British Empire

Breakdown of Pax Britannica

As the first country to industrialise, Britain had been able to draw on most of the accessible world for raw materials and markets. But this situation gradually deteriorated during the 19th century as other powers began to industrialise and sought to use the state to guarantee their markets and sources of supply. By the 1870s, British manufactures in the staple industries of the Industrial Revolution were beginning to experience real competition abroad.

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Industrialisation progressed rapidly in Germany and the United States, allowing them to take over the "old" British and French capitalisms as world leader in some areas. The German textile and metal industries, for example, had by 1870, surpassed those of Britain in organisation and technical efficiency and usurped British manufactures in the domestic market. By the turn of the century, the German metals and engineering industries would even be producing for the free trade market of the former "workshop of the world".

Related Topics:
Germany - United States - 1870

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While invisible exports (banking, insurance and shipping services) kept Britain "out of the red," her share of world trade fell from a quarter in 1880 to a sixth in 1913. Britain was losing out not only in the markets of newly industrialising countries, but also against third-party competition in less-developed countries. Britain was even losing her former overwhelming dominance in trade with India, China, Latin America, or the coasts of Africa.

Related Topics:
1880 - 1913 - Latin America

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Britain's commercial difficulties deepened with the onset of the "Long Depression" of 1873–96, a prolonged period of price deflation punctuated by severe business downturns which added to pressure on governments to promote home industry, leading to the widespread abandonment of free trade among Europe's powers (in Germany from 1879 and in France from 1881).

Related Topics:
Long Depression - 1873 - 96 - 1879 - 1881

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The resulting limitation of both domestic markets and export opportunities led government and business leaders in Europe and later the US to see the solution in sheltered overseas markets united to the home country behind imperial tariff barriers: new overseas subjects would provide export markets free of foreign competition, while supplying cheap raw materials. Although she continued to adhere to free trade until 1932, Britain joined the renewed scramble for formal empire rather than allow areas under her influence to be seized by rivals.

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