The New Penguin History of the World (149 page)

The world economy came to a sharp focus in London, where the financial services which sustained the flow of world trade were centred. A huge amount of the world’s business was transacted by means of the sterling bill of exchange; it rested in turn upon the international gold standard, which sustained confidence by ensuring that the main currencies remained in fairly steady relationships with one another. All major countries had gold currencies and travel anywhere in the world was possible with a bag of gold sovereigns, five-dollar pieces, gold francs or any other major medium of exchange, without any doubts about their acceptability.

London was also in another sense the centre of the world economy, because although the United Kingdom’s gross output was by 1914 overtaken in important respects by that of the United States and Germany she was the greatest of trading nations. The bulk of the world’s shipping and carrying trade was in British hands. She was the main importing and
exporting nation and the only one which sent more of its manufactures to non-European nations than to European. Great Britain was also the biggest exporter of capital and drew a huge income from her overseas investments, notably those in the United States and South America. Her special role imposed a roughly triangular system of international exchange. The British bought goods, manufactured and otherwise, from Europe and paid for them with their own manufactures, cash and overseas produce. To the rest of the world they exported manufactures, capital and services, taking in return food and raw materials and cash. This complex system illustrates how little the European relationship with the rest of the world was a simple one of exchanging manufactures for raw materials. And there was, of course, always the unique instance of the United States, little involved in export, but gradually commanding a greater and greater share of its own domestic market for manufactured goods, and still a capital importer.

Most British economists believed in 1914 that the prosperity which this system enjoyed, and the increasing wealth which it made possible, showed the truth of free trade doctrine. Their own country’s prosperity had grown most rapidly in the heyday of such ideas. Adam Smith had predicted that prosperity would continue if a closed imperial system reserving trade to the mother country were abandoned and so, in the case of America, it had soon proved, for a big expansion had come to the Anglo-American trade within a few years of the peace of 1783. By 1800 a majority of British exports were already going outside Europe and there then still lay ahead the greatest period of expansion of trade in India and East Asia. British imperial policy was directed less to the potentially embarrassing acquisition of new colonies than to the opening of areas closed to trade, for that was where prosperity was deemed to lie. One flagrant example was the Opium War of 1839–42. The outcome was the opening of five Chinese ports to European trade and the
de facto
cession to Great Britain of Hong Kong as a base for the exercise of a jurisdiction inseparable from the management of commerce.

In the middle of the nineteenth century there had been for a couple of decades a high tide of free trade ideas when more governments seemed willing to act upon them than ever before or after. In this phase, tariff barriers were demolished and the comparative advantage of the British – first among trading and manufacturing nations – had continued. But this era passed in the 1870s and 1880s. The onset of a worldwide recession of economic activity and falling prices meant that by 1900 Great Britain was again the only major nation without tariffs for protection and even in that country questioning of the old free trade dogmas was beginning to be heard as competition from Germany grew fiercer and more alarming.

Nevertheless, the economic world of 1914 still seems in retrospect to be one of astonishing economic freedom and confidence. A long European peace provided the soil in which trading connections could mature. Stable currencies assured great flexibility to a world price system; exchange control existed nowhere in the world and Russia and China were by then as completely integrated into this market as other countries. Freight and insurance rates had grown cheaper and cheaper, food prices had shown a long-term decline and wages had shown a long-term rise. Interest rates and taxation were low. It seemed as if a capitalist paradise might be achievable.

As this system had grown to incorporate Asia and Africa, it, too, came to be instrumental in a diffusion of ideas and techniques originally European, but soon acclimatized in other lands. Joint stock companies, banks, commodity and stock exchanges spread around the world by intrusion and imitation; they began to displace traditional structures of commerce. The building of docks and railways, the infrastructure of world trade, together with the beginnings of industrial employment, began in some places to turn peasants into an industrial proletariat. Sometimes the effects on local economies could be bad; the cultivation of indigo in India, for example, more or less collapsed when synthetic dyes became available in Germany and Great Britain. The economic history of South-East Asia and its strategic importance were transformed by the British introduction of the rubber-tree there (a step which also, incidentally, was to ruin the Brazilian rubber industry). Isolation first disturbed by explorers, missionaries and soldiers was destroyed by the arrival of the telegraph and the railway; in the twentieth century the motor car would take this further. Deeper relationships were being transformed, too; the canal opened at Suez in 1869 not only shaped British commerce and strategy, but gave the Mediterranean new importance, not this time as a centre of a special civilization, but as a route.

Economic integration and institutional change were inseparable from cultural contamination. The formal instruments of missionary religion, educational institutions and government policy are only a tiny part of this story. European languages which were used officially, for example, took with them European concepts and opened to educated élites in non-European countries the heritage not only of Christian civilization, but of secular and ‘enlightened’ European culture, too. Missionaries spread more than dogma or medical and educational services; they also provoked the criticism of the colonial regime itself, because of the gap between its performance and the pretensions of the culture it imposed.

In the perspectives of the twentieth century, much of what is most durable
and important in the impact of Europe on the world can be traced to such unintended, ambiguous effects as these. Above all, there was the simple urge to imitate, whether expressed ludicrously in the adoption of European dress or, much more importantly, in the conclusion drawn by many who sought to resist European hegemony that to do so it was necessary to adopt European ways. Almost everywhere, radicals and reformers advocated Europeanization. The ideas of 1776, 1789 and 1848 are still at work in Asia and Africa and the world still debates its future in European terms.

