Overview of the unit
2.1 Resources and wealth
In this unit, we examine some of the factors in modern history that have led to some countries developing at a faster pace than others. We begin by discussing the struggle over the control of resources such as land, water, raw materials and labour. In this section, we explore the global struggle over resources from the fifteenth to the nineteenth century, as reflected in the slave trade, colonial rule and the Industrial Revolution. We also learn of developments that followed in the twentieth century.
2.2 Loans and debts
After the Second World War, the richer nations started providing loans to developing countries to help them improve their standards of living. We learn in this section the opportunities and problems the loans created for developing nations. We also examine issues related to aid and trade between countries that are a cause of major concern for the developing part of the world.
2.3 The global age
In the last few decades, there has been growing interaction between peoples of different countries. Ideas, goods and skills cross borders of nearly all countries at an increasing rate. This interaction forms part of what has come to be known as ‘globalisation’. We learn in this section some of the dilemmas that have arisen for people in developing countries as a result of this global exchange.
Resources and wealth
What impact did the Industrial revolution in Britain have on trade between nations in the eighteenth and nineteenth centuries?
Using information from history books and other sources, find out more about the Industrial Revolution, How was it related to the Atlantic slave trade and colonial rule?
Struggles over resources
Human beings have struggled over natural resources from the earliest of times. Tribes in the past fought over water wells, pastures, and fertile land in river valleys.
As the population of people in an area increased, so too did conflicts over resources. Those who gained control of vital natural and human resources became more powerful and wealthy than those who did not.
In many parts of the world, a feudal system arose in which the ruling classes gained control over large tracts of land as well as the peasants who lived on this land. The feudal system gave way to kingdoms and empires in some parts of the world. The rulers in the kingdoms raised wealth by imposing taxes on the peasants.
Through the use of weapons and warfare, powerful empires were able to impose their will on people they conquered. Emperors used force to capture land, livestock, property and slaves from weaker groups of people. The wealth obtained from the conquests increased the power of the empires.
In the fifteenth and sixteenth centuries. European kingdoms and empires began to grow more powerful than other states. Their superior armies and navies made it
possible for them to defeat other empires and gain control over conquered territories as well as sea routes.
The conquered territories became colonics of the European powers. The Portuguese and Spanish exercised their rule over Central and South America, as well as other areas of the world. The British and French colonised large parts of North America, Africa and Asia. Other European nations also claimed territories for themselves.
The Europeans imposed their rule over these regions, took over the best lands, and levied taxes on the native people. They gained control of the resources and trade in their colonies and used them to create greater wealth.
Other colonial powers. such as the Ottomans, gradually grew weaker and lost their territories to the Europeans.
The Industrial Revolution
The Industrial Revolution began in England in the eighteenth century. spreading rapidly to other European countries. It changed the way people manufactured goods, by introducing factories and the use of machinery in them.
With the invention of machines, the making of products such as cloth became much faster, and could be done on a much wider scale. As a result, craft workers and families working at home were driven out of business. Many of them were forced to join the new factories to continue earning their living.
The factories were first run by water power, and then by steam, Their output was far greater than that obtained by the use of traditional methods. Instead of one worker producing an item, such as a piece of material, a variety of machines made the fabric. Also, instead of one worker doing all the tasks, he or she concentrated on only one task all the time. This ‘assembly line approach was very efficient, but the tasks became repetitive and boring for the workers.
The factories in Europe needed large quantities of raw materials to make their products. They obtained some of these raw materials such as coal and iron, from their own countries. Other raw materials, such as sugar and cotton, were imported from the colonies.
The slave trade
Sugar and cotton were two major forms of raw materials needed by European manufacturers, To obtain these products, the colonists set up large sugar and cotton plantations in Central and North America. They used slave labour on the plantations to produce vast quantities of these raw materials.
The slaves were captured in West Africa and transported across the Atlantic in large numbers. Thousands of slaves died on the way, and the rest endured terrible conditions on the ships and plantations.
The raw materials obtained from the colonies were taken to Europe where they were converted into profitable commodities in the factories. For example, raw cotton from the plantations was turned into large quantities of cloth and sold at a profit both in Europe and in the colonies.
In the following case stud we examine how the trade in cotton cloth was transform by the industrial Revolution. We will examine how control resources and trade led some nations like Britain to become wealthy. While others such as India began to experience poverty.
