The Rise and Fall of the British Empire (75 page)

British power did not decline because its governors lived in a world of make-believe in which foreigners, even dictators, were all fundamentally decent chaps who played with a straight bat. Neville Chamberlain may have faced the newsreel cameras after Munich and attested to Hitler’s trustworthiness, but he never for a moment imagined that a man whom, on first acquaintance, he had characterised as ‘the commonest little dog’ could ever act like an English gentleman.
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Yet Britain’s behaviour before and during the Munich crisis was widely seen as evidence that the country’s power had diminished. As will be explained later, the policy of appeasement was devised to assist the preservation of the empire when external circumstances had severely reduced Britain’s scope for manoeuvre. Even so, and with hindsight, it is still possible to argue that for some years before Munich, and certainly after, British prestige had become a façade that masked a structure which was becoming more and more rickety. What had happened was that Britain’s reputation as a global power had somehow outlived its actual strength in terms of wealth and economic capacity.

Photographs of derelict factories, idle cranes standing over empty shipyards, and disconsolate, jobless men at street corners are still the most familiar images of the British economy of the 1930s. They portray human as well as economic tragedy, and are supported by the statistics. Within two years of the Wall Street stockmarket crash of 1929, unemployment had soared to over 3 million, just over 20 per cent of the nation’s workforce. The already vulnerable and decaying staple industries were hardest hit; unemployment in ship-building and repair touched 62 per cent in 1932, and there were mass lay-offs from the textile mills, coal mines, iron and steel foundries and heavy engineering works, which were all concentrated in South Wales, the North and Scotland. During 1932 nearly half the national budget was dispersed in welfare payments, chiefly to the families of men without work. Recovery was gradual and patchy. Unemployment fell to 11 per cent by 1939, but the older industries remained in the doldrums. After 1937 the demand for housing in the South East and the Midlands, together with that for armaments, had triggered a limited revival whose effects were most marked in the growth of domestic demand for such ‘new’ products as radios, motor cars and refrigerators. But, as in the previous decade, expansion in modern industries was insufficient to take up the slack created by the terminal decay of the older.

Britain had endured and, up to a point, been able to come to terms with stagnation before 1914 largely because of its invisible earnings. Much foreign investment had been disposed of for ready cash during the war, and it was not replaced. The international demand for outside capital fell after 1918, and what there was tended to be met by American banks. Between the wars, corporate and private British investors were cautious, particularly after 1930, when there was an understandably nervous mood abroad. Low-risk, secure government stock, unit trusts, and building societies were therefore highly popular.

There had been, especially on the left, demands for government-directed investment policies as a means to redress both short and long-term economic deliquescence. The government preferred old nostrums, and so thrift, balancing the budget, and
laissez faire
were the order of the day during the Slump. Free trade, however, was killed off. Imperial preference was resuscitated by the 1931 national government, not as a visionary measure to bind together the empire, but as a desperate device to secure raw materials and cheap food, and to keep some outlets for industrial goods in a rapidly shrinking world market. The result was a series of agreements made during and after the 1932 Ottawa conference. Suggestions that Britain and the dominions might cooperate in Keynesian joint-investment schemes were pooh-poohed by the British government. A further economic link between Britain and the empire was the creation of the sterling block which was intended to defend the value of the pound when it, like the rest of the world’s currencies, was sliding about helplessly. All dominion and colonial reserves were to be in pounds, and the exchange value of their individual currencies was pegged against the pound.

Government policies staved off disaster, but the economy remained frail. In 1937, there was a trade deficit of £302 million, which was reduced to £70 million by invisible earnings. By comparison, the force-fed, state-controlled economies of the dictatorships seemed to have pulled through the Slump rather more successfully than Britain’s in terms of their share in the world’s manufacturing output.

The peculiar circumstances of the global depression apart, Britain’s position was weaker than these statistics suggest. Throughout this period British governments, always hesitantly interventionist, left too much to the market, as the immediate post-war decay of aircraft manufacture showed. At the same time, British exporters neglected such entrepreneurial techniques as selling, packaging and advertising. In 1921, virtually no British businessman was showing interest in the fast expanding Malayan market.
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In the aftermath of the wartime rubber boom, Malaya imported goods worth nearly £100 million a year, of which Britain supplied a sixteenth. The default was most noticeable in the export of modern commodities. Nearly all Malaya’s cars came from America, and the West African haulier bought Ford rather than Austin trucks for, in 1926, only 139 of the 2,400 lorries in the Gold Coast were British-made.
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It was worse with the older export staples; 93 per cent of the cotton goods sold in East Africa in 1938 came from Japanese mills.
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Moreover, capital for new imperial enterprises, like the copper mines of Northern Rhodesia or the oil wells of the Persian Gulf, was largely American.

