Social Sciences: Class 10 (Part 3) — Chapter 3: The Making of a Global World

The silk routes are vibrant examples of vibrant pre-modern trade and cultural links between distant parts of the world. The name points to the importance of West-bound Chinese silk cargoes along these pathways.

• Historians have identified several silk routes, over land and by sea, knitting together vast regions of Asia, and linking Asia with Europe and northern Africa.
• They existed since before the Christian era and thrived until the fifteenth century.
• Chinese pottery also travelled the same route, as did textiles and spices from India and Southeast Asia. In return, precious metals – gold and silver – flowed from Europe to Asia.
• Trade and cultural exchange always went hand in hand. Early Christian missionaries, early Muslim preachers, and much earlier, Buddhism emerged from eastern India to spread in several directions through intersecting points on the silk routes.

Food offers many examples of long-distance cultural exchange. Traders and travellers introduced new crops to the lands they travelled.

• It is believed that noodles travelled west from China to become spaghetti. Or, perhaps Arab traders took pasta to fifth-century Sicily, an island now in Italy.
• Many of our common foods such as potatoes, soya, groundnuts, maize, tomatoes, chillies, and sweet potatoes were not known to our ancestors until about five centuries ago.
• These foods were only introduced in Europe and Asia after Christopher Columbus accidentally discovered the vast continent that later came to be known as the Americas.
• Sometimes the new crops made the difference between life and death. Europe's poor began to eat better and live longer with the introduction of the humble potato. Ireland's poor peasants became so dependent on potatoes that when disease destroyed the potato crop in the mid-1840s, hundreds of thousands died of starvation during the Irish Potato Famine.

The pre-modern world shrank greatly in the sixteenth century after European sailors found a sea route to Asia and also successfully crossed the Western Ocean to America.

• Before the discoveries, America had been cut off from regular contact with the rest of the world for millions of years. But from the sixteenth century, its vast lands and abundant crops and minerals began to transform trade and lives everywhere.
• Precious metals, particularly silver, from mines located in present-day Peru and Mexico enhanced Europe's wealth and financed its trade with Asia.
• The Portuguese and Spanish conquest and colonisation of America was decisively under way by the mid-sixteenth century. European conquest was not just a result of superior firepower. In fact, the most powerful weapon of the Spanish conquerors was not a conventional military weapon at all. It was germs, such as those of smallpox, that they carried on their person.
• Because of their long isolation, America's original inhabitants had no immunity against these diseases that came from Europe. Smallpox in particular proved a deadly killer. Once introduced, it spread deep into the continent, ahead even of any Europeans reaching there. It killed and decimated whole communities, paving the way for conquest.
• Until the nineteenth century, poverty and hunger were common in Europe. Cities were crowded and deadly diseases were widespread. Religious dissenters were persecuted. Thousands therefore fled Europe for America. Here, by the eighteenth century, plantations worked by slaves captured in Africa were growing cotton and sugar for European markets.

A good way to understand this nineteenth-century world economy is to look at the changing pattern of food production and consumption in industrial Europe, especially in Britain.

• Traditionally, countries liked to be self-sufficient in food. But in late-nineteenth-century Britain, self-sufficiency implied lower living standards and social conflict.
• Population growth from the late eighteenth century had increased the demand for foodgrains in Britain. As urban centres expanded and industry grew, the demand for agricultural products went up, pushing up foodgrain prices. Under pressure from landed groups, the government also restricted the import of corn. The laws allowing the government to do this were commonly known as the Corn Laws.
• Unhappy with high food prices, industrialists and urban dwellers forced the abolition of the Corn Laws. After the Corn Laws were scrapped, food could be imported into Britain much more cheaply than it could be produced within the country. British agriculture was unable to compete with imports. Vast areas of land were left uncultivated, and thousands of men and women were thrown out of work. They flocked to the cities or migrated overseas.
• As food prices fell, consumption in Britain rose. From the mid-nineteenth century, faster industrial growth in Britain also led to higher incomes, and therefore more food imports. Around the world – in Eastern Europe, Russia, America and Australia – lands were cleared and food production expanded to meet the British demand.

What was the role of technology in all these transformations? The railways, steamships, and the telegraph were crucial inventions without which we cannot imagine the nineteenth-century world transformations.

