Published online by Cambridge University Press: 03 February 2011
It is nearly a quarter century since H. L. Beales produced his notable article on “The Great Depression.” Since then a great deal of work has been done on that period, especially by economists and statisticians, so that it is now possible to make a fuller assessment of the changes in Britain's economic position during those years. Most of this work has been in the form of specialized articles and books covering longer periods, on such subjects as national income, investment, or terms of trade, and there appears to be a need for some attempt at synthesis, especially as the various interpretations put forward are not always in agreement and are sometimes contradictory. It would be impossible, of course, in a mere article, to settle all the theoretical problems suggested by the facts or to resolve all the divergencies of opinion, but it is worth while to draw the evidence and opinions together in an effort to get a general picture.
1 “‘The Great Depression’ in Industry and Trade,” Economic History Review, V (1934–1935), 65–75Google Scholar.
2 See, for example, the statistical series in the Board of Trade's Memoranda, Statistical Tables and Charts …on British and Foreign Trade and Industrial Conditions, Parl. Papers, 1903, LXVII (Cd. 1761)Google Scholar; 1904, LXXXIV (Cd. 2337). These will henceforth be referred to as Memoranda (1903) and Memoranda (1904). See also Cole, G. D. H., British Trade and Industry, Past and Future (London: Macmillan, 1932), ch. vGoogle Scholar.
4 Schumpeter, J. A., Business Cycles (2 vols.; New York: McGraw-Hill Book Co., 1939), I, 338Google Scholar.
6 See Giffen, R., Economic Inquiries and Studies (2 vols.; London: G. Bell & Sons, 1904), passimGoogle Scholar.
7 Rostow, W. W., British Economy of the Nineteenth Century (Oxford: Oxford University Press, 1948), pp. 58–59Google Scholar.
8 Smith, W. E., The Recent Depression of Trade (London, 1880), pp. 26–32Google Scholar; Royal Commission on the Depression of Trade and Industry, Final Report, Pad. Papers, 1886, XXIII ( C 4893), xxi; Memoranda (1903), pp. 209–70Google Scholar, 459-60, 468-69, and Memoranda (1904), pp. 29–75Google Scholar; , Giffen, Economic Inquiries and Studies, especially Vol. I, ch. vGoogle Scholar; Wood, G. H., “Some Statistics Relating to Working-Class Progress Since 1860,” Journal of the Royal Statistical Society, LXII (1899), 639–66CrossRefGoogle Scholar, and “Real Wages and the Standard of Comfort since 1850,” ibid., LXXII (1909), 91-103; Bowley, A. L., “Tests of National Progress,” Economic Journal, XIV (1904), 457–65CrossRefGoogle Scholar, The Change in the Distribution of the National Income, 1880-1913 (Oxford: Milford, 1920), pp. 13–15Google Scholar, and Wages and Income in the United Kingdom Since 1860 (Cambridge: Macmillan, 1937), pp. 27–36Google Scholar and 90-99; Mackenzie, W. A., “Changes in the Standard of Living in the United Kingdom, 1860-1914,” Economica, I (1921), 211–30CrossRefGoogle Scholar; , Cole, British Trade and Industry, p. 84Google Scholar; Layton, W. and Crowther, G., An Introduction to the Study of Prices (London: Macmillan, 1935), pp. 95–97Google Scholar and Appendix E; Clark, C., National Income and Outlay (London: Macmillan, 1937), pp. 228–33Google Scholar; , Rostow, British Economy, ch. ivGoogle Scholar; Prest, A. R., “National Income of the United Kingdom, 1870-1946,” Economic Journal, LVIII (1948), 31–62CrossRefGoogle Scholar.
11 For discussions of the usefulness and limitations of these statistics, see Memoranda (1904), PP. 77–126Google Scholar; Beveridge, W. H., Unemployment: A Problem of Industry (London: Longmans, Green & Co., 1909), ch. iiGoogle Scholar; Bowley, A. L., “The Measurement of Unemployment: An Experiment,” Journ. Roy. Stat. Soc, LXXV (1911–1912), 791–822Google Scholar.
13 Giffen, R., “Trade Depression and Low Prices,” Contemporary Review, XLVII (01-06 1885), 800–22Google Scholar.
15 It formed the main theme of the first edition of Layton's Introduction to the Study of Prices as long ago as 1912. For some recent discussions of this relationship in the United Kingdom during the nineteenth century, see Rostow, British Economy, ch. i, and Brown, E. H. Phelps and Ozga, S. A., “Economic Growth and the Price Level,” Ec. J., LXV (1955), 1–18Google Scholar.
