Before World War I, London was the center of world finance and Britain was the world's largest overseas investor. Britain had also been called the workshop of the world. But during the war, Britain lost markets to the United States and to Japan. The center of world finance moved to New York. Britain emerged from the war deeply in debt to the United States. Forty percent of government spending was to be spent repaying its war debt. An importer of food, many people were to be frugal in eating until the 1950s. And having spent its wealth on war rather than modernizing its machinery, Britain's machinery was becoming antiquated.
After the war, Britain still needed to export its coal, textiles and other manufactured goods to pay for needed imports, but Britain's exports were diminished by the impoverishment of former customers: Germany, Russia and some other East European countries. Britain's war veterans returned home to a dearth in the availability of jobs, and unemployment in Britain rose higher than ten percent of the work force.
Also, the war had brought inflation to Britain, and in 1919 and 1920 wages did not keep up with prices. Labor unions sought recourse in strikes, which were less than helpful. The relatively high cost of labor, along with antiquated machinery, was hurting Britain's trade with other nations – the cost in production raising the price of those goods Britain was trying to sell abroad.
Despite Great Britain's political stability and traditions, the fear of Bolshevism had arisen. Prime Minister Lloyd-George attacked the Labour party as being run by "the extreme pacifist, Bolshevist group," and he cited the Russian Revolution as what could happen as a result of class antagonisms. But, in 1919, despite his outspoken hostility toward Bolshevism, Lloyd-George was unwilling to give much support to the anti-Bolsheviks who were then fighting in Russia's civil war. Lloyd-George believed that Britain did not have enough surplus wealth to spend on an effective intervention on the side of the anti-Bolsheviks in Russia's civil war. Lloyd-George was also concerned that intervention would add to a radicalization of Britain's Left. His enthusiasm for crushing the Bolsheviks was also dampened by misgivings about the anti-Bolshevik commanders, Kolchak and Denikin. Also, Lloyd-George saw a reduced threat to the British Empire by the Bolsheviks remaining in power in Russia. The Bolsheviks were outspoken in their opposition to empire, and Russia under the Bolsheviks, he believed, would be less inclined toward imperial expansion southward. It appeared to Lloyd-George that, under the Bolsheviks, the Crimea, Georgia and the Ukraine might remain independent – which would be of benefit to the British. And Lloyd-George believed that under the Bolsheviks there might be no return of Russian power over Poland and Finland.
Copyright © 1998-2013 by Frank E. Smitha. All rights reserved.