Samuel Jardine

Global Economic Integration, Gladstone’s Nightmare?: How Did Global Integration Contribute To Increasing State Intervention? (1870-1913)

By Samuel Jardine

28 April 2020

A poster calling for ‘Imperial Preference’ during the 1900s (Public Domain)- Imperial Preference advocated the favouring of goods from within the British Empire and protective Tariffs on ‘non-imperial’ foreign goods to safeguard the British economy at a time when it was fear that it was in decline compared to its rivals.

Citation advice: Samuel Jardine, ‘Global Economic Integration, Gladstone’s Nightmare?: How Did Global Integration Contribute To Increasing State Intervention? (1870-1913)’, Snap Histories [Online], (Available at: https://www.samueljardine.co.uk/ ), 1-20

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Abstract: This essay investigates how Victorian Britain’s free trading laissez -faire political economy was successively undermined during the 19 th century by the very global economic integration it had sought to foster, and which had helped make Britain the world’s foremost economic power. It will explore this trend through an analysis of the 1873-1896 ‘Long Depression’ to highlight how the negative consequences, or more importantly, the public’s perception of the negative consequences of being so closely integrated within the global economy, influenced and helped to normalize the growing calls for a greater degree of state intervention within the British economy than its laissez-faire consensus had purported. The analysis of two key political controversies influenced by the negative perception of the ‘Long Depression’ (and thus global economic integration), The Bimetallic Controversy (1880-1889) and the 1900 Tariff Reform Campaign will be used to evidence this. Both movements it will be argued had a far-reaching influence in contributing to the political ‘normalizing’ of the Edwardian eras increasing government intervention .

Britain’s integration within the world economy came with a plethora of benefits to contemporaries such as contributing to its rapid industrialization which helped to secure its central place within the global economy as the ‘workshop of the world’, and itself as a leading financial centre. 1 Its integration though would also present a series of significant political challenges stemming from the greater exposure to economic turbulence it fostered from 1870 onwards that would contribute towards growing demands for state intervention and the re-kindling of protectionism from among significant portions of the electorate and political establishment. This is not to argue that global economic integration was solely responsible for this change, nor that the British state became one of ‘big government’ as it arguably did post-1945. But instead that Britain’s economic integration within the world economy fostered increasing state intervention and a pining for said intervention among elements of the general public as well as key influential lobby groups. In this it is notable, as will be shown, that perception of economic crisis and problems stemming from the global economy was far more important to creating populist political clamour for change and protection, than the actual economic reality.

To put this in perspective using an example that Professor David McLean of King’s College London once noted to us, if 1/10 people are suffering economic hardship or unemployed, while 9/10 are doing fine, is that a depression? What about 3/10? Perception and experience would say yes, for instance after the 2008 financial crash, unemployment in Britain rose by around 3% to reach a peak of 8.1% in 2011, it had been at a consistent 5%

1 Pedro Ferreira et al, ‘Globalization and the Industrial Revolution’, Macroeconomic Dynamics, 20 (2016), 643

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Samuel Jardine from 2000, and since its 2011 peak has continuously declined, 2 but quite rightly the financial crash is still deemed a recession that caused widespread hardship, because a significant proportion of people, but who were not remotely the majority, were suffering, and this significant proportion had the political clout, aided by the media to exert pressure on the British government to improve their situation. This as we shall see is a common story (though varying in extent) throughout global downturns and can lead to a significant political change in economic policy based almost entirely on how a problem is perceived, rather than the reality of its effects.

This essay will present this through a sketching of the period’s context in terms of Britain’s interactions with the world economy and then shift to analysing the 1873-1896 ‘Long Depression’ and how its contemporaries perceived it, before moving onto how this perception helped shape the two great political movements of the time, the ‘Bimetallic Controversy’ (1880-1889) and the 1900 Tariff Reform Campaign. It will investigate both political dissent and shifts, or calls for shifts, towards ever-greater levels of state intervention and the often, though not always affiliated demands for protectionism that accompanied this throughout the period. By 1870 the world economy was strongly established with the last economically important parts of the globe having been integrated into its system. Britain had by 1846 adopted a policy of free trade, in which it unilaterally lowered its tariffs and treated goods from all countries equally, ditching the previous treaty-based model of bilateral mutual reciprocity.3 By 1865 much of Europe was included in these essentially multilateral trade agreements due to the presence of ‘most favoured nation’ clauses within the treaties ensuring any reduction of duties from one state was mirrored in all the nation’s other treaties, the further cross-border integration of infrastructure such as intercontinental railways, postal routes and telegraph cables created a truly interlinked European economy,4 from which Britain healthily benefited as highlighted by the generation in a single year

