Passing on the baton
Lessons from the sun sinking on the British Empire.
For generations of children, the British Empire appeared in pink on maps.
Straddling the globe, stretch through Africa, the Caribbean and allowing a claim to a segment of Antarctica, India was the jewel in the crown, an empire in itself. Ownership of islands enabled Britain to project naval power. Victory at Waterloo had established London as the centre of world capital, from which Britain could project huge financial power.
’s Wealth of Nations newsletter this week included a section which drew on Prof Margaret Macmillan’s Foreign Affairs article, Making American Alone Again which explained how that concentration of power combined with a failure to enter into any permanent alliances led to Britain being viewed with opprobrium, especially during the Boer War:At the Paris Exposition in 1900, admiring crowds piled flowers at the Transvaal Pavilion. The realization of how much they were loathed shocked the British into seeing that even they needed friends. In short order, the British government reached understandings with its rivals France, Japan, and Russia, which lessened the chance of conflict with each and encouraged cooperation, and so mitigated the overstretch.
The war was politically divisive in Britain, with the Conservative government happy with it and the Liberal opposition denouncing it. In letters to his parents, John Maynard Keynes, then a King’s Scholar at Eton, frequently expressed bemused disappointment with his contemporaries’ enthusiasm for the barbarity of empire.
In deciding that it had to be part of the European system, Britain did not set aside its imperial pretensions. London remained the global centre of finance. That continued until 1917, when the cost of financing World War I turned Britain from the world’s great creditor into another European debtor.
By then, Maynard Keynes was in the Treasury, deftly organising financial support for Britain’s allies. In 1917, he was a junior member of the British delegation to Washington, charged with negotiating extensive lines of credit. His determined negotiating style won him few friends, but substantial respect.
Always a realist, Keynes knew that financial power had shifted irrevocably from London to New York. Though the Empire might still be intact, sooner or later, the USA would become the world’s leading political power.
He saw the attempt to return to the gold standard as an impossibly romantic dream of restoring London’s pre-eminence as a Conservative government supported the claims of finance rather than industry.
He also saw the American failure to understand the responsibilities which had devolved onto it as the world's leading creditor as destabilising Europe. By the time that Roosevelt overcame widespread isolationism, war was inevitable.
In that second war, Keynes had the influence to work out how to finance it without causing any substantial instability. His methods involved pawning the Empire. Even in victory, Britain would have to cast aside its imperial pretensions.
Seeing President Trump’s seeming disengagement with his country’s allies, I don’t think that 1900 is the appropriate moment. This is more like the moment in 1931 when Keynes lamented the return to power of “ageing, sclerotic conservatives” who were invested in imperial grandeur rather than economic reform.
The mantle of global leadership had long before slipped from Britain’s shoulders, but the United States had hesitated to don it. Today, we see economic power leaching from the United States - and China, Europe and India pondering how they might best demonstrate global leadership.