dissuade sweeping generalizations and over-simplifications regarding the
roles of inter-capitalist competition and accumulated surplus in precipitating the era of New Imperialism. Formal
empire in India, beginning with the Government of India Act of 1858, was a means of consolidation, reacting to the
abortive Sepoy Rebellion, which was in itself a conservative reaction among Indian traditionalists to the Dalhousie
era of liberalization and consolidation of the subcontinent. Local concerns in particular zones of investment, hence,
should be of concern as well.
Formal empire in Sub-Saharan Africa, the last vast region of the world largely untouched by "informal
imperialism" and "civilization", was also attractive to Europe's ruling elites for other potential reasons. First,
insofar as the "Dark Continent" was agricultural or extractive, and no longer "stagnant" since its integration with
the world's interdependent capitalist economy, it required more capital for development that it could provide itself.
Second, during a time when in nearly every year since the 1813 liberalization of trade onward Britain's balance of
trade showed a deficit, and a time of shrinking and increasingly protectionist continental markets, Africa offered
Britain an open market that would garner it a trade surplus — a market that bought more from the metropole than it
sold overall. Britain, like most other industrial countries, had long since begun to run an unfavorable balance of
trade (which was increasingly offset, however, by the income from overseas investments). As perhaps the world's
first post-industrial nation, financial services became an increasingly more important sector of its economy.
Invisible financial exports, as mentioned, kept Britain out of the red, especially capital investments outside Europe,
particularly to the developing and open markets in Africa, predominately white 'settler colonies', the Middle East,
the Indian Subcontinent, Southeast Asia, and the South Pacific.
Each of Britain's major elites also found some advantages in formal, overseas expansion: mammoth monopolies
wanted imperial support to secure overseas investments against competition and domestic political tensions abroad;
bureaucrats wanted more occupations, military officers desired promotion, and the traditional but waning landed
gentry wanted formal titles. Observing the rise of trade unionism, socialism, and other protest movements during an
era of mass society in both Europe and later North America, the elite in particular was able to utilize imperial
"jingoism" to co-opt the support of the impoverished industrial working class. Riding the sentiments of the late
nineteenth century Romantic Age, imperialism inculcated the masses with 'glorious' neo-aristocratic virtues and
helped instill broad, nationalist sentiments.
20th Century
Overview
By the time of Queen Victoria's death in 1901, other nations, including the United States and Germany, had
developed their own industries; the United Kingdom's comparative economic advantage had lessened, and the
ambitions of its rivals had grown. The losses and destruction of World War I, the depression in its aftermath during
the 1930s, and decades of relatively slow growth eroded the United Kingdom's preeminent international position of
the previous century. The Great Depression hit the nation especially harshly, as it had still not fully recovered from
the war. See also the Great Depression in the United Kingdom.
WWII again saw a great deal of destruction to British infrastructure, and the years after the war also saw Britain
lose almost all of her remaining colonies as the empire dissolved. In UK general election, 1945 the Labour Party
was elected, introducing sweeping reforms of the British economy. Taxes skyrocketed, industries were
nationalised, and a welfare state with national health, pensions, and social security was created.
The next years saw some of the most rapid growth Britain had ever experienced, recovering from the devastation of
the Second World War and then expanding rapidly past the previous size of the economy.
By the end of the 1960s this growth began to slow, and by the 1970s Britain entered a long running period of
relative economic malaise. This led to the election of Margaret Thatcher, who cut back severely on the
government's role in the economy and weakened labour unions.
8
1900-1928: The Early 20th Century
By the turn of the twentieth century, Britain’s economic fortunes were in relative decline. Germany and the United
States were becoming the biggest threats in terms of domestic economic production, having vastly superior natural
resources than Britain. Furthermore, Germany had developed its own policy of imperialism which led to friction
with other imperial powers in Europe upto the First World War.
The First World War (1914–1918) saw absolute losses for Britain’s economy. It is estimated that she lost a quarter
of her total wealth in fighting the war. Failure to appreciate the damage done to the British economy led to the
pursuit of traditional liberal economic policies which plunged the country further into economic dislocation with
high unemployment and sluggish growth. By 1926, a General Strike was called by trade unions but it failed, and
many of those who had gone on strike were blacklisted, and thus were prevented from working for many years
later.
1929-1945: The Great Depression and Second World War
In 1929, the Wall St Crash affected Britain resulting in leaving the Gold Standard. Whereas Britain had
championed the concept of the free market when it ruled the world through its empire, it gradually withdrew to
adopting Tariff Reform as a measure of protectionism. By the early 1930s, protectionism once again signalled the
economic problems the British economy faced. When the Labour Government collapsed in 1931, it was replaced
by a National Government representing all the parties as an indication of the economic troubles that had beset the
country. Britain was not alone, with equal economic troubles affecting most European countries, most powerfully
Germany with hyperinflation.
