Wednesday, February 03, 2010

AP Economics: 4 February 2010

Prayer (alphabetical):

Current Events:

Feb. 3 (Bloomberg) -- Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., talks with Bloomberg's Tom Keene and Ken Prewitt about the outlook for the U.S. economy. El-Erian also discusses President Barack Obama's budget and the bond market. (Source: Bloomberg)

We will pick up where we left off: Economic Growth Chapter 17

Chapter Overview

After discussing the classical model, the chapter presents material on the sources
of long-run economic growth (with particular emphasis on productivity growth)
and the importance of infrastructure. The chapter concludes with a section on innovation waves.

Chapter Outline

Extended Examples in the Chapter

The Changing Face of Innovation Waves

Looking back to Schumpeter’s creative destruction, this section argues that the time between waves of innovation is becoming shorter. It cites the work of William
Baumol, who contends that capitalism’s ability to produce a steady stream of new
ideas and processes has made capitalism the most efficient growth machine and the
best economic system for generating growth.

The sources cited for this section are “Catch the Wave: The Long Cycles of
Industrial Innovation are Becoming Shorter,” from The Economist, February 19,
1999, and The Free-Market Innovation Machine: Analyzing the Growth Miracle of
Capitalism, by William J. Baumol (Princeton: Princeton University Press, 2002).

The Ch. 17 material (below) we will return to as pre-Test material but I will introduce the new material after this brief interlude.

824,000 Jobs Will Disappear On February 5th.

Ch. 18 Keynesian Macroeconomics

Keynesian Macroeconomics, 8:22 discusses how Keynesian economic theories are used by the U.S. government to determine when and where to spend money, or stimulate the economy. In this video there is a brief overview of these theories and their effects on the market. Contrasted with the Austrian view of economics.

Chapter Outline 18 Keynesian Macroeconomics

The construction of this chapter takes students from aggregate expenditures and its components (and the determinants for each), through a simple Keynesian model
and the multiplier, and then completes the model adding government and the foreign sector. At this point recessionary and inflationary gaps are examined. It is worth noting that the extension of the simple Keynesian model to the complete
model (i.e., the addition of government and net exports) is illustrated using the
Savings and Investment graph, while the illustration of the recessionary and inflationary gaps employ the complete aggregate expenditure figures (similar to those used earlier in the chapter). The chapter concludes with a section on the Great Depression and Keynesian analysis.

Aggregate Expenditures, p. 474, :20

Samuelson's Keynesian cross diagram is an attempt to capture the essence of Keynes' theory of effective demand. The blue line represents aggregate expenditure on domestically produced goods and services. Of all the components of aggregate expenditure, only the level of consumption is assumed to be a function of income; the other components are assumed to be autonomous. The red line expresses the accounting identity that aggregate expenditure is equal to national income. The model shows that a change in autonomous expenditure leads to a larger-sized change in national income, a relationship known as the multiplier effect.

Some Simplifying Assumptions, p. 474

Consumption and Saving, p. 475

9:21--Reference in this Nov. 1999 video is made to consumption, the stock market and dot-com booms, and the low saving rate.

Average Propensities to Consume and Save, p. 477, 11:37

An interview with John Quelch, Professor, Harvard Business School. In a tough economy, companies can succeed if they understand their customers' evolving consumption patterns and fine-tune their marketing strategies accordingly.

Marginal Propensities to Consume and Save, p. 478, 3:25

Senior Lecturer in Politics, Economics, and Statistics Dr. John "Jack" Emens talks about about what the marginal propensity to Consume (MPC) is and how it effects the flow of currency through the economy.

Other Determinants of Consumption and Saving, p. 479

Investment, p. 480, 9:51

The difference between investment and consumption.

Investment Demand, p. 481

Other Determinants of Investment Demand, p. 481

Aggregate Investment Schedule, p. 482

Checkpoint: Aggregate Expenditures, p. 483

The Simple Keynesian Model, p. 483

Macroeconomic Equilibrium in the Simple Model, p. 484, 5:33

Just as demand & supply yield the price and quantity of a particular product, Aggregate Demand (AD) & Aggregate Supply (AS) determine the macroeconomic equilibrium - price level (telling whether we have inflation), quantity of goods and services (real GDP), and, indirectly, unemployment.

