Constructing a Post-War Order

The Rise of US Hegemony and the Origins of the Cold War

Andrew Baker

• Publisher: I.B. Tauris
• Year: 2011
• ISBN:
  9780857732330
• Edition: 1
• Topic: Economics
• Subtopic: Political Economy
• Index: Economics

The years 1942 to 1946 saw the acceleration of World War II, its conclusion and the construction of a post-war order that was to culminate in the Cold War. Andrew Baker here examines the expansion of US political and economic power and hegemony during this period, and the extent to which smaller states, particularly Australia, New Zealand, Canada and South Africa, contested this expansion. Through successfully outlining and defending their own notions of sovereignty, property and commercial rights, they were able to a make a significant contribution towards fashioning a post-war framework more conducive to states than empires. This analysis of the period immediately after World War II will appeal to researchers of history and international relations, as well as those interested in the political economy of the post-war world.

CHAPTER 1

THE IMPERIAL WORLD

I have never suggested ... that Britain has failed to do her best to secure the position of the Dominions in international affairs, and I fully agree with you that the attitudes of the United Kingdom and New Zealand towards each other are fundamentally healthy and are very precious possessions to both. But that does not alter the fact as I see it, that Britain, along with the United States and Russia, is determined to create a ‘great power’ world in which the small powers will be allotted the same shadowy role as has been granted to them in the operation of the war. I think this is all wrong, though I do not for a moment suggest that this policy – which I think is implicit – is based on or even intended to achieve the elimination of the Dominions ...

What does worry me is the effect on the Americans ... I am convinced that unless we make it plain at some time that we are an entity with our own views and policies, quite apart from the United Kingdom and quite apart from the British Commonwealth, then we will fall back into the position we occupied half a century ago. The latest instance occurred when I was called down to the State Department ... The discussion was on how the Small Powers could express their views, and I was met, not to my surprise but to my indignation, with the casual remark that ‘of course, New Zealand could express its views through London.’¹

– C.A. Berendsen, 1945

David Reynolds aptly described Anglo-American relations from 1937 as ‘competitive cooperation.’ By 1941, this competitive cooperation had become the overwhelming force in the external (and internal) relations of the small states we are studying here, and it was hard to say whether competition or cooperation worried them more. The new framework of Anglo-American relations altered the strategic and economic context within which small states operated: the real and immediate importance of this development may be apprehended by consideration of aviation politics. This chapter will sketch the American and British ‘imperial systems’ before the war and some of the ways these began to come together during the war; in the next chapter, we shall see how the developing framework of Anglo-American cooperation, even integration, created new threats and opportunities for small states.

Two things may not be entirely obvious at this point. The first is why Anglo-American cooperation – one of the most celebrated developments in twentieth century diplomatic history – might have posed a threat. The reason is that in 1940 both Britain and the US were powerful states with their own imperial systems; their partnership changed the configuration of world politics, but left open important questions about the kind of order they might create together. This chapter will sketch some of the aspects of their respective imperial systems and highlight some of the ways these systems made cooperation difficult.

The second is why the politics of aviation should receive special treatment. In Anglo-American relations, aviation was just one of many areas in which commercial and strategic competition overlapped, and many good studies exist which look at other such areas, for instance shipping, finance or oil extraction. What we are going to see in the next several chapters is that aviation came to hold a special position in the strategic and commercial calculations of the Dominions, indeed that consideration of the realities of aviation altered their identities and forced them to look anew at their own geography and what they considered to be their self-interest. From the standpoint of Anglo-American relations, aviation is a good but arbitrary example of competitive cooperation in action; on the world frontiers, aviation possessed a special significance. This chapter will also investigate why that was so.

More broadly, what this chapter highlights is that ideals of cooperation or a post-imperial world order were well-developed prior to 1939. The First World War had already put an end to the idea that ‘empire’ was the natural, best way of doing business, and British and American statesmen employed real political creativity trying to balance principles of nationalism and self-determination against prerogatives of power. In America there were many, such as Franklin Roosevelt, genuinely committed to Wilsonian principles, while in Britain many were committed to a self-governing Empire-Commonwealth.² Yet political adaptation also served strategic and economic purposes, though experiments in the interwar years in how these different purposes might be reconciled to one another were not entirely happy. While Britain and America developed progressive political platforms that took national claims seriously, their response to the crisis of the 1930’s was economically and strategically inward-looking. This raises the interesting question as to how economic and strategic conservatism was ultimately overcome: what we shall see is that small states played an important role in this process.