Some key dates: 1400-1900
- 1492: End of Muslim rule in al-Andalusia
- 1492: Columbus reaches the West– Indies
- 1498: Vasco da Gama reaches India
- 1530: First Portuguese colony established in Brazil
- 1534: First African slaves transported to Brazil
- 1592: British slave trading begins
- 1600: The English East India Company formed
- 1712: Steam engine built for use in mines
- 1773: The first spinning mill (factory) built
- 1803: The fall of the last Moghul stronghold in India to the English
- 1807: British slave trade abolished
- 1858: India becomes part of the British empire
- 1884: European nations meet in Berlin to-divide Africa among themselves
The story of cotton
Cotton is one of the most important of natural fibers, using in producing almost half of all textiles in the world. It has unique qualities as clothing material and lends itself to a wide variety of uses. It can be made into fine, thin textiles, as well as hard-wearing fabrics. Cotton is the world’s major non-food crop. It is grown in more than 80 countries around the world, covering five percent of the earth’s cultivated land area. It requires a long, sunny and warm growing season, with plenty of water.
No one knows exactly how old cotton is. it has been spun, woven and dyed since prehistoric times. In the River Valley, cotton was being grown, spun and woven into cloth 3,000 years BCE. At about the same time the ancient Egyptians were also making and wearing cotton clothing.
In pre-modern times, India led the way in the growth of cotton and the weaving of cotton fabrics. It developed a flourishing trade in cotton textile with neighbouring and distant land, including Greece, Egypt and Roman Empire. For many centuries, India remained a major producer of cotton fabrics.
The cotton craze in Britain
With the opening of sea routes in the sixteenth century, the demand for goods produced in India and China grew rapidly. One of the products that became widely popular in Europe was India cotton. Large quantities of Indian cotton fabrics, such as calico and muslin, were exported to Europe from India every year by trading companies. Indian cotton became more popular in Europe than woolen garments because of its lightness, flexibility and finish.
Towards the end of the seventeenth century, a ‘cotton craze’ developed in Britain. It was described in the following way in a pamphlet written in 1699:
Twenty years ago, calico was never seen as a fashionable adornment, but nowadays, most men and women would not consider themselves dressed if they did not wear garments made of calico. Men now wear calico shirts, ties, sleeve protectors, gowns and handkerchiefs, while women favour calico hair ornaments, nightdresses, head scarves, aprons, gowns, and underwear. Indian stockings are now all the rage among both the sexes. Unless parliament passes a law prohibiting it or it incurs the ire of the royal family, it will be difficult to restrain this craze.’
The reason for this high demand was the superior quality of cotton produced in India. Compared with other textiles, it was easy to dye and print and its colour did not fade with washing. Indian fabric dyeing techniques were the most advanced in the world at that time, Moreover, Indian cotton was about a third of the price of woolen cloth, making it considerably cheaper than European fabrics.
Crisis and laws
As the demand for Indian cotton grew, traditional wool, linen and other textile businesses in Britain began to become bankrupt. The woolen merchants and manufacturers found themselves in a crisis.
The British government responded to the crisis by passing laws to protect the woolen and linen industry in Britain. In 9720, a calico prohibition law was passed that forbade the use in Britain of ‘any garment or apparel whatsoever, of any painted, printed or dyed calicoes, in or about any bed, chair, cushion, window curtain, or any other sort of household stuff or furniture.’
The calico prohibition law had a considerable impact on the development of the British cotton industry; It led to the manufacture of imitation goods by British textile producers. They applied Indian colour-printing techniques to plain calico imported from India. Thanks to rapid advances in printing techniques, the quality of European printing had improved greatly by 1744.
In the late eighteenth century, the demand for cotton fabric led to the invention of new spinning machines. These machines were powered by water energy and steam engines. The textile manufacturers developed a high-quality cotton yarn that was both fine and strong. They also set up factories where large quantities of cloth could be manufactured in short periods of time at a fraction of their original cost.
All these changes were part of the great Industrial Revolution taking place in Britain. They led to an entirely different way of manufacturing goods. They also had a great impact on the life of people in Britain and around the world.
