United Kingdom

Changes in economic conditions during the last decades of the 19th century were of crucial importance. Mid-Victorian prosperity had reached its peak in a boom that collapsed in 1873. Thereafter, although national income continued to increase (nearly quadrupling between 1851 and 1911), there was persistent pressure on profit margins, with a price fall that lasted until the mid-1890s. Contemporaries talked misleadingly of a “great depression,” but, however misleading the phrase was as a description of the movement of economic indexes, the period as a whole was one of doubt and tension. There was anxious concern about both markets and materials, but the retardation in the national rate of growth to below 2 percent per annum was even harder to bear because the growth rates of competitors were rising, sometimes in spectacular fashion.

The interests of different sections of the community diverged between 1870 and 1900 as they had before the mid-Victorian period. In particular, grain- and meat-producing farmers bore the full weight of foreign competition in cereals, and many, though not all, industrialists felt the growing pressure of foreign competition in both old and new industries. As a result of improved transport, including storage and refrigeration facilities, along with the application of improved agricultural machinery, overseas cereal producers fully penetrated the British market. In 1877 the price of English wheat stood at 56 shillings 9 pence a quarter (compared with 54 shillings 6 pence in 1846); for the rest of the century, it never again came within 10 shillings of that figure. During the 1890s, therefore, there was a sharp fall in rent, a shift in land ownership, and a challenge to the large estate in the cereal-growing and meat-producing areas of the country. The fact that dairy and fruit farmers flourished did not relieve the pessimism of most spokesmen for the threatened landed interests.

In industry, there were new forms of power and a trend toward bigger plants and more impersonal organization. There were also efforts throughout the period to increase cartels and amalgamations. Britain was never as strong or as innovative in the age of steel as it had been in the earlier age of iron. By 1896 British steel output was less than that of either the United States or Germany, while the British textile industry was declining sharply. Exports fell between 1880 and 1900 from £105 million to £95 million.

Yet the country’s economic position would have been completely different had it not been for Britain’s international economic strength as banker and financier. During years of economic challenge at home, capital exports greatly increased, until they reached a figure of almost £200 million per annum before 1914, and investment income poured in to rectify adverse balance of trade accounts. Investing during these years in both “formal” and “informal” empire was more profitable, if more risky, than investing at home. But it also contributed to domestic obsolescence, particularly in the old industries. Thus, ultimately, there was a price to pay for imperial glory. During the last 20 years of peace before 1914, when Britain’s role as rentier was at its height, international prices began to rise again, and they continued to rise, with fluctuations, until after the end of World War I. Against this backdrop, the City of London was at the centre of international markets of capital, money, and commodities.

Meanwhile, whether prices were falling or rising, labour in Britain was increasingly discontented, articulate, and organized. Throughout the period, national income per capita grew faster than the continuing population growth (which stayed at above 10 percent per decade until 1911, although the birth rate had fallen sharply after 1900), but neither the growth of income nor the falling level of retail prices until the mid-1890s made for industrial peace. By the end of the century, when pressure on real wages was once again increasing, there were two million trade unionists in unskilled unions as well as in skilled unions of the mid-century type, and by 1914 the figure had doubled.