- 1 Important Terms
- 2 Important Dates
- 3 Corn Law
- 4 The Three types of flows within inter-national economic exchanges during the 19th century :
- 5 Economic conditions of Britain after the First World War:
- 6 Silk Routes
- 7 First World War
- 8 Impact of Rinderpest
- 9 Factors responsible for indentured labour migration from India :
- 10 The indentured labourers discover their own ways of survival :
- 11 Expansion of trade facilities in the 19th century :
- 12 Characteristics of the Silk Routes
- 13 The Impact of Great Depression on Indian economy
- 14 The social and economic effects of the World War on England and USA
- 15 The impact of technology on food availability
- 16 Role of New International Economic Order (NIEO)
- 17 The Bretton Woods Agreement
Allies: Before the First World War, Britain, France and Russia later joined by U.S.A. formed an alliance and fought together in the First World War.
Axis Powers: Germany, Italy and Japan were known as Axis Powers during the Second World War.
Bank Loan: An amount of money loaned at interest by a bank to a borrower, usually on collateral security, for a certain period of time.
Bank Loan: An amount of money loaned at interest by a bank to a borrower, usually on collateral security, for a certain period of time.
Central Powers: An alliance formed by Germany, Austria, Hungary and Ottoman Turkey, who fought together in the First World War.
Cowrie : A Hindi word meaning ‘sea shells’. These were used in the ancient world as a form of currency.
Coolies : Indian indentured labourers were referred to as coolies in the Caribbean islands.
Corn Laws : British laws which imposed restrictions on the import of corn.
Dissenter : One who refuses to accept established beliefs and practices.
El Dorado: The fabled city of gold.
Exchange Rates: They link national currencies for purposes of international trade. There are broadly two kinds of exchange rates namely fixed exchange rate and floating exchange rate.
Fixed Exchange Rates: The rates which are officially fixed by the government and do not vary with change in demand and supply of foreign currency.
Flexible or Floating Exchange Rates: These rates fluctuate depending on demand and supply of foreign currencies in foreign exchanges markets, in principle without interference by governments.
Globalisation : Globalisation is generally associated with economy as the free movement of capital, goods, technology, ideas and people across the globe. Globalisation in a broader sense also includes cultural exchanges between different countries of the world.
Silk Route : The route taken by traders to carry silk cargoes from China to the West, which affected cultures of China, Central Asia and the West.
Indentured labour : A bonded labourer under contract to work for an employer for a specific amount of time, to pay off his passage to a new country or home.
Industrial War: Economic activities concerned with the processing of raw materials and manufacture of goods in factories, e.g., the use of machine guns, tanks, aircraft, chemical weapons, etc.
Hire Purchase: A system by which a buyer pays for a thing in regular installments while enjoying the use of it.
The Great Depression: A drastic decline in the world economy resulting in mass unemployment and widespread poverty that began around 1929 and lasted till the mid-1930s.
Tariff: Tax imposed on a country’s imports from the rest of the world. Tariffs are levied at the point of entry, i.e., at the border or at the airport.
Hosay: A riotous carnival in Trinidad (for Imam Hussain) where workers of all races and religions join to celebrate.
Plantation: Estate for cultivation of cash crops such as tea, coffee, cotton, tobacco, sugarcane, etc.
MNCs: Multinational corporations (MNCs) are large companies that operate in several countries at the same time.
IMF: It is also termed as International Monetary Fund, the Bretton Woods institution. It was established to deal with external surpluses and deficits of its member nations.
IBRD: It is abbreviated as the International Bank for Reconstruction and Development (popularly known as the World Bank). It was set up to finance post-war reconstruction.
G-77: G-77 or Group of 77 refers to the seventy seven developing countries that did not benefit from the fast growth western economies experienced in 1950s and 1960s.
Great Depression of 1929 : It was a period of serious decline in production, employment, income and trade.
3000 BCE : An active coastal trade linked the Indus Valley Civilization with present day West Asia.
15th Century : Existence of silk routes.
Mid 16th Century : Portuguese and Spanish conquest and colonisation of America.
1845 – 1849 : Potato Famine in Ireland. During this famine, around 1,000,000 people died of starvation in Ireland.
1885 : The big European powers met in Berlin to complete the carving up of Africa between them.
1890 : Global agricultural economy took shape.
1890s : Rinderpest (cattle plague) had a terrifying impact on livelihoods of the African people and the local economy.
1892 : Rinderpest reached Africa’s Atlantic coast.