Textile workers in Britain
Before the Industrial Revolution, most textiles in Britain were produced by families in their homes and cottages, most of whom lived in the rural countryside. The families produced woollen and cotton cloth. They cleaned, combed, spun, dyed and wove the raw material into cloth. The work done by the families often provided them with a much-needed income, in addition to farming. This kind of domestic work became known as ‘cottage industry’.
Towards the end of the eighteenth century, the cottage industry in Britain rapidly became replaced by huge factories. Men, women and children who had once worked in their cottages now began to work in these factories. They left their homes in the country for towns where the factories sprang up.
The working conditions in the factories were very poor. Most of the factory labourers were young children and women. They had to work extremely long hours and dangerous surroundings, and were very poorly paid.
Children were given the dirtiest and most boring jobs in the mills. Many worked as ‘piecers’, tying yarn threads together when they broke, Other children, known as ‘scavengers’, had to pick up pieces of loose cotton from underneath textile machines. The machinery was not stopped for cleaning since it would take time and cost money. Many children were badly injured and some were killed. Few received any compensation. There were no laws at this time to protect children from working in factories.
- adornment – a piece of clothing or ornament that beautifies the body
- apparel- clothing, dress
- calico – plain white or unbleached cotton cloth; from the Indian town ‘Calicut’
- compensation – payment to make up for injury or accident
- ire – anger
- muslin – a fine delicate woven cotton cloth
- prohibition – a law forbidding or preventing a specified action
- scavengers – people who seek and collect discarded items
- yarn – thread
The demand for raw cotton
Since it was not possible to grow cotton in Britain, it had to be imported. Until the beginning of the 1790s, Britain obtained raw cotton from India. With the invention of the new spinning machines, Indian cotton was not found suitable for use because it had short fibers. The textile manufacturers therefore turned to America which grew raw cotton with long fibers that were particularly suitable for fine thread spinning.
In 1794, total exports of raw cotton from the southern states of America to Britain almost doubled in the span of a year. By 1801, the amount had increased dramatically from 90,000 pounds to 8,300,000 pounds. During this period, the United States became the world’s biggest exporter of cotton to Britain. On the other hand, imports of short-staple raw cotton from India dropped sharply. This kind of raw cotton had lost its importance in Britain by the end of the eighteenth century.
Due to the high demand for cotton, many farmers in the sourthern states of America began growing this crop on their plantations. As the plantations increased, so too did the number of slaves who were captured from West Africa and forced to work on the cotton farms.
Like the textile workers in the British factories, the slaves suffered from the hard labour they were forced to perform. Here is a description by Solomon Northrup, a slave who describes what it was like to work on a cotton plantation.
A new form of trading
As a result of the Industrial Revolution, a triangular trade developed in the nineteenth century, at the centre of which was Britain:
1) Slave labour captured from Africa was used to produce cotton on American plantations.
2) The raw cotton was exported to Britain and converted into cloth in the factories.
3) The cloth was sold in Britain, Europe and the colonies at a profit.
The laws enacted by the British government placed tariffs on cotton cloth imported from other countries such as India. The textile producers in Britain were therefore protected from competition and free to expand their trade and profits.
These profits were used to build bigger factories and more powerful machines to produce cotton textiles. Vast quantities of cotton cloth were produced by the British manufacturers at very low cost. To increase their profits, the British had to create a demand for their cloth in new markets.
The colonies in Africa and Asia became the new markets for the British. They sold their manufactured cotton cloth in large quantities in their colonies. Since this cloth was cheaper than that manufactured locally in the colonies, it began to put the local cottage industries out of business.
Impact on the Indian weavers
When cotton cloth made in Britain started being sold in India, it led to millions of Indian spinners and weavers losing their jobs. By 1830, India’s cottage spinning was nearly wiped out. Those who suffered the most were women seeking to earn an income on which to survive. There were twenty women spinners to every male weaver.
The following extract from a letter sent to an Indian journal in 1828 describes the situation of the weavers. It was written by a 22-year old widow from Santipur, a major textile centre in Bengal:
‘My thread is so fine and I spin so fast that others in my area cannot match my output. I maintain my whole family, children and dependent parents-in-law from my spinning income. I already charge so little for my thread; I wonder how poor are the English spinners that they sell their yarn so much cheaper than mine. My income declines steadily. I cannot find a good market.’
At the end of the nineteenth century, India was no longer a major manufacturing country of cotton cloth.
