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The Making of a Global World Notes | Class 10 History

Trade in Ancient Times


All through history, human societies have become steadily more interlinked. From ancient times, travelers, traders, priests and pilgrims traveled vast distances for knowledge, opportunity and spiritual fulfillment, or to escape persecution.


They carried goods, money, values, skills, ideas, inventions, and even germs and diseases.



How Trade Happened in Ancient Times?


As early as 3000 BCE an active coastal trade linked the Indus valley civilisations with present-day West Asia.

For more than a millennia, cowries (the Hindi cowdi or seashells, used as a form of currency) from the Maldives found their way to China and East Africa.


From the ninth century, images of ships appear regularly in memorial stones found in the western coast, indicating the significance of oceanic trade.


The Silk Road and Pre Modern Trade The name ‘silk routes’ points to the importance of West-bound Chinese silk cargoes along this route. They are known to have existed since before the Christian Era and thrived almost till the fifteenth century.


Several silk routes, over land and by sea, knit together vast regions of Asia, linking Asia with Europe and northern Africa.


What items were traded on the Silk Route?


Along with Silk, Chinese pottery, spices, precious stones, gold and silver, the silk routes also led to exchange of cultural ideas. Trade and cultural exchange always went hand in hand.


Religion and Silk Routes


Christian missionaries, Muslim preachers and Buddhist teaching traveled these routes and spread across the world.


Food and Silk Routes


Many ‘ready food’ in distant parts of the world may have a common origin for example Spaghetti and Noodles. It is believed that noodles traveled west from China to become spaghetti.


Similar foods may have traveled by Arab traders into Europe, India and Japan. Traders and travelers also introduced new crops to the lands they traveled. Many of our common foods such as potatoes, soya, groundnuts, maize, tomatoes, chillies, sweet potatoes, and so on 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 would later become known as the Americas. In fact, many of our common foods came from America’s original inhabitants – the American Indians.





New Crops could make a difference between life and death


Europe’s poor began to eat better and live longer with the introduction of the humble potato. Ireland’s poorest peasants became so dependent on potatoes that when disease destroyed the potato crop in the mid-1840s, hundreds of thousands died of starvation.



Conquest, Disease and Trade


The conquest of America by Spanish and Portuguese


Before its ‘discovery’, 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 also enhanced Europe’s wealth and financed its trade with Asia. Legends spread in seventeenth-century Europe about South America’s fabled wealth. Many expeditions set off in search of El Dorado, the fabled city of gold.


Biological Warfare in the 16th Century - Smallpox as a weapon?


European conquest was not just a result of superior firepower. Because of their long isolation, America’s original inhabitants had no immunity against diseases that came from Europe.


The Europeans carried with them germs such as those of smallpox, to which they had immunity and not the native Americans.


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. By the eighteenth century, plantations worked by slaves captured in Africa were growing cotton and sugar for European markets.




The Shifting of the World Trade Center from Asia to Western Europe?


Until well into the eighteenth century, China and India were among the world’s richest countries. They were also pre-eminent in Asian trade. However, from the fifteenth century, China is said to have restricted overseas contacts and retreated into isolation.


China’s reduced role and the rising importance of the Americas gradually moved the center of world trade westwards.


The World in the 19th Century (1815 - 1914)


Economic, political, social, cultural and technological factors interacted in complex ways to transform societies and reshape external relations.


All three flows of trade, labor and capital were closely interwoven and affected peoples’ lives more deeply now than ever before. The interconnections could sometimes be broken – for example, labor migration was often more restricted than goods or capital flows.



The World During Industrial Revolution - A New World Economy Takes Place


Traditionally, countries liked to be self-sufficient in food. But in nineteenth-century Britain, self sufficiency in food meant lower living standards and social conflict. The reason behind this were the 'Corn Laws'


What were Corn Laws?


Population growth from the late eighteenth century had increased the demand for food grains in Britain. As urban centers expanded and industry grew, the demand for agricultural products went up, pushing up food grain 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 more cheaply than it could be produced within the country.


