United Kingdom

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Peace and Economic Adjustment

The Treaty of Versailles (1919), the peace settlement for World War I, severely punished Germany for its aggression by setting limitations on the size of the German military and leveling high reparation payments. Britain absorbed some of the German colonies in Africa and received a small part of the reparation payments, but otherwise attempted to soften more severe French proposals for revenge.

Lloyd George, whose coalition government was reelected in 1918, came home a hero from Versailles but immediately discovered that it would be as difficult to win the peace as it had been to win the war. The effect of large numbers of soldiers returning from the war pushed up prices and drove down wages. The United States, whose economy came out of the war far stronger than Britain’s, challenged Britain for commercial supremacy in overseas markets. Labor unions attempted to protect their members through collective action. Between 1919 and 1920 there were close to 2,000 strikes; the most ominous was in the coal industry, which was still nominally under government control. By 1921 close to one-quarter of the British workforce was unemployed, and the high number of people without work threatened to overwhelm the national program that provided unemployment insurance.

Lloyd George’s coalition government consisted largely of Conservatives, and as the economy worsened it broke apart. The Conservatives won the election of 1922, and for the first time, Labour elected more members to Parliament than did the Liberals. In 1924 the first Labour government ruled briefly, but paradoxically it was brought down by a series of strikes by the unions that had raised it to power.

In 1926 the Trades Union Congress supported a general strike after a series of failed strikes over wages and hours in the coal industry. The general strike officially lasted nine days; it fanned fears of revolution and further divided the social classes. Both mine owners and mine workers proved entirely inflexible, and the government was placed in the hopeless position of mediator. Workers gained little from the strike, but the Conservatives were defeated at the next election. Labour was elected in 1929 in a coalition with the Liberals. The coalition advanced a program of social welfare and full employment. They had hardly taken their seats when the world was plunged into economic crisis.

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The worldwide economic depression of 1929 struck Britain hard. Unemployment rose to 2.5 million within a year and to 3 million by the beginning of 1933. Ramsay MacDonald, the Labour prime minister, resigned in 1931 but agreed to sit in a national coalition government to handle the worsening crisis. The government put emergency measures into effect to raise income taxes on the wealthy, to reduce salaries of government workers, and to reduce unemployment benefits that were crippling the government.

For the first time in a century, Britain abandoned free trade. The government placed duties on imports and encouraged the population to “buy British.” Government programs to build houses and automobiles and expand electric utilities ultimately had their effect on the domestic economy. During the 1930s the government began to nationalize utilities, including coal, and to set wages and prices in large industries such as steel. By 1933 unemployment began to decline, especially in the newer industries, and by 1935 most sectors of the economy were recovering. Britain’s share of world exports continued to shrink, however, and industries that had failed to modernize no longer remained competitive. Not only had the United States become an international competitor, but Germany, too, had survived the worst of the depression; its economy recovered as the result of a massive program of rearmament.

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World War II and Its Aftermath

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World War II

Despite the effects of the Great Depression, Britain was still one of the great world powers. It was one of the nations that enforced compliance with the Treaty of Versailles, and it was a leader in the League of Nations, an alliance that had been created in the aftermath of World War I to help resolve international conflicts peacefully. But a feeling of uncertainty and indecision had settled over Britain, especially in regard to its international responsibilities. The war had taken a great toll, destroying much of the generation that would now have come to power. There was little will to fight again, especially to hold on to colonies that no longer wished to be ruled by Britain.

Britain’s vast empire was proving costly and difficult to maintain. In 1931 the colonies of Canada, Australia, New Zealand, and South Africa became independent countries, although they remained part of the British Commonwealth of Nations, a loose confederation of nations and political entities with historic ties to Britain.

The British had occupied Egypt since 1882, but a nationalist movement forced Britain to grant Egypt independence in 1922. However, Britain retained control of the Suez Canal. The nationalist movement in India, under the inspired leadership of Mahatma Gandhi, made British control of India increasingly difficult.

