The Challenge of Hegemony
(New Zealand and Canada were especially eager). Empire organizations protested returning Germany’s former colonies and criticized America’s anti-imperialist ideology, which they feared and resented (as well as America’s economic internationalism).
ENTRENCHED FREE TRADERS AND THEIR SELF-REINFORCING STRATEGY: COMMERCIAL AND MILITARY COOPERATION
The foreign commercial policy of the rising contenders and the domestic distributional consequences guided Britain’s grand strategy. In facing imperial Germany, Italy, Japan, and to a lesser extent France, the military, inef‹cient industry, and colonial bureaucrats pushed for a grand strategy of punishing these emerging contenders. Economic nationalists were joined by free traders who argued that the loss of Great Britain’s access to global markets would have a detrimental effect on Britain’s wealth and balance of trade. The empowered economic nationalist coalition used these gains to exert pressure to advance their agenda of empire, protectionism, rearma- ment, and state management of the economy. For the economic national- ists, the 1931 election was an overwhelming victory for pro-tariff Conser- vatives (forming the national government), replacing the pro-free-trade Labour government (1929–31). The 1935 election of Conservative Prime Minister Stanley Baldwin was a further mandate for their agenda and against Labour’s reliance on collective security and economic sanctions, disarmament, and free trade (Robertson 1974; Dunbabin 1975, 591–93).
To preserve their faction’s existence, the embattled free-trade coalition lobbied the government for a self-reinforcing grand strategy of cooperation with liberal and imperial contenders. Such a strategy would have the domestic consequence of moderating the rollback of their faction’s rela- tive power; it would retard their economic and political demise. Free traders lobbied to restrain the extreme military and commercial programs of the economic nationalists, calling for limited rearmament, naval arms limitation agreements, territorial concessions, and free trade within the Sterling Area. As a number of authors conclude, although rearmament began in earnest in 1935, the shortage of skilled labor (especially engi- neering) and productive resources in key industries created bottlenecks, thereby further limiting the scope of Britain’s rearmament. One proposed solution, which was rejected by free traders, was the creation of a “semi- war” state organization to allocate manpower.23