The Empire Project: The Rise and Fall of the British World-System, 1830–1970 (76 page)

have reached an important turning-point in their history…It must be brought home to them that their most important market, namely the United Kingdom, could no longer absorb their expanding production, and in years to come would take a diminishing rather than increasing share of their production…If the Dominions in future were to be able to find employment for an increasing population, they must develop their secondary industries.
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Yet, for the moment at least, the British held on. London remained the centre of a great commercial system commanding almost one-third of world trade.
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It was no longer the ‘Queen City’ of its Edwardian heyday: the United States was too powerful. It frustrated the British attempt to devalue the pound against the American dollar – by devaluing the dollar. Its huge gold reserve, the new gold-backed dollar (revalued against gold in 1934) and its massive industrial power made its enmity dangerous in economic affairs. At moments of crisis, capital lodged in London might flee to New York. But it seems premature to assume that America had taken Britain's old place as the pivot of the world economy. The American commitment to free trade (under the Reciprocal Trade Agreement Act of 1934) was more rhetoric than substance.
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America remained mired in depression and recovered much more slowly than Britain. And, while the Americans had invested abroad at a much higher rate than the British between 1924 and 1931, the roles were reversed thereafter when US investment slumped almost to nothing.
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In a world economy without a single great centre, the British were still a great economic power, able to muster huge foreign resources and call up old debts. But the Achilles heel of their system – the lack of a war-chest in American dollars, and the frailty of the pound once Europe lurched towards war – would soon be revealed.

The Empire state

How did opinion in Britain react to the upheaval and stress that afflicted the British world-system after 1929? There was some reason to doubt whether an electorate now based on universal adult suffrage (women under thirty were enfranchised in 1928) would respond sympathetically to the calls for rearmament or approve the confrontation with Germany, Italy and Japan over the fate of ‘far-off countries of which we know nothing’. Beset by economic misfortune at home, would the British electorate regard the furious parliamentary arguments over Indian self-rule that raged from 1930 until 1934 as an annoying distraction and India itself as an unprofitable burden better quickly laid down? Would a fully democratic electorate repudiate the coercive and authoritarian methods on which imperial rule still had to depend? Would the feeling of kinship towards ‘overseas Britons’ survive in an age when migration had ground to a halt? With the violent contraction of world trade, had the old argument of empire – that it helped to secure industrial employment at home – now gone by the board? Would the public see the Empire as an obsolete shell, a set of futile global commitments bringing neither profit nor honour? After all, the most striking effect of depression on the British economy was the apparent decline of its external dependence. Exports had absorbed one-quarter of output in 1914. Twenty years later, that proportion had halved. Had Britain turned inward?

There were certainly many Conservatives who feared the advance of ‘socialist’ sympathies in the new mass electorate, and the careless indifference of ‘socialist’ governments to the value of empire. They liked to contrast the tough-minded realism of Conservative attitudes, and their genuine devotion to the imperial ‘ideal’ (a nebulous relic to which many laid claim), with the naïve sentimentality of their Labour opponents. In their nightmare scenario, an electorate enraged by economic disaster might return an ‘extreme’ socialist government that neglected the navy, alienated the dominions, succumbed to the blandishments of Gandhi in India, and abandoned Britain's claim to great power authority in Europe, the Middle East and East Asia. In reality, of course, the electorate showed little interest in such drastic solutions. The Labour ministry of 1929–31 was a minority government that had won fewer votes at the 1929 election than the Conservative party. When its leaders threw in the towel in August 1931 and agreed to an all-party coalition to meet the economic emergency, they split from the bulk of the Labour party which refused to cut unemployment benefit to balance the budget. The electorate endorsed the new ‘national’ government at the general election of October 1931, and did so again – although not quite so enthusiastically – in November 1935.
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The result from 1931 onwards was governments (under Ramsay MacDonald, Baldwin and Chamberlain) that were Conservative-dominated and depended upon huge Conservative majorities in the House of Commons. Thus, while it was true that the economic, political and international crises of a ‘low, dishonest decade’ evoked an outpouring of radical, socialist and communist comment, and the ‘decadence’ of Western civilisation in general and parliamentary government in particular united extremists of Left and Right, this was barely reflected in the actual mobilisation of public opinion or its electoral expression.