The Fiscal policy and the multiplier effect Multiplier Effect, p. 485, 9:11

The Multiplier, p. 486, 3:48

Australia leading global National Broadband Network developments

The decision from the Australian government to launch a $43 billion national FttH broadband network is a clear indication that they believe broadband is essential infrastructure. It fulfils a national purpose as its trans-sector multiplier effect delivers massive social and economic benefits in healthcare, education, energy and the environment. A digital economy requires an open broadband infrastructure, and for that to work it can only be built by a utility (NBN Co). While there certainly are questions regarding the business model and the investment plan, there is widespread support for the visionary plan. During 2010 the business model needs to be developed, which will take into account the socio-economic benefits the infrastructure can deliver to the country.

The Multiplier Works in Both Directions, p. 487

Checkpoint: The Simple Keynesian Model, p. 488

The Full Keynesian Model, p. 488

Adding Government Spending and Taxes, p. 488

Tax Changes and Equilibrium, p. 489

The Balanced Budget Multiplier, p. 490, 10:39

Balance budget multiplier in Germany discussing Keynes.

This film examines the multiplier effects of balanced budget expenditure in Germany, where the government has increased taxes in the West to fund development of the East.

Adding Net Exports, p. 490

Recessionary and Inflationary Gaps, p. 491

Recessionary Gap, p. 491

Inflationary Gap, p. 492

Checkpoint: The Full Keynesian Model, p. 493

The Great Depression and Keynesian Analysis, p. 493


If we consider numerous sites that exist with photos of bread lines and other scenes typical of the time we will understand better the economic devastation.

Oral history may be helpful in this regard as well. Some students may have grandparents who remember the Great Depression.

Macro in microcosm. Students may share information about where they
work. Ask students employed in service locations like restaurants if they’ve ever
been told not to come in because the “place is not busy.” We can relate the impact on your earnings and spending, and in turn the effects on others, to show in a simple way the roots of the multiplier process.

Chapter Checkpoints
Aggregate Expenditures, p. 494

Question: Figure 3 earlier illustrated that investment spending is much more
volatile than consumption spending. Why is this?

The point is to check that students can: apply their knowledge of the determinants of consumption spending and investment to help evaluate the relative volatility of each component of aggregate expenditures.

The Simple Keynesian Model, p. 495

Question: Business journalists, pundits, economists, and policymakers all pay
attention to the results of the Conference Board’s monthly survey of 5,000 households called the Consumer Confidence Index.

When the index is rising, this is good news for the economy and when it is falling concerns are often heard that it portends a recession. Why is this survey important as a tool in forecasting where the economy is headed in the near future?

The point is to check that students can: synthesize their knowledge of the multiplier effect of a decrease in consumer spending with the importance of consumer spending as the major portion of aggregate expenditures in order to see the potential for a decrease in consumer spending to provide impetus for a recession.

The Full Keynesian Model, p. 495

Question: If the government is considering reducing taxes to stimulate the economy
does it matter if the MPS is .25 or .33?

The point is to check that students can: understand how changes in the size of the MPS affect the value of the multiplier and so influence the impact of a policy change. By extension, students should appreciate that the government needs to estimate factors such as the multiplier in planning policy changes.

Extended Examples in the Chapter

The Great Depression and the Keynesian Analysis

This section provides data that can help capture the magnitude of the Great
Depression: the stock market lost 90% of its value compared to the beginning of the 1930s, unemployment soared from 3.2% in 1929 to nearly 25%. Moreover, the Great Depression lasted for roughly a decade. The Keynesian model can be used to illustrate the situation of the time and to explain Keynes’s reasoning that an “injection” of government spending was needed.

For more about the Great Depression, including a timeline and some photos, see the PBS Web site at

Important points to note: the distrust of the government and banks, the resentment of foreign workers, the persistence of the belief in the classical model (as illustrated in President Herbert Hoover’s remarks at the beginning of the period), the need to banish fear as expressed by President Franklin Roosevelt (another term for a severe lack of consumer confidence).

Examples Used in the End--of--Chapter Questions

Questions 4 and 7 reference growth rates in different countries. Question 11 references per capita income (or output). To learn more about growth rates and per capita income in different countries, visit the CIA Factbook Web site at:

For Further Analysis

Illustrating the Keynesian Model

This example can be used as an in-class small group exercise or as an individual in-class exercise. It is designed to complement the text’s material on the Keynesian model by requiring students to draw the graphs that illustrate the analysis. The student handout provides graphical illustration of the analysis behind the answers to end-of-chapter Questions and Problems 8, 12, and 14.