When Mahatma Ghandi led the struggle for India’s independence from the British in the twentieth century, the charka (spinning wheel) became an important symbol of India’s struggle for freedom. Ghandi wanted Indians to start manufacturing their own cloth again, instead of being dependent on foreign imports.
- exports – goods sold to foreign countries
- hands – workers on terms or factories who perform manual labour
- imports – foreign goods or raw materials brought into a country
- output — quantity or amount produced of an article
- plantations – large farms where crops are cultivated
- short-staple cotton – cotton with short fibers
- swine – pigs
- toted – added up to determine the overall amount or quantity
Review questions and activities
Reflecting on the text
What are some of the reasons why human beings have struggled over resources in the past? The Industrial Revolution and how did it transform at the use of resources? Why did cotton become an raw material in the Industrial Revolution?
Describe the working conditions of the textile workers in the plantations. What were some of the factors that led to the decline in the production of Indian cotton cloth during the Industrial Revolution? What impact did the exporting of the cotton cloth by the British have on its colonies such as India? Can we draw from the cotton case study about the causes of poverty in countries today?
Draw a map showing the triangular trade that developed in the Industrial Revolution between Britain, West Africa, North America and India.
Draw a flow chart to show the various steps through which raw cotton was transformed into a product that could be sold at profit. Which people were involved at each stage’?
Find out more about some of the spinning and weaving machines that were invented during the Industrial Revolution, such as the ‘flying shuttle’ and the ‘spinning jenny’. How was water and steam used to power the machines in the factories?
Compare the advantages and disadvantages of producing cloth in the traditional way and through the factory system. What impact did the Industrial Revolution have on cottage industries?
Imagine you are a merchant and a factory owner in the time of the Industrial Revolution. Write an account of the kind of life you would have led. Now imagine you are a worker in one of the factories, in what ways would your life be different?
What impact did the industrial revolution in Britain have on trade between nations in the eighteenth and nineteenth century?
WORDS TO LOOK UP
- Colonial rule
- Cottage industry
Using information from history books and other sources, find out more about the industrial revolution. Find out how was it related to the Atlantic Slave trade and colonial rule?
Review the work you have done at the school on slavery, colonialism and the Industrial Revolution. What have you learnt about the relation between these three out comes of history?
Discuss the advantages and disadvantages of the Industrial Revolution. To what extent do you agree or disagree that all countries should become industrialized?
In what ways has industrialization led to the creation of wealth as well as poverty in different parts of the world?
The Industrial Revolution and European colonial rule had a major impact on the control of resources and the distribution of wealth between different regions of the world.
2.2 Loans and debts
Capitalists and socialists
The Industrial Revolution was an important factor in the formation of the middle and working classes in Europe. The middle classes included factory owners, merchants, businessmen and other wealthy entrepreneurs. They controlled the means of producing commodities because they were the owners of factories, machinery and capital or wealth. The working classes provided the labour in the factories, but did not have a share in the profits. They were paid wages in return for their labour.
Two opposing views about society arose in the nineteenth century. One view advocated capitalism. The capitalists believed that the best way for societies to progress was by allowing a free market or economic system to operate. People should be allowed to compete freely with one another and to increase their wealth, according to their skills, talents and endeavours. The role of the state was to protect the liberty and property of people so that they could be free to pursue their livelihoods. The capitalists believed that this system would gradually lead to prosperity for everyone.
The second view that arose was based on socialism. The socialists argued for a society where the wealth and resources belonged to all the people. They believed that no single class or group of people should be more powerful or Prosperous than others. The responsibility of the state was to ensure fairness by owning the means of production and. sharing the wealth evenly. Each person in this system had to contribute in the best way he or she could to make the life of all the others better.
The twentieth century
In the twentieth century, countries such as those in Western Europe and North America came to reflect a capitalist model of society. As these became industrialized, the middle classes grew in power and wealth. Many individuals, businesses and corporations became extremely rich, accumulating vast amounts of wealth. The standard of living of the working classes also gradually improved.
The former Soviet Union, Eastern Europe and China adopted a socialist approach. They became known as communist countries because their ultimate aim was to establish a society where all property and wealth were held in common by the people. Community parties arose in many parts of the world. While the socialists sought gradual change, the communists advocated revolution as a means of gaining power.