In political terms, the economic problems found expression in the rise of radical movements who promised
solutions which conventional political parties were no longer able to provide. In Britain this was seen with the rise
of the Communist Party of Great Britain (CPGB) and the Fascists under Oswald Mosley. Their political strength
was limited however and never provided any real alternative to conventional political parties in the UK.
At the same time, the First World War began the process of decolonisation. The empire had been an essential base
in the success of Britain’s economy; providing cheap resources, labour and vital strategic points for defence.
However, during the interwar period came the rise of movements seeking self-determination and self-government,
most notably personified with Gandhi. With the white empire having become a Commonwealth, (a loose
association of states bound by ties of history), it was only a matter of time before the rest of the empire followed
suit.
Britain’s economic problems are cited as the reason for appeasement. Delaying a commitment to war was a means
of buying time to divert scarce economic resources into the production of military hardware and armaments.
1945-1959: The Post-War Era
After WWII, the British economy had again lost huge amounts of absolute wealth. Her economy was driven
entirely for the needs of war and took some time to be reorganised for peaceful production. Immediately after the
war had ended, the USA halted Lend-Lease. This had been fundamental to the sustainability of the British economy
during the war and it was expected that it would continue during the period of transition. Instead, the Labour
Government under Clement Attlee sent John Maynard Keynes to negotiate a loan, known as the Washington Loan
Agreement in December 1945. The terms were not as favourable as the British had hoped for, and included
crucially a convertibility clause. In this, the USA expected that within two years, the British currency, Sterling,
would become fully convertible. The winter of 1946/1947 proved to be very harsh curtailing production and
leading to shortages of coal which again affected the economy so that by August 1947 when convertibility was due
to begin, the economy was not as strong as it needed to be. When the Labour Government enacted convertibility,
there was a run on Sterling, meaning that Sterling was being traded in for dollars, seen as the new, more powerful
and stable currency in the world. This damaged the British economy and within weeks it was stopped. By 1949, the
British pound was over valued and had to be devalued though this is often considered a measure of last resort for
Governments.
9
The Labour Governmens of 1945–1951 enacted a political programme rooted in collectivism including the
nationalisation of industries and state direction of the economy. Both wars had demonstrated the possible benefits
of greater state involvement. This underlined the future direction of the post-war economy, and was supported in
the main by the Conservatives. However, the initial hopes for nationalisation were not fulfilled and more nuanced
understandings of economic management emerged, such as state direction, rather than state ownership. Throughout
though, the basis remained the same: applying the economic theories of Keynes and continued state involvement.
Two world wars had taken their toll on the Empire. Decolonisation began with Indian independence in 1948. For
many countries formerly part of the Empire, they argued that, in effect, they had won their independence by
fighting for Britain during the two wars. However, British power was already shown to be weakened as it became
impossible to resist the tide of self determination which ensued. What began under the Labour Government of
1945–1951 was continued under the Conservatives from 1951–1964 with the exception of the Suez Crisis of 1956.
After Suez, the Conservatives made it a central feature of their foreign policy rhetoric with Harold Macmillan's
Winds of Change speech.
The loss of Empire and the material losses incurred through two world wars had affected the basis of Britain’s
economy. First, its traditional markets were changing as Commonwealth countries made bilateral trade
arrangements with local or regional powers. Second, the initial gains Britain made in the world economy were in
relative decline as those countries whose infrastructure was seriously damaged by war repaired these and reclaimed
a stake in world markets. Third, the British economy changed structure shifting towards a service sector economy
from its manufacturing and industrial origins leaving some regions economically depressed. Finally, part of
consensus politics meant support of the Welfare State and of a world role for Britain; both of these needed funding
through taxes and needed a buoyant economy in order to provide the taxes.
1960-1979: An Economic Malaise
As these factors coalesced during the 1960s, the slogan used by Prime Minister Harold MacMillan "you never had
it so good" seemed increasingly hollow. The Conservative Government presided over a ‘stop-go’ economy as it
tried to prevent inflation spiralling out of control without snuffing out economic growth. Growth continued to
struggle, at about only half the rate of that of Germany or France at the same time. The Labour Party under Harold
Wilson from 1966–1970 was unable to provide a solution either, and eventually was forced to devalue the pound
again in 1967.
Both political parties had come to the conclusion that Britain needed to enter the EEC in order to revive her
economy. This decision came after establishing a European Free Trade Area (EFTA) with other, non EEC countries
since this provided little economic stimulus to Britain’s economy. Levels of trade with the Commonwealth halved
in the period 1945–1965 to around 25% while trade with the EEC had doubled during the same period. However,
General de Gaulle vetoed the British attempt at membership in both 1963 and 1967. It was not until 1973 that
Conservative Prime Minister, Edward Heath, led Britain into Europe.
