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Lesson - The British Empire: The First Global Superpower, 1851-1956 [CA v2.7] Summary Introduction.........................................................................................................1 1. Victoria (1819-1901), Queen of the United Kingdom (1837), Empress of India (1876)..................................................................................................................1 2. The First Urbanized and Industrialized Nation: Towns, Social Classes and Factories..............................................................................................................1 3. The Framework of Globalization : Classical Liberalism....................................1 3.1. Adam Smith (1723-1790)..........................................................................1 3.2. Self-Interest and the Invisible Hand..........................................................1 3.3. From the Division of Labor to the Comparative Advantage......................1 3.4. Classical Liberalism...................................................................................2 4. Victorian Globalization: The Transport Revolution...........................................2 4.1. The Telegraph, the «Victorian Internet»....................................................2 4.2. The Steamship & the Great Ocean Liners.................................................2 4.3. From the Railway Mania to the Met...........................................................2 4.4. The Coming of the Automobile Age..........................................................2 5. The City: Financial Nexus of the World............................................................2 6. The Wealth of the British Empire.....................................................................2

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Introduction From the mid-19th century to the mid-20th century, the United Kingdom ruled the biggest Empire in World History (dominions, colonies, protectorates, mandates...). By 1922, the British Empire held sway over one-fifth of the world's population at the time and covered almost a quarter of the Earth's total land area. The British Empire was the leader of the first modern phase of Globalization and the first global superpower (a state with a dominant position in the international system which has the ability to influence events and protect its own interests on a worldwide scale).

1. Victoria (1819-1901), Queen of the United Kingdom (1837), Empress of India (1876) Queen Victoria of the United Kingdom (Life) Queen Victoria's Diamond Jubilee (1897) - extract Pictures: Drawings (by Victoria herself) (See also here) •

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Victoria (Alexandrina Victoria, 1819-1901) was the daughter of Prince Edward, Duke of Kent and Strathearn, the fourth son of King George III. She inherited the throne at the age of 18 (after her father's three elder brothers had all died). She was Queen of the United Kingdom of Great Britain and Ireland from 1837 until her death. From 1876, she used the additional title of Empress of India. The United Kingdom was a constitutional monarchy. Victoria married her first cousin, Prince Albert of Saxe-Coburg and Gotha, in 1840. Their nine children married into royal and noble families across the continent, tying them together and earning her the nickname "the grandmother of Europe". After Albert's death in 1861, Victoria plunged into deep mourning – wearing only black dresses. Privately, Victoria attempted to influence government policy. Publicly, she became a national icon, and was identified with strict standards of personal morality. Her reign of more than 63 years, the longest of any British monarchs, is known as the Victorian era.

2. The First Urbanized and Industrialized Nation: Towns, Social Classes and Factories •

Crystal Palace (1851): the "Workshop of the World"

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Great Exhibition of 1851 Crystal Palace, 2007 The Great Exhibition of the Works of Industry of all Nations, sometimes referred to as the Crystal Palace Exhibition in reference to the temporary structure in which it was held, was an international exhibition that took place in Hyde Park, London, in 1851. Social classes, Towns and Industrialization:

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UK, Edwardian Era (around 1900) Petticoat Lane – London (1903) ;

England in Color (1926) -

Petticoat Lane (at 2 min. 33') The upper class consisted of the nobility, or the peerage (such as dukes, viscounts...). Most of these 'aristocrats' did not have a profession, as their families had sufficient funds to live in affluence. However, some were captains of industry, especially mining and ship building. The middle class consisted of quite rich families who were respectable, but lacked a "title", and often had skilled professions, such as a doctor, or a teacher. At the beginning of the Victorian times, they were a small proportion of the population. However, the effects of the Industrial Revolutions meant that more people could be defined as 'middle class', because of improvements in education and more opportunities to pull yourself out of the slums. The lower class (working class) were made up of the rural and urban poor, who had often low skilled, dangerous, dirty and boring jobs (often all four) that they had to take because of the lack of education. There was also an underclass below the working class: paupers. They lived in extreme poverty, often because of old age, unemployment or illness. Some became beggars, criminals or prostitutes (see: Jack the Ripper, 1888).