16 The Sauerbeck, Economist, and Board of Trade indices are conveniently reproduced in , Layton and , Crowther, Introduction to the Study of Prices, p. 230Google Scholar.
18 For contemporary expressions of this point of view, see , Giffen, Economic Inquiries, I, chs. iv and vGoogle Scholar; Sauerbeck, A., “Prices of Commodities and the Precious Metals,” fount. Roy. Stat. Soc, XLIX (1886), 581–648Google Scholar; and evidence before the Royal Commission on Recent Changes in the Relative Values of the Precious Metals, Part. Papers, 1887, XXII (C. 5099), 1888, XLV (C. 5248 and C. 5512)Google Scholar.
19 Ashley, W. J., Gold and Prices (London: Longmans, Green & Co., 1912); IGoogle Scholar. , Fisher, The Purchasing Power of Money (New York: The Macmillan Co., 1911), pp. 242–47Google Scholar; Cassel, G., The Theory of Social Economy (London: Unwin, 1923), ch. xiGoogle Scholar; Kitchin, J., “Gold Production,” in Royal Institute of International Affairs, The International Cold Problem (Oxford: Oxford University Press, 1931)Google Scholar; Hawtrey, R. G., The Art of Central Banking (London: Longmans, Green & Co., 1932), pp. 199–200Google Scholar, and A Century of the Bank Rate (London: Longmans, Green & Co., 1938), pp. 46–48Google Scholar, 65, 90-105; Michell, H., “The Gold Standard in the Nineteenth Century,” Canadian Journal of Economics and Political Science, XVII (1951), 369–76CrossRefGoogle Scholar.
23 Phinney, J. T., “Gold Production and the Price Level,” Quarterly Journal of Economics, XLVII (1932–1933), 647–79Google Scholar. See also Brown, Phelps and , Ozga, “Economic Growth,” Ec. J., LXV (1955), 5–8Google Scholar; Higgonet, R. P., “Bank Deposits in the United Kingdom, 1870-1914,” Quarterly Journal of Economics, LXXI (1957), 329–67CrossRefGoogle Scholar.
24 The Economist, 1885, pp. 687–88Google Scholar; Marshall, Official Papers, chs. i and ii (evidence before R. C. on Depression of Trade and Industry, 1886, and R. C. on Gold and Silver, 1887); Wells, Recent Economic Changes, passim.
27 , Rostow, British Economy, especially ch. iii. Sec pp. 2: 5–22Google Scholar of this article for an examination of Rostow's investment theory.
28 See pp. 210-13 of this article. 2 9 See pp. 218-19 of this article.
32 Hoffmann, W., British Industrial Production, 1700-1950 (Oxford: Blackwell, 1955), pp. 31–33Google Scholar.
33 See, for example, Brown, E. H. Phelps and Handfield-Jones, S. J., “The Climacteric of the 1890's: A Study in the Expanding Economy,” Oxford Economic Papers, n.s., IV (1952), 266–307CrossRefGoogle Scholar, and Coppock, D. J., “The Climacteric of the 1890's: A Critical Note,” The Manchester School, XXIV (1956), 1–31CrossRefGoogle Scholar. Coppock follows Lewis, W. A., Economic Survey, 1919-1939 (London: Allen & Unwin, 1949), pp. 74–75Google Scholar, in placing the climacteric in the 1870's.
34 Burn, D. L., The Economic History of Steelmaking, 1867-1939 (Cambridge: Macmillan, 1940), especially ch. x and pp. 67–69 and 296-305Google Scholar; Burnham, T. H. and Hoskins, G. O., Iron and Steel in Britain, 1870-1930 (London: Allen & Unwin, 1943)Google Scholar, especially ch. ix; , Clapham, Economic History, II, 51 and 60-61Google Scholar; III, 70, 122, and 145-56; Report [on] the Iron and Steel Trades After the War, Parl. Papers, 1918, XIII (C. 9071), 5, 18–25, 39Google Scholar.
35 Jones, G. T., Increasing Return (Cambridge, England: Cambridge University Press, 1933), pp. 50–51Google Scholar, 141-45, 236-44.
36 See the third edition of The Coal Question (ed. Flux, A. W., London: Macmillan, 1906)Google Scholar; , Clapham, Economic History, II, 99–104Google Scholar, and III, 63-64, 69, 124-25, 162-68; , Hoffmann, British Industrial Production, pp. 215 and 320Google Scholar; Report of the Royal Commission on the Coal Industry, Parl. Papers, 1925, XIV (Cd. 2600) ch. xiGoogle Scholar.
