Until the mid-1920s, it had seemed as if the profound dislocation of economic and political life unleashed by the war would defeat all attempts to devise a new equilibrium. After 1925, the outlook improved. A new economic order took shape in Europe, underwritten by the flow of American investment. Franco-German reconciliation lifted the threat of a new European struggle. The impetus behind anti-colonial nationalism slackened off. The world economy recovered the vigour of its pre-war decade. The volume of trade surpassed the levels of 1913. As the age of extremes receded, liberalism and ‘moderation’ seemed in the ascendant. But it proved a false dawn. In October 1929, the Wall Street ‘crash’ signalled the return of economic uncertainty, followed soon after by the huge fall in commodity prices, the sharp contraction of trade, deep rural impoverishment and mass unemployment. The crisis of capitalism became the crisis of liberalism. The survival of nations and their internal stability demanded illiberal solutions: protection, autarky, or aggressive imperialism (to those with the means); a retreat to the land, exiguous self-sufficiency, or desperate rural rebellion to those without power. In culture, as in trade, free exchange was devalued in so hostile a climate. Utopianism, despair and nostalgia were its more typical products.

This massive upheaval in global conditions held huge implications for the British world-system. In the late 1920s, its liberal apologists had talked of a ‘third British Empire’, based not on rule but on the growth of cooperation and partnership in a world-spanning ‘Commonwealth’.1 Less liberal politicians looked forward to a period of political calm in which ‘nationalist’ demands in India, the dominions and elsewhere would be soothed by the concession of greater autonomy, and disarmed by the knowledge that secession or exit from the imperial embrace was self-defeating at best. The geopolitical scene was benign. The risks of devolution declined and the costs of defence fell as the threat of armed conflict receded. Despite the heavy burden of war debt, the great revival of trade promised the gradual return of Britain's old role as the merchant, shipper, insurer and banker to much of the world, and the entrepot of its commerce. Britain remained the one great free trading power, just as it had been before 1914. Even British migration (now almost entirely to Empire destinations) picked up to the levels of the 1890s, if not to the great rush of 1900–14.2 But all this was the prelude to a great reversal of fortune.

From 1929 onwards, the British system was caught up in the world's economic and geopolitical earthquake. Almost all the conditions on which its wealth and safety depended now looked much more uncertain. The threat of a great power assault on British interests or territory, a remote possibility before 1930, became increasingly real and imperial defence a more arduous task. The contraction of world trade, the ever-higher walls of protection, and the renewed war between currencies, wrecked the hopes of British exporters and shrank the ‘invisible income’ which made up the deficit on the balance of trade. Britain's wealth and prosperity, the core of its power, seemed to be dwindling away. As economic catastrophe loomed over much of the world, the virus of nationalism (as opinion in Britain was inclined to see it) spread wider and deeper. It infected the great powers on whose mutual restraint the British system relied – if the costs of defence were to be kept within bounds. It encouraged the attack on foreign property and trade which the British (with more of both to lose than anyone else) had good reason to dread. Nationalist ideology corroded the ‘steel frame’ of colonial rule, challenged its systems of political influence and drove it willy-nilly into costly coercion. As geopolitics, economics and nationalism converged, Britain's loose-knit empire, far-flung, ill-defended and so reliant on trade, looked like a hostage to fate. Secure in its ‘Antonine Age’ only twenty years earlier, by the mid-1930s the British system seemed plunged (to some observers at least) in a terminal crisis. ‘The storm clouds are gathering’, Churchill told the Conservative party in December 1934, ‘others are ready and waiting to take our place in the world.’3

There were plenty of those who for partisan reasons foretold the early demise of British world power. Expectant Marxists, frustrated nationalists and embittered imperialists all wrote its obituary. Even sympathetic observers, peering in from outside, were deeply alarmed. ‘England is beset by manifold dangers’, wrote the German jurist, Herman Kantorowicz, in a book first published (in German) in November 1929. ‘The economic foundation of her greatness grows narrower from day to day.’4 The Americans were richer, the Germans better trained, even the Russians more numerous. Britain's industries were outdated, its workforce overpaid, the recourse to tariffs a delusion. In the age of the aeroplane, it was no longer an island, and was too small geographically to be an effective air power. The British were also the main object of Muslim and Asian resentment, and the ‘colonial epoch’ was on its last legs. ‘In this age of nationalism, it will be impossible to hold India’; Iraq and Egypt were already slipping the leash. Deprived of its empire, Britain would decline ‘into a second Holland’. Much of Kantorowicz's warning was echoed by André Siegfried, a French political scientist of unrivalled prestige. In England's Crisis (1931), he emphasised industrial obsolescence, an unsustainable standard of living and the falling away of British foreign investment as the seeds of economic decline. The British depended upon international trade: they had no choice in the matter. Protection would do them no good. But economic nationalism posed a deadly threat. ‘Caught between a “Fordised” America and a “cartelised” Europe, [Britain] will eventually have to enter an international economic alliance.’5 It was not strong enough to preserve a worldwide influence and ‘stand alone as before’.

For much of the decade after 1929, British leaders struggled to contain the effects of geopolitical change, economic depression and nationalist politics. For much of the time, they saw themselves as confronting the centrifugal forces that were pulling their system apart. Their aim, so far as consistent purpose can be seen, was to hold the centre: against the threat of strategic defeat, economic implosion or social upheaval. They wanted Britain to remain, so far as it could, at the centre of world trade. They were determined to keep it in its central position in its own world-system, by hook or by crook. They were also anxious to soften the social conflict at home that high unemployment might bring. But there was a limit to what they could achieve on their own. In the self-governing dominions, preserving the ‘British connection’ in more straitened conditions required the support of local political leaders acutely aware of their own public opinion. In India it was caught up in the four-cornered struggle between the Raj's ‘steel frame’ of British officials, the Congress politicians, the Muslims and the princes. London's survival as a centre of world trade would turn on how well it adapted to the new global economy of blocs, tariffs and barter. But what mattered most was beyond British control. The fate of their system, British leaders were beginning to learn by the late 1930s, might really depend on the unsated ambitions of the ‘have-not’ powers – Germany, Italy and Japan – and their inscrutable leaders.

Imperial defence

Before 1930, there had been good grounds for thinking that the British world-system had entered a phase of exceptional freedom from external assault. In no previous period since the 1880s, when the age of ‘world politics’ began, had British interests (or those of the dominions) appeared less exposed to the threat of a great power attack. Of course, it was true that mutual suspicion still governed the conduct of great power relations. There was much British resentment at the gratuitous expansion of the American navy (as it seemed in London) and the symbolic dethronement of the Royal Navy's supremacy that they had been forced to concede. Periodic tensions with France evoked the reminder that, in European terms (and especially in air power), the French would be a formidable enemy. The Italians were an irritant when they jostled and threatened on the frontiers of Egypt, and cast covetous eyes on Ethiopia and Yemen. The subversive activity of the Soviet Union, whose red hand was seen in the growth of working-class militancy in both Europe and Asia, attracted much official attention. Russian agents were credited with anti-British activity in the Middle East (in Iran) as well as in China. The old imperial bogey of the Russian menace to India via the Northwest Frontier took on a new ideological meaning. The growth of Japanese power, bluntly restrained by Anglo-American pressure in 1921–2, required a watchful presence if Britain's large interests in East Asia were not to be squeezed. Indeed, the British suspected that Japan and the Americans were both happy to see British interests bear the brunt of the Chinese nationalist attack on foreign privilege that was growing in virulence after 1925.

Yet this pattern of friction was actually quite reassuring. For what it revealed was that the most dangerous connections in pre-war international diplomacy had fallen apart. Before 1914, the British had seen their main danger in the German domination of Europe. They relied by default on the alliance of Russia and France, and on winning the arms race against German naval expansion. Maintaining the European balance of power had been the main pillar of empire defence. But its far-reaching demands had been increasingly felt in every vicinity where European interests competed, in the Middle East and East Asia especially. Almost no local matter could be settled without reference to its effect on the European balance: and great power relations in Europe, with its high-voltage circuits of rumour and fear, quivered with the shock of remote detonations and consular outbursts on faraway bunds. The ghastly outcome of this ‘old diplomacy’ had revealed the fine thread upon which Britain's security (and imperial defence) had really been hung. But, once European peace had been assured at Locarno by the Franco-German reconciliation, Europe's balance of power was no longer the key to the peace of the world. Soviet Russia was isolated and geostrategically weak. Japan was much stronger in its own sphere in East Asia, but had almost no prospect of finding a friend among the other great powers. The result was a ‘de-linking’ of the regional conflicts so dangerously linked up before 1914 – to Britain's great strategic advantage. With a navy that was more than equal under the Washington terms to those of France and Italy combined, and much stronger than Japan's, the British had little to fear from a Mediterranean dispute, or a Japanese attack on their interests in Asia, and no reason to fear that they might coincide. There was no likely combination of powers to prevent them from holding their own in Europe, the Middle East, the Indian Ocean or East Asia, nor from applying their power in the theatre they wanted and at the time of their choosing. It was not simply that the British were the one global power: no coalition against them had any chance of cohering.

This highly favourable turn owed a great deal to the path of American power. The British approached this leviathan with a volatile mixture of admiration, mistrust and judicious appeasement. Britain is faced, remarked a senior Foreign Office official (with an American wife) in late 1928,

with a phenomenon for which there is no parallel in our modern history – a State twenty-five times as large, five times as wealthy, three times as populous, twice as ambitious, almost invulnerable, and at least our equal in prosperity, vital energy, technical equipment and industrial science. This State has risen to its present stage of development at a time when Great Britain is still staggering from the effects of the superhuman effort made during the War, is loaded with a great burden of debt and is crippled by the evil of unemployment.6

As Craigie's memorandum suggested, the American challenge to Britain's commercial and industrial power was just as potent as that to its maritime primacy. But, if yielding naval supremacy still stuck in the admirals’ craw, and if the American ‘style’ in diplomatic exchange seemed designed to annoy, the transatlantic ‘phenomenon’ had done little real damage to British world interests. Perhaps the reverse. It was American capital (as we saw in the last chapter) that had smoothed the path of European peace, but without exacting the price in diplomatic allegiance another great power might have sought. America's maritime might, scaled against Britain's, was in practice deployed against the power that was thought to threaten them both. From 1922 onwards, the bulk of the United States Navy was placed in the Pacific.7 While ‘War Plan Red’ (for an Anglo-American war) gathered dust, ‘War Plan Orange’ (against Japan) was real. Anglo-American tensions remained. They were fuelled by the old quarrel over ‘belligerent rights’: whether a naval blockade (the British weapon in a European war) could be used to prevent the traffic of ‘neutral’ (in practice American) trade; and by American pressure for a further reduction of fleet strengths. In London, governments of both parties accepted the case for a new naval agreement. The London Naval Conference of 1930 preserved the existing distribution of maritime power (including that of Japan), extended the ‘holiday’ in battleship building until 1936, averted the threat of a race to build cruisers, and restored good relations across the Atlantic.8

As it turned out, the conference was the swan song of the short golden age of post-war security. The lowering background to the naval agreement had been the deepening crisis in the world economy. The storm broke in East Asia. The acute dependence of Japan on overseas trade, Japanese fears of exclusion from their markets in China (as Kuomintang rule was extended), and their long-standing suspicion of British and American commercial designs in East Asia, created an aggressive and panicky mood in Japanese politics.9 When the full force of depression was felt in early 1931, and with it the threat of violent social unrest, civilian politicians lost control of the army. China's huge northern province of Manchuria had been a target of Japanese economic penetration since before 1914. The ‘South Manchurian Railway’, its large ‘railway zone’, and the colonial army based on the Kwantung peninsula, were the means through which their regional power was asserted. In September 1931, perhaps to pre-empt future resistance from the migrant Chinese now flooding into Manchuria,10 Japanese officers exploited a trivial fracas to impose the ‘Kwantung’ army's control over the whole of the province, to which their colleagues at home extracted Tokyo's assent. It was a gross contravention of the Washington treaties (the post-war charter of East Asian security), a massive infringement of China's territorial integrity and (not least) an obvious breach of Japan's obligations as a member of the League.

There was thus every reason for a fierce British reaction. The restraint of Japan had been a key part of the post-war peace settlement. It meant a great deal to the Pacific dominions, whose fear of Japan was tightly bound up with their racial exclusiveness as white British societies. Among the Western powers with a stake in China's economy, the British had the most to lose – with much more in investment and trade than the United States. Of the great hub of their interests, the port-city of Shanghai and its British-run enclave the ‘International Settlement’, the Foreign Office had remarked that ‘no Chinese government is as yet fit to control the destinies of a city which…compares with London and New York’. Indeed, ‘whenever real danger threatens the city…British interests…are so great that British troops must be sent to protect the Settlement, just as though it were a British possession’.11 Japan's economic imperialism was unlikely to stay far away in the north: Taiwan, after all, was a Japanese colony, and the Japanese presence was already strong in Shanghai. London, however, was very reluctant to take the lead on Manchuria. ‘Avoid at all costs an open breach with Japan’12 was the watchword of policy. This was partly because a possible armed confrontation was extremely unwelcome at a time of enormous uncertainty in Britain's own politics in 1931–2. But it also reflected two other constraints whose force was compelling. The first was the doubt whether it was in Britain's real interests to oppose Japan on Manchuria. The British had conceded (in 1926) that their extra-territorial privileges in China (symbolised by their treaty-port rights, in Shanghai above all) could not be maintained against the nationalist opposition in China. They had begun their retreat from the beleaguered outposts of the old treaty-port system. But they regarded the Kuomintang nationalism of Chiang Kai-shek as xenophobic and unstable, and dreaded a wholesale assault on British persons and property. ‘A strong China is not a necessity to us; indeed the preservation of Hong Kong, and, as long as possible, of our remaining special rights in China, suffices to suggest the contrary’, was the cold comment in London on an enthusiastic despatch from the Peking legation expressing the opposite view.13 Attacking Japan on China's behalf thus had little appeal. The second factor at work was a well-merited caution. Coercing Japan meant sending a fleet to Northeastern Asia at a time when the nearest fully fledged naval base was no closer than Malta. Few naval strategists would have needed reminding that sending a navy from Europe into the Sea of Japan was an exceptionally hazardous business. For the Russians at Tshushima in May 1905 it had been a catastrophe.14 Even courting a quarrel (by the imposing of sanctions on Japanese trade) might expose British interests to threats and reprisals that would be hard to fend off without a strong naval presence, and unsafe to embark on without large reinforcements to send if need be.

