Chapter 1: The UK and the USA, two world-economies from 1850 to the end of the 20th century
Brainstorming : Using your knowledge and the text below, try to give a definition of world-economy.
Source 1 : […] The concept “world-economy” assumes that there exists an “economy” wherever (and
if but only if) there is an ongoing extensive and relatively complete social division of labor with an
integrated set of production processes which relate to each other through a “market” which has been
“instituted” or “created” in some complex way. Using such a concept, the world-economy is not new
in the 20th century nor is it a coming together of “national economies” […]. Rather, a world-economy,
capitalist in form, has been in existence in at least part of the globe since the 16th century. Today, the
entire globe is operating within the framework of this singular social division of labor we are calling
the capitalist world-economy.
Immanuel-Maurice Wallerstein, The politics of the world-economy, 1984.
I.
The Britsh world-economy: 1850-1914:
A. A power born with the Industrial Revolution
Source 1 : Percentage distribution of the World’s manufacturing Production (percentage of world
total).
USA
Germany
UK
France
Russia
Italy
Canada
Belgium
Sweden
Japan
India
Other countries
1870
23.3
13.2
31.8
13.3
3.7
2.4
1
2.9
0.4
- 11
1913
35.8
15.7
14
6.4
5.5
2.7
2.3
2.1
1
1.2
1.1
12.2
Source: League of Nations, Industrialization and World Trade, 1945.
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Source 2: Output of Coal and Lignite (Annual averages in million metric tons)
UK
France
Germany
Austria
Belgium
1840-1860
34.2
3.5
4.4
0.5
4.1
1860-1880
86.3
10
20.8
4.1
10.2
1880-1900
158.9
20.2
65.7
17
17.5
1900-1913
230.4
33
157.3
38.8
23.3
Russia
0.04
3.7
17.3
Source : based on the statistical appendices in Carlo M. Cipolla (Ed), Fontana Economic History of Europe Vol
4: Emergence of industrial societies, 1976-1977.
Source 3: Output of Pig Iron1 (Annual Averages in thousand metric tons).
UK
France
Germany
Austria
Belgium
1855-1859
3,583
900
422
306
312
1875-1879
6,484
1,462
1,770
418
484
1900-1914
8,778
2,665
7,925
1,425
1,070
Russia
254
424
2,773
Source : based on the statistical appendices in Carlo M. Cipolla (Ed), Fontana Economic History of Europe Vol
4: Emergence of industrial societies, 1976-1977.
Questions:
1. Present sources together (you must have six elements in you presentation: nature, author, date,
context, audience and main idea).
2. Which were the reasons explaining why the UK was the world-economy from 1850 to 1914?
B. Social division of labour and British Empire
Case study: Trade and British Empire.
Source 1: Advertising for Lipton tea company, published in Ceylon, 1896.
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Pig iron: after being melted in a blast furnace, iron is called 'pig iron' because it flows into a little canal called
piglets. Fer brut
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Source 2: Lipton company beginnings
Sir Thomas Lipton, born in Glasgow, Scotland in 1850, created such a marketing empire that within a
few decades his name became inextricably linked with quality tea. In 1890, he set sail for Ceylon in
search of the world's finest tea. There, he turned the growing of tea into a subtle and noble art,
blending teas to create unique and refreshing flavours and in doing so became famous.
Under the slogan 'direct from the tea garden to the tea pot', he made tea a popular and approachable
drink for everyone as it was high quality but reasonably priced. Lipton's entry in the tea business was
tremendously successful.
Lipton Teas were an immediate success in the UK. […] Introduction into the US market was a slow
process due to Americans resisting tea, but Lipton’s passion for perfecting the finest blends took him
to the most far flung reaches of the British Empire. He earned the privilege of supplying tea to Queen
Victoria as well as too many of the European royal families.
At the end of the 19th century, he had 300 clerks in London where he had moved his business from
Glasgow in 1891, 2, 5000 hands in Ceylon and 150 shops all over England.
Source: Lipton tea company website.
Source 3: Tea production in China at the end of the 19th century
Photo from the left: Packing finished tea into wooden chests, often lined. Here, the tight packing is ensured by
the dark-clad worker at center who is stamping tea into a chest. Photo from the right: A train of porters with
carrying poles lugging tea chests to the shipper; the colorfully decorated tea chests often became valuable
collectibles in themselves after the tea reached its intended market.
Source 4: Joseph Chamberlain2 vision of the British Empire, June 10th, 1896 and March 31st,
1897
Speech in front of the House of Commons, June 10th, 1896:
[…] The Empire, to parody a celebrated expression, is commerce. It was created by commerce, and it
could not exist a day without commerce. […] The fact is history teaches us that no nation has ever
achieved real greatness without the aid of commerce, and the greatness of no nation has survived the
decay of its trade. Well, then, gentlemen, we have reason to be proud of our commerce and to be
resolved to guard it from attack. […]
Speech in front of the House of Commons, March 31st, 1897
[…] We have suffered much in this country from depression of trade. We know how many of our
fellow-subjects are at this moment unemployed. Is there any man in his senses who believes that the
crowded population of these islands could exist a single day if we were to cut adrift3 from us the great
dependencies which now look to us for protection and assistance, and which are the natural markets
for our trade?
2
3
British minister of colonies from 1895 to 1903.
No longer attached or fixed in the right position.
