The Making Of The Global World...Part II

Q 15. How did Indentured workers discover their own ways of survival?

1. Workers discovered their own ways of surviving. 
2. Many of them escaped into the wilds and if caught they faced severe punishment.
3. Others developed new forms of individual and collective self expression, blending with  different cultural forms, old and new. 
4. 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. 
5. The protest religion of Rastafarianism (made famous by the Jamaican reggae star Bob Marley) also  reflects social and cultural links with Indian migrants to the Caribbean.
6. ‘Chutney music’, popular in Trinidad and Guyana, is creative contemporary expression of the post-indenture experience. 
7. These forms of cultural fusion are part of the making of the global world, where things from different places get mixed, lose their original characteristics and become something entirely new.
8. Most indentured workers stayed on after their contracts ended, or returned to their new homes after a short spell in India.

Q 16. Who were Shikaripuri shroffs and Nattukottai Chettiars?

1. The Shikaripuri shroffs and Nattukottai Chettiars were the groups of bankers and traders who financed export agriculture in Central and Southeast Asia.
2. They used either their own funds or those borrowed from European banks. 
3. They had a sophisticated system to transfer money over large distances and even developed indigenous forms of corporate organisation.

Q 17. How did the industrial revolution in Britain affect India‟s trade?

1. With industrialization British cotton manufacture began to expand and industrialists pressurised the government to restrict cotton imports and protect local industries. 
2. Tariffs were imposed on cloth imports into Britain as a result the in flow of fine Indian cotton declined.
3. British manufacturers also began to seek overseas markets for their cloth. 
4. Excluded from the British market by tariff barriers, Indian textiles now faced stiff competition in other international markets. 
5. The exports of cotton textiles  from India steadly declined from 30 per cent around 1800 to 15 per cent by 1815. 
6. By the 1870's this proportion had dropped to below 3 per cent.

Q 18.What did India export after the decline of its cotton textiles in the European markets?

1. While exports of manufactures declined the export of raw materials increased. 
2. Between 1812 and 1871, the share of raw cotton exports rose from 5 per cent to 35 per cent.
3. Indigo used for dyeing cloth was another important export.
4. Opium shipments to China grew and became for India’s largest export. 
5. Britain grew opium in India and exported it to China and, with the money earned through this sale, it financed its tea and other imports from China.
6. Food grain and raw material exports from India to Britain and the rest of the world increased.

Q 19. Discuss how Britain had a trade surplus with India in the nineteenth century?

1. In the nineteenth century British manufactures flooded the Indian market. 
2. Food grain and raw material exports from India to Britain and the rest of the world increased. 
3. But the value of British exports to India was much higher than the value of British imports from India. 
4. Thus Britain had a ‘trade surplus’ with India. 
5. Britain used this surplus to balance its trade deficits with other countries from which Britain was importing more than it was selling to. 
6. This is also known as multilateral settlement system– as it allows one country’s deficit with another country to be settled by its surplus with a third country. 
7. By helping Britain balance its deficits, India played a crucial role in the late-nineteenth-century world economy.
8. 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.

Q 20. When did the First World War start? Which two camps were involved in this war?

1. The First World War started in 1914-18. It was mainly fought in Europe.
2. The First World War was fought between two power blocs.On the one side were the Allies – Britain, France and Russia (later joined by the US); and on the opposite side were the Central Powers – Germany, Austria-Hungary and Ottoman Turkey.

Q 21. Why is the First World War known as the world‟s first modern industrial war?

1. The First World War was the first modern industrial war. 
2. The fighting involved the world’s leading industrial nations which harnessed the vast powers of modern industry to inflict the greatest possible destruction on their enemies.
3. It saw the use of machine guns, tanks, aircraft, chemical weapons, etc. on a massive scale. 
4. These were the products of modern large scale industry. 
5. To fight the war, millions of soldiers were recruited from around the world and moved to the front lines on large ships and trains.
6. The scale of death and destruction – 9 million dead and 20 million injured – was unthinkable before the industrial age, without the use of industrial arms.
7. During the war industries were restructured to produce war-related goods. 
8. Entire societies were reorganized for war – as men went to battle, women stepped in to undertake jobs that earlier only men were expected to do.
9. Most of the killed and maimed were men of working age. 
10. These deaths and injuries reduced the able-bodied workforce in Europe.With fewer numbers within the familyand household incomes declined after the war.