2 Daniel Clark, ‘Unemployment rate of the United Kingdom 1971-2019’, Sta tista [Online], Available at: https://www.statista.com/statistics/279898/unemployment-rate-in-the-united-kingdom-uk/ (Accessed 24 April 2020) 3 A.A. Iliasu, ‘The Cobden-Chevalier Commercial Treaty of 1860’, The Historical Journal, 14 (1971), 68-71 4 Michael Graff et al, Growth of the International Economy, 1820-2015 (Abingdon, 2013), 69-70

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(1853) of one hundred million pounds worth of exports. A truly ‘striking sign’ of commercial power for any single country at that time. 5 At the same time, British loans, shipping and trade dominated the formally mercantilist Spanish colonies of South America more than any other nation, including their former Spanish master, 6 while the formally closed Qing China and Japan were steadily and forcefully ‘opened’ to international trade on ‘western’ terms through the acquisition of treaty ports acquired by varying degrees of military pressure.7 By 1870 Britain was also at the high-point of its domination of this international economy.8 This new integration though also meant that Britain, at the heart of this international system was far more sensitive to global economic fluctuations than it had previously ever been. Far-away events rippled more efficiently and with greater consequence than ever before through the web of integrated trade and financial connections. This is most clearly highlighted during the crisis of 1873, which was the first truly international monetary crisis.9 It combined the effects of several globally dispersed events such as the collapse of a US investment boom in the late 1860s following the conclusion of their Civil War (1861-65) when the confidence bubble in its markets burst in 1873, and France’s purposeful deflationary fiscal policy which aimed to minimize the value and amount of the indemnity they owed to the newly-founded who they lost the 1870 Franco-Prussian War to. A payment which ironically damaged the German economy as the inflationary affect caused by the shock of France’s payment was akin to a large, quick capital injection directly into an unsteady post-war economy that pushed German markets over the edge, the inflationary affects of this in turn spread to the rest of central Europe. 10

5 Richard Valpy, ‘The Progress and Direction of British Exports, and the Influence Theorem of Free Trade and Gold’, Journal of the Statistical Society of London, 18 (1855), 160 6 Leslie Bethel, ‘Britain and Latin America in historical perspective’, in ’Victor Bulmer-Thomas (ed), Britain and Latin America: a changing relationship (Cambridge, 1989), 1 7 For China though there had been official sanctioned, but limited trade access from 1513 with Portugal, as well as a growing unofficial trade in products like Opium from the 17 th Century. International trade truly flourished after British victory in the First Opium War forced trade concessions, not merely to them but all Europeans. See, Robert Nield, The China Coast: Trade and the First Treaty Ports (Hong Kong, 2010), 87. For Japan this is seen with its opening by the US Commodore Perry after state-directed isolation. See, Peter Ennals, Opening a Window to the West, The Foreign Concessions at Kobe, Japan, 1868-1899 (Toronto, 2014), 6 8 Charles Harley, ‘Trade, 1870-1939: from globalisation to fragmentation’, in Roderick Floud and Paul Johnson (eds), The Cambridge Economic History of Modern Britain, Volume 2: Economic Maturity 1860-1939 (Cambridge, 2004), 161 9 David Glasner, ‘The Crisis of 1873’, in David Glasner et al (eds), Business Cycles and Depressions: An Encyclopedia (Abingdon, 1997), 132-3 10 Glasner, ‘Crisis’ , 132

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Britain acted as a connecting hub for these economic disasters, due to its financial links to both the US and Europe and thus it was also affected by both, though in the immediate sense to a far lesser extent.11 It was the consequences of these crisis’s combined effects that create in Britain a sense of itself, and the world undergoing a ‘Long Depression’ 12 as the states involved, their empires and attendant trading partners were all afflicted, and all began as a result of their interconnected economic pain, to shift away from the liberal free-trading emphasis that Britain had helped to foster globally from the 1840s onwards. A fact evidenced in ’s shift from low to high tariffs on foreign goods as Bismarck attempted to protect and encourage domestic manufacturing over foreign goods, a clear rejection of the previous liberal trade policy. 13 This global shift back to protectionism meant that Britain, who had benefited far more from liberalized and globally interconnected trade (remember it’s comparatively massive 1853 export figure) would be particularly hard- hit economically between 1873-1896.