37 Chapman, S. J., The Lancashire Cotton Industry (Manchester: Sherratt & Hughes, 1904), pp. 32–33 and 70-7:Google Scholar; , Clapham, Economic History, II, 80–81Google Scholar; III, 70, 126, 175-77; , Jones, Increasing Return, pp. 50–51Google Scholar, 114-19, 210, 212, 218; Report. [on[ the Textile Trades After the War, Parl. Papers, 1918, XIII (Cd. 9070), 51–52Google Scholar; Farnie, D. A., “The English Cotton Industry, 1850-1896” (unpublished M.A. thesis, Manchester University, 1953), pp. 21–27 and 37–40Google Scholar
39 See especially Kuznets, S., “Retardation of Industrial Growth,” Economic Change (London: Heinemann, 1954)Google Scholar, who states that a “decline in the rate of increase is a generally observed trait of industrial growth.”
41 Lewis has pointed out that Britain's failure was a “failure to achieve technological leadership in the new trades, especially in steel, in machinery, and, less important, in chemicals.” “International Competition in Manufactures,” American Economic Review, XLVII (1957), 582. See p. 219 of this articleGoogle Scholar.
43 , Coppock, “Critical Note,” Manchester School, XXIV (1956), 23–24 (based onGoogle ScholarWeber, B. and Handfield-Jones, S. J., “Variations in the Rate of Economic Growth in the U.S.A., 1869-1939,” Oxford Economic Papers, n.s., VI , 127Google Scholar; Lewis, W. A. and O'Leary, P. J., “Secular Swings in Production and Trade, 1870-1913,” Manchester School, XXIII , 149Google Scholar; and Stolper, G., The German Economy, 1870-1940 [London: Allen ], p. 41.)Google Scholar See also Clark, C., The Conditions of Economic Progress (London: Macmillan, 1940), chGoogle Scholar.
44 Industrialization and Foreign Trade, p. 13.
45 Gordon, D. F., “Obsolescence and Technical Change: Comment,” Am. Ec. Rev., XLVI (1956), 650Google Scholar.
46 , Clapham, Economic History, II, 122Google Scholar. There is a very good brief discussion of the causes of Britain's relative decline in the article by W. A. Lewis, “International Competition,” cited above (n. 41).
47 Burn, Economic History of Steelmaking, ch. ix.
48 This view has recently been re-emphasized by Frankel, M., “Obsolescence and Technical Change in a Maturing Economy,” Am. Ec. Rev., XLV (1955), 296–319Google Scholar, and XLVI (1956), 652-56.
53 , Lewis, “International Competition,” pp. 585–87Google Scholar. Cf. , Clapham, Economic History, III, 52–53Google Scholar, referring to the great capital export boom after 1905. Rostow, on the other hand, suggests that there was too little foreign investment during the Great Depression. See pp. 215-22 of this article.
65 Douglas, P. H., “An Estimate of the Growth of Capital in the United Kingdom, 1865-1909,” Journal of Economic and Business History, II (1929-1930), 659–84Google Scholar.
56 Lenfant, J. H., “Great Britain's Capital Formation, 1865-1914,” Economica, n.s., XVIII (1951). 151–68CrossRefGoogle Scholar; Brown, Phelps and , Handfield-Jones, “Climacteric,” Oxf. Ec. Pap., n.s., IV (1952), 266–307CrossRefGoogle Scholar; Brown, E. H. Phelps and Weber, B., “Accumulation, Productivity and Distribution in the British Economy, 1870-1938,” Ec. J., LXIII (1953), 263–88CrossRefGoogle Scholar; , Cairncross, Home and Foreign Investment, ch. viGoogle Scholar.
67 , Lenfant, “Great Britain's Capital Formation,” p. 160Google Scholar. Cf. the estimates of Brown, Phelps and , Weber, “Accumulation,” p. 286Google Scholar, and , Cairncross, Home and Foreign Investment, pp. 197–201Google Scholar. It must be pointed out, however, that 1870-1874 was a short cyclical boom period, which cannot be fairly compared with an intercyclical twenty-year period. Unfortunately, there are no reliable estimates for the years before 1870.
60 lbid., pp. xiv-xvi; Memoranda (1903), pp. 454–55Google Scholar; , Bowley, “Tests of National Progress,” Ec. J., XIV (1904), 457–65Google Scholar, National Income, 1880-1913, pp. 8-10, and Wages and Income. … Since 1860, pp. 90-99; , Prest, “National Income,” Ec. J., LVIII (1948), 57Google Scholar.
