The International Impact
THAT resources could not be squandered with the same profligacy as in the nineteenth century was a lesson driven home by the international effects of the world wars. The greater readiness to impose controls on the domestic economy in the Second World War reflected as much as anything else the greatly changed position of Britain in the international economy. It was no longer possible to feel so confident about obtaining supply. The Royal Commission on the Supply of Food and Raw Materials in Time of War, reporting in 1905, opined that with enough money and enough ships there would be no danger.2 That there should not be enough money struck them as the more remote of those two possibilities. The first six months of the First World War confirmed their confidence. From the spring of 1915 onwards,however, the visible signs of Britain’s deteriorating situation in the international economy became constantly more apparent. The scaffolding of multilateral settlements, which before 1914 held together the structure of international trade, rested on two chief bases. The first was that of India’s balance of payments deficit to Britain and the surpluses with other countries with which this deficit was financed, the second the trading balances between Britain, Europe and North America
KeywordsDomestic Economy Royal Commission International Impact Gold Reserve Economic Creed
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- 1.T. Balogh, ‘The Drift towards a Rational Foreign Exchange Policy’, Economica, n. 5. VII (1940).Google Scholar
- 1.D. F. McCurrach, ‘Britain’s U.S. Dollar Problem, 1939–45’, Economic Journal, LVIII (1948). On the sterling balances, see II. A. Shannon, ‘The Sterling Balances of the Sterling Area, 1939–1949’, Economic Journal, LX (1950).Google Scholar
- 1.Argued most succinctly by J. H. Kirk, Agriculture and the Trade Cycle 1926–1931 (1933).Google Scholar
- 2.A. Loveday, Britain and World Trade (1931) p. 7.Google Scholar