As a result, and with no hope of forging an Anglo-American front, the British response was carefully muted. Japan was condemned by the League, but took little notice. However, the need to strengthen Britain's East Asian presence was taken up by the Admiralty which began its campaign for naval expansion and a fleet large enough to fight simultaneously in Europe and the Far East. Hitler's accession to power in January 1933, and his open rejection of disarmament in October that year, hugely strengthened its case. Even those who believed that Japan would only be dangerous if Britain were already embroiled elsewhere, now had to consider the renewed possibility of a conflict with Germany, by far the strongest (if only potentially) of the European powers. It was no longer a matter of an (improbable) war with France or Italy. If Germany resumed its old place as a great military power, the Navy would need to be able to impose a blockade (its weapon of choice) or contain a new German fleet built along pre-1914 lines. The Chiefs of Staff had already denounced (in March 1932) Britain's ‘defenceless’ position in East Asia. In November 1933, in the wake of Hitler's pronouncement, the Cabinet approved the creation of a ‘Defence Requirements Sub-Committee’ to consider what extra spending was needed.15 Its proceedings record the drastic alteration of the geopolitical scene since the halcyon days of 1926–31. But they also reveal the doubts and divisions over how best to respond to the (still dimly glimpsed) new patterns of power.

The argument turned on the relative dangers posed by German and Japanese aggression. In the Admiralty's view, Britain had to be able to deter and defeat an attack by Japan, which meant a strong Eastern fleet to match the Japanese navy. Japan, after all, was now a great island empire that stretched from the Kuriles to Taiwan and since 1918 into the Central and South Pacific; and a mainland power that ruled over Korea and the client state of Manchukuo (as Manchuria was renamed). The disarmament terms of the Washington treaties had barred new fortified bases in East Asian waters – a strategic boon to Japan which had little to fear from Hong Kong or American bases in Guam and the Philippines.16 Even Singapore was poorly defended and lacked proper dry-docking facilities. Yet the Royal Navy had to defend Britain's interests in China (in an era when new markets had exceptional value), its commercial sea-lanes, its Southeast Asian possessions (and those of the Dutch, their strategic dependants), as well as two great provinces of the ‘British world’ in Australia and New Zealand. If it failed to do so, or suffered a setback in trying, the British world-system would suffer a staggering and perhaps irreversible blow. For, in a naval perspective, a defeat of this kind would quickly lead on to the loss of British control in the Indian Ocean, severing Britain's links with its most powerful possession of all, and opening the East and South African coasts to attack from the sea. The whole hinterland of British world power, that had helped Britain sustain the brutal struggle in Europe and the Middle East less than two decades earlier, would have been swept from its grasp. The rest would soon follow. This apocalyptic scenario was reinforced by the view that Japan had become a new ‘Prussian’ state: aggressive, militaristic and set on regional domination17 – a suspicion that was strengthened by its further advance in North China. Japan was a real and immediate danger, so this argument ran: the Germans would follow in several years’ time. But what was urgently necessary was the decision to build up the navy to be able to deal with them both simultaneously.18

But not everyone believed in the scale or immediacy of the Japanese challenge, let alone the wisdom of confronting it militarily. Britain could not fight two wars at once, said the Treasury flatly. Other expert opinion saw the Japanese threat as more economic than military, and hobbled by the resistance of Kuomintang China. Still others insisted that the Germans remained the ‘ultimate’ enemy – the phrase that crept into the Committee's report. If they were deterred, then the Japanese would not move. The fiercest attack on the navy's position came from Neville Chamberlain, now Chancellor of the Exchequer in the National Government. As Chancellor he was determined to keep defence spending within bounds, since the public finances were the bedrock of everything. But he was also (for a Chamberlain) surprisingly sceptical about the real threat from Japan and the fear it evoked in the Pacific dominions. His favoured solution was a friendly approach to Japan, perhaps even a pact.19 The much more urgent priority in Chamberlain's eyes was the protection of Britain in Europe, and against attack from the air. This was best done not by expanding the navy but by deploying a ‘deterrent’ – a large force of bombers to cripple any potential assailant. When the Cabinet came to discuss the Committee's report, Chamberlain's campaign for an Anglo-Japanese understanding won little support. The objection was obvious – that it would wreck Anglo-American relations with far-reaching effects on Britain's general position – and also decisive. But there was no real agreement on how to proceed, perhaps because of the scale of the ‘Eastern’ commitment required. Instead, Chamberlain was allowed to draw up the final recommendations – a chance he seized with a vengeance. The result was to cut back the sum proposed for the navy by some 60 per cent and put it instead towards expanding the air force.20

The sometimes angry debate in Committee and Cabinet exposed the strategic dilemma of the whole British system. If the East was neglected the whole empire might fall. If the West was exposed, Britain itself was at risk. If both were defended to the level required, Britain would be bankrupt. It was not surprising, perhaps, that policy-makers looked for less drastic solutions, and hoped to get by. The British and Americans both came to agree that the real restraint on Japan was the Soviet Union, which had much more to lose from Japan's East Asian imperialism, and had the military power to strike Japan where it mattered.21 British officials worked hard to persuade the Americans that they shared the same view of Japan as a threat and would not jeopardise Anglo-American solidarity by an approach to Japan – whatever Chamberlain said. They largely succeeded. When the naval agreements came up for review in 1934–5, President Roosevelt conveyed by a nod and a wink that no objection would be made to Britain's naval expansion: Atlantic rivalry was suspended.22 In Europe, meanwhile, the Admiralty won what it saw as a useful reprieve. Abandoning the fiction that the Germans were bound by Versailles, it got Hitler's agreement that a new German navy would be kept at just over one-third of Britain's own strength – a concession that bought time for its own naval programme.23 When the Chiefs of Staff reviewed the state of British defences at the start of 1935 (and before the agreement), they made the grudging admission that there was enough naval strength to fight Germany and Japan at the same time – as long as France was an ally. ‘With France as our Ally, the naval situation in Europe would wear a different complexion, and the main British fleet would be available to defend our Empire in the East.’24 Six months later, their view was much darker.

What had happened in between was a third great shock to the geostrategic foundations of the British world-system. In late 1934, a fierce dispute had blown up between Italy and Ethiopia on the border between the Ethiopian Ogaden and Italian Somaliland. It soon became clear that Mussolini had no intention of reaching a peaceful resolution and was set on the partial or total acquisition of Haile Selassie's empire. The French government was concerned most of all to avoid friction with Italy (its long-standing Mediterranean rival) which would weaken its hand in dealing with Hitler. In January 1935, it agreed that Rome should be free to deal with Ethiopia as it wished. This confronted the British with an unpleasant dilemma. As the strongest League power and champion of collective security, Britain could hardly look on while one League member state set out to swallow another. But taking the lead to thwart the aggressor was just as unwelcome. Britain should not be manoeuvred ‘into playing an isolated and futile role of opposition’, said Robert Vansittart, the permanent head of the Foreign Office.25 It was perfectly obvious, said a chorus of voices, that the effort to do so would enrage Mussolini, and drive him out of the League and into a compact with Hitler. Vansittart dreamed hopelessly of an imperial deal: compensating an Ethiopian cession to Italy with a tract of British Somaliland. The crisis, he said, was really the fault of ‘our hogging policy’ in not giving the Italians one of the German lost colonies. ‘I have long thought the distribution of this limited globe quite untenable and quite unjustifiable. Like fools we made it worse at Versailles…We are grossly overloaded.’26 There was no French support for such an exchange, and, by August 1935, the British were contemplating the cost if the League imposed sanctions to restrain Mussolini.

Quite apart from the danger of playing into Germany's hands, the risk of an armed confrontation with Italy was regarded with horror in the Admiralty. Britain was quite unprepared for a conflict, the First Sea Lord warned.27 The programme of replacements meant that the navy's strength would decline before it recovered at the end of the decade, so that even the loss of two or three large ships in a Mediterranean war would be calamitous.28 Both he and Hankey, the powerful Secretary to the Committee of Imperial Defence, were determined that Britain should avoid being dragged into ‘the miserable business of collective security’ (Chatfield's phrase). What was needed was a two-power fleet to counter Germany and Japan, and good relations with Italy. As matters fell out, the British had the worst of both worlds. Under pressure, the Cabinet decided to apply certain sanctions to show disapproval. But, fearing to take the decisive step of imposing sanctions on oil, in December 1935 it despatched Samuel Hoare, the Foreign Secretary, to concert with the French on a new compromise offer that would give Mussolini effective control over much of Ethiopia: the infamous Hoare–Laval pact. Amid a huge public outcry (the government had just won re-election on a platform extolling its commitment to collective security), Hoare was disowned, the pact cast aside and ‘light’ sanctions maintained. Amid continuing high tension in the Mediterranean, the means and the will were lacking to challenge Hitler's forced remilitarisation of the Rhineland in March 1936. ‘If we are seriously to consider the possibility of war with Germany’, declared the Chiefs of Staff on 1 April, ‘it is essential that the Services should be relieved of their Mediterranean responsibilities, otherwise our position is utterly unsafe.’29 In May, Mussolini declared the war in Ethiopia won. In June, the British abandoned their sanctions. But the hope of restoring Anglo-Italian amity proved very far-fetched.

‘There is now the possibility of a hostile Italy on our main line of imperial communications’, reported the Defence Requirements Committee in November 1935.30 By the following year, although there was some disagreement over Mussolini's objectives, Italy's hostility (and its alignment with Germany) had become a new fact of geopolitical life. The result was to force a drastic revision of imperial strategy. There could be no question of a war on three fronts: the Navy would have its hands full in the East and at home. The implication was brutal. Unless French support was assured, the British could not hope to maintain their naval command in the Mediterranean if a crisis arose in the East. It was a tacit admission – despite public denials – that, faced with a war in the East, the route round the Cape and not the short route via Suez might have to be used. Britain's Middle East empire would have to fend for itself.31 Of course, this was still just a grim calculation not an actual reality. But it hugely reinforced the sense of strain and anxiety that had begun to infuse British foreign policy as a whole.

It is important, however, not to exaggerate the scale of British difficulties as they appeared at this stage. In effect, what had happened was that, after the dream-like interval in which the peace of Europe had seemed safe, the British found themselves back in the world of competitive Weltpolitik they had known before 1914. The need to withdraw from the Mediterranean to meet the German threat had been accepted once before – in the great strategic rethink of 1912. The threat posed by Germany in 1936–7 was still modest indeed compared with that which had faced them in 1914. Of course, the real source of British, and especially naval, alarm was the new fact of dispersal. In 1914, the British could mass almost their whole fleet in the Orkneys, in the knowledge that the blockade of German sea-power would keep their Empire secure. Now they must divide their sea strength in two at opposite ends of the globe if their rivals coalesced. The most urgent requirement that followed from this was to ease the friction with Italy, while pressing on with the rearmament needed for a ‘new standard’ navy that could face down the Germans and the Japanese, simultaneously if need be. It was from this position of strength that British leaders hoped to restore ‘discipline’ to Europe's diplomacy, and persuade the Hitler regime that it would gain little by delaying a new general settlement. In the meantime, of course, they had to be cautious, and sometimes disingenuous – as when they reassured the Pacific dominions that they would guard the Mediterranean as well as sending the fleet to Singapore, come what may. ‘Singapore’, said Lord Chatfield, the First Sea Lord and professional head of the navy, ‘was first class assurance for the security of Australia.’32 It was vital not to provoke their three possible enemies into a real (as opposed to rhetorical) combination.33 But, if they kept up their guard, and avoided a crisis, the long-run alignment of forces seemed set in their favour. ‘Welfare states’, remarked Alfred Zimmern (he meant the democratic states of Europe, the United States and the white dominions), ‘enjoy an overwhelming preponderance of power, confirmed and increased by their command of the oceans, except for the time being the Western Pacific.’34 Rejecting economic concessions to Germany, Neville Chamberlain expected the improvement in world trade (and the rise in world prices) to force an eventual retreat from Hitler's policy of arms and autarky.35 Indeed, almost as much as before 1914, the British expected that their commerce power would have the last word in any global confrontation – as long as they played their cards well in the game of world politics.

