The key to the success of the British cycle industry was in exports.
As part of the British Empire before WW1 and ‘The Commonwealth’ after WW2, the vehicle history of these countries is intertwined with our own. British exports provided their first vehicles and helped establish local manufacturers.
The following pages will document examples of British bicycles exported to Commonwealth countries, as well as their own cycle industry.
We start with the end of the British Empire, bankrupted by American loans for WW2…
POST-WW2 BRITISH EMPIRE
At the start of the war, Britain had spent the money that they did have in normal payments for material under the ‘US Cash-and-Carry’ scheme. Basing rights were also traded for equipment e.g. the ‘Destroyers for Bases Agreement.’ But, by 1941, Britain was in a terrible financial state and ‘Lend-Lease’ was introduced.
Large quantities of goods were in Britain or in transit when Washington suddenly and unexpectedly terminated Lend-Lease on 29 August 1945. The British economy had been heavily geared towards war production (around 55% GDP) and had drastically reduced its exports. The UK therefore relied on Lend-Lease imports to obtain essential consumer commodities such as food while it could no longer afford to pay for these items using export profits.
The end of lend-lease thus came as a great economic shock. Britain needed to retain some of this equipment in the immediate post war period. As a result the Anglo-American Loan came about. Lend-lease items retained were sold to Britain at the knockdown price of about 10 cents on the dollar giving an initial value of £1,075 million.
John Maynard Keynes was sent by the United Kingdom to the United States and Canada to obtain more funds. British politicians expected that in view of the United Kingdom’s contribution to the war effort, especially for the lives lost before the United States entered the fight in 1941, America would offer favorable terms. Instead of a grant or a gift, however, Keynes was offered a loan on favourable terms.
Historian Alan Sked has commented that: ‘The U.S. didn’t seem to realize that Britain was bankrupt’ and that the loan was denounced in the House of Lords, but in the end the country had no choice. America offered $US 3.75bn (US$55 billion in 2013) and Canada contributed another US$1.19 bn (US$15 billion in 2013), both at the rate of 2% annual interest. With the interest instead of paying the original loan amount the United Kingdom ended up paying a total of $7.5bn (£3.8bn) to the US and US$2 bn (£1bn) to Canada.
The loan was made subject to conditions, the most damaging of which was the convertibility of sterling. Though not the intention, the effect of convertibility was to worsen British post-war economic problems. International sterling balances became convertible one year after the loan was ratified, on 15 July 1947. Within a month, nations with sterling balances had drawn almost a billion dollars from British dollar reserves, forcing the British government to suspend convertibility and to begin immediate drastic cuts in domestic and overseas expenditure. The rapid loss of dollar reserves also highlighted the weakness of sterling, which was duly devalued in 1949 from $4.02 to $2.80.
World War II changed British society in many ways. First, Great Britain was bankrupted by the war. The Anglo-American Loan Agreement was negotiated by John Maynard Keynes from the United States and Canada on behalf of the United Kingdom, on 15th July 1946. (It was eventually settled on 29th December 2006).
However, despite the Anglo-American Loan and receipt of a third more Marshall Aid than West Germany after WW2 ($2.7 billion v $1.7 billion), postwar British governments chose not to make industrial modernisation its central theme. Instead, it was decided by both Labour and Conservative politicians to use the money to maintain Great Britain’s role as a world power and banker. But it was impossible for the country to return to its pre-war Empire days. India’s independence was followed, in due course, by other colonies, which duly led to the formal creation of the Commonwealth in 1949.
British leaders had also promised its working population more equal treatment as a reward for fighting the Nazis. The creation of the Welfare State was kick-started by the 1942 Beveridge Report. Liberal economist William Beveridge recommended to the government that they should find ways of tackling the five giants, being Want, Disease, Ignorance, Squalor and Idleness. He argued to cure these problems, the government should provide adequate income to people, adequate health care, adequate education, adequate housing and adequate employment. It proposed that ‘All people of working age should pay a weekly National Insurance contribution. In return, benefits would be paid to people who were sick, unemployed, retired or widowed.’