Vast areas of land were now left uncultivated, and thousands of men and women were thrown out of work. They flocked to the cities or migrated overseas.


From the mid- nineteenth century, faster industrial growth in Britain also led to higher incomes, and therefore more food imports.





Migration to Americas and Australia


Nearly 50 million people emigrated from Europe to America and Australia in the nineteenth century. All over the world some 150 million are estimated to have left their homes, crossed oceans and vast distances over land in search of a better future.


Around the world – in Eastern Europe, Russia, America and Australia – lands were cleared and food production expanded to meet the British demand.


Capital flowed from financial centers such as London to build railways, roads, harbors and settlements in the Americas and Australia among other colonies.


By 1890, a global agricultural economy had taken shape. Food no longer came from a nearby village or town, but from thousands of miles away.


Canal Colonies in West Punjab


Here the British Indian government built a network of irrigation canals to transform semi-desert wastes into fertile agricultural lands that could grow wheat and cotton for export. The Canal Colonies, as the areas irrigated by the new canals were called, were settled by peasants from other parts of Punjab.




Role of Technology


Technological advances were often the result of larger social, political and economic factors. Colonization 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


Until the 1870s, animals were shipped live from America to Europe and then slaughtered when they arrived there. But live animals took up a lot of ship space.


Many also died in voyage, fell ill, lost weight, or became unfit to eat. Meat was hence an expensive luxury .High prices in turn kept demand and production down until the development of a new technology, namely, refrigerated ships, which enabled the transport of perishable foods over long distances.


Now animals were 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. Better living conditions promoted social peace within the country and support for imperialism abroad.

Colonialism and Globalization - The conquest of Africa Colonization was the other side of 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, technological advances in some areas and new forms of coercion in others.


In many parts of the world, the expansion of trade and a closer relationship with the world economy also meant a loss of freedoms and livelihoods.



Carving of Africa


Rival European powers in Africa drew up the borders demarcating their respective territories. In 1885 the big European powers met in Berlin to complete the carving up of Africa between them.


Britain and France made vast additions to their overseas 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 colonies earlier held by Spain.


Sir Henry Morton Stanley in Central Africa


Stanley was a journalist and explorer sent by the New York Herald to find Livingston, a missionary and explorer who had been in Africa for several years.

Like other European and American explorers of the time, Stanley went with arms, mobilized local hunters, warriors and laborers to help him, fought with local tribes, investigated African terrains, and mapped different regions.


These explorations helped the conquest of Africa. Geographical explorations were not driven by an innocent search for scientific information. They were directly linked to imperial projects.


Rinderpest helped push Africans into labor market


In Africa, in the 1890s, a fast-spreading disease of cattle plague or rinderpest had a terrifying impact on people’s livelihoods and the local economy.


Historically, Africa had abundant land and a relatively small population. For centuries, land and livestock sustained African livelihoods and people rarely worked for a wage due to which there was a shortage of labor.


Employers used many methods to recruit and retain labour:


  • Heavy taxes were imposed which could be paid only by working for wages on plantations and mines.

  • Inheritance laws were changed - only one member of a family was allowed to inherit land, as a result of which the others were pushed into the labour market

  • Mineworkers were also confined in compounds and not allowed to move about freely.




Another Biological Warfare Weapon - Rinderpest?


Rinderpest arrived in Africa in the late 1880s. It was carried by infected cattle imported from British Asia to feed the Italian soldiers invading Eritrea in East Africa. It spread across Africa like wildfire and killed 90 percent of the cattle.


The loss of cattle destroyed African livelihoods. Planters, mine owners and colonial governments now successfully monopolized what scarce cattle resources remained, to strengthen their power and to force Africans into the labor market.


Control over the scarce resource of cattle enabled European colonists to conquer and subdue Africa.


Indentured Labor Migration from India


What is Indentured labor?


A bonded laborer under contract to work for an employer for a specific amount of time, to pay off his passage to a new country or home.