1900s : Indian nationalist leaders began opposing the system of indentured labour migration as abusive and cruel.
1914-1918 : The First World War was fought.
1921 : Indentured labour was abolished.
1923 : America resumed exporting capital to the rest of the world and became the largest overseas lender.
1929-1935 : The Great Depression.
1939-1945 : The Second World War was fought.
July, 1944 : The United Nations Monetary and Financial Conference were held at Bretton Woods in New Hampshire, USA.
1947 : The IMF and the World Bank commenced financial operations.
1949 : The Chinese Revolution.
The Late 1970s : MNCs began to shift production operations to low-wage Asian countries.
The laws allowing the British Government to restrict the import of corn is known as the “Corn Laws”.
These laws were abolished because of the industrialists and urban dwellers were unhappy with high food prices; as a result of which they forced the abolition of the Corn Laws.
Result of abolishing the corn Laws : Food could be imported into Britain at a much cheaper rate. The immediate effect of the British Government’s decision to abolish the Corn Laws was the inflow of cheaper agricultural crops from the Americas and Australia. Many English farmers left their profession and migrated to towns and cities.
The Effects of the British Government’s decision to abolish the Corn Laws :
(i) Food could be imported into Britain at a much cheaper rate than it would be produced within the country.
(ii) British agriculture was unable to compete with imports. Vast areas of land were left uncultivated.
(iii) As food prices fell, consumption in Britain rose. Faster industrial growth in Britain also led to higher incomes and therefore more food imports.
(iv) Around the world—in Eastern Europe, Russia, America and Australia—lands were cleared and food production expanded to meet the British demand.
(v) Thousands of men and women were thrown out of work. They started migrating to cities.
Food items offer scope for long distance cultural exchange means
(i) Traders and travellers introduced new crops to the lands they travelled.
(ii)It is believed that noodles travelled west from China to become spaghetti.
(iii)Arabs traders took pasta to Sicily, an island now in Italy in 5th century.
(iv)Many of our common foods such as potatoes, soya, groundnut, maize, tomatoes, chillies, sweet potatoes and so on were not known to our ancestors.
The Three types of flows within inter-national economic exchanges during the 19th century :
(i) Flow of Trade : Trade flow of goods, e.g. cloth or wheat, in which goods are exchanged at long and short distances. For example, Indian weavers produced fine quality cotton cloth and exported it to European countries. But post industrial revolution due to tariff barriers this changed drastically.
(ii) Flow of Labour : The migration of people in search of employment is called ‘Flow of Labour’.Nearly 50 million people emigrated from Europe to America and Australia in the 19th century. All over the world, some 150 million people are estimated to have left their homes, crossed oceans and vast distances over land in search of a better future.
(iii) Flow of capital Investment: for short-term or long-term investment. In this, movement of resources from one country to another takes place through loans or business investments.
Economic conditions of Britain after the First World War:
(a) After the First World War, Britain found difficult to recapture its earlier position.
b) Britain was burdened with huge external debts.
(c) The war had led to an economic boom, a large increase in demand, production and employment.
(d) When the war boom ended, production contracted and unemployment increased.
(e) At the same time, the government reduced bloated war expenditures to bring them into line with peace time revenues. These debts led to huge job losses.
(f) Many agricultural economists were also in crisis.
The ‘silk routes’ were the routes through which trade and cultural mingling of far-flung parts of the world took place. China was known for the trade of the silk since ancient period. Chinese silk cargoes used to travel through these routes and from there it got its name the ‘silk routes’. Later Chinese pottery, textiles and spices from India and Southeast Asia also travelled the same routes. In return, precious metals like gold and silver flowed from Europe to Asia.
First World War
(i) It involved the world’s leading industrial nations.
(ii) This war was the first modern industrial war. Machine guns, tanks, aircraft, chemical weapons, were used on a massive scale.
(iii) Most of those who were maimed were men of working age. The scale of death and destruction was great. These deaths and injuries reduced the workforce.
(iv) Industries during the war were restructured to produce war-related products.
(v) The war led to the snapping of economic links between the world’s largest economic powers which were now fighting with each other to pay for them. The war transformed the US from being an international debtor to an international creditor.
The economic conditions of the post First World War period :
(i) Britain which was world’s leading economy in the pre-war period faced a prolonged crisis.
(ii) Indian and Japanese industries were developed as Britain was occupied with war.
(iii) After the war, it was difficult for Britain to recapture its earlier position in the Indian market.
