ABSTRACT
By the end of the nineteenth century, Britain had fallen behind her two major rivals the United States and Germany both economically and industrially. The British Empire survived until World War two thanks to the 'invisible income' generated by invested capital and the services it provided which filled the gap in its trade balance. But during World War One the Empire had expanded to its zenith, due mainly to the un-planned conquest of huge territories in the Middle East. The British Treasury retained strict control of Palestine's currency. The country benefited from the prestige and stability that came with the backing of the pound sterling, a recognized international currency. Initially, Churchill tried to argue that the agreement to guarantee the Palestine loan was not binding on the Conservative government. One final attempt by Amery to secure some gesture from Churchill was rebuffed. The latter remained unmoved by the High Commissioner's resignation threat.