3
Source 5: Maritime routes from Liverpool:
Source: based on Liverpool’s ocean Steamship service’s map, 1922 (conservation, Liverpool national museum).
Questions:
1. Prove that the British world-economy lied on social division of labour and colonial preference
(define those terms first).
2. Which were the three pillars of the British economic power in those times?
C. London, heart of the British world-economy
Source 1: Extract from Mary Poppins, scene at the bank, 1964.
(http://www.youtube.com/watch?v=jt9JpYRulSk)
Source 2: London 1903, Thomas Edison film footage.
(http://www.youtube.com/watch?v=8viKvXl81J0)
Source 3: London at the turn of the 20th century:
[…] Enormous, diverse, London was the imperial capital of the day, surpassing Paris, Vienna, Rome,
New York and Peking in importance. On the docks of the Thames, thousands of workmen unloaded
the riches of the globe – spices, herbs, furs4, jute5, hemp6 – while in the Square Mile of the financial
district, thousands of lawyers, bankers, insurance agents, stockbrokers, importers and exporters made
their fortunes. […] Zoo elephants evoked the exotic reaches of British dominion. The city's revamped
streets provided an imposing backdrop for parades of "sunburned heroes returning from the veldt".
And the white man's burden echoed as a theme in cigarette advertisements, school textbooks and
music hall songs. London was full of racial stereotypes but also brought to Irish, Indian and African
nationalists applied liberal ideologies born and honed in Britain to their own nascent independence
movements. […]
Source: Jonathan Schneer, London 1900, 2001.
4
Fur = fourrure
Le jute.
6
Hemp = Chanvre.
5
4
Source 4: Plan of the City of London in 1896, extract from London guide in 1900.
Source:
http://freepages.genealogy.rootsweb.ancestry.com/~nmfa/Maps/pocket_atlas_and_guide_to_london/plate6r.jpg
Questions:
1. Which were the powers concentrated in London?
2. How did London rule the British Empire and the world-economy from 1850 to 1914?
3. How did it reflect in London landscape?
D. The end British world-economy
Question: Using sources from part A, try to explain how and why the British world-economy ended.
II.
The American world-economy in the 20th century:
A. WW1 brought the USA to the top
Source 1: Consequences of WWI on the American economy:
The international economic position of the United States was permanently altered by the war. The
United States had long been a debtor country. The United States emerged from the war, however, as a
net creditor. The turnaround was dramatic. In 1914 U.S investments abroad amounted to $5.0 billion,
while total foreign investments in the United States amounted to $7.2 billion. Americans were net
debtors to the tune of $2.2 billion. By 1919 U.S investments abroad had risen to $9.7 billion, while
total foreign investments in the United States had fallen to $3.3 billion: Americans were net creditors
to the tune of $6.4 billion7. Before the war the center of the world capital market was London, and the
Bank of England was the world's most important financial institution; after the war leadership shifted
to New York, and the role of the Federal Reserve was enhanced.
Hugh Rockoff, Rutgers University, article US economy in WWI, 2010
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All the data come from U.S. investments abroad (U.S. Bureau of the Census 1975, series U26); Foreign
investments in the U.S. (U.S. 1975, series U26).
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Question: what was the main reason at the origin of the US rise as the 20th century world-economy?
B. Hard Power and Soft Power
Source 1: Modern Times, Charles Chaplin, 1936: Home sweet home extract
http://www.youtube.com/watch?v=5njTU7a3__g&feature=related
Source 2: Marshall plan aid to Europe:
Source: Princeton University.
Source 3: Starbucks and Mac Donald expansions throughout the world:
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Source 4: Proportion of the industries of high technologies in industrial production:
Source : National science foundation, sciences and engeneering indicators, 2004.
Questions:
1. Which are the elements of power of the American world-economy?
2. How does the American world-economy function?
3. What’s the emblematic center of such a power?
C. The end of the hyperpower?
Source: Keith Bradsher, Made in U.S., Shunned in China, NY Times, November 18th, 2005.
GUANGZHOU, China, Nov. 17 - Abby Chan, a 23-year-old advertising copywriter, took a break from
shopping for Levi's jeans at a mall here on Wednesday evening and relaxed at a table in a Starbucks
restaurant. Aside from coffee and denim, there were not many American brand products that interested
her. She covets Chanel clothing and Louis Vuitton bags, dreams of owning a BMW or Mercedes-Benz
someday, and struggles to think of an American brand that appeals to her.
"There are more choices for European brands, more styles, so they are more interesting," she said.
[…] But for a long list of reasons, American products are struggling these days in the Chinese market,
where they have trouble measuring up to European brands and even some Chinese brands.
[…] China's economy is galloping along just as a long series of America's weaknesses are combining
to hurt American exports. With many of America's name brands made in China these days, from
clothing to cars, the Chinese are beginning to wonder what a "Made in U.S.A." label really has to
offer.
[…] Another big reason for the expanding bilateral deficit lies in changing patterns of trade.
Companies from Japan, South Korea, Taiwan and elsewhere in Asia increasingly manufacture only the
most technologically sophisticated components at home. They ship them to China, buy the less
complicated parts locally at low cost and assemble the product in China for shipment directly to
Europe or the United States.
A result is that East Asia has achieved the dream that a dozen years ago gave rise to the North
American Free Trade Agreement: a regional manufacturing center that taps each country for the part it
can produce most efficiently. […]
Question: Does the American world-economy and hyperpower come to an end? (Use the source and
your knowledge)
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