ABSTRACT
In 1913 Britain stood at the centre of the international economy, the world's greatest trading nation providing, through the City of London, sophisticated financial and commercial services which underpinned the structure of world trade. The current account of the balance of payments was heavily in surplus and the exchange stability of the pound sterling unquestioned. The economy, moreover, was currently experiencing a phase of cyclical expansion, capped by an impressive export boom. In short, Britain's economic position on the eve of the First World War appeared to be one of great strength. Yet it is salutary to remember that well before the turn of the century many of those doubts and uncertainties with which a later British public was to become so familiar were already present among the business and investing classes of late Victorian society. The rise of tariff protection in overseas markets after 1870 and the increasing encroachments of foreign sources of supply, both for agricultural and manufactured products, in the domestic market itself, had conspired to undermine the confident optimism of the mid-Victorian era when the supremacy of British industry had gone unchallenged and the future of domestic agriculture seemed assured.1 The period between 1873 and 1896 was one of falling prices and profits, the years of the ‘Great Depression’ in agriculture, trade and industry when, increasingly, the dogma of free trade began to be questioned and the security of Britain's international economic position reassessed. The ‘Fair Trade’ movement of the early 1880s and the ‘Made in Germany’ campaign of the following decade were among the early manifestations of a developing xenophobia in British society,2 a defensive and nationalistic reaction to the challenge of foreign economic rivalry which reached its zenith in political terms in the early years of the twentieth century in the movement for closer commercial integration of the empire in order to isolate Britain from an increasingly hostile world.