The new economics of Empire

At first sight, such confidence seems strange. After all, the British economy lived in the shadow of depression as much as any other. There were also good grounds for thinking that the British had been the great losers from the economic catastrophe of 1929–31 and the huge contraction in world trade that had set in thereafter – just as they had prospered in the era of trade boom before 1914. Worse still, they had entered the depression from a position of weakness: burdened by debt; with their old staple industries of cotton and coal in decline; and with their exports held back by the high value of sterling. Because the collapse of world prices in 1930 was severest in commodities like grain, rice, rubber and minerals, it was primary producers that were hardest hit. As their incomes declined, so did their imports. For the British at home this meant a triple disaster. Much of their export trade was directed towards such primary producers, in their Empire especially. The great commodities traffic, and the reverse flow of manufactures, employed much British shipping – a critical source of invisible income. And a huge amount of British capital was still invested in the infrastructure needed to bring primary goods to market (railways, harbours, freezing works, warehousing etc.) as well as in their actual production on plantations and in mines. The slump in world trade threatened British wealth on all fronts.

Indeed, it is easy to see the 1930s as marking the great watershed in Britain's capacity to meet the economic demands of imperial power, or to sustain a world-system of which it was the leader. As many contemporaries observed, the engines that had driven the long age of expansion up to 1914 now seemed worn out. British manufactures lost their competitive edge and also a large part of their market. The failure was most glaring in the sad condition of the textile industry, especially Lancashire cottons. Before 1914, textiles made up around 40 per cent of British exports by value; and the British supplied two-thirds of the world trade in cotton goods. By 1938, that figure had fallen to around a quarter.36 In India, by far Lancashire's best market in 1913, its sales had fallen by nearly 90 per cent by the end of the 1930s.37 Overall, Britain's share of the world's manufactured exports fell from 25 per cent in 1913 to 19 per cent in 1937, partly reflecting the fact that its newer industries (like cars and pharmaceuticals) could not fill the gap left by the old and declining industries. Industrial weakness was bound to do damage to British trade and traders. Without competitive goods to sell, British trading companies that had played a large role in the organisation of commerce in Asia, Africa and Latin America found themselves under pressure from European, American and Japanese rivals. Some went to the wall and their misfortunes spilt over to affect London's place in world trade.38 These difficulties in the export of goods were matched by the fall-off in the export of capital. Partly because of the effects of the slump in the traditional fields of British investment, partly because of public and private borrowing at home, the amounts raised in London for overseas issues fell to perhaps one tenth of their pre-1914 level39virtually all of it for sterling country destinations. In the harsh conditions of the 1930s, the British seemed to have abandoned the practice once regarded as vital to their commercial success: priming the pump of economic development in less-developed countries, and creating consumers for their export industries. Finally, as if all this was not enough, it looked as if the long surge of population growth in mainland Britain had finally petered out. The ‘export surplus’ of migrants would no longer pour out to the ‘white dominions’. Perhaps even more serious was the clear implication that, as a market for foodstuffs (the staples of Canadian, Australian and New Zealand trade), Britain was now stagnant.40 Perhaps the old mutual interest in markets, money and men between Britain and its ‘invisible empire’ of trade (inside and outside the ‘visible’ Empire) was just fading away.

The causes went deeper than the apparent shortcomings of the British economy. Much of Britain's prosperity before the First World War had been due to the relative openness of markets in Europe and Latin America, as well as in Asia, where free trade was imposed by rule (as in India) or by force (as in China). Free trading conditions encouraged the investment of capital, whose dividend could be paid from the proceeds of exports that reached the world market through London. They made it natural for many primary-product economies to rely on British shipping, insurance and banks to get their produce to market and manage its sale. But, after 1918, there was no real return to the age of free-ish trade. Instead, the disruptions of war, the burden of debt (requiring new revenue sources) and the break-up of empires in Europe and the Near East fostered economic nationalism: to safeguard domestic prosperity against external upheaval and (in new states especially) to reinforce weak political bonds with the glue of economic self-interest. Agrarian protection became almost universal in Europe.41 With the onset of slump, things got far worse. Soviet Russia and Germany became closed autarkic economies. The United States withdrew behind massive walls of protection – the Smoot–Hawley tariff of 1930. Existing tariff barriers (as in the ‘white dominions’) rose higher. Exchange control became widespread, threatening the multilateral pattern of trade with bilateral bargains and barter. None of this boded well for British finance, trade and industry. Nor, at least in the short term, did another new feature of the global economy, the industrialisation of Asia. It was the intense competition of Japanese cottons, combined with the growth of textile manufacture in India, which destroyed so much of Lancashire's market. Even in China, where mechanised production had developed more slowly, it was a similar story. There, British cottons sold barely 1 per cent of their 1913 figure in 1936.42

Despite all these setbacks, the decade of depression in the world economy did not bring a collapse in British economic power. But it did lead to big changes in the way that it worked. The impact of the crash on the New York stock exchange in October 1929, and the trade contraction that followed, were soon felt in London. Unemployment rose steeply from 1.2 million in 1929 to 1.9 million the following year and 2.6 million in 1931. The balance of payments grew less healthy and then crashed into deficit. Public spending shot up to meet the new burdens of borrowing and benefits. As American lenders began to call in their loans to meet obligations at home, they sparked a banking crisis in Europe where too much had been lent ‘long’ on the back of American funds. Soon, those who held sterling in London (attracted in part by the high interest rates offered there) became anxious to sell it or exchange it for gold (the pound was freely convertible) for similar reasons. By August 1931, the loss of gold was acute, while the ‘unbalanced’ budget stoked fears of financial collapse, as the government borrowed more to meet its current outgoings. Governing without an overall majority, Ramsay MacDonald accepted the need for an all-party coalition, a ‘national’ government to meet the emergency. What began as a temporary measure, to last for a few weeks, became a coalition regime that endured for a decade. Likewise, its emergency actions to forestall the danger of sterling's collapse shaped an economic regime that lasted until it was overcome by disaster after June 1940.

The National Government took two crucial decisions. The first was to abandon the fixed price of sterling in gold, allowing the pound to ‘float’ against other currencies. In effect, the pound was devalued. Since sterling was still the most widely used currency in international trade (and thus a source of great profit to the City of London), such a move might have seemed exceptionally risky, to be reversed as quickly as conditions allowed. But that is not what happened. Instead, sterling was left to float for the rest of the decade, while remaining convertible. For much of that time, between 1933 and 1938, its value was stable, and the pound kept its status as the principal medium of international exchange. There were two reasons for this.

The first was London's success in forming a large ‘sterling bloc’, whose members pegged the value of their currency to sterling, and kept much if not all of their reserves of foreign exchange as sterling. This formed a huge trading zone – the largest in the world – whose currencies enjoyed a stable relationship. Parts of this zone had little choice in the matter. The monetary affairs of Britain's colonial territories were run by local ‘currency boards’. A colony's money supply was directly controlled by the size and value of its sterling reserve in London. When London devalued, so did the colony. Much the same was true – although with considerably more argument – in the case of India. India suffered badly from the fall in commodity prices and the fragile state of its public finances (with their heavy dependence on customs receipts and agrarian revenues) threatened to damage the value of the rupee – a situation made worse by the protracted uncertainty over India's new constitution. A further large complication was India's sterling debt – the so-called ‘Home Charges’ – made up of pensions, loan interest and the annual bill for the large British garrison, all of whose costs fell on the Indian budget. London insisted that the Home Charges be paid, whatever the price. It demanded that the rupee remained pegged to sterling, and vetoed any idea of reducing its value in sterling terms. The reason it could do so was that, although the Viceroy and his government enjoyed some fiscal autonomy (and would have liked more), ultimate control over India's external finances was kept firmly in Whitehall, even after the promise of dominion self-government in the 1935 Act.43

With other users of sterling, London relied not on rule but self-interest. In three of the six white dominions, Australia, New Zealand and South Africa, the local pound was now pegged to sterling, not gold.44 Here, the British market was all-important and commercial banking was too enmeshed with the City to make any alternative viable – although South Africa's gold and its nationalist politics kept it on the gold standard until 1933. Canada might have followed with its dollar except for the scale of its debts in New York: the fall of sterling against the American dollar had made this too much of a risk. Two ‘semi-colonies’ did follow: Egypt, which sold almost all its raw cotton to Britain (and sold little else), and Iraq (a British mandate until 1932). Lastly, there was a group of European states – the four Nordic countries and Portugal – for whom Britain's huge share of their exports and their dependence on sterling receipts, made pegging on sterling the key to financial stability.

Secondly, the attractions of sterling were greatly reinforced by the overall success of its management. This was jealously guarded in London and largely controlled not so much by the Bank as by the Treasury and the ‘Exchange Equalisation Account’ whose funds it supplied.45 The object of the Account was partly to prevent sterling rising or falling too sharply. But it was also meant to ensure that sterling's value was kept at a level that allowed ‘cheap money’ – interest rates of around 2 per cent – to prevail in Britain. A cheap money policy helped Britain recover from depression more quickly than most other economies (the main exception was Japan) and much more quickly than the United States. Financially conservative governments (pursuing balanced budgets) reassured overseas holders of sterling. The result, so it seemed, was a virtuous circle. The willingness of sterling bloc countries to keep substantial balances in London helped to strengthen the pound. The balances allowed London to keep up sterling's value, despite the large deficit in Britain's balance of payments, without drawing down its investment overseas. Indeed, they even permitted some modest new issues to sterling countries abroad – as the tacit pay-off for their discretion and loyalty.46

In the depths of the crisis in 1931–2, the British government had taken a second decision no less far-reaching than ‘going off gold’. At the Imperial Conference in 1930, the Labour government and its Cobdenite chancellor, Philip Snowden, had dismissed the idea of a graded tariff on imports to give dominion producers a privileged share in the British market. But, as economic prospects grew bleaker, the appeal of protection in Britain, once confined to sections of the industrial economy, became almost irresistible. Even the City, where free trade sentiment had usually been strong, had now been won over.47 Over the protests of its rump of free traders, the National Government (whose leaders had decided to seek an electoral mandate in October 1931) agreed to impose a new general tariff. The clinching argument was that action was needed to check the huge wave of imports and a further run on the pound.48 However, Neville Chamberlain's import duties bill in February 193249 offered to delay tariffs against British Empire countries to allow time to arrange a system of mutual preferences. This was the purpose of the Ottawa Conference in 1932.

The Ottawa system marked the double departure of Britain from free trade. The British had adopted unilateral protection to save their balance of payments and the value of sterling, and to guard what remained of their agriculture against an impending disaster. With the Ottawa system they emerged as the leader of a large trading bloc, whose members favoured each other by discriminatory tariffs – the so-called ‘imperial preference’. Needless to say, this did not mean that London imposed its commercial agenda – we shall see in a minute that the City's commercial empire had very mixed fortunes after 1930. If the British delegation had hoped for ‘empire free trade’ – giving their manufactures free entry to dominion markets, they were quickly disabused. Dominion leaders were determined to protect their own ‘infant’ industries, and would not have survived had they failed to do so. They were (as always) deeply suspicious of London's official ‘machine’ – the bureaucratic phrase-mongers who would tie them in knots – and its political masters. As Joseph Chamberlain's son, Neville Chamberlain might have expected a warm Canadian welcome, especially from Prime Minister Bennett, a Canadian tory. But Bennett, said Chamberlain (privately), ‘lied like a trooper and…alternately blustered, bullied, sobbed, prevaricated, delayed and obstructed to the very last moment’.50 The British delegates found themselves conceding preferential access to the British market. What they got in return was far from free entry: it was more like exemption from the still higher tariff rates that were piled on non-British imports. Hence the best estimate is that, while the Empire countries increased their share of Britain's imports by around 10 per cent, their share of British exports grew by only half that figure: the effects on British output were marginal.51 The Empire market, despite much excitable rhetoric,52 could not be the saviour of the British export economy.

Yet British leaders were not entirely dissatisfied. They wanted to protect Britain's own floundering agriculture, but could hardly have done so without some concession to dominion producers. They may have thought that offering imperial preference would help to silence demands for a general devaluation of dominion currencies against sterling, with dangerous consequences for its strength and stability. Ensuring the dominions’ access to the market in Britain would make it less difficult for them to remit what they owed in interest and dividends. They had also checked the drift upwards of dominion tariffs against British goods. Most of all, perhaps, they hoped that the agreed lowering of tariffs among all Empire countries would create a zone of recovery that would encourage other states.53 Meanwhile, they pressed on with the making of bilateral agreements with those non-Empire countries with whom their commercial relations were close. Denmark (which competed with Canada in supplying bacon to the British breakfast-table) was given a fixed share of the market in return for its promise to buy British coal.54 Similar agreements were made with the other Scandinavian countries. In 1933, the so-called Roca–Runciman pact allowed Argentina, which sent 40 per cent of its exports to Britain, to keep almost all its pre-Ottawa share of the British market for chilled beef. The price the British attached for throwing this lifeline (no other market existed for Argentine beef) was that almost all the foreign exchange that Buenos Aires earned from Britain would be used to remit the interest and dividends from the large British investment in the country's railways and utilities. These had been blocked by Argentina's exchange control since the onset of depression.55

Imperial preference and the pacts London made with the ‘agreement’ countries helped to stave off the worst effects of depression and also the danger that other countries would retaliate against the British recourse to devaluation and protection.56 They softened the blow of export weakness elsewhere – against Japanese and Indian competition, the closing of Germany, and universal high tariffs. But, by 1937, it was clear that they could not reverse the relative decline of British economic power since the First World War. In the ten years before 1914, the deficit on merchandise trade had usually been balanced by the income that poured in from investments overseas, so that when other invisible trade was added the result was a large current account surplus. In the 1930s, this ceased to be true, as imports surged up and invisibles fell back. This reflected in part the senescence of parts of London's commercial empire – its huge holdings in railways and shipping, now largely unprofitable – and the loss of income from commodity trades. Though the British kept their grip on telecommunications57 in other new industries like civil aircraft and oil (on which global pre-eminence would come to depend) they were much less well placed. Nor could the British deter even their closest trade partners from the quest for new markets (as Australia looked to Japan), and greater self-sufficiency in industrial goods. Neville Chamberlain admitted as much. The dominions, he noted in May 1936,

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.58

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.59 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.60 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.61 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 1935.62 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.63 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.64 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.65 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.66 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.67

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.68 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.69 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’.70 ‘Personally, I am rather sorry’, wrote the Lord Chancellor Sankey when the Statute was passed, ‘but after Balfour's declaration we had no choice.’71 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.72 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.73 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.