Web-Based Exercise

Keynesian Policy in Japan

This example can be used as a small group exercise or as an individual exercise.
The exercise provides an opportunity to see the Keynesian model and policies
applied to a recent example, Japan since the 1990s. This overcomes a student’s tendency to view this material as irrelevant because it is discussed in terms of the 1930s. Requiring additional research can turn this exercise into a more extensive assignment.

Read the essay “Explaining Japan’s Recession,” by Benjamin Powell (posted on
11/19/2002 on the Web site of the Ludwig von Mises Institute: and answer the following:

1) What is the Keynesian explanation for the economic downturn in Japan?

2) What Keynesian policies have been tried? How successful have they been?

3) What does the author suggest should be done in Japan?

One challenge in this topic is to separate business investment in real plant and
equipment from people’s financial investment in stocks, bonds, etc. Students will
likely be able to grasp the importance of consumer confidence, understanding what
amounts to a “self-fulfilling prophecy;” that is, if consumers are fearful of a recession and don’t spend then that (multiplied) decrease in spending can cause a recession.

A good analogy for the Keynesian view is to liken the economy to a car with a
low battery that needs a boost to get running again.


Ch. 17 Pre-Test material:

Examples Used in the End-of-Chapter Questions

Questions 4 and 7 reference growth rates in different countries. Question 11 references per capita income (or output). To learn more about growth rates and per
capita income in different countries, visit the CIA Factbook Web site at

For Further Analysis

Immigration: Good or Bad for Productivity?

The example provided in the student handout can be used as a small group exercise
or as an individual exercise. It is also suitable to use as the basis for a classroom debate. The exercise expands on the chapter’s coverage of the sources of long-run economic growth by exploring the issue of immigration. Students are directed to read two articles about different “types” of workers and use them as a basis for analyzing the impact of immigration.

See the paper on guest-worker programs by Mark Krikorian, executive
director of the Center for Immigration Studies for a presentation of this viewpoint.

Web-Based Exercise
This example requires students to compare two different measures of economic
freedom and to assess what aspects of economic freedom they feel are most important.

This assignment builds on the discussion on the text and also provides an
opportunity to discuss the effects of corruption on economic growth.

The Dimensions of Economic Freedom
Visit the Web site of the Fraser Institute to read its Economic Freedom of the World report. Compare it with the Index of Economic Freedom (from the Heritage
Foundation and The Wall Street Journal) by answering the following:
1) Which are the top ten countries according to each source? (Web sites are and http://www. 2) What categories are included in each definition of freedom? (You may consult the list of categories in the text for the Fraser Institute; for the Heritage Foundation, see the Web site at


The challenge with regard to this material is how much students may take for
granted about their freedoms and the economy in which they live. Trying to give
them another perspective will help them understand the strengths of the U.S. economy and the challenges of other countries.


Immigration: Good or Bad for Productivity?
Growth in the labor force is listed as a major source of long-run economic growth. But what causes the labor force to grow? As noted in the text, immigration is causing the U.S. population to rise faster than anyone thought. Is this good for productivity?

Read the article titled “Keeping Out the Wrong People: Tightened Visa Rules Are Slowing the Vital Flow of Professionals into the U.S.” by Spencer E. Ante in Business Week (October, 2004, pp. 90–94, available on the Web at:

Then read “The Worker Next Door,” by Barry R. Chiswick in The New York Times, June 3, 2006, p. A23. This article is available on the Web at:

Based on the two articles, assess whether immigration is good or bad for U.S. productivity.


"Mankiw's 10 principles of economics, translated for the uninitiated", by Yoram Bauman, . Presented at the AAAS humor session, February 16, 2007. For the record, the talk contains two unattributed quotes ("9 out of 5" is adapted from a line attributed to Paul Samuelson---although apparently he said it about Wall Street indices, not macroeconomists---and "wrong about things" is paraphrased from P.J. O'Rourke's Eat the Rich) and, of course, the Einstein "simple" quote is an intentional misquote. The talk is based on a published article in Annals of Improbable Research (see ), which sponsored my talk and to which you should subscribe ( ). In the paper you can see the "constructive example" of how trade can make everyone worse off (or you can just wait 50 years to see what happens with climate change). More info and other clips on my website ( ), and please sign up for my email list.

