New Industrial Revolution

• Background
  • 1900, the height of imperialism, coincides with the peak of European population and technological superiority with the rest of the world.
  • Shift from steam power and coal resources to electrical power and oil since they are more efficient and produce more energy. More energy equals more factories which equals more stuff.
  • The problem not how much stuff you can produce, but how much you can sell.
• Transportation Revolution
  • Internal Combustion engine is developed for ships, trains, the newly developed automobiles, and aeroplanes.
  • All of these new modes of transportation lead to a transportation revolution.
  • Canals became increasingly popular for example: Suez, Panama, and Kiel
  • Nobel invents TNT, which helps create tunnels for cars and trains
• Chemical Revolution
  • New synthetic fibers
    • rayon
    • nylon
    • synthetic rubber that can be used to make gasoline
  • Pharmaceuticals, for example the big German Pharmacy called Bayern
• Industries and Factories
  • become specialized and linked by transportation
  • assembly line increases efficiency; organization of labor is stratified (labor division)
  • production increases exponentially, as does the ability to transport finished goods
  • the search increasingly becomes for new markets rather than for more goods, which leads to more imperialism
  • the search for raw materials also leads to more imperialism
• The Repeal of Corn (meaning grain, not just corn) Laws (1846)
  • What is was and what it did?
    • created a protective tariff on grains from other countries to encourage British Agricultural production
    • The British didn't want to get stuck in a situation like the did when France barricaded them using the continental system
    • The corn laws were contrary to free trade principles. The classical liberals who were a bunch of new money merchants wanted free trade and no tariffs . Free trade is what the new productive capacity desperately needs. The elimination of trade barriers encourages world trade.
    • The British catalyze a lot of other countries to do the same thing
    • the increase of inner zone trade also increases outer zone agricultural production.
    • By 1914 the inner zone are heavily dependent on world trade
• The Inner Zone during this massive expansion of world trade, encounters economic problem that contradicts standard economic practices.
  • The Balance of trade is the opposite what it seems like it should be. Imports > Exports
  • Invisible Exports
    • Shipping fees- The navy and merchant marine means that GBR rules the waves.These are a huge source of non-material income
    • Lloyd's of London- the foremost insurance company in the world. it insures your goods and reduces risk
    • London becomes the banking centre of the world. Bankers charge banking fees. Banks encourage investment and reduces risk.
    • Stocks and Bonds are sold especially on Wall Street in the City of London, which becomes the clearing house for world investments.
      • stocks are where companies offer part of their companies to the public
      • usually its governments who issue bonds. you get 100% of the return with the full maturity of the bond
      • Bonds are used to build infrastructure, strengthen military, schools and issue bonds.
      • the market for stocks and bonds is the last of the invisible exports
  • So even though there was an unfavorable balance of trade, there was a favorable balance of payments
• Investing
  • 80 million Europeans immigrate to the four corners of the globe
  • Transporting the demand for domestic goods creates foreign markets. Also with excess capital generated by inner zone, foreign investment are usually directed where there has been native emigration
  • Foreign investments are more profitable than domestic ones since local markets get saturated.
  • Inner zone countries could use this excess capital to increase the Standard of living at home
  • Wages and the expansion of welfare state are usually eschewed in favor of foreign investments
  • Oftentimes domestic sacrifices enable outer, developing world advancement. Creation of a better paid working across the world
  • one of the key things in foreign expansion is the world market or gaining new markets
  • Result of this diversion of excess capital results in
    • labor issues in the inner world: socialist, Marxist, and communist
    • capitalization of the underdeveloped world "Imperialism demands the protection of your foreign 'property'" -Cooke
• 1914 Investment Patterns
  • Great Britain
    • $20 billion invested abroad, which is 1/4 of all British Wealth
    • the US Rail system is completely financed by Brits. In 1814 US owes Europe $6 billion
    • by 1919 Europe owes the US $18 billion. The Brits also invested heavily in India, China, and Africa as well as their dominions (Canada, South Africa, Australia, and New Zealand)
  • France
    • $8.7 billion invested abroad, about 1/6 of their total wealth.
    • France's investments tend to follow their alliances, and their number one country they invested in is Russia
  • Germany
    • $6 billion invested abroad, there is some invested in A-H most with Ottomans
  • All of these investments are lost at the end of WW1
• The Gold Standard
  • means that your currency was backed by gold
  • the gold standard makes currencies very stable and facilitates world trade
  • around 1900 trade shifts from bilateral to multilateral
  • the problem is World Economies can only grow as large as your gold reserves
  • by 1890 the world slides into a depression. Deflation is dangerous for indebted nations
  • William Jennings Bryan's Cross of Gold Speech