Economy of Scotland - History

History

When Scotland ratified the 1707 Act of Union, it was an economic backwater comprising poor farmers. Union gave Scotland access to England's global marketplace, triggering an economic and cultural boom transforming a land of only 1.3 million people into a modern society, and opening up a cultural and social revolution. German Sociologist Max Weber credited the Calvinist "Protestant Ethic," involving hard work and a sense of divine predestination and duty, for the entrepreneurial spirit of the Scots.

Growth was rapid after 1700, as Scottish ports, especially those on the Clyde, began to import tobacco from the American colonies. Scottish industries, especially linen-manufacturing, were developed. Scotland embraced the Industrial Revolution, becoming a small commercial and industrial powerhouse of the British Empire. Many young men built careers as imperial administrators. Many Scots became soldiers, returning home after 20 years with their pension and newfound skills.

From 1790 the chief industry in the west of Scotland became textiles, especially the spinning and weaving of cotton. It flourished until the American Civil War in 1861 cut off the supplies of raw cotton; the industry never recovered. However, by that time Scotland had developed heavy industries based on its coal and iron resources. The invention of the hot blast for smelting iron (1828) had revolutionized the iron industry, and Scotland became a center for engineering, shipbuilding, and locomotive construction. Toward the end of the 19th century steel production largely replaced iron production. Emigrant Andrew Carnegie (1835–1919) built the American steel industry, and spent much of his time and philanthropy in Scotland.

Agriculture gained after the union, and standards remained high. However the adoption of free trade in mid-19th century brought cheap American corn which undersold local farmers. The industrial developments, while they brought work and wealth, were so rapid that housing, town-planning, and provision for public health did not keep pace with them, and for a time living conditions in some of the towns were notoriously bad.

Shipbuilding reached a peak in the early 20th century—especially during the Great War, but quickly went into a long downward slide when the war ended. The disadvantage of concentration on heavy industry became apparent for other countries were themselves being industrialized and were no longer markets for Scottish products. Within Britain itself there was also more centralization, and industry tended to drift to the south, leaving Scotland on a neglected fringe. The entire period between the world wars was one of economic depression, of which the world-wide Great Depression of 1929-1939 was the most acute phase. The economy revived with munitions production during World War II. After 1945, however, the older heavy industries continued to decline and the government has given financial encouragement to many new industries, ranging from atomic power and petrochemical production to light engineering. The economy has thus become more diversified and therefore stabler.