82 R. C. on Depression, Final Report (1886), p. xivGoogle Scholar. See also the minority observations appended to the report on p. xxvi.
66 Meyer, J. R., “An Input-Output Approach to Evaluating the Influence of Exports on British Industrial Production in the Late 19th Century,” Explorations in Entrepreneurial History, VIII (1955-1956), 12–34Google Scholar; , Coppock, “Critical Note,” Manchester School, XXIV (1956), 28–31Google Scholar.
69 Schlote, W., British Overseas Trade from iyoo to the 1930's (Oxford: Blackwell, 1952), p. 42Google Scholar. See also Imlah, A. H., “The Terms of Trade of the United Kingdom, 1798-1913,” The Journal of Economic History, X (1950), 170–94CrossRefGoogle Scholar. At 1880 prices, exports rose from an annual average of £188.5 millions in 1875-79 t 0 £284.4 millions in 1890-94 (Imlah).
70 , Schlote, British Overseas Trade, p. 42Google Scholar. At 1880 prices, net imports grew from an annual average of £311.6 millions in 1875-79 to 471-7 millions in 1890-94 (Imlah).
71 Imlah, A. H., “British Balance of Payments and Export of Capital, 1816-1913,” Economic History Review, 2d ser., V (1952), 237–38Google Scholar.
72 Jenks, L. H., Migration of British Capital to 1895 (New York: Alfred A. Knopf, 1927), PP. 332–33Google Scholar.
73 Imlah's figures. For other figures of British foreign investment during this period, see Hobson, C. K., The Export of Capital (London: Constable, 1914), p. 204Google Scholar; , Douglas, “Growth of Capital,” fourn. Ec. Bus. Hist., II (1929-1930), 680Google Scholar; , Lenfant, “Great Britain's Capital Formation,” Economica, n.s., XVIII (1951), 160Google Scholar; , Cairncross, Home and Foreign Investment, p. 180Google Scholar.
75 Thomas, B., Migration and Economic Growth (Cambridge, England: Cambridge University Press, 1954), p. 122Google Scholar, notes that Britain, after “first sowing the seed in the form of capital exports,” was now “reaping the harvest in imports.”
78 Comparisons of home and overseas investment are to be found in the works by Douglas, Lenfant, Cairncross, and Thomas, previously cited (nn. 51, 55, 56, 75).
79 Imlah's estimates.
82 Imlah's figures.
83 From the annual figures of , Lenfant, “Great Britain's Capital Formation,” Economica, n.s., XVIII (1951), 160Google Scholar.
86 Taussig, F. W., International Trade (New York: The Macmillan Co., 1927), pp. 412–13Google Scholar, and “The Change in Great Britain's Foreign Trade Terms after 1900,” Ec. J., XXXV (1925), 1–10Google Scholar;Silverman, A. G., “Monthly Index Numbers of British Export and Import Prices, 1880-1913,” Review of Economic Statistics, XII (1930), 139–48CrossRefGoogle Scholar, and “Some International Trade Factors for Great Britain, 1880-1913,” ibid., XIII (1931), 114-24; , Schlote, British Overseas Trade, p. 155Google Scholar; , Imlah, “Terms of Trade,” The Journal of Economic History, X (1950), 170–94Google Scholar; , Cairncross, Home and Foreign Investment, pp. 189–92Google Scholar; Meier, G. M., “Long-Period Determinants of Britain's Terms of Trade, 1880-1913,” Review of Economic Studies, XX (1952-1953). 5–30Google Scholar; Kindleberger, C. P., “Industrial Europe's Terms of Trade on Current Account, 1870-1953,” Ec. J., LXV (1955), 19–35CrossRefGoogle Scholar.
89 Ojala, E. M., Agriculture and Economic Progress (London: Oxford University Press, 1952), p. 15:Google Scholar.
93 , Layton and , Crowther, Introduction to the Study of Prices, p. 90Google Scholar; , Cairncross, Home and Foreign Investment, p. 192Google Scholar. See also , Ojala, Agriculture and Economic Progress, p. 158Google Scholar, for the improvement in United States agricultural incomes and purchasing power during this period.
94 Cf. the effects of cost-reducing mechanization in British industry in the first half of the nineteenth century. The net barter terms of trade deteriorated, but so great was die increase in output and trade that Britain gained considerably. Ashton, T. S., “The Standard of Life of the Workers in England, 1790-1830,” The Journal of Economic History, IX (1949), Supplement, 19–38CrossRefGoogle Scholar.