Initially, communist countries made great progress towards industrialisation. The communist parties that were in power became responsible for all decision-making as they tried to extend control or every aspect of people’s lives in their countries. In the 1980s, the largest and oldest of the communist systems, the Soviet Union, finally broke down because of economic and political reasons.
The communist approach was abandoned by many countries towards the end of the twentieth century. Capitalist countries, too, came under increasing pressure to reform their systems to create greater fairness in their societies.
What is the Third World debt and how did it arise?
The formation of the ‘Third Wor1d’ nations
The capitalist and communist states formed two major groups of countries after the Second World War. A third group consisted of the colonized nations who gained their independence in this period.
Most of the capitalist and communist powers had made rapid progress towards industrialisation by the middle of the twentieth century.
The countries that were becoming independent, in contrast, found themselves at an early stage of economic development. They came to be known as ‘developing countries’ Or the ‘Third World’.
The developing countries found themselves facing major problems in providing basic services to their growing populations. There was an urgent need to construct schools, hospitals, houses and industries. The people of these countries also needed safe water and electricity, supplies, and other vital services.
The need for funds
The governments of developing countries found themselves in a difficult situation. They had to develop their nations, but did not have the funds to finance their programmes. They had to make difficult decisions about how best to use the limited funds available to them- whether they should provide health care, education, or housing to their people.
While many developing countries were rich in natural resources, they found it difficult to convert them into funds. They were not able to get a fair price for these resources from developed countries. They also lacked industries to convert raw materials into profitable’ commodities, as the developed nations could. When they did manufacture goods, the developed countries charged high tariffs for such goods entering their countries.
The developing countries were also faced with internal problems, such as unstable governments, corruption and civil conflicts. These problems were major obstacles to rapid development.
One of the options for developing nations was to borrow loans from rich countries to fund their programmes.
The following short story by a Turkish writer gives us an insight into why borrowing a loan is sometimes the only solution for people in desperate situations.
Some newly independent countries after 1945:
1947: India and Pakistan
1956: The Sudan
The loan by Talip Apaydin
Source: Apaydin,Tolip (1978) The Loan’, in Fahir 1z (ed.) An Aetiology of Modern Turkish Short Stories, Translated by Janet Heineck. Minneapolis: Bibliotheca Islamica, pp. 231-235.
When morning prayer began, Kandil Omar stood at the door of the mosque and looked sideways and backward angrily. He had grey hair and his face was pale. He was in a thoughtful mood. He thrust his hands into his sash in order not to be cold, but it was no use. A trembling began which came from inside him.
The peasants were coming out of the mosque in ones and twos. Whoever had an overcoat wrapped himself up in it and hurried along. The weather was very cold. It made his shoulders tremble once or twice. He braced himself, relaxed and tried to warm himself. ‘Come on out now, you old rascal,’ he said to himself. ‘The prayer is over. What more are you waiting for?’
He turned around again. The door opened and closed but neither agha nor son-in-law appeared. ‘Nuts! I wish I had waited inside. I’ll catch cold out here,’ he said to himself.
He walked slowly. He was dressed very lightly. There wasn’t even a proper shirt inside his patched jacket, and his black rubber boots had split at the sides. He was shaking all over.
While he was going around Yakub’s corner, he turned back -again. Haji Selim Agha had come out and was coming this way, and his son-in-law Fahri was behind him. They were wrapped in their overcoats and neither of them were bothered by the cold, walking along in conversation.
‘If I wait, then they’ll have a disagreement. Not while they are together. Now is the wrong time,’ he thought to himself. He went home.
On how many days had he found the right moment and been unable to speak? He needed a loan from the agha again. Two hundred liras. If he wouldn’t give that much, a hundred liras. Then he would buy a set of clothes for each child, two loads of wood, and half a can of kerosene. In the middle of winter, they were stark naked. Their situation was terrible.
Haji Selim Agha used to lend money at interest. He wouldn’t give it to everyone but just to those who could pay it back. ‘I’d pay it back anyway but he doesn’t think so. As if his money would be lost! How many times did I want it and he didn’t give anything? I’ll go and talk to his son-in-law Fahri. Perhaps he’ll help. “Give it, father,” he’ll say. “Your money won’t be lost on Omar.” Perhaps it will coincide with a good time for him and he’ll lend it.
