The First World War and British Cotton Piece Exports to India
T | SHE disastrous effects of the First World War on the export of Lancashire's cotton piece-goods' to its most important market, India, have long been a commonplace of economic history.2 However, there has been no detailed discussion of this question, especially of the crucial period from I9I7, and this article is an attempt to fill that gap. This necessarily involves unravelling the effects of a considerable number of factors which affected the scale of the trade. Even prior to the outbreak of war Lancashire was facing problems in India. In I9I3 the market there had become overstocked with cloth,3 whilst demand was hit by the poor monsoon season.4 The war aggravated the situation by bringing about a financial panic in India: the Economist commented that "the War has exerted much the same effect on the delicate machinery of (Indian) credit as the proverbial bull in a china shop".5 At this time most of Lancashire's difficulties lay in Indian demand rather than on the supply side; although freight, insurance, and cabling costs rose, this was offset by the fall in raw cotton prices. The initial crisis passed, and by early I 9I 5 observers were talking of the "smallness of the shock to enterprise" caused by the war.6 By mid-19I5 Lancashire's piece exports to India had stabilized at approximately 66 per cent of the prewar level (see Fig. i). From the middle of I9I7, however, there came a new and much more serious collapse of British exports. This followed the exacerbation of trends which were at the root of the problem of the previous two years-the rising cost and increasing scarcity of freight, increasing competition, and the decline in Indian demand. These three interrelated problems will be considered in turn.