Malayans drove Oldsmobiles, Ford wagons trundled along the streets of Accra, Kikuyu women wore cotton spun in Osaka, and New York financiers put up cash for mines in what had been Cecil Rhodes’s backyard. As much as the locked factory gates in Rochdale or the closed shipyard on Clydeside, these were indicators of Britain’s persistently poor economic performance. Did it then automatically follow that Britain’s prestige was a sham and her power in terminal decay? Superficially, the answer would appear to be yes, but with qualifications. One measurement of international power was a nation’s ability to channel its surplus wealth into weaponry. Here, Britain’s record was still good: in 1938, Britain produced 7,940 aircraft, Russia 10,382 (many of poor quality), Germany 8,295, Japan 4,467, France 3,163, and the US 2,195. But Britain’s survival in a world war would not only depend on her ability to produce armaments, she would have to find the wherewithal to purchase commodities abroad on a scale equal at least to that of the First World War. The decrease in value of overseas investments and a trade balance permanently in the red rendered such an undertaking extremely difficult. Britain’s prestige may still have been high and its armed strength formidable by any standard, but, in the event of an emergency, the government would have to be sparing when it came to signing cheques. This fact of life considerably reduced Britain’s freedom of action and made ministers, diplomats and strategists tread warily. As a diplomat, Sir Alexander Cadogan, told a sailor, Admiral Lord Chatfield, during the China crisis of 1937, it was ‘No good blustering unless we are sure we can carry out our threats.’
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Before 1935 Britain’s rulers did not expect to have to repeat the Herculean effort of 1914 to 1918. They had done everything in their power to construct and operate a system for international stability and peace based upon the League of Nations and a sheaf of non-aggression pacts, signed during the 1920s. What became known as collective security was not only a guarantee of a new international order in which war was outlawed, it created a world in which the empire would be protected and allowed to flourish. For this reason, as much as an idealistic faith in universal brotherhood, British statesmen tailored their policies to the principles of the League.

For a time, the League generated enough optimism to convince many of its supporters that a new millennium was imminent. Blind faith in the League was most pronounced between 1933 and 1936 when, ironically, collective security was on the verge of collapse. Almost in desperation, large sections of the public, mostly middle-class, succumbed to pacifism, and in various ways pledged themselves never to fight ‘for King and Country’. This mood slowly vanished once it was obvious that no one in Berlin, Rome or Tokyo took any notice of self-indulgent moralising and peace ballots. Nonetheless, the government, while largely unmoved by the pacifist lobby, had to proceed carefully for fear of being branded as war-mongering.

Nor could Britain ignore the views of the dominions. They had joined the League as independent states and were wholeheartedly committed to collective security. When Britain had appealed for dominion assistance during the 1922 Chanak confrontation, Australia had pointedly suggested that it was a matter for the League’s arbitration. A few months later, Stanley Bruce, who had represented Australia at the League, warned Britain that, ‘We cannot submit blindly to any policy which may involve us in a war.’
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Similar caveats came from South Africa, Canada and the Australian Labour party during the European crisis of August and September 1938. Even when collective security lay in ruins, Britain could no longer take for granted unqualified dominion support for its European policies.

The mainstay of collective security was international disarmament. Between 1920 and 1932, successive British governments had calculated their defence budgets on the understanding that there would be no general European war within ten years. A new balance of power was engineered in the Far East early in 1922, after Britain had refused to renew the alliance with Japan, largely in deference to the United States and Australia, neither of which had ever been happy with the arrangement. At the same time, restraints were imposed on the sizes of the great powers’ fleets by the Washington Naval Treaty. Battleships were still the measurement of seapower, and so comparative naval strengths were fixed according to the following proportional scale:

Similar ratios were allocated for cruisers, aircraft carriers and destroyers in 1930, although, oddly, no restrictions were placed on submarines.

Always touchy about real or imaginary racial snubs, the Japanese chafed at an agreement which consigned them to an inferior position, and were bitter about what they saw as Britain’s rejection of them in favour of the Americans. There was disquiet too in the Admiralty about arrangements which effectively left the Imperial Japanese Navy sole master of the China Sea and the western Pacific. In 1919, Admiral Jellicoe had returned from Australia and New Zealand full of foreboding. He foresaw, with uncanny exactness, the 1941–2 ‘nanshinron’ of the Japanese navy, army and air force, a relentless thrust southwards through south east Asia, Malaya, the Dutch East Indies and the islands of the western Pacific. His colleague Beatty, now First Sea Lord, was also apprehensive about the scope of Japan’s ambitions.

As Lord Salisbury had once wisely remarked, endless poring over maps was a dangerous activity. In his time, imperial strategists had been making everyone’s flesh creep with scary tales about the grand masterplans of the empire’s enemies, which had in the end come to nothing. Alarmist forecasts about Japanese expansionism were therefore greeted with scepticism in some quarters. Churchill and many others were certain that the Japanese were mentally and physically incapable of carrying through a campaign of conquest on the scale predicted by the scaremongers. Racial contempt for the Japanese was found at every level in the British and American governments throughout the 1920s and 1930s.
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What had happened during the Russo-Japanese War had been forgotten; public men preferred to hark back beyond to the days when Asian armies had been swiftly and totally overwhelmed by smaller numbers of Europeans. This fatal purblindness was summed up by the observation made in 1934 by the British naval attaché in Tokyo. The Japanese, he told the Admiralty, have ‘peculiarly slow brains’.
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