In the mid-nineteenth century, central Indian states experienced many changes – cottage industries declined, land rents rose, lands were cleared for mines and plantations by the Britishers. 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.


In India, indentured laborers were hired under contracts which promised return travel to India after they had worked five years on their employer’s plantation. The main destinations of Indian indentured migrants were the Caribbean islands (mainly Trinidad, Guyana and Surinam), Mauritius and Fiji. Closer home, Tamil migrants went to Ceylon and Malaya. Indentured workers were also recruited for tea plantations in Assam.


Nineteenth-century indenture has been described as a ‘new system of slavery’.


Agents tempted the prospective migrants by providing false information about final destinations, modes of travel, the nature of the work, and living and working conditions. Sometimes agents even forcibly abducted less willing migrants.


On arrival at the plantations, laborers found conditions to be different from what they had imagined. Living and working conditions were harsh, and there were few legal rights.


Social and Cultural Assimilation of Indentured Labor


Many who stayed found ways by surviving by developing new forms of individual and collective self- expression by blending different cultural forms.


  • In Trinidad the annual Muharram procession was transformed into a riotous carnival called ‘Hosay’ (for Imam Hussain) in which workers of all races and religions joined.

  • The protest religion of Rastafarianism (made famous by the Jamaican reggae star Bob Marley) is also 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.


Most indentured workers stayed on after their contracts ended, or returned to their new homes after a short spell in India. Consequently, there are large communities of people of Indian descent in these countries.

From the 1900s India’s nationalist leaders began opposing the system of indentured labor migration as abusive and cruel. It was abolished in 1921.


Descendants of Indian indentured workers, often thought of as ‘coolies’, remained an uneasy minority in the Caribbean islands. Some of V.S Naipaul’s early novels capture their sense of loss and alienation.


Indian Entrepreneurs Abroad


Indian traders followed the colonialists and established business in the newly colonized regions of the world.


Shikaripuri Shroffs and Nattukottai Chettiars 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.


Hyderabadi Sindhi traders established flourishing emporia at busy ports worldwide, selling local and imported curios to tourists.


Indian Trade, Colonialism and the Global System


With industrialisation, British cotton manufacture began to expand, and industrialists pressured the government to restrict cotton imports and protect local industries. Imposition of tariffs on cloth imports into Britain made the demand of the fine Indian cotton decline. While exports of manufactures declined rapidly, export of raw materials increased equally fast.


Indigo used for dyeing cloth was another important export. Opium shipments to China grew rapidly from the 1820s to become for a while India’s single largest export.


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.

India helped Britain balance its deficits with other countries by importing British goods at high cost and exporting its raw materials at a low cost.


Britain’s trade surplus in 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




Wartime Transformations


The First World War (1914-18) was fought between two power blocs i.e., the Allies comprising Britain, France and Russia (later joined by the US) and the Central Powers comprising Germany, Austria, Hungary and Ottoman Turkey.





The First World War was the first modern industrial war. Machine guns, tanks, aircrafts, chemical weapons, etc. were used on a massive scale.

The death of the able-bodied led to a decline in the workforce in Europe. Hence, household incomes declined.


During the war, industries were reconstructed to produce war-related goods. Entire societies were also reorganized for war as men went to battle and women did jobs that earlier only men were expected to do.


Britain borrowed large sums of money from US banks and the public. Thus, making the US and its citizens own more overseas assets than foreign governments and citizens owned in the US.


Post-War Recovery


While Britain was preoccupied with war, industries had developed in India and Japan. Post-war recovery for Britain was hopeless. Burdened with huge external debts, Britain could not compete with Japan and recapture its dominance over the Indian market.


1921: One in every five British workers was out of work due to the increase in the unemployment rate and a fall in the production, after an initial period of the wartime boom.


Grain prices fell, rural income declined and farmers fell deeper into debt because of the recovery of European wheat production as markets were over-flooded with food grains from Canada, Australia and America as well as from Europe.



