The Making of a Global World

The discovery of new sea routes to America by European explorers in the 16th century profoundly changed the pre-modern world. It opened up vast new lands and abundant crops and minerals, especially silver from Peru and Mexico. This influx of precious metals to Europe fed its trade with Asia, financing the expansion of Western trade and creating new global connections.

The Irish Potato Famine in the mid-1840s was caused by a disease that destroyed the potato crop, which was a staple food for poor Irish peasants. This led to widespread death and immense suffering. As a result, hundreds of thousands of Irish people emigrated from Ireland, primarily to America, significantly contributing to the large-scale transatlantic migration of the 19th century.

The Corn Laws were British laws restricting the import of corn (grain). They were enacted to protect local British grain producers from cheaper foreign imports. However, as the population grew and demand for food increased, high food prices due to these laws led to widespread discontent among the urban poor and industrial capitalists. Consequently, the laws were abolished in 1846, leading to a massive inflow of cheaper food imports into Britain.

Rinderpest, or the cattle plague, was a devastating disease that arrived in Africa in the late 1880s, carried by infected cattle imported from Europe for Italian soldiers invading Eritrea. It spread rapidly, killing about 90 per cent of the cattle in Africa. This destroyed African livelihoods, which were heavily dependent on cattle for sustenance and transport. The loss of cattle forced Africans into the labour market for European employers, aiding the European colonisation of Africa.

Indentured labour was a system of bonded labour under contracts in the 19th century. Workers, mostly from India and China, were recruited to work on plantations, mines, and in road and railway construction projects in distant lands like the Caribbean, Fiji, Ceylon, and Malaya. They signed contracts for a specific period (usually five years), promising return passage, though conditions were often harsh, and many never returned.

The Great Depression (starting 1929) had a profound impact on India, which was then a British colony:

• Agricultural Prices Collapse: India's agricultural exports and imports were severely affected. As international prices crashed, Indian peasants and farmers faced steep declines in the prices of their produce (e.g., wheat, jute).
• Increased Debt: Despite the fall in prices, the colonial government continued to demand high revenue taxes, pushing Indian peasants deeper into debt.
• Impact on Jute Growers: Jute growers in Bengal were particularly hard hit. They cultivated raw jute for export, but as demand collapsed, prices plummeted, leading to ruin for many.
• Rural Unrest: The depression led to widespread rural indebtedness and agrarian unrest, especially in Bengal and Uttar Pradesh.
• Urban Impact: While agricultural prices plummeted, urban dwellers, especially salaried employees and landlords, found it easier to live as prices of manufactured goods did not fall as sharply.
• Precious Metal Exports: India became a major exporter of precious metals, especially gold, during this period, as peasants sold their gold and silver jewellery to meet revenue demands. This drained India's gold reserves and further linked it to the global economy's downturn.

The depression deepened the poverty of Indian peasants and contributed to anti-colonial sentiments.

The First World War (1914-1918) significantly transformed the US economy and its global role:

• Economic Boom for US: While European powers were engaged in the war, the US economy boomed. US industries supplied food, arms, and other goods to the Allied powers, becoming a major industrial power.
• Shift from Debtor to Creditor: Before the war, the US was a 'debtor nation' (borrowing from Europe). By the war's end, it had become the largest 'creditor nation' in the world. Britain, for instance, had borrowed huge sums from US banks as well as the US public.
• Post-War Recovery Loans: The US provided crucial loans for Europe's post-war reconstruction. This economic muscle gave the US immense influence in the global economy.
• Rise of Mass Production: The war stimulated industrial innovations like mass production (e.g., Fordism), which led to higher productivity and wages in the US, laying the groundwork for a consumer boom in the 1920s.
• Cultural Dominance: US popular culture, including Hollywood films and jazz music, began to gain global popularity, reflecting its growing economic and cultural clout.

The war marked the end of Britain's economic hegemony and the emergence of the US as the dominant economic power, shaping the global financial system for decades to come, especially through institutions like the Bretton Woods system.

The Bretton Woods system was established at the United Nations Monetary and Financial Conference in July 1944 at Bretton Woods, New Hampshire, USA. Its main features were:

• Post-War Stability: It was designed to ensure economic stability and full employment in the industrial world after World War II.
• Fixed Exchange Rates: It was based on fixed exchange rates. National currencies were pegged to the US dollar at a fixed exchange rate, and the US dollar itself was anchored to gold at a fixed price of $35 per ounce of gold.
• International Institutions: The International Monetary Fund (IMF) and the World Bank were established to manage the system. The IMF was to deal with external surpluses and deficits of member nations, and the World Bank (formally IBRD) was to finance post-war reconstruction and development.
• Decision-making Power: The US had veto power over key IMF and World Bank decisions.

Demand for New International Economic Order (NIEO) by G-77:

Developing countries, which were mostly former colonies, were not benefitting from the rapid growth of the Western economies in the 1950s and 1960s. They organised themselves into the 'Group of 77' (G-77) to demand a New International Economic Order (NIEO). They wanted a system that would give them:

• Real control over their natural resources (which were often exploited by former colonial powers).
• More development assistance from developed countries.
• Fairer prices for raw materials in international markets.
• Better access for their manufactured goods in the markets of developed countries.

The NIEO was a collective demand to reform the existing global economic system to be more equitable and beneficial for developing nations, moving beyond the framework primarily designed by and for Western industrial powers.