The Empire Project: The Rise and Fall of the British World-System, 1830–1970 (57 page)

These changes in the City's position were the most obvious sign that the powerful symbiosis between economics and politics represented by the ‘imperialism of free trade’ had been seriously weakened. The unrestricted flow of trade into, through and out of Britain had made London the entrepot of the world. It had maximised Britain's income from shipping and services as well as her earnings from overseas property. It had spun two virtuous circles of wealth and power. The entrepot function, free trade, ready supplies of capital and credit and sterling–gold convertibility had made the City the reserve bank of most secondary states. They in turn were obliged to accept the commercial and financial disciplines expected by the London market. To retreat from the gold standard into a paper currency, or to default on their obligations, meant a stoppage in the stream of capital and credit on which their hopes of material progress (in an expanding world economy) depended. A developing economy like Canada, remarked the banker Robert Brand in 1913, ‘had as much interest in maintaining unchecked the flow of capital from England as a city has in preventing the supply of water being cut off.’
⁶³
The benefits accruing to Britain were not only profitable investment. British financial, commercial and even engineering practice was diffused more widely. British-based merchant houses managed much of world trade. Information and market expertise flowed increasingly to London. The huge British investment in telecommunications tightened the grip of the British news media on the information that passed to the ‘Outer World’. In more subtle ways, the circulation of news, information and ideas, the prestige and volume of cultural (as well as material) imports, and the freer movement of pilgrims, tourists and migrants reduced the influence of local or regional identity. The scope for imperial or ‘pan-British’ loyalties (among others) was widened. It was not fantastic before 1914 to imagine a ‘liberal empire’ attached to Britain by cultural and ideological as well as commercial attraction.

But the commercial engine-room of this free-trade empire had been damaged by the war, and its machinery dislocated. With its resources straitened, its integrating function in the British world-system was throttled back. Without the carrot of credit, the stick of discipline was much harder to wield. The new technologies of transport and communications, the vital circuits of imperial power, were more difficult to fund. The full modernisation of military power – the top priority of pre-war governments – was too costly to contemplate. The expansive energies symbolised by the huge outpouring of capital and migrants before 1914 were checked, though post-war emigration revived for a while. But, when the world economy collapsed into depression after 1929, the imperialism of free trade would beat a final retreat in the face of a new world order.

The politics of solidarity

The war was bound to strain the political relations between Britain and its most important partners in the imperial association. The contributions in men or money made by the dominions, India and Ireland to the imperial war effort became a central issue in their local politics. The question was even more sharply posed in those other countries where British rule (or its virtual equivalent – as in Egypt) had commandeered the resources to fight or imposed stringent controls on grounds of security. In East and West Africa, for example, the ‘sideshow’ wars for German colonies meant labour conscription and social disruption on a major scale. Death, separation, disease and famine for Africans followed in the wake of the imperialists’ grand quarrel. During the war, but mostly at its end (since wartime regulation restrained public debate), the political cost of ‘British connection’, the hope of reward for imperial loyalty and the demand for compensation for sufferings borne, reopened long-standing questions about the ordering of the imperial system.

War politics in Britain

Britain was no exception to this general rule, although the debate about empire was more muted than elsewhere. British leaders had always been wary of the complaint that empire had become too costly. They were uneasy with the claim that imperial expenditure benefited the few and cost the many. ‘The more the empire expands, the more the Chamberlains contract’ had been the radical gibe against Joseph Chamberlain's expansionist enthusiasm – a reference to the family's manufacturing interests. Before 1914, however, when the most visible charge of empire had been the soaring budget of the Royal Navy, radical criticism was aimed not at the intolerable burden of defending the empire but at the unproven need to defend Britain with such costly armaments. With the navy concentrated in the North Sea, it would have been hard to argue that it was imperial commitments that were costing Britain dear. So, unlike the mid- or late-Victorian radicals, who denounced feckless empire-building in India and Egypt as the enemy of domestic peace, Edwardian radicals were bound to take a different tack. But the argument that battleship-building was the needless provocation of a peaceable Germany,
⁶⁴
or that colonial concessions would appease a disgruntled Berlin, had limited purchase on public opinion. It was the dispute over how much naval power was needed to defend Britain itself that was the real threat to the admirals’ plans.

The immediate
casus belli
(the integrity of Belgium) and the shock of the German advance reinforced the pre-war consensus that the target of German aggression was British independence and great power status in Europe. From first to last, the Western Front consumed by far the largest proportion of British resources and the largest toll of British dead. It preoccupied British opinion to the exclusion of almost every other theatre. In this titanic struggle, the role of Britain's imperial partners and dependants became assistance in the common cause. With Canadian, Australian, New Zealand, South African and Indian troops on the Western Front, it would have been strange to complain that the Empire was a drain on British power.

Yet its converse, the idea that ‘closer union’ with the Empire countries (especially the white dominions) was now essential to British survival, peddled by self-styled ‘imperialists’ before the war, made limited headway. For the first eighteen months of the war, it was blocked by the survival of the Asquithian consensus, remodelled as a coalition ministry in May 1915. Asquith's fiercest critics had been Milner's band of followers.
⁶⁵
They denounced the refusal of the Asquithian regime (and its coalition Tory allies) to accept the logic of total war and cast off the mentality of
laissez-faire
. They looked forward to cleansing the Augean stable of party politics with its ‘old gang’. They hoped for a new alignment in which ‘imperialism’ – offering social reform, a more pro-active state and ‘closer unity’ with the white dominions – would confront ‘socialism’ – the disruptive forces of class warfare, anti-imperialism and anti-capitalism. A modernised imperial state, mobilising British and imperial resources, and commanding the ‘race-patriotism’ of British peoples at home and abroad, was needed if Britain was to survive the struggle of ‘world states’ that the war represented. Had the war ended in 1915 or 1916, they would have remained voices crying in the wilderness. But, by the latter part of 1916, the Milnerites had found powerful new allies. Lord Northcliffe, proprietor of
The Times
and the
Daily Mail
, had joined the chorus against Asquith. So had Sir Edward Carson, the uncrowned king of Ulster and darling of the Tory ultras against Home Rule. But it was Lloyd George's revolt against Asquith that was decisive.