As a result, when the draft statute was debated in November 1931, it made ‘heavy weather’.74 Churchill, the grand rebel, appealed to both strands of the Die Hard tradition, linking Ireland and India in a Cassandra-like warning of impending decay. Ominously for the government, he drew ‘ministerial cheers’ – support from the Conservative benches.75 To ward off the danger of a deeply embarrassing retreat (and an open division among the Conservative followers of the National Government), all the stops were pulled out. Jimmy Thomas, the rough diamond Dominions Secretary, warned that any delay would enrage not just the Irish but the South Africans as well. The Attorney-General, Inskip, insisted (inaccurately) that the legal standing of the Anglo-Irish treaty was unaffected by the Statute (a view overturned by the House of Lords three years later). A letter from Cosgrave, the Free State prime minister, was read out in the Commons, denying any intent to alter the treaty except by agreement. Austen Chamberlain, the party's grandest elder statesman and (like Churchill) a signatory of the treaty, declared his faith in the Free State government. Baldwin, as party leader, warned his supporters that delaying the Statute would deeply offend the dominions ‘even the most British of them’, and shrewdly referred to the prize that most of them (though not Churchill) wanted most: the forthcoming conference on imperial economic unity.76 It was enough to secure an overwhelming majority.

As Churchill had prophesied, Cosgrave soon dropped through the trap-door, to be replaced by De Valera. But, the Free State apart, most opinion in Britain observed little change in the dominion relationship. Jimmy Thomas’ claim that the Statute was the ‘cutting away of dead wood which will render possible new growth’77 was largely accepted. Certainly, among ministers, scepticism about the honesty and even the intelligence of dominion politicians was deeply ingrained. Close encounter at Ottawa reinforced this impression: ‘Bennett a cad and deceitful’ (Baldwin); ‘Bluff!! Mendacity!! Dishonest!! Liar!!’ (Neville Chamberlain); ‘Bennett a liar’ (Thomas).78 The financial instincts of Australian leaders were viewed with suspicion. When New Zealand's first Labour government declared its support for a ‘planned economy’, the reaction was bemused irritation at such doctrinaire folly. But, if most politicians in the overseas dominions were regarded in Britain as parochial in outlook and meagre in talent, they also seemed free of any ‘nationalist’ aspirations to ‘real’ independence. The ‘British’ identity of Canada, Australia and New Zealand was taken for granted. The exception was South Africa, whose ‘native policy’ had already attracted humanitarian disapproval in Britain.79 But doubts over South African ‘loyalty’ were largely assuaged by the entry of Smuts into coalition with Hertzog in 1933. The most ardent British imperialists, including Leo Amery, Edward Grigg and Lionel Curtis who kept the Milnerite faith, were also among Smuts’ warmest admirers. Appeasing Afrikaner demands for the symbols of sovereignty was the surest way, so they argued, of creating a loyal Anglo-Afrikaner dominion. They looked forward to the prospect of a union of two peoples (the blacks were invisible) that would ‘follow the history of the Union of England and Scotland’.80 The powerful Anglo-South African interest entrenched in the City, at The Times, and in academe as well, exerted its influence against any criticism that might offend Afrikaners and endanger the prospects of ‘fusion’ as the South African historian, W. M. Macmillan, found when coming to Britain in 1934.81

This complacent British view of their dominion relations did not extend to India. Between 1928 and 1935, three British governments wrestled with Indian ‘reform’: to frame a new constitution that would win Indian consent – or at least acquiescence. Part of their problem was the refusal of the Congress to accept anything short of full independence, with a ‘strong’ central government. But they were also hemmed in by the widespread unease in the Conservative party that extended well beyond the notorious Die Hards. Neither the minority Labour government of 1929–31 nor the National Government that followed it could hope to enact a new constitution unless its Conservative critics were kept to a minimum. The main difficulty lay in persuading Conservative party opinion that elective self-government should be granted not just to the provinces (as the 1930 Simon Report had proposed and to which even most Die Hards agreed), but to the centre as well, and that India should be promised a future as a self-governing dominion. A loud chorus of outrage, orchestrated by Churchill, denounced both these ideas. It drew on a mass of inherited prejudice about Indian incapacity (lovingly cultivated by generations of ‘Old India Hands’), as well as more recent alarm about caste and communal violence. It castigated the betrayal of imperial duty, an ethos still loudly proclaimed in other parts of the Empire. It exploited the embarrassing absence of Indian leaders pledged to work the reforms in a loyal and cooperative spirit, and pointed instead to the Congress campaign of civil disobedience from mid-1930. It took up the cause of Lancashire cotton, whose waning market in India might decline even more if a self-governing India adopted local protection. It evoked an intangible sense that conceding self-rule to ‘babu’ politicians (so often the butt of official disparagement) would mark a shameful defeat, a blow to ‘race-pride’, and a public avowal that British ‘decline’ had become irreversible.

The pull of these powerful emotions was sometimes unnerving. To Conservative leaders, the danger of being painted as less than loyal to the Empire posed an obvious risk. A sudden upset in India might set off an earthquake in the mood of their followers. Their endorsement of the 1933 constitutional plan offering India responsible government at the centre, and future dominionhood as an ‘All-India’ federation, was shot through with unease. Yet, at the reform bill's second reading in February 1935, it was supported by more than three-quarters of Conservative MPs.82 It seems very unlikely that (as has sometimes been claimed) this decisive result reflected a falling away in the British commitment to Empire. Its arduous passage suggests quite the reverse. The real explanation for the success of the bill was both the widespread belief that (in its eventual form) it would secure key British interests without a sterile (and costly) repression, and the backing it won from almost all senior politicians. To accuse this great phalanx of age and authority (what Lord Hugh Cecil called ‘Front Benchdom’83) of being indifferent to the safety of British world power was too much even for Churchill.

But what lay behind this consensus, and how had it been built? Perhaps the critical stage was the conversion of Baldwin, the Conservative leader, to the need to make more than purely provincial concessions, and offer progress towards Indian self-government at the centre. Like Ramsay MacDonald, Baldwin accepted the view of Lord Irwin (whom he had appointed as Viceroy) that a way had to be found to reconcile Indian ‘moderate’ opinion to the British connection, and that to appear to renege on the promise of eventual self-government made in 1917 would be politically fatal. It chimed with his instinct that the art of good government was holding the centre against the extremes – in both Britain and India. On three vital occasions – in November 1929, in March 1931 and in December 1934 – Baldwin threw all his prestige behind the cause of reform. His message was shrewd. Again and again he insisted that the aim of concession was ‘to keep India in the Empire’;84 that to fall back on repression ‘would break up the Empire’ (a silent reminder of Ireland);85 that ‘the Empire was organic and alive and in constant process of evolution’86 and could not be governed by Victorian methods. ‘The present proposals’, he told his Cabinet colleagues in March 1933 when the reform scheme white paper was about to be published, ‘might save India to the Empire, but if they were not introduced we should certainly lose it.’87 Indeed, far from conceding that Britain's position in India had become a lost cause, or that its Empire was redundant, Baldwin argued the opposite, portraying his Die Hard opponents as defeatists and wreckers with obsolescent ideas. ‘The Empire of today’, he declared in a memorable phrase, ‘is not the Empire of the first Jubilee.’88

Baldwin could count on two useful supports. First, some of the most ardent imperialists shared his view of India, including Geoffrey Dawson, the editor of The Times. They rejected Die Hard ideas as crude and old-fashioned, and Churchill himself as a political fossil. Secondly, the expert advice from the ‘men on the spot’ echoed the need for an advance at the centre to draw the sting of the Congress and force it back into ‘constitutional’ politics. Two recent ex-Viceroys, Lords Reading (1921–6) and Irwin (1926–31), pressed the same case.89 Retired Indian officials were quietly called up to preach the new gospel. The ‘Union of Britain and India’ society was formed in May 1933 to back the white paper policy: its chairman, steering committee and membership were almost entirely made up from former members of the Indian Civil Service.90 Churchill could play on the fears of Conservative activists and enjoyed the support of two great press barons, Rothermere and Beaverbrook, both old foes of Baldwin. But some of his allies mistrusted his motives; his tactics in Parliament offended even some of his friends; and his knowledge of India was transparently shallow. The Die Hards’ best hope was to stir up enough internal party division to frighten the leadership into dropping the bill. Their most dangerous claim was that under its rules the Congress would capture the vast bulk of the seats in any central assembly, and that an Indian dominion on the Statute of Westminster model could repeal any safeguards that London laid down. It was precisely these points that worried Austen Chamberlain, who exerted his influence over a large middle group otherwise sympathetic to the government scheme. But, once the Cabinet agreed to excise any reference to India's future ‘Dominion Status’ from the bill, and to adopt indirect election to the proposed federal assembly, it won over the last major figure with the power to obstruct it.91 Of the seventy-nine Conservative MPs who rejected the bill in February 1935, only Churchill himself had held cabinet rank. ‘Front benchdom’ had triumphed.

The price of consensus had been a large helping of caution. The bill's supporters assumed that India's advance to self-government would be closely controlled by the Viceroy (armed with an arsenal of ‘safeguards’); that London's grip on India's army and its external relations would remain absolute for a long time to come; that the Congress would be hobbled by the constitutional privileges conferred on the Muslims and Princes; and that India's dominionhood (the content of which was left carefully vague) would only begin at an unspecified time in the future. How far these conditions could be imposed in fact, and in constitutional theory, will be discussed later on. But, as an index of British ideas about their own place in the world, the Act is revealing. The sound and fury of the Die Hard campaign was a noisy distraction. What really stood out was the solid insistence of the most ardent reformers that India must remain part of the British world-system, and that, until its leaders accepted this ‘imperial’ fate, they would languish in the limbo of semi-self-government.

Of course, opinion in Britain on India and the Empire was not monolithic. On the Left, the reform scheme was derided as too little and too late to reconcile the nationalists in India. The turn to protection revived the old radical charge that economic imperialism was bound to bring war. Labour's election manifesto in 1935 urged ‘equitable arrangements for access to markets, the international control of…raw materials and…the extension of the mandate system to colonial territories’.92 It was the Cobdenite formula: more free trade meant more peace. But most of those who condemned the current practice of rule in the Empire imagined a future in which Britain was the centre of a loyal community of self-governing satellite states, bound together by common interests and values. There is little reason to think that this imperial world-view was unrepresentative of British opinion at large. ‘The people of this country’, remarked Neville Chamberlain, ‘have a deep sentiment about the Empire, but it is remote from their ordinary thoughts’.93Perhaps this was true, although there was much to remind even the least politically minded of Britain's imperial ties – not least the stream of those travelling to the white dominions and back. Indeed, ‘ordinary’ opinion in Britain relied for its knowledge of much of the world on accounts that were shaped by settler, administrative, missionary or commercial interests, each in their way committed to empire. In the inter-war years, as much if not more than in previous eras, three grand propositions still framed British thinking: that they formed a distinct British ‘race’ among the world's peoples;94 that their institutions and culture enjoyed both global pre-eminence and universal appeal; and that Britain was still the emporium of the world's trade and ideas. Set against these, the divisions and boundaries within their imperial system seemed of little importance. ‘The British prefer to emphasize the unity of the Empire’, remarked an acute foreign observer. ‘To them England and the Empire are one, and no such thing exists as an England conceived separately.’95

In the ‘Newer World’: the dominions96

The arduous negotiations at Ottawa taught British ministers – if they needed reminding – that dominion politicians had as keen a sense of their own ‘national’ interest as the London government itself. With the formal conferment of the dominions’ full sovereignty under the Statute of Westminster, the vigorous assertion of their economic self-interest, and their increasing alarm that Britain might be drawn into a conflict in Europe in which they had no stake, it has sometimes appeared as if this was the time when the dominions acquired a fully fledged sense of their national identity. A new ‘nationalist’ spirit had replaced colonial subservience. They were nation-states in the making, no longer stuck fast in uneasy ‘dominionhood’. It would be hard to deny that the language of ‘nation’ became more widely used among dominion politicians in the inter-war years. But it would be wrong to assume that more than a handful of such ‘nationalists’ envisaged a future outside the British world-system or favoured an open rebellion against it. There were several reasons for this. First, among communities of mainly British origin, affirming a Canadian or Australian identity was not meant to deny their continuing Britishness. They would still be ‘British nations’ as well, numbered among the ‘British peoples’. Secondly, even European immigrants from outside the British Isles displayed a strong attachment to ‘British’ institutions (especially parliamentary government) and the Crown as a source of common allegiance. Thirdly, even where such attachments were weak or contested, as among some French Canadians, Afrikaners and Irish, the right to secede from the Empire and become a republic (to which the Statute of Westminster gave tacit consent) exerted at best an ambiguous appeal. The costs and risks in each case were dauntingly high, and full exit from the Empire was carefully assigned to the indefinite future.