97 , Lewis, “World Production, Prices and Trade (1870-1960),” Manchester School, XX (1952), especially p. 126Google Scholar.
100 Industrialization and Foreign Trade, pp. 14-18 and 157.
103 , Lenfant, “Great Britain's Capital Formation,” Economica, n.s., XVIII (1951), 162–67Google Scholar.
105 This view-that foreign investment determines the terms and quantity of foreign trade, rather than vice versa-is supported by , Taussig, “Britain's Foreign Trade Terms,” Ec. J., XXXV (1925), 7Google Scholar; , Schumpeter, Business Cycles, II, 668Google Scholar; , Clark, Conditions of Economic Progress, pp. 15Google Scholar and 466. See also , Rostow, “Historical Analysis,” Ec. H. R., 2d ser., IV (1951-1952), 63–67Google Scholar.
106 See p. 217 of this article.
110 Industrialization and Foreign Trade, p. 157.
112 See p. 223 of this article.
113 Cunningham, W., The Rise and Decline of the Free Trade Movement (London: Clay, 1904), pp. 85–92Google Scholar. For other works on the growth of foreign competition and protection, see p. 227 of this article.
114 Annual Statements of Trade, Statistical Abstracts, Memoranda (1903), Memoranda (1904). These have been analyzed by Schlote, British Overseas Trade.
115 Memoranda (1903), pp. 18-19. Most European countries, the United States, and Canada were listed as protectionist.
118 Statistical Abstracts.
120 On this latter point see, for example, the 1886 Royal Commission's Final Report, p. xx, and Gastrell, W. S. H., Our Trade in the World in Relation to Foreign Competition, 1885 to 1895 (London, 1897), ch. iiiGoogle Scholar.
122 Lewis points out that “Britain equipped herself in the first half of the nineteenth century to sell cotton and railway materials, and she thus got into a rut which unfitted her to sell steel and machinery at the end of the century.” “International Competition,” Am. Ec. Rev., XLVII (1957). 583Google Scholar. This is an oversimplified exaggeration, but contains a substantial element of truth..
124 Memoranda (1903), pp. 368 and 446-47.
125 Caird, J., The Landed Interest and the Supply of Food (4th ed.; London, 1880), pp. 5–6Google Scholar.
129 The most important contemporary evidence is contained in the reports of the Royal Commissions on agriculture, 1882 and 1894-97, and in the Royal Agricultural Society's Journal. For general accounts of agriculture in this period, see Ernie, Lord, English Farming, Past and Present (4th ed.; London: Longmans, Green & Co., 1927)Google Scholar, ch. xviii, and , Clapham, Economic History, II, ch. vii; III, ch. iiGoogle Scholar.
130 Royal Commission on Agricultural Depression, Final Report, Part. Papers, 1897, XV (C. 8540), 6Google Scholar.
132 Rhee, H. A., in The Rent of Agricultural Land in England and Wales, 1873-1946 (London: Central Landowners Association, 1949), pp. 29–58Google Scholar.
133 Bellerby, R. J., Agriculture and Industry: Relative Income (London: Macmillan, 1956), pp. 56 and 62-71Google Scholar.
137 See, for example, Medley, G. W., The Reciprocity Craze (Cobden Club pamphlet; London, 1881)Google Scholar; Farrer, T. H., Free Trade Versus Fair Trade (London, 1885)Google Scholar; Williams, E. E., Made in Germany (London, 1896)Google Scholar. Later historical studies include Cunningham, Rise and Decline of the Free Trade Movement; Fuchs, C. J., Trade Policy of Great Britain and Her Colonies Since 1860 (London: Macmillan, 1905)Google Scholar; Ashley, P., Modern Tariff History (3d ed.; London: Murray, 1920)Google Scholar; Hoffman, R. J. S., Great Britain and the German Trade Rivalry, 1875-1914 (Philadelphia: University of Pennsylvania Press, 1933)Google Scholar; Brown, B. H., The Tariff Reform Movement in Great Britain, 1881-1895 (New York: Columbia University Press, 1943)Google Scholar.
138 Hobson, C. K., Imperialism (London: Nisbet, 1902)Google Scholar; Moon, P. T., Imperialism and World Politics (New York: The Macmillan Co., 1926)Google Scholar; , Jenks, Migration of British Capital, ch. viiGoogle Scholar; Gallagher, J. and Robinson, R., “The Imperialism of Free Trade,” Ec. H. R., 2d ser., VI (1953-1954). 1–15Google Scholar.
139 Memoranda (1903), pp. 417-18 and 427-30.