development of an international exchange and payments mechanism based upon bills drawn on London, and it was scarcely surprising that the mid-Victorians were convinced that by following the principles of classical political economy, they had discovered the secret which guaranteed both increasing prosperity and world harmony. Although many individuals – Tory protectionists, oriental despots, newfangled socialists – still seemed too purblind to admit this truth, over time everyone would surely recognize the fundamental validity of laissez-faire economics and utilitarian codes of government.29
While all this made Britons wealthier than ever in the short term, did it not also contain elements of strategic danger in the longer term? With the wisdom of retrospect, one can detect at least two consequences of these structural economic changes which would later affect Britain’s relative power in the world. The first was the way in which the country was contributing to the long-term expansion of other nations, both by establishing and developing foreign industries and agriculture with repeated financial injections and by building railways, harbours, and steamships which would enable overseas producers to rival its own production in future decades. In this connection, it is worth noting that while the coming of steam power, the factory system, railways, and later electricity enabled the British to overcome natural, physical obstacles to higher productivity, and thus increased the nation’s wealth and strength, such inventions helped the United States, Russia, and central Europe even more, because the natural, physical obstacles to the development of their landlocked potential were much greater. Put crudely, what industrialization did was to equalize the chances to exploit one’s own indigenous resources and thus to take away some of the advantages hitherto enjoyed by smaller, peripheral, naval-cum-commercial states and to give them to the great land-based states.30
The second potential strategical weakness lay in the increasing dependence of the British economy upon international trade and, more important, international finance. By the middle decades of the nineteenth century, exports composed as much as one-fifth of total national income,31 a far higher proportion than in Walpole’s or Pitt’s time; for the enormous cotton-textile industry in particular, overseas markets were vital. But foreign imports, both of raw materials and (increasingly) of foodstuffs, were also becoming vital as Britain moved from being a predominantly agricultural to being a predominantly urban/industrial society. And in the fastest-growing sector of all, the ‘invisible’ services of banking, insurance, commodity dealing, and overseas investment, the reliance upon a world market was even more critical. The world was the City of London’s oyster, which was all very well in peacetime; but what would the situation be if ever it came to another Great Power war? Would Britain’s export markets be even more badly affected than in 1809 and 1811–12? Was not the entire economy, and domestic population, becoming too dependent upon imported goods, which might easily be cut off or suspended in periods of conflict? And would not the London-based global banking and financial system collapse at the onset of another world war, since the markets might be closed, insurances suspended, international capital transfers retarded, and credit ruined? In such circumstances, ironically, the advanced British economy might be more severely hurt than a state which was less ‘mature’ but also less dependent upon international trade and finance.
Given the Liberal assumptions about interstate harmony and constantly increasing prosperity, these seemed idle fears; all that was required was for statesmen to act rationally and to avoid the ancient folly of quarrelling with other peoples. And, indeed, the laissez-faire Liberals argued, the more British industry and commerce became integrated with, and dependent upon, the global economy, the greater would be the disincentive to pursue policies which might lead to conflict. In the same way, the growth of the financial sector was to be welcomed since it was not only fuelling the midcentury ‘boom’, but demonstrating how advanced and progressive Britain had become; even if other countries followed her lead and did industrialize, she could switch her efforts to servicing that development, and gaining even more profits thereby. In Bernard Porter’s words, she was the first frogspawn egg to grow legs, the first tadpole to change into a frog, the first frog to hop out of the pond. She was economically different from the others, but that was only because she was so far ahead of them.32 Given these auspicious circumstances, fear of strategical weakness appeared groundless; and most mid-Victorians preferred, like Kingsley as he cried tears of pride during the Great Exhibition at the Crystal Palace in 1851, to believe that a cosmic destiny was at work:
The spinning jenny and the railroad, Cunard’s liners and the electric telegraphs, are to me … signs that we are, on some points at least, in harmony with the universe; that there is a mighty spirit working among us … the Ordering and Creating God.33
Like all other civilizations at the top of the wheel of fortune, therefore, the British could believe that their position was both ‘natural’ and destined to continue. And just like all those other civilizations, they were in for a rude shock. But that was still some way into the future, and in the age of Palmerston and Macaulay, it was British strengths rather than weaknesses which were mostly in evidence.
The impact of economic and technological change upon the relative position of the Great Powers of continental Europe was much less dramatic in the half-century or so following 1815, chiefly because the industrialization which did occur started off from a much lower base than in Britain. The farther east one went, the more feudal and agricultural the local economy tended to be; but even in western Europe, which had been closed to Britain in many aspects of commercial and technological development prior to 1790, two decades of war had left a heavy mark: population losses, changed customs barriers, higher taxes, the ‘pastoralization’ of the Atlantic sector, the loss of overseas markets and raw materials, the difficulties of acquiring the latest British inventions, were all setbacks to general economic growth, even when (for special reasons) certain trades and regions had flourished during the Napoleonic wars.34 If the coming of peace meant a resumption of normal trade and also allowed continental entrepreneurs to see how far behind Great Britain they had fallen, it did not produce a sudden burst of modernization. There simply was not enough capital, or local demand, or official enthusiasm, to produce a transformation; and many a European merchant, craftsman, and handloom weaver would bitterly oppose the adoption of English techniques, seeing in them (quite correctly) a threat to their older way of life.35 In consequence, although the steam engine, the power loom, and the railway made some headway in continental Europe,
between 1815 and 1848 the traditional features of the economy remained preeminent: the superiority of agriculture over industrial production, the absence of cheap and rapid means of transport and the priority given to consumer goods over heavy industry.36
As Table 7 above shows, the relative increases in per capita levels of industrialization for the century after 1750 were not very impressive; and only in the 1850s and 1860s did the picture begin to change.
The prevailing political and diplomatic conditions of ‘Restoration Europe’ also combined to freeze the international status quo, or at least to permit only small-scale alterations in the existing order. Precisely because the French Revolution had been such a frightening challenge both to the internal social arrangements and to the traditional states system of Europe, Metternich and fellow conservatives now regarded any new developments with suspicion. An adventurist diplomacy, running the risk of a general war, was as much to be frowned upon as a campaign for national self-determination or for constitutional reform. On the whole, political leaders felt that they had enough on their hands simply dealing with domestic turbulences and the agitation of sectional interests, many of which were beginning to feel threatened by even the