American Pressure on the British Empire for the Independence of India: American Financial Leverage on the Decolonisation of the British Empire.

American Pressure on the British Empire for the Independence of India: American Financial Leverage on the Decolonisation of the British Empire.

American Pressure on the British Empire
for the Independence of India:
American Financial Leverage on the
Decolonisation of the British Empire.

Financial Pressures on the British Empire

“Individual British subjects were creating an informal empire of economic interests (alongside the existing formal empire)”1 and the British political elite saw no need for interference since not only was there no threat to Britain’s industrial, trading or financial position, but more surplus capital for overseas investment was being accumulated, due to the activities of the traders and investors.

“The empire of free trade, operating full-blown from the mid-nineteenth century onwards, looked well beyond the retention of an empire established upon mercantilist ideas. The open, expansive approach of free trade meant that industrial Britain needed firstly to keep a foothold in the expanding markets of Europe and the United States as both areas entered industrial phases, and secondly to exploit new areas of the world for materials that could be processed in Britain’s factories, as well as to maintain the safe trading bloc which the empire provided. The formal empire provided a safe backshop for British power, but in a world of free trade Britain could build up an informal empire of economic influence whenever opportunities presented themselves.”2

To the investors, the United States and Europe became more attractive for investment. This is because both Europe and the United States were undergoing the process of industrialization. For example, Belgium and France needed major improvements in their communication systems and this required financial help. By 1854, about £35-40 million in French railways and £25-30million in Belgian railways, was poured by Britain into the construction of these two countries’ railway networks. In addition, there was considerable British investment in the government securities of France.

As for the United States, it was the major beneficiary. “It is estimated that in 1838 British investment there amounted to $174 million; it helped to cover that country’s national debt, bought government securities and was ploughed into canals, cotton and banks. British money also helped to build rail-roads across the great American prairies.”3 British investment in foreign countries to increase. By 1870 British investment abroad almost doubled the amount Britain had invested in the Empire. Europe and the United States were the leading recipients.

Ironically, “the factor which throughout the nineteenth century had made Britain so unchallengeable-industrialization”4 also pushed her from an undoubted supremacy to a steady decline. As we have said, as a result of rapid production of goods which saturated home and colonial markets, Britain had to seek markets elsewhere to sell the overproduced goods. Therefore, the Parliament had to adopt the idea of free trade. Since Europe and the United States were on the way to industrialization, they become more attractive to the investors for investing there.

The financial help that was offered to Europe and the United States turned them into manufacturing nations. British dominance in a number of fields of industrial output was overtaken as the century drew to a close by the United States and after the turn of the century by Germany. As the decades passed, Japan showed herself to be much more competitive than Britain in a variety of manufacturing fields, particularly in eastern markets. “Furthermore, European manufacturers and industrialists began poaching upon former British markets and performed with a more acute business acumen than their island counterparts.”5

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