This Little Britain

by Harry Bingham

Four: Britain had by far the largest and most diversified commerce of any nation. On the eve of the French Revolution, British trade was roughly 25 per cent larger than the trade of large and populous France. Britain’s trade was also much more international, much more varied by product and region. In the ensuing decades, war and the Royal Navy ensured that the disparity went from substantial to enormous. In the aftermath of Waterloo, Britain’s trade was four to five times greater than France’s. That flood of goods into and out of the country produced profits, employment and capital accumulation, of course. It also meant that Britain could meaningfully address a world market. British cotton cloth could sell to India; British iron goods to Latin America. If British manufacturers needed a raw material not available domestically, then the chances were it was already surging through the ports of London and Liverpool, Bristol and Glasgow.

  Five: British transport was better. In part, this was down to simple luck. Britain is a long, thin country, with plenty of natural waterways, and no inland area is far from the sea. In an age when waterborne transport was cheapest and best, this certainly gave Britain a lead. But successful countries make their own luck. British roads (often privately built) were the best in the world. British stagecoaches (built for speed, not comfort, unlike their European counterparts) offered the densest, most frequent, most competitive road transport anywhere. Of about two thousand miles of navigable waterway in England in 1800, just one third was entirely natural, the remaining two-thirds was the work of engineers. The canal boom of 1760-1800 alone accounted for about one third of those two thousand miles, in a classic example of private sector infrastructure investment encouraging a step-change in industrial performance.

  Six: the British population was growing like Topsy. Everywhere in Europe grew through the eighteenth century. Between 1700 and 1820, the population of France grew by 46 per cent, that of Italy by 52 per cent, that of Germany by 66 per cent—but British population growth, at a staggering 148 per cent, dwarfed such increases. A hugely growing population meant huge domestic demand, plenty of labour, plenty of optimism to fuel investment.

  Seven: Britain had London (Europe’s largest city) and the navy (its largest proto-industrial organization). Both London and the navy acted not simply as major sources of demand, but sources of sophisticated demand: for luxuries in the case of London; for industrial quantities of goods, priced, delivered and packaged according to strict industrial standards, in the case of the navy. Both London and the navy acted as enormous bellows fanning the flames of capitalist growth.

  Eight: Britain enjoyed domestic security. Though invasion scares were (and would remain) commonplace, the country was never invaded again after 1688. The navy’s ‘wooden walls’ became an ever more reliable bulwark against outside threats. British capitalists, unlike their brethren elsewhere, could invest with confidence.

  Nine: Britain had the most sophisticated financial system anywhere. State finance was well managed, interest rates were low, the network of banks, financiers and insurers was second to none.

  Ten (and here I admit to stuffing in as many reasons as one single heading can possibly fit): Britons were politically, economically and intellectually free; they enjoyed stable and legitimate political institutions; the courts upheld rights to personal security, private property and contract enforcement; crimes of violence were limited; government was responsive; political standards of honesty and efficiency were as good as they were anywhere; scientific and technological enquiry had long been open, free, highly regarded and successful; barriers to geographical and social mobility were fairly low; and the religious nonconformity so prevalent in Manchester and other centres of revolution provided an ideology strongly supportive of the new industrial doctrine of self-improvement. Furthermore, Britain had been leading the way on most of these counts for centuries. Georgian Britons weren’t simply enjoying a spell of fine weather; their climate was good and they knew it.

  So, again, why did the Industrial Revolution happen here? The answer is simply that, short of some quite surprising vagaries of chance and circumstance, it was far more likely to happen here than anywhere else. If you still want proof, then here it is. There wasn’t one Industrial Revolution, there were two: in cotton and in iron. Two industries. Two different technologies, product types, capital intensities, geographical centres, and labour dynamics. But both British.

  We didn’t just invent the Industrial Revolution. We invented it twice.

  * The scholar in question is the Scotsman Angus Maddison. His fellow Scot, Adam Smith, would have been proud.