• Technological advances were often the result of larger social, political, and economic factors. For example, colonisation stimulated new investments and improvements in transport: faster railways, lighter wagons, and larger ships helped move food more cheaply and quickly from faraway farms to final markets.
• The trade in meat offers a prime example of this connected process. Till the 1870s, animals were shipped live from America to Europe and then slaughtered when they arrived. Live cattle took up a lot of ship space, many died in voyage, fell ill, lost weight, or became unfit to eat. Meat was hence a luxury beyond the reach of the European poor.
• The development of a new technology – namely, refrigerated ships – enabled the transport of perishable foods over long distances. Animals were now slaughtered for food at the starting point – in America, Australia, or New Zealand – and then transported to Europe as frozen meat. This reduced shipping costs and lowered meat prices in Europe, allowing the European poor to consume a more varied diet.

Trade flourished and markets expanded in the late nineteenth century. But this was not only a period of expanding trade and increased prosperity. It is important to realise that there was a darker side to this process.

• In many parts of the world, the expansion of trade and a closer relationship with the world economy also meant a loss of freedom and livelihoods. Late nineteenth-century European conquests produced many painful economic, social, and ecological changes through which the colonised societies were brought into the world economy.
• In 1885, the big European powers met in Berlin to complete the carving up of Africa between them (The Berlin Conference). Great Britain and France made vast additions to their overseas colonial territories in the late nineteenth century. Belgium and Germany became new colonial powers. The US also became a colonial power in the late 1890s by taking over some territories previously held by Spain.

In Africa, in the 1890s, a fast-spreading disease of cattle plague called rinderpest had a terrifying impact on people's livelihoods and the local economy. This is a clear example of how European imperial desires destroyed livelihoods and shaped colonial conquests.

• Historically, Africa had abundant land and a relatively small population. For centuries, land and livestock sustained African livelihoods, and people rarely worked for wages. In late nineteenth-century Africa, there were few goods that money could buy.
• Europeans were attracted to Africa due to its vast resources of land and minerals. They hoped to establish plantations and mines to produce crops and minerals for export to Europe. But there was an unexpected problem – a shortage of labour willing to work for wages.
• To recruit and retain labour, employers used many methods: harsh taxes were imposed which could be paid only by working for wages on plantations and mines; inheritance laws were changed so that peasants were displaced from land; and mine workers were confined in compounds and not allowed to move about freely.
• Then came rinderpest, a devastating cattle disease. It arrived in Africa in the late 1880s, carried by infected cattle imported from British Asia to feed the Italian soldiers invading Eritrea in East Africa. Entering Africa in the east, rinderpest moved west like forest fire, reaching Africa's Atlantic coast in 1892. It killed 90 per cent of Africa's cattle.
• The loss of cattle destroyed African livelihoods. Planters, mine owners, and colonial governments now successfully monopolised what scarce cattle resources remained, to force Africans into the labour market. Control over the scarce resource of cattle enabled European colonisers to conquer and subdue Africa.

The example of indentured labour migration from India also illustrates the two-sided nature of the nineteenth-century world. It was a world of faster economic growth as well as great misery, higher incomes for some and poverty for others.

• Indentured labour is a bonded labourer under contract to work for an employer for a specific amount of time, to pay off their passage to a new country or home.
• In the nineteenth century, hundreds of thousands of Indian and Chinese labourers went to work on plantations, in mines, and in railway and road construction projects around the world.
• Most Indian indentured workers came from the present-day regions of eastern Uttar Pradesh, Bihar, central India, and the dry districts of Tamil Nadu. In the mid-nineteenth century these regions experienced profound changes: cottage industries declined, land rents rose, and lands were cleared for mines and plantations. All this affected the lives of the poor: they failed to pay their rents, became deeply indebted, and were forced to migrate in search of work.
• The main destinations of Indian indentured migrants were the Caribbean islands (mainly Trinidad, Guyana and Surinam), Mauritius and Fiji. Closer home, Ceylon and Malaya were preferred destinations. Recruitment was carried out by agents engaged by employers and paid a small commission. Many migrants agreed to take up work hoping to escape poverty or oppression in their home villages. Agents tempted them with false information about final destinations, modes of travel, the nature of the work, and living conditions. Often migrants were not even told that they were to embark on a long sea voyage. Sometimes agents even forcibly abducted less willing migrants.
• Nineteenth-century indenture has been described as a 'new system of slavery'. On arrival at the plantations, labourers found conditions to be very different from what they had imagined. Living and working conditions were harsh, and there were few legal rights.
• Yet, workers discovered their own ways of surviving. Over time, they developed new forms of individual and collective self-expression, blending different cultural forms. In Trinidad the annual Muharram procession was transformed into a riotous carnival called 'Hosay' in which workers of all races and religions joined. Similarly, the protest religion of Rastafarianism (made famous by the Jamaican reggae star Bob Marley) is said to reflect social and cultural links with Indian migrants to the Caribbean. 'Chutney music', popular in Trinidad and Guyana, is another creative contemporary expression of the post-indenture experience.