The Pacific dominions

Among the five dominions, there was inevitably wide variation in the extent to which the ‘British connection’ impinged upon their local politics in a period of considerable turmoil. Of the four overseas dominions, Australia and New Zealand were the most homogeneously British. Ethnic resentment against Britain, even in hard times, had little political scope. Both declined to enact the Statute of Westminster in their own legislatures, and showed little interest in the work of its drafting.97 Both were keenly aware of how dependent they were on British sea-power for strategic protection and to safeguard the racial exclusiveness – ‘White Australia’ and ‘White New Zealand’ – that formed the bedrock of their social and cultural identity. In both, the political and business elite (and many farmers as well) acknowledged the umbilical link between their economic prosperity and their close relations with Britain, nowhere more than in Melbourne's Collins Street, Australia's ‘City’. This was not just a matter of markets. In both Pacific dominions, the circulation of credit and cash was tied very closely to the size of the sterling reserves that their banks held in London. The London balances were ‘the real regulative factor and the key to the whole banking system’.98 A shortfall in earnings or the failure to raise a loan in the City threatened the drastic contraction of the local money supply and a savage depression of the kind both had suffered some forty years earlier.

In Australia particularly, the effects of the slump were extremely unsettling. The huge fall in world prices was part of the story. What made things much worse was the scale of the borrowing, public and private, in the boom decade that ended abruptly in October 1929. With public revenues falling, huge railway losses, and the drastic decline in overseas earnings, the risk of default on local and overseas debts loomed large. But the action required to avert this calamity was bound to be painful and to evoke fierce opposition, especially from the supporters of the government in power, the first Labour government since 1916. When the Scullin ministry accepted the advice of the Niemeyer mission (Sir Otto Niemeyer was deputy governor of the Bank of England) that cuts had to be made and wages reduced to balance the federal and state government budgets, the reaction was bitter. The Australian Council of Trade Unions denounced the Loans Councils (which managed public borrowing) for being ‘in the hands of money sharks, loan-mongers and capitalists’.99 As unemployment shot up towards 30 per cent, the Labour party executive called for the nationalisation of banks and insurance companies, and the renegotiation of Australia's war debt to Britain. While Scullin was away at the 1930 Imperial Conference (and promising that Australia would not consider default100), a civil war was being fought within his party and government. In New South Wales, the radical populist Jack Lang won the state election for Labour, and led the demand to ‘nationalise credit’. ‘Enthroned in our society’, he later declared, ‘is a hierarchy of financial anarchists playing with the world of men and women for sheer personal gain’: the villains of the piece were the British banks in Australia and the leaders who had made Australia into a ‘chattel nation’.101 After twice defaulting on the New South Wales overseas debt, Lang was dismissed by the state's governor in May 1932, by which time Scullin's government had also collapsed. In December 1931, the United Australia party, a composite of the National party and Labour rebels like Joe Lyons, the new party's leader, came into power, promising, in Lyons' words, ‘ruthlessly to eradicate all influences insidiously or openly weakening the ties of Empire’.102

Some historians have been tempted to see in the crisis a conflict between conservative middle-class loyalists, deferential to Britain and earnestly mimicking British upper-class rituals, and Labour's ‘radical nationalists’, bent on resisting Britain's ‘imperial demands’.103 It was certainly true that the professional and business elite (most visible in Melbourne, and closely connected to mining finance) regarded itself as the Australian embodiment of Britain's upper class, and subscribed to its political and educational ideals as well as its leisure habits. The young Robert Menzies (a Melbourne barrister) contrasted the refinement of the British ‘establishment’ with the crudeness and avarice of its American counterpart. ‘They engage in a nauseating mixture of sentiment (“Mother's Day”) and dollar-chasing, not palatable to the English mind’, he wrote after a visit to the United States. ‘They have no consciousness of responsibility for the well-being or security of the world; no sense of Imperial destiny.’104 It was equally true that an acrid dislike for the British monied elite was voiced on the left of Australian politics. But it is much too crude to equate this with rejection of Britishness or Australia's British identity. One of the first steps of the Labour government when the depression arrived was to close the door to ‘alien’ (i.e. non-British) migration. In a speech criticising the Ottawa terms, Scullin (whose origins were Catholic and Irish) insisted that the point of imperial preference was the mutual advantage of ‘British nations trading with one another and…keeping the maximum amount of business within the British family of nations’.105 His successor as party leader, John Curtin (also Catholic and Irish), who had flirted with repudiating Australia's debts, was no less emphatic. Australians, he claimed, ‘not only desire to be one people but that we shall be kindred from a common stock; that we shall…be a white people predominantly of British origin’.106 As leader of the United Australia party, Joe Lyons (Catholic and Irish) played the ‘Empire’ card. His more conservative colleagues, like Menzies’ mentor, J. G. Latham, might have disliked the Statute of Westminster, but they were also determined to extract the most favourable trade terms from Britain and be ready to look to the Japanese market.107Trade with the East was where Australia's economic destiny lay, was Latham's conclusion.108 The notorious reluctance of Lyons’ government to question the Royal Navy's ability to defend Australia may have owed most to its fear that this would weaken the Admiralty's case for a strong Eastern fleet and throw an intolerable burden back on Australia itself.

Nor was there much sign that the cultural ferment of the 1930s, that affected Australia like almost everywhere else, had brought a direct confrontation with Australia's peculiar Britishness. Quite the contrary in fact. In 1936, the writer P. K. Stephensen published an influential manifesto, The Foundations of Culture in Australia. Stephensen insisted that Australia must have its own national culture that would diverge ‘from the purely local colour of the British Islands to the precise extent that our environment differs from that of Britain’. ‘Is it sedition or blasphemy to the idea of the British Empire to suggest that each Dominion in this loose alliance will tend to become autonomous politically, commercially, and culturally?’109 But the Australia that Stephensen wanted was a ‘New Britannia…cured of some of the vices…of the Old One’, and avoiding ‘Europe's brawls’. ‘This Island, Australia Felix, effectively occupied by the British race, would be easily defensible against all-comers: which Britain to-day is not. This Island is waiting for the British people to occupy it effectively…. There is no other part of the British Empire so suited as the permanent domicile of the British Race…the British people could find no better stronghold and focus than in the Island Continent of Australia.’110 The Australian accent was clear. But this was the cultural programme not of national separatism but of Britannic nationalism: the claim to be a distinct British people, equal at least and perhaps even superior to the original stock.


Scarred by his encounter with its prime minister, R. B. Bennett, at the Ottawa Conference, Neville Chamberlain took a sour view of Canada's part in the Empire. The United States, he said, ‘controls capital and politics in Canada’.111 Only ten years earlier he had been ‘surprised and delighted’ on a visit to Canada ‘to find the most intense British feeling’.112 Chamberlain resented what he saw as Bennett's bullying tactics, and not without reason. Even Canadian observers were embarrassed and uneasy. But Chamberlain's diagnosis was crude. Canada was bound to be influenced by its huge southern neighbour, at once the world's largest economy, the largest English-speaking country and Canada's largest market. The ease and convenience of cross-border traffic, the importance of New York in Canadian finance, and the influence of the American media – radio, film and the press – made this all-but-inevitable. But pragmatic acceptance of the American fact was combined with affirmation of Canada's British identity by English Canadians, and (with certain qualifications) by French Canadians as well. At the Conservative convention in 1927, the outgoing leader, Arthur Meighen, defended his argument that a Canadian government should consult Canadian opinion before joining Britain in a war by saying that this would reassure the people that Canada was a ‘real British democracy’ and thus strengthen ‘British institutions and British fidelity’.113 A Liberal party pamphlet of 1933 declared that the party ‘stood for British principles of Free Speech and Free Association’.114 A prairie Liberal like Crerar, who disliked ‘Toronto imperialists’ and the ‘strange shore dwellers’ whose first loyalty was to Britain,115 could still think of Britain as ‘the Old Country’ and feel an affinity with its Liberal party and opinion.116 The scale of non-British migration into the west after 1918 sharpened the mood of its bare British majority.117 The Social Credit party, which ruled Alberta after 1935 (and whose leader, William Aberhart, was an ‘intense Anglophile’), wrapped its electoral platforms in the Union Jack.118 A well-regulated service, concluded the parliamentary committee on radio broadcasting, would be ‘one of the most efficient mediums for developing a greater National and Empire consciousness’.119

Canadian nationalism was not an insignificant force, but, as in Australia, it was rarely defined in conflict with Britishness. Its urgency seemed greater after 1930 as the economic depression threatened to fracture the country. ‘Never before had provinces, races, classes and parties been so divided’, complained the Anglophone Montreal lawyer, Brooke Claxton, a former Rhodes Scholar who bought his suits in London.120 What was needed was a strong central government to hold them together. Nationalism reflected the feeling that Canada was still little more than a grouping of regions and provinces.121 But its strongest supporters were equally sure that the nation they wanted should be a ‘British nation’. John W. Dafoe was the editor of the Manitoba Free Press in Winnipeg, the voice of prairie Liberalism, and the most influential Canadian journalist of his day.122Dafoe was an ardent nationalist. But he saw Canada's future as one of the ‘British nations’. ‘I have never believed’, he told one correspondent in 1928, ‘that one of a number of British nations having a common king could remain neutral in a war which threatened the existence of another British nation.’123 Dafoe fiercely opposed the ‘tory-imperialist’ view that Canada had no choice but to follow Britain blindly into any war that it fought. But nor did he want their foreign policies to diverge. The best solution, he thought, would be ‘agreement by the British nations, that…none of them, not even Great Britain, are 100 per cent international “persons”’.124 They should not make war on their own, nor even make treaties that might involve them in wars without each other's consent.

Canadian nationalism of the Dafoe variety was highly articulate but had a limited following. It attracted suspicion. Dafoe himself acknowledged that ‘the Canadian people do not want now any definite break in what we call the “British connection”’.125 There was still a very powerful minority, ‘holding the money, employing labour, owning the newspapers and controlling the parties’, who ‘are very British in sentiment’ and who would answer ‘Ready, aye ready’ to an appeal from Britain, whatever the cause and however divided the rest of Canadian opinion.126 It denounced the idea that Canada had interests that were different from Britain's. The headquarters of this feeling were found in Toronto, the ‘Belfast of Canada’, and the ‘most assertively British of Canadian cities’.127 But just as disheartening in the nationalist view was the indifference of the ‘isolationists’ to events elsewhere in the world as if Canadians could ‘contract out of the universe’.128 Isolationism seemed to be growing in strength after 1931 along with the fear of involvement in Europe's intractable conflicts. Its domestic parallel was endemic provincialism, and the rooted mistrust of the federal government. It was this that had led to the clause in the Statute of Westminster by which power to amend the Canadian constitution was carefully reserved to the Imperial Parliament (and denied to Canada's), at the explicit request of Canadian leaders. ‘Provincial rights’ remained a potent political cry, in Quebec above all, where Canadian ‘nationalism’ was readily seen as a ‘British’ conspiracy. Maintaining the ‘British connection’ in its unreformed shape, ill-defined, emotive and open (as some thought) to British abuse, was thus the great bulwark to unwanted constitutional change.

The boldest challenge to this political impasse came paradoxically from the Conservative government of R. B. Bennett between 1930 and 1935. Bennett had denounced the Liberals for failing to deal with the depression effectively. Bennett's own cry was ‘Canada First’, a sharp rise in tariffs to defend Canadian industry. This cut little ice on the prairies which had to pay more for home-made manufactures while grain prices fell steeply. Bennett had gone to the Imperial Conference in London to demand an imperial (and thus Canadian) preference in the British market for food. Labour rebuffed this attack on free trade. But the 1931 crisis in Britain, the new National Government and its swift turn to protection gave Bennett his chance. By inviting the British and other Empire governments to an economic conference at Ottawa, he aimed to reverse that defeat. The British would be forced to concede the ultimate prize, a protected home market for Empire food exports in return for a modest revision in Canadian tariffs. Bennett's plans were concerted (by his own tacit admission) with the Australian chief delegate, Stanley Bruce, the former prime minister, and now the eminence grise of Australia's economic diplomacy. He had the British ‘completely encircled’.129 Bennett may well have believed that the British delegation would not dare to resist. As a close friend of Lord Beaverbrook, he may have been swayed by his and Leo Amery's hopes of promoting a real protectionist government in Britain, much more fully committed to ‘Empire Free Trade’. A hard line in Ottawa (where Amery was active) would help this to happen.130 It may have been an inkling of this that enraged Baldwin and Chamberlain with Bennett's conference tactics. Certainly Bennett was playing for high stakes. He regarded himself as the saviour of Empire, who would drag the British kicking and screaming towards his own version of it. To have upheld ‘Canada First’, saved the prairie's grain market, and imposed a form of ‘Empire Free Trade’ on the recalcitrant British would have been a remarkable triumph for his vision of Empire. But Baldwin and Chamberlain were not so easily broken.

