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Britain’s Grand Strategy of Restrained Punishment


abandonment of the gold standard, imperial preferences, loans, quotas, and protectionism

Encountering predominantly imperial contenders had the domestic conse- quence of strengthening the economic nationalist coalition while rav- aging the service industries of the City of London. Enhanced economic nationalists pressed for an imperial economy: the abandonment of the gold standard, adopting imperial preferences, British tariffs, quotas against Japanese exports, loan and credit embargoes against Germany, and trade sanctions against Italy. Economic nationalists argued that British ‹nancial and trade concessions would be used to expand Germany’s and Japan’s potential for aggression. Other traditional supporters, such as the National Union of Manufacturers, pressed the government to take action against German-subsidized exports, while the Lancashire textile industry pushed for protection from Japanese competition and preferences in the empire (Lowe 1981, 148). FBI-TUC discussions, representing organized manage- ment and organized labor, articulated a joint program for the development of imperial preferences (Dintenfass 1991, 84–85).

New converts to the economic nationalist coalition included organized labor (Trades Union Congress, or TUC), shipping, and even bank direc- tors and City ‹nanciers, who turned toward protectionism, import con- trols, and the empire to save themselves (including the chairmen of the “big ‹ve” clearinghouses) (Williamson 1984, 119–20; Cain and Hopkins 1993a, 73–75). The Banker’s Industrial Development Corporation (BIDC), established with government encouragement and funding from the Bank of England, a variety of banks, and the City institutions, sup- ported industrial reorganization (Newton 1995, 488). The BIDC limited the competition in cotton spindles, while the National Shipbuilders’ Security purchased and disposed of redundant shipyards to reduce capacity in shipping. Finally, as other states embraced economic nationalism, the proliferation of bankruptcies and factory closures in Britain caused many free-trade constituents to swing around to a pro-tariff and pro-empire posi- tion.

Many free traders were harmed by the global trend toward self- suf‹ciency and exclusive commercial spheres (Roberts 1991, 65–67). As Eric Francis notes, “London’s position as a centre of world banking, insur- ance, shipping and merchanting had inevitably been seriously affected by

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