Perhaps part of the reason was that economic misfortune was felt very unevenly across British society. Some regions – those where the old staples of textiles, shipbuilding and coal were still strongly entrenched – suffered acute unemployment and the deprivation that followed. South Wales, Lancashire, Northeast England and industrial Scotland were especially hard-hit. Here, political feeling displayed deep alienation from the Victorian ethos of liberal capitalism, including perhaps the Victorian conception of a free-trading empire. The sense of betrayal was sharpened by the irony that it was in these old staple regions that wages had been highest, labour unions strongest, and awareness of Britain's great place in the world most widely diffused. But the critical fact was that, despite all their visible hardship, the ‘old’ industrial regions were not representative of the British economy as a whole. The 1930s also saw the rapid expansion of the ‘neotechnic’ industries: electrical goods, chemicals, cars and (later) aircraft. Much of this new industry was built on greenfield sites in the Midlands and the South, and especially around London. It sucked in migrants from the depressed regions of mainland Britain and Ireland.
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For those in
continuous
employment, the huge fall in prices after 1930 in many basic commodities meant a large real rise in their standard of living perhaps by as much as 30 per cent.
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This new ‘disposable’ income fuelled the demand for a vast wave of housebuilding (and the transport systems that went with it) as well as for consumer products and leisure: cars, telephones, electric cookers, toys, hobbies, the cinema and holidays. One other key point should be noted. While depression had devastating effects on the skilled working class of the old industrial regions, it left the middle-class fifth of the population not only largely unscathed, but also (because of the price fall) generally better off.
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Political stability after 1931 was at least partly built on this relative middle-class contentment.

At the time, of course, stability often seemed both elusive and fragile. The famous East Fulham by-election in October 1933 saw an anti-government swing of 29 per cent. In the Putney election in the following year, the swing was almost as large. Both raised the spectre (in Conservative minds) of a great Labour triumph in the next general election. They suggested the volatility of public opinion, and the political hazards of more economic misfortune or diplomatic embarrassment. They help to explain the efforts of Baldwin, the Conservative leader (1923–37), to strike a conciliatory, reassuring, even sentimental note in his public addresses, and lay claim to the centre-ground in British politics.
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Baldwin was understandably nervous that public perception of disarray, uncertainty or precipitate action in economic policy, foreign policy or imperial questions would destroy the credibility of the National Government, before and after he succeeded MacDonald as prime minister in June 1935. But, as it turned out, there was no real danger that opinion at home would become disenchanted with the costs and burdens of the British world-system or with the sometimes machiavellian pragmatism that its upkeep required.

One reason for this was the broad public sympathy for the goal of rearmament. Despite the emphasis given in the official debate to the imperial threat posed by Japanese sea-power, it was the defence of Britain itself that took centre stage in public discussion. As Neville Chamberlain saw, reinforcing Britain's
air
power to deter an aggressor was the least controversial way of spending more on defence. There was no real public debate about the cost of
imperial
(as opposed to home) defence, or about the load Britain carried of far-flung commitments. Perhaps paradoxically, public support for ‘collective security’ – joint action to uphold the principles of the League of Nations Covenant – chimed with the notion of Britain's great power obligations. The National Government wrapped itself carefully in this ideological cloak, so much so that it was forced to disavow the attempt to reach an agreement with Italy at the expense of Abyssinia's independence – the abortive Hoare – Laval pact. It was helped by the incoherence of the Labour opposition, torn between support for collective security, opposition to armaments and the pacifism of its party leader, George Lansbury, until his displacement by Attlee in 1935. On the other hand, the public mood promised little support for a bellicose reaction to Italian and German demands. There was nothing to resemble the naval scare of 1909 and the jingo outcry that followed. The military threat to Britain's overseas interests, the dominions, India or the colonies, remained conjectural and speculative. Those who claimed otherwise risked being denounced as scaremongers or worse. Thus the real constraint on the government's defence programme was not public pressure for more arms or less, but the need, as it seemed, to limit public expenditure (to protect the value of sterling) and avoid a worsening trade deficit (if more export production were switched over to weapons).

