Darwin J. The Empire Project. The Rise and Fall of the British World-System, 1830-1970

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265 / The Edwardian transition

sympathy. Careerist soldiers, unscrupulous concessionaires and reli-

gious mystics touted their reckless projects amid grandiloquent talk of

the Romanov mission. With so insatiable and unpredictable a power,

the partition diplomacy that was Salisbury’s forte stood little chance of

success. This was a gloomy and misleading view of the Russian polity.

But it reﬂected the feeling of impotence in the face of the northern

leviathan: the ‘invulnerable power’ of Selborne’s warning, the ‘inland

tyranny’ immune to naval chastisement in Lord Salisbury’s regretful

phrase. It was fuelled by the paranoid fear that a Russian attack on

the Indian frontier would spark a second Mutiny and bring down the

Raj from within. It was grudging acknowledgment that Russian empire-

building was on a scale as vast as Britain’s and that the colonising drive,

celebrated by Russian historians as much as by British, had accelerated

in the late nineteenth century. As its railways reached further, tighten-

ing its grip on its vast peripheries, Russia’s domination of North Asia

seemed certain to grow.

Instead, it received a violent check. Defeat by Japan in 1905

revealed the latent weakness of the Russian system and the fragile foun-

dations on which Tsardom had erected so imposing a superstructure.

Economic backwardness was the root of the problem. Low agricul-

tural productivity, a narrow industrial base, a stunted rail network

and dependence upon foreign capital were the real index of Russian

power and a massive brake on strategic freedom. Economic weakness

reinforced (and was aggravated by) demographic inadequacy. Ethnic

Russians were too few (forming 45 per cent of the Empire’s popula-

tion) and much too immobile to dominate the minorities that Tsar-

dom had conquered. The frontiers of empire could not be closed: they

were too porous to seal off the external connections that made the

loyalty of frontier peoples so doubtful in time of crisis. In fact, the

Empire remained a multi-ethnic construct to its very core since Tsardom

had advanced not by building up a Russian state but by collaboration

with non-Russian elites – in the Ukraine, the Baltic, Poland, Finland,

Georgia, Armenia and elsewhere. Nor was Russian culture a substitute

for political weakness since it lacked the absorptive quality or universal

appeal to attract the European and Islamic minorities under Tsardom’s

sway.

The result was an imperial power whose size and spasmodic

aggression masked weaknesses laid bare in the military catastrophe of

1905, and the near implosion of the whole regime. Thereafter, it was

clear that for some time to come a forward movement in North Persia

266 / Towards ‘The Sceptre of the World’

or towards the Straits would require the support of either Germany or

Britain. Without one or the other, the outcome would be humiliation –

a lesson conﬁrmed in the Bosnian crisis of 1908.

In ofﬁcial circles, the

need for caution was well understood.

To a realist as brutal as Peter

Durnovo, the saviour of Tsardom in 1906, internal cohesion could

hardly survive the effects of a European war. The age of expansion was

over, he thought. The age of crisis was about to begin.

Britain’s greatest rival, judged by population and output, lay

not in the Old World but in the New. Anglo-American antagonism was

much older than Anglo-German. Relations had improved in the later

nineteenth century. But, in the Caribbean and Central America, there

had been persistent friction between the old colonial power and the new

commercial prodigy. Canadian mistrust of American expansionism was

a further complication. Then, with the Spanish-American War of 1898,

the United States became an imperial power. It annexed Hawaii and

tightened its grip on the Central Paciﬁc. As ruler of the Philippines, it

could claim new inﬂuence in maritime China. As master of Cuba, it

dominated the Caribbean. But the most signiﬁcant change, from the

British point of view, was the new commitment to naval power in the

presidency of Theodore Roosevelt (1901–9). By 1907, he had persuaded

the Congress to fund the building of a ﬂeet second only to Britain’s.

For the embattled Royal Navy, a new sea challenge to its rear joined

the new sea challenge to its front.