Painting of the 16 August 1870 Battle of Mars-La-Tour between France and Prussia by Emil Hunten, 1870 (Public Domain)- The Prussian victory in the Franco-Prussian war would result in the formation of Germany under the Prussian Kaiser, proclaimed in the midst of France’s famous Royal Palace at Versailles to add to its humiliation. The war would also sow the seeds for the First World War through the new German’s annexation of French Alsace-Lorraine. It incidentally would also spark a European-wide economic crisis in its aftermath.

Britain would not though be affected in any obvious way that might easily justify the term ‘Long Depression’ as used by later academics, though this may also be because

11 Charles Kindleberger, Historical Economics Art or Science? (Oxford, 1990), 313 12 Contemporaries referred to this as the ‘Great Depression’, but this essay will follow the example of recent historians and refer to it simply as the ‘Long Depression’ to avoid confusion with the more familiar ‘Great Depression’ of the 1930s. It should be noted however that the fact contemporaries gave such a weighty term to it, highlights the degree to which they perceived it to have such a negative impact upon Britain and the worlds economic well-being. 13 Lambi Ivo Nikolai, Free trade and protection in Germany 1868-1879 (Stuttgart, 1963), 318

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Samuel Jardine economists and economic historians perceive events in the economy through their own particular bias- An advocate of Keynesian economics will see a very different picture on the causes and extent of austerity in post-2010 Britain than one from the Chicago School . Indeed, the actual economic extent of 1873-1896 ‘Long Depression’ is debated. Anna Schwartz writing in 1987 argued there was actually no problem economically for Britain that could be connected with the crisis of 1873, as there was no ‘run on the banks’ and thus no real crisis.14 Schwartz though used a Monetarist lens for economic history,15 and so saw a banking crises as a requirement for an economic downturn. In regard to the broader ‘Depression’ D.J. Coppock views it as a real crisis, unlike Schwartz, but one that stems from a decrease in demand for British exports.16 Samuel Saul however while also recognizing it was a period of turbulence, denies it was a ‘Long Depression’.17 He has highlighted that while British imports for European markets such as France and Italy fell from 23% in 1870-1874 to 18% in 1880-1884, this actually hid the overall pictures that even during the ‘depressed’ years British exports were up by 30% compared to the peak year of the early 1870s.18 Coppock’s assumption that the depression stemmed from a decrease in demand for British exports is thus ill-fitting when overall trends are accounted for. Instead then it might merely be that global trade patterns were changing and so an adjustment period was taking place for certain sectors of Britain’s economy. An example of this can be found within Britain’s staple iron and steel industry who suffered a drop in the volume and value of trade between 1872-1894 of $7,085,000,19 despite actually maintaining its overall 70% global market share in the face of its direct competitors in iron and steel, Belgium and Germany.20 This means that while there would indeed be for some firms who were orientated towards the US market (Where the brunt of iron and steel losses fell) who would subsequently undergo an uncomfortable period of hardship as they readjusted to the changing market conditions, or failed, other British iron and steel companies in different markets (and some in the US) were impacted far less, or even unaffected.

14 Anna Schwartz, Money in Historical Perspective (Chicago, 1987), 273 15 Milton Friedman and Anna Schwartz, The Great Contraction, 1929-1933 (Princeton, 1963), 247 16 D. J. Coppock, 'The Climacteric of the I 890's: A Critical Note', Manchester School , 24 (1956), 2 17 Samuel Saul, The Myth of the Great Depression, 1873-1896 (London, 1968), 54-55 18 Samuel Saul, Studies in British Overseas Trade, 1870-1914 (Liverpool, 1960), 18 19 Saul, Trade, 21 20 Ibid , 18