The economic pattern was similar. In the past, the part played by the Empire in Britain's prosperity had been sometimes fiercely debated. Even those who conceded that command of the seas and of the Indian sub-continent were vital ingredients of economic success balked at the idea of the Empire as an economic community. Because British trade and investment were global in scale and not simply imperial (Britain's European trade and Latin American investments were among the obvious cases), imperial self-sufficiency held little appeal to the economically literate. By contrast, free trade had a talismanic attraction as the source of cheap food (and thus higher working-class living standards) and of the City's pre-eminence in global finance. Those who demanded an imperial tariff, offering preferential access to the British market for the white dominions – the programme of Chamberlainism before 1914 – met entrenched opposition. The claim that this would bind the dominions more closely to their imperial mother-country cut little ice. Then, and again in 1923, the electorate rejected protection. By 1930, however, the tide had turned almost completely. As the depression bit deeper, industry, agriculture, the trade unions and the City all swung round in favour. As foreign markets grew tighter or closed altogether, the willingness of the dominions to offer reciprocal preference looked much more attractive. In a world of trade blocs, colonies acquired a new value – however inflated by economic illusion. The claim that Lancashire's battered cotton industry would suffer directly from more Indian self-government – because Indian politicians would increase the protection of their own cotton interests – threatened a backlash at home against London's scheme for reform. Indeed, it seems likely that the popular image of the Empire as the source for Britain's food and raw materials – Canadian wheat, Australian wool, New Zealand butter – like South Africa's revived reputation (for a much smaller band) as a fount of gold-mining profits, was really fixed in the 1930s, even if its roots were laid earlier. For investors, exporters and consumers alike, the sterling economy had become indispensable. It was left to
The Economist
and a few lonely voices to denounce the recourse to protection and preference as an economic blind alley.
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The turn to protection was not the only great change in Britain's relation to other parts of its world-system. At almost the same time as the Cabinet agreed to press ahead with the tariff, the Statute of Westminster was passing through Parliament. The Statute was meant to settle once and for all the constitutional link between Britain and the self-governing dominions. It renounced all claim by the British Parliament to legislate for the dominions (except with their explicit consent), effectively conferring full sovereignty upon them. In substance, the issue had been resolved at the Imperial Conference of 1926, when Balfour's subtle formula had acknowledged the equality of all the self-governing states – Canada, Australia, New Zealand, South Africa, the Irish Free State and Newfoundland – with Britain itself.
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What remained to be done was to set the new rule in statutory stone, if only to guard against judicial perversity. The reason for this was that law still in force – the Colonial Laws Validity Act 1865 – explicitly licensed the Imperial Parliament to legislate if it chose for every part of the Empire and forbade the dominions from passing laws repugnant to an Imperial Act.
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British ministers regarded the turgid report that emerged with little enthusiasm as ‘an attempt to write by lawyers a very complicated constitution which had better never been written at all’.
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‘Personally, I am rather sorry’, wrote the Lord Chancellor Sankey when the Statute was passed, ‘but after Balfour's declaration we had no choice.’
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For British politicians and officials, the detailed spelling out of dominion equality was a tiresome obligation imposed by the need to appease the ‘troublesome’ (Sankey's description) South Africans and Irish. But they saw little cause for concern except on two points. The first was how the new statutory definition of dominion rights might affect the status of India (whose future dominionhood had been affirmed by the Viceroy in October 1929). The Cabinet was anxious that its right to declare India a dominion should not have to depend on the (uncertain) approval of the other dominions.
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It was also uneasy that, under the draft statute, a dominion could repeal an Imperial Act. As its main legal adviser on India pointed out, once India was declared a dominion, the elaborate statutory ‘safeguards’ by which London proposed to limit the powers of its new responsible government could be cast off in a trice.
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This proved a gift later to the opponents of their Indian reforms. The other source of anxiety was the likely effect of the Statute on the Anglo-Irish treaty of 1921, the constitutional basis of the Irish Free State's reluctant allegiance to the British Crown. Among Conservative MPs (an overwhelming Commons majority at the time of the Statute's passage through Parliament), mistrust of Irish intentions ran deep. Since the treaty took the form of an Imperial Act, it was certainly arguable that under the Statute the Free State parliament could repeal it at will.