Commerce

By 1750 the spice trade had been far surpassed in importance by trade in primary products. In the years that followed, commerce was transformed again, this time by the Industrial Revolution. Because the first Industrial Revolution occurred in Europe, that continent was at the centre of the global commercial network for much of the 19th century. European economies depended on foreign markets to supply raw materials and to demand manufactured goods. The growth of industrial production, therefore, was accompanied by a rapid expansion of commerce. Between 1750 and 1914, world trade increased in value fivefold. During the 19th century alone, world shipping tonnage grew from 4 million to roughly 30 million tonnes. European merchants carried the bulk of this trade.

Industrial growth affected commerce in numerous ways. Initially, the increased production stimulated trade in raw materials. The mechanization of European textile production was responsible for a dramatic rise in American exports of raw cotton. After 1850, trade in grain, meat, and wool also expanded. Europe became a steady importer of wheat from North America, Australia, Argentina, and India, paying for its imports with the products of industry.

Another important aspect of industrial growth was the revolution in land transport. The development of the steam engine and the construction of railway lines promoted commerce between coast and interior on virtually every continent. The railway was especially important in North America, East Asia, and Latin America.

By the end of the 19th century, regions producing primary goods were no longer the most important outlets for the products of European and North American industry. Increasingly, industrial nations became each other’s principal customers, and commerce between the Americas and the European countries took on a multilateral character. The opposite was true for such regions in Africa, Asia, and Latin America: many became part of European colonial empires, and nearly all came to depend heavily on a few foreign markets.

Both internal and external commerce suffered setbacks during World War I. Trade taxes and quantitative restrictions were widely imposed, and it took a series of international conferences during the following decade to dismantle them. The dismantling of controls, however, was not always accompanied by the reduction of trade barriers. The United States and many other countries adopted new customs duties in the 1920s.

With the onset of the Great Depression in 1929, commerce was disrupted once more. National commercial policies remained basically unchanged through the end of 1929, but numerous import controls were imposed in 1930 and the following years. Several relatively self-contained commercial areas then came into being: the sterling area, which traded primarily with Britain; the gold bloc, centred on France; and the German and American trading areas. Within this framework, domestic and foreign commerce recovered slowly but steadily over the course of the 1930s, only to be interrupted again by World War II.

The reduction of trade barriers and the continued expansion of international commerce are two of the notable achievements of the post-war era. Tariff reductions have been accomplished through the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO), and by the creation of customs unions. Although world exports more than doubled in volume and increased in value by a factor of eight between 1954 and 1974, not all countries shared equally in this growth. In the 1950s exports from the industrialized nations of North America and Western Europe expanded rapidly, while exports from the developing countries fell behind. In contrast, after 1965 the exports of the developing nations grew most rapidly, in part because of the rising value of oil exports from petroleum-producing countries. The share of world trade held by Japan and the European Community rose, but that of the Union of Soviet Socialist Republics and Eastern Europe declined. For the world as a whole, the value of international commerce (exports plus imports) rose dramatically. Nevertheless, in the 1970s and 1980s pressure was renewed to erect barriers to foreign trade. Many countries imposed import quotas and negotiated voluntary export restraints—a movement known as the “new protectionism”—but it was not clear whether this represented a serious threat to commerce across national borders, and its effect was in general mitigated in the 1990s by the conclusion of the Uruguay Round of the GATT talks, the establishment of the WTO, and new reciprocal free trade agreements between various nations. Recurrence of this tendency in the 1990s, often as a concomitant of populist politics, was counteracted by a general consensus in favour of free trade, marked by such events as the landmark WTO agreement on telecommunications liberalization reached in 1997.