The Economics of Britain and India

& The Creation of 2 New

Countries

LEQ’s … • What impact did Britain have on India?• How did Britain take India?• How does specialization encourage

trade?• Why is balance in trade important to a

country?• How did Hinduism and Islam impact

this region after WWII?

First we need to know … what is a cottage industry?

An industry where the goods or services are produced at home rather

than a factory.

SPECIALIZATIONEngland

Lots of textile mills producing cloth

NEED Cotton to produce

cloth

IndiaLOTS of cottage industries

growing cotton

NEED someone to buy this cotton

What does each of these countries SPECIALIZE in?What does each country need?

What is the solution?

TRADE!England

Lots of textile mills producing cloth

NEED Cotton to produce

cloth

IndiaLOTS of cottage industries

growing cotton

NEED someone to buy this cotton

Trade with each other … England needs to buy more raw materials

India needs a larger market to sell their raw materials

England buys cotton

India sells

However … problem

Is EVERY single factory owner going to travel to India, search all of India to find the small cottage industries producing cotton, deal with the

various cottage industries to find the cheapest prices, and then travel all the way

back to England with the cotton?What do the factories owners need now?

Solution … A middle man!

He searches all of India to find

the best cotton!

Then, sells the cotton to the

factory owners in England!

In India, who was this “middle man”?

The East India Company

Solution … A middle man!

This “middle man” is willing to risk his money, time, and effort in building this new company.

Therefore, we could call him an …

Entrepreneur

Trading Routes India to England

Why do you think English traders sailed by ship rather than go across land from India to England?

It was a long time between ships. English ships had to sail all the way around the tip of Africa! Until … what was built later that would decrease shipping time?

Therefore, warehouses had to be built to store the goods until a ship arrived to carry the cargo back to England!

Back to the East India Company … …

The East India Trading Company now had quite a bit of valuable goods stored in their

warehouses so now they had a new problem! How would they protect their storage

warehouses? With soldiers from England!

Take 5 … Let’s make sure we are following the money!What is England IMPORTING?What is England EXPORTING?

Manufactured cloth

Raw materials

Take 5 … Let’s make sure we are following the money!What is India EXPORTING?What is India IMPORTING?

Manufactured cloth

Raw materials

Take 5 … Let’s make sure we are following the money!

Manufactured cloth

Raw materials

Back to England and India Remember … trading with India began growing … THEREFORE … the East India Co. was formed … THEREFORE … storage warehouses were built … THEREFORE … the co. needed soldiers to guard their goods … THEREFORE … Britain now had great armies in India …

THEREFORE … Britain takes over India … BTW …

A bit of reading review …What type of organizational

method is used here?

Trading “partners”What do you think you need in order to have a

successful trading partnership?

Manufactured cloth

Raw materials

Balance of trade!

How does a country achieve balance of trade?

Manufactured cloth

Raw materials

A country’s imports and exports are about equal.

Manufactured cloth

Raw materials

A country’s imports and exports are about equal.

However … is this what India experienced with England?

But charged BIG $ for cloth!

England paid little $ for raw materials

No!However … is this what India experienced

with England?

THEREFORE … there was NO balance of trade! THEREFORE … India suffered!

Results of this imbalance of trade …

•Cottage industries put out of business•People lost jobs / income•Indians now living

in poverty •Indians unhappy

•Britain’s power increases•Britain’s wealth

increases •Britain’s rule

increases

THEREFORE … Indians began to

revolt!

British government takes control … • Because of the revolts, British gov. replaces

the East India Company – Continues to enforce British law – Indians living under oppression

• THEREFORE … Indians begin to fight for independence!

Who lead this fight for

independence?

Mohandas

Gandhi

His philosophy in gaining independence?

• Passive resistance!–No violence!–Examples … • Strikes•Marches• Boycotts• Protests • Civil disobedience

The Salt March

British had a law … it was illegal for anyone but British to collect, produce, and sell salt. However, salt was invaluable to the people of India so they had to comply with this law. Salt was in great supply so Indians could easily collect the salt for free; however, this was a criminal offense.Therefore, Gandhi chose salt as the motive for civil disobedience. In 1930, Gandhi, with 78 others, marched 241 miles in 24 days on a non-violent march protesting the British Salt Tax.

What is civil disobedience

? The decision to break

specific laws because they are unjust in an attempt

to change policy).

Gandhi picked up a tiny lump of salt, breaking

the law. The Salt March started a series of protests. Within a

month, Gandhi was arrested and thrown in a

prison already full of fellow protestors. The

world embraced Gandhi, his followers and their

civil disobedience, eventually enabling India to gain their

freedom from Britain.

Independence• India final gained their independence

from Britain – August 15th, 1947!• However … who would rule? – Hindus (who made up 80% of the

population) or Muslims (who made up of 20% of the population) ?

• Solution? – Divide the country!

The two countries were formed and granted

independence in 1947!

Solution – divide India• India for the Hindus • Pakistan for the

Muslims

India’s government• Established a government that – The central government would share power with

the local governments– Government officials would be elected by the

people – The government officials would have to obey all

laws• Therefore … what type of government did

India establish?

Federal

Republic

Limited

Democratic

Pakistan’s government• Established a government that – The central government would share power with

the local governments– Government officials would be elected by the

people – The government officials would have to obey all

laws• Therefore … what type of government did

Pakistan establish?

Federal

Republic

Limited

Democratic

Britain’s impact on India

• Built an extensive railway system … THEREFORE, India now had an established transportation system

• Built schools and universities … THEREFORE, India learned about western ideas such as democracy

• Learned more modern ways of production … THEREFORE, could produce more

BTW … Reading Review!

What type of organizational method is used here?

Still today a disputed territory!

One more problem … the question of Kashmir!

Words, people, and places to know …

• Cottage industry• Entrepreneur • Specialization • Balance of trade• East India Company• Mohandas Gandhi • Passive resistance

• Civil disobedience• boycott • Kashmir• Disputed territory

Words, people, and places to know … • Cottage industry – industry where goods and services are produced in home rather than

factory• Entrepreneur – one who is willing to risk his money, time, and effort in building a new

company … also, one who brings together land, labor, and goods to produce goods and/or services

• Specialization – producing a special product, goods, or service • Balance of trade – the difference in value between a country’s exports and imports over a

certain period of time • East India Company – company established as a the middle man between England and India • Mohandas Gandhi – leader of India – led India to independence – preached non-violence and

passive resistance • Passive resistance – opposition to a government by use of nonviolent means • Civil disobedience – the refusal to obey certain laws in order to force a change in the

government or law • boycott - refusal to buy a product in order to force a change• Kashmir – disputed territory in Southern Asia – between Pakistan and India • Disputed territory - a disagreement between 2 or more countries over the possession or

control of a territory

Got it?Good!