However, with the decline of Britain’s economy during the 1960s, the trade unions began to strike leading to a
complete breakdown with both the Labour Government of Harold Wilson and later with the Conservative
Government of Edward Heath (1970–1974). In the early 1970s, the British economy suffered more as strike action
by trade unions led to a three day week. In all, over nine million days were lost to strike action under Heath’s
Government alone. However, despite a brief period of calm negotiated by the Labour Government of 1974 known
as the Social Contract, a break down with the unions occurred again in 1978, leading to the Winter of Discontent,
and eventually leading to the end of the Labour Government, then being led by Jim Callaghan.
1979-1990: The Thatcher Era
When Margaret Thatcher became Prime Minister in 1979, her main priority was to reduce the power of the unions
and their ability to paralyse the economy, a battle which culminated in the Miners' Strike of 1984. Her other
priority was to apply monetarism which reversed the government taxing and spending patterns of the post-war
years. Her rhetoric was of a trimmer civil service and good housekeeping for efficient spending of public money.
The ultimate success of Thatcher’s approach has been contested, but the political landscape has changed, with the
chief opposition to Thatcher's Conservatives, the Labour Party, advocating many of the same economic methods,
but with a greater social dimension.
10
Since 1973, the UK has been a member of the European Union, and various British governments have signed on to
measures which have been aimed at improving economic conditions, such as the Single European Act (SEA),
signed by Margaret Thatcher. This allowed for the free movement of goods within the European Union area. The
ostensible benefit of this was to give the spur of competition to the British economy, and increase its ultimate
efficiency.
During much of the 1980s Britain experienced a period of boom, including an unprecedented housing boom.
However, the period was also characterised by continued social strife as the government attempted to close coal
mines, and later as Thatcher introduced, ultimately unsucessfully, the Community Charge tax (Poll Tax as its
opponents came to call it). While the policies of Thatcherism took hold in Britain, a similar set of policies were also
being adopted in the U.S. through so called "reaganomics", named for the american president who championed
them.
It is not clear whether Thatcherism was the only reason for the boom in Britain in the 1980s, as there was also a
world wide boom around the same time. However many of the economic policies put in place by the Thatcher
governments have been kept since, and the Labour Party which had once been so opposed to the policies had by the
late 1990s quietly dropped all opposition to them.
1990-1997: The Major Years
In 1990 Margaret Thatcher stood down from the office of Prime Minister after not getting the political support she
felt she needed to continue. John Major was elected her successor
The British pound was tied to EU exchange rates, using the Deutsche Mark as a basis, as part of the Exchange Rate
Mechanism (ERM); however, this resulted in disaster for Britain. The restrictions imposed by the ERM put
pressure on the pound, leading to a run on the currency, initiated by George Soros. Black Wednesday in 1992
ended British membership of the ERM but also brought about a deep recession, affecting many who had benefitted
from the economic boom of the late 1980s. It also damaged the Conservatives' credibility of economic
management, and may have contributed to the end of the 18 years of consecutive Conservative government in
1997.
1997+: New Labour
In 1997 the Labour Party swept to power with a huge majority, mainly on the back of the reputation the
conservative party had garnered for sleaze. On entering power Tony Blair's Labour Party stuck with the former
Conservative governments spending plans and the mid-90s boom gathered pace. The chancellor, Gordon Brown,
gained a reputation as the "prudent chancellor" as he stuck with the conservatives spending plans and tried to
interfere as little as possible with the economy. During his tenure that the power to set interest rates was given to
the Bank Of England, effectively ending the use of interest rates as a political tool.
The 21st Century
By 2000 the world was a very different place to the world of 1900, and Britian too had undergone massive change.
In the Labour Party's second term in office, beginning in 2001, the party increased taxes and borrowing. The
government wanted the money to increase spending on public services, including the National Health Service
which they claimed was suffering from chronic under funding. Throughout the term the economic growth
continued, so the effects of the tax rises and borrowing were not felt by the electorate, and were even relatively
popular (though turnout in elections reached record lows).
Throughout the first two terms the economic growth has continued and the government have gone so far as to claim
an end to the "boom-bust" cycle of economics. However the long term effects of the decisions taken so far in the
Labour era remain to be seen.
Britain is a member of the G7 (now G8), which was established in 1975, as well as the OECD. For further details
on Britain’s contemporary economy, see Economy of the United Kingdom.
11
The United Kingdom, a leading trading power and financial centre, has the fourth largest economy in the world, the
second largest in Europe, and is a member of the European Union. Its capital, London, is the largest financial centre
in the world.
Since the 1980s, and particularly under the Government of Margaret Thatcher, many state enterprises that were
nationalised in the 1940s have been privatised.
GDP growth slipped in 2001–2002 as the global downturn, the high price of the Pound Sterling, and the bursting of
the "new economy" bubble hurt manufacturing and exports. However the UK economy is one of the strongest of
the larger Europe economies; inflation, interest rates, and unemployment remain low. Growth is now at 3.0% per
annum, which is higher than that of France, Germany and many other European countries.
