On the eve of his departure from office in July 2016, Prime Minister David Cameron declared that the Foreign and Commonwealth Office (FCO) was now much more commercially minded than it was when he came to power. 1 âSix years agoâ, he said, âI gave some very clear instructions to the Foreign and Commonwealth Office. To our diplomats and our staff overseas I said: you are also our trade envoys. To our embassies and high commissions I said: you are the shop windows for Britain.â 2 Back in 2010 the British Government declared that it intended to lead the country out of recession through an export led recovery, with British foreign policy becoming more commercially focused and British diplomats playing a role in facilitating this export drive. 3 One of the FCOâs three foreign policy priorities, along with safeguarding the UKâs national security and supporting British nationals abroad, was to build the UKâs prosperity by increasing exports and investment, opening markets, ensuring access to resources and promoting sustainable global growth. 4 Many diplomats would say that it was ever thus; that every government invents commercial work when it comes into office. Diplomats have always had an important role in creating markets, both by removing barriers to trade and developing the international rules-based economic system, and also by supporting UK firms through the provision of commercial intelligence. But the target to effectively double the value of the UKâs exports by 2020âto ÂŁ1 trillionârevealed a scale of ambition not seen since the 1960s and 1970s when worsening balance of payment figures made exports a political priority and a number of high-profile inquiriesâPlowden, Duncan and Berrillâpushed trade promotion up the Foreign Office agenda. The trade agenda has been elevated even further with the UKâs decision, in a referendum of 23 June 2016, to leave the European Union (EU). Brexit will bring new opportunities for British trade but also huge challenges, with new trade agreements needed with other countries to replace those lost when the UK eventually leaves the EU, and an even greater emphasis is likely to be placed on government support.
This fresh emphasis on commercial objectives once again brings into focus the relationship between the Foreign Office and commerce. This volume looks at aspects of this question as it considers the interface of British foreign policy and commerce in the twentieth century. The century saw a change in the attitude of Foreign Secretaries and their staff, at home and overseas, towards commercial interests; sometimes willingly, often reluctantly. It saw institutional and structural changes in how economic and commercial work was handled both within the Foreign Office and embassies, and within Whitehall more generally. It saw Britain having to come to terms with a century of industrial and economic decline, relative or otherwise. The century also saw trade and commerce becoming an inseparable element of foreign and security policies, whether dealing with Germany and Japan during the 1930s or the Soviet bloc during the Cold War.
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Governments have always acknowledged the importance of trade and commerce to Britain. âBritish policy is British tradeâ declared Pitt the Younger. 5 In a Commons debate on the consular establishment in 1842 Disraeli argued that any distinction between political and commercial interests âwas fanciful and arbitrary; incapable of definition, and defying analysisâ. 6 But the exact limits and nature of assistance rendered by government to British commercial interests overseas are more problematical.
For much of the nineteenth century the Foreign Office took a narrow view of its responsibilities towards British trade and investment. It believed that its primary function was to secure equal opportunities for British trade in the markets of the world rather than assisting individual merchants. 7 This reluctance to intervene came partly from the prevailing orthodoxy of the day: the policy of free trade and economic laissez-faire, which deemed that British merchants should be left to prosper by their own skill and initiative. It also stemmed from the fact that the aristocratic diplomatic class had come to consider commercial activity as something beneath their status. This stigma continued even as recruitment opened up to the professional middle classes. Postings where the work was seen as being predominantly commercial in character, rather than political, such as in Latin America, were viewed less as a stepping-stone in a career path than a tombstone. 8 A Commercial Department was established in the Foreign Office in 1865 but was underpowered in terms of resources and support and relied heavily on the Board of Trade, the department responsible for commercial policy, for advice. 9 In addition, British consuls also had a principal duty to protect and promote British trading interests overseas by âfair and proper meansâ, but the consular service was underpaid and understaffed and its performance varied in different parts of the world. Furthermore, the range of functions consuls were expected to perform grew steadily during the nineteenth century to cover notarial, shipping and state duties. 10
The issue of state support became of increasing concern from the 1870s when Britainâs early industrial lead began to wane and manufacturers and traders faced increased competition from other countries. The UK share of world export of manufactures peaked during that decade at around 46 per cent but this fell to 28 per cent by 1913. 11 Periodic inquiries saw the diplomatic and consular service face calls for better support to be made available to the commercial community. The Foreign Office began appointing commercial attachĂ©s in 1880 and by 1914 there were eight of them, based in Paris, Constantinople, Tokyo, Peking, Frankfurt-on-Main and three in London (covering Austria-Hungary, Italy and Greece, Russia, and Spain and Portugal). 12 But their duties were broad and their remits were wide, and they still did not include direct assistance to individual traders. 13 A Royal Commission on the Civil Service reported in 1914 and recommended reforming the consular service and making better use of commercial attachĂ©s, but these changes were delayed due to the outbreak of the First World War. 14