Before 1939, most health care had to be paid for through non government organisations – through a vast network of friendly societies, trade unions and other insurance companies which counted the vast majority of the UK working population as members. These friendly societies provided insurance for sickness, unemployment and invalidity, therefore providing people with an income when they were unable to work. Following the implementation of Beveridge’s recommendations, institutions run by local councils to provide health services for the uninsured poor, part of the poor law tradition of workhouses, were merged into the new national system. As part of the reforms, the Church of England also closed down its voluntary relief networks and passed the ownership of thousands of church schools, hospitals and other bodies to the state.
The postwar years for ordinary British citizens were not easy. Rationing had been introduced in 1939 at outbreak of war, and continued into the mid-fifties, although as much rationing as possible was ended by Queen Elizabeth’s coronation in 1953. But, despite rationing, there was great optimism, and everyone mucked in. The things that affected ordinary people were social. My mother described the importance of fashion to young women after WW2, particularly the ‘New Look’ which was the first collection of the House of Dior, launched on 12th February, 1947.
Popular music was also important to ordinary folks. Before the war, BBC Radio had had an elitist approach to popular music. Jazz, swing or big band music for dancing was relegated to a few late night spots. During the war, the BBC was obliged to adapt, if only because British soldiers were listening to German radio stations to hear their favourite dance bands. American G.I’s had helped popularise Boogie Woogie and the Jitterbug during the War, with dances held in church halls, village halls, clubs, and Air Force bases all over Britain. However, after the war, the big band sound started to decline, and crooners became popular. In 1950s Great Britain, Skiffle – using home-made instruments such as washboards and tea-chests – laid the foundation for Britain’s rock n rollers.
The key to Great Britain’s postwar balance of payments was its Export Drive. Harold Wilson was president of the Board of Trade between 1947 and 1951. He explained in his 1957 book ‘Post-War Economic Policies in Britain’:
Increased exports enabled us to pay for more food and raw materials and to ship capital equipment abroad to speed the development of the Colonies and other parts of the Commonwealth. By 1948 the sum total of our overseas earnings was nearly enough to pay our accounts abroad including a continuing heavy drain on overseas military expenditure. In 1949 we actually had a surplus on our current accounts with the rest of the world, the first time in fifteen years, and this after the loss of a great part of our overseas investments.
Bilateral trading agreements enabled us to import urgently-needed food and raw materials from countries who were willing to take goods in return — Danish food or Swedish timber for British coal and steel and textile yarns: Argentine beef and feeding-stuffs for coal, electrical apparatus, alkali and tinplate: Soviet grain and timber, in return for machinery, forestry and transport equipment from Britain, and wool, rubber and cocoa from the Commonwealth.
Bulk-purchase of our imported food and of certain raw materials was violently attacked by Tory politicians and commodity dealers. But an impartial United Nations Report fairly commented:
‘The explanation of the relatively low prices paid by the United Kingdom for the imports of food and raw materials appears to lie largely in the extensive use which it has made of long-term contracts and bulk-purchase agreements covering a large proportion of its purchases.’
An important part of Labour’s programme was the development of trade with the Commonwealth. Production of food-stuffs and certain raw materials such as cotton and tobacco was stimulated by some fifty separate long-term contracts. By 1949, 45% of all our imports came from the Commonwealth, compared with 36% in 1934 – 38. ehilce historyWhile 51% of our exports went to Commonwealth markets, against 43% in pre-war days. By these means, both in food and raw materials, we made great strides in substituting Commonwealth sources of supply for the dollar areas.
BRITISH EMPIRE 1890s-1920
Exports of British bicycles and components from the late 1880s onwards paved the way for countries around the world to start their own local bicycle industries.
American companies copied British bikes to make their own, and set up a cycle industry to rival the British. As market prices dropped because of over-production (around 1897), quality suffered, so America increased import tariffs to protect their own industry. They tried to export their way out of trouble but, although their bikes were cheaper than the British machines, wooden wheels and tubeless tyres hampered their sales.
The British quality manufacturers maintained their markets, in particular with exports to the British Colonies. Efficient distribution networks, and the supply of top quality bicycles and components enabled local companies in these countries to start their own businesses, first as agents for British companies, then rebadging imported bicycles, and finally using BSA Fittings with their own frames to sell their own products.
BRITISH EAST AFRICA: UGANDA
This is the start of a new project, so please be patient as I build it up 🙂
Postwar intro on War Loans thanks to – http://en.wikipedia.org/wiki/Anglo-American_loan
Photo of EMPIRE chainwheel from New Zealand, thanks to Ross S