Background
The World Depression of 1929-33 broke at a time when the United Kingdom was still far from having recovered
from the effects of the First World War more than a decade earlier.
A major cause of the international financial instability, which preceded and accompanied the Great Depression,
was the debt which many European countries had accumulated to pay for their involvement in the war. This debt
destabilised many European economies as they tried to rebuild during the 1920s.
Britain had largely avoided this trap by financing her war effort largely through sales of foreign assets. Along with
loss of assets through enemy action, such divestiture reduced British investments abroad by around 20% by 1918.
The resulting loss of foreign earnings left the British economy more dependent upon exports, and more vulnerable
to any downturn in world markets. But the war had permanently eroded Britain's trading position in world markets
through disruptions to trade and losses of shipping. Overseas customers for British produce had been lost,
especially in traditional industries such as textiles, steel and coalmining.
The 1920s saw the development of new industries such as the motor industry and the electrical industry, but British
products in these fields were not usually sufficiently advanced to compete in world markets against foreign
competitors possessing more up-to-date plants, and so British products largely served the domestic market.
The traditional industries which formed the bedrock of Britain's export trade (such as coalmining, shipbuilding and
steel) were heavily concentrated in certain areas of Britain, such as the north of England, south Wales and central
Scotland, while the newer industries were heavily concentrated in southern and central England.
Altogether, British industrial output during the 1920s ran at about 80-100%, and exports at about 80% of their prewar levels, so there was little chance of Britain being able to amass enough capital to restore her overseas
investment position.
The Gold Standard
From about 1921, Britain had started a slow economic recovery from the war and the subsequent slump. But in
April 1925 the Conservative Chancellor, Winston Churchill, on advice from the Bank of England, restored the
Pound Sterling to the gold standard at its prewar exchange rate of 4.86 US dollars.
This made the pound convertible to its value in gold, but at a level which made British exports more expensive on
world markets. The economic recovery was immediately slowed. To offset the effects of the high exchange rate,
the export industries tried to cut costs by lowering workers' wages, provoking the General Strike of May 1926.
The traditional industrial areas of Britain spent the rest of the 1920s in recession, and these industries received little
investment or modernisation. Throughout the 1920s the unemployment rate stayed at a steady one million.
12
Economic Crisis and the Labour government 1929-1931
In May 1929 a minority Labour government headed by Ramsay MacDonald came to office with Liberal support.
This was only the second time a Labour government had been in office (they had briefly been in office in 1924),
and few of the government's members had any deep knowledge of economics or experience of running the
economy. MacDonald's Labour Party was not radical in economic thinking, and was wedded to the orthodoxy of
Victorian classical economics, with its emphasis on maintaining a balanced budget at any cost.
In October 1929 the Wall Street Crash in New York heralded the Great Depression. The ensuing US economic
collapse caused a ripple effect across the world. World trade contracted, prices fell and governments faced financial
crisis as the supply of American credit dried up. Many countries adopted an emergency response to the crisis by
erecting trade barriers and tariffs, which worsened the crisis by further hindering global trade.
The effects on the industrial areas of Britain were immediate and devastating, as demand for British products
collapsed. By the end of 1930 unemployment had more than doubled from 1 million to 2.5 million (20% of the
insured workforce), and exports had fallen in value by 50%. Government revenues contracted as national income
fell, while the cost of assisting the jobless rose.
Under pressure from its Liberal allies as well as the Conservative opposition, the Labour government appointed a
committee to review the state of public finances. The May Report of July 1931 urged public-sector wage cuts and
large cuts in public spending (notably in payments to the unemployed) to avoid incurring a budget deficit.
This proposal proved deeply unpopular within the Labour Party and among its main supporters, the trade unions,
which along with several government ministers refused to support any such measures. The Chancellor of the
Exchequer, Philip Snowden, insisted that the Report's recommendations must be adopted to avoid incurring a
budget deficit.
In a memorandum in January 1930, one junior government minister, Oswald Mosley, proposed that the government
should take control of banking and exports, as well as increase pensions to boost purchasing power. When his ideas
were turned down, he resigned. He soon left Labour to form the New Party, and later the British Union of Fascists.
The approach of the British Labour Party to the economic crisis was in stark contrast to that adopted in Sweden by
the Swedish Social Democratic Party, which took a Keynesian approach to the crisis, and initiated governmentfunded public works programmes to ease unemployment and boost the economy.
The National Government
The dispute over spending and wage cuts split the Labour government: as it turned out, fatally. And the resulting
political deadlock caused investors to take fright, and a flight of capital and gold further de-stabilised the economy.
In response, MacDonald, who on the urging of King George V, decided to form a "National Government" with the
Conservatives and the Liberals.
On August 24 MacDonald submitted the resignation of his ministers and led his senior colleagues in forming a
"National Government", with the other parties. MacDonald and his supporters were expelled from the Labour Party
and adopted the label "National Labour". The Labour Party and some Liberals, led by David Lloyd George, went
into opposition. The Labour Party denounced MacDonald as a "traitor" and a "rat" for what they saw as his
betrayal.