Growing food and crops for the world market required capital. Large plantations could borrow it from banks and markets. But what about the humble peasant? Enter the Indian financier.

• Do you know of the Shikaripuri shroffs and Nattukottai Chettiyars? They were among the many groups of bankers and traders who financed export agriculture in Central and Southeast Asia, using either their own funds or those borrowed from European banks. They had a sophisticated system to transfer money over large distances, and even developed indigenous forms of corporate organisation.
• Indian traders and moneylenders also followed European colonisers into Africa. Hyderabadi Sindhi traders, however, ventured even beyond European colonies. From the 1860s they established flourishing emporia at busy ports worldwide, selling local and imported curios to tourists whose numbers were beginning to swell due to the development of safe and comfortable passenger vessels.

With the rise of industrialisation, British cotton manufacture expanded and industrialists pressurized the government to restrict cotton imports and protect local industries. Tariffs were imposed on cloth imports into Britain, consequently, the inflow of fine Indian cotton began to decline.

• From the early nineteenth century, British textile manufacturers also began to seek overseas markets for their cloth. Excluded from the British market by tariff barriers, Indian textiles faced stiff competition in other international markets as well. An examination of the share of Indian exports reveals a steady decline: from some 30 per cent around 1800, the proportion of cotton textiles dropped to less than 15 per cent by 1815, and by the 1870s this proportion had fallen below 3 per cent.
• What then did India export? While exports of manufactured goods declined rapidly, exports of raw materials increased equally fast. Between 1812 and 1871, the share of raw cotton exports rose from 5 per cent to 35 per cent. Indigo used for dyeing cloth was another important export for many decades. Opium shipments to China were another major export component, the British grew opium in India and exported it to China, using the money earned from this trade to finance its tea and other imports from China.
• Over the nineteenth century, British manufactures flooded the Indian market. Foodgrain and raw material exports from India to Britain and the rest of the world increased. But the value of British exports to India was much higher than the value of British imports from India. Thus Britain had a trade surplus with India.
• Britain used this surplus to balance its trade deficits with other countries – that is, with countries from which Britain was importing more than it was exporting to them. This is how a multilateral settlement system works. Britain's trade surplus with India also helped pay the so-called 'Home Charges' that included private remittances home by British officials and traders, interest payments on India's external debt, and pensions of British officials in India.

The First World War was unlike any war fought before. It involved the world's leading industrial nations which now harnessed the vast powers of modern industry to inflict the greatest possible destruction on their enemies.

• It was the first modern industrial war. It saw the use of machine guns, tanks, aircraft, and chemical weapons on a massive scale. These were all products of modern large-scale industry. To fight the war, millions of soldiers had to be recruited from around the world and moved to the front lines on large ships and trains.
• The scale of death and destruction – 9 million dead and 20 million injured – was unthinkable before the industrial age. Most of the killed and maimed were men of working age. These deaths reduced the able-bodied workforce in Europe. With fewer members within the family, household incomes declined after the war.
• During the war, industries were restructured to produce war-related goods. Entire societies were also reorganised for war – as men went to battle, women stepped into factories to undertake jobs that earlier only men were expected to do.
• The war led to the snapping of economic links between some of the world's largest economic powers which were now fighting each other to pay for the war. Britain borrowed large sums of money from US banks as well as the US public. Thus the war transformed the US from being an international debtor to an international creditor. At the war's end, the US and its citizens owned more overseas assets than foreign governments owned in the US.

Post-war economic recovery proved difficult. Britain, which was the world's leading economy in the pre-war period, faced a severe crisis.

