V. The Modern Period, 1789–1914 > A. Global and Comparative Dimensions > 2. Intensifications of Global International and Economic Relations, 1860–1914 > b. The Redefinition of the World Economy
  The Encyclopedia of World History.  2001.
b. The Redefinition of the World Economy
Throughout most of the 19th century, the amount and importance of international trade increased steadily. The lead of Great Britain and then other parts of western Europe and the United States in industrialization heightened the economic imbalance in international trade. Western nations dominated complex manufacturing, shipping, and the great commercial companies; many other areas traded at considerable disadvantage. Western insistence on opening all regions to their trade led to the Opium War with China and the intimidation of Japan.  1
During the first half of the 19th century, British industrial (particularly textile) exports flooded markets in parts of Europe, Latin America, and India. The result was massive deindustrialization of traditional textile producers. Tens of thousands of women weavers and spinners were displaced in Latin America. Hundreds of thousands lost work in India.  2
Western entrepreneurs and skilled workers set up some pilot factories in different parts of the world. In 1843 British textile machinery was imported to Russia. Westerners also set up steamship services on rivers (1820, Volga River) and railroads (1838, Cuba, Havana to Guines; 1851, Russia, St. Petersburg to Moscow) in Russia, Latin America, and elsewhere. These developments did not lead to more general industrialization.  3
Western industrialization also spurred the production of commercial crops and products in other parts of the world. Brazil expanded sugar and coffee production, importing steam engines for processing (1815, first steam-driven sugar mill in Brazil). Nomadic herders in eastern Turkey were pressed by British and French agents to increase production of raw wool. Economic reforms in Egypt included rapid expansion of cotton production, encouraged by Britain. The spread of cotton plantations and ginning in the American South was part of this process.  4
New shipping technology developed around the mid-19th century. The first transatlantic steamer (the Savannah, 1818) sailed from Liverpool to Boston but ran out of coal, finishing by sail; the first full Atlantic steam crossing was achieved by the British-built Dutch Curaçao, 1827. In 1840, regular transatlantic steamship service began with the Cunard line (founded by Samuel Cunard, 1787–1865) and its four steamships. In 1848, 10 million tons of goods were handled by oceanic sailing ships, and only 750,000 tons in steamships. Expansion from 1850 was rapid, with many Western nations establishing steamship lines. The Suez Canal, and later, the Panama Canal, furthered this trend.  5
Underwater telegraph cables connected England and Europe, 1851; England and the United States, 1866; England and India, 1870; England and Australia, 1871. Communication time was cut from several weeks to literally minutes. In 1891, the first underwater long-distance telephone cable linked England and France.  6
Growing international economic links triggered the first modern economic depression, in 1856–57. Induced by several bank failures in the United States, rather than by bad harvests (the traditional cause), the brief but sharp slump spread throughout western Europe. Depressions in the mid-1870s and thereafter had international ramifications, particularly among the industrial nations.  7
After 1870 the global impact of the industrial West increased. A growing number of areas and a growing portion of the economies of these areas were pressed to provide low-cost exports, while importing from Europe and the United States more advanced equipment (including rail lines and rolling stock) and certain luxury goods (such as French fashions). In Latin America, the expansion of coffee production, cultivation of hemp and manufacture of rope in the Yucatán (Mexico), the growth of Peruvian guano output for fertilizer, the spread of foreign-owned copper mines in Chile, and the development (often foreign owned) of tropical fruit production in Central America are all examples of this expansion. Established sectors like sugar and tobacco also grew. More land and more workers were involved in this commercial export sector. On the other side of this equation, by 1910, 57 percent of Mexican importsinvolved Western-made equipment. Western appetites for Middle Eastern rugs caused the expansion of this traditional industry in the Ottoman Empire, involving thousands of new workers. By the 1890s some factories were established to make cheap carpets, with a mixture of Western and Ottoman ownership. The expansion of Japanese silk production, with low-paid women workers, fit Japan into the export economy while providing earnings to purchase equipment. By the 1890s Africa was beginning to be drawn into the network, with expansion of mines in South Africa and the Belgian Congo. But the main impact on African agriculture came after 1914.  8
Western companies also began to set up manufacturing branches in various parts of the world. Some French textile firms had branch operations in Rhode Island and Latin America by the 1830s. Again, the pattern expanded after 1870. Singer sewing machine company, of the United States, set up factories in many countries, including Russia. German electrical and chemical producers, American agricultural equipment producers, and other companies did the same. Operations of this sort, going beyond trade to actual manufacture, constituted the origins of the modern multinational corporation.  9
The Encyclopedia of World History, Sixth edition. Peter N. Stearns, general editor. Copyright © 2001 by Houghton Mifflin Company. Maps by Mary Reilly, copyright 2001 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved.