In Economic History of London - Assignment Example

Introduction: In economic history of London, nineteenth century is always marked as an amazing period. Nineteenth-century London was the capital ofthe first industrial nation, Great Britain. London was the largest and richest urban agglomeration in the world during this period. London was the city in the world with widespread mass sub urbanization (Dyos and Wolff, 1973). It was also a city of contrasts which was evident from the dual existence of extreme of wealth and poverty; the existence of dynamic, successful industries alongside declining ones; as well as the existence of people enjoying leisure and those locked in the most menial hard work (Aldcroft and Richardson, 1969). It is therefore clear that all people living in London in nineteenth century were not benefited from the wave of development, but one can, t just ignore the progress that the city made in every sphere of its economic life during this period. The dynamic economy of London in this nineteenth century has always made historians, and economics astonished at the city’s success in economic front. Intense urbanization in nineteenth century London: The capital city of the United Kingdom, the leading world power by the 1820s, was a special place that made people astonished at its vastness, as well as at its urban life. Urban life of London experienced huge transformation in this period. In this world, urban life marked its beginning over four thousand years ago, when human beings started to combine specific building technologies with ways of organizing society to create densely populated living places. Since then, many different types of society across the world have found urban living useful, and technological change has made the potentials of city existence manifold apparent. However, until the nineteenth century no country became structured as predominantly urban ones. Britain was the first country to experience that shift, and London became the largest and wealthiest city in the world with housing over a fifth of Englands population by 1900 (Briggs, 1968). The cause, of course, was associated with the development of modern capitalist societies - a process in which Britain took the initial lead. Rapid industrialization and economic growth accompanying urbanization: Industrialization and sustained economic growth accompanied urbanization in London during nineteenth century. One important thing to be noted regarding this context is that these inter-linked processes subsequently spread through other countries and continue to encompass more areas of the globe (Hartwell, 1971). Today, Third World countries are experiencing the fastest urban growth rates ever, and it is estimated that over half the worlds population will live in urban areas within a decade, so it seems that the process is set to continue for the foreseeable future and undoubtedly beyond (Hartwell, 1971). Therefore, the growth of London in the nineteenth century represents the first example of this modern phenomenon and its economic history can be interesting for that reason alone. Major characteristics of the economy of nineteenth century London: In nineteenth century city of London went through a series of continuous transformations in every sphere of its economic life, huge changes took place its urban life and in its structure. These changes characterized London as a very different city from what existed a century before. Major characteristics of the economy of nineteenth century London are as follows: The people of a city are its most basic economic resource. London experienced huge population growth during nineteenth century. In this period population was expanding continuously at a very fast rate of around a fifth every decade (Olsen, 1983). Growth of Suburban areas was so huge that the suburbs spilled far beyond the juridical area of the metropolis (Ashworth, 1964). City growth in this period became a self-sustaining process i.e. growth of the city no longer linked to government and aristocratic behaviour but to market relations. Traditional work practices had markedly given way after centuries of slow dissolution, so that nineteenth-century London industry was openly competitive and exhibited explicitly capitalist behaviour (Schwarz, 1992). There occurred an increasingly commonplace separation between workplace and residence amongst all urban social classes (Poeter, 1994). It was also widely believed and desired, that all families should have their own separate accommodation with no shared facilities. In other words to say there occurred significant transformation in the way of living of households (Anderson, 1977; Porter, 1994). The transformed way of living was so pervasive that by the end of the nineteenth century people started condemning home-working and overcrowding as social evils rather than the facts of life they had been for centuries before. These separations transformed the physical structure of the city into its modern, functionally distinct form (Porter, 1994). In Britain, there took place a marked specialization of the countrys regions in particular economic activities and the rapid appearance of major cities in the areas where manufacturing became important during nineteenth century. A group of urban areas simultaneously existed, in what came to be called conurbations, but with notably different features from each other and the metropolis - reflecting the differing industrial specializations of the regions in which they emerged (Robinson, 2004). London, consequently, was one of the most important urban hubs amongst those urban areas. From the very early decades of nineteenth century, another aspect of urban development in this century became significant in London. The technologies of urban life of London were subject to widespread change with many thoroughly transformed. Public transport, for instance, from being virtually non-existent for most social groups became more widespread, and its motive power slowly shifted from the horse to steam and electricity, below ground as well as on it, and finally to the petrol engine (Aldcroft, & Freeman, 1983). This prodigious and unexpected series of innovations, and their subsequent application to metropolitan life, lasted throughout the period up to early twentieth century. Apart from these, there were also some other technological innovations, which were new, but highly expensive to install. Some of the most outstanding innovations among them were street lighting; extensive paved, drained and cleansed roads; sanitation and fresh, piped water for the masses; gas and electricity; the telegraph and telephone; new types of long-distance transport, and ways in which travel was related to cities via stations and ports (Olsen, 1983). The scale of these new inventions, their speed of adoption and the enormous costs of providing them were a unique event of the period of nineteenth century. The high speed of change, however, made investing in the new technologies of urban living a highly risky business. Due to extensive Implementation of new technologies in daily life, the content of urban life was changed beyond recognition. A completely new type of lifestyle formed. The new bundle of technologies extremely increased the spatial spread of the city; expanded hugely the amount of fixed capital required to make urban areas function. London being a wealthy city made sustained economic growth viable under the constant need of huge fixed capital (Schwarcz, 1992). In any country or any city newly innovated technologies become socially useful when some firms or any other organizations turn them into workable products. With regard to the new urban technologies that transformed nineteenth-century London private organizations were the major provider of this technologies, with local government supreme in only a few (Schwarz, 1992). Rules and regulations, however, were put in place to affect the ways in which those private firms operated and invested to ensure that people’s interests are protected. Some of those rules and regulations were fixed by Parliament or by public urban agencies, others arose from the detailed histories of the organizations involved and the nature of the competitive contexts in which they found themselves. These feature show that huge changes took place in the urban life of London in nineteenth century. A large-scale of urban renewal was taken place in nineteenth-century London. Among these changes, the most impressive, short-run, changes were caused by the building of new transport facilities with the help of new technologies. New mode of transport system brought about significant changes in the urban life of London. Despite this, over the longer term, there was a fundamental transformation of most of the pre-existing eighteenth-century urban areas, from which only the best West End locations remained intact (Summerson, 1977). By the 1900s, the city of a century before had been divided into a commercial core of the West End and City of London and an inner-industrial area of factories, workshops and low-income housing. This process of transformation was, however, slow and unplanned. In other European cities, states transformed their capital cities but in England private capital played the major role in transforming its capital, London (Olsen, 1982). One consequence of urban renewal with the help of private capital was that the street and broader urban pattern of previous centuries still predominated in the nineteenth century on which new growth was added. The above features reflect a dynamic, vibrant economic history of nineteenth century London, which went through huge transformation in its urban life. Different aspects of economic life took a huge turn during this period. The subsequent sections illustrate how changes took place in different areas of economy of London in nineteenth centuries and helped in building up a dynamic economic life. Industrial growth and employment: London became less industrially specialized between 1800 and the early 1900s but, even so, over a third of its huge workforce remained employed in manufacturing, making it one of the largest manufacturing centers in the country. New industries also prospered in the nineteenth-century metropolis. Nineteenth century London economy went through the experience of dynamic changes in its industrial sector. With regard to industrial growth prime features of the nineteenth-century London economy were as follows: London became a center of wealth/empire It also experienced huge growth in service industry. And The city became a world financial center. Manufacturing industry: In nineteenth century London was one of the largest manufacturing center in U.K. it also provided huge number of employment to the people of London. Manufacturing industry, therefore, still counted as one of the major industries in nineteenth century London. One important feature of manufacturing industry was the application of labor intensive technology, which in turn increased the attractiveness of the city with its large pool of labor (Schwarz,. 1992). Manufacturing industry requires huge pool of skilled labor, but, in early nineteenth century manufacturing industry of London, however, suffered from the shortage of skilled labor in early nineteenth century because of low educational attainment of the most contemporary workers. As a result producers devised new type of production processes that could circumvent the particular skill shortages. New nineteenth century technologies that applied in manufacturing sectors of London mixed machinery and skilled and unskilled labor (Schwarz, 1992). Service industry: In nineteenth century London experienced significant growth in service industry. Domestic service was a substantial employer of women. Its share of metropolitan employment was reached to the highest peak by mid-century. By mid-century there were around 200,000 domestic servants, representing around a quarter of the workforce, as compared to only 13 per cent in the country as a whole (Aldcroft, and Richardson, 1969). Domestic service sector was, however, declining in absolute terms by the end of the period. In contrast, administrative services were growing from mid-century and growth accelerated from then on, so that in the second half of the century it offered huge amount of employment. This simply reflected contemporary growth in public services, education, and financial services. New organizational practices emerged which put more emphasis on efficient administration and the recording and monitoring of transactions (Aldcroft, and Richardson, 1969). New technologies, such as the typewriter and paper copying, encouraged these trends by making them both cheaper to implement and more effective in their outcomes (Schwarz, 1992). The professions also grew through the period, although with varying