During the war the Foreign Office became intimately involved with economic issues through the blockade of the Central Powers, first through the Contraband Department and later the Ministry of Blockade, which was nominally under the control of the Foreign Office and staffed by its personnel. 15 Its administrative head was the indefatigable Sir Eyre Crowe, whose father, Sir Joseph Crowe, had been the first commercial attaché. The dislocation of British export trade during the war, increased competition from the USA and fears of a post-war German trade revival meant that the recovery of trade was a matter of urgency. The issue of commercial intelligence, both its collection abroad and its dissemination at home, became of paramount importance too. It was obvious to Crowe, and others, that commercial affairs could no longer be separated from normal diplomatic work as had been the case before the war. 16 However, the Foreign Office and the Board of Trade clashed over whether the promotion of commercial interests overseas was part of foreign or commercial policy. The Board of Trade suggested that the consular service and the commercial functions of embassies and legations should be transferred to them, prompting the Foreign Secretary to write to the President of the Board of Trade that the Foreign Office should not be abolished without a hearing. 17 Businessmen feared that commercial issues would be too isolated from political concerns if the work was concentrated in the Board of Trade and thought the Foreign Office was best suited to dealing with commercial questions in foreign countries, if the commercial side of the Foreign Office could be developed along more efficient lines. 18
In 1917 a committee was appointed to investigate the problem, but the committee split over the question of collating and distributing commercial intelligence. Some of its members wanted the function to be transferred to the Foreign Office on the basis that it was in the national interest that those in charge of foreign affairs were kept in close and constant touch with commercial requirements. Others argued for the status quo, believing that closer co-operation between both departments could overcome the problems of dual control. 19 Yet it was this dual system that the business community saw as the worst feature of the old system and the underlying cause of nearly all the inefficiency and the lack of energy they complained of. 20 A compromise solution was adopted with the creation of a Department for Overseas Trade (DoT), jointly controlled by the Foreign Office and the Board of Trade, with the remit to improve the promotion of British trade abroad and the dissemination of commercial information at home. 21 The Department had an Overseas and a UK Division. The former was subdivided geographically and responsible for administering overseas services and collating economic and commercial information received; whilst the latter analysed reports from abroad from the point of view of benefiting industries at home. However, instead of unifying and simplifying commercial procedure all three departments simply overlapped. 22
Due to the unsettled state of affairs a committee was appointed in 1919, headed by Lord Cave, to determine the future of the system. The committee heard evidence from Sir Auckland Geddes, the President of the Board of Trade, who advocated the creation of a new âMinistry of Commerceâ combining both the DoT and the Consular Department with the Board of Trade. Sir Eyre Crowe, who returned from the Peace Conference in Paris specially to give evidence, recommended that the DoT be transferred to the Foreign Office, thus combining foreign trade with foreign policy. Representatives from the Chambers of Commerce and the Federation of British Industries (FBI) expressed the view that separating commercial from political work would be disastrous. Due to its prestige abroad the best policy would be for the Foreign Office to be âcommercializedâ and to take control of foreign commercial policy. However, the Cave Committee merely confirmed the status quo and recommended that the present system of dual control continue but that a standing committee should be established to facilitate discussion between all three departments. The consular and commercial departments of the Foreign Office should be transferred to the DoT along with the commercial diplomatic service (created in 1918 to replace the commercial attachĂ© service). 23
Despite the best of intentions, the post-war reforms served to increase the separation between trade and foreign policy. The Foreign Office became increasingly estranged from commercial work. The DoT now oversaw the commercial diplomatic service (CDS), which operated in foreign countries, and the trade commission service (which had operated in Dominion countries from 1908) although their instructions were issued in the name of the Foreign Secretary and the President of the Board of Trade respectively. Officers in the CDS were recruited from the consular service or business and were attached to British missions. Officers held titles corresponding to those in the Diplomatic Serviceâcommercial counsellors and secretariesâbut were described as being âofâ rather than âinâ the Diplomatic Service, 24 reinforcing the impression that trade was on a separate, lower level to political issues. The CDS took responsibility for commercial matters from their colleagues in the Diplomatic Service. To a number of officials in the newly amalgamated Foreign Office and Diplomatic Service this was unfortunate. Years of dealing with blockade issues had seen the Foreign Office work in a âsympathetic cooperation with the responsible managers of overseas tradeâ and economic work had proved a âsatisfying field of activity and a more tangible touch with realities ...