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There was in fact no absolute economic decline in Britain’s economy during this ‘Long Depression’ then. it can though be argued that a combination of different negative effects stemming from the US and continental crashes, across different industries happening to specific companies in Britain culminated in a period of economic hardship for a significant amount of British people. This was further exacerbated too by a firm trend of British comparative competitive decline. For example, going back to the US iron and steel market, the rest of industrial Europe increased their exports by $1,670,000 between 1872- 1894, mostly at Britain’s expense, implying that growing competition from foreign powers, was at work and biting into the profits and viability previously enjoyed by British iron and steel companies. This is confirmed by a simpler look at Britain’s share of the worlds Gross Domestic Product (GDP) figures, which is the market value of all finished goods and services over a specific time. In 1870 excluding its empire, Britain’s GDP accounted for 9.03% (including the empire it was almost a whole quarter). By 1913 it had dropped to 8.3% (including the empire it had dropped to 19.7%). This was because powers like the USA had dramatically increased there’s for the US in 1870 its share of global GDP was 8.84% but by 1913 it had increased to 18.93%. 21 This it should be noted does not mean Britain was ‘in decline’ in actuality- it was not poorer in 1913 than it had been in 1870, far from it. But more than other states had increased their own production and wealth generation, meaning that Britain was simply less competitive by comparison. Thus, for at least some industries active in some areas, during the Long Depression of the later 19 th century, rising foreign competition squeezed their profits. 22

21 G. D. Keersmaeker, Polarity, Balance of Power and International Relations Theory: Post-Cold War and the 19 th Century Compared, (London, 2017), 90 22 A.E. Musson, ‘The Great Depression in Britain: a reappraisal’, The Journal of Economic History, 19 (1959), 228

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Newspaper Sketch of Tompkins Square Riot in the USA, 1874 (Public Domain)- While the perception of the negative effects of the ‘Long Depression’ in Britain was arguably far greater than its reality, it must be remembered it still made a significant proportion of people struggle. In the US, it resulted in wide-spread unrest as the growing numbers of unemployed in 1874 demanded the US government intervene in the economy provide aid. It’s worth noting that this is at the time when the US economy was starting to outcompete Britain’s. Thus, economic statistics can often only ever tell us half a ‘reality’.

This all created the concept of ‘depression’ linked simply to the falling profits for groups within finance and industry whose greater ability to be heard publicly (due to their prominence and influence) fuelled perceptions of a comparative overall decline of Britain’s place in the world based upon their specific experiences,23 which in reality were by no means shared by even the majority of British businesses. Indeed, it was the perception of a depression among contemporaries that mattered far more in terms of global integration’s consequences than any quantitative reality, with sections of industry and trade complaining about a relative fall in profits and the newspapers reporting a ‘Long Depression’ as ‘fact’ off the back of these complaints,24 as seen in The Scotsman in 1878, who was a liberally inclined paper which catered to a region with heavy links to manufacturing, and thus had a ready audience for tales of woe that may affect this sector. This media perception of a depression was reinforced to the public by the actual closures and lay-offs in the specifically effected industries, despite the negatively affected industries not nearly being in the majority. An example of this can be seen with the

23 H.L. Beales, ‘Revisions in Economic History: 1. The “Great Depression” in Industry and Trade’, The Economic History Review, A5 (1934), 70. 24 The Scotsman , 14 March 1878, 4.

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1880 closure of certain iron mines (not all), which was blamed solely on the ‘Long Depression’.25 The creation of this perception, rather than the actual reality, was to influence political change and set in motion events such as calls for Tariff Reform and Bimetallic controversy through their mimicking of certain recommendations found in the Royal Commission on the Depression of Trade and Industry’s findings, published in 1886, and set-up to investigate the reality of the much-touted depression, on the back of growing public concern. The perception of a depression had thus forced the government to act. The Commission indeed found that there was a depressed state of British industry and trade and its ‘greatest and most permanent’ cause was the growth of subsidized and unsubsidized foreign competition, artificially supported foreign governments use of high tariffs.26 The commission was chaired by the Earl of Iddesleigh, a free-trade ideologue as highlighted by his earlier economic writings in which he had hoped his rabidly pro-free trade interpretation and criticism of previous British government’s trade policies will convince current politicians and the British people of the benefits of free trade.27 Thus, the emphasis on artificial foreign competition as a primary cause is perhaps unsurprising, however the call to legislate 10-15% tariffs on all foreign products entering Britain’s home market from a free-trader is rather surprising. 28 It highlights how the public, media and now government perception of a Long Depression, started to undermine Britain’s laissez faire philosophy of free trade and minimal state intervention in markets, a policy pursued since the 1840s. For while there is much debate about the degree laissez faire was actually a dogmatic socio-economic philosophy in Victorian Britain,29 there is broad consensus that Britain’s electors, officials and political elites largely did not favour state intervention, regardless of if this was informed by philosophy or expediency.