If Tirpitz had been right, the rise of American sea-power would

have sealed Britain’s global fate. For Tirpitz believed that common

antagonism to British supremacy was the natural policy of all sea

states.

The reality was very different. The British were certainly at

pains to conciliate American opinion. Soon after 1900, they had tac-

itly acknowledged that a war with the United States was militarily

unwinnable and politically unthinkable. America’s new status in the

Caribbean was recognised in the Hay-Pauncefote treaty of 1901 when

Britain disclaimed any interest in the Isthmus of Panama. Britain was no

enemy of the Monroe Doctrine, declared Arthur Balfour in the House

of Commons.

When the puppet state of Panama was carved out of

Colombia with American help in 1903, and a canal zone leased in per-

petuity to Washington, the way was open for an American-owned ‘path

between the seas’.

The balance of power had shifted abruptly in the

Western Atlantic – or so it seemed.

Meanwhile, the inexorable rise of

the American economy was a source of commercial unease in London.

267 / The Edwardian transition

But none of this meant that America now threatened the British world-

system.

There were several reasons for this. American opinion was still

too ‘continentalist’ in outlook to be converted to the ‘navalist’ views

of Roosevelt or his successor Taft. After 1908, their ambitions were

reined in by a sceptical Congress.

Secondly, American sea-power was

hobbled by the need to guard two oceans, separated before 1914 by

the voyage round Cape Horn. Thirdly, as Roosevelt gradually saw,

American interests in China had been exposed by Russian defeat to the

pressure of Japan, an ally of Britain since 1902. The Philippines looked

less like a salient in Asia than a hostage to naval fortune. Fourthly, the

onset of revolution in Mexico in 1910 renewed the old American night-

mare: European (or even Japanese) intervention to check the assertion

of Washington’s inﬂuence in its own ‘backyard’.

The timing here was

crucial. For, as completion of the Panama Canal crept nearer, strategic

control of the Caribbean and its approaches loomed larger and larger

in American concerns.

As a result, the social and cultural rapprochement between

Britain and America, and the racial appeal of ‘Anglo-Saxonism’ on both

sides of the Atlantic, had its counterpart in diplomacy. If British leaders

repudiated all thought of Anglo-American conﬂict, it was no more

thinkable in Washington. British naval supremacy, remarked Theodore

Roosevelt, was ‘the great guaranty for the peace of the world’.

For

Roosevelt, a large and efﬁcient United States Navy would be ‘the junior

member of an informal two-power alliance’ tilting the international

balance towards Anglo-American interests.

The cold calculations of

naval planners were based on the same assumption. Japan (‘War Plan

Orange’) and Germany (‘War Plan Black’) were the likely enemies.

A German attack was only possible in the ‘highly improbable’ event of

British acquiescence. To American opinion, concludes a recent study,

the real guarantor of its Atlantic security was British not American

sea-power.

On this calculation, the United States looked less like an

imperial rival and more like a forceful, determined ‘super-dominion’.

These checks and balances in the scope of great power ambition

help to explain why the theoretical vulnerability of Britain’s vast and

straggling empire, sprawled across the globe, as one ofﬁcial remarked,

like ‘a gouty giant’, was not translated into territorial loss. By the yard-

stick of relative power, the British system was surprisingly strong. It

could not be encircled. Its rivals were at odds. Its lines of communication

268 / Towards ‘The Sceptre of the World’

were secure – unless naval catastrophe occurred in Europe. These were

the assets that Edwardian strategy was designed to exploit. But, as the

policy-makers came to realise, they could not be turned to account with-

out a more or less drastic revision of the old assumptions of Salisbury’s

Realpolitik.

The South African War had been the forcing-house of change.