This extraordinary outcome is too often overlooked. In its unravelling, 1900 is only a vantage point, not the end of the story. The Japanese are a gifted people who have inherited exquisite artistic traditions, yet they have adopted not only western industrialism (which is understandable enough) but western art forms and western dress in preference to their own. The Japanese now find whisky and claret fashionable, and the Chinese officially revere Marx, a German philosopher who articulated a system of thought rooted in nineteenth-century German idealism and English social and economic facts, rarely spoke of Asia except with contempt, and never went east of Prussia in his life. This suggests another curious fact: the balance sheet of cultural influence is overwhelmingly one-sided. The world gave back to Europe occasional fashions, but no idea or institution of comparable effect to those Europe gave to the world. The teaching of Marx was long a force throughout twentieth-century Asia; the last non-European whose words had any comparable authority in Europe was Jesus Christ.

One physical transmission of culture was achieved by the movement of Europeans to other continents. Outside the United States, the two largest groups of European communities overseas were (as they still are) in South America and the former British colonies of white settlement which, though formally subject to London’s direct rule for much of the nineteenth century, were in fact long oddly hybrid, not quite independent nations, but not really colonies either. Both groups were fed during the nineteenth century, like the United States, by the great diaspora of Europeans whose numbers justify one name which has been given to this era of European demography: the Great Resettlement. Before 1800, there was little European emigration except from the British Isles. After that date, something like sixty million Europeans went overseas, and this tide began to flow strongly in the 1830s. In the nineteenth century most of it went to North America, and then to Latin America (especially Argentina and Brazil), to Australia and South Africa. At the same time a concealed European emigration was also occurring across land within the Russian empire, which occupied one-sixth of
the world’s land surface and which had vast spaces to draw migrants in Siberia. The peak of European emigration overseas actually came on the eve of the First World War, in 1913, when over a million and a half left Europe; over a third of these were Italians, nearly 400,000 were British and 200,000 Spanish. Fifty years earlier, Italians figured only to a minor degree, Germans and Scandinavians loomed much larger. All the time, the British Isles contributed a steady flow; between 1880 and 1910 eight and a half million Britons went overseas (the Italian figure for this period was just over six million).

The greatest number of British emigrants went to the United States (about 65 per cent of them between 1815 and 1900), but large numbers went also to the self-governing colonies; this ratio changed after 1900 and by 1914 a majority of British emigrants was going to the latter. Italians and Spaniards also went to South America in large numbers, and Italians to the United States. That country remained the greatest of the receivers for all other nationalities; between 1820 and 1950 the United States benefited by the arrival of over 33 million Europeans.

Explanations of this striking demographic evolution are not far to seek. Politics sometimes contributed to the flow, as it did after 1848. Rising populations in Europe always pressed upon economic possibilities as the discovery of the phenomenon of ‘unemployment’ shows. In the last decades of the nineteenth century, too, when emigration was rising fastest, European farmers were pressed by overseas competition. Above all, it mattered that for the first time in human history there were obvious opportunities in other lands, where labour was needed, at a moment when there were suddenly easier and cheaper means of getting there. The steamship and railroad greatly changed demographic history and they both began to produce their greatest effect after 1880. They permitted much greater local mobility, so that temporary migrations of labour and movements within continents became much easier. Great Britain exported Irish peasants, Welsh miners and steelworkers and English farmers; she took in at the end of the nineteenth century an influx of Jewish communities from eastern Europe which was long to remain a distinguishable element in British society. To the seasonal migration of labour, which had always characterized such border districts as southern France, were now added longer-term movements as Poles came to France to work in coal-mines and Italian waiters and ice-cream men became part of British folklore. When political changes made the North African shore accessible, it, too, was changed by short-range migration from Europe; Italians, Spaniards and Frenchmen were drawn there to settle or trade in the coastal cities and thus created a new society with interests distinct both from those of the societies from
which the migrants had come and from those of the native societies beside which they had settled.

Easier travel did not only ease European migration. Chinese and Japanese settlement on the Pacific coasts of North America was already important by 1900. Chinese migrants also moved down into south-east Asia, Japanese to Latin America; the spectacle frightened Australians, who sought to preserve a ‘White Australia’ by limiting immigration by racial criteria. The British Empire provided a huge framework within which Indian communities spread around the world. But these movements, though important, were subordinate to the major phenomenon of the nineteenth century, the last great
Völkerwanderung
of the European peoples, and one as decisive for the future as the barbarian invasions had been.

In ‘Latin America’ (the term was invented in the middle of the nineteenth century), which attracted in the main Italians and Spaniards, southern Europeans could find much that was familiar. There was the framework to cultural and social life provided by Catholicism; there were Latin languages and social customs. The political and legal framework also reflected the imperial past, some of whose institutions had persisted through an era of political upheaval at the beginning of the nineteenth century which virtually ended Spanish and Portuguese colonial rule on the mainland. This happened because events in Europe had led to a crisis in which weaknesses in the old empires proved fatal.

This was not for want of effort, at least on the part of the Spanish. In contrast to the British in the north, the metropolitan government had attempted sweeping reforms in the eighteenth century. When the Bourbons replaced the last Habsburg on the Spanish throne in 1701 a new era of Spanish imperial development had begun, though it took some decades to become apparent. When changes came they led first to reorganization and then to ‘enlightened’ reform. The two viceroyalties of 1700 became four, two more appearing in New Granada (Panama and the area covered by Ecuador, Colombia and Venezuela), and La Plata, which ran from the mouth of the river across the continent to the border of Peru. This structural rationalization was followed by relaxations of the closed commercial system, at first unwillingly conceded and then consciously promoted as a means to prosperity. These stimulated the economy both of the colonies and of those parts of Spain (notably the Mediterranean littoral) which benefited from the ending of the monopoly of colonial trade hitherto confined to the port of Seville.