25 South Wales Daily News , 15 November 1880, 4. 26 The Royal Commission on the Depression of Trade and Industry, Final Report , (London, 1886) , lxiv 27 Stafford Henry Northcote (Earl of Iddesleigh), Twenty Years of Financial Policy. A summary of the chief financial measures passed between 1842 and 1861, with a table of Budgets (London, 1862), 75 28 Royal Commission, Final Report, lxv 29 In favour is Arthur Taylor, who argues laissez-faireism’s prevalence can be seen in the minimal increase in state expenditure between 1820-1870 of 57 to 69 million pounds, which highlighted a lack of state interventionism. - Arthur Taylor, Laissez-Faire and State Intervention in Nineteenth-Century Britain (London, 1972). Arrayed against this was John Brebner, who argued it was a ‘myth’, there actually being a mantra of ever-increasing interventionism to respond to the effects of industrialization. - John Brebner, ‘Laissez Faire and State Intervention in Nineteenth Century Britain’, The Journal of Economic History, 8 (1948), 65-69.

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Painting by Edward Cree of British sailors towing warships to besiege the Chinese city of Canton, 1841 (Public Domain)- The British Empire fought a series of wars against China, to force it to open its ports to international trade (not just British). While there were realpolitik reasons for this, a key influence was Britain’s ideological commitment to ‘Free trade’.

There is also a consensus to the fact that by the start of the 20 th century, state intervention had become mostly uncontroversial in Britain, 30 a huge U-turn. The Royal Commissions recommendation thus shows the influence that exposure to the world economy and perceptions of said exposure had in informing political change in Britain. A further key claim made by the Royal Commission was that the appreciation in the value of gold had also been a factor in driving down prices.31 This analysis highlights the link between the ‘Long Depression’ and the rise of the ‘Bimetallist Controversy’ which took place between 1880-1889. It was an economic controversy deemed important enough politically to contemporaries not merely to appoint a parallel Royal Commission on Currency, tasked to investigate the subject of bimetallism, but also for it to dominate the discussion among the wider-public, as evidence by the fact that the bimetallist controversy generate one publication on the subject by supporters, detractors and reporters every two days between 1881-1891,32 a huge output for the time. The controversy stemmed from Britain’s adoption of the gold standard in 1816, while imposing upon most of its colonies the silver standard.33 Other major industrial

30 P.W.J. Bartrip, ‘State Intervention in Mid-Nineteenth Century Britain: Fact or Fiction?’, Journal of British Studies, 23 (1983), 82, 1. 31 Royal Commission, Final Report, lxxiv 32 Ewen Henry Harvey Green, ‘Rentiers Verses Producers? The Political Economy of the Bimetallic Controversy c. 1880-1898’, The English Historical Review, 103 (1988), 588-612. 33 Wadan Narsey, British Imperialism and the Making of Colonial Systems (London, 2016), 21-22

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Samuel Jardine powers joined the gold standard later, such as Germany in 1873 and the United States in 1876 influenced partly by the prestige of it, and partly due it being a badge of economic confidence, that helped to sway opinion for favourable loan conditions based upon the implied economic stability of having a gold backed currency. 34 The late and relatively sudden joining of most of the worlds other major powers meant the work that the relatively inelastic global gold supply had to do increased, leading to the appreciation in its value, as it became more widely sought (and thus rarer) and the subsequent depression in prices for the economies producers as they adjusted. 35 In tandem to this appreciation in golds value, it also meant that the silver-based colonies and ‘non-industrial’ states like China, could no longer could afford to purchase products from Britain as gold had appreciated far beyond the worth of silver, while also because of this they were able to undercut Britain in its home and overseas markets as their silver-backed goods were far cheaper to produce and make a profit on comparatively than their gold-using British competitors. 36 This is part of the competitive decline mentioned by the Royal Commission as British manufactures and producers were being undercut on the global market by ‘second-rate’ powers, and their own colonies. The effects of this are seen with the Dundee’s jute manufacturers who demanded the government legislate protective trade policies for them (Tariffs) to mitigate India’s newfound competitive advantage over them, which had seen Indian jute able to undercut their own due to India as a silver-using nation able to pay far less for making the same products, while still making a profit in a gold-standard country like Britain. 37 Likewise, the cheaper silver-based colonial goods were seen to especially affect British farmers, hence their support for bimetallism.38 Bimetallism was the political and economic argument that the state should adopt both Gold and Silver as its currency standards, and through unilateral and then international agreement impose the cross convertibility of gold and silver, at a fixed price. In this way they hoped to prevent silver using nations being able to artificially undercut gold-standard nations manufactures.