International isolation and the unrealised threat of a great power com-

bination against them left a lasting impression on British leaders. Post-

war tension with Russia and Germany drove home the lesson that their

imperial ambitions could not be contained by sea-power alone. In the

Foreign Ofﬁce, a diplomacy of studied caution seemed the only cure for

Britain’s exposed position. ‘A maritime state’, remarked a leading ofﬁ-

cial, ‘is, in the literal sense of the word, the neighbour of every country

accessible by sea.’ To avoid falling foul of a hostile coalition, it must

aim to ‘harmonize with the general ideals common to all mankind’,

paying careful attention to ‘the primary and vital interests of a

majority . . . of the other nations’.

Britain could not hope to frustrate

the ambitions of all its rivals, was Crowe’s implication. A new realism

was necessary. This mood was shared even by the most ebullient of

Edwardian politicians. ‘We are not a young people with an innocent

record and a scanty inheritance’, Winston Churchill told his cabinet

colleagues in January 1914. ‘We have engrossed to ourselves an alto-

gether disproportionate share of the wealth and trafﬁc of the world. We

have got all we want in territory, and our claim to be left in the unmo-

lested enjoyment of vast and splendid possessions, mainly acquired by

violence, largely maintained by force, often seems less reasonable to

others than to us.’

The spirit of Edwardian diplomacy was pragmatic acceptance

that Britain now had to compete with ‘world states’ of broadly equal

capabilities and appetites. A second insight followed. More than ever

before, retreat into blue water isolation was impossible. The gradual

integration of world politics since the 1880s was now complete. The

fate of distant regions could not be localised: faraway rivalries led back

ineluctably to the balance of power in Europe. The future of China,

the Arab Middle East, Portuguese Africa or the Belgian Congo would

be settled by the European great powers with the United States and

Japan as their junior partners. Alarming from one point of view, this

vision of a Eurocentric globe offered some consolation. It seemed to

rule out the danger that Britain’s rivals could make dramatic territorial

269 / The Edwardian transition

gains by a military or diplomatic coup. The existing distribution of

global inﬂuence and the colonial ‘share-out’ it embodied could only

be changed by diplomatic agreement. Unless, that is, it was upset by a

major breakdown of the European balance and the sudden emergence

of a dominant superstate. The logic of this was that the British system

could best be protected by the strenuous exercise of Britain’s inﬂuence

in European politics, with the right to be consulted, and the capac-

ity to intervene, if the continental balance were at risk. To many late

Victorians, the prospect of alliances and alignments with the continen-

tal powers had been unwelcome, even dangerous, and the threat of a

European combination against them a real one. To their Edwardian

successors, it seemed that the latent conﬂicts between the European

powers now ran so deep that only by incompetence or abdication could

Britain be isolated. This was the lesson of the ententes with France and

Russia. An active, ﬂexible diplomacy in Europe was thus the best guar-

antee of imperial safety. The ‘balance of power’ was not just an ideal:

to the assumptions on which Edwardian diplomacy was based it had

become a necessity.

These elements of Edwardian grand strategy crystallised in

1912 as the naval competition with Germany intensiﬁed. London

rejected the German demand for its neutrality in a future war as the price

of a naval ‘holiday’. The whole point of naval primacy was to ensure

Britain’s capacity to intervene against disturbance of the continental

equilibrium. Indeed, maritime power was her principal claim to great

power status. The cost, as we have seen, was an even greater concentra-

tion of naval strength in the North Sea to deter aggression by Germany.

The consequence was a naval withdrawal from the Mediterranean, the

sacriﬁce, on a superﬁcial view, of imperial to domestic safety. But the

senior ministers of the Asquith cabinet vehemently rejected this impli-

cation. Churchill (First Lord of the Admiralty), Haldane (Secretary of

State for War), Lloyd George (Chancellor of the Exchequer) and Grey

(Foreign Secretary) all agreed that Britain’s Mediterranean interests

would only be in danger if she had ﬁrst been defeated in the North

Sea. Whatever setbacks she might suffer in the region would quickly

be reversed once command of the sea had been gained in the deci-

sive northern theatre.

