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The growth of overseas trade capital accumulated by merchants financed industrialization. Export of manufactured goods and import of resources supported industrialization as well. The paper discusses to what extent international trade contributed to the British industrial revolution. Outline Introduction Discussion Factors that influenced the British industrial revolution The origin of international trade increase Impact of overseas trade on the British economy Contribution of international trade to industrial revolution Conclusion International Trade and the British Industrial Revolution The industrial revolution was really dramatic in the way it changed peoples everyday lives. It changed the way people worked. Many were forced to leave farms to work in factories with the help of new machines that increased the amount of work that could be done.
The industrial revolutions immediate impact was greatest in Britain. European countries and especially Britain used the natural resources of their colonies and African slave labor to increase Europe's wealth. These riches helped to pay for the building railways, factories and cities. The Great Britain used military to force weaker countries to open up their markets and lands to British companies.
Great Britain appeared to be the first to develop itself as the industrial nation and set the examples for others to follow. After the political revolution, the industrial revolution was inevitably going underway. Such superiority of England was conditioned by several factors. First of all, profits from colonial trade provided a serious capital for investment. Second, Britain possessed flexible banking system.
Third, vast resources of oil iron and coal played its role in the trade. Among other important factors are such as the new transportation system and developing textile industry. Changes in one industry stimulated significant changes in other industries as well. Factory became a symbol of industrial revolution. But factories needed resources to produce goods. Many resources were extracted from colonies.
The origin of the maritime greatness of England dates from the Commonwealth. By forcing the English to do without Dutch brokers, in their dealings with the rest of the world, the Act obliged them to build a mercantile marine for themselves. Material was not lacking. Although there were not many ships on the high seas there was an active coastal trade, largely because land transport for merchandise was slow, difficult and expensive. The author of a famous description of Great Britain wrote: Our trade is the most considerable of the whole world, and indeed Great Britain is of all countries the most proper for trade, as well from its situation as an island as from the freedom and excellence of its constitution... (Chamberlayne, 1708) Thanks to its numerous colonies, and large commercial and military fleet, Britain was able to become a centre of trade and enterprise comparable even to Amsterdam. Circulation of capital increased.
Thanks to international trade, imports and exports may have grown rapidly, particularly in the later eighteenth century, but that does not automatically mean that they were exogenous to industrial growth. Increasing trade may have been a response rather than a cause. For instance, it has been suggested that imports led exports. In other words, rising domestic demand sucked in imports, which then gave foreign purchasers the where-withal to buy British exports. However, trade growth may have been caused, not by rising overseas demand, but by earlier falls in the prices of British manufactures relative to the price of imports. In economic terminology, the demand schedule of the overseas buyers remained the same, but like all buyers, they purchased more if price fell relative to their income.
The alternative is that foreign demand genuinely rose, or in economic terms, the demand curve shifted to the right. Deterioration in Britains terms of trade, that is a fall in the relative prices of British exports, would imply that a growth in export volumes was partly a response to this price fall. But if the terms of trade remained stable, then the goods which Britain imported must have been changing in price at the same rate as British exports, and there would have been no spur to British exports from a fall in their relative price. This holds with even more force if the terms of trade were moving in Britains favor. In reality, Britains terms of trade, while deteriorating somewhat in the first half of the eighteenth century, improved again in the second half when the rise in exports was most dramatic. At the time of the foundation of the Bank of England, the East India Company, already nearly a hundred years old, seemed to be on the verge of collapse.
It had just lived through a time of unprecedented prosperity. Its wealth, then in the hands of very few shareholders, had roused jealousy and covetousness. Interlopers tried, in defiance of the Companys exclusive rights embodied in the Royal Charter of 1600, to compete with it and to obtain for themselves some of its immense profits. The violence of the quarrel to which this union put an end shows how important trade with India had become before the end of the seventeenth century. Thus the spontaneous growth of British trade was further encouraged by war and diplomacy, which opened for it a practically boundless field. That great achievement of British statesmanship was, at the same time, a triumph for the mercantile system -- according to which trade with the colonies, consisting of an export of manufactured goods in exchange for raw materials, was the ideal form of trade.
Export of manufactured goods dramatically influenced British industrial revolution. There is one obvious problem with overseas trade as a stimulus to industrialization: it was frequently interfered with by war. From 1750 to 1815 Britain was officially at war: 1756 - 63 (the Seven Years War), 1776 - 83 (the American War of Independence) and 1793 - 1815 (the Revolutionary and Napoleonic Wars, often called the French Wars), the last with brief breaks which hardly dented their overall impact. All these wars involved disruption to trade, although they also offered opportunities for Britain to seize new markets. The savings of merchants engaged in overseas trade had great influence on the British economy. The savings could be described as capitalist.
Merchants provided credit for a large proportion of the countrys export trades, both those which went through London and trade elsewhere. Merchants, particularly the wholesalers, financed the country with their own money and by issuing bonds which attracted small savers. Some found their financing activities so lucrative that they became bankers. By the eighteenth century it seems that merchants have accumulated enough finances to invest into factories. Their surplus cash was used to finance commercial activities of others and open own enterprises. As incomes and savings rose, some additional surplus became available.
Obviously merchants made a contribution to the capital available, although in many cases the profit gained from the growth of international trade was spent on extravagant houses and other luxury expenditure. Patrick OBrien has demonstrated that all trade with countries outside Europe - not just the slave trade -- was highly unlikely to have contributed more than 7 per cent of total investment between the 1780 s and the 1820 s, and this is making generous assumptions regarding the rate of profit and the amount reinvested. Britains colonial empire and colonial trade allowed the country to make a revolution toward mass production and quantities. Britain controlled much of the sugar islands of the West Indies. Britain also drove the French from the fur-bearing area of America and strengthened her hold on the Newfoundland fishing banks. The industrial revolution was associated with an increase in oceanic trade and produced the technology that helped to defend that trade -- in particular the steam gunboat and the electric telegraph. (Headrick, 1981) Britain thus was in a position to experience the most effective reactions from colonial trade and supplies, and presently certain industries found themselves unable to meet the demands for goods made upon them.
Great contribution of the banks to the industrial revolution consisted in the mobilizing of short-term funds and their transfer from areas where there was little demand for them to others that were hungry for capital. While contribution of international trade to the industrial revolution was not only limited to exporting goods and resources international trade provided also finances. Thanks to overseas trade, capitalists were able to use imported resources and sell their manufacturing goods. Therefore, the growth of international trade made some contributions to the British industrial revolution, while it was not the major factor influenced the industrial revolution. Bibliography: Ashton, T. S.
The Industrial Revolution, 1760 - 1830. Oxford University Press, 1997. Chamberlayne, Manage Britannia Notitia, I, 42. Crane, Brinton. A Decade of Revolution, 1789 - 1799. New York: Harper and Row, 1963.
Engels, Friedrich. Industrial Manchester, 1844 web Headrick, Daniel. The Tools of Empire: Technology and European Imperialism in the Nineteenth Century. Oxford, 1981. pp. 43 - 57 Hudson, P. , The industrial revolution. London: Edward Arnold, 1992.
Falconer, K. Guide to England's industrial heritage. London: Bats ford, 1980. Mantoux, P. The Industrial Revolution in the Eighteenth Century, Rev, 1961.
More, Charles. Understanding the Industrial Revolution. Routledge, 2000. Plan, Maarten. Early Modern Capitalism: Economic and Social Change in Europe 1400 - 1800. Routledge, 2001.
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