Q 22. How did the First World War transformed the socio-economic and political structure of the world?

1. The war led to the snapping of economic links between the world’s largest economic powers which were now fighting each other to pay for them. 
2. Britain borrowed large sums of money from US banks as well as the US public. 
3. Thus the war transformed the US from being an international debtor to an international creditor. 
4. At the end of the war, the US and its citizens owned more overseas assets than foreign governments and citizens owned in the US.
5. Many agricultural economies were in crisis.
6. Before the war eastern Europe was a major supplier of wheat in the world market. 
7. When this supply was disrupted during the war, wheat production in Canada, America and Australia expanded dramatically. 
8. But once the war was over, production in eastern Europe revived and created a glut in wheat output. 
9. Grain prices fell, rural incomes declined, and farmers fell deeper into debt.

Q 23. What were the main effects of First World War on the economy of Britain?

1. Post-war economic recovery proved difficult for Britain.
2. It was the world’s leading economy in the pre-war period faced a prolonged crisis. 
3. While Britain was preoccupied with war industries had developed in India and Japan. 
4. After the war Britain found it difficult to recapture its earlier position of dominance in the Indian market, and to compete with Japan internationally.
5. To finance war expenditures Britain had borrowed liberally from the US and at the end of the war Britain was burdened with huge external debts.
6. The war had led to an economic boom as there was large increase in demand, production and employment. 
7. When the war boom ended,production contracted and unemployment increased. 
8. At the same time the government reduced bloated war expenditures to bring them into line with peacetime revenues. 
9. These developments led to huge job losses – in 1921 one in every five British workers was out of work. 
10. Anxiety and uncertainty about work became an enduring part of the post-war scenario.

Q 25. How did mass production change the US economy?

1. One important feature of the US economy of the 1920's was mass production. 
2. The mass production had begun in the late nineteenth century it became a characteristic feature of industrial production in the US. 
3. Mass production lowered costs and prices of engineered goods.
4. Due to higher wages, more workers could now afford to purchase durable consumer goods such as cars.
5. Car production in the US rose from 2 million in 1919 to more than 5 million in 1929. 
6. There was a spurt in the purchase of refrigerators, washing machines, radios, gramophone players, all through a system of ‘hire purchase.
7. The demand for refrigerators, washing machines, etc. was also fuelled by a boom in house construction and home ownership, financed once again by loans.
8. The housing and consumer boom of the 1920's created the basis of prosperity in the US. 
9. Large investments in housing and household goods seemed to create a cycle of higher employment and incomes, rising consumption demand, more investment, and more employment and incomes.
10. In 1923, the US resumed exporting capital to the rest of the world and became the largest overseas lender. 
11. US imports and capital exports also boosted European recovery and world trade and income growth over the next six years.

Q 26. What was the effect of mass production on the US economy?

1. Mass production lowered costs and prices of engineered goods. Due to higher wages, more workers could now afford to purchase durable consumer goods such as cars. 
2. Car production in the US rose from 2 million in 1919 to more than 5 million in 1929.
3. There was a spurt in the purchase of refrigerators, washing machines, radios, gramophone players, all through a system of ‘hire purchase’ on credit repaid in weekly or monthly installments. 
4. There was a boom in house construction and home ownership, financed by loans.
5. The housing and consumer boom of the 1920's created the basis of prosperity in the US. 
6. Large investments in housing and household goods created higher employment, incomes and more investments.
7. US resumed exporting capital to the rest of the world and became the largest overseas lender. 
8. US imports and capital exports also boosted European recovery and world trade and income growth over the next six years.

Q 27. Explain the causes of Great Depression.

1. The Great Depression began around 1929 and lasted till the mid-1930's. 
2. During this period in most parts of the world there was  decline in production, employment, incomes and trade.
3. Agricultural regions and communities were the worst affected because of the fall in agricultural prices 
4. The depression was caused by a combination of several factors.

       First Cause

1. Agricultural overproduction was made worse by falling agricultural prices. 
2. As prices slumped and agricultural incomes declined, farmers tried to expand production and bring a larger volume of produce to the market to maintain their overall income. 
3. This worsened the glut in the market by pushing down prices even further. 
4. Farm produce rotted for a lack of buyers.