William Baumol. - Air date: 06-12-99

William Jack Baumol (born February 26, 1922) is a New York University economics professor (although he is also affiliated with Princeton University) who has written extensively about labor market and other economic factors that affect the economy. He also made valuable contributions to the history of economic thought. He is among the 500 best economists in the world according to IDEAS/RePEc.
Among his better-known contributions are the theory of contestable markets, the Baumol-Tobin model of transactions demand for money, Baumol's cost disease, which discusses the rising costs associated with service industries, and Pigou taxes.[1]
The 2006 Annual Meetings of the American Economic Association held a special session in his name, and honoring his many years of work, where 12 papers on entrepreneurship were presented.
The British magazine, The Economist published an article about William Baumol and his lifelong work to develop a place in economic theory for the entrepreneur (March 11, 2006, pp 68), much of which owes its genesis to Joseph Schumpeter. They note that traditional microeconomic theory holds a place for 'prices' and 'firms' but not for that (seemingly) important engine of innovation, the entrepreneur. Baumol is given credit for helping to remedy this shortcoming: "Thanks to Mr. Baumol's own painstaking efforts, economists now have a bit more room for entrepreneurs in their theories."
Baumol is a trustee of the Economists for Peace and Security.

Email HW to

1. Infrastructure and Economic Growth, p. 470
Question: Imagine a country with a “failed government” that can no longer enforce
the law. Contracts are not upheld and lawlessness is the order of the day. How could an economy operate and grow in this environment?

The point is to check that students can: understand how important the legal framework is to economic growth.

2. Ch. 16 T/F Quiz Friday, tomorrow.

WH II Honors: 3 February 2010 Ch. 14 Preview


Current Events:

Obama on the Middle East:

Ch. 13 Mass Society and Democracy 1870-1914

Section 2 The Emergence of Mass Society

Media Library

Section 3 The National State and Democracy

Media Library

Western Europe and Political Democracy

Great Britain





The United States and Canada (Is Canada a part of the United States?)



Populists and Progressives
Section 4 Toward the Modern Consciousness

Media Library
Freud and Psychoanalysis

Late Clips Of Sigmund Freud (1932, 1938)

In these brief clips, psychoanalysis founder Sigmund Freud (1856-1939) is first seen in Vienna in 1932 speaking with archeologist Emanuel Loewy, then in 1938 signing the Royal Society's charter book and lastly celebrating his 81st birthday... the latter clips were taken in London where Freud and his family were forced to move from Vienna following the 1938 Nazi Anschluss (he died in London a year later).

Reading Check


What is Freud's theory of the human unconscious?

Social Darwinism and Racism

Reading Check


What does the theory of social Darwinism state?

Anti-Semitism and Zionism


The most serious and divisive scandal began in 1894. A high-ranking army officer, Alfred Dreyfus, was accused of spying for Germany. However, at his military trial, neither Dreyfus nor his lawyer was allowed to see the evidence against him. The injustice was rooted in anti-Semitism. The military elite detested Dreyfus, the first Jewish person to reach such a high position in the army. Although Dreyfus proclaimed his innocence, he was convicted and condemned to life imprisonment on Devil’s Island, a desolate penal colony off the coast of South America. By 1896, new evidence pointed to another officer, Ferdinand Esterhazy, as the spy. Still, the army refused to grant Dreyfus a new trial.

Deep Divisions

The Dreyfus affair, as it was called, scarred French politics and society for decades. Royalists, ultranationalists, and Church officials charged Dreyfus supporters, or “Dreyfusards,” with undermining France. Paris echoed with cries of “Long live the army!” and “Death to traitors!” Dreyfusards, mostly liberals and republicans, upheld ideals of justice and equality in the face of massive public anger. In 1898, French novelist Émile Zola joined the battle. In an article headlined J’Accuse! (I Accuse!), he charged the army and government with suppressing the truth. As a result, Zola was convicted of libel, or the knowing publication of false and damaging statements. He fled into exile.

Slowly, though, the Dreyfusards made progress and eventually the evidence against Dreyfus was shown to be forged. In 1906, a French court finally cleared Dreyfus of all charges and restored his honors. That was a victory for justice, but the political scars of the Dreyfus affair took longer to heal.