From the early months of the war, Lloyd George had been the Liberal minister most identified with the building of a war economy. As minister of munitions and then Secretary of State for War (after Kitchener's death), his political influence (perhaps survival) depended upon military success. By late 1916, he was as radically discontented with Asquithian complacency as the Milnerites, with whom he had secret contacts. When Asquith reneged in early December upon an agreement to hand over daily management of the war to a small committee under his presidency, Lloyd George resigned. But to the chagrin of the Asquithians, it was he who won over their Tory allies, and a critical following among Liberal MPs, to form a new government whose mandate was victory at (almost) any price. In this new regime, the Milnerites were strongly represented – a sign of Lloyd George's openness to new ideas and his need for a network that would help break the grip of the Asquithian ‘establishment’. Milner himself became a member of the small ‘war cabinet’ of five and Lloyd George's first lieutenant in the running of the war. Bonar Law, the Tory leader, was the indispensable guarantor of a Commons majority. And Arthur Henderson was the vital link with the trade unions and Labour. But Milner, with his knowledge of finance, his military and dominion connections and (as an Old Egyptian Hand) his Middle East expertise, became the workhorse of the war effort. In Lloyd George's eyes, he had other virtues as well. ‘Milner and I stand for very much the same things’, he told his confidant, the newspaper proprietor George Riddell, in February 1917. ‘He is a poor man and so am I. He does not represent the landed and capitalist classes any more than I do. He is keen on social reform and so am I.’
⁶⁶
To an embattled prime minister dependent on the support of his bitterest pre-war enemies, trust was a luxury. But Milner, he told Riddell a year later, ‘is a man of first class courage’.
⁶⁷

The question was whether Milner and his followers would be able to turn Britain's domestic politics in the imperial direction for which they longed. Many omens were favourable. The party system against which Milner had railed was to all intents suspended. Public opinion was shaped more by the press than by parliament, and the Milnerites had plenty of friends in the press: it was their natural element.
The Times
was practically their house journal, its editor, Geoffrey Dawson, one of Milner's protégés. On the economic front, the food crisis of 1917–18 and the dollar shortage drove home their pre-war arguments for domestic and imperial self-sufficiency. Milner's Corn Production Act (1917) was designed to renovate Britain's dilapidated agrarian economy by incentives and controls.
⁶⁸
The report of the Dominions Royal Commission urged the creation of an imperial development board to channel investment into Empire resources. Another committee urged tariff protection for strategic industries. Milner himself played an active role in making a new Ministry of Health to spearhead social reform and post-war ‘reconstruction’. The siege economy would be reborn in peacetime as the engine of a new imperialism.
Laissez-faire
and ‘cosmopolitanism’ would be swept away.

In fact, the Milnerites’ ambition outran their influence. In September 1918, Milner pressed on Lloyd George the importance of not returning to the ‘old ways’. The key question was now ‘national development’. ‘The business nation should deal on specially favourable terms with its friends among the nations, and, first and foremost, with its own kith, the nations of its own civilisation and ideals, who can be reckoned on to be
always
friendly.’
⁶⁹
Lloyd George ignored him. There was little support for Milnerite reconstruction at the end of the war: quite the contrary. From business interests there were vehement demands to dismantle the apparatus of wartime controls on profit and production, reducing the scale and scope of government intervention as nearly as possible to its pre-war proportions. The call for a return to ‘normality’ was powerfully seconded in the City, which hoped for an early return to its old financial freedom. Secondly, it turned out that the war had suspended the party system but not destroyed it. A new ‘imperial’ constitution to smash the parties’ grip was as far away as ever. Proportional representation, which Milner favoured for similar reasons,
⁷⁰
was not adopted, and, though the coalition was renewed in December 1918, the huge Conservative majority in the post-war Commons soon proved as stultifyingly parochial as its pre-war counterpart. Thirdly, and chiefly, the war had mobilised a powerful new enemy to the Milnerite vision of tariff reform and imperial unity: organised labour.

The outbreak of the war had split the Labour party. The party leader, Ramsay MacDonald, opposed entry. The trade union leaders, who supplied the party with its funds and membership, supported the government. As the party's
de facto
chief, Arthur Henderson joined the Asquith coalition and then the Lloyd George war cabinet. But trade union patriotism was not without strings. ‘Dilution’ (the replacement of skilled by unskilled labour for the duration) was unpopular: any form of industrial conscription was anathema. The system of ‘leaving certificates’ (to permit a change of employment) was a constant source of friction. Price rises evoked fierce complaints about profiteering. There was a widespread suspicion that employers would exploit wartime flexibility in the workplace to drive down wages once peace had come. As inflation accelerated, shortages increased, and the struggle for manpower intensified, ‘unofficial’ militancy grew and strikes proliferated. Trade union membership swelled from 3.4 million in 1913 to 5.4 million five years later. In the Labour movement as a whole, early support for the war modulated into a more questioning attitude. American intervention and revolution in Russia heightened anticipations of a new world order. By the end of 1917, party differences over the conflict had been largely reconciled. The anti-war faction now commanded general approval for a ‘peace of democratisation’, with a limit on armaments, no annexations, and ‘the abandonment of any form of imperialism’.
⁷¹
When the Labour party adopted a new constitution in January 1918, with individual party membership and a countrywide electoral organisation, a formidable new opposition was in the making.