       Second Cause

1. In the mid-1920's, many countries financed their investments through loans from the US but US overseas lenders panicked at the first sign of trouble. 
2. Countries that depended crucially on US loans faced an acute crisis.
3. The withdrawal of US loans affected the world in different ways. 
4. In Europe it led to the failure of some major banks and the collapse of currencies such as the British pound sterling. 
5. In Latin America it intensified the slump in agricultural and raw material prices. 
6. The US attempt to protect its economy in the depression by doubling import duties also gave severe blow to world trade.

Q 28. What was the impact of Great Depression on US economy?

1. The US was most severely affected by the Great Depression. 
2. With the fall in prices and the prospect of a depression, US banks slashed domestic lending and called back loans. 
3. Farms could not sell their harvests, households were ruined, and businesses collapsed. 
4. Faced with falling incomes, many households in the US could not repay what they had borrowed, and were forced to give up their homes, cars and other consumer durables. 
5. As unemployment soared people travelled long distances looking for any work they could find.
6. The US banking system itself collapsed. 
7. Unable to recover investments, collect loans and repay depositors, thousands of banks went bankrupt and were forced to close.
8. The Great Depression had wider effects on society, politics and international relations, and on peoples’ minds.

Q 29. What was the impact of Great Depression on Indian economy?

1. In the nineteenth century colonial India became an exporter of agricultural goods and importer of manufactures.
2. The depression affected Indian trade. 
3. 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.
4. Peasants and farmers suffered more than urban dwellers. 
5. The agricultural prices fell sharply and the colonial government refused to reduce revenue demands. 
6. Peasants producing for the world market were the worst hit.
7. The jute producers of Bengal grew raw jute that was processed in factories for export in the form of gunny bags. 
8. But as gunny exports collapsed, the price of raw jute crashed more than 60 per cent. 
9. Peasants who borrowed in the hope of better times or to increase output in the hope of higher incomes faced ever lower prices, and fell deeper and deeper into debt.
10. Across India, peasants’ indebtedness increased. 
11. They used up their savings, mortgaged lands, and sold jewellery and precious metals  to meet their expenses. 
12. In these depression years,India became an exporter of precious metals, notably gold.
13. The famous economist John Maynard Keynes thought that Indian gold exports promoted global economic recovery. 
14. They certainly helped speed up Britain’s recovery, but did little for the Indian peasant.
15. Rural India was thus seething with unrest when Mahatma Gandhi launched the civil disobedience movement at the height of the depression in 1931.
16. The depression proved less grim for urban India. 
17. Because of falling prices, those with fixed incomes – say town-dwelling landowners who received rents and middle-class salaried employees  found themselves better off. 
18. Everything cost less. 
19. Industrial investment also grew as the government extended tariff protection to industries, under the pressure of nationalist opinion.

Q 30. Write a note on Second World War.

1. The Second World War lasted from 1939 to 1945.
2. It was fought between the Axis powers mainly Nazi Germany,Japan ,Italy and the Allies Britain, France, the Soviet Union and the US. 
3. It was a war waged for six years on many fronts, in many places, over land, on sea, in the air.
4. Death and destruction was enormous. At least 60 million people, or about 3 per cent of the world’s  population, are believed to have been killed, directly or indirectly, as a result of the war. 
5. Millions were injured and most of these deaths took place outside the battlefields. 
6. Many more civilians than soldiers died from war-related causes. 
7. Vast parts of Europe and Asia were devastated, and several cities were destroyed by aerial bombardment or relentless artillery attacks. 
8. The war caused an immense amount of economic devastation and social disruption. 
9. Reconstruction was to be long and difficult.
10. Two crucial influences shaped post-war reconstruction. 
11. The first was the US’s emerged as the dominant economic, political and military power in the Western world. 
12. The second was the dominance of the Soviet Union. 
13. It had made huge sacrifices to defeat Nazi Germany, and transformed itself from a backward agricultural country into a world power during the very years when the capitalist world was trapped in the Great Depression.

Q 31.Briefly summarise the two lessons learnt by economists and politicians from the inter-war economic experience?

Economists and politicians learnt two key lessons from inter-war
economic experiences.
First 

1. An industrial society based on mass production cannot be sustained without mass consumption. 
2. But to ensure mass consumption, there was a need for high and stable incomes. 
3. Incomes could not be stable if employment was unstable.
4. Thus stable incomes also required steady, full employment.
5. But markets alone could not guarantee full employment.
6. Therefore governments would have to step in to minimise fluctuations of price, output and employment. 
7. Economic stability could be ensured only through the intervention of the government.