histories. These changes show how dynamic the service industry was in nineteenth century London. Financial services: The growth of London as the center of British and international finance is one of the very well-known aspects of the nineteenth-century London economy. Although this sector registered a relatively modest beginning, nineteenth century London economy experienced huge expansion in financial sector across a wide variety of financial activities including government finance, the stock exchange, national banking, investment banking, insurance, international finance and commercial trade (Hartwell, 1971). Rapid growth took place in all of these sectors, particularly after 1860. Financial industry managed to grow so rapidly due to expanding opportunities offered by the world market and the possibility of moving into new areas of business. All financial sectors progressively became more specialised and international in nature, incorporating many foreign-based rivals (Aldcroft, and Richardson, 1969). Living standard, wealth and poverty: Capital cities of all countries show dual existence of extremes of wealth and poverty. Nineteenth century London was not an exception - while in one hand, rich people were leading luxurious lives, and poor people were going thorough extreme misery and deprivation in their daily life (Olsen, 1983; Dyos, & Wolff, 1973). Unequal distribution of income was one of factor behind existence of extreme poverty alongside luxurious lifestyle of a large group of people. Apart from unequal distribution of income, the factors that contributed to poverty were improper functioning of labour market in treating casual labour, inefficient performance of housing markets, the de-skilling of artesian labour, etc (Landes, 1999). In spite of having prevalence of poverty alongside extreme wealth, overall living standard, however, was gradually improving during this period. Retailing shopping and introduction of new mass market: Expansion of shopping was one of the most noticeable signs of economic change in the nineteenth century (Abburgham, 1964). Shops were already common in London by the 1800s and sold a wide variety of goods. Fifty percent of the shops probably sold food and drink while others were pure retailers in areas such as dress accessories, sewing items, textile fabrics and a variety of luxury goods (Durham, 1964). Over the century huge changes took place in the length of the distributional chain and the roles and organization of shops. With regard retailing London was not very innovative (Smith, 2002). As a result most of the changes were imitated from new practices elsewhere. The shift, however, was very profound for the urban economy and it changed the citys street life and micro-geography. Developments in retailing were mainly stimulated by technical changes in production, distribution and enterprise organization, and to some extent by gradually improving living standard. Another dynamic feature of this century was that the mass market was emerging, especially in foodstuffs, basic household goods and clothing. London became one of the richest consumer markets in the world (Olsen, 1983). Leisure accompanied by pleasure: Consumption of leisure of the people of London increased over the course of the nineteenth century. This basically resulted form gradual reduction in working hours and introduction of legally enforceable bank holidays. Apart from increase in leisure hours, the very conception of leisure also changed from just a rest from work to some activity that could be pursued for its own sake. There took place profound shifts in the leisure activities undertaken. Changes in work organization and suburban migration reduced work-centered entertainments such as trade feasts, carnivals and other outings (Anderson, 1985). Amusements became more commercialised and sophisticated. Education increased literacy levels and expectations. People also started to engage in various kinds of social works in their leisure hours. They began to take active parting suppression of socially undesirable activities like the suppression of some atavistic sports like bull and rat baiting, reducing public executions or putting restrictions on drinking hours, etc (Anderson, 1985). All these changes show how life of London was becoming so dynamic. Changes in leisure activities brought about considerable changes in London industry and employment. Several of new jobs were created, for example, in new industries, such as hotels, music halls and cinema, and, yet more, in vastly expanded newspaper and magazine publishing. Increasing Suburbanisation and housing: During nineteenth century, London experiences extensive increase in its size- it was transformed from a city that covered a relatively small area to an extremely large metropolis with suburbs connected to the center by an extensive public transport system (Ashworth, 1964). Rapid population growth accompanied with rising living standards and new social values contributed to enormous demand for single-family homes (Anderson, 1985). The physical separation of workplace and home accelerated to encompass most social strata over the period. Domestic life became increasingly privatised. All these changes enormously contributed to the growth of suburbs. City life no longer remained confined in the core city area. The suburbs mainly grew up as uniform acres of terraced housing facing each other across paved and drained streets behind railways, old turnpikes and the repaved, but often still narrow, lanes that had existed before urban expansion. Adding to it sharp boundary arose between the home and street which eradicated old popular forms of living. The old system of living was predominantly based on street life and extensive use of open spaces. In contrast, in the expanded city, the new suburban open spaces were well-policed street pavements or fenced-off parks (Anderson, 1985). Entertainment ceased to be informal and was instead commercialized, specialized and regulated. Infrastructural changes: Infrastructure of any country or city plays a very crucial role in maintaining a good quality of economic life of that place. Well-developed infrastructure always enhances quality of economic life. Well-developed roads, transport system, network of markets, utilities etc. are very important for having a good economic life of a country or city. Nineteenth century London economy experienced a series of changes in