(iv) Britain was burdened with huge external debts from the US.
(v) Government reduced bloated war expenditure. This led to huge job losses and unemployment.
(vi) Grain prices witnessed a steep fall as wheat supply was disrupted during the First World War.
Major consequences of the Second World War:
(i) Death and destruction were enormous. At least 60 million of the people or about 3 per cent of the world’s population of 1939 are believed to have been killed directly or indirectly as the result of the war.
(ii) Millions more were injured. Unlike in earlier wars, most of these deaths took place outside the battlefield. Many more civilians than soldiers died from war-related causes.
(iii) Vast parts of Europe and Asia were devastated and several cities were destroyed by aerial bombardment or relentless artillery attacks.
(iv) The war caused an immense amount of economic devastation and social destruction. Reconstruction promised to be long and difficult.
The two lessons learnt by the economists and politicians during the Second World War were:
(1) An industrial society based on mass production needs mass consumption. For mass consumption, steady income was necessary and for stable income, full employment was necessary. For this, the government has to take step to minimise the fluctuation of price, production and employment. Hence, economic stability could be ensured by the government intervention.
(2) The goal of full employment could be achieved only if the government controls the flow of goods, capital and labour.
Europeans were attracted to Africa in the late 19th century :
(i) Due to the resources of land and minerals of Africa.
(ii) They came to Africa to establish plantations and exploit mines.
(iii) African countries were militarily weak and backward. So, it was easy to conquer them.
Impact of Rinderpest
Rinderpest arrived in Africa in the late 1880s. Within two years, it spread in the whole continent. It affected the Africans in the following ways:
(i) Rinderpest killed 90% of cattle in Africa.
(ii) The loss of cattle destroyed African livelihood.
(iii) Planters, mine owners and colonial government successfully monopolized what scarce cattle resources remained.
(iv) Colonial government forced Africans into labour market.
(v) Control over the cattle resources enabled European colonists to conquer and subdue Africa.
(vi) Earlier people rarely worked for a wage. They possessed land and livestock. Due to Rinderpest, they were forced to work for wages and so it affected the economy.
Factors responsible for indentured labour migration from India :
(i) In the mid-19th century, cottage industries declined, land rents rose, lands were cleared for mines and plantations. This affected poor people because they were highly indebted and forced to migrate for work.
(ii) Temptation: As the agents provided false information about final destinations, nature of work, living and working conditions, many poor people were tempted to go and work.
(iii) In order to escape poverty or oppression at home and in villages many migrants agreed to work.
The indentured labourers discover their own ways of survival :
(i) Initially the indentured labourers found it difficult to adjust to the harsh living conditions of the plantation. But very soon they discovered new ways of survival.
(ii) They developed new forms of individual and collective self expression, blended art, cultural forms, old and new.
(iii) In Trinidad the cultural Muharram procession was transformed into a riotous carnival called ‘Hosay’ in which workers of all races and religions joined.
(iv) The protest religion ‘Rastafarianism’ is also said to reflect social and cultural links with Indian migrates to Caribbean.
(v) Chutney music popular in Trinidad and Guyana is another creative expression of the post indenture experience.
Indentured labour was described as a new system of slavery because :
(i) Agents tempted the poor people by giving false information about the nature of work, living and working conditions, final destinations modes of travel, etc.
(ii) Less willing workers were at time forcibly abducted by the agents.
(iii) On the plantation, the working conditions were harsh and they had a few legal rights.
(iv) They were beaten or imprisoned for not being able to meet tasks that used to be very heavy or for running away from the job.
(v) Normal medical attention was given to them and wages were deducted in case of absence at work or failure to fulfil the task.
Europeans fled to America in the 19th century because :
(i) Until the 19th century, power and hunger were common in Europe.
(ii) Cities were crowded and deadly diseases were widespread.
(iii) Religious conflicts were common and religious dissenters were persecuted. (iv)Scrapping of Corn Laws, led to inability of British agriculture to compete with imports.
(v) Thousands of people were left unemployed due to agricultural land lying uncultivated. So, people migrated in thousands, crossed oceans to find employment and a better future
(vi) In America, plantations were growing cotton and sugar for the European market. These plantations were worked on by slaves.
Expansion of trade facilities in the 19th century :
(i) In many parts of the world, these developments meant loss of freedom and livelihoods.
(ii) Late 19th century Europeans conquest brought about many destructive economic, social and ecological changes in the colonies.