Soon after this, a General Election was called. The election resulted in a Conservative landslide victory, with the
now leaderless Labour Party winning only 46 seats in Parliament. Although MacDonald continued as Prime
Minister until 1935, after the 1931 election the national government was Conservative dominated.
Emergency measures
The new national government, with the Conservative Neville Chamberlain as Chancellor, immediately instituted a
draconian round of public spending and wage cuts. Public sector wages and unemployment pay were cut by 10%,
and income tax was raised from 22.5 pence to 25 pence in the pound. But these measures merely reduced
13
purchasing power in the economy, and worsened the situation, and by the end of 1931 unemployment had reached
3 million.
Because of the gold standard there was nothing to stop a flight of gold. At first the government tried to stop the
flight by introducing punitive interest rates. But in late 1931 the government was finally forced to abandon the gold
standard, and immediately the exchange rate of the pound fell by 25%, from $4.86 to $3.40. This eased the pressure
on exporters, and laid the ground for a gradual economic recovery. Also, in 1932 Chamberlain introduced tariffs on
imports at a rate of 10% on all imports except those from the countries of the British Empire.
Britain in the 1930s: a nation divided
Although the overall picture for the British economy in the 1930s was bleak, the effects of the depression were
uneven. Some parts of the country, and some industries, fared better than others. Some parts of the country, such as
south Wales, experienced mass unemployment and poverty, while some areas in the south did not.
The South and the Midlands
Although in London and the south east of England unemployment was initially as high as 15%, the later 1930s
were a prosperous time in these areas, as a house building boom was fuelled by the low interest rates which
followed the abolition of the gold standard, and as London's growing population buoyed up the economy of the
south east.
The south was also the home of new developing industries such as the electrical industry, which prospered from the
large-scale electrification of housing and industry. Mass production methods brought new products such as
electrical cookers, washing machines and radios into the reach of the middle classes, and the industries which
produced these prospered.
Another industry which prospered during the 1930s was the motor industry. For cities which had a developed
motor industry such as Birmingham, Coventry and Oxford, the 1930s were a boom time. Manufacturers such as
Austin, Morris and Ford dominated the motor industry during the 1930s, and the number of cars on British roads
doubled within the decade. Agriculture also flourished in the 1930s.
The north and other industrial areas
The north of England however was a quite different matter. The north of England was the home of most of Britain's
traditional industries such as coalmining, shipbuilding, steel and textiles. The north bore the brunt of the
depression, and the '30s were the most difficult time in living memory for people in these areas.
In the north east (the areas around Newcastle-upon-Tyne) this was especially so. The north east was traditionally a
major centre of the shipbuilding industry. The Depression caused a collapse in demand for ships. Between 1929
and 1932 ship production declined by 90%, and this in turn affected all the supply industries such as steel and coal.
In some towns and cities in the north east, unemployment reached as high as 70%. Among the worst affected towns
was Jarrow, where unemployment led to the famous Jarrow March, in which unemployed workers marched 300
miles to London to protest against unemployment.
The north west, a traditional centre of the textile industries, was also hard hit, with places such as Manchester and
Lancashire suffering a slump. South Wales, a centre of the coalmining and steel industries, was also devastated by
the depression. Towns such as Merthyr Tydfil and Swansea had unemployment rates reaching above 25% at certain
times. The industrial belt of central Scotland, also a major shipbuilding centre, was also hard hit by the slump.
In these areas millions of unemployed and their families were left destitute, and queueing at soup kitchens became
a way of life. A government report in the mid 1930s estimated that around 25% of the UK's population existed on a
subsistence diet. In his book The Road to Wigan Pier, George Orwell described life for the unemployed in northern
England during the depression: "Several hundred men risk their lives and several hundred women scrabble in the
mud for hours... searching eagerly for tiny chips of coal in slagheaps so they could heat their homes. For them, this
arduously-gained 'free' coal was more important almost than food."
14
The welfare state during the 1930s
In the 1930s Britain had a relatively advanced welfare system compared to many of the industrialised countries. In
1911 a compulsory national unemployment and health insurance scheme had been put in place by the Liberal
government of David Lloyd George. This scheme had been funded through equal contributions from the
government, the employers and the workers. At first the scheme only applied to certain trades but it was gradually
expanded in the 1920s.
But the scheme only paid out according to the level of contributions rather than according to need, and was only
payable for 26 weeks. Anyone unemployed for longer than that had to rely on relief paid by their local authority. In
effect, millions of workers who had been too poorly paid to make contributions, or who had been unemployed,
were left destitute by the scheme. With the mass unemployment of the 1930s, contributions to the insurance
scheme dried up, which resulted in a funding crisis.