3. The Framework of Globalization : Classical Liberalism Globalization (the free flow of ideas, people, goods, services, and capital between countries), or internationalization, is not a new phenomenon. The period through the end of the 19th century was also characterized by unprecedented economic growth and global integration.

3.1.

Adam Smith (1723-1790)

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Adam Smith (1723-1790)

Philosopher and Economist, father of classical Liberalism. An Inquiry into the Nature and Causes of the Wealth of Nations, 1776

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Could you please name other famous Economists? (ex. : 18 th c. : John Locke, Richard Cantillon (1680?-1734?), Anne-Robert-Jacques Turgot (1727-1781)... ; 19th c. : David Ricardo, John Stuart Mill, Alfred Marshall...)

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3.2.

Self-Interest and the Invisible Hand

“It is not from the benevolence of the butcher, the brewer or the baker, that we expect our dinner, but from their regard to their own self-interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages”. (Smith, Adam, Wealth of Nations, Book 1, chapter 2).

(Neo)liberalism & Globalization: Milton Friedman, Free To Choose, Part 1 of 10, The Power of the Market, 1980, “The Pencil” (source) “By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for society that it was no part of it. By pursuing his own interest [an individual] frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the [common] good”. (Smith, Adam, WN, Book 4, chapter 2, paragraph 9).

Friedman, Milton, Free To Choose, Part 1 of 10, The Power of the Market, 1980, “[Adam Smith's] The Invisible Hand” (source) This famous metaphor express the idea that the order of nature (or of the free market) is a harmonious and self-regulating system (spontaneous order)

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3.3. From the Division of Labor to the Comparative Advantage Smith, Adam, WN, Book 1, Chapter 1, “Of the Division of Labour” Audio version “The greatest improvement in the productive powers of labour, and the greater part of the skill, dexterity, and judgment with which it is any where directed, or applied, seem to have been the effects of the division of labour. […] To take an example, therefore, from a very trifling manufacture; but one in which the division of labour has been very often taken notice of, the trade of the pin-maker; a workman not educated to this business (which the division of labour has rendered a distinct trade), nor acquainted with the use of the machinery employed in it (to the invention of which the same division of labour has probably given occasion), could scarce, perhaps, with his utmost industry, make one pin in a day, and certainly could not make twenty. But in the way in which this business is now carried on, not only the whole work is a peculiar trade, but it is divided into a number of branches, of which the greater part are likewise peculiar trades. One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head; to make the head requires two or three distinct operations; to put it on, is a peculiar business, to whiten the pins is another; it is even a trade by itself to put them into the paper; and the important business of making a pin is, in this manner, divided into about eighteen distinct operations, which, in some manufactories, are all performed by distinct hands, though in others the same man will sometimes perform two or three of them. I have seen a small manufactory of this kind where ten men only were employed, and where some of them consequently performed two or three distinct operations. But though they were very poor, and therefore but indifferently accommodated with the necessary machinery, they could, when they exerted themselves, make among them about twelve pounds of pins in a day. There are in a pound upwards of four thousand pins of a middling size. Those ten persons, therefore, could make among them upwards of forty-eight thousand pins in a day. Each person, therefore, making a tenth part of forty-eight thousand pins, might be considered as making four thousand eight hundred pins in a day. But if they had all wrought separately and independently, and without any of them having been educated to this peculiar business, they certainly could not each of them have made twenty, perhaps not one pin in a day; that is, certainly, not the two hundred and fortieth, perhaps not the four thousand eight hundredth part of what they are at present capable of performing, in consequence of a proper division and combination of their different operations” (source) This idea is still very important today. Not only does it mean higher productivity in the factory (See: the production line, Frederick Winslow Taylor the father of scientific management, Henry Ford and his assembly line1 of 1913...) but also it 1

Ford added the conveyor belt ; the modern assembly line was created by Ransom Eli Olds in 1901 (Oldsmobile).