And, anyway, Churchill insisted, by 1915 the

Royal Navy would be strong enough to return in force.

Meanwhile,

overwhelming strength where it mattered most, and the purchase that

gave in European diplomacy (above all in securing the friendship of

270 / Towards ‘The Sceptre of the World’

France), were the real foundation of British world power. They were

the vital source of leverage against the aggressive designs of rival pow-

ers; the best guarantee that, short of an earthquake in world affairs,

any redivision of the global spoils could only be slow and partial. And,

while British claims to new territory or wider spheres were sure to be

contested, there was no reason to think that holding what she had (no

mean inheritance) was now beyond her means.

The credibility of these assumptions would soon be tested in

the First World War. But, in the meantime, the combination of entente

diplomacy and naval concentration had achieved a striking recovery

from the isolation and vulnerability that British leaders had feared dur-

ing and after the South African War. More to the point, it had done so

without driving a wedge between the different elements of the imperial

system. Of course, the British taxpayer bore the overwhelming brunt

of the ﬁnancial burden. In that sense, a revolt at home was always

the greatest threat to imperial cohesion. There were acrimonious strug-

gles in cabinet over the naval estimates in 1908–9 and again in 1914.

But, despite the demands of welfare reform and a ﬁerce parliamentary

lobby against the surging costs of the naval programme, domestic opin-

ion accepted the dramatic rise in naval spending (from £31 millions a

year in 1904 to £51 millions in 1914). It did so in part because the

invasion of Britain seemed as great a danger as the loss of empire –

exactly the premise on which both foreign and naval policy depended.

Indeed, naval and diplomatic doctrine rendered meaningless the distinc-

tion between domestic and imperial interests. In the white dominions,

this formula was less readily accepted. Dominion public opinion had

been roused by the fear that Britain’s naval decline would expose the

Empire to external attack. If the Empire were broken up, remarked

the (New Zealand) Nelson Evening Mail, ‘in ten years the Asiatic pop-

ulation of New Zealand would exceed the European’.

In Canada,

however, the dominion’s response was caught up in a bitter party quar-

rel between those who favoured a local ‘tin-pot’ navy and those who

preferred a direct contribution to the cost of new dreadnoughts – the

policy of the premier Borden after 1911 but blocked by his opponents

in the Senate. In the Paciﬁc dominions, where the results of Churchill’s

concentration policy were felt most acutely amid growing mistrust of

Japan, there was marked reluctance to see the battleships built by local

money deployed far away in northern Europe. ‘As a Briton’, remarked

the New Zealand defence minister, ‘[I] would like to see a consolidated

271 / The Edwardian transition

Empire strong enough to stand without the Entente cordiale.’

In prac-

tice, Australian and New Zealand leaders had little option but to accept

Churchill’s insistence that their security lay not in little local ﬂotillas

but in the Royal Navy’s ability to face down the threat to its maritime

primacy. ‘The situation in the Paciﬁc’, he told them in April 1913,

‘will be absolutely regulated by the decisions in the North Sea’.

After

all, whatever its shortcomings, this version of imperial defence was

plausible. The alternative, a more far-reaching coordination of military

resources, might restrict the autonomy of dominion governments with-

out giving them more inﬂuence on British grand strategy. Indeed, the

great success of Liberal policy after 1905 had been a credible defence

of British world power without recourse to Chamberlainite schemes of

imperial unity and tariff reform. More remarkably still, at a time of

rising international tension, it avoided the necessity of levying heavier

costs on India, so long the milch-cow of imperial defence. A heavier

load on the Indian taxpayer would have aggravated the resentments

that Morley’s reform was meant to soothe. Instead, from 1904 to 1914

(while Britain’s defence spending was doubled), the Indian military

budget rose barely at all.