In 1934, the 1911 scheme was replaced by a fully government-funded unemployment benefit system. This system,
for the first time, paid out according to need rather than the level of contributions. But the unemployment pay was
subject to a strict means test, and anyone applying for unemployment pay had to endure an inspection by a
government official to make sure that they had no hidden earnings or savings. For many poor people this was a
humiliating experience and was much resented.
Slow recovery
Following Britain's withdrawal from the gold standard and the devaluation of the pound, interest rates were reduced
from 6% to 2%. As a result, British exports became more competitive on world markets than those of countries
which remained on the gold standard. This led to a modest economic recovery, and a fall in unemployment from
1933 onwards. Although exports were still a fraction of their pre-depression levels, they staged a modest recovery.
Unemployment began a modest fall in 1934 and fell further in 1935 and 1936. But the rise in employment levels
occurred mostly in the south, where lower interest rates had spurred a house building boom, which in turn spurred a
recovery in domestic industry. The north remained severely depressed for most of the decade.
In severely depressed parts of the country, the government enacted a number of policies to stimulate growth and
reduce unemployment, including road building, loans to shipyards and tariffs on steel imports. These policies
helped but were not, however, on a sufficiently large scale to make a huge impact on the unemployment levels.
Rearmament and recovery
From 1936 onwards the government followed a policy of mass rearmament to counter the threat from Nazi
Germany. This "accidental Keynesianism" provided the economic stimulus which finally ended the depression. By
1937 unemployment had fallen to 1.5 million, from where it fell even further. The mobilisation of manpower
following the outbreak of war in 1939 finally ended unemployment.
Consequences of the great depression
Following the end of World War II, the majority of the British people, and particularly the working class, did not
want a return to pre-war Conservative economic policies, which they blamed for the hardship of the 1930s, and
there was a mood for widespread social change. At the 1945 general election, to the surprise of many observers,
Winston Churchill was defeated by the Labour Party, headed by Clement Attlee.
The Labour government presided over the foundation of a comprehensive cradle-to-grave welfare state, and
founded a universal, tax funded National Health Service, which gave treatment according to need rather than ability
to pay. The Labour government also enacted Keynesian economic policies, to stimulate the economy to create full
employment. These policies became known as the "post-war consensus," and were accepted by all major political
parties. This post-war consensus lasted until the late 1970s when it came under attack from the Conservatives, led
by Margaret Thatcher.
15
A social class is, in the most basic sense, a group of people that share the same or similar social status.
The relative importance and definition of membership in a particular class differs greatly over time and between
societies, particularly in societies having a legal differentiation of groups of people by birth or occupation.
In the well-known example of socioeconomic class, many scholars view societies as stratifying into a hierarchical
system based on economic status, wealth, or income.
Using wealth as a dimension, many have used a bi-partite model to view societies, from ancient history to the
present day:


an Upper class of the immensely wealthy and/or powerful
a Lower class of the poor and/or weak
With the social changes of the 20th century, a gradually developing urban middle class appeared in most Western
countries, producing three strata:



an Upper class of the immensely wealthy and/or powerful
a Middle class of managers and highly paid professionals
a Lower class of people paid average or low wages or receiving "welfare". This includes those who are
homeless.
(Some writers divide Middle & Lower classes between White collar & Blue collar jobs.)
Social class formed a very important component of Karl Marx's relations of production, which themselves formed
one strand of each historically specific mode of production. He suggested that the primary social division was
between a "ruling class" and a labouring class. Under slavery, this division corresponds to that between the slaveowners and the slaves, while under feudalism, it corresponds to that between lords and serfs. Under capitalism,
Marx argued, the capitalists (the bourgeoisie) exploit the working class (the proletariat, or in other words the wageearners). See labor theory of value.
Note that the Marxist definition of class polarisation is based in the first instance on how money is earned, not how
much money is earned. The bourgeois are those who own capital assets or means of production (i.e. business
owners) and who hire other people to work for them; proletarians are those who do not own means of production,
and earn their living by working for the bourgeois and receiving wages. However, how much money is earned does
become important in defining class boundaries, since beyond a certain amount, the capital owned removes the
necessity to work for an employer. Intermediate classes such as the middle class own substantial personal assets
and earn higher incomes, which can over time make doing a job a choice.
A blue-collar worker is a working class employee who performs manual or technical labor, such as in a factory or
in technical maintenance "trades," in contrast to a white-collar worker, who does non-manual work generally at a
desk.
Some distinctive elements of blue-collar work are the lesser requirements for formal academic education. Training
is often learned on the job while working.
Commonly the "blue-collar" worker will be part of a labor union which is a form of organized labor. These
associations use a process of negotiation called collective bargaining to establish the rights and responsibilities of
the workers, to negotiate the pay rate and benefits received. Also, there are laws and organizations that regulate
safety in the workplace, associated with "blue-collar" conditions.