Following the experience of World War I, the British public seemed uninterested in affairs on the European continent. The outbreak of the Spanish Civil War (1936-1939), Italian aggression in North Africa, and the blatant military buildup by Germany under the rule of the Nazi Party (see National Socialism) were all met with public disinterest and government evasion. In 1937 Neville Chamberlain became prime minister. He adopted a policy of appeasement toward German expansion, attempting to influence Germany’s new chancellor, Adolf Hitler, through personal diplomacy and veiled threats of intervention. Chamberlain tried to maintain peace in Europe largely by making concessions to Germany when conflicts arose.

This policy was one factor that encouraged Germany to increase its military strength and expand its borders. In 1936 Germany sent troops into the Rhineland, a region of western Germany that had been demilitarized under the Treaty of Versailles. Germany annexed Austria in 1938, seized the western half of Czechoslovakia later that year, and in 1939 occupied the remainder of Czechoslovakia as well as the Baltic city of Gdańsk, which had been declared a free city by the Treaty of Versailles and was controlled by the League of Nations. At each point Chamberlain drew a line in the sand, and the waves of German expansionism washed it away.

Britain finally took a stand when Germany invaded Poland in September 1939. When Britain and France declared war on Germany, World War II began. Germany quickly occupied France. During the following two years, the British faced the Germans alone in Europe. Other nations eventually entered the war. By 1941 a coalition led by Germany, Italy, and Japan (known as the Axis powers) faced an alliance of Britain, the Union of Soviet Socialist Republics (USSR), and the United States (known as the Allied powers).

As the military situation weakened, the will of the British people strengthened. Britain fought back, inspired by Britain’s new prime minister, Winston Churchill, one of the greatest orators in the history of the nation. American loans allowed Britain to import much-needed food and war materials. Britain’s first important victory was at Al ‘Alamayn when forces led by General Bernard Montgomery drove the Germans out of the Egyptian desert in 1942. This was followed by a defeat of Axis forces from North Africa and a joint invasion of Italy by Britain and the United States. In 1943 the Royal Air Force (RAF) began its own bombardment of German cities, as well as German munitions and airplane factories. In the following year British forces participated in the D-Day invasion, which landed Allied troops in France. Following the landing, the British and Americans steadily pushed back German troops from the west, while the USSR advanced into Germany from the east. Fighting in Europe ended in May 1945 with the final defeat of Germany.

The war took a toll on British civilians unlike any conflict since the civil wars of the 17th century. For five years, inhabitants of every British city lived under blackout conditions in which lights were extinguished to prevent German bombers from spotting targets. The continual bombings of London and the industrial cities induced a feeling of resignation and helplessness among the population as shells exploded with random destructiveness. Toward the end of the war, rocket bombs created even greater terror—the rockets traveled with such speed that air-raid sirens were unable to warn the population.

The war was an all-consuming experience for every Briton. More than 4.5 million men and women were in uniform overseas, and another 3 million were part of the Home Guard, which responded to air raids and prepared for the constantly anticipated German invasion. Industry shifted entirely to a war footing, and emergency measures gave the government control over nearly every element of the economy. Rationing of food and clothing created hardships. Even in victory, Britain was sapped of its financial and industrial reserves. It was estimated that the war wiped out more than a quarter of the wealth of the entire nation.

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Postwar Britain

The immediate postwar period was one of severe privation. More than 4 million houses had been destroyed or badly damaged; the result was an acute shortage of housing, especially after soldiers returned from the war. Commodity shortages meant the continuation of wartime rationing. Rationing also had to be extended to include items that had not been rationed during the war.

For the first time since the 18th century, Britain became a debtor nation. The loans it had taken out from foreign nations to finance the war exceeded the money it could raise in taxes and other revenues. Without U.S. and Canadian aid, Britain would have defaulted on its considerable debts. Even so, the flood of wealth out of the country was considerable. The winter of 1947 was probably the lowest economic point of the century. Fuel shortages, gas rationing, inadequate food and shelter, and one of the coldest seasons on record all added to the nation’s problems. Unemployment reached 2.3 million, and the monetary crisis worsened.