Calls for a Jewish State

The Dreyfus case reflected the rise of anti-Semitism in Europe. The Enlightenment and the French Revolution had spread ideas about religious toleration. In Western Europe, some Jews had gained jobs in government, universities, and other areas of life. Others had achieved success in banking and business, but most struggled to survive in the ghettos of Eastern Europe or the slums of Western Europe.

By the late 1800s, however, anti-Semitism was again on the rise. Anti-Semites were often members of the lower middle class who felt insecure in their social and economic position. Steeped in the new nationalist fervor, they adopted an aggressive intolerance for outsiders and a violent hatred of Jews.

The Dreyfus case and the pogroms in Russia stirred Theodor Herzl (hurt sul), a Hungarian Jewish journalist living in France. He called for Jews to form their own separate state, where they would have rights that were otherwise denied to them in European countries. Herzl helped launch modern Zionism, a movement devoted to rebuilding a Jewish state in Palestine. Many Jews had kept this dream alive since the destruction of the temple in Jerusalem by the Romans. In 1897, Herzl organized the First Zionist Congress in Basel, Switzerland.

Reading Check


Why did Jews start to move to Palestine?

The Culture of Modernity





Social trends in the mid-1800s in France are readily apparent in the works of many of the impressionist artists. The work of Edgar Degas is a good example. In this activity you will learn about impressionism and about the contribution of Degas to a new style in painting and sculpture.

Edgar Degas


* Read the information on the Web site about Degas. Take notes as you read.
* Click on “Life” and read the information.
* Go back and click on “Artistic Styles.” Read the information.
* Click on two of Degas’ paintings and review his works.

Use the information you found to answer the following questions.



Reading Check


How did the Impressionists radically change the art of painting in the 1870s?

Preview (Chapters 14-15)

Ch. 14 The Height of Imperialism 1800-1914

Section 1 Colonial Rule in Southeast Asia

The New Imperialism

Reading Check


What were four primary motivations for the "new imperialism?"

Colonial Takeover in Southeast Asia

Great Britain


Thailand--The Exception

The United States

Reading Check


What spurred Britain to control Singapore and Burma?

Colonial Regimes in Southeast Asia

Indirect and Direct Rule

Colonial Economies

Reading Check


Why did colonial powers prefer that colonists not develop their own industries?

Resistance to Colonial Rule

Reading Check


Explain three forms of resistance to Western domination.

Section 2 Empire Building in Africa

West Africa

Reading Check


Why did the slave trade decline in the 1800s?

North Africa

Reading Check


Great Britain was determined to have complete control of the Suez Canal. Why?

Central Africa

Reading Check


What effect did King Leopold II of Belgium have on European colonization of the Congo River basin?

East Africa

Reading Check


What was significant about the Berlin Conference?

South Africa

Reading Check


What happened to the Boers at the end of the Boer War?

Colonial Rule in Africa

Reading Check


How did the French system of colonial rule differ from that of Great Britain?

Rise of African Nationalism

Reading Check


Why were many African intellectuals frustrated by colonial policy?

Section 3 British Rule in India

The Sepoy Mutiny

Reading Check


What were two effects of the Great Rebellion?

Colonial Rule

Benefits of British Rule

Costs of British Rule

Reading Check


How was British rule degrading to Indians?

An Indian Nationalist Movement

Reading Check


What were the two goals of Mohandas Gandhi?

Colonial Indian Culture

Reading Check


How did the nationalist movement parallel cultural developments in India?

Section 4 Nation Building in Latin America

Nationalist Revolts

Prelude to Revolution

Reading Check


How did Napoleons's wars affect Latin America?

Revolt in Mexico

Revolts in South America

Reading Check


How did the French Revolution affect Mexico?

Difficulties of Nation Building

Rule of the Caudillos

A New Imperialism

Persistent Inequality

Reading Check


What were some of the difficulties faced by the new Latin American republics?

The United States in Latin America

Revolution in Mexico

Reading Check


What was the United States' role as a colonial power?

Economic Change in Latin America

Reading Check


What caused the growth of a middle class in Latin America?

Chapter 15 East Asia Under Challenge 1800-1914

Section 1 The Decline of the Qing Dynasty

Causes of Decline

Reading Check


What factors led to the decline of the Qing dynasty?