White-collar workers perform tasks which are less "laborious" yet often more highly paid than blue-collar
workers, who do manual work. They are salaried professionals (such as some doctors or lawyers), as well as
employees in administrative or clerical positions. In some studies managers are considered as part of the whitecollar worker grouping, in others they are not. The name derives from the traditional white, button down shirts
worn by workers of such professions.
16
Formerly a minority in the agrarian and early industrial societies, they have become a majority in industrialized
countries. The recent technological revolution has created disproportionately more desk jobs, and lessened the
number of employees doing manual work in factories. Generally, the pay rate is higher among white-collar
workers, although many of the "white-collar" workers are not necessarily upper class as the term once implied.
As salaried employees, white-collar workers are sometimes members of white-collar labor unions and they can
resort to strike action to settle grievances with their employers, when collective bargaining fails.
Class is a complex term, in use since the late eighteenth century, and employed in many different ways. In our
context classes are the more or less distinct social groupings which at any given historical period, taken as a whole,
constituted British Society. Different social classes can be (and were by the classes themselves) distinguished by
inequalities in such areas as power, authority, wealth, working and living conditions, life-styles, life-span,
education, religion, and culture.
Early in the nineteenth century the labels "working classes" and "middle classes" were already coming into
common usage. The old hereditary aristocracy, reinforced by the new gentry who owed their success to commerce,
industry, and the professions, evolved into an "upper class" (its consciousness formed in large part by the Public
Schools and Universities) which tenaciously maintained control over the political system, depriving not only the
working classes but the middle classes of a voice in the political process. The increasingly powerful (and class
conscious) middle classes, however, undertook organized agitation to remedy this situation: the passage of the
Reform Act of 1832 and the abolition of the Corn Laws in 1846 were intimations of the extent to which they would
ultimately be successful.
The working classes, however, remained shut out from the political process, and became increasingly hostile not
only to the aristocracy but to the middle classes as well. As the Industrial Revolution progressed there was further
social stratification. Capitalists, for example, employed industrial workers who were one component of the working
classes (each class included a wide range of occupations of varying status and income; there was a large gap, for
example, between skilled and unskilled labor), but beneath the industrial workers was a submerged "under class"-contemporaries referred to them as the "sunken people"-- which lived in poverty. In mid-century skilled workers
had acquired enough power to enable them to establish Trade Unions (Socialism became an increasingly important
political force) which they used to further improve their status, while unskilled workers and the underclass beneath
them remained much more susceptible to exploitation, and were therefore exploited.
This basic hierarchical structure (presented here in highly oversimplified form), comprising the "upper classes," the
"middle classes," the "Working Classes" (with skilled laborers at one extreme and unskilled at the other), and the
impoverished "Under Class," remained relatively stable despite periodic (and frequently violent) upheavals, and
despite the Marxist view of the inevitability of class conflict, at least until the outbreak of World War I. A modified
class structure clearly remains in existence today.
Victorean women
In many different ways women were regarded as second class, even though Queen Victoria had been on the throne
for fourteen years and few people would have dared to argue with her.
No women could vote, and this would not change until 1918. There were no important female political figures,
apart from the Queen herself and almost all the major reforms during the nineteenth century were carried out by
men. Queen Victoria was also a determined opponent of 'votes for women', which she described a 'mad, wicked
folly'.
At work, women had few opportunities. Work in textile factories was one of the few that women had, the other
main one was domestic service, which became even more important in the second half of the nineteenth century.
Women's legal rights were also restricted. In 1851 a woman could not even be the legal guardian of her own
children and could not retain her own property after marriage. This led to unscrupulous men trying to run away
with rich heiresses and take their fortunes.
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Middle class women usually did not work. Their role in the family was to supervise the household and support their
husbands. The great majority of women seem to have accepted this role.
But, despite all of these disadvantages, there were signs that women were beginning to demand and achieve some
forms of equality. Many of the leading novelists of the first half of the nineteenth century were women. In the field
of medicine, Florence Nightingale, Elizabeth Blackwell and Elizabeth Garrett Anderson all made important
breakthroughs. In the second half of the century women began to demand the vote and the leaders of the suffrage
movements were all female. The first leader was Lydia Becker, but the most famous was Emmeline Pankhurst.
LEGAL MILESTONES FOR WOMEN 1832-1928
1832: First Reform Bill extended the vote to men who owned or rented property worth an annual rate of 10 pounds
or more (about 18% of the adult male population). It included half of the middle class but excluded agricultural
labourers and most industrial workers, and introduced the word 'male' into suffrage legislation for the first time.
1839: Infants and Child Custody Act allowed women who were divorced or separated but had not been proved
adulterous to ask for custody of children under seven. Previously, the father was immediately awarded custody of
all children, regardless of the reasons for divorce.