As a shrewd businessman, Bennett hedged his imperial bets. Access to American markets (closed up by Washington's emergency tariff) remained a vital concern. When President Roosevelt embraced freer trade, Bennett eagerly sought a commercial agreement to match that with Britain. But his domestic experiment in a strong central government and the Bennett ‘New Deal’ fell apart in the face of provincial resistance, internal party division and Bennett's ill-health. The 1935 election was a Conservative bloodbath. Although both parties agreed in opposing Canadian involvement in Britain's confrontation with Italy, the new Liberal government soon faced the old question: what would Canada do if Britain was drawn into a conflict in Europe. Mackenzie King may have thought privately that Canada neither could nor should stand apart.131 But his public position was to say as little as possible and fall back on the formula ‘parliament will decide’. The prime reason for this, as for many years past, was fear that Quebec would revolt against any prior commitment to Britain and bring down the Liberals, both party and government. ‘British imperialism’, said Henri Bourassa, still the great tribune of Quebec's survivance, ‘must not be allowed to drag Canada into any more wars.’132Ernest Lapointe, the Quebec Liberal leader, said much the same thing. Both were fiercely opposed to the separatist nationalism of the ‘Action française’ and its clerical leader, the Abbé Lionel Groulx. Neither was anxious to give him a cause. Indeed, while this sleeping dog lay, Canadien separatism remained carefully vague about when and how a separate Quebec state might come into being. Its leaders denied any wish to break Canada up: ‘Nous ne voulons rien détruire’, said the Abbé Groulx piously.133 Nor could they count on any support from the voters. The real political voice of French Canada's nationalism was the ‘Union nationale’ of Maurice Duplessis. Duplessis' government was a thorn in Ottawa's side. Its programme was not separation but the unremitting defence of provincial autonomy.134 Canada's ‘British connection’ – by default or by choice – remained the pole of its politics.

South Africa

In the cruel trajectory of South African history, the inter-war years have often been seen as the prelude to the triumph of Afrikaner nationalism and its programme of apartheid. It was certainly true that an amalgam of paternalism, segregationist attitudes and overt racial discrimination (especially in the treatment of labour) prefigured much of the substance of post-war apartheid although without the ideological ‘rigour’, systematic enforcement (by classification and removal) and violent repression of the 1950s and after.135 Africans (some 10,000 of whom had qualified for the vote under the property-based franchise that prevailed in the Cape) were removed from the voters’ roll in 1936, but ‘coloureds’ (the South African term for those of mixed race) were not. Zwaartgevaar (‘black peril’) was invoked continually by white politicians in search of cheap votes. But the inter-war state lacked the means to impose real control over many black communities in town and country alike. In a similar way, the irresistible rise of Afrikaner nationalism to political dominance was much less apparent to contemporary eyes than hindsight suggests.

There were several reasons for this. The dominant personality in South African politics was General J. B. M. Hertzog, prime minister from 1924 until 1939. To his political critics, Hertzog's shortcomings were plain. He was the ‘apostle of the short view’ and shared ‘that latent sense of racial grievance’ that inspired many of his followers, wrote Patrick Duncan, Smuts’ right-hand man in the South African party.136 Hertzog was often accused of cloudy and imprecise language (as were Botha and Smuts), the means of survival in South African politics as almost everywhere else. But he was ready to claim that the Imperial Conferences of 1926 and 1930 had lifted the burden of British hegemony, and removed any doubt about South African sovereignty. With the hypothetical right of secession assured, pragmatic acceptance of the Britse konneksie had become politically possible. Hertzog lent his authority to The King's Republics, published by H. J. Schlosberg, a South African lawyer,137 which claimed that, though the dominions now had the right to neutrality, it was inconceivable that they would exercise it if Britain were in danger.138 Hertzog himself now veered towards the position that no issue of substance divided Afrikaners and ‘English’ (the local term for those of British descent). The task of the National party, he told its 1930 congress, was to build a ‘gekonsolideerde Suid-Afrikaanse volk’. The two streams of English and Afrikaans culture must eventually merge (‘saamvloei’).139 Here, perhaps, was a tacit admission that the struggle to define an Afrikaner identity by the systematic denial of ‘English’ influences and attitudes was futile and unwinnable, and could only prolong the sometimes bitter antipathy of the previous decade.

Hertzog may have also been hoping to undermine Smuts, his main political rival. Smuts’ South African party enjoyed the support of many better-off Afrikaners who disliked the (white) populist style of the Nationalists, their pact with the Labour party and the secessionist republicanism favoured by a vociferous wing.140 It also attracted most of the English vote, since Smuts’ attachment to the Britse konneksie could hardly be doubted. ‘Are we going to desert General Smuts, a Dutchman who is sacrificing health and leisure for the British cause?’, asked the young Harry Lawrence in a speech at Kalk Bay near Cape Town in 1927.141 Smuts seems to have regarded himself more and more as the bearer of Rhodes’ old vision of a grander South Africa: fully self-governing, Anglo-Afrikaner in culture, but part of the Empire. He was keener than ever upon South Africa's northward expansion by a ‘fair linking up with the two Rhodesias’, as well as ‘friendship and collaboration with the rest of British Africa’ as ‘junior members of the family’.142 A federation of states from the Cape to the Equator143 would form a great African dominion to rival Australia or Canada – a prospect his opponents denounced as a ‘kaffir state’ nightmare. Yet, for all Smuts’ prestige, his party's survival could not be taken for granted. He had no obvious successor (Smuts was sixty in 1930) with the connections and skill to keep the party's Afrikaner support. His English lieutenants feared that the siren call of hereniging (reunion) would lure their Afrikaner allies away. And the party's cohesion was constantly strained by its English ‘extremists’ who opposed what they saw as the steady erosion of the link with the Empire. ‘Politically they are like children’, said Duncan contemptuously of a breakaway faction in Natal. ‘I do not think the fits of imperial hysteria are good for us or the British connection.’144 The suggestion by one of his English frontbenchers that the party should abandon the dual language provisions of the South Africa Act was dangerous enough to draw a savage rebuke from Smuts himself.145

Perhaps surprisingly, the politics of Depression allowed both Hertzog and Smuts to escape their extremists and construct a ‘moderate’ centre enjoying broad Afrikaner and English support. Hertzog had hoped to ride out the storm without leaving the gold standard, as the British had done. But signs of white unrest on the Rand146 and the bruising effect on agricultural exporters brought a revolt in his party and pushed him towards a coalition with Smuts in February 1933. Both came under pressure from their Afrikaner supporters to press on towards ‘fusion’, a union of parties. The critical issue became South Africa's ‘status’ – the real extent of the freedom conferred by the Statute of Westminster. Within Hertzog's party a sizeable faction led by D. F. Malan was hostile to fusion, because it meant accepting dominionhood as a permanent condition and losing the hope of a republican future outside the Empire. For some of Smuts’ English supporters, there was the opposite fear that their voice would be drowned by the Afrikaner majority, and that Malanite republicanism would enjoy too much influence. But, when the ‘status’ bill was debated (the bill enacted the terms of the Statute of Westminster in South African law), Smuts won over his doubters while those who favoured a future republic also drew back.147 Only seven MPs opposed the bill. The way was now open to form the ‘United’ party: the status Act was its charter. However, much to Duncan's relief, Malan and his followers chose in the end to stay out. ‘It will consolidate our [new] party against a republic’, was Duncan's conclusion, while ‘a small ultra-British group mainly in Durban and East London’ formed on the opposite wing.148 The so-called ‘Dominion’ party won a sensational by-election in 1935 (‘Are you a bulldog or a handsupper?’ was its cry),149 but most English voters elsewhere heeded the warning that ‘the English-speaking must have the support of the moderate Afrikaans-speaking. They alone cannot prevent the country from seceding from the British Empire.’150

But what had fusion achieved? To its supporters it marked the end of ‘race’ conflict between Briton and Boer and the creation of a new ‘South Africanism’. To ensure its success, they were willing, like Duncan, to remove the African franchise – on the grounds that it might cause a dispute among whites. But fusion did not stop the movement to build a distinct Afrikaner identity, which gathered speed in the 1930s, with the promotion of the Afrikaans language (a patois which replaced Dutch as the country's official second language in 1924), the rapid growth in the number of Afrikaans-only schools (by 1936, 55 per cent of white children were receiving instruction only in Afrikaans151), and the systematic propagation of an ‘Afrikaner’ account of South African history in which the Afrikaners were cast as the innocent victims of black barbarity and British imperialism.152 The approaching centenary in 1938 of the Great Trek was perfectly timed to advance the agreeable myth that the Afrikaners were a chosen, martyred but ultimately victorious people and the republic their symbol of national ‘liberation’. Against the power of this racial and cultural appeal (which hindsight confirms), the United party's ‘South Africanism’ now looks rather wan. But it would be wrong to assume that success was assured to separatist nationalism before the Second World War. For many Afrikaners, it was the weakness and poverty of their language and culture that really stood out. The higher civil service was still overwhelmingly English, and few senior officials could or would speak Afrikaans. English opinion was voiced by English-owned newspapers in all the main cities. Almost the entire business world was English and a large proportion of its most influential members were also British by birth. The same was true of the main professions – medicine, law, education, journalism, engineering and architecture.153 Their ties with Britain – family, business or professional – remained strong. The towns into which many Afrikaners were moving were mainly English in culture. It was hardly conceivable that a political movement that proposed to root out the Britse konneksie could escape the furious opposition of this English middle class to an Afrikaner republic outside the Empire. Few well-informed Afrikaners believed that it could be imposed on a hostile minority. Indeed, even republicans were forced to concede that it lay far in the future, while half of those teaching at Stellenbosch University, the seed-plot and seminary of Afrikaner nationalism, backed Hertzog and Smuts, not Malan's ‘Purified Nationalists’. A true (ware) Afrikaner society might be the white hope of ages to come: in the world of practical politics, South Africa would remain a dominion.

It was true that dominionhood left undefined the terms of the British connection in several crucial respects and made the tacit concession that any dominion could secede from the Empire if it chose. The fact that no dominion did so after 1931 was not because there was a constitutional bar, but because in each case the balance of its politics was against such a move. New Zealand's Labour government, elected in 1935, might have had little ideological sympathy with the National Government in London. But its deep British attachment was strongly affirmed: ‘New Zealand was bound to Britain by unbreakable ties of blood’, declared the new prime minister.154 Its planned economy rested on hopes of closer economic integration with Britain – the only real outlet for the increased production of primary products.155 At the other end of the spectrum, the Irish Free State under De Valera's Fianna Fail government rejected the oath of allegiance, refused to pay the annuities owing under the 1921 treaty, and resisted the economic coercion with which London responded. In 1937, a new constitution recognised the Crown but only by virtue of Eire's ‘external association’ with the Commonwealth. But De Valera stopped short of declaring a republic or leaving the Commonwealth, partly because to have done so seemed likely to erase any hope of Ireland's reunification.156 For all the dominions, the greatest source of concern was Britain's involvement in a new European conflict. For Australia and New Zealand, this arose from anxiety that London might overlook its real imperial duty in the Asia-Pacific. In South Africa and Canada, it sprang from the fear that, unless Britain itself was in obvious danger, the local response would foment a racial divide and destroy the fragile consensus on which dominionhood rested. As Europe slid towards war, both kinds of risk grew greater and greater.

Holding India: ‘from power to influence’?157

Had India become the grand anomaly in the British world-system by the mid-1930s? Certainly some people thought so. ‘India is a great historical accident and remains an incredible anomaly’, opined John Dafoe. Hindus and Muslims, he thought, ‘are not part of the moral unit…I might call the British Commonwealth of Nations’.158 The link between Britain and the white dominions had now become voluntary. It was a matter of choice, however theoretical, whether or not to stay in the Empire. In much of the tropical empire, the demand for self-government barely existed as yet outside a very narrow elite. But India was different. There, since the end of the First World War, the British had faced a mass nationalist movement whose leaders had called if not for purna swaraj(complete independence) then for self-government as full as that of Australia or Canada. Under Gandhi's dynamic direction, the Indian National Congress had challenged British authority in a large-scale campaign of civil disobedience that was only abandoned (in 1922) for fear of a rising spiral of violence. But, as a tactical weapon, as well as a way of restoring momentum and extending support, it retained its appeal to the Congress' Gandhian wing. In 1930, it was turned to again to lever major concessions at a time when the British seemed at sixes and sevens.