  * I’ve followed tradition in crediting Hargreaves and Arkwright, but most historians would now credit Highs as the prime mover of the jenny, and Highs and Kay for the water frame. It was Arkwright who patented the latter, however, helping himself to the profit as well as the kudos.

  * The partial exception here, as with most other factors mentioned in this section, is the Netherlands, the ‘Little Britain’ of the age. Or rather, given that British success really took off following a Dutch invasion, perhaps Britain should be referred to as ‘Big Holland’. Either way, if the Industrial Revolution hadn’t happened in Britain, it would probably be known to history as De Industriële Revolutie.

  THE FOOD OF THE PEOPLE

  The notion of globalization is pretty unfashionable these days. Youths with radical hairstyles picket oil companies and smash up McDonald’s. The World Trade Organization has replaced the international Jewish conspiracy as the sinister puppet-master de nos jours. Global warming, genetically modified food, the Doha trade round, American brand names, Big Oil, the Iraq war, Third World debt, the gun lobby, offshoring and various clusters of acronyms (the IMF, WTO, IBRD, IFC, G8, OECD, NAFTA, GATS, MAI) all swim around in a kind of undifferentiated soup of iniquity.

  It probably won’t surprise readers too much to know that I don’t wholly subscribe to the soup-of-iniquity theory. There’s plenty of bad stuff going on in the world, but plenty of good stuff too. Contemporary globalization brings with it some profoundly serious challenges—challenges that policy-makers are not yet sufficiently addressing—but huge numbers of people in the developing world are being lifted from poverty, in part as a result of the opening of markets, most notably in India and China.

  But, if we can, let’s leave aside these twenty-first century debates. Whatever your personal take on contemporary globalization, the issues now are evidently different from the issues in the age of Pax Britannica. Back then, a new magic—industrialization—emerged genie-like from a rainswept corner of northern Europe. The magic spread, but not uniformly, and not always quickly. The divergence between the world’s richest and poorest parts grew very sharply. Some divergence was inevitable. It had taken seven hundred years since the Norman invasion to produce in Britain the conditions that would give birth to industrialization. In the rest of Europe and North America, those same conditions were not far from being achieved. In most of the rest of the world, with its sharply different histories and cultures, those conditions were very far indeed from pertaining. In the eighteen centuries from the birth of Christ to 1820, per capita incomes in Asia outside Japan had grown by around 28 per cent. It would take the Britons of 1820 just twenty-seven years to achieve a similar gain. Nor was Asia, even remotely, the slowest grower. At least incomes had generally risen over those eighteen centuries. In Africa, if anything, they’d declined.

  Divergence, then, was a given. What would matter more to the populations of the poorest countries was whether rich-world policies would tend to deepen and extend that divergence, or whether they would minimize and shorten it. (These days poor-world policies matter at least as much, but in a colonial age the poor world didn’t get much chance to make policy.) Given that Britain was not simply the world’s leading industrial power but also, and by far, its dominant commercial, naval and imperial one, then Britain’s role in determining the fates of others would be absolutely critical.

  So how did she do?

  Let’s start with trad
e. One of the central, and most legitimate, complaints of the modern anti-globalizer is that the rich world raises tariff barriers against imports from the poor world. When tariff barriers are lowered, it is only as part of a tit-for-tat arrangement: mighty America will permit competition from tiny Guatemala only if tiny Guatemala permits competition from mighty America. The arrangement may be carefully reciprocal, but it’s hard not to feel that it’s a wee bit unbalanced all the same. Any industries (notably agriculture) that the rich world chooses to protect are protected, and hang the consequences for anyone else.

  For most of its rise to power, Britain was every bit as protectionist and mercantilist as anyone else. Navigation Acts protected British shipping. Excise duties built a cottage industry from smuggling. In 1815, the price of grain was kept high by Corn Laws, aimed at keeping cheap foreign wheat from undercutting British farmers. By the mid-nineteenth century, however, the old philosophy was under attack from two fronts. First of all, the British classical economists, notably Adam Smith and David Ricardo, built a comprehensive new theory of economics which blew apart the traditional justifications for protectionism. If these theories provided the intellectual weaponry, then the rise of the manufacturing interest in Britain provided the troops. Why, these manufacturers asked, should agricultural interests keep the price of grain high, when the urban poor so obviously suffered as a result? (If that sounds like a surprisingly tender attitude for a Victorian manufacturer, it shouldn’t. The same people reasoned that if the urban poor paid less for bread, they could also be paid less for their labour.)

  In 1846, the campaigners got their way. The Corn Laws fell, and with them British mercantilism. By 1875, Britain had pretty much shed every last vestige of its protectionist past. How unusual this was—and is—can be seen from the table below.

  Average tariffs on imported manufactures, per cent

  1875 1913 Today

  Britain 0 0 —

  France 12–15 20 —

  Germany 4–6 17 —

  Italy 8–10 18 —

  European Union — — 3.6

  United States 40–50 44 3.0

  It wasn’t just manufactured imports which came into the country duty free, it was almost everything else besides. Furthermore, the policy wasn’t adopted as a result of some endless series of tit-for-tat tariff negotiations. With one or two exceptions, the tariff reductions were passed unilaterally. Britain would drop its own barriers. If other countries wanted to follow suit, then so much the better; but if they didn’t, Britain’s policy would remain just the same.*

  Even by modern standards, this was a shockingly radical approach. It is not the policy of the European Union now, nor that of the United States, nor that of anyone else at all. British policy was certainly founded on self-interest. The Smith-, Ricardo-and Cobden-inspired Brits believed that free trade brought benefits even if other countries didn’t have the good grace to reciprocate. (Most economists today would broadly agree.) Self-interested or not, the policy had huge consequences for the rest of the world. Emerging economies could flog their goods to the well-heeled British consumer, with no rich-world bureaucrat seeking to trip them up. If the rich world today adopted a comparable policy, the benefits for the poor world would be stupendous.

  The British reverence for free trade didn’t stop at dismantling tariffs. Practicalities mattered too. Moving goods around the world requires security, and the Royal Navy was there to guard the sealanes of the world from warfare and piracy. The navy also made its own navigation charts available to the entire world, and for free: a quite remarkable sacrifice of strategically and commercially valuable knowledge. Not every policy decision was quite so praiseworthy, of course. British policy-makers were so addicted to trade that they found themselves deeply perplexed by countries that claimed they didn’t want to engage in it. The solution to such curious behaviour was simple and Victorian: send in the gunboats. When China had the temerity to sink some of those gunboats in 1859,* Britain went back the next year, captured Peking and destroyed the Summer Palace. The problem resolved, British traders went happily back to work.

  As a direct result of all these policies, trade boomed. The world had never seen anything remotely like it. Nor should it be thought that some ineluctable force of economics simply makes trade happen. On the contrary, public policy is of profound consequence. With the end of the First World War, the abrupt decline of British influence, and protectionist thinking firmly installed in the United States, trade collapsed. Global trade would not recover its nineteenth-century levels (measured as a proportion of total income) until the 1970s. Only in the 1990s would trade emphatically exceed the levels reached by our much-bewhiskered Victorian forefathers.* These are astonishing facts, and their importance is simply this: trade spreads wealth. The magic genie that James Watt and Richard Arkwright and Henry Cort let out of the bottle in Britain in the 1770s was soon clambering on board ships and journeying to every corner of the globe.

  Even genies need cash, however, and Britain was quick to supply that too. Increasingly, over the Victorian and Edwardian eras, cash poured out of Britain on a huge scale.