34 Michael Bordo and Hugh Rockoff, ‘The Gold Standard as “Good Housekeeping Seal of Approval”’, The Journal of Economic History, 56 (1996), 389-390 35 Green, ‘Rentiers Verses Producers?’, 590-91 36 Green, ‘Rentiers Verses Producers’, 597 37 J. Tomlinson, ‘Orientalism at work?: Dundee’s response to competition from Calcutta, circa 1870-1914’, Journal of Imperial and Commonwealth History, 43 (2015), 807 38 Green, ‘Rentiers Verses Producers’, 595

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Not all suffered though from the discrepancy between gold and silver. Historian Ewen Green argues that London’s financiers benefited from this situation as seen in a statement from the Chairman of the Glynn, Mills and Currie Merchant banks to the Royal Commission on Currency, that the appreciation of gold meant the payments from foreign debtors was comparatively increased, strengthening Britain with a greater flow of goods and money coming in from abroad.39 Anthony Howe argues however that Green’s thesis of producers (industry and agriculture) opposing finance is too neat, he highlights that some manufacturers also supported the gold standard, and financiers could be bimetallic supporters. 40 This is true, bimetallism encompassed a variety of different perspectives at its inception, though as the debate grew, its leaders extolled a binary divide between producers and rentiers as showcased with the comments of the Bimetallic League’s president H.H. Gibbs in 1889 that the producers of wealth suffered at the expense of those who live on ‘realised’ wealth.41 Thus, despite bimetallism from its inception encompassing a variety of views, even those of free-traders who believed it might restore British trade flows with India,42 it was though usurped by protectionist rhetoric,43 and advocators of greater state intervention as highlighted by the Bimetallist League’s vision of the state and not the market being the one to artificially set the value of gold and silver through internationally agreed limitations.44 It is perhaps no coincidence that and , two Conservative politicians who debated not the positives and negatives of free trade, but the scope for tariff reform, should both be bimetallist supporters, despite their later denials.45 The tariff reform movement of course had earlier roots than the Long Depressions aftermath, or the Bimetallic controversy, as highlighted by calls from farmers in 1874 to repeal the work of the Anti-Corn Law League.46 However, its key late-Victorian element was started in 1881 and embodied by the National Fair-Trade League. It was a pressure group for protectionism started by a few Conservative MP’s and businessmen in direct consequence

39 Green, ‘Rentiers Verses Producers’, 599 40 Anthony Howe, ‘Bimetallism, c.1880-1898: A Controversy Re-opened?’, The English Historical Review, 105 (1990), 390-391 41 Green, ‘Rentiers Verses Producers’, 607 42 Howe, Free Trade , 201 43 Anthony Howe, Free Trade and Liberal England, 1846-1946 (Oxford, 1991), 203 44 Green, ‘Rentiers Verses Producers’, 593 45 Green, ‘Rentiers Verses Producers’ 588 46 Robert Blake, Disraeli (London, 1966), 698

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Samuel Jardine to the perception of the ‘Long Depression’ presented by the Royal Commission that the distressed condition of British industry was due to the revived protectionism of foreign powers and the British governments upholding of free trade and unwillingness to fight for reciprocity in trade opportunities through retaliatory tariffs.47 The steady growth of protectionist support meant that by 1900, a considerable number of British businesses deemed retaliatory tariffs necessary,48 as the break-down of the informally know ‘Cobden treaty system’ which had created a significant degree of cheaper, if not free trade, throughout most European states crumbled as protectionist policies were steadily re- implemented by everyone but Britain.49

A poster advertising the Tariff Reform League, 1905-1910 (Public Domain)- The central figure is Joseph Chamberlain, a Conservative imperialist and a charismatic and leading protectionist campaigner who split his party over his anti-free trade, pro-tariff stance. Tariff Reformers feared that Britain was being outcompeted by the US and Germany and needed to adopt protectionist measures (already in place by rival powers) to protect British businesses and the empire.