the city infrastructure. Major changes took place in transport system, and other major forms of utilities and communication, and in market system. Transportation to and from the capital: Throughout the nineteenth century London was the central point of the UK transport system, and, through its port, an important center of international trade. As transportation facilities enhanced, the capitals links were strengthened to even the most remote parts of the country. Both people and goods could move to distant places more quickly and at far less cost than in previous centuries (Aldcroft & Freeman, 1983). Better transportation extended offered great help to the completion of the formation of a national market for many goods and services - an attribute that was crucially important for the development of metropolitan industries (Dyos & Wolff, 1973). Improved communications made regional labor markets more competitive, because with the improved means of transportation it became much easier to migrate from one place to another. Better transport facilities also encouraged greater regional convergence of wage rates in particular trades. Since London was the center of the national transport system, improvement in the transport system of the capital city had profound national implications for competitive structures in national transport as well as for the economic geography of Britain and its regions. It is more or less an obvious fact that the capital of any country is bound to become the hub of the national transport system. Therefore it was evident that London would grow to become the hub of national transport system (Aldcroft & Freeman, 1983). Apart from this fact that London became the centre of U.K. transport system, two other factors stand out in the national context. First, London was the most expensive place to build transport facilities in U.K, but all chief transport companies felt the need to have their presence in London. Second, it remained throughout the period a terminus point and also a barrier to the smooth movement of passengers and goods between the North and Midlands and points beyond, including the Channel. Thus, in nineteenth century because of its very existence and size, London was either a destination or a transshipment point, which had significant implications for the economic geography of Britain as well as in the capital itself (Olsen, 1982). London transportation activities gained considerably from this geographic fact and from the problem of crossing the capital for those who needed to continue journeys. Its position in the economic geography of England, additionally, gave Londons port an extraordinary importance that itself created Transportation within London One of the most significant technical developments affecting the size and functioning of London was the development of mass public transport. Huge changes took place in the transportation system within the city (Aldcroft & Freeman, 1983). There occurred significant shift from walking and private horse carriage to road building, coaches, steamers, horse-drawn buses, surface railways, trams, tubes and motorbuses. Technical innovations was not the only factor that dictated the path of change, but the ways in which firms invested in the new forms of conveyance and competed with each other and alternative forms of travel were also played crucial role in shaping the change . The nature of the investments which involved high fixed costs and low short-run marginal ones, created a particular competitive environment among firms. Under competition, the firms started to face low profits and potentially engaged in ruinous fare wars. Situations became very critical for their survival. As a result, circumstances periodically pushed firms into agreements and mergers (Hartwell, 1971). New inventions, and their application to metropolitan transport problems by risk-taking entrepreneurs, then threatened previously warm relationships among the existing transport undertakings. Therefore, throughout the nineteenth century one can see a clear cycle of innovation, competition and consolidation. Utilities, communications and markets: Transportation facilities are not the only important aspects of the physical infrastructure in a city. Apart form well developed transport facilities, clean drinking water and sewage systems are necessary to carry away unhealthy waste so that good health is maintained. Power is another factor that is crucially needed for industry and homes, so the means to produce and distribute sources of it must be available. Communication system also needed to be developed so that Information and documents need to be circulated within the city and elsewhere. Finally, distribution networks have to be in place to enable the exchange of produce to feed the urban population. In nineteenth century substantial change occurred in all these aspects of metropolitan infrastructure. In 1800, many of them did not exist .for example there was no gas, electricity, the telegraph and telephones in the city. Others were in an undeveloped or a worsening state - namely, the post, water and sewerage. However, over time all these facilities developed in the city and played a crucial role in enhancing quality of economic life of the city and making it more active, more vibrant. The nineteenth century London experienced extensive development in all these fields (Summerson, 1977). The result was that at the end of nineteenth century London became a place of highly improved infrastructure with well developed transport system, improved water supply and sewage, and power supply system, well developed telegraph and telephone system, and an improved network of market. Conclusion: Development in every sphere of economic life that took place in nineteenth century London resulted in a huge shift in the way people used to live their life in earlier century. Urbanization, rapid industrialization, enhanced infrastructure made people more active more dynamic in their daily life. People also learned to utilize their leisure hours in fruitful ways. Their economic life got a great boost. Employment increased substantially, pattern of work also changed, machinery reduced work load. Expansion of service sector played an important role in the way of living. Expansion of administrative services created a new social class – called middle class (Davidoff & HALL,2002). 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