In the decade before the outbreak of war, British leaders

exploited the errors and weaknesses of their imperial rivals and the

new opportunities of global politics. They reinforced Britain’s role

as the strategic guardian of her worldwide system and in doing so

shored up her imperial authority. But they had not of course devised

a ﬁnal solution to the problem of imperial security. Nor could they

rule out extending the territorial burdens over whose vast scope ofﬁ-

cial opinion was always fretting. In the partitioned world, re-partition

was likely sooner or later. Portuguese Africa and the Belgian Congo

might change hands if their owners went bankrupt or their commer-

cial life became dominated by foreign interests – an outcome that Grey

regarded as all but inevitable.

Indeed, Britain and Germany reached

agreement in principle on the division of Portugal’s colonies in 1913.

In the unpartitioned world, the difﬁculties of an amicable share-out and

the risks of collision were considerably greater. In China, the revolu-

tion of 1911 had installed an unstable republican regime. The break-

down of central authority and the rise of regional warlords seemed

likely to test the cooperation of the outside powers – Britain, Russia,

Germany, France, the United States and Japan – even more than the

Boxer Rebellion of 1900. Defending Britain’s large slice of the Chinese

272 / Towards ‘The Sceptre of the World’

commercial cake was unlikely to grow easier or its diplomatic and mil-

itary costs less burdensome.

Most dangerous of all was the political

ﬂux in the Near and Middle East. In Persia, it seemed more than likely

that the insistent pressure of Russian inﬂuence in the north and the

gradual detachment of whole provinces like Azerbaijan (where there

were 10,000 Russian troops by 1913) from Persian control would be

mirrored in a British quasi-protectorate in the south and southwest of

the shah’s dominions – a tendency that the British oil concession there

was bound to accentuate.

In the Persian Gulf and in the Hedjaz –

the seat of the Muslim Holy Places – the British watched uneasily as

the new ‘Young Turk’ regime in Constantinople cut down the free-

doms of local notables – like the Sherif of Mecca, hereditary guardian

of the Holy Places – and drove its railways and garrisons deeper into

Arabia. An Ottoman ‘forward policy’ would push up the cost of British

inﬂuence.

Worse still, after its catastrophic losses in 1912–13 (Libya,

the Dodecanese, Crete and the rest of Ottoman Europe save Eastern

Thrace), the Ottoman Empire might become the catspaw of Germany.

In the Baghdad Railway agreement of 1914, the British insisted that

no German-owned railway be allowed to reach the Gulf and challenge

their political and commercial inﬂuence there. But here, as in North

Persia, the British were well aware that the mutual antagonism of their

European rivals was the key to the economical defence of their regional

interests.

British leaders had made the best of the new geopolitical uni-

verse. They had squared the circle of domestic reform, imperial unity

and great power rivalry. Buoyant revenues and diplomatic fortune had

come to their rescue. But a real equilibrium had eluded them. Ultimately,

their ‘system’ depended upon the stability of great power relations in

Europe and the conservative ethos of ‘old diplomacy’. It assumed that

general war was improbable and that, if it broke out, neither side could

gain decisive victory. It rested upon the accidents of dynastic politics in

Central Europe, and the fate of Europe’s semi-colonial periphery in the

Balkans. But Europe was not the still calm centre of a restless world.

And its stresses were soon to erupt with volcanic force.

The political economy of Edwardian Empire

The cohesion of the British world-system depended in the last resort

upon Britain’s independence and the guarantee of strategic protection

273 / The Edwardian transition

offered by her naval and military power. But it was unlikely to last long

if the British economy began to lose speed. Yet, by some measures, eco-

nomic decline seemed to have set in by 1914. The era when Britain had

been the unchallenged workshop of the world was over. In Germany

and the United States, new industrial economies had grown up. In both

iron and steel production (the basic index of industrial power), they had

outstripped the ﬁrst industrial nation. American output was three times

as great; German production of crude steel was twice that of Britain

by 1910.