The British for their part seemed less sure than they had been before 1914 about what their Raj was to do. The social problems of India had always seemed daunting, but now they were more conscious than ever that they had only makeshift solutions. The Royal Commission on Indian Agriculture (1928) was set up to inquire into the causes of low productivity. But it pointedly ignored the key issue of land tenure so as not to enrage the Raj's key allies among the landholding classes. As the Congress pushed deeper into rural society, the old British claim that they were the guardians of peasants and cultivators looked more and more threadbare. Indeed, the reforms of 1918–19 were meant to shift the burden of social questions towards the ‘transferred’ departments in provincial governments under the charge of elected Indian ministers. The Raj seemed to be asking, as Milner had asked of the British in Egypt in 1920: ‘Are we trying to do too much for these people and getting ourselves disliked without materially benefiting them?’159

Yet (as we have seen) the British could hardly imagine an imperial life after India. The real issue for them was how they could reconcile the Indians’ demand for self-government (which they accepted in principle) with their own irreducible interests. It was India's contribution to the strength and cohesion of the British world-system that really concerned them. Despite its savage contraction as a buyer of Lancashire cottons, India remained a key market for Britain's industrial products, all the more so in the age of the segmented global economy and closed trading blocs. Thus, although the overall value of British exports to India fell in the 1930s, India remained the largest single market for cotton piece-goods, machinery and chemicals, and the second or third market for electricals and iron and steel goods.160 Nor was trade the only or most important economic consideration. Some £500 million (around 12 per cent of British overseas capital) was invested in India, three-quarters of it in government debt. India also contributed to the British balance of payments through its payment for services, pensions (for British officials), debt interest (mostly on railways) and the costs of the large British garrison ‘borrowed’ from home. Before 1931, and even more so after, any change that might affect India's ability to pay these ‘Home Charges’ rang loud alarm bells in London. An elected government in Delhi that sent the garrison home, repudiated its debts or devalued the rupee might wreck sterling's precarious stability.161 It was hard enough sometimes to bully the Viceroy and his British officials: an independent government of India would be a different matter entirely. It was widely agreed in London that Britain's ‘financial stake…in India remains, for all practical purposes, as a permanent obstacle to anything that could reasonably be termed financial self-government’.162

In the Depression decade, commerce and finance were an urgent concern. But even more rooted in British thinking about India was its strategic importance. This could be thought of as active and passive. By comparison with other parts of the British world-system, India's defence budget was huge: six times that of Australia, the next biggest spender. India still paid the ordinary costs of almost one-third of Britain's regular army, stationed in the sub-continent. By convention, India's own army of some 140,000 men, with its British officer corps, was also available for imperial duty, although London would pay the ‘extraordinary’ costs. After 1920, it was accepted that imperial use of this ‘sepoy’ army would be careful and sparing; but India remained the strategic reserve of the British Empire in Asia and its great supply base in war. Troops and supplies could be sent from its ports to a vast arc of targets from Cairo to Shanghai. Its vast pool of labour was a pioneer corps in waiting – as in 1914–18. But ‘passively’ also India was crucial. Together with British-ruled Burma and Ceylon (Sri Lanka), its orientation was one key to the Asian balance of power, and thus that of the world as a whole. Its Muslim minority looked towards Persia and the Arab Middle East. The leaders of Congress admired Chiang Kai-shek's nationalist struggle in China, and some of them longed for a pan-Asian front against British imperialism. But, from the British perspective, a divided, neutral or hostile India, spread-eagled across their route to Southeast Asia, Australasia and China, would be an unimaginable disaster. So hard was it to think of ‘imperial defence’ in these terms that the ‘loss’ of India was almost literally unthinkable.

The constitutional tactics that the British pursued to safeguard their interests and sap Indian opposition were extraordinarily tortuous, although this was partly because of their own internal divisions. The first constitutional scheme was advanced by the Simon Commission, set up in 1927–8 to review the Montford reforms. The Commission (which was boycotted by most Indian leaders in protest against its ‘all-white’ complexion) proposed to give the Indian provinces almost complete control of their local affairs (‘provincial autonomy’ with ministerial or ‘responsible’ government on the Westminster model), with the distant prospect of eventual federation when and if they agreed upon it. In the central government, the Viceroy's executive power would remain unfettered by a toothless central assembly, while the Indian army would be placed even more clearly under London's control, with a guaranteed budget that Indian politicians could not even discuss.163 Simon's object was clear. If the provinces became the arena where Indian politicians could exercise real power, provincial and not ‘All-India’ politics would attract most political energy. The Congress party as a ‘national’ movement would soon fall apart as its provincial divisions went their own separate ways and abandoned the chimaera of early British withdrawal. In political terms, the Raj would have rounded Cape Horn.

Simon's scheme was shot down not so much by its Indian critics as by the Viceroy, Lord Irwin, who saw the lack of any advance at the ‘centre’ as the cause around which Congress would unite to disrupt British rule. He had already insisted that the promise of India's future dominionhood should be clearly affirmed. What Irwin urged was a round table conference at which all interested parties – British and Indian – would draw up proposals for a new constitution. Three such conferences in London in 1930–2 failed to produce an agreed solution. But they did throw up a novel suggestion on which the British seized with alacrity. This was the idea of an ‘All-India’ federation of the Indian states (whose Princes acknowledged Britain's ‘paramount’ power) as well as the ‘British Indian’ provinces.164 The seductive charm of this scheme was its promise of a large conservative bloc of Princes and Muslims (who would keep separate representation) in a new federal government, antipathetic to Congress and anxious to keep the ‘British connection’ as their political guardian for (at least) a long time to come. In the federal assembly that the British envisaged – and to which the Viceroy's government would gradually become more and more answerable as dominionhood arrived by instalments – one-third of the seats would be filled by Muslims and one-third by the delegates sent by the Princes. Even if Congress won all of the open seats that remained, the most vociferous opponents of the British connection could never command a majority.

But, leaving nothing to chance (and under the baleful eye of the Die Hards), London piled up further defences against any untoward weakening of the imperial interest in India. A mass of safeguards entrenched the executive powers of the Viceroy against interference in the army, in India's external relations, or in the rights of minorities. These were meant to continue even after India had become a dominion. The Viceroy also had powers to set the level of spending on the items of greatest interest in London: defence; the pension bill; and railway expenditure. One Congress leader commented acidly that scarcely one-fifth of federal spending would pass under the scrutiny of the federal assembly.165 However, what British plans really relied on was the provincial dynamic towards which Simon had pointed. Giving provincial autonomy would draw Indian leaders away from rhetorical politics towards ‘real’ and ‘responsible’ political power, and make them far more responsive to the needs of their voters. Provincial politics would also come to reflect the wide variation in interests and attitudes in different parts of the sub-continent. Provincial government ministers, even those in the Congress, would resist the demands of ‘All-India’ nationalists and wriggle free from their grasp. All-India politics would be fraught with frustrations for those who aspired to drive out the British. Boxed in by the rules, and by the careful design of the federal assembly, they would find very little had left the Viceroy's control. Yet to struggle against him by mass agitation would get harder and harder against the indifference or hostility of provincial politicians, where control over the party machine would soon come to lie.

But how realistic was this machiavellian scheme? Did the British really have the power on the ground to make it work as they wished? Could they hold on long enough to bend Indian politics in the direction they wanted? There were certainly grounds for a positive view. One of them was the resilience of the old ‘steel frame’, the so-called ‘Superior Services’: the 800 or so members of the Indian Civil Service (ICS); the 150-strong Indian Political Service (still almost entirely British-born166) that dealt with the Princes, and the 500 British officers of the Indian Police. Under the 1935 Act, the pay and conditions of the Superior Services remained under London's control. The Indian Civil Service retained much of its cherished cohesion. It was, said the Viceroy (Lord Willingdon, 1931–6), ‘the most powerful Trade Union that I know’.167 In the late 1930s, despite uncertainties and under-recruitment, British-born officials still made up the majority of its ranks.168 Nor was the loyalty of its Indian contingent yet in serious doubt.169 Faced with the growth of Indian political activity, the ICS accepted the need to enlarge provincial self-government and increase the shift towards federalism originally envisaged before 1914. It learned from mass civil unrest and the bursts of terrorism in Bengal, the risks of exposing its minute administrative manpower, the need to employ more indirect methods, and the logic of retreat to the political centre both in the provinces and in India as a whole. The Indian politicians would have to be guided, not governed. In keeping with this was a new political mantra put about by its leaders. ‘The civilian who used to serve by ruling must learn to rule by serving’, said an Old India Hand, Sir Edward Blunt.170

In the provincial arena, the Indian politicians were bound to rely heavily upon the expertise and advice of the ICS men. They were also bound to observe the constitutional rules that the governors would enforce. The governor could dismiss ministers, dissolve the assemblies and call fresh elections. He could also insist on attending cabinet meetings.171 Where party competition was fierce, party organisation fragile or factionalism rife, these were formidable powers – the reason why Congress tried but failed to secure a promise not to use them. They were deployed with the aim of weaning Congress leaders in the provinces away from their deference to the Congress ‘high command’ and encouraging ‘local’ initiative.172 After 1935, of course, British and ICS power was concentrated at the centre, in the government of India. There, the Viceroy and his ICS staff exercised almost unchecked authority, and would continue to do so long after (and if) the federal assembly came into existence. Indeed, the Viceroy, not London, now held most of the reserved powers that were meant to slide slowly into the hands of responsible federal ministers. His control of the budget was almost absolute. More to the point, the centre had grabbed the lion's share of the most buoyant revenue sources, leaving the rind to the provinces: the rigid, costly and inflammatory land revenue.173 Financially, at least, the centre was stronger than ever, and provincial politicians would need its goodwill. But, if all else failed politically, the Viceroy's ultimate weapon was his command of armed force, the police and the army. Here, too, it seemed, the British had little to fear. Apart from the British contingent (the 50,000 or more men from the British army at home), the Indian army appeared almost untouched by two decades of politics. Its British officer corps (around 20 British officers in each of the army's 120 regiments174) was scheduled for ‘Indianisation’ at the pace of the snail, and Indian applications for officer training (in contrast with the ICS) slumped badly in the 1930s.175 The army's colonial structure, with its heavy reliance on ‘martial races’ and hill peoples, expressly excluded most of the elements that might have been drawn to the Congress. An army mutiny designed to bring Gandhi to power was absurdly improbable.

All this would have counted for less had the British in India faced a united nationalist movement that could grant or withhold its cooperation at will. But the reverse was the case. Since the glory days of the first non-cooperation movement in 1920–2, unity had collapsed. Although Muslims themselves were far from united (and some remained loyal to Congress), their provincial leaders were deeply opposed to the Congress desire for a strong central state which they saw as the instrument of the Hindu majority. In the Muslim majority provinces of Bengal, Sind and Punjab (the North West Frontier Province was a special case), they were determined to hold on to the widest autonomy, and to cling to the privilege of separate electorates. When Congress staged its second civil disobedience campaign in 1930–1, the Muslims took no part.176 The Congress itself was prey to divisions. The moderate non-Gandhian wing, led by Motilal Nehru, Jawaharlal's father, would have settled for ‘Dominion Status’ within the Empire, parliamentary-style government at the Indian centre and an end to separate electorates.177 But their chances were wrecked by Muslim opposition, the Gandhians’ impatience and the tactics of the British. When civil disobedience was suspended (by the Gandhi–Irwin pact), Gandhi went as the Congress’ sole representative to the (second) Round Table Conference convened by the British in late 1931 to consider the federal scheme. But Gandhi gained little. Civil disobedience had been noisy, but was a political failure. The Round Table Conference (attended by Muslims, Sikhs, Princes, untouchables and Eurasians, among others) belied his grand claim that the Congress alone represented India. The new constitution was drawn up in London while the stuttering attempt to restart civil disobedience was crushed by a vigilant Viceroy. When the India Act was passed, Congress faced a dilemma. Would it boycott the reforms that Jawaharlal Nehru called ‘a charter of slavery’? Would it fight the elections, now to be fought on a far larger franchise including millions of women? Would it take office in the provinces where its supporters won a majority? Would it risk being trapped in the constitutional labyrinth the British had constructed around it?

Loud voices were raised against any compromise. Nehru (elected Congress president 1936–8) fiercely opposed the acceptance of office. The Congress should not share responsibility with ‘the apparatus of imperialism’, he told its meeting at Lucknow in April 1936.178 If it did so, the ‘narrowest provincialism [will] rear its ugly head’.179 But, the following year, the vote went against him. This was partly because of the hunger for power after long years in the wilderness. But it was also inspired by the scale of the victory in the provincial elections. Congress had won a clear majority of seats in five of the eleven provinces and was the largest party in a sixth (Bombay). It had crushed the ICS hopes that provincially based parties would attract the voters’ support. Its success was a tribute to organisational strength,180 and its appeal to the peasants as the scourge of the landlords. The landlord party in the United Provinces (to the dismay of the governor) was roundly defeated. But what would Congress leaders do once in office? They proclaimed the intention of using their powers to smash the new constitution. But the British clung to the hope that, once its local leaders were engaged with ‘the great mass of provincial interests’, this would quickly slacken the grip of Congress’ ‘central organisation’.181

The early pattern of politics seemed inconclusive. The cohesion of the Congress was certainly strained and its inclusive appeal began to fray at the edges. Provincial leaders resented ‘supervision’ by the ‘high command's’ triumvirate.182 Faced with peasant unrest in Bihar and labour unrest in Bombay, Congress ministers applied repression with vigour.183 The Congress Socialist party had been formed in 1934. Nehru himself proclaimed the virtues of socialism and admired Stalin's Russia. But Sardar Patel, Gandhi's ‘enforcer’, dismissed socialism as ‘nonsense,’184 and other voices were raised against Nehru's ‘destructive and subversive’ doctrine.185 The ‘high command’ intervened in provincial affairs to defend Indian businessmen against radical or leftist opinion in Congress.186 Subhas Chandra Bose, Nehru's main rival as the radical voice of the Congress, pressed for more recognition of regional and cultural autonomy (reflecting the Bengali Hindu dilemma) and urged Congress support for a federal republic, not a unitary state.187 The Congress old guard engineered his removal. Amid so much division, it was perhaps hardly surprising that Nehru should have thought ‘the sooner we are out of office the better’.188 But, despite all the strain, the Congress did not fragment. Its three-man committee, with Gandhi behind them, imposed a tight central rein. There were also clear signs that the growing strength of the Congress would deter the Princely states from agreeing to join the federal system, and that federation itself might remain a dead letter.