Rise of Mass Production and Consumption


In the US, recovery was quicker, the US economy resumed its strong growth in the early 1920s.


1920: Mass production seen as an important feature in the US. A well-known pioneer of mass production was the car manufacturer Henry Ford. He adapted the assembly line of a Chicago slaughterhouse (in which slaughtered animals were picked apart by butchers as they came down a conveyor belt) to his new car plant in Detroit.


This was a way of increasing the output per worker by speeding up the pace of work. Standing in front of a conveyor belt no worker could afford to delay the motions, take a break, or even have a friendly word with a workmate. The T -Model Ford was the world’ s first mass-produced car.





Henry Ford’s Decision to Double the Wages


At first, workers at the Ford factory were unable to cope with the stress of working on assembly lines in which they could not control the pace of work. So they quit in large numbers.


In desperation Ford doubled the daily wage to $5 in January 1914 and trade unions were disbanded.


Henry Ford recovered the high wage by repeatedly speeding up the production line and forcing workers to work ever harder. So much so, he would soon describe his decision to double the daily wage as the ‘best cost-cutting decision’ he had ever made.


Ford's industrial practices soon spread in the US. They were also widely copied in Europe in the 1920s. Mass production lowered costs and prices of engineered goods.


Due to increased wages, the purchasing capacity of workers increased.

Credit repaid in weekly or monthly instalments increased the demand for refrigerators, washing machines, radios, gramophone players etc. (Hire Purchase)


Large investments in housing and household goods created high employment and incomes and a rise in consumption, investments, employment and incomes.


1923: The US resumed exporting capital to the rest of the world and became the largest overseas lender. US imports and capital exports also boosted European recovery and world trade and income growth over the next six years.





The Great Depression (1929-1930)


The world experienced declines in production, employment, incomes and trade. The fall in agricultural prices was more prolonged than the prices of industrial goods.


Causes


  • Agricultural overproduction: The falling agricultural prices caused a decline in agricultural incomes. The farmers now tried to expand production and bring a larger volume of produce to the market for maintaining their overall income. This worsened the situation in the market, pushing down prices even further. Farm produce rotted for a lack of buyers.


  • Difficulty in Raising Loans from the US : In the first half of 1928, US overseas loans amounted to over $1 billion. Countries that depend crucially on US loans now face an acute crisis. The withdrawal of the US loans led to the failure of some major banks and the collapse of currencies such as the British Pound Sterling.


  • The United States of America attempted to protect its economy in the depression by doubling import duties and also affected world trade.


By 1935, a modest economic recovery was under way in most industrial countries. But the Great Depression’s wider effects on society, politics and international relations, and on peoples’ minds, proved more enduring.





Effects


  • By 1933, over 4,000 banks had closed.

  • 1929-1932: 110,000 companies had collapsed.

  • Farmers could not sell their harvests, households were ruined and businesses collapsed.

  • A household in the US could not repay what they had borrowed and were forced to give up their homes, cars and other consumer durables.

  • US banks had also slashed domestic lending and called back loans.

  • Unemployment soared, people trudged long distances looking for any work they could find.

  • In Latin America and elsewhere, it intensified the slump in agricultural and raw material prices.

  • Unable to recover investments, collect loans and repay depositors, thousands of banks went bankrupt and were forced to close. Thus, the US banking system collapsed.


India and the Great Depression


In the nineteenth century, as you have seen, colonial India had become an exporter of agricultural goods and importer of manufactures. The depression immediately affected Indian trade. 1928-1934: India’s exports and imports nearly halved, Wheat prices in India fell by 50%.


Though agricultural prices fell sharply, the colonial government refused to reduce revenue demands. Peasants producing for the world market were the worst hit.

Those who borrowed in the hope of better times or to increase output in the hope of higher incomes faced even lower prices and fell deeper into debt.


Peasants also used up their savings, mortgaged lands and sold whatever jewellery and precious metals they had to meet their expenses increasing the indebtedness.India became an exporter of precious metals notably gold, which helped speed up the British recovery.