The Royal Commission’s seeming prescience then in warning of the permeance of the issue of ever-increasing artificial protections for foreign companies is confirmed, 50 as

47 Sydney Zebel, ‘Joseph Chamberlain and the Genesis of Tariff Reform’, Journal of British Studies, 7 (1967), 135 48 Martin Hewitt, The Victorian World (Abingdon, 2012), 121 49 Sydney Zebel, ‘Fair trade: An English Reaction to the Breakdown of the Cobden Treaty System’, The Journal of Modern History, (1940), 162 50 Royal Commission, Final Report, lxiv

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Samuel Jardine global economic integration had left British commerce, industry and agriculture at a disadvantage with little time to adjust to the new global realities. When indeed most British farmers who had given evidence of their depressed conditions to the Royal Commission, now began supporting protectionism to alleviate their suffering,51 these traditional core conservative voters combined with the calls of wider British manufacturers prompted Conservative Prime Minister and former bimetallist, Arthur Balfour to promote a retaliatory tariff on foreign goods as articulated in 1903.52 It was a commitment that Britain would put protectionist tariffs on the products of any country which was perceived as treating Britain with ‘outrageous unfairness’.53 This is a rather radical step in contemporary politics, though distinctly less radical than the blanket 10-15% duties on foreign products that the free-trade leaning Royal Commission report paradoxically advocated. Balfour’s smaller radicalism though was necessarily couched in a retaliatory language that was aimed at keeping his divided Conservative party together over the contentious issue of implementing protectionist policies. 54 He attempted this through the implication that this might only be a temporary measure until foreign partners ‘re-shifted’ back to free trade, this it was hoped would satisfy protectionist conservatives while keeping the free traders on board. The conciliatory tone did not work, though it was not the free-traders who refused to compromise, but those protectionists who felt it did not go far enough. Joseph Chamberlain, another key former bimetallist, left his position as Secretary of State for the Colonies in 1903 to advocate aggressively for a more fundamentally protectionist tariff system of ‘Imperial preference’, with preferential treatment for the empire, and tariffs for foreign powers.55 This however was not quite so radically new as typically believed, the free-trading influenced Royal Commission had actually advocated the implementation of a system of preferential tariffs for India and the colonies at the expense of foreign states previously. 56 This highlights the pervasive growth of the protectionist-tariff concept among the British

51 Hewitt, The Victorian World, 121 52 Mary Lawson-Tancred, ‘The Anti-League and the Corn Law Crisis of 1846’, The Historical Journal, 3 (1960), 162-3 53 Andrew Marrison, Free Trade and Its Reception1815-1960: Freedom and Trade Volume One (Abingdon, 2002), 225 54 Douglas Irwin, ‘The Political Economy of Free Trade: Voting in the British General Election of 1906’, Journal of Law and Economics, 37 (1994), 82 55 Marrison, Free Trade, 226-27 56 Royal Commission, Final Report, lxvi

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Samuel Jardine electorate, political elite and even supporters of free-trade, unconsciously or otherwise, directly off the back of the perception of the Long Depression’s, and its social and political fallout. This is highlighted succinctly by the comparative strength of the anti-free trade Tariff Reform League, the leading pressure group which by 1914 had over 250,000 members,57 no small number when compared with the British Naval League’s amassing of only 150,000 members by 1914, despite the Naval Leagues far more cross-party appeal and the prevailing atmosphere of Jingoism and ‘Dreadnought fever’ of the proceeding years helping it along. 58 Thus through the actual and more importantly, the perception of the impact that exposure to the global economy had on Britain, with both the British economies greater susceptibility to depressions caused by events in distant regions of the globe and exacerbated by increasing foreign competition causing Britain’s competitive (though not actual) decline and the perception of these issues among the public, the Conservative party allowed by the 1900s state interventionist and protectionist perspectives to go politically ‘mainstream’ among the political establishment. Especially as members of Chamberlains Tariff Reform League possessed fewer problems with large-scale government expenditure and intervention in the economy than any other widespread British political group at the time. 59 Indeed this state interventionist and protectionist platform would even afflict the liberals, a party based around the support of free trade, by contributing to the implementation of their draft of social interventionist policy from 1905-1914 which made up their ‘New Liberalism’,60 as Henry Herbert Asquith’s government of 1909 sought to stave off criticism for their continued commitment to free trade,61 by implementing such programs as the Development and Road Improvement Act, whose Development Commission were given two-and-a-half million pounds of public funding for agricultural research activities which promoted economic development,62 an unprecedented intervention in the research economy. While it was an intervention that was arguably primarily aimed at trying merely to