On the political scene, to the surprise of the world, Churchill was swept out of office when his Conservative Party lost to the Labour Party in the elections of 1945. The Labour government relaxed restrictions on trade unions and embarked upon a program of nationalization. This program resulted in government ownership of the Bank of England and of the coal, electricity, and gas industries. The government consolidated the railroads into British Rail and the airlines into British Overseas Airways Company (BOAC). The most controversial takeovers were the iron and steel industries, which were profitable private enterprises. The government immediately encountered the difficulties of effectively running complicated industries, many of which were badly in need of modernization. Efforts to make these businesses profitable and competitive in the international market were hampered by outdated equipment and inadequate facilities.

In 1948 the most far-reaching of Britain’s social welfare programs was established. The National Insurance Act of 1946 consolidated benefits involving maternity, unemployment, disability, old age, and death. The National Health Service, set up in 1948, provided free medical service for Britons. British socialists now boasted that citizens were cared for “from cradle to grave.” However, the price tag for both programs was far greater than anyone had anticipated, and the government immediately cut back on some services.

Gradually Britain’s economy recovered. After 1948 the United Kingdom took advantage of the Marshall Plan, a four-year economic recovery program designed by the United States to revitalize the economies of European countries by making low-cost loans available for reconstruction. For all of the damage it had suffered, Britain had not experienced the devastation of other European nations such as France, and Britain soon reestablished its export industries.

After the war, Britain still played an important role in international affairs. In 1945 it became a permanent member of the Security Council of the United Nations. (The United Nations, or UN, is an international organization of countries that was founded in 1945 to promote world peace and cooperation.) As a member of the UN, Britain served as one of the countries that continued to occupy and rebuild Germany. The new Labour government attempted to maintain Britain’s role as a world power by supporting a large overseas military presence in both the British colonies and Europe and by continuing a high level of military spending.

Tensions grew between Communist nations under the leadership of the USSR and capitalist countries led by the United States. Britain developed its own nuclear weapons and cooperated closely with the United States in a policy that relied on using the threat of nuclear attack to discourage aggression by potential enemies. For many Britons, the USSR replaced Germany as the national enemy.

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The Loss of Empire

Even before World War II, Britain had begun to adjust its relationship with many of its colonies. In 1931 Britain created the Commonwealth of Nations. The Commonwealth conferred what was called dominion status on several colonies that had been heavily settled by British immigrants. This effectively ended British rule over Canada, Australia, and New Zealand. Dominion status gave preferential treatment to goods from British dominions after Britain abandoned free trade and began imposing import duties on foreign goods, beginning in the 1930s. This arrangement benefited Britain as well since all three dominions were heavy exporters of agricultural products—grain, meat, butter, and cheese—which were in short supply in Europe after the war.

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India

In India a movement for independence had been gathering momentum for decades. Although the British concluded that they could no longer rule in India, they did not feel that they could simply abandon their centuries-old ties. India was religiously divided, and the two largest groups—Hindus and Muslims—were increasingly antagonistic toward each other. The attempt to create one dominion of India was undermined by the demand of the Muslims for their own separate state.

After the war, the Labour government abandoned efforts to mediate the conflict and resolved to end the British presence in India as quickly as possible. The government opposed colonialism and felt little political attachment to India. The costs of continued peacekeeping were also keenly felt at a time when there was rationing at home. A heroic effort by the last governor-general of India, Louis Mountbatten, created what appeared to be a workable division between largely Hindu India and Muslim Pakistan (the latter has since split into the nations of Pakistan and Bangladesh). The British withdrawal from India in 1948 resulted in increased religious tensions and a terrible civil war. The civil war resulted in the deaths of between 250,000 and 500,000 people, among them Gandhi, who was assassinated by a Hindu extremist opposed to the division of India. The abandonment of India was a blow to British prestige and the beginning of the total disintegration of the empire.