• While Britain was preoccupied with war, industries had developed in India and Japan. After the war, Britain found it difficult to recapture its old position of dominance in the Indian market and to compete with Japan internationally. Moreover, to finance war expenditures Britain had borrowed heavily from the US. This meant that at the war's end Britain was burdened with huge external debts.
• The war had led to an economic boom, that is, to a large increase in demand, production and employment. When the war boom ended, production contracted and unemployment increased. In Britain, one in every five workers was out of work. Anxiety and uncertainty about work became an enduring part of post-war public life.
• Many agricultural economies also faced a crisis. Consider the case of wheat producers. Before the war, Eastern Europe was a major supplier of wheat to the world market. When this supply was disrupted during the war, wheat production in Canada, America, and Australia expanded dramatically. But once the war ended, production in Eastern Europe revived and created a glut in wheat output. Grain prices fell, rural incomes declined, and farmers fell deeper into debt.

In the US, recovery was quicker. We have already seen how the war helped boost the US economy. After a brief period of economic slowdown, the US economy resumed its strong expansion in the early 1920s.

• One important feature of the US economy of the 1920s was the rise of mass production. The move towards mass production had begun in the late nineteenth century, but in the 1920s it became a characteristic feature of industrial production in the US.
• A well-known pioneer of mass production was the car manufacturer Henry Ford. He adapted the assembly line method of a Chicago slaughterhouse to his new car plant in Detroit. He realised that an assembly line method would allow a faster and cheaper way of producing vehicles. The assembly line forced workers to repeat a single task mechanically and continuously at a pace dictated by the conveyor belt. This was a way of increasing output per worker by speeding up the pace of work.
• As a result, Ford cars came off the assembly line at three-minute intervals. The T-Model Ford was the world's first mass-produced car. At first, workers at the Ford factory were unable to cope with the stress of working on assembly lines and quit in large numbers. In desperation, Ford doubled the daily wage to 5 dollars in 1914. At the same time, he banned trade unions from operating in his plants.
• Henry Ford recovered the high wage by repeatedly speeding up the production line and forcing workers to work harder. He described his daily wage decision as the best cost-cutting decision he had ever made.
• Mass production lowered costs and prices of manufactured goods. Thanks to higher wages, more workers could now afford to purchase durable consumer goods such as cars. Car production in the US rose from 2 million in 1919 to over 5 million in 1929. Similarly, there was a boom in the purchase of refrigerators, washing machines, radios, gramophone players, all through a system of 'hire purchase' (i.e., credit repaid in weekly or monthly instalments).
• The demand for refrigerators and washing machines was also fueled by a boom in house construction and home ownership, financed once again by loans. The US economy of the 1920s showed a picture of unprecedented prosperity. Large investments in housing and consumer goods created a cycle of higher employment and incomes, rising consumption demand, and still more investment. In 1923, the US resumed exporting capital to the rest of the world and became the largest international lender.

The Great Depression began around 1929 and lasted till the mid-1930s. During this period, most parts of the world experienced catastrophic declines in production, employment, incomes and trade.

• The exact timing and impact of the depression varied across countries. But in general, agricultural regions and communities were the worst affected. This was because the fall in agricultural prices was greater and lasted longer than the fall in prices of industrial goods.
• The depression was caused by a combination of several factors:
  1. Agricultural overproduction: As agricultural prices fell and agricultural incomes declined, farmers tried to expand production and bring a larger volume of produce to the market to maintain their overall income. This worsened the glut in the market, pushing down prices even further. Farm produce rotted for lack of buyers.
  2. Withdrawal of US loans: In the mid-1920s, many countries financed their investments through loans from the US. While it was easy to raise loans in the US when things were good, US lenders panicked at the first sign of trouble. In the first half of 1928, US overseas loans amounted to over 1 billion dollars. A year later it was one quarter of that amount. Countries that depended crucially on US loans now faced an acute crisis.
• The withdrawal of US loans affected the rest of the world in different ways. In Europe it led to the failure of some major banks and the collapse of currencies such as the British pound sterling. In Latin America and elsewhere it intensified the slump in agricultural and commodity prices. The US attempt to protect its economy by doubling import duties also dealt a severe blow to world trade.
• The US was also the severest hit by the depression. With the fall in prices and the prospect of depression, US banks slashed domestic lending and called back loans. Farms could not sell their harvests, households were ruined, and businesses collapsed. Faced with falling incomes, many households could not repay what they had borrowed, and were forced to give up their homes and cars. As unemployment soared, people trudged long distances in search of any work. Ultimately, the US banking system collapsed – unable to recover investments and loans, and defend depositors, thousands of banks went bankrupt and were forced to close. The numbers are terrifying: by 1933 over 4,000 banks had closed and between 1929 and 1932, some 110,000 companies had collapsed.

