21: Trade and Commerce
Background Britain had had to sell its overseas investments to pay for WW2 - lost income from its
invisibles which used to make up the trade deficit. 1947 devaluation of the pound -
made exports cheaper (encourages exports), however, it reduced investment. Tried to
develop their colonies with the CDaWAs. They tried to create a welfare state which
placed a fresh set of financial demands on the treasury
USA World was dominated economically by the USA post WW2 - only nation that wasn't
damaged economically by the war. Lots of nations had borrowed from the USA - came
out as the world's creditors. Dollars become the main currency. The US Marshall plan of
1948-52 provided Britain with $3.3bn
Britain's In order to buy vital goods, Britain needed to earn dollars and build up foreign
payment for exchange reserves with which to pay for imports. It continued rationing at home to
vital goods reduce food imports and prioritised British industrial production for the export rather than
the domestic market. Tried to develop the productive/export capacities of the colonies,
particularly Africa, where the relative under-development of local resources offered
huge opportunities for growth
Trade with Areas like Malaya were a major contributor to the Hard Currency Pool. Until the 1960s, it
Empire/ provided essential imports of food and raw materials when Britain's reserves of foreign
Common- exchange were too limited to source imports from many other parts of the world
wealth
Investment in Britain invested heavily in its colonies. In 1956, approx. 58% of all overseas investments in
Empire/ the UK in shares and securities were in Empire companies and governments. However,
Common- from the 1960s, other parts of the world became more important to Britain
wealth
Colonial Built on Colonial Development and Welfare Acts of 1940 and 1945 which were used to
Development expand agricultural production and promote new technology in the colonies. Set up in
Corporation 1948 to co-ordinate major projects and develop self-sustaining agriculture, industry and
trade. Renamed Commonwealth Development Corporation in 1963. Not all schemes
were successful e.g. the Tanganyika Groundnuts Scheme of 1948 was an abject failure.
However, Malay rubber proved a crucial dollar earner
Europe European economy recovered from the war much more quickly and impressively than
might have been expected, partially because of support from the US and the climate of
liberal democracy which favoured private enterprise. There had been advances in
science and technology. By the mid-50s there was full employment throughout Europe,
growth rates were high and living standards were rising rapidly so Europe became a
favourable trading partner by 1960
Britain's It chose not to join it in 1957 when it was set up. Instead, they set up their own rival
reaction to EEC trading bloc of European non-EEC members - the European Free Trade Association -
EFTA. Britain was uninterested in the EEC in 1957 thinking trade with the Empire and
Commonwealth was more important. EEC flourished and Britain was increasingly torn
between a future based on a Commonwealth of global trade links and on a future
based on trade and economic relations with Europe
Application to Exports to Europe outstripped those to the Empire in the early 1960s. Britain applied to
join join the EEC in 1963 and 1967. France rejected Britain application to the EEC because
when Britain joined it would bring the Commonwealth with it (imperial preference,
Stirling Area) meaning that countries outside of Europe (with their cheap goods) would
also join. Britain still cared about the Commonwealth and weren't prepared to abandon
it for Europe
Stirling Harold Wilson announced that it was lowering the exchange rate so the pound
Devaluation became worth $2.40, down from $2.80 - just over 14% cut. The decision was taken
1967 reluctantly, in the face of a balance of payment crisis. It was designed to cut Britain's
deficit by making British exports cheaper (but it made imports dearer). The further
devaluation in 1967 shows that the strategies to strengthen the colonies failed.