In urban India, because of the fall in prices, the fixed salaried people found themselves better off. Industrial investment also grew as the government extended tariff protection to industries under the pressure of nationalist opinion.


Second World War


The Second World War broke out a mere two decades after the end of the First World War. It was fought between the Axis Powers (Mainly Nazi Germany, Japan and Italy) and the Allies (Britain, France, the Soviet Union and the US).


Unlike in earlier wars, most of these deaths took place outside the battlefields. Many more civilians than soldiers died from war-related causes.

Vast parts of Europe and Asia were devastated, and several cities were destroyed by aerial bombardment or relentless artillery attacks.


Many more civilians and soldiers died. Vast parts of Europe and Asia were devastated and several cities were destroyed by aerial bombardment or relentless artillery attacks. Immense amount of economic devastation and social disruptions were caused.




Effects


  • The US emerged as the new economic, political and military superpower of the Western world.

  • The Soviet Union transformed itself from a backward agricultural country into a world power, by defeating the Nazi Germany during the Great Depression.


Post-War Settlements and the Bretton Woods Institution


Economists realized that an industrial society based on mass production cannot be sustained without mass consumption, which required stable incomes and employment.


They also realized that the markets alone cannot provide for employment and government intervention is necessary. The goal of full employment could only be achieved if governments had power to control flows of goods, capital and labor.


Steps for minimizing price fluctuations, output and employment were adopted by the governments all over the world for ensuring economic stability.


July, 1944: A framework for preserving economic stability and full employment was agreed upon at the United Nations Monetary and Financial Conference at Bretton Woods in New Hampshire, USA.


The International Monetary Fund (IMF) was set up to deal with external surpluses and deficits of its member nations.


The International Bank for Reconstruction and Development (World Bank) was set up for financing post-war reconstruction.


The IMF and the World Bank are referred to as the Bretton Woods institutions or sometimes the Bretton Woods twins. The post-war international economic system is also often described as the Bretton Woods system.


1947: The IMF and World Bank commenced financial operations


The Bretton Woods System was based on fixed exchange rates. In this system, national currencies were pegged to the dollar at a fixed exchange rate. The dollar itself was anchored to gold at a fixed price of $30 per ounce of gold.





Early Post-War Years


The Bretton Woods system inaugurated an era of unprecedented growth of trade and incomes for the Western industrial nations and Japan.


These following decades also saw the worldwide spread of technology and enterprise. Developing countries were in a hurry to catch up with the advanced industrial countries. 1950-1970: World trade grew annually at over 8% and incomes at nearly 5 %. The unemployment rate averaged less than 5% in most industrial countries.


1920: First multinational companies were established



Decolonisation and Independence


After the Second World War, colonies in Asia and Africa emerged as free and independent nations. These nations were handicapped by colonial rule and were therefore overburdened by poverty and a lack of resources.


The IMF and the World Bank failed in the face of poverty and lack of development. Japan and Europe rapidly rebuilt their economies and grew less dependent on the World Bank.


1950s: The Bretton Woods shifted their attention more towards developing countries. The former colonial powers still controlled vital resources such as minerals and land in many of their former colonies.

The developing countries organized themselves as a group – the Group of 77 (G-77) – for demanding a new international economic order (NIEO).


NIEO is a system that would give control to the developing countries over their natural resources, more development assistance, fairer prices for raw materials and better access to their manufactured goods.





End of Bretton Woods and the Beginning of Globalization


From the 1960s, the rising cost of overseas involvements weakened US finances and competitive strength. The US dollar lost its value as it could not maintain its value in relation to gold. Therefore, the system of fixed exchange rates collapsed and the system of floating exchange rates emerged.


Developing countries were forced to borrow from Western commercial banks and private lending institutions. This led to a periodic debt crisis in the developing world, which resulted in lower incomes and increased poverty in Africa and Latin America. Unemployment increased in the industrial world