He walked along thinking. His teeth were chattering in the morning cold, and he was cold as ice. He went into – his house. His family had not yet risen. They were lying under horse blankets trying to keep warm.
‘You’re still not up? It’s past noon! Why are you still in bed?’
‘You’re letting the cold in, man. Shut it quick!’
‘Get up, old lady. I’ve gone to pray and come back, and you’re still — get up!’
He pulled off the horse blanket and put it over himself. A woman twisted up like the number four staggered out with three children, two before her and one behind. The children awoke and huddled together to get warm.
The woman straightened up and covered them with the horse blanket again.
‘Don’t get up now. Stay in bed and don’t catch cold,’ she said.
She turned to her husband. ‘My God, it’s so cold again today,’ she said.
How could it be otherwise? It’s the middle of winter.’
‘How did it turn out? Did you see Haji Agha?’
‘No I am going now.’
‘Go for goodness sake, man! If you can get a little out of him, we’ll try to pay him back in the summer, If not, by God we’ll die.’
Omar turned his head wearily.
I know, starting to nag again. Would he offer and I not take, for God’s sake?’
He went to bed without getting undressed, lying down by his children. He pulled the blanket over himself and kept on shivering.
The woman looked toward the fireplace. She paced up and didn’t know what to do. She put her hands in her bosom. Her thin body was trembling with cold.
‘Shall I go?’ she asked.
Omar raised his head and looked. ‘Where?’
‘To Haji Selim Agha. I’ll speak if you like. “Give us a loan,” I’ll say … He won’t give it to you but he might give it to me. I’ll describe our situation. “My family will freeze, sir,” I’ll say. Maybe he’ll pity us.’
‘Be quiet, woman. Don’t make me mad! Am I dead that you should go by yourself? Don’t talk that way!’
She went to the fireplace, looking for something to burn, but found nothing. Absolutely nothing was left. She took the old haircloth from the sofa and covered her shoulders. ‘What should I do? Where should I go? This is no summer day when I could gather firewood from the countryside. You know, Lord.’ she said to herself. Poverty and helplessness had made her feel terrible anguish. She was at the end of her rope.
She put on her husband’s rubber boots and went out. It was freezing cold. She looked toward the village. Houses, sheds, and smoking chimneys were all like enemies in the distance. No one turned and looked at them. It was as though everyone had turned his back. ‘God help me,’ she panted.
She went back in. Her poor body was frozen. Slowly she raised the end of the old blanket and got under it again. Her little daughter was crouched there, shivering a little
‘What happened? Did you go to bed again?’
‘What could I do, man? l’m freezing. There’s nothing to burn.’
Omar didn’t answer. He was breathing heavily, angry about something but he didn’t know what. He cursed. Then he was quiet. No sound was heard from the house.
The elder boy was awake, but he didn’t stir lest they give him something to do. He was hungry. If only they had a bowl of hot soup now. Then he would hurry to school. At least there would be a fire in the classroom stove and he would get warm there. This is what he was thinking about.
He turned his head and looked at the small opening they called a window. Outside it was growing lighter.
‘Is it time for school, father?’ he asked fearfully.
‘How should I know? Am I the principal?’ said his father.
‘It’s time, Hasan. Go on, son. Get bread from the pan and eat it on the way. You’ll be warm there, too,’ said his mother gently.
Hasan got up and went off.. He was an undersized child. His black shirt had faded and taken on a grey colour, and there was no jacket on his back. When he went outside, his teeth started to chatter.
Omar turned over on his back which for some reason felt very cold. He tried to warm his shoulders and lower back.
Oh! World!’ he groaned. He couldn’t find anything else to say.
His wife softened her voice.
‘Come on mister. Please go see the agha, will you? Perhaps if you approach him, he’ll lend you a little. So go on!’
‘I’d said I’d go … Just let me get warm first. Don’t you know it’s freezing outside?’
His wife didn’t answer. She closed her eyes and slowly shook
her head. She begged God for guidance and held back her tears.
A little later Omar sat up. He put on his boots and left without saying anything. When he turned the corner of the house, he pushed right into a strong, icy wind and was stunned in a moment by the cold. He clenched his teeth and swore to himself…
He reached Fahri’s door and pounded on it. The door didn’t open at once. He tucked his hands under his armpits. It was as if he were wearing nothing, it was so cold.’