Imperial Systems

What is an imperial system? Asymmetrical relationships are liable to be complicated; terms like ‘imperial’ or ‘empire’ rarely simplify them. ‘Imperial system’ is only meant to highlight some interesting parallels in world politics prior to 1939. That said, there are characteristics common to all forms of imperialism. First, empires – formal or informal – are based on the use of force (dispatching gunboats to collect debts or seize territory in lieu of debts, for instance).³ Second, empires are based on a formalised hierarchy (through ‘unequal treaties,’ for instance) by which one people enjoys rights superior to those of another – ‘inordinate influence or control,’ as Ronald Robinson put it.⁴ Both these definitions cover a wide ground, but fundamentally describe ways in which inequality or hierarchy is enforced and entrenched, to the detriment of a weaker party. While British and American power were different in their expression, they both institutionalised inequality within their respective spheres, whether using force to bring Indian nationalists to heel or to preserve a particular kind of order within the Caribbean littoral. One of the fears that the Dominions had with respect to Anglo-American cooperation was that these two powerful states would combine to extend their imperial prerogatives.

Commonwealth

The broad ideals of Commonwealth, Empire trade and imperial defence evolved out of the British response to the multifaceted crisis of the Boer War. The war raised serious questions about the nature of the British Empire and how it related to increasingly self-governing peoples such as the Canadians or Australians. The Commonwealth ideal which dominated British policy for fifty years or more was a remarkably bold answer to these questions. A new generation of British thinkers such as Lionel Curtis argued it would be possible to foster a genuine sense of political community and ‘we feeling’ under the Crown across a multiracial empire, balancing self-government against regular consultation and a special relationship built round a common history and destiny. The idea gained legal status at the 1907 Colonial Conference; at the same time, the Committee of Imperial Defence, an informal advisory body set up in 1902, became an official organ of imperial consultation. All this appeared more than vindicated by the successful experience of the Imperial War Cabinet in the First World War: the term ‘Commonwealth of Nations’ gained legal recognition in 1917, a Dominions Office was formed in 1925, the first Dominions Secretary appointed in 1930, and the Dominions themselves gained complete legal autonomy by the Statute of Westminster in 1931.

Empire trade, advocated by politicians like Joseph Chamberlain or Leo Amery, reflected both a particular kind of Commonwealth unionism and the realities of Britain’s decline relative to the United States and Germany. The British electorate decisively rejected the idea in the twenties, fearing it would make corn dear; Empire trade thus progressed by small steps, such as the creation of an ‘Empire Marketing Board’ in 1925, until the 1929 crash and the run on the pound in 1931. The negotiation of the sterling area was an emergency response to a financial rather than a trade crisis.⁵ This was reflected in the Ottawa agreements of 1932. As Ian Drummond caustically noted, ‘the history of interwar imperial economic policy is the history of negotiation with respect to objectively insignificant goods,’ estimating that the Ottawa system of imperial preference increased British exports by a paltry 3–5% to 1938, while imperial imports in Britain rose by 7–10%.⁶ In trade, Ottawa reversed conventional wisdom about empires and markets: it was the British market that was increasingly penetrated by the Empire. However, a more recent study has noted this trade imbalance was immaterial so long as trade was conducted in sterling, since the overall balance would still contribute to preserve sterling’s external exchange position.⁷

While the sterling area cushioned Britain against some of the volatility of the Depression, as an experiment it was disappointing: the British Dominions regarded it as a way of leveraging their negotiating position with the United States through British imperial policy, expecting Britain to yield on commodity imports while utilising tariffs to protect nascent domestic industries.⁸ Churchill referred to the imperial trade arrangements as ‘Rottowa;’⁹ in more measured terms: ‘as Mackenzie King had foreseen in the twenties, bilateral tariff bargaining meant imperial fragmentation.’¹⁰

Imperial defence was the strategic counterpart to the Commonwealth idea, though it was often distorted by the centrifugal tendencies of its self-governing members. The idea had emerged out of the many embarrassments and dangers of the Boer War, and was embodied in the Committee of Imperial Defence, whose purpose was to unify various aspects of imperial defence strategy, along with contingency planning and what we would call ‘joined up’ military, naval and political thinking.¹¹ The Committee was a good example of the British genius for cheap, flexible organisational solutions: committee membership was fluid, enabling the Dominions to participate. However, the hope that this might lead to integrated Commonwealth defence planning after the war was frustrated by Dominion governments jealous of their political autonomy and in no hurry to shoulder the burden of peacetime imperial defence. They emphasised their autonomy at every opportunity, such as the 1923 Imperial Conference. In 1919, meanwhile, Lloyd George established that defence planning should proceed on the basis that Britain would not fight another major war for ten years; in 1928, the Chancellor of the Exchequer, Winston Churchill, established this was a ‘rolling’ ten years. ‘When I woke up in the morning,’ the Cabinet Secretary Maurice Hankey recalled, ‘I’d say, ‘Good God, the Ten Year Rule starts again this morning!’¹²