Second

1. The second lesson related to a country’s economic links with the outside world. 
2. The goal of full employment could only be achieved if governments had power to control flows of goods,capital and labour.
3. Thus the main aim of the post-war international economic system was to preserve economic stability and full employment in the industrial world. 
4. Its framework was agreed upon at the United Nations Monetary and Financial Conference held in July 1944 at Bretton Woods in New Hampshire, USA.

Q 32. What is meant by Bretton Woods system?

1. The Bretton Woods conference established the International Monetary Fund (IMF) to deal with external surpluses and deficits of its member nations. 
2. The International Bank for Reconstruction and Development known as the World Bank was set up to finance postwar reconstruction. 
3. The IMF and the World Bank are referred to as the Bretton Woods institutions or the Bretton Woods twins. 
4. The post-war international economic system is described as the Bretton Woods system.
5. The IMF and the World Bank commenced financial operations in 1947. 
6. Decision-making in these institutions is controlled by the Western industrial powers. 
7. The US has right of veto over key IMF and World Bank decisions.
8. The international monetary system is the system linking national currencies and monetary system. 
9. The Bretton Woods system was based on fixed exchange rates. 
10. In this system, national currencies, for example the Indian rupee, were pegged to the dollar at a fixed exchange rate. 
11. The dollar was anchored to gold at a fixed price of $35 per ounce of gold.
12. The Bretton Woods system inaugurated an era of growth of trade and incomes for the Western industrial nations and Japan. 
13. World trade grew annually at over 8 per cent between 1950 and 1970 and incomes at nearly 5 per cent. 
14. The growth was mostly stable, without large fluctuations. 
15. During this period the unemployment rate,  averaged less than 5 per cent in most industrial countries.
16. These decades also saw the worldwide spread of technology and enterprise. 
17. In order to develop faster the developing countries  invested vast amounts of capital, importing industrial plant, equipment and modern technology.

Q 33. Explain what is referred to as G -77 countries. In what ways G -77 can be seen as a reaction to the activities of Bretton Woods twins?

1. After the Second World War colonies in Asia and Africa emerged as free, independent nations.
2. They were overburdened by poverty and a lack of resources, and their economies and societies were handicapped by long periods of colonial rule.
3. The IMF and the World Bank were designed to meet the financial needs of the industrial countries. 
4. They were not equipped to cope with the challenge of poverty and lack of development in the former colonies.
5. As newly independent countries the former colonies faced pressures to lift their populations out of poverty, 
6. They came under the guidance of international agencies dominated by the former colonial powers. 
7. Even after many years of decolonisation, the former colonial powers still controlled vital resources such as minerals and land in many of their former colonies.
8. Large corporations of other powerful countries, for example the US managed to secure rights to exploit developing countries natural resources very cheaply.
9. Most developing countries did not benefit from the fast growth the Western economies experienced in the 1950'sand 1960's. 
10. Therefore they organised themselves as a group – the Group of 77 (or G-77) – to demand a new international economic order (NIEO). 
11. By the 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.

Q 34 What are MNC's?Why MNC's decide to relocate production to Asian countries?

1. Multinational corporations (MNC's) are large companies that operate in several countries at the same time. 
2. The first MNC's were established in the 1920's. 
3. Many more came up in the 1950's and 1960's as US businesses expanded worldwide and Western Europe and Japan also recovered to become powerful industrial economies. 
4. The worldwide spread of MNCs was a notable feature of the 1950's and 1960's. 
5. This was partly because high import tariffs imposed by different governments forced MNC's to locate their manufacturing operations and become ‘domestic producers’ in as many countries as possible.
6. Wages were relatively low in Asian countries like China and India. 
7. Thus they became attractive destinations for investment by foreign MNCs competing to capture world markets.

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New Words

Dissenter – One who refuses to accept established beliefs and practices.

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

Tariff – Tax imposed on a country’s imports from the rest of the world. Tariffs are levied at the point of entry, i.e., at the border
or the airport

Exchange rates – They link national currencies for purposes of international trade. There are broadly two kinds of exchange rates: fixed exchange rate and floating exchange rate.

Fixed exchange rates – When exchange rates are fixed and governments intervene to prevent movements in them

Flexible or floating exchange rates – These rates fluctuate depending on demand and supply of currencies in foreign exchange markets, in principle without interference by governments.