  Capital invested overseas, 1914 ($ million, 1990 equivalents)

  British investments Rest of world investments Britain as % of total

  Europe 1,129 12,315 8.4%

  Western offshoots 8,254 2,919 73.8%

  Latin America 3,682 4,708 43.9%

  Asia 2,873 3,227 47.1%

  Africa 2,373 2,291 50.9%

  Total 18,311 25,459 41.8%

  Over 40 per cent of all global investment overseas was made by British capitalists, yet even that figure understates Britain’s global role. Almost half of all overseas investments made by countries other than Britain went to the already prosperous countries of Europe. All fine and dandy, of course, but hardly a way to help poor countries catch up. British capitalists eschewed prosperous Europe almost completely, preferring instead to plunge their money into the wild frontiers of America and Australia, Latin America, Asia and Africa. British money flowed to the places where it was most needed, not where it was best protected.

  Once again, the contrast with today is striking. In the first place, that torrent of Victorian money was remarkable in its scale. Only in 1980 did the world regain the levels of overseas investment (measured as a ratio of national incomes) that it had known back in 1914. Yet the comparison is misleading. Rich countries may now invest billions overseas, yet few of those billions ever creep beyond the rich world itself. Although the opening of China and India is starting to change the arithmetic, for most of the post-war period the poor world has been given aid (grudgingly), loans (irresponsibly), armaments (lavishly) and productive investment almost not at all. Back in Victorian days, no one would have dreamed of taxing Britons to give handouts to poorer countries. Instead, they did something arguably one step better still: they placed their own cash at the disposal of wealth-creating and infrastructure projects in parts of the world that could best make use of it. In the most successful cases, notably Argentina, the effect was enough to help underdeveloped countries catch up with European living standards in the space of one human lifetime.

  The example of Victorian Britain should give us pause today, not least when it comes to rethinking the issues involved in globalization. As those radically haircutted protesters smash their burger-bar windows (‘McDonald’s munchers, spew up your lunches!’), they might do better to revert to the slogans of an earlier age. As the leading free trade campaigner, Richard Cobden, put it in the House of Commons:

  ‘How far, how just, how honest, and how expedient [is it] to have any tax whatever laid upon the food of the people? That is the question to be decided.’

  It was then. It is now. In the seventy years following Cobden’s triumph, food (and all other) exports from the developing world entered Britain tax free, simultaneously helping British consumers and overseas farmers. These days, those same exports are taxed in a bid to keep European food prices high, and European farmers comfo
rtable. The losers are domestic consumers and those farmers of the developing world who are being denied an outlet for their produce. In the century and a half after Cobden, our answers to his question have got worse, not better.

  * The policy would later cause some perplexity in Whitehall. When policymakers wanted to pressurize foreign rivals into lowering tariff barriers, they found that they’d already given up all the weapons in their arsenal. So instead, they tried invoking moral arguments, and an appeal to equity. You can guess how much effect that had.

  * Fact for trivia buffs: this action, at the mouth of the Peiho river, was Britain’s only significant naval defeat of the nineteenth century.

  * To be sure, there are plenty of reasons for thinking that the extent of global integration is much greater now: trade figures aren’t everything.

  EMPIRE

  AND LIKE A TORRENT RUSH

  Britain is a nation of contradictions, of which one of the more central has to do with her very identity. The country is the oldest continuously functioning state in the world, with national institutions that date back at least to Alfred the Great. Nor has that state exactly lacked prominence in global affairs, having once been the centre of the world’s largest empire. Yet, at the same time, our country seems wildly lacking in even the basic elements of national identity. There’s the whole question of names, for one thing. The terms Great Britain, the British Isles, the United Kingdom, Britannia, Albion and England have all been deployed at one time or another. Yet none of these is what you’ll actually see on your passport, which says, rather, ‘The United Kingdom of Great Britain and Northern Ireland’. Ouch! The name is so unwieldy, it sounds like something concocted by a UN peace commission, or the name given to one of the splinter territories that once made up the Republic Formerly Known As Yugoslavia. You’d think that in the dozen or so centuries since Alfred the Great, we’d have come up with something a wee bit tidier.