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C O U R S E 
A History of the World since 1300
Jeremy Adelman, Princeton University
C O U R S E   L E C T U R E 
The Expanding 19th Century Capitalist System
Notes taken on May 12, 2016 by Edward Tanguay
the British economy emerged over the course of the 19th century as the core of the core of an emerging capitalist world system
co-dependency between Britain and India
although India's participation in the system was not entirely voluntary
Indians because to resist the controls that the British imposed on the Indian economy
the reason why the controls were there because
Britain had enjoyed an trading advantage in the world economy
faced growing competition, e.g. the United States, Germany, Japan, Russia
so to compensate from their trade deficits with the rest of the world, they enforced a trade surplus with India
in economic terms, three things were circulating globally
not just free-wage labor emerging
free flow of commodities
free flow of capital
the capitalist class was emerging at the top of the system
people making money with money
how money circulated around the world
emergence of a new global class of capitalists
allowed Great Britain to compensate for its large trade deficits
capitalists were making investments around the world
Britain became the banker of the world in the 19th century
also vast scores of petty capitalists involved
the ones really kept the system going
a modest, almost pedestrian form of capitalism
the Gujarati merchants of India
emerged of import purveyors of money
lent money to the cultivators in the hinterlands of poppy plants
paid them back with raw opium
became important opium traders
sold their wares for money in Bombay
a network of money and opium flowing to and from the hinterlands and cities in India
began to bypass the East India Company and sold directly to China
vast trading systems running throughout India
by the middle of the century, these networks were openly challenging a hobbled East India company
often operating with Portuguese merchants in Goa
this infrastructure of credit and merchant transactions brought the Indian hinterlands into a relationship with Chinese consumers of opium
this global, petty capitalism began to thrive
local trading being hooked up to global trading
global capitalist class
joint-stock companies
important purveyors of capital commodities around the world
important machines for moving capital around
pools of savings would begin to collect in places like Amsterdam and London
investments could be put into companies so they could expand globally
after 1815, there was a transformation in the ways in which capital markets functioned
a transformation in the logic of the market places
in 1821, the bank of England made its bank notes convertible into gold
gave stability to the sterling
a world-wide measure of value to money
nation building meant building national currencies
led to the emergence of a new class
a merchant banking class
a demand for funds to build e.g. railroads
merchant bankers played an important role in mediating the relationship between the supply of capital and demand for capital
and the most important entrepôt for capital was London
banks owned by influential families
the Rothchilds
banks become lenders themselves
take their capital and choose which firms to support in order to increase profits
important for railroads, canals
ventures on this scale were capital-intensive
we needed these bankers to play these kinds of roles
by 1914 London became the center of international lending
by 1914: most funds went to
continental Europe
Russia into Persia
single largest borrower was: the United States
the world's largest borrower
approximately a third of all lending
in 20th century, less reliant on conquest and colonization
this had profound effects on individual economies, peoples, and the environment