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benefits international trade: Comparative advantage: "If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage." (Smith, WN)

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International trade: Absolute and comparative advantage, 2011.

3.4.

Classical Liberalism

Ashford,

Nigel,

What

is

Classical

Liberalism?, Foundation

for

Economic Education (FEE), 2011. 1. 2. 3. 4. 5. 6.

Liberty (the individual has a natural right to freedom) Individualism Skepticism about power Rule of Law Civil Society Spontaneous Order (the order of nature is a harmonious and self-regulating system) 7. Free Markets 8. Toleration 9. Peace 10. Limited Government It's a philosophy and ideology in which primary emphasis is placed on securing the freedom of the individual by limiting the power of the government and a laissez-faire economic policy. •

The doctrine of laissez-faire became an integral part of nineteenth-century British liberalism. Just as liberals supported freedom of thought in the intellectual sphere, so were they equally prepared to champion the principles of free trade and free competition in the sphere of economics. The state was to be merely a policeman, protecting private property and administering justice, but not interfering with the affairs of its citizens. Businessmen, and particularly British industrialists, were quick to associate these principles with their own economic interests.

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In Britain, in 1843, the newspaper The Economist was founded and became an influential voice for laissez-faire capitalism.

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The Anti-Corn Law League (founded in Manchester in 1838) of the manufacturer Richard Cobden campaigned against the Corn Laws a protectionist policy that imposed tariffs on imported wheat and

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increased the price of food. The Manchester Liberals (or “Manchester School” of economic thought) continued a as force after the repeal of the Corn Laws in 1846 with its advocates promoting peace and free trade. •

John Stuart Mill (1806-1873), “the most influential English-speaking philosopher of the nineteenth century” (src) and one of the most significant classical liberals, published in 1848 The Principles of Political Economy with Some of Their Applications to Social Philosophy.

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In 1867, a free trade treaty was signed between Britain and France, after which several of these treaties were signed among other European countries.

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4. Victorian Revolution

Globalization:

The

Transport

- Bibliography: Evans, Richard J., The Victorians: Time and Space, Gresham [College] Lecture, Monday 13 September, 2010.

As the 19th century progressed, people felt increasingly that they were living, as the English essayist William Rathbone Greg put it in 1875, ‘without leisure and without pause – a life of haste’.

4.1.

The Telegraph, the «Victorian Internet»

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Standage, Tom, The Victorian Internet: The Remarkable Story of the Telegraph and the Nineteenth Century's On-line Pioneers, Walker & Company, 2007. ISBN 9780802716040.

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The Eastern Telegraph Co.: System and its general connections, 1901. Chart of submarine telegraph cable routes, showing the global reach of telecommunications at the beginning of the 20th century (src).

A Network Built for Mom - The Network Effect [Telegraph at 2 min. 28] •

Already in mid-19th century, following the establishment of the first telegraph system, it had become quite normal to send and receive telegrams. Messages were transmitted electrically along wires in a code of long and short impulses, invented in 1835 by an American inventor Samuel Morse (1791-1872). The network soon became global. The first submarine cables were laid across the English Channel in the early 1850s, but it was not until 1865 that the Great Eastern, then the largest ship in the world, succeeded in laying a cable across the Atlantic Ocean. A frenzy of cable-laying followed, and by 1871, punters [= gamblers] in Calcutta (British India) could learn the result of the English Derby no more than five minutes after the race was over. News organizations quickly saw the potential uses of the telegraph, and the enterprising Paul J. Reuter (1816-1899) established the first agency telegraphing news

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4.2.

across the world from Aachen (Germany) in 1851, establishing his British headquarters in London seven years later (Reuters is still a major international news agency). The scale of the British Empire and the dominance of British industry ensured that in 1890 nearly two-thirds of the telegraph lines in the world were owned by British companies, which controlled 156,000 kilometers of cables. The telephone was patented in 1876 by an American inventor Alexander Graham Bell (1847-1922). By the eve of the First World War there were more than half a million subscribers to what was now a national telephone service in Britain. As early as 1880, The [London] Times put a direct phone line in to the House of Commons (at the Palace of Westminster, London) in order to be able to report late-night debates in the following morning’s edition. More revolutionary again, though still in its infancy before the First World War (1914-1918), was the new system of wireless telegraphy (= radio) patented by Guglielmo Marconi (1874-1937) and made potentially commercially viable by the establishment of the British Marconi company in 1897: it was used particularly for seaborne communication; famously in 1910 it was used to bring about the arrest of the alleged murderer D r Hawley Harvey Crippen (1862-1910) as he was fleeing his pursuers by traveling on an ocean liner to Canada.