The Opium War

Reading Check


What did the British do to adjust their trade imbalance with China?

The Tai Ping Rebellion

Reading Check


What social reforms did the Tai Ping Rebellion demand?

Efforts at Reform

Reading Check


What was China's policy of "self-strengthening?"?

The Advance of Imperialism

Mounting Pressures

Internal Crisis

Internal Crisis

Reading Check


What countries claimed Chinese lands between 1880 and 1900?

Opening the Door to China

Reading Check


Why did the United States want an Open Door policy in China?

The Boxer Rebellion

Reading Check


How did the Boxers get their name?

Section 2 Revolution in China

The Fall of the Qing

The Rise of Sun Yat-sen

The Revolution of 1911

Reading Check


What changes did the Revolution of 1911 actually produce in China?

An Era of Civil War

Reading Check


Why were there rebellions in China after General Yuan Shigai became president?

Chinese Society in Transition

Reading Check


How did the arrival of Westerners affect China?

China's Changing Culture

Reading Check


What effects did Western culture have on China?

Section 3 Rise of Modern Japan

An End to Isolation

Reading Check


What benefits did the Treaty of Kanagawa grant the United States?

Resistance to the New Order

Reading Check


What events led to the collapse of the shogunate system in Japan?

The Meiji Restoration

Transformation of Japanese Politics

Meiji Economics

Building a Modern Social Structure

Daily Life and Women's Rights

Reading Check


How was Japan's government structured under the Meiji constitution?

Joining the Imperialist Nations

Beginnings of Expansion

War with Russia

U.S. Relations

Reading Check


Why did Japan turn itself into an imperialist power?

Culture in an Era of Transition

Reading Check


What effect did Japanese culture have on other nations?

Empire Builders

Lord Frederick Lugard, a British empire builder, tried to justify imperialism in Africa with these words:

“There are some who say we have no right to Africa at all, that ‘it belongs to the natives.’ I hold that our right is the necessity that is upon us to provide for our ever-growing population—either by opening new fields for emigration, or by providing work and employment . . . and to stimulate trade by finding new markets.”

Note Taking
Reading Skill: Recognize Multiple Causes As you read the section, make a chart like the one below showing the multiple causes of imperialism in the 1800s.

Critical of British Rule

In 1871, Indian nationalist Dadabhai Naoroji (dah dah by now roh jee) criticized British rule in India:

“[Indians] call the British system ‘Sakar ki Churi’ (sa kur kee choo ree), the knife of sugar. That is to say, there is no oppression, it is all smooth and sweet, but it is the knife notwithstanding.”


Focus Question

How did Britain gradually extend its control over most of India, despite opposition?

For more than 200 years, Mughal rulers governed a powerful empire in India. By the mid-1700s, however, the Mughal empire was collapsing from a lack of strong rulers. Britain then turned its commercial interests in the region into political ones.

East India Company and Rebellion

In the early 1600s, the British East India Company won trading rights on the fringe of the Mughal empire. As Mughal power declined, the company’s influence grew. By the mid-1800s, it controlled three fifths of India.
Exploiting Indian Diversity

The British were able to conquer India by exploiting its diversity. Even when Mughal power was at its height, India was home to many people and cultures. As Mughal power crumbled, India became fragmented. Indians with different traditions and dozens of different languages were not able to unite against the newcomers. The British took advantage of Indian divisions by encouraging competition and disunity among rival princes. Where diplomacy or intrigue did not work, the British used their superior weapons to overpower local rulers.
Implementing British Policies

The East India Company’s main goal in India was to make money, and leading officials often grew rich. At the same time, the company did work to improve roads, preserve peace, and reduce banditry.

The Sepoy Rebellion


Go Online
For: Audio guided tour
Web Code: nap-2441

By the early 1800s, British officials introduced Western education and legal procedures. Missionaries tried to convert Indians to Christianity, which they felt was superior to Indian religions. The British also pressed for social change. They worked to end slavery and the caste system and to improve the position of women within the family. One law banned sati (suh tee), a Hindu custom practiced mainly by the upper classes. It called for a widow to join her husband in death by throwing herself on his funeral fire.
Growing Discontent

In the 1850s, the East India Company made several unpopular moves. First, it required sepoys (see poyz), or Indian soldiers in its service, to serve anywhere, either in India or overseas. For high-caste Hindus, however, overseas travel was an offense against their religion. Second, the East India Company passed a law that allowed Hindu widows to remarry. Hindus viewed both moves as a Christian conspiracy to undermine their beliefs.