As they industrialised, both Germany and the United States

closed their doors to many British-manufactured imports, driving them

towards other markets. Worse still, they began to compete strongly in

export markets favoured by British manufacturers, especially in Europe,

and invaded the home market as well. Not surprisingly, Britain’s share

of world trade fell steadily. Manufactures began to make up a larger

share of British imports, rising to some 25 per cent by 1913. And,

while Germany and the United States moved rapidly into the second

generation of industrial products – electrical goods, chemicals, motor

vehicles – Britain seemed to lag behind. Technological conservatism

and excessive dependence upon ‘old-fashioned’ industries like cotton

textiles, signalled an apparent loss of managerial dynamism, the onset

of commercial sclerosis, and the triumph of a complacent upper-class

amateurism over the scientiﬁc management demanded by the scale and

scope of modern industry.

The implications of failure to compete with the most advanced

and successful industrial economies were dire. If the British economy

grew less swiftly than its main competitors, British consumers would

become (relatively) poorer, and their demand for the commodities of

Britain’s trading partners in the extra-European world would slacken.

If British technology stagnated, then new industries would be slow to

emerge when old products like textiles could no longer compete with

lower-cost rivals in the industrialising world. If neither exports nor

imports kept pace with those of rival powers, Britain would gradually

lose its claim to be the marketplace of the world, and the natural ter-

minus of the world’s merchant shipping. And, as the proﬁts of trade

and industry declined, it might be harder to ﬁnd the capital for the

investment overseas whose proceeds had buoyed up the buying power

of the British consumer. Britain’s trading partners within and without

the Empire would turn instead to new sources of capital, to new and

more vigorous markets, and to more up-to-date suppliers of the tech-

nologies and manufactures they needed. As the vicious circle tightened,

274 / Towards ‘The Sceptre of the World’

the means to sustain the costly apparatus of world power – the expense

of which was subject to constant inﬂation – would begin to dry up. The

allies and associates of the British system would drift at best towards

centrifugal autonomy, at worst towards a new constellation of imperial

power. The British would enter the well-ﬁlled graveyard of empires.

But it is easy to exaggerate the symptoms of commercial decline

and misleading to assume that the British economy was competing

head on with its American and German counterparts. In trade as in

strategy, the interests and capacities of Britain’s main rivals limited

the sphere of outright confrontation. The peculiar trajectory of British

economic development meant that it complemented the growth of new

industrial powers as much as competing with them. It was the viability

of this ‘economics of coexistence’, rather than a Darwinian struggle

for industrial supremacy, that would determine the fate of the British

system.

In 1913, the four largest industrial economies in the world were

the United States, Britain, Germany and France. The American economy

had the largest output (at around £8 billion a year in current prices).

Britain and Germany had smaller economies of roughly equal size

(different estimates place Britain’s GDP at between £2.2 and £2.5 bil-

lion, Germany’s at £2.8 billion). France trailed some way behind; Russia

was an industrial minnow. But this crude ranking conceals important

differences. The British had little in common with the other industrial

powers. They were still the world’s greatest trader. Though their share

of world trade had fallen with the huge increase of commercial trafﬁc,

they still exported and imported far more than any other state: 40 per

cent more than Germany in 1913, nearly 60 per cent more than Amer-

ica. Their share of the world’s manufactured exports at 30 per cent was

comfortably ahead of both. With commercial primacy went a com-

manding superiority in shipping and business services. In 1907,they

earned from these some £107 million, nine times the American ﬁgure.

Britain’s steam-powered mercantile ﬂeet of over 10 million tons was

four times the size of Germany’s. British overseas banks were ubiqui-

tous and their ﬁnancial services indispensable to international business

outside Europe and North America.

Their strength and importance

owed much to London’s unrivalled status as an international money

market. At more than £4 billion, British overseas investment made up

some 44 per cent of the world’s total of foreign-owned capital in 1913.

It was more than twice the size of France’s, more than three times