The Steamship & the Great Ocean Liners

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Speed increasingly became the key measurement of travel. Fast sailing ships raced to be the first to bring the New Year’s tea from China back to Europe, with the tea-clipper Cutty Sark being beaten by the Thermopylae in a famous race, in 1872, when the winner completed the trip from Shanghai to London in 122 days. By the 1890s, ocean-going steamships were vying for the unofficial award of the Blue Riband (list), for the fastest east-west crossing of the Atlantic, The Kaiser Wilhelm der Grosse winning it for the Germans in 1898, at 22 knots, (1 knot = 1.852 kilometers per hour) and the Mauretania recapturing it for the British in 1909 at 26 knots. Thus in just over seventy years, the average speed of the fastest transatlantic ships had increased more than threefold. The period between the end of the 19th century and World War II is considered the golden age of the great ocean liners (list). The Liners: Maiden Voyage - E01

[1833-1915], Channel 4, 1997

[documentary]. Aquitania [1914-1950] Cruise to Bermuda in 1935 (6 min. 07) The famous Titanic sank on her maiden voyage from Britain to the United States in 1912, after hitting an iceberg, with the loss of 1,523 lives. Superliners, like the Queen Mary (1934), became symbols of national pride and an important part of western civilization with influences in design, technology, popular culture and standards of international travel.

4.3.

From the Railway Mania to the Met

Britain's Greatest Machines With Chris Barrie - S02E04: Trains A canal boat could only cover around thirty miles a day [1 mile = 1,6 km], a lone horseback courier up to a hundred. From their earliest days, the railways were known above all for the speed with which they conveyed passengers and goods from one place to another. The English engineer George Stephenson (1781-1848) called his first locomotive Rocket (1829) and reached the amazing speed of 30 miles per hour during trials held in 1829 for the Liverpool and Manchester line, opened in September 1830 in a ceremony attended by the Duke of Wellington (1759-1852) (who defeated Napoleon at the Battle of Waterloo in 1815).

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(src) The track gauge [= the spacing of the rails on a railway track] selected by Stephenson for the railway four feet eight and a half inches [= 1,4 m], became the world’s ‘standard gauge’ and remains so today. Once the thirty-mile Liverpool and Manchester was in operation – and it carried half a million passengers in its first year – it was soon followed by others. Within twenty years (the Railway Mania Era) there were seven thousand miles of railway line covering the country. Everyone traveled in open cars, but railway carriages were soon divided into first, second and third class, the last-named being open to the weather, with passengers seated on wooden benches, and often very dirty. Even the memorial to victims of an 1845 railway accident, in Ely Cathedral (Cambridgeshire, England) made a point of dividing the passengers on ‘the spiritual railway’ into ‘first, second and third class’. In 1863 the world’s first underground railway, the Metropolitan Railway (The Met) opened in London, and was soon extended, but steam locomotives posed many problems; London turned to boring deeper lines for ‘tube’ trains powered by electricity, the first of which was opened in 1890.

