economics in britain 1830-1848

8/6/2019 Economics in Britain 1830-1848

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Economics in Britain1830-1848By Amy


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Goldsmiths as Bankers? Banks and banknotes developed in eighteenth and

nineteenth centuries People sometimes wanted to keep their money safe so theygave it to the goldsmith who gave them a receipt to tell

them they would keep the money safe

Promissory notes were given The governments borrowed money from rich goldsmiths

and merchants

G

oldsmiths gave interest to depositors

Banking and Finance


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Was made so that the government could borrow upto 1.2 million

After 1696 there was national debt because ofloans (government thought it was effective)

National debt was over 800 million in 1815

An act was passed in parliament that preventedrival banks from setting up competition

The Bank Of England

Banking and Finance


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The Clearing Banks Banking systems continued to develop in

goldsmiths and merchants

In London many Banks received a hundreds ofcheques every day Clerks were trusted with large sums of money

from different banks They met up each day to see the differences in

cheque sums and settled these with cash The Beginning of the London Clearing House

system

Banking and Finance


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Financing the Industrial Revolution In the early years of the revolution finances came from

outside sources

Local merchants and landowners wanted to invest inexpanding business enterprises, they paid out loanssometimes

People who owned shares or stock got dividends in returnfor financing big projects

Like the bankers, they met up every day as well They moved to newly built stock exchange In the 1840s there was a rush of investors to fund new

railway companies

Banking and Finance


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The growth of banking Many private banks sprung up across

Britain

Some companies needed cash to pay wages

There was a lot of surplus money around

In 1810 there was 721 small banks withdifferent notes

FRAUD!!!

New law came in forcing banks to merge

Banking and Finance


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The Bank Charter Act of 1844 A law brought in so that every bank note was

backed by a sum of gold

This act separated the bank of England The act also prevented all new banks from

creating bank notes Big banks safer than small Cheque became a more useful way of

transferring money This could have been a serious downfall in

the British economy

Banking and Finance


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Insurance London became the centre of the worldslargest empire

People pay a small sum of money to lookafter their house and all insured houses hadplacards or slabs of metal to show this

They accepted insurance risks from ships tosteel works

Banking and Finance


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Taxation People thought nothing of smuggled goods, even the

rich didnt care

At times of war income tax was brought in so that

if you earned 60 a year or more you had to paythe percentage on the tax, this cost goes up to 200a year or more

There were taxes on every part of society and it hit

the poorest people hardest Income tax was re-introduced again in 1842 and

the rate was 7d in the pound (roughly 3p per 1)


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Overseas Trade

They had exclusive trading rights Chartered companies were set up to take care of trade

overseas, without them, we would not of got raw

materials from overseas The most prominent organisation was the East

India Company, which became very powerful, youmay remember this name from Pirates of the

Caribbean Many fortunes were made in the eighteenthcentury

Earl Grey for example is a delicate tea from China,

discovered by Earl Grey in the eighteenth century

The Chartered Companies


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Overseas TradeThe South Sea Bubble

It was a huge scandal Investors lost a lot of money In South Sea Company They had control of Central & South America,

Pacific coast of North America and later on theygained control of the Spanish Indies

Basically, there was a lot of shareholders who sawtheir shares grow and grow but they sold theirshares at a peak time (the bubble burst) and thevalue of stock dropped dramatically which meant

the investors lost large sums of money


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Overseas Trade

The Triangular Trade This is based on a slavery route The companies in Britain and America gained a lot of money through

profits Organised since 1672 by the Royal African Company

Ships started at Liverpool or Bristol, then headed to West Africa andthey carried cheap goods for slave dealers to take in return for slaves. The slaves had often been caught in battle and yoked together For six weeks the slaves travelled across the Atlantic in shackles,

scarcely able to move. Known as the middle passage

They either went to America or the Caribbean The money for slaves was reinvested by the products eg: sugar, rum,tobacco and cotton ( in great demand in Britain)

The small investment could pay for the valuable cargo on return tripto Britain

Slave trade abolished in Britain in 1807 but it took till 1833 forslavery to be totally abolished throughout the British Empire

To be sold, a negro boy, aged eleven years.

Enquire of the Virginia Coffee Housein Threadneedle Street, behind the Royal Exchange


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Overseas Trade

Overseas Investment Basically the City of London finance trade

overseas

Mostly they invested in government stocks,railways and other projects over the globe

The investments earned high interest rates

Money usually spent on British machineryand equipment to help in these projects


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Free Trade

British Imports & Exports 1720s-1840sDecade British Imports(including re-exports)

British Imports

1720s 7.5 million 7.0 million





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Free TradeMercantilism

Tight control over imported foreign goods Encouraged exports but not imports. Ensuring that balance of trade

was in Britains favour Tariffs or duties were put on foreign imports to protect the British

Manufacturer and bounties (sums of money) were put on exports

Restrictions put on workers who wanted to work abroad (protectIndustrial secrets) Chartered companies brought additional wealth to Britain

(monopolies) Colonies provided raw materials to Britian but they could not send

these materials directly to a country who wanted them, they had to gothrough Britain first

Regulations were made to prevent colonial manufacturers fromcompeting with those of Britain

Known as the Old Colonial System These rules were often ignored or evaded and there was lots of

smuggling

An act for the increase of shipping andencouragement of the navigation whereinthe wealth, safety and strength of this

kingdom is so much concerned


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Free Trade

The Wealth of Nations 1776 America signs Declaration of Independence(liberty one of fundamental rights)

Adam Smith wrote a book The Wealth of Nations which

made a deep impression on William Pitt, the PrimeMinister and on others who were involved in Britishaffairs and he preached liberty

Freedom for manufacturers, farmers, merchants andfinanciers, trying to put forward the idea of Free Trade

Adam Smith opposed monopolies and wanted freeenterprise, meaning he wanted products to be sold at

prices people were willing to pay at Laissez-Faire (leave it alone), later used on other matters

for example: in Industry


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Free TradeThe Change from Mercantilism to Free Trade

William Pitt the Younger Admired Adam Smith He reformed and simplified the system of duties imposed

on foreign goods entering the country He was severely restricted because most of the time the

country was at war The most successful agreement he made was when he

agreed with France that they would lower duties on FrenchWines and other goods and in return British exports costs

to France would also be lowered However, due to the French Revolution this agreement was

useless


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William Huskisson President of the Board of Trade Modified the Navigation Acts but gave preference to

British Merchants In 1823, Huskisson allowed British Colonies to trade

directly with Europe, and also gave preference to colonialimports by charging lower (differential) duties thansimilar imports from non-colonial countries

Lowered duties payable on many imported raw materialsand negotiated agreements with other European TradingNations, each country agreed to lower tariffs (toencourage free trade)

Reciprocity of Duties Act in 1823 covered this


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In 1841, Sir Robert Peel became Prime Minister

He eventually abolished the Corn Laws (which had

restricted the entry of foreign corn into Britain) One of the most important Free trade measures of

nineteenth Century

But, Peel reintroduced income tax in 1842 because he hadreduced so many customs duties

Abolished customs duties on over 600 types of goods andreduced duties on another 1,000 items

In 1853 the Navigation Acts were abandoned


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William Ewart Gladstone

New Chancellor of the Exchequer

Final abandonment of protection Abolished duties on many articles, such as soap, anddrastically lowered others, such as tea

In 1860, he totally abolished all duties apart from some

which had the greatest revenue (wine, tobacco, tea andspirits)

Until the 1930s Britain traded freely with the rest of theworld

economics in britain 1830-1848

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