But in the last year of peace it was too early to tell. The Congress had eluded the trap that the British had set. Whether it could stage an early advance to the All-India centre and expel the British from India in the foreseeable future was far more uncertain. The strict central control that the high command had maintained had saved the Congress from splits. But its veto on coalitions and monolithic authority had further antagonised both Muslims and Princes. For the moment at least, in the trial of strength, stalemate had set in, the prelude perhaps to a new round of adjustments. But, before that could happen, an external crisis of colossal intensity transformed the whole pattern of Indian politics.

Holding the centre

Despite their travails in India and East Asia, the growing tension in Europe and the sense of economic and financial strain after 1930, there was little to show that the British had abandoned their claim to be a world power. Nowhere, perhaps, was this clearer than in the Middle East, the cross-roads of Eurasia and of what Mackinder had called the ‘world-island’. Across a vast arc of territories, including the Sudan, Egypt, Cyprus, Palestine, Trans-Jordan, Iraq, the Persian Gulf statelets, the Hadramaut and Aden (the ‘southern gates of Arabia’), British influence circa 1930 was fiercely exerted through a wide range of regimes: a condominium, a crown colony, three mandates, several protectorates, and a ‘veiled occupation’ in Egypt, while Aden remained an outpost of Bombay until 1937.

To the casual eye, such administrative chaos had an improvised look, as if the British presence was temporary (‘temporary’ had been the notorious adjective applied to the British occupation of Egypt in 1882). In fact, in the inter-war years, far from becoming redundant, the Middle East countries assumed growing imperial value for two different reasons. One was the steady rise in their output of oil, mainly from Anglo-Persian's concession in Southwest Iran and its port-refinery at Abadan, but with the promise of new fields in Iraq and the Gulf. Although Middle East oil supplied only 5 per cent of world product as late as 1939, it reduced British dependence on American oil and was conveniently close to the imperial ‘trunk route’ to Suez and India. The second reason was strategy. The old threat from Russia was dormant, but the risk of a clash with Japan was much more immediate. That meant the rapid despatch of a naval task force from Europe to defend British interests in the Asia-Pacific from the Singapore base. Hence the vital importance of the Suez Canal as the wind-pipe of Empire was notched up still further. Nor was it only a matter of sea-power. The value of air routes to bind the Empire together, and of air-power as a means of internal control and external defence, were well understood. Half of Britain's air strength stationed overseas was in Egypt, Palestine and Iraq. Cairo had already become the hub of air transport, through which flights to Africa, India and the Pacific had to pass. With other bases and airports in Palestine and Iraq and along the Arab coast of the Gulf, the British had constructed an air route to India to which they attached great importance.189 ‘The Gulf is becoming’, wrote a Times correspondent breathlessly, ‘the Suez Canal of the air, an essential channel of communication with India, Singapore and Australia.’190

Since the early 1920s, the British had preferred to make their regional presence as unobtrusive as possible, for financial as much as for political reasons. They had come to terms with the two main state-builders, Kemal Ataturk in Turkey and Reza Pahlavi Shah in Iran. Having installed Feisal in Iraq as the strong-man who would hold its disparate parts together with his ‘Sharifian’ followers (the Sunni elite who formed the administrative caste and the officer corps), they were keen to exchange their Mandatory role for a treaty of alliance that gave Iraq independence – a change carried through between 1930 and 1932. With the air bases they wanted, and with Iraqi dependence on British support against the ‘old enemy’ Turkey (not to mention Iran), there was no conflict of interest between their imperial system and the ruling group in Baghdad.191 London also looked kindly on the state-making ambitions of Ibn Saud in what became Saudi Arabia, and forced its Hashemite clients in Trans-Jordan and Iraq not to encourage his tribal opponents.192 Thus the British imperium was intended to function by indirect means, through a form of hegemonic diplomacy, not old-fashioned rule. As the only great power in the region (for the French offered no challenge), they would be arbiters of its conflicts and quarrels, patrons – or not – of its rulers’ ambitions, regulating the affairs of the region in its best interests and their own.

The heart and centre of British regional influence was, as it had been since 1882, to be found in Egypt. Egypt had the largest population of any Arab country, and the region's most developed economy. Cairo's Al-Azhar mosque was the greatest centre of learning in the Islamic world. With the Suez Canal, the port of Alexandria, its airports and railways, its agrarian resources and its large pool of labour, Egypt was a uniquely valuable asset to Britain's defence system: the ‘swing door’, as one minister put it, between East and West. Having rejected the prospect of direct control at the end of the War, the British would have liked to enshrine their special position in the form of a treaty. But, as they insisted that the terms should include the right to maintain troops there, to require Egyptian conformity with British foreign policy, to be the sole guardian of foreign interests and persons, and to keep effective control of the ‘Anglo-Egyptian’ Sudan (Egypt's great colony), no Egyptian politician who valued his name and his health could be persuaded to sign. After several abortive attempts, the British had all but decided by late 1934 that further effort was futile.193Their situation in Cairo was not so uncomfortable. Despite official insistence that the British Residency played no part in Egyptian political life, successive high commissioners interfered with a will. It was widely assumed that no Egyptian prime minister could survive their displeasure. Since 1930, in fact, the British had simplified matters by allowing the king to repress the Wafd, the main popular party, and rule by decree through his nominee minister. Their rationale was straightforward. If the British disowned him, said a Foreign Office official, the king's position would be precarious if not untenable.194 When the High Commissioner Lampson went to bully King Fuad (r.1917–36) on an occasion in 1935, he told him that failure to comply would raise ‘issues of the gravest kind…including…his continued capacity to rule and the whole future of his dynasty’.195‘J’accepte’, said King Fuad. Since the Qasr el-Nil barracks, where the British garrison was stationed, was ten minutes’ drive from the king's Abdin Palace (and ten minutes’ drive from the Wafd party headquarters), and since the British had removed his predecessor but one, Fuad's discretion was wise.

Nevertheless, in the mid-1930s, the British ability to exploit the political rivalry between the Wafd and the Court was no longer enough to safeguard their interests. Part of the reason was their troubles in Palestine, the one Middle East state where their favoured retreat to indirect rule was thoroughly barred. Under the terms of their Mandate, the British had to provide a ‘national home’ for the immigrant Jews. But it had been obvious from the beginning that the Arab majority was deeply opposed to Jewish land settlement and still more resentful that it had denied them self-rule. Since a shared legislature was out of the question, the British practice had been to deal with Arabs and Jews separately through the Supreme Muslim Council and the Jewish Agency. But this had not prevented fierce communal tensions and recurrent outbreaks of violence. The violence was fuelled by rising rural unrest. By 1930, nearly one-third of Arab peasants were totally landless and more than three-quarters had less than the level of subsistence required.196 The Palestine peasants, reported a British commission, were ‘probably more politically minded than many of the peoples of Europe’.197 Their resentment was probably aimed as much at the Arab notable class (who were selling the land) as at the Jewish intruders. The problem was compounded by the bitter divisions among the Arab elite, between ‘Husseinis’ (the Husseini family were the hereditary muftis of Jerusalem),198 and ‘Nashashibis’, who were supported by larger landowners and businessmen. When rural violence burst out into the open with the murder of two Jews in the spring of 1936, bringing reprisals, a general strike and a state of emergency, armed peasant bands began to appear in the highlands. Amin al-Husseini called for the non-payment of taxes and denounced the police presence in Palestinian villages. The British were forced to deploy some 20,000 men (a tenth of their army) to try to restore their control.

This was not the only anxiety. From late 1935, and the breakdown of the Anglo-French plan to surrender Ethiopia to Italy, the British had to court the risks of a Mediterranean war and suffer the propaganda bombardment from Italian radio. Almost at the same moment, the High Commissioner in Cairo, Sir Miles Lampson, detected an ominous shift in the political climate. All the main parties formed a ‘United Front’ to demand restoration of the 1923 (parliamentary) constitution, and treaty negotiations with London.199 To stand in their way, argued the key British expert on internal security, might mean a return to the massive uprising of 1919. London accepted the case. By May 1936, the Cabinet was debating the prospective treaty in detail. The main attraction on offer was an Anglo-Egyptian alliance, to defend Egypt ‘jointly’. The main stumbling block was the demand by Nahas, the Wafd leader, that the British renounce their claim to occupy the Canal Zone indefinitely, and accept League of Nations arbitration if the two sides disagreed over the treaty's renewal.200 The thought of the backbench reaction to a fresh imperial ‘scuttle’ made some ministers quake. But, by the middle of June, that midsummer of madness, they had steeled themselves for it. A treaty was ‘indispensable’, said Neville Chamberlain, a previous critic, now a key convert. They should accept the twenty-year term on Britain's military rights in the Canal Zone.201 Not to settle with Egypt, said Baldwin, would mean locking 30,000 men in the country ‘during the very critical five or six years immediately in front of us’.202 Nahas, too, was eager to win the great treaty prize. He offered a perpetual alliance (only its terms to be varied in future) and unlimited British reinforcements in an ‘apprehended international emergency’.203 It was enough. At a further Cabinet meeting on 23 June, Baldwin summed up the argument. ‘The immediate reasons for the early conclusion of a treaty’, he told his Cabinet colleagues,

were the reactions of failure on the Arab area. The situation in the Near East was one of considerable gravity. There was also danger of disturbance in Egypt…Failure to conclude a treaty would add a disorganized Near East to the existing disturbed state of Europe. It was essential therefore to obtain a treaty…[H]e hoped that in twenty years time…our position in the Eastern Mediterranean would be very much stronger than it was today, with troops near the Canal.204

Baldwin's remarks were intended, no doubt, to quieten the critics. But it would be wrong to assume that even the treaty's most ardent British supporters saw it as marking a real British retreat. The British had agreed to withdraw their troops from Egypt's main cities. But (as the map to accompany the treaty revealed) their Canal Zone ‘training grounds’ conveniently extended to within a few miles of Cairo.205 As for Nahas, within twelve months of the treaty he had been driven from office by the new king, Farouk. He ‘relied too much on British influence to keep him in power’, said Lampson.206 The old game was renewed. ‘With tact and firmness’, he reassured London, ‘British influence should remain the governing factor…under the new conditions of the post-treaty regime.’207 In Palestine, meanwhile, a Royal Commission had come and gone, and its plan for partition considered and scrapped. More British troops fought the Arab insurgents. Far away in the south, the frontier of control in the Aden protectorate was pushed gradually forward. By adjusting their tactics and searching for allies, the British meant to hold their ground in the region they regarded as indispensable strategically, and imperially ‘central’. What really mattered was whether they could hold the ring. Whatever the treaty terms, Lampson told London in May 1936, ‘in twenty years time Egypt would be just as dependent on us as now if we were still the power we now are’.208 The British meant to hold the centre, but would the centre hold?

Dog days of Empire

In 1937, the omens were unclear. With hindsight, of course, it is easy to see the tensions and strains to which the British system was subject. Economic resentments, nationalist fervour, racial antipathy, religious antagonism and the appeal to class hatred: together they threatened to pull the system apart at the seams. On this diagnosis, the chance of survival was slim. Swift devolution might stave off a crisis but not for too long. Crippled economically by the end of free trade, sapped internally by the growth of separatist feeling in the dominions and India, assaulted externally by new and more ruthless imperialisms, the British world-system could only decline, and eventually fall. It was just a matter of time.

Yet, as we have seen, to many contemporaries (both observers and actors), that was not how it seemed. The economic upheaval was deeply disturbing. The rise of India's mass politics had been a political shock. The surge of new ideologies on the Left and the Right had unsettled old loyalties. The aggressive ambitions of the ‘revisionist’ powers exposed the weakness and confusion of the guardians of world order. But (except to ideologues and visionaries) it was hard to determine the collective significance of these unwelcome developments. Indeed, it was only in the late 1930s, from 1937 onwards, that the pattern became clearer, and their meaning more ominous. Even then, as we will see, it took a strategic catastrophe to inflict irreversible damage.

In the meantime, even the most hard-headed of realists might have hesitated to write the British system's obituary. In the more ‘British’ dominions, there might be impatience with London's zigzag foreign policy, but the sense of British community remained deeply entrenched, with the common Crown as its focus. The coronation of King George VI in 1937 was covered in Canada by twenty-three hours of continuous broadcasting.209 In India, the Congress had abandoned mass agitation and settled for the constitutional politics in which the British had been trying to entrap it for more than a decade. In much of the ‘tropical’ empire, the adoption of indirect rule had anaesthetised politics. Nor was it obvious that there was any escape from the grip of the City on its ‘dominions of debt’: the economic obligations that bound so many producers to the market in London and to dealing in sterling. British expansion might have come to an end, and a form of stalemate set in across the colonial dependencies. But in a fragmenting world it was not unrealistic to expect that the British ‘bloc’ might hold the balance of economic and geopolitical power for an indefinite time. If history was a guide, it would outlast its parvenu rivals. But history was not.

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