57 David Thackery, ‘The Crisis of the Tariff Reform League and the Division of ‘Radical’ Conservatism, c.1913- 1922’, History, 91 (2006), 45 58 See Mathew Johnson, Militarism and the British Left, 1902-1914 (Basingstoke, 2013). 59 Thackery, ‘Tariff Reform League’, 61. 60 Michael Freeden, The New Liberalism: An ideology of Social Reform (Oxford, 1986), 3 61 Howe, Free Trade, 191 62 Robert Olby, ‘Social Imperialism and state support for agricultural research in Edwardian Britain’, Annals of Science, 48 (1991), 515

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Samuel Jardine politically weaken demands for protectionism from farmers through essentially token action.63 The fact remains this was unprecedented from a party who were married to concepts of the free-market and free trade. While this should by no means be conflated with the beginnings of the ‘big government’ that Britain saw post-1945 it shows that the negative consequences, real or imagined of Britain’s centrally integrated place within the global economy helped influence a change in its political economy towards a more interventionist state. This compliments W.T. Hutchison’s point that a ‘new interventionism’ of the state already existed in the mid-19 th century before the ‘old interventionism’ of the pre-free trade era had been fully expunged.64 The evidence for this is as laid out, to summarize this essay, in how global economic integration helped influence the rebirth of popular pro-state interventionist agenda and support for protectionism, even among Britain’s free trade advocates. It did this by the perception of the negative consequences of this global integration, as showcased in the ‘Long Depression’ and the attendant bimetallist controversy, creating social and political dissent in British that pushed the Conservative parties conversation away from Robert Peel’s free trade and towards debates about the extent of tariffs, not if they should exist. At the same time it also informed the growth of the Liberal parties ‘New Liberalism’ which saw the Liberals shift away from unquestioning support of a laissez-faire Gladstonian Imperialism, based upon the principles of the free market, an abhorrence of state intervention in the economy and the support of free trade. 65 Any analysis of the ‘Long Depression’ of 1873-1896 and tracking its economic and political changes is fraught with peril, especially one that is not at least a PHD dissertations length. Generalizations are made by historians, and indeed even by me, over the ‘natures’ of what complex structural changes are. Structural changes that were not even apparent to contemporaries working on the Royal Commissions, let alone historians casting back with fewer direct sources of information than they enjoyed. The fact also that economic conditions are not universal, means that different groups are presented in a myriad of different ways which prevents a strong concluding statement to this essay. Instead i will conclude that overall, for significant proportions of Britain’s society, global economic

63 Paolo Palladino, ‘The Political Economy of Applied Research: Plant Breeding in Great Britain, 1910-1940’, Minerva, 28 (1990), 467. 64 W. T. Hutchison, A Review of Economic Doctrine 1870-1929 (Oxford, 1953) 65 Roland Quinault, William Gladstone: New Studies and Perspectives, (Abingdon, 2016), 327

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Samuel Jardine integration had some impact upon their lives, its negative consequences, highlighted during the Long Depression, or at least the perception popularly promulgated of it to elites and the wider public helped to shape growing calls for state interventionism in Britain in a steady and growing manner. It also allowed the nourishment of a growing reaction against the free trading open integration model that had secured Britain’s economic ascendancy on the world stage. This reaction was to become so great that during the Edwardian era, comparatively large-scale state intervention had become uncontroversial. Britain’s integration within the global economy thus fundamentally influenced changes to its political economy at home, through the fostering at least some economic instability, which led to much social instability based upon its perception.

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