1857: Matrimonial Causes Act/Divorce Act established secular divorce in England. Prior to this secular divorce
required an act of Parliament and cost hundreds of pounds, and only four women had ever achieved a divorce this
way. The 1857 law provided that (1) a court could order maintenance payment to a divorced or estranged wife; (2)
a divorced wife could inherit or bequeath property, enter contracts, sue or be sued, and protect her earnings from a
deserter; (3) a man could secure a divorce on the grounds of his wife's adultery. For women, a husband's adultery
alone was insufficient grounds--she had to prove another charge such as desertion, extreme cruelty, or incest to
secure a divorce.
1867: Second Reform Bill doubled the electorate by extending the vote to almost all working men except
agricultural day-labourers. The feminists' amendment, for which they had presented the petition to John Stuart Mill,
which would have substituted the word 'person' for 'man' in the description of eligible voters, was overwhelmingly
defeated.
1870: Married Women's Property Act mandated that women could keep their earnings and inherit personal property
and small amounts of money; everything else (whether acquired before or after marriage) belonged to their
husbands.
1873: Custody Acts: Women could be awarded custody of children up to age 16, and adulteresses could petition for
custody.
1882: Married Women's Property Act. Married women could keep all personal and real property acquired before
and during marriage.
1884: Third Reform Bill extended suffrage to rural male householders, to almost all men over 21 (thus a male
labourer could vote, but not the wealthy woman who employed him).
1884: Matrimonial Causes Act: a wife deserted by an adulterer could petition for divorce immediately, rather than
waiting two years, as previously required.
1886: Custody reform: stipulated that the mother automatically got custody of children if the father died.
1918: Women's Suffrage: women aged 30 and over could vote and stand for Parliament.
1925: Guardianship of Infants Act recognised that both parents had equal rights and responsibilities for children.
1928: Women's voting age lowered to 21
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Status of women (1900 – 1930)
The status of women in Britain changed dramatically over this period. Largely as a result of campaigning by the
Suffragettes, women won the right to vote in parliamentary elections - a limited measure allowed some women to
vote in 1918, and in1928 all women over 21 got the vote. There were other changes too, linked to World War I and
its aftermath, and to Britain's economy. The impact of the war on women's lives was considerable - though it
caused devastating losses (around 750,00 British men died) it also gave many women an unprecedented taste of
independence, and the opportunity to work in jobs previously open only to men. Women's lives were also affected
by social legislation, such as the introduction of a widow's pension in 1925, and the provision of social services
designed to support the welfare of women and children. As they gained independence, women were increasingly
targeted directly by advertisers selling everything from convenience foods and clothing to cars and cigarettes.
Fashions changed too, from the constricting corsetry and floor-sweeping skirts of the Edwardian period to styles
which were lighter, less structured, and more comfortable and practical.
Although being able to vote since 1928, women in Britain still didn’t have equal status with men in terms of work
and social standing. Like the First World War before it, the needs of the country offered women unique
opportunities to partially change this.
With the introduction of conscription in 1938 and the large-scale mobilisation of men abroad with the outbreak of
the war, Britain was left with a huge labour shortage and organisational problems. As in the First World War,
women were called on to fill this gap. Although women had been working in the army as office staff, canteen
workers and telephone operators since 1938 with the introduction of the “Women’s Auxiliary Territorial
Service” their role and status had yet to change massively, as these jobs were very like the traditional ‘secretary’
role women had performed before the war. The real change came in 1941 with the “National Service Act” which
called on all unmarried women between 20 and 30 to register with the government for ‘war duties’. As with the
First World War, women were again required to work in the essential heavy industries needed to supply the war
effort. Women commonly worked in munitions, tank and aircraft factories in jobs that were, following the First
World War, still only done by men. They also performed essential tasks such as driving trains, ambulances and
even operating anti-aircraft guns, which had certainly been considered ‘men’s work’ before the war. Women could
also join a number of ‘armed forces reserves’ such as the WAAF’s (air force) and WRNS (navy), and although
they would never really see fighting would play an essential role in these branches of the armed forces.
With the ending of the war however, as with the First World War, the role and status of women was once again to
return for the most part back to their pre-war levels. Many of the ‘demobbed’ men, returning from the war returned
to their previous jobs in the traditional heavy industries, and with the reduced need for weapons, many factories
that had been converted to making ammunition returned to their regular production. This once again meant that
women would stop working in the heavy industries and their status would return to it’s pre-war level in terms of
employment. This was not entirely on the same scale as the First World War however. Because of the huge
amounts of casualties during the war, Britain still faced a massive labour shortage. This linked with Clement
Atlee’s plan for rebuilding Britain, which had received damage on a previously unseen scale, meant that many
women did continue to work in essential jobs through out the late forties and well into the fifties. Although not
working in the heavy ‘men’s’ industries as they had during the war, it was much more common for women to work
in the 1950’s than in any previous decade. This labour shortage was only really addressed with the start of mass
immigration from the Commonwealth starting with the arrival of the Empire Windrush in 1958, but by this time
Women’s new role and status in the British workforce was established. Sadly, women were still not regarded as
equal to men through out the period, and no real change to this would happen until the 1960’s and the spread of
Feminism.
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