A trip on the Metropolitan Railway (1910)

Above ground, the electric tramway system devised by Werner von Siemens began running in Berlin in 1879, and soon spread to many other countries. All of these innovations drastically increased the pace of life, as people rushed through the great train stations, built as extravagant temples of locomotion,

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advertising the power and wealth of the nation, such as London St Pancras (1868). Inside the stations, all was bustle and hurry as people rushed to catch their trains. The English artist William Howard Frith represented a scene of this kind in his painting The Railway Station (Paddington, London) in 1862:

(oil on canvas ; src ; another copy: src ; Commentary ; see also: here) The railways, especially as they extended deeper into rural areas in the last part of the nineteenth century through the construction of branch lines, hugely intensified and speeded up the network of communications, bringing newspapers, magazines, books and goods and people of all kinds into contact with small-town and village communities. The railway and the steamship shrank global space, as it became increasingly possible to travel huge distances in an extraordinarily short time. By the time of the First World War, you could travel from the Atlantic to the Pacific; you could cross India on a railway system begun as early as the mid-1840s. Railways, steamships, and the telegraph were part of the technological underpinnings of British domination of the world in the Victorian era. Without rapid and efficient communications, metropolitan control of a vast, far-flung global empire would not have been possible.

4.4.

The Coming of the Automobile Age

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(This 1904 Rolls-Royce 10hp is the oldest surviving Rolls-Royce. It was sold in December 2007 for £3,521,500 (about $5 million) by Bonhams auction house. This car was in the 1904 Paris Salon and the 1905 Olympia Motor Exhibition in England. http://exoticcars.about.com/od/overviewsofmaker1/ig/Rolls-Royce-History/1904-RR-at-Bonhams.htm)

Following the invention of the internal combustion engine and the first production models manufactured in Germany in the 1880s, 200,000 automobiles were being driven around the roads of Britain by the eve of the First World War (1914-1918). The speed at which they traveled was a cause of grave concern to the authorities, who registered alarming increases in the number of traffic fatalities (under 770 a year in London in 1892 to nearly 1,700 five years later). So in 1878 the British Parliament passed a law ordering that any vehicle using a public highway should be preceded by a man on foot holding a red flag and should not go faster than four miles per hour! Under heavy pressure from motorists, this law was repealed in 1896, but as fatalities mounted, public alarm led to a new national speed limit being introduced in 1904, imposing a maximum of 20 miles per hour on all public highways. Car-ownership before 1914 was overwhelmingly the preserve of the rich ; it enabled them once more to revert from the promiscuity of railway travel to the privacy of an individual mode of transportation, exhibiting their wealth and modernity to an astonished world.

5. The City: Financial Nexus of the World

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(http://qed.princeton.edu/index.php/User:Student/International_Investment_1914)

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Finance & Globalization before WWI:

It was the transfer of capital that lay at the heart of the globalisation process and of the international functions fulfilled by the financial centers. Foreign investment saw very strong growth from the final years of the nineteenth century. In 1913 the stock of capital invested abroad reached a total of $44 billions, the United Kingdom being far and away the largest exporter of capital, followed by France, the German Empire and the United States. British foreign investment was spread worldwide, with a distinct preference for the two Americas. The British Empire’s share represented 40% of the total,the largest part being allocated to India and to the settlement colonies with white populations (Canada, South Africa, Australia and New Zealand). More than any other activity, the financing of international trade lay at the heart of the City’s international calling. This activity remained the prerogative of the merchant banks [= investment banks], which held 70% of the market on the eve of the First World War.

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The Pound Sterling:

Britain’s weight in the world economy was, notably, due to the role of the pound sterling. The main international trading and reserve currency, it formed the cornerstone of the international monetary system in force at that time – the gold standard. •

The City of London’s ‘Golden Age’:

The period from 1890 to 1914 is usually considered to constitute the City of London’s ‘Golden Age’. The reasons are twofold. There is, first, the position of the City as the world’s financial center, then unchallenged. From the end of the First World War, its primacy was to be contested and eventually attained by New York. The second is that the City’s standing before 1914 was, in turn, the result of Britain’s dominant position within the world economy. ‘We are, it is admitted, the financial center of the world; this is more than a phrase, it is a fact. Our position has indeed been assailed, but so far without effect.’ This was the view expressed in December 1903 by Felix Schuster, chairman of the Union Bank of London, one of the capital’s largest banks, to his colleagues, gathered at one of their monthly meetings at the Institute of Bankers. London had held the top rank among the international financial centers since the beginning of the nineteenth century. The strengthening was of a quantitative nature – the City’s working population more than doubled, growing from 170,000 people in 1871 to 364,000 in 1911. It was also of a qualitative nature – the City was the first modern financial center where an unrivaled range of hitherto unavailable, or at least hard-to-find, services were provided. The City jealously guarded its independence from government. This independence was symbolized by its own municipal administration, led by the lord mayor of London and separate from the rest of the capital. An attempt was made in 1894 to amalgamate the City and the surrounding County of London, but it did not succeed. The City’s pulse beat to the rhythm of its markets, headed by the London Stock Exchange, the Gold Market (London’s prerogative in the era of the gold standard), the London Metal Exchange (a commodity market for copper, tin, lead, zinc and silver)... The City teemed with private firms, both large and small: bankers, merchants, insurers and brokers in the various commodity markets, chartered accountants and lawyers, all gathered within one square mile. This geographical concentration constituted one of the main characteristics of this financial center. The ‘Big Five’ merchant banking houses: Rothschild, Barings Brothers, J. S. Morgan & Co., J. Henry Schröder & Co. and Kleinwort, Sons & Co. At the beginning of the 1870s, N. M. Rothschild & Sons was unquestionably the foremost merchant bank in the City, with a capital of £6.5 million in 1873 – three times higher than that of Baring Brothers. It probably still ranked top on the eve of the First World War. Above all, the Rothschilds continued to control the issuing of government loans; between 1865 and 1914, they took charge,

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alone or with others, of issuing nearly three-quarters of the government loans floated on the London market.

"If the special interest of the investor is liable to clash with the public interest and to induce a wrecking policy, still more dangerous is the special interest of the financier […] These great businesses—banking, broking, bill discounting, loan floating, company promoting—form the central ganglion of international capitalism. United by the strongest bonds of organization, always in the closest and quickest touch with one another, situated in the very heart of the business capital of every State, controlled, so far as Europe is concerned, chiefly by men of a single and peculiar race, who have behind them many centuries of financial experience, they are in a unique position to manipulate the policy of nations […] Does anyone seriously suppose that a great war could be undertaken by any European State, or a great State loan subscribed, if the house of Rothschild and its connections set their face against it? Every great political act involving a new flow of capital, or a large fluctuation in the values of existing investments, must receive the sanction and the practical aid of this little group of financial kings […] As speculators or financial dealers they constitute […] the gravest single factor in the economics of Imperialism […] Each condition […] of their profitable business […] throws them on the side of Imperialism […] There is not a war, or a revolution, an anarchist assassination or any other public shock, which is not gainful to these men; they are harpies who suck their gains from every sudden disturbance of public credit […] The wealth of these houses, the scale of their operations, and their cosmopolitan organization make them the prime determinants of economic policy. They have the largest definite stake in the business of Imperialism,and the amplest means of forcing their will upon the policy of nations […] [F]inance is […] the governor of the imperial engine, directing the energy and determining the work." [Hobson, J. A., Imperialism: An Essay, 1902, in: Cassis, Youssef, et al., London and Paris as International Financial Centers in the Twentieth Century, OUP, 2005, p. 57-8]

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6. The Wealth of the British Empire

Illustration 1: The British Empire in 1897 (Map) (http://qed.princeton.edu/index.php/User:Student/British_Empire_1897)

The years 1815 to 1914 are referred to as Britain's imperial century, and at this time, the Empire included over 14 million square miles of territory and 450 million people. It included more than a quarter of the world's population and it was said that 'the sun never set on the British Empire'. The Great Exhibition of 1851 was a celebration of the diversity and richness of the Empire. During the Victorian Era, the acquisition of territory continued (promoted by strategic considerations or justified by philanthropic motivations). Victoria, at Disraeli's instigation, had herself crowned Empress of India in 1876. The British Empire was a huge network of military conquest and rule, but it was trade and commerce which held it together. As the Empire expanded, so did the commercial opportunities. British traders shipped opium to China. They planted rubber in India and Malaysia.

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