Fahri’s wife looked through the window. She was a plump, well-fed young girl.
‘What do you want?’ she asked.
‘Fahri Efendi isn’t at home?’
‘No. He went to the coffee shop a little while ago.’
Omar felt sick. It was as though something inside him broke. He mumbled something, turned around and walked away. His shoulders drooped. He had to keep from falling down.
When he reached the coffee shop, he slowed down. If he went in, they would immediately offer him tea, which he couldn’t afford. He bent toward the window looked in. Fahri was leaning over a chair, playing with someone. If he called out, Fahri wouldn’t come, but if he went in to him — ‘At least I’ll get warm,’ he thought.
He opened the door slowly and went inside. He looked timid and downcast, hesitating because he thought someone was going to scold him. He drew near the table.
‘Fehri Efendi,’ he asked imploringly. ‘Can I have a word with you?’
‘Sure! Say here whatever you have to say.’
There’s something —He stooped to his ear.
If you were to mention it to Haji Agha to lend me some money at interest —’
‘What? With interest? Ha, ha! Where will you get the interest, man?’
‘We’ll work during the summer and pay it back. My family at home is in rags, and we’re out of firewood. Please be so kind.’
At the same time, he was watching the shopkeeper Nedim, hoping that he wouldn’t bring any tea. It would be good to drink a hot cup of tea right now, but he had no money. A man could be disgraced over a cup of tea, and it would be better if he didn’t bring any.
‘Fahri Efendi, be kind enough, please. I am very poor. Do me this favour. I’ll buy firewood and clothes for my children,’ he said, stooping down again.
‘Ask him yourself, man. Why do you talk to me?’
‘Haji Agha did not lend it to me.’
‘What did he say?’
“You have nothing, no field or anything else.” But we’ll work during the summer and pay it back. If you mention it, he’ll loan –’
‘No, my good man, no. I don’t want to get involved. Why should I? Go ask him yourself.’
Omar accepted it. He remained standing, unable to say anything, confounded.
A little later, he turned and walked out.
- agha – in Muslim cultures, title of respect for a person of senior position
- braced – prepared oneself for a difficulty –
- coincide – happen at the same time interest – money charged for borrowing a loan
- kerosene – a fuel oil used for heating stoves
- liras – Turkish currency
- son-in-law – the husband of one’s daughter
- anguish – deep pain or suffering
- clenched – closed the teeth tightly
- drooped- sagged, hung down
- huddled – pressed closer to one another
- nag- complain
- panted – breathed with short quick breaths
- staggered – got up unsteadily
- stunned- made numb
- wearily – with tiredness
- confounded – confused, perplexed
- disgraced – brought to shame, made to lose respect
- downcast – depressed. sad
- imploringly – in a pleading way
- stooped – bent ones head or body forward and downward
How the Third World debt problem arose
Loans from the rich nations
As the story of Omar and his family reveals, poverty can often drive people to borrowing loans in order to survive. While a loan may answer their problem in the short term, it may also lead to long-term difficulties. In this section, we examine how developing countries found themselves in difficulties after borrowing large amounts of funds from rich nations.
After the Second World War, developed nations such as the United States decided to set up the World Bank, the International Monetary Fund (IMF) and other institutions that would assist countries in Europe to rebuild themselves by repairing the damage done during the war.
In the 1970s, the World Bank and the IMF started providing loans to developing countries to assist them in funding major programmes of development. The governments and commercial banks of rich nations were also keen to lend large amounts of funds to these countries. The loans had to be repaid after a period of time with interest.
Developing countries such as India, Brazil, Mexico and Argentina borrowed large loans from the World Bank. They aimed to use this money in constructing schools, hospitals, roads, dams, industries and other facilities. They were badly in need of funds, and the loans from the World Bank appeared to be a valuable source of support.
The rising debt problem
In the 1980s, the economy of the world worsened, and many developing countries found themselves burdened with huge debts. They found it extremely difficult to keep up with the repayments of the loans since the interest rates had increased steeply.
The money had to be paid back in US dollars, which further increased the amount of debt owed by developing countries. In some cases, the amount of interest to be paid by a country exceeded the total income earned by that country. Poor nations became severely handicapped by the burden of large loans.
To ensure that the developing countries continued to pay back their loans, the World Bank and the IMF imposed strict conditions on developing countries, such as cutting back on investment in social welfare. These measures restricted development of vital services in some regions and increased poverty in the Third World.
