The Retreat of the Industrial Revolution
During the mid-Victorian era Britains superiority as a manufacturing, commercial and imperial force made her not just one of the Great Powers but, arguably, the greatest. Yet there was an element of illusion in this mid-Victorian triumphalism. In geographical terms Britain was the smallest of the Great Powers. With an army that was quite inadequate for the defence of her imperial possessions, she was lucky that the major powers were too preoccupied elsewhere to challenge her during the Victorian era. Britains population, though growing rapidly, reached only 37.4 million by 1890, behind that of France, Germany, the United States, Russia, Austria-Hungary and Japan. Italy alone, whose claim to the status of a Great Power was dubious, had fewer people.
The beginnings of decline?
What, however, made the crucial difference to Britains strength was her capacity to mobilize her human and physical resources for sophisticated and profitable economic activities more effectively than her rivals. After embarking on industrialization in the second half of the eighteenth century, she had ridden each wave of innovation cotton textiles, iron and steel, railways comfortably ahead of the other European states. Thus, by the middle of the nineteenth century her population had become uniquely industrialized; by 1871 only 11 per cent of her labour force worked in agriculture, and the proportion continued to fall. Her people had also become unusually urbanized 65 per cent of them in 1870 and 78 per cent by 1901. This was two-and-a-half times the proportion in France and Germany. As a result of her early lead, Britain reached her peak as an industrial power in the 1860s. By that time she produced half the worlds coal, over half the iron and steel, and nearly half the cotton goods, and possessed over a third of the worlds merchant shipping. Russia, with over three times as many people and a huge land area, was an underdeveloped country by comparison.
Empire on the cheap
Britain made the most of her limited resources in other ways. Unlike all the great imperial states, apart from the United States, she largely avoided the diversion of her wealth into the armed forces, which received only 23 per cent of gross national produce in the mid-Victorian period. Such expenditure was widely considered unproductive. Parsimony also reflected the traditional fear of a large standing army as a domestic political threat. Yet for all this, in times of crisis Britain proved quite capable of expanding her military effort by means of extra taxation and extensive borrowing. This was a purely temporary expedient. In peacetime her island position enabled her to concentrate on the Royal Navy, an economical form of defence, while maintaining an army of 240,000 men which, in view of Britains huge interests, was extremely small. Victorian free-traders liked to argue that, as more and more nations were drawn into Britains beneficent trading network, the causes of war would steadily diminish and military aggrandizement become a thing of the past.
Of course, the British Empire represented a major complication in this vision of international peace. Both formal possessions and informal commercial interests had to be defended and even extended. Even the supposedly non-imperial mid-Victorian period saw the addition of the Punjab, Sind, Burma and Hong Kong to British territory. Indeed, although the Victorians thought of themselves as presiding over an era of peace, the fact is that the Queens men were actually fighting somewhere in the world in most years of her reign. But only the Crimean War in the 1850s involved a European opponent. On the whole, wars were short and economical engagements by a handful of men with Asians and Africans. It is striking how little impression even a great threat like the Indian Mutiny of 1857 made on British policy. After that revolt British troops in India were increased, but from only 40,000 to 65,000, a tiny force for a huge Empire. British soldiers continued to be outnumbered more than two to one by the Indian sepoys on whom the British Raj relied. Indian troops were often used in campaigns in other parts of the Empire to supplement British forces. Moreover, they were paid for out of Indian revenues, not by the British taxpayer. The nineteenth-century Empire was run on a shoestring.
The Great Depression?
It was during the 1870s that contemporaries seriously began to consider whether Britain had already passed her peak. After several buoyant years at the start of the decade, the economy suffered the sudden collapse of a speculative boom. By 1874 quantities of cheap wheat had begun to arrive from North America, severely undercutting the prices of British farmers. The slump of the 1870s was followed by another in the mid-1880s and by a third in the first half of the 1890s. Such cyclical fluctuations had, of course, characterized the mid-Victorian era too, but now they were regarded as symptoms of a long-term phenomenon the Great Depression from 1874 to 1896. This view gained credibility from a series of royal commissions, which gathered evidence from those farmers and manufacturers who were doing badly.
However, one must disentangle the various threads in the pattern of economic change. In one perspective British producers were experiencing pressures felt all over the world in a period of deflation. From the 1870s to the late 1890s, prices fell by about 40 per cent. This squeezed profits, put some out of business and seemed to mark a basic change from the buoyant mid-Victorian era, when business had been stimulated by mild inflation. But had Britain suffered disproportionately from the vicissitudes of the late nineteenth century? Had her long-term decline as an economic power really begun?
In many ways this seems improbable. Measurements of British gross domestic product show a continuous expansion of a fairly rapid order; by 1890 it was over 50 per cent greater than in 1870, for example. On the other hand, the average annual rate of growth was somewhat slower than in the pre-1870 period. Moreover, productivity, i.e. output per head of population, diminished significantly, especially in the period 190013. This suggests that contemporary complaints from the 1870s give a misleading impression about the