Recent scholarship has drawn a more complicated picture of British defence policy in the thirties than the old one of irresolute drift.¹³ Nevertheless, Britain’s international obligations were complicated, while serious questions pertaining to the organisation and role of new technologies like aeroplanes and armour remained open. Neither the Commonwealth nor ‘imperial defence’ contributed to the development of a working strategy for containing the growing threat of German and Japanese aggression. This became brutally clear at the 1937 Imperial Conference, called for the purpose of coordinating imperial strategy: every Dominion leader cited some reason to avoid making a commitment, whether fear of secessionism in the Canadian plains or Quebec or the New Zealand demand that the League be given some real ‘teeth.’¹⁴ Publicly, the Conference concluded with nothing more than a statement of faith in the capacity of nations to cooperate;¹⁵ privately, the Foreign Secretary Anthony Eden confessed ‘there would be no sense in fighting a war which would break the British Empire.’¹⁶ In this sense, ‘appeasement’ was defined by the search for armed peace despite numerous policy restraints, rather than by a realistic or ‘joined up’ appraisal of the threats confronting the British Empire. The Commonwealth, Empire trade and imperial defence were bold in conception but ambiguous in practice.

Good Neighbours

Like the Commonwealth idea, pan-Americanism traced its roots to before the Great War. While the Commonwealth sought to overcome geographical distance through shared history, pan-Americanism sought to overcome historical distance through shared geography. Latin Americans (i.e. Americans south of the Rio Grande) were linguistically and culturally closer to Europe, enjoying longstanding diplomatic ties and hosting substantial ex-patriot communities. They had also suffered from ‘Big Stick’ diplomacy and territorial acquisitions, such as the coup that conveniently split Panama from Columbia. The First World War reduced European competition, providing an impetus for fuller integration, which became part of Woodrow Wilson’s diplomacy.¹⁷

Map 1 Pan-American’s Air Empire: Pan-American Airlines was a textbook example of informal empire in the Western Hemisphere: it was explicitly promoted as a monopoly enterprise by the US, it enjoyed and exploited close links to American political leaders, and it served to exclude both political and economic competition from European or Latin American states.

Yet American policy lacked coherence – ‘Pan-American Day’ aside – until the 1930’s.¹⁸ Growing Latin American discontent reflected the lack of coherent American economic leadership, especially the unwillingness to deregulate home markets or provide discount facilities to countries in difficulties. So long as Congress controlled tariff policy (until 1934), American trade policy reflected the mistaken belief that American exports could increase indefinitely without opening American markets.¹⁹ This triggered the crisis of the 1930 Smoot-Hawley tariff, which raised duties to an average of 50% ad valorem; the depreciation of the dollar in 1933 under Roosevelt was equivalent to a further 50% hike in duties. The collapse of Latin American trade was staggering: between 1929 and 1932, trade with Latin America contracted (imports by 68%, exports by 78%), while economic distress led to bond defaults and political pressure to expropriate foreign assets, of which Americans owned roughly $3.5 billion in 1933.²⁰

Social crisis and nationalist backlash formed the immediate backdrop to the ‘Good Neighbor’ policy. While the US State Department under Cordell Hull increasingly espoused the view that free trade was the key component to a stable domestic and global order, this view had opponents across the US Government.²¹ Hull could not prevent New Deal import quotas or Franklin Roosevelt’s precipitous dismissal of the London Economic Conference; he did manage to secure the Reciprocal Trade Agreements Act of 1934, which passed tariff policy almost wholly from the legislative to the executive branch of the US Government.

While Hull dreamt of liberalising world trade, American trade policy prior to the war aimed at carefully bounded trade agreements, usually with less-developed states, and at preventing the expropriation of American assets in the western hemisphere. This policy began at the Montevideo Conference on 12 December 1933, when Hull r...

Table of contents

• Cover
• Front Matter
• Title Page
• Copyright
• Contents
• Preface
• List of Illustrations
• Abbreviations
• Introduction
• 1 The Imperial World
• 2 The Trouble with American Power
• 3 Planning for Post-War Order
• 4 Visions of Post-War Order
• 5 The British Commonwealth in World Affairs
• 6 Functional Negotiations
• 7 The Great Powers and Collective Security
• 8 Failure
• 9 Regional Integration, Imperial Disintegration
• Conclusion
• Notes
• Bibliography
• Index