(iii) In Africa, in the 1890s, a fast spreading disease of cattle plague or Rinderpest had a terrifying impact on people’s livelihoods and the local economy.
(iv) The example of indentured labour migration.
(v) Great misery and poverty for others.
(vi) New forms of coercion in Asia and Africa.
Henry Ford revolutionized mass production in the U.S. in the following ways:
(i) Henry Ford adapted the assembly line of a Chicago slaughterhouse to his new car plant in Detroit.
(ii) The assembly line allowed a faster and cheaper way of producing vehicles. It forced workers to repeat a single task mechanically and continuously.
(iii) This increased their efficiency in the single task and the speed of production too.
(iv) Standing in front of the conveyor belt, no worker could delay the motions or take a break.
(v) In the beginning, many workers quit, since they could not cope up with the stress of work.
(vi) Henry Ford doubled their wages and against that, he not only increased the speed of the production time but also banned trade unions from operating in his plants.
Examples to show that the pre-modern world changed with the discovery of new sea routes to America are :
(i) Many common foods, e.g., potatoes, soya, tomatoes, maize, etc., were introduced to Europe from America. These crops made a difference between life and death. The poor began to eat better and live longer in England with the introduction of potatoes.
(ii) Religious dissenters from Europe fled due to the fear of persecution in Europe and migrated to America.
(iii) Slave trade was started. European traders captured slaves in Africa and took them to America where they worked on plantations. Europe became the centre of the world trade.
(iv) Precious metals, e.g., silver from mines located in present day Peru and Mexico also enhanced Europe’s wealth and financed its trade.
Cultural fusion is a phenomenon which emerges when two or more cultures intermingle and produce a new culture.
Indentured labourers used to live and work in very harsh conditions. This forced them to seek new avenues of comfort and relaxations. This blended different cultural forms.
Characteristics of the Silk Routes
(i) The silk routes are a good example of vibrant pre-modern trade and cultural links between distant parts of the world.
(ii) They were spread over land and sea knitting together vast regions of Asia and linking with Europe and Africa.
(iii) They existed since before the Christian Era and thrived almost till the 15th century.
(iv) Chinese pottery, textiles and spices from India travelled to Europe.
(v) In return, precious metals, gold and silver flowed from Europe to Asia.
(vi) Buddhism, Christian missionaries, Muslim preachers also travelled through this route to Asia.
(vii) The name ‘silk routes’ points to the importance of west-bound Chinese silk cargoes along this route.
(viii) Precious metals—gold and silver, etc., flowed from Europe to Asia. Chinese potteries, textiles from China and spices from India were traded.
(ix) Various food items offer very good examples of long distance cultural exchanges.
The Impact of Great Depression on Indian economy
(i) India’s exports and imports nearly halved between 1928 and 1934.
(ii) As agricultural prices fell sharply internationally as a result of this prices plunged in India.
(iii) Despite of this, the colonial government refused to reduce revenue demands.
(iv) Peasants’ indebtedness increased. They used up their savings, mortgaged lands and sold their jewellery and precious metals.
(v) India became exporter of metal.
(vi) Town dwellers found themselves better off.
(vii)Industrial investment grew.
(i) Most of the killed and maimed people were of the working age and this affected the work force in England.
(ii) Household income declined and women stepped in to take up jobs.
(iii) Role and position of women changed forever in England.
(i) Economic links between some of the major economic powers of the world were snapped.
(ii) England borrowed large sums of money from the US Banks.
(iii) USA emerged as an international creditor.
(iv) USA owned more assets in foreign countries than foreign countries owned in the USA.
The impact of technology on food availability
(i) Faster railways, lighter wagons and larger ships helped food to reach more cheaply and quickly from faraway farms to markets.
(ii) Earlier the animals were shipped live from America to Europe, many died on the way or became unfit to eat. Thus meat became expensive.
(iii) Refrigerated ships : The animals could be slaughtered at the starting point of America, Australia or New Zealand and transported to Europe as frozen meat.
(iv) This reduced the shipping cost and lowered prices in Europe.
(v) The poor could add variety to their food and it improved their living conditions.
Role of New International Economic Order (NIEO)
(i) Actual control over their natural resources.
(ii) More development assistance.
(iii) Fairer prices for their raw materials.
(iv) Better access for their manufactured goods in developed countries’ markets.
The Bretton Woods Agreement
(i) The Bretton Woods Conference was convened in July, 1944 at Bretton Woods in New Hampshire, USA
(ii) Its main aim was to preserve economic stability and full employment in the industrial world.