Misuse of funds
Other problems also made the effective use of the loans difficult. Many developing countries suffered – from corruption, and valuable funds from the World Bank and other sources ended up in wrong hands. Quite a few of the development projects could not be launched because of bad planning and management. Some developing countries also spent a large amour of these vital funds on weapons for their military, rather than on health, education and social welfare.
Some of the funds went towards expensive projects that were not needed and which had little benefit for the vast majority of people.
The Third World debt problem today
‘Debt is tearing down schools, clinics and hospita1s’
In the 1970s, the lenders of the funds were optimistic and assumed that poor countries would eventually pay their debt. Today, we find that poor nations are finding it extremely difficult to repay their loans. Thirty five of the world’s forty most debt-burdened countries are in the Sub-Saharan Africa. The total debts that countries in this region owe to developed nations have nearly tripled. The following quotes from various countries and organisations give us a glimpse of the scale of this problem:
The countries of Sub Saharan Africa spend more each year repaying debt than on all primary education and health care. – Jubilee 2000/USA
In Tanzania where percent of the population dies before thirty five the government spends nine times more on foreign debt payments than on health care. — Oxfam
In Mozambique one of four children dies before age five due infectious disease yet the government spends four times as much money servicing its debt that is making payments interest and principal than it does on health care. — Financial Times
While infant mortality rates rise in ambia and I children die each year from diarrhoea in Ethiopia their goverments spend four dollars on debt servicing for every dollar on health. — Oxfam
Debt is tearing down schools, clinics and hospitals. The effects are no less devastating than war. — Adabayo Abedeji, African Center for Development Strategy, Nigeria
Heavily Indebted Poor Countries HIPCs
In 1996, the IMF and the World Bank identified 42 countries which they categorised as ‘Heavily Indebted Poor Countries’ (HIPCs). These countries face an acute debt burden which they cannot overcome, and which is having a severe impact on the quality of life of their people. Collectively, they owe approximately $240 billion to the fund lenders. On average, the debt of each country is four times their annual export earnings.
Faced with the growing debt crisis, the World Bank and the IMF launched a programme of assistance in 1996, known as the the HIPC Initiative. The aim of this initiative is not to remove the debt of the poor countries, but to help them reach a sustainable level of external debt. Before any debt relief is provided, each country isrequired to undergo three years of ‘structural adjustment’. They will then become eligible for refinancing — borrowing additional funds to pay off earlier loans.
While some of the governments of rich nations have cancelled HIPC’s debts, the other lenders have refused to cancel more than half of these outstanding debts. Opponents of the scheme argue that the HIPC will never be able to free them of their debt burden, and they will continue to make payments that far exceed the amount they spend on education and health.
WORDS TO LOOK UP
Make a list of five countries that became independent from colonial rule after the Second World War. What kind of progress did these countries make after their independence?
Review questions and activities
Reflecting on the text
What new social classes were formed after the Industrial Revolution?
What was the economic status of each class?
What two major views about the progress of society emerged in the nineteenth century?
What was the difference between them? What event led to the formation of a new group of countries in the twentieth century? What were these countries called?
What situation did the developing countries face when they became independent?
What do we learn from the story of Omar about poverty and the need to borrowing loans?
What is meant by the “Third World Debt”? How did it arise? Give some examples of ‘Heavily Indebted Poor Countries’. In which regions of the world are they located?
What have been some of the effects of the Third World debt on the people who live in these countries?
Find out more about the major lenders who provide loans to developing nations. On what conditions have these lenders granted funds to poor countries?
Select a country from the map of HIPCs shown on page 48. Find out more about its debt problem. How much money did the country originally borrow? How much does it owe today?
Write a second part of the story of Omar by imagining that he succeeds in getting money from the lender’s, but at high interest. What happens to him and his family as he tries to repay the loan?
Imagine that you borrow 1,000 from a bank at 10% compound interest over a period of ten years. Make a table of the payments due each year in terms of the interest and the capital. Calculate how much total interest you would have to pay on your loan. What would happen to this sum if you had to extend your borrowing to twenty years?
A good way of learning more about loans, debts and repayments is in the context of your family. Discuss with your parents how much money your family pays every month towards servicing various loans and debts.