Destroyed the old 'Stirling Area' by weakening international faith in the value of sterling
and hit at Britain's global imperial pretensions -this was one of the things that tied the
Commonwealth together
Trade with Trade with Empire and Commonwealth grew (both in imports and exports) IMPORTS
Empire was 1948: £933m => 1965: £1720m. Helped pay for crucial imports: Some colonies were a
important to major contributor to the Hard Currency Pool ($) e.g. rubber exports in Malaya. Britain
Britain's post- was dependant on the colonies in some key raw materials and foodstuffs e.g. meat
from N.Z. Colonial Development was key policy & Empire an area for significant British
Background Britain had had to sell its overseas investments to pay for WW2 - lost income from its
invisibles which used to make up the trade deficit. 1947 devaluation of the pound -
made exports cheaper (encourages exports), however, it reduced investment. Tried to
develop their colonies with the CDaWAs. They tried to create a welfare state which
placed a fresh set of financial demands on the treasury
USA World was dominated economically by the USA post WW2 - only nation that wasn't
damaged economically by the war. Lots of nations had borrowed from the USA - came
out as the world's creditors. Dollars become the main currency. The US Marshall plan of
1948-52 provided Britain with $3.3bn
Britain's In order to buy vital goods, Britain needed to earn dollars and build up foreign
payment for exchange reserves with which to pay for imports. It continued rationing at home to
vital goods reduce food imports and prioritised British industrial production for the export rather than
the domestic market. Tried to develop the productive/export capacities of the colonies,
particularly Africa, where the relative under-development of local resources offered
huge opportunities for growth
Trade with Areas like Malaya were a major contributor to the Hard Currency Pool. Until the 1960s, it
Empire/ provided essential imports of food and raw materials when Britain's reserves of foreign
Common- exchange were too limited to source imports from many other parts of the world
wealth
Investment in Britain invested heavily in its colonies. In 1956, approx. 58% of all overseas investments in
Empire/ the UK in shares and securities were in Empire companies and governments. However,
Common- from the 1960s, other parts of the world became more important to Britain
wealth
Colonial Built on Colonial Development and Welfare Acts of 1940 and 1945 which were used to
Development expand agricultural production and promote new technology in the colonies. Set up in
Corporation 1948 to co-ordinate major projects and develop self-sustaining agriculture, industry and
trade. Renamed Commonwealth Development Corporation in 1963. Not all schemes
were successful e.g. the Tanganyika Groundnuts Scheme of 1948 was an abject failure.
However, Malay rubber proved a crucial dollar earner
Europe European economy recovered from the war much more quickly and impressively than
might have been expected, partially because of support from the US and the climate of
liberal democracy which favoured private enterprise. There had been advances in
science and technology. By the mid-50s there was full employment throughout Europe,
growth rates were high and living standards were rising rapidly so Europe became a
favourable trading partner by 1960
Britain's It chose not to join it in 1957 when it was set up. Instead, they set up their own rival
reaction to EEC trading bloc of European non-EEC members - the European Free Trade Association -
EFTA. Britain was uninterested in the EEC in 1957 thinking trade with the Empire and
Commonwealth was more important. EEC flourished and Britain was increasingly torn
between a future based on a Commonwealth of global trade links and on a future
based on trade and economic relations with Europe
Application to Exports to Europe outstripped those to the Empire in the early 1960s. Britain applied to
join join the EEC in 1963 and 1967. France rejected Britain application to the EEC because
when Britain joined it would bring the Commonwealth with it (imperial preference,
Stirling Area) meaning that countries outside of Europe (with their cheap goods) would
also join. Britain still cared about the Commonwealth and weren't prepared to abandon
it for Europe
Stirling Harold Wilson announced that it was lowering the exchange rate so the pound
Devaluation became worth $2.40, down from $2.80 - just over 14% cut. The decision was taken
1967 reluctantly, in the face of a balance of payment crisis. It was designed to cut Britain's
deficit by making British exports cheaper (but it made imports dearer). The further
devaluation in 1967 shows that the strategies to strengthen the colonies failed.
Destroyed the old 'Stirling Area' by weakening international faith in the value of sterling
and hit at Britain's global imperial pretensions -this was one of the things that tied the
Commonwealth together
Trade with Trade with Empire and Commonwealth grew (both in imports and exports) IMPORTS
Empire was 1948: £933m => 1965: £1720m. Helped pay for crucial imports: Some colonies were a
important to major contributor to the Hard Currency Pool ($) e.g. rubber exports in Malaya. Britain
Britain's post- was dependant on the colonies in some key raw materials and foodstuffs e.g. meat
from N.Z. Colonial Development was key policy & Empire an area for significant British