Then, in 1857, the British issued new rifles to the sepoys. Troops were told to bite off the tips of cartridges before loading them into the rifles. The cartridges, however, were greased with animal fat—either from cows, which Hindus considered sacred, or from pigs, which were forbidden to Muslims. When the troops refused the order to “load rifles,” they were imprisoned.
Rebellion and Aftermath

Angry sepoys rose up against their British officers. The Sepoy Rebellion swept across northern and central India. Several sepoy regiments marched off to Delhi, the old Mughal capital. There, they hailed the last Mughal ruler as their leader.

In some places, the sepoys brutally massacred British men, women, and children. But the British soon rallied and crushed the revolt. They then took terrible revenge for their earlier losses, torching villages and slaughtering thousands of unarmed Indians.

The Sepoy Rebellion left a bitter legacy of fear, hatred, and mistrust on both sides. It also brought major changes in British policy. In 1858, Parliament ended the rule of the East India Company and put India directly under the British crown. It sent more troops to India, taxing Indians to pay the cost of these occupying forces. While it slowed the “reforms” that had angered Hindus and Muslims, it continued to develop India for Britain’s own economic benefit.


What were the causes of the Sepoy Rebellion in northern and central India?

Impact of British Colonial Rule

After 1858, Parliament set up a system of colonial rule in India called the British Raj. A British viceroy in India governed in the name of the queen, and British officials held the top positions in the civil service and army. Indians filled most other jobs. With their cooperation, the British made India the “brightest jewel” in the crown of their empire.

British policies were designed to incorporate India into the overall British economy. At the same time, British officials felt they were helping India to modernize. In their terms, modernizing meant adopting not only Western technology but also Western culture.
Vocabulary Builder

overall—(oh vur awl) adj. total
An Unequal Partnership

Britain saw India both as a market and as a source of raw materials. To this end, the British built roads and an impressive railroad network. Improved transportation let the British sell their factory-made goods across the subcontinent and carry Indian cotton, jute, and coal to coastal ports for transport to factories in England. New methods of communication, such as the telegraph, also gave Britain better control of India. After the Suez Canal opened in 1869, British trade with India soared. But it remained an unequal partnership, favoring the British. The British flooded India with inexpensive, machine-made textiles, ruining India’s once-prosperous hand-weaving industry.

Britain also transformed Indian agriculture. It encouraged nomadic herders to settle into farming and pushed farmers to grow cash crops, such as cotton and jute, that could be sold on the world market. Clearing new farmlands led to massive deforestation, or cutting of trees.

Railroads and Trade

By building thousands of miles of railroads, the British opened up India’s vast interior to trade. The British also encouraged Indians to grow tea (top photo) and jute (bottom photo). Today, tea is one of India’s biggest crops. What were some of the benefits of British rule?
Population Growth and Famine

The British introduced medical improvements and new farming methods. Better health care and increased food production led to rapid population growth. The rising numbers, however, put a strain on the food supply, especially as farmland was turned over to growing cash crops instead of food. In the late 1800s, terrible famines swept India.
Benefits of British Rule

On the positive side, British rule brought some degree of peace and order to the countryside. The British revised the legal system to promote justice for Indians regardless of class or caste. Railroads helped Indians move around the country, while the telegraph and postal system improved communication. Greater contact helped bridge regional differences and develop a sense of national unity.

The upper classes, especially, benefited from some British policies. They sent their sons to British schools, where they were trained for posts in the civil service and military. Indian landowners and princes, who still ruled their own territories, grew rich from exporting cash crops.


How did British colonial rule affect Indian agriculture?


Self-check Quiz on Chapter

Vocabulary eFlashcards

Academic Vocabulary


Content Vocabulary

People, Places and Events

On January 30, 1972, British troops opened fire on unarmed and peaceful civilians in Derry, Ireland during a civil rights march. This music video is a tribute to the 14 killed and others wounded - combining video/music of U2, video from "Bloody Sunday" (2002 movie), and photographs from that day.

HW email to
1. p. 423, Questions, #4-5.

2. Be sure to consider the Ch. 13 Test Prep page before Friday's Test.