An examination of how the Great Depression affected India helps illustrate how integrated the global economy had become by the early twentieth century.

• In the nineteenth century, colonial India had become an exporter of agricultural goods and importer of manufactures. The depression immediately affected Indian trade. India's exports and imports nearly halved between 1928 and 1934. As international prices crashed, prices in India also plunged. Between 1928 and 1934, wheat prices in India fell by 50 per cent.
• Peasants and farmers suffered more than urban dwellers. Though agricultural prices fell sharply, the colonial government refused to reduce revenue demands. Peasants producing for the world market were the worst hit.
• Consider the jute producers of Bengal. They grew raw jute that was processed in factories for export as gunny bags. As gunny bag exports collapsed, raw jute prices crashed by more than 60 per cent. Peasants who borrowed in the hope of better times or to increase output faced disaster. They fell deeper into debt, and were forced to sell their family gold and silver ornaments to meet expenses.

Wartime destruction shaped post-war reconstruction. Two key lessons were learned by policymakers from the inter-war economic crises:

1. An industrial society based on mass production cannot be sustained without mass consumption. To ensure mass consumption, there was a need for stable incomes, which required full and stable employment.
2. The second lesson was that full employment could only be achieved if governments had power to control flows of goods, capital, and labour.

• The main framework for this post-war economic system was agreed upon at the United Nations Monetary and Financial Conference held in July 1944 at Bretton Woods in New Hampshire, USA.
• The Bretton Woods Conference established the International Monetary Fund (IMF) to deal with external surpluses and deficits of its member nations. The International Bank for Reconstruction and Development (popularly known as the World Bank) was set up to finance post-war reconstruction.
• The IMF and the World Bank are often referred to as the Bretton Woods twins or the Bretton Woods system. This system was based on fixed exchange rates, where national currencies were pegged to the US dollar at a fixed exchange rate, and the US dollar itself was anchored to gold at a fixed price of 35 dollars per ounce.

When the Second World War ended, large parts of the world were still under European colonial rule. Over the next two decades, most colonies in Asia and Africa emerged as free, independent nations.

• However, these newly independent nations were burdened by poverty and a lack of resources, their economies having been crippled by long periods of colonial rule.
• The IMF and the World Bank were designed to meet the financial needs of the industrial countries. They were not equipped to cope with the poverty and developmental needs of the developing nations. As Europe and Japan rapidly rebuilt their economies, they grew less dependent on the IMF and World Bank. Thus, from the late 1950s, the Bretton Woods twins began to shift their attention more towards developing nations.
• Faced with this developmental challenge, most developing countries did not benefit from the fast growth that the Western economies experienced in the 1950s and 1960s. To challenge this, they organised themselves as a group – the Group of 77 (or G-77) – to demand a New International Economic Order (NIEO). By NIEO they meant a system that would give them real control over their natural resources, more development assistance, fairer prices for raw materials, and better access for their manufactured goods in developed countries' markets.

Despite years of stable growth, all was not well in the post-war world. From the 1970s the US economy faced a severe crisis. The US dollar lost its status as the world's principal currency, unable to maintain its value in terms of gold.

• This led to the collapse of the system of fixed exchange rates and the introduction of a system of floating exchange rates.
• From the mid-1970s the international financial system also changed in important ways. Developing countries were now forced to borrow from Western commercial banks and private lending institutions instead of official developmental institutions, leading to periodic debt crises in the developing world, lower incomes, and increased poverty, especially in Africa and Latin America.
• The industrial world was also hit by unemployment from the mid-1970s. From the late 1970s, multinational corporations (MNCs) began to shift production activities to low-wage Asian countries.
• China had been cut off from the post-war world economy since its revolution in 1949. But new economic policies in China and the collapse of the Soviet Union in Eastern Europe brought many countries back into the fold of the world economy. Wages were relatively low in countries like China, making them attractive destinations for investment by Western MNCs competing to capture world markets.
• The relocation of industry to low-wage economies stimulated world trade and capital flows. In the last two decades, the world economic geography has been completely transformed as countries like India, China, and Brazil have experienced rapid economic growth.